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Filed Pursuant to Rule 424(b)(2)
Registration No. 333-47753
PROSPECTUS SUPPLEMENT
(To Prospectus dated March 18, 1998)
J.P. MORGAN & CO. INCORPORATED
$500,000,000
Floating Rate Notes Due April 6, 2000
Interest payable July 6, October 6, January 6 and April 6
ISSUE PRICE: 99.90489%
Interest on the Floating Rate Notes is payable quarterly in arrears on July 6,
October 6, January 6 and April 6, of each year, commencing July 6, 1998. The
Notes will mature on April 6, 2000 and are not redeemable prior to their stated
maturity.
The interest rate on the Notes will be subject to adjustment, as described
herein, and will be payable at a rate per annum equal to three-month LIBOR minus
5.0 basis points (0.05%). Interest will be computed on the basis of a 360 year
and the actual number of days in the applicable Interest Period. See
"Description of Notes -- Interest and Maturity".
The Notes will be represented by Global Securities registered in the name of the
nominee of The Depository Trust Company, which will act as the Depository.
Interests in the Notes represented by Global Securities will be shown on, and
transfers thereof will be effected only through, records maintained by the
Depository and its direct and indirect participants. Except as described herein,
Notes in definitive form will not be issued. Settlement for the Notes will be
made in immediately available funds. The Notes will trade in the Depository's
Same-Day Funds Settlement System and secondary market trading activity for the
Notes will therefore settle in immediately available funds. All payments of
principal and interest will be made by the Company in immediately available
funds or the equivalent. See "Description of the Notes -- Same-Day Settlement
and Payment".
THE NOTES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER FEDERAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
J.P. Morgan Securities Inc. (the "Underwriter") proposes to offer the Notes from
time to time for sale in one or more negotiated transactions, or otherwise, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices, in each case plus accrued
interest, if any, from April 6, 1998. The Underwriter has agreed to purchase the
Notes at 99.90489% of their principal amount ($499,524,450 aggregate proceeds to
the Company before deducting expenses payable by the Company), plus accrued
interest, if any, from April 6, 1998. The Company has agreed to indemnify the
Underwriter against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting".
The Notes are offered, subject to prior sale, when, as and if accepted by the
Underwriter and subject to the approval of certain legal matters by Cravath,
Swaine & Moore, counsel for the Underwriter. It is expected that delivery of the
Notes will be made through the facilities of The Depository Trust Company on or
about April 6, 1998 against payment therefore in immediately available funds.
J.P. MORGAN & CO.
March 31, 1998
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CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE NOTES. SPECIFICALLY,
THE UNDERWRITER MAY OVERALLOT IN CONNECTION WITH THE OFFERING, AND MAY BID FOR,
AND PURCHASE THE NOTES IN THE OPEN MARKET. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE"UNDERWRITING".
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR THE UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THE SECURITIES TO WHICH THEY RELATE OR ANY OFFER TO SELL
OR THE SOLICITATION OF ANY OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN
WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
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Description of the Notes.................................... S-3
Underwriting................................................ S-6
PROSPECTUS
Available Information....................................... 2
Incorporation of Certain Documents by Reference............. 2
J.P. Morgan & Co. Incorporated.............................. 3
Consolidated Ratio of Earnings to Fixed Charges............. 6
Consolidated Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends............................. 6
Use of Proceeds............................................. 6
Description of J.P. Morgan Debt Securities.................. 6
Description of Debt Warrants................................ 13
Description of Series Preferred Stock....................... 15
Depositary Shares........................................... 18
Description of Preferred Stock Warrants..................... 20
Description of Currency Warrants............................ 21
Risk Factors Relating to Currency Warrants.................. 22
Description of Capital Stock................................ 23
Plan of Distribution........................................ 25
Experts..................................................... 26
Legal Opinions.............................................. 26
</TABLE>
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DESCRIPTION OF THE NOTES
The Company's Floating Rate Notes due April 6, 2000 offered hereby (the "Notes")
will be limited to $500,000,000 aggregate principal amount and will mature on
April 6, 2000. The Notes may not be redeemed prior to stated maturity and are
not entitled to any sinking fund. The Notes will be issued pursuant to an
Indenture (the "Indenture") dated as of August 15, 1982, as amended by the First
Supplemental Indenture dated as of May 5, 1986, by a Second Supplemental
Indenture dated as of February 27, 1996 and a Third Supplemental Indenture dated
as of January 30, 1997, between the Company and U.S. Bank Trust National
Association (formerly First Trust of New York, National Association), as
successor to Chemical Bank (formerly Manufacturers Hanover Trust Company), as
Trustee. The Notes constitute a single series of Debt Securities under the
Indenture.
U.S. Bank Trust National Association is the Principal Paying Agent and Registrar
for the Notes.
Reference should be made to the Prospectus for description of other terms of the
Notes. See "Description of J.P. Morgan Debt Securities". Defined terms used in
this Prospectus Supplement have the meanings ascribed to them in the Prospectus.
INTEREST AND MATURITY
The Notes will mature on April 6, 2000 and will not be subject to redemption by
the Company prior to maturity.
The Notes will bear interest from April 6, 1998 and be payable quarterly in
arrears on July 6, October 6, January 6, and April 6, of each year, commencing
July 6, 1998 (each an "Interest Payment Date") to the persons in whose names the
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
Notes, together with the interest accrued and unpaid thereon, is due in full on
April 6, 2000 (the "Maturity Date"). The "Interest Period" with respect to a
Note is each successive period from and including an Interest Payment Date in
respect of such Note up to but excluding the next succeeding Interest Payment
Date, except that the initial Interest Period commences on April 6, 1998.
If any Interest Payment Date, other than at Maturity, for the Note would
otherwise be a day that is not a Business Day, such Interest Payment Date shall
be postponed to the next day that is a Business Day, except that if such
Business Day is in the next succeeding calendar month, such Interest Payment
Date shall be the immediately preceding Business Day. If the Maturity for the
Note falls on a day which is not a Business Day, payment of principal and
interest with respect to such Note will be paid on the next succeeding Business
Day with the same force and effect as if made on such date and no interest on
such payment will accrue from and after such date. The term "Business Day" means
any day (other than a Saturday or Sunday) on which banking institutions in The
City of New York are open for business and, with respect to LIBOR Notes, which
is also a London Banking Day. The term "London Banking Day" means any day (other
than a Saturday or Sunday) on which dealings in deposits are transacted in the
London interbank market.
The interest rate for each Interest Period will be determined by the Calculation
Agent (defined below) in accordance with the following provisions:
The per annum rate of interest for each Interest Period will be three-month
LIBOR (as defined herein) on the second London Banking Day preceding the
Interest Reset Date for such Interest Period (the "Interest Determination
Date") minus 5.0 basis points (0.05%). The Interest Determination Date for
the first coupon will be April 2, 1998. Interest will be computed on the
basis of a 360 day year and the actual number of days in the applicable
Interest Period. "LIBOR" for each Interest Period will be determined by the
Calculation Agent in accordance with the following provisions:
(i) On each Interest Determination Date, the Calculation Agent will
ascertain the offered rate for three-month deposits in U.S. dollars in the
London interbank market, which appears on the Telerate Page 3750 as of
11:00 a.m. (London time) on such Interest Determination Date.
(ii) If such rate does not appear on the Telerate Page 3750, or the
Telerate Page 3750 is unavailable, the Calculation Agent will request each
of four major banks in the London interbank market (the "Reference
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Banks") to provide the Calculation Agent with its offered quotation (expressed
as a rate per annum) for three-month deposits in U.S. dollars to leading banks
in the London interbank market at approximately 11:00 a.m. (London time) on the
Interest Determination Date. If at least two such quotations are provided, LIBOR
in respect of that Interest Determination Date will be the arithmetic mean of
such quotations.
(iii) If less than two of the Reference Banks provide the Calculation Agent
with such offered quotations, LIBOR in respect of that Interest
Determination Date will be the arithmetic mean of the rates quoted by three
major banks in The City of New York (selected by the Calculation Agent) at
approximately 11:00 a.m., New York City time, on that Interest
Determination Date for three-month loans in U.S. dollars to leading
European banks, in a principal amount equal to an amount of not less than
$1 million that is representative for a single transaction in such market
at such time; provided, however, that if the banks selected as aforesaid by
the Calculation Agent are not quoting as mentioned in this sentence, LIBOR
will be LIBOR in effect on such Interest Determination Date.
"Telerate Page 3750" means the display designated as page "3750" on the Dow
Jones Telerate Service (or such other pages as may replace those pages on
that service for the purpose of displaying the LIBOR Index on a quarterly
basis).
All percentages resulting from any calculation on the 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 dollar amounts used in or resulting from such calculations
will be rounded to the nearest cent (with one-half cent being rounded
upward).
The Company has agreed that, so long as any of the 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 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 the Company
removes the Calculation Agent, the Company will appoint the office of
another bank to act as the Calculation Agent. Morgan Guaranty Trust Company
of New York is an affiliate of the Company.
BOOK-ENTRY SYSTEM
The Notes initially will be represented by one or more global securities (the
"Global Securities") deposited with The Depository Trust Company ("DTC") 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 $250,000 with $50,000
integral multiples thereafter in book-entry form only. The term "Depository"
refers to DTC or any successor depository.
DTC has advised the Company and the Underwriter 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 the Underwriter), 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 the issuance by the Company of 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 the Underwriters. Ownership of beneficial
interests in Notes represented by the Global Securities will
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be limited to participants or persons that hold interests through participants.
Ownership of such beneficial interests in 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
Notes represented by Global Securities.
So long as the Depository for a Global Security, or its nominee, is the
registered owner of such Global Security, 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 Security for all purposes under the Indenture. Except
as provided below, owners of beneficial interest in Notes represented by 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 Notes in definitive form and will not be considered the
owners or holders thereof under the Indenture. 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 Global
Securities registered in the name of the Depository or its nominee will be made
by the Company 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.
The Company 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
Global Securities, will credit immediately the accounts of the related
participants with payment in amounts proportionate to their respective
beneficial interest in the Notes represented by the Global Securities as shown
on the records of the Depository. The Company 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 the Company within 90 days, the
Company will issue individual Notes in definitive form in exchange for the
Global Securities. In addition, the Company 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, the Company 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 $250,000 with $50,000 integral multiples
thereafter and will be issued in registered form only, without coupons.
Neither the Company, the Trustee, any Paying Agent 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 the Underwriter in immediately
available funds. All payments of principal and interest will be made by the
Company in immediately available funds or the equivalent, so long as the
Depository continues to make its Same-Day Funds Settlement System available to
the Company.
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
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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.
UNDERWRITING
Under the terms and subject to the conditions contained in the Underwriting
Agreement dated the date hereof, the Underwriter has agreed to purchase, and the
Company has agreed to sell the principal amount of the Notes offered hereby.
The Company has been advised by the Underwriter that the Underwriter proposes to
offer the Notes to the public initially at the public offering price set forth
on the cover page of this Prospectus Supplement and to certain dealers at such
price less a concession not in excess of .35% of the principal amount of the
Notes, that the Underwriter may allow, and such dealers may reallow, a
concession not in excess of .25% of such principal amount on sales to certain
other dealers; and that after the initial public offering the public offering
price and such concessions may be changed by the Underwriter.
The Company has agreed to indemnify the Underwriter against certain liabilities,
including liabilities under the Securities Act of 1933, as amended.
The Notes are a new issue of securities with no established trading market. The
Company has been advised by the Underwriter that it may from time to time
purchase and sell Notes in the secondary market, but that it is not obligated to
do so. No assurance can be given that there will be a secondary market for the
Notes. The Notes will not be listed on any securities exchange.
In connection with the offering of the Notes, the Underwriter may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Notes. Specifically, the Underwriter may overallot in connection with the
offering of the Notes, creating a syndicate short position. In addition, the
Underwriter may bid for, and purchase, Notes in the open market to cover
syndicate shorts or to stabilize the price of the Notes. Finally, the
underwriting syndicate may reclaim selling concessions allowed for distributing
the Notes in the offering of the Notes, if the syndicate repurchases previously
distributed Notes in syndicate covering transactions, stabilization transactions
or otherwise. Any of these activities may stabilize or maintain the market price
of the Notes above independent market levels. The Underwriter are not required
to engage in any of these activities, and may end any of them at any time.
The Underwriter is an indirect wholly-owned subsidiary of the Company. The
participation of the Underwriter in the offer and sale of the Notes complies
with the requirements of Rule 2720 of the Conduct Rules of the National
Association of Securities Dealers, Inc. (the "NASD") regarding underwriting of
securities of an affiliate and complies with any restrictions imposed on the
Underwriter by the Board of Governors of the Federal Reserve System. In
addition, each NASD member participating in offers and sales of the Notes will
not execute a transaction in the Notes in a discretionary account without the
prior written specific approval of the member's customer.
