-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AkJtX1URZa9FRRF4KObLlNK5MRyqv+0lva4xyljgDBFW7c8hcTZNzzEkhKsEifSu aOs5NVuweB2dXtUnPxFI+A== 0000950123-96-006962.txt : 19961126 0000950123-96-006962.hdr.sgml : 19961126 ACCESSION NUMBER: 0000950123-96-006962 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 21 FILED AS OF DATE: 19961125 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORGAN J P & CO INC CENTRAL INDEX KEY: 0000068100 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 132625764 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-15079 FILM NUMBER: 96671571 BUSINESS ADDRESS: STREET 1: 60 WALL ST CITY: NEW YORK STATE: NY ZIP: 10260 BUSINESS PHONE: 2124832323 MAIL ADDRESS: STREET 1: P O BOX 271 STREET 2: C/O WILLIAM D HALL CITY: WILMINGTON STATE: DE ZIP: 19899 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JPM CAPITAL TRUST I CENTRAL INDEX KEY: 0001026426 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-15079-01 FILM NUMBER: 96671572 BUSINESS ADDRESS: STREET 1: C/O J P MORGAN & CO INC STREET 2: 60 WALL ST 38TH FL CITY: NEW YORK STATE: NY ZIP: 10260-0060 BUSINESS PHONE: 2124832323 MAIL ADDRESS: STREET 1: C/O J P MORGAN & CO INC STREET 2: 60 WALL ST 38TH FL CITY: NEW YORK STATE: NY ZIP: 10260-0060 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JPM CAPITAL TRUST II CENTRAL INDEX KEY: 0001026451 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-15079-02 FILM NUMBER: 96671573 BUSINESS ADDRESS: STREET 1: C/O J P MORGAN & CO INC STREET 2: 60 WALL ST 38TH FL CITY: NEW YORK STATE: NY ZIP: 10260-0060 BUSINESS PHONE: 2124832323 MAIL ADDRESS: STREET 1: C/O J P MORGAN & CO INC STREET 2: 60 WALL ST 38TH FL CITY: NEW YORK STATE: NY ZIP: 10260-0060 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JPM CAPITAL TRUST III CENTRAL INDEX KEY: 0001026452 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-15079-03 FILM NUMBER: 96671574 BUSINESS ADDRESS: STREET 1: C/O J P MORGAN & CO INC STREET 2: 60 WALL ST 38TH FL CITY: NEW YORK STATE: NY ZIP: 10260-0060 BUSINESS PHONE: 2124832323 MAIL ADDRESS: STREET 1: C/O J P MORGAN & CO INC STREET 2: 60 WALL ST 38TH FL CITY: NEW YORK STATE: NY ZIP: 10260-0060 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JPM CAPITAL TRUST IV CENTRAL INDEX KEY: 0001026453 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-15079-04 FILM NUMBER: 96671575 BUSINESS ADDRESS: STREET 1: C/O J P MORGAN & CO INC STREET 2: 60 WALL ST 38TH FL CITY: NEW YORK STATE: NY ZIP: 10260-0060 BUSINESS PHONE: 2124832323 MAIL ADDRESS: STREET 1: C/O J P MORGAN & CO INC STREET 2: 60 WALL ST 38TH FL CITY: NEW YORK STATE: NY ZIP: 10260-0060 S-3/A 1 AMENDMENT NO. 2 TO FORM S-3 1 As filed with the Securities and Exchange Commission on November 25, 1996 Registration Nos. 333-15079 15079-1 15079-2 15079-3 15079-4 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 AMENDMENT NO. 2 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 J.P.MORGAN & CO. INCORPORATED DELAWARE 13-2625764 JPM CAPITAL TRUST I DELAWARE To be applied for JPM CAPITAL TRUST II DELAWARE To be applied for JPM CAPITAL TRUST III DELAWARE To be applied for JPM CAPITAL TRUST IV DELAWARE To be applied for (Exact name of registrant as (State or other jurisdiction of (I.R.S. Employer specified in its charter) incorporation or organization) Identification No.)
60 Wall Street New York, New York 10260-0060 (212) 483-2323 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Rachel F. Robbins, Esq. General Counsel and Secretary J.P. Morgan & Co. Incorporated 60 Wall Street New York, New York 10260-0060 (212) 483-2323 (Name, address, including zip code, and telephone number, including area code, of agent for service) COPIES TO: Gene A. Capello, Esq. B. Robbins Kiessling, Esq. Vice President and Assistant General Counsel Cravath, Swaine & Moore J.P. Morgan & Co. Incorporated 825 Eighth Avenue 60 Wall Street New York, New York 10019 New York, New York 10260-0060 (212) 474-1500 (212) 648-3375 2 2 Approximate date of commencement of proposed sale to the public: From time to time after this Registration Statement becomes effective. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. /X/ If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. /X/ Calculation of Registration Fee 3 3
Title of each class of securities Proposed maximum Amount of registration fee (2) to be registered aggregate offering price(1) Senior debt securities, subordinated debt $1,000,000,000 (3)(4)(5) $303,031 securities and junior subordinated debt securities (collectively, "Debt Securities") of J.P. Morgan & Co. Incorporated Preferred Securities of JPM Capital Trusts I, II, III, and IV severally ("Preferred Securities") Guarantees (the "Guarantees") of Preferred Securities of JPM Capital Trusts I, II, III and IV by J.P. Morgan & Co. Incorporated (6)
(1) Estimated solely for purposes of calculating the registration fee, exclusive of accrued interest and dividends, if any. (2) Calculated pursuant to Rule 457(o) and previously submitted. (3) Such indeterminable number or amount of (i) Debt Securities of J.P. Morgan & Co. Incorporated as may from time to time be issued at indeterminate prices or upon conversion or exchange of securities so issued and (ii) Preferred Securities of JPM Capital Trusts I, II, III and IV, severally, as may from time to time be issued at indeterminate prices. Junior Subordinated Debt Securities may be issued and sold to JPM Capital Trusts I, II, III and IV, severally, in which event such Junior Subordinated Debt Securities may later be distributed to the holders of Preferred Securities upon a dissolution of JPM Capital Trust I, II, III or IV and the distribution of the assets thereof. (4) Such amount in U.S. dollars or the equivalent in foreign denominated currency units, or if any Debt Securities are issued at original issue discount, such greater amount as shall result in an aggregate initial offering price of $1,000,000,000. The Prospectuses herein cover $1,000,000,000 of securities. (5) This Registration Statement also relates to offers and sales of Debt Securities, Preferred Securities and Guarantees in connection with market-making transactions by and through affiliates of the registrants, including J.P. Morgan Securities Inc. (6) In addition to the Preferred Securities Guarantees and the Junior Subordinated Debt Securities, J.P. Morgan & Co.Incorporated is also registering under this registration statement certain other back-up obligations of J.P. Morgan & Co. Incorporated. Such back-up obligations include its obligations under the Indenture (as defined) and under the Amended and Restated Declaration of Trust of each Trust pursuant to which J.P. Morgan & Co. Incorporated will agree, among other things, to pay all debts and obligations (other than with respect to the Trust Securities (as defined)) of the relevant Trust, and all costs or expenses of the relevant Trust, including all fees, expenses and taxes of such Trust. No separate consideration will be received by J.P. Morgan & Co. Incorporated for the Preferred Securities Guarantees or such other back-up obligations. See "Relationship between the Preferred Securities, the Junior Subordinated Debentures and the Preferred Securities Guarantee" in the form of Prospectus Supplement included herein. The registrants hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until the registrants shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the securities act of 1933, or until the registration statement shall become effective on such date as the commission, acting pursuant to said section 8(a), may determine. 4 4 EXPLANATORY NOTE This Registration Statement contains one form of Prospectus Supplement and two forms of Prospectuses to be used in connection with offerings of the following securities: (1) preferred securities of JPM Capital Trusts I, II, III and IV, severally, junior subordinated debt securities of J.P. Morgan & Co. Incorporated and guarantees by J.P. Morgan & Co. Incorporated of preferred securities issued severally by JPM Capital Trusts I, II, III and IV, and (2) debt securities (both senior and subordinated) of J.P. Morgan & Co. Incorporated. Each offering of securities made under this Registration Statement will be made pursuant to one of these Prospectuses, with the specifications of the securities offered thereby set forth in an accompanying Prospectus Supplement. The complete Prospectus Supplement and Prospectus for the offering of the preferred securities of J.P. Morgan & Co. Incorporated Capital Trusts I, II, III and IV, severally, the junior subordinated debt securities of J.P. Morgan & Co. Incorporated and the guarantees by J.P. Morgan & Co. Incorporated of the preferred securities issued severally by JPM Capital Trusts I, II, III and IV follow immediately after this Explanatory Note, which is then immediately followed by the complete Prospectus for the offering of debt securities (both senior and subordinated) of J.P. Morgan & Co. Incorporated. 5 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED NOVEMBER 25, 1996 PROSPECTUS SUPPLEMENT (TO PROSPECTUS DATED , 1996) [ ] Cumulative Preferred Securities JPM Capital Trust I [ ] % Cumulative Preferred Trust Securities (Liquidation Amount $ per Preferred Security) Fully and Unconditionally Guaranteed as Set Forth Herein by J.P. Morgan & Co. Incorporated The % Preferred Trust Securities (the "Preferred Securities") offered hereby represent preferred undivided beneficial interests in the assets of JPM Capital Trust I, a statutory business trust formed under the laws of the State of Delaware (the "Trust"). J.P. Morgan & Co. Incorporated, a Delaware corporation (the "Company"), will directly or indirectly own all the common securities (the "Common Securities" and, together with the Preferred Securities, the "Trust Securities") representing common undivided beneficial interests in the assets of the Trust. The Trust exists for the sole purpose of issuing the Preferred Securities and Common Securities and investing the proceeds thereof in an equivalent amount of % Junior Subordinated Debentures due of the Company ("Junior Subordinated Debentures"). (continued on next page) Application will be made to list the Preferred Securities on the New York Stock Exchange, Inc. (the "NYSE"). See "Underwriting." SEE "RISK FACTORS" BEGINNING ON PAGE S-[ ] FOR CERTAIN INFORMATION RELEVANT TO AN INVESTMENT IN THE PREFERRED SECURITIES. 6 THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER FEDERAL AGENCY. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Price to Underwriting Proceeds to Public (1) Discounts JPM Capital and Trust I Commissions (2) (1)(3)(4) Per Preferred Security $ (3) $ Total (5) (3)
(1) Plus accrued distributions, if any, from , 1996, to date of delivery. (2) See "Underwriting." (3) In view of the fact that the proceeds of the sale of the Preferred Securities will be invested in Junior Subordinated Debentures, the Company has agreed to pay to the Underwriters as compensation ("Underwriters' Compensation") for their arranging the investment therein of such proceeds $ per Preferred Security (or $ in the aggregate). See "Underwriting". (4) Before deducting expenses payable by the Company estimated to be $ . (5) The Trust and the Company have granted to the Underwriters an option, exercisable within 30 days of the date hereof, to purchase up to [ ] additional Preferred Securities at the Price to Public for the purpose of covering over-allotments, if any. If such option is exercised in full, the total Price to Public, Underwriting Discounts and Commissions and Proceeds to JPM Capital Trust I would be $ , $ and $ , respectively. The Preferred Securities are offered by the Underwriters, subject to prior sale, when, as and if delivered to and accepted by the Underwriters, and subject to their right to reject orders in whole or in part. It is expected that delivery of the Preferred Securities will be made in book-entry form through the facilities of The Depository Trust Company, on or about , 1996, against payment therefor in immediately available funds. This Prospectus Supplement and the accompanying Prospectus may be used by the Company or certain affiliates of the Company in connection with offers and sales related to secondary market transactions in the Preferred Securities S-2 7 at negotiated prices related to prevailing market prices at the time of sale or otherwise. Such Company affiliates may act as principal or agent in such transactions. The date of this Prospectus Supplement is , 1996. S-3 8 (Continued from previous page) The Preferred Securities and the Common Securities will rank pari passu with each other and will have equivalent terms; provided that (i) if an Event of Default (as defined herein) under the Declaration (as defined herein) occurs and is continuing, the holders of Preferred Securities will have a priority over holders of the Common Securities with respect to distributions and payments upon liquidation, redemption or otherwise and (ii) holders of Common Securities have the exclusive right (subject to the terms of the Declaration) to appoint, replace or remove Trustees (as defined in the accompanying Prospectus) and to increase or decrease the number of Trustees. Holders of the Preferred Securities will be entitled to receive cumulative cash distributions at an annual rate of % of the stated liquidation amount of $ per Preferred Security, accruing from the date of original issuance of the Preferred Securities and payable quarterly, in arrears, on the last day of March, June, September and December of each year, commencing on , 1997 ("distributions"). Cash distributions in arrears for more than one quarter will bear interest thereon at the annual rate of % (to the extent permitted by applicable law), compounded quarterly. The term "distributions" as used herein includes such cash distributions and any such interest payable unless otherwise stated. The distribution rate and the distribution and other payment dates for the Preferred Securities will correspond to the interest rate and the interest and other payment dates on the Junior Subordinated Debentures deposited in the Trust as trust assets. If principal or interest is not paid on the Junior Subordinated Debentures, including as a result of the Company's election to extend the interest payment period on the Junior Subordinated Debentures as described below, the Trust will not make payments on the Trust Securities. The Junior Subordinated Debentures provide that, so long as the Company shall not be in default in the payment of interest on the Junior Subordinated Debentures, the Company shall have the right to defer payments of interest on the Junior Subordinated Debentures by extending the interest payment period from time to time for a period not exceeding 20 consecutive quarterly interest periods (each, a "Deferral Period"). No interest shall be due and payable during a Deferral Period and, as a consequence, distributions on the Trust Securities will also be deferred, S-4 9 but at the end of such Deferral Period the Company shall pay all interest then accrued and unpaid on the Junior Subordinated Debentures, together with interest thereon at the same rate specified for the Junior Subordinated Debentures to the extent permitted by applicable law, compounded quarterly ("Compounded Interest"). All references herein to interest shall include Compounded Interest unless otherwise stated. There could be multiple Deferral Periods of varying lengths throughout the term of the Junior Subordinated Debentures, each not to exceed 20 consecutive quarters or to cause any extension beyond the maturity of the Junior Subordinated Debentures. During any such Deferral Period, the Company may not declare or pay dividends on, or redeem, purchase, acquire or make a distribution or liquidation payment with respect to, any of its common stock or preferred stock or make any guarantee payments with respect thereto; provided, however, that the foregoing restrictions shall not apply to (i) dividends, redemptions, purchases, acquisitions, distributions or payments made by the Company by way of issuance of shares of its capital stock, (ii) payments of accrued dividends by the Company upon the redemption, exchange or conversion of any preferred stock of the Company as may be outstanding from time to time in accordance with the terms of such preferred stock, (iii) cash payments made by the Company in lieu of delivering fractional shares upon the redemption, exchange or conversion of any preferred stock of the Company as may be outstanding from time to time in accordance with the terms of such preferred stock, (iv) repurchases, redemptions or other acquisitions of shares of capital stock of the company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or consultants, or (v) any declaration of a dividend in connection with the implementation of a stockholders' rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of such rights pursuant thereto. See "Risk Factors--Option to Extend Interest Payment Period; Tax Impact of Extension;" "Description of the Junior Subordinated Debentures--Interest" and "--Option to Extend Interest Payment Period." The payment of distributions out of moneys held by the Property Trustee (as defined in the accompanying Prospectus) and payments on liquidation of the Trust and on redemption of Preferred Securities, as set forth below, are guaranteed by the Company on a subordinated basis as and to the extent described herein (the "Preferred Securities Guarantee"). S-5 10 See "Description of the Preferred Securities Guarantees" in the accompanying Prospectus. The Preferred Securities Guarantee covers payments of distributions and other payments on the Preferred Securities only if and to the extent that the Trust has funds available therefor which will not be the case unless the Company has made a payment of interest or principal or other payments on the Junior Subordinated Debentures held by the Trust as its sole asset. The Preferred Securities Guarantee, when taken together with the Company's obligations under the Junior Subordinated Debentures and the Indenture (as defined herein) and its obligations under the Declaration, including its obligation to pay all costs, expenses, debts and other obligations of the Trust (other than with respect to the Trust Securities), provides a full and unconditional guarantee of amounts due on the Preferred Securities. The obligations of the Company under the Preferred Securities Guarantee are subordinate and junior in right of payment to all other indebtedness, liabilities and obligations of the Company and any guarantees, endorsements or other contingent obligations of the Company in respect of such indebtedness, liabilities or obligations, including Junior Subordinated Debt Securities (as defined in the accompanying Prospectus) and senior to all capital stock now or hereafter issued by the Company and to any guarantee now or hereafter entered into by the Company in respect of its capital stock. The obligations of the Company under the Junior Subordinated Debentures are subordinate and junior in right of payment to all present and future Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations of the Company (as such terms are defined in the accompanying Prospectus). Because the Company is a holding company, the Junior Subordinated Debentures (and the Company's obligations under the Preferred Securities Guarantee) are also effectively subordinated to all existing and future liabilities of the Company's subsidiaries, except to the extent that the Company is a creditor of the subsidiaries recognized as such. The Preferred Securities are subject to mandatory redemption, in whole or in part, upon repayment of the Junior Subordinated Debentures at maturity or their earlier redemption. Subject to the Company having received prior approval of the Federal Reserve to do so if then required under applicable capital guidelines or policies of the Federal Reserve, the Junior Subordinated Debentures may be redeemed by the Company (in whole or in part) from time to time prior to maturity on or after [ ], or at any time in certain circumstances upon the occurrence of a Tax Event or Capital Treatment Event (each as defined herein). If the Company redeems Junior Subordinated Debentures, the Trust must redeem Trust Securities having an aggregate liquidation amount equal to the aggregate principal amount of the Junior Subordinated Debentures so redeemed at $ per Trust Security plus accrued and unpaid S-6 11 distributions thereon (the "Redemption Price") to the date fixed for redemption. See "Description of the Preferred Securities--Mandatory Redemption." The Preferred Securities will be redeemed upon maturity of the Junior Subordinated Debentures. The Junior Subordinated Debentures mature on [ ,] which date may be (i) shortened to a date not earlier than , 2001, if the Company has received the prior approval of the Federal Reserve to do so if then required under applicable capital guidelines or policies, or (ii) extended to a date not later than [ ,] if certain conditions are met. In addition, upon the occurrence of a Special Event (as defined herein) arising from a change in law or a change in legal interpretation, unless the Junior Subordinated Debentures are redeemed in the limited circumstances described below and subject to the Company having received prior approval from the Federal Reserve for such dissolution if then required under applicable capital guidelines or policies of the Federal Reserve, the Trust shall be dissolved with the result that the Junior Subordinated Debentures will be distributed to the holders of the Preferred Securities, on a pro rata basis, in lieu of any cash distribution. In the case of a Special Event that is a Tax Event, the Company will have the right in certain circumstances, subject to the Company having received prior approval of the Federal Reserve to do so if then required under applicable capital guidelines or policies of the Federal Reserve, to redeem the Junior Subordinated Debentures, which would result in the redemption by the Trust of the Trust Securities in the same amount on a pro rata basis. In the event of the voluntary or involuntary dissolution of the Trust, the holders of the Preferred Securities will be entitled to receive, for each Preferred Security, a liquidation amount of $ plus accrued and unpaid distributions thereon (including interest thereon) to the date of payment, unless in connection with such dissolution, the Junior Subordinated Debentures are distributed to the holders of the Preferred Securities. See "Description of the Preferred Securities--Liquidation Distribution Upon Dissolution." If the Junior Subordinated Debentures are distributed to the holders of the Preferred Securities, the Company will use its best efforts to have the Junior Subordinated Debentures listed on the NYSE or on such other exchange as the Preferred Securities are then listed. See "Description of the Preferred Securities--Special Event Redemption or S-7 12 Distribution" and "Description of the Junior Subordinated Debentures." IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN ANY OVER-THE-COUNTER MARKET OR OTHERWISE AND, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. S-8 13 RISK FACTORS Prospective purchasers of Preferred Securities should carefully review the information contained elsewhere in this Prospectus Supplement and in the accompanying Prospectus and should particularly consider the following matters: RANKING OF SUBORDINATED OBLIGATIONS UNDER PREFERRED SECURITIES GUARANTEE AND JUNIOR SUBORDINATED DEBENTURES; DEPENDENCE ON THE COMPANY The obligations of the Company under the Junior Subordinated Debentures are unsecured obligations of the Company and will be subordinate and junior in right of payment to Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations of the Company (as such terms are defined herein) but senior to its capital stock. The Company's obligations under the Preferred Securities Guarantee are unsecured and will rank (i) subordinate and junior in right of payment to all other indebtedness, liabilities and obligations of the Company and any guarantees, endorsements or other contingent obligations of the Company in respect of such indebtedness, liabilities or obligations, including the Junior Subordinated Debentures and any other series of Junior Subordinated Debt Securities, except those made pari passu or subordinate by their terms, and (ii) senior to all capital stock now or hereafter issued by the Company and to any guarantee now or hereafter entered into by the Company in respect of its capital stock. Because the Company is a holding company, the Junior Subordinated Debentures (and the Company's obligations under the Preferred Securities Guarantee) are also effectively subordinated to all existing and future liabilities of the Company's subsidiaries, except to the extent that the Company is a creditor of the subsidiaries recognized as such. There are no terms in the Preferred Securities, the Junior Subordinated Debentures or the Preferred Securities Guarantee that limit the Company's ability to incur additional indebtedness or other obligations, including indebtedness or obligations that rank senior to or pari passu with the Junior Subordinated Debentures and the Preferred Securities Guarantee, or the ability of its subsidiaries to incur additional indebtedness. See "Description of the Preferred Securities Guarantees--Status of the Preferred Securities Guarantees" and "Description of the Junior Subordinated Debt Securities--Subordination" in the accompanying Prospectus. S-9 14 The Trust's ability to make distributions and other payments on the Preferred Securities is solely dependent upon the Company making interest and other payments on the Junior Subordinated Debentures deposited as trust assets as and when required. If the Company were not to make distributions or other payments on the Junior Subordinated Debentures for any reason, including as a result of the Company's election to defer the payment of interest on the Junior Subordinated Debentures by extending the interest period on the Junior Subordinated Debentures, the Trust will not make payments on the Trust Securities. In such an event, holders of the Preferred Securities would not be able to rely on the Preferred Securities Guarantee since distributions and other payments on the Preferred Securities are subject to the Preferred Securities Guarantee only if and to the extent that the Company has made a payment to the Property Trustee of interest or principal on the Junior Subordinated Debentures deposited in the Trust as trust assets. Instead, holders of Preferred Securities would rely on the enforcement (i) by the Property Trustee of its rights as registered holder of the Junior Subordinated Debentures against the Company pursuant to the terms of the Indenture or (ii) by such holder of Preferred Securities of its right against the Company to directly enforce payments of principal and interest on the Junior Subordinated Debentures. However, if the Trust's failure to make distributions on the Preferred Securities is a consequence of the Company's exercise of its right to extend the interest payment period for the Junior Subordinated Debentures, neither the Property Trustee nor any holder of Preferred Securities will have any right to enforce the payment of distributions on the Preferred Securities until an Event of Default under the Declaration shall have occurred. The Company's obligations under the Preferred Securities Guarantee are subordinate and junior in right of payment to all other indebtedness, liabilities and obligations of the Company and any guarantees, endorsements or other contingent obligations of the Company in respect of such indebtedness, liabilities or obligations, including the Junior Subordinated Debentures, and any other series of Junior Subordinated Debt Securities except those made pari passu or subordinate by their terms to the Preferred Securities Guarantee, and senior to its capital stock or to any guarantee of the Company in respect of its capital stock. The Declaration provides that each holder of Preferred Securities, by acceptance thereof, agrees to the provisions of the Preferred Securities Guarantee, including the subordination provisions thereof, and of the Indenture. The Declaration provides that the Company shall pay for all debts and obligations (other than with respect to the Trust Securities) and all costs and expenses of the Trust, including any taxes and all costs and expenses with respect thereto, to which the Trust may become subject, except for United States withholding taxes. No assurance can be given that the Company will have sufficient resources to enable it S-10 15 to pay such debts, obligations, costs and expenses on behalf of the Trust. If an Event of Default (as defined herein) occurs and is continuing, then the holders of Preferred Securities would rely on the enforcement by the Property Trustee of its rights as a holder of the Junior Subordinated Debentures against the Company. In addition, the holders of a majority in liquidation amount of the Preferred Securities will have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Property Trustee or to direct the exercise of any trust or power conferred upon the Property Trustee under the Declaration, including the right to direct the Property Trustee to exercise the remedies available to it as a holder of the Junior Subordinated Debentures. If the Property Trustee fails to enforce its rights under the Junior Subordinated Debentures, any holder of Preferred Securities may, to the extent permitted by applicable law, after a period of 30 days has elapsed from such holder's written request, directly institute a legal proceeding against the Company to enforce the Property Trustee's rights under the Junior Subordinated Debentures without first instituting any legal proceeding against the Property Trustee or any other person or entity. If an Event of Default occurs and is continuing and such event is attributable to the failure of the Company to pay interest or principal on the Junior Subordinated Debentures on the date such interest or principal is otherwise payable (or in the case of redemption, on the redemption date), then a holder of Preferred Securities may also directly institute a proceeding for enforcement of payment to such holder of the principal of or interest on Junior Subordinated Debentures having a principal amount equal to the aggregate liquidation amount of the Preferred Securities held by such holder (a "Direct Action") on or after the respective due date specified in the Junior Subordinated Debentures without first (i) directing the Property Trustee to enforce the terms of the Junior Subordinated Debentures or (ii) instituting a legal proceeding against the Company to enforce the Property Trustee's rights under the Junior Subordinated Debentures. In connection with such Direct Action, the Company will be subrogated to the rights of such holder of Preferred Securities under the Declaration to the extent of any payment made by the Company to such holder of Preferred Securities in such Direct Action. The holders of Preferred Securities will not be able to exercise directly any other remedy available to the holders of the Junior Subordinated Debentures unless the Property Trustee first fails to do so. OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX IMPACT OF EXTENSION So long as the Company shall not be in default in the payment of interest on the Junior Subordinated Debentures, the Company has the right under the Indenture to defer payments of interest on the Junior Subordinated Debentures by extending the interest payment period from time to time on the Junior Subordinated Debentures for a Deferral Period not exceeding 20 consecutive quarterly interest periods, during which no interest shall be due and payable. Quarterly distributions on the Preferred Securities would not be made by the Trust during any such Deferral Period (but would continue to accrue with interest thereon at the rate of % per annum, compounded quarterly). If the Company exercises the right to extend an interest payment period, the Company may not during such Deferral Period declare or pay dividends on, or redeem, purchase, acquire or make a distribution or liquidation payment with respect to, any of its common stock or preferred stock or make any guarantee payments with respect thereto; provided, however, that the foregoing restrictions shall not apply to (i) dividends, redemptions, purchases, acquisitions, distributions or payments made by the Company by way of issuance of shares of its capital stock, (ii) payments of accrued dividends by the Company upon the redemption, exchange or conversion of any preferred stock of the Company as may be outstanding from time to time in accordance with the terms of such preferred stock, (iii) cash payments made by the Company in lieu of delivering fractional shares upon the redemption, exchange or conversion of any preferred stock of the Company as may be outstanding from time to time in accordance with the terms of such preferred stock, (iv) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or consultants, or (v) any declaration of a dividend in connection with the implementation of a stockholders' rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of such rights pursuant thereto. See "Description of the Junior Subordinated Debentures--Option to Extend Interest Payment Period" for a description of certain terms of the outstanding preferred stock of the Company. S-11 16 Prior to the termination of any Deferral Period, the Company may further extend such Deferral Period; provided that such Deferral Period together with all such previous and further extensions thereof may not exceed 20 consecutive quarterly interest periods. Upon the termination of any Deferral Period and the payment of all amounts then due, the Company may commence a new Deferral Period, subject to the above requirements. The Company may also prepay at any time all or any portion of the interest accrued during a Deferral Period. Consequently, there could be multiple Deferral Periods of varying lengths throughout the term of the Junior Subordinated Debentures, each not to exceed 20 consecutive quarters or to cause any extension beyond the maturity of the Junior Subordinated Debentures. See "Description of the Preferred Securities--Distributions" and "Description of the Junior Subordinated Debentures--Option to Extend Interest Payment Period." If a Deferral Period occurs, the Junior Subordinated Debentures will be treated as having "original issue discount" for United States Federal income tax purposes at all times after the beginning of the first Deferral Period, including after the termination of the Deferral Period. During such times, holders of Preferred Securities will be required to include their pro rata share of original issue discount in gross income as it accrues for United States Federal income tax purposes in advance of the receipt of cash, even though no cash distributions will be made during a Deferral Period. Even before the beginning of the First Deferral Period, while the Company will take the position that original issue discount does not arise, it is possible that all of a holder's taxable interest income with respect to the Junior Subordinated Debentures will be accounted for as original issue discount and actual distributions of stated interest will not be separately reported as taxable income. See "Taxation--Original Issue Discount". The Company has no current intention of exercising its option to defer payments of interest. SPECIAL EVENT REDEMPTION OR DISTRIBUTION Upon the occurrence and during the continuation of a Tax Event or Investment Company Event (each as defined herein), which may occur at any time, the Trust shall, unless the Junior Subordinated Debentures are redeemed in the limited circumstances described below and subject to the Company having received prior approval of the Federal Reserve for such dissolution if then required under applicable capital guidelines or policies of the Federal Reserve, be dissolved with the result that, in the manner S-12 17 described in "Description of the Preferred Securities-Liquidation Distribution Upon Dissolution", after satisfaction of liabilities to creditors of the Trust, Junior Subordinated Debentures having an aggregate principal amount equal to the aggregate stated liquidation amount of, and bearing accrued and unpaid interest in an amount equal to the accrued and unpaid distributions on, the Preferred Securities and the Common Securities would be distributed on a Pro Rata Basis (as defined under the caption "JPM Trusts" in the accompanying Prospectus) to the holders of the Preferred Securities and the Common Securities in liquidation of the Trust. In the case of a Tax Event or Capital Treatment Event (as defined herein), in certain circumstances, the Company shall have the right, subject to the Company having received prior approval of the Federal Reserve to do so if then required under applicable capital guidelines or policies of the Federal Reserve, to redeem the Junior Subordinated Debentures, in whole or in part, in which event the Trust will redeem Preferred Securities and Common Securities on a Pro Rata Basis to the same extent as the Junior Subordinated Debentures are redeemed. There can be no assurance as to the market prices for Preferred Securities or the Junior Subordinated Debentures which may be distributed in exchange for Preferred Securities if a dissolution and liquidation of the Trust were to occur. Accordingly, the Preferred Securities that an investor may purchase, or the Junior Subordinated Debentures that the investor may receive on dissolution and liquidation of the Trust, may trade at a discount to the price that the investor paid to purchase the Preferred Securities offered hereby. Because holders of Preferred Securities may receive Junior Subordinated Debentures upon the occurrence of a Special Event, prospective purchasers of Preferred Securities are also making an investment decision with regard to the Junior Subordinated Debentures and should carefully review all the information regarding the Junior Subordinated Debentures contained herein and in the accompanying Prospectus. See "Description of the Preferred Securities--Special Event Redemption or Distribution" and "Description of the Junior Subordinated Debentures--General." Recent Clinton Administration proposals would prevent the Company from deducting interest on the Junior Subordinated Debentures. The proposals would have applied to instruments issued on or after December 7, 1995. However, the Chairmen of the Senate Finance and House Ways and Means Committees have issued a joint statement stating their intention that the proposals, if enacted, would not apply to instruments issued prior to the date of appropriate Congressional action. No such Congressional action has yet occurred. Nevertheless, there can be no assurance that future legislation would not prevent the Company from deducting interest on the Junior Subordinated Debentures. Such legislation would constitute a Tax Event and could result in the distribution of the Junior Subordinated Debentures to holders of the Preferred Securities or, in certain circumstances, S-13 18 the redemption of the Junior Subordinated Debentures by the Company and the distribution of the resulting cash in redemption of the Preferred Securities. See "Description of the Preferred Securities--Special Event Redemption or Distribution." Under current United States Federal income tax law, a distribution of the Junior Subordinated Debentures upon a Tax Event or Investment Company Event would not be a taxable event to holders of the Preferred Securities. See "Taxation--Distribution of Junior Subordinated Debentures to Holders of Preferred Securities." SHORTENING OF STATED MATURITY OF JUNIOR SUBORDINATED DEBENTURES The Company will have the right at any time to shorten the maturity of the Junior Subordinated Debentures to a date not earlier than , 2001. The Preferred Securities will be subject to mandatory redemption at the revised maturity of the Junior Subordinated Debentures. The exercise of such right is subject to the receipt of prior approval of the Federal Reserve if then required under applicable capital guidelines or policies of the Federal Reserve. EXTENSION OF STATED MATURITY OF JUNIOR SUBORDINATED DEBENTURES The Company will also have the right to extend the maturity of the Junior Subordinated Debentures, whether or not the Trust is terminated and the Junior Subordinated Debentures are distributed to holders of the Preferred Securities, to a date no later than the 49th anniversary of the initial issuance of the Preferred Securities, provided that the Company can extend the maturity only if at the time such election is made and at the time of such extension (i) the Company is not in bankruptcy, otherwise insolvent or in liquidation, (ii) the Company is not in default in the payment of any interest or principal on the Junior Subordinated Debentures, (iii) the Trust is not in arrears on payments of distributions on the Preferred Securities and no deferred distributions are accumulated and (iv) at least one nationally recognized statistical rating organization has rated the Junior Subordinated Debentures at a rating level of BBB- or higher, in the case of Standard & Poor's Rating Services, Baa3 or higher, in the case of Moody's Investors Services, Inc. or an equivalent rating in the case S-14 19 of any other nationally recognized statistical rating organization. LIMITED VOTING RIGHTS Holders of Preferred Securities will have limited voting rights, but will not be able to appoint, remove or replace, or to increase or decrease the number of, Trustees, which rights are vested exclusively in the Common Securities. LISTING OF PREFERRED SECURITIES; TRADING PRICES The Preferred Securities constitute a new issue of securities with no established trading market. While application will be made to list the Preferred Securities on the NYSE, there can be no assurance that an active market for the Preferred Securities will develop or be sustained in the future on the NYSE. Although J.P. Morgan Securities Inc. has indicated to the Company and the Trust that it intends to make a market in the Preferred Securities as permitted by applicable laws and regulations, it is not obligated to do so and may discontinue any such market-making at any time without notice. Accordingly, no assurance can be given as to the liquidity of, or trading markets for, the Preferred Securities. The Preferred Securities may trade at a price that does not fully reflect the value of accrued but unpaid interest with respect to the underlying Junior Subordinated Debentures. A holder who disposes of his Preferred Securities between record dates for payments of distributions thereon will be required to include accrued but unpaid interest on the Junior Subordinated Debentures through the date of disposition in income as ordinary income, and to add such amount to his adjusted tax basis in his pro rata share of the underlying Junior Subordinated Debentures deemed disposed of. Accordingly, such a holder will recognize a capital loss to the extent the selling price (which may not fully reflect the value of accrued but unpaid interest) is less than the holder's adjusted tax basis (which will include accrued but unpaid interest). Subject to certain limited exceptions, capital losses cannot be applied to offset ordinary income for United States Federal income tax purposes. See "Taxation--Accrual of Original Issue Discount and Premium" and "--Disposition of the Preferred Securities." S-15 20 POTENTIAL MARKET VOLATILITY DURING DEFERRAL PERIOD As described above, the Company has the right to extend an interest payment period on the Junior Subordinated Debentures from time to time for a period not exceeding 20 consecutive quarterly interest periods. If the Company determines to extend an interest payment period, or if the Company thereafter extends a Deferral Period or prepays interest accrued during a Deferral Period as described above, the market price of the Preferred Securities is likely to be affected. In addition, as a result of such rights, the market price of the Preferred Securities (which represent an undivided interest in Junior Subordinated Debentures) may be more volatile than other securities on which original issue discount accrues that do not have such rights. A holder that disposes of its Preferred Securities during a Deferral Period, therefore, may not receive the same return on its investment as a holder that continues to hold its Preferred Securities. See "Description of the Junior Subordinated Debentures--Option to Extend Interest Payment Period." THE FOLLOWING INFORMATION CONCERNING THE COMPANY, JPM CAPITAL TRUST I, THE PREFERRED SECURITIES, THE PREFERRED SECURITIES GUARANTEE AND THE JUNIOR SUBORDINATED DEBENTURES IS IN ADDITION TO, AND SHOULD BE READ IN CONJUNCTION WITH, THE INFORMATION CONTAINED IN THE ACCOMPANYING PROSPECTUS. CAPITALIZED TERMS USED IN THIS PROSPECTUS SUPPLEMENT HAVE THE SAME MEANINGS AS IN THE ACCOMPANYING PROSPECTUS. SELECTED CONSOLIDATED FINANCIAL DATA OF J.P. MORGAN & CO. INCORPORATED. The following tables set forth certain condensed financial data with respect to the Company selected from the unaudited consolidated financial statements appearing in the Report on Form 10-Q for the quarter ended September 30, 1996, and from the audited consolidated financial statements appearing in the Annual Report on Form 10-K for the year ended December 31, 1995, which are incorporated herein by reference. This information should be read in conjunction with the other details of financial information concerning the Company appearing in the aforementioned documents. S-16 21 SUMMARY FINANCIAL INFORMATION DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA
Nine Months Ended September 30, Year ended December 31, ---------------- ----------------------------------------------------------------- 1996 1995 1995 1994 1993 1992 1991 ------ ------ ------ ------ ------ ------ ------ (UNAUDITED) (AUDITED) (AUDITED) (AUDITED) (AUDITED) (AUDITED) SELECTED FINANCIAL DATA Total interest revenue ........... $ 7,788 $ 7,328 $ 9,937 $ 8,379 $ 7,442 $ 7,281 $ 7,786 Total noninterest revenue ........ 3,832 2,871 3,901 3,536 4,499 2,950 2,528 Total revenues ................... 11,620 10,199 13,838 11,915 11,941 10,231 10,314 Net interest revenue ............. 1,218 1,515 2,003 1,981 1,772 1,708 1,484 Provision for credit losses ...... -- -- -- -- -- 55 40 Total operating expenses ......... 3,326 3,008 3,998 3,692 3,580 2,854 2,487 Net income ....................... 1,155 930 1,296 1,215 1,586(a) 1,582(b) 1,146(c) At period-end: Total assets .................... 211,648 178,331 184,879 154,917 133,888 103,197 103,468 Long-term debt(d) ............... 11,916 9,450 9,327 6,802 5,276 5,443 5,395 Stockholders' equity ............ 11,078 10,113 10,451 9,568 9,859 7,308 6,068 Common stockholders' equity ..... 10,384 9,619 9,957 9,074 9,365 6,814 5,574 Per common share: Net income(e) ................... $ 5.60 $ 4.62 $ 6.42 $ 6.02 $ 7.80(a) $ 7.95(b) $ 5.80(c) Book value ...................... 50.71(f) 46.73(g) 47.25(h) 35.56 29.41 Dividends declared .............. 2.43 2.25 3.06 2.79 2.48 2.23 1/2 2.03 EARNINGS RATIOS Net income as % of: Average total assets ............ 0.55% 0.53% 0.73%(f) 0.70%(g) 1.08%(h)(i) 1.32%(j) 1.05%(k) Average stockholders' equity .... 10.6 9.5 13.2(f) 12.5(g) 19.8(h)(i) 22.5(j) 20.4(k) Average common stockholders' equity ....................... 11.3(m) 10.0%(m) 13.6(f) 12.9(g) 20.9(h)(i) 23.9(j) 21.9(k) DIVIDEND PAYOUT RATIO Dividends declared per common share as % of net income per common share .................... 43.4% 48.7% 47.7% 46.3% 31.8%(i) 28.1%(j) 35.0%(k) CAPITAL RATIOS Average stockholders' equity as % of average total assets ............. 5.2% 5.6% 5.5%(f) 5.7%(g) 5.5%(h) 5.8% 5.2% Common stockholders' equity as % of: Average total assets ............. 5.0 5.5 5.6(f) 5.3(g) 6.4(h) 5.7 5.1 Total year-end assets ............ 4.9 5.4 5.4(f) 5.9(g) 7.0(h) 6.6 5.4 Total stockholders' equity as % of: Average total assets ............. 5.3 5.8 5.9(f) 5.5(g) 6.7(h) 6.1 5.6 Total year-end assets ............ 5.2 5.7 5.7(f) 6.2(g) 7.4(h) 7.1 5.9 Tier 1 risk-based capital ratio(l) . 8.1 8.5 8.8 9.6 9.3 8.9 6.9 Total risk-based capital ratio(l) .. 11.7 12.5 13.0 14.2 13.0 13.0 10.7 Leverage ratio(l) .................. 6.2 6.3 6.1 6.5 7.3 7.1 5.8 OTHER SELECTED DATA Common shares outstanding at period- end (in thousands) ............... 185,917 187,570 187,116 187,701 193,087 191,610 189,529 Total employees at period-end .... 15,188 16,394 15,613 17,055 15,193 14,368 13,323
- --------------- (a) Net income in 1993 includes a $137 million ($0.68 per share) charge related to the cumulative effect of a change in accounting for postretirement benefits adopted January 1, 1993. S-17 22 (b) Net income in 1992 includes $452 million ($2.29 per share) related to the cumulative effect of a change in accounting for income taxes adopted retroactive to January 1, 1992. As a result of applying the new method of accounting for income taxes, income before the cumulative effect of the change for 1992 was reduced by $252 million, or $1.26 per share ($1.27 per share assuming full dilution); net income was increased by $200 million, or $1.03 per share ($1.02 per share assuming full dilution). (c) Net income in 1991 includes $32 million ($0.17 per share) related to the extraordinary gain on early retirement of debt. (d) Includes $3,590 million, $3,197 million, $2,459 million, $2,300 million and $2,080 million of long-term debt qualifying as risk-based capital in 1995, 1994, 1993, 1992 and 1991 respectively. Also incudes $3,740 million and $3,422 million for the periods ended September 30, 1996 and 1995 respectively. (e) Earnings per share amounts for 1994 and 1993 represent both primary and fully diluted earnings per share; earnings per share amounts for 1995, 1992 and 1991 represent primary earnings per share. For the period ended September 30, 1996 fully diluted earnings per share were $5.57. For 1995 fully diluted earnings per share were $6.36. For the period ended September 30, 1995 fully diluted earnings per share were $4.57. For 1992 fully diluted earnings per share before and after the cumulative effect of the change in accounting were $5.63 and $7.92 respectively. For 1991 fully diluted earnings per share before and after the extraordinary gain were $5.58 and $5.75 respectively. (f) Excluding the effect of SFAS No. 115, the book value per common share would have been $47.83 for the twelve months ended December 31, 1995; net income would have been 0.73% of average total assets, 13.78% of average stockholders' equity, and 14.3% of average common stockholders' equity; average stockholders' equity would have been 5.3% of average total assets; common stockholders' equity would have been 5.29% of average total assets and 5.11% of total year-end assets; and total stockholders' equity would have been 5.57% of average total assets and 5.37% of total year-end assets. (g) Excluding the effect of SFAS No. 115, the book value per common share would have been $44.39 for the twelve months ended December 31, 1994; net income would have been 0.71% of average total assets, 13.6% of average stockholders' equity, and 14.2% of average common stockholders' equity; average stockholders' equity would have been 5.2% of average total assets; common stockholders' equity would have been 5.0% of average total assets and 5.6% of total year-end assets; total stockholders' equity would have been 5.3% of average total assets and 5.9% of total year-end assets. (h) Excluding the effect of adopting SFAS No. 115 at December 31, 1993, the book value per common share would have been $41.37; net income would have been 1.09% of average total assets, 19.8% of average stockholders' equity, and 20.9% of average common stockholders' equity; average stockholders' equity would have been 5.5% of average total assets; common stockholders' equity would have been 5.6% of average total assets and 6.2% of total year-end assets; total stockholders' equity would have been 6.0% of average total assets and 6.6% of total year-end assets. (i) Excluding the cumulative effect of the accounting change for postretirement benefits, 1993 net income would have been 1.18% of average total assets, 21.1% of average stockholders' equity, and 22.3% of average common stockholders' equity; dividends declared per common share would have been 29.3% of income per common share before the accounting change. (j) Excluding the cumulative effect of the accounting change for income taxes, 1992 net income would have been 0.94% of average total assets, 17.2% of average stockholders' equity, and 18.3% of average common stockholders' equity; dividends declared per common share would have been 39.5% of income per common share before the accounting change. (k) Excluding the effect of the extraordinary gain on early retirement of debt, 1991 net income would have been 1.03% of average total assets, 19.8% of average stockholders' equity, and 21.3% of average common stockholders' equity; dividends declared per common share would have been 36.1% of income per common share before the extraordinary gain. (l) In accordance with Federal Reserve Board guidelines, the effect of SFAS No. 115 and the equity, assets, and off-balance-sheet exposures of J.P. Morgan Securities Inc. are excluded. (m) Excluding the effect of SFAS No. 115, the annualized rate of return on average common stockholders' equity would have been 15.5% and 13.8% for the nine months ended September 30, 1996 and 1995, respectively. S-18 23 CAPITALIZATION OF J.P. MORGAN & CO. INCORPORATED The consolidated capitalization of the Company and its consolidated subsidiaries at September 30, 1996, and as adjusted for the issuance of the Company-Obligated Mandatorily Redeemable Preferred Securities of Subsidiary Grantor Trusts Holding Solely Junior Subordinated Debentures of the Company, follows:
(US$ IN MILLIONS) ---------------------------- (UNAUDITED) OUTSTANDING AS ADJUSTED ----------- ----------- Long-term debt qualifying as risk-based capital: J.P. Morgan (parent) Zero-coupon subordinated notes due 1998 ........................ $ 352 $ 352 4 3/4% convertible debentures due 1998 ......................... 2 2 7 5/8% subordinated notes due 1998-2004 ........................ 747 747 Floating-rate subordinated notes due 2000-2005 ................. 940 940 5 3/4%-7 1/4% subordinated notes due 2002-2011 ................. 824 824 8% subordinated Italian lire notes due 2003(1) ................. 85 85 6 1/4%-8 1/2% subordinated notes due 2003-2010 ................. 749 749 6 7/8% subordinated Canadian dollar notes due 2004(1) ...................................................... 185 185 4.78% subordinated Japanese yen loan due 2005(1) ...................................................... 90 90 7.69% Medium-Term notes due 2011 ............................... 75 75 Floating-rate, Medium-Term notes due 2026 ...................... 5 5 Morgan Guaranty 7 3/8% subordinated notes due 2002 ............................. 199 199 ------ ----- 4,253 4,253 Less: amortization for risk-based capital purposes ..................................................... 513 513 ------ ----- Total long-term debt qualifying as risk-based capital ...................................................... 3,740 3,740 ------ ----- Long-term debt not qualifying as risk-based capital: J.P. Morgan (parent) 6 1/2%-8% notes due 1997 ....................................... 801 801 14 1/2% South African rand notes due 1997(1) ................... 55 55 Floating-rate notes due 1997 ................................... 500 500 Floating-rate Medium-Term notes due 1997-2006 .................. 370 370 4 5/8%-7 1/4% Deutsche mark notes due 1998-2000(1) ............. 366 366 4 1/2% Mandatorily Exchangeable notes due 1998 ................. 13 13 6%-6.36% Medium-Term notes due 1998-2001 ....................... 81 81 3 3/4%-5 1/2% Swiss franc notes due 1999-2003(1) ............... 569 569 6% Netherlands guilder notes due 2000(1) ....................... 147 147 8.95% Italian lire notes due 2001(1) ........................... 167 167 6 5/8% French franc notes due 2008(1) .......................... 185 185 7.7% notes, Series B-E due 2008-2009 ........................... 425 425 7 1/2% convertible mortgage loan due 2018 ...................... 406 406 Morgan Guaranty Zero-coupon notes due 1996-1997 ................................ 6 6 Zero-coupon notes due 1996-1997 ................................ 15 15 7%-8.11% notes due 1996-1998 ................................... 422 422 Floating-rate Deutsche mark notes issued by J.P. Morgan Holding Deutschland GmbH due 1996-1997(1)(2) .............................................. 7 7
S-19 24
(US$ IN MILLIONS) ----------------- (UNAUDITED) OUTSTANDING AS ADJUSTED ----------- ----------- 11 3/8% Italian lire notes due 1997(1) ...................... 115 115 Floating-rate Portuguese escudo notes due 1998- 2006(1) ................................................... 148 148 Floating-rate notes due 1998 ................................ 800 800 Floating-rate notes due 1998-2011 ........................... 703 703 5.78%-10% notes due 1999-2004 ............................... 927 927 6.06% notes due 2001 ........................................ 40 40 8.0% Australian dollar notes due 2001(1) .................... 106 106 British pound financing obligation(1) ....................... 289 289 -------- -------- 7,663 7,663 Add: amortization for risk-based capital purposes .................................................. 513 513 -------- -------- Total long-term debt not qualifying as risk- based capital ............................................. 8,176 8,176 -------- -------- Total long-term debt(3) ................................... 11,916 11,916 -------- -------- Company-Obligated Mandatorily Redeemable Preferred Securities of Subsidiary Grantor Trusts Holding Solely Junior Subordinated Debentures of the Company (4) ..... -- Stockholders' equity: -------- -------- Preferred stock (authorized: 10,400,000 shares; issued and outstanding: 2,444,300 shares of adjustable rate cumulative preferred stock; 250,000 shares of variable cumulative preferred stock; 400,000 shares of fixed cumulative preferred stock) ............................................ 694 694 Common stock, $2.50 par value (authorized: 500,000,000 shares; issued: 200,684,623 shares) ..................................................... 502 502 Capital surplus ................................................ 1,442 1,442 Retained earnings .............................................. 8,392 8,392 Net unrealized gains on investment securities, net of taxes ................................................ 317 317 Other .......................................................... 754 754 Less: Treasury stock (14,767,312 shares) at cost ...................................................... (1,023) (1,023) -------- -------- Total stockholders' equity ................................ 11,078 11,078 -------- -------- Total long-term debt, Company-Obligated Manditorily Redeemable Preferred Securities of Subsidiary Grantor Trusts Holding Solely Junior Subordinated Debentures of the Company and stockholders' equity .. $22,994 ======== ========
- --------------- Notes: (1) The following exchange rates were utilized to convert non-U.S. dollar notes outstanding at September 30, 1996: British pound..................... 0.639 Italian lire.................... 1,526.33 Canadian dollar................... 1.362 Japanese yen.................... 111.00 Swiss franc....................... 1.254 Portuguese escudo .............. 155.20 Netherlands guilder............... 1.712 South African rand.............. 4.535 Deutsche mark..................... 1.527 Australian dollar............... 1.280 French Franc.................... 5.171
(2) Payment of principal and interest unconditionally guaranteed by J.P. Morgan & Co. Incorporated. (3) The capitalization table does not include significant amounts of deposit liabilities, including deposit notes, and short-term obligations incurred by J.P. Morgan & Co. Incorporated and its consolidated subsidiaries in S-20 25 the ordinary course of business, including federal funds purchased, securities sold under repurchase agreements and commercial paper. (4) The assets of the Subsidiary Grantor Trust consist solely of $ aggregate principal amount of the % Junior Subordinated Debentures due of the Company. Events subsequent to September 30, 1996: New Issues: $2 billion Floating-rate notes due 1997, $300 million 6% notes due 1998, $150 million Floating-rate notes due 1998, $197 million Italian lire Floating-rate notes due 1998, $315 million British pound 7.75% notes due 2003, $13.5 million Floating-rate notes due 2006, $5 million Floating-rate Subordinated Medium-Term notes due 2026 Maturities: $20 million 7.137% notes due 1998 Except as noted above there has been no material change to the consolidation capitalization of J.P. Morgan and its consolidated subsidiaries, as adjusted, since September 30, 1996 JPM CAPITAL TRUST I JPM Capital Trust I is a statutory business trust formed on October 29, 1996, under the Delaware Business Trust Act (the "Business Trust Act") pursuant to a declaration of trust among the Trustees and the Company and the filing of a certificate of trust with the Secretary of State of the State of Delaware. Such declaration will be amended and restated in its entirety (as so amended and restated, the "Declaration") substantially in the form filed as an exhibit to the Registration Statement of which this Prospectus Supplement and the accompanying Prospectus form a part, as of the date the Preferred Securities are initially issued. The Declaration is qualified under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). Upon issuance of the Preferred Securities, the holders thereof will own all the issued and outstanding Preferred Securities. The Company will acquire Common Securities in an amount equal to at least 3% of the total capital of the Trust and will own, directly or indirectly, all the issued and outstanding Common Securities. The Trust exists for the purpose of (a) issuing its Trust Securities for cash and investing the gross proceeds thereof in an equivalent amount of Junior Subordinated Debentures and (b) engaging in such other activities as are necessary, convenient or incidental thereto. The rights of the holders of the Trust Securities, including economic rights, rights to information and voting rights, are as set forth in the Declaration, the Business Trust Act and the Trust Indenture Act. The Declaration does not permit the incurrence by the Trust of any indebtedness for borrowed money or the making of any investment other than in the Junior Subordinated Debentures. In the Declaration, the Company has agreed to pay for all debts and obligations (other than with respect to the Trust Securities) and all costs and expenses of the Trust, including the fees and expenses of the Trustees and any taxes and all costs and expenses with respect thereto, to which the Trust may become subject, except for United States withholding taxes. S-21 26 ACCOUNTING TREATMENT The financial statements of the Trust will be consolidated with the Company's financial statements, with the Preferred Securities shown as "Company-Obligated Mandatorily Redeemable Preferred Securities of Subsidiary Grantor Trusts Holding Solely Junior Subordinated Debentures of the Company". The assets of the Grantor Trust consist solely of $ aggregate principal amount of the % Junior Subordinated Debentures due of the Company. The Company has agreed that future financial reports of the Company will: (i) present the Preferred Securities issued by other JPM Trusts on the Company's balance sheet as a separate line item entitled "Company -- Obligated Mandatorily Redeemable Preferred Securities of Subsidiary Grantor Trusts Holding Solely Junior Subordinated Debentures of the Company"; (ii) include in a footnote to the financial statements disclosure that the sole assets of the trusts are the Junior Subordinated Debentures (specifying as to each trust the principal amount, interest rate and maturity date of Junior Subordinated Debentures held) and whether Staff Accounting Bulletin 53 treatment is sought; (iii) include, in an audited footnote to the financial statements, disclosure that (a) the JPM Trusts are wholly owned, (b) the sole assets of the JPM Trusts are the Junior Subordinated Debentures (specifying as to each trust the principal amount,interest rate and maturity date of the Junior Subordinated Debentures held), and (c) the obligations of the Company under the documents, in the aggregate, constitute a full and unconditional guarantee by the Company of the JPM Trusts' obligations under the Preferred Securities issued by each JPM Trust. USE OF PROCEEDS The Trust will use the proceeds from the sale of the Preferred Securities to purchase the Junior Subordinated Debentures from the Company. The net proceeds from the sale of the Junior Subordinated Debentures will be used by the Company for general corporate purposes, including investment in equity and debt securities and interest-bearing deposits of subsidiaries, the repurchase of issued and outstanding preferred and/or common shares of the Company and other general corporate purposes as may be determined by management. The Company is required by the Federal Reserve to maintain certain levels of capital for bank regulatory purposes. On October 21, 1996, the Federal Reserve announced that cumulative preferred securities having the characteristics of the Preferred Securities could be included as Tier 1 capital for bank holding companies. Such Tier 1 capital treatment, together with the Company's ability to deduct, for income tax purposes, interest payable on the Junior Subordinated Debentures, will provide the Company with a more cost-effective means of obtaining capital for regulatory purposes than if the Company were to issue preferred stock. DESCRIPTION OF THE PREFERRED SECURITIES The Preferred Securities will be issued pursuant to the terms of the Declaration which is qualified under the Trust Indenture Act. The Property Trustee, First Trust of New York, National Association, but not the other Trustees of the Trust, will act as the indenture trustee for purposes of the Trust Indenture Act. The terms of the Preferred Securities and the Declaration include those stated in the Declaration and those made part of the Declaration by the Trust Indenture Act and the Business Trust Act. The following summarizes the material terms and provisions of the Preferred Securities and is qualified in its entirety by reference to, the Declaration, which has been filed as an exhibit to the Registration Statement of which this Prospectus Supplement forms a part, the Business Trust Act and the Trust Indenture Act. GENERAL The Declaration authorizes the Trust to issue the Preferred Securities, which represent preferred undivided beneficial interests in the assets of the Trust, and the Common Securities, which represent common undivided beneficial interests in the assets of the Trust. All the Common Securities will be owned, directly or indirectly, by the S-22 27 Company. The Common Securities and the Preferred Securities rank pari passu with each other and will have equivalent terms except that (i) if an Event of Default under the Declaration occurs and is continuing, the holders of Preferred Securities will have a priority over holders of the Common Securities with respect to distributions and payments upon liquidation, redemption or otherwise and (ii) holders of Common Securities have the exclusive right (subject to the terms of the Declaration) to appoint, remove or replace Trustees and to increase or decrease the number of Trustees. The Declaration does not permit the issuance by the Trust of any securities or other evidences of beneficial ownership of, or beneficial interests in, the Trust other than the Preferred Securities and the Common Securities, and does not permit the incurrence of any indebtedness for borrowed money by the Trust or the making of any investment other than in the Junior Subordinated Debentures. Pursuant to the Declaration, the Property Trustee will have legal title to, and will hold, the Junior Subordinated Debentures as trust assets for the benefit of the holders of the Preferred Securities and the Common Securities. The payment of distributions out of moneys held by the Property Trustee and payments on redemption of the Preferred Securities or liquidation of the Trust are guaranteed by the Company on a subordinated basis as and to the extent described under "Description of the Preferred Securities Guarantees" in the accompanying Prospectus. The Property Trustee will hold the Preferred Securities Guarantee for the benefit of holders of the Preferred Securities. The Preferred Securities Guarantee, when taken together with the Company's obligations under the Junior Subordinated Debentures and the Indenture and its obligations under the Declaration, provides a full and unconditional guarantee from the time of issuance of the Preferred Securities of amounts due on the Preferred Securities. The Preferred Securities Guarantee itself, however, covers distributions and other payments on the Preferred Securities only if and to the extent that the Company has made a payment to the Property Trustee of interest or principal on the Junior Subordinated Debentures deposited in the Trust as trust assets. DISTRIBUTIONS Distributions on the Preferred Securities will be fixed at a rate per annum of % of the stated liquidation amount of $ per Preferred Security. Distributions in arrears for more than one quarter will bear interest thereon at the rate per annum of % (to the extent permitted by law), compounded quarterly. The term "distributions" as used herein includes any such interest payable unless otherwise stated. The amount of distributions payable for any period will be S-23 28 computed on the basis of a 360-day year of twelve 30-day months. Distributions on the Preferred Securities will be cumulative, will accrue from the original date of issuance and, except as otherwise described below, will be payable quarterly in arrears on the last day of March, June, September and December of each year, commencing on , 1997, but only if, and to the extent that, interest payments are made in respect of Junior Subordinated Debentures held by the Property Trustee. So long as the Company shall not be in default in the payment of interest on the Junior Subordinated Debentures, the Company has the right under the Indenture to defer payments of interest on the Junior Subordinated Debentures by extending the interest payment period from time to time on the Junior Subordinated Debentures for a period not exceeding 20 consecutive quarterly interest periods and, as a consequence, the Trust would defer quarterly distributions on the Preferred Securities (though such distributions would continue to accrue with interest thereon at the rate of % per annum, compounded quarterly) during any such Deferral Period. If the Company exercises the right to extend an interest payment period, the Company may not declare or pay dividends on, or redeem, purchase, acquire or make a distribution or liquidation payment with respect to, any of its common stock or preferred stock during such Deferral Period or make any guarantee payments with respect thereto; provided, however, that the foregoing restrictions shall not apply to (i) dividends, redemptions, purchases, acquisitions, distributions or payments made by the Company by way of issuance of shares of its capital stock , (ii) payments of accrued dividends by the Company upon the redemption, exchange or conversion of any preferred stock of the Company as may be outstanding from time to time in accordance with the terms of such preferred stock, (iii) cash payments made by the Company in lieu of delivering fractional shares upon the redemption, exchange or conversion of any preferred stock of the Company as may be outstanding from time to time in accordance with the terms of such preferred stock, (iv) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or consultants, or (v) any declaration of a dividend in connection with the implementation of a stockholders' rights plan, or the S-24 29 issuance of stock under any such plan in the future, or the redemption or repurchase of such rights pursuant thereto. Prior to the termination of any such Deferral Period, the Company may further extend such Deferral Period; provided that such Deferral Period together with all such previous and further extensions thereof may not exceed 20 consecutive quarterly interest periods and may not extend beyond the maturity of the Junior Subordinated Debentures. Upon the termination of any Deferral Period and the payment of all amounts then due, the Company may commence a new Deferral Period, subject to the above requirements. The Company may also prepay at any time all or any portion of the interest accrued during a Deferral Period. Consequently, there could be multiple Deferral Periods of varying lengths throughout the term of the Junior Subordinated Debentures, each not to exceed 20 consecutive quarters or to cause any extension beyond the maturity of the Junior Subordinated Debentures. See "Risk Factors--Option to Extend Interest Payment Period; Tax Impact of Extension;" "Description of the Junior Subordinated Debentures--Interest" and "--Option to Extend Interest Payment Period." Subject to prepayments as described above, payments of accrued distributions will be payable to holders of Preferred Securities as they appear on the books and records of the Trust on the first record date after the end of a Deferral Period. The Company has no current intention of exercising its right to defer payments of interest by extending the interest payment period on the Junior Subordinated Debentures. Distributions on the Preferred Securities must be paid on the dates payable to the extent that the Property Trustee has cash on hand in the Property Account to permit such payment. The funds available for distribution to the holders of the Preferred Securities will be limited to payments received by the Property Trustee in respect of the Junior Subordinated Debentures that are deposited in the Trust as trust assets. See "Description of the Junior Subordinated Debentures." If the Company does not make interest payments on the Junior Subordinated Debentures, the Property Trustee will not make distributions on the Preferred Securities. Under the Declaration, if and to the extent the Company does make interest payments on the Junior Subordinated Debentures deposited in the Trust as trust assets, the Property Trustee is obligated to make distributions on the Trust Securities on a Pro Rata Basis. The payment of distributions on the Preferred Securities is guaranteed by the Company on a S-25 30 subordinated basis as and to the extent set forth under "Description of the Preferred Securities Guarantees" in the accompanying Prospectus. The Preferred Securities Guarantee, when taken together with the Company's obligations under the Junior Subordinated Debentures and the Indenture and its obligations under the Declaration, provides a full and unconditional guarantee from the time of issuance of the Preferred Securities of amounts due on the Preferred Securities. The Preferred Securities Guarantee itself, however covers distributions and other payments on the Preferred Securities only if and to the extent that the Company has made a payment to the Property Trustee of interest or principal on the Junior Subordinated Debentures deposited in the Trust as trust assets. Distributions on the Preferred Securities will be made to the holders thereof as they appear on the books and records of the Trust on the relevant record dates. As long as the Preferred Securities remain in book-entry form, the relevant record dates will be one Business Day (as defined herein) prior to the relevant distribution payment date. Distributions payable on any Preferred Securities that are not punctually paid on any distribution payment date as a result of the Company having failed to make the corresponding interest payment on the Junior Subordinated Debentures will forthwith cease to be payable to the person in whose name such Preferred Security is registered on the relevant record date, and such defaulted distribution will instead be payable to the person in whose name such Preferred Security is registered on the special record date established by the Regular Trustees, which record date shall correspond to the special record date or other specified date determined in accordance with the Indenture; provided, however, that distributions shall not be considered payable on any distribution payment date falling within a Deferral Period unless the Company has elected to make a full or partial payment of interest accrued on the Junior Subordinated Debentures on such distribution payment date. Distributions on the Preferred Securities will be paid through the Property Trustee who will hold amounts received in respect of the Junior Subordinated Debentures in the Property Account for the benefit of the holders of the Preferred Securities and the Common Securities. Subject to any applicable laws and regulations and the provisions of the Declaration, each such payment will be made as described under "Book-Entry Only Issuance--The Depository Trust Company" below. In the event that the Preferred Securities do not continue to remain in book-entry form, the Regular Trustees shall have the right to select relevant record dates which shall be more than one Business Day prior to the relevant payment dates. The Declaration provides that the payment dates or record dates for the Preferred Securities S-26 31 shall be the same as the payment dates and record dates for the Junior Subordinated Debentures. All distributions paid with respect to the Trust Securities shall be paid on a Pro Rata Basis to the holders thereof entitled thereto. If any date on which distributions are to be made on the Preferred Securities is not a Business Day, then payment of the distribution to be made on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. "Business Day" shall mean any day other than Saturday, Sunday or any other day on which banking institutions in the City of New York in the State of New York are permitted or required by any applicable law to close. SPECIAL EVENT REDEMPTION OR DISTRIBUTION If, at any time, a Tax Event or an Investment Company Event (each as hereinafter defined, and each, along with a Capital Treatment Event, a "Special Event") shall occur and be continuing, the Trust shall, unless the Junior Subordinated Debentures are redeemed in the limited circumstances described below and subject to the Company having received prior approval of the Federal Reserve for such dissolution if then required under applicable capital guidelines or policies of the Federal Reserve, be dissolved with the result that, after satisfaction of liabilities to creditors of the Trust, Junior Subordinated Debentures with an aggregate principal amount equal to the aggregate stated liquidation amount of the Preferred Securities and the Common Securities would be distributed on a Pro Rata Basis to the holders of the Preferred Securities and the Common Securities in liquidation of such holders' interests in the Trust, within 90 days following the occurrence of such Special Event; provided, however, that in the case of the occurrence of a Tax Event, as a condition of such dissolution and distribution, the Regular Trustees shall have received an opinion of nationally recognized independent tax counsel experienced in such matters (a "No Recognition Opinion"), which opinion may rely on any then applicable published revenue rulings of the Internal Revenue Service, to the effect that the holders of the Preferred Securities will not recognize any gain or loss for United States Federal income tax purposes as a result of such dissolution and distribution of Junior Subordinated S-27 32 Debentures; and, provided further, that, if at the time there is available to the Trust the opportunity to eliminate, within such 90 day period, the Special Event by taking some ministerial action, such as filing a form or making an election, or pursuing some other similar reasonable measure, which has no adverse effect on the Trust or the Company or the holders of the Preferred Securities, the Trust will pursue such measure in lieu of dissolution. The Company may also elect, in its sole discretion, to shorten the maturity of the Junior Subordinated Debentures as described under "Description of the Junior Subordinated Debentures--General" in lieu of dissolving the Trust, if doing so would eliminate the Tax Event. Furthermore, if in the case of the occurrence of a Tax Event, (i) the Regular Trustees have received an opinion (a "Redemption Tax Opinion") of nationally recognized independent tax counsel experienced in such matters that, as a result of a Tax Event, there is more than an insubstantial risk that the Company would be precluded from deducting the interest on the Junior Subordinated Debentures for United States Federal income tax purposes even if the Junior Subordinated Debentures were distributed to the holders of Trust Securities in liquidation of such holders' interests in the Trust as described above or (ii) the Regular Trustees shall have been informed by such tax counsel that a No Recognition Opinion cannot be delivered to the Trust, the Company shall have the right, subject to the Company having received prior approval of the Federal Reserve to do so if then required under applicable capital guidelines or policies of the Federal Reserve, upon not less than 30 nor more than 60 days notice, to redeem the Junior Subordinated Debentures in whole or in part for cash within 90 days following the occurrence of such Tax Event, and promptly following such redemption Preferred Securities and Common Securities with an aggregate liquidation amount equal to the aggregate principal amount of the Junior Subordinated Debentures so redeemed will be redeemed by the Trust at the Redemption Price on a Pro Rata Basis; provided, however, that if at the time there is available to the Company or the Regular Trustees (as defined in the accompanying Prospectus) the opportunity to eliminate, within such 90 day period, the Tax Event by taking some ministerial action, such as filing a form or making an election, or pursuing some other similar reasonable measure, which has no adverse effect on the Trust, the Company or the holders of the Preferred Securities, the Company will pursue such measure in lieu of redemption and provided further that the foregoing provisions shall not require the Company to shorten the S-28 33 maturity of the Junior Subordinated Debentures and the Company shall have no right to redeem the Junior Subordinated Debentures while the Regular Trustees on behalf of the Trust are pursuing any such ministerial action. The Common Securities will be redeemed on a Pro Rata Basis with the Preferred Securities, except that if an Event of Default under the Declaration has occurred and is continuing, the Preferred Securities will have a priority over the Common Securities with respect to payment of the Redemption Price. "Tax Event" means that the Regular Trustees shall have obtained an opinion of a nationally recognized independent tax counsel experienced in such matters (a "Dissolution Tax Opinion") to the effect that on or after the date of this Prospectus Supplement as a result of (a) any amendment to, or change in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, (b) any amendment to, or change in, an interpretation or application of any such laws or regulations by any legislative body, court, governmental agency or regulatory authority (including the enactment of any legislation and the publication of any judicial decision or regulatory determination), (c) any interpretation or pronouncement that provides for a position with respect to such laws or regulations that differs from the theretofore generally accepted position or (d) any action taken by any governmental agency or regulatory authority, which amendment or change is enacted, promulgated, issued or effective or which interpretation or pronouncement is issued or announced or which action is taken, in each case on or after the date of this Prospectus Supplement, there is more than an insubstantial risk that (assuming in each case that the Stated Maturity will not be shortened) (i) the Trust is, or will be within 90 days of the date thereof, subject to United States Federal income tax with respect to income accrued or received on the Junior Subordinated Debentures, (ii) the Trust is, or will be within 90 days of the date thereof, subject to more than a de minimis amount of other taxes, duties or other governmental charges or (iii) interest payable by the Company to the Trust on the Junior Subordinated Debentures is not, or within 90 days of the date thereof will not be, deductible by the Company for United States Federal income tax purposes. "Investment Company Event" means that the Regular Trustees shall have received an opinion of nationally recognized independent counsel experienced in practice under the Investment Company Act of 1940, as amended (the "1940 S-29 34 Act"), that as a result of the occurrence of a change in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority (a "Change in 1940 Act Law"), there is more than an insubstantial risk that the Trust is or will be considered an "investment company" which is required to be registered under the 1940 Act, which Change in 1940 Act Law becomes effective on or after the date of this Prospectus Supplement. "Capital Treatment Event" means that the Company has reasonably determined that, as the result of the occurrence of a change in law or regulation or a change in the interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, there is more than an insubstantial risk that the Company will not be able to treat the minority interest in the Trust as "Tier 1 capital" (or the equivalent) for purposes of the capital adequacy guidelines of the Federal Reserve, as then in effect and applicable to the Company. On the date fixed for any distribution of Junior Subordinated Debentures, upon dissolution of the Trust, (i) the Preferred Securities and the Common Securities will no longer be deemed to be outstanding, (ii) the depositary or its nominee, as the record holder of the Preferred Securities, will receive a registered global certificate or certificates representing the Junior Subordinated Debentures to be delivered upon such distribution and (iii) any certificates representing Preferred Securities not held by the depositary or its nominee will be deemed to represent Junior Subordinated Debentures having an aggregate principal amount equal to the aggregate stated liquidation amount of, with an interest rate identical to the distribution rate of, and accrued and unpaid interest equal to accrued and unpaid distributions on, such Preferred Securities, until such certificates are presented to the Company or its agent for transfer or reissuance. There can be no assurance as to the market price for the Junior Subordinated Debentures which may be distributed in exchange for Preferred Securities if a dissolution and liquidation of the Trust were to occur. Accordingly, the Junior Subordinated Debentures which a holder of Preferred Securities may subsequently receive upon the dissolution of the Trust may trade at a discount to the price of the Preferred Securities exchanged. If the Junior Subordinated Debentures are distributed to the holders of Preferred S-30 35 Securities upon the dissolution of the Trust, the Company will use its best efforts to list the Junior Subordinated Debentures on the NYSE or on such other exchange on which the Preferred Securities are then listed. MANDATORY REDEMPTION Upon the repayment of the Junior Subordinated Debentures, whether at maturity, upon redemption or otherwise, the proceeds from such repayment will be promptly applied to redeem Preferred Securities and Common Securities having an aggregate liquidation amount equal to the Junior Subordinated Debentures so repaid, upon not less than 30 nor more than 60 days' notice, at the Redemption Price. The Common Securities will be entitled to be redeemed on a Pro Rata Basis with the Preferred Securities, except that if an Event of Default under the Declaration has occurred and is continuing, the Preferred Securities will have a priority over the Common Securities with respect to payment of the Redemption Price. Subject to the foregoing, if fewer than all outstanding Preferred Securities and Common Securities are to be redeemed, the Preferred Securities and Common Securities will be redeemed on a Pro Rata Basis. In the event fewer than all outstanding Preferred Securities are to be redeemed, Preferred Securities registered in the name of and held by DTC or its nominee will be redeemed as described under "Description of Preferred Securities--Book-Entry-Only Issuance; The Depository Trust Company" below. REDEMPTION PROCEDURES The Trust may not redeem fewer than all the outstanding Preferred Securities unless all accrued and unpaid distributions have been paid on all Preferred Securities for all quarterly distribution periods terminating on or prior to the date of redemption. If the Trust gives a notice of redemption in respect of Preferred Securities (which notice will be irrevocable) then, by 12:00 noon, New York City time, on the redemption date and provided that the Company has paid to the Property Trustee a sufficient amount of cash in connection with the related redemption or maturity of the Junior Subordinated Debentures, the Trust will irrevocably deposit with the Depositary funds sufficient to pay the applicable Redemption Price and will give the Depositary irrevocable instructions and authority to pay the Redemption Price to the holders of S-31 36 the Preferred Securities. See "Book-Entry Only Issuance-The Depository Trust Company." If notice of redemption shall have been given and funds deposited as required, then, immediately prior to the close of business on the redemption date, distributions will cease to accrue on the Preferred Securities called for redemption, such Preferred Securities shall no longer be deemed to be outstanding and all rights of holders of such Preferred Securities so called for redemption will cease, except the right of the holders of such Preferred Securities to receive the Redemption Price, but without interest on such Redemption Price. Neither the Trustees nor the Trust shall be required to register or cause to be registered the transfer of any Preferred Securities which have been so called for redemption. If any date fixed for redemption of Preferred Securities is not a Business Day, then payment of the Redemption Price payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date fixed for redemption. If the Company fails to repay Junior Subordinated Debentures on maturity or on the date fixed for redemption or if payment of the Redemption Price in respect of Preferred Securities is improperly withheld or refused and not paid by the Property Trustee or by the Company pursuant to the Preferred Securities Guarantee described under "Description of the Preferred Securities Guarantees" in the accompanying Prospectus, distributions on the Preferred Securities will continue to accrue, from the original redemption date of the Preferred Securities to the date of payment, in which case the actual payment date will be considered the date fixed for redemption for purposes of calculating the Redemption Price. In the event that fewer than all the outstanding Preferred Securities are to be redeemed, the Preferred Securities will be redeemed pro rata as described below under "Book Entry Only Issuance--The Depository Trust Company." If a partial redemption of the Preferred Securities would result in the delisting of the Preferred Securities by any national securities exchange or other organization on which the Preferred Securities are then listed, the Company pursuant to the Indenture will only redeem Junior S-32 37 Subordinated Debentures in whole and, as a result, the Trust may only redeem the Preferred Securities in whole. Subject to the foregoing and applicable law (including, without limitation, United States Federal securities laws), the Company or any of its subsidiaries may at any time and from time to time purchase outstanding Preferred Securities by tender, in the open market or by private agreement. LIQUIDATION DISTRIBUTION UPON DISSOLUTION Pursuant to the Declaration, the Trust shall dissolve: (i) on [ ]; (ii) when all the Trust Securities shall have been called for redemption and the amounts necessary for redemption thereof shall have been paid to the holders of Trust Securities in accordance with the terms of the Trust Securities; or (iii) when all the Junior Subordinated Debentures shall have been distributed to the holders of Trust Securities in exchange for all the Trust Securities in accordance with the terms of the Trust Securities. In the event of any voluntary or involuntary dissolution of the Trust, the holders of the Preferred Securities and Common Securities at the date of dissolution of the Trust will be entitled to receive on a Pro Rata Basis solely out of the assets of the Trust, after satisfaction of liabilities to creditors (to the extent not satisfied by the Company as provided in the Declaration), an amount equal to the aggregate of the stated liquidation amount of $ per Trust Security plus accrued and unpaid distributions thereon to the date of payment (such amount being the "Liquidation Distribution"), unless, in connection with such dissolution, Junior Subordinated Debentures in an aggregate principal amount equal to the aggregate stated liquidation amount of such Trust Securities and bearing accrued and unpaid interest in an amount equal to the accrued and unpaid distributions on such Trust Securities shall be distributed on a Pro Rata Basis to the holders of the Preferred Securities and the Common Securities in exchange therefor. If, upon any such dissolution, the Liquidation Distribution can be paid only in part because the Trust has insufficient assets available to pay in full the aggregate Liquidation Distribution, then the amounts payable directly by the Trust on the Preferred Securities and the Common Securities shall, subject to the following sentence, be paid on a Pro Rata Basis. The holders of the Common Securities will be entitled to receive dis- S-33 38 tributions upon any such dissolution on a Pro Rata Basis with the holders of the Preferred Securities, except that if an Event of Default under the Declaration has occurred and is continuing, the Preferred Securities shall have a priority over the Common Securities with respect to payment of the Liquidation Distribution. NO MERGER, CONSOLIDATION OR SALE OF ASSETS OF THE TRUST The Trust may not merge or consolidate with or into, or be replaced by, or sell, transfer or lease all or substantially all its properties and assets to, any corporation or other entity or, except as expressly permitted hereby, sell or transfer any junior subordinated debentures to any corporation or other entity. DECLARATION EVENTS OF DEFAULT An Indenture Event of Default (as defined in the accompanying Prospectus) will constitute an event of default under the Declaration with respect to the Trust Securities (an "Event of Default"); provided that pursuant to the Declaration, the holder of the Common Securities will be deemed to have waived any such Event of Default with respect to the Common Securities until all Events of Default with respect to the Preferred Securities have been cured or waived. Until all such Events of Default with respect to the Preferred Securities have been so cured or waived, the Property Trustee will be deemed to be acting solely on behalf of the holders of the Preferred Securities, and only the holders of the Preferred Securities will have the right to direct the Property Trustee with respect to certain matters under the Declaration and consequently under the Indenture. In the event that any Event of Default with respect to the Preferred Securities is waived by the holders of the Preferred Securities as provided in the Declaration, the holders of Common Securities pursuant to the Declaration have agreed that such waiver also constitutes a waiver of such Event of Default with respect to the Common Securities for all purposes under the Declaration without any further act, vote or consent of the holders of the Common Securities. See "Voting Rights." Upon the occurrence of an Event of Default, the Property Trustee as the holder of all the Junior Subordinated Debentures will have the right under the Indenture to declare the principal of, and interest on, the Junior Subordinated Debentures to be immediately due and S-34 39 payable. In addition, the Property Trustee will have the power to exercise all rights, powers and privileges under the Indenture. If the Property Trustee fails to enforce its rights under the Indenture, any holder of Preferred Securities may, to the extent permitted by applicable law, after a period of 30 days has elapsed from such holder's written request to the Property Trustee to enforce such rights, institute a legal proceeding against the Company to enforce the Property Trustee's rights. Notwithstanding the foregoing, if an Event of Default has occurred and is continuing and such event is attributable to the failure of the Company to pay interest or principal on the Junior Subordinated Debentures on the date such interest or principal is otherwise payable (or in the case of redemption, the redemption date), then a holder of Preferred Securities may directly institute suit against the Company for enforcement of payment to such holder of the principal of or interest on Junior Subordinated Debentures having a principal amount equal to the aggregate liquidation amount of the Preferred Securities held by such holder on or after the respective due date specified in the Junior Subordinated Debentures. The holders of Preferred Securities will not be able to exercise directly against the Company any other remedy available to the holders of the Junior Subordinated Debentures unless the Property Trustee first fails to do so. See "Description of the Junior Subordinated Debentures." VOTING RIGHTS Except as provided below, under "Modification and Amendment of the Declaration" and "Description of the Preferred Securities Guarantees--Amendments and Assignment" in the accompanying Prospectus and as otherwise required by the Business Trust Act, the Trust Indenture Act or the Declaration, the holders of the Preferred Securities will have no voting rights. Subject to the requirements of the second to last sentence of this paragraph, the holders of a majority in aggregate liquidation amount of the Preferred Securities have the right (i) on behalf of all holders of Preferred Securities, to waive any past default that is waivable under the Declaration and (ii) to direct the time, method and place of conducting any proceeding for any remedy available to the Property Trustee, or exercising any trust or power conferred upon the Property Trustee under the Declaration, including the right to direct the Property Trustee, as the holder of the Junior Subordinated Debentures, to (A) direct the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee (as defined herein), or executing any trust or power conferred on the Indenture Trustee with respect to the Junior Subordinated Debentures, (B) waive any past default that is waivable under Section [ ] of the Indenture, or (C) exercise any right to rescind or annul a declaration that the principal of all the Junior Subordinated Debentures shall be due and payable; provided, however, that where a consent under the Indenture would require the consent of (a) holders of Junior Subordinated Debentures representing a specified percentage greater than a majority in principal amount of the Junior Subordinated Debentures or (b) each holder of Junior Subordinated Debentures affected thereby, no such consent shall be given by the Property Trustee without the prior consent of, in the case of clause (a) above, holders of Preferred Securities representing such specified percentage of the aggregate liquidation amount of the Preferred Securities or, in the case of clause (b) above, each holder of Preferred Securities affected thereby. The Property Trustee shall not revoke any action previously authorized or approved by a vote of the holders of Preferred Securities. S-35 40 The Property Trustee shall notify all holders of record of Preferred Securities of any notice of default received from the Indenture Trustee with respect to the Junior Subordinated Debentures. Other than with respect to directing the time, method and place of conducting any proceeding for any remedy available to the Property Trustee or the Indenture Trustee as set forth above, the Property Trustee shall be under no obligation to take any of the foregoing actions at the direction of the holders of the Preferred Securities unless the Property Trustee shall have obtained an opinion of nationally recognized independent tax counsel recognized as expert in such matters to the effect that the Trust will not be classified for United States Federal income tax purposes as an association taxable as a corporation or a partnership on account of such action and will be treated as a grantor trust for United States Federal income tax purposes following such action. If the Property Trustee fails to enforce its rights under the Declaration (including, without limitation, its rights, powers and privileges as a holder of the Junior Subordinated Debentures under the Indenture), any holder of Preferred Securities may, to the extent permitted by applicable law, after a period of 30 days has elapsed from such holder's written request to the Property Trustee to enforce such rights, institute a legal proceeding directly against the Company to enforce the Property Trustee's rights under the Declaration, without first instituting a legal proceeding against the Property Trustee or any other person. A waiver of an Indenture Event of Default by the Property Trustee at the direction of holders of the Preferred Securities will constitute a waiver of the corresponding Event of Default under the Declaration in respect of the Trust Securities. In the event the consent of the Property Trustee as the holder of the Junior Subordinated Debentures is required under the Indenture with respect to any amendment, modification or termination of the Indenture or the Junior Subordinated Debentures, the Property Trustee shall request the direction of the holders of the Trust Securities with respect to such amendment, modification or termination and shall vote with respect to such amendment, modification or termination as directed by a majority in liquidation amount of the Trust Securities voting together as a single class; provided, however, that where any such amendment, modification or termination under the Indenture would require the consent or vote of (1) holders of Junior Subordinated Debentures repre- S-36 41 senting a specified percentage greater than a majority in principal amount of the Junior Subordinated Debentures or (2) each holder of Junior Subordinated Debentures, the Property Trustee may only give such consent or vote, in the case of clause (1), at the direction of the holders of Trust Securities representing such specified percentage of the aggregate liquidation amount of the Trust Securities or, in the case of clause (2), as directed by each holder of Trust Securities; and, provided further, however, that the Property Trustee shall be under no obligation to take any such action in accordance with the directions of the holders of the Trust Securities unless the Property Trustee has obtained an opinion of nationally recognized independent tax counsel recognized as expert in such matters to the effect that the Trust will not be classified for United States Federal income tax purposes as an association taxable as a corporation or a partnership on account of such action and will be treated as a grantor trust for United States Federal income tax purposes following such action. Any required approval or direction of holders of Preferred Securities may be given at a separate meeting of holders of Preferred Securities convened for such purpose, at a meeting of all the holders of Trust Securities or pursuant to written consent. The Regular Trustees will cause a notice of any meeting at which holders of Preferred Securities are entitled to vote, or of any matter upon which action by written consent of such holders is to be taken, to be mailed to each holder of record of Preferred Securities. Each such notice will include a statement setting forth (i) the date of such meeting or the date by which such action is to be taken; (ii) a description of any resolution proposed for adoption at such meeting on which such holders are entitled to vote or of such matter upon which written consent is sought; and (iii) instructions for the delivery of proxies or consents. No vote or consent of the holders of Preferred Securities will be required for the Trust to redeem and cancel Preferred Securities or distribute Junior Subordinated Debentures in accordance with the Declaration. Notwithstanding that holders of Preferred Securities are entitled to vote or consent under any of the circumstances described above, any of the Preferred Securities at such time that are owned by the Company or by any entity directly or indirectly controlling or controlled by or under direct or indirect common control with the Company shall not be entitled to vote or consent and shall, for purposes of such vote or consent, be treated as if they were not outstanding. S-37 42 The procedures by which persons owning Preferred Securities registered in the name of and held by DTC or its nominee may exercise their voting rights are described under "Description of Preferred Securities--Book-Entry Only Issuance; The Depository Trust Company" below. Holders of the Preferred Securities will have no rights to increase or decrease the number of Trustees or to appoint, remove or replace a Trustee, which rights are vested exclusively in the holders of the Common Securities. MODIFICATION AND AMENDMENT OF THE DECLARATION The Declaration may be modified and amended with the approval of a majority of the Regular Trustees, provided that, if any proposed modification or amendment provides for, or the Regular Trustees otherwise propose to effect, (a) any action that would adversely affect the powers, preferences or special rights of the Trust Securities, whether by way of amendment to the Declaration or otherwise, or (b) the dissolution, liquidation, winding-up or termination of the Trust other than pursuant to the terms of the Declaration, then the holders of the outstanding Trust Securities as a class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of at least 66 2/3% in liquidation amount of the Trust Securities, provided that if any amendment or proposal referred to above would adversely affect only the Preferred Securities or the Common Securities, then only the affected class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of 66 2/3% in liquidation amount of such class of Trust Securities. Notwithstanding the foregoing, (i) no amendment or modification may be made to the Declaration unless the Regular Trustees shall have obtained (a) either a ruling from the Internal Revenue Service or a written unqualified opinion of nationally recognized independent tax counsel experienced in such matters to the effect that such amendment will not cause the Trust to be classified for United States Federal income tax purposes as an association taxable as a corporation or a partnership and to the effect that the Trust will continue to be treated as a grantor trust for purposes of United States Federal income taxation and (b) a written unqualified opinion of nationally recognized independent counsel experienced in such matters to the effect S-38 43 that such amendment will not cause the Trust to be an "investment company" which is required to be registered under the 1940 Act; (ii) certain specified provisions of the Declaration may not be amended without the consent of all the holders of the Trust Securities; (iii) no amendment which adversely affects the rights, powers and privileges of the Property Trustee or the Delaware Trustee shall be made without the consent of the Property Trustee or the Delaware Trustee, as applicable; (iv) Article IV of the Declaration relating to the obligation of the Company to purchase the Common Securities and to pay certain obligations and expenses of the Trust as described under "The JPM Trusts" in the accompanying Prospectus may not be amended without the consent of the Company; and (v) the rights of holders of Common Securities under Article V of the Declaration to increase or decrease the number of, and to appoint, replace or remove, Trustees shall not be amended without the consent of each holder of Common Securities. The Declaration further provides that it may be amended without the consent of the holders of the Trust Securities to (i) cure any ambiguity; (ii) correct or supplement any provision in the Declaration that may be defective or inconsistent with any other provision of the Declaration; (iii) to add to the covenants, restrictions or obligations of the Company; and (iv) to conform to changes in, or a change in interpretation or application of, certain 1940 Act requirements by the Securities and Exchange Commission (the "Commission"), which amendment does not adversely affect the rights, preferences or privileges of the holders. BOOK-ENTRY ONLY ISSUANCE--THE DEPOSITORY TRUST COMPANY The Depository Trust Company ("DTC") will act as securities depositary for the Preferred Securities. The Preferred Securities will be issued only as fully registered securities registered in the name of DTC or its nominee. One or more fully-registered global Preferred Securities certificates (each a "Preferred Securities Global Certificate"), representing the total aggregate number of Preferred Securities, will be issued and will be deposited with DTC. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of securities in definitive form. Such laws may impair the ability to transfer beneficial interests in a global Preferred Security. S-39 44 DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds securities that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations ("Direct Participants"). DTC is owned by a number of its Direct Participants and by the NYSE, the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The rules applicable to DTC and its Participants are on file with the Commission. Upon issuance of a Preferred Securities Global Certificate, DTC will credit on its book-entry registration and transfer system the number of Preferred Securities represented by such Preferred Securities Global Certificate to the accounts of institutions that have accounts with DTC. Ownership of beneficial interests in a Preferred Securities Global Certificate will be limited to Participants or persons that may hold interests through Participants. The ownership interest of each actual purchaser of each Preferred Security ("Beneficial Owner") is in turn to be recorded on the Direct Participants' and the Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchases, but Beneficial Owners are expected to receive written confirmations providing details of the transactions, as well as periodic statements of their holdings, from the Direct Participants or the Indirect Participants through which the Beneficial Owners purchased Preferred Securities. Transfers of ownership interests in the Preferred Securities are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. S-40 45 DTC has no knowledge of the actual Beneficial Owners of the Preferred Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Preferred Securities are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. So long as DTC, or its nominee, is the owner of a Preferred Securities Global Certificate, DTC or such nominee, as the case may be, will be considered the sole owner and holder of record of the Preferred Securities represented by such Preferred Securities Global Certificate for all purposes. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to Cede & Co. If less than all the Preferred Securities are being redeemed, DTC will reduce pro rata (subject to adjustment to eliminate fractional Preferred Securities) the amount of interest of each Direct Participant in the Preferred Securities to be redeemed. Although voting with respect to the Preferred Securities is limited, in those instances in which a vote is required, neither DTC nor Cede & Co. itself will consent or vote with respect to Preferred Securities. Under its usual procedures, DTC would mail an omnibus proxy to the Trust as soon as possible after the record date. The omnibus proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Preferred Securities are credited on the record date (identified in a listing attached to the omnibus proxy). Distribution payments on the Preferred Securities represented by a Preferred Securities Global Certificate will be made by the Property Trustee to DTC. DTC's practice is to credit Direct Participants' accounts on the relevant payment date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payments on such payment date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices and will be S-41 46 the responsibility of such Participants and not of DTC, the Trust or the Company, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of distributions to DTC is the responsibility of the Trust, disbursement of such payments to Direct Participants is the responsibility of DTC, and disbursement of such payments to the Beneficial Owners is the responsibility of Direct Participants and Indirect Participants. Except as provided herein, a Beneficial Owner in a Preferred Securities Global Certificate will not be entitled to receive physical delivery of Preferred Securities. Accordingly, each Beneficial Owner must rely on the procedures of DTC to exercise any rights under the Preferred Securities. DTC may discontinue providing its services as securities depositary with respect to the Preferred Securities at any time by giving reasonable notice to the Trust and the Property Trustee. Under such circumstances, if a successor securities depositary is not obtained, Preferred Security certificates will be required to be printed and delivered. Additionally, the Trust may decide to discontinue use of the system of book-entry transfers through DTC (or a successor depositary). In that event, certificates for the Preferred Securities will be printed and delivered. