For the fiscal year ended
|
Commission file | |
December 31, 2005
|
number 1-5805 |
Delaware
|
13-2624428 | |
(State or other jurisdiction of
|
(I.R.S. employer | |
incorporation or organization)
|
identification no.) |
270 Park Avenue, New York, NY
|
10017 | |
(Address of principal executive offices)
|
(Zip code) |
Common stock
|
Indexed Linked Notes on the S&P 500® Index due November 26, 2007 | |
Depositary shares representing a one-tenth interest in 65/8%
|
JPMorgan Market Participation Notes on the S&P 500® Index due | |
cumulative preferred stock (stated value$500)
|
March 12, 2008 | |
61/8% subordinated notes due 2008
|
Capped Quarterly Observation Notes Linked to S&P 500® Index due | |
6.75% subordinated notes due 2008
|
September 22, 2008 | |
6.50% subordinated notes due 2009
|
Capped Quarterly Observation Notes Linked to S&P 500® Index due | |
Guarantee of 7.50% Capital Securities, Series I, of J.P. Morgan Chase
|
October 30, 2008 | |
Capital IX
|
Capped Quarterly Observation Notes Linked to S&P 500® Index due | |
Guarantee of 7.00% Capital Securities, Series J, of J.P. Morgan
|
January 21, 2009 | |
Chase Capital X
|
JPMorgan Market Participation Notes on the S&P 500® Index due | |
Guarantee of 57/8% Capital Securities, Series K, of J.P. Morgan Chase
|
March 31, 2009 | |
Capital XI
|
Capped Quarterly Observation Notes Linked to S&P 500® Index due | |
Guarantee of 6.25% Capital Securities, Series L, of J.P. Morgan
|
July 7, 2009 | |
Chase Capital XII
|
Capped Quarterly Observation Notes Linked to S&P 500® Index due | |
Guarantee of 6.20% Capital Securities, Series N, of JPMorgan
|
September 21, 2009 | |
Chase Capital XIV
|
Consumer Price Indexed Securities due January 15, 2010 | |
Guarantee of 6.35% Capital Securities, Series P, JPMorgan Chase Capital XVI
|
Principal Protected Notes Linked to S&P 500® Index due | |
Guarantee of 7.20% Preferred Securities of BANK ONE Capital VI
|
September 30, 2010 |
Part I | Page | |||||||
Item 1 | Business |
1 | ||||||
Overview |
1 | |||||||
Business segments |
1 | |||||||
Competition |
1 | |||||||
Supervision and regulation |
1 | |||||||
Non-U.S. operations |
4 | |||||||
Distribution of assets, liabilities and stockholders equity; interest rates and interest differentials |
136140 | |||||||
Return on equity and assets | 22, 133, 136137 | |||||||
Securities portfolio |
141 | |||||||
Loan portfolio | 6472, 106107, 142144 | |||||||
Summary of loan and lending-related commitments loss experience | 7374, 107108, 145146 | |||||||
Deposits |
146 | |||||||
Short-term and other borrowed funds |
147 | |||||||
Item 1A | Risk factors |
4 | ||||||
Item 1B | Unresolved SEC Staff comments |
6 | ||||||
Item 2 | Properties |
7 | ||||||
Item 3 | Legal proceedings |
7 | ||||||
Item 4 | Submission of matters to a vote of security holders |
9 | ||||||
Executive officers of the registrant |
9 | |||||||
Part II | ||||||||
Item 5 | Market for Registrants common equity, related stockholder matters and issuer purchases of equity securities |
11 | ||||||
Item 6 | Selected financial data |
11 | ||||||
Item 7 | Managements discussion and analysis of financial condition and results of operations |
11 | ||||||
Item 7A | Quantitative and qualitative disclosures about market risk |
11 | ||||||
Item 8 | Financial statements and supplementary data |
11 | ||||||
Item 9 | Changes in and disagreements with accountants on accounting and financial disclosure |
11 | ||||||
Item 9A | Controls and procedures |
12 | ||||||
Item 9B | Other information |
12 | ||||||
Part III | ||||||||
Item 10 | Directors and executive officers of the Registrant |
12 | ||||||
Item 11 | Executive compensation |
12 | ||||||
Item 12 | Security ownership of certain beneficial owners and management and related stockholder matters | 12 | ||||||
Item 13 | Certain relationships and related transactions |
12 | ||||||
Item 14 | Principal accounting fees and services |
12 | ||||||
Part IV | ||||||||
Item 15 | Exhibits, financial statement schedules |
12 |
1
2
3
4
5
6
7
8
Name |
Age (at December 31, 2005) |
Positions and offices held with JPMorgan Chase |
||||
William B. Harrison, Jr.
|
62 | Chairman of the Board since December 31, 2005, prior to which he was Chairman and Chief Executive Officer from November 2001. He was President and Chief Executive Officer from December 2000 until November 2001 and Chairman and Chief Executive Officer from January through December 2000. | ||||
James Dimon
|
49 | President and Chief Executive Officer since December 31, 2005, prior to which he was President and Chief Operating Officer. Prior to the Merger, he had been Chairman and Chief Executive Officer of Bank One Corporation since March 2000. Before joining Bank One Corporation, he had been a private investor from November 1998 until March 2000, prior to which he held various senior executive positions at Citigroup Inc., its subsidiary, Salomon Smith Barney, and its predecessor company, Travelers Group, Inc. | ||||
Austin A. Adams
|
62 | Chief Information Officer. Prior to the Merger, he had been Chief Information Officer of Bank One Corporation since March 2001. Before joining Bank One Corporation, he had been Chief Information Officer at First Union Corporation (now known as Wachovia Corp.). | ||||
Frank Bisignano
|
46 | Chief Administrative Officer since December 2005. Prior to joining JPMorgan Chase, he had been Chief Executive Officer of Citigroup Inc.s Global Transaction Services from 2002 until December 2005 and Chief Administrative Officer of Citigroup Inc.s Global Corporate and Investment Bank from 2000 until 2002. | ||||
Steven D. Black
|
53 | Co-Chief Executive Officer of the Investment Bank since March 2004, prior to which he had been Deputy Head of the Investment Bank since January 2001 and Head of Institutional Equities business since 2000. Prior to joining JPMorgan Chase in 2000, he had been Vice Chairman of Citigroup Inc. subsidiary, Salomon Smith Barney. | ||||
John F. Bradley
|
45 | Director of Human Resources since December 2005. He had been Head of Human Resources for Europe and Asia regions from April 2003 until December 2005, prior to which he was Human Resources executive for Technology and Operations since 2002 and was responsible for human resources integration efforts in 2001. He had been Co-Head of Global Human Resources at J.P. Morgan & Co. Incorporated. | ||||
Michael J. Cavanagh
|
39 | Chief Financial Officer since September 2004, prior to which he had been Head of Middle Market Banking. Prior to the Merger, he had been Chief Administrative Officer of Commercial Banking from February 2003, Chief Operating Officer for Middle Market Banking from August 2003, Treasurer from 2001 until 2003, and Head of Strategy and Planning from May 2000 until 2001 at Bank One Corporation. |
9
Ina R. Drew
|
49 | Chief Investment Officer since February 2005, prior to which she was Head of Global Treasury. | ||||
Joan Guggenheimer
|
53 | Co-General Counsel since July 2004. Prior to the Merger, she had been Chief Legal Officer and Corporate Secretary at Bank One Corporation since May 2003. She had served in various positions with Citigroup Inc. and its predecessor entities from 1985 until 2003, and immediately prior to joining Bank One Corporation was General Counsel of the Global Corporate and Investment Bank and also served as Co-General Counsel of Citigroup Inc. | ||||
Samuel Todd Maclin
|
49 | Head of Commercial Banking since July 2004, prior to which he had been Chairman and CEO of the Texas Region and Head of Middle Market Banking. | ||||
Jay Mandelbaum
|
43 | Head of Strategy and Business Development. Prior to the Merger, he had been Head of Strategy and Business Development since September 2002 at Bank One Corporation. Prior to joining Bank One Corporation, he had been Vice Chairman and Chief Executive Officer of the Private Client Group of Citigroup Inc. subsidiary Salomon Smith Barney from September 2000 until August 2002, prior to which he had been Senior Executive Vice President of Private Client Sales and Marketing at Salomon Smith Barney. | ||||
William H. McDavid
|
59 | Co-General Counsel since July 2004. Prior to the Merger, he had been General Counsel. | ||||
Heidi Miller
|
52 | Chief Executive Officer of Treasury & Securities Services. Prior to the Merger, she had been Chief Financial Officer at Bank One Corporation since March 2002. Prior to joining Bank One Corporation, she had been Vice Chairman of Marsh, Inc. from January 2001 until March 2002, prior to which she had held several executive positions at Priceline.com and at Citigroup Inc., including Chief Financial Officer. | ||||
Charles W. Scharf
|
40 | Head of Retail Financial Services. Prior to the Merger, he had been Head of Retail Banking from May 2002, prior to which he was Chief Financial Officer from June 2000 at Bank One Corporation. Prior to joining Bank One Corporation, he had been Chief Financial Officer at Citigroup Global Corporate and Investment Bank. | ||||
Richard J. Srednicki
|
58 | Chief Executive Officer of Card Services from July 2004, prior to which he was Executive Vice President of Chase Cardmember Services. | ||||
James E. Staley
|
49 | Global Head of Asset & Wealth Management since 2001, prior to which he had been Head of the Private Bank at J.P. Morgan & Co. Incorporated. | ||||
Don M. Wilson III
|
57 | Chief Risk Officer. He had been Co-Head of Credit & Rate Markets from 2001 until July 2003, prior to which he headed the Global Trading Division. | ||||
William T. Winters
|
44 | Co-Chief Executive Officer of the Investment Bank since March 2004, prior to which he had been Deputy Head of the Investment Bank and Head of Credit & Rate Markets. He had been Head of Global Markets at J.P. Morgan & Co. Incorporated. |
10
Total open | Average | Dollar value of | ||||||||||
For the year ended | market shares | price paid | remaining authorized | |||||||||
December 31, 2005 | repurchased | per share(a) | repurchase program | |||||||||
First quarter |
35,972,000 | $ 36.57 | $ 3,946 | |||||||||
Second quarter |
16,807,465 | 35.32 | 3,352 | |||||||||
Third quarter |
14,445,300 | 34.61 | 2,853 | |||||||||
October |
5,964,000 | 35.77 | 2,640 | |||||||||
November |
8,428,600 | 37.90 | 2,321 | |||||||||
December |
11,913,900 | 39.29 | 1,853 | |||||||||
Fourth quarter |
26,306,500 | 38.05 | 1,853 | |||||||||
Total for 2005 |
93,531,265 | $ 36.46 | $ 1,853 | |||||||||
(a) | Excludes commission costs. |
For the year ended | Total shares | Average price | ||||||
December 31, 2005 | repurchased | paid per share | ||||||
First quarter |
6,993,164 | $ 37.22 | ||||||
Second quarter |
680,851 | 35.10 | ||||||
Third quarter |
386,526 | 34.90 | ||||||
October |
67,885 | 33.99 | ||||||
November |
31,110 | 37.77 | ||||||
December |
19,362 | 39.09 | ||||||
Fourth quarter |
118,357 | 35.82 | ||||||
Total for 2005 |
8,178,898 | $ 36.91 | ||||||
11
Number of shares to be | Weighted-average | Number of shares remaining | ||||||||||
December 31, 2005 | issued upon exercise of | exercise price of | available for future issuance under | |||||||||
(Shares in thousands) | outstanding options/SARs | outstanding options/SARs | stock compensation plans | |||||||||
Employee stock-based incentive plans approved by shareholders |
292,248 | $ 36.64 | 260,367 | |||||||||
Employee stock-based incentive plans not approved by shareholders |
150,452 | 42.37 | | |||||||||
Total |
442,700 | $ 38.59 | 260,367 | (a) | ||||||||
(a) | Future shares will be issued out of the shareholder-approved 2005 Long-Term Incentive Plan (2005 Plan). The 2005 Plan replaces three existing stock compensation plans the 1996 Long-Term Incentive Plan, as amended, and two nonshareholder approved plans all of which expired in May 2005. |
Exhibits, financial statement schedules | ||
1. | Financial statements | |
The Consolidated financial statements, the Notes thereto and the report thereon listed in Item 8 are set forth commencing on page 87. | ||
2. | Financial statement schedules | |
Financial statement schedules are omitted since the required information is either not applicable, not deemed material, or is shown in the respective Consolidated financial statements or in the Notes thereto. |
12
3.
|
Exhibits | |
3.1
|
Restated Certificate of Incorporation of JPMorgan Chase & Co. (incorporated by reference to Exhibit 3.1 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2004). | |
3.2
|
By-laws of JPMorgan Chase & Co., effective December 31, 2005. | |
4.1
|
Deposit Agreement, dated as of February 8, 1996, between J.P. Morgan & Co. Incorporated (succeeded through merger by JPMorgan Chase & Co.) and Morgan Guaranty Trust Company of New York (succeeded through merger by JPMorgan Chase Bank), as Depository (incorporated by reference to Exhibit 4.7 to the Registration Statement on Form 8A (File No. 1-5805) of The Chase Manhattan Corporation (now known as JPMorgan Chase & Co.) filed December 20, 2000). | |
4.2
|
Indenture, dated as of December 1, 1989, between Chemical Banking Corporation (now known as JPMorgan Chase & Co.) and The Chase Manhattan Bank (National Association) (succeeded by Deutsche Bank Trust Company Americas), as Trustee (incorporated by reference to Exhibit 4.2 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2004). | |
4.3(a)
|
Indenture, dated as of April 1, 1987, as amended and restated as of December 15, 1992, between Chemical Banking Corporation (now known as JPMorgan Chase & Co.) and Morgan Guaranty Trust Company of New York (succeeded by U.S. Bank Trust National Association), as Trustee. | |
4.3(b)
|
Second Supplemental Indenture, dated as of October 8, 1996, between The Chase Manhattan Corporation (now known as JPMorgan Chase & Co.) and First Trust of New York, National Association (succeeded by U.S. Bank Trust National Association), as Trustee, to the Indenture, dated as of April 1, 1987, as amended and restated as of December 15, 1992. | |
4.3(c)
|
Third Supplemental Indenture, dated as of December 29, 2000, between The Chase Manhattan Corporation (now known as JPMorgan Chase & Co.) and U.S. Bank Trust National Association, as Trustee, to the Indenture, dated as of April 1, 1987, as amended and restated as of December 15, 1992. | |
4.4(a)
|
Amended and Restated Indenture, dated as of September 1, 1993, between The Chase Manhattan Corporation (succeeded through merger by JPMorgan Chase & Co.) and Chemical Bank (succeeded by U.S. Bank Trust National Association), as Trustee. | |
4.4(b)
|
First Supplemental Indenture, dated as of March 29, 1996, among Chemical Banking Corporation (now known as JPMorgan Chase & Co.), The Chase Manhattan Corporation, (succeeded through merger by JPMorgan Chase & Co.), Chemical Bank, as Resigning Trustee, and First Trust of New York, National Association (succeeded by U.S. Bank Trust National Association), as Successor Trustee, to the Amended and Restated Indenture, dated as of September 1, 1993. | |
4.4(c)
|
Second Supplemental Indenture, dated as of October 8, 1996, between The Chase Manhattan Corporation (now known as JPMorgan Chase & Co.) and First Trust of New York, National Association (succeeded by U.S. Bank Trust National Association), as Trustee, to the Amended and Restated Indenture, dated as of September 1, 1993. | |
4.4(d)
|
Third Supplemental Indenture, dated as of December 29, 2000, between The Chase Manhattan Corporation (now known as JPMorgan Chase & Co.) and U.S. Bank Trust National Association, as Trustee, to the Amended and Restated Indenture, dated as of September 1, 1993. | |
4.5(a)
|
Indenture, dated as of August 15, 1982, between J.P. Morgan & Co. Incorporated (succeeded through merger by JPMorgan Chase & Co.) and Manufacturers Hanover Trust Company (succeeded by U.S. Bank Trust National Association), as Trustee. | |
4.5(b)
|
First Supplemental Indenture, dated as of May 5, 1986, between J.P. Morgan & Co. Incorporated (succeeded through merger by JPMorgan Chase & Co.) and Manufacturers Hanover Trust Company (succeeded by U.S. Bank Trust National Association), as Trustee, to the Indenture, dated as of August 15, 1982. | |
4.5(c)
|
Second Supplemental Indenture, dated as of February 27, 1996, between J.P. Morgan & Co. Incorporated (succeeded through merger by JPMorgan Chase & Co.) and First Trust of New York, National Association (succeeded by U.S. Bank Trust National Association), as Trustee, to the Indenture, dated as of August 15, 1982. | |
4.5(d)
|
Third Supplemental Indenture, dated as of January 30, 1997, between J.P. Morgan & Co. Incorporated (succeeded through merger by JPMorgan Chase & Co.) and First Trust of New York, National Association (succeeded by U.S. Bank Trust National Association), as Trustee, to the Indenture, dated as of August 15, 1982. | |
4.5(e)
|
Fourth Supplemental Indenture, dated as of December 29, 2000, among J.P. Morgan & Co. Incorporated (succeeded through merger by JPMorgan Chase & Co.), The Chase Manhattan Corporation (now known as JPMorgan Chase & Co.) and U.S. Bank Trust National Association, as Trustee, to the Indenture, dated as of August 15, 1982. | |
4.6(a)
|
Indenture, dated as of March 1, 1993, between J.P. Morgan & Co. Incorporated (succeeded through merger by JPMorgan Chase & Co.) and Citibank, N.A. (succeeded by U.S. Bank Trust National Association), as Trustee. | |
4.6(b)
|
First Supplemental Indenture, dated as of December 29, 2000, among J.P. Morgan & Co. Incorporated (succeeded through merger by JPMorgan Chase & Co.), The Chase Manhattan Corporation (now known as JPMorgan Chase & Co.) and U.S. Bank Trust National Association, as Trustee, to the Indenture, dated as of March 1, 1993. | |
4.7
|
Indenture, dated as of May 25, 2001, between J.P. Morgan Chase & Co. and Bankers Trust Company (succeeded by Deutsche Bank Trust Company Americas), as Trustee (incorporated by reference to Exhibit 4(a)(1) to the amended Registration Statement on Form S-3 (File No. 333-52826) of J.P. Morgan Chase & Co. filed June 13, 2001). | |
4.8(a)
|
Junior Subordinated Indenture, dated as of December 1, 1996, between The Chase Manhattan Corporation (now known as JPMorgan Chase & Co.) and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.8(a) to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2004). | |
4.8(b)
|
Guarantee Agreement, dated as of January 24, 1997, between The Chase Manhattan Corporation (now known as JPMorgan Chase & Co.) and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.8(b) to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2004). | |
4.8(c)
|
Amended and Restated Trust Agreement, dated as of January 24, 1997, among The Chase Manhattan Corporation (now known as JPMorgan Chase & Co.), The Bank of New York, as Property Trustee, The Bank of New York (Delaware), as Delaware Trustee, and the Administrative Trustees named therein (incorporated by reference to Exhibit 4.8(c) to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2004). |
13
4.9(a)
|
Indenture, dated as of March 3, 1997, between Banc One Corporation (succeeded through merger by JPMorgan Chase & Co.) and The Chase Manhattan Bank (succeeded by Deutsche Bank Trust Company Americas), as Trustee (incorporated by reference to Exhibit 4.9(a) to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2004). | |
4.9(b)
|
First Supplemental Indenture, dated as of October 2, 1998, between Banc One Corporation (succeeded through merger by JPMorgan Chase & Co.) and The Chase Manhattan Bank (succeeded by Deutsche Bank Trust Company Americas), as Trustee, to the Indenture, dated as of March 3, 1997 (incorporated by reference to Exhibit 4.9(b) to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2004). | |
4.9(c)
|
Form of Second Supplemental Indenture, dated as of July 1, 2004, among J.P. Morgan Chase & Co., Bank One Corporation (succeeded through merger by JPMorgan Chase & Co.), JPMorgan Chase Bank, as Resigning Trustee, and Deutsche Bank Trust Company Americas, as Successor Trustee, to the Indenture, dated as of March 3, 1997 (incorporated by reference to Exhibit 4.22 to the Registration Statement on Form S-3 (File No. 333-116822) of JPMorgan Chase & Co. filed June 24, 2004). | |
4.10(a)
|
Indenture, dated as of March 3, 1997, between Banc One Corporation (succeeded through merger by JPMorgan Chase & Co.) and The Chase Manhattan Bank (succeeded by U.S. Bank Trust National Association), as Trustee (incorporated by reference to Exhibit 4.10(a) to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2004). | |
4.10(b)
|
First Supplemental Indenture, dated as of October 2, 1998, between Banc One Corporation (succeeded through merger by JPMorgan Chase & Co.) and The Chase Manhattan Bank (succeeded by U.S. Bank Trust National Association), as Trustee, to the Indenture, dated as of March 3, 1997 (incorporated by reference to Exhibit 4.10(b) to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2004). | |
4.10(c)
|
Second Supplemental Indenture, dated as of July 1, 2004, among J.P. Morgan Chase & Co., Bank One Corporation (succeeded through merger by JPMorgan Chase & Co.), JPMorgan Chase Bank, as Resigning Trustee, and U.S. Bank Trust National Association, as Successor Trustee, to the Indenture, dated as of March 3, 1997 (incorporated by reference to Exhibit 4.25 to the Registration Statement on Form S-3 (File No. 333-116822) of JPMorgan Chase & Co. filed June 24, 2004). | |
4.11(a)
|
Form of Indenture, dated as of July 1, 1995, between Banc One Corporation (succeeded through merger by JPMorgan Chase & Co.) and Citibank N.A, as Trustee (incorporated by reference to Exhibit 4.11(a) to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2004). | |
4.11(b)
|
Form of Supplemental Indenture, dated as of July 1, 2004, among J.P. Morgan Chase & Co., Bank One Corporation (succeeded through merger by JPMorgan Chase & Co.) and Citibank N.A., as Trustee, to the Indenture, dated as of July 1, 1995 (incorporated by reference to Exhibit 4.31 to the amended Registration Statement on Form S-3 (File No. 333-116822) of JPMorgan Chase & Co. filed July 1, 2004). |
4.12(a)
|
Form of Indenture, dated as of December 1, 1995, between First Chicago NBC Corporation (succeeded through merger by JPMorgan Chase & Co.) and The Chase Manhattan Bank (National Association) (succeeded by U.S. Bank Trust National Association), as Trustee (incorporated by reference to Exhibit 4.12(a) to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2004). | |
4.12(b)
|
Form of Supplemental Indenture, dated as of July 1, 2004, among J.P. Morgan Chase & Co., Bank One Corporation (succeeded through merger by JPMorgan Chase & Co.), JPMorgan Chase Bank, as Resigning Trustee, and U.S. Bank Trust National Association, as Successor Trustee, to the Indenture, dated as of December 1, 1995 (incorporated by reference to Exhibit 4.29 to the Registration Statement on Form S-3 (File No. 333-116822) of JPMorgan Chase & Co. filed June 24, 2004). | |
10.1
|
Deferred Compensation Plan for Non-Employee Directors of The Chase Manhattan Corporation (now known as JPMorgan Chase & Co.) and The Chase Manhattan Bank (now known as JPMorgan Chase Bank, N.A.), as amended and restated effective December, 1996 (incorporated by reference to Exhibit 10.1 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2004). | |
10.2
|
Post-Retirement Compensation Plan for Non-Employee Directors of The Chase Manhattan Corporation (now known as JPMorgan Chase & Co.), as amended and restated effective May 21, 1996 (incorporated by reference to Exhibit 10.2 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2004). | |
10.3
|
Deferred Compensation Program of JPMorgan Chase & Co. and Participating Companies, effective as of January 1, 1996 (incorporated by reference to Exhibit 10.3 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2004). | |
10.4
|
2005 Deferred Compensation Program of JPMorgan Chase & Co., effective December 31, 2005. | |
10.5
|
JPMorgan Chase & Co. 2005 Long-Term Incentive Plan (incorporated by reference to Appendix C of Schedule 14A of JPMorgan Chase & Co. (File No. 1-5805) filed April 4, 2005). | |
10.6
|
The Chase Manhattan Corporation 1996 Long-Term Incentive Plan. | |
10.7
|
Key Executive Performance Plan of JPMorgan Chase & Co., as restated as of January 1, 2005. | |
10.8
|
Excess Retirement Plan of The Chase Manhattan Bank and Participating Companies, restated effective January 1, 2005. | |
10.9
|
1984 J.P. Morgan & Co. Incorporated Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10.11 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2004). | |
10.10
|
1992 J.P. Morgan & Co. Incorporated and Affiliated Companies Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10.10 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2004). | |
10.11
|
1995 J.P. Morgan & Co. Incorporated Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10.12 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2004). |
14
10.12
|
1998 J.P. Morgan & Co. Incorporated and Affiliated Companies Performance Plan (incorporated by reference to Exhibit 10.13 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2004). | |
10.13
|
Executive Retirement Plan of The Chase Manhattan Corporation and Certain Subsidiaries. | |
10.14
|
Benefit Equalization Plan of The Chase Manhattan Corporation and Certain Subsidiaries. | |
10.15
|
Summary of Terms of JPMorgan Chase & Co. Severance Policy. | |
10.16
|
Employment Agreement between J.P. Morgan Chase & Co. and James Dimon dated January 14, 2004 (incorporated by reference to Exhibit 10.1 of the Registration Statement on Form S-4 of J.P. Morgan Chase & Co. (File No. 333-112967) filed February 20, 2004). | |
10.17
|
Summary of Terms of Pension of William B. Harrison, Jr. (incorporated by reference to Form 8-K Item 1.01 of JPMorgan Chase & Co. filed February 28, 2005 (File No. 1-5805)). | |
10.18
|
Bank One Corporation Director Stock Plan, as amended (incorporated by reference to Exhibit 10(B) to the Form 10-K of Bank One Corporation (File No. 1-15323) for the year ended December 31, 2003). | |
10.19
|
Summary of Bank One Corporation Director Deferred Compensation Plan. | |
10.20
|
Bank One Corporation Stock Performance Plan (incorporated by reference to Exhibit 10(A) to the Form 10-K of Bank One Corporation (File No. 1-15323) for the year ended December 31, 2002). | |
10.21
|
Bank One Corporation Deferred Compensation Plan. | |
10.22
|
Bank One Corporation Supplemental Savings and Investment Plan, as amended (incorporated by reference to Exhibit 10(E) to the Form 10-K of Bank One Corporation (File No. 1-15323) for the year ended December 31, 2003). | |
10.23
|
Bank One Corporation Supplemental Personal Pension Account Plan, as amended (incorporated by reference to Exhibit 10(F) to the Form 10-K of Bank One Corporation (File No. 1-15323) for the year ended December 31, 2003). | |
10.24
|
Bank One Corporation Key Executive Change of Control Plan, as amended (incorporated by reference to Exhibit 10(G) to the Form 10-K of Bank One Corporation (File No. 1-15323) for the year ended December 31, 2003). | |
10.25
|
Bank One Corporation Planning Group Annual Incentive Plan, as amended (incorporated by reference to Exhibit 10(H) to the Form 10-K of Bank One Corporation (File No. 1-15323) for the year ended December 31, 2003). | |
10.26
|
Bank One Corporation Investment Option Plan. | |
10.27
|
First Chicago Corporation Stock Incentive Plan (incorporated by reference to Exhibit 10.28 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2004). | |
10.28
|
NBD Bancorp, Inc. Performance Incentive Plan, as amended (incorporated by reference to Exhibit 10.29 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2004). |
10.29
|
Bank One Corporation Revised and Restated 1989 Stock Incentive Plan (incorporated by reference to Exhibit 10.30 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2004). | |
10.30
|
Bank One Corporation Revised and Restated 1995 Stock Incentive Plan (incorporated by reference to Exhibit 10.31 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2004). | |
10.31
|
Form of JPMorgan Chase & Co. Long-Term Incentive Plan Award Agreement of January 2005 stock appreciation rights. | |
10.32
|
JPMorgan Chase & Co. Long-Term Incentive Plan Award Agreement of January 2005 restricted stock units (incorporated by reference to Exhibit 10.1 to Form 8-K of JPMorgan Chase & Co. (File No. 1-5805) filed April 11, 2005). | |
10.33
|
Form of JPMorgan Chase & Co. Long-Term Incentive Plan Award Agreement of October 2005 stock appreciation rights. | |
10.34
|
Amendment and Restatement of Letter Agreement between JPMorgan Chase & Co. and Charles W. Scharf, dated December 29, 2005. | |
12.1
|
Computation of ratio of earnings to fixed charges. | |
12.2
|
Computation of ratio of earnings to fixed charges and preferred stock dividend requirements. | |
21.1
|
List of Subsidiaries of JPMorgan Chase & Co. | |
22.1
|
Annual Report on Form 11-K of the JPMorgan Chase 401(k) Savings Plan (to be filed by amendment pursuant to Rule 15d-21 under the Securities Exchange Act of 1934). | |
23.1
|
Consent of independent registered public accounting firm. | |
31.1
|
Certification. | |
31.2
|
Certification. | |
31.3
|
Certification. | |
32
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
15
16
22 | Five-year summary of consolidated financial highlights |
23 | Introduction | |
25 | Executive overview | |
27 | Consolidated results of operations | |
31 | Explanation and reconciliation of the Firms use of non-GAAP financial measures |
|
34 | Business segment results | |
55 | Balance sheet analysis | |
56 | Capital management | |
58 | Off-balance sheet arrangements and contractual cash obligations |
|
60 | Risk management | |
61 | Liquidity risk management | |
63 | Credit risk management | |
75 | Market risk management | |
79 | Operational risk management | |
80 | Reputation and fiduciary risk management | |
80 | Private equity risk management | |
81 | Critical accounting estimates used by the Firm | |
83 | Accounting and reporting developments | |
84 | Nonexchange-traded commodity derivative contracts at fair value |
85 | Managements report on internal control over financial reporting |
|
86 | Report of independent registered public accounting firm | |
87 | Consolidated financial statements | |
91 | Notes to consolidated financial statements |
133 | Selected quarterly financial data | |
134 | Glossary of terms | |
135 | Forward-looking statements |
JPMorgan Chase & Co. / 2005 Annual Report | 21 |
(unaudited) | ||||||||||||||||||||
(in millions, except per share, headcount
and ratio data) |
Heritage JPMorgan Chase only | |||||||||||||||||||
As of or for the year ended December 31, | 2005 | 2004 | (e) | 2003 | 2002 | 2001 | ||||||||||||||
Selected income statement data |
||||||||||||||||||||
Noninterest revenue |
$ | 34,702 | $ | 26,336 | $ | 20,419 | $ | 17,436 | $ | 17,943 | ||||||||||
Net interest income |
19,831 | 16,761 | 12,965 | 12,178 | 11,401 | |||||||||||||||
Total net revenue |
54,533 | 43,097 | 33,384 | 29,614 | 29,344 | |||||||||||||||
Provision for credit losses |
3,483 | 2,544 | 1,540 | 4,331 | 3,182 | |||||||||||||||
Noninterest expense before Merger costs and Litigation
reserve charge |
35,549 | 29,294 | 21,716 | 20,254 | 21,073 | |||||||||||||||
Merger and restructuring costs |
722 | 1,365 | | 1,210 | 2,523 | |||||||||||||||
Litigation reserve charge |
2,564 | 3,700 | 100 | 1,300 | | |||||||||||||||
Total noninterest expense |
38,835 | 34,359 | 21,816 | 22,764 | 23,596 | |||||||||||||||
Income before income tax expense and effect of accounting
change |
12,215 | 6,194 | 10,028 | 2,519 | 2,566 | |||||||||||||||
Income tax expense |
3,732 | 1,728 | 3,309 | 856 | 847 | |||||||||||||||
Income before effect of accounting change |
8,483 | 4,466 | 6,719 | 1,663 | 1,719 | |||||||||||||||
Cumulative effect of change in accounting principle (net
of tax) |
| | | | (25 | ) | ||||||||||||||
Net income |
$ | 8,483 | $ | 4,466 | $ | 6,719 | $ | 1,663 | $ | 1,694 | ||||||||||
Per common share |
||||||||||||||||||||
Net income per share: Basic |
$ | 2.43 | $ | 1.59 | $ | 3.32 | $ | 0.81 | $ | 0.83 | (f) | |||||||||
Diluted |
2.38 | 1.55 | 3.24 | 0.80 | 0.80 | (f) | ||||||||||||||
Cash dividends declared per share |
1.36 | 1.36 | 1.36 | 1.36 | 1.36 | |||||||||||||||
Book value per share |
30.71 | 29.61 | 22.10 | 20.66 | 20.32 | |||||||||||||||
Common shares outstanding |
||||||||||||||||||||
Average: Basic |
3,492 | 2,780 | 2,009 | 1,984 | 1,972 | |||||||||||||||
Diluted |
3,557 | 2,851 | 2,055 | 2,009 | 2,024 | |||||||||||||||
Common shares at period-end |
3,487 | 3,556 | 2,043 | 1,999 | 1,973 | |||||||||||||||
Selected ratios |
||||||||||||||||||||
Return on common equity (ROE) |
8 | % | 6 | % | 16 | % | 4 | % | 4 | % | ||||||||||
Return on assets (ROA)(a) |
0.72 | 0.46 | 0.87 | 0.23 | 0.23 | |||||||||||||||
Tier 1 capital ratio |
8.5 | 8.7 | 8.5 | 8.2 | 8.3 | |||||||||||||||
Total capital ratio |
12.0 | 12.2 | 11.8 | 12.0 | 11.9 | |||||||||||||||
Tier 1 leverage ratio |
6.3 | 6.2 | 5.6 | 5.1 | 5.2 | |||||||||||||||
Selected balance sheet data (period-end) |
||||||||||||||||||||
Total assets |
$ | 1,198,942 | $ | 1,157,248 | $ | 770,912 | $ | 758,800 | $ | 693,575 | ||||||||||
Securities |
47,600 | 94,512 | 60,244 | 84,463 | 59,760 | |||||||||||||||
Loans |
419,148 | 402,114 | 214,766 | 216,364 | 217,444 | |||||||||||||||
Deposits |
554,991 | 521,456 | 326,492 | 304,753 | 293,650 | |||||||||||||||
Long-term debt |
108,357 | 95,422 | 48,014 | 39,751 | 39,183 | |||||||||||||||
Common stockholders equity |
107,072 | 105,314 | 45,145 | 41,297 | 40,090 | |||||||||||||||
Total stockholders equity |
107,211 | 105,653 | 46,154 | 42,306 | 41,099 | |||||||||||||||
Credit quality metrics |
||||||||||||||||||||
Allowance for credit losses |
$ | 7,490 | $ | 7,812 | $ | 4,847 | $ | 5,713 | $ | 4,806 | ||||||||||
Nonperforming assets(b) |
2,590 | 3,231 | 3,161 | 4,821 | 4,037 | |||||||||||||||
Allowance for loan losses to total loans(c) |
1.84 | % | 1.94 | % | 2.33 | % | 2.80 | % | 2.25 | % | ||||||||||
Net charge-offs |
$ | 3,819 | $ | 3,099 | $ | 2,272 | $ | 3,676 | $ | 2,335 | ||||||||||
Net charge-off rate(c) |
1.00 | % | 1.08 | % | 1.19 | % | 1.90 | % | 1.13 | % | ||||||||||
Headcount |
168,847 | 160,968 | 96,367 | 97,124 | 95,812 | (g) | ||||||||||||||
Share price (d) |
||||||||||||||||||||
High |
$ | 40.56 | $ | 43.84 | $ | 38.26 | $ | 39.68 | $ | 59.19 | ||||||||||
Low |
32.92 | 34.62 | 20.13 | 15.26 | 29.04 | |||||||||||||||
Close |
39.69 | 39.01 | 36.73 | 24.00 | 36.35 | |||||||||||||||
(a) | Represents Net income divided by Total average assets. | |
(b) | Excludes wholesale purchased held-for-sale (HFS) loans purchased as part of the Investment Banks proprietary activities. | |
(c) | Excluded from the allowance coverage ratios were end-of-period loans held-for-sale; and excluded from the net charge-off rates were average loans held-for-sale. | |
(d) | JPMorgan Chases common stock is listed and traded on the New York Stock Exchange, the London Stock Exchange Limited and the Tokyo Stock Exchange. The high, low and closing prices of JPMorgan Chases common stock are from The New York Stock Exchange Composite Transaction Tape. | |
(e) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. | |
(f) | Basic and diluted earnings per share were each reduced by $0.01 in 2001 because of the impact of the adoption of SFAS 133 relating to the accounting for derivative instruments and hedging activities. | |
(g) | Represents full-time equivalent employees, as headcount data is unavailable. |
22 | JPMorgan Chase & Co. / 2005 Annual Report |
JPMorgan Chase & Co. / 2005 Annual Report | 23 |
24 | JPMorgan Chase & Co. / 2005 Annual Report |
As of or for the year ended December 31, | ||||||||||||
(in millions, except per share and ratio data) | 2005 | 2004 | (a) | Change | ||||||||
Total net revenue |
$ | 54,533 | $ | 43,097 | 27 | % | ||||||
Provision for credit losses |
3,483 | 2,544 | 37 | |||||||||
Total noninterest expense |
38,835 | 34,359 | 13 | |||||||||
Net income |
8,483 | 4,466 | 90 | |||||||||
Net income per share diluted |
2.38 | 1.55 | 54 | |||||||||
Average common equity |
105,507 | 75,641 | 39 | |||||||||
Return on common equity (ROE) |
8 | % | 6 | % | ||||||||
Loans |
$ | 419,148 | $ | 402,114 | 4 | % | ||||||
Total assets |
1,198,942 | 1,157,248 | 4 | |||||||||
Deposits |
554,991 | 521,456 | 6 | |||||||||
Tier 1 capital ratio |
8.5 | % | 8.7 | % | ||||||||
Total capital ratio |
12.0 | 12.2 | ||||||||||
(a) | Includes six months of the combined Firms results and six months of heritage JPMorgan Chase results. |
JPMorgan Chase & Co. / 2005 Annual Report | 25 |
26 | JPMorgan Chase & Co. / 2005 Annual Report |
Year ended December 31,(a) | ||||||||||||
(in millions) | 2005 | 2004 | 2003 | |||||||||
Investment banking fees |
$ | 4,088 | $ | 3,537 | $ | 2,890 | ||||||
Trading revenue |
5,860 | 3,612 | 4,427 | |||||||||
Lending & deposit related fees |
3,389 | 2,672 | 1,727 | |||||||||
Asset management, administration
and commissions |
10,390 | 8,165 | 6,039 | |||||||||
Securities/private equity gains |
473 | 1,874 | 1,479 | |||||||||
Mortgage fees and related income |
1,054 | 806 | 790 | |||||||||
Credit card income |
6,754 | 4,840 | 2,466 | |||||||||
Other income |
2,694 | 830 | 601 | |||||||||
Noninterest revenue |
34,702 | 26,336 | 20,419 | |||||||||
Net interest income |
19,831 | 16,761 | 12,965 | |||||||||
Total net revenue |
$ | 54,533 | $ | 43,097 | $ | 33,384 | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. |
JPMorgan Chase & Co. / 2005 Annual Report | 27 |
28 | JPMorgan Chase & Co. / 2005 Annual Report |
Year ended December 31,(a) | ||||||||||||
(in millions) | 2005 | 2004 | 2003 | |||||||||
Compensation expense |
$ | 18,255 | $ | 14,506 | $ | 11,387 | ||||||
Occupancy expense |
2,299 | 2,084 | 1,912 | |||||||||
Technology and communications
expense |
3,624 | 3,702 | 2,844 | |||||||||
Professional & outside services |
4,224 | 3,862 | 2,875 | |||||||||
Marketing |
1,917 | 1,335 | 710 | |||||||||
Other expense |
3,705 | 2,859 | 1,694 | |||||||||
Amortization of intangibles |
1,525 | 946 | 294 | |||||||||
Merger costs |
722 | 1,365 | | |||||||||
Litigation reserve charge |
2,564 | 3,700 | 100 | |||||||||
Total noninterest expense |
$ | 38,835 | $ | 34,359 | $ | 21,816 | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. |
JPMorgan Chase & Co. / 2005 Annual Report | 29 |
Year ended December 31,(a) | ||||||||||||
(in millions, except rate) | 2005 | 2004 | 2003 | |||||||||
Income before income tax expense |
$ | 12,215 | $ | 6,194 | $ | 10,028 | ||||||
Income tax expense |
3,732 | 1,728 | 3,309 | |||||||||
Effective tax rate |
30.6 | % | 27.9 | % | 33.0 | % | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. |
30 | JPMorgan Chase & Co. / 2005 Annual Report |
JPMorgan Chase & Co. / 2005 Annual Report | 31 |
Year ended December 31,(a) | 2005 | 2004 | ||||||||||||||||||||||||||||||||||||||
(in millions, except | Reported | Credit | Nonoperating | Tax-equivalent | Operating | Reported | Credit | Nonoperating | Tax-equivalent | Operating | ||||||||||||||||||||||||||||||
per share and ratio data) | results | card(b) | items | adjustments | basis | results | card(b) | items | adjustments | basis | ||||||||||||||||||||||||||||||
Revenue |
||||||||||||||||||||||||||||||||||||||||
Investment banking fees |
$ | 4,088 | $ | | $ | | $ | | $ | 4,088 | $ | 3,537 | $ | | $ | | $ | | $ | 3,537 | ||||||||||||||||||||
Trading revenue(c) |
6,019 | | | | 6,019 | 5,562 | | | | 5,562 | ||||||||||||||||||||||||||||||
Lending & deposit
related fees |
3,389 | | | | 3,389 | 2,672 | | | | 2,672 | ||||||||||||||||||||||||||||||
Asset management,
administration and
commissions |
10,390 | | | | 10,390 | 8,165 | | | | 8,165 | ||||||||||||||||||||||||||||||
Securities/private
equity gains |
473 | | | | 473 | 1,874 | | | | 1,874 | ||||||||||||||||||||||||||||||
Mortgage fees and
related income |
1,054 | | | | 1,054 | 806 | | | | 806 | ||||||||||||||||||||||||||||||
Credit card income |
6,754 | (2,718 | ) | | | 4,036 | 4,840 | (2,267 | ) | | | 2,573 | ||||||||||||||||||||||||||||
Other income |
2,694 | | | 571 | 3,265 | 830 | (86 | ) | 118 | (3) | 317 | 1,179 | ||||||||||||||||||||||||||||
Noninterest revenue(c) |
34,861 | (2,718 | ) | | 571 | 32,714 | 28,286 | (2,353 | ) | 118 | 317 | 26,368 | ||||||||||||||||||||||||||||
Net interest income(c) |
19,672 | 6,494 | | 269 | 26,435 | 14,811 | 5,251 | | 6 | 20,068 | ||||||||||||||||||||||||||||||
Total net revenue |
54,533 | 3,776 | | 840 | 59,149 | 43,097 | 2,898 | 118 | 323 | 46,436 | ||||||||||||||||||||||||||||||
Provision for credit losses |
3,483 | 3,776 | | | 7,259 | 2,544 | 2,898 | (858 | )(4) | | 4,584 | |||||||||||||||||||||||||||||
Noninterest expense |
||||||||||||||||||||||||||||||||||||||||
Merger costs |
722 | | (722 | )(1) | | | 1,365 | | (1,365 | )(1) | | | ||||||||||||||||||||||||||||
Litigation reserve charge |
2,564 | | (2,564 | )(2) | | | 3,700 | | (3,700 | )(2) | | | ||||||||||||||||||||||||||||
All other noninterest
expense |
35,549 | | | | 35,549 | 29,294 | | | | 29,294 | ||||||||||||||||||||||||||||||
Total noninterest
expense |
38,835 | | (3,286 | ) | | 35,549 | 34,359 | | (5,065 | ) | | 29,294 | ||||||||||||||||||||||||||||
Income before income
tax expense |
12,215 | | 3,286 | 840 | 16,341 | 6,194 | | 6,041 | 323 | 12,558 | ||||||||||||||||||||||||||||||
Income tax expense |
3,732 | | 1,248 | 840 | 5,820 | 1,728 | | 2,296 | 323 | 4,347 | ||||||||||||||||||||||||||||||
Net income |
$ | 8,483 | $ | | $ | 2,038 | $ | | $ | 10,521 | $ | 4,466 | $ | | $ | 3,745 | $ | | $ | 8,211 | ||||||||||||||||||||
Earnings per
share diluted |
$ | 2.38 | $ | | $ | 0.57 | $ | | $ | 2.95 | $ | 1.55 | $ | | $ | 1.31 | $ | | $ | 2.86 | ||||||||||||||||||||
Return on common equity |
8 | % | | % | 2 | % | | % | 10 | % | 6 | % | | % | 5 | % | | % | 11 | % | ||||||||||||||||||||
Return on equity
less goodwill |
14 | | 3 | | 17 | 9 | | 7 | | 16 | ||||||||||||||||||||||||||||||
Return on assets |
0.72 | NM | NM | NM | 0.84 | 0.46 | NM | NM | NM | 0.81 | ||||||||||||||||||||||||||||||
Overhead ratio |
71 | NM | NM | NM | 60 | 80 | NM | NM | NM | 63 | ||||||||||||||||||||||||||||||
Effective income tax rate |
31 | NM | 38 | NM | 36 | 28 | NM | 38 | NM | 35 | ||||||||||||||||||||||||||||||
LoansPeriod-end |
$ | 419,148 | $ | 70,527 | | | $ | 489,675 | $ | 402,114 | $ | 70,795 | | | $ | 472,909 | ||||||||||||||||||||||||
Total assets average |
1,185,066 | 67,180 | | | 1,252,246 | 962,556 | (a) | 51,084 | (a) | | | 1,013,640 | (a) | |||||||||||||||||||||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | The impact of credit card securitizations affects CS. See pages 4546 of this Annual Report for further information. | |
(c) | Trading-related net interest income reclassification |
Year ended December 31,(a) (in millions) | 2005 | 2004 | 2003 | |||||||||||||
Trading revenue reported (d) |
$ | 5,860 | $ | 3,612 | $ | 4,427 | ||||||||||
Trading-related NII |
159 | 1,950 | 2,129 | |||||||||||||
Trading revenue adjusted (d) |
$ | 6,019 | $ | 5,562 | $ | 6,556 | ||||||||||
Net interest income reported |
$ | 19,831 | $ | 16,761 | $ | 12,965 | ||||||||||
Trading-related NII |
(159 | ) | (1,950 | ) | (2,129 | ) | ||||||||||
Net interest income adjusted |
$ | 19,672 | $ | 14,811 | $ | 10,836 | ||||||||||
(d) | Reflects Trading revenue at the Firm level. The majority of Trading revenue is recorded in the Investment Bank. |
32 | JPMorgan Chase & Co. / 2005 Annual Report |
2003 | ||||||||||||||||||
Reported | Credit | Nonoperating | Tax-equivalent | Operating | ||||||||||||||
results | card (b) | items | adjustments | basis | ||||||||||||||
$ | 2,890 | $ | | $ | | $ | | $ | 2,890 | |||||||||
6,556 | | | | 6,556 | ||||||||||||||
1,727 | | | | 1,727 | ||||||||||||||
6,039 | | | | 6,039 | ||||||||||||||
1,479 | | | | 1,479 | ||||||||||||||
790 | | | | 790 | ||||||||||||||
2,466 | (1,379 | ) | | | 1,087 | |||||||||||||
601 | (71 | ) | | 89 | 619 | |||||||||||||
22,548 | (1,450 | ) | | 89 | 21,187 | |||||||||||||
10,836 | 3,320 | | 44 | 14,200 | ||||||||||||||
33,384 | 1,870 | | 133 | 35,387 | ||||||||||||||
1,540 | 1,870 | | | 3,410 | ||||||||||||||
| | | | | ||||||||||||||
100 | | | | 100 | ||||||||||||||
21,716 | | | | 21,716 | ||||||||||||||
21,816 | | | | 21,816 | ||||||||||||||
10,028 | | | 133 | 10,161 | ||||||||||||||
3,309 | | | 133 | 3,442 | ||||||||||||||
$ | 6,719 | $ | | $ | | $ | | $ | 6,719 | |||||||||
$ | 3.24 | $ | | $ | | $ | | $ | 3.24 | |||||||||
16 | % | | % | | % | | % | 16 | % | |||||||||
19 | | | | 19 | ||||||||||||||
0.87 | NM | NM | NM | 0.83 | ||||||||||||||
65 | NM | NM | NM | 62 | ||||||||||||||
33 | NM | NM | NM | 34 | ||||||||||||||
$ | 214,766 | $ | 34,856 | | | $ | 249,622 | |||||||||||
775,978 | 32,365 | | | 808,343 | ||||||||||||||
(1) | Merger costs of $722 million in 2005 and $1.4 billion in 2004 reflect costs associated with the Merger. | |
(2) | Net nonoperating litigation charges of $2.6 billion and $3.7 billion were taken in 2005 and 2004, respectively. | |
(3) | Other income in 2004 reflects $118 million of other accounting policy conformity adjustments. | |
(4) | The Provision for credit losses in 2004 reflects $858 million of accounting policy conformity adjustments, consisting of a $1.4 billion charge related to the decertification of the sellers interest in credit card securitizations, partially offset by a benefit of $584 million related to conforming wholesale and consumer credit provision methodologies for the combined Firm. |
Reported
|
Net income* / Average common equity | |
Operating
|
Operating earnings* / Average common equity |
Reported
|
Net income* / Average common equity less goodwill | |
Operating
|
Operating earnings*/ Average common equity less goodwill |
Reported
|
Net income / Average assets | |
Operating
|
Operating earnings / Average managed assets |
Reported
|
Total noninterest expense / Total net revenue | |
Operating
|
Total noninterest expense / Total net revenue |
* | Represents earnings applicable to common stock |
(a) | The Firm uses return on equity less goodwill, a non-GAAP financial measure, to evaluate the operating performance of the Firm. The Firm utilizes this measure to facilitate operating comparisons to competitors. |
JPMorgan Chase & Co. / 2005 Annual Report | 33 |
Year ended December 31, | Total net revenue | Noninterest expense | ||||||||||||||||||||||
(in millions, except ratios) | 2005 | 2004 | Change | 2005 | 2004 | Change | ||||||||||||||||||
Investment Bank |
$ | 14,578 | $ | 12,605 | 16 | % | $ | 9,739 | $ | 8,696 | 12 | % | ||||||||||||
Retail Financial Services |
14,830 | 10,791 | 37 | 8,585 | 6,825 | 26 | ||||||||||||||||||
Card Services |
15,366 | 10,745 | 43 | 4,999 | 3,883 | 29 | ||||||||||||||||||
Commercial Banking |
3,596 | 2,374 | 51 | 1,872 | 1,343 | 39 | ||||||||||||||||||
Treasury & Securities Services |
6,241 | 4,857 | 28 | 4,470 | 4,113 | 9 | ||||||||||||||||||
Asset & Wealth Management |
5,664 | 4,179 | 36 | 3,860 | 3,133 | 23 | ||||||||||||||||||
Corporate |
(1,126 | ) | 885 | NM | 2,024 | 1,301 | 56 | |||||||||||||||||
Total |
$ | 59,149 | $ | 46,436 | 27 | % | $ | 35,549 | $ | 29,294 | 21 | % | ||||||||||||
(a) | Represents reported results on a tax-equivalent basis and excludes the impact of credit card securitizations; Merger costs, litigation reserve charges and insurance recoveries deemed nonoperating; and accounting policy conformity adjustments related to the Merger. | |
(b) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. | |
(c) | As a result of the Merger, new capital allocation methodologies were implemented during the third quarter of 2004. The capital allocated to each line of business considers several factors: stand-alone peer comparables, economic risk measures and regulatory capital requirements. In addition, effective with the third quarter of 2004, goodwill, as well as the associated capital, is only allocated to the Corporate line of business. Prior periods have not been revised to reflect these new methodologies and are not comparable to the presentation beginning in the third quarter of 2004. |
34 | JPMorgan Chase & Co. / 2005 Annual Report |
Year ended December 31, | Operating earnings | Return on common equity goodwill(c) | ||||||||||||||||||
(in millions, except ratios) | 2005 | 2004 | Change | 2005 | 2004 | |||||||||||||||
Investment Bank |
$ | 3,658 | $ | 2,948 | 24 | % | 18 | % | 17 | % | ||||||||||
Retail Financial Services |
3,427 | 2,199 | 56 | 26 | 24 | |||||||||||||||
Card Services |
1,907 | 1,274 | 50 | 16 | 17 | |||||||||||||||
Commercial Banking |
1,007 | 608 | 66 | 30 | 29 | |||||||||||||||
Treasury & Securities Services |
1,037 | 440 | 136 | 55 | 17 | |||||||||||||||
Asset & Wealth Management |
1,216 | 681 | 79 | 51 | 17 | |||||||||||||||
Corporate |
(1,731 | ) | 61 | NM | NM | NM | ||||||||||||||
Total |
$ | 10,521 | $ | 8,211 | 28 | % | 17 | % | 16 | % | ||||||||||
JPMorgan Chase & Co. / 2005 Annual Report | 35 |
Year ended December 31,(a) | ||||||||||||
(in millions, except ratios) | 2005 | 2004 | 2003 | |||||||||
Revenue |
||||||||||||
Investment banking fees: |
||||||||||||
Advisory |
$ | 1,263 | $ | 938 | $ | 640 | ||||||
Equity underwriting |
864 | 781 | 699 | |||||||||
Debt underwriting |
1,969 | 1,853 | 1,532 | |||||||||
Total investment banking fees |
4,096 | 3,572 | 2,871 | |||||||||
Trading-related revenue: |
||||||||||||
Fixed income and other |
5,673 | 5,008 | 6,016 | |||||||||
Equities |
350 | 427 | 556 | |||||||||
Credit portfolio |
116 | 6 | (186 | ) | ||||||||
Total trading-related revenue(b) |
6,139 | 5,441 | 6,386 | |||||||||
Lending & deposit related fees |
594 | 539 | 440 | |||||||||
Asset management, administration
and commissions |
1,724 | 1,400 | 1,217 | |||||||||
Other income |
615 | 328 | 103 | |||||||||
Noninterest revenue |
13,168 | 11,280 | 11,017 | |||||||||
Net interest income(b) |
1,410 | 1,325 | 1,667 | |||||||||
Total net revenue(c) |
14,578 | 12,605 | 12,684 | |||||||||
Provision for credit losses |
(838 | ) | (640 | ) | (181 | ) | ||||||
Credit reimbursement from (to) TSS(d) |
154 | 90 | (36 | ) | ||||||||
Noninterest expense |
||||||||||||
Compensation expense |
5,785 | 4,893 | 4,462 | |||||||||
Noncompensation expense |
3,954 | 3,803 | 3,840 | |||||||||
Total noninterest expense |
9,739 | 8,696 | 8,302 | |||||||||
Operating earnings before
income tax expense |
5,831 | 4,639 | 4,527 | |||||||||
Income tax expense |
2,173 | 1,691 | 1,722 | |||||||||
Operating earnings |
$ | 3,658 | $ | 2,948 | $ | 2,805 | ||||||
Financial ratios |
||||||||||||
ROE |
18 | % | 17 | % | 15 | % | ||||||
ROA |
0.61 | 0.62 | 0.64 | |||||||||
Overhead ratio |
67 | 69 | 65 | |||||||||
Compensation expense as
% of total net revenue |
40 | 39 | 35 | |||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | Trading revenue, on a reported basis, excludes the impact of Net interest income related to IBs trading activities; this income is recorded in Net interest income. However, in this presentation, to assess the profitability of IBs trading business, the Firm combines these revenues for segment reporting purposes. The amount reclassified from Net interest income to Trading revenue was $0.2 billion, $1.9 billion and $2.1 billion for 2005, 2004 and 2003, respectively. The decline from prior years is due to tightening spreads as short-term funding rates have risen sharply and also, to a lesser extent, increased funding costs from growth in noninterest-bearing trading assets. | |
(c) | Total net revenue includes tax-equivalent adjustments, primarily due to tax-exempt income from municipal bond investments and income tax credits related to affordable housing investments, of $752 million, $274 million and $117 million for 2005, 2004 and 2003, respectively. | |
(d) | TSS is charged a credit reimbursement related to certain exposures managed within the IB credit portfolio on behalf of clients shared with TSS. For a further discussion, see Credit reimbursement on page 35 of this Annual Report. |
Year ended December 31,(a) | ||||||||||||
(in millions) | 2005 | 2004 | 2003 | |||||||||
Revenue by business |
||||||||||||
Investment banking fees |
$ | 4,096 | $ | 3,572 | $ | 2,871 | ||||||
Fixed income markets |
7,242 | 6,314 | 6,987 | |||||||||
Equities markets |
1,799 | 1,491 | 1,406 | |||||||||
Credit portfolio |
1,441 | 1,228 | 1,420 | |||||||||
Total net revenue |
$ | 14,578 | $ | 12,605 | $ | 12,684 | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. |
36 | JPMorgan Chase & Co. / 2005 Annual Report |
Year ended December 31,(a) | ||||||||||||
(in millions, except headcount and ratio data) | 2005 | 2004 | 2003 | |||||||||
Revenue by region |
||||||||||||
Americas |
$ | 8,223 | $ | 6,870 | $ | 7,250 | ||||||
Europe/Middle East/Africa |
4,627 | 4,082 | 4,331 | |||||||||
Asia/Pacific |
1,728 | 1,653 | 1,103 | |||||||||
Total net revenue |
$ | 14,578 | $ | 12,605 | $ | 12,684 | ||||||
Selected average balances |
||||||||||||
Total assets |
$ | 598,118 | $ | 473,121 | $ | 436,488 | ||||||
Trading assetsdebt and
equity instruments |
231,303 | 173,086 | 156,408 | |||||||||
Trading assetsderivatives receivables |
55,239 | 58,735 | 83,361 | |||||||||
Loans: |
||||||||||||
Loans retained(b) |
42,918 | 36,494 | 40,240 | |||||||||
Loans held-for-sale(c) |
12,014 | 6,124 | 4,797 | |||||||||
Total loans |
54,932 | 42,618 | 45,037 | |||||||||
Adjusted assets(d) |
455,277 | 393,646 | 370,776 | |||||||||
Equity(e) |
20,000 | 17,290 | 18,350 | |||||||||
Headcount |
19,769 | 17,478 | 14,691 | |||||||||
Credit data and quality statistics |
||||||||||||
Net charge-offs (recoveries) |
$ | (126 | ) | $ | 47 | $ | 680 | |||||
Nonperforming assets: |
||||||||||||
Nonperforming loans(f) |
594 | 954 | 1,708 | |||||||||
Other nonperforming assets |
51 | 242 | 370 | |||||||||
Allowance for loan losses |
907 | 1,547 | 1,055 | |||||||||
Allowance for lending related commitments |
226 | 305 | 242 | |||||||||
Net charge-off (recovery) rate(c) |
(0.29 | )% | 0.13 | % | 1.69 | % | ||||||
Allowance for loan losses to average loans(c) |
2.11 | 4.24 | 2.56 | |||||||||
Allowance for loan losses to
nonperforming loans(f) |
187 | 163 | 63 | |||||||||
Nonperforming loans to average loans |
1.08 | 2.24 | 3.79 | |||||||||
Market riskaverage trading and
credit portfolio VAR(g)(h)(i) |
||||||||||||
Trading activities: |
||||||||||||
Fixed income(g) |
$ | 67 | $ | 74 | $ | 61 | ||||||
Foreign exchange |
23 | 17 | 17 | |||||||||
Equities |
34 | 28 | 18 | |||||||||
Commodities and other |
21 | 9 | 8 | |||||||||
Diversification(i) |
(59 | ) | (43 | ) | (39 | ) | ||||||
Total trading VAR |
86 | 85 | 65 | |||||||||
Credit portfolio VAR(h) |
14 | 14 | 18 | |||||||||
Diversification(i) |
(12 | ) | (9 | ) | (14 | ) | ||||||
Total trading and credit
portfolio VAR |
$ | 88 | $ | 90 | $ | 69 | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | Loans retained include Credit Portfolio, Conduit loans, leverage leases, bridge loans for underwriting and other accrual loans. | |
(c) | Loans held-for-sale, which include warehouse loans held as part of the IBs mortgage-backed, asset-backed and other securitization businesses, are excluded from Total loans for the allowance coverage ratio and net charge-off rate. | |
(d) | Adjusted assets, a non-GAAP financial measure, equals total average assets minus (1) securities purchased under resale agreements and securities borrowed less securities sold, not yet purchased; (2) assets of variable interest entities (VIEs) consolidated under FIN 46R; (3) cash and securities segregated and on deposit for regulatory and other purposes; and (4) goodwill and intangibles. The amount of adjusted assets is presented to assist the reader in comparing the IBs asset and capital levels to other investment banks in the securities industry. Asset-to-equity leverage ratios are commonly used as one measure to assess a companys capital adequacy. The IB believes an adjusted asset amount, which excludes certain assets considered to have a low risk profile, provides a more meaningful measure of balance sheet leverage in the securities industry. | |
(e) | Equity includes $15.0 billion, $15.0 billion and $14.6 billion of economic risk capital assigned to the IB for the years ended 2005, 2004 and 2003 respectively. | |
(f) | Nonperforming loans include loans held-for-sale of $109 million, $2 million and $30 million as of December 31, 2005, 2004 and 2003, respectively. These amounts are not included in the allowance coverage ratios. | |
(g) | Includes all fixed income mark-to-market trading activities, plus available-for-sale securities held for proprietary purposes. | |
(h) | Includes VAR on derivative credit valuation adjustments, credit valuation adjustment hedges and mark-to-market hedges of the accrual loan portfolio, which are all reported in Trading revenue. This VAR does not include the accrual loan portfolio, which is not marked to market. | |
(i) | Average VARs are less than the sum of the VARs of its market risk components, due to risk offsets resulting from portfolio diversification. The diversification effect reflects the fact that the risks are not perfectly correlated. The risk of a portfolio of positions is therefore usually less than the sum of the risks of the positions themselves. |
2005 | 2004 | 2003 | ||||||||||||||||||||||
Market | Market | Market | ||||||||||||||||||||||
December 31, | Share | Rankings | Share | Rankings | Share | Rankings | ||||||||||||||||||
Global debt, equity and
equity-related |
6 | % | #4 | 7 | % | #3 | 8 | % | #3 | |||||||||||||||
Global syndicated loans |
16 | #1 | 19 | #1 | 20 | #1 | ||||||||||||||||||
Global long-term debt |
6 | #4 | 7 | #2 | 8 | #2 | ||||||||||||||||||
Global equity and
equity-related |
7 | #6 | 6 | #6 | 8 | #4 | ||||||||||||||||||
Global announced M&A |
24 | #3 | 24 | #3 | 16 | #4 | ||||||||||||||||||
U.S. debt, equity and
equity-related |
8 | #4 | 8 | #5 | 9 | #3 | ||||||||||||||||||
U.S. syndicated loans |
28 | #1 | 32 | #1 | 34 | #1 | ||||||||||||||||||
U.S. long-term debt |
11 | #2 | 12 | #2 | 12 | #2 | ||||||||||||||||||
U.S. equity and
equity-related |
9 | #5 | 8 | #6 | 11 | #4 | ||||||||||||||||||
U.S. announced M&A |
24 | #3 | 31 | #2 | 14 | #7 | ||||||||||||||||||
(a) | Source: Thomson Financial Securities data. Global announced M&A is based on rank value; all other rankings are based upon proceeds, with full credit to each book manager/equal if joint. Because of joint assignments, market share of all participants will add up to more than 100%. The market share and rankings for the years ended December 31, 2004 and 2003 are presented on a combined basis, as if the merger of JPMorgan Chase and Bank One had been in effect during the periods. |
JPMorgan Chase & Co. / 2005 Annual Report | 37 |
Asset | ||||||||||||||||||||||||||||
Year ended | Trading- | Lending & | management, | |||||||||||||||||||||||||
December 31,(a) | Investment | related | deposit | administration | Other | Net interest | Total net | |||||||||||||||||||||
(in millions) | banking fees | revenue | related fees | and commissions | income | income | revenue | |||||||||||||||||||||
2005 |
||||||||||||||||||||||||||||
Investment banking fees |
$ | 4,096 | $ | | $ | | $ | | $ | | $ | | $ | 4,096 | ||||||||||||||
Fixed income markets |
| 5,673 | 251 | 219 | 365 | 734 | 7,242 | |||||||||||||||||||||
Equities markets |
| 350 | | 1,462 | (88 | ) | 75 | 1,799 | ||||||||||||||||||||
Credit portfolio |
| 116 | 343 | 43 | 338 | 601 | 1,441 | |||||||||||||||||||||
Total |
$ | 4,096 | $ | 6,139 | $ | 594 | $ | 1,724 | $ | 615 | $ | 1,410 | $ | 14,578 | ||||||||||||||
2004 |
||||||||||||||||||||||||||||
Investment banking fees |
$ | 3,572 | $ | | $ | | $ | | $ | | $ | | $ | 3,572 | ||||||||||||||
Fixed income markets |
| 5,008 | 191 | 287 | 304 | 524 | 6,314 | |||||||||||||||||||||
Equities markets |
| 427 | | 1,076 | (95 | ) | 83 | 1,491 | ||||||||||||||||||||
Credit portfolio |
| 6 | 348 | 37 | 119 | 718 | 1,228 | |||||||||||||||||||||
Total |
$ | 3,572 | $ | 5,441 | $ | 539 | $ | 1,400 | $ | 328 | $ | 1,325 | $ | 12,605 | ||||||||||||||
2003 |
||||||||||||||||||||||||||||
Investment banking fees |
$ | 2,871 | $ | | $ | | $ | | $ | | $ | | $ | 2,871 | ||||||||||||||
Fixed income markets |
| 6,016 | 107 | 331 | 84 | 449 | 6,987 | |||||||||||||||||||||
Equities markets |
| 556 | | 851 | (85 | ) | 84 | 1,406 | ||||||||||||||||||||
Credit portfolio |
| (186 | ) | 333 | 35 | 104 | 1,134 | 1,420 | ||||||||||||||||||||
Total |
$ | 2,871 | $ | 6,386 | $ | 440 | $ | 1,217 | $ | 103 | $ | 1,667 | $ | 12,684 | ||||||||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. |
38 | JPMorgan Chase & Co. / 2005 Annual Report |
Year ended December 31,(a) | ||||||||||||
(in millions, except ratios) | 2005 | 2004 | 2003 | |||||||||
Revenue |
||||||||||||
Lending & deposit related fees |
$ | 1,452 | $ | 1,013 | $ | 486 | ||||||
Asset management, administration
and commissions |
1,498 | 1,020 | 459 | |||||||||
Securities / private equity gains (losses) |
9 | (83 | ) | 381 | ||||||||
Mortgage fees and related income |
1,104 | 866 | 803 | |||||||||
Credit card income |
426 | 230 | 107 | |||||||||
Other income |
136 | 31 | (28 | ) | ||||||||
Noninterest revenue |
4,625 | 3,077 | 2,208 | |||||||||
Net interest income |
10,205 | 7,714 | 5,220 | |||||||||
Total net revenue |
14,830 | 10,791 | 7,428 | |||||||||
Provision for credit losses(b) |
724 | 449 | 521 | |||||||||
Noninterest expense |
||||||||||||
Compensation expense |
3,337 | 2,621 | 1,695 | |||||||||
Noncompensation expense |
4,748 | 3,937 | 2,773 | |||||||||
Amortization of intangibles |
500 | 267 | 3 | |||||||||
Total noninterest expense |
8,585 | 6,825 | 4,471 | |||||||||
Operating earnings before
income tax expense |
5,521 | 3,517 | 2,436 | |||||||||
Income tax expense |
2,094 | 1,318 | 889 | |||||||||
Operating earnings |
$ | 3,427 | $ | 2,199 | $ | 1,547 | ||||||
Financial ratios |
||||||||||||
ROE |
26 | % | 24 | % | 37 | % | ||||||
ROA |
1.51 | 1.18 | 1.05 | |||||||||
Overhead ratio |
58 | 63 | 60 | |||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | 2005 includes a $250 million special provision related to Hurricane Katrina allocated as follows: $140 million in Consumer Real Estate Lending, $90 million in Consumer & Small Business Banking and $20 million in Auto & Education Finance. |
JPMorgan Chase & Co. / 2005 Annual Report | 39 |
Year ended December 31,(a) | ||||||||||||
(in millions, except headcount and ratios) | 2005 | 2004 | 2003 | |||||||||
Selected ending balances |
||||||||||||
Total assets |
$ | 224,801 | $ | 226,560 | $ | 139,316 | ||||||
Loans(b) |
197,299 | 202,473 | 121,921 | |||||||||
Core deposits(c) |
161,666 | 156,885 | 75,850 | |||||||||
Total deposits |
191,415 | 182,372 | 86,162 | |||||||||
Selected average balances |
||||||||||||
Total assets |
$ | 226,368 | $ | 185,928 | $ | 147,435 | ||||||
Loans(d) |
198,153 | 162,768 | 120,750 | |||||||||
Core deposits(c) |
160,641 | 120,758 | 80,116 | |||||||||
Total deposits |
186,811 | 137,404 | 89,793 | |||||||||
Equity |
13,383 | 9,092 | 4,220 | |||||||||
Headcount |
60,998 | 59,632 | 32,278 | |||||||||
Credit data and quality statistics |
||||||||||||
Net charge-offs(e) |
$ | 572 | $ | 990 | $ | 381 | ||||||
Nonperforming loans(f) |
1,338 | 1,161 | 569 | |||||||||
Nonperforming assets |
1,518 | 1,385 | 775 | |||||||||
Allowance for loan losses |
1,363 | 1,228 | 1,094 | |||||||||
Net charge-off rate(d) |
0.31 | % | 0.67 | % | 0.40 | % | ||||||
Allowance for loan losses to
ending loans(b) |
0.75 | 0.67 | 1.04 | |||||||||
Allowance for loan losses to
nonperforming loans(f) |
104 | 107 | 209 | |||||||||
Nonperforming loans to total loans |
0.68 | 0.57 | 0.47 | |||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | Includes loans held for sale of $16,598 million, $18,022 million and $17,105 million at December 31, 2005, 2004 and 2003, respectively. These amounts are not included in the allowance coverage ratios. | |
(c) | Includes demand and savings deposits. | |
(d) | Average loans include loans held for sale of $15,675 million, $14,736 million and $25,293 million for 2005, 2004 and 2003, respectively. These amounts are not included in the net charge-off rate. | |
(e) | Includes $406 million of charge-offs related to the manufactured home loan portfolio in 2004. | |
(f) | Nonperforming loans include loans held for sale of $27 million, $13 million and $45 million at December 31, 2005, 2004 and 2003, respectively. These amounts are not included in the allowance coverage ratios. |
Year ended December 31,(a) | ||||||||||||
(in millions) | 2005 | 2004 | 2003 | |||||||||
Prime production and servicing |
||||||||||||
Production |
$ | 692 | $ | 728 | $ | 1,339 | ||||||
Servicing: |
||||||||||||
Mortgage servicing revenue,
net of amortization |
635 | 651 | 453 | |||||||||
MSR risk management results(b) |
283 | 113 | 784 | |||||||||
Total net revenue |
1,610 | 1,492 | 2,576 | |||||||||
Noninterest expense |
943 | 1,115 | 1,124 | |||||||||
Operating earnings |
422 | 240 | 918 | |||||||||
Consumer real estate lending |
||||||||||||
Total net revenue |
2,704 | 2,376 | 1,473 | |||||||||
Provision for credit losses |
298 | 74 | 240 | |||||||||
Noninterest expense |
940 | 922 | 606 | |||||||||
Operating earnings |
935 | 881 | 414 | |||||||||
Total Home Finance |
||||||||||||
Total net revenue |
4,314 | 3,868 | 4,049 | |||||||||
Provision for credit losses |
298 | 74 | 240 | |||||||||
Noninterest expense |
1,883 | 2,037 | 1,730 | |||||||||
Operating earnings |
1,357 | 1,121 | 1,332 | |||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | For additional information, see page 42 of this Annual Report. |
40 | JPMorgan Chase & Co. / 2005 Annual Report |
Year ended December 31,(a) | ||||||||||||
(in millions, except ratios and | ||||||||||||
where otherwise noted) | 2005 | 2004 | 2003 | |||||||||
Origination volume by channel (in billions) |
||||||||||||
Retail |
$ | 83.9 | $ | 74.2 | $ | 90.8 | ||||||
Wholesale |
50.4 | 48.5 | 65.6 | |||||||||
Correspondent |
14.0 | 22.8 | 44.5 | |||||||||
Correspondent negotiated transactions |
34.5 | 41.5 | 83.3 | |||||||||
Total |
182.8 | 187.0 | 284.2 | |||||||||
Origination volume by business (in billions) |
||||||||||||
Mortgage |
$ | 128.7 | $ | 144.6 | $ | 259.5 | ||||||
Home equity |
54.1 | 42.4 | 24.7 | |||||||||
Total |
182.8 | 187.0 | 284.2 | |||||||||
Business metrics (in billions) |
||||||||||||
Third-party mortgage loans
serviced (ending)(b) |
$ | 467.5 | $ | 430.9 | $ | 393.7 | ||||||
MSR net carrying value (ending) |
6.5 | 5.1 | 4.8 | |||||||||
End-of-period loans owned |
||||||||||||
Mortgage loans held-for-sale |
13.7 | 14.2 | 15.9 | |||||||||
Mortgage loans retained |
43.0 | 42.6 | 34.5 | |||||||||
Home equity and other loans |
76.8 | 67.9 | 24.1 | |||||||||
Total end of period loans owned |
133.5 | 124.7 | 74.5 | |||||||||
Average loans owned |
||||||||||||
Mortgage loans held-for-sale |
12.1 | 12.1 | 23.5 | |||||||||
Mortgage loans retained |
46.4 | 40.7 | 32.0 | |||||||||
Home equity and other loans |
70.2 | 47.0 | 19.4 | |||||||||
Total average loans owned |
128.7 | 99.8 | 74.9 | |||||||||
Overhead ratio |
44 | % | 53 | % | 43 | % | ||||||
Credit data and quality statistics |
||||||||||||
30+ day delinquency rate(c) |
1.61 | % | 1.27 | % | 1.81 | % | ||||||
Net charge-offs |
||||||||||||
Mortgage |
$ | 25 | $ | 19 | $ | 26 | ||||||
Home equity and other loans(d) |
129 | 554 | 109 | |||||||||
Total net charge-offs |
154 | 573 | 135 | |||||||||
Net charge-off rate |
||||||||||||
Mortgage |
0.05 | % | 0.05 | % | 0.08 | % | ||||||
Home equity and other loans |
0.18 | 1.18 | 0.56 | |||||||||
Total net charge-off rate(e) |
0.13 | 0.65 | 0.26 | |||||||||
Nonperforming assets(f) |
$ | 998 | $ | 844 | $ | 546 | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | Includes prime first mortgage loans and subprime loans. | |
(c) | Excludes delinquencies related to loans eligible for repurchase as well as loans repurchased from GNMA pools that are insured by government agencies of $0.9 billion, $0.9 billion and $0.1 billion, for December 31, 2005, 2004 and 2003, respectively. These amounts are excluded as reimbursement is proceeding normally. | |
(d) | Includes $406 million of charge-offs related to the manufactured home loan portfolio in 2004. | |
(e) | Excludes mortgage loans held for sale. | |
(f) | Excludes nonperforming assets related to loans eligible for repurchase as well as loans repurchased from GNMA pools that are insured by government agencies of $1.1 billion, $1.5 billion and $2.3 billion for December 31, 2005, 2004 and 2003, respectively. These amounts are excluded as reimbursement is proceeding normally. |
JPMorgan Chase & Co. / 2005 Annual Report | 41 |
Year ended December 31,(a) | Prime production and servicing | Consumer real estate lending | Total revenue | |||||||||||||||||||||||||||||||||
(in millions) | 2005 | 2004 | 2003 | 2005 | 2004 | 2003 | 2005 | 2004 | 2003 | |||||||||||||||||||||||||||
Net interest income |
$ | 426 | $ | 700 | $ | 1,556 | $ | 2,672 | $ | 2,245 | $ | 1,226 | $ | 3,098 | $ | 2,945 | $ | 2,782 | ||||||||||||||||||
Securities / private equity gains (losses) |
3 | (89 | ) | 359 | | | | 3 | (89 | ) | 359 | |||||||||||||||||||||||||
Mortgage fees and related income(b) |
1,181 | 881 | 661 | 32 | 131 | 247 | 1,213 | 1,012 | 908 | |||||||||||||||||||||||||||
Total |
$ | 1,610 | $ | 1,492 | $ | 2,576 | $ | 2,704 | $ | 2,376 | $ | 1,473 | $ | 4,314 | $ | 3,868 | $ | 4,049 | ||||||||||||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | Includes activity reported elsewhere as Other income. |
Year ended December 31,(a) | ||||||||||||
(in millions) | 2005 | 2004 | 2003 | |||||||||
Reported amounts: |
||||||||||||
MSR valuation adjustments(b) |
$ | 777 | $ | (248 | ) | $ | (253 | ) | ||||
Derivative valuation adjustments
and other risk management gains (losses)(c) |
(494 | ) | 361 | 1,037 | ||||||||
MSR risk management results |
$ | 283 | $ | 113 | $ | 784 | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | Excludes subprime loan MSR activity of $(7) million and $(2) million in 2005 and 2004, respectively. There was no subprime loan MSR activity in 2003. | |
(c) | Includes gains, losses and interest income associated with derivatives, both designated and not designated, as a SFAS 133 hedge, and securities classified as both trading and available-for-sale. |
Year ended December 31,(a) | ||||||||||||
(in millions) | 2005 | 2004 | 2003 | |||||||||
Noninterest revenue |
$ | 2,929 | $ | 1,864 | $ | 828 | ||||||
Net interest income |
5,476 | 3,521 | 1,594 | |||||||||
Total net revenue |
8,405 | 5,385 | 2,422 | |||||||||
Provision for credit losses |
214 | 165 | 76 | |||||||||
Noninterest expense |
5,431 | 3,981 | 2,358 | |||||||||
Operating earnings (loss) |
1,684 | 760 | (4 | ) | ||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. |
42 | JPMorgan Chase & Co. / 2005 Annual Report |
Year ended December 31,(a) | ||||||||||||
(in millions, except ratios and | ||||||||||||
where otherwise noted) | 2005 | 2004 | 2003 | |||||||||
Business metrics (in billions) |
||||||||||||
Selected ending balances |
||||||||||||
Small business loans |
$ | 12.7 | $ | 12.5 | $ | 2.2 | ||||||
Consumer and other loans(b) |
1.7 | 2.2 | 2.0 | |||||||||
Total loans |
14.4 | 14.7 | 4.2 | |||||||||
Core deposits(c) |
152.3 | 146.3 | 66.4 | |||||||||
Total deposits |
181.9 | 171.8 | 76.7 | |||||||||
Selected average balances |
||||||||||||
Small business loans |
$ | 12.4 | $ | 7.3 | $ | 2.1 | ||||||
Consumer and other loans(b) |
2.0 | 2.1 | 2.0 | |||||||||
Total loans |
14.4 | 9.4 | 4.1 | |||||||||
Core deposits(c) |
149.0 | 109.6 | 64.8 | |||||||||
Total deposits |
175.1 | 126.2 | 74.4 | |||||||||
Number of: |
||||||||||||
Branches |
2,641 | 2,508 | 561 | |||||||||
ATMs |
7,312 | 6,650 | 1,931 | |||||||||
Personal bankers |
7,067 | 5,750 | 1,820 | |||||||||
Personal checking accounts (in thousands)(d) |
7,869 | 7,235 | 1,984 | |||||||||
Business checking accounts (in thousands)(d) |
924 | 889 | 347 | |||||||||
Active online customers (in thousands) |
4,231 | 3,359 | NA | |||||||||
Debit cards issued (in thousands) |
9,266 | 8,392 | 2,380 | |||||||||
Overhead ratio |
65 | % | 74 | % | 97 | % | ||||||
Retail brokerage business metrics |
||||||||||||
Investment sales volume |
$ | 11,144 | $ | 7,324 | $ | 3,579 | ||||||
Number of dedicated investment sales
representatives |
1,449 | 1,364 | 349 | |||||||||
Credit data and quality statistics |
||||||||||||
Net charge-offs |
||||||||||||
Small business |
$ | 101 | $ | 77 | $ | 35 | ||||||
Consumer and other loans |
40 | 77 | 40 | |||||||||
Total net charge-offs |
141 | 154 | 75 | |||||||||
Net charge-off rate |
||||||||||||
Small business |
0.81 | % | 1.05 | % | 1.67 | % | ||||||
Consumer and other loans |
2.00 | 3.67 | 2.00 | |||||||||
Total net charge-off rate |
0.98 | 1.64 | 1.83 | |||||||||
Nonperforming assets |
$ | 283 | $ | 299 | $ | 72 | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | Primarily community development loans. | |
(c) | Includes demand and savings deposits. | |
(d) | Prior periods amounts have been restated to reflect inactive accounts that should have been closed during those periods. |
Year ended December 31,(a) | ||||||||||||
(in millions) | 2005 | 2004 | 2003 | |||||||||
Total net revenue |
$ | 1,467 | $ | 1,145 | $ | 842 | ||||||
Provision for credit losses |
212 | 210 | 205 | |||||||||
Noninterest expense |
751 | 490 | 291 | |||||||||
Operating earnings |
307 | 270 | 206 | |||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. |
| Personal bankers Retail branch office personnel who acquire, retain and expand new and existing customer relationships by assessing customer needs and recommending and selling appropriate banking products and services. | |
| Investment sales representatives Licensed retail branch sales personnel, assigned to support several branches, who assist with the sale of investment products including college planning accounts, mutual funds, annuities and retirement accounts. |
JPMorgan Chase & Co. / 2005 Annual Report | 43 |
Year ended December 31,(a) | ||||||||||||
(in millions, except ratios and | ||||||||||||
where otherwise noted) | 2005 | 2004 | 2003 | |||||||||
Business metrics (in billions) |
||||||||||||
End-of-period loans and lease related assets Loans outstanding |
$ | 44.7 | $ | 54.6 | $ | 33.7 | ||||||
Lease related assets(b) |
5.2 | 8.0 | 9.5 | |||||||||
Total end-of-period loans and lease
related assets |
49.9 | 62.6 | 43.2 | |||||||||
Average loans and lease related assets |
||||||||||||
Loans outstanding(c) |
$ | 48.5 | $ | 44.3 | $ | 32.0 | ||||||
Lease related assets(d) |
6.6 | 9.0 | 9.7 | |||||||||
Total average loans and lease
related assets(c)(d) |
55.1 | 53.3 | 41.7 | |||||||||
Overhead ratio |
51 | % | 43 | % | 35 | % | ||||||
Credit quality statistics |
||||||||||||
30+ day delinquency rate |
1.65 | % | 1.55 | % | 1.42 | % | ||||||
Net charge-offs |
||||||||||||
Loans |
$ | 257 | $ | 219 | $ | 130 | ||||||
Lease receivables(d) |
20 | 44 | 41 | |||||||||
Total net charge-offs |
277 | 263 | 171 | |||||||||
Net charge-off rate |
||||||||||||
Loans(c) |
0.57 | % | 0.52 | % | 0.43 | % | ||||||
Lease receivables |
0.32 | 0.49 | 0.42 | |||||||||
Total net charge-off rate(c) |
0.54 | 0.52 | 0.43 | |||||||||
Nonperforming assets |
$ | 237 | $ | 242 | $ | 157 | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | Includes operating lease-related assets of $0.9 billion for 2005. Balances prior to January 1, 2005, were insignificant. | |
(c) | Average loans include loans held for sale of $3.5 billion, $2.3 billion and $1.8 billion for, 2005, 2004 and 2003, respectively. These are not included in the net charge-off rate. | |
(d) | Includes operating lease-related assets of $0.4 billion for 2005. Balances prior to January 1, 2005, were insignificant. These are not included in the net charge-off rate. |
Year ended December 31,(a) | ||||||||||||
(in millions) | 2005 | 2004 | 2003 | |||||||||
Total net revenue |
$ | 644 | $ | 393 | $ | 115 | ||||||
Noninterest expense |
520 | 317 | 92 | |||||||||
Operating earnings |
79 | 48 | 13 | |||||||||
Memo: Consolidated gross insurance-related revenue(b) |
1,642 | 1,191 | 611 | |||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | Includes revenue reported in the results of other businesses. |
Year ended December 31,(a) | ||||||||||||
(in millions, except where otherwise noted) | 2005 | 2004 | 2003 | |||||||||
Business metrics ending balances |
||||||||||||
Invested assets |
$ | 7,767 | $ | 7,368 | $ | 1,559 | ||||||
Policy loans |
388 | 397 | | |||||||||
Insurance policy and claims reserves |
7,774 | 7,279 | 1,096 | |||||||||
Term life sales first year annualized
premiums |
60 | 28 | | |||||||||
Term life premium revenues |
477 | 234 | | |||||||||
Proprietary annuity sales |
706 | 208 | 548 | |||||||||
Number of policies in force direct/assumed
(in thousands) |
2,441 | 2,611 | 631 | |||||||||
Insurance in force direct/assumed |
$ | 282,903 | $ | 277,827 | $ | 31,992 | ||||||
Insurance in force retained |
87,753 | 80,691 | 31,992 | |||||||||
A.M. Best rating |
A | A | A | |||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. |
| Proprietary annuity sales represent annuity contracts marketed through and issued by subsidiaries of the Firm. | |
| Insurance in force direct/assumed includes the aggregate face amount of insurance policies directly underwritten and assumed through reinsurance. | |
| Insurance in force retained includes the aggregate face amounts of insurance policies directly underwritten and assumed through reinsurance, after reduction for face amounts ceded to reinsurers. |
44 | JPMorgan Chase & Co. / 2005 Annual Report |
Year ended December 31,(a)(b) | ||||||||||||
(in millions, except ratios) | 2005 | 2004 | 2003 | |||||||||
Revenue |
||||||||||||
Asset management,
administration and commissions |
$ | | $ | 75 | $ | 108 | ||||||
Credit card income |
3,351 | 2,179 | 930 | |||||||||
Other income |
212 | 117 | 54 | |||||||||
Noninterest revenue |
3,563 | 2,371 | 1,092 | |||||||||
Net interest income |
11,803 | 8,374 | 5,052 | |||||||||
Total net revenue |
15,366 | 10,745 | 6,144 | |||||||||
Provision for credit losses(c) |
7,346 | 4,851 | 2,904 | |||||||||
Noninterest expense |
||||||||||||
Compensation expense |
1,081 | 893 | 582 | |||||||||
Noncompensation expense |
3,170 | 2,485 | 1,336 | |||||||||
Amortization of intangibles |
748 | 505 | 260 | |||||||||
Total noninterest expense |
4,999 | 3,883 | 2,178 | |||||||||
Operating earnings before
income tax expense |
3,021 | 2,011 | 1,062 | |||||||||
Income tax expense |
1,114 | 737 | 379 | |||||||||
Operating earnings |
$ | 1,907 | $ | 1,274 | $ | 683 | ||||||
Memo: Net securitization
gains (amortization) |
$ | 56 | $ | (8 | ) | $ | 1 | |||||
Financial metrics |
||||||||||||
ROE |
16 | % | 17 | % | 20 | % | ||||||
Overhead ratio |
33 | 36 | 35 | |||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | As a result of the integration of Chase Merchant Services and Paymentech merchant processing businesses into a joint venture, beginning in the fourth quarter of 2005, Total net revenue, Noninterest expense and pre-tax earnings have been reduced to reflect the deconsolidation of Paymentech. There is no impact to operating earnings. | |
(c) | 2005 includes a $100 million special provision related to Hurricane Katrina. |
JPMorgan Chase & Co. / 2005 Annual Report | 45 |
Year ended December 31,(a) | ||||||||||||
(in millions, except headcount, ratios | ||||||||||||
and where otherwise noted) | 2005 | 2004 | 2003 | |||||||||
% of average managed outstandings: |
||||||||||||
Net interest income |
8.65 | % | 9.16 | % | 9.95 | % | ||||||
Provision for credit losses |
5.39 | 5.31 | 5.72 | |||||||||
Noninterest revenue |
2.61 | 2.59 | 2.15 | |||||||||
Risk adjusted margin(b) |
5.88 | 6.45 | 6.38 | |||||||||
Noninterest expense |
3.67 | 4.25 | 4.29 | |||||||||
Pre-tax income (ROO) |
2.21 | 2.20 | 2.09 | |||||||||
Operating earnings |
1.40 | 1.39 | 1.35 | |||||||||
Business metrics |
||||||||||||
Charge volume (in billions) |
$ | 301.9 | $ | 193.6 | $ | 88.2 | ||||||
Net accounts opened (in thousands) |
21,056 | 7,523 | 4,177 | |||||||||
Credit cards issued (in thousands) |
110,439 | 94,285 | 35,103 | |||||||||
Number of registered
Internet customers (in millions) |
14.6 | 13.6 | 3.7 | |||||||||
Merchant
acquiring business(c) Bank card volume (in billions) |
$ | 563.1 | $ | 396.2 | $ | 261.2 | ||||||
Total transactions (in millions)(d) |
15,499 | 9,049 | 4,254 | |||||||||
Selected ending balances |
||||||||||||
Loans: |
||||||||||||
Loans on balance sheets |
$ | 71,738 | $ | 64,575 | $ | 17,426 | ||||||
Securitized loans |
70,527 | 70,795 | 34,856 | |||||||||
Managed loans |
$ | 142,265 | $ | 135,370 | $ | 52,282 | ||||||
Selected average balances |
||||||||||||
Managed assets |
$ | 141,933 | $ | 94,741 | $ | 51,406 | ||||||
Loans: |
||||||||||||
Loans on balance sheets |
$ | 67,334 | $ | 38,842 | $ | 17,604 | ||||||
Securitized loans |
69,055 | 52,590 | 33,169 | |||||||||
Managed loans |
$ | 136,389 | $ | 91,432 | $ | 50,773 | ||||||
Equity |
11,800 | 7,608 | 3,440 | |||||||||
Headcount |
18,629 | 19,598 | 10,612 | |||||||||
Credit quality statistics |
||||||||||||
Net charge-offs |
$ | 7,100 | $ | 4,821 | $ | 2,996 | ||||||
Managed net charge-off rate |
5.21 | % | 5.27 | % | 5.90 | % | ||||||
Delinquency ratios |
||||||||||||
30+ days |
2.79 | % | 3.70 | % | 4.68 | % | ||||||
90+ days |
1.27 | 1.72 | 2.19 | |||||||||
Allowance for loan losses |
$ | 3,274 | $ | 2,994 | $ | 1,225 | ||||||
Allowance for loan losses to
period-end loans |
4.56 | % | 4.64 | % | 7.03 | % | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | Represents Total net revenue less Provision for credit losses. | |
(c) | Represents 100% of the merchant acquiring business. | |
(d) | Prior periods have been restated to conform methodologies following the integration of Chase Merchant Services and Paymentech merchant processing businesses. |
Year ended December 31,(a) | ||||||||||||
(in millions) | 2005 | 2004 | 2003 | |||||||||
Income statement data |
||||||||||||
Credit card income |
||||||||||||
Reported data for the period |
$ | 6,069 | $ | 4,446 | $ | 2,309 | ||||||
Securitization adjustments |
(2,718 | ) | (2,267 | ) | (1,379 | ) | ||||||
Managed credit card income |
$ | 3,351 | $ | 2,179 | $ | 930 | ||||||
Other income Reported data for the period |
$ | 212 | $ | 203 | $ | 125 | ||||||
Securitization adjustments |
| (86 | ) | (71 | ) | |||||||
Managed other income |
$ | 212 | $ | 117 | $ | 54 | ||||||
Net interest income |
||||||||||||
Reported data for the period |
$ | 5,309 | $ | 3,123 | $ | 1,732 | ||||||
Securitization adjustments |
6,494 | 5,251 | 3,320 | |||||||||
Managed net interest income |
$ | 11,803 | $ | 8,374 | $ | 5,052 | ||||||
Total net revenue(b) |
||||||||||||
Reported data for the period |
$ | 11,590 | $ | 7,847 | $ | 4,274 | ||||||
Securitization adjustments |
3,776 | 2,898 | 1,870 | |||||||||
Managed total net revenue |
$ | 15,366 | $ | 10,745 | $ | 6,144 | ||||||
Provision for credit losses |
||||||||||||
Reported data for the period(c) |
$ | 3,570 | $ | 1,953 | $ | 1,034 | ||||||
Securitization adjustments |
3,776 | 2,898 | 1,870 | |||||||||
Managed provision for credit losses |
$ | 7,346 | $ | 4,851 | $ | 2,904 | ||||||
Balance sheet average balances |
||||||||||||
Total average assets |
||||||||||||
Reported data for the period |
$ | 74,753 | $ | 43,657 | $ | 19,041 | ||||||
Securitization adjustments |
67,180 | 51,084 | 32,365 | |||||||||
Managed average assets |
$ | 141,933 | $ | 94,741 | $ | 51,406 | ||||||
Credit quality statistics |
||||||||||||
Net charge-offs |
||||||||||||
Reported net charge-offs data
for the period |
$ | 3,324 | $ | 1,923 | $ | 1,126 | ||||||
Securitization adjustments |
3,776 | 2,898 | 1,870 | |||||||||
Managed net charge-offs |
$ | 7,100 | $ | 4,821 | $ | 2,996 | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | Includes noninterest revenue and Net interest income. | |
(c) | 2005 includes a $100 million special provision related to Hurricane Katrina. |
| Charge volume Represents the dollar amount of cardmember purchases, balance transfers and cash advance activity. | |
| Net accounts opened Includes originations, portfolio purchases and sales. | |
| Merchant acquiring business Represents an entity that processes payments for merchants. JPMorgan Chase is a partner in Chase Paymentech Solutions, LLC. | |
| Bank card volume Represents the dollar amount of transactions processed for the merchants. | |
| Total transactions Represents the number of transactions and authorizations processed for the merchants. |
46 | JPMorgan Chase & Co. / 2005 Annual Report |
Year ended December 31,(a) | ||||||||||||
(in millions, except ratios) | 2005 | 2004 | 2003 | |||||||||
Revenue |
||||||||||||
Lending & deposit related fees |
$ | 575 | $ | 441 | $ | 301 | ||||||
Asset management, administration
and commissions |
60 | 32 | 19 | |||||||||
Other income(b) |
351 | 209 | 73 | |||||||||
Noninterest revenue |
986 | 682 | 393 | |||||||||
Net interest income |
2,610 | 1,692 | 959 | |||||||||
Total net revenue |
3,596 | 2,374 | 1,352 | |||||||||
Provision for credit losses(c) |
73 | 41 | 6 | |||||||||
Noninterest expense |
||||||||||||
Compensation expense |
661 | 465 | 285 | |||||||||
Noncompensation expense |
1,146 | 843 | 534 | |||||||||
Amortization of intangibles |
65 | 35 | 3 | |||||||||
Total noninterest expense |
1,872 | 1,343 | 822 | |||||||||
Operating earnings before income
tax expense |
1,651 | 990 | 524 | |||||||||
Income tax expense |
644 | 382 | 217 | |||||||||
Operating earnings |
$ | 1,007 | $ | 608 | $ | 307 | ||||||
Financial ratios |
||||||||||||
ROE |
30 | % | 29 | % | 29 | % | ||||||
ROA |
1.78 | 1.67 | 1.87 | |||||||||
Overhead ratio |
52 | 57 | 61 | |||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | IB-related and commercial card revenues are included in Other income. | |
(c) | 2005 includes a $35 million special provision related to Hurricane Katrina. |
JPMorgan Chase & Co. / 2005 Annual Report | 47 |
Year ended December 31,(a) | ||||||||||||
(in millions, except headcount and ratios) | 2005 | 2004 | 2003 | |||||||||
Revenue by product: |
||||||||||||
Lending |
$ | 1,076 | $ | 764 | $ | 396 | ||||||
Treasury services |
2,299 | 1,467 | 896 | |||||||||
Investment banking |
213 | 120 | 66 | |||||||||
Other |
8 | 23 | (6 | ) | ||||||||
Total Commercial Banking revenue |
3,596 | 2,374 | 1,352 | |||||||||
Revenue by business: |
||||||||||||
Middle Market Banking |
$ | 2,369 | $ | 1,499 | $ | 772 | ||||||
Mid-Corporate Banking |
548 | 367 | 194 | |||||||||
Real Estate |
534 | 368 | 206 | |||||||||
Other |
145 | 140 | 180 | |||||||||
Total Commercial Banking revenue |
3,596 | 2,374 | 1,352 | |||||||||
Selected average balances |
||||||||||||
Total assets |
$ | 56,561 | $ | 36,435 | $ | 16,460 | ||||||
Loans and leases |
51,797 | 32,417 | 14,049 | |||||||||
Liability balances(b) |
73,395 | 52,824 | 32,880 | |||||||||
Equity |
3,400 | 2,093 | 1,059 | |||||||||
Average loans by business: |
||||||||||||
Middle market |
$ | 31,156 | $ | 17,471 | $ | 5,609 | ||||||
Mid-corporate banking |
6,375 | 4,348 | 2,880 | |||||||||
Real estate |
10,639 | 7,586 | 2,831 | |||||||||
Other |
3,627 | 3,012 | 2,729 | |||||||||
Total Commercial Banking loans |
51,797 | 32,417 | 14,049 | |||||||||
Headcount |
4,456 | 4,555 | 1,730 | |||||||||
Credit data and quality statistics: |
||||||||||||
Net charge-offs |
$ | 26 | $ | 61 | $ | 76 | ||||||
Nonperforming loans |
272 | 527 | 123 | |||||||||
Allowance for loan losses |
1,392 | 1,322 | 122 | |||||||||
Allowance for lending-related commitments |
154 | 169 | 26 | |||||||||
Net charge-off rate |
0.05 | % | 0.19 | % | 0.54 | % | ||||||
Allowance for loan losses to average loans |
2.69 | 4.08 | 0.87 | |||||||||
Allowance for loan losses to
nonperforming loans |
512 | 251 | 99 | |||||||||
Nonperforming loans to average loans |
0.53 | 1.63 | 0.88 | |||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | Liability balances include deposits and deposits swept to on-balance sheet liabilities. |
| Term loans | |
| Revolving lines of credit | |
| Bridge financing | |
| Asset-based structures | |
| Leases |
| U.S. dollar and multi-currency clearing | |
| ACH | |
| Lockbox | |
| Disbursement and reconciliation services | |
| Check deposits | |
| Other check and currency-related services | |
| Trade finance and logistics solutions | |
| Commercial card | |
| Deposit products, sweeps and money market mutual funds |
| Loan syndications | |
| Investment-grade debt | |
| Asset-backed securities | |
| Private placements | |
| High-yield bonds | |
| Equity underwriting | |
| Advisory | |
| Interest rate derivatives | |
| Foreign exchange hedges |
48 | JPMorgan Chase & Co. / 2005 Annual Report |
Year ending December 31,(a) | ||||||||||||
(in millions, except ratios) | 2005 | 2004 | 2003 | |||||||||
Revenue |
||||||||||||
Lending & deposit related fees |
$ | 728 | $ | 647 | $ | 470 | ||||||
Asset management, administration
and commissions |
2,908 | 2,445 | 1,903 | |||||||||
Other income |
543 | 382 | 288 | |||||||||
Noninterest revenue |
4,179 | 3,474 | 2,661 | |||||||||
Net interest income |
2,062 | 1,383 | 947 | |||||||||
Total net revenue |
6,241 | 4,857 | 3,608 | |||||||||
Provision for credit losses |
| 7 | 1 | |||||||||
Credit reimbursement (to) from IB(b) |
(154 | ) | (90 | ) | 36 | |||||||
Noninterest expense |
||||||||||||
Compensation expense |
2,061 | 1,629 | 1,257 | |||||||||
Noncompensation expense |
2,293 | 2,391 | 1,745 | |||||||||
Amortization of intangibles |
116 | 93 | 26 | |||||||||
Total noninterest expense |
4,470 | 4,113 | 3,028 | |||||||||
Operating earnings before income
tax expense |
1,617 | 647 | 615 | |||||||||
Income tax expense |
580 | 207 | 193 | |||||||||
Operating earnings |
$ | 1,037 | $ | 440 | $ | 422 | ||||||
Financial ratios |
||||||||||||
ROE |
55 | % | 17 | % | 15 | % | ||||||
Overhead ratio |
72 | 85 | 84 | |||||||||
Pre-tax margin ratio(c) |
26 | 13 | 17 | |||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | TSS is charged a credit reimbursement related to certain exposures managed within the IB credit portfolio on behalf of clients shared with TSS. For a further discussion, see Credit reimbursement on page 35 of this Annual Report. | |
(c) | Pre-tax margin represents Operating earnings before income tax expense divided by Total net revenue, which is a comprehensive measure of pre-tax performance and is another basis by which TSS management evaluates its performance and that of its competitors. Pre-tax margin is an effective measure of TSS earnings, after all operating costs are taken into consideration. |
JPMorgan Chase & Co. / 2005 Annual Report | 49 |
Year ending December 31,(a) | ||||||||||||
(in millions, except headcount and where | ||||||||||||
otherwise noted) | 2005 | 2004 | 2003 | |||||||||
Revenue by business |
||||||||||||
Treasury Services |
$ | 2,622 | $ | 1,994 | $ | 1,200 | ||||||
Investor Services |
2,155 | 1,709 | 1,448 | |||||||||
Institutional Trust Services |
1,464 | 1,154 | 960 | |||||||||
Total net revenue |
$ | 6,241 | $ | 4,857 | $ | 3,608 | ||||||
Business metrics |
||||||||||||
Assets under custody (in billions)(b) |
$ | 11,249 | $ | 9,300 | $ | 7,597 | ||||||
Corporate trust securities
under administration (in billions)(c) |
6,818 | 6,676 | 6,127 | |||||||||
Number of: |
||||||||||||
US$ ACH transactions originated (in millions) |
2,966 | 1,994 | NA | |||||||||
Total US$ clearing volume (in thousands) |
95,713 | 81,162 | NA | |||||||||
International electronic funds transfer
volume (in thousands)(d) |
89,537 | 45,654 | NA | |||||||||
Wholesale check volume (in millions) |
3,856 | NA | NA | |||||||||
Wholesale cards issued (in thousands)(e) |
13,206 | 11,787 | NA | |||||||||
Selected average balances |
||||||||||||
Total assets |
$ | 26,947 | $ | 23,430 | $ | 18,379 | ||||||
Loans |
10,430 | 7,849 | 6,009 | |||||||||
Liability balances(f) |
164,305 | 125,712 | 85,994 | |||||||||
Equity |
1,900 | 2,544 | 2,738 | |||||||||
Headcount |
24,484 | 22,612 | 15,145 | |||||||||
TSS firmwide metrics |
||||||||||||
Treasury Services firmwide revenue(g) |
$ | 5,224 | $ | 3,665 | $ | 2,214 | ||||||
Treasury & Securities Services
firmwide revenue(g) |
8,843 | 6,528 | 4,622 | |||||||||
Treasury Services firmwide overhead ratio(h) |
55 | % | 62 | % | 62 | % | ||||||
Treasury & Securities Services
firmwide overhead ratio(h) |
62 | 74 | 76 | |||||||||
Treasury Services firmwide liability balances(i) |
$ | 139,579 | $ | 102,785 | $ | 64,819 | ||||||
Treasury & Securities Services firmwide
liability balances(i) |
237,699 | 178,536 | 118,873 | |||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | 2005 assets under custody include approximately $530 billion of ITS assets under custody that have not been included previously. At December 31, 2005, approximately 5% of total assets under custody were trust-related. | |
(c) | Corporate trust securities under administration include debt held in trust on behalf of third parties and debt serviced as agent. | |
(d) | International electronic funds transfer includes non-US$ ACH and clearing volume. | |
(e) | Wholesale cards issued include domestic commercial card, stored value card, prepaid card, and government electronic benefit card products. | |
(f) | Liability balances include deposits and deposits swept to on-balance sheet liabilities. | |
(g) | Firmwide revenue includes TS revenue recorded in the Commercial Banking, Consumer & Small Business Banking and Asset & Wealth Management businesses (see below) and excludes FX revenues recorded in the IB for TSS-related FX activity. TSS firmwide FX revenue, which includes FX revenue recorded in TSS and FX revenue associated with TSS customers who are FX customers of the IB, was $382 million, $320 million and $256 million for the years ended December 31, 2005, 2004 and 2003, respectively. | |
(h) | Overhead ratios have been calculated based on firmwide revenues and TSS and TS expenses, respectively, including those allocated to certain other lines of business. FX revenues and expenses recorded in the IB for TSS-related FX activity are not included in this ratio. | |
(i) | Firmwide liability balances include TS liability balances recorded in certain lines of business. Liability balances associated with TS customers who are also customers of the Commercial Banking line of business are not included in TS liability balances. |
(in millions)(a) | 2005 | 2004 | 2003 | |||||||||
Treasury Services revenue reported in
Commercial Banking |
$ | 2,299 | $ | 1,467 | $ | 896 | ||||||
Treasury Services revenue reported in
other lines of business |
303 | 204 | 118 | |||||||||
50 | JPMorgan Chase & Co. / 2005 Annual Report |
Year ended December 31,(a) | ||||||||||||
(in millions, except ratios) | 2005 | 2004 | 2003 | |||||||||
Revenue |
||||||||||||
Asset management, administration
and commissions |
$ | 4,189 | $ | 3,140 | $ | 2,258 | ||||||
Other income |
394 | 243 | 224 | |||||||||
Noninterest revenue |
4,583 | 3,383 | 2,482 | |||||||||
Net interest income |
1,081 | 796 | 488 | |||||||||
Total net revenue |
5,664 | 4,179 | 2,970 | |||||||||
Provision for credit losses(b) |
(56 | ) | (14 | ) | 35 | |||||||
Noninterest expense |
||||||||||||
Compensation expense |
2,179 | 1,579 | 1,213 | |||||||||
Noncompensation expense |
1,582 | 1,502 | 1,265 | |||||||||
Amortization of intangibles |
99 | 52 | 8 | |||||||||
Total noninterest expense |
3,860 | 3,133 | 2,486 | |||||||||
Operating earnings before
income tax expense |
1,860 | 1,060 | 449 | |||||||||
Income tax expense |
644 | 379 | 162 | |||||||||
Operating earnings |
$ | 1,216 | $ | 681 | $ | 287 | ||||||
Financial ratios |
||||||||||||
ROE |
51 | % | 17 | % | 5 | % | ||||||
Overhead ratio |
68 | 75 | 84 | |||||||||
Pre-tax margin ratio(c) |
33 | 25 | 15 | |||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | 2005 includes a $3 million special provision related to Hurricane Katrina. | |
(c) | Pre-tax margin represents Operating earnings before income tax expense divided by Total net revenue, which is a comprehensive measure of pre-tax performance and is another basis by which AWM management evaluates its performance and that of its competitors. Pre-tax margin is an effective measure of AWMs earnings, after all costs are taken into consideration. |
Year ended December 31,(a) | ||||||||||||
(in millions, except headcount and ranking | ||||||||||||
data, and where otherwise noted) | 2005 | 2004 | 2003 | |||||||||
Revenue by client segment |
||||||||||||
Private bank |
$ | 1,689 | $ | 1,554 | $ | 1,437 | ||||||
Retail |
1,544 | 1,184 | 774 | |||||||||
Institutional |
1,395 | 891 | 681 | |||||||||
Private client services |
1,036 | 550 | 78 | |||||||||
Total net revenue |
$ | 5,664 | $ | 4,179 | $ | 2,970 | ||||||
Business metrics |
||||||||||||
Number of: |
||||||||||||
Client advisors |
1,430 | 1,333 | 651 | |||||||||
Retirement Plan Services participants |
1,299,000 | 918,000 | 756,000 | |||||||||
% of customer assets in 4 & 5 Star Funds(b) |
46 | % | 48 | % | 48 | % | ||||||
% of AUM in 1st and 2nd quartiles:(c) |
||||||||||||
1 year |
69 | 66 | 57 | |||||||||
3 years |
68 | 71 | 69 | |||||||||
5 years |
74 | 68 | 65 | |||||||||
Selected average balances |
||||||||||||
Total assets |
$ | 41,599 | $ | 37,751 | $ | 33,780 | ||||||
Loans |
26,610 | 21,545 | 16,678 | |||||||||
Deposits(d) |
42,123 | 32,431 | 20,576 | |||||||||
Equity |
2,400 | 3,902 | 5,507 | |||||||||
Headcount |
12,127 | 12,287 | 8,520 | |||||||||
JPMorgan Chase & Co. / 2005 Annual Report | 51 |
Credit data and quality statistics |
||||||||||||
Net charge-offs |
$ | 23 | $ | 72 | $ | 9 | ||||||
Nonperforming loans |
104 | 79 | 173 | |||||||||
Allowance for loan losses |
132 | 216 | 130 | |||||||||
Allowance for lending-related commitments |
4 | 5 | 4 | |||||||||
Net charge-off rate |
0.09 | % | 0.33 | % | 0.05 | % | ||||||
Allowance for loan losses to average loans |
0.50 | 1.00 | 0.78 | |||||||||
Allowance for loan losses to nonperforming loans |
127 | 273 | 75 | |||||||||
Nonperforming loans to average loans |
0.39 | 0.37 | 1.04 | |||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | Star rankings derived from Morningstar and Standard & Poors. | |
(c) | Quartile rankings sourced from Lipper and Standard & Poors. | |
(d) | Reflects the transfer in 2005 of certain consumer deposits from Retail Financial Services to Asset & Wealth Management. |
Assets under supervision(a) (in billions) | ||||||||
As of or for the year ended December 31, | 2005 | 2004 | ||||||
Assets by asset class |
||||||||
Liquidity |
$ | 238 | $ | 232 | ||||
Fixed income |
165 | 171 | ||||||
Equities & balanced |
370 | 326 | ||||||
Alternatives |
74 | 62 | ||||||
Total Assets under management |
847 | 791 | ||||||
Custody/brokerage/administration/deposits |
302 | 315 | ||||||
Total Assets under supervision |
$ | 1,149 | $ | 1,106 | ||||
Assets by client segment |
||||||||
Institutional |
$ | 481 | $ | 466 | ||||
Private Bank |
145 | 139 | ||||||
Retail |
169 | 133 | ||||||
Private Client Services |
52 | 53 | ||||||
Total Assets under management |
$ | 847 | $ | 791 | ||||
Institutional |
$ | 484 | $ | 487 | ||||
Private Bank |
318 | 304 | ||||||
Retail |
245 | 221 | ||||||
Private Client Services |
102 | 94 | ||||||
Total Assets under supervision |
$ | 1,149 | $ | 1,106 | ||||
Assets by geographic region |
||||||||
U.S./Canada |
$ | 562 | $ | 554 | ||||
International |
285 | 237 | ||||||
Total Assets under management |
$ | 847 | $ | 791 | ||||
U.S./Canada |
$ | 805 | $ | 815 | ||||
International |
344 | 291 | ||||||
Total Assets under supervision |
$ | 1,149 | $ | 1,106 | ||||
Mutual fund assets by asset class |
||||||||
Liquidity |
$ | 182 | $ | 183 | ||||
Fixed income |
45 | 41 | ||||||
Equity |
150 | 104 | ||||||
Total mutual fund assets |
$ | 377 | $ | 328 | ||||
Assets under management rollforward(b) |
||||||||
Beginning balance, January 1 |
$ | 791 | $ | 561 | ||||
Flows: |
||||||||
Liquidity |
8 | 3 | ||||||
Fixed income |
| (8 | ) | |||||
Equity, balanced and alternative |
24 | 14 | ||||||
Acquisitions /divestitures(c) |
| 183 | ||||||
Market/performance/other impacts(d) |
24 | 38 | ||||||
Ending balance, December 31 |
$ | 847 | $ | 791 | ||||
Assets under supervision rollforward(b) |
||||||||
Beginning balance, January 1 |
$ | 1,106 | $ | 764 | ||||
Net asset flows |
49 | 42 | ||||||
Acquisitions /divestitures(e) |
(33 | ) | 221 | |||||
Market/performance/other impacts(d) |
27 | 79 | ||||||
Ending balance, December 31 |
$ | 1,149 | $ | 1,106 | ||||
(a) | Excludes Assets under management of American Century. | |
(b) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. | |
(c) | Reflects the Merger with Bank One ($176 billion) and the acquisition of a majority interest in Highbridge Capital Management ($7 billion) in 2004. | |
(d) | Includes AWMs strategic decision to exit the Institutional fiduciary business ($12 billion) in 2005. | |
(e) | Reflects the Merger with Bank One ($214 billion) and the acquisition of a majority interest in Highbridge Capital Management ($7 billion) in 2004, and the sale of BrownCo ($33 billion) in 2005. |
52 | JPMorgan Chase & Co. / 2005 Annual Report |
Year ended December 31,(a) | ||||||||||||
(in millions) | 2005 | 2004 | (d) | 2003 | (d) | |||||||
Revenue |
||||||||||||
Securities / private equity gains |
$ | 200 | $ | 1,786 | $ | 1,031 | ||||||
Other income(b) |
1,410 | 315 | 303 | |||||||||
Noninterest revenue |
1,610 | 2,101 | 1,334 | |||||||||
Net interest income |
(2,736 | ) | (1,216 | ) | (133 | ) | ||||||
Total net revenue |
(1,126 | ) | 885 | 1,201 | ||||||||
Provision for credit losses(c) |
10 | (110 | ) | 124 | ||||||||
Noninterest expense |
||||||||||||
Compensation expense |
3,151 | 2,426 | 1,893 | |||||||||
Noncompensation expense |
4,216 | 4,088 | 3,216 | |||||||||
Subtotal |
7,367 | 6,514 | 5,109 | |||||||||
Net expenses allocated to other businesses |
(5,343 | ) | (5,213 | ) | (4,580 | ) | ||||||
Total noninterest expense |
2,024 | 1,301 | 529 | |||||||||
Operating earnings before income
tax expense |
(3,160 | ) | (306 | ) | 548 | |||||||
Income tax expense (benefit) |
(1,429 | ) | (367 | ) | (120 | ) | ||||||
Operating earnings (loss) |
$ | (1,731 | ) | $ | 61 | $ | 668 | |||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | Includes $1.3 billion (pre-tax) gain on the sale of BrownCo in 2005. | |
(c) | 2005 includes a $12 million special provision related to Hurricane Katrina. | |
(d) | In 2005, the Corporate sectors and the Firms operating results were presented on a tax-equivalent basis. Prior period results have been restated. This restatement had no impact on the Corporate sectors or the Firms operating earnings. |
Year ended December 31,(a) | ||||||||||||
(in millions, except headcount) | 2005 | 2004 | 2003 | |||||||||
Selected average balances |
||||||||||||
Short-term investments(b) |
$ | 16,808 | $ | 14,590 | $ | 4,076 | ||||||
Investment portfolio(c) |
54,481 | 65,985 | 65,113 | |||||||||
Goodwill(d) |
43,475 | 21,773 | 293 | |||||||||
Total assets |
160,720 | 162,234 | 104,395 | |||||||||
Headcount |
28,384 | 24,806 | 13,391 | |||||||||
Treasury |
||||||||||||
Securities gains (losses) |
$ | (1,502 | ) | $ | 347 | $ | 999 | |||||
Investment portfolio (average) |
46,520 | 57,776 | 56,299 | |||||||||
Investment portfolio (ending) |
30,741 | 64,949 | 45,811 | |||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | Represents Federal funds sold, Securities borrowed, Trading assets debt and equity instruments and Trading assets derivative receivables. | |
(c) | Represents Investment securities and private equity investments. | |
(d) | As of July 1, 2004, the Firm revised the goodwill allocation methodology to retain all goodwill in Corporate. Effective with the first quarter of 2006, the Firm will refine its methodology to allocate goodwill to the lines of business. |
JPMorgan Chase & Co. / 2005 Annual Report | 53 |
Year ended December 31,(a) | ||||||||||||
(in millions) | 2005 | 2004 | 2003 | |||||||||
Private equity gains (losses) |
||||||||||||
Direct investments Realized gains |
$ | 1,969 | $ | 1,423 | $ | 535 | ||||||
Write-ups / (write-downs) |
(72 | ) | (192 | ) | (404 | ) | ||||||
Mark-to-market gains (losses) |
(338 | ) | 164 | 215 | ||||||||
Total direct investments |
1,559 | 1,395 | 346 | |||||||||
Third-party fund investments |
132 | 34 | (319 | ) | ||||||||
Total private equity gains (losses) |
1,691 | 1,429 | 27 | |||||||||
Other income |
40 | 53 | 47 | |||||||||
Net interest income |
(209 | ) | (271 | ) | (264 | ) | ||||||
Total net revenue |
1,522 | 1,211 | (190 | ) | ||||||||
Total noninterest expense |
244 | 288 | 268 | |||||||||
Operating earnings (loss) before income
tax expense |
1,278 | 923 | (458 | ) | ||||||||
Income tax expense |
457 | 321 | (168 | ) | ||||||||
Operating earnings (loss) |
$ | 821 | $ | 602 | $ | (290 | ) | |||||
Private equity portfolio information(b) |
||||||||||||
Direct investments |
||||||||||||
Public securities |
||||||||||||
Carrying value |
$ | 479 | $ | 1,170 | $ | 643 | ||||||
Cost |
403 | 744 | 451 | |||||||||
Quoted public value |
683 | 1,758 | 994 | |||||||||
Private direct securities |
||||||||||||
Carrying value |
5,028 | 5,686 | 5,508 | |||||||||
Cost |
6,463 | 7,178 | 6,960 | |||||||||
Third-party fund investments |
||||||||||||
Carrying value |
669 | 641 | 1,099 | |||||||||
Cost |
1,003 | 1,042 | 1,736 | |||||||||
Total private equity portfolio |
||||||||||||
Carrying value |
$ | 6,176 | $ | 7,497 | $ | 7,250 | ||||||
Cost |
$ | 7,869 | $ | 8,964 | $ | 9,147 | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | For further information on the Firms policies regarding the valuation of the private equity portfolio, see Note 9 on pages 103105 of this Annual Report. |
54 | JPMorgan Chase & Co. / 2005 Annual Report |
December 31, (in millions) | 2005 | 2004 | ||||||
Assets |
||||||||
Cash and due from banks |
$ | 36,670 | $ | 35,168 | ||||
Deposits with banks and Federal funds sold |
26,072 | 28,958 | ||||||
Securities purchased under resale agreements
and Securities borrowed |
204,174 | 141,504 | ||||||
Trading assets debt and equity instruments |
248,590 | 222,832 | ||||||
Trading assets derivative receivables |
49,787 | 65,982 | ||||||
Securities: |
||||||||
Available-for-sale |
47,523 | 94,402 | ||||||
Held-to-maturity |
77 | 110 | ||||||
Loans, net of allowance for loan losses |
412,058 | 394,794 | ||||||
Other receivables |
27,643 | 31,086 | ||||||
Goodwill and other intangible assets |
58,180 | 57,887 | ||||||
All other assets |
88,168 | 84,525 | ||||||
Total assets |
$ | 1,198,942 | $ | 1,157,248 | ||||
Liabilities |
||||||||
Deposits |
$ | 554,991 | $ | 521,456 | ||||
Securities sold under repurchase agreements
and securities lent |
117,124 | 112,347 | ||||||
Trading liabilities debt and equity instruments |
94,157 | 87,942 | ||||||
Trading liabilities derivative payables |
51,773 | 63,265 | ||||||
Long-term debt and capital debt securities |
119,886 | 105,718 | ||||||
All other liabilities |
153,800 | 160,867 | ||||||
Total liabilities |
1,091,731 | 1,051,595 | ||||||
Stockholders equity |
107,211 | 105,653 | ||||||
Total liabilities and stockholders equity |
$ | 1,198,942 | $ | 1,157,248 | ||||
JPMorgan Chase & Co. / 2005 Annual Report | 55 |
| Integrate firmwide capital management activities with capital management activities within each of the lines of business. | |
| Measure performance consistently across all lines of business. | |
| Provide comparability with peer firms for each of the lines of business. |
(in billions) | Yearly Average | |||||||
Line of business equity | 2005 | 2004 | (a) | |||||
Investment Bank |
$ | 20.0 | $ | 17.3 | ||||
Retail Financial Services |
13.4 | 9.1 | ||||||
Card Services |
11.8 | 7.6 | ||||||
Commercial Banking |
3.4 | 2.1 | ||||||
Treasury & Securities Services |
1.9 | 2.5 | ||||||
Asset & Wealth Management |
2.4 | 3.9 | ||||||
Corporate(b) |
52.6 | 33.1 | ||||||
Total common stockholders equity |
$ | 105.5 | $ | 75.6 | ||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. | |
(b) | 2005 includes $43.5 billion of equity to offset goodwill and $9.1 billion of equity, primarily related to Treasury, Private Equity and the Corporate Pension Plan. |
(in billions) | Yearly Average | |||||||
Economic risk capital | 2005 | 2004 | (a) | |||||
Credit risk |
$ | 22.6 | $ | 16.5 | ||||
Market risk |
9.8 | 7.5 | ||||||
Operational risk |
5.5 | 4.5 | ||||||
Business risk |
2.1 | 1.9 | ||||||
Private equity risk |
3.8 | 4.5 | ||||||
Economic risk capital |
43.8 | 34.9 | ||||||
Goodwill |
43.5 | 25.9 | ||||||
Other(b) |
18.2 | 14.8 | ||||||
Total common stockholders equity |
$ | 105.5 | $ | 75.6 | ||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. | |
(b) | Additional capital required to meet internal debt and regulatory rating objectives. |
| Loan equivalent amount for counterparty exposures in an over-the-counter derivative transaction is represented by the expected positive exposure based upon potential movements of underlying market rates. Loan equivalents for unused revolving credit facilities represent the portion of an unused commitment likely, based upon the Firms average portfolio historical experience, to become outstanding in the event an obligor defaults. | |
| Default likelihood is based upon current market conditions for all publicly traded names and investment banking clients, by referencing the growing market in credit derivatives and secondary market loan sales. This methodology produces, in the Firms view, more active risk management by utilizing a forward-looking measure of credit risk. This dynamic measure captures current market conditions and will change with the credit cycle over time impacting the level of credit risk capital. For privately-held firms in the commercial banking portfolio, default likelihood is based upon longer term averages over an entire credit cycle. |
56 | JPMorgan Chase & Co. / 2005 Annual Report |
| Loss severity of exposure is based upon the Firms average historical experience during workouts, with adjustments to account for collateral or subordination. | |
| Market credit spreads are used in the evaluation of changes in exposure value due to credit deterioration. |
Capital ratios | Well-capitalized | |||||||||||
December 31, | 2005 | 2004 | ratios | |||||||||
Tier 1 capital ratio |
8.5 | % | 8.7 | % | 6.0 | % | ||||||
Total capital ratio |
12.0 | 12.2 | 10.0 | |||||||||
Tier 1 leverage ratio |
6.3 | 6.2 | NA | |||||||||
Total stockholders equity to assets |
8.9 | 9.1 | NA | |||||||||
December 31, (in millions) | 2005 | 2004 | ||||||
Total Tier 1 capital |
$ | 72,474 | $ | 68,621 | ||||
Total Tier 2 capital |
29,963 | 28,186 | ||||||
Total capital |
$ | 102,437 | $ | 96,807 | ||||
Risk-weighted assets |
$ | 850,643 | $ | 791,373 | ||||
Total adjusted average assets |
1,152,546 | 1,102,456 | ||||||
JPMorgan Chase & Co. / 2005 Annual Report | 57 |
58 | JPMorgan Chase & Co. / 2005 Annual Report |
Year ended December 31,(a) | ||||||||||||
(in millions) | VIEs | (b) | QSPEs | Total | ||||||||
2005 |
$ | 222 | $ | 1,645 | $ | 1,867 | ||||||
2004 |
154 | 1,438 | 1,592 | |||||||||
2003 |
79 | 979 | 1,058 | |||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | Includes VIE-related revenue (i.e., revenue associated with consolidated and significant nonconsolidated VIEs). |
2005 | ||||||||||||||||||||||||
By remaining maturity at December 31, | Under | 13 | 35 | Over | 2004 | |||||||||||||||||||
(in millions) | 1 year | years | years | 5 years | Total | Total | ||||||||||||||||||
Lending-related |
||||||||||||||||||||||||
Consumer |
$ | 597,047 | $ | 4,177 | $ | 3,971 | $ | 50,401 | $ | 655,596 | $ | 601,196 | ||||||||||||
Wholesale: |
||||||||||||||||||||||||
Other unfunded commitments to extend
credit(a)(b) |
78,912 | 47,930 | 64,244 | 17,383 | 208,469 | 185,822 | ||||||||||||||||||
Asset purchase agreements(c) |
9,501 | 17,785 | 2,947 | 862 | 31,095 | 39,330 | ||||||||||||||||||
Standby letters of credit and
guarantees(a)(d) |
24,836 | 19,588 | 27,935 | 4,840 | 77,199 | 78,084 | ||||||||||||||||||
Other letters of credit(a) |
6,128 | 586 | 247 | 40 | 7,001 | 6,163 | ||||||||||||||||||
Total wholesale |
119,377 | 85,889 | 95,373 | 23,125 | 323,764 | 309,399 | ||||||||||||||||||
Total lending-related |
$ | 716,424 | $ | 90,066 | $ | 99,344 | $ | 73,526 | $ | 979,360 | $ | 910,595 | ||||||||||||
Other guarantees |
||||||||||||||||||||||||
Securities lending guarantees(e) |
$ | 244,316 | $ | | $ | | $ | | $ | 244,316 | $ | 220,783 | ||||||||||||
Derivatives qualifying as guarantees(f) |
25,158 | 14,153 | 2,264 | 20,184 | 61,759 | 53,312 | ||||||||||||||||||
Contractual cash obligations |
||||||||||||||||||||||||
By remaining maturity at December 31, (in
millions) |
||||||||||||||||||||||||
Time deposits of $100,000 and over |
$ | 111,359 | $ | 2,917 | $ | 805 | $ | 692 | $ | 115,773 | $ | 115,343 | ||||||||||||
Long-term debt |
16,323 | 41,137 | 19,107 | 31,790 | 108,357 | 95,422 | ||||||||||||||||||
Trust preferred capital debt securities |
| | | 11,529 | 11,529 | 10,296 | ||||||||||||||||||
FIN 46R long-term beneficial interests(g) |
106 | 80 | 24 | 2,144 | 2,354 | 6,393 | ||||||||||||||||||
Operating leases(h) |
993 | 1,849 | 1,558 | 5,334 | 9,734 | 9,853 | ||||||||||||||||||
Contractual purchases and capital expenditures |
1,145 | 777 | 255 | 147 | 2,324 | 2,742 | ||||||||||||||||||
Obligations under affinity and co-brand programs |
1,164 | 2,032 | 1,891 | 1,790 | 6,877 | 4,402 | ||||||||||||||||||
Other liabilities(i) |
762 | 1,636 | 1,172 | 8,076 | 11,646 | 10,966 | ||||||||||||||||||
Total |
$ | 131,852 | $ | 50,428 | $ | 24,812 | $ | 61,502 | $ | 268,594 | $ | 255,417 | ||||||||||||
(a) | Represents contractual amount net of risk participations totaling $29.3 billion and $26.4 billion at December 31, 2005 and 2004, respectively. | |
(b) | Includes unused advised lines of credit totaling $28.3 billion and $22.8 billion at December 31, 2005 and 2004, respectively, which are not legally binding. In regulatory filings with the FRB, unused advised lines are not reportable. | |
(c) | The maturity is based upon the weighted average life of the underlying assets in the SPE, primarily multi-seller asset-backed commercial paper conduits. | |
(d) | Includes unused commitments to issue standby letters of credit of $37.5 billion and $38.4 billion at December 31, 2005 and 2004, respectively. | |
(e) | Collateral held by the Firm in support of securities lending indemnification agreements was $245.0 billion and $221.6 billion at December 31, 2005 and 2004, respectively. | |
(f) | Represents notional amounts of derivative guarantees. For a further discussion of guarantees, see Note 27 on pages 124125 of this Annual Report. | |
(g) | Included on the Consolidated balance sheets in Beneficial interests issued by consolidated VIEs. | |
(h) | Excludes benefit of noncancelable sublease rentals of $1.3 billion and $689 million at December 31, 2005 and 2004, respectively. | |
(i) | Includes deferred annuity contracts and expected funding for pension and other postretirement benefits for 2006. Funding requirements for pension and postretirement benefits after 2006 are excluded due to the significant variability in the assumptions required to project the timing of future cash payments. |
JPMorgan Chase & Co. / 2005 Annual Report | 59 |
| Risk identification: The Firm identifies risk by dynamically assessing the potential impact of internal and external factors on transactions and positions. Business and risk professionals develop appropriate mitigation strategies for the identified risks. | |
| Risk measurement: The Firm measures risk using a variety of methodologies, including calculating probable loss, unexpected loss and value-at-risk, and by conducting stress tests and making comparisons to external benchmarks. Measurement models and related assumptions are routinely reviewed with the goal of ensuring that the Firms risk estimates are reasonable and reflective of underlying positions. | |
| Risk monitoring/Control: The Firm establishes risk management policies and procedures. These policies contain approved limits by customer, product and business that are monitored on a daily, weekly and monthly basis as appropriate. | |
| Risk reporting: Risk reporting covers all lines of business and is provided to management on a daily, weekly and monthly basis as appropriate. |
60 | JPMorgan Chase & Co. / 2005 Annual Report |
| Holding company short-term position: Measures the parent holding companys ability to repay all obligations with a maturity of less than one year at a time when the ability of the Firms subsidiaries to pay dividends to the parent company is constrained. Holding company short-term position is managed to a positive position over time. | |
| Cash capital surplus: Measures the Firms ability to fund assets on a fully collateralized basis, assuming access to unsecured funding is lost. This measurement is intended to ensure that the illiquid portion of the balance sheet can be funded by equity, long-term debt, trust preferred securities and deposits the Firm believes to be core. |
| Basic surplus: Measures the Banks ability to sustain a 90-day stress event that is specific to the Firm where no new funding can be raised to meet obligations as they come due. |
JPMorgan Chase & Co. / 2005 Annual Report | 61 |
Short-term debt | Senior long-term debt | |||||||||||
Moody's | S&P | Fitch | Moody's | S&P | Fitch | |||||||
JPMorgan Chase & Co.
|
P-1 | A-1 | F1 | Aa3 | A+ | A+ | ||||||
JPMorgan Chase Bank, N.A.
|
P-1 | A-1+ | F1+ | Aa2 | AA- | A+ | ||||||
Chase Bank USA, N.A.
