Registration No. 33-55851
Post-Effective Amendment No. 5 to Post-Effective Amendment No. 4 to
Registration Statement No. 33-49775 Registration Statement No. 33-45651
Post-Effective Amendment No. 3 to Post-Effective Amendment No. 3 to
Registration Statement No. 33-15763 Registration Statement No.33-41006
Post-Effective Amendment No. 4 to Post-Effective Amendment No. 3 to
Registration Statement No. 33-10810 Registration Statement No. 33-28320
Post-Effective Amendment No. 3 to Post-Effective Amendment No. 3 to
Registration Statement No. 2-10807 Registration Statement No.2-49280
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
J.P. MORGAN & CO. INCORPORATED
(Exact name of Registrant as specified in its charter)
DELAWARE 13-2625764
(State or other jurisdiction of (I.R.S. Employer
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)
EDWARD J. KELLY III
General Counsel and Secretary
J.P. Morgan & Co. Incorporated
60 Wall Street, New York, New York 10260-0060
(212) 648-8423
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
MARGARET M. FORAN, ESQ.
Vice President and Assistant General Counsel
J.P. MORGAN & CO. INCORPORATED
60 Wall Street
New York, New York 10260-0060
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement
as determined by market conditions.
If any of the securities being registered on this Form are to be
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, please check the following
box. [X]
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
Registrant 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, as amended,
or until the Registration Statement shall become effective on such date
as the Commission, acting pursuant to said Section 8(a), may determine.
<PAGE>
EXPLANATORY NOTE
The prospectus filed with this Post-Effective Amendment contains a
form of market maker prospectus intended for use by direct or indirect
wholly-owned subsidiaries of J.P. Morgan & Co. Incorporated, including
J.P. Morgan Securities Inc., in connection with offers and sales related
to secondary market transactions in debt securities that have been
previously registered by J.P. Morgan & Co. Incorporated under the
Securities Act of 1933 pursuant to the above-referenced registration
statements on file with the Securities and Exchange Commission and in
certain debt securities that are initially offered and sold by or on
behalf of J.P. Morgan & Co. Incorporated after the effective date of this
Post-Effective Amendment. The market maker prospectus is in addition to,
and not in substitution for, the prospectuses relating to the referenced
registration statements currently on file with the Securities and
Exchange Commission.
<PAGE>
Prospectus
J.P. Morgan & Co. Incorporated
Debt Securities
J.P. Morgan & Co. Incorporated ("J.P. Morgan") has issued one
series of 1973 Debt Securities (as defined herein) pursuant
to an indenture, dated as of November 11, 1973, between J.P.
Morgan and The Bank of New York, as Trustee (the "1973
Indenture"). The following 1973 Debt Securities have been
issued pursuant to the 1973 Indenture:
$150,000,000 aggregate principal amount of 4 3/4%
Convertible Debentures due November 1, 1998.
J.P. Morgan has issued one series of 1982 Debt Securities (as
defined herein) pursuant to an indenture, dated as of August
15, 1982, between J.P. Morgan and Chemical Bank (formerly
Manufacturers Hanover Trust Company), as Trustee, as amended
by the First Supplemental Indenture dated as of May 5, 1986
(the "1982 Indenture"). The following 1982 Debt Securities
have been issued pursuant to the 1982 Indenture:
$290,000,000 aggregate principal amount of Floating Rate
Notes due March 8, 1996.
J.P. Morgan has issued from time to time one or more series
of 1986 Debt Securities (as defined herein) pursuant to an
indenture, dated as of December 1, 1986, between J.P. Morgan
and First Trust of New York, as Sucessor Trustee to Citibank,
N.A., as amended by the First Supplemental Indenture dated as
of May 12, 1992 (the "1986 Indenture"). The following 1986
Debt Securities have been issued pursuant to the 1986
Indenture:
$400,000,000 aggregate principal amount of Zero Coupon
Subordinated Notes due April 1, 1998; $250,000,000
aggregate principal amount of 7 5/8% Subordinated Notes
due November 15, 1998; $200,000,000 aggregate principal
amount of 7 1/4% Subordinated Notes due January 15,
2002; $150,000,000 aggregate principal amount of 8 1/2%
Subordinated Notes due August 15, 2003; and $300,000,000
aggregate principal amount of 9 5/8% Subordinated Notes
due December 15, 1998.
J.P. Morgan has issued from time to time one or more series
of 1993 Debt Securities (as defined herein) pursuant to an
indenture, dated as of March 1, 1993, between J.P. Morgan and
First Trust of New York, as Sucessor Trustee to Citibank,
N.A., (the "1993 Indenture"). The following 1993 Debt
Securities have been issued pursuant to the 1993 Indenture:
$200,000,000 aggregate principal amount of Subordinated
Constant Maturity Treasury Floating Rate Notes due March
13, 2000;
$150,000,000 aggregate principal amount of 5 3/4%
Subordinated Notes due October 15, 2008;
$300,000,000 aggregate principal amount of 6 1/4%
Subordinated Notes due January 15, 2009; and
$500,000,000 aggregate principal amount of 7 5/8%
Subordinated Notes due September 15, 2004.
The Debt 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 NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is March , 1995.
<PAGE>
This Prospectus has been prepared in connection with the
securities (the "Debt Securities") previously issued pursuant
to the 1973 Indenture, the 1982 Indenture, the 1986 Indenture
and the 1993 Indenture (which are collectively referred to
herein as the "Indentures"). (The trustees and sucessor
trustees under the Indentures are hereinafter referred to as
the "Trustees" and individually as a "Trustee".) This
prospectus is to be used by J.P. Morgan Securities Inc.
("JPMSI"), a broker-dealer and an indirect wholly-owned
subsidiary of J.P. Morgan, in connection with offers and
sales of the Debt Securities in the course of its business as
a broker-dealer. The participation of JPMSI in the offer and
sale of the Debt Securities complies with the requirements of
Schedule E of the By-laws of the National Association of
Securities Dealers, Inc. (the "NASD") regarding underwriting
of securities of an affiliate and complies with any
restrictions imposed on JPMSI by the Board of Governors of
the Federal Reserve System. JPMSI may act as principal or
agent in such transactions. The Debt Securities may be
offered or sold on the New York Stock Exchange in the event
the particular series of Debt Securities has been listed
thereon, or another stock exchange, or off any exchange in
negotiated transactions, or otherwise. Sales will be made at
prices related to prices prevailing at the time of sale.
AVAILABLE INFORMATION
J.P. Morgan is subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and in accordance therewith files reports
and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and
other information concerning J.P. Morgan can be inspected and
copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549;
Northwestern Atrium 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. In addition, reports, proxy statements
and other information concerning J.P. Morgan may be inspected
at the offices of the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005.
J.P. Morgan has filed with the Commission registration
statement numbers 2-49280, 33-10810, 33-28320, 33-41006, 33-
10807, 33-15763, 33-45651, 33-49775 and 33-55851 (herein,
together with all amendments and exhibits, referred to as the
"Registration Statements") under the Securities Act of 1933,
as amended (the "Securities Act"), relating to the Debt
Securities. This Prospectus does not contain all of the
information set forth in the Registration Statements, certain
parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information,
reference is hereby made to the Registration Statements.
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, 1993 (included in its Annual Report
to Stockholders), the Quarterly Reports of J.P. Morgan on
Form 10-Q for the quarters ended March 31, 1994, June 30,
1994 and September 30, 1994 and Form 10-Q/A for the quarters
ended June 30, 1994 and September 30, 1994 and J.P. Morgan's
Reports on Form 8-K dated January 4, 1994, January 13, 1994,
April 14, 1994, July 14, 1994, September 15, 1994, October
13, 1994, December 14, 1994, January 12, 1995, February 14,
1995 and February 27, 1995 heretofore filed pursuant to
Section 13 of the Exchange Act.
All documents filed by J.P. Morgan pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of this Prospectus and prior to the termination of
the offering of the Debt Securities shall be deemed to be
incorporated by reference in this Prospectus.
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 the 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 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 a copy of this
Prospectus is delivered, on the written or oral request of
any such person, a copy of any or all of the documents
incorporated herein by reference, except the exhibits to such
documents (unless such exhibits are specifically incorporated
by reference in such documents). Written requests should be
directed to the Office of the Corporate Secretary, J.P.
Morgan & Co. Incorporated, 60 Wall Street, New York, New York
10260. Telephone requests for such copies should be directed
to the Corporate Secretary at (212) 648-3406.
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 below.
Corporate Finance
J.P. Morgan provides strategic advice and capital
raising services to a broad range of clients. J.P. Morgan
advises clients on the financial and business implications of
corporate strategies, including mergers and acquisitions,
divestitures, recapitalizations, privatizations, joint
ventures, and restructurings. J.P. Morgan also provides
advice on defensive strategies and analysis and research on
capital structure. To enable clients to put their initiatives
to work, J.P. Morgan structures and executes financing
strategies in markets throughout the world. J.P. Morgan's
advisory role and ability to execute transactions extends
across the full range of its clients' capital structures,
from commercial paper to syndicated loans, private
placements, and the underwriting of both debt and equity.
J.P. Morgan also extends credit, accepts deposits, and
provides a variety of other banking and financial services.
In addition, J.P. Morgan invests in debt and equity
securities for its own account.
Global Sales and Trading and Market Risk Management
J.P. Morgan is an active participant, as a principal and
as an agent for clients, in the markets for all major
financial instruments, and it engages in hedging and managing
a wide variety of financial risks both for clients and its
own account. J.P. Morgan trades debt and equity securities in
U.S. and international markets, and it distributes these
securities to investors. J.P. Morgan structures, executes and
makes markets in swaps, options, and other derivative
instruments, and it buys and sells foreign currencies,
conducting all of these transactions with clients and
counterparties around the world. J.P. Morgan also trades
certain commodities, and it buys and sells loans of emerging
market countries and other debtors. Market activities for
clients and for its own account are supported by credit,
economic, market, and fundamental industry and company
research.
Global Asset Management
J.P. Morgan provides investment management services to
institutional investors and investment management and
fiduciary services to private clients, consisting of wealthy
individuals, families, and their businesses. J.P. Morgan
manages employee benefit plans for corporations, state and
local governments, and unions. Investment management services
are also provided to a broad spectrum of other institutional
investors, including foundations, endowments, sovereign
governments, and insurance companies. Discretionary and
nondiscretionary investment management services, credit and
deposit products, and investment banking services are
provided to private clients as well as fiduciary services,
consisting of generational planning and trust and estate
administration services.
Operational Services
J.P. Morgan serves clients with a variety of operational
capabilities, including securities custody, clearing and
settlement, and securities lending. J.P. Morgan provides
services for equity brokerage, cash management and money
transfer, and administration of American and other depositary
receipts as well as agency execution services. J.P. Morgan
also serves as a futures commission merchant in the execution
and clearance of futures contracts on major futures exchanges
worldwide.
J.P. Morgan operates the Euroclear System under contract
to the Euroclear System Societe Cooperative in Brussels. The
Euroclear System is the world's largest clearance and
settlement system for internationally traded securities. It
links approximately 2,700 participants from more than 60
countries to over 20 securities markets around the world.
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 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
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. 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. It and J.P. Morgan Delaware,
another wholly owned subsidiary of J.P. Morgan, are members
of the Federal Deposit Insurance Corporation ("FDIC"). Their
businesses are 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 and J.P. Morgan Delaware
within the meaning of the applicable federal statutes. Such
banks are 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 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 is (212) 483-2323.
Consolidated Ratios
Consolidated Ratio of Earnings to Fixed Charges
Year Ended December 31,
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
Excluding Interest on Deposits. . . 1.40 1.70(a) 1.53(b) 1.42(c) 1.25(d)
Including Interest on Deposits. . . 1.28 1.46(a) 1.31(b) 1.23(c) 1.14(d)
- ------------------
(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.
(d) For the year ended December 31, 1990, the ratio of
earnings to fixed charges, including the cumulative effect of
a change in the method of accounting for trading swaps, was
1.32 excluding interest on deposits and 1.17 including
interest on deposits.
Consolidated Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends
Year Ended December31,
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
Excluding Interest on Deposits. . . 1.39 1.69(a) 1.52(b) 1.40(c) 1.24(d)
Including Interest on Deposits. . . 1.27 1.46(a) 1.31(b) 1.22(c) 1.13(d)
- ------------------------
(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.
(d) For the year ended December 31, 1990, 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 trading swaps, was 1.31 excluding
interest on deposits and 1.17 including interest on deposits.
DESCRIPTION OF DEBT SECURITIES
UNDER THE 1973 INDENTURE
The brief summary of the principal provisions of the
1973 Indenture and the Debt Securities issued thereunder (the
"1973 Debt Securities") does not purport to be complete.
Certain capitalized terms used herein are defined in the 1973
Indenture. References in italics are to sections or articles
of the 1973 Indenture. Where any particular sections or
defined terms of the 1973 Indenture are referred to, such
sections or defined terms are incorporated herein by
reference as a part of the statement made, and the statement
is qualified in its entirety by such reference.
Terms and Provisions of the 4 3/4% Convertible Debentures due
November 1, 1998
The 4 3/4% Convertible Debentures due November 1, 1998
(the "Convertible Debentures") were issued under the 1973
Indenture and interest is payable semi-annually on May 1 and
November 1 of each year to registered holders of record at
the close of business on the April 15 or October 15 next
preceding such May 1 or November 1. Interest is paid by
checks mailed to such registered holders.
Since J.P. Morgan is a holding company, the rights of
creditors of J.P. Morgan, including the holders of the
Convertible Debentures, to participate in any distribution of
assets of any subsidiary upon the liquidation or
reorganization of such subsidiary are subject to the prior
claims of creditors of the subsidiary.
Terms of the 1973 Indenture
Conversion Rights. The 1973 Debt Securities are convertible
at their principal amount into shares of J.P. Morgan common
stock at any time prior to November 1, 1998 (unless the 1973
Debt Securities or a portion thereof is called for
redemption, in which case to and including but not after the
date fixed for redemption in respect of such 1973 Debt
Securities or portion thereof called for redemption) at $80 a
share (the "Conversion Price"), subject to adjustment in
certain events. (Section 4.01.) Notice of redemption will be
given to holders of the 1973 Debt Securities to be redeemed
by first class mail at their last addresses on the registry
books of J.P. Morgan. (Section 3.02.)
The Conversion Price is subject to adjustment upon
certain events, including the issuance of common stock of
J.P. Morgan as a dividend or distribution; subdivisions,
combinations or reclassifications of common stock of J.P.
Morgan; the issuance to holders of J.P. Morgan common stock
of rights or warrants (expiring 45 days after the record date
for determining stockholders entitled to receive them) to
subscribe for J.P. Morgan common stock at less than the then
current market price (as defined); or the distribution to the
holders of J.P. Morgan common stock of evidences of
indebtedness, assets (excluding dividends in cash out of
retained earnings) or rights or warrants to subscribe other
than those mentioned above. Upon conversion no adjustments
will be made for accrued interest or dividends and,
therefore, 1973 Debt Securities surrendered for conversion
after April 15 or October 15 next preceding an interest
payment date and prior to such interest payment date must be
accompanied by payment of an amount equal to the interest
thereon which is to be paid on such interest payment date. No
adjustment of the Conversion Price will be required to be
made in any case until cumulative adjustments amount to $0.50
per share or more. J.P. Morgan reserves the right to make
such reductions in the Conversion Price in addition to those
required in the foregoing provisions as J.P. Morgan in its
discretion shall determine to be advisable in order that
certain stock-related distributions hereafter made by J.P.
Morgan to its stockholders shall not be taxable. (Sections
4.02 and 4.04.)
Conversion of the 1973 Debt Securities may be effected
by delivering them at the office or agency to be maintained
by J.P. Morgan for that purpose in New York City. (Section
4.02.)
Fractional shares of common stock will not be delivered
upon conversion, but a cash adjustment will be paid in
respect of such fractional interests, based on the then
current market price of J.P. Morgan common stock. (Section
4.03.)
Redemption. The 1973 Debt Securities may be redeemed on at
least 30 and not more than 60 days' notice at the option of
J.P. Morgan, as a whole or in part, at any time, at 100% of
the principal amount thereof, in each case with accrued
interest to the date fixed for redemption. (Sections 3.01 and
3.02.)
Events of Default. Events of default are defined in the 1973
Indenture as being: default for 30 days in payment of any
interest installment when due; default in payment of
principal or premium, if any, when due; default for 90 days
after notice to J.P. Morgan by the Trustee or to J.P. Morgan
and the Trustee by the holders of 25% in principal amount of
the outstanding 1973 Debt Securities in performance of any
other covenant in the 1973 Indenture; and certain events of
bankruptcy, insolvency and reorganization of J.P. Morgan.
(Section 7.01.)
The Trustee shall be entitled, subject to the duty of
the Trustee during default to act within the required
standard of care, to be indemnified by the holders of the
1973 Debt Securities before proceeding to exercise any right
or power under the 1973 Indenture at the request of holders
of the 1973 Debt Securities. (Section 8.02.) The holders of a
majority in principal amount of the outstanding 1973 Debt
Securities may 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. (Section 7.07.)
J.P. Morgan will file annually with the Trustee a
certificate of no default or a certificate specifying any
default that exists. (Section 11.02.)
Modification of the 1973 Indenture. The 1973 Indenture
contains provisions permitting J.P. Morgan and the Trustee,
with the consent of the holders of 66 2/3% in principal
amount of the outstanding 1973 Debt Securities, to execute
supplemental indentures adding any provisions to or changing
or eliminating any of the provisions of the 1973 Indenture or
modifying the rights of the holders of 1973 Debt Securities,
except that no such supplemental indenture may (i) extend the
fixed maturity of any 1973 Debt Security, or reduce the rate
or extend the time of payment of interest thereon, or reduce
the principal amount thereof or premium thereon, or change
the currency of payment, or impair the right to convert the
1973 Debt Securities, without the consent of the holder of
each 1973 Debt Security so affected, or (ii) reduce the
aforesaid percentage of 1973 Debt Securities, the holders of
which are required to consent to any such supplemental
indenture, without the consent of the holders of all
outstanding 1973 Debt Securities. (Section 11.02.)
See "Description of Capital Securities" below.
DESCRIPTION OF DEBT SECURITIES
UNDER THE 1982 INDENTURE
The brief summary of the principal provisions of the
1982 Indenture and the Debt Securities issued thereunder (the
"1982 Debt Securities") does not purport to be complete.
Certain capitalized terms used herein are defined in the 1982
Indenture. References in italics are to sections or articles
of the 1982 Indenture. Where any particular sections or
defined terms of the 1982 Indenture are referred to, such
sections or defined terms are incorporated herein by
reference as a part of the statement made, and the statement
is qualified in its entirety by such reference.
Terms and Provisions of the Floating Rate Notes due March 8,
1996
General. The Floating Rate Notes due March 8, 1996 (the
"Floating Rate Notes") were issued under the 1982 Indenture
and interest is payable quarterly on June 8, 1995, September
8, 1995, December 8, 1995 and March 8, 1996 (each an
"Interest Payment Date") to the persons whose names the
Floating Rate Notes are registered at the close of business
on the fifteenth calendar day prior to each Interest Payment
Date. The interest rate on the Floating Rate Notes will be
subject to daily adjustments, as described below under
"Interest and Maturity", and will be equal to 10 basis points
(0.10%) above the Average Federal Funds Rate, determined as
described below. Interest will be computed on the basis of a
360 day year and the actual number of days in the applicable
Interest Period (as defined below). The Floating Rate Notes may
not be redeemed prior to stated maturity and are not entitled to
any sinking fund.
The Floating Rate Notes are not represented by notes in
definitive form but are represented by one or more global
securities (the "1982 Global Securities") registered in the
name of the nominee of The Depository Trust Company (the
"Depository"). Interests in the Floating Rate Notes
represented by the 1982 Global Securities are shown on, and
transfers thereof are effected only through, records
maintained by the Depository and its direct and indirect
participants. The Floating Rate Notes trade in the
Depository's Same-Day Funds Settlement System, and secondary
market trading activity therefore settles in immediately
available funds. All payments of principal and interest made
by J.P. Morgan are in immediately available funds or the
equivalent so long as the Depository continues to make its
Same-Day Funds Settlement System available to J.P. Morgan.
See "Same-Day Funds Settlement System" below.
The Floating Rate Notes are issued in fully registered
form, in denominations of $1,000 and any integral multiple
thereof. The paying agent and transfer agent for the Floating
Rate Notes is First Trust of New York, National Association,
100 Wall Street, Suite 1600, New York, New York 10005.
The Floating Rate Notes are unsecured and 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 1982 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.
Interest and Maturity. The Floating Rate Notes will mature
on March 8, 1996 and will not be subject to redemption by
J.P. Morgan prior to maturity.
The Floating Rate Notes will bear interest from March 8,
1995 and be payable quarterly in arrears on June 8, 1995,
September 8, 1995, December 8, 1995 and March 8, 1996 (each
an "Interest Payment Date") to the persons in whose names the
Floating Rate Notes are registered at the close of business
on the fifteenth calendar day prior to the Interest Payment
Date (each a "Record Date"). The principal of the Floating
Rate Notes, together with the interest accrued and unpaid
thereon, is due in full on March 8, 1996 (the "Maturity
Date").
In any case in which an Interest Payment Date or the
Maturity Date is not a Business Day, the Interest Payment
Date or Maturity Date, as the case may be, will become the
next succeeding Business Day. The term "Business Day" shall
mean any day other than a Saturday or Sunday or a day on
which banking institutions in New York City are authorized or
required by law or executive order to close. The "Interest
Period" with respect to a Floating Rate Note is each
successive period from and including an Interest Payment Date
in respect of such Floating Rate Note up to but excluding the
next succeeding Interest Payment Date, except that the
initial Interest Period commences on March 8, 1995.
The interest rate for each Interest Period will be
determined by the Calculation Agent (defined below) in
accordance with the following provisions:
The interest rate for each Interest Period will be
equal to 10 basis points (0.10%) above the Average
Federal Funds Rate (as defined below). Interest will be
computed on the basis of a 360 day year and the actual
number of days in the applicable Interest Period.
The Average Federal Funds Rate for an Interest
Period will be the arithmetic mean, as determined by the
Calculation Agent, of the appropriate daily "Federal
Funds Rate" for each day in such Interest Period.
The "Federal Funds Rate" to be applied to any day
in an Interest Period means the Federal Funds Effective
Rate for the next preceding Business Day (the "Interest
Determination Date") as set forth on Telerate Screen
Page 120 (defined below) or, if not so set forth, then
the Federal Funds Rate will be the rate on such Interest
Determination Date for Federal Funds as published by the
Board of Governors of the Federal Reserve System in H.15
(519) under the heading "Federal Funds (Effective)" or,
if not so published by 9:00 a.m., New York City time, on
the Calculation Date, the Federal Funds Rate will be the
rate on such Interest Determination Date as published by
the Federal Reserve Bank of New York in Composite
Quotations (defined below) under the heading "Federal
Funds/Effective Rate." If such rate is not yet
published in Composite Quotations by 3:30 p.m., New York
City time, on the Calculation Date, then the Federal
Funds Rate will be the arithmetic mean, as calculated by
the Calculation Agent, of the rates for the last
transaction in overnight Federal Funds arranged by three
leading brokers of Federal Funds transactions in The
City of New York selected by the Calculation Agent after
consultation with J.P. Morgan as of 11:00 a.m., New York
City time, on such Interest Determination Date; provided
that if the brokers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this
sentence, the rate mentioned in this sentence, the rate
of interest will be the rate of interest in effect on
such Interest Determination Date.
The "Calculation Date" pertaining to an Interest
Period will be the Business Day preceding the relevant
Interest Payment Date.
"Telerate Screen Page 120" means the display
designated as page "120" on the Dow Jones Telerate
Service (or such other page as may replace that page on
that service for the purpose of displaying the Federal
Funds Effective Rate on a daily basis).
"Composite Quotations" means the daily statistical
release designated as Composite 3:30 p.m. Quotations for
U.S. Government Securities or any successor publication,
published by the Federal Reserve Bank of New York.
All percentages resulting from any calculations on
the Floating Rate Notes will be rounded, if necessary,
to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point
rounded upward (e.g. 9.876545% (or .09876545) being
rounded to 9.87655% (or .0987655)), and all dollar
amounts used in or resulting from such calculation will
be rounded to the nearest cent (with one-half cent
being rounded upward).
J.P. Morgan has agreed that, so long as any of the
Floating Rate Notes remain outstanding, it will maintain
under appointment an agent (the "Calculation Agent"),
initially the New York branch of Morgan Guaranty Trust
Company of New York, to calculate the rate of interest
payable on the Floating Rate Notes in respect of each
Interest Period. If the Calculation Agent is unable or
unwilling to continue to act as such, or if the
Calculation Agent fails to establish the applicable rate
of interest for any Interest Period, or if J.P. Morgan
removes the Calculation Agent, J.P. Morgan will appoint
the office of another bank to act as the Calculation
Agent. Morgan Guaranty Trust Company of New York is an
affiliate of J.P. Morgan.
Terms of the 1982 Indenture
Events of Default, Waiver, Notice, 1982 Debt Securities in
Foreign Currencies. An Event of Default is defined as (i)
default for 30 days in payment of any interest; (ii) default
in payment of principal of or premium, if any, when due
either at maturity, upon redemption, by declaration or
otherwise; (iii) default by J.P. Morgan in the performance of
any other covenant or warranty contained in the 1982
Indenture which shall not have been remedied for a period of
90 days after notice given as specified in the 1982
Indenture; and (iv) certain events of bankruptcy, insolvency
and reorganization of J.P. Morgan. (Section 5.1.) The 1982
Indenture provides that the Trustee may withhold notice to
the holders of the 1982 Debt Securities of any series of any
default (except in payment of principal of or interest or
premium, if any, on such 1982 Debt Securities) if the Trustee
considers it in the interest of the holders of 1982 Debt
Securities to do so. (Section 5.11)
If an Event of Default as described in clause (i), (ii)
or (iii) above shall have occurred and be continuing, either
the Trustee or the holders of at least 25% in principal
amount of the 1982 Debt Securities then outstanding may
declare the principal of all outstanding 1982 Debt Securities
and the interest accrued thereon, if any, to be due and
payable immediately and if an Event of Default described in
clause (iii) or (iv) above shall have occurred and be
continuing, either the Trustee or the holders of at least 25%
in principal amount of all 1982 Debt Securities then
outstanding may declare the principal 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,) may
be waived by the holders of a majority in principal amount of
the 1982 Debt Securities then outstanding. (Sections 5.1 and
5.10.)
The holders of a majority in principal amount of the
outstanding 1982 Debt Securities affected shall have the
right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee under the
1982 Indenture, subject to certain limitations specified in
the 1982 Indenture, provided that the holders of the 1982
Debt Securities shall have offered to the Trustee reasonable
indemnity against expenses and liabilities. (Sections 5.9 and
6.2(d).)
Each year J.P. Morgan shall deliver to the Trustee a
written statement as to the absence of certain defaults under
the 1982 Indenture. (Section 3.5.)
Modification of the 1982 Indenture. The 1982 Indenture
contains provisions permitting J.P. Morgan and the Trustee,
with the consent of not less than 66 2/3% in principal amount
of the 1982 Debt Securities at the time outstanding, to
modify the 1982 Indenture or any supplemental indenture or
the rights of the holders of the 1982 Debt Securities;
provided that no such modification shall (i) extend the final
maturity, 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
1982 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 1982 Debt Security, or impair or
affect the right of a holder to institute suit for the
payment thereof or, if the 1982 Debt Securities provide
therefor, any right of repayment at the option of the holder
of a 1982 Debt Security, without the consent of the holder of
each 1982 Debt Security so affected or (ii) reduce the
aforesaid percentage of 1982 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 1982
Debt Security so affected. (Section 8.2.)
The 1982 Indenture permits J.P. Morgan and the Trustee
to amend the 1982 Indenture in certain circumstances without
the consent of the holders of the 1982 Debt Securities to
evidence the merger of J.P. Morgan or the replacement of the
Trustee 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 1982 Debt Securities and
the performance and observance of all the covenants and
conditions of the 1982 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.)
DESCRIPTION OF DEBT SECURITIES
UNDER THE 1986 INDENTURE
Brief summaries of the principal provisions of the 1986
Indenture and the Debt Securities issued thereunder (the
"1986 Debt Securities") do not purport to be complete.
Certain capitalized terms used herein are defined in the 1986
Indenture. References in italics are to sections or articles
of the 1986 Indenture. Where any particular sections or
defined terms of the 1986 Indenture are referred to, such
sections or defined terms are incorporated herein by
reference as a part of the statement made, and the statement
is qualified in its entirety by such reference.
Terms and Provisions of the Zero Coupon Subordinated Notes
due April 1, 1998
The Zero Coupon Subordinated Notes due April 1, 1998
(the "Zero Coupon Notes") were issued pursuant to the 1986
Indenture and may not be redeemed prior to stated maturity
and are not entitled to any sinking fund. There will not be
any periodic payment of interest on the Zero Coupon Notes;
instead the Zero Coupon Notes are issued at a substantial
discount from their principal amount at stated maturity.
The Zero Coupon Notes are issued in fully registered
form, in denominations of $1,000 and any integral multiple
thereof. The paying agent, registrar and transfer agent for
the Zero Coupon Notes is First Trust of New York, National
Association, 100 Wall Street, Suite 1600, New York, New York
10005.