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the Trust and the Company believe to be reliable, but the Trust and the Company take no responsibility for the accuracy thereof. REGISTRAR, TRANSFER AGENT AND PAYING AGENT In the event the Preferred Securities do not remain in book-entry only form, the following provisions will apply: Payment of distributions and payments on redemption of the Preferred Securities will be payable, the transfer of the Preferred Securities will be registrable and Preferred Securities will be exchangeable for Preferred Securities of other denominations of a like aggregate liquidation amount at the principal corporate trust office of the Property Trustee in The City of New York; provided that payment of distributions may be made at the option of the Regular Trustees on behalf of the Trust by check mailed to the address of the persons entitled thereto and that the payment S-42 47 on redemption of any Preferred Security will be made only upon surrender of such Preferred Security to the Property Trustee. [ ] or one of its affiliates will act as registrar and transfer agent for the Preferred Securities. [ ] will also act as paying agent and, with the consent of the Regular Trustees, may designate additional paying agents. Registration of transfers of Preferred Securities will be effected without charge by or on behalf of the Trust, but upon payment (with the giving of such indemnity as the Trust or the Company may require) in respect of any tax or other governmental charges that may be imposed in relation to it. The Trust will not be required to register or cause to be registered the transfer of Preferred Securities after such Preferred Securities have been called for redemption. INFORMATION CONCERNING THE PROPERTY TRUSTEE The Property Trustee, prior to a default with respect to the Trust Securities, undertakes to perform only such duties as are specifically set forth in the Declaration and, after default, shall exercise the same degree of care as a prudent individual would exercise in the conduct of his or her own affairs. Subject to such provision, the Property Trustee is under no obligation to exercise any of the powers vested in it by the Declaration at the request of any holder of Preferred Securities, unless offered reasonable indemnity by such holder against the costs, expenses and liabilities which might be incurred thereby. The Property Trustee is not required to expend or risk its own funds or otherwise incur personal financial liability in the performance of its duties if the Property Trustee reasonably believes that repayment or adequate indemnity is not reasonably assured to it. The Property Trustee is a depositary for funds and performs other services for, and transacts other banking business with, the Company in the normal course of business. S-43 48 GOVERNING LAW The Declaration and the Preferred Securities will be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to principles of conflicts of laws. MISCELLANEOUS The Regular Trustees are authorized and directed to take such action as they deem reasonable in order that the Trust will not be deemed to be an "investment company" required to be registered under the 1940 Act or that the Trust will not be classified for United States Federal income tax purposes as an association taxable as a corporation or a partnership and will be treated as a grantor trust for United States Federal income tax purposes. In this connection, the Regular Trustees are authorized to take any action, not inconsistent with applicable law, the certificate of trust of the Trust or the Declaration, that the Regular Trustees determine in their discretion to be reasonable and necessary or desirable for such purposes, as long as such action does not adversely affect the interests of holders of the Trust Securities. The Company and the Regular Trustees on behalf of the Trust will be required to provide to the Property Trustee annually a certificate as to whether or not the Company and the Trust, respectively, is in compliance with all the conditions and covenants under the Declaration. DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE Set forth below is a summary of information concerning the Preferred Securities Guarantee that will be executed and delivered by the Company for the benefit of the holders from time to time of the Preferred Securities. The Preferred Securities Guarantee will be qualified under the Trust Indenture Act and will be held by First Trust of New York, National Association, acting in its capacity as indenture trustee with respect thereto, for the benefit of holders of the Preferred Securities of the Trust. The terms of the Preferred Securities Guarantee will be those set forth in the Preferred Securities Guarantee and those made part of the Preferred Securities Guarantee by the Trust Indenture Act. This description summarizes the material terms of the Preferred Securities Guarantee and is qualified in its entirety by reference to the Preferred Securities Guarantee, and the Trust Indenture Act. Section references S-44 49 used herein are references to the provisions of the Preferred Securities Guarantee. General Pursuant to the Preferred Securities Guarantee, the Company will irrevocably and unconditionally agree, to the extent set forth therein, to pay in full, to the holders of the Preferred Securities, the Guarantee Payments (as defined herein), to the extent not paid by the Trust, regardless of any defense, right of set-off or counterclaim that the Trust may have or assert. The following payments or distributions with respect to Preferred Securities to the extent not paid or made by the Trust (the "Guarantee Payments"), will be subject to the Preferred Securities Guarantee (without duplication): (i) any accrued and unpaid distributions on Preferred Securities, and the redemption price, including all accrued and unpaid distributions to the date of redemption, with respect to any Preferred Securities called for redemption by the Trust, but if and only to the extent that in each case the Company has made a payment to the Property Trustee of interest or principal on the Junior Subordinated Debt Securities deposited in the Trust as trust assets, and (ii) upon a voluntary or involuntary liquidation, dissolution, winding-up or termination of the Trust (other than in connection with the distribution of such Junior Subordinated Debt Securities to the holders of the Preferred Securities or the redemption of all the Preferred Securities upon the maturity or redemption of such Junior Subordinated Debt Securities) the lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid distributions on the Preferred Securities to the date of payment, to the extent the Trust has funds available therefor, or (b) the amount of assets of the Trust remaining available for distribution to holders of the Preferred Securities upon liquidation of the Trust. The Company's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by the Company to the holders of the Preferred Securities or by causing the Trust to pay such amounts to such holders. S-45 50 The Company's obligations under the Declaration, the Preferred Securities Guarantee, the Junior Subordinated Debt Securities purchased by the Trust and the Indenture in the aggregate will provide a full and unconditional guarantee on a subordinated basis by the Company of payments due on the Preferred Securities. However, the Preferred Securities Guarantee covers distributions and other payments on the Preferred Securities only if and to the extent that the Company has made a payment to the Property Trustee of interest or principal on the Junior Subordinated Debt Securities deposited in the Trust as trust assets. If the Company does not make interest or principal payments on the Junior Subordinated Debt Securities deposited in the Trust as trust assets, the Property Trustee will not make distributions on the Preferred Securities of the Trust and the Trust will not have funds available therefor. Certain Covenants of the Company In the Preferred Securities Guarantee, the Company will covenant that, so long as any Preferred Securities remain outstanding, the Company will not declare or pay any dividends on, or redeem, purchase, acquire or make a distribution or liquidation payment with respect to, any of its common stock or preferred stock or make any guarantee payment with respect thereto, if at such time (i) the Company shall be in default with respect to its Guarantee Payments or other payment obligations under such Preferred Securities Guarantee, (ii) there shall have occurred any Declaration Event of Default or (iii) in the event that Junior Subordinated Debt Securities are issued to the Trust in connection with the issuance of Trust Securities by the Trust, the Company shall have given notice of its election to defer payments of interest on such Junior Subordinated Debt Securities by extending the interest payment period as provided in the terms of the Junior Subordinated Debt Securities and such period, or any extension thereof, is continuing; provided, however, that the foregoing restrictions shall not apply to (i) dividends, redemptions, purchases, acquisitions, distributions or payments made by the Company by way of issuance of shares of its capital S-46 51 stock, (ii) payments of accrued dividends by the Company upon the redemption, exchange or conversion of any preferred stock of the Company as may be outstanding from time to time in accordance with the terms of such preferred stock, (iii) cash payments made by the Company in lieu of delivering fractional shares upon the redemption, exchange or conversion of any preferred stock of the Company as may be outstanding from time to time in accordance with the terms of such preferred stock, (iv) repurchase, redemptions or other acquisitions of shares of capital stock of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or consultants, or (v) any declaration of a dividend in connection with the implementation of a stockholders' rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of such rights pursuant thereto. In addition, so long as any Preferred Securities remain outstanding, the Company has agreed (i) to remain the sole direct or indirect owner of all the outstanding Common Securities and not to cause or permit such Common Securities to be transferred except to the extent permitted by the Declaration, provided that any permitted successor of the Company under the Indenture may succeed to the Company's ownership of such Common Securities, and (ii) to use reasonable efforts to cause the Trust to continue to be treated as a grantor trust for United States Federal income tax purposes, except in connection with a distribution of Junior Subordinated Debt Securities. (Section 6.01) Amendments and Assignment Except with respect to any changes that do not adversely affect the rights of holders of the applicable Preferred Securities (in which case no consent will be required), the Preferred Securities Guarantee may be amended only with the prior approval of the holders of not less than 66-2/3% in liquidation amount of the outstanding Preferred Securities. (Section 9.02) All guarantees and agreements contained in the Preferred Securities Guarantee shall bind the successors, assignees, receivers, trustees and representatives of the Company and shall inure to the benefit of the holders of the Preferred Securities then outstanding. Except in connection with a consolidation, merger or sale involving the Company that is permitted under the Indenture, the Company may not assign its obligations under the Preferred Securities Guarantee. (Section 9.01) S-47 52 Termination of the Preferred Securities Guarantee The Preferred Securities Guarantee will terminate and be of no further force and effect upon full payment of the redemption price of all Preferred Securities, or upon distribution of the Junior Subordinated Debt Securities to the holders of the Preferred Securities in exchange for all the Preferred Securities, or upon full payment of the amounts payable upon liquidation of the Trust. Notwithstanding the foregoing, the 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 such Preferred Securities or such Preferred Securities Guarantee. (Section 7.01) Status of the Preferred Securities Guarantee The Company's obligations under the Preferred Securities Guarantee to make the Guarantee Payments will constitute an unsecured obligation of the Company and will rank (i) subordinate and junior in right of payment to all other indebtedness, liabilities and obligations of the Company and any guarantees, endorsements or other contingent obligations of the Company in respect of such indebtedness, liabilities or obligations, including the Junior Subordinated Debt Securities, except those made pari passu or subordinate by their terms, and (ii) senior to all capital stock now or hereafter issued by the Company and to any guarantee now or hereafter entered into by the Company in respect of any of its capital stock. The Company's obligations under the Preferred Securities Guarantee will rank pari passu with any other Preferred Securities Guarantee. (Section 6.02) Because the Company is a holding company, the Company's obligations under the Preferred Securities Guarantee are also effectively subordinated to all existing and future liabilities of the Company's subsidiaries, except to the extent that the Company is a creditor of the subsidiaries recognized as such. The Declaration provides that each holder of Preferred Securities, by acceptance thereof, agrees to the subordination provisions and other terms of the Preferred Securities Guarantee. S-48 53 28 The Preferred Securities Guarantee will constitute a guarantee of payment and not of collection (that is, the guaranteed party may institute a legal proceeding directly against the Company to enforce its rights under the Preferred Securities Guarantee without first instituting a legal proceeding against any other person or entity). The Preferred Securities Guarantee will be deposited with First Trust of New York, National Association, as indenture trustee, to be held for the benefit of the holders of the Preferred Securities. First Trust of New York, National Association shall enforce such Preferred Securities Guarantee on behalf of the holders of the Preferred Securities. The holders of not less than a majority in aggregate liquidation amount of the Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available in respect of the Preferred Securities Guarantee, including the giving of directions to First Trust of New York, National Association. If First Trust of New York, National Association fails to enforce the Preferred Securities Guarantee as above provided, any holder of Preferred Securities may institute a legal proceeding directly against the Company to enforce its rights under such Preferred Securities Guarantee, without first instituting a legal proceeding against the Trust or any other person or entity. Miscellaneous The Company will be required to provide annually to First Trust of New York, National Association a statement as to the performance by the Company of certain of its obligations under the Preferred Securities Guarantee and as to any default in such performance. The Company is required to file annually with First Trust of New York, National Association an officer's certificate as to the Company's compliance with all conditions to be complied with by it under the Preferred Securities Guarantee. (Section 2.04) First Trust of New York, National Association, prior to the occurrence of a default, undertakes to perform only such duties as are specifically set forth in the Preferred Securities Guarantee and, after default with respect to the Preferred Securities Guarantee, shall exercise the same degree of care as a prudent individual would exercise in the conduct of his or her own affairs. Subject to such provision, First Trust of New York, National Association is under no obligation to exercise any of the powers vested in it by the Preferred Securities Guarantee at the request of any holder of Preferred Securities unless it is offered reasonable indemnity against the costs, expenses and liabilities that might be incurred thereby. (Section 3.02) Governing Law The Preferred Securities Guarantee will be governed by, and construed in accordance with, the laws of the State of New York. DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES Set forth below is a description of the Junior Subordinated Debentures in which the Trust will invest the proceeds from the issuance and sale of the Trust Securities and which will be deposited in the Trust as trust assets. The terms of the Junior Subordinated Debentures include those stated in the Indenture dated as of , 1996, between the Company and First Trust of New York, National Association, as trustee (the "Indenture Trustee"), as supplemented by the First Supplemental Indenture dated as of , 1996, between the Company and the Indenture Trustee (as so supplemented, the "Indenture"), forms of which have been filed as exhibits to the Registration Statement of which this Prospectus Supplement forms a part, and those made part of the Indenture by the Trust Indenture S-49 54 55 Act. This description supplements the description of the general terms and provisions of the Subordinated Debt Securities set forth in the accompanying Prospectus under the caption "Description of the Junior Subordinated Debt Securities." The following description does not purport to be complete and is qualified in its entirety by reference to the Indenture and the Trust Indenture Act. Whenever particular provisions or defined terms in the Indenture are referred to herein, such provisions or defined terms are incorporated by reference herein. Section references used herein are references to provisions of the Indenture. The Indenture does not limit the aggregate principal amount of indebtedness which may be issued thereunder and provides that junior subordinated debentures may be issued thereunder from time to time in one or more series (collectively, together with the Junior Subordinated Debentures, the "Subordinated Debentures"). The Junior Subordinated Debentures constitute a separate series under the Indenture. Under certain circumstances involving the dissolution of the Trust following the occurrence of a Special Event, Junior Subordinated Debentures may be distributed to the holders of the Trust Securities upon dissolution of the Trust. See "Description of the Preferred Securities-- Special Event Redemption or Distribution." GENERAL The Junior Subordinated Debentures are unsecured, subordinated obligations of the Company, limited in aggregate principal amount to an amount equal to the sum of (i) the stated liquidation amount of the Preferred Securities issued by the Trust and (ii) the proceeds received by the Trust upon issuance of the Common Securities to the Company (which proceeds will be used to purchase an equal principal amount of Junior Subordinated Debentures). The entire principal amount of the Junior Subordinated Debentures will become due and payable, together with any accrued and unpaid interest thereon, on [ , ] (such date, as it may be shortened or extended as hereinafter described, the "Stated Maturity"). Such date may be shortened at any time by the Company to any date not earlier than , 2001, subject to receipt of prior approval of the Federal Reserve if then required under applicable capital guidelines or policies of the Federal Reserve. Such date may also be extended at any time at the S-50 56 election of the Company for one or more periods, but in no event to a date later than [ , ], provided that at the time such election is made and at the time of extension (i) the Company is not in bankruptcy, otherwise insolvent or in liquidation, (ii) the Company is not in default in the payment of any interest or principal on the Junior Subordinated Debentures, (iii) the Trust is not in arrears on payments of distributions on the Preferred Securities and no deferred distributions are accumulated, (iv) at least one nationally recognized statistical rating organization has rated the Junior Subordinated Debentures at a rating level of BBB- or higher, in the case of Standard & Poor's Ratings Services, Baa3 or higher, in the case of Moody's Investors Services, Inc. or an equivalent rating, in the case of other nationally recognized statistical rating organization and (v) the extended Stated Maturity is not later than the 49th anniversary of the initial issuance of the Preferred Securities; provided, however, that, if the Company exercises its right to liquidate the Trust and distribute the Junior Subordinated Debentures, effective upon such exercise the Stated Maturity of the Junior Subordinated Debentures may be changed to any date elected by the Company that is (i) no earlier than the date five years after the initial issuance of the Preferred Securities and (ii) no later than the date 30 years (plus an extended term of up to an additional 19 years if the above-referenced conditions are satisfied) after the date of the initial issuance of the Preferred Securities. The Junior Subordinated Debentures are not subject to any sinking fund. The Junior Subordinated Debentures are subordinate in right of payment to Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations (as such terms are defined in the accompanying Prospectus) of the Company. At , 1996, the amount of Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations was approximately $ billion. See "Description of the Junior Subordinated Debt Securities--Subordination" in the Prospectus. If Junior Subordinated Debentures are distributed to holders of Preferred Securities upon dissolution of the Trust, such Junior Subordinated Debentures will initially be issued as a Global Security (as defined below). As described herein, under certain limited circumstances, Junior Subordinated Debentures may be issued in certificated form in exchange for a Global Security. See "Book-Entry and Settlement" below. In the event that Junior Subordinated S-51 57 Debentures are issued in certificated form, such Junior Subordinated Debentures will be in denominations of $ and integral multiples thereof and may be transferred or exchanged at the offices described below. Payments on Junior Subordinated Debentures issued as a Global Security will be made to DTC, a successor depositary or, in the event that no depositary is used, to a paying agent for the Junior Subordinated Debentures. In the event that Junior Subordinated Debentures are issued in certificated form, payments of principal and interest will be payable, the transfer of the Junior Subordinated Debentures will be registrable and Junior Subordinated Debentures will be exchangeable for Junior Subordinated Debentures of other denominations of a like aggregate principal amount at the corporate trust office of the Indenture Trustee in The City of New York; provided that payment of interest may be made at the option of the Company by check mailed to the address of the persons entitled thereto and that the payment of principal with respect to any Junior Subordinated Debenture will be made only upon surrender of such Junior Subordinated Debenture to the Indenture Trustee. If the Junior Subordinated Debentures are distributed to the holders of Preferred Securities upon dissolution of the Trust, the Company will use its best efforts to list the Junior Subordinated Debentures on the NYSE or on such other exchange on which the Preferred Securities are then listed. OPTIONAL REDEMPTION Except as provided below, the Junior Subordinated Debentures may not be redeemed prior to [ ]. Subject to the Company having received prior approval of the Federal Reserve to do so if then required under applicable capital guidelines or policies of the Federal Reserve, the Company shall have the right to redeem the Junior Subordinated Debentures, in whole or in part, from time to time, on or after [ ], upon not less than 30 nor more than 60 days notice, at a redemption price equal to 100% of the principal amount to be redeemed, plus any accrued and unpaid interest to the redemption date, including interest accrued during a Deferral Period. The Company will also have the right to redeem the Junior Subordinated Debentures at any time upon the occurrence of a Capital Treatment Event or upon the occurrence of a Tax Event if certain conditions are met as described under "Description S-52 58 of the Preferred Securities--Special Event Redemption or Distribution", subject in each case to the Company having received prior approval of the Federal Reserve for such redemption if then required under applicable capital guidelines or policies of the Federal Reserve. If the Company gives a notice of redemption in respect of Junior Subordinated Debentures (which notice will be irrevocable) then, by 12:00 noon, New York City time, on the redemption date, the Company will deposit irrevocably with the Indenture Trustee funds sufficient to pay the applicable redemption price and will give irrevocable instructions and authority to pay such redemption price to the holders of the Junior Subordinated Debentures. If notice of redemption shall have been given and funds deposited as required, then, upon the date of such deposit, interest will cease to accrue on the Junior Subordinated Debentures called for redemption, such Junior Subordinated Debentures will no longer be deemed to be outstanding and all rights of holders of such Junior Subordinated Debentures so called for redemption will cease, except the right of the holders of such Junior Subordinated Debentures to receive the applicable redemption price, but without interest on such redemption price. If any date fixed for redemption of Junior Subordinated Debentures is not a Business Day, then payment of the redemption price payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date fixed for redemption. If payment of the redemption price in respect of Junior Subordinated Debentures is improperly withheld or refused and not paid by the Company, interest on such Junior Subordinated Debentures will continue to accrue, from the original redemption date to the date of payment, in which case the actual payment date will be considered the date fixed for redemption for purposes of calculating the applicable redemption price. If fewer than all the Junior Subordinated Debentures are to be redeemed, the Junior Subordinated Debentures to be redeemed shall be selected by lot or pro rata or in some other equitable manner determined by the Indenture Trustee. In the event of any redemption in part, the Company shall not be required to (i) issue, register the transfer of or exchange any Junior Subordinated Debentures during a period beginning at the opening of business 15 days before S-53 59 any selection for redemption of Junior Subordinated Debentures and ending at the close of business on the earliest date on which the relevant notice of redemption is deemed to have been given to all holders of Junior Subordinated Debentures to be redeemed and (ii) register the transfer of or exchange any Junior Subordinated Debentures so selected for redemption, in whole or in part, except the unredeemed portion of any Junior Subordinated Debentures being redeemed in part. (Section [ ]) INTEREST The Junior Subordinated Debentures will bear interest at the rate of % per annum from the original date of issuance. Interest will be payable quarterly in arrears on the last day of March, June, September and December of each year (each, an "Interest Payment Date"), commencing on , 1997, to the person in whose name such Junior Subordinated Debenture is registered, subject to certain exceptions, at the close of business on the Business Day next preceding such Interest Payment Date. In the event (i) the Preferred Securities shall not continue to remain in book-entry only form or (ii) if, following distribution of the Junior Subordinated Debentures to holders of Trust Securities upon dissolution of the Trust as described under "Description of the Preferred Securities," the Junior Subordinated Debentures shall not continue to remain in book-entry only form, the relevant record date will be the fifteenth day of the month immediately preceding the month in which the relevant Interest Payment Date. Interest payable on any Junior Subordinated Debenture that is not punctually paid or duly provided for on any interest payment date will forthwith cease to be payable to the person in whose name such Junior Subordinated Debenture is registered on the relevant record date, and such defaulted interest will instead be payable to the person in whose name such Junior Subordinated Debenture is registered on the special record date or other specified date determined in accordance with the Indenture; provided, however, that interest,shall not be considered payable by the Company on any Interest Payment Date falling within a Deferral Period unless the Company has elected to make a full or partial payment of interest accrued on the Junior Subordinated Debentures on such Interest Payment Date. The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months and for any period shorter than a full quarterly period for which interest is computed, the amount of S-54 60 interest payable will be computed on the basis of the actual number of days elapsed per 30-day month. If any date on which interest is payable on the Junior Subordinated Debentures is not a Business Day, then payment of the interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. OPTION TO EXTEND INTEREST PAYMENT PERIOD So long as the Company shall not be in default in the payment of interest on the Junior Subordinated Debentures, the Company shall have the right to extend the interest payment period from time to time for a period not exceeding 20 consecutive quarterly interest periods. The Company has no current intention of exercising its right to extend an interest payment period. No interest shall be due and payable during a Deferral Period, except at the end thereof. During any Deferral Period, the Company shall not declare or pay any dividends on, or redeem, purchase, acquire or make a distribution or liquidation payment with respect to, any of its common stock or preferred stock or make any guarantee payments with respect thereto; provided, however, that the foregoing restrictions shall not apply to (i) dividends, redemptions, purchases, acquisitions, distributions or payments made by the Company by way of issuance of shares of its capital stock, (ii) payments of accrued dividends by the Company upon the redemption, exchange or conversion of any preferred stock of the Company as may be outstanding from time to time in accordance with the terms of such preferred stock, (iii) cash payments made by the Company in lieu of delivering fractional shares upon the redemption, exchange or conversion of any preferred stock of the Company as may be outstanding from time to time in accordance with the terms of such preferred stock, (iv) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or consultants, or (v) any declaration of a dividend in connection with the implementation of a stockholders' rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of such rights pursuant thereto. S-55 61 Prior to the termination of any such Deferral Period, the Company may further extend the interest payment period; provided that such Deferral Period together with all such previous and further extensions thereof may not exceed 20 consecutive quarterly interest periods and may not extend beyond the maturity of the Junior Subordinated Debentures. On the first Interest Payment Date occurring at or after the end of each Deferral Period, the Company shall pay to the holders of Junior Subordinated Debentures of record on the record date for such Interest Payment Date (regardless of who the holders of record may have been on other dates during the Deferral Period) all accrued and unpaid interest on the Junior Subordinated Debentures, together with interest thereon at the rate specified for the Junior Subordinated Debentures to the extent permitted by applicable law, compounded quarterly ("Compounded Interest"). Upon the termination of any Deferral Period and the payment of all amounts then due, the Company may commence a new Deferral Period, subject to the above requirements. The Company may also prepay at any time all or any portion of the interest accrued during a Deferral Period. Consequently, there could be multiple Deferral Periods of varying lengths throughout the term of the Junior Subordinated Debentures, each not to exceed 20 consecutive quarterly interest periods or to cause any extension beyond maturity of the Junior Subordinated Debentures. The failure by the Company to make interest payments during a Deferral Period would not constitute a Default or an Event of Default under the Indenture or the Company's currently outstanding indebtedness. If the Property Trustee shall be the sole holder of the Junior Subordinated Debentures, the Company shall give the Property Trustee notice of its selection of such Deferral Period one Business Day prior to the earlier of (i) the next succeeding date on which the distributions on the Preferred Securities are payable or (ii) the date the Trust is required to give notice to the NYSE (if the Preferred Securities are then listed thereon) or other applicable self-regulatory organization or to holders of the Preferred Securities of the record date or the payment date for such distribution. The Trust shall give notice of the Company's selection of such Deferral Period to the holders of the Preferred Securities. If Junior Subordinated Debentures have been distributed to holders of Trust Securities, the Company shall give the holders of the Junior Subordinated Debentures notice of its selection of such Deferral Period ten Business Days prior to the earlier of (i) the next succeeding Interest Payment Date S-56 62 or (ii) the date the Company is required to give notice to the NYSE (if the Junior Subordinated Debentures are then listed thereon) or other applicable self-regulatory organization or to holders of the Junior Subordinated Debentures of the record or payment date for such related interest payment. COMPOUNDED INTEREST Payments of Compounded Interest on the Junior Subordinated Debentures held by the Trust will make funds available to pay any interest on distributions in arrears in respect of the Preferred Securities pursuant to the terms thereof. INDENTURE EVENTS OF DEFAULT If any Indenture Event of Default shall occur and be continuing, the Property Trustee, as the holder of the Junior Subordinated Debt Securities, will have the right to declare the principal of and the interest on the Junior Subordinated Debt Securities (including any Compound Interest) and any other amounts payable under the Indenture to be forthwith due and payable and to enforce its other rights as a creditor with respect to the Junior Subordinated Debt Securities. See "Description of Junior Subordinated Debt Securities--Events of Default" in the accompanying Prospectus for a description of the Indenture Events of Default. An Indenture Event of Default also constitutes a Declaration Event of Default. The holders of Preferred Securities in certain circumstances have the right to direct the Property Trustee to exercise its rights as the holder of the Junior Subordinated Debt Securities. See "Description of Preferred Securities--Declaration Events of Default" and "--Voting Rights". S-57 63 BOOK-ENTRY AND SETTLEMENT If any Junior Subordinated Debentures are distributed to holders of Preferred Securities (see "Description of the Preferred Securities"), such Junior Subordinated Debentures will be issued in the form of one or more global certificates (each a "Global Security") registered in the name of the depositary or its nominee. Except under the limited circumstances described below, Junior Subordinated Debentures represented by the Global Security will not be exchangeable for, and will not otherwise be issuable as, Junior Subordinated Debentures in definitive form. The Global Securities described above may not be transferred except by the depositary to a nominee of the depositary or by a nominee of the depositary to the depositary or another nominee of the depositary or to a successor depositary or its nominee. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of such securities in definitive form. Such laws may impair the ability to transfer beneficial interests in such a Global Security. Except as provided below, owners of beneficial interests in such a Global Security will not be entitled to receive physical delivery of Junior Subordinated Debentures in definitive form and will not be considered the holders (as defined in the Indenture) thereof for any purpose under the Indenture, and no Global Security representing Junior Subordinated Debentures shall be exchangeable, except for another Global Security of like denomination and tenor to be registered in the name of the depositary or its nominee or to a successor depositary or its nominee. Accordingly, each Beneficial owner must rely on the procedures of the depositary or if such person is not a Participant, on the procedures of the Participant through which such person owns S-58 64 its interest to exercise any rights of a holder under the Indenture. If Junior Subordinated Debentures are distributed to holders of Preferred Securities, DTC will act as securities depositary for the Junior Subordinated Debentures. For a description of DTC and DTC's book-entry system, see "Description of Preferred Securities--Book-Entry Only Issuance--The Depository Trust Company." As of the date of this Prospectus Supplement, the description herein of DTC's book-entry system and DTC's practices as they relate to purchases, transfers, notices and payments with respect to the Preferred Securities apply in all material respects to any debt obligations represented by one or more Global Securities held by DTC. The Company may appoint a successor to DTC or any successor depositary in the event DTC or such successor depositary is unable or unwilling to continue as a depositary for the Global Securities. None of the Company, the Indenture Trustee, any paying agent and any other agent of the Company or the Indenture Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in a Global Security for such Junior Subordinated Debentures or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. A Global Security shall be exchangeable for Junior Subordinated Debentures registered in the names of persons other than the depositary or its nominee only if (i) the depositary notifies the Company that it is unwilling or unable to continue as a depositary for such Global Security and no successor depositary shall have been appointed; (ii) the depositary, at any time, ceases to be a clearing agency registered under the Exchange Act at which time the depositary is required to be so registered to act as such depositary and no successor depositary shall have been appointed; (iii) the Company, in its sole discretion, determines that such Global Security shall be so exchangeable; or (iv) there shall have occurred an Indenture Event of Default with respect to such Junior Subordinated Debentures. Any Global Security that is exchangeable pursuant to the preceding sentence shall be exchangeable for Junior Subordinated Debentures registered in such names as the depositary shall direct. It is expected that such instructions will be based upon directions received by the S-59 65 depositary from its Participants with respect to ownership of beneficial interests in such Global Security. RELATIONSHIP BETWEEN THE PREFERRED SECURITIES, THE JUNIOR SUBORDINATED DEBENTURES AND THE PREFERRED SECURITIES GUARANTEE As set forth in the Declaration, the Trust exists for the sole purpose of (a) issuing and selling the Trust Securities evidencing undivided beneficial interests in the assets of the Trust and investing the proceeds from such issuance and sale in the Junior Subordinated Debentures and (b) engaging in such other activities as are necessary, convenient or incidental thereto. As long as payments of interest and other payments are made when due on the Junior Subordinated Debentures, such payments will be sufficient to cover distributions and other payments due on the Preferred Securities primarily because (i) the aggregate principal amount of Junior Subordinated Debentures held as trust assets will be equal to the sum of the aggregate stated liquidation amount of the Trust Securities; (ii) the interest rate and interest and other payment dates on the Junior Subordinated Debentures will match the distribution rate and distribution and other payment dates for the Preferred Securities; (iii) the Declaration provides that the Company shall pay for all debts and obligations (other than with respect to the Trust Securities) and all costs and expenses of the Trust, including any taxes and all costs and expenses with respect thereto, to which the Trust may become subject, except for United States withholding taxes; and (iv) the Declaration further provides that the Trustees shall not cause or permit the Trust, among other things, to engage in any activity that is not consistent with the limited purposes of the Trust. With respect to clause (iii) above, however, no assurance can be given that the Company will have sufficient resources to enable it to pay such debts, obligations, costs and expenses on behalf of the Trust. Payments of distributions and other payments due on the Preferred Securities are guaranteed by the Company on a subordinated basis as and to the extent set forth under "Description of the Preferred Securities Guarantees", in the accompanying Prospectus. If the Company does not make S-60 66 interest or other payments on the Junior Subordinated Debentures, the Trust will not make distributions or other payments on the Preferred Securities. Under the Declaration, if and to the extent the Company does make interest or other payments on the Junior Subordinated Debentures, the Property Trustee is obligated to make distributions or other payments on the Preferred Securities. The Preferred Securities Guarantee is a full and unconditional guarantee from the time of issuance of the Preferred Securities, but the Preferred Securities Guarantee covers distributions and other payments on the Preferred Securities only if and to the extent that the Company has made a payment to the Property Trustee of interest or principal on the Junior Subordinated Debentures deposited in the Trust as trust assets. The Property Trustee will have the Power to exercise all rights, powers and privileges under the Indenture with respect to the Junior Subordinated Debentures, including its rights as the holder of the Junior Subordinated Debentures to enforce the Company's obligations under the Junior Subordinated Debentures upon the occurrence of an Indenture Event of Default, and will also have the right to enforce the Preferred Securities Guarantee on behalf of the holders of the Preferred Securities. In addition, the holders of at least a majority in liquidation amount of the Preferred Securities will have the right to direct the Property Trustee with respect to certain matters under the Declaration and the Preferred Securities Guarantee. If the Property Trustee fails to enforce its rights under the Indenture, any holder of Preferred Securities may, to the extent permitted by applicable law, after a period of 30 days has elapsed from such holder's written request to the Property Trustee to enforce such rights, institute a legal proceeding against the Company to enforce the Property Trustee's rights under the Junior Subordinated Debentures without first instituting any legal proceeding against the Property Trustee or any other person or entity. Notwithstanding the foregoing, if an Event of Default has occurred and is continuing and such event is attributable to the failure of the Company to pay interest or principal on the Junior Subordinated Debentures on the date such interest or principal is otherwise payable (or in the case of redemption, the redemption date), then a holder of Preferred Securities may directly institute suit against the Company for enforcement of payment to such holder of the principal of or interest on Junior Subordinated Debentures having a principal amount equal to the aggregate liquidation amount of the Preferred Securities held by such holder on or after the respective due date specified in the Junior Subordinated Debentures. The holders of Preferred Securities will not be able to exercise directly against the Company any other remedy available to the holders of the Junior Subordinated Debentures unless the Property Trustee first fails to do so. If the Property Trustee fails to enforce the Preferred Securities Guarantee, to the extent permitted by applicable law, any holder of Preferred Securities may institute a legal proceeding directly against the Company to enforce the Property Trustee's rights under the Preferred Securities Guarantee without first instituting a legal proceeding against the Trust, the Property Trustee or any other person or entity. Notwithstanding the foregoing, if the Company has failed to make a Guarantee Payment, a holder of Preferred Securities may directly institute a proceeding against the Company for enforcement of such holder's right to receive payment under the Guarantee. The Company waives any right or remedy to require that any action be brought first against the Trust or any other person or entity before proceeding directly against the Company. See "Description of the Preferred Securities" and "Description of the Preferred Securities Guarantees" in the accompanying Prospectus. The above mechanisms and obligations, taken together, provide a full and unconditional guarantee by the Company of payments due on the Preferred Securities. S-61 67 TAXATION In the opinion of Cravath, Swaine & Moore, counsel to the Company and the Trust ("Tax Counsel"), the following are the material United States Federal income tax consequences of the ownership and disposition of Preferred Securities. Unless otherwise stated, this summary deals only with Preferred Securities held as capital assets by holders who acquire the Preferred Securities upon original issuance ("Initial Holders"). It does not deal with special classes of holders, such as dealers in securities or currencies, life insurance companies, persons holding Preferred Securities as part of a straddle or as part of a hedging or conversion transaction, or persons whose functional currency is not the United States dollar. This summary is based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations thereunder and administrative and judicial interpretations thereof are of the date hereof, all of which are subject to change (possibly on a retroactive basis). INVESTORS ARE ADVISED TO CONSULT THEIR TAX ADVISORS AS TO THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF PREFERRED SECURITIES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR OTHER TAX LAWS. CLASSIFICATION OF THE TRUST In the opinion of Tax Counsel, under current law and assuming full compliance with the terms of the Declaration, the Trust will be classified for United States Federal income tax purposes as a grantor trust and not as a partnership or an association taxable as a corporation. Accordingly, each holder of Preferred Securities (a "Securityholder") will be considered the owner of a pro rata portion of the Junior Subordinated Debentures held by the Trust and will be required to include in gross income the pro rata share of income accrued on the Junior Subordinated Debentures. CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES In the opinion of Tax Counsel, under current law and assuming full compliance with the Indenture, the Junior Subordinated Notes will be classified for United S-62 68 States Federal income tax purposes as indebtedness of the Company. INTEREST AND ORIGINAL ISSUE DISCOUNT If a Deferral Period occurs, the Junior Subordinated Debentures would be considered to have original issue discount at all times after the beginning of the first Deferral Period, including after the termination of the Deferral Period. In addition, the Company's option to defer the payment of interest on the Junior Subordinated Debentures during a Deferral Period might cause the Junior Subordinated Debentures to be considered initially to be issued with original issue discount. The Company believes, and will take the position, that this latter result will not arise because of an exception in the Treasury Regulations that applies when there is only a "remote" likelihood that a Deferral Period will occur. Assuming that the likelihood of a Deferral Period is in fact remote, Tax Counsel believes that this position is correct although there is no authority directly on point and the Internal Revenue Service could take a contrary position. If the original issue discount rules apply to the Junior Subordinated Debentures (either following the occurrence of a Deferral Period or initially), each Securityholder, whether on the cash or accrual method of accounting, will be required to accrue its pro rata share of original issue discount into income in accordance with a constant yield method based on the compounding of interest. As a result, income will be required to be reported by Securityholders before the receipt of cash attributable to such income, and, in particular, income will be reported during a Deferral Period even though no cash distributions are being made. If the original issue discount rules apply for a period during which cash distributions are currently being made, the sum of the daily accruals of income for a quarterly period for a Securityholder that purchased the Preferred Securities for their liquidation value will equal the cash distribution received by the Securityholder for such quarter, assuming no disposition prior to the record date for such distribution. If the original issue discount rules apply, actual distributions of stated interest will not be separately reported as income. A Securityholder's tax basis for the Junior Subordinated Debentures will be increased by original issue discount accrued into income, and decreased by cash distributions of interest. If the original issue discount S-63 69 rules do not apply, stated interest will be includable in a holder's gross income as ordinary interest income in accordance with such holder's regular method of tax accounting. Whether or not the original issue discount rules apply, no portion of the amounts received on the Preferred Securities will be eligible for the corporate dividends received deduction. DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES TO HOLDERS OF PREFERRED SECURITIES Under current law, a distribution by the Trust of the Junior Subordinated Debentures as described under the caption "Description of the Preferred Securities--Special Event Redemption or Distribution" will be non-taxable and will result in the Securityholder receiving directly such Securityholder's pro rata share of the Junior Subordinated Debentures previously held indirectly through the Trust, with a holding period and tax basis equal to the holding period and adjusted tax basis such Securityholder was considered to have had in such Securityholder's pro rata share of the underlying Junior Subordinated Debentures immediately prior to such distribution. If, however, the special event giving rise to the distribution is a Tax Event which results in the Trust being treated as an association taxable as a corporation, the distribution would constitute a taxable event to holders of the Preferred Securities. MARKET DISCOUNT AND BOND PREMIUM Securityholders other than Initial Holders may be considered to have acquired their pro rata interest in the Junior Subordinated Debentures with market discount, acquisition premium or amortizable bond premium. Such holders are advised to consult their tax advisors as to the income tax consequences of the acquisition, ownership and disposition of the Preferred Securities. DISPOSITION OF THE PREFERRED SECURITIES Upon a sale, exchange or other disposition of the Preferred Securities (including a distribution of cash in redemption of a Securityholder's Preferred Securities upon redemption or repayment of the underlying Junior Subordinated Debentures, but excluding the distribution of Junior Subordinated Debentures), a Securityholder will be S-64 70 considered to have disposed of all or part of such Securityholder's pro rata share of the Junior Subordinated Debentures, and will recognize gain or loss equal to the difference between the amount realized (other than amounts attributable to accrued but unpaid stated interest that is not treated as original issue discount) and the Securityholder's adjusted tax basis in such Securityholder's pro rata share of the underlying Junior Subordinated Debentures deemed disposed of. A holder's adjusted tax basis in the Preferred Securities generally will be its initial purchase price increased by original issue discount previously includable in such holder's gross income to the date of disposition and decreased by payments (other than payments of stated interest that are not treated as original issue discount) received on the Preferred Securities. Gain or loss will be capital gain or loss (except to the extent of any accrued interest or market discount not previously included in income). See "Market Discount and Bond Premium" above. Such gain or loss will be long-term capital gain or loss if the Preferred Securities have been held for more than one year. UNITED STATES ALIEN HOLDERS For purposes of this discussion, a "United States Alien Holder" is any individual, corporation, partnership, estate or trust that is, as to the United States, a non-resident alien individual or a foreign corporation, partnership, estate or trust. Under present United States Federal income tax law: (i) payments by the Trust or any of its paying agents to any holder of a Preferred Security who or which is a United States Alien Holder will not be subject to United States Federal income or withholding tax, provided that (a) the beneficial owner of the Preferred Security does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of the Company entitled to vote; (b) the beneficial owner of the Preferred Security is not a controlled foreign corporation that is related to the Company through stock ownership; and (c) either (A) the beneficial owner of the Preferred Security certifies to the Trust or its agent, under penalties of perjury, generally on IRS Form W-8, that it is not a United States holder and provides its name and address or (B) a securities clearing organization, bank or other financial institution that holds customers' S-65 71 securities in the ordinary course of its trade or business (a "Financial Institution") and holds the Preferred Security certifies to the Trust or its agent under penalties of perjury that such statement has been received from the beneficial owner by it or by a Financial Institution between it and the beneficial owner and furnishes the Trust or its agent with a copy thereof; and (ii) A United States Alien Holder of a Preferred Security will not be subject to United States Federal income or withholding tax on any gain realized upon the sale or other disposition of a Preferred Security unless (a) the United States Alien Holder is an individual who is present in the United States for 183 days or more in the taxable year of disposition, and certain other conditions apply or (b) the gain is effectively connected with the conduct by the United States Alien Holder of a trade or business in the United States. INFORMATION REPORTING TO HOLDERS The Trust will report the interest paid or the original issue discount that accrued during the year with respect to the Junior Subordinated Debentures, and any gross proceeds received by the Trust from the retirement or redemption of the Junior Subordinated Debentures, annually to the holders of record of the Preferred Securities and the Internal Revenue Service. The Trust currently intends to deliver such reports to holders of record prior to January 31 following each calendar year. BACKUP WITHHOLDING Payments made on, and proceeds from the sale of, Preferred Securities may be subject to a "backup" withholding tax of 31% unless the holder complies with certain identification requirements. Any withheld amounts will generally be allowed as a credit against the holder's Federal income tax, provided the required information is timely filed with the Internal Revenue Service. POSSIBLE TAX LAW CHANGES On March 19, 1996, the Clinton Administration proposed legislation (the "Proposed Legislation") which would, among other things, generally deny corporate issuers a deduction for interest in respect of certain debt obligations, such as the Junior Subordinated Debentures, issued on or after December 7, 1995 if such debt obligations have a maximum term in excess of 20 years and are not shown as indebtedness on the issuer's applicable consolidated balance sheet. On March 29, 1996, Senate Finance Committee Chairman William V. Roth, Jr. and House Ways and Means Committee Chairman Bill Archer issued a joint statement (the "Joint Statement") indicating their intent that the Proposed Legislation, if adopted by either of the tax-writing committees of Congress, would have an effective date that is no earlier than the date of "appropriate Congressional action." In addition, subsequent to the publication of the Joint Statement, Senator Daniel Patrick Moynihan and Representatives Sam M. Gibbons and Charles B. Rangel wrote letters to the Treasury Department (the "Democrat Letters"), which concurred with the view expressed in the Joint Statement. No such Congressional action has yet occurred. If the principles contained in the Joint Statement and the Democrat Letters were followed and if the Proposed Legislation were enacted, such legislation would not apply to the Junior Subordinated Debentures. There can be no assurance, however, that the effective date guidance contained in the Joint Statement and the Democrat Letters will be incorporated into the Proposed Legislation, if enacted, or that other legislation enacted after the date hereof will not otherwise adversely affect the ability of the Company to deduct the interest payable on the Junior Subordinated Debentures. Such a change could give rise to a Tax Event. See "Description of the Preferred Securities--Special Event Redemption or Distribution." 66 72 UNDERWRITING Subject to the terms and conditions set forth in an underwriting agreement dated the date hereof (the "Underwriting Agreement"), the Company and the Trust have agreed that the Trust will sell to each of the Underwriters named below, and each of the Underwriters, for whom [ ] is acting as representative (the "Representative"), has severally agreed to purchase from the Trust, the number of Preferred Securities set forth opposite its name below.
NUMBER OF UNDERWRITER PREFERRED SECURITIES - ----------------------------------------------------- -------------------- Total.......................................
In the Underwriting Agreement, the several Underwriters have agreed, subject to the terms and conditions set forth therein, to purchase all the Preferred Securities offered hereby if any Preferred Securities are purchased by the Underwriters. In the event of default by an Underwriter, the Underwriting Agreement provides that, in certain circumstances, the purchase commitment of the nondefaulting Underwriters may be increased or the Underwriting Agreement may be terminated. The Company has been advised by the Representative that the Underwriters propose initially to offer the Preferred Securities to the public at the public offering price set forth on the cover page of this Prospectus Supplement, and to certain dealers at such price less a concession not in excess of $ per Preferred Security. The Underwriters may allow, and such dealers may reallow, a concession not in excess of $ per Preferred Security to certain brokers and dealers. After the initial public offering, the public offering price and such concessions may be changed. In view of the fact that the proceeds of the sale of the Preferred Securities will be used to purchase the Junior Subordinated Debentures of the Company, the Underwriting Agreement provides that the Company will pay as compensation ("Underwriters' Compensation") for the Underwriters' arranging the investment therein of such proceeds $ per Preferred Security or $ in the aggregate ($ in the aggregate if the Underwriters' overallotment option is S-67 73 exercised in full) for the accounts of the several Underwriters. Pursuant to the Underwriting Agreement, the Trust has granted to the Underwriters an option, exercisable for 30 days from the date hereof, to purchase up to additional Preferred Securities at the price to public set forth on the cover page hereof. The Underwriters may exercise such option to purchase solely for the purpose of covering over-allotments, if any, made in connection with the offering. The Company will pay Underwriters' Compensation in the amount per Preferred Security set forth above with respect to such additional Preferred Securities. To the extent such option is exercised, each Underwriter will become obligated, subject to certain conditions, to purchase approximately the same percentage of such additional Preferred Securities as the number set forth next to such Underwriter's name in the preceding table bears to the total number of Preferred Securities offered by the Underwriters hereby. During a period of days from the date of this Prospectus Supplement, neither the Trust nor the Company will, without the prior written consent of the Representative, directly or indirectly, sell, offer to sell, grant any option for the sale of, or otherwise dispose of, any Preferred Securities, any security convertible into or exchangeable into or exercisable for Preferred Securities or Junior Subordinated Debentures or any debt securities substantially similar to the Junior Subordinated Debentures or equity securities substantially similar to the Preferred Securities (except for the Junior Subordinated Debentures and the Preferred Securities offered hereby). Application will be made to list the Preferred Securities on the NYSE. [ ] has advised the Trust that it intends to make a market in the Preferred Securities. [ ] will have no obligation to make a market in the Preferred Securities, however, and may cease market making activities, if commenced, at any time. Prior to this offering, there has been no public market for the Preferred Securities. In order to meet one of the requirements for listing the Preferred Securities on the NYSE, the Underwriters will undertake to sell lots of 100 or more Preferred Securities to a minimum of 400 beneficial holders. S-68 74 The Representative is a wholly-owned subsidiary of the Company. The underwriting of the Preferred Securities offered hereby is being conducted in accordance with Rule 2720 of the NASD Conduct Rules. The Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, or contribute to payments which the Underwriters may be required to make in respect thereof. S-69 75 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL, PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED NOVEMBER , 1996 PROSPECTUS J. P. Morgan & Co. Incorporated Junior Subordinated Debt Securities JPM Capital Trust I JPM Capital Trust II JPM Capital Trust III JPM Capital Trust IV Preferred Securities Fully and Unconditionally Guaranteed as Set Forth Herein by J. P. Morgan & Co. Incorporated J. P. Morgan & Co. Incorporated ("J. P. Morgan" or the "Company") may offer, from time to time, junior subordinated debt securities (the "Junior Subordinated Debt Securities") consisting of debentures, notes or other evidences of indebtedness in one or more series and in amounts, at prices and on terms to be determined at or prior to the time of any such offering. The Junior Subordinated Debt Securities when issued will be unsecured obligations of the Company. The Company's obligations under the Junior Subordinated Debt Securities will be subordinate and junior in right of payment to all Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations of the Company (as such terms are defined herein) of the Company. JPM Capital Trust I, JPM Capital Trust II, JPM Capital Trust III and JPM Capital Trust IV (the "JPM Trusts"), each a statutory business trust formed under the laws of the State of Delaware, may offer and sell, from time to time, preferred securities ("Preferred Securities") representing undivided beneficial interests in the assets of 76 2 the respective JPM Trust. The payment of periodic cash distributions ("distributions") with respect to Preferred Securities of a JPM Trust out of moneys held by the Property Trustee (as defined herein) and payments on liquidation of such JPM Trust and on redemption of Preferred Securities of such JPM Trust will be guaranteed by the Company on a subordinated basis to the extent described herein (each such guarantee, a "Preferred Securities Guarantee"). See "Description of the Preferred Securities Guarantees". The Preferred Securities Guarantee covers payments of distributions and other payments on the Preferred Securities only if and to the extent that the applicable JPM Trust has funds available therefor which will not be the case unless the Company has made a payment of interest or principal or other payments on the Junior Subordinated Debt Securities held by such JPM Trust as its sole asset. The Preferred Securities Guarantees, when taken together with the Company's obligations under the Junior Subordinated Debt Securities held by a JPM Trust and the Indenture (as defined herein) and its obligations under the Amended and Restated Declaration of such JPM Trust, including its obligation to pay all costs, expenses, debts and other obligations of such JPM Trust (other than with respect to the Trust Securities (as defined herein)), will provide a full and unconditional guarantee of amounts due on the Preferred Securities of such JPM Trust. Junior Subordinated Debt Securities may be issued and sold, from time to time, in one or more series by the Company to a JPM Trust, or a trustee of such JPM Trust, in connection with the investment of the proceeds from the offering of Preferred Securities and Common Securities (as defined herein) of such JPM Trust. The Junior Subordinated Debt Securities purchased by a JPM Trust may be subsequently distributed pro rata to holders of Preferred Securities and Common Securities of such JPM Trust in connection with the dissolution of such JPM Trust upon the occurrence of certain events as may be described in an accompanying Prospectus Supplement. Specific terms of the Junior Subordinated Debt Securities of any series or the Preferred Securities of any JPM Trust in respect of which this Prospectus is being delivered (the "Offered Securities") will be set forth in a Prospectus Supplement with respect to such Offered Securities, which will describe, without limitation and where applicable, the following: (i) in the case of Junior Subordinated Debt Securities, the specific designation, aggregate principal amount, authorized denomination, maturity, premium, if any, redemption or sinking fund provisions, if any, interest rate (which may be fixed or variable), if any, time and method of calculating interest payments, if any, dates on which premium, if any, and interest, if any, will be payable, right of the Company, if any, to defer payment of interest on the Junior Subordinated 77 3 Debt Securities and the maximum length of such deferral period, the initial public offering price, and any listing on a securities exchange and other specific terms of the offering; and (ii) in the case of Preferred Securities, the specific designation, number of securities, liquidation amount per security, initial public offering price, and any listing on a securities exchange, distribution rate (or method of calculation thereof), dates on which distributions shall be payable and dates from which distributions shall accrue, voting rights (if any), terms for any conversion or exchange into other securities, any redemption or sinking fund provisions, any other rights, preferences, privileges, limitations or restrictions relating to the Preferred Securities and the terms upon which the proceeds of the sale of the Preferred Securities shall be used to purchase a specific series of Junior Subordinated Debt Securities of the Company. Unless otherwise indicated in an accompanying Prospectus Supplement, the Company does not intend to list any of the Offered Securities on a national securities exchange. The Offered Securities may be offered in amounts, at prices and on terms to be determined at the time of offering. Any Prospectus Supplement relating to any series of Offered Securities will contain information concerning certain United States Federal income tax considerations, if applicable, to the Offered Securities. By separate prospectus, the form of which is included in the Registration Statement of which this Prospectus is a part, the Company may offer from time to time senior debt securities and/or subordinated debt securities each of which will be direct, unsecured obligations of the Company. The aggregate initial public offering price of the securities to be offered by this Prospectus and such other prospectus shall not exceed $1,000,000,000. The Offered Securities may be sold (i) directly to purchasers, (ii) through agents designated from time to time, (iii) to dealers or (iv) through underwriters or a group of underwriters. If agents of the Company and/or any JPM Trust or underwriters are involved in the sale of the Offered Securities, their names will be set forth in the applicable Prospectus Supplement. If agents of the Company and/or any JPM Trust, or underwriters or dealers are involved in the sale of the Offered Securities, descriptions of their compensation and indemnification arrangements and the net proceeds to the Company and/or any JPM Trust will be set forth in the applicable Prospectus Supplement. 78 4 THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. -------------------- THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF OFFERED SECURITIES UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT. -------------------- This Prospectus and the related Prospectus Supplement may be used by direct or indirect wholly-owned subsidiaries of the Company in connection with offers and sales related to secondary market transactions in the Offered Securities. Such subsidiaries may act as principal or agent in such transactions. Such sales will be made at prices related to prevailing market prices at the time of sale. -------------------- The date of this Prospectus is , 1996. 79 5 No person has been authorized to give any information or to make any representations other than those contained or incorporated by reference in this Prospectus and the Prospectus Supplement in connection with the offering made hereby, and if given or made such information or representation must not be relied upon as having been authorized by J. P. Morgan or by another person. AVAILABLE INFORMATION J. P. Morgan is subject to the information requirements of the Securities Exchange Act of 1934 (the "1934 Act") and in accordance therewith files reports and other information with the Securities and Exchange Commission (the "Commission"). Reports, proxy statements and other information can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549; Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and Seven World Trade Center, 13th floor, New York, New York 10048. Copies of such material can be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such material may also be accessed electronically by means of the Commission's home page on the Internet at http://www.sec.gov. Such reports, proxy statements and other information concerning J. P. Morgan may also be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. This Prospectus does not contain all information set forth in the Registration Statement and exhibits thereto which J. P. Morgan has filed with the Commission under the Securities Act of 1933 and to which reference is hereby made. No separate financial statements of any of the JPM Trusts have been included or incorporated by reference herein. The Company and the JPM Trusts do not consider that such financial statements would be material to holders of the Preferred Securities because (i) all the voting securities of each JPM Trust will be owned, directly or indirectly, by the Company, a reporting company under the 1934 Act, (ii) each JPM Trust is a newly formed special purpose entity, has no operating history, has no independent operations and is not engaged in, and does not propose to engage in, any activity other than issuing Trust Securities (as defined herein) representing undivided beneficial interests in the assets of such JPM Trust and investing the proceeds thereof in Junior Subordinated Debt Securities issued by the Company and (iii) the obligations of each JPM Trust under the Preferred Securities of such JPM Trust will be fully and unconditionally guaranteed by the Company as described herein. See "The JPM Trusts", "Description of the Preferred Securities", "Description of the Preferred Securities Guarantees" and "Description of the Junior Subordinated Debt Securities". The JPM Trusts are business trusts formed under the laws of the State of Delaware. The Company, as of the date of this Prospectus, beneficially owns all the beneficial interests in each JPM Trust. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE J. P. Morgan hereby incorporates by reference in this Prospectus J. P. Morgan's Annual Report on Form 10-K for the year ended December 31, 1995 (included in its Annual Report to Stockholders), J. P. Morgan's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996, June 30, 1996 and September 30, 1996 and J. P. Morgan's Reports on Form 8-K dated January 11, 1996, February 6, 1996, February 20, 1996, 80 6 February 23, 1996, April 11, 1996, May 13, 1996, July 11, 1996, August 13, 1996 and October 10, 1996 heretofore filed pursuant to Section 13 of the 1934 Act. In addition, all reports and definitive proxy or information statements filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Securities shall be deemed to be incorporated by reference into this Prospectus and to be a apart hereof from the date of filing of such documents. Any statement contained herein or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any subsequently filed document which also is or is deemed to be incorporated by reference herein or in the accompanying Prospectus Supplement modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. J. P. Morgan will provide without charge to each person, including any beneficial owner, to whom this Prospectus is delivered, on the written or oral request of any such person, a copy of any or all of the foregoing documents incorporated herein by reference (other than exhibits to such documents). Written requests should be directed to the Office of the Secretary, J. P. Morgan & Co. Incorporated, 60 Wall Street, New York, New York 10260-0060. Telephone requests may be directed to (212) 648-3380. J. P. MORGAN & CO. INCORPORATED J. P. Morgan, whose origins date to a merchant banking firm founded in London in 1838, is the holding company for subsidiaries engaged globally in providing a wide range of financial services to corporations, governments, financial institutions, institutional investors, professional firms, privately held companies, nonprofit organizations, and financially sophisticated individuals. J.P. Morgan's activities are summarized as follows: 81 7 Finance and Advisory Finance and Advisory encompasses the sophisticated advisory, capital raising, and financing work that J.P. Morgan does for its broad base of clients around the world. These clients include corporations, governments, municipalities, and financial institutions, and the expertise J.P. Morgan offers them is based on in-depth knowledge of their needs and the industries and financial markets in which they operate. Linking clients to the full range of J.P. Morgan's financial capabilities is a global network of senior client managers. In partnership with clients, J.P. Morgan's advisory professionals explore the risks and rewards of such strategic alternatives as mergers and acquisitions, divestitures, privatizations, and recapitalizations. J.P. Morgan also advises clients on their capital structures, looking for ways to unlock value and seize opportunities. J.P. Morgan's debt underwriting, equities, and credit businesses provide the capabilities to raise the necessary capital and execute the appropriate strategies. In J.P. Morgan's equities business, underwriting is complemented by its ability to provide clients with liquidity in the secondary markets through its global sales and trading network. J.P. Morgan also applies its expertise in the equities markets to structuring equity derivatives as a means of helping clients manage market volatility. High-quality equity research is integral to all aspects of its business. J.P. Morgan's credit capabilities include meeting clients' financing needs by issuing and syndicating loans and other credit facilities. Sales and Trading Sales and Trading provides clients with around-the-clock access to global markets. J.P. Morgan makes markets in fixed income, foreign exchange, and commodity instruments; it serves as a counterparty to help clients manage risks; and it provides financial and economic research to help clients assess opportunities and track performance. To function effectively in its role as a market-maker, it also takes positions. J.P. Morgan's clients include corporations, central banks, governments and 82 8 their agencies, financial institutions, pension funds, mutual funds, and leveraged funds. J.P. Morgan's fixed income activities encompass acting as a primary dealer in U.S. and foreign government securities; making markets in options, money market instruments, U.S. government agency securities, and corporate debt securities; and helping clients manage their exposure to fluctuating interest and foreign exchange rates by structuring, executing, and making markets in risk management instruments. J.P. Morgan's foreign exchange capabilities include executing spot transactions and structuring transactions to help clients manage their foreign currency exposures. In commodities, J.P. Morgan makes markets in precious metals, base metals, and energy products and develops hedging and financial strategies for clients. J.P. Morgan's emerging markets activities, while principally related to fixed income activities, cross all markets, and J.P. Morgan's worldwide network enables it to fulfill its role as a market-maker and provide clients with a steady flow of market information. In addition to J.P. Morgan's client-focused businesses, it has a separate proprietary unit that engages in transactions for its own account across all markets. Asset Management and Servicing Asset Management and Servicing activities encompass designing and executing investment strategies and providing administrative and brokerage services. J.P. Morgan's clients include corporations, financial and governmental institutions, and high net worth individuals. J.P. Morgan tailors its asset management capabilities for both institutional and private clients. For institutional clients, it offers such services as the management of employee-benefit-plan assets, executing investment strategies across the spectrum of asset classes in all major markets. J.P. Morgan's private banking group helps high net worth individuals plan and execute their investment strategies with a broad range of capabilities, which include managed investment and trust portfolios, Morgan-advised 83 9 mutual funds, and a full-service brokerage unit. Credit, deposit, trust, and estate services are also provided to private clients. J.P. Morgan's exchange traded products professionals provide institutional clients with worldwide access to major exchanges by acting as futures and options brokers in executing and clearing contracts. J.P. Morgan provides such operational services as the administration of depositary receipt programs and global trust and agency services. It operates the Euroclear System, the world's largest clearance and settlement system for internationally traded securities, and offers credit and deposit services to Euroclear participants. Equity Investments J.P. Morgan invests its capital in the private equity of rapidly growing companies, management buyouts, privatizations, and recapitalizations. These investments are made and managed with the objective of maximizing total return--both long-term appreciation and net realized gains. While each opportunity for investment is evaluated to achieve the firm's desired balance between risk and return, many of these opportunities arise from its client relationships. J.P. Morgan's equity investment portfolio consists of approximately 95 investments diversified by industry, geography, and year of investment. J.P. Morgan's goal is to maintain a diversified portfolio capable of generating significant returns over time. This is a high-risk, high-reward business, and the firm operates under a variety of legal and regulatory restrictions in managing the portfolio. Investments are generally held for three to seven years, depending on J.P. Morgan's view of when a sale will produce optimal returns. Typically, investments are harvested through a public offering of securities or the sale of the investment. While realization of gains in the portfolio accelerates during periods of strong equity and merger markets, the process of assessing and managing the risks and rewards of new opportunities and existing investments continues throughout market cycles. Asset and Liability Management 84 10 Asset and Liability Management activities include managing the firm's interest rate risk as it relates to nontrading-related assets, liabilities, and off-balance-sheet activities and managing the firm's overall liquidity risk. J.P. Morgan's objective when it comes to interest rate risk management is to create longer-term value, which is realized over time primarily as net interest revenue and net investment securities gains. J.P. Morgan's primary focus is on achieving a desired overall interest rate profile, which may change over time, based on management's longer-term view of global interest rate trends and economic conditions. A variety of instruments -- in numerous currencies both on- and off-balance-sheet -- are used in an integrated manner to achieve this objective. J.P. Morgan manages the maturity and repricing imbalances between its assets and liabilities through the use of investments in the more liquid fixed income markets worldwide and derivatives. Asset and liability management swaps are used to hedge exposures; to modify the interest rate characteristics of specified assets or liabilities; and, in the case of risk-adjusting swaps, to adjust Morgan's overall interest rate risk profile. The firm's liquidity risk profile is managed to ensure that even under adverse conditions, it has the ability to access funds at a reasonable cost. A strong capital position is therefore an integral part of our liquidity management because it enables us to raise funds as inexpensively as possible in a variety of international markets. Regulation J. P. Morgan is subject to regulation under the Bank Holding Company Act of 1956 (the "Act"). Under the Act, J. P. Morgan is required to file certain reports with the Board of Governors of the Federal Reserve System (the "Board") and is subject to examination by the Board. The Act generally precludes J. P. Morgan and its subsidiaries from engaging in nonbanking activities, or from acquiring more than 5% of any class of voting securities of any company engaging in such activities, unless the Board has determined, by order or regulation, that such proposed activities are closely related to banking. Federal law and 85 11 Board interpretations limit the extent to which J. P. Morgan and its subsidiaries can engage in certain aspects of the securities business. Under Board policy, J. P. Morgan is expected to act as a source of financial strength to each subsidiary bank and to commit resources to support such subsidiary bank, even in circumstances where J. P. Morgan might not be in a financial position to do so. The Glass-Steagall Act prohibits affiliates of banks that are members of the Federal Reserve System, including J. P. Morgan Securities Inc. ("JPMSI"), from being "engaged principally" in bank-ineligible underwriting and dealing activities (mainly corporate debt and equity securities). As interpreted by the Board, this prohibition currently restricts JPMSI's gross revenues from such activities to a maximum of 10% of its total gross revenues. The Board has proposed a modification to its interpretation which would increase such limit to 25% of total gross revenues, but there can be no assurance that such modification will be adopted. J. P. Morgan will continue to seek ways to expand the limits on such activities and to achieve the reform of the Glass-Steagall Act necessary to achieve its long-term objectives. Morgan Guaranty Trust Company of New York ("Morgan Guaranty"), J. P. Morgan's largest subsidiary, is a member of the Federal Reserve System and a member of the Federal Deposit Insurance Corporation ("FDIC"). Its business is subject to both U.S. federal and state law and to examination and regulation by U.S. federal and state banking authorities. J. P. Morgan and its nonbank subsidiaries are affiliates of Morgan Guaranty within the meaning of the applicable federal statutes. Morgan Guaranty is subject to restrictions on loans and extensions of credit to J. P. Morgan and certain other affiliates and on certain other types of transactions with them or involving their securities. Among other wholly owned subsidiaries: JPMSI is a broker-dealer registered with the Securities and Exchange Commission and is a member of the National Association of Securities Dealers, the New York Stock Exchange, and other exchanges. J. P. Morgan Futures Inc. is subject to regulation by the Commodity Futures Trading 86 12 Commission, the National Futures Association, and the commodity exchanges and clearinghouses of which it is a member. J. P. Morgan Investment Management Inc. is registered with the Securities and Exchange Commission as an investment adviser under the Investment Advisers Act of 1940, as amended. J. P. Morgan subsidiaries conducting business in other countries are also subject to regulations and restrictions imposed by those jurisdictions, including capital requirements. The principal executive office of J. P. Morgan is located at 60 Wall Street, New York, New York 10260-0060, and its telephone number of (212) 483-2323. J.P. MORGAN CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
Nine Months Ended Years Ended December 31, September 30, ---------------------------------------------- 1996 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- ---- Excluding Interest on Deposits .......... 1.36 1.35 1.40 1.70(a) 1.53(b) 1.42(c) Including Interest on Deposits .......... 1.26 1.24 1.28 1.46(a) 1.31(b) 1.23(c)
- ----------- (a) For the year ended December 31, 1993, the ratio of earnings to fixed charges, including the cumulative effect of a change in the method of accounting for postretirement benefits other than pensions, was 1.64 excluding interest on deposits and 1.43 including interest on deposits. (b) For the year ended December 31, 1992, the ratio of earnings to fixed charges, including the cumulative effect of a change in the method of accounting for income taxes, was 1.67 excluding interest on deposits and 1.39 including interest on deposits. (c) For the year ended December 31, 1991, the ratio of earnings to fixed charges, including the extraordinary gain on early retirement of debt, was 1.43 excluding interest on deposits and 1.24 including interest on deposits. 87 13 J.P. MORGAN CONSOLIDATED RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Nine Months Ended Years Ended December 31, September 30, ---------------------------------------------- 1996 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- ---- Excluding Interest on Deposits .......... 1.35 1.34 1.39 1.69(a) 1.52(b) 1.40(c) Including Interest on Deposits .......... 1.25 1.23 1.27 1.46(a) 1.31(b) 1.22(c)
- ----------- (a) For the year ended December 31, 1993, the ratio of earnings to combined fixed charges and preferred stock dividends, including the cumulative effect of a change in the method of accounting for postretirement benefits other than pensions, was 1.63 excluding interest on deposits and 1.42 including interest on deposits. (b) For the year ended December 31, 1992, the ratio of earnings to combined fixed charges and preferred stock dividends, including the cumulative effect of a change in the method of accounting for income taxes, was 1.65 excluding interest on deposits and 1.39 including interest on deposits. (c) For the year ended December 31, 1991, the ratio of earnings to combined fixed charges and preferred stock dividends, including the extraordinary gain on early retirement of debt, was 1.41 excluding interest on deposits and 1.23 including interest on deposits. USE OF PROCEEDS Each JPM Trust will use the proceeds from the sale of the Preferred Securities to purchase Junior Subordinated Debt Securities from J.P. Morgan. Unless otherwise indicated in the applicable Prospectus Supplement, the net proceeds from the sale of the Junior Subordinated Debt Securities will be used by J.P. Morgan for general corporate purposes, including investment in equity and debt securities and interest-bearing deposits of subsidiaries, the repurchase of issued and outstanding preferred and or common shares of J.P. Morgan and other general corporate purposes as may be determined by management. Pending such use, J. P. Morgan may temporarily invest the net proceeds or may use them to reduce short-term indebtedness. THE JPM TRUSTS Each of JPM Capital Trust I, JPM Capital Trust II, JPM Capital Trust III and JPM Capital Trust IV is a business trust formed on October 29, 1996 under the Delaware Business Trust Act (the "Business Trust Act") pursuant to a separate declaration of trust among the Trustees (as defined herein) of such JPM Trust and the Company and the filing of a certificate of trust with the Secretary of State of the State of Delaware. Such declaration will be amended and restated in its entirety (as so amended and restated, the "Declaration") substantially in the form filed as an exhibit to the Registration Statement 88 14 of which this Prospectus forms a part, as of the date the Preferred Securities of such JPM Trust are initially issued. Each Declaration will be qualified under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). This description summarizes the material terms of the Declarations and is qualified in its entirety by reference to the form of Declaration, which has been filed as an exhibit to the Registration Statement of which this Prospectus is a part, and the Trust Indenture Act. Trust Securities Upon issuance of any Preferred Securities by a JPM Trust, the holders thereof will own all the issued and outstanding Preferred Securities of such JPM Trust. The Company will acquire securities representing common undivided beneficial interests in the assets of each JPM Trust (the "Common Securities" and, together with the Preferred Securities, the "Trust Securities") in an amount equal to at least 3% of the total capital of such JPM Trust and will own, directly or indirectly, all the issued and outstanding Common Securities of each JPM Trust. The Preferred Securities and the Common Securities will rank pari passu with each other and will have equivalent terms; provided that (i) if a Declaration Event of Default (as defined herein) under the Declaration of a JPM Trust occurs and is continuing, the holders of Preferred Securities of such JPM Trust will have a priority over holders of the Common Securities of such JPM Trust with respect to payments in respect of distributions and payments upon liquidation, redemption and maturity and (ii) holders of Common Securities have the exclusive right (subject to the terms of the Declaration) to appoint, remove or replace the Trustees and to increase or decrease the number of Trustees. Each JPM Trust exists for the purpose of (a) issuing its Preferred Securities, (b) issuing its Common Securities to the Company, (c) investing the gross proceeds from the sale of the Trust Securities in Junior Subordinated Debt Securities of the Company and (d) engaging in only such other activities as are necessary, convenient or incidental thereto. The rights of the holders of the Preferred Securities, including economic rights, rights to information and voting rights, are set forth in the applicable Declaration, the Business Trust Act and the Trust Indenture Act. 89 15 Powers and Duties of Trustees The number of trustees (the "Trustees") of each JPM Trust shall initially be five. Three of such Trustees (the "Regular Trustees") are individuals who are employees or officers of the Company. The fourth such trustee will be First Trust of New York, National Association, which is unaffiliated with the Company and which will serve as the property trustee (the "Property Trustee") and act as the indenture trustee for purposes of the Trust Indenture Act. The fifth such trustee is Wilmington Trust Company, which has its principal place of business in the State of Delaware (the "Delaware Trustee"). Pursuant to each Declaration, legal title to the Junior Subordinated Debt Securities purchased by a JPM Trust will be held by the Property Trustee for the benefit of the holders of the Trust Securities of such JPM Trust, and the Property Trustee will have the power to exercise all rights, powers and privileges under the Indenture (as defined under "Description of the Junior Subordinated Debt Securities") with respect to such Junior Subordinated Debt Securities. In addition, the Property Trustee will maintain exclusive control of a segregated non-interest-bearing bank account (the "Property Account") to hold all payments in respect of the Junior Subordinated Debt Securities purchased by a JPM Trust for the benefit of the holders of Trust Securities. The Property Trustee will promptly make distributions to the holders of the Trust Securities of a JPM Trust out of funds from the Property Account of such JPM Trust. The Preferred Securities Guarantees are separately qualified under the Trust Indenture Act and will be held by First Trust of New York, National Association, acting in its capacity as indenture trustee with respect thereto, for the benefit of the holders of the applicable Preferred Securities. As used in this Prospectus and any accompanying Prospectus Supplement, the term "Property Trustee" with respect to a JPM Trust refers to First Trust of New York, National Association acting either in its capacity as a Trustee under the relevant Declaration and the holder of legal title to the Junior Subordinated Debt Securities purchased by such Trust or in its capacity as indenture trustee under, and the holder of, the applicable Preferred Securities Guarantee, as the context may require. The Company, as the direct or indirect owner of all the Common Securities of each JPM Trust, will have the exclusive right (subject to the terms of the related Declaration) to appoint, remove or replace Trustees and to increase or decrease the number of Trustees, provided that the number of Trustees shall be at least five and the majority of Trustees shall be Regular Trustees. The term of a JPM Trust will be set forth in the applicable 90 16 Prospectus Supplement, but may terminate earlier as provided in the Declaration of such JPM Trust. The duties and obligations of the Trustees of a JPM Trust shall be governed by the Declaration of such JPM Trust. Under its Declaration, each JPM Trust shall not, and the Trustees of such JPM Trust shall cause such JPM Trust not to, engage in any activity other than in connection with the purposes of such JPM Trust or other than as required or authorized by such Declaration. In particular, each JPM Trust shall not, and the Trustees of such JPM Trust shall cause such JPM Trust not to, (a) invest any proceeds received by such JPM Trust from holding the Junior Subordinated Debt Securities purchased by such JPM Trust, but shall promptly distribute from the Property Account of such JPM Trust all such proceeds to holders of its Trust Securities pursuant to the terms of the Declaration of such JPM Trust and of such Trust Securities; (b) acquire any assets other than as expressly provided in such Declaration; (c) possess Trust property for other than a Trust purpose; (d) make any loans, other than loans represented by such Junior Subordinated Debt Securities; (e) possess any power or otherwise act in such a way as to vary the assets of such JPM Trust or the terms of its Trust Securities in any way whatsoever; (f) issue any securities or other evidences of beneficial ownership of, or beneficial interests in, such JPM Trust other than its Trust Securities; (g) incur any indebtedness for borrowed money or (h)(i) direct the time, method and place of exercising any trust or power conferred upon the Indenture Trustee (as defined under "Description of the Junior Subordinated Debt Securities") with respect to the Junior Subordinated Debt Securities deposited in such JPM Trust as trust assets or upon the Property Trustee of such JPM Trust with respect to its Preferred Securities, (ii) waive any past default that is waivable under the applicable Indenture or such Declaration, (iii) exercise any right to rescind or annul any declaration that the principal of all of the Junior Subordinated Debt Securities deposited in such JPM Trust as trust assets shall be due and payable or (iv) consent to any amendment, modification or termination of such Indenture or such Junior Subordinated Debt Securities or such Declaration, in each case where such consent shall be required, unless in the case of this clause (h) the Property Trustee shall have received an unqualified opinion of nationally recognized independent tax counsel recognized as expert in such matters to the effect that such action will not cause such JPM Trust to be classified for United States Federal income tax purposes as 91 17 an association taxable as a corporation or a partnership and that such JPM Trust will continue to be classified as a grantor trust for United States Federal income tax purposes. Books and Records The books and records of each JPM Trust will be maintained at the principal office of such JPM Trust and will be open for inspection by a holder of Preferred Securities of such JPM Trust or such holder's representative for any purpose reasonably related to such holder's interest in such JPM Trust during normal business hours. Each holder of Preferred Securities will be furnished annually with unaudited financial statements of the applicable JPM Trust as soon as available after the end of such JPM Trust's fiscal year. Voting Except as set forth below or as provided under the Business Trust Act, the applicable Declaration and the Trust Indenture Act, holders of Preferred Securities will have no voting rights. If any proposed amendment to the Declaration of a JPM Trust provides for, or the Regular Trustees otherwise propose to effect, (i) any action that would adversely affect the powers, preferences or special rights of the Trust Securities, whether by way of amendment to such Declaration or otherwise, or (ii) the dissolution, winding-up or termination of the Trust, other than in connection with the distribution of Junior Subordinated Debentures held by the Property Trustee, upon the occurrence of a Special Event or in connection with the redemption of Preferred Securities as a consequence of a redemption of such Junior Subordinated Debentures, then the holders of outstanding Trust Securities will be entitled to vote on such amendment or proposal as a class and such amendment or proposal shall not be effective except with the approval of the holders of Trust Securities representing 66-2/3% in liquidation amount of such Trust Securities; provided, however, that if any amendment or proposal referred to in clause (i) above would adversely affect only the Preferred Trust Securities or the Common Securities, then only the affected class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of 66-2/3% in liquidation amount of such class of Trust Securities. The Property Trustee The Property Trustee, for the benefit of the holders of the Trust Securities of a JPM Trust, is authorized under each Declaration to exercise all rights under the Indenture with respect to the Junior Subordinated Debt Securities deposited in such JPM Trust as trust assets, including its rights as the holder of such Junior Subordinated Debt Securities to enforce the Company's obligations under such Junior Subordinated Debt Securities upon the occurrence of an Indenture Event of Default. The Property Trustee is also authorized to enforce the rights of holders of Preferred Securities of a JPM Trust under the related Preferred Securities Guarantee. If any JPM Trust's failure to make distributions on the Preferred Securities of such JPM Trust is a consequence of the Company's exercise of any right under the terms of the Junior Subordinated Debt Securities deposited in such JPM Trust as trust assets to extend the interest payment period for such Junior Subordinated Debt Securities, the Property Trustee will have no right to enforce the payment of distributions on such Preferred Securities until a Declaration Event of Default 92 18 shall have occurred. Holders of at least a majority in liquidation amount of the Preferred Securities of a JPM Trust will have the right to direct the Property Trustee for such JPM Trust with respect to certain matters under the Declaration for such JPM Trust and the related Preferred Securities Guarantee. If the Property Trustee fails to enforce its rights under the Indenture or fails to enforce the applicable Preferred Securities Guarantee, to the extent permitted by applicable law, any holder of Preferred Securities of a JPM Trust may institute a legal proceeding against the Company to enforce such rights or such Preferred Securities Guarantee, as the case may be. Distributions Pursuant to each Declaration, distributions on the Preferred Securities of a JPM Trust must be paid on the dates payable to the extent that the Property Trustee has cash on hand in the Property Account of such JPM Trust to permit such payment. The funds available for distribution to the holders of the Preferred Securities of a JPM Trust will be limited to payments received by the Property Trustee in respect of the Junior Subordinated Debt Securities that are deposited in such JPM Trust as trust assets. If the Company does not make interest payments on the Junior Subordinated Debt Securities deposited in a JPM Trust as trust assets, the Property Trustee will not make distributions on the Preferred Securities of such JPM Trust. Under the Declaration, if and to the extent the Company does make interest payments on the Junior Subordinated Debt Securities deposited in a JPM Trust as trust assets, the Property Trustee is obligated to make distributions on the Trust Securities of such JPM Trust on a Pro Rata Basis (as defined below). The payment of distributions on the Preferred Securities of a JPM Trust is guaranteed by the Company on a subordinated basis as and to the extent set forth under "Description of the Preferred Securities Guarantees." A Preferred Securities Guarantee, when taken together with the Company's obligations under the Junior Subordinated Debentures and the Indenture and its obligations under the Declaration, provides a full and unconditional guarantee from the time of issuance of the Preferred Securities of a JPM Trust of amounts due on such Preferred Securities. Such Preferred Securities Guarantee itself, however, covers distributions and other payments on such Preferred Securities only if and to the extent that the Company has made a payment to the Property Trustee of interest or principal on the Junior Subordinated Debt Securities deposited in such JPM Trust as trust assets. As used in this Prospectus, the term "Pro Rata Basis" shall mean pro rata to each holder of Trust Securities of a JPM 93 19 Trust according to the aggregate liquidation amount of the Trust Securities of such JPM Trust held by the relevant holder in relation to the aggregate liquidation amount of all Trust Securities of such JPM Trust outstanding unless, in relation to a payment, a Declaration Event of Default under the Declaration has occurred and is continuing, in which case any funds available to make such payment shall be paid first to each holder of the Preferred Securities of such JPM Trust pro rata according to the aggregate liquidation amount of the Preferred Securities held by the relevant holder in relation to the aggregate liquidation amount of all the Preferred Securities of such JPM Trust outstanding, and only after satisfaction of all amounts owed to the holders of such Preferred Securities, to each holder of Common Securities of such JPM Trust pro rata according to the aggregate liquidation amount of such Common Securities held by the relevant holder in relation to the aggregate liquidation amount of all Common Securities of such JPM Trust outstanding. Events of Default If an Indenture Event of Default occurs and is continuing with respect to Junior Subordinated Debt Securities deposited in a JPM Trust as trust assets, an Event of Default under the Declaration (a "Declaration Event of Default") of such JPM Trust will occur and be continuing with respect to any outstanding Trust Securities of such JPM Trust. In such event, each Declaration provides that the holders of Common Securities of the applicable JPM Trust will be deemed to have waived any such Declaration Event of Default with respect to such Common Securities until all Declaration Events of Default with respect to the Preferred Securities of such JPM Trust have been cured or waived. Until all such Declaration Events of Default with respect to the Preferred Securities of such JPM Trust have been so cured or waived, the Property Trustee will be deemed to be acting solely on behalf of the holders of the Preferred Securities of such JPM Trust and only the holders of such Preferred Securities will have the right to direct the Property Trustee with respect to certain matters under such Declaration and consequently under the Indenture. In the event that any Declaration Event of Default with respect to the Preferred Securities of a JPM Trust is waived by the holders of the Preferred Securities of such JPM Trust as provided in the Declaration of such JPM Trust, the holders of Common Securities of such JPM Trust pursuant to such 94 20 Declaration have agreed that such waiver also constitutes a waiver of such Declaration Event of Default with respect to such Common Securities for all purposes under such Declaration without any further act, vote or consent of the holders of such Common Securities. Record Holders Each Declaration provides that the Trustees of the applicable JPM Trust may treat the person in whose name a certificate representing Preferred Securities of such JPM Trust is registered on the books and records of such JPM Trust as the sole holder thereof and of the Preferred Securities represented thereby for purposes of receiving distributions and for all other purposes and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such certificate or in the Preferred Securities represented thereby on the part of any person, whether or not such JPM Trust shall have actual or other notice thereof. Preferred Securities will be issued in fully registered form. Unless otherwise specified in a Prospectus Supplement, Preferred Securities will be represented by a global certificate registered on the books and records of such JPM Trust in the name of a depositary (the "Depositary") named in an accompanying Prospectus Supplement or its nominee. Under each Declaration: (i) the applicable JPM Trust and the Trustees thereof shall be entitled to deal with the Depositary (or any successor depositary) for all purposes, including the payment of distributions and receiving approvals, votes or consents under such Declaration and, except as set forth in such Declaration with respect to the Property Trustee, shall have no obligation to persons owning a beneficial interest in Preferred Securities of such JPM Trust ("Preferred Security Beneficial Owners") registered in the name of and held by the Depositary or its nominee; and (ii) the rights of Preferred Security Beneficial Owners shall be exercised only through the Depositary (or any successor depositary) and shall be limited to those established by law and agreements between such Preferred Security Beneficial Owners and the Depositary and/or its participants. With respect to Preferred Securities registered in the name of and held by the Depositary or its nominee, all notices and other 95 21 communications required under such Declaration shall be given to, and all distributions on such Preferred Securities shall be given or made to, the Depositary (or its successor). The specific terms of the depositary arrangement with respect to the Preferred Securities of a JPM Trust will be disclosed in the applicable Prospectus Supplement. Debts and Obligations In each Declaration, the Company has agreed to pay for all debts and obligations (other than with respect to the Trust Securities of the applicable JPM Trust) and all costs and expenses of such JPM Trust, including the fees and expenses of its Trustees and any taxes and all costs and expenses with respect thereto, to which such JPM Trust may become subject, except for United States withholding taxes. The foregoing obligations of the Company under each Declaration are for the benefit of, and shall be enforceable by, any person to whom any such debts, obligations, costs, expenses and taxes are owed (a "Creditor") whether or not such Creditor has received notice thereof. Any such Creditor may enforce such obligations of the Company directly against the Company and the Company has irrevocably waived any right or remedy to require that any such Creditor take any action against any JPM Trust or any other person before proceeding against the Company. The Company has agreed in each Declaration to execute such additional agreements as may be necessary or desirable in order to give full effect to the foregoing. The business address of each JPM Trust is c/o J. P. Morgan & Co. Incorporated, 60 Wall Street, New York, NY 10260-0060, telephone number (212) 483-2323. DESCRIPTION OF THE PREFERRED SECURITIES Each JPM Trust may issue, from time to time, only one series of Preferred Securities having terms described in the Prospectus Supplement relating thereto. The Declaration of each JPM Trust authorizes the Regular Trustees of such JPM Trust to issue on behalf of such JPM Trust one series of Preferred Securities. Each Declaration will be qualified as an indenture under the Trust Indenture Act. The Preferred Securities will have such terms, including distributions, 96 22 redemption, voting, liquidation rights and such other preferred, deferred or other special rights or such restrictions as shall be set forth in the related Declaration or made part of such Declaration by the Trust Indenture Act. Reference is made to the Prospectus Supplement relating to the Preferred Securities of a JPM Trust for specific terms, including (i) the specific designation of such Preferred Securities, (ii) the number of Preferred Securities issued by such JPM Trust, (iii) the annual distribution rate (or method of calculation thereof) for Preferred Securities issued by such JPM Trust, the date or dates upon which such distributions shall be payable and the record date or dates for the payment of such distributions, (iv) whether distributions on Preferred Securities issued by such JPM Trust shall be cumulative, and, in the case of Preferred Securities having such cumulative distribution rights, the date or dates or method of determining the date or dates from which distributions on Preferred Securities issued by such JPM Trust shall be cumulative, (v) the amount or amounts which shall be paid out of the assets of such JPM Trust to the holders of Preferred Securities of such JPM Trust upon voluntary or involuntary liquidation, dissolution, winding-up or termination of such JPM Trust, (vi) the obligation or right, if any, of such JPM Trust to purchase or redeem Preferred Securities issued by such JPM Trust (including with the proceeds of any redemption of Subordinated Debt Securities held by such JPM Trust) and the price or prices at which, the period or periods within which and the terms and conditions upon which Preferred Securities issued by such JPM Trust shall or may be purchased or redeemed, in whole or in part, pursuant to such obligation or right, (vii) the voting rights, if any, of Preferred Securities issued by such JPM Trust in addition to those required by law, including the number of votes per Preferred Security and any requirement for the approval by the holders of Preferred Securities, or of Preferred Securities issued by one or more JPM Trusts, or of both, as a condition to specified actions or amendments to the Declaration of such JPM Trust, (viii) terms for any conversion or exchange into other securities and (ix) any other relevant rights, preferences, privileges, limitations or restrictions of Preferred Securities issued by such JPM Trust consistent with the Declaration of such JPM Trust or with applicable law. All Preferred Securities offered hereby will be fully and unconditionally guaranteed by the Company as set forth below under "Description of the Preferred Securities Guarantees." Certain United States Federal income tax considerations applicable to any offering of Preferred 97 23 Securities will be described in the Prospectus Supplement relating thereto. In connection with the issuance of Preferred Securities, each JPM Trust will issue one series of Common Securities. The Declaration of each JPM Trust authorizes the Regular Trustees of such JPM Trust to issue on behalf of such JPM Trust one series of Common Securities having such terms including distributions, redemption, voting, liquidation rights or such restrictions as shall be set forth therein. The terms of the Common Securities issued by a JPM Trust will be substantially identical to the terms of the Preferred Securities issued by such JPM Trust and the Common Securities will rank pari passu and payments will be made thereon on a Pro Rata Basis with the Preferred Securities except that, if a Declaration Event of Default occurs and is continuing, the rights of the holders of such Common Securities to payment in respect of distributions and payments upon liquidation, redemption and maturity will be subordinated to the rights of the holders of such Preferred Securities. Except in certain limited circumstances, the Common Securities issued by a JPM Trust will also carry the right to vote and to appoint, remove or replace any of the Trustees of such JPM Trust. All the Common Securities of a JPM Trust will be directly or indirectly owned by the Company. If an Event of Default with respect to the Declaration of any JPM Trust occurs and is continuing, then the holders of Preferred Securities of such JPM Trust would rely on the enforcement by the Property Trustee of its rights as a holder of the Junior Subordinated Debt Securities deposited in such JPM Trust against the Company. In addition, the holders of a majority in liquidation amount of such Preferred Securities will have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Property Trustee or to direct the exercise of any trust or power conferred upon the Property Trustee under such Declaration, including the right to direct the Property Trustee to exercise the remedies available to it as a holder of such Junior Subordinated Debt Securities. If the Property Trustee fails to enforce its rights under such Junior Subordinated Debt Securities deposited in such JPM Trust, any holder of such Preferred Securities may, to the extent permitted by applicable law, after a period of 30 days has elapsed from such holder's written request, institute a legal proceeding against the Company to enforce the Property Trustee's rights under such Junior Subordinated Debt Securities without first instituting any legal proceeding against the Property Trustee or any other person or entity. If an Event of Default with respect to the Declaration of any JPM Trust occurs and is continuing and such event is attributable to the failure of the Company to pay interest or principal on the Junior Subordinated Debt Securities on the date such interest or principal is otherwise payable (or in the case of redemption, on the redemption date), then a holder of Preferred Securities of such JPM Trust may also directly institute a proceeding for enforcement of payment to such holder of the principal of or interest on such Junior Subordinated Debt Securities having a principal amount equal to the aggregate liquidation amount of such Preferred Securities held by such holder (a "Direct Action") on or after the respective due date specified in such Junior Subordinated Debt Securities without first (i) directing the Property Trustee to enforce the terms of such Junior Subordinated Debt Securities or (ii) instituting a legal proceeding against the Company to enforce the Property Trustee's rights under such Junior Subordinated Debt Securities. In connection with such Direct Action, the Company will be subrogated to the rights of such holder of such Preferred Securities under such Declaration to the extent of any payment made by the Company to such holder of such Preferred Securities in such Direct Action. The Holders of Preferred Securities of a JPM Trust will not be able to exercise directly any other remedy available to the holders of the Junior Subordinated Debt Securities unless the Property Trustee first fails to do so. DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEES Set forth below is a summary of information concerning the Preferred Securities Guarantees that will be executed and delivered by the Company for the benefit of the holders from time to time of Preferred Securities of a JPM Trust. Each Preferred Security Guarantee will be separately qualified under the Trust Indenture Act and will be held by First Trust of New York, National Association, acting in its capacity as indenture trustee with respect thereto, for the benefit of holders of the Preferred Securities of the applicable JPM Trust. The terms of each Preferred Securities Guarantee will be those set forth in such Preferred Securities Guarantee and those made part of such Preferred Securities Guarantee by the Trust Indenture Act. This description summarizes the material terms of the Preferred Securities Guarantees and is qualified in its entirety by reference to the form of Preferred Securities Guarantee, which is filed as an exhibit to the Registration Statement of which this Prospectus forms a part, and the Trust Indenture Act. Section references 98 24 used herein are references to the provisions of the form of Preferred Securities Guarantee. General Pursuant to each Preferred Securities Guarantee, the Company will irrevocably and unconditionally agree, to the extent set forth therein, to pay in full, to the holders of the Preferred Securities issued by the applicable JPM Trust, the Guarantee Payments (as defined herein), to the extent not paid by such JPM Trust, regardless of any defense, right of set-off or counterclaim that such JPM Trust may have or assert. The following payments or distributions with respect to Preferred Securities issued by a JPM Trust to the extent not paid or made by such JPM Trust (the "Guarantee Payments"), will be subject to the Preferred Securities Guarantee (without duplication): (i) any accrued and unpaid distributions on such Preferred Securities, but only if and to the extent that in each case the Company has made a payment to the Property Trustee of interest on the Junior Subordinated Debt Securities, (ii) the redemption price, including all accrued and unpaid distributions to the date of redemption, with respect to any Preferred Securities called for redemption by such JPM Trust, but if and only to the extent that in each case the Company has made a payment to the Property Trustee of interest or principal on the Junior Subordinated Debt Securities deposited in such JPM Trust as trust assets, and (iii) upon a voluntary or involuntary liquidation, dissolution, winding-up or termination of such JPM Trust (other than in connection with the distribution of such Junior Subordinated Debt Securities to the holders of such Preferred Securities or the redemption of all such Preferred Securities upon the maturity or redemption of such Junior Subordinated Debt Securities) the lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid distributions on such Preferred Securities to the date of payment, to the extent such JPM Trust has funds available therefor, and (b) the amount of assets of such JPM Trust remaining available for distribution to holders of such Preferred Securities upon liquidation of such JPM Trust. The Company's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by the Company to the holders of the applicable Preferred Securities or by causing the applicable JPM Trust to pay such amounts to such holders. The Company's obligations under the Declaration for each JPM Trust, the Preferred Securities Guarantee issued with respect to Preferred Securities issued by such JPM Trust, the Junior Subordinated Debt Securities purchased by such JPM Trust and the Indenture in the aggregate will provide a full and unconditional guarantee on a subordinated basis by the Company of payments due on the Preferred Securities issued by such JPM Trust. However, the Preferred 99 25 Securities Guarantees cover distributions and other payments on such Preferred Securities only if and to the extent that the Company has made a payment to the Property Trustee of interest or principal on the Junior Subordinated Debt Securities deposited in the applicable JPM Trust as trust assets. If the Company does not make interest or principal payments on the Junior Subordinated Debt Securities deposited in the applicable JPM Trust as trust assets, the Property Trust will not make distributions on the Preferred Securities of such JPM Trust and the JPM Trust will not have funds available therefor. Certain Covenants of the Company In each Preferred Securities Guarantee, the Company will covenant that, so long as any Preferred Securities issued by the applicable JPM Trust remain outstanding, the Company will not declare or pay any dividends on, or redeem, purchase, acquire or make a distribution or liquidation payment with respect to, any of its common stock or preferred stock or make any guarantee payment with respect thereto, if at such time (i) the Company shall be in default with respect to its Guarantee Payments or other payment obligations under such Preferred Securities Guarantee, (ii) there shall have occurred any Event of Default under the related Declaration or (iii) in the event that Junior Subordinated Debt Securities are issued to the applicable JPM Trust in connection with the issuance of Trust Securities by such JPM Trust, the Company shall have given notice of its election to defer payments of interest on such Junior Subordinated Debt Securities by extending the interest payment period as provided in the terms of the Junior Subordinated Debt Securities and such period, or any extension thereof, is continuing; provided, however, that the foregoing restrictions shall not apply to (i) dividends, redemptions, purchases, acquisitions, distributions or payments made by the Company by way of issuance of shares of its capital 100 26 stock, (ii) payments of accrued dividends by the Company upon the redemption, exchange or conversion of any preferred stock of the Company as may be outstanding from time to time in accordance with the terms of such preferred stock, (iii) cash payments made by the Company in lieu of delivering fractional shares upon the redemption, exchange or conversion of any preferred stock of the Company as may be outstanding from time to time in accordance with the terms of such preferred stock, (iv) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or consultants, or (v) any declaration of a dividend in connection with the implementation of a stockholders' rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of such rights pursuant thereto. In addition, so long as any Preferred Securities of a JPM Trust remain outstanding, the Company has agreed (i) to remain the sole direct or indirect owner of all the outstanding Common Securities issued by such JPM Trust and not to cause or permit such Common Securities to be transferred except to the extent permitted by the Declaration of such JPM Trust, provided that any permitted successor of the Company under the Indenture may succeed to the Company's ownership of such Common Securities, and (ii) to use reasonable efforts to cause such JPM Trust to continue to be treated as a grantor trust for United States Federal income tax purposes, except in connection with a distribution of Junior Subordinated Debt Securities. (Section 6.01) Amendments and Assignment Except with respect to any changes that do not adversely affect the rights of holders of the applicable Preferred Securities (in which case no consent will be required), each Preferred Securities Guarantee may be amended only with the prior approval of the holders of not less than 66-2/3% in liquidation amount of the outstanding Preferred Securities issued by the applicable JPM Trust. The manner of obtaining any such approval of holders of such Preferred Securities will be set forth in an accompanying Prospectus Supplement. (Section 9.02) All guarantees and agreements contained in a Preferred Securities Guarantee shall bind the successors, assignees, receivers, trustees and representatives of the Company and shall inure to the benefit of the holders of the Preferred Securities of the applicable JPM Trust then outstanding. Except in connection with a consolidation, merger or sale involving the Company that is permitted under the Indenture, the Company may not assign its obligations under any Preferred Securities Guarantee. (Section 9.01) 101 27 Termination of the Preferred Securities Guarantees Each Preferred Securities Guarantee will terminate and be of no further force and effect as to the Preferred Securities issued by the applicable JPM Trust upon full payment of the redemption price of all Preferred Securities of such JPM Trust, or upon distribution of the Junior Subordinated Debt Securities to the holders of the Preferred Securities of such JPM Trust in exchange for all the Preferred Securities issued by such JPM Trust, or upon full payment of the amounts payable upon liquidation of such JPM Trust. Notwithstanding the foregoing, each 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 issued by the applicable JPM Trust must restore payment of any sums paid under such Preferred Securities or such Preferred Securities Guarantee. (Section 7.01) Status of the Preferred Securities Guarantees The Company's obligations under each Preferred Securities Guarantee to make the Guarantee Payments will constitute an unsecured obligation of the Company and will rank (i) subordinate and junior in right of payment to all other indebtedness, liabilities and obligations of the Company and any guarantees, endorsements or other contingent obligations of the Company in respect of such indebtedness, liabilities or obligations, including the Junior Subordinated Debt Securities, except those made pari passu or subordinate by their terms, and (ii) senior to all capital stock now or hereafter issued by the Company and to any guarantee now or hereafter entered into by the Company in respect of any of its capital stock. The Company's obligations under each Preferred Securities Guarantee will rank pari passu with each other Preferred Securities Guarantee. (Section 6.02) Because the Company is a holding company, the Company's obligations under each Preferred Securities Guarantee are also effectively subordinated to all existing and future liabilities of the Company's subsidiaries, except to the extent that the Company is a creditor of the subsidiaries recognized as such. Each Declaration provides that each holder of Preferred Securities issued by the applicable JPM Trust, by acceptance thereof, agrees to the subordination provisions and other terms of the related Preferred Securities Guarantee. 