|
P-1 | A-1+ | F1+ | Aa2 | AA- | A+ | ||||||
Moody's | S&P | A.M. Best | ||||
Chase Insurance Life and Annuity Company
|
A2 | A+ | A | |||
Chase Insurance Life Company
|
A2 | A+ | A | |||
62 | JPMorgan Chase & Co. / 2005 Annual Report |
| establishes a comprehensive credit risk policy framework | |
| calculates Allowance for credit losses and ensures appropriate credit risk-based capital management | |
| assigns and manages credit authorities to approve all credit exposure | |
| monitors and manages credit risk across all portfolio segments | |
| manages criticized exposures |
JPMorgan Chase & Co. / 2005 Annual Report | 63 |
Nonperforming | Average annual | |||||||||||||||||||||||||||||||
As of or for the year ended December 31, | Credit exposure | assets(i) | Net charge-offs | net charge-off rate(k) | ||||||||||||||||||||||||||||
(in millions, except ratios) | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | (h) | 2005 | 2004 | (h) | ||||||||||||||||||||||
Total credit portfolio |
||||||||||||||||||||||||||||||||
Loans reported(a) |
$ | 419,148 | $ | 402,114 | $ | 2,343 | (j) | $ | 2,743 | (j) | $ | 3,819 | $ | 3,099 | 1.00 | % | 1.08 | % | ||||||||||||||
Loans securitized(b) |
70,527 | 70,795 | | | 3,776 | 2,898 | 5.47 | 5.51 | ||||||||||||||||||||||||
Total managed loans(c) |
489,675 | 472,909 | 2,343 | 2,743 | 7,595 | 5,997 | 1.68 | 1.76 | ||||||||||||||||||||||||
Derivative receivables(d) |
49,787 | 65,982 | 50 | 241 | NA | NA | NA | NA | ||||||||||||||||||||||||
Interests in purchased receivables |
29,740 | 31,722 | | | NA | NA | NA | NA | ||||||||||||||||||||||||
Total managed credit-related assets |
569,202 | 570,613 | 2,393 | 2,984 | 7,595 | 5,997 | 1.68 | 1.76 | ||||||||||||||||||||||||
Lending-related commitments(e) |
979,360 | 910,595 | NA | NA | NA | NA | NA | NA | ||||||||||||||||||||||||
Assets acquired in loan satisfactions |
NA | NA | 197 | 247 | NA | NA | NA | NA | ||||||||||||||||||||||||
Total credit portfolio |
$ | 1,548,562 | $ | 1,481,208 | $ | 2,590 | $ | 3,231 | $ | 7,595 | $ | 5,997 | 1.68 | % | 1.76 | % | ||||||||||||||||
Credit derivative hedges notional(f) |
$ | (29,882 | ) | $ | (37,200 | ) | $ | (17 | ) | $ | (15 | ) | NA | NA | NA | NA | ||||||||||||||||
Collateral held against derivatives |
(6,000 | ) | (9,301 | ) | NA | NA | NA | NA | NA | NA | ||||||||||||||||||||||
Held-for-sale |
||||||||||||||||||||||||||||||||
Total average HFS loans |
$ | 27,689 | $ | 20,860 | (h) | NA | NA | NA | NA | NA | NA | |||||||||||||||||||||
Nonperforming purchased(g) |
341 | 351 | NA | NA | NA | NA | NA | NA | ||||||||||||||||||||||||
(a) | Loans are presented net of unearned income of $3.0 billion and $4.1 billion at December 31, 2005 and 2004, respectively. | |
(b) | Represents securitized credit card receivables. For a further discussion of credit card securitizations, see Card Services on pages 4546 of this Annual Report. | |
(c) | Past-due 90 days and over and accruing include loans of $1.1 billion and $998 million, and related credit card securitizations of $730 million and $1.3 billion at December 31, 2005 and 2004, respectively. | |
(d) | Reflects net cash received under credit support annexes to legally enforceable master netting agreements of $27 billion and $32 billion as of December 31, 2005 and 2004, respectively. | |
(e) | Includes wholesale unused advised lines of credit totaling $28.3 billion and $22.8 billion at December 31, 2005 and 2004, respectively, which are not legally binding. In regulatory filings with the Federal Reserve Board, unused advised lines are not reportable. Credit card lending-related commitments of $579 billion and $532 billion at December 31, 2005 and 2004, respectively, represents the total available credit to its cardholders; however, the Firm can reduce or cancel these commitments at any time as permitted by law. | |
(f) | Represents the net notional amount of protection purchased and sold of single-name and portfolio credit derivatives used to manage the credit risk of credit exposures; these derivatives do not qualify for hedge accounting under SFAS 133. | |
(g) | Represents distressed HFS wholesale loans purchased as part of IBs proprietary activities, which are excluded from nonperforming assets. | |
(h) | Includes six months of the combined Firms results and six months of heritage JPMorgan Chase results. | |
(i) | Includes nonperforming HFS loans of $136 million and $15 million as of December 31, 2005 and 2004, respectively. | |
(j) | Excludes nonperforming assets related to loans eligible for repurchase as well as loans repurchased from GNMA pools that are insured by government agencies of $1.1 billion and $1.5 billion for December 31, 2005 and 2004, respectively. These amounts are excluded, as reimbursement is proceeding normally. | |
(k) | Net charge-off rates exclude average loans HFS. |
64 | JPMorgan Chase & Co. / 2005 Annual Report |
Wholesale | Nonperforming | Average annual | ||||||||||||||||||||||||||||||
As of or for the year ended December 31, | Credit exposure | assets(g) | Net charge-offs | net charge-off rate(i) | ||||||||||||||||||||||||||||
(in millions, except ratios) | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | (f) | 2005 | 2004 | (f) | ||||||||||||||||||||||
Loans reported(a) |
$ | 150,111 | $ | 135,067 | $ | 992 | $ | 1,574 | $ | (77 | ) | $ | 186 | (0.06 | )% | 0.18 | % | |||||||||||||||
Derivative receivables(b) |
49,787 | 65,982 | 50 | 241 | NA | NA | NA | NA | ||||||||||||||||||||||||
Interests in purchased receivables |
29,740 | 31,722 | | | NA | NA | NA | NA | ||||||||||||||||||||||||
Total wholesale credit-related assets |
229,638 | 232,771 | 1,042 | 1,815 | (77 | ) | 186 | (0.06 | ) | 0.18 | ||||||||||||||||||||||
Lending-related commitments(c) |
323,764 | 309,399 | NA | NA | NA | NA | NA | NA | ||||||||||||||||||||||||
Assets acquired in loan satisfactions |
NA | NA | 17 | 23 | NA | NA | NA | NA | ||||||||||||||||||||||||
Total wholesale credit exposure |
$ | 553,402 | $ | 542,170 | $ | 1,059 | $ | 1,838 | $ | (77 | )(h) | $ | 186 | (0.06 | )% | 0.18 | % | |||||||||||||||
Credit derivative hedges notional(d) |
$ | (29,882 | ) | $ | (37,200 | ) | $ | (17 | ) | $ | (15 | ) | NA | NA | NA | NA | ||||||||||||||||
Collateral held against derivatives |
(6,000 | ) | (9,301 | ) | NA | NA | NA | NA | NA | NA | ||||||||||||||||||||||
Held-for-sale |
||||||||||||||||||||||||||||||||
Total average HFS loans |
$ | 12,014 | $ | 6,124 | (f) | NA | NA | NA | NA | NA | NA | |||||||||||||||||||||
Nonperforming purchased(e) |
341 | 351 | NA | NA | NA | NA | NA | NA | ||||||||||||||||||||||||
(a) | Past-due 90 days and over and accruing include loans of $50 million and $8 million at December 31, 2005 and 2004, respectively. | |
(b) | Reflects net cash received under credit support annexes to legally enforceable master netting agreements of $27 billion and $32 billion as of December 31, 2005 and 2004, respectively. | |
(c) | Includes unused advised lines of credit totaling $28.3 billion and $22.8 billion at December 31, 2005 and 2004, respectively, which are not legally binding. In regulatory filings with the Federal Reserve Board, unused advised lines are not reportable. | |
(d) | Represents the net notional amount of protection purchased and sold of single-name and portfolio credit derivatives used to manage the credit risk of credit exposures; these derivatives do not qualify for hedge accounting under SFAS 133. | |
(e) | Represents distressed HFS loans purchased as part of IBs proprietary activities, which are excluded from nonperforming assets. | |
(f) | Includes six months of the combined Firms results and six months of heritage JPMorgan Chase results. | |
(g) | Includes nonperforming HFS loans of $109 million and $2 million as of December 31, 2005 and 2004, respectively. | |
(h) | Excludes $67 million in gains on sales of nonperforming loans in 2005; for additional information, see page 67 of this Annual Report. | |
(i) | Net charge-off rates exclude average loans HFS. |
Wholesale exposure | Maturity profile(c) | Ratings profile | ||||||||||||||||||||||||||||||
At December 31, 2005 | Investment-grade ("IG")(d) | Noninvestment-grade(d) | Total % | |||||||||||||||||||||||||||||
(in billions, except ratios) | <1 year(d) | 15 years(d) | > 5 years(d) | Total | AAA to BBB- | BB+ & below | Total | of IG(d) | ||||||||||||||||||||||||
Loans |
43 | % | 44 | % | 13 | % | 100 | % | $ | 87 | $ | 45 | $ | 132 | 66 | % | ||||||||||||||||
Derivative receivables |
2 | 42 | 56 | 100 | 42 | 8 | 50 | 84 | ||||||||||||||||||||||||
Interests in purchased
receivables |
41 | 57 | 2 | 100 | 29 | | 29 | 100 | ||||||||||||||||||||||||
Lending-related commitments |
37 | 56 | 7 | 100 | 276 | 48 | 324 | 85 | ||||||||||||||||||||||||
Total excluding HFS |
36 | % | 52 | % | 12 | % | 100 | % | $ | 434 | $ | 101 | 535 | 81 | % | |||||||||||||||||
Held-for-sale(a) |
18 | |||||||||||||||||||||||||||||||
Total exposure |
$ | 553 | ||||||||||||||||||||||||||||||
Credit derivative hedges
notional(b) |
15 | % | 74 | % | 11 | % | 100 | % | $ | (27 | ) | $ | (3 | ) | $ | (30 | ) | 90 | % | |||||||||||||
Maturity profile(c) | Ratings profile | |||||||||||||||||||||||||||||||
At December 31, 2004 | Investment-grade ("IG")(d) | Noninvestment-grade(d) | Total % | |||||||||||||||||||||||||||||
(in billions, except ratios) | <1 year(d) | 15 years(d) | > 5 years(d) | Total | AAA to BBB- | BB+ & below | Total | of IG(d) | ||||||||||||||||||||||||
Loans |
44 | % | 43 | % | 13 | % | 100 | % | $ | 83 | $ | 46 | $ | 129 | 64 | % | ||||||||||||||||
Derivative receivables |
19 | 39 | 42 | 100 | 57 | 9 | 66 | 86 | ||||||||||||||||||||||||
Interests in purchased
receivables |
37 | 61 | 2 | 100 | 32 | | 32 | 100 | ||||||||||||||||||||||||
Lending-related commitments |
46 | 52 | 2 | 100 | 266 | 43 | 309 | 86 | ||||||||||||||||||||||||
Total excluding HFS |
42 | % | 49 | % | 9 | % | 100 | % | $ | 438 | $ | 98 | 536 | 82 | % | |||||||||||||||||
Held-for-sale(a) |
6 | |||||||||||||||||||||||||||||||
Total exposure |
$ | 542 | ||||||||||||||||||||||||||||||
Credit derivative hedges
notional(b) |
18 | % | 77 | % | 5 | % | 100 | % | $ | (35 | ) | $ | (2 | ) | $ | (37 | ) | 95 | % | |||||||||||||
(a) | HFS loans primarily relate to securitization and syndication activities. | |
(b) | Ratings are based upon the underlying referenced assets. | |
(c) | The maturity profile of Loans and lending-related commitments is based upon the remaining contractual maturity. The maturity profile of Derivative receivables is based upon the maturity profile of Average exposure. See page 68 of this Annual Report for a further discussion of Average exposure. | |
(d) | Excludes HFS loans. |
JPMorgan Chase & Co. / 2005 Annual Report | 65 |
Collateral | ||||||||||||||||||||||||||||
Noninvestment-grade | held against | |||||||||||||||||||||||||||
As of December 31, 2005 | Credit | Investment | Net charge-offs/ | Credit | derivative | |||||||||||||||||||||||
(in millions, except ratios) | exposure | (d) | grade | Noncriticized | Criticized | (recoveries) | derivative hedges(e) | receivables | (d) | |||||||||||||||||||
Top 10 industries(a) |
||||||||||||||||||||||||||||
Banks and finance companies |
$ | 53,579 | 88 | % | $ | 6,462 | $ | 232 | $ | (16 | ) | $ | (9,490 | ) | $ | (1,482 | ) | |||||||||||
Real estate |
29,974 | 55 | 13,226 | 276 | | (560 | ) | (2 | ) | |||||||||||||||||||
Consumer products |
25,678 | 71 | 6,791 | 590 | 2 | (927 | ) | (28 | ) | |||||||||||||||||||
Healthcare |
25,435 | 79 | 4,977 | 243 | 12 | (581 | ) | (7 | ) | |||||||||||||||||||
State and municipal governments(b) |
25,328 | 98 | 409 | 40 | | (597 | ) | (1 | ) | |||||||||||||||||||
Utilities |
20,482 | 90 | 1,841 | 295 | (4 | ) | (1,624 | ) | | |||||||||||||||||||
Retail and consumer services(b) |
19,920 | 75 | 4,654 | 288 | 12 | (989 | ) | (5 | ) | |||||||||||||||||||
Oil and gas |
18,200 | 77 | 4,267 | 9 | | (1,007 | ) | | ||||||||||||||||||||
Asset managers |
17,358 | 82 | 2,949 | 103 | (1 | ) | (25 | ) | (954 | ) | ||||||||||||||||||
Securities firms and exchanges |
17,094 | 89 | 1,833 | 15 | | (2,009 | ) | (1,525 | ) | |||||||||||||||||||
All other |
282,802 | 82 | 47,966 | 3,081 | (82 | ) | (12,073 | ) | (1,996 | ) | ||||||||||||||||||
Total excluding HFS |
$ | 535,850 | 81 | % | $ | 95,375 | $ | 5,172 | $ | (77 | ) | $ | (29,882 | ) | $ | (6,000 | ) | |||||||||||
Held-for-sale(c) |
17,552 | |||||||||||||||||||||||||||
Total exposure |
$ | 553,402 | ||||||||||||||||||||||||||
Collateral | ||||||||||||||||||||||||||||
Noninvestment-grade | held against | |||||||||||||||||||||||||||
As of December 31, 2004 | Credit | Investment | Net charge-offs/ | Credit | derivative | |||||||||||||||||||||||
(in millions, except ratios) | exposure | (d) | grade | Noncriticized | Criticized | (recoveries) | derivative hedges(e) | receivables | (d) | |||||||||||||||||||
Top 10 industries(a) Banks and finance companies |
$ | 55,840 | 90 | % | $ | 5,348 | $ | 187 | $ | 6 | $ | (11,695 | ) | $ | (3,464 | ) | ||||||||||||
Real estate |
25,761 | 62 | 9,036 | 765 | 9 | (800 | ) | (45 | ) | |||||||||||||||||||
Consumer products |
21,251 | 68 | 6,267 | 479 | 85 | (1,189 | ) | (50 | ) | |||||||||||||||||||
Healthcare |
21,890 | 79 | 4,321 | 249 | 1 | (741 | ) | (13 | ) | |||||||||||||||||||
State and municipal governments |
19,728 | 97 | 592 | 14 | | (394 | ) | (18 | ) | |||||||||||||||||||
Utilities |
21,132 | 85 | 2,316 | 890 | 63 | (2,247 | ) | (27 | ) | |||||||||||||||||||
Retail and consumer services |
21,573 | 76 | 4,815 | 393 | | (1,767 | ) | (42 | ) | |||||||||||||||||||
Oil and gas |
14,420 | 81 | 2,713 | 51 | 9 | (1,282 | ) | (26 | ) | |||||||||||||||||||
Asset managers |
20,199 | 79 | 4,192 | 115 | (15 | ) | (80 | ) | (655 | ) | ||||||||||||||||||
Securities firms and exchanges |
18,034 | 88 | 2,218 | 17 | 1 | (1,398 | ) | (2,068 | ) | |||||||||||||||||||
All other |
295,902 | 82 | 48,150 | 5,122 | 27 | (15,607 | ) | (2,893 | ) | |||||||||||||||||||
Total excluding HFS |
$ | 535,730 | 82 | % | $ | 89,968 | $ | 8,282 | $ | 186 | $ | (37,200 | ) | $ | (9,301 | ) | ||||||||||||
Held-for-sale(c) |
6,440 | |||||||||||||||||||||||||||
Total exposure |
$ | 542,170 | ||||||||||||||||||||||||||
(a) | Based upon December 31, 2005, determination of Top 10 industries. | |
(b) | During the second quarter of 2005, the Firm revised its industry classification for educational institutions to better reflect risk correlations and enhance the Firms management of industry risk, resulting in an increase to State and municipal governments and a decrease to Retail and consumer services. | |
(c) | HFS loans primarily relate to securitization and syndication activities. | |
(d) | Credit exposure is net of risk participations and excludes the benefit of credit derivative hedges and collateral held against derivative receivables or loans. At December 31, 2005 and 2004, collateral held against derivative receivables excludes $27 billion and $32 billion, respectively, of cash collateral as a result of the Firm electing to report the fair value of derivative assets and liabilities net of cash received and paid, respectively, under legally enforceable master netting agreements. | |
(e) | Represents notional amounts only; these credit derivatives do not qualify for hedge accounting under SFAS 133. |
66 | JPMorgan Chase & Co. / 2005 Annual Report |
2005 | 2004 | |||||||||||||||
As of December 31, | Credit | % of | Credit | % of | ||||||||||||
(in millions) | exposure | portfolio | exposure | portfolio | ||||||||||||
Media |
$ | 684 | 13.2 | % | $ | 509 | 6.1 | % | ||||||||
Automotive |
643 | 12.4 | 359 | 4.4 | ||||||||||||
Consumer products |
590 | 11.4 | 479 | 5.8 | ||||||||||||
Telecom services |
430 | 8.3 | 275 | 3.3 | ||||||||||||
Airlines |
333 | 6.5 | 450 | 5.4 | ||||||||||||
Utilities |
295 | 5.7 | 890 | 10.7 | ||||||||||||
Machinery and equipment
manufacturing |
290 | 5.6 | 459 | 5.6 | ||||||||||||
Retail and consumer services |
288 | 5.6 | 393 | 4.8 | ||||||||||||
Real estate |
276 | 5.4 | 765 | 9.2 | ||||||||||||
Building materials/construction |
266 | 5.1 | 430 | 5.2 | ||||||||||||
All other |
1,077 | 20.8 | 3,273 | 39.5 | ||||||||||||
Total excluding HFS |
$ | 5,172 | 100.0 | % | $ | 8,282 | 100.0 | % | ||||||||
Held-for-sale(a) |
1,069 | 2 | ||||||||||||||
Total |
$ | 6,241 | $ | 8,284 | ||||||||||||
(a) | HFS loans primarily relate to securitization and syndication activities; excludes purchased nonperforming HFS loans. |
| Banks and finance companies: This industry group, primarily consisting of exposure to commercial banks, is the largest segment of the Firms wholesale credit portfolio. Credit quality is high, as 88% of the exposure in this category is rated investment-grade. | |
| Real estate: This industry, the second largest segment of the Firms wholesale credit portfolio, grew modestly in 2005, as the portfolio continued to benefit from relatively low interest rates, high liquidity and increased capital demand. The exposure is well-diversified by client, transaction type, geography and property type. | |
| Oil and gas: During 2005, exposure to this industry group increased as a result of the rise in oil and gas prices; derivative receivables MTM increased on contracts that were executed at lower price levels. In addition, the Firm extended shorter term loans that were expected to be refinanced through capital market transactions and further syndications. | |
| Media: Criticized exposures within Media increased in 2005, and this industry now represents the largest percentage of the total criticized portfolio. The increase was attributable primarily to the extension of short-term financings to select borrowers. The remaining Media portfolio is stable, with the majority of the exposure rated investment-grade. | |
| Automotive: In 2005, Automotive original equipment manufacturers (OEMs) and suppliers based in North America were negatively affected by a challenging operating environment. As a result, criticized exposures to the Automotive industry grew, primarily as a result of downgrades to select names within the portfolio. However, though larger in the aggregate, most of the criticized exposure remains undrawn and performing. | |
| All other: All other in the wholesale credit exposure concentration table at December 31, 2005, excluding HFS, included $283 billion of credit exposure to 21 industry segments. Exposures related to SPEs and high-net-worth individuals totaled 45% of this category. SPEs provide secured financing (generally backed by receivables, loans or bonds on a bankruptcy-remote, non-recourse or limited-recourse basis) originated by companies in a diverse group of industries that are not highly correlated. The remaining All other exposure is well diversified across other industries; none comprise more than 3% of total exposure. |
JPMorgan Chase & Co. / 2005 Annual Report | 67 |
As of December 31, | Notional amounts(a) | Derivative receivables MTM | ||||||||||||||
(in billions) | 2005 | 2004 | 2005 | 2004 | ||||||||||||
Interest rate |
$ | 38,493 | $ | 37,022 | $ | 30 | $ | 46 | ||||||||
Foreign exchange |
2,136 | 1,886 | 3 | 8 | ||||||||||||
Equity |
458 | 434 | 6 | 6 | ||||||||||||
Credit derivatives |
2,241 | 1,071 | 4 | 3 | ||||||||||||
Commodity |
265 | 101 | 7 | 3 | ||||||||||||
Total |
$ | 43,593 | $ | 40,514 | 50 | 66 | ||||||||||
Collateral held against
derivative receivables |
NA | NA | (6 | ) | (9 | ) | ||||||||||
Exposure net of collateral |
NA | NA | $ | 44 | (b) | $ | 57 | (c) | ||||||||
(a) | The notional amounts represent the gross sum of long and short third-party notional derivative contracts, excluding written options and foreign exchange spot contracts, which significantly exceed the possible credit losses that could arise from such transactions. For most derivative transactions, the notional principal amount does not change hands; it is used simply as a reference to calculate payments. | |
(b) | The Firm held $33 billion of collateral against derivative receivables as of December 31, 2005, consisting of $27 billion in net cash received under credit support annexes to legally enforceable master netting agreements, and $6 billion of other liquid securities collateral. The benefit of the $27 billion is reflected within the $50 billion of derivative receivables MTM. Excluded from the $33 billion of collateral is $10 billion of collateral delivered by clients at the initiation of transactions; this collateral secures exposure that could arise in the derivatives portfolio should the MTM of the clients transactions move in the Firms favor. Also excluded are credit enhancements in the form of letters of credit and surety receivables. | |
(c) | The Firm held $41 billion of collateral against derivative receivables as of December 31, 2004, consisting of $32 billion in net cash received under credit support annexes to legally enforceable master netting agreements, and $9 billion of other liquid securities collateral. The benefit of the $32 billion is reflected within the $66 billion of derivative receivables MTM. Excluded from the $41 billion of collateral is $10 billion of collateral delivered by clients at the initiation of transactions; this collateral secures exposure that could arise in the derivatives portfolio should the MTM of the clients transactions move in the Firms favor. Also excluded are credit enhancements in the form of letters of credit and surety receivables. |
68 | JPMorgan Chase & Co. / 2005 Annual Report |
Rating equivalent | 2005 | 2004 | ||||||||||||||
December 31, | Exposure net | % of exposure | Exposure net | % of exposure | ||||||||||||
(in millions) | of collateral | (a) | net of collateral | of collateral | (b) | net of collateral | ||||||||||
AAA to AA- |
$ | 20,735 | 48 | % | $ | 30,384 | 53 | % | ||||||||
A+ to A- |
8,074 | 18 | 9,109 | 16 | ||||||||||||
BBB+ to BBB- |
8,243 | 19 | 9,522 | 17 | ||||||||||||
BB+ to B- |
6,580 | 15 | 7,271 | 13 | ||||||||||||
CCC+ and below |
155 | | 395 | 1 | ||||||||||||
Total |
$ | 43,787 | 100 | % | $ | 56,681 | 100 | % | ||||||||
(a) | The Firm held $33 billion of collateral against derivative receivables as of December 31, 2005, consisting of $27 billion in net cash received under credit support annexes to legally enforceable master netting agreements, and $6 billion of other liquid securities collateral. The benefit of the $27 billion is reflected within the $50 billion of derivative receivables MTM. Excluded from the $33 billion of collateral is $10 billion of collateral delivered by clients at the initiation of transactions; this collateral secures exposure that could arise in the derivatives portfolio should the MTM of the clients transactions move in the Firms favor. Also excluded are credit enhancements in the form of letters of credit and surety receivables. | |
(b) | The Firm held $41 billion of collateral against derivative receivables as of December 31, 2004, consisting of $32 billion in net cash received under credit support annexes to legally enforceable master netting agreements, and $9 billion of other liquid securities collateral. The benefit of the $32 billion is reflected within the $66 billion of derivative receivables MTM. Excluded from the $41 billion of collateral is $10 billion of collateral delivered by clients at the initiation of transactions; this collateral secures exposure that could arise in the derivatives portfolio should the MTM of the clients transactions move in the Firms favor. Also excluded are credit enhancements in the form of letters of credit and surety receivables. |
Notional amount | ||||||||||||||||||||
Portfolio management | Dealer/client | |||||||||||||||||||
December 31, | Protection | Protection | Protection | Protection | ||||||||||||||||
(in billions) | purchased | (a) | sold | purchased | sold | Total | ||||||||||||||
2005 |
$ | 31 | $ | 1 | $ | 1,096 | $ | 1,113 | $ | 2,241 | ||||||||||
2004 |
37 | | 501 | 533 | 1,071 | |||||||||||||||
(a) | Includes $848 million and $2 billion at December 31, 2005 and 2004, respectively, of portfolio credit derivatives. |
JPMorgan Chase & Co. / 2005 Annual Report | 69 |
December 31, | Notional amount of protection purchased | |||||||
(in millions) | 2005 | 2004 | ||||||
Credit derivatives used to manage: |
||||||||
Loans and lending-related commitments |
$ | 18,926 | $ | 25,002 | ||||
Derivative receivables |
12,088 | 12,235 | ||||||
Total |
$ | 31,014 | $ | 37,237 | ||||
For the year ended December 31, | ||||||||
(in millions) | 2005 | 2004 | (c) | |||||
Hedges of lending-related commitments(a) |
$ | 24 | $ | (234 | ) | |||
CVA and hedges of CVA(a) |
84 | 188 | ||||||
Net gains (losses)(b) |
$ | 108 | $ | (46 | ) | |||
(a) | These hedges do not qualify for hedge accounting under SFAS 133. | ||
(b) | Excludes $8 million and $52 million in 2005 and 2004, respectively, of other credit portfolio trading results that are not associated with hedging activities. | ||
(c) | Includes six months of the combined Firms results and six months of heritage JPMorgan Chase results. |
70 | JPMorgan Chase & Co. / 2005 Annual Report |
Credit | Nonperforming | Average annual | ||||||||||||||||||||||||||||||||
As of or for the year ended December 31, | exposure | assets(g) | Net charge-offs | net charge-off rate(i) | ||||||||||||||||||||||||||||||
(in millions, except ratios) | 2005 | 2004 | 2005 | 2004 | 2005 | 2004(f) | 2005 | 2004(f) | ||||||||||||||||||||||||||
Consumer real estate |
||||||||||||||||||||||||||||||||||
Home finance Home equity and other(a) |
$ | 76,727 | $ | 67,837 | $ | 422 | $ | 416 | $ | 129 | $ | 554 | 0.18 | % | 1.18 | % | ||||||||||||||||||
Home finance Mortgage |
56,726 | 56,816 | 441 | 257 | 25 | 19 | 0.05 | 0.05 | ||||||||||||||||||||||||||
Total Home finance(a) |
133,453 | 124,653 | 863 | (h) | 673 | (h) | 154 | 573 | 0.13 | 0.65 | ||||||||||||||||||||||||
Auto & education finance(b) |
49,047 | 62,712 | 195 | 193 | 277 | 263 | 0.54 | 0.52 | ||||||||||||||||||||||||||
Consumer & small business and other |
14,799 | 15,107 | 280 | 295 | 141 | 154 | 0.98 | 1.64 | ||||||||||||||||||||||||||
Credit card receivables reported(c) |
71,738 | 64,575 | 13 | 8 | 3,324 | 1,923 | 4.94 | 4.95 | ||||||||||||||||||||||||||
Total consumer loans reported |
269,037 | 267,047 | 1,351 | 1,169 | 3,896 | 2,913 | 1.56 | 1.56 | ||||||||||||||||||||||||||
Credit card securitizations(c)(d) |
70,527 | 70,795 | | | 3,776 | 2,898 | 5.47 | 5.51 | ||||||||||||||||||||||||||
Total consumer loans managed(c) |
339,564 | 337,842 | 1,351 | 1,169 | 7,672 | 5,811 | 2.41 | 2.43 | ||||||||||||||||||||||||||
Assets acquired in loan satisfactions |
NA | NA | 180 | 224 | NA | NA | NA | NA | ||||||||||||||||||||||||||
Total consumer related assets managed |
339,564 | 337,842 | 1,531 | 1,393 | 7,672 | 5,811 | 2.41 | 2.43 | ||||||||||||||||||||||||||
Consumer lending-related commitments: |
||||||||||||||||||||||||||||||||||
Home finance |
65,106 | 53,223 | NA | NA | NA | NA | NA | NA | ||||||||||||||||||||||||||
Auto & education finance |
5,732 | 5,193 | NA | NA | NA | NA | NA | NA | ||||||||||||||||||||||||||
Consumer & small business and other |
5,437 | 10,312 | NA | NA | NA | NA | NA | NA | ||||||||||||||||||||||||||
Credit card(e) |
579,321 | 532,468 | NA | NA | NA | NA | NA | NA | ||||||||||||||||||||||||||
Total lending-related commitments |
655,596 | 601,196 | NA | NA | NA | NA | NA | NA | ||||||||||||||||||||||||||
Total consumer credit portfolio |
$ | 995,160 | $ | 939,038 | $ | 1,531 | $ | 1,393 | $ | 7,672 | $ | 5,811 | 2.41 | % | 2.43 | % | ||||||||||||||||||
Total average HFS loans |
$ | 15,675 | $ | 14,736 | (f) | NA | NA | NA | NA | NA | NA | |||||||||||||||||||||||
Memo: Credit card managed |
142,265 | 135,370 | $ | 13 | $ | 8 | $ | 7,100 | $ | 4,821 | 5.21 | % | 5.27 | % | ||||||||||||||||||||
(a) | Includes $406 million of charge-offs related to the manufactured home loan portfolio in the fourth quarter of 2004. | |
(b) | Excludes operating lease-related assets of $858 million for December 31, 2005. Balances at December 31, 2004, were insignificant. | |
(c) | Past-due loans 90 days and over and accruing includes credit card receivables of $1.1 billion and $998 million, and related credit card securitizations of $730 million and $1.3 billion at December 31, 2005 and 2004, respectively. | |
(d) | Represents securitized credit cards. For a further discussion of credit card securitizations, see Card Services on pages 4546 of this Annual Report. | |
(e) | The credit card lending-related commitments represent the total available credit to the Firms cardholders. The Firm has not experienced, and does not anticipate, that all of its cardholders will exercise their entire available line of credit at any given point in time. The Firm can reduce or cancel a credit card commitment by providing the cardholder prior notice or without notice as permitted by law. | |
(f) | Includes six months of the combined Firms results and six months of heritage JPMorgan Chase results. | |
(g) | Includes nonperforming HFS loans of $27 million and $13 million at December 31, 2005 and 2004, respectively. | |
(h) | Excludes nonperforming assets related to loans eligible for repurchase as well as loans repurchased from GNMA pools that are insured by government agencies of $1.1 billion and $1.5 billion for December 31, 2005, and December 31, 2004, respectively. These amounts are excluded, as reimbursement is proceeding normally. | |
(i) | Net charge-off rates exclude average loans HFS. |
JPMorgan Chase & Co. / 2005 Annual Report | 71 |
December 31, | 2005 | 2004 | ||||||||||||||
(in billions) | Outstanding | % | Outstanding | % | ||||||||||||
Top 10 U.S. States |
||||||||||||||||
California |
$ | 24.4 | 18 | % | $ | 22.8 | 18 | % | ||||||||
New York |
19.5 | 15 | 18.4 | 15 | ||||||||||||
Florida |
10.3 | 8 | 7.1 | 6 | ||||||||||||
Illinois |
7.7 | 6 | 8.0 | 6 | ||||||||||||
Texas |
7.6 | 6 | 7.9 | 6 | ||||||||||||
Ohio |
6.1 | 5 | 6.1 | 5 | ||||||||||||
Arizona |
5.8 | 4 | 5.2 | 4 | ||||||||||||
New Jersey |
5.3 | 4 | 4.5 | 4 | ||||||||||||
Michigan |
5.2 | 4 | 5.2 | 4 | ||||||||||||
Colorado |
3.2 | 2 | 3.2 | 3 | ||||||||||||
Total Top 10 |
95.1 | 72 | 88.4 | 71 | ||||||||||||
Other |
38.4 | 28 | 36.3 | 29 | ||||||||||||
Total |
$ | 133.5 | 100 | % | $ | 124.7 | 100 | % | ||||||||
72 | JPMorgan Chase & Co. / 2005 Annual Report |
For the year ended December 31, | 2005 | 2004(e) | ||||||||||||||||||||||
(in millions) | Wholesale | Consumer | Total | Wholesale | Consumer | Total | ||||||||||||||||||
Loans: |
||||||||||||||||||||||||
Beginning balance at January 1, |
$ | 3,098 | $ | 4,222 | $ | 7,320 | $ | 2,204 | $ | 2,319 | $ | 4,523 | ||||||||||||
Addition resulting
from the Merger, July 1, 2004 |
| | | 1,788 | 1,335 | 3,123 | ||||||||||||||||||
Gross charge-offs |
(255 | ) | (4,614 | ) | (4,869 | ) | (543 | ) | (3,262 | ) | (3,805 | ) | ||||||||||||
Gross recoveries |
332 | 718 | 1,050 | 357 | 349 | 706 | ||||||||||||||||||
Net (charge-offs) recoveries |
77 | (3,896 | ) | (3,819 | ) | (186 | ) | (2,913 | ) | (3,099 | ) | |||||||||||||
Provision for loan losses: |
||||||||||||||||||||||||
Provision excluding accounting
policy conformity |
(716 | ) | 4,291 | 3,575 | (c) | (605 | ) | 2,403 | 1,798 | |||||||||||||||
Accounting policy conformity |
| | | (103 | ) | 1,188 | (f) | 1,085 | ||||||||||||||||
Total Provision for loan losses |
(716 | ) | 4,291 | 3,575 | (708 | ) | 3,591 | 2,883 | ||||||||||||||||
Other |
(6 | ) | 20 | 14 | | (110 | ) | (110 | )(g) | |||||||||||||||
Ending balance |
$ | 2,453 | (a) | $ | 4,637 | (b) | $ | 7,090 | $ | 3,098 | (a) | $ | 4,222 | (b) | $ | 7,320 | ||||||||
Components: |
||||||||||||||||||||||||
Asset specific |
$ | 203 | $ | | $ | 203 | $ | 469 | $ | | $ | 469 | ||||||||||||
Statistical component |
1,629 | 3,422 | 5,051 | 1,639 | 3,169 | 4,808 | ||||||||||||||||||
Adjustment to statistical component |
621 | 1,215 | 1,836 | 990 | 1,053 | 2,043 | ||||||||||||||||||
Total Allowance for loan losses |
$ | 2,453 | $ | 4,637 | $ | 7,090 | $ | 3,098 | $ | 4,222 | $ | 7,320 | ||||||||||||
Lending-related commitments: |
||||||||||||||||||||||||
Beginning balance at January 1, |
$ | 480 | $ | 12 | $ | 492 | $ | 320 | $ | 4 | $ | 324 | ||||||||||||
Addition resulting
from the Merger, July 1, 2004 |
| | | 499 | 9 | 508 | ||||||||||||||||||
Provision for lending-related commitments: |
||||||||||||||||||||||||
Provision excluding accounting
policy conformity |
(95 | ) | 3 | (92 | ) | (111 | ) | (1 | ) | (112 | ) | |||||||||||||
Accounting policy conformity |
| | | (227 | ) | | (227 | ) | ||||||||||||||||
Total Provision for lending-related commitments |
(95 | ) | 3 | (92 | ) | (338 | ) | (1 | ) | (339 | ) | |||||||||||||
Other |
| | | (1 | ) | | (1 | ) | ||||||||||||||||
Ending balance |
$ | 385 | $ | 15 | $ | 400 | (d) | $ | 480 | $ | 12 | $ | 492 | (h) | ||||||||||
(a) | The wholesale allowance for loan losses to total wholesale loans was 1.85% and 2.41%, excluding wholesale HFS loans of $17.6 billion and $6.4 billion at December 31, 2005 and 2004, respectively. | |
(b) | The consumer allowance for loan losses to total consumer loans was 1.84% and 1.70%, excluding consumer HFS loans of $16.6 billion and $18.0 billion at December 31, 2005 and 2004, respectively. | |
(c) | 2005 includes a special provision related to Hurricane Katrina allocated as follows: Retail Financial Services $250 million, Card Services $100 million, Commercial Banking $35 million, Asset & Wealth Management $3 million and Corporate $12 million. | |
(d) | Includes $60 million of asset-specific and $340 million of formula-based allowance at December 31, 2005. The formula-based allowance for lending-related commitments is based upon statistical calculation. There is no adjustment to the statistical calculation for lending-related commitments. | |
(e) | Includes six months of the combined Firms results and six months of heritage JPMorgan Chase results. | |
(f) | Reflects an increase of $1.4 billion as a result of the decertification of heritage Bank One sellers interest in credit card securitizations, partially offset by a $254 million decrease in the allowance to conform methodologies in 2004. | |
(g) | Primarily represents the transfer of the allowance for accrued interest and fees on reported and securitized credit card loans. | |
(h) | Includes $130 million of asset-specific and $362 million of formula-based allowance at December 31, 2004. The formula-based allowance for lending-related commitments is based upon a statistical calculation. There is no adjustment to the statistical calculation for lending-related commitments. |
JPMorgan Chase & Co. / 2005 Annual Report | 73 |
Provision for | ||||||||||||||||||||||||
For the year ended December 31,(a) | Provision for loan losses | lending-related commitments | Total provision for credit losses | |||||||||||||||||||||
(in millions) | 2005 | 2004 | 2005 | 2004 | 2005 | (c) | 2004 | |||||||||||||||||
Investment Bank |
$ | (757 | ) | $ | (525 | ) | $ | (81 | ) | $ | (115 | ) | $ | (838 | ) | $ | (640 | ) | ||||||
Commercial Banking |
87 | 35 | (14 | ) | 6 | 73 | 41 | |||||||||||||||||
Treasury & Securities Services |
(1 | ) | 7 | 1 | | | 7 | |||||||||||||||||
Asset & Wealth Management |
(55 | ) | (12 | ) | (1 | ) | (2 | ) | (56 | ) | (14 | ) | ||||||||||||
Corporate |
10 | (110 | ) | | | 10 | (110 | ) | ||||||||||||||||
Total Wholesale |
(716 | ) | (605 | ) | (95 | ) | (111 | ) | (811 | ) | (716 | ) | ||||||||||||
Retail Financial Services |
721 | 450 | 3 | (1 | ) | 724 | 449 | |||||||||||||||||
Card Services |
3,570 | 1,953 | | | 3,570 | 1,953 | ||||||||||||||||||
Total Consumer |
4,291 | 2,403 | 3 | (1 | ) | 4,294 | 2,402 | |||||||||||||||||
Accounting policy conformity(b) |
| 1,085 | | (227 | ) | | 858 | |||||||||||||||||
Total provision for credit losses |
3,575 | 2,883 | (92 | ) | (339 | ) | 3,483 | 2,544 | ||||||||||||||||
Credit card securitization |
3,776 | 2,898 | | | 3,776 | 2,898 | ||||||||||||||||||
Accounting policy conformity |
| (1,085 | ) | | 227 | | (858 | ) | ||||||||||||||||
Total managed provision for credit losses |
$ | 7,351 | $ | 4,696 | $ | (92 | ) | $ | (112 | ) | $ | 7,259 | $ | 4,584 | ||||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. | |
(b) | The 2004 provision for loan losses includes an increase of approximately $1.4 billion as a result of the decertification of heritage Bank One sellers interest in credit card securitizations, partially offset by a reduction of $357 million to conform provision methodologies. The 2004 provision for lending-related commitments reflects a reduction of $227 million to conform provision methodologies in the wholesale portfolio. | |
(c) | 2005 includes a $400 million special provision related to Hurricane Katrina allocated as follows: Retail Financial Services $250 million, Card Services $100 million, Commercial Banking $35 million, Asset & Wealth Management $3 million and Corporate $12 million. |
74 | JPMorgan Chase & Co. / 2005 Annual Report |
| Establishment of a comprehensive market risk policy framework | |
| Independent measurement, monitoring and control of business segment market risk | |
| Definition, approval and monitoring of limits | |
| Performance of stress testing and qualitative risk assessments |
| Nonstatistical risk measures | |
| Value-at-Risk (VAR) | |
| Loss advisories | |
| Economic value stress testing | |
| Earnings-at-risk stress testing | |
| Risk identification for large exposures (RIFLE) |
JPMorgan Chase & Co. / 2005 Annual Report | 75 |
2005 | 2004(e) | |||||||||||||||||||||||||||||||
As of or for the year ended | Average | Minimum | Maximum | At | Average | Minimum | Maximum | At | ||||||||||||||||||||||||
December 31, (in millions) | VAR | VAR | VAR | December 31, | VAR | VAR | VAR | December 31, | ||||||||||||||||||||||||
By risk type: |
||||||||||||||||||||||||||||||||
Fixed income |
$ | 67 | $ | 37 | $ | 110 | $ | 89 | $ | 74 | $ | 45 | $ | 118 | $ | 57 | ||||||||||||||||
Foreign exchange |
23 | 16 | 32 | 19 | 17 | 10 | 33 | 28 | ||||||||||||||||||||||||
Equities |
34 | 15 | 65 | 24 | 28 | 15 | 58 | 20 | ||||||||||||||||||||||||
Commodities and other |
21 | 7 | 50 | 34 | 9 | 7 | 18 | 8 | ||||||||||||||||||||||||
Less: portfolio diversification |
(59 | )(c) | NM | (d) | NM | (d) | (63 | )(c) | (43 | )(c) | NM | (d) | NM | (d) | (41 | )(c) | ||||||||||||||||
Total trading VAR |
$ | 86 | $ | 53 | $ | 130 | $ | 103 | $ | 85 | $ | 52 | $ | 125 | $ | 72 | ||||||||||||||||
Credit portfolio VAR(b) |
14 | 11 | 17 | 15 | 14 | 11 | 17 | 15 | ||||||||||||||||||||||||
Less: portfolio diversification |
(12 | )(c) | NM | (d) | NM | (d) | (10 | )(c) | (9 | )(c) | NM | (d) | NM | (d) | (9 | )(c) | ||||||||||||||||
Total trading and credit
portfolio VAR |
$ | 88 | $ | 57 | $ | 130 | $ | 108 | $ | 90 | $ | 55 | $ | 132 | $ | 78 | ||||||||||||||||
(a) | Trading VAR excludes VAR related to the Firms private equity business and certain exposures used to manage MSRs. For a discussion of Private equity risk management and MSRs, see page 80 and Note 15 on pages 114116 of this Annual Report, respectively. Trading VAR includes substantially all mark-to-market trading activities in the IB, plus available-for-sale securities held for the IBs proprietary purposes (included within Fixed Income); however, particular risk parameters of certain products are not fully captured, for example, correlation risk. | |
(b) | Includes VAR on derivative credit valuation adjustments, credit valuation adjustment hedges and mark-to-market hedges of the accrual loan portfolio, which are all reported in Trading revenue. This VAR does not include the accrual loan portfolio, which is not marked to market. | |
(c) | Average and period-end VARs are less than the sum of the VARs of its market risk components, which is due to risk offsets resulting from portfolio diversification. The diversification effect reflects the fact that the risks are not perfectly correlated. The risk of a portfolio of positions is therefore usually less than the sum of the risks of the positions themselves. | |
(d) | Designated as not meaningful (NM) because the minimum and maximum may occur on different days for different risk components, and hence it is not meaningful to compute a portfolio diversification effect. | |
(e) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. |
76 | JPMorgan Chase & Co. / 2005 Annual Report |
Daily IB market risk-related gains and losses year ended December 31, 2005 Daily IB VAR less market risk-related losses. $ in millions number of trading days average daily revenue: 37.3 million |
JPMorgan Chase & Co. / 2005 Annual Report | 77 |
Immediate change in rates | |||||||||||||
(in millions) | +200bp | +100bp | -100bp | ||||||||||
December 31, 2005 |
$ | 265 | $ | 172 | $ | (162 | ) | ||||||
December 31, 2004 |
(557 | ) | (164 | ) | (180 | ) | |||||||
78 | JPMorgan Chase & Co. / 2005 Annual Report |
| Client service and selection | |
| Business practices | |
| Fraud, theft and malice | |
| Execution, delivery and process management | |
| Employee disputes | |
| Disasters and public safety | |
| Technology and infrastructure failures |
JPMorgan Chase & Co. / 2005 Annual Report | 79 |
80 | JPMorgan Chase & Co. / 2005 Annual Report |
JPMorgan Chase & Co. / 2005 Annual Report | 81 |
Trading assets | Trading liabilities | ||||||||||||||||||||
Securities | Securities | AFS | |||||||||||||||||||
purchased (a) | Derivatives (b) | sold (a) | Derivatives (b) | securities | |||||||||||||||||
Fair value based upon: |
|||||||||||||||||||||
Quoted market prices |
86 | % | 2 | % | 97 | % | 2 | % | 91 | % | |||||||||||
Internal models with significant
observable market parameters |
12 | 96 | 2 | 97 | 6 | ||||||||||||||||
Internal models with significant
unobservable market parameters |
2 | 2 | 1 | 1 | 3 | ||||||||||||||||
Total |
100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||
(a) | Reflected as debt and equity instruments on the Firms Consolidated balance sheets. | |
(b) | Based upon gross mark-to-market valuations of the Firms derivatives portfolio prior to netting positions pursuant to FIN 39, as cross-product netting is not relevant to an analysis based upon valuation methodologies. |
82 | JPMorgan Chase & Co. / 2005 Annual Report |
JPMorgan Chase & Co. / 2005 Annual Report | 83 |
For the year ended | ||||||||
December 31, 2005 (in millions) | Asset position | Liability position | ||||||
Net fair value of contracts
outstanding at January 1, 2005 |
$ | 1,449 | $ | 999 | ||||
Effect of legally enforceable master
netting agreements |
2,304 | 2,233 | ||||||
Gross fair value of contracts
outstanding at January 1, 2005 |
3,753 | 3,232 | ||||||
Contracts realized or otherwise settled
during the period |
(12,589 | ) | (10,886 | ) | ||||
Fair value of new contracts |
37,518 | 30,691 | ||||||
Changes in fair values attributable to
changes in valuation techniques
and assumptions |
| | ||||||
Other changes in fair value |
(11,717 | ) | (7,635 | ) | ||||
Gross fair value of contracts
outstanding at December 31, 2005 |
16,965 | 15,402 | ||||||
Effect of legally enforceable master |
||||||||
netting agreements |
(10,014 | ) | (10,078 | ) | ||||
Net fair value of contracts
outstanding at December 31, 2005 |
$ | 6,951 | $ | 5,324 | ||||
At December 31, 2005 (in millions) | Asset position | Liability position | ||||||
Maturity less than 1 year |
$ | 6,682 | $ | 6,254 | ||||
Maturity 13 years |
8,231 | 7,590 | ||||||
Maturity 45 years |
1,616 | 1,246 | ||||||
Maturity in excess of 5 years |
436 | 312 | ||||||
Gross fair value of contracts
outstanding at December 31, 2005 |
16,965 | 15,402 | ||||||
Effects of legally enforceable master
netting agreements |
(10,014 | ) | (10,078 | ) | ||||
Net fair value of contracts
outstanding at December 31, 2005 |
$ | 6,951 | $ | 5,324 | ||||
84 | JPMorgan Chase & Co. / 2005 Annual Report |
JPMorgan Chase & Co. / 2005 Annual Report | 85 |
86 | JPMorgan Chase & Co. / 2005 Annual Report |
Year ended December 31, (in millions, except per share data)(a) | 2005 | 2004 | 2003 | |||||||||
Revenue |
||||||||||||
Investment banking fees |
$ | 4,088 | $ | 3,537 | $ | 2,890 | ||||||
Trading revenue |
5,860 | 3,612 | 4,427 | |||||||||
Lending & deposit related fees |
3,389 | 2,672 | 1,727 | |||||||||
Asset management, administration and commissions |
10,390 | 8,165 | 6,039 | |||||||||
Securities/private equity gains |
473 | 1,874 | 1,479 | |||||||||
Mortgage fees and related income |
1,054 | 806 | 790 | |||||||||
Credit card income |
6,754 | 4,840 | 2,466 | |||||||||
Other income |
2,694 | 830 | 601 | |||||||||
Noninterest revenue |
34,702 | 26,336 | 20,419 | |||||||||
Interest income |
45,200 | 30,595 | 24,044 | |||||||||
Interest expense |
25,369 | 13,834 | 11,079 | |||||||||
Net interest income |
19,831 | 16,761 | 12,965 | |||||||||
Total net revenue |
54,533 | 43,097 | 33,384 | |||||||||
Provision for credit losses |
3,483 | 2,544 | 1,540 | |||||||||
Noninterest expense |
||||||||||||
Compensation expense |
18,255 | 14,506 | 11,387 | |||||||||
Occupancy expense |
2,299 | 2,084 | 1,912 | |||||||||
Technology and communications expense |
3,624 | 3,702 | 2,844 | |||||||||
Professional & outside services |
4,224 | 3,862 | 2,875 | |||||||||
Marketing |
1,917 | 1,335 | 710 | |||||||||
Other expense |
3,705 | 2,859 | 1,694 | |||||||||
Amortization of intangibles |
1,525 | 946 | 294 | |||||||||
Merger costs |
722 | 1,365 | | |||||||||
Litigation reserve charge |
2,564 | 3,700 | 100 | |||||||||
Total noninterest expense |
38,835 | 34,359 | 21,816 | |||||||||
Income before income tax expense |
12,215 | 6,194 | 10,028 | |||||||||
Income tax expense |
3,732 | 1,728 | 3,309 | |||||||||
Net income |
$ | 8,483 | $ | 4,466 | $ | 6,719 | ||||||
Net income applicable to common stock |
$ | 8,470 | $ | 4,414 | $ | 6,668 | ||||||
Net income per common share |
||||||||||||
Basic earnings per share |
$ | 2.43 | $ | 1.59 | $ | 3.32 | ||||||
Diluted earnings per share |
2.38 | 1.55 | 3.24 | |||||||||
Average basic shares |
3,492 | 2,780 | 2,009 | |||||||||
Average diluted shares |
3,557 | 2,851 | 2,055 | |||||||||
Cash dividends per common share |
$ | 1.36 | $ | 1.36 | $ | 1.36 | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. |
JPMorgan Chase & Co. / 2005 Annual Report | 87 |
At December 31, (in millions, except share data) | 2005 | 2004 | ||||||
Assets |
||||||||
Cash and due from banks |
$ | 36,670 | $ | 35,168 | ||||
Deposits with banks |
21,661 | 21,680 | ||||||
Federal funds sold and securities purchased under resale agreements |
133,981 | 101,354 | ||||||
Securities borrowed |
74,604 | 47,428 | ||||||
Trading assets (including assets pledged of $79,657 at December 31, 2005, and $77,266 at December 31, 2004) |
298,377 | 288,814 | ||||||
Securities: |
||||||||
Available-for-sale (including assets pledged of $17,614 at December 31, 2005, and $26,881 at
December 31, 2004) |
47,523 | 94,402 | ||||||
Held-to-maturity (fair value: $80 at December 31, 2005, and $117 at December 31, 2004) |
77 | 110 | ||||||
Interests in purchased receivables |
29,740 | 31,722 | ||||||
Loans |
419,148 | 402,114 | ||||||
Allowance for loan losses |
(7,090 | ) | (7,320 | ) | ||||
Loans, net of Allowance for loan losses |
412,058 | 394,794 | ||||||
Private equity investments |
6,374 | 7,735 | ||||||
Accrued interest and accounts receivable |
22,421 | 21,409 | ||||||
Premises and equipment |
9,081 | 9,145 | ||||||
Goodwill |
43,621 | 43,203 | ||||||
Other intangible assets: |
||||||||
Mortgage servicing rights |
6,452 | 5,080 | ||||||
Purchased credit card relationships |
3,275 | 3,878 | ||||||
All other intangibles |
4,832 | 5,726 | ||||||
Other assets |
48,195 | 45,600 | ||||||
Total assets |
$ | 1,198,942 | $ | 1,157,248 | ||||
Liabilities |
||||||||
Deposits: |
||||||||
U.S. offices: |
||||||||
Noninterest-bearing |
$ | 135,599 | $ | 129,257 | ||||
Interest-bearing |
287,774 | 261,673 | ||||||
Non-U.S. offices: |
||||||||
Noninterest-bearing |
7,476 | 6,931 | ||||||
Interest-bearing |
124,142 | 123,595 | ||||||
Total deposits |
554,991 | 521,456 | ||||||
Federal funds purchased and securities sold under repurchase agreements |
125,925 | 127,787 | ||||||
Commercial paper |
13,863 | 12,605 | ||||||
Other borrowed funds |
10,479 | 9,039 | ||||||
Trading liabilities |
145,930 | 151,207 | ||||||
Accounts payable, accrued expenses and other liabilities (including the Allowance for lending-related
commitments of $400 at December 31, 2005, and $492 at December 31, 2004) |
78,460 | 75,722 | ||||||
Beneficial interests issued by consolidated VIEs |
42,197 | 48,061 | ||||||
Long-term debt |
108,357 | 95,422 | ||||||
Junior subordinated deferrable interest debentures held by trusts that issued guaranteed capital debt securities |
11,529 | 10,296 | ||||||
Total liabilities |
1,091,731 | 1,051,595 | ||||||
Commitments and contingencies (see Note 25 of this Annual Report) |
||||||||
Stockholders equity |
||||||||
Preferred stock |
139 | 339 | ||||||
Common stock (authorized 9,000,000,000 shares
at December 31, 2005 and 2004; issued 3,618,189,597 shares and
3,584,747,502 shares at December 31, 2005 and 2004, respectively) |
3,618 | 3,585 | ||||||
Capital surplus |
74,994 | 72,801 | ||||||
Retained earnings |
33,848 | 30,209 | ||||||
Accumulated other comprehensive income (loss) |
(626 | ) | (208 | ) | ||||
Treasury stock, at cost (131,500,350 shares at December 31, 2005, and 28,556,534 shares at December 31, 2004) |
(4,762 | ) | (1,073 | ) | ||||
Total stockholders equity |
107,211 | 105,653 | ||||||
Total liabilities and stockholders equity |
$ | 1,198,942 | $ | 1,157,248 | ||||
88 | JPMorgan Chase & Co. / 2005 Annual Report |
Year ended December 31, (in millions, except per share data)(a) | 2005 | 2004 | 2003 | |||||||||
Preferred stock |
||||||||||||
Balance at beginning of year |
$ | 339 | $ | 1,009 | $ | 1,009 | ||||||
Redemption of preferred stock |
(200 | ) | (670 | ) | | |||||||
Balance at end of year |
139 | 339 | 1,009 | |||||||||
Common stock |
||||||||||||
Balance at beginning of year |
3,585 | 2,044 | 2,024 | |||||||||
Issuance of common stock |
33 | 72 | 20 | |||||||||
Issuance of common stock for purchase accounting acquisitions |
| 1,469 | | |||||||||
Balance at end of year |
3,618 | 3,585 | 2,044 | |||||||||
Capital surplus |
||||||||||||
Balance at beginning of year |
72,801 | 13,512 | 13,222 | |||||||||
Issuance of common stock and options for purchase accounting acquisitions |
| 55,867 | | |||||||||
Shares
issued and commitments to issue common stock for employee
stock-based awards and related tax effects |
2,193 | 3,422 | 290 | |||||||||
Balance at end of year |
74,994 | 72,801 | 13,512 | |||||||||
Retained earnings |
||||||||||||
Balance at beginning of year |
30,209 | 29,681 | 25,851 | |||||||||
Net income |
8,483 | 4,466 | 6,719 | |||||||||
Cash dividends declared: |
||||||||||||
Preferred stock |
(13 | ) | (52 | ) | (51 | ) | ||||||
Common stock ($1.36 per share each year) |
(4,831 | ) | (3,886 | ) | (2,838 | ) | ||||||
Balance at end of year |
33,848 | 30,209 | 29,681 | |||||||||
Accumulated other comprehensive income (loss) |
||||||||||||
Balance at beginning of year |
(208 | ) | (30 | ) | 1,227 | |||||||
Other comprehensive income (loss) |
(418 | ) | (178 | ) | (1,257 | ) | ||||||
Balance at end of year |
(626 | ) | (208 | ) | (30 | ) | ||||||
Treasury stock, at cost |
||||||||||||
Balance at beginning of year |
(1,073 | ) | (62 | ) | (1,027 | ) | ||||||
Purchase of treasury stock |
(3,412 | ) | (738 | ) | | |||||||
Reissuance from treasury stock |
| | 1,082 | |||||||||
Share repurchases related to employee stock-based awards |
(277 | ) | (273 | ) | (117 | ) | ||||||
Balance at end of year |
(4,762 | ) | (1,073 | ) | (62 | ) | ||||||
Total stockholders equity |
$ | 107,211 | $ | 105,653 | $ | 46,154 | ||||||
Comprehensive income |
||||||||||||
Net income |
$ | 8,483 | $ | 4,466 | $ | 6,719 | ||||||
Other comprehensive income (loss) |
(418 | ) | (178 | ) | (1,257 | ) | ||||||
Comprehensive income |
$ | 8,065 | $ | 4,288 | $ | 5,462 | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. |
JPMorgan Chase & Co. / 2005 Annual Report | 89 |
Year ended December 31, (in millions)(a) | 2005 | 2004 | 2003 | |||||||||
Operating activities |
||||||||||||
Net income |
$ | 8,483 | $ | 4,466 | $ | 6,719 | ||||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: |
||||||||||||
Provision for credit losses |
3,483 | 2,544 | 1,540 | |||||||||
Depreciation and amortization |
4,318 | 3,835 | 3,101 | |||||||||
Deferred tax (benefit) provision |
(1,791 | ) | (827 | ) | 1,428 | |||||||
Investment securities (gains) losses |
1,336 | (338 | ) | (1,446 | ) | |||||||
Private equity unrealized (gains) losses |
55 | (766 | ) | (77 | ) | |||||||
Gain on dispositions of businesses |
(1,254 | ) | (17 | ) | (68 | ) | ||||||
Net change in: |
||||||||||||
Trading assets |
(3,845 | ) | (48,703 | ) | (2,671 | ) | ||||||
Securities borrowed |
(27,290 | ) | (4,816 | ) | (7,691 | ) | ||||||
Accrued interest and accounts receivable |
(1,934 | ) | (2,391 | ) | 1,809 | |||||||
Other assets |
(9 | ) | (17,588 | ) | (9,848 | ) | ||||||
Trading liabilities |
(12,578 | ) | 29,764 | 15,769 | ||||||||
Accounts payable, accrued expenses and other liabilities |
5,532 | 13,277 | 5,973 | |||||||||
Other operating adjustments |
1,267 | (245 | ) | 63 | ||||||||
Net cash (used in) provided by operating activities |
(24,227 | ) | (21,805 | ) | 14,601 | |||||||
Investing activities |
||||||||||||
Net change in: |
||||||||||||
Deposits with banks |
104 | (4,196 | ) | (1,233 | ) | |||||||
Federal funds sold and securities purchased under resale agreements |
(32,469 | ) | (13,101 | ) | (11,059 | ) | ||||||
Other change in loans |
(148,894 | ) | (136,851 | ) | (171,779 | ) | ||||||
Held-to-maturity securities: |
||||||||||||
Proceeds |
33 | 66 | 221 | |||||||||
Available-for-sale securities: |
||||||||||||
Proceeds from maturities |
31,053 | 45,197 | 10,548 | |||||||||
Proceeds from sales |
82,902 | 134,534 | 315,738 | |||||||||
Purchases |
(81,749 | ) | (173,745 | ) | (301,854 | ) | ||||||
Proceeds due to the sale and securitization of loans |
126,310 | 108,637 | 170,870 | |||||||||
Net cash (used) received in business acquisitions or dispositions |
(1,039 | ) | 13,864 | (575 | ) | |||||||
All other investing activities, net |
4,796 | 2,519 | 1,541 | |||||||||
Net cash (used in) provided by investing activities |
(18,953 | ) | (23,076 | ) | 12,418 | |||||||
Financing activities |
||||||||||||
Net change in: |
||||||||||||
Deposits |
31,415 | 52,082 | 21,851 | |||||||||
Federal funds purchased and securities sold under repurchase agreements |
(1,862 | ) | 7,065 | (56,017 | ) | |||||||
Commercial paper and other borrowed funds |
2,618 | (4,343 | ) | 555 | ||||||||
Proceeds from the issuance of long-term debt and capital debt securities |
43,721 | 25,344 | 17,195 | |||||||||
Repayments of long-term debt and capital debt securities |
(26,883 | ) | (16,039 | ) | (8,316 | ) | ||||||
Proceeds from the issuance of stock and stock-related awards |
682 | 848 | 1,213 | |||||||||
Redemption of preferred stock |
(200 | ) | (670 | ) | | |||||||
Treasury stock purchased |
(3,412 | ) | (738 | ) | | |||||||
Cash dividends paid |
(4,878 | ) | (3,927 | ) | (2,865 | ) | ||||||
All other financing activities, net |
3,868 | (26 | ) | 133 | ||||||||
Net cash provided by (used in) financing activities |
45,069 | 59,596 | (26,251 | ) | ||||||||
Effect of exchange rate changes on cash and due from banks |
(387 | ) | 185 | 282 | ||||||||
Net increase (decrease) in cash and due from banks |
1,502 | 14,900 | 1,050 | |||||||||
Cash and due from banks at the beginning of the year |
35,168 | 20,268 | 19,218 | |||||||||
Cash and due from banks at the end of the year |
$ | 36,670 | $ | 35,168 | $ | 20,268 | ||||||
Cash interest paid |
$ | 24,583 | $ | 13,384 | $ | 10,976 | ||||||
Cash income taxes paid |
$ | 4,758 | $ | 1,477 | $ | 1,337 | ||||||
Note: | In 2004, the fair values of noncash assets acquired and liabilities assumed in the Merger with Bank One were $320.9 billion and $277.0 billion, respectively, and approximately 1,469 million shares of common stock, valued at approximately $57.3 billion, were issued in connection with the merger with Bank One. |
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. |
90 | JPMorgan Chase & Co. / 2005 Annual Report |
JPMorgan Chase & Co. / 2005 Annual Report | 91 |
Trading activities |
Note 3 | Page 94 | ||||||
Other noninterest revenue |
Note 4 | Page 95 | ||||||
Pension and other postretirement employee
benefit plans |
Note 6 | Page 96 | ||||||
Employee stock-based incentives |
Note 7 | Page 100 | ||||||
Securities and private equity investments |
Note 9 | Page 103 | ||||||
Securities financing activities |
Note 10 | Page 105 | ||||||
Loans |
Note 11 | Page 106 | ||||||
Allowance for credit losses |
Note 12 | Page 107 | ||||||
Loan securitizations |
Note 13 | Page 108 | ||||||
Variable interest entities |
Note 14 | Page 111 | ||||||
Goodwill and other intangible assets |
Note 15 | Page 114 | ||||||
Premises and equipment |
Note 16 | Page 116 | ||||||
Income taxes |
Note 22 | Page 120 | ||||||
Accounting for derivative instruments
and hedging activities |
Note 26 | Page 123 | ||||||
Off-balance sheet lending-related financial
instruments and guarantees |
Note 27 | Page 124 | ||||||
Fair value of financial instruments |
Note 29 | Page 126 | ||||||
(in millions, except per share amounts) | July 1, 2004 | |||||||
Purchase
price |
||||||||
Bank One common stock exchanged |
1,113 | |||||||
Exchange ratio |
1.32 | |||||||
JPMorgan Chase common stock issued |
1,469 | |||||||
Average
purchase price per
JPMorgan Chase common share(a) |
$ | 39.02 | ||||||
$ | 57,336 | |||||||
Fair value of employee stock awards and direct acquisition costs |
1,210 | |||||||
Total purchase price |
$ | 58,546 | ||||||
Net assets acquired: |
||||||||
Bank One stockholders equity |
$ | 24,156 | ||||||
Bank One goodwill and other intangible assets |
(2,754 | ) | ||||||
Subtotal |
21,402 | |||||||
Adjustments to reflect assets acquired at fair value: |
||||||||
Loans and leases |
(2,261 | ) | ||||||
Private equity investments |
(72 | ) | ||||||
Identified intangibles |
8,665 | |||||||
Pension plan assets |
(778 | ) | ||||||
Premises and equipment |
(417 | ) | ||||||
Other assets |
(267 | ) | ||||||
Amounts
to reflect liabilities assumed at fair value: |
||||||||
Deposits |
(373 | ) | ||||||
Deferred income taxes |
932 | |||||||
Other postretirement benefit plan liabilities |
(49 | ) | ||||||
Other liabilities |
(1,162 | ) | ||||||
Long-term debt |
(1,234 | ) | ||||||
24,386 | ||||||||
Goodwill resulting from Merger(b) |
$ | 34,160 | ||||||
(a) | The value of the Firms common stock exchanged with Bank One shareholders was based on the average closing prices of the Firms common stock for the two days prior to, and the two days following, the announcement of the Merger on January 14, 2004. | |
(b) | Goodwill resulting from the Merger reflects adjustments of the allocation of the purchase price to the net assets acquired through June 30, 2005. Minor adjustments subsequent to June 30, 2005, are reflected in the December 31, 2005 Goodwill balance in Note 15 on page 114 of this Annual Report. |
92 | JPMorgan Chase & Co. / 2005 Annual Report |
(in millions) | July 1, 2004 | |||
Assets |
||||
Cash and cash equivalents |
$ | 14,669 | ||
Securities |
70,512 | |||
Interests in purchased receivables |
30,184 | |||
Loans, net of allowance for loan losses |
129,650 | |||
Goodwill and other intangible assets |
42,825 | |||
All other assets |
47,739 | |||
Total assets |
$ | 335,579 | ||
Liabilities |
||||
Deposits |
$ | 164,848 | ||
Short-term borrowings |
9,811 | |||
All other liabilities |
61,494 | |||
Long-term debt |
40,880 | |||
Total liabilities |
277,033 | |||
Net assets acquired |
$ | 58,546 | ||
Fair value | Weighted average | Useful life | ||||||||||
(in millions) | life (in years) | (in years) | ||||||||||
Core deposit intangibles |
$ | 3,650 | 5.1 | Up to 10 | ||||||||
Purchased credit card relationships |
3,340 | 4.6 | Up to 10 | |||||||||
Other credit
card-related intangibles |
295 | 4.6 | Up to 10 | |||||||||
Other customer relationship intangibles |
870 | 4.610.5 | Up to 20 | |||||||||
Subtotal |
8,155 | 5.1 | Up to 20 | |||||||||
Indefinite-lived asset management
intangibles |
510 | NA | NA | |||||||||
Total |
$ | 8,665 | ||||||||||
Year ended December 31, (in millions, except per share) | 2004 | 2003 | ||||||
Noninterest revenue |
$ | 31,175 | $ | 28,966 | ||||
Net interest income |
21,366 | 21,715 | ||||||
Total net revenue |
52,541 | 50,681 | ||||||
Provision for credit losses |
2,727 | 3,570 | ||||||
Noninterest expense |
40,504 | 33,136 | ||||||
Income before income tax expense |
9,310 | 13,975 | ||||||
Net income |
$ | 6,544 | $ | 9,330 | ||||
Net income per common share: |
||||||||
Basic |
$ | 1.85 | $ | 2.66 | ||||
Diluted |
1.81 | 2.61 | ||||||
Average common shares outstanding: |
||||||||
Basic |
3,510 | 3,495 | ||||||
Diluted |
3,593 | 3,553 | ||||||
JPMorgan Chase & Co. / 2005 Annual Report | 93 |
Year ended December 31,(a) (in millions) | 2005 | 2004 | 2003 | |||||||||
Fixed income and other(b) |
$ | 4,554 | $ | 2,976 | $ | 4,046 | ||||||
Equities(c) |
1,271 | 797 | 764 | |||||||||
Credit portfolio(d) |
35 | (161 | ) | (383 | ) | |||||||
Total |
$ | 5,860 | $ | 3,612 | $ | 4,427 | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | Includes bonds and commercial paper and various types of interest rate derivatives as well as foreign exchange and commodities. | |
(c) | Includes equity securities and equity derivatives. | |
(d) | Includes credit derivatives. |
December 31, (in millions) | 2005 | 2004 | ||||||
Trading assets |
||||||||
Debt and equity instruments: |
||||||||
U.S. government and federal agency obligations |
$ | 16,283 | $ | 16,867 | ||||
U.S. government-sponsored enterprise obligations |
24,172 | 23,513 | ||||||
Obligations of state and political subdivisions |
9,887 | 3,486 | ||||||
Certificates of deposit, bankers acceptances
and commercial paper |
5,652 | 7,341 | ||||||
Debt securities issued by non-U.S. governments |
48,671 | 50,699 | ||||||
Corporate securities and other |
143,925 | 120,926 | ||||||
Total debt and equity instruments |
248,590 | 222,832 | ||||||
Derivative receivables: |
||||||||
Interest rate |
30,416 | 45,892 | ||||||
Foreign exchange |
2,855 | 7,939 | ||||||
Equity |
5,575 | 6,120 | ||||||
Credit derivatives |
3,464 | 2,945 | ||||||
Commodity |
7,477 | 3,086 | ||||||
Total derivative receivables |
49,787 | 65,982 | ||||||
Total trading assets |
$ | 298,377 | $ | 288,814 | ||||
Trading liabilities |
||||||||
Debt and equity instruments(a) |
$ | 94,157 | $ | 87,942 | ||||
Derivative payables: |
||||||||
Interest rate |
28,488 | 41,075 | ||||||
Foreign exchange |
3,453 | 8,969 | ||||||
Equity |
11,539 | 9,096 | ||||||
Credit derivatives |
2,445 | 2,499 | ||||||
Commodity |
5,848 | 1,626 | ||||||
Total derivative payables |
51,773 | 63,265 | ||||||
Total trading liabilities |
$ | 145,930 | $ | 151,207 | ||||
(a) | Primarily represents securities sold, not yet purchased. |
Year ended December 31,(a) (in millions) | 2005 | 2004 | 2003 | |||||||||
Trading assets debt and
equity instruments |
$ | 237,370 | $ | 200,467 | $ | 154,597 | ||||||
Trading assets derivative receivables |
57,365 | 59,521 | 85,628 | |||||||||
Trading liabilities debt and
equity instruments(b) |
$ | 93,102 | $ | 82,204 | $ | 72,877 | ||||||
Trading liabilities derivative payables |
55,723 | 52,761 | 67,783 | |||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | Primarily represents securities sold, not yet purchased. |
94 | JPMorgan Chase & Co. / 2005 Annual Report |
Year ended December 31, (in millions)(a) | 2005 | 2004 | 2003 | |||||||||
Underwriting: |
||||||||||||
Equity |
$ | 864 | $ | 780 | $ | 699 | ||||||
Debt |
1,969 | 1,859 | 1,549 | |||||||||
Total Underwriting |
2,833 | 2,639 | 2,248 | |||||||||
Advisory |
1,255 | 898 | 642 | |||||||||
Total |
$ | 4,088 | $ | 3,537 | $ | 2,890 | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. |
Year ended December 31, (in millions)(a) | 2005 | 2004 | 2003 | |||||||||
Interest income |
||||||||||||
Loans |
$ | 26,062 | $ | 16,771 | $ | 11,812 | ||||||
Securities |
3,129 | 3,377 | 3,542 | |||||||||
Trading assets |
9,117 | 7,527 | 6,592 | |||||||||
Federal funds sold and securities
purchased under resale agreements |
4,125 | 1,627 | 1,497 | |||||||||
Securities borrowed |
1,154 | 463 | 323 | |||||||||
Deposits with banks |
680 | 539 | 214 | |||||||||
Interests in purchased receivables |
933 | 291 | 64 | |||||||||
Total interest income |
45,200 | 30,595 | 24,044 | |||||||||
Interest expense |
||||||||||||
Interest-bearing deposits |
10,295 | 4,630 | 3,604 | |||||||||
Short-term and other liabilities |
9,542 | 6,260 | 5,871 | |||||||||
Long-term debt |
4,160 | 2,466 | 1,498 | |||||||||
Beneficial interests issued by
consolidated VIEs |
1,372 | 478 | 106 | |||||||||
Total interest expense |
25,369 | 13,834 | 11,079 | |||||||||
Net interest income |
19,831 | 16,761 | 12,965 | |||||||||
Provision for credit losses |
3,483 | 2,544 | 1,540 | |||||||||
Net interest income after provision
for credit losses |
$ | 16,348 | $ | 14,217 | $ | 11,425 | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. |
JPMorgan Chase & Co. / 2005 Annual Report | 95 |
96 | JPMorgan Chase & Co. / 2005 Annual Report |
Defined benefit pension plans | ||||||||||||||||||||||||
U.S. | Non-U.S. | Other postretirement benefit plans (c)(d) | ||||||||||||||||||||||
December 31, (in millions) | 2005 | 2004 | (b) | 2005 | 2004 | (b) | 2005 | 2004 | (b) | |||||||||||||||
Change in benefit obligation |
||||||||||||||||||||||||
Benefit obligation at beginning of year |
$ | (7,594 | ) | $ | (4,633 | ) | $ | (1,969 | ) | $ | (1,659 | ) | $ | (1,577 | ) | $ | (1,252 | ) | ||||||
Merger with Bank One |
| (2,497 | ) | | (25 | ) | | (216 | ) | |||||||||||||||
Cazenove business partnership |
| | (291 | ) | | | | |||||||||||||||||
Benefits earned during the year |
(280 | ) | (251 | ) | (25 | ) | (17 | ) | (13 | ) | (15 | ) | ||||||||||||
Interest cost on benefit obligations |
(431 | ) | (348 | ) | (104 | ) | (87 | ) | (81 | ) | (81 | ) | ||||||||||||
Plan amendments |
| 70 | | | 117 | 32 | ||||||||||||||||||
Employee contributions |
| | | | (44 | ) | (36 | ) | ||||||||||||||||
Actuarial gain (loss) |
(122 | ) | (511 | ) | (310 | ) | (99 | ) | 21 | (163 | ) | |||||||||||||
Benefits paid |
723 | 555 | 66 | 64 | 187 | 167 | ||||||||||||||||||
Curtailments |
28 | 21 | | | (9 | ) | (8 | ) | ||||||||||||||||
Special termination benefits |
| | | (12 | ) | (1 | ) | (2 | ) | |||||||||||||||
Foreign exchange impact and other |
| | 255 | (134 | ) | 5 | (3 | ) | ||||||||||||||||
Benefit obligation at end of year |
$ | (7,676 | ) | $ | (7,594 | ) | $ | (2,378 | ) | $ | (1,969 | ) | $ | (1,395 | ) | $ | (1,577 | ) | ||||||
Change in plan assets |
||||||||||||||||||||||||
Fair value of plan assets at beginning of year |
$ | 9,637 | $ | 4,866 | $ | 1,889 | $ | 1,603 | $ | 1,302 | $ | 1,149 | ||||||||||||
Merger with Bank One |
| 3,280 | | 20 | | 98 | ||||||||||||||||||
Cazenove business partnership |
| | 252 | | | | ||||||||||||||||||
Actual return on plan assets |
703 | 946 | 308 | 164 | 43 | 84 | ||||||||||||||||||
Firm contributions |
| 1,100 | 78 | 40 | 3 | 2 | ||||||||||||||||||
Benefits paid |
(723 | ) | (555 | ) | (66 | ) | (64 | ) | (19 | ) | (31 | ) | ||||||||||||
Foreign exchange impact and other |
| | (238 | ) | 126 | | | |||||||||||||||||
Fair value of plan assets at end of year |
$ | 9,617 | (e) | $ | 9,637 | (e) | $ | 2,223 | $ | 1,889 | $ | 1,329 | $ | 1,302 | ||||||||||
Reconciliation of funded status |
||||||||||||||||||||||||
Funded status |
$ | 1,941 | $ | 2,043 | $ | (155 | ) | $ | (80 | ) | $ | (66 | ) | $ | (275 | ) | ||||||||
Unrecognized amounts: (a) |
||||||||||||||||||||||||
Net transition asset |
| | | (1 | ) | | | |||||||||||||||||
Prior service cost |
40 | 47 | 3 | 4 | (105 | ) | (23 | ) | ||||||||||||||||
Net actuarial loss |
1,078 | 997 | 599 | 590 | 335 | 321 | ||||||||||||||||||
Prepaid benefit cost reported in Other assets |
$ | 3,059 | $ | 3,087 | $ | 447 | (f) | $ | 513 | (f) | $ | 164 | $ | 23 | ||||||||||
Accumulated benefit obligation |
$ | (7,274 | ) | $ | (7,167 | ) | $ | (2,303 | ) | $ | (1,931 | ) | NA | NA | ||||||||||
(a) | For pension benefit plans, the unrecognized net loss is primarily the result of declines in interest rates in recent years, as offset by recent asset gains and amounts recognized through amortization in expense. Other factors that contribute to this unrecognized amount include demographic experience, which differs from expected, and changes in other actuarial assumptions. For other postretirement benefit plans, the primary drivers of the cumulative unrecognized loss was the decline in the discount rate in recent years and the medical trend, which was higher than expected. These losses have been offset somewhat by the recognition of future savings attributable to Medicare Part D subsidy payments. | |
(b) | Effective July 1, 2004, the Firm assumed the obligations of heritage Bank Ones pension and postretirement plans. These plans were similar to those of JPMorgan Chase and were merged into the Firms plans effective December 31, 2004. | |
(c) | The Medicare Prescription Drug, Improvement and Modernization Act of 2003 resulted in a $35 million reduction in the Accumulated other postretirement benefit obligation as of January 1, 2004. During 2005, an additional $116 million reduction was reflected for recognition of the final Medicare Part D regulations issued on January 21, 2005. | |
(d) | Includes postretirement benefit obligation of $44 million and $43 million and postretirement benefit liability (included in Accrued expenses) of $50 million and $57 million at December 31, 2005 and 2004, respectively, for the U.K. plan, which is unfunded. | |
(e) | At December 31, 2005 and 2004, approximately $405 million and $358 million, respectively, of U.S. plan assets relate to surplus assets of group annuity contracts. | |
(f) | At December 31, 2005 and 2004, Accrued expenses related to non-U.S. defined benefit pension plans that JPMorgan Chase elected not to prefund fully totaled $164 million and $124 million, respectively. |
Defined benefit pension plans | ||||||||||||||||||||||||||||||||||||
U.S. | Non-U.S. | Other postretirement benefit plans | ||||||||||||||||||||||||||||||||||
For the year ended December 31, (in millions) | 2005 | 2004 | (a) | 2003 | (b) | 2005 | 2004 | (a) | 2003 | (b) | 2005 | (c) | 2004 | (a) (c) | 2003 | (b) | ||||||||||||||||||||
Components of net periodic benefit cost |
||||||||||||||||||||||||||||||||||||
Benefits earned during the period |
$ | 280 | $ | 251 | $ | 180 | $ | 25 | $ | 17 | $ | 16 | $ | 13 | $ | 15 | $ | 15 | ||||||||||||||||||
Interest cost on benefit
obligations |
431 | 348 | 262 | 104 | 87 | 74 | 81 | 81 | 73 | |||||||||||||||||||||||||||
Expected return on plan assets |
(694 | ) | (556 | ) | (322 | ) | (109 | ) | (90 | ) | (83 | ) | (90 | ) | (86 | ) | (92 | ) | ||||||||||||||||||
Amortization of unrecognized
amounts: |
||||||||||||||||||||||||||||||||||||
Prior service cost |
5 | 13 | 6 | 1 | 1 | | (10 | ) | | 1 | ||||||||||||||||||||||||||
Net actuarial loss |
4 | 23 | 62 | 38 | 44 | 35 | 12 | | | |||||||||||||||||||||||||||
Curtailment (gain) loss |
2 | 7 | 2 | | | 8 | (17 | ) | 8 | 2 | ||||||||||||||||||||||||||
Settlement (gain) loss |
| | | | (1 | ) | | | | | ||||||||||||||||||||||||||
Special termination benefits |
| | | | 11 | | 1 | 2 | | |||||||||||||||||||||||||||
Reported net periodic benefit costs |
$ | 28 | $ | 86 | $ | 190 | $ | 59 | $ | 69 | $ | 50 | $ | (10 | ) | $ | 20 | $ | (1 | ) | ||||||||||||||||
(a) | Effective July 1, 2004, the Firm assumed the obligations of heritage Bank Ones pension and postretirement plans. These plans were similar to those of JPMorgan Chase and were merged into the Firms plans effective December 31, 2004. | |
(b) | Heritage JPMorgan Chase results only for 2003. | |
(c) | The Medicare Prescription Drug, Improvement and Modernization Act of 2003 resulted in a $15 million and $5 million reduction in 2005 and 2004, respectively, in net periodic benefit cost. The impact on 2005 cost was higher as a result of the final Medicare Part D regulations issued on January 21, 2005. |
JPMorgan Chase & Co. / 2005 Annual Report | 97 |
U.S. | Non-U.S. | |||||||||||||||
For the year ended December 31, | 2005 | 2004 | 2005 | 2004 | ||||||||||||
Weighted-average assumptions used to determine benefit obligations |
||||||||||||||||
Discount rate: |
||||||||||||||||
Pension |
5.70 | % | 5.75 | % | 2.00-4.70 | % | 2.00-5.30 | % | ||||||||
Postretirement benefit |
5.65 | 5.75 | 4.7 | 5.3 | ||||||||||||
Rate of compensation increase |
4.00 | 4.50 | 3.00-3.75 | 1.75-3.75 | ||||||||||||
U.S. | Non-U.S. | |||||||||||||||||||||||
For the year ended December 31, | 2005 | 2004 | 2003 | (b) | 2005 | 2004 | 2003 | (b) | ||||||||||||||||
Weighted-average assumptions used to determine net
periodic benefit costs |
||||||||||||||||||||||||
Discount rate |
5.75% | (a) | 6.00 | % | 6.50 | % | 2.00-5.30 | % | 2.00-5.75 | % | 1.50-5.60 | % | ||||||||||||
Expected long-term rate of return on plan assets: |
||||||||||||||||||||||||
Pension |
7.50 | 7.50-7.75 | 8.00 | 3.25-5.75 | 3.00-6.50 | 2.70-6.50 | ||||||||||||||||||
Postretirement benefit |
4.75-7.00 | 4.75-7.00 | 8.00 | NA | NA | NA | ||||||||||||||||||
Rate of compensation increase |
4.00 | 4.25-4.50 | 4.50 | 1.75-3.75 | 1.75-3.75 | 1.25-3.00 | ||||||||||||||||||
(a) | The postretirement plan was remeasured as of August 1, 2005, and a rate of 5.25% was used from the period of August 1, 2005, through December 31, 2005. | |
(b) | Heritage JPMorgan Chase results only for 2003. |
98 | JPMorgan Chase & Co. / 2005 Annual Report |
December 31, | 2005 | 2004 | (a) | 2003 | (b) | |||||||
Health care cost trend rate assumed |
||||||||||||
for next year |
10 | % | 10 | % | 10 | % | ||||||
Rate to which cost trend rate is assumed
to decline (ultimate trend rate) |
5 | 5 | 5 | |||||||||
Year that rate reaches ultimate trend rate |
2012 | 2011 | 2010 | |||||||||
(in millions) | 1-Percentage- | 1-Percentage- | ||||||
For the year ended December 31,2005 | point increase | point decrease | ||||||
Effect on total service and interest costs |
$ | 4 | $ | (3 | ) | |||
Effect on postretirement benefit obligation |
64 | (55 | ) | |||||
(a) | Effective July 1, 2004, the Firm assumed the obligations of heritage Bank Ones pension and postretirement plans. These plans were similar to those of JPMorgan Chase and were merged into the Firms plans effective December 31, 2004. | |
(b) | 2003 reflects the results of heritage JPMorgan Chase only. |
Defined benefit pension plans | |||||||||||||||||||||||||||||||||||||
U.S. | Non-U.S.(a) | Postretirement benefit plans(b) | |||||||||||||||||||||||||||||||||||
Target | % of plan assets | Target | % of plan assets | Target | % of plan assets | ||||||||||||||||||||||||||||||||
December 31, | Allocation | 2005 | 2004 | Allocation | 2005 | 2004 | Allocation | 2005 | 2004 | ||||||||||||||||||||||||||||
Asset category |
|||||||||||||||||||||||||||||||||||||
Debt securities |
30 | % | 33 | % | 38 | % | 74 | % | 75 | % | 76 | % | 50 | % | 54 | % | 54 | % | |||||||||||||||||||
Equity securities |
55 | 57 | 53 | 25 | 24 | 24 | 50 | 46 | 46 | ||||||||||||||||||||||||||||
Real estate |
5 | 6 | 5 | 1 | 1 | | | | | ||||||||||||||||||||||||||||
Other |
10 | 4 | 4 | | | | | | | ||||||||||||||||||||||||||||
Total |
100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||
(a) | Represents the U.K. defined benefit pension plan only, as plans outside the U.K. are not significant. | |
(b) | Represents the U.S. postretirement benefit plan only, as the U.K. plan is unfunded. |
JPMorgan Chase & Co. / 2005 Annual Report | 99 |
Non- | Other postretirement | |||||||||||||||
Year ended December 31, | U.S. pension | U.S. pension | benefits before | |||||||||||||
(in millions) | benefits | benefits | Medicare Part D subsidy | Medicare Part D subsidy | ||||||||||||
2006 |
$ | 558 | $ | 67 | $ | 124 | $ | 14 | ||||||||
2007 |
550 | 70 | 127 | 15 | ||||||||||||
2008 |
565 | 74 | 127 | 16 | ||||||||||||
2009 |
584 | 77 | 128 | 17 | ||||||||||||
2010 |
600 | 81 | 129 | 19 | ||||||||||||
Years 20112015 |
3,266 | 396 | 633 | 111 | ||||||||||||
100 | JPMorgan Chase & Co. / 2005 Annual Report |
2005 | 2004 | 2003 | ||||||||||||||||||||||
Year ended December 31,(a) | Number of | Weighted-average | Number of | Weighted-average | Number of | Weighted-average | ||||||||||||||||||
(Options/SARs in thousands) | options/SARs | exercise price | options/SARs | exercise price | options | exercise price | ||||||||||||||||||
Outstanding, January 1 |
376,330 | $ | 37.59 | 294,026 | $ | 39.88 | 298,731 | $ | 40.84 | |||||||||||||||
Granted |
17,248 | 35.55 | 16,667 | 39.79 | 26,751 | 22.15 | ||||||||||||||||||
Bank One
Conversion, July 1 |
NA | NA | 111,287 | 29.63 | NA | NA | ||||||||||||||||||
Exercised |
(26,731 | ) | 24.28 | (27,763 | ) | 25.33 | (14,574 | ) | 17.47 | |||||||||||||||
Canceled |
(28,272 | ) | 44.77 | (17,887 | ) | 46.68 | (16,882 | ) | 47.57 | |||||||||||||||
Outstanding, December 31 |
338,575 | $ | 37.93 | 376,330 | $ | 37.59 | 294,026 | $ | 39.88 | |||||||||||||||
Exercisable, December 31 |
286,017 | $ | 38.89 | 246,945 | $ | 36.82 | 176,163 | $ | 37.88 | |||||||||||||||
(a) | 2004 includes six months of awards for the combined Firm and six months of awards for heritage JPMorgan Chase. 2003 reflects the awards for heritage JPMorgan Chase only. |
Options/SARs outstanding | Options/SARs exercisable | |||||||||||||||||||
(Options/SARs in thousands) | Weighted-average | Weighted-average remaining | Weighted-average | |||||||||||||||||
Range of exercise prices | Outstanding | exercise price | contractual life (in years) | Exercisable | exercise price | |||||||||||||||
$7.27$20.00 |
2,504 | $ | 19.12 | 0.8 | 2,503 | $ | 19.12 | |||||||||||||
$20.01$35.00 |
125,422 | 28.02 | 5.8 | 88,418 | 27.22 | |||||||||||||||
$35.01$50.00 |
135,263 | 40.04 | 4.9 | 119,710 | 40.13 | |||||||||||||||
$50.01$63.48 |
75,386 | 51.27 | 4.8 | 75,386 | 51.27 | |||||||||||||||
Total |
338,575 | $ | 37.93 | 5.2 | 286,017 | $ | 38.89 | |||||||||||||
(in thousands) | Number of restricted stock/RSUs | |||||||||||
Year ended December 31,(a) | 2005 | 2004 | 2003 | |||||||||
Outstanding, January 1 |
85,099 | 85,527 | 55,886 | |||||||||
Granted |
38,115 | 32,514 | 44,552 | |||||||||
Bank One conversion |
NA | 15,116 | NA | |||||||||
Lapsed(b) |
(30,413 | ) | (43,349 | ) | (12,545 | ) | ||||||
Forfeited |
(8,197 | ) | (4,709 | ) | (2,366 | ) | ||||||
Outstanding, December 31 |
84,604 | 85,099 | 85,527 | |||||||||
(a) | 2004 includes six months of awards for the combined Firm and six months of awards for heritage JPMorgan Chase. 2003 reflects the awards for heritage JPMorgan Chase only. | |
(b) | Lapsed awards represent both restricted stock for which restrictions have lapsed and RSUs that have been converted into common stock. |
JPMorgan Chase & Co. / 2005 Annual Report | 101 |
Year ended December 31, | 2005 | 2004 | 2003 | |||||||||||||||||||||
Number of | Weighted-average | Number of | Weighted-average | Number of | Weighted-average | |||||||||||||||||||
(Options/SARs in thousands) | options/SARs | exercise price | options/SARs | exercise price | options | exercise price | ||||||||||||||||||
Outstanding, January 1 |
112,184 | $ | 40.42 | 117,822 | $ | 39.11 | 113,155 | $ | 40.62 | |||||||||||||||
Granted |
| | 6,321 | 39.96 | 12,846 | 21.87 | ||||||||||||||||||
Exercised |
(2,000 | ) | 24.10 | (5,960 | ) | 15.26 | (2,007 | ) | 13.67 | |||||||||||||||
Canceled |
(4,602 | ) | 39.27 | (5,999 | ) | 39.18 | (6,172 | ) | 37.80 | |||||||||||||||
Outstanding, December 31 |
105,582 | $ | 40.78 | 112,184 | $ | 40.42 | 117,822 | $ | 39.11 | |||||||||||||||
Exercisable, December 31 |
52,592 | $ | 40.29 | 30,082 | $ | 36.33 | 36,396 | $ | 32.88 | |||||||||||||||
Options/SARs outstanding | Options/SARs exercisable | |||||||||||||||||||
(Options/SARs in thousands) | Weighted-average | Weighted-average remaining | Weighted-average | |||||||||||||||||
Range of exercise prices | Outstanding | exercise price | contractual life (in years) | Exercisable | exercise price | |||||||||||||||
$20.01$35.00 |
15,200 | $ | 25.01 | 4.3 | 10,490 | $ | 26.42 | |||||||||||||
$35.01$50.00 |
70,088 | 41.18 | 4.5 | 41,990 | 43.72 | |||||||||||||||
$50.01$51.22 |
20,294 | 51.22 | 5.1 | 112 | 51.22 | |||||||||||||||
Total |
105,582 | $ | 40.78 | 4.6 | 52,592 | $ | 40.29 | |||||||||||||
Year ended December 31, (a) | ||||||||||||||||
(in millions, except per share data) | 2005 | 2004 | 2003 | |||||||||||||
Net income as reported | $ | 8,483 | $ | 4,466 | $ | 6,719 | ||||||||||
Add: |
Employee stock-based compensation expense originally included in reported net income | 938 | 778 | 551 | ||||||||||||
Deduct: |
Employee stock-based compensation expense determined under the fair value method for all awards | (1,015 | ) | (960 | ) | (863 | ) | |||||||||
Pro forma net income | $ | 8,406 | $ | 4,284 | $ | 6,407 | ||||||||||
Earnings per share: | ||||||||||||||||
Basic: |
As reported | $ | 2.43 | $ | 1.59 | $ | 3.32 | |||||||||
Pro forma | 2.40 | 1.52 | 3.16 | |||||||||||||
Diluted: |
As reported | $ | 2.38 | $ | 1.55 | $ | 3.24 | |||||||||
Pro forma | 2.36 | 1.48 | 3.09 | |||||||||||||
(a) | 2004 results include six months of awards for the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. |
Year ended December 31, (a) | 2005 | 2004 | 2003 | |||||||||
Weighted-average grant-date fair value |
||||||||||||
Stock options: |
||||||||||||
Key employee |
$ | 10.44 | $ | 13.04 | $ | 5.60 | ||||||
Broad-based employee |
NA | 10.71 | 4.98 | |||||||||
Converted Bank One options |
NA | 14.05 | NA | |||||||||
Restricted stock and RSUs
(all payable solely in stock) |
37.35 | 39.58 | 22.03 | |||||||||
Weighted-average annualized stock option valuation assumptions |
||||||||||||
Risk-free interest rate |
4.25 | % | 3.44 | % | 3.19 | % | ||||||
Expected dividend yield (b) |
3.79 | 3.59 | 5.99 | |||||||||
Expected common stock price volatility |
37 | 41 | 44 | |||||||||
Assumed weighted-average expected
life of stock options (in years) |
||||||||||||
Key employee |
6.8 | 6.8 | 6.8 | |||||||||
Broad-based employee |
NA | 3.8 | 3.8 | |||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | Based primarily upon historical data at the grant dates. |
102 | JPMorgan Chase & Co. / 2005 Annual Report |
Year ended December 31, (in millions) | 2005 | 2004 | (a) | |||||
Expense category |
||||||||
Compensation |
$ | 238 | $ | 467 | ||||
Occupancy |
(77 | ) | 448 | |||||
Technology and communications and other |
561 | 450 | ||||||
Total(b) |
$ | 722 | $ | 1,365 | ||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. | |
(b) | With the exception of occupancy-related write-offs, all of the costs in the table require the expenditure of cash. |
Year ended December 31, (in millions) | 2005 | 2004 | (a) | |||||
Liability balance, beginning of period |
$ | 952 | $ | | ||||
Recorded as merger costs |
722 | 1,365 | ||||||
Recorded as goodwill |
26 | 1,028 | ||||||
Liability utilized |
(903 | ) | (1,441 | ) | ||||
Total |
$ | 797 | $ | 952 | ||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. |
Year ended December 31,(a) | ||||||||||||
(in millions) | 2005 | 2004 | 2003 | |||||||||
Realized gains |
$ | 302 | $ | 576 | $ | 2,123 | ||||||
Realized losses |
(1,638 | ) | (238 | ) | (677 | ) | ||||||
Net realized securities gains (losses) |
(1,336 | ) | 338 | 1,446 | ||||||||
Private equity gains |
1,809 | 1,536 | 33 | |||||||||
Total Securities/private
equity gains |
$ | 473 | $ | 1,874 | $ | 1,479 | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. |
2005 | 2004 | |||||||||||||||||||||||||||||||
Gross | Gross | Gross | Gross | |||||||||||||||||||||||||||||
Amortized | unrealized | unrealized | Fair | Amortized | unrealized | unrealized | Fair | |||||||||||||||||||||||||
December 31, (in millions) | cost | gains | losses | value | cost | gains | losses | value | ||||||||||||||||||||||||
Available-for-sale securities |
||||||||||||||||||||||||||||||||
U.S. government and federal agency obligations: |
||||||||||||||||||||||||||||||||
U.S. treasuries |
$ | 4,245 | $ | 24 | $ | 2 | $ | 4,267 | $ | 13,621 | $ | 7 | $ | 222 | $ | 13,406 | ||||||||||||||||
Mortgage-backed securities |
80 | 3 | | 83 | 2,405 | 41 | 17 | 2,429 | ||||||||||||||||||||||||
Agency obligations |
165 | 16 | | 181 | 12 | | | 12 | ||||||||||||||||||||||||
Collateralized mortgage obligations |
4 | | | 4 | 71 | 4 | 4 | 71 | ||||||||||||||||||||||||
U.S. government-sponsored enterprise obligations |
22,604 | 9 | 596 | 22,017 | 46,143 | 142 | 593 | 45,692 | ||||||||||||||||||||||||
Obligations of state and political subdivisions |
712 | 21 | 7 | 726 | 2,748 | 126 | 8 | 2,866 | ||||||||||||||||||||||||
Debt securities issued by non-U.S. governments |
5,512 | 12 | 18 | 5,506 | 7,901 | 59 | 38 | 7,922 | ||||||||||||||||||||||||
Corporate debt securities |
5,754 | 39 | 74 | 5,719 | 7,007 | 127 | 18 | 7,116 | ||||||||||||||||||||||||
Equity securities |
3,179 | 110 | 7 | 3,282 | 5,810 | 39 | 14 | 5,835 | ||||||||||||||||||||||||
Other, primarily asset-backed securities(a) |
5,738 | 23 | 23 | 5,738 | 9,103 | 25 | 75 | 9,053 | ||||||||||||||||||||||||
Total available-for-sale securities |
$ | 47,993 | $ | 257 | $ | 727 | $ | 47,523 | $ | 94,821 | $ | 570 | $ | 989 | $ | 94,402 | ||||||||||||||||
Held-to-maturity securities(b) |
||||||||||||||||||||||||||||||||
Total held-to-maturity securities |
$ | 77 | $ | 3 | $ | | $ | 80 | $ | 110 | $ | 7 | $ | | $ | 117 | ||||||||||||||||
(a) | Includes collateralized mortgage obligations of private issuers, which generally have underlying collateral consisting of obligations of the U.S. government and federal agencies and corporations. | |
(b) | Consists primarily of mortgage-backed securities. |
JPMorgan Chase & Co. / 2005 Annual Report | 103 |
Securities with unrealized losses | ||||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||
Gross | Gross | Total | Gross | |||||||||||||||||||||
Fair | unrealized | Fair | unrealized | Fair | unrealized | |||||||||||||||||||
2005 (in millions) | value | losses | value | losses | value | losses | ||||||||||||||||||
Available-for-sale securities |
||||||||||||||||||||||||
U.S. government and federal agency obligations: |
||||||||||||||||||||||||
U.S. treasuries |
$ | 3,789 | $ | 1 | $ | 85 | $ | 1 | $ | 3,874 | $ | 2 | ||||||||||||
Mortgage-backed securities |
| | 47 | | 47 | | ||||||||||||||||||
Agency obligations |
7 | | 13 | | 20 | | ||||||||||||||||||
Collateralized mortgage obligations |
15 | | 30 | | 45 | | ||||||||||||||||||
U.S. government-sponsored enterprise
obligations |
10,607 | 242 | 11,007 | 354 | 21,614 | 596 | ||||||||||||||||||
Obligations of state and political subdivisions |
237 | 3 | 107 | 4 | 344 | 7 | ||||||||||||||||||
Debt securities issued by non-U.S. governments |
2,380 | 17 | 71 | 1 | 2,451 | 18 | ||||||||||||||||||
Corporate debt securities |
3,076 | 52 | 678 | 22 | 3,754 | 74 | ||||||||||||||||||
Equity securities |
1,838 | 7 | 2 | | 1,840 | 7 | ||||||||||||||||||
Other, primarily asset-backed securities |
778 | 14 | 370 | 9 | 1,148 | 23 | ||||||||||||||||||
Total securities with unrealized losses |
$ | 22,727 | $ | 336 | $ | 12,410 | $ | 391 | $ | 35,137 | $ | 727 | ||||||||||||
Securities with unrealized losses | ||||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||
Gross | Gross | Total | Gross | |||||||||||||||||||||
Fair | unrealized | Fair | unrealized | Fair | unrealized | |||||||||||||||||||
2004 (in millions) | value | losses | value | losses | value | losses | ||||||||||||||||||
Available-for-sale securities |
||||||||||||||||||||||||
U.S. government and federal agency obligations: |
||||||||||||||||||||||||
U.S. treasuries |
$ | 10,186 | $ | 154 | $ | 940 | $ | 68 | $ | 11,126 | $ | 222 | ||||||||||||
Mortgage-backed securities |
344 | 1 | 1,359 | 16 | 1,703 | 17 | ||||||||||||||||||
Agency obligations |
5 | | 3 | | 8 | | ||||||||||||||||||
Collateralized mortgage obligations |
278 | 4 | 2 | | 280 | 4 | ||||||||||||||||||
U.S. government-sponsored enterprise
obligations |
34,760 | 282 | 10,525 | 311 | 45,285 | 593 | ||||||||||||||||||
Obligations of state and political
subdivisions |
678 | 6 | 96 | 2 | 774 | 8 | ||||||||||||||||||
Debt securities issued by non-U.S.
governments |
3,395 | 17 | 624 | 21 | 4,019 | 38 | ||||||||||||||||||
Corporate debt securities |
1,103 | 13 | 125 | 5 | 1,228 | 18 | ||||||||||||||||||
Equity securities |
1,804 | 14 | 23 | | 1,827 | 14 | ||||||||||||||||||
Other, primarily asset-backed securities |
1,896 | 41 | 321 | 34 | 2,217 | 75 | ||||||||||||||||||
Total securities with unrealized losses |
$ | 54,449 | $ | 532 | $ | 14,018 | $ | 457 | $ | 68,467 | $ | 989 | ||||||||||||
104 | JPMorgan Chase & Co. / 2005 Annual Report |
Available-for-sale securities | Held-to-maturity securities | |||||||||||||||||||||||
Maturity schedule of securities | Amortized | Fair | Average | Amortized | Fair | Average | ||||||||||||||||||
December 31, 2005 (in millions) | cost | value | yield | (a) | cost | value | yield | (a) | ||||||||||||||||
Due in one year or less |
$ | 6,723 | $ | 6,426 | 2.77 | % | $ | | $ | | | % | ||||||||||||
Due after one year through five years |
7,740 | 8,009 | 3.72 | | | | ||||||||||||||||||
Due after five years through 10 years |
5,346 | 5,366 | 4.70 | 30 | 31 | 6.96 | ||||||||||||||||||
Due after 10 years(b) |
28,184 | 27,722 | 4.69 | 47 | 49 | 6.73 | ||||||||||||||||||
Total securities |
$ | 47,993 | $ | 47,523 | 4.27 | % | $ | 77 | $ | 80 | 6.82 | % | ||||||||||||
(a) | The average yield is based upon amortized cost balances at year-end. Yields are derived by dividing interest income by total amortized cost. Taxable-equivalent yields are used where applicable. | |
(b) | Includes securities with no stated maturity. Substantially all of JPMorgan Chases MBSs and CMOs are due in 10 years or more based upon contractual maturity. The estimated duration, which reflects anticipated future prepayments based upon a consensus of dealers in the market, is approximately four years for MBSs and CMOs. |
2005 | 2004 | |||||||||||||||
Carrying | Carrying | |||||||||||||||
December 31, (in millions) | value | Cost | value | Cost | ||||||||||||
Total private equity investments |
$ | 6,374 | $ | 8,036 | $ | 7,735 | $ | 9,103 | ||||||||
JPMorgan Chase & Co. / 2005 Annual Report | 105 |
December 31, (in millions) | 2005 | 2004 | ||||||
Securities purchased under resale agreements |
$ | 129,570 | $ | 94,076 | ||||
Securities borrowed |
74,604 | 47,428 | ||||||
Securities sold under repurchase agreements |
$ | 103,052 | $ | 105,912 | ||||
Securities loaned |
14,072 | 6,435 | ||||||
December 31, (in millions) | 2005 | 2004 | ||||||
U.S. wholesale loans: |
||||||||
Commercial and industrial |
$ | 70,233 | $ | 61,033 | ||||
Real estate |
13,612 | 13,038 | ||||||
Financial institutions |
11,100 | 14,195 | ||||||
Lease financing receivables |
2,621 | 3,098 | ||||||
Other |
14,499 | 8,504 | ||||||
Total U.S. wholesale loans |
112,065 | 99,868 | ||||||
Non-U.S. wholesale loans: |
||||||||
Commercial and industrial |
27,452 | 25,120 | ||||||
Real estate |
1,475 | 1,747 | ||||||
Financial institutions |
7,975 | 7,280 | ||||||
Lease financing receivables |
1,144 | 1,052 | ||||||
Total non-U.S. wholesale loans |
38,046 | 35,199 | ||||||
Total wholesale loans:(a) |
||||||||
Commercial and industrial |
97,685 | 86,153 | ||||||
Real estate(b) |
15,087 | 14,785 | ||||||
Financial institutions |
19,075 | 21,475 | ||||||
Lease financing receivables |
3,765 | 4,150 | ||||||
Other |
14,499 | 8,504 | ||||||
Total wholesale loans |
150,111 | 135,067 | ||||||
Total consumer loans:(c) |
||||||||
Consumer real estate |
||||||||
Home finance home equity & other |
76,727 | 67,837 | ||||||
Home finance mortgage |
56,726 | 56,816 | ||||||
Total Home finance |
133,453 | 124,653 | ||||||
Auto & education finance |
49,047 | 62,712 | ||||||
Consumer & small business and other |
14,799 | 15,107 | ||||||
Credit card receivables(d) |
71,738 | 64,575 | ||||||
Total consumer loans |
269,037 | 267,047 | ||||||
Total loans(e)(f)(g) |
$ | 419,148 | $ | 402,114 | ||||
(a) | Includes Investment Bank, Commercial Banking, Treasury & Securities Services and Asset & Wealth Management. | |
(b) | Represents credits extended for real estaterelated purposes to borrowers who are primarily in the real estate development or investment businesses and for which the primary repayment is from the sale, lease, management, operations or refinancing of the property. | |
(c) | Includes Retail Financial Services and Card Services. | |
(d) | Includes billed finance charges and fees net of an allowance for uncollectible amounts. | |
(e) | Loans are presented net of unearned income of $3.0 billion and $4.1 billion at December 31, 2005 and 2004, respectively. | |
(f) | Includes loans held for sale (primarily related to securitization and syndication activities) of $34.2 billion and $24.5 billion at December 31, 2005 and 2004, respectively. | |
(g) | Amounts are presented gross of the Allowance for loan losses. |
106 | JPMorgan Chase & Co. / 2005 Annual Report |
Year ended December 31, (in millions)(a) | 2005 | 2004 | 2003 | |||||||||
Net gains on sales of loans held for sale |
$ | 596 | $ | 368 | $ | 933 | ||||||
Lower of cost or fair value adjustments |
(332 | ) | 39 | 26 | ||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. |
December 31, (in millions)(a) | 2005 | 2004 | ||||||
Impaired loans with an allowance |
$ | 1,095 | $ | 1,496 | ||||
Impaired loans without an allowance(b) |
80 | 284 | ||||||
Total impaired loans |
$ | 1,175 | $ | 1,780 | ||||
Allowance for impaired loans under SFAS 114(c) |
$ | 257 | $ | 521 | ||||
Average balance of impaired loans during the year |
1,478 | 1,883 | ||||||
Interest income recognized on impaired
loans during the year |
5 | 8 | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. | |
(b) | When the discounted cash flows, collateral value or market price equals or exceeds the carrying value of the loan, then the loan does not require an allowance under SFAS 114. | |
(c) | The allowance for impaired loans under SFAS 114 is included in JPMorgan Chases Allowance for loan losses. |
JPMorgan Chase & Co. / 2005 Annual Report | 107 |
Reported in: | ||||||||
Allowance for | ||||||||
credit losses on: | Balance sheet | Income statement | ||||||
Loans |
Allowance for loan losses | Provision for credit losses | ||||||
Lending-related
commitments |
Other liabilities | Provision for credit losses | ||||||
December 31, (in millions) | 2005 | 2004 | (c) | |||||
Allowance for loan losses at January 1 |
$ | 7,320 | $ | 4,523 | ||||
Addition resulting from the Merger, July 1, 2004 |
| 3,123 | ||||||
Gross charge-offs |
(4,869 | ) | (3,805 | )(d) | ||||
Gross recoveries |
1,050 | 706 | ||||||
Net charge-offs |
(3,819 | ) | (3,099 | ) | ||||
Provision for loan losses: |
||||||||
Provision excluding
accounting policy conformity |
3,575 | 1,798 | ||||||
Accounting policy conformity(a) |
| 1,085 | ||||||
Total Provision for loan losses |
3,575 | 2,883 | ||||||
Other |
14 | (110 | )(e) | |||||
Allowance for loan losses at December 31 |
$ | 7,090 | (b) | $ | 7,320 | (f) | ||
(a) | Represents an increase of approximately $1.4 billion as a result of the decertification of heritage Bank One sellers interest in credit card securitizations, partially offset by a reduction of $357 million to conform provision methodologies. | |
(b) | 2005 includes $203 million of asset-specific and $6.9 billion of formula-based allowance. Included within the formula-based allowance was $5.1 billion related to a statistical calculation (including $400 million related to Hurricane Katrina), and an adjustment to the statistical calculation of $1.8 billion. | |
(c) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. | |
(d) | Includes $406 million related to the Manufactured Home Loan portfolio in the fourth quarter of 2004. | |
(e) | Primarily represents the transfer of the allowance for accrued interest and fees on reported and securitized credit card loans. | |
(f) | 2004 includes $469 million of asset-specific loss and $6.8 billion of formula-based loss. Included within the formula-based loss is $4.8 billion related to statistical calculation and an adjustment to the statistical calculation of $2.0 billion. |
December 31, (in millions) | 2005 | 2004 | (c) | ||||||
Allowance for lending-related commitments
at January 1 |
$ | 492 | $ | 324 | |||||
Addition resulting from the Merger, July 1, 2004 |
| 508 | |||||||
Provision for lending-related commitments: |
|||||||||
Provision excluding
accounting policy conformity |
(92 | ) | (112 | ) | |||||
Accounting policy conformity(a) |
| (227 | ) | ||||||
Total Provision for lending-related commitments |
(92 | ) | (339 | ) | |||||
Other |
| (1 | ) | ||||||
Allowance for lending-related commitments
at December 31(b) |
$ | 400 | $ | 492 | |||||
(a) | Represents a reduction of $227 million to conform provision methodologies in the wholesale portfolio. | |
(b) | 2005 includes $60 million of asset-specific and $340 million of formula-based allowance. 2004 includes $130 million of asset-specific and $362 million of formula-based allowance. The formula-based allowance for lending-related commitments is based upon a statistical calculation. There is no adjustment to the statistical calculation for lending-related commitments. | |
(c) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. |
108 | JPMorgan Chase & Co. / 2005 Annual Report |
December 31, (in billions) | 2005 | 2004 | ||||||
Credit card receivables |
$ | 96.0 | $ | 106.3 | ||||
Residential mortgage receivables |
29.8 | 19.1 | ||||||
Wholesale activities(a) |
72.9 | 44.8 | ||||||
Automobile loans |
5.5 | 4.9 | ||||||
Total |
$ | 204.2 | $ | 175.1 | ||||
(a) | Co-sponsored securitizations include non-JPMorgan Chase originated assets. |
Year ended December 31, | 2005 | 2004(a) | ||||||||||||||||||||||||||||||
Residential | Wholesale | Residential | Wholesale | |||||||||||||||||||||||||||||
(in millions) | mortgage | Credit card | Automobile | activities | (e) | mortgage | Credit card | Automobile | activities | (e) | ||||||||||||||||||||||
Principal securitized |
$ | 18,125 | $ | 15,145 | $ | 3,762 | $ | 22,691 | $ | 6,529 | $ | 8,850 | $ | 1,600 | $ | 8,756 | ||||||||||||||||
Pre-tax gains (losses) |
21 | 101 | 9 | (c) | 131 | 47 | 52 | (3 | ) | 135 | ||||||||||||||||||||||
Cash flow information: |
||||||||||||||||||||||||||||||||
Proceeds from securitizations |
$ | 18,093 | $ | 14,844 | $ | 2,622 | $ | 22,892 | $ | 6,608 | $ | 8,850 | $ | 1,597 | $ | 8,430 | ||||||||||||||||
Servicing fees collected |
17 | 94 | 4 | | 12 | 69 | 1 | 3 | ||||||||||||||||||||||||
Other cash flows received |
| 298 | | 3 | 25 | 225 | | 16 | ||||||||||||||||||||||||
Proceeds from collections reinvested
in revolving securitizations |
| 129,696 | | | | 110,697 | | | ||||||||||||||||||||||||
Key assumptions (rates per annum): |
||||||||||||||||||||||||||||||||
Prepayment rate(b) |
9.112.1 | % | 16.720.0 | % | 1.5 | % | 050 | % | 23.837.6 | % | 15.516.7 | % | 1.5 | % | 17.050.0 | % | ||||||||||||||||
CPR | PPR | ABS | CPR | PPR | ABS | |||||||||||||||||||||||||||
Weighted-average life (in
years) |
5.66.7 | 0.40.5 | 1.41.5 | 1.04.4 | 1.93.0 | 0.50.6 | 1.8 | 2.04.0 | ||||||||||||||||||||||||
Expected credit losses |
| (d) | 4.75.7 | % | 0.60.7 | % | 02.0 | %(d) | 1.02.3 | % | 5.55.8 | % | 0.6 | % | 0.03.0 | %(d) | ||||||||||||||||
Discount rate |
13.013.3 | % | 12.0 | % | 6.37.3 | % | 0.618.5 | % | 15.030.0 | % | 12.0 | % | 4.1 | % | 0.65.0 | % | ||||||||||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. | |
(b) | CPR: constant prepayment rate; ABS: absolute prepayment speed; PPR: principal payment rate. | |
(c) | The auto securitization gain of $9 million does not include the write-down of loans transferred to held-for-sale in 2005 and risk management activities intended to protect the economic value of the loans while held-for-sale. | |
(d) | Expected credit losses for prime residential mortgage and certain wholesale securitizations are minimal and are incorporated into other assumptions. | |
(e) | Wholesale activities consist of wholesale loans (primarily commercial real estate) originated by the Investment Bank as well as $11.4 billion and $1.8 billion of consumer loans purchased from the market in 2005 and 2004, respectively, and then packaged and securitized by the Investment Bank. |
December 31, (in millions) | 2005 | 2004 | ||||||
Residential mortgage(a) |
$ | 182 | $ | 433 | ||||
Credit card(a) |
808 | 494 | ||||||
Automobile(a)(b) |
150 | 85 | ||||||
Wholesale activities(c) |
265 | 23 | ||||||
Total |
$ | 1,405 | $ | 1,035 | ||||
(a) | Pre-tax unrealized gains (losses) recorded in Stockholders equity that relate to retained securitization interests totaled $60 million and $118 million for Residential mortgage; $6 million and $(3) million for Credit card; and $5 million and $11 million for Automobile at December 31, 2005 and 2004, respectively. | |
(b) | In addition to the automobile retained interest amounts noted above, the Firm also retained senior securities totaling $490 million at December 31, 2005, from 2005 auto securitizations that are classified as AFS securities. These securities are valued using quoted market prices and are therefore not included in the key economic assumption and sensitivities table that follows. | |
(c) | In addition to the wholesale retained interest amounts noted above, the Firm also retained subordinated securities totaling $51 million at December 31, 2005, from re-securitization activities. These securities are valued using quoted market prices and are therefore not included in the key assumptions and sensitivities table that follows. |
JPMorgan Chase & Co. / 2005 Annual Report | 109 |
December 31, 2005 (in millions) | Residential mortgage | Credit card | Automobile | Wholesale activities | ||||||||||||
Weighted-average life (in years) |
0.53.5 | 0.40.7 | 1.2 | 0.24.1 | ||||||||||||
Prepayment rate |
20.143.7 | % CPR | 11.920.8 | % PPR | 1.5 | % ABS | 0.050.0 | %(a) | ||||||||
Impact of 10% adverse change |
$ | (3 | ) | $ | (44 | ) | $ | | $ | (5 | ) | |||||
Impact of 20% adverse change |
(5 | ) | (88 | ) | (2 | ) | (6 | ) | ||||||||
Loss assumption |
0.05.2 | %(b) | 3.28.1 | % | 0.7 | % | 0.02.0 | %(b) | ||||||||
Impact of 10% adverse change |
$ | (10 | ) | $ | (77 | ) | $ | (4 | ) | $ | (6 | ) | ||||
Impact of 20% adverse change |
(19 | ) | (153 | ) | (9 | ) | (11 | ) | ||||||||
Discount rate |
12.730.0 | %(c) | 6.912.0 | % | 7.2 | % | 0.218.5 | % | ||||||||
Impact of 10% adverse change |
$ | (4 | ) | $ | (2 | ) | $ | (1 | ) | $ | (6 | ) | ||||
Impact of 20% adverse change |
(8 | ) | (4 | ) | (3 | ) | (12 | ) | ||||||||
December 31, 2004 (in millions) | Residential mortgage | Credit card | Automobile | Wholesale activities | ||||||||||||
Weighted-average life (in years) |
0.83.4 | 0.51.0 | 1.3 | 0.24.0 | ||||||||||||
Prepayment rate |
15.137.1 | % CPR | 8.316.7 | % PPR | 1.4 | % ABS | 0.050.0 | % (a) | ||||||||
Impact of 10% adverse change |
$ | (5 | ) | $ | (34 | ) | $ | (6 | ) | $ | (1 | ) | ||||
Impact of 20% adverse change |
(8 | ) | (69 | ) | (13 | ) | (1 | ) | ||||||||
Loss assumption |
0.05.0 | % (b) | 5.78.4 | % | 0.7 | % | 0.03.0 | % (b) | ||||||||
Impact of 10% adverse change |
$ | (17 | ) | $ | (144 | ) | $ | (4 | ) | $ | | |||||
Impact of 20% adverse change |
(34 | ) | (280 | ) | (8 | ) | | |||||||||
Discount rate |
13.030.0 | % (c) | 4.912.0 | % | 5.5 | % | 1.022.9 | % | ||||||||
Impact of 10% adverse change |
$ | (9 | ) | $ | (2 | ) | $ | (1 | ) | $ | | |||||
Impact of 20% adverse change |
(18 | ) | (4 | ) | (2 | ) | | |||||||||
(a) | Prepayment risk on certain wholesale retained interests are minimal and are incorporated into other assumptions. | |
(b) | Expected credit losses for prime residential mortgage and certain wholesale securitizations are minimal and are incorporated into other assumptions. | |
(c) | The Firm sold certain residual interests from sub-prime mortgage securitizations via Net Interest Margin (NIM) securitizations and retains residual interests in these NIM transactions, which are valued using a 30% discount rate. |
Loans securitized in:(a) | ||||||||||||||||||||||||
2005 | 2004(b) | 2003(b) | ||||||||||||||||||||||
Residential mortgage(c) | Automobile | Residential mortgage | Automobile | Residential mortgage | Automobile | |||||||||||||||||||
December 31, 2005 |
0.0 | % | 0.9 | % | 0.02.4 | % | 0.8 | % | 0.02.0 | % | 0.5 | % | ||||||||||||
December 31, 2004 |
NA | NA | 0.03.3 | 1.1 | 0.02.1 | 0.9 | ||||||||||||||||||
December 31, 2003 |
NA | NA | NA | NA | 0.03.6 | 0.9 | ||||||||||||||||||
(a) | Static-pool losses are not applicable to credit card securitizations due to their revolving structure. | |
(b) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(c) | 2005 securitizations consist of prime-mortgage securitizations only. Expected losses are minimal and incorporated in other assumptions. |
110 | JPMorgan Chase & Co. / 2005 Annual Report |
Nonaccrual and 90 days or | Net loan charge-offs(a) | |||||||||||||||||||||||
Total Loans | more past due | Year ended | ||||||||||||||||||||||
December 31, (in millions) | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | ||||||||||||||||||
Home finance |
$ | 133,453 | $ | 124,653 | $ | 863 | $ | 673 | $ | 154 | $ | 573 | ||||||||||||
Auto & education finance |
49,047 | 62,712 | 195 | 193 | 277 | 263 | ||||||||||||||||||
Consumer & small business and other |
14,799 | 15,107 | 280 | 295 | 141 | 154 | ||||||||||||||||||
Credit card receivables |
71,738 | 64,575 | 1,091 | 1,006 | 3,324 | 1,923 | ||||||||||||||||||
Total consumer loans |
269,037 | 267,047 | 2,429 | 2,167 | 3,896 | 2,913 | ||||||||||||||||||
Total wholesale loans |
150,111 | 135,067 | 1,042 | 1,582 | (77 | ) | 186 | |||||||||||||||||
Total loans reported |
419,148 | 402,114 | 3,471 | 3,749 | 3,819 | 3,099 | ||||||||||||||||||
Securitized loans: |
||||||||||||||||||||||||
Residential mortgage(b) |
8,061 | 11,533 | 370 | 460 | 105 | 150 | ||||||||||||||||||
Automobile |
5,439 | 4,763 | 11 | 12 | 15 | 24 | ||||||||||||||||||
Credit card |
70,527 | 70,795 | 730 | 1,337 | 3,776 | 2,898 | ||||||||||||||||||
Total consumer loans securitized |
84,027 | 87,091 | 1,111 | 1,809 | 3,896 | 3,072 | ||||||||||||||||||
Securitized wholesale activities |
9,049 | 1,401 | 4 | | | | ||||||||||||||||||
Total loans securitized(c) |
93,076 | 88,492 | 1,115 | 1,809 | 3,896 | 3,072 | ||||||||||||||||||
Total loans reported and securitized(d) |
$ | 512,224 | $ | 490,606 | $ | 4,586 | $ | 5,558 | $ | 7,715 | $ | 6,171 | ||||||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. | |
(b) | Includes $5.9 billion and $10.3 billion of outstanding principal balances on securitized sub-prime 14 family residential mortgage loans as of December 31, 2005 and 2004, respectively. | |
(c) | Total assets held in securitization-related SPEs were $204.2 billion and $175.1 billion at December 31, 2005 and 2004, respectively. The $93.1 billion and $88.5 billion of loans securitized at December 31, 2005 and 2004, respectively, excludes: $85.6 billion and $50.8 billion of securitized loans, in which the Firms only continuing involvement is the servicing of the assets; $24.8 billion and $35.2 billion of sellers interests in credit card master trusts; and $0.7 billion and $0.6 billion of escrow accounts and other assets, respectively. | |
(d) | Represents both loans on the Consolidated balance sheets and loans that have been securitized, but excludes loans for which the Firms only continuing involvement is servicing of the assets. |
| Investment Bank: Utilizes VIEs to assist clients in accessing the financial markets in a cost-efficient manner by providing the structural flexibility to meet their needs pertaining to price, yield and desired risk. There are two broad categories of transactions involving VIEs in the IB: (1) multi-seller conduits and (2) client intermediation; both are discussed below. The IB also securitizes loans through QSPEs which are not considered VIEs, to create asset-backed securities, as further discussed in Note 13 on pages 108111 of this Annual Report. | |
| Asset & Wealth Management: Provides investment management services to a limited number of the Firms mutual funds deemed VIEs. AWM earns a fixed fee based upon assets managed; the fee varies with each funds investment objective and is competitively priced. For the limited number of funds that qualify as VIEs, AWMs relationships with such funds are not considered significant interests under FIN 46R. | |
| Treasury & Securities Services: Provides trustee and custodial services to a number of VIEs. These services are similar to those provided to non-VIEs. TSS earns market-based fees for services provided. Such relationships are not considered significant interests under FIN 46R. | |
| Commercial Banking: Utilizes VIEs to assist clients in accessing the financial markets in a cost-efficient manner. This is often accomplished through the use of products similar to those offered in the Investment Bank. |
Commercial Banking may assist in the structuring and/or on-going administration of these VIEs and may provide liquidity, letters of credit and/or derivative instruments in support of the VIE. |
| The Firms Private Equity business, included in Corporate, is involved with entities that may be deemed VIEs. Private equity activities are accounted for in accordance with the Investment Company Audit Guide (Audit Guide). The FASB deferred adoption of FIN 46R for non-registered investment companies that apply the Audit Guide until the proposed Statement of Position on the clarification of the scope of the Audit Guide is finalized. The Firm continues to apply this deferral provision; had FIN 46R been applied to VIEs subject to this deferral, the impact would have had an insignificant impact on the Firms Consolidated financial statements as of December 31, 2005. |
JPMorgan Chase & Co. / 2005 Annual Report | 111 |
Consolidated | Nonconsolidated | Total | ||||||||||||||||||||||
December 31, (in billions) | 2005 | 2004 | 2005 | 2004 | (b) | 2005 | 2004 | (b) | ||||||||||||||||
Total commercial paper issued by conduits |
$ | 35.2 | $ | 35.8 | $ | 8.9 | $ | 9.3 | $ | 44.1 | $ | 45.1 | ||||||||||||
Commitments |
||||||||||||||||||||||||
Asset-purchase agreements |
$ | 47.9 | $ | 47.2 | $ | 14.3 | $ | 16.3 | $ | 62.2 | $ | 63.5 | ||||||||||||
Program-wide liquidity commitments |
5.0 | 4.0 | 1.0 | 2.0 | 6.0 | 6.0 | ||||||||||||||||||
Program-wide limited credit enhancements |
1.3 | 1.4 | 1.0 | 1.2 | 2.3 | 2.6 | ||||||||||||||||||
Maximum exposure to loss(a) |
48.4 | 48.2 | 14.8 | 16.9 | 63.2 | 65.1 | ||||||||||||||||||
(a) | The Firms maximum exposure to loss is limited to the amount of drawn commitments (i.e., sellers assets held by the multi-seller conduits for which the Firm provides liquidity support) of $41.6 billion and $42.2 billion at December 31, 2005 and 2004, respectively, plus contractual but undrawn commitments of $21.6 billion and $22.9 billion at December 31, 2005 and 2004, respectively. Since the Firm provides credit enhancement and liquidity to these multi-seller conduits, the maximum exposure is not adjusted to exclude exposure absorbed by third-party liquidity providers. | |
(b) | In December 2003 and February 2004, two multi-seller conduits were restructured, with each conduit issuing preferred securities acquired by an independent third-party investor; the investor absorbs the majority of the expected losses of the conduit. In determining the primary beneficiary of the restructured conduits, the Firm leveraged an existing rating agency model an independent market standard to estimate the size of the expected losses, and the Firm considered the relative rights and obligations of each of the variable interest holders. |
112 | JPMorgan Chase & Co. / 2005 Annual Report |
December 31, (in billions) | 2005 | 2004 | ||||||
Credit-linked note vehicles(a) |
$ | 13.5 | $ | 17.8 | ||||
Municipal bond vehicles(b) |
13.7 | 7.5 | ||||||
(a) | Assets of $1.8 billion and $2.3 billion reported in the table above were recorded on the Firms Consolidated balance sheets at December 31, 2005 and 2004, respectively, due to contractual relationships held by the Firm that relate to collateral held by the VIE. | |
(b) | Total amounts consolidated due to the Firm owning residual interests were $4.9 billion and $2.6 billion at December 31, 2005 and 2004, respectively, and are reported in the table. Total liquidity commitments were $5.8 billion and $3.1 billion at December 31, 2005 and 2004, respectively. The Firms maximum credit exposure to all municipal bond vehicles was $10.7 billion and $5.7 billion at December 31, 2005 and 2004, respectively. |
December 31, (in billions) | 2005 | 2004 | ||||||
Consolidated VIE assets(a) |
||||||||
Investment securities(b) |
$ | 1.9 | $ | 10.6 | ||||
Trading assets(c) |
9.3 | 4.7 | ||||||
Loans |
8.1 | 3.4 | ||||||
Interests in purchased receivables |
29.6 | 31.6 | ||||||
Other assets |
3.0 | 0.4 | ||||||
Total consolidated assets |
$ | 51.9 | $ | 50.7 | ||||
(a) | The Firm also holds $3.9 billion and $3.4 billion of assets, at December 31, 2005 and December 31, 2004, respectively, primarily as a sellers interest, in certain consumer securi-tizations in a segregated entity, as part of a two-step securitization transaction. This interest is included in the securitization activities disclosed in Note 13 on pages 108111 of this Annual Report. | |
(b) | The decline in balance is primarily attributable to the sale of the Firms interest in a structured investment vehicles capital notes and resulting deconsolidation of this vehicle in 2005. | |
(c) | Includes the fair value of securities and derivatives. |
JPMorgan Chase & Co. / 2005 Annual Report | 113 |
December 31, (in millions) | 2005 | 2004 | ||||||
Goodwill |
$ | 43,621 | $ | 43,203 | ||||
Mortgage servicing rights |
6,452 | 5,080 | ||||||
Purchased credit card relationships |
3,275 | 3,878 | ||||||
December 31, (in millions) | 2005 | 2004 | ||||||
All other intangibles: |
||||||||
Other credit
card-related intangibles |
$ | 124 | $ | 272 | ||||
Core deposit intangibles |
2,705 | 3,328 | ||||||
All other intangibles |
2,003 | 2,126 | ||||||
Total All other intangible assets |
$ | 4,832 | $ | 5,726 | ||||
Dec. 31, | Dec. 31, | Goodwill resulting | ||||||||||
(in millions) | 2005 | 2004 | from the Merger | |||||||||
Investment Bank |
$ | 3,531 | $ | 3,309 | $ | 1,179 | ||||||
Retail Financial Services |
14,991 | 15,022 | 14,576 | |||||||||
Card Services |
12,984 | 12,781 | 12,802 | |||||||||
Commercial Banking |
2,651 | 2,650 | 2,599 | |||||||||
Treasury & Securities Services |
2,062 | 2,044 | 465 | |||||||||
Asset & Wealth Management |
7,025 | 7,020 | 2,539 | |||||||||
Corporate (Private Equity) |
377 | 377 | | |||||||||
Total goodwill |
$ | 43,621 | $ | 43,203 | $ | 34,160 | ||||||
114 | JPMorgan Chase & Co. / 2005 Annual Report |
Year ended December 31, (in millions)(a) | 2005 | 2004 | 2003 | |||||||||
Balance at January 1 |
$ | 6,111 | $ | 6,159 | $ | 4,864 | ||||||
Additions |
1,897 | 1,757 | 3,201 | |||||||||
Bank One merger |
NA | 90 | NA | |||||||||
Sales |
| (3 | ) | | ||||||||
Other-than-temporary impairment |
(1 | ) | (149 | ) | (283 | ) | ||||||
Amortization |
(1,295 | ) | (1,297 | ) | (1,397 | ) | ||||||
SFAS 133 hedge valuation adjustments |
90 | (446 | ) | (226 | ) | |||||||
Balance at December 31 |
6,802 | 6,111 | 6,159 | |||||||||
Less: valuation allowance |
350 | 1,031 | 1,378 | |||||||||
Balance at December 31, after
valuation allowance |
$ | 6,452 | $ | 5,080 | $ | 4,781 | ||||||
Estimated fair value at December 31 |
$ | 6,668 | $ | 5,124 | $ | 4,781 | ||||||
Weighted-average prepayment
speed assumption (CPR) |
17.56 | % | 17.29 | % | 17.67 | % | ||||||
Weighted-average discount rate |
9.68 | % | 7.93 | % | 7.31 | % | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
CPR: Constant prepayment rate |
2005 | ||||
Weighted-average prepayment speed assumption (CPR) |
17.56 | % | ||
Impact on fair value with 10% adverse change |
$ | (340 | ) | |
Impact on fair value with 20% adverse change |
(654 | ) | ||
Weighted-average discount rate |
9.68 | % | ||
Impact on fair value with 10% adverse change |
$ | (231 | ) | |
Impact on fair value with 20% adverse change |
(446 | ) | ||
Year ended December 31, (in millions)(a) | 2005 | 2004 | 2003 | |||||||||
Balance at January 1 |
$ | 1,031 | $ | 1,378 | $ | 1,634 | ||||||
Other-than-temporary impairment |
(1 | ) | (149 | ) | (283 | ) | ||||||
SFAS 140 impairment (recovery) adjustment |
(680 | ) | (198 | ) | 27 | |||||||
Balance at December 31 |
$ | 350 | $ | 1,031 | $ | 1,378 | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results, while 2003 results include heritage JPMorgan Chase only. |
JPMorgan Chase & Co. / 2005 Annual Report | 115 |
2005 | 2004 | |||||||||||||||||||||||
Net | Net | |||||||||||||||||||||||
Gross | Accumulated | carrying | Gross | Accumulated | carrying | |||||||||||||||||||
December 31, (in millions) | amount | amortization | value | amount | amortization | value | ||||||||||||||||||
Purchased credit card relationships |
$ | 5,325 | $ | 2,050 | $ | 3,275 | $ | 5,225 | $ | 1,347 | $ | 3,878 | ||||||||||||
All other intangibles: |
||||||||||||||||||||||||
Other credit cardrelated intangibles |
183 | 59 | 124 | 295 | 23 | 272 | ||||||||||||||||||
Core deposit intangibles |
3,797 | 1,092 | 2,705 | 3,797 | 469 | 3,328 | ||||||||||||||||||
Other intangibles |
2,582 | 579 | (a) | 2,003 | 2,528 | 402 | (a) | 2,126 |
Amortization expense (in millions)(b) | 2005 | 2004 | 2003 | |||||||||
Purchased credit card relationships |
$ | 703 | $ | 476 | $ | 256 | ||||||
Other credit cardrelated intangibles |
36 | 23 | | |||||||||
Core deposit intangibles |
623 | 330 | 6 | |||||||||
All other intangibles |
163 | 117 | 32 | |||||||||
Total amortization expense |
$ | 1,525 | $ | 946 | $ | 294 | ||||||
(a) | Includes $14 million and $16 million for 2005 and 2004, respectively, of amortization expense related to servicing assets on securitized automobile loans, which is recorded in Asset management, administration and commissions. | |
(b) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. |
Other credit | ||||||||||||||||||||
(in millions) | Purchased credit | card-related | Core deposit | All other | ||||||||||||||||
Year ended December 31, | card relationships | intangibles | intangibles | intangible assets | Total | |||||||||||||||
2006 |
$ | 688 | $ | 16 | $ | 547 | $ | 163 | $ | 1,414 | ||||||||||
2007 |
620 | 15 | 469 | 145 | 1,249 | |||||||||||||||
2008 |
515 | 15 | 402 | 132 | 1,064 | |||||||||||||||
2009 |
372 | 15 | 329 | 123 | 839 | |||||||||||||||
2010 |
312 | 13 | 276 | 110 | 711 | |||||||||||||||
116 | JPMorgan Chase & Co. / 2005 Annual Report |
By remaining contractual maturity at December 31, 2005 | Under | After | 2005 | 2004 | ||||||||||||||||||||
(in millions) | 1 year | 15 years | 5 years | total | total | |||||||||||||||||||
Parent company | ||||||||||||||||||||||||
Senior debt:(a) |
Fixed rate | $ | 5,991 | $ | 14,705 | $ | 4,224 | $ | 24,920 | $ | 25,563 | |||||||||||||
Variable rate | 3,574 | 11,049 | 2,291 | 16,914 | 15,128 | |||||||||||||||||||
Interest rates(b) | 2.806.88 | % | 0.226.63 | % | 1.128.85 | % | 0.228.85 | % | 0.207.63 | % | ||||||||||||||
Subordinated debt: |
Fixed rate | $ | 758 | $ | 8,241 | $ | 15,818 | $ | 24,817 | $ | 22,055 | |||||||||||||
Variable rate | | 26 | 1,797 | 1,823 | 2,686 | |||||||||||||||||||
Interest rates(b) | 6.137.88 | % | 4.8010.00 | % | 1.929.88 | % | 1.9210.00 | % | 1.9210.00 | % | ||||||||||||||
Subtotal | $ | 10,323 | $ | 34,021 | $ | 24,130 | $ | 68,474 | $ | 65,432 | ||||||||||||||
Subsidiaries | ||||||||||||||||||||||||
Senior debt:(a) |
Fixed rate | $ | 636 | $ | 3,746 | $ | 2,362 | $ | 6,744 | $ | 6,249 | |||||||||||||
Variable rate | 5,364 | 21,632 | 5,013 | 32,009 | 22,097 | |||||||||||||||||||
Interest rates(b) | 3.0010.95 | % | 1.7117.00 | % | 1.7613.00 | % | 1.7117.00 | % | 1.7113.00 | % | ||||||||||||||
Subordinated debt: |
Fixed rate | $ | | $ | 845 | $ | 285 | $ | 1,130 | $ | 1,644 | |||||||||||||
Variable rate | | | | | | |||||||||||||||||||
Interest rates(b) | | 6.136.70 | % | 8.25 | % | 6.138.25 | % | 6.008.25 | % | |||||||||||||||
Subtotal | $ | 6,000 | $ | 26,223 | $ | 7,660 | $ | 39,883 | $ | 29,990 | ||||||||||||||
Total long-term debt | $ | 16,323 | $ | 60,244 | $ | 31,790 | $ | 108,357 | (d)(e)(f) | $ | 95,422 | |||||||||||||
FIN 46R long-term beneficial interests:(c) | ||||||||||||||||||||||||
Fixed rate | $ | 80 | $ | 9 | $ | 376 | $ | 465 | $ | 775 | ||||||||||||||
Variable rate | 26 | 95 | 1,768 | 1,889 | 5,618 | |||||||||||||||||||
Interest rates(b) | 3.397.35 | % | 0.517.00 | % | 2.4212.79 | % | 0.5112.79 | % | 0.5412.79 | % | ||||||||||||||
Total FIN 46R long-term beneficial interests | $ | 106 | $ | 104 | $ | 2,144 | $ | 2,354 | $ | 6,393 | ||||||||||||||
(a) | Included are various equity-linked or other indexed instruments. Embedded derivatives separated from hybrid securities in accordance with SFAS 133 are reported at fair value and shown net with the host contract on the balance sheet. Changes in fair value of separated derivatives are recorded in Trading revenue. | |
(b) | The interest rates shown are the range of contractual rates in effect at year-end, including non-U.S. dollar fixed and variable-rate issuances, which excludes the effects of related derivative instruments. The use of these derivative instruments modifies the Firms exposure to the contractual interest rates disclosed in the table above. Including the effects of derivatives, the range of modified rates in effect at December 31, 2005, for total long-term debt was 0.49% to 17.00%, versus the contractual range of 0.22% to 17.00% presented in the table above. | |
(c) | Included on the Consolidated balance sheets in Beneficial interests issued by consolidated variable interest entities. | |
(d) | At December 31, 2005, long-term debt aggregating $27.7 billion was redeemable at the option of JPMorgan Chase, in whole or in part, prior to maturity, based upon the terms specified in the respective notes. | |
(e) | The aggregate principal amount of debt that matures in each of the five years subsequent to 2005 is $16.3 billion in 2006, $17.8 billion in 2007, $23.4 billion in 2008, $11.1 billion in 2009, and $8.0 billion in 2010. | |
(f) | Includes $2.3 billion of outstanding zero-coupon notes at December 31, 2005. The aggregate principal amount of these notes at their respective maturities is $5.9 billion. |
JPMorgan Chase & Co. / 2005 Annual Report | 117 |
Amount | Principal | Stated maturity | ||||||||||||||||||||||||||
of capital | amount of | of capital | ||||||||||||||||||||||||||
securities | debenture | securities | Earliest | Interest rate of | Interest | |||||||||||||||||||||||
issued | held | Issue | and | redemption | capital securities | payment/ | ||||||||||||||||||||||
December 31, 2005 (in millions) | by trust(a) | by trust(b) | date | debentures | date | and debentures | distribution dates | |||||||||||||||||||||
Bank One Capital III |
$ | 474 | $ | 616 | 2000 | 2030 | Any time | 8.75 | % | Semiannually | ||||||||||||||||||
Bank One Capital V |
300 | 335 | 2001 | 2031 | 2006 | 8.00 | % | Quarterly | ||||||||||||||||||||
Bank One Capital VI |
525 | 556 | 2001 | 2031 | 2006 | 7.20 | % | Quarterly | ||||||||||||||||||||
Chase Capital I |
600 | 619 | 1996 | 2026 | 2006 | 7.67 | % | Semiannually | ||||||||||||||||||||
Chase Capital II |
495 | 511 | 1997 | 2027 | 2007 | LIBOR + 0.50% | Quarterly | |||||||||||||||||||||
Chase Capital III |
296 | 306 | 1997 | 2027 | 2007 | LIBOR + 0.55% | Quarterly | |||||||||||||||||||||
Chase Capital VI |
249 | 256 | 1998 | 2028 | Any time | LIBOR + 0.625% | Quarterly | |||||||||||||||||||||
First Chicago NBD Capital I |
248 | 256 | 1997 | 2027 | 2007 | LIBOR + 0.55% | Quarterly | |||||||||||||||||||||
First Chicago NBD
Institutional Capital A |
499 | 551 | 1996 | 2026 | 2006 | 7.95 | % | Semiannually | ||||||||||||||||||||
First Chicago NBD
Institutional Capital B |
250 | 273 | 1996 | 2026 | 2006 | 7.75 | % | Semiannually | ||||||||||||||||||||
First USA Capital Trust I |
3 | 3 | 1996 | 2027 | 2007 | 9.33 | % | Semiannually | ||||||||||||||||||||
JPM Capital Trust I |
750 | 773 | 1996 | 2027 | 2007 | 7.54 | % | Semiannually | ||||||||||||||||||||
JPM Capital Trust II |
400 | 412 | 1997 | 2027 | 2007 | 7.95 | % | Semiannually | ||||||||||||||||||||
J.P. Morgan Chase Capital IX |
500 | 509 | 2001 | 2031 | 2006 | 7.50 | % | Quarterly | ||||||||||||||||||||
J.P. Morgan Chase Capital X |
1,000 | 1,022 | 2002 | 2032 | 2007 | 7.00 | % | Quarterly | ||||||||||||||||||||
J.P. Morgan Chase Capital XI |
1,075 | 1,009 | 2003 | 2033 | 2008 | 5.88 | % | Quarterly | ||||||||||||||||||||
J.P. Morgan Chase Capital XII |
400 | 393 | 2003 | 2033 | 2008 | 6.25 | % | Quarterly | ||||||||||||||||||||
JPMorgan Chase Capital XIII |
472 | 487 | 2004 | 2034 | 2014 | LIBOR + 0.95% | Quarterly | |||||||||||||||||||||
JPMorgan Chase Capital XIV |
600 | 593 | 2004 | 2034 | 2009 | 6.20 | % | Quarterly | ||||||||||||||||||||
JPMorgan Chase Capital XV |
994 | 1,049 | 2005 | 2035 | Any time | 5.88 | % | Semiannually | ||||||||||||||||||||
JPMorgan Chase Capital XVI |
500 | 501 | 2005 | 2035 | 2010 | 6.35 | % | Quarterly | ||||||||||||||||||||
JPMorgan Chase Capital XVII |
496 | 499 | 2005 | 2035 | Any time | 5.85 | % | Semiannually | ||||||||||||||||||||
Total |
$ | 11,126 | $ | 11,529 | ||||||||||||||||||||||||
(a) | Represents the amount of capital securities issued to the public by each trust, net of unamortized discount. | |
(b) | Represents the principal amount of JPMorgan Chase debentures held as assets by each trust, net of unamortized discount amounts. The principal amount of debentures held by the trusts includes the impact of hedging and purchase accounting fair value adjustments that are recorded on the Firms financial statements. |
Stated value and | Rate in effect at | |||||||||||||||||||||||||||
(in millions, except | redemption | Shares | Outstanding at December 31, | Earliest | December 31, | |||||||||||||||||||||||
per share amounts and rates) | price per share(b) | 2005 | 2004 | 2005 | 2004 | redemption date | 2005 | |||||||||||||||||||||
6.63% Series H cumulative(a) |
$ | 500.00 | 0.28 | 0.28 | $ | 139 | $ | 139 | 3/31/2006 | 6.63 | % | |||||||||||||||||
Fixed/adjustable rate, noncumulative |
50.00 | | 4.00 | | 200 | | | |||||||||||||||||||||
Total preferred stock |
0.28 | 4.28 | $ | 139 | $ | 339 | ||||||||||||||||||||||
(a) | Represented by depositary shares. | |
(b) | Redemption price includes amount shown in the table plus any accrued but unpaid dividends. |
118 | JPMorgan Chase & Co. / 2005 Annual Report |
December 31,(a) (in millions) | 2005 | 2004 | 2003 | |||||||||
Issued balance at January 1 |
3,584.8 | 2,044.4 | 2,023.6 | |||||||||
Newly issued: |
||||||||||||
Employee benefits and
compensation plans |
34.0 | 69.0 | 20.9 | |||||||||
Employee stock purchase plans |
1.4 | 3.1 | 0.7 | |||||||||
Purchase accounting acquisitions
and other |
| 1,469.4 | | |||||||||
Total newly issued |
35.4 | 1,541.5 | 21.6 | |||||||||
Cancelled shares |
(2.0 | ) | (1.1 | ) | (0.8 | ) | ||||||
Total issued balance at December 31 |
3,618.2 | 3,584.8 | 2,044.4 | |||||||||
Treasury balance at January 1 |
(28.6 | ) | (1.8 | ) | (24.9 | ) | ||||||
Purchase of treasury stock |
(93.5 | ) | (19.3 | ) | | |||||||
Share repurchases related to employee
stock-based awards(b) |
(9.4 | ) | (7.5 | ) | (3.0 | ) | ||||||
Issued from treasury: |
||||||||||||
Employee benefits and
compensation plans |
| | 25.8 | |||||||||
Employee stock purchase plans |
| | 0.3 | |||||||||
Total issued from treasury |
| | 26.1 | |||||||||
Total treasury balance at December 31 |
(131.5 | ) | (28.6 | ) | (1.8 | ) | ||||||
Outstanding |
3,486.7 | 3,556.2 | 2,042.6 | |||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | Participants in the Firms stock-based incentive plans may have shares withheld to cover income taxes. The shares withheld amounted to 8.2 million, 5.7 million and 2.3 million for 2005, 2004 and 2003, respectively. |
Year ended December 31, | ||||||||||||
(in millions, except per share amounts)(a) | 2005 | 2004 | 2003 | |||||||||
Basic earnings per share |
||||||||||||
Net income |
$ | 8,483 | $ | 4,466 | $ | 6,719 | ||||||
Less: preferred stock dividends |
13 | 52 | 51 | |||||||||
Net income applicable to common stock |
$ | 8,470 | $ | 4,414 | $ | 6,668 | ||||||
Weighted-average basic
shares outstanding |
3,491.7 | 2,779.9 | 2,008.6 | |||||||||
Net income per share |
$ | 2.43 | $ | 1.59 | $ | 3.32 | ||||||
Diluted earnings per share |
||||||||||||
Net income applicable to
common stock |
$ | 8,470 | $ | 4,414 | $ | 6,668 | ||||||
Weighted-average basic
shares outstanding |
3,491.7 | 2,779.9 | 2,008.6 | |||||||||
Add: Broad-based options |
3.6 | 5.4 | 4.1 | |||||||||
Restricted stock, restricted stock
units and key employee options |
62.0 | 65.3 | 42.4 | |||||||||
Weighted-average diluted
shares outstanding |
3,557.3 | 2,850.6 | 2,055.1 | |||||||||
Net income per share(b) |
$ | 2.38 | $ | 1.55 | $ | 3.24 | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | Options issued under employee benefit plans to purchase 280 million, 300 million and 335 million shares of common stock were outstanding for the years ended 2005, 2004 and 2003, respectively, but were not included in the computation of diluted EPS because the options exercise prices were greater than the average market price of the common shares. |
Accumulated | ||||||||||||||||
Year ended | Unrealized | Cash | other | |||||||||||||
December 31,(a) | gains (losses) | Translation | flow | comprehensive | ||||||||||||
(in millions) | on AFS securities(b) | adjustments | hedges | income (loss) | ||||||||||||
Balance at
December 31, 2002 |
$ | 731 | $ | (6 | ) | $ | 502 | $ | 1,227 | |||||||
Net change |
(712 | ) | | (545 | ) | (1,257 | ) | |||||||||
Balance at
December 31, 2003 |
19 | (6 | ) | (43 | ) | (30 | ) | |||||||||
Net change |
(80 | )(c) | (2 | )(d) | (96 | ) | (178 | ) | ||||||||
Balance at
December 31, 2004 |
(61 | ) | (8 | ) | (139 | ) | (208 | ) | ||||||||
Net change |
(163 | )(e) | | (f) | (255 | ) | (418 | ) | ||||||||
Balance at
December 31, 2005 |
$ | (224 | ) | $ | (8 | ) | $ | (394 | ) | $ | (626 | ) | ||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | Represents the after-tax difference between the fair value and amortized cost of the AFS securities portfolio and retained interests in securitizations recorded in Other assets. | |
(c) | The net change during 2004 was due primarily to rising interest rates and recognition of unrealized gains through securities sales. | |
(d) | Includes $280 million of after-tax gains (losses) on foreign currency translation from operations for which the functional currency is other than the U.S. dollar offset by $(282) million of after-tax gains (losses) on hedges. | |
(e) | The net change during 2005 was due primarily to higher interest rates, partially offset by the reversal of unrealized losses through securities sales. | |
(f) | Includes $(351) million of after-tax gains (losses) on foreign currency translation from operations for which the functional currency is other than the U.S. dollar offset by $351 million of after-tax gains (losses) on hedges. |
JPMorgan Chase & Co. / 2005 Annual Report | 119 |
Year ended December 31, (in millions)(a) | 2005 | 2004 | 2003 | |||||||||
Unrealized gains (losses) on AFS securities: |
||||||||||||
Net unrealized holdings gains (losses)
arising during the period, net of taxes(b) |
$ | (1,058 | ) | $ | 41 | $ | 149 | |||||
Reclassification adjustment for (gains) losses
included in income, net of taxes(c) |
895 | (121 | ) | (861 | ) | |||||||
Net change |
$ | (163 | ) | $ | (80 | ) | $ | (712 | ) | |||
Cash flow hedges: |
||||||||||||
Net unrealized holdings gains (losses)
arising during the period, net of taxes(d) |
$ | (283 | ) | $ | 34 | $ | 86 | |||||
Reclassification adjustment for (gains) losses
included in income, net of taxes(e) |
28 | (130 | ) | (631 | ) | |||||||
Net change |
$ | (255 | ) | $ | (96 | ) | $ | (545 | ) | |||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | Net of income tax expense (benefit) of $(648) million for 2005, $27 million for 2004 and $92 million for 2003. | |
(c) | Net of income tax expense (benefit) of $(548) million for 2005, $79 million for 2004 and $528 million for 2003. | |
(d) | Net of income tax expense (benefit) of $(187) million for 2005, $23 million for 2004 and $60 million for 2003. | |
(e) | Net of income tax expense (benefit) of $(18) million for 2005 and $86 million for 2004 and $438 million for 2003. |
December 31, (in millions) | 2005 | 2004 | ||||||
Deferred tax assets |
||||||||
Allowance for other than loan losses |
$ | 3,554 | $ | 3,711 | ||||
Employee benefits |
3,381 | 2,677 | ||||||
Allowance for loan losses |
2,745 | 2,739 | ||||||
Non-U.S. operations |
807 | 743 | ||||||
Fair value adjustments |
531 | | ||||||
Gross deferred tax assets |
$ | 11,018 | $ | 9,870 | ||||
Deferred tax liabilities |
||||||||
Depreciation and amortization |
$ | 3,683 | $ | 3,558 | ||||
Leasing transactions |
3,158 | 4,266 | ||||||
Fee income |
1,396 | 1,162 | ||||||
Non-U.S. operations |
1,297 | 1,144 | ||||||
Fair value adjustments |
| 186 | ||||||
Other, net |
149 | 348 | ||||||
Gross deferred tax liabilities |
$ | 9,683 | $ | 10,664 | ||||
Valuation allowance |
$ | 110 | $ | 150 | ||||
Net deferred tax asset (liability) |
$ | 1,225 | $ | (944 | ) | |||
Year ended December 31, (in millions)(a) | 2005 | 2004 | 2003 | |||||||||
Current income tax expense |
||||||||||||
U.S. federal |
$ | 4,269 | $ | 1,695 | $ | 965 | ||||||
Non-U.S. |
917 | 679 | 741 | |||||||||
U.S. state and local |
337 | 181 | 175 | |||||||||
Total current expense |
5,523 | 2,555 | 1,881 | |||||||||
Deferred income tax (benefit) expense |
||||||||||||
U.S. federal |
(2,063 | ) | (382 | ) | 1,341 | |||||||
Non-U.S. |
316 | (322 | ) | 14 | ||||||||
U.S. state and local |
(44 | ) | (123 | ) | 73 | |||||||
Total deferred (benefit) expense |
(1,791 | ) | (827 | ) | 1,428 | |||||||
Total income tax expense |
$ | 3,732 | $ | 1,728 | $ | 3,309 | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. |
120 | JPMorgan Chase & Co. / 2005 Annual Report |
Year ended December 31,(a) | 2005 | 2004 | 2003 | |||||||||
Statutory U.S. federal tax rate |
35.0 | % | 35.0 | % | 35.0 | % | ||||||
Increase (decrease) in tax rate resulting from: |
||||||||||||
U.S. state and local income taxes, net of
federal income tax benefit |
1.6 | 0.6 | (b) | 2.1 | ||||||||
Tax-exempt income |
(3.0 | ) | (4.1 | ) | (2.4 | ) | ||||||
Non-U.S. subsidiary earnings |
(1.4 | ) | (1.3 | ) | (0.7 | ) | ||||||
Business tax credits |
(3.6 | ) | (4.1 | ) | (0.9 | ) | ||||||
Other, net |
2.0 | 1.8 | (0.1 | ) | ||||||||
Effective tax rate |
30.6 | % | 27.9 | % | 33.0 | % | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | The lower rate in 2004 was attributable to changes in the proportion of income subject to different state and local taxes. |
Year ended December 31, (in millions)(a) | 2005 | 2004 | 2003 | |||||||||
U.S. |
$ | 8,959 | $ | 3,817 | $ | 7,333 | ||||||
Non-U.S.(b) |
3,256 | 2,377 | 2,695 | |||||||||
Income before income tax expense |
$ | 12,215 | $ | 6,194 | $ | 10,028 | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | For purposes of this table, non-U.S. income is defined as income generated from operations located outside the United States of America. |
JPMorgan Chase & Co. / 2005 Annual Report | 121 |
Tier 1 | Total | Risk-weighted | Adjusted | Tier 1 | Total | Tier 1 | ||||||||||||||||||||||
(in millions, except ratios) | capital | capital | assets(c) | average assets(d) | capital ratio | capital ratio | leverage ratio | |||||||||||||||||||||
December 31, 2005 |
||||||||||||||||||||||||||||
JPMorgan Chase & Co.(a) |
$ | 72,474 | $ | 102,437 | $ | 850,643 | $ | 1,152,546 | 8.5 | % | 12.0 | % | 6.3 | % | ||||||||||||||
JPMorgan Chase Bank, N.A. |
61,050 | 84,227 | 750,397 | 995,095 | 8.1 | 11.2 | 6.1 | |||||||||||||||||||||
Chase Bank USA, N.A. |
8,608 | 10,941 | 72,229 | 59,882 | 11.9 | 15.2 | 14.4 | |||||||||||||||||||||
December 31, 2004 JPMorgan Chase & Co.(a) |
$ | 68,621 | $ | 96,807 | $ | 791,373 | $ | 1,102,456 | 8.7 | % | 12.2 | % | 6.2 | % | ||||||||||||||
JPMorgan Chase Bank, N.A. |
55,489 | 78,478 | 670,295 | 922,877 | 8.3 | 11.7 | 6.0 | |||||||||||||||||||||
Chase Bank USA, N.A. |
8,726 | 11,186 | 86,955 | 71,797 | 10.0 | 12.9 | 12.2 | |||||||||||||||||||||
Well-capitalized ratios(b) |
6.0 | % | 10.0 | % | 5.0 | %(e) | ||||||||||||||||||||||
Minimum capital ratios(b) |
4.0 | 8.0 | 3.0 | (f) | ||||||||||||||||||||||||
(a) | Asset and capital amounts for JPMorgan Chases banking subsidiaries reflect intercompany transactions, whereas the respective amounts for JPMorgan Chase reflect the elimination of intercompany transactions. | |
(b) | As defined by the regulations issued by the FRB, FDIC and OCC. | |
(c) | Includes off-balance sheet risk-weighted assets in the amounts of $279.2 billion, $260.0 billion and $15.5 billion, respectively, at December 31, 2005, and $250.3 billion, $229.6 billion and $15.5 billion, respectively, at December 31, 2004. | |
(d) | Average adjusted assets for purposes of calculating the leverage ratio include total average assets adjusted for unrealized gains/losses on securities, less deductions for disallowed goodwill and other intangible assets, investments in subsidiaries and the total adjusted carrying value of nonfinancial equity investments that are subject to deductions from Tier 1 capital. | |
(e) | Represents requirements for bank subsidiaries pursuant to regulations issued under the Federal Deposit Insurance Corporation Improvement Act. There is no Tier 1 leverage component in the definition of a well-capitalized bank holding company. | |
(f) | The minimum Tier 1 leverage ratio for bank holding companies and banks is 3% or 4% depending on factors specified in regulations issued by the FRB and OCC. |
December 31, (in millions) | 2005 | 2004 | ||||||
Tier 1 capital |
||||||||
Total stockholders equity |
$ | 107,211 | $ | 105,653 | ||||
Effect of net unrealized losses on AFS
securities and cash flow hedging activities |
618 | 200 | ||||||
Adjusted stockholders equity |
107,829 | 105,853 | ||||||
Minority interest(a) |
12,660 | 11,050 | ||||||
Less: Goodwill |
43,621 | 43,203 | ||||||
Investments in certain subsidiaries |
401 | 370 | ||||||
Nonqualifying intangible assets |
3,993 | 4,709 | ||||||
Tier 1 capital |
$ | 72,474 | $ | 68,621 | ||||
Tier 2 capital |
||||||||
Long-term debt and other instruments qualifying as Tier 2 |
$ | 22,733 | $ | 20,690 | ||||
Qualifying allowance for credit losses |
7,490 | 7,798 | ||||||
Less: Investments in certain subsidiaries and other |
260 | 302 | ||||||
Tier 2 capital |
$ | 29,963 | $ | 28,186 | ||||
Total qualifying capital |
$ | 102,437 | $ | 96,807 | ||||
(a) | Primarily includes trust preferred securities of certain business trusts. |
Year ended December 31, (in millions) | ||||
2006 |
$ | 993 | ||
2007 |
948 | |||
2008 |
901 | |||
2009 |
834 | |||
2010 |
724 | |||
After |
5,334 | |||
Total minimum payments required(a) |
9,734 | |||
Less: Sublease rentals under noncancelable subleases |
(1,323 | ) | ||
Net minimum payment required |
$ | 8,411 | ||
(a) | Lease restoration obligations are accrued in accordance with SFAS 13, and are not reported as a required minimum lease payment. |
Year ended December 31, (in millions)(a) | 2005 | 2004 | 2003 | |||||||||
Gross rental expense |
$ | 1,269 | $ | 1,187 | $ | 1,061 | ||||||
Sublease rental income |
(192 | ) | (158 | ) | (106 | ) | ||||||
Net rental expense |
$ | 1,077 | $ | 1,029 | $ | 955 | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. |
December 31, (in billions) | 2005 | 2004 | ||||||
Reverse repurchase/securities borrowing agreements |
$ | 320 | $ | 238 | ||||
Securities |
24 | 49 | ||||||
Loans |
74 | 75 | ||||||
Other(a) |
99 | 90 | ||||||
Total assets pledged |
$ | 517 | $ | 452 | ||||
(a) | Primarily composed of trading assets. |
122 | JPMorgan Chase & Co. / 2005 Annual Report |
Year ended December 31, (in millions)(a) | 2005 | 2004 | ||||||
Fair value hedge ineffective net gains/(losses)(b) |
$ | (58 | ) | $ | 199 | |||
Cash flow hedge ineffective net gains/(losses)(b) |
(2 | ) | | |||||
Cash flow hedging gains on forecasted
transactions that failed to occur |
| 1 | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. | |
(b) | Includes ineffectiveness and the components of hedging instruments that have been excluded from the assessment of hedge effectiveness. |
JPMorgan Chase & Co. / 2005 Annual Report | 123 |
Allowance for | ||||||||||||||||
Contractual | lending-related | |||||||||||||||
amount | commitments | |||||||||||||||
December 31, (in millions) | 2005 | 2004 | 2005 | 2004 | ||||||||||||
Lending-related |
||||||||||||||||
Consumer |
$ | 655,596 | $ | 601,196 | $ | 15 | $ | 12 | ||||||||
Wholesale: |
||||||||||||||||
Other unfunded commitments
to extend credit(a)(b)(c) |
208,469 | 185,822 | 208 | 183 | ||||||||||||
Asset purchase agreements(d) |
31,095 | 39,330 | 3 | 2 | ||||||||||||
Standby letters of credit
and guarantees(a)(e) |
77,199 | 78,084 | 173 | 292 | ||||||||||||
Other letters of credit(a) |
7,001 | 6,163 | 1 | 3 | ||||||||||||
Total wholesale |
323,764 | 309,399 | 385 | 480 | ||||||||||||
Total lending-related |
$ | 979,360 | $ | 910,595 | $ | 400 | $ | 492 | ||||||||
Other guarantees |
||||||||||||||||
Securities lending guarantees(f) |
$ | 244,316 | $ | 220,783 | NA | NA | ||||||||||
Derivatives qualifying as
guarantees |
61,759 | 53,312 | NA | NA | ||||||||||||
(a) | Represents contractual amount net of risk participations totaling $29.3 billion and $26.4 billion at December 31, 2005 and 2004, respectively. | |
(b) | Includes unused advised lines of credit totaling $28.3 billion and $22.8 billion at December 31, 2005 and 2004, respectively, which are not legally binding. In regulatory filings with the FRB, unused advised lines are not reportable. | |
(c) | Excludes unfunded commitments to private third-party equity funds of $242 million and $563 million at December 31, 2005 and 2004, respectively. | |
(d) | Represents asset purchase agreements to the Firms administered multi-seller asset-backed commercial paper conduits, which excludes $32.4 billion and $31.7 billion at December 31, 2005 and 2004, respectively, related to conduits that were consolidated in accordance with FIN 46R, as the underlying assets of the conduits are reported in the Firms Consolidated balance sheets. It also includes $1.3 billion of asset purchase agreements to other third-party entities at December 31, 2005 and $7.5 billion of asset purchase agreements to structured wholesale loan vehicles and other third-party entities at December 31, 2004. | |
(e) | Includes unused commitments to issue standby letters of credit of $37.5 billion and $38.4 billion at December 31, 2005 and 2004, respectively. | |
(f) | Collateral held by the Firm in support of securities lending indemnification agreements was $245.0 billion and $221.6 billion at December 31, 2005 and 2004, respectively. |
124 | JPMorgan Chase & Co. / 2005 Annual Report |
JPMorgan Chase & Co. / 2005 Annual Report | 125 |
Wholesale exposure |
Page 65 | |||
Wholesale selected industry concentrations |
Page 66 | |||
Country exposure |
Page 70 | |||
Consumer real estate loan portfolio by geographic location |
Page 72 | |||
2005 | 2004 | |||||||||||||||||||||||
Credit | On-balance | Off-balance | Credit | On-balance | Off-balance | |||||||||||||||||||
December 31, (in billions) | exposure(b) | sheet(b)(c) | sheet(d) | exposure(b) | sheet(b)(c) | sheet(d) | ||||||||||||||||||
Wholesale-related: |
||||||||||||||||||||||||
Banks and finance companies |
$ | 53.7 | $ | 20.3 | $ | 33.4 | $ | 56.2 | $ | 25.7 | $ | 30.5 | ||||||||||||
Real estate |
32.5 | 19.0 | 13.5 | 28.2 | 16.7 | 11.5 | ||||||||||||||||||
Consumer products |
26.7 | 10.0 | 16.7 | 21.4 | 7.1 | 14.3 | ||||||||||||||||||
Healthcare |
25.5 | 4.7 | 20.8 | 22.0 | 4.5 | 17.5 | ||||||||||||||||||
State and municipal governments |
25.3 | 6.1 | 19.2 | 19.8 | 4.1 | 15.7 | ||||||||||||||||||
All other wholesale |
389.7 | 169.5 | 220.2 | 394.6 | 174.7 | 219.9 | ||||||||||||||||||
Total wholesale-related |
553.4 | 229.6 | 323.8 | 542.2 | 232.8 | 309.4 | ||||||||||||||||||
Consumer-related: |
||||||||||||||||||||||||
Home finance |
198.6 | 133.5 | 65.1 | 177.9 | 124.7 | 53.2 | ||||||||||||||||||
Auto & education finance |
54.7 | 49.0 | 5.7 | 67.9 | 62.7 | 5.2 | ||||||||||||||||||
Consumer & small business and other |
20.3 | 14.8 | 5.5 | 25.4 | 15.1 | 10.3 | ||||||||||||||||||
Credit card receivables(a) |
651.0 | 71.7 | 579.3 | 597.0 | 64.5 | 532.5 | ||||||||||||||||||
Total consumer-related |
924.6 | 269.0 | 655.6 | 868.2 | 267.0 | 601.2 | ||||||||||||||||||
Total exposure |
$ | 1,478.0 | $ | 498.6 | $ | 979.4 | $ | 1,410.4 | $ | 499.8 | $ | 910.6 | ||||||||||||
(a) | Excludes $70.5 billion and $70.8 billion of securitized credit card receivables at December 31, 2005 and 2004, respectively. | |
(b) | Includes HFS loans. | |
(c) | Represents loans, derivative receivables and interests in purchased receivables. | |
(d) | Represents lending-related financial instruments. |
| at fair value on the Consolidated balance sheets, with changes in fair value recorded each period in the Consolidated statements of income; | |
| at fair value on the Consolidated balance sheets, with changes in fair value recorded each period in a separate component of Stockholders equity and as part of Other comprehensive income; | |
| at cost (less other-than-temporary impairments), with changes in fair value not recorded in the consolidated financial statements but disclosed in the notes thereto; or | |
| at the lower of cost or fair value. |
| Credit valuation adjustments are necessary when the market price (or parameter) is not indicative of the credit quality of the counterparty. As few derivative contracts are listed on an exchange, the majority of derivative positions are valued using internally developed models that use as their basis observable market parameters. Market practice is to quote parameters equivalent to a AA credit rating; thus, all counterparties are assumed to have the same credit quality. An adjustment is therefore necessary to reflect the credit quality of each derivative counterparty and to arrive at fair value. Without this adjustment, derivative positions would not be appropriately valued. |
126 | JPMorgan Chase & Co. / 2005 Annual Report |
| Liquidity adjustments are necessary when the Firm may not be able to observe a recent market price for a financial instrument that trades in inactive (or less active) markets. Thus, valuation adjustments for risk of loss due to a lack of liquidity are applied to those positions to arrive at fair value. The Firm tries to ascertain the amount of uncertainty in the initial valuation based upon the liquidity or illiquidity, as the case may be, of the market in which the instrument trades and makes liquidity adjustments to the financial instruments. The Firm measures the liquidity adjustment based upon the following factors: (1) the amount of time since the last relevant pricing point; (2) whether there was an actual trade or relevant external quote; and (3) the volatility of the principal component of the financial instrument. | |
| Concentration valuation adjustments are necessary to reflect the cost of unwinding larger-than-normal market-size risk positions. The cost is determined based upon the size of the adverse market move that is likely to occur during the extended period required to bring a position down to a nonconcentrated level. An estimate of the period needed to reduce, without market disruption, a position to a nonconcentrated level is generally based upon the relationship of the position to the average daily trading volume of that position. Without these adjustments, larger positions would be valued at a price greater than the price at which the Firm could exit the positions. |
| position valuation, principally based upon liquid market pricing as evidenced by exchange-traded prices, broker-dealer quotations or related input parameters, which assume all counterparties have the same credit rating; | |
| credit valuation adjustments to the resulting portfolio valuation, to reflect the credit quality of individual counterparties; and | |
| other fair value adjustments to take into consideration liquidity, concentration and other factors. |
| Fair value for the wholesale loan portfolio is estimated primarily, using the cost of credit derivatives, which is adjusted to account for the differences in recovery rates between bonds, upon which the cost of credit derivatives is based, and loans. | |
| Fair values for consumer installment loans (including automobile financings) and consumer real estate, for which market rates for comparable loans are readily available, are based upon discounted cash flows adjusted for prepayments. The discount rates used for consumer installment loans are current rates offered by commercial banks. For consumer real estate, secondary market yields for comparable mortgage-backed securities, adjusted for risk, are used. | |
| Fair value for credit card receivables is based upon discounted expected cash flows. The discount rates used for credit card receivables incorporate only the effects of interest rate changes, since the expected cash flows already reflect an adjustment for credit risk. |
JPMorgan Chase & Co. / 2005 Annual Report | 127 |
| The fair value of loans in the held-for-sale and trading portfolios is generally based upon observable market prices and upon prices of similar instruments, including bonds, credit derivatives and loans with similar characteristics. If market prices are not available, the fair value is based upon the estimated cash flows adjusted for credit risk; that risk is discounted, using a rate appropriate for each maturity that incorporates the effects of interest rate changes. |
2005 | 2004 | |||||||||||||||||||||||||||
Carrying | Estimated | Appreciation/ | Carrying | Estimated | Appreciation/ | |||||||||||||||||||||||
December 31, (in billions) | value | fair value | (depreciation) | value | fair value | (depreciation) | ||||||||||||||||||||||
Financial assets | ||||||||||||||||||||||||||||
Assets for which fair value approximates carrying value | $ | 155.4 | $ | 155.4 | $ | | $ | 125.7 | $ | 125.7 | $ | | ||||||||||||||||
Federal funds sold and securities purchased under resale
agreements |
134.0 | 134.3 | 0.3 | 101.4 | 101.3 | (0.1 | ) | |||||||||||||||||||||
Trading assets | 298.4 | 298.4 | | 288.8 | 288.8 | | ||||||||||||||||||||||
Securities | 47.6 | 47.6 | | 94.5 | 94.5 | | ||||||||||||||||||||||
Loans: |
Wholesale, net of allowance for loan losses | 147.7 | 150.2 | 2.5 | 132.0 | 134.6 | 2.6 | |||||||||||||||||||||
Consumer, net of allowance for loan losses | 264.4 | 262.7 | (1.7 | ) | 262.8 | 262.5 | (0.3 | ) | ||||||||||||||||||||
Interests in purchased receivables | 29.7 | 29.7 | | 31.7 | 31.8 | 0.1 | ||||||||||||||||||||||
Other assets | 53.4 | 54.7 | 1.3 | 50.4 | 51.1 | 0.7 | ||||||||||||||||||||||
Total financial assets | $ | 1,130.6 | $ | 1,133.0 | $ | 2.4 | $ | 1,087.3 | $ | 1,090.3 | $ | 3.0 | ||||||||||||||||
Financial liabilities | ||||||||||||||||||||||||||||
Liabilities for which fair value approximates carrying value | $ | 241.0 | $ | 241.0 | $ | | $ | 228.8 | $ | 228.8 | $ | | ||||||||||||||||
Interest-bearing deposits | 411.9 | 411.7 | 0.2 | 385.3 | 385.5 | (0.2 | ) | |||||||||||||||||||||
Federal funds purchased and securities sold under repurchase
agreements |
125.9 | 125.9 | | 127.8 | 127.8 | | ||||||||||||||||||||||
Trading liabilities | 145.9 | 145.9 | | 151.2 | 151.2 | | ||||||||||||||||||||||
Beneficial interests issued by consolidated VIEs | 42.2 | 42.1 | 0.1 | 48.1 | 48.0 | 0.1 | ||||||||||||||||||||||
Long-term debt-related instruments | 119.9 | 120.6 | (0.7 | ) | 105.7 | 107.7 | (2.0 | ) | ||||||||||||||||||||
Total financial liabilities | $ | 1,086.8 | $ | 1,087.2 | $ | (0.4 | ) | $ | 1,046.9 | $ | 1,049.0 | $ | (2.1 | ) | ||||||||||||||
Net appreciation | $ | 2.0 | $ | 0.9 | ||||||||||||||||||||||||
128 | JPMorgan Chase & Co. / 2005 Annual Report |
Income before | ||||||||||||||||
For the year ended December 31, (in millions)(a) | Revenue | (b) | Expense | (c) | income taxes | Net income | ||||||||||
2005 |
||||||||||||||||
Europe/Middle East and Africa |
$ | 7,708 | $ | 5,454 | $ | 2,254 | $ | 1,547 | ||||||||
Asia and Pacific |
2,840 | 2,048 | 792 | 509 | ||||||||||||
Latin America and the Caribbean |
969 | 497 | 472 | 285 | ||||||||||||
Other |
165 | 89 | 76 | 44 | ||||||||||||
Total international |
11,682 | 8,088 | 3,594 | 2,385 | ||||||||||||
Total U.S. |
42,851 | 34,230 | 8,621 | 6,098 | ||||||||||||
Total |
$ | 54,533 | $ | 42,318 | $ | 12,215 | $ | 8,483 | ||||||||
2004 |
||||||||||||||||
Europe/Middle East and Africa |
$ | 6,566 | $ | 4,635 | $ | 1,931 | $ | 1,305 | ||||||||
Asia and Pacific |
2,631 | 1,766 | 865 | 547 | ||||||||||||
Latin America and the Caribbean |
816 | 411 | 405 | 255 | ||||||||||||
Other |
112 | 77 | 35 | 25 | ||||||||||||
Total international |
10,125 | 6,889 | 3,236 | 2,132 | ||||||||||||
Total U.S. |
32,972 | 30,014 | 2,958 | 2,334 | ||||||||||||
Total |
$ | 43,097 | $ | 36,903 | $ | 6,194 | $ | 4,466 | ||||||||
2003 |
||||||||||||||||
Europe/Middle East and Africa |
$ | 6,344 | $ | 4,076 | $ | 2,268 | $ | 1,467 | ||||||||
Asia and Pacific |
1,902 | 1,772 | 130 | 91 | ||||||||||||
Latin America and the Caribbean |
1,000 | 531 | 469 | 287 | ||||||||||||
Other |
50 | 17 | 33 | 34 | ||||||||||||
Total international |
9,296 | 6,396 | 2,900 | 1,879 | ||||||||||||
Total U.S. |
24,088 | 16,960 | 7,128 | 4,840 | ||||||||||||
Total |
$ | 33,384 | $ | 23,356 | $ | 10,028 | $ | 6,719 | ||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | Revenue is composed of Net interest income and noninterest revenue. | |
(c) | Expense is composed of Noninterest expense and Provision for credit losses. |
JPMorgan Chase & Co. / 2005 Annual Report | 129 |
Year ended December 31,(b) | Investment Bank(d) | Retail Financial Services | Card Services(e) | Commercial Banking | ||||||||||||||||||||||||||||||||||||||||||||
(in millions, except ratios) | 2005 | 2004 | 2003 | 2005 | 2004 | 2003 | 2005 | 2004 | 2003 | 2005 | 2004 | 2003 | ||||||||||||||||||||||||||||||||||||
Noninterest revenue |
$ | 13,168 | $ | 11,280 | $ | 11,017 | $ | 4,625 | $ | 3,077 | $ | 2,208 | $ | 3,563 | $ | 2,371 | $ | 1,092 | $ | 986 | $ | 682 | $ | 393 | ||||||||||||||||||||||||
Net interest income |
1,410 | 1,325 | 1,667 | 10,205 | 7,714 | 5,220 | 11,803 | 8,374 | 5,052 | 2,610 | 1,692 | 959 | ||||||||||||||||||||||||||||||||||||
Total net revenue |
14,578 | 12,605 | 12,684 | 14,830 | 10,791 | 7,428 | 15,366 | 10,745 | 6,144 | 3,596 | 2,374 | 1,352 | ||||||||||||||||||||||||||||||||||||
Provision for credit losses |