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PROSPECTUS
J.P. MORGAN & CO. INCORPORATED
Debt Securities, Warrants to Purchase Debt Securities,
Series Preferred Stock, Depositary Shares,
Warrants to Purchase Series Preferred Stock or
Depositary Shares and Universal Warrants
J.P. Morgan & Co. Incorporated ("J.P. Morgan") may from time to time offer its
senior debt securities (the "Debt Securities") and subordinated debt securities
(the "Subordinated Debt Securities") (the Debt Securities and the Subordinated
Debt Securities are collectively known as the "J.P. Morgan Debt Securities"),
warrants to purchase J.P. Morgan Debt Securities (the "Debt Warrants"), one or
more series of its series preferred stock (the "Series Preferred Stock"),
interests in which may be represented by depositary shares (the "Depositary
Shares"), warrants to purchase shares of Series Preferred Stock or Depositary
Shares (together the "Preferred Stock Warrants") and Universal Warrants (the
"Universal Warrants"), for issuance and sale, at an aggregate initial public
offering price not to exceed $2,000,000,000, on terms determined by market
conditions at the time of sale. J.P. Morgan Debt Securities and Debt Warrants
are collectively called the "Securities". As used herein, Securities shall
include Securities denominated in U.S. dollars or, at the option of J.P. Morgan
if so specified in the applicable Prospectus Supplement, in any other freely
transferable currency or units based on or relating to currencies, including
European Currency Units (ECU). With respect to the J.P. Morgan Debt Securities
as to which this Prospectus is being delivered, the specific designation,
aggregate principal amount, maturity, rate and time of payment of any interest,
coin or currency or currency units in which principal and interest will be paid,
purchase price and any terms for conversion or for mandatory or optional
redemption (including any sinking fund) of any J.P. Morgan Debt Securities, the
exercise price and terms of any Debt Warrants and any other specific terms of
the Securities are set forth in the accompanying Prospectus Supplement
("Prospectus Supplement"). If Series Preferred Stock is offered, the Prospectus
Supplement will set forth the specific title, number of shares of Series
Preferred Stock and number of Depositary Shares, if any, any dividend,
liquidation, redemption, conversion, voting or other rights, the initial public
offering price and any other terms of the offering. If Preferred Stock Warrants
or Universal Warrants are offered, the Prospectus Supplement will set forth the
number offered, a description (if applicable) of the Series of Preferred Stock
for which each is exercisable, the exercise price and duration. The Securities,
the Series Preferred Stock, the Depositary Shares, the Preferred Stock Warrants
and the Universal Warrants are hereinafter collectively known as the "Offered
Securities".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Offered Securities may be offered directly, through agents designated from
time to time, through dealers or through one or more managing underwriters,
acting alone or with other underwriters. See "Plan of Distribution". Any such
agents or dealers, and any underwriters, are set forth in the Prospectus
Supplement. If an agent of J.P. Morgan or a dealer or underwriter is involved in
the offering of the Offered Securities in connection with which this Prospectus
is being delivered, the agent's commission, dealer's purchase price or
underwriter's discount will be set forth in, or may be calculated from, the
Prospectus Supplement and the net proceeds to J.P. Morgan from such sale will be
the purchase price of such Offered Securities less such commission in the case
of an agent, the purchase price of such Offered Securities in the case of a
dealer, and the public offering price less such discount in the case of an
underwriter and less, in each case, the other expenses of J.P. Morgan associated
with such issuance and distribution.
The aggregate proceeds to J.P. Morgan from all the Offered Securities sold will
be the purchase price of such Offered Securities excluding any agents'
commissions, any underwriters' discounts and the other expenses of issuance and
distribution. See "Plan of Distribution" for possible indemnification
arrangements for agents, dealers and underwriters.
This Prospectus and related Prospectus Supplement may be used by direct or
indirect wholly-owned subsidiaries of J.P. Morgan in connection with offers and
sales related to secondary market transactions in the Offered Securities. Such
subsidiaries may act as principal or agent in such transactions. Such sales will
be made at prices related to prevailing market prices at the time of sale.
March 18, 1998
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No person has been authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
Prospectus and the Prospectus Supplement in connection with the offering made
hereby, and if given or made such information or representation must not be
relied upon as having been authorized by J.P. Morgan or by another person.
AVAILABLE INFORMATION
J.P. Morgan is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and other
information concerning J.P. Morgan may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices located at Northeast Regional Office, Seven World Trade Center, Suite
1300, New York, New York 10048 and Midwest Regional Office, Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can also be obtained from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. The Commission maintains a website that contains reports,
proxy and information statements and other materials that are filed through the
Commission's Electronic Data Gathering, Analysis and Retrieval (EDGAR) System.
This website can be accessed at http:/www.sec.gov. Information provided to or
filed with the Commission by J.P. Morgan pursuant to the 1934 Act can be located
by reference to the Commission file number 1-5885. 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.
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, 1997 (included in its
Annual Report to Stockholders), and J.P. Morgan's Reports on Form 8-K dated
January 15, 1998 and February 19, 1998, heretofore filed pursuant to Section 13
of the 1934 Act.
In addition, all reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act subsequent to the
date of this Prospectus and prior to the termination of the offering of the
Securities shall be deemed to be incorporated by reference into this Prospectus
and to be a part hereof from the date of filing of such documents. Any statement
contained herein or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein or in the accompanying Prospectus Supplement modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
J.P. Morgan will provide without charge to each person, including any beneficial
owner, to whom this Prospectus is delivered, on the written or oral request of
any such person, a copy of any or all of the foregoing documents incorporated
herein by reference (other than exhibits to such documents). Written requests
should be directed to the Office of the Secretary, J.P. Morgan & Co.
Incorporated, 60 Wall Street, New York, New York 10260-0060. Telephone requests
may be directed to (212) 648-3380.
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J.P. MORGAN & CO. INCORPORATED
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 activities are summarized as
follows:
FINANCE AND ADVISORY
The Finance and Advisory sector encompasses the sophisticated advisory, capital
raising, and financing work that J.P. Morgan does for its broad base of clients
around the world -- including corporations, financial institutions, governments,
municipalities, and individuals. J.P. Morgan's expertise is based on an in-depth
knowledge of its clients' needs and of the industries and financial markets in
which they operate.
In partnership with clients, J.P. Morgan's advisory professionals analyze the
risks and rewards of such strategic alternatives as merger, acquisition,
divestiture, privatization, and recapitalization. J.P. Morgan also looks for
ways to unlock value when analyzing a client's capital structure. J.P. Morgan's
debt and equities underwriting business provides clients with the capability to
raise the capital necessary to execute their strategies. High-quality research
is an integral part of this business.
J.P. Morgan's credit activities include meeting clients' financing needs by
arranging and syndicating loans and other credit facilities. They also include
the responsibility for managing the firm's credit risk arising from traditional
credit activities as well as J.P. Morgan's derivatives trading activities.
MARKET MAKING
J.P. Morgan's market making activities provide clients with around-the-clock
access to global markets. J.P. Morgan makes markets in fixed income, equities,
foreign exchange, commodity instruments, and derivatives in both developed and
emerging markets. J.P. Morgan also develops customized transactions to assist
clients in managing risk and enhancing returns. J.P. Morgan provides research to
help clients assess opportunities and track performance. J.P. Morgan takes
positions to facilitate client transactions and to benefit from its role as a
market maker.
J.P. Morgan's clients include banks, other nonbanks, financial institutions,
corporations, governments and their agencies, leveraged funds, pension funds,
mutual funds, and individuals.
J.P. Morgan's fixed income activities include acting as a primary dealer in U.S.
and foreign government securities; making markets in money market instruments,
U.S. government agency securities, corporate debt securities, swaps and other
derivatives; and helping clients manage their exposure to interest rate and
foreign exchange risk.
J.P. Morgan's emerging markets activities include acting as a dealer and market
maker in securities and derivatives from non-G-10 countries in Latin America,
Eastern Europe, Asia, and Africa. While many of J.P. Morgan's emerging market
activities involve fixed income securities, J.P. Morgan deals in many other
markets and instruments.
J.P. Morgan's equities market making activities include acting as both agent and
principal to facilitate clients' transactions in exchange-listed and
over-the-counter securities. J.P. Morgan also structures equity derivatives for
clients.
J.P. Morgan's foreign exchange capabilities include making markets in spot,
options, and short-term interest rate products, in order to help clients manage
their foreign currency exposures.
J.P. Morgan's commodities activities include advising clients on developing
hedging, investment, and commodity-linked financing strategies. J.P. Morgan also
provides commodity services which may include the settlement of physical trades
in various metal and oil markets and metal borrowing and lending services.
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ASSET MANAGEMENT AND SERVICING
J.P. Morgan provides a wide range of investment-related services, including:
global asset management for pension plans, governments, endowments, and
foundations; integrated financial services for high-net worth individuals; fully
bundled services for defined contribution pension plans through American Century
Companies; and mutual fund distribution to intermediaries.
J.P. Morgan's global dedicated research capabilities support portfolio
management across all asset classes and markets. With the acquisition of
O'Connor Realty Advisors, a real estate investment firm, J.P. Morgan has further
broadened its expertise and ability to bring a full range of investment options
to its clients. This spectrum of capabilities is delivered to institutional and
individual investors in both discretionary account and mutual fund form.
In July 1997, J.P. Morgan agreed to purchase a 45% interest in American Century
Companies, the fourth largest U.S. no-load direct mutual fund company. With this
investment, which was concluded in January 1998, J.P. Morgan has gained scale
expertise in technology and operations for distribution and servicing, as well
as complementary investment capabilities that broaden its product offerings
significantly. J.P. Morgan has formed a business partnership with American
Century to pursue jointly the growing retirement plan market, distribution of
mutual funds to third parties such as financial advisors, and other
opportunities in integrated personal financial services.
J.P. Morgan offers ultra high-net worth clients an advice-based integrated array
of financial services that includes tax-advantaged asset structures; a wide
range of investment options, including managed portfolios and brokerage; and
credit and liquidity services. These capabilities form the foundation for an
expansion of services to investors that will be pursued selectively.
J.P. Morgan's futures and options brokerage group provides institutional clients
with worldwide access to major exchanges by acting as brokers in executing and
clearing contracts. Currently, J.P. Morgan has dealers on 51 exchanges around
the world. J.P. Morgan operates, under contract, the Euroclear System, the
world's largest clearance and settlement system for internationally traded
securities. J.P. Morgan provides credit and deposit services to Euroclear
participants. In addition, J.P. Morgan provides certain operational services
such as the administration of American depository receipt (ADR) programs.
EQUITY INVESTMENTS
J.P. Morgan invests for its own account on a global basis in private equity and
equity-related securities in leveraged and unleveraged acquisitions,
privatizations, recapitalizations, rapidly growing companies, expansion
financings, turnaround situations, and other special equity situations. These
investments are made with the objective of maximizing total return, which is a
measure of both long-term appreciation and net recognized gains.
The Equity Investments group works closely with other areas of J.P. Morgan to
capture the competitive advantage of J.P. Morgan's global presence and expertise
in sourcing, evaluating, managing, and exiting investments. Opportunities often
develop through relationships with clients. J.P. Morgan has also managed initial
public offerings and high-yield debt issues, arranged credit facilities, and
provided mergers and acquisitions advice to portfolio companies at later stages
of their development.
PROPRIETARY INVESTING AND TRADING
J.P. Morgan takes market and credit risk positions for our own account using
both relative value and directional risk-taking strategies to enhance the value
of the firm. J.P. Morgan uses a relative value strategy when they anticipate
changes in relationships between markets and classes of instruments (e.g., a
change in prices between bonds and swaps) or when they believe certain assets
are fundamentally mispriced by the market. J.P. Morgan uses directional
strategies in an attempt to profit from its anticipation of how it believes a
market will move (e.g., absolute rates or prices will go up or down).
Experienced market professionals manage these strategies and use them over many
currencies and types of instruments, including fixed income securities, foreign
exchange, equity securities, commodity products, and related derivatives.
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<PAGE> 11
Positions may be held for long or short periods of time, depending on the
strategy and actual market performance. Certain longer-term strategies are
considered to be investment activities and tend to utilize government, mortgage-
backed, and corporate debt securities.
J.P. Morgan also manages its liquidity and capital profile to ensure it has
access to funding at a reasonable cost, even under adverse circumstances, to
support all the business activities of the firm. A strong capital position is an
integral part of J.P. Morgan's liquidity management because it enables the firm
to raise funds as inexpensively as possible in a variety of international
markets.
REGULATION
J.P. Morgan is subject to regulation under the Bank Holding Company Act of 1956
(the "Bank Act"). Under the Bank Act, J.P. Morgan is required to file reports
with the Board of Governors of the Federal Reserve System (the "Board"). J.P.
Morgan is also subject to examination by the Board. The Bank Act prevents J.P.
Morgan and its subsidiaries from engaging in activities not related to banking,
and limits the amount of securities it can acquire of a company engaging in
nonbanking activities. An exception may be made if the Board determines that the
company's activities are closely related to banking. Federal law and Board
interpretations limit the extent to which J.P. Morgan can engage in certain
aspects of the securities business. The Glass-Steagall Act prohibits bank
affiliates that are members of the Federal Reserve System -- including J.P.