102 28 Each Preferred Securities Guarantee will constitute a guarantee of payment and not of collection (that is, the guaranteed party may institute a legal proceeding directly against the Company to enforce its rights under such Preferred Securities Guarantee without first instituting a legal proceeding against any other person or entity). Each Preferred Securities Guarantee will be deposited with First Trust of New York, National Association, as indenture trustee, to be held for the benefit of the holders of the Preferred Securities issued by the applicable JPM Trust. First Trust of New York, National Association shall enforce such Preferred Securities Guarantee on behalf of the holders of such Preferred Securities. The holders of not less than a majority in aggregate liquidation amount of the Preferred Securities issued by the applicable JPM Trust have the right to direct the time, method and place of conducting any proceeding for any remedy available in respect of the related Preferred Securities Guarantee, including the giving of directions to First Trust of New York, National Association. If First Trust of New York, National Association fails to enforce a Preferred Securities Guarantee as above provided, any holder of Preferred Securities issued by the applicable JPM Trust may institute a legal proceeding directly against the Company to enforce its rights under such Preferred Securities Guarantee, without first instituting a legal proceeding against the applicable JPM Trust or any other person or entity. Notwithstanding the foregoing, if the Company has failed to make a Guarantee Payment, a holder of Preferred Securities may directly institute a proceeding against the Company for enforcement of such holder's right to receive payment under the Preferred Securities Guarantee. The Company waives any right or remedy to require that any action be brought first against a JPM Trust or any other person or entity before proceeding directly against the Company. Miscellaneous The Company will be required to provide annually to First Trust of New York, National Association a statement as to the performance by the Company of certain of its obligations under each Preferred Securities Guarantee and as to any default in such performance. The Company is required to file annually with First Trust of New York, National Association an officer's certificate as to the Company's compliance with all conditions to be complied with by it under each Preferred Securities Guarantee. (Section 2.04) First Trust of New York, National Association, prior to the occurrence of a default, undertakes to perform only such duties as are specifically set forth in the applicable Preferred Securities Guarantee and, after default with respect to a Preferred Securities Guarantee, shall exercise the same degree of care as a prudent individual would exercise in the conduct of his or her own affairs. Subject to such provision, First Trust of New York, National Association is under no obligation to exercise any of the powers vested in it by a Preferred Securities Guarantee at the request of any holder of Preferred 103 29 Securities unless it is offered reasonable indemnity against the costs, expenses and liabilities that might be incurred thereby. (Section 3.02) Governing Law The Preferred Securities Guarantees will be governed by, and construed in accordance with, the laws of the State of New York. DESCRIPTION OF THE JUNIOR SUBORDINATED DEBT SECURITIES Junior Subordinated Debt Securities may be issued from time to time in one or more series under an Indenture, which term includes all supplements thereto, (the "Indenture") between the Company and First Trust of New York, National Association, as trustee (the "Indenture Trustee"). The Indenture has been filed as an exhibit to the Registration Statement of which this Prospectus forms a part. The following description summarizes the material terms of the Indenture, and is qualified in its entirety by reference to the Indenture and the Trust Indenture Act. Whenever particular provisions or defined terms in the Indenture are referred to herein, such provisions or defined terms are incorporated by reference herein. Section references used herein are references to provisions of the Indenture. General The Junior Subordinated Debt Securities will be unsecured, junior subordinated obligations of the Company. The Indenture does not limit the amount of additional indebtedness the Company or any of its subsidiaries may incur. Since the Company is a holding company, the Company's rights and the rights of its creditors, including the holders of Junior Subordinated Debt Securities, to participate in the assets of any subsidiary upon the latter's liquidation or recapitalization will be subject to the prior claims of the subsidiary's creditors, except to the extent that the Company may itself be a creditor with recognized claims against the subsidiary. The Indenture does not limit the aggregate principal amount of indebtedness which may be issued thereunder and provides that Junior Subordinated Debt Securities may be issued thereunder from time to time in one 104 30 or more series. The Junior Subordinated Debt Securities are issuable in one or more series pursuant to an indenture supplemental to the Indenture. In the event Junior Subordinated Debt Securities are issued to a JPM Trust or a Trustee of such JPM Trust in connection with the issuance of Trust Securities by such JPM Trust, such Junior Subordinated Debt Securities subsequently may be distributed pro rata to the holders of such Trust Securities in connection with the dissolution of such JPM Trust upon the occurrence of certain events described in the applicable Prospectus Supplement. Only one series of Junior Subordinated Debt Securities will be issued to a JPM Trust or a Trustee of such JPM Trust in connection with the issuance of Trust Securities by such JPM Trust. Reference is made to the Prospectus Supplement which will accompany this Prospectus for the following terms of the series of Junior Subordinated Debt Securities being offered thereby (to the extent such terms are applicable to the Junior Subordinated Debt Securities): (i) the specific designation of such Junior Subordinated Debt Securities, aggregate principal amount and purchase price; (ii) any limit on the aggregate principal amount of such Junior Subordinated Debt Securities; (iii) the date or dates on which the principal of such Junior Subordinated Debt Securities is payable and the right, if any, to extend such date or dates; (iv) the rate or rates at which such Junior Subordinated Debt Securities will bear interest or the method of calculating such rate or rates, if any; (v) the date or dates from which such interest shall accrue, the interest payment dates on which such interest will be payable or the manner of determination of such interest payment dates and the record dates for the determination of holders to whom interest is payable on any such interest payment dates; (vi) the right, if any, to extend the interest payment periods and the duration of such extension; (vii) the period or periods within which, the price or prices at which, and the terms and conditions upon which, such Junior Subordinated Debt Securities may be redeemed, in whole or in part, at the option of the Company; (viii) the obligation, if any, of the Company to redeem or purchase such Junior Subordinated Debt Securities pursuant to any sinking fund or analogous provisions or at the option of the holder thereof and the period or periods for which, the price or prices at which, and the terms and conditions upon which, such Junior Subordinated Debt Securities shall be redeemed or purchased, in whole or part, pursuant to such 105 31 obligation; (ix) any applicable United States Federal income tax consequences, including whether and under what circumstances the Company will pay additional amounts on the Junior Subordinated Debt Securities held by a person who is not a U.S. person in respect of any tax, assessment or governmental charge withheld or deducted and, if so, whether the Company will have the option to redeem such Junior Subordinated Debt Securities rather than pay such additional amounts; (x) the form of such Junior Subordinated Debt Securities; (xi) if other than denominations of $25 or any integral multiple thereof, the denominations in which such Junior Subordinated Debt Securities shall be issuable; (xii) any and all other terms with respect to such series, including any modification of or additions to the events of default or covenants provided for with respect to the Junior Subordinated Debt Securities, and any terms which may be required by or advisable under applicable laws or regulations not inconsistent with the Indenture; and (xiii) whether such Junior Subordinated Debt Securities are issuable as a global security, and in such case, the identity of the depositary. (Section 2.3) Unless otherwise indicated in the applicable Prospectus Supplement, the Junior Subordinated Debentures will be issued in United States dollars in fully registered form without coupons in denominations of $25 or integral multiples thereof. Junior Subordinated Debt Securities may be presented for exchange and transfer in the manner, at the places and subject to the restrictions set forth in the Indenture. Such services will be provided without charge, other than any tax or other governmental charge payable in connection therewith, but subject to the limitations provided in the Indenture. (Section 2.8) Junior Subordinated Debt Securities may bear interest at a fixed rate or a floating rate. Junior Subordinated Debt Securities bearing no interest or interest at a rate that at the time of issuance is below the prevailing market rate will be sold at a discount below their stated principal amount. Special United States Federal income tax considerations applicable to any such discounted Junior Subordinated Debt Securities or to certain Junior Subordinated Debt Securities issued at par which are treated as having been issued at a discount for United 106 32 States Federal income tax purposes will be described in the applicable Prospectus Supplement. Certain Covenants of the Company Applicable to the Junior Subordinated Debt Securities If Junior Subordinated Debt Securities are issued to a JPM Trust in connection with the issuance of Trust Securities by such JPM Trust, the Company will covenant in the Indenture that, so long as the Preferred Securities of such JPM Trust remain outstanding, the Company will not declare or pay any dividends on, or redeem, purchase, acquire or make a distribution or liquidation payment with respect to, any of its common stock or preferred stock or make any guarantee payments with respect thereto if at such time (i) the Company shall be in default with respect to its Guarantee Payments or other payment obligations under the related Preferred Securities Guarantee, (ii) there shall have occurred any Indenture Event of Default with respect to such Junior Subordinated Debt Securities or (iii) in the event that Junior Subordinated Debt Securities are issued to a JPM Trust in connection with the issuance of Trust Securities by such JPM Trust, the Company shall have given notice of its election to defer payments of interest on such Junior Subordinated Debt Securities by extending the interest payment period as provided in the terms of such Junior Subordinated Debt Securities and such period, or any extension thereof, is continuing; provided, however, that the foregoing restrictions shall not apply to (i) dividends, redemptions, purchases, acquisitions, distributions or payments made by the Company by way of issuance of shares of its capital stock, (ii) payments of accrued dividends by the Company upon the redemption, exchange or conversion of any preferred stock of the Company as may be outstanding from time to time in accordance with the terms of such preferred stock or (iii) cash payments made by the Company in lieu of delivering fractional shares upon the redemption, exchange or conversion of any preferred stock of the Company as may be outstanding from time to time in accordance with the terms of such preferred stock. In addition, if Junior Subordinated Debt Securities are issued to a JPM Trust in connection with the issuance of Trust Securities by such JPM Trust, for so long as the Preferred Securities of such JPM Trust remain outstanding, the Company has agreed (i) to remain the sole direct or indirect owner of all the outstanding Common Securities issued by such JPM Trust and not to cause or permit such Common Securities to be 107 33 transferred except to the extent permitted by the Declaration of such JPM Trust; provided that any permitted successor of the Company under the Indenture may succeed to the Company's ownership of such Common Securities, (ii) to comply fully with all its obligations and agreements contained in such Declaration and (iii) not to take any action which would cause such JPM Trust to cease to be treated as a grantor trust for United States Federal income tax purposes, except in connection with a distribution of Junior Subordinated Debt Securities. Subordination The Junior Subordinated Debt Securities will be unsecured and will be subordinate in right of payment to all Senior Indebtedness, Subordinated Indebtedness and to Derivative Obligations (as such terms are defined below) of J. P. Morgan, whether outstanding as of this date or hereafter incurred. In addition, since J. P. Morgan is a holding company, the right of J. P. Morgan to participate as a shareholder in any distribution of assets of any subsidiary upon its liquidation or reorganization or otherwise (and thus the ability of holders of the Junior Subordinated Debt Securities to benefit as creditors of J. P. Morgan from such distribution) is subject to the prior claims of creditors of any such subsidiary. J. P. Morgan and its subsidiaries are subject to claims by creditors for long-term and short-term debt obligations, including substantial obligations for federal funds purchased and securities sold under repurchase agreement, as well as deposit liabilities. There are also various legal limitations on the extent to which subsidiaries of J. P. Morgan may pay dividends or otherwise supply funds to J. P. Morgan. The Junior Subordinated Debt Securities will be subordinate in right of payment as provided in the Indenture to all Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations of J. P. Morgan. No payment pursuant to the Junior Subordinated Debt Securities may be made and no holder of the Junior Subordinated Debt Securities or any coupon appertaining thereto shall be entitled to demand or receive any such payment (i) unless all amounts of principal, premium, if any, and interest then due on all Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations of J. P. Morgan shall have been paid in full or duly provided for or (ii) if, at the time of such 108 34 payment or immediately after giving effect thereto, there shall exist with respect to any given Senior Indebtedness, Subordinated Indebtedness or Derivative Obligations of J.P. Morgan any event of default permitting the holders thereof to accelerate the maturity or payment thereof or any event which, with notice or lapse of time, or both, will become such an event of default. (Section 10.2) In the event of the acceleration of the maturity of any Junior Subordinated Debt Securities, the holders of all Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations outstanding at the time of such acceleration will first be entitled to receive payment in full of all amounts due thereon (including any amounts due upon acceleration) before the holders of Junior Subordinated Debt Securities will be entitled to receive or retain any payment on the Junior Subordinated Debt Securities; provided, however, that holders of Subordinated Debt shall not be entitled to receive payment of any such amounts in preference to the Junior Subordinated Debt Securities to the extent that such Subordinated Debt is by its terms subordinated to trade creditors. Upon any distribution of the assets of J. P. Morgan upon dissolution, winding up, liquidation or reorganization, the holders of Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations of J. P. Morgan will be entitled to receive payment in full of principal, premium, if any, and interest before any payment may be made on the Junior Subordinated Debt Securities. By reason of such subordination, in the event of a bankruptcy or insolvency of J. P. Morgan, holders of Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations of J. P. Morgan may receive more, ratably, and holders of the Junior Subordinated Debt Securities may receive less, ratably, than the other creditors of J. P. Morgan. Such subordination will not prevent the occurrence of any Event of Default in respect of the Junior Subordinated Debt Securities. The Indenture does not limit the amount of Senior Indebtedness, Subordinated Indebtedness or Derivative Obligations J. P. Morgan may incur. Senior Indebtedness of J. P. Morgan is defined as the principal of, premium, if any, and interest on (a) all Debt of J. P. Morgan, whether outstanding on the date of execution of the Indenture or thereafter created, assumed or incurred, except such Debt as is by its terms expressly 109 35 stated to be not superior in right of payment to the Junior Subordinated Debt Securities or to rank pari passu with the Junior Subordinated Debt Securities and (b) any deferrals, renewals or extensions of any such Senior Indebtedness; provided, however, that Senior Indebtedness shall not be deemed to include (i) Debt which by its terms is subordinated to trade accounts payable or accrued liabilities arising in the ordinary course of business to the extent that payments made to the holders of such Debt by the holders of the Junior Subordinated Debt Securities as a result of the subordination provisions of the Indenture would be greater than they otherwise would have been as a result of any obligation of such holders to pay amounts over to the obligees on such trade accounts payable or accrued liabilities arising in the ordinary course of business as a result of subordination provisions to which such Debt is subject; (ii) Debt which constitutes Subordinated Indebtedness and (iii) any other debt securities issued pursuant to the Indenture. "Subordinated Indebtedness" is defined as the principal of, premium, if any, and interest, on Debt, whether outstanding on the date of the execution of the Indenture or thereafter incurred, which is by its terms expressly provided to be junior and subordinate to other Debt of J.P. Morgan (other than the Junior Subordinated Debt Securities). The term "Debt" as used in the foregoing definitions shall mean any obligation of, or any obligation guaranteed by, J. P. Morgan for the repayment of borrowed money, whether or not evidenced by bonds, debentures, notes or other written instruments, and any deferred obligation for the payment of the purchase price of property or assets (but shall not include trade accounts payable or accrued liabilities arising in the ordinary course of business). The term "pari passu" as used herein shall mean ranking equally in right of payment in the event of J. P. Morgan's bankruptcy. (Section 1.1) "Derivative Obligations" of J. P. Morgan are defined in the Indenture as obligations of J. P. Morgan to make payments on claims in respect of derivative products such as interest and foreign exchange rate contracts, commodity contracts and similar arrangements; provided, however, that Derivative Obligations do not include claims in respect of Senior Indebtedness, Subordinated Indebtedness or obligations which, by their terms, are expressly stated not to be superior in right of payment to the Junior Subordinated Debt Securities or to rank pari passu with the 110 36 Junior Subordinated Debt Securities. For purposes of this definition, "claim" has the meaning assigned thereto in Section 101(4) of the United States Bankruptcy code of 1978, as amended and in effect on the date of the Indenture. (Section 1.1) The Prospectus Supplement will set forth the aggregate amount of outstanding indebtedness as of the most recent practicable date that by the terms of such debt securities would be senior to the Junior Subordinated Debt Securities and any limitation on the issuance of such additional senior indebtedness. Notwithstanding anything to the contrary in the Indenture or the Junior Subordinated Debt Securities, Senior Indebtedness and Subordinated Indebtedness shall not include (i) any indebtedness of the Company which, by its terms or the terms of the instrument creating or evidencing it, is subordinate in right of payment to, or pari passu with, the Junior Subordinated Debt Securities, as the case may be, and in particular, the Junior Subordinated Debt Securities shall rank pari passu with respect to all other debt securities and guarantees in respect thereof issued to any other trusts, partnerships or other entity affiliated with the Company which is a financing vehicle of the Company in connection with the issuance of preferred securities by such financing vehicle, or (ii) any indebtedness of the Company to a subsidiary of the Company. Events of Default, Waiver, Notice The Indenture provides that any one or more of the following described events, which has occurred and is continuing, constitutes an "Indenture Event of Default" with respect to each series of Junior Subordinated Debt Securities: (a) failure for 30 days to pay interest on the Junior Subordinated Debt Securities of such series when due; provided that a valid extension of the interest payment period by the Company shall not constitute a default in the payment of interest for this purpose; (b) failure to pay principal of or premium, if any, on the Junior Subordinated Debt Securities of such series when due whether at maturity, upon redemption, by declaration or otherwise; 111 37 (c) failure to observe or perform any other covenant contained in the Indenture with respect to such series for 90 days after written notice to the Company from the Indenture Trustee or the holders of at least 25% in principal amount of the outstanding Junior Subordinated Debt Securities of such series; or (d) certain events in bankruptcy, insolvency or reorganization of the Company. In each and every such case, unless the principal of all the Junior Subordinated Debt Securities of such series shall have already become due and payable, either the Indenture Trustee or the holders of not less than 25% in aggregate principal amount of the Junior Subordinated Debt Securities of such series then outstanding, by notice in writing to the Company (and to the Indenture Trustee if given by such holders), may declare the principal of all the Junior Subordinated Debt Securities of such series to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable. (Section [ ]) The holders of a majority in aggregate outstanding principal amount of the Junior Subordinated Debt Securities of the applicable series have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee. (Section [ ]) The Indenture Trustee or the holders of not less than 25% in aggregate outstanding principal amount of the Junior Subordinated Debt Securities of such series may declare the principal due and payable immediately upon an Indenture Event of Default with respect to such series, but the holders of a majority in aggregate outstanding principal amount of Junior Subordinated Debt Securities of such series may annul such declaration and waive the default if the default has been cured and a sum sufficient to pay all matured installments of interest and principal otherwise than by acceleration and any premium has been deposited with the Indenture Trustee. (Sections [ ] and [ ]) The holders of a majority in aggregate outstanding principal amount of the Junior Subordinated Debt Securities of a series may, on behalf of the holders of all the Junior Subordinated Debt Securities of such series, waive any past default, except a default in the payment of principal, premium, if any, or interest on Junior Subordinated Securities of such series (unless such default has been 112 38 cured and a sum sufficient to pay all matured installments of interest and principal otherwise than by acceleration and any premium has been deposited with the Indenture Trustee) or a call for redemption of Junior Subordinated Debt Securities of such series. (Section [ ]) The Company is required to file annually with the Indenture Trustee a certificate as to whether or not the Company is in compliance with all the conditions and covenants under the Indenture. (Section [ ]) If a series of Junior Subordinated Debt Securities is issued to a JPM Trust in connection with the issuance of Trust Securities of such JPM Trust, then, under the applicable Declaration, an Indenture Event of Default with respect to such series of Junior Subordinated Debt Securities will constitute a Declaration Event of Default. Modification of the Indentures; Waiver of Compliance The Indenture contains provisions permitting J. P. Morgan and the Trustee, with the consent of the holders of not less than a majority in principal amount of the respective Junior Subordinated Debt Securities of all series affected by such modification or waiver at the time outstanding (voting as one class), to modify the Indenture or any supplemental indenture or the rights of the holders of the respective Junior Subordinated Debt Securities, or waive compliance by J. P. Morgan with any of its obligations thereunder, provided that no such modification or waiver shall (i) extend the final maturity of any respective Junior Subordinated Debt Security, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or change the currency or currency unit of payment thereof, or change the method in which amounts of payments of principal or interest thereon are determined, or reduce the portion of the principal amount of an original issue discount Junior Subordinated Debt Security due and payable upon acceleration of the maturity thereof or the portion of the principal amount thereof provable in bankruptcy, or reduce any amount payable upon redemption of any Junior Subordinated Debt Security, or impair or affect the right of a holder to institute suit for the payment thereof or, if the Junior Subordinated Debt Securities provide therefor, any right of repayment at the option of the holder of a Junior Subordinated Debt Security, without the consent of the holder of each respective Junior Subordinated Debt Security so affected or (ii) reduce the aforesaid percentage of Junior Subordinated Debt Securities 113 39 of any series, the consent of the holders of which is required for any such modification, without the consent of the holder of each Junior Subordinated Debt Security so affected. (Sections 8.2 and 8.6) In the event the consent of the Property Trustee as the holder of the Junior Subordinated Debentures is required under the Indenture with respect to any amendment, modification or termination of the Indenture or the Junior Subordinated Debentures, the Property Trustee shall request the direction of the holders of the Trust Securities with respect to such amendment, modification or termination and shall vote with respect to such amendment, modification or termination as directed by a majority in liquidation amount of the Trust Securities voting together as a single class; provided, however, that where any such amendment, modification or termination under the Indenture would require the consent or vote of (1) holders of Junior Subordinated Debentures repre- senting a specified percentage greater than a majority in principal amount of the Junior Subordinated Debentures or (2) each holder of Junior Subordinated Debentures, the Property Trustee may only give such consent or vote, in the case of clause (1), at the direction of the holders of Trust Securities representing such specified percentage of the aggregate liquidation amount of the Trust Securities or, in the case of clause (2), as directed by each holder of Trust Securities; and, provided further, however, that the Property Trustee shall be under no obligation to take any such action in accordance with the directions of the holders of the Trust Securities unless the Property Trustee has obtained an opinion of nationally recognized independent tax counsel recognized as expert in such matters to the effect that the Trust will not be classified for United States Federal income tax purposes as an association taxable as a corporation or a partnership on account of such action and will be treated as a grantor trust for United States Federal income tax purposes following such action. The Indenture also permits J. P. Morgan and the Trustee to amend such Indenture in certain circumstances without the consent of the holders of Junior Subordinated Debt Securities to evidence the merger of J. P. Morgan, the replacement of the Trustee, to effect modifications which do not affect any series of Junior Subordinated Debt Security already outstanding, and for certain other purposes. (Section 8.1) Consolidations, Mergers and Sales of Assets J. P. Morgan may not merge or consolidate with any other corporation or sell or convey all or substantially all of its assets to any Person, unless either J. P. Morgan shall be the continuing corporation or the successor corporation shall be a corporation organized under the laws of the United States or any state thereof and shall expressly assume the payment of the principal of and interest on the Junior Subordinated Debt Securities and the performance and observance of all the covenants and conditions of the Indenture binding upon J. P. Morgan, and J. P. Morgan or such successor corporation shall not, immediately after such merger or consolidation, or such sale or conveyance, be in default in the performance of any such covenant or condition. (Article Nine) Book Entry and Settlement If any Junior Subordinated Debt Securities of a series are represented by one or more global securities (each, a "Global Security"), the applicable Prospectus Supplement will describe the circumstances, if any, under which beneficial owners of interests in any such Global Security may exchange such interests for Junior Subordinated Debt Securities of such series and of like tenor and principal amount in any authorized form and denomination. Principal of, and any premium and interest on, a Global Security will be payable in the manner described in the applicable Prospectus Supplement. 114 40 The specific terms of the depositary arrangement with respect to any portion of a series of Junior Subordinated Debt Securities to be represented by a Global Security will be described in the applicable Prospectus Supplement. Governing Law The Indenture and the Junior Subordinated Debt Securities will be governed by, and construed in accordance with, the laws of the State of New York. (Section 12.8) Information Concerning the Indenture Trustee The Indenture Trustee, prior to default, undertakes to perform only such duties as are specifically set forth in the Indenture and, after default, shall exercise the same degree of care as a prudent individual would exercise in the conduct of his or her own affairs. (Section 7.01) Subject to such provision, the Indenture Trustee is under no obligation to exercise any of the powers vested in it by the Indenture at the request of any holder of Junior Subordinated Debt Securities, unless offered reasonable indemnity by such holder against the costs, expenses and liabilities that might be incurred thereby. (Section 7.02) The Indenture Trustee is not required to expend or risk its own funds or otherwise incur personal financial liability in the performance of its duties if the Indenture Trustee reasonably believes that repayment or adequate indemnity is not reasonably assured to it. (Section 7.01) First Trust of New York, National Association is a depositary for funds and performs other services for, and transacts other banking business with, the Company in the normal course of business. ERISA MATTERS The Company and certain affiliates of the Company may each be considered a "party in interest" (within the meaning of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) or a "disqualified person" (within the meaning of Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code")) with respect to many employee benefit plans ("Plans") that are subject to ERISA. 115 41 The purchase of Offered Securities by a Plan that is subject to the fiduciary responsibility provisions of ERISA or the prohibited transaction provisions of Section 4975 of the Code (including individual retirement arrangements and other plans described in Section 4975(e)(1) of the Code) and with respect to which the Company, or any affiliate of the Company is a service provider (or otherwise is a party in interest or a disqualified person) may constitute or result in a prohibited transaction under ERISA or Section 4975 of the Code, unless such Offered Securities are acquired pursuant to and in accordance with an applicable exemption. Any pension or other employee benefit plan proposing to acquire any Offered Securities should consult with its counsel. PLAN OF DISTRIBUTION The Company may sell any series of Junior Subordinated Debt Securities and the JPM Trusts may sell the Preferred Securities being offered hereby (i) through agents, (ii) through underwriters, (iii) through dealers and (iv) directly to purchasers. Any such persons may be customers of, engage in transactions with, or perform services for, J. P. Morgan in the ordinary course of business. Offered Securities may be offered and sold through agents designated by J. P. Morgan from time to time. Any such agent involved in the offer or sale of the Securities in respect of which this Prospectus is delivered will be named, and any commissions payable by J. P. Morgan to such agent will be set forth, in the Prospectus Supplement. Unless otherwise indicated in the Prospectus Supplement, any such agent will be acting on a best efforts basis for the period of its appointment (ordinarily five business days or less). Any such agent may be deemed to be an underwriter, as that term is defined in the Securities Act of 1933, as amended, of the Offered Securities so offered and sold. Agents may be entitled under agreements which may be entered into with J. P. Morgan to indemnification by J. P. Morgan against certain liabilities, including liabilities under the Securities Act of 1933, as amended. If an underwriter or underwriters are utilized in the sale of the Offered Securities, J. P. Morgan will execute an underwriting agreement with such underwriter or underwriters at the time an agreement for such sale is 116 42 reached, and the names of the specific managing underwriter or underwriters, as well as any other underwriters, and the terms of the transaction, including compensation of the underwriters and dealers, if any, will be set forth in the Prospectus Supplement which will be used by the underwriters to make resales of the Offered Securities in respect of which this Prospectus is delivered to the public. Underwriters will acquire Offered Securities for their own account and may resell such Offered Securities from time to time in one or more transactions, including negotiated transactions, at fixed public offering prices or at varying prices determined at the time of sale. Offered Securities may be offered to the public either through underwriting syndicates represented by managing underwriters, or directly by the managing underwriters. The underwriters may be entitled, under the relevant underwriting agreement, to indemnification by J. P. Morgan against certain liabilities, including liabilities under the Securities Act of 1933, as amended. Only underwriters named in the Prospectus Supplement are deemed to be underwriters in connection with the Offered Securities offered thereby. If any underwriter or underwriters are utilized in the sale of the Offered Securities, the underwriting agreement provides that the obligations of the underwriters are subject to certain conditions precedent and that the underwriters with respect to a sale of Offered Securities will be obligated to purchase all such Offered Securities if any are purchased. If a dealer is utilized in the sale of the Offered Securities in respect of which this Prospectus is delivered, J. P. Morgan will sell such Offered Securities to the dealer, as principal. The dealer may then resell such Securities to the public at varying prices to be determined by such dealer at the time of resale. Any such dealer may be deemed to be an underwriter, as such term is defined in the Securities Act f 1933, as amended, of the Offered Securities so offered and sold. Dealers may be entitled, under agreements which may be entered into with J. P. Morgan, to indemnification by J. P. Morgan against certain liabilities, including liabilities under the Securities Act of 1933, as amended. The name of the dealer and the terms of the transaction will be set forth in the Prospectus Supplement relating thereto. Offers to purchase Offered Securities may be solicited directly by J. P. Morgan and sales thereof may be made by J. P. Morgan directly to institutional investors or others, who may be deemed to be underwriters within the 117 43 meaning of the Securities Act of 1933, as amended, with respect to any sale thereof. The terms of any such sales will be described in the Prospectus Supplement relating thereto. If so indicated in the Prospectus Supplement, J. P. Morgan will authorize agents and underwriters to solicit offers by certain institutions to purchase Offered Securities from J. P. Morgan at the public offering price set forth in the Prospectus Supplement pursuant to Delayed Delivery Contracts ("Contracts") providing for payment and delivery on the date stated in the Prospectus Supplement. Each Contract will be for an amount no less than, and, unless J. P. Morgan otherwise agrees, the aggregate principal amount of Securities sold pursuant to Contracts shall be not less nor more than, the respective amounts stated in the Prospectus Supplement. Institutions with whom Contracts, when authorized, may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and other institutions but shall in all cases be subject to the approval of J. P. Morgan. Contracts will not be subject to any conditions except that any related sale of Offered Securities to underwriters shall have occurred and the purchase by an institution of the Offered Securities covered by its Contract shall not at the time of delivery be prohibited under the laws of any jurisdiction in the United States to which such institution is subject. A commission indicated in the Prospectus Supplement will be paid to underwriters and agents soliciting purchases of Offered Securities pursuant to Contracts accepted by J. P. Morgan. The place and time of delivery of the Offered Securities in respect of which this Prospectus is delivered are set forth in the accompanying Prospectus Supplement. This Prospectus and related Prospectus Supplement may be used by direct or indirect wholly-owned subsidiaries of J. P. Morgan in connection with offers and sales related to secondary market transactions in the Offered Securities. Such subsidiaries may act as principal or agent in such transactions. Such sales will be made at prices related to prevailing market prices at the time of a sale. The offer and sale of the Offered Securities by an affiliate of J. P. Morgan will comply with the requirements 118 44 of Rule 2720 of the Conduct Rules of the National Association of Securities Dealers, Inc. (the "NASD") regarding underwriting of securities of an affiliate. Accordingly, an affiliate of J. P. Morgan that is a member of the NASD may participate in a public offering and sale of Offered Securities if the offering is of a class of securities rated investment grade by a nationally recognized statistical rating organization. In addition, an affiliate of J. P. Morgan that is a member of the NASD may participate in any public offering and sale of the Offered Securities if the price at which an equity issue is distributed to the public is no higher or the yield at which a debt issue is distributed to the public is no lower than that recommended by a "qualified independent underwriter" (determined to be so qualified by the NASD prior to commencement of such offering), in each case in compliance with the provisions of Rule 2720 of the Conduct Rules. Each NASD member participating in offers and sales of the Offered Securities will not execute a transaction in the Offered Securities in a discretionary account without the prior written specific approval of the member's customer. Certain of the underwrites or agents and their associates may be customers of, engage in transactions with, and perform services for, J. P. Morgan in the ordinary course of business. Agents and underwriters may be customers of, engage in transactions with, or perform services for, the Company in the ordinary course of business. LEGAL MATTERS Unless otherwise indicated in the applicable Prospectus Supplement, certain matters of Delaware law relating to the validity of the Preferred Securities will be passed upon by Morris, Nichols, Arsht & Tunnell, Wilmington, Delaware. The validity of the Preferred Securities Guarantees and the Junior Subordinated Debt Securities and certain other matters will be passed upon for the Company by Gene A. Capello, Vice President and Assistant General Counsel of J. P. Morgan, and for the agents or underwriters, if any, by Cravath, Swaine & Moore, New York, New York. 119 45 EXPERTS The audited financial statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1995 (included in J. P. Morgan's Annual Report to Stockholders) are incorporated by reference in this Prospectus in reliance upon the report of Price Waterhouse LLP, independent accountants, given upon the authority of said firm as experts in auditing and accounting. 120 PROSPECTUS J.P. Morgan & Co. Incorporated Debt Securities J.P. Morgan & Co. Incorporated ("J.P. Morgan") may from time to time offer its senior debt securities (the "Debt Securities") and subordinated debt securities (the "Subordinated Debt Securities") (the Debt Securities and the Subordinated Debt Securities are collectively known as the "Securities") for issuance and sale, at an aggregate initial public offering price not to exceed $1,000,000,000, on terms determined by market conditions at the time of sale. Securities may be denominated in U.S. dollars or, at the option of J.P. Morgan if so specified in the applicable Prospectus Supplement, in any other freely transferable currency or units based on or relating to currencies, including European Currency Units (ECU). With respect to the J.P. Morgan Debt Securities as to which this Prospectus is being delivered (the "Offered Securities"), the specific designation, aggregate principal amount, maturity, rate and time of payment of any interest, coin or currency or currency units in which principal and interest will be paid, purchase price and any terms for mandatory or optional redemption (including any sinking fund) of any J.P. Morgan Debt Securities and any other specific terms of the Securities are set forth in the accompanying Prospectus Supplement ("Prospectus Supplement"). --------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. --------------- 121 The Offered Securities may be offered directly, through agents designated from time to time, through dealers or through one or more managing underwriters, acting alone or with other underwriters. See "Plan of Distribution". Any such agents or dealers, and any underwriters, are set forth in the Prospectus Supplement. If an agent of J.P. Morgan or a dealer or underwriter is involved in the offering of the Offered Securities in connection with which this Prospectus is being delivered, the agent's commission, dealer's purchase price or underwriter's discount is set forth in, or may be calculated from, the Prospectus Supplement and the net proceeds to J.P. Morgan from such sale will be the purchase price of such Offered Securities less such commission in the case of an agent, the purchase price of such Offered Securities in the case of a dealer, and the public offering price less such discount in the case of an underwriter and less, in each case, the other expenses of J.P. Morgan associated with such issuance and distribution. The aggregate proceeds to J.P. Morgan from all the Offered Securities sold will be the purchase price of such Offered Securities excluding any agents' commissions, any underwriters' discounts and the other expenses of issuance and distribution. See "Plan of Distribution" for possible indemnification arrangements for agents, dealers and underwriters. This Prospectus and related Prospectus Supplement may be used by direct or indirect wholly-owned subsidiaries of J.P. Morgan in connection with offers and sales related to secondary market transactions in the Offered Securities. Such subsidiaries may act as principal or agent in such transactions. Such sales will be made at prices related to prevailing market prices at the time of sale. November __, 1996 No person has been authorized to give any information or to make any representations other than those contained or incorporated by reference in this Prospectus and the Prospectus Supplement in connection with the offering made hereby, and if given or made such information or representation must not be relied upon as having been authorized by J.P. Morgan or by another person. AVAILABLE INFORMATION J.P. Morgan is subject to the informational requirements of the Securities Exchange Act of 1934 (the "1934 Act") and in accordance therewith files reports and other information with the Securities and Exchange Commission (the "Commission"). Reports, proxy statements and other information can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549; Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and Seven World Trade Center, 13th floor, New York, New York 10048. Copies of such material can be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such material may also be accessed electronically by means of the Commission's homepage on the Internet at http://www.sec.gov. Such reports, proxy statements and other information concerning J.P. Morgan may also be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. This Prospectus does not contain all information set forth in the Registration Statement and exhibits thereto which J.P. Morgan has filed with the Commission under the Securities Act of 1933 and to which reference is hereby made. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE J.P. Morgan hereby incorporates by reference in this Prospectus J.P. Morgan's Annual Report on Form 10-K for the year ended December 31, 1995 (included in its Annual Report to Stockholders), J.P. Morgan's Quarterly Reports on Form 10-Q for 122 the quarters ended March 31, 1996, June 30, 1996 and September 30, 1996 and J.P. Morgan's Reports on Form 8-K dated January 11, 1996, February 6, 1996, February 20, 1996, February 23, 1996, April 11, 1996, May 13, 1996, July 11, 1996, August 13, 1996 and October 10, 1996 heretofore filed pursuant to Section 13 of the 1934 Act. In addition, all reports and definitive proxy or information statements filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Securities shall be deemed to be incorporated by reference into this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained herein or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any subsequently filed document which also is or is deemed to be incorporated by reference herein or in the accompanying Prospectus Supplement modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. J.P. Morgan will provide without charge to each person, including any beneficial owner, to whom this Prospectus is delivered, on the written or oral request of any such person, a copy of any or all of the foregoing documents incorporated herein by reference (other than exhibits to such documents). Written requests should be directed to the Office of the Secretary, J.P. Morgan & Co. Incorporated, 60 Wall Street, New York, New York 10260-0060. Telephone requests may be directed to (212) 648-3380. J.P. MORGAN & CO. INCORPORATED J.P. Morgan, whose origins date to a merchant banking firm founded in London in 1838, is the holding company for subsidiaries engaged globally in providing a wide range of financial services to corporations, governments, financial institutions, institutional investors, professional firms, privately held companies, nonprofit organizations, and financially sophisticated individuals. J.P. Morgan's activities are summarized as follows: Finance and Advisory Finance and Advisory encompasses the sophisticated advisory, capital raising, and financing work that J.P. Morgan does for its broad base of clients around the world. These clients include corporations, governments, municipalities, and financial institutions, and the expertise J.P. Morgan offers them is based on in-depth knowledge of their needs and the industries and financial markets in which they operate. Linking clients to the full range of J.P. Morgan's financial capabilities is a global network of senior client managers. In partnership with clients, J.P. Morgan's advisory professionals explore the risks and rewards of such strategic alternatives as mergers and acquisitions, divestitures, privatizations, and recapitalizations. J.P. Morgan also advises clients on their capital structures, looking for ways to unlock value and seize opportunities. J.P. Morgan's debt underwriting, equities, and credit businesses provide the capabilities to raise the necessary capital and execute the appropriate strategies. In J.P. Morgan's equities business, underwriting is complemented by its ability to provide clients with liquidity in the secondary markets through its global sales and trading network. J.P. Morgan also applies its expertise in the equities markets to structuring equity derivatives as a means of helping clients manage market volatility. High-quality equity research is integral to all aspects of its business. J.P. Morgan's credit capabilities include meeting clients' financing needs by issuing and syndicating loans and other credit facilities. Sales and Trading Sales and Trading provides clients with around-the-clock access to global markets. J.P. Morgan makes markets in fixed income, foreign exchange, and commodity instruments; it serves as a counterparty to help clients 123 manage risks; and it provides financial and economic research to help clients assess opportunities and track performance. To function effectively in its role as a market-maker, it also takes positions. J.P. Morgan's clients include corporations, central banks, governments and their agencies, financial institutions, pension funds, mutual funds, and leveraged funds. J.P. Morgan's fixed income activities encompass acting as a primary dealer in U.S. and foreign government securities; making markets in options, money market instruments, U.S. government agency securities, and corporate debt securities; and helping clients manage their exposure to fluctuating interest and foreign exchange rates by structuring, executing, and making markets in risk management instruments. J.P. Morgan's foreign exchange capabilities include executing spot transactions and structuring transactions to help clients manage their foreign currency exposures. In commodities, J.P. Morgan makes markets in precious metals, base metals, and energy products and develops hedging and financial strategies for clients. J.P. Morgan's emerging markets activities, while principally related to fixed income activities, cross all markets, and J.P. Morgan's worldwide network enables it to fulfill its role as a market-maker and provide clients with a steady flow of market information. In addition to J.P. Morgan's client-focused businesses, it has a separate proprietary unit that engages in transactions for its own account across all markets. Asset Management and Servicing Asset Management and Servicing activities encompass designing and executing investment strategies and providing administrative and brokerage services. J.P. Morgan's clients include corporations, financial and governmental institutions, and high net worth individuals. J.P. Morgan tailors its asset management capabilities for both institutional and private clients. For institutional clients, it offers such services as the management of employee-benefit-plan assets, executing investment strategies across the spectrum of asset classes in all major markets. 124 J.P. Morgan's private banking group helps high net worth individuals plan and execute their investment strategies with a broad range of capabilities, which include managed investment and trust portfolios, Morgan-advised mutual funds, and a full-service brokerage unit. Credit, deposit, trust, and estate services are also provided to private clients. J.P. Morgan's exchange traded products professionals provide institutional clients with worldwide access to major exchanges by acting as futures and options brokers in executing and clearing contracts. J.P. Morgan provides such operational services as the administration of depositary receipt programs and global trust and agency services. It operates the Euroclear System, the world's largest clearance and settlement system for internationally traded securities, and offers credit and deposit services to Euroclear participants. Equity Investments J.P. Morgan invests its capital in the private equity of rapidly growing companies, management buyouts, privatizations, and recapitalizations. These investments are made and managed with the objective of maximizing total return--both long-term appreciation and net realized gains. While each opportunity for investment is evaluated to achieve the firm's desired balance between risk and return, many of these opportunities arise from its client relationships. J.P. Morgan's equity investment portfolio consists of approximately 95 investments diversified by industry, geography, and year of investment. J.P. Morgan's goal is to maintain a diversified portfolio capable of generating significant returns over time. This is a high-risk, high-reward business, and the firm operates under a variety of legal and regulatory restrictions in managing the portfolio. Investments are generally held for three to seven years, depending on J.P. Morgan's view of when a sale will produce optimal returns. Typically, investments are harvested through a public offering of securities or the sale of the investment. While realization of gains in the portfolio accelerates during periods of strong equity and merger markets, the process of assessing and managing the 125 risks and rewards of new opportunities and existing investments continues throughout market cycles. Asset and Liability Management Asset and Liability Management activities include managing the firm's interest rate risk as it relates to nontrading-related assets, liabilities, and off-balance-sheet activities and managing the firm's overall liquidity risk. J.P. Morgan's objective when it comes to interest rate risk management is to create longer-term value, which is realized over time primarily as net interest revenue and net investment securities gains. J.P. Morgan's primary focus is on achieving a desired overall interest rate profile, which may change over time, based on management's longer-term view of global interest rate trends and economic conditions. A variety of instruments -- in numerous currencies both on- and off-balance-sheet -- are used in an integrated manner to achieve this objective. J.P. Morgan manages the maturity and repricing imbalances between its assets and liabilities through the use of investments in the more liquid fixed income markets worldwide and derivatives. Asset and liability management swaps are used to hedge exposures; to modify the interest rate characteristics of specified assets or liabilities; and, in the case of risk-adjusting swaps, to adjust Morgan's overall interest rate risk profile. The firm's liquidity risk profile is managed to ensure that even under adverse conditions, it has the ability to access funds at a reasonable cost. A strong capital position is therefore an integral part of our liquidity management because it enables us to raise funds as inexpensively as possible in a variety of international markets. Regulation J.P. Morgan is subject to regulation under the Bank Holding Company Act of 1956 (the "Act"). Under the Act, J.P. Morgan is required to file certain reports with the Board of Governors of the Federal Reserve System (the "Board") and is subject to examination by the Board. The Act generally precludes J.P. Morgan and its subsidiaries from engaging in nonbanking activities, or from acquiring 126 more than 5% of any class of voting securities of any company engaging in such activities, unless the Board has determined, by order or regulation, that such proposed activities are closely related to banking. Federal law and Board interpretations limit the extent to which J.P. Morgan and its subsidiaries can engage in certain aspects of the securities business. Under Board policy, J.P. Morgan is expected to act as a source of financial strength to each subsidiary bank and to commit resources to support such subsidiary bank, even in circumstances where J.P. Morgan might not be in a financial position to do so. The Glass-Steagall Act prohibits affiliates of banks that are members of the Federal Reserve System, including J.P. Morgan Securities Inc. ("JPMSI"), from being "engaged principally" in bank-ineligible underwriting and dealing activities (mainly corporate debt and equity securities). As interpreted by the Board, this prohibition currently restricts JPMSI's gross revenues from such activities to a maximum of 10% of its total gross revenues. The Board has proposed a modification to its interpretation which would increase such limit to 25% of total gross revenues, but there can be no assurance that such modification will be adopted. J.P. Morgan will continue to seek ways to expand the limits on such activities and to achieve the reform of the Glass-Steagall Act necessary to achieve its long-term objectives. Morgan Guaranty Trust Company of New York ("Morgan Guaranty"), J.P. Morgan's largest subsidiary, is a member of the Federal Reserve System and a member of the Federal Deposit Insurance Corporation ("FDIC"). Its business is subject to both U.S. federal and state law and to examination and regulation by U.S. federal and state banking authorities. J.P. Morgan and its nonbank subsidiaries are affiliates of Morgan Guaranty within the meaning of the applicable federal statutes. Morgan Guaranty is subject to restrictions on loans and extensions of credit to J.P. Morgan and certain other affiliates and on certain other types of transactions with them or involving their securities. Among other wholly owned subsidiaries: JPMSI is a broker-dealer registered with the Securities and Exchange Commission and is a member of the National Association of Securities Dealers, the New York Stock Exchange, and other exchanges. 127 J.P. Morgan Futures Inc. is subject to regulation by the Commodity Futures Trading Commission, the National Futures Association, and the commodity exchanges and clearinghouses of which it is a member. J.P. Morgan Investment Management Inc. is registered with the Securities and Exchange Commission as an investment adviser under the Investment Advisers Act of 1940, as amended. J.P. Morgan subsidiaries conducting business in other countries are also subject to regulations and restrictions imposed by those jurisdictions, including capital requirements. The principal executive office of J.P. Morgan is located at 60 Wall Street, New York, New York 10260-0060, and its telephone number of (212) 483-2323. J.P. MORGAN CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
Nine Months Ended Years Ended December 31, September 30, ----------------------------------------- 1996 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- ---- Excluding Interest on Deposits .......... 1.36 1.35 1.40 1.70(a) 1.53(b) 1.42(c) Including Interest on Deposits........... 1.26 1.24 1.28 1.46(a) 1.31(b) 1.23(c)
- ----------- (a) For the year ended December 31, 1993, the ratio of earnings to fixed charges, including the cumulative effect of a change in the method of accounting for postretirement benefits other than pensions, was 1.64 excluding interest on deposits and 1.43 including interest on deposits. (b) For the year ended December 31, 1992, the ratio of earnings to fixed charges, including the cumulative effect of a change in the method of accounting for income taxes, was 1.67 excluding interest on deposits and 1.39 including interest on deposits. (c) For the year ended December 31, 1991, the ratio of earnings to fixed charges, including the extraordinary gain on early retirement of debt, was 1.43 excluding interest on deposits and 1.24 including interest on deposits. 128 USE OF PROCEEDS Unless otherwise indicated in the applicable Prospectus Supplement, the net proceeds from the sale of the Offered Securities will be used for general corporate purposes, including investment in equity and debt securities and interest-bearing deposits of subsidiaries. Pending such use, J.P. Morgan may temporarily invest the net proceeds or may use them to reduce short-term indebtedness. DESCRIPTION OF J.P. MORGAN DEBT SECURITIES The Debt Securities offered hereby will be issuable in one or more series under an Indenture dated as of August 15, 1982 and all indentures supplemental thereto, including the First Supplemental Indenture dated as of May 5, 1986 (collectively referred to as the "Debt Indenture"), between J.P. Morgan and First Trust of New York, National Association, successor to Chemical Bank (formerly Manufacturers Hanover Trust Company), as Trustee (the "Debt Trustee"). The Subordinated Debt Securities offered hereby will be issuable in one or more series under an Indenture dated as of March 1, 1993, and any indentures supplemental thereto, (the "Subordinated Indenture"), between J.P. Morgan and First Trust of New York, National Association, successor to Citibank, N.A., as Trustee (the "Subordinated Trustee"). The Debt Indenture and the Subordinated Indenture are sometimes referred to collectively as the "Indentures" and the Debt Trustee and the Subordinated Trustee are sometimes referred to collectively as the "Trustees." The following statements are subject to the detailed provisions of the Indentures, copies of which are filed as exhibits to the Registration Statement, and to the provisions of the Trust Indenture Act of 1939, as amended. Wherever references are made to particular provisions of the Indentures, such provisions are incorporated by reference as a part of the statements made and such statements are qualified in their entirety by such reference. Certain capitalized terms used herein are defined in the Indentures. References in italics are to sections or articles of the Indentures. General Each Indenture does not limit the amount of J.P. Morgan Debt Securities that may be issued thereunder and provides that J.P. Morgan Debt Securities may be issued in series thereunder up to the aggregate principal amount that may be authorized from time to time by J.P. Morgan. Reference is made to the Prospectus Supplement for the following terms of each series of J.P. Morgan Debt Securities in respect of which this Prospectus is being delivered: (1) whether the J.P. Morgan Debt Securities are Debt Securities or Subordinated Debt Securities; (2) the designation, aggregate principal amount and authorized denominations of such J.P. Morgan Debt Securities; (3) the purchase price of such J.P. Morgan Debt Securities (expressed as a percentage of the principal amount thereof); (4) the date on which such J.P. Morgan Debt Securities will mature; (5) the rate or rates per annum at which such J.P. Morgan Debt Securities will bear interest, if any, or the method by which such interest will be determined; (6) the coin or currency or units based on or relating to currency units (including ECU) for which J.P. Morgan Debt Securities may be purchased and in which payment of principal and interest will be made; (7) the dates on which such interest, if any, will be payable; (8) the terms of any mandatory or optional redemption (including any sinking fund); (9) whether the J.P. Morgan Debt Securities will be issued in fully registered form without coupons attached or in bearer form with coupons; (10) the restrictions, if any, applicable to the exchange of J.P. Morgan Debt Securities of one form for another and to the offer, sale and delivery of the J.P. Morgan Debt Securities; (11) whether and under what circumstances J.P. Morgan will pay additional amounts on J.P. Morgan Debt Securities in the event of certain developments with respect to United States withholding tax or information reporting laws; (12) whether J.P. Morgan may redeem the J.P. Morgan Debt 129 Securities in the event of such developments; and (13) any other specific terms. If a Prospectus Supplement specifies that J.P. Morgan Debt Securities are denominated in a currency other than U.S. dollars or in a currency unit, such Prospectus Supplement shall also specify the coin or currency or currency unit in which the principal, premium, if any, and interest, if any, on such J.P. Morgan Debt Securities will be payable, which may be U.S. dollars based upon the exchange rate for such other currency or currency unit existing on or about the time a payment is due. Unless otherwise specified, principal and interest, and additional amounts, if any, will be payable at the office of First Trust of New York, National Association in New York City, provided that payment of interest on any J.P. Morgan Debt Securities in registered form may be made at the option of J.P. Morgan by check mailed to the registered holders. Some of the J.P. Morgan Debt Securities may be issued as original issue discount J.P. Morgan Debt Securities (bearing no interest or interest at a rate which at the time of issuance is below market rates), to be sold at a substantial discount below their stated principal amount. Federal income tax, accounting and other special considerations applicable to any such original issue discount J.P. Morgan Debt Securities will be described in the Prospectus Supplement relating thereto. J.P. Morgan Debt Securities may be presented for exchange, and registered J.P. Morgan Debt Securities may be presented for transfer, in the manner, at the places and subject to the restrictions set forth in the applicable Indenture, the J.P. Morgan Debt Securities and the Prospectus Supplement. J.P. Morgan Debt Securities in bearer form and the coupons, if any, appertaining thereto will be transferable by delivery. No service charge will be made for any exchange of the J.P. Morgan Debt Securities or transfer of J.P. Morgan Debt Securities in registered form, but J.P. Morgan may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. (Sections 2.8 of the Indentures) The Indentures and Debt Securities will not contain any provision that would require J.P. Morgan to repurchase or redeem or otherwise modify the terms of the Debt Securities upon a change in control or other events involving J.P. Morgan that may adversely affect the credit quality of J.P. Morgan. Subordinated Debt Securities Subordination The Subordinated Debt Securities will be unsecured and will be subordinate in right of payment to all Senior Indebtedness (as defined below) of J.P. Morgan and, in certain circumstances relating to the bankruptcy or insolvency of J.P. Morgan, the Derivative Obligations (as defined below), whether outstanding as of this date or hereafter incurred. In addition, since J.P. Morgan is a holding company, the right of J.P. Morgan to participate as a shareholder in any distribution of assets of any subsidiary upon its liquidation or reorganization or otherwise (and thus the ability of holders of the Subordinated Debt Securities to benefit as creditors of J.P. Morgan from such distribution) is subject to the prior claims of creditors of any such subsidiary. J.P. Morgan and its subsidiaries are subject to claims by creditors for long-term and short-term debt obligations, including substantial obligations for federal funds purchased and securities sold under repurchase agreements, as well as deposit liabilities. There are also various legal limitations on the extent to which subsidiaries of J.P. Morgan may pay dividends or otherwise supply funds to J.P. Morgan. The Subordinated Debt Securities will be subordinate in right of payment as provided in the Indenture to all Senior Indebtedness of J.P. Morgan. In certain events of bankruptcy or 130 insolvency of J.P. Morgan, the Subordinated Debt Securities will also be subordinate in right of payment to the extent set forth in the Subordinated Indenture to the prior payment in full of Derivative Obligations (as defined below). No payment pursuant to the Subordinated Debt Securities may be made and no holder of the Subordinated Debt Securities or any coupon appertaining thereto shall be entitled to demand or receive any such payment (i) unless all amounts of principal, premium, if any, and interest then due on all Senior Indebtedness of J.P. Morgan shall have been paid in full or duly provided for or (ii) if, at the time of such payment or immediately after giving effect thereto, there shall exist with respect to any given Senior Indebtedness of J.P. Morgan any event of default permitting the holders thereof to accelerate the maturity thereof or any event which, with notice or lapse of time, or both, will become such an event of default. (Section 10.2. of the Subordinated Indenture) Upon any distribution of the assets of J.P. Morgan upon dissolution, winding up, liquidation or reorganization, (i) the holders of Senior Indebtedness of J.P. Morgan will be entitled to receive payment in full of principal, premium, if any, and interest before any payment may be made on the Subordinated Debt Securities and (ii) if, after giving effect to the operation of clause (i) above, amounts remain available for payment or distribution in respect of the Subordinated Debt Securities (any such remaining amount being defined as the "Excess Proceeds") and creditors in respect of Derivative Obligations have not received payment in full of amounts due or to become due thereon, then such Excess Proceeds shall first be applied to pay or provide for the payment in full of all such Derivative Obligations before any payment may be made on the Subordinated Debt Securities. (Sections 10.3 and 10.12 of the Subordinated Indenture.) By reason of such subordination, in the event of a bankruptcy or insolvency of J.P. Morgan, holders of Senior Indebtedness and Derivative Obligations of J.P. Morgan may receive more, ratably, and holders of the Subordinated Debt Securities or coupons appertaining thereto may receive less, ratably, than the other creditors of J.P. Morgan. No series of subordinated debt is subordinated to any other series of subordinated debt. However, by reason of the obligation of the holders of the Subordinated Debt Securities to pay over any Excess Proceeds to creditors in respect of Derivative Obligations, in the event of a bankruptcy or insolvency of J.P. Morgan, the holders of the Subordinated Debt Securities may receive less, ratably, than holders of Antecedent Subordinated Indebtedness (as defined below). Such subordination will not prevent the occurrence of any Event of Default in respect of the Subordinated Debt Securities. The Subordinated Indenture does not limit the amount of Senior Indebtedness J.P. Morgan may incur. Senior Indebtedness of J.P. Morgan is defined as the principal of, premium, if any, and interest on (a) all indebtedness of J.P. Morgan for money borrowed, whether outstanding on the date of execution of the Indenture or thereafter created, assumed or incurred, except (i) the DM400,000,000 aggregate principal amount of Floating Rate Subordinated Notes of 1985/1995 of J.P. Morgan; (ii) the U.S. $400,000,000 aggregate principal amount of Zero Coupon Subordinated Notes Due 1998 of J.P. Morgan; (iii) the U.S. $250,000,000 aggregate principal amount of 7% Subordinated Notes Due 1998 of J.P. Morgan; (iv) the U.S. $150,000,000 aggregate principal amount of 8 1/2% Subordinated Notes Due 2003 of J.P. Morgan; (v) the U.S. $500,000,000 aggregate principal amount of 7 5/8% Subordinated Notes Due 2004 of J.P. Morgan; (vi) the CAN. $250,000,000 aggregate principal amount of 6 7/8% Subordinated Notes Due 2004 of J.P. Morgan; (vii) the U.S. $200,000,000 aggregate principal amount of 7 1/4% Subordinated Notes Due 2002 of J.P. Morgan; (viii) the U.S. $200,000,000 aggregate principal amount of Floating Rate Subordinated Notes Due 2002 of J.P. Morgan; (ix) the U.S. $250,000,000 aggregate principal amount of Floating Rate Subordinated Notes Due 2002; (x) the U.S. 131 $200,000,000 aggregate principal amount of Floating Rate Subordinated Constant Maturity Treasury Notes Due 2000 of J.P. Morgan; (xi) the U.S. $300,000,000 aggregate principal amount of Floating Rate Subordinated Notes Due 2005; (xii) the U.S. $150,000,000 aggregate principal amount of 5% Subordinated Notes Due 2008 of J.P. Morgan; (xiii) the U.S. $300,000,000 aggregate principal amount of 6 1/4% Subordinated Notes Due 2009 of J.P. Morgan; (xiv) the ITL. 150,000,000,000 aggregate principal amount of 8% Subordinated Notes Due 2003 of J.P. Morgan; (xv) the U.S.$100,000,000 aggregate principal amount of 8% Subordinated Notes due 2005 of J.P. Morgan; (xvi) the U.S.$100,000,000 aggregate principal amount of 7 1/4% Subordinated Notes due 2010 of J.P. Morgan; and (xvii) such indebtedness as is by its terms expressly stated to be not superior in right of payment to the Subordinated Debt Securities or to rank pari passu with the Subordinated Debt Securities and (b) any deferrals, renewals or extensions of any such Senior Indebtedness. The term "Indebtedness of J.P. Morgan for money borrowed" as used in the foregoing sentence shall mean any obligation of, or any obligation guaranteed by, J.P. Morgan for the repayment of borrowed money, whether or not evidenced by bonds, debentures, notes or other written instruments, and any deferred obligation for the payment of the purchase price of property or assets. The Subordinated Debt Securities shall rank pari passu with the Subordinated Notes referred to in (a)(i) through (a)(xv), although, as noted above, the Subordinated Debt Securities, as opposed to the Antecedent Subordinated Indebtedness, will be subordinated in the event of a bankruptcy or insolvency of J.P. Morgan to Derivative Obligations. The term "pari passu" as used herein shall mean ranking equally in right of payment in the event of J.P. Morgan's bankruptcy. (Section 1.1. of the Subordinated Indenture) Derivative Obligations of J.P. Morgan are defined in the Subordinated Indenture as obligations of J.P. Morgan to make payments on claims in respect of derivative products such as interest and foreign exchange rate contracts, commodity contracts and similar arrangements; provided, however, that Derivative Obligations do not include claims in respect of Senior Indebtedness or obligations which, by their terms, are expressly stated not to be superior in right of payment to the Subordinated Debt Securities or to rank pari passu with the Subordinated Debt Securities. For purposes of this definition, "claim" has the meaning assigned thereto in Section 101(4) of the United States Bankruptcy Code of 1978, as amended and in effect on the date of the Subordinated Indenture. (Section 1.1. of the Subordinated Indenture) Antecedent Subordinated Indebtedness of J.P. Morgan is defined in the Subordinated Indenture as all indebtedness and other obligations outstanding on the date of the Subordinated Indenture and enumerated in clauses (a)(i) through (a)(ix) of the definition of "Senior Indebtedness" (Section 1.1. of the Subordinated Indenture) The Prospectus Supplement will set forth the aggregate amount of outstanding indebtedness as of the most recent practicable date that by the terms of such debt securities would be senior to the subordinated debt and any limitation on the issuance of such additional senior indebtedness. Limited Right of Acceleration. Unless otherwise specified in the Prospectus Supplement relating to any series of Subordinated Debt Securities, payment of principal of the Subordinated Debt Securities may be accelerated only in the case of the bankruptcy or reorganization of J.P. Morgan. There is no right of acceleration in the case of a default in the payment of principal of, premium, if any, or interest on the Subordinated Debt Securities or the performance of any other covenant of J.P. Morgan contained in the Indenture. In the event of a default in the payment of principal of, premium, if any, or interest, or the 132 performance of any other covenant in the Subordinated Debt Securities or the Indenture, the Trustee may, subject to certain limitations and conditions, seek to enforce payment of such principal, premium, or interest or the performance of such covenant. (Sections 5.2 and 5.4 of the Subordinated Indenture.) Senior Debt Securities The Debt Securities will be unsecured and will rank on a parity with all other unsecured and unsubordinated indebtedness of J.P. Morgan. Since J.P. Morgan is a holding company, however, the right of J.P. Morgan to participate as a shareholder in any distribution of assets of any subsidiary upon its liquidation or reorganization or otherwise (and thus the ability of holders of the Debt Securities to benefit as creditors of J.P. Morgan from such distribution) is subject to the prior claims of creditors of any such subsidiary. J.P. Morgan and its subsidiaries are subject to claims by creditors for long-term and short-term debt obligations, including substantial obligations for federal funds purchased and securities sold under repurchase agreements, as well as deposit liabilities. There are also various legal limitations on the extent to which subsidiaries of J.P. Morgan may pay dividends or otherwise supply funds to J.P. Morgan. Events of Default, Waiver, Notice, J.P. Morgan Debt Securities in Foreign Currencies As to any series of J.P. Morgan Debt Securities, an Event of Default is defined in the Indentures as (a) default for 30 days in payment of any interest on the J.P. Morgan Debt Securities of such series; (b) default in payment of principal of or premium, if any, on the J.P. Morgan Debt Securities of such series when due either at maturity, upon redemption, by declaration or otherwise; (c) default in the payment of a sinking fund installment, if any, on the J.P. Morgan Debt Securities of such series; (d) default by J.P. Morgan in the performance of any other covenant or warranty contained in the respective Indenture for the benefit of such series which shall not have been remedied for a period of 90 days after notice given as specified in the Indenture; and (e) certain events of bankruptcy or reorganization of J.P. Morgan. (Sections 5.1. of the Indentures) An Event of Default with respect to a particular series of J.P. Morgan Debt Securities issued under the respective Indenture does not necessarily constitute an Event of Default with respect to any other series of J.P. Morgan Debt Securities issued thereunder. Each Indenture provides that the Trustee may withhold notice to the holders of the respective J.P. Morgan Debt Securities of any series of any default (except in payment of principal of or interest or premium, if any, on such J.P. Morgan Debt Securities or in the making of any sinking fund payment with respect to such J.P. Morgan Debt Securities) if the Trustee considers it in the interest of the holders of J.P. Morgan Debt Securities of such series to do so. (Sections 5.11. of the Indentures) The Subordinated Indenture provides that if an Event of Default described in clause (e) above shall have occurred and be continuing, either the Subordinated Trustee or the holders of at least 25% in principal amount of all Subordinated Debt Securities then outstanding (voting as one class) may declare the principal (or, in the case of original issue discount Subordinated Debt Securities, the portion thereof specified in the terms thereof) of all Subordinated Debt Securities then outstanding and the interest accrued thereon, if any, to be due and payable immediately, but upon certain conditions such declarations may be annulled and past defaults (except for defaults in the payment of principal of or premium, or interest, if any, on such Subordinated Debt Securities) may be waived by the holders of a majority in principal amount of the Subordinated Debt Securities of all series then outstanding. (Sections 5.1 and 5.10. of the 133 Subordinated Indenture) The Debt Indenture provides that (1) if an Event of Default described in clause (a), (b), (c) or (d) above (if the Event of Default under clause (d) is with respect to less than all series of Debt Securities then outstanding) shall have occurred and be continuing with respect to one or more series, either the Trustee or the holders of at least 25% in principal amount of the Debt Securities of such series then outstanding (each such series voting as a separate class in the case of an Event of Default under clause (a), (b) or (c) and all such series voting as one class in the case of an Event of Default under clause (d)) may declare the principal (or, in the case of original issue discount Debt Securities, the portion thereof specified in the terms thereof) of all outstanding Debt Securities of such series and the interest accrued thereon, if any, to be due and payable immediately and (2) if an Event of Default described in clause (d) or (e) above (if the Event of Default under clause (d) is with respect to all series of Debt Securities then outstanding) shall have occurred and be continuing, either the Debt Trustee or the holders of at least 25% in principal amount of all Debt Securities then outstanding (voting as one class) may declare the principal (or, in the case of original issue discount Debt Securities, the portion thereof specified in the terms thereof) of all Debt Securities then outstanding and the interest accrued thereon, if any, to be due and payable immediately, but upon certain conditions such declarations may be annulled and past defaults (except for defaults in the payment of principal of, or premium or interest, if any, on such Debt Securities) may be waived by the holders of a majority in principal amount of the Debt Securities of such series (or of all series as the case may be) then outstanding. (Sections 5.1 and 5.10. of the Debt Indenture) The holders of a majority in principal amount of the outstanding J.P. Morgan Debt Securities of each series affected (with each series voting as a separate class) shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee under the applicable Indenture, subject to certain limitations specified in the applicable Indenture, provided that the holders of J.P. Morgan Debt Securities shall have offered to the Trustee reasonable indemnity against expenses and liabilities. (Sections 5.9 and 6.2(d) of the Indentures.) The Indentures require the annual delivery by J.P. Morgan to the Trustee of a written statement as to the absence of certain defaults under the applicable Indenture. (Sections 3.5 of the Indentures.) Whenever either Indenture provides for an action by, or the determination of any of the rights of, or any distribution to, holders of J.P. Morgan Debt Securities, in the absence of any provision to the contrary in the form of J.P. Morgan Debt Security, any amount in respect of any J.P. Morgan Debt Security denominated in a currency other than U.S. dollars or in any currency unit shall be treated as that amount of U.S. dollars that could be obtained for such amount on such reasonable basis of exchange and as of such date as J.P. Morgan specifies to the Trustee or in the absence of such notice, as the Trustee may determine. (Section 12.11 of the Subordinated Indenture and Section 11.11 of the Debt Indenture.) Modification of the Indentures; Waiver of Compliance Each Indenture contains provisions permitting J.P. Morgan and the Trustee, with the consent of the holders of not less than a majority in principal amount of the respective J.P. Morgan Debt Securities of all series affected by such modification or waiver at the time outstanding (voting as one class), to modify the Indenture or any supplemental indenture or the rights of the holders of the respective J.P. Morgan Debt Securities, or waive compliance by J.P. Morgan with any of its obligations thereunder, provided that no such modification or waiver shall 134 (i) extend the final maturity of any respective J.P. Morgan Debt Security, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or change the currency or currency unit of payment thereof, or change the method in which amounts of payments of principal or interest thereon are determined, or reduce the portion of the principal amount of an original issue discount J.P. Morgan Debt Security due and payable upon acceleration of the maturity thereof or the portion of the principal amount thereof provable in bankruptcy, or reduce any amount payable upon redemption of any J.P. Morgan Debt Security, or impair or affect the right of a holder to institute suit for the payment thereof or, if the J.P. Morgan Debt Securities provide therefor, any right of repayment at the option of the holder of a J.P. Morgan Debt Security, without the consent of the holder of each respective J.P. Morgan Debt Security so affected or (ii) reduce the aforesaid percentage of J.P. Morgan Debt Securities of any series, the consent of the holders of which is required for any such modification, without the consent of the holder of each J.P. Morgan Debt Security so affected. (Sections 8.2 and 8.6. of the Indentures) The Indentures also permit J.P. Morgan and the Trustee to amend such Indenture in certain circumstances without the consent of the holders of J.P. Morgan Debt Securities to evidence the merger of J.P. Morgan, the replacement of the Trustee, to effect modifications which do not affect any series of J.P. Morgan Debt Security already outstanding, and for certain other purposes. (Sections 8.1. of the Indentures) Consolidations, Mergers and Sales of Assets J.P. Morgan may not merge or consolidate with any other corporation or sell or convey all or substantially all of its assets to any Person, unless either J.P. Morgan shall be the continuing corporation or the successor corporation shall be a corporation organized under the laws of the United States or any state thereof and shall expressly assume the payment of the principal of and interest on the J.P. Morgan Debt Securities and the performance and observance of all the covenants and conditions of the Indenture binding upon J.P. Morgan, and J.P. Morgan or such successor corporation shall not, immediately after such merger or consolidation, or such sale or conveyance, be in default in the performance of any such covenant or condition. (Articles Nine of the Indentures.) Concerning the Trustee, Paying Agent, Registrar and Transfer Agent J.P. Morgan and its subsidiaries have normal banking relationships with the Trustee, First Trust of New York, National Association. First Trust of New York, National Association, 100 Wall Street, Suite 1600, New York, New York 10005, will also be the paying agent, registrar and transfer agent for any series of J.P. Morgan Debt Securities. Global J.P. Morgan Debt Securities Any series of J.P. Morgan Debt Securities may be issued in the form of one or more global certificates (the "Global Debt Security") registered in the name of a depository or a nominee of a depository (the "Depository"). Unless otherwise specified in an applicable Prospectus Supplement, the Depository will be the Depository Trust Company ("DTC"). The Corporation has been informed by DTC that its nominee will be CEDE & CO. ("CEDE"). Accordingly, CEDE is expected to be the initial registered holder of any series of J.P. Morgan Debt Securities. No person acquiring an interest in such series of J.P. Morgan Debt Securities (a "Holder") will be entitled to receive a certificate representing such person's interest in the J.P. Morgan Debt Securities except as set forth herein. Unless and until definitive J.P. Morgan Debt Securities are issued under the 135 limited circumstances described herein, all references to actions by Holders shall refer to actions taken by DTC upon instructions from its Participants (as defined below), and all references herein to payments and notices to Holders shall refer to payments and notices to DTC or CEDE, as the registered holder of the J.P. Morgan Debt Securities, as the case may be, for distribution to Holders in accordance with the DTC procedures. DTC is a limited purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to Section 17A of the 1934 Act. DTC was created to hold securities for its participating organizations ("Participants") and to facilitate the clearance and settlement of securities transactions between Participants through electronic book-entry, thereby eliminating the need for physical movement of certificates. Participants include securities brokers and dealers, banks, trust companies and clearing corporations, and may include certain other organizations. Indirect access to the DTC system also is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly ("Indirect Participants"). Holders that are not Participants or Indirect Participants but desire to purchase, sell or otherwise transfer ownership of, or other interests in, J.P. Morgan Debt Securities may do so only through Participants and Indirect Participants. Under a book-entry format, Holders may experience some delay in their receipt of payments, since such payments will be forwarded by the agent designated by J.P. Morgan to CEDE, as nominee for DTC. DTC will forward such payments to its Participants, which thereafter will forward them to Indirect Participants or Holders. It is anticipated that CEDE, as nominee of DTC, will be the registered holder of all of the J.P. Morgan Debt Securities. Holders will not be recognized by either of the Trustees as registered holders of the J.P. Morgan Debt Securities entitled to the benefits of the relevant Indenture. Holders that are not Participants will be permitted to exercise their rights as such only indirectly through Participants. Under the rules, regulations and procedures creating and affecting DTC and its operations (the "Rules"), DTC will be required to make book-entry transfers of J.P. Morgan Debt Securities among Participants and to receive and transmit payments to Participants. Participants and Indirect Participants with which Holders have accounts with respect to the J.P. Morgan Debt Securities similarly are required to make book-entry transfers and receive and transmit such payments on behalf of their respective Holders. Because DTC can only act on behalf of Participants, who in turn act on behalf of Indirect Participants, and on behalf of certain banks, trust companies and other persons approved by it, the ability of a Holder to pledge J.P. Morgan Debt Securities to persons or entities that do not participate in the DTC system, or to otherwise act with respect to such J.P. Morgan Debt Securities, may be limited due to the absence of physical certificates for such J.P. Morgan Debt Securities. DTC has advised J.P. Morgan that it will take any action permitted to be taken by a Holder under the relevant Indenture only at the direction of one or more Participants to whose accounts with DTC the J.P. Morgan Debt Securities are credited. The Global Debt Security shall be exchangeable for J.P. Morgan Debt Securities registered in the names of persons other than DTC or its nominee only if (i) DTC notifies J.P. Morgan that it is unwilling or unable to continue as depository for such 136 Global Debt Security or if at any time DTC ceases to be a clearing agency registered under the 1934 Act at a time when DTC is required to be so registered to act as such depository or (ii) J.P. Morgan executes and delivers to the Trustee a Company Order that such Global Debt Security shall be so exchangeable. Any Global Debt Security that is exchangeable pursuant to the preceding sentence shall be exchangeable for J.P. Morgan Debt Securities registered in such names as DTC shall direct. Upon the occurrence of any event described in the immediately preceding paragraph, DTC is generally required to notify all Participants of the availability through DTC of definitive J.P. Morgan Debt Securities. Upon surrender by DTC of the Global Debt Security representing the J.P. Morgan Debt Securities and instructions for registration, the Trustee will reissue the J.P. Morgan Debt Securities as definitive J.P. Morgan Debt Securities, and thereafter the Trustee will recognize the holders of such definitive J.P. Morgan Debt Securities as registered holders of J.P. Morgan Debt Securities entitled to the benefits of the applicable Indenture. The Global Debt Security may not be transferred except as a whole by DTC with respect to such Global Debt Security to a nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC or to a successor Depository appointed by the Corporation. DTC may not sell, assign, transfer or otherwise convey any beneficial interest in a Global Debt Security evidencing all or part of the J.P. Morgan Debt Securities unless such beneficial interest is an amount equal to an authorized denomination for the J.P. Morgan Debt Securities. 137 PLAN OF DISTRIBUTION J.P. Morgan may sell the Offered Securities being offered hereby (i) through agents, (ii) through underwriters, (iii) through dealers and (iv) directly to purchasers. Any such persons may be customers of, engage in transactions with, or perform services for, J.P. Morgan in the ordinary course of business. Securities may be offered and sold through agents designated by J.P. Morgan from time to time. Any such agent involved in the offer or sale of the Securities in respect of which this Prospectus is delivered will be named, and any commissions payable by J.P. Morgan to such agent will be set forth, in the Prospectus Supplement. Unless otherwise indicated in the Prospectus Supplement, any such agent will be acting on a best efforts basis for the period of its appointment (ordinarily five business days or less). Any such agent may be deemed to be an underwriter, as that term is defined in the Securities Act of 1933, as amended, of the Securities so offered and sold. Agents may be entitled under agreements which may be entered into with J.P. Morgan to indemnification by J.P. Morgan against certain liabilities, including liabilities under the Securities Act of 1933, as amended. If an underwriter or underwriters are utilized in the sale of the Offered Securities, J.P. Morgan will execute an underwriting agreement with such underwriter or underwriters at the time an agreement for such sale is reached, and the names of the specific managing underwriter or underwriters, as well as any other underwriters, and the terms of the transaction, including compensation of the underwriters and dealers, if any, will be set forth in the Prospectus Supplement which will be used by the underwriters to make resales of the Offered Securities in respect of which this Prospectus is delivered to the public. Underwriters will acquire Offered Securities for their own account and may resell such Offered Securities from time to time in one or more transactions, including negotiated transactions, at fixed public offering prices or at varying prices determined at the time of sale. Offered Securities may be offered to the public either through underwriting syndicates represented by managing underwriters, or directly by the managing underwriters. The underwriters may be entitled, under the relevant underwriting agreement, to indemnification by J.P. Morgan against certain liabilities, including liabilities under the Securities Act of 1933, as amended. Only underwriters named in the Prospectus Supplement are deemed to be underwriters in connection with the Offered Securities offered thereby. If any underwriter or underwriters are utilized in the sale of the Offered Securities, the underwriting agreement provides that the obligations of the underwriters are subject to certain conditions precedent and that the underwriters with respect to a sale of Offered Securities will be obligated to purchase all such Offered Securities if any are purchased. If a dealer is utilized in the sale of the Offered Securities in respect of which this Prospectus is delivered, J.P. Morgan will sell such Offered Securities to the dealer, as principal. The dealer may then resell such Offered Securities to the public at varying prices to be determined by such dealer at the time of resale. Any such dealer may be deemed to be an underwriter, as such term is defined in the Securities Act of 1933, as amended, of the Offered Securities so offered and sold. Dealers may be entitled, under agreements which may be entered into with J.P. Morgan, to indemnification by J.P. Morgan against certain liabilities, including liabilities under the Securities Act of 1933, as amended. The name of the dealer and the terms of the transaction will be set 138 forth in the Prospectus Supplement relating thereto. Offers to purchase Offered Securities may be solicited directly by J.P. Morgan and sales thereof may be made by J.P. Morgan directly to institutional investors or others, who may be deemed to be underwriters within the meaning of the Securities Act of 1933, as amended, with respect to any sale thereof. The terms of any such sales will be described in the Prospectus Supplement relating thereto. If so indicated in the Prospectus Supplement, J.P. Morgan will authorize agents and underwriters to solicit offers by certain institutions to purchase Offered Securities from J.P. Morgan at the public offering price set forth in the Prospectus Supplement pursuant to Delayed Delivery Contracts ("Contracts") providing for payment and delivery on the date stated in the Prospectus Supplement. Each Contract will be for an amount not less than, and, unless J.P. Morgan otherwise agrees, the aggregate principal amount of Securities sold pursuant to Contracts shall be not less nor more than, the respective amounts stated in the Prospectus Supplement. Institutions with whom Contracts, when authorized, may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and other institutions but shall in all cases be subject to the approval of J.P. Morgan. Contracts will not be subject to any conditions except that any related sale of Offered Securities to underwriters shall have occurred and the purchase by an institution of the Offered Securities covered by its Contract shall not at the time of delivery be prohibited under the laws of any jurisdiction in the United States to which such institution is subject. A commission indicated in the Prospectus Supplement will be paid to underwriters and agents soliciting purchases of Offered Securities pursuant to Contracts accepted by J.P. Morgan. The place and time of delivery of the Offered Securities in respect of which this Prospectus is delivered are set forth in the accompanying Prospectus Supplement. This Prospectus and related Prospectus Supplement may be used by direct or indirect wholly-owned subsidiaries of J.P. Morgan in connection with offers and sales related to secondary market transactions in the Offered Securities. Such subsidiaries may act as principal or agent in such transactions. Such sales will be made at prices related to prevailing market prices at the time of a sale. The offer and sale of the Offered Securities by an affiliate of J.P. Morgan will comply with the requirements of Rule 2720 of the Conduct Rules of the National Association of Securities Dealers, Inc. (the "NASD") regarding underwriting of securities of an affiliate. Accordingly, an affiliate of J.P. Morgan that is a member of the NASD may participate in a public offering and sale of J.P. Morgan Debt Securities if the offering is of a class of securities rated investment grade by a nationally recognized statistical rating organization or the yield at which such debt issue is distributed to the public is no lower than that recommended by a "qualified independent underwriter" (determined to be so qualified by the NASD prior to commencement of such offering), in compliance with the provisions of Rule 2720 of the Conduct Rules. Each NASD member participating in offers and sales of the 139 Offered Securities will not execute a transaction in the Offered Securities in a discretionary account without the prior written specific approval of the member's customer. Certain of the underwriters or agents and their associates may be customers of, engage in transactions with, and perform services for, J.P. Morgan in the ordinary course of business. EXPERTS The audited financial statements contained in J.P. Morgan's Annual Report on Form 10-K for the year ended December 31, 1995, (included in J.P. Morgan's Annual Report to Stockholders) are incorporated by reference in this Prospectus in reliance on the report of Price Waterhouse LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. LEGAL OPINIONS The validity of the Securities offered hereby will be passed upon by Gene A. Capello, Vice President and Assistant General Counsel of J.P. Morgan, and by Cravath, Swaine & Moore, New York, New York, counsel for any underwriters, selling agents and certain other purchasers. 140 PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution. The expenses in connection with the issuance and distribution of securities being registered, other than underwriting compensation and related hedging costs, are as follows: Securities and Exchange Commission Registration Fee $303,031 Legal Fees and Expenses............................................. 250,000 NYSE Listing Fees .................................................. 60,000 Accounting Fees and Expenses ....................................... 85,000 Trustee's Fees and Expenses (including counsel fees) Blue Sky Fees and Expenses ......................................... 45,000 Rating Agency Fees ................................................. 2,500 Printing and Engraving Fees ........................................ 125,000 Miscellaneous ...................................................... 150,000 6,500 ---------- Total ...................................... $1,027,031 ==========
- ---------------------------- * Estimated Item 15. Indemnification of Officers and Directors. Article Seventh of the Restated Certificate of Incorporation of J.P. Morgan & Co. Incorporated (the "Registrant") provides, in effect, that, to the extent and under the circumstances permitted by Section 145 of the General Corporation Law of Delaware, the Registrant shall indemnify directors, officers, employees and agents of the Registrant, or persons serving at the written request of the Registrant as directors, officers, employees or agents of another corporation or enterprise, including Morgan Guaranty, against loss and expenses. Subsection (a) of Section 145 of the General Corporation Law of Delaware empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or 141 2 in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit, or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Subsection (b) of Section 145 empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person acted in any of the capacities set forth above, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification may be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Delaware Court of Chancery or the court in which such action or suit was brought shall determine that despite the adjudication of liability such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper. Section 145 further provides that to the extent a director, officer, employee or agent of a corporation has been successful in the defense of any action, suit or proceeding referred to in subsections (a) and (b) or in the defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) 142 3 actually and reasonably incurred by him in connection therewith. It also provides that indemnification provided for by Section 145 shall not be deemed exclusive of any other rights to which the indemnified party may be entitled under any by-law, agreement, vote of shareholders or disinterested directors or otherwise, and it empowers the corporation to purchase and maintain insurance in such amounts as the Board of Directors deems appropriate on behalf of a director, officer, employee or agent of the corporation against any liability asserted against him or incurred by him in any such capacity or arising out of his status as such whether or not the corporation would have the power to indemnify him against such liabilities under Section 145. The indemnification permitted by Article Seventh of the Restated Certificate of Incorporation of the Registrant has been extended to all officers and directors of the Registrant's wholly owned direct and indirect subsidiaries, and to such officers and directors in their respective capacities as directors and officers of other corporations 25% or more of the voting securities of which is owned, directly or indirectly, by the Registrant. The Registrant has purchase liability insurance of the type referred to in Section 145. Subject to a $250,000 deductible for each loss, the policy covers the Registrant with respect to its obligation to indemnify directors and officers of the Registrant and its wholly owned direct and indirect subsidiaries. In addition, the policy covers directors and officers of the Registrant and its wholly owned direct and indirect subsidiaries with respect to certain liabilities which are not reimbursable by the Registrant. Subject to certain exclusions from the coverage, the insurance provides for payment of loss in excess of the applicable deductible to an aggregate limit of $90,000,000 for each policy year. Insurance coverage does not extend to certain claims, including claims based upon or attributable to the insured's gaining personal profit or advantage in which he is not legally entitled, claims brought about or contributed to by the dishonesty of the insured, and claims under Section 16(b) of the Securities Exchange Act of 1934 for an accounting of profits resulting from the purchase or sale by the insured of the Registrant's securities. Item 16. Exhibits. 1(a)(l)* Form of Underwriting Agreement (including form of Delayed Delivery Contract) for Subordinated Debt. 143 4 l(a)(2)** Form of Underwriting Agreement (including form of Delayed Delivery Contract) for Debt. 1(a)(3)+ Form of Underwriting Agreement for Series Preferred Stock, Depositary Shares and Preferred Stock Warrants. 3(a)+++ Restated Certificate of Incorporation of J.P. Morgan & Co. Incorporated, as amended. 3(b)+ By-Laws of J.P. Morgan & Co. Incorporated as amended through December 11, 1991. 4(a)(1) Form of Junior Subordinated Debt Indenture to be entered into between J.P. Morgan & Co. Incorporated and First Trust of New York, National Association, as Trustee. 4(a)(2)* Indenture dated as of March 1, 1993, between J.P. Morgan & Co. Incorporated and Citibank, N.A., as Trustee (now First Trust of New York, National Association, as Successor Trustee). 4(a)(3) Indenture dated as of August 15, 1982, between J.P. Morgan & Co. Incorporated and Chemical Bank (formerly Manufacturers Hanover Trust Company), as Trustee (now First Trust of New York, National Association, as Successor Trustee), (incorporated herein by reference to J.P. Morgan's Current Report on Form 8-K, dated February 7, 1986, filed pursuant to Section 13 of the Securities and Exchange Act of 1934 (the "Act")). 4(a)(4) Form of First Supplemental Indenture dated as of May 5, 1986 between J.P. Morgan & Co. Incorporated and Chemical Bank (formerly Manufacturers Hanover Trust Company), as Trustee, (now First Trust of New York, National Association, as Successor Trustee) (incorporated herein by reference to J.P. Morgan's Current Report on Form 8-K, dated August 13, 1986, filed pursuant to Section 13 of the Act). 4(a)(5) Form of Second Supplemental Indenture dated as of February 27, 1996 between J.P. Morgan & Co. Incorporated and First Trust of New York, National Association, as Trustee (incorporated herein by reference to J.P. Morgan's Current Report on Form 8-K, dated February 23, 1996, filed pursuant to Section 13 of the Act). 4(b)(1)* Form of Security (Subordinated Note). 4(b)(2)** Form of Security (Note). 4(c)(1)* Form of Security (Subordinated Debenture). 4(c)(2)** Form of Security (Debenture). 4(d)(1)* Form of Security (Discount Subordinated Security). 4(d)(2)** Form of Security (Discount Security). 144 5 4(e)(1)* Form of Security (Zero Coupon Subordinated Security). 4(e)(2)** Form of Security (Zero Coupon Security). 4(f)(1)* Form of Security (Extendible Subordinated Note). 4(f)(2)** Form of Security (Extendible Note). 4(g)(1) Declaration of Trust of JPM Capital Trust I. 4(g)(2) Certificate of Trust of JPM Capital Trust I. 4(g)(3) Declaration of Trust of JPM Capital Trust II. 4(g)(4) Certificate of Trust of JPM Capital Trust II. 4(g)(5) Declaration of Trust of JPM Capital Trust III. 4(g)(6) Certificate of Trust of JPM Capital Trust III. 4(g)(7) Declaration of Trust of JPM Capital Trust IV. 4(g)(8) Certificate of Trust of JPM Capital Trust IV. 4(h) Form of Amended and Restated Declaration of Trust for each of JPM Capital Trust I, II, III and IV. 4(i) Form of Preferred Security (included in Exhibit 4(h)). 4(j) Form of Supplemental Indenture to be used in connection with issuance of Junior Subordinated Debt Securities and Preferred Securities. 4(k) Form of Junior Subordinated Debt Security (included in Exhibit 4(j)). 4(l)(1) Form of Guarantee with respect to Preferred Securities of JPM Capital Trust I. 4(l)(2) Form of Guarantee with respect to Preferred Securities of JPM Capital Trust II. 4(l)(3) Form of Guarantee with respect to Preferred Securities of JPM Capital Trust III. 4(l)(4) Form of Guarantee with respect to Preferred Securities of JPM Capital Trust IV. 5.1 Opinion of Gene A. Capello. 5.2 Opinion of Morris, Nichols, Arsht & Tunnell, Delaware counsel. 5.3 Opinion of Cravath, Swaine & Moore. 12.3 Computation of Consolidated Ratio of Earnings to Fixed Charges and Consolidated Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends. (Incorporated by reference to J. P. Morgan's Annual Report on Form 10-K for the year ended December 31, 1995 and J. P. Morgan's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996.) 23(a) Consent of Price Waterhouse LLP. (b) Consent of Gene A. Capello (included in Exhibit 5.1). (c) Consent of Morris, Nichols, Arsht & Tunnell (included in Exhibit 5.2). 23(d) Consent of Cravath, Swaine & Moore (included in Exhibit 5.3). 24## Powers of Attorney. 25.1 Statement of Eligibility of Debt Trustee on Form T-1. 25.2# Statement of Eligibility of Subordinated Trustee on Form T-1. 25.3# Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of First Trust of New York, National Association, as Trustee, under the Junior Subordinated Indenture. 25.4# Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of First Trust of New York, National Association, as Trustee, with respect to the Amended and Restated Declaration of Trust of JPM Capital Trust I. 145 6 25.5# Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of First Trust of New York, National Association, as Trustee, with respect to the Amended and Restated Declaration of Trust of JPM Capital Trust II. 25.6# Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of First Trust of New York, National Association, as Trustee, with respect to the Amended and Restated Declaration of Trust of JPM Capital Trust III. 25.7# Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of First Trust of New York, National Association, as Trustee, with respect to the Amended and Restated Declaration of Trust of JPM Capital Trust IV. 25.8# Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of First Trust of New York, National Association, as Trustee, under the Preferred Securities Guarantee of the Company with respect to the Preferred Securities of JPM Capital Trust I. 25.9# Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of First Trust of New York, National Association, as Trustee, under the Preferred Securities Guarantee of the Company with respect to the Preferred Securities of JPM Capital Trust II. 25.10# Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of First Trust of New York, National Association, as Trustee, under the Preferred Securities Guarantee of the Company with respect to the Preferred Securities of JPM Capital Trust III. 25.11# Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of First Trust of New York, National Association, as Trustee, under the Preferred Securities Guarantee of the Company with respect to the Preferred Securities of JPM Capital Trust IV. * Previously filed as an exhibit to Registration Statement No. 33-45651 and incorporated by reference herein. ** Previously filed as an exhibit to Registration Statement No. 33-49049 and incorporated by reference herein. + Previously filed as an exhibit to Registration Statement No. 33-49775 and incorporated by reference herein. ++ Previously filed as an exhibit to Registration Statement No. 33-64193 and incorporated by reference herein. +++ Previously filed as an exhibit to Registration Statement No. 33-55851 and incorporated by reference herein. 146 7 # Incorporated by reference to Exhibit 25.1. ## Previously filed as an exhibit to Registration Statement No. 333-01121 and incorporated by reference herein. Item 17. Undertakings. The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended; (ii) To reflect in the Prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in the Registration Statement. provided, however, that subparagraphs (i) and (ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, as amended, each such post-effective amendment shall be deemed to be a new registration statement relating to the Securities offered herein, and the offering of such Securities at that time shall be deemed to be the initial bona fide offering thereof. 147 8 (3) To remove from registration by means of a post-effective amendment any of the Securities being registered which remain unsold at the termination of the offering. The undersigned Registrant hereby further undertakes that, for purposes of determining any liability under the Securities Act of 1933, as amended, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities and Exchange Act of 1934 that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the Securities offered herein, and the offering of such Securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described under Item 15 of this Registration Statement, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in such Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person, in connection with the Securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in such Act and will be governed by the final adjudication of such issue. 148 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in The City of New York and State of New York, on this 25th day of November, 1996. J.P. MORGAN & CO. INCORPORATED By: /s/ Michael E. Patterson -------------------------- Michael E. Patterson Vice Chairman of the Board and Director Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities indicated. SIGNATURE TITLE DATE - --------- ----- ---- DOUGLAS A. WARNER III* Chairman of the Board, November 25, 1996 - ------------------------- President and Director (Douglas A. Warner III) (Principal Executive Officer) RILEY P. BECHTEL* Director November 25, 1996 - ------------------------- (Riley P. Bechtel) MARTIN FELDSTEIN* Director November 25, 1996 - ------------------------- (Martin Feldstein) HANNA H. GRAY* Director November 25, 1996 - ------------------------- (Hanna H. Gray) JAMES R. HOUGHTON* Director November 25, 1996 - ------------------------- (James R. Houghton) JAMES L. KETELSEN* Director November 25, 1996 - ------------------------- (James L. Ketelsen) WILLIAM S. LEE* Director November 25, 1996 - ------------------------- (William S. Lee) ROBERTO G. MENDOZA* Vice Chairman of the Board November 25, 1996 - ------------------------- and Director (Roberto G. Mendoza) MICHAEL E. PATTERSON Vice Chairman of the Board November 25, 1996 - ------------------------- and Director (Michael E. Patterson) LEE R. RAYMOND* Director November 25, 1996 - ------------------------- (Lee R. Raymond) RICHARD D. SIMMONS Director November 25, 1996 - ------------------------- (Richard D. Simmons) KURT F. VIERMETZ* Vice Chairman of the Board November 25, 1996 - ------------------------- and Director (Kurt F. Viermetz) DENNIS WEATHERSTONE* Director November 25, 1996 - ------------------------- (Dennis Weatherstone) DOUGLAS C. YEARLEY* Director November 25, 1996 - ------------------------- (Douglas C. Yearley) JOHN A. MAYER, JR.* Chief Financial Officer November 25, 1996 - ------------------------- (Principal Financial Officer) (John A. Mayer, Jr.) DAVID H. SIDWELL* Managing Director and Controller November 25, 1996 - ------------------------- (Principal Accounting Officer) (David H. Sidwell) *By: /s/ Michael E. Patterson -------------------------- Michael E. Patterson Vice Chairman of the Board and Director 149 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, JPM Capital Trust I, JPM Capital Trust II, JPM Capital Trust III and JPM Capital Trust IV each certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York on November 25, 1996. JPM CAPITAL TRUST I, by J.P. Morgan & Co. Incorporated, as Sponsor by /s/ Gene A. Capello -------------------------------- Name: Gene A. Capello Title: Vice President and Assistant General Counsel JPM CAPITAL TRUST II, by J.P. Morgan & Co. Incorporated, as Sponsor by /s/ Gene A. Capello -------------------------------- Name: Gene A. Capello Title: Vice President and Assistant General Counsel JPM CAPITAL TRUST III, by J.P. Morgan & Co. Incorporated, as Sponsor by /s/ Gene A. Capello -------------------------------- Name: Gene A. Capello Title: Vice President and Assistant General Counsel JPM CAPITAL TRUST IV, by J.P. Morgan & Co. Incorporated, as Sponsor by /s/ Gene A. Capello -------------------------------- Name: Gene A. Capello Title: Vice President and Assistant General Counsel 150 Exhibit Index 1(a)(l)* Form of Underwriting Agreement (including form of Delayed Delivery Contract) for Subordinated Debt. l(a)(2)** Form of Underwriting Agreement (including form of Delayed Delivery Contract) for Debt. 1(a)(3)+ Form of Underwriting Agreement for Series Preferred Stock, Depositary Shares and Preferred Stock Warrants. 3(a)+++ Restated Certificate of Incorporation of J.P. Morgan & Co. Incorporated, as amended. 3(b)+ By-Laws of J.P. Morgan & Co. Incorporated as amended through December 11, 1991. 4(a)(1) Form of Junior Subordinated Debt Indenture to be entered into between J.P. Morgan & Co. Incorporated and First Trust of New York, National Association, as Trustee. 4(a)(2)* Indenture dated as of March 1, 1993, between J.P. Morgan & Co. Incorporated and Citibank, N.A., as Trustee (now First Trust of New York, National Association, as Successor Trustee). 4(a)(3) Indenture dated as of August 15, 1982, between J.P. Morgan & Co. Incorporated and Chemical Bank (formerly Manufacturers Hanover Trust Company), as Trustee (now First Trust of New York, National Association, as Successor Trustee), (incorporated herein by reference to J.P. Morgan's Current Report on Form 8-K, dated February 7, 1986, filed pursuant to Section 13 of the Securities and Exchange Act of 1934 (the "Act")). 4(a)(4) Form of First Supplemental Indenture dated as of May 5, 1986 between J.P. Morgan & Co. Incorporated and Chemical Bank (formerly Manufacturers Hanover Trust Company), as Trustee, (now First Trust of New York, National Association, as Successor Trustee) (incorporated herein by reference to J.P. Morgan's Current Report on Form 8-K, dated August 13, 1986, filed pursuant to Section 13 of the Act). 4(a)(5) Form of Second Supplemental Indenture dated as of February 27, 1996 between J.P. Morgan & Co. Incorporated and First Trust of New York, National Association, as Trustee (incorporated herein by reference to J.P. Morgan's Current Report on Form 8-K, dated February 23, 1996, filed pursuant to Section 13 of the Act). 4(b)(1)* Form of Security (Subordinated Note). 4(b)(2)** Form of Security (Note). 4(c)(1)* Form of Security (Subordinated Debenture). 4(c)(2)** Form of Security (Debenture). 4(d)(1)* Form of Security (Discount Subordinated Security). 4(d)(2)** Form of Security (Discount Security). 151 4(e)(1)* Form of Security (Zero Coupon Subordinated Security). 4(e)(2)** Form of Security (Zero Coupon Security). 4(f)(1)* Form of Security (Extendible Subordinated Note). 4(f)(2)** Form of Security (Extendible Note). 4(g)(1) Declaration of Trust of JPM Capital Trust I. 4(g)(2) Certificate of Trust of JPM Capital Trust I. 4(g)(3) Declaration of Trust of JPM Capital Trust II. 4(g)(4) Certificate of Trust of JPM Capital Trust II. 4(g)(5) Declaration of Trust of JPM Capital Trust III. 4(g)(6) Certificate of Trust of JPM Capital Trust III. 4(g)(7) Declaration of Trust of JPM Capital Trust IV. 4(g)(8) Certificate of Trust of JPM Capital Trust IV. 4(h) Form of Amended and Restated Declaration of Trust for each of JPM Capital Trust I, II, III and IV. 4(i) Form of Preferred Security (included in Exhibit 4(h)). 4(j) Form of Supplemental Indenture to be used in connection with issuance of Junior Subordinated Debt Securities and Preferred Securities. 4(k) Form of Junior Subordinated Debt Security (included in Exhibit 4(j)). 4(l)(1) Form of Guarantee with respect to Preferred Securities of JPM Capital Trust I. 4(l)(2) Form of Guarantee with respect to Preferred Securities of JPM Capital Trust II. 4(l)(3) Form of Guarantee with respect to Preferred Securities of JPM Capital Trust III. 4(l)(4) Form of Guarantee with respect to Preferred Securities of JPM Capital Trust IV. 5.1 Opinion of Gene A. Capello. 5.2 Opinion of Morris, Nichols, Arsht & Tunnell, Delaware counsel. 5.3 Opinion of Cravath, Swaine & Moore. 12.3 Computation of Consolidated Ratio of Earnings to Fixed Charges and Consolidated Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends. (Incorporated by reference to J. P. Morgan's Annual Report on Form 10-K for the year ended December 31, 1995 and J. P. Morgan's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996.) 23(a) Consent of Price Waterhouse LLP. (b) Consent of Gene A. Capello (included in Exhibit 5.1). (c) Consent of Morris, Nichols, Arsht & Tunnell (included in Exhibit 5.2). 23(d) Consent of Cravath, Swaine & Moore (included in Exhibit 5.3). 24## Powers of Attorney. 25.1 Statement of Eligibility of Debt Trustee on Form T-1. 25.2# Statement of Eligibility of Subordinated Trustee on Form T-1. 25.3# Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of First Trust of New York, National Association, as Trustee, under the Junior Subordinated Indenture. 25.4# Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of First Trust of New York, National Association, as Trustee, with respect to the Amended and Restated Declaration of Trust of JPM Capital Trust I. 152 25.5# Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of First Trust of New York, National Association, as Trustee, with respect to the Amended and Restated Declaration of Trust of JPM Capital Trust II. 25.6# Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of First Trust of New York, National Association, as Trustee, with respect to the Amended and Restated Declaration of Trust of JPM Capital Trust III. 25.7# Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of First Trust of New York, National Association, as Trustee, with respect to the Amended and Restated Declaration of Trust of JPM Capital Trust IV. 25.8# Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of First Trust of New York, National Association, as Trustee, under the Preferred Securities Guarantee of the Company with respect to the Preferred Securities of JPM Capital Trust I. 25.9# Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of First Trust of New York, National Association, as Trustee, under the Preferred Securities Guarantee of the Company with respect to the Preferred Securities of JPM Capital Trust II. 25.10# Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of First Trust of New York, National Association, as Trustee, under the Preferred Securities Guarantee of the Company with respect to the Preferred Securities of JPM Capital Trust III. 25.11# Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of First Trust of New York, National Association, as Trustee, under the Preferred Securities Guarantee of the Company with respect to the Preferred Securities of JPM Capital Trust IV. * Previously filed as an exhibit to Registration Statement No. 33-45651 and incorporated by reference herein. ** Previously filed as an exhibit to Registration Statement No. 33-49049 and incorporated by reference herein. + Previously filed as an exhibit to Registration Statement No. 33-49775 and incorporated by reference herein. ++ Previously filed as an exhibit to Registration Statement No. 33-64193 and incorporated by reference herein. +++ Previously filed as an exhibit to Registration Statement No. 33-55851 and incorporated by reference herein. # Incorporated by reference to Exhibit 25.1. ## Previously filed as an exhibit to Registration Statement No. 333-01121 and incorporated by reference herein. EX-4.A1 2 FORM OF JUNIOR SUBORDINATED DEBT INDENTURE 1 EXHIBIT 4(a)(1) ================================================================================ INDENTURE between J.P. MORGAN & CO. INCORPORATED and FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION as Trustee Dated as of November , 1996 Junior Subordinated Debt Securities ================================================================================ 2 TABLE OF CONTENTS 1/
Page PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 RECITALS Purpose of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Compliance with legal requirements . . . . . . . . . . . . . . . . . . . . . . . . 1 Purpose of and consideration for Indenture . . . . . . . . . . . . . . . . . . . . 1 ARTICLE I Definitions ----------- SECTION 1.01 Certain terms defined in the Trust Indenture Act of 1939, as amended, or by reference therein in the Securities Act of 1933, as amended, to have the meanings assigned therein . . . . . . . . . . . . . . . . . . . . . . . 2 Authenticating Agent . . . . . . . . . . . . . . . . . . 2 Board of Directors . . . . . . . . . . . . . . . . . . . 3 Board Resolution . . . . . . . . . . . . . . . . . . . . 3 Business Day . . . . . . . . . . . . . . . . . . . . . . 3 Certificate . . . . . . . . . . . . . . . . . . . . . . . 3 Common Securities . . . . . . . . . . . . . . . . . . . . 3 Company . . . . . . . . . . . . . . . . . . . . . . . . . 3 Corporate Trust Office . . . . . . . . . . . . . . . . . 3 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Declaration of Trust . . . . . . . . . . . . . . . . . . 3 Default . . . . . . . . . . . . . . . . . . . . . . . . . 4 Depositary . . . . . . . . . . . . . . . . . . . . . . . 4 Derivative Obligations . . . . . . . . . . . . . . . . . 4 ECU . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 European Communities . . . . . . . . . . . . . . . . . . 4 Event of Default . . . . . . . . . . . . . . . . . . . . 4
- --------------------------- 1/ This Table of Contents does not constitute part of the Indenture and should not have any bearing upon the interpretation of any of its terms or provisions. i 3 Global Security . . . . . . . . . . . . . . . . . . . . . 4 Governmental Obligations . . . . . . . . . . . . . . . . 5 Guarantee . . . . . . . . . . . . . . . . . . . . . . . . 5 Indenture . . . . . . . . . . . . . . . . . . . . . . . . 5 Interest Payment Date . . . . . . . . . . . . . . . . . . 5 JPM Capital Trust . . . . . . . . . . . . . . . . . . . . 5 Officers' Certificate . . . . . . . . . . . . . . . . . . 6 Opinion of Counsel . . . . . . . . . . . . . . . . . . . 6 Outstanding . . . . . . . . . . . . . . . . . . . . . . . 6 Person . . . . . . . . . . . . . . . . . . . . . . . . . 6 Predecessor Security . . . . . . . . . . . . . . . . . . 7 Preferred Securities . . . . . . . . . . . . . . . . . . 7 Property Trustee . . . . . . . . . . . . . . . . . . . . 7 Responsible Officer . . . . . . . . . . . . . . . . . . . 7 Security or Securities . . . . . . . . . . . . . . . . . 7 Security Exchange . . . . . . . . . . . . . . . . . . . . 7 Securityholder . . . . . . . . . . . . . . . . . . . . . 7 Senior Indebtedness . . . . . . . . . . . . . . . . . . . 8 Stated Maturity . . . . . . . . . . . . . . . . . . . . . 8 Subordinated Indebtedness . . . . . . . . . . . . . . . . 8 Subsidiary . . . . . . . . . . . . . . . . . . . . . . . 8 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 9 Trust Indenture Act . . . . . . . . . . . . . . . . . . . 9 ARTICLE II Issue, Description, Terms, Execution ------------------------------------ Registration and Exchange of Securities --------------------------------------- SECTION 2.01 Designation, terms, amount, authentication and delivery of Securities . . . . . . . . . . . . . . . . . . . . . 9 SECTION 2.02 Form of Securities and Trustee's certificate . . . . . . 11 SECTION 2.03 Date and denominations of Securities and provisions for payment of principal, premium and interest . . . . . 11 SECTION 2.04 Execution of Securities . . . . . . . . . . . . . . . . . 14 SECTION 2.05 Exchange of Securities . . . . . . . . . . . . . . . . . 15 (a) Registration and transfer of Securities . . . . . . . 15
ii 4 (b) Securities to be accompanied by proper instruments of transfer . . . . . . . . . . . . . . . . . . . . 15 (c) Charges upon exchange, transfer or regulations of Security . . . . . . . . . . . . . . . . . . . . 16 (d) Restrictions on transfer or exchange at time of redemption . . . . . . . . . . . . . . . . . . . 16 SECTION 2.06 Temporary Securities . . . . . . . . . . . . . . . . . . 17 SECTION 2.07 Mutilated, destroyed, lost or stolen Securities . . . . . 17 SECTION 2.08 Cancelation of surrendered Securities . . . . . . . . . . 18 SECTION 2.09 Provisions of Indenture and Securities for sole benefit of parties and Securityholders . . . . . . . . . . . . . 19 SECTION 2.10 Appointment of Authenticating Agent . . . . . . . . . . . 19 SECTION 2.11 Global Security . . . . . . . . . . . . . . . . . . . . . 20 (a) Authentication and Delivery; Legend . . . . . . . . . 20 (b) Transfer of Global Security . . . . . . . . . . . . . 20 (c) Issuance of Securities in definitive form . . . . . . 20 SECTION 2.12 CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . 21 ARTICLE III Redemption of Securities and ----------------------------- Sinking Fund Provisions ----------------------- SECTION 3.01 Redemption of Securities . . . . . . . . . . . . . . . . 22
iii 5 SECTION 3.02 (a) Notice of redemption . . . . . . . . . . . . . . . . 22 (b) Selection of Securities in case less than all Securities to be redeemed . . . . . . . . . . . . 23 SECTION 3.03 (a) When Securities called for redemption become due and payable . . . . . . . . . . . . . . . . . . . . . 23 (b) Receipt of new Security upon partial payment . . . . 24 SECTION 3.04 Sinking Fund for Securities . . . . . . . . . . . . . . . 24 SECTION 3.05 Satisfaction of Sinking Fund Payments with Securities . . 24 SECTION 3.06 Redemption of Securities for Sinking Fund . . . . . . . . 25 ARTICLE IV Particular Covenants of the Company ----------------------------------- SECTION 4.01 Payment of principal of (and premium, if any) and interest on Securities . . . . . . . . . . . . . . . . . . . . 25 SECTION 4.02 Maintenance of office or agency for payment of Securities, designation of office or agency for payment, registration, transfer and exchange of Securities . . 26 SECTION 4.03 (a) Duties of payment agent . . . . . . . . . . . . . . . 26 (b) Company as payment agent . . . . . . . . . . . . . . 27 (c) Holding sums of trust . . . . . . . . . . . . . . . . 27 SECTION 4.04 Appointment to fill vacancy in office of Trustee . . . . 27
iv 6 ARTICLE V Securityholders' Lists and Reports by the Company and the Trustee SECTION 5.01 Company to furnish Trustee information as to names and addresses of Securityholders . . . . . . . . . . . . 28 SECTION 5.02 Trustee's Treatment of Securityholders' List (a) Trustee to preserve information as to names and addresses of Securityholders received by it in capacity of payment agent . . . . . . . . . . . . 28 (b) Trustee may destroy list of Securityholders on certain conditions . . . . . . . . . . . . . . . . . . . 28 (c) Trustee to make information as to names and addresses of Securityholders available to "applicants" or mail communications to Securityholders in certain circumstances . . . . . . . . . . . . . . . . . . 28 (d) Procedure if Trustee elects not to make information available to applicants . . . . . . . . . . . . . 29 (e) Company and Trustee not accountable for disclosure of information . . . . . . . . . . . . . . . . . . . 30 SECTION 5.03 Reports filed by Company (a) Annual and other reports to be filed by Company with Trustee . . . . . . . . . . . . . . . . . . . . . 30
v 7 (b) Additional information and reports to be filed with Trustee and Securities and Exchange Commission . 30 (c) Summaries of information and reports to be transmitted by Company to Securityholders . . . . . . . . . . 31 (d) Annual Certificate to be furnished to Trustee . . . . 31 SECTION 5.04 Reports Transmitted by Trustee (a) Trustee to transmit annual report to Securityholders 31 (b) Trustee to transmit certain further reports to Securityholders . . . . . . . . . . . . . . . . . 32 (c) Copies of reports to be filed with stock exchanges and Securities and Exchange Commission . . . . . . . 33 ARTICLE VI Remedies of the Trustee and Securityholders ------------------------------------------- on Event of Default ------------------- SECTION 6.01 (a) Events of Default defined . . . . . . . . . . . . . . 33 (b) Acceleration of maturity upon Event of Default . . . 35 (c) Waiver of default and rescission of declaration of maturity . . . . . . . . . . . . . . . . . . . . 35 (d) Restoration of former position and rights upon curing default . . . . . . . . . . . . . . . . . . . . . 36 (e) Certain rights of holders of Preferred Securities . . 36
vi 8 SECTION 6.02 (a) Covenant of Company to pay to Trustee whole amount due on Securities on Default in payment of interest or principal (and premiums, if any) . . . . . . . . 37 (b) Trustee may recover judgment for whole amount due on Securities on failure of Company to pay . . . . . 37 (c) Filing of proof of claim by Trustee in bankruptcy, reorganization or receivership proceeding . . . . 37 (d) Rights of action and of asserting claims may be enforced by Trustee without possession of Securities . . . . . . . . . . . . . . . . . . . 38 SECTION 6.03 Application of moneys collected by Trustee . . . . . . . 39 SECTION 6.04 Limitation on suits by holders of Securities . . . . . . 39 SECTION 6.05 (a) Remedies cumulative . . . . . . . . . . . . . . . . . 40 (b) Delay or omission in exercise of rights not waiver of default . . . . . . . . . . . . . . . . . . . . . 40 SECTION 6.06 Rights of holders of majority in principal amount of Securities to direct Trustee and to waive defaults . 41 SECTION 6.07 Trustee to give notice of defaults known to it, but may withhold in certain circumstances . . . . . . . . . . 42 SECTION 6.08 Requirements of an undertaking to pay costs in certain suits under Indenture or against Trustee . . . . . . 43
vii 9 ARTICLE VII Concerning the Trustee SECTION 7.01 Trustee Conduct: (a) Upon Event of Default occurring and continuing, Trustee shall exercise powers vested in it, and use same degree of care and skill in their exercise, as prudent individual would use . . . . 43 (b) Trustee not relieved from liability for negligence or wilful misconduct except as provided in this Section . . . . . . . . . . . . . . . . . . . . . 44 (1) Prior to Event of Default and after the curing of all Events of Default which may have occurred . . 44 (i) Trustee not liable except for performance of duties specifically set forth . . . . . . . . . . 44 (ii) In absence of bad faith, Trustee may conclusively rely on certificates or opinions furnished it hereunder, subject to duty to examine the same if specifically required to be furnished to it . . . 44 (2) Trustee not liable for error . . . . . . . . . . 44 (3) Trustee not liable for actions taken at the direction of holders . . . . . . . . . . . . . . 44
viii 10 (4) Trustee not required to expend funds in certain circumstances without indemnity . . . . . . . . . 45 (5) Liability provisions are subject to Article VII . 45 SECTION 7.02 Subject to provisions of Section 7.01: (a) Trustee may rely on documents believed genuine and properly signed or presented . . . . . . . . . . 45 (b) Sufficient evidence by certain instruments provided for . . . . . . . . . . . . . . . . . . . . . . . 45 (c) Trustee may consult with counsel and act on advice or Opinion of Counsel . . . . . . . . . . . . . . . 46 (d) Trustee may require indemnity from Securityholders . 46 (e) Trustee not liable for actions in good faith believed to be authorized . . . . . . . . . . . . . . . . 46 (f) Prior to Event of Default, Trustee not bound to investigate facts or matters stated in certificates, etc. unless requested in writing by Securityholders . . . . . . . . . . . . . . . . . 46 (g) Trustee may act through agents . . . . . . . . . . . 47 SECTION 7.03 (a) Trustee not liable for recitals in Indenture or in Security . . . . . . . . . . . . . . . . . . . . 47
ix 11 (b) No representations by Trustee as to validity of Indenture or of Securities . . . . . . . . . . . 47 (c) Trustee not accountable for use of Securities or proceeds . . . . . . . . . . . . . . . . . . . . 47 SECTION 7.04 Trustee, paying agent or Security Registrar may own Securities . . . . . . . . . . . . . . . . . . . . . 47 SECTION 7.05 Moneys received by Trustee to be held in trust without interest . . . . . . . . . . . . . . . . . . . . . . 47 SECTION 7.06 (a) Trustee entitled to compensation, reimbursement and indemnity . . . . . . . . . . . . . . . . . . . . 47 (b) Obligations to Trustee to be secured by lien prior to Securities . . . . . . . . . . . . . . . . . . . 48 SECTION 7.07 Right of Trustee to rely on certificate of officers of Company where other evidence specifically prescribed 48 SECTION 7.08 (a) Trustee acquiring conflicting interest to eliminate conflict or resign . . . . . . . . . . . . . . . 49 (b) Notice to Securityholders in case of failure to comply with subsection (a) . . . . . . . . . . . . . . . 49 (c) Definition of certain interest . . . . . . . . . . . 49 (d) Definitions of certain terms . . . . . . . . . . . . 54 (e) Calculation of percentages of Securities . . . . . . 55
x 12 (f) Trustee resignation not required under certain circumstances . . . . . . . . . . . . . . . . . . 56 SECTION 7.09 Requirements for eligibility of Trustee . . . . . . . . . 57 SECTION 7.10 (a) Resignation of Trustee and appointment of successor . . . . . . . . . . . . . . . . . . . . 57 (b) Removal of Trustee by Company or by court on Securityholders' application . . . . . . . . . . 58 (c) Removal of Trustee by holders of majority in principal amount of Securities . . . . . . . . . . . . . . 59 (d) Time when resignation or removal of Trustee effective 59 (e) One Trustee for each series . . . . . . . . . . . . . . . . . . . . 59 SECTION 7.11 (a) Acceptance by successor to Trustee . . . . . . . . . 59 (b) Trustee with respect to less than all series . . . . 59 (c) Company to confirm Trustee's rights . . . . . . . . . 60 (d) Successor Trustee to be qualified . . . . . . . . . . 61 (e) Notice of succession . . . . . . . . . . . . . . . . 61 SECTION 7.12 Successor to Trustee by merger, consolidation or succession to business . . . . . . . . . . . . . . . . . . . . . 61 SECTION 7.13 (a) Limitations on rights of Trustee as a creditor to obtain payment of certain
xi 13 claims within four months prior to default or during default, or to realize on property as such creditor thereafter . . . . . . . . . . . . . 61 (b) Certain creditor relationships excluded . . . . . . . 65 (c) Definition of certain terms . . . . . . . . . . . . . 65 ARTICLE VIII Concerning the Securityholders ------------------------------ SECTION 8.01 Evidence of action by Securityholders . . . . . . . . . . 66 SECTION 8.02 Proof of execution of instruments and of holding of Securities . . . . . . . . . . . . . . . . . . . . . 67 SECTION 8.03 Who may be deemed owners of Securities . . . . . . . . . 68 SECTION 8.04 Securities owned by Company or controlled or controlling companies disregarded for certain purposes . . . . . 68 SECTION 8.05 Instruments executed by Securityholders bind future holders 69 ARTICLE IX Supplemental Indentures ------------------------ SECTION 9.01 Purposes for which supplemental indenture may be entered into without consent of Securityholders . . . . . . . 69 SECTION 9.02 Modification of Indenture with consent of Securityholders 71
xii 14 SECTION 9.03 Effect of supplemental indentures . . . . . . . . . . . . 73 SECTION 9.04 Securities may bear notation of changes by supplemental indentures . . . . . . . . . . . . . . . . . . . . . 74 SECTION 9.05 Opinion of Counsel . . . . . . . . . . . . . . . . . . . 74 SECTION 9.06 Waiver of Compliance by holders of Securities . . . . . . 74 SECTION 9.07 Fixing of record dates . . . . . . . . . . . . . . . . . 74 ARTICLE X Consolidation, Merger, Sale or Conveyance ----------------------------------------- SECTION 10.01 Company may consolidate, etc. only on certain terms . . . 75 SECTION 10.02 Successor corporation substituted . . . . . . . . . . . . 75 SECTION 10.03 Opinion of Counsel . . . . . . . . . . . . . . . . . . . 76 ARTICLE XI Satisfaction and Discharge of Indenture; ---------------------------------------- Unclaimed Moneys ---------------- SECTION 11.01 Satisfaction and discharge of Indenture . . . . . . . . . 76 SECTION 11.02 Application by Trustee of funds deposited for payments of Securities . . . . . . . . . . . . . . . . . . . . . 79 SECTION 11.03 Application by Trustee of funds deposited for payment of Securities . . . . . . . . . . . . . . . . . . . . . 80 SECTION 11.04 Repayment of moneys held by paying agent . . . . . . . . 80