(838 | ) | (640 | ) | (181 | ) | 724 | 449 | 521 | 7,346 | 4,851 | 2,904 | 73 | 41 | 6 | |||||||||||||||||||||||||||||||||
Credit reimbursement
(to)/from TSS(c) |
154 | 90 | (36 | ) | | | | | | | | | | |||||||||||||||||||||||||||||||||||
Merger costs |
| | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||
Litigation reserve charge |
| | 100 | | | | | | | | | | ||||||||||||||||||||||||||||||||||||
Other noninterest expense |
9,739 | 8,696 | 8,202 | 8,585 | 6,825 | 4,471 | 4,999 | 3,883 | 2,178 | 1,872 | 1,343 | 822 | ||||||||||||||||||||||||||||||||||||
Total noninterest expense |
9,739 | 8,696 | 8,302 | 8,585 | 6,825 | 4,471 | 4,999 | 3,883 | 2,178 | 1,872 | 1,343 | 822 | ||||||||||||||||||||||||||||||||||||
Income (loss) before
income tax expense |
5,831 | 4,639 | 4,527 | 5,521 | 3,517 | 2,436 | 3,021 | 2,011 | 1,062 | 1,651 | 990 | 524 | ||||||||||||||||||||||||||||||||||||
Income tax expense (benefit) |
2,173 | 1,691 | 1,722 | 2,094 | 1,318 | 889 | 1,114 | 737 | 379 | 644 | 382 | 217 | ||||||||||||||||||||||||||||||||||||
Net income (loss) |
$ | 3,658 | $ | 2,948 | $ | 2,805 | $ | 3,427 | $ | 2,199 | $ | 1,547 | $ | 1,907 | $ | 1,274 | $ | 683 | $ | 1,007 | $ | 608 | $ | 307 | ||||||||||||||||||||||||
Average equity |
$ | 20,000 | $ | 17,290 | $ | 18,350 | $ | 13,383 | $ | 9,092 | $ | 4,220 | $ | 11,800 | $ | 7,608 | $ | 3,440 | $ | 3,400 | $ | 2,093 | $ | 1,059 | ||||||||||||||||||||||||
Average assets |
598,118 | 473,121 | 436,488 | 226,368 | 185,928 | 147,435 | 141,933 | 94,741 | 51,406 | 56,561 | 36,435 | 16,460 | ||||||||||||||||||||||||||||||||||||
Return on average equity |
18 | % | 17 | % | 15 | % | 26 | % | 24 | % | 37 | % | 16 | % | 17 | % | 20 | % | 30 | % | 29 | % | 29 | % | ||||||||||||||||||||||||
Overhead ratio |
67 | 69 | 65 | 58 | 63 | 60 | 33 | 36 | 35 | 52 | 57 | 61 | ||||||||||||||||||||||||||||||||||||
(a) | In addition to analyzing the Firms results on a reported basis, management reviews the line of business results on an operating basis, which is a non-GAAP financial measure. The definition of operating basis starts with the reported U.S. GAAP results. In the case of the Investment Bank, operating basis noninterest revenue includes, in Trading revenue, Net interest income (NII) related to trading activities. In the case of Card Services, refer to footnote (e). These adjustments do not change JPMorgan Chases reported net income. Operating basis also excludes Merger costs, nonoperating Litigation reserve charges and accounting policy conformity adjustments, as management believes these items are not part of the Firms normal daily business operations (and, therefore, not indicative of trends) and do not provide meaningful comparisons with other periods. Finally, operating results reflect revenues (Noninterest revenue and NII) on a tax-equivalent basis. Refer to footnote (f) for the impact of these adjustments. | |
(b) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(c) | TSS reimburses the IB for credit portfolio exposures the IB manages on behalf of clients the segments share. At the time of the Merger, the reimbursement methodology was revised to be based upon pre-tax earnings, net of the cost of capital related to those exposures. Prior to the Merger, the credit reimbursement was based upon pre-tax earnings, plus the allocated capital associated with the shared clients. | |
(d) | Segment operating results include the reclassification of NII related to trading activities to Trading revenue within Noninterest revenue, which impacts primarily the Investment Bank. Trading-related NII reclassified to Trading revenue was $159 million, $2.0 billion and $2.1 billion in 2005, 2004 and 2003, respectively. These amounts are eliminated in Corporate/reconciling items to arrive at NII and Noninterest revenue on a reported GAAP basis for JPMorgan Chase. | |
(e) | Operating results for Card Services exclude the impact of credit card securitizations on revenue, provision for credit losses and average assets, as JPMorgan Chase treats the sold receivables as if they were still on the balance sheet in evaluating the overall performance of the credit card portfolio. These adjustments are eliminated in Corporate/reconciling items to arrive at the Firms reported GAAP results. The related securitization adjustments were as follows: |
Year ended December 31, (in millions)(b) | 2005 | 2004 | 2003 | |||||||||
Net interest income |
$ 6,494 | $ 5,251 | $ 3,320 | |||||||||
Noninterest revenue |
(2,718 | ) | (2,353 | ) | (1,450 | ) | ||||||
Provision for credit losses |
3,776 | 2,898 | 1,870 | |||||||||
Average assets |
67,180 | 51,084 | 32,365 | |||||||||
130 | JPMorgan Chase & Co. / 2005 Annual Report |
Corporate/ | ||||||||||||||||||||||||||||||||||||||||||||||||
Treasury & Securities Services | Asset & Wealth Management | reconciling items(d)(e)(f) | Total | |||||||||||||||||||||||||||||||||||||||||||||
2005 | 2004 | 2003 | 2005 | 2004 | 2003 | 2005 | 2004 | 2003 | 2005 | 2004 | 2003 | |||||||||||||||||||||||||||||||||||||
$ | 4,179 | $ | 3,474 | $ | 2,661 | $ | 4,583 | $ | 3,383 | $ | 2,482 | $ | 3,598 | $ | 2,069 | $ | 566 | $ | 34,702 | $ | 26,336 | $ | 20,419 | |||||||||||||||||||||||||
2,062 | 1,383 | 947 | 1,081 | 796 | 488 | (9,340 | ) | (4,523 | ) | (1,368 | ) | 19,831 | 16,761 | 12,965 | ||||||||||||||||||||||||||||||||||
6,241 | 4,857 | 3,608 | 5,664 | 4,179 | 2,970 | (5,742 | ) | (2,454 | ) | (802 | ) | 54,533 | 43,097 | 33,384 | ||||||||||||||||||||||||||||||||||
| 7 | 1 | (56 | ) | (14 | ) | 35 | (3,766 | ) | (2,150 | )(g) | (1,746 | ) | 3,483 | 2,544 | 1,540 | ||||||||||||||||||||||||||||||||
(154 | ) | (90 | ) | 36 | | | | | | | | | | |||||||||||||||||||||||||||||||||||
| | | | | | 722 | (h) | 1,365 | (h) | | 722 | 1,365 | | |||||||||||||||||||||||||||||||||||
| | | | | | 2,564 | 3,700 | | 2,564 | 3,700 | 100 | |||||||||||||||||||||||||||||||||||||
4,470 | 4,113 | 3,028 | 3,860 | 3,133 | 2,486 | 2,024 | 1,301 | 529 | 35,549 | 29,294 | 21,716 | |||||||||||||||||||||||||||||||||||||
4,470 | 4,113 | 3,028 | 3,860 | 3,133 | 2,486 | 5,310 | 6,366 | 529 | 38,835 | 34,359 | 21,816 | |||||||||||||||||||||||||||||||||||||
1,617 | 647 | 615 | 1,860 | 1,060 | 449 | (7,286 | ) | (6,670 | ) | 415 | 12,215 | 6,194 | 10,028 | |||||||||||||||||||||||||||||||||||
580 | 207 | 193 | 644 | 379 | 162 | (3,517 | ) | (2,986 | ) | (253 | ) | 3,732 | 1,728 | 3,309 | ||||||||||||||||||||||||||||||||||
$ | 1,037 | $ | 440 | $ | 422 | $ | 1,216 | $ | 681 | $ | 287 | $ | (3,769 | ) | $ | (3,684 | ) | $ | 668 | $ | 8,483 | $ | 4,466 | $ | 6,719 | |||||||||||||||||||||||
$ | 1,900 | $ | 2,544 | $ | 2,738 | $ | 2,400 | $ | 3,902 | $5,507 | $52,624 | $ | 33,112 | $ | 7,674 | $105,507 | $75,641 | $42,988 | ||||||||||||||||||||||||||||||
26,947 | 23,430 | 18,379 | 41,599 | 37,751 | 33,780 | 93,540 | 111,150 | 72,030 | 1,185,066 | 962,556 | 775,978 | |||||||||||||||||||||||||||||||||||||
55 | % | 17 | % | 15 | % | 51 | % | 17 | % | 5 | % | NM | NM | NM | 8 | % | 6 | % | 16 | % | ||||||||||||||||||||||||||||
72 | 85 | 84 | 68 | 75 | 84 | NM | NM | NM | 71 | 80 | 65 | |||||||||||||||||||||||||||||||||||||
(f) | Segment operating results reflect revenues on a tax-equivalent basis with the corresponding income tax impact recorded within income tax expense. Tax-equivalent adjustments were as follows: |
Year ended December 31, (in millions)(b) | 2005 | 2004 | 2003 | |||||||||
Net interest income |
$ | 269 | $ | 6 | $ | 44 | ||||||
Noninterest revenue |
571 | 317 | 89 | |||||||||
Income tax expense |
840 | 323 | 133 | |||||||||
These adjustments are eliminated in Corporate/reconciling items to arrive at the Firms reported GAAP results. |
||
(g) | Includes $858 million of accounting policy conformity adjustments consisting of approximately $1.4 billion related to the decertification of the sellers retained interest in credit card securitizations, partially offset by a benefit of $584 million related to conforming wholesale and consumer provision methodologies for the combined Firm. | |
(h) | Merger costs attributed to the lines of business for 2005 and 2004 were as follows (there were no merger costs in 2003): |
Year ended December 31, (in millions)(b) | 2005 | 2004 | ||||||
Investment Bank |
$ | 32 | $ | 74 | ||||
Retail Financial Services |
133 | 201 | ||||||
Card Services |
222 | 79 | ||||||
Commercial Banking |
3 | 23 | ||||||
Treasury & Securities Services |
95 | 68 | ||||||
Asset & Wealth Management Services |
60 | 31 | ||||||
Corporate |
177 | 889 | ||||||
JPMorgan Chase & Co. / 2005 Annual Report | 131 |
Parent company statements of income | ||||||||||||
Year ended December 31, (in millions)(a) | 2005 | 2004 | 2003 | |||||||||
Income |
||||||||||||
Dividends from bank and bank
holding company subsidiaries |
$ | 2,361 | $ | 1,208 | $ | 2,436 | ||||||
Dividends from nonbank subsidiaries(b) |
791 | 773 | 2,688 | |||||||||
Interest income from subsidiaries |
2,369 | 1,370 | 945 | |||||||||
Other interest income |
209 | 137 | 130 | |||||||||
Other income from subsidiaries, primarily fees: |
||||||||||||
Bank and bank holding company |
246 | 833 | 632 | |||||||||
Nonbank |
462 | 499 | 385 | |||||||||
Other income |
13 | 204 | (25 | ) | ||||||||
Total income |
6,451 | 5,024 | 7,191 | |||||||||
Expense |
||||||||||||
Interest expense to subsidiaries(b) |
846 | 603 | 422 | |||||||||
Other interest expense |
3,076 | 1,834 | 1,329 | |||||||||
Compensation expense |
369 | 353 | 348 | |||||||||
Other noninterest expense |
496 | 1,105 | 747 | |||||||||
Total expense |
4,787 | 3,895 | 2,846 | |||||||||
Income before income tax benefit and
undistributed net income of subsidiaries |
1,664 | 1,129 | 4,345 | |||||||||
Income tax benefit |
852 | 556 | 474 | |||||||||
Equity in undistributed net income (loss)
of subsidiaries |
5,967 | 2,781 | 1,900 | |||||||||
Net income |
$ | 8,483 | $ | 4,466 | $ | 6,719 | ||||||
Parent company balance sheets | ||||||||
December 31, (in millions) | 2005 | 2004 | ||||||
Assets |
||||||||
Cash with banks, primarily with bank subsidiaries |
$ | 461 | $ | 513 | ||||
Deposits with banking subsidiaries |
9,452 | 10,703 | ||||||
Securities purchased under resale agreements,
primarily with nonbank subsidiaries |
24 | | ||||||
Trading assets |
7,548 | 3,606 | ||||||
Available-for-sale securities |
285 | 2,376 | ||||||
Loans |
338 | 162 | ||||||
Advances to, and receivables from, subsidiaries: |
||||||||
Bank and bank holding company |
22,673 | 19,076 | ||||||
Nonbank |
31,342 | 34,456 | ||||||
Investment (at equity) in subsidiaries: |
||||||||
Bank and bank holding company |
110,745 | 105,599 | ||||||
Nonbank(b) |
21,367 | 17,701 | ||||||
Goodwill and other intangibles |
804 | 890 | ||||||
Other assets |
10,553 | 11,557 | ||||||
Total assets |
$ | 215,592 | $ | 206,639 | ||||
Liabilities and stockholders equity |
||||||||
Borrowings from, and payables to, subsidiaries(b) |
$ | 16,511 | $ | 14,195 | ||||
Other borrowed funds, primarily commercial paper |
15,675 | 15,050 | ||||||
Other liabilities |
7,721 | 6,309 | ||||||
Long-term debt(c) |
68,474 | 65,432 | ||||||
Total liabilities |
108,381 | 100,986 | ||||||
Stockholders equity |
107,211 | 105,653 | ||||||
Total liabilities and stockholders equity |
$ | 215,592 | $ | 206,639 | ||||
Parent company - statements of cash flows | ||||||||||||
Year ended December 31, (in millions)(a) | 2005 | 2004 | 2003 | |||||||||
Operating activities |
||||||||||||
Net income |
$ | 8,483 | $ | 4,466 | $ | 6,719 | ||||||
Less: Net income of subsidiaries |
9,119 | 4,762 | 7,017 | |||||||||
Parent company net loss |
(636 | ) | (296 | ) | (298 | ) | ||||||
Add: Cash dividends from subsidiaries(b) |
2,891 | 1,964 | 5,098 | |||||||||
Other, net |
(130 | ) | (81 | ) | (272 | ) | ||||||
Net cash provided by operating activities |
2,125 | 1,587 | 4,528 | |||||||||
Investing activities |
||||||||||||
Net cash change in: |
||||||||||||
Deposits with banking subsidiaries |
1,251 | 1,851 | (2,560 | ) | ||||||||
Securities purchased under resale agreements,
primarily with nonbank subsidiaries |
(24 | ) | 355 | 99 | ||||||||
Loans |
(176 | ) | 407 | (490 | ) | |||||||
Advances to subsidiaries |
(483 | ) | (5,772 | ) | (3,165 | ) | ||||||
Investment (at equity) in subsidiaries |
(2,949 | ) | (4,015 | ) | (2,052 | ) | ||||||
Other, net |
34 | 11 | 12 | |||||||||
Available-for-sale securities: |
||||||||||||
Purchases |
(215 | ) | (392 | ) | (607 | ) | ||||||
Proceeds from sales and maturities |
124 | 114 | 654 | |||||||||
Cash received in business acquisitions |
| 4,608 | | |||||||||
Net cash (used in) provided by
investing activities |
(2,438 | ) | (2,833 | ) | (8,109 | ) | ||||||
Financing activities |
||||||||||||
Net cash change in borrowings
from subsidiaries(b) |
2,316 | 941 | 2,005 | |||||||||
Net cash change in other borrowed funds |
625 | (1,510 | ) | (2,104 | ) | |||||||
Proceeds from the issuance of
long-term debt |
15,992 | 12,816 | 12,105 | |||||||||
Repayments of long-term debt |
(10,864 | ) | (6,149 | ) | (6,733 | ) | ||||||
Proceeds from the issuance of stock
and stock-related awards |
682 | 848 | 1,213 | |||||||||
Redemption of preferred stock |
(200 | ) | (670 | ) | | |||||||
Treasury stock purchased |
(3,412 | ) | (738 | ) | | |||||||
Cash dividends paid |
(4,878 | ) | (3,927 | ) | (2,865 | ) | ||||||
Net cash provided by (used in)
financing activities |
261 | 1,611 | 3,621 | |||||||||
Net increase (decrease) in cash with banks |
(52 | ) | 365 | 40 | ||||||||
Cash with banks
at the beginning of the year |
513 | 148 | 108 | |||||||||
Cash with banks at the end of
the year, primarily with bank subsidiaries |
$ | 461 | $ | 513 | $ | 148 | ||||||
Cash interest paid |
$ | 3,838 | $ | 2,383 | $ | 1,918 | ||||||
Cash income taxes paid |
$ | 3,426 | $ | 701 | $ | 754 | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. For a further discussion of the Merger, see Note 2 on pages 9293 of this Annual Report. | |
(b) | Subsidiaries include trusts that issued guaranteed capital debt securities (issuer trusts). As a result of FIN 46, the Parent deconsolidated these trusts in 2003. The Parent received dividends of $21 million and $15 million from the issuer trusts in 2005 and 2004, respectively. For a further discussion on these issuer trusts, see Note 17 on pages 117118 of this Annual Report. | |
(c) | At December 31, 2005, debt that contractually matures in 2006 through 2010 totaled $10.3 billion, $9.5 billion, $11.9 billion, $8.8 billion and $3.8 billion, respectively. |
132 | JPMorgan Chase & Co. / 2005 Annual Report |
(in millions, except per share, ratio and headcount data) | 2005(f) | 2004 | ||||||||||||||||||||||||||||||||||||||
As of or for the period ended | 4th | 3rd | 2nd | 1st | 4th(f) | 3rd(f) | 2nd(h) | 1st(h) | ||||||||||||||||||||||||||||||||
Selected income statement data | ||||||||||||||||||||||||||||||||||||||||
Noninterest revenue | $ | 8,925 | $ | 9,613 | $ | 7,742 | $ | 8,422 | $ | 7,621 | $ | 7,053 | $ | 5,637 | $ | 6,025 | ||||||||||||||||||||||||
Net interest income | 4,753 | 4,852 | 5,001 | 5,225 | 5,329 | 5,452 | 2,994 | 2,986 | ||||||||||||||||||||||||||||||||
Total net revenue | 13,678 | 14,465 | 12,743 | 13,647 | 12,950 | 12,505 | 8,631 | 9,011 | ||||||||||||||||||||||||||||||||
Provision for credit losses | 1,224 | 1,245 | (g) | 587 | 427 | 1,157 | 1,169 | 203 | 15 | |||||||||||||||||||||||||||||||
Noninterest expense before Merger costs
and Litigation reserve charge |
8,666 | 9,243 | 8,748 | 8,892 | 8,863 | 8,625 | 5,713 | 6,093 | ||||||||||||||||||||||||||||||||
Merger costs | 77 | 221 | 279 | 145 | 523 | 752 | 90 | | ||||||||||||||||||||||||||||||||
Litigation reserve charge | (208 | ) | | 1,872 | 900 | | | 3,700 | | |||||||||||||||||||||||||||||||
Total noninterest expense | 8,535 | 9,464 | 10,899 | 9,937 | 9,386 | 9,377 | 9,503 | 6,093 | ||||||||||||||||||||||||||||||||
Income (loss) before income tax expense (benefit) | 3,919 | 3,756 | 1,257 | 3,283 | 2,407 | 1,959 | (1,075 | ) | 2,903 | |||||||||||||||||||||||||||||||
Income tax expense (benefit) | 1,221 | 1,229 | 263 | 1,019 | 741 | 541 | (527 | ) | 973 | |||||||||||||||||||||||||||||||
Net income (loss) | $ | 2,698 | $ | 2,527 | $ | 994 | $ | 2,264 | $ | 1,666 | $ | 1,418 | $ | (548 | ) | $ | 1,930 | |||||||||||||||||||||||
Per common share | ||||||||||||||||||||||||||||||||||||||||
Net
income (loss) per share: Basic |
$ | 0.78 | $ | 0.72 | $ | 0.28 | $ | 0.64 | $ | 0.47 | $ | 0.40 | $ | (0.27 | ) | $ | 0.94 | |||||||||||||||||||||||
Diluted |
0.76 | 0.71 | 0.28 | 0.63 | 0.46 | 0.39 | (0.27 | ) | 0.92 | |||||||||||||||||||||||||||||||
Cash dividends declared per share | 0.34 | 0.34 | 0.34 | 0.34 | 0.34 | 0.34 | 0.34 | 0.34 | ||||||||||||||||||||||||||||||||
Book value per share | 30.71 | 30.26 | 29.95 | 29.78 | 29.61 | 29.42 | 21.52 | 22.62 | ||||||||||||||||||||||||||||||||
Common shares outstanding | ||||||||||||||||||||||||||||||||||||||||
Average: Basic | 3,472 | 3,485 | 3,493 | 3,518 | 3,515 | 3,514 | 2,043 | 2,032 | ||||||||||||||||||||||||||||||||
Diluted |
3,564 | 3,548 | 3,548 | 3,570 | 3,602 | 3,592 | 2,043 | 2,093 | ||||||||||||||||||||||||||||||||
Common shares at period end | 3,487 | 3,503 | 3,514 | 3,525 | 3,556 | 3,564 | 2,088 | 2,082 | ||||||||||||||||||||||||||||||||
Selected ratios | ||||||||||||||||||||||||||||||||||||||||
Return on common equity (ROE)(a) |
10 | % | 9 | % | 4 | % | 9 | % | 6 | % | 5 | % | NM |
17 | % | |||||||||||||||||||||||||
Return on assets (ROA)(a)(b) |
0.89 | 0.84 | 0.34 | 0.79 | 0.57 | 0.50 | NM |
1.01 | ||||||||||||||||||||||||||||||||
Tier 1 capital ratio | 8.5 | 8.2 | 8.2 | 8.6 | 8.7 | 8.6 | 8.2 | % | 8.4 | |||||||||||||||||||||||||||||||
Total capital ratio | 12.0 | 11.3 | 11.3 | 11.9 | 12.2 | 12.0 | 11.2 | 11.4 | ||||||||||||||||||||||||||||||||
Tier 1 leverage ratio | 6.3 | 6.2 | 6.2 | 6.3 | 6.2 | 6.5 | 5.5 | 5.9 | ||||||||||||||||||||||||||||||||
Selected balance sheet data (period-end) | ||||||||||||||||||||||||||||||||||||||||
Total assets | $ | 1,198,942 | $ | 1,203,033 | $ | 1,171,283 | $ | 1,178,305 | $ | 1,157,248 | $ | 1,138,469 | $ | 817,763 | $ | 801,078 | ||||||||||||||||||||||||
Securities | 47,600 | 68,697 | 58,573 | 75,251 | 94,512 | 92,816 | 64,915 | 70,747 | ||||||||||||||||||||||||||||||||
Total loans | 419,148 | 420,504 | 416,025 | 402,669 | 402,114 | 393,701 | 225,938 | 217,630 | ||||||||||||||||||||||||||||||||
Deposits | 554,991 | 535,123 | 534,640 | 531,379 | 521,456 | 496,454 | 346,539 | 336,886 | ||||||||||||||||||||||||||||||||
Long-term debt | 108,357 | 101,853 | 101,182 | 99,329 | 95,422 | 91,754 | 52,981 | 50,062 | ||||||||||||||||||||||||||||||||
Common stockholders equity | 107,072 | 105,996 | 105,246 | 105,001 | 105,314 | 104,844 | 44,932 | 47,092 | ||||||||||||||||||||||||||||||||
Total stockholders equity | 107,211 | 106,135 | 105,385 | 105,340 | 105,653 | 105,853 | 45,941 | 48,101 | ||||||||||||||||||||||||||||||||
Credit quality metrics | ||||||||||||||||||||||||||||||||||||||||
Allowance for credit losses | $ | 7,490 | $ | 7,615 | $ | 7,233 | $ | 7,423 | $ | 7,812 | $ | 8,034 | $ | 4,227 | $ | 4,417 | ||||||||||||||||||||||||
Nonperforming assets(c) | 2,590 | 2,839 | 2,832 | 2,949 | 3,231 | 3,637 | 2,482 | 2,882 | ||||||||||||||||||||||||||||||||
Allowance for loan losses to total loans(d) | 1.84 | % | 1.86 | % | 1.76 | % | 1.82 | % | 1.94 | % | 2.01 | % | 1.92 | % | 2.08 | % | ||||||||||||||||||||||||
Net charge-offs | $ | 1,360 | $ | 870 | $ | 773 | $ | 816 | $ | 1,398 | $ | 865 | $ | 392 | $ | 444 | ||||||||||||||||||||||||
Net charge-off rate(a)(d) | 1.39 | % | 0.89 | % | 0.82 | % | 0.88 | % | 1.46 | % | 0.93 | % | 0.78 | % | 0.92 | % | ||||||||||||||||||||||||
Wholesale net charge-off (recovery) rate(a)(d) | 0.07 | (0.12 | ) | (0.16 | ) | (0.03 | ) | 0.21 | (0.07 | ) | 0.29 | 0.50 | ||||||||||||||||||||||||||||
Managed Card net charge-off rate(a) | 6.39 | 4.70 | 4.87 | 4.83 | 5.24 | 4.88 | 5.85 | 5.81 | ||||||||||||||||||||||||||||||||
Headcount | 168,847 | 168,955 | 168,708 | 164,381 | 160,968 | 162,275 | 94,615 | 96,010 | ||||||||||||||||||||||||||||||||
Share price(e) | ||||||||||||||||||||||||||||||||||||||||
High | $ | 40.56 | $ | 35.95 | $ | 36.50 | $ | 39.69 | $ | 40.45 | $ | 40.25 | $ | 42.57 | $ | 43.84 | ||||||||||||||||||||||||
Low | 32.92 | 33.31 | 33.35 | 34.32 | 36.32 | 35.50 | 34.62 | 36.30 | ||||||||||||||||||||||||||||||||
Close | 39.69 | 33.93 | 35.32 | 34.60 | 39.01 | 39.73 | 38.77 | 41.95 | ||||||||||||||||||||||||||||||||
(a) | Based upon annualized amounts. | |
(b) | Represents Net income divided by Total average assets. | |
(c) | Excludes wholesale purchased held-for-sale (HFS) loans purchased as part of the Investment Banks proprietary activities. | |
(d) | Excluded from the allowance coverage ratios were end-of-period loans held-for-sale; and excluded from the net charge-off rates were average loans held-for-sale. | |
(e) | JPMorgan Chases common stock is listed and traded on the New York Stock Exchange, the London Stock Exchange Limited and the Tokyo Stock Exchange. The high, low and closing prices of JPMorgan Chases common stock are from The New York Stock Exchange Composite Transaction Tape. | |
(f) | Quarterly results include three months of the combined Firms results. | |
(g) | Includes a $400 million special provision related to Hurricane Katrina allocated as follows: Retail Financial Services $250 million, Card Services $100 million, Commercial Banking $35 million, Asset & Wealth Management $3 million and Corporate $12 million. | |
(h) | Heritage JPMorgan Chase results only. |
JPMorgan Chase & Co. / 2005 Annual Report | 133 |
134 | JPMorgan Chase & Co. / 2005 Annual Report |
JPMorgan Chase & Co. / 2005 Annual Report | 135 |
(Table continued on next page) | 2005 | |||||||||||
Year ended December 31,(a) | Average | Average | ||||||||||
(Taxable-equivalent interest and rates; in millions, except rates) | balance | Interest | rate | |||||||||
Assets |
||||||||||||
Deposits with banks |
$ | 15,203 | $ | 680 | 4.48 | % | ||||||
Federal funds sold and securities purchased under resale
agreements |
139,957 | 4,125 | 2.95 | |||||||||
Securities borrowed |
63,023 | 1,154 | 1.83 | |||||||||
Trading assets - debt instruments |
187,912 | 9,312 | 4.96 | |||||||||
Securities: |
||||||||||||
Available-for-sale |
71,549 | 3,276 | 4.58 | (b) | ||||||||
Held-to-maturity |
95 | 10 | 10.42 | |||||||||
Interests in purchased receivables |
28,397 | 933 | 3.29 | |||||||||
Loans |
410,114 | 25,979 | (c) | 6.33 | ||||||||
Total interest-earning assets |
916,250 | 45,469 | 4.96 | |||||||||
Allowance for loan losses |
(7,074 | ) | ||||||||||
Cash and due from banks |
30,880 | |||||||||||
Trading assets - equity instruments |
49,458 | |||||||||||
Trading assets - derivative receivables |
57,365 | |||||||||||
All other assets |
138,187 | |||||||||||
Total assets |
$ | 1,185,066 | ||||||||||
Liabilities |
||||||||||||
Interest-bearing deposits |
$ | 395,643 | $ | 10,295 | 2.60 | % | ||||||
Federal funds purchased and securities sold under
repurchase agreements |
155,010 | 4,268 | 2.75 | |||||||||
Commercial paper |
14,450 | 407 | 2.81 | |||||||||
Other borrowings(d) |
106,186 | 4,867 | 4.58 | |||||||||
Beneficial interests issued by consolidated VIEs |
44,675 | 1,372 | 3.07 | |||||||||
Long-term debt |
112,370 | 4,160 | 3.70 | |||||||||
Total interest-bearing liabilities |
828,334 | 25,369 | 3.06 | |||||||||
Noninterest-bearing deposits |
129,343 | |||||||||||
Trading liabilities - derivative payables |
55,723 | |||||||||||
All other liabilities, including the allowance for
lending-related commitments |
65,952 | |||||||||||
Total liabilities |
1,079,352 | |||||||||||
Stockholders equity |
||||||||||||
Preferred stock |
207 | |||||||||||
Common stockholders equity |
105,507 | |||||||||||
Total stockholders equity |
105,714 | (e) | ||||||||||
Total liabilities, preferred stock of subsidiary and
stockholders equity |
$ | 1,185,066 | ||||||||||
Interest rate spread |
1.90 | % | ||||||||||
Net interest income and net yield on interest-earning assets |
$ | 20,100 | 2.19 | |||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | The annualized rate for available-for-sale securities based on amortized cost was 4.56% in 2005, 4.38% in 2004 and 4.61% in 2003, and does not give effect to changes in fair value that are reflected in Accumulated other comprehensive income. | |
(c) | Fees and commissions on loans included in loan interest amounted to $1,151 million in 2005, $1,374 million for 2004 and $876 million in 2003. | |
(d) | Includes securities sold but not yet purchased. | |
(e) | The ratio of average stockholders equity to average assets was 8.9% for 2005, 8.0% for 2004 and 5.7% for 2003. The return on average stockholders equity was 8.0% for 2005, 5.8% for 2004 and 15.3% for 2003. |
136
2004 | 2003 | |||||||||||||||||||||||
Average | Average | Average | Average | |||||||||||||||||||||
balance | Interest | rate | balance | Interest | rate | |||||||||||||||||||
$ | 28,625 | $ | 539 | 1.88 | % | $ | 9,742 | $ | 214 | 2.20 | % | |||||||||||||
93,979 | 1,627 | 1.73 | 87,273 | 1,497 | 1.72 | |||||||||||||||||||
49,387 | 463 | 0.94 | 40,305 | 323 | 0.80 | |||||||||||||||||||
169,203 | 7,535 | 4.45 | 148,970 | 6,608 | 4.44 | |||||||||||||||||||
78,697 | 3,471 | 4.41 | (b) | 77,156 | 3,537 | 4.58 | (b) | |||||||||||||||||
172 | 11 | 6.50 | 286 | 21 | 7.19 | |||||||||||||||||||
15,564 | 291 | 1.87 | 5,414 | 64 | 1.18 | |||||||||||||||||||
308,450 | 16,664 | (c) | 5.40 | 220,692 | 11,824 | (c) | 5.36 | |||||||||||||||||
744,077 | 30,601 | 4.11 | 589,838 | 24,088 | 4.09 | |||||||||||||||||||
(5,951 | ) | (5,161 | ) | |||||||||||||||||||||
25,390 | 17,951 | |||||||||||||||||||||||
31,264 | 5,627 | |||||||||||||||||||||||
59,521 | 85,628 | |||||||||||||||||||||||
108,255 | 82,095 | |||||||||||||||||||||||
$ | 962,556 | $ | 775,978 | |||||||||||||||||||||
$ | 309,020 | $ | 4,630 | 1.50 | % | $ | 227,645 | $ | 3,604 | 1.58 | % | |||||||||||||
155,665 | 2,312 | 1.49 | 161,020 | 2,199 | 1.37 | |||||||||||||||||||
12,699 | 131 | 1.03 | 13,387 | 151 | 1.13 | |||||||||||||||||||
83,721 | 3,817 | 4.56 | 69,703 | 3,521 | 5.05 | |||||||||||||||||||
26,817 | 478 | 1.78 | 9,421 | 106 | 1.13 | |||||||||||||||||||
79,193 | 2,466 | 3.11 | 49,095 | 1,498 | 3.05 | |||||||||||||||||||
667,115 | 13,834 | 2.07 | 530,271 | 11,079 | 2.09 | |||||||||||||||||||
101,994 | 77,640 | |||||||||||||||||||||||
52,761 | 67,783 | |||||||||||||||||||||||
64,038 | 56,287 | |||||||||||||||||||||||
885,908 | 731,981 | |||||||||||||||||||||||
1,007 | 1,009 | |||||||||||||||||||||||
75,641 | 42,988 | |||||||||||||||||||||||
76,648 | (e) | 43,997 | (e) | |||||||||||||||||||||
$ | 962,556 | $ | 775,978 | |||||||||||||||||||||
2.04 | % | 2.00 | % | |||||||||||||||||||||
$ | 16,767 | 2.25 | $ | 13,009 | 2.21 | |||||||||||||||||||
137
2005 | ||||||||||||
Year ended December 31,(a) | Average | Average | ||||||||||
(Taxable-equivalent interest and rates; in millions, except rates) | balance | Interest | rate | |||||||||
Interest-earning assets: |
||||||||||||
Deposits with banks, primarily non-U.S. |
$ | 15,203 | $ | 680 | 4.48 | % | ||||||
Federal funds sold and securities purchased under resale agreements: |
||||||||||||
U.S. |
94,419 | 3,375 | 3.57 | |||||||||
Non-U.S. |
45,538 | 750 | 1.65 | |||||||||
Securities borrowed, primarily U.S. |
63,023 | 1,154 | 1.83 | |||||||||
Trading assets - debt instruments: |
||||||||||||
U.S. |
97,943 | 4,861 | 4.96 | |||||||||
Non-U.S. |
89,969 | 4,451 | 4.95 | |||||||||
Securities: |
||||||||||||
U.S. |
54,441 | 2,705 | 4.97 | |||||||||
Non-U.S. |
17,203 | 581 | 3.38 | |||||||||
Interests in purchased receivables, primarily U.S. |
28,397 | 933 | 3.29 | |||||||||
Loans: |
||||||||||||
U.S. |
373,038 | 24,934 | 6.68 | |||||||||
Non-U.S. |
37,076 | 1,045 | 2.82 | |||||||||
Total interest-earning assets |
916,250 | 45,469 | 4.96 | |||||||||
Interest-bearing liabilities: |
||||||||||||
Interest-bearing deposits: |
||||||||||||
U.S. |
272,064 | 6,682 | 2.46 | |||||||||
Non-U.S. |
123,579 | 3,613 | 2.92 | |||||||||
Federal funds purchased and securities sold under repurchase agreements: |
||||||||||||
U.S. |
113,540 | 3,685 | 3.25 | |||||||||
Non-U.S. |
41,470 | 583 | 1.41 | |||||||||
Other borrowed funds: |
||||||||||||
U.S. |
64,765 | 2,837 | 4.38 | |||||||||
Non-U.S. |
55,871 | 2,437 | 4.36 | |||||||||
Beneficial interests issued by consolidated VIEs, primarily U.S. |
44,675 | 1,372 | 3.07 | |||||||||
Long-term debt, primarily U.S. |
112,370 | 4,160 | 3.70 | |||||||||
Intracompany funding: |
||||||||||||
U.S. |
28,800 | 789 | | |||||||||
Non-U.S. |
(28,800 | ) | (789 | ) | | |||||||
Total interest-bearing liabilities |
828,334 | 25,369 | 3.06 | |||||||||
Noninterest-bearing liabilities(b) |
87,916 | |||||||||||
Total investable funds |
$ | 916,250 | $ | 25,369 | 2.77 | % | ||||||
Net interest income and net yield: |
$ | 20,100 | 2.19 | % | ||||||||
U.S. |
18,366 | 2.70 | ||||||||||
Non-U.S. |
1,734 | 0.73 | ||||||||||
Percentage of total assets and liabilities attributable
to non-U.S. operations: |
||||||||||||
Assets |
29.4 | |||||||||||
Liabilities |
29.3 | |||||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | Represents the amount of noninterest-bearing liabilities funding interest-earning assets. |
138
(Continuation of table) | 2004 | 2003 | ||||||||||||||||||||||
Average | Average | Average | Average | |||||||||||||||||||||
balance | Interest | rate | balance | Interest | rate | |||||||||||||||||||
$ | 28,625 | $ | 539 | 1.88 | % | $ | 9,742 | $ | 214 | 2.20 | % | |||||||||||||
64,673 | 1,182 | 1.83 | 61,925 | 988 | 1.59 | |||||||||||||||||||
29,306 | 445 | 1.52 | 25,348 | 509 | 2.01 | |||||||||||||||||||
49,387 | 463 | 0.94 | 40,305 | 323 | 0.80 | |||||||||||||||||||
100,658 | 4,361 | 4.33 | 86,234 | 4,013 | 4.65 | |||||||||||||||||||
68,545 | 3,174 | 4.63 | 62,736 | 2,595 | 4.14 | |||||||||||||||||||
65,853 | 3,053 | 4.63 | 67,024 | 3,168 | 4.71 | |||||||||||||||||||
13,016 | 429 | 3.29 | 10,418 | 390 | 3.75 | |||||||||||||||||||
15,564 | 291 | 1.87 | 5,414 | 64 | 1.18 | |||||||||||||||||||
275,914 | 15,675 | 5.68 | 188,637 | 10,973 | 5.82 | |||||||||||||||||||
32,536 | 989 | 3.04 | 32,055 | 851 | 2.66 | |||||||||||||||||||
744,077 | 30,601 | 4.11 | 589,838 | 24,088 | 4.09 | |||||||||||||||||||
198,075 | 2,701 | 1.36 | 117,035 | 1,688 | 1.44 | |||||||||||||||||||
110,945 | 1,929 | 1.74 | 110,610 | 1,916 | 1.73 | |||||||||||||||||||
122,760 | 1,830 | 1.49 | 129,715 | 1,599 | 1.23 | |||||||||||||||||||
32,905 | 482 | 1.47 | 31,305 | 600 | 1.92 | |||||||||||||||||||
61,687 | 2,138 | 3.47 | 59,249 | 2,323 | 3.92 | |||||||||||||||||||
34,733 | 1,810 | 5.21 | 23,841 | 1,349 | 5.66 | |||||||||||||||||||
26,817 | 478 | 1.78 | 9,421 | 106 | 1.13 | |||||||||||||||||||
79,193 | 2,466 | 3.11 | 49,095 | 1,498 | 3.05 | |||||||||||||||||||
26,687 | 207 | | 44,856 | 946 | | |||||||||||||||||||
(26,687 | ) | (207 | ) | | (44,856 | ) | (946 | ) | | |||||||||||||||
667,115 | 13,834 | 2.07 | 530,271 | 11,079 | 2.09 | |||||||||||||||||||
76,962 | 59,567 | |||||||||||||||||||||||
$ | 744,077 | $ | 13,834 | 1.86 | % | $ | 589,838 | $ | 11,079 | 1.88 | % | |||||||||||||
$ | 16,767 | 2.25 | % | $ | 13,009 | 2.21 | % | |||||||||||||||||
15,125 | 2.74 | 11,124 | 2.54 | |||||||||||||||||||||
1,642 | 0.86 | 1,885 | 1.24 | |||||||||||||||||||||
29.7 | 30.7 | |||||||||||||||||||||||
30.6 | 35.5 | |||||||||||||||||||||||
139
2005 versus 2004(a) | 2004 versus 2003(a) | |||||||||||||||||||||||
(On a taxable-equivalent basis; | Increase (decrease) due to change in: | Net | Increase (decrease) due to change in: | Net | ||||||||||||||||||||
in millions) | Volume | Rate | change | Volume | Rate | change | ||||||||||||||||||
Interest-earning assets |
||||||||||||||||||||||||
Deposits with banks, primarily non-U.S. |
$ | (603 | ) | $ | 744 | $ | 141 | $ | 356 | $ | (31 | ) | $ | 325 | ||||||||||
Federal funds sold and securities
purchased under resale agreements: |
||||||||||||||||||||||||
U.S. |
1,068 | 1,125 | 2,193 | 45 | 149 | 194 | ||||||||||||||||||
Non-U.S. |
267 | 38 | 305 | 60 | (124 | ) | (64 | ) | ||||||||||||||||
Securities borrowed, primarily U.S. |
251 | 440 | 691 | 84 | 56 | 140 | ||||||||||||||||||
Trading
assets debt instruments: |
||||||||||||||||||||||||
U.S. |
(134 | ) | 634 | 500 | 624 | (276 | ) | 348 | ||||||||||||||||
Non-U.S. |
1,058 | 219 | 1,277 | 272 | 307 | 579 | ||||||||||||||||||
Securities: |
||||||||||||||||||||||||
U.S. |
(572 | ) | 224 | (348 | ) | (61 | ) | (54 | ) | (115 | ) | |||||||||||||
Non-U.S. |
140 | 12 | 152 | 87 | (48 | ) | 39 | |||||||||||||||||
Interests in purchased receivables, primarily U.S. |
421 | 221 | 642 | 190 | 37 | 227 | ||||||||||||||||||
Loans: |
||||||||||||||||||||||||
U.S. |
6,500 | 2,759 | 9,259 | 4,966 | (264 | ) | 4,702 | |||||||||||||||||
Non-U.S. |
128 | (72 | ) | 56 | 16 | 122 | 138 | |||||||||||||||||
Change in interest income |
8,524 | 6,344 | 14,868 | 6,639 | (126 | ) | 6,513 | |||||||||||||||||
Interest-bearing liabilities |
||||||||||||||||||||||||
Interest-bearing deposits: |
||||||||||||||||||||||||
U.S. |
1,802 | 2,179 | 3,981 | 1,107 | (94 | ) | 1,013 | |||||||||||||||||
Non-U.S. |
375 | 1,309 | 1,684 | 2 | 11 | 13 | ||||||||||||||||||
Federal funds purchased and securities
sold under repurchase agreements: |
||||||||||||||||||||||||
U.S. |
(306 | ) | 2,161 | 1,855 | (106 | ) | 337 | 231 | ||||||||||||||||
Non-U.S. |
121 | (20 | ) | 101 | 23 | (141 | ) | (118 | ) | |||||||||||||||
Other borrowed funds: |
||||||||||||||||||||||||
U.S. |
138 | 561 | 699 | 82 | (267 | ) | (185 | ) | ||||||||||||||||
Non-U.S. |
922 | (295 | ) | 627 | 568 | (107 | ) | 461 | ||||||||||||||||
Beneficial interests issued by consolidated VIEs,
primarily U.S.(b) |
548 | 346 | 894 | 311 | 61 | 372 | ||||||||||||||||||
Long-term debt, primarily U.S. |
1,227 | 467 | 1,694 | 939 | 29 | 968 | ||||||||||||||||||
Intracompany funding: |
||||||||||||||||||||||||
U.S. |
59 | 523 | 582 | (142 | ) | (597 | ) | (739 | ) | |||||||||||||||
Non-U.S. |
(59 | ) | (523 | ) | (582 | ) | 142 | 597 | 739 | |||||||||||||||
Change in interest expense |
4,827 | 6,708 | 11,535 | 2,926 | (171 | ) | 2,755 | |||||||||||||||||
Change in net interest income |
$ | 3,697 | $ | (364 | ) | $ | 3,333 | $ | 3,713 | $ | 45 | $ | 3,758 | |||||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. |
140
Due in 1 | Due after 1 | Due after 5 | Due after | |||||||||||||||||
December 31, 2005 (in millions, rates on a taxable-equivalent basis) | year or less | through 5 years | through 10 years | 10 years | (a) | Total | ||||||||||||||
U.S. government and federal agency obligations: |
||||||||||||||||||||
Amortized cost |
$ | 537 | $ | 1,525 | $ | 1,090 | $ | 1,342 | $ | 4,494 | ||||||||||
Fair value |
537 | 1,525 | 1,096 | 1,377 | 4,535 | |||||||||||||||
Average yield(b) |
0.67 | % | 4.38 | % | 4.56 | % | 5.73 | % | 4.38 | % | ||||||||||
U.S. government-sponsored enterprise obligations: |
||||||||||||||||||||
Amortized cost |
$ | 13 | $ | 31 | $ | 192 | $ | 22,368 | $ | 22,604 | ||||||||||
Fair value |
13 | 31 | 190 | 21,783 | 22,017 | |||||||||||||||
Average yield(b) |
5.46 | % | 4.36 | % | 4.26 | % | 5.16 | % | 5.15 | % | ||||||||||
Other:(c) Amortized cost |
$ | 6,173 | $ | 6,184 | $ | 4,064 | $ | 4,474 | $ | 20,895 | ||||||||||
Fair value |
5,876 | 6,453 | 4,080 | 4,562 | 20,971 | |||||||||||||||
Average yield(b) |
2.94 | % | 3.55 | % | 4.76 | % | 2.06 | % | 3.29 | % | ||||||||||
Total available-for-sale securities:(d) |
||||||||||||||||||||
Amortized cost |
$ | 6,723 | $ | 7,740 | $ | 5,346 | $ | 28,184 | $ | 47,993 | ||||||||||
Fair value |
6,426 | 8,009 | 5,366 | 27,722 | 47,523 | |||||||||||||||
Average yield(b) |
2.77 | % | 3.72 | % | 4.70 | % | 4.69 | % | 4.27 | % | ||||||||||
Total held-to-maturity securities:(d) |
Amortized cost |
$ | | $ | | $ | 30 | $ | 47 | $ | 77 | |||||||||
Fair value |
| | 31 | 49 | 80 | |||||||||||||||
Average yield(b) |
| | 6.96 | % | 6.73 | % | 6.82 | % | ||||||||||||
(a) | Securities with no stated maturity are included with securities with a contractual maturity of 10 years or more. Substantially all of JPMorgan Chases mortgaged-backed securities (MBSs) and collateralized mortgage obligations (CMOs) are due in 10 years or more based on contractual maturity. The estimated duration, which reflects anticipated future prepayments based on a consensus of dealers in the market, is approximately four years for MBSs and CMOs. | |
(b) | The average yield was based on amortized cost balances at the end of the year, and does not give effect to changes in fair value that are reflected in Accumulated other comprehensive income. Yields are derived by dividing interest income (including the effect of related derivatives on available-for-sale securities and the amortization of premiums and accretion of discounts) by total amortized cost. Taxable-equivalent yields are used where applicable. | |
(c) | Includes obligations of state and political subdivisions, debt securities issued by non-U.S. governments, corporate debt securities, CMOs of private issuers and other debt and equity securities. | |
(d) | For the amortized cost of the above categories of securities at December 31, 2004, see Note 9 on page 103. At December 31, 2003, the amortized cost of U.S. government and federal agency obligations and U.S. government-sponsored enterprise obligations was $45,690 million, and other available-for-securities was $14,732 million. At December 31, 2003, the amortized cost of U.S. government and federal agency obligations and U.S. government-sponsored enterprise obligations held-to-maturity securities was $176 million. There were no other held-to-maturity securities at December 31, 2003. |
141
December 31, (in millions) | 2005 | 2004 | 2003 | (a) | 2002 | (a) | 2001 | (a) | ||||||||||||
U.S. loans: |
||||||||||||||||||||
Commercial and industrial |
$ | 84,597 | $ | 76,890 | $ | 38,879 | $ | 49,205 | $ | 56,680 | ||||||||||
Commercial
real estate commercial mortgage(b) |
16,074 | 15,323 | 3,182 | 3,176 | 3,533 | |||||||||||||||
Commercial
real estate construction(b) |
4,143 | 4,612 | 589 | 516 | 615 | |||||||||||||||
Financial institutions |
13,259 | 12,664 | 4,622 | 3,770 | 5,608 | |||||||||||||||
Consumer |
261,361 | 255,073 | 136,393 | 124,687 | 111,850 | |||||||||||||||
Total U.S. loans |
379,434 | 364,562 | 183,665 | 181,354 | 178,286 | |||||||||||||||
Non-U.S. loans: |
||||||||||||||||||||
Commercial and industrial |
28,969 | 27,293 | 24,618 | 31,446 | 33,530 | |||||||||||||||
Commercial real estate(b) |
311 | 929 | 79 | 381 | 167 | |||||||||||||||
Financial institutions |
7,468 | 6,494 | 5,671 | 2,438 | 3,570 | |||||||||||||||
Non-U.S. governments |
1,295 | 2,778 | 705 | 616 | 1,161 | |||||||||||||||
Consumer |
1,671 | 58 | 28 | 129 | 730 | |||||||||||||||
Total non-U.S. loans |
39,714 | 37,552 | 31,101 | 35,010 | 39,158 | |||||||||||||||
Total loans(c) |
$ | 419,148 | $ | 402,114 | $ | 214,766 | $ | 216,364 | $ | 217,444 | ||||||||||
(a) | Heritage JPMorgan Chase only. | |
(b) | Represents loans secured by commercial real estate. | |
(c) | Loans are presented net of unearned income of $3.0 billion, $4.1 billion, $1.3 billion, $1.9 billion and $1.8 billion at December 31, 2005, 2004, 2003, 2002 and 2001, respectively. |
Within | 1-5 | After 5 | ||||||||||||||
December 31, 2005 (in millions) | 1 year | (a) | years | years | Total | |||||||||||
U.S.: |
||||||||||||||||
Commercial and industrial |
$ | 36,898 | $ | 37,741 | $ | 9,958 | $ | 84,597 | ||||||||
Commercial real estate |
4,259 | 10,719 | 5,239 | 20,217 | ||||||||||||
Financial institutions |
8,578 | 2,989 | 1,692 | 13,259 | ||||||||||||
Non-U.S. |
19,469 | 11,084 | 7,490 | 38,043 | ||||||||||||
Total commercial loans |
$ | 69,204 | $ | 62,533 | $ | 24,379 | $ | 156,116 | ||||||||
Loans at fixed interest rates |
$ | 29,409 | $ | 11,955 | ||||||||||||
Loans at variable interest rates |
33,124 | 12,424 | ||||||||||||||
Total commercial loans |
$ | 62,533 | $ | 24,379 | ||||||||||||
(a) | Includes demand loans and overdrafts. |
142
Net local | Total | Total | ||||||||||||||||||||||||||||||
country | direct | cross-border | ||||||||||||||||||||||||||||||
(in millions) | At December 31, | Governments | Banks | Other | (b) | assets | exposure | (c) | Commitments | (d) | exposure | |||||||||||||||||||||
U.K. |
2005 | $ | 1,108 | $ | 16,782 | $ | 9,893 | $ | | $ | 27,783 | $ | 146,854 | $ | 174,637 | |||||||||||||||||
2004 | 1,531 | 23,421 | 24,357 | | 49,309 | 102,770 | 152,079 | |||||||||||||||||||||||||
2003 | (a) | 1,111 | 3,758 | 11,839 | | 16,708 | 35,983 | 52,691 | ||||||||||||||||||||||||
Germany |
2005 | $ | 26,959 | $ | 8,462 | $ | 10,579 | $ | | $ | 46,000 | $ | 89,112 | $ | 135,112 | |||||||||||||||||
2004 | 28,114 | 10,547 | 9,759 | 509 | 48,929 | 47,268 | 96,197 | |||||||||||||||||||||||||
2003 | (a) | 14,741 | 12,353 | 4,383 | | 31,477 | 31,332 | 62,809 | ||||||||||||||||||||||||
France |
2005 | $ | 8,346 | $ | 7,890 | $ | 7,717 | $ | 305 | $ | 24,258 | $ | 75,577 | $ | 99,835 | |||||||||||||||||
2004 | 3,315 | 15,178 | 11,790 | 2,082 | 32,365 | 33,724 | 66,089 | |||||||||||||||||||||||||
2003 | (a) | 2,311 | 3,788 | 6,070 | 599 | 12,768 | 22,385 | 35,153 | ||||||||||||||||||||||||
Italy |
2005 | $ | 14,193 | $ | 4,053 | $ | 5,264 | $ | 308 | $ | 23,818 | $ | 36,688 | $ | 60,506 | |||||||||||||||||
2004 | 12,431 | 5,589 | 6,911 | 180 | 25,111 | 14,895 | 40,006 | |||||||||||||||||||||||||
2003 | (a) | 9,336 | 3,743 | 2,570 | 818 | 16,467 | 10,738 | 27,205 | ||||||||||||||||||||||||
Netherlands |
2005 | $ | 2,918 | $ | 2,330 | $ | 11,410 | $ | | $ | 16,658 | $ | 36,584 | $ | 53,242 | |||||||||||||||||
2004 | 1,563 | 4,656 | 13,302 | | 19,521 | 16,985 | 36,506 | |||||||||||||||||||||||||
2003 | (a) | 4,571 | 3,997 | 11,152 | | 19,720 | 11,689 | 31,409 | ||||||||||||||||||||||||
Spain |
2005 | $ | 2,876 | $ | 3,108 | $ | 2,455 | $ | 733 | $ | 9,172 | $ | 24,000 | $ | 33,172 | |||||||||||||||||
2004 | 4,224 | 3,781 | 5,276 | 659 | 13,940 | 11,087 | 25,027 | |||||||||||||||||||||||||
2003 | (a) | 1,365 | 1,909 | 2,964 | | 6,238 | 7,301 | 13,539 | ||||||||||||||||||||||||
Japan |
2005 | $ | 2,474 | $ | 3,008 | $ | 1,167 | $ | | $ | 6,649 | $ | 20,801 | $ | 27,450 | |||||||||||||||||
2004 | 25,349 | 3,869 | 5,765 | | 34,983 | 23,582 | 58,565 | |||||||||||||||||||||||||
2003 | (a) | 8,902 | 510 | 2,358 | | 11,770 | 13,474 | 25,244 | ||||||||||||||||||||||||
Switzerland |
2005 | $ | 207 | $ | 2,873 | $ | 3,471 | $ | | $ | 6,551 | $ | 18,794 | $ | 25,345 | |||||||||||||||||
2004 | 327 | 4,131 | 5,184 | 311 | 9,953 | 7,807 | 17,760 | |||||||||||||||||||||||||
2003 | (a) | 370 | 4,630 | 2,201 | 320 | 7,521 | 4,993 | 12,514 | ||||||||||||||||||||||||
Luxembourg |
2005 | $ | 1,326 | $ | 2,484 | $ | 9,082 | $ | | $ | 12,892 | $ | 7,625 | $ | 20,517 | |||||||||||||||||
2004 | 397 | 5,000 | 9,690 | | 15,087 | 1,721 | 16,808 | |||||||||||||||||||||||||
2003 | (a) | 774 | 718 | 8,336 | | 9,828 | 1,007 | 10,835 | ||||||||||||||||||||||||
Belgium |
2005 | $ | 2,350 | $ | 1,268 | $ | 1,893 | $ | | $ | 5,511 | $ | 1,481 | $ | 6,992 | |||||||||||||||||
2004 | 2,899 | 3,177 | 3,075 | | 9,151 | 1,254 | 10,405 | |||||||||||||||||||||||||
2003 | (a) | 1,426 | 474 | 1,096 | | 2,996 | 1,072 | 4,068 | ||||||||||||||||||||||||
(a) | Heritage JPMorgan Chase only. | |
(b) | Consists primarily of commercial and industrial. | |
(c) | Exposure includes loans and accrued interest receivable, interest-bearing deposits with banks, acceptances, resale agreements, other monetary assets, cross-border trading debt and equity instruments, mark-to-market exposure of foreign exchange and derivative contracts and local country assets, net of local country liabilities. The amounts associated with foreign exchange and derivative contracts are presented after taking into account the impact of legally enforceable master netting agreements. | |
(d) | Commitments include outstanding letters of credit, undrawn commitments to extend credit and credit derivatives. |
143
December 31, (in millions) | 2005 | 2004 | 2003 | (d) | 2002 | (d) | 2001 | (d) | ||||||||||||
Nonperforming assets |
||||||||||||||||||||
U.S. nonperforming loans:(a) |
||||||||||||||||||||
Commercial and industrial |
$ | 818 | $ | 1,175 | $ | 1,060 | $ | 1,769 | $ | 1,186 | ||||||||||
Commercial real estate |
234 | 326 | 31 | 48 | 131 | |||||||||||||||
Financial institutions |
1 | 1 | 1 | 258 | 33 | |||||||||||||||
Consumer |
1,117 | 895 | 542 | 544 | 537 | |||||||||||||||
Total U.S. nonperforming loans |
2,170 | 2,397 | 1,634 | 2,619 | 1,887 | |||||||||||||||
Non-U.S. nonperforming loans:(a) |
||||||||||||||||||||
Commercial and industrial |
135 | 288 | 909 | 1,566 | 679 | |||||||||||||||
Commercial real estate |
12 | 13 | 13 | 11 | 9 | |||||||||||||||
Financial institutions |
25 | 43 | 25 | 36 | 23 | |||||||||||||||
Non-U.S. governments |
| | | | 11 | |||||||||||||||
Consumer |
1 | 2 | 3 | 2 | 4 | |||||||||||||||
Total non-U.S. nonperforming loans |
173 | 346 | 950 | 1,615 | 726 | |||||||||||||||
Total nonperforming loans |
2,343 | 2,743 | 2,584 | 4,234 | 2,613 | |||||||||||||||
Derivative receivables |
50 | 241 | 253 | 289 | 1,300 | |||||||||||||||
Other receivables |
| | 108 | 108 | | |||||||||||||||
Assets acquired in loan satisfactions |
197 | 247 | 216 | 190 | 124 | |||||||||||||||
Total nonperforming assets(b) |
$ | 2,590 | $ | 3,231 | $ | 3,161 | $ | 4,821 | $ | 4,037 | ||||||||||
Contractually past-due assets(c) |
||||||||||||||||||||
U.S. loans: |
||||||||||||||||||||
Commercial and industrial |
$ | 75 | $ | 34 | $ | 41 | $ | 57 | $ | 11 | ||||||||||
Commercial real estate |
7 | | | | 19 | |||||||||||||||
Consumer |
1,046 | 970 | 269 | 473 | 484 | |||||||||||||||
Total U.S. loans |
1,128 | 1,004 | 310 | 530 | 514 | |||||||||||||||
Non-U.S. loans |
||||||||||||||||||||
Commercial and industrial |
| 2 | 5 | | 5 | |||||||||||||||
Consumer |
| | | | 2 | |||||||||||||||
Total non-U.S. loans |
| 2 | 5 | | 7 | |||||||||||||||
Total |
$ | 1,128 | $ | 1,006 | $ | 315 | $ | 530 | $ | 521 | ||||||||||
(a) | All nonperforming loans are accounted for on a nonaccrual basis. There were no nonperforming renegotiated loans. Renegotiated loans are those for which concessions, such as the reduction of interest rates or the deferral of interest or principal payments, have been granted as a result of a deterioration in the borrowers financial condition. | |
(b) | Excludes wholesale purchased held-for-sale (HFS) loans purchased as part of the Investment Banks proprietary activities. | |
(c) | Represents accruing loans past-due 90 days or more as to principal and interest, which are not characterized as nonperforming loans. | |
(d) | Heritage JPMorgan Chase only. |
Year ended December 31, (in millions)(a) | 2005 | 2004 | 2003 | |||||||||
U.S.: |
||||||||||||
Gross amount of interest that would have been
recorded at the original rate |
$ | 170 | $ | 124 | $ | 86 | ||||||
Interest that was recognized in income |
(30 | ) | (8 | ) | (5 | ) | ||||||
Negative
impact U.S. |
140 | 116 | 81 | |||||||||
Non-U.S.: |
||||||||||||
Gross amount of interest that would have been recorded at the original rate |
11 | 36 | 58 | |||||||||
Interest that was recognized in income |
(4 | ) | | | ||||||||
Negative
impact non-U.S. |
7 | 36 | 58 | |||||||||
Total negative impact on interest income |
$ | 147 | $ | 152 | $ | 139 | ||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. |
144
Year ended December 31, (in millions)(a) | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||
Balance at beginning of year |
$ | 7,320 | $ | 4,523 | $ | 5,350 | $ | 4,524 | $ | 3,665 | ||||||||||
Addition resulting from the Merger, July 1, 2004 |
| 3,123 | | | | |||||||||||||||
Provision for loan losses |
3,575 | 2,883 | 1,579 | 4,039 | 3,185 | |||||||||||||||
U.S. charge-offs |
||||||||||||||||||||
Commercial and industrial |
(456 | ) | (483 | ) | (668 | ) | (967 | ) | (852 | ) | ||||||||||
Commercial real estate |
(36 | ) | (17 | ) | (2 | ) | (5 | ) | (7 | ) | ||||||||||
Financial institutions |
| (8 | ) | (5 | ) | (19 | ) | (35 | ) | |||||||||||
Consumer |
(4,334 | ) | (3,079 | ) | (1,646 | ) | (2,070 | ) | (1,485 | ) | ||||||||||
Total U.S. charge-offs |
(4,826 | ) | (3,587 | ) | (2,321 | ) | (3,061 | ) | (2,379 | ) | ||||||||||
Non-U.S. charge-offs |
||||||||||||||||||||
Commercial and industrial |
(33 | ) | (211 | ) | (470 | ) | (955 | ) | (192 | ) | ||||||||||
Financial institutions |
(1 | ) | (6 | ) | (26 | ) | (43 | ) | (1 | ) | ||||||||||
Non-U.S. governments |
| | | | (9 | ) | ||||||||||||||
Consumer |
(9 | ) | (1 | ) | (1 | ) | (1 | ) | (1 | ) | ||||||||||
Total non-U.S. charge-offs |
(43 | ) | (218 | ) | (497 | ) | (999 | ) | (203 | ) | ||||||||||
Total charge-offs |
(4,869 | ) | (3,805 | ) | (2,818 | ) | (4,060 | ) | (2,582 | ) | ||||||||||
U.S. recoveries |
||||||||||||||||||||
Commercial and industrial |
202 | 202 | 167 | 45 | 56 | |||||||||||||||
Commercial real estate |
10 | 20 | 5 | 24 | 9 | |||||||||||||||
Financial institutions |
3 | 8 | 5 | 1 | 12 | |||||||||||||||
Consumer |
668 | 319 | 191 | 276 | 132 | |||||||||||||||
Total U.S. recoveries |
883 | 549 | 368 | 346 | 209 | |||||||||||||||
Non-U.S. recoveries |
||||||||||||||||||||
Commercial and industrial |
144 | 124 | 155 | 36 | 30 | |||||||||||||||
Financial institutions |
20 | 32 | 23 | 1 | 7 | |||||||||||||||
Non-U.S. governments |
| | | 1 | | |||||||||||||||
Consumer |
3 | 1 | | | 1 | |||||||||||||||
Total non-U.S. recoveries |
167 | 157 | 178 | 38 | 38 | |||||||||||||||
Total recoveries |
1,050 | 706 | 546 | 384 | 247 | |||||||||||||||
Net charge-offs |
(3,819 | ) | (3,099 | ) | (2,272 | ) | (3,676 | ) | (2,335 | ) | ||||||||||
Allowance related to purchased portfolios |
17 | | | 460 | | |||||||||||||||
Other(b) |
(3 | ) | (110 | ) | (134 | ) | 3 | 9 | ||||||||||||
Balance at year-end |
$ | 7,090 | $ | 7,320 | $ | 4,523 | $ | 5,350 | $ | 4,524 | ||||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. All periods prior to 2004 reflect the results of heritage JPMorgan Chase only. | |
(b) | Primarily relates to the transfer of the allowance for accrued interest and fees on reported and securitized credit card loans in 2004 and 2003. |
Year ended December 31, (in millions)(a) | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||
Balance at beginning of year |
$ | 492 | $ | 324 | $ | 363 | $ | 282 | $ | 283 | ||||||||||
Addition resulting from the Merger, July 1, 2004 |
| 508 | | | | |||||||||||||||
Provision for lending-related commitments |
(92 | ) | (339 | ) | (39 | ) | 292 | (3 | ) | |||||||||||
U.S.
charge-offs commercial and industrial |
| | | (212 | ) | | ||||||||||||||
Total charge-offs |
| | | (212 | ) | | ||||||||||||||
Non-U.S.
recoveries commercial and industrial |
| | | | 3 | |||||||||||||||
Total recoveries |
| | | | 3 | |||||||||||||||
Net charge-offs |
| | | (212 | ) | 3 | ||||||||||||||
Other |
| (1 | ) | | 1 | (1 | ) | |||||||||||||
Balance at year-end |
$ | 400 | $ | 492 | $ | 324 | $ | 363 | $ | 282 | ||||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. All periods prior to 2004 reflect the results of heritage JPMorgan Chase only. |
145
Year ended December 31, (in millions, except ratios)(a) | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||
Balances |
||||||||||||||||||||
Loans average |
$ | 410,114 | $ | 308,450 | $ | 220,692 | $ | 211,432 | $ | 219,843 | ||||||||||
Loans year-end |
419,148 | 402,114 | 214,766 | 216,364 | 217,444 | |||||||||||||||
Net
charge-offs(b) |
3,819 | 3,099 | 2,272 | 3,676 | 2,335 | |||||||||||||||
Allowance for loan losses: |
||||||||||||||||||||
U.S. |
6,642 | 6,617 | 3,677 | 4,122 | 3,743 | |||||||||||||||
Non-U.S. |
448 | 703 | 846 | 1,228 | 781 | |||||||||||||||
Total allowance for loan losses |
7,090 | 7,320 | 4,523 | 5,350 | 4,524 | |||||||||||||||
Nonperforming loans |
2,343 | 2,743 | 2,584 | 4,234 | 2,613 | |||||||||||||||
Ratios |
||||||||||||||||||||
Net charge-offs to: |
||||||||||||||||||||
Loans
average(c) |
1.00 | % | 1.08 | % | 1.19 | % | 1.90 | % | 1.13 | % | ||||||||||
Allowance for loan losses |
53.86 | 42.34 | 50.23 | 68.71 | 51.61 | |||||||||||||||
Allowance for loan losses to: |
||||||||||||||||||||
Loans
year-end (c) |
1.84 | 1.94 | 2.33 | 2.80 | 2.25 | |||||||||||||||
Nonperforming loans(c) |
321 | 268 | 180 | 128 | 181 | |||||||||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. All periods prior to 2004 reflect the results of heritage JPMorgan Chase only. | |
(b) | Excludes net charge-offs (recoveries) on lending-related commitments of $212 million and $(3) million in 2002 and 2001, respectively. There were no net charge-offs (recoveries) on lending-related commitments in 2005, 2004 or 2003. | |
(c) | Excludes loans held for sale. |
Average balances(a) | Average interest rates(a) | |||||||||||||||||||||||
(in millions, except interest rates) | 2005 | 2004 | 2003 | 2005 | 2004 | 2003 | ||||||||||||||||||
U.S.: |
||||||||||||||||||||||||
Noninterest-bearing demand |
$ | 43,692 | $ | 31,733 | $ | 22,289 | | % | | % | | % | ||||||||||||
Interest-bearing demand |
13,620 | 11,040 | 4,859 | 2.69 | 1.31 | 1.22 | ||||||||||||||||||
Savings |
239,772 | 176,850 | 104,863 | 1.57 | 0.80 | 0.75 | ||||||||||||||||||
Time |
98,063 | 73,757 | 55,911 | 2.61 | 1.54 | 1.51 | ||||||||||||||||||
Total U.S. deposits |
395,147 | 293,380 | 187,922 | 1.69 | 0.92 | 0.90 | ||||||||||||||||||
Non-U.S.: |
||||||||||||||||||||||||
Noninterest-bearing demand |
6,237 | 6,479 | 6,561 | | | | ||||||||||||||||||
Interest-bearing demand |
70,403 | 56,870 | 66,460 | 2.94 | 1.62 | 1.63 | ||||||||||||||||||
Savings |
549 | 746 | 607 | 0.36 | 0.11 | 0.15 | ||||||||||||||||||
Time |
52,650 | 53,539 | 43,735 | 2.93 | 1.88 | 1.90 | ||||||||||||||||||
Total non-U.S. deposits(b) |
129,839 | 117,634 | 117,363 | 2.78 | 1.64 | 1.63 | ||||||||||||||||||
Total deposits |
$ | 524,986 | $ | 411,014 | $ | 305,285 | 1.96 | % | 1.13 | % | 1.18 | % | ||||||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | The majority of non-U.S. deposits were in denominations of $100,000 or more. |
3 months | Over 3 months | Over 6 months | Over | |||||||||||||||||
By remaining maturity at December 31, 2005 (in millions) | or less | but within 6 months | but within 12 months | 12 months | Total | |||||||||||||||
U.S. time certificates of deposit ($100,000 or more) |
$ 8,980 | $ 2,200 | $ 3,474 | $ 3,008 | $ 17,662 | |||||||||||||||
146
(in millions, except rates) | 2005 | 2004 | (a) | 2003 | (a) | |||||||
Federal funds purchased and securities sold under repurchase agreements: |
||||||||||||
Balance at year-end |
$ 125,925 | $ 127,787 | $ 113,466 | |||||||||
Average daily balance during the year |
155,010 | 155,665 | 161,020 | |||||||||
Maximum month-end balance |
177,144 | 168,257 | 205,955 | |||||||||
Weighted-average rate at December 31 |
3.26 | % | 2.15 | % | 1.17 | % | ||||||
Weighted-average rate during the year |
2.75 | 1.49 | 1.37 | |||||||||
Commercial paper: |
||||||||||||
Balance at year-end |
$ 13,863 | $ 12,605 | $ 14,284 | |||||||||
Average daily balance during the year |
14,450 | 12,699 | 13,387 | |||||||||
Maximum month-end balance |
18,077 | 15,300 | 15,769 | |||||||||
Weighted-average rate at December 31 |
3.62 | % | 1.98 | % | 0.98 | % | ||||||
Weighted-average rate during the year |
2.81 | 1.03 | 1.13 | |||||||||
Other borrowed funds:(b) |
||||||||||||
Balance at year-end |
$ 104,636 | $ 96,981 | $ 87,147 | |||||||||
Average daily balance during the year |
106,186 | 83,721 | 69,703 | |||||||||
Maximum month-end balance |
120,051 | 99,689 | 95,690 | |||||||||
Weighted-average rate at December 31 |
4.51 | % | 3.81 | % | 4.47 | % | ||||||
Weighted-average rate during the year |
4.58 | 4.56 | 5.05 | |||||||||
FIN 46 short-term beneficial interests:(c) |
||||||||||||
Commercial paper: |
||||||||||||
Balance at year-end |
$ 35,161 | $ 38,519 | $ 6,321 | |||||||||
Average daily balance during the year |
34,439 | 19,472 | 6,185 | |||||||||
Maximum month-end balance |
35,676 | 38,519 | 12,007 | |||||||||
Weighted-average rate at December 31 |
2.69 | % | 2.23 | % | 0.88 | % | ||||||
Weighted-average rate during the year |
3.07 | 1.80 | 1.11 | |||||||||
Other borrowed funds: |
||||||||||||
Balance at year-end |
$ 4,682 | $ 3,149 | $ 3,545 | |||||||||
Average daily balance during the year |
3,569 | 3,219 | 2,048 | |||||||||
Maximum month-end balance |
5,568 | 3,447 | 3,545 | |||||||||
Weighted-average rate at December 31 |
1.92 | % | 1.93 | % | 2.26 | % | ||||||
Weighted-average rate during the year |
2.13 | 1.10 | 0.83 | |||||||||
(a) | 2004 results include six months of the combined Firms results and six months of heritage JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only. | |
(b) | Includes securities sold but not yet purchased. | |
(c) | Included on the Consolidated balance sheets in Beneficial interests issued by consolidated variable interest entities. VIEs had unused commitments to borrow an additional $4.1 billion and $4.2 billion at December 31, 2005 and 2004, respectively, for general liquidity purposes. |
147
JPMorgan Chase & Co. (Registrant) |
||||||
By: | /s/ WILLIAM B. HARRISON, JR. | |||||
(William B. Harrison, Jr. Chairman of the Board) |
||||||
By: | /s/ JAMES DIMON | |||||
(James Dimon President and Chief Executive Officer) |
||||||
Date: March 8, 2006 |
Capacity | Date | ||||
/s/ WILLIAM B. HARRISON, JR.
|
Director and Chairman of the Board | ||||
(William B. Harrison, Jr.) |
|||||
/s/ JAMES DIMON |
Director, President and Chief Executive Officer | ||||
(James Dimon) |
(Principal Executive Officer) | ||||
/s/ HANS W. BECHERER
|
Director | ||||
(Hans W. Becherer) |
|||||
/s/ JOHN H. BIGGS
|
Director | ||||
(John H. Biggs)
|
March 8, 2006 | ||||
/s/ LAWRENCE A. BOSSIDY
|
Director | ||||
(Lawrence A. Bossidy) |
|||||
/s/ STEPHEN B. BURKE
|
Director | ||||
(Stephen B. Burke) |
|||||
/s/ JAMES S. CROWN
|
Director | ||||
(James S. Crown) |
|||||
/s/ ELLEN V. FUTTER
|
Director | ||||
(Ellen V. Futter) |
148
Capacity | Date | ||||
/s/ WILLIAM H. GRAY, III
|
Director | ||||
(William H. Gray, III) |
|||||
/s/ LABAN P. JACKSON, JR.
|
Director | ||||
(Laban P. Jackson, Jr.) |
|||||
/s/ JOHN W. KESSLER
|
Director | ||||
(John W. Kessler) |
|||||
/s/ ROBERT I. LIPP
|
Director | ||||
(Robert I. Lipp) |
|||||
/s/ RICHARD A. MANOOGIAN
|
Director | ||||
(Richard A. Manoogian)
|
March 8, 2006 | ||||
/s/ DAVID C. NOVAK
|
Director | ||||
(David C. Novak) |
|||||
/s/ LEE R. RAYMOND
|
Director | ||||
(Lee R. Raymond) |
|||||
/s/ WILLIAM C. WELDON
|
Director | ||||
(William C. Weldon) |
|||||
/s/ MICHAEL J. CAVANAGH |
Executive Vice President | ||||
(Michael J. Cavanagh) |
and Chief Financial Officer | ||||
(Principal Financial Officer) | |||||
/s/ JOSEPH L. SCLAFANI
|
Executive Vice President and Controller | ||||
(Joseph L. Sclafani) |
(Principal Accounting Officer) |
149
Article |
||||||
I | Meetings of Stockholders | |||||
Section 1.01 | Annual Meeting | |||||
Section 1.02 | Special Meetings | |||||
Section 1.03 | Notice of Meetings | |||||
Section 1.04 | Quorum | |||||
Section 1.05 | Organization | |||||
Section 1.06 | Voting | |||||
Section 1.07 | List of Stockholders | |||||
Section 1.08 | Inspectors of Election | |||||
Section 1.09 | Notice of Stockholder Business and Director Nominations. | |||||
II | Board of Directors | |||||
Section 2.01 | Number | |||||
Section 2.02 | Vacancies | |||||
Section 2.03 | Annual Meeting | |||||
Section 2.04 | Regular Meetings | |||||
Section 2.05 | Special Meetings | |||||
Section 2.06 | Quorum | |||||
Section 2.07 | Rules and Regulations | |||||
Section 2.08 | Compensation | |||||
III | Committees | |||||
Section 3.01 | Executive Committee | |||||
Section 3.02 | Audit Committee | |||||
Section 3.03 | Other Committees | |||||
IV | Officers and Agents | |||||
Section 4.01 | Officers | |||||
Section 4.02 | Clerks and Agents | |||||
Section 4.03 | Term of Office | |||||
Section 4.04 | Chairman of the Board | |||||
Section 4.05 | Chief Executive Officer | |||||
Section 4.06 | President | |||||
Section 4.07 | Vice Chairman of the Board | |||||
Section 4.08 | Chief Financial Officer | |||||
Section 4.09 | Controller | |||||
Section 4.10 | Secretary | |||||
Section 4.11 | Assistant Corporate Secretary | |||||
Section 4.12 | General Auditor | |||||
Section 4.13 | Powers and Duties of Other Officers |
V | Proxies re Stock or Other Securities of Other Corporations | |||||
VI | Shares and Their Transfer | |||||
Section 6.01 | Certificates for Stock | |||||
Section 6.02 | Transfers of Stock | |||||
Section 6.03 | Regulations | |||||
Section 6.04 | Lost, Stolen, Destroyed and Mutilated Certificates | |||||
Section 6.05 | Fixing Date for Determination of Stockholders of Record | |||||
VII | Corporate Seal | |||||
VIII | Fiscal Year | |||||
IX | Indemnification | |||||
Section 9.01 | Right to Indemnification | |||||
Section 9.02 | Contracts and Funding | |||||
Section 9.03 | Employee Benefit Plans | |||||
Section 9.04 | Indemnification Not Exclusive Right | |||||
Section 9.05 | Advancement of Expenses; Procedures | |||||
X | By-laws | |||||
Section 10.01 | Inspection | |||||
Section 10.02 | Amendments | |||||
Section 10.03 | Construction |
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(a) | on the date fixed pursuant to the provisions of Article VI of these By-laws as the record date for the determination of stockholders who shall be entitled to notice of and to vote at such meeting, or | ||
(b) | if no such record date shall have been so fixed, then at the close of business on the day next preceding the day on which notice of the meeting shall be given. |
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(a) | if only one shall vote, his act shall bind all; | ||
(b) | if more than one shall vote, the act of the majority so voting shall bind all; and | ||
(c) | if more than one shall vote, but the vote shall be evenly split on any particular matter, then, except as otherwise required by the Delaware General Corporation Law, each faction may vote the shares in question proportionally. |
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(a) | Business and Director Nominations to be Considered at Annual Meeting of Stockholders. |
(1) | Nominations of persons for election to the Board and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders (i) pursuant to the Corporations notice of meeting, (ii) by or at the direction of the Board, or (iii) by any stockholder of the Corporation who was a stockholder of record at the time of giving of notice provided for in this By-law who is entitled to vote at the meeting and complies with the notice procedures set forth in this By-law. | ||
(2) | For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of paragraph (a)(1) of this By-law Section 1.09, (i) the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and (ii) such other business must otherwise be a proper matter for stockholder action. To be timely, a stockholders notice shall be delivered to the Secretary at the principal offices of the Corporation not later than the close of business on the 90th day nor earlier than the 120th day prior to the first anniversary of the preceding years annual meeting; provided, however, that in the event that the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall the public announcement of an adjournment of an annual meeting commence a new |
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time period for the giving of a stockholders notice as described above. Such stockholders notice shall set forth (i) as to each person whom the stockholder proposes to nominate for election or re-election as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the Exchange Act) and Rule 14a-11 thereunder (including such persons written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (ii) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (iii) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (A) the name and address of such stockholder, as they appear on the Corporations books, and of such beneficial owner, (B) the class and number of shares of the Corporation which are owned beneficially and of record by such stockholder and any such beneficial owner, and (C) whether the proponent intends or is part of a group which intends to solicit proxies from other stockholders in support of such proposal or nomination. |
(3) | Notwithstanding anything in the second sentence of paragraph (a)(2) of this By-law to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least ninety (90) days prior to the first anniversary of the preceding years annual meeting, a stockholders notice required by this By-law shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation. |
(b) | Business and Director Nominations to be Considered at Special Meetings of Stockholders. |
(1) | Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the Corporations notice of meeting. |
||
(2) | Nominations of persons for election to the Board may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporations notice of meeting (i) by or at the direction of the Board; or (ii) provided that the Board has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who (A) is a stockholder of record at the time of giving of notice provided for in this By-law, (B) shall be entitled to vote at the meeting, and (C) complies with the notice procedures set forth in this By-law. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more persons to the Board, any such stockholder may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporations notice of meeting, if the stockholders notice required by paragraph (a)(2) of this By-law shall be delivered to the Secretary at the |
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principal offices of the Corporation not earlier than the 90th day prior to such special meeting, and not later than the close of business on the later of the 60th day and prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and the nominees proposed by the Board for election at such meeting. In no event shall the public announcement of an adjournment of a special meeting commence a new time period for the giving of a stockholders notice as described above. |
(c) | General. |
(1) | Only such persons who are nominated in accordance with the procedures set forth in this By-law (or who are elected or appointed to the Board pursuant to Article II, Section 2.02 of these By-laws) shall be eligible to serve as directors of the Corporation and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this By-law. | ||
(2) | Except as otherwise provided by law, the Restated Certificate of Incorporation or these By-laws, the chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this By-law and if any nomination or business is not in compliance with this By-law to declare that such defective proposal or nomination shall be disregarded. | ||
(3) | For purposes of this By-law, public announcement shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. | ||
(4) | Notwithstanding the foregoing provisions of this By-law, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this By-law. Nothing in this By-law shall be deemed to affect any rights (i) of stockholders to request inclusion of proposals in the Corporations proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders of any series of preferred stock to elect directors under specified circumstances. |
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-8-
-9-
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(a) | record all the proceedings of the meetings of the
stockholders, the Board and the Executive Committee in one or more books kept for that purpose; |
||
(b) | see that all notices are duly given in accordance with the provisions of these By-laws or as required by law; | ||
(c) | be custodian of the seal of the Corporation; and he may see
that such seal or a facsimile thereof is affixed to any documents the execution of which on behalf of the Corporation is duly authorized and may attest such seal when so affixed; and |
||
(d) | in general, perform all duties incident to the office of Secretary and such other duties as from time to time may be prescribed by the Board, the Chairman, the Chief Executive Officer, the President, or a Vice Chairman of the Board. |
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(a) | In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If no record is fixed by the Board, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting. | ||
(b) | In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board may fix a record date, which record |
-13-
date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board, and which date shall not be
more than ten (10) days after the date upon which the resolution
fixing the record date is adopted by the Board. If no record date
has been fixed by the Board, the record date for determining
stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board is required by
Delaware General Corporation Law, shall be the first date on which
signed written consent setting forth the action taken or proposed to
be taken is delivered to the Corporation by delivery to its
registered office in the State of Delaware, its principal place of
business, or an officer or agent of the Corporation having custody
of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporations registered office shall
be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the Board and prior
action by the Board is required by Delaware General Corporation Law,
the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close
of business on the day on which the Board adopts the resolution taking such prior action. |
(c) | In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be the close of business on the day on which the Board adopts the resolution relating thereto. |
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Exhibit 4.3(a) CHEMICAL BANKING CORPORATION AND MORGAN GUARANTY TRUST COMPANY OF NEW YORK, Trustee ------------------- Indenture Dated as of April 1, 1987 Amended and Restated as of December 15, 1992 ------------------
CHEMICAL NEW YORK CORPORATION Reconciliation and tie between Trust Indenture Act of 1939 and Indenture dated as of April 1, 1987 and Amended and Restated as of December 15, 1992 Trust Indenture Indenture Act Section Section ----------- -------------- Section310(a)(1) ............................................ 8.09 (a)(2) ............................................ 8.09 (a)(3) ............................................ Not applicable (a)(4) ............................................ Not applicable (b) ............................................ 8.08, 8.10 Section311(a) ............................................ 8.13(a) (b) ............................................ 8.13(b) Section312(a) ............................................ 6.01, 6.02(a) (b) ............................................ 6.02(b) (c) ............................................ 6.02(c) Section313(a) ............................................ 6.04(a) (b) ............................................ 6.04(b) (c) ............................................ 6.04(c) (d) ............................................ 6.04(d) Section314(a) ............................................ 6.03 (b) ............................................ Not applicable (c)(1) ............................................ 2.01, 20.05 (c)(2) ............................................ 2.01, 20.05 (c)(3) ............................................ Not applicable (d) ............................................ Not applicable (e) ............................................ 20.05 Section315(a) ............................................ 8.01 (b) ............................................ 7.08 (c) ............................................ 8.01 (d) ............................................ 8.01 (d)(1) ............................................ 8.01(a) (d)(2) ............................................ 8.01(b) (d)(3) ............................................ 8.01(c) (e) ............................................ 7.09 Section316(a)(1) (A)......................................... 7.07 (a)(1) (B)......................................... 7.07 (a)(2) ............................................ Not applicable (b) ............................................ 7.04 Section317(a)(1) ............................................ 7.02 (a)(2) ............................................ 7.02 (b) ............................................ 13.02 Section318(a) ............................................ 20.07 - ---------- NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture.
TABLE OF CONTENTS* Page ARTICLE ONE DEFINITIONS...................................................... 2 Section 1.01. Definitions.............................................. 2 ARTICLE TWO THE SECURITIES.................................................. 10 Section 2.01. Forms of Securities..................................... 10 Section 2.02. Form of Trustee's Certificate of Authentication......... 12 ARTICLE THREE ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF SECURITIES................................................ 12 Section 3.01. Title, Amount and Terms of Securities................... 12 Section 3.02. Denominations, Dates, Interest Payment and Record Dates. 14 Section 3.03. Execution of Securities................................. 15 Section 3.04. Exchange and Registration of Transfer of Securities.............................................. 15 Section 3.05. Mutilated, Destroyed, Lost or Stolen Securities......... 17 Section 3.06. Temporary Securities.................................... 18 Section 3.07. Cancellation of Securities Paid, etc.................... 19 Section 3.08. Computation of Interest................................. 19 ARTICLE FOUR REDEMPTION OF SECURITIES....................................... 19 Section 4.01. Applicability of This Article........................... 19 Section 4.02. Election to Redeem; Notice to Trustee................... 19 Section 4.03. Selection of Securities to Be Redeemed.................. 20 Section 4.04. Notice of Redemption.................................... 20 Section 4.05. Deposit of Redemption Price............................. 21 Section 4.06. Payment of Securities Called for Redemption............. 21 ARTICLE FIVE PARTICULAR COVENANTS OF THE CORPORATION........................ 22 Section 5.01. To Pay Principal and Interest........................... 22 Section 5.02. To Maintain Office or Agency............................ 22 Section 5.03. To Fill a Vacancy in the Office of Trustee.............. 23 - -------- * This table of contents shall not, for any purpose, be deemed to be a part of the Indenture.
Page Section 5.04. Appointment of Paying Agents and Exchange Agents; Money for Securities Payments to be Set Aside in Trust; Transfer of Moneys Held by Paying Agents.............. 23 Section 5.05. Maintenance of Corporate Existence, Rights and Franchise 24 Section 5.06. Certificate as to No Default............................ 24 Section 5.07. Limitation on Sale of Stock of the Bank................. 24 ARTICLE SIX SECURITYHOLDERS LISTS AND REPORTS BY THE CORPORATION AND THE TRUSTEE....................................................... 25 Section 6.01. Securityholders Lists................................... 25 Section 6.02. Preservation and Disclosure of Lists.................... 25 Section 6.03. Reports by the Corporation.............................. 27 Section 6.04. Reports by the Trustee.................................. 27 ARTICLE SEVEN EVENTS OF DEFAULT; REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS....................................................... 29 Section 7.01. Events of Default; Remedies............................. 29 Section 7.02. Payment of Securities on Default; Suit Therefor......... 31 Section 7.03. Application of Moneys Collected by Trustee.............. 33 Section 7.04. Proceedings by Securityholders.......................... 34 Section 7.05. Proceedings by Trustee.................................. 34 Section 7.06. Remedies Cumulative and Continuing...................... 35 Section 7.07. Direction of Proceedings and Waiver of Defaults by Majority of Securityholders.......................... 35 Section 7.08. Notice of Defaults...................................... 36 Section 7.09. Undertaking to Pay Costs................................ 36 ARTICLE EIGHT CONCERNING THE TRUSTEE........................................ 37 Section 8.01. Duties and Responsibilities of Trustee.................. 37 Section 8.02. Reliance on Documents, Opinions, etc.................... 38 Section 8.03. No Responsibilities for Recitals, etc................... 39 Section 8.04. Trustee, Paying Agent, Exchange Agent or Registrar May Own Securities......................................... 39 Section 8.05. Moneys to be Held in Trust.............................. 39 Section 8.06. Compensation and Expenses of Trustee.................... 39 Section 8.07. Officers' Certificate as Evidence....................... 40 Section 8.08. Conflicting Interest of Trustee......................... 40 Section 8.09. Eligibility of Trustee.................................. 40 Section 8.10. Resignation or Removal of Trustee....................... 40 Section 8.11. Acceptance by Successor Trustee......................... 41 Section 8.12. Succession by Merger, etc............................... 43 Section 8.13. Preferential Collection of Claims Against Corporation... 43 Section 8.14. Appointment of Authenticating Agent..................... 43 ii
Page ARTICLE NINE CONCERNING THE SECURITYHOLDERS................................. 45 Section 9.01. Action by Securityholders............................... 45 Section 9.02. Proof of Execution by Securityholders................... 45 Section 9.03. Who are Deemed Absolute Owners.......................... 46 Section 9.04. Corporation-Owned Securities Disregarded................ 46 Section 9.05. Revocation of Consents; Future Holders Bound............ 46 ARTICLE TEN SECURITYHOLDERS' MEETINGS....................................... 47 Section 10.01. Purposes of Meetings................................... 47 Section 10.02. Call of Meetings by Trustee............................ 47 Section 10.03. Call of Meetings by Corporation or Securityholders..... 47 Section 10.04. Qualifications for Voting.............................. 48 Section 10.05. Regulations............................................ 48 Section 10.06. Voting................................................. 48 Section 10.07. Written Consent in Lieu of Meeting..................... 49 ARTICLE ELEVEN SUPPLEMENTAL INDENTURES...................................... 49 Section 11.01. Supplemental Indentures without Consent of Securityholders...................................... 49 Section 11.02. Supplemental Indentures with Consent of Securityholders...................................... 51 Section 11.03. Compliance with Trust Indenture Act of 1939; Effect of Supplemental Indentures.............................. 52 Section 11.04. Notation on Securities................................. 52 Section 11.05. Evidence of Compliance of Supplemental Indenture to be Furnished Trustee.................................... 52 ARTICLE TWELVE CONSOLIDATION, MERGER AND SALE............................... 53 Section 12.01. Corporation May Consolidate, etc., on Certain Terms.... 53 Section 12.02. Successor Corporation to be Substituted................ 53 Section 12.03. Opinion of Counsel to be Given Trustee................. 53 ARTICLE THIRTEEN SATISFACTION AND DISCHARGE OF INDENTURE.................... 54 Section 13.01. Discharge of Indenture................................. 54 Section 13.02. Deposited Moneys to be Held in Trust by Trustee........ 55 Section 13.03. Paying Agent or Exchange Agent to Repay Moneys and Capital Securities Held.............................. 55 Section 13.04. Return of Unclaimed Moneys............................. 55 ARTICLE FOURTEEN IMMUNITY OF INCORPORATORS; STOCKHOLDERS, OFFICERS AND DIRECTORS................................................ 55 Section 14.01. Indenture and Securities Solely Corporate Obligations.. 55 iii
Page ARTICLE FIFTEEN SINKING FUNDS............................................... 56 Section 15.01. General................................................ 56 Section 15.02. Satisfaction of Sinking Fund Payments with Securities.. 56 Section 15.03. Redemption of Securities for Sinking Fund.............. 56 ARTICLE SIXTEEN SUBORDINATION OF THE SECURITIES............................. 57 Section 16.01. Agreement that the Securities be Subordinated to the Extent Provided................................. 57 Section 16.02. Corporation Not to Make Payments with Respect to Securities in Certain Circumstances................. 57 Section 16.03. Securities Subordinated to Prior Payment of All Senior Indebtedness on Dissolution, Liquidation or Reorganization of the Corporation................... 57 Section 16.04. Post-Amendment Securities Subordinated to Prior Payment of All Additional Senior Obligations on Dissolution, Liquidation or Reorganization of the Corporation.... 58 Section 16.05. Obligation of the Corporation to Give Prompt Notice to Trustee; Trustee and Holders of Securities May Rely on Certificate of Liquidating Agent; Trustee May Require Further Evidence as to Ownership of Senior Indebtedness and Additional Senior Obligations...... 60 Section 16.06. Obligation of the Corporation Unconditional............ 61 Section 16.07. No Fiduciary Duty to Holders of Senior Indebtedness or Additional Senior Obligations....................... 61 Section 16.08. Notice to Trustee of Facts Prohibiting Payments........ 61 Section 16.09. Application by Trustee of Moneys Deposited with It..... 62 Section 16.10. Subordination Rights Not Impaired by Acts or Omissions of the Corporation or Holders of Senior Indebtedness or Additional Senior Obligations.................... 62 Section 16.11. Authorization of Trustees to Effectuate Subordination of the Securities................................... 62 Section 16.12. Right of Trustee to Hold Senior Indebtedness or Additional Senior Obligations....................... 62 Section 16.13. Article Sixteen Not to Prevent Defaults................ 63 ARTICLE SEVENTEEN EXCHANGE OF CAPITAL SECURITIES FOR SECURITIES............. 63 Section 17.01. Applicability of Article............................... 63 Section 17.02. Exchange of Capital Securities......................... 63 Section 17.03. Evidence of Exchange................................... 64 Section 17.04. Notices of Exchange.................................... 64 Section 17.05. Rights and Duties of Holders of Securities to be Exchanged for Capital Securities.................... 66 Section 17.06. Deposit of Exchange Price.............................. 67 Section 17.07. Securities Due on Exchange Date; Securities Exchanged in Part............................................. 67 Section 17.08. Form of Capital Securities Election Form............... 68 iv
Page Section 17.09. Covenants of the Corporation........................... 69 Section 17.10. Revocation of Obligation to Exchange Capital Securities for Securities...................................... 70 Section 17.11. Provision in Case of Consolidation, Merger or Transfer of Assets........................................... 71 Section 17.12. Responsibility of Trustee.............................. 71 ARTICLE EIGHTEEN DESIGNATED PROCEEDS........................................ 71 Section 18.01. Sale or Issuance of Capital Securities to Generate Designated Proceeds................................. 71 Section 18.02. Optional Redemption Using Designated Proceeds.......... 72 Section 18.03. Officers' Certificates as to Designated Proceeds....... 72 ARTICLE NINETEEN CONVERSION OF SECURITIES................................... 72 Section 19.01. General................................................ 72 Section 19.02. Right to Convert....................................... 72 Section 19.03. Manner of Exercise of Conversion Privilege; Delivery of Common Stock; No Adjustment for Interest or Dividends........................................... 73 Section 19.04. Cash Payments in Lieu of Fractional Shares............. 74 Section 19.05. Conversion Price Adjustments; Effect of Reclassifications, Mergers, Consolidations and Sales of Assets........................................... 74 Section 19.06. Taxes on Shares Issued................................. 78 Section 19.07. Shares to be Fully Paid; Compliance with Governmental Requirements; Listing of Common Stock............... 78 Section 19.08. Responsibility of Trustee.............................. 79 Section 19.09. Covenant to Reserve Shares............................. 79 Section 19.10. Other Conversions...................................... 79 ARTICLE TWENTY MISCELLANEOUS PROVISIONS..................................... 79 Section 20.01. Provisions Binding on Corporation's Successors......... 79 Section 20.02. Official Acts by Successor Corporation................. 79 Section 20.03. Addresses for Notices, etc............................. 80 Section 20.04. New York Contract...................................... 80 Section 20.05. Evidence of Compliance with Conditions Precedent....... 80 Section 20.06. Legal Holidays......................................... 80 Section 20.07. Trust Indenture Act to Control......................... 80 Section 20.08. Table of Contents, Headings, etc....................... 81 Section 20.09. Execution in Counterparts.............................. 81 Section 20.10. Securities Denominated in Foreign Currencies........... 81 v
THIS INDENTURE, dated as of April 1, 1987, and amended and restated as of December 15, 1992, between CHEMICAL BANKING CORPORATION, a corporation duly organized and existing under the laws of the State of Delaware (hereinafter sometimes called the "Corporation"), and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, a corporation duly organized and existing under the laws of the State of New York, as Trustee hereunder (hereinafter sometimes called the "Trustee"), WITNESSETH: WHEREAS, the Corporation has duly authorized the issue of its Securities from time to time in separate series and, to provide the terms and conditions upon which the Securities are to be authenticated, issued and delivered, the Corporation entered into the Indenture dated as of April 1, 1987 between the Corporation and the Trustee (the "Original Indenture"); WHEREAS, the Original Indenture was amended by the First Supplemental Indenture dated as of October 27, 1988 (the "First Supplemental Indenture"); WHEREAS, the Original Indenture, as amended by the First Supplemental Indenture, is hereby amended and restated (A) to reflect the First Supplemental Indenture and (B) to (i) enable the Post-Amendment Securities issued hereunder to qualify as Tier II capital under the applicable regulations and classifications issued by the Primary Federal Regulator of the Corporation, (ii) reflect certain amendments to the Trust Indenture Act of 1939 enacted by the Trust Indenture Reform Act of 1990, (iii) provide that Securities of a series that so permits may be converted into shares of Common Stock or other securities of the Corporation in accordance with the terms of such series and (iv) provide that Securities may be issued in the form of Global Securities; and WHEREAS, all acts and things necessary to constitute this Indenture a valid agreement according to its terms have been done and performed, and the execution and delivery of this Indenture have in all respects been duly authorized, and the Corporation proposes to do all acts and things necessary to make the Securities, when executed by the Corporation and authenticated and delivered by the Trustee, as in this Indenture provided, and issued, the valid, binding and legal obligations of the Corporation; NOW, THEREFORE, THIS INDENTURE WITNESSETH: That in order to declare the terms and conditions upon which the Securities are, and are to be, authenticated, issued and delivered, and in consideration of the premises and of the purchase and acceptance of the Securities by the holders thereof, the Corporation covenants and agrees with the Trustee for the equal and proportionate benefit, except as otherwise expressly provided in this Indenture, of the respective holders from time to time of the Securities as follows:
2 ARTICLE ONE. DEFINITIONS. Section 1.01. Definitions. The terms defined in this Section 1.01 (except as herein otherwise expressly provided or unless the context otherwise requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section 1.01. All other terms used in this Indenture which are defined in the Trust Indenture Act of 1939 or which are by reference therein defined in the Securities Act of 1933, as amended (except as herein otherwise expressly provided or unless the context otherwise requires), shall have the meanings assigned to such terms in said Trust Indenture Act and in said Securities Act as in force at the date of this Indenture as originally executed. Additional Senior Obligations: The term "Additional Senior Obligations" shall mean, whether outstanding on the date of execution of this Indenture or thereafter created, assumed or incurred, all indebtedness of the Corporation for claims in respect to derivative products such as interest and foreign exchange rate contracts, commodity contracts and similar arrangements, provided, however, that Additional Senior Obligations shall not include claims in respect of Senior Indebtedness or obligations which, by their terms, are expressly stated (x) to be not superior in right of payment to the Post-Amendment Securities or (y) to rank pari passu in right of payment with the Post-Amendment Securities. For purposes of this definition, "claim" shall have the meaning assigned thereto in Section 101(4) of the Bankruptcy Code of 1978, as amended and in effect on the date of execution of this Indenture. Assets: The term "Assets" shall have the meaning set forth in Section 19.05(a)(iii). Authenticating Agent: The term "Authenticating Agent" shall mean, with respect to the Securities of any series, any Person or Persons authorized by the Trustee to act on behalf of the Trustee to authenticate Securities of such series. Authorized Newspaper: The term "Authorized Newspaper" shall mean a newspaper of general circulation in The City of New York, printed in the English language and customarily published on each Business Day therein. Bank: The term "Bank" shall mean Chemical Bank, a banking corporation duly organized and existing under the laws of the State of New York, and any successor thereto.
3 Board of Directors: The term "Board of Directors" shall mean the Board of Directors of the Corporation or any duly authorized committee of such Board of Directors or any directors and officers of the Corporation to whom such Board of Directors or such committee shall have duly delegated its authority to act hereunder. Board Resolution: The term "Board Resolution" shall mean a resolution of the Board of Directors, a copy of which has been certified by the Secretary or an Assistant Secretary of the Corporation to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. Business Day: The term "business day" shall mean any day which is not a Saturday or Sunday or a day on which banking institutions generally in The City of New York are authorized or required by law or executive order to be closed. Capital Securities: The term "Capital Securities" shall mean any securities issued by the Corporation which consist of any one of the following: (i) Common Stock, (ii) Perpetual Preferred Stock, or (iii)other securities of the Corporation; provided that, in the case of securities referred to under (iii), the Corporation's Primary Federal Regulator permits the exchange of such securities in payment for, or the proceeds from the sale of such securities to be applied to the retirement of, obligations such as Securities of any series exchangeable for Capital Securities. Capital Securities may have such terms, rights and preferences as may be determined by the Corporation. Capital Securities Election Form: The term "Capital Securities Election Form" shall mean a form substantially in the form included in Section 17.08. Cash Election Holders: The term "Cash Election Holders" shall mean, with respect to any series of Securities, holders who have elected or are deemed to have elected, in accordance with the provisions of Article Seventeen, to receive on any Exchange Date with respect to such series of Securities cash in payment of such holder's Securities from amounts representing Designated Proceeds or from the proceeds of a Secondary Offering instead of Capital Securities. Common Stock: The term "Common Stock" shall mean any stock of any class of the Corporation which has no preference in respect of dividends or of amounts payable in the event of any voluntary or
4 involuntary liquidation, dissolution or winding up of the Corporation and which is not subject to redemption by the Corporation and includes the common stock, $1 par value per share, of the Corporation as the same exists at the date of this Indenture or as such stock may be constituted from time to time. Conversion Price: The term "Conversion Price" shall mean, with respect to any series of Securities which are convertible into Common Stock, the price per share of Common Stock at which the Securities of such series are so convertible as set forth in the Board Resolution with respect to such series (or in any supplemental indenture entered into pursuant to Section 11.01(h) with respect to such series), as the same may be adjusted from time to time in accordance with Section 19.05 (or such supplemental indenture pursuant to Section 19.01). Corporation: The term "Corporation" shall mean Chemical Banking Corporation, a Delaware corporation, and subject to the provisions of Article Twelve shall include its successors and assigns. Default: The term "Default" shall have the meaning set forth in Section 7.02. Depositary: The term "Depositary" shall mean, with respect to the Securities of any series issuable in the form of one or more Global Securities, the Person (which shall be a clearing agency registered under the Securities Exchange Act of 1934, as amended) designated by the Corporation as Depositary with respect to the Securities of that series pursuant to Section 3.01, until a successor Depositary shall have become such pursuant to the applicable provisions of this Indenture, and thereafter the term "Depositary" shall mean or include each Person who is then a Depositary hereunder with respect to the Securities of that series. Designated Proceeds: The term "Designated Proceeds" shall mean, with respect to Securities of a series, subject to the proviso below, such amounts, if any, as the Corporation, at its option, has, in accordance with and within the meaning of applicable regulations or other criteria of the Corporation's Primary Federal Regulator, dedicated to the retirement or redemption of the Securities of such series and which represent only (i) the net proceeds from the sale of Capital Securities for cash, (ii) funds equal to the market value (as determined by the Corporation) of Capital Securities sold in exchange for other property or issued to finance acquisitions, including acquisitions of business entities, less the expenses incurred to effect such exchange or issuance, and (iii) other funds which the regulations or other criteria of the Corporation's Primary Federal Regulator then permit to be used for the retirement or redemption of the Securities of such series; provided,
5 however, that (x) in the case of funds referred to in clauses (i) and (ii), the Corporation has denominated such proceeds or funds as Designated Proceeds on its books and records in the manner required by its Primary Federal Regulator and (y) there shall be deducted from Designated Proceeds an amount equal to any Designated Proceeds used to repay or redeem a series of Securities. Discounted Security: The term "Discounted Security" shall mean any Security which provides for an amount (excluding any amounts attributable to accrued but unpaid interest thereon) less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof pursuant to Section 7.01. Event of Default: The term "Event of Default" shall mean, when used with respect to the Securities of any series, any event specified in Section 7.01, continued for the period of time, if any, and after the giving of the notice, if any, therein designated. Excess Proceeds: The term "Excess Proceeds" shall have the meaning set forth in the second paragraph of Section 16.04. Exchange Agent: The term "Exchange Agent", when used with respect to the Securities of any series, shall mean the Person or Persons appointed by the Corporation to give notices and to exchange Securities of such series for Capital Securities as specified in Article Seventeen. Exchange Date: The term "Exchange Date", when used with respect to the Securities of any series, shall mean any date on which such Securities are to be exchanged for Capital Securities pursuant to Article Seventeen. Exchange Price: The term "Exchange Price", when used with respect to any Security of any series to be exchanged for Capital Securities, shall mean the amount of Capital Securities for which such Security is to be exchanged pursuant to the terms thereof and this Indenture or the aggregate sale price of such Capital Securities in the Secondary Offering for the account of the holder of such Security, as the case may be. Federal Bankruptcy Act: The term "Federal Bankruptcy Act" shall mean Title 11 of the United States Code.
6 Global Security or Global Securities: The term "Global Security" or "Global Securities" shall mean a Security or Securities evidencing all or part of a series of Securities which is issued to the Depositary or its nominee for such series and is registered in the name of the Depositary or its nominee. Indenture: The term "Indenture" shall mean this instrument as amended and restated as of the date hereof, and if further amended or supplemented as herein provided, as so further amended or supplemented, and shall include the form and terms of each particular series of Securities established in accordance with Section 3.01. Market Value: The term "Market Value" shall mean, with respect to any Capital Securities issued on any Exchange Date in exchange for Securities of any series, if there is a Secondary Offering, the sales price of such Capital Securities as are sold in the Secondary Offering, which price may be determined up to ten Business Days, and not less than 3 Business Days, prior to the Exchange Date. In the event no such Secondary Offering takes place, the term "Market Value" shall mean, with respect to such Capital Securities, the fair value of such Capital Securities on the relevant Exchange Date as determined by three independent nationally recognized investment banking firms selected by the Corporation. NASDAQ: The term "NASDAQ" shall have the meaning set forth in Section 19.05(a)(v). Officers' Certificate: The term "Officers' Certificate", when used with respect to the Corporation, shall mean a certificate signed by the Chairman of the Board, the President, a Vice Chairman of the Board, the Chief Financial Officer or the Treasurer of the Corporation (or any other officer identified by any of the foregoing officers in an Officers' Certificate to be an executive officer of the Corporation) and the Secretary, an Assistant Secretary or the Controller of the Corporation. Each such certificate shall include the statements provided for in Section 20.05 if and to the extent required by the provisions of such Section. Opinion of Counsel: The term "Opinion of Counsel" shall mean an opinion in writing signed by legal counsel, who may be an employee of or of counsel to the Corporation, or who may be other counsel satisfactory to the Trustee. Each such opinion shall include the statements provided for in Section 20.05 if and to the extent required by the provisions of such Section.
7 Outstanding: The term "Outstanding", when used with reference to Securities, shall, subject to the provisions of Section 9.04, mean, as of any particular time, all Securities theretofore authenticated and delivered by the Trustee under this Indenture, except: (i) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (ii) Securities for whose payment, redemption or exchange money or Capital Securities, as the case may be, in the necessary amounts shall have been deposited in trust with the Trustee or with any paying agent or Exchange Agent (other than the Corporation) or shall have been set aside and segregated in trust by the Corporation (if the Corporation shall act as its own paying agent or Exchange Agent) for holders of such Securities; provided that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made and provided further, that if such Securities are being exchanged for Capital Securities, the Exchange Date has occurred; (iii) Securities held by the Exchange Agent after exchange for Capital Securities pursuant to Article Seventeen or Securities converted into shares of Common Stock, securities or other property pursuant to Article Nineteen; and (iv) Securities in lieu of or in substitution for which other Securities shall have been authenticated and delivered pursuant to the terms of Section 3.05, or which shall have been paid pursuant thereto, unless proof satisfactory to the Trustee is presented that any such Securities are held by any person in whose hands any such Securities are legal, valid and binding obligations of the Corporation. In determining whether the holders of the requisite principal amount of outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, the principal amount of a Discounted Security shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the maturity thereof pursuant to Section 7.01. Perpetual Preferred Stock: The term "Perpetual Preferred Stock" shall mean any stock of any class or series of the Corporation which has a preference over Common Stock in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation and which is not mandatorily redeemable or repayable by the Corporation, or redeemable or repayable at the option of the holder of such stock, otherwise than in shares of Common Stock or Perpetual Preferred Stock of another class or series or with the proceeds of the sale of Common Stock or Perpetual Preferred Stock.
8 Person: The term "Person" shall mean any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. Post-Amendment Securities: The term "Post-Amendment Securities" shall mean any Securities originally issued under this Indenture on or after December 15, 1992. Pre-Amendment Securities: The term "Pre-Amendment Securities" shall mean any Securities originally issued under this Indenture prior to December 15, 1992. Primary Federal Regulator: The term "Primary Federal Regulator" shall mean the Corporation's primary federal banking regulator (which at the date of this Indenture is the Board of Governors of the Federal Reserve System), or any successor body or institution performing substantially the same regulatory function with respect to the Corporation and the adequacy of its capital as said Board of Governors performs on the date hereof. Principal Office of the Trustee: The term "principal office of the Trustee" or any other similar term shall mean the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of the execution of this Indenture is located at 60 Wall Street, New York, NY 10260. Responsible Officer: The term "Responsible Officer", when used with respect to the Trustee, shall mean any officer of the Trustee assigned by the Trustee to administer its corporate trust matters. Secondary Offering: The term "Secondary Offering", when used with respect to the Securities of any series, shall mean the offering and sale by the Corporation of Capital Securities for the account of holders of Securities of such series who elect to receive cash and not Capital Securities on any Exchange Date.
9 Security or Securities: The term "Security" or "Securities" shall mean any unsecured subordinated debt security or unsecured subordinated debt securities (including any Global Security or Global Securities), as the case may be, authenticated and delivered under this Indenture. Securityholder: The term "Securityholder" or "holder of Securities", or other similar terms, shall mean any Person in whose name at the time a particular Security is registered on the books of the Corporation kept for that purpose in accordance with the terms hereof. Senior Indebtedness: The term "Senior Indebtedness" shall mean the principal of and premium, if any, and interest on (i) all indebtedness of the Corporation for money borrowed, whether outstanding on the date of execution of this Indenture or thereafter created, assumed or incurred, except (x) Securities (whether outstanding on December 15, 1992 or thereafter issued under this Indenture), (y) the Corporation's 10-1/2% Subordinated Capital Notes Due 2000, the Corporation's 9-3/4% Subordinated Capital Notes due 1999, the Corporation's Floating Rate Subordinated Capital Notes due 1997, the Corporation's Floating Rate Subordinated Capital Notes Due 1999, the Corporation's Floating Rate Subordinated Notes due 1996, the Corporation's 8-1/2% Subordinated Notes Due 2002, the Corporation's 8-5/8% Subordinated Debentures due 2002, the Corporation's 8-1/8% Subordinated Notes Due 2002, the Corporation's 10-3/8% Subordinated Notes Due 1999, the Corporation's Floating Rate Subordinated Notes Due 1998, the Corporation's Floating Rate Subordinated Notes Due 1997, the Corporation's Floating Rate Subordinated Capital Notes Due 1998, the Corporation's 8.50% Subordinated Capital Notes Due 1999, the Corporation's Floating Rate Subordinated Notes Due 1996, the Corporation's Guaranteed Floating Rate Subordinated Notes Due 1996, each of which ranks pari passu in right of payment with the Securities, subject to the subordination provisions set forth in Article Sixteen, and (z) such other indebtedness of the Corporation as is by its terms expressly stated to be not superior in right of payment to the Securities or to rank pari passu in right of payment with the Securities, and (ii) any deferrals, renewals or extensions of any such Senior Indebtedness. The term "indebtedness of the Corporation for money borrowed" means any obligation of, or any obligation guaranteed by, the Corporation for the repayment of money borrowed, whether or not evidenced by bonds, debentures, notes or other written instruments, and any deferred obligation for payment of the purchase price of property or assets. Series: The term "series" when used with respect to the Securities shall mean all Securities bearing the same title established pursuant to Section 3.01.
10 Time of Determination: The term "Time of Determination" shall have the meaning set forth in Section 19.05(a)(v). Trading Day: The term "Trading Day" shall have the meaning set forth in Section 19.05(a)(v). Trustee: The term "Trustee" shall mean Morgan Guaranty Trust Company of New York until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Trustee which is then a Trustee hereunder, and if at any time there is more than one such Trustee, "Trustee" as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series. Trust Indenture Act of 1939: The term "Trust Indenture Act of 1939" shall mean the Trust Indenture Act of 1939, as amended, as it was in force on the date of this Indenture, except as provided in Section 11.03. Yield to Maturity: The term "Yield to Maturity", when used with respect to any Discounted Security, shall mean the yield to maturity, if any, set forth on the face of such Security. ARTICLE TWO THE SECURITIES. Section 2.01. Forms of Securities. The Securities shall be in such form or forms (including global form) as shall be established by or pursuant to a Board Resolution, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture or any indenture supplemental hereto and may have such letters, numbers or other marks of identification and such legends or endorsements imprinted thereon as the officers executing the same may approve (execution thereof to be conclusive evidence of such approval). Prior to the first delivery of Securities of any series in any such form to the Trustee for authentication, the Corporation shall deliver to the Trustee the following: (1) The Board Resolution or Board Resolutions by or pursuant to which the form or forms of such Securities have been approved and the Board Resolution or Board Resolutions establishing the terms of such Securities or authorizing officers or directors of the Corporation to establish such terms;
11 (2) An Officers' Certificate delivered to the Trustee, stating that all conditions precedent provided for in this Indenture relating to the authentication and delivery of Securities in such form have been complied with; and (3) An Opinion of Counsel stating that the form or forms of such Securities have been approved by or pursuant to a Board Resolution or Board Resolutions in conformity with the provisions of the Indenture; that a Board Resolution or Board Resolutions establishing the terms of such Securities or authorizing officers or directors of the Corporation to establish such terms have been duly adopted by the Board of Directors; and that when the terms, if any, of such Securities not established by such Board Resolution or Board Resolutions have been established in accordance with the authority conferred thereby and Securities in such approved form or forms have been completed by appropriate insertions and executed and delivered by the Corporation to the Trustee for authentication in accordance with this Indenture, authenticated and delivered by the Trustee in accordance with this Indenture within the authorization as to aggregate principal amount established from time to time by the Board of Directors and sold in the manner specified in such Opinion of Counsel, such Securities will be legal, valid and binding obligations of the Corporation entitled to the benefits of this Indenture, subject to applicable bankruptcy, reorganization, insolvency and other similar laws generally affecting creditors' rights, to general equitable principles and to such other qualifications as such counsel shall conclude do not materially affect the rights of holders of such Securities. After any such first delivery, any separate request by the Corporation that the Trustee authenticate Securities of such series for original issue will be deemed to be a certification by the Corporation that all conditions precedent provided for in this Indenture relating to the authentication and delivery of such Securities continue to be complied with. The Trustee shall have the right to decline to authenticate and deliver any Securities under this Section 2.01 if the Trustee, being advised by counsel, determines that such action may not lawfully be taken or if the Trustee in good faith by its board of directors or trustees, executive committee, or a trust committee of directors or Responsible Officers shall determine that such action would expose the Trustee to personal liability to existing Securityholders. The definitive Securities shall be printed, lithographed or engraved or produced by any combination of these methods on steel engraved borders or may be produced in any other manner, all as determined by the officers executing the same (execution thereof to be conclusive evidence of such approval). Any Global Security issued hereunder shall bear a legend substantially to the following effect: "UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH
12 NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY," or to such effect as shall be required by the Depositary. Section 2.02. Form of Trustee's Certificate of Authentication. The Trustee's certificate of authentication shall be in substantially the following form: This is one of the Securities issued under the Indenture described herein. MORGAN GUARANTY TRUST COMPANY OF NEW YORK, AS TRUSTEE BY_____________________________ AUTHORIZED OFFICER ARTICLE THREE ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF SECURITIES. Section 3.01. Title, Amount and Terms of Securities. The aggregate principal amount of Securities which may be authenticated and delivered and outstanding under this Indenture is not limited. The Securities may be issued in an aggregate principal amount up to the aggregate principal amount of Securities from time to time authorized by or pursuant to Board Resolutions. The Securities may be issued in one or more series, each of which shall be issued by or pursuant to a Board Resolution. With respect to any particular series of Securities, there shall be established by or pursuant to a Board Resolution and set forth (or the manner of determination set forth) in an Officers' Certificate: (1) the title of the Securities of that series (which shall distinguish the Securities of that series from Securities of all other series); (2) any limit upon the aggregate principal amount of the Securities of that series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of that series pursuant to Section 3.04, 3.05, 3.06, 4.06, 11.04, 17.07 or 19.03); (3) the date or dates on which the principal of the Securities of that series is payable; (4) the rate or rates, or the method to be used in ascertaining the rate or rates, at which the Securities of that series shall bear interest (if any), the date or dates from which such interest shall accrue, the interest payment dates on which such interest shall be payable and the record date for the interest payable on any interest payment date;
13 (5) the place or places where the principal of (and premium, if any) and interest, if any, on Securities of that series shall be payable; (6) if applicable, the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of that series may be redeemed, in whole or in part, at the option of the Corporation; (7) the obligation, if any, of the Corporation to redeem or purchase Securities of that series pursuant to any sinking fund or analogous provisions or at the option of a holder thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of that series shall be redeemed or purchased, in whole or in part, pursuant to such obligation; (8) if other than denominations of $1,000 and any integral multiple thereof, the denominations in which Securities of that series shall be issuable; (9) if other than the principal amount thereof, the portion of the principal amount of Securities of that series which shall be payable upon a declaration of acceleration of the maturity thereof pursuant to Section 7.01; (10) if applicable, the place or places at which, the period or periods within which, the price or prices at which and the terms and conditions, if any, upon which Securities of that series shall be exchangeable for Capital Securities of the Corporation, which terms and conditions shall not be inconsistent with Article Seventeen; (11) if other than such coin or currency of the United States of America as at the time of payment is legal tender for payment of public or private debts, the coin or currency (which may be a composite currency) in which payment of the principal of (and premium, if any) and interest, if any, on the Securities of that series shall be payable; (12) if the principal of (and premium, if any) or interest, if any, on the Securities of that series are to be payable, at the election of the Corporation or a holder thereof, in a coin or currency (including a composite currency) other than that in which the Securities would be payable but for such election, the period or periods within which, and the terms and conditions upon which, such election may be made; (13) if the amounts of principal (and premium, if any) or interest, if any, payable with respect to the Securities of the series are to be determined with reference to an index based on any currency (including a composite currency) the manner in which such amounts shall be determined; (14) if the Securities of that series are convertible into or exchangeable for other securities of the Corporation, the terms upon which the Securities of that series shall be convertible into or exchangeable for such other securities;
14 (15) if the Securities of that series are convertible into Common Stock, the Conversion Price therefor, the period during which such Securities are convertible and any terms and conditions for the conversion of such Securities which differ from Article Nineteen; (16) whether the Securities of that series shall be issued in whole or in part in the form of one or more Global Securities and, in such case, the Depositary for such Global Security or Global Securities, and the terms and conditions, if any, upon which such Global Security or Global Securities may be exchanged in whole or in part for other individual Securities; and (17) any other terms of that series (which terms shall not be inconsistent with the provisions of this Indenture). The Pre-Amendment Securities shall be subordinate and junior in right of payment to Senior Indebtedness and the Post-Amendment Securities shall be subordinate and junior in right of payment to Senior Indebtedness and, in certain circumstances, to Additional Senior Obligations, as provided in Article Sixteen. All Securities of any particular series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to the Board Resolution relating thereto and set forth (or the manner of determination set forth) in an Officers' Certificate. Section 3.02. Denominations, Dates, Interest Payment and Record Dates. In the absence of any provision to the contrary in the form of Security of any particular series, the Securities shall be issuable as registered Securities without coupons in the denominations of $1,000 and any multiple of $1,000. Every Security shall be dated the date of its authentication and shall bear interest, if any, from the date specified in or pursuant to the Board Resolution authorizing the issuance thereof. The Person in whose name any Security is registered at the close of business on any record date (as hereinafter in this Section 3.02 defined) with respect to any interest payment date shall be entitled to receive the interest payable on such interest payment date notwithstanding the cancellation of such Security upon any registration of transfer or exchange subsequent to the record date and prior to such interest payment date; provided, however, that if and to the extent the Corporation shall default in the payment of the interest due on such interest payment date, such defaulted interest shall be paid to the Persons in whose names outstanding Securities are registered at the close of business on a subsequent record date established by notice given by mail by or on behalf of the Corporation to the holders of Securities not less than 15 days preceding such subsequent record date, such record date to be not less than five days preceding the date of payment of such defaulted interest. As used in this Section 3.02, the term "record date" for the interest payable on any Security on any interest payment date (except a date for payment of defaulted interest) shall mean the date, if any, specified in such Security as the "record date" for the interest payable on such Security on any interest payment date for such Security (except a date for payment of defaulted interest on such Security).
15 Except as otherwise specified as contemplated in Section 3.01 for Securities of any series, if any Security of any series is exchanged for Capital Securities after any record date and on or prior to the next succeeding interest payment date for such series (other than any Security whose maturity is prior to such interest payment date), interest due on such interest payment date shall be paid by the Corporation on such interest payment date notwithstanding such exchange, and such interest (whether or not punctually paid or duly provided for) shall be paid to the Person in whose name the Security is registered at the close of business on such record date. Section 3.03. Execution of Securities. The Securities shall be signed in facsimile in the name and on behalf of the Corporation by the Chairman of the Board, the President, a Vice Chairman of the Board or the Chief Financial Officer (or any other officer certified by any of the foregoing officers in an Officers' Certificate to be an executive officer of the Corporation), under its corporate seal (which may be printed, engraved or otherwise reproduced thereon, by facsimile or otherwise), attested by its Secretary or an Assistant Secretary. Only such Securities as shall bear thereon a certificate of authentication substantially in the form set forth in Section 2.02, executed by the Trustee, or Section 8.14, executed by the Authenticating Agent, if any, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. Such certificate by the Trustee upon any Security executed by the Corporation shall be conclusive evidence that the Security so authenticated has been duly authenticated and delivered hereunder and that the holder is entitled to the benefits of this Indenture. In case any officer of the Corporation who shall have signed any of the Securities shall cease to be such officer before the Securities so signed shall have been authenticated and delivered by the Trustee, or disposed of by the Corporation, such Securities nevertheless may be authenticated and delivered or disposed of as though the Person who signed such Securities had not ceased to be such officer of the Corporation; and any Security may be signed on behalf of the Corporation by such Persons as, at the actual date of the execution of such Security, shall be the proper officers of the Corporation, although at the date of the execution of this Indenture any such Person was not such an officer. Section 3.04. Exchange and Registration of Transfer of Securities. Securities of any series (except for Global Securities) may be exchanged for an equal aggregate principal amount of Securities of other authorized denominations of the same series of like tenor. Securities to be exchanged shall be surrendered at the office or agency to maintained by the Corporation for such purpose in the Borough of Manhattan, The City of New York, as provided in Section 5.02, and the Corporation shall execute and register and the Trustee shall authenticate and deliver in exchange therefor the Security or Securities which the Securityholder making the exchange shall be entitled to receive. The Corporation shall keep, at said office or agency, a register in which, subject to such reasonable regulations as it may prescribe, the Corporation shall provide for registration of Securities and registration of transfers of Securities as in this Article Three provided. Such register shall be in written form or in any other form capable of being converted into written form within a reasonable time. At all reasonable times such register shall be open for inspection by the Trustee and the Corporation. The Bank is hereby appointed Security registrar for the purpose of registering Securities and registering the transfers of Securities as herein provided.
16 Upon due presentment for registration of transfer of any Security of a particular series at such office or agency and compliance in full with the conditions of this Section 3.04, the Corporation shall execute and register and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Security or Securities of the same series for an equal aggregate principal amount. All Securities issued upon any registration of transfer or exchange of Securities shall be the legal, valid and binding obligations of the Corporation, evidencing the same debt and entitled to the same benefits under this Indenture as the Securities surrendered upon such registration of transfer or exchange. During the period of 15 days preceding any date for payment of principal of or interest on Securities of a series, the Corporation shall not be required to register the transfer of or to exchange any Securities of such series. In addition, the Corporation shall not be required (i) to register the transfer of or to exchange any Securities of a series for a period of 15 days immediately preceding any date fixed for any selection of Securities of such series to be redeemed or to be exchanged for Capital Securities, and (ii) to register the transfer of or to exchange any Securities of a series, or portion thereof, selected for redemption or for exchange for Capital Securities, except the unredeemed or unexchanged portion of any Security being redeemed or exchanged in part. All Securities presented for registration of transfer or for exchange or payment shall (if so required by the Corporation or the Security registrar) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Corporation and the Security registrar duly executed by, the holder or his attorney duly authorized in writing. No service charge shall be made for any exchange or registration of transfer of Securities, but the Corporation or the Security registrar may (except as otherwise provided in Sections 3.06, 4.06, 11.04 and 17.07) required payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. Notwithstanding any other provision of this Section 3.04, unless and until it is exchanged in whole or in part for Securities in definitive form, a Global Security representing all or a portion of the Securities of a series may not be transferred except as a whole by the Depositary for such series to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor Depositary for such series or a nominee of such successor Depositary. Unless otherwise provided as contemplated by Section 3.01 with respect to any series of Securities evidenced in whole or in part by a Global Security, the Depositary may not sell, assign, transfer or otherwise convey any beneficial interest in a Global Security evidencing all or part of the Securities of such series unless such beneficial interest is in an amount equal to an authorized denomination for Securities of such series. If at any time the Depositary for the Securities of a series notifies the Corporation that it is unwilling or unable to continue as a Depositary for the Securities of such series or if at any time the Depositary for Securities of a series shall no longer be registered or in good standing
17 under the Securities Exchange Act of 1934, as amended, or other applicable statute or regulation, the Corporation shall appoint a successor Depositary with respect to the Securities of such series. If a successor Depositary for the Securities of such series is not appointed by the Corporation within 90 days after the Corporation receives such notice or becomes aware of such condition, the Corporation will execute, and the Trustee, upon the written request or authorization of any officer of the Corporation, will authenticate and deliver Securities of such series in definitive form in an aggregate principal amount equal to the principal amount of the Global Security or Global Securities representing Securities of such series in exchange for such Global Security or Global Securities. In the event that (i) the Corporation at any time and in its sole discretion determines that the Securities of any series issued in the form of one or more Global Securities shall no longer be represented by such Global Security or Global Securities or (ii) there shall have occurred and be continuing an Event of Default or an event which, with the giving of notice or lapse of time or both, would constitute an Event of Default with respect to the Securities of any series, the Corporation will execute, and the Trustee, upon the written request or authorization of any officer of the Corporation, will authenticate and deliver Securities of such series in definitive form and in an aggregate principal amount equal to the principal amount of the Global Security or Global Securities representing such series in exchange for such Global Security or Global Securities. If so established pursuant to Section 3.01 with respect to Securities of any series, the Depositary for such series of Securities may surrender a Global Security for such series of Securities in exchange, in whole or in part, for Securities of such series in definitive form on such terms as are acceptable to the Corporation and such Depositary. Thereupon, the Corporation shall execute and the Trustee shall authenticate and deliver, without charge, (i) to each Person specified by the Depositary, a new Security or Securities of the same series in definitive form in an aggregate principal amount equal to and in exchange for such Person's beneficial interest in the surrendered Global Security; and (ii) to the Depositary, a new Global Security in a denomination equal to the difference, if any, between the principal amount of the surrendered Global Security and the aggregate principal amount of Securities of such series delivered in definitive form to Securityholders pursuant to clause (i) above. Upon the exchange of a Global Security or Global Securities for Securities of such series in definitive form, such Global Security shall be cancelled by the Trustee. Securities issued in definitive form in exchange for a Global Security pursuant to this Section 3.04 shall be registered in such names and in such authorized denominations as the Depositary for such Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Securities in definitive form to the Person in whose name such Securities are so registered. Section 3.05. Mutilated, Destroyed, Lost or Stolen Securities. If any mutilated Security is surrendered to the Trustee, the Corporation shall execute and the Trustee shall authenticate and
18 deliver in exchange therefor a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding. If there shall be delivered to the Corporation, to the Security registrar and to the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and of the ownership thereof and (ii) such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Corporation, the Security registrar or the Trustee that such Security has been acquired by a bona fide purchaser, the Corporation shall execute and upon its request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding. The Trustee may authenticate any substitute Security and deliver the same upon the written request or authorization of any officer of the Corporation. Upon the issuance of any substituted Security, the Corporation may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses, including counsel fees of the Corporation, the Trustee and paying agent or Security registrar connected therewith. In case any Security which has matured or is about to mature shall become mutilated or be destroyed, lost or stolen, the Corporation may, instead of issuing a substitute Security, pay or authorize the payment of the same or exchange or authorize the exchange of same (without surrender thereof except in the case of a mutilated Security) if the applicant shall furnish to the Corporation, to the Security registrar and to the Trustee such security or indemnity as may be required by them to save each of them harmless and, in the case of destruction, loss or theft, evidence satisfactory to the Corporation, the Security registrar and the Trustee of the destruction, loss or theft of such Security and of the ownership thereof. Every substituted Security issued pursuant to the provisions of this Section 3.05 by virtue of the fact that any Security is destroyed, lost or stolen shall constitute an original additional contractual obligation of the Corporation, whether or not the destroyed, lost or stolen Security shall be found at any time, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. All Securities shall be held and owned upon the express condition that the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities and shall preclude to the extent permitted by law any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. Section 3.06. Temporary Securities. Pending the preparation of definitive Securities of any series, the Corporation may execute and the Trustee shall authenticate and deliver temporary Securities (printed or lithographed) of such series. Temporary Securities of any series shall be issuable in any authorized denomination, and substantially in the form of the definitive Securities of such series but with such omissions, insertions and variations as may be appropriate for temporary Securities of such series, all as the officers of the Corporation executing such Securities may determine, as evidenced by their execution of such Securities. Every such temporary Security shall be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with the same effect, as the definitive Securities of such
19 series of like tenor. Without unreasonable delay the Corporation will execute and deliver to the Trustee definitive Securities of such series and thereupon any or all temporary Securities of such series may be surrendered in exchange therefor, at the principal office of the Trustee, and the Trustee shall authenticate and deliver in exchange for such temporary Securities an equal aggregate principal amount of definitive Securities of such series. Such exchange shall be made by the Corporation at its own expense. Until so exchanged, the temporary Securities of any series shall in all respects be entitled to the same benefits under, and be subject to the terms and conditions of, this Indenture as definitive Securities of the same series authenticated and delivered hereunder. Section 3.07. Cancellation of Securities Paid, etc. All Securities surrendered for the purpose of payment, exchange, conversion or registration of transfer shall, if surrendered to the Corporation, any paying agent, any Security registrar or any Exchange Agent, be delivered to the Trustee for cancellation and, if not already cancelled, promptly cancelled by it, or, if surrendered to the Trustee, shall, if not already cancelled, be promptly cancelled by it, and no Securities shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. The Trustee shall destroy cancelled Securities and deliver a certificate of such destruction to the Corporation. If the Corporation shall acquire any of the Securities, however, such acquisition shall not operate as a satisfaction of the indebtedness represented by such Securities unless and until the same are surrendered to the Trustee for cancellation. Section 3.08. Computation of Interest. Except as otherwise established pursuant to Section 3.01 for Securities of any series, interest on the Securities of each series shall be computed on the basis of a year of twelve 30-day months. ARTICLE FOUR REDEMPTION OF SECURITIES. Section 4.01. Applicability of This Article. Redemption of Securities (whether by operation of a sinking fund or otherwise) as permitted or required by the terms of any form of Security issued pursuant to this Indenture shall be made in accordance with such terms and this Article; provided, however, that if any provisions of any such form of Security shall conflict with any provision of this Article, the provision of such form of Security shall govern. Except as otherwise set forth in the form of Security for such series, each Security shall be subject to partial redemption only in the amount of $1,000 or integral multiples of $1,000. This Article shall not be applicable to exchanges of Securities for Capital Securities or any Secondary Offering relating thereto. Section 4.02. Election to Redeem; Notice to Trustee. The election of the Corporation to redeem any Securities shall be made in accordance with the terms of the form of Security for such series. In case of any redemption at the election of the Corporation of less than all of the Securities of any particular series, the Corporation shall, at least 60 days prior to the date fixed for redemption (unless a shorter notice shall be satisfactory to the Trustee) notify the Trustee of such date and of the principal amount of Securities of that series to be redeemed.
20 Section 4.03. Selection of Securities to Be Redeemed. If less than all the Securities of a particular series are to be redeemed, the Trustee, not more than 60 days prior to the date fixed for redemption, shall select, in such manner as in its sole discretion it shall deem appropriate and fair, the Securities or portions thereof (in multiples of $1,000, except as set forth in the applicable form of Security) of such series to be redeemed. The Trustee shall promptly notify the Corporation in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed. Section 4.04. Notice of Redemption. Notice of redemption shall be given by first-class mail, postage prepaid, mailed not later than the thirtieth day, and not earlier than the sixtieth day, prior to the date fixed for redemption, to each holder of Securities to be redeemed, at his address as it appears on the registry books of the Corporation. With respect to Securities of each series to be redeemed, each notice of redemption shall state: (1) the date fixed for redemption for Securities of such series; (2) the redemption price at which Securities of such series are to be redeemed and the amount of interest payable thereon, if any; (3) if less than all outstanding Securities of such particular series are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the particular Securities to be redeemed; (4) that on the date fixed for redemption, the redemption price at which such Securities are to be redeemed and any accrued interest will become due and payable upon each such Security or portion thereof, and that interest thereon, if any, shall cease to accrue on and after said date; (5) the place or places where such Securities are to be surrendered for payment of the redemption price at which such Securities are to be redeemed and any accrued interest; (6) if applicable, the Conversion Price with respect to such Securities, that a holder of the Securities to be redeemed who desires to convert such Securities must satisfy the requirements for conversion applicable to such Securities, and that the right to convert such Securities shall expire after the close of business on the date fixed for redemption; and (7) that the redemption is for a sinking fund, if such is the case.
21 Notice of redemption of Securities to be redeemed at the election of the Corporation shall be given by the Corporation or, at the Corporation's request, by the Trustee in the name and at the expense of the Corporation. The notice if mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the holder receives such notice. In any case, a failure to give such notice by mail or any defect in the notice to the holder of any Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security. Section 4.05. Deposit of Redemption Price. Prior to the redemption date specified in the notice of redemption given as provided in Section 4.04, the Corporation will deposit with the Trustee or with one or more paying agents an amount of money sufficient to redeem on the redemption date all the Securities so called for redemption at the applicable redemption price and (except if the date fixed for redemption is the date on which any regular payment of interest becomes due) to pay interest, if any, accrued to the date fixed for redemption on all the Securities which are to be redeemed on that date. Section 4.06. Payment of Securities Called for Redemption. If any notice of redemption has been given as provided in Section 4.04, the Securities or portions of Securities with respect to which such notice has been given shall become due and payable on the date and at the place or places stated in such notice at the applicable redemption price, together with interest accrued to the date fixed for redemption, and on and after said date (unless the Corporation shall default in the payment of such Securities at the redemption price, together with interest accrued to said date) interest on the Securities or portions of Securities so called for redemption shall cease to accrue, and such Securities shall cease from and after the date fixed for redemption to be entitled to any benefit under this Indenture, including the right to convert such Securities or portions thereof, if the terms of such Securities established pursuant to Section 3.01 provide for conversion, and the holders thereof shall have no right in respect of such Securities, except to receive payment of the redemption price thereof and unpaid interest to the date fixed for redemption. On presentation and surrender of such Securities at a place of payment in said notice specified, the said Securities or the specified portions thereof shall be paid and redeemed by the Corporation at the applicable redemption price, together with interest accrued thereon to the date fixed for redemption; provided, however, that any regular payment of interest becoming due on the date fixed for redemption shall be payable to the holders of such Securities registered as such on the relevant record date, subject to the terms and provisions of Section 3.02, and, if applicable, Section 19.03. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal thereof (and premium, if any, thereon) shall, until paid, bear interest from the date fixed for redemption at the rate prescribed therefor in the Security. If any Security called for redemption is converted pursuant to Article Nineteen, any moneys deposited with the Trustee or any paying agent for the purpose of redeeming such Security shall be promptly repaid to the Corporation. Upon presentation of any Security redeemed in part only, the Corporation shall execute and the Trustee shall authenticate and deliver to the holder thereof, at the expense of the
22 Corporation, a new Security or Securities of the same series, of authorized denominations, in aggregate principal amount equal to the unredeemed portion of the Security so presented. If a Global Security is so redeemed and surrendered, such new Security so issued shall be a new Global Security. ARTICLE FIVE PARTICULAR COVENANTS OF THE CORPORATION. Section 5.01. To Pay Principal and Interest. The Corporation will duly and punctually pay, or cause to be paid, the principal of (and premium, if any) and interest, if any, on each and every Security at the times and place and in the manner provided herein and in such Securities. Interest upon Securities shall be payable without presentment of such Securities, and only to or upon the written order of the registered holders thereof determined as provided in Section 3.02. For all purposes of this Indenture, the exchange of Capital Securities for Securities of any series pursuant to the terms of such Securities and this Indenture shall constitute full payment of the principal of the Securities of such series being exchanged on any Exchange Date for Capital Securities, without prejudice to any Securityholder's rights pursuant to Section 17.09. The Corporation shall have the right to require a Securityholder, in connection with the payment of the principal of (and premium, if any) or interest, if any, on a Security, to present at the office or agency of the Corporation at which such payment is made a certificate, in such form as the Corporation may from time to time prescribe, to enable the Corporation to determine its duties and liabilities with respect to any taxes, assessments or governmental charges which it may be required to deduct or withhold therefrom under any present or future law of the United States of America or of any State, County, Municipality or taxing authority therein, and the Corporation shall be entitled to determine its duties and liabilities with respect to such deduction or withholding on the basis of information contained in such certificate or, if no such certificate shall be so presented, on the basis of any presumption created by any such law, and shall be entitled to act in accordance with such determination. Section 5.02. To Maintain Office or Agency. So long as any Securities remain outstanding, the Corporation will maintain in the Borough of Manhattan, City and State of New York, an office or agency where the Securities may be presented for payment, an office or agency where the Securities may be presented for registration of transfer and exchange or conversion as provided in this Indenture, and an office or agency where notices or demands to or upon the Corporation in respect of this Indenture and where Capital Securities Election Forms with respect to any series of Securities may be served. Until otherwise designated by the Corporation in a written notice to the Trustee, the office or agency for all such purposes shall be the principal corporate trust office of the Bank in the Borough of Manhattan, City and State of New York. In case the Corporation shall at any time fail to maintain any such office or agency, or shall fail to give notice to the Trustee of any change in the location thereof, presentation and demand may be made and notices and Capital Securities Election Forms may be served, with respect to any series of Securities or in respect of this Indenture, at the principal office of the Trustee, and the Corporation hereby appoints the Trustee its agent to receive all such presentations, surrenders, notices and demands.
23 In addition to any such office or agency the Corporation may from time to time constitute and appoint one or more paying agents for the payment of such Securities, in one or more other cities, and may from time to time rescind such appointments, as the Corporation may deem desirable or expedient. The Corporation will give prompt written notice to the Trustee of any such appointment or rescission and of any change in the location of any such appointed paying agent. Section 5.03. To Fill a Vacancy in the Office of Trustee. The Corporation, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Article Eight, a Trustee, so that there shall at all times be a Trustee hereunder. Section 1.01. Appointment of Paying Agents and Exchange Agents; Money for Securities Payments to be Set Aside in Trust; Transfer of Moneys Held by Paying Agents. (a) If, as to any series of Securities, the Corporation shall appoint a paying agent or Exchange Agent other than the Trustee, it will cause such paying agent or Exchange Agent to execute and deliver to the Trustee an instrument in which such paying agent or Exchange Agent shall agree with the Trustee, subject to the provisions of this Section 5.04: (1) that it will hold all sums (including Capital Securities, if required) held by it as such paying agent or Exchange Agent for the payment of the principal (including principal to be paid by the delivery of Capital Securities) of (and premium, if any) or interest, if any, on such Securities in trust for the benefit of the holders of the Securities entitled thereto, or for the benefit of the Trustee, as the case may be, until such sums shall be paid out to such holders or otherwise as herein provided; (2) that it will give the Trustee notice of any failure by the Corporation in the making of any deposit with such paying agent or Exchange Agent for the payment of principal (including principal to be paid by the delivery of Capital Securities) of (and premium, if any) or interest, if any, on such Securities which shall have become payable and of any default by the Corporation in making any payment of the principal (including principal to be paid by the delivery of Capital Securities) of (and premium, if any) or interest, if any, on such Securities when the same shall be due and payable; and (3) that it will at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums (including Capital Securities, if required) so held in trust by such paying agent or Exchange Agent. (b) If the Corporation or the Bank shall act as paying agent or Exchange Agent as to any series of Securities, it will, on or before each due date of the principal (including principal to be paid by the delivery of Capital Securities) of (and premium, if any) or interest, if any, on such Securities, set aside and hold in trust for the benefit of the holders of such Securities entitled thereto a sum (including Capital Securities, if required) sufficient (together with any sums (including Capital Securities, if required) deposited with any other paying agent or Exchange Agent for such purpose) to pay such principal (including principal to be paid by the delivery of Capital Securities) (and premium, if any) or interest, if any, so becoming due and will notify the Trustee of any failure by it to take such action. Whenever the Corporation shall have one or
24 more paying agents or Exchange Agents with respect to any particular series of Securities, it will, on or before each due date of the principal (including principal to be paid by the delivery of Capital Securities) of (and premium, if any) or interest, if any, on the Securities, deposit with a paying agent or Exchange Agent a sum sufficient to pay such principal (including principal to be paid by the delivery of Capital Securities) (and principal to be paid by the delivery of Capital Securities) (and premium, if any) or interest, if any, so becoming due, such sums (including Capital Securities, if required) to be held in trust for the benefit of the holders of such Securities entitled thereto, and (unless the paying agent or Exchange Agent is the Trustee) the Corporation will notify the Trustee of failure by it to take such action. (c) Anything in this Section 5.04 to the contrary notwithstanding, the Corporation may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture pursuant to Article Thirteen, or for any other purpose, pay or cause to be paid to the Trustee all sums (including Capital Securities, if required) held in trust by the Corporation or any paying agent or Exchange Agent as required by this Section 5.04, such sums to be held by the Trustee upon the trusts herein contained. (d) Anything in this Section 5.04 to the contrary notwithstanding, the agreement to hold sums (including Capital Securities, if required) in trust as provided in this Section 5.04 is subject to the provisions of Section 13.03 and 13.04. Section 5.05. Maintenance of Corporate Existence, Rights and Franchise. So long as any of the Securities shall be outstanding, the Corporation will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights and franchises to carry on its business; provided, however, that nothing in this Section 5.05 shall prevent (i) any consolidation or merger of the Corporation, or any sale or conveyance of all or substantially all its property and assets, permitted by Article Twelve, (ii) the liquidation or dissolution of the Corporation after a sale or conveyance of all or substantially all its property and assets permitted by Article Twelve or (iii) the forfeiture or abandonment of any such right or franchise in any jurisdiction if the Board of Directors shall determine that preservation thereof is no longer desirable in the conduct of its business and that the loss thereof is not disadvantageous in any material respect to the Securityholders. Section 5.06. Certificate as to No Default. The Corporation hereby covenants and agrees to deliver to the Trustee, not less often than annually and in any case within 120 days after the end of each fiscal year of the Corporation, commencing with the fiscal year ending December 31, 1987, a certificate from the Chairman of the Board, the President, any Vice Chairman of the Board, the Chief Financial Officer, the Treasurer or the Principal Accounting Officer of the Corporation as to his or her knowledge of the Corporation's compliance with all conditions and covenants under this Indenture. For purposes of this Section 5.06, such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Indenture. Section 5.07. Limitation on Sale of Stock of the Bank. For the exclusive benefit of the Pre-Amendment Securities, but subject to the provisions of Article Twelve, the Corporation will not sell, transfer or otherwise dispose of any shares of, securities convertible into or options,
25 warrants or rights to subscribe for or purchase shares of, Voting Stock of the Bank, nor will it permit the Bank to issue any shares of, securities convertible into or options, warrants or rights to subscribe for or purchase shares of, Voting Stock of the Bank; provided, however, that the foregoing shall not prohibit any such issuance, sale, transfer or disposition consisting of (i) issuances or sales of directors' qualifying shares, (ii) issuances or sales of shares to the Corporation, (iii) sales or other dispositions or issuances for fair market value, as determined by the Board of Directors of the Corporation, if after giving effect to such sales, dispositions or issuances and to the issuance of any shares of Voting Stock of the Bank issuable upon conversion of convertible securities or upon the exercise of options, warrants or rights, the Corporation would own directly or indirectly not less than 80% of the issued and outstanding shares of Voting Stock of the Bank, (iv) sales, transfers or other dispositions or issuances made in compliance with an order or direction of a court or regulatory authority of competent jurisdiction, and (v) sales of shares of Voting Stock of the Bank made by the Bank to its shareholders if the sale does not reduce the percentage of shares of Voting Stock of the Bank owned by the Corporation. For the purposes of this Section 5.07, the term "Voting Stock of the Bank" shall mean stock of any class or classes, however designated, having ordinary voting power for the election of a majority of the Board of Directors of the Bank, other than stock having such power only by reason of the happening of a contingency. ARTICLE SIX SECURITYHOLDERS LISTS AND REPORTS BY THE CORPORATION AND THE TRUSTEE. Section 6.01. Securityholders Lists. The Corporation covenants and agrees that, with respect to each series of Securities, it will furnish or cause to be furnished to the Trustee, (a) semiannually, not less than 45 days nor more than 60 days after (i) each record date for the payment of interest on any interest payment date (except a date for payment of defaulted interest) in the case of interest-bearing Securities or (ii) the last business day of each June and December in the case of non-interest-bearing Securities, and (b) at such other times as the Trustee may request in writing, within 30 days after receipt by the Corporation of any such request, a list in such form as the Trustee may reasonably require of the names and addresses of the holders of Securities of such series as of a date not more than l5 days prior to the time such information is furnished; provided, however, that if the Trustee shall be the Security register, such list shall not be required to be furnished. Section 6.02. Preservation and Disclosure of Lists. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the holders of Securities contained in the most recent list furnished to it as provided in Section 6.01 and received by the Trustee in its capacity as Security registrar or paying agent if so acting. The Trustee may destroy any list furnished to it as provided in Section 6.01 upon receipt of a new list so furnished.