If upon the occurrence of an Event of Default the Zero
Coupon Notes are declared to be due and payable (as described
below under "Terms of the 1986 Indenture - Events of Default,
Waiver, Notice, 1986 Debt Securities in Foreign Currencies")
the amount due and payable will equal the sum of (i) the
initial public offering price of the Zero Coupon Notes
(56.086%) plus (ii) the accrued amortization of original
issue discount calculated using the "interest" method
(computed in accordance with generally accepted accounting
principles in effect on the original issue date of the Zero
Coupon Notes) from the date of original issuance to the date
of acceleration.
If a bankruptcy proceeding is commenced in respect of
J.P. Morgan, under Section 502(b)(2) of Title 11 of the
United States Code, the claim of the holder of a Zero Coupon
Note with respect to the principal amount thereof would be
limited to the issue price plus the pro rata portion of the
initial discount (the difference between such principal
amount and the issue price of the Zero Coupon Notes)
attributable to the period from the date of original issue of
the Zero Coupon Notes to the commencement of the proceeding.
The method used to pro rata the discount may differ from the
method set forth below under "Terms of the 1986 Indenture -
Subordination".
United States Tax Considerations
This summary is based on the Internal Revenue Code of
1986, as amended (the "Code"), and existing Treasury
Regulations, Revenue Rulings and judicial decisions. This
summary discusses only Zero Coupon Notes held as capital
assets within the meaning of Section 1221 of the Code. It
does not discuss all of the tax consequences that may be
relevant to a holder in light of his particular circumstances
or to holders subject to special rules, such as certain
financial institutions, insurance companies, or dealers in
securities. Persons considering the purchase of Zero Coupon
Notes should consult their own tax advisors with regard to
the application of the United States federal income tax laws
to their particular situations as well as any tax
consequences arising under the laws of any state, local or
foreign taxing jurisdiction.
Original Issue Discount. Under certain Treasury Regulations,
the Zero Coupon Notes are considered to have been issued with
original issue discount for federal income tax purposes
because they were issued for an amount less than their stated
redemption price at maturity. As a result, holders of the
Zero Coupon Notes are required to include original issue
discount in income for federal income tax purposes as it
accrues, in accordance with a constant interest method based
on a compounding of interest, before the receipt of cash
payments attributable to such income. Under this method,
holders of the Zero Coupon Notes generally are required to
include in income increasingly greater amounts of original
issue discount in successive semiannual accrual periods. The
issue price of the Zero Coupon Notes, which is set forth on
the legend on the face of each Zero Coupon Note, is equal to
the initial offering price at which a substantial amount of
the Zero Coupon Notes were sold (excluding sales to bond
houses and brokers acting in their capacity as underwriters
or wholesalers).
Sale, Exchange, Retirement or Other Disposition of the Zero
Coupon Notes. Upon the sale, exchange, retirement or other
disposition of a Zero Coupon Note, a holder will recognize
taxable gain or loss equal to the difference between the
amount realized on the sale, exchange, retirement or other
disposition and such holder's adjusted tax basis in the Zero
Coupon Note. A holder's adjusted tax basis in a Zero Coupon
Note is equal to the cost of the Zero Coupon Note to such
holder, increased by the amounts of original issue discount
and any market discount previously included in income by the
holder with respect to such Zero Coupon Note.
Gain or loss realized on the sale, exchange, retirement
or other disposition of a Zero Coupon Note is capital gain or
loss (except to the extent of any accrued market discount not
previously included in the holder's taxable income). See
"Market Discount and Premium" below. Although capital gains
are generally taxed at the same rates as ordinary income,
with respect to certain non-corporate taxpayers the excess of
net long-term capital gains over short-term capital losses
may be taxed at a lower rate than ordinary income. A capital
gain or loss is long-term if the asset is held for more than
one year and short-term if held one year or less. In
addition, the distinction between capital gain or loss and
ordinary income or loss is relevant for purposes of, among
other things, limitations on the deductibility of capital
losses.
Market Discount and Premium. If a holder purchases a Zero
Coupon Note (including upon its original issuance) for an
amount that is less than its "revised issue price", the
amount of the difference will be treated as "market discount"
for federal income tax purposes, unless such difference is
less than the specified de minimis amount. The revised issue
price of a Zero Coupon Note is defined as the sum of the
issue price of the Zero Coupon Note and the aggregate amount
of original issue discount includible, without regard to the
rules for amortization of acquisition premium discussed
below, in the gross income of all previous holders of the
Zero Coupon Note.
Under the market discount rules of the Code, a holder is
required to treat any gain on the sale, exchange, retirement
or other disposition of a Zero Coupon Note as ordinary income
to the extent of the market discount which has not previously
been included in income (pursuant to an election by the
holder to include such market discount in income as it
accrues) and is treated as having accrued on such Zero Coupon
Note during the period that the holder owned such Zero Coupon
Note. If such Zero Coupon Note is disposed of in a nontaxable
transaction (other than a nonrecognition transaction
described in Code Section 1276(d)), accrued market discount
will be includible as ordinary income to the holders if such
had sold the Zero Coupon Note at its then fair market value.
In addition, the holder may be required to defer, until the
maturity of the Zero Coupon Note or its earlier disposition
in a taxable transaction, the deduction of all or a portion
of the interest expense on any indebtedness incurred or
maintained to purchase or carry such Zero Coupon Note.
Market discount will be considered to accrue ratably
during the period from the date of acquisition to the
maturity date of the Zero Coupon Note, unless the holder
elects to accrue on the basis of semiannual compounding. A
holder may elect to include market discount in income
currently as it accrues (on either a ratable or semiannual
compounding basis), in which case the rule described above
regarding deferral of interest deductions will not apply. An
election to include market discount currently, once made,
will apply to all market discount obligations acquired by the
holder on or after the first day of the first taxable year to
which the election applies, and may not be revoked without
the consent of the Internal Revenue Service.
A holder who purchases a Zero Coupon Note for an amount
that is greater than its revised issue price but less than
its stated redemption price at maturity will be considered to
have purchased such Zero Coupon Note at an "acquisition
premium". Under the acquisition premium rules of the Code,
the amount of original issue discount which such holder must
include in its gross income with respect to such Zero Coupon
Note for any taxable year will be reduced by the portion of
such acquisition premium properly allocable to such year.
Alternatively, a holder may elect to compute original
discount accruals using an issue price equal to its cost.
Backup Withholding and Information Reporting. Certain
noncorporate holders may be subject to backup withholding at
a rate of 31% on payments of principal, premium and interest
(including original issue discount) on, the proceeds of
disposition of, a Zero Coupon Note. Backup withholding will
apply only if the holder (i) fails to furnish its Taxpayer
Identification Number ("TIN") which, for an individual, would
be his Social Security number, (ii) furnishes an incorrect
TIN, (iii) is notified by the Internal Revenue Service that
it has failed to properly report payments of interest and
dividends or (iv) under certain circumstances, fails to
certify, under penalty of perjury, that it has furnished a
correct TIN and has not been notified by the Internal Revenue
Service that it is subject to backup withholding for failure
to report interest and dividend payments. Holders should
consult their tax advisers regarding their qualification for
exemption from backup withholding and the procedure for
obtaining such an exemption if applicable.
The amount of any backup withholding from a payment to a
holder will be allowed as a credit against such holder's
United States federal income tax liability and may entitle
such holder to a refund, provided that the required
information is furnished to the Internal Revenue Service.
Terms and Provisions of the 7 5/8% Subordinated Notes due
November 15, 1998
The 7 5/8% Subordinated Notes due November 15, 1998 (the
"7 5/8% Notes") were issued under the 1986 Indenture and
interest is payable semi-annually on May 15 and November 15
of each year to the persons in whose names the 7 5/8% Notes
are registered at the close of business on May 1 or November
1, as the case may be, preceding such May 15 and November 15.
The 7 5/8% Notes are unsecured debt obligations of J.P.
Morgan and are subordinate in right of payment to all Senior
Indebtedness of J.P. Morgan to the extent set forth herein.
The 7 5/8% Notes may not be redeemed prior to stated maturity
and are not entitled to any sinking fund. The 7 5/8% Notes
are not represented by notes in definitive form but are
represented by one or more global securities (the "7 5/8%
Global Securities") registered in the name of the nominee of
The Depository Trust Company (the "Depository"). Interests in
the 7 5/8% Notes represented by the 7 5/8% Global Securities
are shown on, and transfers thereof are effected only
through, records maintained by the Depository and its direct
and indirect participants. Settlement for the 7 5/8% Notes
will be made in immediately available funds. The 7 5/8% Notes
trade in the Depository's Same-Day Funds Settlement System
until maturity, and secondary market trading activity
therefore settles in immediately available funds. All
payments of principal and interest made by J.P. Morgan are in
immediately available funds or the equivalent so long as the
Depository continues to make its Same-Day Funds Settlement
System available to J.P. Morgan. See "Same-Day Funds
Settlement System" below.
The 7 5/8% Notes are issued in fully registered form, in
denominations of $1,000 and any integral multiple thereof.
The paying agent, registrar and transfer agent for the 7 5/8%
Notes is First Trust of New York, National Association, 100
Wall Street, Suite 1600, New York, New York 10005.
Terms and Provisions of the 7 1/4% Subordinated Notes due
January 15, 2002
The 7 1/4% Subordinated Notes due January 15, 2002 (the
"7 1/4% Notes") were issued under the 1986 Indenture and
interest is payable semi-annually on January 15 and July 15
of each year to the persons in whose names the 7 1/4% Notes
are registered at the close of business on January 1 or July
1, as the case may be, preceding such January 15 and July 15.
The 7 1/4% Notes may not be redeemed prior to stated maturity
and are not entitled to any sinking fund. The 7 1/4% Notes
are not represented by notes in definitive form but are
represented by one or more global securities (the "7 1/4%
Global Securities") registered in the name of the nominee of
The Depository Trust Company (the "Depository"). Interests in
the 7 1/4% Notes represented by the 7 1/4% Global Securities
are shown on, and transfers thereof are effected only
through, records maintained by the Depository and its direct
and indirect participants. Settlements for the 7 1/4% Notes
will be made in immediately available funds. The 7 1/4% Notes
trade in the Depository's Same-Day Funds Settlement System
until maturity, and secondary market trading activity
therefore settles in immediately available funds. All
payments of principal and interest made by J.P. Morgan are in
immediately available funds or the equivalent so long as the
Depository continues to make its Same-Day Funds Settlement
System available to J.P. Morgan. See "Same-Day Funds
Settlement System" below.
The 7 1/4% Notes are issued in fully registered form, in
denominations of $1,000 and any integral multiple thereof.
The paying agent, registrar and transfer agent for the 7 1/4%
Notes is First Trust of New York, National Association, 100
Wall Street, Suite 1600, New York, New York 10005.
Terms and Provisions of the 8 1/2% Subordinated Notes due
August 15, 2003
The 8 1/2% Subordinated Notes due August 15, 2003 (the
"8 1/2% Notes") were issued under the 1986 Indenture and
interest is payable semi-annually on February 15 and August
15 of each year to the persons in whose names the 8 1/2%
Notes are registered at the close of business on February 1
or August 1, as the case may be, preceding such February 15
and August 15. The 8 1/2% Notes may not be redeemed prior to
stated maturity and are not entitled to any sinking fund. The
8 1/2% Notes are not represented by notes in definitive form
but are represented by one or more global securities (the "8
1/2% Global Securities") registered in the name of the
nominee of The Depository Trust Company (the "Depository").
Interests in the 8 1/2% Notes represented by the 8 1/2%
Global Securities are shown on, and transfers thereof are
effected only through, records maintained by the Depository
and its direct and indirect participants. Settlements for the
8 1/2% Notes will be made in immediately available funds. The
8 1/2% Notes trade in the Depository's Same-Day Funds
Settlement System until maturity, and secondary market
trading activity therefore settles in immediately available
funds. All payments of principal and interest made by J.P.
Morgan are in immediately available funds or the equivalent
so long as the Depository continues to make its Same-Day
Funds Settlement System available to J.P. Morgan. See "Same-
Day Funds Settlement System" below.
The 8 1/2% Notes are issued in fully registered form, in
denominations of $1,000 and any integral multiple thereof.
The paying agent, registrar and transfer agent for the 8 1/2%
Notes is First Trust of New York, National Association, 100
Wall Street, Suite 1600, New York, New York 10005.
Terms and Provisions of the 9 5/8% Subordinated Notes due
December 15, 1998
The 9 5/8% Subordinated Notes due December 15, 1998 (the
"9 5/8% Notes") were issued under the 1986 Indenture and
interest is payable semi-annually on June 15 and December 15
of each year to the persons in whose names the 9 5/8% Notes
are registered at the close of business on June 1 or December
1, as the case may be, preceding such June 15 and December
15. The 9 5/8% Notes may not be redeemed prior to December
15, 1995. Thereafter, they may be redeemed on at least 30
days' notice at the option of J.P. Morgan, as a whole or in
part, at any time, at 100% of the principal amount thereof,
together with accrued interest to the date fixed for
redemption. The 9 5/8% Notes are subordinated in right of
payment to Senior Indebtedness of J.P. Morgan.
The 9 5/8% Notes are issued in fully registered form, in
denominations of $1,000 and any integral multiple thereof.
The paying agent, registrar and transfer agent for the 9 5/8%
Notes is First Trust of New York, National Association, 100
Wall Street, Suite 1600, New York, New York 10005.
Terms of the 1986 Indenture
General. The 1986 Indenture does not limit the amount of
1986 Debt Securities which may be issued thereunder. The 1986
Debt Securities are unsecured and subordinate in right of
payment to all Senior Indebtedness of J.P. Morgan as
discussed under "Subordination" below. 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 1986 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 1986 Debt Securities may be presented for exchange,
and registered 1986 Debt Securities may be presented for
transfer, in the manner, at the places and subject to the
restrictions set forth in the 1986 Indenture and the 1986
Debt Securities. The 1986 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 1986 Debt Securities or transfer of 1986 Debt
Securities in registered form, but J.P. Morgan may require
payment of a sum sufficient to cover any tax or governmental
charge payable in connection therewith. (Section 2.8.)
Subordination. The 1986 Debt Securities are subordinate in
right of payment as provided in the 1986 Indenture to all
Senior Indebtedness of J.P. Morgan. No payment pursuant to
the 1986 Debt Securities may be made and no holder of the
1986 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.) Upon any
distribution of the assets of J.P. Morgan upon dissolution,
winding up, liquidation or reorganization, 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 1986 Debt
Securities. (Section 10.3.) By reason of such subordination,
in the event of the insolvency of J.P. Morgan, holders of
Senior Indebtedness of J.P. Morgan may receive more, ratably,
and holders of the 1986 Debt Securities or coupon
appertaining thereto 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 1986 Debt Securities. The 1986 Indenture does not limit
the amount of Senior Indebtedness J.P. Morgan may incur.
Senior Indebtedness of J.P. Morgan for purposes of this
description of 1986 Debt Securities 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 1986 Indenture or
thereafter created, assumed or incurred, except such
indebtedness as is by its terms expressly stated to be not
superior in right of payment to the 1986 Debt Securities or
to rank pari passu with the 1986 Debt Securities and (b) any
deferrals, renewals or extensions of any such Senior
Indebtedness. The term "pari passu" as used herein shall mean
ranking equally in right of payment in the event of J.P.
Morgan's bankruptcy.
Events of Default, Waiver, Notice, 1986 Debt Securities in
Foreign Currencies. As to any series of 1986 Debt
Securities, an Event of Default is defined in the 1986
Indenture as (a) default for 30 days payment of any interest
on the 1986 Debt Securities of such series; (b) default in
payment of principal of or premium, if any, on the 1986 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 1986
Debt Securities of such series; (d) default by J.P. Morgan in
the performance of any other covenant or warranty contained
in the 1986 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 1986 Indenture; and (e)
certain events of bankruptcy, insolvency and reorganization
of J.P. Morgan. (Section 5.1.) An Event of Default with
respect to a particular series of 1986 Debt Securities issued
under the 1986 Indenture does not necessarily constitute an
Event of Default with respect to any other series of 1986
Debt Securities issued thereunder. The 1986 Indenture
provides that the Trustee may withhold notice to the holders
of 1986 Debt Securities of any series of any default (except
in payment of principal of or interest or premium, if any, on
such 1986 Debt Securities or in the making of any sinking
fund payment with respect to such 1986 Debt Securities) if
the Trustee considers it in the interest of the holders of
1986 Debt Securities of such series to do so. (Section 5.11.)
If an Event of Default described in clause (e) above
shall have occurred and be continuing, either the Trustee or
the holders of not less than 25% in principal amount of all
1986 Debt Securities then outstanding (treated as one class)
by notice in writing to J.P. Morgan (and to the Trustee if
given by the holders of 1986 Debt Securities), may declare
the entire principal (or, in the case of original issue
discount 1986 Debt Securities, the portion thereof specified
in the terms thereof) of all 1986 Debt Securities then
outstanding and the interest accrued thereon, if any, to be
due and payable immediately, and upon such declaration the
same shall become immediately due and payable. Prior to the
declaration of the acceleration of the maturity of the 1986
Debt Securities of any series, the holders thereof of a
majority in principal amount thereof then outstanding (voting
as one class) may waive any such default or Event of Default,
and its consequences except a default in respect of a
covenant or provision hereof which cannot be modified or
amended without the consent of the holders of each series of
1986 Debt Securities so affected. In the case of any such
waiver, J.P. Morgan, the Trustee and the holders of 1986 Debt
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. (Sections 5.1 and 5.10.)
The holders of a majority in principal amount of the
outstanding 1986 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
1986 Indenture, subject to certain limitations specified in
the 1986 Indenture, provided that the holders of 1986 Debt
Securities shall have offered to the Trustee reasonable
indemnity against expenses and liabilities. (Sections 5.9 and
6.2(d).) The 1986 Indenture requires the annual delivery by
J.P. Morgan to the Trustee of a written statement as to the
absence of certain defaults under the 1986 Indenture.
(Section 3.5.) Whenever the 1986 Indenture provides for an
action by, or the determination of any of the rights of, or
any distribution to, holders of 1986 Debt Securities, any
amount in respect of any 1986 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.)
Modification of the 1986 Indenture; Waiver of Compliance.
The 1986 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 1986 Debt
Securities of all series affected by such modification or
waiver at the time outstanding (voting as one class), to
modify the 1986 Indenture or any supplemental indenture or
the right of the holders of the 1986 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 1986 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
1986 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 1986 Debt Security, or impair or
affect the right of a holder to institute suit for the
payment thereof or, if the 1986 Debt Securities provide
therefor, any right of repayment at the option of the holder
of a 1986 Debt Security, without the consent of the holder of
each 1986 Debt Security so affected or (ii) reduce the
aforesaid percentage of 1986 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 1986
Debt Security so affected. (Sections 8.2 and 8.6.)
The 1986 Indenture also permits J.P. Morgan and the
Trustee to amend the 1986 Indenture in certain circumstances
without the consent of the holders of 1986 Debt Securities to
evidence the merger of J.P. Morgan or the replacement of the
Trustee 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 1986 Debt Securities and
the performance and observance of all the covenants and
conditions of the 1986 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.)
DESCRIPTION OF DEBT SECURITIES
UNDER THE 1993 INDENTURE
Brief summaries of certain provisions of the 1993
Indenture and the Debt Securities issued thereunder (the
"1993 Debt Securities") do not purport to be complete.
Certain capitalized terms used herein are defined in the 1993
Indenture. References in italics are to sections or articles
of the 1993 Indenture. Where any particular sections or
defined terms of the 1993 Indenture are referred to, such
sections or defined terms are incorporated herein by
reference as a part of the statement made, and the statement
is qualified in its entirety by such reference.
Terms of the Subordinated Constant Maturity Treasury Floating
Rate Notes due March 13, 2000
General. The Subordinated Constant Maturity Treasury
Floating Rate Notes due March 13, 2000 (the "CMT Notes") were
issued under the 1993 Indenture and interest is payable
quarterly on the thirteenth day of each March, June,
September and December (the "CMT Interest Payment Date"), to
the persons in whose names the CMT Notes are registered at
the close of business on the fifteenth calendar day prior to
each CMT Interest Payment Date. The interest rate on the CMT
Notes for each CMT Interest Period will be at a floating rate
equal to 2.25% per annum plus the product of 0.4 times the
Ten Year Constant Maturity Treasury Rate (the "Ten Year CMT
Rate"), determined as described below under "Interest",
subject to a minimum rate for each CMT Interest Period of
5.30% per annum. Interest will be computed on the basis of a
365 or 366 day year and the actual number of days in the
applicable CMT Interest Period. The CMT Notes are not
redeemable prior to their stated maturity.
The CMT Notes are issued in fully registered form, in
denominations of $250,000 and any integral multiple thereof.
The paying agent, registrar and transfer agent for the CMT
Notes is First Trust of New York, National Association, 100
Wall Street, Suite 1600, New York, New York 10005.
The CMT Notes are unsecured debt obligations of J.P.
Morgan and are subordinate in right of payment to all Senior
Indebtedness of J.P. Morgan and, in certain circumstances, to
the Derivative Obligations (as defined) of J.P. Morgan to the
extent set forth below under "Subordination". Payment of
principal of the CMT Notes 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 the default
in the payment of interest on the CMT Notes, or the
performance of any other covenant of J.P. Morgan.
The CMT Notes are represented by global securities (the
"CMT Global Securities") registered in the name of the
nominee of The Depository Trust Company, acting as the
depository (the "Depository"). Interests in the CMT Notes
represented by the CMT Global Securities are shown on, and
transfers thereof are effected only through, records
maintained by the Depository and its direct and indirect
participants. CMT Notes in definitive form will not be
issued. Settlement for the CMT Notes will be made in
immediately available funds. The CMT Notes trade in the
Depository's Same-Day Funds Settlement System and Secondary
market trading activity for the CMT Notes will therefore
settle in immediately available funds. All payments of
principal and interest will be made by J.P. Morgan in
immediately available funds or the equivalent so long as the
Depository continues to make its Same-Day Funds Settlement
System available to J.P. Morgan. See "Same-Day Funds
Settlement System" below.
Interest. The "CMT Interest Period" is each period from and
including a CMT Interest Payment Date in respect of the CMT
Notes up to but excluding the next succeeding CMT Interest
Payment Date.
The Ten Year CMT Rate will be determined by the New York
branch of Morgan Guaranty Trust Company of New York, as
Calculation Agent (the "CMT Calculation Agent") (or, if the
CMT Calculation Agent fails to establish the applicable rate
of interest for any CMT Interest Period, or if J.P. Morgan
removes the CMT Calculation Agent, J.P. Morgan will appoint
the office of another bank to act as the CMT Calculation
Agent) for each CMT Interest Period in accordance with the
following provisions:
For each CMT Interest Period, except as provided below
in this paragraph, the Ten Year CMT Rate will be the
respective daily rate set forth for the last New York
Business Day contained in the weekly Federal Reserve
Statistical Release H.15(519) (or any successor publication)
of the Board of Governors of the Federal Reserve System most
recently during the Calendar Period immediately prior to the
second New York Business Day (the "CMT Interest Determination
Date") preceding the first day of the applicable CMT Interest
Period (such first day shall be the "CMT Reset Date")
opposite the caption "U.S. Government Securities/Treasury
Constant Maturities/ 10-Year" or any replacement caption. In
the event that a per annum Ten Year CMT Rate shall not be
available as described above, then the Ten Year CMT Rate for
such CMT Interest Period shall be the Fall Back Rate
(hereinafter defined). The Fall Back Rate will be the daily
per annum yield to maturity of the current ("on the run")
U.S. Treasury Note with a ten year maturity based on the mid-
market yield displayed on Telerate Page 7690 by Cantor
Fitzgerald at 12:00 noon, New York time, on the CMT Interest
Determination Date. Telerate Page 7690 shall mean the page
7690 or its replacement as provided by the Telerate News
Service. In the event that the CMT Calculation Agent
determines in good faith that for any reason the CMT
Calculation Agent cannot determine the Fall Back Rate for any
CMT Interest Period as provided above in this paragraph, the
Fall Back Rate for such CMT Interest Period shall be the
arithmetic average of the per annum average yields to
maturity based upon the closing bids on the CMT Interest
Determination Date of the actively traded U.S. Treasury fixed
interest rate securities (other than Special Securities (as
defined below)) with a final maturity date not less than
eight nor more than twelve years from the date of each such
quotation, as chosen and quoted on such CMT Interest
Determination Date to the CMT Calculation Agent by at least
three recognized dealers in U.S. Government securities
selected by the CMT Calculation Agent.
All percentages resulting from any calculations on the
CMT Notes will be rounded, if necessary, to the nearest one
hundred-thousandth of a percentage point, with five one-
millionths of a percentage point rounded upward (e.g.,
9.876545% (or .09876545) being rounded to 9.87655% (or
.0987655)), and all dollar amounts used in or resulting from
such calculation will be rounded to the nearest cent (with
one-half cent being rounded upward).
As used herein, the term "Calendar Period" means a
period of ten calendar days; the term "New York Business Day"
means any day on which commercial banks are open for business
(including dealings in foreign exchange and foreign currency
deposits) in New York City, New York; and the term "Special
Securities" means securities which can, at the option of the
holder, be surrendered at face value in payment of any
Federal estate tax or which provide tax benefits to the
holder and are priced to reflect such tax benefits or which
were originally issued at a deep or substantial discount.
J.P. Morgan has agreed that, so long as the CMT Notes
remain outstanding, it will maintain under appointment an
agent (the "CMT Calculation Agent"), initially the New York
branch of Morgan Guaranty Trust Company of New York, to
calculate the rate of interest payable on the CMT Notes in
respect of each CMT Interest Period subsequent to the CMT
Initial Interest Period. If the CMT Calculation Agent fails
to establish the applicable rate of interest for any CMT
Interest Period, or if J.P. Morgan removes the CMT
Calculation Agent, J.P. Morgan will appoint the office of
another bank to act as the CMT Calculation Agent.
Terms and Provisions of the 5 3/4% Subordinated Notes due
October 15, 2008
The 5 3/4% Subordinated Notes due October 15, 2008 (the
"5 3/4% Notes") were issued under the 1993 Indenture and
interest is payable semi-annually on April 15 and October 15
of each year to the persons in whose names the 5 3/4% Notes
are registered at the close of business on April 1 or October
1, as the case may be, preceding such April 15 and October
15. The 5 3/4% Notes may not be redeemed prior to stated
maturity and are not entitled to any sinking fund. The 5 3/4%
Notes are represented by Global Securities (the "5 3/4%
Global Securities") registered in the name of The Depository
Trust Company (the "Depository"). Interests in the 5 3/4%
Notes represented by the 5 3/4% Global Securities are shown
on, and transfers thereof are effected only through, records
maintained by the Depository and its direct and indirect
participants. Except as described herein, 5 3/4% Notes in
definitive form will not be issued. Settlement for the 5 3/4%
Notes will be made in immediately available funds. The 5 3/4%
Notes will trade in the Depository's Same-Day Funds
Settlement System and secondary market trading activity will
be made by J.P. Morgan in immediately available funds or the
equivalent. See "Same-Day Funds Settlement System" below.
The 5 3/4% Notes are issued in fully registered form, in
denominations of $1,000 and any integral multiple thereof.
The paying agent, registrar and transfer agent for the 5 3/4%
Notes is First Trust of New York, National Association, 100
Wall Street, Suite 1600, New York, New York 10005.
Terms and Provisions of the 6 1/4% Subordinated Notes due
January 15, 2009
The 6 1/4% Subordinated Notes due January 15, 2009 (the
"6 1/4% Notes") were issued under the 1993 Indenture and
interest is payable semi-annually on July 15 and January 15
of each year to the persons in whose names the 6 1/4% Notes
are registered at the close of business on July 1 or January
1, as the case may be, preceding such July 15 and January 15.
The 6 1/4% Notes may not be redeemed prior to stated maturity
and are not entitled to any sinking fund. The 6 1/4% Notes
are represented by Global Securities (the "6 1/4% Global
Securities") registered in the name of The Depository Trust
Company (the "Depository"). Interests in the 6 1/4% Notes
represented by the 6 1/4% Global Securities are shown on, and
transfers thereof are effected only through, records
maintained by the Depository and its direct and indirect
participants. Except as described herein, 6 1/4% Notes in
definitive form will not be issued. Settlement for the 6 1/4%
Notes will be made in immediately available funds. The 6 1/4%
Notes will trade in the Depository's Same-Day Funds
Settlement System and secondary market trading activity will
be made by J.P. Morgan in immediately available funds or the
equivalent. See "Same-Day Funds Settlement System" below.
The 6 1/4% Notes are issued in fully registered form, in
denominations of $1,000 and any integral multiple thereof.
The paying agent, registrar and transfer agent for the 6 1/4%
Notes is First Trust of New York, National Association, 100
Wall Street, Suite 1600, New York, New York 10005.
Terms and Provisions of the 7 5/8% Subordinated Notes due
September 15, 2004
The 7 5/8% Subordinated Notes due September 15, 2004
(the "2004 Notes") were issued under the 1993 Indenture and
interest is payable semi-annually on March 15 and September
15 of each year to the persons in whose names the 2004 Notes
are registered at the close of business on March 1 or
September 1, as the case may be, preceding such March 15 and
September 15. The 2004 Notes may not be redeemed prior to
stated maturity and are not entitled to any sinking fund. The
2004 Notes are represented by Global Securities (the "2004
Global Securities") registered in the name of The Depository
Trust Company (the "Depository"). Interests in the 2004 Notes
represented by the 2004 Global Securities are shown on, and
transfers thereof are effected only through, records
maintained by the Depository and its direct and indirect
participants. Except as described herein, 2004 Notes in
definitive form will not be issued. Settlement for the 2004
Notes will be made in immediately available funds. The 2004
Notes will trade in the Depository's Same-Day Funds
Settlement System and secondary market trading activity will
be made by J.P. Morgan in immediately available funds or the
equivalent. See "Same-Day Funds Settlement System" below.