Morgan Securities Inc. ("JPMSI"), a "Section 20" subsidiary, -- from being
engaged principally in bank-ineligible underwriting and dealing activities
(mainly corporate debt and equity securities). This prohibition restricts
JPMSI's gross revenues from these activities to a maximum of 25% of total gross
revenues.
J.P. Morgan's largest subsidiary, Morgan Guaranty Trust Company of New York
("Morgan Guaranty"), is a member of the Federal Reserve System and a member of
the Federal Deposit Insurance Corporation ("FDIC"). Its business is subject to
both U.S. federal and state law. It is examined and regulated by U.S. federal
and state banking authorities. J.P. Morgan and its nonbank subsidiaries are
affiliates of Morgan Guaranty within the meaning of the applicable federal
statutes. Morgan Guaranty is subject to restrictions on loans and extensions of
credit to J.P. Morgan and certain other affiliates. It is also restricted on
some other types of transactions with J.P. Morgan, or involving J.P. Morgan's
securities.
Among other wholly owned subsidiaries:
JPMSI is a broker-dealer registered with and subject to regulation by 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 advisor 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.
As used in this Prospectus, unless the context otherwise requires, the term
"J.P. Morgan" refers to J.P. Morgan & Co. Incorporated and its consolidated and
unconsolidated subsidiaries.
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<PAGE> 12
CONSOLIDATED RATIOS
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
------------------------------------
YEAR ENDED DECEMBER 31,
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Excluding Interest on Deposits.................. 1.27 1.35 1.35 1.40 1.70(a)
Including Interest on Deposits.................. 1.20 1.26 1.24 1.28 1.46(a)
</TABLE>
- ---------------
(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.
CONSOLIDATED RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK
DIVIDENDS
<TABLE>
<CAPTION>
------------------------------------
YEAR ENDED DECEMBER 31,
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Excluding Interest on Deposits.................. 1.26 1.34 1.34 1.39 1.69(a)
Including Interest on Deposits.................. 1.20 1.25 1.23 1.27 1.46(a)
</TABLE>
- ---------------
(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.
USE OF PROCEEDS
Unless otherwise indicated in the applicable Prospectus Supplement, the net
proceeds from the sale of the Offered Securities will be used for general
corporate purposes, including investment in equity and debt securities and
interest-bearing deposits of subsidiaries. Pending such use, J.P. Morgan may
temporarily invest the net proceeds or may use them to reduce short-term
indebtedness.
DESCRIPTION OF J.P. MORGAN DEBT SECURITIES
The Debt Securities offered hereby will be issuable in one or more series under
an Indenture dated as of August 15, 1982 and all indentures supplemental
thereto, including the First Supplemental Indenture dated as of May 5, 1986, the
Second Supplemental Indenture dated as of February 27, 1996 and the Third
Supplemental Indenture dated as of January 30, 1997 (collectively referred to as
the "Debt Indenture"), between J.P. Morgan and First Trust of New York, National
Association, successor to Chemical Bank (formerly Manufacturers Hanover Trust
Company), as Trustee (the "Debt Trustee"). The Subordinated Debt Securities
offered hereby will be issuable in one or more series under an Indenture dated
as of March 1, 1993, and any indentures supplemental thereto, (the "Subordinated
Indenture"), between J.P. Morgan and First Trust of New York, National
Association, successor to Citibank, N.A., as Trustee (the "Subordinated
Trustee"). The Debt Indenture and the Subordinated Indenture are sometimes
referred to collectively as the "Indentures" and the Debt Trustee and the
Subordinated Trustee are sometimes referred to collectively as the "Trustees."
The following statements are subject to the detailed provisions of the
Indentures, copies of which are filed as exhibits to the Registration Statement,
and to the provisions of the Trust Indenture Act of 1939, as amended. Wherever
references are made to particular provisions of the Indentures, such provisions
are incorporated by reference as a part of the statements made and such
statements are qualified in their entirety by such reference. Certain
capitalized terms used herein are defined in the Indentures. References in
italics are to sections or articles of the Indentures.
GENERAL
Each Indenture does not limit the amount of J.P. Morgan Debt Securities that may
be issued thereunder and provides that J.P. Morgan Debt Securities may be issued
in series thereunder up to the aggregate principal amount
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<PAGE> 13
that may be authorized from time to time by J.P. Morgan. Reference is made to
the Prospectus Supplement for the following terms of each series of J.P. Morgan
Debt Securities in respect of which this Prospectus is being delivered: (1)
whether the J.P. Morgan Debt Securities are Debt Securities or Subordinated Debt
Securities; (2) the designation, aggregate principal amount and authorized
denominations of such J.P. Morgan Debt Securities; (3) the purchase price of
such J.P. Morgan Debt Securities (expressed as a percentage of the principal
amount thereof); (4) the date on which such J.P. Morgan Debt Securities will
mature; (5) the rate or rates per annum at which such J.P. Morgan Debt
Securities will bear interest, if any, or the method by which such interest will
be determined; (6) the coin or currency or units based on or relating to
currency units (including ECU) for which J.P. Morgan Debt Securities may be
purchased and in which payment of principal and interest will be made; (7) the
dates on which such interest, if any, will be payable; (8) the terms of any
mandatory or optional redemption (including any sinking fund); (9) the
currencies, currency units, composite currencies, commodity prices, financial or
non-financial indices, securities, baskets of securities, indices, baskets of
indices, interest rates, swap rates, baskets of swap rates or factors, if any,
to which the principal, premium (if any) or interest of the J.P. Morgan Debt
Securities will be indexed; (10) the terms, if any, on which the J.P. Morgan
Debt Securities may be converted or exchanged into securities of any entity
unaffiliated with J.P. Morgan, a basket of securities, an index or indices of
securities, a basket of indices, a combination of the above, or the value
thereof, or with payments linked to the value thereof; (11) whether the J.P.
Morgan Debt Securities will be issued in fully registered form without coupons
attached or in bearer form with coupons; (12) the restrictions, if any,
applicable to the exchange of J.P. Morgan Debt Securities of one form for
another and to the offer, sale and delivery of the J.P. Morgan Debt Securities;
(13) whether and under what circumstances J.P. Morgan will pay additional
amounts on J.P. Morgan Debt Securities in the event of certain developments with
respect to United States withholding tax or information reporting laws; (14)
whether J.P. Morgan may redeem the J.P. Morgan Debt Securities in the event of
such developments; and (5) any other specific terms. If a Prospectus Supplement
specifies that J.P. Morgan Debt Securities are denominated in a currency other
than U.S. dollars or in a currency unit, such Prospectus Supplement shall also
specify the coin or currency or currency unit in which the principal, premium,
if any, and interest, if any, on such J.P. Morgan Debt Securities will be
payable, which may be U.S. dollars based upon the exchange rate for such other
currency or currency unit existing on or about the time a payment is due. Unless
otherwise specified, principal and interest, and additional amounts, if any,
will be payable at the office of First Trust of New York, National Association
in New York City, provided that payment of interest on any J.P. Morgan Debt
Securities in registered form may be made at the option of J.P. Morgan by check
mailed to the registered holders.
Some of the J.P. Morgan Debt Securities may be issued as original issue discount
J.P. Morgan Debt Securities (bearing no interest or interest at a rate which at
the time of issuance is below market rates), to be sold at a substantial
discount below their stated principal amount. Federal income tax, accounting and
other special considerations applicable to any such original issue discount J.P.
Morgan Debt Securities will be described in the Prospectus Supplement relating
thereto.
J.P. Morgan Debt Securities may be presented for exchange, and registered J.P.
Morgan Debt Securities may be presented for transfer, in the manner, at the
places and subject to the restrictions set forth in the applicable Indenture,
the J.P. Morgan Debt Securities and the Prospectus Supplement. J.P. Morgan Debt
Securities in bearer form and the coupons, if any, appertaining thereto will be
transferable by delivery. No service charge will be made for any exchange of the
J.P. Morgan Debt Securities or transfer of J.P. Morgan Debt Securities in
registered form, but J.P. Morgan may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
(Sections 2.8 of the Indentures.)
The Indentures and Debt Securities will not contain any provision that would
require J.P. Morgan to repurchase or redeem or otherwise modify the terms of the
Debt Securities upon a change in control or other events involving J.P. Morgan
that may adversely affect the credit quality of J.P. Morgan.
SUBORDINATED DEBT SECURITIES
Subordination
The Subordinated Debt Securities will be unsecured and will be subordinate in
right of payment to all Senior Indebtedness (as defined below) of J.P. Morgan
and, in certain circumstances relating to the bankruptcy or insolvency of J.P.
Morgan, the Derivative Obligations (as defined below), whether outstanding as of
this date or
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<PAGE> 14
hereafter incurred. In addition, since J.P. Morgan is a holding company, the
right of J.P. Morgan to participate as a shareholder in any distribution of
assets of any subsidiary upon its liquidation or reorganization or otherwise
(and thus the ability of holders of the Subordinated Debt Securities to benefit
as creditors of J.P. Morgan from such distribution) is subject to the prior
claims of creditors of any such subsidiary. J.P. Morgan and its subsidiaries are
subject to claims by creditors for long-term and short-term debt obligations,
including substantial obligations for federal funds purchased and securities
sold under repurchase agreements, as well as deposit liabilities. There are also
various legal limitations on the extent to which subsidiaries of J.P. Morgan may
pay dividends or otherwise supply funds to J.P. Morgan.
The Subordinated Debt Securities will be subordinate in right of payment as
provided in the Indenture to all Senior Indebtedness of J.P. Morgan. In certain
events of bankruptcy or insolvency of J.P. Morgan, the Subordinated Debt
Securities will also be subordinate in right of payment to the extent set forth
in the Subordinated Indenture to the prior payment in full of Derivative
Obligations (as defined below). No payment pursuant to the Subordinated Debt
Securities may be made and no holder of the Subordinated Debt Securities or any
coupon appertaining thereto shall be entitled to demand or receive any such
payment (i) unless all amounts of principal, premium, if any, and interest then
due on all Senior Indebtedness of J.P. Morgan shall have been paid in full or
duly provided for or (ii) if, at the time of such payment or immediately after
giving effect thereto, there shall exist with respect to any given Senior
Indebtedness of J.P. Morgan any event of default permitting the holders thereof
to accelerate the maturity thereof or any event which, with notice or lapse of
time, or both, will become such an event of default. (Section 10.2 of the
Subordinated Indenture.)
Upon any distribution of the assets of J.P. Morgan upon dissolution, winding up,
liquidation or reorganization, (i) the holders of Senior Indebtedness of J.P.
Morgan will be entitled to receive payment in full of principal, premium, if
any, and interest before any payment may be made on the Subordinated Debt
Securities and (ii) if, after giving effect to the operation of clause (i)
above, amounts remain available for payment or distribution in respect of the
Subordinated Debt Securities (any such remaining amount being defined as the
"Excess Proceeds") and creditors in respect of Derivative Obligations have not
received payment in full of amounts due or to become due thereon, then such
Excess Proceeds shall first be applied to pay or provide for the payment in full
of all such Derivative Obligations before any payment may be made on the
Subordinated Debt Securities. (Sections 10.3 and 10.12 of the Subordinated
Indenture.) By reason of such subordination, in the event of a bankruptcy or
insolvency of J.P. Morgan, holders of Senior Indebtedness and Derivative
Obligations of J.P. Morgan may receive more, ratably, and holders of the
Subordinated Debt Securities or coupons appertaining thereto may receive less,
ratably, than the other creditors of J.P. Morgan. No series of subordinated debt
is subordinated to any other series of subordinated debt. However, by reason of
the obligation of the holders of the Subordinated Debt Securities to pay over
any Excess Proceeds to creditors in respect of Derivative Obligations, in the
event of a bankruptcy or insolvency of J.P. Morgan, the holders of the
Subordinated Debt Securities may receive less, ratably, than holders of
Antecedent Subordinated Indebtedness (as defined below). Such subordination will
not prevent the occurrence of any Event of Default in respect of the
Subordinated Debt Securities. The Subordinated Indenture does not limit the
amount of Senior Indebtedness J.P. Morgan may incur.
Senior Indebtedness of J.P. Morgan is defined as the principal of, premium, if
any, and interest on (a) all indebtedness of J.P. Morgan for money borrowed,
whether outstanding on the date hereof or thereafter created, assumed or
incurred, except (1) the U.S. $400,000,000 aggregate principal amount of
Zero-Coupon Subordinated Notes Due 1998 of J.P. Morgan; (2) the U.S.
$250,000,000 aggregate principal amount of 7 5/8% Subordinated Notes Due 1998 of
J.P. Morgan; (3) the U.S. $150,000,000 aggregate principal amount of 8 1/2%
Subordinated Notes Due 2003 of J.P. Morgan; (4) the U.S. $500,000,000 aggregate
principal amount of 7 5/8% Subordinated Notes Due 2004 of J.P. Morgan; (5) the
CAN. $250,000,000 aggregate principal amount of 6 7/8% Subordinated Notes Due
2004 of J.P. Morgan; (6) the U.S. $200,000,000 aggregate principal amount of
7 1/4% Subordinated Notes Due 2002 of J.P. Morgan; (7) the U.S. $200,000,000
aggregate principal amount of Floating Rate Subordinated Notes Due 2002 of J.P.