26 (b) In case three or more holders of Securities of any series (hereinafter referred to as "applicants") apply in writing to the Trustee and furnish to the Trustee reasonable proof that each such applicant has owned a Security of such series for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other holders of Securities of such series with respect to their rights under this Indenture or under the Securities of such series and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall, within five Business Days after the receipt of such application, at its election, either (1) afford such applicants access to the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section 6.02, or (2) inform such applicants as to the approximate number of holders of Securities of such series whose names and addresses appear in the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section 6.02, and as to the approximate cost of mailing to such Securityholders the form of proxy or other communication, if any, specified in such application. If the Trustee shall elect not to afford such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each holder of Securities of such series whose name and address appears in the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section 6.02 a copy of the form of proxy or other communication which is specified in such request, with responsible promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender, the Trustee shall mail to such applicants and file with the Securities and Exchange Commission, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interests of the holders of Securities of such series or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If said Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if after the entry of an order sustaining one or more of such objections, said Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Securityholders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise, the Trustee shall be relieved of any obligation or duty to such applicants respecting their application. (c) Each and every holder of the Securities, by receiving and holding the same, agrees with the Corporation and the Trustee that neither the Corporation nor the Trustee nor any paying agent nor any Exchange Act nor any Security registrar shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the holders of Securities in accordance with the provisions of subsection (b) of this Section 6.02, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under said subsection (b).
27 Section 6.03. Reports by the Corporation. (a) The Corporation covenants and agrees to file with the Trustee within 15 days after the Corporation is required to file the same with the Securities and Exchange Commission, copies of the annual reports and of the information, documents, and other reports (or copies of such portions of any of the foregoing as said Commission may from time to time by rules and regulations prescribe) which the Corporation may be required to file with said Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended; or, if the Corporation is not required to file information, documents or reports pursuant to either of such sections, then to file with the Trustee and said Commission, in accordance with the rules and regulations prescribed from time to time by said Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Securities Exchange Act of 1934, as amended, in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations. (b) The Corporation covenants and agrees to file with the Trustee and the Securities and Exchange Commission, in accordance with the rules and regulations prescribed from time to time by said Commission, such additional information, documents and reports with respect to compliance by the Corporation with the conditions and covenants provided for in this Indenture as may be required from time to time by such rules and regulations. (c) The Corporation covenants and agrees to transmit by mail to all holders of Securities, as the names and addresses of such holders appear upon the registry books of the Corporation, within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Corporation pursuant to subsection (a) or (b) of this Section 6.03 as may be required by rules and regulations prescribed from time to time by the Securities and Exchange Commission. Section 6.04. Reports by the Trustee. (a) On or before May 15, 1988, and on or before May 15 in every year thereafter, so long as any Securities are outstanding hereunder, the Trustee shall transmit to the Securityholders for which it is acting as Trustee, as hereinafter in this Section 6.04 provided, a brief report dated as of the preceding March 15 with respect to any of the following events which may have occurred within the previous 12 months (but if no such event has occurred within such period, no report need be so transmitted): (1) any change to its eligibility under Section 8.09 and its qualification under Section 8.08; (2) the creation of or any material change to a relationship which is the subject of Section 8.08; (3) the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) which remain unpaid on the date of such report, and for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Securities with respect to which it is acting as Trustee, on any property or funds held or collected by it as Trustee, except that the Trustee shall not be required (but may elect) to state such advances if such
28 advances so remaining unpaid aggregate not more than one-half of one percent of the principal amount of such Securities outstanding on the date of such report; (4) any change to the amount, interest rate or maturity date of all other indebtedness owing by the Corporation (or by any other obligor on such Securities) to the Trustee in its individual capacity, on the date of such report, with a brief description of any property held as collateral security therefor, except an indebtedness based upon a creditor relationship arising in any manner which is the subject of Section 8.13; (5) any change to the property and funds, if any, physically in the possession of the Trustee, for the benefit of any series of Securities, at the date of such report; (6) any additional issue of Securities with respect to which it is acting as Trustee which it has not previously reported; and (7) any action taken by the Trustee in the performance of its duties under this Indenture which it has not previously reported and which in its opinion materially affects such Securities, except action in respect of a default, notice of which has been or is to be withheld by it in accordance with the provisions of Section 7.08. (b) The Trustee shall transmit to the Securityholders with respect to which it is acting as Trustee, as hereinafter provided, a brief report with respect to the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such), since the date of the last report transmitted pursuant to the provisions of subsection (a) of this Section 6.04 (or, if no such report has yet been so transmitted, since the date of execution of this Indenture), for the reimbursement of which it claims or may claim a lien or charge prior to that of the Securities with respect to which it is acting as Trustee on property or funds held or collected by it as Trustee, and which it has not previously reported pursuant to this subsection, except that the Trustee shall not be required (but may elect ) to report such advances if such advances remaining unpaid at any time aggregate the percent or less of the principal amount of such Securities outstanding at such time, such report to be transmitted within 90 days after such time. (c) Reports pursuant to this Section 6.04 shall be transmitted by mail to all holders of Securities as the names and addresses of such holders appear upon the registry books of the Corporation. (d) A copy of each such report shall, at the time of such transmission to Securityholders, be filed by the Trustee with each stock exchange upon which the Securities with respect to which it is acting as Trustee are listed and also with the Securities and Exchange Commission. The Corporation will notify the Trustee when and as such Securities become listed on any stock exchange.
29 ARTICLE SEVEN EVENTS OF DEFAULT; REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS Section 7.01. Events of Default; Remedies. The occurrence of any of the following events shall constitute an Event of Default hereunder with respect to the Securities of any particular series: (a) with respect to Pre-Amendment Securities, a court having jurisdiction in the premises shall have entered a decree or order for relief in respect to the Corporation in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect of the United States of America or any political subdivision thereof, and such decree or order shall have continued unstayed and in effect for a period of sixty consecutive days; or, a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, trustee, assignee, custodian, sequestrator or other similar official of the Corporation or of all or substantially all of the property of the Corporation, or for the winding up or liquidation of the affairs of the Corporation, shall have been entered, and such decree or order shall have continued unstayed and in effect for a period of sixty consecutive days; or, with respect to Post-Amendment Securities, a court having jurisdiction in the premises shall have entered a decree or order for relief in respect to the Corporation in an involuntary case under any applicable bankruptcy, insolvency or reorganization law now or hereafter in effect of the United States of America or any political subdivision thereof, and such decree or order shall have continued unstayed and in effect for a period of sixty consecutive days; or (b) with respect to Pre-Amendment Securities, the Corporation shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect of the United States of America or a political subdivision thereof, or consent to the entry of an order for relief in an involuntary case under any such law, or, consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Corporation or of all or substantially all of the property of the Corporation, or make any general assignment for the benefit of creditors, or admit in writing its inability to pay its debts generally as they become due; or, with respect to Post-Amendment Securities, the Corporation shall commence a voluntary case under any applicable bankruptcy, insolvency or reorganization law now or hereafter in effect of the United States of America or a political subdivision thereof, or consent to the entry of an order for relief in an involuntary case under any such law; or (c) any other Event of Default specifically provided by the terms of the Securities of such series. In case one or more of the Events of Default as specified above shall have occurred and be continuing with respect to the Securities of any particular series, then and in each and every such case, unless the principal of all of the Securities of that series shall have already become due and payable, either the Trustee or the holders of not less than twenty-five percent in aggregate
30 principal amount of the Securities of that series then outstanding hereunder, by notice in writing to the Corporation (and to the Trustee if given by Securityholders), may declare the principal or, in the case of Discounted Securities, such amount of principal as may be provided for in such Securities, of all the Securities of that series to be due and payable in cash immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in this Indenture or in the Securities of that series contained to the contrary notwithstanding. This provision, however, is subject to the conditions that if, at any time after such principal or such amount of principal, as the case may be, shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, the Corporation shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest upon all Securities of that series and the sum in cash or, if applicable, Capital Securities then required pursuant to the terms of such Securities equal to the principal of (and premium, if any, on) any and all Securities of that series which shall have become due otherwise than by acceleration (with interest on overdue installments of interest) (to the extent that payment of such interest is enforceable under applicable law) and on such principal (and premium, if any) at the rate of interest (or, in the case of Discounted Securities, at the Yield to Maturity) borne by such Securities, to the date of such payment or deposit, and the expenses of the Trustee, and any and all defaults under this Indenture with respect to the Securities of that series, other than the nonpayment of principal of (and premium, if any) and accrued interest on the Securities of that series which shall have become due by acceleration shall have been remedied - then and in every such case the holders of a majority in aggregate principal amount of the Securities of that series then outstanding, by written notice to the Corporation and to the Trustee, may waive all defaults and rescind and annul such declaration and its consequences; but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default, or shall impair any right consequent thereon. In case the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee, then and in every such case the Corporation and the Trustee shall be restored respectively to their several positions and rights hereunder, and all rights, remedies and powers of the Corporation and the Trustee shall continue as though no such proceeding has been taken. Upon declaration by the Trustee or receipt by the Trustee of any written declaration of acceleration, or waiver, rescission, and annulment thereof, with respect to Securities of a series all or part of which is represented by a Global Security, the Trustee shall establish a record date for determining holders of outstanding Securities of such series entitled to join in such declaration of acceleration, or waiver, rescission, and annulment, which record date shall be at the close of business on the day the Trustee receives such declaration of acceleration, or waiver, rescission, and annulment, as the case may be. The holders on such record date, or their duly designated proxies, and only such Persons, shall be entitled to join in such declaration of acceleration, or waiver, rescission, and annulment, as the case may be, whether or not such holders remain holders after such record date; provided, that unless such declaration of acceleration, or waiver, rescission, and annulment, as the case may be, shall have become
31 effective by virtue of the requisite percentage having been obtained prior to the day which is 90 days after such record date, such declaration of acceleration, or waiver, rescission, and annulment, as the case may be, shall automatically and without further action by any holder be cancelled and of no further effect. Section 7.02. Payment of Securities on Default; Suit Therefor. The Corporation covenants that (a) in case default shall be made in the payment of any installment of interest upon any of the Securities of any series as and when the same shall become due and payable, and such default shall have continued for a period of 30 days, or (b) in case default shall be made in the payment (including any obligation to exchange Capital Securities for Securities of a series pursuant to Article Seventeen) of the principal of (or premium, if any, on) any of the Securities of any series as and when the same shall have become due and payable, whether at maturity of the Securities of that series or by declaration or otherwise, or (c) default is made in the performance of any covenant of the Corporation in this Indenture or in the terms of the Securities of a series (other than a covenant a default in whose performance is elsewhere in this Section or in the terms of the Securities of such series specifically addressed), and such default continues for a period of 60 days after there has been given, by registered or certified mail to the Company by the Trustee or to the Company and the Trustee by the holders of at least twenty-five percent in aggregate principal amount of the Securities of any affected series, a written notice specifying such default and requiring that it be remedied, then, upon demand of the Trustee, the Corporation will pay to the Trustee, for the benefit of the holders of such Securities, the whole amount that then shall have become due and payable on all such Securities for principal (and premium, if any) or interest, if any, (including the delivery of any Capital Securities then required to be delivered), with interest upon the overdue principal (and premium, if any) and (to the extent that payment of such interest is enforceable under applicable law) upon the overdue installments of interest at the rate of interest (or the Yield to Maturity in the case of Discounted Securities) borne by the Securities of that series; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including all amounts owed to the Trustee and any predecessor Trustee under Section 8.06; and further, with respect to an event referred to in clause (c), the Trustee in its discretion may proceed to protect and enforce the rights of the Securityholders and the Trustee by such appropriate judicial proceedings as the Trustee shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. Each of the events referred to in (a), (b) and (c) is referred to herein as a "Default". Upon notice of Default to the Corporation by the Trustee or receipt by the Trustee of any notice of Default, with respect to Securities of a series all or part of which is represented by a Global Security, the Trustee shall establish a record date for determining holders of outstanding Securities of such series entitled to join in such direction, which record date shall be at the close of business on the date the Trustee receives such direction. The holders on such record date, or their duly designated proxies, and only such Persons, shall be entitled to join in such direction, whether or not such holders remain holders after such record date; provided, that unless such requisite percentage in aggregate principal amount shall have been obtained prior to the day
32 which is 90 days after such record date, such direction shall automatically and without further action by any holder be cancelled and of no further effect. In case the Corporation shall fail forthwith to pay such amounts (including the delivery of any Capital Securities then required to be delivered) or take any action to comply with any covenant or agreement in this Indenture upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any actions or proceedings at law or in equity for the collection of the sums so due and unpaid and the delivery of any Capital Securities required to be delivered and not so delivered, or the performance of any covenant or agreement in this Indenture, or in the case of the failure to delivery Capital Securities as required by Article Seventeen moneys equal to the principal amount of the Securities for which the Capital Securities were to be exchanged, and may prosecute any such action or proceeding to judgment or final decree, and may enforce any such judgment or final decree against the Corporation and collect in the manner provided by law out of the property of the Corporation wherever situated the moneys (or moneys equal to the principal amount of any Securities for which Capital Securities were to be exchanged) adjudged or decreed to be payable. In case there shall be pending proceedings for the bankruptcy or for the reorganization of the Corporation under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect of the United States of America or any political subdivision thereof, or in case there is appointed a receiver, liquidator, trustee, assignee, custodian, sequestrator or similar official of the Corporation or for all or substantially all of the property of the Corporation, or in case of any other similar judicial proceeding relative to the Corporation, or to the creditors or property of the Corporation, the Trustee, irrespective of whether the principal of such Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section 7.02, shall be entitled and empowered, by intervention in such proceedings or otherwise, to file and prove a claim or claims for the whole amount of principal (and premium, if any) and interest, if any (or, if the Securities of any series are Discounted Securities, such portion of the principal amount as may be provided for in such Securities), owing and unpaid in respect of such Securities, and, in case of any judicial proceedings, to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and any predecessor Trustee and of the holders of such Securities allowed in such judicial proceedings relative to the Corporation, its creditors, or its property, and to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute the same after the deduction of its charges and expenses; and any receiver, custodian, assignee or trustee in bankruptcy or reorganization is hereby authorized by each of the Securityholders to make such payments to the Trustee, and, in the event that the Trustee shall consent to the making of such payments directly to the Securityholders, to pay to the Trustee any amount due it for compensation and expenses, including counsel fees incurred by the Trustee or any predecessor Trustee up to the date of such distribution. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any holder of any Security of any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any holder
33 thereof or to authorize the Trustee to vote in respect of the claim of any holder in any such proceeding. All rights of action and of asserting claims under this Indenture, or under any of the Securities, may be enforced by the Trustee without the possession of any of the Securities, or the production thereof in any trial or other proceeding relative thereto, and any suit or proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall be for the ratable benefit of the holders of the Securities in respect of which such judgment has been recovered. Section 7.03. Application of Moneys Collected by Trustee. Subject to the provisions of Article Sixteen, any moneys collected by the Trustee shall be applied in the order following, at the date or dates fixed by the Trustee for the distribution of such moneys, upon presentation of the Securities in respect of which moneys have been collected, and stamping thereon the payment, if only partially paid, and upon surrender thereof if fully paid: First: To the payment of all amounts owing to the Trustee and any predecessor Trustee under Section 8.06; Second: In case the principal of the outstanding Securities in respect of which moneys have been collected shall not have become due and be unpaid, to the payment of interest, if any, on such Securities, in the order of the maturity of the installments of such interest, with interest (to the extent permitted by applicable law and to the extent that such interest has been collected by the Trustee) upon the overdue installments of interest at the rate of interest (or the Yield to Maturity in the case of Discounted Securities) borne by such Securities, such payments to be made ratably to the Persons entitled thereto; Third: In case the principal of the outstanding Securities in respect of which moneys and Capital Securities have been collected shall have become due, by declaration or otherwise, to the payment of the whole amount then owing and unpaid upon such Securities for principal (and premium, if any) and interest, if any, with interest on the overdue principal (and premium, if any) and (to the extent permitted by applicable law and to the extent that such interest has been collected by the Trustee) upon overdue installments of interest at the rate of interest (or the Yield to Maturity in the case of Discounted Securities) borne by such Securities; and in case such moneys (and Capital Securities, if required) shall be insufficient to pay in full the whole amounts so due and unpaid upon such Securities, then to the payment of such principal (and premium, if any) and interest without preference or priority of principal (and premium, if any) over interest, or of interest over principal (and premium, if any) or of any installment of interest over any other installment of interest, or of any Security over any other Security, ratably to the aggregate of such principal (and premium, if any) and accrued and unpaid interest; Fourth: To the payment of the balance, if any, to the Corporation or any other Person or Persons legally entitled thereto.
34 Section 7.04. Proceedings by Securityholders. No holder of any Security of any series shall have any right by virtue of or by availing of any provision of this Indenture to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Indenture or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (i) such holder previously shall have given to the Trustee written notice of Default and of the continuance thereof, as hereinbefore provided, (ii) the holders of not less than twenty-five percent in aggregate principal amount of the Securities of that series then outstanding shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as Trustee hereunder and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby, (iii) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have neglected or refused to institute any such action, suit or proceeding, and (iv) no direction inconsistent with any such written request has been given to the Trustee during such 60-day period by the holders of a majority in principal amount of the Securities of such series at the time outstanding; it being understood and intended, and being expressly covenanted by the taker and holder of every Security with every other taker and holder and the Trustee, that no one or more holders of Securities of that series shall have any right in any manner whatever by virtue of or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other holder of such Securities, or to obtain or seek to obtain priority over or preference to any such holder, or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all holders of Securities of that series. Notwithstanding any other provisions in this Indenture, the right of any holder of any Security to receive payment of the principal of (any premium, if any) and interest, if any, on such Security (or to have Capital Securities exchanged for such Security pursuant to Article Seventeen), on or after the respective due dates expressed in such Security, or to have the Security converted into shares of Common Stock, securities or other property pursuant to Article Nineteen, or to institute suit for the enforcement of any such payment, exchange or conversion on or after such respective dates, shall not be impaired or affected without the consent of such holder. Upon receipt by the Trustee of any such notice, request and offer of indemnity with respect to Securities of a series all or part of which is represented by a Global Security, the Trustee shall establish a record date for determining holders of outstanding Securities of such series entitled to join in such notice, request and offer of indemnity, which record date shall be at the close of business on the day the Trustee receives such notice, request and offer of indemnity. The holders on such record date, or their duly designated proxies, and only such Persons, shall be entitled to join in such notice, request and offer of indemnity, whether or not such holders remain holders after such record date; provided, that unless the requisite percentage in aggregate principal amount shall have been obtained prior to the day which is 90 days after such record date, such notice, request and offer of indemnity shall automatically and without further action by any holder be cancelled and of no further effect. Section 7.05. Proceedings by Trustee. In case of an Event of Default referred to in Section 7.01 or any of the Defaults referred to in Section 7.02 the Trustee may in its discretion
35 proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either by suit in equity or by action at law or by proceeding in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law. Section 7.06. Remedies Cumulative and Continuing. All powers and remedies given by this Article Seven to the Trustee or to the Securityholders shall, to the extent permitted by law, be deemed cumulative and not exclusive of any thereof or of any other powers and remedies available to the Trustee or the holders of the Securities, by judicial proceedings or otherwise to enforce the performance or observance of the covenants and agreements contained in this Indenture, and no delay or omission of the Trustee or of any holder of any of the Securities to exercise any right or power accruing upon any Default occurring and continuing as aforesaid shall impair any such right or power, or shall be construed to be a waiver of any such Default or an acquiescence therein; and, subject to the provisions of Section 7.04, every power and remedy given by this Article Seven or by law to the Trustee or to the Securityholders may be exercised from time to time and as often as shall be deemed expedient by the Trustee or by the Securityholders. Section 7.07. Direction of Proceedings and Waiver of Defaults by Majority of Securityholders. The holders of a majority in aggregate principal amount of the Securities of any series at the time outstanding determined in accordance with Section 9.04 shall have the right to direct the time, method and place of conducting any proceedings for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of that series; provided, however, that (subject to the provisions of Section 8.01) the Trustee shall have the right to decline to follow any such direction if the Trustee being advised by counsel determines that the action or proceeding so directed may not lawfully be taken or if the Trustee in good faith by its board of directors, executive committee, or a trust committee of directors and/or Responsible Officers shall determine that the action or proceedings so directed would involve the Trustee in personal liability. Prior to any declaration accelerating the maturity of the Securities of any series, the holder of a majority in aggregate principal amount of the Securities of that series at the time outstanding may on behalf of the holders of all Securities of that series waive any past Default or Event of Default hereunder and its consequences except a Default in the payment of the principal of (or premium, if any) or interest, if any, on the Securities of that series (or in the delivery of Capital Securities in exchange for any Securities of that series when required). Upon any such waiver the Corporation, the Trustee and the holders of such Securities shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. Whenever any Default or Event of Default hereunder shall have been waived as permitted by this Section 7.07, said Default or Event of Default shall for all purposes of the Securities of such series and this Indenture with respect to such Securities be deemed to have been cured and to be not continuing.
36 Upon receipt by the Trustee of any such direction (including the waiver of a Default or Event of Default) with respect to Securities of a series all or part of which is represented by a Global Security, the Trustee shall establish a record date for determining holders of outstanding Securities of such series entitled to join in such direction, which record date shall be at the close of business on the date the Trustee receives such direction. The holders on such record date, or their duly designated proxies, and only such persons, shall be entitled to join in such direction, whether or not such holders remain holders after such record date; provided, that unless such majority in aggregate principal amount shall have been obtained prior to the day which is 90 days after such record date, such direction shall automatically and without further action by any holder be cancelled and of no further effect. Section 7.08. Notice of Defaults. The Trustee shall, within 90 days after the occurrence of a default with respect to the Securities of any series, mail to all holders of such Securities, as the names and addresses of such holders appear upon the registry books of the Corporation, notice of all defaults known to the Trustee, unless such defaults shall have been cured before the giving of such notice (the term "defaults" for the purpose of this Section 7.08 being hereby defined to be any Event of Default or Default, not including periods of grace, if any, provided for therein or in the terms of the Securities of any series and irrespective of the giving of the notice, if any, specified therein or in the terms of the Securities of any series); provided, however, that, except in the case of an event described in either clause (a) or (b) of Section 7.01 or a Default in the payment of the principal of (or premium, if any) or interest, if any, on any such Securities, or in the obligation to exchange Capital Securities for such Securities pursuant to Article Seventeen, the Trustee shall be protected in withholding such notice if and so long as the board of directors or trustees, the executive committee, or a trust committee of directors of the Trustee and/or Responsible Officers in good faith determines that the withholding of such notice is in the interest of the holders of such Securities. Section 7.09. Undertaking to Pay Costs. All parties to this Indenture agree, and each holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 7.09 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholders, or group of Securityholders, holding in the aggregate more than ten percent in principal amount of the Securities outstanding of any series, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Security against the Corporation on or after the due date expressed in such Security or the right to exchange any Security for Capital Securities as provided in Article Seventeen.
37 ARTICLE EIGHT CONCERNING THE TRUSTEE. Section 8.01. Duties and Responsibilities of Trustee. With respect to the Securities of any particular series the Trustee, prior to the occurrence of an Event of Default or Default and after the curing of all Events of Default and Defaults which may have occurred, in each case, with respect to the Securities of such series, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default or a Default has occurred (which has not been cured or waived) with respect to the Securities of any particular series the Trustee shall, with respect to the Securities of such series, exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that (a) prior to the occurrence of an Event of Default or a Default with respect to the Securities of any particular series and after the curing or waiving of all Events of Default or Defaults with respect to the Securities of any particular series which may have occurred (1) the duties and obligations of the Trustee with respect to the Securities of such series shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture; (b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (c) the Trustee shall not be liable with respect to any action taken, suffered or omitted to be taken by it in good faith in accordance with the direction of the holders of not less than a majority in principal amount of the Securities of any particular series at the time outstanding determined as provided in Section 9.04 relating to the time, method and place of conducting any
38 proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture. Section 8.02. Reliance on Documents, Opinions, etc. Subject to the provisions of Section 8.01. (a) the Trustee may rely and shall be protected in acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, constant, order, approval, bond, debenture, coupon or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request, direction, order or demand of the Corporation mentioned herein shall be sufficiently evidenced by an Officers' Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any resolution of the Board of Directors may be evidenced to the Trustee by a Board Resolution; (c) the Trustee may consult with counsel and any advice or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with the such advice or Opinion of Counsel; (d) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Securityholders pursuant to the provisions of this Indenture, unless such Securityholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which may be incurred therein or thereby; (e) the Trustee shall not be liable for any action taken, suffered or omitted by it in good faith, and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture; (f) prior to the occurrence of an Event of Default or a Default with respect to the Securities of any particular series hereunder and after the curing or waiving of all Events of Default and Defaults with respect to the Securities of such series, the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, debenture, coupon or other paper or document, unless requested in writing to do so by the holders of not less than a majority in principal amount of the Securities of such series then outstanding; provided, however, that if the payment within a reasonable time to the Trustee of the cost, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such expense or liability as a condition to so proceeding; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys, and the Trustee shall not be
39 responsible for any misconduct or negligence on the part of an agent or attorney appointed by it with due care hereunder. Section 8.03. No Responsibilities for Recitals, etc. The recitals contained herein and in the Securities (except in the Trustee's certificate of authentication) shall be taken as the statements of the Corporation, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representations as to the validity or sufficiency of this Indenture or the Securities or any Capital Securities or shares of Common Stock. The Trustee shall not be accountable for the use or application by the Corporation of any Securities or the proceeds of any Securities authenticated and delivered by the Trustee in conformity with the provisions of this Indenture. Section 8.04. Trustee, Paying Agent, Exchange Agent or Registrar May Own Securities. The Trustee or any paying agent, Exchange Agent or Security registrar, in its individual or any other capacity, may become the owner or pledgee of Securities with the same rights it would have if it were not Trustee, paying agent, Exchange Agent or Security registrar. Section 8.05. Moneys to be Held in Trust. Subject to the provisions of Section 13.04, all moneys received by the Trustee or any paying agent or Exchange Agent shall, until used or applied as herein provided, be held in trust for the purposes for which they were received. Moneys held by the Trustee or any paying agent or Exchange Agent in trust hereunder need not be segregated from other funds except to the extent required by law. Neither the Trustee nor any paying agent or Exchange Agent shall be under any liability for interest on any moneys received by it hereunder except such as it may agree with the Corporation to pay thereon. So long as no Event of Default shall have occurred and be continuing, all interest allowed on any such moneys shall be paid from time to time upon the written order of the Corporation, signed by the Chairman of the Board, the President, a Vice Chairman of the Board, the Chief Financial Officer or the Treasurer of the Corporation (or any other officer certified by any of the foregoing officers to be an executive officer of the Corporation). Section 8.06. Compensation and Expenses of Trustee. The Corporation covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, reasonable compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust), and the Corporation will pay or reimburse the Trustee and any predecessor Trustee upon request for all reasonable expenses, disbursements and advances incurred or made by the Trustee or any predecessor Trustee in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of their counsel and of all Persons not regularly in their employ) except to the extent that any such expense, disbursement or advance is due to its own negligence or bad faith. The Corporation also covenants to indemnify each of the Trustee and any predecessor Trustee for, and to hold it harmless against, any loss, liability or expense arising out of or in connection with the acceptance or administration of this trust or the performance of its duties hereunder, including the costs and expenses of defending itself against any claim of liability in the premises, except to the extent that any such loss, liability or expense is due to its own negligence or bad faith. The obligations of the Corporation under this Section 8.06 to compensate the Trustee and to pay or reimburse the Trustee for expenses, disbursements and advances shall constitute a prior
40 claim to that of the Securities upon all property and funds held or collected by the Trustee, as such, except funds held in trust for the benefit of the holders of particular Securities. Section 8.07. Officers' Certificate as Evidence. Subject to the provisions of Sections 8.01 and 8.02, whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officers' Certificate delivered to the Trustee, and such Certificate, in the absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted by it under the provisions of this Indenture upon the faith thereof. Section 8.08. Conflicting Interest of Trustee. If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act of 1939, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act of 1939 and this Indenture. Section 8.09. Eligibility of Trustee. The Trustee hereunder shall at all times be a corporation organized and doing business under the laws of the United States or any State or Territory thereof or of the District of Columbia authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least five million dollars and subject to supervision or examination by Federal, State, Territorial, or District of Columbia authority. If such corporation publishes reports of conditions at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section 8.09, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. Neither the Corporation nor any Person directly or indirectly controlling, controlled by or under common control with the Corporation shall serve as Trustee hereunder. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 8.09, the Trustee shall resign immediately in the manner and with the effect specified in Section 8.10. Section 8.10. Resignation or Removal of Trustee. (a) The Trustee may at any time resign with respect to the Securities of one or more series by giving written notice of such resignation to the Corporation and by mailing notice thereof to the holders of Securities of such series at their addresses as they shall appear on the registry books of the Corporation. Upon receiving such notice of resignation, the Corporation shall promptly appoint a successor trustee or trustees with respect to the Securities of such series by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to each successor trustee. If no successor trustee shall have been so appointed and have accepted appointment within 30 days after the mailing of such notice of resignation to the Securityholders of such series, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor trustee, or any Securityholder who has been a bona fide holder of a Security or Securities of such series for at least six months may, subject to the provisions of Section 7.09, on behalf of himself and all others similarly situated,
41 petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee. (b) In case at any time any of the following shall occur -- (1) the Trustee shall fail to comply with the provisions of Section 8.08 after written request therefor by the Corporation or by any Securityholder who has been a bona fide holder of a Security or Securities for at least six months, or (2) the Trustee shall cease to be eligible in accordance with the provisions of Section 8.09 and shall fail to resign after written request therefor by the Corporation or by any such Securityholder, or (3) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, the Corporation may remove the Trustee with respect to all Securities and appoint a successor trustee or trustees by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the Trustee so removed and one copy to each successor trustee, or, subject to the provisions of Section 7.09, any Securityholder who has been a bona fide holder of a Security or Securities for at least six months may, on behalf of himself and all others similar situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee or trustees. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee or trustees. (c) The holders of a majority in aggregate principal amount of the Securities of any series at the time outstanding may at any time remove the Trustee with respect to such series and nominate a successor trustee which shall be deemed appointed as successor trustee unless within ten days after such nomination the Corporation objects thereto, in which case the Trustee so removed or any holder of Securities of such series, upon the terms and conditions and otherwise as in subdivision (a) of this Section 8.10 provided, may petition any court of competent jurisdiction for an appointment of a successor trustee. (d) Any resignation or removal of the Trustee and any appointment of a successor trustee pursuant to any of the provisions of this Section 8.10 shall become effective upon acceptance of appointment by the successor trustee as provided in Section 8.11. Section 8.11. Acceptance by Successor Trustee. In the case of the appointment hereunder of a successor trustee with respect to all Securities, any successor trustee so appointed as provided in Section 8.10 shall execute, acknowledge and deliver to the Corporation and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights,
42 powers, duties and obligations of its predecessor hereunder, with like effect as if originally named as trustee herein; nevertheless, on the written request of the Corporation or of the successor trustee, the trustee ceasing to act shall, upon payment of any amounts then due it pursuant to the provisions of Section 8.06, execute and deliver an instrument transferring to such successor trustee all the rights and powers of the trustee so ceasing to act. In case of the appointment hereunder of a successor trustee with respect to the Securities of one or more (but not all) series, the Corporation, the predecessor trustee and each successor trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to vest in, or confirm to, each successor trustee all the rights, powers, duties and obligations of the predecessor trustee with respect to the Securities of that or those series to which the appointment of such successor trustee relates, (2) if the predecessor trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, duties and obligations of the predecessor trustee with respect to the Securities of that or those series as to which the predecessor trustee is not retiring shall continue to be vested in the predecessor trustee, and (3) shall add to or change any of the provisions of the Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such trustees co-trustees of the same trust and that each such trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the predecessor trustee shall become effective to the extent provided therein and each such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, duties and obligations of the predecessor trustee with respect to the Securities of that or those series to which the appointment of such successor trustee relates; but, nevertheless, on the written request of the Corporation or any successor trustee, such predecessor trustee shall, upon payment of any amounts then due to it pursuant to Section 8.06 hereof, duly assign, transfer and deliver to such successor trustee all property and money held by such predecessor trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor trustee relates. Upon request of any such successor trustee, the Corporation shall execute any and all instruments in writing in order more fully and certainly to vest in and confirm to such successor trustee all such rights, powers and trusts referred to in the two preceding sentences. Any trustee ceasing to act shall, nevertheless, retain a lien upon all property or funds held or collected by such trustee to secure any amounts then due it pursuant to the provisions of Section 8.06. No successor trustee shall accept appointment as provided in this Section 8.11 unless at the time of such acceptance such successor trustee shall be qualified pursuant to the provisions of Section 8.08 and eligible under the provisions of Section 8.09. Upon acceptance of appointment by a successor trustee as provided in this Section 8.11, the Corporation shall mail notice of the succession of such trustee hereunder to all holders of Securities of the series affected as the names and addresses of such holders appear on the registry books of the Corporation. If the Corporation fails to mail such notice in the prescribed manner
43 within ten days after the acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be mailed at the expense of the Corporation. Section 8.12. Succession by Merger, etc. Any corporation or national banking association into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation or national banking association resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder; provided, that such corporation or national banking association shall be otherwise qualified and eligible under this Article to act as Trustee hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture any of the Securities shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Securities so authenticated; and in case at that time any of the Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Securities or in this Indenture provided that the certificate of the Trustee shall have; provided, however, that the right to adopt the certificate of authentication of any predecessor Trustee or authenticate Securities in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation. Section 8.13. Preferential Collection of Claims Against Corporation. If and when the Trustee shall be or shall become a creditor, directly or indirectly, secured or unsecured, of the Corporation or of any other obligor on the Securities, the Trustee shall be subject to the provisions of the Trust Indenture Act of 1939 regarding the collection of claims against the Corporation or any other obligor on the Securities. Section 8.14. Appointment of Authenticating Agent. At any time the Trustee may appoint an Authenticating Agent or Agents with respect to one or more series of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities of such series, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Corporation and shall at all times be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or State authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of
44 such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent; provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Corporation. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Corporation. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Corporation. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section. The Trustee agrees to pay to each Authenticating Agent from time to time (unless such Authenticating Agent shall otherwise agree) reasonable compensation for its services under this Section, and the Trustee shall be entitled to be reimbursed for such payments, subject to the provisions of Section 8.06. The provisions of Sections 8.03, 8.04 and 9.03 shall be applicable to each Authenticating Agent. If an appointment with respect to one or more series is made pursuant to this Section, the Securities of such series may have endorsed thereon, in substitution for the Trustee's certificate of authentication, an alternate certificate of authentication in the following form:
45 This is one of the Securities issued under the Indenture described herein. MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Trustee, By [Authenticating Agent], as Authenticating Agent By ____________________________ Authorized Officer ARTICLE NINE CONCERNING THE SECURITYHOLDERS. Section 9.01. Action by Securityholders. Whenever in this Indenture it is provided that the holders of a specified percentage in aggregate principal amount of the Securities of any or all series may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action) the fact that at the time of taking any such action the holders of such specified percentage have joined therein may be evidenced (a) by any instrument or any number of instruments of similar tenor executed by holders of such Securities in person or by agent or proxy appointed in writing, or (b) by the record of the holders of such Securities voting in favor thereof at any meeting of holders of such Securities duly called and held in accordance with the provisions of Article Ten, or (c) by a combination of such instrument or instruments and any such record of such a meeting of holders of such Securities. Except as otherwise provided in Sections 7.01, 7.02, 7.04 and 7.07, the Corporation may set a record date in the circumstances permitted by the Trust Indenture Act of 1939 for the purpose of determining the holders of Securities of any series entitled to take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action), or to vote on any action authorized or permitted to be given or taken by holders of Securities of such series; provided, that if a record date is not set by the Corporation prior to the first solicitation of a holder of Securities of such series in respect of any such action, or, in the case of any such vote, prior to such vote, the record date for any such action or vote shall be the 30th day (or, if later, the date of the most recent list of holders required to be provided pursuant to Section 6.01) prior to such first solicitation or vote, as the case may be. With regard to any record date for action to be taken by the holders of one or more series of Securities, only the holders of Securities of such series on such date (or their duly designated proxies) shall be entitled to take, or vote on, the relevant action. Section 9.02. Proof of Execution by Securityholders. Subject to the provisions of Sections 8.01, 8.02 and 10.05, proof of the execution of any instruments by a Securityholder or his agent or proxy shall be sufficient if made in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the
46 Trustee. The ownership of Securities shall be provided by the registry books of the Corporation or by a certificate of the Security registrar. The record of any Securityholders' meeting shall be proved in the manner provided in Section 10.06. Section 9.03. Who are Deemed Absolute Owners. The Corporation, the Trustee, any paying agent, any Security registrar and any Exchange Agent may deem the person in whose name any Securities shall be registered upon the registry books of the Corporation to be, and may treat such person as, the absolute owner of such Security (whether or not such Security shall be overdue) for the purpose of receiving payment (including any obligation to exchange Capital Securities for Securities of a series pursuant to Article Seventeen) of or on account of the principal of (and premium, if any) and interest, if any, on such Security and for all other purposes; and neither the Corporation nor the Trustee nor any paying Agent nor any Security registrar nor any Exchange Agent shall be affected by any notice to the contrary. All such payments so made to any holder for the time being, or upon his order shall be valid, and, to the extent of the sum or sums so paid, effective to satisfy and discharge the liability for moneys payable upon any such Security. No holder of any beneficial interest in any Global Security held on its behalf by a Depositary shall have any rights under this Indenture with respect to such Global Security, and such Depositary may be treated by the Corporation, the Trustee, any paying agent, any Security registrar or any Exchange Agent as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall impair, as between a Depositary and such holders of beneficial interests, the operation of customary practices governing the exercise of the rights of the Depositary as holder of any Security. Section 9.04. Corporation-Owned Securities Disregarded. In determining whether the holders of the requisite aggregate principal amount of Securities have concurred in any direction, consent or waiver under this Indenture, Securities which are owned by the Corporation or any other obligor on the Securities or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Corporation or any other obligor on the Securities shall be disregarded and deemed not to be outstanding for the purpose of any such determination; provided, that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver only Securities which the Trustee knows are so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as outstanding for the purposes of this Section 9.04 if the pledgee shall establish to the satisfaction of the Trustee the pledgee's right to vote such Securities and that the pledgee is not a Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Corporation or any such other obligor. In the case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Section 9.05. Revocation of Consents; Future Holders Bound. At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 9.01, of the taking of any action by the holders of the percentage in aggregate principal amount of the Securities specified in this
47 Indenture in connection with such action, any holder of a Security the serial number of which is shown by the evidence to be included in the Securities the holders of which have consented to such action may, by filing written notice with the Trustee at its principal office and upon proof of holding as provided in Section 9.02, revoke such action so far as concerns such Security. Except as aforesaid any such action taken by the holder of any Security (including the election of the holder of a Security to receive Capital Securities on the Exchange Date) shall be conclusive and binding upon such holder and upon all future holders and owners of such Security and of any Security issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon such Security. ARTICLE TEN SECURITYHOLDERS' MEETINGS. Section 10.01. Purposes of Meetings. A meeting of holders of Securities of one or more series may be called at any time and from time to time pursuant to the provision of this Article Ten for any of the following purposes: (1) to give any notice to the Corporation or to the Trustee, or to give any directions to the Trustee, or to consent to the waiving of any Default or Event of Default hereunder and its consequences, or to take any other action authorized to be taken by such Securityholders pursuant to any of the provisions of Article Seven; (2) to remove the Trustee and nominate a successor trustee pursuant to the provisions of Article Eight; (3) to consent to the execution of an indenture or indentures supplemental hereto pursuant to the provisions of Section 11.02; or (4) to take any other action authorized to be taken by or on behalf of the holders of any specified aggregate principal amount of the Securities of one or more series under any other provision of this Indenture or under applicable law. Section 10.02. Call of Meetings by Trustee. The Trustee may at any time call a meeting of holders of Securities of one or more series to take any action specified in Section 10.01, to be held at such time and at such place in the Borough of Manhattan, The City of New York, as the Trustee shall determine. Notice of every such meeting of the Securityholders setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be mailed to holders of Securities of each series affected at their addresses as they shall appear on the registry books of the Corporation. Such notice shall be mailed not less than 20 nor more than 90 days prior to the date fixed for the meeting. Section 10.03. Call of Meetings by Corporation or Securityholders. In case at any time the Corporation, pursuant to a Board Resolution, or the holders of at least ten percent in aggregate principal amount of the Securities of one or more series then outstanding, shall have
48 requested the Trustee to call a meeting of holders of Securities of such series, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed the notice of such meeting within 20 days after receipt of such request, then the Corporation or such Securityholders may determine the time and the place in said Borough of Manhattan for such meeting and may call such meeting to take any action authorized in Section 10.01, by mailing notice thereof as provided in Section 10.02. Section 10.04. Qualifications for Voting. To be entitled to vote at any meeting of holders of Securities of any series a person shall (a) be a holder of one or more Securities of such series or (b) be a person appointed by an instrument in writing as proxy by a holder of one or more Securities of such series. The only persons who shall be entitled to be present or to speak at any meeting of Securityholders shall be the persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of the Corporation and its counsel. Section 10.05. Regulations. Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Securityholders, in regard to proof of the holding of Securities and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think fit. The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Corporation or by Securityholders as provided in Section 10.03, in which case the Corporation or the Securityholders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by majority vote of the meeting. Subject to the provisions of Section 9.04, at any meeting each Securityholder or proxy shall be entitled to one vote for each $1,000 principal amount (in the case of Discounted Securities, such principal amount to be determined as provided in the definition of the term "outstanding") of Securities of each series affected, held or represented by such Securityholder; provided, however, that no vote shall be cast or counted at any meeting in respect of any Security challenged as not outstanding and ruled by the chairman of the meeting to be not outstanding. The chairman of the meeting shall have no right to vote other than by virtue of Securities of each series affected, held by him or instruments in writing as aforesaid duly designating him as the Person to vote on behalf of other Securityholders. Any meeting of Securityholders duly called pursuant to the provisions of Section 10.02 or 10.03 may be adjourned from time to time by a majority of those present, whether or not constituting a quorum, and the meeting may be held as so adjourned without further notice. Section 10.06. Voting. The vote upon any resolution submitted to any meeting of Securityholders shall be by written ballots on which shall be subscribed the signatures of the holders of Securities or of their representatives by proxy and the principal amount of the Securities of each series affected, held or represented by them. The permanent chairman of the
49 meeting shall appoint two inspectors of votes who shall count all votes cast at the meting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Securityholders shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was mailed as provided in Section 10.02. The record shall show the principal amount of the Securities of each series affected voting in favor of or against any resolution. The record shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one of the duplicates shall be delivered to the Corporation and the other to the Trustee to be preserved by the Trustee. Any record so signed and verified shall be conclusive evidence of the matters therein stated. Section 10.07. Written Consent in Lieu of Meeting. The written authorization or consent of the requisite percentage of Securityholders herein provided, entitled to vote at any such meeting, evidenced as provided in Article Nine and filed with the Trustee shall be effective in lieu of a meeting of Securityholders, with respect to any matter provided for in this Article Ten. ARTICLE ELEVEN SUPPLEMENTAL INDENTURES. Section 11.01. Supplemental Indentures without Consent of Securityholders. The Corporation, when authorized by a resolution of the Board of Directors, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto for one or more of the following purposes: (a) to evidence the succession of another corporation to the Corporation, or successive successions, and the assumption by the successor corporation of the covenants, agreements and obligations of the Corporation pursuant to Article Twelve hereof; (b) to add to the covenants of the Corporation such further covenants, restrictions or conditions for the protection of the holders of all or any series of the Securities as the Board of Directors and the Trustee shall consider to be for the protection of the holders of all the Securities or the Securities of any series, as the case may be (and if such covenants are to be for the benefit of fewer than all series of Securities, stating that such covenants are expressly being included solely for the benefit of the Securities of such series), and to make the occurrence, or the occurrence and continuance, of a default in any of such additional covenants, restrictions or conditions a Default or an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; provided, however, that in respect of any such additional covenant, restriction or condition such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than
50 that allowed in the case of other defaults) or may provide for an immediate enforcement upon such default or may limit the remedies available to the Trustee upon such default; (c) to provide for the issuance under this Indenture of Securities in bearer form, registrable or nonregistrable as to principal and with or without interest coupons, and to provide for exchangeability of such Securities with the Securities of the same series issued hereunder in fully registered form and to make all appropriate changes for such purpose, or to permit or facilitate the issuance of Securities in uncertificated form; (d) to establish the form or terms of Securities of any series as permitted by Sections 2.01 and 3.01; (e) to add to the conditions, limitations and restrictions on the authorized amount, terms or purposes of issue, authentication and delivery of Securities, as herein set forth, other conditions, limitations and restrictions thereafter to be observed; (f) to provide for the terms and conditions upon which Securities which qualify as capital under rules, regulations, orders, interpretive rulings and guidelines of the Primary Federal Regulator as from time to time in effect may be issued and the terms and characteristics of any such Securities; provided, however, that any such Securities shall be subordinated to Senior Indebtedness as provided in Article Sixteen; provided further, that no such supplemental indenture shall effect any change in any Securities which may at the time be outstanding under this Indenture; (g) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 8.11 hereof; (h) to provide for the terms and conditions of conversion into Common Stock, securities or other property of the Securities of any series which are convertible into Common Stock, securities or other property to the extent such terms and conditions differ from those set forth in Article Nineteen; (i) to add to, change or eliminate any of the provisions of this Indenture; provided, that any such addition, change or elimination (i) shall become effective only when no Security of any series entitled to the benefits of such provision and issued prior to the execution of such supplemental indenture is outstanding or (ii) shall not apply to any outstanding Security; or (j) to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture or to make such other provisions in regard to matters or questions arising under this Indenture or any supplemental indenture which the Board of Directors may deem necessary or desirable and which shall not adversely affect in any material respect the interest of the holders of the Securities.
51 The Trustee is hereby authorized to join with the Corporation in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer and assignment of any property thereunder, but the Trustee shall not be obligated to, but may in its discretion, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Any supplemental indenture authorized by the provisions of this Section 11.01 may be executed by the Corporation and the Trustee without the consent of the holders of any of the Securities at the time outstanding, notwithstanding any of the provisions of Section 11.02. Section 11.02. Supplemental Indentures with Consent of Securityholders. With the consent (evidenced as provided in Section 9.01) of the holders of not less than a majority in aggregate principal amount of the Securities at the time outstanding of each series affected by such supplemental indenture, the Corporation, when authorized by a resolution of the Board of Directors, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the right of the holders of the Securities of each such series; provided, however, that no such supplemental indenture shall, without the consent of the holder of each Security affected thereby, (i) change the stated maturity date of the principal of, or any installment of principal of or interest on, any Security, (ii) reduce the principal amount of, or the interest (or premium, if any), on, any Security, (iii) reduce the portion of the principal amount of a Discounted Security payable upon acceleration of the maturity thereof, (iv) reduce any amount payable upon redemption of any Security, (v) change the place or places where, or the coin or currency in which, any Security or any premium or the interest thereon is payable as specified in such Security, (vi) change the definition of "Market Value" in Section 1.01, (vii) impair the right of any holder of Securities of any series to receive on any Exchange Date for Securities of such series Capital Securities with a Market Value equal to that required by the terms of the Securities, (viii) impair the right of any holders of Securities of a series entitled to the conversion rights set forth in Article Nineteen to receive shares of Common Stock, securities or other property upon the exercise of such conversion rights, (ix) impair the right of a holder to institute suit for the enforcement of any payment on or with respect to any Security (including any right of redemption at the option of the holder of such Security), or for the delivery of Capital Securities in exchange for Securities pursuant to Article Seventeen, or to require the Corporation to sell Capital Securities in a Secondary Offering pursuant to Article Seventeen, or for the delivery of Common Stock, securities or other property upon conversion of Securities pursuant to Article Nineteen, (x) reduce the aforesaid percentage of Securities of any series, the holders of which are required to consent to any such supplemental indenture, or reduce the percentage of Securities of any series the holders of which are required to waive any past Default or Event of Default, as specified in Section 7.07, or (xi) modify the foregoing provisions of clauses (i) through (x). A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the holders of Securities of
52 such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the holders of Securities of any other series. Upon the request of the Corporation, accompanied by a Board Resolution authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Securityholders as aforesaid, the Trustee shall join with the Corporation in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. It shall not be necessary for the consent of the Securityholders under this Section 11.02 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. Section 11.03. Compliance with Trust Indenture Act of 1939; Effect of Supplemental Indentures. Any supplemental indenture executed pursuant to the provisions of this Article Eleven shall comply with the Trust Indenture Act of 1939, as then in effect. Upon the execution of any supplemental indenture pursuant to the provisions of this Article Eleven, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Corporation and the holders of Securities of the series affected shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. Section 11.04. Notation on Securities. Securities authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article Eleven may bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Corporation shall so determine, new Securities so modified as to confirm, in the opinion of the Trustee and the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may, at the Corporation's expense, be prepared and executed by the Corporation, authenticated by the Trustee and delivered in exchange for the Securities then outstanding. Section 11.05. Evidence of Compliance of Supplemental Indenture to be Furnished Trustee. The Trustee, subject to the provisions of Sections 8.01 and 8.02, may receive an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant hereto complies with the requirements of this Article Eleven.
53 ARTICLE TWELVE CONSOLIDATION, MERGER AND SALE. Section 12.01. Corporation May Consolidate, etc., on Certain Terms. The Corporation covenants that it will not merge or consolidate with or into any other corporation or sell or convey all or substantially all of its assets as an entirety to any other corporation, unless (i) either the Corporation shall be the continuing corporation, or the successor corporation (if other than the Corporation) shall expressly assume the due and punctual payment of the principal of (and premium, if any) and interest, if any, on all the Securities (including issuance and delivery of Capital Securities pursuant to Article Seventeen), according to their tenor, and the due and punctual performance and observance of all of the covenants and conditions of this Indenture to be performed or observed by the Corporation (including, without limitation, the obligation of the Corporation to deliver shares of Common Stock, securities or other property upon conversion of Securities eligible for conversion in accordance with Article Nineteen, by supplemental indenture satisfactory in form to the Trustee, executed and delivered to the Trustee by such corporation and (ii) the Corporation or such successor corporation, as the case may be, shall not, immediately after such merger or consolidation, or such sale or conveyance, be in default in the performance or observance of any such covenant or condition. Section 12.02. Successor Corporation to be Substituted. In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor corporation, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the due and punctual payment of the principal of (and premium, if any) and interest, if any, on all the Securities (including issuance and delivery of Capital Securities pursuant to Article Seventeen) and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Corporation, such successor corporation shall succeed to and be substituted for the Corporation, with the same effect as if it had been named herein as the Corporation. Such successor corporation thereupon may cause to be signed, and may issue either in its own name or in the name of the Corporation any or all of the Securities issuable hereunder which theretofore shall not have been signed by the Corporation and delivered to the Trustee; and, upon the order of such successor corporation instead of the Corporation and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities which previously shall have been signed and delivered by the officers of the Corporation to the Trustee for authentication, and any Securities which such successor corporation thereafter shall cause to be signed and delivered to the Trustee for that purpose. All the Securities of a particular series so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities of such series theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Securities had been issued at the date of the execution hereof. Section 12.03. Opinion of Counsel to be Given Trustee. The Trustee, subject to Sections 8.01 and 8.02, may receive an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale or conveyance and any such assumption complies with the provisions of this Article.
54 ARTICLE THIRTEEN SATISFACTION AND DISCHARGE OF INDENTURE. Section 13.01. Discharge of Indenture. If at any time (a) the Corporation shall have paid or caused to be paid the principal of (and premium, if any) and interest, if any, on all the Securities theretofore authenticated hereunder (other than Securities which have been destroyed, lost or stolen and which have been replaced or paid or exchanged as provided in Section 3.05 and other than Securities for whose payment money (including Capital Securities, if required) has theretofore been deposited in trust or segregated and held in trust by any paying agent or Exchange Agent and thereafter repaid to the Corporation or discharged from such trust, as provided in Section 13.04, or paid to any State or to the District of Columbia pursuant to its unclaimed property or similar laws), as and when the same shall have become due and payable, or (b) the Corporation shall have delivered to the Trustee cancelled or for cancellation all Securities of any series theretofore authenticated (other than any Securities of such series which shall have been destroyed, lost or stolen and which shall have been replaced or paid or exchanged as provided in Section 3.05), or (c)(i) all the Securities of any series not theretofore delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and (ii) the Corporation shall have irrevocably deposited or caused to be deposited with the Trustee or any paying agent or Exchange Agent, in trust, funds (and Capital Securities, if required) sufficient to pay at maturity or upon redemption all Securities of such series (other than any such Securities which shall have been mutilated, destroyed, lost or stolen and which shall have been replaced or paid or exchanged as provided in Section 3.05) not theretofore cancelled or delivered to the Trustee for cancellation, including principal (and premium, if any) and interest, if any, due or to become due to such date of maturity as the case may be, but excluding, however, the amount of any moneys (including Capital Securities, if required) for the payment of the principal of (and premium, if any) or interest, if any, on the Securities of such series (1) theretofore deposited with the Trustee or any paying agent or Exchange Agent and repaid by the Trustee or any paying agent or Exchange Agent to the Corporation in accordance with the provisions of Section 13.04, or (2) paid to any State or the District of Columbia pursuant to its unclaimed property or similar laws, and if, in any such case, the Corporation shall also pay or cause to be paid all other sums (including Capital Securities, if required) payable hereunder by the Corporation with respect to Securities of such series, then this Indenture shall cease to be of further effect with respect to Securities of such series (except as to (i) rights of registration of transfer and exchange, and the Corporation's right of optional redemption, (ii) substitution of mutilated, destroyed, lost or stolen Securities, (iii) rights of holders to receive payments of principal (including principal to be paid by the delivery of Capital Securities) thereof and interest thereon, and remaining rights of the holders to receive mandatory sinking fund payments, if any, (iv) any surviving rights to exchange Securities for Capital Securities pursuant to Article Seventeen or to convert Securities into Common Stock, securities or other property pursuant to Article Nineteen, (v) the rights, obligations and immunities of the Trustee hereunder and (vi) the rights of the Securityholders of such series as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them), and the Trustee, on demand of the Corporation accompanied by
55 an Officers' Certificate and an Opinion of Counsel as required by Section 20.05 and at the cost and expense of the Corporation, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture with respect to Securities of such series, the Corporation, however, hereby agreeing to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred by the Trustee in connection with this Indenture or the Securities. Section 13.02. Deposited Moneys to be Held in Trust by Trustee. All moneys and Capital Securities deposited with the Trustee or any paying agent or Exchange Agent pursuant to Section 18.01 shall be held in trust and applied by it to the payment, either directly or through any paying agent or Exchange Agent (including the Corporation if acting as its own paying agent or Exchange Agent), to the holders of the particular Securities for the payment of which such moneys and Capital Securities have been deposited with the Trustee, or any paying agent or Exchange Agent, of all sums due and to become due thereon for principal (including principal to be paid by the delivery of Capital Securities) (and premium, if any) and interest, if any. Section 13.03. Paying Agent or Exchange Agent to Repay Moneys and Capital Securities Held. Upon the satisfaction and discharge of this Indenture all moneys and Capital Securities then held by any paying agent or Exchange Agent of the Securities (other than the Trustee) shall, upon demand of the Corporation, be repaid to it or paid to the Trustee, and thereupon such paying agent or Exchange Agent shall be released from all further liability with respect to such moneys. Section 13.04. Return of Unclaimed Moneys. Any moneys or Capital Securities deposited with or paid to the Trustee or any paying agent or Exchange Agent for payment of the principal of (or premium, if any) or interest, if any, on or the Exchange Price for Securities of any series and not applied but remaining unclaimed by the holders of such Securities for two years after the date upon which the principal of (or premium, if any) or interest, if any, or the Exchange Price, on such Securities, as the case may be, shall have become due and payable, shall be repaid to the Corporation by the Trustee or such paying agent on demand; and the holder of any of such Securities shall thereafter look only to the Corporation for any payment which such holder may be entitled to collect. ARTICLE FOURTEEN IMMUNITY OF INCORPORATORS; STOCKHOLDERS, OFFICERS AND DIRECTORS. Section 14.01. Indenture and Securities Solely Corporate Obligations. No recourse for the payment of the principal of (or premium, if any) or interest, if any, on any Security, or for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Corporation in this Indenture or in any supplemental indenture, or in any Security, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Corporation or of any successor corporation, either directly or through the Corporation or any successor corporation, whether by virtue of any constitution, statute or rule of
56 law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issue of the Securities. ARTICLE FIFTEEN SINKING FUNDS. Section 15.01. General. Any redemption of Securities of any series under any sinking fund as required or permitted by the terms of any form of Securities duly issued pursuant to this Indenture shall be made in accordance with such terms and this Article Fifteen. The Securities of any series may be subject to redemption pursuant to a sinking fund, in whole or in part, as set forth in the form of Security for the Securities of such series. The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an "optional sinking fund payment". If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 15.02 hereof. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series. Section 15.02. Satisfaction of Sinking Fund Payments with Securities. The Corporation (1) may deliver to the Trustee for cancellation outstanding Securities of a series (other than any previously called for redemption) and (2) may apply as a credit Securities of a series which have been redeemed either at the election of the Corporation pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Securities of such series required to be made pursuant to the terms of such Securities as provided for by the terms of such series; provided, that such Securities have not been previously so credited. Such Securities shall be received and credited for such purpose by the Trustee at the redemption price specified in such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly. Section 15.03. Redemption of Securities for Sinking Fund. Not less than 60 days prior to each sinking fund payment date for any series of Securities, the Corporation will deliver to the Trustee an Officers' Certificate (which need not comply with Section 20.05) specifying the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that series, the portion thereof, if any, which is to be by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities of that series pursuant to Section 15.02 hereof and will also deliver to the Trustee any Securities to be so delivered if not theretofore delivered. Not less than 45 days before each sinking fund payment date, the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 4.03 hereof and cause notice of the redemption thereof to be given in the
57 manner provided in Section 4.04. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 4.05 and 4.06. ARTICLE SIXTEEN SUBORDINATION OF THE SECURITIES. Section 16.01. Agreement that the Securities be Subordinated to the Extent Provided. The Corporation, for itself, its successors and assigns, covenants and agrees, and each holder of a Security likewise covenants and agrees by his acceptance thereof, that the obligation of the Corporation to make any payment of principal (including principal to be paid by the delivery of Capital Securities) of and interest on each and all of the Securities is hereby expressly subordinated, to the extent and in the manner hereinafter set forth, to the prior payment in full of (i) all Senior Indebtedness and (ii) with respect to Post-Amendment Securities only, under the circumstances described in Section 16.04, all Additional Senior Obligations. Subject to the provisions of this Article, all Securities will rank pari passu in right of payment with all other Securities. Section 16.02. Corporation Not to Make Payments with Respect to Securities in Certain Circumstances. No payment of principal of (and premium, if any) or interest on the Securities or exchange of Securities for Capital Securities shall be made and no holder of the Securities shall be entitled to demand or receive any such payment or exchange (i) unless all amounts of principal of (and premium, if any) and interest then due on all Senior Indebtedness shall have been paid in full or duly provided for, or (ii) if, at the time of such payment or exchange or immediately after giving effect thereto, there shall exist with respect to any Senior Indebtedness 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, would become such an event of default. Section 16.03. Securities Subordinated to Prior Payment of All Senior Indebtedness on Dissolution, Liquidation or Reorganization of the Corporation. Upon any distribution of the assets of the Corporation in connection with the dissolution, winding up, liquidation or reorganization of the Corporation (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or any other marshalling of the assets and liabilities of the Corporation or otherwise), the holders of Senior Indebtedness shall first be entitled to receive payment in full in accordance with the terms of such Senior Indebtedness of the principal thereof (and premium, if any) and the interest due thereon before the holders of the Securities are entitled to receive any payment on the Securities. Upon any such dissolution, winding up, liquidation or reorganization, any payment or distribution of assets of the Corporation of any kind or character, whether in cash, property or securities, to which the holders of the Securities would be entitled except for the provisions of this Article, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Corporation being subordinated to the payment of the Securities, shall be made by the liquidating trustee or agent or other Person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of Senior Indebtedness or their representative or representatives or to the
58 trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness may have been issued, ratably according to the aggregate amounts remaining unpaid on account of the principal of and premium, if any, and interest (including interest accruing subsequent to the commencement of any proceeding for the bankruptcy or reorganization of the Corporation under any applicable bankruptcy, insolvency, or similar law now or hereafter in effect) on the Senior Indebtedness held or represented by each, to the extent necessary to pay in full all such Senior Indebtedness remaining unpaid, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness. If the holders of the Securities, or any of them, shall fail to file a proper claim in the form required in any proceeding referred to in the first paragraph of this Section, prior to thirty days before the expiration of the time to file such claim or claims pursuant to the authority granted to the Trustee pursuant to the provisions of Section 7.02, then the holders of Senior Indebtedness are hereby authorized to file an appropriate claim or claims for and on behalf of the holders of the Securities in the form required in any such proceeding. In the event that, notwithstanding the foregoing, upon any such dissolution, winding up, liquidation or reorganization, any payment or distribution of assets of the Corporation of any kind or character, whether in cash, property or securities, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Corporation being subordinated to the payment of the Securities, shall be received by the Trustee, any paying agent, any Exchange Agent or the holders of the Securities before all Senior Indebtedness is paid in full, then, subject to the receipt by the Trustee, any paying agent or any Exchange Agent of notice pursuant to Section 16.08, such payment or distribution shall be held in trust for the benefit of and shall be paid over to the holders of such Senior Indebtedness or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness may have been issued, ratably as aforesaid for application to the payment of all Senior Indebtedness remaining unpaid until all such Senior Indebtedness shall have been paid in full, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness. Subject to the payment in full of all Senior Indebtedness, the holders of the Securities shall be subrogated to the rights of the holders of such Senior Indebtedness to receive payments or distributions of assets of the Corporation applicable to such Senior Indebtedness until the Securities shall be paid in full, and none of the payments or distributions to the holders of such Senior Indebtedness to which the holders of the Securities or the Trustee would be entitled except for the provisions of this Article or of payments over, pursuant to the provisions of this Article, to the holders of such Senior Indebtedness by the holders of the Securities or the Trustee shall, as between the Corporation, its creditors other than the holders of such Senior Indebtedness and the holders of the Securities, be deemed to be a payment by the Corporation to or on account of such Senior Indebtedness; it being understood that the provisions of Section 16.02 and this Section are and are intended solely for the purpose of defining the relative rights of the holders of the Securities, on the one hand, and the holders of the Senior Indebtedness, on the other hand. Section 16.04. Post-Amendment Securities Subordinated to Prior Payment of All Additional Senior Obligations on Dissolution, Liquidation or Reorganization of the Corporation.
59 Upon the occurrence of any of the events specified in the first paragraph of Section 16.03, the provisions of that Section shall be given effect to determine the amount of cash, property or securities which may be payable or deliverable as between the holders of Securities, on the one hand, and the holders of Senior Indebtedness, on the other hand. If after giving effect to the provisions of Section 16.03, any amount of cash, property or securities shall be available for payment or distribution in respect of the Securities, including, without limitation, any such amount that shall be available pursuant to the rights of subrogation set forth in the final paragraph of Section 16.03 ("Excess Proceeds"), then such Excess Proceeds shall be made available by the liquidating trustee or agent or other Person making such payment or distribution of assets, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, for the ratable benefit of the Securities; provided, that if any creditors in respect of Additional Senior Obligations shall not have received payment in full of all amounts due or to become due on or in respect of Additional Senior Obligations (and provision shall not have been made for such payment in money or money's worth), then the amount of Excess Proceeds available for payment or distribution in respect of Post-Amendment Securities shall first be applied to pay or provide for the ratable payment of Additional Senior Obligations remaining unpaid, to the extent necessary to pay all Additional Senior Obligations in full, after giving effect to any concurrent payment or distribution in respect of Additional Senior Obligations. Any Excess Proceeds originally available in respect of Post-Amendment Securities remaining after the payment (or provision for payment) in full of all Additional Senior Obligations shall continue to be available for payment or distribution in respect of Post-Amendment Securities. If the holders of Post-Amendment Securities, or any of them, shall fail to file a proper claim in the form required in any proceeding referred to in the first paragraph of Section 16.03, prior to thirty days before the expiration of the time to file such claim or claims pursuant to the authority granted to the Trustee pursuant to the provisions of Section 7.02, then the holders of Additional Senior Obligations are hereby authorized to file an appropriate claim or claims for and on behalf of the holders of Post-Amendment Securities in the form required in any such proceeding. If after giving effect to the provisions of Section 16.03, in the event that, notwithstanding the foregoing provisions of this Section 16.04, upon the occurrence of any of the events described in the first paragraph of Section 16.03, any payment or distribution of assets of the Corporation of any kind or character in respect of the Post-Amendment Securities, whether in cash, property or securities, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Corporation being subordinated to the payment of the Post-Amendment Securities, shall be received by the Trustee, any paying agent, any Exchange Agent or the holders of the Post-Amendment Securities before all Additional Senior Obligations are paid in full, then, subject to receipt by the Trustee, any paying agent or any Exchange Agent of notice pursuant to Section 16.08, such payment or distribution shall be held in trust for the benefit of and shall be paid over to the holders of such additional Senior Obligations or their representative or representatives, ratably as aforesaid for application to the payment of all Additional Senior Obligations remaining unpaid until all such Additional Senior Obligations shall have been paid in full, after giving effect to any concurrent payment or distribution to the holders of such Additional Senior Obligations.
60 Subject to the payment in full of all Additional Senior Obligations, the holders of the Post-Amendment Securities shall be subrogated to the rights of the holders of such Additional Senior Obligations to receive payments or distributions of assets of the Corporation applicable to such Additional Senior Obligations until the Post-Amendment Securities shall be paid in full, and none of the payments or distributions to the holders of such Additional Senior Obligations to which the holders of the Post-Amendment Securities or the Trustee would be entitled except for the provisions of this Article or of payments over, pursuant to the provisions of this Article, to the holders of such Additional Senior Obligations by the holders of the Post-Amendment Securities or the Trustee shall, as between the Corporation, its creditors other than the holders of such Additional Senior Obligations and the holders of the Post-Amendment Securities, be deemed to be a payment by the Corporation to or on account of such Additional Senior Obligations; it being understood by the parties hereto that the provisions of this Section are and are intended solely for the purpose of defining the relative rights of the holders of the Post-Amendment Securities, on the one hand, and the holders of the Additional Senior Obligations, on the other hand. Section 16.05. Obligation of the Corporation to Give Prompt Notice to Trustee; Trustee and Holders of Securities May Rely on Certificate of Liquidating Agent; Trustee May Require Further Evidence as to Ownership of Senior Indebtedness and Additional Senior Obligations. The Corporation shall give prompt written notice to the Trustee of any dissolution, winding up, liquidation or reorganization of the Corporation within the meaning of this Article. The Trustee, subject to the provisions of Section 8.01, shall be entitled to assume that no such event has occurred unless the Corporation or any one or more holders of Senior Indebtedness or Additional Senior Obligations or any trustee therefor (who shall have been certified or otherwise established to the satisfaction of the Trustee to be such a holder or trustee) has given written notice thereof to the Trustee at its corporate trust office in accordance with Section 16.08. Upon any distribution of assets of the Corporation referred to in this Article, the Trustee and the holders of the Securities shall be entitled to rely upon any order or decree of a court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Indebtedness and Additional Senior Obligations, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon, and all other facts pertinent thereto or to this Article, and the Trustee, subject to the provisions of Article Eight, and the holders of the Securities shall be entitled to rely upon a certificate of the liquidating trustee or agent or other Person making any distribution to the Trustee or to the holders of the Securities for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness and Additional Senior Obligations, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article. In the absence of notice from any liquidating trustee, agent or other Person to the contrary, the Trustee shall be entitled to rely upon a written notice by a Person representing himself to be a holder of Senior Indebtedness or Additional Senior Obligations (or a trustee or representative on behalf of such holder), as the case may be, as evidence that such Person is a holder of Senior
61 Indebtedness or Additional Senior Obligations (or is such a trustee or representative), as the case may be. In the event that the Trustee determines, in good faith, that further evidence is required with respect to the right of any Person, as a holder of Senior Indebtedness or Additional Senior Obligations, as the case may be, to participate in any payment or distribution pursuant to this Section, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of such Senior Indebtedness or Additional Senior Obligations, as the case may be, held by such Person, as to the extent to which such Person is entitled to participation in such payment or distribution, and as to other facts pertinent to the rights of such Person under this Section, and if such evidence is not furnished, the Trustee may defer any payment to such person pending judicial determination as to the right of such Person to receive such payment. Section 16.06. Obligation of the Corporation Unconditional. Nothing contained in this Article or elsewhere in this Indenture or in the Securities is intended to or shall impair, as between the Corporation and the holders of the Securities, the obligation of the Corporation, which is absolute and unconditional, to pay to the holders of the Securities the principal of and interest (including interest accruing subsequent to the commencement of any proceeding for the bankruptcy or reorganization of the Corporation under any applicable bankruptcy, insolvency, or similar law now or hereafter in effect) on the Securities as and when the same shall become due and payable in accordance with the terms thereof and to deliver Capital Securities in exchange for Securities when required pursuant to the Securities and this Indenture, or is intended to or shall affect the relative rights of the holders of the Securities and creditors of the Corporation other than the holders of the Senior Indebtedness and Additional Senior Obligations, nor shall anything herein or therein prevent the Trustee or the holder of any Securities from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article of the holders of Senior Indebtedness and Additional Senior Obligations in respect of cash, property, or securities of the Corporation received upon the exercise of any such remedy. Section 16.07. No Fiduciary Duty to Holders of Senior Indebtedness or Additional Senior Obligations. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness or Additional Senior Obligations, as the case may be, but shall have only such obligations to such holders as are expressly set forth in Sections 16.03 and 16.04. Section 16.08. Notice to Trustee of Facts Prohibiting Payments. Notwithstanding any of the provisions of this Article or any other provision of this Indenture, neither the Trustee, any paying agent nor any Exchange Agent shall at any time be charged with knowledge of the existence of any facts which would prohibit the making of any payment of moneys to or by the Trustee or any paying agent or any delivery of Capital Securities or moneys by any Exchange Agent, when required pursuant to the Securities and this Indenture, unless and until the Trustee, any paying agent or any Exchange Agent shall have received at its corporate trust office written notice thereof from the Corporation or from one or more holders of Senior Indebtedness or from any trustee therefor or from any holder of Additional Senior Obligations, or, if applicable, from any trustee therefor, who shall have been certified by the Corporation or otherwise established to the reasonable satisfaction of the Trustee to be such a holder or trustee; and, prior to the receipt of any such written notice, the Trustee, any paying agent or any Exchange Agent, subject to the provisions of Section 8.01, shall be entitled in all respects to assume that no such facts exist; provided, however, that, if prior to the fifth Business Day preceding the date upon which by the
62 terms hereof any such moneys may become payable for any purpose or any such Capital Securities are required to be delivered, or in the event of the execution of an instrument pursuant to Section 12.01 acknowledging satisfaction and discharge of this Indenture, then if prior to the second Business Day preceding the date of such execution, the Trustee, any paying agent or any Exchange Agent shall not have received with respect to such moneys or Capital Securities or such execution the notice provided for in this Section, then, anything herein contained to the contrary notwithstanding, the Trustee, any paying agent or any Exchange Agent may, in its discretion, receive such moneys or Capital Securities and/or apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary, which may be received by it on or after either such date, as the case may be; provided, however, no such application shall affect the obligations under this Article of the Persons receiving such moneys or Capital Securities from the Trustee, any paying agent or any Exchange Agent. Section 16.09. Application by Trustee of Moneys Deposited with It. Anything in this Indenture to the contrary notwithstanding, any deposit of moneys or Capital Securities to be exchanged for Securities on any Exchange Date by the Corporation with the Trustee or any paying agent or any Exchange Agent (whether or not in trust) for the payment of the principal of, interest on or the Exchange Price for any Securities shall, except as provided in Section 16.08, be subject to the provisions of Sections 16.01, 16.02, 16.03 and 16.04. Section 16.10. Subordination Rights Not Impaired by Acts or Omissions of the Corporation or Holders of Senior Indebtedness or Additional Senior Obligations. No right of any present or future holders of any Senior Indebtedness or Additional Senior Obligations to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Corporation or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Corporation with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof which any such holder may have or be otherwise charged with. The holders of Senior Indebtedness and Additional Senior Obligations may at any time or from time to time and in their absolute discretion, change the manner, place or terms of payment, change or extend the time of payment of, or renew or alter, any such Senior Indebtedness or Additional Senior Obligations, or amend or supplement any instrument pursuant to which any such Senior Indebtedness or Additional Senior Obligations is issued or by which it may be secured, or release any security therefor, or exercise or refrain from exercising any other of their rights under the Senior Indebtedness or Additional Senior Obligations, including, without limitation, the waiver of default thereunder, all without notice to or assent from the holders of the Securities or the Trustee and without affecting the obligations of the Corporation, the Trustee or the holders of the Securities under this Article. Section 16.11. Authorization of Trustees to Effectuate Subordination of the Securities. Each holder of a Security, by his acceptance thereof, authorizes and expressly directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate, as between the holders of Securities and the holders of Senior Indebtedness and Additional Senior Obligations, the subordination provided in this Article. Section 16.12. Right of Trustee to Hold Senior Indebtedness or Additional Senior Obligations. The Trustee shall be entitled to all of the rights set forth in this Article in respect of
63 any Senior Indebtedness or Additional Senior Obligations at any time held by it to the same extent as any other holder of such Senior Indebtedness or Additional Senior Obligations, as the case may be, and nothing in this Indenture shall be construed to deprive the Trustee of any of its rights as such holder. Section 16.13. Article Sixteen Not to Prevent Defaults. The failure to make a payment or to deliver Capital Securities in exchange for Securities pursuant to the Securities by reason of any provision in this Article shall not be construed as preventing the occurrence of a Default or an Event of Default. ARTICLE SEVENTEEN EXCHANGE OF CAPITAL SECURITIES FOR SECURITIES. Section 17.01. Applicability of Article. This Article shall apply to Securities of a series which are exchangeable by their terms for Capital Securities. The Corporation shall exchange Capital Securities for such Securities in accordance with their terms and in accordance with this Article. Section 17.02. Exchange of Capital Securities. At maturity and at any earlier time or times as established in the terms of Securities of any series as contemplated by Section 3.01, the Securities of a series will be exchanged for Capital Securities with a Market Value equal to 100% of the principal amount of such Securities or, at its option, the Corporation shall pay the principal of such Securities from amounts representing Designated Proceeds (unless, as specified in the Securities and this Indenture, the Securities of such series are earlier redeemed or exchanged and except to the extent the obligation of the Corporation to exchange Capital Securities for Securities of such series is revoked with respect to all or any part of the Securities of such series pursuant to the Securities and Section 17.10). Notice of an Exchange Date shall be given in the manner described in Section 17.04(a). An Exchange Date established pursuant to this paragraph may be accelerated to any date on or after the date 60 days prior to the date so established by a later notice given by the Corporation in the manner prescribed in Section 17.04(b) not less than three Business Days prior to the accelerated Exchange Date. No fractional Capital Securities shall be issued upon exchange for any Securities. If more than one Security of any Series shall be surrendered for exchange at one time by the same holder, the amount of all Capital Securities which shall be issuable upon exchange thereof shall be computed on the basis of the aggregate principal amount of Securities so surrendered. In lieu of issuing any fractional Capital Security, the Corporation shall pay a cash adjustment in respect of such fraction in an amount equal to the same fraction of the Market Value of the Capital Security. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the exchange of Securities shall relate, in the case of any Security exchanged or to be exchanged only in part, to the portion of the principal amount of such Security which has been or is to be exchanged.
64 Section 17.03. Evidence of Exchange. An Officers' Certificate shall evidence any election of the Corporation to exchange Capital Securities for Securities of a series prior to their stated maturity pursuant to Section 17.02 and the terms of the Securities of such series. Section 17.04. Notices of Exchange. (a) All notices subject to this paragraph shall be given in the manner described in Section 17.04(b) not less than 90 nor more than 120 days prior to any Exchange Date. The Company shall promptly deliver a copy of each such notice to the Trustee and the Exchange Agent. All notices of exchange shall: (1) state the Exchange Date and that the Exchange Date is subject to acceleration in the manner described in Section 17.02; (2) state the type of Capital Securities to be exchanged for the Securities on such Exchange Date; (3) contain or be accompanied by the form of Capital Securities Election Form specified in Section 17.08; (4) if less than all of the outstanding Securities of a series are to be exchanged on such Exchange Date, state the serial numbers of Securities selected to be exchanged and, in the case of Securities to be exchanged in part, the portions thereof selected for exchange; (5) state that each holder of Securities being exchanged will receive on such Exchange Date accrued and unpaid interest in cash (subject to Section 3.02) and may elect to receive Capital Securities in exchange for Securities of such series with a Market Value equal to the principal amount of the Securities of such series by returning the Capital Securities Election Form contained in Section 17.08 within the time set forth therein (which shall be a date 30 days subsequent to the giving of the notice described in Section 17.04(a)); (6) state that, if the holder does not return the Capital Securities Election Form within the specified time period, such holder shall be deemed to have received Capital Securities on the Exchange Date and to have elected to have such Capital Securities sold by the Corporation in the related Secondary Offering and the proceeds thereof, together with accrued and unpaid interest, delivered to such holder on the Exchange Date; provided, however, that in the event the Corporation does not effect the Secondary Offering or sell in a Secondary Offering a sufficient amount of Capital Securities so that the sale proceeds thereof, when added to any Designated Proceeds which the Corporation has elected to apply, are sufficient to satisfy all cash elections, such holder will receive on the Exchange Date Capital Securities to the extent that the aggregate cash elections exceed the proceeds of any Secondary Offering and such Designated Proceeds;
65 (7) state that on such Exchange Date the Exchange Price will become due and payable, whether in money or Capital Securities, with respect to each such Security to be exchanged and that interest thereon will cease to accrue on and after such Exchange Date; (8) state that because the Market Value of Capital Securities sold in the Secondary Offering will be determined prior to the Exchange Date, holders of Securities who elect to receive Capital Securities on the Exchange Date will bear the market risk with respect to the value of the Capital Securities to be received from the date such Market Value is determined to the Exchange Date; (9) state that each holder for whom Capital Securities are being offered in the Secondary Offering shall be deemed to have appointed the Corporation its attorney-in-fact to execute any and all documents and agreements which the Corporation deems necessary or appropriate to effect such Secondary Offering and the precise terms of such appointment; (10) state that (i) the Corporation will assume, unless advised to the contrary in writing, that the Capital Securities are to be offered for the account of the holder, that such holder has not held any position, office or other material relationship with the Corporation within three years preceding the Secondary Offering, that the holder owns no such Capital Securities which are held other than in the name of the holder and that after completion of the Secondary Offering the holder will own less than one percent of the class of such Capital Securities, (ii) if any of these assumptions are not correct, the holder shall promptly so advise the Corporation, and (iii) a failure on the part of such holder to promptly advise the Corporation of the incorrectness of any of such assumptions will expose such holder to liability to the Corporation, other holders of Securities of such series and underwriters, agents and other similar persons to the extent set forth in Section 17.05 and exonerate the Corporation from liability to such holder to the extent set forth in Section 17.09; and (11) state the place or places where such Securities are to be surrendered for payment or exchange for Capital Securities. (b) Each notice shall be given to the holders of Securities of any series to be exchanged by first-class mail, postage prepaid, to their address as they shall appear on the Security register and published in an Authorized Newspaper. The Corporation shall promptly deliver a copy of each such notice to the Trustee and the Exchange Agent. If Capital Securities are to be delivered on the Exchange Date, notice shall be given, in a like manner, not less than five Business Days prior to the Exchange Date of the amount of Capital Securities to be exchanged for each $1,000 principal amount of Securities of such series. (c) If less than all the Securities of a series are to be exchanged, the Corporation shall at least 15 days prior to the notice establishing such Exchange Date (unless a shorter period shall be satisfactory to the Trustee) notify the Trustee of such Exchange Date and of the principal amount of Securities of such series to be exchanged, and the particular Securities to be exchanged shall be selected in authorized denominations by the Trustee from the outstanding
66 Securities of such series by such method as the Trustee shall deem fair and equitable, provided that such method shall comply with the requirements of applicable law, including Federal securities laws. The Trustee shall promptly notify the Corporation in writing of the Securities selected for exchange and, in the case of any Securities selected for partial exchange, the principal amount thereof to be exchanged. Section 17.05. Rights and Duties of Holders of Securities to be Exchanged for Capital Securities. (a) Subject to Section 7.01 and 7.02 and without prejudice to the rights pursuant to Section 17.09 of holders of Securities of any series to be exchanged, no holder of Securities of a series which is exchangeable in accordance with its terms shall be entitled to receive any cash from the Corporation on any Exchange Date except from the proceeds of the sale of Capital Securities in the related Secondary Offering or from Designated Proceeds and except as provided herein in lieu of any fractional Capital Securities and for accrued and unpaid interest. In the event the Corporation does not, prior to any Exchange Date, effect a Secondary Offering or sell in a Secondary Offering a sufficient amount of Capital Securities so that the sale proceeds thereof, when added to any Designated Proceeds, are sufficient to satisfy all cash elections, Cash Election Holders will on the Exchange Date receive whole Capital Securities and not cash to the extent that aggregate cash elections exceed the aggregate amount of any Secondary Offering sale proceeds and any Designated Proceeds. If Cash Election Holders are to receive any Capital Securities on any Exchange Date, the Trustee will allocate such Capital Securities, any proceeds of a Secondary Offering and any available Designated Proceeds among Cash Election Holders on a pro rata basis to the extent practicable or by such other means as the Trustee deems fair and appropriate and, in any event, in such manner as may be required by applicable law. In such event, the Corporation will have no continuing obligation to effect a Secondary Offering in respect of the Capital Securities received by Cash Election Holders, but will not be relieved of any liability for money damages it would have for breach of its obligation to effect a Secondary Offering of sufficient amounts of Capital Securities. To the extent such Cash Election Holders do not receive cash they will receive whole Capital Securities for the balance and cash in lieu of any fractional Capital Security. (b) Each holder for whom Capital Securities are offered in a Secondary Offering shall be deemed to have appointed the Corporation its attorney-in-fact to execute any and all documents and agreements the Corporation deems necessary or appropriate to effect such Secondary Offering on such terms as are set out in the notice described in Section 17.04(a). (c) Unless advised to the contrary in writing within 30 days following the giving of the notice described in Section 17.04(a) by any holder for whom Capital Securities are offered in a Secondary Offering, the Corporation shall assume for the purposes of such Secondary Offering that the Capital Securities are to be offered for the account of such holder, that such holder has not held any position or office or had any other material relationship with the Corporation with-in three years preceding the Secondary Offering, that such holder owns no such Capital Securities which are held other than in the name of such holder and that after completion of the Secondary Offering such holder will own less than 1% of each class of such Capital Securities.
67 (d) Each holder of Securities for whom Capital Securities we offered in the Secondary Offering is deemed by virtue of taking delivery of Securities to agree, to the extent such agreement is enforceable under applicable law, to indemnify and hold harmless the Corporation, any other holder and any underwriter, agent or other similar person from and against any and all losses, claims, damages and liabilities resulting from or based upon any untrue statement or alleged untrue statement of any material fact contained in any notice of exchange, any offering memorandum or selling document or registration statement relating to the Secondary Offering, any preliminary prospectus or prospectus contained therein, or any amendment thereof or supplement thereto, or resulting from or based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading which untrue statement, alleged untrue statement, omission or alleged omission is made therein (i) in reliance upon and in conformity with written information furnished to the Corporation by or on behalf of such holder specifically for use in connection with the preparation thereof or (ii) because of such holder's failure to advise the Corporation in writing that any assumption described in Section 17.04(a)(10) is incorrect. (e) In order to receive Capital Securities on any Exchange Date for any Security, the holder of the Security to be exchanged shall return to the Exchange Agent a Capital Securities Election Form and surrender to the Exchange Agent such Security (with, if the Corporation or the Exchange Agent so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Corporation and the Exchange Agent duly executed by, the holder of any Security or his attorney duly authorized in writing). If no such form is timely returned by any holder, such holder will be deemed to have received Capital Securities on the Exchange Date and to have elected to have such Capital Securities sold by the Corporation in the related Secondary Offering and the proceeds thereof, together with accrued and unpaid interest, delivered to such holder on the Exchange Date. Section 17.06. Deposit of Exchange Price. At least 90 days prior to any Exchange Date, the Corporation will appoint an Exchange Agent, and on or prior to any Exchange Date, the Corporation shall deposit with the Trustee or with the Exchange Agent (or, if the Corporation is acting as the Exchange Agent, segregate and hold in trust as provided in Section 5.04) certificates for Capital Securities and in amount of money which together are sufficient to pay the Exchange Price of, and accrued interest on, all the Securities or portions thereof which are to be exchanged on that Exchange Date. Section 17.07. Securities Due on Exchange Date; Securities Exchanged in Part. Notice of exchange having been given as aforesaid, the Securities of any series so to be exchanged shall, on the Exchange Date, become due and payable at the Exchange Price therein specified, and from and after such date (unless the Corporation shall default in the payment of the Exchange Price and accrued interest) Securities of such series, or portions thereof, to be exchanged shall cease to bear interest provided, that the Corporation has deposited with the Exchange Agent (or, if the Corporation is acting as Exchange Agent, segregated and held in trust as provided in Section 5.04) certificates for Capital Securities and an amount of money which together are sufficient to pay the Exchange Price of, and accrued interest on, all the Securities of such series or portions thereof which are to be exchanged on the Exchange Date in accordance with Section
68 17.06. Securities of such series to be exchanged or, at the option of the Corporation, paid as set forth in the terms of the Indenture and the terms of the Securities of such series shall be deemed to have been exchanged or paid, as the case may be, on the Exchange Date therefor, and at such time the rights of the holders of such Securities as holders shall cease and the Person or Persons entitled to receive Capital Securities issuable upon such exchange shall be treated for all purposes as the record holder or holders of such Capital Securities at such time and entitled to receive the Exchange Price as set forth below. Upon surrender of any Security for exchange in accordance with said notice, such Security shall be paid by the Corporation at the Exchange Price, together with accrued interest to, but not including the Exchange Date; provided, however, that installments of interest whose maturity is on or prior to the Exchange Date shall be payable to the holders of such Securities, or one or more predecessor Securities, registered as of the close of business on the record date for payment of interest on such Securities according to their terms and the provisions of Section 3.02. If any Security of any series for which the notice specified in Section 17.04(a) is duly given shall not be so paid or exchanged upon surrender thereof for exchange in accordance with Section 17.05(e), the principal shall, until paid, bear interest from such Exchange Date at the rate or rates prescribed therefor in such Security. Any Security which is to be exchanged only in part shall be surrendered to the Exchange Agent (with, if the Corporation or the Exchange Agent so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Corporation and the Exchange Agent duly executed by, the holder thereof or his attorney duly authorized in writing) and the Corporation shall execute, the Trustee shall authenticate, and there shall be delivered to the holder of such Security without service charge a new Security or Securities of the same series, of any authorized denomination as requested by such holder in aggregate principal amount equal to and in exchange for the unexchanged portion of the principal of the Security so surrendered. Section 17.08. Form of Capital Securities Election Form. The form of Capital Securities Election Form shall be substantially as follows with such additions, deletions or changes thereto as may be approved by the Corporation. CAPITAL SECURITIES ELECTION FORM To: [insert name and address of Exchange Agent] The undersigned holder of [insert title of Security] (the "Securities") of Chemical Banking Corporation, hereby elects to receive on the Exchange Date referred to in the Indenture, dated as of April 1, 1987 (the "Indenture"), between Chemical Banking Corporation and Morgan Guaranty Trust Company of New York, Trustee, and referred to in the notice of exchange delivered to the undersigned with this Capital Securities Election Form, Capital Securities of Chemical Banking Corporation with a Market Value equal to the principal amount of the Securities being exchanged registered in the name of the undersigned holder. Unless this Capital Securities Election Form is received by at the address specified above, on or prior to , 19 (the date 30 days subsequent to the giving of the notice described in
69 Section 17.04(a) of the Indenture), the holder will be deemed to have elected to participate in the sale of the holder's Capital Securities in the Secondary Offering and will receive cash on the Exchange Date in an amount equal to the principal amount of all Securities being exchanged registered in the name of, or held by, the holder. All terms used herein and not otherwise defined herein shall have the meanings specified in the Indenture. Dated , 19 Name of Holder List of Serial Numbers of Securities List of Serial Numbers of Securities Section 17.09. Covenants of the Corporation. (a) The Corporation agrees that all Capital Securities issued in exchange for Securities will upon issuance be duly and validly issued and, if applicable, fully paid and nonassessable. If any Capital Securities required to be exchanged for Securities hereunder require registration with or approval of any governmental authority under any Federal or State law or any national securities exchange, before such Capital Securities may be issued, the Corporation shall use its best efforts to cause such Capital Securities to be duly registered or approved, as the case may be. The Corporation will pay any and all transfer, stamp or similar taxes that may be payable in respect of the issue or delivery of Capital Securities in exchange for Securities pursuant hereto. (b) The Corporation unconditionally undertakes to sell or cause to be sold Capital Securities in each Secondary Offering (and to bear all expenses of each Secondary Offering, including underwriting discounts and commissions) at the times and in the manner required by this Indenture and the Securities of the series exchanged for Capital Securities unless all holders of the Securities of such series to be exchanged have duly elected to receive Capital Securities on the related Exchange Date, or the Designated Proceeds the Corporation has elected to apply to the payment of Securities of such series are sufficient to satisfy the claims of all Cash Election Holders with respect to the principal amount of the Securities held by such holders. (c) The Corporation agrees, to the extent such agreement is enforceable under applicable law, to indemnify and hold harmless each holder of Securities for the account of whom Capital Securities are being offered and sold in connection with any Secondary Offering and any underwriter, agent or other similar person from and against any and all losses, claims, damages and liabilities resulting from or based upon any untrue statement or alleged untrue statement of any material fact contained in any notice of exchange, any offering memorandum or selling document or registration statement relating to the Secondary Offering, any preliminary prospectus or prospectus contained therein, or any amendment thereof or supplement thereto, or resulting from or based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or
70 resulting from the Corporation's failure to comply with Section 17.09(a); provided, however, that the Corporation will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement, alleged untrue statement, omission or alleged omission made therein (i) in reliance upon and in conformity with written information furnished to the Corporation by or on behalf of such holder specifically for use in connection with the preparation thereof or (ii) because of such holder's failure to advise the Corporation in writing that any assumption described in Section 17.04(a)(10) is incorrect. In connection with any Secondary Offering, the Corporation agrees to obtain usual and appropriate indemnification of any holder for the account of whom Capital Securities are being offered and sold in any Secondary Offering from any underwriter, agent or other similar person. (d) The Corporation will effect each Secondary Offering such that the closing of such Secondary Offering will occur on or before the relevant Exchange Date. Section 17.10. Revocation of Obligation to Exchange Capital Securities for Securities. The Corporation's obligation to exchange Capital Securities for Securities of a series which are not redeemed prior to maturity shall be absolute and unconditional; provided, however, that such obligation may be revoked with respect to all or any part of the Securities of such series at the option of the Corporation at any time, on not less than 30 days' prior notice given in the manner provided in Section 17.04(b) to the holders of the Securities of such series, the Trustee and the Exchange Agent, if (i) the Corporation determines that Securities of such series (other than Securities which am not king treated as "primary capital" or "Tier 1 capital" as the result of the issuance of Capital Securities) do not constitute "primary capital" or "Tier 1 capital" of the Corporation under applicable capital guidelines or regulations at the time being generally applied by its Primary Federal Regulator, (ii) the Securities of such series (other than Securities which are not being treated as "primary capital" or "Tier 1 capital" as the result of the issuance of Capital Securities) cease being treated as "primary capital" or "Tier 1 capital" of the Corporation by its Primary Federal Regulator under applicable capital guidelines or regulations at the time being generally applied by its Primary Federal Regulator, or (iii) approval of the Corporation's Primary Federal Regulator is obtained, or is not at the time required, for such revocation and, in each case, the Corporation shall furnish the Trustee with an Opinion of Counsel to such effect. In the event that such obligation is revoked with respect to all or any part of the Securities of a series: (a) the Corporation will pay the percentage of the principal amount established in the terms of the Securities of such series in cash from any source on the stated maturity thereof, or (b) the Corporation may, at any time when pursuant to their terms such Securities are redeemable, redeem the Securities in whole or in part, for cash in the manner set forth in the Securities at the percentage of the principal amount established in the terms of the Securities of such series plus accrued interest to the redemption date, but such Securities shall not thereafter be exchangeable for Capital Securities under any circumstances. If such obligation is revoked with respect to fewer than all the Securities of a
71 series, such Securities of such series or portions thereof will be selected by the Trustee in such manner as the Trustee shall deem equitable and fair and, in any event, in such manner as may be required by applicable law. Any notice with respect to the partial revocation of such obligation shall specify the Securities of such series affected; such notice need not be mailed to holders of Securities not affected by such revocation. Section 17.11. Provision in Case of Consolidation, Merger or Transfer of Assets. In case of any consolidation of the Corporation with, or merger of the Corporation into, any other corporation (other than a consolidation or merger in which the Corporation is the continuing corporation), or in case of any sale, conveyance or transfer of the properties and assets of the Corporation substantially as an entirety, the corporation formed by such consolidation or the corporation into which the Corporation shall have been merged or the corporation which shall have acquired such assets of the Corporation, as the case may be, shall execute and deliver to the Trustee a supplemental indenture providing that the holder of each Security then outstanding shall, subject to the terms of the Securities and this Article Seventeen, have the right thereafter to receive securities of such successor on the Exchange Date for such Security with a Market Value equal to the principal amount of such Security. The above provisions of this Section shall similarly apply to successive consolidations, mergers, conveyances or transfers. Section 17.12. Responsibility of Trustee. The Trustee shall not at any time be under any duty or responsibility to any holder of Securities of any series to be exchanged to determine the Market Value of any Capital Securities delivered in exchange for Securities of such series and may rely on and shall be entitled to receive prior to any Exchange Date an Officers' Certificate of the Corporation as to the Market Value of the Capital Securities being exchanged for such Securities and the amount of Capital Securities being exchanged for each $1,000 principal amount of Securities of such series and that such Capital Securities qualify as Capital Securities under the definition thereof contained in this Indenture. The Trustee shall not be accountable with respect to the validity or value (or the kind or amount) of any Capital Securities which may at any time be issued or delivered in exchange for any Security, and the Trustee does not make any representation with respect thereto. The Trustee shall not be responsible for any failure of the Corporation to issue, transfer or deliver any Capital Securities or Capital Security certificates or other securities or property upon the surrender of any Security for the purpose of exchange or to comply with any of the covenants of the Corporation contained in this Article. ARTICLE EIGHTEEN DESIGNATED PROCEEDS. Section 18.01. Sale or Issuance of Capital Securities to Generate Designated Proceeds. The Corporation may from time to time, at its option or as required by the terms of the Securities of a series, sell, issue or exchange Capital Securities for the purpose of generating Designated Proceeds to be used to pay or redeem Securities. There will be no segregation of Designated Proceeds in any account and the holders of any series of Securities and the Trustee will have no security interest in or other claim upon amounts representing Designated Proceeds or any investment or earnings thereon until such time, if any, as amounts representing such Designated
72 Proceeds are deposited with the Trustee or any paying agent or Exchange Agent for payment in respect of such series of Securities. Section 18.02. Optional Redemption Using Designated Proceeds. The Corporation may elect to redeem the Securities of a series, in whole or in part, in accordance with the terms of the Securities of such series and of Article Four by paying the principal of such Securities with amounts representing Designated Proceeds at a price equal to the percentage of the principal amount established in the terms of the Securities of such series on the redemption date of the Securities to be so redeemed and (except if such redemption date shall be an interest payment date) accrued interest on such Securities to such redemption date. If such redemption date is an interest payment date, the interest payable on such date shall be paid to the holder of Securities according to the terms of the Securities and the provisions of Section 3.02. To the extent provided in the Securities of a series, and redemption pursuant to this paragraph may be in lieu of, or in addition to, any exchange of Capital Securities for Securities of such series which may be made in accordance with the provisions of Article Seventeen. Section 18.03. Officers' Certificates as to Designated Proceeds. If any payment by the Corporation is required, pursuant to the terms of the Securities of a series and this Indenture, to be made only from amounts representing Designated Proceeds, the Corporation shall deliver to the Trustee, upon its request, an Officers' Certificate certifying that such payment had been or will be made from only Designated Proceeds. ARTICLE NINETEEN CONVERSION OF SECURITIES. Section 19.01. General. If so provided in the terms of the Securities of any series established in accordance with Section 3.01, the principal amount of the Securities of such series shall be convertible into shares of Common Stock in accordance with the terms of such series of Securities and this Article Nineteen; provided, however, that if any of the terms by which any such Security shall be convertible into Common Stock are set forth in a supplemental indenture entered into with respect thereto pursuant to Section 11.01(h) hereof, the terms of such supplemental indenture shall govern. Section 19.02. Right to Convert. Subject to and upon compliance with the provisions of this Article, the holder of any Security that is convertible into Common Stock shall have the right, at such holder's option, at any time on or after the date of original issue of such Security or such other date specified in the applicable Board Resolution delivered pursuant to Section 3.01 and prior to the close of business on the date set forth in such Board Resolution (or if such Security is called for redemption, then in respect of such Security to and including but not after the close of business on the date of redemption unless the Corporation shall default in the payment due on such date) to convert the principal amount of any such Security and any authorized denomination, or, in the case of any Security to be converted of a denomination greater than the minimum denomination for Securities of the applicable series, any portion of such principal which is an authorized denomination of an integral multiple thereof, into that
73 number of fully paid and nonassessable shares of Common Stock obtained by dividing the principal amount of such Security or portion thereof surrendered for conversion by the Conversion Price therefor by surrender of the Security so to be converted in whole or in part in the manner provided in Section 19.03. Such conversion shall be effected by the Corporation in accordance with the provisions of this Article. Section 19.03. Manner of Exercise of Conversion Privilege; Delivery of Common Stock; No Adjustment for Interest or Dividends. In order to effect a conversion, the holder of any Security to be converted, in whole or in part, shall surrender such Security at the office or agency maintained by the Corporation for such purpose in the Borough of Manhattan, The City of New York, as provided in Section 5.02 and shall give written notice of conversion to the Corporation at such office or agency that the holder elects to convert such Security or the portion thereof specified in said notice. The notice shall state the name or names (with address), and taxpayer identification number, in which the certificate or certificates for shares of Common Stock which shall be deliverable on such conversion shall be registered, and shall be accompanied by payments in respect of transfer taxes, if required pursuant to Section 19.06. Each Security surrendered for conversion shall, unless the shares of Common Stock deliverable on conversion are to be issued in the same name as the registration of such Security, be duly endorsed by or be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or such holder's duly authorized attorney, and by any payment required pursuant to this Section 19.03. As promptly as practicable after the surrender of such Security and notice, as aforesaid, the Corporation shall deliver or cause to be delivered at such office or agency to such holder, or on such holder's written order, a certificate or certificates for the number of full shares of Common Stock deliverable upon the conversion of such Security or portion thereof in accordance with the provisions of this Article and a check or cash in respect of any fractional interest in respect of a share of Common Stock arising upon such conversion as provided in Section 19.04. In case any Security of a denomination greater than the minimum denomination for Securities of the applicable series shall be surrendered for partial conversion, the Corporation shall execute and register and the Trustee shall authenticate and deliver to or upon the written order of the Corporation and the holder of the Security so surrendered, without charge to such holder, a new Security or Securities of the same series in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Security. Each conversion shall be deemed to have been effected as of the date on which such Security shall have been surrendered (accompanied by the funds, if any, required by the last paragraph of this Section) and such notice received by the Corporation, as aforesaid, and the person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be registrable upon such conversion shall become on said date the holder of record of the shares represented thereby, provided, however, that any such surrender on any date when the stock transfer books of the Corporation shall be closed shall constitute the person in whose name the certificates are to be registered as the record holder thereof for all purposes on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date upon which such Security shall have been so surrendered. Any Security or portion thereof surrendered for conversion during the period from the close of business on the regular record date for any interest payment date to the opening of
74 business on such interest payment date shall (unless such Security or portion thereof being converted shall have been called for redemption or submitted for repayment on a date during such period) be accompanied by payment, in legal tender or other funds acceptable to the Corporation, of an amount equal to the interest otherwise payable on such interest payment date on the principal amount being converted; provided, however, that no such payment need be made if there shall exist at the time of conversion a default in the payment of interest on, the applicable series of Securities. An amount equal to such payment shall be paid by the Corporation on such interest payment date to the holder of such Security on such regular record date; provided, however, that if the Corporation shall default in the payment of interest on such interest payment date, such amount shall be paid to the person who made such required payment. Except as provided above in this Section, no adjustment shall he made for interest accrued on any Security converted or for dividends on any shares issued upon the conversion of such Security as provided in this Article. Section 19.04. Cash Payments in Lieu of Fractional Shares. No fractional shares of Common Stock or scrip representing fractional shares of Common Stock shall be delivered upon conversion of Securities. If more than one Security shall be surrendered for conversion at one time by the same holder, the number of full shares of Common Stock which shall be deliverable upon conversion shall be computed on the basis of the aggregate principal amount of the Securities (or specified portions thereof to the extent permitted hereby) so surrendered. Instead of any fraction of a share of Common Stock which would otherwise be deliverable upon the conversion of any Security, the Corporation shall pay to the holder of such Security an amount in cash (computed to the nearest cent, with one-half cent being rounded upward) equal to the same fraction of the closing price (determined in the manner provided in Section 19.05(a)(v)) of the Common Stock on the date of conversion or if such date is not a Trading Day (as defined in Section 19.05 (a)(v)) on the Trading Date next preceding the date of conversion. Section 19.05. Conversion Price Adjustments; Effect of Reclassifications, Mergers, Consolidations and Sales of Assets. (a) The Conversion Price shall be adjusted from time to time as follows: (i) In case the Corporation shall (x) pay a dividend or make a distribution on the Common Stock in shares of Common Stock, (y) subdivide the outstanding Common Stock into a greater number of shares or (z) combine the outstanding Common Stock into a smaller number of shares, the Conversion Price shall be adjusted so that the holder of any Security thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock of the Corporation which such holder would have owned or have been entitled to receive after the happening of any of the events described above had such Security been converted immediately prior to the record date in the case of a dividend or the effective date in the case of subdivision or combination. An adjustment made pursuant to this subparagraph (i) shall become effective immediately after the record date in the case of a dividend, except as provided in subparagraph (vii) below, and shall become effective immediately after the effective date in the case of a subdivision or combination.
75 (ii) In case the Corporation shall issue rights or warrants to all holders of shares of Common Stock entitling them (for a period expiring within 45 days after the record date mentioned below) to subscribe for or purchase shares of Common Stock at a price per share less than the current market price per share of Common Stock (as defined for purposes of this subparagraph (ii) in subparagraph (v) below), the Conversion Price in effect after the record date for the determination of stockholders entitled to receive such rights or warrants shall be determined by multiplying the Conversion Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding on such record date plus the number of shares of Common Stock which the aggregate offering price of the total number of shares of Common Stock so offered would purchase at such current market price, and the denominator of which shall be the number of shares of Common Stock outstanding on the record date for issuance of such rights or warrants plus the number of additional shares of Common Stock receivable upon exercise of such rights or warrants. Such adjustment shall be made successively whenever any such rights or warrants are issued, and shall become effective immediately, except as provided in subparagraph (vii) below, after such record date. (iii) In case the Corporation shall distribute to all holders of Common Stock any shares of capital stock of the Corporation (other than Common Stock) or evidences of its indebtedness or assets (excluding cash dividends or distributions paid from retained earnings of the Corporation or dividends payable in Common Stock) or rights or warrants to subscribe for or purchase any of its securities (excluding those rights or warrants referred to in subparagraph (ii) above) (any of the foregoing being hereinafter in this subparagraph (iii) called the "Assets"), then, in each such case, the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the record date for determination of stockholders entitled to receive such distribution by a fraction the numerator of which shall be the current market price per share (as defined for purposes of this subparagraph (iii) in subparagraph (v) below) of the Common Stock at such record date for determination of stockholders entitled to receive such distribution less the then fair market value (as determined by the Board of Directors, whose determination shall be conclusive) of the portion of the Assets so distributed applicable to one share of Common Stock, and the denominator of such shall be the current market price per share (as defined in subparagraph (v) below) of the Common Stock at such record date. Such adjustment shall become effective immediately, except as provided in subparagraph (vii) below, after the record date for the determination of stockholders entitled to receive such distribution. (iv) If, pursuant to subparagraph (ii) or (iii) above, the number of shares of Common Stock into which a Security is convertible shall have been adjusted because the Corporation has declared a dividend, or made a distribution, on the outstanding shares of Common Stock in the form of any rights or warrant to purchase securities of the Corporation, or the Corporation has issued any such right or warrant, then, upon the expiration of any such unexercised right or unexercised warrant, the Conversion Price
76 shall forthwith be adjusted to equal the Conversion Price that would have applied had such right or warrant never been declared, distributed or issued. (v) For the purpose of any computation under subparagraphs (ii) or (iii) above, the current market price per share of Common Stock on any date shall be deemed to be the average of the daily closing prices of the Common Stock for the shorter of (i) 30 consecutive Trading Days ending on the last full Trading Day on the exchange or market specified in the second following sentence prior to the Time of Determination or (ii) the period commencing on the date next succeeding the first public announcement of the issuance of such rights or warrants or such distribution through such last full Trading Day prior to the Time of Determination. The term "Time of Determination" as used herein shall be the time and date of the earlier of (x) the determination of stockholders entitled to receive such rights, warrants or distributions or (y) the commencement of "ex-dividend" trading in the Common Stock on the exchange or market specified in the following sentence. The closing price for each day shall be the reported last sales price, regular way, or, in case no sale takes place on such day, the average of the reported closing bid and asked prices, regular way, in either case as reported on the New York Stock Exchange Composite Tape or, if the Common Stock is not listed or admitted to trading on the New York Stock Exchange at such time, on the principal national securities exchange on which the Common Stock is listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, on the National Market System of the National Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or, if the Common Stock is not quoted on such National Market System, the average of the closing bid and asked prices on such day in the over-the-counter market as reported by NASDAQ or, if bid and asked prices for the Common Stock on each such day shall not have been reported through NASDAQ, the average of the bid and asked prices for such date as furnished by any New York Stock Exchange member firm regularly making a market in the Common Stock selected for such purpose by the Corporation or, if no such quotations are available, the fair market value of the Common Stock as determined by a New York Stock Exchange member firm regularly making a market in the Common Stock selected for such purpose by the Corporation. As used herein, the term "Trading Day" with respect to Common Stock means (x) if the Common Stock is listed or admitted for trading on the New York Stock Exchange or another national securities exchange, a day on which the New York Stock Exchange or such other national securities exchange, as the case may be, is open for business or (y) if the Common Stock is quoted on the National Market System of the NASDAQ, a day on which trades may be made on such National Market System or (z) otherwise, any day other than a Saturday or Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. (vi) No adjustment in the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% in such price; provided, however, that any adjustments which by reason of this subparagraph (vi) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 19.05(a) shall be made to the nearest cent or to the
77 nearest .01 of a share, as the case may be, with one-half cent and .005 of a share, respectively, being rounded upward. Anything in this Section 19.05(a) to the contrary notwithstanding, the Corporation shall be entitled to make such reductions in the Conversion Price, in addition to those required by this Section 19.05(a), as it in its discretion shall determine to be advisable in order that any stock dividend, subdivision of shares, distribution of rights or warrants to purchase stock or securities, or distribution of other assets (other that cash dividends) hereafter made by the Corporation to its stockholders shall not be taxable. (vii) In any case in which this Section 19.05(a) provides that an adjustment shall become effective immediately after a record date for an event, the Corporation may defer until the occurrence of such event (x) issuing to the holder of any Security converted after such record date and before the occurrence of such event the additional shares of Common Stock issuable upon such conversion by reason of the adjustment required by such event over and above the Common Stock issuable upon such conversion before giving effect to such adjustment and (y) paying to such holder any amount of cash in lieu of any fractional share of Common Stock pursuant to Section 19.04. (viii) Whenever the Conversion Price is adjusted as herein provided, the Corporation shall file with the Trustee an Officers' Certificate, setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment, which certificate shall be conclusive evidence of the correctness of such adjustment; provided, however, that the failure of the Corporation to file such Officers' Certificate shall not affect the legality or validity of any corporate action by the Corporation. (ix) Whenever the Conversion Price for any series of Securities is adjusted as provided in this Section 19.05(a), the Corporation shall cause to be mailed to each holder of Securities of such series at its then registered address by first-class mail, postage prepaid, a notice of such adjustment of the Conversion Price setting forth such adjusted Conversion Price and the effective date of such adjusted Conversion Price; provided, however, that the failure of the Corporation to give such notice shall not affect the legality or validity of any corporate action by the Corporation. (b) (i) Notwithstanding any other provision herein to the contrary, if any of the following events occur, namely (x) any reclassification or change of outstanding shares of Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination of the Common Stock), (y) any consolidation, merger or combination of the Corporation with or into another corporation as a result of which holders of Common Stock shall be entitled to receive stock, securities or other property or assets (including cash) with respect to or in exchange for such Common Stock, or (z) any sale or conveyance of all or substantially all of the assets of the Corporation to any other entity as a result of which holders of Common Stock shall be entitled to receive stock, securities or other property or assets (including cash) with respect to or in exchange for such Common Stock, then appropriate provision shall be made so that (A) the holder of any outstanding Security that is convertible into Common Stock shall have the right to convert such Security into
78 the kind and amount of the shares of stock and securities or other property or assets (including cash) that would have been receivable upon such reclassification, change, consolidation, merger, combination, sale, or conveyance by a holder of the number of shares of Common Stock issuable upon conversion of such Security immediately prior to such reclassification, change, consolidation, merger, combination, sale, or conveyance and (B) the number of shares of any such other stock or securities into which such Security shall thereafter be convertible shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the terms of adjustment provided for in this Section, and Sections 19.02, 19.03, 19.04, 19.06, 19.07, 19.08 and 19.09 shall apply on like terms to any such other stock or securities. (ii) In case of any reclassification or change of the Common Stock (other than a subdivision or combination of its outstanding Common Stock, or a change in par value, or from par value to no par value, or from no par value to par value), or of any consolidation, merger or combination of the Corporation with or into another corporation or of the sale or conveyance of all or substantially all of the assets of the Corporation, the Corporation shall cause to be filed with the Trustee and to be mailed to each holder of Securities that are convertible into shares of Common Stock at such holder's registered address, the date on which such reclassification, change, consolidation, merger, combination, sale or conveyance is expected to become effective, and the date as of which it is expected that holders of Common Stock shall be entitled to exchange their Common Stock for stock, securities or other property deliverable upon such reclassification, change, consolidation, merger, combination, sale or conveyance. Section 19.06. Taxes on Shares Issued. The delivery of stock certificates upon conversions of Securities shall be made without charge to the holder converting a Security for any tax in respect of the issue thereof. The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the delivery of stock registered in any name other than of the holder of any Security converted, and the Corporation shall not be required to deliver any such stock certificate unless and until the person or persons requesting the delivery thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid. Section 19.07. Shares to be Fully Paid; Compliance with Governmental Requirements; Listing of Common Stock. The Corporation covenants that all shares of Common Stock which may be delivered upon conversion of Securities of any series which are convertible into Common Stock will upon delivery be fully paid and nonassessable by the Corporation and free from all taxes, liens and charges with respect to the issue thereof. The Corporation covenants that if any shares of Common Stock to be provided for the purpose of conversion of Securities hereunder require registration with or approval of any governmental authority under any Federal or state law before such shares may be validly delivered upon conversion, the Corporation will in good faith and as expeditiously as possible endeavor to secure such registration or approval, as the case may be. The Corporation further covenants that it will, if permitted by the rules of The New York Stock Exchange, Inc., list and keep listed for so long as the Common Stock shall be so listed on
79 such exchange, upon official notice of issuance, all Common Stock deliverable upon conversion of Securities of any series which are convertible into Common Stock. Section 19.08. Responsibility of Trustee. Neither the Trustee nor any conversion agent shall at any time be under any duty or responsibility to any holder of Securities to determine whether any facts exist which may require any adjustment of the Conversion Price applicable to such Securities, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same. Neither the Trustee nor any conversion agent shall be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities or property, which may at any time be delivered upon the conversion of any Security; and neither the Trustee nor any conversion agent makes any representation with respect thereto. Neither the Trustee nor any conversion agent shall be responsible for any failure of the Corporation to deliver any shares of Common Stock or stock certificates or other securities or property or cash upon the surrender of any Security for the purpose of conversion or for any failure of the Corporation to comply with any of the covenants of the Corporation contained in this Article Nineteen. Section 19.09. Covenant to Reserve Shares. The Corporation covenants that it will at all times reserve and keep available, free from pre-emptive rights, out of its authorized but unissued Common Stock, such number of shares of Common Stock as shall then be deliverable upon the conversion of all outstanding Securities of any series of Securities which are convertible into Common Stock. Section 19.10. Other Conversions. If so provided in a Board Resolution with respect to the Securities of a series, the principal amount of the Securities of such series shall be convertible into or exchangeable for a principal amount of other securities of the Corporation (which other securities may be issued under this Indenture or otherwise), and the issuance of such securities upon any such conversion or exchange shall be made in accordance with the terms of such Board Resolution. ARTICLE TWENTY MISCELLANEOUS PROVISIONS. Section 20.01. Provisions Binding on Corporation's Successors. All the covenants, stipulations, promises and agreements in this Indenture contained by the Corporation shall bind its successors and assigns whether so expressed or not. Section 20.02. Official Acts by Successor Corporation. Any act or proceeding by any provision of this Indenture authorized or required to be done or performed by any board, committee or officer of the Corporation shall and may be done and performed with like force and effect by the like board, committee or officer of any corporation that shall at the time be the lawful sole successor of the Corporation.
80 Section 20.03. Addresses for Notices, etc. Any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the holders of Securities on the Corporation may be given or served by being deposited postage prepaid in a post office box addressed (until another address is filed by the Corporation with the Trustee) to Chemical Banking Corporation, 270 Park Avenue, New York, N.Y. 10017, Attention: Secretary. Any notice, direction, request or demand by any Securityholder to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given or made in writing at the principal office of the Trustee, addressed to the attention of: Corporate Trust Administration. Section 20.04. New York Contract. This Indenture and each Security shall be deemed to be a contract made under the laws of the State of New York, and for all purposes shall be governed by and construed in accordance with the laws of said State. Section 20.05. Evidence of Compliance with Conditions Precedent. Upon any application or demand by the Corporation to the Trustee to take any action under any of the provisions of this Indenture, the Corporation shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with. Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture shall include (1) a statement that the person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinion contained in such certificate or opinion are based; (3) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. Section 20.06. Legal Holidays. In any case where the date of maturity of interest on or principal of the Securities is not a business day, then, unless otherwise established pursuant to Section 3.01 with respect to Securities of any series, payment of such interest on or principal of the Securities need not be made on such date but may be made on the next succeeding business day with the same force and effect as if made on the date of maturity and no interest shall accrue for the period from and after such date of maturity. If the last day on which a Security may be converted into Common Stock or other securities of the Corporation is not a business day, such Security may be surrendered for conversion on the next succeeding day that is a business day. Section 20.07. Trust Indenture Act to Control. If and to the extent that any provision of this Indenture limits, qualifies or conflicts with another provision included in this Indenture which is required to be included in this Indenture by any of Sections 310 to 317, inclusive, of the Trust Indenture Act of 1939, such required provision shall control.
81 Section 20.08. Table of Contents, Headings, etc. The table of contents and the titles and headings of the articles and sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof. Section 20.09. Execution in Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. Morgan Guaranty Trust Company of New York, as Trustee, hereby accepts the trusts in this Indenture declared and provided, upon the terms and conditions hereinabove set forth. Section 20.10. Securities Denominated in Foreign Currencies. Whenever this Indenture provides for any action by, or any distribution to, holders of Securities denominated in United States dollars and in any other currency or currencies, in the absence of any provision to the contrary in the form of Security of any particular series (or the terms thereof established pursuant to Section 3.01), any amount in respect of any Security denominated in a currency other than United States dollars shall be treated for purposes of such action or distribution as that amount of United States dollars that could be obtained for such amount on such reasonable basis of exchange and as of such date as the Corporation may specify in a written notice to the Trustee.
82 IN WITNESS WHEREOF, Chemical Banking Corporation has caused this Indenture to be signed in its corporate name and acknowledged by its Chairman of the Board, its President, a Vice Chairman of the Board, its Chief Financial Officer or its Treasurer or another executive officer, and its corporate seal to be affixed hereunto or impressed hereon, and the same to be attested by its Secretary or an Assistant Secretary, and Morgan Guaranty Trust Company of New York, Trustee, has caused this Indenture to be signed and acknowledged by one of its Vice Presidents, has caused its corporate seal to be affixed hereunto or impressed hereon, and the same to be attested by one of its Assistant Secretary, as of the day and year first written above. CHEMICAL BANKING CORPORATION By ________________________________ Title: [CORPORATE SEAL] Attest: ___________________________ MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Trustee By ________________________________ Title: Vice President [CORPORATE SEAL] Attest: ____________________________ Assistant Secretary
Exhibit 4.3(b) THE CHASE MANHATTAN CORPORATION, AND FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, as Trustee SECOND SUPPLEMENTAL INDENTURE Dated as of October 8, 1996 to INDENTURE Dated as of April 1, 1987 Amended and Restated as of December 15, 1992
SECOND SUPPLEMENTAL INDENTURE, dated as of October 8, 1996, among THE CHASE MANHATTAN CORPORATION (formerly known as Chemical Banking Corporation), a Delaware corporation (the "Corporation"), and FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION (as successor to Morgan Guaranty Trust Company of New York), a national banking association organized under the laws of the United States (the "Trustee"). WHEREAS, the Corporation and the Trustee have heretofore executed and delivered a certain indenture, dated as of April 1, 1987 (the "Original Indenture"), providing for the issuance from time to time of unsecured subordinated debt securities of the Corporation (the "Securities"); WHEREAS, the Original Indenture was amended by the First Supplemental Indenture, dated as of October 27, 1988 (the "First Supplemental Indenture"); WHEREAS, the Original Indenture, as amended by the First Supplemental Indenture, was amended and restated as of December 15, 1992 (as so amended and restated, the "Indenture"); WHEREAS, on March 31, 1996, The Chase Manhattan Corporation, a Delaware corporation ("Old Chase"), merged with and into the Corporation, which thereupon changed its name to The Chase Manhattan Corporation, and in connection with such merger, the Corporation assumed all of the outstanding subordinated debt securities of Old Chase; WHEREAS, Section 11.01(j) of the Indenture provides, among other things, that, without the consent of the holders of any Securities, the Corporation, when authorized by a resolution of the Board of Directors, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental to the Indenture to make such provisions in regard to matters or questions arising under the Indenture which the Board of Directors may deem necessary or desirable and which shall not adversely affect in any material respect the interest of the holders of the Securities; WHEREAS, the Corporation desires and has requested that the Trustee join in the execution of this Second Supplemental Indenture for the purpose of amending certain provisions of the Indenture as hereinafter set forth; WHEREAS, the execution and delivery of this Second Supplemental Indenture has been authorized by a Board Resolution of the Board of Directors of the Corporation; and WHEREAS, all conditions precedent and requirements necessary to make this Second Supplemental Indenture a valid and legally binding instrument in accordance with its terms have been
2 complied with, performed and fulfilled and the execution and delivery hereof have been in all respects duly authorized; NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH: For and in consideration of the premises and intending to be legally bound hereby, it is mutually covenanted and agreed, for the equal and proportionate benefit of all holders of the Securities, as follows: ARTICLE ONE REPRESENTATIONS OF THE CORPORATION The Corporation represents and warrants to the Trustee as follows: SECTION 1.1. The Corporation is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. SECTION 1.2. The execution, delivery and performance by the Corporation of this Second Supplemental Indenture has been authorized and approved by all necessary corporate action on the part of the Corporation. ARTICLE TWO AMENDMENTS SECTION 3.1. The definition of "Senior Indebtedness" contained in Section 1.01 of the Indenture is hereby amended in its entirety to read as follows: "Senior Indebtedness: The term "Senior Indebtedness" shall mean the principal of and premium, if any, and interest on (i) all indebtedness of the Corporation for money borrowed, whether outstanding on the date of execution of this Indenture or thereafter created, assumed or incurred, except (A) Securities (whether outstanding on October 8, 1996 or thereafter issued under this Indenture); (B) the Corporation's 6-1/2% Subordinated Debentures Due 2009, the Corporation's 7-7/8% Subordinated Debentures Due 2006, the Corporation's 7-1/8% Subordinated Debentures Due 2005, the Corporation's Floating Rate Notes Due 2003, the Corporation's 7-5/8% Subordinated Notes Due 2003, the Corporation's 8-1/2% Subordinated Notes Due 2002, the Corporation's 8-1/8% Subordinated Notes Due 2002, the
3 Corporation's 8-5/8% Subordinated Debentures Due 2002, the Corporation's 10-1/8% Subordinated Capital Notes Due 2000, the Corporation's 9-3/4% Subordinated Capital Notes Due 1999, the Corporation's 10-3/8% Subordinated Notes Due 1999, the Corporation's 8.50% Subordinated Capital Notes Due 1999, the Corporation's Floating Rate Subordinated Notes Due 1998 and the Corporation's Floating Rate Subordinated Notes Due 1997, all of which rank pari passu in right of payment with the Securities, subject to the subordination provisions set forth in Article Sixteen; (C) the Corporation's Floating Rate Subordinated Notes Due 2009, the Corporation's Floating Rate Subordinated Notes Due 2000 and the Corporation's Floating Rate Subordinated Notes Due 1997; all of which rank pari passu with the Securities, subject to the subordination provisions set forth in Article Sixteen; (D) all securities issued pursuant to that certain Amended and Restated Indenture, dated as of September 1, 1993, between the Corporation (as successor by merger to The Chase Manhattan Corporation) and First Trust of New York, National Association, as Trustee, as the same may be amended, supplemented or otherwise modified from time to time; all of which rank pari passu with the Securities, subject to the subordination provisions set forth in Article Sixteen; and (E) such other indebtedness of the Corporation as is by its terms expressly stated to be not superior in right of payment to the Securities or to rank pari passu in right of payment with the Securities, and (ii) any deferrals, renewals or extensions of any such Senior Indebtedness. The term "indebtedness of the Corporation for money borrowed" means any obligation of, or any obligation guaranteed by, the Corporation for the repayment of money borrowed, whether or not evidenced by bonds, debentures, notes or other written instruments, and any deferred obligation for payment of the purchase price of property or assets." SECTION 3.2. Except as amended hereby, the Indenture and the Securities are in all respects ratified and confirmed and all the terms thereof shall remain in full force and effect and the Indenture, as so amended, shall be read, taken and construed as one and the same instrument. ARTICLE FOUR APPOINTMENT OF AUTHENTICATING AGENT SECTION 4.1. Pursuant to Section 8.14 of the Indenture, the Trustee hereby appoints The Chase Manhattan Bank as an Authenticating Agent for all series of the Securities. The Chase Manhattan Bank shall have all powers and authority and be entitled to take all actions as set forth in Section 8.14 of the Indenture.
4 ARTICLE FIVE MISCELLANEOUS SECTION 5.1. The Trustee accepts the modification of the Indenture effected by this Second Supplemental Indenture, but only upon the terms and conditions set forth in the Indenture. Without limiting the generality of the foregoing, the Trustee assumes no responsibility for the correctness of the recitals herein contained, which shall be taken as the statements of the Corporation. The Trustee makes no representation and shall have no responsibility as to the validity and sufficiency of this Second Supplemental Indenture. SECTION 5.2. If and to the extent that any provision of this Second Supplemental Indenture limits, qualifies or conflicts with another provision included in this Second Supplemental Indenture, or in the Indenture, which is required to be included in this Second Supplemental Indenture or the Indenture by any of the provisions of Sections 310 to 317, inclusive, of the Trust Indenture Act of 1939, as amended, such required provision shall control. SECTION 5.3. Nothing in this Second Supplemental Indenture is intended to or shall provide any rights to any parties other than those expressly contemplated by this Second Supplemental Indenture. SECTION 5.4. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Indenture. SECTION 5.5. THIS SECOND SUPPLEMENTAL INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. SECTION 5.6. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 5.7. Upon execution and delivery hereof by the parties hereto, this Second Supplemental Indenture shall become effective as of the date first above written.