The 2004 Notes are issued in fully registered form, in
denominations of $1,000 and any integral multiple thereof.
The paying agent, registrar and transfer agent for the 2004
Notes is First Trust of New York, National Association, 100
Wall Street, Suite 1600, New York, New York 10005.
Terms of the 1993 Indenture
General. The 1993 Indenture does not limit the amount of
1993 Debt Securities which may be issued thereunder and
provides that 1993 Debt Securities may be issued in series
thereunder up to the aggregate principal amount which may be
authorized from time to time by J.P. Morgan.
The 1993 Debt Securities are unsecured and subordinate
in right of payment to all Senior Indebtedness of J.P. Morgan
and, in certain circumstances relating to bankruptcy or
insolvency of J.P. Morgan, the Derivative Obligations (as
defined below), whether outstanding as of this date or
hereafter incurred, as discussed under "Subordination" below.
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 1993 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.
Subordination. The 1993 Debt Securities are subordinate in
right of payment as provided in the 1993 Indenture to all
Senior Indebtedness of J.P. Morgan. No payment pursuant to
the 1993 Debt Securities may be made and no holder of the
1993 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.)
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 1993
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 1993 Debt
Securities (any such remaining amount being defined in the
1993 Indenture 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 1993 Debt Securities.
(Sections 10.3 and 10.12.) By reason of such subordination,
in the event of 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
1993 Debt Securities or coupon appertaining thereto may
receive less, ratably, than the other creditors of J.P.
Morgan. No series of subordinated debt is subordinate to any
other series of subordinated debt. However, by reason of the
obligation of the holders of the 1993 Debt Securities to pay
over any Excess Proceeds to creditors in respect of
Derivative Obligations, in the event of bankruptcy or
insolvency of J.P. Morgan, the holders of the 1993 Debt
Securities may receive less, ratably, than holders of
Antecedent Subordinated Indebtedness (as defined below). Such
subordination will not prevent the occurrence of an Event of
Default in respect of the 1993 Debt Securities. The 1993
Indenture does not limit the amount of Senior Indebtedness
J.P. Morgan may incur.
Senior Indebtedness of J.P. Morgan for purposes of this
description of 1993 Debt Securities is defined as principal
of, premium, if any, and interest on all indebtedness of J.P.
Morgan for money borrowed, whether outstanding on the date of
execution of the 1993 Indenture or thereafter created,
assumed or incurred and such indebtedness as is by its terms
expressly stated to be not superior in right of payment to
the 1993 Debt Securities or to rank pari passu with the 1993
Debt Securities and 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 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
1993 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 1993 Debt Securities or to rank pari passu with the 1993
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 1993 Indenture. Antecedent Subordinated
Indebtedness of J.P. Morgan is defined in the 1993 Indenture
as all indebtedness and other obligations outstanding on the
date of the 1993 Indenture. (Section 1.1.)
Events of Default, Waiver, Notice, 1993 Debt Securities in
Foreign Currencies. As to any series of 1993 Debt
Securities, an Event of Default is defined in the 1993
Indenture as (a) default for 30 days in payment of any
interest on the 1993 Debt Securities of such series; (b)
default in payment of principal of or premium, if any, on the
1993 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 1993 Debt Securities of such series; (d) default by
J.P. Morgan in the performance of any other covenant or
warranty contained in the 1993 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 1993
Indenture; and (e) certain events of bankruptcy or
reorganization of J.P. Morgan. (Section 5.1.) An Event of
Default with respect to a particular series of 1993 Debt
Securities issued under the 1993 Indenture does not
necessarily constitute an Event of Default with respect to
any other series of 1993 Debt Securities issued thereunder.
The 1993 Indenture provides that the Trustee may withhold
notice to the holders of 1993 Debt Securities of any series
of any default (except in payment of principal of or interest
or premium, if any, on such 1993 Debt Securities or in the
making of any sinking fund payment with respect to such 1993
Debt Securities) if the Trustee considers it in the interest
of the holders of 1993 Debt Securities of such series to do
so. (Section 5.11.)
The 1993 Indenture provides that if an Event of Default
described in clause (e) above shall have occurred and be
continuing, either the Trustee or the holders of at least 25%
in principal amount of all 1993
Debt Securities then outstanding (voting as one class) may
declare the principal (or, in the case of original issue
discount 1993 Debt Securities, the portion thereof specified
in the terms thereof) of all 1993 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 premium, or interest, if any, on
such 1993 Debt Securities) may be waived by the holders of a
majority in principal amount of the 1993 Debt Securities of
all series then outstanding. (Sections 5.1 and 5.10.)
The holders of a majority in principal amount of the
outstanding 1993 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
1993 Indenture, subject to certain limitations specified in
the 1993 Indenture, provided that the holders of 1993 Debt
Securities shall have offered to the Trustee reasonable
indemnity against expense and liabilities. (Sections 5.9 and
6.2(d).) The 1993 Indenture requires the annual delivery by
J.P. Morgan to the Trustee of a written statement as to the
absence of certain defaults under the 1993 Indenture.
Whenever the 1993 Indenture provides for an action by, or the
determination of any of the rights of, or any distribution
to, holders of 1993 Debt Securities, in the absence of any
provision to the contrary in the form of 1993 Debt Security,
any amount in respect of any 1993 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.)
Modification of the 1993 Indenture; Waiver of Compliance.
The 1993 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 1993 Debt
Securities of all series affected by such modification or
waiver at the time outstanding (voting as one class), to
modify the 1993 Indenture or any supplemental indenture or
the rights of the holders of the 1993 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 1993 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
1993 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 1993 Debt Security, or impair or
affect the right of a holder to institute suit for the
payment thereof or, if the 1993 Debt Security provide
therefor, any right of repayment at the option of the holder
of a 1993 Debt Security, without the consent of the holder of
each 1993 Debt Security so affected or (ii) reduce the
aforesaid percentage of 1993 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 1993
Debt Security so affected. (Sections 8.2 and 8.6.)
The 1993 Indenture also permits J.P. Morgan and the
Trustee to amend the 1993 Indenture in certain circumstances
without the consent of the holders of 1993 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 1993 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 1993 Debt Securities and
the performance and observance of all the covenants and
conditions of the 1993 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.)
SAME-DAY FUNDS SETTLEMENT SYSTEM
The Same-Day Funds Settlement System is applicable to
the Floating Rate Notes, 7 5/8% Notes, 7 1/4% Notes, 8 1/2%
Notes, CMT Notes, 5 3/4% Notes, 6 1/4% Notes and the 2004
Notes (each referred to herein as the "Notes") which are
represented by the Floating Rate Global Securities, 7 5/8%
Global Securities, 7 1/4% Global Securities, 8 1/2% Global
Securities, CMT Global Securities, 5 3/4% Global Securities,
6 1/4% Global Securities and 2004 Global Securities,
respectively, (each referred to herein as the "Global
Securities") which are registered in the name of the nominee
of The Depository Trust Company ("DTC"), which acts as the
Depository (the "Depository") for the Global Securities. The
following is a summary of DTC's Same-Day Funds Settlement
System.
Book-Entry System. The Notes are represented by one or more
global securities deposited with the Depository and
registered in the name of a nominee of DTC. Except as set
forth below, the Notes will be available for purchase in
denominations of $1,000 and integral multiples thereof
(except for the CMT Notes which are available for purchase in
denominations of $250,000 and integral multiples thereof) in
book-entry form only. The term "Depository" refers to DTC or
any successor depository.
DTC has advised J.P. Morgan and JPMSI as follows: 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 was created to hold
securities of persons who have accounts with DTC
("participants") and to facilitate the clearance and
settlement of securities transactions among its participants
in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need
for physical movement of securities certificates. DTC's
participants include securities brokers and dealers
(including JPMSI), banks, trust companies, clearing
corporations and certain other organizations, some of which
(and/or their representatives) own DTC. Access to DTC's book-
entry system is also 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.
Upon issuance by J.P. Morgan of the Notes represented by
the Global Securities, the Depository or its nominee will
credit, on its book-entry registration and transfer system,
the respective principal amounts of the Notes represented by
such Global Securities to the accounts of participants. The
accounts to be credited shall be designated by JPMSI.
Ownership of beneficial interests in the Notes represented by
the Global Securities will be limited to participants or
persons that hold interests through participants. Ownership
of such beneficial interests in the Notes will be shown on,
and the transfer of that ownership will be effected only
through, records maintained by the Depository (with respect
to interests of participants in the Depository), or by
participants in the Depository or persons that may hold
interests through such participants (with respect to persons
other than participants in the Depository). The laws of some
states require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer
beneficial interests in the Notes represented by the Global
Securities.
So long as the Depository for the Global Securities, or
its nominee, is the registered owner of such Global
Securities, the Depository or its nominee, as the case may
be, will be considered the sole owner or holder of the Notes
represented by such Global Securities for all purposes under
the Indentures. Except as provided below, owners of
beneficial interests in the Notes represented by the Global
Securities will not be entitled to have the Notes represented
by such Global Securities registered in their names, will not
receive or be entitled to receive physical delivery of the
Notes in definitive form and will not be considered the
owners or holders thereof under the Indentures. Unless and
until the Global Securities are exchanged in whole or in part
for individual certificates evidencing the Notes represented
thereby, such Global Securities may not be transferred except
as a whole by the Depository for such Global Securities to a
nominee of such Depository or by a nominee of such Depository
to such Depository or another nominee of such Depository or
by the Depository or any nominee of such Depository to a
successor Depository or any nominee of such successor
Depository.
Payments of principal of and interest on the Notes
represented by the Global Securities registered in the name
of the Depository or its nominee will be made by J.P. Morgan
through the Paying Agent to the Depository or its nominee, as
the case may be, as the registered owner of the Notes
represented by such Global Securities.
J.P. Morgan has been advised that the Depository or its
nominee, upon receipt of any payment of principal or interest
in respect of the Notes represented by the Global Securities,
will credit immediately the accounts of the related
participants with payment in amounts proportionate to their
respective beneficial interests in the Notes represented by
the Global Securities as shown on the records of the
Depository. J.P. Morgan expects that payments by participants
to owners of beneficial interests in the Notes represented by
the Global Securities will be governed by standing customer
instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form
or registered in "street name." Such payments will be the
responsibility of such participants.
If the Depository is at any time unwilling or unable to
continue as Depository and a successor Depository is not
appointed by J.P. Morgan within 90 days, J.P. Morgan will
issue individual Notes in definitive form in exchange for the
Global Securities. In addition, J.P. Morgan may at any time
and in its sole discretion determine not to have Global
Securities, and, in such event, will issue individual Notes
in definitive form in exchange for the Global Securities. In
either instance, J.P. Morgan will issue Notes in definitive
form, equal in aggregate principal amount to the Global
Securities, in such names and in such principal amounts as
the Depository shall request. Notes so issued in definitive
form will be issued in denominations of $1,000 and integral
multiples thereof (except for the CMT Notes which will be
issued in denominations of $250,000 and integral multiples
thereof) and will be in registered form only, without
coupons.
Neither J.P. Morgan, the Trustees, and any Paying Agents
nor the registrar for the Notes will have any responsibility
or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in
the Notes represented by such Global Securities or for
maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Same-Day Settlement and Payment. Settlement for the Notes
will be made by JPMSI in immediately available funds. All
payments of principal and interest will be made by J.P.
Morgan in immediately available funds or the equivalent, so
long as the Depository continues to make its Same-Day Funds
Settlement System available to J.P. Morgan.
Secondary trading in long-term notes and debentures of
corporate issuers is generally settled in clearinghouse or
next-day funds. In contrast, the Notes will trade in the
Depository's Same-Day Funds Settlement System, and secondary
market trading activity in the Notes will therefore be
required by the Depository to settle in immediately available
funds. No assurance can be given as to the effect, if any, of
settlement in immediately available funds on trading activity
in the Notes.
DESCRIPTION OF CAPITAL SECURITIES
The authorized capital stock of J.P. Morgan consists of
500,000,000 shares of Common Stock, $2.50 par value, and
10,000,000 shares of Preferred Stock, no par value. At
December 31, 1994, there were 200,668,373 shares outstanding
of Common Stock and 2,444,300 shares of Series A Adjustable
Rate Cumulative Preferred Stock and 50,000 shares each of
Series B, C, D, E, and F Variable Cumulative Preferred Stock.
The brief summary of the principal provisions contained
in J.P. Morgan's Restated Certificate of Incorporation does
not purport to be complete.
Common Stock
Subject to the prior rights of the Preferred Stock,
holders of J.P. Morgan Common Stock are entitled to receive
dividends when, as and if declared by the Board of Directors
out of any fund legally available therefor and upon
liquidation, dissolution or winding up to receive pro rata
all of J.P. Morgan remaining after provision has been made
for the payments of creditors.
Under the Federal Reserve Act and New York State law,
there are legal restrictions limiting the amount of dividends
that Morgan Guaranty, a subsidiary of J.P. Morgan and a state
member bank, can declare. The most restrictive test requires
approval of the Board of Governors of the Federal Reserve
System ("Federal Reserve Board") if dividends declared exceed
the net profits for that year combined with the net profits
for the preceding two years. The calculation of the amount
available for payment of dividends is based on net profits
determined in accordance with bank regulatory accounting
principles, reduced by the amount of dividends declared. At
December 31, 1993, the cumulative retained net profits for
the years 1993 and 1992 available for distribution as
dividends by Morgan Guaranty in 1994 without approval of the
Federal Reserve Board amounted to approximately $1,775
million.
The Federal Reserve Board may prohibit the payment of
dividends if it determines that circumstances relating to the
financial condition of a bank are such that the payment of
dividends would be an unsafe and unsound practice. Delaware
banking law also places certain limitations on the amount of
dividends that J.P. Morgan Delaware, a subsidiary of J.P.
Morgan and a Delaware state bank, can pay.
Voting Rights. Subject to the voting rights of the Preferred
Stock, all voting rights are vested in the holders of shares
of J.P. Morgan Common Stock, each share being entitled to one
vote.
Preemptive Rights. Holders of J.P. Morgan Common Stock do not
have any preemptive rights to subscribe to any additional
securities that J.P. Morgan may issue.
Non-Assessability. Under Delaware law J.P. Morgan Common
Stock is validly issued, fully paid and non-assessable.
Preferred Stock
General. The Preferred Stock, of which 10,000,000 shares have
been authorized, upon issuance has preference over the Common
Stock with respect to the payment of dividends and the
distribution of assets in the event of liquidation,
dissolution or winding up of J.P. Morgan and such other
rights, preferences and limitations as may be fixed by the
Board of Directors. Dividend provisions, liquidation
preferences, voting rights, if any, sinking fund and
redemption provisions, if any, and conversion and exchange
provisions, if any, also will be fixed by the Board of
Directors. The shares of Series Preferred Stock referred to
in this Prospectus, when issued and paid for, will be validly
issued, fully paid and non-assessable.
Series A Preferred Stock. Adjustable Rate Cumulative
Preferred Stock, Series A. In March 1983, J.P. Morgan issued
2,500,000 shares of Adjustable Rate Cumulative Preferred
Stock, Series A (the "Series A Preferred Stock") of which
2,444,300 shares are currently outstanding. Dividends on the
Series A Preferred Stock are cumulative. If the equivalent of
six quarterly dividends payable on the Series A Preferred
Stock are in arrears in an amount equivalent to dividends for
six full dividend periods (whether or not consecutive), the
number of directors of J.P. Morgan will be increased by two
and the holders of the outstanding Series A Preferred Stock,
voting together as a single class with holders of shares of
any other series preferred stock then outstanding upon which
like voting rights have been conferred and are then
exercisable, will be entitled to elect two additional
directors (the holders of record of Series A Preferred Stock
being entitled to cast 1/10 of one vote) until all dividends
in arrears have been declared and paid or set apart for
payment in full. In the event of liquidation or dissolution,
the holders of shares of Series A Preferred Stock are
entitled to receive a distribution of $100 per share, plus,
in each case, accrued and unpaid dividends to the date of
final distribution.
Except under certain circumstances, shares of Series A
Preferred Stock were not redeemable prior to March 1, 1986.
On or after such date and prior to February 29, 1988, shares
of Series A Preferred Stock were redeemable at the option of
J.P. Morgan, as a whole or in part, at a redemption price per
share of $103.00 and thereafter at $100 per share. The
redemption price set forth above with respect to Series A
Preferred Stock will be increased, in each case, by the
amount of accrued and unpaid dividends thereon to the date
fixed for redemption.
Dividends on the Series A Preferred Stock are
established quarterly by a formula based on the interest
rates of certain actively traded U.S. Treasury obligations.
In no event will the quarterly dividends payable on the
Series A Preferred Stock be less than 5.00% or greater than
11.50% per annum.
Series B, C, D, E and F Preferred Stock. Variable Cumulative
Preferred Stock, Series B, C, D, E and F. In January 1990, as
another series of series preferred stock, J.P. Morgan issued
$250 million, or 250,000 shares, of Variable Cumulative
Preferred Stock, Series B, C, D, E and F (the "Variable
Cumulative Preferred Stock") in five series of 50,000 shares
each - Series B, Series C, Series D, Series E and Series F.
These issues, priced at $1,000 per share, have contingent
voting rights and a liquidation preference of $1,000 per
share, plus accrued and unpaid dividends. Each of the five
series is identical except that the dividend rates and
dividend payment dates vary and separate auctions on
different auction dates are held by each series.
The shares of each of these series of Variable
Cumulative Preferred Stock are redeemable as a whole or in
part (in units of 100 shares), except under certain
conditions, at the option of J.P. Morgan, at a redemption
price of $1,000 per share plus an amount equal to accrued and
unpaid dividends.
Dividends on each series of Variable Cumulative
Preferred Stock are cumulative and are payable generally
every 49 days, subject to certain conditions. The dividend
rates determined by either the Auction Procedures or the
Remarketing Procedures for any Subsequent Dividend Period
will not exceed the Maximum Rate, which is the product of a
percentage ranging from 110% to 200% and the Federal Funds
Rate, the Effective Composite Commercial Paper Rate, the
Effective LIBOR Rate or the U.S. Treasury Rate, depending
upon the prevailing rating of the Shares of Variable
Preferred Stock at such time and the duration of such
Subsequent Dividend Period.
ERISA MATTERS
J.P. Morgan and JPMSI 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 Code) with respect to employee benefit plans ("Plans")
that are subject to ERISA. The purchase of Debt 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 J.P. Morgan, JPMSI or
any of their affiliates 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 Debt Securities are
acquired pursuant to and in accordance with an applicable
exemption, such as Prohibited Transaction Class Exemption
("PTCE") 84-14 (an exemption for certain transactions
determined by an independent qualified professional asset
manager), PTCE 91-38 (an exemption for certain transaction
involving bank collective investment funds) or PTCE 90-1 (an
exemption for certain transaction involving insurance company
pooled separate accounts).
Additionally, ERISA and the Code may place restrictions
on the purchase of Debt Securities by certain investors that
are not Plans. The United States Supreme Court recently
held, in the case of John Hancock Mutual Life Ins. Co. v.
Harris Trust and Savings Bank, 114 S.Ct. 517 (1993), that
under certain circumstances the assets of an insurance
company's general account may be treated as the assets of an
ERISA Plan for purposes of the fiduciary responsibility
provisions of ERISA. Based on the reasoning of the John
Hancock case, it could be argued that if J.P. Morgan or JPMSI
is a party in interest or a disqualified person with respect
to a Plan that has assets invested in the general account of
an insurance company that acquires, holds or invests in Debt
Securities using such general account funds, such acquisition
of, or holding of, or investment in such Debt Securities
might constitute a prohibited transaction for purposes of
Section 4975 of the Code or Section 406 of ERISA.
By its purchase of a Debt Security, each holder will be
deemed to have represented and warranted that the acquisition
and ownership of such Debt Security by such holder will not
constitute a prohibited transaction under ERISA or the Code.
ANY PLANS OR OTHER ENTITIES WHOSE ASSETS INCLUDE PLAN ASSETS
SUBJECT TO ERISA SHOULD CONSULT THEIR ERISA ADVISORS.
EXPERTS
The audited financial statements contained in J.P.
Morgan's Annual Report on Form 10-K for the year ended
December 31, 1993 (included in J.P. Morgan's Annual Report to
Stockholders) are incorporated by reference in this
Prospectus and have been so incorporated in reliance on the
report of Price Waterhouse LLP, independent accountants,
given on the authority of said firm as experts in auditing
and accounting.
No dealer, salesman or
any other person has been DEBT SECURITIES
authorized to give any
representations other
than those contained or
incorporated by reference
in this Prospectus in
connection with the offer
contained in this
Prospectus, and, if given
or made, such information
or representations must
not be relied upon as
having been authorized by
J.P. Morgan or by JPMSI.
This Prospectus shall not
constitute an offer to
sell or a solicitation of
an offer to buy any of
the securities offered
hereby in any
jurisdiction to any
person to whom it is
unlawful to make such
offer or solicitation in
such jurisdiction. The
delivery of this
Prospectus at any time J.P. MORGAN & CO. INCORPORATED
does not imply that the
information herein is
correct as of any time
subsequent to the date
hereof.
- -------------------------
TABLE OF CONTENTS
Page
----
Available Information............ 2
Incorporation of Certain
Documents by Reference......... 2
J.P. Morgan & Co. Incorporated... 3
Description of Debt Securities
Under the 1973 Indenture........ 6 J.P. MORGAN SECURITIES
Description of Debt Securities INC.
Under the 1982 Indenture........ 7
Description of Debt Securities
Under the 1986 Indenture........ 10
Description of Debt Securities
Under the 1993 Indenture........ 16
Same-Day Funds Settlement System. 21
Description of Capital
Securities...................... 22
ERISA Matters.................... 24
Experts.......................... 25
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
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 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) 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)(1) - Form of Underwriting Agreement (including form of Delayed
Delivery Contract) for Subordinated Debt (previously filed as an exhibit to
Registration Statement No. 33-45651 and incorporated by reference herein).
1(a)(2) - Form of Underwriting Agreement (including form of Delayed
Delivery Contract) for Debt (previously filed as an exhibit to Registration
Statement No. 33-49049 and incorporated by reference herein).
1(a)(3)* - Form of Underwriting Agreement for Series Preferred Stock,
Depositary Shares and Preferred Stock Warrants.
1(a)(4)* - Form of Underwriting Agreement for Currency Warrants.
1(b)(1) - Form of Purchase Agreement for Subordinated Debt (previously
filed as an exhibit to Registration Statement No. 33-45651 and incorporated
by reference herein).
1(b)(2) - Form of Purchase Agreement for Debt (previously filed as an
exhibit to Registration Statement No. 33-49049 and incorporated by
reference herein).
1(c)(1) - Form of Selling Agent Agreement for Subordinated Debt (previously
filed as an exhibit to Registration Statement No. 33-45651 and incorporated
by reference herein).
1(c)(2) - Form of Selling Agent Agreement for Debt (previously filed as an
exhibit to Registration Statement No. 33-49049 and incorporated by
reference herein).
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) - Indenture dated as of March 1, 1993, between J.P. Morgan & Co.
Incorporated and First Trust of New York, as Sucessor Trustee to Citibank,
N.A., (previously filed as an exhibit to Registration Statement No.
33-45651 and incorporated by reference herein).
4(a)(2) - Indenture dated as of August 15, 1982, between J.P. Morgan & Co.
Incorporated and Chemical Bank (formerly Manufacturers Hanover Trust
Company), as 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 Exchange Act of 1934 (the "Act"), and
previously filed as an exhibit to Registration Statement No. 33-49049 and
incorporated by reference herein).
4(a)(3) - 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, (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, and previously filed as an
exhibit to Registration Statement No. 33-49049 and incorporated by
reference herein).
4(a)(4)* - Form of Certificate of Designations for Series Preferred Stock.
4(a)(5)* - Form of Certificate for Shares of Series Preferred Stock.
4(a)(6)* - Form of Deposit Agreement.
4(a)(9) - Indenture dated as of November 11, 1973 between J.P. Morgan & Co.
Incorporated and The Bank of New York, as Trustee (previously filed as an
exhibit to Registration Statement No. 2-49280 and incorporated herein by
reference).
4(a)(10) - Indenture dated as of December 1, 1986 between J.P. Morgan & Co.
Incorporated and First Trust of New York, as Sucessor Trustee to Citibank,
N.A., (incorporated herein by reference to J.P. Morgan's Current Report on
Form 8-K, dated April 12, 1989, filed pursuant to Section 13 of the Act,
and previously filed as an exhibit to Registration Statement No. 33-10807
and incorporated by reference herein).
4(a)(11) - Form of First Supplemental Indenture dated as of May 12, 1992
between J.P. Morgan & Co. Incorporated and First Trust of New York, as
Sucessor Trustee to Citibank, N.A., (previously filed as an exhibit to
Registration Statement No. 33-45651 and incorporated by reference herein).
4(b)(1) - Form of Security (Subordinated Note) (previously filed as an
exhibit to Registration Statement No. 33-45651 and incorporated by
reference herein).
4(b)(2) - Form of Security (Note) (previously filed as an exhibit to
Registration Statement No. 33-49049 and incorporated by reference herein).
4(c)(1) - Form of Security (Subordinated Debenture) (previously filed as an
exhibit to Registration Statement No. 33-45651 and incorporated by
reference herein).
4(c)(2) - Form of Security (Debenture) (previously filed as an exhibit to
Registration Statement No. 33-49049 and incorporated by reference herein).
4(d)(1) - Form of Security (Discount Subordinated Security) (previously
filed as an exhibit to Registration Statement No. 33-45651 and incorporated
by reference herein).
4(d)(2) - Form of Security (Discount Security) (previously filed as an
exhibit to Registration Statement No. 33-49049 and incorporated by
reference herein).
4(e)(1) - Form of Security (Zero Coupon Subordinated Security) (previously
filed as an exhibit to Registration Statement No. 33-45651 and incorporated
by reference herein).
4(e)(2) - Form of Security (Zero Coupon Security) (previously filed as an
exhibit to Registration Statement No. 33-49049 and incorporated by
reference herein).
4(f)(1) - Form of Security (Extendible Subordinated Note) (previously filed
as an exhibit to Registration Statement No. 33-45651 and incorporated by
reference herein).
4(f)(2) - Form of Security (Extendible Note) (previously filed as an
exhibit to Registration Statement No. 33-49049 and incorporated by
reference herein).
4(g) - Form of Debt Warrant Agreement (previously filed as an exhibit to
Registration Statement No. 33-45651 and incorporated by reference herein).
4(h) - Form of Debt Warrant (included as Exhibit A to form of Warrant
Agreement) (previously filed as an exhibit to Registration Statement No.
33-45651 and incorporated by reference herein).
4(i)* - Form of Preferred Stock Warrant Agreement.
4(j)* - Form of Preferred Stock Warrant (included as Exhibit A to form of
Preferred Stock Warrant Agreement).
4(k)* - Form of Currency Warrant Agreement.
4(l)* - Form of Currency Warrant (included as Exhibit A to form of Currency
Warrant Agreement).
5* - Opinion of Margaret M. Foran.
12.3 - Computation of Consolidated Ratio of Earnings to Fixed Charges and
Consolidated Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends.
23(a) - Consent of Price Waterhouse LLP.
(b)* - Consent of Margaret M. Foran (included in Exhibit 5).
24* - Powers of Attorney.
25.1* - Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of Chemical Bank (formerly Manufacturers Hanover
Trust Company).
25.2 - Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of First Trust of New York.
25.4 - Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of The Bank of New York (previously filed and an
exhibit to Registration Statement No. 2-49280 and incorporated by reference
herein).
- ---------------------------
* Previously filed.
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.
(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.
<PAGE>
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
Post-Effective Amendment No. 1 to 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 13th day of March, 1995.
J.P. MORGAN & CO. INCORPORATED
By Margaret M. Foran /s/
Margaret M. Foran
(Vice President, Assistant Secretary and
Assistant General Counsel)
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Post-Effective Amendment No. 1 to 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, March 13, 1995
(Douglas A. Warner III) President and Director
(Principal Executive Officer)
MARTIN FELDSTEIN* Director March 13, 1995
(Martin Feldstein)
HANNA H. GRAY* Director March 13, 1995
(Hanna H. Gray)
JAMES R. HOUGHTON* Director March 13, 1995
(James R. Houghton)
JAMES L. KETELSEN* Director March 13, 1995
(James L. Ketelsen)
WILLIAM S. LEE* Director March 13, 1995
(William S. Lee)
ROBERTO G. MENDOZA* Vice Chairman of March 13, 1995
(Roberto G. Mendoza) the Board and Director
LEE R. RAYMOND* Director March 13, 1995
(Lee R. Raymond)
RICHARD D. SIMMONS* Director March 13, 1995
(Richard D. Simmons)
JOHN G. SMALE* Director March 13, 1995
(John G. Smale)
KURT F. VIERMETZ* Vice Chairman of March 13, 1995
(Kurt F. Viermetz) the Board and Director
RODNEY B. WAGNER* Vice Chairman of March 13, 1995
(Rodney B. Wagner) the Board and Director
DENNIS WEATHERSTONE* Director March 13, 1995
(Dennis Weatherstone)
DOUGLAS C. YEARLEY* Director March 13, 1995
(Douglas C. Yearley)
JAMES T. FLYNN* Chief Financial Officer March 13, 1995
(James T. Flynn) (Principal Financial and
Accounting Officer)
*By: /s/ Margaret M. Foran March 13, 1995
(Margaret M. Foran, Attorney-in-Fact)
Exhibit 3(a)
RESTATED
CERTIFICATE OF INCORPORATION
of
J. P. MORGAN & CO.
Incorporated
Pursuant to Section 245 of the
General Corporation Law of Delaware
_________________
THE ORIGINAL CERTIFICATE OF INCORPORATION OF J. P. MORGAN &
CO. INCORPORATED WAS FILED WITH THE SECRETARY OF STATE OF
DELAWARE ON DECEMBER 20, 1968.