Morgan; (8) the U.S. $250,000,000 aggregate principal amount of Floating Rate
Subordinated Notes Due 2002 of J.P. Morgan; (9) the U.S. $200,000,000 aggregate
principal amount of Floating Rate Subordinated Constant Maturity Treasury Notes
Due 2000 of J.P. Morgan; (10) the U.S. $300,000,000 aggregate principal amount
of Floating Rate Subordinated Notes Due 2005; (11) the U.S. $150,000,000
aggregate principal amount of 5 3/4% Subordinated Notes Due 2008 of J.P. Morgan;
(12) the
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<PAGE> 15
U.S. $300,000,000 aggregate principal amount of 6 1/4% Subordinated Notes Due
2009 of J.P. Morgan; (13) the U.S. $75,000,000 aggregate principal amount of 8%
ITL Subordinated Notes Due 2003 of J.P. Morgan; (14) the U.S. $100,000,000
aggregate principal amount of 8% Subordinated Notes Due 2005 of J.P. Morgan;
(15) the U.S. $100,000,000 aggregate principal amount of 7 1/4% Subordinated
Notes Due 2010 of J.P. Morgan; (16) the U.S. $100,000,000 aggregate principal
amount of 6.61% Subordinated Notes Due 2010 of J.P. Morgan; (17) the U.S.
$300,000,000 aggregate principal amount of 6 1/4% Subordinated Notes Due 2005 of
J.P. Morgan; (18) the U.S. $75,000,000 aggregate principal amount of 7.15%
Subordinated Notes Due 2011 of J.P. Morgan; (19) the U.S. $75,000,000 aggregate
principal amount of 7.69% Subordinated Notes Due 2011 of J.P. Morgan; (20) the
U.S. $5,200,000 aggregate principal amount of Floating Rate Subordinated Notes
Due 2026 of J.P. Morgan; (21) the U.S. $100,000,000 aggregate principal amount
of 6 1/4% Subordinated Notes Due 2011 of J.P. Morgan; (22) the U.S. $77,000,000
aggregate principal amount of 4.78% Japanese Yen Subordinated Loan Due 2005 of
J.P. Morgan; (23) the U.S. $300,000,000 aggregate principal amount of 6.875%
Subordinated Notes Due 2007 of J.P. Morgan; (24) the U.S. $200,000,000 aggregate
principal amount of Floating Rate Subordinated Notes Due 2012 of J.P. Morgan;
(25) the U.S. $5,000,000 aggregate principal amount of Floating Rate
Subordinated Notes Due 2026 of J.P. Morgan; (26) the U.S. $81,000,000 aggregate
principal amount of Zero-Coupon Subordinated Notes Due 2027 of J.P. Morgan; (27)
the U.S. $31,000,000 aggregate principal amount of Zero-Coupon Subordinated
Notes Due 2027 of J.P. Morgan; (28) the U.S. $9,000,000 aggregate principal
amount of Zero-Coupon Subordinated Notes Due 2027 of J.P. Morgan; (29) the U.S.
$23,000,000 aggregate principal amount of Zero-Coupon Subordinated Notes Due
2027 of J.P. Morgan; (30) the U.S. $85,000,000 aggregate principal amount of
7.00% Subordinated Notes Due 2017 of J.P. Morgan; (31) the U.S. $45,000,000
aggregate principal amount of Subordinated Trigger Notes Due 2012 of J.P.
Morgan; (32) the U.S. $20,000,000 aggregate principal amount of 7.00%
Subordinated Notes Due 2012 of J.P. Morgan; (33) the U.S. $350,000,000 aggregate
principal amount of 6.70% Subordinated Notes Due 2007 of J.P. Morgan; (34) the
U.S. $100,000,000 aggregate principal amount of 7.00% Subordinated Notes Due
2012 of J.P. Morgan; (35) the U.S. $58,000,000 aggregate principal amount of
7.00% Subordinated Notes Due 2017 of J.P. Morgan; (36) the U.S. $25,000,000
aggregate principal amount of 7.00% Subordinated Notes Due 2017 of J.P. Morgan;
(37) the U.S. $2,000,000 aggregate principal amount of Zero-Coupon Subordinated
Notes Due 2017 of J.P. Morgan; (38) the U.S. $80,000,000 aggregate principal
amount of Zero-Coupon Subordinated Notes Due 2027 of J.P. Morgan; (39) such
indebtedness as is by its items expressly stated to be not superior in right of
payment to the Subordinated Notes or to rank pari passu with the Subordinated
Notes and (b) any deferrals, renewals or extensions of any such Senior
Indebtedness. The term "Indebtedness of J.P. Morgan for money borrowed" as used
in the foregoing sentence shall mean any obligation of, or any obligation
guaranteed by, J.P. Morgan for the repayment of borrowed money, whether or not
evidenced by bonds, debentures, notes or other written instruments, and any
deferred obligation for the payment of the purchase price of property or assets.
The Subordinated Debt Securities shall rank pari passu with the Subordinated
Notes referred to in (a)(1) through (a)(38), although, as noted above, the
Subordinated Debt Securities, as opposed to the Antecedent Subordinated
Indebtedness, will be subordinated in the event of a bankruptcy or insolvency of
J.P. Morgan to Derivative Obligations. The term "pari passu" as used herein
shall mean ranking equally in right of payment in the event of J.P. Morgan's
bankruptcy. (Section 1.1 of the Subordinated Indenture.)
Derivative Obligations of J.P. Morgan are defined in the Subordinated Indenture
as obligations of J.P. Morgan to make payments on claims in respect of
derivative products such as interest and foreign exchange rate contracts,
commodity contracts and similar arrangements; provided, however, that Derivative
Obligations do not include claims in respect of Senior Indebtedness or
obligations which, by their terms, are expressly stated not to be superior in
right of payment to the Subordinated Debt Securities or to rank pari passu with
the Subordinated Debt Securities. For purposes of this definition, "claim" has
the meaning assigned thereto in Section 101(4) of the United States Bankruptcy
Code of 1978, as amended and in effect on the date of the Subordinated
Indenture. (Section 1.1 of the Subordinated Indenture.)
Antecedent Subordinated Indebtedness of J.P. Morgan is defined in the
Subordinated Indenture as all indebtedness and other obligations outstanding on
the date of the Subordinated Indenture and enumerated in clauses (a)(i) through
(a)(ix) of the definition of "Senior Indebtedness". (Section 1.1 of the
Subordinated Indenture.)
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The Prospectus Supplement will set forth the aggregate amount of outstanding
indebtedness as of the most recent practicable date that by the terms of such
debt securities would be senior to the subordinated debt and any limitation on
the issuance of such additional senior indebtedness.
Limited Right of Acceleration
Unless otherwise specified in the Prospectus Supplement relating to any series
of Subordinated Debt Securities, payment of principal of the Subordinated Debt
Securities may be accelerated only in the case of the bankruptcy or
reorganization of J.P. Morgan. There is no right of acceleration in the case of
a default in the payment of principal of, premium, if any, or interest on the
Subordinated Debt Securities or the performance of any other covenant of J.P.
Morgan contained in the Indenture. In the event of a default in the payment of
principal of, premium, if any, or interest, or the performance of any other
covenant in the Subordinated Debt Securities or the Indenture, the Trustee may,
subject to certain limitations and conditions, seek to enforce payment of such
principal, premium, or interest or the performance of such covenant. (Sections
5.2 and 5.4 of the Subordinated Indenture.)
SENIOR DEBT SECURITIES
The Debt Securities will be unsecured and will rank on a parity with all other
unsecured and unsubordinated indebtedness of J.P. Morgan. Since J.P. Morgan is a
holding company, however, the right of J.P. Morgan to participate as a
shareholder in any distribution of assets of any subsidiary upon its liquidation
or reorganization or otherwise (and thus the ability of holders of the Debt
Securities to benefit as creditors of J.P. Morgan from such distribution) is
subject to the prior claims of creditors of any such subsidiary. J.P. Morgan and
its subsidiaries are subject to claims by creditors for long-term and short-term
debt obligations, including substantial obligations for federal funds purchased
and securities sold under repurchase agreements, as well as deposit liabilities.
There are also various legal limitations on the extent to which subsidiaries of
J.P. Morgan may pay dividends or otherwise supply funds to J.P. Morgan.
EVENTS OF DEFAULT, WAIVER, NOTICE, J.P. MORGAN DEBT SECURITIES IN FOREIGN
CURRENCIES
As to any series of J.P. Morgan Debt Securities, an Event of Default is defined
in the Indentures as (a) default for 30 days in payment of any interest on the
J.P. Morgan Debt Securities of such series; (b) default in payment of principal
of or premium, if any, on the J.P. Morgan Debt Securities of such series when
due either at maturity, upon redemption, by declaration or otherwise; (c)
default in the payment of a sinking fund installment, if any, on the J.P. Morgan
Debt Securities of such series; (d) default by J.P. Morgan in the performance of
any other covenant or warranty contained in the respective Indenture for the
benefit of such series which shall not have been remedied for a period of 90
days after notice given as specified in the Indenture; and (e) certain events of
bankruptcy or reorganization of J.P. Morgan. (Sections 5.1 of the Indentures.)
An Event of Default with respect to a particular series of J.P. Morgan Debt
Securities issued under the respective Indenture does not necessarily constitute
an Event of Default with respect to any other series of J.P. Morgan Debt
Securities issued thereunder. Each Indenture provides that the Trustee may
withhold notice to the holders of the respective J.P. Morgan Debt Securities of
any series of any default (except in payment of principal of or interest or
premium, if any, on such J.P. Morgan Debt Securities or in the making of any
sinking fund payment with respect to such J.P. Morgan Debt Securities) if the
Trustee considers it in the interest of the holders of J.P. Morgan Debt
Securities of such series to do so. (Sections 5.11 of the Indentures.)
The Subordinated Indenture provides that if an Event of Default described in
clause (e) above shall have occurred and be continuing, either the Subordinated
Trustee or the holders of at least 25% in principal amount of all Subordinated
Debt Securities then outstanding (voting as one class) may declare the principal
(or, in the case of original issue discount Subordinated Debt Securities, the
portion thereof specified in the terms thereof) of all Subordinated Debt
Securities then outstanding and the interest accrued thereon, if any, to be due
and payable immediately, but upon certain conditions such declarations may be
annulled and past defaults (except for defaults in the payment of principal of
or premium, or interest, if any, on such Subordinated Debt Securities) may be
waived by the holders of a majority in principal amount of the Subordinated Debt
Securities of all series then outstanding. (Sections 5.1 and 5.10 of the
Subordinated Indenture.)
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The Debt Indenture provides that (1) if an Event of Default described in clause
(a), (b), (c) or (d) above (if the Event of Default under clause (d) is with
respect to less than all series of Debt Securities then outstanding) shall have
occurred and be continuing with respect to one or more series, either the
Trustee or the holders of at least 25% in principal amount of the Debt
Securities of such series then outstanding (each such series voting as a
separate class in the case of an Event of Default under clause (a), (b) or (c)
and all such series voting as one class in the case of an Event of Default under
clause (d)) may declare the principal (or, in the case of original issue
discount Debt Securities, the portion thereof specified in the terms thereof) of
all outstanding Debt Securities of such series and the interest accrued thereon,
if any, to be due and payable immediately and (2) if an Event of Default
described in clause (d) or (e) above (if the Event of Default under clause (d)
is with respect to all series of Debt Securities then outstanding) shall have
occurred and be continuing, either the Debt Trustee or the holders of at least
25% in principal amount of all Debt Securities then outstanding (voting as one
class) may declare the principal (or, in the case of original issue discount
Debt Securities, the portion thereof specified in the terms thereof) of all Debt
Securities then outstanding and the interest accrued thereon, if any, to be due
and payable immediately, but upon certain conditions such declarations may be
annulled and past defaults (except for defaults in the payment of principal of,
or premium or interest, if any, on such Debt Securities) may be waived by the
holders of a majority in principal amount of the Debt Securities of such series
(or of all series as the case may be) then outstanding. (Sections 5.1 and 5.10
of the Debt Indenture.)
The holders of a majority in principal amount of the outstanding J.P. Morgan
Debt Securities of each series affected (with each series voting as a separate
class) shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee under the applicable
Indenture, subject to certain limitations specified in the applicable Indenture,
provided that the holders of J.P. Morgan Debt Securities shall have offered to
the Trustee reasonable indemnity against expenses and liabilities. (Sections 5.9
and 6.2(d) of the Indentures.) The Indentures require the annual delivery by
J.P. Morgan to the Trustee of a written statement as to the absence of certain
defaults under the applicable Indenture. (Sections 3.5 of the Indentures.)
Whenever either Indenture provides for an action by, or the determination of any
of the rights of, or any distribution to, holders of J.P. Morgan Debt
Securities, in the absence of any provision to the contrary in the form of J.P.