5 IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested all as of the day and year first above written. THE CHASE MANHATTAN CORPORATION By/s/ DEBORAH L. DUNCAN --------------------------- Name: Deborah L. Duncan Title: Executive Vice President and Treasurer (Corporate Seal) Attest: /s/ SUSAN S. SPAGNOLA - ------------------------------ FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, as Trustee By/s/ ALFIA MONASTRA --------------------------- Name: Alfia Monastra Title: Assistant Vice President (Corporate Seal) Attest: /s/ WARD SPOONER - ------------------------------
STATE OF NEW YORK ) : ss.: COUNTY OF NEW YORK ) On this 17th day of October, 1996, before me, the undersigned officer, personally appeared Deborah L. Duncan, who acknowledged herself to be the Executive Vice President and Treasurer of THE CHASE MANHATTAN CORPORATION, a corporation, and that she as such officer, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the corporation by herself as such officer. IN WITNESS WHEREOF, I hereunto set my hand and official seal. /s/ JOSEPH R. BEATTIE -------------------------- Notary Public [SEAL]
STATE OF NEW YORK ) : ss.: COUNTY OF NEW YORK ) On this 17th day of October, 1996, before me, the undersigned officer, personally appeared Alfia Monastra, who acknowledged herself to be an Assistant Vice President of FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, a national banking association, and that she as such officer, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the association by herself as such officer. IN WITNESS WHEREOF, I hereunto set my hand and official seal. /s/ JOANNE E. ILSE --------------------------- Notary Public [SEAL]
Exhibit 4.3(c) THE CHASE MANHATTAN CORPORATION AND U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee THIRD SUPPLEMENTAL INDENTURE Dated as of December 29, 2000 to INDENTURE Dated as of April 1, 1987 Amended and Restated as of December 15, 1992, as amended SUBORDINATED DEBT SECURITIES
THIRD SUPPLEMENTAL INDENTURE, dated as of December 29, 2000, between, THE CHASE MANHATTAN CORPORATION, a Delaware corporation (the "Corporation"), and U.S. BANK TRUST NATIONAL ASSOCIATION (formerly known as First Trust of New York, National Association), a national banking association, as successor to Morgan Guaranty Trust Company of New York, a New York banking corporation, as trustee (the "Trustee", which term shall include any successor trustee appointed pursuant to Article Eight of the Indenture hereafter referred to). WHEREAS, the Corporation and the Trustee have heretofore executed and delivered a certain Indenture, dated as of April 1, 1987, as amended by a First Supplemental Indenture, dated as of October 27, 1988, as amended and restated as of December 15, 1992, and by a Second Supplemental Indenture, dated as of October 8, 1996 (as so amended, the "Indenture"; capitalized terms not otherwise defined herein shall have the meanings set forth in the Indenture), providing for the issuance from time to time of Securities; WHEREAS, the Corporation and J.P. Morgan & Co. Incorporated ("J.P. Morgan") have entered into an Agreement and Plan of Merger, dated as of September 12, 2000 (the "Merger Agreement"), which contemplates the execution and filing of a Certificate of Merger on the date hereof providing for the merger (effective December 31, 2000) of J.P. Morgan with and into the Corporation, with the Corporation continuing its corporate existence under Delaware law under the name "J.P. Morgan Chase & Co."; WHEREAS, Section 11.01(j) of the Indenture provides, among other things, that, without the consent of the holders of any Securities, the Corporation, when authorized by a resolution of the Board of Directors, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental to the Indenture to make such provisions in regard to matters or questions arising under the Indenture which the Board of Directors may deem necessary or desirable and which shall not adversely affect in any material respect the interests of the holders of the Securities; WHEREAS, the Corporation desires and has requested that the Trustee join in the execution of this Third Supplemental Indenture for the purpose of amending certain provisions of the Indenture as hereinafter set forth; WHEREAS, the execution and delivery of this Third Supplemental Indenture has been authorized by resolutions of the boards of directors of the Corporation; and WHEREAS, all conditions precedent and requirements necessary to make this Third Supplemental Indenture a valid and legally binding instrument in accordance with its terms have been complied with, performed and fulfilled and the execution and delivery hereof have been in all respects duly authorized; NOW, THEREFORE, THIS THIRD SUPPLEMENTAL INDENTURE WITNESSETH: For and in consideration of the premises and intending to be legally bound hereby, it is mutually covenanted and agreed, for the equal and proportionate benefit of all holders of Securities, as follows: 1
ARTICLE ONE REPRESENTATIONS OF THE CORPORATION The Corporation represents and warrants to the Trustee as follows: SECTION 1.1. The Corporation is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. SECTION 1.2. The execution, delivery and performance by the Corporation of this Third Supplemental Indenture have been authorized and approved by all necessary corporate action on the part of it. ARTICLE TWO AMENDMENTS SECTION 2.1. The definition of "Senior Indebtedness" contained in Section 1.01 of the Indenture is hereby amended in its entirety to read as follows: "'Senior Indebtedness' of the Corporation means the principal of, premium, if any, and interest on: (i) all indebtedness of the Corporation for money borrowed, whether outstanding on the date of execution of this Indenture or thereafter created, assumed or incurred, except (A) the Securities; (B) all securities issued pursuant to the Amended and Restated Indenture, dated as of September 1, 1993, as amended by the First Supplemental Indenture, dated as of March 29, 1996, the Second Supplemental Indenture, dated as of October 8, 1996, and the Third Supplemental Indenture, dated as of December 29, 2000, between the Corporation (as successor-by-merger to The Chase Manhattan Corporation, a Delaware corporation) and U.S. Bank Trust National Association (formerly known as First Trust of New York, National Association), a national banking association, as successor to Chemical Bank, a New York banking corporation, as the same may be further amended, supplemented or otherwise modified from time to time; (C) all securities issued pursuant to the Indenture, dated as of March 1, 1993, as amended by the First Supplemental Indenture, dated as of December 29, 2000, between the Corporation (as successor-by-merger to J.P. Morgan & Co. Incorporated, a Delaware corporation) and U.S. Bank Trust National Association (formerly known as First Trust of New York, National Association), a national banking association, as successor to Citibank, N.A., a national banking association, as the same may be further amended, supplemented or otherwise modified from time to time; (D) all securities issued pursuant to the Indenture, dated as of December 1, 1986, as amended by the First Supplemental Indenture, dated as of May 12, 1992, and the Second Supplemental Indenture, dated as of December 29, 2000, between the Corporation (as successor-by-merger to J.P. Morgan & Co. Incorporated, a Delaware corporation) and U.S. Bank Trust National Association (formerly known as First Trust of New York, National Association), a national banking association, as successor to Citibank, N.A., a national banking association, as the same may be further amended, supplemented or otherwise modified from time to time; and (E) such other indebtedness as is by its terms expressly stated not to be superior in right of payment to, or to rank pari passu with, the Securities 2
or the other securities referred to in clauses (B) through (D); and (ii) any deferrals, renewals or extensions of any such Senior Indebtedness. The term "indebtedness of the Corporation for money borrowed" means any obligation of, or any obligation guaranteed by, the Corporation for the repayment of money borrowed, 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 Securities shall rank pari passu with the securities referred to in clauses (i)(B) through (i)(D) above, subject to the subordination provisions of Article Sixteen." SECTION 2.2. Except as amended hereby, the Indenture and the Securities and Coupons are in all respects ratified and confirmed and all the terms thereof shall remain in full force and effect and the Indenture, as so amended, shall be read, taken and construed as one and the same instrument. ARTICLE THREE MISCELLANEOUS SECTION 3.1. The Trustee accepts the modification of the Indenture effected by this Third Supplemental Indenture, but only upon the terms and conditions set forth in the Indenture. Without limiting the generality of the foregoing, the Trustee assumes no responsibility for the correctness of the recitals herein contained, which shall be taken as the statements of the Corporation. The Trustee makes no representation and shall have no responsibility as to the validity and sufficiency of this Third Supplemental Indenture. SECTION 3.2. If and to the extent that any provision of this Third Supplemental Indenture limits, qualifies or conflicts with another provision included in this Third Supplemental Indenture or in the Indenture that is required to be included in this Third Supplemental Indenture or the Indenture by any of the provisions of Sections 310 to 317, inclusive, of the Trust Indenture Act of 1939, such required provision shall control. SECTION 3.3. Nothing in this Third Supplemental Indenture is intended to or shall provide any rights to any parties other than those expressly contemplated by this Third Supplemental Indenture. SECTION 3.4. This Third Supplemental Indenture shall be deemed to be a contract made under the laws of the State of New York, and for all purposes shall be governed by and construed in accordance with the laws of said State. SECTION 3.5. This Third Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 3.6. This Third Supplemental Indenture shall become effective as of the Effective Time (as defined in the Merger Agreement). 3
IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested all as of the day and year first above written. THE CHASE MANHATTAN CORPORATION By____________________________________ Name: Title: (Corporate Seal) Attest: ________________________________ Assistant Secretary U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By____________________________________ Name: Title: (Corporate Seal) Attest: ________________________________
STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) On this ____ day of December, 2000, before me, the undersigned officer, personally appeared Marc J. Shapiro, who acknowledged himself to be the Vice Chairman, Finance, Risk Management and Administration of THE CHASE MANHATTAN CORPORATION, a Delaware corporation, and that he as such officer, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the corporation by himself as such officer. IN WITNESS WHEREOF, I hereunto set my hand and official seal. _____________________________________ Notary Public [SEAL]
STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) On this ___ day of December, 2000, before me, the undersigned officer, personally appeared _______________, who acknowledged himself to be _______________ of U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association, and that he as such officer, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the association by himself as such officer. IN WITNESS WHEREOF, I hereunto set my hand and official seal. _____________________________________ Notary Public [SEAL]
Exhibit 4.4(a) The Chase Manhattan Corporation, to Chemical Bank, Trustee -------------------------- AMENDED AND RESTATED INDENTURE -------------------------- Dated as of September 1, 1993 (Including the Third Supplemental Indenture, dated as of September 1, 1993) Providing for the Issuance of Subordinated Debt Securities
TABLE OF CONTENTS Parties ..................................................................... 1 Recitals .................................................................... 1 ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 101. Definitions .................................................... 2 Act ....................................................... 2 Additional Amounts ........................................ 2 Affiliate; control ........................................ 2 Applicable Percentage ..................................... 3 Authenticating Agent ...................................... 3 Authorized Newspaper ...................................... 3 Authorized Officer ........................................ 3 Available Funds ........................................... 3 Bank ...................................................... 3 Bearer Security ........................................... 3 Board of Directors ........................................ 3 Board Resolution .......................................... 3 Business Day .............................................. 3 Capital Securities ........................................ 4 Capital Security Election Form ............................ 4 Capital Stock of the Bank ................................. 4 Cash Election Holders ..................................... 4 Commission ................................................ 4 Common Depositary ......................................... 4 Common Stock .............................................. 4 Company ................................................... 4 Company Request or Company Order .......................... 4 Corporate Trust Office .................................... 4 Coupon .................................................... 5 Currency or Money ......................................... 5 Currency Indexed Note ..................................... 5 Default ................................................... 5 Defaulted Interest ........................................ 5 Dollars or $ .............................................. 5 Event of Default .......................................... 5 Event Relating to Federal Income Taxes .................... 5 Exchange Agent ............................................ 5 Exchange Date ............................................. 5 i
Exchange Price ...................................... 5 Global Exchange Date ................................ 6 Holder .............................................. 6 Indenture ........................................... 6 Independent Public Accountants ...................... 6 Indexed Security .................................... 6 interest ............................................ 6 Interest Payment Date ............................... 6 Legal Holiday ....................................... 6 Market Value ........................................ 7 Maturity ............................................ 7 Office or Agency .................................... 7 Officers' Certificate ............................... 7 Opinion of Counsel .................................. 7 Optional Available Funds ............................ 7 Original Issue Discount Security .................... 7 Outstanding ......................................... 7 Paying Agent ........................................ 9 Perpetual Preferred Stock ........................... 9 Person .............................................. 9 Place of Payment .................................... 9 Predecessor Security ................................ 9 Primary Federal Regulator ........................... 9 ranking on a parity with the Securities ............. 9 ranking junior to the Securities .................... 10 Redemption Date ..................................... 10 Redemption Price .................................... 10 Registered Security ................................. 10 Regular Record Date ................................. 10 Responsible Officer ................................. 10 Secondary Offering .................................. 11 Securities .......................................... 11 Security Register and Security Registrar ............ 11 Senior Indebtedness of the Company .................. 11 Special Record Date ................................. 11 Stated Maturity ..................................... 11 Subsidiary or subsidiary ............................ 11 Trustee ............................................. 11 Trust Indenture Act ................................. 12 United States ....................................... 12 United States Alien ................................. 12 U.S. Depository ..................................... 12 Vice President ...................................... 12 Section 102. Compliance Certificates and Opinions ................ 12 ii
Section 103. Form of Documents Delivered to Trustee .............. 13 Section 104. Acts of Holders ..................................... 14 Section 105. Notices, Etc. to Trustee and Company ................ 16 Section l06. Notice to Holders; Waiver ........................... 16 Section 107. Conflict with Trust Indenture Act ................... 17 Section 108. Effect of Headings and Table of Contents ............ 18 Section 109. Successors and Assigns .............................. 18 Section 110. Separability Clause ................................. 18 Section 111. Benefits of Indenture ............................... 18 Section 1l2. Governing Law ....................................... 18 Section 113. Legal Holidays ...................................... 18 Section 114. Language of Notices ................................. 19 ARTICLE TWO SECURITIES FORMS Section 201. Forms Generally ..................................... 19 Section 202. Form of Trustee's Certificate of Authentication ..... 20 Section 203. Securities in Global Form ........................... 20 ARTICLE THREE THE SECURITIES Section 301. Amount Unlimited; Issuable in Series ................ 21 Section 302. Denominations ....................................... 24 Section 303. Execution, Authentication, Delivery and Dating ...... 25 Section 304. Temporary Securities ................................ 27 Section 305. Registration, Registration of Transfer and Exchange ...................................... 29 Section 306. Mutilated, Destroyed, Lost and Stolen Securities .... 33 Section 307. Payment of Interest and Certain Additional Amounts; Rights to Interest and Certain Additional Amounts Preserved ...................... 34 Section 308. Persons Deemed Owners ............................... 35 Section 309. Cancellation ........................................ 36 Section 310. Computation of Interest ............................. 37 Section 311. Form of Certification by a Person Entitled to Receive a Bearer Security ...................... 37 iii
ARTICLE FOUR SATISFACTION AND DISCHARGE Section 401. Satisfaction and Discharge of Indenture ............. 42 Section 402. Application of Trust Money and Capital Securities ... 44 ARTICLE FIVE REMEDIES Section 50l. Events of Default ................................... 44 Section 502. Acceleration of Maturity; Rescission and Annulment ......................................... 45 Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee ............................ 46 Section 504. Trustee May File Proofs of Claim .................... 48 Section 505. Trustee May Enforce Claims Without Possession of Securities or Coupons .......................... 49 Section 506. Application of Money and Capital Securities Collected ......................................... 49 Section 507. Limitations on Suits ................................ 50 Section 508. Unconditional Right of Holders to Receive Principal, Premium, Interest and Additional Amounts ................................ 50 Section 509. Restoration of Rights and Remedies .................. 51 Section 510. Rights and Remedies Cumulative ...................... 51 Section 511. Delay or Omission Not Waiver ........................ 51 Section 512. Control by Holders .................................. 52 Section 513. Waiver of Past Defaults ............................. 52 Section 514. Undertaking for Costs ............................... 52 Section 515. Waiver of Stay or Extension Laws .................... 53 Section 516. Certain Outstanding Securities ...................... 53 ARTICLE SIX THE TRUSTEE Section 601. Certain Duties and Responsibilities ................. 53 Section 602. Notice of Defaults .................................. 55 Section 603. Certain Rights of Trustee ........................... 55 Section 604. Not Responsible for Recitals or Issuance of Securities ........................................ 56 Section 605. May Hold Securities ................................. 57 iv
Section 606. Money Held in Trust ................................. 57 Section 607. Compensation and Reimbursement ...................... 57 Section 608. Corporate Trustee Required; Eligibility; Conflict of Interest .............................. 58 Section 609. Resignation and Removal; Appointment of Successor ......................................... 58 Section 610. Acceptance of Appointment by Successor .............. 60 Section 611. Merger, Conversion, Consolidation or Succession to Business ....................................... 61 Section 612. Appointment of Authenticating Agent ................. 61 ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY Section 701. Company to Furnish Trustee Names and Addresses of Holders .............................. 63 Section 702. Preservation of Information; Communications to Holders ........................................... 64 Section 703. Reports by Trustee .................................. 64 Section 704. Reports by Company .................................. 64 ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER Section 801. Company May Consolidate, Etc., only on Certain Terms ............................................. 65 Section 802. Successor Corporation Substituted ................... 66 ARTICLE NINE SUPPLEMENTAL INDENTURES Section 901. Supplemental Indentures Without Consent of Holders ........................................... 66 Section 902. Supplemental Indentures with Consent of Holders ........................................... 68 Section 903. Execution of Supplemental Indentures ................ 69 Section 904. Effect of Supplemental Indentures ................... 69 Section 905. Conformity with Trust Indenture Act ................. 70 Section 906. Reference in Securities to Supplemental Indentures ........................................ 70 v
ARTICLE TEN COVENANTS Section 1001. Payment of Principal, Premium, Interest and Additional Amounts ............................. 70 Section l002. Maintenance of Office or Agency ...................... 71 Section 1003. Money for Securities Payments to Be Held in Trust .............................................. 72 Section 1004. Corporate Existence .................................. 73 Section 1005. Restrictions on Disposition of Capital Stock of Bank ............................................ 74 Section 1006. Statement as to Compliance ........................... 74 Section 1007. Waiver of Certain Covenants .......................... 74 Section 1008. Additional Amounts ................................... 75 ARTICLE ELEVEN REDEMPTION OF SECURITIES Section 1101. Applicability of Article ............................. 76 Section 1102. Election to Redeem; Notice to Bank and Trustee ....... 76 Section 1103. Selection by Bank of Securities to be Redeemed ........................................... 76 Section 1104. Notice of Redemption ................................. 77 Section 1105. Deposit of Redemption Price .......................... 78 Section 1106. Securities Payable on Redemption Date ................ 78 Section 1107. Securities Redeemed in Part .......................... 79 Section 1108. Special Cash Redemption .............................. 80 ARTICLE TWELVE SUBORDINATION OF SECURITIES Section 1201. Agreement to Subordinate ............................. 81 Section 1202. Obligation of the Company Unconditional .............. 83 Section 1203. Limitations on Duties to Holders of Senior Indebtedness of the Company ........................ 83 Section 1204. Notice to Trustee and Exchange Agent of Facts Prohibiting Payments and Deliveries ................ 84 Section 1205. Application by Trustee or Agent of Money or Capital Securities ................................. 85 Section 1206. Subrogation .......................................... 85 vi
Section 1207. Subordination Rights Not Impaired by Acts or Omissions of Company or Holders of Senior Indebtedness of the Company ........................ 85 Section 1208. Authorization of Trustee to Effectuate Subordination of Securities ........................ 86 Section 1209. Right of Trustee to Hold Senior Indebtedness of the Company ..................................... 86 Section 1210. Article Twelve Not to Prevent Events of Default or Defaults ................................ 86 ARTICLE THIRTEEN EXCHANGE OF CAPITAL SECURITIES FOR SECURITIES Section 1301. Applicability of Article ............................. 87 Section 1302. Exchange of Capital Securities ....................... 87 Section 1303. Notices of Exchange .................................. 90 Section 1304. Rights and Duties of Holders of Securities for which Capital Securities are to Be Exchanged ... 92 Section 1305. Deposit of Exchange Price ............................ 95 Section 1306. Securities Due on Exchange Date; Securities Exchanged in Part .................................. 96 Section 1307. Form of Capital Security Election Form ............... 97 Section 1308. Covenants of the Company ............................. 98 Section 1309. Revocation of Obligation to Exchange Capital Securities for Securities .......................... 99 Section 1310. Optional Available Funds ............................ 100 Section 1311. Provision in Case of Consolidation, Merger, Conveyance or Transfer ............................ 101 Section 1312. Responsibility of Trustee ........................... 101 ARTICLE FOURTEEN AVAILABLE FUNDS Section 140l. Available Funds ..................................... 102 Section 1402. Covenant of Company to Obtain Available Funds ....... 102 Section 1403. Release of Available Funds upon Redemption or Payment ............................. 103 vii
ARTICLE FIFTEEN REPAYMENT OPTION Section 1501. Applicability of Article ........................... 103 ARTICLE SIXTEEN MEETINGS OF HOLDERS OF SECURITIES Section 1601. Purposes for Which Meetings May Be Called ........... 104 Section 1602. Call, Notice and Place of Meetings .................. 104 Section 1603. Persons Entitled to Vote at Meetings ................ 104 Section 1604. Quorum; Action ...................................... 105 Section 1605. Determination of Voting Rights; Conduct and Adjournment of Meetings ........................... 106 Section 1606. Counting Votes and Recording Action of Meetings ..... 106 ARTICLE SEVENTEEN MISCELLANEOUS PROVISIONS Section 1701. Securities in Foreign Currencies ................... 107 Testimonium ................................................................ 108 Signatures and Seals ....................................................... 108 Acknowledgements ........................................................... 109 viii
INDENTURE, dated as of September 1, 1993 (the "Indenture"), among THE CHASE MANHATTAN CORPORATION, a Delaware corporation (hereinafter called the "Company"), having its principal office located at 1 Chase Manhattan Plaza, New York, New York 10081, and CHEMICAL BANK, a corporation organized and existing under the laws of the State of New York, as Trustee (hereinafter called the "Trustee"). RECITALS OF THE COMPANY The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its subordinated debt securities consisting of debentures, notes or other unsecured evidences of indebtedness (hereinafter called the "Securities"), to be issued in one or more series as provided in the Indenture. The Company has heretofore executed and delivered an Indenture between the Company and the Trustee dated as of May 1, 1987 (the "Original Indenture") and supplements to the Original Indenture in the form of a First Supplemental Indenture, dated as of May 1, 1991 and a Second Supplemental Indenture, dated as of October 1, 1992 (such First and Second Supplemental Indentures, together with the Original Indenture, being referred to as the "Supplemented Indenture"). Section 901(3) of the Original Indenture provides that a supplemental indenture may be entered into by the Company and the Trustee without the consent of any Holders of Securities to add to or to change any of the provisions of the Original Indenture to permit or facilitate the issuance of Securities in bearer form. Section 901(9) of the Original Indenture provides, inter alia that a supplemental indenture may be entered into by the Company and the Trustee without consent of any Holders of Securities to make provision with respect to matters or question arising under the Original Indenture, provided such action shall not adversely affect the interests of the Holders of Securities of any series in any material respect. The Company deems it advisable to amend the Original Indenture pursuant to a Third Supplemental Indenture, dated as of September 1, 1993, the provisions of which shall be applicable only to Securities issued on or after September 1, 1993 (other than the provisions that reflect the requirements of the Trust Indenture Act). Also as of September 1, 1993, the Company restates this Indenture pursuant to the terms and provisions of this Indenture as supplemented by such First, Second and Third Supplemental Indentures, each difference between the Supplemented Indenture and the Indenture as restated herein being pursuant to the terms and provisions of said Third Supplemental Indenture. All things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done. 1
NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of series thereof or Coupons (as herein defined) appertaining to the Securities of any series, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 101. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles; and (4) the words "herein", "hereof, "hereto" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; Certain terms, used principally in Article Six are defined in that Article. "Act", when used with respect to any Holder, has the meaning specified in Section 104. "Additional Amounts" means any additional amounts which are required hereby or by any Security, under circumstances specified herein or therein, to be paid by the Company in respect of certain taxes imposed on Holders specified therein and which are owing to such Holders. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or 2
indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have the meanings correlative to the foregoing. "Applicable Percentage" has the meaning specified in Section 301(15). "Authenticating Agent" means any Person authorized by the Trustee to act on behalf of the Trustee to authenticate Securities. "Authorized Newspaper" means a newspaper, in an official language of the place of publication or in the English language, customarily published on each day that is a Business Day in the place of publication, whether or not published on days that are Legal Holidays in the place of publication, and of general circulation in each place in connection with which the term is used or in the financial community of each such place. Where successive publications are required to be made in Authorized Newspapers, the successive publications may be made in the same or in different newspapers in the same city meeting the foregoing requirements and in each case on any day that is a Business Day in the place of publication. "Authorized Officer" means the Chairman of the Board, the President, any Vice Chairman of the Board or any Vice President, or the Treasurer, any Assistant Treasurer, the Secretary or any Associate Secretary or Assistant Secretary, of the Company. "Available Funds" has the meaning specified in Section 1401. "Bank" means The Chase Manhattan Bank (National Association), a national banking association incorporated under the laws of the United States and any successor thereto. "Bearer Security" means any Security in the form established pursuant to Section 201 which is payable to bearer. "Board of Directors" means either the board of directors of the Company or any duly authorized committee of that board, and shall include, in connection with any action or matter arising hereunder, any one or more officers of the Company duly authorized by the board of directors of the Company or any such committee to act thereon. "Board Resolution" means a copy of a resolution or document, certified by the Secretary, an Associate Secretary or an Assistant Secretary of the Company to have been duly adopted, approved or authorized by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day" with respect to any Place of Payment means, except as otherwise specified in the terms of Securities of any series established as provided in Section 301, any day, other than a Saturday or Sunday, on which banking institutions in that Place of Payment are open for business. 3
"Capital Securities" means any securities issued by the Company which consist of any one of the following: (i) Common Stock, (ii) Perpetual Preferred Stock, or (iii) other securities which at the date of issuance constitute primary capital of the Company under regulations of or as determined by the Primary Federal Regulator, provided that if any securities under (iii) are (x) issued in exchange for Securities under this Indenture and (y) debt obligations for which Capital Securities are exchangeable, the Company shall have received the approval of the Primary Federal Regulator for such issuance. Capital Securities may have such terms, rights and preferences as may be determined by the Company. "Capital Security Election Form" means a form substantially in the form included in Section 1307. "Capital Stock of the Bank" means the capital stock, par value $15.00 per share, of the Bank as such capital stock exists on May 1, 1987 and such other shares of stock of the Bank as shall have ordinary power to vote for election of directors of the Bank and shall not have any preference as to distribution of assets upon any dissolution or winding up of the Bank. "Cash Election Holders" means Holders who do not elect in accordance with the procedures described in this Indenture to receive Capital Securities and who are deemed to have elected to receive cash instead of such Capital Securities. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Common Depositary" has the meaning specified in Section 304. "Common Stock" includes any stock of any class of the Company which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which is not subject to redemption by the Company. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor corporation. "Company Request" or "Company Order" mean a written request or order signed in the name of the Company by its Chairman of the Board, its President, any Vice Chairman of the Board or any Vice President, and by its Treasurer, an Assistant Treasurer, an Associate Secretary, its Secretary or an Assistant Secretary, and delivered to the Trustee. "Corporate Trust Office" means the principal office of the Trustee in the Borough of Manhattan, The City of New York, at which at any particular time its corporate trust business 4
shall be administered, which office, at the date of execution of this instrument, is located at 450 West 33rd Street, New York, New York 10001. "Coupon" means any interest coupon appertaining to a Bearer Security. "Currency" or "Money", with respect to any payment, deposit or other transfer in respect of the principal of or any premium or interest on or any Additional Amounts with respect to any Security, means the unit or units of legal tender for the payment of public and private debts (or any composite thereof) in which such payment, deposit or other transfer is required to be made by or pursuant to the terms hereof and, with respect to any other payment, deposit or transfer pursuant to or contemplated by the terms hereof, means Dollars. "Currency Indexed Note" means any Security with the amount of principal payments determined by reference to an index Currency. "Default" has the meaning specified in Section 503. "Defaulted Interest" has the meaning specified in Section 307. "Dollars" or "$" means a dollar or other equivalent unit of legal tender for payment of public or private debts in the United States of America except as may otherwise be provided in any Security. "Event of Default" has the meaning specified in Section 501. "Event Relating to Federal Income Taxes" has the meaning specified in Section 1302. "Exchange Agent" means the Person or Persons appointed by the Company to give notices and to exchange Capital Securities for Securities of any series as specified in Article Thirteen. "Exchange Date", when used with respect to Securities of any series, means the date on which Capital Securities are to be exchanged for Securities of such series in accordance with the terms of this Indenture and the terms of the Securities of such series and shall be (i) the Stated Maturity of Securities of such series, or (ii) any earlier date resulting from an acceleration of the date of any such exchange by the Company pursuant to the second paragraph of Section 1302, or (iii) the date of any such exchange established as provided in the third paragraph of Section 1302. "Exchange Price", when used with respect to a Security of any series for which Capital Securities are to be exchanged, means the amount of Capital Securities to be exchanged for such Security pursuant to this Indenture or the aggregate sale price of such Capital Securities in the Secondary Offering for the account of the Holder of such Security, as the case may be. 5
"Global Exchange Date" has the meaning specified in Section 304. "Holder" means, in the case of a Registered Security, a Person in whose name a Security is registered in the Security Register and, in the case of any Bearer Security or any Coupon, the bearer thereof. "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and, shall include the terms of particular series of Securities established as provided in Section 301; provided, however, that, if at any time more than one Person is acting as Trustee under this instrument, "Indenture" shall mean, with respect to any one or more series of Securities for which such Person is Trustee, this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and shall include the terms of the particular series of Securities for which such Person is Trustee established as contemplated by Section 301, exclusive, however, of any provisions or terms which relate solely to other series of Securities for which such Person is Trustee, regardless of when such terms or provisions were adopted, and exclusive of any provisions or terms adopted by means of one or more indentures supplemental hereto executed and delivered after such Person had become such Trustee but to which such Person, as such Trustee, was not a party. "Independent Public Accountants" means accountants or a firm of accountants that, with respect to the Company and any other obligor under the Securities or the Coupons, are independent public accountants within the meaning of the Securities Act of 1933, as amended, and the rules and regulations promulgated by the Commission thereunder, who may be the independent public accountants regularly retained by the Company or who may be other independent public accountants. Such accountants or firm shall be entitled to rely upon any Opinion of Counsel as to the interpretation of any legal matters relating to the Indenture or certificates required to be provided hereunder. "Indexed Security" means a Security the terms of which provide that the principal amount thereof payable at Stated Maturity may be more or less than the principal face amount thereof at original issuance. "interest", when used with respect to an Original Issue Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity and, with respect to any Security which provides for the payment of Additional Amounts pursuant to Section 1008, includes such Additional Amounts. "Interest Payment Date", when used with respect to any Security, means the Stated Maturity of an instalment of interest on such Security. "Legal Holiday", except as may be provided herein or in any Security with respect to any Place of Payment or other location, means a Saturday, a Sunday or a day on which banking 6
institutions or trust companies in such Place of Payment or other location are not authorized or obligated to be open. "Market Value" of any Capital Securities issued on any Exchange Date for Securities of any series shall be the sale price of such Capital Securities as are sold in the Secondary Offering for the account of the Holders of the Securities of such series. In the event no such Secondary Offering takes place, the Market Value of such Capital Securities shall be the fair value of such Capital Securities on such Exchange Date as determined by three independent nationally recognized investment banking firms selected by the Company. "Maturity", when used with respect to any Security, means the date on which the principal of such Security or an instalment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise. "Office or Agency", with respect to any Securities, means an office or agency of the Company maintained or designated in a Place of Payment for such Securities pursuant to Section 1002 or any other office or agency of the Company maintained or designated for such Securities pursuant to Section 1002 or, to the extent designated or required by Section 1002 in lieu of such office or agency, the Corporate Trust Office of the Trustee. "Officers' Certificate" means a certificate signed by the Chairman of the Board, the President, any Vice Chairman of the Board, or any Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary, an Associate Secretary or an Assistant Secretary of the Company, that complies with the requirements of Section 314(e) of the Trust Indenture Act, if applicable, and is delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel, who may (except as otherwise expressly provided in this Indenture) be counsel for the Company or other counsel acceptable to the Trustee, that complies with the requirements of Section 314(e) of the Trust Indenture Act, if applicable. "Optional Available Funds" has the meaning specified in Section 1310. "Original Issue Discount Security" means any Security which provides for an amount less than the principal amount thereof to be due and payable upon declaration of acceleration of the Maturity thereof pursuant to Section 502. "Outstanding", when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: (i) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; 7
(ii) Securities for whose payment, redemption or exchange of Capital Securities therefor, Money and Capital Securities, in each case in the necessary amount, have been theretofore deposited with the Trustee or any Paying Agent (other than the Company) or any Exchange Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent or Exchange Agent) for the Holders of such Securities and any Coupons appertaining thereto, provided that, if such Securities are to be redeemed or Capital Securities are to be exchanged therefor, notice of such redemption or exchange has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; (iii) Securities held by the Exchange Agent after Capital Securities have been exchanged therefor; and (iv) Securities which have been paid pursuant to Section 306 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given any request, demand, authorization, direction, notice, consent, waiver or other action hereunder, or are present at a meeting of Holders of Securities for quorum purposes and for purposes of making the calculations required by Section 313 of the Trust Indenture Act, (i) the principal amount of an Original Issue Discount Security that may be counted in making such determination and that shall be deemed to be Outstanding for such purposes shall be equal to the amount of the principal thereof that would be due and payable upon a declaration of acceleration thereof pursuant to Section 502 at the time of such determination or calculation, and (ii) the principal amount of any Indexed Security that may be counted in making such determination and that shall be deemed Outstanding for such purpose shall be equal to the principal face amount of such Indexed Security at original issuance, unless otherwise provided in or pursuant to this Indenture, and (iii) the principal amount of any Security denominated other than in Dollars that may be counted in making such determination or calculation and that shall be deemed Outstanding for such purpose shall be equal to the Dollar equivalent, determined by the Company as of the date such Security is originally issued by the Company, of the principal amount (or, in the case of an Original Issue Discount Security, the Dollar equivalent as of such date of original issuance of the amount determined as provided in clause (i) above) of such Security, and (iv) Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor, other than Securities issued after May 1, 1991 purchased in connection with the distribution or trading thereof, shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent, waiver, or other action, or upon any such determination as to the 8
presence of a quorum, only Securities which the Trustee knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor. "Paying Agent" means any Person authorized by the Company to pay the principal of (and premium, if any) or interest on, or any Additional Amounts with respect to, any Security or any Coupon on behalf of the Company. "Perpetual Preferred Stock" means any stock of any class of the Company which has a preference over Common Stock in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which is not mandatorily redeemable or repayable, or redeemable or repayable at the option of the Holder, otherwise than in shares of Common Stock or Perpetual Preferred Stock of another class or series or with the proceeds of the sale of Common Stock or Perpetual Preferred Stock. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Place of Payment", when used with respect to the Securities of any series, means the place or places where the principal of, (and premium, if any) and interest, if any, on, or any Additional Amounts with respect to, the Securities of that series are payable as specified as contemplated by Section 301. "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security or any Security to which a mutilated, destroyed, lost or stolen Coupon appertains shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security or the Security to which a mutilated, destroyed, lost or stolen Coupon appertains. "Primary Federal Regulator" means the Board of Governors of the Federal Reserve System of the United States or any successor United States governmental agency or instrumentality performing substantially the same regulatory function with respect to the Company and the adequacy of its capital as said Board of Governors performs on the date hereof. "ranking on a parity with the Securities", when used with respect to any obligation of the Company, shall mean the Floating Rate Subordinated Notes Due 1995, the Floating Rate Subordinated Notes Due 1997, the Floating Rate Subordinated Notes Due 2000, the Floating Rate Subordinated Notes Due 2009, the 7 1/2% Subordinated Notes Due 1997, the 10% 9
Subordinated Notes Due 1999, the 8% Subordinated Notes Due 1999, the 7 3/4% Subordinated Notes due 1999, the Floating Rate Subordinated Notes Due 2000, the 9 3/8% Subordinated Notes Due 2001, the 9 3/4% Subordinated Notes Due 2001, the 7.50% Subordinated Notes Due 2003, the Floating Rate Subordinated Notes Due 2003, the 6.50% Subordinated Notes Due 2005, the Floating Rate Subordinated Notes Due August 1, 2003 and the 6.75% Subordinated Notes Due 2008, issued by the Company and any other obligation of the Company which (a) ranks equally with and not prior to the Securities in right of payment upon the happening of any event of the kind specified in the first sentence of the first paragraph of Section 1201, and (b) is specifically designated as ranking on a parity with the Securities by express provision in the instrument creating or evidencing such obligation. "ranking junior to the Securities", when used with respect to any obligation of the Company, shall mean any obligation of the Company which (a) ranks junior to and not equally with or prior to the Securities (and any other obligations of the Company ranking on a parity with the Securities) in right of payment upon the happening of any event of the kind specified in the first sentence of the first paragraph of Section 1201, and (b) is specifically designated as ranking junior to the Securities by express provision in the instrument creating or evidencing such obligation. The securing of any obligations of the Company, otherwise ranking on a parity with or junior to the Securities, shall not be deemed to prevent such obligations from constituting obligations ranking on a parity with or junior to the Securities. "Redemption Date", when used with respect to any Security or portion thereof to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture or such Security. "Redemption Price", when used with respect to any Security or portion thereof to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture or such Security. "Registered Security" means any Security in the form established pursuant to Section 201 which is registered in the Security Register. "Regular Record Date", for the interest payable on any Interest Payment Date on Registered Securities of any series, means the date specified for that purpose in the terms of the Securities of such series established as provided in Section 301. "Responsible Officer", when used with respect to the Trustee, means the chairman of the board of directors, the chairman or the vice chairman of the executive committee of the board of directors, the president, any vice chairman, the chairman of the trust committee, any executive vice president, any senior vice president, any vice president, any assistant vice president, the secretary, any assistant secretary, the cashier, any trust officer, any assistant trust officer, or any other officer or assistant officer of the Trustee customarily performing functions 10
similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his knowledge of and familiarity with the particular subject. "Secondary Offering", when used with respect to Capital Securities exchanged for Securities of any series, means the offering and sale by the Company of such Capital Securities for the account of Cash Election Holders. "Securities" has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated and delivered under this Indenture; provided, however, that, if at any time there is more than one Person acting as Trustee under this Indenture, "Securities", with respect to any such Person, shall mean Securities authenticated and delivered under this Indenture, exclusive, however, of Securities of any series as to which such Person is not Trustee. "Security Register" and "Security Registrar" have the respective meanings specified in Section 305. "Senior Indebtedness of the Company" shall mean the obligations of the Company to its creditors other than the Holders of the Securities, whether outstanding on the date of execution of this Indenture or thereafter incurred, except obligations ranking on a parity with the Securities or ranking junior to the Securities. "Special Record Date" for the payment of any Defaulted Interest on any Registered Security means a date fixed by the Trustee pursuant to Section 307. "Stated Maturity", when used with respect to any Security or any instalment of principal thereof or interest thereon or any Additional Amounts with respect thereto, means the date specified in such Security or a Coupon representing such instalment of interest, as the date on which the principal of such Security or such instalment of principal or interest is or such Additional Amounts are due and payable. "Subsidiary" or "subsidiary" means any corporation at least a majority of whose outstanding voting stock shall at the time be owned by the Company or by one or more Subsidiaries or by the Company and one or more Subsidiaries. For this purpose "voting stock" of any corporation means stock of any class or classes (however designated), including any and all shares, interests, participations and other equivalents (however designated) of corporate stock, having ordinary voting power for the election of a majority of the directors of such corporation, other than stock having such power only by reason of the happening of a contingency. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such with respect to the Securities of one or more series pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder, and if at any time there is 11
more than one such Person, "Trustee" as used with respect to the Securities of any series shall mean the Trustee with respect to the Securities of that series. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended, and any reference herein to the Trust Indenture Act or a particular provision thereof shall mean such Act or provision, as the case may be, as amended or replaced from time to time or as supplemented from time to time by rules or regulations adopted by the Commission under or in furtherance of the purposes of such Act or provision, as the case may be. "United States", except as otherwise provided herein or in any Security, means the United States of America (including the states thereof and the District of Columbia), its territories and possessions and other areas subject to its jurisdiction. "United States Alien", except as otherwise provided in or pursuant to this Indenture, means any Person who, for United States Federal income tax purposes, is a foreign corporation, a non-resident alien individual, a non-resident alien fiduciary of a foreign estate or trust, or a foreign partnership one or more of the members of which is, for United States Federal income tax purposes, a foreign corporation, a non-resident alien individual or a non-resident alien fiduciary of a foreign estate or trust. "U.S. Depository" means, with respect to the Securities of any series issuable or issued in whole or in part in the form of one or more global Securities, the Person designated as U.S. Depository by the Company pursuant to Section 301, which must be a clearing agency registered under the Securities Exchange Act of 1934, as amended, and, if so provided pursuant to Section 301 with respect to the Securities of any series, any successor to such Person. If at any time there is more than one such Person, "U.S. Depository" shall mean, with respect to any series of Securities, the qualifying entity which has been appointed with respect to the Securities of that series. "Vice President", when used with respect to the Company, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president". Section 102. Compliance Certificates and Opinions. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. 12
Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 103. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. 13
Section 104. Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing, or by any Person duly authorized by means of any written certification or other authorization furnished by a U.S. Depository. Any request, demand, authorization, direction, notice, consent, waiver or other action provided in or pursuant to this Indenture to be given or taken by Holders of Securities of any series may, alternatively, be embodied in and evidenced by the record of Holders of Securities of such series voting in favor thereof, either in person or by proxies duly appointed in writing, at any meeting of Holders of Securities of such series duly called and held in accordance with the provisions of Article Sixteen, or a combination of such instruments and any such record. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record or both are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments and any such record (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders of Securities signing such instrument or instruments or, in the case of the U.S. Depository, furnishing the written certification or other authorization pursuant to which such instrument or instruments are signed, or so voting at any such meeting. Proof of execution of any such instrument, any writing appointing any such agent, or authorizing any such Person or any such written certification, or of the holding by any Person of a Security, shall be sufficient for any purpose of this Indenture and (subject to Section 315 of the Trust Indenture Act) conclusive in favor of the Trustee and the Company if made in the manner provided in this Section. The record of any meeting of Holders of Securities shall be proved in the manner provided in Section 1606. Without limiting the generality of this Section 104, unless otherwise established in or pursuant to a Board Resolution or set forth or determined in an Officers' Certificate, or established in one or more indentures supplemental hereto, pursuant to Section 301, a Holder, including a U.S. Depository that is a Holder of a global Security, may make, give or take, by a proxy or proxies, duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in or pursuant to this Indenture to be made, given or taken by Holders, and a U.S. Depository that is a Holder of a global Security may provide its proxy or proxies to the beneficial owners of interests in any such global Security through such U.S. Depository's standing instructions and customary practices. The Trustee shall fix a record date for the purpose of determining the Persons who are beneficial owners of interest in any permanent global Security held by a U.S. Depository entitled under the procedures of such U.S. Depository to make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in or pursuant to this Indenture to be made, given or taken by Holders. If such a record date is fixed, the Holders on such record date or their duly appointed proxy or proxies, and only such Persons, shall be entitled to make, give or take such request, demand, 14
authorization, direction, notice, consent, waiver or other action, whether or not such Holders remain Holders after such record date. No such request, demand, authorization, direction, notice, consent, waiver or other action shall be valid or effective if made, given or taken more than 90 days after such record date. (b) The fact and date of the execution by any Person of any such instrument, writing or certification may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument, writing or certification acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient. (c) The ownership, principal amount and serial numbers of Registered Securities held by any Person, and the date of the commencement and the date of the termination of holding the same, shall be proved by the Security Register. (d) The ownership, principal amount and serial numbers of Bearer Securities held by any Person, and the date of the commencement and the date of the termination of holding the same, may be proved by the production of such Bearer Securities or by a certificate executed, as depositary, by any bank, banker or other depositary reasonably acceptable to the Company, wherever situated, if such certificate shall be deemed by the Company and the Trustee to be satisfactory, showing that at the date therein mentioned such Person had on deposit with such depositary, or exhibited to it, the Bearer Securities therein described; or such facts may be proved by the certificate or affidavit of the Person holding such Bearer Securities, if such certificate or affidavit is deemed by the Trustee to be satisfactory. The Trustee and the Company may assume that such ownership of any Bearer Security continues until (1) another certificate or affidavit bearing a later date issued in respect of the same Bearer Security is produced, or (2) such Bearer Security is produced to the Trustee by some other Person, or (3) such Bearer Security is surrendered in exchange for a Registered Security, or (4) such Bearer Security is no longer Outstanding. The fact and date of execution of any such instrument or writing, the authority of the Person executing the same and the principal amount and serial numbers of Bearer Securities held by the Person so executing such instrument or writing and the date of commencement and the date of termination of holding the same may also be proved in any other manner which the Trustee deems sufficient; and the Trustee may in any instance require further proof with respect to any of the matters referred to in this Section. (e) If the Company shall solicit from the Holders of any Registered Securities any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company may at its option (but is not obligated to), by Board Resolutions, fix in advance a record date for the determination of Holders of Registered Securities entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act. If such a record date is fixed, 15
such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of Registered Securities of record at the close of business on such record date shall be deemed to be Holders of Registered Securities for the purpose of determining whether Holders of the requisite proportion of Outstanding Securities have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the Outstanding Registered Securities shall be computed as of such record date; provided that no such authorization, agreement or consent by the Holders of Registered Securities on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after the record date. (f) Any request, demand, authorization, direction, notice, consent, waiver or other action of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee, any Security Registrar, any Paying Agent or the Company in reliance thereon, whether or not notation of such action is made upon such Security. Section 105. Notices, Etc. to Trustee and Company. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Holder or the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, Attention: Corporate Trustee Administration Department or (2) the Company by the Trustee or any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class mail, postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this instrument or at any other address previously furnished in writing to the Trustee by the Company. Section 106. Notice to Holders; Waiver. Where this Indenture or the Securities provide for notice to Holders of any event, such notice shall be sufficiently given to Holders of Registered Securities or to the Holders of Bearer Securities who have filed their names and addresses with the Trustee within two years preceding the giving of such notice (unless otherwise expressly provided herein or in the Securities) if in writing and mailed, first-class postage prepaid, to each Holder of a Registered Security or to 16
each such Holder of such Bearer Security affected by such event, at his address as it appears in the Security Register or in such filing, as the case may be, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. Except as provided in the preceding sentence, such notice shall be sufficiently given to Holders of Bearer Securities and any Coupons appertaining thereto, if any, if published in an Authorized Newspaper in The City of New York and, if such Securities are then listed on any stock exchange outside the United States, in an Authorized Newspaper in such city as the Company shall advise the Trustee that such stock exchange so requires or if not practicable, elsewhere in Europe, on a Business Day at least twice, the first such publication to be not earlier than the earliest date and not later than the latest date prescribed for the giving of such notice. In any case where notice to Holders of Registered Securities is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder of a Registered Security shall affect the sufficiency of such notice with respect to other Holders of Registered Securities or the sufficiency of any notice to Holders of Bearer Securities given as provided herein. Where this Indenture or the Securities provide for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders of Securities shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of publication of any Authorized Newspaper or by reason of any other cause, it shall be impossible or impracticable to make publication of any notice in an Authorized Newspaper or Authorized Newspapers when said notice is required to be published pursuant to any provision of this Indenture or of the Securities, then any manner of publication or notification as shall be satisfactory to the Trustee shall be deemed to be a sufficient publication of such notice. In case, by reason of the suspension of or irregularities in regular mail service or by reason of any other cause, it shall be impossible or impracticable to mail notice of any event to Holders of Registered Securities when said notice is required to be given pursuant to any provision of this Indenture or of the Securities, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. Section 107. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof which is deemed to be incorporated in this Indenture by any of the provisions of the Trust Indenture Act, such incorporated provision shall control. 17
Section 108. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 109. Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. Section 110. Separability Clause. In case any provision in this Indenture, any Security or any Coupon shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 111. Benefits of Indenture. Except as otherwise provided in Article Twelve, nothing in this Indenture, any Security or any Coupon, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, the holders of Senior Indebtedness of the Company and the Holders of Securities or Coupons, any benefit or any legal or equitable right, remedy or claim under this Indenture. Section 112. Governing Law. This Indenture, the Securities and any Coupons shall be governed by and construed in accordance with the laws of the State of New York. Section 113. Legal Holidays. In any case where any Interest Payment Date, Redemption Date, Exchange Date or Stated Maturity of any Securities of any series shall not be a Business Day at any Place of Payment, then (notwithstanding any other provision of this Indenture, any Security or any Coupon other than a provision in any Security or Coupon that specifically states that such provision shall apply in lieu of this Section) payment of interest on or any Additional Amounts or principal of (and premium, if any, on) Securities or exchange of Capital Securities or cash for such Securities need not be made on such date, but may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on such 18
Interest Payment Date, Redemption Date or Exchange Date or at such Stated Maturity, and no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date, Exchange Date or Stated Maturity, as the case may be. Section 114. Language of Notices. Any request, demand, authorization, direction, notice, consent, election or waiver required or permitted under this Indenture shall be in the English language, except that, if the Company so elects, any published notice may be in an official language of the country of publication. ARTICLE TWO SECURITIES FORMS Section 201. Forms Generally. Each Registered Security, Bearer Security, Coupon and temporary global Security shall be substantially in such form as shall be established by or pursuant to a Board Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Securities as evidenced by their execution of such Securities. If the form of Securities of any series is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary, an Associate Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 303 for the authentication and delivery of such Securities. Unless otherwise provided in or pursuant to this Indenture, the Securities shall be issuable in registered form without Coupons and Securities in bearer form shall have interest Coupons attached. The definitive Securities and definitive Coupons shall be printed, lithographed or engraved on steel engraved borders or may be produced by any combination of these methods or in any other manner, all as determined by the officers executing such Securities or Coupons, as evidenced by their execution of such Securities or Coupons. 19
Section 202. Form of Trustee's Certificate of Authentication. The Trustee's certificate of authentication on all Securities shall be substantially in the following form: This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. CHEMICAL BANK, as Trustee By________________________ Authorized Officer Section 203. Securities in Global Form. If Securities of a series shall be issuable in global form, any such Security may provide that it or any number of such Securities shall represent the aggregate amount of all Outstanding Securities of such series (or such lesser amount as is permitted by the terms thereof) from time to time endorsed thereon and may also provide that the aggregate amount of Outstanding Securities represented thereby may from time to time be increased or reduced to reflect exchanges. Any endorsement of any Security in global form to reflect the amount, or any increase or decrease in the amount, or changes in the rights of Holders, of Outstanding Securities represented thereby shall be made in such manner and by such Person or Persons as shall be specified therein or in the Company Order to be delivered pursuant to Section 303 or 304 with respect thereto. Subject to the provisions of Section 303 and, if applicable, Section 304, the Trustee shall deliver and redeliver any Security in permanent global form in the manner and upon instructions given by the Person or Persons specified therein or in the applicable Company Order. If a Company Order pursuant to Section 303 or 304 has been, or simultaneously is, delivered, any instructions by the Company with respect to a Security in global form shall be in writing but need not be accompanied by or contained in an Officers' Certificate and need not be accompanied by an Opinion of Counsel. The provisions of the second to last sentence of Section 303 shall apply to any Security represented by a Security in global form if such Security was never issued and sold by the Company and the Company delivers to the Trustee the Security in global form together with written instructions (which need not comply with Section 102 and need not be accompanied by an Opinion of Counsel) with regard to the reduction in the principal amount of Securities represented thereby, together with the written statement contemplated by the second to last sentence of Section 303. 20
Notwithstanding the provisions of Section 307, unless otherwise specified as contemplated by Section 301, payment of principal of and any premium and interest on any Security in permanent global form shall be made to the Person or Persons specified therein. Notwithstanding the provisions of Section 308 and except as provided in the preceding paragraph, the Company, the Trustee and any agent of the Company and the Trustee shall treat as the Holder of such principal amount of Outstanding Securities represented by a permanent global Security (i) in the case of a permanent global Security in registered form, the Holder of such permanent global Security in registered form, or (ii) in the case of a permanent global Security in bearer form, the Person or Persons specified pursuant to Section 301. ARTICLE THREE THE SECURITIES Section 301. Amount Unlimited; Issuable in Series. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more series. There shall be established by or pursuant to a Board Resolution and, subject to Section 303, set forth, or determined in the manner or method provided in an Officers' Certificate or in one or more indentures supplemental hereto prior to the issuance of Securities of each series: (1) the title of the Securities of the series (which shall distinguish the Securities of the series from all other Securities); (2) any limit upon the aggregate principal amount of the Securities of the series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of such series pursuant to Section 304, 305, 306, 906, 1107 or 1306); (3) whether such Securities of the series are to be issuable as Registered Securities, as Bearer Securities or alternatively as Bearer Securities and Registered Securities, and whether the Bearer Securities are to be issuable with Coupons, without Coupons or both, and any restrictions applicable to the offer, sale or delivery of the Bearer Securities and the terms, if any, upon which Bearer Securities may be exchanged for Registered Securities; provided that if such Board Resolution shall fail to specify whether such Securities are to be issuable as Registered Securities, as Bearer Securities or alternatively as Bearer Securities and Registered Securities, such Securities shall be issued as Registered Securities. 21
(4) whether any of such Securities of the series are to be issuable initially in global form, when any of such Securities are to be issuable in global form and, if so, (i) whether beneficial owners of interests in any such global Security may exchange such interests for Securities of such series and of like tenor and of any authorized form and denomination and the circumstances under which any such exchanges may occur, If other than in the manner specified in Section 305, (ii) the name of the depository or the U.S. Depository, as the case may be, with respect to any global Security and (iii) the manner in which interest payable on a global Security will be paid; (5) if any of such Securities are to be issuable as Bearer Securities or in global form, the date as of which any such Bearer Security or global Security shall be dated (if other than the date of original issuance of the first of such Securities to be issued); (6) if any of such Securities are to be issuable as Bearer Securities, whether interest in respect of any portion of a temporary Bearer Security in global form (representing all of the Outstanding Bearer Securities of the series) payable in respect of an Interest Payment Date therefor prior to the exchange, if any, of such temporary Bearer Security for definitive Securities of the series shall be paid to any clearing organization with respect to the portion of such temporary Bearer Security held for its account and, in such event, the terms and conditions (including any certification requirements) upon which any such interest payment received by a clearing organization will be credited to the Persons entitled to interest payable on such Interest Payment Date; (7) the date or dates on which the principal of the Securities of the series is payable; (8) the rate or rates, or the method to be used in ascertaining the rate or rates, at which the Securities of the series shall bear interest, if any, the date or dates from which such interest shall accrue, the Interest Payment Dates on which such interest shall be payable and the Regular Record Date, if any, for the interest payable on Registered Securities on each Interest Payment Date, and whether and under what circumstances Additional Amounts on such Securities or any of them shall be payable and, if so, whether the Company has the option to redeem the affected Securities rather than pay such Additional Amounts; (9) the place or places where the principal of (and premium, if any) and interest, if any, on or any Additional Amounts with respect to Securities of the series shall be payable; (10) the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series may be redeemed, in whole or in part, at the option of the Company; 22
(11) the period or periods within which and the terms and conditions, if any, upon which Securities of the series may be converted into other securities; (12) the terms and conditions, if any, upon which Capital Securities shall be exchangeable for Securities of the series, including the place or places at which and the period or periods within which such Capital Securities shall be exchangeable for Securities of the series; (13) the terms and conditions, if any, upon which the Company may designate Optional Available Funds for Securities of the series; (14) the terms and conditions, if any, upon which the Company shall designate Available Funds for Securities of the series, including any covenant or option of the Company with respect thereto; (15) if other than the principal amount thereof, the percentage, or the method to be used in calculating the percentage, of the principal amount of the Securities of the series to be applicable at any particular time for purposes of determining the amount of Capital Securities which shall be exchangeable for Securities of the series or the amount of cash which the Holders of Securities of the series shall be entitled to receive on account of principal (such percentage being herein referred to as the "Applicable Percentage"); (16) if other than denominations of $1,000 and any integral multiple thereof, the denominations in which Registered Securities of the series shall be issuable and the denominations in which Securities of the series that are Bearer Securities shall be issuable if other than the denomination of $5,000; (17) if other than the principal amount thereof, the portion, or the method to be used in calculating the portion, of the principal amount of the Securities of the series at any particular time which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 502; (18) the Currency or Currencies, including any composite of Currencies, in which payment of the principal of (and premium, if any) or interest, if any, on or Additional Amounts with respect to the Securities of the series shall or may be payable (if other than Currency of the United States of America), in which case any references in this Indenture to "cash", "funds", "Money" or "sum" shall mean any such Currency or Currencies, including any composite of Currencies, as the context requires; (19) if the principal of, any premium or interest on or any Additional Amounts with respect to any of such Securities are to be payable, at the election of the Company or a Holder thereof or otherwise in a Currency other than that in which such Securities are stated to be payable, the period or periods within which, and the other terms and 23
conditions upon which, such election may be made, and the time and manner of determining the exchange rate between the Currency in which such Securities are denominated or stated to be payable and the Currency in which such Securities or any of them are to be so payable; (20) if the amount of payments of principal of (and premium, if any) or interest, if any, on or Additional Amounts with respect to the Securities of the series may be determined with reference to an index, the manner in which such amounts shall be determined; (21) any Event of Default with respect to Securities of the series, if not set forth herein; (22) any other terms of the Securities of the series that permit Securities of the series to qualify as primary capital of the Company under regulations of or as determined by the Primary Federal Regulator, (23) whether there is more than one Trustee, the identity of the Trustee and, if not the Trustee, the identity of each Security Registrar, Paying Agent or Authenticating Agent with respect to such Securities; and (24) any other terms of the Securities of the series (which terms shall not be inconsistent with the provisions of this Indenture). All Securities of any one series and all Coupons, if any, pertaining to Bearer Securities of such series shall be substantially identical except as to Currency of payment due thereunder, denomination and the rate or rates of interest, if any, and Stated Maturity, the date from which interest, if any, shall accrue and except as may otherwise be provided in or pursuant to such Board Resolution and (subject to Section 303) set forth, or determined in the manner or method provided, in such Officers' Certificate or in any such supplemental indenture hereto. All Securities of any one series issued after May 1, 1991 need not be issued at the same time, and unless otherwise provided, a series issued after May 1, 1991 may be reopened for issuances of additional Securities of such series or to establish additional terms of such series of Securities. If any of the terms of the Securities of any series are established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary, an Associate Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers' Certificate. Section 302. Denominations. The Registered Securities of each series, if any, shall be issuable in registered form without Coupons in such denominations as shall be specified in the terms of the Registered 24
Securities of such series established as provided in Section 301. In the absence of any such provisions with respect to the Registered Securities of any series, the Registered Securities of such series shall be issuable in denominations of $1,000 and any integral multiple thereof. The Bearer Securities of each series, if any, shall be issued in such denominations as shall be specified in the terms of the Bearer Securities of such series established as provided in Section 301. In the absence of any such provision with respect to the Bearer Securities of any series, the Bearer Securities of such series shall be issuable in denominations of $5,000. Section 303. Execution, Authentication, Delivery and Dating. Securities shall be executed on behalf of the Company by any two of its Chairman of the Board, its President, any Vice Chairman of the Board, or any Vice President, under its corporate seal reproduced thereon. The signature of any of these officers on the Securities may be manual or facsimile. Coupons shall bear the facsimile signature of the Chairman of the Board or the President of the Company. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company and Coupons bearing the facsimile signatures of such individuals shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series, together with any Coupons appertaining thereto, executed by the Company, to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities; provided, however, that, in connection with its original issuance, no Bearer Security shall be mailed or otherwise delivered to any location in the United States, and provided, further, that a definitive Bearer Security may be delivered in connection with its original issuance only if the Trustee or its Authenticating Agent shall have received from the Person entitled to receive such Bearer Security a certificate in the form required by Section 311(a). In authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities and any Coupons appertaining thereto, the Trustee shall be entitled to receive, and (subject to Sections 315(a), (b) and (d) of the Trust Indenture Act) shall be fully protected in relying upon: (1) a copy of any Board Resolution or Board Resolutions relating thereto and, if applicable, an appropriate record of any action taken pursuant to any such Board Resolution; (2) an executed supplemental indenture, if any; and (3) an Opinion of Counsel stating that 25
(A) the forms of such Securities and Coupons, if any, have been established by or pursuant to a Board Resolution or by an indenture supplemental hereto as permitted by Section 201 in conformity with the provisions of this Indenture; (B) the terms of such Securities and Coupons, if any, have been established by or pursuant to a Board Resolution or by an indenture supplemental hereto as permitted by Section 301 in conformity with the provisions of this Indenture; and (C) such Securities and Coupons, if any, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and binding obligations of the Company entitled to the benefits of this Indenture, except to the extent that enforcement thereof may be limited by applicable bankruptcy, insolvency and other laws affecting creditors' rights generally, and except that enforcement thereof may be limited under general principles of equity, provided that such Opinion of Counsel need not express any opinion concerning the enforceability of the provisions of Article Thirteen (other than any obligation of the Company thereunder, to the extent applicable, to pay to the Holders of such Securities on the Exchange Date cash in an amount equal to the principal amount (or the Applicable Percentage thereof) of such Securities (and premium, if any, thereon) and interest, if any, accrued and unpaid thereon to the Exchange Date) or of the provisions of Article Fourteen or as to whether a court in the United States of America would render a money judgment in a Currency other than that of the United States of America. Notwithstanding the provisions of Section 301 and the preceding paragraph, if all Securities of a series are not to be originally issued at one time, it shall not be necessary to deliver the Officers' Certificate otherwise required pursuant to Section 301 or the Company Order and Opinion of Counsel otherwise required pursuant to such preceding paragraph at or prior to the time of authentication of each Security of such series if such documents are delivered at or prior to the time of authentication upon original issuance of the first Security of such series. With respect to Securities of a series not to be originally issued at one time, the Trustee may rely, as to the authorization by the Company of any such Securities, the form and terms thereof and the legality, validity, binding effect and enforceability thereof, upon the Opinion of Counsel and other documents delivered pursuant to Sections 201 and 301 and this Section, as applicable, in connection with the first authentication of Securities of such series unless and until such opinion or other documents have been superseded or revoked. Each Registered Security shall be dated the date of its authentication. Unless otherwise specified as contemplated by Section 301, each Bearer Security and any temporary Bearer Security in global form shall be dated as of the date of the original issuance of such Security. No Security or Coupon appertaining thereto shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Security a 26
certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. Notwithstanding the foregoing, unless otherwise specified as contemplated by Section 301, if any Security shall have been duly authenticated and delivered hereunder but never sold by the Company and the Company shall deliver to the Trustee and the Authenticating Agent a written statement (which need not comply with Section 102) signed by an Authorized Officer, specifically identifying such Security by series and number, and stating that such Security has never been sold by the Company, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder, shall never be entitled to the benefits of this Indenture and shall be disposed of by the Trustee as contemplated by the last paragraph of Section 309. Except as permitted by Section 306 or 307, the Trustee shall not authenticate and deliver any Bearer Security unless all Coupons appertaining thereto then matured have been detached and cancelled. Section 304. Temporary Securities. Pending the preparation of definitive Securities of any series, the Company may execute and, upon Company Order, the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued in registered form, or, if authorized, in bearer from with one or more Coupons or without Coupons and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities. Except in the case of temporary Securities in global form, which shall be exchanged in accordance with the provisions below, if temporary Securities of any series are issued, the Company will cause definitive Securities of that series to be prepared without unreasonable delay. After the preparation of definitive Securities of such series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series upon surrender of the temporary Securities of such series at the Office or Agency of the Company maintained for such purpose pursuant to Section 1002, without charge to the Holder thereof. Upon surrender for cancellation of any one or more temporary Securities of any series (accompanied by any unmatured Coupons appertaining thereto), the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities of the same series of authorized denominations and containing identical terms and provisions; provided, however, that no definitive Bearer Security, except as provided in or pursuant to this Indenture, shall be delivered in exchange for a temporary Registered Security; and provided. further, that a definitive Bearer Security shall be delivered in exchange for a temporary Bearer Security only in compliance with the conditions set forth in or pursuant to this Indenture. Unless otherwise provided in or pursuant to this Indenture with respect to a temporary global Security, 27
until so exchanged the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series. If temporary Securities of any series are issued outside the United States in global form, any such temporary global Security shall, unless otherwise provided in such temporary global Security, be delivered to the London office of a depositary or common depositary (the "Common Depositary"), for the benefit of the operator of the Euroclear System ("Euroclear") and CEDEL S.A., for credit to the respective accounts of the beneficial owners of such Securities (or to such other accounts as they may direct). Upon receipt of written instructions (which need not comply with Section 102) from an Authorized Officer acting pursuant to a Board Resolution, the Trustee or any Authenticating Agent, as the case may be, shall endorse such temporary global Security to reflect the initial principal amount, or an increase in the principal amount, of Outstanding Securities represented thereby. Until such initial endorsement, such temporary global Security shall not evidence any obligation of the Company. Such temporary global Security shall at any time represent the aggregate principal amount of Outstanding Securities theretofore endorsed thereon as provided above, subject to reduction to reflect exchanges as described below. Unless otherwise specified in such temporary global Security, and subject to the second proviso in the immediately following paragraph, the interest of a beneficial owner of Securities of a series in a temporary global Security shall be exchanged for definitive Securities of such series and of like tenor following the Global Exchange Date (as defined below) when the account holder instructs Euroclear or CEDEL S.A., as the case may be, to request such exchange on his behalf and delivers to Euroclear or CEDEL S.A., as the case may be, a certificate in the form required by Section 311(a), dated no earlier than 15 days prior to the Global Exchange Date, copies of which certificate shall be available from the offices of Euroclear and CEDEL S.A., the Trustee, and any Authenticating Agent appointed for such series of Securities and each Paying Agent. Unless otherwise specified in such temporary global Security, any such exchange shall be made free of charge to the beneficial owners of such temporary Security, except that a Person receiving definitive Securities must bear the cost of insurance, postage, transportation and the like in the event that such person does not take delivery of such definitive Securities in person at the offices of Euroclear or CEDEL S.A. Without unnecessary delay but in any event not later than the date specified in, or determined pursuant to the terms of, any such temporary global Security (the "Global Exchange Date"), the Company shall deliver to the Trustee or any Authenticating Agent, as shall be specified in, or determined pursuant to the terms of, such temporary global Security, definitive Securities in aggregate principal amount equal to the principal amount of the temporary global Security, executed by the Company. Unless otherwise specified as contemplated by Section 301, such definitive Securities shall be in the form of Bearer Securities, and if so specified as contemplated by Section 301, such definitive Securities shall be in the form of Registered Securities or shall be in the form of any combination of Bearer Securities and Registered Securities. On or after the Global Exchange Date such temporary global Security shall be surrendered by the Common Depositary to the Trustee or such Authenticating Agent, as the Company's agent for such purpose, to be exchanged, in whole or from time to time in part, for 28
definitive Securities without charge and the Trustee or such Authenticating Agent shall authenticate and deliver, in exchange for each portion of such temporary global Security, an equal aggregate principal amount of definitive Securities of the same series of authorized denominations and of like tenor as the portion of such temporary global Security to be exchanged, which, except as otherwise specified as contemplated by Section 301, shall be in the form of Bearer Securities; provided, however, that unless otherwise specified in such temporary global Security, upon such presentation by the Common Depositary, such temporary global Security is accompanied by a certificate dated the Global Exchange Date or a subsequent date and signed by Euroclear as to the portion of such temporary global Security held for its account then to be exchanged and a certificate dated the Global Exchange Date or a subsequent date and signed by CEDEL S.A., as to the portion of such temporary global Security held for Its account then to be exchanged, each in the form required by Section 311(b); and provided, further, that a definitive Bearer Security shall be delivered in exchange for a portion of a temporary global Security only in compliance with the conditions set forth in Section 303. Upon any exchange of a portion of any such temporary global Security, such temporary global Security shall be endorsed by the Trustee or Authenticating Agent, as the case may be, to reflect the reduction of the principal amount evidenced thereby, whereupon its remaining principal amount shall be reduced for all purposes by the amount to be exchanged. Until so exchanged in full, such temporary global Security shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series authenticated and delivered hereunder, except that, unless otherwise specified as contemplated by Section 301, interest payable on such temporary global Security on an Interest Payment Date for Securities of such series occurring prior to the applicable Global Exchange Date for Securities of such series shall be payable, without interest, to each of Euroclear and CEDEL S.A., on such Interest Payment Date upon delivery by Euroclear and CEDEL S.A., to the Trustee or Authenticating Agent, as the case may be, of a certificate or certificates in the form required by Section 311(c), for credit on or after such Interest Payment Date to the respective accounts of the persons who are the beneficial owners of such temporary global Security on such Interest Payment Date and who have each delivered to Euroclear or CEDEL, S.A., as the case may be, a certificate in the form required by Section 311(d). Section 305. Registration, Registration of Transfer and Exchange. With respect to the Registered Securities of each series, the Company shall cause to be kept at an Office or Agency to be maintained by the Company in accordance with Section 1002 a register (herein sometimes referred to as the "Security Register" with respect to the Registered Securities of such series) in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of such Registered Securities and of transfers of such Registered Securities. Unless otherwise provided in a Board Resolution or indenture supplemental hereto with respect to the Registered Securities of any particular series, the Bank is hereby appointed "Security Registrar" for the purpose of registering Registered Securities and transfers of Registered Securities as herein provided. 29
Upon surrender for registration of transfer of any Registered Security of any series at the Office or Agency of the Company, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Registered Securities of the same series, of any authorized denominations and of a like aggregate principal amount. At the option of the Holder, Registered Securities of any series may be exchanged for other Registered Securities of the same series, of any authorized denominations and of a like aggregate principal amount, upon surrender of the Registered Securities to be exchanged at such Office or Agency. Whenever any Registered Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Registered Securities which the Holder making the exchange is entitled to receive. All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. Every Registered Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Security Registrar) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing. At the option of the Holder, Bearer Securities of such series may be exchanged for Registered Securities of the same series, of any authorized denominations and of a like aggregate principal amount and tenor, upon surrender of the Bearer Securities to be exchanged at any Office or Agency for such series, with all unmatured Coupons and all matured Coupons in default thereto appertaining. If the Holder of a Bearer Security is unable to produce any such unmatured Coupon or Coupons or matured Coupon or Coupons in default, such exchange may be effected if the Bearer Securities are accompanied by payment in funds acceptable to the Company and the Trustee in an amount equal to the face amount of such missing Coupon or Coupons, or the surrender of such missing Coupon or Coupons may be waived by the Company and the Trustee if there is furnished to them such security or indemnity as they may require to save each of them and any Paying Agent harmless. If thereafter the Holder of such Bearer Security shall surrender to any Paying Agent any such missing Coupon in respect of which such a payment shall have been made, such Holder shall be entitled to receive the amount of such payment; provided, however, that, except as otherwise provided in Section 1002, interest represented by Coupons shall be payable only upon presentation and surrender of those Coupons at an Office or Agency located outside the United States. Notwithstanding the foregoing, in case a Bearer Security of any series is surrendered at any such Office or Agency for such series in exchange for a Registered Security of the same series and like tenor after the close of business at such Office or Agency on (i) any Regular Record Date and before the opening of business at such Office or Agency on the relevant Interest Payment Date, or (ii) any Special Record Date 30
and before the opening of business at such Office or Agency on the related date for payment of Defaulted Interest, such Bearer Security shall be surrendered without the Coupon relating to such Interest Payment Date or proposed date of payment, as the case may be (or, if such Coupon is so surrendered with such Bearer Security, such Coupon shall be returned to the Person so surrendering the Bearer Security), and interest or Defaulted Interest, as the case may be, shall not be payable on such Interest Payment Date or proposed date for payment, as the case may be, in respect of the Registered Security issued in exchange for such Bearer Security, but shall be payable only to the Holder of such Coupon when due in accordance with the provisions of this Indenture. Whenever any Securities are surrendered for exchange as contemplated by the immediately preceding paragraph, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 304, 906, 1107 or 1306 not involving any transfer. The Company shall not be required (i) to issue, register the transfer of or exchange Securities of any series during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Securities of that series selected for redemption under Section 1103 and ending at the close of business on the day of such mailing, or (ii) to issue, register the transfer of or exchange Securities of any series during a period beginning at the opening of business 15 days before the day of mailing of a notice of exchange of Capital Securities for Securities of that series selected for exchange of Capital Securities therefor under Section 1303(c) and ending at the close of business on the day of such mailing, or (iii) unless otherwise specified in the terms of the Securities of any series established as provided in Section 301, to register the transfer of or exchange any Security of such series so selected for redemption or for exchange of Capital Securities therefor in whole or in part, or (iv) to exchange any Bearer Security so selected for redemption except that such Bearer Security may be exchanged for a Registered Security of like tenor and the same series, provided that such Registered Security shall be immediately surrendered for redemption with written instruction for payment consistent with the provisions of this Indenture. Notwithstanding the foregoing, except as otherwise specified as contemplated by Section 301, any global Security registered in the name of a U.S. Depositary or its nominee shall be exchangeable only if (i) the U.S. Depository is at any time unwilling or unable to continue as U.S. Depository and a successor depository is not appointed by the Company within 60 days of the receipt by the Company of notice to such effect from the U.S. Depository, (ii) the Company executes and delivers to the Trustee a Company Order to the effect that such global Security shall be so exchangeable, or (iii) an Event of Default has occurred and is continuing with respect to the Securities. If the beneficial owners of interests in such global Security are entitled to 31
exchange such interests for Securities of such series with the same terms and provisions and of like principal amount of any authorized form and denomination, as specified as contemplated by Section 301, then without unnecessary delay, the Company shall deliver to the Trustee or any Authenticating Agent definitive Securities of that series with the same terms and provisions in aggregate principal amount equal to the principal amount of such global Security, executed by the Company. On or after the earliest date on which such interests may be so exchanged, such global Security shall be surrendered from time to time by the U.S. Depository or such other depository as shall be specified in the Company Order with respect thereto, and in accordance with instructions given to the Trustee or any Authenticating Agent and the U.S. Depository or such other depository, as the case may be (which instructions shall be in writing but need not comply with Section 102 or be accompanied by an Opinion of Counsel), as shall be specified in the Company Order with respect thereto, to the Trustee, or any Authenticating Agent as the Company's agent for such purpose, to be exchanged, in whole or in part, for definitive Securities of the same series without charge. The Trustee or such Authenticating Agent shall authenticate and make available for delivery, in exchange for each portion of such surrendered global Security, a like aggregate principal amount of definitive Securities in the form in which the Securities are issuable, as specified as contemplated by Section 301, which (unless such Securities are not issuable both as Bearer Securities and as Registered Securities, in which case the definitive Securities exchanged for the global Security shall be issuable only in the form in which the Securities are issuable, as provided in or pursuant to this Indenture) shall be in the form of Bearer Securities or Registered Securities, or any combination thereof, as shall be specified by the beneficial owner thereof; provided, however, that no such exchanges may occur during a period beginning at the opening of business 15 days before any selection of Securities of that series to be redeemed and ending on the relevant Redemption Date; and provided, further, that (unless otherwise provided in or pursuant to this Indenture) no Bearer Security delivered in exchange for a portion of a global Security shall be mailed or otherwise delivered to any location in the United States. Promptly following any such exchange in part, such global Security shall be returned by the Trustee or the Authenticating Agent to such depository or the U.S. Depository, as the case may be, or such other depository or U.S. Depository referred to above in accordance with the instructions of the Company referred to above. If a Registered Security is issued in exchange for any portion of a global Security after the close of business at the Office or Agency where such exchange occurs on (i) any Regular Record Date and before the opening of business at such Office or Agency on the relevant Interest Payment Date, or (ii) any Special Record Date and before the opening of business at such Office or Agency on the related proposed date for payment of interest or Defaulted Interest, as the case may be, interest will not be payable on such Interest Payment Date or proposed date for payment, as the case may be, in respect of such Registered Security, but will be payable on such Interest Payment Date or proposed date for payment, as the case may be, only to the Person to whom interest in respect of such portion of such global Security is payable in accordance with the provisions of this Indenture. None of the Company, the Trustee, any Paying Agent or the Securities Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. 32
Section 306. Mutilated, Destroyed, Lost and Stolen Securities. If (i) any mutilated Security or a Security with a mutilated Coupon appertaining to it is surrendered to the Trustee, or the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Security or Coupon, and (ii) there is delivered to the Company and the Trustee such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security or Coupon has been acquired by a bona fide purchaser, the Company shall execute and, upon the Company's request the Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Security or in exchange for the Security to which a mutilated, destroyed, lost or stolen Coupon appertains (with all appurtenant Coupons not mutilated, destroyed, lost or stolen), a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding, with Coupons corresponding to the Coupons, if any, appertaining to such mutilated, destroyed, lost or stolen Security or to the Security to which such mutilated, destroyed, lost or stolen Coupon appertains. In case any such mutilated, destroyed, lost or stolen Security or Coupon has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security or Coupon; provided, however, that payment of principal of, any premium or interest on or any Additional Amounts with respect to any Bearer Securities shall, except as otherwise provided in Section 1002, be payable only at an Office or Agency for such Securities located outside the United States. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security of any series, with any Coupons appertaining thereto, issued pursuant to this Section in lieu of any destroyed, lost or stolen Security, or in exchange for a Security to which a destroyed, lost or stolen Coupon appertains, shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security and Coupons appertaining thereto or the destroyed, lost or stolen Coupon shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that series and any Coupons, if any, duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities or Coupons. 33
Section 307. Payment of Interest and Certain Additional Amounts; Rights to Interest and Certain Additional Amounts Preserved. Interest on and any Additional Amounts with respect to any Registered Security which are payable, and are punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name such Security (or one or more Predecessor Securities) is registered as of the close of business on the Regular Record Date for such interest. In case a Bearer Security of any series is surrendered in exchange for a Registered Security after the close of business at an Office or Agency for such Security on any Regular Record Date therefor and before the opening of business at such Office or Agency on the next succeeding Interest Payment Date therefor, such Bearer Security shall be surrendered without the Coupon relating to such Interest Payment Date and interest shall not be payable on such Interest Payment Date in respect of the Registered Security issued in exchange for such Bearer Security, but shall be payable only to the Holder of such Coupon when due in accordance with the provisions of this Indenture. Any interest on and any Additional Amounts with respect to any Registered Security of any series which are payable, but are not punctually paid or duly provided for, on any Interest Payment Date for such Registered Security (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder thereof on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Person in whose name the Registered Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Registered Security of such series and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such Money when so deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. Thereupon, the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class postage prepaid, to each Holder of such Registered Securities of such series at his address as it appears in the Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose name the Registered Securities of such series (or their respective Predecessor Securities) are registered 34
at the close of business on such Special Record Date and shall no longer be payable pursuant to the following Clause (2). In case a Bearer Security is surrendered at the Office or Agency for such Security in exchange for a Registered Security after the close of business at such Office or Agency on any Special Record Date and before the opening of business at such Office or Agency on the related proposed date for payment of Defaulted Interest, such Bearer Security shall be surrendered without the Coupon relating to such proposed date of payment and Defaulted Interest shall not be payable on such proposed date of payment in respect of the Registered Security issued in exchange for such Bearer Security, but shall be payable only to the Holder of such Coupon when due in accordance with the provisions of this Indenture. (2) The Company may make payment of any Defaulted Interest on the Securities of any series in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee. If any instalment of interest whose Stated Maturity is on or prior to the Redemption Date for any Securities called for redemption pursuant to Article Eleven is not paid or duly provided for on or prior to the Redemption Date in accordance with the foregoing provisions of this Section, such interest shall be payable as part of the Redemption Price of such Securities. Except as otherwise specified in the terms of the Securities of any series established as provided in Section 301, if any instalment of interest whose Stated Maturity is on or prior to the Exchange Date for Securities of such series for which a notice of exchange of Capital Securities therefor has been given pursuant to Article Thirteen is not paid or duly provided for on or prior to the Exchange Date in accordance with the foregoing provisions of this Section, such interest shall be payable concurrently with the payment of the Exchange Price of such Securities to the Persons to whom such Exchange Price shall be payable. Subject to the foregoing provisions of this Section and Section 305, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. Section 308. Persons Deemed Owners. Title to any Bearer Security, any Coupons appertaining thereto and any temporary global Bearer Security shall pass by delivery. Prior to due presentment of a Registered Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in 35
whose name such Registered Security is registered as the owner of such Registered Security for the purpose of receiving payment of principal of (and premium, if any), and (subject to Sections 305 and 307) interest on and any Additional Amounts with respect to such Registered Security and for all other purposes whatsoever, whether or not such Registered Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. The Company, the Trustee and any agent of the Company or the Trustee may treat the bearer of any Bearer Security or the bearer of any Coupon as the absolute owner of such Security or Coupon for the purpose of receiving payment thereof or on account thereof and for all other purposes whatsoever, whether or not any payment with respect to such Security or Coupon shall be overdue, and neither the Company, nor the Trustee or any agent of the Company or the Trustee shall be affected by notice to the contrary. No holder of any beneficial interest in any global Security held on its behalf by a depository shall have any rights under this Indenture with respect to such global Security, and such depository may be treated by the Company, the Trustee, and any agent of the Company or the Trustee as the owner of such global Security for all purposes whatsoever. None of the Company, the Trustee, any Paying Agent or the Security Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Section 309. Cancellation. All Securities and Coupons surrendered for payment, redemption, registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee, and any such Securities and Coupons, as well as Securities and Coupons surrendered directly to the Trustee or the Security Registrar for any such purpose, shall be promptly cancelled by the Trustee or the Security Registrar, as the case may be. The Company may at any time deliver to the Trustee or the Security Registrar for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly cancelled by the Trustee or the Security Registrar, as the case may be. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Securities and Coupons held by the Trustee shall be disposed of by the Trustee in accordance with its customary procedures, unless by a Company Order the Company directs their return to it. The Trustee shall promptly notify the Company of all cancelled securities. Each Security, together with Coupons appertaining thereto, if any, which, pursuant to Section 303, is deemed never to have been authenticated and delivered hereunder shall be delivered to the Trustee and disposed of by the Trustee; and the Trustee shall promptly notify 36
the Security Registrar that, pursuant to Section 303, such Security is deemed never to have been authenticated and delivered hereunder and shall instruct the Security Registrar to make or cause to be made the necessary notations in the Security Register to reflect the foregoing. Section 310. Computation of Interest. Except as otherwise specified in the terms of the Securities of any series established as provided in Section 301, interest on the Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months. Section 311. Form of Certification by a Person Entitled to Receive a Bearer Security. (a) Whenever any provision of this Indenture or the forms of Security contemplate that certification be given by a Person entitled to receive a Bearer Security, such certification shall be provided substantially in the form of the following certificate, with only such changes as shall be approved by the Company: [FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED TO RECEIVE BEARER SECURITY] CERTIFICATE [Insert title or sufficient description of Securities to be delivered] This is to certify that none of the above-captioned Securities are being acquired by or on behalf of a United States person, or for offer to resell or for resale to a United States person or to a person within the United States, or, if a beneficial interest in any such Security is being acquired by or on behalf of a United States person, that such person is a financial institution or is acquiring through a financial institution and that such Security is held by a financial institution that has agreed in writing to comply with the requirements of Section 165 (j)(3)(A), (B) or (C) of the United States Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder. If this certificate is being provided by a clearing organization, it is based on statements provided to it by its member organizations. If the undersigned is a dealer, the undersigned agrees to obtain a similar certificate from each person entitled to delivery of any of the above-captioned Securities in bearer form purchased from it; provided, however, that, if the undersigned has actual knowledge that the information contained in such a certificate is false, the undersigned will not deliver any Security in temporary or definitive bearer form to the person who signed such certificate notwithstanding the delivery of such certificate to the undersigned. 37
As used herein, "United States person" means any citizen or resident of the United States, any corporation, partnership or other entity created or organized in or under the laws of the United States, or any estate or trust the income of which is subject to United States federal income taxation regardless of its source, and "United States" means the United States of America (including the States and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction. We undertake to advise you by telex if the above statement as to beneficial ownership is not correct on the date of delivery of the above-captioned Securities in bearer form as to all of such Securities. We understand that this certificate is required in connection with certain tax legislation in the United States. If administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorize you to produce this certificate or a copy hereof to any interested party in such proceedings. [Name of Person Entitled to Receive Bearer Security] Dated: ______, 19__ __________________________________ (Authorized Signatory) Name: Title: (b) Whenever any provision of this Indenture or the forms of Security contemplate that certification be given by Euroclear or CEDEL S.A. in connection with the exchange of a portion of a temporary global Security, such certification shall be provided substantially in the form of the following certificate, with only such changes as shall be approved by the Company: [FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR OR CEDEL S.A. IN CONNECTION WITH EXCHANGE OF A PORTION OF A TEMPORARY GLOBAL SECURITY] CERTIFICATE [Insert title or sufficient description of Securities to be exchanged] 38
This is to certify with respect to $ ____ principal amount of the above-captioned Securities (i) that we have received from each of the persons appearing in our records as persons entitled to a portion of such principal amount (our "Qualified Account Holders") a certificate with respect to such portion substantially in the form attached hereto, and (ii) that we are not submitting herewith for exchange any portion of the temporary global Security representing the above-captioned Securities excepted in such certificates. We further certify that as of the date hereof we have not received any notification from any of our Qualified Account Holders to the effect that the statements made by such Qualified Account Holders with respect to any portion of the part submitted herewith for exchange are no longer true and cannot be relied upon as of the date hereof. Dated: ________, 19___ [To be dated no earlier than the Global Exchange Date] [MORGAN GUARANTY TRUST COMPANY OF NEW YORK, Brussels Office, as Operator of the Euroclear System] [CEDEL S.A.] By __________________________ (c) Whenever any provision of this Indenture or the forms of Security contemplate that certification be given by Euroclear of CEDEL S.A. in connection with payment of interest on a temporary global Security prior to the related Global Exchange Date, such certification shall be provided substantially in the form of the following certificate, with only such changes as shall be approved by the Company: [FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR OR CEDEL S.A. TO OBTAIN INTEREST PRIOR TO A GLOBAL EXCHANGE DATE] CERTIFICATE [Insert title or sufficient description of Securities] 39
This is to certify that, as of the Interest Payment Date on [insert date], the undersigned, which is a holder of an interest in the temporary global Security representing the above Securities, is not a United States person. As used herein, "United States person" means any citizen or resident of the United States, any corporation, partnership or other entity created or organized in or under the laws of the United States, or any estate or trust the income of which is subject to United States federal income taxation regardless of its source, and "United States" means the United States of America (including the States and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction. We confirm that the interest payable on such Interest Payment Date will be paid to each of the persons appearing in our records as being entitled to interest to be paid on the above date from whom we have received a written certification dated not earlier than 15 days prior to such Interest Payment Date to the effect that the beneficial owner of such portion with respect to which interest is to be paid on such date either is not a United States person or is a United States person which is a financial institution which has provided an United States Internal Revenue Service Form W-9 or is an exempt recipient as defined in United States Treasury Regulation Section 1.6049-4(c)(l)(ii) under the United States Internal Revenue Code of 1986, as amended. We undertake to retain certificates received from our member organizations in connection herewith for four years from the end of the calendar year in which such certificates are received. The foregoing reflects any advice received subsequent to the date of any certificates stating that the statements contained in such certificate are no longer correct. Dated: ______________, 19__ [To be dated on or after the relevant Interest Payment Date] [MORGAN GUARANTY TRUST COMPANY OF NEW YORK, Brussels Office, as Operator of the Euroclear System] [CEDEL S.A.] By ______________________ (d) Whenever any provision of the Indenture or the forms of Security contemplate that certification be given by a beneficial owner of a portion of a temporary global Security in 40
connection with payment of interest on a temporary global Security prior to the related Global Exchange Date, such certification shall be provided substantially in the form of the following certificate with only such changes as shall be approved by the Company: [FORM OF CERTIFICATE TO BE GIVEN BY BENEFICIAL OWNERS TO OBTAIN INTEREST PRIOR TO A GLOBAL EXCHANGE DATE] CERTIFICATE [Insert title or sufficient description of Securities] This is to certify that as of the date hereof, no portion of the temporary global Security representing the above-captioned Securities and held by you for our account is beneficially owned by a United States person or, if any portion thereof held by you for our account is beneficially owned by a United States person, such United States person is a financial institution within the meaning of Section 1.165-12T(c)(l)(v) of the United States Treasury regulations which hereby agrees to comply with Section 165(j)(3)(A),(B) or (C) of the United States Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder, and certifies that either it has provided an Internal Revenue Service Form W-9 or is an exempt recipient as defined in United States Treasury Regulations Section 1.6049-4(c)(l)(ii) under the United States Internal Revenue Code of 1986, as amended. As used herein, "United States person" means any citizen or resident of the United States, any corporation, partnership or other entity created or organized in or under the laws of the United States, or any estate or trust the income of which is subject to United States federal income taxation regardless of its source, and "United States" means the United States of America (including the States and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction. We undertake to advise you by telex if the above statement as to beneficial ownership is not correct on the Interest Payment Date on [Insert date] as to any such portion of such temporary global Security. 41
We understand that this certificate is required in connection with certain securities and tax legislation in the United States. If administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorize you to produce this certificate or a copy thereof to any interested party in such proceedings. Dated: ________, 19__ [To be dated on or after the 15th day before the relevant Interest Payment Date] [Name of Account Holder] __________________________ (Authorized Signatory) Name: Title: ARTICLE FOUR SATISFACTION AND DISCHARGE Section 401. Satisfaction and Discharge of Indenture This Indenture shall cease to be of further effect (except as to any surviving rights to receive Capital Securities which are exchanged for Securities of any series or rights of registration of transfer or exchange of Securities herein expressly provided for and any right to receive Additional Amounts), and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (1) either (A) all Securities theretofore authenticated and delivered and all Coupons appertaining thereto (other than (i) Coupons appertaining to Bearer Securities surrendered in exchange for Registered Securities and maturing after such exchange whose surrender is not required or has been waived as provided in Section 305, (ii) Securities and Coupons which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306, (iii) Coupons appertaining to Securities called for redemption and maturing after the relevant Redemption Date whose surrender has been waived as provided in Section 1106, and (iv) Securities and Coupons for whose payment Money and Capital Securities as required have theretofore been deposited in trust or segregated and held in trust by the 42
Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 1003) have been delivered to the Trustee for cancellation; or (B) all such Securities and, in the case of (i) or (ii) below, any Coupons appertaining thereto not theretofore delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at their stated Maturity within one year, or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of (i), (ii) or (iii) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose an amount of Money (or in the case of (i) above, an amount of Money with the Trustee and Capital Securities and/or Money as required with the Exchange Agent) sufficient to pay and discharge the entire indebtedness on such Securities and any Coupons appertaining thereto not theretofore delivered to the Trustee for cancellation, for principal of (premium, if any) and interest on, and any Additional Amounts with respect to, such Securities and any Coupons appertaining thereto, to the date of such deposit (in the case of Securities which have become due and payable) or to the Redemption Date, Exchange Date or Stated Maturity Date, as the case may be; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Sections 607 and 1308 and to any Holder of a Security pursuant to Section 508 and Section 1308, the rights and remedies of the Trustee under Articles Five and Six with respect to the enforcement of Section 1308, the obligations of the Trustee to any Authenticating Agent under Section 612 and, if Money or Capital Securities shall have been deposited with the Trustee or the Exchange Agent pursuant to subclause (B) of Clause (1) of this Section, the obligations of the Trustee and the Exchange Agent under Section 402 and the last paragraph of Section 1003 shall survive. 43
Section 402. Application of Trust Money and Capital Securities. Subject to the provisions of the last paragraph of Section 1003, all Money or Capital Securities deposited with the Trustee or the Exchange Agent pursuant to Section 401 shall be held in trust and applied by the Trustee or the Exchange Agent, as the case may be, in accordance with the provisions of the Securities, the Coupons and this Indenture, to the payment, directly, or in the case of Money, through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any), interest and Additional Amounts for whose payment such Money has or Capital Securities have been deposited with the Trustee or the Exchange Agent, as the case may be. All Moneys deposited with the Trustee pursuant to Section 401 (and held by it or any Paying Agent) for the payment of Securities for which Capital Securities subsequently are exchanged shall be returned to the Company upon receipt by the Trustee of a Company Request. ARTICLE FIVE REMEDIES Section 501. Events of Default. "Event of Default", wherever used herein with respect to Securities of any series, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) for Securities originally issued prior to October 1, 1992, the entry of a decree or order by a court having jurisdiction in the premises in respect of the Company under the Federal Bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other similar law, or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; and for Securities originally issued on or after October 1, 1992, the entry of a decree or order by a court having jurisdiction in the premises in rest of the Company under the Federal Bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy insolvency or other similar law, or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or substantially all of its property (other than the appointment of a conservator with respect to the Bank or any other depository institution Subsidiary of the Company insured by the 44
Federal Deposit Insurance Corporation or any successor agency), or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or (2) for Securities originally issued prior to October 1, 1992, the commencement by the Company of a voluntary case under the Federal Bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other similar law, or the consent by it to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the failure by the Company to pay its debts generally as they become due; and for Securities originally issued on or after October 1, 1992, the commencement by the Company of a voluntary case under the Federal Bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other similar law, or the consent by it to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or substantially all of its property (other than the appointment of a conservator with respect to the Bank or any other depository institution Subsidiary of the Company insured by the Federal Deposit Insurance Corporation or any successor agency), or the making by it of an assignment for the benefit of creditors; or (3) any other Event of Default provided with respect to Securities of that series. Section 502. Acceleration of Maturity; Rescission and Annulment. If an Event of Default with respect to Securities of any series at the time Outstanding occurs and is continuing, then in every such case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of that series may declare the principal amount (or, if the Securities of that Series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of that series) of all the Securities of that series, or such lesser amount as may be provided for in the Securities of such series, to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the Holders), and upon any such declaration such principal or such lesser amount (or specified amount) shall become immediately due and payable in cash. At any time after such a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree for payment of the Money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Securities of that series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if (1) the Company has paid or deposited with the Trustee a sum sufficient to pay 45
(A) all overdue instalments of interest on and Additional Amounts with respect to all Securities of that series and any Coupon appertaining thereto, (B) the principal of (and premium, if any, on) any Securities of that series which have become due otherwise than by such declaration of acceleration and interest thereon and any Additional Amounts with respect thereto at the rate or rates prescribed therefor in such Securities, (C) to the extent that payment of such interest or Additional Amounts is lawful, interest upon overdue interest and Additional Amounts at the rate or rates prescribed therefor in such Securities, and (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) all Events of Default with respect to Securities of that series, other than the non-payment of the principal of Securities of that series which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 513. No such rescission shall affect any subsequent default or impair any right consequent thereon. Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee. Each of the following shall be a "Default" with respect to the Securities of any particular series: (1) default in the payment of any instalment of interest on or any Additional Amounts with respect to any of the Securities of such series or any Coupon appertaining thereto when such interest or Additional Amounts becomes due and payable and continuance of such default for a period of 30 days, or (2) default in the payment (including any obligation to exchange Capital Securities for Securities of such series pursuant to Article Thirteen) of the principal of (or premium, if any, on) any of the Securities of such series at the Maturity thereof, or (3) failure on the part of the Company duly to observe or perform any of the other covenants or agreements on its part in this Indenture or in the terms of the Securities of such series (other than a covenant or agreement a default in whose performance or whose breach is elsewhere in this Section specifically dealt with or a covenant or agreement which has been expressly included in this Indenture or in the Securities of any one or more other 46
series solely for the benefit of the Holders of Securities of such other series) and continuance of such failure for a period of 90 days after the date on which written notice of such failure, requiring the Company to remedy the same and stating that such notice is a "Notice of Default" hereunder, shall have been given by registered mail to the Company by the Trustee, or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of such series. The Company covenants that if a Default shall occur with respect to the Securities of any particular series, the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of Securities of such series and any Coupons appertaining thereto, the whole amount then due and payable on Securities of such series for principal (and premium, if any) and interest, if any (including the delivery of any Capital Securities then required to be delivered) and any Additional Amounts, if any, and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal (and premium, if any) and on any overdue interest or any Additional Amounts, at the rate or rates prescribed therefor in Securities of such series, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If Capital Securities are to be exchanged for Securities of any series and the Company shall fail to elect the type of Capital Securities to be exchanged for Securities of such series on or prior to the relevant Exchange Date or shall fail to issue or deliver such Capital Securities on or prior to such Exchange Date, the Company shall be liable to the Holders of any Securities of such series for which such Capital Securities were to be exchanged for the payment of the principal amount (or the Applicable Percentage thereof) of such Securities for which Capital Securities were to be exchanged in cash on the earlier of the relevant proposed Exchange Date or the Stated Maturity of Securities of such series. If the Company fails to pay such amounts (including the delivery of any Capital Securities then required to be delivered) forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid (including an action to enforce the delivery of any Capital Securities then required to be delivered and not so delivered or an action for Moneys equal to the principal amount (or the Applicable Percentage thereof) then due in respect of Securities of such series), and may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon Securities of such series and any Coupons appertaining thereto and collect the Moneys (including Moneys equal to the principal amount (or the Applicable Percentage thereof) of any Securities of such series for which such Capital Securities were to be exchanged) adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon Securities of such series and any Coupons appertaining thereto, wherever situated. If an Event of Default or Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series and any Coupons appertaining thereto by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce 47
any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. Section 504. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities of any series or the property of the Company or such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Securities of any series shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of any overdue principal, (or premium, if any) interest or Additional Amounts) shall be entitled and empowered, by intervention in such proceeding or otherwise, (i) to file and prove a claim for the whole amount, or such lesser amount as may be provided for in the Securities of such series, of the principal (and premium, if any) interest and Additional Amounts owing and unpaid in respect of the Securities of any series and any Coupons appertaining thereto and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents or counsel) and of the Holders of Securities or any Coupons allowed in such judicial proceeding, and (ii) to collect and receive any Moneys or other property payable or deliverable on any such claims and to distribute the same; and any receiver, assignee, trustee, liquidator, sequestrator or (other similar official) in any such judicial proceeding is hereby authorized by each Holder of Securities or any Coupons to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders of Securities or any Coupons, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 607. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder of a Security or any Coupon any plan of reorganization, arrangement, adjustment or composition affecting the Securities or Coupons or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder of a Security or any Coupon in any such proceeding. 48
Section 505. Trustee May Enforce Claims Without Possession of Securities or Coupons. All rights of action and claims under this Indenture or any of the Securities or Coupons may be prosecuted and enforced by the Trustee without the possession of any of the Securities or Coupons or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery or judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of a Security or Coupon in respect of which such judgment has been recovered. Section 506. Application of Money and Capitol Securities Collected. Subject to the provisions of Article Twelve, any Money and Capital Securities collected by the Trustee pursuant to this Article in respect of the Securities of any series shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such Money and Capital Securities on account of principal (or premium, if any), interest or Additional Amounts, upon presentation of the Securities or Coupons, or both, as the case may be, in respect of which such Money and Capital Securities have been collected and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee and any predecessor Trustee under Section 607; SECOND: In case the principal of the Outstanding Securities of such series shall not have become due and be unpaid, to the payment of interest and Additional Amounts on the Securities of such series and any Coupons, in the order of the maturity of the instalments of such interest and Additional Amounts, with interest and Additional Amounts (to the extent that such interest and Additional Amounts have been collected by the Trustee) upon the overdue instalments of interest and Additional Amounts at the rate or rates prescribed therefor in the Securities of such series, such payments to be made ratably to the persons entitled thereto; THIRD: In case the principal of the Outstanding Securities of such series shall have become due by declaration or otherwise, to the payment of the whole amount then owing and unpaid upon the Securities of such series and any Coupons for principal (and premium, if any), interest and Additional Amounts, with interest on the overdue principal (and premium, if any) and Additional Amounts and (to the extent that such interest has been collected by the Trustee) upon overdue instalments of interest at the rate or rates prescribed therefor in the Securities of such series, and in case such Money and Capital Securities shall be insufficient to pay in full the whole amounts so due and unpaid upon the Securities of such Series and any Coupons, then to the payment of such principal (and premium, if any), 49
interest and Additional Amounts without preference or priority of any kind, ratably according to the aggregate of such principal (and premium, if any), accrued and unpaid interest and Additional Amounts. Section 507. Limitations on Suits. No Holder of any Security of any series or any Coupons appertaining thereto shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default or Default with respect to the Securities of that series; (2) the Holders of not less than 25% in principal amount of the Outstanding Securities of that series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default or Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities of that series; it being understood and intended that no one or more Holders of the Securities of any series or any Coupons appertaining thereto shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other such Holders or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders. Section 508. Unconditional Right of Holders to Receive Principal, Premium, Interest and Additional Amounts. Notwithstanding any other provision in this Indenture, the Holder of any Security or Coupon shall have the right, which is absolute and unconditional, to receive payment of the principal of (and premium, if any) and (subject to Sections 305 and 307) interest, if any, on, and any Additional Amounts with respect to, such Security or payment of such Coupon, as the case may be, on the respective Stated Maturities expressed in such Security or Coupon (or, in the 50
case of redemption, on the Redemption Date or, in the case of repayment at the option of such Holder if provided in or pursuant to this Indenture, on the date such repayment is due), and, if applicable, to have delivered the Capital Securities to be exchanged for such Security pursuant to Article Thirteen and to have such Capital Securities sold in a Secondary Offering as provided in such Security and in Article Thirteen and to institute suit for the enforcement of any such payment, delivery or sale, and such rights shall not be impaired without the consent of such Holder. Section 509. Restoration of Rights and Remedies. If the Trustee or any Holder of a Security or a Coupon has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. Section 510. Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities or Coupons in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders of a Security or a Coupon is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 511. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Security or Coupon to exercise any right or remedy accruing upon any Event of Default or Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders of a Security or a Coupon may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. 51
Section 512. Control by Holders. The Holders of a majority in principal amount of the Outstanding Securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series and any Coupons appertaining thereto, provided that (1) such direction shall not be in conflict with any rule of law or with this Indenture and shall not involve the Trustee in personal liability, and (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. Section 513. Waiver of Past Defaults. The Holders of not less than a majority in principal amount of the Outstanding Securities of any series may on behalf of the Holders of all the Securities of such series and any Coupons appertaining thereto waive any past default hereunder with respect to the Securities of such series and its consequences, except a default (1) in the payment (including any obligation to exchange Capital Securities for Securities of such series pursuant to Article Thirteen) of the principal of (or premium, if any) or interest, if any, on, or any Additional Amounts with respect to, any Security of such series or any Coupons appertaining thereto, or (2) in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected thereby. Upon any such waiver, such default shall cease to exist, and any Event of Default or Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. Section 514. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Security or any Coupon appertaining thereto by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the 52
claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities of any series, or to any suit instituted by any Holder for the enforcement of the payment (including any obligation to exchange Capital Securities for Securities of such series pursuant to Article Thirteen) of the principal of (or premium, if any) or interest, if any, on, or Additional Amounts with respect to, any Security on or after the Stated Maturity or Maturities expressed in such Security or on the Exchange Date, as the case may be (or, in the case of redemption, on or after the Redemption Date). Section 515. Waiver of Stay or Extension Laws. The Company covenants that (to the extent that it may lawfully do so) it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. Section 516. Certain Outstanding Securities. Notwithstanding anything in the Indenture to the contrary, if a Default or an Event of Default has occurred with respect to certain Securities of a series that were originally issued prior to October 1, 1992 but has not occurred with respect to other Securities of such series that were originally issued on or after October 1, 1992 as a result of those provisions of Section 501 which relate only to Securities issued prior to October 1, 1992 or the provisions of Section 1005, which is applicable only to Securities issued prior to October 1, 1992, then solely for the purposes of Articles Five and Six of the Indenture or any other provisions of the Indenture relating to Defaults or Events of Default, those Securities of such series with respect to which such Default or Event of Default has occurred and is continuing shall constitute a separate series of Securities under the Indenture. ARTICLE SIX THE TRUSTEE Section 601. Certain Duties and Responsibilities. (a) With respect to the Securities of any particular series, except during the continuance of an Event of Default or Default with respect to the Securities of such series, 53
(1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. (b) In case an Event of Default or Default has occurred with respect to the Securities of any particular series and is continuing, the Trustee shall, with respect to the Securities of such series, exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own wilful misconduct, except that (1) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in principal amount of the Outstanding Securities of any series relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities of such series; and (4) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. 54
(d) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. Section 602. Notice of Defaults. Within 90 days after the occurrence of any default hereunder with respect to the Securities of any series, the Trustee shall transmit by mail to all Holders of Securities of such series, entitled to receive reports pursuant to Section 703(c), notice of such default hereunder known to the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment (including any obligation to exchange Capital Securities for any Security of such series pursuant to Article Thirteen) of the principal of (or premium, if any), or interest, if any, on, or Additional Amounts with respect to, any Security of such series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interest of the Holders of Securities and Coupons of such series; and provided, further, that in the case of any default of the character specified in Section 501(3) or Section 503(3) with respect to Securities of such series, no such notice to Holders shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default or Default with respect to Securities of such series. Section 603. Certain Rights of Trustee. Except as provided in Section 601: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness, Coupon or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or a Company Order (in each case, other than delivery of any Security, together with any Coupons appertaining thereto, to the Trustee for authentication and delivery pursuant to Section 303 which shall be sufficiently evidenced as provided therein) and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action 55
hereunder, the Trustee (unless other evidence shall be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (d) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders of Securities of any series or any Coupons appertaining thereto pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, debenture, other evidence of indebtedness, Coupon or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; and (h) the Trustee shall not be liable for any action taken or omitted by it in good faith or believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture. Section 604. Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Securities and any Coupons and in any documents relating to any Secondary Offering, except the Trustee's certificates of authentication, shall be taken as the statements of the Company and the Trustee or any Authenticating Agent assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities or the Coupons or any Capital Securities. The Trustee or any Authenticating Agent shall not be accountable for the use or application by the Company of the Securities or the proceeds thereof. 56
Section 605. May Hold Securities. The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar, any Exchange Agent or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities or Coupons and, subject to Sections 310(a)(5), 310(b) and 311 of the Trust Indenture Act, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar, Exchange Agent or such other agent. Section 606. Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any Money received by it hereunder except as otherwise agreed with the Company. Section 607. Compensation and Reimbursement. The Company agrees: (1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to the Trustee's negligence or bad faith; and (3) to indemnify the Trustee for, and to hold them harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. As security for the performance of the obligations of the Company under this Section, the Trustee shall have a lien prior to the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of principal of (and premium, if any) or interest on or any Additional Amounts with respect to particular Securities or any Coupons appertaining thereto. 57
Section 608. Corporate Trustee Required; Eligibility. Conflict of Interest. There shall at all times be a Trustee hereunder that is a corporation permitted by the Trust Indenture Act to act as trustee under an indenture qualified under the Trust Indenture Act and that has a combined capital and surplus (computed in accordance with Section 310(a)(2) of the Trust Indenture Act) of at least $5,000,000. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. To the extent permitted by the Trust Indenture Act, the Trustee shall not be deemed to have a conflicting interest with respect to the Securities of any series by virtue of being Trustee with respect to the Securities of any particular series of Securities other than that series or by virtue of being trustee under the Indenture, dated as of November 1, 1983, under which the Company's Floating Rate Subordinated Notes Due 1995 are outstanding. Section 609. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 610. (b) The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 610 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (c) The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series, delivered to the Trustee and the Company. (d) If at any time: (1) the Trustee shall fail to comply with the obligations imposed upon it under Section 310(b) of the Trust Indenture Act with respect to Securities of any series after written request therefor by the Company or by any Holder of a Security of such series who has been a bona fide Holder of a Security of such series for at lent six months, or (2) the Trustee shall cease to be eligible under Section 608 and shall fail to resign after written request therefor by the Company or by any such Holder, or 58
(3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (i) the Company by a Board Resolution may remove the Trustee with respect to all Securities or (ii) subject to Section 315(e) of the Trust Indenture Act, any Holder of a Security who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Securities of one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Securities of any particular series) and shall comply with the applicable requirements of Section 610. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 610, become the successor Trustee with respect to the Securities of such series and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Company or the Holders of Securities and accepted appointment in the manner required by Section 610, any Holder of a Security who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (f) The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series by mailing written notice of such event by first-class mail, postage prepaid, to Holders of Registered Securities, if any, of such series as their names and addresses appear in the Security Register, if Securities of such series are issued as Bearer Securities, by publishing notice of such event once in an Authorized Newspaper in each Place of Payment located outside the United States, and if any Holders of Bearer Securities have filed their names and addresses with the Trustee within two years preceding the giving of such notice, by mailing written notice of such event by first-class mail, postage prepaid, to all such Holders as their names and addresses appear in such tiling. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office. 59
Section 610. Acceptance of Appointment by Successor. (a) Upon the appointment hereunder of any successor Trustee with respect to all Securities, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and Money held by such retiring Trustee hereunder, subject nevertheless to its claim, if any, provided for in Section 607. (b) In the case of the appointment hereunder of any successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees as co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and Money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, subject nevertheless to the lien, if any, of the retiring Trustee provided for in Section 607. (c) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all 60
such rights, powers and trusts referred to in paragraph (a) or (b) of this Section, as the case may be. (d) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. Section 611. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. Section 612. Appointment of Authenticating Agent. The Trustee may (and, if provided pursuant to Section 301 with respect to Securities of any series, shall) appoint an Authenticating Agent or Authenticating Agents with respect to Securities of a series which shall be authorized to act on behalf of the Trustee to authenticate Securities of such series issued upon original issue, exchange, registration of transfer or partial redemption or upon exchange of Capital Securities for a portion of any Security, or pursuant to Section 306, and, if the Trustee is required to appoint one or more Authenticating Agents with respect to Securities of any series, to authenticate Securities of such series upon original issue and to take such other actions as are specified in Sections 303, 304, 309, 1107 and 1306, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or State authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then, for the purposes of this Section, the combined capital and surplus of 61
such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall (i) mail written notice of such appointment by first-class mail, postage prepaid, to all Holders of Registered Securities, if any, of the series with respect to which such Authenticating Agent will serve, as their names and addresses appear in the Security Register, (ii) if Securities of the series are issued as Bearer Securities, publish notice of such appointment at least once in an Authorized Newspaper in the place where such successor Authenticating Agent has its principal office if such office is located outside the United States, and (iii) if any Holders of Bearer Securities of such series have filed their names and addresses with the Trustee within two years preceding the giving of such notice, mail written notice of such appointment by first-class mail, postage prepaid, to all such Holders of such series, as their names and addresses appear in such filing. Any successor Authenticating Agent, upon acceptance of its appointment hereunder, shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section. The Company agrees to pay each Authenticating Agent from time to time reasonable compensation for its services under this Section. The provisions of Sections 308, 604 and 605 shall be applicable to each Authenticating Agent. Unless otherwise provided with respect to Securities of any series as contemplated by Section 301, the Bank is hereby initially appointed Authenticating Agent for the purpose of authenticating each series of Securities issued under this Indenture as herein provided, and the Trustee shall incur no liability for such appointment or for any misconduct or negligence of such 62
Authenticating Agent, including without limitation, its authentication of Securities upon original issuance or pursuant to Section 306. In the event that the Trustee does incur liability for any such misconduct or negligence of such Authenticating Agent, the Company agrees to indemnify the Trustee for, and hold it harmless against, any such liability, including the costs and expenses of defending itself against any liability in connection with such misconduct or negligence of such Authenticating Agent. If an appointment with respect to the Securities of one or more series is made pursuant to this Section, the Securities of such series may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternate certificate of authentication in the following form: This is one of the Securities of the series designated herein referred to in the within-mentioned Indenture. CHEMICAL BANK, as Trustee By ________________________ Authenticating Agent By ________________________ Authorized Signatory ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY Section 701. Company to Furnish Trustee Names and Addresses of Holders. The Company will furnish or cause to be furnished to the Trustee (a) not more than 15 days after each September 1 and March 1, a list, in such form as the Trustee may reasonably require, containing all the information in the possession or control of the Company, or any of its Paying Agents, other than the Trustee, as to the names and addresses of the Holders of Securities as of the preceding September 1 or March 1, as the case may be, and 63
(b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; excluding from any such list, if the Trustee shall then be Security Registrar, names and addresses received by the Trustee in its capacity as Security Registrar. Section 702. Preservation of Information: Communications to Holders. The Trustee shall comply with the obligations imposed upon it pursuant to Section 312 of the Trust Indenture Act. Every Holder of Securities or Coupons, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company, the Trustee, any Paying Agent nor any Security Registrar shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders of Securities in accordance with Section 312 of the Trust Indenture Act, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made pursuant to Section 312(b) of the Trust Indenture Act. Section 703. Reports by Trustee. (a) Within 60 days after May 15 of each year, commencing with the year 1988, if required by Section 313(a) of the Trust Indenture Act, the Trustee shall transmit, pursuant to Section 313(c) of the Trust Indenture Act, a brief report dated as of such May 15 with respect to any of the events specified in said Section 313(a) which may have occurred since the immediately preceding May 15. (b) The Trustee shall transmit the reports required by Section 313(b) of the Trust Indenture Act at the times specified therein. (c) Reports pursuant to this Section shall be transmitted in the manner and to the Persons required by Sections 3 13(c) and 3 13(d) of the Trust Indenture Act. Section 704. Reports by Company. The Company shall: (1) file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the 64
Commission may from time to time by rules and regulations prescribe) which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934; or, if the Company is not required to file information, documents or reports pursuant to either of said Sections, then it shall file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Securities Exchange Act of 1934 in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations; (2) file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and (3) transmit in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be tiled by the Company pursuant to paragraphs (I) and (2) of this Section as may be required by rules and regulations prescribed from time to time by the Commission. ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER Section 801. Company May Consolidate, Etc., only on Certain Terms. The Company shall not consolidate with or merge into any other corporation or convey or transfer its properties and assets substantially as an entirety to any Person, unless: (1) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer the properties and assets of the Company substantially as an entirety shall be a corporation organized and existing under the laws of the United States of America or any State or the District of Columbia, and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of (and premium, if any) and interest on and any Additional Amounts with respect to all the Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed; 65
(2) immediately after giving effect to such transaction, no Event of Default or Default, and no event which, after notice or lapse of time, or both, would become an Event of Default or Default, shall have happened and be continuing; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each stating that such consolidation, merger, conveyance or transfer and such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transactions have been complied with. Section 802. Successor Corporation Substituted. Upon any consolidation or merger, or any conveyance or transfer of the properties and assets of the Company substantially as an entirety in accordance with Section 801, the successor corporation formed by such consolidation or into which the Company is merged or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor corporation had been named as the Company herein; and in the event of any such conveyance or transfer, the Company (which term shall for this purpose mean the Person named as the Company in the first paragraph of this Indenture or any successor corporation which shall theretofore have become such in the manner prescribed in this Article) shall be discharged from all liability under this Indenture and in respect of the Securities and Coupons and may be dissolved and liquidated. ARTICLE NINE SUPPLEMENTAL INDENTURES Section 901. Supplemental Indentures Without Consent of Holders. Without the consent of any Holders of Securities or Coupons, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another corporation to the Company and the assumption by any such successor of the covenants of the Company herein and in the Securities contained; or (2) to add to the covenants of the Company such further covenants, restrictions or conditions for the protection of the Holders of all or any series of the Securities as the Board of Directors and the Trustee shall consider to be for the protection of the Holders of all the Securities or any such series of the Securities, as the case may be (and if such 66
covenants are to be for the benefit of fewer than all series of Securities, stating that such covenants are expressly being included solely for the benefit of Holders of Securities of one or more particular series), or to surrender any right or power conferred upon the Company in this Indenture with respect to one or more particular series of Securities, or to make the occurrence, or the occurrence and continuance, of a default in any of such additional covenants, restrictions or conditions an Event of Default or Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; provided, however, that in respect of any such additional covenant, restriction or condition such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such default or may limit the remedies available to the Trustee upon such default; or (3) to add to or change any of the provisions of this Indenture to provide that Bearer Securities may be registrable as to principal, to change or eliminate any restrictions on the payment of principal of, any premium or interest on or any Additional Amounts with respect to Securities, to permit Registered Securities to be exchanged for Bearer Securities, to permit Bearer Securities to be exchanged for Bearer Securities of other authorized denominations or to permit or facilitate the issuance of Securities in uncertificated form, provided any such action shall not adversely affect the interests of the Holders of Securities of any series or any Coupons appertaining thereto in any material respect; or (4) to change or eliminate any of the provisions of this Indenture, provided that any such change or elimination shall become effective only when there is no Outstanding Security of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision; or (5) to secure the Securities; or (6) to establish the form or terms of Securities of any series and any Coupons appertaining thereto as permitted by Sections 201 and 301; or (7) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 610(b); or (8) to add to or change any of the provisions of this Indenture to such extent as shall be necessary to provide for or facilitate the issuance of Securities convertible into or exchangeable for other securities; or 67
(9) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture, provided such action shall not adversely affect the interests of the Holders of Securities of any series or any Coupons appertaining thereto in any material respect. Section 902. Supplemental Indentures with Consent of Holders. With the consent of the Holders of not less than 66 2/3% in principal amount of the Outstanding Securities of each series affected by such supplemental indenture, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities of such series under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby, (1) change the Stated Maturity of the principal of, or any instalment of principal of or interest on or any Additional Amounts with respect to, any Security, or reduce the principal amount thereof or change the rate or rates of interest thereon or any Additional Amounts with respect thereto (except as provided herein or in such Security), as the case may be, or any premium payable upon the redemption thereof, or change the obligation of the Company to pay Additional Amounts pursuant to Section 1008 (except as contemplated by Section 801(1) and permitted by Section 901(1)), or reduce the portion of the principal amount of an Original Issue Discount Security that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502, or change any place where, or the coin or Currency in which, the principal amount of any Security or any premium or interest thereon or any Additional Amount with respect thereto, is payable, or impair any right to institute suit for the enforcement of any right to receive payment of the principal of (and premium, if any) and (subject to 307) interest and/or Additional Amounts, if any, on such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) or, if applicable, to have delivered Capital Securities to be exchanged for such Security pursuant to Article Thirteen and to have such Capita] Securities sold in a Secondary Offering as provided in such Security and in Article Thirteen, or modify the provisions of this Indenture with respect to the subordination of the Securities in a manner adverse to the Holders, or (2) reduce the percentage in principal amount of the Outstanding Securities of any series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) 68
provided for in this Indenture or reduce the requirements of Section 1604 for quorums or voting, or (3) modify any of the provisions of this Section, Section 513 or Section 1007, except to increase any such percentage or to provide that certain other provisions of this indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby; provided, however, that this clause shall not be deemed to require the consent of any Holder with respect to changes in the references to "the Trustee" and concomitant changes in this Section, or the deletion of this proviso, in accordance with the requirements of Sections 610(b) and 901(7), or (4) impair the right of any Holder of Securities of any series, subject to the provisions of this Indenture and of Securities of such series, to receive on any Exchange Date for Securities of such series, Capital Securities with a Market Value equal to the amount established with respect to the Securities of such series held by such Holder. A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series. It shall not be necessary for any Act of Holders of Securities under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. Section 903. Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trust created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 315 of the Trust Indenture Act) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this indenture or otherwise. Section 904. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of a Security theretofore or thereafter 69
authenticated and delivered hereunder and of any Coupon appertaining thereto shall be bound thereby. Section 905. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. Section 906. Reference in Securities to Supplemental indentures. Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series. ARTICLE TEN COVENANTS Section 1001. Payment of Principal, Premium, Interest and Additional Amounts. The Company covenants and agrees for the benefit of each series of Securities that it will duly and punctually pay the principal of (and premium, if any) and interest, if any, on and any Additional Amounts with respect to the Securities of that series in accordance with the terms of such Securities, any Coupons appertaining thereto and this Indenture. Unless otherwise specified as contemplated by Section 301 with respect to any series of Securities, any interest due on any Bearer Security on or before the Maturity thereof, and any Additional Amounts payable with respect to such interest, shall be payable only upon presentation and surrender of the Coupons appertaining thereto as they severally mature. For all purposes of this Indenture, the exchange for Securities of any series of Capital Securities with the Market Value established for the Securities of such series shall constitute full payment of the entire principal amount of the Securities of such series for which Capital Securities are so exchanged on any Exchange Date therefor, without prejudice to any Holder's rights pursuant to Sections 502, 503, 1304 and 1308. 70
Section 1002. Maintenance of Office or Agency. The Company will maintain in the Borough of Manhattan, The City of New York and in each Place of Payment for each series of Securities an Office or Agency where Securities of such series (but not Bearer Securities, except as otherwise provided below, unless such Place of Payment is located outside the United States) may be presented or surrendered for payment (including exchange of Capital Securities therefor), where Securities of such series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company and any Capital Security Election Forms in respect of the Securities of such series and this Indenture may be served. If Securities of a series are issuable as Bearer Securities, the Company shall maintain, subject to any laws or regulations applicable thereto, an Office or Agency in a Place of Payment for such series which is located outside the United States where Securities of such series and any Coupons appertaining thereto may be presented and surrendered for payment (including payment of any Additional Amounts payable on Securities of such series pursuant to Section 1008); provided, however, that if the Securities of such series are listed on The Stock Exchange of the United Kingdom and the Republic of Ireland or the Luxembourg Stock Exchange or any other stock exchange located outside the United States and such stock exchange shall so require, the Company shall maintain a Paying Agent in London, Luxembourg or any other required city located outside the United States, as the case may be, so long as the Securities of such series are listed on such exchange. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of any such Office or Agency. If at any time the Company shall fail to maintain any such required Office or Agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices, demands and Capital Security Election Forms may be made or served at the Corporate Trust Office, except that Bearer Securities of such series and any Coupons appertaining thereto may be presented and surrendered for payment (including payment of any Additional Amounts payable on Securities of that series pursuant to Section 1008) at the place specified for the purpose with respect to such Securities as provided in or pursuant to this Indenture, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices, demands and Capital Security Election Forms. Except as otherwise provided in or pursuant to this Indenture, no payment of principal, premium, interest on or Additional Amounts with respect to Bearer Securities shall be made at any Office or Agency in the United States or by check mailed to any address in the United States or by transfer to an account maintained with a bank located in the United States; provided, however, if amounts owing with respect to any Bearer Securities shall be payable in Dollars, payment of principal of, any premium or interest on and any Additional Amounts with respect to any such Security may be made at the Corporate Trust Office of the Trustee or any Office or Agency designated by the Company in the Borough of Manhattan, The City of New York, if (but only if) payment of the full amount of such principal, premium, interest or Additional Amounts at all offices outside the United States maintained for such purpose by the Company in accordance with this Indenture is illegal or effectively precluded by exchange controls or other similar restrictions. 71
The Company may also from time to time designate one or more other Offices or Agencies where the Securities of one or more series or any Capital Security Election Forms applicable thereto may be presented, surrendered or served for any or all such purposes and may constitute and appoint one or more Paying Agents for the payment of the Securities of any series and may from time to time rescind such designations and appointments; provided, however, that no such designation, appointment or rescission shall in any manner relieve the Company of its obligation to maintain an Office or Agency in each Place of Payment for Securities of any series or, with respect to Registered Securities, in the Borough of Manhattan, The City of New York, for such purposes. The Company will give prompt written notice to the Trustee of any such designation, appointment or rescission and of any change in the location of any such other Office or Agency. Unless otherwise provided in or pursuant to this Indenture, the Company hereby designates as the Place of Payment for each series of Registered Securities the Borough of Manhattan, The City of New York, and initially appoints the principal office of the Bank in the Borough of Manhattan, The City of New York, at which, at any particular time, its corporate trust business is administered as its Office or Agency for such purposes set forth in the first sentence of this Section. Pursuant to Section 301(9) of this Indenture, the Company may subsequently appoint one or more other place or places in the Borough of Manhattan, The City of New York, where such Securities may be payable. The Company may subsequently appoint one or more other place or places where Capital Security Election Forms with respect to Securities of one or more series may be presented or served. Section 1003. Money for Securities Payments to Be Held in Trust. If the Company shall at any time act as its own Paying Agent with respect to any series of Securities, it will, on or before each due date of the principal of, (and premium, if any) or interest on or Additional Amounts with respect to any of the Securities of that series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest or Additional Amounts so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents for any series of Securities, it will, prior to each due date of the principal of (and premium, if any) or interest on or any Additional Amounts with respect to any Securities of that series, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest or Additional Amounts so becoming due, such sum to be held in trust for the benefit of the Persons entitled thereto, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. The Company will cause each Paying Agent for any series of Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: 72
(1) hold all sums held by it for the payment of the principal of (and premium, if any) or interest on or any Additional Amounts with respect to Securities of that series in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (2) give the Trustee notice of any default by the Company (or any other obligor upon the Securities of that series) in the making of any payment of principal (and premium, if any) or interest on or any Additional Amounts with respect to the Securities of that series; and (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such Money. Any Money deposited with the Trustee or any Paying Agent, or then held by the Company in trust for the payment of the principal of (and premium, if any) or interest on or any Additional Amounts with respect to any Security of any series and remaining unclaimed for two years after such principal (and premium, if any) or interest or any such Additional Amounts has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security or any Coupon appertaining thereto shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent, with respect to such trust Money and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in an Authorized Newspaper in each Place of Payment with respect to such Security, notice that such Money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such Money then remaining will be repaid to the Company. Section 1004. Corporate Existence. So long as any of the Securities shall be Outstanding, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and will comply with all laws applicable to it; provided, however, that nothing in this Section shall prevent (i) any consolidation, merger or conveyance or transfer of the properties of the 73
Company substantially as an entirety as permitted by Article Eight, or (ii) the dissolution and liquidation of the Company after any such conveyance or transfer. Section 1005. Restrictions on Disposition of Capital Stock of Bank. So long as any of the Securities shall be Outstanding, the Company will not create any security interest in more than 20% of the shares of Capital Stock of the Bank, or permit more than 20% of such shares (exclusive of directors' qualifying shares) to be held directly or indirectly by any Person other than the Company or a corporation which is wholly-owned (except for directors' qualifying shares) by the Company. This Section applies only to Securities originally issued prior to October 1, 1992. Section 1006. Statement as to Compliance. The Company will deliver to the Trustee, within 120 days after the end of each fiscal year, a written statement signed by the Chairman of the Board, the President, any Vice Chairman of the Board or any Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary, an Associate Secretary or an Assistant Secretary, of the Company (at least one of which foregoing officers shall be the principal executive officer, the principal financial officer or the principal accounting officer of the Company), stating, as to each signer thereof, that (1) a review of the activities of the Company during such year and of its performance under this Indenture has been made under his supervision, and (2) to the best of his knowledge, based on such review, the Company has fulfilled all its obligations and has complied with all conditions and covenants under this Indenture throughout such year, or, if there has been a default in the fulfillment of any such obligation, condition or covenant, specifying each such default known to him and the nature and status thereof. For purposes of this Section 1006, compliance shall be determined without regard to any grace period or requirement of notice provided pursuant to the terms of this Indenture. Section 1007. Waiver of Certain Covenants. The Company may omit in any particular instance to comply with any covenant or condition set forth in Section 1004 or Section 1005 with respect to the Securities of any series if before the time for such compliance the Holders of at least 66 2/3% in principal amount of the Outstanding Securities of such series shall, by Act of such Holders, either waive such compliance in such instance or generally waived compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such covenant or condition shall remain in full force and effect. 74
Section 1008. Additional Amounts. If any Securities of a series provide for the payment of Additional Amounts, the Company agrees to pay to the Holder of any such Security or any Coupon appertaining thereto Additional Amounts as provided therein. Whenever in this Indenture there is mentioned, in any context, the payment of the principal of (or premium, if any) or interest on, or in respect of, any Security of any series or any Coupon or the net proceeds received on the sale or exchange of any Security of any series, such mention shall be deemed to include mention of the payment of Additional Amounts provided by the terms of such series established hereby or pursuant hereto to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof pursuant to such terms, and express mention of the payment of Additional Amounts (if applicable) in any provision hereof shall not be construed as excluding Additional Amounts in those provisions hereof where such express mention is not made. Except as otherwise provided in or pursuant to this Indenture, if the Securities of a series provide for the payment of Additional Amounts, at least 10 days prior to the first Interest Payment Date with respect to such series of Securities (or if the Securities of such series shall not bear interest prior to Maturity, the first day on which a payment of principal is made), and at least 10 days prior to each date of payment of principal (or premium, if any) or interest if there has been any change with respect to the matters set forth in the below-mentioned Officers' Certificate, the Company shall furnish to the Trustee and the principal Paying Agent or Paying Agents, if other than the Trustee, an Officers' Certificate instructing the Trustee and such Paying Agent or Paying Agents whether such payment of principal of (and premium, if any) or interest on the Securities of such series shall be made to Holders of Securities of such series or the Coupons appertaining thereto who are United States Aliens without withholding for or on account of any tax, assessment or other governmental charge described in the Securities of such series. If any such withholding shall be required, then such Officers' Certificate shall specify by country the amount, if any, required to be withheld on such payments to such Holders of Securities or Coupons, and the Company agrees to pay to the Trustee or such Paying Agent the Additional Amounts required by the terms of such Securities or this Section. The Company covenants to indemnify the Trustee and any Paying Agent for, and to hold them harmless against, any loss, liability or expense reasonably incurred without negligence or bad faith on their part arising out of or in connection with actions taken or omitted by any of them in reliance on any Officers' Certificate furnished pursuant to this Section. 75
ARTICLE ELEVEN REDEMPTION OF SECURITIES Section 1101. Applicability of Article. Securities of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise specified in the terms of the Securities of any series established as provided in Section 301) in accordance with this Article. Section 1102. Election to Redeem; Notice to Bank and Trustee. The election of the Company to redeem any Securities shall be evidenced by a Board Resolution. In case of any redemption at the election of the Company of (a) less than all the Securities of any series or (b) all of the Securities of any series with the same terms and provisions, the Company shall, at least 75 days prior to the Redemption Date fixed by the Company (or, in the case of a redemption pursuant to Section 1108 of Securities of any series for which Capital Securities are exchangeable, at least 105 days prior to the Redemption Date) (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee and the Bank in writing of such Redemption Date. In the case of any redemption of Securities prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with such restriction. Section 1103. Selection by Bank of Securities to be Redeemed. If less than all of the Securities are to be redeemed, the Company shall select the series to be redeemed. If less than all the Securities of any series with the same terms and provisions are to be redeemed, the particular Securities of such series to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Bank, from the Outstanding Securities of such series not previously called for redemption, by such method as it shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to the minimum authorized denomination for Securities of such series or any integral multiple thereof) of the principal amount of Registered Securities of such series of a denomination larger than the minimum authorized denomination for Securities of that series; provided, that in the case of a redemption pursuant to Section 1108 of Securities of any series for which Capital Securities are exchangeable, (1) the particular Securities of such series to be so redeemed shall be so selected not less than 105 days nor more than 120 days prior to the Redemption Date, or (ii) if particular Securities of such series have been selected in accordance with Section 1303(c) for exchange of Capital Securities therefor pursuant to the third paragraph of Section 1302 (and the Securities so selected for purposes of such exchange constitute less than all of the Securities of such 76
series), the particular Securities of such series to be so redeemed shall be all of the Securities of such series not so selected for exchange of Capital Securities therefor. The Bank shall promptly notify the Company and the Trustee in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed. Section 1104. Notice of Redemption. Notice of redemption shall be given in the manner provided in Section 106 to the Holder of Securities to be redeemed not less than 30 nor more than 60 days prior to the Redemption Date (or, in the case of a redemption pursuant to Section 1108 of Securities of any series for which Capital Securities are exchangeable, not less than 60 days nor more than 90 days prior to the Redemption Date), unless a different period is specified as contemplated by Section 301 for Securities of any series to be redeemed. All notices of redemption shall state: (1) the Redemption Date, (2) the Redemption Price, (3) if less than all the Outstanding Securities of any series are to be redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the particular Securities to be redeemed, (4) that, on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed and, if applicable, that interest thereon will cease to accrue on and after said date, (5) the place or places where such Securities, together (in the case of Bearer Securities) with all Coupons appertaining thereto, if any, maturing after the Redemption Date, are to be surrendered for payment of the Redemption Price and any accrued interest and Additional Amounts pertaining thereto, (6) if Bearer Securities are to be redeemed, that, unless otherwise specified in such notice, Bearer Securities surrendered for redemption must be accompanied by all Coupons maturing subsequent to the date fixed for redemption or the amount of any 77
such missing Coupon or Coupons will be deducted from the Redemption Price, unless security or indemnity satisfactory to the Company, the Trustee and any Paying Agent is furnished, and (7) if Bearer Securities of any series are to be redeemed and any Registered Securities of such series are not to be redeemed, and if such Bearer Securities may be exchanged for Registered Securities not subject to redemption on the Redemption Date pursuant to Section 305 or otherwise, the last date, as determined by the Company, on which such exchanges may be made. Notice of redemption of Securities to be redeemed shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. Section 1105. Deposit of Redemption Price. Prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount sufficient to pay the Redemption Price of all the Securities or portions thereof which are to be redeemed on that date. Section 1106. Securities Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after the Redemption Date (unless the Company shall default in the payment of the Redemption Price) such Securities shall cease to bear interest and the Coupons for such interest appertaining to any Bearer Securities so to be redeemed, except to the extent provided below, shall be void. Upon surrender of any such Security for redemption in accordance with said notice, together with all Coupons, if any, appertaining thereto maturing after the Redemption Date, such Security shall be paid by the Company at the Redemption Price; provided, however, that instalments of interest on Bearer Securities whose Stated Maturity is on or prior to the Redemption Date shall be payable only upon presentation and surrender of Coupons for such interest (at an Office or Agency located outside the United States except as otherwise provided in Section 1002), and provided, further, that instalments of interest on Registered Securities whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Regular Record Dates according to their terms and the provisions of Section 307. If any Bearer Security surrendered for redemption shall not be accompanied by all appurtenant Coupons maturing after the Redemption Date, such Security may be paid after deducting from the Redemption Price an amount equal to the face amount of all such missing 78
Coupons, or the surrender of such missing Coupon or Coupons may be waived by the Company and the Trustee if there be furnished to them such security or indemnity as they may require to save each of them and any Paying Agent harmless. If thereafter the Holder of such Security shall surrender to the Trustee or any Paying Agent any such missing Coupon in respect of which a deduction shall have been made from the Redemption Price, such Holder shall be entitled to receive the amount so deducted; provided, however, that any interest or Additional Amounts represented by Coupons shall be payable only upon presentation and surrender of those Coupons at an Office or Agency for such Security located outside of the United States except as otherwise provided in Section 1002. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in such Security. Section 1107. Securities Redeemed in Part. Any Registered Security (including any global Security) which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee or the Authenticating Agent shall authenticate and deliver to the Holder of such Security without service charge, a new Registered Security or Securities of the same series of any authorized denomination as requested by such Holder and of like tenor, as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered. If a Security in global form is so surrendered, the Company shall execute, and the Trustee shall authenticate and deliver to the U.S. Depository or other depository for such Security in global form as shall be specified in the Company Order with respect thereto to the Trustee, without service charge, a new Security in global form in a denomination equal to and in exchange for the unredeemed portion of the principal of the Security in global form so surrendered; provided that in the case of such surrender of any Security which is to be redeemed only in part pursuant to Section 1108, the Company shall execute, the Trustee or the Authenticating Agent shall authenticate and there shall be delivered (or, if not delivered, there shall be deemed to be delivered), on behalf of the Holder of such Security (without service charge), to the Exchange Agent for purposes of exchange of Capital Securities therefor pursuant to the third paragraph of Section 1302, a new Security or Securities of the same series, of any authorized denomination selected by the Bank, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered, and such new Security or Securities when so delivered (or deemed to be delivered) shall be deemed to be surrendered on the Exchange Date in accordance with Section 1304(e) for exchange of Capital Securities therefor pursuant to the third paragraph of Section 1302. 79
Section 1108. Special Cash Redemption. If so specified in the terms of the Securities of any series established as provided in Section 301, in case an Event Relating to Federal Income Taxes shall occur, the Securities of such series shall be subject to redemption at any time, at the option of the Company, in accordance with the following provisions: (i) Securities of any series for which Capital Securities are exchangeable will be subject to redemption from Optional Available Funds or from other sources approved for such purpose by the Primary Federal Regulator; provided that less than all of the Securities of such series may be so redeemed only if notice shall have been given in accordance with Section 1302 that Capital Securities are to be exchanged as provided in the third paragraph of Section 1302 for all of the Securities of such series which are not to be so redeemed and (ii) Securities of any series for which Capital Securities are not exchangeable will be subject to redemption, as a whole but not in part, from Available Funds or from other sources approved for such purpose by the Primary Federal Regulator. Any such redemption shall be made only upon written notice given in the manner provided in Section 106 to the Holders of the Securities to be so redeemed not less than 60 days nor more than 90 days prior to the Redemption Date in the case of any redemption referred to in clause (i) above and not less than 30 days nor more than 60 days prior to the Redemption Date in the case of any redemption referred to in clause (ii) above. Unless otherwise specified in the terms of the Securities of any series established as provided in Section 301, Securities of such series which are redeemed for cash in accordance with the preceding paragraph shall be redeemed at a Redemption Price equal to 100% of the principal amount thereof (or the Applicable Percentage thereof), together with accrued and unpaid interest, if any, to the Redemption Date (subject to Sections 307 and 1106). Prior to the giving of any notice of redemption as provided in this Section, the Company shall deliver to the Trustee a certificate of an officer of the Company (which need not comply with Section 102) to the effect that the Company has complied with the provisions of this Section relating to such redemption and that the Company has received an opinion of independent counsel to the effect that the Company's determination that an Event Relating to Federal Income Taxes has occurred is proper. In the event that the Company shall give notice as provided above to Holders of Securities of any series that are to be redeemed, the Company will redeem the Securities of such series for cash from Optional Available Funds or Available Funds, as the case may be, or from other sources approved for such purpose by the Primary Federal Regulator. The Securities of such series may be redeemed for cash pursuant to this Section 1108 only if, at the time that notice of such redemption is given to the Holders of the Securities of such series, (a) there shall be sufficient Optional Available Funds or Available Funds, as the case may be, to redeem all of the Securities of such series to be redeemed or (b) such other sources for redemption shall have been approved by the Primary Federal Regulator. 80
ARTICLE TWELVE SUBORDINATION OF SECURITIES Section 1201. Agreement to Subordinate. The Company, for itself, its successors and assigns, covenants and agrees, and each Holder of a Security likewise covenants and agrees by his acceptance thereof, that the obligation of the Company to make any payment on account of the principal of (and premium, if any), interest on and Additional Amounts with respect to each and all of the Securities shall be subordinate and junior in right of payment to the Company's obligations to the holders of Senior Indebtedness of the Company, in that in the case of any insolvency, receivership, conservatorship, reorganization, readjustment of debt, marshalling of assets and liabilities or similar proceedings or any liquidation or winding-up of or relating to the Company as a whole, whether voluntary or involuntary, all obligations of the Company to holders of Senior Indebtedness of the Company shall be entitled to be paid in full before any payment shall be made on account of the principal of (or premium, if any), interest on or Additional Amounts with respect to the Securities. In the event of any such proceeding, after payment in full of all sums owing with respect to Senior Indebtedness of the Company, the Holders of the Securities and any Coupons appertaining thereto, together with the holders of any obligations of the Company ranking on a parity with the Securities, shall be entitled to be paid from the remaining assets of the Company the amounts at the time due and owing on account of unpaid principal of (and premium, if any), interest on and Additional Amounts with respect to the Securities before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any capital stock or any obligations of the Company ranking junior to the Securities. In addition, in the event of any such proceeding, if any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Company being subordinated to the payment of the Securities, shall be received by the Trustee or the Holders of the Securities or Coupons before all Senior Indebtedness of the Company is paid in full, such payment or distribution shall be held in trust for the benefit of and shall be paid over to the holders of such Senior Indebtedness of the Company or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness of the Company may have been issued, ratably, for application to the payment of all Senior Indebtedness of the Company remaining unpaid until all such Senior Indebtedness of the Company shall have been paid in full, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness of the Company. The obligations of the Company in respect of the Securities of each series shall rank on a parity with the Floating Rate Subordinated Notes Due 1995, the Floating Rate Subordinated Notes Due 1997, the Floating Rate Subordinated Notes Due 2000, the Floating Rate Subordinated Notes Due 2009, the 7 1/2% Subordinated Notes Due 1997, the 10% Subordinated Notes Due 1999, the 8% Subordinated Notes Due 1999, the 7 3/4% Subordinated Notes due 1999, the Floating Rate Subordinated Notes Due 2000, the 9 3/8% Subordinated Notes Due 2001, the 9 3/4% Subordinated Notes Due 81
2001, the 7.50% Subordinated Notes Due 2003, the Floating Rate Subordinated Notes Due 2003, the 6.50% Subordinated Notes Due 2005, the Floating Rate Subordinated Notes Due August 1, 2003 and the 6.75% Subordinated Notes Due 2008 issued by the Company, the Securities of each other series and any other obligations of the Company ranking on a parity with the Securities. The subordination provisions of the foregoing paragraph shall not be applicable to amounts at the time due and owing on the Securities on account of the unpaid principal of (or premium, if any), interest on or Additional Amounts with respect to the Securities for the payment of which funds have been deposited in trust with the Trustee or any Paying Agent, or Capital Securities and/or funds as required have been deposited with the Exchange Agent, or funds and/or Capital Securities have been set aside by the Company in trust in accordance with the provisions of this Indenture; nor shall such provisions impair any rights, interests, remedies or powers of any secured creditor of the Company in respect of any security the creation of which is not prohibited by the provisions of this Indenture. The securing of any obligations of the Company, otherwise ranking on a parity with the Securities or ranking junior to the Securities, shall not be deemed to prevent such obligations from constituting obligations ranking on a parity with the Securities or ranking junior to the Securities. The Company shall give prompt written notice to the Trustee of any insolvency, receivership, conservatorship, reorganization, readjustment of debt, marshalling of assets and liabilities or similar proceedings or any liquidation or winding-up of or relating to the Company as a whole, whether voluntary or involuntary. The Trustee, subject to the provisions of Section 601, shall be entitled to assume that, and may act as if, no such event has occurred unless a Responsible Officer of the Trustee assigned to the Trustee's Corporate Trustee Administration Department has received at the Corporate Trust Office from the Company or any one or more holders of Senior Indebtedness of the Company or any trustee therefor (who shall have been certified or otherwise established to the satisfaction of the Trustee to be such a holder or trustee) written notice thereof. Upon any distribution of assets of the Company referred to in this Article, the Trustee and the Holders of the Securities and Coupons shall be entitled to rely upon any order or decree of a court of competent jurisdiction in which proceedings relating to any event specified in the first sentence of this paragraph are pending for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon, and all other facts pertinent thereto or to this Article, and the Trustee, subject to the provisions of Article Six, and the Holders of the Securities and Coupons shall be entitled to rely upon a certificate of the liquidating trustee or agent or other Person making any distribution to the Trustee or to the Holders of the Securities or Coupons for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article. In the absence of any such liquidating trustee, agent or other Person, the Trustee shall be entitled to rely upon a written 82
notice by a Person representing himself to be a holder of Senior Indebtedness of the Company (or a trustee or representative on behalf of such holder) as evidence that such Person is a holder of such Senior Indebtedness of the Company (or is such a trustee or representative). In the event that the Trustee determines, in good faith, that further evidence is required with respect to the right of any Person, as a holder of Senior Indebtedness of the Company, to participate in any payment or distribution pursuant to this Section, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of such Senior Indebtedness of the Company held by such Person, as to the extent to which such Person is entitled to participation in such payment or distribution, and as to other facts pertinent to the rights of such Person under this Section, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. Section 1202. Obligation of the Company Unconditional. Nothing contained in this Article or elsewhere in this Indenture is intended to or shall impair, as between the Company and the Holders of the Securities and Coupons, the obligation of the Company, which is absolute and unconditional, to pay to the Holders of the Securities and Coupons the principal of (and premium, if any), interest on, and any Additional Amounts with respect to, the Securities when, where and as the same shall become due and payable, all in accordance with the terms of the Securities and Coupons, or is intended to or shall affect the relative rights of the Holders of the Securities and Coupons and creditors of the Company other than the holders of the Senior Indebtedness of the Company, nor shall anything herein or therein prevent the Trustee or the Holder of any Security or Coupon, from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article of the holders of Senior Indebtedness of the Company in respect of cash, property, or securities of the Company received upon the exercise of any such remedy. Section 1203. Limitations on Duties to Holders of Senior Indebtedness of the Company. With respect to the holders of Senior Indebtedness of the Company, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article, and no implied covenants or obligations with respect to the holders of Senior Indebtedness of the Company shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness of the Company, except with respect to Moneys held in trust pursuant to the first paragraph of Section 1201. 83
Section 1204. Notice to Trustee and Exchange Agent of Facts Prohibiting Payments and Deliveries. Notwithstanding any of the provisions of this Article or any other provision of this Indenture, the Trustee shall not at any time be charged with knowledge of the existence of any facts which would prohibit the making of any payment of Moneys to or by the Trustee unless and until a Responsible Officer of the Trustee assigned to its Corporate Trustee Administration Department shall have received at the Corporate Trust Office written notice thereof from the Company or from one or more holders of Senior Indebtedness of the Company or from any trustee therefor who shall have been certified by the Company or otherwise established to the reasonable satisfaction of the Trustee to be such a holder or trustee; and, prior to the receipt of any such written notice, the Trustee, subject to the provisions of Section 601, shall be entitled in all respects to assume that no such facts exist; provided, however, that, if prior to the fifth Business Day preceding the date upon which by the terms hereof any such Moneys may become payable for any purpose, or in the event of the execution of an instrument pursuant to Section 401 acknowledging satisfaction and discharge of this Indenture, then if prior to the second Business Day preceding the date of such execution, the Trustee shall not have received with respect to such Moneys the notice provided for in this Section, then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such Moneys and/or apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary which may be received by it on or after such date; provided, however, that no such application shall affect the obligations under this Article of the Persons receiving such Moneys from the Trustee. Notwithstanding any of the provisions of this Article or any other provision of this Indenture, no Exchange Agent which shall have made the designation referred to below in the instrument referred to in Section 1305 shall at any time be charged with knowledge of the existence of any facts which would prohibit the making of any delivery or payment of Capital Securities or Moneys, as the case may be, to or by such Exchange Agent unless and until one or more officers as may be designated by such Exchange Agent in the instrument referred to in Section 1305 shall have received, at such office as may be designated by such Exchange Agent in such instrument, written notice thereof from the Company or from one or more holders of Senior Indebtedness of the Company or from any trustee therefor who shall have been certified by the Company or otherwise established to the reasonable satisfaction of such Exchange Agent to be such a holder or trustee; and, prior to the receipt of any such written notice, such Exchange Agent shall be entitled in all respects to assume that no such facts exist; provided, however, that, if prior to the fifth Business Day preceding the date upon which by the terms hereof any such Capital Securities or Moneys may become deliverable or payable, as the case may be, for any purpose, or in the event of the execution of an instrument pursuant to Section 401 acknowledging satisfaction and discharge of this Indenture, then if prior to the second Business Day preceding the date of such execution, such Exchange Agent shall not have received with respect to such Capital Securities or Moneys the notice provided for in this Section, then, anything herein contained to the contrary notwithstanding, such Exchange Agent shall have full power and authority to receive such Capital Securities or Moneys and/or apply the same to the 84
purpose for which they were received, and shall not be affected by any notice to the contrary which may be received by it on or after such date; provided, however, that no such application shall affect the obligations under this Article of the Persons receiving such Capital Securities or Moneys from such Exchange Agent. Section 1205. Application by Trustee or Agent of Money or Capital Securities. Anything in this Indenture to the contrary notwithstanding, any deposit of Moneys or Capital Securities by the Company with the Trustee or any agent (whether or not in trust) for any payment of the principal of (or premium, if any), interest on or Additional Amounts with respect to any Securities shall, except as provided in Section 1204, be subject to the provisions of Section 1201. Section 1206. Subrogation. Subject to the payment in full of all Senior Indebtedness of the Company, the Holders of the Securities and Coupons shall be subrogated to the rights of the holders of such Senior Indebtedness of the Company to receive payments or distributions of assets of the Company applicable to such Senior Indebtedness of the Company until all of the Securities shall be paid in full and none of the payments or distributions to the holders of such Senior Indebtedness of the Company to which the Holders of all of the Securities and Coupons or the Trustee would be entitled except for the provisions of this Article or of payments over, pursuant to the provisions of this Article, to the holders of such Senior Indebtedness of the Company by the Holders of the Securities and Coupons or the Trustee shall, as between the Company, its creditors other than the holders of such Senior Indebtedness of the Company, and the Holders of the Securities and Coupons, be deemed to be a payment by the Company to or on account of such Senior Indebtedness of the Company; it being understood that the provisions of this Article are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities and Coupons, on the one hand, and the holders of the Senior Indebtedness of the Company, on the other hand. Section 1207. Subordination Rights Not impaired by Acts or Omissions of Company or Holders of Senior Indebtedness of the Company. No right of any present or future holders of any Senior Indebtedness of the Company to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof which any such holder may have or be otherwise charged with. The holders of Senior Indebtedness of the Company may, at any time or from time to time and in their absolute discretion, change the 85
manner, place or terms of payment, change or extend the time of payment of, or renew or alter, any such Senior Indebtedness of the Company, or amend or supplement any instrument pursuant to which any such Senior Indebtedness of the Company is issued or by which it may be secured, or release any security therefor, or exercise or refrain from exercising any other of their rights under the Senior Indebtedness of the Company including, without limitation, the waiver of any default thereunder, all without notice to or assent from the Holders of the Securities or Coupons or the Trustee and without affecting the obligations of the Company, the Trustee or the Holders of the Securities or Coupons under this Article. Section 1208. Authorization of Trustee to Effectuate Subordination of Securities. Each Holder of a Security or Coupon, by his acceptance thereof, authorizes and expressly directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate, as between the Holders of Securities and Coupons and the holders of Senior Indebtedness of the Company, the subordination provided in this Article. If, in the event of any proceeding or other action relating to the Company referred to in the first sentence of Section 1201, a proper claim or proof of debt in the form required in such proceeding or action is not filed by or on behalf of the Holders of the Securities of any series or Coupons appertaining thereto prior to 15 days before the expiration of the time to file such claim or claims, then the holder or holders of Senior Indebtedness of the Company shall have the right to file and are hereby authorized to file an appropriate claim for and on behalf of the Holders of the Securities of such series or Coupons appertaining thereto. Section 1209. Right of Trustee to Hold Senior Indebtedness of the Company. The Trustee shall be entitled to all of the rights set forth in this Article in respect of any Senior Indebtedness of the Company at any time held by it in its individual capacity to the same extent as any other holder of such Senior Indebtedness of the Company, and nothing in this Indenture shall be construed to deprive the Trustee of any of its rights as such holder. Section 1210. Article Twelve Not to Prevent Events of Default or Defaults. The failure to make a payment pursuant to the Securities by reason of any provision in this Article shall not be construed as preventing the occurrence of an Event of Default or a Default. 86
ARTICLE THIRTEEN EXCHANGE OF CAPITAL SECURITIES FOR SECURITIES Section 1301. Applicability of Article. If the terms of the Securities of any series established as provided in Section 301 shall provide that Capital Securities are exchangeable for the Securities of such series, the Company shall exchange Capital Securities for the Securities of such series in accordance with their terms and (except as otherwise specified in the terms of the Securities of such series established as provided in Section 301) in accordance with this Article on a date not later than the Stated Maturity of the Securities of such series. Section 1302. Exchange of Capital Securities. The amount of Capital Securities which shall be exchangeable for each Security of any series for which Capital Securities are exchangeable shall be Capital Securities with a Market Value equal to the principal amount of such Security or the Applicable Percentage of such principal amount, as established in or pursuant to a Board Resolution or indenture supplemental hereto as provided in Section 301 or, if not so established, shall be Capital Securities with a Market Value equal to the principal amount of such Security. Except as otherwise provided in this Section 1302, unless the Company's obligation to exchange Capital Securities for Securities of any series for which Capital Securities are exchangeable has been revoked as provided in Section 1309 or the Securities of such series are redeemed as provided in Article Eleven, on the Exchange Date for the Securities of such series, the Company shall (i) exchange for all or part of the Securities of such series Capital Securities with the Market Value established for the Securities of such series as provided in Section 301, or (ii) if so specified in the terms of the Securities of such series established as provided in Section 301, at the Company's option, pay the principal amount (or the Applicable Percentage thereof) of all or part of the Securities of such series from Optional Available Funds (or funds from any other source to the extent approved by the Primary Federal Regulator), and, in either case, the Company shall pay or cause to be paid on the Exchange Date to the Persons entitled thereto accrued and unpaid interest to the Exchange Date. The notice prescribed in Section 1303(a) shall be given in the manner provided in Section 1303(a) not less than 90 days nor more than 120 days prior to the Exchange Date for the Securities of any series for which Capital Securities are exchangeable. At the Company's option, the Exchange Date may be accelerated to a date not more than 60 days prior to the Stated Maturity of the Securities of such series by a notice given by the Company in the manner provided in Section 1303(b) not less than three Business Days prior to the accelerated Exchange Date. If so specified in the terms of the Securities of any series for which Capital Securities are exchangeable established as provided in Section 301 and except as otherwise provided in this Section 1302, unless the Company's obligation to exchange Capital Securities for Securities of 87
such series has been revoked as provided in Section 1309 or the Securities of such series are redeemed as provided in Article Eleven, the Company may, at any time at the Company's option, exchange for all or part of the Securities of such series Capital Securities with the Market Value established for the Securities of such series as provided in Section 301, upon not less than 90 days' nor more than 120 days' written notice mailed to the Holders thereof, if the Company shall determine that it is not, or that there is a substantial probability that it will not be, allowed to deduct under Section 163(a) of the Internal Revenue Code of 1986 or any similar successor provision, payments of interest to Holders of the Securities of such series as a result of (a) any change in, or amendment to, or officially proposed change in, or amendment to, the laws (or any regulations, revenue rulings or revenue procedures promulgated thereunder) of the United States or any change in, or officially proposed change in, operation or official interpretation of such laws, rulings or regulations, or (b) any action taken by a taxing authority of the United States on or after the original issue date of the Securities of such series, which action is generally applied or which is taken with respect to the Company, or (c) a decision rendered by a court of competent jurisdiction in the United States on or after the original issue date of the Securities of such series, whether or not such decision was rendered with respect to the Company, or (d) a technical advice memorandum or ruling issued by the United States Internal Revenue Service on substantially the same facts as those affecting the Company (each of the foregoing an "Event Relating to Federal Income Taxes"). In the case of any such exchange of Capital Securities for Securities of any such series, the Company shall pay or cause to be paid on the Exchange Date to the Persons entitled thereto accrued and unpaid interest on such Securities to the Exchange Date. Prior to the mailing of any notice of such exchange, the Company shall deliver to the Trustee a certificate of an officer of the Company (which need not comply with Section 102) to the effect that the Company has complied with the provisions of this Section relating to such exchange and that the Company has received an opinion of independent counsel to the effect that the Company's determination that an Event Relating to Federal Income Taxes has occurred is proper. If Capital Securities are to be exchanged for the Securities of any series pursuant to this paragraph, prior to the time notice of the Company's election to effect such exchange is given to the Holders thereof, the Company shall have appointed an Exchange Agent and deposited with the Exchange Agent in trust or, if the Company shall be the Exchange Agent, segregated and held in trust, for the benefit of the Persons entitled thereto, certificates for the Capital Securities issuable upon such exchange and an amount in cash which together are sufficient to pay the Exchange Price of and (subject to Section 307) accrued and unpaid interest to the Exchange Date on all of the Securities of such series or portions thereof for which Capital Securities are to be exchanged on the Exchange Date, plus an amount in cash in lieu of any fractional Capital Securities. Upon the deposit of such certificates and cash with the Exchange Agent, the Exchange Agent shall notify the Trustee in writing of such deposit, and the Trustee shall be protected in relying on such notice, subject to Section 601, for all purposes of this Indenture, including, but not limited to, Section 401. Capital Securities may be so exchanged for less than all of the Securities of any series only if all of the Securities of such series for which Capital Securities are not so exchanged are to be redeemed as provided in Section 1108 and, prior to the time notice of such exchange is given, the Company shall have given irrevocable instructions to the Trustee to give on behalf of the Company notice of such redemption to Holders of the Securities to be so redeemed as provided 88
in Sections 1104 and 1108, and the Company shall have irrevocably given to the Bank and the Trustee the notice provided in Section 1102 with respect to such redemption. The notice of exchange given to Holders of Securities of any series as provided in this paragraph shall (x) be given in the manner provided in Section 1303(a), (y) set forth the Exchange Date and state that each Holder of Securities of such series for which Capital Securities are being exchanged will receive on such Exchange Date accrued and unpaid interest to such Exchange Date in cash (subject to Section 307) and (z) except as otherwise specified in the terms of the Securities of such series established as provided in Section 301, include statements to the effect set forth in Sections 1303(a) (2), (4), (7) and (11). Except as otherwise specified in the terms of the Securities of any series established as provided in Section 301, (i) the following provisions of this Article Thirteen shall apply to the exchange of Capital Securities for Securities of such series pursuant to this paragraph (unless the context of any such provision otherwise requires): Section 1301; the first, third, fourth and fifth paragraphs of this Section 1302; Section 1303(b) (to the extent applicable to any notice given pursuant to Section 1309); Sections 1303(c) and 1304(e) and (f); the second paragraph (including clauses (1), (2) and (3)) of Section 1305; the third paragraph of Section 1305; and Sections 1306, 1308(a), 1309, 1310, 1311 and 1312; and (ii) the remaining provisions of this Article Thirteen shall not apply to such exchange. Subject to Sections 502 and 503, no Holder of a Security for which Capital Securities are exchanged pursuant to this paragraph shall be entitled to receive any cash from the Company on the Exchange Date established pursuant to this paragraph or at the Stated Maturity of the Securities of such series, except: (A) as provided herein, in lieu of any fractional Capital Securities and (subject to Section 307) for accrued and unpaid interest, and (B) as otherwise specified in the terms of the Securities of such series established as provided in Section 301. Any additional terms and conditions which may apply to such an exchange of Capital Securities for the Securities of any series upon an Event Relating to Federal Income Taxes shall be specified in the terms of the Securities of such series established as provided in Section 301. No fractional Capital Securities shall be issued upon any exchange of Capital Securities for Securities of any series. If more than one Security of any series shall be surrendered for purposes of such exchange at one time by the same Holder, the amount of all Capital Securities which shall be issuable upon such exchange shall be computed on the basis of the aggregate principal amount of such Securities so surrendered. In lieu of issuing any fractional Capital Security, the Company shall pay a cash adjustment in respect of such fraction in an amount equal to the same fraction of the Market Value of the Capital Security. The Company shall not be obligated to deliver Capital Securities to any Holder of a Security of any series to the extent that the Company elects to apply Optional Available Funds (or funds from any other source to the extent approved by the Primary Federal Regulator) to pay such Security in cash. The Company shall not be obligated to apply Available Funds or Optional Available Funds to the payment of any Securities of any series. 89
Section 1303. Notices of Exchange. (a) Each notice in accordance with this Section 1303(a) shall be given to the Holders of Securities of any series for which Capital Securities are to be exchanged by first-class mail, postage prepaid, to their addresses as they shall appear in the Security Register (a copy of which shall promptly be delivered to the Trustee and the Exchange Agent) and shall: (1) state the Exchange Date and that it is subject to acceleration in the manner provided in the second paragraph of Section 1302; (2) state the type of Capital Securities to be exchanged for the Securities of such series on such Exchange Date; (3) contain or be accompanied by a Capital Security Election Form; (4) if Capital Securities are to be exchanged for less than all of the Outstanding Securities of such series on such Exchange Date, state the identification (and, in the case of exchange of Capital Securities for less than the whole principal amounts of Securities of such series, the principal amounts) of the particular Securities for which Capital Securities are to be exchanged; (5) state that each Holder of Securities of such series for which Capital Securities are being exchanged will receive on such Exchange Date accrued and unpaid interest to such Exchange Date in cash (subject to Section 307) and may elect to receive Capital Securities with a Market Value equal to the principal amount (or the Applicable Percentage thereof) of such Securities registered in the name of such Holder by returning such Capital Security Election Form on or before the date set forth therein (which shall be the date 30 days subsequent to the giving of the notice prescribed in this Section 1303(a) and shall not be less than 60 days prior to the Stated Maturity of the Securities of such series); (6) state that, in the absence of the election specified in (5) above, such Holder shall be deemed to have received Capital Securities on the Exchange Date and to have elected to have such Capital Securities sold by the Company in the related Secondary Offering and the proceeds thereof, together with accrued and unpaid interest (subject to Section 307), delivered to such Holder on the Exchange Date; provided, however, that in the event that the Company does not effect the Secondary Offering and the Company has not elected to apply Optional Available Funds (or funds from any other source to the extent approved by the Primary Federal Regulator) to the payment of the Securities of such series, such Holder will receive on or after the Exchange Date the Capital Securities described in the notice and not cash (other than cash in lieu of fractional Capital Securities and for accrued and unpaid interest (subject to Section 307)); 90
(7) state that on such Exchange Date the Exchange Price will become due and payable, whether in cash or Capital Securities, with respect to each such Security of such series for which Capital Securities are to be exchanged and that interest thereon will cease to accrue on and after such Exchange Date; (8) state that if there is a Secondary Offering, the Market Value of any Capital Securities issued on the Exchange Date will be equal to the sale price of such Capital Securities as are sold in the Secondary Offering and that because such sale price will be determined prior to the Exchange Date, Holders of Securities who elect to receive Capital Securities on the Exchange Date will bear the market risk with respect to the value of the Capital Securities to be received from the date such sale price is determined to the Exchange Date; (9) state that each Holder for whom Capital Securities are being offered in the Secondary Offering shall be deemed to have appointed the Company such Holder's attorney-in-fact to execute any and all documents and agreements which the Company deems necessary or appropriate to effect such Secondary Offering on the terms set forth in the notice; (10) state that (i) unless, within 30 days following the giving of the notice prescribed in this Section 1303(a), the Company shall be advised to the contrary in writing by the Holder, the Company will be entitled to assume for purposes of such Secondary Offering that the Capital Securities are to be offered for the account of such Holder, that such Holder has not held any position, office or other material relationship with the Company within three years preceding the Secondary Offering, that the Holder owns no such Capital Securities which are held other than in the name of the Holder and that after completion of the Secondary Offering the Holder will own less than 1% of the class of such Capital Securities, (ii) if any of these assumptions is not correct, the Holder shall promptly, but in any event within such 30-day period, so advise the Company, and (iii) a failure on the part of such Holder to advise the Company promptly, but in any event within such 30-day period, of the incorrectness of any of such assumptions will expose such Holder to liability to the Company, the Trustee, the Exchange Agent, other Holders of Securities of such series and underwriters, agents and other similar Persons to the extent set forth in Section 1304(d) and exonerate the Company from liability to such Holder to the extent set forth in Section 1308(c); and (11) state the place or places where such Securities are to be surrendered for exchange of Capital Securities therefor. (b) Each notice in accordance with this Section 1303(b) shall be given to the Holders of Securities of any series for which Capital Securities are to be exchanged by first-class mail, postage prepaid, to their addresses as they shall appear in the Security Register and shall be published in an Authorized Newspaper. The Company shall promptly deliver a copy of each such notice to the Trustee and the Exchange Agent. In the event that there has been a Secondary 91
Offering, notice shall be given not less than three Business Days prior to the Exchange Date of the amount of Capital Securities to be exchanged for each $1,000 principal amount of Securities of such series in the manner provided in this Section 1303(b). (c) If Capital Securities are to be exchanged for less than all of the Securities of any series on any Exchange Date, the Company shall, at least 15 days prior to the giving of the notice prescribed in Section 1303(a) (unless a shorter notice shall be satisfactory to the Bank), notify the Bank and the Trustee of the Exchange Date and of the principal amount of Securities of such series for which Capital Securities are to be exchanged, and the particular Securities of such series for which Capital Securities are to be exchanged shall be selected, not less than 105 days prior to the Exchange Date, by the Bank, from the Outstanding Securities of such series, by such method as the Bank shall deem fair and appropriate and which may provide for the selection for such purpose of portions (equal to the minimum authorized denomination for Securities of that series or any integral multiple thereof) of the principal amount of Securities of such series of a denomination larger than the minimum authorized denomination for Securities of that series; provided that in the case of an exchange of Capital Securities for the Securities of any series pursuant to the third paragraph of Section 1302, if particular Securities of such series have been selected in accordance with Section 1103 for redemption pursuant to Section 1108 (and the Securities so selected for such redemption constitute less than all of the Securities of such series), the particular Securities of such series for which Capital Securities are to be so exchanged shall be all of the Securities of such series not so selected for redemption. The Bank shall promptly notify the Company, the Trustee and the Exchange Agent in writing of the Securities selected for such purpose and, in the case of any Securities so selected in part, the principal amount thereof for which Capital Securities are to be exchanged. Section 1304. Rights and Duties of Holders of Securities for which Capital Securities are to Be Exchanged. (a) Each Holder of Securities of any series for which Capital Securities are to be exchanged will receive on the Exchange Date accrued and unpaid interest to such Exchange Date in cash (subject to Section 307) and may elect to receive Capital Securities with a Market Value equal to the principal amount (or the Applicable Percentage thereof) of such Securities registered in the name of such Holder by returning the Capital Security Election Form specified in Section 1307 not later than the date set forth therein (which shall be the date 30 days subsequent to the giving of the notice prescribed in Section 1303(a) and shall not be less than 60 days prior to the Stated Maturity of the Securities of such series). All Capital Security Election Forms may be delivered to the office of the Exchange Agent at the address specified in such form or to any Office or Agency maintained for such purpose as provided in Section 1002 or, if the Company shall fail to maintain such Office or Agency, to the Corporate Trust Office. If any such Holder shall fail to make the election specified in the first sentence of this Section 1304(a) on or before the last day provided therein for making such election, such Holder shall be deemed to have received Capital Securities on the Exchange Date and to have elected to have such Capital Securities sold by the Company in the related Secondary Offering and the proceeds thereof, 92
together with accrued and unpaid interest (subject to Section 307), delivered to such Holder on the Exchange Date (such Holder being thereby deemed to be a Cash Election Holder). Subject to Sections 502 and 503, and without prejudice to the rights pursuant to Section 1308 of Holders of Securities of any series for which Capital Securities are exchangeable, no Holder of a Security of any series for which Capital Securities are exchanged in accordance with the provisions of this Article and the terms of the Securities of such series shall be entitled to receive any cash from the Company on the Exchange Date for, or at the Stated Maturity of, the Securities of such series, except: (i) from the proceeds of the sale of Capital Securities in the related Secondary Offering or from Optional Available Funds (or funds from any other source to the extent approved by the Primary Federal Regulator) which the Company has elected to apply to the payment of Securities of such series, and (ii) as provided herein, in lieu of any fractional Capital Securities and (subject to Section 307) for accrued and unpaid interest. Cash Election Holders of Securities of any series will receive any Optional Available Funds (or funds from any other source to the extent approved by the Primary Federal Regulator) which the Company elects to apply to the payment of Securities of such series up to the principal amount (or the Applicable Percentage thereof) of such Holders' Securities of such series. If the Company does not sell in a Secondary Offering with respect to the Securities of any series a sufficient amount of Capital Securities so that the sale proceeds thereof, when added to any Optional Available Funds (or funds from any other source to the extent approved by the Primary Federal Regulator) which the Company elects to apply to the payment of the Securities of such series, are sufficient to satisfy the cash elections of the Cash Election Holders of the Securities of such series, the Exchange Agent will allocate Capital Securities, the proceeds of such Secondary Offering and such Optional Available Funds (or funds from any other source to the extent approved by the Primary Federal Regulator) among such Cash Election Holders pro rata based upon the respective principal amounts of the Securities of such series held by such Cash Election Holders to the extent practicable or by such other means as the Exchange Agent deems fair and appropriate and, in any event, in such manner as may be required by applicable law. To the extent that such Cash Election Holders do not receive cash, they will receive whole Capital Securities for the balance and cash in lieu of any fractional Capital Securities. In the event that such Cash Election Holders receive Capital Securities in accordance with the foregoing sentence, the delivery of such Capital Securities together with the proceeds of such Secondary Offering and such Optional Available Funds (or funds from any other source to the extent approved by the Primary Federal Regulator) shall constitute payment in full of the principal of such Cash Election Holders' Securities, and the Company shall have no further obligation to effect such Secondary Offering, without prejudice to such Cash Election Holders' rights pursuant to Section 1308. In the event that the Company does not effect a Secondary Offering to provide cash to the Cash Election Holders of the Securities of any series on the Exchange Date and the Company has not elected to apply any Optional Available Funds (or funds from any other source to the extent approved by the Primary Federal Regulator) to the payment of the Securities of such 93
series, such Holders shall receive on or after the Exchange Date the Capital Securities described in the notice prescribed in Section 1303(a), with the Market Value determined pursuant to the terms of the Securities of such series, and not cash (other than cash in lieu of fractional Capital Securities and for accrued and unpaid interest (subject to Section 307)), and the Company shall have no further obligation to effect such Secondary Offering, without prejudice to such Cash Election Holders' rights pursuant to Section 1308. (b) Each Holder for whom Capital Securities are offered in a Secondary Offering shall be deemed to have appointed the Company such Holder's attorney-in-fact to execute any and all documents and agreements which the Company deems necessary or appropriate to effect such Secondary Offering on the terms set forth in the notice prescribed in Section 1303(a). (c) Unless, within 30 days following the giving of the notice prescribed in Section 1303(a), the Company shall be advised to the contrary in writing by any Holder for whom Capital Securities are offered in a Secondary Offering, the Company shall be entitled to assume for purposes of such Secondary Offering that the Capital Securities are to be offered for the account of such Holder, that such Holder has not held any position, office or other material relationship with the Company within three years preceding the Secondary Offering, that such Holder owns no such Capital Securities which are held other than in the name of the Holder and that after completion of the Secondary Offering such Holder will own less than 1% of the class of such Capital Securities. (d) Each Holder for whom Capital Securities are offered in the Secondary Offering agrees to indemnify and hold harmless the Company, the Trustee, the Exchange Agent, any other Holder and any underwriter, agent or other similar Person from and against any and all losses, claims, damages and liabilities resulting from or based upon any untrue statement or alleged untrue statement of any material fact contained in any notice of exchange, any offering memorandum or selling document or registration statement relating to the Secondary Offering, any preliminary prospectus or prospectus contained therein, or any amendment thereof or supplement thereto, or resulting from or based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, which untrue statement, alleged untrue statement, omission or alleged omission is made therein (i) in reliance upon and in conformity with any written information furnished to the Company by or on behalf of such Holder specifically for use in connection with the preparation thereof or (ii) because of such Holder's failure to advise the Company in writing that any of the assumptions described in the Company's notice pursuant to Section 1303(a)(10) is incorrect. (e) In order to receive the Exchange Price of any Security for which Capital Securities are to be exchanged, together with accrued and unpaid interest thereon plus an amount in cash in lieu of any fractional Capital Securities, the Holder of such Security shall surrender such Security (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, 94
the Holder thereof or his attorney duly authorized in writing) to the Exchange Agent at the place or places specified in the notice prescribed in Section 1303(a). (f) Capital Securities shall be deemed to be exchanged for Securities of any series for which Capital Securities are to be exchanged, effective on the Exchange Date therefor, in accordance with the provisions of this Article and the terms of the Securities of such series, and at such time the rights of the Holders of such Securities as such Holders shall cease (subject to any additional terms of the Securities of any series established as provided in Section 301) and the Person or Persons entitled to receive Capital Securities issuable upon such exchange shall be treated for all purposes as the record holder or holders of such Capital Securities at such time. The Company shall cause the Exchange Agent to deliver, on and after the Exchange Date upon surrender of any Security for purposes of exchange in accordance with Section 1304(e), a certificate or certificates for the Capital Securities issuable upon such exchange, together with an amount in cash in lieu of any fractional Capital Securities and (subject to Section 307) accrued and unpaid interest. Section 1305. Deposit of Exchange Price. At least 90 days prior to the Exchange Date for the Securities of any series for which Capital Securities are to be exchanged, the Company shall appoint an Exchange Agent and, on or prior to the Exchange Date for the Securities of such series, the Company shall deposit with the Exchange Agent in trust or, if the Company shall be the Exchange Agent, segregate and hold in trust, for the benefit of the Persons entitled thereto, certificates for the Capital Securities issuable upon such exchange and an amount in cash which together are sufficient to pay the Exchange Price of and (subject to Section 307) accrued and unpaid interest to the Exchange Date on all of the Securities of such series or portions thereof for which Capital Securities are to be exchanged on the Exchange Date, plus an amount in cash in lieu of any fractional Capital Securities. Upon the deposit of such certificates and cash with the Exchange Agent, the Exchange Agent shall notify the Trustee in writing of such deposit, and the Trustee shall be protected in relying on such notice, subject to Section 601, for all purposes of this Indenture, including, but not limited to, Section 401. The Company will cause the Exchange Agent to execute and deliver to the Trustee an instrument in which such Exchange Agent shall agree with the Trustee, or if the Trustee shall be the Exchange Agent, the Trustee hereby agrees that, subject to the provisions of this Section, such Exchange Agent will: (1) hold all certificates for Capital Securities and all amounts of cash held by it for delivery and payment pursuant to this Article in trust for the benefit of the Persons entitled thereto until such certificates shall be delivered and such cash shall be paid to such Persons or otherwise disposed of as herein provided; (2) give the Trustee notice of any default by the Company (or any other obligor upon the Securities of such series) in the making of any such deposit; and 95
(3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith deliver to the Trustee all certificates for Capital Securities and pay to the Trustee all amounts of cash so held pursuant to this Article in trust by such Exchange Agent. Such instrument may also designate one or more officers of the Exchange Agent to receive notices pursuant to the second paragraph of Section 1204 and the office of the Exchange Agent at which such notices shall be received. Any certificates for Capital Securities or amounts of cash deposited with the Exchange Agent pursuant to this Article in trust as hereinabove provided which (i) shall not be delivered and paid to the Holders of any Security because the Company shall not be obligated to make or cause to be made the delivery or payment thereof pursuant to the terms of this Indenture or if such Security shall be delivered or repaid, as the case may be, to the Company on Company Request or (ii) shall remain unclaimed by the Holder of any Security for two years after the same shall have been so deposited with the Exchange Agent shall be delivered or repaid, as the case may be, to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security who was entitled thereto shall thereafter look only to the Company for delivery or payment thereof, and all liability of the Trustee or the Exchange Agent (other than the Company) with respect to such certificates or cash, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or the Exchange Agent, before being required to make any such delivery or repayment, may at the expense of the Company cause to be published once, in an Authorized Newspaper, notice that such certificates or cash remain unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such certificates or cash then remaining will be delivered or repaid, as the case may be, to the Company. Section 1306. Securities Due on Exchange Date; Securities Exchanged in Part. The Securities of any series for which Capital Securities are to be exchanged shall, on the Exchange Date for the Securities of such series, become due and payable at the Exchange Price therein specified, and from and after the Exchange Date (unless the Company shall default in the payment of the Exchange Price and accrued and unpaid interest) such Securities or portions thereof for which Capital Securities are to be exchanged shall cease to bear interest. Upon surrender of any such Security for purposes of such exchange, such Security shall be paid by the Company, or Capital Securities shall be exchanged therefor, at the Exchange Price, together with accrued and unpaid interest to the Exchange Date (subject to Section 307), plus an amount in cash in lieu of any fractional Capital Securities. If any Security of any series for which the notice prescribed in Section 1303(a) is duly given shall not be so paid, or if Capital Securities shall not be exchanged therefor, upon surrender thereof for purposes of such exchange, the principal shall, until paid, or until Capital 96
Securities shall be exchanged for such principal, bear interest from the Exchange Date at the rate prescribed therefor in such Security. Upon surrender to the Exchange Agent in accordance with Section 1304(e) of any Security for which Capital Securities are to be exchanged only in part, the Company shall execute, the Trustee shall authenticate and there shall be delivered to the Holder of such Security without service charge, a new Security or Securities of the same series, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the portion of the principal of the Security so surrendered for which Capital Securities have not been exchanged; provided that in the case of such surrender of any Security for which Capital Securities are to be exchanged only in part pursuant to the third paragraph of Section 1302, the Company shall execute, the Trustee shall authenticate and there shall be delivered (or, if not delivered, there shall be deemed to be delivered), on behalf of the Holder of such Security (without service charge), to a place where Securities of such series may be surrendered for redemption pursuant to Section 1108, a new Security or Securities of the same series, of any authorized denomination selected by the Bank, in aggregate principal amount equal to and in exchange for the portion of the principal of the Security so surrendered for which Capital Securities have not been exchanged, and such new Security or Securities when so delivered (or deemed to be delivered) shall be deemed to be surrendered on the Redemption Date in accordance with Section 1106 or 1107 for redemption pursuant to Section 1108. Section 1307. Form of Capital Security Election Form. The form of Capital Security Election Form shall be substantially as follows, with such additions, deletions or changes thereto as may be approved by the Company. CAPITAL SECURITY ELECTION FORM To: [Insert Name and Address of Exchange Agent] The undersigned Holder of [Insert title of Securities] ("Securities") of The Chase Manhattan Corporation hereby elects to receive on the Exchange Date determined pursuant to the Amended and Restated Indenture dated as of September 1, 1993 ("Indenture") between The Chase Manhattan Corporation and Chemical Bank, Trustee, and referred to in the notice of exchange delivered to the undersigned with this Capital Security Election Form, Capital Securities (as defined in the Indenture), registered in the name of the undersigned Holder, in exchange for all, or the portion of the principal stated below, of such Securities. As stated in the notice of exchange delivered to the undersigned Holder, (i) Capital Securities are to be exchanged for [Company to insert appropriate portion of principal amount if partial exchange] of the principal amount of the Securities held by the undersigned Holder and (ii) the undersigned Holder shall receive Capital Securities with a Market Value (as defined in the Indenture) equal to [Company to insert 100% of the principal amount or the Applicable Percentage thereof] of the Securities for which Capital Securities are being exchanged. Unless this Capital 97
Security Election Form is received by the Exchange Agent named above at the address shown above (or at any Office or Agency maintained for such purpose as provided in Section 1002 of the Indenture or, if the Company shall fail to maintain such office or agency, at the Corporate Trust Office) on or prior to , 19 [the date 30 days subsequent to the giving of the notice prescribed in Section 1303(a)], the undersigned Holder will be deemed to have elected to participate in the sale of the Holder's Capital Securities in the Secondary Offering and, as provided in the above-mentioned notice of exchange, will receive cash on the Exchange Date in an amount equal to [Company to insert 100% of the principal amount or the Applicable Percentage thereof] of all Securities for which Capital Securities are being exchanged owned by the Holder. All terms used herein and not otherwise defined herein shall have the meanings specified in the Indenture. Dated . . . . . . . . . . . . . . . . . . . . . . . . . Name of Holder Section 1308. Covenants of the Company. (a) The Company agrees that all Capital Securities issued in exchange for Securities will upon issuance be duly and validly issued and, if applicable, fully paid and nonassessable. If any Capital Securities to be exchanged for Securities hereunder require registration with or approval of any governmental authority under any Federal or State law, or listing on any national securities exchange, before such Capital Securities may be issued, the Company shall use its best efforts to cause such Capital Securities to be duly registered or approved or listed, as the case may be. The Company will pay any and all transfer, stamp or similar taxes that may be payable in respect of the issue or delivery of Capital Securities in exchange for Securities pursuant hereto to the same Holder. (b) The Company unconditionally undertakes to sell, or cause to be sold, in a Secondary Offering all Capital Securities to be exchanged for Securities of any series held by Cash Election Holders of Securities of such series (and to bear all expenses of such Secondary Offering, including underwriting discounts and commissions and transfer, stamp and similar taxes) at the times and in the manner required by this Indenture unless all Holders of the Securities of such series have elected to receive Capital Securities on the related Exchange Date or the amount of Optional Available Funds (and funds from any other source to the extent approved by the Primary Federal Regulator) which the Company has elected to apply to the payment of Securities of such series is sufficient to pay the principal of all of the Securities of such series held by all Cash Election Holders of the Securities of such series. The Company will effect each Secondary Offering such that the closing of such Secondary Offering will occur on or before the relevant Exchange Date. 98
(c) The Company agrees to indemnify and hold harmless any Holder for the account of whom Capital Securities are being offered and sold in connection with any Secondary Offering and the Trustee, the Exchange Agent and any underwriter, agent or other similar Person from and against any and all losses, claims, damages and liabilities resulting from or based upon any untrue statement or alleged untrue statement of any material fact contained in any notice of exchange, any offering memorandum or selling document or registration statement relating to the Secondary Offering, any preliminary prospectus or prospectus contained therein, or any amendment thereof or supplement thereto, or resulting from or based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or resulting from the Company's failure to comply with Section 1308(a); provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement, alleged untrue statement, omission or alleged omission made therein (i) in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Holder specifically for use in connection with the preparation thereof or (ii) because of such Holder's failure to advise the Company in writing that any assumption described in the Company's notice pursuant to Section 1303(a)(10) is incorrect. In connection with any Secondary Offering, the Company agrees to obtain usual and appropriate indemnification of any Holder for the account of whom Capital Securities are being offered and sold in any Secondary Offering from any underwriter, agent or other similar Person. Section 1309. Revocation of Obligation to Exchange Capital Securities for Securities. The Company's obligation to exchange Capital Securities for Securities of any series as provided in Section 1301 is absolute and unconditional; provided, however, that such obligation may be revoked at the option of the Company at any time on not less than 60 days' prior notice given in the manner provided in Section 1303(b) to the Holders of Securities of such series, the Trustee and the Exchange Agent, if the Company shall determine that the Securities of such series do not constitute primary capital of the Company under applicable regulations of the Primary Federal Regulator or if the Securities of such series shall cease being treated as primary capital of the Company by the Primary Federal Regulator or if approval of the Primary Federal Regulator is obtained for such revocation and, in any such case, the Company shall deliver to the Trustee a certificate of an officer of the Company (which need not comply with Section 102) to the effect that the Company has received an opinion of independent counsel to such effect. In the event that such obligation is revoked, (a) the Company will pay the Securities of such series in cash from any source at the principal amount thereof at the Stated Maturity thereof, plus accrued and unpaid interest to the date of payment (subject to Section 307), and 99
(b) the Company may, at any time when pursuant to their terms the Securities of such series are redeemable, on not less than 30 days' nor more than 60 days' prior notice, redeem the Securities of such series, in whole or in part, in accordance with Article Eleven and the terms of the Securities of such series, for cash from any source at the Redemption Price for the Securities of such series, plus accrued and unpaid interest to the Redemption Date (subject to Sections 307 and 1106). Section 1310. Optional Available Funds. (a) With respect to the Securities of any series for which Capital Securities are exchangeable, the Company may elect to create and establish an identifiable fund on its books and records for certain funds of the same character referred to in clauses (i), (ii) and (iii) of Section 1401 ("Optional Available Funds") which at any time may be designated by the Company and used, as provided in this Indenture or in the terms of the Securities of such series established as provided in Section 301, to pay the principal of the Securities of such series. The Company shall have no obligation (A) to create and establish such a fund or (B) to designate the proceeds of the issuance of any Capital Securities as Optional Available Funds or (C) to issue any Capital Securities for such purpose or (D) to apply any Optional Available Funds to the payment of any Securities. Notwithstanding any provision to the contrary contained in this Indenture or in the Securities of any series, neither funds designated as Optional Available Funds nor any other property from time to time held as Optional Available Funds shall be deemed to be for any purpose property of the Holders of any Securities or trust funds and Optional Available Funds shall not constitute security for the payment of any Securities. (b) In lieu of, or in addition to, any exchange of Capital Securities for Securities of any series, or any other payment of the principal of the Securities of any series from Optional Available Funds (or funds from any other source to the extent approved by the Primary Federal Regulator), which may be made in accordance with the provisions of this Article, the Company may, at any time when pursuant to their terms the Securities of such series are redeemable, redeem the Securities of such series, in whole or in part, in accordance with Article Eleven and the terms of the Securities of such series, for cash from funds designated as Optional Available Funds for the Securities of such series (or with funds from any other source to the extent approved by the Primary Federal Regulator) at the Redemption Price for the Securities of such series, plus accrued and unpaid interest to the Redemption Date (subject to Sections 307 and 1106). (c) Any Optional Available Funds remaining after redemption of all of the Securities of the series for which such Optional Available Funds have been designated or after payment (including the delivery of any Capital Securities exchanged for the Securities of such series) in full of the principal of (and premium, if any) and interest on all of the Securities of such series (or provision for the payment thereof as provided in Article Four) shall be released from such designation. 100
Section 1311. Provision in Case of Consolidation, Merger, Conveyance or Transfer. In case of any consolidation of the Company with, or merger of the Company into, any other corporation (other than a consolidation or merger in which the Company is the continuing corporation), or in case of any conveyance or transfer of the properties and assets of the Company substantially as an entirety in accordance with Section 801, the corporation formed by such consolidation or the corporation into which the Company shall have been merged or the corporation which shall have acquired by conveyance or transfer the property and assets of the Company substantially as an entirety, as the case may be, shall execute and deliver to the Trustee an indenture supplemental hereto providing that the Holder of each Security of any series for which Capital Securities are exchangeable then Outstanding shall have the right thereafter to receive, in accordance with the provisions of this Article Thirteen and the terms of the Securities of such series, Capital Securities of such corporation on the Exchange Date for such Security with a Market Value equal to the principal amount (or the Applicable Percentage thereof) of such Security, together with such amounts in cash as are provided in this Article Thirteen and the terms of the Securities of such series. The above provisions of this Section shall similarly apply to successive consolidations, mergers, conveyances or transfers. Section 1312. Responsibility of Trustee. The Trustee shall not at any time be under any duty or responsibility to any Holder of Securities of any series for which Capital Securities are to be exchanged to determine the Market Value of any Capital Securities delivered in exchange for Securities of such series and may rely on and shall be entitled to receive prior to any Exchange Date for Securities of such series an Officers' Certificate of the Company as to the Market Value of the Capital Securities being exchanged for the Securities of such series and the amount of Capital Securities being exchanged for each $1,000 principal amount of Securities of such series and stating that such Capital Securities qualify as Capital Securities under the definition thereof contained in this Indenture. The Trustee shall not be accountable with respect to the validity or value (or the kind or amount) of any Capital Securities which may at any time be issued or delivered in exchange for any Security; and the Trustee does not make any representation with respect thereto. The Trustee shall not be responsible for any failure of the Company to issue, transfer or deliver any Capital Securities or Capital Security certificates or other securities or property upon the surrender of any Security for the purpose of exchange or to comply with any of the covenants of the Company contained in this Article. 101
ARTICLE FOURTEEN AVAILABLE FUNDS Section 1401. Available Funds. "Available Funds" will consist of amounts equal to (i) the net proceeds from the sale for cash from time to time of Capital Securities, (ii) the market value, as determined by the Company, of Capital Securities issued from time to time in exchange for other property, less the expenses to effect any such exchanges and (iii) other funds which the regulations or other criteria of the Primary Federal Regulator then permit in determining primary capital of the Company, provided that (x) the Company has designated such amounts as Available Funds on its books and records in the manner required by the Primary Federal Regulator, and (y) there shall be deducted from Available Funds an amount equal to the amount of any funds used to redeem or repay the Securities for which Available Funds are required to be designated. Notwithstanding any provision to the contrary contained in this Indenture or in the Securities of any series, neither funds designated as Available Funds nor any other property from time to time held as Available Funds shall be deemed to be for any purpose property of the Holders of any Securities or trust funds and Available Funds shall not constitute security for the payment of any Securities. Section 1402. Covenant of Company to Obtain Available Funds. The Company hereby covenants and agrees with regard to the Securities of any series for which Available Funds are required to be designated that (i) by the Interest Payment Date which occurs on or next preceding the date when one-third of the period from the original issue date of the Securities of such series to their Stated Maturity has elapsed, it will have obtained Available Funds in an amount that will equal at least one-third of the original aggregate principal amount of the Securities of such series which, at such date, may be treated for United States bank regulatory purposes as primary capital of the Company (or such lesser amount as the Primary Federal Regulator may permit from time to time), and will have delivered to the Trustee an Officers' Certificate to the foregoing effect, (ii) by the Interest Payment Date which occurs on or next preceding the date when two-thirds of the Period from the original issue date of the Securities of such series to their Stated Maturity has elapsed, it will have obtained Available Funds in an amount that will equal at least two-thirds of the original aggregate principal amount of the Securities of such series which, at such date, may be treated for United States bank regulatory purposes as primary capital of the Company (or such lesser amount as the Primary Federal Regulator may permit from time to time), and will have delivered to the Trustee an Officers' Certificate to the foregoing effect, and (iii) by 60 days prior to the Stated Maturity of the Securities of such series, it will have obtained Available Funds in an amount that will equal not less than the original aggregate principal amount of the Securities of such series which, at such date, may be treated for United States bank regulatory purposes as primary capital of the Company (or such lesser amount as the Primary Federal Regulator may permit from time to time), and will have delivered to the Trustee an Officers' Certificate to the foregoing effect; provided, however, that such covenant and agreement shall be cancelled, and any amounts 102
theretofore designated as Available Funds with regard to the Securities of such series shall be released from such designation, in the event and to the extent that the Primary Federal Regulator shall determine that any portion of the indebtedness represented by the Securities of such series previously treated as primary capital of the Company for United States bank regulatory purposes may not thereafter be so treated or in the event and to the extent that the Company shall have redeemed Securities of such series pursuant to the terms of Securities of such series from a source other than amounts designated as Available Funds. Section 1403. Release of Available Funds upon Redemption or Payment. Any Available Funds remaining after redemption of all of the Securities of the series for which such Available Funds have been designated or after payment in full of the principal of (and premium, if any) and interest on all of the Securities of such series (or provision for the payment thereof as provided in Article Four) shall be released from such designation. ARTICLE FIFTEEN REPAYMENT OPTION Section 1501. Applicability of Article. Securities of any series which are repayable at the option of the Holders thereof before their Stated Maturity shall be repaid in accordance with the terms of the Securities of such series. The repayment of any principal amount of Securities pursuant to such option of the Holder to require repayment of Securities before their Stated Maturity, for purposes of Section 309, shall not operate as a payment, redemption or satisfaction of the indebtedness represented by such Securities unless and until the Company, at its option, shall deliver or surrender the same to the Trustee with a directive that such Securities be cancelled. Notwithstanding anything to the contrary contained in this Article Fifteen, in connection with any repayment of Securities, the Company may arrange for the purchase of any Securities by an agreement with one or more investment bankers or other purchasers to purchase such Securities by paying to the Holders of such Securities on or before the close of business on the repayment date an amount not less than the repayment price payable by the Company on repayment of such Securities, and the obligation of the Company to pay the repayment price of such Securities shall be satisfied and discharged to the extent such payment is so paid by such purchasers. 103
ARTICLE SIXTEEN MEETINGS OF HOLDERS OF SECURITIES Section 1601. Purposes for Which Meetings May Be Called. A meeting of Holders of Securities of any series may be called at any time and from time to time pursuant to this Article to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be made, given or taken by Holders of Securities of such series. Section 1602. Call, Notice and Place of Meetings. (a) The Trustee may at any time call a meeting of Holders of Securities of any series for any purpose specified in Section 1601, to be held at such time and at such place in the Borough of Manhattan, The City of New York, or in London or in such place outside the United States as the Trustee shall determine. Notice of every meeting of Holders of Securities of any series, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given, in the manner provided in Section 106, not less than 21 nor more than 180 days prior to the date fixed for the meeting. (b) In case at any time the Company (by a Board Resolution) or the Holders of at least 10% in principal amount of the Outstanding Securities of any series shall have requested the Trustee to call a meeting of the Holders of Securities of such series for any purpose specified in Section 1601, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have made the first publication of the notice of such meeting within 21 days after receipt of such request or shall not thereafter proceed to cause the meeting to be held as provided herein, then the Company or the Holders of Securities of such series in the amount above specified, as the case may be, may determine the time and the place in the Borough of Manhattan, The City of New York, or in London for such meeting and may call such meeting for such purposes by giving notice thereof as provided in subsection (a) of this Section. Section 1603. Persons Entitled to Vote at Meetings. To be entitled to vote at any meeting of Holders of Securities of any series, a Person shall be (1) a Holder of one or more Outstanding Securities of such series, or (2) a Person appointed by an instrument in writing as proxy for a Holder or Holders of one or more Outstanding Securities of such series by such Holder or Holders. The only Persons who shall be entitled to be present or to speak at any meeting of Holders of Securities of any series shall be the Persons entitled to vote at such meeting and their counsel, any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. 104
Section 1604. Quorum; Action. The Persons entitled to vote a majority in principal amount of the Outstanding Securities of a series shall constitute a quorum for a meeting of Holders of Securities of such series; provided, however, that if any action is to be taken at such meeting with respect to a consent or waiver which this Indenture expressly provides may be given by the Holders of not less than 66 2/3% in principal amount of the Outstanding Securities of a series, the Persons entitled to vote 66 2/3% in principal amount of the Outstanding Securities of such series shall constitute a quorum. In the absence of a quorum within 30 minutes after the time appointed for any such meeting, the meeting shall, if convened at the request of Holders of Securities of such series, be dissolved. In any other case the meeting may be adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such adjourned meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in Section 1602(a), except that such notice need be given only once not less than five days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage, as provided above, of the principal amount of the Outstanding Securities of such series which shall constitute a quorum. Except as limited by the proviso to Section 902, any resolution presented to a meeting or adjourned meeting duly reconvened at which a quorum is present as aforesaid may be adopted only by the affirmative vote of the Holders of a majority in principal amount of the Outstanding Securities of that series; provided, however, that any resolution with respect to any consent or waiver which this Indenture expressly provides may be given by the Holders of not less than 66 2/3% in principal amount of the Outstanding Securities of a series may be adopted at a meeting or an adjourned meeting duly convened and at which a quorum is present as aforesaid only by the affirmative vote of the Holders of 66 2/3% in principal amount of the Outstanding Securities of that series; and provided, further, that any resolution with respect to any request, demand, authorization, direction, notice, consent, waiver or other action which this Indenture expressly provides may be made, given or taken by the Holders of a specified percentage, which is less than a majority, in principal amount of the Outstanding Securities of a series may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid by the affirmative vote of the Holders of such specified percentage in principal amount of the Outstanding Securities of such series. Any resolution passed or decision taken at any meeting of Holders of Securities of any series duly held in accordance with this Section shall be binding on all the Holders of Securities of such series and the Coupons appertaining thereto, whether or not such Holders were present or represented at the meeting. 105
Section 1605. Determination of Voting Rights; Conduct and Adjournment of Meetings. (a) Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders of Securities of any series in regard to proof of the holding of Securities of such series and of the appointment of proxies and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. Except as otherwise permitted or required by any such regulations, the holding of Securities shall be proved in the manner specified in Section 104 and the appointment of any proxy shall be proved in the manner specified in Section 104 or by having the signature of the person executing the proxy witnessed or guaranteed by any trust company, bank or banker authorized by Section 104 to certify to the holding of Bearer Securities. Such regulations may provide that written instruments appointing proxies, regular on their face, may be presumed valid and genuine without the proof specified in Section 104 or other proof. (b) The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Holders of Securities as provided in Section 1602(b), in which case the Company or the Holders of Securities of the series calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Persons entitled to vote a majority in principal amount of the Outstanding Securities of such series represented at the meeting. (c) At any meeting of Holders of Securities of any series, each Holder of a Security of such series or proxy shall be entitled to one vote for each $1,000 principal amount of Securities of such series held or represented by him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and ruled by the chairman of the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote, except as a Holder of a Security of such series or proxy. (d) Any meeting of Holders of Securities of any series duly called pursuant to Section 1602 at which a quorum is present may be adjourned from time to time by Persons entitled to vote a majority in principal amount of the Outstanding Securities of such series represented at the meeting; and the meeting may be held as so adjourned without further notice. Section 1606. Counting Votes and Recording Action of Meetings. The vote upon any resolution submitted to any meeting of Holders of Securities of any series shall be by written ballots on which shall be subscribed the signatures of the Holders of Securities of such series or of their representatives by proxy and the principal amounts and serial numbers of the Outstanding Securities of such series held or represented by them. The 106
permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in triplicate of all votes cast at the meeting. A record, at least in triplicate, of the proceedings of each meeting of Holders of Securities of any series shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was given as provided in Section 1602 and, if applicable, Section 1604. Each copy shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one such copy shall be delivered to the Company, and another to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated. ARTICLE SEVENTEEN MISCELLANEOUS PROVISIONS Section 1701. Securities in Foreign Currencies. Whenever this Indenture provides for any distribution to Holders of Securities, in the absence of any provision to the contrary in the form of Security of any particular series, any amount in respect of any Security denominated in a Currency other than Dollars shall be treated for the purpose of any such distribution as that amount of Dollars that could be obtained for such amount on such reasonable basis of exchange and as of the record date with respect to Registered Securities of such series (if any) for such distribution (or, if there shall be no applicable record date, such other date reasonably proximate to the date of such action, determination of rights or distribution) as the Company may specify in a written notice to the Trustee or, in the absence of such written notice, as the Trustee may determine. ---------------------------------------- 107
This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. The Trustee hereby accepts the trusts in this Indenture declared and provided upon the terms and conditions set forth herein. IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture, dated as of September 1, 1993, and restatement of the Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. [SEAL] The Chase Manhattan Corporation Attest: /s/ [Illegible] By /s/ Arjun K. Mathrani - ------------------- ------------------------------------- Name: Arjun K. Mathrani Title: Executive Vice President and Treasurer [SEAL] Chemical Bank, as Trustee Attest: /s/ [Illegible] By /s/ P.J. Gilkeson - -------------------- ------------------------------------- Name: P.J. Gilkeson Title: Vice President 108
STATE OF NEW YORK) : SS.: COUNTY OF NEW YORK) On the 31st day of August, 1993, before me personally came Arjun K. Mathrani to me known, who, being by me duly sworn, did depose and say that he is a Executive Vice President and Treasurer of The Chase Manhattan Corporation, a State of Delaware corporation, one of the persons described in and who executed the foregoing instrument; that he knows the seal of said Corporation; that the seal affixed to said instrument is such Corporation's seal; that it was so affixed by authority of the Board of Directors of said Corporation; and that he signed his name thereto by like authority. /s/ May Derzie ---------------------------------- Notary Public [NOTARIAL SEAL] MAY DERZIE Notary Public, State of New York No. 4973471 Qualified in Nassau County Certificate Filed in New York County Commission Expires Oct. [Illegible] STATE OF NEW YORK) : SS.: COUNTY OF NEW YORK) On the 31st day of August, 1993, before me personally came P.J. Gilkeson to me known, who, being by me duly sworn, did depose and say that he is a Vice President of Chemical Bank, a banking corporation organized and existing under the laws of State of New York, one of the persons described in and who executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporation's seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority. /s/ Annabelle DeLuca ---------------------------------- Notary Public ANNABELLE DeLUCA [NOTARIAL SEAL] Notary Public, State of New York No. 01DE5013759 Qualified in Kings County Certificate Filed in New York County Commission Expires July 15, 1995 109
Exhibit 4.4(b) CHEMICAL BANKING CORPORATION, THE CHASE MANHATTAN CORPORATION, CHEMICAL BANK, as Resigning Trustee AND FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, as Successor Trustee FIRST SUPPLEMENTAL INDENTURE Dated as of March 29, 1996 to AMENDED AND RESTATED INDENTURE Dated as of September 1, 1993
FIRST SUPPLEMENTAL INDENTURE, dated as of March 29, 1996, among CHEMICAL BANKING CORPORATION, a Delaware corporation ("Successor"), THE CHASE MANHATTAN CORPORATION, a Delaware corporation ("Chase"), CHEMICAL BANK, a banking corporation duly organized and existing under the laws of the State of New York, as trustee ("Resigning Trustee"), and FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, an association duly organized and existing under the federal laws of the United States ("Successor Trustee"). WHEREAS, Chase and Resigning Trustee have heretofore executed and delivered a certain indenture, dated as of May 1, 1987 (the "Original Indenture"), authorizing the issuance from time to time of subordinated debt securities of Chase (the "Securities"), and supplements to the Original Indenture in the form of a First Supplemental Indenture, dated as of May 1, 1991, a Second Supplemental Indenture, dated as of October 1, 1992, and a Third Supplemental Indenture, dated as of September 1, 1993, the provisions of which Third Supplemental Indenture are applicable only to Securities issued on or after September 1, 1993 (other than the provisions that reflect the requirements of the Trust Indenture Act) (the Original Indenture, as so supplemented by the First, Second and Third Supplemental Indentures, the "Original Supplemented Indenture"); WHEREAS, as of September 1, 1993, Chase and Resigning Trustee restated the Original Supplemented Indenture pursuant to the terms thereof (the Original Supplemented Indenture, as so restated, the "Indenture"); WHEREAS, Chase and Successor have entered into an Agreement and Plan of Merger, dated as of August 27, 1995 (the "Merger Agreement"), which contemplates the execution and filing of a Certificate of Merger, dated as of March 29, 1996 (the "Certificate of Merger"), providing for the merger (effective March 31, 1996) of Chase with and into Successor (the "Merger"), with Successor continuing its corporate existence under Delaware law under the name "The Chase Manhattan Corporation"; WHEREAS, Section 801 of the Indenture provides, among other things, that Chase shall not merge into any other corporation unless the corporation into which Chase is merged shall expressly assume, by an indenture supplemental to the Indenture, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of (and premium, if any) and interest on and any Additional Amounts with respect to all the Securities and the performance of every covenant of the Indenture on the part of Chase to be performed or observed; WHEREAS, upon effectiveness of the Merger, Resigning Trustee shall become a subsidiary of the issuer of the Securities
2 under the Indenture and accordingly Resigning Trustee desires to resign pursuant to Section 609(b) of the Indenture and Successor Trustee is willing to accept appointment as successor Trustee under the Indenture; WHEREAS, Sections 901(1) and 901(7), respectively, of the Indenture provide, among other things, that, without the consent of the Holders, Chase, when authorized by a Board Resolution of Chase, and the Trustee, at any time and from time to time, may enter into an indenture supplemental to the Indenture, in form satisfactory to the Trustee, for the purposes of (i) evidencing the succession of Successor to Chase, and the assumption by Successor of the covenants of Chase contained in the Indenture and the Securities and (ii) evidencing and providing for the acceptance of appointment under the Indenture by a successor Trustee; WHEREAS, Successor and Chase desire and have requested that Resigning Trustee and Successor Trustee join in the execution of this First Supplemental Indenture for the purpose of (i) evidencing the succession and assumption by Successor to Chase and the assumption by Successor of the covenants of Chase contained in the Indenture and the Securities, (ii) evidencing the resignation of the Resigning Trustee, (iii) appointing Successor Trustee with respect to all Securities and evidencing acceptance of such appointment by Successor Trustee and (iv) amending certain provisions of the Indenture in connection with such succession and assumption, and such appointment and acceptance, as hereinafter set forth; WHEREAS, the execution and delivery of this First Supplemental Indenture has been authorized by Board Resolutions of the Boards of Directors of Chase and Successor and have been duly authorized by all necessary action on the part of Resigning Trustee and Successor Trustee; and WHEREAS, all conditions precedent and requirements necessary to make this First Supplemental Indenture a valid and legally binding instrument in accordance with its terms have been complied with, performed and fulfilled and the execution and delivery hereof have been in all respects duly authorized; NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH: For and in consideration of the premises and intending to be legally bound hereby, it is mutually covenanted and agreed, for the equal and proportionate benefit of all holders of the Securities, as follows:
3 ARTICLE ONE REPRESENTATIONS AND COVENANTS OF RESIGNING TRUSTEE SECTION 1.1. Pursuant to Section 609(b) of the Indenture, Resigning Trustee hereby notifies Chase that Resigning Trustee is hereby resigning as Trustee under the Indenture. SECTION 1.2. Resigning Trustee hereby represents and warrants to Successor Trustee that: (a) No covenant or condition contained in the Indenture has been waived by Resigning Trustee or, to the best of the knowledge of the Responsible Officers assigned to Resigning Trustee's Corporate Trustee Administration Department, by the Holders of the percentage in aggregate principal amount of Securities of any series required by the Indenture to effect any such waiver. (b) There is no action, suit or proceeding pending or, to the best of the knowledge of the Responsible Officers assigned to Resigning Trustee's Corporate Trustee Administration Department, threatened against Resigning Trustee before any court or any governmental authority arising out of any action or omission by Resigning Trustee as Trustee under the Indenture. (c) To the best of the knowledge of the Responsible Officers assigned to the Resigning Trustee's Corporate Trustee Administration Department, no event has occurred and is continuing which is, or after notice or lapse of time or both would become, an Event of Default under Section 501 of the Indenture. SECTION 1.3. Resigning Trustee hereby assigns, transfers, delivers and confirms to Successor Trustee all right, title and interest of Resigning Trustee in and to the trust under the Indenture; all the rights, powers, trusts and duties of the Trustee under the Indenture; and all property and money held by Resigning Trustee under the Indenture, subject nevertheless to Resigning Trustee's lien, if any, provided for in Section 607 of the Indenture. Resigning Trustee shall execute and deliver such further instruments and shall do such other things as Successor Trustee may reasonably require so as to more fully and certainly vest and confirm in Successor Trustee all the rights, trusts, powers and duties hereby assigned, transferred, delivered and confirmed to Successor Trustee.