FIRST The name of the Corporation is J. P. Morgan & Co.
Incorporated.
SECOND The address of its registered office in the State
of Delaware is 902 Market Street, City of Wilmington, County of
New Castle. The name of its registered agent is J. P. Morgan &
Co. Incorporated.
THIRD The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be now or
hereafter organized under the General Corporation Law of
Delaware.
FOURTH The total number of shares of all classes of
capital stock which the Corporation shall have authority to issue
is five hundred ten million shares, of which ten million shares
shall be shares of Preferred Stock without par value (hereinafter
called "Preferred Stock"), and five hundred million shares shall
be shares of Common Stock of the par value of $2.50 per share
(hereinafter called "Common Stock").
Any amendment to the Certificate of Incorporation which
shall increase or decrease the authorized capital stock of the
Corporation may be adopted by the affirmative vote of the holders
of a majority of the outstanding shares of stock of the
Corporation entitled to vote.
A. The designations and the powers, preferences and
rights, and the qualifications, limitations or restrictions
thereof, of the Preferred Stock shall be as follows:
(1) The Board of Directors is expressly authorized at any
time, and from time to time, to provide for the issuance of
shares of Preferred Stock in one or more series, with such voting
powers, full or limited but not to exceed one vote per share, or
without voting powers and with such designations, preferences and
relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as shall be
expressed in the resolution or resolutions providing for the
issue thereof adopted by the Board of Directors and as are not
expressed in this Certificate of Incorporation or any amendment
thereto, including (but without limiting the generality of the
foregoing) the following:
(a) the designation of such series;
(b) the dividend rate of such series, the conditions
and the dates upon which such dividends shall be payable, the
preference or relation which such dividends shall bear to the
dividends payable on any other class or classes or on any other
series of any class or classes of capital stock of the
Corporation, and whether such dividends shall be cumulative or
noncumulative;
(c) whether the shares of such series shall be subject
to redemption by the Corporation and, if made subject to such
redemption, the times, prices and other terms and conditions of
such redemption;
(d) the terms and amount of any sinking fund provided
for the purchase or redemption of the shares of such series;
(e) whether the shares of such series shall be
convertible into or exchangeable for shares of any other class or
classes or of any other series of any class or classes of capital
stock of the Corporation and, if provision be made for conversion
or exchange, the times, prices, rates, adjustments, and other
terms and conditions of such conversion or exchange;
(f) the extent, if any, to which the holders of the
shares of such series shall be entitled to vote as a class or
otherwise with respect to the election of directors or otherwise;
provided, however, that in no event shall any holder of any
series of Preferred Stock be entitled to more than one vote for
each share of such Preferred Stock held by him;
(g) the restrictions and conditions, if any, upon the
issue or reissue of any additional Preferred Stock ranking on a
parity with or prior to such shares as to dividends or upon
dissolution;
(h) the rights of the holders of the shares of such
series upon the dissolution of, or upon the distribution of
assets of, the Corporation, which rights may be different in the
case of a voluntary dissolution than in the case of an
involuntary dissolution.
(2) Except as otherwise required by law and except for such
voting powers with respect to the election of directors or other
matters as may be stated in the resolutions of the Board of
Directors creating any series of Preferred Stock, the holders of
any such series shall have no voting power whatsoever.
B. Designation of Adjustable Rate Cumulative Preferred
Stock, Series A.
1. Designation. The designation of such preferred stock shall
be Adjustable Rate Cumulative Preferred Stock, Series A
(hereinafter referred to as the "Series A Preferred Stock") and
the number of shares constituting such series is 2,500,000.
Shares of the Series A Preferred Stock shall have a stated value
of $100 per share. The number of authorized shares of the Series
A Preferred Stock may be reduced by further resolution duly
adopted by the Board of Directors of the Corporation and by the
filing of a certificate pursuant to the provisions of the General
Corporation Law of the State of Delaware stating that such
reduction has been so authorized, but the number of authorized
shares of the Series A Preferred Stock shall not be increased.
2. Dividends. Dividend rates on the shares of the Series A
Preferred Stock shall be: (i) for the period (the "Initial
Dividend Period") from the respective dates of original issue
thereof to and including June 30, 1983, the rate shall be 9.25%
per annum, and (ii) for each quarterly dividend period
(hereinafter referred to as a "Quarterly Dividend Period", and
the Initial Dividend Period or any Quarterly Dividend Period
being hereinafter individually referred to as a "Dividend Period"
and collectively referred to as "Dividend Periods") thereafter,
which Quarterly Dividend Periods shall commence on January 1,
April 1, July 1 and October 1 in each year and shall end on and
include the day next preceding the first day of the next
Quarterly Dividend Period, at a rate per annum of the stated
value thereof equal to the Applicable Rate (as defined in Section
3) in respect of such Quarterly Dividend Period. Such dividends
shall be cumulative from the respective dates of original issue
of such shares and shall be payable, when and as declared by the
Board of Directors, on March 31, June 30, September 30 and
December 31 of each year, commencing June 30, 1983. Each such
dividend shall be paid to the holders of record of shares of the
Series A Preferred Stock as they appear on the stock register of
the Corporation on such record date, not exceeding 30 days
preceding the payment date thereof, as shall be fixed by the
Board of Directors of the Corporation, or by a committee of said
Board of Directors duly authorized to fix such date. Dividends
on account of arrears for any past Dividend Periods may be
declared and paid at any time, without reference to any regular
dividend payment date, to holders of record on such date, not
exceeding 45 days preceding the payment date thereof, as may be
fixed by the Board of Directors of the Corporation, or by a
committee of said Board of Directors duly authorized to fix such
date. In the event that there shall be outstanding shares of any
other series of preferred stock ranking on a parity as to
dividends with the Series A Preferred Stock, the Corporation, in
making any dividend payment on account of arrears on the Series A
Preferred Stock or such other series of preferred stock, shall
make payments ratably upon all outstanding shares of the Series A
Preferred Stock and such other series of preferred stock in
proportion to the respective amounts of dividends in arrears upon
all such outstanding shares of the Series A Preferred Stock and
such other series of preferred stock to the date of such dividend
payment. No interest, or sum of money in lieu of interest, shall
be payable in respect of any dividend payment or payments which
may be in arrears.
Dividends payable on the Series A Preferred Stock for each
full Quarterly Dividend Period shall be computed by dividing the
Applicable Rate by four. Dividends payable on the Series A
Preferred Stock for any period less than a full Quarterly
Dividend Period, and for the portion of the Initial Dividend
Period prior to April 1, 1983, shall be computed on the basis of
a 360 day year of four 90 day quarters and the actual number of
days elapsed in the period for which payable.
3. Definition of Applicable Rate, etc. Except as provided
below in this paragraph, the "Applicable Rate" for any Quarterly
Dividend Period shall be (a) 4.875% less than (b) the highest of
the Treasury Bill Rate, the Ten Year Constant Maturity Rate or
the Twenty Year Constant Maturity Rate (each as hereinafter
defined) for such Dividend Period. In the event that the
Corporation determines in good faith that for any reason:
(i) any one of the Treasury Bill Rate, the Ten Year
Constant Maturity Rate or the Twenty Year Constant Maturity Rate
cannot be determined for any Quarterly Dividend Period, then the
Applicable Rate for such Dividend Period shall be 4.875% less
than the higher of whichever two of such Rates can be so
determined;
(ii) only one of the Treasury Bill Rate, the Ten Year
Constant Maturity Rate or the Twenty Year Constant Maturity Rate
can be determined for any Quarterly Dividend Period, then the
Applicable Rate for such Dividend Period shall be 4.875% less
than whichever such Rate can be so determined; or
(iii) none of the Treasury Bill Rate, the Ten Year
Constant Maturity Rate and the Twenty Year Constant Maturity Rate
can be determined for any Quarterly Dividend Period, then the
Applicable Rate in effect for the preceding Dividend Period shall
be continued for such Dividend Period.
Anything herein to the contrary notwithstanding, the Applicable
Rate for any Quarterly Dividend Period shall in no event be less
than 5.00% per annum or greater than 11.50% per annum.
Except as provided below in this paragraph, the "Treasury
Bill Rate" for each Quarterly Dividend Period shall be the
arithmetic average of the two most recent weekly per annum market
discount rates (or the one weekly per annum market discount rate,
if only one such rate shall be published during the relevant
Calendar Period as provided below) for three-month U.S. Treasury
bills, as published weekly by the Federal Reserve Board during
the Calendar Period immediately prior to the last ten calendar
days of March, June, September or December, as the case may be,
prior to the Quarterly Dividend Period for which the dividend
rate on the Series A Preferred Stock is being determined. In the
event that the Federal Reserve Board does not publish such a
weekly per annum market discount rate during such Calendar
Period, then the Treasury Bill Rate for such Dividend Period
shall be the arithmetic average of the two most recent weekly per
annum market discount rates (or the one weekly per annum market
discount rate, if only one such rate shall be published during
the relevant Calendar Period as provided below) for three-month
U.S. Treasury bills, as published weekly during such Calendar
Period by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Corporation. In the event
that a per annum market discount rate for three-month U.S.
Treasury bills shall not be published by the Federal Reserve
Board or by any Federal Reserve Bank or by any U.S. Government
department or agency during such Calendar Period, then the
Treasury Bill Rate for such Dividend Period shall be the
arithmetic average of the two most recent weekly per annum market
discount rates (or the one weekly per annum market discount rate,
if only one such rate shall be published during the relevant
Calendar Period as provided below) for all of the U.S. Treasury
bills then having maturities of not less than 80 nor more than
100 days, as finally published during such Calendar Period by the
Federal Reserve Board or, if the Federal Reserve Board shall not
publish such rates, by any Federal Reserve Bank or by any U.S.
Government department or agency selected by the Corporation. In
the event that the Corporation determines in good faith that for
any reason no such U.S. Treasury bill rates are published as
provided above during such Calendar Period, then the Treasury
Bill Rate for such Dividend Period shall be the arithmetic
average of the per annum market discount rates based upon the
closing bids during such Calendar Period for each of the issues
of marketable non-interest bearing U.S. Treasury securities with
a maturity of not less than 80 nor more than 100 days from the
date of each such quotation, as quoted daily for each business
day in New York City (or less frequently if daily quotations
shall not be generally available) to the Corporation by at least
three recognized U.S. Government securities dealers selected by
the Corporation. In the event that the Corporation determines in
good faith that for any reason the Corporation cannot determine
the Treasury Bill Rate for any Quarterly Dividend Period as
provided above in this paragraph, the Treasury Bill Rate for such
Dividend Period shall be the arithmetic average of the per annum
market discount rates based upon the closing bids during such
Calendar Period for each of the issues of marketable interest-
bearing U.S. Treasury securities with a maturity of not less than
80 nor more than 100 days, as chosen and quoted daily for each
business day in New York City (or less frequently if daily
quotations shall not be generally available) to the Corporation
by at least three recognized U.S. Government securities dealers
selected by the Corporation.
Except as provided below in this paragraph, the "Ten Year
Constant Maturity Rate" for each Quarterly Dividend Period shall
be the arithmetic average of the two most recent weekly per annum
Ten Year Average Yields (or the one weekly per annum Ten Year
Average Yield, if only one such Yield shall be published during
the relevant Calendar Period as provided below), as published
weekly by the Federal Reserve Board during the Calendar Period
immediately prior to the last ten calendar days of March, June,
September or December, as the case may be, prior to the Quarterly
Dividend Period for which the dividend rate on the Preferred
Stock is being determined. In the event that the Federal Reserve
Board does not publish such a weekly per annum Ten Year Average
Yield during such Calendar Period, then the Ten Year Constant
Maturity Rate for such Dividend Period shall be the arithmetic
average of the two most recent weekly per annum Ten Year Average
Yields (or the one weekly per annum Ten Year Average Yield, if
only one such Yield shall be published during the relevant
Calendar Period as provided below), as published weekly during
such Calendar Period by any Federal Reserve Bank or by any U.S.
Government department or agency selected by the Corporation. In
the event that a per annum Ten Year Average Yield shall not be
published by the Federal Reserve Board or by any Federal Reserve
Bank or by any U.S. Government department or agency during such
Calendar Period, then the Ten Year Constant Maturity Rate for
such Dividend Period shall be the arithmetic average of the two
most recent weekly per annum average yields to maturity (or the
one weekly average yield to maturity, if only one such yield
shall be published during the relevant Calendar Period as
provided below) for all of the actively traded marketable U.S.
Treasury fixed interest rate securities (other than Special
Securities) then having maturities of not less than eight nor
more than twelve years, as finally published during such Calendar
Period by the Federal Reserve Board or, if the Federal Reserve
Board shall not publish such yields, by any Federal Reserve Bank
or by any U.S. Government department or agency selected by the
Corporation. In the event that the Corporation determines in
good faith that for any reason the Corporation cannot determine
the Ten Year Constant Maturity Rate for any Quarterly Dividend
Period as provided above in this paragraph, then the Ten Year
Constant Maturity Rate for such Dividend Period shall be the
arithmetic average of the per annum average yields to maturity
based upon the closing bids during such Calendar Period for each
of the issues of actively traded marketable U.S. Treasury fixed
interest rate securities (other than Special Securities) with a
final maturity date not less than eight nor more than twelve
years from the date of each such quotation, as chosen and quoted
daily for each business day in New York City (or less frequently
if daily quotations shall not be generally available) to the
Corporation by at least three recognized U.S. Government
securities dealers selected by the Corporation.
Except as provided below in this paragraph, the "Twenty Year
Constant Maturity Rate" for each Quarterly Dividend Period shall
be the arithmetic average of the two most recent weekly per annum
Twenty Year Average Yields (or the one weekly per annum Twenty
Year Average Yield, if only one such Yield shall be published
during the relevant Calendar Period as provided below), as
published weekly by the Federal Reserve Board during the Calendar
Period immediately prior to the last ten calendar days of March,
June, September or December, as the case may be, prior to the
Quarterly Dividend Period for which the dividend rate on the
Series A Preferred Stock is being determined. In the event that
the Federal Reserve Board does not publish such a weekly per
annum Twenty Year Average Yield during such Calendar Period, then
the Twenty Year Constant Maturity Rate for such Dividend Period
shall be the arithmetic average of the two most recent weekly per
annum Twenty Year Average Yields (or the one weekly per annum
Twenty Year Average Yield, if only one such Yield shall be
published during the relevant Calendar Period as provided below),
as published weekly during such Calendar Period by any Federal
Reserve Bank or by any U.S. Government department or agency
selected by the Corporation. In the event that a per annum
Twenty Year Average Yield shall not be published by the Federal
Reserve Board or by any Federal Reserve Bank or by any U.S.
Government department or agency during such Calendar Period, then
the Twenty Year Constant Maturity Rate for such Dividend Period
shall be the arithmetic average of the two most recent weekly per
annum average yields to maturity (or the one weekly average yield
to maturity, if only one such yield shall be published during the
relevant Calendar Period as provided below) for all of the
actively traded marketable U.S. Treasury fixed interest rate
securities (other than Special Securities) then having maturities
of not less than eighteen nor more than twenty-two years, as
finally published during such Calendar Period by the Federal
Reserve Board or, if the Federal Reserve Board shall not publish
such yields, by any Federal Reserve Bank or by any U.S.
Government department or agency selected by the Corporation. In
the event that the Corporation determines in good faith that for
any reason the Corporation cannot determine the Twenty Year
Constant Maturity Rate for any Quarterly Dividend Period as
provided above in this paragraph, then the Twenty Year Constant
Maturity Rate for such Dividend Period shall be the arithmetic
average of the per annum average yields to maturity based upon
the closing bids during such Calendar Period for each of the
issues of actively traded marketable U.S. Treasury fixed interest
rate securities (other than Special Securities) with a final
maturity date not less than eighteen nor more than twenty-two
years from the date of each such quotation, as quoted daily for
each business day in New York City (or less frequently if daily
quotations shall not be generally available) to the Corporation
by at least three recognized U.S. Government securities dealers
selected by the Corporation.
The Treasury Bill Rate, the Ten Year Constant Maturity Rate
and the Twenty Year Constant Maturity Rate shall each be rounded
to the nearest five hundredths of a percentage point.
The Applicable Rate with respect to each Quarterly Dividend
Period shall be calculated as promptly as practicable by the
Corporation according to the appropriate method described herein.
The Corporation shall cause each Applicable Rate to be published
in a newspaper of general circulation in New York City prior to
the commencement of the new Quarterly Dividend Period to which it
applies and shall cause notice of such Applicable Rate to be
enclosed with the dividend payment checks next mailed to the
holder of the Series A Preferred Stock.
For purposes of this Section, the term
(i) "Calendar Period" shall mean 14 calendar days;
(ii) "Special Securities" shall mean securities which
can, at the option of the holder, be surrendered at face value in
payment of any Federal estate tax or which provide tax benefits
to the holder and are priced to reflect such tax benefits or
which were originally issued at a deep or substantial discount;
(iii) "Ten Year Average Yield" shall mean the average
yield to maturity for actively traded marketable U.S. Treasury
fixed interest rate securities (adjusted to constant maturities
of ten years); and
(iv) "Twenty Year Yield" shall mean the average yield
to maturity for actively traded marketable U.S. Treasury fixed
interest rate securities (adjusted to constant maturities of
twenty years).
4. Redemption. The Series A Preferred Stock shall not be
redeemable prior to March 1, 1986. On or after March 1, 1986,
the Corporation, at its option, may redeem the Series A Preferred
Stock, as a whole or in part, at any time or from time to time,
at a redemption price (i) in the case of any redemption on a
redemption date from March 1, 1986 to February 29, 1988,
inclusive of $103.00 per share and (ii) in the case of any
redemption on a redemption date occurring on or after March 1,
1988, of $ 100.00 per share, plus, in each case, accrued and
unpaid dividends thereto to the date fixed for redemption.
In the event the Corporation shall redeem shares of Series A
Preferred Stock, notice of such redemption shall be given by
first class mail, postage prepaid, mailed not less than 30 nor
more than 60 days prior to the redemption date, to each holder of
record of the shares to be redeemed; at such holder's address as
the same appears on the stock register of the Corporation. Each
such notice shall state: (1) the redemption date; (2) the number
of shares of Series A Preferred Stock to be redeemed and, if less
than all the shares held by such holder are to be redeemed, the
number of such shares to be redeemed from such holder; (3) the
redemption price; (4) the place or places where certificates for
such shares are to be surrendered for payment of the redemption
price; and (5) that dividends on the shares to be redeemed will
cease to accrue on such redemption date. Notice having been
mailed as aforesaid, from and after the redemption date (unless
default shall be made by the Corporation in providing money for
the payment of the redemption price) dividends on the shares of
the Series A Preferred Stock so called for redemption shall cease
to accrue, and said shares shall no longer be deemed to be
outstanding, and all rights of the holders thereof as
stockholders of the Corporation (except the right to receive from
the Corporation the redemption price) shall cease. Upon
surrender in accordance with said notice of the certificates for
any shares so redeemed (properly endorsed or assigned for
transfer, if the Board of Directors of the Corporation shall so
require and the notice shall so state) such shares shall be
redeemed by the Corporation at the redemption price aforesaid. If
less than all the outstanding shares of the Series A Preferred
Stock are to be redeemed, shares to be redeemed shall be selected
by the Corporation from outstanding shares of Series A Preferred
Stock not previously called for redemption by lot or pro rata (as
nearly as may be) or by any other method determined by the
Corporation in its sole discretion to be equitable. A new
certificate shall be issued representing the unredeemed shares
without cost to the holder thereof.
Notwithstanding the foregoing provisions of this Section 4,
if any dividends on the Series A Preferred Stock are in arrears,
no shares of the Series A Preferred Stock shall be redeemed
unless all outstanding shares of the Series A Preferred Stock are
simultaneously redeemed, and the Corporation shall not purchase
or otherwise acquire any shares of such Series; provided,
however, that the foregoing shall not prevent the purchase or
acquisition of shares of the Series A Preferred Stock pursuant to
a purchase or exchange offer made on the same terms to holders of
all outstanding shares of the Series A Preferred Stock.
5. Shares to be Retired. All shares of the Series A Preferred
Stock redeemed by the Corporation shall be retired and cancelled
and shall be restored to the status of authorized but unissued
shares of preferred stock, without designation as to series, and
may thereafter be issued.
6. Conversion or Exchange. The holders of shares of the Series
A Preferred Stock shall not have any rights to convert such
shares into or exchange such shares for shares of any other class
or classes or of any other series of any class or classes of
capital stock of the Corporation.
7. Voting. The Series A Preferred Stock shall have no voting
powers either general or special except as otherwise required by
law and as hereinafter provided in this Section 7.
If at the time of any annual meeting of stockholders for the
election of directors, the equivalent of six-quarterly dividends
(whether or not consecutive) payable on any share or shares of
preferred stock are in default, the number of directors
constituting the Board of Directors of the Corporation shall be
increased by two. The holders of record of the Series A
Preferred Stock, voting separately as a class with the holders of
shares of any one or more other series of preferred stock upon
which like voting rights have been conferred, shall be entitled
at said meeting of stockholders (and at each subsequent annual
meeting of stockholders), unless all dividends in arrears have
been paid or declared and set apart for payment prior thereto, to
vote for the election of two directors of the Corporation, the
holder of any Series A Preferred Stock being entitled to cast one
tenth (1/10) of one vote, with the remaining directors of the
Corporation to be elected by the holders of shares of any other
class or classes or series of stock entitled to vote therefor.
Until the default in payments of all dividends which permitted
the election of said directors shall cease to exist, any director
who shall have been so elected pursuant to the next preceding
sentence may be removed at any time, either with or without
cause, only by the affirmative vote of the holders of the shares
at the time entitled to cast a majority of the votes entitled to
be cast for the election of any such director at a special
meeting of such holders called for that purpose, and any vacancy
thereby created may be filled by the vote of such holders. If
and when such default shall cease to exist, the holders of the
Series A Preferred Stock and the holders of shares of any one or
more series of preferred stock upon which like voting rights have
been conferred shall be divested of the foregoing special voting
rights, subject to revesting in the event of each and every
subsequent like default in payments of dividends. Upon the
termination of the foregoing special voting rights, the terms of
office of all persons who may have been elected directors
pursuant to said special voting rights shall forthwith terminate,
and the number of directors constituting the Board of Directors
shall be reduced by two.
Unless the vote or consent of the holders of a greater
number of shares shall then be required by law, the consent of
the holders of record of at least 66 2/3% of all of the Series A
Preferred Stock and all other shares of the same class at the
time outstanding, given in person or by proxy, either in writing
or by a vote at a meeting called for that purpose, voting as a
class without regard to series, the holders of the Series A
Preferred Stock being entitled to cast one tenth (1/10) of one
vote per share, shall be necessary for authorizing, effecting or
validating the amendment, alteration or repeal of any of the
provisions of the Restated Certificate of Incorporation or of any
certificate amendatory thereof or supplemental thereto (including
any Certificate of Designation, Preferences and Rights or any
similar document relating to any series of preferred stock) so as
to affect adversely the preferences, rights, powers or privileges
of the Series A Preferred Stock and any other shares of the same
class; provided, however, that in any case in which one or more,
but not all, series of such class would be adversely affected as
to the preferences, rights, powers or privileges thereof, the
affirmative consent of holders of shares entitled to cast at
least 66 2/3% of the votes entitled to be cast by the holders of
all of the shares of all of the series that would be adversely
affected, voting as a class, shall be required in lieu thereof.
Unless the vote or consent of the holders of a greater
number of shares shall then be required by law, the consent of
the holders of record of at least 66 2/3% of all of the shares of
the Series A Preferred Stock and all other series of preferred
stock ranking on a parity with shares of the Series A Preferred
Stock, either as to dividends or upon liquidation, at the time
outstanding, given in person or by proxy, either in writing or by
a vote at a meeting called for the purpose at which the holders
of shares of the Series A Preferred Stock and such other series
of preferred stock shall vote together as a single class without
regard to series, the holders of the Series A Preferred Stock
being entitled to cast one tenth (1/10) of one vote, shall be
necessary to issue, authorize, or increase the authorized amount
of, or issue or authorize any obligation or security convertible
into or evidencing a right to purchase, any additional class or
series of stock ranking prior to the Series A Preferred Stock as
to dividends or upon liquidation.
8. Liquidation Preference. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the
Corporation, the holders of the Series A Preferred Stock shall be
entitled to receive out of the assets of the Corporation
available for distribution to stockholders, before any
distribution of assets shall be made to the holders of Common
Stock or of any other shares of stock of the Corporation ranking
as to such a distribution junior to the Series A Preferred Stock,
an amount equal to $100 per share plus an amount equal to any
accrued and unpaid dividends thereon (whether or not earned or
declared) to the date fixed for payment of such distribution. If
upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the amounts payable with respect
to the Series A Preferred Stock and any other shares of stock of
the Corporation ranking as to any such distribution on a parity
with the Series A Preferred Stock are not paid in full, the
holders of the Series A Preferred Stock and of such other shares
shall share ratably in any such distribution of assets of the
Corporation in proportion to the full respective preferential
amounts to which they are entitled. After payment to the holders
of the Series A Preferred Stock of the full preferential amounts
provided for in this Section 8, the holders of the Series A
Preferred Stock shall be entitled to no further participation in
any distribution of assets by the Corporation.
Neither the sale, conveyance, exchange or transfer of all or
substantially all the property or business of the Corporation,
the merger or consolidation of the Corporation into or with any
other corporation nor the merger or consolidation of any other
corporation into or with the Corporation shall be deemed to be a
dissolution, liquidation or winding up, voluntary or involuntary,
of the Corporation for the purposes of this Section 8.
9. Limitation on Dividends on Junior Ranking Stock. So long as
any of the Series A Preferred Stock shall be outstanding, the
Corporation shall not declare any dividends on the Common Stock
of the Corporation or any other stock of the Corporation ranking
as to dividends or distribution of assets junior to the Series A
Preferred Stock (as defined below, the "Junior Stock"), or make
any payment on account of, or set apart money for, a sinking or
other analogous fund for the purchase, redemption or other
retirement of any shares of Junior Stock, or make any
distribution in respect thereof, whether in cash or property or
in obligations or stock of the Corporation, other than Junior
Stock (such dividends, payments, setting apart and distributions
being herein called "Junior Stock Payments"), unless full
cumulative dividends shall have been paid or declared and set
apart for payment upon all outstanding shares of preferred stock
other than Junior Stock, at the date of such declaration in the
case of any such dividend, or the date of such setting apart in
the case of any such fund, or the date of such payment or
distribution in the case of any other Junior Stock Payment.
10. Ranking of Stock of the Corporation. For purposes of this
designation, any stock of any class or classes of the Corporation
shall be deemed to rank:
(1) prior to the shares of the Series A Preferred
Stock, either as to dividends or upon liquidation, if the holders
of such class or classes shall be entitled to the receipt of
dividends or of amounts distributable upon dissolution,
liquidation or winding up of the Corporation, as the case may be,
in preference or priority to the holders of shares of the Series
A Preferred Stock;
(2) on a parity with shares of the Series A Preferred
Stock, either as to dividends or upon liquidation, whether or not
the dividend rates, dividend payment dates or redemption or
liquidation prices per share or sinking fund provisions, if any,
be different from those of the Series A Preferred Stock, if the
holders of such stock shall be entitled to the receipt of
dividends or of amounts distributable upon dissolution,
liquidation or winding up of the Corporation, as the case may be,
in proportion to their respective dividend rates or liquidation
prices, without preference or priority, one over the other, as
between the holders of such stock and the holders of shares of
the Series A Preferred Stock; and
(3) junior to shares of the Series A Preferred Stock,
either as to dividends or upon liquidation, if such class shall
be Common Stock or if the holders of shares of the Series A
Preferred Stock shall be entitled to receipt of dividends or of
amounts distributable upon dissolution, liquidation or winding up
of the Corporation, as the case may be, in preference or priority
to the holders of shares of such class or classes.
C. Designation of Variable Cumulative Preferred Stock,
Series B through F.
1. Designation. The designation of such preferred stock shall
be the Variable Cumulative Preferred Stock (hereinafter referred
to as the "Variable Cumulative Preferred Stock") and the number
of shares constituting such Variable Cumulative Preferred Stock
is 250,000. Each share shall constitute a series, and there shall
be five groups each comprising 50,000 series (each group a
"Series"), such Series to be designated the Variable Cumulative
Preferred Stock, Series B-1 through B-50,000 (hereinafter
referred to as "Series B"), Variable Cumulative Preferred Stock,
Series C-1 through C-50,000 (hereinafter referred to as "Series
C"), Variable Cumulative Preferred Stock, Series D-1 through D-
50,000 (hereinafter referred to as "Series D"), Variable
Cumulative Preferred Stock, Series E-1 through E-50,000
(hereinafter referred to as "Series E"), and Variable Cumulative
Preferred Stock, Series F-1 through F-50,000 (hereinafter
referred to as "Series F"). Shares of the Variable Cumulative
Preferred Stock shall have a stated value of $1,000 per share.