Morgan Debt Security, any amount in respect of any J.P. Morgan Debt Security
denominated in a currency other than U.S. dollars or in any currency unit shall
be treated as that amount of U.S. dollars that could be obtained for such amount
on such reasonable basis of exchange and as of such date as J.P. Morgan
specifies to the Trustee or in the absence of such notice, as the Trustee may
determine. (Section 12.11 of the Subordinated Indenture and Section 11.11 of the
Debt Indenture.)
MODIFICATION OF THE INDENTURES; WAIVER OF COMPLIANCE
Each Indenture contains provisions permitting J.P. Morgan and the Trustee, with
the consent of the holders of not less than a majority in principal amount of
the respective J.P. Morgan Debt Securities of all series affected by such
modification or waiver at the time outstanding (voting as one class), to modify
the Indenture or any supplemental indenture or the rights of the holders of the
respective J.P. Morgan Debt Securities, or waive compliance by J.P. Morgan with
any of its obligations thereunder, provided that no such modification or waiver
shall (i) extend the final maturity of any respective J.P. Morgan Debt Security,
or reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, or change the currency or currency unit of payment
thereof, or change the method in which amounts of payments of principal or
interest thereon are determined, or reduce the portion of the principal amount
of an original issue discount J.P. Morgan Debt Security due and payable upon
acceleration of the maturity thereof or the portion of the principal amount
thereof provable in bankruptcy, or reduce any amount payable upon redemption of
any J.P. Morgan Debt Security, or impair or affect the right of a holder to
institute suit for the payment thereof or, if the J.P. Morgan Debt Securities
provide therefor, any right of repayment at the option of the holder of a J.P.
Morgan Debt Security, without the consent of the holder of each respective J.P.
Morgan Debt Security so affected or (ii) reduce the aforesaid percentage of J.P.
Morgan Debt Securities of any series, the consent of the holders of which is
required for any such modification, without the consent of the holder of each
J.P. Morgan Debt Security so affected. (Sections 8.2 and 8.6 of the Indentures.)
The Indentures also permit J.P. Morgan and the Trustee to amend such Indenture
in certain circumstances without the consent of the holders of J.P. Morgan Debt
Securities to evidence the merger of J.P. Morgan, the replacement
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of the Trustee, to effect modifications which do not affect any series of J.P.
Morgan Debt Security already outstanding, and for certain other purposes.
(Sections 8.1 of the Indentures.)
CONSOLIDATIONS, MERGERS AND SALES OF ASSETS
J.P. Morgan may not merge or consolidate with any other corporation or sell or
convey all or substantially all of its assets to any Person, unless either J.P.
Morgan shall be the continuing corporation or the successor corporation shall be
a corporation organized under the laws of the United States or any state thereof
and shall expressly assume the payment of the principal of and interest on the
J.P. Morgan Debt Securities and the performance and observance of all the
covenants and conditions of the Indenture binding upon J.P. Morgan, and J.P.
Morgan or such successor corporation shall not, immediately after such merger or
consolidation, or such sale or conveyance, be in default in the performance of
any such covenant or condition. (Articles Nine of the Indentures.)
CONCERNING THE TRUSTEE, PAYING AGENT, REGISTRAR AND TRANSFER AGENT
J.P. Morgan and its subsidiaries have normal banking relationships with the
Trustee, First Trust of New York, National Association. First Trust of New York,
National Association, 100 Wall Street, Suite 1600, New York, New York 10005,
will also be the paying agent, registrar and transfer agent for any series of
J.P. Morgan Debt Securities.
GLOBAL J.P. MORGAN DEBT SECURITIES
Any series of J.P. Morgan Debt Securities may be issued in the form of one or
more global certificates (the "Global Debt Security") registered in the name of
a depository or a nominee of a depository (the "Depository"). Unless otherwise
specified in an applicable Prospectus Supplement, the Depository will be the
Depository Trust Company ("DTC"). The Corporation has been informed by DTC that
its nominee will be CEDE & CO. ("CEDE"). Accordingly, CEDE is expected to be the
initial registered holder of any series of J.P. Morgan Debt Securities. No
person acquiring an interest in such series of J.P. Morgan Debt Securities (a
"Holder") will be entitled to receive a certificate representing such person's
interest in the J.P. Morgan Debt Securities except as set forth herein. Unless
and until definitive J.P. Morgan Debt Securities are issued under the limited
circumstances described herein, all references to actions by Holders shall refer
to actions taken by DTC upon instructions from its Participants (as defined
below), and all references herein to payments and notices to Holders shall refer
to payments and notices to DTC or CEDE, as the registered holder of the J.P.
Morgan Debt Securities, as the case may be, for distribution to Holders in
accordance with the DTC procedures.
DTC is a limited purpose trust company organized under the New York Banking Law,
a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to Section 17A of the 1934 Act. DTC was created to hold
securities for its participating organizations ("'Participants") and to
facilitate the clearance and settlement of securities transactions between
Participants through electronic book-entry, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations, and may include
certain other organizations. Indirect access to the DTC system also is available
to others such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants").
Holders that are not Participants or Indirect Participants but desire to
purchase, sell or otherwise transfer ownership of, or other interests in, J.P.
Morgan Debt Securities may do so only through Participants and Indirect
Participants. Under a book-entry format, Holders may experience some delay in
their receipt of payments, since such payments will be forwarded by the agent
designated by J.P. Morgan to CEDE, as nominee for DTC. DTC will forward such
payments to its Participants, which thereafter will forward them to Indirect
Participants or Holders. It is anticipated that CEDE, as nominee of DTC, will be
the registered holder of all of the J.P. Morgan Debt Securities. Holders will
not be recognized by either of the Trustees as registered holders of the J.P.
Morgan Debt Securities entitled to the benefits of the relevant Indenture.
Holders that are not Participants will be permitted to exercise their rights as
such only indirectly through Participants.
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Under the rules, regulations and procedures creating and affecting DTC and its
operations (the "Rules"), DTC will be required to make book-entry transfers of
J.P. Morgan Debt Securities among Participants and to receive and transmit
payments to Participants. Participants and Indirect Participants with which
Holders have accounts with respect to the J.P. Morgan Debt Securities similarly
are required to make book-entry transfers and receive and transmit such payments
on behalf of their respective Holders.
Because DTC can only act on behalf of Participants, who in turn act on behalf of
Indirect Participants, and on behalf of certain banks, trust companies and other
persons approved by it, the ability of a Holder to pledge J.P. Morgan Debt
Securities to persons or entities that do not participate in the DTC system, or
to otherwise act with respect to such J.P. Morgan Debt Securities, may be
limited due to the absence of physical certificates for such J.P. Morgan Debt
Securities.
DTC has advised J.P. Morgan that it will take any action permitted to be taken
by a Holder under the relevant Indenture only at the direction of one or more
Participants to whose accounts with DTC the J.P. Morgan Debt Securities are
credited. The Global Debt Security shall be exchangeable for J.P. Morgan Debt
Securities registered in the names of persons other than DTC or its nominee only
if (i) DTC notifies J.P. Morgan that it is unwilling or unable to continue as
depository for such Global Debt Security or if at any time DTC ceases to be a
clearing agency registered under the 1934 Act at a time when DTC is required to
be so registered to act as such depository or (ii) J.P. Morgan executes and
delivers to the Trustee a Company Order that such Global Debt Security shall be
so exchangeable. Any Global Debt Security that is exchangeable pursuant to the
preceding sentence shall be exchangeable for J.P. Morgan Debt Securities
registered in such names as DTC shall direct. Upon the occurrence of any event
described in the immediately preceding paragraph, DTC is generally required to
notify all Participants of the availability through DTC of definitive J.P.
Morgan Debt Securities. Upon surrender by DTC of the Global Debt Security
representing the J.P. Morgan Debt Securities and instructions for registration,
the Trustee will reissue the J.P. Morgan Debt Securities as definitive J.P.
Morgan Debt Securities, and thereafter the Trustee will recognize the holders of
such definitive J.P. Morgan Debt Securities as registered holders of J.P. Morgan
Debt Securities entitled to the benefits of the applicable Indenture.
The Global Debt Security may not be transferred except as a whole by DTC with
respect to such Global Debt Security to a nominee of DTC or by a nominee of DTC
to DTC or another nominee of DTC or to a successor Depository appointed by the
Corporation. DTC may not sell, assign, transfer or otherwise convey any
beneficial interest in a Global Debt Security evidencing all or part of the J.P.
Morgan Debt Securities unless such beneficial interest is an amount equal to an
authorized denomination for the J.P. Morgan Debt Securities.
GOVERNING LAW AND JUDGMENTS
The Securities will be governed by and construed in accordance with the laws of
the State of New York. In the event action based on Securities denominated in a
Specified Currency other than U.S. dollars were commenced in a court in the
United States, it is likely that such court would grant judgment relating to the
Securities only in U.S. Dollars. If an action based on Securities denominated in
a Specified Currency other than U.S. dollars were commenced in a New York court,
however, such court should render or enter a judgment or decree in the Specified
Currency. Such judgment should then be converted into U.S. dollars at the rate
of exchange prevailing on the date of entry of the judgment or decree.
DESCRIPTION OF DEBT WARRANTS
J.P. Morgan may issue Debt Warrants for the purchase of J.P. Morgan Debt
Securities. The Debt Warrants are to be issued under warrant agreements (each a
"Debt Warrant Agreement") to be entered into between J.P. Morgan and Morgan
Guaranty, as warrant agent (the "Debt Warrant Agent"), all as set forth in the
Prospectus Supplement relating to the particular issue of Debt Warrants (the
"Offered Debt Warrants"). A copy of the Debt Warrant Agreement, including the
form of warrant certificate (the "Debt Warrant Certificate") representing the
Debt Warrants, substantially in the form in which it will be executed, is filed
as an exhibit to the Registration Statement. Brief summaries of the principal
provisions of the Debt Warrant Agreement and the Debt Warrant Certificates do
not purport to be complete.
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GENERAL
If Debt Warrants are offered, the Prospectus Supplement will describe the terms
of the Offered Debt Warrants, the Debt Warrant Agreement relating to the Offered
Debt Warrants and the Debt Warrant Certificates representing the Offered Debt
Warrants, including the following: (1) the designation, aggregate principal
amount and terms of the J.P. Morgan Debt Securities purchasable upon exercise of
the Offered Debt Warrants; (2) if applicable, the designation and terms of any
related J.P. Morgan Debt Securities with which the Offered Debt Warrants are
issued and the number of Offered Debt Warrants issued with each such J.P. Morgan
Debt Security; (3) if the J.P. Morgan Debt Securities purchasable upon exercise
of Offered Debt Warrants are denominated in a currency other than U.S. dollars
or in any currency unit, the denomination of such J.P. Morgan Debt Securities
and the coin or currency or units based on or relating to currencies (including
ECU) in which the principal, premium, if any, and interest on such J.P. Morgan
Debt Securities will be payable, which may be U.S. dollars based upon the
exchange rate for such other currency or currency unit existing on or about the
time a payment is due; (4) if applicable, the date on and after which the
Offered Debt Warrants and the related J.P. Morgan Debt Securities will be
separately transferable; (5) the principal amount of J.P. Morgan Debt Securities
purchasable upon exercise of the Offered Debt Warrants and the price at which
and coin or currency or units based on or relating to currencies (including ECU)
in which such principal amount of J.P. Morgan Debt Securities may be purchased
upon such exercise; (6) the date on which the right to exercise the Offered Debt
Warrants shall commence and the date (the "Expiration Date") on which such right
shall expire; (7) if the J.P. Morgan Debt Securities purchasable upon exercise
of Offered Debt Warrants are original issue discount J.P. Morgan Debt
Securities, a discussion of the specific Federal income tax, accounting and
other special considerations applicable thereto; and (8) whether the Debt
Warrants represented by the Debt Warrant Certificates will be issued in
registered or bearer form.
Debt Warrant Certificates will be exchangeable for new Debt Warrant Certificates
of different denominations, may, if in registered form, be presented for
registration and transfer, and may be exercised at the corporate trust office of
the Debt Warrant Agent or any other office indicated in the Prospectus
Supplement. Prior to the exercise of their Debt Warrants, holders of Debt
Warrants will not have any of the rights of holders of the J.P. Morgan Debt
Securities purchasable upon such exercise and will not be entitled to payments
of principal of, premium, if any, or interest, if any, on the J.P. Morgan Debt
Securities purchasable upon such exercise.
EXERCISE OF DEBT WARRANTS
Each Offered Debt Warrant will entitle the holder to purchase for cash such
principal amount of J.P. Morgan Debt Securities at such exercise price as shall
in each case be set forth in, or be determinable as set forth in, the Prospectus
Supplement relating to the Offered Debt Warrants. Offered Debt Warrants may be
exercised at any time up to the close of business on the Expiration Date set
forth in the Prospectus Supplement relating to the Offered Debt Warrants. After
the close of business on the Expiration Date (or such later date to which such
Expiration Date may be extended by J.P. Morgan), unexercised Debt Warrants will
become void.