4 ARTICLE TWO REPRESENTATIONS OF AND ACCEPTANCE BY SUCCESSOR TRUSTEE SECTION 2.1. Successor Trustee hereby represents and warrants to Resigning Trustee and to Chase and Successor that Successor Trustee is not disqualified under the provisions of Section 608 of the Indenture and is eligible under the provisions of Section 609 of the Indenture to act as Trustee under the Indenture. SECTION 2.2. Successor Trustee hereby accepts its appointment as successor Trustee under the Indenture and accepts the rights, powers, trusts, duties and obligations of Resigning Trustee as Trustee under the Indenture, upon the terms and conditions set forth therein, with like effect as if originally named as Trustee under the Indenture. ARTICLE THREE REPRESENTATIONS AND COVENANTS OF CHASE AND SUCCESSOR SECTION 3.1. Each of Chase and Successor represents and warrants to Resigning Trustee and Successor Trustee as follows: (a) It is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. (b) The execution, delivery and performance by it of this First Supplemental Indenture have been authorized and approved by all necessary corporate action on the part of it. (c) Upon the filing of the Certificate of Merger with the Secretary of State of the State of Delaware or at such other time thereafter as is provided in the Certificate of Merger (the "Effective Time"), the Merger will be effective in accordance with the terms of the Merger Agreement and Delaware law. (c) Immediately after the Merger, no Event of Default or Default, and no event which, after notice or lapse of time, or both, would become an Event of Default or Default, shall have happened and be continuing. SECTION 3.2 Each of Chase and Successor hereby appoints Successor Trustee as Trustee under the Indenture to succeed to, and hereby vests Successor Trustee with, all the rights, powers, trusts, duties and obligations of Resigning
5 Trustee under the Indenture with like effect as if originally named as Trustee in the Indenture. SECTION 3.3. Promptly after the effectiveness of this First Supplemental Indenture, Successor shall, in accordance with the provisions of Section 609(f) of the Indenture, cause a notice, substantially in the form of Exhibit A annexed hereto, (i) to be sent to each Holder of Registered Securities, (ii) to be published in an Authorized Newspaper in each Place of Payment located outside of the United States with respect to Bearer Securities and (iii) if any Holder of Bearer Securities has filed its name and address with the Trustee within the two years preceding the issuance of such notice, to be sent to such Holder as its name and address appears in such filing. SECTION 3.4. Notwithstanding the resignation, appointment and acceptance effected by this First Supplemental Indenture, Successor shall remain obligated under Section 607 of the Indenture to compensate, reimburse and indemnify Resigning Trustee in connection with its trusteeship under the Indenture. ARTICLE FOUR ASSUMPTION BY SUCCESSOR SECTION 4.1. Successor hereby expressly assumes the due and punctual payment of the principal of, premium, if any, and interest on and any Additional Amounts with respect to all the Securities and the performance of every covenant of the Indenture to be performed or observed by Chase. SECTION 4.2. The Securities may bear a notation concerning the assumption of the Indenture and the Securities by Successor. SECTION 4.3. Successor shall succeed to and be substituted for Chase under the Indenture, with the same effect as if Successor had been named as the "Company" therein. ARTICLE FIVE AMENDMENTS SECTION 5.1. (a) The reference in the first paragraph of the Indenture to "THE CHASE MANHATTAN CORPORATION, a Delaware corporation (hereinafter called the "Company") having its principal office at 1 Chase Manhattan Plaza, New York, New York 10081" is hereby amended to read "THE CHASE MANHATTAN CORPORATION, formerly known as Chemical Banking Corporation, a Delaware corporation (hereinafter called the "Company") having its principal office at 270 Park Avenue, New York, New York
6 10017" and each other reference therein to "The Chase Manhattan Corporation" shall be amended to read "The Chase Manhattan Corporation, formerly known as Chemical Banking Corporation"; (b) the reference in the first paragraph of the Indenture to "CHEMICAL BANK, a corporation organized and existing under the laws of the State of New York" is hereby amended to read "FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, a national association organized and existing under the federal laws of the United States" and each other reference therein to "Chemical Bank" shall be amended to read "First Trust of New York, National Association"; (c) the reference to "450 West 33rd Street, New York, New York 10001" in the definition of "Corporate Trust Office" in Section 101 of the Indenture is hereby amended to read "100 Wall Street, Suite 1600, New York, New York 10005"; and (d) the reference to "Corporate Trustee Administration Department" in clause (1) of Section 105 of the Indenture is hereby amended to read "Corporate Trust Administration". SECTION 5.2. Except as amended hereby, the Indenture and the Securities are in all respects ratified and confirmed and all the terms thereof shall remain in full force and effect and the Indenture, as so amended, shall be read, taken and construed as one and the same instrument. ARTICLE SIX MISCELLANEOUS SECTION 6.1. Resigning Trustee and Successor Trustee each accepts the modification of the Indenture effected by this First Supplemental Indenture, but only upon the terms and conditions set forth in the Indenture. Without limiting the generality of the foregoing, neither Resigning Trustee nor Successor Trustee assumes any responsibility for the correctness of the recitals herein contained, which shall be taken as the statements of Chase and Successor. Neither Resigning Trustee nor Successor Trustee makes any representation and shall have no responsibility as to the validity and sufficiency of this First Supplemental Indenture, other than Articles One and Two hereof, as applicable. SECTION 6.2. If and to the extent that any provision of this First Supplemental Indenture limits, qualifies or conflicts with another provision included in this First Supplemental Indenture, or in the Indenture, which is required to be included in this First Supplemental Indenture or the Indenture by any of the provisions of Sections 310 to 317, inclusive, of the Trust Indenture Act of 1939, as amended, such required provision shall control.
7 SECTION 6.3. Nothing in this First Supplemental Indenture is intended to or shall provide any rights to any parties other than those expressly contemplated by this First Supplemental Indenture. SECTION 6.4. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Indenture. SECTION 6.5. This First Supplemental Indenture shall be construed in accordance with and governed by the laws of the State of New York. SECTION 6.6. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 6.7. This First Supplemental Indenture shall become effective as of March 31, 1996.
8 IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested all as of the day and year first above written. THE CHASE MANHATTAN CORPORATION By /s/ Arjun K. Mathrani --------------------------------- Name: Arjun K. Mathrani Title: Executive Vice President and Chief Financial Officer (Corporate Seal) Attest: /s/ Ronald C. Mayer - ------------------------------------ Secretary CHEMICAL BANKING CORPORATION By /s/ John B. Wynne --------------------------------- Name: John B. Wynne Title: Secretary (Corporate Seal) Attest: /s/ Jean E. Rugani - ------------------------------------ Assistant Secretary
9 CHEMICAL BANK, as Resigning Trustee By /s/ P.J. Gilkeson --------------------------------- Name: P.J. Gilkeson Title: Vice President (Corporate Seal) Attest: - ------------------------------ FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, as Successor Trustee By /s/ Alfia Monastra --------------------------------- Name: Alfia Monastra Title: Assistant Vice President (Corporate Seal) Attest: /s/ Catherine F. Donohue - ------------------------------
STATE OF NEW YORK ) : ss.: COUNTY OF NEW YORK ) On this 22d day of March, 1996, before me, the undersigned officer, personally appeared Arjun K. Mathrani, who acknowledged himself to be the Executive Vice President and Chief Financial Officer of THE CHASE MANHATTAN CORPORATION, a corporation, and that he as such officer, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the corporation by himself as such officer. IN WITNESS WHEREOF, I hereunto set my hand and official seal. /s/ Kevin F. Carey ------------------------------ Notary Public [SEAL] STATE OF NEW YORK ) : ss.: COUNTY OF NEW YORK ) On this 22nd day of March, 1996, before me, the undersigned officer, personally appeared John B. Wynne, who acknowledged himself to be the Secretary of CHEMICAL BANKING CORPORATION, a corporation, and that he as such officer, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the corporation by himself as such officer. IN WITNESS WHEREOF, I hereunto set my hand and official seal. /s/ Heather L.B. Lehne ------------------------------ Notary Public [SEAL]
Exhibit 4.4(c) THE CHASE MANHATTAN CORPORATION, AND FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, as Trustee SECOND SUPPLEMENTAL INDENTURE Dated as of October 8, 1996 to AMENDED AND RESTATED INDENTURE Dated as of September 1, 1993
SECOND SUPPLEMENTAL INDENTURE, dated as of October 8, 1996, among THE CHASE MANHATTAN CORPORATION, a Delaware corporation (the "Company"), and FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION (as successor to Chemical Bank), a national banking association organized under the laws of the United States (the "Trustee"). WHEREAS, the Company and the Trustee have heretofore executed and delivered a certain amended and restated indenture dated as of September 1, 1993 (the "Indenture") providing for the issuance from time to time of unsecured subordinated debt securities of the Company (the "Securities"); WHEREAS, the Indenture was amended by the First Supplemental Indenture, dated as of March 29, 1996; WHEREAS, on March 31, 1996, The Chase Manhattan Corporation ("Old Chase") merged with and Chemical Banking Corporation, which thereupon changed its name to The Chase Manhattan Corporation, and in connection with such merger assumed all of the outstanding subordinated debt securities of Old Chase, including the Securities; WHEREAS, Section 901(9) of the Indenture provides, among other things, that, without the consent of the holders of any Securities, the Company, when authorized by a Board Resolution, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental to the Indenture to make any provisions with respect to matters or questions arising under the Indenture, provided such action shall not adversely affect the interests of the Holders of the Securities of any series or any Coupons appertaining thereto in any material respect; WHEREAS, the Company desires and has requested that the Trustee join in the execution of this Second Supplemental Indenture for the purpose of amending certain provisions of the Indenture as hereinafter set forth; WHEREAS, the execution and delivery of this Second Supplemental Indenture has been authorized by a Board Resolution of the Board of Directors of the Company; and WHEREAS, all conditions precedent and requirements necessary to make this Second Supplemental Indenture a valid and legally binding instrument in accordance with its terms have been complied with, performed and fulfilled and the execution and delivery hereof have been in all respects duly authorized; NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH:
2 For and in consideration of the premises and intending to be legally bound hereby, it is mutually covenanted and agreed, for the equal and proportionate benefit of all holders of the Securities, as follows: ARTICLE ONE REPRESENTATIONS OF THE COMPANY The Company represents and warrants to the Trustee as follows: SECTION 1.1. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. SECTION 1.2. The execution, delivery and performance by the Company of this Second Supplemental Indenture has been authorized and approved by all necessary corporate action on the part of the Company. ARTICLE TWO AMENDMENTS SECTION 3.1. The definition of "Senior Indebtedness" contained in Section 101 of the Indenture is hereby amended in its entirety to read as follows: "'Senior Indebtedness of the Company' shall mean the obligations of the Company to its creditors other than the Holders of the Securities, whether outstanding on the date of execution of this Indenture or thereafter incurred, except obligations ranking on a parity with the Securities (which Securities so ranking on a parity shall include, without limitation, all CBC Subordinated Indebtedness and all MHC Subordinated Indebtedness) or ranking junior to the Securities.' SECTION 3.2. Section 101 of the Indenture is hereby amended to insert, in the appropriate alphabetical order, the following new definitions: "'CBC Subordinated Indebtedness' shall mean all securities issued pursuant to that certain Indenture, dated as of April 1, 1987, as amended and restated as of December 15, 1992, and as further amended, supplemented or otherwise modified from time to time, between the Company and First Trust of New York, National Association (as successor to Morgan Guaranty Trust Company of New York), as trustee, and all other securities that, pursuant to the terms of such indenture, rank on a parity with such securities." "'MHC Subordinated Indebtedness' shall mean all securities issued pursuant to that certain Indenture, dated as of
3 June 1, 1985, as amended, supplemented or otherwise modified from time to time, between the Company (as successor by merger to Manufacturers Hanover Trust Company) and IBJ Schroder Bank & Trust Company, as trustee, and all other securities that, pursuant to the terms of such indenture, rank on a parity with such securities." SECTION 3.3. Except as amended hereby, the Indenture and the Securities are in all respects ratified and confirmed and all the terms thereof shall remain in full force and effect and the Indenture, as so amended, shall be read, taken and construed as one and the same instrument. ARTICLE FOUR APPOINTMENT OF AUTHENTICATING AGENT SECTION 4.1. Pursuant to Section 612 of the Indenture, the Trustee hereby appoints The Chase Manhattan Bank as an Authenticating Agent for all series of the Securities. The Chase Manhattan Bank shall have all powers and authority and be entitled to take all actions as set forth in Section 612 of the Indenture. ARTICLE FIVE MISCELLANEOUS SECTION 5.1. The Trustee accepts the modification of the Indenture effected by this Second Supplemental Indenture, but only upon the terms and conditions set forth in the Indenture. Without limiting the generality of the foregoing, the Trustee assumes no responsibility for the correctness of the recitals herein contained, which shall be taken as the statements of the Company. The Trustee makes no representation and shall have no responsibility as to the validity and sufficiency of this Second Supplemental Indenture. SECTION 5.2. If and to the extent that any provision of this Second Supplemental Indenture limits, qualifies or conflicts with another provision included in this Second Supplemental Indenture, or in the Indenture, which is required to be included in this Second Supplemental Indenture or the Indenture by any of the provisions of Sections 310 to 317, inclusive, of the Trust Indenture Act of 1939, as amended, such required provision shall control. SECTION 5.3. Nothing in this Second Supplemental Indenture is intended to or shall provide any rights to any parties other than those expressly contemplated by this Second Supplemental Indenture. SECTION 5.4. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Indenture.
4 SECTION 5.5. THIS SECOND SUPPLEMENTAL INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. SECTION 5.6. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 5.7. Upon execution and delivery hereof by the parties hereto, this Second Supplemental Indenture shall become effective as of the date first above written.
5 IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested all as of the day and year first above written. THE CHASE MANHATTAN CORPORATION By/s/ DEBORAH L. DUNCAN ----------------------------------- Name: Deborah L. Duncan Title: Executive Vice President and Treasurer (Corporate Seal) Attest: /s/ SUSAN SPAGNOLA - -------------------------------- FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, as Trustee By/s/ ALFIA MONASTRA ----------------------------------- Name: Alfia Monastra Title: Assistant Vice President (Corporate Seal) Attest: /s/ WARD SPOONER - --------------------------------
STATE OF NEW YORK ) : ss.: COUNTY OF NEW YORK ) On this 17th day of October, 1996, before me, the undersigned officer, personally appeared Deborah L. Duncan, who acknowledged herself to be the Executive Vice President and Treasurer of THE CHASE MANHATTAN CORPORATION, a corporation, and that she as such officer, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the corporation by herself as such officer. IN WITNESS WHEREOF, I hereunto set my hand and official seal. /s/ ROBERT C. CARROLL ----------------------------- Notary Public [SEAL]
STATE OF NEW YORK ) : ss.: COUNTY OF NEW YORK ) On this 17th day of October, 1996, before me, the undersigned officer, personally appeared Alfia Monastra, who acknowledged herself to be an Assistant Vice President of FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, a national banking association, and that she as such officer, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the association by herself as such officer. IN WITNESS WHEREOF, I hereunto set my hand and official seal. /s/ Joanne E. Ilse ------------------------------ Notary Public [SEAL]
Exhibit 4.4(d) THE CHASE MANHATTAN CORPORATION AND U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee THIRD SUPPLEMENTAL INDENTURE Dated as of December 29, 2000 to AMENDED AND RESTATED INDENTURE dated as of September 1, 1993, as amended SUBORDINATED DEBT SECURITIES
THIRD SUPPLEMENTAL INDENTURE, dated as of December 29, 2000, between, THE CHASE MANHATTAN CORPORATION, a Delaware corporation (the "Company"), and U.S. BANK TRUST NATIONAL ASSOCIATION (formerly known as First Trust of New York, National Association), a national banking association, as successor to Chemical Bank, a New York banking corporation, as trustee (the "Trustee", which term shall include any successor trustee appointed pursuant to Article Six of the Indenture hereafter referred to). WHEREAS, the Company and the Trustee have heretofore executed and delivered a certain Amended and Restated Indenture, dated as of September 1, 1993, as amended by a First Supplemental Indenture, dated as of March 29, 1996, and a Second Supplemental Indenture, dated as of October 8, 1996 (as so amended, the "Indenture"; capitalized terms not otherwise defined herein shall have the meanings set forth in the Indenture), providing for the issuance from time to time of Securities; WHEREAS, the Company and J.P. Morgan & Co. Incorporated ("J.P. Morgan") have entered into an Agreement and Plan of Merger, dated as of September 12, 2000 (the "Merger Agreement"), which contemplates the execution and filing of a Certificate of Merger on the date hereof providing for the merger (effective December 31, 2000) of J.P. Morgan with and into the Company, with the Company continuing its corporate existence under Delaware law under the name "J.P. Morgan Chase & Co."; WHEREAS, Section 901(9) of the Indenture provides, among other things, that, without the consent of the holders of any Securities, the Company, when authorized by a Board Resolution, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental to the Indenture to make any provisions with respect to matters or questions arising under the Indenture, provided such action shall not adversely affect the interests of the holders of the Securities of any series or any Coupons appertaining thereto in any material respect; WHEREAS, the Company desires and has requested that the Trustee join in the execution of this Third Supplemental Indenture for the purpose of amending certain provisions of the Indenture as hereinafter set forth; WHEREAS, the execution and delivery of this Third Supplemental Indenture has been authorized by a Board Resolution of the Company; and WHEREAS, all conditions precedent and requirements necessary to make this Third Supplemental Indenture a valid and legally binding instrument in accordance with its terms have been complied with, performed and fulfilled and the execution and delivery hereof have been in all respects duly authorized; NOW, THEREFORE, THIS THIRD SUPPLEMENTAL INDENTURE WITNESSETH: For and in consideration of the premises and intending to be legally bound hereby, it is mutually covenanted and agreed, for the equal and proportionate benefit of all holders of Securities, as follows: 1
ARTICLE ONE REPRESENTATIONS OF THE COMPANY The Company represents and warrants to the Trustee as follows: SECTION 1.1. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. SECTION 1.2. The execution, delivery and performance by the Company of this Third Supplemental Indenture have been authorized and approved by all necessary corporate action on the part of the Company. ARTICLE TWO AMENDMENTS SECTION 2.1. The definition of "Senior Indebtedness" contained in Section 101 of the Indenture is hereby amended in its entirety to read as follows: "'Senior Indebtedness of the Company' shall mean the obligations of the Company to its creditors other than the Holders of the Securities, whether outstanding on the date of the execution of this Indenture or thereafter incurred, except obligations ranking on a parity with the Securities (which Securities so ranking on a parity shall include, without limitation, all CBC Subordinated Indebtedness, all MHC Subordinated Indebtedness and all JPM Subordinated Indebtedness) or ranking junior to the Securities." SECTION 2.2. Section 1.01 of the Indenture is hereby amended to insert, in the appropriate alphabetical order, the following new definition: "'JPM Subordinated Indebtedness' shall mean (i) all securities issued pursuant to (A) the Indenture, dated as of March 1, 1993, as amended by the First Supplemental Indenture, dated as of December 29, 2000, between the Corporation (as successor-by-merger to J.P. Morgan & Co. Incorporated, a Delaware corporation) and U.S. Bank Trust National Association (formerly known as First Trust of New York, National Association), a national banking association, as successor to Citibank, N.A., a national banking association, as the same may be further amended, supplemented or otherwise modified from time to time or (B) the Indenture, dated as of December 1, 1986, as amended by the First Supplemental Indenture, dated as of May 12, 1992, and the Second Supplemental Indenture, dated as of December 29, 2000, between the Corporation (as successor-by-merger to J.P. Morgan & Co. Incorporated, a Delaware corporation) and U.S. Bank Trust National Association (formerly known as First Trust of New York, National Association), a national banking association, as successor to Citibank, N.A., a national banking association, as the same may be further amended, supplemented or otherwise modified from time to time; and (ii) all other securities that, pursuant to the terms of the 2
aforementioned indentures and securities, rank on a parity with such securities referred to in clause (i)." SECTION 2.3. Except as amended hereby, the Indenture and the Securities and Coupons are in all respects ratified and confirmed and all the terms thereof shall remain in full force and effect and the Indenture, as so amended, shall be read, taken and construed as one and the same instrument. ARTICLE THREE MISCELLANEOUS SECTION 3.1. The Trustee accepts the modification of the Indenture effected by this Third Supplemental Indenture, but only upon the terms and conditions set forth in the Indenture. Without limiting the generality of the foregoing, the Trustee assumes no responsibility for the correctness of the recitals herein contained, which shall be taken as the statements of the Company. The Trustee makes no representation and shall have no responsibility as to the validity and sufficiency of this Third Supplemental Indenture. SECTION 3.2. If and to the extent that any provision of this Third Supplemental Indenture limits, qualifies or conflicts with another provision included in this Third Supplemental Indenture or in the Indenture that is required to be included in this Third Supplemental Indenture or in the Indenture by any of the provisions of Sections 310 to 317, inclusive, of the Trust Indenture Act, such required provision shall control. SECTION 3.3. Nothing in this Third Supplemental Indenture is intended to or shall provide any rights to any parties other than those expressly contemplated by this Third Supplemental Indenture. SECTION 3.4. This Third Supplemental Indenture shall be governed by and construed in accordance with the laws of the State of New York. SECTION 3.5. This Third Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 3.6. This Third Supplemental Indenture shall become effective as of the Effective Time (as defined in the Merger Agreement). 3
IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested all as of the day and year first above written. THE CHASE MANHATTAN CORPORATION By___________________________________ Name: Title: (Corporate Seal) Attest: _____________________________ Assistant Secretary U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By__________________________________ Name: Title: (Corporate Seal) Attest: _____________________________
STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) On this ____ day of December, 2000, before me, the undersigned officer, personally appeared Marc J. Shapiro, who acknowledged himself to be the Vice Chairman, Finance, Risk Management and Administration of THE CHASE MANHATTAN CORPORATION, a Delaware corporation, and that he as such officer, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the corporation by himself as such officer. IN WITNESS WHEREOF, I hereunto set my hand and official seal. _____________________________________ Notary Public [SEAL]
STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) On this ___ day of December, 2000, before me, the undersigned officer, personally appeared _______________, who acknowledged himself to be _______________ of U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association, and that he as such officer, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the association by himself as such officer. IN WITNESS WHEREOF, I hereunto set my hand and official seal. _____________________________________ Notary Public [SEAL]
Exhibit 4.5(a) ================================================================================ J.P. MORGAN & CO. INCORPORATED AND MANUFACTURERS HANOVER TRUST COMPANY, TRUSTEE INDENTURE DATED AS OF AUGUST 15, 1982 ------------- ================================================================================
CROSS REFERENCE SHEET* -------------------- Between provisions of Trust Indenture Act of 1939 and Indenture to be dated as of August 15, 1982 between J. P. MORGAN & CO. INCORPORATED and MANUFACTURERS HANOVER TRUST COMPANY, Trustee: Section of the Act Section of Indenture - ------------------ -------------------- 310(a)(1) and (2).................. 6.9 310(a)(3) and (4).................. Inapplicable 310(b)............................. 6.8 and 6.10(a), (b) and (d) 310(c)............................. Inapplicable 311(a)............................. 6.13(a) and (c)(1) and (2) 311(b)............................. 6.13(b) 311(c)............................. Inapplicable 312(a)............................. 4.1 and 4.2(a) 312(b)............................. 4.2(b) and (b)(i) and (ii) 312(c)............................. 4.2(c) 313(a)............................. 4.4(a)(i), (ii), (iii), (iv), (v) and (vi) 313(b)(1).......................... Inapplicable 313(b)(2).......................... 4.4 313(c)............................. 4.4 313(d)............................. 4.4 314(a)............................. 4.3 314(b)............................. Inapplicable 314(c)(1) and (2).................. 11.5 314(c)(3).......................... Inapplicable 314(d)............................. Inapplicable 314(e)............................. 11.5 314(f)............................. Inapplicable 315(a), (c) and (d)................ 6.1 315(b)............................. 5.11 315(e)............................. 5.12 316(a)(1).......................... 5.9 316(a)(2).......................... Not required 316(a) (last sentence)............. 7.4 316(b)............................. 5.7 317(a)............................. 5.2 317(b)............................. 3.4(a) and (b) 318(a)............................. 11.7 - ---------- * This Cross Reference sheet is not part of the Indenture.
TABLE OF CONTENTS PAGE PARTIES........................................................................1 RECITALS Authorization of Indenture...............................................1 Compliance with Legal Requirements.......................................1 Purpose of and Consideration for Indenture...............................1 ARTICLE ONE DEFINITIONS SECTION 1.1. Certain Terms Defined...........................................1 ARTICLE TWO SECURITIES SECTION 2.1. Forms Generally.................................................4 SECTION 2.2. Form of Trustee's Certificate of Authentication.................4 SECTION 2.3. Amount Unlimited; Issuable in Series............................5 SECTION 2.4. Authentication and Delivery of Securities.......................6 SECTION 2.5. Execution of Securities.........................................7 SECTION 2.6. Certificate of Authentication...................................8 SECTION 2.7. Denomination and Date of Securities; Payments of Interest.......8 SECTION 2.8. Registration, Transfer and Exchange.............................8 SECTION 2.9. Mutilated, Defaced, Destroyed, Lost and Stolen Securities.......9 SECTION 2.10. Cancellation of Securities; Destruction Thereof................10 SECTION 2.11. Temporary Securities...........................................10 SECTION 2.12. Computation of Interest........................................11 ARTICLE THREE COVENANTS OF THE ISSUER SECTION 3.1. Payment of Principal and Interest..............................11 SECTION 3.2. Offices for Payments, etc......................................11 SECTION 3.3. Appointment to Fill a Vacancy in Office of Trustee.............12 SECTION 3.4. Paying Agents..................................................12 SECTION 3.5. Written Statement to Trustee...................................12 -i-
PAGE ---- ARTICLE FOUR SECURITYHOLDERS' LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE SECTION 4.1. Issuer to Furnish Trustee Information as to Names and Addresses of Securityholders..................................13 SECTION 4.2. Preservation and Disclosure of Securityholders' Lists..........13 SECTION 4.3. Reports by the Issuer..........................................14 SECTION 4.4. Reports by the Trustee.........................................15 ARTICLE FIVE REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT SECTION 5.1. Event of Default Defined; Acceleration of Maturity; Waiver of Default.............................................16 SECTION 5.2. Collection of Indebtedness by Trustee; Trustee May Prove Debt....................................................18 SECTION 5.3. Application of Proceeds........................................20 SECTION 5.4. Suits for Enforcement..........................................21 SECTION 5.5. Restoration of Rights on Abandonment of Proceedings............21 SECTION 5.6. Limitations on Suits by Securityholders........................22 SECTION 5.7. Unconditional Right of Securityholders to Institute Certain Suits.................................................22 SECTION 5.8. Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default.............................................22 SECTION 5.9. Control by Securityholders.....................................23 SECTION 5.10. Waiver of Past Defaults........................................23 SECTION 5.11. Trustee to Give Notice of Default, But May Withhold in Certain Circumstances......................................23 SECTION 5.12. Right of Court to Require Filing of Undertaking to Pay Costs.....................................................24 ARTICLE SIX CONCERNING THE TRUSTEE SECTION 6.1. Duties and Responsibilities of the Trustee; During Default; Prior to Default.....................................24 SECTION 6.2. Certain Rights of the Trustee..................................25 SECTION 6.3. Trustee Not Responsible for Recitals, Disposition of Securities or Application of Proceeds Thereof..............26 SECTION 6.4. Trustee and Agents May Hold Securities; Collections, etc.......27 SECTION 6.5. Moneys Held by Trustee.........................................27 SECTION 6.6. Compensation and Indemnification of Trustee and Its Prior Claim...................................................27 SECTION 6.7. Right of Trustee to Rely on Officers' Certificate, etc.........27 SECTION 6.8. Qualification of Trustee; Conflicting Interests................28 SECTION 6.9. Persons Eligible for Appointment as Trustee....................32 SECTION 6.10. Resignation and Removal; Appointment of Successor Trustee.......................................................33 SECTION 6.11. Acceptance of Appointment by Successor Trustee.................34 SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business of Trustee...........................................35 ii
PAGE ---- SECTION 6.13. Preferential Collection of Claims Against the Issuer...........35 ARTICLE SEVEN CONCERNING THE SECURITYHOLDERS SECTION 7.1. Evidence of Action Taken by Securityholders....................39 SECTION 7.2. Proof of Execution of Instruments and of Holding of Securities.................................................39 SECTION 7.3. Holders to be Treated as Owners................................39 SECTION 7.4. Securities Owned by Issuer Deemed Not Outstanding..............39 SECTION 7.5. Right of Revocation of Action Taken............................40 ARTICLE EIGHT SUPPLEMENTAL INDENTURES SECTION 8.1. Supplemental Indentures Without Consent of Securityholders...............................................40 SECTION 8.2. Supplemental Indentures With Consent of Securityholders...............................................41 SECTION 8.3. Effect of Supplemental Indenture...............................42 SECTION 8.4. Documents to Be Given to Trustee...............................43 SECTION 8.5. Notation on Securities in Respect of Supplemental Indentures....................................................43 ARTICLE NINE CONSOLIDATION, MERGER, SALE OR CONVEYANCE SECTION 9.1. Issuer May Consolidate, etc., on Certain Terms.................43 SECTION 9.2. Successor Corporation to be Substituted........................43 SECTION 9.3. Opinion of Counsel to Trustee..................................44 ARTICLE TEN SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS. SECTION 10.1. Satisfaction and Discharge of Indenture........................44 SECTION 10.2. Application by Trustee of Funds Deposited for Payment of Securities.........................................45 SECTION 10.3. Repayment of Moneys Held by Paying Agent.......................45 SECTION 10.4. Return of Moneys Held by Trustee and Paying Agent Unclaimed for Three Years.....................................45 ARTICLE ELEVEN MISCELLANEOUS PROVISIONS SECTION 11.1. Incorporators, Stockholders, Officers and Directors of Issuer Exempt from Individual Liability...........46 SECTION 11.2. Provisions of Indenture for the Sole Benefit of Parties and Securityholders...................................46 iii
PAGE ---- SECTION 11.3. Successors and Assigns of Issuer Bound by Indenture............46 SECTION 11.4. Notices and Demands on Issuer, Trustee and Securityholders...............................................46 SECTION 11.5. Officers' Certificates and Opinions of Counsel; Statements to Be Contained Therein............................47 SECTION 11.6. Payments Due on Saturdays, Sundays and Holidays................47 SECTION 11.7. Conflict of Any Provision of Indenture with Trust Indenture Act of 1939.........................................47 SECTION 11.8. New York Law to Govern.........................................48 SECTION 11.9. Counterparts...................................................48 SECTION 11.10. Effect of Headings.............................................48 SECTION 11.11. Securities in Foreign Currencies...............................48 ARTICLE TWELVE REDEMPTION OF SECURITIES AND SINKING FUNDS SECTION 12.1. Applicability of Article.......................................48 SECTION 12.2. Notice of Redemption; Partial Redemptions......................48 SECTION 12.3. Payment of Securities Called for Redemption....................49 SECTION 12.4. Exclusion of Certain Securities from Eligibility for Selection for Redemption......................................50 SECTION 12.5. Mandatory and Optional Sinking Funds...........................50 TESTIMONIUM...................................................................52 SIGNATURES....................................................................53 ACKNOWLEDGEMENTS..............................................................54 iv
THIS INDENTURE, dated as of August 15, 1982 between J.P. MORGAN & CO. INCORPORATED, a Delaware corporation (the "Issuer"), and MANUFACTURERS HANOVER TRUST COMPANY, a New York corporation (the "Trustee"), W I T N E S S E T H : WHEREAS, the Issuer has duly authorized the issue from time to time of its unsecured debentures, notes or other evidences of indebtedness to be issued in one or more series (the "Securities") up to such principal amount or amounts as may from time to time be authorized in accordance with the terms of this Indenture and to provide, among other things, for the authentication, delivery and administration thereof, the Issuer has duly authorized the execution and delivery of this Indenture; and WHEREAS, all things necessary to make this Indenture a valid indenture and agreement according to its terms, have been done; NOW, THEREFORE: In consideration of the premises and the purchases of the Securities by the holders thereof, the Issuer and the Trustee mutually covenant and agree for the equal and proportionate benefit of the respective holders from time to time of the Securities as follows: ARTICLE ONE DEFINITIONS SECTION 1.1. Certain Terms Defined. The following terms (except as otherwise expressly provided or unless the context otherwise clearly requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section. All other terms used in this Indenture that are defined in the Trust Indenture Act of 1939 or the definitions of which in the Securities Act of 1933 are referred to in the Trust Indenture Act of 1939 (except as herein otherwise expressly provided or unless the context otherwise clearly requires), shall have the meanings assigned to such terms in said Trust Indenture Act and in said Securities Act as in force at the date of this Indenture. All accounting terms used herein and not expressly defined shall have the meanings assigned to such terms in accordance with generally accepted accounting principles, and the term "generally accepted accounting principles" means such accounting principles as are generally accepted at the time of any computation. The words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. The terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular. "Board of Directors" means either the Board of Directors of the Issuer or any committee of such Board duly authorized to act hereunder.
"Business Day" means, unless otherwise specified pursuant to Section 2.3, with respect to any Security, a day that in the city (or in any of the cities, if more than one) in which amounts are payable, as specified in the form of such Security, is not a day on which banking institutions are authorized or required by law or regulation to close. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, or if at any time after the execution and delivery of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. "Corporate Trust Office" means the office of the Trustee at which the corporate trust business of the Trustee shall, at any particular time, be principally administered, which office is, at the date as of which this Indenture is dated, located at 600 Fifth Avenue, New York, New York 10020. "Event of Default" means any event or condition specified as such in Section 5.1. "Holder", "holder of Securities", "Securityholder" or other similar terms mean the registered holder of any Security. "Indenture" means this instrument as originally executed and delivered or, if amended or supplemented as herein provided, as so amended or supplemented, or both, and shall include the forms and terms of particular series of Securities established as contemplated hereunder. "interest" means where used with respect to non-interest bearing securities, interest payable after maturity. "Issuer" means (except as otherwise provided in Article Six) J.P. Morgan & Co. Incorporated, a Delaware corporation, and, subject to Article Nine, its successors and assigns. "Officers' Certificate" means a certificate signed by the chairman of the Board of Directors, the president, the chairman of the executive committee, any vice chairman of the Board of Directors, or any vice president and by the treasurer or any assistant treasurer, the secretary or any assistant secretary of the Issuer and delivered to the Trustee. Each such certificate shall include the statements provided for in Section 11.5. "Opinion of Counsel" means an opinion in writing signed by legal counsel who may be an employee of or counsel to the Issuer and who shall be satisfactory to the Trustee. Each such opinion shall include the statements provided for in Section 11.5, if and to the extent required hereby. "Original issue date" of any Security (or portion thereof) means the earlier of (a) the date of such Security or (b) the date of any Security (or portion thereof) for which such Security was issued (directly or indirectly) on registration of transfer, exchange or substitution. 2
"Original Issue Discount Security" means any Security that provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof pursuant to Section 5.1. "Outstanding" (except as otherwise provided in Section 6.8), when used with reference to Securities, shall, subject to the provisions of Section 7.4, mean, as of any particular time, all Securities authenticated and delivered by the Trustee under this Indenture, except: (a) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (b) Securities, or portions thereof, for the payment or redemption of which moneys in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than the Issuer) or shall have been set aside, segregated and held in trust by the Issuer for the holders of such securities (if the Issuer shall act as its own paying agent), provided that if such Securities, or portions thereof, are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as herein provided, or provision satisfactory to the Trustee shall have been made for giving such notice; and (c) Securities in substitution for which other Securities shall have been authenticated and delivered, or which shall have been paid, pursuant to the terms of Section 2.9 (except with respect to any such Security as to which proof satisfactory to the Trustee is presented that such Security is held by a person in whose hands such Security is a legal, valid and binding obligation of the Issuer). In determining whether the Holders of the requisite principal amount of Outstanding Securities of any or all series have given any request, demand, authorization, direction, notice, consent or waiver hereunder, the principal amount of an Original Issue Discount Security that shall be deemed to be Outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the maturity thereof pursuant to Section 5.1. "Person" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "principal" whenever used with reference to the Securities or any Security or any portion thereof shall be deemed to include "and premium, if any". "Responsible Officer" when used with respect to the Trustee means the chairman of the Board of Directors, any vice chairman of the Board of Directors, the chairman of the trust committee, the chairman of the executive committee, any vice chairman of the executive committee, the president, any vice president, the cashier, the secretary, the treasurer, any trust officer, any assistant trust officer, any assistant vice president, any assistant cashier, any assistant secretary, any assistant treasurer, or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall 3
be such officers, respectively, or to whom any corporate trust matter is referred because of his knowledge of and familiarity with the particular subject. "Security" or "Securities" (except as otherwise provided in Section 6.8) has the meaning stated in the first recital of this Indenture, or, as the case may be, Securities that have been authenticated and delivered under this Indenture. "Trustee" means the Person identified as "Trustee" in the first paragraph hereof and, subject to the provisions of Article Six, shall also include any successor trustee. "Trust Indenture Act of 1939" (except as otherwise provided in Sections 8.1 and 8.2) means the Trust Indenture Act of 1939 as in force at the date as of which this Indenture was originally executed. "vice president" when used with respect to the Issuer or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title of "vice president". "Yield to Maturity" means the yield to maturity on a series of Securities, calculated at the time of issuance of such series, or, if applicable, at the most recent redetermination of interest on such series, and calculated in accordance with accepted financial practice. ARTICLE TWO SECURITIES SECTION 2.1. Forms Generally. The Securities of each series shall be substantially in such form (not inconsistent with this Indenture) as shall be established by or pursuant to a resolution of the Board of Directors or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture and may have imprinted or otherwise reproduced thereon such legend or legends, not inconsistent with the provisions of this Indenture, as may be required to comply with any law or with any rules or regulations pursuant thereto, or with any rules of any securities exchange or to conform to general usage, all as may be determined by the officers executing such Securities, as evidenced by their execution of the Securities. The definitive Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities. SECTION 2.2. Form of Trustee's Certificate of Authentication. The Trustee's certificate of authentication on all Securities shall be in substantially the following form: 4
This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture. MANUFACTURERS HANOVER TRUST COMPANY, as Trustee By__________________________________ Authorized Officer SECTION 2.3. Amount Unlimited; Issuable in Series. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more series. There shall be established in or pursuant to a resolution of the Board of Directors and set forth in an Officers' Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series, (1) the title of the Securities of the series (which shall distinguish the Securities of the series from all other Securities); (2) any limit upon the aggregate principal amount of the Securities of the series that may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of, transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 2.8, 2.9, 2.11 or 12.3); (3) the date or dates on which the principal of the Securities of the series is payable or the method by which such date or dates shall be determined; (4) the rate or rates at which the Securities of the series shall bear interest, if any, or the method by which such rate or rates shall be determined, the date or dates from which such interest shall accrue, the interest payment dates on which such interest shall be payable and the record dates for the determination of Holders to whom interest is payable; (5) the place or places where the principal of and any interest on Securities of the series shall be payable; (6) the price or prices at which, the period or periods within which and the terms and conditions upon which Securities of the series may be redeemed, in whole or in part, at the option of the Issuer, pursuant to any sinking fund or otherwise; (7) the obligation, if any, of the Issuer to redeem, purchase or repay Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the price or prices at which and the period or periods within which and the terms and conditions upon which Securities of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation; 5
(8) if other than denominations of U.S. $1,000 and any multiple thereof, the denominations in which Securities of the series shall be issuable; (9) if other than the principal amount thereof, the portion of the principal amount of Securities of the series which shall be payable upon declaration of acceleration of the maturity thereof pursuant to Section 5.1 or provable in bankruptcy pursuant to Section 5.2; (10) any authenticating or paying agents, transfer agents or registrars or any other agents with respect to the Securities of such series; (11) if other than such coin or currency of the United States of America as at the time of payment is legal tender for payment of public or private debts, the coin or currency in which payment of the principal of and interest, if any, on the Securities of that series shall be payable; (12) if the principal of or interest, if any, on the Securities of that series are to be payable, at the election of the Issuer or a holder thereof, in a coin or currency other than that in which the Securities are stated to be payable, the period or periods within which, and the terms and conditions upon which, such election may be made; (13) if the amount of payments of principal of or interest, if any, on the Securities of the series may be determined with reference to an index, formula or other method based on a coin or currency other than that in which the Securities are stated to be payable, the manner in which such amounts shall be determined; and (14) any other terms of the series, including provisions for payment by wire transfers if any, or modifications of the definition of Business Day (which terms shall not be inconsistent with the provisions of this Indenture). All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to such resolution of the Board of Directors or in any such indenture supplemental hereto. SECTION 2.4. Authentication and Delivery of Securities. At any time and from time to time after the execution and delivery of this Indenture, the Issuer may deliver Securities of any series executed by the Issuer to the Trustee for authentication. Except as otherwise provided in this Section, the Trustee shall thereupon authenticate and deliver such Securities to or upon the written order of the Issuer, signed by both (a) the chairman of its Board of Directors, its president, or the chairman of its executive committee, any vice chairman of its Board of Directors or any vice president and (b) by its treasurer or any assistant treasurer, without any further action by the Issuer. In authenticating such Securities and accepting the additional responsibilities under this Indenture in relation to such Securities the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be fully protected in relying upon: (1) a certified copy of any resolution or resolutions of the Board of Directors authorizing the action taken pursuant to the resolution or resolutions delivered under clause (2) below; 6
(2) a copy of any resolution or resolutions of the Board of Directors relating to such series, in each case certified by the Secretary or an Assistant Secretary of the Issuer; (3) an executed supplemental indenture, if any; (4) an Officers' Certificate setting forth the form and terms of the Securities as required pursuant to Sections 2.1 and 2.3, respectively and prepared in accordance with Section 11.5; (5) an Opinion of Counsel, prepared in accordance with Section 11.5, which shall state (a) that the form or forms and terms of such Securities have been established by or pursuant to a resolution of the Board of Directors or by a supplemental indenture as permitted by Sections 2.1 and 2.3 in conformity with the provisions of this Indenture; (b) that such Securities, when authenticated and delivered by the Trustee and issued by the Issuer in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and binding obligations of the Issuer; (c) that all laws and requirements in respect of the execution and delivery by the Issuer of the Securities have been complied with; and (d) such other matters as the Trustee may reasonably request. The Trustee shall have the right to decline to authenticate and deliver any Securities under this Section if the Trustee, being advised by counsel, determines that such action may not lawfully be taken by the Issuer or if the Trustee in good faith by its board of directors, executive committee, or a trust committee of directors and/or Responsible Officers shall determine that such action would expose the Trustee to personal liability to existing Holders. SECTION 2.5. Execution of Securities. The Securities shall be signed on behalf of the Issuer by the chairman of its Board of Directors, its president, or the chairman of its executive committee, any vice chairman of its Board of Directors or any vice president under its corporate seal attested by its secretary or any assistant secretary. Such signatures may be the manual or facsimile signatures of the present or any future such officers. The seal of the Issuer may be in the form of a facsimile thereof and may be impressed, affixed, imprinted or otherwise reproduced on the Securities. Typographical and other minor errors or defects in any such reproduction of the seal or any such signature shall not affect the validity or enforceability of any Security that has been duly authenticated and delivered by the Trustee. In case any officer of the Issuer who shall have signed any of the Securities shall cease to be such officer before the Security so signed shall be authenticated and delivered by the Trustee or disposed of by the Issuer, such Security nevertheless may be authenticated and delivered or disposed of as though the person who signed such Security had not ceased to be 7
such officer of the Issuer; and any Security may be signed on behalf of the Issuer by such persons as, at the actual date of the execution of such Security, shall be the proper officers of the Issuer, although at the date of the execution and delivery of this Indenture any such person was not such an officer. SECTION 2.6. Certificate of Authentication. Only such Securities as shall bear thereon a certificate of authentication substantially in the form hereinbefore recited, executed by the Trustee by the manual signature of one of its authorized officers, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. Such certificate by the Trustee upon any Security executed by the Issuer shall be conclusive evidence that the Security so authenticated has been duly authenticated and delivered hereunder and that the Holder is entitled to the benefits of this Indenture. SECTION 2.7. Denomination and Date of Securities; Payments of Interest. The Securities shall be issuable as registered securities without coupons and in denominations as shall be specified as contemplated by Section 2.3. In the absence of any such specification with respect to the Securities of any series, the Securities of such series shall be issuable in denominations of U.S. $1,000 and any multiple thereof. The Securities shall be numbered, lettered, or otherwise distinguished in such manner or in accordance with such plan as the officers of the Issuer executing the same may determine as evidenced by the execution and authentication thereof. Each Security shall be dated the date of its authentication, shall bear interest, if any, from the date and shall be payable on the dates, in each case, which shall be specified as contemplated by Section 2.3. The person in whose name any Security of any series is registered at the close of business on any record date applicable to a particular series with respect to any interest payment date for such series shall be entitled to receive the interest, if any, payable on such interest payment date notwithstanding any transfer or exchange of such Security subsequent to the record date and prior to such interest payment date, except if and to the extent the Issuer shall default in the payment of the interest due on such interest payment date for such series, in which case such defaulted interest shall be paid to the persons in whose names outstanding Securities for such series are registered at the close of business on a subsequent record date (which shall be not less than ten business days prior to the date of payment of such defaulted interest) established by notice given by mail by or on behalf of the Issuer to the holders of Securities not less than 15 days preceding such subsequent record date. The term "record date" as used with respect to any interest payment date (except a date for payment of defaulted interest) shall mean the date specified as such in the terms of the Securities of any particular series, or, if no such date is so specified, if such interest payment date is the first day of a calendar month, the fifteenth day of the next preceding calendar month or, if such interest payment date is the fifteenth day of a calendar month, the first day of such calendar month, whether or not such record date is a Business Day. SECTION 2.8. Registration, Transfer and Exchange. The Issuer will keep at an office or agency to be maintained for the purpose as provided in Section 3.2 a register or registers for each series of Securities issued hereunder (collectively, the "Security register") in 8
which, subject to such reasonable regulations as it may prescribe, it will register, and will register the transfer of, Securities as in this Article provided. Such register shall be in written form or the English language or in any other form capable of being converted into such form within a reasonable time. At all reasonable times such register or registers shall be open for inspection by the Trustee. Upon due presentation for registration of transfer of any Security of any series at an office or agency to be maintained for the purpose as provided in Section 3.2, the Issuer shall execute and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Security or Securities of the same series in authorized denominations for a like aggregate principal amount. Any Security or Securities of any series may be exchanged for a Security or Securities of the same series in other authorized denominations, in an equal aggregate principal amount. Securities of any series to be exchanged shall be surrendered at an office or agency to be maintained by the Issuer for the purpose as provided in Section 3.2, and the Issuer shall execute and the Trustee shall authenticate and deliver in exchange therefor the Security or Securities of the same series which the Securityholder making the exchange shall be entitled to receive, bearing numbers not contemporaneously outstanding. All Securities presented for registration of transfer, exchange, redemption or payment shall (if so required by the Issuer or the Trustee) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Issuer and the Trustee duly executed by, the Holder or his attorney duly authorized in writing. The Issuer may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any exchange or registration of transfer of Securities. No service charge shall be made for any such transaction. The Issuer shall not be required to exchange or register a transfer of (a) any Securities of any series for a period of 15 days next preceding the first mailing of notice of redemption of Securities of such series to be redeemed, or (b) any Securities selected, called or being called for redemption except, in the case of any Security where public notice has been given that such Security is to be redeemed in part, the portion thereof not so to be redeemed. All Securities issued upon any transfer or exchange of securities shall be valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange. SECTION 2.9. Mutilated, Defaced, Destroyed, Lost and Stolen Securities. In case any temporary or definitive Security shall become mutilated, defaced or be destroyed, lost or stolen, the Issuer in its discretion may execute, and upon the written request of any officer of the Issuer, the Trustee shall authenticate and deliver, a new Security of the same series, bearing a number not contemporaneously outstanding, in exchange and substitution for the mutilated or defaced Security, or in lieu of and substitution for the Security so destroyed, lost or stolen. In every case the applicant for a substitute Security shall furnish to the Issuer and to the Trustee and any agent of the Issuer or the Trustee such security or indemnity as may be required by them to 9
indemnify and defend and to save each of them harmless and, in every case of destruction, loss or theft, evidence to their satisfaction of the destruction, loss or theft of such Security and of the ownership thereof. Upon the issuance of any substitute Security, the Issuer may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. In case any Security which has matured or is about to mature or has been called for redemption in full shall become mutilated or defaced or be destroyed, lost or stolen, the Issuer may, instead of issuing a substitute Security, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated or defaced Security), if the applicant for such payment shall furnish to the Issuer and to the Trustee and any agent of the Issuer or the Trustee such security or indemnity as any of them may require to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Issuer and the Trustee and any agent of the Issuer or the Trustee evidence to their satisfaction of the destruction, loss or theft of such Security and of the ownership thereof. Every substitute Security of any series issued pursuant to the provisions of this Section by virtue of the fact that any such Security is destroyed, lost or stolen shall constitute an additional contractual obligation of the Issuer, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone and shall be entitled to all the benefits of (but shall be subject to all the limitations of rights set forth in) this Indenture equally and proportionately with any and all other Securities of such series duly authenticated and delivered hereunder. All Securities shall be held and owned upon the express condition that, to the extent permitted by law, the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, defaced or destroyed, lost or stolen Securities and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. SECTION 2.10. Cancellation of Securities; Destruction Thereof. All Securities surrendered for payment, retirement, redemption, registration of transfer or exchange, or for credit against any payment in respect of a sinking or analogous fund, if surrendered to the Issuer or any agent of the Issuer or the Trustee, shall be delivered to the Trustee for cancellation or, if surrendered to the Trustee, shall be cancelled by it; and no Securities shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. The Trustee shall destroy cancelled Securities held by it and deliver a certificate of destruction to the Issuer. If the Issuer shall acquire any of the Securities, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities unless and until the same are delivered to the Trustee for cancellation. SECTION 2.11. Temporary Securities. Pending the preparation of definitive Securities for any series, the Issuer may execute and the Trustee shall authenticate and deliver temporary Securities for such series (printed, lithographed, typewritten or otherwise reproduced, in each case in form satisfactory to the Trustee). Temporary Securities of any series shall be issuable as registered Securities without coupons, of any authorized denomination, and substantially in the form of the definitive Securities of such series but with such omissions, 10
insertions and variations as may be appropriate for temporary Securities, all as may be determined by the Issuer with the concurrence of the Trustee. Temporary Securities may contain such reference to any provisions of this Indenture as may be appropriate. Every temporary Security shall be executed by the Issuer and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Securities. Without unreasonable delay the Issuer shall execute and shall furnish definitive Securities of such series and thereupon temporary Securities of such series may be surrendered in exchange therefor without charge at the office or agency to be maintained by the Issuer for that purpose pursuant to Section 3.2, and the Trustee shall authenticate and deliver in exchange for such temporary Securities of such series a like aggregate principal amount of definitive Securities of the same series of authorized denominations. Until so exchanged, the temporary Securities of any series shall be entitled to the same benefits under this Indenture as definitive Securities of such series. SECTION 2.12. Computation of Interest. Except as otherwise specified as contemplated by Section 2.3 for Securities of any series, interest on the Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months. ARTICLE THREE COVENANTS OF THE ISSUER SECTION 3.1. Payment of Principal and Interest. The Issuer covenants and agrees for the benefit of each series of Securities that it will duly and punctually pay or cause to be paid the principal of, and interest on, each of the Securities of such series at the place or places, at the respective times and in the manner provided in such Securities. Each installment of interest on the Securities of any series may be paid by mailing checks for such interest payable to or upon the written order of the holders of Securities entitled thereto as they shall appear on the registry books of the Issuer. If so provided in the resolutions or supplemental indenture referred to in Section 2.3, payment of principal of or interest on the Securities may be made by wire transfer of funds in the manner set forth in such resolutions or supplemental indenture. SECTION 3.2. Offices for Payments, etc. So long as any of the Securities remain outstanding, the Issuer will maintain in the Borough of Manhattan, The City of New York, the following for each series: an office or agency (a) where the Securities may be presented for payment, (b) where the Securities may be presented for registration of transfer and for exchange as in this Indenture provided and (c) where notices and demands to or upon the Issuer in respect of the Securities or of this Indenture may be served. The Issuer will give to the Trustee written notice of the location of any such office or agency and of any change of location thereof. With respect to each series of Securities whose terms are established pursuant to Section 2.3, the Issuer hereby designates its office or agency specified in accordance with Section 2.3 as the initial office to be maintained by it for each such purpose. In case the Issuer shall fail to maintain any such office or agency or shall fail to give such notice of the location or of any change in the location thereof, presentations and demands may be made and notices may be served at the Corporate Trust Office. 11
SECTION 3.3. Appointment to Fill a Vacancy in Office of Trustee. The Issuer, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 6.10, a Trustee, so that there shall at all times be a Trustee with respect to each series of Securities hereunder. SECTION 3.4. Paying Agents. Whenever the Issuer shall appoint a paying agent other than the Trustee with respect to the Securities of any series, it will cause such paying agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section, (a) that it will hold all sums received by it as such agent for the payment of the principal of or interest on the Securities of such series (whether such sums have been paid to it by the Issuer or by any other obligor on the Securities of such series) in trust for the benefit of the holders of the Securities of such series or of the Trustee, and (b) that it will give the Trustee notice of any failure by the Issuer (or by any other obligor on the Securities of such series) to make any payment of the principal of or interest on the Securities of such series when the same shall be due and payable. The Issuer will, prior to each due date of the principal of or interest on the Securities of such series, deposit with the paying agent a sum or sums in the required currencies sufficient to pay such principal or interest so becoming due, and (unless such paying agent is the Trustee) the Issuer will promptly notify the Trustee of any failure to take such action. If the Issuer shall act as its own paying agent with respect to the Securities of any series, it will, on or before each due date of the principal of or interest on the Securities of such series, set aside, segregate and hold in trust for the benefit of the holders of the Securities of such series a sum sufficient to pay such principal or interest so becoming due. The Issuer will promptly notify the Trustee of any failure to take such action. Anything in this Section to the contrary notwithstanding, the Issuer may at any time, for the purpose of obtaining a satisfaction and discharge with respect to one or more or all series of Securities hereunder, or for any other reason, pay or cause to be paid to the Trustee all sums held in trust for any such series by the Issuer or any paying agent hereunder, as required by this Section, such sums to be held by the Trustee upon the trusts herein contained. Anything in this Section to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section is subject to the provisions of Sections 10.3 and 10.4. SECTION 3.5. Written Statement to Trustee. The Issuer will deliver to the Trustee on or before August 1 in each year (beginning with the August 1 next succeeding execution of the Indenture) a written statement, signed by two of its officers (which need not comply with Section 11.5), stating that in the course of the performance of their duties as officers of the Issuer they would normally have knowledge of any default by the Issuer in the performance of any covenants contained in this Indenture, stating whether or not they have knowledge of any such default and, if so, specifying each such default of which the signers have knowledge and the nature thereof. 12
ARTICLE FOUR SECURITYHOLDERS' LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE SECTION 4.1. Issuer to Furnish Trustee Information as to Names and Addresses of Securityholders. The Issuer covenants and agrees that it will furnish or cause to be furnished to the Trustee a list in such form as the Trustee may reasonably require of the names and addresses of the holders of the Securities of each series: (a) not more than 15 days after each record date for the payment of interest on such Securities, as hereinabove specified, as of such record date and on dates to be determined pursuant to Section 2.3 for non-interest bearing Securities in each year, and (b) at such other times as the Trustee may request in writing, within 30 days after receipt by the Issuer of any such request as of a date not more than 15 days prior to the time such information is furnished, provided that if and so long as the Trustee shall be the Security registrar for such series, such list shall not be required to be furnished. SECTION 4.2. Preservation and Disclosure of Securityholders' Lists. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the holders of each series of Securities contained in the most recent list furnished to it as provided in Section 4.1 or maintained by the Trustee in its capacity as Security registrar for such series, if so acting. The Trustee may destroy any list furnished to it as provided in Section 4.1 upon receipt of a new list so furnished. (b) In case three or more holders of Securities (hereinafter referred to as "applicants") apply in writing to the Trustee and furnish to the Trustee reasonable proof that each such applicant has owned a Security for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other holders of Securities of a particular series (in which case the applicants must all hold Securities of such series) or with Holders of all Securities with respect to their rights under this Indenture or under such Securities and such application is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall, within five Business Days after the receipt of such application, at its election, either (i) afford to such applicants access to the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section, or (ii) inform such applicants as to the approximate number of holders of Securities of such series or all Securities, as the case may be, whose names and addresses appear in the information preserved at the time by the Trustee, in accordance with the provisions of subsection (a) of this Section, and as to the approximate cost of mailing to such Securityholders the form of proxy or other communication, if any, specified in such application. 13
If the Trustee shall elect not to afford to such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Securityholder of such series or all Securities, as the case may be, whose name and address appears in the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section a copy of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender, the Trustee shall mail to such applicants and file with the Commission together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interests of the holders of Securities of such series or all Securities, as the case may be, or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met, and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Securityholders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application. (c) Each and every holder of Securities, by receiving and holding the same, agrees with the Issuer and the Trustee that neither the Issuer nor the Trustee nor any agent of the Issuer or the Trustee shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the holders of Securities in accordance with the provisions of subsection (b) of this Section, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under such subsection (b). SECTION 4.3. Reports by the Issuer. The Issuer covenants: (a) to file with the Trustee, within 15 days after the Issuer is required to file the same with the Commission, copies of the annual reports and of the information, documents, and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Issuer may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, or if the Issuer is not required to file information, documents, or reports pursuant to either of such Sections, then to file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents, and reports which may be required pursuant to Section 13 of the Securities Exchange Act of 1934, in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations; (b) to file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents, and reports with respect to compliance by the Issuer with the conditions and 14
covenants provided for in this Indenture as may be required from time to time by such rules and regulations; and (c) to transmit by mail to the holders of Securities, within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Issuer pursuant to subsections (a) and (b) of this Section as may be required to be transmitted to such Holders by rules and regulations prescribed from time to time by the Commission. SECTION 4.4. Reports by the Trustee. (a) On or before July 15 in each year following the date hereof, so long as any Securities are outstanding hereunder, the Trustee shall transmit by mail as provided below to the Securityholders of each series, as hereinafter in this Section provided, a brief report dated as of the preceding May 15 with respect to: (i) its eligibility under Section 6.9 and its qualification under Section 6.8, or in lieu thereof, if to the best of its knowledge it has continued to be eligible and qualified under such Sections, a written statement to such effect; (ii) the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) which remain unpaid on the date of such report and for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Securities of any series, on any property or funds held or collected by it as Trustee, except that the Trustee shall not be required (but may elect) to report such advances if such advances so remaining unpaid aggregate not more than 1/2 of 1% of the principal amount of the Securities of any series Outstanding on the date of such report; (iii) the amount, interest rate, and maturity date of all other indebtedness owing by the Issuer (or by any other obligor on the Securities) to the Trustee in its individual capacity on the date of such report, with a brief description of any property held as collateral security therefor, except any indebtedness based upon a creditor relationship arising in any manner described in Section 6.13(b)(2), (3), (4) or (6); (iv) the property and funds, if any, physically in the possession of the Trustee (as such) on the date of such report; (v) any additional issue of Securities which the Trustee has not previously reported; and (vi) any action taken by the Trustee in the performance of its duties under this Indenture which it has not previously reported and which in its opinion materially affects the Securities, except action in respect of a default, notice of which has been or is to be withheld by it in accordance with the provisions of Section 5.11. (b) The Trustee shall transmit to the Securityholders of each series, as provided in subsection (c) of this Section, a brief report with respect to the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee as such since the date of the last report transmitted pursuant to the 15
provisions of subsection (a) of this Section (or if no such report has yet been so transmitted, since the date of this Indenture) for the reimbursement of which it claims or may claim a lien or charge prior to that of the Securities of such series on property or funds held or collected by it as Trustee and which it has not previously reported pursuant to this subsection (b), except that the Trustee shall not be required (but may elect) to report such advances if such advances remaining unpaid at any time aggregate 10% or less of the principal amount of Securities of such series outstanding at such time, such report to be transmitted within 90 days after such time. (c) Reports pursuant to this Section shall be transmitted by mail to all registered holders of Securities, as the names and addresses of such holders appear upon the security register of the Issuer. (d) A copy of each such report shall, at the time of such transmission to Securityholders, be furnished to the Issuer and be filed by the Trustee with each stock exchange upon which the Securities of any applicable series are listed and also with the Commission. The Issuer agrees to notify the Trustee with respect to any series when and as the Securities of such series become admitted to trading on any stock exchange. ARTICLE FIVE REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT SECTION 5.1. Event of Default Defined; Acceleration of Maturity; Waiver of Default. "Event of Default" with respect to Securities of any series wherever used herein, means each one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (a) default in the payment of any installment of interest upon any of the Securities of such series as and when the same shall become due and payable, and continuance of such default for a period of 30 days; or (b) default in the payment of all or any part of the principal on any of the Securities of such series as and when the same shall become due and payable either at maturity, upon redemption, by declaration or otherwise; or (c) default in the payment of any sinking fund installment as and when the same shall become due and payable by the terms of a Security of such series; or (d) default in the performance, or breach, of any covenant or warranty of the Issuer in respect of the Securities of such series (other than a covenant or warranty in respect of the Securities of such series a default in whose performance or whose breach is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, 16
to the Issuer by the Trustee or to the Issuer and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of such series, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (e) a court having jurisdiction in the premises shall enter a decree or order for relief in respect of the Issuer in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Issuer or for any substantial part of its property or ordering the winding up or liquidation of its affairs, and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (f) the Issuer shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Issuer or for any substantial part of its property, or make any general assignment for the benefit of creditors. 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 Securities then Outstanding) occurs and is continuing, then, and in each and every such case, unless the principal of all of the Securities of such series shall have already become due and payable, either the Trustee or the holders of not less than 25% in aggregate principal amount of the Securities of all series affected thereby then Outstanding hereunder (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)), by notice in writing to the Issuer (and to the Trustee if given by Securityholders), may declare the entire principal (or, if the Securities of such series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) of all Securities affected thereby and the interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable. If an Event of Default described in clause (d), (e) or (f) above (if the Event of Default under clause (d) is with respect to all the Securities at the time Outstanding) occurs and is continuing, then and in each and every such case, unless the principal of all the Securities shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of all the Securities then Outstanding hereunder (treated as one class), by notice in writing to the Issuer (and to the Trustee if given by Securityholders), may declare the entire principal (or, if any Securities are Original Issue Discount Securities, such portion of the principal as may be specified in the terms thereof) of all the Securities then outstanding and interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable. The foregoing provisions, however, are subject to the condition that if, at any time after the principal (or, if the Securities are Original Issue Discount Securities, such portion of the Principal as may be specified in the terms thereof) of the Securities of any series (or of all the Securities affected, or of all the Securities, as the case may be) shall have been so declared due 17
and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, the Issuer shall pay or shall deposit with the Trustee a sum sufficient to pay all matured instalments of interest upon all the Securities of such series (or of all the Securities affected, or of all the Securities, as the case may be) and the principal of any and all Securities of such series (or of all the Securities affected, or of all the Securities, as the case may be) which shall have become due otherwise than by acceleration (with interest upon such principal and, extent that payment of such interest is enforceable under applicable law, on overdue instalments of interest, at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the securities of such series (or at the respective rates of interest or Yields to Maturity of all the Securities affected or all the Securities, as the case may be) to the date of such payment or deposit) and such amount as shall be sufficient to cover reasonable compensation to the Trustee, its agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Trustee except as a result of negligence or bad faith, and if any and all Events of Default under the Indenture, other than the non-payment of the principal of Securities which shall have become due by acceleration, shall have been cured, waived or otherwise remedied as provided herein--then and in every such case the holders of a majority in aggregate principal amount of the Securities of such series (or of all the Securities affected, or of all the Securities, as the case may be) then outstanding, by written notice to the Issuer and to the Trustee, may waive all defaults with respect to such series (or of all the Securities affected, or with respect to all Securities, as the case may be--in such case, treated as a single class) and rescind and annul such declaration and its consequences, but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default or shall impair any right consequent thereon. For all purposes under this Indenture, if a portion of the principal of any Original Issue Discount Securities shall have been accelerated and declared due and payable pursuant to the provisions hereof, then, from and after such declaration, unless such declaration has been rescinded and annulled, the principal amount of such Original Issue Discount Securities shall be deemed, for all purposes hereunder, to be such portion of the principal thereof as shall be due and payable as a result of such acceleration, and payment of such portion of the principal thereof as shall be due and payable as a result of such acceleration, together with interest, if any, thereon and all other amounts owing thereunder, shall constitute payment in full of such Original Issue Discount Securities. SECTION 5.2. Collection of Indebtedness by Trustee; Trustee May Prove Debt. The Issuer covenants that (a) in case the default shall be made in the payment of any instalment of interest on any of the Securities of any series when such interest shall have become due and payable, and such default shall have continued for a period of 30 days or (b) in case default shall be made in the payment of all or any part of the principal or any part of the Securities of any series when the same shall have become due and payable, whether upon maturity of the Securities of such series or upon any redemption or by declaration or otherwise--then upon demand of the Trustee, the Issuer will pay to the Trustee for the benefit of the Holders of the Securities of such series the whole amount that then shall have become due and payable on all Securities of such series for principal or interest, as the case may be (with interest to the date of such payment upon the overdue principal and, to the extent that payment of such interest is enforceable under applicable law, on overdue instalments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the 18
Securities of such series); and in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including reasonable compensation to the Trustee and each predecessor Trustee, their respective agents, attorneys and counsel, and any expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of its negligence or bad faith. Until such demand is made by the Trustee, the Issuer may pay the principal of and interest on the Securities of any series to the registered holders, whether or not the principal of and interest, if any, on the Securities of such series be overdue. In case the Issuer shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against the Issuer or other obligor upon such Securities and collect in the manner provided by law out of the property of the Issuer or other obligor upon such Securities, wherever situated, the moneys adjudged or decreed to be payable. In case there shall be pending proceedings relative to the Issuer or any other obligor upon the Securities of any series under Title 11 of the United States Code or any other applicable Federal or state bankruptcy, insolvency or other similar law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Issuer or its property or such other obligor, or in case of any other comparable judicial proceedings relative to the Issuer or other obligor upon the Securities of any series, or to the creditors or property of the Issuer or such other obligor, the Trustee, irrespective of whether the principal of any Securities of any series shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section, shall be entitled and empowered, by intervention in such proceedings or otherwise: (a) to file and prove a claim or claims for the whole amount of principal and interest (or, if the Securities of any series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) owing and unpaid in respect of the Securities of any series, and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for reasonable compensation to the Trustee and each predecessor Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee, except as a result of negligence or bad faith) and of the Securityholders allowed in any judicial proceedings relative to the Issuer or other obligor upon the Securities of any series, or to the creditors or property of the Issuer or such other obligor, (b) unless prohibited by applicable law and regulations, to vote on behalf of the holders of the Securities of any series in any election of a trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings or person performing similar functions in comparable proceedings, and 19
(c) to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute all amounts received with respect to the claims of the Securityholders and of the Trustee on their behalf; and any trustee, receiver, or liquidator, custodian or other similar official is hereby authorized by each of the Securityholders to make payments to the Trustee, and, in the event that the Trustee shall consent to the making of payments directly to the Securityholders, to pay to the Trustee such amounts as shall be sufficient to cover reasonable compensation to the Trustee, each predecessor Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of negligence or bad faith, and all other amounts due the Trustee and each predecessor Trustee pursuant to Section 6.6. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement, adjustment or composition affecting the Securities of any series or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar person. All rights of action and of asserting claims under this Indenture, or under any of the Securities, may be enforced by the Trustee without the possession of any of the Securities or the production thereof on any trial or other proceedings relative thereto, and any such action or proceedings instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Trustee, each predecessor Trustee and their respective agents and attorneys, shall be for the ratable benefit of the holders of the Securities in respect of which such action was taken. In any proceedings brought by the Trustee (and also any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party) the Trustee shall be held to represent all the holders of the Securities in respect of which such action was taken, and it shall not be necessary to make any holders of such Securities parties to any such proceedings. SECTION 5.3. Application of Proceeds. Any moneys collected by the Trustee pursuant to this Article in respect of any series shall be applied in the following order at the date or dates fixed by the Trustee and, in case of the distribution of such moneys on account of principal or interest, upon presentation of the several Securities in respect of which moneys have been collected and stamping (or otherwise noting) thereon the payment, or issuing Securities of such series in reduced principal amounts in exchange for the presented Securities of such series if only partially paid, or upon surrender thereof if fully paid: FIRST: To the payment of costs and expenses applicable to such series in respect of which moneys have been collected, including reasonable compensation to the Trustee and each predecessor Trustee and their respective agents and attorneys and of all expenses and liabilities incurred, and all advances made, by the Trustee and each 20
predecessor Trustee except as a result of negligence or bad faith, and all other amounts due to the Trustee or any predecessor Trustee pursuant to Section 6.6; SECOND: In case the principal of the Securities in respect of which moneys have been collected shall not have become and be then due and payable, to the payment of interest on the Securities of such series in default in the order of the maturity of the instalments of such interest, with interest (to the extent that such interest has been collected by the Trustee) upon the overdue instalments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in such Securities, such payments to be made ratably to the persons entitled thereto, without discrimination or preference; THIRD: In case the principal of the Securities in respect of which moneys have been collected shall have become and shall be then due and payable, to the payment of the whole amount then owing and unpaid upon all the Securities of such series for principal and interest, with interest upon the overdue principal, and (to the extent that such interest has been collected by the Trustee) upon overdue instalments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of such series; and in case such moneys shall be insufficient to pay in full the whole amount so due and unpaid upon the Securities of such series, then to the payment of such principal and interest, without preference or priority of principal over interest, or of interest over principal, or of any instalment of interest over any other instalment of interest, or of any Security of such series over any other Security of such series, ratably to the aggregate of such principal and accrued and unpaid interest; and FOURTH: To the payment of the remainder, if any, to the Issuer or any other person lawfully entitled thereto. SECTION 5.4. Suits for Enforcement. In case an Event of Default has occurred, has not been waived and is continuing, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law. SECTION 5.5. Restoration of Rights on Abandonment of Proceedings. In case the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, then and in every such case the Issuer and the Trustee shall be restored respectively to their former positions and rights hereunder, and all rights, remedies and powers of the Issuer, the Trustee and the Securityholders shall continue as though no such proceedings had been taken. 21
SECTION 5.6. Limitations on Suits by Securityholders. No holder of any Security of any series shall have any right by virtue or by availing of any provision of this Indenture to institute any action or proceeding at law or in equity or in bankruptcy or otherwise upon or under or with respect to this Indenture, or for the appointment of a trustee, receiver, liquidator, custodian or other similar official or for any other remedy hereunder, unless such holder previously shall have given to the Trustee written notice of default and of the continuance thereof, as hereinbefore provided, and unless also the Holders of not less than 25% in aggregate principal amount of the Securities of such series then Outstanding shall have made written request upon the Trustee to institute such action or proceedings in its own name as trustee hereunder and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby and the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action or proceeding and no direction inconsistent with such written request shall have been given to the Trustee pursuant to Section 5.9; it being understood and intended, and being expressly covenanted by the taker and Holder of every Security with every other taker and Holder and the Trustee, that no one or more Holders of Securities of any series shall have any right in any manner whatever by virtue or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other Holder of Securities of that or any other series, or to obtain or seek to obtain priority over or preference to any other such Holder or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all Holders of Securities of the applicable series. For the protection and enforcement of the provisions of this Section, each and every Securityholder and the Trustee shall be entitled to such relief as can be given either at law or in equity. SECTION 5.7. Unconditional Right of Securityholders to Institute Certain Suits. Notwithstanding any other provision in this Indenture and any provision of any Security, the right of any Holder of any Security to receive payment of the principal of and interest on such Security on or after the respective due dates expressed in such Security, or to institute suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. SECTION 5.8. Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default. Except as provided in Section 5.6, no right or remedy herein conferred upon or reserved to the Trustee or to the Securityholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. No delay or omission of the Trustee or of any Securityholder to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein; and, subject to Section 5.6, every power and remedy given by this Indenture or by law to the Trustee or to the Securityholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Securityholders. 22
SECTION 5.9. Control by Securityholders. The Holders of a majority in aggregate principal amount of the Securities of each series affected (with each series voting as a separate class) at the time Outstanding shall have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee with respect to the Securities of such series by this Indenture; provided that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture and provided further that (subject to the provisions of Section 6.1) the Trustee shall have the right to decline to follow any such direction if the Trustee, being advised by counsel, shall determine that the action or proceeding so directed may not lawfully be taken or if the Trustee in good faith by its board of directors, the executive committee, or a trust committee of directors or Responsible Officers of the Trustee shall determine that the action or proceedings so directed would involve the Trustee in personal liability or if the Trustee in good faith shall so determine that the actions or forebearances specified in or pursuant to such direction would be unduly prejudicial to the interests of Holders of the Securities of all series so affected not joining in the giving of said direction, it being understood that (subject to Section 6.1) the Trustee shall have no duty to ascertain whether or not such actions or forebearances are unduly prejudicial to such Holders. Nothing in this Indenture shall impair the right of the Trustee in its discretion to take any action deemed proper to the Trustee and which is not inconsistent with such direction or directions by Securityholders. SECTION 5.10. Waiver of Past Defaults. Prior to the declaration of the acceleration of the maturity of the Securities of any series as provided in Section 5.1, the Solders of a majority in aggregate principal amount of the Securities of such series at the time Outstanding may on behalf of the Holders of all the Securities of such series waive any past default or Event of Default described in clause (d) of Section 5.1 (if such default or Event of Default under clause (d) is with respect to less than all the Securities then Outstanding) or, in the case of an event specified in clause (d), (e) or (f) of Section 5.1 (if such default or Event of Default under clause (d) is with respect to all the Securities then Outstanding), the Holders of Securities of a majority in principal amount of all the Securities then outstanding (voting as one class) may waive any such default or Event of Default, and its consequences except a default in respect of a covenant or provision hereof which cannot be modified or amended without the consent of the Holder of each Security affected. In the case of any such waiver, the Issuer, the Trustee and the Holders of the Securities of such series shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. Upon any such waiver, such default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of Default arising therefrom shall be deemed to have been cured, and not to have occurred for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. SECTION 5.11. Trustee to Give Notice of Default, But May Withhold in Certain Circumstances. The Trustee shall transmit to the Securityholders of any series, as the names and addresses of such Holders appear on the registry books, notice by mail of all defaults which have 23
occurred with respect to such series known to the Trustee, such notice to be transmitted within 90 days after the occurrence thereof, unless such defaults shall have been cured before the giving of such notice (the term "default" or "defaults" for the purposes of this Section being hereby defined to mean any event or condition which is, or with notice or lapse of time or both would become, an Event of Default); provided that, except in the case of default in the payment of the principal of or interest on any of the Securities of such series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors or trustees and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Securityholders of such series. SECTION 5.12. Right of Court to Require Filing of Undertaking to Pay Costs. All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder or group of Securityholders of any series holding in the aggregate more than 10% in aggregate principal amount of the Securities of such series (or, in the case of any suit relating to or arising under clause (d) (if the suit under clause (d) relates to all the Securities then Outstanding), (e) or (f) of Section 5.1, 10% in aggregate principal amount of all Securities) Outstanding, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of or interest on any Security on or after the due date expressed in such Security. ARTICLE SIX. CONCERNING THE TRUSTEE SECTION 6.1. Duties and Responsibilities of the Trustee; During Default; Prior to Default. With respect to the Holders of any series of Securities issued hereunder, the Trustee, prior to the occurrence of an Event of Default with respect to the Securities of a particular series and after the curing or waiving of all Events of Default which may have occurred with respect to such series undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default with respect to the Securities of a series has occurred (which has not been cured or waived) the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that 24
(a) prior to the occurrence of an Event of Default with respect to the Securities of any series and after the curing or waiving of all such Events of Default with respect to such series which may have occurred: (i) The duties and obligations of the Trustee with respect to the Securities of any series shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any statements, certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such statements, certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture; (b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (c) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders pursuant to Section 5.9 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture. None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if there shall be reasonable ground for believing that the repayment of such funds or adequate indemnity against such liability is not reasonably assured to it. SECTION 6.2. Certain Rights of the Trustee. Subject to Section 6.1: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, Officers' Certificate or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, note, coupon, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request, direction, order or demand of the Issuer mentioned herein shall be sufficiently evidenced by an Officers' Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any resolution of the Board of 25
Directors may be evidenced to the Trustee by a copy thereof certified by the secretary or an assistant secretary of the Issuer; (c) the Trustee may consult with counsel and any advice or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in accordance with such advice or Opinion of Counsel; (d) the Trustee shall be under no obligation to exercise any of the trusts or powers vested in it by this Indenture at the request, order or direction of any of the Securityholders pursuant to the provisions of this Indenture, unless such Securityholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred therein or thereby; (e) the Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture; (f) prior to the occurrence of an Event of Default hereunder and after the curing or waiving of all Events of Default, the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, coupon, security, or other paper or document unless requested in writing so to do by the holders of not less than a majority in aggregate principal amount of the Securities of all series affected then Outstanding; provided that, if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such expenses or liabilities as a condition to proceeding; the reasonable expenses of every such investigation shall be paid by the Issuer or, if paid by the Trustee or any predecessor trustee, shall be repaid by the Issuer upon demand; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys not regularly in its employ and the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care by it hereunder. SECTION 6.3. Trustee Not Responsible for Recitals, Disposition of Securities or Application of Proceeds Thereof. The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Issuer, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representation as to the validity or sufficiency of this Indenture or of the Securities. The Trustee shall not be accountable for the use or application by the Issuer of any of the Securities or of the proceeds thereof. 26
SECTION 6.4. Trustee and Agents May Hold Securities; Collections, etc. The Trustee or any agent of the Issuer or the Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities with the same rights it would have if it were not the Trustee or such agent and, subject to Sections 6.8 and 6.13, if operative, may otherwise deal with the Issuer and receive, collect, hold and retain collections from the Issuer with the same rights it would have if it were not the Trustee or such agent. SECTION 6.5. Moneys Held by Trustee. Subject to the provisions of Section 10.4 hereof, all moneys received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by mandatory provisions of law. Neither the Trustee nor any agent of the Issuer or the Trustee shall be under any liability for interest on any moneys received by it hereunder except such as it may agree with the Issuer to pay thereon. SECTION 6.6. Compensation and Indemnification of Trustee and Its Prior Claim. The Issuer covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, reasonable compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) and the Issuer covenants and agrees to pay or reimburse the Trustee and each predecessor Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all agents and other persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence or bad faith. The Issuer also covenants to indemnify the Trustee and each predecessor Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder and its duties hereunder, including the costs and expenses of defending itself against or investigating any claim of liability in the premises. The obligations of the Issuer under this Section to compensate and indemnify the Trustee and each predecessor Trustee and to pay or reimburse the Trustee and each predecessor Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture. Such additional indebtedness shall be a senior claim to that of the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the holders of particular Securities, and the Securities are hereby subordinated to such senior claim. SECTION 6.7. Right of Trustee to Rely on Officers' Certificate, etc. Subject to Sections 6.1 and 6.2, whenever in the administration of the trusts of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officers' Certificate delivered to the Trustee, and such certificate, in the absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted by it under the provisions of this Indenture upon the faith thereof. 27
SECTION 6.8. Qualification of Trustee; Conflicting Interests. (a) If the Trustee has or shall acquire any conflicting interest, as defined in this Section, it shall, within 90 days after ascertaining that it has such conflicting interest, either eliminate such conflicting interest or resign in the manner and with the effect specified in this Indenture. (b) In the event that the Trustee shall fail to comply with the provisions of subsection (a) of this Section, the Trustee shall, within 10 days after the expiration of such 90 day period, transmit by mail notice of such failure to the Securityholders at their last addresses as they appear on the Security register. (c) For the purposes of this Section, the Trustee shall be deemed to have a conflicting interest with respect to Securities of any series if (i) the Trustee is trustee under this Indenture with respect to the outstanding Securities of any other series or is a trustee under another indenture under which any other securities, or certificates of interest or participation in any other securities, of the Issuer are outstanding, unless such other indenture is a collateral trust indenture under which the only collateral consists of Securities issued under this Indenture; provided that there shall be excluded from the operation of this paragraph the indenture dated as of June 16, 1972 between J.P. Morgan Overseas Capital Corporation and J.P. Morgan & Co. Incorporated, as Guarantor and the Trustee, under which the 4 1/4% Convertible Guaranteed Debentures Due 1987 of J.P. Morgan Overseas Capital Corporation, guaranteed as to principal and interest by the Issuer, are outstanding and this Indenture with respect to the Securities of any other series and there shall also be so excluded any other indenture or indentures under which other securities, or certificates of interest or participation in other securities, of the Issuer are outstanding if (i) this Indenture, with respect to Securities of such series, and, if applicable, this Indenture with respect to such other series issued pursuant to this Indenture and such other indenture or indentures are wholly unsecured, and such other indenture or indentures are hereafter qualified under the Trust Indenture Act of 1939, unless the Commission shall have found and declared by order pursuant to Section 305(b) or Section 307(c) of such Trust Indenture Act of 1939 that differences exist between the provisions of this Indenture with respect to Securities of such series and one or more other series, or the provisions of this Indenture and the provisions of such other indenture or indentures which are so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify the Trustee from acting as such under this Indenture with respect to Securities of such series and such other series, or under this Indenture or such other indenture or indentures, or (ii) the Issuer shall have sustained the burden of proving, on application to the Commission and after opportunity for hearing thereon, that trusteeship under this Indenture with respect to Securities of such series and such other series, or under this Indenture and such other indenture or indentures is not so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify the Trustee from acting as such under this Indenture with respect to Securities of such series and such other series, or under this Indenture and such other indentures; 28
(ii) the Trustee or any of its directors or executive officers is an obligor upon the Securities of any series issued under this Indenture or an underwriter for the Issuer; (iii) the Trustee directly or indirectly controls or is directly or indirectly controlled by or is under direct or indirect common control with the Issuer or an underwriter for the Issuer; (iv) the Trustee or any of its directors or executive officers is a director, officer, partner, employee, appointee, or representative of the Issuer, or of an underwriter (other than the Trustee itself) for the Issuer who is currently engaged in the business of underwriting, except that (x) one individual may be a director or an executive officer, or both, of the Trustee and a director or an executive officer, or both, of the Issuer, but may not be at the same time an executive officer of both the Trustee and the Issuer; (y) if and so long as the number of directors of the Trustee in office is more than nine, one additional individual may be a director or an executive officer, or both, of the Trustee and a director of the Issuer; and (z) the Trustee may be designated by the Issuer or by any underwriter for the Issuer to act in the capacity of transfer agent, registrar, custodian, paying agent, fiscal agent, escrow agent, or depositary, or in any other similar capacity, or, subject to the provisions of subsection (c)(i) of this Section, to act as trustee, whether under an indenture or otherwise; (v) 10% or more of the voting securities of the Trustee is beneficially owned either by the Issuer or by any director, partner or executive officer thereof, or 20% or more of such voting securities is beneficially owned, collectively, by any two or more of such persons; or 10% or more of the voting securities of the Trustee is beneficially owned either by an underwriter for the Issuer or by any director, partner, or executive officer thereof, or is beneficially owned, collectively, by any two or more such persons; (vi) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default, (x) 5% or more of the voting securities or 10% or more of any other class of security of the Issuer, not including the Securities issued under this Indenture and securities issued under any other indenture under which the Trustee is also trustee, or (y) 10% or more of any class of security of an underwriter for the Issuer; (vii) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default, 5% or more of the voting securities of any person who, to the knowledge of the Trustee, owns 10% or more of the voting securities of, or controls directly or indirectly or is under direct or indirect common control with, the Issuer; (viii) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default, 10% or more of any class of security of any person who, to the knowledge of the Trustee, owns 50% or more of the voting securities of the Issuer; or (ix) the Trustee owns on May 15 in any calendar year, in the capacity of executor, administrator, testamentary or inter vivos trustee, guardian, committee or conservator, or in any other similar capacity, an aggregate of 25% or more of the voting securities, or of any class of security, of any person, the beneficial ownership of a 29
specified percentage of which would have constituted a conflicting interest under Section 6.8(c)(vi), (vii) or (viii). As to any such securities of which the Trustee acquired ownership through becoming executor, administrator, or testamentary trustee of an estate which included them, the provisions of the preceding sentence shall not apply, for a period of two years from the date of such acquisition, to the extent that such securities included in such estate do not exceed 25% of such voting securities or 25% of any such class of security. Promptly after May 15 in each calendar year, the Trustee shall make a check of its holdings of such securities in any of the above-mentioned capacities as of such May 15. If the Issuer fails to make payment in full of principal of or interest on any of the Securities when and as the same becomes due and payable, and such failure continues for 30 days thereafter, the Trustee shall make a prompt check of its holdings of such securities in any of the above-mentioned capacities as of the date of the expiration of such 30-day period, and after such date, notwithstanding the foregoing provisions of this paragraph, all such securities so held by the Trustee, with sole or joint control over such securities vested in it, shall, but only so long as such failure shall continue, be considered as though beneficially owned by the Trustee for the purposes of subsections (c)(vi), (vii) and (viii) of this Section. The specification of percentages in subsections (c)(v) to (ix) inclusive of this Section shall not be construed as indicating that the ownership of such percentages of the securities of a person is or is not necessary or sufficient to constitute direct or indirect control for the purposes of subsections (c)(iii) or (vii) of this Section. For the purposes of subsections (c)(vi), (vii), (viii) and (ix), of this Section, only, (i) the terms "security" and "securities" shall include only such securities as are generally known as corporate securities, but shall not include any note or other evidence of indebtedness issued to evidence an obligation to repay moneys lent to a person by one or more banks, trust companies, or banking firms, or any certificate of interest or participation in any such note or evidence of indebtedness; (ii) an obligation shall be deemed to be in default when a default in payment of principal shall have continued for 30 days or more and shall not have been cured; and (iii) the Trustee shall not be deemed to be the owner or holder of (x) any security which it holds as collateral security, as trustee or otherwise, for an obligation which is not in default as defined in clause (ii) above, or (y) any security which it holds as collateral security under this Indenture, irrespective of any default hereunder, or (z) any security which it holds as agent for collection, or as custodian, escrow agent, or depositary, or in any similar representative capacity. Except as provided above, the word "security" or "securities" as used in this Section shall mean any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas or other mineral rights, or, in general, any interest or instrument commonly known as a "security", or any 30
certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing. (d) For purposes of this Section: (i) the term "underwriter" when used with reference to the Issuer shall mean every person who, within three years prior to the time as of which the determination is made, has purchased from the Issuer with a view to, or has offered or sold for the Issuer in connection with, the distribution of any security of the Issuer outstanding at such time, or has participated or has had a direct or indirect participation in any such undertaking, or has participated or has had a participation in the direct or indirect underwriting of any such undertaking, but such term shall not include a person whose interest was limited to a commission from an underwriter or dealer not in excess of the usual and customary distributors' or sellers' commission; (ii) the term "director" shall mean any director of a corporation or any individual performing similar functions with respect to any organization whether incorporated or unincorporated; (iii) the term "person" shall mean an individual, a corporation, a partnership, an association, a joint stock company, a trust, an unincorporated organization, or a government or political subdivision thereof; as used in this paragraph, the term "trust" shall include only a trust where the interest or interests of the beneficiary or beneficiaries are evidenced by a security; (iv) the term "voting security" shall mean any security presently entitling the owner or holder thereof to vote in the direction or management of the affairs of a person, or any security issued under or pursuant to any trust, agreement or arrangement whereby a trustee or trustees or agent or agents for the owner or holder of such security are presently entitled to vote in the direction or management of the affairs of a person; (v) the term "Issuer" shall mean any obligor upon the Securities; and (vi) the term "executive officer" shall mean the president, every vice president, every trust officer, the cashier, the secretary, and the treasurer of a corporation, and any individual customarily performing similar functions with respect to any organization whether incorporated or unincorporated, but shall not include the chairman of the board of directors. (e) The percentages of voting securities and other securities specified in this Section shall be calculated in accordance with the following provisions: (i) a specified percentage of the voting securities of the Trustee, the Issuer or any other person referred to in this Section (each of whom is referred to as a "person" in this paragraph) means such amount of the outstanding voting securities of such person as entitles the holder or holders thereof to cast such specified percentage of the aggregate votes which the holders of all the outstanding voting securities of such person are entitled to cast in the direction or management of the affairs of such person; 31
(ii) a specified percentage of a class of securities of a person means such percentage of the aggregate amount of securities of the class outstanding; (iii) the term "amount", when used in regard to securities, means the principal amount if relating to evidences of indebtedness, the number of shares if relating to capital shares, and the number of units if relating to any other kind of security; (iv) the term "outstanding" means issued and not held by or for the account of the issuer; the following securities shall not be deemed outstanding within the meaning of this definition: (A) securities of an issuer held in a sinking fund relating to securities of the issuer of the same class; (B) securities of an issuer held in a sinking fund relating to another class of securities of the issuer, if the obligation evidenced by such other class of securities is not in default as to principal or interest or otherwise; (C) securities pledged by the issuer thereof as security for an obligation of the issuer not in default as to principal or interest or otherwise; and (D) securities held in escrow if placed in escrow by the issuer thereof; provided, that any voting securities of an issuer shall be deemed outstanding if any person other than the issuer is entitled to exercise the voting rights thereof; and (v) a security shall be deemed to be of the same class as another security if both securities confer upon the holder or holders thereof substantially the same rights and privileges; provided, that, in the case of secured evidences of indebtedness, all of which are issued under a single indenture, differences in the interest rates or maturity dates of various series thereof shall not be deemed sufficient to constitute such series different classes and provided, further, that, in the case of unsecured evidences of indebtedness, differences in the interest rates or maturity dates thereof shall not be deemed sufficient to constitute them securities of different classes, whether or not they are issued under a single indenture. SECTION 6.9. Persons Eligible for Appointment as Trustee. The Trustee for each series of Securities hereunder shall not all times be a corporation organized and doing business under the laws of the United States of America or of any state or the District of Columbia having a combined capital and surplus of at least $5,000,000, and which is authorized under such laws to exercise corporate trust powers and is subject to supervision or examination by Federal, State or District of Columbia authority. Such corporation shall have its principal place of business in the Borough of Manhattan, The City of New York, if there be such a corporation in such location willing to act upon reasonable and customary terms and conditions. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any 32
time the Trustee shall cease to be eligible in accordance with the provisions of this Section, the Trustee shall resign immediately in the manner and with the effect specified in Section 6.10. SECTION 6.10. Resignation and Removal; Appointment of Successor Trustee. (a) The Trustee, or any trustee or trustees hereafter appointed, may at any time resign with respect to one or more or all series of Securities by giving written notice of resignation to the Issuer and by mailing notice thereof by first class mail to holders of the applicable series of Securities at their last addresses as they shall appear on the Security register. Upon receiving such notice of resignation, the Issuer shall promptly appoint a successor trustee or trustees with respect to the applicable series by written instrument in duplicate, executed by authority of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee or trustees. If no successor trustee shall have been so appointed with respect to any series and have accepted appointment within 30 days after the mailing of such notice of resignation, the resigning trustee may petition any court of competent jurisdiction for the appointment of a successor trustee, or any Securityholder who has been a bona fide holder of a Security or Securities of the applicable series for at least six months may, subject to the provisions of Section 5.12, on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee. (b) In case at any time any of the following shall occur: (i) the Trustee shall fail to comply with the provisions of Section 6.8 with respect to any series of Securities after written request therefor by the Issuer or by any Securityholder who has been a bona fide holder of a Security or Securities of such series for at least six months; or (ii) the Trustee shall cease to be eligible in accordance with the provisions of Section 6.9 and shall fail to resign after written request therefor by the Issuer or by any Securityholder; or (iii) the Trustee shall become incapable of acting with respect to any series of Securities, or shall be adjudged a bankrupt or insolvent, or a receiver or liquidator of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then, in any such case, the Issuer may remove the Trustee with respect to the applicable series of Securities and appoint a successor trustee for such series by written instrument, in duplicate, executed by order of the Board of Directors of the Issuer, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 5.12, any Securityholder who has been a bona fide holder of a Security or Securities of such series for at least six months may on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee with respect to such series. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee. 33
(c) The holders of a majority in aggregate principal amount of the Securities of each series at the time outstanding may at any time remove the Trustee with respect to Securities of such series and appoint a successor trustee with respect to the Securities of such series by delivering to the Trustee so removed, to the successor trustee so appointed and to the Issuer the evidence provided for in Section 7.1 of the action in that regard taken by the Securityholders. (d) Any resignation or removal of the Trustee with respect to any series and any appointment of a successor trustee with respect to such series pursuant to any of the provisions of this Section 6.10 shall become effective upon acceptance of appointment by the successor trustee as provided in Section 6.11. SECTION 6.11. Acceptance of Appointment by Successor Trustee. Any successor trustee appointed as provided in Section 6.10 shall execute and deliver to the Issuer and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee with respect to all or any applicable series shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all rights, powers, duties and obligations with respect to such series of its predecessor hereunder, with like effect as if originally named as trustee for such series hereunder; but, nevertheless, on the written request of the Issuer or of the successor trustee, upon payment of its charges then unpaid, the trustee ceasing to act shall, subject to Section 10.4, pay over to the successor trustee all moneys at the time held by it hereunder and shall execute and deliver an instrument transferring to such successor trustee all such rights, powers, duties and obligations. Upon request of any such successor trustee, the Issuer shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim upon all property or funds held or collected by such trustee to secure any amounts then due it pursuant to the provisions of Section 6.6. If a successor trustee is appointed with respect to the Securities of one or more (but not all) series, the Issuer, the predecessor Trustee and each successor trustee with respect to the Securities of any applicable series shall execute and deliver an indenture supplemental hereto which shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the predecessor Trustee with respect to the Securities of any series as to which the predecessor Trustee is riot retiring shall continue to be vested in the predecessor Trustee, and shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such trustees co-trustees of the same trust and that each such trustee shall be trustee of a trust or trusts under separate indentures. No successor trustee with respect to any series of Securities shall accept appointment as provided in this Section 6.11 unless at the time of such acceptance such successor trustee shall be qualified under the provisions of Section 6.8 and eligible under the provisions of Section 6.9. Upon acceptance of appointment by any successor trustee as provided in this Section, the Issuer shall mail notice thereof by first-class mail to the Holders of Securities of any 34
series for which such successor trustee is acting as trustee at their last addresses as they shall appear in the Security register. If the acceptance of appointment is substantially contemporaneous with the resignation, then the notice called for by the preceding sentence may be combined with the notice called for by Section 6.10. If the Issuer fails to mail such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be mailed at the expense of the Issuer. SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business of Trustee. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided that such corporation shall be qualified under the provisions of Section 6.8 and eligible under the provisions of Section 6.9, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture any of the Securities of any series shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor Trustee and deliver such Securities so authenticated; and, in case at that time any of the Securities of any series shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor Trustee; and in all such cases such certificate shall have the full force which it is anywhere in the Securities of such series or in this Indenture provided that the certificate of the Trustee shall have; provided, that the right to adopt the certificate of authentication of any predecessor Trustee or to authenticate Securities of any series in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation. SECTION 6.13. Preferential Collection of Claims Against the Issuer. (a) Subject to the provisions of this Section, if the Trustee shall be or shall become a creditor, directly or indirectly, secured or unsecured, of the Issuer within four months prior to a default, as defined in subsection (c) of this Section, or subsequent to such a default, then, unless and until such default shall be cured, the Trustee shall set apart and hold in a special account for the benefit of the Trustee individually, the holders of the Securities and the holders of other indenture securities (as defined in this Section): (1) an amount equal to any and all reductions in the amount due and owing upon any claim as such creditor in respect of principal or interest, effected after the beginning of such four months' period and valid as against the Issuer and its other creditors, except any such reduction resulting from the receipt or disposition of any property described in subsection (a)(2) of this Section, or from the exercise of any right of set-off which the Trustee could have exercised if a petition in bankruptcy had been filed by or against the Issuer upon the date of such default; and (2) all property received by the Trustee in respect of any claim as such creditor, either as security therefor, or in satisfaction or composition thereof, or otherwise, after the beginning of such four months' period, or an amount equal to the 35
proceeds of any such property, if disposed of, subject, however, to the rights, if any, of the Issuer and its other creditors in such property or such proceeds. Nothing herein contained, however, shall affect the right of the Trustee: (A) to retain for its own account (i) payments made on account of any such claim by any person (other than the Issuer) who is liable thereon, (ii) the proceeds of the bona fide sale of any such claim by the Trustee to a third person, and (iii) distributions made in cash, securities or other property in respect of claims filed against the Issuer in bankruptcy or receivership or in proceedings for reorganization pursuant to Title 11 of the United States Code or applicable state law; (B) to realize, for its own account, upon any property held by it as security for any such claim, if such property was so held prior to the beginning of such four months' period; (C) to realize, for its own account, but only to the extent of the claim hereinafter mentioned, upon any property held by it as security for any such claim, if such claim was created after the beginning of such four months' period and such property was received as security therefor simultaneously with the creation thereof, and if the Trustee shall sustain the burden of proving that at the time such property was so received the Trustee had no reasonable cause to believe that a default as defined in subsection (c) of this Section would occur within four months; or (D) to receive payment on any claim referred to in paragraph (B) or (C), against the release of any property held as security for such claim as provided in such paragraph (B) or (C), as the case may be, to the extent of the fair value of such property. For the purposes of paragraphs (B), (C) and (D), property substituted after the beginning of such four months' period for property held as security at the time of such substitution shall, to the extent of the fair value of the property released, have the same status as the property released, and, to the extent that any claim referred to in any of such paragraphs is created in renewal of or in substitution for or for the purpose of repaying or refunding any preexisting claim of the Trustee as such creditor, such claim shall have the same status as such pre-existing claim. If the Trustee shall be required to account, the funds and property held in such special account and the proceeds thereof shall be apportioned between the Trustee, the Securityholders and the holders of other indenture securities in such manner that the Trustee, such Securityholders, and the holders of other indenture securities realize, as a result of payments from such special account and payments of dividends on claims filed against the Issuer in bankruptcy or receivership or in proceedings for reorganization pursuant to Title 11 of the United States Code or applicable State law, the same percentage of their respective claims, figured before crediting to the claim of the Trustee anything on account of the receipt by it from the 36
Issuer of the funds and property in such special account and before crediting to the respective claims of the Trustee, such Securityholders and the holders of other indenture securities dividends on claims filed against the Issuer in bankruptcy or receivership or in proceedings for reorganization pursuant to Title 11 of the United States Code or applicable State law, but after crediting thereon receipts on account of the indebtedness represented by their respective claims from all sources other than from such dividends and from the funds and property so held in such special account. As used in this paragraph, with respect to any claim, the term "dividends" shall include any distribution with respect to such claim, in bankruptcy or receivership or in proceedings for reorganization pursuant to Title 11 of the United States Code or applicable State law, whether such distribution is made in cash, securities or other property, but shall not include any such distribution with respect to the secured portion, if any, of such claim. The court in which such bankruptcy, receivership or proceeding for reorganization is pending shall have jurisdiction (i) to apportion between the Trustee, such Securityholders and the holders of other indenture securities, in accordance with the provisions of this paragraph, the funds and property held in such special account and the proceeds thereof, or (ii) in lieu of such apportionment, in whole or in part, to give to the provisions of this paragraph due consideration in determining the fairness of the distributions to be made to the Trustee, such Securityholders and the holders of other indenture securities with respect to their respective claims, in which event it shall not be necessary to liquidate or to appraise the value of any securities or other property held in such special account or as security for any such claim, or to make a specific allocation of such distributions as between the secured and unsecured portions of such claims, or otherwise to apply the provisions of this paragraph as a mathematical formula. Any Trustee who has resigned or been removed after the beginning of such four months' period shall be subject to the provisions of this subsection (a) as though such resignation or removal had not occurred. If any Trustee has resigned or been removed prior to the beginning of such four months' period, it shall be subject to the provisions of this subsection (a) if and only if the following conditions exist: (i) the receipt of property or reduction of claim which would have given rise to the obligation to account, if such Trustee had continued as trustee, occurred after the beginning of such four months' period; and (ii) such receipt of property or reduction of claim occurred within four months after such resignation or removal. (b) There shall be excluded from the operation of this Section a creditor relationship arising from (1) the ownership or acquisition of securities issued under any indenture, or any security or securities having a maturity of one year or more at the time of acquisition by the Trustee; (2) advances authorized by a receivership or bankruptcy court of competent jurisdiction or by this Indenture for the purpose of preserving any property which shall at any time be subject to the lien of this Indenture or of discharging tax liens or other prior liens or encumbrances thereon, if notice of such advance and of the circumstances 37
surrounding the making thereof is given to the Securityholders at the time and in the manner provided in this Indenture; (3) disbursements made in the ordinary course of business in the capacity of trustee under an indenture, transfer agent, registrar, custodian, paying agent, fiscal agent or depositary, or other similar capacity; (4) an indebtedness created as a result of services rendered or premises rented or an indebtedness created as a result of goods or securities sold in a cash transaction as defined in subsection (c)(3) below; (5) the ownership of stock or of other securities of a corporation organized under the provisions of Section 25(a) of the Federal Reserve Act, as amended, which is directly or indirectly a creditor of the Issuer; or (6) the acquisition, ownership, acceptance or negotiation of any drafts, bills of exchange, acceptances or obligations which fall within the classification of self-liquidating paper as defined in subsection (c)(4) of this Section. (c) As used in this Section: (1) the term "default" shall mean any failure to make payment in full of the principal of or interest upon any of the Securities or upon the other indenture securities when and as such principal or interest becomes due and payable; (2) the term "other indenture securities" shall mean securities upon which the Issuer is an obligor (as defined in the Trust Indenture Act of 1939) outstanding under any other indenture (i) under which the Trustee is also trustee, (ii) which contains provisions substantially similar to the provisions of subsection (a) of this Section, and (iii) under which a default exists at the time of the apportionment of the funds and property held in said special account; (3) the term "cash transaction" shall mean any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand; (4) the term "self-liquidating paper" shall mean any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Issuer for the purpose of financing the purchase, processing, manufacture, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Issuer arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation; and (5) the term "Issuer" shall mean any obligor upon the Securities. 38
ARTICLE SEVEN CONCERNING THE SECURITYHOLDERS SECTION 7.1. Evidence of Action Taken by Securityholders. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by a specified percentage in principal amount of the Securityholders of any or all series may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such specified percentage of Securityholders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 6.1 and 6.2) conclusive in favor of the Trustee and the Issuer, if made in the manner provided in this Article. SECTION 7.2. Proof of Execution of Instruments and of Holding of Securities. Subject to Sections 6.1 and 6.2, the execution of any instrument by a Securityholder or his agent or proxy may be proved in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee. The holding of Securities shall be proved by the Security register or by a certificate of the registrar thereof. SECTION 7.3. Holders to be Treated as Owners. The Issuer, the Trustee and any agent of the Issuer or the Trustee may deem and treat the person in whose name any Security shall be registered upon the Security register for such series as the absolute owner of such Security (whether or not such Security shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or on account of the principal of and, subject to the provisions of this Indenture, interest on such Security and for all other purposes; and neither the Issuer nor the Trustee nor any agent of the Issuer or the Trustee shall be affected by any notice to the contrary. All such payments so made to any such person, or upon his order, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Security. SECTION 7.4. Securities Owned by Issuer Deemed Not Outstanding. In determining whether the Holders of the requisite aggregate principal amount of Outstanding Securities of any or all series have concurred in any direction, consent or waiver under this Indenture, Securities which are owned by the Issuer or any other obligor on the Securities with respect to which such determination is being made or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer or any other obligor on the Securities with respect to which such determination is being made shall be disregarded and deemed not to be outstanding for the purpose of any such determination, except that for the purpose of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver only Securities which the Trustee knows are so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Issuer or any other obligor upon the Securities or any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer or any other obligor on the Securities. In case of a 39
dispute as to such right, the advice of counsel shall be full protection in respect of any decision made by the Trustee in accordance with such advice. Upon request of the Trustee, the Issuer shall furnish to the Trustee promptly an Officers' Certificate listing and identifying all Securities, if any, known by the Issuer to be owned or held by or for the account of any of the above-described persons; and, subject to Sections 6.1 and 6.2, the Trustee shall be entitled to accept such Officers' Certificate as conclusive evidence of the facts therein set forth and of the fact that all Securities not listed therein are Outstanding for the purpose of any such determination. SECTION 7.5. Right of Revocation of Action Taken. At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 7.1, of the taking of any action by the Holders of the percentage in aggregate principal amount of the Outstanding Securities of any or all series, as the case may be, specified in this Indenture in connection with such action, any Holder of a Security the serial number of which is shown by the evidence to be included among the serial numbers of the Securities the Holders of which have consented to such action may, by filing written notice at the Corporate Trust Office and upon proof of holding as provided in this Article, revoke such action so far as concerns such security. Except as aforesaid any such action taken by the Holder of any Security shall be conclusive and binding upon such Holder and upon all future Holders and owners of such security and of any Securities issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Security. Any action taken by the Holders of the percentage in aggregate principal amount of the Securities of any or all series, as the case may be, specified in this Indenture in connection with such action shall be conclusively binding upon the Issuer, the Trustee and the Holders of all the Securities affected by such action. ARTICLE EIGHT SUPPLEMENTAL INDENTURES SECTION 8.1. Supplemental Indentures Without Consent of Securityholders. The Issuer, when authorized by a resolution of its Board of Directors, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act of 1939 as in force at the date of the execution thereof) for one or more of the following purposes: (a) to convey, transfer, assign, mortgage or pledge to the Trustee as security for the Securities of one or more series any property or assets; (b) to evidence the succession of another corporation to the Issuer, or successive successions, and the assumption by the successor corporation of the covenants agreements and obligations of the Issuer pursuant to Article Nine; (c) to add to the covenants of the Issuer such further covenants, restrictions, conditions or provisions as its Board of Directors and the Trustee shall consider to be for the protection of the Holders of Securities, and to make the occurrence, or the occurrence and continuance, of a default in any such additional covenants, restrictions, conditions or provisions 40
an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; provided, that in respect of any such additional covenant, restriction, condition or provision such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such an Event of Default or may limit the remedies available to the Trustee upon such an Event of Default or may limit the right of the Holders of a majority in aggregate principal amount of the Securities of affected series to waive such an Event of Default; (d) to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture; or to make such other provisions in regard to matters or questions arising under this Indenture or under any supplemental indenture as the Board of Directors may deem necessary or desirable and which shall not materially and adversely affect the interests of the Holders of the Securities; (e) to provide for the issuance under this Indenture of Securities in coupon form (including Securities registrable as to principal only) and to provide for exchangeability of such Securities with Securities issued hereunder in fully registered form, and to make all appropriate changes for such purpose; (f) to establish the form or terms of Securities of any series as permitted by Sections 2.1 and 2.3; and (g) to evidence and provide for the acceptance of appointment hereunder by a successor trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one trustee, pursuant to the requirements of Section 6.11. The Trustee is hereby authorized to join with the Issuer in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Any supplemental indenture authorized by the provisions of this Section may be executed without the consent of the Holders of any of the Securities at the time outstanding, notwithstanding any of the provisions of Section 8.2. SECTION 8.2. Supplemental Indentures With Consent of Securityholders. With the consent (evidenced as provided in Article Seven) of the Holders of not less than 66 2/3% in aggregate principal amount of the Securities at the time outstanding of all series affected by such supplemental indenture (voting as one class), the Issuer, when authorized by a resolution of its Board of Directors, and the Trustee may, from time to time and at any time, enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust 41
Indenture Act of 1939 as in force at the date of execution thereof) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Securities of each such series; provided, that no such supplemental indenture shall (a) extend the final maturity of any Security, or reduce the principal amount thereof or the method in which amounts of payments of principal or interest thereon are determined, or reduce the rate or extend the time of payment of interest thereon, or change the currency of payment thereof, or the method in which amounts of payments of principal or interest thereon are determined, or reduce any amount payable on redemption thereof or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon an acceleration of the maturity thereof pursuant to Section 5.1 or the amount thereof provable in bankruptcy pursuant to Section 5.2, or impair or affect the right of any Securityholder to institute suit for the payment thereof or, if the Securities provide therefor, any right of repayment at the option of the Securityholder without the consent of the Holder of each Security so affected, or (b) reduce the aforesaid percentage of Securities of any series, the consent of the Holders of which is required for any such supplemental indenture, without the consent of the Holders of each Security so affected. A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision shall be deemed not to affect the rights under this Indenture of the Holder of any other series. Upon the request of the Issuer, accompanied by a copy of a resolution of the Board of Directors certified by the secretary or an assistant secretary of the Issuer authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Securityholders as aforesaid and other documents, if any, required by Section 7.1, the Trustee shall join with the Issuer in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. It shall not be necessary for the consent of the Securityholders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Issuer and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Issuer shall mail a notice thereof by first-class mail to the Holders of Securities of each series affected thereby at their addresses as they shall appear on the registry books of the Issuer, setting forth in general terms the substance of such supplemental indenture. Any failure of the Issuer to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. SECTION 8.3. Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Issuer and the Holders of Securities of each series affected thereby shall thereafter be determined, exercised and 42
enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. SECTION 8.4. Documents to Be Given to Trustee. The Trustee, subject to the provisions of Sections 6.1 and 6.2, may receive an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article 8 complies with the applicable provisions of this Indenture. SECTION 8.5. Notation on Securities in Respect of Supplemental Indentures. Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article may bear a notation in form approved by the Trustee for such series as to any matter provided for by such supplemental indenture or as to any action taken at any such meeting. If the Issuer or the Trustee shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Issuer, authenticated by the Trustee and delivered in exchange for the Securities of such series then outstanding. ARTICLE NINE CONSOLIDATION, MERGER, SALE OR CONVEYANCE SECTION 9.1. Issuer May Consolidate, etc., on Certain Terms. The Issuer covenants that it will not merge or consolidate with any other corporation or sell or convey all or substantially all of its assets to any Person, unless (i) either the Issuer shall be the continuing corporation, or the successor corporation (if other than the Issuer) shall be a corporation organized under the laws of the United States of America or any State thereof and shall expressly assume the due and punctual payment of the principal of and interest on all the Securities, according to their tenor, and the due and punctual performance and observance of all of the covenants and conditions of this Indenture to be performed or observed by the Issuer, by supplemental indenture satisfactory to the Trustee, executed and delivered to the Trustee by such corporation, and (ii) the Issuer or such successor corporation, as the case may be, shall not, immediately after such merger, consolidation, or such sale or conveyance, be in default in the performance of any such covenant or condition. SECTION 9.2. Successor Corporation to be Substituted. In case of any such consolidation, merger, sale or conveyance, other than a conveyance by way of lease, and upon any such assumption by the successor corporation, such successor corporation shall succeed to and be substituted for the Issuer, with the same effect as if it had been named herein as the Issuer, and the Issuer shall thereupon be released from all obligations hereunder and under the Securities and the Issuer as the predecessor corporation may thereupon or at any time thereafter be dissolved, wound up or liquidated. Such successor corporation thereupon may cause to be signed, and may issue either in its own name or in the name of J. P. Morgan & Co. Incorporated any or all of the Securities issuable hereunder which theretofore shall not have been signed by the Issuer and delivered to the Trustee; and, upon the order of such successor corporation instead 43
of the Issuer and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities which previously shall have been signed and delivered by the officers of the Issuer to the Trustee for authentication, and any Securities which such successor corporation thereafter shall cause to be signed and delivered to the Trustee for that purpose. All of the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Securities had been issued at the date of the execution hereof. In case of any such consolidation, merger, sale or conveyance such changes in phraseology and form (but not in substance) may be made in the Securities thereafter to be issued as may be appropriate. SECTION 9.3. Opinion of Counsel to Trustee. The Trustee, subject to the provisions of Sections 6.1 and 6.2, may receive an Opinion of Counsel, prepared in accordance with Section 11.5, as conclusive evidence that any such consolidation, merger, sale or conveyance, and any such assumption complies with the applicable provisions of Article Nine. ARTICLE TEN SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS. SECTION 10.1. Satisfaction and Discharge of Indenture. If at any time (a) the Issuer shall have paid or caused to be paid the principal of and interest on all the Securities theretofore authenticated hereunder (other than Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.9 and other than Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by any paying agent and thereafter repaid to the Issuer or discharged from such trust, as provided in Section 10.4), as and when the same shall have become due and payable, or (b) the Issuer shall have delivered to the Trustee for cancellation, all Securities of any series theretofore authenticated (other than any Securities of such series which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.9) or (c) (i) all the Securities of any series not theretofore delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and (ii) the Issuer shall have irrevocably deposited or caused to be deposited with the Trustee as trust funds the entire amount in cash (other than moneys repaid by the Trustee or any paying agent to the Issuer in accordance with Section 10.4) sufficient to pay at maturity or upon redemption all Securities of such series not theretofore delivered to the Trustee for cancellation, including principal and interest due or to become due to such date of maturity as the case may be, and if, in any such case, the Issuer shall also pay or cause to be paid all other sums payable hereunder by the Issuer with respect to Securities of such series, then this Indenture shall cease to be of further effect with respect to Securities of such series (except as to (i) rights of registration of transfer and exchange, and the Issuer's right of optional redemption, (ii) substitution of mutilated, defaced, destroyed, lost or stolen Securities, (iii) rights of holders to receive payments of principal thereof and interest thereon, and remaining rights of the holders to 44
receive mandatory sinking fund payments, if any, (iv) the rights, obligations and immunities of the Trustee hereunder and (v) the rights of the Securityholders, of such series as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them), and the Trustee, on demand of the Issuer accompanied by an Officers' Certificate and an Opinion of Counsel and at the cost and expense of the Issuer, shall execute proper instruments acknowledging such satisfaction of and discharging this Indenture with respect to such series; provided, that the rights of holders of the Securities to receive amounts in respect of principal of and interest on the Securities held by them shall not be delayed longer than required by then applicable mandatory rules or policies of any securities exchange upon which the Securities are listed. The Issuer agrees to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred and to compensate the Trustee for any services thereafter reasonably and properly rendered by the Trustee in connection with this Indenture or the Securities of such series. SECTION 10.2. Application by Trustee of Funds Deposited for Payment of Securities. Subject to Section 10.4, all moneys deposited with the Trustee pursuant to Section 10.1 shall be held in trust and applied by it to the payment, either directly or through any paying agent (including the Issuer acting as its own paying agent), to the Holders of the particular Securities of such series for the payment or redemption of which such moneys have been deposited with the Trustee, of all sums due and to become due thereon for principal and interest; but such money need not be segregated from other funds except to the extent required by law. SECTION 10.3. Repayment of Moneys Held by Paying Agent. In connection with the satisfaction and discharge of this Indenture with respect to Securities of any series, all moneys then held by any paying agent under the provisions of this Indenture with respect to such series of Securities shall, upon demand of the Issuer, be repaid to it or paid to the Trustee and thereupon such paying agent shall be released from all further liability with respect to such moneys. SECTION 10.4. Return of Moneys Held by Trustee and Paying Agent Unclaimed for Three Years. Any moneys deposited with or paid to the Trustee or any paying agent for the payment of the principal of or interest on any Security of any series and not applied but remaining unclaimed for three years after the date upon which such principal or interest shall have become due and payable, shall, upon the written request of the Issuer and unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, be repaid to the Issuer by the Trustee for such series or such paying agent, and the Holder of the Security of such series shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property laws, thereafter look only to the Issuer for any payment which such Holder may be entitled to collect, and all liability of the Trustee or any paying agent with respect to such moneys shall thereupon cease; provided, the Trustee or such paying agent, before being required to make any such repayment, may at the Issuer's expense cause to be mailed to all Holders of the Securities of such series at their addresses as set forth in the Security register notice that such moneys have not been so applied and that after a date named in such notice any unclaimed balance of such moneys then remaining will be returned to the Issuer. 45
ARTICLE ELEVEN MISCELLANEOUS PROVISIONS SECTION 11.1. Incorporators, Stockholders, Officers and Directors of Issuer Exempt from Individual Liability. No recourse under or upon any obligation, covenant or agreement contained in this Indenture, or in any Security, or because of any indebtedness evidenced thereby, shall be had against any incorporator, as such or against any past, present or future stockholder, officer or director, as such, of the Issuer or of any successor, either directly or through the Issuer or any successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of the Securities by the holders thereof and as part of the consideration for the issue of the Securities. SECTION 11.2. Provisions of Indenture for the Sole Benefit of Parties and Securityholders. Nothing in this Indenture or in the Securities, expressed or implied, shall give or be construed to give to any person, firm or corporation, other than the parties hereto and their successors and the holders of the Securities, any legal or equitable right, remedy or claim under this Indenture or under any covenant or provision herein contained, all such covenants and provisions being for the sole benefit of the parties hereto and their successors and of the holders of the Securities. SECTION 11.3. Successors and Assigns of Issuer Bound by Indenture. All the covenants, stipulations, promises and agreements in this Indenture contained by or in behalf of the Issuer shall bind its successors and assigns, whether so expressed or not. SECTION 11.4. Notices and Demands on Issuer, Trustee and Securityholders. Any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the Holders of Securities to or on the Issuer may be given or served by being deposited postage prepaid, first class mail (except as otherwise specifically provided herein) addressed (until another address of the Issuer is filed by the Issuer with the Trustee) to J.P. Morgan & Co. Incorporated, 23 Wall Street, New York, N.Y. 10015, Attention: Secretary. Any notice, direction, request or demand by the Issuer or any Securityholder to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given or made at the Corporate Trust Office marked to the attention of the Corporate Trust Department. Where this Indenture provides for notice to Holders, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first class postage prepaid, to each Holder entitled thereto, at his last address as it appears in the Security register. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. 46
In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Issuer and Securityholders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. SECTION 11.5. Officers' Certificates and Opinions of Counsel; Statements to Be Contained Therein. Upon any application or demand by the Issuer to the Trustee to take any action under any of the provisions of this Indenture, the Issuer shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished. Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture shall include (a) a statement that the person making such certificate or opinion has read such covenant or condition, (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based, (c) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with and (d) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. Any certificate, statement or opinion of an officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of counsel may be based, insofar as it relates to factual matters, information with respect to which is in the possession of the Issuer, upon the certificate, statement or opinion of or representations by an officer of officers of the Issuer, unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous. SECTION 11.6. Payments Due on Saturdays, Sundays and Holidays. If the date of maturity of interest on or principal of the Securities of any series or the date fixed for redemption or repayment of any such Security shall not be a Business Day, then payment of interest or principal need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the date of maturity or the date fixed for redemption, and no interest shall accrue for the period after such date. SECTION 11.7. Conflict of Any Provision of Indenture with Trust Indenture Act of 1939. If and to the extent that any provision of this Indenture limits, qualifies or conflicts with 47
another provision included in this Indenture which is to be included herein by any of Sections 310 to 317, inclusive, of the Trust Indenture Act of 1939, such required provision shall control. SECTION 11.8. New York Law to Govern. This Indenture and each Security shall be deemed to be a contract under the laws of the State of New York, and for all purposes shall be construed in accordance with the laws of such State, except as may otherwise be required by mandatory provisions of law. SECTION 11.9. Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. SECTION 11.10. Effect of Headings. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 11.11. Securities in Foreign Currencies. Whenever this Indenture provides for any action by, or the determination of any of the rights of, or any distribution to, holders of Securities denominated in United States dollars and in any other currency, in the absence of any provision to the contrary in the form of Security of any particular series, any amount in respect of any Security denominated in a currency other than United States dollars shall be treated for any such action or distribution as that amount of United States dollars that could be obtained for such amount on such reasonable basis of exchange and as of such date as the Issuer may specify in a written notice to the Trustee or in the absence of such written notice, as the Trustee may determine. ARTICLE TWELVE REDEMPTION OF SECURITIES AND SINKING FUNDS SECTION 12.1. Applicability of Article. The provisions of this Article shall be applicable to the Securities of any series which are redeemable before their maturity or to any sinking fund for the retirement of Securities of a series except as otherwise specified as contemplated by Section 2.3 for Securities of such series. SECTION 12.2. Notice of Redemption; Partial Redemptions. Notice of redemption to the holders of Securities of any series to be redeemed as a whole or in part at the option of the Issuer shall be given by mailing notice of such redemption by first class mail, postage prepaid, at least 30 days and not more than 60 days prior to the date fixed for redemption to such holders of Securities of such series at their last addresses as they shall appear upon the registry books. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the holder receives the notice. Failure to give notice by mail, or any defect in the notice to the Holder of any Security of a series designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security of such series. 48
The notice of redemption to each such Holder shall specify the principal amount of each Security of such series held by such Holder to be redeemed, the date fixed for redemption, the redemption price, the place or places of payment, that payment will be made upon presentation and surrender of such Securities, that such redemption is pursuant to the mandatory or optional sinking fund, or both, if such be the case, that interest accrued to the date fixed for redemption will be paid as specified in such notice and that on and after said date interest thereon or on the portions thereof to be redeemed will cease to accrue. In case any Security of a series is to be redeemed in part, only the notice of redemption shall state the portion of the principal amount thereof to be redeemed and shall state that on and after the date fixed for redemption, upon surrender of such Security, a new Security or Securities of such series in principal amount equal to the unredeemed portion thereof will be issued. The notice of redemption of Securities of any series to be redeemed at the option of the Issuer shall be given by the Issuer or, at the Issuer's request, by the Trustee in the name and at the expense of the Issuer. At least one Business Day prior to the redemption date specified in the notice of redemption given as provided in this Section, the Issuer will deposit with the Trustee or with one or more paying agents (or, if the Issuer is acting as its own paying agent, set aside, segregate and hold in trust as provided in Section 3.4) an amount of money sufficient to redeem on the redemption date all the Securities of such series so called for redemption at the appropriate redemption price, together with accrued interest to the date fixed for redemption. If less than all the outstanding Securities of a series are to be redeemed, the Issuer will deliver to the Trustee at least 60 days prior to the date fixed for redemption, an Officers' Certificate stating the aggregate principal amount of Securities to be redeemed. If less than all the Securities of a series are to be redeemed, the Trustee shall select, in such manner as it shall deem appropriate and fair, Securities of such series to be redeemed in whole or in part. Securities may be redeemed in part in multiples equal to the minimum authorized denomination for Securities of such series or any multiple thereof. The Trustee shall promptly notify the Issuer in writing of the Securities of such series selected for redemption and, in the case of any Securities of such series selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities of any series shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed. SECTION 12.3. Payment of Securities Called for Redemption. If notice of redemption has been given as above provided, the Securities or portions of Securities specified in such notice shall become due and payable on the date and at the place stated in such notice at the applicable redemption price, together with interest accrued to the date fixed for redemption, and on and after said date (unless the Issuer shall default in the payment of such Securities at the redemption price, together with interest accrued to said date) interest on the Securities or portions of Securities so called for redemption shall cease to accrue and, except as provided in Sections 6.5 and 10.4, such Securities shall cease from and after the date fixed for redemption to be entitled to any benefit or security under this Indenture, and the holders thereof shall have no right in respect of such Securities except the right to receive the redemption price thereof and 49
unpaid interest to the date fixed for redemption. On presentation and surrender of such Securities at a place of payment specified in said notice, said Securities or the specified portions thereof shall be paid and redeemed by the Issuer at the applicable redemption price, together with interest accrued thereon to the date fixed for redemption; provided that any payment of interest becoming due on the date fixed for redemption shall be payable to the Holders of such Securities registered as such on the relevant record date subject to the terms and provisions of Section 2.4 hereof. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid or duly provided for, bear interest from the date fixed for redemption at the rate of interest or Yield to Maturity (in the case of an Original Issue Discount Security) borne by the Security. Upon presentation of any Security redeemed in part only, the Issuer shall execute and the Trustee shall authenticate and deliver to or on the order of the Holder thereof, at the expense of the Issuer, a new Security or Securities of such series, of authorized denominations, in principal amount equal to the unredeemed portion of the Security so presented. SECTION 12.4. Exclusion of Certain Securities from Eligibility for Selection for Redemption. Securities shall be excluded from eligibility for selection for redemption if they are identified by registration and certificate number in a written statement signed by an authorized officer of the Issuer and delivered to the Trustee at least 30 days prior to the last date on which notice of redemption may be given as being owned of record and/or beneficially by, and not pledged or hypothecated by either (a) the Issuer or (b) an entity specifically identified in such written statement directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer. SECTION 12.5. Mandatory and Optional Sinking Funds. The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an "optional sinking fund payment". The date on which a sinking fund payment is to be made is herein referred to as the "sinking fund payment date". In lieu of making all or any part of any mandatory sinking fund payment with respect to any series of Securities in cash, the Issuer may at its option (a) deliver to the Trustee Securities of such series theretofore purchased or otherwise acquired (except upon redemption pursuant to the mandatory sinking fund) by the Issuer or receive credit for Securities of such series (not previously so credited) theretofore purchased or otherwise acquired (except as aforesaid) by the Issuer and delivered to the Trustee for cancellation pursuant to Section 2.10, (b) receive credit for optional sinking fund payments (not previously so credited) made pursuant to this Section, or (c) receive credit for Securities of such series (not previously so credited) redeemed by the Issuer through any optional redemption provision contained in the terms of such series. Securities so delivered or credited shall be received or credited by the Trustee at the sinking fund redemption price specified in such Securities. 50
On or before the sixtieth day next preceding each sinking fund payment date for any series, the Issuer will deliver to the Trustee a written statement (which need not contain the statements required by Section 11.5) signed by an authorized officer of the Issuer (a) specifying the portion of the mandatory sinking fund payment to be satisfied by payment of cash and the portion to be satisfied by credit of Securities of such series, (b) stating that none of the Securities of such series has theretofore been so credited, (c) stating that no defaults in the payment of interest or Events of Default with respect to such series have occurred (which have not been waived or cured) and are continuing and (d) stating whether or not the Issuer intends to exercise its right to make an optional sinking fund payment with respect to such series and, if so, specifying the amount of such optional sinking fund payment which the Issuer intends to pay on or before the next succeeding sinking fund payment date. Any Securities of such series to be credited and required to be delivered to the Trustee in order for the Issuer to be entitled to credit therefor as aforesaid which have not theretofore been delivered to the Trustee shall be delivered for cancellation pursuant to Section 2.10 to the Trustee with such written statement (or reasonably promptly thereafter if acceptable to the Trustee). Such written statement shall be irrevocable and upon its delivery the Issuer shall become unconditionally obligated to make all the cash payments or payments therein referred to, if any, on or before the next succeeding sinking fund payment date. Failure of the Issuer, on or before any such sixtieth day, to deliver such written statement and Securities specified in this paragraph, if any, shall not constitute a default but shall constitute, on and as of such date, the irrevocable election of the Issuer (i) that the mandatory sinking fund payment for such series due on the next succeeding sinking fund payment date shall be paid entirely in cash without the option to deliver or credit Securities of such series in respect thereof and (ii) that the Issuer will make no optional sinking fund payment with respect to such series as provided in this Section. If the sinking fund payment or payments (mandatory or optional or both) to be made in cash on the next succeeding sinking fund payment date plus any unused balance of any preceding sinking fund payments made in cash shall exceed $50,000 (or a lesser sum if the Issuer shall so request) with respect to the Securities of any particular series, such cash shall be applied on the next succeeding sinking fund payment date to the redemption of Securities of such series at the sinking fund redemption price together with accrued interest to the date fixed for redemption. If such amount shall be $50,000 or less and the Issuer makes no such request then it shall be carried over until a sum in excess of $50,000 is available. The Trustee shall select, in the manner provided in Section 12.2, for redemption on such sinking fund payment date a sufficient principal amount of Securities of such series to absorb said cash, as nearly as may be, and shall (if requested in writing by the Issuer) inform the Issuer of the serial numbers of the Securities of such series (or portions thereof) so selected. Securities of any series which are (a) owned by the Issuer or an entity known by the Trustee to be directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer, as shown by the Security register, and not known to the Trustee to have been pledged or hypothecated by the Issuer or any such entity or (b) identified in an Officers' Certificate at least 60 days prior to the sinking fund payment date as being beneficially owned by, and not pledged or hypothecated by, the Issuer or an entity directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer shall be excluded from Securities of such series eligible for selection for redemption. The Trustee, in the name and at the expense of the Issuer (or the Issuer, if it shall so request the Trustee in writing) shall cause notice of redemption of the Securities of such series to be given in substantially the manner provided in Section 12.2 (and 51
with the effect provided in Section 12.3) for the redemption of Securities of such series in part at the option of the Issuer. The amount of any sinking fund payments not so applied or allocated to the redemption of Securities of such series shall be added to the next cash sinking fund payment for such series and, together with such payment, shall be applied in accordance with the provisions of this Section. Any and all sinking fund moneys held on the stated maturity date of the Securities of any particular series (or earlier, if such maturity is accelerated), which are not held for the payment or redemption of particular Securities of such series shall be applied, together with other moneys, if necessary, sufficient for the purpose, to the payment of the principal of, and interest on, the Securities of such series at maturity. At least one Business Day before each sinking fund payment date, the Issuer shall pay to the Trustee in cash or shall otherwise provide for the payment of all interest accrued to the date fixed for redemption on Securities to be redeemed on the next following sinking fund payment date. The Trustee shall not redeem or cause to be redeemed any Securities of a series with sinking fund moneys or mail any notice of redemption of Securities for such series by operation of the sinking fund during the continuance of a default in payment of interest on such Securities or of any Event of Default except that, where the mailing of notice of redemption of any Securities shall theretofore have been made, the Trustee shall redeem or cause to be redeemed such Securities, provided that it shall have received from the Issuer a sum sufficient for such redemption. Except as aforesaid, any moneys in the sinking fund for such series at the time when any such default or Event of Default shall occur, and any moneys thereafter paid into the sinking fund, shall, during the continuance of such default or Event of Default, be deemed to have been collected under Article Five and held for the payment of all such Securities. In case such Event of Default shall have been waived as provided in Section 5.10 or the default cured on or before the sixtieth day preceding the sinking fund payment date in any year, such moneys shall thereafter be applied on the next succeeding sinking fund payment date in accordance with this Section to the redemption of such Securities. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of August 15, 1982. J.P. MORGAN & CO. INCORPORATED By________________________________ (CORPORATE SEAL] Attests By______________________________ 52
STATE OF New York ) ) ss.: COUNTY OF New York ) On this _________ day of ________before me personally came to me personally known, who, being by me duly sworn, did depose and say that he resides at ; that he is a of Manufacturers Hanover Trust Company, one of the corporations described in and which executed the above instrument; that he knows the corporate seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. [NOTARIAL SEAL] ______________________________ Notary Public 53
MANUFACTURERS HANOVER TRUST COMPANY By_________________________________ Vice President [CORPORATE SEAL] Attest: By__________________________ Trust Officer STATE OF New York ) ) ss.: COUNTY OF New York ) On this day of before me personally came , to me personally known, who, being by me duly sworn, did depose and say that he resides at ; that he is a of J. P. Morgan Co. Incorporated, one of the corporations described in and which executed the above instrument; that he knows the corporate seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. [NOTARIAL SEAL] _________________________________ Notary Public 54
Exhibit 4.5(b) FIRST SUPPLEMENTAL INDENTURE, dated as of May 5, 1986, between J. P. MORGAN & CO. INCORPORATED, a corporation duly organized and existing under the laws of the State of Delaware (hereinafter called the "Company") and MANUFACTURERS HANOVER TRUST COMPANY, a corporation duly organized and existing under the laws of the State of New York, as Trustee (hereinafter called the "Trustee", which term shall include any successor trustee appointed pursuant to Article Six of the Indenture hereinafter referred to). WITNESSETH: WHEREAS, the Company and the Trustee have heretofore executed and delivered the Indenture, dated as of August 15, 1982 (hereinafter called the "Indenture"), providing for the issuance from time to time of one or more series of Securities evidencing unsecured indebtedness of the Company (hereinafter called "Securities"); and WHEREAS, terms used in this First Supplemental Indenture which are defined in the Indenture shall have the meanings assigned to them in the Indenture; and WHEREAS, pursuant to Section 8.1(d) and (e) of the Indenture, this First Supplemental Indenture (hereinafter sometimes referred to as this "Instrument") amends the Indenture in order to permit the principal of, premium, if any, and interest on Securities issued after the date hereof to be denominated or payable in units based on or relating to currencies including European currency Units ("ECU"; references herein to coin or currency to include, unless otherwise specified or unless the context otherwise requires, ECU) and to permit the Securities to be issuable in either registered form or in bearer form with or without Coupons attached; NOW, THEREFORE; For and in consideration of the premises and the purchase of the Securities by the holders thereof, the Company covenants and agrees, for the equal and proportionate benefit of the respective holders from time to time hereafter of the Securities, as follows: ARTICLE ONE SECTION 1.01. Amendment of Recitals. The last paragraph in the Recitals is amended to read as follows: In consideration of the premises and the purchases of the Securities by the holders thereof, the Issuer and the Trustee mutually covenant and agree for the equal and proportionate benefit of the respective holders from time to time of the Securities and of the Coupons, if any, appertaining thereto as follows: SECTION 1.02. Amendment of Section 1.1. (a) The following definition of "Authorized Newspaper" is inserted immediately before the definition of "Board of Directors": "Authorized Newspaper" means a newspaper (which, in the case of the United Kingdom, will, if practicable, be the Financial Times (London Edition) and, in the
2 case of Luxembourg, will, if practicable, be the Luxemburger Wort) published in an official language of the country of publication customarily published at least once a day for at least five days in each calendar week and of general circulation in the United Kingdom or in Luxembourg, as applicable. If it shall be impractical in the opinion of the Trustee to make any publication of any notice required hereby in an Authorized Newspaper, any publication or other notice in lieu thereof which is made or given with the approval of the Trustee shall constitute a sufficient publication of such notice. (b) The following phrase is added at the end of the definition of "Business Day": "or a day on which transactions in the currency in which the Securities are payable are not conducted." (c) The following definitions of "Coupon", "ECU", "EMS" and "European communities" are inserted between the definitions of "Corporate Trust Office" and "Event of Default": "Coupon" means any interest coupon appertaining to an Unregistered Security. "ECU" means the European Currency Unit as define and revised from time to time by the Council of European Communities. "EMS" means the European Monetary System. "European Communities" means the European Economic Community (the "EEC"), the European Coal and Steel Community and Euratom. (d) The definition of "Holder" is amended to read in full as follows: "Holder", "holder of Securities", "Securityholder" or other similar terms mean (a) in the case of any Registered Security, the Person in whose name such Security is registered in the security register kept by the Issuer for that purpose in accordance with the terms hereof, and (b) in the case of any Unregistered Security, the of such Security, or any Coupon appertaining hereto, as the case may be. (e) The following definition of "Registered security" is inserted between the definitions of "principal" and "Responsible Officer": "Registered Security" means any Security registered on the Security register of the Issuer. (f) The following definition of "Unregistered Security" is inserted between the definitions of "Trust Indenture Act of 1939" and "vice president": "Unregistered Security" means any Security other than a Registered Security.