2. Definitions. As used herein, the following terms shall have
the following meanings, unless the context otherwise requires:
"Affiliate" shall mean any Person controlled by, in control
of, or under common control with, the Corporation.
"Agent Member" shall mean the member of the Auction Stock
Depository that will act on behalf of a Bidder and is identified
as such in such Bidder's Master Purchaser's Letter.
"Applicable Determining Rate" shall mean with respect to a
Dividend Period from one day to five days, the greater of the
Effective Composite Commercial Paper Rate for commercial paper of
a term of five days and the Federal Funds Rate; with respect to a
Dividend Period of six days to 89 days, the Effective Composite
Commercial Paper Rate; with respect to a Dividend Period of 90
days to 364 days, the Effective LIBOR Rate; and with respect to a
Dividend Period of 365 days to 30 years, the U.S. Treasury Rate.
"Auction" shall mean the periodic implementation of the
Auction Procedures.
"Auction Date" shall mean the Business Day immediately
preceding the first day of a Dividend Period for MMP.
"Auction Method" shall mean the method of determining the
duration of Dividend Periods and Dividend Rates for the Shares of
Variable Cumulative Preferred Stock of a Series pursuant to the
procedures described in paragraph D of Section 5 hereof.
"Auction Procedures" shall mean the procedures for
conducting Auctions set forth in Section 6 hereof.
"Auction Stock Depository" shall mean any securities
depository selected by the Corporation and reasonably acceptable
to the Trust Company which agrees to follow the procedures
required to be followed by such securities depository in
connection with the Auction of Shares of MMP.
"Available Shares" shall have the meaning specified in
paragraph C(1)(a) of Section 6 hereof.
"Bid" and "Bids" shall have the respective meanings
specified in paragraph A(2) of Section 6 hereof.
"Bidder" and "Bidders" shall have the respective meanings
specified in paragraph A(2) of Section 6 hereof.
"Board of Directors" shall mean the Board of Directors of
the Corporation or, unless the context otherwise requires, an
authorized committee thereof.
"Broker-Dealer" shall mean any broker-dealer, or other
entity permitted by law to perform the function required of a
Broker-Dealer in the Auction Procedures, that is a member of, or
a participant in, the Auction Stock Depository, and that has been
selected by the Corporation and has entered into a Broker-Dealer
Agreement with the Trust Company that remains effective and
pursuant to which agreement such Broker-Dealer agrees to follow
the Auction Procedures.
"Business Day" shall mean a day on which the New York Stock
Exchange, Inc. is open for trading and which is neither a
Saturday, Sunday nor other day on which banks in The City of New
York, New York, are authorized by law to close.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Converted MMP" shall mean Shares of MMP which, by reason of
an election by the Method Selection Agent of a different Dividend
Determination Method, will becomes SABRES at the end of the then-
current Dividend Period applicable thereto.
"Converted SABRES" shall mean Shares of SABRES which, by
reason of an election by the Method Selection Agent of a
different Dividend Determination Method, will become MMP at the
end of the then-current Dividend Period applicable thereto.
"Date of Original Issue" shall mean, as to any Share of
Variable Cumulative Preferred Stock, the date on which the
Corporation initially issues such Share.
"Dividend Determination Method" or "Method" shall mean
either the Auction Method or the Remarketing Method.
"Dividend Payment Date" shall mean, with respect to each
Share of Variable Cumulative Preferred Stock, the First Business
Day of the Subsequent Dividend Period immediately following the
end of each Dividend Period applicable thereto, regardless of its
length. In addition, "Dividend Payment Date" shall mean (i) in
the case of Dividend Periods for MMP of any Series of more than
99 days, such additional Dividend Payment Dates as are determined
by the Term Selection Agent for such Series prior to commencement
of such Dividend Periods and (ii) in the case of Dividend Periods
for SABRES of more than 99 days, the following additional dates:
(a) if such Dividend Period is from 100 to 190 days, the 9lst day
of such Dividend Period; (b) if such Dividend Period is from 191
to 281 days, the 91st and 182nd days of such Dividend Period; (c)
if such Dividend Period is from 282 to 364 days, the 91st, 182nd
and 273rd days of such Dividend Period; and (d) if such Dividend
Period is from 365 days to 30 years, January 15, April 15, July
15 and October 15 of each year. However, in all such cases, if
such Dividend Payment Date is not a Business Day, then such
Dividend Payment Date shall be the Business Day next succeeding
such date and, so long as the Auction Stock Depository shall make
payments to participants and members in next-day funds, if a day
that otherwise would be a Dividend Payment Date for Shares of MMP
is succeeded by a day which is not a Business Day then the
Dividend Payment Date will be the next succeeding Business Day
that is immediately succeeded by a Business Day.
"Dividend Period" and "Dividend Periods" shall mean, as to
each Share of Variable Cumulative Preferred Stock, each period,
to which one or more Dividend Payment Dates may relate, with
respect to which dividends on such Share shall accumulate and be
payable, each such Dividend Period to be determined pursuant to
either the Auction Method or the Remarketing Method.
"Dividend Rate" and "Dividend Rates" shall mean, as to each
Share of Variable Cumulative Preferred Stock, each rate at which
dividends accumulate and are payable on such Share during a
Dividend Period, such Dividend Rate to be determined pursuant to
either the Auction Method or the Remarketing Method.
"Effective Composite Commercial Paper Rate" shall mean, on
any date, (i) the Money Market Yield of the rate on commercial
paper placed on behalf of issuers whose corporate bonds are rated
"AA" by Standard & Poor's or "Aa" by Moody's or the equivalent of
such rating by another nationally recognized rating agency, for a
maturity that equals the duration of the relevant Dividend Period
as such rate is made available on a discount basis or otherwise
by the Federal Reserve Bank of New York on such date, or (ii) in
the event that the Federal Reserve Bank of New York does not make
available such a rate by 2:00 P.M., New York City time, on such
date, the Money Market Yield of the arithmetic mean of the rates
on commercial paper of such maturity placed on behalf of such
issuers, as quoted on a discount basis or otherwise by Shearson
Lehman Commercial Paper Incorporated, The First Boston
Corporation or Goldman, Sachs & Co., or, in lieu of any thereof,
their respective affiliates or successors that are commercial
paper dealers (the "Commercial Paper Dealers"), to the Trust
Company or the Tender Agent, as the case may be, for the close of
business on the Business Day immediately preceding such date. In
the event that the Federal Reserve Bank of New York does not make
available such a rate and if any Commercial Paper Dealer does not
quote a rate required to determine the Effective Composite
Commercial Paper Rate, the Effective Composite Commercial Paper
Rate shall be determined on the basis of the quotation or
quotations furnished by the remaining Commercial Paper Dealer or
Commercial Paper Dealers and any Substitute Commercial Paper
Dealer or Substitute Commercial Paper Dealers selected by the
Corporation to provide such rate or rates not being supplied by
any Commercial Paper Dealer or Commercial Paper Dealers, as the
case may be, or, if the Corporation does not select any such
Substitute Commercial Paper Dealer or Substitute Commercial Paper
Dealers, by the remaining Commercial Paper Dealer or Commercial
Paper Dealers. "Substitute Commercial Paper Dealers" shall mean
Merrill Lynch, Pierce, Fenner & Smith Incorporated or Citibank
N.A., or, in lieu of either thereof, their respective affiliates
or successors that are commercial paper dealers. In the event
that no quoted rates are available for a maturity that equals the
duration of the relevant Dividend Period, then the rate will be
the higher of the quoted rate for the maturity immediately
shorter or immediately longer than the duration of the relevant
Dividend Period.
"Effective LIBOR Rate" shall mean, on any date, the offered
rates for deposits in dollars for a period of the same duration
as the relevant Dividend Period, which appear on the Reuters
Screen LIBO Page as of 11:00 A.M., London time, on such date. If
at least two such offered rates appear on the Reuters Screen LIBO
Page, the Effective LIBOR Rate in respect of such date will be
the arithmetic mean of such offered rates. If fewer than two
offered rates appear, the Effective LIBOR Rate in respect of such
date will be determined on the basis of the rates quoted to the
Trust Company or the Tender Agent, as the case may be, at which
deposits in dollars are offered by the Reference Banks (as
hereinafter defined) at approximately 11:00 A.M., London time, on
the day that is the Business Day preceding such date to prime
banks in the London interbank market for a period of the same
duration as the relevant Dividend Period. The Corporation shall
request the principal London office of each of the Reference
Banks to provide a quotation of such rate to the Trust Company or
the Tender Agent, as the case may be. If at least two such
quotations are provided, the Effective LIBOR Rate in respect of
such date will be the arithmetic mean of the quotations. If
fewer than two quotations are provided as requested, the
Effective LIBOR Rate in respect of such date will be the
arithmetic mean of the rates quoted to the Trust Company or
Tender Agent, as the case may be, by major banks in New York
City, selected by the Corporation, at approximately 11:00 A.M.,
New York City time, on such date for loans in dollars to leading
European banks for a period of the same duration as the relevant
Dividend Period. "Reference Banks" means four major banks in the
London interbank market, selected by the Corporation, and may
include Morgan Guaranty Trust Company of New York. In the event
that no quoted rates are available for a maturity that equals the
duration of the relevant Dividend Period, then the rate will be
the higher of the quoted rate for the maturity immediately
shorter or immediately longer than the duration of the relevant
Dividend Period.
"Existing Holder" shall mean, with respect to Shares of MMP,
a Person who has signed a Master Purchaser's Letter and is listed
as the beneficial owner of such Shares of MMP in the records of
the Trust Company and will in all events include holders of
Converted SABRES.
"Federal Funds Rate" shall mean, on any date (i) the
overnight Federal funds rate as such rate is made available by
the Federal Reserve Bank of New York or (ii) in the event that
the Federal Reserve Bank of New York does not make available such
a rate by 2:00 P.M., New York City time, on any day, the
arithmetic mean of the rates for the last transaction in
overnight Federal funds arranged prior to 9:00 A.M., New York
City time, on that day by each of three leading brokers of
Federal funds transactions in New York City as selected by the
Corporation.
"Hold Order" and "Hold Orders" shall have the respective
meanings specified in paragraph A(2) of Section 6 hereof.
"Initial Auction Date" shall mean the Business Day
immediately preceding the first day of a Dividend Period for
Converted SABRES.
"Initial Dividend Period" shall mean, for each Share of
Variable Cumulative Preferred Stock, the initial Dividend Period
applicable to such Share, which period will commence on the Date
of Original Issue and will end on February 7, 1990 in the case of
the Series B Shares, February 14, 1990 in the case of the Series
C Shares, February 21, 1990 in the case of Series D Shares,
February 28, 1990 in the case of Series E Shares and March 7,
1990 in the case of the Series F Shares.
"Junior Stock" shall mean all stock of the Corporation now
or hereafter authorized, except (i) Variable Cumulative Preferred
Stock, (ii) Series A Preferred Stock and (iii) any future class
of stock ranking prior to or on a parity with Variable Cumulative
Preferred Stock as to dividends or distributions upon
liquidation.
"Master Purchaser's Letter" shall mean a letter addressed to
the Corporation, the Trust Company, a Remarketing Agent, and an
Agent Member in which a Person agrees, among other things, that
if such Person should offer to purchase, purchase, offer to sell
and/or sell Shares of a Series of Variable Cumulative Preferred
Stock, such Person will be bound by the Auction Procedures and
the Remarketing Procedures; such letter to be in substantially
the form set forth as Exhibit C to the Trust Company Agreement,
dated as of December 15, 1989, between the Corporation and
Bankers Trust Company, or in such other form as may be agreed (i)
with respect to MMP, by the Corporation and the Trust Company and
(ii) with respect to SABRES, by the Corporation and the
applicable Remarketing Agent.
"Maximum Rate" shall mean, on any date, with respect to any
Share of Variable Cumulative Preferred Stock, the product of the
percentage (determined as set forth below based on the prevailing
rating of such Share of Variable Cumulative Preferred Stock in
effect at the close of business on the second Business Day
immediately preceding such date) and the Applicable Determining
Rate for such Share on such date:
Percentage
of Applicable
Prevailing Rating Determining Rate
_________________ ________________
AA-/"aa3" or above 110%
A-/"a3" 125%
BBB-/"baa3" 150%
Below BBB-/"baa3" 200%
For purposes of this definition, the "prevailing rating" of each
Series of Variable Cumulative Preferred Stock shall be (i) AA-
/"aa3" or above, if the Shares of such Series of Variable
Cumulative Preferred Stock have a rating of AA- or better by
Standard & Poor's or "aa3" or better by Moody's or the equivalent
of either of such ratings by a substitute rating agency or
agencies selected as provided below, (ii) if not AA-/"aa3" or
above, then
A-/"a3" if the Shares of such Series of Variable Cumulative
Preferred Stock have a rating of A- or better by Standard &
Poor's or "a3" or better by Moody's or the equivalent of either
of such ratings by a substitute rating agency or agencies
selected as provided below, (iii) if not AA-/"aa3" or above or A-
/"a3" then BBB-/"baa3" if the Shares of such Series of Variable
Cumulative Preferred Stock have a rating of BBB- or better by
Standard & Poor's or "baa3" or better by Moody's or the
equivalent of either of such ratings by a substitute rating
agency or agencies selected as provided below, and (iv) if not AA-
/"aa3" or above, A-/"a3" or BBB-/"baa3" then below BBB-/"baa3".
The Corporation will take all reasonable action necessary to
enable Standard & Poor's and Moody's to provide a rating for each
Series of the Variable Cumulative Preferred Stock. If either
Standard & Poor's or Moody's fails to make such a rating
available, the Corporation or its duly authorized agent will
select one or two nationally recognized securities rating
agencies to act as a substitute rating agency or agencies, as the
case may be. If an alternative nationally recognized securities
rating agency or agencies are not available, the applicable
rating shall be the highest rating last published by Standard &
Poor's, Moody's or such substitute rating agency or agencies.
"Method Selection Agent" shall mean at any time the entity
appointed by the Corporation to act on its behalf in selecting
Dividend Determination Methods for a Series of Variable
Cumulative Preferred Stock, provided that, if the Corporation
shall appoint more than one entity to so act with respect to a
Series, "Method Selection Agent" shall mean, unless the context
otherwise requires, all entities so appointed.
"Money Market Yield" shall mean, with respect to any rate
which is quoted on a bank discount basis, a yield (expressed as a
percentage) calculated in accordance with the following formula:
Money Market Yield = D x 360
_____________ x 100
360 - (D x M)
where "D" refers to the per annum rate, quoted on a bank discount
basis and expressed as a decimal; and "M" refers to the number of
days for which such bank discount rate is quoted.
"MMP" shall mean the Shares of Variable Cumulative Preferred
Stock for which the Dividend Rate and Dividend Period are
determined, other than during a Payment Failure, pursuant to the
Auction Method and during a Payment Failure, "MMP" shall mean the
Shares of Variable Cumulative Preferred Stock which were MMP
immediately preceding such Payment Failure.
"Moody's" shall mean Moody's Investors Service, Inc. and its
successors.
"Notice of Method Selection" shall mean a notice from the
applicable Method Selection Agent to all record holders of Shares
of Variable Cumulative Preferred Stock of a Series specifying the
Dividend Determination Method for any Subsequent Dividend Period
with respect to all Shares of such Series.
"Notice of Removal" shall mean a notice from the Corporation to
all record holders of Shares of Variable Cumulative Preferred
Stock of a Series specifying that each Term Selection Agent or
Method Selection Agent, as the case may be, with respect to such
Series has been removed by the Corporation.
"Notice of Term Selection" shall mean a notice from the
applicable Term Selection Agent to all record holders of Shares
of MMP or Converted SABRES of a Series specifying, among other
things, the length of the next succeeding Dividend Period with
respect to such Series.
"Notice of Withdrawal" shall mean a notice from the applicable
Term Selection Agent to all record holders of Shares of MMP or
Converted SABRES of a Series specifying that the Notice of Term
Selection previously sent to record holders of Shares of such
Series has been withdrawn.
"Order" and "Orders" shall have the respective meanings specified
in paragraph A(2) of Section 6 hereof.
"Outstanding" shall mean, as of any date, Shares of a Series of
Variable Cumulative Preferred Stock theretofore issued by the
Corporation except (i) any Shares of such Series of Variable
Cumulative Preferred Stock theretofore cancelled or delivered for
cancellation or redeemed by the Corporation, or as to which a
notice of redemption shall have been given by the Corporation
(unless the Corporation defaults in providing money for the
payment of the redemption price of such Shares within three
Business Days following the redemption date therefor), (ii) any
Shares of such Series of Variable Cumulative Preferred Stock as
to which the Corporation or any Affiliate thereof shall be an
owner (except that any Shares acquired by an Affiliate which is a
Broker-Dealer and which acquired such Shares in the normal course
of its business shall be deemed to be Outstanding), or (iii) any
Shares of such Series of Variable Cumulative Preferred Stock
represented by any certificate in lieu of which a new certificate
has been executed and delivered by the Corporation.
"Paying Agent" shall mean a bank or trust company duly appointed
as such Paying Agent.
"Payment Failure" shall mean any failure by the Corporation to
pay (or set aside for payment): (i) any dividends in respect of
any Share of Variable Cumulative Preferred Stock which have
accumulated during any Dividend Period applicable to such Share
on the last Dividend Payment Date with respect to such Dividend
Period or (ii) the redemption price in respect of Shares of
Variable Cumulative Preferred Stock called for redemption on the
date of redemption, provided that, in the case of either clause
(i) or (ii) above, such failure shall continue unremedied for
more than three Business Days.
"Person" shall mean and include an individual, a partnership, a
corporation, a trust, an unincorporated association, a joint
venture or other entity or a government or any agency or
political subdivision thereof.
"Potential Holder" shall mean, with respect to Shares of MMP, any
Person, including any Existing Holder, (i) who shall have
executed a Master Purchaser's Letter and (ii) who may be
interested in acquiring Shares of MMP (or, in the case of an
Existing Holder, acquiring additional Shares of MMP).
"Remaining Shares" shall have the meaning specified in paragraph
D(1)(d) of Section 6 hereof.
"Remarketing" shall mean the periodic implementation of the
Remarketing Procedures.
"Remarketing Agent" shall mean, at any time, the entity or
entities appointed by the Corporation to act on its behalf in
establishing Dividend Rates, Dividend Periods, redemption prices
and redemption dates for Shares of SABRES of a Series and to act
on behalf of holders of such Shares in Remarketing such Shares as
provided in the Remarketing Procedures.
"Remarketing Agreement" shall mean an agreement between the
Corporation and a Remarketing Agent pursuant to which a
Remarketing Agent agrees to following the Remarketing Procedures.
"Remarketing Conditions" shall mean the following factors: (i)
short-term and long-term market rates and indices of such short-
term and long-term rates, (ii) market supply and demand for short-
term and long-term securities, (iii) yield curves for short-term
and long-term securities comparable to the Shares of Variable
Cumulative Preferred Stock, (iv) industry and financial
conditions which may affect the Shares of Variable Cumulative
Preferred Stock, (v) the number of Shares of Variable Cumulative
Preferred Stock to be sold pursuant to an Auction or a
Remarketing, as the case may be, (vi) the number of potential
purchasers of Variable Cumulative Preferred Stock, (vii) the
Dividend Periods and Dividend Rates at which current and
potential holders of Variable Cumulative Preferred Stock would
remain or become holders, (viii) current tax laws and
administrative interpretations with respect thereto and (ix)
discussions with the Corporation about its current and projected
funding requirements based on its asset and liability position,
tax position and current financing objectives.
"Remarketing Method" shall mean a method of determining the
duration of Dividend Periods and Dividend Rates for the Shares of
Variable Cumulative Preferred Stock of a Series pursuant to the
Remarketing Procedures, as described in paragraph E of Section 5
hereof.
"Remarketing Procedures" shall mean the procedures for
Remarketing Shares of SABRES set forth in Section 7 hereof.
"Rounding Procedures" shall mean, if as a result of an Auction
(including the implementation of the Auction Procedures), any
Existing Holder would be entitled to hold or required to sell, or
any Potential Holder would be required to purchase, a number of
Shares of MMP not evenly divisible by 100, on any Auction Date,
the Trust Company shall, in such manner as it determines, round
up or down the number of Shares of MMP to be held, purchased or
sold by each Existing Holder or Potential Holder on such Auction
Date so that the number of Shares of MMP held, purchased or sold
by each Existing Holder or Potential Holder on such Auction Date
will be a number of Shares of MMP evenly divisible by 100, even
if such allocation results in one or more of such Potential
Holders not purchasing any Shares of MMP on such Auction Date.
"SABRES" shall mean the Shares of Variable Cumulative Preferred
Stock for which the Dividend Rate and Dividend Period are
determined, other than during a Payment Failure, pursuant to the
Remarketing Method and during a Payment Failure, "SABRES" shall
mean the Shares of Variable Cumulative Preferred Stock which were
SABRES immediately preceding such Payment Failure.
"SABRES Depository" shall mean any depository selected by the
Corporation which agrees to follow the procedures required to be
followed by such depository in connection with the Shares of
SABRES.
"Sell Order" and "Sell Orders" shall have the respective meanings
specified in paragraph A(2) of Section 6 hereof.
"Series" shall mean each group of series of Shares of Variable
Cumulative Preferred Stock, of 50,000 Shares each, designated
Series B, Series C, Series D, Series E and Series F,
respectively.
"Series A Preferred Stock" shall mean the Adjustable Rate
Cumulative Preferred Stock, Series A, without par value, stated
value $100 per Share, of the Corporation.
"Shares" shall mean the shares of any or all Series of Variable
Cumulative Preferred Stock.
"Standard & Poor's" shall mean Standard & Poor's Corporation and
its successors.
"Standard Auction Period" shall mean 49 days, provided that, if
there is a change in tax law altering the holding period
specified in Section 246(c) of the Code or any successor
provision thereto, the Board of Directors may increase or
decrease the period of time theretofore constituting the Standard
Auction Period so as to adjust uniformly the number of days in
the Standard Auction Period for Dividend Periods commencing after
the date of such change in law to equal or exceed the then-
current holding period specified in Section 246(c) of the Code or
any successor provision thereto, and such period as so adjusted
shall be the Standard Auction Period; and provided further that
the number of days as so adjusted shall not exceed 98 and shall
be evenly divisible by seven.
"Submission Deadline" shall mean 1:00 P.M., New York City time,
on any Auction Date or such other time on any Auction Date by
which Broker-Dealers are required to submit Orders to the Trust
Company as specified by the Trust Company from time to time.
"Submitted Bid" and "Submitted Bids" shall have the respective
meanings specified in paragraph C(l) of Section 6 hereof.
"Submitted Hold Order" and "Submitted Hold Orders" shall have the
respective meanings specified in paragraph C(1) of Section 6
hereof.
"Submitted Order" and "Submitted Orders" shall have the
respective meanings specified in paragraph C(1) of Section 6
hereof.
"Submitted Sell Order" and "Submitted Sell Orders" shall have the
respective meanings specified in paragraph C(1) of Section 6
hereof.
"Subsequent Dividend Period" and "Subsequent Dividend Periods"
shall mean, for each Share of Variable Cumulative Preferred
Stock, each Dividend Period applicable thereto other than the
Initial Dividend Period applicable thereto.
"Sufficient Clearing Bids" shall have the meaning specified in
paragraph C(1)(b) of Section 6 hereof.
"Tender Agent" shall mean, at any time, the bank or the
organization appointed by the Corporation to perform the duties
of Tender Agent as provided in the Remarketing Procedures.
"Term Selection Agent" shall mean at any time the entity
appointed by the Corporation to act on its behalf in establishing
Dividend Periods, redemption prices and redemption dates for a
Series of MMP or Converted SABRES, provided that, if the
Corporation shall appoint more than one entity to so act with
respect to a Series, "Term Selection Agent" shall mean, unless
the context otherwise requires, all entities so appointed.
"Trust Company" shall mean a bank or trust company duly appointed
as such.
"Unit" shall mean 100 Shares, or integral multiples thereof, of a
Series of Variable Cumulative Preferred Stock.
"U.S. Treasury Rate" shall mean, on any date, (i) the yield as
calculated by reference to the bid price quotation of the
actively traded, current coupon Treasury security with a maturity
most nearly comparable to the length of the related Dividend
Period, as such bid price quotation is published on the Business
Day immediately preceding such date by the Federal Reserve Bank
of New York in its Composite 3:30 P.M. Quotations for U.S.
Government Securities report for such Business Day, or (ii) if
such yield as so calculated is not available, the Alternate
Treasury Rate on such date. "Alternate Treasury Rate" on any
date means the yield as calculated by reference to the arithmetic
average of the bid price quotations of the actively traded,
current coupon Treasury security with a maturity most nearly
comparable to the length of the related Dividend Period, as
determined by bid price quotations as of any time on the Business
Day immediately preceding such date, obtained by the Trust
Company or the Tender Agent, as the case may be, from at least
three recognized primary U.S. Government securities dealers
selected by the Corporation.
"Winning Bid Rate" shall have the meaning specified in paragraph
C(1)(c) of Section 6 hereof.
3.Parity. All Shares of all Series of Variable Cumulative
Preferred Stock, and all Shares of Series A Preferred Stock,
shall rank equally with respect to payments of dividends and
distributions upon liquidation.
4.Different Shares as Different Series. Each Share of Variable
Cumulative Preferred Stock shall be a separate series of its
respective Series. Each Share shall have identical voting
powers, designations, preferences and relative, participating,
optional or other rights, and qualifications, limitations or
restrictions thereof; provided, however, that each Share may have
a different Dividend Period, Dividend Rate, redemption price and
redemption date from each other Share, including without
limitation different Dividend Rates, redemption prices and
redemption dates for Shares having Dividend Periods of equal
length which were set on the same day. Shares will be issued in
Units only.
5.Dividends and Dividend Periods.
A. The holders of Shares of Variable Cumulative Preferred Stock
shall be entitled to receive, when, as and if declared by the
Board of Directors of the Corporation, out of funds legally
available therefor, cumulative cash preferential dividends at the
Dividend Rates per annum, on the dates, for the periods and
otherwise in the manner provided in this Section 5. Such
preferential dividends shall be declared and paid or set apart
for payment in full for all previous Dividend Periods before the
declaration, payment or setting apart of any funds or assets for
payment of any dividends on, or the making of, or the setting
apart of, any funds or assets for any distribution with respect
to, any class of Junior Stock, and before any purchase,
redemption or other acquisition of any class of Junior Stock or
the setting apart of any funds or assets for such purchase,
redemption or acquisition. Each Share of Variable Cumulative
Preferred Stock shall rank on a parity with each Share of Series
A Preferred Stock and with each other Share of Variable
Cumulative Preferred Stock, irrespective of Series, with respect
to the preferential dividends at the respective rate fixed for
such Share, and no preferential dividend shall be declared or
paid or set apart for payment on any Shares of Variable
Cumulative Preferred Stock of any Series for any current Dividend
Period if dividends on any other Shares of Variable Cumulative
Preferred Stock or Series A Preferred Stock are accumulated and
unpaid for any prior dividend period or, in case of payment of
dividend arrearages on Variable Cumulative Preferred Stock or
Series A Preferred Stock, unless at the same time the Corporation
shall also declare or pay or set apart for payment, as the case
may be, such amounts with respect to all such dividend arrearages
on all shares of Variable Cumulative Preferred Stock and Series A
Preferred Stock so that all such shares shall share ratably in
such payment in proportion to the respective amounts of dividends
in arrears on all such shares to the date of payment. For
purposes hereof, dividend accumulations and arrearages do not
include any dividends which have not yet become payable or
dividends for any Dividend Payment Date that has not occurred.
B. Dividends on each Share of Variable Cumulative Preferred
Stock shall accumulate from the Date of Original Issue thereof
and shall be payable on the last Dividend Payment Date with
respect to each Dividend Period applicable thereto, regardless of
its length, and on each additional Dividend Payment Date, if any,
for such Share. The Dividend Rate for Shares of each Series of
Variable Cumulative Preferred Stock for the Initial Dividend
Period shall be 6.75% per annum. Thereafter, the determination
of the duration of each Subsequent Dividend Period with respect
to each Series of Variable Cumulative Preferred Stock and the
Dividend Rate and each Dividend Payment Date for such Subsequent
Dividend Period shall be determined by either the Auction Method
or the Remarketing Method.
Subject to the limitations set forth below, either Dividend
Determination Method may be selected by the Method Selection
Agent for a Series of Variable Cumulative Preferred Stock for any
Subsequent Dividend Period with respect to all the Shares of
Variable Cumulative Preferred Stock of such Series if such Method
Selection Agent determines at the time of such selection, based
upon then-current Remarketing Conditions, that the Method so
selected will be the most favorable financing alternative for the
Corporation. If more than one entity is serving as Method
Selection Agent for a Series, such entities shall act in concert
in performing their duties, provided that the notices referred to
herein may be given by one entity on behalf of all such entities.
The Method Selection Agent for any Series shall make such
selection in a Notice of Method Selection sent to holders of
record of Shares of such Series by such Method Selection Agent,
by first-class mail, postage prepaid, to the address of each such
holder as the same appears on the stock register of the
Corporation, not less than seven Business Days prior to the first
day of such Subsequent Dividend Period. Copies of such Notice of
Method Selection shall be delivered physically or by telecopier
or other written electronic communication to the Corporation and
the Trust Company or the Remarketing Agent, as the case may be,
at the same time they are transmitted to the record holders of
Shares. Each Notice of Method Selection will state the Method
selected by the Method Selection Agent. If the Method Selection
Agent for a Series which are then SABRES selects the Auction
Method for any Subsequent Dividend Period, the Remarketing Agent
for such Series will establish Dividend Periods and Dividend
Rates for Shares of such Series until the Initial Auction Date in
a manner that will best promote an orderly transition to the
Auction Method. Any Dividend Determination Method so selected by
the Method Selection Agent for a Series shall continue in effect
for such Series until the Method Selection Agent selects the
other Method in the aforesaid manner. Until a Method Selection
Agent for any Series has been appointed, the Dividend
Determination Method will be the Auction Method.