Subject to any restrictions and additional requirements that may be set forth in
the Prospectus Supplement relating thereto, Debt Warrants may be exercised by
delivery to the Debt Warrant Agent of the Debt Warrant Certificate evidencing
such Debt Warrants properly completed and duly executed and of payment as
provided in the Prospectus Supplement of the amount required to purchase the
J.P. Morgan Debt Securities purchasable upon such exercise. The exercise price
will be that price applicable on the date of receipt of payment in full of the
requisite amount of funds, determined as set forth in the Prospectus Supplement
relating to the Offered Debt Warrants. Upon receipt of such payment and such
Debt Warrant Certificate at the corporate trust office of the Debt Warrant Agent
or any other office indicated in the Prospectus Supplement, J.P. Morgan will, as
soon as practicable, forward the J.P. Morgan Debt Securities purchasable upon
such exercise. If less than all of the Debt Warrants represented by such Debt
Warrant Certificate are exercised, a new Debt Warrant Certificate will be issued
for the remaining Debt Warrants.
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DESCRIPTION OF SERIES PREFERRED STOCK
J.P. Morgan is authorized to issue up to 10,000,000 shares of preferred stock
without par value (the "Preferred Stock"), which may be issued from time to time
in one or more series with such terms as are determined by resolution of the
Board of Directors. All shares of Series Preferred Stock, irrespective of
series, constitute one and the same class. See "Description of Capital Stock."
The following description of the terms of the Series Preferred Stock sets forth
certain general terms and provisions of the Series Preferred Stock to which any
Prospectus Supplement may relate. Certain terms of any series of Series
Preferred Stock offered by any Prospectus Supplement will be described in the
Prospectus Supplement relating to such series of Series Preferred Stock. If so
indicated in the Prospectus Supplement, the terms of any such series may differ
from the terms set forth below.
The Board of Directors is authorized to establish and designate series and to
fix the number of shares and the relative rights, preferences and limitations of
the respective series of the Series Preferred Stock. The terms of a particular
series of Series Preferred Stock may differ, among other things, in (1) the
number of shares to constitute such series, (2) the dividend rate (or the method
of calculation) on the shares of such series, and whether such dividends are
cumulative, (3) whether or not the shares of the series shall be redeemable and
the terms thereof, (4) the terms and amount of any sinking fund provided for the
purchase or redemption of the series, (5) whether or not the shares of the
series shall be convertible into, or exchangeable for, cash or shares of any
other series of Series Preferred Stock or other securities of J.P. Morgan and
the terms thereof, (6) the amount per share payable on the shares of the series
in case of liquidation, dissolution or winding up of J.P. Morgan, (7) the terms
of voting rights, if any, of shares of the series, (8) whether there are
restrictions or conditions upon the issue or reissue of any additional preferred
stock ranking on a parity with or prior to such series as to dividends or upon
liquidation, dissolution or winding up, and (9) the other rights and privileges
and any qualifications, limitations or restrictions of such rights or privileges
of such series. Unless otherwise specifically set forth in the Prospectus
Supplement relating to a series of Series Preferred Stock, all series of Series
Preferred Stock shall be of equal rank, preference and priority as to dividends
and upon liquidation, dissolution or winding up of J.P. Morgan; when the stated
dividends are not paid in full, the shares of all series of the Series Preferred
Stock shall share ratably in any payment thereof, and upon liquidation,
dissolution or winding up of J.P. Morgan, if assets are insufficient to pay in
full all shares of all series of Series Preferred Stock, then such assets shall
be distributed among the holders ratably.
As described under "Depositary Shares" below, J.P. Morgan may, at its option,
elect to offer depositary shares evidenced by depositary receipts, each
representing a fraction (to be specified in the Prospectus Supplement relating
to the particular series of Series Preferred Stock) of a share of the particular
series of Series Preferred Stock issued and deposited with a depositary, in lieu
of offering full shares of such series of the Series Preferred Stock.
Since J.P. Morgan is a holding company, the right of J.P. Morgan, and hence the
right of creditors and stockholders of J.P. Morgan, to participate in any
distribution of assets of any subsidiary, upon its liquidation or reorganization
or otherwise is necessarily subject to the prior claims of creditors of the
subsidiary, except to the extent that claims of J.P. Morgan itself as a creditor
of the subsidiary may be recognized.
The brief description of the principal provisions of the Series Preferred Stock
set forth below does not purport to be complete.
DIVIDEND RIGHTS
The holders of the Series Preferred Stock shall be entitled to receive, but only
when and as declared by the Board of Directors out of funds legally available
for that purpose, cash dividends at the rates and on the dates set forth in the
Prospectus Supplement relating to a particular series of Series Preferred Stock,
and no more, payable quarterly (each, a "Dividend Payment Date"), unless
otherwise specified in the Prospectus Supplement relating to a series of Series
Preferred Stock. Such rate may be fixed or variable. Each such dividend will be
payable to the holders of record as they appear on the stock books of J.P.
Morgan (or, if applicable, the records of the Depositary referred to below under
"Depositary Shares") on such record dates as will be fixed by the Board of
Directors of J.P. Morgan or a duly authorized committee thereof. Dividends
payable on the Series Preferred Stock for any period
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less than a full quarter will be computed on the basis of the actual number of
days elapsed over a 360 day year and for a period of a full calendar quarter,
will be computed on the basis of a 360 day year consisting of twelve 30 day
months. Unless otherwise specified in the Prospectus Supplement relating to a
series of Series Preferred Stock, such dividends shall be payable from, and
shall be cumulative from, the date of original issue of each share, so that if
in any quarterly dividend period (being the period between such dividend payment
dates) dividends at the rate or rates as described in the Prospectus Supplement
relating to such series of Series Preferred Stock shall not have been declared
and paid or set apart for payment on all outstanding shares of Series Preferred
Stock for such quarterly dividend period and all preceding quarterly dividend
periods from and after the first day from which dividends are cumulative then
the aggregate deficiency shall be declared and fully paid or set apart for
payment, but without interest, before any dividends shall be declared or paid or
set apart for payment on the Common Stock by J.P. Morgan. The cutting-off of
dividends on Common Stock until the arrearages have been paid or provided for,
as outlined above, and such rights, if any, to vote for the election of
directors as may be set forth in the Prospectus Supplement relating to a series
of Series Preferred Stock, shall be the only consequences of the failure to
declare or pay dividends on the Series Preferred Stock. After payment in full of
all dividend arrearages on the Series Preferred Stock, dividends on the Common
Stock may be declared and paid out of funds legally available for that purpose
as the Board of Directors may determine.
Each series of the Series Preferred Stock will be entitled to dividends as
described in the Prospectus Supplement relating to such series. Different series
of the Series Preferred Stock may be entitled to dividends at different dividend
rates or based upon different methods of determination.
OPTIONAL REDEMPTION
J.P. Morgan may, at its option, at any time or from time to time on not less
than 30 and not more than 60 days' notice, redeem one or more series of the
Series Preferred Stock, in whole or in part, at the redemption prices and on the
dates set forth in the Prospectus Supplement for the related series of Series
Preferred Stock.
Any optional redemption by J.P. Morgan shall be with the approval of the
appropriate bank regulatory authorities unless at the time such approval is not
required. At the date of this Prospectus approval by the Federal Reserve Board
is required.
If less than all the outstanding shares of a series of the Series Preferred
Stock are to be redeemed, the selection of the shares to be redeemed shall be
determined by lot or pro rata as may be determined by the Board of Directors of
J.P. Morgan or by any other method which may be determined by the Board of
Directors to be equitable. From and after the redemption date (unless default
shall be made by J.P. Morgan in providing for the payment of the redemption
price), dividends shall cease to accrue on the shares of such Series Preferred
Stock called for redemption and all rights of the holders thereof (except the
right to receive the redemption price) shall cease.
At the option of J.P. Morgan, shares of Series Preferred Stock redeemed or
otherwise acquired may be restored to the status of authorized but unissued
shares of Series Preferred Stock.
CONVERSION OR EXCHANGE
The holders of the Series Preferred Stock will have such rights, if any, to
convert such shares into or to exchange such shares for, cash or shares of any
other series of Series Preferred Stock or other securities of J.P. Morgan, as
may be set forth in the Prospectus Supplement relating to a series of Series
Preferred Stock.
VOTING RIGHTS
Except as indicated below or in the Prospectus Supplement relating to a
particular series of Series Preferred Stock, or except as expressly required by
applicable law, the holders of the Series Preferred Stock will not be entitled
to vote. In the event that J.P. Morgan issues full shares of any series of
Series Preferred Stock, each such share will be generally entitled to one vote
on matters on which holders of such series of the Series Preferred Stock are
entitled to vote, irrespective of such series' aggregate stated value,
liquidation preference or initial offering price. However, as more fully
described under "Depositary Shares" below, if J.P. Morgan elects to issue
Depositary Shares representing a fraction of a share of a series of Series
Preferred Stock, each such Depositary Share will, in
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effect, be entitled to such fraction of a vote as shall be set forth in the
Prospectus Supplement relating to such series rather than one vote, per
Depositary Share.
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 by J.P. Morgan on any series of Series Preferred Stock are
in default, the number of directors of J.P. Morgan will be increased by two and
the holders of record of all outstanding series of Series Preferred Stock upon
which like voting rights have been conferred, voting as a single class without
regard to series, will be entitled to vote for the election of such additional
two directors until all dividends in default have been paid or declared and set
apart for payment.
So long as any shares of Series Preferred Stock remain outstanding (except as
may be otherwise specified in the Certificate of Designation creating such
Series Preferred Stock), J.P. Morgan shall not, without the affirmative vote or
consent of the holders of at least two-thirds of the votes of the Series
Preferred Stock at the time outstanding and entitled to vote, given in person or
by proxy, either in writing or by resolution adopted at a meeting at which the
holders of any series of Series Preferred Stock (alone or together with the
holders of one or more other series of Series Preferred Stock at the time
outstanding and entitled to vote) voting separately as a class, alter the
provisions of the Series Preferred Stock so as to materially adversely affect
its rights; provided; however, that in the event any such materially adverse
alteration affects the rights of only a single series of Series Preferred Stock,
then the alteration may be effected only with the vote or consent of at least
two-thirds of the votes of such series of Series Preferred Stock; provided,
further, that no such vote of any series of Series Preferred Stock will be
required to authorize an increase in the amount of the authorized Series
Preferred Stock and/or the creation and issuance of other series of Series
Preferred Stock in accordance with J.P. Morgan's Restated Certificate of
Incorporation, as amended. In connection with the exercise of the voting rights
contained in the preceding sentence, holders of all series of Series Preferred
Stock which are granted such voting rights shall vote as a class (except as
specifically provided otherwise).
The foregoing voting provisions will not apply if, in connection with the
matters specified, provision is made for the redemption or retirement of all
outstanding Series Preferred Stock.
Under regulations adopted by the Federal Reserve Board, if the holders of any
series of Series Preferred Stock become entitled to vote for the election of
directors because dividends on such series are in arrears, such series may then
be deemed a "class of voting securities" and a holder of 25% or more of such
series (or a holder of 5% or more if it otherwise exercises a "controlling
influence" over J.P. Morgan) may then be subject to regulation as a bank holding
company in accordance with the Bank Holding Company Act of 1956, as amended. In
addition, at such time (i) any bank holding company may be required to obtain
the approval of the Federal Reserve Board under the Bank Holding Company Act of
1956, as amended, to acquire or retain 5% or more of any series of Series
Preferred Stock and (ii) any person other than a bank holding company may be
required to obtain the approval of the Federal Reserve Board under the Bank
Change in Control Act to acquire 10% or more of such series of Series Preferred
Stock.
LIQUIDATION RIGHTS
Upon any liquidation, dissolution or winding up of J.P. Morgan, whether
voluntary or involuntary, the holders of each series of Series Preferred Stock
shall have preference and priority over the Common Stock for payment out of the
assets of J.P. Morgan or proceeds thereof, whether from capital or surplus, of
such amounts as are set forth in the Prospectus Supplement relating to such
series of Series Preferred Stock and, after such payment, the holders of such
series of Series Preferred Stock shall be entitled to no other payments. If, in
such case, the assets of J.P. Morgan or proceeds thereof shall be insufficient
to make the full liquidating payment on such series of Series Preferred Stock
and liquidating payments on any other outstanding series of Series Preferred
Stock (including accrued and unpaid dividends, if any), then such assets and
proceeds shall be distributed among the holders of such series of Series
Preferred Stock and any other outstanding series of Series Preferred Stock,
ratably in accordance with the respective amounts which would be payable on all
Series Preferred Stock (including accrued and unpaid dividends, if any) if all
such liquidating amounts payable were paid in full. A consolidation or merger of
J.P. Morgan with or into any other corporation or corporations or a sale,
whether for cash, shares of stock,
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securities or properties, of all or substantially all or any part of the assets
of J.P. Morgan shall not be deemed or construed to be a liquidation, dissolution
or winding up of J.P. Morgan.