xiii 15 SECTION 11.05 Repayment of moneys held by Trustee . . . . . . . . . . . 80 ARTICLE XII Immunity of Incorporators, Stockholders, ---------------------------------------- Officers and Directors ---------------------- SECTION 12.01 Incorporators, stockholders, officers and directors of Company exempt from individual liability . . . . . . 81 ARTICLE XIII Miscellaneous Provisions ------------------------ SECTION 13.01 Successors and assigns of Company bound by Indenture . . 81 SECTION 13.02 Acts of board, committee or officer of successor company valid . . . . . . . . . . . . . . . . . . . . . . . . 82 SECTION 13.03 Surrender of powers of Company . . . . . . . . . . . . . 82 SECTION 13.04 Required notices or demands may be served by mail . . . . 82 SECTION 13.05 Indenture and Securities to be construed in accordance with laws of the State of New York . . . . . . . . . . . . 82 SECTION 13.06 (a) Officers' Certificate and Opinion of Counsel to be furnished upon applications or demands by Company 82 (b) Statements to be included in each certificate or opinion with respect to compliance with condition or covenant . . . . . . . . . . . . . . . . . . . 83 SECTION 13.07 Payments due on Sundays or holidays . . . . . . . . . . . 83
xiv 16 SECTION 13.08 Provisions required by Trust Indenture Act of 1939 to control . . . . . . . . . . . . . . . . . . . . . . . 83 SECTION 13.09 Execution of Indenture in Counterparts . . . . . . . . . 83 SECTION 13.10 Separability of Indenture provisions . . . . . . . . . . 83 SECTION 13.11 Assignment by Company to subsidiary . . . . . . . . . . . 84 SECTION 13.12 Holders of Preferred Securities as third party beneficiaries of this Indenture; holders of Preferred Securities may institute legal proceedings against the Company in certain cases . . . . . . . . . . . . . . 84 ARTICLE XIV Subordination of Securities ---------------------------- SECTION 14.01 Agreement to Subordinate . . . . . . . . . . . . . . . . 84 SECTION 14.02 Payment over of proceeds upon dissolution, etc. . . . . . 85 SECTION 14.03 Trustee to effectuate subordination . . . . . . . . . . . 85 SECTION 14.04 Trustee not charged with knowledge of prohibition . . . . 88 SECTION 14.05 Rights of Trustee as Holder of Senior Indebtedness . . . 90 SECTION 14.06 Trustee not fiduciary for Holders of Senior Indebtedness 91 SECTION 14.07 Article applicable to Paying Agents . . . . . . . . . . . 91 SECTION 14.08 Application by Trustee of moneys deposited with it . . . 92
xv 17 SECTION 14.09 Subordination rights not impaired by acts or omissions by the Company, holders of Senior Indebtedness and Subordinated Indebtedness or creditors in respect of Derivative Obligations . . . . . . . . . . . . . . . . . . . . . 92 SECTION 14.10 Authorization of Trustee to effectivate subordination of the Securities . . . . . . . . . . . . . . . . . . . 92 SECTION 14.11 Right of Trustee to hold Senior Indebtedness, Subordinated Indebtedness or Derivative Obligations of the Company 93 SECTION 14.12 Article XIV not to prevent events of default . . . . . . 93 ACCEPTANCE OF TRUST BY TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . 93 SIGNATURES AND SEALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
xvi 18 INDENTURE dated as of the day of November , 1996, between J.P. MORGAN & CO. INCORPORATED, a corporation duly organized and existing under the laws of the State of Delaware (hereinafter sometimes referred to as the "Company"), and FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, a national banking association duly incorporated and existing under the laws of the United States, as Trustee (hereinafter sometimes referred to as the "Trustee"). WHEREAS, for its lawful corporate purposes, the Company has fully authorized the execution and delivery of this Indenture to provide for the issuance of unsecured debentures (hereinafter referred to as the "Securities"), in an unlimited aggregate principal amount to be issued from time to time in one or more series in accordance with the terms of this Indenture, as registered Securities without coupons, to be authenticated by the certificate of the Trustee; WHEREAS, to provide the terms and conditions upon which the Securities are to be authenticated, issued and delivered, the Company has duly authorized the execution of this Indenture; WHEREAS the Securities and the certificate of authentication to be borne by the Securities (the "Certificate of Authentication") are to be substantially in such forms as may be approved by the Board of Directors (as defined below) or set forth in any indenture supplemental to this Indenture; and WHEREAS all acts and things necessary to make the Securities issued pursuant hereto, when executed by the Company and authenticated and delivered by the Trustee in accordance with the terms of this Indenture, the legal, valid and binding obligations of the Company, and to make this Indenture a valid indenture and agreement of the Company in accordance with its terms, have been done and performed or will be done and performed prior to the issuance of such Securities, and the execution of this Indenture has been and the issuance hereunder of the 19 2 Securities has been, or will be prior to issuance, in all respects duly authorized, and the Company, in the exercise of the legal right and power in it vested, executes this Indenture and proposes to make, execute, issue and deliver the Securities. NOW, THEREFORE, in order to declare the terms and conditions upon which the Securities are, and are to be, authenticated, issued and delivered, and in consideration of the premises, and of the acquisition and acceptance of the Securities by the holders thereof, the Company covenants and agrees with the Trustee, for the equal and proportionate benefit (subject to the provisions of this Indenture) of the respective holders from time to time of the Securities, without any discrimination, preference or priority of any one Security over any other by reason of priority in the time of issue, sale or negotiation thereof, or otherwise, except as provided herein, as follows: ARTICLE I Definitions SECTION 1.01. The terms defined in this Section (except as in this Indenture otherwise expressly provided or unless the context otherwise requires) for all purposes of this Indenture, any resolution of the Board of Directors of the Company and of any indenture supplemental hereof shall have the respective meanings specified in this Section. All other terms used in this Indenture which are defined in the Trust Indenture Act of 1939, as amended, or which are by reference in such Act defined in the Securities Act of 1933, as amended (except as herein otherwise expressly provided or unless the context otherwise requires), shall have the meanings assigned to such terms in said Trust Indenture Act and in said Securities Act as in force at the date of this instrument. "Authenticating Agent" means an authenticating agent with respect to all or any of the series of Securities, as the case may be, appointed with respect to all or any series of the Securities, as the case may be, by the Trustee pursuant to Section 2.10. 20 3 "Board of Directors" means the Board of Directors of the Company, or any committee of such Board duly authorized to act on behalf of such Board. "Board Resolution" means a copy of one or more resolutions, certified by the secretary or an assistant secretary of the Company to have been adopted or consented to by the Board of Directors and to be in full force and effect, and delivered to the Trustee. "Business Day", with respect to any series of Securities, means any day other than a day on which banking institutions in the Borough of Manhattan, the City and State of New York, are authorized or obligated by law or executive order to close. "Certificate" means a certificate signed by the principal executive officer, the principal financial officer or the principal accounting officer of the Company. The Certificate need not comply with the provisions of Section 13.06. "Common Securities" means the common undivided beneficial interests in the assets of the applicable JPM Capital Trust. "Company" means J.P. Morgan & Co. Incorporated, a corporation duly organized and existing under the laws of the State of Delaware, and, subject to the provisions of Article X, shall also include its successors and assigns. "Corporate Trust Office" means the office of the Trustee at which at any particular time its corporate trust business shall be principally administered, which office at the date of the execution of this Indenture is located at Attention of . "Debt" of the Company means any obligation of, or any obligation guaranteed by, the Company for the repayment of borrowed money, whether or not evidenced by bonds, debentures, notes or other written instruments, and any deferred obligation for the payment of the purchase price of property or assets. "Declaration of Trust" means the Declaration of the JPM Capital Trust, if any, specified in the applicable Board Resolution or supplemental indenture establishing a particular series of Securities pursuant to Section 2.01. 21 4 "Default" means any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default. "Depositary" means, with respect to Securities of any series for which the Company shall determine that such Securities will be issued as a Global Security, The Depository Trust Company, New York, New York, another clearing agency, or any successor registered as a clearing agency under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or other applicable statute or regulation, which, in each case, shall be designated by the Company pursuant to either Section 2.01 or 2.11. "Derivative Obligations" means obligations of the Company to make payments on claims in respect of derivative products such as interest and foreign exchange rate contracts, commodity contracts and similar arrangements; provided, however, that Derivative Obligations shall not include claims in respect of Senior Indebtedness, Subordinated Indebtedness or obligations which, by their terms, are expressly stated not to be superior in right of payment to the Securities or to rank pari passu with the Securities. For purposes of this. definition, "claim" shall have the meaning assigned thereto in Section 101(4) of the Bankruptcy Code of 1978, as amended and in effect on November 1, 1992. "ECU" means the European Currency Unit as defined and revised from time to time by the Council of European Communities. "European Communities" means the European Economic Community (the "EEC"), the European Coal and Steel Community and Eurotom. "Event of Default" means, with respect to Securities of a particular series, any event specified in Section 6.01(a), continued for the period of time, if any, therein designated. "Global Security" means, with respect to any series of Securities, a Security executed by the Company and delivered by the Trustee to the Depositary or pursuant to the Depositary's instruction, all in accordance with the Indenture, which shall be registered in the name of the Depositary or its nominee. 22 5 "Governmental Obligations" means securities that are (i) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act of 1933, as amended) as custodian with respect to any such Governmental Obligation or a specific payment of principal of, or interest on, any such Governmental Obligation held by such custodian for the account of the holder of such depositary receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the Governmental Obligation or the specific payment of principal of, or interest on, the Governmental Obligation evidenced by such depositary receipt. "Guarantee" means the guarantee, if any, that the Company may enter into that operates directly or indirectly for the benefit of holders of Preferred Securities issued by a JPM Capital Trust. "Indenture" means this instrument as originally executed, or, if amended or supplemented as herein provided, as so amended or supplemented, including for all purposes of this instrument, as amended or supplemented, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this instrument, as amended or supplemented. "Interest Payment Date" when used with respect to any installment of interest on a Security of a particular series means the date specified in such Security or in a Board Resolution or in an indenture supplemental hereto with respect to such series as the fixed date on which an installment of interest with respect to Securities of that series is due and payable. "JPM Capital Trust" means such statutory business trust created under the laws of the State of Delaware specified in the applicable Board Resolution or supplemental indenture establishing a particular series of Securities 23 6 pursuant to Section 2.01 and to whom such series of Securities will be sold. "Officers' Certificate" means a certificate signed by the Chairman of the Board, the Vice-Chairman of the Board, the President or any Vice President and by the Treasurer or any Assistant Treasurer or the Controller or any Assistant Controller or the Secretary or any Assistant Secretary of the Company and delivered to the Trustee. Each such certificate shall include the statements provided for in Section 13.06, if and to the extent required by the provisions thereof. "Opinion of Counsel" means an opinion in writing signed by legal counsel, who may be an employee of, or counsel for, the Company and who shall be satisfactory to the Trustee. Each such opinion shall include the statements provided for in Section 13.06, if and to the extent required by the provisions thereof. "Outstanding", when used with reference to Securities of any series, subject to the provisions of Section 8.01, means, as of any particular time, all Securities of that series theretofore authenticated and delivered by the Trustee under this Indenture, except (a) Securities theretofore canceled by the Trustee or any paying agent, or delivered to the Trustee or any paying agent for cancelation or which have previously been canceled; (b) Securities or portions thereof for the payment or redemption of which moneys or Governmental Obligations in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than the Company) or shall have been set aside and segregated in trust for the holders of such Securities by the Company (if the Company shall act as its own paying agent); provided, however, that if such Securities or portions of such Securities are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in Article III provided, or provision satisfactory to the Trustee shall have been made for giving such notice; and (c) Securities in lieu of, or in substitution for, which other Securities shall have been authenticated and delivered pursuant to the terms of Section 2.07. "Person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated 24 7 organization or government or any agency or political subdivision thereof. "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 2.07 in lieu of a lost, destroyed or stolen Security shall be deemed to evidence the same debt as the lost, destroyed or stolen Security. "Preferred Securities" means the preferred undivided beneficial interests in the assets of the applicable JPM Capital Trust. "Property Trustee" means the entity performing the function of the Property Trustee under the applicable Declaration of Trust of a JPM Capital Trust. "Responsible Officer" when used with respect to the Trustee means the chairman of the board of directors, the president, any vice president, the secretary, the treasurer, any trust officer, any corporate trust officer or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his or her knowledge of, and familiarity with, the particular subject. "Security" or "Securities" means any Security or Securities, as the case may be, authenticated and delivered under this Indenture. "Security Exchange" when used with respect to the Securities of any series which are held as trust assets of a JPM Capital Trust pursuant to the Declaration of Trust of such JPM Capital Trust means the distribution of the Securities of such series by such JPM Capital Trust in exchange for the Preferred Securities and Common Securities of such JPM Capital Trust in dissolution of such JPM Capital Trust pursuant to the Declaration of Trust of such JPM Capital Trust. "Securityholder", "holder of Securities", "registered holder", or other similar term, means the person or persons in whose name or names a particular Security 25 8 shall be registered on the books of the Company kept for such purpose in accordance with the terms of this Indenture. "Senior Indebtedness" of the Company means the principal of, premium, if any, and interest on: (a) all Debt of the Company, whether outstanding on the date of execution of this Indenture or thereafter created, assumed or incurred, except such Debt as is by its terms expressly stated to be not superior in right of payment to the Securities or to rank pari passu with the Securities and (b) any deferrals, renewals or extensions of any such Senior Indebtedness; provided, however, that Senior Indebtedness shall not be deemed to include (i) Debt which by its terms is subordinated to trade accounts payable or accrued liabilities arising in the ordinary course of business to the extent that payments made to the holders of such Debt by the holders of the Securities under Article XIV of this Indenture would be greater than they otherwise would have been as a result of any obligation of such holders to pay amounts over to the obligees on such trade accounts payable or accrued liabilities arising in the ordinary course of business as a result of subordination provisions to which such Debt is subject; (ii) Debt which constitutes Subordinated Indebtedness and (iii) any other debt securities issued pursuant to this Indenture. "Stated Maturity" when used with respect to any Security or any installment of principal thereof [or interest thereon] means the date specified pursuant to the terms of such Security as the date on which the principal of such Security [or such installment of interest] is due and payable whether at the Stated Maturity or declaration of acceleration, call for redemption or otherwise, as such Stated Maturity may be shortened or extended as set forth in this Indenture. "Subordinated Indebtedness" of the Company means the principal of, premium, if any, and interest, on Debt, whether outstanding on the date of execution of this Indenture or thereafter created, assumed or incurred, which Subordinated Indebtedness is by its terms expressly stated to be junior and subordinate in right of payment to other Debt of the Company (other than the Securities). "Subsidiary" means any corporation, association or other business entity of which a majority of the outstanding stock, having under ordinary circumstances (not dependent upon the happening of a contingency) voting power to elect a 26 9 majority of the board of directors (or persons performing similar functions) of such corporation, association or other business entity in question, is at the time, directly or indirectly, owned or controlled by the Company or by one or more Subsidiaries or by the Company and one or more Subsidiaries; collectively, the "Subsidiaries". "Trustee" means First Trust of New York, National Association, a national banking association, and, subject to the provisions of Article Seven, shall also include its successors and assigns, and, if at any time there is more than one person acting in such capacity hereunder, "Trustee" shall mean each such person. The term "Trustee" as used with respect to a particular series of the Securities means the trustee with respect to such series. "Trust Indenture Act", subject to the provisions of Sections 9.01 and 9.02, means the Trust Indenture Act of 1939, as amended and in effect at the date of execution of this Indenture. ARTICLE II Issue, Description, Terms, Execution, Registration and Exchange of Securities SECTION 2.01. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more series up to the aggregate principal amount of Securities of that series authorized in or pursuant to one or more indentures supplemental hereto, prior to the initial issuance of Securities of a particular series. Prior to the initial issuance of Securities of any series, there shall be established in or pursuant to one or more indentures supplemental hereto: (1) the title of the Securities of the series (which shall distinguish the Securities of the series from all other Securities); (2) any limit upon the aggregate principal amount of the Securities of the series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon 27 10 registration of transfer of, or in exchange for, or in lieu of, other Securities of the series); (3) the date or dates on which the principal of the Securities of the series is payable and the right, if any, to extend or shorten such date or dates and the conditions, if any, to such extension; (4) the rate or rates at which the Securities of the series shall bear interest or the manner of calculation of such rate or rates, if any; (5) the date or dates from which such interest shall accrue, the Interest Payment Dates on which such interest will be payable or the manner of determination of such Interest Payment Dates and the record date for the determination of holders to whom interest is payable on any such Interest Payment Dates; (6) the right, if any, to extend or defer the interest payment periods and the duration of such extension or deferral and the conditions, if any, to such an extension or deferral; (7) the period or periods within which, the price or prices at which, and the terms and conditions upon which, Securities of the series may be redeemed, in whole or in part, at the option of the Company; (8) the obligation, if any, of the Company to redeem or purchase Securities of the series pursuant to any sinking fund or analogous provisions (including payments made in cash in anticipation of future sinking fund obligations) or at the option of a holder thereof and the period or periods within which, the price or prices at which, and the terms and conditions upon which, Securities of the series shall be redeemed or purchased, in whole or in part, pursuant to such obligation; (9) the form of the Securities of the series, including the form of the Certificate of Authentication for the series; (10) if other than denominations of $25 or any integral multiple thereof, the denominations in which the Securities of the series shall be issuable; 28 11 (11) whether the Securities of the series are issuable as a Global Security and, in such case, the identity of the Depositary for the Securities of the series; (12) any and all other terms with respect to the Securities of the series (which terms shall not be inconsistent with the terms of this Indenture); (13) if the Securities of the series are to be deposited as trust assets in a JPM Capital Trust, the name of the applicable JPM Capital Trust (which shall distinguish such statutory business trust from all other JPM Capital Trusts) into which the Securities of the series are to be deposited as trust assets and the date of its Declaration of Trust; and (14) any condition to, or restriction on, the transferability of the Securities. All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to any indenture supplemental hereto. SECTION 2.02. The Securities of any series and the Trustee's certificate of authentication to be borne by such Securities shall be substantially of the tenor and purport as set forth in one or more indentures supplemental hereto and may have such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Indenture, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which Securities of that series may be listed, or to conform to usage. SECTION 2.03. The Securities shall be issuable as registered Securities and in the denominations of $25 or any integral multiple thereof, subject to Section 2.01(10). The Securities of a particular series shall bear interest payable on the dates and at the rate specified with respect to that series. The principal of and the interest on the Securities of any series, as well as any premium thereon in case of redemption thereof prior to maturity, shall be payable in such coin or currency of the United States of 29 12 America as at the time of payment is legal tender for public and private debt, at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, the City and State of New York. Each Security shall be dated the date of its authentication. Interest on the Securities shall be computed on the basis of a 360-day year of twelve 30-day months. The interest installment on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date for Securities of that series shall be paid to the person in whose name such Security (or one or more Predecessor Securities) is registered at the close of business on the regular record date for such interest installment. In the event that any Security of a particular series or portion thereof is called for redemption and the redemption date is subsequent to a regular record date with respect to any Interest Payment Date for Securities of that series and on or prior to such Interest Payment Date, interest on such Security will be paid upon presentation and surrender of such Security as provided in Section 3.03. Any interest on any Security which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date for Securities of that series (herein called "Defaulted Interest") shall forthwith cease to be payable to the registered holder on the relevant regular record date by virtue of having been such holder; and such Defaulted Interest shall be paid by the Company, at its election, as provided in clause (1) or clause (2) below: (1) The Company may make payment of any Defaulted Interest on Securities to the persons in whose names such Securities (or their respective Predecessor Securities) are registered at the close of business on a special record date for the payment of such Defaulted Interest, which shall be fixed in the following manner: the Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each such Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the persons entitled to such Defaulted Interest as in this 30 13 clause provided. Thereupon the Trustee shall fix a special record date for the payment of such Defaulted Interest which shall not be more than 15 nor less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such special record date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the special record date therefor to be mailed, first-class postage prepaid, to each Securityholder at his or her address as it appears in the Security Register (as hereinafter defined), not less than 10 days prior to such special record date. Notice of the proposed payment of such Defaulted Interest and the special record date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the persons in whose names such Securities (or their Predecessor Securities) are registered on such special record date and shall be no longer payable pursuant to the following clause (2). (2) The Company may make payment of any Defaulted Interest on any Securities in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee. Unless otherwise set forth in one or more indentures supplemental hereto establishing the terms of any series of Securities pursuant to Section 2.01, the term "regular record date" as used in this Section with respect to a series of Securities with respect to any Interest Payment Date for such series shall mean either (x) the fifteenth day of the month immediately preceding the month in which an Interest Payment Date established for such series pursuant to Section 2.01 shall occur, if such Interest Payment Date is the first day of a month, or (y) the last day of the month immediately preceding the month in which an Interest Payment Date established for such series pursuant to Section 2.01 shall occur, if such Interest Payment Date is the fifteenth day of a month, whether or not such date is a Business Day. 31 14 Subject to the foregoing provisions of this Section, each Security of a series delivered under this Indenture upon transfer of, or in exchange for, or in lieu of, any other Security of such series shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. SECTION 2.04. Subject to the provisions of Section 2.06, the Securities shall be printed, lithographed or engraved on steel engraved borders or produced by any combination of these methods or may be produced in any other manner, as the proper officers of the Company may determine, and shall be signed on behalf of the Company by the Chairman or Vice Chairman of its Board of Directors or its President or one of its Vice Presidents, and its Treasurer and Assistant Treasurer under its corporate seal attested by its Secretary or one of its Assistant Secretaries. The signature of the Chairman, Vice Chairman, President or a Vice President, the signature of the Treasurer or Assistant Treasurer and/or the signature of the Secretary or an Assistant Secretary in attestation of the corporate seal, upon the Securities, may be in the form of a manual or facsimile signature of a present or any future Chairman, Vice Chairman, President or Vice President and of a present or any future Secretary or Assistant Secretary and may be imprinted or otherwise reproduced on the Securities and for that purpose the Company may use the manual or facsimile signature of any person who shall have been a Chairman, Vice Chairman, President or Vice President, or of any person who shall have been a Secretary or Assistant Secretary, notwithstanding the fact that at the time the Securities shall be authenticated and delivered, or disposed of, such person shall have ceased to be the Chairman, Vice Chairman, President or a Vice President, or the Secretary or an Assistant Secretary, of the Company, as the case may be. The seal of the Company may be in the form of a facsimile of the seal of the Company and may be impressed, affixed, imprinted or otherwise reproduced on the Securities. Only such Securities as shall bear thereon a Certificate of Authentication substantially in the form established for such Securities, executed manually by an authorized signatory of the Trustee, or by any Authenticating Agent with respect to such Securities, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. Such Certificate of Authentication executed by the Trustee, or by any Authenticating Agent appointed by the Trustee with respect 32 15 to such Securities, upon any Security executed by the Company shall be conclusive evidence that the Security so authenticated has been duly authenticated and made available for delivery hereunder and that the holder is entitled to the benefits of this Indenture. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication, together with a written order of the Company in the form of an Officers' Certificate for the authentication and delivery of such Securities, and the other documents required by Section 13.06 and the Trustee, in accordance with such written order, shall authenticate and make available for delivery such Securities. In authenticating such Securities and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section 7.01) shall be fully protected in relying upon, an Opinion of Counsel stating that the form and terms thereof have been established in conformity with the provisions of this Indenture. The Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this Indenture will affect the Trustee's own rights, duties or immunities under the Securities, this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee. SECTION 2.05. (a) Securities of any series may be exchanged, upon presentation thereof at the office or agency of the Company designated for such purpose in the Borough of Manhattan, the City and State of New York, for other Securities of such series of authorized denominations, and for a like aggregate principal amount, upon payment of a sum sufficient to cover any tax or other governmental charge in relation thereto, all as provided in this Section. In respect of any Securities so surrendered for exchange, the Company shall execute, the Trustee shall authenticate and such office or agency shall make available for delivery in exchange therefor the Security or Securities of the same series which the Securityholder making the exchange shall be entitled to receive, bearing numbers not contemporaneously outstanding. 33 16 (b) The Company shall keep, or cause to be kept, at its office or agency designated for such purpose in the Borough of Manhattan, the City and State of New York, or such other location designated by the Company a register or registers (herein referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall register the Securities and the transfers of Securities as in this Article provided and which at all reasonable times shall be open for inspection by the Trustee. The registrar for the purpose of registering Securities and transfers of Securities as herein provided shall be appointed as authorized by Board Resolution (the "Security Registrar"). Upon surrender for transfer of any Security at the office or agency of the Company designated for such purpose in the Borough of Manhattan, the City and State of New York, the Company shall execute, the Trustee shall authenticate and such office or agency shall make available for delivery in the name of the transferee or transferees a new Security or Securities of the same series as the Security presented for a like aggregate principal amount. All Securities presented or surrendered for exchange or registration of transfer, as provided in this Section, shall be accompanied (if so required by the Company or the Security Registrar) by a written instrument or instruments of transfer, in form satisfactory to the Company or the Security Registrar, duly executed by the registered holder or by his duly authorized attorney in writing. (c) No service charge shall be made for any exchange or registration of transfer of Securities, or issue of new Securities in case of partial redemption of any series, but the Company may require payment by the Securityholder requesting an exchange or registration of transfer of a sum sufficient to cover any tax or other governmental charge in relation thereto, other than in connection with exchanges made pursuant to Section 2.06, Section 3.03(b) and Section 9.04 not involving any transfer. (d) The Company shall not be required (i) to issue, register the transfer of or exchange any Securities during a period beginning at the opening of business 15 days before any selection for redemption of Securities and ending at the close of business on the earliest date on which the relevant notice of redemption is deemed to have been given to all holders of Securities to be redeemed and 34 17 (ii) register the transfer of or exchange any Securities so selected for redemption, in whole or in part, except the unredeemed portion of any Securities being redeemed in part. The provisions of this Section 2.05 are, with respect to any Global Security, subject to Section 2.11. SECTION 2.06. Pending the preparation of definitive Securities of any series, the Company may execute, and the Trustee shall authenticate and make available for delivery, temporary Securities (printed, lithographed or typewritten) of any authorized denomination, and substantially in the form of the definitive Securities in lieu of which they are issued, but with such omissions, insertions and variations as may be appropriate for temporary Securities, all as may be determined by the Company. Every temporary Security of any series shall be executed by the Company and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Securities of such series. Without unnecessary delay the Company will execute and will furnish definitive Securities of such series and thereupon any or all temporary Securities of such series may be surrendered in exchange therefor (without charge to the holders), at the office or agency of the Company designated for the purpose in the Borough of Manhattan, the City and State of New York, and the Trustee shall authenticate and such office or agency shall make available for delivery in exchange for such temporary Securities an equal aggregate principal amount of definitive Securities of such series, unless the Company advises the Trustee to the effect that definitive Securities need not be executed and furnished until further notice from the Company. Until so exchanged, the temporary Securities of such series shall be entitled to the same benefits under this Indenture as definitive Securities of such series authenticated and delivered hereunder. SECTION 2.07. In case any temporary or definitive Security shall become mutilated or be destroyed, lost or stolen, the Company (subject to the next succeeding sentence) shall execute, and upon its request the Trustee (subject as aforesaid) shall authenticate and make available for delivery, a new Security of the same series bearing a number not contemporaneously Outstanding, in exchange and substitution for the mutilated Security, or in lieu of and in substitution for the Security so destroyed, lost or stolen. In every case the applicant for a substituted Security shall furnish to the Company and to the Trustee 35 18 such security or indemnity as may be required by them to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company and to the Trustee evidence to their satisfaction of the destruction, loss or theft of the applicant's Security and of the ownership thereof. The Trustee may authenticate any such substituted Security and make available for delivery the same upon the written request or authorization of any officer of the Company. Upon the issuance of any substituted Security, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. In case any Security which has matured or is about to mature shall become mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a substitute Security, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated Security) if the applicant for such payment shall furnish to the Company and to the Trustee such security or indemnity as they may require to save each of them harmless, and, in case of destruction, loss or theft, evidence to the satisfaction of the Company and the Trustee of the destruction, loss or theft of such Security and of the ownership thereof. Every Security issued pursuant to the provisions of this Section in substitution for any Security which is mutilated, destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of the same series duly issued hereunder. All Securities shall be held and owned upon the express condition that the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities, and shall preclude (to the extent lawful) any and all other rights or remedies, notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. SECTION 2.08. All Securities surrendered for the purpose of payment, redemption, exchange or registration of transfer shall, if surrendered to the Company or any paying agent, be delivered to the Trustee for cancellation, or, if 36 19 surrendered to the Trustee, shall be canceled by it, and no Securities shall be issued in lieu thereof except as expressly required or permitted by any of the provisions of this Indenture. On written request of the Company, the Trustee shall deliver to the Company canceled Securities held by the Trustee. If the Company shall otherwise acquire any of the Securities, however, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities unless and until the same are delivered to the Trustee for cancelation. SECTION 2.09. Nothing in this Indenture or in the Securities, express or implied, shall give or be construed to give to any Person, other than the parties hereto and the holders of the Securities, any legal or equitable right, remedy or claim under, or in respect of, this Indenture, or under any covenant, condition or provision herein contained; all such covenants, conditions and provisions being for the sole benefit of the parties hereto and of the holders of the Securities. SECTION 2.10. So long as any of the Securities of any series remain Outstanding there may be an Authenticating Agent for any or all such series of Securities which the Trustee shall have the right to appoint. Said Authenticating Agent shall be authorized to act on behalf of the Trustee to authenticate Securities of such series issued upon exchange, transfer or partial redemption thereof, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. All references in this Indenture to the authentication of Securities by the Trustee shall be deemed to include authentication by an Authenticating Agent for such series except for authentication upon original issuance or pursuant to Section 2.07 hereof. Each Authenticating Agent shall be acceptable to the Company and shall be a corporation which has a combined capital and surplus, as most recently reported or determined by it, sufficient under the laws of any jurisdiction under which it is organized or in which it is doing business to conduct a trust business, and which is otherwise authorized under such laws to conduct such business and is subject to supervision or examination by Federal or state authorities. If at any time any Authenticating Agent shall cease to be eligible in accordance with these provisions, it shall resign immediately. 37 20 Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time (and upon request by the Company shall) terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and to the Company. Upon resignation, termination or cessation of eligibility of any Authenticating Agent, the Trustee may appoint an eligible successor Authenticating Agent acceptable to the Company. Any successor Authenticating Agent, upon acceptance of its appointment hereunder, shall become vested with all the rights, powers and duties of its predecessor hereunder as if originally named as an Authenticating Agent pursuant hereto. SECTION 2.11. (a) If, pursuant to Section 2.01, the Company shall establish that the Securities of a particular series are to be issued as one or more Global Securities, then the Company shall execute, and the Trustee shall, in accordance with Section 2.04, authenticate and deliver, one or more Global Securities which (i) shall represent, and shall be denominated in an aggregate amount equal to the aggregate principal amount of, all of the Outstanding Securities of such series, (ii) shall be registered in the name of the Depositary or its nominee, (iii) shall be delivered by the Trustee to the Depositary or pursuant to the Depositary's instruction and (iv) shall bear a legend substantially to the following effect: "Except as otherwise provided in Section 2.11 of the Indenture, this Security may be transferred, in whole but not in part, only to another nominee of the Depositary or to a successor Depositary or to a nominee of such successor Depositary." (b) Notwithstanding the provisions of Section 2.05, the Global Security of a series may be transferred, in whole but not in part and in the manner provided in Section 2.05, only to another nominee of the Depositary for such series, or to a successor Depositary for such series selected or approved by the Company or to a nominee of such successor Depositary. (c) If at any time the Depositary for a series of Securities notifies the Company that it is unwilling or unable to continue as Depositary for such series or if at any time the Depositary for such series shall no longer be registered, or in good standing, under the Exchange Act or other applicable statute or regulation and a successor Depositary for such series is not appointed by the Company within 90 days after the Company receives such notice or 38 21 becomes aware of such condition, as the case may be, this Section 2.11 shall no longer be applicable to the Securities of such series, and the Company will execute, and subject to Section 2.05, the Trustee will authenticate and make available for delivery, Securities of such series in definitive registered form without coupons, in authorized denominations, and in an aggregate principal amount equal to the principal amount of the Global Security of such series in exchange for such Global Security. In addition, the Company may at any time determine that the Securities of any series shall no longer be represented by one or more Global Securities and that the provisions of this Section 2.11 shall no longer apply to the Securities of such series. In such event, the Company will execute and, subject to Section 2.05, the Trustee, upon receipt of an Officers' Certificate evidencing such determination by the Company, will authenticate and deliver Securities of such series in definitive registered form, without coupons, in authorized denominations, and in an aggregate principal amount equal to the principal amount of the Global Security of such series in exchange for such Global Security. Upon the exchange of a Global Security for such Securities in definitive registered form, without coupons, in authorized denominations, the Global Security shall be canceled by the Trustee. Any Securities in definitive registered form issued in exchange for a Global Security pursuant to this Section 2.11(c) shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Securities to the Depositary for delivery to the persons in whose names such Securities are so registered. SECTION 2.12. CUSIP Numbers. The Company in issuing the Securities may use "CUSIP" and "CINS" numbers (if then generally in use), and the Trustee shall use CUSIP numbers or CINS numbers, as the case may be, in notices of redemption or exchange as a convenience to Securityholders but no representation shall be made by the Company, the Trustee or any other Person as to the correctness of such numbers either as printed on the Securities or as contained in any notice of redemption or exchange. 39 22 ARTICLE III Redemption of Securities and Sinking Fund Provisions SECTION 3.01. The Company may redeem the Securities of any series issued hereunder on and after the dates and in accordance with the terms established for such series pursuant to Section 2.01. SECTION 3.02. (a) In case the Company shall desire to exercise such right to redeem all or, as the case may be, a portion of the Securities of any series in accordance with the right reserved so to do, it shall give notice of such redemption, first class postage prepaid, not less than 30 nor more than 60 days before the date fixed for redemption to holders of the Securities of the series to be redeemed at their last addresses as they shall appear upon the Security Register. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the registered holder receives the notice. In any case, failure duly to give such notice to the holder of any Security of any series designated for redemption in whole or in part, or any defect in the notice, shall not affect the validity of the proceedings for the redemption of any other Securities of such series or any other series. In the case of any redemption of Securities prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with any such restriction. Each such notice of redemption shall specify the date fixed for redemption and the redemption price at which Securities of that series are to be redeemed, and shall state that payment of the redemption price of such Securities to be redeemed will be made at the office or agency of the Company in the Borough of Manhattan, the City and State of New York, upon presentation and surrender of such Securities, that interest accrued to the date fixed for redemption will be paid as specified in said notice, that from and after said date interest will cease to accrue and that the redemption is for a sinking fund, if such is the case. If less than all the Securities of a series are to be redeemed, the notice to the holders of Securities of that series to be redeemed in whole or in part shall specify the particular Securities to be so redeemed. In case any 40 23 Security is to be redeemed in part only, the notice which relates to such Security shall state the portion of the principal amount thereof to be redeemed and shall state that, on and after the redemption date, upon surrender of such Security, a new Security or Securities of such series in principal amount equal to the unredeemed portion thereof will be issued. (b) If less than all the Securities of a series are to be redeemed, the Company shall give the Trustee at least 45 days notice in advance of the date fixed for redemption as to the aggregate principal amount of Securities of the series to be redeemed, and thereupon the Trustee shall select, by lot or in any other manner as it shall deem appropriate and fair in its discretion and which may provide for the selection of a portion or portions (equal to $25 or any integral multiple thereof) of the principal amount of such Securities of a denomination larger than $25, the Securities to be redeemed and shall thereafter promptly notify the Company in writing of the numbers of the Securities to be redeemed, in whole or in part. The Company may, if and whenever it shall so elect, by delivery of instructions signed on its behalf by its President or any Vice President, instruct the Trustee or any paying agent to call all or any part of the Securities of a particular series for redemption and to give notice of redemption in the manner set forth in this Section, such notice to be in the name of the Company or its own name as the Trustee or such paying agent may deem advisable. In any case in which notice of redemption is to be given by the Trustee or any such paying agent, the Company shall deliver or cause to be delivered to, or permit to remain with, the Trustee or such paying agent, as the case may be, such Security Register, transfer books or other records or suitable copies or extracts therefrom, sufficient to enable the Trustee or such paying agent to give any notice by mail that may be required under the provisions of this Section. SECTION 3.03. (a) If the giving of notice of redemption shall have been completed as above provided, the Securities or portions of Securities of the series to be redeemed specified in such notice shall become due and payable on the date and at the place stated in such notice at the applicable redemption price, together with interest accrued to but not including the date fixed for redemption and interest on such Securities or portions of Securities shall cease to accrue on and after the date fixed for 41 24 redemption, unless the Company shall default in the payment of such redemption price and accrued interest with respect to any such Security or portion thereof. On presentation and surrender of such Securities on or after the date fixed for redemption at the place of payment specified in the notice, said Securities shall be paid and redeemed at the applicable redemption price for such series, together with interest accrued thereon to but not including the date fixed for redemption (but if the date fixed for redemption is after the record date with respect to an Interest Payment Date and on or prior to such Interest Payment Date, the interest installment payable on such Interest Payment Date shall be payable to the registered holder at the close of business on the applicable record date pursuant to Section 2.03). (b) Upon presentation of any Security of such series which is to be redeemed in part only, the Company shall execute and the Trustee shall authenticate and the office or agency where the Security is presented shall make available for delivery to the holder thereof, at the expense of the Company, a new Security or Securities of the same series, of authorized denominations in principal amount equal to the unredeemed portion of the Security so presented. SECTION 3.04. The provisions of Sections 3.04, 3.05 and 3.06 shall be applicable to any sinking fund for the retirement of Securities of a series, except as otherwise specified as contemplated by Section 2.01 for Securities of such series. The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an "optional sinking fund payment". If provided for by the terms of Securities for any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 3.05. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series. SECTION 3.05. The Company (i) may deliver Outstanding Securities of a series (other than any previously called for redemption) and (ii) may apply as credit Securities of a series which have been redeemed, 42 25 either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Securities of such series required to be made pursuant to the terms of such Securities as provided for by the terms of such series; provided that such Securities have not been previously so credited. Such Securities shall be received and credited for such purpose by the Trustee at the redemption price specified in such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly. SECTION 3.06. Not less than 45 days prior to each sinking fund payment date for any series of Securities, the Company (i) will deliver to the Trustee an Officers' Certificate specifying (x) the amount of the next ensuing sinking fund payment for that series pursuant to the terms of such series, and (y) the portion thereof, if any, which is to be satisfied by delivering and crediting Securities of such series pursuant to Section 3.05 and the basis for such credit and (ii) will, together with such Officers' Certificate, deliver to the Trustee any Securities to be so delivered. Not less than 30 days before each such sinking fund payment date, the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 3.02 and cause notice of the redemption thereof to be given in the name and at the expense of the Company in the manner provided in Section 3.02. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Section 3.03. ARTICLE IV Particular Covenants of the Company The Company covenants and agrees for each series of the Securities as follows: SECTION 4.01. The Company will duly and punctually pay or cause to be paid the principal of (and premium, if any), and interest on, the Securities of such series at the time and place and in the manner provided herein and established with respect to such Securities. 43 26 SECTION 4.02. So long as any series of the Securities remain Outstanding, the Company agrees to maintain an office or agency in the Borough of Manhattan, The City and State of New York, with respect to each such series and at such other location or locations as may be designated as provided in this Section 4.02, where (i) Securities of that series may be presented for payment, (ii) Securities of that series may be presented as hereinabove authorized for registration of transfer and exchange, and (iii) notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be given or served, such designation to continue with respect to such office or agency until the Company shall, by written notice signed by its President or a Vice President and delivered to the Trustee, designate some other office or agency for any or all of such purposes. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, notices and demands. SECTION 4.03. (a) If the Company shall appoint one or more paying agents for all or any series of the Securities, other than the Trustee, the Company will cause each such paying agent to execute and deliver to the Trustee an instrument in which such paying agent shall agree with the Trustee, subject to the provisions of this Section: (1) that it will hold all sums held by it as such agent for the payment of the principal of (and premium, if any), or interest on, the Securities of that series (whether such sums have been paid to it by the Company or by any other obligor of such Securities) in trust for the benefit of the persons entitled thereto; (2) that it will give the Trustee written notice of any failure by the Company (or by any other obligor of such Securities) to make any payment of the principal of (and premium, if any), or interest on, the Securities of that series when the same shall be due and payable; (3) that it will, at any time during the continuance of any failure referred to in the preceding paragraph (a)(2) above, upon the written request of the 44 27 Trustee, forthwith pay to the Trustee all sums so held in trust by such paying agent; and (4) that it will perform all other duties of paying agent as set forth in this Indenture. (b) If the Company shall act as its own paying agent with respect to any series of the Securities, it will, on or before each due date of the principal of (and premium, if any), or interest on, Securities of that series, set aside, segregate and hold in trust for the benefit of the persons entitled thereto a sum sufficient to pay such principal (and premium, if any) or interest so becoming due on Securities of that series until such sums shall be paid to such persons or otherwise disposed of as herein provided and will promptly notify the Trustee in writing of such action, or any failure (by it or any other obligor on such Securities) to take such action. Whenever the Company shall have one or more paying agents for any series of Securities, it will, prior to each due date of the principal of (and premium, if any), or interest on, any Securities of that series, deposit with the paying agent a sum sufficient to pay the principal (and premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the persons entitled to such principal, premium or interest, and (unless such paying agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. (c) Anything in this Section to the contrary notwithstanding, (i) the agreement to hold sums in trust as provided in this Section is subject to the provisions of Section 11.04 and (ii) the Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or direct any paying agent to pay, to the Trustee all sums held in trust by the Company or such paying agent, such sums to be held by the Trustee upon the same terms and conditions as those upon which such sums were held by the Company or such paying agent; and, upon such payment by any paying agent to the Trustee, such paying agent shall be released from all further liability with respect to such money. SECTION 4.04. The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 7.10, a Trustee, so that there shall at all times be a Trustee hereunder. 45 28 ARTICLE V Securityholders' Lists and Reports by the Company and the Trustee SECTION 5.01. The Company will furnish or cause to be furnished to the Trustee (a) on a monthly basis on each regular record date (as defined in Section 2.03) a list, in such form as the Trustee may reasonably require, of the names and addresses of the holders of each series of Securities as of such regular record date; provided that the Company shall not be obligated to furnish or cause to be furnished such list at any time that the list shall not differ in any respect from the most recent list furnished to the Trustee by the Company and (b) at such other times as the Trustee may request in writing within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; provided, however, that no such list need be furnished for any series for which the Trustee shall be the Security Registrar. SECTION 5.02. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the holders of Securities contained in the most recent list furnished to it as provided in Section 5.01 and as to the names and addresses of holders of Securities received by the Trustee in its capacity as Security Registrar (if acting in such capacity). (b) The Trustee may destroy any list furnished to it as provided in Section 5.01 upon receipt of a new list so furnished. (c) In case three or more holders of Securities of a series (hereinafter referred to as "applicants") apply in writing to the Trustee, and furnish to the Trustee reasonable proof that each such applicant has owned a Security for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other holders of Securities of such series or holders of all Securities with respect to their rights under this Indenture or under such Securities, and such application is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall 46 29 within five business days after the receipt of such application, at its election, either: (1) afford to such applicants access to the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section 5.02; or (2) inform such applicants as to the approximate number of holders of Securities of such series or of all Securities, as the case may be, whose names and addresses appear in the information preserved at the time by the Trustee, in accordance with the provisions of subsection (a) of this Section 5.02, and as to the approximate cost of mailing to such Securityholders the form of proxy or other communication, if any, specified in such application. (d) If the Trustee shall elect not to afford such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each holder of such series or of all Securities, as the case may be, whose name and address appears in the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section 5.02, a copy of the form of proxy or other communication which is specified in the application of such applicants received pursuant to subsection (c) of this Section 5.02, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender, the Trustee shall mail to such applicants and file with the Securities and Exchange Commission (the "Commission"), together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interests of the holders of Securities of such series or of all Securities, as the case may be, or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee shall mail copies of such material to 47 30 all such Securityholders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise, the Trustee shall be relieved of any obligation or duty to such applicants respecting their application. (e) Each and every holder of the Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any paying agent nor any Security Registrar shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the holders of Securities in accordance with the provisions of this Section, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under this Section. SECTION 5.03. (a) The Company covenants and agrees to file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports pursuant to either of such Sections, then to file with the Trustee and the Commission in accordance with the rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Exchange Act, in respect of a security listed and registered on a national securities exchange, as may be prescribed from time to time in such rules and regulations. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). (b) The Company covenants and agrees to file with the Trustee and the Commission, in accordance with the rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the 48 31 conditions and covenants provided for in this Indenture as may be required from time to time by such rules and regulations. (c) The Company covenants and agrees to transmit by mail, first-class postage prepaid, or by reputable overnight delivery service which provides for evidence of receipt, to the Securityholders, as their names and addresses appear upon the Security Register, within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to subsections (a) and (b) of this Section as may be required by rules and regulations prescribed from time to time by the Commission. (d) The Company covenants and agrees to furnish to the Trustee, on or before May 15 in each calendar year in which any of the Securities are Outstanding, or on or before such other day in each calendar year as the Company and the Trustee may from time to time agree upon, a Certificate of the principal executive officer, principal financial officer, or principal accounting officer as to his or her knowledge of the Company's compliance with all conditions and covenants under this Indenture. For purposes of this subsection (d), such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Indenture. SECTION 5.04. (a) On or before July 15 in each year in which any of the Securities are Outstanding, the Trustee shall transmit by mail, first class postage prepaid, to the Securityholders, as their names and addresses appear upon the Security Register, a brief report dated as of the preceding May 15, with respect to any of the following events which may have occurred within the previous 12 months (but if no such event has occurred within such period no report need be transmitted): (1) any change to its eligibility under Section 7.09, and its qualifications under Section 7.08; (2) the creation of, or any material change to, a relationship specified in paragraphs (1) through (10) of subsection (c) of Section 7.08; (3) the character and amount of any advances (and if the Trustee elects so to state, the circumstances 49 32 surrounding the making thereof) made by the Trustee (as such) which remain unpaid on the date of such report, and for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Securities, on any property or funds held or collected by it as Trustee if such advances so remaining unpaid aggregate more than 1/2 of 1% of the principal amount of the Securities outstanding, determined in accordance with Section 8.04, on the date of such report; (4) any change to the amount, interest rate, and maturity date of all other indebtedness owing by the Company, or by any other obligor on the Securities, to the Trustee in its individual capacity, on the date of such report, with a brief description of any property held as collateral security therefor, except any indebtedness based upon a creditor relationship arising in any manner described in paragraph (2), (3), (4) or (6) of subsection (b) of Section 7.13; (5) any change to the property and funds, if any, physically in the possession of the Trustee as such on the date of such report; (6) any release, or release and substitution, of property subject to the lien of this Indenture (and the consideration thereof, if any) which it has not previously reported; (7) any additional issue of Securities which the Trustee has not previously reported; and (8) any action taken by the Trustee in the performance of its duties under this Indenture which it has not previously reported and which in its opinion materially affects the Securities or the Securities of any series, except any action in respect of a default, notice of which has been or is to be withheld by it in accordance with the provisions of Section 6.07. (b) The Trustee shall transmit by mail, first class postage prepaid, to the Securityholders, as their names and addresses appear upon the Security Register, a brief report with respect to the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee as such since the date of the last report transmitted pursuant to the provisions of subsection (a) of 50 33 this Section (or if no such report has yet been so transmitted, since the date of execution of this Indenture), for the reimbursement of which it claims or may claim a lien or charge prior to that of the Securities of any series on property or funds held or collected by it as Trustee, and which it has not previously reported pursuant to this subsection if such advances remaining unpaid at any time aggregate more than 10% of the principal amount of Securities of such series outstanding, determined in accordance with Section 8.04, at such time, such report to be transmitted within 90 days after such advances. (c) A copy of each such report shall, at the time of such transmission to Securityholders, be filed by the Trustee with the Company, with each stock exchange upon which any Securities are listed (if so listed) and also with the Commission. The Company agrees to notify the Trustee when any Securities become listed on any stock exchange. ARTICLE VI Remedies of the Trustee and Securityholders on Event of Default SECTION 6.01. (a) Whenever used herein with respect to Securities of a particular series, "Event of Default" means any one or more of the following events which has occurred and is continuing: (1) default in the payment of any installment of interest upon any of the Securities of that series, as and when the same shall become due and payable, and continuance of such default for a period of 30 days; provided, however, that a valid extension of an interest payment period by the Company in accordance with the terms of any indenture supplemental hereto, shall not constitute a default in the payment of interest; (2) default in the payment of the principal of (or premium, if any, on) any of the Securities of that series as and when the same shall become due and payable whether at maturity, upon redemption, by declaration or otherwise, or in any payment required by any sinking or analogous fund established with respect to that series; 51 34 (3) failure on the part of the Company duly to observe or perform any other of the covenants or agreements on the part of the Company with respect to that series contained in such Securities or otherwise established with respect to that series of Securities pursuant to Section 2.01 or contained in this Indenture (other than a covenant or agreement which has been expressly established solely for the benefit of one or more series of Securities other than such series) for a period of 90 days after the date on which written notice of such failure, requiring the same to be remedied and stating that such notice is a "Notice of Default" hereunder, shall have been given to the Company by the Trustee, by registered or certified mail, or to the Company and the Trustee by the holders of at least 25% in principal amount of the Securities of that series at the time outstanding, determined in accordance with Section 8.04; (4) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable Federal or State law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 90 consecutive days; or (5) the commencement by the Company of a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing 52 35 by it of a petition or answer or consent seeking reorganization or relief under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company in furtherance of any such action. (b) If an Event of Default occurs and is continuing with respect to Securities of a particular series, unless the principal of all the Securities of such series shall have already become due and payable, either the Trustee or the holders of not less than 25% in aggregate principal amount of the Securities of that series then outstanding hereunder, determined in accordance with Section 8.04, by notice in writing to the Company (and to the Trustee if given by such Securityholders), may declare the principal of all the Securities of that series to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything contained in this Indenture or in the Securities of that series or established with respect to that series pursuant to Section 2.01 to the contrary notwithstanding. (c) Section 6.01(b), however, is subject to the condition that if, at any time after the principal of the Securities of a series shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, the Company shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest upon all the Securities of such series and the principal of (and premium, if any, on) any and all Securities of that series which shall have become due otherwise than by acceleration (with interest upon such principal (and premium, if any), and, to the extent that such payment is enforceable under applicable law, upon overdue installments of interest, at the rate per annum expressed in the Securities of such series to the date of such payment or deposit) and the amount payable to the Trustee under Section 7.06, and any and all defaults under the Indenture, other than the nonpayment of principal on 53 36 Securities of such series which shall not have become due by their terms, shall have been remedied or waived as provided in Section 6.06, then the holders of a majority in aggregate principal amount of the Securities of such series then outstanding, determined in accordance with Section 8.04, (subject to, in the case of any series of Securities held as trust assets of a JPM Capital Trust and with respect to which a Security Exchange has not theretofore occurred, such consent of the holders of the Preferred Securities and the Common Securities of such JPM Capital Trust as may be required under the Declaration of Trust of such JPM Capital Trust), by written notice to the Company and to the Trustee, may rescind and annul such declaration and its consequences with respect to such series of Securities; but no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair any right consequent thereon. (d) In case the Trustee shall have proceeded to enforce any right with respect to Securities of a series under this Indenture and such proceedings shall have been discontinued or abandoned because of rescission or annulment as provided in (c) above or for any other reason or shall have been determined adversely to the Trustee, then the Company and the Trustee shall be restored to their former respective positions and rights hereunder, and all rights, remedies and powers of the Company and the Trustee shall continue as though no such proceedings had been taken. (e) If, prior to a Security Exchange with respect to the Securities of any series, a Default with respect to the Securities of such series shall have occurred, the Company expressly acknowledges that under the circumstances set forth in the applicable Declaration of Trust, any holder of Preferred Securities of the applicable JPM Capital Trust may enforce directly against the Company the applicable Property Trustee's rights hereunder. In furtherance of the foregoing and for the avoidance of any doubt, the Company acknowledges that, under the circumstances described in the applicable Declaration of Trust, any such holder of Preferred Securities, in its own name, in the name of the applicable JPM Capital Trust or in the name of the holders of the Preferred Securities issued by such JPM Capital Trust, may institute or cause to be instituted a proceeding, including, without limitation, any suit in equity, an action at law or other judicial or administrative proceeding, to enforce the applicable Property Trustee's rights hereunder directly against the Company as issuer of the applicable 54 37 series of Securities, and may prosecute such proceeding to judgment or final decree, and enforce the same against the Company. SECTION 6.02. (a) The Company covenants that (1) in case default shall be made in the payment of any installment of interest on any of the Securities of a series, or any payment required by any sinking or analogous fund established with respect to such series as and when the same shall have become due and payable, and such default shall have continued for a period of 10 Business Days, or (2) in case default shall be made in the payment of the principal of (or premium, if any, on) any of the Securities of a series when the same shall have become due and payable, whether upon maturity of the Securities of a series or upon redemption or upon declaration or otherwise, then, upon demand of the Trustee, the Company will pay to the Trustee, for the benefit of the holders of the Securities of such series, the whole amount that then shall have become due and payable on all Securities of such series for principal (and premium, if any) or interest, or both, as the case may be, with interest upon the overdue principal (and premium, if any) and (to the extent that payment of such interest is enforceable under applicable law and without duplication of any other amounts paid by the Company or the applicable JPM Capital Trust in respect thereof) upon overdue installments of interest at the rate per annum expressed in the Securities of such series; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, and the amount payable to the Trustee under Section 7.06. (b) In case the Company shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceeding to judgment or final decree, and may enforce any such judgment or final decree against the Company or other obligor upon the Securities of such series and collect in the manner provided by law out of the property of the Company or other obligor upon the Securities of such series wherever situated the moneys adjudged or decreed to be payable. (c) In case of any receivership, insolvency, liquidation, bankruptcy, reorganization, readjustment, arrangement, composition or other judicial proceedings 55 38 affecting the Company, any other obligor on the Securities of any series, or the creditors or property of either, the Trustee shall have the power to intervene in such proceedings and take any action therein that may be permitted by the court and shall (except as may be otherwise provided by law) be entitled to file such proofs of claim and other papers and documents as may be necessary or advisable in order to have the claims of the Trustee and of the holders of Securities of such series allowed for the entire amount due and payable by the Company or such other obligor under the Indenture at the date of institution of such proceedings and for any additional amount which may become due and payable by the Company or such other obligor after such date, and to collect and receive any moneys or other property payable or deliverable on any such claim, and to distribute the same after the deduction of the amount payable to the Trustee under Section 7.06; and any receiver, assignee or trustee in bankruptcy or reorganization is hereby authorized by each of the holders of Securities of such series to make such payments to the Trustee, and, in the event that the Trustee shall consent to the making of such payments directly to such Securityholders, to pay to the Trustee any amount due it under Section 7.06. (d) All rights of action and of asserting claims under this Indenture, or under any of the terms established with respect to Securities of any series, may be enforced by the Trustee without the possession of any of such Securities, or the production thereof at any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for payment to the Trustee of any amounts due under Section 7.06, be for the ratable benefit of the holders of the Securities of such series. In case of an Event of Default hereunder, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law. 56 39 Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement, adjustment or composition affecting the Securities of any series or the rights of any holder thereof or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding. SECTION 6.03. Any moneys collected by the Trustee pursuant to Section 6.02 with respect to a particular series of Securities shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such moneys on account of principal (or premium, if any) or interest, upon presentation of the Securities of such series, and stamping thereon the payment, if only partially paid, and upon surrender thereof if fully paid: FIRST: To the payment of costs and expenses of collection and of all amounts payable to the Trustee under Section 7.06; SECOND: To the payment of the amounts then due and unpaid upon Securities of such series for principal (and premium, if any) and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal (and premium, if any) and interest, respectively; and THIRD: The balance, if any, to the Person or Persons entitled thereto. SECTION 6.04. No holder of any Security of any series shall have any right by virtue or by availing of any provision of this Indenture to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Indenture or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless such holder previously shall have given to the Trustee written notice of an Event of Default and of the continuance thereof with respect to Securities of such series specifying such Event of Default, as hereinbefore provided, and unless also the holders of not less than 25% in aggregate principal amount of the Securities of such series then outstanding, determined in accordance with Section 8.04, shall have made 57 40 written request upon the Trustee to institute such action, suit or proceeding in its own name as trustee hereunder and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby, and the Trustee for 60 days after its receipt of such notice, request and offer of indemnity, shall have failed to institute any such action, suit or proceeding; it being understood and intended, and being expressly covenanted by the holders and the Trustee, that no one or more holders of Securities of such series shall have any right in any manner whatsoever by virtue or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of the holders of any other of such Securities, or to obtain or seek to obtain priority over or preference to any other such holder, or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all holders of Securities of such series. For the protection and enforcement of the provisions of this Section, each and every Securityholder and the Trustee shall be entitled to such relief as can be given either at law or in equity. Notwithstanding any other provisions of this Indenture, however, the right of any holder of any Security to receive payment of the principal of (and premium, if any) and interest on such Security, as therein provided, on or after the respective due dates expressed in such Security (or in the case of redemption, on the redemption date), or to institute suit for the enforcement of any such payment on or after such respective dates or redemption date, shall not be impaired or affected without the consent of such holder. SECTION 6.05. (a) All powers and remedies given by this Article to the Trustee or to the Securityholders shall, to the extent permitted by law, be deemed cumulative and not exclusive of any others thereof or of any other powers and remedies available to the Trustee or the holders of the Securities, by judicial proceedings or otherwise, to enforce performance or observance of the covenants and agreements contained in this Indenture or otherwise established with respect to such Securities. (b) No delay or omission by the Trustee or by any holder of any of the Securities to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power, or shall be construed to be a waiver of any such 58 41 default or an acquiescence therein; and, subject to the provisions of Section 6.04, every power and remedy given by this Article or by law to the Trustee or to the Securityholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Securityholders. SECTION 6.06. The holders of a majority in aggregate principal amount of the Securities of any series at the time outstanding, determined in accordance with Section 8.04 (with, in the case of any series of Securities held as trust assets of a JPM Capital Trust and with respect to which a Security Exchange has not theretofore occurred, such consent of holders of the Preferred Securities and the Common Securities of such JPM Capital Trust as may be required under the Declaration of Trust of such JPM Capital Trust), shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee with respect to such series; provided, however, that such direction shall not be in conflict with any rule of law or with this Indenture or unduly prejudicial to the rights of holders of Securities of any other series at the time outstanding (determined in accordance with Section 8.04) and not parties thereto. Subject to the provisions of Section 7.01, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall, by a Responsible Officer or Responsible Officers of the Trustee, determine that the proceeding so directed would involve the Trustee in personal liability. The holders of a majority in aggregate principal amount of the Securities of any series at the time outstanding, determined in accordance with Section 8.04, affected thereby, determined in accordance with Section 8.04 (with, in the case of any series of Securities held as trust assets of a JPM Capital Trust and with respect to which a Security Exchange has not theretofore occurred, such consent of holders of the Preferred Securities and the Common Securities of such JPM Capital Trust as may be required under the Declaration of Trust of such JPM Capital Trust), may, on behalf of the holders of all of the Securities of such series, waive any past default in the performance of any of the covenants contained herein or established pursuant to Section 2.01 with respect to such series and its consequences, except a default in the payment of the principal of, or premium, if any, or interest on, any of the Securities of such series as and when the same shall become due (x) by the terms of such Securities otherwise than by 59 42 acceleration (unless such default has been cured and a sum sufficient to pay all matured installments of interest and principal and any premium has been deposited with the Trustee (in accordance with Section 6.01(c)) or (y) as a result of a call for redemption of Securities of such series. Upon any such waiver, the default covered thereby shall be deemed to be cured for all purposes of this Indenture and the Company, the Trustee and the holders of the Securities of such series shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION 6.07. The Trustee shall, within 90 days after the occurrence of a default with respect to a particular series, transmit by mail, first-class postage prepaid, to the holders of Securities of such series, as their names and addresses appear upon the Security Register, notice of all defaults with respect to such series known to the Trustee, unless such defaults shall have been cured before the giving of such notice (the term "defaults" for the purpose of this Section being hereby defined to be the events specified in subsections (1), (2), (3), (4) and (5) of Section 6.01(a), not including any periods of grace provided for therein and irrespective of the giving of notice provided for by subsection (3) of Section 6.01(a)); provided that, except in the case of default in the payment of the principal of (or premium, if any), or interest on, any of the Securities of such series or in the payment of any sinking fund installment established with respect to such series, the 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 Trustee in good faith determine that the withholding of such notice is in the interests of the holders of Securities of such series; provided further, however, that, in the case of any default of the character specified in Section 6.01(a)(3) with respect to Securities of such series, no such notice to the holders of the Securities of such series shall be given until at least 30 days after the occurrence thereof. The Trustee shall not be deemed to have knowledge of any default, except (i) a default under subsection (a)(1) or (a)(2) of Section 6.01 as long as the Trustee is acting as paying agent for such series of Securities or (ii) any default as to which the Trustee shall have received written notice or a Responsible Officer charged with the 60 43 administration of this Indenture shall have obtained written notice. SECTION 6.08. All parties to this Indenture agree, and each holder of any Securities by his or her acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, or by any Securityholder, or group of Securityholders, holding more than 10% in aggregate principal amount of the Securities of any series at the time outstanding, determined in accordance with Section 8.04, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of (premium, if any), or interest on, any Security of such series, on or after the respective due dates expressed in such Security or established pursuant to this Indenture. ARTICLE VII Concerning the Trustee SECTION 7.01. (a) The Trustee, prior to the occurrence of an Event of Default with respect to Securities of a series and after the curing of all Events of Default with respect to Securities of that series which may have occurred, shall undertake to perform with respect to Securities of such series such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants shall be read into this Indenture against the Trustee. In case an Event of Default with respect to Securities of a series has occurred (which has not been cured or waived), the Trustee shall exercise with respect to Securities of that series such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. 61 44 (b) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own wilful misconduct, except that: (1) prior to the occurrence of an Event of Default with respect to Securities of a series and after the curing or waiving of all such Events of Default which may have occurred with respect to such series: (i) the duties and obligations of the Trustee shall with respect to Securities of such series be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable with respect to Securities of such series except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on the part of the Trustee, the Trustee may with respect to Securities of such series 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 Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the 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 principal 62 45 amount of the Securities of any series at the time outstanding, determined in accordance with Section 8.04, relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture with respect to the Securities of such series; (4) none of the provisions contained in this Indenture shall require the 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 there is reasonable ground for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Indenture or adequate indemnity against such risk is not reasonably assured to it; and (5) whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Article VII. SECTION 7.02. Except as otherwise provided in Section 7.01: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by a Board Resolution or an instrument signed in the name of the Company by the Chairman or the Vice Chairman of the Board of Directors or the President or any Vice President and by the Secretary or any Assistant Secretary or the Treasurer or any Assistant Treasurer or the Controller or any Assistant Controller (unless other evidence in respect thereof is specifically prescribed herein); 63 46 (c) the Trustee may consult with counsel of its selection and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted hereunder in good faith and in reliance thereon; (d) the Trustee shall be under no obligations to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Securityholders, pursuant to the provisions of this Indenture, unless such Securityholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which may be incurred therein or thereby; nothing herein contained shall, however, relieve the Trustee of the obligation, upon the occurrence of an Event of Default with respect to a series of the Securities (which has not been cured or waived) to exercise with respect to Securities of that series such of the rights and powers vested in it by this Indenture, and to use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs; (e) the Trustee shall not be liable for any action taken or omitted to be taken by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture; (f) the 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, consent, order, approval, bond, security, or other papers or documents, unless requested in writing so to do by the holders of not less than a majority in principal amount of the Securities of the particular series outstanding affected thereby, determined in accordance with Section 9.04; provided, however, that if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such costs, expenses or liabilities as a 64 47 condition to so proceeding. The reasonable expense of every such examination shall be paid by the Company or, if paid by the Trustee, shall be repaid by the Company upon demand; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the 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. SECTION 7.03. (a) The recitals contained herein and in the Securities (other than the Certificate of Authentication on the Securities) shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same. (b) The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. (c) The Trustee shall not be accountable for the use or application by the Company of any of the Securities or of the proceeds of such Securities, or for the use or application of any moneys paid over by the Trustee in accordance with any provision of this Indenture or established pursuant to Section 2.01, or for the use or application of any moneys received by any paying agent other than the Trustee. SECTION 7.04. The Trustee or any paying agent or Security Registrar, in its individual or any other capacity, may become the owner or pledgee of Securities with the same rights it would have if it were not Trustee, paying agent or Security Registrar. SECTION 7.05. Subject to the provisions of Section 11.04, all moneys received by the Trustee shall until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any moneys received by it hereunder except such as it may agree with the Company to pay thereon. SECTION 7.06. (a) The Company covenants and agrees to pay to the Trustee from time to time, and the 65 48 Trustee shall be entitled to, such reasonable compensation as the Company and the Trustee shall from time to time agree in writing (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) for all services rendered by it in the execution of the trusts hereby created and in the exercise and performance of any of the powers and duties hereunder of the Trustee, and the Company will pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence or bad faith. The Company also covenants to indemnify the Trustee (and its officers, agents, directors and employees) for, and to hold it harmless against, any loss, liability or expense including taxes (other than taxes based upon, measured by or determined by the income of the Trustee) incurred without negligence or bad faith on the part of the Trustee and arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability in the premises. (b) The obligations of the Company under this Section to compensate and indemnify the Trustee and to pay or reimburse the Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder. Such additional indebtedness shall be secured by a lien prior to that of the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the holders of particular Securities. SECTION 7.07. Except as otherwise provided in Section 7.01, whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting to take any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officers' Certificate delivered to the Trustee and such certificate, in the absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the 66 49 Trustee for any action taken, suffered or omitted to be taken by it under the provisions of this Indenture in reliance thereon. SECTION 7.08. (a) If the Trustee has or shall acquire any conflicting interest, as defined in this Section, with respect to the Securities of any series and if the Default to which such conflicting interest relates has not been cured, duly waived or otherwise eliminated, within 90 days after ascertaining that it has such conflicting interest, it shall either eliminate such conflicting interest, except as otherwise provided herein, or resign with respect to the Securities of such series in the manner and with the effect specified in Section 7.10 and the Company shall promptly appoint a successor Trustee in the manner provided herein. (b) In the event that the Trustee shall fail to comply with the provisions of subsection (a) of this Section, with respect to the Securities of any series the Trustee shall, within ten days after the expiration of such 90-day period, transmit notice of such failure by mail, first class postage prepaid, to the Securityholders of such series as their names and addresses appear upon the Security Register. (c) For the purposes of this Section, the Trustee shall be deemed to have a conflicting interest with respect to the Securities of any series if a Default has occurred and is continuing and: (1) the Trustee is trustee under this Indenture with respect to the Outstanding Securities of any series other than such series, or is trustee under another indenture under which any other securities, or certificates of interest or participation in any other securities, of the Company are outstanding, unless such other indenture is a collateral trust indenture under which the only collateral consists of Securities issued under this Indenture; provided, however, that there shall be excluded from the operation of this paragraph the Securities of any series other than such series and any other indenture or indentures under which other securities, or certificates of interest or participation in other securities, of the Company are outstanding if (i) this Indenture and such other indenture or indentures and all series of securities issuable thereunder are wholly unsecured and rank 67 50 equally and such other indenture or indentures (and such series) are hereafter qualified under the Trust Indenture Act, unless the Commission shall have found and declared by order pursuant to subsection (b) of Section 305 or subsection (c) of Section 307 of the Trust Indenture Act, that differences exist between (A) the provisions of this Indenture with respect to Securities of that series and with respect to one or more other series or (B) the provisions of this Indenture and the provisions of such other indenture or indentures (or such series), which are so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify the Trustee from acting as such under this Indenture with respect to the Securities of such series and such other series or such other indenture or indentures, or (ii) the Company shall have sustained the burden of proving, on application to the Commission and after opportunity for hearing thereon, that the trusteeship under this Indenture with respect to Securities of such series and such other series or such other indenture or indentures is not so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify the Trustee from acting as such under this Indenture with respect to Securities of such series and such other series or under such other indentures; (2) the Trustee or any of its directors or executive officers is an underwriter for the Company; (3) the Trustee directly or indirectly controls or is directly or indirectly controlled by or is under direct or indirect common control with or an underwriter for, the Company; (4) the Trustee or any of its directors or executive officers is a director, officer, partner, employee, appointee or representative of the Company, or of an underwriter (other than the Trustee itself) for the Company who is currently engaged in the business of underwriting, except that (A) one individual may be a director and/or an executive officer of the Trustee and a director and/or an executive officer of the Company, but may not be at the same time an executive officer of both the Trustee and the Company; (B) if and so long as the number of 68 51 directors of the Trustee in office is more than nine, one additional individual may be a director and/or an executive officer of the Trustee and a director of the Company; and (C) the Trustee may be designated by the Company or by an underwriter for the Company to act in the capacity of transfer agent, registrar, custodian, paying agent, fiscal agent, escrow agent, or depositary, or in any other similar capacity, or, subject to the provisions of paragraph (1) of this subsection (c), to act as trustee whether under an indenture or otherwise; (5) 10% or more of the voting securities of the Trustee is beneficially owned either by the Company or by any director, partner, or executive officer thereof, or 20% or more of such voting securities is beneficially owned, collectively, by any two or more of such persons; or 10% or more of the voting securities of the Trustee is beneficially owned either by an underwriter for the Company or by any director, partner, or executive officer thereof, or is beneficially owned, collectively by any two or more such persons; (6) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this subsection (c) defined), (A) 5% or more of the voting securities, or 10% or more of any other class of security, of the Company, not including the Securities issued under this Indenture and securities issued under any other indenture under which the Trustee is also trustee, or (B) 10% or more of any class of security of an underwriter for the Company; (7) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this subsection (c) defined), 5% or more of the voting securities of any person who, to the knowledge of the Trustee, owns 10% or more of the voting securities of, or controls directly or indirectly or is under direct or indirect common control with, the Company; (8) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this subsection (c) defined), 10% or more of any class of security of any 69 52 person who, to the knowledge of the Trustee, owns 50% or more of the voting securities of the Company; (9) the Trustee owns, on the date of Default upon the Securities of any series or any anniversary of such Default while such Default upon the Securities issued under this Indenture remains Outstanding, in the capacity of executor, administrator, testamentary or inter vivos trustee, guardian, committee or conservator, or in any other similar capacity, an aggregate of 25% or more of the voting securities, or of any class of security, of any person, the beneficial ownership of a specified percentage of which would have constituted a conflict of interest under paragraph (6), (7), or (8) of this subsection (c). As to any such securities of which the Trustee acquired ownership through becoming executor, administrator or testamentary trustee of an estate which includes them, the provisions of the preceding sentence shall not apply, for a period of two years from the date of such acquisition, to the extent that such securities in such estate do not exceed 25% of such voting securities or 25% of any such class of security. Promptly after the dates of any such Default upon the Securities issued under this Indenture and annually in each succeeding year that the Securities issued under this Indenture remain in Default, the Trustee shall make a check of its holding of such securities in any of the above-mentioned capacities as of such dates. If the Company fails to make payment in full of principal of, or interest on, any of the Securities when and as the same become due and payable, and such failure continues for 30 days thereafter, the Trustee shall make a prompt check of its holding of such securities in any of the above-mentioned capacities as of the date of the expiration of such 30-day period, and after such date, notwithstanding the foregoing provisions of this paragraph (9), all such securities so held by the Trustee, with sole or joint control over such securities vested in it, shall be considered to be beneficially owned by the Trustee for the purposes of paragraphs (6), (7) and (8) of this subsection (c), but only for so long as such failure shall continue; or (10) except under the circumstances described in paragraph (1), (3), (4), (5) or (6) of subsection (b) of Section 7.13 the Trustee shall be or shall become a creditor of the Company. 70 53 For purposes of paragraph (1) of this subsection (c), and of Section 6.06, the term "series of securities" or "securities" means a series, class or group of securities issuable under an indenture pursuant to which holders of one such series may vote to direct the indenture trustee, or otherwise take action pursuant to a vote of such holders, separately from holders of another such series; provided that "series of securities" or "series" shall not include any series of securities issuable under an indenture if all such series rank equally and are wholly secured. The specification of percentages in paragraphs (5) to (9), inclusive, of this subsection (c) shall not be construed as indicating that the ownership of such percentages of securities of a person is or is not necessary or sufficient to constitute direct or indirect control for the purposes of paragraph (3) or (7) of this subsection (c). For the purposes of paragraphs (6), (7), (8) and (9) of this subsection (c) only, (A) the terms "security" and "securities" shall include only such securities as are generally known as corporate securities, but shall not include any note or other evidence of indebtedness issued to evidence an obligation to repay moneys lent to a person by one or more banks, trust companies or banking firms, or any certificate of interest or participation in any such note or evidence of indebtedness; (B) an obligation shall be deemed to be in "default", when a default in payment of principal shall have continued for 30 days or more and shall not have been cured; and (C) the Trustee shall not be deemed to be the owner or holder of (i) any security which it holds as collateral security (as trustee or otherwise) for any obligation which is not in default as defined in clause (B) above, or (ii) any security which it holds as collateral security under this Indenture, irrespective of any Default hereunder, or (iii) any security which it holds as agent for collection, or as custodian, escrow agent or depositary, or in any similar representation capacity. Except as above provided, the word "security" or "securities" as used in this Indenture shall mean any note, stock, treasury stock, bond, indenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral trust certificate, pre-organization certificate or subscription, transferable share, investment contract, voting trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, or, in 71 54 general, any interest or instrument commonly known as a "security", or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing. (d) For the purposes of this Section: (1) The term "underwriter" when used with reference to the Company shall mean every person, who, within one year prior to the time as of which the determination is made, has purchased from the Company with a view to, or has offered or sold for the Company in connection with, the distribution of any security of the Company, or has participated or has had a direct or indirect participation in any such undertaking, or has participated or has had participation in the direct or indirect underwriting of any such undertaking, but such term shall not include a person whose interest was limited to a commission from an underwriter or dealer not in excess of the usual and customary distributors' or sellers' commission. (2) The term "director" shall mean any member of the board of directors of a corporation or any individual performing similar functions with respect to any organization whether incorporated or unincorporated. (3) The term "person" shall mean an individual, a corporation, a partnership, an association, a joint-stock company, a trust, an unincorporated organization or a government or political subdivision thereof. As used in this paragraph, the term "trust" shall include only a trust where the interest or interests of the beneficiary or beneficiaries are evidenced by a security. (4) The term "voting security" shall mean any security presently entitling the owner or holder thereof to vote in the direction or management of the affairs of a person, or any security issued under or pursuant to any trust, agreement or arrangement whereby a trustee or trustees or agent or agents for the owner or holder of such security are presently entitled to vote in the direction or management of the affairs of a person. 72 55 (5) The term "Company" shall mean any obligor upon the Securities. (6) The term "executive officer" shall mean the chairman of the board of directors, president, every vice president, every assistant vice president, every trust officer, the cashier, the secretary, and the treasurer of a corporation, and any individual customarily performing similar functions with respect to any organization whether incorporated or unincorporated. (e) The percentages of voting securities and other securities specified in this Section shall be calculated in accordance with the following provisions: (1) A specified percentage of the voting securities of the Trustee, the Company or any other person referred to in this Section (each of whom is referred to as a "person" in this paragraph) means such amount of the outstanding voting securities of such person as entitles the holder or holders thereof to cast such specified percentage of the aggregate votes which the holders of all the outstanding voting securities of such person are entitled to cast in the direction or management of the affairs of such person. (2) A specified percentage of a class of securities of a person means such percentage of the aggregate amount of securities of the class outstanding. (3) The term "amount", when used in regard to securities, means the principal amount if relating to evidences of indebtedness, the number of shares if relating to capital shares and the number of units if relating to any other kind of security. (4) The term "outstanding" means issued and not held by or for the account of the issuer. The following securities shall not be deemed outstanding within the meaning of this definition: (i) securities of an issuer held in a sinking fund relating to securities of the issuer of the same class; 73 56 (ii) securities of an issuer held in a sinking fund relating to another class of securities of the issuer, if the obligation evidenced by such other class of securities is not in default as to principal or interest or otherwise; (iii) securities pledged by the issuer thereof as security for an obligation of the issuer not in default as to principal or interest or otherwise; and (iv) securities held in escrow if placed in escrow by the issuer thereof, provided, however, that any voting securities of an issuer shall be deemed outstanding if any person other than the issuer is entitled to exercise the voting rights thereof. (5) A security shall be deemed to be of the same class as another security if both securities confer upon the holder or holders thereof substantially the same rights and privileges; provided, however, that, in the case of secured evidences of indebtedness, all of which are issued under a single indenture, differences in the interest rates or maturity dates of various series thereof shall not be deemed sufficient to constitute such series different classes; and provided further that, in the case of unsecured evidences of indebtedness, differences in the interest rates or maturity dates thereof shall not be deemed sufficient to constitute them securities of different classes, whether or not they are issued under a single indenture. (f) Except in the case of a default in the payment of the principal of (or premium, if any), or interest on, any Securities issued under this Indenture, or in the payment of any sinking or analogous fund installment, the Trustee shall not be required to resign as provided by this Section 7.08 if such Trustee shall have sustained the burden of proving, on application to the Commission and after opportunity for hearing thereon, that (i) the default under the Indenture may be cured or waived during a reasonable period and under the procedures described in such application and (ii) a stay of the Trustee's duty to resign will not be inconsistent with the interests of Securityholders. The filing of such an application shall 74 57 automatically stay the performance of the duty to resign until the Commission orders otherwise. Any resignation of the Trustee shall become effective only upon the appointment of a successor trustee and such successor's acceptance of such an appointment. SECTION 7.09. There shall at all times be a Trustee with respect to the Securities issued hereunder which shall at all times 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 Columbia, or a corporation or other person permitted to act as trustee by the Commission, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million dollars, 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 aforesaid supervising or examining authority, then for the purposes of this Section, 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. The Company may not, nor may any Person directly or indirectly controlling, controlled by, or under common control with the Company, serve as Trustee. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, the Trustee shall resign immediately in the manner and with the effect specified in Section 7.10. SECTION 7.10. (a) The Trustee or any successor hereafter appointed may at any time resign with respect to the Securities of one or more series by giving written notice thereof to the Company and by transmitting notice of resignation by mail, first class postage prepaid, to the Securityholders of such series, as their names and addresses appear upon the Security Register. Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee with respect to Securities of such series by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee. If no successor trustee shall have been so appointed and have accepted appointment within 30 days after the mailing of such notice of resignation, the resigning Trustee may petition any court of competent 75 58 jurisdiction for the appointment of a successor trustee with respect to Securities of such series, or any Securityholder of that series who has been a bona fide holder of a Security or Securities for at least six months may, subject to the provisions of Section 6.08, on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee. (b) In case at any time any of the following shall occur: (1) the Trustee shall fail to comply with the provisions of subsection (a) of Section 7.08 after written request therefor by the Company or by any Securityholder who has been a bona fide holder of a Security or Securities for at least six months; or (2) the Trustee shall cease to be eligible in accordance with the provisions of Section 7.09 and shall fail to resign after written request therefor by the Company or by any such Securityholder; or (3) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, the Company may remove the Trustee with respect to all Securities and appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee. If no successor trustee shall have been so appointed and have accepted appointment within 30 days after the mailing of such notice of removal, the Trustee so removed may petition any court of competent jurisdiction for the appointment of a successor trustee with respect to Securities of such series, or any Securityholder of that series who has been a bona fide holder of a Security or Securities for at least six months may, subject to the provisions of Section 6.08, on behalf of himself and all others similarly situated, petition any such court for the removal of the Trustee and the appointment of a successor trustee. Such court 76 59 may thereupon after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee. (c) The holders of a majority in aggregate principal amount of the Securities of any series at the time outstanding, determined in accordance with Section 8.04, may at any time remove the Trustee with respect to such series and appoint a successor trustee. (d) Any resignation or removal of the Trustee and appointment of a successor trustee with respect to the Securities of a series pursuant to any of the provisions of this Section shall become effective upon acceptance of appointment by the successor trustee as provided in Section 7.11. (e) Any successor trustee appointed pursuant to this Section may be appointed with respect to the Securities of one more series or all such series, but at any time there shall be only one Trustee with respect to the Securities of any particular series. SECTION 7.11. (a) In case of the appointment hereunder of a successor trustee with respect to all Securities, such successor trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor trustee all the rights, powers, and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor trustee all property and money held by such retiring Trustee hereunder. (b) In case of the appointment hereunder of a successor trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee and each successor trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer 77 60 and confirm to, and to vest in, each successor trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor trustee relates, (2) shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust, that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee and that no Trustee shall be responsible for any act or failure to act on the part of any other Trustee hereunder; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein, such retiring Trustee shall with respect to the Securities of that or those series to which the appointment of such successor trustee relates have no further responsibility for the exercise of rights and powers or for the performance of the duties and obligations vested in the Trustee under this Indenture, and each such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor trustee, to the extent contemplated by such supplemental indenture, the property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor trustee relates. (c) Upon request of any such successor trustee, the Company shall execute any and all instruments for more fully and certainly vesting in, and confirming to, such successor trustee all such rights, power and trusts referred to in paragraph (a) or (b) of this Section, as the case may be. 78 61 (d) No successor trustee shall accept its appointment unless at the time of such acceptance such successor trustee shall be qualified and eligible under this Article. (e) Upon acceptance of appointment by a successor trustee as provided in this Section, the Company shall transmit notice of the succession of such trustee hereunder by mail, first class postage prepaid, to the Securityholders, as their names and addresses appear upon the Security Register. If the Company fails to transmit such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be transmitted at the expense of the Company. SECTION 7.12. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be qualified under the provisions of Section 7.08 and eligible under the provisions of Section 7.09, without the execution or filing of any paper of any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. In case any Securities shall have been authenticated, but not made available for delivery, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and make available for delivery the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. SECTION 7.13. (a) Subject to the provisions of subsection (b) of this Section, if the Trustee shall be or shall become a creditor, directly or indirectly, secured or unsecured, of the Company within three months prior to a default, as defined in subsection (b) of this Section, or subsequent to such a default, then, unless and until such default shall be cured, the Trustee shall set apart and hold in a special account for the benefit of the Trustee individually, the holders of the Securities and the holders 79 62 of other indenture securities (as defined in subsection (c) of this Section): (1) an amount equal to any and all reductions in the amount due and owing upon any claim as such creditor in respect of principal or interest, effected after the beginning of such three months' period and valid as against the Company and its other creditors, except any such reduction resulting from the receipt or disposition of any property described in paragraph (2) of this subsection, or from the exercise of any right of setoff which the Trustee could have exercised if a petition in bankruptcy had been filed by or against the Company upon the date of such default; and (2) all property received by the Trustee in respect of any claim as such creditor, either as security therefor, or in satisfaction or composition thereof, or otherwise, after the beginning of such three months' period, or an amount equal to the proceeds of any such property, if disposed of, subject, however, to the rights, if any, of the Company and its other creditors in such property or such proceeds. Nothing herein contained, however, shall affect the right of the Trustee: (A) to retain for its own account (i) payments made on account of any such claim by any person (other than the Company) who is liable thereon, and (ii) the proceeds of the bona fide sale of any such claim by the Trustee to a third person, and (iii) distributions made in cash, securities, or other property in respect of claims filed against the Company in bankruptcy or receivership or in a case for reorganization pursuant to the Federal Bankruptcy Code or applicable State law; (B) to realize, for its own account, upon any property held by it as security for any such claim, if such property was so held prior to the beginning of such three month period; (C) to realize, for its own account, but only to the extent of the claim hereinafter mentioned, upon any property held by it as security for any such claim, if such claim was created after the beginning of such three month period and such property was received as security therefor simultaneously with the creation 80 63 thereof, and if the Trustee shall sustain the burden of proving that the time such property was so received the Trustee had no reasonable cause to believe that a default, as defined in subsection (c) of this Section, would occur within three months; or (D) to receive payment on any claim referred to in paragraph (B) or (C), against the release of any property held as security for such claim as provided in such paragraph (B) or (C), as the case may be, to the extent of the fair value of such property. For the purposes of paragraphs (B), (C) and (D), property substituted after the beginning of such three month period for property held as security at the time of such substitution shall, to the extent of the fair value of the property released, have the same status as the property released, and, to the extent that any claim referred to in any of such paragraphs is created in renewal of or in substitution for or for the purpose of repaying or refunding any pre-existing claim of the Trustee as such creditor, such claim shall have the same status as such pre-existing claim. If the Trustee shall be required to account, the funds and property held in such special account and the proceeds thereof shall be apportioned between the Trustee, the Securityholders and the holders of other indenture securities in such manner that the Trustee, the Securityholders and the holders of other indenture securities realize, as a result of payments from such special account and payments of dividends on claims filed against the Company in bankruptcy or receivership or in a case for reorganization pursuant to the Federal Bankruptcy Code or applicable State law, the same percentage of their respective claims, figured before crediting to the claim of the Trustee anything on account of the receipt by it from the Company of the funds and property in such special account and before crediting to the respective claims of the Trustee, the Securityholders and the holders of other indenture securities dividends on claims filed against the Company in bankruptcy or receivership or in a case for reorganization pursuant to the Federal Bankruptcy Code or applicable State law, but after crediting thereon receipts on account of the indebtedness represented by their respective claims from all sources other than from such dividends and from the funds and property so held in such special account. As used in this paragraph, with respect to any claim, the term "dividends" shall include any 81 64 distribution with respect to such claim, in bankruptcy or receivership or in a case for reorganization pursuant to the Federal Bankruptcy Code or applicable State law, whether such distribution is made in cash, securities, or other property, but shall not include any such distribution with respect to the secured portion, if any, of such claim. The court in which such bankruptcy, receivership or a case for reorganization is pending shall have jurisdiction (i) to apportion between the Trustee, the Securityholders and the holders of other indenture securities, in accordance with the provisions of this paragraph, the funds and property held in such special account and the proceeds thereof, or (ii) in lieu of such apportionment, in whole or in part, to give to the provisions of this paragraph due consideration in determining the fairness of the distributions to be made to the Trustee, the Securityholders and the holders of other indenture securities with respect to their respective claims, in which event it shall not be necessary to liquidate or to appraise the value of any securities or other property held in such special account or as security for any such claim, or to make a specific allocation of such distributions as between the secured and unsecured portions of such claims, or otherwise to apply the provisions of this paragraph as a mathematical formula. Any Trustee who has resigned or been removed after the beginning of such three month period shall be subject to the provisions of this subsection (a) as though such resignation or removal had not occurred. If any Trustee has resigned or been removed prior to the beginning of such three month period, it shall be subject to the provisions of this subsection (a) if and only if the following conditions exist: (i) the receipt of property or reduction of claim which would have given rise to the obligation to account, if such Trustee had continued as trustee, occurred after the beginning of such three-month period; and (ii) such receipt of property or reduction of claim occurred within three months after such resignation or removal. 82 65 (b) There shall be excluded from the operation of subsection (a) of this Section a creditor relationship arising from: (1) the ownership or acquisition of securities issued under any indenture, or any security or securities having a maturity of one year or more at the time of acquisition by the Trustee; (2) advances authorized by a receivership or bankruptcy court of competent jurisdiction, or by this Indenture, for the purpose of preserving any property other than cash which shall at any time be subject to the lien, if any, of this Indenture or of discharging tax liens or other prior liens or encumbrances thereon, if notice of such advance and of the circumstances surrounding the making thereof is given to the Securityholders at the time and in the manner provided in this Indenture; (3) disbursements made in the ordinary course of business in the capacity of trustee under an indenture, transfer agent, registrar, custodian, paying agent, subscription agent, fiscal agent or depositary, or other similar capacity; (4) any indebtedness created as a result of services rendered or premises rented; or any indebtedness created as a result of goods or securities sold in a cash transaction as defined in subsection (c) of this Section; (5) the ownership of stock or of other securities of a Company organized under the provisions of Section 25(a) of the Federal Reserve Act, as amended, which is directly or indirectly a creditor of the Company; or (6) the acquisition, ownership, acceptance or negotiation of any drafts, bills of exchange, acceptance or obligations which fall within the classification of self-liquidating paper as defined in subsection (c) of this Section. (c) As used in this Section: (1) The term "default" shall mean any failure to make payment in full of the principal of (or premium, 83 66 if any) or interest upon any of the Security or upon the other indenture securities when and as such principal (or premium, if any) or interest becomes due and payable. (2) The term "other indenture securities" shall mean securities upon which the Company is an obligor (as defined in the Trust Indenture Act) outstanding under any other indenture (A) under which the Trustee is also trustee, (B) which contains provisions substantially similar to the provisions of subsection (a) of this Section, and (C) under which a default exists at the time of the apportionment of the funds and property held in said special account. (3) The term "cash transaction" shall mean any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand. (4) The term "self-liquidating paper" shall mean any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Company for the purpose of financing the purchase, processing, manufacture, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Company arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation. (5) The term "Company shall mean any obligor upon any of the Securities. ARTICLE VIII Concerning the Securityholders SECTION 8.01. Whenever in this Indenture it is provided that the holders of a majority or a specified 84 67 percentage in aggregate principal amount of the Securities of a particular series may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action), the fact that, at the time of taking any such action, the holders of such majority or specified percentage of such series have joined therein may be evidenced by any instrument or any number of instruments of similar terms executed by the holders of Securities of such series in person or by agent or proxy appointed in writing. If the Company shall solicit from the Securityholders of any series any request, demand, authorization, direction, notice, consent, waiver or other action, the Company may, at its option, as evidenced by an Officers' Certificate, fix in advance a record date for such series for the determination of Securityholders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other action, but the Company shall have no obligation to do so. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other action may be given before or after the record date, but only the Securityholders of record at the close of business on the record date shall be deemed to be Securityholders for the purposes of determining whether Securityholders of the requisite proportion of outstanding Securities of that series have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other action, and for that purpose the outstanding Securities of that series shall be computed as of the record date; provided that no such authorization, agreement or consent by such Securityholders on the record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after the record date. SECTION 8.02. Subject to the provisions of Section 7.01, proof of the execution of any instrument by a Securityholder (such proof will not require notarization) or his agent or proxy and proof of the holding by any person of any of the Securities shall be sufficient if made in the following manner: (a) The fact and date of the execution by any such person of any instrument may be proved in any reasonable manner acceptable to the Trustee. 85 68 (b) The ownership of Securities shall be proved by the Security Register for Securities of such series or by a certificate of the Security Registrar with respect thereto. (c) The Trustee may require such additional proof of any matter referred to in this Section as it shall deem necessary. SECTION 8.03. Prior to the due presentment for registration of transfer of any Security, the Company, the Trustee, any paying agent and any Security Registrar may deem and treat the person in whose name such Security shall be registered upon the books of the Company as the absolute owner of such Security (whether or not such Security shall be overdue and notwithstanding any notice of ownership or writing thereon made by anyone other than the Security Registrar) for the purpose of receiving payment of, or on account of, the principal of, premium, if any, and (subject to Section 2.03) interest on, such Security and for all other purposes; and neither the Company nor the Trustee nor any paying agent nor any Security Registrar shall be affected by any notice to the contrary. SECTION 8.04. In determining whether the holders of the requisite aggregate principal amount of Securities of a particular series have concurred in any direction, consent or waiver under this Indenture, Securities of that series which are owned by the Company or any other obligor on the Securities of that series or by any Subsidiary of the Company or of such other obligor on the Securities of that series shall be disregarded and deemed not to be outstanding for the purpose of any such determination, except that for the purpose of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver, only Securities of such series which the Trustee actually knows are so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as outstanding for the purposes of this Section, if the pledgee shall establish to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not a person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any such other obligor. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. 86 69 SECTION 8.05. At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 8.01, of the taking of any action by the holders of the majority or a specified percentage in aggregate principal amount of the Securities of a particular series, any holder of a Security of that series which is shown by the evidence to be included in the Securities the holders of which have consented to such action may, by filing written notice with the Trustee, and upon proof of holding as provided in Section 8.02, revoke such action so far as concerns such Security. Except as aforesaid any such action taken by the holder of any Security shall be conclusive and binding upon such holder and upon all future holders and owners of such Security, and of any Security issued in exchange therefor, on registration of transfer thereof or in place thereof, irrespective of whether or not any notation in regard thereto is made upon such Security. Any action required by the Indenture to be taken, and that is taken, by the holders of the majority or a specified percentage in aggregate principal amount of the Securities of a particular series shall be conclusively binding upon the Company, the Trustee and the holders of all the Securities of that series. ARTICLE IX Supplemental Indentures SECTION 9.01. The Company, when authorized by a Board Resolution, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act of 1939 as in force at the date of the execution thereof) for one or more of the following purposes: (a) to convey, transfer, assign, mortgage or pledge to the Trustee as security for the Securities of one or more series any property or assets; (b) to evidence the succession of another corporation to the Company, or successive successions, and the assumption by the successor corporation of the covenants, agreements and obligations of the Company pursuant to Article X; 87 70 (c) to add to the covenants of the Company such further covenants, restrictions, conditions or provisions as its Board of Directors and the Trustee shall consider to be for the protection of the holders of Securities, and to make the occurrence, or the occurrence and continuance, of a default in any such additional covenants, restrictions, conditions or provisions an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; provided that in respect of any such additional covenant, restriction, condition or provision such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such an Event of Default or may limit the remedies available to the Trustee upon such an Event of Default or may limit the right of the holders of a majority in aggregate principal amount of the Securities of affected series to waive such an Event of Default; (d) to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture; or to make such other provisions in regard to matters or questions arising under this Indenture or under any supplemental indenture as the Board of Directors may deem necessary or desirable and which shall not [materially] 2/ adversely affect the interests of the holders of the Securities; (e) to establish the form or terms of Securities of any series as permitted by Sections 2.01, 2.02 and 2.03; (f) to evidence and provide for the acceptance of appointment hereunder by a successor trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder - -------------------- 2/ Not in Paine Webber. 88 71 by more than one trustee, pursuant to the requirements of Section 7.11; and (g) to add to, change or eliminate any of the provisions of this Indenture; provided that any such addition, change or elimination (i) shall become effective only when there is no Security Outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision or (ii) shall not apply to any Security then Outstanding. The Trustee is hereby authorized to join with the Company in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Any supplemental indenture authorized by the provisions of this Section may be executed without the consent of the Holders of any of the Securities at the time outstanding, notwithstanding any of the provisions of Section 9.02. SECTION 9.02. With the consent (evidenced as provided in Article VIII) of the holders of not less than a majority in aggregate principal amount of the Securities at the time Outstanding of all series affected by such supplemental indenture (voting as one class), (and, in the case of any series of Securities held as trust assets of a JPM Capital Trust and with respect to which a Security Exchange has not theretofore occurred, such consent of the holders of the Preferred Securities and the Common Securities of such JPM Capital Trust as may be required under the Declaration of Trust of such JPM Capital Trust), the Company, when authorized by a Board Resolution, and the Trustee may, from time to time and at any time, enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act of 1939 as in force at the date of execution thereof) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the holders of the Securities of 89 72 each such series; provided that no such supplemental indenture shall (a) extend the final maturity of any Security, or reduce the principal amount thereof or the method in which amounts of payments of principal or interest thereon are determined, or reduce the rate or extend the time of payment of interest thereon, [or change the coin or currency or units based on or related to currencies (including ECU) of payment thereof,] 3/ or the method in which amounts of payments of principal or interest thereon are determined, or reduce any amount payable on redemption thereof or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon an acceleration of the maturity thereof pursuant to Section 6.01 or the amount thereof provable in bankruptcy pursuant to Section 6.02, or impair or affect the right of any Security holder to institute suit for the payment thereof or, if the Securities provide therefor, any right of repayment at the option of the Security holder without the consent of the holder of each Security so affected, or (b) reduce the aforesaid percentage of Securities of any series, the consent of the holders of which is required for any such supplemental indenture, without the consent of the holders of each Security (and, in the case of any series of Securities held as trust assets of a JPM Capital Trust and with respect to which a Security Exchange has not theretofore occurred, such consent of the holders of the Preferred Securities and the Common Securities of such JPM Capital Trust as may be required under the Declaration of Trust of such JPM Capital Trust) so affected. A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities or which modifies the rights of the holders of Securities of such series with respect to such covenant or other provision shall be deemed not to affect the rights under this Indenture of the holders of any other series. Upon the request of the Company, accompanied by a copy of a Board Resolution certified by the secretary or an assistant secretary of the Company authorizing the execution of any such supplemental indenture, and upon the filing with - -------------------- 3/ If this is kept in, other sections from JPM indenture (e.g. Section 12.11) must be imported; if not kept in, delete definitions for ECU and European Communities and delete from base prospectus. 90 73 the Trustee of evidence of the consent of Security holders as aforesaid and other documents, if any, required by Section 8.01, (and, in the case of any series of Securities held as trust assets of a JPM Capital Trust and with respect to which a Security Exchange has not theretofore occurred, such consent of the holders of the Preferred Securities and the Common Securities of such JPM Capital Trust as may be required under the Declaration of Trust of such JPM Capital Trust), the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. It shall not be necessary for the consent of the Security holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Company shall mail a notice thereof by first-class mail to the holders of then Outstanding Securities of each series affected thereby at their addresses as they shall appear on the Security Register. Such notice shall set forth in general terms the substance of such supplemental indenture. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. SECTION 9.03. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the holders of Securities of each series affected thereby shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. 91 74 SECTION 9.04. The Trustee, subject to the provisions of Sections 7.01 and 7.02, may receive an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article IX complies with the applicable provisions of this Indenture. SECTION 9.05. Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article may bear a notation in form approved by the Trustee for such series as to any matter provided for by such supplemental indenture or as to any action taken at any such meeting. If the Company or the Trustee shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Company, authenticated by the Trustee and delivered in exchange for the Securities of such series then outstanding. SECTION 9.06. Anything in this Indenture to the contrary notwithstanding, any of the acts which the Company is required to do or is prohibited from doing by any of the provisions of this Indenture may, to the extent that such provisions might be changed or eliminated by a supplemental indenture pursuant to Section 9.02 upon consent of holders of a majority in aggregate principal amount of the Securities or any series thereof at the time outstanding, be omitted or done by the Company, if there is obtained the prior written consent thereto (evidenced as provided in Article VIII), or the prior written waiver of compliance with any such provision or provisions, by the holders of at least a majority of the aggregate principal amount of the Securities or such series thereof at the time outstanding. The Company agrees promptly to file with the Trustee a duplicate original of each such consent or waiver. SECTION 9.07. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the holders entitled to take any action under this Indenture by vote or consent. Except as provided herein, such record date shall be the later of (i) 30 days prior to the first solicitation of such consent or vote or (ii) the date of the most recent list of Security holders furnished to the Trustee pursuant to Section 5.01 prior to such solicitation. If a record date is fixed, those Persons who were Security holders at such record date (or their duly 92 75 designated proxies), and only those Persons, shall be entitled to take such action by vote or consent or to revoke any vote or consent previously given, whether or not such Persons continue to be holders after such record date; provided, however, that unless such vote or consent is obtained from the holders (or their duly designated proxies) of the requisite principal amount of Securities Outstanding prior to the date which is the 120th day after such record date, any such vote or consent previously given shall automatically and without further action by any Holder be canceled and of no further effect. ARTICLE X Consolidation, Merger, Sale or Conveyance SECTION 10.01. The Company covenants that it will not merge or consolidate with any other corporation or sell or convey all or substantially all of its assets to any Person, unless (i) either the Company shall be the continuing corporation, or the successor corporation (if other than the Company) shall be a corporation organized under the laws of the United States of America or any State thereof and shall expressly assume the due and punctual payment of the principal of and interest on all the Securities, according to their tenor, and the due and punctual performance and observance of all of the covenants and conditions of this Indenture to be performed or observed by the Company, by supplemental indenture satisfactory to the Trustee, executed and delivered to the Trustee by such corporation, and (ii) the Company or such successor corporation, as the case may be, shall not, immediately after such merger or consolidation, or such sale or conveyance, be in default in the performance of any such covenant or condition. SECTION 10.02. In case of any such consolidation, merger, sale or conveyance, other than a conveyance by way of lease, and upon any such assumption by the successor corporation, such successor corporation shall succeed to and be substituted for the Company, with the same effect as if it had been named herein as the Company, and the Company shall thereupon be released from all obligations hereunder and under the Securities and the Company as the predecessor corporation may thereupon or at any time thereafter be dissolved, wound up or liquidated. Such successor corporation thereupon may cause to be signed, and may issue 93 76 either in its own name or in the name of J.P. Morgan & Co. Incorporated any or all of the Securities issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor corporation instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities which previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication, and any Securities which such successor corporation thereafter shall cause to be signed and delivered to the Trustee for that purpose. All of the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Securities had been issued at the date of the execution hereof. In case of any such consolidation, merger, sale or conveyance such changes in phraseology and form (but not in substance) may be made in the Securities thereafter to be issued as may be appropriate. SECTION 10.03. The Trustee, subject to the provisions of Sections 7.01 and 7.02, may receive an Opinion of Counsel and/or an Officers' Certificate, prepared in accordance with Section 13.06, as conclusive evidence that any such consolidation, merger, sale or conveyance, and any such assumption complies with the applicable provisions of Article IX. ARTICLE XI Satisfaction and Discharge of Indenture; Unclaimed Moneys SECTION 11.01. (A) If at any time (a) the Company shall have paid or caused to be paid the principal of, and interest on, all the Securities of any series outstanding hereunder (other than Securities of such series which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.07) as and when the same shall have become due and payable, or (b) the Company shall have delivered to the Trustee for cancellation all Securities of any series theretofore authenticated (other than any Securities of such series which shall have 94 77 been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.07) or (c)) (i) all the Securities of any series not theretofore delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and (ii) the Company shall have irrevocably deposited or caused to be deposited with the Trustee as trust funds the entire amount in cash (other than moneys repaid by the Trustee or any paying agent to the Company in accordance with Section 11.04) or Government Obligations, maturing as to principal and interest at such times and in such amounts as will insure the availability of cash, or a combination thereof, sufficient in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay (A) the principal and interest on all Securities of such series on each date that such principal or interest is due and payable and (B) any mandatory sinking fund payments on the dates on which such payments are due and payable in accordance with the terms of the Indenture and the Securities of such series; and if, in any such case, the Company shall also pay or cause to be paid all other sums payable hereunder by the Company, then this Indenture shall cease to be of further effect (except as to (i) rights of registration of transfer and exchange of Securities of such series and the Company's right of optional redemption, if any, (ii) substitution of mutilated, defaced, destroyed, lost or stolen Securities, (iii) rights of holders of Securities to receive payments of principal thereof and interest thereon, upon the original stated due dates therefor (but not upon acceleration), and remaining rights of the Securityholders to receive mandatory sinking fund payments, if any, (iv) the rights, obligations, duties and immunities of the Trustee hereunder, (v) the rights of the holders of Securities of such series as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them, and (vi) the obligations of the Company under Section 4.02) and the Trustee, on demand of the Company accompanied by an Officers' Certificate and an Opinion of Counsel and at the cost and expense of the Company, shall execute proper instruments acknowledging such satisfaction of and discharging this Indenture; provided that the rights of Holders of the Securities to receive amounts in respect of principal of, and interest on, the Securities held by them shall not be delayed longer than 95 78 required by then-applicable mandatory rules or policies of any securities exchange upon which the Securities are listed. The Company agrees to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred and to compensate the Trustee for any services thereafter reasonably and properly rendered by the Trustee in connection with this Indenture or the Securities of such series. (B) The following provisions shall apply to the Securities of each series unless specifically otherwise provided in a supplemental indenture hereto pursuant to Section 2.01. In addition to discharge of the Indenture pursuant to the next preceding paragraph, the Company shall be deemed to have paid and discharged the entire indebtedness on all the Securities of a series on the date of the deposit referred to in subparagraph (a) below, and the provisions of this Indenture with respect to the Securities of such series shall no longer be in effect (except as to (i) rights of registration of transfer and exchange of Securities of such series and the Company's right of optional redemption, if any, (ii) substitution of mutilated, defaced, destroyed, lost or stolen Securities, (iii) rights of holders of Securities to receive payments of principal thereof and interest thereon, upon the original stated due dates therefor (but not upon acceleration), and remaining rights of the holders of Securities to receive mandatory sinking fund payments, if any, (iv) the rights, obligations, duties and immunities of the Trustee hereunder, (v) the rights of the holders of Securities as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them and (vi) the obligations of the Company under Section 4.02) and the Trustee, at the expense of the Company, shall at the Company's request, execute proper instruments acknowledging the same, if (a) with reference to this provision the Company has irrevocably deposited or caused to be irrevocably deposited with the Trustee as trust funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the holders of the Securities of such series (i) cash in an amount, or (ii) Governmental Obligations maturing as to principal and interest at such times and in such amounts as will insure the availability of cash or (iii) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants 96 79 expressed in a written certification thereof delivered to the Trustee, to pay (A) the principal and interest on all Securities of such series on each date that such principal or interest is due and payable and (B) any mandatory sinking fund payments on the dates on which such payments are due and payable in accordance with the terms of the Indenture and the Securities of such series; (b) such deposit will not result in a breach or violation of, or constitute a default under, any agreement or instrument to which the Company is a party or by which it is bound; (c) the Company has delivered to the Trustee an Opinion of Counsel based on the fact that (x) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (y) since the date hereof, there has been a change in the applicable Federal income tax law, in either case to the effect that, and such opinion shall confirm that, the holders of the Securities of such series will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to Federal income tax on the same amount and in the same manner and at the same times, as would have been the case if such deposit, defeasance and discharge had not occurred; (d) the Company has delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to the defeasance contemplated by this provision have been complied with; and (e) no event or condition shall exist that, pursuant to the provisions of Section 14.02 or 14.03, would prevent the Company from making payments of the principal of or interest on the Securities of such series on the date of such deposit. SECTION 11.02. Subject to Section 11.04, all moneys deposited with the Trustee (or other trustee) pursuant to Section 11.01 shall be held in trust and applied by it to the payment, either directly or through any paying agent (including the Company acting as its own paying agent), to the holders of the particular Securities of such series for the payment or redemption of which such moneys 97 80 have been deposited with the Trustee, of all sums due and to become due thereon for principal and interest; but such money need not be segregated from other funds except to the extent required by law. SECTION 11.03. In connection with the satisfaction and discharge of this Indenture with respect to Securities of any series, all moneys then held by any paying agent under the provisions of this Indenture with respect to such series of Securities shall, upon demand of the Company be repaid to it or paid to the Trustee and thereupon such paying agent shall be released from all further liability with respect to such moneys. SECTION 11.04. Any moneys deposited with, or paid to, the Trustee or any paying agent for the payment of principal of, or interest on, any Security of any series and not applied but remaining unclaimed for two years after the date upon which such principal or interest shall have become due and payable, shall, upon the written request of the Company and unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, be repaid to the Company by the Trustee for such series or such paying agent, and the holder of any Securities of such series shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property laws, thereafter look only to the Company for any payment which such holder may be entitled to collect, and all liability of the Trustee or any paying agent with respect to such moneys shall thereupon cease; provided, however, that the Trustee or such paying agent, before being required to make any such repayment with respect to moneys deposited with it for any payment, shall, at the expense of the Company, mail by first-class mail to holders of such Securities at their addresses as they shall appear on the Security Register, notice that such moneys remain and that, after a date specified therein, which shall not be less than 30 days from the date of such mailing, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 11.05. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on, or assessed against, the Governmental Obligations deposited pursuant to Section 11.01 or the principal or interest received in respect of such obligations. 98 81 ARTICLE XII Immunity of Incorporators, Stockholders, Officers and Directors SECTION 12.01. No recourse under or upon any obligation, covenant or agreement of this Indenture, or of any Security, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, stockholder, officer or director, past, present or future, as such, of the Company or of any predecessor or successor corporation, either directly or through the Company or any such predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that this Indenture and the obligations issued hereunder are solely corporate obligations, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, stockholders, officers or directors, as such, of the Company or of any predecessor or successor corporation, or any of them, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations covenants or agreements contained in this Indenture or in any of the Securities or implied therefrom; and that any and all such personal liability of every name and nature, either at common law or in equity or by constitution or statute, and any and all such rights and claims against every such incorporator, stockholder, officer or director, as such, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Securities or implied therefrom, are hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issuance of such Securities. ARTICLE XIII Miscellaneous Provisions SECTION 13.01. All the covenants, stipulations, promises and agreements in this Indenture made by, or on behalf of, the Company shall bind its successors and assigns, whether so expressed or not. 99 82 SECTION 13.02. Any act or proceeding required by any provision of this Indenture to be authorized or performed by any board, committee or officer of the Company shall and may be done and performed with like force and effect by the corresponding board, committee or officer of any corporation that shall at the time be the lawful sole successor of the Company. SECTION 13.03. The Company, by instrument in writing executed by authority of two-thirds of its Board of Directors and delivered to the Trustee, may surrender any of the powers reserved to the Company and thereupon such power so surrendered shall terminate both as to the Company and as to any successor corporation. SECTION 13.04. Except as otherwise expressly provided herein, any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the holders of Securities to or on the Company may be given or served by being deposited first class postage prepaid in a post-office letterbox addressed (until another address is filed in writing by the Company with the Trustee), as follows: J.P. Morgan & Co. Incorporated, 60 Wall Street, New York, New York 10015, Attention of Secretary. Any notice, election, request or demand by the Company or any Securityholder to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given or made in writing at the Corporate Trust Office of the Trustee. SECTION 13.05. This Indenture and each Security shall be deemed to be a contract made under the laws of the State of New York, and for all purposes shall be construed in accordance with the laws of said State (without regard to principles of conflicts of laws thereof). SECTION 13.06. (a) Upon any application or demand by the Company to the Trustee to take any action under any of the provisions of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this 100 83 Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished. (b) Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant in this Indenture (other than the Certificate provided pursuant to Section 5.03(d) shall include (1) a statement that the person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. SECTION 13.07. Except as provided pursuant to Section 2.01 in one or more indentures supplemental to this Indenture, in any case where the date of maturity of interest or principal of any Security or the date of redemption of any Security shall not be a Business Day then payment of interest or principal (and premium, if any) may be made on the next succeeding day which is a Business Day with the same force and effect as if made on the nominal date of maturity or redemption, and no interest shall accrue for the period after such nominal date. SECTION 13.08. If and to the extent that any provision of this Indenture 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 13.09. This Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. SECTION 13.10. In case any one or more of the provisions contained in this Indenture or in the Securities of any series shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Indenture or of such Securities, but this 101 84 Indenture and such Securities shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein. SECTION 13.11. The Company will have the right at all times to assign any of its rights or obligations under this Indenture to a direct or indirect wholly owned Subsidiary of the Company; provided that, in the event of any such assignment, the Company will remain jointly and severally liable for all such obligations. Subject to the foregoing, this Indenture is binding upon and inures to the benefit of the parties thereto and their respective successors and assigns. This Indenture may not otherwise be assigned by the parties hereto. SECTION 13.12. The Company hereby acknowledges that, to the extent specifically set forth herein, prior to a Security Exchange with respect to the Securities of any series held as trust assets of a JPM Capital Trust, the holders of the Preferred Securities of such JPM Capital Trust shall expressly be third party beneficiaries of this Indenture. The Company further acknowledges that, prior to a Security Exchange with respect to Securities of any series held as trust assets of a JPM Capital Trust, if the Property Trustee of such JPM Capital Trust fails to enforce its rights under this Indenture as the holder of the Securities of a series held as trust assets of such JPM Capital Trust, any holder of the Preferred Securities of such JPM Capital Trust may institute legal proceedings directly against the Company to enforce such Property Trustee's rights under this Indenture without first instituting any legal proceedings against such Property Trustee or any other Person. ARTICLE XIV Subordination of the Securities SECTION 14.01. The Company, for itself, its successors and assigns, covenants and agrees, and each holder of a Security likewise covenants and agrees by his acceptance thereof, that any payment of principal of and interest on each and all of the Securities is hereby expressly subordinated, to the extent and in the manner hereinafter set forth, to the prior payment in full of all Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations of the Company. 102 85 SECTION 14.02. No payment of principal of or interest on the Securities shall be made and no holder of the Securities shall be entitled to demand or receive any such payment (i) unless all amounts then due for principal of, premium, if any, and interest (including interest accruing subsequent to the commencement of any proceeding for the bankruptcy or reorganization of the Company under any applicable bankruptcy, insolvency or similar law now or hereafter in effect) on all Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations of the Company have been paid in full or duly provided for, or (ii) if, at the time of such payment or immediately after giving effect thereto, there shall exist with respect to any such Senior Indebtedness, Subordinated Indebtedness or Derivative Obligations any event of default permitting the holders thereof to accelerate the maturity or payment thereof or any event which, with notice or lapse of time or both, would become such an event of default. SECTION 14.03. Upon any distribution of the assets of the Company in connection with dissolution, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or any other marshalling of the assets and liabilities of the Company or otherwise), the holders of Senior Indebtedness and Subordinated Indebtedness and creditors in respect of Derivative Obligations of the Company shall first be entitled to receive payment in full in accordance with the terms of such Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations of the principal thereof, premium, if any, and the interest due thereon (including interest accruing subsequent to the commencement of any proceeding for the bankruptcy or reorganization of the Company under any applicable bankruptcy, insolvency or similar law now or hereafter in effect) before the holders of the Securities are entitled to receive any payment of the principal of, premium, if any, or interest thereon; and, upon any such dissolution, winding up, liquidation or reorganization, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the holders of the Securities or the Trustee would be entitled except for the provisions of this Article, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other Debt of the Company being subordinated to the payment of the Securities, shall be made by the liquidating trustee or 103 86 agent or other person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of Senior Indebtedness and Subordinated Indebtedness and creditors in respect of Derivative Obligations of the Company or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations may have been issued, ratably according to the aggregate amounts remaining unpaid on account of the principal of, premium, if any, and interest (including interest accruing subsequent to the commencement of any proceeding for the bankruptcy or reorganization of the Company under any applicable bankruptcy, insolvency, or similar law now or hereafter in effect) on the Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations of the Company held or represented by each, to the extent necessary to pay in full all such Senior Indebtedness remaining unpaid, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness and Subordinated Indebtedness and creditors in respect of Derivative Obligations. In the event that, notwithstanding the foregoing, upon any such dissolution, winding up, liquidation or reorganization, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other Debt of the Company being subordinated to the payment of the Securities, shall be received by the Trustee or the holders of the Securities before all Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations of the Company are paid in full, such payment or distribution shall be held in trust for the benefit of and shall be paid over to the holders of such Senior Indebtedness and Subordinated Indebtedness and creditors in respect of Derivative Obligations or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations may have been issued, ratably as aforesaid for application to the payment of all Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations of the Company remaining unpaid until all such Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations shall have been paid in full, after 104 87 giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness and Subordinated Indebtedness and creditors in respect of Derivative Obligations. Subject to the payment in full of all Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations of the Company, the holders of the Securities shall be subrogated (equally and ratably with the holders of all Debt of the Company which by its express terms is subordinated to Debt of the Company to substantially the same extent as the Securities are subordinated and is entitled to like rights of subrogation) to the rights of the holders of such Senior Indebtedness and Subordinated Indebtedness and creditors in respect of Derivative Obligations to receive payments or distributions of assets of the Company applicable to such Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations until the Securities shall be paid in full and none of the payments or distributions to the holders of such Senior Indebtedness and Subordinated Indebtedness and creditors in respect of Derivative Obligations to which the holders of the Securities or the Trustee would be entitled except for the provisions of this Article or of payments over, pursuant to the provisions of this Article, to the holders of such Senior Indebtedness and Subordinated Indebtedness and creditors in respect of Derivative Obligations by the holders of the Securities or the Trustee shall, as between the Company, its creditors other than the holders of such Senior Indebtedness and Subordinated Indebtedness and creditors in respect of Derivative Obligations and the holders of the Securities, be deemed to be a payment by the Company to or on account of such Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations; it being understood that the provisions of this Article are and are intended solely for the purpose of defining the relative rights of the holders of the Securities, on the one hand, and the holders of the Senior Indebtedness and Subordinated Indebtedness and creditors in respect of Derivative Obligations of the Company (and, the holders of other Debt of the Company which by its terms is subordinated to Debt of the Company to substantially the same extent as the Securities are subordinated and entitled to like rights of subordination), on the other hand. The Company shall give prompt written notice to the Trustee of any dissolution, winding up, liquidation or reorganization of the Company within the meaning of this 105 88 Article. The Trustee shall be entitled to assume that no such event has occurred unless the Company or any one or more holders of Senior Indebtedness or Subordinated Indebtedness of the Company or any trustee therefor or any creditor in respect of Derivative Obligations has given written notice thereof to the Trustee at its corporate trust office. Upon any distribution of assets of the Company referred to in this Article, the Trustee and the holders of the Securities shall be entitled to rely upon any order or decree of a court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Indebtedness and Subordinated Indebtedness of the Company, the creditors in respect of Derivative Obligations, the amounts thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article, and the Trustee and the holders of the Securities shall be entitled to rely upon a certificate of the liquidating trustee or agent or other person making any distribution to the Trustee or to the holders of the Securities for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Indebtedness and the Subordinated Indebtedness of the Company, the creditors in respect of Derivative Obligations, the amounts thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article. In the event that the Trustee determines, in good faith, that further evidence is required with respect to the right of any person, as a holder of Senior Indebtedness or Subordinated Indebtedness of the Company or as a creditor in respect of Derivative Obligations, to participate in any payment or distribution pursuant to this Article, the Trustee may request such person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of such Senior Indebtedness, Subordinated Indebtedness or such Derivative Obligations, as applicable, held by such person, as to the extent to which such person is entitled to participation in such payment or distribution, and as to other facts pertinent to the rights of such person under this Article, and if such evidence is not furnished, the Trustee may defer any payment to such person pending judicial determination as to the right of such person to receive such payment. SECTION 14.04. In the event that any Securities are declared due and payable before their Stated Maturity, 106 89 then and in such event the holders of all Senior Indebtedness and Subordinated Indebtedness and creditors in respect of Derivative Obligations outstanding at the time such Securities so become due and payable shall be entitled to receive payment in full of all amounts due on or in respect of such Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations (including any amounts due upon acceleration), or provision shall be made for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations before the holders of the Securities are entitled to receive any payment or distribution of any kind or character, whether in cash, properties or securities, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other Debt of the Company being subordinated to the payment of the Securities, by the Company on account of the principal of, premium, if any, or interest on the Securities or on account of the purchase or other acquisition of Securities by the Company or any Subsidiary; [provided, however, that nothing in this Section shall prevent the satisfaction of any sinking fund payment in accordance with this Indenture or as otherwise specified as contemplated by Section 2.01 for the Securities of any series by delivering and crediting pursuant to Section 3.05 or as otherwise specified as contemplated by Section 2.01 for the Securities of any series Securities which have been acquired (upon redemption or otherwise) prior to such declaration of acceleration; provided [further], however, that holders of Senior Indebtedness shall not be entitled to receive payment of any such amounts in preference or prior to the Securities to the extent that such Subordinated Indebtedness is by its terms subordinated in right of payment to any trade creditors. In the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other Debt of the Company being subordinated to the payment of the Securities, shall be received by the Trustee or the holders of the Securities before all Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations of the Company are paid in full, such payment or distribution shall be held in trust for the benefit of and shall be paid over to the holders of such Senior Indebtedness or Subordinated Indebtedness or creditors in respect of such Derivative 107 90 Obligations or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations may have been issued, ratably as aforesaid for application to the payment of all Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations of the Company remaining unpaid until all such Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations shall have been paid in full, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness [shall be paid over and delivered forthwith to the Company]. 4/ The provisions of this Section shall not apply to any payment with respect to which Section 14.02 would be applicable. SECTION 14.05. Nothing contained in this Article or elsewhere in this Indenture or in the Securities is intended to or shall impair as between the Company and the holders of the Securities, the obligation of the Company, which is absolute and unconditional (and which, subject to the rights under this Article of the holders of Senior Indebtedness and Subordinated Indebtedness and the creditors in respect of Derivative Obligations, is intended to rank pari passu with all other general obligations of the Company) to pay to the holders of the Securities the principal of and interest (including interest accruing subsequent to the commencement of any proceeding for the bankruptcy or reorganization of the Company under any applicable bankruptcy, insolvency or similar law now or hereafter in effect) on the Securities as and when the same shall become due and payable in accordance with the terms thereof, or is intended to or shall affect the relative rights of the holders of the Securities and creditors of the Company other than the holders of the Senior Indebtedness and Subordinated Indebtedness of the Company and creditors in respect of Derivative Obligations of the Company, nor shall anything herein or therein prevent the Trustee or the holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article of the holders of Senior Indebtedness and Subordinated Indebtedness of the Company, and of creditors - ---------------------- 4/ Goldman alternative. 108 91 in respect of Derivative Obligations of the Company, in respect of cash, property or securities of the Company received upon the exercise of any such remedy. SECTION 14.06. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness or Subordinated Indebtedness of the Company or creditors in respect of Derivative Obligations of the Company, except as provided in Section 10.03. SECTION 14.07. Notwithstanding any of the provisions of this Article or any other provision of this Indenture, the Trustee shall not at any time be charged with knowledge of the existence of any facts which would prohibit the making of any payment of moneys to or by the Trustee, unless and until the Trustee shall have received at its corporate trust office written notice thereof from the Company or from one or more holders of Senior Indebtedness or Subordinated Indebtedness of the Company or from any trustee therefor or from any creditor in respect of Derivative Obligations who shall have been certified by the Company or otherwise established to the reasonable satisfaction of the Trustee to be such a holder, trustee or creditor; and, prior to the receipt of any such written notice, the Trustee shall be entitled in all respects to assume that no such facts exist; provided that if prior to the fifth business day preceding the date upon which by the terms hereof any such moneys may become payable for any purpose, or in the event of the execution of an instrument pursuant to Section 11.01 acknowledging satisfaction and discharge of this Indenture, then if prior to the second business day preceding the date of such execution the Trustee shall not have received with respect to such moneys the notice provided for in this Section, then, anything herein contained to the contrary notwithstanding, the Trustee may, in its discretion, receive such moneys and apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary which may be received by it on or after such date; provided, however, no such application shall affect the obligations under this Article of the persons receiving such moneys from the Trustee. In any case, the Trustee shall have no responsibility to holders of Senior Indebtedness or Subordinated Indebtedness or creditors in respect of Derivative Obligations for payments made to holders of Securities by the Company, any transfer agent or any paying agent unless such payments are made at the direction of the Trustee. 109 92 SECTION 14.08. Anything in this Indenture to the contrary notwithstanding, any deposit of moneys by the Company with the Trustee, any transfer agent or any paying agent (whether or not in trust) for the payment of the principal of or interest on any Securities shall, except as provided in Section 10.07, be subject to the provisions of Sections 14.01, 14.02, 14.03 and 14.04. SECTION 14.09. No right of any present or future holders of any Senior Indebtedness or Subordinated Indebtedness of the Company or creditors in respect of Derivative Obligations to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder or creditor, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof which any such holder or creditor may have or be otherwise charged with. The holders of Senior Indebtedness and Subordinated Indebtedness of the Company and the creditors in respect of Derivative Obligations may at any time or from time to time and in their absolute discretion, change the manner, place or terms of payment, change or extend the time of payment of, or renew or alter, any such Senior Indebtedness, Subordinated Indebtedness or Derivative Obligations, or amend or supplement any instrument pursuant to which any such Senior Indebtedness, Subordinated Indebtedness or Derivative Obligations is issued or by which it may be secured, or release any security therefor, or exercise or refrain from exercising any other of their rights under the Senior Indebtedness and Subordinated Indebtedness of the Company or Derivative Obligations including, without limitation, the waiver of default thereunder, all without notice to or assent from the holders of the Securities or the Trustee and without affecting the obligations of the Company, the Trustee or the holders of the Securities under this Article. SECTION 14.10. Each holder of a Security, by his acceptance thereof, authorizes and expressly directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article. If, in the event of any dissolution, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise) tending towards 110 93 liquidation of the business and assets of the Company, a proper claim or proof of debt in the form required in such proceeding is not filed by all of the holders of the Securities prior to 30 days before the expiration of the time to file such claim or claims, and is not filed by the Trustee pursuant to the authority granted to the Trustee pursuant to the provisions of Section 6.02 prior to 15 days before such expiration, then the holder or holders of Senior Indebtedness and Subordinated Indebtedness of the Company and creditors in respect of Derivative Obligations are hereby authorized to, and have the right to, file an appropriate claim for and on behalf of the holders of the Securities. SECTION 14.11. The Trustee shall be entitled to all of the rights set forth in this Article in respect of any Senior Indebtedness, Subordinated Indebtedness or Derivative Obligations of the Company at any time held by it to the same extent as any other holder of such Senior Indebtedness or Subordinated Indebtedness or creditor in respect of such Derivative Obligations, and nothing in this Indenture shall be construed to deprive the Trustee of any of its rights as such holder or creditor. SECTION 14.12. The failure to make a payment pursuant to the Securities by reason of any provision in this Article shall not be construed as preventing the occurrence of an Event of Default under Section 6.01. First Trust of New York, National Association, as Trustee, hereby accepts the trust in this Indenture declared and provided, upon the terms and conditions hereinabove set forth. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. J.P. MORGAN & CO. INCORPORATED, by ----------------------------------- Name: Title: 111 94 Attest: - ------------------------------- Name: Title: FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, AS TRUSTEE, by ----------------------------------- Name: Title: Attest: - ------------------------------- Name: Title: 112 96 STATE OF NEW YORK, ) ) ss.: COUNTY OF NEW YORK, ) On __________, 199__ before me, _________________, Notary Public, personally appeared _____________________ and / / personally known tome -OR- / / proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. - ------------------------- Signature of Notary CAPACITY CLAIMED BY SIGNER / / INDIVIDUAL(S) _______________________ / / CORPORATE OFFICER(S) / / PARTNER(S) / / ATTORNEY-IN-FACT / / TRUSTEE(S) / / GUARDIAN/CONSERVATOR / / OTHER: SIGNER IS REPRESENTING: NAME OF PERSON(S) OR ENTITY(IES) J.P. MORGAN & CO. INCORPORATED EX-4.G1 3 DECLARATION OF TRUST JPM CAPITAL TRUST I 1 EXHIBIT 4(g)(1) DECLARATION OF TRUST, dated as of October 29, 1996, between J.P. Morgan & Co. Incorporated, a Delaware corporation, as Sponsor, First Trust of New York National Association, Wilmington Trust Company, a Delaware banking corporation, as Delaware Trustee, and H. Christian Raymond, Andrew G. Kerber and Susan L. McCullin as Regular Trustees (collectively with the Delaware Trustee, the "Trustees"). The Sponsor and the Trustees hereby agree as follows: 1. The trust created hereby (the "Trust") shall be known as "JPM Capital Trust I", in which name the Trustees, or the Sponsor to the extent provided herein, may conduct the business of the Trust, make and execute contracts, and sue and be sued. 2. The Sponsor hereby assigns, transfers, conveys and sets over to the Trustees the sum of $10. The Trustees hereby acknowledge receipt of such amount in trust from the Sponsor, which amount shall constitute the initial trust estate. The Trustees hereby declare that they will hold the trust estate in trust for the Sponsor. It is the intention of the parties hereto that the Trust created hereby constitute a business trust under Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. Sections 3801 et seq. (the "Business Trust Act"), and that this document constitute the governing instrument of the Trust. The Trustees are hereby authorized and directed to execute and file a certificate of trust in the office of the Secretary of State of the State of Delaware in the form attached hereto. The Trust is hereby established by the Sponsor and the Trustees for the purposes of (i) issuing preferred securities ("Preferred Securities") representing undivided beneficial interests in the assets of the Trust in exchange for cash and investing the proceeds thereof in junior subordinated debentures of the Sponsor, (ii) issuing and selling common securities ("Common Securities" and, together with the Preferred Securities, "Trust Securities") representing undivided beneficial interests in the assets of the Trust to the Sponsor in exchange for cash and investing the proceeds thereof in additional junior subordinated debentures of the Sponsor and (iii) engaging in such other activities as are necessary, convenient or incidental thereto. 3. Concurrent with the first issuance of any Trust Securities by the Trust, the Sponsor and the Trustees intend to enter into an amended and restated Declaration of Trust, satisfactory to each such party and substantially in the form included as an exhibit to the 1933 Act Registration 2 2 Statement referred to below at the time such registration statement becomes effective under the Securities Act of 1933, as amended (the "Securities Act"), to provide for the contemplated operation of the Trust created hereby and the issuance of the Preferred Securities and the Common Securities referred to therein. Prior to the execution and delivery of such amended and restated Declaration of Trust, the Trustees shall not have any duty or obligation hereunder or with respect to the trust estate, except as otherwise required by applicable law or as may be necessary to obtain, prior to such execution and delivery, any licenses, consents or approvals required by applicable law or otherwise. 4. The Sponsor and the Trustees hereby authorize and direct the Sponsor, as the sponsor of the Trust, (i) to prepare and file with the Securities and Exchange Commission (the "Commission") and execute, in each case on behalf of the Trust, (a) a Registration Statement on Form S-3 (the "1933 Act Registration Statement"), including any pre-effective or post-effective amendments to such Registration Statement, relating to the registration of the Preferred Securities under the Securities Act and (b) a Registration Statement on Form 8-A (the "1934 Act Registration Statement") (including any pre-effective or post-effective amendments thereto) relating to the registration of the Preferred Securities under Section 12(b) of the Securities Exchange Act of 1934, as amended; (ii) to prepare and file with the New York Stock Exchange and execute, in each case on behalf of the Trust, a listing application and all other applications, statements, certificates, agreements and other instruments as shall be necessary or desirable to cause the Preferred Securities to be listed on the New York Stock Exchange; (iii) to prepare and file and execute, in each case on behalf of the Trust, such applications, reports, surety bonds, irrevocable consents, appointments of attorney for service of process and other papers and documents as shall be necessary or desirable to register the Preferred Securities under the securities or "blue sky" laws of such jurisdictions as the Sponsor, on behalf of the Trust, may deem necessary or desirable; and (iv) to negotiate the terms of, and execute on behalf of the Trust, an underwriting agreement among the Trust, the Sponsor and any underwriter, dealer or agent relating to the Preferred Securities, substantially in the form included as an exhibit to the 1933 Act Registration Statement at the time it becomes effective under the Securities Act. It is hereby acknowledged and agreed that in connection with any execution, filing or document referred to in clauses (i)-(iii) above, (A) any 3 3 Regular Trustee (or his attorneys-in-fact and agents or the Sponsor as permitted herein) is authorized on behalf of the Trust to file and execute such document on behalf of the Trust and (B) the Delaware Trustee shall not be required to join in any such filing or execute on behalf of the Trust any such document unless required by the rules and regulations of the Commission or the New York Stock Exchange or state securities or blue sky laws, and in such case only to the extent so required. In connection with all of the foregoing, the Sponsor and each Regular Trustee, solely in its capacity as Trustee of the Trust, hereby constitutes and appoints Gene A. Capello and James C.P. Berry, and each of them, his, her or its, as the case may be, true and lawful attorneys-in-fact, and agents, with full power of substitution and resubstitution, for the Sponsor or such Trustee and in the Sponsor's or such Trustee's name, place and stead, in any and all capacities, to sign and file (i) any and all amendments (including post-effective amendments) to the 1933 Act Registration Statement and the 1934 Act Registration Statement with all exhibits thereto, and other documents in connection therewith, and (ii) a registration statement and any and all amendments thereto filed pursuant to Rule 462(b) under the Securities Act with the Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as the Sponsor or such Trustee might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his or her substitute or substitutes, shall do or cause to be done by virtue hereof. 5. This Declaration of Trust may be executed in one or more counterparts. 6. The number of Trustees initially shall be four (4) and thereafter the number of Trustees shall be such number as shall be fixed from time to time by a written instrument signed by the Sponsor which may increase or decrease the number of Trustees; provided, however, that the number of Trustees shall in no event be less than four (4); and provided, further, however, that to the extent required by the Business Trust Act, one Trustee shall either be a natural person who is a resident of the State of Delaware or, if not a natural person, an entity which has its principal place of business in the State of Delaware and meets any other requirements imposed by applicable law. Subject to the foregoing, the Sponsor is entitled to appoint 4 4 or remove without cause any Trustee at any time. Any Trustee may resign upon 30 days prior notice to the Sponsor provided, however, that the Delaware Trustee may resign immediately upon notice to the Sponsor if the Delaware Trustee is required to join in any filing or execute on behalf of the Trust any document pursuant to the provisions of paragraph 4 hereof and, upon giving such notice, the Delaware Trustee shall not be required to join in any such filing or execute on behalf of the Trust any such document; provided, further, however, that no resignation of the Delaware Trustee shall be effective until a successor Delaware Trustee has been appointed and has accepted such appointment by instrument executed by such successor Delaware Trustee and delivered to the Trust, the Sponsor and the resigning Delaware Trustee. 7. To the fullest extent permitted by applicable law, the Sponsor agrees to indemnify (i) the Delaware Trustee, (ii) any affiliate of the Delaware Trustee, and (iii) any officers, directors, shareholders, members, partners, employees, representatives, nominees, custodians or agents of the Delaware Trustee (each of the persons or entities in (i) through (iii) being referred to as an "Indemnified Person") for, and to hold each Indemnified Person harmless against, any loss, liability 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 obligation to indemnify as set forth in this paragraph 7 shall survive the termination of this Declaration. 8. The Trust may terminate without issuing any Trust Securities at the election of the Sponsor. 5 5 IN WITNESS WHEREOF, the parties hereto have caused this Declaration of Trust to be duly executed as of the day and year first above written. J.P. MORGAN & CO. INCORPORATED, as Sponsor, by /s/ Gene A. Capello --------------------------------- Name: Gene A. Capello Title: Vice President and Assistant General Counsel Wilmington Trust Company, as Delaware Trustee, by /s/ Norma P. Close --------------------------------- Name: Norma P. Close Title: Vice President /s/ H. Christian Raymond ------------------------------------- H. Christian Raymond, as Trustee /s/ Andrew G. Kerber ------------------------------------- Andrew G. Kerber, as Trustee /s/ Susan L. McCullin ------------------------------------- Susan L. McCullin, as Trustee EX-4.G2 4 CERTIFICATE OF TRUST OF JPM CAPITAL TRUST I 1 EXHIBIT 4(g)(2) CERTIFICATE OF TRUST OF JPM CAPITAL TRUST I This Certificate of Trust is being executed as of October 29, 1996 for the purpose of organizing a business trust pursuant to the Delaware Business Trust Act, 12 Del. C. Sections 3801 et seq. (the "Act"). The undersigned hereby certifies as follows: 1. Name. The name of the business trust is "JPM Capital Trust I" (the "Trust"). 2. Delaware Trustee. The name and business address of the Delaware resident trustee of the Trust meeting the requirements of Section 3807 of the Act are as follows: Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 3. Effective. This Certificate of Trust shall be effective immediately upon filing in the Office of the Secretary of State of the State of Delaware. 2 4. Counterparts. This Certificate of Trust may be executed in one or more counterparts. IN WITNESS WHEREOF, the undersigned, being all of the trustees of the Trust, have duly executed this Certificate of Trust as of the day and year first above written. WILMINGTON TRUST COMPANY, as Delaware Trustee by: /s/ Norma P. Close ------------------------ Name: Norma P. Close Title: Vice President /s/ H. Christian Raymond ------------------------------ H. Christian Raymond Trustee /s/ Andrew G. Kerber ------------------------------ Andrew G. Kerber Trustee /s/ Susan L. McCullin ------------------------------ Susan L. McCullin Trustee EX-4.G3 5 DECLARATION OF TRUST OF JPM CAPITAL TRUST II 1 EXHIBIT 4(g)(3) DECLARATION OF TRUST, dated as of October 29, 1996, between J.P. Morgan & Co. Incorporated, a Delaware corporation, as Sponsor, First Trust of New York National Association, Wilmington Trust Company, a Delaware banking corporation, as Delaware Trustee, and H. Christian Raymond, Andrew G. Kerber and Susan L. McCullin as Regular Trustees (collectively with the Delaware Trustee, the "Trustees"). The Sponsor and the Trustees hereby agree as follows: 1. The trust created hereby (the "Trust") shall be known as "JPM Capital Trust II", in which name the Trustees, or the Sponsor to the extent provided herein, may conduct the business of the Trust, make and execute contracts, and sue and be sued. 2. The Sponsor hereby assigns, transfers, conveys and sets over to the Trustees the sum of $10. The Trustees hereby acknowledge receipt of such amount in trust from the Sponsor, which amount shall constitute the initial trust estate. The Trustees hereby declare that they will hold the trust estate in trust for the Sponsor. It is the intention of the parties hereto that the Trust created hereby constitute a business trust under Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. Sections 3801 et seq. (the "Business Trust Act"), and that this document constitute the governing instrument of the Trust. The Trustees are hereby authorized and directed to execute and file a certificate of trust in the office of the Secretary of State of the State of Delaware in the form attached hereto. The Trust is hereby established by the Sponsor and the Trustees for the purposes of (i) issuing preferred securities ("Preferred Securities") representing undivided beneficial interests in the assets of the Trust in exchange for cash and investing the proceeds thereof in junior subordinated debentures of the Sponsor, (ii) issuing and selling common securities ("Common Securities" and, together with the Preferred Securities, "Trust Securities") representing undivided beneficial interests in the assets of the Trust to the Sponsor in exchange for cash and investing the proceeds thereof in additional junior subordinated debentures of the Sponsor and (iii) engaging in such other activities as are necessary, convenient or incidental thereto. 3. Concurrent with the first issuance of any Trust Securities by the Trust, the Sponsor and the Trustees intend to enter into an amended and restated Declaration of Trust, satisfactory to each such party and substantially in the form included as an exhibit to the 1933 Act Registration 2 2 Statement referred to below at the time such registration statement becomes effective under the Securities Act of 1933, as amended (the "Securities Act"), to provide for the contemplated operation of the Trust created hereby and the issuance of the Preferred Securities and the Common Securities referred to therein. Prior to the execution and delivery of such amended and restated Declaration of Trust, the Trustees shall not have any duty or obligation hereunder or with respect to the trust estate, except as otherwise required by applicable law or as may be necessary to obtain, prior to such execution and delivery, any licenses, consents or approvals required by applicable law or otherwise. 4. The Sponsor and the Trustees hereby authorize and direct the Sponsor, as the sponsor of the Trust, (i) to prepare and file with the Securities and Exchange Commission (the "Commission") and execute, in each case on behalf of the Trust, (a) a Registration Statement on Form S-3 (the "1933 Act Registration Statement"), including any pre-effective or post-effective amendments to such Registration Statement, relating to the registration of the Preferred Securities under the Securities Act and (b) a Registration Statement on Form 8-A (the "1934 Act Registration Statement") (including any pre-effective or post-effective amendments thereto) relating to the registration of the Preferred Securities under Section 12(b) of the Securities Exchange Act of 1934, as amended; (ii) to prepare and file with the New York Stock Exchange and execute, in each case on behalf of the Trust, a listing application and all other applications, statements, certificates, agreements and other instruments as shall be necessary or desirable to cause the Preferred Securities to be listed on the New York Stock Exchange; (iii) to prepare and file and execute, in each case on behalf of the Trust, such applications, reports, surety bonds, irrevocable consents, appointments of attorney for service of process and other papers and documents as shall be necessary or desirable to register the Preferred Securities under the securities or "blue sky" laws of such jurisdictions as the Sponsor, on behalf of the Trust, may deem necessary or desirable; and (iv) to negotiate the terms of, and execute on behalf of the Trust, an underwriting agreement among the Trust, the Sponsor and any underwriter, dealer or agent relating to the Preferred Securities, substantially in the form included as an exhibit to the 1933 Act Registration Statement at the time it becomes effective under the Securities Act. It is hereby acknowledged and agreed that in connection with any execution, filing or document referred to in clauses (i)-(iii) above, (A) any 3 3 Regular Trustee (or his attorneys-in-fact and agents or the Sponsor as permitted herein) is authorized on behalf of the Trust to file and execute such document on behalf of the Trust and (B) the Delaware Trustee shall not be required to join in any such filing or execute on behalf of the Trust any such document unless required by the rules and regulations of the Commission or the New York Stock Exchange or state securities or blue sky laws, and in such case only to the extent so required. In connection with all of the foregoing, the Sponsor and each Regular Trustee, solely in its capacity as Trustee of the Trust, hereby constitutes and appoints Gene A. Capello and James C.P. Berry, and each of them, his, her or its, as the case may be, true and lawful attorneys-in-fact, and agents, with full power of substitution and resubstitution, for the Sponsor or such Trustee and in the Sponsor's or such Trustee's name, place and stead, in any and all capacities, to sign and file (i) any and all amendments (including post-effective amendments) to the 1933 Act Registration Statement and the 1934 Act Registration Statement with all exhibits thereto, and other documents in connection therewith, and (ii) a registration statement and any and all amendments thereto filed pursuant to Rule 462(b) under the Securities Act with the Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as the Sponsor or such Trustee might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his or her substitute or substitutes, shall do or cause to be done by virtue hereof. 5. This Declaration of Trust may be executed in one or more counterparts. 6. The number of Trustees initially shall be four (4) and thereafter the number of Trustees shall be such number as shall be fixed from time to time by a written instrument signed by the Sponsor which may increase or decrease the number of Trustees; provided, however, that the number of Trustees shall in no event be less than four (4); and provided, further, however, that to the extent required by the Business Trust Act, one Trustee shall either be a natural person who is a resident of the State of Delaware or, if not a natural person, an entity which has its principal place of business in the State of Delaware and meets any other requirements imposed by applicable law. Subject to the foregoing, the Sponsor is entitled to appoint 4 4 or remove without cause any Trustee at any time. Any Trustee may resign upon 30 days prior notice to the Sponsor provided, however, that the Delaware Trustee may resign immediately upon notice to the Sponsor if the Delaware Trustee is required to join in any filing or execute on behalf of the Trust any document pursuant to the provisions of paragraph 4 hereof and, upon giving such notice, the Delaware Trustee shall not be required to join in any such filing or execute on behalf of the Trust any such document; provided, further, however, that no resignation of the Delaware Trustee shall be effective until a successor Delaware Trustee has been appointed and has accepted such appointment by instrument executed by such successor Delaware Trustee and delivered to the Trust, the Sponsor and the resigning Delaware Trustee. 7. To the fullest extent permitted by applicable law, the Sponsor agrees to indemnify (i) the Delaware Trustee, (ii) any affiliate of the Delaware Trustee, and (iii) any officers, directors, shareholders, members, partners, employees, representatives, nominees, custodians or agents of the Delaware Trustee (each of the persons or entities in (i) through (iii) being referred to as an "Indemnified Person") for, and to hold each Indemnified Person harmless against, any loss, liability 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 obligation to indemnify as set forth in this paragraph 7 shall survive the termination of this Declaration. 8. The Trust may terminate without issuing any Trust Securities at the election of the Sponsor. 5 5 IN WITNESS WHEREOF, the parties hereto have caused this Declaration of Trust to be duly executed as of the day and year first above written. J.P. MORGAN & CO. INCORPORATED, as Sponsor, by /s/ Gene A. Capello --------------------------------- Name: Gene A. Capello Title: Vice President and Assistant General Counsel Wilmington Trust Company, as Delaware Trustee, by /s/ Norma P. Close --------------------------------- Name: Norma P. Close Title: Vice President /s/ H. Christian Raymond ------------------------------------- H. Christian Raymond, as Trustee /s/ Andrew G. Kerber ------------------------------------- Andrew G. Kerber, as Trustee /s/ Susan L. McCullin ------------------------------------- Susan L. McCullin, as Trustee EX-4.G4 6 CERTIFICATE OF TRUST OF JPM CAPITAL TRUST II 1 EXHIBIT 4(g)(4) CERTIFICATE OF TRUST OF JPM CAPITAL TRUST II This Certificate of Trust is being executed as of October 29, 1996 for the purpose of organizing a business trust pursuant to the Delaware Business Trust Act, 12 Del. C. Sections 3801 et seq. (the "Act"). The undersigned hereby certifies as follows: 1. Name. The name of the business trust is "JPM Capital Trust II" (the "Trust"). 2. Delaware Trustee. The name and business address of the Delaware resident trustee of the Trust meeting the requirements of Section 3807 of the Act are as follows: Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 3. Effective. This Certificate of Trust shall be effective immediately upon filing in the Office of the Secretary of State of the State of Delaware. 2 4. Counterparts. This Certificate of Trust may be executed in one or more counterparts. IN WITNESS WHEREOF, the undersigned, being all of the trustees of the Trust, have duly executed this Certificate of Trust as of the day and year first above written. WILMINGTON TRUST COMPANY, as Delaware Trustee by: /s/ Norma P. Close ------------------------- Name: Norma P. Close Title: Vice President /s/ H. Christian Raymond ------------------------------ H. Christian Raymond Trustee /s/ Andrew G. Kerber ------------------------------ Andrew G. Kerber Trustee /s/ Susan L. McCullin ------------------------------ Susan L. McCullin Trustee EX-4.G5 7 DECLARATION OF TRUST OF JPM CAPITAL TRUST III 1 EXHIBIT 4(g)(5) DECLARATION OF TRUST, dated as of October 29, 1996, between J.P. Morgan & Co. Incorporated, a Delaware corporation, as Sponsor, First Trust of New York National Association, Wilmington Trust Company, a Delaware banking corporation, as Delaware Trustee, and H. Christian Raymond, Andrew G. Kerber and Susan L. McCullin as Regular Trustees (collectively with the Delaware Trustee, the "Trustees"). The Sponsor and the Trustees hereby agree as follows: 1. The trust created hereby (the "Trust") shall be known as "JPM Capital Trust III", in which name the Trustees, or the Sponsor to the extent provided herein, may conduct the business of the Trust, make and execute contracts, and sue and be sued. 2. The Sponsor hereby assigns, transfers, conveys and sets over to the Trustees the sum of $10. The Trustees hereby acknowledge receipt of such amount in trust from the Sponsor, which amount shall constitute the initial trust estate. The Trustees hereby declare that they will hold the trust estate in trust for the Sponsor. It is the intention of the parties hereto that the Trust created hereby constitute a business trust under Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. Sections 3801 et seq. (the "Business Trust Act"), and that this document constitute the governing instrument of the Trust. The Trustees are hereby authorized and directed to execute and file a certificate of trust in the office of the Secretary of State of the State of Delaware in the form attached hereto. The Trust is hereby established by the Sponsor and the Trustees for the purposes of (i) issuing preferred securities ("Preferred Securities") representing undivided beneficial interests in the assets of the Trust in exchange for cash and investing the proceeds thereof in junior subordinated debentures of the Sponsor, (ii) issuing and selling common securities ("Common Securities" and, together with the Preferred Securities, "Trust Securities") representing undivided beneficial interests in the assets of the Trust to the Sponsor in exchange for cash and investing the proceeds thereof in additional junior subordinated debentures of the Sponsor and (iii) engaging in such other activities as are necessary, convenient or incidental thereto. 3. Concurrent with the first issuance of any Trust Securities by the Trust, the Sponsor and the Trustees intend to enter into an amended and restated Declaration of Trust, satisfactory to each such party and substantially in the form included as an exhibit to the 1933 Act Registration 2 2 Statement referred to below at the time such registration statement becomes effective under the Securities Act of 1933, as amended (the "Securities Act"), to provide for the contemplated operation of the Trust created hereby and the issuance of the Preferred Securities and the Common Securities referred to therein. Prior to the execution and delivery of such amended and restated Declaration of Trust, the Trustees shall not have any duty or obligation hereunder or with respect to the trust estate, except as otherwise required by applicable law or as may be necessary to obtain, prior to such execution and delivery, any licenses, consents or approvals required by applicable law or otherwise. 4. The Sponsor and the Trustees hereby authorize and direct the Sponsor, as the sponsor of the Trust, (i) to prepare and file with the Securities and Exchange Commission (the "Commission") and execute, in each case on behalf of the Trust, (a) a Registration Statement on Form S-3 (the "1933 Act Registration Statement"), including any pre-effective or post-effective amendments to such Registration Statement, relating to the registration of the Preferred Securities under the Securities Act and (b) a Registration Statement on Form 8-A (the "1934 Act Registration Statement") (including any pre-effective or post-effective amendments thereto) relating to the registration of the Preferred Securities under Section 12(b) of the Securities Exchange Act of 1934, as amended; (ii) to prepare and file with the New York Stock Exchange and execute, in each case on behalf of the Trust, a listing application and all other applications, statements, certificates, agreements and other instruments as shall be necessary or desirable to cause the Preferred Securities to be listed on the New York Stock Exchange; (iii) to prepare and file and execute, in each case on behalf of the Trust, such applications, reports, surety bonds, irrevocable consents, appointments of attorney for service of process and other papers and documents as shall be necessary or desirable to register the Preferred Securities under the securities or "blue sky" laws of such jurisdictions as the Sponsor, on behalf of the Trust, may deem necessary or desirable; and (iv) to negotiate the terms of, and execute on behalf of the Trust, an underwriting agreement among the Trust, the Sponsor and any underwriter, dealer or agent relating to the Preferred Securities, substantially in the form included as an exhibit to the 1933 Act Registration Statement at the time it becomes effective under the Securities Act. It is hereby acknowledged and agreed that in connection with any execution, filing or document referred to in clauses (i)-(iii) above, (A) any 3 3 Regular Trustee (or his attorneys-in-fact and agents or the Sponsor as permitted herein) is authorized on behalf of the Trust to file and execute such document on behalf of the Trust and (B) the Delaware Trustee shall not be required to join in any such filing or execute on behalf of the Trust any such document unless required by the rules and regulations of the Commission or the New York Stock Exchange or state securities or blue sky laws, and in such case only to the extent so required. In connection with all of the foregoing, the Sponsor and each Regular Trustee, solely in its capacity as Trustee of the Trust, hereby constitutes and appoints Gene A. Capello and James C.P. Berry, and each of them, his, her or its, as the case may be, true and lawful attorneys-in-fact, and agents, with full power of substitution and resubstitution, for the Sponsor or such Trustee and in the Sponsor's or such Trustee's name, place and stead, in any and all capacities, to sign and file (i) any and all amendments (including post-effective amendments) to the 1933 Act Registration Statement and the 1934 Act Registration Statement with all exhibits thereto, and other documents in connection therewith, and (ii) a registration statement and any and all amendments thereto filed pursuant to Rule 462(b) under the Securities Act with the Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as the Sponsor or such Trustee might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his or her substitute or substitutes, shall do or cause to be done by virtue hereof. 5. This Declaration of Trust may be executed in one or more counterparts. 6. The number of Trustees initially shall be four (4) and thereafter the number of Trustees shall be such number as shall be fixed from time to time by a written instrument signed by the Sponsor which may increase or decrease the number of Trustees; provided, however, that the number of Trustees shall in no event be less than four (4); and provided, further, however, that to the extent required by the Business Trust Act, one Trustee shall either be a natural person who is a resident of the State of Delaware or, if not a natural person, an entity which has its principal place of business in the State of Delaware and meets any other requirements imposed by applicable law. Subject to the foregoing, the Sponsor is entitled to appoint 4 4 or remove without cause any Trustee at any time. Any Trustee may resign upon 30 days prior notice to the Sponsor provided, however, that the Delaware Trustee may resign immediately upon notice to the Sponsor if the Delaware Trustee is required to join in any filing or execute on behalf of the Trust any document pursuant to the provisions of paragraph 4 hereof and, upon giving such notice, the Delaware Trustee shall not be required to join in any such filing or execute on behalf of the Trust any such document; provided, further, however, that no resignation of the Delaware Trustee shall be effective until a successor Delaware Trustee has been appointed and has accepted such appointment by instrument executed by such successor Delaware Trustee and delivered to the Trust, the Sponsor and the resigning Delaware Trustee. 7. To the fullest extent permitted by applicable law, the Sponsor agrees to indemnify (i) the Delaware Trustee, (ii) any affiliate of the Delaware Trustee, and (iii) any officers, directors, shareholders, members, partners, employees, representatives, nominees, custodians or agents of the Delaware Trustee (each of the persons or entities in (i) through (iii) being referred to as an "Indemnified Person") for, and to hold each Indemnified Person harmless against, any loss, liability 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 obligation to indemnify as set forth in this paragraph 7 shall survive the termination of this Declaration. 8. The Trust may terminate without issuing any Trust Securities at the election of the Sponsor. 5 5 IN WITNESS WHEREOF, the parties hereto have caused this Declaration of Trust to be duly executed as of the day and year first above written. J.P. MORGAN & CO. INCORPORATED, as Sponsor, by /s/ Gene A. Capello ------------------------------ Name: Gene A. Capello Title: Vice President and Assistant General Counsel Wilmington Trust Company, as Delaware Trustee, by /s/ Norma P. Close ------------------------------ Name: Norma P. Close Title: Vice President /s/ H. Christian Raymond ---------------------------------- H. Christian Raymond, as Trustee /s/ Andrew G. Kerber ---------------------------------- Andrew G. Kerber, as Trustee /s/ Susan L. McCullin ---------------------------------- Susan L. McCullin, as Trustee EX-4.G6 8 CERTIFICATE OF TRUST OF JPM CAPITAL TRUST III 1 EXHIBIT 4(g)(6) CERTIFICATE OF TRUST OF JPM CAPITAL TRUST III This Certificate of Trust is being executed as of October 29, 1996 for the purpose of organizing a business trust pursuant to the Delaware Business Trust Act, 12 Del. C. Sections 3801 et seq. (the "Act"). The undersigned hereby certifies as follows: 1. Name. The name of the business trust is "JPM Capital Trust III" (the "Trust"). 2. Delaware Trustee. The name and business address of the Delaware resident trustee of the Trust meeting the requirements of Section 3807 of the Act are as follows: Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 3. Effective. This Certificate of Trust shall be effective immediately upon filing in the Office of the Secretary of State of the State of Delaware. 2 4. Counterparts. This Certificate of Trust may be executed in one or more counterparts. IN WITNESS WHEREOF, the undersigned, being all of the trustees of the Trust, have duly executed this Certificate of Trust as of the day and year first above written. WILMINGTON TRUST COMPANY, as Delaware Trustee by: /s/ Norma P. Close ---------------------------- Name: Norma P. Close Title: Vice President /s/ H. Christian Raymond --------------------------------- H. Christian Raymond Trustee /s/ Andrew G. Kerber --------------------------------- Andrew G. Kerber Trustee /s/ Susan L. McCullin --------------------------------- Susan L. McCullin Trustee EX-4.G7 9 DECLARATION OF TRUST OF JPM CAPITAL TRUST IV 1 EXHIBIT 4(g)(7) DECLARATION OF TRUST, dated as of October 29, 1996, between J.P. Morgan & Co. Incorporated, a Delaware corporation, as Sponsor, First Trust of New York National Association, Wilmington Trust Company, a Delaware banking corporation, as Delaware Trustee, and H. Christian Raymond, Andrew G. Kerber and Susan L. McCullin as Regular Trustees (collectively with the Delaware Trustee, the "Trustees"). The Sponsor and the Trustees hereby agree as follows: 1. The trust created hereby (the "Trust") shall be known as "JPM Capital Trust IV", in which name the Trustees, or the Sponsor to the extent provided herein, may conduct the business of the Trust, make and execute contracts, and sue and be sued. 2. The Sponsor hereby assigns, transfers, conveys and sets over to the Trustees the sum of $10. The Trustees hereby acknowledge receipt of such amount in trust from the Sponsor, which amount shall constitute the initial trust estate. The Trustees hereby declare that they will hold the trust estate in trust for the Sponsor. It is the intention of the parties hereto that the Trust created hereby constitute a business trust under Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. Sections 3801 et seq. (the "Business Trust Act"), and that this document constitute the governing instrument of the Trust. The Trustees are hereby authorized and directed to execute and file a certificate of trust in the office of the Secretary of State of the State of Delaware in the form attached hereto. The Trust is hereby established by the Sponsor and the Trustees for the purposes of (i) issuing preferred securities ("Preferred Securities") representing undivided beneficial interests in the assets of the Trust in exchange for cash and investing the proceeds thereof in junior subordinated debentures of the Sponsor, (ii) issuing and selling common securities ("Common Securities" and, together with the Preferred Securities, "Trust Securities") representing undivided beneficial interests in the assets of the Trust to the Sponsor in exchange for cash and investing the proceeds thereof in additional junior subordinated debentures of the Sponsor and (iii) engaging in such other activities as are necessary, convenient or incidental thereto. 3. Concurrent with the first issuance of any Trust Securities by the Trust, the Sponsor and the Trustees intend to enter into an amended and restated Declaration of Trust, satisfactory to each such party and substantially in the form included as an exhibit to the 1933 Act Registration 2 2 Statement referred to below at the time such registration statement becomes effective under the Securities Act of 1933, as amended (the "Securities Act"), to provide for the contemplated operation of the Trust created hereby and the issuance of the Preferred Securities and the Common Securities referred to therein. Prior to the execution and delivery of such amended and restated Declaration of Trust, the Trustees shall not have any duty or obligation hereunder or with respect to the trust estate, except as otherwise required by applicable law or as may be necessary to obtain, prior to such execution and delivery, any licenses, consents or approvals required by applicable law or otherwise. 4. The Sponsor and the Trustees hereby authorize and direct the Sponsor, as the sponsor of the Trust, (i) to prepare and file with the Securities and Exchange Commission (the "Commission") and execute, in each case on behalf of the Trust, (a) a Registration Statement on Form S-3 (the "1933 Act Registration Statement"), including any pre-effective or post-effective amendments to such Registration Statement, relating to the registration of the Preferred Securities under the Securities Act and (b) a Registration Statement on Form 8-A (the "1934 Act Registration Statement") (including any pre-effective or post-effective amendments thereto) relating to the registration of the Preferred Securities under Section 12(b) of the Securities Exchange Act of 1934, as amended; (ii) to prepare and file with the New York Stock Exchange and execute, in each case on behalf of the Trust, a listing application and all other applications, statements, certificates, agreements and other instruments as shall be necessary or desirable to cause the Preferred Securities to be listed on the New York Stock Exchange; (iii) to prepare and file and execute, in each case on behalf of the Trust, such applications, reports, surety bonds, irrevocable consents, appointments of attorney for service of process and other papers and documents as shall be necessary or desirable to register the Preferred Securities under the securities or "blue sky" laws of such jurisdictions as the Sponsor, on behalf of the Trust, may deem necessary or desirable; and (iv) to negotiate the terms of, and execute on behalf of the Trust, an underwriting agreement among the Trust, the Sponsor and any underwriter, dealer or agent relating to the Preferred Securities, substantially in the form included as an exhibit to the 1933 Act Registration Statement at the time it becomes effective under the Securities Act. It is hereby acknowledged and agreed that in connection with any execution, filing or document referred to in clauses (i)-(iii) above, (A) any 3 3 Regular Trustee (or his attorneys-in-fact and agents or the Sponsor as permitted herein) is authorized on behalf of the Trust to file and execute such document on behalf of the Trust and (B) the Delaware Trustee shall not be required to join in any such filing or execute on behalf of the Trust any such document unless required by the rules and regulations of the Commission or the New York Stock Exchange or state securities or blue sky laws, and in such case only to the extent so required. In connection with all of the foregoing, the Sponsor and each Regular Trustee, solely in its capacity as Trustee of the Trust, hereby constitutes and appoints Gene A. Capello and James C.P. Berry, and each of them, his, her or its, as the case may be, true and lawful attorneys-in-fact, and agents, with full power of substitution and resubstitution, for the Sponsor or such Trustee and in the Sponsor's or such Trustee's name, place and stead, in any and all capacities, to sign and file (i) any and all amendments (including post-effective amendments) to the 1933 Act Registration Statement and the 1934 Act Registration Statement with all exhibits thereto, and other documents in connection therewith, and (ii) a registration statement and any and all amendments thereto filed pursuant to Rule 462(b) under the Securities Act with the Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as the Sponsor or such Trustee might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his or her substitute or substitutes, shall do or cause to be done by virtue hereof. 5. This Declaration of Trust may be executed in one or more counterparts. 6. The number of Trustees initially shall be four (4) and thereafter the number of Trustees shall be such number as shall be fixed from time to time by a written instrument signed by the Sponsor which may increase or decrease the number of Trustees; provided, however, that the number of Trustees shall in no event be less than four (4); and provided, further, however, that to the extent required by the Business Trust Act, one Trustee shall either be a natural person who is a resident of the State of Delaware or, if not a natural person, an entity which has its principal place of business in the State of Delaware and meets any other requirements imposed by applicable law. Subject to the foregoing, the Sponsor is entitled to appoint 4 4 or remove without cause any Trustee at any time. Any Trustee may resign upon 30 days prior notice to the Sponsor provided, however, that the Delaware Trustee may resign immediately upon notice to the Sponsor if the Delaware Trustee is required to join in any filing or execute on behalf of the Trust any document pursuant to the provisions of paragraph 4 hereof and, upon giving such notice, the Delaware Trustee shall not be required to join in any such filing or execute on behalf of the Trust any such document; provided, further, however, that no resignation of the Delaware Trustee shall be effective until a successor Delaware Trustee has been appointed and has accepted such appointment by instrument executed by such successor Delaware Trustee and delivered to the Trust, the Sponsor and the resigning Delaware Trustee. 7. To the fullest extent permitted by applicable law, the Sponsor agrees to indemnify (i) the Delaware Trustee, (ii) any affiliate of the Delaware Trustee, and (iii) any officers, directors, shareholders, members, partners, employees, representatives, nominees, custodians or agents of the Delaware Trustee (each of the persons or entities in (i) through (iii) being referred to as an "Indemnified Person") for, and to hold each Indemnified Person harmless against, any loss, liability 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 obligation to indemnify as set forth in this paragraph 7 shall survive the termination of this Declaration. 8. The Trust may terminate without issuing any Trust Securities at the election of the Sponsor. 5 5 IN WITNESS WHEREOF, the parties hereto have caused this Declaration of Trust to be duly executed as of the day and year first above written. J.P. MORGAN & CO. INCORPORATED, as Sponsor, by /s/ Gene A. Capello --------------------------------- Name: Gene A. Capello Title: Vice President and Assistant General Counsel Wilmington Trust Company, as Delaware Trustee, by /s/ Norma P. Close --------------------------------- Name: Norma P. Close Title: Vice President /s/ H. Christian Raymond ------------------------------------- H. Christian Raymond, as Trustee /s/ Andrew G. Kerber ------------------------------------- Andrew G. Kerber, as Trustee /s/ Susan L. McCullin ------------------------------------- Susan L. McCullin as Trustee EX-4.G8 10 CERTIFICATE OF TRUST OF JPM CAPITAL TRUST IV 1 EXHIBIT 4(g)(8) CERTIFICATE OF TRUST OF JPM CAPITAL TRUST IV This Certificate of Trust is being executed as of October 29, 1996 for the purpose of organizing a business trust pursuant to the Delaware Business Trust Act, 12 Del. C. Sections 3801 et seq. (the "Act"). The undersigned hereby certifies as follows: 1. Name. The name of the business trust is "JPM Capital Trust IV" (the "Trust"). 2. Delaware Trustee. The name and business address of the Delaware resident trustee of the Trust meeting the requirements of Section 3807 of the Act are as follows: Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 3. Effective. This Certificate of Trust shall be effective immediately upon filing in the Office of the Secretary of State of the State of Delaware. 2 4. Counterparts. This Certificate of Trust may be executed in one or more counterparts. IN WITNESS WHEREOF, the undersigned, being all of the trustees of the Trust, have duly executed this Certificate of Trust as of the day and year first above written. WILMINGTON TRUST COMPANY, as Delaware Trustee by: /s/ Norma P. Close ----------------------------- Name: Norma P. Close Title: Vice President /s/ H. Christian Raymond ---------------------------------- H. Christian Raymond Trustee /s/ Andrew G. Kerber ---------------------------------- Andrew G. Kerber Trustee /s/ Susan L. McCullin -------------------------- Susan L. McCullin Trustee EX-4.H 11 FORM OF AMENDED AND RESTATED DECLATATION OF TRUST 1 EXHIBIT 4(h) ================================================================================ FORM OF AMENDED AND RESTATED DECLARATION OF TRUST OF JPM CAPITAL TRUST [ ] _________________ DATED AS OF , 199 ================================================================================ 2 TABLE OF CONTENTS*
Page ---- PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I Definitions SECTION 1.01 Certain terms defined; other terms defined in the Trust Indenture Act of 1939, as amended, or by reference therein in the Securities Act of 1933, as amended, to have the meanings assigned therein . . . . . . . . . . . . . . . . . . . . . . . 2 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Book Entry Interest . . . . . . . . . . . . . . . . . . . . . . . . 3 Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Business Trust Act . . . . . . . . . . . . . . . . . . . . . . . . 3 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Certificate of Trust . . . . . . . . . . . . . . . . . . . . . . . 3 Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Clearing Agency Participant . . . . . . . . . . . . . . . . . . . . 3 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Common Securities . . . . . . . . . . . . . . . . . . . . . . . . . 4 Common Security Certificate . . . . . . . . . . . . . . . . . . . . 4 Covered Person . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Debenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 4 Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Definitive Preferred Security Certificates . . . . . . . . . . . . 4 Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 4 Depositary Agreement . . . . . . . . . . . . . . . . . . . . . . . 4
__________________________________ * This Table of Contents does not constitute part of the Amended and Restated Declaration of Trust and should not have any bearing upon the interpretation of any of its terms or provisions. 3 Contents p. 2 Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 DTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . 5 Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Global Certificate . . . . . . . . . . . . . . . . . . . . . . . . 5 Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Indemnified Person . . . . . . . . . . . . . . . . . . . . . . . . 5 Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Indenture Event of Default . . . . . . . . . . . . . . . . . . . . 5 Investment Company . . . . . . . . . . . . . . . . . . . . . . . . 5 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . 5 Legal Action . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Liquidation Distribution . . . . . . . . . . . . . . . . . . . . . 5 Majority in liquidation amount of the Securities . . . . . . . . . 6 Ministerial Action . . . . . . . . . . . . . . . . . . . . . . . . 6 Option Closing Date . . . . . . . . . . . . . . . . . . . . . . . . 6 Original Declaration . . . . . . . . . . . . . . . . . . . . . . . 6 Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Preferred Guarantee . . . . . . . . . . . . . . . . . . . . . . . . 6 Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . 6 Preferred Security Beneficial Owner . . . . . . . . . . . . . . . . 6 Preferred Security Certificate . . . . . . . . . . . . . . . . . . 7 Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 7 Property Account . . . . . . . . . . . . . . . . . . . . . . . . . 7 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Regular Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Related Party . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Resignation Request . . . . . . . . . . . . . . . . . . . . . . . . 7 Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . 7 Rule 3a-7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . 7 66-2/3% in liquidation amount of the Securities . . . . . . . . . . 8 Special Event . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Sponsor or JPM . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Successor Delaware Trustee . . . . . . . . . . . . . . . . . . . . 8 Successor Property Trustee . . . . . . . . . . . . . . . . . . . . 8 10% in liquidation amount of the Securities . . . . . . . . . . . . 8 Treasury Regulations . . . . . . . . . . . . . . . . . . . . . . . 8 Trustee or Trustees . . . . . . . . . . . . . . . . . . . . . . . . 9 Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . 9 Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . 9
4 Contents p. 3
Page ---- ARTICLE II Trust Indenture Act ------------------- SECTION 2.01 Trust Indenture Act; Application . . . . . . . . . . . . . . . . . 9 SECTION 2.02 List of Holders of Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 SECTION 2.03 Reports by the Property Trustee . . . . . . . . . . . . . . . . . . 10 SECTION 2.04 Periodic Reports to Property Trustee . . . . . . . . . . . . . . . 10 SECTION 2.05 Evidence of Compliance with Conditions Precedent . . . . . . . . . 10 SECTION 2.06 Events of Default; Waiver . . . . . . . . . . . . . . . . . . . . . 10 SECTION 2.07 Disclosure of Information . . . . . . . . . . . . . . . . . . . . . 13 ARTICLE III Organization ------------ SECTION 3.01 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 SECTION 3.02 Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 SECTION 3.03 Issuance of the Trust Securities . . . . . . . . . . . . . . . . . 14 SECTION 3.04 Purchase of Debentures . . . . . . . . . . . . . . . . . . . . . . 14 SECTION 3.05 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 SECTION 3.06 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 3.07 Title to Property of the Trust . . . . . . . . . . . . . . . . . . 16 SECTION 3.08 Powers and Duties of the Regular Trustees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 3.09 Prohibition of Actions by Trust and Trustees . . . . . . . . . . . 19 SECTION 3.10 Powers and Duties of the Property Trustee . . . . . . . . . . . . . 20 SECTION 3.11 Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 3.12 Certain Rights and Duties of the Property Trustee . . . . . . . . . 24 SECTION 3.13 Registration Statement and Related Matters . . . . . . . . . . . . 28 SECTION 3.14 Filing of Amendments to Certificate of Trust . . . . . . . . . . . 29 SECTION 3.15 Execution of Documents by Regular Trustees . . . . . . . . . . . . 29 SECTION 3.16 Trustees Not Responsible for Recitals or Issuance of Securities . . 29 SECTION 3.17 Duration of Trust . . . . . . . . . . . . . . . . . . . . . . . . . 30
5 Contents p. 4
Page ---- ARTICLE IV Sponsor ------- SECTION 4.01 Purchase of Common Securities by Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 SECTION 4.02 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 ARTICLE V Trustees -------- SECTION 5.01 Number of Trustees; Qualifications . . . . . . . . . . . . . . . . 31 SECTION 5.02 Appointment, Removal and Resignation of Trustees . . . . . . . . . 34 SECTION 5.03 Vacancies Among Trustees . . . . . . . . . . . . . . . . . . . . . 35 SECTION 5.04 Effect of Vacancies . . . . . . . . . . . . . . . . . . . . . . . . 36 SECTION 5.05 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 SECTION 5.06 Delegation of Power . . . . . . . . . . . . . . . . . . . . . . . . 37 ARTICLE VI Distributions ------------- SECTION 6.01 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 ARTICLE VII Issuance of Securities ---------------------- SECTION 7.01 General Provisions Regarding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 ARTICLE VIII Termination of Trust -------------------- SECTION 8.01 Termination of Trust . . . . . . . . . . . . . . . . . . . . . . . 40
6 Contents p. 5
Page ---- ARTICLE IX Transfer of Interests --------------------- SECTION 9.01 Transfer of Securities . . . . . . . . . . . . . . . . . . . . . . 40 SECTION 9.02 Transfer of Certificates . . . . . . . . . . . . . . . . . . . . . 41 SECTION 9.03 Deemed Security Holders . . . . . . . . . . . . . . . . . . . . . . 42 SECTION 9.04 Book Entry Interests . . . . . . . . . . . . . . . . . . . . . . . 42 SECTION 9.05 Notices to Holders of Certificates . . . . . . . . . . . . . . . . 43 SECTION 9.06 Appointment of Successor Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 SECTION 9.07 Definitive Preferred Securities Certificates . . . . . . . . . . . 43 SECTION 9.08 Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . 44 ARTICLE X Limitation of Liability, Indemnification ---------------------------------------- SECTION 10.01 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 SECTION 10.02 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 45 SECTION 10.03 Outside Business . . . . . . . . . . . . . . . . . . . . . . . . . 46 ARTICLE XI Accounting ---------- SECTION 11.01 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 SECTION 11.02 Certain Accounting Matters . . . . . . . . . . . . . . . . . . . . 47 SECTION 11.03 Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 SECTION 11.04 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 ARTICLE XII Amendments and Meetings ----------------------- SECTION 12.01 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 SECTION 12.02 Meetings of the Holders of Securities; Action by Written Consent . 50
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Page ---- ARTICLE XIII Representations of Property Trustee ----------------------------------- and Delaware Trustee -------------------- SECTION 13.01 Representations and Warranties of Property Trustee . . . . . . . . 52 ARTICLE XIV Miscellaneous ------------- SECTION 14.01 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 SECTION 14.02 Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . 55 SECTION 14.03 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 SECTION 14.04 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 SECTION 14.05 Partial Enforceability . . . . . . . . . . . . . . . . . . . . . . 55 SECTION 14.06 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 SECTION 14.07 Intention of the Parties . . . . . . . . . . . . . . . . . . . . . 56 SECTION 14.08 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . 56 SIGNATURES AND SEALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
EXHIBIT A CERTIFICATE OF TRUST EXHIBIT B TERMS OF THE PREFERRED SECURITIES EXHIBIT C TERMS OF THE COMMON SECURITIES 8 AMENDED AND RESTATED DECLARATION OF TRUST OF JPM CAPITAL TRUST [ ] , 199 AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration"), dated and effective as of , 199 , by the undersigned trustees (together with all other Persons from time to time duly appointed and serving as trustees in accordance with the provisions of this Declaration, the "Trustees"), J.P. Morgan & Co. Incorporated, a Delaware corporation, as trust sponsor ("JPM" or the "Sponsor"), and the holders, from time to time, of undivided beneficial interests in the assets of the JPM Capital Trust [ ] to be issued pursuant to this Declaration. WHEREAS the Sponsor and the Trustees entered into a Declaration of Trust dated as of October 29, 1996 (the "Original Declaration") in order to establish JPM Capital Trust [ ], a statutory business trust (the "Trust") under the Business Trust Act (as defined herein); WHEREAS the Certificate of Trust (the "Certificate of Trust") of the Trust was filed with the office of the Secretary of State of the State of Delaware on October 29, 1996; WHEREAS the Trustees and the Sponsor desire to continue the Trust pursuant to the Business Trust Act for the purpose of, as described more fully in Sections 3.03, 3.04 and 3.05 hereof, (i) issuing and selling Preferred Securities (as defined herein) representing preferred undivided beneficial interests in the assets of the Trust for cash and investing the proceeds thereof in Debentures (as defined herein) of JPM issued under the Indenture (as defined herein) to be held as assets of the Trust, (ii) issuing and selling Common Securities (as defined herein) representing common undivided beneficial interests in the assets of the Trust to JPM for cash and investing the 9 2 proceeds thereof in additional Debentures issued under the Indenture to be held as assets of the Trust and (iii) engaging in such other activities as are necessary, convenient or incidental thereto; and NOW, THEREFORE, it being the intention of the parties hereto that the Trust constitute a business trust under the Business Trust Act, that the Original Declaration be amended and restated in its entirety as provided herein and that this Declaration constitute the governing instrument of such business trust, the Trustees declare that all assets referred to in clauses (i) and (ii) of the previous Whereas clause purchased by the Trust will be held in trust for the benefit of the Holders (as defined herein) from time to time of the Certificates (as defined herein) representing undivided beneficial interests in the assets of the Trust issued hereunder, subject to the provisions of this Declaration. ARTICLE I Definitions SECTION 1.01. Definitions. (a) Capitalized terms used in this Declaration but not defined in the preamble above have the respective meanings assigned to them in this Section 1.01; (b) a term defined anywhere in this Declaration has the same meaning throughout; (c) all references to "the Declaration" or "this Declaration" are to this Amended and Restated Declaration of Trust (including Exhibits A, B and C hereto (the "Exhibits")) as modified, supplemented or amended from time to time; (d) all references in this Declaration to Articles and Sections and Exhibits are to Articles and Sections of and Exhibits to this Declaration unless otherwise specified; (e) a term defined in the Trust Indenture Act has the same meaning when used in this Declaration unless otherwise defined in this Declaration or unless the context otherwise requires; and (f) a reference to the singular includes the plural and vice versa. "Affiliate" has the same meaning as given to that term in Rule 405 of the Securities Act or any successor rule thereunder. 10 3 "Book Entry Interest" means a beneficial interest in a Global Certificate registered in the name of a Clearing Agency or a nominee thereof, ownership and transfers of which shall be maintained and made through book entries by such Clearing Agency as described in Section 9.04. "Business Day" means any day other than a Saturday, Sunday or any other day on which banking institutions in New York, New York are authorized or required by law to close. "Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended from time to time. "Certificate" means a Common Security Certificate or a Preferred Security Certificate. "Certificate of Trust" has the meaning set forth in the second Whereas clause above. "Clearing Agency" means an organization registered as a "Clearing Agency" pursuant to Section 17A of the Exchange Act that is acting as depository for the Preferred Securities and in whose name, or in the name of a nominee of that organization, shall be registered a Global Certificate and which shall undertake to effect book entry transfers and pledges of the Preferred Securities. "Clearing Agency Participant" means a broker, dealer, bank, other financial institution or other Person for whom from time to time the Clearing Agency effects book entry transfers and pledges of securities deposited with the Clearing Agency. "Closing Date" means the Closing Date as specified in the Underwriting Agreement, which date is also the date of execution and delivery of this Declaration. "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor legislation. A reference to a specific section of the Code refers not only to such specific section but also to any corresponding provision of any Federal tax statute enacted after the date of this Declaration, as such specific section or corresponding provision is in effect on the date of application of the provisions of this Declaration containing such reference. 11 4 "Commission" means the Securities and Exchange Commission. "Common Securities" has the meaning specified in Section 7.01(b). "Common Security Certificate" means a definitive certificate in fully registered form representing a Common Security substantially in the form of Annex I to Exhibit C. "Covered Person" means (i) any officer, director, shareholder, partner, member, representative, employee or agent of the Trust or its Affiliates, (ii) any officer, director, shareholder, employee, representative or agent of JPM or any of its Affiliates and (iii) the Holders from time to time of the Securities. "Debenture Trustee" means First Trust of New York, National Association, as trustee under the Indenture, until a successor, if any, is appointed thereunder and thereafter means such successor trustee. "Debentures" means the series of Junior Subordinated Debentures issued by JPM under the Indenture to the Property Trustee and entitled the "___% Junior Subordinated Debentures due [ ]". "Definitive Preferred Security Certificates" has the meaning set forth in Section 9.04. "Delaware Trustee" has the meaning set forth in Section 5.01(a)(3). "Depositary Agreement" means the agreement among the Trust, the Property Trustee and DTC dated as of the Closing Date, as the same may be amended or supplemented from time to time. "Distribution" means a distribution payable to Holders of Securities in accordance with Section 6.01. "DTC" means The Depository Trust Company, the initial Clearing Agency. "Event of Default" in respect of the Securities means an Indenture Event of Default has occurred and is continuing in respect of the Debentures. 12 5 "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor legislation. "Fiscal Year" has the meaning specified in Section 11.01. "Global Certificate" has the meaning set forth in Section 9.04. "Holder" means a Person in whose name a Certificate representing a Security is registered, such Person being a beneficial owner within the meaning of the Business Trust Act. "Indemnified Person" means any Trustee, any Affiliate of any Trustee, any officer, director, shareholder, member, partner, employee, representative or agent of any Trustee, or any employee or agent of the Trust or any of its Affiliates. "Indenture" means the Indenture dated as of , 199 between JPM and the Debenture Trustee, as supplemented by the [ ] Supplemental Indenture thereto dated as of , 199 , pursuant to which the Debentures are to be issued, as each may be amended or supplemented from time to time. "Indenture Event of Default" means an event or condition defined as an "Event of Default" with respect to the Debentures under Section 6.01(a) of the Indenture has occurred and is continuing. "Investment Company" means an investment company as defined in the Investment Company Act. "Investment Company Act" means the Investment Company Act of 1940, as amended from time to time, or any successor legislation. "Legal Action" has the meaning specified in Section 3.08(g). "Liquidation Distribution" has the meaning set forth in the terms of the Securities as set forth in Exhibits B and C hereto. 13 6 "Majority in liquidation amount of the Securities" means, except as otherwise required by the Trust Indenture Act and except as provided in the penultimate paragraph of paragraph 5 of Exhibit B hereto, Holder(s) of outstanding Securities voting together as a single class or, as the context may require, Holder(s) of outstanding Preferred Securities or Common Securities voting separately as a class, who are the record owners of a relevant class of Securities whose liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) represents more than 50% of the liquidation amount of all outstanding Securities of such class. "Ministerial Action" has the meaning set forth in Section 4(c) of the terms of the Securities as set forth in Exhibits B and C hereto. "Option Closing Date" means the Option Closing Date as specified in the Underwriting Agreement. "Original Declaration" has the meaning set forth in the first Whereas clause above. "Paying Agent" has the meaning specified in Section 3.10(i). "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. "Preferred Guarantee" means the Guarantee Agreement dated as of , 199 of JPM in respect of the Preferred Securities. "Preferred Securities" has the meaning specified in Section 7.01(b). "Preferred Security Beneficial Owner" means, with respect to a Book Entry Interest, a Person who is the beneficial owner of such Book Entry Interest, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly as a Clearing Agency Participant or as an indirect 14 7 participant, in each case in accordance with the rules of such Clearing Agency). "Preferred Security Certificate" means a definitive certificate in fully registered form representing a Preferred Security substantially in the form of Annex I to Exhibit B. "Property Trustee" means the Trustee meeting the eligibility requirements set forth in Section 5.01(c) and having the duties set forth for the Property Trustee herein. "Property Account" has the meaning specified in Section 3.10(c)(i). "Quorum" means a majority of the Regular Trustees or, if there are only two Regular Trustees, both such Regular Trustees. "Regular Trustee" means any Trustee other than the Property Trustee or the Delaware Trustee. "Related Party" means any direct or indirect wholly owned subsidiary of JPM or any Person which owns, directly or indirectly, 100% of the outstanding voting securities of JPM. "Resignation Request" has the meaning specified in Section 5.02(d). "Responsible Officer" means, with respect to the Property Trustee, any officer of the Property Trustee with responsibility for the administration of this Declaration 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. "Rule 3a-7" means Rule 3a-7 under the Investment Company Act or any successor rule thereunder. "Securities" means the Common Securities and the Preferred Securities. "Securities Act" means the Securities Act of 1933, as amended from time to time, or any successor legislation. 15 8 "66-2/3% in liquidation amount of the Securities" means, except as otherwise required by the Trust Indenture Act and except as provided in the penultimate paragraph of paragraph 5 of Exhibit B hereto, Holder(s) of outstanding Securities voting together as a single class or, as the context may require, Holder(s) of outstanding Preferred Securities or Common Securities, voting separately as a class, who are the record owners of a relevant class of Securities whose liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) represents 66-2/3% or more of the liquidation amount of all outstanding Securities of such class. "Special Event" has the meaning set forth in Section 4(c) of the terms of the Securities as set forth in Exhibits B and C hereto. "Sponsor" or "JPM" means J.P. Morgan & Co. Incorporated, a Delaware corporation, or any successor entity in a merger, consolidation or other business combination transaction in its capacity as sponsor of the Trust. "Successor Delaware Trustee" has the meaning specified in Section 5.02(b)(ii). "Successor Property Trustee" means a successor Trustee possessing the qualifications to act as Property Trustee under Section 5.02(b)(i). "10% in liquidation amount of the Securities" means, except as otherwise required by the Trust Indenture Act and except as provided in the penultimate paragraph of paragraph 5 of Exhibit B hereto, Holder(s) of outstanding Securities voting together as a single class or, as the context may require, Holder(s) of outstanding Preferred Securities or Common Securities, voting separately as a class, who are the record owners of a relevant class of Securities whose liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) represents 10% or more of the liquidation amount of all outstanding Securities of such class. 16 9 "Treasury Regulations" means the income tax regulations, including temporary and proposed regulations, promulgated under the Code by the United States Treasury, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations). "Trustee" or "Trustees" means each Person who has signed this Declaration as a trustee, so long as such Person shall continue in office in accordance with the terms hereof, and all other Persons who may from time to time be duly appointed, qualified and serving as a Trustee in accordance with the provisions hereof, and references herein to a Trustee or the Trustees shall refer to such Person or Persons solely in their capacity as trustees hereunder. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended from time to time, or any successor legislation. "Underwriting Agreement" means the Underwriting Agreement dated , 199 among the Trust, the Sponsor and J.P. Morgan Securities, Inc. [and the other representatives named therein], as representative[s] of the several underwriters named therein. ARTICLE II Trust Indenture Act SECTION 2.01. Trust Indenture Act; Application. (a) This Declaration is subject to the provisions of the Trust Indenture Act that are required to be part of this Declaration and shall, to the extent applicable, be governed by such provisions; (b) if and to the extent that any provision of this Declaration limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control; (c) the Property Trustee, to the extent permitted by applicable law and/or the rules and regulations of the Commission, shall be the only Trustee which is a trustee for the purposes of the Trust Indenture Act; and (d) the application of the Trust Indenture Act to this Declaration shall not affect the nature of the Securities as equity securities representing undivided beneficial interests in the assets of the Trust. 17 10 SECTION 2.02. Lists of Holders of Preferred Securities. (a) Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide the Property Trustee with such information as is required under Section 312(a) of the Trust Indenture Act at the times and in the manner provided in Section 312(a); and (b) the Property Trustee shall comply with its obligations under Sections 310(b), 311 and 312(b) of the Trust Indenture Act. SECTION 2.03. Reports by the Property Trustee. Within 60 days after [May 15] of each year, the Property Trustee shall provide to the Holders of the Securities such reports as are required by Section 313 of the Trust Indenture Act, if any, in the form, in the manner and at the times provided by Section 313 of the Trust Indenture Act. The Property Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act. SECTION 2.04. Periodic Reports to Property Trustee. Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide to the Property Trustee, the Commission and the Holders of the Securities, as applicable, such documents, reports and information as required by Section 314(a)(1)-(3) (if any) of the Trust Indenture Act and the compliance certificates required by Section 314(a)(4) and (c) of the Trust Indenture Act, any such certificates to be provided in the form, in the manner and at the times required by Section 314(a)(4) and (c) of the Trust Indenture Act (provided that any certificate to be provided pursuant to Section 314(a)(4) of the Trust Indenture Act shall be provided within 120 days of the end of each Fiscal Year). SECTION 2.05. Evidence of Compliance with Conditions Precedent. Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide to the Property Trustee such evidence of compliance with any conditions precedent, if any, provided for in this Declaration which 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 pursuant to Section 314(c) shall comply with Section 314(e) of the Trust Indenture Act. SECTION 2.06. Events of Default; Waiver. (a) Subject to Section 2.06(c), Holders of Preferred Securities may, by vote of at least a Majority in liquidation amount of the Preferred Securities, (A) in accordance with the terms of the Preferred Securities, direct the time, method and place of conducting any 18 11 proceeding for any remedy available to the Property Trustee, or exercising any trust or power conferred upon the Property Trustee, or (B) on behalf of the Holders of all Preferred Securities, waive any past Event of Default in respect of the Preferred Securities and its consequences; provided that, if the Event of Default arises out of an Indenture Event of Default: (i) which is not waivable under the Indenture, the Event of Default under this Declaration shall also be not waivable; or (ii) which requires the consent or vote of (1) holders of Debentures representing a specified percentage greater than a majority in principal amount of the Debentures, or (2) each holder of Debentures, the Event of Default under this Declaration may only be waived by, in the case of clause (1) above, the vote of Holders of Preferred Securities representing such specified percentage of the aggregate liquidation amount of the Preferred Securities or, in the case of clause (2) above, each Holder of Preferred Securities. Upon such waiver, any such default shall cease to exist, and any Event of Default with respect to the Preferred Securities arising therefrom shall be deemed to have been cured for every purpose of this Declaration, but no such waiver shall extend to any subsequent or other default or Event of Default with respect to the Preferred Securities or impair any right consequent thereto. (b) Subject to Section 2.06(c), Holders of Common Securities may, by vote of at least a Majority in liquidation amount of the Common Securities, (A) in accordance with the terms of the Common Securities, direct the time, method and place of conducting any proceeding for any remedy available to the Property Trustee, or exercising any trust or power conferred upon the Property Trustee, or (B) on behalf of the Holders of all of the Common Securities, waive any past Event of Default with respect to the Common Securities and its consequences; provided that if the Event of Default arises out of an Indenture Event of Default: (i) which is not waivable under the Indenture, except where the Holders of the Common Securities are deemed to have waived such Event of Default under the 19 12 Declaration as provided below, the Event of Default under this Declaration shall also not be waivable; or (ii) which requires the consent or vote of (1) holders of Debentures representing a specified percentage greater than a majority in principal amount of the Debentures or (2) each holder of Debentures, except where the holders of the Common Securities are deemed to have waived such Event of Default under this Declaration as provided below, the Event of Default under this Declaration may only be waived by, in the case of clause (1) above, the vote of Holders of Common Securities representing such specified percentage of the aggregate liquidation amount of the Common Securities or, in the case of clause (2) above, each holder of Common Securities; and provided further that each Holder of Common Securities will be deemed to have waived any Event of Default with respect to the Common Securities and its consequences until all Events of Default with respect to the Preferred Securities have been cured, waived by the Holders of Preferred Securities as provided in this Declaration or otherwise eliminated and until all Events of Default with respect to the Preferred Securities have been so cured, waived or otherwise eliminated, the Property Trustee will be deemed to be acting solely on behalf of the Holders of the Preferred Securities and only the Holders of the Preferred Securities will have the right to direct the Property Trustee in accordance with the terms of this Declaration or the Securities. In the event that an Event of Default with respect to the Preferred Securities is waived by the Holders of Preferred Securities as provided in this Declaration, the Holders of Common Securities agree that such waiver shall also constitute the waiver of such Event of Default with respect to the Common Securities for all purposes under this Declaration without any further act, vote or consent of the Holders of the Common Securities. Subject to the foregoing provisions of this Section 2.06(b), upon such waiver, any such default shall cease to exist and any Event of Default with respect to the Common Securities arising therefrom shall be deemed to have been cured for every purpose of this Declaration, but no such waiver shall extend to any subsequent or other default or Event of Default with respect to the Common Securities or impair any right consequent thereon. 