Any Notice of Method Selection with respect to any Subsequent
Dividend Period for any Series of Variable Cumulative Preferred
Stock shall be deemed to have been withdrawn if on or prior to
the second Business Day preceding the first day of such
Subsequent Dividend Period the Corporation shall have removed the
Method Selection Agent for such Series, and in such event the
Corporation shall give a Notice of Removal to record holders of
Shares of such Series by first-class mail, postage prepaid, to
the address of each such holder as the same appears on the stock
register of the Corporation. If more than one entity has been
appointed and is acting as Method Selection Agent for that
Series, such Notice of Method Selection shall be deemed to have
been withdrawn only if the Corporation shall have removed all
such entities; and the removal at any time by the Corporation of
one or more but not all such entities shall not effect a deemed
withdrawal of a Notice of Method Selection and in any such event
no Notice of Removal need be given. Copies of any Notice of
Removal shall be delivered physically or by telecopier or other
written electronic communication to the Trust Company or the
applicable Remarketing Agent, as the case may be, at the same
time they are transmitted to the record holders of Shares. If
the Method Selection Agent for any Series resigns or is removed
(or, in either case, if more than one entity has been appointed
and is acting as Method Selection Agent for that Series, then all
such entities), the Dividend Determination Method applicable to
such Series in effect at the time of such resignation or removal
will continue in effect until the Corporation appoints a
successor Method Selection Agent for such Series and such Method
Selection Agent sends a Notice of Method Selection. If, as a
result of such resignation or removal of the Method Selection
Agent, the Dividend Determination Method for any Series will
continue to be the Auction Method, then the duration of the next
succeeding Dividend Period for such Series will be the Standard
Auction Period.
Any Method for a Series of Variable Cumulative Preferred Stock
selected by the Method Selection Agent for such Series pursuant
to a Notice of Method Selection (except a Notice of Method
Selection that is deemed to be withdrawn) shall be conclusive and
binding on the Corporation and the holders of Shares of such
Series. If the Notice of Method Selection is not deemed to have
been withdrawn, any Method so selected by the Method Selection
Agent for a Series will continue in effect for that Series until
such Method Selection Agent selects the other Method in the
aforesaid manner. No defect in the Notice of Method Selection or
the Notice of Removal of the Method Selection Agent or in the
mailing thereof shall affect the validity of any change in the
Dividend Determination Method or any such withdrawal or removal.
Notwithstanding the foregoing, the Method Selection Agent for a
Series shall not be entitled to change the Dividend Determination
Method then applicable to such Series if (i) at the time of an
election that the Remarketing Method apply to a Series, the
Corporation has not appointed (and given notice or taken such
other action as may be necessary for the timely effectiveness of
such appointment) a Remarketing Agent, a Tender Agent and a
SABRES Depository for such Series, (ii) at the time of an
election that the Auction Method apply to a Series, the
Corporation has not appointed (and given notice or taken such
other action as aforesaid) a Trust Company, an Auction Stock
Depository and at least one Broker-Dealer for such Series, or
such election would result in more than one Dividend Period for
the Shares of such Series or (iii) at the time of any such
election, a Payment Failure has occurred and is continuing. Once
the Method Selection Agent for a Series shall have selected a
Dividend Determination Method for such Series for a Subsequent
Dividend Period in the aforesaid manner, such selection shall
become effective on the last day of the Dividend Period(s) then
applicable to Shares of such Series notwithstanding any Payment
Failure which may occur after the delivery of the Notice of
Method Selection by the Method Selection Agent, the failure to
remarket tendered Shares of SABRES of such Series, in the case of
the selection of the Remarketing Method, or the lack of
Sufficient Clearing Bids in the Auction for such Series, in the
case of the selection of the Auction Method.
C. Each Dividend Period for Shares of Variable Cumulative
Preferred Stock shall have a duration of not more than 30 years
and not less than (i) seven days in the case of MMP and (ii) one
Business Day in the case of SABRES. Each Dividend Period shall
end on the day immediately preceding the first day of a
Subsequent Dividend Period.
D. Each Subsequent Dividend Period for each Series of MMP will
begin on a Dividend Payment Date and, except as otherwise
provided herein, the duration of each Subsequent Dividend Period
for each Series of MMP shall be the Standard Auction Period,
provided that, subject to the limitations set forth in paragraph
C of this Section 5, the applicable Term Selection Agent for such
Series may, except during the continuance of a Payment Failure,
select the duration of any Subsequent Dividend Period for Shares
of MMP of such Series by sending a Notice of Term Selection to
all holders of record of Shares of MMP or Converted SABRES of
such Series, by first-class mail, postage prepaid, to the address
of each such holder as the same appears on the stock register of
the Corporation, not less than seven Business Days nor more than
60 days prior to the first day of such Subsequent Dividend
Period. The Term Selection Agent for each Series of MMP will
establish Dividend Periods for such Series (and any additional
Dividend Payment Dates, and redemption dates and redemption
prices) that the Term Selection Agent determines will be the most
favorable financing alternative for the Corporation based upon
the then-current Remarketing Conditions. If more than one entity
is serving as Term Selection Agent for a Series, such entities
shall act in concert in performing their duties, provided that
notices referred to herein may be given by one such entity on
behalf of all such entities. Each Notice of Term Selection shall
state (i) the length of the next succeeding Dividend Period, (ii)
in the case of any Dividend Period in excess of 99 days in
duration, any Dividend Payment Date or Dates selected by the Term
Selection Agent in addition to the last Dividend Payment Date
with respect to such Dividend Period and (iii) any additional
dates on which Shares of MMP may be redeemed and the
corresponding redemption prices (which may not be less than One
Thousand Dollars ($1,000) per Share in the case of Shares having
a Dividend Period in excess of 364 days) determined by such Term
Selection Agent. In the absence of any Notice of Term Selection
for a Series of MMP with respect to a Subsequent Dividend Period,
the duration of such period shall be the Standard Auction Period.
The Term Selection Agent for any series of MMP may withdraw any
Notice of Term Selection with respect to such Series, if such
Term Selection Agent determines that because of subsequent
changes in the Remarketing Conditions the duration of the
Subsequent Dividend Period specified in such Notice of Term
Selection will not result in the most favorable financing
alternative for the Corporation, by sending a Notice of
Withdrawal to all holders of record of Shares of MMP or Converted
SABRES of such Series by first-class mail, postage prepaid, to
the address of each such holder as the same appears on the stock
register of the Corporation, by no later than 3:00 P.M., New York
City time, on the third Business Day preceding the first day of
the applicable Subsequent Dividend Period.
Any Notice of Term Selection with respect to any Series of MMP
shall be deemed to have been withdrawn if on or prior to the
second Business Day preceding the first day of the applicable
Subsequent Dividend Period for such Series, the Corporation shall
have removed the Term Selection Agent for such Series, and in
such event the Corporation shall give a Notice of Removal to
record holders of Shares of such Series by first-class mail,
postage prepaid, to the address of each such holder as the same
appears on the stock register of the Corporation. If more than
one entity has been appointed and is acting as Term Selection
Agent for that Series, such Notice of Term Selection shall be
deemed to have been withdrawn only if the Corporation shall have
removed all such entities; and the removal at any time by the
Corporation of one or more but not all such entities shall not
effect a deemed withdrawal of a Notice of Term Selection and in
any such event no Notice of Removal need be given. If the Term
Selection Agent for any Series of MMP sends a Notice of Term
Selection with respect to any Subsequent Dividend Period for such
Series and delivers a Notice of Withdrawal with respect thereto
or such Notice of Term Selection is deemed to have been
withdrawn, the duration of such Subsequent Dividend Period for
such Series will be the Standard Auction Period. In addition, if
there is no Term Selection Agent for any Series of MMP as a
result of the resignation or removal of all entities then serving
as such, then the duration of each Subsequent Dividend Period
will be the Standard Auction Period until the Corporation shall
appoint a Term Selection Agent for such Series and such Term
Selection Agent shall send a Notice of Term Selection. Any
Subsequent Dividend Period for a Series of MMP established by the
Term Selection Agent for such Series pursuant to a Notice of Term
Selection Agent for such Series pursuant to a Notice of Term
Selection (except a Notice of Term Selection that is deemed to be
withdrawn) and any withdrawal thereof pursuant to a Notice of
Withdrawal shall be conclusive and binding on the Corporation and
the holders of Shares of such Series of MMP.
Copies of any Notice of Term Selection, Notice of Withdrawal or
Notice of Removal shall be delivered physically or by telecopier
or other written electronic communication to the Trust Company
and the applicable Method Selection Agent by the Term Selection
Agent or the Corporation, as the case may be, at the same time
they are transmitted to the record holders of Shares of MMP. The
Trust Company will thereupon use its reasonable best efforts to
provide copies of any such notice to each Broker-Dealer for such
Series as soon as practicable after receiving such notice. No
defect in any notice or in the mailing thereof shall affect the
validity of any change in the Dividend Period or any such
withdrawal or removal.
Notwithstanding the foregoing, in the event that Sufficient
Clearing Bids have not been made, so that the Dividend Rate for
the next Dividend Period for a Series of MMP is equal to the
Maximum Rate, then the duration of the Subsequent Dividend Period
in respect of such Series of MMP shall be the lesser of (i) the
length of such Dividend Period as specified by the Term Selection
Agent in a Notice of Term Selection sent as described above, or
(ii) the Standard Auction Period.
At all times prior to a Payment Failure, all Shares of MMP of a
Series will have a single Dividend Period and will accumulate
dividends at a single Dividend Rate. Except as provided in
paragraph G of this Section 5, the Dividend Rate per annum on the
Shares of MMP of a Series for each Subsequent Dividend Period
shall be equal to the rate per annum that the Trust Company
advises the Corporation has resulted from an Auction for such
Series. An Auction for MMP of each Series to determine the
Dividend Rate for each Subsequent Dividend Period for such Series
will be held on the Business Day immediately preceding the first
day of each such Subsequent Dividend Period.
E. Each Subsequent Dividend Period for each Series of SABRES
will begin on a Dividend Payment Date, and except as otherwise
provided in paragraphs F and G of this Section 5, the duration of
each Subsequent Dividend Period and the Dividend Rate for each
such Subsequent Dividend Period for each Share of SABRES shall be
established by the Remarketing Agent for such Shares pursuant to
the Remarketing Procedures, such determination to be conclusive
and binding on the Corporation and the holder of such Share of
SABRES.
F. Notwithstanding the provisions of paragraphs D and E of this
Section 5, the Dividend Rate which results from the application
of the Auction Procedures or the Remarketing Procedures for any
Subsequent Dividend Period for any Share of Variable Cumulative
Preferred Stock shall not be greater than the Maximum Rate for
such Share (i) on the Auction Date, if such Share is MMP or
Converted SABRES, or (ii) on the day of Remarketing of such
Share, if such Share is SABRES or Converted MMP.
G. Notwithstanding the foregoing provisions of this Section 5,
the application of the Auction Procedures and the Remarketing
Procedures shall be suspended during the continuance of a Payment
Failure; and during such continuance dividends will accumulate on
the Shares of Variable Cumulative Preferred Stock of all Series
at Dividend Rates equal to two hundred percent (200%) of the
Applicable Determining Rate for successive Dividend Periods
commencing on and after the date such Payment Failure first
occurred, or, in the case of the Shares of any Series of Variable
Cumulative Preferred Stock so called for redemption, for
successive Dividend Periods commencing on and after such
redemption date, the duration of such Dividend Periods to be one
Business Day in the case of Shares of SABRES and the Standard
Auction Period in the case of Shares of MMP. In no event shall
the Dividend Rate on any Share of Variable Cumulative Preferred
Stock be adjusted prior to the end of a Dividend Period for such
Share. If no Payment Failure continues to exist at the end of a
Dividend Period, the application of the Auction Procedures and
the Remarketing Procedures shall the resumed.
H. The Corporation shall pay to the Paying Agent not later than
(i) in the case of Dividend Periods of one Business Day, 4:00
P.M., New York City time, and (ii) in the case of all other
Dividend Periods, 12:00 noon, New York City time, in each case,
on the Business Day next preceding each Dividend Payment Date for
Shares of Variable Cumulative Preferred Stock, an aggregate
amount of funds available on the next Business Day in The City of
New York, New York, equal to all dividends to be paid to all
holders of Shares of such Variable Cumulative Preferred Stock on
such Dividend Payment Date. All such moneys shall be held in
trust for the payment of such dividends by the Paying Agent for
the benefit of the holders.
I. Each dividend shall be paid to the holders of record at their
respective addresses as the same appear on the stock register of
the Corporation on the Business Day next preceding the Dividend
Payment Date relating to such dividend. Dividends in arrears for
any past Dividend Period may be declared and paid at any time,
without reference to any regular Dividend Payment Date.
J. The amount of dividends per Share accumulated on each Share
of Variable Cumulative Preferred Stock during any Dividend Period
of less than 365 days shall be computed by multiplying the
Dividend Rate for such Dividend Period by a fraction, the
numerator of which shall be the number of days in such Dividend
Period (calculated by counting the first day thereof and
including the last day thereof) and the denominator of which
shall be 360, and multiplying One Thousand Dollars ($1,000) by
the rate so obtained. During any Dividend Period of 365 days or
longer, the amount of dividends per Share accumulated on each
Share of Variable Cumulative Preferred Stock shall be computed on
the basis of a 360-day year consisting of twelve 30-day months.
K. Each prospective purchaser of Shares of Variable Cumulative
Preferred Stock will be required to sign a Master Purchaser's
Letter and deliver such Master Purchaser's Letter (i) to a Broker-
Dealer (who will deliver copies thereof to the Trust Company) as
a condition precedent to purchasing MMP or (ii) to the applicable
Remarketing Agent (who will deliver copies thereof to the Tender
Agent) as a condition precedent to purchasing SABRES.
6.Auction Procedures.
A. Orders by Existing Holders and Potential Holders in an
Auction. All Orders must be submitted in Units. On or prior to
the Submission Deadline on each Auction Date:
(1) each Existing Holder may submit to a Broker-Dealer
information as to:
(a) the number of Outstanding Shares of MMP of such
Series, if any, held by such Existing Holder which such Existing
Holder desires to continue to hold for the next succeeding
Dividend Period without regard to the rate determined by the
Auction Procedures for the next succeeding Dividend Period;
(b) the number of Outstanding Shares of MMP of such
Series, if any, that such Existing Holder desires to sell for the
next succeeding Dividend Period if the rate determined by the
Auction Procedures shall be less than the rate per annum
specified by such Existing Holder; and/or
(c) the number of Outstanding Shares of MMP of such
Series, if any, held by such Existing Holder which such Existing
Holder offers to sell without regard to the rate determined by
the Auction Procedures for the next succeeding Dividend Period;
and
(2) one or more Broker-Dealers shall in good faith, for the
purpose of conducting a competitive Auction in a commercially
reasonable manner, contact Potential Holders, including Persons
that are not Existing Holders, by telephone or otherwise to
determine the number of Shares of MMP of such Series, if any,
which each such Potential Holder offers to purchase, provided
that the rate determined by the Auction Procedures for the next
succeeding Dividend Period shall not be less than the rate per
annum specified by such Potential Holder.
For the purposes hereof, the communication to a Broker-Dealer of
information referred to in paragraph A(1)(a), A(1)(b), or A(1)(c)
or A(2) of this Section 6 is hereinafter referred to as an
"Order" and collectively as "Orders" and each Existing Holder and
each Potential Holder placing an Order is hereinafter referred to
as a "Bidder" and collectively as "Bidders"; an Order containing
the information referred to in paragraph A(l)(a) of this Section
6 is hereinafter referred to as a "Hold Order" and collectively
as "Hold Orders"; an Order containing the information referred to
in paragraph A(1)(b) or A(2) of this Section 6 is hereinafter
referred to as a "Bid" and collectively as "Bids"; and an Order
containing the information referred to in paragraph A(l)(c) of
this Section 6 is hereinafter referred to as a "Sell Order" and
collectively as "Sell Orders."
(3) a Bid by an Existing Holder shall constitute an irrevocable
offer to sell:
(a) the number of Outstanding Shares of MMP of such
Series specified in such Bid if the rate determined by the
Auction Procedures on such Auction Date shall be less than the
rate specified therein; or
(b) such number or a lesser number of Outstanding
Shares of MMP of such Series to be determined as set forth in
paragraph D(1)(d) of this Section 6 if the rate determined by the
Auction Procedures on such Auction Date shall be equal to the
rate specified therein; or
(c) a lesser number of Outstanding Shares of MMP of
such Series to be determined as set forth in paragraph D(2)(c) of
this Section 6 if the rate specified therein shall be higher than
the Maximum Rate and Sufficient Clearing Bids do not exist.
(4) a Sell Order by an Existing Holder shall constitute an
irrevocable offer to sell:
(a) the number of Outstanding Shares of MMP of such
Series specified in such Sell Order, or
(b) such number or a lesser number of Outstanding
Shares of MMP of such Series as set forth in paragraph D(2)(c) of
this Section 6 if Sufficient Clearing Bids do not exist.
(5) a Bid by a Potential Holder shall constitute an irrevocable
offer to purchase:
(a) the number of Outstanding Shares of MMP of such
Series specified in such Bid if the rate determined by the
Auction Procedures on such Auction Date shall be higher than the
rate specified therein; or
(b) the number or a lesser number of Outstanding Shares
of MMP of such Series as set forth in paragraph D(1)(e) of this
Section 6 if the rate determined by the Auction Procedures on
such Auction Date shall be equal to the rate specified therein.
B. Submission of Orders by Broker-Dealers to Trust Company.
(1) Each Broker-Dealer shall submit in writing to the Trust
Company prior to the Submission Deadline on each Auction Date for
a Series of MMP all Orders obtained by such Broker-Dealer and
specify with respect to each Order:
(a) the name of the Bidder placing such Order;
(b) the aggregate number of Shares of MMP of such
Series that are the subject of such Order;
(c) to the extent that such Bidder is an Existing
Holder:
(i) the number of Shares of MMP of such Series, if
any, subject to any Hold Order;
(ii) the number of Shares of MMP of such Series,
if any, subject to any Bid and the rate specified in such Bid;
and
(iii) the number of Shares of MMP of such Series,
if any, subject to any Sell Order; and
(d) to the extent such Bidder is a Potential
Holder, the rate specified in such Potential Holder's Bid.
(2) If any rate specified in any Bid contains more than three
figures to the right of the decimal point, the Trust Company
shall round such rate up to the next highest one thousandth
(.001) of 1%.
(3) If an Order or Orders covering all of the Outstanding Shares
of MMP of such Series held by any Existing Holder is or are not
submitted for any reason to the Trust Company prior to the
Submission Deadline, the Trust Company shall deem a Hold Order to
have been submitted on behalf of such Existing Holder covering
the number of Outstanding Shares of MMP of such Series held by
such Existing Holder and not subject to Orders submitted to the
Trust Company, except that (i) a Sell Order will be deemed to
have been submitted on behalf of an Existing Holder if an Order
is not submitted on behalf of such Existing Holder in the case of
an Auction for a Dividend Period of 365 days or more and (ii) a
Sell Order will be deemed to have been submitted on behalf of a
holder of Converted SABRES if an Order is not submitted on behalf
of such holder.
(4) If one or more Orders covering in the aggregate more than the
number of Outstanding Shares of MMP of such Series held by any
Existing Holder are submitted to the Trust Company, such Orders
shall be considered valid as follows and in the following order
of priority:
(a) all Hold Orders shall be considered valid, but only
up to and including in the aggregate the number of Shares of MMP
of such Series held by such Existing Holder, and, if the number
of Shares of MMP of such Series subject to such Hold Orders
exceeds the number of Shares of MMP of such Series held by such
Existing Holder, the number of Shares of MMP of such Series
subject to each such Hold Order shall be reduced pro rata to
cover the number of Shares of MMP of such Series held by such
Existing Holder:
(b) (i) any Bid shall be considered valid up to and
including the excess of the number of Outstanding Shares of MMP
of such Series held by such Existing Holder over the number of
Shares of MMP of such Series subject to any Hold Order referred
to in paragraph B(4)(a) above,
(ii) subject to paragraph B(4)(b)(i) above, if
more than one Bid with the same rate is submitted on behalf of
such Existing Holder and the number of Shares of MMP of such
Series subject to such Bids is greater than such excess such Bids
shall be considered valid up to the amount of such excess, and
the number of Shares of MMP of such Series subject to each Bid
with the same rate shall be reduced pro rata to cover the number
of Shares of MMP of such Series equal to such excess.
(iii) subject to paragraphs B(4)(b)(i) and (ii)
above, if more than one Bid with different rates is submitted on
behalf of such Existing Holder, such Bids shall be considered
valid in the ascending order of their respective rates up to the
amount of such excess, and
(iv) in any such event the number, if any, of such
Shares of MMP of such Series subject to Bids not valid under this
paragraph B(4)(b) shall be treated as the subject of a Bid by a
Potential Holder; and
(c) all Sell Orders shall be considered valid but only
up to and including in the aggregate the excess of the number of
Outstanding Shares of MMP of such Series held by such Existing
Holder over the sum of the Shares of MMP of such Series subject
to Hold Orders referred to in paragraph B(4)(a) and valid Bids by
Existing Holders referred to in paragraph B(4)(b) above.
(5) If more than one Bid is submitted on behalf of any Potential
Holder, each Bid submitted shall be a separate Bid with the rate
therein specified.
C.Determination of Sufficient Clearing Bids, Winning Bid Rate and
Dividend Rate.
(1) Not earlier than the Submission Deadline on each Auction Date
for a Series of MMP, the Trust Company shall assemble all Orders
submitted or deemed submitted to it by Broker-Dealers (each such
Order as submitted or deemed submitted by a Broker-Dealer being
hereinafter referred to individually as a "Submitted Hold Order,"
a "Submitted Bid" or a "Submitted Sell Order," as the case may
be, or as a "Submitted Order" and collectively as "Submitted Hold
Orders," "Submitted Bids" or "Submitted Sell Orders," as the
case may be, or as "Submitted Orders") and shall determine:
(a) the excess of the total number of Outstanding
Shares of MMP of such Series over the number of Outstanding
Shares of MMP of such Series that are the subject of Submitted
Hold Orders (such excess being hereinafter referred to as the
"Available Shares");
(b) From the Submitted Orders whether the number of
Outstanding Shares of MMP of such Series that are the subject of
Submitted Bids by Potential Holders specifying one or more rates
equal to or lower than the Maximum Rate exceeds or is equal to
the sum of:
(i) the number of Outstanding Shares of MMP of
such Series that are the subject of Submitted Bids by Existing
Holders specifying one or more rates higher than the Maximum
Rate, and
(ii) the number of Outstanding Shares of MMP of
such Series that are subject to Submitted Sell Orders
(in the event of such excess or such equality, other than because
the number of Shares of MMP of such Series in paragraphs
C(1)(b)(i) and C(1)(b)(ii) above is zero because all of the
Outstanding Shares of MMP of such Series are the subject of
Submitted Hold Orders, such Submitted Bids in this paragraph (b)
being hereinafter referred to collectively as "Sufficient
Clearing Bids"), and
(c) if Sufficient Clearing Bids exist, the lowest rate
specified in the Submitted Bids (the "Winning Bid Rate") which
if:
(i) (A) each Submitted Bid from Existing Holders
specifying such lowest rate and (B) all other Submitted Bids from
Existing Holders specifying lower rates were rejected, thus
entitling such Existing Holders to continue to hold the Shares of
MMP of such Series that are the subject of such Submitted Bids,
and
(ii) (A) each Submitted Bid from Potential Holders
specifying such lowest rate and (B) all other Submitted Bids from
Potential Holders specifying lower rates were accepted, thus
entitling the Potential Holders to purchase the Shares of MMP of
such Series that are the subject of those Submitted Bids,
would result in such Existing Holders described in paragraph
C(1)(c)(i) above continuing to hold an aggregate number of
Outstanding Shares of MMP of such Series which, when added to the
number of Outstanding Shares of MMP of such Series to be
purchased by such Potential Holders described in paragraph
C(1)(c)(ii) above would equal not less than the Available Shares.
(2) Promptly after the Trust Company has made the determinations
pursuant to paragraph C(1) above, the Trust Company shall advise
the Corporation of the Applicable Determining Rate and the
Maximum Rate and, based on such determinations, the Dividend Rate
for the next succeeding Dividend Period as follows:
(a) if Sufficient Clearing Bids exist, that the
Dividend Rate for the next succeeding Dividend Period shall be
equal to the Winning Bid Rate so determined;
(b) if Sufficient Clearing Bids do not exist (other
than because all of the Outstanding Shares of MMP of such Series
of a Series are the subject of Submitted Hold Orders), that the
Dividend Rate for the next succeeding Dividend Period shall be
the Maximum Rate; or
(c) if all of the Outstanding Shares of MMP of such
Series are the subject of Submitted Hold Orders, the Dividend
Rate for the next succeeding Dividend Period shall be equal to
fifty-eight per cent (58%) of the Applicable Determining Rate.
D.Acceptance and Rejection of Submitted Bids and Submitted Sell
Orders and Allocation of Shares in an Auction. Based on the
determinations made pursuant to paragraph C(l) above, the
Submitted Bids and the Submitted Sell Orders shall be accepted or
rejected and the Trust Company shall take such other action as
set forth below:
(l) If Sufficient Clearing Bids have been made, Submitted Bids
and Submitted Sell Orders shall be accepted or rejected as
follows in the following order of priority and all other
Submitted Bids shall be rejected, subject to the Rounding
Procedures:
(a) the Submitted Sell Orders of Existing Holders shall
be accepted and the Submitted Bids of each of the Existing
Holders specifying any rate that is higher than the Winning Bid
Rate shall be accepted, thus requiring each such Existing Holder
to sell the Shares of MMP of such Series that are the subject of
such Submitted Bids;
(b) the Submitted Bids of each of the Existing Holders
specifying any rate that is lower than the Winning Bid Rate shall
be rejected, thus requiring each such Existing Holder to continue
to hold the Shares of MMP of such Series that are the subject of
such Submitted Bids;
(c) the Submitted Bids of each of the Potential Holders
specifying any rate that is lower than the Winning Bid Rate shall
be accepted;
(d) the Submitted Bids of each of the Existing Holders
specifying a rate that is equal to the Winning Bid Rate shall be
rejected, thus requiring each such Existing Holder to continue to
hold the Shares of MMP of such Series that are the subject of
such Submitted Bids, unless the number of Outstanding Shares of
MMP of such Series subject to all such Submitted Bids shall be
greater than the number of Shares ("Remaining Shares") equal to
the excess of the Available Shares over the number of Shares of
MMP of such Series subject to Submitted Bids described in
paragraphs D(1)(b) and D(1)(c) above, in which event the
Submitted Bids of each such Existing Holder shall be rejected in
part, and each such Existing Holder shall be required to continue
to hold Shares of MMP of such Series, but only in an amount equal
to the difference between (A) the number of Outstanding Shares of
MMP of such Series then held by such Existing Holder subject to
such Submitted Bids and (B) the number of Shares of MMP of such
Series obtained by multiplying the number of Remaining Shares by
a fraction, the numerator of which shall be the number of
Outstanding Shares of MMP of such Series held by such Existing
Holder subject to such Submitted Bids, and the denominator of
which shall be the sum of the number of Outstanding Shares of MMP
of such Series subject to such Submitted Bids made by all such
Existing Holders that specified a rate equal to the Winning Bid
Rate; and
(e) the Submitted Bids of each of the Potential Holders
specifying a rate that is equal to the Winning Bid Rate shall be
accepted but only in an amount equal to the number of Shares of
MMP of such Series obtained by multiplying the difference between
the Available Shares and the number of Shares of MMP of such
Series subject to Submitted Bids described in paragraphs D(1)(b),
D(1)(c) and D(1)(d) above by a fraction, the numerator of which
shall be the number of Outstanding Shares of MMP of such Series
subject to such Submitted Bids, and the denominator of which
shall be the sum of the number of Outstanding Shares of MMP of
such Series subject to such Submitted Bids made by all such
Potential Holders that specified a rate equal to the Winning Bid
Rate.
(2) If Sufficient Clearing Bids have not been made (other than
because all of the Outstanding Shares of MMP of such Series are
subject to Submitted Hold Orders), Submitted Orders shall be
accepted or rejected as follows in the following order of
priority and all other Submitted Bids shall be rejected, subject
to the Rounding Procedures:
(a) the Submitted Bids of each Existing Holder
specifying any rate that is equal to or lower than the Maximum
Rate shall be rejected, thus requiring such Existing Holder to
continue to hold the Shares of MMP of such Series that are the
subject of such Submitted Bids;
(b) the Submitted Bids if each Potential Holder
specifying any rate that is equal to or lower than the Maximum
Rate shall be accepted; and
(c) the Submitted Bids of each Existing Holder
specifying any rate that is higher than the Maximum Rate shall be
accepted and the Submitted Sell Orders of each Existing Holder
shall be accepted, thus entitling each Existing Holder that
submitted any such Submitted Bid or Submitted Sell Order to sell
the Shares of MMP of such Series subject to Submitted Bid or
Submitted Sell Order, but, in both cases only in an amount equal
to the difference between (A) the number of Outstanding Shares of
MMP of such Series then held by such Existing Holder subject to
such Submitted Bids or Submitted Sell Orders and (B) the number
of Shares of MMP of such Series obtained by multiplying the
difference between the Available Shares and the aggregate number
of Shares of MMP of such Series subject to Submitted Bids
described in paragraphs D(2)(a) and D(2)(b) above by a fraction,
the numerator of which shall be the number of Outstanding Shares
of MMP of such Series held by such Existing Holder subject to
such Submitted Bids or Submitted Sell Orders, and the denominator
of which shall be the number of Outstanding Shares of MMP of such
Series subject to all such Submitted Bids and Submitted Sell
Orders.