MISCELLANEOUS
Unless otherwise specified in the applicable Prospectus Supplement, First
Chicago Trust Company will serve as transfer agent, dividend disbursing agent
and registrar for any series of Series Preferred Stock. The holders of any
series of Series Preferred Stock will not have any preemptive rights to purchase
or subscribe for any shares of any class or other securities of any type of J.P.
Morgan. When issued, each series of the Series Preferred Stock will be fully
paid and nonassessable. The Certificate of Designation setting forth the
provisions of any series of Series Preferred Stock will become effective after
the date of the Prospectus Supplement relating to such series of Series
Preferred Stock, but on or before issuance of such series of Series Preferred
Stock.
DEPOSITARY SHARES
GENERAL
J.P. Morgan may, at its option, elect to offer fractional shares of a particular
series of Series Preferred Stock, rather than full shares of such series of
Series Preferred Stock. In the event such option is exercised, J.P. Morgan will
issue to the public receipts for Depositary Shares, each of which will represent
a fraction (to be set forth in the Prospectus Supplement relating to a
particular series of Series Preferred Stock) of a share of a particular series
of Series Preferred Stock as described below. The shares of any series of Series
Preferred Stock represented by Depositary Shares will be deposited under a
Deposit Agreement (the "Deposit Agreement") between J.P. Morgan and a bank or
trust company selected by J.P. Morgan having its principal office in the United
States and having a combined capital and surplus of at least $50,000,000 (the
"Depositary"). Subject to the terms of the Deposit Agreement, each owner of a
Depositary Share will be entitled, in proportion to the applicable fraction of a
share of Series Preferred Stock represented by such Depositary Share, to all the
rights and preferences of the Series Preferred Stock represented thereby
(including dividend, voting, redemption and liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued pursuant
to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts will be
distributed to those persons purchasing the fractional shares of the particular
series of Series Preferred Stock in accordance with the terms of the offering
described in the related Prospectus Supplement. Copies of the forms of the
Deposit Agreement and Depositary Receipt are filed as exhibits to the
Registration Statement, and the following summary is qualified in its entirety
by reference to such exhibits.
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary may, upon the written order of J.P. Morgan, issue temporary
Depositary Receipts substantially identical to (and entitling the holders
thereof to all the rights pertaining to) the definitive Depositary Receipts but
not in definitive form. Definitive Depositary Receipts will be prepared
thereafter without unreasonable delay, and temporary Depositary Receipts will be
exchangeable for definitive Depositary Receipts at J.P. Morgan's expense.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash distributions
received in respect of the particular series of Series Preferred Stock to the
record holders of Depositary Shares relating to such Series Preferred Stock in
proportion to the number of such Depositary Shares owned by such holders.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
J.P. Morgan, sell such property and distribute the net proceeds from such sale
to such holders.
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WITHDRAWAL OF STOCK
Upon surrender of Depositary Receipts at the corporate trust office of the
Depositary (unless the related Depositary Shares have previously been called for
redemption), the holder of the Depositary Shares evidenced thereby is entitled
to delivery, at such office to or upon his order, of the number of whole shares
of the related series of Series Preferred Stock and any money or other property
represented by such Depositary Shares. Holders of Depositary Shares will be
entitled to receive whole shares of the related series of Series Preferred Stock
on the basis set forth in the related Prospectus Supplement for such series of
Series Preferred Stock, but holders of such whole shares of Series Preferred
Stock will not thereafter be entitled to receive Depositary Shares therefor. If
the Depositary Receipts delivered by the holder evidence a number of Depositary
Shares in excess of the number of Depositary Shares representing the number of
whole shares of the related series of Series Preferred Stock to be withdrawn,
the Depositary will deliver to such holder at the same time a new Depositary
Receipt evidencing such excess number of Depositary Shares.
REDEMPTION OF DEPOSITARY SHARES
If a series of Series Preferred Stock represented by Depositary Shares is
subject to redemption, the Depositary Shares will be redeemed from the proceeds
received by the Depositary resulting from the redemption, in whole or in part,
of such series of Series Preferred Stock held by the Depositary. The redemption
price per Depositary Share will be equal to the applicable fraction of the
redemption price per share payable with respect to such series of the Series
Preferred Stock. Whenever J.P. Morgan redeems shares of Series Preferred Stock
held by the Depositary, the Depositary will redeem as of the same redemption
date the number of Depositary Shares representing shares of the related series
of Series Preferred Stock so redeemed. If less than all the Depositary Shares
are to be redeemed, the Depositary Shares to be redeemed will be selected by lot
or pro rata as may be determined by the Depositary.
VOTING THE SERIES PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the Series
Preferred Stock are entitled to vote, the Depositary will mail the information
contained in such notice of meeting to the record holders of the Depositary
Shares relating to such Series Preferred Stock. Each record holder of such
Depositary Shares on the record date (which will be the same date as the record
date for the Series Preferred Stock) will be entitled to instruct the Depositary
as to the exercise of the voting rights pertaining to the amount of the Series
Preferred Stock represented by such holder's Depositary Shares. The Depositary
will endeavor, insofar as practicable, to vote the amount of the Series
Preferred Stock represented by such Depositary Shares in accordance with such
instructions, and J.P. Morgan will agree to take all action which may be deemed
necessary by the Depositary in order to enable the Depositary to do so. The
Depositary will abstain from voting shares of the Series Preferred Stock to the
extent it does not receive specific instructions from the holders of Depositary
Shares representing such Series Preferred Stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between J.P. Morgan and the Depositary. However, any amendment which materially
and adversely alters the rights of the holders of Depositary Shares will not be
effective unless such amendment has been approved by the holders of at least a
majority of the Depositary Shares then outstanding. The Deposit Agreement may be
terminated by J.P. Morgan or the Depositary only if (i) all outstanding
Depositary Shares have been redeemed or (ii) there has been a final distribution
in respect of the related series of Series Preferred Stock in connection with
any liquidation, dissolution or winding up of J.P. Morgan and such distribution
has been distributed to the holders of Depositary Receipts.
CHARGES OF DEPOSITARY
J.P. Morgan will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. J.P. Morgan
will pay charges of the Depositary in connection with the initial deposit of the
related series of Series Preferred Stock and any redemption of such Series
Preferred Stock. Holders of Depositary
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Receipts will pay transfer and other taxes and governmental charges and such
other charges as are expressly provided in the Deposit Agreement to be for their
accounts.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to J.P. Morgan notice of its
election to do so, and J.P. Morgan may at any time remove the Depositary, any
such resignation or removal to take effect upon the appointment of a successor
Depositary and its acceptance of such appointment. Such successor depositary
must be appointed within 60 days after delivery of the notice of resignation or
removal and must be a bank or trust company having its principal office in the
United States and having a combined capital and surplus of at least $50,000,000.
MISCELLANEOUS
The Depositary will forward all reports and communications from J.P. Morgan
which are delivered to the Depositary and which J.P. Morgan is required to
furnish to the holders of the related series of Series Preferred Stock.
Neither the Depositary nor J.P. Morgan will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of J.P. Morgan and the
Depositary under the Deposit Agreement will be limited to performance in good
faith of their duties thereunder and they will not be obligated to prosecute or
defend any legal proceeding in respect of any Depositary Shares or Series
Preferred Stock unless satisfactory indemnity is furnished. They may rely on
written advice of counsel or accountants, or information provided by persons
presenting Series Preferred Stock for deposit, holders of Depositary Receipts or
other persons believed to be competent and on documents believed to be genuine.
DESCRIPTION OF PREFERRED STOCK WARRANTS
J.P. Morgan may issue Preferred Stock Warrants for the purchase of a particular
series of Series Preferred Stock or Depositary Shares. The Preferred Stock
Warrants are to be issued under warrant agreements (each a "Preferred Stock
Warrant Agreement") to be entered into between J.P. Morgan and Morgan Guaranty,
as warrant agent (the "Preferred Stock Warrant Agent"), all as set forth in the
Prospectus Supplement relating to the particular issue of Preferred Stock
Warrants (the "Offered Preferred Stock Warrants"). A copy of the Preferred Stock
Warrant Agreement, including the form of preferred stock warrant certificate
(the "Preferred Stock Warrant Certificate") representing the Preferred Stock
Warrants, substantially in the form in which it will be executed, is filed as an
exhibit to the Registration Statement. Brief summaries of the principal
provisions of the Preferred Stock Warrant Agreement and Preferred Stock Warrant
Certificates do not purport to be complete.
GENERAL
If Preferred Stock Warrants are offered, the Prospectus Supplement will describe
the terms of the Offered Preferred Stock Warrants, and the Preferred Stock
Warrant Agreement relating to the Offered Preferred Stock Warrants and the
Preferred Stock Warrant Certificates representing the Offered Preferred Stock
Warrants including the following:
(i) the designation, number of shares, stated value and terms
(including, without limitation, liquidation, dividend, conversion and
voting rights) of the series of Series Preferred Stock or Depositary Shares
purchasable upon exercise of Preferred Stock Warrants and the price at
which such number of shares of Series Preferred Stock or Depositary Shares
may be purchased upon such exercise;
(ii) the date on which the right to exercise such Preferred Stock
Warrants shall commence and the date (the "Expiration Date") on which such
right shall expire;
(iii) United States Federal income tax consequences applicable to such
Preferred Stock Warrants; and
(iv) any other terms of such Preferred Stock Warrants.
Preferred Stock Warrants for the purchase of Series Preferred Stock or
Depositary Shares will be offered and exercisable for U.S. dollars only.
Preferred Stock Warrants will be issued in registered form only. The exercise
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price for Preferred Stock Warrants will be subject to adjustment in accordance
with the applicable Prospectus Supplement.
EXERCISE OF PREFERRED STOCK WARRANTS
Each Preferred Stock Warrant will entitle the holder to purchase for cash such
number of shares (as applicable) of Series Preferred Stock or Depositary Shares,
at such exercise price as shall in each case be set forth in, or calculable
from, the Prospectus Supplement relating to the Offered Preferred Stock
Warrants, which exercise price may be subject to adjustment upon the occurrence
of certain events as set forth in such Prospectus Supplement. Offered Preferred
Stock Warrants may be exercised at any time up to the close of business on the
Expiration Date set forth in the Prospectus Supplement relating to the Offered
Preferred Stock Warrants. After the close of business on the Expiration Date (or
such later date to which such Expiration Date may be extended by J.P. Morgan),
unexercised Preferred Stock Warrants will become void. The place or places
where, and the manner in which, Preferred Stock Warrants may be exercised shall
be specified in the Prospectus Supplement relating to such Preferred Stock
Warrants.
Prior to the exercise of any Preferred Stock Warrants to purchase Series
Preferred Stock or Depositary Shares, holders of such Preferred Stock Warrants
will not have any rights of holders of the Series Preferred Stock or Depositary
Shares purchasable upon such exercise, including the right to receive payments
of dividends, if any, on the Series Preferred Stock or Depositary Shares
purchasable upon such exercise or to exercise any applicable right to vote.
DESCRIPTION OF UNIVERSAL WARRANTS
The following description of the terms of the Universal Warrants sets forth
certain general terms and provisions of the Universal Warrants to which any
Prospectus Supplement may relate. The particular terms of the Universal Warrants
offered by any Prospectus Supplement and the extent, if any, to which such
general provisions do not apply to the Universal Warrants so offered will be
described in the Prospectus Supplement relating to such Universal Warrants.
Each issue of Universal Warrants will be issued under a warrant agreement (each
a "Universal Warrant Agreement") to be entered into between J.P. Morgan and
Morgan Guaranty, as warrant agent (the "Universal Warrant Agent"), all as
described in the Prospectus Supplement relating to such Universal Warrants. A
copy of the form of Universal Warrant Agreement including the form of Universal
warrant certificate (the "Universal Warrant Certificate") representing the
Universal Warrants, substantially in the form in which it will be executed, will
be filed as an exhibit to the Registration Statement. Brief summaries of the
principal provisions of the Universal Warrants and the Universal Warrant
Agreement do not purport to be complete.
GENERAL
J.P. Morgan may issue Universal Warrants (i) to purchase or sell securities of
any entity unaffiliated with J.P. Morgan or securities based on the performance
of such entity, but not including the performance of a particular subsidiary or
subsidiaries of such entity, a basket of securities, an index or indices of
securities, a basket of indices, or any combination of the above, (ii) to
purchase or sell currencies or currency units or composite currencies, (iii) to
purchase or sell commodities or (iv) entitling the holders thereof to receive an
amount in cash determined by references to increases or decreases in the yield
or closing price of one or more debt instruments, in the interest rate, interest
swap rate or other rate; or any combination of the above.
J.P. Morgan may satisfy its obligations, if any, with respect to any Universal
Warrants by delivering the underlying securities, currencies or commodities (if
applicable) or the cash value of the Universal Warrant, as set forth in the
applicable prospectus supplement.
Prospective purchasers of Universal Warrants should be aware of special United
States Federal income tax considerations applicable to instruments such as the
Universal Warrants. The Prospectus Supplement relating to each issue of
Universal Warrants will describe such tax considerations.