20 13 (c) The right of any Holder of Securities to receive payment of Distributions on the Securities in accordance with this Declaration and the terms of the Securities set forth in Exhibits B and C on or after the respective payment dates therefor, or to institute suit for the enforcement of any such payment on or after such payment dates, shall not be impaired without the consent of such Holder. (d) As provided in the terms of the Securities set forth in Exhibits B and C hereto, a waiver of an Indenture Event of Default by the Property Trustee at the written direction of the Holders of the Preferred Securities constitutes a waiver of the corresponding Event of Default under this Declaration in respect of the Securities. SECTION 2.07. Disclosure of Information. The disclosure of information as to the names and addresses of the Holders of the Securities in accordance with Section 312 of the Trust Indenture Act, regardless of the source from which such information was derived, shall not be deemed to be a violation of any existing law or any law hereafter enacted which does not specifically refer to Section 312 of the Trust Indenture Act, nor shall the Property Trustee be held accountable by reason of mailing any material pursuant to a request made under Section 312(b) of the Trust Indenture Act. ARTICLE III Organization SECTION 3.01. Name. The Trust continued by this Declaration is named "JPM Capital Trust [ ]" as such name may be modified from time to time by the Regular Trustees following written notice to the Holders of Securities. The Trust's activities may be conducted under the name of the Trust or any other name deemed advisable by the Regular Trustees. SECTION 3.02. Office. The address of the principal office of the Trust is c/o J.P. Morgan & Co. Incorporated, 60 Wall Street, New York, New York 10260-0060. Upon ten days' written notice to the Holders (a copy of such notice to be sent to the Property Trustee and the Delaware Trustee), the Regular Trustees may change the location of the Trust's principal office. The name of the registered agent and office of the Trust in the State of Delaware is 21 14 Wilmington Trust Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890. At any time, the Regular Trustees may designate another registered agent and/or registered office. SECTION 3.03. Issuance of the Trust Securities. On , 199 , the Sponsor, on behalf of the Trust and pursuant to the Original Declaration, executed and delivered the Underwriting Agreement. On the Closing Date and contemporaneously with the execution and delivery of this Declaration, the Regular Trustees, on behalf of the Trust, shall execute and deliver (i) to the underwriters named in the Underwriting Agreement, a Global Certificate, registered in the name of the nominee of the initial Clearing Agency as specified in Section 9.04, in an aggregate amount of Preferred Securities having an aggregate liquidation amount of $ , against receipt of the aggregate purchase price of such Preferred Securities of $ , and (ii) to the Sponsor, Common Securities Certificates, registered in the name of the Sponsor, in an aggregate amount of Common Securities having an aggregate liquidation amount of $ , against receipt of the aggregate purchase price of such Common Securities of $ . In the event and to the extent the overallotment option granted by the Trust pursuant to the Underwriting Agreement is exercised by such underwriters, on the Option Closing Date the Regular Trustees, on behalf of the Trust, shall execute and deliver (i) to such underwriters a Global Certificate, registered in the name of the nominee of the initial Clearing Agency as specified in Section 9.04, in an aggregate amount of up to Preferred Securities having an aggregate liquidation amount of up to $ , against receipt of the aggregate purchase price of such Preferred Securities of up to $ , and (ii) to the Sponsor, Common Securities Certificates, registered in the name of the Sponsor, in an aggregate amount of up to [ ] Common Securities having an aggregate liquidation amount of up to $[ ] against receipt of the aggregate purchase price of such Common Securities of up to $[ ]. SECTION 3.04. Purchase of Debentures. On the Closing Date and contemporaneously with the execution and delivery of this Declaration, the Regular Trustees, on behalf of the Trust, shall purchase from the Sponsor with the proceeds received by the Trust from the sale of the Securities on such date pursuant to Section 3.03, at a purchase price of 100% of the principal amount thereof, 22 15 Debentures, registered in the name of the Property Trustee and having an aggregate principal amount equal to $ , and, in satisfaction of the purchase price for such Debentures, the Regular Trustee, on behalf of the Trust, shall deliver or cause to be delivered to the Sponsor the sum of $ . In the event the overallotment option granted by the Trust with respect to the Preferred Securities pursuant to the Underwriting Agreement is exercised by the underwriters named therein, on the Option Closing Date the Regular Trustees, on behalf of the Trust, shall purchase from the Sponsor with the proceeds received by the Trust from the sale of the Securities on such date pursuant to Section 3.03, at a purchase price of 100% of the principal amount thereof, additional Debentures, registered in the name of the Property Trustee and having an aggregate principal amount of up to $ , and, in satisfaction of the purchase price for such Debentures, the Regular Trustees, on behalf of the Trust, shall deliver or cause to be delivered to the Sponsor an amount equal to the aggregate principal amount of the Debentures being purchased. SECTION 3.05. Purpose. The exclusive purposes and functions of the Trust are: (a)(i) to issue and sell Preferred Securities for cash and use the proceeds of such sales to acquire from JPM Debentures issued under the Indenture having an aggregate principal amount equal to the aggregate liquidation amount of the Preferred Securities so issued and sold; (ii) to enter into such agreements and arrangements as may be necessary in connection with the sale of Preferred Securities to the initial purchasers thereof (including the Underwriting Agreement) and to take all actions and exercise such discretion as may be necessary or desirable in connection therewith and to file such registration statements or make such other filings under the Securities Act, the Exchange Act or state securities or "Blue Sky" laws as may be necessary or desirable in connection therewith and the issuance of the Preferred Securities; and (iii) to issue and sell Common Securities to JPM for cash and use the proceeds of such sale to purchase as trust assets an equal aggregate principal amount of Debentures issued under the Indenture; and (b) except as otherwise limited herein, to engage in such other activities as are necessary, convenient or incidental thereto. The Trust shall not borrow money, issue debt or reinvest proceeds derived from investments, pledge any of its assets or, at any time while the Securities are outstanding, otherwise undertake (or permit to be undertaken) an activity that would result in or cause the Trust to be treated as 23 16 anything other than a grantor trust for United States federal income tax purposes. SECTION 3.06. Authority. Subject to the limitations provided in this Declaration and to the specific duties of the Property Trustee, the Regular Trustees shall have exclusive and complete authority to carry out the purposes of the Trust. An action taken by the Regular Trustees in accordance with their powers shall constitute the act of and serve to bind the Trust and an action taken by the Property Trustee in accordance with its powers shall constitute the act of and serve to bind the Trust. In dealing with the Trustees acting on behalf of the Trust, no Person shall be required to inquire into the authority of the Trustees to bind the Trust. Persons dealing with the Trust are entitled to rely conclusively on the power and authority of the Trustees as set forth in this Declaration. SECTION 3.07. Title to Property of the Trust. Except as provided in Section 3.10 with respect to the Debentures and the Property Account or unless otherwise provided in this Declaration, legal title to all assets of the Trust shall be vested in the Trust. The Holders shall not have legal title to any part of the assets of the Trust, but shall have an individual undivided beneficial interest in the assets of the Trust. SECTION 3.08. Powers and Duties of the Regular Trustees. The Regular Trustees shall have the exclusive power, authority and duty to cause the Trust, and shall cause the Trust, to engage in the following activities: (a) to issue Preferred Securities and Common Securities, in each case in accordance with this Declaration; provided, however, that the Trust may issue no more than one series of Preferred Securities and no more than one series of Common Securities; and provided further that there shall be no interests in the Trust other than the Securities and the issuance of Securities shall be limited to (x) a one-time, simultaneous issuance of both Preferred Securities and Common Securities on the Closing Date and (y) any subsequent issuance of both Preferred Securities and Common Securities on the Option Closing Date pursuant to an exercise of the overallotment option granted to the underwriters in the Underwriting Agreement; 24 17 (b) in connection with the issuance of the Preferred Securities, at the direction of the Sponsor, to effect or cause to be effected the filings, and to execute or cause to be executed the documents, set forth in Section 3.13 and to execute, deliver and perform on behalf of the Trust the Depositary Agreement; (c) to acquire as trust assets Debentures with the proceeds of the sale of the Preferred Securities and Common Securities; provided, however, that the Regular Trustees shall cause all the Debentures to be held of record in the name of the Property Trustee for the benefit of the Holders of the Preferred Securities and the Common Securities; (d) to cause the Trust to enter into such agreements and arrangements as may be necessary or desirable in connection with the sale of Preferred Securities to the initial purchasers thereof and the consummation thereof, and to take all action, and exercise all discretion, as may be necessary or desirable in connection with the consummation thereof; (e) to give the Sponsor and the Property Trustee prompt written notice of the occurrence of a Special Event; provided that the Regular Trustees shall consult with the Sponsor and the Property Trustee before taking or refraining to take any Ministerial Action in relation to a Special Event; (f) to establish a record date with respect to all actions to be taken hereunder that require a record date be established, including for the purposes of Section 316(c) of the Trust Indenture Act and with respect to Distributions, voting rights, redemptions and exchanges, and to issue relevant notices to Holders of the Preferred Securities and the Common Securities as to such actions and applicable record dates; (g) to bring or defend, pay, collect, compromise, arbitrate, resort to legal action or otherwise adjust claims or demands of or against the Trust ("Legal Action"), unless, pursuant to Section 3.10(e), the Property Trustee has the exclusive power to bring such Legal Action; 25 18 (h) to employ or otherwise engage employees and agents (who may be designated as officers with titles) and managers, contractors, advisors and consultants and pay reasonable compensation for such services; (i) to cause the Trust to comply with the Trust's obligations under the Trust Indenture Act; (j) to give the certificate to the Property Trustee required by Section 314(a)(4) of the Trust Indenture Act, which certificate may be executed by any Regular Trustee; (k) to incur expenses which are necessary or incidental to carrying out any of the purposes of the Trust; (l) to act as, or appoint another Person to act as, registrar and transfer agent for the Securities, the Regular Trustees hereby initially appointing the Property Trustee for such purposes; (m) to take all actions and perform such duties as may be required of the Regular Trustees pursuant to the terms of the Securities set forth in Exhibits B and C hereto; (n) to execute all documents or instruments, perform all duties and powers and do all things for and on behalf of the Trust in all matters necessary, convenient or incidental to the foregoing; (o) to take all action which may be necessary or appropriate for the preservation and the continuation of the Trust's valid existence, rights, franchises and privileges as a statutory business trust under the laws of the State of Delaware and of each other jurisdiction in which such existence is necessary to protect the limited liability of the Holders of the Securities or to enable the Trust to effect the purposes for which the Trust has been created; (p) to take all action, not inconsistent with this Declaration or with applicable law, which the Regular Trustees determine in their discretion to be reasonable 26 19 and necessary or desirable in carrying out the activities of the Trust as set out in this Section 3.08, in order that: (i) the Trust will not be deemed to be an Investment Company required to be registered under the Investment Company Act; (ii) the Trust will not be classified for United States Federal income tax purposes as an association taxable as a corporation or a partnership and will be treated as a grantor trust for United States Federal income tax purposes; and (iii) the Trust will comply with any requirements imposed by any taxing authority on holders of instruments treated as indebtedness for Unites States Federal income tax purposes; provided that such action does not adversely affect the interests of Holders; (q) to take all action necessary to cause all applicable tax returns and tax information reports that are required to be filed with respect to the Trust to be duly prepared and filed by the Regular Trustees, on behalf of the Trust; and (r) subject to the requirements of Rule 3a-7 and Section 317(b) of the Trust Indenture Act, to appoint one or more Paying Agents in addition to the Property Trustee. The Regular Trustees must exercise the powers set forth in this Section 3.08 in a manner which is consistent with the purposes and functions of the Trust set out in Section 3.05 and the Regular Trustees shall not take any action which is inconsistent with the purposes and functions of the Trust set forth in Section 3.05. Subject to this Section 3.08, the Regular Trustees shall have none of the powers nor any of the authority of the Property Trustee set forth in Section 3.10. SECTION 3.09. Prohibition of Actions by Trust and Trustees. The Trust shall not, and the Trustees (including the Property Trustee) shall cause the Trust not to, engage in any activity other than as required or authorized by this 27 20 Declaration. In particular, the Trust shall not, and the Trustees (including the Property Trustee) shall cause the Trust not to: (a) invest any proceeds received by the Trust from holding the Debentures, but shall promptly distribute all such proceeds to Holders of Securities pursuant to the terms of this Declaration and of the Securities; (b) acquire any assets other than as expressly provided herein; (c) possess Trust property for other than a Trust purpose; (d) make any loans, other than loans represented by the Debentures; (e) possess any power or otherwise act in such a way as to vary the Trust assets or the terms of the Securities in any way whatsoever; (f) issue any securities or other evidences of beneficial ownership of, or beneficial interests in, the Trust other than the Securities; (g) incur any indebtedness for borrowed money; or (h)(i) direct the time, method and place of exercising any trust or power conferred upon the Debenture Trustee with respect to the Debentures, (ii) waive any past default that is waivable under Section 6.06 of the Indenture, (iii) exercise any right to rescind or annul any declaration that the principal of all of the Debentures shall be due and payable or (iv) consent to any amendment, modification or termination of the Indenture or the Debentures, where such consent shall be required, unless in the case of this clause (h) the Property Trustee shall have received an unqualified opinion of nationally recognized independent tax counsel recognized as expert in such matters to the effect that such action will not cause the Trust to be classified for United States Federal income tax purposes as an association taxable as a corporation or partnership and that the Trust will continue to be classified as a grantor trust for United States federal income tax purposes. 28 21 SECTION 3.10. Powers and Duties of the Property Trustee. (a) The Debentures shall be held of record in the name of the Property Trustee in trust for the benefit of the Holders of the Securities. The right, title and interest of the Property Trustee to the Debentures shall vest automatically in each Person who may hereafter be appointed as Property Trustee in accordance with Article V. Such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered. (b) The Property Trustee shall not transfer its right, title and interest in the Debentures to the Regular Trustees or, if the Property Trustee does not also act as the Delaware Trustee, the Delaware Trustee. (c) The Property Trustee shall: (i) establish and maintain a segregated non- interest bearing bank account (the "Property Account") in the name of and under the exclusive control of the Property Trustee on behalf of the Holders of the Securities and on the receipt of payments of funds made in respect of the Debentures held by the Property Trustee, deposit such funds into the Property Account and, without any further acts of the Property Trustee or the Regular Trustees, promptly make payments to the Holders of the Preferred Securities and Common Securities from the Property Account in accordance with Section 6.01. Funds in the Property Account shall be held uninvested, and without liability for interest thereon, until disbursed in accordance with this Declaration. The Property Account shall be an account which is maintained with a banking institution whose long term unsecured indebtedness is rated by a "nationally recognized statistical rating organization", as such term is defined for purposes of Rule 436(g)(2) under the Securities Act, at least equal to (but in no event less than "A" or the equivalent) the rating assigned to the Preferred Securities by a nationally recognized statistical rating organization; (ii) engage in such ministerial activities as shall be necessary or appropriate to effect promptly the redemption of the Preferred Securities and the Common Securities to the extent the Debentures are redeemed or mature; 29 22 (iii) upon notice of distribution issued by the Regular Trustees in accordance with the terms of the Preferred Securities and the Common Securities, engage in such ministerial activities as shall be necessary or appropriate to effect promptly, pursuant to the terms of the Securities, the distribution of Debentures to Holders of Securities upon the occurrence of a Special Event; and (iv) have the legal power to exercise all of the rights, powers and privileges of a holder of the Debentures under the Indenture and, if an Event of Default occurs and is continuing, the Property Trustee, subject to Section 2.06(b), shall, for the benefit of the Holders of the Securities, enforce its rights as holder of the Debentures under the Indenture, subject to the rights of the Holders of the Preferred Securities pursuant to the terms of this Declaration, the Business Trust Act and the Trust Indenture Act. (d) The Property Trustee shall take all actions and perform such duties as may be specifically required of the Property Trustee pursuant to the terms of the Securities set forth in Exhibits B and C hereto. (e) The Property Trustee shall take any Legal Action which arises out of or in connection with an Event of Default or the Property Trustee's duties and obligations under this Declaration, the Business Trust Act or the Trust Indenture Act. (f) All moneys deposited in the Property Account, and all Debentures held by the Property Trustee for the benefit of the Holders of the Securities, will not be subject to any right, charge, security interest, lien or claim of any kind in favor of, or for the benefit of, the Property Trustee or its agents or their creditors. (g) The Property Trustee shall, within 90 days after the occurrence of a default with respect to the Securities, transmit by mail, first class postage prepaid, to the holders of the Securities, as their names and addresses appear upon the register, notice of all defaults with respect to the Securities known to the Property Trustee, unless such defaults shall have been cured before the giving of such notice (the term "defaults" for the purposes of this Section 3.10(g) being hereby defined to be an Indenture Event of Default, not including any periods of 30 23 grace provided for in the Indenture and irrespective of the giving of any notice provided therein); provided that, except in the case of default in the payment of the principal of (or premium, if any) or interest on any of the Debentures, the Property 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 Property Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of the Securities. The Property Trustee shall not be deemed to have knowledge of any default, except (i) a default in the payment of principal of (or premium, if any) or interest on the Debentures or (ii) any default as to which the Property Trustee shall have received written notice or a Responsible Officer charged with the administration of this Declaration shall have obtained written notice. (h) The Property Trustee shall not resign as a Trustee unless either: (i) the Trust has been completely liquidated and the proceeds thereof distributed to the Holders of Securities pursuant to the terms of the Securities; or (ii) a Successor Property Trustee has been appointed and accepted that appointment in accordance with Article V. (i) The Property Trustee shall act as paying agent in respect of the Common Securities and the Preferred Securities and, subject to Section 3.08(r), may authorize one or more Persons (each, a "Paying Agent") to pay Distributions, redemption payments or liquidation payments on behalf of the Trust with respect to the Preferred Securities. Any such Paying Agent shall comply with Section 317(b) of the Trust Indenture Act. Any Paying Agent may be removed by the Property Trustee, after consultation with the Regular Trustees, at any time and a successor Paying Agent or additional Paying Agents may be appointed at any time by the Property Trustee, subject to Section 3.08(r). (j) The Property Trustee shall give prompt written notice to the Holders of the Securities of any notice received by it from JPM of its election to defer payments of interest on the Debentures by extending the interest payment period with respect thereto. 31 24 (k) Subject to this Section 3.10, the Property Trustee shall have none of the powers or the authority of the Regular Trustees set forth in Section 3.08. (1) The Property Trustee shall exercise the powers, duties and rights set forth in this Section 3.10 and Section 3.12 in a manner which is consistent with the purposes and functions of the Trust set out in Section 3.05, and the Property Trustee shall not take any action which is inconsistent with the purposes and functions of the Trust set forth in Section 3.05. SECTION 3.11. Delaware Trustee. Notwithstanding any other provision of this Declaration other than Section 5.01(a)(3), the Delaware Trustee shall not be entitled to exercise any powers, nor shall the Delaware Trustee have any of the duties and responsibilities of the Regular Trustees or the Property Trustee described in this Declaration. Except as set forth in Section 5.01(a)(3), the Delaware Trustee shall be a Trustee for the sole and limited purpose of fulfilling the requirements of Section 3807 of the Business Trust Act. No implied covenants or obligations shall be read into this Declaration against the Delaware Trustee. SECTION 3.12. Certain Rights and Duties of the Property Trustee. (a) The Property Trustee, before the occurrence of an 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 Declaration, and no implied covenants shall be read into this Declaration against the Property Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.06), the Property Trustee shall exercise such of the rights and powers vested in it by this Declaration, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. 32 25 (b) No provision of this Declaration shall be construed to relieve the Property 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 an 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 Property Trustee shall be determined solely by the express provisions of this Declaration, and the Property Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Declaration, and no implied covenants or obligations shall be read into this Declaration against the Property Trustee; and (B) in the absence of bad faith on the part of the Property Trustee, the Property 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 Property Trustee and conforming to the requirements of this Declaration; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Property Trustee, the Property Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Declaration; (ii) the Property Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Property Trustee, unless it shall be proved that the Property Trustee was negligent in ascertaining the pertinent facts; (iii) the Property 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 as provided herein relating to the time, method and place of conducting any proceeding for any remedy available to the Property Trustee hereunder or under the Indenture, or exercising any trust or power 33 26 conferred upon the Property Trustee under this Declaration; and (iv) no provision of this Declaration shall require the Property 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 it shall have reasonable ground for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Declaration or adequate indemnity against such risk or liability is not reasonably assured to it. (c) Subject to the provisions of Section 3.12(a) and (b): (i) whenever in the administration of this Declaration, the Property Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Property Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part and, if the Trust is excluded from the definition of Investment Company solely by means of Rule 3a-7, subject to the requirements of Rule 3a-7, request and rely upon a certificate, which shall comply with the provisions of Section 314(e) of the Trust Indenture Act, signed by any two of the Regular Trustees or by an authorized officer of the Sponsor, as the case may be; (ii) the Property Trustee (A) may consult with counsel (which may be counsel to the Sponsor or any of its Affiliates and may include any of its employees) selected by it in good faith and with due care 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 reliance thereon and in accordance with such advice and opinion and (B) shall have the right at any time to seek instructions concerning the administration of this Declaration from any court of competent jurisdiction; (iii) the Property Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or 34 27 attorneys and the Property Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed by it in good faith and with due care; (iv) the Property Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Declaration at the request or direction of any Holders, unless such Holders shall have offered to the Property Trustee reasonable security and indemnity against the costs, expenses (including attorneys' fees and expenses) and liabilities that might be incurred by it in complying with such request or direction; provided that nothing contained in this clause (iv) shall relieve the Property Trustee of the obligation, upon the occurrence of an Event of Default (which has not been cured or waived) to exercise such of the rights and powers vested in it by this Declaration, and to use the same degree of care and skill in this exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs; (v) any action taken by the Property Trustee or its agents hereunder shall bind the Trust and the Holders of the Securities and the signature of the Property Trustee or its agents alone shall be sufficient and effective to perform any such action; and no third party shall be required to inquire as to the authority of the Property Trustee to so act, or as to its compliance with any of the terms and provisions of this Declaration, both of which shall be conclusively evidenced by the Property Trustee's or its agent's taking such action; (vi) the Property Trustee may rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, security 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; and (vii) the Property 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, consent, order, bond, 35 28 security or other paper or document, but the Property Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit. SECTION 3.13. Registration Statement and Related Matters. In accordance with the Original Declaration, JPM and the Trustees have authorized and directed, and hereby confirm the authorization of, JPM, as the sponsor of the Trust, (i) to file with the Commission and execute, in each case on behalf of the Trust, (a) the Registration Statement on Form S-3 (File Nos. 333-15079, 333-15079-1, 333-15079-2, 333-15079-3 and 333-15079-4) (the "1933 Act Registration Statement") including any amendments thereto and any further pre-effective or post-effective amendments to such Registration Statement, relating to the registration under the Securities Act of, among other things, the Preferred Securities of the Trust and the related guarantees of such Preferred Securities by the Sponsor and (b) a Registration Statement on Form 8-A or other appropriate form (the "1934 Act Registration Statement") (including all pre-effective and post-effective amendments thereto) relating to the registration of the Preferred Securities of the Trust and the related guarantees of such Preferred Securities by the Sponsor under Section 12(b) of the Exchange Act; (ii) to file with the New York Stock Exchange and execute on behalf of the Trust a listing application and all other applications, statements, certificates, agreements and other instruments as shall be necessary or desirable to cause the Preferred Securities to be listed on the New York Stock Exchange; (iii) to file and execute on behalf of the Trust such applications, reports, surety bonds, irrevocable consents, appointments of attorney for service of process and other papers and documents as shall be necessary or desirable to register the Preferred Securities under the securities or "Blue Sky" laws of such jurisdictions as JPM, on behalf of the Trust, may deem necessary or desirable and (iv) to negotiate and execute on behalf of the Trust the Underwriting Agreement. In the event that any filing referred to in clauses (i)-(iii) above is required by the rules and regulations of the Commission, the New York Stock Exchange or state securities or blue sky laws, to be executed on behalf of the Trust by the Trustees, the Regular Trustees, in their capacities as Trustees of the Trust, are hereby authorized and directed to join in any such filing and to execute on behalf of the Trust any and all of the foregoing, it being understood that the Property Trustee and the Delaware Trustee, in their capacities as Trustees of the 36 29 Trust, shall not be required to join in any such filing or execute on behalf of the Trust any such document unless required by the rules and regulations of the Commission, the New York Stock Exchange or state securities or blue sky laws. In connection with all of the foregoing, JPM and each Trustee, solely in its capacity as a Trustee of the Trust, have constituted and appointed, and hereby confirm the appointment of [ ], [ ], [ ] and [ ], and each of them, as his, her or its, as the case may be, true and lawful attorneys-in-fact, and agents, with full power of substitution and resubstitution, for JPM or such Trustee or in JPM's or such Trustee's name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to the 1933 Act Registration Statement and the 1934 Act Registration Statement and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as JPM or such Trustee might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his or her substitute or substitutes, shall do or cause to be done by virtue hereof. SECTION 3.14. Filing of Amendments to Certificate of Trust. The Certificate of Trust as filed with the Secretary of State of the State of Delaware on October 29, 1996 is attached hereto as Exhibit A. On or after the date of execution of this Declaration, the Trustees shall cause the filing with the Secretary of State of the State of Delaware of such amendments to the Certificate of Trust as the Trustees shall deem necessary or desirable. SECTION 3.15. Execution of Documents by Regular Trustees. Unless otherwise determined by the Regular Trustees and except as otherwise required by the Business Trust Act with respect to the Certificate of Trust or otherwise, a majority of, or if there are only two, both of, the Regular Trustees are authorized to execute and deliver on behalf of the Trust any documents which the Regular Trustees have the power and authority to execute or deliver pursuant to this Declaration. SECTION 3.16. Trustees Not Responsible for Recitals or Issuance of Securities. The recitals contained 37 30 in this Declaration and the Securities shall be taken as the statements of the Sponsor and the Trustees do not assume any responsibility for their correctness. The Trustees make no representations as to the value or condition of the property of the Trust or any part thereof. The Trustees make no representations as to the validity or sufficiency of this Declaration or the Securities. SECTION 3.17. Duration of Trust. The Trust, absent termination pursuant to the provisions of Article VIII hereof, shall have existence until , 203 . ARTICLE IV Sponsor SECTION 4.01. Purchase of Common Securities by Sponsor. On the Closing Date, the Sponsor will purchase all of the Common Securities issued by the Trust at the same time as the Preferred Securities to be issued on such date are issued, such purchase to be in an amount equal to 3% of the total capital of the Trust. On the Option Closing Date, the Sponsor shall purchase all of the Common Securities issued by the Trust at the same time as the Preferred Securities to be issued on such date are issued, such purchase to be in such amount so that the Common Securities continue to represent 3% of the total capital of the Trust. SECTION 4.02. Expenses. (a) In connection with the purchase of the Debentures by the Trust, the Sponsor, in its capacity as Sponsor and not as a Holder, shall be responsible for and shall pay for all debts and obligations (other than with respect to the Securities) and all costs and expenses of the Trust (including, but not limited to, costs and expenses relating to the organization of the Trust, the issuance of the Preferred Securities to initial purchasers thereof, the fees and expenses (including reasonable counsel fees and expenses) of the Trustees (including any amounts payable under Article X), the costs and expenses relating to the operation of the Trust, including without limitation, costs and expenses of accountants, attorneys, statistical or bookkeeping services, expenses for printing and engraving and computing or accounting equipment, Paying Agent(s), registrars, transfer agent(s), duplicating, travel and telephone and other 38 31 telecommunications expenses and costs and expenses incurred in connection with the disposition of Trust assets). (b) In connection with the purchase of the Debentures by the Trust, the Sponsor, in its capacity as Sponsor and not as a Holder, will pay any and all taxes (other than United States withholding taxes attributable to the Trust or its assets) and all liabilities, costs and expenses with respect to such taxes of the Trust. (c) The Sponsor's obligations under this Section 4.02 shall be for the benefit of, and shall be enforceable by, any Person to whom any such debts, obligations, costs, expenses and taxes are owed (a "Creditor") whether or not such Creditor has received notice hereof. Any such Creditor may enforce the Sponsor's obligations under this Section 4.02 directly against the Sponsor and the Sponsor irrevocably waives any right or remedy to require that any such Creditor take any action against the Trust or any other Person before proceeding against the Sponsor. The Sponsor agrees to execute such additional agreements as may be necessary or desirable in order to give full effect to the provisions of this Section 4.02. ARTICLE V Trustees SECTION 5.01. Number of Trustees; Qualifications. (a) Except as provided in (1) below, the number of Trustees initially shall be five (5). At any time (i) before the issuance of the Securities, the Sponsor may, by written instrument, increase or decrease the number of, and appoint, remove and replace the, Trustees, and (ii) after the issuance of the Securities the number of Trustees may be increased or decreased solely by, and Trustees may be appointed, removed or replaced solely by, vote of Holders of Common Securities representing a Majority in liquidation amount of the Common Securities voting as a class; provided that in any case: (1) the number of Trustees shall be at least five (5) unless the Trustee that acts as the Property Trustee also acts as the Delaware Trustee, in which case the number of Trustees shall be at least three (3); 39 32 (2) at least a majority of the Trustees shall at all times be officers or employees of JPM; (3) if required by the Business Trust Act, one Trustee (the "Delaware Trustee") shall be either a natural person who is a resident of the State of Delaware or, if not a natural person, an entity which has its principal place of business in the State of Delaware and otherwise is permitted to act as a Trustee hereunder under the laws of the State of Delaware, except that if the Property Trustee has its principal place of business in the State of Delaware and otherwise is permitted to act as a Trustee hereunder under the laws of the State of Delaware, then the Property Trustee shall also be the Delaware Trustee and Section 3.09 shall have no application; and (4) there shall at all times be a Property Trustee hereunder which shall satisfy the requirements of Section 5.01(c). Each Trustee shall be either a natural person at least 21 years of age or a legal entity which shall act through one or more duly appointed representatives. (b) The initial Regular Trustees shall be: [ ] [ ] [ ] In care of J.P. Morgan & Co. Incorporated 60 Wall Street New York, New York 10260-0060 (c) There shall at all times be one Trustee which shall act as Property Trustee. In order to act as Property Trustee hereunder, such Trustee shall: (i) not be an Affiliate of the Sponsor; (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 Columbia, or a corporation or Person permitted by the Commission to act as an institutional trustee under the Trust Indenture Act, authorized under such laws to exercise corporate trust powers, having a combined 40 33 capital and surplus of at least $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 5.01(c)(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; and (iii) if the Trust is excluded from the definition of an Investment Company solely by reason of Rule 3a-7 and to the extent Rule 3a-7 requires a trustee having certain qualifications to hold title to the "eligible assets" (as defined in Rule 3a-7) of the Trust, the Property Trustee shall possess those qualifications. If at any time the Property Trustee shall cease to satisfy the requirements of clauses (i)-(iii) above, the Property Trustee shall immediately resign in the manner and with the effect set out in Section 5.02(d). If the Property Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Property Trustee and the Holders of the Common Securities (as if such Holders were the obligor referred to in Section 310(b) of the Trust Indenture Act) shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. The Preferred Guarantee shall be deemed to be specifically described in this Declaration for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. The initial Trustee which shall serve as the Property Trustee is First Trust of New York, National Association, whose address is as set forth in Section 14.01(b). (d) The initial Trustee which shall serve as the Delaware Trustee is Wilmington Trust Company, a Delaware banking corporation, whose address is as set forth in Section 14.01(c). (e) Any action taken by Holders of Common Securities pursuant to this Article V shall be taken at a meeting of Holders of Common Securities convened for such purpose or by written consent as provided in Section 12.02. 41 34 (f) No amendment may be made to this Section 5.01 which would change any rights with respect to the number, existence or appointment and removal of Trustees, except with the consent of each Holder of Common Securities. SECTION 5.02. Appointment, Removal and Resignation of Trustees. (a) Subject to Section 5.02(b), Trustees may be appointed or removed without cause at any time: (i) until the issuance of the Securities, by written instrument executed by the Sponsor; and (ii) after the issuance of the Securities by vote of the Holders of a Majority in liquidation amount of the Common Securities voting as a class. (b)(i) The Trustee that acts as Property Trustee shall not be removed in accordance with Section 5.02(a) until a Successor Property Trustee possessing the qualifications to act as Property Trustee under Section 5.01(c) (a "Successor Property Trustee") has been appointed and has accepted such appointment by written instrument executed by such Successor Property Trustee and delivered to the Regular Trustees, the Sponsor and the Property Trustee being removed; and (ii) the Trustee that acts as Delaware Trustee shall not be removed in accordance with Section 5.02(a) until a successor Trustee possessing the qualifications to act as Delaware Trustee under Section 5.01(a)(3) (a "Successor Delaware Trustee") has been appointed and has accepted such appointment by written instrument executed by such Successor Delaware Trustee and delivered to the Regular Trustees, the Sponsor and the Delaware Trustee being removed. (c) A Trustee appointed to office shall hold office until his successor shall have been appointed or until his death, removal or resignation. (d) Any Trustee may resign from office (without need for prior or subsequent accounting) by an instrument (a "Resignation Request") in writing signed by the Trustee and delivered to the Sponsor and the Trust, which resignation shall take effect upon such 42 35 delivery or upon such later date as is specified therein; provided, however, that: (i) no such resignation of the Trustee that acts as the Property Trustee shall be effective until: (A) a Successor Property Trustee possessing the qualifications to act as Property Trustee under Section 5.01(c) has been appointed and has accepted such appointment by instrument executed by such Successor Property Trustee and delivered to the Trust, the Sponsor and the resigning Property Trustee; or (B) if the Trust is excluded from the definition of an Investment Company solely by reason of Rule 3a-7, until the assets of the Trust have been completely liquidated and the proceeds thereof distributed to the Holders of the Securities; and (ii) no such resignation of the Trustee that acts as the Delaware Trustee shall be effective until a Successor Delaware Trustee has been appointed and has accepted such appointment by instrument executed by such Successor Delaware Trustee and delivered to the Trust, the Sponsor and the resigning Delaware Trustee. (e) If no Successor Property Trustee or Successor Delaware Trustee shall have been appointed and accepted appointment as provided in this Section 5.02 within 60 days after delivery to the Sponsor and the Trust of a Resignation Request, the resigning Property Trustee or Delaware Trustee may petition any court of competent jurisdiction for appointment of a Successor Property Trustee or Successor Delaware Trustee. Such court may thereupon after such notice, if any, as it may deem proper and prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee, as the case may be. (f) The Sponsor shall provide notice to the Property Trustee of any resignation or removal of a Regular Trustee. SECTION 5.03. Vacancies Among Trustees. If a Trustee ceases to hold office for any reason and the number of Trustees is not reduced pursuant to Section 5.01 or if 43 36 the number of Trustees is increased pursuant to Section 5.01, a vacancy shall occur. A resolution certifying the existence of such vacancy by a majority of the Regular Trustees shall be conclusive evidence of the existence of such vacancy. The vacancy shall be filled with a Trustee appointed in accordance with the requirements of this Article V. SECTION 5.04. Effect of Vacancies. The death, resignation, retirement, removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to perform the duties of a Trustee, or any one of them, shall not operate to annul the Trust. Whenever a vacancy in the number of Regular Trustees shall occur until such vacancy is filled as provided in this Article V, the Regular Trustees in office, regardless of their number, shall have all the powers granted to the Regular Trustees and shall discharge all the duties imposed upon the Regular Trustees by this Declaration. SECTION 5.05. Meetings. Meetings of the Regular Trustees shall be held from time to time upon the call of any Trustee. Regular meetings of the Regular Trustees may be held at a time and place fixed by resolution of the Regular Trustees. Notice of any in-person meeting of the Regular Trustees shall be hand delivered or otherwise delivered in writing (including by facsimile, with a hard copy by overnight courier) not less than 48 hours before such meeting. Notice of any telephonic meeting of the Regular Trustees or any committee thereof shall be hand delivered or otherwise delivered in writing (including by facsimile, with a hard copy by overnight courier) not less than 24 hours before such meeting. Notices shall contain a brief statement of the time, place and anticipated purposes of the meeting. The presence (whether in person or by telephone) of a Regular Trustee at a meeting shall constitute a waiver of notice of such meeting except where a Regular Trustee attends a meeting for the express purpose of objecting to the transaction of any activity on the ground that the meeting has not been lawfully called or convened. Unless provided otherwise in this Declaration, any action of the Regular Trustees may be taken at a meeting by vote of a majority of the Regular Trustees present (whether in person or by telephone) and eligible to vote with respect to such matter; provided that a Quorum is present, or without a meeting by the unanimous written consent of the Regular Trustees. 44 37 SECTION 5.06. Delegation of Power. (a) Any Regular Trustee may, by power of attorney consistent with applicable law, delegate to any other natural person over the age of 21 his or her power for the purpose of executing any registration statement or amendment thereto or other document or schedule filed with the Commission or making any other governmental filing (including, without limitation the filings referred to in Section 3.13). (b) The Regular Trustees shall have the power to delegate from time to time to such of their number or to officers of the Trust or to officers of JPM the doing of such things and the execution of such instruments either in the name of the Trust or the names of the Regular Trustees or otherwise as the Regular Trustees may deem expedient, to the extent such delegation is not prohibited by applicable law or contrary to the provisions of the Trust, as set forth herein. ARTICLE VI Distributions SECTION 6.01. Distributions. Holders shall receive periodic distributions, redemption payments and liquidation distributions in accordance with the applicable terms of the relevant Holder's Securities ("Distributions"). Distributions shall be made to the Holders of Preferred Securities and Common Securities in accordance with the terms of the Securities as set forth in Exhibits B and C hereto. If and to the extent that JPM makes a payment of interest (including Compounded Interest (as defined in the Indenture)), premium or principal on the Debentures held by the Property Trustee (the amount of any such payment being a "Payment Amount"), the Property Trustee shall and is directed to promptly make a Distribution of the Payment Amount to Holders in accordance with the terms of the Securities as set forth in Exhibits B and C hereto. ARTICLE VII Issuance of Securities SECTION 7.01. General Provisions Regarding Securities. (a) The Regular Trustees shall issue on behalf of the Trust securities in fully registered form 45 38 representing undivided beneficial interests in the assets of the Trust in accordance with Section 7.01(b) and for the consideration specified in Section 3.03. (b) The Regular Trustees shall issue on behalf of the Trust one class of preferred securities representing undivided beneficial interests in the assets of the Trust having such terms as are set forth in Exhibit B (the "Preferred Securities") which terms are incorporated by reference in, and made a part of, this Declaration as if specifically set forth herein, and one class of common securities representing undivided beneficial interests in the assets of the Trust having such terms as are set forth in Exhibit C (the "Common Securities") which terms are incorporated by reference in, and made a part of, this Declaration as if specifically set forth herein. The Trust shall have no securities or other interests in the assets of the Trust other than the Preferred Securities and the Common Securities. (c) The Certificates shall be signed on behalf of the Trust by the Regular Trustees (or if there are more than two Regular Trustees by any two of the Regular Trustees). Such signatures may be the manual or facsimile signatures of the present or any future Regular Trustee. Typographical and other minor errors or defects in any such reproduction of any such signature shall not affect the validity of any Certificate. In case any Regular Trustee of the Trust who shall have signed any of the Certificates shall cease to be such Regular Trustee before the Certificate so signed shall be delivered by the Trust, such Certificate nevertheless may be delivered as though the person who signed such Certificate had not ceased to be such Regular Trustee; and any Certificate may be signed on behalf of the Trust by such persons as, at the actual date of the execution of such Certificate, shall be the Regular Trustees of the Trust, although at the date of the execution and delivery of the Declaration any such person was not such a Regular Trustee. Certificates shall be printed, lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the Regular Trustees, as evidenced by their execution thereof, and may have such letters, numbers or other marks of identification or designation and such legends or endorsements as the Regular Trustees may deem appropriate, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Securities may be listed, or to conform to usage. Pending 46 39 the preparation of definitive Certificates, the Regular Trustees on behalf of the Trust may execute temporary Certificates (printed, lithographed or typewritten), in substantially the form of the definitive Certificates in lieu of which they are issued, but with such omissions, insertions and variations as may be appropriate for temporary Certificates, all as may be determined by the Regular Trustees. Each temporary Certificate shall be executed by the Regular Trustees on behalf of the Trust upon the same conditions and in substantially the same manner, and with like effect, as definitive Certificates. Without unnecessary delay, the Regular Trustees on behalf of the Trust will execute and furnish definitive Certificates and thereupon any or all temporary Certificates may be surrendered to the transfer agent and registrar in exchange therefor (without charge to the Holders). Each Certificate whether in temporary or definitive form shall be countersigned by the manual or facsimile signature of an authorized signatory of the Person acting as registrar and transfer agent for the Securities, which shall initially be the Property Trustee. (d) The consideration received by the Trust for the issuance of the Securities shall constitute a contribution to the capital of the Trust and shall not constitute a loan to the Trust. (e) Upon issuance of the Securities as provided in this Declaration, the Securities so issued shall be deemed to be validly issued, fully paid and non-assessable. (f) Every Person, by virtue of having become a Holder or a Preferred Security Beneficial Owner in accordance with the terms of this Declaration, shall be deemed to have expressly assented and agreed to the terms of, and shall be bound by, this Declaration. (g) Upon issuance of the Securities as provided in this Declaration, the Regular Trustees on behalf of the Trust shall return to JPM the $10 constituting initial trust assets as set forth in the Original Declaration. ARTICLE VIII Termination of Trust 47 40 SECTION 8.01. Termination of Trust. The Trust shall dissolve when: (i) all of the Securities shall have been called for redemption and the amounts necessary for redemption thereof shall have been paid to the Holders of Securities in accordance with the terms of the Securities; or (ii) all of the Debentures shall have been distributed to the Holders of Securities in exchange for all of the Securities in accordance with the terms of the Securities; or (iii) upon the expiration of the term of the Trust as set forth in Section 3.17, and thereafter the Trustees shall, after satisfaction of all obligations of the Trust, file a certificate of cancelation with the Secretary of State of the State of Delaware and the Trust shall terminate. The Trustees shall so file such a certificate as soon as practicable after the occurrence of an event referred to in this Section 8.01. The provisions of Sections 3.12 and 4.02 and Article X shall survive the termination of the Trust. ARTICLE IX Transfer of Interests SECTION 9.01. Transfer of Securities. (a) Securities may only be transferred, in whole or in part, in accordance with the terms and conditions set forth in this Declaration. Any transfer or purported transfer of any Security not made in accordance with this Declaration shall be null and void. (b) Subject to this Article IX, Preferred Securities shall be freely transferable. (c) Subject to this Article IX, JPM and any Related Party may only transfer Common Securities to JPM or a Related Party; provided that any such transfer shall be subject to the condition that the transferor shall have obtained (1) either a ruling from the Internal Revenue Service or an unqualified written opinion addressed to the 48 41 Trust and delivered to the Trustees of nationally recognized independent tax counsel experienced in such matters to the effect that such transfer will not (i) cause the Trust to be treated as issuing a class of interests in the Trust differing from the class of interests represented by the Common Securities originally issued to JPM, (ii) result in the Trust acquiring or disposing of, or being deemed to have acquired or disposed of, an asset, or (iii) result in or cause the Trust to be treated as anything other than a grantor trust for United States Federal income tax purposes and (2) an unqualified written opinion addressed to the Trust and delivered to the Trustees of a nationally recognized independent counsel experienced in such matters that such transfer will not cause the Trust to be an Investment Company or controlled by an Investment Company. SECTION 9.02. Transfer of Certificates. The Regular Trustees shall cause to be kept at an office or agency to be maintained by the Trust a register in which, subject to such reasonable regulations as it may prescribe, the Trust shall provide for the registration of Certificates and of transfers of Certificates, which will be effected without charge but only upon payment (with such indemnity as the Trust may require) in respect of any tax or other government charges which may be imposed in relation to it. The Property Trustee will be the initial registrar and transfer agent (the "Registrar") for the purpose of registering Certificates and transfers of Certificates as provided herein. Upon surrender for registration of transfer of any Certificate at the office or agency of the Registrar, the Regular Trustees shall execute and the Registrar shall countersign in accordance with section 7.01(c) one or more new Certificates of any authorized denominations and of a like aggregate liquidation amount to be issued in the name of the designated transferee or transferees. Every Certificate surrendered for registration of transfer shall be accompanied by a written instrument of transfer in form satisfactory to the Trust duly executed by the Holder or such Holder's attorney duly authorized in writing. Each Certificate surrendered for registration of transfer shall be canceled by the Regular Trustees. A transferee of a Certificate shall be entitled to the rights and subject to the obligations of a Holder hereunder upon the receipt by such transferee of a Certificate. By acceptance of a Certificate, each transferee shall be deemed to have agreed to be bound by this Declaration. 49 42 SECTION 9.03. Deemed Security Holders. The Trustees may treat the Person in whose name any Certificate shall be registered on the books and records of the Trust as the sole holder of such Certificate and of the Securities represented by such Certificate for purposes of receiving Distributions and for all other purposes whatsoever and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such Certificate or in the Securities represented by such Certificate on the part of any Person, whether or not the Trustees shall have actual or other notice thereof. SECTION 9.04. Book Entry Interests. Unless otherwise specified in the terms of the Preferred Securities, the Preferred Securities Certificates, on original issuance (including Preferred Securities, if any, issued on the Option Closing Date pursuant to the exercise of the overallotment option set forth in the Underwriting Agreement), will be issued in the form of one or more, fully registered, global Preferred Security Certificates (each a "Global Certificate"), to be delivered to DTC, the initial Clearing Agency, by, or on behalf of, the Trust. Such Global Certificates shall initially be registered on the books and records of the Trust in the name of Cede & Co., the nominee of DTC, and no Preferred Security Beneficial Owner will receive a definitive Preferred Security Certificate representing such Preferred Security Beneficial Owner's interests in such Global Certificates, except as provided in Section 9.07. Unless and until definitive, fully registered Preferred Security Certificates (the "Definitive Preferred Security Certificates") have been issued to the Preferred Security Beneficial Owners pursuant to Section 9.07: (i) the provisions of this Section 9.04 shall be in full force and effect; (ii) the Trust and the Trustees shall be entitled to deal with the Clearing Agency for all purposes of this Declaration (including the payment of Distributions on the Global Certificates and receiving approvals, votes or consents hereunder) as the Holder of the Preferred Securities and the sole holder of the Global Certificates and shall have no obligation to the Preferred Security Beneficial Owners; (iii) to the extent that the provisions of this Section 9.04 conflict with any other provisions of this 50 43 Declaration, the provisions of this Section 9.04 shall control; and (iv) the rights of the Preferred Security Beneficial Owners shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Preferred Security Beneficial Owners and the Clearing Agency and/or the Clearing Agency Participants. DTC will make book entry transfers among the Clearing Agency Participants and receive and transmit payments of Distributions on the Global Certificates to such Clearing Agency Participants. SECTION 9.05. Notices to Holders of Certificates. Whenever a notice or other communication to the Holders is required to be given under this Declaration, unless and until Definitive Preferred Security Certificates shall have been issued pursuant to Section 9.07, the relevant Trustees shall give all such notices and communications, specified herein to be given to Preferred Securities Holders, to the Clearing Agency and, with respect to any Preferred Security Certificate registered in the name of a Clearing Agency or the nominee of a Clearing Agency, the Trustees shall, except as set forth herein have no notice obligations to the Preferred Security Beneficial Owners. SECTION 9.06. Appointment of Successor Clearing Agency. If any Clearing Agency elects to discontinue its services as securities depository with respect to the Preferred Securities, the Regular Trustees may, in their sole discretion, appoint a successor Clearing Agency with respect to the Preferred Securities. SECTION 9.07. Definitive Preferred Securities Certificates. If (i) a Clearing Agency elects to discontinue its services as securities depository with respect to the Preferred Securities and a successor Clearing Agency is not appointed within 90 days after such discontinuance pursuant to Section 9.06 or (ii) the Regular Trustees elect after consultation with the Sponsor to terminate the book entry system through the Clearing Agency with respect to the Preferred Securities, then (x) Definitive Preferred Security Certificates shall be prepared by the Regular Trustees on behalf of the Trust with respect to such Preferred Securities and (y) upon surrender of the Global Certificates by the Clearing Agency, accompanied by registration instructions, the Regular Trustees shall cause 51 44 definitive Preferred Security Certificates to be delivered to Preferred Security Beneficial Owners in accordance with the instructions of the Clearing Agency. Neither the Trustees nor the Trust shall be liable for any delay in delivery of such instructions and each of them may conclusively rely on, and shall be protected in relying on, such instructions. SECTION 9.08. Mutilated, Destroyed, Lost or Stolen Certificates. If (a) any mutilated Certificates should be surrendered to the Regular Trustees, or if the Regular Trustees shall receive evidence to their satisfaction of the destruction, loss or theft of any Certificate and (b) there shall be delivered to the Regular Trustees such security or indemnity as may be required by them to keep each of them harmless, then in the absence of notice that such Certificate shall have been acquired by a bona fide purchaser, any two Regular Trustees on behalf of the Trust shall execute and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like denomination. In connection with the issuance of any new Certificate under this Section 9.08, the Regular Trustees may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. Any duplicate Certificate issued pursuant to this Section shall constitute conclusive evidence of an ownership interest in the relevant Securities, as if originally issued, whether or not the lost, stolen or destroyed Certificate shall be found at any time. ARTICLE X Limitation of Liability; Indemnification SECTION 10.01 Exculpation. (a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise to the Trust 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 on behalf of the Trust and in a manner such Indemnified Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this Declaration 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 gross negligence (or, in the case of the Property Trustee, 52 45 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 Trust and upon such information, opinions, reports or statements presented to the Trust by any Person as to matters the Indemnified Person reasonably believes are within such other Person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Trust, 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 Securities might properly be paid. (c) Pursuant to Section 3803(a) of the Business Trust Act, the Holders of Securities, in their capacities as Holders, shall be entitled to the same limitation of liability that is extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. SECTION 10.02. Indemnification and Compensation. (a) To the fullest extent permitted by applicable law, the Sponsor shall indemnify and hold harmless each Indemnified Person from and against any loss, damage or claim incurred by such Indemnified Person by reason of any act or omission performed or omitted by such Indemnified Person in good faith on behalf of the Trust and in a manner such Indemnified Person reasonably believed to be within the scope of authority conferred on such Indemnified Person by this Declaration, except that no Indemnified Person shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such Indemnified Person by reason of gross negligence (or, in the case of the Property Trustee, negligence) or willful misconduct with respect to such acts or omissions. (b) To the fullest extent permitted by applicable law, expenses (including legal fees) incurred by an Indemnified Person in defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the Sponsor prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Sponsor of an undertaking by or on behalf of the Indemnified Person to repay such amount if it shall be determined that 53 46 the Indemnified Person is not entitled to be indemnified as authorized in Section 10.02(a). (c) The Sponsor agrees to pay the Property Trustee and the Delaware Trustee from time to time such compensation for all services rendered by the Property Trustee and the Delaware Trustee hereunder as may be mutually agreed upon in writing by the Sponsor and the Property Trustee or the Delaware Trustee, as the case may be, and, except as otherwise expressly provided herein, to reimburse the Property Trustee and the Delaware Trustee upon its or their request for all reasonable expenses, disbursements and advances incurred or made by the Property Trustee or the Delaware Trustee, as the case may be, in accordance with the provisions of this Declaration, except any such expense, disbursement or advance as may be attributable to its or their negligence or bad faith. SECTION 10.03. Outside Businesses. Any Covered Person, the Sponsor, JPM, the Delaware Trustee and the Property Trustee may engage in or possess an interest in other business ventures of any nature or description, independently or with others, similar or dissimilar to the business of the Trust, and the Trust and the Holders of Securities shall have no rights by virtue of this Declaration in and to such independent ventures or the income or profits derived therefrom, and the pursuit of any such venture, even if competitive with the business of the Trust, shall not be deemed wrongful or improper. None of the Covered Persons, the Sponsor, JPM, the Delaware Trustee or the Property Trustee shall be obligated to present any particular investment or other opportunity to the Trust even if such opportunity is of a character that, if presented to the Trust, could be taken by the Trust, and any Covered Person, the Sponsor, JPM, the Delaware Trustee and the Property Trustee shall have the right to take for its own account (individually or as a partner or fiduciary) or to recommend to others any such particular investment or other opportunity. Any Covered Person, the Delaware Trustee and the Property Trustee may engage or be interested in any financial or other transaction with the Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee or agent for, or act on any committee or body of holders of, securities or other obligations of the Sponsor or its Affiliates. 54 47 ARTICLE XI Accounting SECTION 11.01. Fiscal Year. The fiscal year ("Fiscal Year") of the Trust shall be the calendar year, or such other year as is required by the Code. SECTION 11.02. Certain Accounting Matters. (a) At all times during the existence of the Trust, the Regular Trustees shall keep, or cause to be kept, full books of account, records and supporting documents, which shall reflect in reasonable detail each transaction of the Trust. The books of account shall be maintained on the accrual method of accounting, in accordance with generally accepted accounting principles consistently applied. The Trust shall use the accrual method of accounting for United States Federal income tax purposes. The books and records of the Trust, together with a copy of this Declaration and a certified copy of the Certificate of Trust, or any amendment thereto, shall at all times be maintained at the principal office of the Trust and shall be open for inspection for any examination by any Holder or its duly authorized representative for any purpose reasonably related to its interest in the Trust during normal business hours. (b) The Regular Trustees shall, as soon as available after the end of each Fiscal Year of the Trust, cause to be prepared and mailed to each Holder of Securities unaudited financial statements of the Trust for such Fiscal Year, prepared in accordance with generally accepted accounting principles; provided that if the Trust is required to comply with the periodic reporting requirements of Sections 13(a) or 15(d) of the Exchange Act, such financial statements for such Fiscal Year shall be examined and reported on by a firm of independent certified public accountants selected by the Regular Trustees (which firm may be the firm used by the Sponsor). (c) The Regular Trustees shall cause to be prepared and mailed to each Holder of Securities an annual United States Federal income tax information statement, on such form as is required by the Code, containing such information with regard to the Securities held by each Holder as is required by the Code and the Treasury Regulations. Notwithstanding any right under the Code to deliver any such statement at a later date, the Regular Trustees shall endeavor to deliver all such statements 55 48 within 30 days after the end of each Fiscal Year of the Trust. (d) The Regular Trustees shall cause to be prepared and filed with the appropriate taxing authority an annual United States Federal income tax return, on such form as is required by the Code, and any other annual income tax returns required to be filed by the Regular Trustees on behalf of the Trust with any state or local taxing authority, such returns to be filed as soon as practicable after the end of each Fiscal Year of the Trust. SECTION 11.03. Banking. The Trust shall maintain one or more bank accounts in the name and for the sole benefit of the Trust; provided, however, that all payments of funds in respect of the Debentures held by the Property Trustee shall be made directly to the Property Account and no other funds from the Trust shall be deposited in the Property Account. The sole signatories for such accounts shall be designated by the Regular Trustees; provided, however, that the Property Trustee shall designate the sole signatories for the Property Account. SECTION 11.04. Withholding. The Trust and the Trustees shall comply with all withholding requirements under United States Federal, state and local law. The Trust shall request, and the Holders shall provide to the Trust, such forms or certificates as are necessary to establish an exemption from withholding with respect to each Holder, and any representations and forms as shall reasonably be requested by the Trust to assist it in determining the extent of, and in fulfilling, its withholding obligations. The Property Trustee shall file required forms with applicable jurisdictions and, unless an exemption from withholding is properly established by a Holder, the Property Trustee shall remit amounts withheld with respect to the Holder to applicable jurisdictions. To the extent that the Trust is required to withhold and pay over any amounts to any authority with respect to distributions or allocations to any Holder, the amount withheld shall be deemed to be a distribution in the amount of the withholding to the Holder. In the event of any claimed overwithholding, Holders shall be limited to an action against the applicable jurisdiction. If the amount to be withheld was not withheld from a Distribution, the Property Trustee may reduce subsequent Distributions by the amount of such withholding. 56 49 ARTICLE XII Amendments and Meetings SECTION 12.01. Amendments. (a) Except as otherwise provided in this Declaration or by any applicable terms of the Securities, this Declaration may be amended by, and only by, a written instrument executed by a majority of the Regular Trustees (or, if there are only two Regular Trustees, both Regular Trustees); provided, however, that (i) no amendment to this Declaration shall be made unless the Regular Trustees shall have obtained (A) either a ruling from the Internal Revenue Service or a written unqualified opinion of nationally recognized independent tax counsel experienced in such matters to the effect that such amendment will not cause the Trust to be classified for United States Federal income tax purposes as an association taxable as a corporation or a partnership and to the effect that the Trust will continue to be treated as a grantor trust for purposes of United States Federal income taxation and (B) a written unqualified opinion of nationally recognized independent counsel experienced in such matters to the effect that such amendment will not cause the Trust to be an Investment Company which is required to be registered under the Investment Company Act, (ii) if Securities are outstanding, any amendment which would adversely affect the rights, privileges or preferences of any Holder of Securities may be effected only after satisfaction of such additional requirements as may be set forth in the terms of such Securities, (iii) Section 4.02, Section 9.01(c) and this Section 12.01 shall not be amended without the consent of all Holders of the Securities, (iv) no amendment which adversely affects the rights, powers and privileges of the Property Trustee or the Delaware Trustee shall be made without the consent of the Property Trustee or the Delaware Trustee, as the case may be, (v) Article IV shall not be amended without the consent of the Sponsor, and (vi) the rights of Holders of Common Securities under Article V to increase or decrease the number of, and to appoint, replace or remove, Trustees shall not be amended without the consent of each Holder of Common Securities. (b) Notwithstanding Section 12.02(a)(ii), this Declaration may be amended without the consent of the Holders of the Securities to (i) cure any ambiguity, (ii) correct or supplement any provision in this Declaration that may be defective or inconsistent with any other 57 50 provision of this Declaration, (iii) to add to the covenants, restrictions or obligations of the Sponsor, and (iv) to conform to any changes in Rule 3a-7 or any change in interpretation or application of Rule 3a-7 by the Commission, which amendment does not adversely affect the rights, preferences or privileges of the Holders. (c) The Regular Trustees shall promptly furnish to each of the Property Trustee and the Delaware Trustee a copy of each amendment to this Declaration. SECTION 12.02. Meetings of the Holders of Securities; Action by Written Consent. (a) Meetings of the Holders of Preferred Securities and/or Common Securities may be called at any time by the Regular Trustees (or as provided in the terms of the Securities) to consider and act on any matter on which Holders of such class of Securities are entitled to act under the terms of this Declaration, the terms of the Securities or the rules of any stock exchange on which the Preferred Securities are listed or admitted for trading. The Regular Trustees shall call a meeting of Holders of Preferred Securities or Common Securities if directed to do so by Holders of at least 10% in liquidation amount of such class of Securities. Such direction shall be given by delivering to the Regular Trustees one or more notices in writing stating that the signing Holders of Securities wish to call a meeting and indicating the general or specific purpose for which the meeting is to be called. Any Holders of Securities calling a meeting shall specify in writing the Certificates held by the Holders of Securities exercising the right to call a meeting and only those specified Certificates shall be counted for purposes of determining whether the required percentage set forth in the second sentence of this paragraph has been met. (b) Except to the extent otherwise provided in the terms of the Securities, the following provision shall apply to meetings of Holders of Securities: (i) Notice of any such meeting shall be given by mail to each Trustee and all the Holders of Securities having a right to vote thereat not less than seven days nor more than 60 days prior to the date of such meeting. Whenever a vote, consent or approval of the Holders of Securities is permitted or required under this Declaration or the rules of any stock exchange on which the Preferred Securities are listed or admitted for trading, such vote, consent or approval may be 58 51 given at a meeting of the Holders of Securities. Any action that may be taken at a meeting of the Holders of Securities may be taken without a meeting if a consent in writing setting forth the action so taken is signed by Holders of Securities owning not less than the minimum aggregate liquidation amount of Securities that would be necessary to authorize or take such action at a meeting at which all Holders of Securities having a right to vote thereon were present and voting. Prompt notice of the taking of action without a meeting shall be given to the Holders of Securities entitled to vote who have not consented in writing. The Regular Trustees may specify that any written ballot submitted to the Holders of Securities for the purpose of taking any action without a meeting shall be returned to the Trust within the time specified by the Regular Trustees. (ii) Each Holder of a Security may authorize any Person to act for it by proxy on all matters in which a Holder of a Security is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the Holder of Security executing it. Except as otherwise provided herein or in the terms of the Securities, all matters relating to the giving, voting or validity of proxies shall be governed by the General Corporation Law of the State of Delaware relating to proxies and judicial interpretations thereunder as if the Trust were a Delaware corporation and the Holders of the Securities were stockholders of a Delaware corporation. (iii) Each meeting of the Holders of the Securities shall be conducted by the Regular Trustees or by such other Person that the Regular Trustees may designate. (iv) Unless otherwise provided in the Business Trust Act, this Declaration or the rules of any stock exchange on which the Preferred Securities are then listed or admitted for trading, the Regular Trustees, in their sole discretion, shall establish all other provisions relating to meetings of Holders of Securities, including notice of the time, place or purpose of any meeting at which any matter is to be voted on by any Holders of Securities, waiver of any 59 52 such notice, action by consent without a meeting, the establishment of a record date, quorum requirements, voting in person or by proxy or any other matter with respect to the exercise of any such right to vote. ARTICLE XIII Representations of Property Trustee and Delaware Trustee SECTION 13.01. Representations and Warranties of Property Trustee. (a) The Trustee which acts as initial Property Trustee represents and warrants to the Trust and to the Sponsor at the date of this Declaration, and each Successor Property Trustee represents and warrants to the Trust and the Sponsor at the time of the Successor Property Trustee's acceptance of its appointment as Property Trustee that: (i) The Property Trustee is a banking corporation with trust powers, duly organized, validly existing and in good standing under the laws of the State of its incorporation, with trust power and authority to execute and deliver, and to carry out and perform its obligations under the terms of, this Declaration. (ii) The execution, delivery and performance by the Property Trustee of this Declaration has been duly authorized by all necessary corporate action on the part of the Property Trustee. The Declaration has been duly executed and delivered by the Property Trustee, and constitutes a legal, valid and binding obligation of the Property Trustee, enforceable against it in accordance with its terms, subject to applicable bankruptcy, reorganization, moratorium, insolvency, and other similar laws affecting creditors' rights generally and to general principles of equity and the discretion of the court (regardless of whether the enforcement of such remedies is considered in a proceeding in equity or at law). (iii) The execution, delivery and performance of this Declaration by the Property Trustee does not conflict with or constitute a breach of the charter or By-laws of the Property Trustee. 60 53 (iv) No consent, approval or authorization of, or registration with or notice to, any banking authority which supervises or regulates the Property Trustee is required for the execution, delivery or performance by the Property Trustee of this Declaration. (v) The Property Trustee satisfies the qualifications set forth in Section 5.01(c). (b) The Trustee which acts as initial Delaware Trustee represents and warrants to the Trust and the Sponsor at the date of this Declaration, and each Successor Delaware Trustee represents and warrants to the Trust and the Sponsor at the time of the Successor Delaware Trustee's acceptance of its appointment as Delaware Trustee, that it satisfies the qualifications set forth in Section 5.01(a)(3). ARTICLE XIV Miscellaneous SECTION 14.01. Notices. All notices provided for in this Declaration 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: (a) if given to the Trust, in care of the Regular Trustees at the Trust's mailing address set forth below (or such other address as the Regular Trustees on behalf of the Trust may give notice of to the Property Trustee, the Delaware Trustee and the Holders of the Securities): JPM Capital Trust [ ] In care of J.P. Morgan & Co. Incorporated 60 Wall Street New York, New York 10260-0060 Attention of [ ] [ ] [ ], Trustees Facsimile No: (212) [ ] (b) if given to the Property Trustee, at the mailing address of the Property Trustee set forth below (or such other address as the Property Trustee may give 61 54 notice of to the Trust and the Holders of the Securities): First Trust of New York, National Association 100 Wall Street, Suite 2000 New York, New York 10005 Attention of [ ] Facsimile No: [ ] (c) if given to the Delaware Trustee, at the mailing address of the Delaware Trustee set forth below (or such other address as the Delaware Trustee may give notice of to the Trust and the Holders of the Securities): Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention of [ ] Facsimile No: (302) [ ] (d) if given to the Holder of the Common Securities, at the mailing address of the Sponsor set forth below (or such other address as the Holder of the Common Securities may give notice to the Property Trustee, the Delaware Trustee and the Trust): J.P. Morgan & Co. Incorporated 60 Wall Street New York, New York 10260-0060 Attention of [ ] Facsimile No: (212) [ ] (e) if given to any other Holder, at the address set forth on the books and records of the Trust. A copy of any notice to the Property Trustee or the Delaware Trustee shall also be sent to the Trust. All 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. 62 55 SECTION 14.02. Undertaking for Costs. All parties to this Declaration agree, and each Holder of any Securities by his or her acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Declaration, or in any suit against the Property Trustee for any action taken or omitted by it as Property Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 14.02 shall not apply to any suit instituted by the Property Trustee, to any suit instituted by any Holder of Preferred Securities, or group of Holders of Preferred Securities, holding more than 10% in aggregate liquidation amount of the outstanding Preferred Securities, or to any suit instituted by any Holder of Preferred Securities for the enforcement of the payment of the principal of (or premium, if any) or interest on the Debentures, on or after the respective due dates expressed in such Debentures. SECTION 14.03. Governing Law. This Declaration and the rights of the parties hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware and all rights and remedies shall be governed by such laws without regard to principles of conflict of laws. SECTION 14.04. Headings. Headings contained in this Declaration are inserted for convenience of reference only and do not affect the interpretation of this Declaration or any provision hereof. SECTION 14.05. Partial Enforceability. If any provision of this Declaration, or the application of such provision to any Person or circumstance, shall be held invalid, the remainder of this Declaration, or the application of such provision to persons or circumstances other than those to which it is held invalid, shall not be affected thereby. SECTION 14.06. Counterparts. This Declaration may contain more than one counterpart of the signature pages and this Declaration may be executed by the affixing of the signature of the Sponsor and each of the Trustees to one of such counterpart signature pages. All of such counterpart 63 56 signature pages shall be read as though one, and they shall have the same force and effect as though all of the signers had signed a single signature page. SECTION 14.07. Intention of the Parties. It is the intention of the parties hereto that the Trust not be classified for United States Federal income tax purposes as an association taxable as a corporation or partnership but that the Trust be treated as a grantor trust for United States Federal income tax purposes. The provisions of this Declaration shall be interpreted to further this intention of the parties. SECTION 14.08. Successors and Assigns. Whenever in this Declaration any of the parties hereto is named or referred to, the successors and assigns of such party shall be deemed to be included, and all covenants and agreements in this Declaration by the Sponsor and the Trustees shall bind and inure to the benefit of their respective successors and assigns, whether so expressed. IN WITNESS WHEREOF, the undersigned have caused these presents to be executed as of the day and year first above written. J.P. MORGAN & CO. INCORPORATED, as Sponsor by ------------------------------------ Name: Title: [ ], as Trustee, by -------------------------------- Name: Title: 64 57 [ ], as Trustee, by ------------------------------------- Name: Title: [ ], as Trustee, by ------------------------------------ Name: Title: FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, as Property Trustee, by ----------------------------------- Name: Title: WILMINGTON TRUST COMPANY, as Delaware Trustee, by ----------------------------------- Name: Title: 65 STATE OF NEW YORK, ) ) ss. COUNTY OF NEW YORK, ) BEFORE ME, the undersigned authority, on this day of , 199 , personally appeared (on behalf of J.P. Morgan & Co. Incorporated), [ ], [ ] and [ ], each known to me (or proved to me by introduction upon the oath of a person known to me) to be the person and officer, as the case may be, whose name is subscribed to the foregoing instrument, and each acknowledged to me that he executed the same as the act of such trust for the purposes and consideration herein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL THIS day of , 199 . ---------------------------------------- NOTARY PUBLIC, STATE OF NEW YORK Print Name: Commission Expires: 66 STATE OF NEW YORK, ) ) ss. COUNTY OF NEW YORK, ) BEFORE ME, the undersigned authority, on this day of , 199 , personally appeared [ ] of First Trust of New York, National Association known to me (or proved to me by introduction upon the oath of a person known to me) to be the person and officer whose names are subscribed to the foregoing instrument, and acknowledged to me that she executed the same as the act of such trust for the purposes and consideration herein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL THIS day of , 199 . (SEAL) ---------------------------------------- NOTARY PUBLIC, STATE OF NEW YORK Print Name: Commission Expires: 67 STATE OF DELAWARE, ) ) ss. COUNTY OF , ) BEFORE ME, the undersigned authority, on this day of , 199 , personally appeared [ ] of Wilmington Trust Company known to me (or proved to me by introduction upon the oath of a person known to me) to be the person and officer whose names are subscribed to the foregoing instrument, and acknowledged to me that she executed the same as the act of such trust for the purposes and consideration herein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL THIS day of , 199 . (SEAL) ---------------------------------------- NOTARY PUBLIC, STATE OF DELAWARE Print Name: Commission Expires: 68 EXHIBIT A CERTIFICATE OF TRUST OF JPM CAPITAL TRUST [ ] THIS Certificate of Trust of JPM Capital Trust [ ] (the "Trust"), dated October 29, 1996, is being duly executed and filed by the undersigned, as trustees, to form a business trust under the Delaware Business Trust Act (12 Del. Code Section 3801 et seq.). 1. Name. The name of the business trust being formed hereby is JPM Capital Trust [ ]. 2. Delaware Trustee. The name and business address of the trustee of the Trust with a principal place of business in the State of Delaware is Wilmington Trust Company, a Delaware banking corporation, Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890. 3. Effective Date. This Certificate of Trust shall be effective as of its filing. IN WITNESS WHEREOF, the undersigned, being the sole trustees of the Trust, have executed this Certificate of Trust as of the date first above written. WILMINGTON TRUST COMPANY, as Delaware Trustee, by ------------------------------------ Name: Title: FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, as Property Trustee, by ------------------------------------ Name: Title: 69 2 ---------------------------------------- Name: as Trustee ---------------------------------------- Name: as Trustee ---------------------------------------- Name: as Trustee 70 EXHIBIT B TERMS OF PREFERRED SECURITIES Pursuant to Section 7.01 of the Amended and Restated Declaration of Trust of JPM Capital Trust [ ] dated as of , 199 (as amended from time to time, the "Declaration"), the designations, rights, privileges, restrictions, preferences and other terms and provisions of the Preferred Securities are set forth below (each capitalized term used but not defined herein having the meaning set forth in the Declaration): 1. Designation and Number. Preferred Securities of the Trust with an aggregate liquidation amount in the assets of the Trust of Dollars ($ ) (including up to Dollars ($ ) issuable upon exercise of the overallotment option set forth in the Underwriting Agreement) and a liquidation amount in the assets of the Trust of $ per Preferred Security are hereby designated as " % Preferred Trust Securities". The Preferred Security Certificates evidencing the Preferred Securities shall be substantially in the form attached hereto as Annex I, with such changes and additions thereto or deletions therefrom as may be required by ordinary usage, custom or practice or to conform to the rules of any stock exchange on which the Preferred Securities are listed. In connection with the issuance and sale of the Preferred Securities and the Common Securities, the Trust will purchase, as trust assets, Debentures of JPM having an aggregate principal amount equal to the aggregate liquidation amount of the Preferred Securities and the Common Securities so issued and bearing interest at an annual rate equal to the annual Distribution rate on the Preferred Securities and the Common Securities and having payment and redemption provisions which correspond to the payment and redemption provisions of the Preferred Securities and the Common Securities. 2. Distributions. (a) Distributions payable on each Preferred Security will be fixed at a rate per annum of % (the "Coupon Rate") of the stated liquidation amount of $ per Preferred Security. Distributions in arrears for more than one quarter will bear interest at the rate per annum of % thereof (to the extent permitted by law), compounded quarterly. The term "Distributions" as used in these terms means such periodic cash distributions and any such interest payable unless otherwise stated. A Distribution will be made by the Property Trustee only to 71 2 the extent that interest payments are made in respect of the Debentures held by the Property Trustee. The amount of Distributions payable for any period will be computed for any quarterly Distribution period on the basis of a 360-day year of twelve 30-day months, and for any period shorter than a 90-day quarterly Distribution period for which Distributions are computed, Distributions will be computed on the basis of the actual number of days elapsed. (b) Distributions on the Preferred Securities will be cumulative, will accrue from , 199 and will be payable quarterly in arrears, on the last day of March, June, September and December of each year commencing on , 199 , except as otherwise described below, but only if and to the extent that interest payments are made in respect of the Debentures held by the Property Trustee. So long as JPM is not in default in the payment of interest on the Debentures, JPM shall have the right under the Indenture for the Debentures to defer payments of interest by extending the interest payment period from time to time on the Debentures for a period not to exceed 20 consecutive quarterly interest periods (a "Deferral Period"). During any such Deferral Period, quarterly Distributions will continue to accrue with interest thereon (to the extent permitted by applicable law) at the rate of % per annum, compounded quarterly. Prior to the termination of any such Deferral Period, JPM may further extend such Deferral Period; provided that such Deferral Period together with all such previous and further extensions thereof may not exceed 20 consecutive quarterly interest periods. Upon the termination of any Deferral Period and the payment of all amounts then due, JPM may commence a new Deferral Period, subject to the above requirements. Payments of accrued Distributions will be payable to Holders of Preferred Securities as they appear on the books and records of the Trust on the record date for the first interest payment date occurring at or after the end of the Deferral Period. (c) Distributions on the Preferred Securities will be payable promptly by the Property Trustee (or other Paying Agent) upon receipt of immediately available funds to the Holders thereof as they appear on the books and records of the Trust on the relevant record dates. While the Preferred Securities remain in book-entry only form, the relevant record dates shall be one Business Day prior to the relevant Distribution date, and if the Preferred Securities are no longer in book-entry only form, the relevant record 72 3 dates will be the fifteenth (15th) day of the month in which the relevant Distribution date occurs, which record and payment dates correspond to the record and interest payment dates for the Debentures. Distributions payable on any Preferred Securities that are not punctually paid on any Distribution payment date as a result of JPM having failed to make the corresponding interest payment on the Debentures will forthwith cease to be payable to the Person in whose name such Preferred Security is registered on the relevant record date, and such defaulted Distribution will instead be payable to the Person in whose name such Preferred Security is registered on the special record date established by the Regular Trustees, which record date shall correspond to the special record date or other specified date determined in accordance with the Indenture; provided, however, that Distributions shall not be considered payable on any Distribution payment date falling within a Deferral Period unless JPM has elected to make a full or partial payment of interest accrued on the Debentures on such Distribution payment date. Subject to any applicable laws and regulations and the provisions of the Declaration, each payment in respect of the Preferred Securities will be made as described in paragraph 9 hereof. If any date on which Distributions are payable on the Preferred Securities is not a Business Day, then payment of the Distribution payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. (d) All Distributions paid with respect to the Preferred Securities and the Common Securities will be paid pro rata to the Holders thereof entitled thereto. If an Event of Default has occurred and is continuing, the Preferred Securities shall have a priority over the Common Securities with respect to Distributions. (e) In the event that there is any money or other property held by or for the Trust that is not accounted for under the Declaration, such money or property shall be distributed pro rata among the Holders of the Preferred Securities and the Common Securities. 3. Liquidation Distribution upon Dissolution. In the event of any voluntary or involuntary dissolution, winding-up or termination of the Trust, the Holders of the 73 4 Preferred Securities and the Common Securities at the date of the dissolution, winding-up or termination, as the case may be, will be entitled to receive pro rata solely out of the assets of the Trust available for distribution to Holders of Preferred Securities and Common Securities after satisfaction of liabilities to creditors, an amount equal to the aggregate of the stated liquidation amount of $ per Preferred Security and Common Security plus accrued and unpaid Distributions thereon to the date of payment (such amount being the "Liquidation Distribution"), unless, in connection with such dissolution, winding-up or termination, and after satisfaction of liabilities to creditors, Debentures in an aggregate principal amount equal to the aggregate stated liquidation amount of such Preferred Securities and Common Securities and bearing accrued and unpaid interest in an amount equal to the accrued and unpaid Distributions on such Preferred Securities and Common Securities, shall be distributed pro rata to the Holders of the Preferred Securities and Common Securities in exchange for such Securities. If, upon any such dissolution, the Liquidation Distribution can be paid only in part because the Trust has insufficient assets available to pay in full the aggregate Liquidation Distribution, then the amounts payable directly by the Trust on the Preferred Securities and the Common Securities shall be paid, subject to the next paragraph, on a pro rata basis. Holders of Common Securities will be entitled to receive Liquidation Distributions upon any such dissolution pro rata with Holders of Preferred Securities, except that, if an Event of Default has occurred and is continuing, the Preferred Securities shall have a priority over the Common Securities with respect to such Liquidation Distribution. 4. Redemption and Distribution of Debentures. The Preferred Securities and the Common Securities may only be redeemed if Debentures having an aggregate principal amount equal to the aggregate liquidation amount of the Preferred Securities and the Common Securities are repaid, redeemed or distributed as set forth below: (a) Upon the repayment of the Debentures, in whole or in part, whether at maturity or upon redemption at any time or from time to time on or after , 200 , the proceeds of such repayment will be promptly applied to redeem pro rata Preferred Securities and Common 74 5 Securities having an aggregate liquidation amount equal to the aggregate principal amount of the Debentures so repaid, upon not less than 30 nor more than 60 days notice, at a redemption price of $ per Preferred and Common Security plus an amount equal to accrued and unpaid Distributions thereon to the date of redemption, payable in cash (the "Redemption Price"). The date of any such repayment of Preferred Securities and Common Securities shall be established to coincide with the repayment date of the Debentures. (b) If fewer than all the outstanding Preferred Securities and Common Securities are to be so redeemed, the Preferred Securities and the Common Securities will be redeemed pro rata, it being understood that Preferred Securities held of record by a Clearing Agency or nominee will be redeemed as described in paragraph 4(f)(ii) below. If a partial redemption would result in the delisting of the Preferred Securities by any national securities exchange or other organization on which the Preferred Securities are then listed, JPM pursuant to the Indenture, will only redeem Debentures in whole and the Trust will only redeem the Preferred Securities in whole. (c) If, at any time, a Tax Event or an Investment Company Event (each as hereinafter defined, and each, along with a Capital Treatment Event, a "Special Event") shall occur and be continuing, the Regular Trustees shall, unless the Debentures are redeemed in the limited circumstances described below, dissolve the Trust and, after satisfaction of creditors, cause Debentures held by the Property Trustee having an aggregate principal amount equal to the aggregate stated liquidation amount of, and bearing accrued and unpaid interest equal to accrued and unpaid Distributions on, and having the same record date for payment as, the Preferred Securities and the Common Securities, to be distributed to the Holders of the Preferred Securities and the Common Securities on a pro rata basis in liquidation of such Holders' interests in the Trust, within 90 days following the occurrence of such Special Event (the "90 Day Period"); provided, however, that in the case of the occurrence of a Tax Event, as a condition of such dissolution and distribution, the Regular Trustees shall have received an opinion of a nationally recognized independent tax counsel experienced in such matters (a "No Recognition Opinion"), which opinion may rely on any then applicable published revenue ruling of the Internal Revenue Service, to the effect that the Holders of the Preferred Securities will not 75 6 recognize any gain or loss for United States Federal income tax purposes as a result of the dissolution of the Trust and distribution of Debentures; and provided further that, if and as long as at the time there is available to the Trust the opportunity to eliminate, within the 90 Day Period, the Special Event by taking some ministerial action, such as filing a form or making an election, or pursuing some other similar reasonable measure that has no adverse effect on the Trust, JPM or the Holders of the Preferred Securities (a "Ministerial Action"), the Trust will pursue such Ministerial Action in lieu of dissolution. JPM may also elect, in its sole discretion, to shorten the maturity of the Debentures, as provided in Section [ ] of the [ ] Supplemental Indenture to the Indenture in lieu of dissolving the Trust, if doing so would eliminate the Tax Event. If in the case of the occurrence of a Tax Event, (i) the Regular Trustees have received an opinion (a "Redemption Tax Opinion") of nationally recognized independent tax counsel experienced in such matters that, as a result of a Tax Event, there is more than an insubstantial risk that JPM would be precluded from deducting the interest on the Debentures for United States Federal income tax purposes even if the Debentures were distributed to the Holders of Preferred Securities and Common Securities in liquidation of such Holder's interest in the Trust as described in this paragraph 4(c) or (ii) the Regular Trustees shall have been informed by such tax counsel that a No Recognition Opinion cannot be delivered to the Trust, JPM shall have the right at any time, subject to JPM having received prior approval of the Federal Reserve to do so if then required under applicable capital guidelines or policies of the Federal Reserve, upon not less than 30 nor more than 60 days notice, to redeem the Debentures in whole or in part for cash at the Redemption Price within 90 days following the occurrence of such Tax Event, and, promptly following such redemption, Preferred Securities and Common Securities with an aggregate liquidation amount equal to the aggregate principal amount of the Debentures so redeemed will be redeemed by the Trust at the Redemption Price on a pro rata basis; provided, however, that, if at the time there is available to JPM or the Regular Trustees on behalf of the Trust the opportunity to eliminate, within such 90 day period, the Tax Event by taking some Ministerial Action, JPM or the Regular Trustees on behalf of the Trust will pursue such measure in lieu of redemption; and provided further that the foregoing provisions shall not require JPM 76 7 to shorten the maturity of the Debentures and JPM shall have no right to redeem the Debentures while the Regular Trustees on behalf of the Trust are pursuing such Ministerial Action. The Common Securities will be redeemed pro rata with the Preferred Securities, except that if an Event of Default under the Indenture has occurred and is continuing, the Preferred Securities will have a priority over the Common Securities with respect to payment of the Redemption Price. "Tax Event" means that the Regular Trustees shall have obtained an opinion of nationally recognized independent tax counsel experienced in such matters (a "Dissolution Tax Opinion") to the effect that, on or after , 199 , as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, (b) any amendment to, or change in, an interpretation or application of any such laws or regulations by any legislative body, court, governmental agency or regulatory authority (including the enactment of any legislation and the publication of any judicial decision or regulatory determination), (c) any interpretation or pronouncement that provides for a position with respect to such laws or regulations that differs from the theretofore generally accepted position or (d) any action taken by any governmental agency or regulatory authority, which amendment or change is enacted, promulgated, issued or announced or which interpretation or pronouncement is issued or announced or which action is taken, in each case on or after , 199 , there is more than an insubstantial risk that (i) the Trust is, or will be within 90 days of the date thereof, subject to United States Federal income tax with respect to income accrued or received on the Debentures, (ii) the Trust is, or will be within 90 days of the date thereof, subject to more than a de minimis amount of other taxes, duties or other governmental charges or (iii) interest payable by JPM to the Trust on the Debentures is not, or within 90 days of the date thereof will not be, deductible by JPM for United States Federal income tax purposes. "Investment Company Event" means that the Regular Trustees shall have received an opinion of nationally recognized independent counsel experienced in practice under the Investment Company Act that, as a result of the occurrence of a change in law or regulation or a change in interpretation or application of law or regulation by any 77 8 legislative body, court, governmental agency or regulatory authority (a "Change in 1940 Act Law"), there is more than an insubstantial risk that the Trust is or will be considered an Investment Company which is required to be registered under the Investment Company Act, which Change in 1940 Act Law becomes effective on or after , 199 . "Capital Treatment Event" means that JPM has reasonably determined that, as the result of the occurrence of a change in law or regulation or a change in the interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, there is more than an insubstantial risk that JPM will not be able to treat the minority interest in the Trust as "Tier 1 capital" (or the equivalent) for purposes of the capital adequacy guidelines of the Federal Reserve, as then in effect and applicable to JPM. On the date fixed for any distribution of Debentures, upon dissolution of the Trust, (i) the Preferred Securities will no longer be deemed to be outstanding and (ii) certificates representing Preferred Securities will be deemed to represent beneficial interests in the Debentures having an aggregate principal amount equal to the stated liquidation amount of, and bearing accrued and unpaid interest equal to accrued and unpaid Distributions on, such Preferred Securities until such certificates are presented to JPM or its agent for transfer or reissuance. (d) The Trust may not redeem fewer than all the outstanding Preferred Securities unless all accrued and unpaid Distributions have been paid on all Preferred Securities for all monthly Distribution periods terminating on or prior to the date of redemption. (e) If Debentures are distributed to Holders of the Preferred Securities, JPM, pursuant to the terms of the Indenture, will use its best efforts to have the Debentures listed on the New York Stock Exchange or on such other exchange as the Preferred Securities were listed immediately prior to the distribution of the Debentures. (f)(i) Notice of any redemption of, or notice of distribution of Debentures in exchange for, the Preferred Securities and the Common Securities (a "Redemption/Distribution Notice") will be given by the Regular Trustees on behalf of the Trust by mail to each 78 9 Holder of Preferred Securities and Common Securities to be redeemed or exchanged not less than 30 nor more than 60 days prior to the date fixed for redemption or exchange thereof. For purposes of the calculation of the date of redemption or exchange and the dates on which notices are given pursuant to this paragraph (f)(i), a Redemption/Distribution Notice shall be deemed to be given on the day such notice is first mailed by first class mail, postage prepaid, to Holders of Preferred Securities and Common Securities. Each Redemption/Distribution Notice shall be addressed to the Holders of Preferred Securities and Common Securities at the address of each such Holder appearing in the books and records of the Trust. No defect in the Redemption/Distribution Notice or in the mailing of either thereof with respect to any Holder shall affect the validity of the redemption or exchange proceedings with respect to any other Holder. (ii) In the event that fewer than all the outstanding Preferred Securities are to be redeemed, the Preferred Securities to be redeemed will be redeemed pro rata from each Holder of Preferred Securities, it being understood that, in respect of Preferred Securities registered in the name of and held of record by DTC (or a successor Clearing Agency) or any other nominee, the Preferred Securities will be redeemed from, and the distribution of the proceeds of such redemption will be made to, each Clearing Agency Participant (or person on whose behalf such nominee holds such securities) in accordance with the procedures applied by such agency or nominee. (iii) Subject to paragraph 9 hereof, if the Trust gives a Redemption/Distribution Notice in respect of a redemption of Preferred Securities as provided in this paragraph 4 (which notice will be irrevocable) then (A) while the Preferred Securities are in book-entry only form, by 12:00 noon, New York City time, on the redemption date, provided that JPM has paid the Property Trustee in immediately available funds a sufficient amount of cash in connection with the related redemption or maturity of the Debentures, the Property Trustee will deposit irrevocably with DTC (or any successor Clearing Agency) funds sufficient to pay the applicable Redemption Price with respect to the Preferred Securities and will give DTC (or any successor Clearing Agency) irrevocable instructions and authority to pay the Redemption Price to the Holders of the Preferred Securities and (B) if the Preferred Securities are issued in definitive form, and provided that JPM has paid the Property 79 10 Trustee in immediately available funds a sufficient amount of cash in connection with the related redemption or maturity of the Debentures, the Property Trustee will pay the relevant Redemption Price to the Holders of such Preferred Securities by check mailed to the address of the relevant Holder appearing on the books and records of the Trust on the redemption date. If a Redemption/ Distribution Notice shall have been given and funds deposited as required, if applicable, then immediately prior to the close of business on the redemption date, Distributions will cease to accrue on the Preferred Securities called for redemption, such Preferred Securities will no longer be deemed to be outstanding and all rights of Holders of such Preferred Securities so called for redemption will cease, except the right of the Holders of such Preferred Securities to receive the Redemption Price, but without interest on such Redemption Price. Neither the Trustees nor the Trust shall be required to register or cause to be registered the transfer of any Preferred Securities which have been so called for redemption. If any date fixed for redemption of Preferred Securities is not a Business Day, then payment of the Redemption Price payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date fixed for redemption. If payment of the Redemption Price in respect of Preferred Securities is improperly withheld or refused and not paid either by the Property Trustee or, pursuant to the Preferred Securities Guarantee, by JPM, Distributions on such Preferred Securities will continue to accrue, from the original redemption date to the date of payment, in which case the actual payment date will be considered the date fixed for redemption for purposes of calculating the Redemption Price. (iv) Redemption/Distribution Notices shall be sent by the Regular Trustees on behalf of the Trust to DTC or its nominee (or any successor Clearing Agency or its nominee) if the Global Certificates have been issued or, if Definitive Preferred Security Certificates have been issued, to the Holders of the Preferred Securities. (v) Upon the date of dissolution of the Trust and distribution of Debentures as a result of the occurrence of a Special Event, Preferred Security Certificates shall be deemed to represent beneficial interests in the Debentures 80 11 so distributed, and the Preferred Securities will no longer be deemed outstanding and may be canceled by the Regular Trustees. The Debentures so distributed shall have an aggregate principal amount equal to the aggregate liquidation amount of the Preferred Securities so distributed. (vi) Subject to the foregoing and applicable law (including, without limitation, United States Federal securities laws), JPM or any of its subsidiaries may at any time and from time to time purchase outstanding Preferred Securities by tender, in the open market or by private agreement. 5. Voting Rights. (a) Except as provided under paragraph 5(b) below and as otherwise required by law and the Declaration, the Holders of the Preferred Securities will have no voting rights. (b) If any proposed amendment to the Declaration provides for, or the Regular Trustees otherwise propose to effect, (i) any action that would adversely affect the powers, preferences or special rights of the Securities, whether by way of amendment to the Declaration or otherwise, or (ii) the dissolution, winding-up or termination of the Trust, other than in connection with the distribution of Debentures held by the Property Trustee, upon the occurrence of a Special Event or in connection with the redemption of Preferred Securities as a consequence of a redemption of Debentures, then the Holders of outstanding Securities will be entitled to vote on such amendment or proposal as a class and such amendment or proposal shall not be effective except with the approval of the Holders of Securities representing 66-2/3% in liquidation amount of such Securities; provided, however, that (A) if any amendment or proposal referred to in clause (i) above would adversely affect only the Preferred Securities or the Common Securities, then only the affected class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of 66-2/3% in liquidation amount of such class of Securities and (B) amendments to the Declaration shall be subject to such further requirements as are set forth in Sections 12.1 and 12.2 of the Declaration. In the event the consent of the Property Trustee, as the holder of the Debentures, is required under the Indenture with respect to any amendment, modification or termination of the Indenture or the Debentures, the Property 81 12 Trustee shall request the written direction of the Holders of the Securities with respect to such amendment, modification or termination. The Property Trustee shall vote with respect to such amendment, modification or termination as directed by a Majority in liquidation amount of the Securities voting together as a single class; provided that where such amendment, modification or termination of the Indenture requires the consent or vote of (1) holders of Debentures representing a specified percentage greater than a majority in principal amount of the Debentures or (2) each holder of Debentures, the Property Trustee may only vote with respect to that amendment, modification or termination as directed by, in the case of clause (1) above, the vote of Holders of Securities representing such specified percentage of the aggregate liquidation amount of the Securities, or, in the case of clause (2) above, each Holder of Securities; and provided further that the Property Trustee shall be under no obligation to take any action in accordance with the directions of the Holders of Securities unless the Property Trustee shall have received, at the expense of the Sponsor, an opinion of nationally recognized independent tax counsel recognized as expert in such matters to the effect that the Trust will not be classified for United States Federal income tax purposes as an association taxable as a corporation or a partnership on account of such action and will be treated as a grantor trust for United States Federal income tax purposes following such action. Subject to Section 2.6 of the Declaration, and the provisions of this and the next succeeding paragraph, the Holders of a Majority in liquidation amount of the Preferred Securities, voting separately as a class, shall have the right to (A) on behalf of all Holders of Preferred Securities, waive any past default that is waivable under the Declaration (subject to, and in accordance with, the Declaration) and (B) direct the time, method and place of conducting any proceeding for any remedy available to the Property Trustee, or exercising any trust or power conferred upon the Property Trustee under the Declaration, including the right to direct the Property Trustee, as the holder of the Debentures, to (i) direct the time, method and place of conducting any proceeding for any remedy available to the Debenture Trustee, or exercising any trust or power conferred on the Debenture Trustee with respect to the Debentures, (ii) waive any past default that is waivable under Section 6.06 of the Indenture, or (iii) exercise any right to rescind or annul a declaration that the principal 82 13 of all the Debentures shall be due and payable; provided that where the taking of any action under the Indenture requires the consent or vote of (1) holders of Debentures representing a specified percentage greater than a majority in principal amount of the Debentures or (2) each holder of Debentures, the Property Trustee may only take such action if directed by, in the case of clause (1) above, the vote of Holders of Preferred Securities representing such specified percentage of the aggregate liquidation amount of the Preferred Securities, or, in the case of clause (2) above, each Holder of Preferred Securities. The Property Trustee shall not revoke any action previously authorized or approved by a vote of the Holders of the Preferred Securities. Other than with respect to directing the time, method and place of conducting any proceeding for any remedy available to the Property Trustee or the Debenture Trustee as set forth above, the Property Trustee shall be under no obligation to take any of the foregoing actions at the direction of the Holders of Preferred Securities unless the Property Trustee shall have received, at the expense of the Sponsor, an opinion of nationally recognized independent tax counsel recognized as expert in such matters to the effect that the Trust will not be classified for United States Federal income tax purposes as an association taxable as a corporation or a partnership on account of such action and will be treated as a grantor trust for United States federal income tax purposes following such action. If the Property Trustee fails to enforce its rights under the Declaration (including, without limitation, its rights, powers and privileges as a holder of the Debentures under the Indenture), any Holder of Preferred Securities may, to the extent permitted by law, after a period of 30 days has elapsed from such Holder's written request to the Property Trustee to enforce such rights, institute a legal proceeding directed against JPM to enforce the Property Trustee's rights under the Declaration, without first instituting a legal proceeding against the Property Trustee or any other Person. A waiver of an Indenture Event of Default by the Property Trustee at the direction of the Holders of the Preferred Securities will constitute a waiver of the corresponding Event of Default under the Declaration in respect of the Securities. Any required approval or direction of Holders of Preferred Securities may be given at a separate meeting of Holders of Preferred Securities convened for such purpose, 83 14 at a meeting of all of the Holders of Securities of the Trust or pursuant to written consent. The Regular Trustees will cause a notice of any meeting at which Holders of Preferred Securities are entitled to vote, or of any matter upon which action by written consent of such Holders is to be taken, to be mailed to each Holder of record of Preferred Securities. Each such notice will include a statement setting forth (i) the date of such meeting or the date by which such action is to be taken, (ii) a description of any resolution proposed for adoption at such meeting on which such Holders are entitled to vote or of such matter upon which written consent is sought and (iii) instructions for the delivery of proxies or consents. No vote or consent of the Holders of Preferred Securities will be required for the Trust to redeem and cancel Preferred Securities in accordance with the Declaration. Notwithstanding that Holders of Preferred Securities are entitled to vote or consent under any of the circumstances described above, any of the Preferred Securities at such time that are owned by JPM or by any entity directly or indirectly controlling or controlled by or under direct or indirect common control with JPM shall not be entitled to vote or consent and shall, for purposes of such vote or consent, be treated as if they were not outstanding. Except as provided in this paragraph 5, Holders of the Preferred Securities will have no rights to increase or decrease the number of Trustees or to appoint, remove or replace a Trustee, which voting rights are vested solely in the Holders of the Common Securities. 6. Pro Rata Treatment. A reference in these terms of the Preferred Securities to any payment, distribution or treatment as being "pro rata" shall mean pro rata to each Holder of Securities according to the aggregate liquidation amount of the Securities held by the relevant Holder in relation to the aggregate liquidation amount of all Securities outstanding unless, in relation to a payment, an Event of Default has occurred and is continuing, in which case any funds available to make such payment shall be paid first to each Holder of the Preferred Securities pro rata according to the aggregate liquidation amount of Preferred Securities held by the relevant Holder relative to the aggregate liquidation amount of all Preferred Securities 84 15 outstanding, and only after satisfaction of all amounts owed to the Holders of the Preferred Securities, to each Holder of Common Securities pro rata according to the aggregate liquidation amount of Common Securities held by the relevant Holder relative to the aggregate liquidation amount of all Common Securities outstanding. 7. Ranking. The Preferred Securities rank pari passu and payment thereon will be made pro rata with the Common Securities except that where an Event of Default occurs and is continuing, the rights of Holders of Preferred Securities to payment in respect of Distributions and payments upon liquidation, redemption or otherwise rank in priority to the rights of Holders of the Common Securities. 8. Mergers, Consolidations or Amalgamations. The Trust may not consolidate, amalgamate, merge with or into, or be replaced by, or sell, transfer or lease all or substantially all its properties and assets to, any Person. 9. Transfer, Exchange, Method of Payments. Payment of Distributions and payments on redemption of the Preferred Securities will be payable, the transfer of the Preferred Securities will be registrable, and Preferred Securities will be exchangeable for Preferred Securities of other denominations of a like aggregate liquidation amount, at the principal corporate trust office of the Property Trustee in The City of New York; provided that payment of Distributions may be made at the option of the Regular Trustees on behalf of the Trust by check mailed to the address of the Persons entitled thereto and that the payment on redemption of any Preferred Security will be made only upon surrender of such Preferred Security to the Property Trustee. 