7.Remarketing Procedures.
A. Determination of Dividend Periods and Rates for Remarketed
Stock. Subject to paragraphs F and G of Section 5 hereof, the
duration of each Subsequent Dividend Period, and the Dividend
Rate for each Subsequent Dividend Period, will be established by
the Remarketing Agent for each Share of SABRES and will be
conclusive and binding on the Corporation and the holder of such
Share of SABRES. Each Remarketing Agent will establish Dividend
Rates (which shall not exceed the Maximum Rate) for each Dividend
Period for such Share of SABRES which it shall determine will be
the lowest rate at which tendered Shares of SABRES would be
remarketed at One Thousand Dollars ($1,000) per Share. In
establishing each Dividend Period and Dividend Rate, each
Remarketing Agent will select Dividend Periods and Dividend Rates
which it shall determine will result in the most favorable
financing alternative for the Corporation based on the then-
current Remarketing Conditions. The Shares of SABRES will be
remarketed and traded only in Units. All the Shares of SABRES in
a Unit will have the same Dividend Rate and Dividend Period.
B. Remarketing; Tender for Remarketing. The following
procedures shall be applicable to each Remarketed Share:
(1) The Remarketing Agent. The Corporation shall take
all reasonable action necessary so that, at all times when a
Series of SABRES or Converted MMP is outstanding, one or more
investment banks, brokers, dealers or other organizations
qualified to remarket Shares of SABRES and to establish Dividend
Periods and Dividend Rates as herein provided shall act as
Remarketing Agent for each Share of SABRES of such Series. Each
Remarketing Agent shall use its best efforts to remarket all
Shares of SABRES, on behalf of the holders thereof, tendered for
sale by Remarketing for which it is acting as Remarketing Agent
without charge to such holder, only at $1,000 per Share, provided
that no such Remarketing Agent shall be obligated to remarket
such Shares if there shall be a material misstatement or omission
in any disclosure document provided by the Corporation and used
in connection with the Remarketing of such Share or at any time
such Remarketing Agent shall have determined that it is not
advisable to remarket such Share by reason of: (i) a material
adverse change in the financial condition of the Corporation,
(ii) a banking moratorium, (iii) domestic or international
hostilities, (iv) an amendment of the provisions hereof which
materially and adversely changes the nature of the Shares of
SABRES or the Remarketing Procedures or (v) a Payment Failure.
Any Remarketing Agent may purchase tendered Shares for its own
account. Should the Remarketing Agent for any Share of SABRES
not succeed in Remarketing all such Shares of SABRES so tendered
for Remarketing on any date, such Remarketing Agent shall select
the Shares of such SABRES to be sold from those tendered pro rata
or in such other manner as it shall deem appropriate so that each
owner shall beneficially own Shares of SABRES of a Series only in
Units. Payments for Shares of SABRES remarketed shall be made by
the Tender Agent by crediting such payments to the accounts of
the holders thereof maintained by the Tender Agent or, to the
extent duly requested by holders, by wire or other transfer in
immediately available funds to their accounts with commercial
banks in the United States, but, in either case, only upon
surrender to the Tender Agent of the certificates representing
such Shares of SABRES, properly endorsed for transfer. If for
any reason a Share of SABRES tendered for Remarketing is not
remarketed in the applicable Remarketing, such Share will be
retained by its holder. Until remarketed each such Share of
SABRES will have successive Dividend Periods of one Business Day
and will be entitled to dividends, payable daily, at the Maximum
Rate.
(2) Notice of Shares To Be Retained. Each Share of
SABRES or Converted MMP shall be deemed to have been tendered to
the Tender Agent for sale by Remarketing on the Business Day
immediately preceding the first day of each Subsequent Dividend
Period applicable thereto, unless the holder thereof shall have
given irrevocable notice otherwise to the Remarketing Agent for
such Share of SABRES or Converted MMP or, if so instructed by
such Remarketing Agent, to the Tender Agent. Such notice, which
may be telephonic or written, must be delivered to such agent
prior to 3:00 P.M., New York City time, on such Business Day or
on such earlier day specified in a notice, if any, mailed by the
Tender Agent at the direction of such Remarketing Agent to such
record holder at its address as the same appears on the stock
register of the Corporation, which day shall be a Business Day at
least four Business Days after the mailing of such notice. The
notice from such holder of an election to retain Shares of SABRES
shall state (i) the number of the certificate representing the
Shares of SABRES not to be deemed to have been so tendered,
unless such certificate is held by the SABRES Depository, (ii)
the number of Shares of SABRES represented by such certificate
or, in the case of Shares of SABRES held by the SABRES
Depository, the number of Shares so held, and (iii) the number of
such Shares of SABRES which shall be deemed not to have been so
tendered. An owner may tender Shares of SABRES or Converted MMP
of a Series only in Units.
(3) Shares Deemed To Have Been Tendered. The failure
to give notice with respect to any Share of SABRES or Converted
MMP as provided in paragraph B(2) above shall constitute the
irrevocable tender for Remarketing of such Share. Certificates
representing Shares so tendered and remarketed shall be issued to
the purchasers thereof or to the SABRES Depository, irrespective
of whether the certificates formerly representing such Shares
shall have been delivered to the Tender Agent. A holder which
has not given notice that it will retain Shares of SABRES or
Converted MMP shall have no further rights with respect to such
Shares upon the Remarketing of such Shares, except the right to
receive any previously declared but unpaid dividends thereon and
the proceeds of the Remarketing of such Shares (but only upon
surrender of the certificates representing such Shares to the
Tender Agent properly endorsed for transfer, in the case of a
holder which has taken physical delivery of a Share certificate).
At any time, any or all Units of SABRES of a Series may have
Dividend Periods of various lengths. Depending on Remarketing
Conditions at the time of Remarketing, any or all Units of SABRES
of a Series may have different Dividend Rates, including those
set on the same day for Dividend Periods of equal length.
(4) Funds for Purchase of Shares. Shares of SABRES
tendered for Remarketing as provided in this Section 7 shall be
purchased, and payments to the holders for Shares of SABRES
remarketed will be made, solely from the proceeds received from
the purchasers of such Shares in a Remarketing. Neither the
Corporation, the Tender Agent nor any Remarketing Agent shall be
obligated to provide funds to make payment to the holders of
Shares so tendered.
C. The Remarketing Process. The Remarketing process will be
conducted on the following schedule and in the following manner
(all times are New York City Time):
The Business Day Immediately Preceding the First Day of each
Subsequent Dividend Period: (1)
(1) Or such other time and day as may have been specified in a
notice mailed to the holders of Shares of SABRES or Converted
MMP.
Beginning Not Later The Remarketing Agent for the
Than 1:00 P.M. Shares then being remarketed
will determine and, upon request, make available to all
interested persons non-binding indications of Dividend Periods
and Dividend Rates based upon then-current Remarketing
Conditions. Each holder may obtain a binding commitment as to
the specific Dividend Period or Dividend Periods and the related
Dividend Rate or Dividend Rates which will be applicable to such
holder's Shares.
At 3:00 P.M. Holders of Shares of SABRES
and Converted MMP will be deemed to have tendered Shares for sale
by Remarketing at $1,000 per Share and only in Units unless they
have given contrary instructions to the Remarketing Agent for
such Shares or, if so instructed by such Remarketing Agent, to
the Tender Agent.
After 3:00 P.M. The applicable Remarketing
Agent will solicit and receive orders from prospective investors
to purchase tendered Shares of SABRES. A purchaser, at the
time of its agreement to purchase Shares of SABRES, may obtain a
binding commitment as to the specific Dividend Period or Dividend
Periods and the related Dividend Rate or Dividend Rates for such
Shares of SABRES based upon then-current Remarketing Conditions.
The First Day of such Subsequent Dividend Period (always a
Business Day):
Opening of Business The applicable Remarketing
Agent will continue, if necessary, Remarketing Shares of SABRES.
By 1:00 P.M. The applicable Remarketing
Agent will have completed Remarketing and will advise the Tender
Agent as to the Dividend Rate and Dividend Period applicable to
each Share of SABRES commencing a Dividend Period on that day and
of any failure to remarket.
By 2:30 P.M. New holders must deliver the
purchase price as instructed by the applicable Remarketing Agent.
Former holders will be paid the proceeds of the Remarketing of
their Shares by the Tender Agent (upon surrender of their
certificates, if applicable).
8. Miscellaneous.
A. The Board of Directors may interpret the provisions
hereof to resolve any inconsistency or ambiguity which may arise
or be revealed in connection with the Auction Procedures or the
Remarketing Procedures provided for herein.
B. So long as the Dividend Rate is based on the results of
an Auction, an Existing Holder (i) may sell, transfer or
otherwise dispose of Shares of MMP of such Series only pursuant
to a Bid or Sell Order in accordance with the Auction Procedures
or to or through a Broker-Dealer or to a Person that shall have
delivered, or has caused to be delivered, a signed copy of a
Master Purchaser's Letter to the Trust Company, provided that in
the case of all transfers other than pursuant to Auctions, such
Existing Holder, its Agent Member or its Broker-Dealer advises
the Trust Company of such transfer, and (ii) shall have the
ownership of the Shares of Variable Cumulative Preferred Stock of
the Series held by it maintained in book entry form by the
Auction Stock Depository in the account of its Agent Member,
which in turn will maintain records of such Existing Holder's
beneficial ownership. Any transfer of Shares of MMP in violation
of the terms of a Master Purchaser's Letter may affect the right
of the Person acquiring such Shares to participate in Auctions.
C. Each Remarketing Agent will be required to register on a
list maintained pursuant to a Remarketing Agreement a transfer of
Shares of SABRES for which it is the Remarketing Agent from a
holder to another person only if such transfer is made to a
person that has delivered a signed Master Purchaser's Letter to
such Remarketing Agent and if (i) such transfer is pursuant to a
Remarketing or (ii) such Remarketing Agent has been notified in
writing (A) by such holder of such transfer or (B) by any person
that purchased or sold such Shares in a Remarketing of the
failure of such Shares to be delivered or paid for, as the case
may be, in connection with such Remarketing. A Remarketing Agent
is not required to register a transfer of Shares of SABRES
pursuant to clause (ii) above on or prior to the Business Day
immediately preceding the first day of a Subsequent Dividend
Period for such Shares unless it receives the written notice
required by such clause (ii) by 3:00 P.M., New York City time, on
the second Business Day preceding the first day of such
Subsequent Dividend Period. Such Remarketing Agent will rescind
a transfer registered on such list as a result of a Remarketing
if the Remarketing Agent is notified in writing of the failure of
Shares to be delivered or paid for as required. Any transfer of
Shares of SABRES made in violation of the terms of a Master
Purchaser's Letter may affect the right of the Person acquiring
such Shares to participate in Remarketings.
D. The Corporation or any Affiliate of the Corporation may
acquire, hold or dispose of Shares of SABRES. As at the date of
the Certificate of Designations, Preferences and Rights of the
Variable Cumulative Preferred Stock, the Corporation anticipates,
subject to such limitations as it and the Remarketing Agent may
agree, that it and its Affiliates will purchase Shares of SABRES
during Remarketings only after 3:00 P.M. on the Business Day
immediately preceding the first day of each Subsequent Dividend
Period and only at Dividend Rates and for Dividend Periods
established by the Remarketing Agents without regard to such
offers by the Corporation or its Affiliates and will tender
Shares of SABRES for Remarketing only upon at least ten days'
prior notice to the Remarketing Agents. In the event that the
Corporation or its Affiliates purchase Shares of SABRES for their
respective accounts, all Shares of the same Series of SABRES
tendered by other owners, including any such Shares of SABRES
owned by a Remarketing Agent, will be remarketed before the
Remarketing of any such Shares of SABRES of such Series owned by
the Corporation or its Affiliates. If any Shares of SABRES
tendered for Remarketing are not sold, any Shares of SABRES of
the same Series tendered for Remarketing by the Corporation or an
Affiliate of the Corporation, up to the number of such Shares not
so sold, will be deemed not to have been so tendered. If the
Method of determining the Dividend Rate for some or all of the
Series of SABRES were to be changed from the Remarketing Method
to the Auction Method, the Corporation or any Affiliate of the
Corporation may submit Sell Orders in an Auction with respect to
the Converted SABRES created thereby.
Neither the Corporation nor any Affiliate thereof may submit
an Order in an Auction, except a Sell Order and, in the case of
an Affiliate which is then acting as a Broker-Dealer, Orders on
behalf of Existing Holders or Potential Holders not for its own
account.
E. The Trust Company shall reject any Submitted Order of
the Corporation or an Affiliate, except for Sell Orders and
Orders of affiliated Broker-Dealers permitted under paragraph D
of this Section 8.
F. If (i) a Payment Failure shall have occurred or (ii) the
Auction Stock Depository shall resign and the Corporation shall
not have selected a substitute Auction Stock Depository
reasonably acceptable to the Trust Company prior to such
resignation, Shares of MMP of each Series may be registered for
transfer or exchange and new certificates issued upon surrender
of the older certificates in form deemed by the Trust Company
properly endorsed for transfer with all necessary endorsers'
signatures guaranteed in such manner and form as the Trust
Company may require by a guarantor reasonably believed by the
Trust Company to be responsible, accompanied by such assurances
as the Trust Company shall deem necessary or appropriate to
evidence the genuineness and effectiveness of each necessary
endorsement and satisfactory evidence of compliance with all
applicable law relating to the collection of taxes or funds
necessary for the payment of such taxes.
G. The Corporation or any Affiliate of the Corporation may
acquire Shares of MMP from Existing Holders other than through an
Auction, provided that any Shares so acquired are cancelled and
returned to the status of authorized but undesignated shares of
preferred stock.
H. Upon the selection of a Dividend Determination Method
for a Series of Variable Cumulative Preferred Stock for any
Subsequent Dividend Period other than the Dividend Determination
Method then applicable to such Series, the holders of record of
the Shares of such Series shall transfer the certificates for
such Shares to the Auction Stock Depository, in the case of the
selection of the Auction Method, or the SABRES Depository, in the
case of the selection of the Remarketing Method, in either case
on the first day of such Subsequent Dividend Period. In the
event a holder fails to so transfer its certificates as
aforesaid, such certificates shall be deemed cancelled and the
Corporation shall issue a new certificate to the Auction Stock
Depository or the SABRES Depository, as the case may be.
I. The purchase price of each Share of Variable Cumulative
Preferred Stock which is sold either through the Auction
Procedures or the Remarketing Procedures shall be One Thousand
Dollars ($l,000).
J. All certificates representing Shares shall be issued in
Share amounts equivalent to Units.
K. An Auction will be held in respect of each Series of
Converted SABRES on the Initial Auction Date. If a holder of
Converted SABRES does not submit an Order in such Auction, such
holder will be deemed to have submitted a Sell Order in such
Auction.
L. If a holder of Shares of Converted MMP fails to give
irrevocable notice otherwise to the Remarketing Agent for such
Shares (or, if so instructed by such Remarketing Agent, to the
Tender Agent) by no later than 3:00 P.M., New York City time, on
the Business Day immediately preceding the first day of the
Subsequent Dividend Period applicable thereto, or such other day
as is specified in a notice delivered in the manner set forth in
paragraph (B)(2) of Section 7, such holder will be deemed to have
tendered such Shares for sale by Remarketing on such Business
Day.
M. At all times when Shares of a Series of MMP or Converted
SABRES are Outstanding, the Corporation will use its best efforts
to maintain a Broker-Dealer and Trust Company for such Shares.
At all times when Shares of a Series of SABRES or Converted MMP
are outstanding, the Corporation will use its best efforts to
maintain a Remarketing Agent for such Shares.
9. Redemption.
A. The Shares of Variable Cumulative Preferred Stock of
each Series shall be subject to redemption in Units, as a whole
or from time to time in part at the option of the Corporation out
of funds legally available therefor on one of the following dates
(each such date is hereinafter referred to herein as a
"redemption date") (i) on the last Dividend Payment Date with
respect to any Dividend Period and at any time when the Dividend
Rate applicable to such Shares is the Maximum Rate at a
redemption price of One Thousand Dollars ($1,000) per Share, plus
an amount equal to accumulated and unpaid dividends thereon to,
but excluding, the date fixed for redemption and (ii) on such
redemption dates and at redemption prices (which may not be less
than $1,000 per Share in the case of Shares having a Dividend
Period in excess of 364 days) established by the applicable Term
Selection Agent in the case of MMP, or by the applicable
Remarketing Agent in the case of SABRES, prior to the
commencement of such Dividend Period, plus an amount equal to
accumulated and unpaid dividends thereon to, but excluding, the
date set for redemption. The applicable Term Selection Agent or
the applicable Remarketing Agent, as the case may be, will
establish dates on which Shares may be redeemed and the
corresponding redemption prices of such Shares on such dates that
the applicable Term Selection Agent or the applicable Remarketing
Agent, as the case may be, determines based on the then-current
Remarketing Conditions will be the most favorable financing
alternative for the Corporation. Notice of redemption will be
provided to record holders of Shares of Variable Cumulative
Preferred Stock to be redeemed not less than 30 nor more than 60
days prior to the date fixed for redemption by mail, first-class,
postage prepaid, such notice to be addressed to the record holder
at the address for such holder as the same appears on the stock
register of the Corporation. Such notice shall specify the
record date for determining holders of Shares to be redeemed.
B. Notwithstanding the foregoing, if any dividends on
Shares of Variable Cumulative Preferred Stock are in arrears, no
Shares of Variable Cumulative Preferred Stock shall be redeemed
unless all Outstanding Shares of Variable Cumulative Preferred
Stock are simultaneously redeemed, and the Corporation shall not
purchase or otherwise acquire any Shares of Variable Cumulative
Preferred Stock, provided, that the foregoing shall not prevent
the purchase or acquisition of Shares of Variable Cumulative
Preferred Stock pursuant to a purchase or exchange offer made on
the same terms to holders of all Outstanding Shares of Variable
Cumulative Preferred Stock. None of the foregoing shall preclude
the Corporation from acquiring Shares of Variable Cumulative
Preferred Stock, constituting either all or a part of a Series,
in a tender or an exchange offer.
C. Each holder of Shares of Variable Cumulative Preferred
Stock called for redemption shall surrender the certificate or
certificates, if any, evidencing such Shares to the Corporation
at the place designated in the notice of redemption for such
Shares (properly endorsed or assigned for transfer, if the notice
shall so state) and shall thereupon be entitled to receive
payment of the redemption price plus an amount equal to
accumulated and unpaid dividends to, but excluding, the
redemption date therefor.
D. If fewer than all of the Outstanding Shares of Variable
Cumulative Preferred Stock of any Series are to be redeemed as
set forth above, the number of Shares to be redeemed shall be
determined by the Board of Directors. In the case of Shares of
MMP, the Shares of such Series shall be redeemed pro rata from
the holders of record of such Shares in proportion to the number
of such Shares held by such holders with adjustments for
fractional shares and so as to ensure that the Shares remaining
Outstanding after such redemption are held of record in Units.
In the case of SABRES, the Shares of such Series shall be
redeemed pro rata from the holders of record of the Shares of
such Series having the same Dividend Period and redemption terms,
with adjustments for fractional shares and so as to ensure that
the Shares remaining Outstanding after such redemption are held
of record in Units.
E. If notice of redemption shall have been given, then,
notwithstanding that any certificate for Shares so called for
redemption shall not have been surrendered for cancellation, from
and after the date fixed for redemption (unless a Payment Failure
shall have occurred), the Shares represented thereby shall no
longer be deemed Outstanding, dividends thereon shall cease to
accumulate and all rights of the holders thereon with respect to
the Shares so called for redemption shall forthwith on such
redemption date cease and terminate, except only the right of the
holders thereof to receive the amount payable upon redemption
thereof, without interest. After the date designated for
redemption, and if the redemption price has been paid or set
aside for payment, such Shares of Variable Cumulative Preferred
Stock shall not be transferrable on the stock register of the
Corporation. Upon surrender in accordance with the notice of
redemption of the certificate or certificates for the Shares so
redeemed (properly endorsed or assigned for transfer, if such
notice shall so state), the redemption price set forth above will
be paid by the Paying Agent.
F. Any notice which is mailed in the manner herein provided
shall be conclusively presumed to have been duly given whether or
not the record holder receives the notice. In any case, failure
duly to give such notice to the holder of any Shares of any
Series of Variable Cumulative Preferred Stock designated for
redemption, in whole or in part, or any defect in such notice
shall not affect the validity of the proceedings for the
redemption of any other Shares of a Series.
G. Shares of Variable Cumulative Preferred Stock which have been
redeemed will be cancelled and upon the filing of any certificate
that may be required under Delaware law may be restored to the
status of authorized but undesignated and unissued shares of
preferred stock.
10. Sinking Fund. There shall not be any sinking fund for the
redemption of any Shares of any Series of Variable Cumulative
Preferred Stock.
11. Liquidation Preference.
A. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the
holders of Shares of Variable Cumulative Preferred Stock of each
Series shall be entitled to receive out of assets of the
Corporation available for distribution to stockholders, before
any distribution of assets of the Corporation is made to holders
of Junior Stock, One Thousand Dollars ($1,000) per Share plus an
amount equal to accumulated and unpaid dividends to the date of
distribution.
B. If, in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the
amounts payable with respect to each Series of the Variable
Cumulative Preferred Stock, the Series A Preferred Stock and any
other shares of stock of the Corporation ranking as to any such
distribution on a parity with the Variable Cumulative Preferred
Stock are not paid in full, then the holders of the Variable
Cumulative Preferred Stock and of all such other shares shall
share ratably in any such distribution of assets of the
Corporation in proportion to the full respective preferential
amounts to which they are entitled assuming all amounts thereon
were paid in full.
C. After payment to the holders of the Variable Cumulative
Preferred Stock of the full preferential amounts to which they
are entitled, the holders of the Shares of Variable Cumulative
Preferred Stock will not be entitled to any further participation
in any distribution of assets by the Corporation. The merger or
consolidation of the Corporation into or with any other Person
shall not be or be deemed to be a liquidation, dissolution or
winding up for purposes of this Section 11.
12. Voting Rights.
A. Holders of the Variable Cumulative Preferred Stock of
any Series are not entitled to any voting rights, except as may
be required by law or as specified in this Section 12.
B. If at the time of any annual meeting of stockholders for
the election of directors, the equivalent of six quarterly
dividends (whether or not consecutive) payable on any share or
shares of preferred stock of the Corporation are in default, the
number of directors constituting the Board of Directors will be
increased by two. The holders of record of the Variable
Cumulative Preferred Stock, voting separately as a class with the
holders of shares of any one or more other series of preferred
stock upon which like voting rights have been conferred
(including, without limitation, the Series A Preferred Stock),
shall be entitled at said meeting of stockholders (and at each
subsequent annual meeting of stockholders), unless all dividends
in arrears have been paid or declared and set apart for payment
prior thereto, to vote for the election of two directors of the
Corporation, the holders of record of Variable Cumulative
Preferred Stock being entitled to cast one vote per Share and the
holders of record of Series A Preferred Stock being entitled to
cast one-tenth (1/10) of one vote per share, with the remaining
directors of the Corporation to be elected by the holders of
record of shares of any other class or classes or series of stock
entitled to vote therefor. Until the default in payments of all
dividends which permitted the election of said directors shall
cease to exist, any director who shall have been so elected
pursuant to the next preceding sentence may be removed at any
time, without cause, only by the affirmative vote of the holders
of record of the shares of preferred stock at the time entitled
to cast a majority of the votes entitled to be cast for the
election of any such director at a special meeting of such
holders of record called for that purpose, and any vacancy in
such directorship thereby created or otherwise created may be
filled by the vote of such holders of record. If and when such
default shall cease to exist, the holders of record of Variable
Cumulative Preferred Stock and the holders of record of shares of
any one or more series of preferred stock upon which like voting
rights have been conferred (including, without limitation, the
holders of record of the Series A Preferred Stock) shall be
divested of the foregoing special voting rights, subject to
revesting in the event of each and every subsequent like default
in payments of dividends. Upon the termination of the foregoing
special voting rights, the terms of office of all persons who may
have been elected directors pursuant to said special voting
rights shall forthwith terminate, and the number of directors
constituting the Board of Directors shall be reduced by two. For
purposes of the foregoing, default in the payment of dividends
for the equivalent of six quarterly dividends means, in the case
of Variable Cumulative Preferred Stock which pays dividends
either more or less frequently than every quarter, default in the
payment of dividends in respect of one or more Dividend Periods
containing in the aggregate not less than 540 days.
C. Unless the vote or consent of the holders of record of a
greater number of shares shall then be required by law, the
consent of the holders of record of at least 66 2/3% of all of
the Shares of all Series of Variable Cumulative Preferred Stock
and all other shares of the same class at the time outstanding
(including, without limitation, the holders of record of the
Series A Preferred Stock), given in person or by proxy, either in
writing or by a vote at a meeting called for that purpose, voting
as a class without regard to series, the holders of record of
Shares of Variable Cumulative Preferred Stock being entitled to
cast one vote per Share and the holders of record of Series A
Preferred Stock being entitled to cast one-tenth (1/10) of one
vote per share, shall be necessary for authorizing, effecting or
validating the amendment, alteration or repeal of any of the
provisions of the Restated Certificate of Incorporation or of any
certificate amendatory thereof or supplemental thereto (including
any Certificate of Designations, Preferences and Rights or any
similar document relating to any series of preferred stock) so as
to affect adversely the preferences, rights, powers or privileges
of such Series and any other shares of the same class (including,
without limitation, the Series A Preferred Stock); provided,
however, that in any case in which one or more, but not all,
Series of Variable Cumulative Preferred Stock, Series A Preferred
Stock or other series of such class would be adversely affected
as to the preferences, rights, powers or privileges thereof, the
affirmative consent of holders of record of shares entitled to
cast at least 66 2/3% of the votes entitled to be cast by the
holders of all of the shares of all of such series that would be
adversely affected (including, without limitation, the Series A
Preferred Stock), voting as a class, shall be required in lieu
thereof.
D. Unless the vote or consent of the holders of record of a
greater number of shares shall then be required by law, the
consent of the holders of record of at least 66 2/3% of all
Shares of all Series of Variable Cumulative Preferred Stock and
all shares of all other series of preferred stock ranking on a
parity with the Shares, either as to dividends or upon
liquidation (including, without limitation, the Series A
Preferred Stock), at the time outstanding, given in person or by
proxy, either in writing or by a vote at a meeting called for the
purpose at which the holders of record of Shares of all Series of
Variable Cumulative Preferred Stock, Series A Preferred Stock and
shares of such other series of preferred stock shall vote
together as a single class without regard to series, the holders
of record of Shares of all Series of Variable Cumulative
Preferred Stock being entitled to cast one vote per Share and the
holders of record of Series A Preferred Stock being entitled to
cast one-tenth (1/10) of one vote per share, shall be necessary
to issue, authorize, or increase the authorized amount of, or
issue or authorize any obligations or security convertible into
or evidencing a right to purchase, any additional class or series
of stock ranking prior to the Shares, Series A Preferred Stock or
such other preferred stock as to dividends or upon liquidation.
FIFTH The number of Directors constituting the Board of
Directors shall be fixed in, or in the manner provided in, the by-
laws, but in no case shall be less than three.
SIXTH Except to the extent otherwise specifically
provided therein, the by-laws may be made, altered, amended or
repealed by the Board of Directors. The books of the Corporation
(subject to the provisions of the laws of the State of Delaware)
may be kept outside of the State of Delaware at such places as
from time to time may be designated by the Board of Directors.
SEVENTH (1) (a) A director of the Corporation shall not be
liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for
Liability (i) for any breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a
knowing violation of the law, (iii) under Section 174 of the
General Corporation Law of the State of Delaware, or (iv) for any
transaction from which the director derived an improper personal
benefit.
(b) If the General Corporation Law of the State of Delaware
is hereafter amended to further eliminate or limit the liability
of a director of a corporation, then a director of the
Corporation, in addition to the circumstances set forth herein,
shall not be liable to the fullest extent permitted by the
General Corporation Law of the State of Delaware as so amended.
(2) (a) Each person who was or is a party or is threatened
to be made a party to, or is involved in any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such
person 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, shall be indemnified and held harmless by the
Corporation to the fullest extent permitted by applicable law.
The right to indemnification conferred in this Article SEVENTH
shall also include the right to be paid by the corporation the
expenses incurred in connection with any such proceeding in
advance of its final disposition to the fullest extent authorized
by applicable law. The right to indemnification conferred in
this Article SEVENTH shall be a contract right.
(b) The Corporation shall determine the right of any person
to receive indemnification as provided hereunder in accordance
with the provisions of applicable law.
(c) The Corporation may purchase and maintain insurance, at
its expense, to protect itself and any person who is or was a
director, officer, employee or agent of the Corporation or who 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 any expense,
liability or loss incurred by such person in any such capacity,
whether or not the Corporation would have the power to indemnify
such person against such expense, liability or loss under
applicable law.