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Reference is made to the Prospectus Supplement for the following terms of and
information relating to any Universal Warrants: (i) whether such Universal
Warrants are put Warrants or call Warrants; (ii) the designated securities,
currencies or composite currencies, index or indices of securities or the
formula for determining the cash settlement value of such; (iii) the price at
which and the currency or composite currency with which such Universal Warrants
may be exercised; (iv) whether such exercise price may be paid in cash, by the
exchange of any other Security offered with such Universal Warrants or both and
the method of such exercise; (v) whether the exercise of such Universal Warrants
is to be settled in cash or by delivery of the underlying securities, currencies
or commodities or both; (vi) the date on which the right to exercise the
Universal Warrants shall commence and the date (the "Universal Warrant
Expiration Date") on which such right shall expire or, if the Universal Warrants
are not continuously exercisable throughout such period, the specific date or
dates on which they will be exercisable (each, a "Universal Warrant Exercise
Date," which term shall also mean, with respect to Universal Warrants
continuously exercisable for a period of time, every date during such period);
(vii) the national securities exchange on which such Universal Warrants will be
listed, if any; (viii) whether such Universal Warrants will, from the
perspective of holders, be represented by certificates or issued in book-entry
form; (ix) the place or places at which payment of the cash settlement value of
such Universal Warrants is to be made by J.P. Morgan, if applicable; (x) the
circumstances which will cause the Universal Warrants to be deemed to be
automatically exercised, and any other terms of such Universal Warrants.
BOOK-ENTRY PROCEDURE AND SETTLEMENT
Except as may otherwise be provided in the applicable Prospectus Supplement, the
Universal Warrants will be issued in the form of a single global Universal
Warrant Certificate, registered in the name of a depositary or its nominee.
Holders will not be entitled to receive definitive certificates representing
Universal Warrants. A holder's ownership of a Universal Warrant will be recorded
on or through the records of the brokerage firm or other entity that maintains
such holder's account. In turn, the total number of Universal Warrants held by
an individual brokerage firm for its clients will be maintained on the records
of the depositary in the name of such brokerage firm or its agent. Transfer of
ownership of any Universal Warrant will be affected only through the selling
holder's brokerage firm.
EXERCISE OF UNIVERSAL WARRANTS
Unless otherwise specified in the applicable Prospectus Supplement, each
Universal Warrant will entitle the holder to the cash settlement value of such
Universal Warrant on the applicable Universal Warrant Exercise Date, in each
case as such terms will be defined in the applicable Prospectus Supplement.
LISTING
Each issue of Universal Warrants may be listed on a national securities
exchange, subject only to official notice of issuance and exchange approval as a
condition of sale of any such Universal Warrants. If such listing is sought,
there can be no assurance that such approval will be granted. In the event that
the Universal Warrants are delisted from, or permanently suspended from trading
on, such exchange, the Universal Warrant Expiration Date for such Universal
Warrants will be the date such delisting or trading suspension becomes effective
and Universal Warrants not previously exercised will be deemed automatically
exercised on such Universal Warrant Expiration Date. The applicable Universal
Warrant agreement will contain a covenant of J.P. Morgan not to seek delisting
of the Universal Warrants, or suspension of their trading, on such exchange
unless J.P. Morgan has, at the same time, arranged for listing on another
national securities exchange.
RISK FACTORS RELATING TO UNIVERSAL WARRANTS
Universal Warrants involve a high degree of risk, including the risk of expiring
worthless. Purchasers should be prepared to sustain a loss of some or all of the
purchase price of their Universal Warrants. Prospective purchasers of the
Universal Warrants should be experienced with respect to options and option
transactions and should reach an investment decision only after careful
consideration with their advisers of the suitability of the Universal Warrants
in light of their particular financial circumstances, the information set forth
under "Description of Universal Warrants" herein and the risk factors and
information regarding the Universal Warrants set forth in the Prospectus
Supplement relating to such Universal Warrants.
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DESCRIPTION OF CAPITAL STOCK
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, 1997, there were 176,317,729 shares of Common Stock
outstanding and 2,444,300 shares of Series A Adjustable Rate Cumulative
Preferred Stock, 50,000 shares each of Series B, C, D, E and F Variable
Cumulative Preferred Stock, and 400,000 shares of Series H Fixed Cumulative
Preferred Stock outstanding.
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, there are legal restrictions that limit the
amount of dividends that Morgan Guaranty Trust Company of New York ("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 if dividends declared exceed the net profits for that
year as defined, 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, 1997, the
cumulative retained net profits for the years 1997 and 1996 available for
distribution as dividends by Morgan Guaranty in 1998 without approval of the
Federal Reserve Board amounted to approximately $1,679 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.
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.
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, the
Corporation issued 2,500,000 shares of the 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
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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 are set at a rate per annum that is determined either by an
auction conducted on each such series of Variable Cumulative Preferred Stock on
the business day preceding the commencement of a subsequent dividend period or
by a remarketing. The rate for any dividend period is subject to a maximum rate
based upon the "AA" Composite Commercial Paper Rate and the credit ratings of
the Variable Cumulative Preferred Stock in effect on a particular auction date.
SERIES H PREFERRED STOCK
Fixed Cumulative Preferred Stock, Series H. In February 1996, as another series
of preferred stock, J.P. Morgan issued $200 million, or 400,000 shares, of
6 5/8% Cumulative Preferred Stock, Series H (the "Series H Preferred Stock").
Shares of the Series H Preferred Stock have a stated value of $500 per share.
The shares of this Series H Preferred Stock are not redeemable prior to March
31, 2006. On or after March 31, 2006, J.P. Morgan, at its option, with prior
approval of the appropriate bank regulators, if so required, may redeem the
Series H Preferred stock, as a whole or in part, at any time or from time to
time out of funds legally available therefor, at a redemption price of $500 per
share plus an amount equal to accrued and unpaid dividends thereon to the date
fixed for redemption.
Dividends on this Series H Preferred Stock shall be declared by the Board of
Directors of J.P. Morgan at a rate of 6 5/8% per annum on the stated value
thereof. Such dividends shall be cumulative and payable generally on March 31,
June 30, September 30 and December 31 of each year.
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PLAN OF DISTRIBUTION
J.P. Morgan may sell the Securities being offered hereby (i) through agents,
(ii) through underwriters, (iii) through dealers and (iv) directly to
purchasers. J.P. Morgan may sell the Series Preferred Stock, including any
associated Depositary Shares, the Preferred Stock Warrants or the Universal
Warrants being offered hereby through underwriters. Any such persons may be
customers of, engage in transactions with, or perform services for, J.P. Morgan
in the ordinary course of business.
Securities may be offered and sold through agents designated by J.P. Morgan from
time to time. Any such agent involved in the offer or sale of the Securities in
respect of which this Prospectus is delivered will be named, and any commissions
payable by J.P. Morgan to such agent will be set forth, in the Prospectus
Supplement. Unless otherwise indicated in the Prospectus Supplement, any such
agent will be acting on a best efforts basis for the period of its appointment
(ordinarily five business days or less). Any such agent may be deemed to be an
underwriter, as that term is defined in the Securities Act of 1933, as amended
(the "1933 Act") of the Securities so offered and sold. Agents may be entitled
under agreements which may be entered into with J.P. Morgan to indemnification
by J.P. Morgan against certain liabilities, including liabilities under the 1933
Act and the 1934 Act.
If an underwriter or underwriters are utilized in the sale of the Offered
Securities, J.P. Morgan will execute an underwriting agreement with such
underwriter or underwriters at the time an agreement for such sale is reached,
and the names of the specific managing underwriter or underwriters, as well as
any other underwriters, and the terms of the transaction, including compensation
of the underwriters and dealers, if any, will be set forth in the Prospectus
Supplement which will be used by the underwriters to make resales of the Offered
Securities in respect of which this Prospectus is delivered to the public.
Underwriters will acquire Offered Securities for their own account and may
resell such Offered Securities from time to time in one or more transactions,
including negotiated transactions, at fixed public offering prices or at varying
prices determined at the time of sale. Offered Securities may be offered to the
public either through underwriting syndicates represented by managing
underwriters, or directly by the managing underwriters. The underwriters may be
entitled, under the relevant underwriting agreement, to indemnification by J.P.
Morgan against certain liabilities, including liabilities under the 1933 Act.
Only underwriters named in the Prospectus Supplement are deemed to be
underwriters in connection with the Offered Securities offered thereby. If any
underwriter or underwriters are utilized in the sale of the Offered Securities,
the underwriting agreement provides that the obligations of the underwriters are
subject to certain conditions precedent and that the underwriters with respect
to a sale of Offered Securities will be obligated to purchase all such Offered
Securities if any are purchased.
If a dealer is utilized in the sale of the Securities in respect of which this
Prospectus is delivered, J.P. Morgan will sell such Securities to the dealer, as
principal. The dealer may then resell such Securities to the public at varying
prices to be determined by such dealer at the time of resale. Any such dealer
may be deemed to be an underwriter, as such term is defined in the 1933 Act, of
the Securities so offered and sold. Dealers may be entitled, under agreements
which may be entered into with J.P. Morgan, to indemnification by J.P. Morgan
against certain liabilities, including liabilities under the 1933 Act. The name
of the dealer and the terms of the transaction will be set forth in the
Prospectus Supplement relating thereto.
Offers to purchase Securities may be solicited directly by J.P. Morgan and sales
thereof may be made by J.P. Morgan directly to institutional investors or
others, who may be deemed to be underwriters within the meaning of the 1933 Act,
with respect to any sale thereof. The terms of any such sales will be described
in the Prospectus Supplement relating thereto.
If so indicated in the Prospectus Supplement, J.P. Morgan will authorize agents
and underwriters to solicit offers by certain institutions to purchase Offered
Securities from J.P. Morgan at the public offering price set forth in the
Prospectus Supplement pursuant to Delayed Delivery Contracts ("Contracts")
providing for payment and delivery on the date stated in the Prospectus
Supplement. Each Contract will be for an amount not less than, and, unless J.P.
Morgan otherwise agrees, the aggregate principal amount of Securities sold
pursuant to Contracts shall be not less nor more than, the respective amounts
stated in the Prospectus Supplement. Institutions with whom Contracts, when
authorized, may be made include commercial and savings banks, insurance
companies, pension funds,
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investment companies, educational and charitable institutions and other
institutions but shall in all cases be subject to the approval of J.P. Morgan.
Contracts will not be subject to any conditions except the condition that any
related sale of Offered Securities to underwriters shall have occurred and the
purchase by an institution of the Offered Securities covered by its Contract
shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject. A
commission indicated in the Prospectus Supplement will be paid to underwriters
and agents soliciting purchases of Offered Securities pursuant to Contracts
accepted by J.P. Morgan.
The place and time of delivery of the Offered Securities in respect of which
this Prospectus is delivered will be set forth in the accompanying Prospectus
Supplement.
This Prospectus and related Prospectus Supplement may be used by direct or
indirect wholly-owned subsidiaries of J.P. Morgan in connection with offers and
sales related to secondary market transactions in the Offered Securities. Such
subsidiaries may act as principal or agent in such transactions. Such sales will
be made at prices related to prevailing market prices at the time of a sale.
The offer and sale of the Offered Securities by an affiliate of J.P. Morgan will
comply with the requirements of Rule 2720 of the National Association of
Securities Dealers, Inc. (the "NASD") Conduct Rules regarding underwriting of
securities of an affiliate and will comply with any restrictions imposed on the
Underwriter by the Board of Governors of the Federal Reserve System.
Accordingly, an affiliate of J.P. Morgan that is a member of the NASD may
participate in a public offering and sale of J.P. Morgan Debt Securities, Series
Preferred Stock or Depositary Shares if the offering is of a class of securities
rated investment grade by a nationally recognized statistical rating
organization. In addition, an affiliate of J.P. Morgan that is a member of the
NASD may participate in any public offering and sale of the Offered Securities,
including without limitation Debt Warrants, Preferred Stock Warrants and
Universal Warrants, if the price at which an equity issue is distributed to the
public is no higher or the yield at which a debt issue is distributed to the
public is no lower than that recommended by a "qualified independent
underwriter" (determined to be so qualified by the NASD prior to commencement of
such offering), in each case in compliance with the provisions of the NASD.
Each NASD member participating in offers and sales of the Offered Securities
will not execute a transaction in the Offered Securities in a discretionary
account without the prior written specific approval of the member's customer.
Certain of the underwriters or agents and their associates may be customers of,
engage in transactions with, and perform services for, J.P. Morgan in the
ordinary course of business.
EXPERTS
The audited financial statements contained in J.P. Morgan's Annual Report on
Form 10-K for the year ended December 31, 1997, (included in J.P. Morgan's
Annual Report to Stockholders) are incorporated by reference in this Prospectus
in reliance on the report of Price Waterhouse LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
LEGAL OPINIONS
The validity of the offered Securities offered hereby will be passed upon by
James F.X. Sullivan, Vice President and Assistant General Counsel of J.P.
Morgan, and by Cravath, Swaine & Moore, New York, New York, counsel for any
underwriters, selling agents and certain other purchasers.
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