3 SECTION 1.03. Amendment of Section 2.1. (a) The first sentence of Section 2.1 shall be amended to read in full as follows: The Securities of each series and the Coupons, if any, to be attached thereto shall be substantially in such form (not inconsistent with this Indenture) as shall be established by or pursuant to a resolution of the Board of Directors or in one or more indentures supplemental hereto, in each case with such variations as are required or permitted by this Indenture and may have imprinted or otherwise reproduced thereon such legend or legends, not inconsistent with the provisions of this Indenture, as may be required to comply with any law or with any rules of any securities exchange or to conform to general usage, all as may be determined by the officers executing such Securities and coupons, if any, as evidenced by their execution of the Securities and Coupons. (b) The phrase "and Coupons" shall be added after the word "Securities" in the second paragraph of Section 2.1. SECTION 1.04. Amendment of Section 2.3. (a) Paragraph (8) of Section 2.3 is amended to read as follows: (8) if other than denominations of U.S. $1,000 and any integral multiple thereof, in the case of Registered Securities, or U.S. $1,000 in the case of the Unregistered Securities, such denominations in which Securities of the series shall be issuable; (b) Paragraphs (11), (12) and (13) of Section 2.3 of the Indenture are amended to read in full as follows: (11) if other than such coin or currency of the United States of America as at the time of payment is legal tender for payment of public or private debts, the coin or currency or units based on or relating to currencies (including ECU) in which payment of the principal of and interest on the Securities of that series shall be payable; (12) if the principal of or interest, if any, on the Securities of that series are to be payable, at the election of the Issuer or a holder thereof, in a coin or currency or units based on or relating to currencies (including ECU) other than that in which the Securities are stated to be payable, the period or periods within which, and the terms and conditions upon which, such election may be made; (13) if the amount of payments of principal of or interest, if any, on the Securities of the series may be determined with reference to an index, formula or other method based on a coin or currency or units based on or relating to currencies (including ECU) other than that in which the Securities are stated to be payable, the manner in which such amounts shall be determined; (c) Paragraph (14) shall be renumbered to be paragraph (17).
4 (d) The following new paragraphs (14), (15) and (16) are inserted between paragraphs (13) and (17): (14) whether the Securities of the series will be issuable as Registered Securities or Unregistered Securities (with or without Coupons), or both, any restrictions applicable to the offer, sale or delivery of Unregistered Securities and, if other than as provided in Section 2.8, the terms upon which Unregistered Securities of any series may be exchanged for Registered Securities of such series and the terms upon which Registered Securities may be exchanged for Unregistered Securities of such series; (15) whether and under what circumstances the Issuer will pay additional amounts on the Securities of the series held by a Person who is not a U.S. person in respect of any tax, assessment or governmental charge withheld or deducted and, if so, whether the Issuer will have the option to redeem such Securities rather than pay such additional amounts; (16) if the Securities of such series are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary Security of such series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, then the form and terms of such certificates, documents or conditions; and SECTION 1.05. Amendment of Section 2.4. (a) he phrase "having attach-ed thereto appropriate Coupons, if any," shall be inserted after the word "series" appearing in the first sentence of Section 2.4. (b) The phrase "and Coupons, if any," shall be inserted after the word "Securities" in each place in which it appears in Section 2.4. SECTION 1.06. Amendment of Section 2.5. (a) The phrase "and, if applicable, each Coupon appertaining thereto" shall be inserted after the word "Securities" in the first and third sentences of the first paragraph in Section 2.5. (b) The phrase "or Coupon" shall be inserted after the word "Security" in each place in which the word "Security" appears in the second paragraph of Section 2.5. (c) The phrase "or Coupons" shall be inserted after the word "Securities" in each place in which the word "Securities" appears in the second paragraph of section 2.5. (d) The phrase "(or the Security to which the coupon so signed appertains)" shall be inserted after the word "signed" and before the word "shall" appearing in the second paragraph of Section 2.5. SECTION 1.07. Amendment of Section 2.6. The following sentence shall be inserted after the first sentence in Section 2.6:
5 No Coupon shall be entitled to the benefits of this Indenture or shall be valid or obligatory for any purpose until such certificate by the Trustee shall have become duly executed on the Security to which such Coupon appertains. SECTION 1.08. Amendment of Section 2.7. (a) The first two sentences appearing in Section 2.7 are hereby amended to read in full as follows: The Securities shall be issuable as Registered Securities or Unregistered Securities in such denominations as shall be specified as contemplated by Section 2.3. In the absence of any such specifications with respect to the Registered Securities of any series, Registered Securities shall be issued in denomination of U.S. $1,000 and any integral multiples thereof. In the absence of any such specifications with respect to the Unregistered Securities, Unregistered Securities shall be issued in denomination of U.S. $1,000. (b) The second paragraph of Section 2.7 is hereby amended to read in full as follows: Each Registered Security shall be dated the date to its authentication. Each Unregistered Security shall be dated as provided in the resolution or resolutions of the Board of Directors of the Issuer or the supplemental indenture referred to in Section 2.3. The Securities of each series shall bear interest, if any, from the date, and such interest shall be payable on the dates, established as contemplated by Section 2.3. (c) The word "Registered" shall be inserted before the words "Security" and "Securities" in each place in which the words "Security" and "Securities" appear in the third paragraph of Section 2.7. (d) The following paragraph shall be inserted after the last paragraph appearing in Section 2.7: Any defaulted interest payable in respect of any Unregistered Security shall be payable pursuant to such procedures as may be satisfactory to the Trustee in such manner that there is no discrimination as between the holders of Registered securities and Unregistered Securities of the same series and notice of the payment date therefor shall be given by the Trustee in the name and at the expense of the Company by publication at least once in an Authorized Newspaper. In case an Unregistered Security is surrendered for exchange for a Registered Security after the close of business on any record date for the payment of defaulted interest and before the opening of business on the proposed date of payment of such defaulted interest, the Coupon appertaining to such surrendered Unregistered Security and due for payment on such proposed date of payment will not be surrendered with such surrendered Unregistered Security and interest payable on such proposed date of payment will be made only to the holder of such Coupon on such proposed date. SECTION 1.09. Amendment of Section 2.8. (a) The first sentence of the first paragraph of Section 2.8 is hereby amended to read in full as follows:
6 The issuer will keep or cause to be kept at an office or agency to be maintained for the purpose as provided in Section 3.2 a register or registers for each series of Securities issued hereunder (collectively, the "Security Register") in which, subject to such reasonable regulations as it may prescribe, it will register, and will register the transfer of, or cause the registration of the transfer of, Registered Securities as in this Article provided. (b) The word "Registered" shall be inserted before the words "Security" or "Securities" in each place in which the words "Security" or "Securities" appear in the second paragraph of Section 2.8. (c) The following paragraph shall be inserted between the second and third paragraphs of Section 2.8: Unregistered Securities (except for any temporary Unregistered Securities) and Coupons (except for Coupons attached to any temporary Unregistered Securities) shall be transferable by delivery. (d) The word "Registered" shall be inserted before the words "Security" or "Securities" in each place in which the words "Security" or "Securities" appear in the paragraph beginning "Any Security". (e) The following shall be inserted after the last sentence in the paragraph beginning "Any Security": If the Securities of any series are issued in both registered and unregistered form, except as otherwise specified pursuant to Section 2.3, at the option of the Holder thereof, Unregistered Securities of any series may be exchanged for Registered Securities of such series, maturity date and interest rate of any authorized denominations and of a like aggregate principal amount, upon surrender of such Unregistered Securities to be exchanged at the agency of the Issuer that shall be maintained for such purpose in accordance with Section 3.2, with, in the case of Unregistered Securities that have Coupons attached, all unmatured Coupons and all matured Coupons in default appertaining thereto, and upon payment, if the Issuer shall so require, of the charges hereinafter provided. At the option of the Holder thereof, if Unregistered Securities of any series, maturity date, interest rate and original issue date are issued in more than one authorized denomination, except as otherwise specified pursuant to Section 2.3, such Unregistered securities may be exchanged for Unregistered Securities of such series, maturity date, interest rate and original issue date of other authorized denominations and of a like aggregate principal amount, upon surrender of such Unregistered Securities to be exchanged at the agency of the Issuer that shall be maintained for such purpose in accordance with Section 3.2 or as specified pursuant to Section 2.3, with, in the case of Unregistered Securities that have Coupons attached, all unmatured Coupons and all matured Coupons in default thereto appertaining, and upon payment, if the Issuer shall so require, of the charges hereinafter provided. Unless otherwise specified pursuant to Section 2.3, Registered Securities of any
7 series may not be exchanged for unregistered Securities of such series. whenever any Securities and the Coupons appertaining thereto, if any, are so surrendered for exchange, the Issuer shall execute, and the Trustee shall authenticate and deliver, the Securities and the Coupons appertaining thereto, if any, which the Holder making the exchange is entitled to receive. Notwithstanding the foregoing, in case an Unregistered Security of any series is surrendered at any such office or agency in exchange for a Registered Security of the same series after the close of business at such office or agency on any record date and before the opening of business at such office or agency on the relevant interest payment date, such Unregistered Security shall be surrendered without the Coupon relating to such interest payment date or proposed date of payment, as the case may be. (f) The word "Registered" shall be inserted before the word "Securities" in the paragraph beginning with the word "All". (g) The following phrase shall be inserted at the end of the sixth paragraph of Section 2.8: and except that an Unregistered security may be exchanged for a Registered Security of the same series if such Registered Securities is immediately surrendered for redemption. (h) The following paragraph shall be inserted as the last paragraph in Section 2.8: Notwithstanding anything herein or in the terms of any series of Securities to the contrary, neither the Issuer nor the Trustee (which shall rely on an Officers' Certificate and an Opinion of Counsel) shall be required to exchange any Unregistered Security for a Registered Security if such exchange would result in adverse Federal income tax consequences to the Issuer (including, without limitation, the inability of the Issuer to deduct from its income, as computed for Federal income tax purposes, the interest payable on the Unregistered Securities) under then applicable United States Federal income tax laws. SECTION 1.10. Amendment of Section 2.9. (a) The phrase "or any Coupon appertaining to any Security" shall be inserted after the word "Security" appearing in the first sentence of Section 2.0. (b) The following phrase shall be inserted after the phrase "so destroyed, lost or stolen" appearing in the first sentence of section 2.9: with Coupons corresponding to the Coupons appertaining to the security so mutilated, defaced, destroyed, lost or stolen, or in exchange or substitution for the Security to which such mutilated, defaced, destroyed, lost or stolen Coupon appertained, with Coupons appertaining thereto corresponding to the Coupons so mutilated, defaced, destroyed, lost or stolen.
8 (c) The phrase "or Coupon" shall be inserted after the word "Security" appearing in the second sentence of the first paragraph of Section 2.9. (d) In the second and third paragraphs of Section 2.9, the phrase "or Coupon" shall be inserted after the word "Security" in each place in which the word "Security" appears and the phrase "or Coupons" shall be inserted after the word "Securities" in each place in which the word "Securities" appears. (e) In the second paragraph of Section 2.9, the phrase 11, as the case may bell shall be inserted between the words "redemption" and "in". SECTION 1.11. Amendment of Section 2.10. (a) The phrase "and Coupons" shall be inserted after the word "Securities" where the word "Securities" first appears in the first sentence of Section 2.10. (b) In the second sentence of Section 2.10, the phrase "or Coupons" shall be inserted after the word "Securities" in each place in which the word "Securities" appears in Section 2.10. SECTION 1.12. Amendment of Section 2.11. (a) The second sentence of Section 2.11 shall be amended to read as follows: Temporary Securities of any series shall be issuable as Registered Securities without Coupons, or as Unregistered Securities with or without Coupons attached thereto, of any authorized denomination, and substantially in the form of the definitive Securities of such series but with such omissions, insertions and variations as may be appropriate for temporary Registered Securities, all as may be determined by the Issuer with the concurrence of the Trustee. (b) The fifth sentence of Section 2.11 shall be amended to read as follows: Without unreasonable delay the Issuer shall execute and shall furnish definitive Securities of such series and thereupon temporary Registered securities of such series may be surrendered in exchange therefor without charge at each office or agency to be maintained by the Issuer for that purpose pursuant to Section 3.2 and in the case of Unregistered Securities together with any unmatured coupons and any matured Coupons in default appertaining thereto, at any agency maintained by the Issuer for such purpose as specified pursuant to Section 2.3, and the Trustee shall authenticate and deliver in exchange for such temporary Securities of such series a like aggregate principal amount of definitive Securities of the same series of authorized denominations and, in the case of Unregistered Securities, having attached thereto any appropriate Coupons. (c) In the sixth sentence of Section 2.11, the phrase "and any unmatured Coupons appertaining thereto" shall be inserted after the word "series" in each place in which the word "series" appears.
9 (d) The following sentences shall be inserted after the sixth sentence of Section 2.11: The provisions of this Section are subject to any restrictions or limitations an the issue and delivery of temporary Unregistered Securities of any series that may be established pursuant to Section 2.3 (including any provision that Unregistered Securities of such series initially be issued in the form of a single global Unregistered Security to be delivered to a depositary or agency of the Issuer located outside the United States and the procedures pursuant to which definitive Unregistered Securities of such series would be issued in exchange for such temporary global Unregistered Security). SECTION 1.13. Amendment of Section 3.1. (a) The following sentences shall be inserted after the first sentence of Section 3.1: The interest on Unregistered Securities with Coupons attached (together with any additional amounts payable pursuant to the terms of such Unregistered Securities) shall be payable only upon presentation and surrender of the several Coupons for such interest installments as are evidenced thereby as they severally mature. Except as specified as contemplated in Section 2.3, the interest on any temporary Unregistered Securities (together with any additional amounts payable pursuant to the terms of such temporary Unregistered Securities) shall be paid, as to the installments of interest evidenced by Coupons attached thereto, if any, only upon presentation and surrender thereof, and, as to the other installments of interest, if any, only upon presentation of such Securities for notation thereon of the payment of such interest. (b) The word "Registered" shall be inserted before the word "Securities" in the sentence beginning with the words "Each installment". SECTION 1.14. Amendment of Section 3.2. (a) The word "Registered" shall be inserted before the word "Securities" in clauses (a), (b) and (c) of the first sentence of Section 3.2. (b) The second sentence of Section 3.2 shall begin as a new paragraph. (c) The following paragraph shall be inserted after the first paragraph of Section 3.2: The Issuer will maintain one or more agencies in a city or cities located outside the United States (including any city in which such an agency is required to be maintained under the rules of any stock exchange on which the Securities of such series are listed) where the Unregistered securities, if any, of each series and coupons, if any, appertaining thereto may be presented and surrendered for payment. No payment on any Unregistered Security or Coupon will be made upon presentation of such Unregistered Security or Coupon at an agency of the Issuer within the United States nor will any payment be made by transfer to an account in, or by mail to an address in, the United States unless pursuant to applicable United States laws and regulations then in effect,
10 such payment can be made without adverse tax consequences to the Issuer. Notwithstanding the foregoing, payments in U.S. dollars on Unregistered Securities of any series and Coupons appertaining thereto which are denominated in U.S. dollars may be made at an agency of the Issuer maintained in the Borough of Manhattan, The City of New York if such payment in U.S. dollars at each agency maintained by the Issuer outside the United States for payment on such Unregistered Securities is illegal or effectively precluded by exchange controls or other similar restrictions. (d) The phrase "and Coupons" shall be inserted after the word "Securities" in the third paragraph of Section 3.2. SECTION 1.15. Amendment of Section 3.4. The phrase "or the Coupons appertaining thereto," shall be inserted after the word "series" where it last appears in clause (a) of the first paragraph of Section 3.4 and in the third paragraph of Section 3.4. SECTION 1.16. Addition of New Section 3.6. The following Section 3.6 shall be inserted after Section 3.5: SECTION 3.6. Luxembourg Publications. In the event of the publication of any notice pursuant to Section 5.11, 6.10(a), 6.11, 8.2, 10.4 or 12.2, the party making such publication in London shall also, to the extent that notice is required to be given to Holders of Securities of any series by applicable Luxembourg law or stock exchange regulation, as evidenced by an officers' Certificate delivered to such party, make a similar publication in Luxembourg. SECTION 1.17. Amendment of Section 4.1. The phrase "and all of the Securities of any series are Registered Securities," shall be inserted after the word "series" appearing in the proviso of Section 4.1. SECTION 1.18. Amendment of Section 4.2. (a) "(i)" shall be inserted between the words "Securities" and "contained" in the first sentence of paragraph (a) of Section 4.2. a comma shall be inserted after 114.111 appearing in the first sentence of paragraph (a) of Section 4.2 and the remainder of such sentence shall be replaced by the following: (ii) received by it in the capacity of Security registrar for such series, if so acting and (iii) filed with it within the two preceding years pursuant to 4.4 (c) (ii). (b) The phrase "and Coupons" shall be inserted after the word "Securities" where it first appears in clause (c) of Section 4.2. SECTION 1.19. Amendment of Section 4.4. Clause (c) of Section 4.4 shall be amended to read in full as follows: (c) Reports pursuant to this Section shall be transmitted by mail:
11 (i) to all registered Holders of securities, as the names and addresses of such Holders appear upon the registry books of the Issuer; (ii) to such other Holders of Securities as have, within two years preceding such transmission, filed their names and addresses with the Trustee for that purpose; and (iii) except in the case of reports pursuant to subsection-(b), to each Holder of a Security whose name and address are preserved at the time by the Trustee as provided in Section 4.2(a). SECTION 1.20. Amendment of Section 5.2. (a) The phrase ", and such Coupons, if any" shall be inserted after the phrase "on all Securities of such series" appearing in the first paragraph of Section 5.2. (b) The word "registered" shall be deleted in the second paragraph of Section 5.2. (c) The phrase "or Coupons appertaining to such Securities" shall be inserted after the word "series" appearing in the fourth paragraph of Section 5.2. (d) The phrase "or Coupons appertaining to such Securities," shall be inserted after the word "Securities" in each place in which the word "Securities" appears in the fifth and sixth paragraphs of Section 5.2. SECTION 1.21. Amendment of Section 5.3. The phrase "and Coupons appertaining to such securities" shall be inserted after the word "Securities" where it first appears in the first paragraph of Section 5.3. SECTION 1.22. Amendment of Section 5.6. (a) The phrase "or of any Coupon appertaining thereto" shall be inserted after the word "series" where it first appears in Section 5.6. (b) The phrase "or Coupon" shall be inserted after the word "Security" and the phrase "or Coupons appertaining to such Securities" shall be inserted after the word "series" in each place in which the words "Security" or "series", as the case may be, appear after the semi-colon in the first sentence of Section 5.6. SECTION 1.23. Amendment of Section 5.7. The phrase "or Coupon" shall be inserted after the word "Security" in each place in which the word "Security" appears in Section 5.7. SECTION 1.24. Amendment of Section 5.11. (a) The portion of the first sentence of Section 5.11 beginning with the first word appearing therein through and including the word "thereof" shall be deleted and replaced by the following: The Trustee shall, within 90 days after the occurrence of a default with respect to the Securities of any series known to the Trustee, provide notice to the Holders of
12 Securities of such series and Coupons appertaining thereto, if any, (i) if any Unregistered Securities of that series are then Outstanding, to the Holders thereof, by publication at least once in an Authorized Newspaper in London (and, if required by Section 3.6, at least once in an Authorized Newspaper in Luxembourg), (ii) if any Unregistered Securities of that series are then outstanding, to all Holders thereof who have filed their names and addresses with the Trustee pursuant to Section 4.4(c)(ii), by mailing such notice to such Holders at such addresses and (iii) to all Holders of then Outstanding Registered Securities of that series, by mailing such notice to such Holders at their addresses as they shall appear in the registry books, SECTION 1.25. Amendment of Section 5.12. The phrase "or Coupon" shall be inserted after the word "Security" in each place in which the word "Security" appears in Section 5.12. SECTION 1.26. Amendment of Section 6.3. The phrase "or Coupons" shall be inserted after the word "Securities" in each place in which the word "Securities" appears in the first and second sentences of Section 6.3. SECTION 1.27. Amendment of Section 6.4. The phrase "or Coupons" shall be inserted after the word "Securities" appearing in section 6.4 and in the heading thereto. SECTION 1.28. Amendment of Section 6.6. The phrase "or Coupons" shall be inserted after the word "Securities" in each place in which it appears in the last sentence of Section 6.6. SECTION 1.29. Amendment of Section 6.8. Paragraph (b) of Section 6.8 is amended to read in full as follows: In the event that the Trustee shall fail to comply with the provisions of subsection (a) of this Section, the Trustee shall, within 10 days after the expiration of such 90 day period, provide notice of such failure to the Securityholders in the manner and to the extent required by Section 4.4(c) SECTION 1.30. Amendment of Section 6.10. The following shall be inserted after the word "and" and before the word "by" appearing in the first sentence of the first paragraph of Section 6.10: (i) if any Unregistered Securities of a series affected are then Outstanding, by giving notice of such resignation to the Holders thereof, by publication at least once in an Authorized Newspaper in London (and, if required by Section 3.6, at least once in an Authorized Newspaper in Luxembourg), (ii) if any Unregistered Securities of a series affected are then Outstanding, by mailing notice of such resignation to the Holders thereof who have filed their names and addresses with the Trustee pursuant to Section 4.4(c)(ii) at such addresses as were so furnished to the Trustee and (iii) if any Registered Securities of a series affected are then outstanding,
13 SECTION 1.31. Amendment of Section 6.11. (a) The word "the" immediately preceding the word "Holders" appearing in the first sentence of the fourth paragraph of Section 6.11 shall be changed to the word "such". (b) The following shall be inserted after the word "thereof" and before the word "by" appearing in the first sentence of the fourth paragraph of Section 6.11: (a) if any Unregistered Securities of a series affected are then Outstanding, to the Holders thereof, by publication of such notice at least once in an Authorized Newspaper in London (and, if required by Section 3.8, at least once in an Authorized Newspaper in Luxembourg), (b) if any Unregistered Securities of a series affected are then Outstanding, to the Holders thereof who have filed their names and addresses with the Trustee pursuant to Section 4.4(c)(ii), by mailing such notice to such Holders at such addresses as were so furnished to the Trustee (and the Trustee shall make such information available to the Issuer for such purpose) and (c) if any Registered Securities of a series affected are then outstanding, to the Holders of Registered Securities of each series affected, SECTION 1.32. Amendment of Section 7.2. Section 7.2 is amended to read in full as follows: Subject to Sections 6.1 and 6.2, the fact and date of the execution of any instrument by a Securityholder or his agent or proxy and the amount and numbers of Securities of any series held by the person so executing any instrument by a Securityholder or his agent or proxy and the amount and numbers of any Security or Securities for such series may also be proven in accordance with such reasonable rules and regulations as may be prescribed by the Trustee for such series or in any other manner which the Trustee for such series may deem sufficient. SECTION 1.33. Amendment of Section 7.3. (a) The following sentence shall be inserted after the first sentence of Section 7.3: The Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the Holder of any Unregistered Security and the Holder of any Coupon as the absolute owner of such Unregistered Security or Coupon (whether or not such Unregistered Security or Coupon shall be overdue) for the purpose of receiving payment thereof or on account thereof and for all other purposes and neither the Issuer, the Trustee, nor any agent of the Issuer or the Trustee shall be affected by any notice to the contrary. (b) The phrase "or Coupon" shall be inserted after the word "Security" appearing in the last sentence of Section 7.3. SECTION 1.34. Amendment of Section 8.1. (a) The phrase "or Coupons" shall be inserted after the word "Securities" where it first appears in clause (c) of Section 8.1.
14 (b) Clause (e) of Section 8.1 shall be deleted; clause (f) shall become clause (e) and clause (g) shall become clause (f). (c) The phrase "or of the Coupons appertaining to such Securities" shall be inserted after the word "series" in clause (e) of Section 8.1. SECTION 1.35. Amendment of Section 8.2. (a) The phrase "or the Coupons appertaining to such Securities" shall be inserted following the phrase "such series" appearing before the proviso in the first sentence of Section 8.2. (b) The clause "or change the currency of payment thereof" shall be replaced by the clause "or change the coin or currency or units based on or related to currencies (including ECU) of payment thereof". (c) "(i)" shall be inserted in the fourth paragraph of Section 8.2 between the words "thereof" and "by"; (d) the phrase "Holders of Securities" appearing in the fourth paragraph of Section 8.2 shall be replaced by the phrase "Holders of then Outstanding Registered Securities"; (e) the phrase "setting forth in general terms the substance of such supplemental indenture" appearing in the fourth paragraph of Section 8.2 shall be replaced by the following: , (ii) 46f any Unregistered Securities of a series affected thereby are then Outstanding, to the Holders thereof who have filed their names and addresses with the Trustee pursuant to Section 4.4(c)(ii), by mailing a notice thereof by first-class mail to such Holders at such addresses as were so furnished to the Trustee and (iii) if any Unregistered Securities of a series affected thereby are then Outstanding, to all Holders thereof, by publication of a notice thereof at least once in an Authorized Newspaper in London (and, if required by Section 3.6, at least once in an Authorized Newspaper in Luxembourg), and in each case such notice shall set forth in general terms the substance of such supplemental indenture. SECTION 1.36. Amendment of Section 9.1. The phrase "and Coupons" shall be inserted after the word "Securities" appearing in Section 9.1. SECTION 1.37. Amendment of Section 9.2. (a) The phrase ",together with any Coupons appertaining thereto," shall be inserted after the phrases "under the Securities", "Securities issuable hereunder", "deliver any Securities", "and any Securities" and "Securities so issued" appearing in the first paragraph of Section 9.2. (b) The phrase "and Coupons" shall be inserted after the word "Securities" appearing in the last sentence of the first paragraph of Section 9.2 and in the second paragraph of Section 9.2.
15 SECTION 1.38. Amendment of Section 10.1. (a) The phrase "and all unmatured coupons appertaining thereto" shall be inserted after the phrases "authenticated hereunder", "theretofore authenticated", any Securities of such series", "all Securities of such series", and "any series" appearing in Section 10.1. (b) The phrase "and Coupons appertaining thereto" shall be inserted following the phrases "(other than Securities", and "Securities of such series". I (c) The phrase "or Coupons" shall be inserted following the phrase "Stolen Securities" appearing in clause (ii) of Section 10.1. (d) The word "Securityholders" shall be replaced with the phrase "Holders of Securities of such series and Coupons appertaining thereto". (e) The phrase "and Coupons" shall be inserted following the word "Securities" in each place in which the word "Securities" appears in the proviso of the first sentence of Section 10.1. SECTION 1.39. Amendment of Section 10.2. The phrase "and of Coupons appertaining thereto" shall be inserted after the word "series" appearing in Section 10.2. SECTION 1.40. Amendment of Section 10.4. (a) That portion of the paragraph beginning "may at the Issuer's expense . . . 11 through the end of such paragraph shall be deleted and replaced with the following: with respect to moneys deposited with it for any payment (a) in respect of Registered Securities of any series, shall at the expense of the Issuer, mail by first-class mail to Holders of such Securities at their addresses as they shall appear on the Security register, and (b) in respect of Unregistered Securities of any series, shall at the expense of the Issuer cause to be published once, in an Authorized Newspaper in London (and if required by Section 3.6, once in an Authorized Newspaper in Luxembourg), notice, that such moneys remain and that, after a date specified therein, which shall not be less than thirty days from the date of such mailing or publication, any unclaimed balance of such money then remaining will be repaid to the Issuer. SECTION 1.41. Amendment of Section 11.1. The phrase "and the Coupons appertaining thereto" shall be inserted after the word "Securities" in each place in which the word "Securities" appears in Section 11.1. SECTION 1.42. Amendment of Section 11.2. (a) The phrase "Securityholders" appearing in the heading of Section 11.2 shall be replaced by the phrase "Holders of Securities and Coupons". (b) The phrase "or in the Coupons appertaining thereto" shall be inserted after the word "Securities" and before the word "expressed" appearing in Section 11.2.
16 (c) The phrase "or Coupons" shall be inserted after the word "Securities" and before the word "any" appearing in Section 11.2. SECTION 1.43. Amendment of Section 11.4. (a) in the heading and the text of Section 11.4, the word "Securityholders" shall be replaced by the phrase "Holders of Securities and Coupons". (b) The phrase "or Coupons" shall be inserted after the word "Securities" appearing in the first sentence of Section 11.4. SECTION 1.44. Amendment of Section 11.6. The phrase "or any Coupons appertaining thereto" shall be inserted after the word "series" appearing in section 11.6. SECTION 1.45. Amendment of Section 11.8. The phrase "and Coupon" shall be inserted after the word "Security" appearing in Section 11.8. SECTION 1.46. Amendment of Section 11.11. Section 11.11 is amended to read in full as follows: SECTION 11.11 Securities in Foreign currencies or in ECU. Whenever this Indenture provides for any action by, or the determination of any of the rights of, or any distribution to, Holders of Securities denominated in United States dollars and in any other currency or currency unit (including ECU), in the absence of any provision to the contrary in the form of Security of any particular series, any amount in respect of any Security denominated in a currency or currency unit (including ECU) other than United States dollars shall be treated for any such action or distribution as that amount of United States dollars that could be obtained for such amount on such reasonable basis of exchange and as of such date as the Issuer may specify in a written notice to the Trustee or in the absence of such written notice, as the Trustee shall so determine. SECTION 1.47. Amendment of Section 12.2 .(a) The word "Registered" shall be inserted immediately preceding the word "Securities" where it first appears in Section 12.2. (b) The following shall be inserted between the first and second sentences of Section 12.2: Notice of redemption to the Holders of Unregistered Securities to be redeemed as a whole or in part, who have filed their names and addresses with the Trustee pursuant to Section 4.4(c)(ii), shall be given by mailing notice of such redemption, by first class mail, postage prepaid, at least thirty days and not more than sixty prior to the date fixed for redemption, to such Holders at such addresses as were so furnished to the Trustee (and, in the case of any such notice given by the Issuer, the Trustee shall make such information available to the Issuer for such purpose). Notice of redemption to all other holders of Unregistered Securities shall be published in an Authorized Newspaper in London (and, if required by Section 3.6, in an Authorized Newspaper in Luxembourg), in each case, once in
17 each of two successive calendar weeks, the first publication to be not less than thirty nor more than sixty days prior to the date fixed for redemption. (c) The following clause shall be inserted after the phrases "surrender of such Securities" and "surrender of such Security" appearing in the second paragraph of Section 12.2: and, in the case of Securities with Coupons attached thereto, of all Coupons appertaining thereto maturing after the date fixed for redemption SECTION 1.48. Amendment of Section 12.4. (a)The phrase "or Coupons, as the case may be," shall be inserted after the phrase "new Security or Securities" appearing in the last sentence of Section 12.2. SECTION 1.49. Amendment of Section 12.3. (a) The phrase "and the unmatured Coupons, if any, appertaining thereto shall be void", shall be inserted after the word "accrue", appearing in the first sentence of the first paragraph of Section 12.3 (b) The phrase "together with all Coupons, if any, appertaining thereto maturing after the date fixed for redemption", shall be inserted between the words "notice," and "said" appearing in the second sentence of the first paragraph of Section 12.3. (c) The phrase "with, in the case of any Unregistered Securities that have Coupons attached, all matured Coupons in default appertaining thereto" shall be inserted between the words "Securities" and "or" appearing in the second sentence of the first paragraph of Section 12.3. (d) The following phrase shall be inserted between the words "payable" and "to" in the proviso of the first paragraph of Section 12.3: in the case of Securities with Coupons attached thereto, to the bearers of the Coupons for such interest upon surrender thereof, and in the case of Registered Securities, (e) The following paragraph shall be inserted immediately following the second paragraph which begins "If any Security called": If any Security with Coupons attached thereto is surrendered for redemption and is not accompanied by all appurtenant Coupons maturing after the date fixed for redemption, the surrender of such missing Coupon or Coupons may be waived by the Issuer and the Trustee, if there be furnished to each of them such security or indemnity as they may require to save each of them harmless. (f) The phrase "or Coupons appertaining thereto" shall be inserted after the word "Security" in each place in which the word "Security" appears in the last paragraph of Section 12.3. (g) The phrase "together with all Coupons, is any, appertaining thereto" shall be inserted after the word "series" appearing in the last paragraph of Section 12.3.
18 SECTION 1.50. Amendment of Section 12.4. (a) The phrase "At least one Business Day immediately preceding before each sinking fund payment date, the Issuer shall pay to the Trustee in cash or" shall be inserted immediately preceding the word "shall" where it first appears on the last page of the Indenture. (b) The phrase "mail any" appearing in the first sentence of the last paragraph of Section 12.4 shall be replaced by the word "provide". (c) The phrase "or publication" shall be inserted between the words "'mailing" and "of" appearing in the first sentence of the last paragraph of Section 12.4.
19 ARTICLE TWO . This First Supplemental Indenture shall be effective as of the opening of business on the date first above written upon the execution and delivery hereof by each of the parties hereto. . This Instrument shall be governed by and construed in accordance with the laws of the jurisdiction which govern the Indenture and its construction. . This Instrument may be executed in any number of counterparts each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. J. P. MORGAN & CO. INCORPORATED By________________________________ ATTEST: ___________________ Secretary MANUFACTURERS HANOVER TRUST COMPANY, Trustee By________________________________ Vice President ATTEST: _________________________ Trust Officer
20 ARTICLE TWO SECTION 2.01. This First Supplemental Indenture shall be effective as of the opening of business on the date first above written upon the execution and delivery hereof by each of the parties hereto. SECTION 2.02. This Instrument shall be governed by and construed in accordance with the laws of the jurisdiction which govern the Indenture and its construction. SECTION 2.03. This Instrument may be executed in any number of counterparts each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. J. P. MORGAN & CO. INCORPORATED By________________________________ ATTEST: _________________________ Secretary MANUFACTURERS HANOVER TRUST COMPANY, Trustee By________________________________ Vice President ATTEST: _________________________ Trust Officer
21 STATE OF NEW YORK ) : ss.: COUNTY OF NEW YORK ) On the __ day of August 1986, before me personally came _____________,to me known, who, being by me duly sworn, did depose and say that he is a _______________ of J. P. MORGAN & CO. INCORPORATED, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. _______________________________ Notary Public
TABLE OF CONTENTS PAGE ARTICLE One.......................................................................................................1 SECTION 1.01. Amendment of Recitals.........................................................1 SECTION 1.02. Amendment of Section 1.1......................................................1 SECTION 1.03. Amendment of Section 2.1......................................................3 SECTION 1.04. Amendment of Section 2.3......................................................3 SECTION 1.05. Amendment of Section 2.4......................................................4 SECTION 1.06. Amendment of Section 2.5......................................................4 SECTION 1.07. Amendment of Section 2.6......................................................5 SECTION 1.08. Amendment of Section 2.7......................................................5 SECTION 1.09. Amendment of Section 2.8......................................................6 SECTION 1.10. Amendment of Section 2.9......................................................7 SECTION 1.11. Amendment of Section 2.10.....................................................8 SECTION 1.12. Amendment of Section 2.11.....................................................8 SECTION 1.13. Amendment of Section 3.1......................................................9 SECTION 1.14. Amendment of Section 3.2......................................................9 SECTION 1.15. Amendment of Section 3.4.....................................................10 SECTION 1.16. Addition of New Section 3.6..................................................10 SECTION 1.17. Amendment of Section 4.1.....................................................10 SECTION 1.18. Amendment of Section 4.2.....................................................10 SECTION 1.19. Amendment of Section 4.4.....................................................11 SECTION 1.20. Amendment of Section 5.2.....................................................11 SECTION 1.21. Amendment of Section 5.3.....................................................11 SECTION 1.22. Amendment of Section 5.6.....................................................12
23 SECTION 1.23. Amendment of Section 5.7.....................................................12 SECTION 1.24. Amendment of Section 5.11....................................................12 SECTION 1.25. Amendment of Section 5.12....................................................12 SECTION 1.26. Amendment of Section 6.3.....................................................12 SECTION 1.27. Amendment of Section 6.4.....................................................12 SECTION 1.28. Amendment of Section 6.6.....................................................13 SECTION 1.29. Amendment of Section 6.8.....................................................13 SECTION 1.30. Amendment of Section 6.10....................................................13 SECTION 1.31. Amendment of Section 6.11....................................................13 SECTION 1.32. Amendment of Section 7.2.....................................................14 SECTION 1.33. Amendment of Section 7.3.....................................................14 SECTION 1.34. Amendment of Section 8.1.....................................................14 SECTION 1.35. Amendment of Section 8.2.....................................................14 SECTION 1.36. Amendment of Section 9.1.....................................................15 SECTION 1.37. Amendment of Section 9.2.....................................................15 SECTION 1.38. Amendment of Section 10.1....................................................15 SECTION 1.39. Amendment of Section 10.2....................................................16 SECTION 1.40. Amendment of Section 10.4....................................................16 SECTION 1.41. Amendment of Section 11.1....................................................16 SECTION 1.42. Amendment of Section 11.2....................................................16 SECTION 1.43. Amendment of Section 11.4....................................................17 SECTION 1.44. Amendment of Section 11.6....................................................17 SECTION 1.45. Amendment of Section 11.8....................................................17 SECTION 1.46. Amendment of Section 11.11...................................................17 SECTION 1.47. Amendment of Section 12.2....................................................17
24 SECTION 1.48. Amendment of Section 12.4....................................................18 SECTION 1.49. Amendment of Section 12.3....................................................18 SECTION 1.50. Amendment of Section 12.4....................................................19 ARTICLE Two......................................................................................................20 ARTICLE Three....................................................................................................21
Exhibit 4.5(c) ================================================================================ J. P. MORGAN & CO. INCORPORATED AND FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, as Trustee ----------------------- SECOND SUPPLEMENTAL INDENTURE Dated as of February 27, 1996 ================================================================================
SECOND SUPPLEMENTAL INDENTURE dated as of February 27, 1996 (this "Supplemental Indenture"), between J. P. MORGAN & CO. INCORPORATED, a corporation duly organized and existing under the laws of the State of Delaware (the "Company") and FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, successor to Chemical Bank (formerly Manufacturers Hanover Trust Company), a national banking association, as Trustee (hereinafter called the "Trustee", which term shall include any successor trustee appointed pursuant to Article Six of the Basic Indenture hereinafter referred to). WHEREAS the Company and the Trustee have entered into an Indenture, dated as of August 15, 1982, as amended by supplemental indentures, including a First Supplemental Indenture, dated as of May 5, 1986 (as so amended, the "Basic Indenture"), providing for the issuance from time to time of one or more series of Securities (as such term is defined in the Basic Indenture) evidencing unsecured indebtedness of the Company; WHEREAS the Company proposes to issue one or more series of "Mandatorily Exchangeable Debt Securities sm" (each such series of Securities being referred to herein as "MEDS sm"), the principal amount at Maturity of which is mandatorily exchangeable into securities or obligations (the "Exchange Issuer Securities") of J.P. Morgan or other persons (collectively, the "Exchange Issuers") or, at the option of the Company, payable in cash, in either case at an Exchange Rate as described herein; WHEREAS Sections 8.1(f) and (d) of the Basic Indenture provide that without the consent of the Holders of Securities, the Company, when authorized by a resolution of its Board of Directors, and the Trustee may enter into one or more indentures supplemental to the Basic Indenture (a) to establish the form or terms of Securities of any series as permitted by Sections 2.1 and 2.3 thereof and (b) to cure any ambiguity or to correct or supplement any provision contained in the Basic Indenture or any supplemental indenture which may be defective or inconsistent with any other provision of the Basic Indenture or any supplemental indenture or to make such other provisions in regard to matters or questions arising under the Basic Indenture or any supplemental indenture as the Board of Directors may deem necessary or desirable and which shall not materially and adversely affect the interests of the Holders of the Securities; WHEREAS the entry into this Supplemental Indenture by the parties hereto is in all respects authorized by the provisions of the Basic Indenture; and WHEREAS all things necessary to make this Supplemental Indenture a valid agreement of the Company in accordance with its terms have been done. NOW, THEREFORE, for and in consideration of the premises and purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders, without preference, priority or distinction of any of the Securities over any of the others by reason of difference in series or priority in time of issuance, negotiation or maturity thereof, or otherwise except as otherwise provided in the Basic Indenture or this Supplemental Indenture, as follows:
ARTICLE I Amendments to the Basic Indenture The Basic Indenture is amended as set forth below: SECTION 1.01. Amendment to Section 2.3. The Basic Indenture is hereby amended by amending Section 2.3 of the Basic Indenture by (i) adding as a new paragraph (17) the following: "(17) the terms and conditions, if any, upon which the Securities of such series may or shall be convertible into or exchangeable or exercisable for or payable in, among other things, other securities (whether or not issued by, or the obligation of, the Company), instruments, contracts, currencies, commodities or other forms of property, rights or interests or any combination of the foregoing; and"; and by (ii) renumbering current paragraph (17) of Section 2.3 to paragraph (18). SECTION 1.02. Amendments to Authorize MEDS. The Basic Indenture is hereby amended, solely with respect to one or more series of Securities that consist of MEDS, as follows: (a) By amending Section 1.1 to add new definitions thereto, in the appropriate alphabetical sequence, as follows: "Closing Price" has the meaning specified in Section 13.1. "Conversion Premium", with respect to any issuance of MEDS, shall be equal to the quotient of (i) the Threshold Appreciation Price less the Initial price, divided by (ii) the Initial Price. "Exchange Issuer" means the Company or other persons into whose securities or obligations the principal amount of the MEDS are mandatorily exchangeable at Maturity, at the option of the Company. "Exchange Issuer Securities" means the securities or obligations of the Exchange Issuer into which the principal amount of the MEDS are mandatorily exchangeable at Maturity, at the option of the Company. "Exchange Rate" has the meaning specified in Section 13.1. "Extraordinary Cash Dividend" has the meaning specified in Section 13.3. "Initial Price", with respect to any issuance of MEDS, shall have the meaning set forth in the applicable Prospectus Supplement. "Maturity", when used with respect to any Security, means the date on which the principal of such Security (or any installment of principal) becomes due and payable as 2
therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise. "Maturity Price" has the meaning specified in Section 13.1. "MEDS" means any series of "Mandatorily Exchangeable Debt SecuritiesSM" of the Company, the principal amount at Maturity of which is mandatorily exchangeable into the Exchange Issuer Securities of the Exchange Issuers at the option of the Company. "NYSE" has the meaning specified in Section 13.1. "Prospectus Supplement" means any prospectus of the Company, whether or not filed pursuant to Rule 424(b) of the Securities Act of 1933, as amended, providing for the issuance of a series of MEDS. "Reorganization Event" has the meaning specified in Section 13.3. "Stated Maturity", when used with respect to any Security, or any installment of principal thereof or interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security, or such installment of principal or interest, is due and payable. "Threshold Appreciation Price", with respect to any issuance of MEDS, shall have the meaning set forth in the applicable Prospectus Supplement. "Trading Day" has the meaning specified in Section 13.1. "Transaction Value" has the meaning specified in Section 13.3. (b) By amending Section 6.1 of the Basic Indenture by (i) deleting the word "and" at the end of clause (b); (ii) replacing the period at the end of clause (c) with "; and" ; and (iii) adding as a new clause (d) the following: "(d) the Trustee shall not at any time be under any duty or responsibility to any Holder of a Security that may or shall be convertible into or exchangeable or exercisable for or payable in, among other things, other securities, instruments, contracts, currencies, commodities or other forms of property, rights or interests or any combination of the foregoing, (A) to make or cause to be made any adjustment of the amount of, among other things, the securities, instruments, contracts, currencies, commodities or other forms of property, rights or interests or any combination of the foregoing that may be issued, transferred or delivered to such Holder, or to determine whether any facts exist which may require any such adjustment, or with respect to the nature or extent of any such adjustment when made, or with respect to any method employed in making the same, (B) to account for the validity or value (or the kind or amount) of, among other things, the securities, instruments, contracts, currencies, commodities or other forms of property, rights or interests or any combination of the foregoing that may at any time be issued, transferred or delivered to such Holder or (C) with respect to the failure of the Company to issue, transfer or deliver, among other things, any 3
securities, instruments, contracts, currencies, commodities or other forms of property, rights or interests or any combination of the foregoing pursuant to the terms of such Security." (c) By amending Section 8.2 of the Basic Indenture by deleting at the end of proviso (a) thereof, the words "without the consent of the Holder of each Security so affected, or" and inserting in place thereof the following: "or change the terms or conditions of any Securities so as to adversely affect the terms or conditions upon which such Securities are convertible into or exchangeable or exercisable for or payable in, among other things, other securities, instruments, contracts, currencies, commodities or other forms of property, rights or interests or any combination of the foregoing without, in each case, the consent of the Holder of each Security so affected, or". (d) By adding the following Article Thirteen: "ARTICLE THIRTEEN Exchange of MEDS SECTION 13.1. Exchange at Maturity. At Maturity, the principal amount payable with respect to each series of MEDS shall be automatically and mandatorily exchanged into a number of securities ("Exchange Issuer Securities") of the Exchange Issuer at the applicable Exchange Rate (as defined below). The "Exchange Rate" with respect to each series of MEDS shall be equal to, subject to adjustment as a result of certain dilution events relating to the Issuer Exchange Securities as provided for in Section 13.3, (a) if the Maturity Price (as defined below) is greater than or equal to the "Threshold Appreciation Price" (as set forth in the applicable Prospectus Supplement), a number of Exchange Issuer Securities equal to a fraction, the numerator of which is one and the denominator of which is the sum of one and the Conversion Premium, (b) if the Maturity Price is less than the Threshold Appreciation Price but is greater than the Initial Price, a fractional Exchange Issuer Security per MEDS so that the value of such fractional Exchange Issuer Security (determined at the Maturity Price) is equal to the Initial Price (such fractional share being calculated to the nearest 1/10,000th of a share or, if there is not a nearest 1/10,000th of a share, to the next highest 1/10,000th of a share) and (c) if the Maturity Price is less than or equal to the Initial Price, one Exchange Issuer Security per MEDS. No fractional Exchange Issuer Securities will be issued at Maturity as provided in Section 13.2. Notwithstanding the foregoing, the Company may, at its option in lieu of delivering Exchange Issuer Securities, deliver cash in an amount (calculated to the nearest 1/100th of a dollar per MEDS or, if there is not a nearest 1/100th of a dollar, then to the next higher 1/100th of a dollar) equal to the value of such number of Exchange Issuer Securities at the Maturity Price. In determining the amount of cash deliverable in exchange for the MEDS in lieu of Exchange Issuer Securities pursuant to the immediately preceding sentence hereof, if more than one MEDS shall be surrendered for exchange at one time by the same Holder, the amount of cash which shall be delivered upon exchange shall be computed on the basis of the aggregate number of MEDS so surrendered at Maturity. The "Maturity Price" is defined as the average Closing Price per Exchange Issuer Security on the number of Trading Days specified in the applicable Prospectus Supplement 4
immediately prior to, but not including, the Maturity date. The "Closing Price" of any security on any date of determination means the closing sale price (or, if no closing price is reported, the last reported sale price) of such security on the New York Stock Exchange (the "NYSE") on such date or, if such security is not listed for trading on the NYSE on any such date, as reported in the composite transactions for the principal United States securities exchange on which such security is so listed, or if such security is not so listed on a United States national or regional securities exchange, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System, or, if such security is not so reported, the last quoted bid price for such security in the over-the-counter market as reported by the National Quotation Bureau or similar organization, or, if such bid price is not available, the market value of such security on such date as determined by a nationally recognized independent investment banking firm retained for such purpose by the Company. A "Trading Day" is defined as a day on which the security the Closing Price of which is being determined (A) is not suspended from trading on any national or regional securities exchange or association or over-the-counter market at the close of business and (B) has traded at least once on the national or regional securities exchange or association or over-the-counter market that is the primary market for trading of such security SECTION 13.2. No Fractional Securities. No fractional securities or scrips representing fractional Exchange Issuer Securities shall be issued or delivered upon the exchange at Maturity of any MEDS. If more than one MEDS of any series shall be surrendered for exchange at one time by the same Holder, the number of full Exchange Issuer Securities which shall be delivered upon exchange, in whole or in part, as the case may be, shall be computed on the basis of the aggregate number of MEDS so surrendered at Maturity. Instead of any fractional Exchange Issuer Security which would otherwise be deliverable upon exchange of any MEDS at Maturity, the Company, through any applicable paying agent, shall make a cash payment in respect of such fractional interest in an amount equal to the value of such fractional Exchange Issuer Security at the Maturity Price. The Company shall, upon exchange of any MEDS, provide cash to any applicable paying agent in an amount equal to the cash payable with respect to any fractional Exchange Issuer Securities deliverable upon exchange of such MEDS in lieu of such fractional Exchange Issuer Securities. SECTION 13.3. Adjustment of Exchange Rate. (a) Adjustment for Distributions, Reclassifications, etc. The Exchange Rate shall be subject to adjustment from time to time as follows: (i) If an Exchange Issuer shall: (A) pay a dividend or make a distribution with respect to the Exchange Issuer Securities in such securities; (B) subdivide or split the outstanding Exchange Issuer Securities into a greater number of securities; (C) combine the outstanding Exchange Issuer Securities into a smaller number of securities; or 5
(D) issue by reclassification of Exchange Issuer Securities any other securities of the Exchange Issuer; then, in any such event, the Exchange Rate in effect immediately prior to such event shall each be adjusted so that the holder of any MEDS of the relevant series shall thereafter be entitled to receive, upon mandatory exchange of the principal amount of such MEDS at Maturity, as set forth in Section 13.1, the number of Exchange Issuer Securities which such holder would have owned or been entitled to receive immediately following any event described above had such MEDS been exchanged immediately prior to such event or any record date with respect thereto. Each such adjustment shall become effective at the opening of business on the Business Day next following the record date for determination of holders of Exchange Issuer Securities entitled to receive such dividend or distribution in the case of a dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, split, combination or reclassification. Each such adjustment shall be made successively. (ii) If an Exchange Issuer shall, after the date hereof, issue rights or warrants to all holders of Exchange Issuer Securities entitling them to subscribe for or purchase Exchange Issuer Securities (other than rights to purchase Exchange Issuer Securities pursuant to a plan for the reinvestment of dividends or interest) at a price per security less than the market price of Exchange Issuer Securities (determined for purposes of this clause (ii) as the average Closing Price per share of such Exchange Issuer Securities on the number of Trading Days specified in the applicable Prospectus Supplement immediately prior to the date such rights or warrants are issued), then in each case the Exchange Rate for the relevant series of MEDS shall be adjusted by multiplying the Exchange Rate in effect immediately prior to the date of issuance of such rights or warrants by a fraction, the numerator of which shall be the number of Exchange Issuer Securities outstanding on the date of issuance of such rights or warrants, immediately prior to such issuance, plus the number of additional Exchange Issuer Securities offered for subscription or purchase pursuant to such rights or warrants, and the denominator of which shall be the number of Exchange Issuer Securities outstanding on the date of issuance of such rights or warrants, immediately prior to such issuance, plus the number of additional Exchange Issuer Securities which the aggregate offering price of the total number of Exchange Issuer Securities so offered for subscription or purchase pursuant to such rights or warrants would purchase at such market price (calculated as the average Closing Price per security of Exchange Issuer Securities on the number of Trading Days specified in the applicable Prospectus Supplement immediately prior to the date such rights or warrants are issued), which shall be determined by multiplying such total number of securities by the exercise price of such rights or warrants and dividing the product so obtained by such market price. Such adjustment shall become effective at the opening of business on the Business Day next following the record date for the determination of stockholders entitled to received such rights or warrants. To the extent that Exchange Issuer Securities are not delivered after the expiration of such rights or warrants, the Exchange Rate for the relevant series of MEDS shall be readjusted to the Exchange Rate which would then be in effect had such adjustments for the issuance of such rights or warrants been made upon the basis of delivery of only the number of 6
Exchange Issuer Securities actually delivered. Each such adjustment shall be made successively. (iii) If an Exchange Issuer shall pay a dividend or make a distribution to all holders of Exchange Issuer Securities of evidences of its indebtedness or other assets (excluding any dividends or distributions referred to in subparagraph (i) above and any cash dividends that do not constitute Extraordinary Cash Dividends (as defined in clause (vi) below)) or shall issue to all holders of Exchange Issuer Securities rights or warrants to subscribe for or purchase any of its securities (other than those referred to in subparagraph (ii) above), then in each such case, the Exchange Rate for the relevant series of MEDS shall be adjusted by multiplying the Exchange Rate in effect on the record date mentioned below by a fraction, the numerator of which shall be the market price per Exchange Issuer Security on the record date for the determination of securityholders entitled to receive such dividend or distribution (such market price being the average Closing Price per security of the Exchange Issuer Securities on the 20 Trading Days immediately prior to such record date), and the denominator of which shall be such market price per Exchange Issuer Security less the fair market value (as determined by a nationally recognized independent investment banking firm retained for such purpose by the Company) as of such record date of the portion of the assets or evidences of indebtedness so distributed or of such subscription rights or warrants applicable to one Exchange Issuer Security. Each such adjustment shall become effective on the opening of business on the Business Day next following the record date for the determination of securityholders entitled to receive such dividend or distribution. Each such adjustment shall be made successively. (iv) Any Exchange Issuer Securities issuable in payment of a dividend shall be deemed to have been issued immediately prior to the close of business on the record date for such dividend for purposes of calculating the number of outstanding Exchange Issuer Securities under subparagraph (ii) above. (v) All adjustments to the Exchange Rate shall be calculated to the nearest 1/10,000th of an Exchange Issuer Security (or if there is not a nearest 1/10,000th of a security, to the next lower 1/10,000th of a security). No adjustment in the Exchange Rate shall be required unless such adjustment would require an increase or decrease of at least one percent therein; provided, however, that any adjustments which by reason of this subparagraph are not required to be made shall be carried forward and taken into account in any subsequent adjustment. If an adjustment is made to the Exchange Rate pursuant to subparagraph (i), (ii) or (iii) of this Section 13.3(a), an adjustment shall also be made to the Maturity Price solely to determine which of paragraphs (a), (b) or (c) of the definition of Exchange Rate in Section 13.1 will apply at Maturity. The required adjustment shall be determined by multiplying the Maturity Price by the number determined under subparagraph (i), (ii) or (iii) by which the then existing Exchange Rate was multiplied to adjust such rate. This subparagraph (v) shall be so used to adjust the definition of Maturity Price only as such term is used for the first time in each of subparagraphs (a), (b) and (c) of the definition of Exchange Rate. 7
(vi) For purposes of the foregoing, the term "Extraordinary Cash Dividend" shall mean, with respect to any one-year period, all cash dividends with respect to the Exchange Issuer Securities during such period to the extent such dividends exceed on a per security basis 10% of the average of the Closing Prices per security of the Exchange Issuer Securities over such one-year period, and for purposes of applying the formula set forth in clause (iii) above, the fair market value of such dividends being calculated pursuant to such clause (iii) shall be equal to (x) the aggregate amount of all such cash dividends occurring in such period minus (y) the aggregate amount of such other cash dividends occurring in such period for which a prior adjustment in the Exchange Rate was previously made under this Section 13.3(a). In making the determinations required by the foregoing sentence, the amount of cash dividends paid on a per security basis shall be appropriately adjusted to reflect the occurrence during such period of any event described in Section 13.3(a). (b) Adjustment for Consolidation, Merger or Other Reorganization Event. In the event of (i) any consolidation or merger of an Exchange Issuer, or any surviving entity or subsequent surviving entity of an Exchange Issuer (an "Exchange Issuer Successor"), with or into another entity (other than a merger or consolidation in which such Exchange Issuer is the continuing corporation and in which the Exchange Issuer Securities outstanding immediately prior to the merger or consolidation are not exchanged for cash, securities or other property of such Exchange Issuer or another corporation), (ii) any sale, transfer, lease or conveyance to another corporation of the property of such Exchange Issuer or any Exchange Issuer Successor as an entirety or substantially as an entirety, (iii) any statutory exchange of securities of such Exchange Issuer or any Exchange Issuer Successor with another corporation (other than in connection with a merger or acquisition) or (iv) any liquidation, dissolution or winding up of such Exchange Issuer or any Exchange Issuer Successor (any such event, a "Reorganization Event"), the Exchange Rate used to determine the amount payable upon exchange at Maturity for each MEDS of the relevant series will be adjusted to provide that each holder of MEDS of such series will receive at Maturity cash in an amount equal to (a) if the Transaction Value (as defined below) is greater than or equal to the Threshold Appreciation Price, the product of (I) a fraction, the numerator of which is one and the denominator of which is the sum of one and the Conversion Premium and (II) the Transaction Value, (b) if the Transaction Value is less than the Threshold Appreciation Price but greater than the Initial Price, the Initial Price and (c) if the Transaction Value is less than or equal to the Initial Price, the Transaction Value. "Transaction Value" means (x) for any cash received in any such Reorganization Event, the amount of cash received per Exchange Issuer Security, (y) for any property other than cash or securities received in any such Reorganization Event, an amount equal to the market value at Maturity of such property received per Exchange Issuer Security as determined by a nationally recognized independent investment banking firm retained for such purpose by the Company and (z) for any securities received in any such Reorganization Event, an amount equal to the average Closing Price per security of such securities on the 20 Trading Days immediately prior to Maturity, multiplied by the number of such securities received for each Exchange Issuer Security. Notwithstanding the foregoing, in lieu of delivering cash as provided above, the Company may at its option deliver an equivalent value of securities or other property received in such Reorganization Event, determined in accordance with clause (y) or (z) above, as applicable. The kind and amount of securities into which the MEDS of the relevant series shall be 8
exchangeable after consummation of such transaction shall be subject to adjustment as described in paragraph (a) above following the date of consummation of such transaction. SECTION 13.4. Notice of Adjustments and Certain Other Events. (a) Whenever the Exchange Rate for any series of MEDS is adjusted as herein provided, the Company shall: (i) forthwith compute the adjusted Exchange Rate in accordance with Section 13.3 and prepare a certificate signed by an officer of the Company setting forth the adjusted Exchange Rate, the method of calculation thereof in reasonable detail, and the facts requiring such adjustment and upon which such adjustment is based, which certificate shall be conclusive, final and binding evidence of the correctness of the adjustment, and file such certificate forthwith with the Trustee; and (ii) within 10 Business Days following the occurrence of an event that permits or requires an adjustment to the Exchange Rate pursuant to Section 13.3 (or if the Company is not aware of such occurrence, as soon as practicable after becoming so aware), provide written notice to the Trustee and to the Holders of the outstanding MEDS of the relevant series of the occurrence of such event and a statement in reasonable detail setting forth the method by which the adjustment to the Exchange Rate was determined and setting forth the revised Exchange Rate per MEDS of such series. (b) In case at any time while any of the MEDS of any series are outstanding the Company receives notice that: (i) an Exchange Issuer shall declare a dividend (or any other distribution) on or in respect of the Exchange Issuer Securities to which Section 13.3(a)(i) or (ii) shall apply (other than any cash dividends and distributions, if any, paid from time to time by such Exchange Issuer that do not constitute Extraordinary Cash Dividends); (ii) an Exchange Issuer shall authorize the issuance to all holders of Exchange Issuer Securities of rights or warrants to subscribe for or purchase Exchange Issuer Securities or of any other subscription rights or warrants; (iii) there shall occur any conversion or reclassification of Exchange Issuer Securities (other than a subdivision or combination of outstanding shares of such Exchange Issuer Securities) or any consolidation, merger or reorganization to which such Exchange Issuer is a party and for which approval of any securityholders of such Exchange Issuer is required, or the sale or transfer of all or substantially all of the assets of an Exchange Issuer; or (iv) there shall occur the voluntary or involuntary dissolution, liquidation or winding up of an Exchange Issuer; then the Company shall promptly cause to be delivered to the Trustee and any applicable paying agent and filed at the office or agency maintained for the purpose of exchanging the MEDS of the relevant series at Maturity in the Borough of Manhattan, in The City of New York by the Trustee (or any applicable paying agent), and shall promptly cause to be mailed to the Holders of MEDS of the relevant series at their last addresses as they shall appear upon 9
the registration books of the Trustee (or any applicable note registrar), at least 10 days before the date hereinafter specified (or the earlier of the dates hereinafter specified, in the event that more than one is specified), a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution or grant of rights or warrants, or, if a record is not to be taken, the date as of which the holders of the Exchange Issuer Securities of record to be entitled to such dividend, distribution or grant of rights or warrants are to be determined, or (y) the date, if known by the Company, on which such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up is expected to become effective. (c) On or prior to seven Business Days preceding the Stated Maturity of the MEDS of any series, the Company will provide notice to the Holders of record of the MEDS of such series and to the Trustee and will provide such other notice as specified in the applicable Prospectus Supplement stating whether the Company has irrevocably elected to deliver Exchange Issuer Securities or cash (or any other property or securities that may be delivered pursuant to Section 13.3(b)) upon the mandatory exchange of the principal amount of the MEDS of such series in accordance with Section 13. 1. SECTION 13.5. Shares Free and Clear. The Company hereby warrants that upon exchange of MEDS at Maturity pursuant to this Indenture, the Holder of MEDS shall receive all rights held by the Company in the Exchange Issuer Securities for which such MEDS are at such time exchangeable pursuant to this Indenture, free and clear of any and all liens, claims, charges and encumbrances other than any liens, claims, charges and encumbrances which may have been placed on any Exchange Issuer Securities by the prior owner thereof, prior to the time such Exchange Issuer Securities were acquired by the Company. In addition, the Company further warrants that any Exchange Issuer Securities so delivered in exchange for MEDS hereunder shall be free of any transfer restrictions under United States laws (other than such as are solely attributable to any Holder's status as an affiliate of such Exchange Issuer). SECTION 13.6. Cancellation of Security. Upon receipt by the Trustee of MEDS delivered to it for exchange under this Article Thirteen, the Trustee shall cancel and dispose of the same as provided in Section 2.10. (e) By amending the table of contents of the Basic Indenture to reflect the additions described in sections (a) and (d) of this Section 1.02. ARTICLE II Miscellaneous SECTION 2.01. Single Indenture. The Basic Indenture, as supplemented and amended by this Supplemental Indenture and all other indentures supplemental thereto, is in all respects ratified and confirmed, and the Basic Indenture, this Supplemental Indenture and all indentures supplemental thereto shall be read, taken and construed as one and the same instrument. SECTION 2.02. Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Supplemental 10
Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control. SECTION 2.03. Successors and Assigns. All covenants and agreements in this Supplemental Indenture by the Company shall bind its successors and assigns, whether so expressed or not. SECTION 2.04. Severability. In case any provision in this Supplemental Indenture or in the Securities of any series shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions (or of the other series of Securities) shall not in any way be affected or impaired thereby. SECTION 2.05. Third Party Rights. Nothing in this Supplemental Indenture, expressed or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Holders of each series of Securities any benefit or any legal or equitable right, remedy or claim under this Supplemental Indenture. SECTION 2.06. Applicable Law. This Supplemental Indenture and each Security of any series shall be deemed to be a contract made under the laws of the State of New York and this Supplemental Indenture and each such Security shall be governed by and construed in accordance with the laws of the State of New York. SECTION 2.07. Defined Terms. All terms used in this Supplemental Indenture not otherwise defined herein that are defined in the Basic Indenture shall have the meanings set forth therein. SECTION 2.08. Counterparts. This Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. SECTION 2.09. Responsibility of Company. The recitals contained herein and in the Securities, except the certificate of authentication of the Trustee thereon, shall be taken as statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of the Basic Indenture, this Supplemental Indenture or of the Securities and shall not be accountable for the use or application by the Company of the Securities or the proceeds thereof. SECTION 2.10. Headings. The headings used herein are for convenience of reference only, are not part of this Supplemental Indenture and are not to affect the construction of, or to be taken into consideration in interpreting, this Supplemental Indenture. IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. 11
Exhibit 4.5(d) THIRD SUPPLEMENTAL INDENTURE dated as of January 30, 1997 (this "Supplemental Indenture"), between J. P. MORGAN & CO. INCORPORATED, a corporation duly organized and existing under the laws of the State of Delaware (the "Company") and FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, successor to Chemical Bank (formerly Manufacturers Hanover Trust Company), a national banking association, as Trustee (hereinafter called the "Trustee", which term shall include any successor trustee appointed pursuant to Article Six of the Basic Indenture hereinafter referred to). WHEREAS the Company and the Trustee have entered into an Indenture, dated as of August 15, 1982, as amended by supplemental indentures, including a First Supplemental Indenture, dated as of May 5, 1986, and a Second Supplemental Indenture, dated as of February 27, 1996 (as so amended, the "Basic Indenture"), providing for the issuance from time to time of one or more series of Securities (as such term is defined in the Basic Indenture) evidencing unsecured indebtedness of the Company; WHEREAS the Company proposes to issue one or more series of MEDS, as described in the Indenture, but the principal amount at Maturity with respect to which is mandatorily exchangeable into Exchange Issuer Securities or, at the option of the Company, payable in cash, in either case at an Exchange Rate as described herein; WHEREAS Sections 8.1(f) and (d) of the Basic Indenture provide that without the consent of the Holders of Securities, the Company, when authorized by a resolution of its Board of Directors, and the Trustee may enter into one or more indentures supplemental to the Basic Indenture (a) to establish the form or terms of Securities of any series as permitted by Sections 2.1 and 2.3 thereof and (b) to cure any ambiguity or to correct or supplement any provision contained in the Basic Indenture or any supplemental indenture which may be defective or inconsistent with any other provision of the Basic Indenture or any supplemental indenture or to make such other provisions in regard to matters or questions arising under the Basic Indenture or any supplemental indenture as the Board of Directors may deem necessary or desirable and which shall not materially and adversely affect the interests of the Holders of the Securities; WHEREAS the entry into this Supplemental Indenture by the parties hereto is in all respects authorized by the provisions of the Basic Indenture; and WHEREAS all things necessary to make this Supplemental Indenture a valid agreement of the Company in accordance with its terms have been done. NOW, THEREFORE, for and in consideration of the premises and purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders, without preference, priority or distinction of any of the Securities over any of the others by reason of difference in series or priority in time of issuance, negotiation or maturity thereof, or otherwise except as otherwise provided in the Basic Indenture or this Supplemental Indenture, as follows:
2 ARTICLE I Amendments to the Basic Indenture The Basic Indenture is amended as set forth below: SECTION 1.01. Amendments to Authorize Additional Exchange Rate Option. The Basic Indenture is hereby amended, solely with respect to one or more series of Securities that consist of MEDS, as follows: (a) By amending Section 1.1 to add new definitions thereto, in the appropriate alphabetical sequence, as follows: "Capped Participation Percentage", with respect to any issuance of MEDS, shall have the meaning set forth in the applicable Prospectus Supplement. (b) By amending the second sentence of Section 13.1 to read as follows: "The `Exchange Rate' with respect to each series of MEDS shall be equal to, as set forth in the applicable Prospectus Supplement and subject to adjustment as a result of certain dilution events relating to the Issuer Exchange Securities as provided for in Section 13.3, either (I) (a) if the Maturity Price (as defined below) is greater than or equal to the `Threshold Appreciation Price' (as set forth in the applicable Prospectus Supplement), a number of Exchange Issuer Securities equal to a fraction, the numerator of which is one and the denominator of which is the sum of one and the Conversion Premium, (b) if the Maturity Price is less than the Threshold Appreciation Price but is greater than the Initial Price, a fractional Exchange Issuer Security per MEDS so that the value of such fractional Exchange Issuer Security (determined at the Maturity Price) is equal to the Initial Price (such fractional share being calculated to the nearest 1/10,000th of a share or, if there is not a nearest 1/10,000th of a share, to the next highest 1/10,000th of a share) and (c) if the Maturity Price is less than or equal to the Initial Price, one Exchange Issuer Security per MEDS, (II) (a) if the Maturity Price is less than or equal to the `Capped Appreciation Price' (as set forth in the applicable Prospectus Supplement), one Exchange Issuer Security per MEDS, and (b) if the Maturity Price is greater than the Capped Appreciation Price, a fractional Exchange Issuer Security per MEDS so that the value of such fractional Exchange Issuer Security (determined at the Maturity Price) is equal to the Capped Appreciation Price (calculated as above) or (III) the Exchange Rate, as otherwise defined in any Prospectus Supplement relating to an issuance of MEDS." (c) By amending the first sentence of Section 13.3 to read as follows: "Unless otherwise specified in any Prospectus Supplement relating to an issuance of MEDS, the Exchange Rate shall be subject to adjustment from time to time as follows:" (d) By adding the following Section 13.7: "SECTION 13.7. Tax Matters. The parties hereto hereby agree, and each Holder of a MEDS issued on or after January 30, 1997, by its purchase of a MEDS hereby agrees:
3 (i) to treat, for U.S. federal income tax purposes, each MEDS as a forward purchase contract to purchase Exchange Issuer Securities at Maturity (including as a result of acceleration or otherwise) (the "forward purchase contract characterization"), under the terms of which contract (a) at the time of issuance of the MEDS the Holder deposits irrevocably with the Company a fixed amount of cash equal to the purchase price of the MEDS to assure the fulfillment of the Holder's purchase obligation described in clause (c) below, which deposit will unconditionally and irrevocably be applied at Maturity to satisfy such obligation, (b) until Maturity the Company will be obligated to pay interest on such deposit at a rate equal to the stated rate of interest on the MEDS as compensation to the Holder for the Company's use of such cash deposit during the term of the MEDS, and (c) at Maturity such cash deposit unconditionally and irrevocably will be applied by the Company in full satisfaction of the Holder's obligation under the forward purchase contract, and the Company will deliver to the Holder the number of Exchange Issuer Securities that the Holder is entitled to receive at that time pursuant to the terms of the MEDS (subject to the Company's right to deliver cash in lieu of the Exchange Issuer Securities); (ii) to treat, consistent with the above characterization, (x) amounts paid to the Company in respect of the original issue of a MEDS as allocable in their entirety to the amount of the cash deposit attributable to such MEDS, and (y) amounts denominated as interest that are payable with respect to the MEDS as interest payable on the amount of such deposit, includible annually in the income of the Holder as interest income in accordance with its method of accounting; and (iii) to file all U.S. federal, state and local income and franchise tax returns consistent with the forward purchase contract characterization (unless required otherwise by an applicable taxing authority or notified to such effect by the Company)." ARTICLE II Miscellaneous SECTION 2.01. Single Indenture. The Basic Indenture, as supplemented and amended by this Supplemental Indenture and all other indentures supplemental thereto, is in all respects ratified and confirmed, and the Basic Indenture, this Supplemental Indenture and all indentures supplemental thereto shall be read, taken and construed as one and the same instrument. SECTION 2.02. Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Supplemental Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control. SECTION 2.03. Successors and Assigns. All covenants and agreements in this Supplemental Indenture by the Company shall bind its successors and assigns, whether so expressed or not.
4 SECTION 2.04. Severability. In case any provision in this Supplemental Indenture or in the Securities of any series shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions (or of the other series of Securities) shall not in any way be affected or impaired thereby. SECTION 2.05. Third Party Rights. Nothing in this Supplemental Indenture, expressed or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Holders of each series of Securities any benefit or any legal or equitable right, remedy or claim under this Supplemental Indenture. SECTION 2.06. Applicable Law. This Supplemental Indenture and each Security of any series shall be deemed to be a contract made under the laws of the State of New York and this Supplemental Indenture and each such Security shall be governed by and construed in accordance with the laws of the State of New York. SECTION 2.07. Defined Terms. All terms used in this Supplemental Indenture not otherwise defined herein that are defined in the Basic Indenture shall have the meanings set forth therein. SECTION 2.08. Counterparts. This Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. SECTION 2.09. Responsibility of Company. The recitals contained herein and in the Securities, except the certificate of authentication of the Trustee thereon, shall be taken as statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of the Basic Indenture, this Supplemental Indenture or of the Securities and shall not be accountable for the use or application by the Company of the Securities or the proceeds thereof.
5 SECTION 2.10. Headings. The headings used herein are for convenience of reference only, are not part of this Supplemental Indenture and are not to affect the construction of, or to be taken into consideration in interpreting, this Supplemental Indenture. IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. J. P. MORGAN & CO. INCORPORATED, by ________________________________ Name: Title: [Seal] Attest: ____________________________ Name: Title: FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, as Trustee, by _______________________________ Name: Title: [Seal] Attest: ____________________________ Name: Title:
6 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) On the 30th day of January 1997, before me personally came to me known, who, being by me duly sworn, did depose and say that he/she is a of J. P. MORGAN & CO. INCORPORATED, one of the corporations described in and which executed the foregoing instrument; that he/she knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he/she signed his/her name thereto by like authority. _______________________________ Notary Public
7 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) On the 30th day of January 1997, before me personally came to me known, who, being by me duly sworn, did depose and say that he/she is an Assistant Vice President of FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, one of the corporations described in and which executed the foregoing instrument; that he/she knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he/she signed his/her name thereto by like authority. _______________________________ Notary Public
Exhibit 4.5(e) THE CHASE MANHATTAN CORPORATION, J.P. MORGAN & CO. INCORPORATED AND U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee FOURTH SUPPLEMENTAL INDENTURE Dated as of December 29, 2000 to INDENTURE Dated as of August 15, 1982, as amended SENIOR DEBT SECURITIES
FOURTH SUPPLEMENTAL INDENTURE, dated as of December 29, 2000, among THE CHASE MANHATTAN CORPORATION, a Delaware corporation ("Successor"), J.P. MORGAN & CO. INCORPORATED, a Delaware corporation ("J.P. Morgan"), and U.S. BANK TRUST NATIONAL ASSOCIATION (formerly known as First Trust of New York, National Association), a national banking association, as successor to Chemical Bank (formerly Manufacturers Hanover Trust Company), a New York banking corporation, as trustee (the "Trustee", which term shall include any successor trustee appointed pursuant to Article Six of the Indenture hereafter referred to). WHEREAS, J.P. Morgan and the Trustee have heretofore executed and delivered a certain Indenture, dated as of August 15, 1982, as amended, including by 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 (as so amended, the "Indenture"; capitalized terms not otherwise defined herein shall have the meanings set forth in the Indenture), providing for the issuance from time to time of Securities; WHEREAS, J.P. Morgan and Successor have entered into an Agreement and Plan of Merger, dated as of September 12, 2000 (the "Merger Agreement"), which contemplates the execution and filing of a Certificate of Merger on the date hereof (the "Certificate of Merger") providing for the merger (effective December 31, 2000) of J.P. Morgan with and into Successor (the "Merger"), with Successor continuing its corporate existence under Delaware law under the name "J.P. Morgan Chase & Co."; WHEREAS, Section 9.1 of the Indenture provides, among other things, that J.P. Morgan shall not merge into any other corporation unless, among other things, the corporation into which J.P. Morgan is merged shall expressly assume the due and punctual payment of the principal of and interest on all the Securities and Coupons, according to their tenor, and the due and punctual performance and observance of all of the covenants and conditions of the Indenture to be performed or observed by the Issuer thereunder, by supplemental indenture satisfactory to the Trustee; WHEREAS, Section 8.1(b) of the Indenture provides, among other things, that, without the consent of the Holders of the Securities, the Issuer, when authorized by a resolution of the Board of Directors of the Issuer, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental to the Indenture to evidence the succession of another corporation to the Issuer, and the assumption by the successor corporation of the covenants, agreements and obligations of the Issuer; WHEREAS, Successor and J.P. Morgan desire and have requested that the Trustee join in the execution of this Fourth Supplemental Indenture for the purpose of evidencing such succession and assumption and amending certain provisions of the Indenture as hereinafter set forth; WHEREAS, the execution and delivery of this Fourth Supplemental Indenture has been authorized by resolutions of the boards of directors of J.P. Morgan and Successor; and
WHEREAS, all conditions precedent and requirements necessary to make this Fourth Supplemental Indenture a valid and legally binding instrument in accordance with its terms have been complied with, performed and fulfilled and the execution and delivery hereof have been in all respects duly authorized; NOW, THEREFORE, THIS FOURTH SUPPLEMENTAL INDENTURE WITNESSETH: For and in consideration of the premises and intending to be legally bound hereby, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders, as follows: ARTICLE ONE REPRESENTATIONS OF J.P. MORGAN AND SUCCESSOR Each of J.P. Morgan and Successor represents and warrants to the Trustee as follows: SECTION 1.1 It is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. SECTION 1.2 The execution, delivery and performance by it of this Fourth Supplemental Indenture have been authorized and approved by all necessary corporate action on the part of it. SECTION 1.3 Upon the filing of the Certificate of Merger with the Secretary of State of the State of Delaware or at such other time thereafter as is provided in the Certificate of Merger (the "Effective Time"), the Merger will be effective in accordance with the terms of the Merger Agreement and Delaware law. SECTION 1.4 Immediately after giving effect to the Merger, Successor shall not be in default in the performance of any covenant or condition of the Indenture. ARTICLE TWO ASSUMPTION AND AGREEMENTS SECTION 2.1 Successor hereby expressly assumes the due and punctual payment of the principal of and interest on all the Securities and Coupons, according to their tenor, and the due and punctual performance and observance of all covenants and conditions of the Indenture to be performed or observed by the Issuer thereunder. SECTION 2.2 The Securities and Coupons may bear a notation concerning the assumption of the Indenture and the Securities and Coupons by Successor. 2
SECTION 2.3 Successor shall succeed to and be substituted for J.P. Morgan under the Indenture, with the same effect as if Successor had been named as the Issuer thereunder. ARTICLE THREE AMENDMENTS SECTION 3.1 The reference in the preamble to the Indenture to "J.P. MORGAN & CO. INCORPORATED, a Delaware corporation (the "Issuer")," is hereby amended to read "J.P. MORGAN CHASE & CO. (formerly known as The Chase Manhattan Corporation), a Delaware corporation (the "Issuer")," and each other reference therein to "J.P. Morgan & Co. Incorporated" shall be amended to read "J.P. Morgan Chase & Co. (formerly known as The Chase Manhattan Corporation)". SECTION 3.2 Except as amended hereby, the Indenture and the Securities and Coupons are in all respects ratified and confirmed and all the terms thereof shall remain in full force and effect and the Indenture, as so amended, shall be read, taken and construed as one and the same instrument. ARTICLE FOUR MISCELLANEOUS SECTION 4.1 The Trustee accepts the modification of the Indenture effected by this Fourth Supplemental Indenture, but only upon the terms and conditions set forth in the Indenture. Without limiting the generality of the foregoing, the Trustee assumes no responsibility for the correctness of the recitals herein contained, which shall be taken as the statements of J.P. Morgan and Successor. The Trustee makes no representation and shall have no responsibility as to the validity and sufficiency of this Fourth Supplemental Indenture. SECTION 4.2 If and to the extent that any provision of this Fourth Supplemental Indenture limits, qualifies or conflicts with another provision included in this Fourth Supplemental Indenture or in the Indenture that is required to be included in this Fourth Supplemental Indenture or in the Indenture by any of the provisions of Sections 310 to 317, inclusive, of the Trust Indenture Act of 1939, such required provision shall control. SECTION 4.3 Nothing in this Fourth Supplemental Indenture is intended to or shall provide any rights to any parties other than those expressly contemplated by this Fourth Supplemental Indenture. SECTION 4.4 This Fourth Supplemental Indenture shall be deemed to be a contract under the laws of the State of New York, and for all purposes shall be construed in accordance with the laws of such State, except as may otherwise be required by mandatory provisions of law. 3
SECTION 4.5 This Fourth Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 4.6 This Fourth Supplemental Indenture shall become effective as of the Effective Time. [Remainder of this page intentionally left blank.] 4
IN WITNESS WHEREOF, the parties hereto have caused this Fourth Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested all as of the day and year first above written. J.P. MORGAN & CO. INCORPORATED By______________________________________ Name: Title: (Corporate Seal) Attest: ________________________________ Secretary THE CHASE MANHATTAN CORPORATION By______________________________________ Name: Title: (Corporate Seal) Attest: ________________________________ Assistant Secretary
U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By_____________________________________ Name: Title: (Corporate Seal) Attest: ________________________________
STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) On this ___ of December, 2000, before me, the undersigned officer, personally appeared___________, who acknowledged himself to be the __________________ of J.P. MORGAN & CO. INCORPORATED, a corporation, and that he as such officer, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the corporation by himself as such officer. IN WITNESS WHEREOF, I hereunto set my hand and official seal. _________________________________________ Notary Public [SEAL] STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) On this ____ day of December, 2000, before me, the undersigned officer, personally appeared Marc J. Shapiro, who acknowledged himself to be the Vice Chairman, Finance, Risk Management and Administration of THE CHASE MANHATTAN CORPORATION, a corporation, and that he as such officer, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the corporation by himself as such officer. IN WITNESS WHEREOF, I hereunto set my hand and official seal. _________________________________________ Notary Public [SEAL]
STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) On this ___ day of December, 2000, before me, the undersigned officer, personally appeared _______________, who acknowledged himself to be _______________ of U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking corporation, and that he as such officer, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the association by himself as such officer. IN WITNESS WHEREOF, I hereunto set my hand and official seal. _________________________________________ Notary Public [SEAL]
Exhibit 4.6(a) J.P. MORGAN & CO. INCORPORATED, ISSUER AND CITIBANK, N.A., TRUSTEE ------------------------ INDENTURE DATED AS OF MARCH 1, 1993 ------------------------- SUBORDINATED DEBT SECURITIES
CROSS REFERENCE SHEET* -------------------- Between provisions of Trust Indenture Act of 1939 and Indenture to be dated as of March 1, 1993 between J.P. MORGAN & CO. INCORPORATED and CITIBANK, N.A., Trustee: Section of the Act Section of Indenture - ------------------ -------------------- 310(a)(1) and (2).......................................................... 6.9 310(a)(3) and (4).......................................................... Inapplicable 310(a)(5).................................................................. 6.9 310(b)..................................................................... 6.8 and 6.10(a), (b) and (d) 310(c)..................................................................... Inapplicable 311(a)..................................................................... 6.13 311(b)..................................................................... 6.13 311(c)..................................................................... Inapplicable 312(a)..................................................................... 4.1 and 4.2(a) 312(b)..................................................................... 4.2(b) 312(c)..................................................................... 4.2(c) 313(a)..................................................................... 4.4(a) 313(b)(1).................................................................. Inapplicable 313(b)(2).................................................................. 4.4(a) 313(c)..................................................................... 4.4(a) 313(d)..................................................................... 4.4(b) 314(a)(1), (2) and (3)..................................................... 4.3 314(a)(4).................................................................. 3.5 314(b)..................................................................... Inapplicable 314(c)(1) and (2).......................................................... 12.5 314(c)(3).................................................................. Inapplicable 314(d)..................................................................... Inapplicable 314(e)..................................................................... 12.5 314(f)..................................................................... Inapplicable 315(a), (c) and (d)........................................................ 6.1 315(b)..................................................................... 5.11 315(e)..................................................................... 5.12 316(a)(1)(A)............................................................... 5.9 316(a)(1)(B)............................................................... 5.10 316(a)(2).................................................................. Not required 316(a) (last sentence)..................................................... 7.4 316(b)..................................................................... 5.7 316(c)..................................................................... 8.7 317(a)(1) and (2).......................................................... 5.2 317(b)..................................................................... 3.4(a) and (b) 318(a)..................................................................... 12.7 - -------------------------- *This Cross Reference sheet is not part of the Indenture.
TABLE OF CONTENTS* Page ---- PARTIES......................................................................... 1 RECITALS Authorization of Indenture.......................................... 1 Compliance with Legal Requirements.................................. 1 Purpose of and Consideration for Indenture.......................... 1 ARTICLE ONE DEFINITIONS SECTION 1.1. Certain Terms Defined............................................ 1 ARTICLE TWO SECURITIES SECTION 2.1. Forms Generally ............................................... 6 SECTION 2.2. Form of Trustee's Certificate of Authentication................. 6 SECTION 2.3. Amount Unlimited; Issuable in Series............................ 6 SECTION 2.4. Authentication and Delivery of Securities....................... 8 SECTION 2.5. Execution of Securities......................................... 9 SECTION 2.6. Certificate of Authentication................................... 10 SECTION 2.7. Denomination and Date of Securities; Payments of Interest....... 10 SECTION 2.8. Registration, Transfer and Exchange............................. 11 SECTION 2.9. Mutilated, Defaced, Destroyed, Lost and Stolen Securities....... 13 SECTION 2.10. Cancellation of Securities; Destruction Thereof................. 14 SECTION 2.11. Temporary Securities............................................ 14 SECTION 2.12. Computation of Interest......................................... 15 ARTICLE THREE COVENANTS OF THE ISSUER SECTION 3.1. Payment of Principal and Interest............................... 15 SECTION 3.2. Offices for Payments, etc....................................... 15 SECTION 3.3. Appointment to Fill a Vacancy in Office of Trustee.............. 16 SECTION 3.4. Paying Agents ................................................. 16 SECTION 3.5. Written Statement to Trustee.................................... 17 - ------------------- *The Table of Contents is not part of the Indenture. -i-
Page ---- SECTION 3.6. Luxembourg Publications......................................... 17 ARTICLE FOUR SECURITYHOLDERS' LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE SECTION 4.1. Issuer to Furnish Trustee Information as to Names and Addresses of Securityholders................. 17 SECTION 4.2. Preservation and Disclosure of Securityholders' Lists........... 18 SECTION 4.3. Reports by the Issuer........................................... 19 SECTION 4.4. Reports by the Trustee.......................................... 20 ARTICLE FIVE REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT SECTION 5.1. Event of Default Defined; Acceleration of Maturity; Waiver of Default...................................... 20 SECTION 5.2. Collection of Indebtedness by Trustee; Trustee May Prove Debt... 22 SECTION 5.3. Application of Proceeds......................................... 24 SECTION 5.4. Suits for Enforcement........................................... 25 SECTION 5.5. Restoration of Rights on Abandonment of Proceedings............. 25 SECTION 5.6. Limitations on Suits by Securityholders......................... 25 SECTION 5.7. Unconditional Right of Securityholders to Institute Certain Suits........................................ 26 SECTION 5.8. Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default................................... 26 SECTION 5.9. Control by Securityholders...................................... 26 SECTION 5.10. Waiver of Past Defaults.......................................... 27 SECTION 5.11. Trustee to Give Notice of Default, But May Withhold in Certain Circumstances................................ 27 SECTION 5.12. Right of Court to Require Filing of Undertaking to Pay Costs..... 27 ARTICLE SIX CONCERNING THE TRUSTEE SECTION 6.1. Duties and Responsibilities of the Trustee; During Default; Prior to Default............................. 28 SECTION 6.2. Certain Rights of the Trustee................................... 29 SECTION 6.3. Trustee Not Responsible for Recitals, Disposition of Securities or Application of Proceeds Thereof ........................... 30 SECTION 6.4. Trustee and Agents May Hold Securities or Coupons; Collections, etc............................. 30 SECTION 6.5. Moneys Held by Trustee.......................................... 30 SECTION 6.6. Compensation and Indemnification of Trustee and Its Prior Claim........................................ 31 SECTION 6.7. Right of Trustee to Rely on Officers' Certificate, etc.......... 31 SECTION 6.8. Disqualification of Trustee; Conflicting Interests.............. 31 -ii-
Page ---- SECTION 6.9. Persons Eligible for Appointment as Trustee..................... 31 SECTION 6.10. Resignation and Removal; Appointment of Successor Trustee....... 32 SECTION 6.11. Acceptance of Appointment by Successor Trustee................... 33 SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business of Trustee...................................... 34 SECTION 6.13. Preferential Collection of Claims Against the Issuer............. 35 ARTICLE SEVEN CONCERNING THE SECURITYHOLDERS SECTION 7.1. Evidence of Action Taken by Securityholders..................... 35 SECTION 7.2. Proof of Execution of Instruments and of Holding of Securities.. 35 SECTION 7.3. Holders to be Treated as Owners................................. 36 SECTION 7.4. Securities Owned by Issuer Deemed Not Outstanding............... 36 SECTION 7.5. Right of Revocation of Action Taken............................. 36 ARTICLE EIGHT SUPPLEMENTAL INDENTURES SECTION 8.1. Supplemental Indentures Without Consent of Securityholders...... 37 SECTION 8.2. Supplemental Indentures With Consent of Securityholders......... 38 SECTION 8.3. Effect of Supplemental Indenture................................ 39 SECTION 8.4. Documents to Be Given to Trustee................................ 40 SECTION 8.5. Notation on Securities in Respect of Supplemental Indentures.... 40 SECTION 8.6. Waiver of Compliance by Securityholders......................... 40 SECTION 8.7. Fixing of Record Dates.......................................... 40 ARTICLE NINE CONSOLIDATION, MERGER, SALE OR CONVEYANCE SECTION 9.1. Issuer May Consolidate, etc., on Certain Terms.................. 41 SECTION 9.2. Successor Corporation to be Substituted......................... 41 SECTION 9.3. Opinion of Counsel and Officers' Certificate to Trustee......... 41 ARTICLE TEN SUBORDINATION OF THE SECURITIES SECTION 10.1. Agreement that the Securities be Subordinated to the Extent Provided..................................... 42 SECTION 10.2. Issuer Not to Make Payments with Respect to Securities in Certain Circumstances........................ 42 SECTION 10.3. Securities Subordinated to Prior Payment of All Senior Indebtedness of the Issuer on Dissolution, Liquidation or Reorganization of the Issuer.. 42 SECTION 10.4. Obligation of the Issuer Unconditional......................... 44 SECTION 10.5. No Fiduciary Duty to Holders of Senior Indebtedness of the Issuer....................................... 45 SECTION 10.6. Notice to Trustee of Facts Prohibiting Payments................ 45 -iii-
Page ---- SECTION 10.7. Application by Trustee of Moneys Deposited with It............. 45 SECTION 10.8. Subordination Rights Not Impaired by Acts or Omissions of the Issuer, Holders of Senior Indebtedness of the Issuer or Creditors in Respect of Derivative Obligations.................... 45 SECTION 10.9. Authorization of Trustee to Effectuate Subordination of the Securities................................... 46 SECTION 10.10. Right of Trustee to Hold Senior Indebtedness or Derivative Obligations of the Issuer................................ 46 SECTION 10.11. Article Ten Not to Prevent Events of Default.................... 46 SECTION 10.12. Securities to Rank pari passu with Antecedent Subordinated Indebtedness; Payment of Proceeds in Certain Cases................................ 46 ARTICLE ELEVEN SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS SECTION 11.1. Satisfaction and Discharge of Indenture......................... 48 SECTION 11.2. Application by Trustee of Funds Deposited for Payment of Securities................................... 49 SECTION 11.3. Repayment of Moneys Held by Paying Agent........................ 49 SECTION 11.4. Return of Moneys Held by Trustee and Paying Agent Unclaimed for Three Years.............................. 49 ARTICLE TWELVE MISCELLANEOUS PROVISIONS SECTION 12.1. Incorporators, Stockholders, Officers and Directors of Issuer Exempt from Individual Liability............. 50 SECTION 12.2. Provisions of Indenture for the Sole Benefit of Parties and Holders of Securities and Coupons............ 50 SECTION 12.3. Successors and Assigns of Issuer Bound by Indenture............. 50 SECTION 12.4. Notices and Demands on Issuer, Trustee and Holders of Securities and Coupons....................... 50 SECTION 12.5. Officers' Certificates and Opinions of Counsel; Statements to be Contained Therein......................... 51 SECTION 12.6. Payments Due on Saturdays, Sundays and Holidays................. 51 SECTION 12.7. Conflict of Any Provision of Indenture with Trust Indenture Act of 1939.................................. 52 SECTION 12.8. New York Law to Govern.......................................... 52 SECTION 12.9. Counterparts .................................................. 52 SECTION 12.10. Effect of Headings ............................................ 52 SECTION 12.11. Securities in a Foreign Currency or in ECU...................... 52 ARTICLE THIRTEEN REDEMPTION OF SECURITIES AND SINKING FUNDS SECTION 13.1. Applicability of Article........................................ 53 -iv-
Page ---- SECTION 13.2. Notice of Redemption; Partial Redemptions....................... 53 SECTION 13.3. Payment of Securities Called for Redemption..................... 54 SECTION 13.4. Exclusion of Certain Securities from Eligibility for Selection for Redemption............................... 55 SECTION 13.5. Mandatory and Optional Sinking Funds............................ 55 TESTIMONIUM..................................................................... 57 SIGNATURES...................................................................... 58 ACKNOWLEDGEMENTS................................................................ 59 -v-
THIS INDENTURE, dated as of March 1, 1993 between J. P. MORGAN & CO. INCORPORATED, a Delaware corporation (the "Issuer"), and CITIBANK, N.A., a national banking association duly incorporated and existing under the laws of the United States of America (the "Trustee"), W I T N E S S E T H: WHEREAS, the Issuer has duly authorized the issue from time to time of its unsecured subordinated debentures, notes or other evidences of indebtedness to be issued in one or more series (the "Securities") up to such principal amount or amounts as may from time to time be authorized in accordance with the terms of this Indenture and to provide, among other things, for the authentication, delivery and administration thereof, the Issuer has duly authorized the execution and delivery of this Indenture; and WHEREAS, all things necessary to make this Indenture a valid indenture and agreement according to its terms, have been done; NOW, THEREFORE: In consideration of the premises and the purchases of the Securities by the holders thereof, the Issuer and the Trustee mutually covenant and agree for the equal and proportionate benefit of the respective holders from time to time of the Securities and of the Coupons, if any, appertaining thereto, as follows: ARTICLE ONE. DEFINITIONS SECTION 1.1. Certain Terms Defined. The following terms (except as otherwise expressly provided or unless the context otherwise clearly requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section. All terms used in this Indenture that are defined in the Trust Indenture Act of 1939 or the definitions of which in the Securities Act of 1933 are referred to in the Trust Indenture Act of 1939 (except as herein otherwise expressly provided or unless the context otherwise clearly requires) shall have the meanings assigned to such terms in said Trust Indenture Act and in said Securities Act as in force at the date of this Indenture. The following Trust Indenture Act of 1939 terms used in this Indenture have the following meanings: "indenture securities" means the Securities; "indenture security holder" means a Securityholder; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the Securities means the Issuer, any other obligor upon the Securities or any successor obligor upon the Securities. All accounting terms used herein and not expressly defined shall have the meanings assigned to such terms in accordance with generally accepted accounting principles, and the term "generally accepted accounting principles" means such accounting principles as are generally accepted at the time of any computation. The words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. The terms defined in this
Article have the meanings assigned to them in this Article and include the plural as well as the singular. "Antecedent Subordinated Indebtedness" means all indebtedness and other obligations outstanding on the date of this Indenture and enumerated in clauses (a)(i) through (a)(xi) of the definition of Senior Indebtedness. "Authorized Newspaper" means a newspaper (which, in the case of the United Kingdom, will, if practicable, be the Financial Times (London Edition) and, in the case of Luxembourg, will, if practicable, be the Luxemburger Wort) published in an official language of the country of publication customarily published at least once a day for at least five days in each calendar week and of general circulation in the United Kingdom or in Luxembourg, as applicable. If it shall be impractical in the opinion of the Trustee to make any publication of any notice required hereby in an Authorized Newspaper, any publication or other notice in lieu thereof which is made or given with the approval of the Trustee shall constitute a sufficient publication of such notice. "Board of Directors" means either the Board of Directors of the Issuer or any committee of such Board duly authorized to act hereunder for such Board in respect hereof. "Business Day" means, unless otherwise specified pursuant to Section 2.3, with respect to any Security, a day that in the city (or in any of the cities, if more than one) in which amounts are payable, as specified in the form of such Security, is not a day on which banking institutions are authorized or required by law or regulation to close or a day on which transactions in the currency in which the Securities are payable are not conducted. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, or if at any time after the execution and delivery of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act of 1939, then the body performing such duties on such date. "Corporate Trust Office" means the principal office of the Trustee in New York, New York at which at any particular time its corporate trust business shall be principally administered, which office at the date as of which this Indenture is dated is located at 5 Hanover Square, New York, New York 10043, except that with respect to the presentation of Securities for payment or for registration of transfer and exchange, such term shall mean the office or the agency of the Trustee in said city at which at any particular time its corporate agency business shall be conducted, which office at the date hereof is located at 111 Wall Street, 5th floor, New York, New York 10043. "Coupon" means any interest Coupon appertaining to an Unregistered Security. "Derivative Obligations" means obligations of the Issuer to make payments on claims in respect of derivative products such as interest and foreign exchange rate contracts, commodity contracts and similar arrangements; provided, however, that Derivative Obligations shall not include claims in respect of Senior Indebtedness or obligations which, by their terms, are expressly stated not to be superior in right of payment to the Securities or to rank pari passu -2-
with the Securities. For purposes of this definition, "claim" shall have the meaning assigned thereto in Section 101(4) of the Bankruptcy Code of 1978, as amended and in effect on November 1, 1992. "ECU" means the European Currency Unit as defined and revised from time to time by the Council of European Communities. "EMS" means the European Monetary System. "European Communities" means the European Economic Community (the "EEC"), the European Coal and Steel Community and Euratom. "Event of Default" means any event or condition specified as such in Section 5.1. "Excess Proceeds" has the meaning specified in Section 10.12. "Holder", "Holder of Securities", "Securityholder" or other similar terms mean (a) in the case of any Registered Security, the person in whose name such Security is registered in the Security Register kept by the Issuer for that purpose, in accordance with the terms hereof, and (b) in the case of any Unregistered Security, the bearer of such Security or any Coupon appertaining thereto, as the case may be. "Indenture" means this instrument as originally executed and delivered or, if amended or supplemented as herein provided, as so amended or supplemented, or both, and shall include the forms and terms of particular series of Securities established as contemplated hereunder. "interest" where used with respect to noninterest bearing securities, means interest payable after maturity. "Issuer" means (except as otherwise provided in Article Six) J. P. Morgan & Co. Incorporated, a Delaware corporation, and, subject to Article Nine, its successors and assigns. "Officers' Certificate" means a certificate signed by the chairman of the Board of Directors, the president, the chairman of the executive committee, any vice chairman of the Board of Directors, or any vice president and by the treasurer or any assistant treasurer, the secretary or any assistant secretary of the Issuer and delivered to the Trustee. Each such certificate shall include the statements provided for in Section 12.5. "Opinion of Counsel" means an opinion in writing signed by legal counsel who may be an employee of or counsel to the Issuer and who shall be satisfactory to the Trustee. Each such opinion shall include the statements provided for in Section 12.5, if and to the extent required hereby. "Original issue date" of any Security (or portion thereof) means the earlier of (a) the date of such Security or (b) the date of any Security (or portion thereof) for which such Security was issued (directly or indirectly) on registration of transfer, exchange or substitution. -3-
"Original Issue Discount Security" means any Security that provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof pursuant to Section 5.1. "Outstanding" (except as otherwise provided in Section 6.8), when used with reference to Securities, shall, subject to the provisions of Section 7.4, mean, as of any particular time, all Securities authenticated and delivered by the Trustee under this Indenture, except (a) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (b) Securities, or portions thereof, for the payment or redemption of which moneys in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than the Issuer) or shall have been set aside, segregated and held in trust by the Issuer for the holders of such securities (if the Issuer shall act as its own paying agent), provided that if such Securities, or portions thereof, are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as herein provided, or provision satisfactory to the Trustee shall have been made for giving such notice; and (c) Securities in substitution for which other Securities shall have been authenticated and delivered, or which shall have been paid, pursuant to the terms of Section 2.9 (except with respect to any such Security as to which proof satisfactory to the Trustee is presented that such Security is held by a person in whose hands such Security is a legal, valid and binding obligation of the Issuer). In determining whether the Holders of the requisite principal amount of Outstanding Securities of any or all series have given any request, demand, authorization, direction, notice, consent or waiver hereunder, the principal amount of an Original Issue Discount Security that shall be deemed to be Outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon declaration of acceleration of the maturity thereof pursuant to Section 5.1. "Person" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "principal" whenever used with reference to the Securities or any Security or any portion thereof shall be deemed to include "and premium, if any". "Registered Security" means any Security registered on the Security Register of the Issuer. "Responsible Officer" when used with respect to the Trustee means the chairman of the Board of Directors, any vice chairman of the Board of Directors, the chairman of the executive committee, any vice chairman of the executive committee, the president, any vice president, the cashier, the secretary, the treasurer, the controller, any senior trust officer, any trust officer, any assistant trust officer, any assistant cashier, any assistant secretary, any assistant -4-
treasurer, any assistant controller or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his knowledge of and familiarity with the particular subject. "Security" or "Securities" (except as otherwise provided in the Trust Indenture Act) has the meaning stated in the first recital of this Indenture, or, as the case may be, means all Securities that have been authenticated and delivered under this Indenture. "Senior Indebtedness" of the Issuer means the principal of, premium, if any, and interest on: (a) all indebtedness of the Issuer for money borrowed, whether outstanding on the date of execution of this Indenture or thereafter created, assumed or incurred, except (i) the DM400,000,000 aggregate principal amount of Floating Rate Subordinated Notes of 1985/1995 of the Issuer; (ii) the U.S. $200,000,000 aggregate principal amount of Floating Rate Subordinated Capital Notes Due December 1997 of the Issuer; (iii) the U.S. $100,000,000 aggregate principal amount of 8 1/2% Subordinated Notes Due 1993 of the Issuer; (iv) the Y20,000,000,000 aggregate principal amount of 6% Subordinated Notes Due 1994 of the Issuer; (v) the U.S. $400,000,000 aggregate principal amount of Zero Coupon Subordinated Notes Due 1998 of the Issuer; (vi) the U.S. $250,000,000 aggregate principal amount of 8 7/8% Subordinated Capital Notes Due 1994 of the Issuer; (vii) the U.S. $300,000,000 aggregate principal amount of 9 5/8% Subordinated Notes Due 1998 of the Issuer; (viii) the U.S. $150,000,000 aggregate principal amount of 8 1/2% Subordinated Notes Due 2003 of the Issuer; (ix) the U.S. $250,000,000 aggregate principal amount of 7 5/8% Subordinated Notes Due 1998 of the Issuer; (x) the U.S. $200,000,000 aggregate principal amount of 7 1/4% Subordinated Notes Due 2002 of the Issuer; (xi) the U.S. $200,000,000 aggregate principal amount of Subordinated Floating Rate Notes Due 2002 of the Issuer; (xii) the U.S. $250,000,000 aggregate principal amount of Subordinated Floating Rate Notes Due 2002 of the Issuer; and (xiii) such indebtedness as is by its terms expressly stated to be not superior in right of payment to the Securities or to rank pari passu with the Securities and (b) any deferrals, renewals or extensions of any such Senior Indebtedness. The term "indebtedness of the Issuer for money borrowed" as used in the foregoing sentence shall mean any obligation of, or any obligation guaranteed by, the Issuer 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 Securities shall rank pari passu with the Subordinated Notes referred to in (a)(i) through (a)(xii) above. "Trust Indenture Act of 1939" (except as otherwise provided in Sections 8.1 and 8.2) means the Trust Indenture Act of 1939 as in force at the date as of which this Indenture was originally executed. "Trustee" means the Person identified as "Trustee" in the first paragraph hereof until the acceptance of appointment of a successor trustee pursuant to the provisions of Article Six, and thereafter shall mean such successor trustee. "Unregistered Security" means any Security other than a Registered Security. -5-
"vice president" when used with respect to the Issuer or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title of "vice president". "Yield to Maturity" means the yield to maturity on a series of Securities, calculated at the time of issuance of such series, or, if applicable, at the most recent redetermination of interest on such series, and calculated in accordance with accepted financial practice. ARTICLE TWO SECURITIES SECTION 2.1. Forms Generally. The Securities of each series and the Coupons, if any, to be attached thereto shall be substantially in such form (not inconsistent with this Indenture) as shall be established by or pursuant to a resolution of the Board of Directors or in one or more indentures supplemental hereto, in each case with such variations as are required or permitted by this Indenture and may have imprinted or otherwise reproduced thereon such legend or legends, not inconsistent with the provisions of this Indenture, as may be required to comply with any law or with any rules of any securities exchange or to conform to general usage, all as may be determined by the officers executing such Securities and Coupons, if any, as evidenced by their execution of the Securities and Coupons. The definitive Securities and Coupons shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities. SECTION 2.2. Form of Trustee's Certificate of Authentication. The Trustee's certificate of authentication on all Securities shall be in substantially the following form: This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture. CITIBANK, N.A., as Trustee By________________________ Authorized Officer SECTION 2.3. Amount Unlimited; Issuable in Series. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more series. There shall be established in or pursuant to a resolution of the Board of Directors and set forth in an Officers' Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series, -6-
(1) the title of the Securities of the series (which shall distinguish the Securities of the series from all other Securities); (2) any limit upon the aggregate principal amount of the Securities of the series that may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of, transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 2.8, 2.9, 2.11 or 13.3); (3) the date or dates on which the principal of the Securities of the series is payable or the method by which such date or dates shall be determined; (4) the rate or rates at which the Securities of the series shall bear interest, if any, or the method by which such rate or rates shall be determined, the date or dates from which such interest shall accrue, the interest payment dates on which such interest shall be payable and the record dates for the determination of Holders to whom interest is payable; (5) the place or places where the principal of and interest, if any, on Securities of the series shall be payable; (6) the price or prices at which, the period or periods within which and the terms and conditions upon which Securities of the series may be redeemed, in whole or in part, at the option of the Issuer, pursuant to any sinking fund or otherwise; (7) the obligation, if any, of the Issuer to redeem, purchase or repay Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the price or prices at which and the period or periods within which and the terms and conditions upon which Securities of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation; (8) if other than denominations of U.S. $1,000 and any integral multiple thereof, in the case of Registered Securities, or U.S. $1,000 in the case of the Unregistered Securities, such denominations in which Securities of the series shall be issuable; (9) if other than the principal amount thereof, the portion of the principal amount of Securities of the series which shall be payable upon declaration of acceleration of the maturity thereof pursuant to Section 5.1 or provable in bankruptcy pursuant to Section 5.2; (10) any authenticating or paying agents, transfer agents or registrars or any other agents with respect to the Securities of such series; (11) if other than such coin or currency of the United States of America as at the time of payment is legal tender for payment of public or private debts, the coin or currency or units based on or relating to currencies (including ECU) in which payment of the principal of and interest, if any, on the Securities of that series shall be payable; -7-
(12) if the principal of or interest, if any, on the Securities of that series are to be payable, at the election of the Issuer or a holder thereof, in a coin or currency or units based on or relating to currencies (including ECU) other than that in which the Securities are stated to be payable, the period or periods within which, and the terms and conditions upon which, such election may be made; (13) if the amount of payments of principal of or interest, if any, on the Securities of the series may be determined with reference to an index, formula or other method based on a coin or currency or units based on or relating to currencies (including ECU) other than that in which the Securities are stated to be payable, the manner in which such amounts shall be determined; and (14) whether the Securities of the series will be issuable as Registered Securities or Unregistered Securities (with or without Coupons), or both, any restrictions applicable to the offer, sale or delivery of Unregistered Securities and, if other than as provided in Section 2.8, the terms upon which Unregistered Securities of any series may be exchanged for Registered Securities of such series and the terms upon which Registered Securities may be exchanged for Unregistered Securities of such series; (15) whether and under what circumstances the Issuer will pay additional amounts on the Securities of the series held by a person who is not a U.S. person in respect of any tax, assessment or governmental charge withheld or deducted and, if so, whether the Issuer will have the option to redeem such Securities rather than pay such additional amounts; (16) if the Securities of such series are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary Security of such series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, then the form and terms of such certificates, documents or conditions; and (17) any other terms of the series, including provisions for payment by wire transfers if any, or modifications of the definition of Business Day, (which terms shall not be inconsistent with the provisions off this Indenture). All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to such resolution of the Board of Directors or in any such indenture supplemental hereto. SECTION 2.4. Authentication and Delivery of Securities. At any time and from time to time after the execution and delivery of this Indenture, the Issuer may deliver Securities of any series having attached thereto appropriate Coupons, if any, executed by the Issuer to the Trustee for authentication. Except as otherwise provided in this Section, the Trustee shall thereupon authenticate and deliver such Securities with Coupons, if any, to or upon the written order of the Issuer, signed by both (a) the chairman of its Board of Directors, its president, or the chairman of its executive committee, any vice chairman of its Board of Directors or any vice president and (b) by its treasurer or any assistant treasurer, without any further action by the Issuer. In authenticating such Securities and Coupons, if any, and accepting the additional -8-
responsibilities under this Indenture in relation to such Securities and Coupons, if any, the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be fully protected in relying upon: (1) a certified copy of any action taken pursuant to the resolution or resolutions delivered under clause (2) below; (2) a copy of any resolution or resolutions of the Board of Directors relating to such series, in each case certified by the Secretary or an Assistant Secretary of the Issuer; (3) an executed supplemental indenture, if any; (4) an Officers' Certificate setting forth the form and terms of the Securities and Coupons, if any, as required pursuant to Sections 2.1 and 2.3, respectively and prepared in accordance with Section 12.5; (5) an Opinion of Counsel, prepared in accordance with Section 12.5, which shall state (a) that the form or forms and terms of such Securities and Coupons, if any, have been established by or pursuant to a resolution of the Board of Directors or by a supplemental indenture as permitted by Sections 2.1 and 2.3 in conformity with the provisions of this Indenture; (b) that such Securities, and Coupons, if any, when authenticated and delivered by the Trustee and issued by the Issuer in the manner and subject to any conditions, assumptions, exceptions and limitations specified in such Opinion of Counsel, will constitute valid and binding obligations of the Issuer; (c) that all laws and requirements in respect of the execution and delivery by the Issuer of the Securities and Coupons, if any, have been complied with; and (d) such other matters as the Trustee may reasonably request. The Trustee shall have the right to decline to authenticate and deliver any Securities and Coupons, if any, under this Section if the Trustee, being advised by counsel, determines that such action may not lawfully be taken by the Issuer or if the Trustee in good faith by its board of directors, executive committee, or a trust committee of directors and/or Responsible Officers shall determine that such action would expose the Trustee to personal liability to existing Holders. SECTION 2.5. Execution of Securities. The Securities and, if applicable, each Coupon appertaining thereto, shall be signed on behalf of the Issuer by the chairman of its Board of Directors, its president, or the chairman of its executive committee, any vice chairman of its Board of Directors or any vice president under its corporate seal attested by its secretary or any assistant secretary. Such signatures may be the manual or facsimile signatures of the present or -9-
any future such officers. The seal of the Issuer may be in the form of a facsimile thereof and may be impressed, affixed, imprinted or otherwise reproduced on the Securities and, if applicable, each Coupon appertaining thereto. Typographical and other minor errors or defects in any such reproduction of the seal or any such signature shall not affect the validity or enforceability of any Security that has been duly authenticated and delivered by the Trustee. In case any officer of the Issuer who shall have signed any of the Securities or Coupons shall cease to be such officer before the Security or Coupon so signed or the Security to which the Coupon so signed appertains shall be authenticated and delivered by the Trustee or disposed of by the Issuer, such Security or Coupon nevertheless may be authenticated and delivered or disposed of as though the person who signed such Security or Coupon had not ceased to be such officer of the Issuer; and any Security or Coupon may be signed on behalf of the Issuer by such persons as, at the actual date of the execution of such Security or Coupon, shall be the proper officers of the Issuer, although at the date of the execution and delivery of this Indenture any such person was not such an officer. SECTION 2.6. Certificate of Authentication. Only such Securities as shall bear thereon a certificate of authentication substantially in the form hereinbefore recited, executed by the Trustee by the manual signature of one of its authorized officers, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. No Coupon shall be entitled to the benefits of this Indenture or shall be valid or obligatory for any purpose until such certificate by the Trustee shall have become duly executed on the Security to which such coupon appertains. Such certificate by the Trustee upon any Security executed by the Issuer shall be conclusive evidence that the Security so authenticated has been duly authenticated and delivered hereunder and that the Holder is entitled to the benefits of this Indenture. SECTION 2.7. Denomination and Date of Securities; Payments of Interest. The Securities shall be issuable as Registered Securities or Unregistered Securities in such denominations as shall be specified as contemplated by Section 2.3. In the absence of any such specifications with respect to the Registered Securities of any series, Registered Securities shall be issued in denominations of U.S. $1,000 and any integral multiple thereof. In the absence of any such specification with respect to Unregistered Securities, Unregistered Securities shall be issued in the denomination of U.S. $1,000. The Securities shall be numbered, lettered or otherwise distinguished in such manner or in accordance with such plan as the officers of the Issuer executing the same may determine as evidenced by the execution thereof. Each Registered Security shall be dated the date of its authentication. Each Unregistered Security shall be dated as provided in or pursuant to the resolution or resolutions of the Board of Directors of the Issuer or the supplemental indenture referred to in Section 2.3. The Securities of each series shall bear interest, if any, from the date and such interest shall be payable on the dates established as contemplated by Section 2.3. The person in whose name any Registered Security of any series is registered at the close of business on any record date applicable to a particular series with respect to any interest payment date for such series shall be entitled to receive the interest, if any, payable on such interest payment date notwithstanding any transfer or exchange of such Registered Security subsequent to the record date and prior to such interest payment date, except if and to the extent the Issuer shall default in the payment of the interest due on such interest payment date for such series, in which case such defaulted interest -10-
shall be paid to the persons in whose names outstanding Registered Securities for such series are registered at the close of business on a subsequent record date (which shall be not less than ten business days prior to the date of payment of such defaulted interest) established by notice given by mail by or on behalf of the Issuer to the holders of Registered Securities not less than 15 days preceding such subsequent record date. The term "record date" as used with respect to any interest payment date (except a date for payment of defaulted interest) shall mean the date specified as such in the terms of the Registered Securities of any particular series, or, if no such date is so specified, if such interest payment date is the first day of a calendar month, the fifteenth day of the next preceding calendar month or, if such interest payment date is the fifteenth day of a calendar month, the first day of such calendar month, whether or not such record date is a Business Day. Any defaulted interest payable in respect of any Unregistered Security shall be payable pursuant to such procedures as may be satisfactory to the Trustee in such manner that there is no discrimination as between the holders of Registered Securities and Unregistered Securities of the same series and notice of the payment date therefor shall be given by the Trustee in the name and at the expense of the Issuer by publication at least once in an Authorized Newspaper. In case an Unregistered Security is surrendered for exchange for a Registered Security after the close of business on any record date for the payment of defaulted interest and before the opening of business on the proposed date of payment of such defaulted interest, the Coupon appertaining to such surrendered Unregistered Security and due for payment on such proposed date of payment will not be surrendered with such surrendered Unregistered Security and interest payable on such proposed date of payment will be made only to the holder of such Coupon on such proposed date. SECTION 2.8. Registration, Transfer and Exchange. The Issuer will keep or cause to be kept at an office or agency to be maintained for such purpose as provided in Section 3.2 a register or registers for each series of Securities issued hereunder (collectively, the "Security Register") in which, subject to such reasonable regulations as it may prescribe, it will register, and will register the transfer of or cause the registration of the transfer of, Registered Securities as in this Article provided. Upon due presentation for registration of transfer of any Registered Security of any series at an office or agency to be maintained for such purpose as provided in Section 3.2, the Issuer shall execute and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Registered Security or Registered Securities of the same series in authorized denominations for a like aggregate principal amount. Unregistered Securities (except for any temporary Unregistered Securities) and Coupons (except for Coupons attached to any temporary Unregistered Securities) shall be transferable by delivery. At the option of the Holder thereof, any Registered Security or Registered Securities of any series may be exchanged for a Registered Security or Registered Securities of the same series in other authorized denominations, in an equal aggregate principal amount. Registered Securities of any series to be exchanged shall be surrendered at an office or agency to be maintained by the Issuer for such purpose as provided in Section 3.2, and the Issuer shall -11-
execute and the Trustee shall authenticate and deliver in exchange therefor the Registered Security or Registered Securities of the same series which the Securityholder making the exchange shall be entitled to receive, bearing numbers not contemporaneously outstanding. If the Securities of any series are issued in both registered and unregistered form, except as otherwise specified pursuant to Section 2.3, at the option of the Holder thereof, Unregistered Securities of any series may be exchanged for Registered Securities of such series, maturity date and interest rate of any authorized denominations and of a like aggregate principal amount, upon surrender of such Unregistered Securities to be exchanged at the office or agency of the Issuer that shall be maintained for such purpose in accordance with Section 3.2, with, in the case of Unregistered Securities that have Coupons attached, all unmatured Coupons and all matured Coupons in default thereto appertaining, and upon payment, if the Issuer shall so require, of the charges hereinafter provided. At the option of the Holder thereof, if Unregistered Securities of any series, maturity date, interest rate and original issue date are issued in more than one authorized denomination, except as otherwise specified pursuant to Section 2.3, such Unregistered Securities may be exchanged for Unregistered Securities of such series, maturity date, interest rate and original issue date of other authorized denominations and of a like aggregate principal amount, upon surrender of such Unregistered Securities to be exchanged at the office or agency of the Issuer that shall be maintained for such purpose in accordance with Section 3.2 or as specified pursuant to Section 2.3, with, in the case of Unregistered Securities that have Coupons attached, all unmatured Coupons and all matured Coupons in default thereto appertaining, and upon payment, if the Issuer shall so require, of the charges hereinafter provided. Unless otherwise specified pursuant to Section 2.3, Registered Securities of any series may not be exchanged for Unregistered Securities of such series. Whenever any Securities and the Coupons appertaining thereto, if any, are so surrendered for exchange, the Issuer shall execute, and the Trustee shall authenticate and deliver, the Securities and the Coupons appertaining thereto, if any, which the Holder making the exchange is entitled to receive. Notwithstanding the foregoing, in case an Unregistered Security of any series is surrendered at any such office or agency in exchange for a Registered Security of the same series after the close of business at such office or agency on any record date and before the opening of business at such office or agency on the relevant interest payment date, such Unregistered Security shall be surrendered without the Coupon relating to such interest payment date or proposed date of payment, as the case may be. All Registered Securities presented for registration of transfer, exchange, redemption or payment shall (if so required by the Issuer or the Trustee) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Issuer and the Trustee duly executed by, the Holder or his attorney duly authorized in writing. The Issuer may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any exchange or registration of transfer of Securities. No service charge shall be made for any such transaction. The Issuer shall not be required to exchange or register a transfer of (a) any Securities of any series for a period of 15 days next preceding the close of business on the date of selection of Securities of such series to be redeemed, of (b) any Securities selected, called or being called for redemption except, in the case of any Security where public notice has been -12-
given that such Security is to be redeemed in part, the portion thereof not so to be redeemed and except that an Unregistered Security may be exchanged for a Registered Security of the same series if such Registered Security is immediately surrendered for redemption. All Securities issued upon any transfer or exchange of Securities shall be valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange. Notwithstanding anything herein or in the terms of any series of Securities to the contrary, neither the Issuer nor the Trustee (which shall rely on an Officers' Certificate and an Opinion of Counsel) shall be required to exchange any Unregistered Security for a Registered Security if such exchange would result in adverse Federal income tax consequences to the Issuer (including, without limitation, the inability of the Issuer to deduct from its income, as computed for Federal income tax purposes, the interest payable on the Unregistered Securities) under then applicable United States Federal income tax laws. SECTION 2.9. Mutilated, Defaced, Destroyed, Lost and Stolen Securities. In case any temporary or definitive Security or any Coupon appertaining to any Security shall become mutilated, defaced or be destroyed, lost or stolen, the Issuer in its discretion may execute, and upon the written request of any officer of the Issuer, the Trustee shall authenticate and deliver, a new Registered Security of the same series, bearing a number not contemporaneously outstanding, in exchange and substitution for the mutilated or defaced Security, or in lieu of and substitution for the Security so destroyed, lost or stolen with Coupons corresponding to the Coupons appertaining to the Security so mutilated, defaced, destroyed, lost or stolen, or in exchange or substitution for the Security to which such mutilated, defaced, destroyed, lost or stolen Coupon appertained, with Coupons appertaining thereto corresponding to the Coupons so mutilated, defaced, destroyed, lost or stolen. In every case the applicant for a substitute Security or Coupon shall furnish to the Issuer and to the Trustee and any agent of the Issuer or the Trustee such security or indemnity as may be required by them to indemnify and defend and to save each of them harmless and, in every case of destruction, loss or theft, evidence to their satisfaction of the destruction, loss or theft of such Security or Coupon and of the ownership thereof. Upon the issuance of any substitute Security or Coupon, the Issuer may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. In case any Security or Coupon which has matured or is about to mature or has been called for redemption, as the case may be, in full shall become mutilated or defaced or be destroyed, lost or stolen, the Issuer may, instead of issuing a substitute Security or Coupon, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated or defaced Security or Coupon), if the applicant for such payment shall furnish to the Issuer and to the Trustee and any agent of the Issuer or the Trustee such security or indemnity as any of them may require to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Issuer and the Trustee and any agent of the Issuer or the Trustee evidence to their satisfaction of the destruction, loss or theft of such Security or Coupon and of the ownership thereof. -13-
Every substitute Security or Coupon of any series issued pursuant to the provisions of this Section by virtue of the fact that any such Security or Coupon is destroyed, lost or stolen shall constitute an additional contractual obligation of the Issuer, whether or not the destroyed, lost or stolen Security or Coupon shall be at any time enforceable by anyone and shall be entitled to all the benefits of (but shall be subject to all the limitations of rights set forth in) this Indenture equally and proportionately with any and all other Securities or Coupons of such series duly authenticated and delivered hereunder. All Securities or Coupons shall be held and owned upon the express condition that, to the extent permitted by law, the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, defaced or destroyed, lost or stolen Securities or Coupons and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. SECTION 2.10. Cancellation of Securities; Destruction Thereof. All Securities and Coupons surrendered for payment, retirement, redemption, registration of transfer or exchange, or for credit against any payment in respect of a sinking or analogous fund, if surrendered to the Issuer or any agent of the Issuer or the Trustee, shall be delivered to the Trustee for cancellation or, if surrendered to the Trustee, shall be cancelled by it; and no Securities or Coupons shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. The Trustee shall destroy cancelled Securities and Coupons held by it and deliver a certificate of such destruction to the Issuer. If the Issuer shall acquire any of the Securities or Coupons, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities or Coupons unless and until the same are delivered to the Trustee for cancellation. SECTION 2.11. Temporary Securities. Pending the preparation of definitive Securities for any series, the Issuer may execute and the Trustee shall authenticate and deliver temporary Securities for such series (printed, lithographed, typewritten or otherwise reproduced, in each case in form satisfactory to the Trustee). Temporary Securities of any series shall be issuable as Registered Securities without Coupons, or as Unregistered Securities with or without Coupons attached thereto of any authorized denomination, and substantially in the form of the definitive securities of such series but with such omissions, insertions and variations as may be appropriate for temporary Registered Securities, all as may be determined by the Issuer with the concurrence of the Trustee. Temporary Securities may contain such reference to any provisions of this Indenture as may be appropriate. Every temporary Security shall be executed by the Issuer and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Securities. Without unreasonable delay the Issuer shall execute and shall furnish definitive Securities of such series and thereupon temporary Registered Securities of such series may be surrendered in exchange therefor without charge at each office or agency to be maintained by the Issuer for that purpose pursuant to Section 3.2 and in the case of Unregistered Securities, together with any unmatured Coupons and any matured Coupons in default appertaining thereto, at any agency maintained by the Issuer for such purpose as specified pursuant to Section 2.3 and the Trustee shall authenticate and deliver in exchange for such temporary Securities of such series a like aggregate principal amount of definitive Securities of the same series of authorized denominations and, in the case of Unregistered Securities having attached thereto any appropriate Coupons. Until so exchanged, the temporary Securities of such series and any unmatured Coupons appertaining thereto shall be entitled to the -14-
same benefits under this Indenture as definitive Securities of such series and any unmatured Coupons appertaining thereto. The provisions of this Section are subject to any restrictions or limitations on the issue and delivery of temporary Unregistered Securities of any series that may be established pursuant to Section 2.3 (including any provision that Unregistered Securities of such series initially be issued in the form of a single global Unregistered Security to be delivered to a depositary or agency of the Issuer located outside the United States and the procedures pursuant to which definitive Unregistered Securities of such series would be issued in exchange for such temporary global Unregistered Security). SECTION 2.12. Computation of Interest. Except as otherwise specified as contemplated by Section 2.3 for Securities of any series, interest on the Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months. ARTICLE THREE COVENANTS OF THE ISSUER SECTION 3.1. Payment of Principal and Interest. The Issuer covenants and agrees for the benefit of each series of Securities that it will duly and punctually pay or cause to be paid the principal of, and interest on, each of the Securities of such series at the place or places, at the respective times and in the manner provided in this Indenture and in such Securities. The interest on Unregistered Securities with Coupons attached (together with any additional amounts payable pursuant to the terms of such Unregistered Securities) shall be payable only upon presentation and surrender of the several Coupons for such interest installments as are evidenced thereby as they severally mature. Except as specified as contemplated in Section 2.3, the interest on any temporary Unregistered Securities (together with any additional amounts payable pursuant to the terms of such temporary Unregistered Securities) shall be paid, as to the installments of interest evidenced by Coupons attached thereto, if any, only upon presentation and surrender thereof, and, as to the other installments of interest, if any, only upon presentation of such Securities for notation thereon of the payment of such interest. Each installment of interest on the Registered Securities of any series may be paid by mailing checks for such interest payable to or upon the written order of the holders of such Securities entitled thereto as they shall appear on the registry books of the Issuer. If so provided in the resolutions or supplemental indenture referred to in Section 2.3, payment of principal of or interest on the Securities may be made by wire transfer of funds in the manner set forth in such resolutions or supplemental indenture. SECTION 3.2. Offices for Payments, etc. So long as any of the Securities remain outstanding, the Issuer will maintain in the Borough of Manhattan, The City of New York, the following for each series of Securities: an office or agency (a) where the Registered Securities may be presented for payment, (b) where the Registered Securities may be presented for registration of transfer and for exchange as in this Indenture provided and (c) where notices and demands to or upon the Issuer in respect of the Registered Securities or of this Indenture may be served. -15-
The Issuer will maintain one or more agencies in a city or cities located outside the United States (including any city in which such an agency is required to be maintained under the rules of any stock exchange on which the Securities of such series are listed) where the Unregistered Securities, if any, of each series and Coupons, if any, appertaining thereto may be presented and surrendered for payment. No payment on any Unregistered Security or Coupon will be made upon presentation of such Unregistered Security or Coupon at an office or agency of the Issuer within the United States nor will any payment be made by transfer to an account in, or by mail to an address in, the United States unless pursuant to applicable United States laws and regulations then in effect, such payment can be made without adverse tax consequences to the Issuer. Notwithstanding the foregoing, payments in U.S. dollars on Unregistered Securities of any series and Coupons appertaining thereto which are denominated in U.S. dollars may be made at such office or agency of the Issuer maintained in the Borough of Manhattan, The City of New York if such payment in U.S. dollars at each agency maintained by the Issuer outside the United States for payment on such Unregistered Securities is illegal or effectively precluded by exchange controls or other similar restrictions. The Issuer will give to the Trustee written notice of the location of any such office or agency and of any change of location thereof. With respect to each series of Securities and Coupons whose terms are established pursuant to Section 2.3, the Issuer hereby designates its office or agency specified in accordance with Section 2.3 as the initial office to be maintained by it for each such purpose. In case the Issuer shall fail to maintain any such office or agency or shall fail to give such notice of the location or of any change in the location thereof, presentations and demands may be made and notices may be served at the Corporate Trust Office. SECTION 3.3. Appointment to Fill a Vacancy in Office of Trustee. The Issuer, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 6.10, a Trustee, so that there shall at all times be a Trustee with respect to each series of Securities hereunder. SECTION 3.4. Paying Agents. Whenever the Issuer shall appoint a paying agent other than the Trustee with respect to the Securities of any series, it will cause such paying agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section, (a) that it will hold all sums received by it as such agent for the payment of the principal of or interest on the Securities of such series (whether such sums have been paid to it by the Issuer or by any other obligor on the Securities of such series) in trust for the benefit of the holders of the Securities of such series or the Coupons appertaining thereto or of the Trustee, and (b) that it will give the Trustee notice of any failure by the Issuer (or by any other obligor on the Securities of such series) to make any payment of the principal of or interest on the Securities of such series when the same shall be due and payable. The Issuer will, prior to each due date of the principal of or interest on the Securities of such series, deposit with the paying agent a sum or sums in the required currencies -16-
sufficient to pay such principal or interest so becoming due, and (unless such paying agent is the Trustee) the Issuer will promptly notify the Trustee of any failure to take such action. If the Issuer shall act as its own paying agent with respect to the Securities of any series, it will, on or before each due date of the principal of or interest on the Securities of such series, set aside, segregate and hold in trust for the benefit of the holders of the Securities of such series or the Coupons appertaining thereto a sum sufficient to pay such principal or interest so becoming due. The Issuer will promptly notify the Trustee of any failure to take such action. Anything in this Section to the contrary notwithstanding, the Issuer may at any time, for the purpose of obtaining a satisfaction and discharge with respect to one or more or all series of Securities hereunder, or for any other reason, pay or cause to be paid to the Trustee all sums held in trust for any such series by the Issuer of any paying agent hereunder, as required by this Section, such sums to be held by the Trustee upon the trusts herein contained. Anything in this Section to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section is subject to the provisions of Article Ten and Sections 11.3 and 11.4. SECTION 3.5. Written Statement to Trustee. The Issuer will deliver to the Trustee on or before August 1 in each year (beginning with the August 1 next succeeding execution of the Indenture) a written statement (which need not comply with Section 12.5) signed by the principal executive, financial or accounting officer of the Issuer, as to his or her knowledge of the Issuer's compliance with all conditions and covenants under this Indenture (without regard to any period of grace or requirement of notice provided hereunder). SECTION 3.6. Luxembourg Publications. In the event of the publication of any notice pursuant to Section 5.11, 6.10(a), 6.11, 8.2, 11.4 or 13.2, the party making such publication in the Borough of Manhattan, The City of New York and London shall also, to the extent that notice is required to be given to Holders of Securities of any series by applicable Luxembourg law or stock exchange regulation, as evidenced by an Officers' Certificate delivered to such party, make a similar publication in Luxembourg. ARTICLE FOUR SECURITYHOLDERS' LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE SECTION 4.1. Issuer to Furnish Trustee Information as to Names and Addresses of Securityholders. The Issuer covenants and agrees that it will furnish or cause to be furnished to the Trustee a list in such form as the Trustee may reasonably require of the names and addresses of the Holders of the Registered Securities of each series: (a) not more than 15 days after each record date for the payment of semi annual interest on such Securities, as of such record date and on semi annual dates to be determined pursuant to Section 2.3 for non-interest bearing Securities in each year, and -17-
(b) at such other times as the Trustee may request in writing, within 30 days after receipt by the Issuer of any such request as of a date not more than 15 days prior to the time such information is furnished, provided that if and so long as the Trustee shall be the Security registrar for such series and all of the Securities of any series are Registered Securities, such list shall not be required to be furnished. SECTION 4.2. Preservation and Disclosure of Securityholders' Lists. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the Holders of each series of Securities (i) contained in the most recent list furnished to it as provided in Section 4.1, (ii) received by it in the capacity of Security registrar for such series, if so acting and (iii) filed with it within the two preceding years pursuant to Section 313(c)(2) of the Trust Indenture Act of 1939. The Trustee may destroy any list furnished to it as provided in Section 4.1 upon receipt of a new list so furnished. (b) In case three or more holders of Securities (hereinafter referred to as "applicants") apply in writing to the Trustee and furnish to the Trustee reasonable proof that each such applicant has owned a Security for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other holders of Securities of a particular series (in which case the applicants must all hold Securities of such series) or with Holders of all Securities with respect to their rights under this Indenture or under such Securities and such application is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall, within five Business Days after the receipt of such application, at its election, either (i) afford to such applicants access to the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section, or (ii) inform such applicants as to the approximate number of holders of Securities of such series or all Securities, as the case may be, whose names and addresses appear in the information preserved at the time by the Trustee, in accordance with the provisions of subsection (a) of this Section, and as to the approximate cost of mailing of this Section, and as to the approximate cost of mailing to such Securityholders the form of proxy or other communication, if any, specified in such application. If the Trustee shall elect not to afford to such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Securityholder of such series or all Securities, as the case may be, whose name and address appears in the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section a copy of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender, the Trustee shall mail to such applicants and file with the Commission together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interests of the holders of Securities of such series or all Securities, as the case may be, or would be in -18-
violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met, and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Securityholders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application. (c) Each and every holder of Securities and Coupons, by receiving and holding the same, agrees with the Issuer and the Trustee that neither the Issuer nor the Trustee nor any agent of the Issuer or the Trustee shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the holders of Securities in accordance with the provisions of subsection (b) of this Section, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under such subsection (b). SECTION 4.3. Reports by the Issuer. The Issuer covenants: (a) to file with the Trustee, within 15 days after the Issuer is required to file the same with the Commission, copies of the annual reports and of the information, documents, and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Issuer may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, or if the Issuer in not required to file information, documents, or reports pursuant to either of such Sections, then to file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents, and reports which may be required pursuant to Section 13 of the Securities Exchange Act of 1934, in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations; (b) to file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents, and reports with respect to compliance by the Issuer with the conditions and covenants provided for in this Indenture as may be required from time to time by such rules and regulations; and (c) to transmit by mail to the Holders of Securities, on the list preserved by the Trustee under Section 4.2(a) within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Issuer pursuant to subsections (a) and (b) of this Section as may be required to be transmitted to such Holders by rules and regulations prescribed from time to time by the Commission. -19-
SECTION 4.4. Reports by the Trustee. (a) The Trustee shall transmit to Holders of Securities such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto; provided, however, that any reports required by Section 313(a) of the Trust Indenture Act of 1939 shall be transmitted by mail to Holders within 60 days after December 31 of each year commencing with the year 1993. (b) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which the Securities of any applicable series are listed, with the Commission and with the Issuer. The Issuer will notify the Trustee when any Securities under the Indenture are listed on any stock exchange. ARTICLE FIVE REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT SECTION 5.1. Event of Default Defined; Acceleration of Maturity; Waiver of Default. "Event of Default" with respect to Securities of any series wherever used herein, means each one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (a) default in the payment of any installment of interest upon any of the Securities of such series as and when the same shall become due and payable, and continuance of such default for a period of 30 days; or (b) default in the payment of all or any part of the principal on any of the Securities of such series as and when the same shall become due and payable either at maturity, upon redemption, by declaration or otherwise; or (c) default in the payment of any sinking fund installment as and when the same shall become due and payable by the terms of a Security of such series; or (d) default in the performance, or breach, of any covenant or warranty of the Issuer in respect of the Securities of such series (other than a covenant or warranty in respect of the Securities of such series a default in whose performance or whose breach is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Issuer by the Trustee or to the Issuer and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of such series, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or -20-
(e) a court having jurisdiction in the premises shall enter a decree or order for relief in respect of the Issuer in an involuntary case under any applicable Federal or State bankruptcy, insolvency or other similar law now or hereafter in effect, and such decree or order shall remain unstayed and in effect for a period of 90 consecutive days; or (f) the Issuer shall commence a voluntary case under any applicable Federal or State bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under such law. If an Event of Default described in clause (e) or (f) above occurs and is continuing, then and in each and every such case, unless the principal of all the Securities shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of all the Securities then Outstanding hereunder (treated as one class), by notice in writing to the Issuer (and to the Trustee if given by Securityholders), may declare the entire principal (or, if any Securities are Original Issue Discount Securities, such portion of the principal as may be specified in the terms thereof) of all the Securities then outstanding and interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable. The foregoing provisions, however, are subject to the condition that if, at any time after the principal (or, if the Securities are Original Issue Discount Securities, such portion of the principal as may be specified in the terms thereof) of the Securities of any series (or of all the Securities affected, or of all the Securities, as the case may be) shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, the Issuer shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest upon all the Securities of such series (or of all the Securities affected, or of all the Securities, as the case may be) and the principal of any and all Securities of such series (or of all the Securities affected, or of all the Securities, as the case may be) which shall have become due otherwise than by acceleration (with interest upon such principal and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest, at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of such series (or at the respective rates of interest or Yields to Maturity of all the Securities affected or all the Securities, as the case may be) to the date of such payment or deposit) and such amount as shall be sufficient to cover reasonable compensation to the Trustee, its agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Trustee except as a result of negligence or bad faith, and if any and all Events of Default under the Indenture, other than the non-payment of the principal of Securities which shall have become due by acceleration, shall have been cured, waived or otherwise remedied as provided herein--then and in every such case the holders of a majority in aggregate principal amount of the Securities of such series (or of all the Securities affected, or of all the Securities, as the case may be) then outstanding, by written notice to the Issuer and to the Trustee, may waive all defaults with respect to such series (or of all the Securities affected, or with respect to all Securities, as the case may be--in such case, treated as a single class) and rescind and annul such declaration and its consequences, but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default or shall impair any right consequent thereon. -21-
For all purposes under this Indenture, if a portion of the principal of any Original Issue Discount Securities shall have been accelerated and declared due and payable pursuant to the provisions hereof, then, from and after such declaration, unless such declaration has been rescinded and annulled, the principal amount of such Original Issue Discount Securities shall be deemed, for all purposes hereunder, to be such portion of the principal thereof as shall be due and payable as a result of such acceleration, and payment of such portion of the principal thereof as shall be due and payable as a result of such acceleration, together with interest, if any, thereon and all other amounts owing thereunder, shall constitute payment in full of such Original Issue Discount Securities. SECTION 5.2. Collection of Indebtedness by Trustee; Trustee May Prove Debt. The Issuer covenants that (a) in case default shall be made in the payment of any installment of interest on any of the Securities of any series or Coupons appertaining thereto when such interest shall have become due and payable, and such default shall have continued for a period of 30 days or (b) in case default shall be made in the payment of all or any part of the principal of any of the securities of any series when the same shall have become due and payable, whether upon maturity of the Securities of such series or upon any redemption or by declaration or otherwise--then upon demand of the Trustee, the Issuer will pay to the Trustee for the benefit of the Holders of the Securities of such series the whole amount that then shall have become due and payable on all Securities of such series and such Coupons, if any, for principal or interest, as the case may be (with interest to the date of such payment upon the overdue principal and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of such series); and in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including reasonable compensation to the Trustee and each predecessor Trustee, their respective agents, attorneys and counsel, and any expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of its negligence or bad faith. Until such demand is made by the Trustee, the Issuer may pay the principal of and interest on the Securities of any series to the holders, whether or not the principal of and interest, if any, on the Securities of such series be overdue. In case the Issuer shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against the Issuer or other obligor upon such Securities and collect in the manner provided by law out of the property of the Issuer or other obligor upon such Securities, wherever situated, the moneys adjudged or decreed to be payable. In case there shall be pending proceedings relative to the Issuer or any other obligor upon the Securities of any series or Coupons appertaining to such Securities under Title 11 of the United States Code or any other applicable Federal or state bankruptcy, insolvency or other similar law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Issuer or its property or such other obligor, or in case of any other comparable judicial -22-
proceedings relative to the Issuer or other obligor upon the Securities of any series, or to the creditors or property of the Issuer or such other obligor, the Trustee, irrespective of whether the principal of any Securities of any series shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section, shall be entitled and empowered, by intervention in such proceedings or otherwise: (a) to file and prove a claim or claims for the whole amount of principal and interest (or, if the Securities of any series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) owing and unpaid in respect of the Securities of any series, and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for reasonable compensation to the Trustee and each predecessor Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee, except as a result of negligence or bad faith) and of the Securityholders allowed in any judicial proceedings relative to the Issuer or other obligor upon the Securities of any series, or to the creditors or property of the Issuer or such other obligor, (b) unless prohibited by applicable law and regulations, to vote on behalf of the holders of the Securities of any series in any election of a trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings or person performing similar functions in comparable proceedings, and (c) to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute all amounts received with respect to the claims of the Securityholders and of the Trustee on their behalf; and any trustee, receiver, or liquidator, custodian or other similar official is hereby authorized by each of the Securityholders to make payments to the Trustee, and, in the event that the Trustee shall consent to the making of payments directly to the Securityholders, to pay to the Trustee such amounts as shall be sufficient to cover reasonable compensation to the Trustee, each predecessor Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of negligence or bad faith, and all other amounts due the Trustee and each predecessor Trustee pursuant to Section 6.6. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement, adjustment or composition affecting the Securities of any series or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar person. All rights of action and of asserting claims under this Indenture, or under any of the Securities or Coupons appertaining to such Securities, may be enforced by the Trustee without the possession of any of the Securities or Coupons appertaining to such Securities or the -23-
production thereof on any trial or other proceedings relative thereto, and any such action or proceedings instituted by the Trustees shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Trustee, each predecessor Trustee and their respective agents and attorneys, shall be for the ratable benefit of the holders of the Securities or Coupons appertaining to such securities in respect of which such action was taken. In any proceedings brought by the Trustee (and also any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party) the Trustee shall be held to represent all the holders of the Securities or Coupons appertaining to such Securities in respect of which such action was taken, and it shall not be necessary to make any holders of such Securities or Coupons appertaining to such Securities parties to any such proceedings. SECTION 5.3. Application of Proceeds. Any moneys collected by the Trustee pursuant to this Article in respect of any series shall, subject to Article Ten, be applied in the following order at the date or dates fixed by the Trustee and, in case of the distribution of such moneys on account of principal or interest, upon presentation of the several Securities or Coupons appertaining to such Securities in respect of which moneys have been collected and stamping (or otherwise noting) thereon the payment, or issuing Securities of such series in reduced principal amounts in exchange for the presented Securities of such series if only partially paid, or upon surrender thereof if fully paid: FIRST: To the payment of costs and expenses applicable to such series in respect of which moneys have been collected, including reasonable compensation to the Trustee and each predecessor Trustee and their respective agents and attorneys and of all expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of negligence or bad faith, and all other amounts due to the Trustee or any predecessor Trustee pursuant to Section 6.6; SECOND: In case the principal of the Securities in respect of which moneys have been collected shall not have become and be then due and payable, to the payment of interest on the Securities of such series in default in the order of the maturity of the installments of such interest, with interest (to the extent that such interest has been collected by the Trustee) upon the overdue installments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in such Securities, such payments to be made ratably to the persons entitled thereto, without discrimination or preference; THIRD: In case the principal of the Securities in respect of which moneys have been collected shall have become and shall be then due and payable, to the payment of the whole amount then owing and unpaid upon all the Securities of such series for principal and interest, with interest upon the overdue principal, and (to the extent that such interest has been collected by the Trustee) upon overdue installments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of such series; and in case such moneys shall be insufficient to pay in full the whole amount so due and unpaid upon the -24-
Securities of such series, then to the payment of such principal and interest, without preference or priority of principal over interest, or of interest over principal, or of any installment of interest over any other installment of interest, or of any Security of such series over any other Security of such series, ratably to the aggregate of such principal and accrued and unpaid interest; and FOURTH: To the payment of the remainder, if any, to the Issuer or any other person lawfully entitled thereto. SECTION 5.4. Suits for Enforcement. In case an Event of Default has occurred, has not been waived and is continuing, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law. SECTION 5.5. Restoration of Rights on Abandonment of Proceedings. In case the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, then and in every such case the Issuer and the Trustee shall be restored respectively to their former positions and rights hereunder, and all rights, remedies and powers of the Issuer, the Trustee and the Securityholders shall continue as though no such proceedings had been taken. SECTION 5.6. Limitations on Suits by Securityholders. No holder of any Security of any series or of any Coupon appertaining thereto shall have any right by virtue or by availing of any provision of this Indenture to institute any action or proceeding at law or in equity or in bankruptcy or otherwise upon or under or with respect to this Indenture, or for the appointment of a trustee, receiver, liquidator, custodian or other similar official or for any other remedy hereunder, unless such holder previously shall have given to the Trustee written notice of default and of the continuance thereof, as hereinbefore provided, and unless also the Holders of not less than 25% in aggregate principal amount of the Securities of such series then Outstanding shall have made written request upon the Trustee to institute such action or proceedings in its own name as trustee hereunder and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby and the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action or proceeding and no direction inconsistent with such written request shall have been given to the Trustee pursuant to Section 5.9; it being understood and intended, and being expressly covenanted by the taker and Holder of every Security or Coupon with every other taker and Holder and the Trustee, that no one or more Holders of Securities of any series or Coupons appertaining to such Securities shall have any right in any manner whatever by virtue or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other Holder of Securities or Coupons of that or any other series or Coupons appertaining to such Securities, or to obtain or seek to obtain priority over or preference to any other such Holder or to enforce any right under this Indenture, except in the manner herein -25-