10. Acceptance of Indenture and Preferred Guarantee. Each Holder of Preferred Securities, by the acceptance thereof, agrees to the provisions of (i) the Preferred Guarantee, including the subordination provisions therein and (ii) the Indenture and the Debentures, including the subordination provisions of the Indenture. 11. No Preemptive Rights. The Holders of Preferred Securities shall have no preemptive rights to subscribe to any additional Preferred Securities or Common Securities. 85 16 12. Miscellaneous. These terms shall constitute a part of the Declaration. The Trust will provide a copy of the Declaration and the Indenture to a Holder without charge on written request to the Trust at its principal place of business. 86 ANNEX I [IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT--THIS PREFERRED SECURITY IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY ("DTC") OR A NOMINEE OF DTC. THIS PREFERRED SECURITY IS EXCHANGEABLE FOR PREFERRED SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS PREFERRED SECURITY (OTHER THAN A TRANSFER OF THIS PREFERRED SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES. UNLESS THIS PREFERRED SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY PREFERRED SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC OR ANY SUCCESSOR DEPOSITARY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC OR ANY SUCCESSOR DEPOSITARY, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL, SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.] Preferred Securities _______________ Number ________________ CUSIP NO. _____________ 87 2 Certificate Evidencing Preferred Securities of JPM Capital Trust [ ] % Preferred Trust Securities (liquidation amount $ per Preferred Security) JPM Capital Trust [ ], a statutory business trust created under the laws of the State of Delaware (the "Trust"), hereby certifies that (the "Holder") is the registered owner of [ ] preferred securities of the Trust representing undivided beneficial interests in the assets of the Trust designated the % Preferred Trust Securities (liquidation amount $ per Preferred Security) (the "Preferred Securities"). The transfer of Preferred Securities is registrable 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 registration of transfer. 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 Declaration of Trust of the Trust dated as of ____________, 199_, as the same may be amended from time to time (the "Declaration"), including the designation of the terms of Preferred Securities as set forth in Exhibit B thereto. The Preferred Securities and the Common Securities issued by the Trust pursuant to the Declaration represent undivided beneficial interests in the assets of the Trust, including the Debentures (as defined in the Declaration) issued by J.P. Morgan & Co. Incorporated, a Delaware corporation ("JPM"), to the Trust pursuant to the Indenture referred to in the Declaration. The Holder is entitled to the benefits of the Guarantee Agreement of JPM dated as of ___________, 199_ (the "Guarantee"), to the extent provided therein. The Trust will furnish a copy of the Declaration, the Guarantee and the Indenture to the Holder without charge, upon written request to the Trust, at its principal place of business or registered office. The Holder of this Certificate, by accepting this Certificate, is deemed to have (i) agreed to the terms of the Indenture and the Debentures, including that the 88 3 Debentures are subordinate and junior in right of payment to all Senior Debt (as defined in the Indenture) as and to the extent provided in the Indenture and (ii) agreed to the terms of the Guarantee, including that the Guarantee is subordinate and junior in right of payment to all other indebtedness, liabilities and obligations of JPM, including the Debentures, except those made pari passu or subordinate by their terms, and senior to all capital stock now or hereafter issued by JPM and to any guarantee now or hereafter entered into by JPM in respect of any of its capital stock. Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to the benefits thereunder. IN WITNESS WHEREOF, the Trustees of the Trust have executed this certificate this ___ day of _____________, 199_. JPM CAPITAL TRUST [ ], by ------------------------------------ Name: Title: Trustee by ------------------------------------ Name: Title: Trustee Dated: Countersigned and Registered: First Trust of New York, National Association, as Transfer Agent and Registrar By: --------------------------- Authorized Officer 89 4 ASSIGNMENT FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred Security to: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Insert assignee's social security or tax identification number) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Insert address and zip code of assignee) and irrevocably appoints - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- agent to transfer this Preferred Security Certificate on the books of the Trust. The agent may substitute another to act for him or her. Date: ------------------------- Signature: ------------------- NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. 90 EXHIBIT C TERMS OF COMMON SECURITIES Pursuant to Section 7.1 of the Amended and Restated Declaration of Trust of JPM Capital Trust [ ] dated as of , 199 (as amended from time to time, the "Declaration"), the designations, rights, privileges, restrictions, preferences and other terms and provisions of the Common Securities are set forth below (each capitalized term used but not defined herein having the meaning set forth in the Declaration): 1. Designation and Number. Common Securities of the Trust with an aggregate liquidation amount in the assets of the Trust of Dollars ($ ) (including up to Dollars ($ ) issuable upon exercise of the overallotment option set forth in the Underwriting Agreement) and a liquidation amount in the assets of the Trust of $ per Common Security are hereby designated as " % Common Trust Securities". The Common Security Certificates evidencing the Common Securities shall be substantially in the form attached hereto as Annex I, with such changes and additions thereto or deletions therefrom as may be required by ordinary usage, custom or practice. The Common Securities are to be issued and sold to J.P. Morgan & Co. Incorporated ("JPM") in consideration of $ in cash. In connection with the issuance and sale of the Preferred Securities and the Common Securities, the Trust will purchase, as trust assets, Debentures of JPM having an aggregate principal amount equal to the aggregate liquidation amount of the Preferred Securities and the Common Securities so issued, and bearing interest at an annual rate equal to the annual Distribution rate on the Preferred Securities and the Common Securities and having payment and redemption provisions which correspond to the payment and redemption provisions of the Preferred Securities and the Common Securities. 2. Distributions. (a) Distributions payable on each Common Security will be fixed at a rate per annum of % (the "Coupon Rate") of the stated liquidation amount of $ per Common Security. Distributions in arrears for more than one month will bear interest at the rate per annum of % thereof (to the extent permitted by applicable law), compounded monthly. The term "Distributions" as used in these terms means such periodic cash distributions and any such interest payable unless otherwise stated. A 91 2 Distribution will be made by the Property Trustee only to the extent that interest payments are made in respect of the Debentures held by the Property Trustee. The amount of Distributions payable for any period will be computed for any monthly Distribution period on the basis of a 360-day year of twelve 30-day months, and for any Distribution period shorter than a 30-day monthly Distribution period for which Distributions are computed, Distributions will be computed on the basis of the actual number of days elapsed. (b) Distributions on the Common Securities will be cumulative, will accrue from , 199 and will be payable quarterly in arrears, on the last day of March, June, September and December of each year, commencing on , 199 , except as otherwise described below, but only if and to the extent that interest payments are made in respect of the Debentures held by the Property Trustee. So long as JPM is not in default in the payment of interest on the Debentures, JPM shall have the right under the Indenture for the Debentures to defer payments of interest by extending the interest payment period from time to time on the Debentures for a period not to exceed 20 consecutive quarterly interest periods (each, a "Deferral Period"). During any such Deferral Period, quarterly Distributions will continue to accrue with interest thereon (to the extent permitted by applicable law) at the rate of % per annum, compounded quarterly. Prior to the termination of any such Deferral Period, JPM may further extend such Deferral Period; provided that such Deferral Period, together with all such previous and further extensions thereof, may not exceed 20 consecutive quarterly interest periods. Upon the termination of any Deferral Period and the payment of all amounts then due, JPM may commence a new Deferral Period, subject to the above requirements. Payments of accrued Distributions will be payable to Holders of Common Securities as they appear on the books and records of the Trust on the record date for the first interest payment date occurring at or after the end of the Deferral Period. (c) Distributions on the Common Securities will be payable promptly by the Property Trustee (or other Paying Agent) upon receipt of immediately available funds to the Holders thereof as they appear on the books and records of the Trust on the relevant record dates which will be one Business Day prior to the relevant Distribution date unless the Preferred Securities are no longer in book-entry only form, in which event the relevant record dates will be the fifteenth (15th) day of the month in which the relevant 92 3 Distribution date occurs, which record and payment dates correspond to the record and interest payment dates for the Debentures. Distributions payable on any Common Securities that are not punctually paid on any Distribution date as a result of JPM having failed to make the corresponding interest payment on the Debentures will forthwith cease to be payable to the Person in whose name such Common Security is registered on the relevant record date, and such defaulted Distribution will instead be payable to the Person in whose name such Common Security is registered on the special record date established by the Regular Trustees, which record date shall correspond to the special record date or other specified date determined in accordance with the Indenture; provided, however, that Distributions shall not be considered payable on any Distribution payment date falling within a Deferral Period unless JPM has elected to make a full or partial payment of interest accrued on the Debentures on such Distribution payment date. Subject to any applicable laws and regulations and the provisions of the Declaration, each payment in respect of the Common Securities will be made as described in paragraph 9 hereof. If any date on which Distributions are payable on the Common Securities is not a Business Day, then payment of the Distribution payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. (d) All Distributions paid with respect to the Common Securities and the Preferred Securities will be paid pro rata to the Holders thereof entitled thereto. If an Event of Default has occurred and is continuing, the Preferred Securities shall have a priority over the Common Securities with respect to Distributions. (e) In the event that there is any money or other property held by or for the Trust that is not accounted for under the Declaration, such money or property shall be distributed pro rata among the Holders of the Preferred Securities and the Common Securities. 3. Liquidation Distribution Upon Dissolution. In the event of any voluntary or involuntary dissolution, winding-up or termination of the Trust, the Holders of the Preferred Securities and Common Securities at the date of 93 4 the dissolution, winding-up or termination, as the case may be, will be entitled to receive pro rata solely out of the assets of the Trust available for distribution to Holders of Preferred Securities and the Common Securities, after satisfaction of liabilities to creditors, an amount equal to the aggregate of the stated liquidation amount of $ per Preferred Security and Common Security plus accrued and unpaid Distributions thereon to the date of payment (such amount being the "Liquidation Distribution"), unless, in connection with such dissolution, winding-up or termination, and after satisfaction of liabilities to creditors, Debentures in an aggregate principal amount equal to the aggregate stated liquidation amount of such Preferred Securities and Common Securities bearing accrued and unpaid interest in an amount equal to the accrued and unpaid Distributions on, such Preferred Securities and Common Securities, shall be distributed pro rata to the Holders of the Preferred Securities and Common Securities in exchange for such Securities. If, upon any such dissolution, the Liquidation Distribution can be paid only in part because the Trust has insufficient assets available to pay in full the aggregate Liquidation Distribution, then the amounts payable directly by the Trust on the Preferred Securities and the Common Securities shall be paid, subject to the next paragraph, on a pro rata basis. Holders of Common Securities will be entitled to receive Liquidation Distributions upon any such dissolution pro rata with Holders of Preferred Securities, except that, if an Event of Default has occurred and is continuing, the Preferred Securities shall have a priority over the Common Securities with respect to such Liquidation Distribution. 4. Redemption and Distribution of Debentures. The Preferred Securities and the Common Securities may only be redeemed if Debentures having an aggregate principal amount equal to the aggregate liquidation amount of the Preferred Securities and the Common Securities are repaid, redeemed or distributed as set forth below: (a) Upon the repayment of the Debentures, in whole or in part, whether at maturity or upon redemption at any time or from time to time on or after , 200 , the proceeds of such repayment will be promptly applied to redeem pro rata Preferred Securities and Common Securities having an aggregate liquidation amount equal to the 94 5 aggregate principal amount of the Debentures so repaid, upon not less than 30 nor more than 60 days notice, at a redemption price of $ per Preferred and Common Security plus an amount equal to accrued and unpaid Distributions thereon to the date of redemption, payable in cash (the "Redemption Price"). The date of any such repayment of Preferred Securities and Common Securities shall be established to coincide with the repayment or redemption date of the Debentures. (b) If fewer than all the outstanding Preferred Securities and Common Securities are to be so redeemed, the Preferred Securities and the Common Securities will be redeemed pro rata and, with respect to the Common Securities to be redeemed, as described in paragraph 4(e)(ii) below. If a partial redemption would result in the delisting of the Preferred Securities by any national securities exchange or other organization on which the Preferred Securities are then listed, JPM, pursuant to the Indenture, will only redeem Debentures in whole and the Trust will only redeem the Common Securities in whole. (c) If, at any time, a Tax Event or an Investment Company Event (each, as hereinafter defined, and each, along with a Capital Treatment Event, a "Special Event") shall occur and be continuing, the Regular Trustees shall, unless the Debentures are redeemed in the limited circumstances described below, dissolve the Trust and, after satisfaction of creditors, cause Debentures held by the Property Trustee having an aggregate principal amount equal to the aggregate stated liquidation amount of, and bearing accrued and unpaid interest equal to accrued and unpaid Distributions on, and having the same record date for payment as, the Preferred Securities and the Common Securities, to be distributed to the Holders of the Preferred Securities and the Common Securities on a pro rata basis in liquidation of such Holders' interests in the Trust, within 90 days following the occurrence of such Special Event (the "90 Day Period"); provided, however, that in the case of the occurrence of a Tax Event, as a condition of such dissolution and distribution, the Regular Trustees shall have received an opinion of a nationally recognized independent tax counsel experienced in such matters (a "No Recognition Opinion"), which opinion may rely on any then applicable published revenue rulings of the Internal Revenue Service, to the effect that the Holders of the Preferred Securities will not recognize any gain or loss for United States Federal income tax purposes as a result of the dissolution of the Trust and 95 6 distribution of Debentures; and provided further that, if and as long as at the time there is available to the Trust the opportunity to eliminate, within such 90 Day Period, the Special Event by taking some ministerial action, such as filing a form or making an election, or pursuing some other similar reasonable measure that has no adverse effect on the Trust, JPM or the Holders of the Preferred Securities (a "Ministerial Action"), the Trust will pursue such Ministerial Action in lieu of dissolution. JPM may also elect, in its sole discretion, to shorten the maturity of the Debentures, as provided in Section [ ] of the [ ] Supplemental Indenture to the Indenture in lieu of dissolving the Trust, if doing so would eliminate the Tax Event. If in the case of the occurrence of a Tax Event, (i) the Regular Trustees have received an opinion (a "Redemption Tax Opinion") of nationally recognized independent tax counsel experienced in such matters that, as a result of a Tax Event, there is more than an insubstantial risk that JPM would be precluded from deducting the interest on the Debentures for United States Federal income tax purposes even if the Debentures were distributed to the Holders of Preferred Securities and Common Securities in liquidation of such Holders' interest in the Trust as described in this paragraph 4(c) or (ii) the Regular Trustees shall have been informed by such tax counsel that a No Recognition Opinion cannot be delivered to the Trust, JPM shall have the right at any time, subject to JPM having received prior approval of the Federal Reserve to do so if then required under applicable capital guidelines or policies of the Federal Reserve, upon not less than 30 nor more than 60 days notice, to redeem the Debentures in whole or in part for cash at the Redemption Price within 90 days following the occurrence of such Tax Event, and, promptly following such redemption, Preferred Securities and Common Securities with an aggregate liquidation amount equal to the aggregate principal amount of the Debentures so redeemed will be redeemed by the Trust at the Redemption Price on a pro rata basis; provided, however, that, if at the time there is available to JPM or the Regular Trustees on behalf of the Trust the opportunity to eliminate, within such 90 Day Period, the Tax Event by taking some Ministerial Action, JPM or the Holders of the Preferred Securities, JPM or the Regular Trustees, on behalf of the Trust, will pursue such measure in lieu of redemption; and provided further, that the foregoing provisions shall not require JPM to shorten the maturity of the Debentures and JPM shall have no 96 7 right to redeem the Debentures while the Regular Trustees, on behalf of the Trust, are pursuing such Ministerial Action. The Common Securities will be redeemed pro rata with the Preferred Securities, except that if an Event of Default under the Indenture has occurred and is continuing, the Preferred Securities will have a priority over the Common Securities with respect to payment of the Redemption Price. "Tax Event" means that the Regular Trustees shall have obtained an opinion of nationally recognized independent tax counsel experienced in such matters (a "Dissolution Tax Opinion") to the effect that, on or after , 199 as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, (b) any amendment to, or change in, an interpretation or application of any such laws or regulations by any legislative body, court, governmental agency or regulatory authority (including the enactment of any legislation and the publication of any judicial decision or regulatory determination), (c) any interpretation or pronouncement that provides for a position with respect to such laws or regulations that differs from the theretofore generally accepted position or (d) any action taken by any governmental agency or regulatory authority, which amendment or change is enacted, promulgated, issued or announced or which interpretation or pronouncement is issued or announced or which action is taken, in each case on or after , 199 , there is more than an insubstantial risk that (i) the Trust is, or will be within 90 days of the date thereof, subject to United States Federal income tax with respect to income accrued or received on the Debentures, (ii) the Trust is, or will be within 90 days of the date thereof, subject to more than a de minimis amount of taxes, duties or other governmental charges or (iii) interest payable by JPM to the Trust on the Debentures is not, or within 90 days of the date thereof will not be, deductible by JPM for United States Federal income tax purposes. "Investment Company Event" means that the Regular Trustees shall have received an opinion of nationally recognized independent counsel experienced in practice under the Investment Company Act that, as a result of the occurrence of a change in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory 97 8 authority (a "Change in 1940 Act Law"), there is more than an insubstantial risk that the Trust is or will be considered an Investment Company which is required to be registered under the Investment Company Act, which Change in 1940 Act Law becomes effective on or after , 199 . "Capital Treatment Event" means that JPM has reasonably determined that, as the result of the occurrence of a change in law or regulation or a change in the interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, there is more than an insubstantial risk that JPM will not be able to treat the minority interest in the Trust as "Tier 1 capital" (or the equivalent) for purposes of the capital adequacy guidelines of the Federal Reserve, as then in effect and applicable to JPM. On the date fixed for any distribution of Debentures, upon dissolution of the Trust, (i) the Common Securities will no longer be deemed to be outstanding and (ii) any certificates representing Common Securities will be deemed to represent beneficial interests in the Debentures having an aggregate principal amount equal to the stated liquidation amount of, and bearing accrued and unpaid interest equal to accrued and unpaid Distributions on, such Common Securities until such certificates are presented to JPM or its agent for transfer or reissuance. (d) The Trust may not redeem fewer than all the outstanding Common Securities unless all accrued and unpaid Distributions have been paid on all Common Securities for all monthly Distribution periods terminating on or prior to the date of redemption. (e)(i) Notice of any redemption of, or notice of distribution of Debentures in exchange for, the Preferred Securities and the Common Securities (a "Redemption/Distribution Notice") will be given by the Regular Trustees on behalf of the Trust by mail to each Holder of Preferred Securities and Common Securities to be redeemed or exchanged not less than 30 nor more than 60 days prior to the date fixed for redemption or exchange thereof. For purposes of the calculation of the date of redemption or exchange and the dates on which notices are given pursuant to this paragraph (e)(i), a Redemption/Distribution Notice shall be deemed to be given on the day such notice is first mailed by first-class mail, postage prepaid, to Holders of 98 9 Preferred Securities and Common Securities. Each Redemption/ Distribution Notice shall be addressed to the Holders of Preferred Securities and Common Securities at the address of each such Holder appearing in the books and records of the Trust. No defect in the Redemption/Distribution Notice or in the mailing of either thereof with respect to any Holder shall affect the validity of the redemption or exchange proceedings with respect to any other Holder. (ii) In the event that fewer than all the outstanding Common Securities are to be redeemed, the Common Securities to be redeemed will be redeemed pro rata from each Holder of Common Securities (subject to adjustment to eliminate fractional Common Securities). (iii) If the Trust gives a Redemption/Distribution Notice in respect of a redemption of Common Securities as provided in this paragraph 4 (which notice will be irrevocable), then immediately prior to the close of business on the redemption date, provided that JPM has paid to the Property Trustee in immediately available funds a sufficient amount of cash in connection with the related redemption or maturity of the Debentures, Distributions will cease to accrue on the Common Securities called for redemption, such Common Securities will no longer be deemed to be outstanding and all rights of Holders of such Common Securities so called for redemption will cease, except the right of the Holders of such Common Securities to receive the Redemption Price, but without interest on such Redemption Price. Neither the Trustees nor the Trust shall be required to register or cause to be registered the transfer of any Common Securities which have been so called for redemption. If any date fixed for redemption of Common Securities is not a Business Day, then payment of the Redemption Price payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date fixed for redemption. If payment of the Redemption Price in respect of Common Securities is improperly withheld or refused and not paid by the Property Trustee, Distributions on such Common Securities will continue to accrue, from the original redemption date to the date of payment, in which case the actual payment date will 99 10 be considered the date fixed for redemption for purposes of calculating the Redemption Price. (iv) Redemption/Distribution Notices shall be sent by the Regular Trustees on behalf of the Trust to the Holders of the Common Securities. (v) Upon the date of dissolution of the Trust and distribution of Debentures as a result of the occurrence of a Special Event, Common Security Certificates shall be deemed to represent beneficial interests in the Debentures so distributed, and the Common Securities will no longer be deemed outstanding and may be canceled by the Regular Trustees. The Debentures so distributed shall have an aggregate principal amount equal to the aggregate liquidation amount of the Common Securities so distributed. 5. Voting Rights. (a) Except as provided under paragraph 5(b) below and as otherwise required by law and the Declaration, the Holders of the Common Securities will have no voting rights. (b) Holders of Common Securities have the sole right under the Declaration to increase or decrease the number of Trustees, and to appoint, remove or replace a Trustee, any such increase, decrease, appointment, removal or replacement to be approved by Holders of Common Securities representing a Majority in liquidation amount of the Common Securities. If any proposed amendment to the Declaration provides for, or the Regular Trustees otherwise propose to effect, (i) any action that would adversely affect the powers, preferences or special rights of the Securities, whether by way of amendment to the Declaration or otherwise, or (ii) the dissolution, winding-up or termination of the Trust, other than in connection with the distribution of Debentures held by the Property Trustee, upon the occurrence of a Special Event or in connection with the redemption of Common Securities as a consequence of a redemption of Debentures, then the Holders of outstanding Securities will be entitled to vote on such amendment or proposal as a class and such amendment or proposal shall not be effective except with the approval of the Holders of Securities representing 66-2/3% in liquidation amount of such Securities; provided, however, that (A) if any amendment or proposal referred to in clause (i) above would adversely affect only the Preferred Securities or the Common Securities, then only the 100 11 affected class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of 66-2/3 in liquidation amount of such class of Securities, (B) the rights of Holders of Common Securities under Article V of the Declaration to increase or decrease the number of, and to appoint, replace or remove, Trustees shall not be amended without the consent of each Holder of Common Securities, and (C) amendments to the Declaration shall be subject to such further requirements as are set forth in Sections 12.1 and 12.2 of the Declaration. In the event the consent of the Property Trustee as the holder of the Debentures, is required under the Indenture with respect to any amendment, modification or termination of the Indenture or the Debentures, the Property Trustee shall request the written direction of the Holders of the Securities with respect to such amendment, modification or termination. The Property Trustee shall vote with respect to such amendment, modification or termination as directed by a Majority in liquidation amount of the Securities voting together as a single class; provided that where such amendment, modification or termination of the Indenture requires the consent or vote of (1) holders of Debentures representing a specified percentage greater than a majority in principal amount of the Debentures or (2) each holder of Debentures, the Property Trustee may vote only with respect to that amendment, modification or termination as directed by, in the case of clause (1) above, the vote of Holders of Securities representing such specified percentage of the aggregate liquidation amount of the Securities, or, in the case of clause (2) above, each Holder of Securities; and provided, further, that the Property Trustee shall be under no obligation to take any action in accordance with the directions of the Holders of the Securities unless the Property Trustee shall have received, at the expense of the Sponsor, an opinion of nationally recognized independent tax counsel recognized as an expert in such matters to the effect that the Trust will not be classified for United States Federal income tax purposes as an association taxable as a corporation or a partnership on account of such action and will be treated as a grantor trust for United States Federal income tax purposes following such action. Subject to Section 2.6 of the Declaration and the provisions of this and the next succeeding paragraph, the Holders of a Majority in liquidation amount of the Common 101 12 Securities, voting separately as a class, shall have the right to (A) on behalf of all Holders of Common Securities, waive any past default that is waivable under the Declaration (subject to, and in accordance with, the Declaration) and (B) direct the time, method and place of conducting any proceeding for any remedy available to the Property Trustee, or exercising any trust or power conferred upon the Property Trustee under the Declaration, including the right to direct the Property Trustee, as holder of the Debentures, to (i) direct the time, method and place of conducting any proceeding for any remedy available to the Debenture Trustee, or exercising any trust or power conferred on the Debenture Trustee with respect to the Debentures, (ii) waive any past default and its consequences that is waivable under Section 6.06 of the Indenture, or (iii) exercise any right to rescind or annul a declaration that the principal of all the Debentures shall be due and payable; provided that where the taking of any action under the Indenture requires the consent or vote of (1) holders of Debentures representing a specified percentage greater than a majority in principal amount of the Debentures or (e) each holder of Debentures, the Property Trustee may take such action only if directed by, in the case of clause (1) above, the vote of Holders of Common Securities representing such specified percentage of the aggregate liquidation amount of the Common Securities, or, in the case of clause (2) above, each Holder of Common Securities. Pursuant to this paragraph, the Property Trustee shall not revoke, or take any action inconsistent with, any action previously authorized or approved by a vote of the Holders of the Preferred Securities, and shall not take any action in accordance with the direction of the Holders of the Common Securities under this paragraph if the action is prejudicial to the Holders of Preferred Securities. Other than with respect to directing the time, method and place of conducting any proceeding for any remedy available to the Property Trustee or the Debenture Trustee as set forth above, the Property Trustee shall be under no obligation to take any of the foregoing actions at the direction of the Holders of Common Securities unless the Property Trustee shall have received, at the expense of the Sponsor, an opinion of nationally recognized independent tax counsel recognized as expert in such matters to the effect that the Trust will not be classified for United States Federal income tax purposes as an association taxable as a corporation or a partnership on account of such action and will be treated as a grantor trust for United States income tax purposes following such action. 102 13 Notwithstanding any other provision of these terms, each Holder of Common Securities will be deemed to have waived any Event of Default with respect to the Common Securities and its consequences until all Events of Default with respect to the Preferred Securities have been cured, waived by the Holders of Preferred Securities as provided in the Declaration or otherwise eliminated, and until all Events of Default with respect to the Preferred Securities have been so cured, waived by the Holders of Preferred Securities or otherwise eliminated, the Property Trustee will be deemed to be acting solely on behalf of the Holders of Preferred Securities and only the Holders of the Preferred Securities will have the right to direct the Property Trustee in accordance with the terms of the Declaration or of the Securities. In the event that any Event of Default with respect to the Preferred Securities is waived by the Holders of Preferred Securities as provided in the Declaration, the Holders of Common Securities agree that such waiver shall also constitute the waiver of such Event of Default with respect to the Common Securities for all purposes under the Declaration without any further act, vote or consent of the Holders of the Common Securities. A waiver of an Indenture Event of Default by the Property Trustee at the direction of the Holders of the Preferred Securities will constitute a waiver of the corresponding Event of Default under the Declaration in respect of the Securities. Any required approval of Holders of Common Securities may be given at a separate meeting of Holders of Common Securities convened for such purpose, at a meeting of all of the Holders of Securities of the Trust or pursuant to written consent. The Regular Trustees will cause a notice of any meeting at which Holders of Common Securities are entitled to vote, or of any matter upon which action by written consent of such Holders is to be taken, to be mailed to each Holder of record of Common Securities. Each such notice will include a statement setting forth (i) the date of such meeting or the date by which such action is to be taken, (ii) a description of any resolution proposed for adoption at such meeting on which such Holders are entitled to vote or of such matter upon which written consent is sought and (iii) instructions for the delivery of proxies or consents. 103 14 No vote or consent of the Holders of Common Securities will be required for the Trust to redeem and cancel Common Securities in accordance with the Declaration. 6. Pro Rata Treatment. A reference in these terms of the Common Securities to any payment, distribution or treatment as being "pro rata" shall mean pro rata to each Holder of Securities according to the aggregate liquidation amount of the Securities held by the relevant Holder in relation to the aggregate liquidation amount of all Securities outstanding unless, in relation to a payment, an Event of Default has occurred and is continuing, in which case any funds available to make such payment shall be paid first to each Holder of the Preferred Securities pro rata according to the aggregate liquidation amount of Preferred Securities held by the relevant Holder relative to the aggregate liquidation amount of all Preferred Securities outstanding, and only after satisfaction of all amounts owed to the Holders of the Preferred Securities, to each Holder of Common Securities pro rata according to the aggregate liquidation amount of Common Securities held by the relevant Holder relative to the aggregate liquidation amount of all Common Securities outstanding. 7. Ranking. The Common Securities rank pari passu and payment thereon will be made pro rata with the Preferred Securities except that where an Event of Default occurs and is continuing, the rights of Holders of Common Securities to payment in respect of Distributions and payments upon liquidation, redemption or otherwise are subordinate to the rights of Holders of the Preferred Securities. 8. Mergers, Consolidations or Amalgamations. The Trust may not consolidate, amalgamate, merge with or into, or be replaced by, or sell, transfer or lease all or substantially all its properties and assets to, any Person. 9. Transfers, Exchanges, Method Payments. Payment of Distributions and payments on redemption of the Common Securities will be payable, the transfer of the Common Securities will be registrable, and Common Securities will be exchangeable for Common Securities of other denominations of a like aggregate liquidation amount, at the principal corporate trust office of the Property Trustee in The City of New York; provided that payment of Distributions may be made at the option of the Regular Trustees on behalf of the Trust by check mailed to the address of the Persons 104 15 entitled thereto and that the payment on redemption of any Common Security will be made only upon surrender of such Common Security to the Property Trustee. Notwithstanding the foregoing, transfers of Common Securities are subject to conditions set forth in Section 9.1(c) of the Declaration. 10. Acceptance of Indenture. Each Holder of Common Securities, by the acceptance thereof, agrees to the provisions of the Indenture and the Debentures, including the subordination provisions thereof. 11. No Preemptive Rights. The Holders of Common Securities shall have no preemptive rights to subscribe to any additional Common Securities or Preferred Securities. 12. Miscellaneous. These terms shall constitute a part of the Declaration. The Trust will provide a copy of the Declaration and the Indenture to a Holder without charge on written request to the Trust at its principal place of business. 105 Annex I TRANSFER OF THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS SET FORTH IN THE DECLARATION REFERRED TO BELOW Certificate Number Number of Common Securities Certificate Evidencing Common Securities of JPM Capital Trust [ ] ___% Common Trust Securities (liquidation amount $ per Common Security) JPM Capital Trust [ ], a statutory business trust formed under the laws of the State of Delaware (the "Trust"), hereby certifies that J.P. Morgan & Co. Incorporated (the "Holder") is the registered owner of ( ) common securities of the Trust representing undivided beneficial interests in the assets of the Trust designated the " % Common Trust Securities" (liquidation amount $ per Common Security) (the "Common Securities"). The transfer of Common Securities is registrable 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 registration of transfer and satisfaction of the other conditions set forth in the Declaration (as defined below) including, without limitation, Section 9.01(c) thereof. The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Common Securities are set forth in, and this certificate and the Common Securities represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Declaration of Trust of the Trust dated as of , 199 , as the same may be amended from time to time (the "Declaration"), including the designation of the terms of Common Securities as set forth in Exhibit C thereto. The Common Securities and the Preferred Securities issued by the Trust pursuant to the Declaration represent undivided beneficial interests in the assets of the Trust, 106 2 including the Debentures (as defined in the Declaration) issued by J.P. Morgan & Co. Incorporated, a Delaware corporation, to the Trust pursuant to the Indenture referred to in the Declaration. The Trust will furnish a copy of the Declaration and the Indenture to the Holder without charge upon written request to the Trust at its principal place of business or registered office. The Holder of this Certificate, by accepting this Certificate, is deemed to have agreed to the terms of the Indenture and the Debentures, including that the Debentures are subordinate and junior in right of payment to all Senior Debt (as defined in the Indenture) as and to the extent provided in the Indenture. 107 3 Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to the benefits thereunder. IN WITNESS WHEREOF, the Trustees of the Trust have executed this certificate this day of , 199 . JPM CAPITAL TRUST [ ], by , ------------------------- Name: Title: Trustee by , ------------------------- Name: Title: Trustee Dated: Countersigned and Registered: The First Trust of New York, National Association Transfer Agent and Registrar by -------------------------- Authorized Officer 108 4 ASSIGNMENT FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security Certificate to: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Insert assignee's social security or tax identification number) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Insert address and zip code of assignee) and irrevocably appoints - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- agent to transfer this Common Security Certificate on the books of the Trust. The agent may substitute another to act for him or her. Date: ------------------------------ Signature: ------------------------- (Sign exactly as your name appears on the other side of this Common Security Certificate) EX-4.J 12 FORM OF SUPPLEMENTAL INDENTURE 1 Exhibit 4(j) ================================================================================ J.P. MORGAN & CO. INCORPORATED AND FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION as Trustee ______________________ [ ] SUPPLEMENTAL INDENTURE Dated as of , 199 TO INDENTURE Dated as of November , 1996 ______________________ % Junior Subordinated Debentures Due 20 ================================================================================ 2 [ ] SUPPLEMENTAL INDENTURE, dated as of the day of 199 (this "[ ] Supplemental Indenture"), between J.P. MORGAN & CO. INCORPORATED, a corporation duly organized and existing under the laws of the State of Delaware (hereinafter sometimes referred to as the "Company") and FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, a national banking association, as trustee (hereinafter sometimes referred to as the "Trustee") under the Indenture dated as of November , 1996, between the Company and the Trustee (the "Indenture"); as set forth in Section 7.01 hereto and except as otherwise set forth herein, all terms used and not defined herein are used as defined in the Indenture). WHEREAS the Company executed and delivered the Indenture to the Trustee to provide for the future issuance of its junior subordinated debt securities (the "Securities"), said Securities to be issued from time to time in series as might be determined by the Company under the Indenture, in an unlimited aggregate principal amount which may be authenticated and delivered thereunder as in the Indenture provided; WHEREAS, pursuant to the terms of the Indenture, the Company desires to provide for the establishment of a new series of its Securities to be known as its % Junior Subordinated Debentures due 20[ ] (said series being hereinafter referred to as the "Series % Debentures"), the form of such Series % Debentures and the terms, provisions and conditions thereof to be as provided in the Indenture and this [ ] Supplemental Indenture; WHEREAS the Company has caused to be formed JPM Capital Trust [ ] (the "Trust") as a statutory business trust under the Business Trust Act of the State of Delaware (12 Del. Code Sec. 801 et seq.) pursuant to a declaration of trust dated October [29], 1996 (the "Original Declaration"), and the filing of a certificate of trust with the Secretary of State of the State of Delaware on October [29], 1996; WHEREAS the Original Declaration is to be amended and restated in its entirety pursuant to an Amended and Restated Declaration of Trust dated as of , 199 , (such Amended and Restated Declaration of Trust, as amended from time to time, the "Declaration of Trust"); 3 WHEREAS the Trust desires to issue its % Cumulative Preferred Trust Securities (the "Preferred Securities") and sell such Preferred Securities to initial purchasers; WHEREAS, in connection with such purchases of Preferred Securities and the related purchase by the Company of the Common Securities (as defined in the Declaration of Trust) of the Trust, the Trust will purchase as trust assets Series % Debentures; WHEREAS, pursuant to the Declaration of Trust, the legal title to the Series % Debentures shall be held by and in the name of First Trust New York, National Association or its successor under the Declaration of Trust, as Property Trustee (the "Property Trustee"), in trust for the benefit of holders of the Preferred Securities and the Common Securities; WHEREAS, upon the occurrence of a Special Event (as defined in the Declaration of Trust), the Regular Trustees (as defined in the Declaration of Trust) of the Trust shall, unless the Series % Debentures are redeemed as described herein, dissolve the Trust and cause to be distributed to the holders of the Preferred Securities and Common Securities, on a Pro Rata basis (determined as provided in the terms of the Preferred Securities and Common Securities attached as Exhibits B and C to the Declaration of Trust), Series % Debentures and, in connection with a Liquidation Distribution (as defined in the Declaration of Trust), the Regular Trustees may cause to be distributed to holders of Preferred Securities and Common Securities, on such Pro Rata basis, Series % Debentures (each a "Dissolution Event"); and WHEREAS the Company desires and has requested the Trustee to join with it in the execution and delivery of this [ ] Supplemental Indenture, and all requirements necessary to make this [ ] Supplemental Indenture a valid instrument, enforceable in accordance with its terms, and to make the Series % Debentures, when executed by the Company and authenticated and delivered by the Trustee, the valid obligations of the Company, have been performed and fulfilled, and the execution and delivery of this Supplemental Indenture and the Series % Debentures have been in all respects duly authorized. 4 NOW, THEREFORE, in consideration of the purchase and acceptance of the Series % Debentures by the holders thereof, and for the purpose of setting forth, as provided in the Indenture, the form of the Series % Debentures and the terms, provisions and conditions thereof, the Company covenants and agrees with the Trustee as follows: ARTICLE I General Terms and Conditions of the Series % Debentures SECTION 1.01. (a) There shall be and is hereby authorized a series of Securities designated the " % Junior Subordinated Debentures Due 20[ ]", limited in aggregate principal amount to $ (except as provided in this Section 1.01 and Section 6.01). Upon exercise of the overallotment option set forth in the Underwriting Agreement (as defined in the Declaration of Trust), additional Series % Debentures in the aggregate principal amount of up to $ may be executed by the Company and delivered to the Trustee for authentication, and the Trustee shall thereupon authenticate and deliver said Series % Debentures to or upon the written order of the Company, which order shall be accompanied by evidence satisfactory to the Trustee that the overallotment option has been exercised. Except as provided in Section 1.01(b) and 1.01(c), the Series % Debentures shall mature and the principal thereof shall be due and payable, together with all accrued and unpaid interest thereon, including Compounded Interest (as defined below) on , 20[ ]. (b) Subject to the terms of Article II of the Indenture, the Company shall have the right to shorten the Stated Maturity of the Series % Debentures to a date no earlier than , 2001; provided, that at the time any election to shorten the Stated Maturity is made and at the time of such shortening the Company shall have received Federal Reserve Approval (as defined below) therefor. (c) Subject to the terms of Article II of the Indenture, the Company shall have the right to extend the Stated Maturity of the Series % Debentures to a date no later than [the 49th anniversary of the initial issuance of the Preferred Securities] [ , 2045]; provided, that at the time such election to extend the Stated Maturity is made and at the time of such extension, (i) the Company is not in 5 bankruptcy, otherwise insolvent or in liquidation, (ii) the Company is not in default on the payment of any interest or principal on the Series % Debentures [and no deferred interest payments thereon have accrued], (iii) JPM Capital Trust [ ] is not in arrears on payments of Distributions (as defined in the Declaration) on its Preferred Securities and no deferred Distributions thereon are accumulated, (iv) the Series % Debentures are rated by a nationally recognized statistical rating organization and such rating is BBB- or higher if such organization is Standard & Poor's Rating Services, Baa3 or higher if such organization is Moody's Investors Services Inc. or an equivalent rating if such organization is any other nationally recognized statistical rating organization and (v) the Company shall have received Federal Reserve Approval therefor. "Federal Reserve Approval" means the approval of the Board of Governors of the Federal Reserve System (the "Federal Reserve") then required to be obtained under applicable capital guidelines or policies of the Federal Reserve in connection with any action to be taken by the Company or JPM Capital Trust [ ] with respect to the Series % Debentures or the Preferred Securities. SECTION 1.02. (a) Except as provided in Section 1.02(b), the Series % Debentures shall be issued in definitive registered certificated form without interest coupons. Principal and interest on the Series % Debentures issued in certificated form will be payable, the transfer of such Series % Debentures will be registrable and such Series % Debentures will be exchangeable for Series % Debentures bearing identical terms and provisions at the office or agency of the Company in the Borough of Manhattan, The City and State of New York; provided, however, that payment of interest may be made at the option of the Company by check mailed to the registered holder at such address as shall appear in the Security Register and that the payment of principal with respect to the Series % Debentures will only be made upon surrender of the Series % Debentures to the Trustee. Notwithstanding the foregoing, so long as the Property Trustee is the record holder of Series % Debentures, the payment of the principal of, and interest (including Compounded Interest, if any) on, the Series % Debentures held of record by the Property Trustee will be made by the Company in immediately available funds on the payment date therefor to the Property Account (as defined in the 6 Declaration of Trust) established and maintained by the Property Trustee pursuant to the Declaration of Trust. (b) In connection with a Dissolution Event: (i) Series % Debentures in certificated form in an aggregate principal amount equal to the aggregate liquidation amount of all Preferred Securities held in book-entry form may be presented to the Trustee by the Property Trustee in exchange for a Global Debenture representing such Series % Debentures, such Global Debenture to be registered in the name of the Depositary, or its nominee, and delivered by the Trustee to the Depositary pursuant to the instructions of the Regular Trustees (as defined in the Declaration of Trust) for crediting to the accounts of the Depositary's participants. The Company, upon any such presentation, shall execute a Global Debenture representing the Series % Debentures in such aggregate principal amount and deliver the same to the Trustee for authentication and delivery in accordance with the Indenture and this [ ] Supplemental Indenture. Payments on the Series % Debentures issued as a Global Debenture will be made to the Depositary. (ii) If any Preferred Securities are held in non book-entry certificated form ("Non Book-Entry Preferred Securities"), Series % Debentures in certificated form in an aggregate principal amount equal to the aggregate liquidation amount of any such Non Book-Entry Preferred Securities may be presented to the Trustee by the Property Trustee, and any Preferred Security Certificate (as defined in the Declaration of Trust) held in non book-entry certificated form will be deemed to represent beneficial interests in such Series % Debentures presented to the Trustee by the Property Trustee having an aggregate principal amount equal to the aggregate liquidation amount of the Non Book-Entry Preferred Securities represented by such Preferred Security Certificate until such Preferred Security Certificate is presented to the Security registrar for transfer or reissuance at which time such Preferred Security Certificate will be canceled and a Series % Debenture, registered in the name of the holder of the Preferred Security Certificate or the transferee of the holder of such Preferred Security Certificate, as the case may be, with an aggregate 7 principal amount equal to the aggregate liquidation amount of the Preferred Security Certificate canceled will be executed by the Company and delivered to the Trustee for authentication and delivery in accordance with the Indenture and this [ ] Supplemental Indenture. On issue of such Series % Debentures, Series % Debentures with an equivalent aggregate principal amount that were presented by the Property Trustee to the Trustee will be deemed to have been canceled. SECTION 1.03. Each Series % Debenture will bear interest at the rate of % per annum from , 199 until the principal thereof becomes due and payable, and on any overdue principal, and (to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the same rate per annum, compounded quarterly, payable (subject to the provisions of Article III) quarterly in arrears on the last day of each [March, June, September and December of each year] (each, an "Interest Payment Date", commencing on , 199 ), to the person in whose name such Series % Debenture (or one or more Predecessor Securities) is registered at the close of business on the regular record date for such interest installment, which, except as set forth below, shall be, in respect of any Series % Debentures represented by a Global Security or of which the Property Trustee is the registered holder, the close of business on the Business Day next preceding the Interest Payment Date with respect to such interest installment. Notwithstanding the foregoing sentence, if the Preferred Securities are no longer in book-entry only form or if, pursuant to the provisions of Section 2.11(c) of the Indenture, the Series % Debentures are no longer represented solely by a Global Debenture, the regular record date for such interest installment shall be the close of business on the fifteenth day of the month in which the Interest Payment Date with respect to such interest installment occurs. Any installment of interest not punctually paid or duly provided for shall forthwith cease to be payable to the registered holder of a Series % Debenture on such regular record date and may be paid to the person in whose name such Series % Debenture (or one or more Predecessor Securities) is registered at the close of business on a special record date to be fixed by the Trustee for the payment of such defaulted interest, notice whereof to be given to the registered holders of the Series % Debentures not less than 10 days prior to such special 8 record date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Series % Debentures may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months and for any period shorter than a quarterly interest period for which interest is computed, the amount of interest payable will be computed on the basis of the actual number of days elapsed. In the event that any date on which interest is payable on the Series % Debentures is not a Business Day, then payment of interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. ARTICLE II Optional Redemption of the Series % Debentures SECTION 2.01. Except as provided in Section 2.02, Series % Debentures may not be redeemed by the Company prior to , 200 . Subject to the terms of Article III of the Indenture, the Company shall have the right to redeem the Series % Debentures, in whole or in part, at any time or from time to time, on or after , 200 , at a redemption price equal to 100% of the principal amount to be redeemed plus any accrued and unpaid interest thereon, including Compounded Interest, if any, to the date of such redemption (the "Optional Redemption Price"); provided that at the time of such election to redeem and at the time of such redemption, the Company shall have received Federal Reserve Approval therefor. Any redemption pursuant to this Section will be made upon not less than 30 nor more than 60 days' notice. SECTION 2.02. If, at any time, a Tax Event (as defined below) shall occur or be continuing and (i) the Regular Trustees and the Company shall have received an opinion (a "Redemption Tax Opinion") of nationally recognized independent tax counsel experienced in such 9 matters that, as a result of such Tax Event, there is more than an insubstantial risk that the Company would be precluded from deducting the interest on the Series % Debentures for United States Federal income tax purposes even if the Series % Debentures were distributed to the holders of Preferred Securities and Common Securities in liquidation of such holders' interest in the Trust as set forth in the Declaration of Trust or (ii) the Regular Trustees shall have been informed by such tax counsel that a No Recognition Opinion (as defined below) cannot be delivered to the Trust, the Company shall have the right, upon not less than 30 or more than 60 days notice, to redeem the Series % Debentures in whole or in part for cash at the Optional Redemption Price within 90 days following the occurrence of such Tax Event; provided that, at the time of such election to redeem and at the time of such redemption, the Company shall have received Federal Reserve Approval therefor; and provided further that if at the time there is available to the Company or the Regular Trustees, on behalf of the Trust, the opportunity to eliminate, within such 90-day period, such Tax Event by taking some ministerial action ("Ministerial Action"), such as filing a form or making an election, or pursuing some other similar reasonable measure that has no adverse effect on the Trust, the Company or the holders of the Preferred Securities, then the Company or the Regular Trustees, on behalf of the Trust, will pursue such measure in lieu of redemption; and provided further that the Company shall have no right to redeem the Series % Debentures while the Regular Trustees, on behalf of the Trust, are pursuing any such Ministerial Action. "Tax Event" means that the Regular Trustees and the Company shall have obtained an opinion of nationally recognized independent tax counsel experienced in such matters (a "Dissolution Tax Opinion") to the effect that on or after , 199 as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, (b) any amendment to, or change in, an interpretation or application of any such laws or regulations by any legislative body, court, governmental agency or regulatory authority (including the enactment of any legislation and the publication of any judicial decision or regulatory determination), (c) any interpretation or pronouncement that provides for a position with respect to such laws or regulations that differs from the theretofore generally accepted position or (d) any action taken by any 10 governmental agency or regulatory authority, which amendment or change is enacted, promulgated, issued or effective or which interpretation or pronouncement is issued or announced or which action is taken, in each case on or after , 199 , there is more than an insubstantial risk that (i) the Trust, is, or will be within 90 days of the date thereof, subject to United States Federal income tax with respect to income accrued or received on the Series % Debentures, (ii) the Trust is, or will be within 90 days of the date thereof, subject to more than a de minimis amount of other taxes, duties or other governmental charges or (iii) interest payable by the Company to the Trust on the Series % Debentures is not, or within 90 days of the date thereof will not be, deductible by the Company for United States Federal income tax purposes. "No Recognition Opinion" means an opinion of nationally recognized independent tax counsel experienced in such matters, which opinion may rely on any then applicable published revenue rulings of the Internal Revenue Service, to the effect that the holders of the Preferred Securities will not recognize any gain or loss for United States Federal income tax purposes as a result of a dissolution of the Trust and distribution of the Series % Debentures as provided in the Declaration of Trust. SECTION 2.03. If the Series % Debentures are only partially redeemed pursuant to this Article II, the Series % Debentures will be redeemed pro rata or by lot or by any other equitable method chosen by the Trustee; provided that if, at the time of redemption, any Series % Debentures are represented by a Global Debenture, the Depositary shall determine by lot the principal amount of such Series % Debentures held by each Debentureholder to be redeemed in accordance with its customary procedures. Notwithstanding the foregoing, if a partial redemption of the Series % Debentures would result in the delisting of the Preferred Securities by any national securities exchange on which the Preferred Securities are then listed, the Company shall not be permitted to effect such partial redemption and will only redeem the Series % Debentures in whole. 11 ARTICLE III Deferral of Interest Payment Period SECTION 3.01. So long as the Company is not in default in the payment of interest on the Series % Debentures, the Company shall have the right, at any time during the term of the Series % Debentures, from time to time to defer the interest payment period of the Series % Debentures for a period not exceeding 20 consecutive quarterly interest periods (a "Deferral Period"); provided, however, that at the end of any such period the Company shall pay all interest accrued and unpaid thereon (together with interest on such accrued and unpaid interest at the rate of % per annum, to the extent permitted by applicable law, compounded quarterly ("Compounded Interest")). During any Deferral Period, the Company shall not declare or pay any dividends on, or redeem, purchase, acquire or make a distribution or liquidation payment with respect to, any of its common stock or preferred stock or make any payments on guarantees with respect thereto; provided, however, that the foregoing restrictions shall not apply to (i) dividends, redemptions, purchases, acquisitions, distributions or payments made by the Company by way of issuance of shares of its capital stock, (ii) payments of accrued dividends by the Company upon the redemption, exchange or conversion of any preferred stock of the Company as may be outstanding from time to time in accordance with the terms of such preferred stock or (iii) cash payments made by the Company in lieu of delivering fractional shares upon the redemption, exchange or conversion of any preferred stock of the Company as may be outstanding from time to time in accordance with the terms of such preferred stock. Prior to the termination of any Deferral Period, the Company may pay all or any portion of the interest accrued on the Series % Debentures on any Interest Payment Date to holders of record on the regular record date for such Interest Payment Date or from time to time further defer such Deferral Period; provided that such Deferral Period together with all such previous and further extensions thereof may not exceed 20 consecutive quarterly interest periods. Upon the termination of any Deferral Period and upon the payment of all accrued and unpaid interest then due, together with Compounded Interest, the Company may select a new Deferral Period. No interest shall be due and payable during a Deferral Period, except at the end thereof. At the end of any Deferral Period, the Company shall pay all interest accrued and unpaid on the Series % 12 Debentures, including any Compounded Interest, to the holders in whose names the Series % Debentures are registered on the Security Register on the regular record date for the first Interest Payment Date occurring at or after the end of the Extended Interest Payment Period. SECTION 3.02. (a) So long as the Property Trustee is the sole record holder of the Series % Debentures, at the time the Company selects a Deferral Period, the Company shall give both the Property Trustee and the Trustee written notice of its selection of such Deferral Period at least one Business Day prior to the earlier of (i) the next succeeding date on which distributions on the Preferred Securities are payable and (ii) the date on which the Trust is required to give notice of the record or payment date for such distribution to the New York Stock Exchange (if the Preferred Securities are then listed thereon) or other applicable self-regulatory organization or to holders of the Preferred Securities, but in any event not less than one Business Day prior to such record date. The Company shall cause the Trust to give notice to the holders of the Preferred Securities of the Company's selection of such Deferral Period. (b) If as a result of a Dissolution Event, Series % Debentures have been distributed to holders of Preferred Securities and Common Securities, at the time the Company selects a Deferral Period, the Company shall give the holders of the Series % Debentures and the Trustee written notice of its selection of such Deferral Period at least 10 business days prior to the earlier of (i) the next succeeding Interest Payment Date or (ii) the date the Company is required to give notice of the record or payment date for such interest payment to the New York Stock Exchange (if the Series % Debentures are then listed thereon) or other applicable self-regulatory organization or to holders of the Series % Debentures. SECTION 3.03. The quarter in which any notice is given pursuant to Section 3.02 shall be counted as one of the 20 consecutive quarterly interest periods permitted in the maximum Extended Interest Payment Period permitted under this Article III. 13 ARTICLE IV Covenants Applicable to Series % Debentures SECTION 4.01. So long as any Preferred Securities remain outstanding, the Company will not declare or pay any dividends on, or redeem, purchase, acquire or make a distribution or liquidation payment with respect to, any of its common stock or preferred stock or make any payments on guarantees with respect thereto if at such time (i) the Company shall be in default with respect to its Guarantee Payments (as defined in the Guarantee Agreement) or other payment obligations under the Guarantee Agreement or (ii) there shall have occurred any Event of Default under the Indenture with respect to the Series % Debentures; provided, however, that the foregoing restrictions shall not apply to (i) dividends, redemptions, purchases, acquisitions, distributions or payments made by the Company by way of issuance of shares of its capital stock, (ii) payments of accrued dividends by the Company upon the redemption, exchange or conversion of any preferred stock of the Company as may be outstanding from time to time in accordance with the terms of such preferred stock or (iii) cash payments made by the Company in lieu of delivering fractional shares upon the redemption, exchange or conversion of any preferred stock of the Company as may be outstanding from time to time in accordance with the terms of such preferred stock. SECTION 4.02. In connection with the distribution of the Series % Debentures to the holders of the Preferred Securities upon a Dissolution Event, the Company will use its best efforts to list such Series % Debentures on the New York Stock Exchange or on such other exchange as the Preferred Securities are then listed. SECTION 4.03. The Company covenants and agrees for the benefit of the holders of the Preferred Securities to comply fully with all its obligations and agreements under the Declaration of Trust, including, without limitation, its obligations under Article IV thereof. SECTION 4.04. Prior to the distribution of Series % Debentures to the holders of Preferred Securities upon a Dissolution Event, the Company covenants and agrees for the benefit of the holders of the Preferred Securities (i) to remain the sole direct or indirect owner of all 14 Common Securities issued by the Trust and not to cause or permit the Common Securities to be transferred except to the extent permitted by the Declaration of Trust; provided that any permitted successor of the Company under the Indenture may succeed to the Company's ownership of such Common Securities and (ii) to use reasonable efforts to cause the Trust to continue to be treated as a grantor trust for United States Federal income tax purposes, except in connection with a distribution of the Series % Debentures as provided in the Declaration of Trust. ARTICLE V Form of Series % Debentures SECTION 5.01. The Series % Debentures and the Trustee's Certificate of Authentication to be endorsed thereon are to be substantially in the following forms: (FORM OF FACE OF SECURITY) [IF THE NOTE IS A GLOBAL SECURITY, INSERT: This Security is a Global Security within the meaning of the Indenture hereinafter referred to and is registered in the name of a Depositary or a nominee of a Depositary. This Security is exchangeable for Securities registered in the name of a person other than the Depositary or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Security (other than a transfer of this Security as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary) may be registered except in such limited circumstances. UNLESS THIS GLOBAL SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.] 15 No. $ CUSIP NO. _____________ J.P. MORGAN & CO. INCORPORATED % JUNIOR SUBORDINATED DEBENTURE DUE 20 J.P. Morgan & Co. Incorporated, a corporation duly organized and existing under the laws of the State of Delaware (herein referred to as the "Company", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to , or registered assigns, the principal sum of Dollars on , 20[ ] (the "Stated Maturity", such date subject to shortening or extension as set forth herein and in the Indenture) and to pay interest on said principal sum from , 199 or from the most recent interest payment date (each such date, an "Interest Payment Date") to which interest has been paid or duly provided for, quarterly (subject to deferral as set forth herein) in arrears on the last day of each quarter commencing , 199 , at the rate of % per annum, until the principal hereof shall have become due and payable, and on any overdue principal and (to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the same rate per annum, compounded quarterly. The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months and for any period shorter than a quarterly interest period for which interest is computed, the amount of interest payable will be computed on the basis of the actual number of days elapsed. In the event that any date on which interest is payable on this Debenture is not a Business Day, then payment of interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture referred to on the reverse side hereof, be paid to the 16 person in whose name this Debenture (or one or more Predecessor Securities) is registered at the close of business on the regular record date for such interest installment, which shall be the close of business on the Business Day next preceding such Interest Payment Date; provided, however, that if the Preferred Securities are no longer in book-entry only form or if, pursuant to the provisions of Section 2.11(c) of the Indenture, the Series % Debentures are no longer represented solely by a Global Security, the regular record date shall be the close of business on the fifteenth day of the month in which such Interest Payment Date occurs. Any such interest installment not punctually paid or duly provided for shall forthwith cease to be payable to the registered holder of this Security on such regular record date, and may be paid to the person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a special record date to be fixed by the Trustee for the payment of such defaulted interest, notice whereof to be given to the registered holders of this series of Securities not less than 10 days prior to such special record date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which this series of Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. The principal of, and the interest on, this Security shall be payable at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City and State of New York in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest may be made at the option of the Company by check mailed to the registered holder at such address as shall appear in the Security Register and that the payment of principal will only be made upon the surrender of this Security to the Trustee. Notwithstanding the foregoing, so long as the record holder of this Security is the Property Trustee (as defined in the Indenture), the payment of the principal of, and interest on, this Security will be made to such account of the Property Trustee as may be designated by the Property Trustee. The indebtedness evidenced by this Debenture is, to the extent provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness, Subordinated Indebtedness and Derivative Obligations and this Debenture is issued subject 17 to the provisions of the Indenture with respect thereto. Each holder of this Debenture, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination so provided and (c) appoints the Trustee his attorney-in-fact, for any and all such purposes. Each holder hereof, by his acceptance hereof hereby waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Indebtedness and Subordinated Indebtedness, and each creditor in respect of Derivative Obligations, whether now outstanding or hereafter incurred, and waives reliance by each such Holder upon such provisions. Unless the Certificate of Authentication hereon has been executed by the Trustee referred to on the reverse side hereof, this Debenture shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. The provisions of this Debenture are continued on the reverse side hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. IN WITNESS WHEREOF, the Company has caused this instrument to be executed. Date ----------------------- J.P. MORGAN & CO. INCORPORATED, by ---------------------------- Attest: - ----------------------------- Secretary 18 (FORM OF CERTIFICATE OF AUTHENTICATION) CERTIFICATE OF AUTHENTICATION This is one of the Debentures of the series of Debentures described in the within-mentioned Indenture. First Trust New York, National Association, as Trustee, ------------------------------ or as Authentication Agent by ----------------------- ------------------------------ Authorized Signatory Authorized Signatory (FORM OF REVERSE OF SECURITY) This Security is one of a duly authorized series of Securities of the Company (herein sometimes referred to as the "Securities"), all issued or to be issued in one or more series under and pursuant to an Indenture dated as of November , 1996 duly executed and delivered between the Company and First Trust New York, National Association, a national banking association, as Trustee (herein referred to as the "Trustee"), as supplemented by the [ ] Supplemental Indenture dated as of , 199 between the Company and the Trustee (said Indenture as so supplemented being hereinafter referred to as the "Indenture"), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the holders of the Securities, and, to the extent specifically set forth in the Indenture, the holders of Senior Indebtedness, Subordinated Indebtedness and Preferred Securities and creditors in respect of Derivative Obligations. By the terms of the Indenture, the Securities are issuable in series which may vary as to amount, date of maturity, rate of interest and in other 19 respects as in the Indenture provided. This series of Securities is designated the % Junior Subordinated Debentures due 20 (the "Series % Debentures") and is limited in aggregate principal amount as specified in said [ ] Supplemental Indenture. Except as provided in the next paragraph, the Series % Debentures may not be redeemed by the Company prior to , 20 . The Company shall have the right to redeem the Series % Debentures, in whole or in part, at any time or from time to time on or after , 20 (an "Optional Redemption"), at a redemption price equal to 100% of the principal amount to be redeemed plus any accrued and unpaid interest, including any Compounded Interest, thereon to the date of such redemption; provided that at the time of such election to redeem and at the time of such redemption, the Company shall have received Federal Reserve Approval therefor. Any redemption pursuant to this paragraph will be made upon not less than 30 nor more 60 days notice. If the Series ___% Debentures are only partially redeemed by the Company pursuant to an Optional Redemption, the Series % Debentures will be redeemed pro rata or by lot or by any other equitable method chosen by the Trustee; provided that if, at the time of redemption, any Series % Debentures are represented by a Global Security, the Depository shall determine by lot the principal amount of such Series % Debentures held by each holder of Series % Debentures to be redeemed in accordance with its customary procedures. If, at any time, a Tax Event (as defined below) shall occur or be continuing and (i) the Regular Trustees and the Company shall have received an opinion (a "Redemption Tax Opinion") of nationally recognized independent tax counsel experienced in such matters that, as a result of such Tax Event, there is more than an insubstantial risk that the Company would be precluded from deducting the interest on the Series % Debentures for United States Federal income tax purposes even if the Series % Debentures were distributed to the holders of Preferred Securities and Common Securities in liquidation of such holders' interest in the Trust as set forth in the Declaration of Trust or (ii) the Regular Trustees shall have been informed by such tax counsel that a No Recognition Opinion (as defined below) cannot be delivered to the Trust, the Company shall have the right, upon not less than 30 nor more than 60 days notice, to redeem the Series % Debentures in whole or in part for cash at the Optional 20 Redemption Price within 90 days following the occurrence of such Tax Event; provided that at the time of such election to redeem and at the time of such redemption, the Company shall have received Federal Reserve Approval therefor; provided further that, if at the time there is available to the Company or the Regular Trustees, on behalf of the Trust, the opportunity to eliminate, within such 90-day period, the Tax Event by taking some ministerial action ("Ministerial Action"), such as filing a form or making an election, or pursuing some other similar reasonable measure, which has no adverse effect on the Trust, the Company or the holders of the Preferred Securities, the Company or the Regular Trustees, on behalf of the Trust, will pursue such measure in lieu of redemption; and provided further that the Company shall have no right to redeem the Series % Debentures while the Regular Trustees, on behalf of the Trust, are pursuing any such Ministerial Action. "Tax Event" means that the Regular Trustees and the Company shall have obtained an opinion of nationally recognized independent tax counsel experienced in such matters (a "Dissolution Tax Opinion") to the effect that on or after , 199 , as a result of (a) any amendment to, or change (or announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, (b) any amendment to, or change in, an interpretation or application of any such laws or regulations by any legislative body, court, governmental agency or regulatory authority (including the enactment of any legislation and the publication of any judicial decision or regulatory determination), (c) any interpretation or pronouncement that provides for a position with respect to such laws or regulations that differs from the theretofore generally accepted position or (d) any action taken by any governmental agency or regulatory authority, which amendment or change is enacted, promulgated, issued or effective or which interpretation or pronouncement is issued or announced or which action is taken, in each case on or after , 199 , there is more than an insubstantial risk that (i) the Trust is, or will be within 90 days of the date thereof, subject to United States Federal income tax with respect to income accrued or received on the Series % Debentures, (ii) the Trust is, or will be within 90 days of the date thereof, subject to more than a de minimis amount of other taxes, duties or other governmental charges or (iii) interest payable by the Company to the Trust on the Series % Debentures is not, or within 90 days of the date 21 thereof will not be, deductible by the Company for United States Federal income tax purposes. "No Recognition Opinion" means an opinion of nationally recognized independent tax counsel experienced in such matters, which opinion may rely on any then applicable published revenue rulings of the Internal Revenue Service, to the effect that the holders of the Preferred Securities will not recognize any gain or loss for United States Federal income tax purposes as a result of a dissolution of the Trust and distribution of the Series % Debentures as provided in the Declaration of Trust. If the Series ___% Debentures are only partially redeemed by the Company pursuant to an Optional Redemption or as a result of a Tax Event as described above, the ___% Debentures will be redeemed pro rata or by lot or by any other equitable method chosen by the Trustee. Notwithstanding the foregoing, if a partial redemption of the Series % Debentures would result in the delisting of the Preferred Securities by any national securities exchange on which the Preferred Securities are then listed, the Company shall not be permitted to effect such partial redemption and will only redeem the Series ___% Debentures in whole. In the event of redemption of this Series ___% Debenture in part only, a new Series ___% Debenture or Debentures will be issued for the unredeemed portion hereof in the name of the holder hereof upon the cancelation of this Debenture. The Indenture contains provisions permitting the Company to shorten or extend the Stated Maturity subject, in each case, to certain conditions set forth therein, including the receipt by the Company at the time of the election to shorten or extend such Stated Maturity and at the time of such shortening or extension, as the case may be, of Federal Reserve Approval (as defined in the Indenture) therefor. In case an Event of Default, as defined in the Indenture, shall have occurred and be continuing, the principal of all of the Series % Debentures may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. 22 The Indenture contains provisions for defeasance at any time of the entire indebtedness of the Series % Debentures upon compliance by the Company with certain conditions set forth therein. The Indenture contains provisions permitting the Company and the Trustee, with the consent of the holders of not less than a majority in aggregate principal amount of the Securities of each series affected at the time Outstanding, as defined in Section 8.04 of the Indenture, (and, in the case of any series of Securities held as trust assets of a JPM Capital Trust and with respect to which a Security Exchange has not theretofore occurred, such consent of holders of the Preferred Securities and the Common Securities of such JPM Capital Trust as may be required under the Declaration of Trust of such JPM Capital Trust), to execute supplemental indentures for the purpose of adding any provisions to or modifying in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or of modifying in any manner the rights of the holders of any series of Securities; provided, however, that no such supplemental indenture shall (i) extend the final maturity of any Securities of any series, or reduce the principal amount thereof or the method in which amounts of payments of principal or interest thereon are determined, or reduce the rate or extend the time of payment of interest thereon, [or change the coin or currency units based on or related to currencies (including ECU (as defined in the Indenture) of payment thereof] or reduce any amount payable upon the redemption thereof, or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon an acceleration of the maturity thereof pursuant to Section 6.01 or the amount thereof provable in bankruptcy pursuant to Section 6.02, or impair or affect the right of any holder of the Security to institute suit for the payment thereof or, if the Securities provide therefor, any right of repayment at the option of the holder of the Security, without the consent of the holder of each Security so affected or (ii) reduce the aforesaid percentage of Securities, the consent of the holders of which is required any such supplemental indenture, without the consent of the holders of each Security (and, in the case of any series of Securities held as trust assets of a JPM Capital Trust and with respect to which a Security Exchange has not theretofore occurred, such consent of the holders of the Preferred Securities and the Common Securities of such JPM Capital Trust as may be required under the Declaration of 23 Trust of such JPM Capital Trust) so affected thereby. The Indenture also contains provisions permitting the holders of a majority in aggregate principal amount of the Securities of a series at the time outstanding affected thereby (subject, in the case of any series of Securities held as trust assets of a JPM Capital Trust and with respect to which a Securities Exchange has not theretofore occurred, to such consent of holders of Preferred Securities and Common Securities of such JPM Capital Trust as may be required under the Declaration of Trust of such JPM Capital Trust), on behalf of the holders of the Securities of such series, to waive any past default in the performance of any of the covenants contained in the Indenture, or established pursuant to the Indenture with respect to such series and its consequences, except a default in the payment of the principal of, or premium, if any, or interest on, any of the Debentures of such series. Any such consent or waiver by the registered holder of this Series % Debenture (unless revoked as provided in the Indenture) shall be conclusive and binding upon such holder and upon all future holders and owners of this Series % Debenture and of any Security issued in exchange herefor or in place hereof (whether by registration of transfer or otherwise), irrespective of whether or not any notation of such consent or waiver is made upon this Series % Debenture. Subject to Section 13.11 of the Indenture, no reference herein to the Indenture (other than such Section) and no provision of this Series % Debenture or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and interest on this Series % Debenture at the time and place at the rate and in the money herein prescribed. So long as the Company is not in default in the payment of interest on the Series % Debentures, the Company shall have the right, at any time during the term of the Series % Debentures, from time to time to defer the interest payment period of the Series % Debentures for a period not exceeding 20 consecutive quarterly interest periods (a "Deferral Period"); provided, however, that at the end of any such period the Company shall pay all interest accrued and unpaid thereon, together with any Compounded Interest. During any Deferral Period, the Company shall not declare or pay any dividends on, or redeem, purchase, acquire or make a distribution or liquidation payment with respect to, any of its common stock 24 or preferred stock, or make any payments on guarantees with respect thereto; provided, however, that the foregoing restrictions shall not apply to (i) dividends, redemptions, purchases, acquisitions, distributions or payments made by the Company by way of issuance of shares of its capital stock, (ii) payments of accrued dividends by the Company upon the redemption, exchange or conversion of any preferred stock of the Company as may be outstanding from time to time in accordance with the terms of such preferred stock or (iii) cash payments made by the Company in lieu of delivering fractional shares upon the redemption, exchange or conversion of any preferred stock of the Company as may be outstanding from time to time in accordance with the terms of such preferred stock. Prior to the termination of any Deferral Period, the Company may pay all or any portion of the interest accrued on the Series % Debentures on any Interest Payment Date to holders of record on the regular record date for such Interest Payment Date or from time to time further extend such Deferral Period; provided that such Deferral Period together with all such previous and further extensions thereof may not exceed 20 consecutive quarterly interest periods. Upon the termination of any Deferral Period and upon the payment of all accrued and unpaid interest then due, together with Compounded Interest, the Company may select a new Deferral Period. No interest shall be due and payable during a Deferral Period, except at the end thereof. At the end of any Deferral Period, the Company shall pay all interest accrued and unpaid on the Series % Debentures, including any Compounded Interest which shall be payable to the holders in whose names the Series % Debentures are registered on the Security Register on the regular record date for the first Interest Payment Date occurring on or after the end of the Deferral Period. As provided in the Indenture and subject to certain limitations therein set forth, this Debenture is transferable by the registered holder hereof on the Security Register of the Company, upon surrender of this Series % Debenture for registration of transfer at the office or agency of the Company designated for such purpose in the Borough of Manhattan, The City and State of New York, accompanied by a written instrument or instruments of transfer in form satisfactory to the Company or the Security registrar duly executed by the registered holder hereof or his attorney duly authorized in writing, and thereupon one or more new Series % Debentures of authorized denominations and for the same aggregate principal amount will be issued to the designated transferee or transferees. 25 No service charge will be made for any such transfer, but the Company may require payment by the holder of the Series % Debenture seeking such transfer of a sum sufficient to cover any tax or other governmental charge payable in relation thereto. Prior to due presentment for registration of transfer of this Security, the Company, the Trustee, any paying agent and any Security registrar may deem and treat the registered holder hereof as the absolute owner hereof (whether or not this Series % Debenture shall be overdue and notwithstanding any notice of ownership or writing hereon made by anyone other than the Security registrar) for the purpose of receiving payment of or on account of the principal hereof and interest due hereon and for all other purposes, and neither the Company nor the Trustee nor any paying agent nor any Security registrar shall be affected by any notice to the contrary. No recourse under or upon any obligation, covenant or agreement of the Indenture, or of this Series % Debenture, or for any claim based thereon or hereon, or otherwise in respect thereof or hereof shall be had against any incorporator, stockholder, officer or director, past, present or future, as such, of the Company or of any predecessor or successor corporation, either directly or through the Company or any such predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that this Series % Debenture and the obligations represented hereunder are solely corporate obligations, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, stockholders, officers or directors, as such, of the Company or of any predecessor or successor corporation, or any of them, because of the creation of this indebtedness, or under or by reason of the obligations covenants or agreements contained in the Indenture or this Debenture or implied therefrom; and that any and all such personal liability of every name and nature, either at common law or in equity or by constitution or statute, and any and all such rights and claims against every such incorporator, stockholder, officer or director, as such, because of the creation of this indebtedness, or under or by reason of the obligations, covenants or agreements contained in the Indenture or in this Series % Debenture or implied therefrom, are hereby expressly waived and released by the acceptance hereof and 26 as a condition of, and as a consideration for, the execution of the Indenture and the issuance of this Series % Debenture. [IF THE SECURITY IS A GLOBAL SECURITY INSERT: This Global Security is exchangeable for Securities in definitive form under certain limited circumstances set forth in the Indenture.] The Series % Debentures are issuable only in registered form without interest coupons in denominations of $25 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations [IF THE SECURITY IS A GLOBAL SECURITY, INSERT: herein and] therein set forth, Series % Debentures are exchangeable for a like aggregate principal amount of Series % Debentures of a different authorized denomination, as requested by the holder surrendering the same. Terms used and not defined in this Series % Debenture shall have the meanings assigned to them in the Indenture. ARTICLE VI Original Issue of Series % Debentures SECTION 6.01. Except as provided in Section 1.01 and this Section 6.01, Series % Debentures in the aggregate principal amount equal to $ may, upon execution of this [ ] Supplemental Indenture, be executed by the Company and delivered to the Trustee for authentication, and the Trustee shall thereupon authenticate and make available for delivery said Series % Debentures to or upon the written order of the Company, signed by its Chairman, its President, Vice President, its Treasurer or an Assistant Treasurer and attested to by its Secretary or an Assistant Secretary, without any further action by the Company. Upon exercise of the overallotment option set forth in the Underwriting Agreement, additional Series ___% Debentures in the aggregate principal amount of up to $ may be executed by the Company and delivered to the Trustee for authentication, and the Trustee shall thereupon authenticate and make available for delivery said Series % Debentures to or upon the written order of the Company, which order shall be accompanied by evidence 27 satisfactory to the Trustee that the overallotment option has been exercised. ARTICLE VII Miscellaneous Provisions SECTION 7.01. Except as otherwise expressly provided in this [ ] Supplemental Indenture or in the form of Series % Debenture or otherwise clearly required by the context hereof or thereof, all terms used herein or in said form of Series % Debenture that are defined in the Indenture shall have the several meanings respectively assigned to them thereby. SECTION 7.02. The Indenture, as supplemented by this [ ] Supplemental Indenture, is in all respects ratified and confirmed. This [ ] Supplemental Indenture shall be deemed part of the Indenture in the manner and to the extent herein and therein provided. SECTION 7.03. The recitals herein contained are made by the Company and not by the Trustee, and the Trustee assumes no responsibility for the correctness thereof. The Trustee makes no representation as to the validity or sufficiency of this [ ] Supplemental Indenture. SECTION 7.04. This [ ] Supplemental Indenture may be executed in any number of counterparts each of which 28 shall be an original; but such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this [ ] Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, on the date or dates indicated in the acknowledgments and as of the day and year first above written. J.P. MORGAN & CO. INCORPORATED, by ------------------------------ Name: Title: Attest: - --------------------------------- Name: Title: FIRST TRUST OF NEW YORK, A NATIONAL ASSOCIATION, as Trustee, by ------------------------------ Name: Title: Attest: - -------------------------------- Name: Title: 29 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) On the day of , in the year one thousand nine hundred ninety- , before me personally came to me known, who, being by me duly sworn, did depose and say that he or she resides at ; that he or she is of J.P. MORGAN & CO. INCORPORATED, one of the corporations described in and which executed the above instrument; that he knows the corporate seal of said corporation; that the seal affixed to such instrument is such corporation seal; that it was so affixed by authority of the Board of Directors of such corporation, and that he signed his name thereto by like authority. ----------------------------- Notary Public My Commission Expires 30 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) On the day of , in the year one thousand nine hundred ninety- , before me personally came to me known, who, being by me duly sworn, did depose and say that he resides at ; that he or she is a of FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, one of the corporations described in and which executed the above instrument; that he or she knows the corporate seal of said corporation; that the seal affixed to such instrument is such corporation seal; that it was so affixed by authority of the Board of Directors of such corporation and that he signed his name thereto by like authority. ---------------------- Notary Public My Commission Expires EX-4.L1 13 FORM OF GUARANTEE - JPM CAPITAL TRUST I 1 EXHIBIT 4(l)(1) ================================================================================ FORM OF GUARANTEE AGREEMENT OF JPM CAPITAL TRUST I ________________ DATED AS OF , 199 ================================================================================ 2 2 This GUARANTEE AGREEMENT, dated as of , 199 , is executed and delivered by J.P. Morgan & Co. Incorporated, a Delaware corporation (the "Guarantor"), and First Trust of New York, National Association, as the initial GUARANTEE Trustee (as defined herein) for the benefit of the Holders (as defined herein) from time to time of the Preferred Securities (as defined herein) of JPM Capital Trust I, a Delaware statutory business trust (the "Issuer"). WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the "Declaration"), dated as of , 199 among the trustees of the Issuer named therein, J.P. Morgan & Co. Incorporated, as Sponsor, and the Holders from time to time of undivided beneficial interests in the assets of the Issuer, the Issuer may issue up to aggregate liquidation amount of its % Preferred Trust Securities (the "Preferred Securities") representing undivided beneficial interests in the assets of the Issuer and having the terms set forth in Exhibit B to the Declaration, of which $ liquidation amount of the Preferred Securities are being issued as of the date hereof. Up to the remaining $ liquidation amount of Preferred Securities may be issued by the Issuer if and to the extent that the over-allotment option granted by the Guarantor and the Issuer pursuant to the Underwriting Agreement (as defined in the Declaration) is exercised by the Underwriters named in the Underwriting Agreement. WHEREAS, as incentive for the Holders to purchase Preferred Securities, the Guarantor desires to irrevocably and unconditionally agree, to the extent set forth herein, to pay to the Holders of the Preferred Securities the GUARANTEE Payments (as defined herein) and to make certain other payments on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the purchase by the initial purchasers thereof of Preferred Securities, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this GUARANTEE Agreement for the benefit of the Holders from time to time of the Preferred Securities. 3 3 ARTICLE I Definitions (a) Capitalized terms used in this GUARANTEE Agreement but not defined in the preamble above have the respective meanings assigned to them in this Section 1.01. (b) A term defined anywhere in this GUARANTEE Agreement has the same meaning throughout. (c) All references to "the GUARANTEE Agreement" or "this GUARANTEE Agreement" are to this GUARANTEE Agreement as modified, supplemented or amended from time to time. (d) All references in this GUARANTEE Agreement to Articles and Sections are to Articles and Sections of this GUARANTEE Agreement unless otherwise specified. (e) A term defined in the Trust Indenture Act as the same meaning when used in this GUARANTEE Agreement unless otherwise defined in this GUARANTEE Agreement or unless the context otherwise requires. (f) A reference to the singular includes the plural and vice versa. "Affiliate" has the same meaning as given to that term in Rule 405 of the Securities Act of 1933, as amended, or any successor rule thereunder. "Commission" means the Securities and Exchange Commission. "Common Securities" means the securities representing undivided beneficial interests in the assets of the Issuer, having the terms set forth in Exhibit C to the Declaration. "Covered Person" means any Holder of Preferred Securities. "Debentures" means the series of Junior Subordinated Debentures issued by the Guarantor under the Indenture to the Property Trustee and entitled the " % Junior Subordinated Debentures due ". 4 4 "Distributions" means the periodic distributions and other payments payable to Holders of Preferred Securities in accordance with the terms of the Preferred Securities set forth in Exhibit B to the Declaration. "Event of Default" means a default by the Guarantor on any of its payment or other obligations under this GUARANTEE Agreement. "Guarantee Payments" shall mean 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 accrued and unpaid Distributions and the redemption price, including all accrued and unpaid Distributions to the date of redemption (the "Redemption Price"), with respect to the Preferred Securities called for redemption by the Issuer but only if and to the extent that in each case the Guarantor has made a payment to the Property Trustee of interest or principal on the Debentures and (ii) upon a voluntary or involuntary dissolution, winding-up or termination of the Issuer (other than in connection with the distribution of Debentures to Holders or the redemption of all the Preferred Securities upon the maturity or redemption of the Debentures as provided in the Declaration), the lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid Distributions on the Preferred Securities to the date of payment, to the extent the Issuer has funds available therefor, or (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"). "Guarantee Trustee" means First Trust of New York, National Association until a Successor GUARANTEE Trustee has been appointed and accepted such appointment pursuant to the terms of this GUARANTEE Agreement 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 entity directly or indirectly controlling or controlled by or under direct or indirect common control with the Guarantor. 5 5 "Indemnified Person" means the GUARANTEE Trustee, any Affiliate of the GUARANTEE Trustee, and any officers, directors, shareholders, members, partners, employees, representatives or agents of the GUARANTEE Trustee. "Indenture" means the Junior Subordinated Indenture dated as of November , 1996 between the Guarantor and First Trust of New York, National Association, as trustee, as supplemented by the [ ] Supplemental Indenture thereto dated as of 199 , pursuant to which the Debentures are to be issued. "Majority in liquidation amount of the Preferred Securities" means, except as otherwise required by the Trust Indenture Act, Holder(s) of outstanding Preferred Securities voting together as a single class, who are the record owners of Preferred Securities whose liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) represents more than 50% of the liquidation amount of all outstanding Preferred Securities. "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. "Preferred Securities" has the meaning set forth in the first WHEREAS clause above. "Property Trustee" means the Person acting as Property Trustee under the Declaration. "Redemption Price" means the amount payable on redemption of the Preferred Securities in accordance with the terms of the Preferred Securities. "Responsible Officer" means, with respect to the GUARANTEE Trustee, the chairman of the board of directors, the president, any vice-president, any assistant vice-president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, any trust officer or assistant trust officer or any other officer of the GUARANTEE Trustee customarily performing functions similar to those performed by any of the above designated officers 6 6 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. "66- 2/3% in liquidation amount of the Preferred Securities" means, except as otherwise required by the Trust Indenture Act, Holder(s) of outstanding Preferred Securities voting together as a single class who are the record owners of Preferred Securities whose liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) represents 66- 2/3% or more of the liquidation amount of all Preferred Securities. "Successor GUARANTEE Trustee" means a successor GUARANTEE Trustee possessing the qualifications to act as a GUARANTEE Trustee under Section 4.01. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended. ARTICLE II Trust Indenture Act SECTION 2.01. Trust Indenture Act; Application. (a) This GUARANTEE Agreement is subject to the provisions of the Trust Indenture Act that are required to be part of this GUARANTEE Agreement and shall, to the extent applicable, be governed by such provisions. (b) If and to the extent that any provision of this 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. (c) The application of the Trust Indenture Act to this GUARANTEE Agreement shall not affect the nature of the Preferred Securities as equity securities representing undivided beneficial interests in the assets of the Issuer. 7 7 SECTION 2.02. Lists of Holders of Preferred Securities. (a) The Guarantor shall provide the GUARANTEE Trustee with such information as is required under Section 312(a) of the Trust Indenture Act at the times and in the manner provided in Section 312(a). (b) The GUARANTEE Trustee shall comply with its obligations under Sections 310(b), 311 and 312(b) of the Trust Indenture Act. SECTION 2.03. Reports by the GUARANTEE Trustee. Within 60 days after May 15 of each year, the GUARANTEE Trustee shall provide to the Holders of the Preferred Securities such reports as are required by Section 313 of the Trust Indenture Act, if any, in the form, in the manner and at the times 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. SECTION 2.04. Periodic Reports to the GUARANTEE Trustee. The Guarantor shall provide to the GUARANTEE Trustee, the Commission and the Holders of the Preferred Securities, as applicable, such documents, reports and information as required by Section 314(a)(1)-(3) (if any) of the Trust Indenture Act and the compliance certificates required by Section 314(a)(4) and (c) of the Trust Indenture Act, any such certificates to be provided in the form, in the manner and at the times required by Section 314(a)(4) and (c) of the Trust Indenture Act (provided that any certificate to be provided pursuant to Section 314(a)(4) of the Trust Indenture Act shall be provided within 120 days of the end of each fiscal year of the Issuer). SECTION 2.05. Evidence of Compliance with Conditions Precedent. The Guarantor shall provide the GUARANTEE Trustee such evidence of compliance with any conditions precedent, if any, provided for in this GUARANTEE Agreement which 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 pursuant to Section 314(c) shall comply with Section 314(e) of the Trust Indenture Act. SECTION 2.06. Events of Default; Waiver. (a) Subject to Section 2.06(b), Holders of Preferred Securities may by vote of at least a Majority in liquidation amount of the Preferred Securities, (A) direct the time, method and place of conducting any proceeding for any remedy 8 8 available to the GUARANTEE Trustee, or exercising any trust or power conferred upon by the GUARANTEE Trustee or (B) on behalf of the Holders of all Preferred Securities waive any past Event of Default and its consequences. Upon such waiver, any such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this GUARANTEE Agreement, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. (b) The right of any Holder of Preferred Securities to receive payment of the GUARANTEE Payments in accordance with this GUARANTEE Agreement, or to institute suit for the enforcement of any such payment, shall not be impaired without the consent of each such Holder. SECTION 2.07. Disclosure of Information. The disclosure of information as to the names and addresses of the Holders of the Preferred Securities in accordance with Sections 312 of the Trust Indenture Act, regardless of the source from which such information was derived, shall not be deemed to be a violation of any existing law, or any law hereafter enacted which does not specifically refer to Section 312 of the Trust Indenture Act, nor shall the GUARANTEE Trustee be held accountable by reason of mailing any material pursuant to a request made under Section 312(b) of the Trust Indenture Act. SECTION 2.08. Conflicting Interest. The Declaration shall be deemed to be specifically described in this GUARANTEE Agreement for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. ARTICLE III Powers, Duties and Rights of Guarantee Trustee SECTION 3.01. Powers and Duties of the GUARANTEE Trustee. (a) This GUARANTEE Agreement shall be held by the GUARANTEE Trustee in trust for the benefit of the Holders of the Preferred Securities. The GUARANTEE Trustee shall not transfer its right, title and interest in the GUARANTEE Agreement to any Person except a Successor GUARANTEE Trustee on acceptance by such Successor GUARANTEE Trustee of its appointment to act as GUARANTEE Trustee or to a Holder of Preferred Securities exercising his or her rights pursuant 9 9 to Section 5.04. The right, title and interest of the GUARANTEE Trustee to the GUARANTEE Agreement shall vest automatically in each Person who may hereafter be appointed as GUARANTEE Trustee in accordance with Article IV. Such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered. (b) If an Event of Default occurs and is continuing, the GUARANTEE Trustee shall enforce this GUARANTEE Agreement for the benefit of the Holders of the Preferred Securities. (c) This GUARANTEE Agreement and all moneys received by the Property Trustee hereunder in respect of the GUARANTEE Payments will not be subject to any right, charge, security interest, lien or claim of any kind in favor of, or for the benefit of the GUARANTEE Trustee or its agents or their creditors. (d) 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, as their names and addresses appear upon the register, notice of all Events of Default known to the GUARANTEE Trustee, unless such defaults shall have been cured before the giving of such notice; provided, that, 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 determine that the withholding of such notice is in the interests of the Holders of the Preferred Securities. The GUARANTEE Trustee shall not be deemed to have knowledge of any default except any default as to which the GUARANTEE Trustee shall have received written notice or a Responsible Officer charged with the administration of the GUARANTEE Agreement shall have obtained written notice. (e) The GUARANTEE Trustee shall not resign as a Trustee unless a Successor GUARANTEE Trustee has been appointed and accepted that appointment in accordance with Article IV. SECTION 3.02. Certain Rights and Duties of the GUARANTEE Trustee. (a) The GUARANTEE Trustee, before the occurrence of an 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 10 10 set forth in this GUARANTEE Agreement, and no implied covenants shall be read into this GUARANTEE Agreement against the GUARANTEE Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.06(a)), the GUARANTEE Trustee shall exercise such of the rights and powers vested in it by this GUARANTEE Agreement, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in this conduct of his or her own affairs. (b) No provision of this GUARANTEE Agreement shall be construed to relieve the GUARANTEE Trustee from liability for its own negligent action, its own negligent failure to act or its own wilful misconduct, except that: (i) prior to the occurrence of an 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 GUARANTEE Agreement, and the GUARANTEE Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this GUARANTEE Agreement, and no implied covenants or obligations shall be read into this GUARANTEE Agreement 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 GUARANTEE Agreement; 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 GUARANTEE Agreement; (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 11 11 shall be proved that the GUARANTEE Trustee was negligent in ascertaining the pertinent facts; (iii) the GUARANTEE Trustee shall not be liable with respect to any action take or omitted to be taken by it in good faith in accordance with the direction of the Holders of Preferred Securities as provided herein 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 GUARANTEE Agreement; and (iv) no provision of this GUARANTEE Agreement shall require the GUARANTEE Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of its duties or in the exercise of any of its rights or powers, if it shall have reasonable ground for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this GUARANTEE Agreement or adequate indemnity against such risk or liability is not reasonably assured to it. (c) Subject to the provisions of Section 3.02(a) and (b): (i) whenever in the administration of this GUARANTEE Agreement, the GUARANTEE Trustee shall deem it desirable that a matter proved or established prior to 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 rely upon a certificate, which shall comply with the provisions of Section 314(e) of the Trust Indenture Act, signed by any authorized officer of the Guarantor; (ii) the GUARANTEE Trustee (A) may consult with counsel (which may be counsel to the Guarantor or any of its Affiliates and may include any of its employees) selected by it in good faith and with due care 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 reliance thereon and in accordance with such advice and opinion and (B) shall have the right at 12 12 any time to seek instructions concerning the administration of this GUARANTEE Agreement from any court of competent jurisdiction; (iii) the GUARANTEE Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the GUARANTEE Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed by it in good faith and with due care; (iv) the GUARANTEE Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this GUARANTEE Agreement at the request or direction of any Holders of Preferred Securities, unless such Holders shall have offered to the GUARANTEE Trustee reasonable security and indemnity against the costs, expenses (including its attorneys' fees and expenses) and liabilities that might be incurred by it in complying with such request or direction; provided that nothing contained in this clause (iv) shall relieve the GUARANTEE Trustee of the obligation, upon the occurrence of an Event of Default (which has not been cured or waived) to exercise such of the rights and powers vested in it by this GUARANTEE Agreement, and to use the same degree of care and skill in this exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs; and (v) any action taken by the GUARANTEE Trustee or its agents hereunder shall bind the Holders of the Preferred Securities and the signature of the GUARANTEE Trustee or its agents alone shall be sufficient and effective to perform any such action; and no third party shall be required to inquire as to the authority of the GUARANTEE Trustee to so act, or as to its compliance with any of the terms and provisions of this GUARANTEE Agreement, both of which shall be conclusively evidenced by the GUARANTEE Trustee's or its agent's taking such action. SECTION 3.03. Not Responsible for Recitals or Issuance of Guarantee. The recitals contained in this 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 13 13 representations as to the validity or sufficiency of this GUARANTEE Agreement. ARTICLE IV Guarantee Trustee SECTION 4.01. Qualifications. (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 Columbia, or a corporation or Person permitted by the 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 $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 4.01(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. If at any time the GUARANTEE Trustee shall cease to satisfy the requirements of clauses (i)-(ii) above, the GUARANTEE Trustee shall immediately resign in the manner and with the effect set out in Section 4.02. 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 the Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. SECTION 4.02. Appointment, Removal and Resignation of GUARANTEE Trustee. (a) Subject to Section 4.02(b), the GUARANTEE Trustee may be appointed or removed without cause at any time by the Guarantor. 14 14 (b) The GUARANTEE Trustee shall not be removed in accordance with Section 4.02(a) until a Successor GUARANTEE Trustee possessing the qualifications to act as GUARANTEE Trustee under Section 4.01(a) has been appointed and has accepted such appointment by written instrument executed by such Successor GUARANTEE Trustee and delivered to the Guarantor and the GUARANTEE Trustee being removed. (c) The GUARANTEE Trustee appointed to office shall hold office until his successor shall have been appointed or until its removal or resignation. (d) The GUARANTEE Trustee may resign from office (without need for prior or subsequent accounting) by an instrument (a "Resignation Request") in writing signed by the Guarantee Trustee and delivered to the Guarantor, which resignation shall take effect upon such delivery or upon such later date as is specified therein; provided, however, that no such resignation of the GUARANTEE Trustee shall be effective until a Successor GUARANTEE Trustee possessing the qualifications to act as GUARANTEE Trustee under Section 4.01(a) has been appointed and has accepted such appointment by instrument executed by such Successor GUARANTEE Trustee and delivered to Guarantor and the resigning GUARANTEE Trustee. (e) If no Successor GUARANTEE Trustee shall have been appointed and accepted appointed as provided in this Section 4.02 within 60 days after delivery to the Guarantor of a Resignation Request, the resigning GUARANTEE Trustee may petition any court of competent jurisdiction for appointment of a Successor GUARANTEE Trustee. Such court may thereupon after such notice, if any, as it may deem proper and prescribe, appoint a Successor GUARANTEE Trustee. ARTICLE V Guarantee SECTION 5.01. 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) regardless of any defense, right of set-off or counterclaim which the Issuer may have or assert. The Guarantor's obligation to make a GUARANTEE Payment may be satisfied by direct payment of the 15 15 required amounts by the Guarantor to the Holders or by causing the Issuer to pay such amounts to the Holders. SECTION 5.02. Waiver of Notice. The Guarantor hereby waives notice of acceptance of this GUARANTEE Agreement and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Issuer or any other Person before proceeding against the Guarantor, protect, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. SECTION 5.03. Obligations Not Affected. The obligations, covenants, agreements and duties of the Guarantor under this GUARANTEE Agreement 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 (other than an extension of time for payment of Distributions that results from the extension of any interest payment period on the Debentures), Redemption Price, Liquidation Distribution (as defined in the Declaration) 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; (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 16 16 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 circumstances whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 5.03 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 5.04. Enforcement of Guarantee. The Guarantor and the GUARANTEE Trustee expressly acknowledge that (i) this Guarantee Agreement will be deposited with the GUARANTEE Trustee to be held for the benefit of the Holders; (ii) the GUARANTEE Trustee has the right to enforce this GUARANTEE Agreement on behalf of the Holders; (iii) Holders representing not less than a Majority in liquidation amount of the Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available in respect of this GUARANTEE Agreement including the giving of directions to the GUARANTEE Trustee, or exercising any trust or other power conferred upon the GUARANTEE Trustee under this GUARANTEE Agreement, and (iv) if the GUARANTEE Trustee fails to enforce this GUARANTEE Agreement, any Holder of Preferred Securities may institute a legal proceeding directly against the Guarantor to enforce its rights under this GUARANTEE Agreement, without first instituting a legal proceeding against the Issuer, the GUARANTEE Trustee, or any other Person. SECTION 5.05. GUARANTEE of Payment. This GUARANTEE Agreement creates a GUARANTEE of payment and not merely of collection. This GUARANTEE Agreement will not be discharged except by payment of the GUARANTEE Payments in full (without duplication of amounts theretofore paid by the Issuer). 17 17 SECTION 5.06. Subrogation. The Guarantor shall be subrogated to all (if any) rights of the Holders against the Issuer in respect of any amounts paid to the Holders by the Guarantor under this GUARANTEE Agreement; provided, however, that the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any rights which it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this GUARANTEE Agreement, if, at the time of any such payment, any amounts are due and unpaid under this GUARANTEE Agreement. 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 5.07. 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 GUARANTEE Agreement notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.03 hereof. ARTICLE VI Limitation of Transactions; Subordination SECTION 6.01. Limitation of Transactions. So long as any Preferred Securities remain outstanding, the Guarantor will not declare or pay dividends on, or redeem, purchase, acquire or make a distribution or liquidation payment with respect to, any of its common stock or preferred stock or make any GUARANTEE payment with respect thereto if at such time (i) the Guarantor shall be in default with respect to its GUARANTEE Payments or other payment obligations hereunder, (ii) there shall have occurred any event of default under the Declaration or (iii) the Guarantor shall have given notice of its selection of a Deferral Period (as defined in the Indenture) and such period, or any extension thereof, is continuing; provided, however, that the foregoing restrictions shall not apply to (i) dividends, redemptions, purchases, acquisitions, distributions or payments made by the Guarantor by way of issuance of shares of its capital stock, (ii) payments of 18 18 accrued dividends by the Guarantor upon the redemption, exchange or conversion of any preferred stock of the Guarantor as may be outstanding from time to time in accordance with the terms of such preferred stock, (iii) cash payments made by the Guarantor in lieu of delivering fractional shares upon the redemption, exchange or conversion of any preferred stock of the Guarantor as may be outstanding from time to time in accordance with the terms of such preferred stock, (iv) repurchases, redemptions or other acquisitions of shares of capital stock of the Guarantor in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors of consultants, or (v) any declaration of a dividend in connection with the implementation of a stockholders' rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of such rights pursuant thereto. In addition, so long as any Preferred Securities remain outstanding, the Guarantor (i) will remain the sole direct or indirect owner of all of the outstanding Common Securities and shall not cause or permit the Common Securities to be transferred except to the extent such transfer is permitted under Section 9.01(c) of the Declaration; provided that any permitted successor of the Guarantor under the Indenture may succeed to the Guarantor's ownership of the Common Securities and (ii) will use reasonable efforts to cause the Issuer to continue to be treated as a grantor trust for United States Federal income tax purposes except in connection with a distribution of Debentures as provided in the Declaration. SECTION 6.02. Subordination. This GUARANTEE Agreement will constitute an unsecured obligation of the Guarantor and will rank (i) subordinate and junior in right of payment to all other liabilities of the Guarantor, including the Debentures, except those made pari passu or subordinate by their terms, and (ii) senior to all capital stock now or hereafter issued by the Guarantor and to any GUARANTEE now or hereafter entered into by the Guarantor in respect of any of its capital stock. The Guarantor's obligations under this GUARANTEE Agreement will rank pari passu with respect to obligations under other GUARANTEE agreements which it may enter into from time to time to the extent that such agreements shall be entered into in substantially the form hereof and provided for comparable guarantees by the Guarantor of payment on preferred securities issued by other JPM Capital Trusts. 19 19 ARTICLE VII Termination SECTION 7.01. This GUARANTEE Agreement shall terminate and be of no further force and effect upon full payment of the Redemption Price of all Preferred Securities, or upon the distribution of Debentures to Holders of Preferred Securities and Common Securities in exchange for all of the Preferred Securities and Common Securities, or upon full payment of the amounts payable in accordance with the Declaration upon liquidation of the Issuer. Notwithstanding the foregoing, the GUARANTEE Agreement will continue to be executive or will be reinstated, as the case may be, if at any time any Holder must restore payment of any sums paid with respect to the Preferred Securities or this GUARANTEE Agreement. ARTICLE VIII Limitation of Liability; Indemnification SECTION 8.01. 