(3) The rights and authority conferred in this Article
SEVENTH shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, provision
of this Certificate of Incorporation or the by-laws of the
Corporation, agreement, vote of stockholders or disinterested
directors or otherwise.
(4) Neither the amendment nor repeal of this Article
SEVENTH nor the adoption of any provision of this Certificate of
Incorporation or the by-laws of the Corporation or of any statute
inconsistent with this Article SEVENTH shall eliminate or reduce
the effect of this Article SEVENTH in respect of any acts or
omissions occurring prior to such amendment, repeal or adoption
of an inconsistent provision.
EIGHTH Whenever the vote of stockholders at a meeting
thereof is required or permitted to be taken for or in connection
with any corporate action by any provision of the General
Corporation Law of the State of Delaware the meeting and vote of
stockholders may be dispensed with if such action is taken with
the written consent of the holders of not less than a majority of
all of the stock entitled to be voted upon such action if a
meeting were held; provided that in no case shall the written
consent be by the holders of stock having less than the minimum
percentage of the vote required by statute for such action, and
provided that prompt notice is given to all stockholders of the
taking of corporate action without a meeting and by less than
unanimous written consent. Election of directors need not be by
ballot unless the by-laws so provide.
NINTH The Corporation reserves the right to amend,
alter, change or repeal any provision contained in the
Certificate of Incorporation, in the manner now or hereafter
prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
J. P. MORGAN & CO. INCORPORATED, a corporation organized and
existing under the General Corporation Law of the State of
Delaware, does hereby certify as follows:
In accordance with the provisions of Section 245 of the
General Corporation Law of Delaware the foregoing Restated
Certificate of Incorporation was duly adopted by the Board of
Directors without a vote of stockholders. This Restated
Certificate of Incorporation only restates and integrates and
does not further amend the provisions of the Certificate of
Incorporation as theretofore amended, and there is no discrepancy
between those provisions and the provisions of this Restated
Certificate of Incorporation.
IN WITNESS WHEREOF, J. P. Morgan & Co. Incorporated has
caused this certificate to be signed by Dennis Weatherstone, its
Chairman of the Board, and Barbara S. Stokes, its Secretary, on
the 9th day of May, 1990.
DENNIS WEATHERSTONE /s/
Chairman of the Board
Attest: BARBARA S. STOKES/s/
Secretary
CERTIFICATE OF DECREASE
OF SERIES A PREFERRED STOCK
OF
J.P. MORGAN & CO. INCORPORATED
Pursuant to Section 151(g) of the
Delaware General Corporation Law
J.P. Morgan & Co. Incorporated (the "Corporation"), a
corporation existing under the laws of the State of Delaware,
hereby certifies that, at a meeting of the Board of Directors of
the Corporation duly called and held on July 13, 1985, the Board
of Directors of the Corporation adopted a resolution retiring
55,700 shares of a previously-established series of the preferred
stock of the Corporation, no par value, which series was
designated "Series A Preferred Stock" pursuant to a Certificate
of Designation filed with the Delaware Secretary of State on
February 25, 1983, and providing that the shares so retired shall
resume the status of authorized but unissued shares of Preferred
Stock, no par value, thereby decreasing the number of shares of
preferred stock of the Corporation that are designated as Series
A Preferred Stock from 2,500,000 to 2,444,300.
IN WITNESS WHEREOF the Corporation has caused this
Certificate to be signed by Barbara S. Stokes its Vice President
and her signature to be attested by Silke Ossenkopp its Assistant
Secretary this 24th day of September, 1992.
J.P. MORGAN & CO. INCORPORATED
By: Barbara S. Stokes /s/
Barbara S. Stokes
Vice President
ATTEST:
Silke Ossenkopp/s/
Assistant Secretary
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
of
SERIES G REDEEMABLE PARTICIPATING PREFERRED STOCK
of
J. P. MORGAN & CO. INCORPORATED
J. P. MORGAN & CO. INCORPORATED, a corporation
organized and existing under the laws of the State of Delaware
(herein referred to as the "Corporation"), in accordance with the
provisions of Section 151 of the General Corporation Law of the
State of Delaware, DOES HEREBY CERTIFY:
A resolution providing for and in connection with the
issuance of the Series G Redeemable Participating Preferred Stock
of the Corporation (the "Series G Preferred Stock") (as
designated by the Board of Directors of the Corporation), without
par value, was duly adopted by the Securities Committee (the
"Securities Committee") of the Board of Directors (the "Board of
Directors") of the Corporation, pursuant to authority conferred
on the Securities Committee by the Board of Directors, and on the
Board of Directors (which fixed the voting rights with respect to
the shares designated herein) by the provisions of the Restated
Certificate of Incorporation of the Corporation, which Restated
Certificate of Incorporation authorizes the issuance of up to ten
million shares of preferred stock, without par value, and which
resolution provides as follows:
RESOLVED, that the issue of the Series G Preferred
Stock, without par value, of the Corporation, as designated by
the Board of Directors of the Corporation on November 9, 1994, is
hereby provided for and shall hereby consist of 924,928 shares,
and the voting powers, designations, preferences and relative,
participating, optional or other special rights, and
qualifications, limitations or restrictions thereof are set forth
in the following Sections 1 through 7:
1. Designation. The designation of such preferred stock shall
be the Series G Redeemable Participating Preferred Stock
(hereinafter referred to as the "Series G Preferred Stock") and
the number of shares constituting such Series G Preferred Stock
is 924,928.
2. Ranking. The Series G Preferred Stock shall rank junior to
all shares of Series A Preferred Stock and all shares of the
Variable Cumulative Preferred Stock and all other as of yet
unissued preferred stock of the Corporation (unless the Board
shall provide in the resolutions setting forth the terms of such
preferred stock that such stock shall rank junior to the Series G
Preferred Stock), but shall rank prior to all other equity
securities of the Corporation ("Junior Stock") with respect to
payments of dividends and distributions upon liquidation.
3. Dividends.
A. The holders of Shares of Series G Preferred Stock shall
be entitled to receive, when, as and if declared by the Board of
Directors of the Corporation, out of funds legally available
therefor, a fixed cumulative cash preferential dividend (the
"Fixed Dividend") at the rate of 1% of the Liquidation Preference
per share per annum, payable annually on the 15th day of December
(each a "Fixed Dividend Payment Date") to holders of record on
the tenth Business Day (as defined below) preceding such Fixed
Dividend Payment Date (the "Fixed Dividend Record Date"). In the
event that any Fixed Dividend Payment Date shall fall on any day
other than a Business Day, the dividend payment due on such Fixed
Dividend Payment Date shall be paid on the Business Day
immediately following such Fixed Dividend Payment Date.
"Business Day" shall mean any day which is not a Saturday, Sunday
or bank holiday in New York, New York, or London, England. Fixed
Dividends shall begin to accrue on outstanding shares of Series G
Preferred Stock from April 30, 1995. Fixed Dividends shall
accrue on a daily basis whether or not during such annual period
there shall be funds legally available therefor, but Fixed
Dividends accrued on the shares of Series G Preferred Stock for
any period less than a full annual period between Fixed Dividend
Payment Dates (or, in the case of the first dividend payment,
from the date of issuance of the shares of Series G Preferred
Stock through the first Fixed Dividend Payment Date) shall be
computed on the basis of a 360-day year of 30-day months.
Accrued but unpaid Fixed Dividends shall cumulate as of the Fixed
Dividend Payment Date on which they first become payable, but no
interest shall accrue on accumulated but unpaid Fixed Preferred
Dividends.
B. The holders of outstanding Shares of Series G
Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors of the Corporation, out of
funds legally available therefore, a participating dividend (the
"Participating Dividend") per share of Series G Preferred Stock
equal to 50% of the amount of any declared dividend so declared
per share of Common Stock, $2.50 par value, of the Corporation
(the "Common Stock") payable on the day the corresponding Common
Stock dividend is payable (the "Participating Dividend Payment
Date") to holders of record on the tenth Business Day preceding
the Participating Dividend Payment Date (the "Participating
Dividend Record Date") and if such day is not a Business Day, the
immediately following Business Day.
4. Redemption.
A. The Shares of Series G Preferred Stock may be
redeemed, in whole, by the Corporation from 60 days after the
issuance of such Series G Preferred Stock upon 30 days notice to
the holders of record of the Series G Preferred Stock at the
fixed redemption price of $50 per share plus an amount equal to
any accumulated but unpaid dividends. Notice is duly given upon
the mailing of such notice through the United States postal
service whether or not the holders of record of the Shares of
Series G Preferred Stock received such notice.
B. The shares of Series G Preferred Stock, in whole or
in part, at the option of the holder of such Series G Preferred
Stock, shall be redeemed by the Corporation on either (i) the
last Business Day of any month after the issuance of the Series G
Preferred Stock so long as a request for redemption is made, in
writing, by the holder and received by the Corporation by the
20th day of such month (if such day is a Business Day and if it
is not, the immediately following Business Day) or (ii) on such
other date or dates as the Corporation may, at its unrestricted
and sole discretion, determine, at the fixed redemption price of
$50 per share plus an amount equal to any accumulated and unpaid
dividends. Any requests for redemption not received by the 20th
day (or if not a Business Day, the immediately following Business
Day) of any month shall be executed at that price either (i) on
the last Business Day of the immediately following month or (ii)
on such other date or dates as the Corporation may, at its
unrestricted and sole discretion, determine. Receipt of a
written request for redemption shall mean actual receipt of such
request by the appropriate officer of the Corporation.
5. Transferability. Shares of Series G Preferred Stock and
beneficial interests thereof are nontransferable without the
express approval of the Board of Directors of the Corporation or
the Securities Committee thereof.
6. Liquidation Preference. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the
Corporation, the holders of Shares of Series G Preferred Stock
shall be entitled to receive out of assets of the Corporation
available for distribution to stockholders, before any
distribution of assets of the Corporation is made to holders of
Junior Stock, up to a maximum of Fifty Dollars ($50.00) per Share
plus an amount equal to accumulated and unpaid dividends to the
date of distribution.
7. Voting Rights.
A. Holders of the Series G Preferred Stock are not
entitled to any voting rights, except as may be required by law
or as specified in this Section 7.
B. Unless the vote or consent of the holders of a
greater number of Shares is then required by law, the consent of
the holders of record of at least 66_% of all of the outstanding
Shares of Series G Preferred Stock, given in person or by proxy,
either in writing or by a vote at a meeting called for that
purpose, shall be necessary for authorizing, effecting or
validating the amendment, alteration or repeal of any of the
provisions of the Restated Certificate of Incorporation or of any
certificate amendatory thereof or supplemental thereto (including
this Certificate of Designation) so as to effect adversely the
preferences, rights, powers or privileges of the Series G
Preferred Stock.
IN WITNESS WHEREOF, this Certificate of Designation has been
executed by Margaret M. Foran its duly appointed Vice President
this 29th day of December 1994.
J.P. MORGAN & CO. INCORPORATED
By: Margaret M. Foran /s/
Margaret M. Foran
Vice President
<TABLE>
Exhibit 12
Computation of Ratio of Earnings to Fixed Charges
J.P. Morgan & Co. Incorporated
Consolidated
________________________________________________________________________________
<CAPTION>
Dollars in millions
Twelve months ended December 31
________________________________________________________________________________
1994 1993 1992 1991 1990
________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Earnings:
Income before extraordinary gain
and cumulative effect of
accounting $1 215 $1 723 $1 130 $1 114 $ 775
changes
Add: income taxes 610 968 619 371 279
Less: equity in undistributed
income
(loss) of all affiliates 21 50 3 1 (4 )
accounted
for by the equity method
Add: fixed charges, excluding
interest
on deposits and capitalized 4 483 3 781 3 292 3 503 3 874
interest
________________________________________________________________________________
Earnings available for fixed
charges, 6 287 6 422 5 038 4 987 4 932
excluding interest on deposits
Add: interest on deposits 1 946 1 917 2 306 2 830 3 456
________________________________________________________________________________
Earnings available for fixed
charges, 8 233 8 339 7 344 7 817 8 388
including interest on deposits
________________________________________________________________________________
Fixed charges:
Interest expense, excluding
interest on 4 452 3 753 3 267 3 472 3 841
deposits
Interest factor in net rental 31 28 25 31 33
expense
________________________________________________________________________________
Total fixed charges, excluding
interest
on deposits and capitalized 4 483 3 781 3 292 3 503 3 874
interest
Capitalized interest - - - 20 59
________________________________________________________________________________
Total fixed charges, excluding
interest 4 483 3 781 3 292 3 523 3 933
on deposits
Add: interest on deposits 1 946 1 917 2 306 2 830 3 456
________________________________________________________________________________
Total fixed charges, including
interest 6 429 5 698 5 598 6 353 7 389
on deposits
________________________________________________________________________________
Ratio of earnings to fixed charges:
Excluding interest on deposits 1.40 1.70(a) 1.53(b) 1.42(c) 1.25(d)
Including interest on deposits 1.28 1.46(a) 1.31(b) 1.23(c) 1.14(d)
________________________________________________________________________________
<FN>
(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.
(d) For the year ended December 31, 1990, the ratio of earnings to fixed
charges, including the cumulative effect of a change in the method of accounting
for trading swaps, was 1.32 excluding interest on deposits and 1.17 including
interest on deposits.
</TABLE>
<PAGE> 2
<TABLE>
Exhibit 12
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends
J.P. Morgan & Co. Incorporated
Consolidated
________________________________________________________________________________
<CAPTION>
Dollars in millions
Twelve months ended December 31
________________________________________________________________________________
1994 1993 1992 1991 1990
________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Earnings:
Income before extraordinary gain
and cumulative effect of
accounting $1 215 $1 723 $1 130 $1 114 $ 775
changes
Add: income taxes 610 968 619 371 279
Less: equity in undistributed
income
(loss) of all affiliates 21 50 3 1 (4)
accounted
for by the equity method
Add: fixed charges, excluding
interest
on deposits, preferred stock 4 483 3 781 3 292 3 503 3 874
dividends, and capitalized
interest
________________________________________________________________________________
Earnings available for fixed
charges, 6 287 6 422 5 038 4 987 4 932
excluding interest on deposits
Add: interest on deposits 1 946 1 917 2 306 2 830 3 456
________________________________________________________________________________
Earnings available for fixed
charges, 8 233 8 339 7 344 7 817 8 388
including interest on deposits
________________________________________________________________________________
Fixed charges:
Interest expense, excluding
interest on 4 452 3 753 3 267 3 472 3 841
deposits
Interest factor in net rental 31 28 25 31 33
expense
________________________________________________________________________________
Total fixed charges, excluding
interest
on deposits, preferred stock 4 483 3 781 3 292 3 503 3 874
dividends, and capitalized
interest
Preferred stock dividends 30 28 29 32 38
Capitalized interest - - - 20 59
________________________________________________________________________________
Total fixed charges, excluding
interest 4 513 3 809 3 321 3 555 3 971
on deposits
Add: interest on deposits 1 946 1 917 2 306 2 830 3 456
________________________________________________________________________________
Total fixed charges, including
interest 6 459 5 726 5 627 6 385 7 427
on deposits
________________________________________________________________________________
Ratio of earnings to fixed charges:
Excluding interest on deposits 1.39 1.69(a) 1.52(b) 1.40(c) 1.24(d)
Including interest on deposits 1.27 1.46(a) 1.31(b) 1.22(c) 1.13(d)
________________________________________________________________________________
<FN>
(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.
(d) For the year ended December 31, 1990, 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 trading swaps, was 1.31 excluding
interest on deposits and 1.17 including interest on deposits.
</TABLE>
Exhibit 23 (a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectus constituting part of this Post-Effective Amendment No.
1 to the Registration Statement on Form S-3 (No. 33-55851) of our
report dated January 12, 1994 appearing on page 36 of J.P. Morgan
& Co. Incorporated's Annual Report on Form 10-K for the year
ended December 31, 1993. We also consent to the reference to us
under the heading "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
New York, New York
March 13, 1995
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, NY 10005
(Address of principal executive offices) (Zip Code)
For information, contact:
Terry L. McRoberts, President
First Trust of New York, National Association
100 Wall Street, 16th Floor
New York, NY 10005
Telephone: (212) 361-2500
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
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.
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.
Exhibit 7. Report of Condition of First Trust of
New York, National Association, as of the close of
business on December 31, 1994, 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 13th day of March, 1995.
FIRST TRUST OF NEW YORK,
NATIONAL ASSOCIATION
By: /s/ David K. Leverich
David K. Leverich
Vice President
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 13th day of March, 1995.
FIRST TRUST OF NEW YORK,
NATIONAL ASSOCIATION
By: /s/David K. Leverich
David K. Leverich
Vice President
<PAGE>
Exhibit 4
FIRST TRUST OF NEW YORK,
NATIONAL ASSOCIATION
BYLAWS
ARTICLE I
Meetings of Shareholders
Section 1.1. Annual Meeting. The annual meeting of the
shareholders, for the election of directors and the transaction
of other business, shall be held at a time and place as the
Chairman or President may designate. Notice of such meeting shall
be given at least ten days prior to the date thereof, to each
shareholder of the Association. If, for any reason, an election
of directors is not made on the designated day, the election
shall be held on some subsequent day, as soon thereafter as
practicable, with prior notice thereof.
Section 1.2. Special Meetings. Except as otherwise
specially provided by law, special meetings of the shareholders
may be called for any purpose, at any time by a majority of the
board of directors, or by any shareholder or group of
shareholders owning at least ten percent of the outstanding
stock. Every such special meeting, unless otherwise provided by
law, shall be called upon not less than ten days prior notice
stating the purpose of the meeting.
Section 1.3. Nominations for Directors. Nominations for
election to the board of directors may be made by the board of
directors or by any shareholder.
Section 1.4. Proxies. Shareholders may vote at any meeting
of the shareholders by proxies duly authorized in writing.
Proxies shall be valid only for one meeting and any adjournments
of such meeting and shall be filed with the records of the
meeting.
Section 1.5. Quorum. A majority of the outstanding capital
stock, represented in person or by proxy, shall constitute a
quorum at any meeting of shareholders, unless otherwise provided
by law. A majority of the votes cast shall decide every question
or matter submitted to the shareholders at any meeting, unless
otherwise provided by law or by the Articles of Association.
ARTICLE II
Directors
Section 2.1. Board of Directors. The board of directors
(hereinafter referred to as the "board"), shall have power to
manage and administer the business and affairs of the
Association. All authorized corporate powers of the Association
shall be vested in and may be exercised by the board.
Section 2.2. Powers. In addition to the foregoing, the
board of directors shall have and may exercise all of the powers
granted to or conferred upon it by the Articles of Association,
the Bylaws and by law.
Section 2.3. Number. The board shall consist of a number of
members to be fixed and determined from time to time by
resolution of the board or the shareholders at any meeting
thereof, in accordance with the Articles of Association.
Section 2.4. Organization Meeting. The newly elected board
shall meet for the purpose of organizing the new board and
electing and appointing such officers of the Association as may
be appropriate. Such meeting shall be held on the day of the
election or as soon thereafter as practicable, and, in any event,
within thirty days thereafter. If, at the time fixed for such
meeting, there shall not be a quorum present, the directors
present may adjourn the meeting until a quorum is obtained.
Section 2.5. Regular Meetings. The regular meetings of the
board shall be held, without notice, as the Chairman or President
may designate and deem suitable.
Section 2.6. Special Meetings. Special meetings of the
board may be called by the Chairman or the President of the
Association, or at the request of two or more directors. Each
member of the board shall be given notice stating the time and
place of each such meeting.
Section 2.7. Quorum. A majority of the directors shall
constitute a quorum at any meeting, except when otherwise
provided by law; but fewer may adjourn any meeting. Unless
otherwise provided, once a quorum is established, any act by a
majority of those constituting the quorum shall be the act of the
board.
Section 2.8. Vacancies. When any vacancy occurs among the
directors, the remaining members of the board may appoint a
director to fill such vacancy at any regular meeting of the
board, or at a special meeting called for that purpose.
ARTICLE III
Committees
Section 3.1. Advisory Board of Directors. The board may
appoint persons, who need not be directors, to serve as advisory
directors on an advisory board of directors established with
respect to the business affairs of either this Association alone
or the business affairs of a group of affiliated organizations of
which this Association is one. Advisory directors, shall have
such powers and duties as may be determined by the board,
provided, that the board's responsibility for the business and
affairs of this Association shall in no respect be delegated or
diminished.
Section 3.2. Audit Committee. The board shall appoint an
Audit Committee which shall consist of at least two Directors .
If legally permissible, the Board may determine to name itself as
the Audit Committee. The Audit Committee shall direct and review
audits of the Association's fiduciary activities.
The members of the Audit Committee shall be appointed each
year and shall continue to act until their successors are named.
The Audit Committee shall have power to adopt its own rules and
procedures and to do those things which in the judgment of such
Committee are necessary or helpful with respect to the exercise
of its functions or the satisfaction of its responsibilities.
Section 3.3. Executive Committee. The board may appoint an
Executive Committee which shall consist of at least three
directors and which shall have, and may exercise, all the powers
of the board between meetings of the board or otherwise when the
board is not meeting.
Section 3.4. Other Committees. The board may appoint, from
time to time, committees of one or more persons who need not be
directors, for such purposes and with such powers as the board
may determine. In addition, either the Chairman or the President
may appoint, from time to time, committees of one or more
officers, employees, agents or other persons, for such purposes
and with such powers as either the Chairman or the President
deems appropriate and proper.
Whether appointed by the board, the Chairman, or the
President, any such Committee shall at all times be subject to
the direction and control of the board.
Section 3.5. Meetings. Minutes and Rules. An advisory board
of directors and/or committee shall meet as necessary in
consideration of the purpose of the advisory board of directors
or committee, and shall maintain minutes in sufficient detail to
indicate actions taken or recommendations made; unless required
by the members, discussions, votes or other specific details need
not be reported. An advisory board of directors or a committee
may, in consideration of its purpose, adopt its own rules for the
exercise of any of its functions or authority.
ARTICLE IV
Officers and Employees
Section 4.1. Chairman of the Board. The board may appoint
one of its members to be Chairman of the board to serve at the
pleasure of the board. The Chairman shall supervise the carrying
out of the policies adopted or approved by the board; shall have
general executive powers, as well as the specific powers
conferred by these Bylaws; shall also have and may exercise such
powers and duties as from time to time may be conferred upon or
assigned by the board.
Section 4.2. President. The board may appoint one of its
members to be President of the Association. In the absence of the
Chairman, the President shall preside at any meeting of the board
. The President shall have general executive powers, and shall
have and may exercise any and all other powers and duties
pertaining by law, regulation or practice, to the Office of
President, or imposed by these Bylaws. The President shall also
have and may exercise such powers and duties as from time to time
may be conferred or assigned by the Board.
Section 4.3. Vice President. The board may appoint one or
more Vice Presidents who shall have such powers and duties as may
be assigned by the board and to perform the duties of the
President on those occasions when the President is absent,
including presiding at any meeting of the board in the absence of
both the Chairman and President.
Section 4.4. Secretary. The board shall appoint a
Secretary, or other designated officer who shall be Secretary of
the board and of the Association, and shall keep accurate minutes
of all meetings. The Secretary shall attend to the giving of all
notices required by these Bylaws to be given; shall be custodian
of the corporate seal, records, document and papers of the
Association; shall provide for the keeping of proper records of
all transactions of the Association; shall have and may exercise
any and all other powers and duties pertaining by law, regulation
or practice, to the Secretary, or imposed by these Bylaws; and
shall also perform such other duties as may be assigned from time
to time, by the Board .
Section 4.5. Other Officers. The board may appoint, and may
authorize the Chairman or the President to appoint, any officer
as from time to time may appear to the board, the Chairman or the
President to be required or desirable to transact the business of
the Association. Such officers shall exercise such powers and
perform such duties as pertain to their several offices, or as
may be conferred upon or assigned to them by these Bylaws, the
board, the Chairman or the President.
Section 4.6. Tenure of Office. The Chairman or the
President and all other officers shall hold office for the
current year for which the board was elected, unless they shall
resign, become disqualified, or be removed. Any vacancy occurring
in the Office of Chairman or President shall be filled promptly
by the board.
Any officer elected by the board or appointed by the
Chairman or the President may be removed at any time, with or
without cause, by the affirmative vote of a majority of the board
or, if such officer was appointed by the Chairman or the
President, by the Chairman or the President, respectively.
ARTICLE V
Stock
Section 5.1. Shares of stock shall be transferable on the
books of the Association, and a transfer book shall be kept in
which all transfers of stock shall be recorded. Every person
becoming a shareholder by such transfer shall, in proportion to
such person's shares, succeed to all rights of the prior holder
of such shares. Each certificate of stock shall recite on its
face that the stock represented thereby is transferable only upon
the books of the Association properly endorsed.
ARTICLE VI
Corporate Seal
Section 6.1. The Chairman, the President, the Secretary,
any Assistant Secretary or other officer designated by the board,
the Chairman, or the President, shall have authority to affix the
corporate seal to any document requiring such seal, and to attest
the same. Such seal shall be substantially in the following
form:
ARTICLE VII
Miscellaneous Provisions
Section 7.1. Execution of Instruments. All agreements,
checks, drafts, orders, indentures, notes, mortgages, deeds,
conveyances, transfers, endorsements, assignments, certificates,
declarations, receipts, discharges, releases, satisfactions,
settlements, petitions, schedules, accounts, affidavits, bonds,
undertakings, guarantees, proxies and other instruments or
documents may be signed, countersigned, executed, acknowledged,
endorsed, verified, delivered or accepted on behalf of the
Association, whether in a fiduciary capacity or otherwise, by any
officer of the Association, or such employee or agent as may be
designated from time to time by the board by resolution, or by
the Chairman or the President by written instrument, which
resolution or instrument shall be certified as in effect by the
Secretary or an Assistant Secretary of the Association. The
provisions of this section are supplementary to any other
provision of the Articles of Association or Bylaws.
Section 7.2. Records. The Articles of Association, the
Bylaws and the proceedings of all meetings of the shareholders,
the board, and standing committees of the board, shall be
recorded in appropriate minute books provided for the purpose.
The minutes or each meeting shall be signed by the Secretary, or
other officer appointed to act as Secretary of the meeting.
Section 7.3. Trust Files. There shall be maintained in the
Association files all fiduciary records necessary to assure that
its fiduciary responsibilities have been properly undertaken and
discharged.
Section 7.4. Trust Investments. Funds held in a fiduciary
capacity shall be invested according to the instrument
establishing the fiduciary relationship and according to law.
Where such instrument does not specify the character and class of
investments to be made and does not vest in the Association a
discretion in the matter, funds held pursuant to such instrument
shall be invested in investments in which corporate fiduciaries
may invest under law.
Section 7.5. Notice. Whenever notice is required by the
Articles of Association, the Bylaws or law, such notice shall be
by mail, postage prepaid, telegram, in person, or by any other
means by which such notice can reasonably be expected to be
received, using the address of the person to receive such notice,
or such other personal data, as may appear on the records of the
Association. Prior notice shall be proper if given not more than
30 days nor less than 10 days prior to the event for which notice
is given.
ARTICLE VIII
Indemnification
Section 8.1. The association shall indemnify to the full
extent permitted by, and in the manner permissible under, the
Articles of Association and the laws of the United States of
America, as applicable and as amended from time to time, any
person made, or threatened to be made, a party to any action,
suit or proceeding, whether criminal, civil, administrative or
investigative, by reason of the fact that such person is or was a
director, advisory director, officer or employee of the
Association, or any predecessor of the Association, or served any
other enterprise as a director or officer at the request of the
Association or any predecessor of the Association.
Section 8.2. The board in its discretion may, on behalf of
the Association, indemnify any person, other than a director,
advisory director, officer or employee, made a party to any
action, suit or proceeding by reason of the fact that such person
is or was an agent of the Association or any predecessor of the
Association serving in such capacity at the request of the
Association or any predecessor of the Association.
ARTICLE IX
Bylaws: Interpretation and Amendment
Section 9.1. These Bylaws shall be interpreted in
accordance with and subject to appropriate provisions of law, and
may be amended, altered or repealed, at any regular or special
meeting of the board.
Section 9.2. A copy of the Bylaws, with all amendments,
shall at all times be kept in a convenient place at the main
office of the Association, and shall be open for inspection to
all shareholders during Association hours.
I, Patrick J. Crowley, hereby certify that: (i) I am the
duly constituted secretary of FIRST TRUST OF NEW YORK, NATIONAL
ASSOCIATION (the "Association"), and secretary of its board of
directors, and as such officer am the official custodian of its
records; and (ii) the foregoing bylaws are the bylaws of the
Association, and all of them are now lawfully in force and
effect.
I have hereunto affixed my official signature and the seal
of the Association, in the City of New York, on the 15th day of
December, 1994.
/s / PJ Crowley
Name: Patrick J. Crowley
Title: Secretary
<PAGE>
Exhibit 7
First Trust of New York, N. A.
Statement of Financial Condition
As of 12/31/94
($000's)
12/31/94
--------
Assets
Cash and Due From Depository
Institutions $29,673
Federal Reserve Stock 3,150
Fixed Assets 907
Intangible Assets 72,209
Other Assets 2,337
Total Assets $108,276
Liabilities
Other Liabilities 3,476
Total Liabilities 3,476
Equity
Common and Preferred Stock 1,000
Surplus 104,000
Undivided Profits (200)
Total Equity Capital 104,800
Total Liabilities and Equity Capital $108,276
To the best of the undersigned's determination, as of this date
the above financial information is true and correct.
First Trust of New York, N. A.
By: /s/ David K. Leverich
Vice President
Date: March 13, 1995