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 and in a manner such Indemnified Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this GUARANTEE Agreement 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 wilful 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 Guarantor and upon such information, opinions, reports or statements presented to the Guarantor by any Person as to matters the Indemnified Person reasonably believes are within such other Person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Guarantor, 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 amounts of assets from which 20 20 Distributions to Holders of Preferred Securities might properly be paid. SECTION 8.02. Indemnification. (a) To the fullest extent permitted by applicable law, the Guarantor shall indemnify and hold harmless each Indemnified Person from and against any loss, damage or claim incurred by such Indemnified Person by reason of any act or omission performed or omitted by such Indemnified Person in good faith and in a manner such Indemnified Person reasonably believed to be within the scope of authority conferred on such Indemnified Person by this GUARANTEE Agreement, except that no Indemnified Person shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such Indemnified Person by reason of negligence or wilful misconduct with respect to such acts or omissions. (b) To the fullest extent permitted by applicable law, expenses (including legal fees) incurred by an Indemnified Person in defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the Guarantor prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Guarantor of an undertaking by or on behalf of the Indemnified Person to repay such amount if it shall be determined that the Indemnified Person is not entitled to be indemnified as authorized in Section 8.02(a). ARTICLE IX Miscellaneous SECTION 9.01. Successors and Assigns. All guarantees and agreements contained in this GUARANTEE Agreement shall bind the successors, assignees, 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 a consolidation, merger or sale involving the Guarantor that is permitted under Article Ten of the Indenture, the Guarantor shall not assign its obligations hereunder. SECTION 9.02. Amendments. Except with respect to any changes which do not adversely affect the rights of Holders (in which case no consent of Holders will be required), this GUARANTEE Agreement may only be amended with the prior approval of the Holders of not less than 66- 2/3% in 21 21 liquidation amount of the Preferred Securities. The provisions of Section 12.02 of the Declaration concerning meetings of Holders shall apply to the giving of such approval. SECTION 9.03 Notices. Any notice, request or other communication required or permitted to be given hereunder shall be in writing, duly signed by the party giving such notice, and delivered, telecopied or mailed by first class mail as follows: (a) if given to the Guarantor, to the address set forth below or such other address as the Guarantor may give notice of to the Holders: J.P. Morgan & Co. Incorporated 60 Wall Street New York, New York 10260-0060 Facsimile No.: (212) [ ] Attention: [ ] (b) if given to the GUARANTEE Trustee, to the address set forth below or such other address as the GUARANTEE Trustee may give notice to the Holders: First Trust of New York, National Association 100 Wall Street Suite 2000 New York, New York 10005 Facsimile No.: (212) [ ] Attention: [ ] (c) if given to any Holder of Preferred Securities, at the address set forth on the books and records of the Issuer. All notices hereunder 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 9.04. Genders. The masculine, feminine and neuter genders used herein shall include the masculine, feminine and neuter genders. 22 22 SECTION 9.05. Benefit. This GUARANTEE Agreement is solely for the benefit of the Holders and subject to Section 3.01(a) is not separately transferable from the Preferred Securities. SECTION 9.06. Governing Law. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS). SECTION 9.07. Counterparts. This GUARANTEE Agreement may be executed in counterparts, each of which shall be an original; but such counterparts shall together constitute one and the same instrument. SECTION 9.08. Exercise of Overallotment Option. If and to the extent that Preferred Securities are issued by the Issuer upon exercise of the overallotment option referred to the second WHEREAS clause, the Guarantor agrees to give prompt notice thereof to the GUARANTEE Trustee but the failure to give such notice shall not relieve the Guarantor of any of its obligations hereunder. THIS GUARANTEE AGREEMENT is executed as of the day and year first above written. J.P. MORGAN & CO. INCORPORATED, by ------------------------------------ Name: Title: FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, as GUARANTEE Trustee, by ------------------------------------ Name: Title: 23 23 STATE OF NEW YORK ) ) COUNTY OF NEW YORK ) BEFORE ME, the undersigned authority, on this day of , 199 , personally appeared of J.P. Morgan & Co. Incorporated, known to me (or proved to me by introduction upon the oath of a person known to me) to be the person and officer whose name is subscribed to the foregoing instrument, and acknowledged to me that he/she executed the same as the act of such trust for the purposes and consideration herein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL THIS DAY OF , 199 . {SEAL} ---------------------------------------- NOTARY PUBLIC, STATE OF NEW YORK Print Name: ----------------------------- Commission Expires: --------------------- 24 24 STATE OF NEW YORK ) ) COUNTY OF NEW YORK ) BEFORE ME, the undersigned authority, on this day of , 199 , personally appeared of First Trust of New York, National Association, known to me (or proved to me by introduction upon the oath of a person known to me) to be the person and officer whose name is subscribed to the foregoing instrument, and acknowledged to me that he/she executed the same as the act of such trust for the purposes and consideration herein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL THIS DAY OF , 199 . {SEAL} ---------------------------------------- NOTARY PUBLIC, STATE OF NEW YORK Print Name: ----------------------------- Commission Expires: --------------------- EX-4.L2 14 FORM OF GUARANTEE - JPM CAPTIAL TRUST II 1 EXHIBIT 4(l)(2) ================================================================================ FORM OF GUARANTEE AGREEMENT OF JPM CAPITAL TRUST II ________________ DATED AS OF , 199 ================================================================================ 2 2 This GUARANTEE AGREEMENT, dated as of , 199 , is executed and delivered by J.P. Morgan & Co. Incorporated, a Delaware corporation (the "Guarantor"), and First Trust of New York, National Association, as the initial GUARANTEE Trustee (as defined herein) for the benefit of the Holders (as defined herein) from time to time of the Preferred Securities (as defined herein) of JPM Capital Trust II, a Delaware statutory business trust (the "Issuer"). WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the "Declaration"), dated as of , 199 among the trustees of the Issuer named therein, J.P. Morgan & Co. Incorporated, as Sponsor, and the Holders from time to time of undivided beneficial interests in the assets of the Issuer, the Issuer may issue up to aggregate liquidation amount of its % Preferred Trust Securities (the "Preferred Securities") representing undivided beneficial interests in the assets of the Issuer and having the terms set forth in Exhibit B to the Declaration, of which $ liquidation amount of the Preferred Securities are being issued as of the date hereof. Up to the remaining $ liquidation amount of Preferred Securities may be issued by the Issuer if and to the extent that the over-allotment option granted by the Guarantor and the Issuer pursuant to the Underwriting Agreement (as defined in the Declaration) is exercised by the Underwriters named in the Underwriting Agreement. WHEREAS, as incentive for the Holders to purchase Preferred Securities, the Guarantor desires to irrevocably and unconditionally agree, to the extent set forth herein, to pay to the Holders of the Preferred Securities the GUARANTEE Payments (as defined herein) and to make certain other payments on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the purchase by the initial purchasers thereof of Preferred Securities, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this GUARANTEE Agreement for the benefit of the Holders from time to time of the Preferred Securities. 3 3 ARTICLE I Definitions (a) Capitalized terms used in this GUARANTEE Agreement but not defined in the preamble above have the respective meanings assigned to them in this Section 1.01. (b) A term defined anywhere in this GUARANTEE Agreement has the same meaning throughout. (c) All references to "the GUARANTEE Agreement" or "this GUARANTEE Agreement" are to this GUARANTEE Agreement as modified, supplemented or amended from time to time. (d) All references in this GUARANTEE Agreement to Articles and Sections are to Articles and Sections of this GUARANTEE Agreement unless otherwise specified. (e) A term defined in the Trust Indenture Act as the same meaning when used in this GUARANTEE Agreement unless otherwise defined in this GUARANTEE Agreement or unless the context otherwise requires. (f) A reference to the singular includes the plural and vice versa. "Affiliate" has the same meaning as given to that term in Rule 405 of the Securities Act of 1933, as amended, or any successor rule thereunder. "Commission" means the Securities and Exchange Commission. "Common Securities" means the securities representing undivided beneficial interests in the assets of the Issuer, having the terms set forth in Exhibit C to the Declaration. "Covered Person" means any Holder of Preferred Securities. "Debentures" means the series of Junior Subordinated Debentures issued by the Guarantor under the Indenture to the Property Trustee and entitled the " % Junior Subordinated Debentures due ". 4 4 "Distributions" means the periodic distributions and other payments payable to Holders of Preferred Securities in accordance with the terms of the Preferred Securities set forth in Exhibit B to the Declaration. "Event of Default" means a default by the Guarantor on any of its payment or other obligations under this GUARANTEE Agreement. "Guarantee Payments" shall mean 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 accrued and unpaid Distributions and the redemption price, including all accrued and unpaid Distributions to the date of redemption (the "Redemption Price"), with respect to the Preferred Securities called for redemption by the Issuer but only if and to the extent that in each case the Guarantor has made a payment to the Property Trustee of interest or principal on the Debentures and (ii) upon a voluntary or involuntary dissolution, winding-up or termination of the Issuer (other than in connection with the distribution of Debentures to Holders or the redemption of all the Preferred Securities upon the maturity or redemption of the Debentures as provided in the Declaration), the lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid Distributions on the Preferred Securities to the date of payment, to the extent the Issuer has funds available therefor, or (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"). "Guarantee Trustee" means First Trust of New York, National Association until a Successor GUARANTEE Trustee has been appointed and accepted such appointment pursuant to the terms of this GUARANTEE Agreement 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 entity directly or indirectly controlling or controlled by or under direct or indirect common control with the Guarantor. 5 5 "Indemnified Person" means the GUARANTEE Trustee, any Affiliate of the GUARANTEE Trustee, and any officers, directors, shareholders, members, partners, employees, representatives or agents of the GUARANTEE Trustee. "Indenture" means the Junior Subordinated Indenture dated as of November , 1996 between the Guarantor and First Trust of New York, National Association, as trustee, as supplemented by the [ ] Supplemental Indenture thereto dated as of 199 , pursuant to which the Debentures are to be issued. "Majority in liquidation amount of the Preferred Securities" means, except as otherwise required by the Trust Indenture Act, Holder(s) of outstanding Preferred Securities voting together as a single class, who are the record owners of Preferred Securities whose liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) represents more than 50% of the liquidation amount of all outstanding Preferred Securities. "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. "Preferred Securities" has the meaning set forth in the first WHEREAS clause above. "Property Trustee" means the Person acting as Property Trustee under the Declaration. "Redemption Price" means the amount payable on redemption of the Preferred Securities in accordance with the terms of the Preferred Securities. "Responsible Officer" means, with respect to the GUARANTEE Trustee, the chairman of the board of directors, the president, any vice-president, any assistant vice-president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, any trust officer or assistant trust officer or any other officer of the GUARANTEE Trustee customarily performing functions similar to those performed by any of the above designated officers 6 6 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. "66- 2/3% in liquidation amount of the Preferred Securities" means, except as otherwise required by the Trust Indenture Act, Holder(s) of outstanding Preferred Securities voting together as a single class who are the record owners of Preferred Securities whose liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) represents 66- 2/3% or more of the liquidation amount of all Preferred Securities. "Successor GUARANTEE Trustee" means a successor GUARANTEE Trustee possessing the qualifications to act as a GUARANTEE Trustee under Section 4.01. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended. ARTICLE II Trust Indenture Act SECTION 2.01. Trust Indenture Act; Application. (a) This GUARANTEE Agreement is subject to the provisions of the Trust Indenture Act that are required to be part of this GUARANTEE Agreement and shall, to the extent applicable, be governed by such provisions. (b) If and to the extent that any provision of this 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. (c) The application of the Trust Indenture Act to this GUARANTEE Agreement shall not affect the nature of the Preferred Securities as equity securities representing undivided beneficial interests in the assets of the Issuer. 7 7 SECTION 2.02. Lists of Holders of Preferred Securities. (a) The Guarantor shall provide the GUARANTEE Trustee with such information as is required under Section 312(a) of the Trust Indenture Act at the times and in the manner provided in Section 312(a). (b) The GUARANTEE Trustee shall comply with its obligations under Sections 310(b), 311 and 312(b) of the Trust Indenture Act. SECTION 2.03. Reports by the GUARANTEE Trustee. Within 60 days after May 15 of each year, the GUARANTEE Trustee shall provide to the Holders of the Preferred Securities such reports as are required by Section 313 of the Trust Indenture Act, if any, in the form, in the manner and at the times 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. SECTION 2.04. Periodic Reports to the GUARANTEE Trustee. The Guarantor shall provide to the GUARANTEE Trustee, the Commission and the Holders of the Preferred Securities, as applicable, such documents, reports and information as required by Section 314(a)(1)-(3) (if any) of the Trust Indenture Act and the compliance certificates required by Section 314(a)(4) and (c) of the Trust Indenture Act, any such certificates to be provided in the form, in the manner and at the times required by Section 314(a)(4) and (c) of the Trust Indenture Act (provided that any certificate to be provided pursuant to Section 314(a)(4) of the Trust Indenture Act shall be provided within 120 days of the end of each fiscal year of the Issuer). SECTION 2.05. Evidence of Compliance with Conditions Precedent. The Guarantor shall provide the GUARANTEE Trustee such evidence of compliance with any conditions precedent, if any, provided for in this GUARANTEE Agreement which 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 pursuant to Section 314(c) shall comply with Section 314(e) of the Trust Indenture Act. SECTION 2.06. Events of Default; Waiver. (a) Subject to Section 2.06(b), Holders of Preferred Securities may by vote of at least a Majority in liquidation amount of the Preferred Securities, (A) direct the time, method and place of conducting any proceeding for any remedy 8 8 available to the GUARANTEE Trustee, or exercising any trust or power conferred upon by the GUARANTEE Trustee or (B) on behalf of the Holders of all Preferred Securities waive any past Event of Default and its consequences. Upon such waiver, any such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this GUARANTEE Agreement, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. (b) The right of any Holder of Preferred Securities to receive payment of the GUARANTEE Payments in accordance with this GUARANTEE Agreement, or to institute suit for the enforcement of any such payment, shall not be impaired without the consent of each such Holder. SECTION 2.07. Disclosure of Information. The disclosure of information as to the names and addresses of the Holders of the Preferred Securities in accordance with Sections 312 of the Trust Indenture Act, regardless of the source from which such information was derived, shall not be deemed to be a violation of any existing law, or any law hereafter enacted which does not specifically refer to Section 312 of the Trust Indenture Act, nor shall the GUARANTEE Trustee be held accountable by reason of mailing any material pursuant to a request made under Section 312(b) of the Trust Indenture Act. SECTION 2.08. Conflicting Interest. The Declaration shall be deemed to be specifically described in this GUARANTEE Agreement for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. ARTICLE III Powers, Duties and Rights of Guarantee Trustee SECTION 3.01. Powers and Duties of the GUARANTEE Trustee. (a) This GUARANTEE Agreement shall be held by the GUARANTEE Trustee in trust for the benefit of the Holders of the Preferred Securities. The GUARANTEE Trustee shall not transfer its right, title and interest in the GUARANTEE Agreement to any Person except a Successor GUARANTEE Trustee on acceptance by such Successor GUARANTEE Trustee of its appointment to act as GUARANTEE Trustee or to a Holder of Preferred Securities exercising his or her rights pursuant 9 9 to Section 5.04. The right, title and interest of the GUARANTEE Trustee to the GUARANTEE Agreement shall vest automatically in each Person who may hereafter be appointed as GUARANTEE Trustee in accordance with Article IV. Such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered. (b) If an Event of Default occurs and is continuing, the GUARANTEE Trustee shall enforce this GUARANTEE Agreement for the benefit of the Holders of the Preferred Securities. (c) This GUARANTEE Agreement and all moneys received by the Property Trustee hereunder in respect of the GUARANTEE Payments will not be subject to any right, charge, security interest, lien or claim of any kind in favor of, or for the benefit of the GUARANTEE Trustee or its agents or their creditors. (d) 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, as their names and addresses appear upon the register, notice of all Events of Default known to the GUARANTEE Trustee, unless such defaults shall have been cured before the giving of such notice; provided, that, 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 determine that the withholding of such notice is in the interests of the Holders of the Preferred Securities. The GUARANTEE Trustee shall not be deemed to have knowledge of any default except any default as to which the GUARANTEE Trustee shall have received written notice or a Responsible Officer charged with the administration of the GUARANTEE Agreement shall have obtained written notice. (e) The GUARANTEE Trustee shall not resign as a Trustee unless a Successor GUARANTEE Trustee has been appointed and accepted that appointment in accordance with Article IV. SECTION 3.02. Certain Rights and Duties of the GUARANTEE Trustee. (a) The GUARANTEE Trustee, before the occurrence of an 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 10 10 set forth in this GUARANTEE Agreement, and no implied covenants shall be read into this GUARANTEE Agreement against the GUARANTEE Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.06(a)), the GUARANTEE Trustee shall exercise such of the rights and powers vested in it by this GUARANTEE Agreement, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in this conduct of his or her own affairs. (b) No provision of this GUARANTEE Agreement shall be construed to relieve the GUARANTEE Trustee from liability for its own negligent action, its own negligent failure to act or its own wilful misconduct, except that: (i) prior to the occurrence of an 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 GUARANTEE Agreement, and the GUARANTEE Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this GUARANTEE Agreement, and no implied covenants or obligations shall be read into this GUARANTEE Agreement 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 GUARANTEE Agreement; 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 GUARANTEE Agreement; (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 11 11 shall be proved that the GUARANTEE Trustee was negligent in ascertaining the pertinent facts; (iii) the GUARANTEE Trustee shall not be liable with respect to any action take or omitted to be taken by it in good faith in accordance with the direction of the Holders of Preferred Securities as provided herein 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 GUARANTEE Agreement; and (iv) no provision of this GUARANTEE Agreement shall require the GUARANTEE Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of its duties or in the exercise of any of its rights or powers, if it shall have reasonable ground for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this GUARANTEE Agreement or adequate indemnity against such risk or liability is not reasonably assured to it. (c) Subject to the provisions of Section 3.02(a) and (b): (i) whenever in the administration of this GUARANTEE Agreement, the GUARANTEE Trustee shall deem it desirable that a matter proved or established prior to 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 rely upon a certificate, which shall comply with the provisions of Section 314(e) of the Trust Indenture Act, signed by any authorized officer of the Guarantor; (ii) the GUARANTEE Trustee (A) may consult with counsel (which may be counsel to the Guarantor or any of its Affiliates and may include any of its employees) selected by it in good faith and with due care 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 reliance thereon and in accordance with such advice and opinion and (B) shall have the right at 12 12 any time to seek instructions concerning the administration of this GUARANTEE Agreement from any court of competent jurisdiction; (iii) the GUARANTEE Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the GUARANTEE Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed by it in good faith and with due care; (iv) the GUARANTEE Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this GUARANTEE Agreement at the request or direction of any Holders of Preferred Securities, unless such Holders shall have offered to the GUARANTEE Trustee reasonable security and indemnity against the costs, expenses (including its attorneys' fees and expenses) and liabilities that might be incurred by it in complying with such request or direction; provided that nothing contained in this clause (iv) shall relieve the GUARANTEE Trustee of the obligation, upon the occurrence of an Event of Default (which has not been cured or waived) to exercise such of the rights and powers vested in it by this GUARANTEE Agreement, and to use the same degree of care and skill in this exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs; and (v) any action taken by the GUARANTEE Trustee or its agents hereunder shall bind the Holders of the Preferred Securities and the signature of the GUARANTEE Trustee or its agents alone shall be sufficient and effective to perform any such action; and no third party shall be required to inquire as to the authority of the GUARANTEE Trustee to so act, or as to its compliance with any of the terms and provisions of this GUARANTEE Agreement, both of which shall be conclusively evidenced by the GUARANTEE Trustee's or its agent's taking such action. SECTION 3.03. Not Responsible for Recitals or Issuance of Guarantee. The recitals contained in this 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 13 13 representations as to the validity or sufficiency of this GUARANTEE Agreement. ARTICLE IV Guarantee Trustee SECTION 4.01. Qualifications. (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 Columbia, or a corporation or Person permitted by the 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 $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 4.01(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. If at any time the GUARANTEE Trustee shall cease to satisfy the requirements of clauses (i)-(ii) above, the GUARANTEE Trustee shall immediately resign in the manner and with the effect set out in Section 4.02. 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 the Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. SECTION 4.02. Appointment, Removal and Resignation of GUARANTEE Trustee. (a) Subject to Section 4.02(b), the GUARANTEE Trustee may be appointed or removed without cause at any time by the Guarantor. 14 14 (b) The GUARANTEE Trustee shall not be removed in accordance with Section 4.02(a) until a Successor GUARANTEE Trustee possessing the qualifications to act as GUARANTEE Trustee under Section 4.01(a) has been appointed and has accepted such appointment by written instrument executed by such Successor GUARANTEE Trustee and delivered to the Guarantor and the GUARANTEE Trustee being removed. (c) The GUARANTEE Trustee appointed to office shall hold office until his successor shall have been appointed or until its removal or resignation. (d) The GUARANTEE Trustee may resign from office (without need for prior or subsequent accounting) by an instrument (a "Resignation Request") in writing signed by the Guarantee Trustee and delivered to the Guarantor, which resignation shall take effect upon such delivery or upon such later date as is specified therein; provided, however, that no such resignation of the GUARANTEE Trustee shall be effective until a Successor GUARANTEE Trustee possessing the qualifications to act as GUARANTEE Trustee under Section 4.01(a) has been appointed and has accepted such appointment by instrument executed by such Successor GUARANTEE Trustee and delivered to Guarantor and the resigning GUARANTEE Trustee. (e) If no Successor GUARANTEE Trustee shall have been appointed and accepted appointed as provided in this Section 4.02 within 60 days after delivery to the Guarantor of a Resignation Request, the resigning GUARANTEE Trustee may petition any court of competent jurisdiction for appointment of a Successor GUARANTEE Trustee. Such court may thereupon after such notice, if any, as it may deem proper and prescribe, appoint a Successor GUARANTEE Trustee. ARTICLE V Guarantee SECTION 5.01. 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) regardless of any defense, right of set-off or counterclaim which the Issuer may have or assert. The Guarantor's obligation to make a GUARANTEE Payment may be satisfied by direct payment of the 15 15 required amounts by the Guarantor to the Holders or by causing the Issuer to pay such amounts to the Holders. SECTION 5.02. Waiver of Notice. The Guarantor hereby waives notice of acceptance of this GUARANTEE Agreement and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Issuer or any other Person before proceeding against the Guarantor, protect, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. SECTION 5.03. Obligations Not Affected. The obligations, covenants, agreements and duties of the Guarantor under this GUARANTEE Agreement 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 (other than an extension of time for payment of Distributions that results from the extension of any interest payment period on the Debentures), Redemption Price, Liquidation Distribution (as defined in the Declaration) 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; (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 16 16 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 circumstances whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 5.03 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 5.04. Enforcement of Guarantee. The Guarantor and the GUARANTEE Trustee expressly acknowledge that (i) this Guarantee Agreement will be deposited with the GUARANTEE Trustee to be held for the benefit of the Holders; (ii) the GUARANTEE Trustee has the right to enforce this GUARANTEE Agreement on behalf of the Holders; (iii) Holders representing not less than a Majority in liquidation amount of the Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available in respect of this GUARANTEE Agreement including the giving of directions to the GUARANTEE Trustee, or exercising any trust or other power conferred upon the GUARANTEE Trustee under this GUARANTEE Agreement, and (iv) if the GUARANTEE Trustee fails to enforce this GUARANTEE Agreement, any Holder of Preferred Securities may institute a legal proceeding directly against the Guarantor to enforce its rights under this GUARANTEE Agreement, without first instituting a legal proceeding against the Issuer, the GUARANTEE Trustee, or any other Person. SECTION 5.05. GUARANTEE of Payment. This GUARANTEE Agreement creates a GUARANTEE of payment and not merely of collection. This GUARANTEE Agreement will not be discharged except by payment of the GUARANTEE Payments in full (without duplication of amounts theretofore paid by the Issuer). 17 17 SECTION 5.06. Subrogation. The Guarantor shall be subrogated to all (if any) rights of the Holders against the Issuer in respect of any amounts paid to the Holders by the Guarantor under this GUARANTEE Agreement; provided, however, that the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any rights which it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this GUARANTEE Agreement, if, at the time of any such payment, any amounts are due and unpaid under this GUARANTEE Agreement. 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 5.07. 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 GUARANTEE Agreement notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.03 hereof. ARTICLE VI Limitation of Transactions; Subordination SECTION 6.01. Limitation of Transactions. So long as any Preferred Securities remain outstanding, the Guarantor will not declare or pay dividends on, or redeem, purchase, acquire or make a distribution or liquidation payment with respect to, any of its common stock or preferred stock or make any GUARANTEE payment with respect thereto if at such time (i) the Guarantor shall be in default with respect to its GUARANTEE Payments or other payment obligations hereunder, (ii) there shall have occurred any event of default under the Declaration or (iii) the Guarantor shall have given notice of its selection of a Deferral Period (as defined in the Indenture) and such period, or any extension thereof, is continuing; provided, however, that the foregoing restrictions shall not apply to (i) dividends, redemptions, purchases, acquisitions, distributions or payments made by the Guarantor by way of issuance of shares of its capital stock, (ii) payments of 18 18 accrued dividends by the Guarantor upon the redemption, exchange or conversion of any preferred stock of the Guarantor as may be outstanding from time to time in accordance with the terms of such preferred stock, (iii) cash payments made by the Guarantor in lieu of delivering fractional shares upon the redemption, exchange or conversion of any preferred stock of the Guarantor as may be outstanding from time to time in accordance with the terms of such preferred stock, (iv) repurchases, redemptions or other acquisitions of shares of capital stock of the Guarantor in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors of consultants, or (v) any declaration of a dividend in connection with the implementation of a stockholders' rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of such rights pursuant thereto. In addition, so long as any Preferred Securities remain outstanding, the Guarantor (i) will remain the sole direct or indirect owner of all of the outstanding Common Securities and shall not cause or permit the Common Securities to be transferred except to the extent such transfer is permitted under Section 9.01(c) of the Declaration; provided that any permitted successor of the Guarantor under the Indenture may succeed to the Guarantor's ownership of the Common Securities and (ii) will use reasonable efforts to cause the Issuer to continue to be treated as a grantor trust for United States Federal income tax purposes except in connection with a distribution of Debentures as provided in the Declaration. SECTION 6.02. Subordination. This GUARANTEE Agreement will constitute an unsecured obligation of the Guarantor and will rank (i) subordinate and junior in right of payment to all other liabilities of the Guarantor, including the Debentures, except those made pari passu or subordinate by their terms, and (ii) senior to all capital stock now or hereafter issued by the Guarantor and to any GUARANTEE now or hereafter entered into by the Guarantor in respect of any of its capital stock. The Guarantor's obligations under this GUARANTEE Agreement will rank pari passu with respect to obligations under other GUARANTEE agreements which it may enter into from time to time to the extent that such agreements shall be entered into in substantially the form hereof and provided for comparable guarantees by the Guarantor of payment on preferred securities issued by other JPM Capital Trusts. 19 19 ARTICLE VII Termination SECTION 7.01. This GUARANTEE Agreement shall terminate and be of no further force and effect upon full payment of the Redemption Price of all Preferred Securities, or upon the distribution of Debentures to Holders of Preferred Securities and Common Securities in exchange for all of the Preferred Securities and Common Securities, or upon full payment of the amounts payable in accordance with the Declaration upon liquidation of the Issuer. Notwithstanding the foregoing, the GUARANTEE Agreement will continue to be executive or will be reinstated, as the case may be, if at any time any Holder must restore payment of any sums paid with respect to the Preferred Securities or this GUARANTEE Agreement. ARTICLE VIII Limitation of Liability; Indemnification SECTION 8.01. 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 and in a manner such Indemnified Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this GUARANTEE Agreement 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 wilful 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 Guarantor and upon such information, opinions, reports or statements presented to the Guarantor by any Person as to matters the Indemnified Person reasonably believes are within such other Person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Guarantor, 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 amounts of assets from which 20 20 Distributions to Holders of Preferred Securities might properly be paid. SECTION 8.02. Indemnification. (a) To the fullest extent permitted by applicable law, the Guarantor shall indemnify and hold harmless each Indemnified Person from and against any loss, damage or claim incurred by such Indemnified Person by reason of any act or omission performed or omitted by such Indemnified Person in good faith and in a manner such Indemnified Person reasonably believed to be within the scope of authority conferred on such Indemnified Person by this GUARANTEE Agreement, except that no Indemnified Person shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such Indemnified Person by reason of negligence or wilful misconduct with respect to such acts or omissions. (b) To the fullest extent permitted by applicable law, expenses (including legal fees) incurred by an Indemnified Person in defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the Guarantor prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Guarantor of an undertaking by or on behalf of the Indemnified Person to repay such amount if it shall be determined that the Indemnified Person is not entitled to be indemnified as authorized in Section 8.02(a). ARTICLE IX Miscellaneous SECTION 9.01. Successors and Assigns. All guarantees and agreements contained in this GUARANTEE Agreement shall bind the successors, assignees, 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 a consolidation, merger or sale involving the Guarantor that is permitted under Article Ten of the Indenture, the Guarantor shall not assign its obligations hereunder. SECTION 9.02. Amendments. Except with respect to any changes which do not adversely affect the rights of Holders (in which case no consent of Holders will be required), this GUARANTEE Agreement may only be amended with the prior approval of the Holders of not less than 66- 2/3% in 21 21 liquidation amount of the Preferred Securities. The provisions of Section 12.02 of the Declaration concerning meetings of Holders shall apply to the giving of such approval. SECTION 9.03 Notices. Any notice, request or other communication required or permitted to be given hereunder shall be in writing, duly signed by the party giving such notice, and delivered, telecopied or mailed by first class mail as follows: (a) if given to the Guarantor, to the address set forth below or such other address as the Guarantor may give notice of to the Holders: J.P. Morgan & Co. Incorporated 60 Wall Street New York, New York 10260-0060 Facsimile No.: (212) [ ] Attention: [ ] (b) if given to the GUARANTEE Trustee, to the address set forth below or such other address as the GUARANTEE Trustee may give notice to the Holders: First Trust of New York, National Association 100 Wall Street Suite 2000 New York, New York 10005 Facsimile No.: (212) [ ] Attention: [ ] (c) if given to any Holder of Preferred Securities, at the address set forth on the books and records of the Issuer. All notices hereunder 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 9.04. Genders. The masculine, feminine and neuter genders used herein shall include the masculine, feminine and neuter genders. 22 22 SECTION 9.05. Benefit. This GUARANTEE Agreement is solely for the benefit of the Holders and subject to Section 3.01(a) is not separately transferable from the Preferred Securities. SECTION 9.06. Governing Law. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS). SECTION 9.07. Counterparts. This GUARANTEE Agreement may be executed in counterparts, each of which shall be an original; but such counterparts shall together constitute one and the same instrument. SECTION 9.08. Exercise of Overallotment Option. If and to the extent that Preferred Securities are issued by the Issuer upon exercise of the overallotment option referred to the second WHEREAS clause, the Guarantor agrees to give prompt notice thereof to the GUARANTEE Trustee but the failure to give such notice shall not relieve the Guarantor of any of its obligations hereunder. THIS GUARANTEE AGREEMENT is executed as of the day and year first above written. J.P. MORGAN & CO. INCORPORATED, by ----------------------------------- Name: Title: FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, as GUARANTEE Trustee, by ----------------------------------- Name: Title: 23 23 STATE OF NEW YORK ) ) COUNTY OF NEW YORK ) BEFORE ME, the undersigned authority, on this day of , 199 , personally appeared of J.P. Morgan & Co. Incorporated, known to me (or proved to me by introduction upon the oath of a person known to me) to be the person and officer whose name is subscribed to the foregoing instrument, and acknowledged to me that he/she executed the same as the act of such trust for the purposes and consideration herein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL THIS DAY OF , 199 . {SEAL} ---------------------------------------- NOTARY PUBLIC, STATE OF NEW YORK Print Name: ----------------------------- Commission Expires: --------------------- 24 24 STATE OF NEW YORK ) ) COUNTY OF NEW YORK ) BEFORE ME, the undersigned authority, on this day of , 199 , personally appeared of First Trust of New York, National Association, known to me (or proved to me by introduction upon the oath of a person known to me) to be the person and officer whose name is subscribed to the foregoing instrument, and acknowledged to me that he/she executed the same as the act of such trust for the purposes and consideration herein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL THIS DAY OF , 199 . {SEAL} ---------------------------------------- NOTARY PUBLIC, STATE OF NEW YORK Print Name: ----------------------------- Commission Expires: --------------------- EX-4.L3 15 FORM OF GUARANTEE - JPM CAPTIAL TRUST III 1 EXHIBIT 4(l)(3) ================================================================================ FORM OF GUARANTEE AGREEMENT OF JPM CAPITAL TRUST III ________________ DATED AS OF , 199 ================================================================================ 2 2 This GUARANTEE AGREEMENT, dated as of , 199 , is executed and delivered by J.P. Morgan & Co. Incorporated, a Delaware corporation (the "Guarantor"), and First Trust of New York, National Association, as the initial GUARANTEE Trustee (as defined herein) for the benefit of the Holders (as defined herein) from time to time of the Preferred Securities (as defined herein) of JPM Capital Trust III, a Delaware statutory business trust (the "Issuer"). WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the "Declaration"), dated as of , 199 among the trustees of the Issuer named therein, J.P. Morgan & Co. Incorporated, as Sponsor, and the Holders from time to time of undivided beneficial interests in the assets of the Issuer, the Issuer may issue up to aggregate liquidation amount of its % Preferred Trust Securities (the "Preferred Securities") representing undivided beneficial interests in the assets of the Issuer and having the terms set forth in Exhibit B to the Declaration, of which $ liquidation amount of the Preferred Securities are being issued as of the date hereof. Up to the remaining $ liquidation amount of Preferred Securities may be issued by the Issuer if and to the extent that the over-allotment option granted by the Guarantor and the Issuer pursuant to the Underwriting Agreement (as defined in the Declaration) is exercised by the Underwriters named in the Underwriting Agreement. WHEREAS, as incentive for the Holders to purchase Preferred Securities, the Guarantor desires to irrevocably and unconditionally agree, to the extent set forth herein, to pay to the Holders of the Preferred Securities the GUARANTEE Payments (as defined herein) and to make certain other payments on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the purchase by the initial purchasers thereof of Preferred Securities, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this GUARANTEE Agreement for the benefit of the Holders from time to time of the Preferred Securities. 3 3 ARTICLE I Definitions (a) Capitalized terms used in this GUARANTEE Agreement but not defined in the preamble above have the respective meanings assigned to them in this Section 1.01. (b) A term defined anywhere in this GUARANTEE Agreement has the same meaning throughout. (c) All references to "the GUARANTEE Agreement" or "this GUARANTEE Agreement" are to this GUARANTEE Agreement as modified, supplemented or amended from time to time. (d) All references in this GUARANTEE Agreement to Articles and Sections are to Articles and Sections of this GUARANTEE Agreement unless otherwise specified. (e) A term defined in the Trust Indenture Act as the same meaning when used in this GUARANTEE Agreement unless otherwise defined in this GUARANTEE Agreement or unless the context otherwise requires. (f) A reference to the singular includes the plural and vice versa. "Affiliate" has the same meaning as given to that term in Rule 405 of the Securities Act of 1933, as amended, or any successor rule thereunder. "Commission" means the Securities and Exchange Commission. "Common Securities" means the securities representing undivided beneficial interests in the assets of the Issuer, having the terms set forth in Exhibit C to the Declaration. "Covered Person" means any Holder of Preferred Securities. "Debentures" means the series of Junior Subordinated Debentures issued by the Guarantor under the Indenture to the Property Trustee and entitled the " % Junior Subordinated Debentures due ". 4 4 "Distributions" means the periodic distributions and other payments payable to Holders of Preferred Securities in accordance with the terms of the Preferred Securities set forth in Exhibit B to the Declaration. "Event of Default" means a default by the Guarantor on any of its payment or other obligations under this GUARANTEE Agreement. "Guarantee Payments" shall mean 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 accrued and unpaid Distributions and the redemption price, including all accrued and unpaid Distributions to the date of redemption (the "Redemption Price"), with respect to the Preferred Securities called for redemption by the Issuer but only if and to the extent that in each case the Guarantor has made a payment to the Property Trustee of interest or principal on the Debentures and (ii) upon a voluntary or involuntary dissolution, winding-up or termination of the Issuer (other than in connection with the distribution of Debentures to Holders or the redemption of all the Preferred Securities upon the maturity or redemption of the Debentures as provided in the Declaration), the lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid Distributions on the Preferred Securities to the date of payment, to the extent the Issuer has funds available therefor, or (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"). "Guarantee Trustee" means First Trust of New York, National Association until a Successor GUARANTEE Trustee has been appointed and accepted such appointment pursuant to the terms of this GUARANTEE Agreement 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 entity directly or indirectly controlling or controlled by or under direct or indirect common control with the Guarantor. 5 5 "Indemnified Person" means the GUARANTEE Trustee, any Affiliate of the GUARANTEE Trustee, and any officers, directors, shareholders, members, partners, employees, representatives or agents of the GUARANTEE Trustee. "Indenture" means the Junior Subordinated Indenture dated as of November , 1996 between the Guarantor and First Trust of New York, National Association, as trustee, as supplemented by the [ ] Supplemental Indenture thereto dated as of 199 , pursuant to which the Debentures are to be issued. "Majority in liquidation amount of the Preferred Securities" means, except as otherwise required by the Trust Indenture Act, Holder(s) of outstanding Preferred Securities voting together as a single class, who are the record owners of Preferred Securities whose liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) represents more than 50% of the liquidation amount of all outstanding Preferred Securities. "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. "Preferred Securities" has the meaning set forth in the first WHEREAS clause above. "Property Trustee" means the Person acting as Property Trustee under the Declaration. "Redemption Price" means the amount payable on redemption of the Preferred Securities in accordance with the terms of the Preferred Securities. "Responsible Officer" means, with respect to the GUARANTEE Trustee, the chairman of the board of directors, the president, any vice-president, any assistant vice-president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, any trust officer or assistant trust officer or any other officer of the GUARANTEE Trustee customarily performing functions similar to those performed by any of the above designated officers 6 6 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. "66- 2/3% in liquidation amount of the Preferred Securities" means, except as otherwise required by the Trust Indenture Act, Holder(s) of outstanding Preferred Securities voting together as a single class who are the record owners of Preferred Securities whose liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) represents 66- 2/3% or more of the liquidation amount of all Preferred Securities. "Successor GUARANTEE Trustee" means a successor GUARANTEE Trustee possessing the qualifications to act as a GUARANTEE Trustee under Section 4.01. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended. ARTICLE II Trust Indenture Act SECTION 2.01. Trust Indenture Act; Application. (a) This GUARANTEE Agreement is subject to the provisions of the Trust Indenture Act that are required to be part of this GUARANTEE Agreement and shall, to the extent applicable, be governed by such provisions. (b) If and to the extent that any provision of this 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. (c) The application of the Trust Indenture Act to this GUARANTEE Agreement shall not affect the nature of the Preferred Securities as equity securities representing undivided beneficial interests in the assets of the Issuer. 7 7 SECTION 2.02. Lists of Holders of Preferred Securities. (a) The Guarantor shall provide the GUARANTEE Trustee with such information as is required under Section 312(a) of the Trust Indenture Act at the times and in the manner provided in Section 312(a). (b) The GUARANTEE Trustee shall comply with its obligations under Sections 310(b), 311 and 312(b) of the Trust Indenture Act. SECTION 2.03. Reports by the GUARANTEE Trustee. Within 60 days after May 15 of each year, the GUARANTEE Trustee shall provide to the Holders of the Preferred Securities such reports as are required by Section 313 of the Trust Indenture Act, if any, in the form, in the manner and at the times 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. SECTION 2.04. Periodic Reports to the GUARANTEE Trustee. The Guarantor shall provide to the GUARANTEE Trustee, the Commission and the Holders of the Preferred Securities, as applicable, such documents, reports and information as required by Section 314(a)(1)-(3) (if any) of the Trust Indenture Act and the compliance certificates required by Section 314(a)(4) and (c) of the Trust Indenture Act, any such certificates to be provided in the form, in the manner and at the times required by Section 314(a)(4) and (c) of the Trust Indenture Act (provided that any certificate to be provided pursuant to Section 314(a)(4) of the Trust Indenture Act shall be provided within 120 days of the end of each fiscal year of the Issuer). SECTION 2.05. Evidence of Compliance with Conditions Precedent. The Guarantor shall provide the GUARANTEE Trustee such evidence of compliance with any conditions precedent, if any, provided for in this GUARANTEE Agreement which 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 pursuant to Section 314(c) shall comply with Section 314(e) of the Trust Indenture Act. SECTION 2.06. Events of Default; Waiver. (a) Subject to Section 2.06(b), Holders of Preferred Securities may by vote of at least a Majority in liquidation amount of the Preferred Securities, (A) direct the time, method and place of conducting any proceeding for any remedy 8 8 available to the GUARANTEE Trustee, or exercising any trust or power conferred upon by the GUARANTEE Trustee or (B) on behalf of the Holders of all Preferred Securities waive any past Event of Default and its consequences. Upon such waiver, any such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this GUARANTEE Agreement, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. (b) The right of any Holder of Preferred Securities to receive payment of the GUARANTEE Payments in accordance with this GUARANTEE Agreement, or to institute suit for the enforcement of any such payment, shall not be impaired without the consent of each such Holder. SECTION 2.07. Disclosure of Information. The disclosure of information as to the names and addresses of the Holders of the Preferred Securities in accordance with Sections 312 of the Trust Indenture Act, regardless of the source from which such information was derived, shall not be deemed to be a violation of any existing law, or any law hereafter enacted which does not specifically refer to Section 312 of the Trust Indenture Act, nor shall the GUARANTEE Trustee be held accountable by reason of mailing any material pursuant to a request made under Section 312(b) of the Trust Indenture Act. SECTION 2.08. Conflicting Interest. The Declaration shall be deemed to be specifically described in this GUARANTEE Agreement for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. ARTICLE III Powers, Duties and Rights of Guarantee Trustee SECTION 3.01. Powers and Duties of the GUARANTEE Trustee. (a) This GUARANTEE Agreement shall be held by the GUARANTEE Trustee in trust for the benefit of the Holders of the Preferred Securities. The GUARANTEE Trustee shall not transfer its right, title and interest in the GUARANTEE Agreement to any Person except a Successor GUARANTEE Trustee on acceptance by such Successor GUARANTEE Trustee of its appointment to act as GUARANTEE Trustee or to a Holder of Preferred Securities exercising his or her rights pursuant 9 9 to Section 5.04. The right, title and interest of the GUARANTEE Trustee to the GUARANTEE Agreement shall vest automatically in each Person who may hereafter be appointed as GUARANTEE Trustee in accordance with Article IV. Such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered. (b) If an Event of Default occurs and is continuing, the GUARANTEE Trustee shall enforce this GUARANTEE Agreement for the benefit of the Holders of the Preferred Securities. (c) This GUARANTEE Agreement and all moneys received by the Property Trustee hereunder in respect of the GUARANTEE Payments will not be subject to any right, charge, security interest, lien or claim of any kind in favor of, or for the benefit of the GUARANTEE Trustee or its agents or their creditors. (d) 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, as their names and addresses appear upon the register, notice of all Events of Default known to the GUARANTEE Trustee, unless such defaults shall have been cured before the giving of such notice; provided, that, 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 determine that the withholding of such notice is in the interests of the Holders of the Preferred Securities. The GUARANTEE Trustee shall not be deemed to have knowledge of any default except any default as to which the GUARANTEE Trustee shall have received written notice or a Responsible Officer charged with the administration of the GUARANTEE Agreement shall have obtained written notice. (e) The GUARANTEE Trustee shall not resign as a Trustee unless a Successor GUARANTEE Trustee has been appointed and accepted that appointment in accordance with Article IV. SECTION 3.02. Certain Rights and Duties of the GUARANTEE Trustee. (a) The GUARANTEE Trustee, before the occurrence of an 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 10 10 set forth in this GUARANTEE Agreement, and no implied covenants shall be read into this GUARANTEE Agreement against the GUARANTEE Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.06(a)), the GUARANTEE Trustee shall exercise such of the rights and powers vested in it by this GUARANTEE Agreement, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in this conduct of his or her own affairs. (b) No provision of this GUARANTEE Agreement shall be construed to relieve the GUARANTEE Trustee from liability for its own negligent action, its own negligent failure to act or its own wilful misconduct, except that: (i) prior to the occurrence of an 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 GUARANTEE Agreement, and the GUARANTEE Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this GUARANTEE Agreement, and no implied covenants or obligations shall be read into this GUARANTEE Agreement 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 GUARANTEE Agreement; 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 GUARANTEE Agreement; (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 11 11 shall be proved that the GUARANTEE Trustee was negligent in ascertaining the pertinent facts; (iii) the GUARANTEE Trustee shall not be liable with respect to any action take or omitted to be taken by it in good faith in accordance with the direction of the Holders of Preferred Securities as provided herein 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 GUARANTEE Agreement; and (iv) no provision of this GUARANTEE Agreement shall require the GUARANTEE Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of its duties or in the exercise of any of its rights or powers, if it shall have reasonable ground for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this GUARANTEE Agreement or adequate indemnity against such risk or liability is not reasonably assured to it. (c) Subject to the provisions of Section 3.02(a) and (b): (i) whenever in the administration of this GUARANTEE Agreement, the GUARANTEE Trustee shall deem it desirable that a matter proved or established prior to 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 rely upon a certificate, which shall comply with the provisions of Section 314(e) of the Trust Indenture Act, signed by any authorized officer of the Guarantor; (ii) the GUARANTEE Trustee (A) may consult with counsel (which may be counsel to the Guarantor or any of its Affiliates and may include any of its employees) selected by it in good faith and with due care 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 reliance thereon and in accordance with such advice and opinion and (B) shall have the right at 12 12 any time to seek instructions concerning the administration of this GUARANTEE Agreement from any court of competent jurisdiction; (iii) the GUARANTEE Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the GUARANTEE Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed by it in good faith and with due care; (iv) the GUARANTEE Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this GUARANTEE Agreement at the request or direction of any Holders of Preferred Securities, unless such Holders shall have offered to the GUARANTEE Trustee reasonable security and indemnity against the costs, expenses (including its attorneys' fees and expenses) and liabilities that might be incurred by it in complying with such request or direction; provided that nothing contained in this clause (iv) shall relieve the GUARANTEE Trustee of the obligation, upon the occurrence of an Event of Default (which has not been cured or waived) to exercise such of the rights and powers vested in it by this GUARANTEE Agreement, and to use the same degree of care and skill in this exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs; and (v) any action taken by the GUARANTEE Trustee or its agents hereunder shall bind the Holders of the Preferred Securities and the signature of the GUARANTEE Trustee or its agents alone shall be sufficient and effective to perform any such action; and no third party shall be required to inquire as to the authority of the GUARANTEE Trustee to so act, or as to its compliance with any of the terms and provisions of this GUARANTEE Agreement, both of which shall be conclusively evidenced by the GUARANTEE Trustee's or its agent's taking such action. SECTION 3.03. Not Responsible for Recitals or Issuance of Guarantee. The recitals contained in this 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 13 13 representations as to the validity or sufficiency of this GUARANTEE Agreement. ARTICLE IV Guarantee Trustee SECTION 4.01. Qualifications. (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 Columbia, or a corporation or Person permitted by the 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 $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 4.01(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. If at any time the GUARANTEE Trustee shall cease to satisfy the requirements of clauses (i)-(ii) above, the GUARANTEE Trustee shall immediately resign in the manner and with the effect set out in Section 4.02. 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 the Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. SECTION 4.02. Appointment, Removal and Resignation of GUARANTEE Trustee. (a) Subject to Section 4.02(b), the GUARANTEE Trustee may be appointed or removed without cause at any time by the Guarantor. 14 14 (b) The GUARANTEE Trustee shall not be removed in accordance with Section 4.02(a) until a Successor GUARANTEE Trustee possessing the qualifications to act as GUARANTEE Trustee under Section 4.01(a) has been appointed and has accepted such appointment by written instrument executed by such Successor GUARANTEE Trustee and delivered to the Guarantor and the GUARANTEE Trustee being removed. (c) The GUARANTEE Trustee appointed to office shall hold office until his successor shall have been appointed or until its removal or resignation. (d) The GUARANTEE Trustee may resign from office (without need for prior or subsequent accounting) by an instrument (a "Resignation Request") in writing signed by the Guarantee Trustee and delivered to the Guarantor, which resignation shall take effect upon such delivery or upon such later date as is specified therein; provided, however, that no such resignation of the GUARANTEE Trustee shall be effective until a Successor GUARANTEE Trustee possessing the qualifications to act as GUARANTEE Trustee under Section 4.01(a) has been appointed and has accepted such appointment by instrument executed by such Successor GUARANTEE Trustee and delivered to Guarantor and the resigning GUARANTEE Trustee. (e) If no Successor GUARANTEE Trustee shall have been appointed and accepted appointed as provided in this Section 4.02 within 60 days after delivery to the Guarantor of a Resignation Request, the resigning GUARANTEE Trustee may petition any court of competent jurisdiction for appointment of a Successor GUARANTEE Trustee. Such court may thereupon after such notice, if any, as it may deem proper and prescribe, appoint a Successor GUARANTEE Trustee. ARTICLE V Guarantee SECTION 5.01. 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) regardless of any defense, right of set-off or counterclaim which the Issuer may have or assert. The Guarantor's obligation to make a GUARANTEE Payment may be satisfied by direct payment of the 15 15 required amounts by the Guarantor to the Holders or by causing the Issuer to pay such amounts to the Holders. SECTION 5.02. Waiver of Notice. The Guarantor hereby waives notice of acceptance of this GUARANTEE Agreement and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Issuer or any other Person before proceeding against the Guarantor, protect, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. SECTION 5.03. Obligations Not Affected. The obligations, covenants, agreements and duties of the Guarantor under this GUARANTEE Agreement 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 (other than an extension of time for payment of Distributions that results from the extension of any interest payment period on the Debentures), Redemption Price, Liquidation Distribution (as defined in the Declaration) 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; (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 16 16 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 circumstances whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 5.03 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 5.04. Enforcement of Guarantee. The Guarantor and the GUARANTEE Trustee expressly acknowledge that (i) this Guarantee Agreement will be deposited with the GUARANTEE Trustee to be held for the benefit of the Holders; (ii) the GUARANTEE Trustee has the right to enforce this GUARANTEE Agreement on behalf of the Holders; (iii) Holders representing not less than a Majority in liquidation amount of the Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available in respect of this GUARANTEE Agreement including the giving of directions to the GUARANTEE Trustee, or exercising any trust or other power conferred upon the GUARANTEE Trustee under this GUARANTEE Agreement, and (iv) if the GUARANTEE Trustee fails to enforce this GUARANTEE Agreement, any Holder of Preferred Securities may institute a legal proceeding directly against the Guarantor to enforce its rights under this GUARANTEE Agreement, without first instituting a legal proceeding against the Issuer, the GUARANTEE Trustee, or any other Person. SECTION 5.05. GUARANTEE of Payment. This GUARANTEE Agreement creates a GUARANTEE of payment and not merely of collection. This GUARANTEE Agreement will not be discharged except by payment of the GUARANTEE Payments in full (without duplication of amounts theretofore paid by the Issuer). 17 17 SECTION 5.06. Subrogation. The Guarantor shall be subrogated to all (if any) rights of the Holders against the Issuer in respect of any amounts paid to the Holders by the Guarantor under this GUARANTEE Agreement; provided, however, that the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any rights which it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this GUARANTEE Agreement, if, at the time of any such payment, any amounts are due and unpaid under this GUARANTEE Agreement. 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 5.07. 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 GUARANTEE Agreement notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.03 hereof. ARTICLE VI Limitation of Transactions; Subordination SECTION 6.01. Limitation of Transactions. So long as any Preferred Securities remain outstanding, the Guarantor will not declare or pay dividends on, or redeem, purchase, acquire or make a distribution or liquidation payment with respect to, any of its common stock or preferred stock or make any GUARANTEE payment with respect thereto if at such time (i) the Guarantor shall be in default with respect to its GUARANTEE Payments or other payment obligations hereunder, (ii) there shall have occurred any event of default under the Declaration or (iii) the Guarantor shall have given notice of its selection of a Deferral Period (as defined in the Indenture) and such period, or any extension thereof, is continuing; provided, however, that the foregoing restrictions shall not apply to (i) dividends, redemptions, purchases, acquisitions, distributions or payments made by the Guarantor by way of issuance of shares of its capital stock, (ii) payments of 18 18 accrued dividends by the Guarantor upon the redemption, exchange or conversion of any preferred stock of the Guarantor as may be outstanding from time to time in accordance with the terms of such preferred stock, (iii) cash payments made by the Guarantor in lieu of delivering fractional shares upon the redemption, exchange or conversion of any preferred stock of the Guarantor as may be outstanding from time to time in accordance with the terms of such preferred stock, (iv) repurchases, redemptions or other acquisitions of shares of capital stock of the Guarantor in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors of consultants, or (v) any declaration of a dividend in connection with the implementation of a stockholders' rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of such rights pursuant thereto. In addition, so long as any Preferred Securities remain outstanding, the Guarantor (i) will remain the sole direct or indirect owner of all of the outstanding Common Securities and shall not cause or permit the Common Securities to be transferred except to the extent such transfer is permitted under Section 9.01(c) of the Declaration; provided that any permitted successor of the Guarantor under the Indenture may succeed to the Guarantor's ownership of the Common Securities and (ii) will use reasonable efforts to cause the Issuer to continue to be treated as a grantor trust for United States Federal income tax purposes except in connection with a distribution of Debentures as provided in the Declaration. SECTION 6.02. Subordination. This GUARANTEE Agreement will constitute an unsecured obligation of the Guarantor and will rank (i) subordinate and junior in right of payment to all other liabilities of the Guarantor, including the Debentures, except those made pari passu or subordinate by their terms, and (ii) senior to all capital stock now or hereafter issued by the Guarantor and to any GUARANTEE now or hereafter entered into by the Guarantor in respect of any of its capital stock. The Guarantor's obligations under this GUARANTEE Agreement will rank pari passu with respect to obligations under other GUARANTEE agreements which it may enter into from time to time to the extent that such agreements shall be entered into in substantially the form hereof and provided for comparable guarantees by the Guarantor of payment on preferred securities issued by other JPM Capital Trusts. 19 19 ARTICLE VII Termination SECTION 7.01. This GUARANTEE Agreement shall terminate and be of no further force and effect upon full payment of the Redemption Price of all Preferred Securities, or upon the distribution of Debentures to Holders of Preferred Securities and Common Securities in exchange for all of the Preferred Securities and Common Securities, or upon full payment of the amounts payable in accordance with the Declaration upon liquidation of the Issuer. Notwithstanding the foregoing, the GUARANTEE Agreement will continue to be executive or will be reinstated, as the case may be, if at any time any Holder must restore payment of any sums paid with respect to the Preferred Securities or this GUARANTEE Agreement. ARTICLE VIII Limitation of Liability; Indemnification SECTION 8.01. 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 and in a manner such Indemnified Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this GUARANTEE Agreement 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 wilful 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 Guarantor and upon such information, opinions, reports or statements presented to the Guarantor by any Person as to matters the Indemnified Person reasonably believes are within such other Person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Guarantor, 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 amounts of assets from which 20 20 Distributions to Holders of Preferred Securities might properly be paid. SECTION 8.02. Indemnification. (a) To the fullest extent permitted by applicable law, the Guarantor shall indemnify and hold harmless each Indemnified Person from and against any loss, damage or claim incurred by such Indemnified Person by reason of any act or omission performed or omitted by such Indemnified Person in good faith and in a manner such Indemnified Person reasonably believed to be within the scope of authority conferred on such Indemnified Person by this GUARANTEE Agreement, except that no Indemnified Person shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such Indemnified Person by reason of negligence or wilful misconduct with respect to such acts or omissions. (b) To the fullest extent permitted by applicable law, expenses (including legal fees) incurred by an Indemnified Person in defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the Guarantor prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Guarantor of an undertaking by or on behalf of the Indemnified Person to repay such amount if it shall be determined that the Indemnified Person is not entitled to be indemnified as authorized in Section 8.02(a). ARTICLE IX Miscellaneous SECTION 9.01. Successors and Assigns. All guarantees and agreements contained in this GUARANTEE Agreement shall bind the successors, assignees, 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 a consolidation, merger or sale involving the Guarantor that is permitted under Article Ten of the Indenture, the Guarantor shall not assign its obligations hereunder. SECTION 9.02. Amendments. Except with respect to any changes which do not adversely affect the rights of Holders (in which case no consent of Holders will be required), this GUARANTEE Agreement may only be amended with the prior approval of the Holders of not less than 66- 2/3% in 21 21 liquidation amount of the Preferred Securities. The provisions of Section 12.02 of the Declaration concerning meetings of Holders shall apply to the giving of such approval. SECTION 9.03 Notices. Any notice, request or other communication required or permitted to be given hereunder shall be in writing, duly signed by the party giving such notice, and delivered, telecopied or mailed by first class mail as follows: (a) if given to the Guarantor, to the address set forth below or such other address as the Guarantor may give notice of to the Holders: J.P. Morgan & Co. Incorporated 60 Wall Street New York, New York 10260-0060 Facsimile No.: (212) [ ] Attention: [ ] (b) if given to the GUARANTEE Trustee, to the address set forth below or such other address as the GUARANTEE Trustee may give notice to the Holders: First Trust of New York, National Association 100 Wall Street Suite 2000 New York, New York 10005 Facsimile No.: (212) [ ] Attention: [ ] (c) if given to any Holder of Preferred Securities, at the address set forth on the books and records of the Issuer. All notices hereunder 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 9.04. Genders. The masculine, feminine and neuter genders used herein shall include the masculine, feminine and neuter genders. 22 22 SECTION 9.05. Benefit. This GUARANTEE Agreement is solely for the benefit of the Holders and subject to Section 3.01(a) is not separately transferable from the Preferred Securities. SECTION 9.06. Governing Law. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS). SECTION 9.07. Counterparts. This GUARANTEE Agreement may be executed in counterparts, each of which shall be an original; but such counterparts shall together constitute one and the same instrument. SECTION 9.08. Exercise of Overallotment Option. If and to the extent that Preferred Securities are issued by the Issuer upon exercise of the overallotment option referred to the second WHEREAS clause, the Guarantor agrees to give prompt notice thereof to the GUARANTEE Trustee but the failure to give such notice shall not relieve the Guarantor of any of its obligations hereunder. THIS GUARANTEE AGREEMENT is executed as of the day and year first above written. J.P. MORGAN & CO. INCORPORATED, by ------------------------------------ Name: Title: FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, as GUARANTEE Trustee, by ------------------------------------ Name: Title: 23 23 STATE OF NEW YORK ) ) COUNTY OF NEW YORK ) BEFORE ME, the undersigned authority, on this day of , 199 , personally appeared of J.P. Morgan & Co. Incorporated, known to me (or proved to me by introduction upon the oath of a person known to me) to be the person and officer whose name is subscribed to the foregoing instrument, and acknowledged to me that he/she executed the same as the act of such trust for the purposes and consideration herein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL THIS DAY OF , 199 . {SEAL} ---------------------------------------- NOTARY PUBLIC, STATE OF NEW YORK Print Name: ----------------------------- Commission Expires: --------------------- 24 24 STATE OF NEW YORK ) ) COUNTY OF NEW YORK ) BEFORE ME, the undersigned authority, on this day of , 199 , personally appeared of First Trust of New York, National Association, known to me (or proved to me by introduction upon the oath of a person known to me) to be the person and officer whose name is subscribed to the foregoing instrument, and acknowledged to me that he/she executed the same as the act of such trust for the purposes and consideration herein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL THIS DAY OF , 199 . {SEAL} ---------------------------------------- NOTARY PUBLIC, STATE OF NEW YORK Print Name: ----------------------------- Commission Expires: --------------------- EX-4.L4 16 FORM OF GUARANTEE - JPM CAPTIAL TRUST IV 1 EXHIBIT 4(l)(4) ================================================================================ FORM OF GUARANTEE AGREEMENT OF JPM CAPITAL TRUST IV ________________ DATED AS OF , 199 ================================================================================ 2 2 This GUARANTEE AGREEMENT, dated as of , 199 , is executed and delivered by J.P. Morgan & Co. Incorporated, a Delaware corporation (the "Guarantor"), and First Trust of New York, National Association, as the initial GUARANTEE Trustee (as defined herein) for the benefit of the Holders (as defined herein) from time to time of the Preferred Securities (as defined herein) of JPM Capital Trust IV, a Delaware statutory business trust (the "Issuer"). WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the "Declaration"), dated as of , 199 among the trustees of the Issuer named therein, J.P. Morgan & Co. Incorporated, as Sponsor, and the Holders from time to time of undivided beneficial interests in the assets of the Issuer, the Issuer may issue up to aggregate liquidation amount of its % Preferred Trust Securities (the "Preferred Securities") representing undivided beneficial interests in the assets of the Issuer and having the terms set forth in Exhibit B to the Declaration, of which $ liquidation amount of the Preferred Securities are being issued as of the date hereof. Up to the remaining $ liquidation amount of Preferred Securities may be issued by the Issuer if and to the extent that the over-allotment option granted by the Guarantor and the Issuer pursuant to the Underwriting Agreement (as defined in the Declaration) is exercised by the Underwriters named in the Underwriting Agreement. WHEREAS, as incentive for the Holders to purchase Preferred Securities, the Guarantor desires to irrevocably and unconditionally agree, to the extent set forth herein, to pay to the Holders of the Preferred Securities the GUARANTEE Payments (as defined herein) and to make certain other payments on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the purchase by the initial purchasers thereof of Preferred Securities, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this GUARANTEE Agreement for the benefit of the Holders from time to time of the Preferred Securities. 3 3 ARTICLE I Definitions (a) Capitalized terms used in this GUARANTEE Agreement but not defined in the preamble above have the respective meanings assigned to them in this Section 1.01. (b) A term defined anywhere in this GUARANTEE Agreement has the same meaning throughout. (c) All references to "the GUARANTEE Agreement" or "this GUARANTEE Agreement" are to this GUARANTEE Agreement as modified, supplemented or amended from time to time. (d) All references in this GUARANTEE Agreement to Articles and Sections are to Articles and Sections of this GUARANTEE Agreement unless otherwise specified. (e) A term defined in the Trust Indenture Act as the same meaning when used in this GUARANTEE Agreement unless otherwise defined in this GUARANTEE Agreement or unless the context otherwise requires. (f) A reference to the singular includes the plural and vice versa. "Affiliate" has the same meaning as given to that term in Rule 405 of the Securities Act of 1933, as amended, or any successor rule thereunder. "Commission" means the Securities and Exchange Commission. "Common Securities" means the securities representing undivided beneficial interests in the assets of the Issuer, having the terms set forth in Exhibit C to the Declaration. "Covered Person" means any Holder of Preferred Securities. "Debentures" means the series of Junior Subordinated Debentures issued by the Guarantor under the Indenture to the Property Trustee and entitled the " % Junior Subordinated Debentures due ". 4 4 "Distributions" means the periodic distributions and other payments payable to Holders of Preferred Securities in accordance with the terms of the Preferred Securities set forth in Exhibit B to the Declaration. "Event of Default" means a default by the Guarantor on any of its payment or other obligations under this GUARANTEE Agreement. "Guarantee Payments" shall mean 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 accrued and unpaid Distributions and the redemption price, including all accrued and unpaid Distributions to the date of redemption (the "Redemption Price"), with respect to the Preferred Securities called for redemption by the Issuer but only if and to the extent that in each case the Guarantor has made a payment to the Property Trustee of interest or principal on the Debentures and (ii) upon a voluntary or involuntary dissolution, winding-up or termination of the Issuer (other than in connection with the distribution of Debentures to Holders or the redemption of all the Preferred Securities upon the maturity or redemption of the Debentures as provided in the Declaration), the lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid Distributions on the Preferred Securities to the date of payment, to the extent the Issuer has funds available therefor, or (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"). "Guarantee Trustee" means First Trust of New York, National Association until a Successor GUARANTEE Trustee has been appointed and accepted such appointment pursuant to the terms of this GUARANTEE Agreement 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 entity directly or indirectly controlling or controlled by or under direct or indirect common control with the Guarantor. 5 5 "Indemnified Person" means the GUARANTEE Trustee, any Affiliate of the GUARANTEE Trustee, and any officers, directors, shareholders, members, partners, employees, representatives or agents of the GUARANTEE Trustee. "Indenture" means the Junior Subordinated Indenture dated as of November , 1996 between the Guarantor and First Trust of New York, National Association, as trustee, as supplemented by the [ ] Supplemental Indenture thereto dated as of 199 , pursuant to which the Debentures are to be issued. "Majority in liquidation amount of the Preferred Securities" means, except as otherwise required by the Trust Indenture Act, Holder(s) of outstanding Preferred Securities voting together as a single class, who are the record owners of Preferred Securities whose liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) represents more than 50% of the liquidation amount of all outstanding Preferred Securities. "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. "Preferred Securities" has the meaning set forth in the first WHEREAS clause above. "Property Trustee" means the Person acting as Property Trustee under the Declaration. "Redemption Price" means the amount payable on redemption of the Preferred Securities in accordance with the terms of the Preferred Securities. "Responsible Officer" means, with respect to the GUARANTEE Trustee, the chairman of the board of directors, the president, any vice-president, any assistant vice-president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, any trust officer or assistant trust officer or any other officer of the GUARANTEE Trustee customarily performing functions similar to those performed by any of the above designated officers 6 6 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. "66- 2/3% in liquidation amount of the Preferred Securities" means, except as otherwise required by the Trust Indenture Act, Holder(s) of outstanding Preferred Securities voting together as a single class who are the record owners of Preferred Securities whose liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) represents 66- 2/3% or more of the liquidation amount of all Preferred Securities. "Successor GUARANTEE Trustee" means a successor GUARANTEE Trustee possessing the qualifications to act as a GUARANTEE Trustee under Section 4.01. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended. ARTICLE II Trust Indenture Act SECTION 2.01. Trust Indenture Act; Application. (a) This GUARANTEE Agreement is subject to the provisions of the Trust Indenture Act that are required to be part of this GUARANTEE Agreement and shall, to the extent applicable, be governed by such provisions. (b) If and to the extent that any provision of this 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. (c) The application of the Trust Indenture Act to this GUARANTEE Agreement shall not affect the nature of the Preferred Securities as equity securities representing undivided beneficial interests in the assets of the Issuer. 7 7 SECTION 2.02. Lists of Holders of Preferred Securities. (a) The Guarantor shall provide the GUARANTEE Trustee with such information as is required under Section 312(a) of the Trust Indenture Act at the times and in the manner provided in Section 312(a). (b) The GUARANTEE Trustee shall comply with its obligations under Sections 310(b), 311 and 312(b) of the Trust Indenture Act. SECTION 2.03. Reports by the GUARANTEE Trustee. Within 60 days after May 15 of each year, the GUARANTEE Trustee shall provide to the Holders of the Preferred Securities such reports as are required by Section 313 of the Trust Indenture Act, if any, in the form, in the manner and at the times 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. SECTION 2.04. Periodic Reports to the GUARANTEE Trustee. The Guarantor shall provide to the GUARANTEE Trustee, the Commission and the Holders of the Preferred Securities, as applicable, such documents, reports and information as required by Section 314(a)(1)-(3) (if any) of the Trust Indenture Act and the compliance certificates required by Section 314(a)(4) and (c) of the Trust Indenture Act, any such certificates to be provided in the form, in the manner and at the times required by Section 314(a)(4) and (c) of the Trust Indenture Act (provided that any certificate to be provided pursuant to Section 314(a)(4) of the Trust Indenture Act shall be provided within 120 days of the end of each fiscal year of the Issuer). SECTION 2.05. Evidence of Compliance with Conditions Precedent. The Guarantor shall provide the GUARANTEE Trustee such evidence of compliance with any conditions precedent, if any, provided for in this GUARANTEE Agreement which 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 pursuant to Section 314(c) shall comply with Section 314(e) of the Trust Indenture Act. SECTION 2.06. Events of Default; Waiver. (a) Subject to Section 2.06(b), Holders of Preferred Securities may by vote of at least a Majority in liquidation amount of the Preferred Securities, (A) direct the time, method and place of conducting any proceeding for any remedy 8 8 available to the GUARANTEE Trustee, or exercising any trust or power conferred upon by the GUARANTEE Trustee or (B) on behalf of the Holders of all Preferred Securities waive any past Event of Default and its consequences. Upon such waiver, any such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this GUARANTEE Agreement, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. (b) The right of any Holder of Preferred Securities to receive payment of the GUARANTEE Payments in accordance with this GUARANTEE Agreement, or to institute suit for the enforcement of any such payment, shall not be impaired without the consent of each such Holder. SECTION 2.07. Disclosure of Information. The disclosure of information as to the names and addresses of the Holders of the Preferred Securities in accordance with Sections 312 of the Trust Indenture Act, regardless of the source from which such information was derived, shall not be deemed to be a violation of any existing law, or any law hereafter enacted which does not specifically refer to Section 312 of the Trust Indenture Act, nor shall the GUARANTEE Trustee be held accountable by reason of mailing any material pursuant to a request made under Section 312(b) of the Trust Indenture Act. SECTION 2.08. Conflicting Interest. The Declaration shall be deemed to be specifically described in this GUARANTEE Agreement for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. ARTICLE III Powers, Duties and Rights of Guarantee Trustee SECTION 3.01. Powers and Duties of the GUARANTEE Trustee. (a) This GUARANTEE Agreement shall be held by the GUARANTEE Trustee in trust for the benefit of the Holders of the Preferred Securities. The GUARANTEE Trustee shall not transfer its right, title and interest in the GUARANTEE Agreement to any Person except a Successor GUARANTEE Trustee on acceptance by such Successor GUARANTEE Trustee of its appointment to act as GUARANTEE Trustee or to a Holder of Preferred Securities exercising his or her rights pursuant 9 9 to Section 5.04. The right, title and interest of the GUARANTEE Trustee to the GUARANTEE Agreement shall vest automatically in each Person who may hereafter be appointed as GUARANTEE Trustee in accordance with Article IV. Such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered. (b) If an Event of Default occurs and is continuing, the GUARANTEE Trustee shall enforce this GUARANTEE Agreement for the benefit of the Holders of the Preferred Securities. (c) This GUARANTEE Agreement and all moneys received by the Property Trustee hereunder in respect of the GUARANTEE Payments will not be subject to any right, charge, security interest, lien or claim of any kind in favor of, or for the benefit of the GUARANTEE Trustee or its agents or their creditors. (d) 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, as their names and addresses appear upon the register, notice of all Events of Default known to the GUARANTEE Trustee, unless such defaults shall have been cured before the giving of such notice; provided, that, 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 determine that the withholding of such notice is in the interests of the Holders of the Preferred Securities. The GUARANTEE Trustee shall not be deemed to have knowledge of any default except any default as to which the GUARANTEE Trustee shall have received written notice or a Responsible Officer charged with the administration of the GUARANTEE Agreement shall have obtained written notice. (e) The GUARANTEE Trustee shall not resign as a Trustee unless a Successor GUARANTEE Trustee has been appointed and accepted that appointment in accordance with Article IV. SECTION 3.02. Certain Rights and Duties of the GUARANTEE Trustee. (a) The GUARANTEE Trustee, before the occurrence of an 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 10 10 set forth in this GUARANTEE Agreement, and no implied covenants shall be read into this GUARANTEE Agreement against the GUARANTEE Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.06(a)), the GUARANTEE Trustee shall exercise such of the rights and powers vested in it by this GUARANTEE Agreement, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in this conduct of his or her own affairs. (b) No provision of this GUARANTEE Agreement shall be construed to relieve the GUARANTEE Trustee from liability for its own negligent action, its own negligent failure to act or its own wilful misconduct, except that: (i) prior to the occurrence of an 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 GUARANTEE Agreement, and the GUARANTEE Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this GUARANTEE Agreement, and no implied covenants or obligations shall be read into this GUARANTEE Agreement 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 GUARANTEE Agreement; 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 GUARANTEE Agreement; (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 11 11 shall be proved that the GUARANTEE Trustee was negligent in ascertaining the pertinent facts; (iii) the GUARANTEE Trustee shall not be liable with respect to any action take or omitted to be taken by it in good faith in accordance with the direction of the Holders of Preferred Securities as provided herein 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 GUARANTEE Agreement; and (iv) no provision of this GUARANTEE Agreement shall require the GUARANTEE Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of its duties or in the exercise of any of its rights or powers, if it shall have reasonable ground for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this GUARANTEE Agreement or adequate indemnity against such risk or liability is not reasonably assured to it. (c) Subject to the provisions of Section 3.02(a) and (b): (i) whenever in the administration of this GUARANTEE Agreement, the GUARANTEE Trustee shall deem it desirable that a matter proved or established prior to 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 rely upon a certificate, which shall comply with the provisions of Section 314(e) of the Trust Indenture Act, signed by any authorized officer of the Guarantor; (ii) the GUARANTEE Trustee (A) may consult with counsel (which may be counsel to the Guarantor or any of its Affiliates and may include any of its employees) selected by it in good faith and with due care 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 reliance thereon and in accordance with such advice and opinion and (B) shall have the right at 12 12 any time to seek instructions concerning the administration of this GUARANTEE Agreement from any court of competent jurisdiction; (iii) the GUARANTEE Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the GUARANTEE Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed by it in good faith and with due care; (iv) the GUARANTEE Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this GUARANTEE Agreement at the request or direction of any Holders of Preferred Securities, unless such Holders shall have offered to the GUARANTEE Trustee reasonable security and indemnity against the costs, expenses (including its attorneys' fees and expenses) and liabilities that might be incurred by it in complying with such request or direction; provided that nothing contained in this clause (iv) shall relieve the GUARANTEE Trustee of the obligation, upon the occurrence of an Event of Default (which has not been cured or waived) to exercise such of the rights and powers vested in it by this GUARANTEE Agreement, and to use the same degree of care and skill in this exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs; and (v) any action taken by the GUARANTEE Trustee or its agents hereunder shall bind the Holders of the Preferred Securities and the signature of the GUARANTEE Trustee or its agents alone shall be sufficient and effective to perform any such action; and no third party shall be required to inquire as to the authority of the GUARANTEE Trustee to so act, or as to its compliance with any of the terms and provisions of this GUARANTEE Agreement, both of which shall be conclusively evidenced by the GUARANTEE Trustee's or its agent's taking such action. SECTION 3.03. Not Responsible for Recitals or Issuance of Guarantee. The recitals contained in this 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 13 13 representations as to the validity or sufficiency of this GUARANTEE Agreement. ARTICLE IV Guarantee Trustee SECTION 4.01. Qualifications. (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 Columbia, or a corporation or Person permitted by the 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 $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 4.01(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. If at any time the GUARANTEE Trustee shall cease to satisfy the requirements of clauses (i)-(ii) above, the GUARANTEE Trustee shall immediately resign in the manner and with the effect set out in Section 4.02. 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 the Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. SECTION 4.02. Appointment, Removal and Resignation of GUARANTEE Trustee. (a) Subject to Section 4.02(b), the GUARANTEE Trustee may be appointed or removed without cause at any time by the Guarantor. 14 14 (b) The GUARANTEE Trustee shall not be removed in accordance with Section 4.02(a) until a Successor GUARANTEE Trustee possessing the qualifications to act as GUARANTEE Trustee under Section 4.01(a) has been appointed and has accepted such appointment by written instrument executed by such Successor GUARANTEE Trustee and delivered to the Guarantor and the GUARANTEE Trustee being removed. (c) The GUARANTEE Trustee appointed to office shall hold office until his successor shall have been appointed or until its removal or resignation. (d) The GUARANTEE Trustee may resign from office (without need for prior or subsequent accounting) by an instrument (a "Resignation Request") in writing signed by the Guarantee Trustee and delivered to the Guarantor, which resignation shall take effect upon such delivery or upon such later date as is specified therein; provided, however, that no such resignation of the GUARANTEE Trustee shall be effective until a Successor GUARANTEE Trustee possessing the qualifications to act as GUARANTEE Trustee under Section 4.01(a) has been appointed and has accepted such appointment by instrument executed by such Successor GUARANTEE Trustee and delivered to Guarantor and the resigning GUARANTEE Trustee. (e) If no Successor GUARANTEE Trustee shall have been appointed and accepted appointed as provided in this Section 4.02 within 60 days after delivery to the Guarantor of a Resignation Request, the resigning GUARANTEE Trustee may petition any court of competent jurisdiction for appointment of a Successor GUARANTEE Trustee. Such court may thereupon after such notice, if any, as it may deem proper and prescribe, appoint a Successor GUARANTEE Trustee. ARTICLE V Guarantee SECTION 5.01. 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) regardless of any defense, right of set-off or counterclaim which the Issuer may have or assert. The Guarantor's obligation to make a GUARANTEE Payment may be satisfied by direct payment of the 15 15 required amounts by the Guarantor to the Holders or by causing the Issuer to pay such amounts to the Holders. SECTION 5.02. Waiver of Notice. The Guarantor hereby waives notice of acceptance of this GUARANTEE Agreement and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Issuer or any other Person before proceeding against the Guarantor, protect, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. SECTION 5.03. Obligations Not Affected. The obligations, covenants, agreements and duties of the Guarantor under this GUARANTEE Agreement 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 (other than an extension of time for payment of Distributions that results from the extension of any interest payment period on the Debentures), Redemption Price, Liquidation Distribution (as defined in the Declaration) 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; (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 16 16 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 circumstances whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 5.03 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 5.04. Enforcement of Guarantee. The Guarantor and the GUARANTEE Trustee expressly acknowledge that (i) this Guarantee Agreement will be deposited with the GUARANTEE Trustee to be held for the benefit of the Holders; (ii) the GUARANTEE Trustee has the right to enforce this GUARANTEE Agreement on behalf of the Holders; (iii) Holders representing not less than a Majority in liquidation amount of the Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available in respect of this GUARANTEE Agreement including the giving of directions to the GUARANTEE Trustee, or exercising any trust or other power conferred upon the GUARANTEE Trustee under this GUARANTEE Agreement, and (iv) if the GUARANTEE Trustee fails to enforce this GUARANTEE Agreement, any Holder of Preferred Securities may institute a legal proceeding directly against the Guarantor to enforce its rights under this GUARANTEE Agreement, without first instituting a legal proceeding against the Issuer, the GUARANTEE Trustee, or any other Person. SECTION 5.05. GUARANTEE of Payment. This GUARANTEE Agreement creates a GUARANTEE of payment and not merely of collection. This GUARANTEE Agreement will not be discharged except by payment of the GUARANTEE Payments in full (without duplication of amounts theretofore paid by the Issuer). 17 17 SECTION 5.06. Subrogation. The Guarantor shall be subrogated to all (if any) rights of the Holders against the Issuer in respect of any amounts paid to the Holders by the Guarantor under this GUARANTEE Agreement; provided, however, that the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any rights which it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this GUARANTEE Agreement, if, at the time of any such payment, any amounts are due and unpaid under this GUARANTEE Agreement. 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 5.07. 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 GUARANTEE Agreement notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.03 hereof. ARTICLE VI Limitation of Transactions; Subordination SECTION 6.01. Limitation of Transactions. So long as any Preferred Securities remain outstanding, the Guarantor will not declare or pay dividends on, or redeem, purchase, acquire or make a distribution or liquidation payment with respect to, any of its common stock or preferred stock or make any GUARANTEE payment with respect thereto if at such time (i) the Guarantor shall be in default with respect to its GUARANTEE Payments or other payment obligations hereunder, (ii) there shall have occurred any event of default under the Declaration or (iii) the Guarantor shall have given notice of its selection of a Deferral Period (as defined in the Indenture) and such period, or any extension thereof, is continuing; provided, however, that the foregoing restrictions shall not apply to (i) dividends, redemptions, purchases, acquisitions, distributions or payments made by the Guarantor by way of issuance of shares of its capital stock, (ii) payments of 18 18 accrued dividends by the Guarantor upon the redemption, exchange or conversion of any preferred stock of the Guarantor as may be outstanding from time to time in accordance with the terms of such preferred stock, (iii) cash payments made by the Guarantor in lieu of delivering fractional shares upon the redemption, exchange or conversion of any preferred stock of the Guarantor as may be outstanding from time to time in accordance with the terms of such preferred stock, (iv) repurchases, redemptions or other acquisitions of shares of capital stock of the Guarantor in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors of consultants, or (v) any declaration of a dividend in connection with the implementation of a stockholders' rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of such rights pursuant thereto. In addition, so long as any Preferred Securities remain outstanding, the Guarantor (i) will remain the sole direct or indirect owner of all of the outstanding Common Securities and shall not cause or permit the Common Securities to be transferred except to the extent such transfer is permitted under Section 9.01(c) of the Declaration; provided that any permitted successor of the Guarantor under the Indenture may succeed to the Guarantor's ownership of the Common Securities and (ii) will use reasonable efforts to cause the Issuer to continue to be treated as a grantor trust for United States Federal income tax purposes except in connection with a distribution of Debentures as provided in the Declaration. SECTION 6.02. Subordination. This GUARANTEE Agreement will constitute an unsecured obligation of the Guarantor and will rank (i) subordinate and junior in right of payment to all other liabilities of the Guarantor, including the Debentures, except those made pari passu or subordinate by their terms, and (ii) senior to all capital stock now or hereafter issued by the Guarantor and to any GUARANTEE now or hereafter entered into by the Guarantor in respect of any of its capital stock. The Guarantor's obligations under this GUARANTEE Agreement will rank pari passu with respect to obligations under other GUARANTEE agreements which it may enter into from time to time to the extent that such agreements shall be entered into in substantially the form hereof and provided for comparable guarantees by the Guarantor of payment on preferred securities issued by other JPM Capital Trusts. 19 19 ARTICLE VII Termination SECTION 7.01. This GUARANTEE Agreement shall terminate and be of no further force and effect upon full payment of the Redemption Price of all Preferred Securities, or upon the distribution of Debentures to Holders of Preferred Securities and Common Securities in exchange for all of the Preferred Securities and Common Securities, or upon full payment of the amounts payable in accordance with the Declaration upon liquidation of the Issuer. Notwithstanding the foregoing, the GUARANTEE Agreement will continue to be executive or will be reinstated, as the case may be, if at any time any Holder must restore payment of any sums paid with respect to the Preferred Securities or this GUARANTEE Agreement. ARTICLE VIII Limitation of Liability; Indemnification SECTION 8.01. 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 and in a manner such Indemnified Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this GUARANTEE Agreement 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 wilful 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 Guarantor and upon such information, opinions, reports or statements presented to the Guarantor by any Person as to matters the Indemnified Person reasonably believes are within such other Person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Guarantor, 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 amounts of assets from which 20 20 Distributions to Holders of Preferred Securities might properly be paid. SECTION 8.02. Indemnification. (a) To the fullest extent permitted by applicable law, the Guarantor shall indemnify and hold harmless each Indemnified Person from and against any loss, damage or claim incurred by such Indemnified Person by reason of any act or omission performed or omitted by such Indemnified Person in good faith and in a manner such Indemnified Person reasonably believed to be within the scope of authority conferred on such Indemnified Person by this GUARANTEE Agreement, except that no Indemnified Person shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such Indemnified Person by reason of negligence or wilful misconduct with respect to such acts or omissions. (b) To the fullest extent permitted by applicable law, expenses (including legal fees) incurred by an Indemnified Person in defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the Guarantor prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Guarantor of an undertaking by or on behalf of the Indemnified Person to repay such amount if it shall be determined that the Indemnified Person is not entitled to be indemnified as authorized in Section 8.02(a). ARTICLE IX Miscellaneous SECTION 9.01. Successors and Assigns. All guarantees and agreements contained in this GUARANTEE Agreement shall bind the successors, assignees, 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 a consolidation, merger or sale involving the Guarantor that is permitted under Article Ten of the Indenture, the Guarantor shall not assign its obligations hereunder. SECTION 9.02. Amendments. Except with respect to any changes which do not adversely affect the rights of Holders (in which case no consent of Holders will be required), this GUARANTEE Agreement may only be amended with the prior approval of the Holders of not less than 66- 2/3% in 21 21 liquidation amount of the Preferred Securities. The provisions of Section 12.02 of the Declaration concerning meetings of Holders shall apply to the giving of such approval. SECTION 9.03 Notices. Any notice, request or other communication required or permitted to be given hereunder shall be in writing, duly signed by the party giving such notice, and delivered, telecopied or mailed by first class mail as follows: (a) if given to the Guarantor, to the address set forth below or such other address as the Guarantor may give notice of to the Holders: J.P. Morgan & Co. Incorporated 60 Wall Street New York, New York 10260-0060 Facsimile No.: (212) [ ] Attention: [ ] (b) if given to the GUARANTEE Trustee, to the address set forth below or such other address as the GUARANTEE Trustee may give notice to the Holders: First Trust of New York, National Association 100 Wall Street Suite 2000 New York, New York 10005 Facsimile No.: (212) [ ] Attention: [ ] (c) if given to any Holder of Preferred Securities, at the address set forth on the books and records of the Issuer. All notices hereunder 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 9.04. Genders. The masculine, feminine and neuter genders used herein shall include the masculine, feminine and neuter genders. 22 22 SECTION 9.05. Benefit. This GUARANTEE Agreement is solely for the benefit of the Holders and subject to Section 3.01(a) is not separately transferable from the Preferred Securities. SECTION 9.06. Governing Law. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS). SECTION 9.07. Counterparts. This GUARANTEE Agreement may be executed in counterparts, each of which shall be an original; but such counterparts shall together constitute one and the same instrument. SECTION 9.08. Exercise of Overallotment Option. If and to the extent that Preferred Securities are issued by the Issuer upon exercise of the overallotment option referred to the second WHEREAS clause, the Guarantor agrees to give prompt notice thereof to the GUARANTEE Trustee but the failure to give such notice shall not relieve the Guarantor of any of its obligations hereunder. THIS GUARANTEE AGREEMENT is executed as of the day and year first above written. J.P. MORGAN & CO. INCORPORATED, by ------------------------------------------ Name: Title: FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, as GUARANTEE Trustee, by ------------------------------------------ Name: Title: 23 23 STATE OF NEW YORK ) ) COUNTY OF NEW YORK ) BEFORE ME, the undersigned authority, on this day of , 199 , personally appeared of J.P. Morgan & Co. Incorporated, known to me (or proved to me by introduction upon the oath of a person known to me) to be the person and officer whose name is subscribed to the foregoing instrument, and acknowledged to me that he/she executed the same as the act of such trust for the purposes and consideration herein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL THIS DAY OF , 199 . {SEAL} ---------------------------------------- NOTARY PUBLIC, STATE OF NEW YORK Print Name: ----------------------------- Commission Expires: --------------------- 24 24 STATE OF NEW YORK ) ) COUNTY OF NEW YORK ) BEFORE ME, the undersigned authority, on this day of , 199 , personally appeared of First Trust of New York, National Association, known to me (or proved to me by introduction upon the oath of a person known to me) to be the person and officer whose name is subscribed to the foregoing instrument, and acknowledged to me that he/she executed the same as the act of such trust for the purposes and consideration herein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL THIS DAY OF , 199 . {SEAL} ---------------------------------------- NOTARY PUBLIC, STATE OF NEW YORK Print Name: ----------------------------- Commission Expires: --------------------- EX-5.1 17 OPINION OF GENE A. CAPELLO 1 Exhibit 5.1 [Letterhead of J.P. Morgan & Co. Incorporated] November 25, 1996 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 RE: J. P. Morgan & Co. Incorporated Amendment No. 2 to the JPM Capital Trust I-IV Registration Statement on Form S-3 File Nos. 333-15079-0--333-15079-4 Dear Sir or Madame: I am a Vice President and Assistant General Counsel of J. P. Morgan & Co. Incorporated, a Delaware corporation ("J. P. Morgan") and in such capacity am acting as counsel in connection with J. P. Morgan's Amendment No. 1 to the Registration Statement on Form S-3 (the "Registration Statement") being filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "act") with respect to $1,000,000,000 aggregate amount of Senior Debt Securities, Subordinated Debt Securities and Junior Subordinated Debt Securities along with Guarantees to be issued in connection with Preferred Securities to be issued by JPM Capital Trusts I-IV (the "Registration Statement"). Capitalized terms not defined herein have the meaning given to them in the Registration Statement. I have examined such documents and made such other investigations as I have deemed necessary or advisable for purposes of this opinion. Based thereon, I am of the opinion that: 1. J. P. Morgan is a corporation duly organized and validity existing under the laws of the State of Delaware. 2 2. The Senior Debt Securities, Subordinated Debt Securities and Junior Subordinated Securities, when duly authorized, executed, authenticated and delivered against payment therefor, and the Guarantees of the Preferred Securities to be issued by JPM Capital Trusts I-IV, when such Preferred Securities have been duly authorized, executed, authenticated and delivered against payment therefor, will be legally issued and will constitute binding obligations of J. P. Morgan in accordance with their terms. I hereby consent to the filing of their opinion as an exhibit to the Registration Statement. I also consent to the use of my name under the caption "Legal Opinion's" in the Prospectus contained in the Registration Statement Very truly yours, /s/ Gene A. Capello Gene A. Capello Vice President and Assistant General Counsel EX-5.2 18 OPINION OF MORRIS, NICHOLS, ARSHT & TUNNELL 1 EXHIBIT 5.2 [Letterhead of Morris, Nichols, Arsht & Tunnell] November 25, 1996 JPM Capital Trust I JPM Capital Trust II JPM Capital Trust III JPM Capital Trust IV c/o J.P. Morgan & Co. Incorporated 60 Wall Street New York, New York 10260 Re: The JPM Capital Trusts (as defined below) Ladies and Gentlemen: We have acted as special Delaware counsel to JPM Capital Trust I, JPM Capital Trust II, JPM Capital Trust III and JPM Capital Trust IV, each a Delaware statutory business trust (collectively referred to herein as the "JPM Capital Trusts" and each individually as a "JPM Capital Trust"), in connection with certain matters relating to the creation of the JPM Capital Trusts and the proposed issuance of Preferred Securities therein to beneficial owners pursuant to Registration Statement No. 333-15079 (and the Prospectus forming a part thereof) on Form S-3 filed with the Securities and Exchange Commission on October 30, 1996, as amended by Pre-effective Amendments No. 1 and No. 2 thereto (as so amended. the "Registration Statement"). Capitalized terms used herein and not otherwise herein defined are used as defined in the form of Amended and Restated Declaration of Trust attached as an exhibit to the Registration Statement. In rendering this opinion, we have examined copies of the following documents in the forms provided to us; the Certificate of Trust of each JPM Capital Trust, each as filed in the Office of the Secretary of State of the State of Delaware (the "State Office") on October 29, 1996 (each a "Certificate"); the Declaration of Trust of each JPM Capital Trust, each dated as of October 29, 1996 (each an "Original Governing Instrument"); the form of Indenture to be entered into between J.P. Morgan & Co. Incorporated and First Trust of New York, National Association, as Trustee, and the form of Supplemental Indenture to be entered into in connection therewith; the form of Preferred Guarantee to be made 2 JPM Capital Trust I JPM Capital Trust II JPM Capital Trust III JPM Capital Trust IV November 25, 1996 Page 2 by J.P. Morgan & Co. Incorporated with respect to each JPM Capital Trust; and the Registration Statement; and a certification of good standing of each of the JPM Capital Trusts obtained as of a recent date from the State Office. In such examinations, we have assumed the genuineness of all signatures, the conformity to original documents of all documents submitted to us as drafts or copies or forms of documents to be executed and the legal capacity of natural persons to complete the execution of documents. We have further assumed for purposes of this opinion: (i) the due formation or organization, valid existence and good standing of each entity (other than the JPM Capital Trusts) that is a party to any of the documents reviewed by us under the laws of the jurisdiction of its respective formation or organization; (ii) the due authorization, execution and delivery by, or on behalf of, each of the parties thereto of the above-referenced documents with respect to each JPM Capital Trust; (iii) that J.P. Morgan & Co. Incorporated, First Trust of New York, National Association, and the appropriate Regular Trustees will duly authorize, execute and deliver an amended and restated declaration of trust for each JPM Capital Trust in the form of the Amended and Restated Declaration of Trust attached as an exhibit to the Registration Statement (each a "Governing Instrument") and all other documents contemplated thereby or by the Registration Statement to be executed in connection with the creation or each JPM Capital Trust and the issuance by each such JPM Capital Trust of Preferred Securities, in each case prior to the first issuance of Preferred Securities; (iv) that the Preferred Securities of each JPM Capital Trust will be offered and sold pursuant to the Registration Statement and a prospectus supplement that will be consistent with, and accurately describe, the terms of the applicable Governing Instrument and the Preferred Guarantee relating to each such JPM Capital Trust and all other relevant documents; (v) that no event has or will occur subsequent to the filing of any Certificate that would cause a dissolution or liquidation of any JPM Capital Trust under the applicable Original Governing Instrument or the applicable Governing Instrument; (vi) that the activities of each JPM Capital Trust have been and will be conducted in accordance with its Original Governing Instrument or Governing Instrument, as applicable, and the Delaware Business Trust Act, 12 Del. C. Sections 3801 et seq. (the "Delaware Act"); (vii) that each Holder of Preferred Securities of each JPM Capital Trust will make payment of the required consideration therefor and receive a Preferred Securities Certificate in consideration thereof in accordance with the terms and conditions of the Registration Statement and the Prospectus forming a part thereof, the applicable Governing Instrument and the applicable prospectus supplement, and that the Preferred Securities of each JPM Capital Trust are otherwise issued and sold to the 3 JPM Capital Trust I JPM Capital Trust II JPM Capital Trust III JPM Capital Trust IV November 25, 1996 Page 3 Preferred Securities Holders of such JPM Capital Trust in accordance with the terms, conditions, requirements and procedures set forth in the Registration Statement and the Prospectus forming a part thereof, the applicable Governing Instrument and the applicable prospectus supplement; and (viii) that the documents examined by us, or contemplated hereby, express the entire understanding of the parties thereto with respect to the subject matter thereof and have not been, and, prior to the issuance of Preferred Securities by each JPM Capital Trust, will not be, modified, supplemented or otherwise amended, except as herein referenced. No opinion is expressed with respect to the requirements or, or compliance with, federal or state securities or blue sky laws. Further, we express no opinion with respect to the Registration Statement or any other offering materials relating to the Preferred Securities offered by any JPM Capital Trust and we assume no responsibility for their contents. As to any fact material to our opinion, other than those assumed, we have relied without independent investigation on the above-referenced documents and on the accuracy, as of the date hereof, of the matters therein contained. Based on and subject to the foregoing, and limited in all respects to matters of Delaware law, it is our opinion that: 1. Each JPM Capital Trust is a duly created and validly existing business trust in good standing under the laws of the State of Delaware. 2. Upon issuance, the Preferred Securities of each JPM Capital Trust will constitute validly issued and, subject to the terms of the applicable Governing Instrument, fully paid and non-assessable beneficial interest in the assets of such JPM Capital Trust. We note that pursuant to Section 11.04 of the Governing Instrument, each JPM Capital Trust may withhold amounts otherwise distributable to a Holder of Securities in such JPM Capital Trust and pay over such amounts to the applicable jurisdictions in accordance with federal, state and local law and any amounts withheld will be deemed to have been distributed to such Holder and that, pursuant to the Governing Instrument, the Preferred Security Holders of each JPM Capital Trust may be obligated to make payments or provide indemnity or security under the circumstances set forth therein. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our name under the heading "Legal Opinions" in the Prospectus forming a part thereof. In giving this consent, we do not thereby admit that we 4 JPM Capital Trust I JPM Capital Trust II JPM Capital Trust III JPM Capital Trust IV November 25, 1996 Page 4 come within the category of persons whose consent is required under Section 7 of the Securities Act or 1993, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder. This opinion speaks only as of the date hereof and is based on our understandings and assumptions as to present facts, and our review of the above-referenced documents and the application of Delaware law as the same exist on the date hereof, and we undertake no obligation to update or supplement this opinion after the date hereof for the benefit of any person or entity with respect to any facts or circumstances that may hereafter come to our attention or any changes in facts or law that may hereafter occur or take effect. This opinion is intended solely for the benefit of the addressees hereof in connection with the matters contemplated hereby and may not be relied upon by any other person or entity or for any other purpose without our prior written consent. Very truly yours, MORRIS, NICHOLS, ARSHT & TUNNELL /s/ MORRIS, NICHOLS, ARSHT & TUNNELL ------------------------------------ EX-5.3 19 OPINION OF CRAVATH, SWAINE & MOORE 1 EXHIBIT 5.3 [LETTERHEAD OF CRAVATH, SWAINE & MOORE] November 25, 1996 J.P. Morgan & Co. Incorporated JPM Capital Trusts I-IV Preferred Securities Dear Sirs: We have acted as special Federal tax counsel to J.P. Morgan & Co. Incorporated, a Delaware corporation and JPM Capital Trusts I-IV, each a Delaware trust (collectively, the "Registrants"), in connection with the filing by the Registrants with the Securities and Exchange Commission of a Registration Statement on Form S-3 (the "Registration Statement") registering Debt Securities and Guarantees of J.P. Morgan & Co. Incorporated and Preferred Securities of JPM Capital Trusts I-IV (the "Securities"). We hereby confirm that the statements set forth in the form of prospectus supplement (the "Prospectus Supplement") forming a part of the Registration Statement under the heading "Taxation", accurately describe the material Federal income tax consequences to holders of the Preferred Securities issued pursuant to the Prospectus Supplement. 2 2 We know that we are referred to under the headings "Taxation" in the Prospectus Supplement forming a part of the Registration Statement, and we hereby consent to such use of our name therein and to the use of this opinion for filing with the Registration Statement as Exhibits 5.3 and 23(d) thereto. Very truly yours, /s/ Cravath, Swaine & Moore J.P. Morgan & Co. Incorporated 60 Wall Street New York, NY 10260-0260 JPM Capital Trusts I-IV c/o J.P. Morgan & Co. Incorporated 60 Wall Street New York, NY 10260-0260 120A O EX-23.A 20 CONSENT OF PRICE WATERHOUSE LLP 1 Exhibit 23(a) CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectus constituting part of this Registration Statement on Form S-3 of our report dated January 10, 1996, which appears on page 40 of J.P. Morgan & Co. Incorporated's 1995 Annual Report on Form 10-K for the year ended December 31, 1995 (included in J.P. Morgan & Co. Incorporated's Annual Report to Stockholders). We also consent to the reference to us under the heading "Experts" in such Prospectus. /s/ Price Waterhouse LLP - ----------------------------- Price Waterhouse LLP New York, New York November 25, 1996 EX-25.1 21 FORM T-1 1 EXHIBIT 25.1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 -------------------- FORM T - 1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE -------------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305 (b) (2) _________ FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION (Exact name of trustee as specified in its charter) 13-3781471 (I. R. S. Employer Identification No.) 100 Wall Street, New York, New York 10005 (Address of principal executive offices) (Zip Code) -------------------- FOR INFORMATION, CONTACT: Dennis J. Calabrese, President First Trust of New York, National Association 100 Wall Street, 16th Floor New York, NY 10005 Telephone: (212) 361-2506 -------------------- J.P. MORGAN & CO. INCORPORATED (Exact name of obligor as specified in its charter) Delaware 13-2625764 (State or other jurisdiction of (I. R. S. Employer incorporation or organization) Identification No.) J.P. Morgan & Co. Incorporated 60 Wall Street New York, New York 10260 (Address of principal executive offices) (Zip Code) -------------------- DEBT SECURITIES, PREFERRED SECURITIES, GUARANTEES 2 Item 1. GENERAL INFORMATION. Furnish the following information as to the trustee - - (a) Name and address of each examining or supervising authority to which it is subject. Name Address ---- ------- Comptroller of the Currency Washington, D. C. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. AFFILIATIONS WITH THE OBLIGOR. If the obligor is an affiliate of the trustee, describe each such affiliation. None. Item 16. LIST OF EXHIBITS. Exhibit 1. Articles of Association of First Trust of New York, National Association, incorporated herein by reference to Exhibit 1 of Form T-1, Registration No. 33-83774. Exhibit 2. Certificate of Authority to Commence Business for First Trust of New York, National Association, incorporated herein by reference to Exhibit 2 of Form T-1, Registration No. 33-83774. Exhibit 3. Authorization of the Trustee to exercise corporate trust powers for First Trust of New York, National Association, incorporated herein by reference to Exhibit 3 of Form T-1, Registration No. 33-83774. Exhibit 4. By-Laws of First Trust of New York, National Association, Incorporated herein by reference to Exhibit 4 of Form T-1, Registration No. 33-55851. Exhibit 5. Not applicable. Exhibit 6. Consent of First Trust of New York, National Association, required by Section 321(b) of the Act, incorporated herein by reference to Exhibit 6 of Form T-1, Registration No. 33-83774. 3 Exhibit 7. Report of Condition of First Trust of New York, National Association, as of the close of business on September 30, 1996, published pursuant to law or the requirements of its supervising or examining authority. Exhibit 8. Not applicable. Exhibit 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, First Trust of New York, National Association, a national banking association organized and existing under the laws of the United States, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York, and State of New York, on the 22nd day of November, 1996. FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION By: /S/David K. Leverich ------------------------------ David K. Leverich Vice President -----END PRIVACY-ENHANCED MESSAGE-----