provided and for the equal, ratable and common benefit of all Holders of Securities or Coupons of the applicable series or Coupons appertaining to such Securities. For the protection and enforcement of the provisions of this Section, each and every Securityholder and the Trustee shall be entitled to such relief as can be given either at law or in equity. SECTION 5.7. Unconditional Right of Securityholders to Institute Certain Suits. Notwithstanding any other provision in this Indenture and any provision of any Security or Coupon, but subject to Article Ten, the right of any Holder of any Security or Coupon to receive payment of the principal of and interest on such Security or Coupon on or after the respective due dates expressed in such Security or Coupon, or to institute suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. SECTION 5.8. Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default. Except as provided in Section 5.6, no right or remedy herein conferred upon or reserved to the Trustee or to the holder of Securities or coupons is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. No delay or omission of the Trustee or of any holder of Securities or Coupons to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein; and subject to Section 5.6, every power and remedy given by this Indenture or by law to the Trustee or to the holder of Securities or Coupons may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the holder of Securities or Coupons. SECTION 5.9. Control by Securityholders. The Holders of a majority in aggregate principal amount of the Securities of each series affected (with each series voting as a separate class) at the time Outstanding shall have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee with respect to the Securities of such series by this Indenture; provided that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture and provided further that (subject to the provisions of Section 6.1) the Trustee shall have the right to decline to follow any such direction if the Trustee, being advised by counsel, shall determine that the action or proceeding so directed may not lawfully be taken or if the Trustee in good faith by its board of directors, the executive committee, or a trust committee of directors or Responsible Officer or Officers of the Trustee shall determine that the action or proceedings so directed would involve the Trustee in personal liability or if the Trustee in good faith shall so determine that the actions or forbearances specified in or pursuant to such direction would be unduly prejudicial to the interests of Holders of Securities of all series so affected not joining in the giving of said direction, it being understood that (subject to Section 6.1) the Trustee shall have no duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such Holders. -26-
Nothing in this Indenture shall impair the right of the Trustee in its discretion to take any action deemed proper by the Trustee and which is not inconsistent with such direction or directions by Securityholders. SECTION 5.10. Waiver of Past Defaults. Prior to the declaration of the acceleration of the maturity of the securities of any series as provided in Section 5.1, the Holders of securities of a majority in principal amount of the Securities then outstanding (voting as one class) may waive any such default or Event of Default, and its consequences except a default in respect of a covenant or provision hereof which cannot be modified or amended without the consent of the Holder of each Security affected. In the case of any such waiver, the Issuer, the Trustee and the Holder of Securities of such series shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. Upon any such waiver, such default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of Default arising therefrom shall be deemed to have been cured, and not to have occurred for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. SECTION 5.11. Trustee to Give Notice of Default, But May Withhold in Certain Circumstances. The Trustee shall, within 90 days after the occurrence of a default with respect to the Securities of any series known to the Trustee, provide notice to the Holders of Securities of such series and Coupons appertaining thereto, if any, (i) if any Unregistered Securities of that series are then Outstanding, to the Holders thereof, by publication at least once in an Authorized Newspaper in the Borough of Manhattan, The City of New York and at least once in an Authorized Newspaper in London (and, if required by Section 3.6, at least once in an Authorized Newspaper in Luxembourg), (ii) if any Unregistered Securities of that series are then outstanding, to all Holders thereof who have filed their names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act of 1939, by mailing such notice to such Holders at such addresses and (iii) to all Holders of then Outstanding Registered Securities of that series, by mailing such notice to such Holders at their addresses as they shall appear in the registry books, unless such defaults have been cured before the giving of such notice (the term "default" or "defaults" for the purposes of this Section being hereby defined to mean any event or condition which is, or with notice or lapse of time or both would become, an Event of Default); provided that, except in the case of default in the payment of the principal of or interest on any of the Securities of such series or the payment of any sinking fund installment, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors or Responsible Officer or Officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Securityholders of such series. SECTION 5.12. Right of Court to Require Filing of Undertaking to Pay Costs. All parties to this Indenture agree, and each Holder of any Security or Coupon by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such -27-
suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder or group of Securityholders of any series holding in the aggregate more than 10% in aggregate principal amount of the Securities of such series (or, in the case of any suit relating to or arising under clause (d) (if the suit under clause (d) relates to all the Securities then Outstanding), (e) or (f) of Section 5.1, 10% in aggregate principal amount of all Securities) Outstanding, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of or interest on any Security or Coupon on or after the due date expressed in such Security or Coupon. ARTICLE SIX CONCERNING THE TRUSTEE SECTION 6.1. Duties and Responsibilities of the Trustee; During Default; Prior to Default. With respect to the Holders of any series of Securities issued hereunder, the Trustee, prior to the occurrence of an Event of Default with respect to the Securities of a particular series and after the curing or waiving of all Events of Default which may have occurred with respect to such series, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default with respect to the securities of a series has occurred (which has not been cured or waived) the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own wilful misconduct, except that (a) prior to the occurrence of an Event of Default with respect to the Securities of any series and after the curing or waiving of all such Events of Default with respect to such series which may have occurred: (i) the duties and obligations of the Trustee with respect to the Securities of any series shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any statements, certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such statements, certificates or opinions which by any provision -28-
hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture; (b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (c) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders pursuant to Section 5.9 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture. None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if there shall be reasonable ground for believing that the repayment of such funds or adequate indemnity against such liability is not reasonably assured to it. SECTION 6.2. Certain Rights of the Trustee. Subject to Section 6.1: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, Officers' Certificate or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, note, Coupon, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request, direction, order or demand of the Issuer mentioned herein shall be sufficiently evidenced by an Officers' Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any resolution of the Board of Directors may be evidenced to the Trustee by a copy thereof certified by the secretary or an assistant secretary of the Issuer; (c) the Trustee may consult with counsel and any advice or opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in accordance with such advice or Opinion of Counsel; (d) the Trustee shall be under no obligation to exercise any of the trusts or powers vested in it by this Indenture at the request, order or direction of any of the Securityholders pursuant to the provisions of this Indenture, unless such Securityholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred therein or thereby; (e) the Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture; -29-
(f) prior to the occurrence of an Event of Default hereunder and after the curing or waiving of all Events of Default, the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, Coupon, security, or other paper or document unless requested in writing so to do by the holders of not less than a majority in aggregate principal amount of the Securities of all series affected then Outstanding; provided that, if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such expenses or liabilities as a condition to proceeding; the reasonable expenses of every such investigation shall be paid by the Issuer or, if paid by the Trustee or any predecessor trustee, shall be repaid by the Issuer upon demand; (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys not regularly in its employ and the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care by it hereunder; and (h) the Trustee shall not be liable for any action taken or omitted to be taken by any transfer agent or paying agent unless such action taken or omitted was so taken or omitted at the direction of the Trustee. SECTION 6.3. Trustee Not Responsible for Recitals, Disposition of Securities or Application of Proceeds Thereof. The recitals contained herein and in the Securities or Coupons, except the Trustee's certificates of authentication, shall be taken as the statements of the Issuer, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representation as to the validity or sufficiency of this Indenture or of the Securities or Coupons. The Trustee shall not be accountable for the use or application by the Issuer of any of the Securities or of the proceeds thereof. SECTION 6.4. Trustee and Agents May Hold Securities or Coupons; Collections, etc. The Trustee or any agent of the Issuer or the Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities or Coupons with the same rights it would have if it were not the Trustee or such agent and, subject to Sections 6.8 and 6.13, if operative, may otherwise deal with the Issuer and receive, collect, hold and retain collections from the Issuer with the same rights it would have if it were not the Trustee or such agent. SECTION 6.5. Moneys Held by Trustee. Subject to the provisions of Section 11.4 hereof, all moneys received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by mandatory provisions of law. Neither the Trustee nor any agent of the Issuer or the Trustee shall be under any liability for interest on any moneys received by it hereunder except such as it may agree with the Issuer to pay thereon. -30-
SECTION 6.6. Compensation and Indemnification of Trustee and Its Prior Claim. The Issuer covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, reasonable compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) and the Issuer covenants and agrees to pay or reimburse the Trustee and each predecessor Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all agents and other persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence or bad faith. The Issuer also covenants to indemnify the Trustee and each predecessor Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder and its duties hereunder, including the costs and expenses of defending itself against or investigating any claim of liability in the premises. The obligations of the Issuer under this Section to compensate and indemnify the Trustee and each predecessor Trustee and to pay or reimburse the Trustee and each predecessor Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture. Such additional indebtedness shall have a claim prior to that of the Securities or Coupons upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the holders of particular Securities or Coupons. Payments to the Trustee pursuant to this Section 6.6 shall not be subject to the provisions of Article Ten. SECTION 6.7. Right of Trustee to Rely on Officers' Certificate, etc. Subject to Sections 6.1 and 6.2, whenever in the administration of the trusts of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officers' Certificate delivered to the Trustee, and such Certificate, in the absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted by it under the provisions of this Indenture upon the faith thereof. SECTION 6.8. Disqualification of Trustee; Conflicting Interests. If the Trustee has or shall acquire a conflicting interest within the meaning of Section 310(b) of the Trust Indenture Act of 1939, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture. To the extent permitted by such Act, the Trustee shall not be deemed to have a conflicting interest by virtue of being a trustee under the Indentures dated as of February 28, 1985, November 19, 1985, and December 1, 1986, each as amended, and each between the Issuer and the Trustee. SECTION 6.9. Persons Eligible for Appointment as Trustee. There shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act of 1939 to act as such and has combined capital and surplus of at least $85,000,000. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of a supervising or examining authority, then for the purposes of this Section, -31-
the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. SECTION 6.10. Resignation and Removal; Appointment of Successor Trustee. (a) The Trustee, or any trustee or trustees hereafter appointed, may at any time resign with respect to one or more or all series of Securities by giving written notice of resignation to the Issuer and (i) if any Unregistered Securities of a series affected are then outstanding, by giving notice of such resignation to the Holders thereof, by publication at least once in an Authorized Newspaper in the Borough of Manhattan, The City of New York, and at least once in an Authorized Newspaper in London (and, if required by Section 3.6, at least once in an Authorized Newspaper in Luxembourg), (ii) if any Unregistered Securities of a series affected are then Outstanding, by mailing notice of such resignation to the Holders thereof who have filed their names and addresses with the Trustee pursuant to Section 4.4(c)(ii) at such addresses as were so furnished to the Trustee, (iii) if any Registered Securities of a series affected are then Outstanding, by mailing notice thereof by first class mail to holders of the applicable series of Securities at their last addresses as they shall appear on the Security register. Upon receiving such notice of resignation, the Issuer shall promptly appoint a successor trustee or trustees with respect to the applicable series by written instrument in duplicate, executed by authority of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee or trustees. If no successor trustee shall have been so appointed with respect to any series and have accepted appointment within 60 days after the mailing of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor trustee, or any Securityholder who has been a bona fide holder of a Security or Securities of the applicable series for at least six months may, subject to the provisions of Section 5.12, on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee. (b) In case at any time any of the following shall occur: (i) the Trustee shall fail to comply with the provisions of Section 6.8 with respect to any series of Securities after written request therefor by the Issuer or by any Securityholder who has been a bona fide holder of a security or Securities of such series for at least six months; or (ii) the Trustee shall cease to be eligible in accordance with the provisions of Section 6.9 and shall fail to resign after written request therefor by the Issuer or by any Securityholder; or (iii) the Trustee shall become incapable of acting with respect to any series of securities, or shall be adjudged a bankrupt or insolvent, or a receiver or liquidator of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; -32-
then, in any such case, the Issuer may remove the Trustee with respect to the applicable series of Securities and appoint a successor trustee for such series by written instrument, in duplicate, executed by order of the Board of Directors of the Issuer, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 5.12, any Securityholder who has been a bona fide holder of a Security or Securities of such series for at least six months may on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee with respect to such series. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee. (c) The holders of a majority in aggregate principal amount of the Securities of each series at the time outstanding may at any time remove the Trustee with respect to Securities of such series and appoint a successor trustee with respect to the Securities of such series by delivering to the Trustee so removed, to the successor trustee so appointed and to the Issuer the evidence provided for in Section 7.1 of the action in that regard taken by the Securityholders. (d) Any resignation or removal of the Trustee with respect to any series and any appointment of a successor trustee with respect to such series pursuant to any of the provisions of this Section 6.10 shall become effective upon acceptance of appointment by the successor trustee as provided in section 6.11. SECTION 6.11. Acceptance of Appointment by Successor Trustee. Any successor trustee appointed as provided in section 6.10 all execute and deliver to the Issuer and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee with respect to all or any applicable series shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all rights, powers, duties and obligations with respect to such series of its predecessor hereunder, with like effect as if originally named as trustee for such series hereunder; but, nevertheless, on the written request of the Issuer or of the successor trustee, upon payment of its charges then unpaid, the trustee ceasing to act shall, subject to Section 11.4, pay over to the successor trustee all moneys at the time held by it hereunder and shall execute and deliver an instrument transferring to such successor trustee all such rights, powers, duties and obligations. Upon request of any such successor trustee, the Issuer shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim upon all property or funds held or collected by such trustee to secure any amounts then due it pursuant to the provisions of Section 6.6. If a successor trustee is appointed with respect to the Securities of one or more (but not all) series, the Issuer, the predecessor Trustee and each successor trustee with respect to the Securities of any applicable series shall execute and deliver an indenture supplemental hereto which shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the predecessor Trustee with respect to the Securities of any series as to which the predecessor Trustee is not retiring shall continue to be vested in the predecessor Trustee, and shall add to or change any of the provisions of this Indenture as shall be -33-
necessary to provide for or facilitate the administration of the trusts hereunder by more than one trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such trustees co-trustees of the same trust and that each such trustee shall be trustee of a trust or trusts under separate indentures. No successor trustee with respect to any series of Securities shall accept appointment as provided in this Section 6.11 unless at the time of such acceptance such successor trustee shall be qualified under the provisions of Section 6.8 and eligible under the provisions of Section 6.9. Upon acceptance of appointment by any successor trustee as provided in this Section, the Issuer shall give notice thereof (a) if any Unregistered Securities of a series affected are then Outstanding, to the Holders thereof, by publication of such notice at least once in an Authorized Newspaper in the Borough of Manhattan, The City of New York and at least once in an Authorized Newspaper in London (and, if required by Section 3.6, at least once in an Authorized Newspaper in Luxembourg), (b) if any Unregistered Securities of a series affected are then Outstanding, to the Holders thereof who have filed their names and addresses with the Trustee pursuant to Section 4.4(c)(ii), by mailing such notice to such Holders at such addresses as were so furnished to the Trustee (and the Trustee shall make such information available to the Issuer for such purpose) and (c) if any Registered Securities of a series affected are then outstanding, to the Holders of Registered Securities of each series affected, by first-class mail to such Holders of Securities of any series for which such successor trustee is acting as trustee at their last addresses as they shall appear in the Security Register. If the acceptance of appointment is substantially contemporaneous with the resignation, then the notice called for by the preceding sentence may be combined with the notice called for by Section 6.10. If the Issuer fails to mail such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be mailed at the expense of the Issuer. SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business of Trustee. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided that such corporation shall be qualified under the provisions of Section 6.8 and eligible under the provisions of Section 6.9, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture any of the Securities of any series shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor Trustee and deliver such Securities so authenticated; and, in case at that time any of the Securities of any series shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor Trustee; and in all such cases such certificate shall have the full force which it is anywhere in the Securities of such series or in this Indenture provided that the certificate of the Trustee shall have; provided, that the right to adopt the certificate of authentication of any predecessor Trustee or to authenticate Securities of any series in the name of any -34-
predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation. SECTION 6.13. Preferential Collection of Claims Against the Issuer. The Trustee shall comply with Section 311(a) of the Trust Indenture Act of 1939. For Purposes of Section 311(b)(4) and Section 311(b)(6) of such Act, the following terms shall have the following meanings: "cash transaction" means any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers acceptances and payable upon demand. "self-liquidating paper" means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Issuer for the purpose of financing the purchase, processing, manufacture, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Issuer arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation. ARTICLE SEVEN CONCERNING THE SECURITYHOLDERS SECTION 7.1. Evidence of Action Taken by Securityholders. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by a specified percentage in principal amount of the Securityholders of any or all series may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such specified percentage of Securityholders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 6.1 and 6.2) conclusive in favor of the Trustee and the Issuer, if made in the manner provided in this Article. SECTION 7.2. Proof of Execution of Instruments and of Holding of Securities. Subject to Sections 6.1 and 6.2, the fact and date of the execution of any instrument by a Securityholder or his agent or proxy and the amount and numbers of Securities of any series held by the person so executing any instrument by a Securityholder or his agent or proxy and the amount and numbers of any Security or Securities for such series may also be proven in accordance with such reasonable rules and regulations as may be prescribed by the Trustee for such series or in any other manner which the Trustee for such series may deem sufficient. -35-
SECTION 7.3. Holders to be Treated as Owners. The Issuer, the Trustee and any agent of the Issuer or the Trustee may deem and treat the person in whose name any Security shall be registered upon the Security Register for such series as the absolute owner of such Security (whether or not such Security shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or on account of the principal of and, subject to the provisions of this Indenture, interest on such Security and for all other purposes; and neither the Issuer nor the Trustee nor any agent of the Issuer or the Trustee shall be affected by any notice to the contrary. The Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the Holder of any Unregistered Security and the Holder of any Coupon as the absolute owner of such Unregistered Security or Coupon (whether or not such Unregistered Security or Coupon shall be overdue) for the purpose of receiving payment thereof or on account thereof and for all other purposes and neither the Issuer, the Trustee, nor any agent of the Issuer or the Trustee shall be affected by any notice to the contrary. All such payments so made to any such person, or upon his order, shall be valid and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Security or Coupon. SECTION 7.4. Securities Owned by Issuer Deemed Not Outstanding. In determining whether the Holders of the requisite aggregate principal amount of Outstanding Securities of any or all series have concurred in any direction, consent or waiver under this Indenture, Securities which are owned by the Issuer or any other obligor on the Securities with respect to which such determination is being made or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer or any other obligor on the Securities with respect to which such determination is being made shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, except that for the purpose of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver only Securities which the Trustee knows are so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Issuer or any other obligor upon the Securities or any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer or any other obligor on the Securities. In case of a dispute as to such right, the advice of counsel shall be full protection in respect of any decision made by the Trustee in accordance with such advice. Upon request of the Trustee, the Issuer shall furnish to the Trustee promptly an Officers' Certificate listing and identifying all Securities, if any, known by the Issuer to be owned or held by or for the account of any of the above-described persons; and, subject to Sections 6.1 and 6.2, the Trustee shall be entitled to accept such Officers' Certificate as conclusive evidence of the facts therein set forth and of the fact that all Securities not listed therein are Outstanding for the purpose of any such determination. SECTION 7.5. Right of Revocation of Action Taken. At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 7.1, of the taking of any action by the Holders of the percentage in aggregate principal amount of the outstanding Securities of any or all series, as the case may be, specified in this Indenture in connection with such action, any Holder of a Security the serial number of which is shown by the evidence to be included among the serial numbers of the Securities the Holders of which have consented to such action may, by -36-
filing written notice at the Corporate Trust Office and upon proof of holding as provided in this Article, revoke such action so far as concerns such Security. Except as aforesaid any such action taken by the Holder of any Security shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Security and of any Securities issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Security. Any action taken by the Holders of the percentage in aggregate principal amount of the Securities of any or all series, as the case may be, specified in this Indenture in connection with such action shall be conclusively binding upon the Issuer, the Trustee and the Holders of all the Securities affected by such action. ARTICLE EIGHT SUPPLEMENTAL INDENTURES SECTION 8.1. Supplemental Indentures Without Consent of Securityholders. The Issuer, when authorized by a resolution of its Board of Directors, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act of 1939 as in force at the date of the execution thereof) for one or more of the following purposes: (a) to convey, transfer, assign, mortgage or pledge to the Trustee as security for the Securities of one or more series any property or assets; (b) to evidence the succession of another corporation to the Issuer, or successive successions, and the assumption by the successor corporation of the covenants, agreements and obligations of the Issuer pursuant to Article Nine; (c) to add to the covenants of the Issuer such further covenants, restrictions, conditions or provisions as its Board of Directors and the Trustee shall consider to be for the protection of the Holders of Securities or Coupons, and to make the occurrence, or the occurrence and continuance, of a default in any such additional covenants, restrictions, conditions or provisions an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; provided, that in respect of any such additional covenant, restriction, condition or provision such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such an Event of Default or may limit the remedies available to the Trustee upon such an Event of Default or may limit the right of the Holders of a majority in aggregate principal amount of the Securities of affected series to waive such an Event of Default; (d) to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture; or to make such other provisions in regard to matters or questions arising under this Indenture or under any -37-
supplemental indenture as the Board of Directors may deem necessary or desirable and which shall not materially adversely affect the interests of the Holders of the Securities; (e) to establish the form or terms of Securities of any series or of the Coupons appertaining to such Securities as permitted by Sections 2.1 and 2.3; (f) to evidence and provide for the acceptance of appointment hereunder by a successor trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one trustee, pursuant to the requirements of Section 6.11; and (g) to add to, change or eliminate any of the provisions of this Indenture; provided, that any such addition, change or elimination (i) shall become effective only when there is no Security Outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision or (ii) shall not apply to any Security then Outstanding. The Trustee is hereby authorized to join with the Issuer in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Any supplemental indenture authorized by the provisions of this Section may be executed without the consent of the Holders of any of the Securities at the time outstanding, notwithstanding any of the provisions of Section 8.2. SECTION 8.2. Supplemental Indentures With Consent of Securityholders. With the consent (evidenced as provided in Article Seven) of the Holders of not less than a majority in aggregate principal amount of the Securities at the time Outstanding of all series affected by such supplemental indenture (voting as one class), the Issuer, when authorized by a resolution of its Board of Directors, and the Trustee may, from time to time and at any time, enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act of 1939 as in force at the date of execution thereof) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Securities of each such series or the Coupons appertaining to such Securities; provided, that no such supplemental indenture shall (a) extend the final maturity of any Security, or reduce the principal amount thereof or the method in which amounts of payments of principal or interest thereon are determined, or reduce the rate or extend the time of payment of interest thereon, or change the coin or currency or units based on or related to currencies (including ECU) of payment thereof, or the method in which amounts of payments of principal or interest thereon are determined, or reduce any amount payable on redemption thereof or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon an acceleration of the maturity thereof pursuant to Section 5.1 or the amount thereof provable in -38-
bankruptcy pursuant to Section 5.2, or impair or affect the right of any Securityholder to institute suit for the payment thereof or, if the Securities provide therefor, any right of repayment at the option of the Securityholder without the consent of the Holder of each Security so affected, or (b) reduce the aforesaid percentage of Securities of any series, the consent of the Holders of which is required for any such supplemental indenture, without the consent of the Holders of each Security so affected. A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision shall be deemed not to affect the rights under this Indenture of the Holders of any other series. Upon the request of the Issuer, accompanied by a copy of a resolution of the Board of Directors certified by the secretary or an assistant secretary of the Issuer authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Securityholders as aforesaid and other documents, if any, required by Section 7.1, the Trustee shall join with the Issuer in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. It shall not be necessary for the consent of the Securityholders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Issuer and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Issuer shall mail a notice thereof (i) by first-class mail to the Holders of then outstanding Registered Securities of each series affected thereby at their addresses as they shall appear on the registry books of the Issuer, (ii) if any Unregistered Securities of a series affected thereby are then Outstanding, to the Holders thereof who have filed their names and addresses with the Trustee pursuant to Section 4.4(c)(ii), by mailing a notice thereof by first-class mail to such Holders at such addresses as were so furnished to the Trustee and (iii) if any Unregistered Securities of a series affected thereby are then Outstanding, to all Holders thereof, by publication of a notice thereof at least once in an Authorized Newspaper in the Borough of Manhattan, The City of New York and at least once in an Authorized Newspaper in London (and, if required by Section 3.6, at least once in an Authorized Newspaper in Luxembourg), and in each case such notice shall set forth in general terms the substance of such supplemental indenture. Any failure of the Issuer to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. SECTION 8.3. Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Issuer and the Holders of Securities of each series affected thereby shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the -39-
terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. SECTION 8.4. Documents to Be Given to Trustee. The Trustee, subject to the provisions of Sections 6.1 and 6.2, may receive an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article 8 complies with the applicable provisions of this Indenture. SECTION 8.5. Notation on Securities in Respect of Supplemental Indentures. Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article may bear a notation in form approved by the Trustee for such series as to any matter provided for by such supplemental indenture or as to any action taken at any such meeting. If the Issuer or the Trustee shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Issuer, authenticated by the Trustee and delivered in exchange for the Securities of such series then outstanding. SECTION 8.6. Waiver of Compliance by Securityholders. Anything in this Indenture to the contrary notwithstanding, any of the acts which the Issuer is required to do or is prohibited from doing by any of the provisions of this Indenture may, to the extent that such provisions might be changed or eliminated by a supplemental indenture pursuant to Section 8.2 upon consent of holders of a majority in aggregate principal amount of the securities or any series thereof at the time outstanding, be omitted or done by the Issuer, if there is obtained the prior written consent thereto (evidenced as provided in Article Seven), or the prior written waiver of compliance with any such provision or provisions, by the holders of at least a majority of the aggregate principal amount of the Securities or such series thereof at the time outstanding. The Issuer agrees promptly to file with the Trustee a duplicate original of each such consent or waiver. SECTION 8.7. Fixing of Record Dates. The Issuer may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to take any action under this Indenture by vote or consent. Except as provided herein, such record date shall be the later of (i) 30 days prior to the first solicitation of such consent or vote or (ii) the date of the most recent list of Securityholders furnished to the Trustee pursuant to Section 4.1 prior to such solicitation. If a record date is fixed, those Persons who were Securityholders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to take such action by vote or consent or to revoke any vote or consent previously given, whether or not such Persons continue to be Holders after such record date; provided, however, that unless such vote or consent is obtained from the Holders (or their duly designated proxies) of the requisite principal amount of Securities Outstanding prior to the date which is the 120th day after such record date, any such vote or consent previously given shall automatically and without further action by any Holder be canceled and of no further effect. -40-
ARTICLE NINE CONSOLIDATION, MERGER, SALE OR CONVEYANCE SECTION 9.1. Issuer May Consolidate, etc., on Certain Terms. The Issuer covenants that it will not merge or consolidate with any other corporation or sell or convey all or substantially all of its assets to any Person, unless (i) either the Issuer shall be the continuing corporation, or the successor corporation (if other than the Issuer) shall be a corporation organized under the laws of the United States of America or any State thereof and shall expressly assume the due and punctual payment of the principal of and interest on all the Securities and Coupons, according to their tenor, and the due and punctual performance and observance of all of the covenants and conditions of this Indenture to be performed or observed by the Issuer, by supplemental indenture satisfactory to the Trustee, executed and delivered to the Trustee by such corporation, and (ii) the Issuer or such successor corporation, as the case may be, shall not, immediately after such merger or consolidation, or such sale or conveyance, be in default in the performance of any such covenant or condition. SECTION 9.2. Successor Corporation to be Substituted. In case of any such consolidation, merger, sale or conveyance, other than a conveyance by way of lease, and upon any such assumption by the successor corporation, such successor corporation shall succeed to and be substituted for the Issuer, with the same effect as if it had been named herein as the Issuer, and the Issuer shall thereupon be released from all obligations hereunder and under the Securities together with any Coupons appertaining thereto and the Issuer as the predecessor corporation may thereupon or at any time thereafter be dissolved, wound up or liquidated. Such successor corporation thereupon may cause to be signed, and may issue either in its own name or in the name of J. P. Morgan & Co. Incorporated any or all of the Securities issuable hereunder together with any Coupons appertaining thereto which theretofore shall not have been signed by the Issuer and delivered to the Trustee; and, upon the order of such successor corporation instead of the Issuer and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities together with any Coupons appertaining thereto which previously shall have been signed and delivered by the officers of the Issuer to the Trustee for authentication, and any Securities together with any Coupons appertaining thereto which such successor corporation thereafter shall cause to be signed and delivered to the Trustee for that purpose. All of the Securities so issued together with any Coupons appertaining thereto shall in all respects have the same legal rank and benefit under this Indenture as the Securities and Coupons theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Securities and Coupons had been issued at the date of the execution hereof. In case of any such consolidation, merger, sale or conveyance such changes in phraseology and form (but not in substance) may be made in the Securities and Coupons thereafter to be issued as may be appropriate. SECTION 9.3. Opinion of Counsel and Officers' Certificate to Trustee. The Trustee, subject to the provisions of Sections 6.1 and 6.2, may receive an Opinion of Counsel and/or an Officers' Certificate, prepared in accordance with Section 12.5, as conclusive evidence -41-
that any such consolidation, merger, sale or conveyance, and any such assumption complies with the applicable provisions of Article Nine. ARTICLE TEN SUBORDINATION OF THE SECURITIES SECTION 10.1. Agreement that the Securities be Subordinated to the Extent Provided. The Issuer, for itself, its successors and assigns, covenants and agrees, and each holder of a Note and each holder of any Coupon appertaining thereto likewise covenants and agrees by his acceptance thereof, that any payment of principal of and interest on each and all of the Securities is hereby expressly subordinated, to the extent and in the manner hereinafter set forth, to the prior payment in full of all Senior Indebtedness of the Issuer. SECTION 10.2. Issuer Not to Make Payments with Respect to Securities in Certain Circumstances. No payment of principal of or interest on the Securities shall be made and no holder of the Securities or Coupons shall be entitled to demand or receive any such payment (i) unless all amounts then due for principal of and interest (including interest accruing subsequent to the commencement of any proceeding for the bankruptcy or reorganization of the Issuer under any applicable bankruptcy, insolvency or similar law now or hereafter in effect) on all Senior Indebtedness of the Issuer have been paid in full or duly provided for, or (ii) if, at the time of such payment or immediately after giving effect thereto, there shall exist with respect to any such Senior Indebtedness 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, would become such an event of default. SECTION 10.3. Securities Subordinated to Prior Payment of All Senior Indebtedness of the Issuer on Dissolution, Liquidation or Reorganization of the Issuer. Upon any distribution of the assets of the Issuer in connection with dissolution, winding up, liquidation or reorganization of the Issuer (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or any other marshalling of the assets and liabilities of the Issuer or otherwise), the holders of Senior Indebtedness of the Issuer shall first be entitled to receive payment in full in accordance with the terms of such Senior Indebtedness of the principal thereof and the interest due thereon (including interest accruing subsequent to the commencement of any proceeding for the bankruptcy or reorganization of the Issuer under any applicable bankruptcy, insolvency or similar law now or hereafter in effect) before the holders of the Securities and Coupons are entitled to receive any payment of the principal of or interest thereon; and, upon any such dissolution, winding up, liquidation or reorganization, any payment or distribution of assets of the Issuer of any kind or character, whether in cash, property or securities, to which the holders of the Securities or Coupons or the Trustee would be entitled except for the provisions of this Article, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Issuer being subordinated to the payment of the Securities or Coupons, shall be made by the liquidating trustee or agent or other person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of Senior Indebtedness of the Issuer or their representative or representatives or to the trustee or trustees -42-
under any indenture under which any instruments evidencing any of such Senior Indebtedness may have been issued, ratably according to the aggregate amounts remaining unpaid on account of the principal of and interest (including interest accruing subsequent to the commencement of any proceeding for the bankruptcy or reorganization of the Issuer under any applicable bankruptcy, insolvency, or similar law now or hereafter in effect) on the Senior Indebtedness of the Issuer held or represented by each, to the extent necessary to pay in full all such Senior Indebtedness remaining unpaid, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness. In the event that, notwithstanding the foregoing, upon any such dissolution, winding up, liquidation or reorganization, any payment or distribution of assets of the Issuer of any kind or character, whether in cash, property or securities, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Issuer being subordinated to the payment of the Securities and Coupons, shall be received by the Trustee or the holders of the Securities or the Coupons before all Senior Indebtedness of the Issuer is paid in full, such payment or distribution shall be held in trust for the benefit of and shall be paid over to the holders of such Senior Indebtedness or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness may have been issued, ratably as aforesaid for application to the payment of all Senior Indebtedness of the Issuer remaining unpaid until all such Senior Indebtedness shall have been paid in full, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness. Subject to the payment in full of all Senior Indebtedness of the Issuer, the holders of the Securities and Coupons shall be subrogated (equally and ratably with the holders of all Antecedent Subordinated Indebtedness of the Issuer and all indebtedness of the Issuer which by its express terms is subordinated to indebtedness of the Issuer to substantially the same extent as the Securities are subordinated and is entitled to like rights of subrogation) to the rights of the holders of such Senior Indebtedness to receive payments or distributions of assets of the Issuer applicable to such Senior Indebtedness until the Securities and Coupons shall be paid in full and none of the payments or distributions to the holders of such Senior Indebtedness to which the holders of the Securities and Coupons or the Trustee would be entitled except for the provisions of this Article or of payments over, pursuant to the provisions of this Article, to the holders of such Senior Indebtedness by the holders of the Securities and Coupons or the Trustee shall, as between the Issuer, its creditors other than the holders of such Senior Indebtedness and the holders of the Securities and Coupons, be deemed to be a payment by the Issuer to or on account of such Senior Indebtedness; it being understood that the provisions of this Article are and are intended solely for the purpose of defining the relative rights of the holders of the Securities and Coupons, on the one hand, and the holders of the Senior Indebtedness of the Issuer (and, in the case of Section 10.2, the holders of Antecedent Subordinated Indebtedness and holders of other indebtedness of the Issuer which by its terms is subordinated to indebtedness of the Issuer to substantially the same extent as the Securities are subordinated and entitled to like rights of subordination and, in the case of Section 10.12, the holders of Antecedent Subordinated Indebtedness and creditors in respect of Derivative Obligations), on the other hand. The Issuer shall give prompt written notice to the Trustee of any dissolution, winding up, liquidation or reorganization of the Issuer within the meaning of this Article. The -43-
Trustee shall be entitled to assume that no such event has occurred unless the Issuer or any one or more holders of Senior Indebtedness of the Issuer or any trustee therefor or any creditor in respect of Derivative Obligations has given written notice thereof to the Trustee at its corporate trust office. Upon any distribution of assets of the Issuer referred to in this Article, the Trustee and the holders of the Securities and Coupons shall be entitled to rely upon any order or decree of a court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Indebtedness of the Issuer, the creditors in respect of Derivative Obligations, the amounts thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article, and the Trustee and the holders of the Securities and Coupons shall be entitled to rely upon a certificate of the liquidating trustee or agent or other person making any distribution to the Trustee or to the holders of the Securities and Coupons for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Indebtedness of the Issuer, the creditors in respect of Derivative Obligations, the amounts thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article. In the event that the Trustee determines, in good faith, that further evidence is required with respect to the right of any person, as a holder of Senior Indebtedness of the Issuer or as a creditor in respect of Derivative Obligations, to participate in any payment or distribution pursuant to this Article, the Trustee may request such person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of such Senior Indebtedness or such Derivative Obligations, as applicable, held by such person, as to the extent to which such person is entitled to participation in such payment or distribution, and as to other facts pertinent to the rights of such person under this Article, and if such evidence is not furnished, the Trustee may defer any payment to such person pending judicial determination as to the right of such person to receive such payment. SECTION 10.4. Obligation of the Issuer Unconditional. Nothing contained in this Article or elsewhere in this Indenture or in the Securities is intended to or shall impair as between the Issuer and the holders of the Securities and Coupons, the obligation of the Issuer, which is absolute and unconditional (and which, subject to the rights under this Article of the holders of Senior Indebtedness and the rights under Section 10.12 of creditors in respect of Derivative Obligations, is intended to rank pari passu with all other general obligations of the Issuer) to pay to the holders of the Securities or Coupons the principal of and interest (including interest accruing subsequent to the commencement of any proceeding for the bankruptcy or reorganization of the Issuer under any applicable bankruptcy, insolvency or similar law now or hereafter in effect) on the Securities as and when the same shall become due and payable in accordance with the terms thereof, or is intended to or shall affect the relative rights of the holders of the Securities and Coupons and creditors of the Issuer other than the holders of the Senior Indebtedness of the Issuer and creditors in respect of Derivative Obligations of the Issuer, nor shall anything herein or therein prevent the Trustee or the holder of any Security or Coupon from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article of the holders of Senior Indebtedness of the Issuer, and under Section 10.12 of creditors in respect of Derivative Obligations of the Issuer, in respect of cash, property or securities of the Issuer received upon the exercise of any such remedy. -44-
SECTION 10.5. No Fiduciary Duty to Holders of Senior Indebtedness of the Issuer. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness of the Issuer or creditors in respect of Derivative Obligations of the Issuer, except as provided in Section 10.3 and subsection (d) of Section 10.12. SECTION 10.6. Notice to Trustee of Facts Prohibiting Payments. Notwithstanding any of the provisions of this Article or any other provision of this Indenture, the Trustee shall not at any time be charged with knowledge of the existence of any facts which would prohibit the making of any payment of moneys to or by the Trustee, unless and until the Trustee shall have received at its corporate trust office written notice thereof from the Issuer or from one or more holders of Senior Indebtedness of the Issuer or from any trustee therefor or from any creditor in respect of Derivative Obligations who shall have been certified by the Issuer or otherwise established to the reasonable satisfaction of the Trustee to be such a holder, trustee or creditor; and, prior to the receipt of any such written notice, the Trustee shall be entitled in all respects to assume that no such facts exist; provided, that, if prior to the fifth business day preceding the date upon which by the terms hereof any such moneys may become payable for any purpose, or in the event of the execution of an instrument pursuant to Section 11.1 acknowledging satisfaction and discharge of this Indenture, then if prior to the second business day preceding the date of such execution the Trustee shall not have received with respect to such moneys the notice provided for in this Section, then, anything herein contained to the contrary notwithstanding, the Trustee may, in its discretion, receive such moneys and apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary which may be received by it on or after such date; provided, however, no such application shall affect the obligations under this Article of the persons receiving such moneys from the Trustee. In any case, the Trustee shall have no responsibility to holders of Senior Indebtedness or creditors in respect of Derivative Obligations for payments made to holders of Securities by the Issuer, the Transfer Agent or any paying agent unless such payments are made at the direction of the Trustee. SECTION 10.7. Application by Trustee of Moneys Deposited with It. Anything in this Indenture to the contrary notwithstanding, any deposit of moneys by the Issuer with the Trustee, any transfer agent or any paying agent (whether or not in trust) for the payment of the principal of or interest on any Securities shall, except as provided in Section 10.6, be subject to the provisions of Sections 10.1, 10.2, 10.3 and 10.12. SECTION 10.8. Subordination Rights Not Impaired by Acts or Omissions of the Issuer, Holders of Senior Indebtedness of the Issuer or Creditors in Respect of Derivative Obligations. No right of any present or future holders of any Senior Indebtedness of the Issuer or creditors in respect of Derivative Obligations to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Issuer or by any act or failure to act, in good faith, by any such holder or creditor, or by any noncompliance by the Issuer with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof which any such holder or creditor may have or be otherwise charged with. The holders of Senior Indebtedness of the Issuer and the creditors in respect of Derivative Obligations may at any time or from time to time and in their absolute discretion, change the manner, place or terms of payment, change or extend the time of payment of, or renew or alter, any such Senior Indebtedness or Derivative Obligations, or amend or supplement -45-
any instrument pursuant to which any such Senior Indebtedness or Derivative Obligations is issued or by which it may be secured, or release any security therefor, or exercise or refrain from exercising any other of their rights under the Senior Indebtedness of the Issuer or Derivative Obligations including, without limitation, the waiver of default thereunder, all without notice to or assent from the holders of the Securities or Coupons or the Trustee and without affecting the obligations of the Issuer, the Trustee or the holders of the Securities or Coupons under this Article. SECTION 10.9. Authorization of Trustee to Effectuate Subordination of the Securities. Each holder of a Security and each holder of any Coupon appertaining thereto, by his acceptance thereof, authorizes and expressly directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article. If, in the event of any dissolution, winding up, liquidation or reorganization of the Issuer (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise) tending towards liquidation of the business and assets of the Issuer, a proper claim or proof of debt in the form required in such proceeding is not filed by all of the holders of the Securities and Coupons prior to 30 days before the expiration of the time to file such claim or claims, and is not filed by the Trustee pursuant to the authority granted to the Trustee pursuant to the provisions of Section 5.2 prior to 15 days before such expiration, then the holder or holders of Senior Indebtedness of the Issuer and creditors in respect of Derivative Obligations are hereby authorized to, and have the right to, file an appropriate claim for and on behalf of the holders of the Securities and Coupons. SECTION 10.10. Right of Trustee to Hold Senior Indebtedness or Derivative Obligations of the Issuer. The Trustee shall be entitled to all of the rights set forth in this Article in respect of any Senior Indebtedness or Derivative Obligations of the Issuer at any time held by it to the same extent as any other holder of such Senior Indebtedness or creditor in respect of such Derivative Obligations, and nothing in this Indenture shall be construed to deprive the Trustee of any of its rights as such holder or creditor. SECTION 10.11. Article Ten Not to Prevent Events of Default. The failure to make a payment pursuant to the Securities by reason of any provision in this Article shall not be construed as preventing the occurrence of an Event of Default under Section 5.1. SECTION 10.12. Securities to Rank pari passu with Antecedent Subordinated Indebtedness; Payment of Proceeds in Certain Cases. (a) Subject to the provisions of this Section and to any provisions established or determined with respect to Securities of any series pursuant to Section 2.3, the Securities shall rank pari passu in right of payment with the Antecedent Subordinated Indebtedness. (b) Upon the occurrence of any of the events specified in the first paragraph of Section 10.3, the provisions of that Section and the corresponding provisions of each indenture or other instrument or document establishing or governing the terms of any Antecedent Subordinated Indebtedness shall be given effect on a pro rata basis to determine the amount of cash, property or securities which may be payable or deliverable as between the holders of Senior Indebtedness, on the one hand, and the holders of Securities and holders of Antecedent Subordinated Indebtedness, on the other hand. -46-
(c) If, after giving such effect to the provisions of Section 10.3, and the respective corresponding provisions of each indenture or other instrument or document establishing or governing the terms of any Antecedent Subordinated Indebtedness on such pro rata basis, any amount of cash, property or securities shall be available for payment or distribution in respect of the Securities ("Excess Proceeds"), and any creditors in respect of Derivative Obligations shall not have received payment in full of all amounts due or to become due on or in respect of such Derivative Obligations (and provision shall not have been made for such payment in money or money's worth), then such Excess Proceeds shall first be applied (ratably with any amount of cash, property or securities available for payment or distribution in respect of any other indebtedness of the Issuer that by its express terms provides for the payment over of amounts corresponding to Excess Proceeds to creditors in respect of Derivative Obligations) to pay or provide for the payment of the Derivative Obligations remaining unpaid, to the extent necessary to pay all Derivative Obligations in full, after giving effect to any concurrent payment or distribution to or for creditors in respect of Derivative Obligations. Any Excess Proceeds remaining after the payment (or provision for payment) in full of all Derivative Obligations shall be available for payment or distribution in respect of the Securities. (d) In the event that, notwithstanding the foregoing provisions of subsection (c) of this Section, the Trustee or holder of any Security shall, in the circumstances contemplated by such subsection, have received any payment or distribution of assets of the Issuer of any kind or character, whether in cash, property or securities, before all Derivative Obligations are paid in full or payment thereof duly provided for, and if such fact shall, at or prior to the time of such payment or distribution, have been made known to the Trustee or, as the case may be, such holder, then and in such event, subject to any obligation that the Trustee or such holder may have pursuant to Section 10.3, such payment or distribution shall be paid over or delivered forthwith to the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other Person making payment or distribution of assets of the Issuer for payment in accordance with subsection (c). (e) Subject to the payment in full of all Derivative Obligations, the holders of the Securities shall be subrogated (equally and ratably with the holders of all indebtedness of the Issuer that by its express terms provides for the payment over of amounts corresponding to Excess Proceeds to creditors in respect of Derivative Obligations and is entitled to like rights of subrogation) to the rights of the creditors in respect of Derivative Obligations to receive payments and distributions of cash, property and securities applicable to the Derivative Obligations until the principal of and interest on the Securities shall be paid in full. For purposes of such subrogation, no payments or distributions to creditors in respect of Derivative Obligations of any cash, property or securities to which holders of the Securities or the Trustee would be entitled except for the provisions of this Section and no payments over pursuant to the provisions of this Section to creditors in respect of Derivative Obligations by holders of Securities or the Trustee, shall, as among the Issuer, its creditors other than creditors in respect of Derivative Obligations and the holders of Securities be deemed to be a payment or distribution by the Issuer to or on account of the Derivative Obligations. -47-
(f) The provisions of subsections (c), (d) and (e) of this Section are and are intended solely for the purpose of defining the relative rights of the holders of the Securities, on the one hand, and the creditors in respect of Derivative Obligations, on the other hand, after giving effect to the rights of the holders of Senior Indebtedness, as provided in this Article. Nothing contained in subsections (c), (d) and (e) of this Section is intended to or shall affect the relative rights against the Issuer of the holders of the Securities and (1) the holders of Senior Indebtedness, (2) the holders of Antecedent Subordinated Indebtedness or (3) other creditors of the Issuer other than creditors in respect of Derivative Obligations. ARTICLE ELEVEN SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS SECTION 11.1. Satisfaction and Discharge of Indenture. If at any time (a) the Issuer shall have paid or caused to be paid the principal of and interest on all the Securities theretofore authenticated hereunder and all unmatured Coupons appertaining thereto (other than Securities and Coupons appertaining thereto which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.9 and other than Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by any paying agent and thereafter repaid to the Issuer or discharged from such trust, as provided in Section 11.4), as and when the same shall have become due and payable, or (b) the Issuer shall have delivered to the Trustee for cancellation all Securities of any series theretofore authenticated and all unmatured Coupons appertaining thereto (other than any Securities of such series and all unmatured Coupons appertaining thereto which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.9) or (c) (i) all the Securities of any series and all unmatured Coupons appertaining thereto not heretofore delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and (ii) the Issuer shall have irrevocably deposited or caused to be deposited with the Trustee as trust funds the entire amount in cash (other than moneys repaid by the Trustee or any paying agent to the Issuer in accordance with Section 11.4) sufficient to pay at maturity or upon redemption all Securities of such series and all unmatured Coupons appertaining thereto not theretofore delivered to the Trustee for cancellation, including principal and interest due or to become due to such date of maturity as the case may be, and if, in any such case, the Issuer shall also pay or cause to be paid all other sums payable hereunder by the Issuer with respect to Securities of such series and Coupons appertaining thereto, then this Indenture shall cease to be of further effect with respect to Securities of such series (except as to (i) rights of registration of transfer and exchange, and the Issuer's right of optional redemption, (ii) substitution of mutilated, defaced, destroyed, lost or stolen Securities or Coupons, (iii) rights of holders to receive payments of principal thereof and interest thereon, and remaining rights of the Holders to receive mandatory sinking fund payments, if any, (iv) the rights, obligations and immunities of the Trustee hereunder and (v) the rights of the Holders of Securities of such series and Coupons appertaining thereto, as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or -48-
any of them), and the Trustee, on demand of the Issuer accompanied by an Officers' Certificate and an Opinion of Counsel and at the cost and expense of the Issuer, shall execute proper instruments acknowledging such satisfaction of and discharging this Indenture with respect to such series; provided, that the rights of holders of the Securities and Coupons to receive amounts in respect of principal of and interest on the Securities and Coupons held by them shall not be delayed longer than required by then applicable mandatory rules or policies of any securities exchange upon which the Securities and Coupons are listed. The Issuer agrees to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred and to compensate the Trustee for any services thereafter reasonably and properly rendered by the Trustee in connection with this Indenture or the Securities and Coupons of such series. SECTION 11.2. Application by Trustee of Funds Deposited for Payment of Securities. Subject to Section 11.4, all moneys deposited with the Trustee pursuant to Section 11.1 shall be held in trust and applied by it to the payment, either directly or through any paying agent (including the Issuer acting as its own paying agent), to the Holders of the particular securities of such series and of Coupons appertaining thereto for the payment or redemption of which such moneys have been deposited with the Trustee, of all sums due and to become due thereon for principal and interest; but such money need not be segregated from other funds except to the extent required by law. SECTION 11.3. Repayment of Moneys Held by Paying Agent. In connection with the satisfaction and discharge of this Indenture with respect to Securities of any series, all moneys then held by any paying agent under the provisions of this Indenture with respect to such series of Securities shall, upon demand of the Issuer, be repaid to it or paid to the Trustee and thereupon such paying agent shall be released from all further liability with respect to such moneys. SECTION 11.4. Return of Moneys Held by Trustee and Paying Agent Unclaimed for Three Years. Any moneys deposited with or paid to the Trustee or any paying agent for the payment of the principal of or interest on any Security of any series or Coupons attached thereto and not applied but remaining unclaimed for three years after the date upon which such principal or interest shall have become due and payable, shall, upon the written request of the Issuer and unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, be repaid to the Issuer by the Trustee for such series and/or such paying agent, and the Holder of the Security of such series and of any Coupons appertaining thereto, shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property laws, thereafter look only to the Issuer for any payment which such Holder may be entitled to collect, and all liability of the Trustee or any paying agent with respect to such moneys shall thereupon cease; provided, the Trustee or such paying agent, before being required to make any such repayment, with respect to moneys deposited with it for any payment (a) in respect of Registered Securities of any series, shall at the expense of the Issuer, mail by first-class mail to Holders of such Securities at their addresses as they shall appear on the Security Register, and (b) in respect of Unregistered Securities of any series, shall at the expense of the Issuer cause to be published once, in an Authorized Newspaper in the Borough of Manhattan, The City of New York and once in an Authorized Newspaper in London (and if required by Section 3.6, once in an Authorized Newspaper in Luxembourg), notice, that such moneys remain and that, after a date specified therein, which shall not be less -49-
than thirty days from the date of such mailing or publication, any unclaimed balance of such money then remaining will be repaid to the Issuer. ARTICLE TWELVE MISCELLANEOUS PROVISIONS SECTION 12.1. Incorporators, Stockholders, Officers and Directors of Issuer Exempt from Individual Liability. No recourse under or upon any obligation, covenant or agreement contained in this Indenture, or in any Security, or because of any indebtedness evidenced thereby, shall be had against any incorporator, as such or against any past, present or future stockholder, officer or director, as such, of the Issuer or of any successor, either directly or through the Issuer or any successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of the Securities and the Coupons appertaining thereto by the holders thereof and as part of the consideration for the issue of the Securities and the Coupons appertaining thereto. SECTION 12.2. Provisions of Indenture for the Sole Benefit of Parties and Holders of Securities and Coupons. Nothing in this Indenture or in the Securities or in the Coupons appertaining thereto, expressed or implied, shall give or be construed to give to any person, firm or corporation, other than the parties hereto and their successors and the holders of the Securities and the Coupons appertaining thereto, and, to the extent provided in Article 10, to the holders of Senior Indebtedness any legal or equitable right, remedy or claim under this Indenture or under any covenant or provision herein contained, all such covenants and provisions being for the sole benefit of the parties hereto and their successors and of the holders of the Securities and the Coupons, and, to the extent provided in Article 10, to the holders of Senior Indebtedness. SECTION 12.3. Successors and Assigns of Issuer Bound by Indenture. All the covenants, stipulations, promises and agreements in this Indenture contained by or in behalf of the Issuer shall bind its successors and assigns, whether so expressed or not. SECTION 12.4. Notices and Demands on Issuer, Trustee and Holders of Securities and Coupons. Any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the Holders of Securities or Coupons to or on the Issuer may be given or served by being deposited postage prepaid, first class mail (except as otherwise specifically provided herein) addressed (until another address of the Issuer is filed by the Issuer with the Trustee) to J. P. Morgan & Co. Incorporated, 60 Wall Street, New York, N.Y. 10015, Attention: Secretary. Any notice, direction, request or demand by the Issuer or any holder of Securities and Coupons to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given or made at the Corporate Trust Office marked to the attention of the Corporate Trust Department. Where this Indenture provides for notice to Holders, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first -50-
class postage prepaid, to each Holder entitled thereto, at his last address as it appears in the Security Register. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Issuer and when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. SECTION 12.5. Officers' Certificates and Opinions of Counsel; Statements to Be Contained Therein. Upon any application or demand by the Issuer to the Trustee to take any action under any of the provisions of this Indenture, the Issuer shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished. Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture shall include (a) a statement that the person making such certificate or opinion has read such covenant or condition, (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based, (c) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with and (d) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. Any certificate, statement or opinion of an officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of counsel may be based, insofar as it relates to factual matters, information with respect to which is in the possession of the Issuer, upon the certificate, statement or opinion of or representations by an officer or officers of the Issuer, unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous. SECTION 12.6. Payments Due on Saturdays, Sundays and Holidays. If the date of maturity of interest on or principal of the Securities of any series or any Coupons appertaining -51-
thereto or the date fixed for redemption or repayment of any such Security or Coupon shall not be a Business Day, then payment of interest or principal need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the date of maturity or the date fixed for redemption, and no interest shall accrue for the period after such date. SECTION 12.7. Conflict of Any Provision of Indenture with Trust Indenture Act of 1939. If and to the extent that any provision of this Indenture limits, qualifies or conflicts with a provision that is required under the Trust Indenture Act of 1939 to be a part of and govern this Indenture, the latter provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be. SECTION 12.8. New York Law to Govern. This Indenture and each Security and Coupon shall be deemed to be a contract under the laws of the State of New York, and for all purposes shall be construed in accordance with the laws of such State, except as may otherwise be required by mandatory provisions of law. SECTION 12.9. Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. SECTION 12.10. Effect of Headings. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 12.11. Securities in a Foreign Currency or in ECU. Unless otherwise specified in an Officer's Certificate delivered pursuant to Section 2.3 of this Indenture with respect to a particular series of Securities, whenever for purposes of this Indenture any action may be taken by the holders of a specified percentage in aggregate principal amount of securities of all series or all series affected by a particular action at the time Outstanding and, at such time, there are Outstanding Securities of any series which are denominated in a coin or currency other than Dollars (including ECUs), then the principal amount of Securities of such series which shall be deemed to be Outstanding for the purpose of taking such action shall be that amount of Dollars that could be obtained for such amount at the Market Exchange Rate. For purposes of this Section 11.11, Market Exchange Rate shall mean the noon Dollar buying rate for that currency for cable transfers quoted in The City of New York as certified for customs purposes by the Federal Reserve Bank of New York; provided, however, in the case of ECUs, Market Exchange Rate shall mean the rate of exchange determined by the Commission of the European Communities (or any successor thereto) as published in the Official Journal of the European Communities (such publication or any successor publication, the "Journal"). If such Market Exchange Rate is not available for any reason with respect to such currency, the Trustee shall use, in its sole discretion and without liability on its part, such quotation of the Federal Reserve Bank of New York or, in the case of ECUs, the rate of exchange as published in the Journal, as of the most recent available date, or quotations or, in the case of ECUs, rates of exchange from one or more major banks in The City of New York or in the country of issue of the currency in question, which for purposes of the ECU shall be Brussels, Belgium, or such other quotations or, -52-
in the case of ECU, rates of exchange as the Trustee shall deem appropriate. The provisions of this paragraph shall apply in determining the equivalent principal amount in respect of Securities of a series denominated in a currency other than Dollars in connection with any action taken by holders of Securities pursuant to the terms of this Indenture. All decisions and determinations of the Trustee regarding the Market Exchange Rate or any alternative determination provided for in the preceding paragraph shall be in its sole discretion and shall, in the absence of manifest error, be conclusive for all purposes and irrevocably binding upon the Issuer and all Holders. ARTICLE THIRTEEN REDEMPTION OF SECURITIES AND SINKING FUNDS SECTION 13.1. Applicability of Article. The provisions of this Article shall be applicable to the Securities of any series which are redeemable before their maturity or to any sinking fund for the retirement of Securities of a series except as otherwise specified as contemplated by Section 2.3 for Securities of such series. SECTION 13.2. Notice of Redemption; Partial Redemptions. Notice of redemption to the holders of Registered Securities of any series to be redeemed as a whole or in part at the option of the Issuer shall be given by mailing notice of such redemption by first class mail, postage prepaid, at least 30 days and not more than 60 days prior to the date fixed for redemption to such holders of Securities of such series at their last addresses as they shall appear upon the registry books. Notice of redemption to the Holders of Unregistered Securities to be redeemed as a whole or in part, who have filed their names and addresses with the Trustee pursuant to Section 4.4(c)(ii), shall be given by mailing notice of such redemption, by first class mail, postage prepaid, at least thirty days and not more than sixty prior to the date fixed for redemption, to such Holders at such addresses as were so furnished to the Trustee (and, in the case of any such notice given by the Issuer, the Trustee shall make such information available to the Issuer for such purpose). Notice of redemption to all other holders of Unregistered Securities shall be published in an Authorized Newspaper in the Borough of Manhattan, The City of New York and in an Authorized Newspaper in London (and, if required by Section 3.6, in an Authorized Newspaper in Luxembourg), in each case, once in each of three successive calendar weeks, the first publication to be not less than thirty nor more than sixty days prior to the date fixed for redemption. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the holder receives the notice. Failure to give notice by mail, or any defect in the notice to the Holder of any Security of a series designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security of such series. The notice of redemption to each such Holder shall specify the principal amount of each Security of such series held by such Holder to be redeemed, the date fixed for redemption, the redemption price, the place or places of payment, that payment will be made upon presentation and surrender of such Securities and, in the case of Securities with Coupons attached thereto, of all Coupons appertaining thereto maturing after the date fixed for -53-
redemption, that such redemption is pursuant to the mandatory or optional sinking fund, or both, if such be the case, that interest accrued to the date fixed for redemption will be paid as specified in such notice and that on and after said date interest thereon or on the portions thereof to be redeemed will cease to accrue. In case any Security of a series is to be redeemed in part only, the notice of redemption shall state the portion of the principal amount thereof to be redeemed and shall state that on and after the date fixed for redemption, upon surrender of such Security and, in the case of Securities with Coupons attached thereto, of all Coupons appertaining thereto maturing after the date fixed for redemption, a new Security or Securities or Coupons, as the case may be, of such series in principal amount equal to the unredeemed portion thereof will be issued. The notice of redemption of Securities of any series to be redeemed at the option of the Issuer shall be given by the Issuer or, at the Issuer's request, by the Trustee in the name and at the expense of the Issuer. On or prior to the opening of business on the redemption date at each place of payment for the series of Securities to be redeemed as specified in the notice of redemption given as provided in this Section, the Issuer will deposit with the Trustee or with one or more paying agents (or, if the Issuer is acting as its own paying agent, set aside, segregate and hold in trust as provided in Section 3.4) an amount of money sufficient to redeem on the redemption date all the Securities of such series so called for redemption at the appropriate redemption price, together with accrued interest to the date fixed for redemption. If less than all the outstanding Securities of a series are to be redeemed, the Issuer will deliver to the Trustee at least 60 days prior to the date fixed for redemption (or such shorter period as may be acceptable to the Trustee in its sole discretion) an Officers' Certificate stating the aggregate principal amount of Securities to be redeemed. If less than all the Securities of a series are to be redeemed, the Trustee shall select, in such manner as it shall deem appropriate and fair, Securities of such series to be redeemed in whole or in part. Securities may be redeemed in part in multiples equal to the minimum authorized denomination for Securities of such series or any multiple thereof. The Trustee shall promptly notify the Issuer in writing of the Securities of such series selected for redemption and, in the case of any Securities of such series selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of securities of any series shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed. SECTION 13.3. Payment of Securities Called for Redemption. If notice of redemption has been given as above provided, the Securities or portions of Securities specified in such notice shall become due and payable on the date and at the place stated in such notice at the applicable redemption price, together with interest accrued to the date fixed for redemption, and on and after said date (unless the Issuer shall default in the payment of such Securities at the redemption price, together with interest accrued to said date) interest on the Securities or portions of securities so called for redemption shall cease to accrue and the unmatured Coupons, if any, appertaining thereto shall be void and, except as provided in Sections 6.5 and 11.4, such Securities shall cease from and after the date fixed for redemption to be entitled to any benefit or -54-
security under this Indenture, and the holders thereof shall have no right in respect of such Securities except the right to receive the redemption price thereof and unpaid interest to the date fixed for redemption. On presentation and surrender of such Securities at a place of payment specified in said notice, together with all Coupons, if any, appertaining thereto maturing after the date fixed for redemption, said Securities with, in the case of any Unregistered Securities that have Coupons attached, all matured Coupons in default appertaining thereto or the specified portions thereof shall be paid and redeemed by the Issuer at the applicable redemption price, together with interest accrued thereon to the date fixed for redemption; provided that any payment of interest becoming due on the date fixed for redemption shall be payable in the case of Securities with Coupons attached thereto, to the bearers of the Coupons for such interest upon surrender thereof, and in the case of Registered Securities to the Holders of such Securities registered as such on the relevant record date subject to the terms and provisions of Section 2.4 hereof. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid or duly provided for, bear interest from the date fixed for redemption at the rate of interest or Yield to Maturity (in the case of an Original Issue Discount Security) borne by the Security. If any Security with Coupons attached thereto is surrendered for redemption and is not accompanied by all appurtenant Coupons maturing after the date fixed for redemption, the surrender of such missing Coupon or Coupons may be waived by the Issuer and the Trustee, if there be furnished to each of them such security or indemnity as they may require to save each of them harmless. Upon presentation of any Security or Coupons appertaining thereto redeemed in part only, the Issuer shall execute and the Trustee shall authenticate and deliver to or on the order of the Holder thereof, at the expense of the Issuer, a new Security or Coupons appertaining thereto or Securities of such series together with all Coupons, if any, appertaining thereto, of authorized denominations, in principal amount equal to the unredeemed portion of the Security or Coupons appertaining thereto so presented. SECTION 13.4. Exclusion of Certain Securities from Eligibility for Selection for Redemption. Securities shall be excluded from eligibility for selection for redemption if they are identified by registration and certificate number in a written statement signed by an authorized officer of the Issuer and delivered to the Trustee at least 30 days prior to the last date on which notice of redemption may be given as being owned of record and/or beneficially by, and not pledged or hypothecated by either (a) the Issuer or (b) an entity specifically identified in such written statement directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer. SECTION 13.5. Mandatory and Optional Sinking Funds. The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an "optional sinking fund payment". The date on which a sinking fund payment is to be made is herein referred to as the "sinking fund payment date". -55-
In lieu of making all or any part of any mandatory sinking fund payment with respect to any series of Securities in cash, the Issuer may at its option (a) deliver to the Trustee Securities of such series theretofore purchased or otherwise acquired (except upon redemption pursuant to the mandatory sinking fund) by the Issuer or receive credit for Securities of such series (not previously so credited) theretofore purchased or otherwise acquired (except as aforesaid) by the Issuer and delivered to the Trustee for cancellation pursuant to Section 2.10, (b) receive credit for optional sinking fund payments (not previously so credited) made pursuant to this Section, or (c) receive credit for Securities of such series (not previously so credited) redeemed by the Issuer through any optional redemption provision contained in the terms of such series. Securities so delivered or credited shall be received or credited by the Trustee at the sinking fund redemption price specified in such securities. On or before the sixtieth day next preceding each sinking fund payment date for any series, the Issuer will deliver to the Trustee a written statement (which need not contain the statements required by Section 12.5) signed by either the chairman of the Board of Directors, the president, the chairman of the executive committee, any vice chairman of the Board of Directors, any vice president, the treasurer, any assistant treasurer, the secretary or any assistant secretary of the Issuer (a) specifying the portion of the mandatory sinking fund payment to be satisfied by payment of cash and the portion to be satisfied by credit of Securities of such series, (b) stating that none of the Securities of such series has theretofore been so credited, (c) stating that no defaults in the payment of interest or Events of Default with respect to such series have occurred (which have not been waived or cured) and are continuing and (d) stating whether or not the Issuer intends to exercise its right to make an optional sinking fund payment with respect to such series and, if so, specifying the amount of such optional sinking fund payment which the Issuer intends to pay on or before the next succeeding sinking fund payment date. Any Securities of such series to be credited and required to be delivered to the Trustee in order for the Issuer to be entitled to credit therefor as aforesaid which have not theretofore been delivered to the Trustee shall be delivered for cancellation pursuant to Section 2.10 to the Trustee with such written statement. Such written statement shall be irrevocable and upon its delivery the Issuer shall become unconditionally obligated to make all the cash payments or payments therein referred to, if any, on or before the next succeeding sinking fund payment date. Failure of the Issuer, on or before any such sixtieth day, to deliver such written statement and Securities specified in this paragraph, if any, shall not constitute a default but shall constitute, on and as of such date, the irrevocable election of the Issuer (i) that the mandatory sinking fund payment for such series due on the next succeeding sinking fund payment date shall be paid entirely in cash without the option to deliver or credit Securities of such series in respect thereof and (ii) that the Issuer will make no optional sinking fund payment with respect to such series as provided in this Section. If the sinking fund payment or payments (mandatory or optional or both) to be made in cash on the next succeeding sinking fund payment date plus any unused balance of any preceding sinking fund payments made in cash shall exceed $50,000 (or a lesser sum if the Issuer shall so request) with respect to the Securities of any particular series, such cash shall be applied on the next succeeding sinking fund payment date to the redemption of Securities of such series at the sinking fund redemption price together with accrued interest to the date fixed for redemption. If such amount shall be $50,000 or less and the Issuer makes no such request then it shall be carried over until a sum in excess of $50,000 is available. The Trustee shall select, in the manner provided in Section 13.2, for redemption on such sinking fund payment date a sufficient -56-
principal amount of Securities of such series to absorb said cash, as nearly as may be, and shall (if requested in writing by the Issuer) inform the Issuer of the serial numbers of the Securities of such series (or portions thereof) so selected. Securities of any series which are (a) owned by the Issuer or an entity known by the Trustee to be directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer, as shown by the Security Register, and not known to the Trustee to have been pledged or hypothecated by the Issuer or any such entity or (b) identified in an Officers' Certificate at least 60 days prior to the sinking fund payment date as being beneficially owned by, and not pledged or hypothecated by, the Issuer or an entity directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer shall be excluded from Securities of such series eligible for selection for redemption. The Issuer, (or the Trustee, in the name and at the expense of the Issuer if the Issuer shall so request the Trustee in writing) shall cause notice of redemption of the Securities of such series to be given in substantially the manner provided in Section 13.2 (and with the effect provided in Section 13.3) for the redemption of Securities of such series in part at the option of the Issuer. The amount of any sinking fund payments not so applied or allocated to the redemption of Securities of such series shall be added to the next cash sinking fund payment for such series and, together with such payment, shall be applied in accordance with the provisions of this Section. Any and all sinking fund moneys held on the stated maturity date of the Securities of any particular series (or earlier, if such maturity is accelerated), which are not held for the payment or redemption of particular Securities of such series shall be applied, together with other moneys, if necessary, sufficient for the purpose, to the payment of the principal of, and interest on, the Securities of such series at maturity. At least one Business Day before each sinking fund payment date, the Issuer shall pay to the Trustee in cash or shall otherwise provide for the payment of all interest accrued to the date fixed for redemption on Securities to be redeemed on the next following sinking fund payment date. The Trustee shall not redeem or cause to be redeemed any Securities of a series with sinking fund moneys or provide notice of redemption of Securities for such series by operation of the sinking fund during the continuance of a default in payment of interest on such Securities or of any Event of Default except that, where the mailing or publication of notice of redemption of any Securities shall theretofore have been made, the Trustee shall redeem or cause to be redeemed such Securities, provided that it shall have received from the Issuer a sum sufficient for such redemption. Except as aforesaid, any moneys in the sinking fund for such series at the time when any such default or Event of Default shall occur, and any moneys thereafter paid into the sinking fund, shall, during the continuance of such default or Event of Default, be deemed to have been collected under Article Five and held for the payment of all such Securities. In case such Event of Default shall have been waived as provided in Section 5.10 or the default cured on or before the sixtieth day preceding the sinking fund payment date in any year, such moneys shall thereafter be applied on the next succeeding sinking fund payment date in accordance with this Section to the redemption of such Securities. -57-
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of March 1, 1993. J. P. MORGAN & CO. INCORPORATED By_____________________________ Title: Vice President (CORPORATE SEAL] Attest: By_______________________ Title: Assistant Secretary CITIBANK N.A. By_____________________________ Title: [CORPORATE SEAL] Attest: By_______________________ Title: -58-
STATE OF NEW YORK ) ) ss. COUNTY OF NEW YORK ) On this 1st day of March 1993, before me personally came Marion I. Pearson, to me personally known, who, being by me duly sworn, did depose and say that she resides at 60 Wall Street, NYC 10260; that she is an Assistant Secretary of J. P. MORGAN & CO. INCORPORATED, one of the parties described in and which executed the above instrument; that she knows the corporate seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed pursuant to authority of the board of directors of said corporation, and that she signed her name thereto by like authority. [NOTARY SEAL] ______________________ Notary Public STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) On this 19th day of February ___, 1988 before me personally came Timothy Finnegan, to me personally known, who, being by me duly sworn, did depose and say that he resides at 120 Wall Street, NYC, NY 10005 ; that he is a Vice President of CITIBANK, N.A. one of the parties described in and which executed the above instrument; that he knows the corporate seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the board of directors of said corporation, and that he signed his name thereto by like authority. [NOTARY SEAL] ______________________ Notary Public -59-
Exhibit 4.6(b) THE CHASE MANHATTAN CORPORATION, J.P. MORGAN & CO. INCORPORATED AND U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee FIRST SUPPLEMENTAL INDENTURE Dated as of December 29, 2000 to INDENTURE Dated as of March 1, 1993 SUBORDINATED DEBT SECURITIES
FIRST SUPPLEMENTAL INDENTURE, dated as of December 29, 2000, among THE CHASE MANHATTAN CORPORATION, a Delaware corporation ("Successor"), J.P. MORGAN & CO. INCORPORATED, a Delaware corporation ("J.P. Morgan"), and U.S. BANK TRUST NATIONAL ASSOCIATION (formerly known as First Trust of New York, National Association), a national banking association, successor to Citibank, N.A., a national banking association, as trustee (the "Trustee", which term shall include any successor trustee appointed pursuant to Article Six of the Indenture hereafter referred to). WHEREAS, J.P. Morgan and the Trustee have heretofore executed and delivered a certain Indenture, dated as of March 1, 1993 (as amended or modified prior to the date hereof, the "Indenture"; capitalized terms not otherwise defined herein shall have the meanings set forth in the Indenture), providing for the issuance from time to time of Securities; WHEREAS, J.P. Morgan and Successor have entered into an Agreement and Plan of Merger, dated as of September 12, 2000 (the "Merger Agreement"), which contemplates the execution and filing of a Certificate of Merger on the date hereof (the "Certificate of Merger") providing for the merger (effective December 31, 2000) of J.P. Morgan with and into Successor (the "Merger"), with Successor continuing its corporate existence under Delaware law under the name "J.P. Morgan Chase & Co."; WHEREAS, Section 9.1 of the Indenture provides, among other things, that the Issuer shall not merge into any other corporation unless, among other things, the corporation into which the Issuer is merged shall expressly assume the due and punctual payment of the principal of and interest on all the Securities and Coupons, according to their tenor, and the due and punctual performance and observance of all of the covenants and conditions of the Indenture to be performed or observed by the Issuer thereunder, by supplemental indenture satisfactory to the Trustee; WHEREAS, Section 8.1 of the Indenture provides, among other things, that, without the consent of the Holders, the Issuer, when authorized by a resolution of the Board of Directors of the Issuer, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental to the Indenture (i) to evidence the succession of another corporation to the Issuer, and the assumption by the successor corporation of the covenants, agreements and obligations of the Issuer and (ii) to make provisions in regard to matters or questions arising under the Indenture as the Board of Directors may deem necessary or desirable and which shall not materially adversely affect the interests of the Holders of the Securities; WHEREAS, Successor and J.P. Morgan desire and have requested that the Trustee join in the execution of this First Supplemental Indenture for the purpose of evidencing such succession and assumption and amending certain provisions of the Indenture as hereinafter set forth; WHEREAS, the execution and delivery of this First Supplemental Indenture has been authorized by resolutions of the boards of directors of J.P. Morgan and Successor; and WHEREAS, all conditions precedent and requirements necessary to make this First Supplemental Indenture a valid and legally binding instrument in accordance with its terms have been complied with, performed and fulfilled and the execution and delivery hereof have been in all respects duly authorized; 1
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH: For and in consideration of the premises and intending to be legally bound hereby, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders, as follows: ARTICLE ONE REPRESENTATIONS OF J.P. MORGAN AND SUCCESSOR Each of J.P. Morgan and Successor represents and warrants to the Trustee as follows: SECTION 1.1. It is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. SECTION 1.2. The execution, delivery and performance by it of this First Supplemental Indenture have been authorized and approved by all necessary corporate action on the part of it. SECTION 1.3. Upon the filing of the Certificate of Merger with the Secretary of State of the State of Delaware or at such other time thereafter as is provided in the Certificate of Merger (the "Effective Time"), the Merger will be effective in accordance with the terms of the Merger Agreement and Delaware law. SECTION 1.4. Immediately after giving effect to the Merger, Successor shall not be in default in the performance of any covenant or condition of the Indenture. ARTICLE TWO ASSUMPTION AND AGREEMENTS SECTION 2.1. Successor hereby expressly assumes the due and punctual payment of the principal of and interest on all the Securities and Coupons, according to their tenor, and the due and punctual performance and observance of all covenants and conditions of the Indenture to be performed or observed by the Issuer thereunder. SECTION 2.2. The Securities and Coupons may bear a notation concerning the assumption of the Indenture and the Securities and Coupons by Successor. SECTION 2.3. Successor shall succeed to and be substituted for J.P. Morgan under the Indenture, with the same effect as if Successor had been named as the Issuer thereunder. 2
ARTICLE THREE AMENDMENTS SECTION 3.1. The reference in the preamble to the Indenture to "J.P. MORGAN & CO. INCORPORATED, a Delaware corporation (the "Issuer")," is hereby amended to read "J.P. MORGAN CHASE & CO. (formerly known as The Chase Manhattan Corporation), a Delaware corporation (the "Issuer")," and each other reference therein to "J.P. Morgan & Co. Incorporated" shall be amended to read "J.P. Morgan Chase & Co. (formerly known as The Chase Manhattan Corporation)". SECTION 3.2. The definition of "Antecedent Subordinated Indebtedness" contained in Section 1.1 of the Indenture is hereby amended in its entirety to read as follows: "'Antecedent Subordinated Indebtedness' means all indebtedness and other obligations outstanding on March 1, 1993 and enumerated in clauses (a)(ii) through (a)(iv) of the definition of Senior Indebtedness." SECTION 3.3. The definition of "Senior Indebtedness" contained in Section 1.1 of the Indenture is hereby amended in its entirety to read as follows: "'Senior Indebtedness' of the Issuer means the principal of, premium, if any, and interest on: (a) all indebtedness of the Issuer for money borrowed, whether outstanding on the date of execution of this Indenture or thereafter created, assumed or incurred, except (i) the Securities; (ii) the U.S.$150,000,000 aggregate principal amount of 8-1/2% Subordinated Notes Due 2003 of the Issuer; (iii) the U.S.$200,000,000 aggregate principal amount of 7-1/4% Subordinated Notes Due 2002 of the Issuer; (iv) the U.S.$200,000,000 aggregate principal amount of Subordinated Floating Rate Notes Due 2002 of the Issuer; (v) the U.S.$250,000,000 aggregate principal amount of Subordinated Floating Rate Notes Due 2002 of the Issuer; (vi) all securities issued pursuant to the Indenture, dated as of April 1, 1987, as amended and restated as of December 15, 1992, and as amended by the Second Supplemental Indenture, dated as of October 8, 1996, and the Third Supplemental Indenture, dated as of December 29, 2000, between the Issuer (formerly known as Chemical Banking Corporation) and U.S. Bank Trust National Association (formerly known as First Trust of New York, National Association), a national banking association, as successor to Morgan Guaranty Trust Company of New York, a New York banking corporation, as the same may further be amended, supplemented or otherwise modified from time to time; (vii) all securities issued pursuant to the Amended and Restated Indenture, dated as of September 1, 1993, as amended by the First Supplemental Indenture, dated as of March 29, 1996, the Second Supplemental Indenture, dated as of October 8, 1996, and the Third Supplemental Indenture, dated as of December 29, 2000, between the Issuer (as successor-by-merger to The Chase Manhattan Corporation, a Delaware corporation) and U.S. Bank Trust National Association (formerly known as First Trust of New York, National Association), a national banking association, as successor to Chemical Bank, a New York banking corporation, as the same may be further amended, supplemented or otherwise modified from time to time; and (viii) such indebtedness as is by its terms expressly stated not to be superior in right of payment to, or to rank pari passu with, the Securities 3
or the other securities referred to in clauses (ii) through (vii); and (b) any deferrals, renewals or extensions of any such Senior Indebtedness. The term "indebtedness of the Issuer for money borrowed" as used in the foregoing sentence shall mean any obligation of, or any obligation guaranteed by, the Issuer 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 Securities shall rank pari passu with the securities referred to in clauses (a)(ii) through (a)(vii) above." SECTION 3.4. Except as amended hereby, the Indenture and the Securities and Coupons are in all respects ratified and confirmed and all the terms thereof shall remain in full force and effect and the Indenture, as so amended, shall be read, taken and construed as one and the same instrument. ARTICLE FOUR MISCELLANEOUS SECTION 4.1. The Trustee accepts the modification of the Indenture effected by this First Supplemental Indenture, but only upon the terms and conditions set forth in the Indenture. Without limiting the generality of the foregoing, the Trustee assumes no responsibility for the correctness of the recitals herein contained, which shall be taken as the statements of J.P. Morgan and Successor. The Trustee makes no representation and shall have no responsibility as to the validity and sufficiency of this First Supplemental Indenture. SECTION 4.2. If and to the extent that any provision of this First Supplemental Indenture limits, qualifies or conflicts with another provision included in this First Supplemental Indenture or in the Indenture that is required to be included in this First Supplemental Indenture or in the Indenture by any of the provisions of Sections 310 to 317, inclusive, of the Trust Indenture Act of 1939, such required provision shall control. SECTION 4.3. Nothing in this First Supplemental Indenture is intended to or shall provide any rights to any parties other than those expressly contemplated by this First Supplemental Indenture. SECTION 4.4. This First Supplemental Indenture shall be deemed to be a contract under the laws of the State of New York, and for all purposes shall be construed in accordance with the laws of such State, except as may otherwise be required by mandatory provisions of law. SECTION 4.5. This First Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 4.6. This First Supplemental Indenture shall become effective as of the Effective Time. 4
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested all as of the day and year first above written. J.P. MORGAN & CO. INCORPORATED By ------------------------------------- Name: Title: (Corporate Seal) Attest: - --------------------------------- Secretary THE CHASE MANHATTAN CORPORATION By ------------------------------------- Name: Title: (Corporate Seal) Attest: - --------------------------------- Assistant Secretary
U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By ------------------------------------- Name: Title: (Corporate Seal) Attest: - ---------------------------------
STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) On this ___ of December, 2000, before me, the undersigned officer, personally appeared___________, who acknowledged himself to be the __________________ of J.P. MORGAN & CO. INCORPORATED, a Delaware corporation, and that he as such officer, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the corporation by himself as such officer. IN WITNESS WHEREOF, I hereunto set my hand and official seal. _____________________________________ Notary Public [SEAL] STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) On this ____ day of December, 2000, before me, the undersigned officer, personally appeared Marc J. Shapiro, who acknowledged himself to be the Vice Chairman, Risk Management and Administration of THE CHASE MANHATTAN CORPORATION, a Delaware corporation, and that he as such officer, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the corporation by himself as such officer. IN WITNESS WHEREOF, I hereunto set my hand and official seal. ________________________________ Notary Public [SEAL]
STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) On this ___ day of December, 2000, before me, the undersigned officer, personally appeared _______________, who acknowledged himself to be _______________ of U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association, and that he as such officer, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the association by himself as such officer. IN WITNESS WHEREOF, I hereunto set my hand and official seal. ________________________________ Notary Public [SEAL]
| did not made a Distribution Election with respect to a Deferred Amount, | ||
| elected a lump sum following Separation from Service with respect to a Deferred Amount, | ||
| is subject to automatic distribution rules of Section 7.7(a) with respect to a Deferred Amount, including investment experience, or | ||
| made a Distribution Election of a specific year that immediately precedes the calendar year of the Participants Separation from Service. |
| between January 1 through June 30th is January of the following calendar year and | ||
| between July 1 and December 31st is July of the following calendar year. |
| designated by the Administrator or his delegatee as an officer and/or other key employee of a Participating Company, and | ||
| notified in writing by the Administrator or his delegatee that he or she is eligible to participate in the Plan. |
| If your employment terminates with fewer than five years of service (including service with predecessor organizations); or | |
| If your employment terminates before age 65 and your deferral was invested in DSIB for less than 12 months prior to your termination. |
| If you defer a portion of your 2004 performance year bonus into DSIB and your employment terminates before January 1, 2006 (12 months after January 1, 2005), your DSIB deferral will be recalculated at the Short-Term Fixed Income rate, unless you are age 65 or older at the time of termination. | |
| If you defer a portion of your 2005 eligible compensation (for commission-paid employees) into Pending DSIB and your employment terminates before January 1, 2007 (12 months after January 1, 2006), your DSIB deferral will be recalculated at the Short-Term Fixed Income rate, unless you are age 65 or older at the time of termination. |
1. | A lump-sum survivor benefit The lump-sum benefit is equivalent to the present value of the applicable survivor annuity as of the distribution date, i.e., the year in which the estate tax is due. In the event annuity payments have already commenced at the time of your death, the lump-sum benefit is the present value equivalent of the remaining annuity payments. | |
2. | 50% of the above amount payable as a lump sum, and the remaining portion of the benefit payable in equal annual installments beginning in the year the lump-sum portion is paid. |
| Your beneficiary must be someone other than your spouse, or must be a spouse who is not a U.S. citizen; | |
| The annual installment benefit payable to your beneficiary must be greater than $50,000; and |
| At least one year must have elapsed between your election of a lump-sum survivor benefit and your death (unless your death is due to an accident, as defined under the JPMorgan Chase Accidental Death and Dismemberment (AD&D) Insurance Plan, subsequent to your election). |
Assumptions: | ||||
Age When Beginning DSIB Deferrals |
45 | |||
Years Contributing |
5 | |||
Annual Contribution Amount |
$ | 10,000 |
Normal Age 65 DSIB Benefit | Survivor Income Benefit | |||||||||||||||||||||||||||
Age at | Amount | Annual Payment | Total Annual | Total of | Annual Survivor | Total Annual | Total of 15 | |||||||||||||||||||||
Deferral | Deferred | per $1,000 at Age 65 | Payment on | 15 Annual | Income per $1,000 | Survivor Income on | Annual Survivor | |||||||||||||||||||||
(from Table 1 | $10,000 Deferral | Payments | (from Table 3 | $10,000 Deferral | Payments | |||||||||||||||||||||||
on page 22) | on page 24) | |||||||||||||||||||||||||||
45 |
$ | 10,000 | $ | 448 | $ | 4,480 | $ | 67,200 | $ | 335 | $ | 3,350 | $ | 50,250 | ||||||||||||||
46 |
$ | 10,000 | $ | 421 | $ | 4,210 | $ | 63,150 | $ | 315 | $ | 3,150 | $ | 47,250 | ||||||||||||||
47 |
$ | 10,000 | $ | 396 | $ | 3,960 | $ | 59,400 | $ | 296 | $ | 2,960 | $ | 44,400 | ||||||||||||||
48 |
$ | 10,000 | $ | 372 | $ | 3,720 | $ | 55,800 | $ | 278 | $ | 2,780 | $ | 41,700 | ||||||||||||||
49 |
$ | 10,000 | $ | 349 | $ | 3,490 | $ | 52,350 | $ | 261 | $ | 2,610 | $ | 39,150 | ||||||||||||||
Total |
$ | 50,000 | $ | 1,986 | $ | 19,860 | $ | 297,900 | $ | 1,485 | $ | 14,850 | $ | 222,750 | ||||||||||||||
You Put In é |
You Get Out é |
Normal Age 65 DSIB Benefit | Normal Age 65 DSIB Benefit | Survivor Income Benefit | ||||||||||||||||||
Age at | Annual Deferrals | Annual Payout | Total Payout | Annual | Total | |||||||||||||||
Initial Deferral | (5 years) | Age 65-79 | Survivor Income | Survivor Income | ||||||||||||||||
35 |
$ | 50,000 | $ | 35,270 | $ | 529,050 | $ | 26,350 | $ | 395,250 | ||||||||||
55 |
$ | 50,000 | $ | 10,190 | $ | 152,850 | $ | 7,620 | $ | 114,300 | ||||||||||
You Put In é |
You Get Out é |
| Table 1 shows the payments beginning at age 65 for each $1,000 deferred, transferred, or reallocated into Pending DSIB during 2004 and for deferrals of performance year 2004 cash bonuses, as applicable. | |
| Table 2 shows reduction factors for benefits that begin before age 65. | |
| Table 3 shows survivor income benefits payable. |
You'll receive this amount | ||||||
If you defer | annually for 15 years | Total of | Age 65 rate | |||
at age2 | starting at age 653 | 15 payments | of return | |||
25 |
$1,240 | $18,600 | 6.50% | |||
26 |
1,189 | 17,835 | 6.55% | |||
27 |
1,139 | 17,085 | 6.60% | |||
28 |
1,090 | 16,350 | 6.65% | |||
29 |
1,042 | 15,630 | 6.70% | |||
30 |
996 | 14,940 | 6.75% | |||
31 |
950 | 14,250 | 6.80% | |||
32 |
906 | 13,590 | 6.85% | |||
33 |
863 | 12,945 | 6.90% | |||
34 |
822 | 12,330 | 6.95% | |||
35 |
781 | 11,715 | 7.00% | |||
36 |
742 | 11,130 | 7.05% | |||
37 |
704 | 10,560 | 7.10% | |||
38 |
668 | 10,020 | 7.15% | |||
39 |
632 | 9,480 | 7.20% | |||
40 |
598 | 8,970 | 7.25% | |||
41 |
566 | 8,490 | 7.30% | |||
42 |
534 | 8,010 | 7.35% | |||
43 |
504 | 7,560 | 7.40% | |||
44 |
475 | 7,125 | 7.45% | |||
45 |
448 | 6,720 | 7.50% | |||
46 |
421 | 6,315 | 7.55% | |||
47 |
396 | 5,940 | 7.60% | |||
48 |
372 | 5,580 | 7.65% | |||
49 |
349 | 5,235 | 7.70% | |||
50 |
327 | 4,905 | 7.75% | |||
51 |
306 | 4,590 | 7.80% | |||
52 |
287 | 4,305 | 7.85% | |||
53 |
268 | 4,020 | 7.90% | |||
54 |
250 | 3,750 | 7.95% | |||
55 |
234 | 3,510 | 8.00% | |||
56 |
218 | 3,270 | 8.05% | |||
57 |
203 | 3,045 | 8.10% | |||
58 |
189 | 2,835 | 8.15% | |||
59 |
175 | 2,625 | 8.20% | |||
60 |
163 | 2,445 | 8.25% | |||
61 |
151 | 2,265 | 8.30% | |||
62 |
140 | 2,100 | 8.35% | |||
63 |
130 | 1,950 | 8.40% | |||
64 |
120 | 1,800 | 8.45% | |||
65 |
111 | 1,665 | 8.50% |
1 | This table is in effect for amounts deferred, transferred, or reallocated into Pending DSIB during 2004 and for deferrals of performance year 2004 cash bonuses, as applicable. | |
2 | Attained age as of December 31, 2004. | |
3 | Benefits start in January of the year following your 65th birthday. |
Benefits commenced at age2 | Percentage of age 65 benefits paid | |
64 |
94.34% | |
63 |
89.00% | |
62 |
83.96% | |
61 |
79.21% | |
60 |
74.73% | |
59 |
70.50% | |
58 |
66.51% | |
57 |
62.74% | |
56 |
59.19% | |
55 |
55.84% | |
54 |
52.68% | |
53 |
49.70% | |
52 |
46.88% | |
51 |
44.23% | |
50 |
41.73% | |
49 |
39.36% | |
48 |
37.14% | |
47 |
35.03% | |
46 |
33.05% | |
45 |
31.18% | |
44 |
29.42% | |
43 |
27.75% | |
42 |
26.18% | |
41 |
24.70% | |
40 |
23.30% | |
39 |
21.98% | |
38 |
20.74% | |
37 |
19.56% | |
36 |
18.46% | |
35 |
17.41% | |
34 |
16.43% | |
33 |
15.50% | |
32 |
14.62% | |
31 |
13.79% | |
30 |
13.01% | |
29 |
12.27% | |
28 |
11.58% | |
27 |
10.92% | |
26 |
10.31% | |
25 |
9.72% |
1 | This table is in effect for amounts deferred, transferred, or
reallocated into Pending DSIB during 2004 and for deferrals of performance
year 2004 cash bonuses, as applicable. |
|
2 | Attained age as of December 31 in the year before payments commence or, for survivor benefits, in the year of death. |
Pre-Retirement Survivor Benefit2 | ||||
Age at deferral3 | Annual 15 year payment | Total payment | ||
25 |
$927 | $13,905 | ||
26 |
889 | 13,335 | ||
27 |
851 | 12,765 | ||
28 |
815 | 12,225 | ||
29 |
779 | 11,685 | ||
30 |
744 | 11,160 | ||
31 |
710 | 10,650 | ||
32 |
677 | 10,155 | ||
33 |
645 | 9,675 | ||
34 |
614 | 9,210 | ||
35 |
584 | 8,760 | ||
36 |
554 | 8,310 | ||
37 |
526 | 7,890 | ||
38 |
499 | 7,485 | ||
39 |
472 | 7,080 | ||
40 |
447 | 6,705 | ||
41 |
423 | 6,345 | ||
42 |
399 | 5,985 | ||
43 |
377 | 5,655 | ||
44 |
355 | 5,325 | ||
45 |
335 | 5,025 | ||
46 |
315 | 4,725 | ||
47 |
296 | 4,440 | ||
48 |
278 | 4,170 | ||
49 |
261 | 3,915 | ||
50 |
244 | 3,660 | ||
51 |
229 | 3,435 | ||
52 |
214 | 3,210 | ||
53 |
200 | 3,000 | ||
54 |
187 | 2,805 | ||
55 |
175 | 2,625 | ||
56 |
163 | 2,445 | ||
57 |
152 | 2,280 | ||
58 |
141 | 2,115 | ||
59 |
131 | 1,965 | ||
60 |
122 | 1,830 | ||
61 |
120 | 1,800 | ||
62 |
118 | 1,770 | ||
63 |
116 | 1,740 | ||
64 |
113 | 1,695 | ||
65 |
111 | 1,665 |
1 | This table is in effect for amounts deferred, transferred, or reallocated into Pending DSIB during 2004 and for deferrals of performance year 2004 cash bonuses, as applicable. | |
2 | Survivor benefit equals the greater of the survivor benefit in this Table or the benefit in Table 2 if the death occurs after age 60. | |
3 | Attained age as of December 31, 2004. |
EXHIBIT 10.6 THE CHASE MANHATTAN CORPORATION 1996 LONG-TERM INCENTIVE PLAN Restated and Effective as of May 16, 2000 1. PURPOSE. The purposes of The Chase Manhattan Corporation 1996 Long-Term Incentive Plan (the "Plan"), as amended and restated by the Board (as defined below) on March 21, 2000 with certain amendments effective following stockholder approval at the May 16, 2000 annual meeting, are to encourage selected employees of the Company (as defined below) to acquire a proprietary and vested interest in the growth and performance of the Company, to generate an increased incentive to contribute to the Company's future success and prosperity, thus enhancing the value of the Company for the benefit of stockholders, to enhance the Company's ability to attract, retain and reward employees of exceptional talent upon whom, in large measure, the sustained progress, growth and profitability of the Company depends and to allow the Company to respond to a changing business environment in a flexible manner. The purposes of the Plan are to be achieved through the grant of various types of stock-based awards. 2. DEFINITIONS. For purposes of the Plan, the following terms shall have the meanings set forth in this Section 2: (a) "Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. (b) "Award" shall mean any type of stock-based award granted pursuant to the Plan. (c) "Board" shall mean the Board of Directors of CMC; provided that any action taken by a duly authorized committee of the Board within the scope of authority delegated to such committee by the Board shall be considered an action of the Board for purposes of this Plan. (d) "CMC" shall mean The Chase Manhattan Corporation, and, except as otherwise specified in this Plan in a particular context, any successor thereto, whether by merger, consolidation, purchase of all or substantially all its assets or otherwise. (e) "Code" shall mean the Internal Revenue Code of 1986, as from time to time amended. (f) "Committee" shall mean the Compensation and Benefits Committee of the Board (or any successor committee) or any subcommittee thereof composed of not less than two directors, each of whom is a "non-employee director" as defined in Rule 16b-3 promulgated by the Securities and Exchange Commission under the Act, or any
successor definition adopted by the Commission and is an "outside director" for purposes of Section 162(m) of the Code. (g) "Common Stock" shall mean the common stock of CMC, par value $1 per share. (h) "Company" shall mean CMC and its Subsidiaries. (i) "Employee" shall mean any employee of the Company. (j) "Fair Market Value" shall mean, per share of Common Stock, the average of high and low sale prices of the Common Stock as reported on the New York Stock Exchange ("NYSE") composite tape on the applicable date, or, if there are no such sale prices of Common Stock reported on the NYSE composite tape on such date, then the average price of the Common Stock on the last previous day on which high and low sale prices are reported on the NYSE composite tape. (k) "Other Stock-Based Award" shall mean any of those Awards described in Section 9 hereof. (l) "Participant" shall mean an Employee who is selected by the Committee to receive an Award under the Plan. (m) "Retirement" shall mean termination of employment with the consent of the Committee after having satisfied such age and service requirements as the Committee may specify in any Award agreement as described in Section 11. 2
(n) "Subsidiary" shall mean any corporation that at the time qualifies as a subsidiary of CMC under the definition of "subsidiary corporation" in Section 424(f) of the Code, as amended from time to time. Notwithstanding the foregoing, the Committee, in its sole and absolute discretion, may determine that any entity in which CMC has a significant equity or other interest is a "Subsidiary." (o) "Total Disability" shall mean a physical or mental incapacity, which would entitle the individual to benefits under a long term disability program sponsored by the Company; provided that if an individual has not elected coverage under the applicable program, the Committee shall determine, utilizing the criteria of such program, whether the individual has incurred a Total Disability. 3. SHARES SUBJECT TO THE PLAN. (a) Shares of Common Stock which may be granted pursuant to Awards under the Plan may be either authorized and unissued shares of Common Stock or authorized and issued shares of Common Stock held in CMC's Treasury. Subject to adjustment as provided in Sections 3(b) and 15, the number of shares of Common Stock with respect to which Awards may be granted under the Plan in any calendar year shall be 2 percent of the total number of shares of Common Stock outstanding on the last day of the preceding calendar year (including treasury shares); provided that no more than a total of 30 million shares of Common Stock during the term of the Plan may be subject to incentive stock options. (b) In addition to the number of shares of Common Stock provided for in Section 3(a), there shall be available for grant under the Plan in any calendar year: (i) the excess of (X) the total number of shares of Common Stock with respect to which Awards could have been granted in all preceding calendar years under Section 3(a) over (Y) the total number of shares of Common Stock with respect to which Awards shall have been granted during all such calendar years; (ii) to the extent not re-granted hereunder, the sum of the number of shares of Common Stock allocable to (i) any stock option granted under the Plan that expires or is forfeited as to any shares of Common Stock covered thereby (except with respect to a 3
stock option which terminates on the exercise of a stock appreciation right) and (ii) any other Award that expires or is forfeited; (iii) shares of Common Stock awarded under the Plan after May 16, 2000 which are used to satisfy any obligation under a compensation arrangement or program where the compensation can be paid in either cash or shares of Common Stock ; provided that such Awards shall also not reduce the number of shares of available for grant under Section 3(b)(i) and Section 3(b)(ii); and (iv) the numbers of shares determined under Sections 3(b)(i) and 3(b)(ii) shall be adjusted to take into consideration the split of Common Stock on May 20,1998. 4. ELIGIBILITY. All Employees who have demonstrated significant management potential, have contributed to the successful performance of the Company, or have the potential of making such contributions to the Company in the future, in each case as determined by the Committee, are eligible to be Participants in the Plan. 5. LIMITATIONS. (a) The Committee may not grant Other Stock-Based Awards to Participants with respect to shares of Common Stock in excess of twenty-five percent of the number determined to be available for issuance under Section 3 for any calendar year. (b) The Committee shall not grant stock options and stock appreciation rights to any Participant with respect to more than 1.6 million shares of Common Stock in any calendar year and shall not grant Other Stock-Based Awards to any Participant with respect to more than 500,000 shares of Common Stock in any calendar year except as otherwise specified in Sections 5(c) and 5(d). (c) In addition to the annual limit specified in Section 5(b) with respect to stock options and stock appreciation rights, there shall be available for grant to a Participant in any calendar year an additional number of stock options and stock appreciation rights equal to the excess of (i) the number that could have been granted to such Participant under the Plan in all prior calendar years, over (ii) the number actually granted, if any, in such prior calendar years; provided that the foregoing numbers shall be adjusted to take into consideration the split of 4
Common Stock on May 20, 1998. (d) In addition to the annual limit specified in Section 5(b) with respect to Other Stock-Based Awards, there shall be available for grant to a Participant in any calendar year an additional number of Other Stock-Based Awards equal to the excess of (i) the number that could have been granted to such Participant under the Plan in all prior calendar years, over (ii) the number actually granted, if any, in such prior calendar years; provided that the foregoing numbers shall be adjusted to take into consideration the split of Common Stock on May 20, 1998. (e) The foregoing limitations of Section 5 shall not require the aggregation of stock options and stock appreciation rights to the extent that rights under the stock options or the stock appreciation rights terminate upon the exercise of either. 6. ADMINISTRATION. The Plan shall be administered by the Committee. The Committee may operate through subcommittees established by it, consisting of not fewer than two members of the Committee. As to the selection of, and Awards to, Participants who are not subject to Section 16 of the Act, the Committee may delegate any or all of its responsibilities to officers or employees of the Company. Subject to the provisions of the Plan, the Committee shall be authorized to interpret the Plan, to establish, amend, and rescind any rules and regulations relating to the Plan, to determine the terms and provisions of any agreements entered into hereunder, and to make all other determinations in its discretion that it may deem necessary or advisable for the administration of the Plan. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award in the manner and to the extent it shall deem desirable to carry the Plan or any such Award into effect. The determinations of the Committee in the administration of the Plan, as described herein, shall be final and conclusive. The validity, construction and effect of the Plan, and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of New York without reference to principles of conflict of laws. 7. STOCK OPTIONS. Any stock options granted under the Plan shall be in such form as the Committee may from time to time approve and shall be subject to the terms and conditions provided herein and such additional terms and conditions 5
not inconsistent with the terms of the Plan, as the Committee shall deem desirable. Stock options may be granted to any Participant. In the case of incentive stock options, the terms and conditions of such grants shall be subject to and comply with such requirements as may be prescribed by Section 422 (b) of the Code, and any implementing regulations. The Committee shall establish the option price at the time each stock option is granted, which price shall not be less than 100% of the Fair Market Value of the Common Stock on the date of grant; provided that the per share price of any stock option may not be decreased after it has been granted (other than as provided for in Section 15); provided, further, that an option may not be surrendered as consideration in exchange for the grant of a new Award under this Plan if such Award were to have a lower per share exercise price. Stock options may not be exercisable later than 10 years after their date of grant. The option price of each share of Common Stock as to which a stock option is exercised shall be paid in full at the time of such exercise. Such payment may be made at the sole discretion of the Committee, pursuant to and in accordance with criteria and guidelines established by the Committee, as the same may be modified from time to time, (i) in cash, (ii) by tender (in such manner as the Committee shall authorize) of shares of Common Stock already owned by the Participant, valued at Fair Market Value as of the date of exercise, (iii) if authorized by the Committee, by delivery of a properly executed exercise notice together with irrevocable instructions to a securities broker (or, in the case of pledges, lender) approved by the Company to, (a) sell shares of Common Stock subject to the option and to deliver promptly to the Company a portion of the proceeds of such sale transaction on behalf of the exercising Participant to pay the option price, or (b) pledge shares of Common Stock subject to the option to a margin account maintained with a broker or lender, as security for a loan, and such broker or lender, pursuant to irrevocable instructions, delivers to the Company the loan proceeds, at the time of exercise to pay the option price, or (iv) by any combination of (i), (ii), or (iii) above. 8. STOCK APPRECIATION RIGHTS. Stock appreciation rights may be granted independent of any stock option or in conjunction with all or any part of any stock option granted under the Plan, either at the same time as the stock option is granted or at any later time during the term of the option; provided that the exercise price of a stock appreciation right granted in tandem with a stock option shall not be less than 100% of the Fair Market Value at the date of the grant of such option. Stock appreciation rights shall be subject to such terms and 6
conditions as determined by the Committee, not inconsistent with the provisions of the Plan; provided that the per share exercise price of any stock appreciation right may not be decreased after it has been granted other than as provided for in Section 15; provided, further, that a stock appreciation right may not be surrendered as consideration in exchange for the grant of a new Award under this Plan if such Award were to have a lower per share exercise price. Upon exercise, a stock appreciation right shall entitle the Participant to receive from the Company an amount equal to the positive difference between the Fair Market Value of a share of Common Stock on the exercise date of the stock appreciation right and the per share grant or option price, as applicable, multiplied by the number of shares of Common Stock with respect to which the stock appreciation right is exercised. A stock appreciation right or applicable portion thereof allocated to a stock option shall terminate and no longer be exercisable upon the termination or exercise of any related stock option. In addition, the Committee shall determine at issuance or upon exercise whether the stock appreciation right shall be settled in cash, Common Stock or a combination of cash and Common Stock. 9. OTHER STOCK-BASED AWARDS. (a) Other Awards of Common Stock and Awards that are valued in whole or in part by reference to, or otherwise based on the Fair Market Value of Common Stock (all such Awards being referred to herein as "Other Stock-Based Awards"), may be granted under the Plan in the discretion of the Committee. Other Stock-Based Awards shall be in such form as the Committee shall determine, including without limitation, (i) shares of Common Stock, (ii) shares of Common Stock subject to restrictions on transfer until the completion of a specified period of service, the occurrence of an event or the attainment of performance objectives, each as specified by the Committee, (iii) shares of Common Stock issuable upon the completion of a specified period of service, and (iv) conditioning the right to an Award upon the occurrence of an event or the attainment of one or more of performance objectives, as more fully described in Section 9(b). (b) Notwithstanding anything to the contrary herein, certain Other Stock-Based Awards granted under this Section 9 may be granted in a manner which is deductible by the Company under Section 162(m) of the Code (or any successor section thereto) ("Performance-Based Awards"). A Participant's Performance-Based Award shall be determined based on the attainment of written performance goals approved by the Committee for a performance period established by the 7
Committee (i) while the outcome for that performance period is substantially uncertain and (ii) no more than 90 days after the commencement of the performance period to which the performance goal relates or, if less, the number of days which is equal to 25 percent of the relevant performance period. The performance goals, which must be objective, shall be based upon one or more of the following criteria: (i) income before or after taxes (including income before interest, taxes, depreciation and amortization); (ii) earnings per share; (iii) return on common equity; (iv) expense management; (v) return on investment; (vi) stock price; (vii) revenue growth; (viii) efficiency ratio; (ix) credit quality; (x) ratio of non-performing assets to performing assets; (xi) shareholder value added; (xii) return on assets; and (xii) profitability or performance of identifiable business units. Additionally, the foregoing criteria may relate to the CMC, one or more of its Subsidiaries or one or more of its divisions or units. In addition, to the degree consistent with Section 162(m) of the Code (or any successor section thereto), the performance goals may be calculated without regard to extraordinary items. The maximum number of shares awarded to a Participant in the form of a Performance-Based Award during a calendar year shall be the aggregate number determined under Section 5(b), (c) and (d) as applicable. The Committee shall determine whether, with respect to a performance period, the applicable performance goals have been met with respect to a given Participant and, if they have, to so certify and ascertain the amount of the applicable Performance-Based Award. No Performance-Based Awards will be paid for such performance period until the Committee makes such certification. The amount of the Performance-Based Award actually paid to a given Participant may be less than the amount determined by the applicable performance goal formula, at the discretion of the Committee. The amount of the Performance-Based Award determined by the Committee for a performance period shall be paid to the Participant at such time as determined by the Committee in its sole discretion after the end of such performance period; provided, however, that a participant may, if and to the extent permitted by the Committee and consistent with the provisions of Section 162(m) of the Code, elect to defer payment of the Performance-Based Award. (c) Subject to the provisions of the Plan, the Committee shall have the sole and absolute discretion to determine to whom and when such Other Stock-Based Awards will be made, the number of shares of Common Stock to be awarded under (or otherwise related to) such Other Stock-Based Awards and all other terms and conditions of such Awards. The Committee shall determine whether Other Stock-Based Awards shall be settled in cash, Common Stock or a combination of cash and Common Stock. 8
10. DIVIDENDS, EQUIVALENTS AND VOTING RIGHTS. Awards of Other Stock-Based Awards in the form of restricted stock and restricted stock units may provide the Participant with dividends or dividend equivalents; and Awards of Other Stock-Based Awards in the form of restricted stock may provide for voting rights prior to vesting. 11. AWARD AGREEMENTS. Each Award under the Plan shall be evidenced by an agreement setting forth the terms and conditions, not inconsistent with the provisions of the Plan, as determined by the Committee, which shall apply to such Award. Such provisions may include, but are not limited to, those that could result in a deferral of receipt of income, including that attributable to the exercise of a stock option or vesting of Other Stock-Based Awards, and may be imposed, in the discretion of the Committee, on Awards and awards under any prior shareholder approved long term incentive plan of CMC. The Committee may amend any Award agreement to conform to the requirements of law, including the law of the jurisdiction where the Participant resides. 12. WITHHOLDING. The Company shall have the right to deduct from all amounts paid to any Participant in cash (whether under this Plan or otherwise) any taxes required by law to be withheld therefrom. In the case of payments of Awards in the form of Common Stock, at the Committee's discretion, the Participant may be required to pay to the Company the amount of any taxes required to be withheld with respect to such Common Stock, or, in lieu thereof, the Company shall have the right to retain the number of shares of Common Stock the Fair Market Value of which equals the amount required to be withheld. Without limiting the foregoing, the Committee may, in its discretion and subject to such conditions as it shall impose, permit share withholding to be done at the Participant's election. 13. NONTRANSFERABILITY. No Award shall be assignable or transferable, and no right or interest of any Participant in any Award shall be subject to any lien, obligation or liability of the Participant, except by will, the laws of descent and distribution, or as otherwise set forth in the Award agreement; provided that with respect to Awards (other than an Award of an incentive stock option) and awards under any prior shareholder approved long term incentive plan of CMC, the Committee may, in its sole discretion, permit certain Participants or classes of Participants to transfer Awards of nonqualified stock options or Other Stock-Based Awards to such individuals or entities as the Committee may specify. 9
14. NO RIGHT TO EMPLOYMENT OR CONTINUED PARTICIPATION IN PLAN. No person shall have any claim or right to the grant of an Award prior to the date that an Award agreement is delivered to such person and the satisfaction of the appropriate formalities specified in the Award agreement, and the grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of the Company or to be eligible for any subsequent Awards. Further, the Company expressly reserves the right to dismiss at any time a Participant free from any liability or any claim under the Plan, except as provided herein or in any agreement entered into hereunder. 15. ADJUSTMENT OF AND CHANGES IN COMMON STOCK. In the event of any change in the outstanding shares of Common Stock by reason of any stock dividend or split, recapitalization, issuance of a new class of common stock, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to stockholders of Common Stock other than regular cash dividends, the Committee may make such substitution or adjustment, if any, as it deems to be equitable, as to the number or kind of shares of Common Stock or other securities issued or reserved for issuance pursuant to the Plan, including, but not limited to, adjustments with respect to the limitations imposed by Sections 3 and 5 and the numerical limitations imposed on individual Awards by Section 5 (without regard to the re-pricing restrictions set forth in Sections 7 and 8) and to make appropriate adjustments (including the number of shares and the exercise price) to outstanding Awards (without regard to the re-pricing restrictions set forth in Sections 7 and 8). 16. AMENDMENT. The Board may amend, suspend or terminate the Plan or any portion hereof at any time without stockholder approval, except to the extent otherwise required by the Act. Notwithstanding the foregoing, except in the case of an adjustment under Section 15, any amendment by the Board shall be conditioned on stockholder approval if it increases (i) the number of shares of Common Stock authorized for grant under Section 3, (ii) the percentage to be awarded as Other Stock-Based Awards as set forth in Section 5(a) or (iii) the number of shares authorized for grant to individual participants under any form of an Award as set forth in Sections 5(b), 5(c) and 5(d), or if such amendment eliminates restrictions applicable to the reduction of the exercise price of an option or stock appreciation right or the surrender of such Award in consideration for a new Award with a lower exercise price as set forth in Sections 7 and 8. 17. UNFUNDED STATUS OF PLAN. The Plan is intended to constitute an 10
"unfunded" plan for long-term incentive compensation. Nothing herein shall construed to give any Participant any rights with respect to unpaid Awards that are greater than those of a general unsecured creditor of CMC. 18. SUCCESSORS AND ASSIGNS. The Plan and Awards made thereunder shall be binding on all successors and assigns of the Company and each Participant, including without limitation, the estate of such Participant and the executor, administrator or trustee of such estate, or any receiver or trustee in bankruptcy or representative of the Participant's creditors. 19. EFFECTIVE DATE. The amendments to the Plan specified in the Proxy Statement in connection with the 2000 annual meeting of stockholders shall, subject to stockholder approval, become effective May 16, 2000 (i.e. such approval will have the effect of approving the amended and restated Plan). Any other amendment to this Plan contained in this amended and restated Plan became effective March 21, 2000. Subject to such stockholder approval, this amended and restated Plan ends May 15, 2005, after which date no Awards may be granted under the Plan. Absent such approval, no Awards under the Plan may be made after May 21, 2001.
(a) | Award means an amount payable to a Participant pursuant to Section 4 of this Plan. | ||
(b) | Board of Directors means the Board of Directors of the Corporation. | ||
(c) | Compensation Committee or Committee means the Compensation and Management Development Committee of the Board of Directors. | ||
(d) | Corporation means J.P. Morgan Chase & Co. | ||
(e) | Participant means an employee of the Corporation or of a Subsidiary who has been designated by the Committee as eligible to receive an Award pursuant to the Plan for the Plan Year. | ||
(f) | Plan Year means the calendar year. | ||
(g) | Subsidiary means (i) any corporation, domestic or foreign, more than 50 percent of the voting stock of which is owned or controlled, directly or indirectly, by the Corporation; or, (ii) any partnership, more than 50 percent of the profits interest or capital interest of which is owned or |
controlled, directly or indirectly, by the Corporation; or (iii) any other legal entity, more than 50 percent of the ownership interest, such interest to be determined by the Committee, of which is owned or controlled, directly or indirectly, by the Corporation. |
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EXHIBIT 10.13 EXECUTIVE RETIREMENT PLAN OF THE CHASE MANHATTAN CORPORATION AND CERTAIN SUBSIDIARIES PURPOSE. This Plan is a pension plan designed to provide supplemental retirement benefits to a select group of management or highly compensated employees. This Plan shall be unfunded and shall not be subject to Parts 2, 3 or 4 of Title 1 of the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended from time to time. ARTICLE I. DEFINITIONS. The following are defined terms wherever they appear in the Plan: "Accrual Amount" shall mean the amount which has been specified in writing, from time to time, by the Administrator to the Participant pursuant to which his/her benefit will be based at termination of employment with an Employer; provided that the Accrual Amount at the time specified by the Administrator shall not exceed the amount specified by the Committee for the salary grade level of the Participant; provided, that if an individual becomes eligible to participate after age 58 and declines to satisfy certain conditions with the consent of the Administrator, the Administrator may take into consideration in specifying the Accrual Amount that such conditions have not been satisfied.
"Accrued Benefit" shall mean the amount calculated pursuant to Section 3.1(a) as of any determination date, as if the Participant had terminated employment on such date. It shall not include actuarial factors, payment dates, form of payment and other optional benefits hereunder. "Administrator" shall mean the individual holding the title Director Human Resources of the Corporation or the Bank, or any successor title. "Bank" shall mean The Chase Manhattan Bank (formerly Chemical Bank), or any successor thereto, whether by merger, consolidation, purchase of substantially all its assets, or otherwise. "Board" shall mean the Board of Directors of the Corporation; provided that any action taken by a duly authorized committee of the Board (including any action pursuant to Article 6.1) within the scope of the authority designated to it by the Board, shall be considered an action of the Board for purposes of this Plan. "Cause" shall mean either (i) any violation of the Code of Conduct of the Corporation, including, but not limited to, an act or acts of personal dishonesty resulting or intended to result in the personal enrichment of the Participant to the detriment of his/her Employer and gross negligence or willful misconduct in the performance of the Participant's duties, or (ii) the issuance of an order by a United States or State bank regulatory authority, removing the Participant from office pursuant to a disciplinary proceeding based on the actions of the Participant. "Corporation" shall mean The Chase Manhattan Corporation (formerly Chemical Banking Corporation) or any successor thereto, whether by merger, consolidation, purchase of substantially all its assets, or otherwise. "Disability Plan" shall mean the Long-Term Disability Plan of The Chase Manhattan Bank and Certain Affiliated Companies. 2
"Disabled" or "Disability" shall mean a condition resulting in the receipt of benefits by a Participant under the Long-Term Disability Plan. "Early Retirement" shall mean a termination of employment of an Employee with an Employer or any Subsidiary on or after attaining age 55 and with a Period of Service of at least 10 years. "Effective Date" shall mean April 1, 1995. "Employee" shall mean an individual who is a salaried employee of an Employer. "Employer" shall mean the Corporation or any Subsidiary which is designated by the Administrator as an Employer. "Initial Plan Participation Date" shall mean the date specified by the Administrator in the notice referred to in Section 2.1, which shall not be earlier than the date that the individual satisfies the criteria established by the Board for participation, and in no event earlier than January 1, 1992. "Normal Retirement" shall mean termination of employment of an Employee with an Employer or any Subsidiary on or after attaining age 60 with a Period of Service of at least 10 years. "Participant" shall mean each Employee of the Employer who is eligible to participate under Section 2.1 and elects to participate as provided for in Section 2.2. "Period of Service" shall have the meaning ascribed thereto by the Retirement Plan of The Chase Manhattan Bank and Certain Affiliated Companies, or its successor plan; provided that a Period of Service shall exclude service prior to the date of acquisition with respect to an 3
entity acquired by an Employer after January 1, 1995, unless the Administrator specifies to the contrary. "Plan" shall mean this Executive Retirement Plan of The Chase Manhattan Corporation and Certain Subsidiaries. "Retirement Plan" shall mean the Retirement Plan of The Chase Manhattan Bank and Certain Affiliated Companies, or its successor plan. "Subsidiary" shall mean an entity in which an Employer owns directly, or indirectly, fifty percent or more of the outstanding voting common stock or, if not a corporation, fifty percent or more of the voting power of such entity. "Surviving Spouse" shall have the meaning ascribed to the individual entitled to the Final Salary Benefit of a Participant under the Retirement Plan upon the death of a Participant. ARTICLE II. PARTICIPATION. 2.1 Eligibility. The Administrator shall notify, in writing, each key Employee who is eligible to participate in the Plan and shall specify in such writing the Initial Plan Participation Date and Level of Participation of each such Employee; provided that each such key Employee shall have satisfied the criteria established by the Board for participation in this Plan, or shall be listed on Schedule I hereto. 2.2 Participation. Each Employee shall elect within sixty days after the date of notification by the Administrator of his/her eligibility to participate in the Plan by completing such forms as the Administrator shall require, including but not limited to, an agreement to participate in other programs as the Administrator may specify and by providing, from time to time, such information as may be specified by the Administrator. If any individual does not elect to participate in the Plan when first eligible, the Administrator, in his/her sole discretion, may 4
extend on another date or dates the opportunity to participate hereunder to such individual on such terms and conditions as the Administrator may specify in writing. 2.3 (a) Discontinued Participation by Election of Employer. Notwithstanding the continued employment of a Participant with an Employer, the Administrator may in the exercise of his/her sole discretion, terminate the participation of any Participant by written notice to the Participant. No additional benefits shall be accrued under Section 3.1(a) from the date active participation ceases hereunder, as specified by the Administrator. Such Accrued Benefit shall be subject to vesting under Section 4.1 and to the provisions of Section 3.1(c) or (d), if applicable, upon termination of employment with an Employer or Subsidiary. (b) Discontinued Participation by Election of Participant. A Participant may voluntarily discontinue participation in the Plan at any time by giving 30 days' advance written notice to the Administrator. No additional benefits shall be accrued under Section 3.1(a) from the date active participation ceases hereunder, as specified by the Administrator. Such Accrued Benefit shall be forfeited unless the Participant is vested pursuant to Section 4.1 as of the date of receipt of the notice by the Administrator. In addition, unless such Participant, as of the date of receipt of the notice by the Administrator, has satisfied the criteria for Retirement or Early Retirement, as the case may be, such Accrued Benefit (if vested) shall be treated in accordance with Section 3.1(e). ARTICLE III. BENEFITS. 3.1 (a) Annuity Benefits. Subject to Sections 3.1(b)-(f), each Participant who is vested pursuant to Section 4.1, shall receive an annual annuity, payable in 12 equal monthly installments, for life commencing at age 65, equal to the product of (i) his/her Period of Service from the Initial Plan Participation Date to the date of termination of employment with an Employer (or the date participation is discontinued, as specified pursuant to Section 2.3, if applicable) multiplied by (ii) his/her Accrual Amount as specified by the Administrator. 5
(b) Change in Participant Level . Notwithstanding Section 3.1(a), if a Participant, within a 60 day period following written notice from the Administrator that such Participant is eligible to participate at an increased Accrual Amount, does not satisfy various criteria as specified by the Administrator for participation at such increased Accrual Amount, the annuity benefit described in Section 3.1(a) shall be based on the Accrual Amount for which such criteria were satisfied. (c) Normal Retirement. Upon Normal Retirement, a Participant shall receive the annual annuity benefit as calculated under Section 3.1(a) without actuarial reduction. (d) Early Retirement. Upon Early Retirement, a Participant shall receive the annual annuity benefit as calculated under Section 3.1(a) reduced by 0.5% for each month prior to age 60 that such benefit commences. (e) Vested Terminated Benefits. Upon a termination of employment with an Employer or a Subsidiary after a Period of Service of at least 10 years but before attaining age 55, a Participant shall receive the annual annuity benefit as calculated under Section 3.1(a) commencing at age 65; provided that if the benefit commences prior to age 65, it shall be reduced by .625% for each month prior to age 65 that such benefit commences. (See Section 5.1(b) for payment date.) (f) Disability. If a Participant becomes Disabled and receives for an 18 month period disability benefits from the Disability Plan, the Accrual Amount per one year Period of Service, as specified by written notice from Administrator, shall be reduced by 50% for each one year Period of Service commencing as of the first day of the month following the expiration of such 18 month period until the first to occur: (i) the date of a Participant's return to active employment with an Employer, or (ii) the date of termination of employment, or 6
(iii) the date disability benefits cease under the Disability Plan. ARTICLE IV. VESTING DATE. 4.1 Vesting. A Participant shall vest in his/her annuity benefit described in Section 3.1 after a Period of Service of at least 10 years. If employment terminates with an Employer or Subsidiary at any time prior to the satisfaction of such Period of Service, all benefits described in Article III of the Plan shall be forfeited and shall not be restored upon rehire or recommencement of participation. 4.2 Forfeiture of Benefits. Notwithstanding Section 4.1 to the contrary, Accrued Benefits (whether or not in pay status) shall be terminated and forfeited in the following circumstances: (i) a termination of employment for Cause; (ii) within 2 years of a termination of employment, the solicitation of the customers, or clients of the Employer or any affiliate of the Employer by the Participant in order to compete with his/her Employer or any affiliate of the Employer; (iii) within 2 years of termination of employment, the hiring of, or the attempt to hire, the Employees of the Employer or any affiliate of the Employer; (iv) at any time after a termination of employment, a release to any party unrelated to an Employer of secret or confidential information obtained by the Participant in the course of his/her employment, except as the case may be required by law; or 7
(v) at any time, an attempt to assign, encumber or hypothecate benefits as provided in Section 7.1. ARTICLE V. PAYMENT. 5.1(a) Annuity Payments on Retirement. If employment terminates as a result of Normal Retirement or Early Retirement, benefits shall commence on the first day of the month following such Normal or Early Retirement in the form specified in Section 3.1(a) and subject to the reduction specified in Section 3.1(d), if applicable. The Administrator may, in his/her sole discretion, specify a form of annuity other than a single life annuity. The Administrator shall specify such actuarial factors as he/she deems reasonable or appropriate in converting the single life annuity under Section 3.1(a) into such other annuity form. (b) Other Annuity Payment. Except as otherwise provided in Section 5.1(a) above, payment of the annuity benefit under the Plan shall be made at the same time, in the same form of payment as of the Participant's Final Salary Benefit under the Retirement Plan. The Administrator may, however, in his/her and absolute discretion, provide for a different form of payments. The Administrator shall specify such actuarial factors as he/she deems reasonable or appropriate in converting the single life annuity under Section 3.1(a) into such other annuity form. 5.2 Survivor Benefit After Termination of Employment. In the event that a Participant with a vested annuity benefit dies after his/her employment has terminated but before the annuity commences, the Surviving Spouse of such individual shall receive an amount equal to that provided to a surviving spouse under a 50% joint and survivor annuity commencing on the first day of the month following (i) the date of death if death occurs after age 55 or (ii) the date that such Participant would have attained age 55 if death occurs before age 55. The amount of such spousal annuity shall be based upon the assumption that the Participant had received the benefit specified in Section 3.1(a) on the later of the day preceding his date of death or age 55, in the form of a 50% joint and survivor benefit, and immediately died. The Administrator may, 8
specify such actuarial factors as he/she deems reasonable or appropriate in converting the single life annuity under Section 3.1(a) into a 50% joint and survivor annuity benefit. 5.3 Small Benefits. If any annuity payment hereunder is $200.00 or less per month, the Administrator shall, within a reasonable period of time following the date that the first such payment is due, convert such amount into a lump sum utilizing such actuarial factors as he/she deems appropriate or reasonable and shall pay out the lump sum value as soon as practicable thereafter. Payment of such lump sum shall relieve and discharge the Plan of all liability to make further payments. 5.4 Responsibility for Payment. Payment of annuity benefits under the Plan shall be made by the Employer who last employed the Participant. In the case benefits are payable with respect to a Participant whose service included employment with more than one Employer, the Administrator, in his sole discretion , shall determine any amounts to be reimbursed by the prior Employer to the Employer paying benefits hereunder. 5.5 Withholding. The Employer shall withhold any amount required to be withheld under applicable Federal, state and local laws, and any such payment shall be reduced by the amount so withheld. 5.6 Participant's Rights Unsecured. All annuity payments under the Plan shall be made from the general funds of the Employer. No assets of the Employer shall be required to be segregated or earmarked to represent any liability for the annuity benefits under Section 3.1, but the Employer shall have the right to establish vehicles to assist it in meeting its obligations hereunder. The rights of any person to receive benefits under the Plan shall be only those of a general unsecured creditor; and such status shall not be enhanced by reason of the establishment of any vehicles to assist the Employer in meeting its obligations hereunder. ARTICLE VI AMENDMENT AND TERMINATION. 9
6.1 Amendment. The Board may amend the Plan in any respect and at any time; provided, however, that no amendment shall have the effect of reducing (i) any benefit then being paid to any Participant or to any other person pursuant to Articles III, or (ii) the Accrued Benefit under Section 3.1(a), theretofore accrued on behalf of any Participant. 6.2 Termination. The Board may terminate the Plan at any time. In the event of termination, the Plan shall continue in force with respect to any Participant, or other person entitled to an Accrued Benefit under Article III to the extent accrued under the Plan prior to its termination, and shall be binding upon any successor to substantially all the assets of the Corporation or any other Employer. Notwithstanding the foregoing, the Board may determine that it is in the best interests of the Corporation, the Employers or the Participants to terminate the Plan in its entirety and distribute to each Participant (or each person entitled to receive payments hereunder) the value of his/her benefits hereunder, utilizing such actuarial factors, as the Administrator in his/her sole discretion shall deem reasonable. ARTICLE VII. GENERAL PROVISIONS. 7.1 Assignability. No right to receive payments hereunder shall be transferable or assignable by a Participant, other than by will or by the laws of descent and distribution or by a court of competent jurisdiction. Any other attempted assignment or alienation of payments hereunder shall be void and of no force or effect and shall result in forfeiture of benefits. 7.2 Administration. Except as otherwise provided herein, the Plan shall be administered by the Administrator, who shall have the authority to adopt rules and regulations for carrying out the provisions of the Plan, and who shall interpret, construe and implement the provisions of the Plan, including eligibility to participate, Initial Plan Participation Date, Accrual Amount, the entitlement to benefits, the amount of benefits and actuarial factors. 10
7.3 Legal Opinions. The Administrator may consult with legal counsel, who may be counsel for the Bank or other counsel, with respect to his obligations or duties hereunder, or with respect to any action proceeding or any question of law, and shall not be liable with respect to any action taken, or omitted, by him in good faith pursuant to the advice of such counsel. 7.4 Liability. Any decision made or action taken by the Board, the board of directors (or governing body) of an Employer, Committee, the Administrator or any employee of the Corporation or of any Employer, arising out of, or in connection with, the construction, administration, interpretation and effect of the Plan, shall be within absolute discretion of such person, and will be conclusive and binding on all parties. Neither the Administrator nor a member of the Board or the board of directors (or governing body) of an Employer or the Committee and no Employee shall be liable for any act or action hereunder, whether of omission or commission, by any other member or employee or by any agent to whom duties in connection with the administration of the Plan have been delegated or for anything done or omitted to be done in connection with this Plan, except in circumstances involving bad faith. 7.5 Corporate Reorganization. In the event that a corporation or unincorporated entity ceases to meet the definition of an Employer, such corporation or entity shall cease to be an Employer under the Plan and its employees shall cease to be Participants under the Plan. Benefits shall be frozen as specified in Article II. 7.6 Construction. The masculine gender, where appearing in this Plan, shall be deemed to also include the feminine gender. The singular shall also include the plural, where appropriate. 7.7 Claims and Appeals. The Administrator shall establish a claims and appeals procedure that satisfies the requirements of Part 5 of Title I of ERISA. 7.8 Governing Law. The Plan shall be construed and administered in accordance with the laws of the State of New York. 11
7.9 Not an Employment Contract. Nothing herein shall be construed to confer upon any person any legal right to continued employment with the Corporation or any Subsidiary. 12
EXHIBIT 10.14 BENEFIT EQUALIZATION PLAN OF THE CHASE MANHATTAN CORPORATION AND CERTAIN SUBSIDIARIES PURPOSE. This Plan is a pension plan designed to provide supplemental retirement benefits to a select group of management or highly compensated employees who were previously covered by retirement plans of Chemical Banking Corporation and Manufacturers Hanover Corporation. This Plan shall be unfunded and shall not be subject to Parts 2, 3 or 4 of Title 1 of the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended from time to time. ARTICLE I. DEFINITIONS. The following are defined terms wherever they appear in the Plan: "Accrued Benefit" shall mean the amount calculated pursuant to Section 3.1(a) as of any determination date, as if the Participant had terminated employment on such date. It shall not include actuarial factors, payment dates, form of payment and other optional benefits hereunder. "Administrator" shall mean the individual holding the title Director Human Resources of the Corporation or the Bank, or any successor title. "Bank" shall mean The Chase Manhattan Bank, or any successor thereto, whether by merger, consolidation, purchase of substantially all its assets, or otherwise.
2 "Board" shall mean the Board of Directors of the Corporation; provided that any action taken by the Compensation and Benefits Committee of the Board (including any action pursuant to Article 6.1) shall be considered an action of the Board for purposes of this Plan. "Cause" shall mean either (i) any violation of the Code of Conduct of the Corporation, including, but not limited to, an act or acts of personal dishonesty resulting or intended to result in the personal enrichment of the Participant to the detriment of his/her Employer and gross negligence or willful misconduct in the performance of the Participant's duties, or (ii) the issuance of an order by a United States or State bank regulatory authority, removing the Participant from office pursuant to a disciplinary proceeding based on the actions of the Participant. "Committee" shall mean the Compensation and Benefits Committee of the Board. "Corporation" shall mean The Chase Manhattan Corporation or any successor thereto, whether by merger, consolidation, purchase of substantially all its assets, or otherwise. "Disability Plan" shall mean the Long-Term Disability Plan of The Chase Manhattan and Certain Affiliated Companies or any successor plan. "Disabled" or "Disability" shall mean a condition resulting in the receipt of benefits by a Participant under the Disability Plan. "Early Retirement" shall mean a termination of employment of an Eligible Employee with an Employer or any Subsidiary on or after attaining age 55 and with a Period of Service of at least 10 years. Notwithstanding the foregoing, "Early Retirement" shall also mean a termination of employment of an Eligible Employee with an Employer or any Subsidiary if such Eligible Employee is entitled to retiree medical benefits under the Bank's Retiree Medical Plan by virtue of his/her actual age and actual years of service and not by virtue of any contractual obligation of his/her Employer or any Subsidiary.
3 "Effective Date" shall mean August 1, 1995. "Eligible Employee" shall mean an individual who is a salaried employee of an Employer and who by written act of the Committee is designated as eligible for benefits under this Plan. "Employer" shall mean the Corporation or any Subsidiary which is designated by the Administrator as an Employer. "Excess Retirement Plan" shall mean the Excess Retirement Plan of The Chase Manhattan Corporation and Certain Subsidiaries, including any obligation to a Participant under the former Executive Cash Plan of Chemical Banking Corporation and Certain Subsidiaries. "Executive Cash Plan for Retirement" shall mean the Executive Cash Plan for Retirement of The Chemical Banking Corporation and Certain Subsidiaries, the obligations of which became part of the Excess Retirement Plan. "Executive Retirement Plan" shall mean the Executive Retirement Plan of The Chase Manhattan Corporation and Certain Subsidiaries.. "Final Average Salary" shall mean, as of any determination date, the average annual Salary received by a Participant from an Employer during a Period of Service consisting of any 60 consecutive month period within a 120 consecutive month period immediately preceding a Retirement Date which will produce the highest annual average salary. "Normal Retirement" shall mean termination of employment of a Participant with an Employer or any Subsidiary on or after attaining age 60 with a Period of Service of at least 10 years. "Participant" shall mean each Eligible Employee of the Employer who is eligible to participate under Section 2.1.
4 "Period of Service" shall have the meaning ascribed thereto by the Retirement Plan; provided that a Period of Service shall exclude service prior to the date of acquisition with respect to an entity acquired by an Employer after January 1, 1995, unless the Administrator specifies to the contrary. "Plan" shall mean the Benefit Equalization Plan of The Chase Manhattan Corporation and Certain Subsidiaries. "Retirement Date" shall mean Early or Normal Retirement or any date thereafter. "Retirement Plan" shall mean the Retirement Plan of The Chase Manhattan Bank and Certain Affiliated Companies, or its successor plan. "Salary" shall mean the regular base rate of pay of a Participant from an Employer for services rendered. Further, "Salary" does not include salary advances, bonus, incentive compensation, severance, deferred compensation, payments under this Plan or any other employee benefit plan (other than a wage continuation plan as a result of a short-term disability), accrued vacation paid in a lump sum on termination of employment, or any other kind of extra or additional remuneration. "Split Dollar Plan" shall mean the Permanent Life Insurance Plan of Manufacturers Hanover Trust Company. "Subsidiary" shall mean an entity in which an Employer owns directly, or indirectly, fifty percent or more of the outstanding voting common stock or, if not a corporation, fifty percent or more of the voting power of such entity. "Surviving Spouse" shall have the meaning ascribed under the Retirement Plan upon the death of a Participant.
5 ARTICLE II. PARTICIPATION. 2.1 Participation. Each employee designated by the Committee at its July 18,1995 meeting as an Eligible Employee shall participate in this Plan. The Committee, by written resolution, may designate additional salaried employees as Eligible Employees. As of April 1, 1999, no additional salaried employees have been designated. 2.2 Discontinued Participation by Election of Employer. Notwithstanding the continued employment of a Participant with an Employer, the Administrator may in the exercise of his/her sole discretion, terminate the participation of any Participant by written notice to the Participant. No additional benefits shall be accrued under Section 3.1(a) from the date active participation ceases hereunder as specified by the Administrator. Such Accrued Benefit shall remain subject to the vesting requirements under Section 4.1. ARTICLE III. BENEFITS. 3.1 (a) Annuity Benefits. Subject to Sections 3.1(b)-(c), each Participant who is vested pursuant to Section 4.1 and who terminates employment with his or her Employer or any Subsidiary, shall receive an annual annuity, payable in 12 equal monthly installments, for life commencing at age 60, equal to the excess of: (I) the product of: (i) two percent of Final Average Salary, and (ii) the Periods of Service (but not more than 30 years) commencing with the date that the Participant became eligible to participate in the Retirement Plan or any predecessor retirement plan, including those of Chemical Bank and Manufacturers Hanover Trust Company, and ending with the date that employment terminates with his/her Employer (or if earlier the date, specified in Section 2.2); over
6 (II) the sum of benefits payable, if any, to the Participant from: (i) the Retirement Plan; (ii) the Excess Retirement Plan, including, as successor to, obligations under the Executive Cash Plan for Retirement; (iii) the Executive Retirement Plan, and (iv) the Split Dollar Plan. By way of clarification, benefits payable under a predecessor plan of those listed in this Section 3.1(a) II shall be included. (b) Conversion. The offset benefits described in Section 3.1(a)(II) shall be assumed to be payable on the date specified in Article V hereof and shall be assumed to be payable in the form of a single life annuity, in either case, notwithstanding any election of the Participant to the contrary. Upon Early Retirement, the annual amount as calculated under Section 3.1(a)(I) (without reference to II) shall be reduced by 0.5% for each month prior to age 60 that such benefit commences. The offset benefits described in Section 3.1(a)(II) shall, to the extent not otherwise payable in the form of a single life annuity, be converted into a single life annuity utilizing the actuarial factors specified in the Retirement Plan, including, but not limited to, the discount rate on thirty year Treasuries. In the absence of an appropriate actuarial factor under the Retirement Plan, the Administrator shall specify the relevant factor in his/her sole discretion. (c) Failure to Participate. Solely for purposes of calculating a benefit hereunder in the event that a Participant eligible to participate in a plan listed in Section 3.1(a)(II) either failed to participate or did not participate to the fullest extent permitted by any such plan, the offset
7 benefit under Section 3.1(a) (II) with respect to such plan shall be adjusted upward so that the Participant shall be treated as if he or she had participated or had participated to the fullest extent permitted by the terms of the applicable plan. 3.2 Normal Retirement. Upon Normal Retirement, a Participant shall receive the annual annuity benefit as calculated under Section 3.1(a) without actuarial reduction. 3.3 Disability. If a Participant becomes Disabled and receives for an 24 month period disability benefits from the Disability Plan, the Participant shall continue to participate in this Plan until the first to occur: (i) the date of termination of employment, (ii) the date disability benefits cease under the Disability Plan, or (iii) the election to commence benefits under any plan listed in Section 3.1(a)(II). ARTICLE IV. VESTING DATE. 4.1 Vesting. A Participant shall vest in his/her annuity benefit described in Section 3.1 upon reaching his or her Retirement Date. If employment terminates with an Employer or Subsidiary at any time prior to reaching his or her Retirement Date, all benefits described in Article III of the Plan shall be forfeited and shall not be restored upon rehire or recommencement of participation. 4.2 Forfeiture of Benefits. Notwithstanding Section 4.1 to the contrary, Accrued Benefits (whether or not in pay status) shall be terminated and forfeited in the following circumstances:
8 (i) a termination of employment for Cause; (ii) within 2 years of a termination of employment, the solicitation of the customers, or clients of the Employer or any affiliate of the Employer by the Participant in order to compete with his/her Employer or any affiliate of the Employer; (iii) within 2 years of termination of employment, the hiring of, or the attempt to hire, the Employees of the Employer or any affiliate of the Employer; (iv) at any time after a termination of employment, a release to any party unrelated to an Employer of secret or confidential information obtained by the Participant in the course of his/her employment, except as the case may be required by law; or (v) at any time, an attempt to assign, encumber or hypothecate benefits as provided in Section 7.1. ARTICLE V. PAYMENT. 5.1 Timing of Payment. Payment of the Annuity Benefit shall be made at the such time and, in the such form of payment, as the Administrator may, in his/her and absolute discretion, provide. The Administrator shall utilize the actuarial factors specified in the Retirement Plan or in the absence of such factors, such actuarial factors as he/she deems reasonable or appropriate. 5.2 Survivor Benefit. In the event that a Participant dies after his Retirement Date but before the annuity commences, the Surviving Spouse of such individual shall receive an amount equal to that provided to a surviving spouse under a 50% joint and survivor annuity commencing as of the first day of the month following the date of death. The amount of such spousal annuity shall be based upon the assumption that (i) the Participant had received the benefit specified in
9 Section 3.1(a) on the day preceding his/her date of death, (ii) the benefit was converted into the form of a 50% joint and survivor benefit, and (iii) the Participant immediately died. The Administrator shall utilize the actuarial factors specified in the Retirement Plan and in the absence of such factors, such actuarial factor as he/she deems reasonable or appropriate, to convert the single life annuity to a joint or survivor annuity. 5.3 Small Benefits. If any annuity payment hereunder is $100.00 or less per month, the Administrator may, within a reasonable period of time following the date that the first such payment is due, convert such amount into a lump sum utilizing such actuarial factors as he/she deems appropriate or reasonable and shall pay out the lump sum value as soon as practicable thereafter. Payment of such lump sum shall relieve and discharge the Plan of all liability to make further payments. 5.4 Responsibility for Payment. Payment of annuity benefits under the Plan shall be made by the Employer who last employed the Participant. In the case benefits are payable with respect to a Participant whose service included employment with more than one Employer, the Administrator, in his sole discretion, shall determine any amounts to be reimbursed by the prior Employer to the Employer paying benefits hereunder. 5.5 Withholding. The Employer shall withhold any amount required to be withheld under applicable Federal, state and local laws, and any such payment shall be reduced by the amount so withheld. 5.6 Participant's Rights Unsecured. All annuity payments under the Plan shall be made from the general funds of the Employer. No assets of the Employer shall be required to be segregated or earmarked to represent any liability for the annuity benefits under Section 3.1, but the Employer shall have the right to establish vehicles to assist it in meeting its obligations hereunder. The rights of any person to receive benefits under the Plan shall be only those of a general unsecured creditor; and such status shall not be enhanced by reason of the establishment of any vehicles to assist the Employer in meeting its obligations hereunder.
10 ARTICLE VI AMENDMENT AND TERMINATION. 6.1 Amendment. The Board may amend the Plan in any respect and at any time; provided, however, that no amendment shall have the effect of reducing (i) any benefit then being paid to any Participant or to any other person pursuant to Articles III, or (ii) the Accrued Benefit under Section 3.1(a), theretofore accrued on behalf of any Participant. 6.2 Termination. The Board may terminate the Plan at any time. In the event of termination, the Plan shall continue in force with respect to any Participant, or other person entitled to an Accrued Benefit under Article III to the extent accrued under the Plan prior to its termination, and shall be binding upon any successor to substantially all the assets of the Corporation or any other Employer. Notwithstanding the foregoing, the Board may determine that it is in the best interests of the Corporation, the Employers or the Participants to terminate the Plan in its entirety and distribute to each Participant (or each person entitled to receive payments hereunder) the value of his/her benefits hereunder, utilizing such actuarial factors, as the Administrator in his/her sole discretion shall deem reasonable. ARTICLE VII. GENERAL PROVISIONS. 7.1 Assignability. No right to receive payments hereunder shall be transferable or assignable by a Participant, other than by will or by the laws of descent and distribution or by a court of competent jurisdiction. Any other attempted assignment or alienation of payments hereunder shall be void and of no force or effect and shall result in forfeiture of benefits. 7.2 Administration. Except as otherwise provided herein, the Plan shall be administered by the Administrator, who shall have the authority to adopt rules and regulations for carrying out the provisions of the Plan, and who shall have complete and absolute discretionary authority to interpret, construe and implement the provisions of the Plan, including eligibility to participate, the entitlement to benefits, the amount of benefits and actuarial factors.
11 7.3 Legal Opinions. The Administrator may consult with legal counsel, who may be counsel for the Bank or other counsel, with respect to his obligations or duties hereunder, or with respect to any action proceeding or any question of law, and shall not be liable with respect to any action taken, or omitted, by him in good faith pursuant to the advice of such counsel. 7.4 Liability. Any decision made or action taken by the Board, Committee, the Administrator, arising out of, or in connection with, the construction, administration, interpretation and effect of the Plan, shall be within absolute discretion of such person, and will be conclusive and binding on all parties. Neither the Administrator nor a member of the Board or the Committee shall be liable for any act or action hereunder, whether of omission or commission, by any other member or employee or by any agent to whom duties in connection with the administration of the Plan have been delegated or for anything done or omitted to be done in connection with this Plan, except in circumstances involving bad faith. 7.5 Corporate Reorganization. In the event that a corporation or unincorporated entity ceases to meet the definition of an Employer, such corporation or entity shall cease to be an Employer under the Plan and its employees shall cease to be Participants under the Plan. Benefits shall be frozen as specified in Article II. 7.6 Construction. The masculine gender, where appearing in this Plan, shall be deemed to also include the feminine gender. The singular shall also include the plural, where appropriate. 7.7 Claims and Appeals. The Administrator shall establish a claims and appeals procedure that satisfies the requirements of Part 5 of Title I of ERISA. 7.8 Governing Law. The Plan shall be construed and administered in accordance with the laws of the State of New York.
12 7.9 Not an Employment Contract. Nothing herein shall be construed to confer upon any person any legal right to continued employment with the Corporation or any Subsidiary.
EXHIBIT 10.15 JPMORGAN CHASE & CO. SEVERANCE POLICY -- SUMMARY OF TERMS PURPOSE: To provide severance and other termination-related benefits in the case of involuntary termination, except for cause. BENEFIT AMOUNT: For select executive officers other than the CEO, an amount equal to two times current base salary, plus eligibility for a discretionary payment at the sole determination of the Firm. The total amount will be paid in installments over 24 months following a separation from service. In the event that an executive officer is a "specified employee" (i.e. a top paid 50 employee) as defined by Section 409A, payment of such installments will be delayed for the six month period following separation from service with a make up payment in the seventh month equal to the delayed installments . TREATMENT OF STOCK AWARDS: Under the current terms and conditions of restricted stock unit awards and option /stock appreciation right (SAR) grants, upon a job elimination: (1) officers would be entitled to continued vesting of restricted stock units; and (2) stock options and SARs would become exercisable immediately and remain exercisable for their original remaining term for persons who are retirement eligible and for up to the lesser of two years or their original term for persons not retirement eligible. WELFARE BENEFITS: Officers can elect to continue to receive medical and dental benefits for two years following such separation from service. Other severance provisions (if any) applicable to any Named Executive Officers are contained in their respective employment agreements.
1
2
3
4
5
6
1
2
3
4
5
6
7
Grant Date: | January 20, 2005 | The exercisable schedule for this award is as follows: | ||||
Number Granted:
|
Number | Exercisable Dates | ||||
Exercise Price:
|
$37.47 | January 25, 2008 | ||||
Expiration Date:
|
January 20, 2015 | January 25, 2009 | ||||
January 25, 2010 |
Grantee:
|
JPMorgan Chase & Co. | |
Date:
|
/s/ John J. Farrell |
Grant Date:
|
January 20, 2005 | The exercisable schedule for this award is as follows: | |||||
Number Granted:
|
Number | Exercisable Dates | |||||
Exercise Price:
|
$37.47 | January 25, 2007 | |||||
Expiration Date:
|
January 20, 2015 | January 25, 2008 |
Grantee:
|
JPMorgan Chase & Co. | |
Date:
|
/s/ John J. Farrell |
Award Agreement
|
These terms and conditions are made part of the Award Agreement dated as of January 20, 2005 (Grant Date) awarding stock appreciation rights (referred to as Stock Appreciation Awards) pursuant to the terms of the JPMorgan Chase & Co. 1996 Long-Term Incentive Plan (Plan). To the extent the terms of the Award Agreement (all references to which will include these terms and conditions) conflict with the Plan, the Plan will govern. | |
The grant of this award is contingent upon your acceptance of this Award Agreement. Unless you decline by the deadline and in the manner specified in the Award Agreement, you will have accepted this award and be bound by these terms and conditions, effective as of the Grant Date. If you decline the award, it will not become effective and will be cancelled as of the Grant Date. | ||
Capitalized terms that are not defined in the Award Agreement will have the same meaning as set forth in the Plan. | ||
JPMorgan Chase & Co. will be referred to throughout the Award Agreement as JPMorgan Chase, and together with its subsidiaries as the Firm. | ||
Form and Purpose of Award
|
Stock Appreciation Awards represent the right, following exercise, to receive (without payment), a number of shares of JPMorgan Chase Common Stock, the Fair Market Value of which, as of the date of exercise, is equal to the excess of the Fair Market Value of one share of such Common Stock on such exercise date over the Exercise Price, multiplied by the number of Stock Appreciation Awards being exercised. The Firm will retain from each distribution the number of shares of Common Stock required to satisfy tax withholding obligations. | |
The purpose of this award is to motivate your future performance and to align your interests with those of the Firm and its shareholders. | ||
Exercisable Dates/Expiration Date |
Your award will become exercisable on the Exercisable Dates set forth in your Award Agreement, provided that you are continuously employed by the Firm through the relevant Exercisable Date or you meet the requirements to allow your award to remain outstanding upon termination of employment as described below. Your award will remain exercisable until the earlier of the tenth anniversary of the Grant Date (the Expiration Date) or the date the award is cancelled pursuant to this Award Agreement. No Stock Appreciation Award may be exercised after its Expiration Date. | |
Termination of Employment
|
Except as explicitly set forth below, any Stock Appreciation Awards outstanding under this award will be cancelled effective on the date your employment with the Firm terminates for any reason. | |
Subject to Your Obligations and the other requirements below, you will be eligible to have your Stock Appreciation Awards remain outstanding for the period described below following the termination of your employment if one of the following circumstances applies to you: | ||
Job Elimination: | ||
If the Director Human Resources of the Firm or his nominee in his sole discretion determines that the Firm terminated your employment because your job was eliminated, your outstanding Stock Appreciation Awards (whether or not exercisable on your date of termination) will become exercisable as of your date of termination and will remain exercisable for the two year period immediately following your termination of employment but in no event beyond the Expiration Date. Any unexercised Stock Appreciation Awards outstanding at the end of the period specified in the preceding sentence, including Stock Appreciation Awards that were exercisable prior to termination of employment, shall be cancelled. |
January 20, 2005 Stock Appreciation
Awards (continued...) |
||
Retirement: | ||
Your award will become exercisable on the Exercisable Dates and will remain exercisable up to its Expiration Date provided that your employment was not terminated for Cause and you meet the following criteria: | ||
Your employment terminates after you reach at least age 55 and complete at least 15 years of
Cumulative Service of which at least the 5 years immediately preceding termination of employment are
continuous (or your employment terminates due to a job elimination after you reach at least age 50
and complete at least 20 years of Cumulative Service), and |
||
For the one year period following the termination of your employment, or if longer, during
the period that your Stock Appreciation Awards remain outstanding, you do not perform services
(including self-employment) for |
||
- competitor of the Firm in any capacity, or |
||
- a non-competitor in a role within your profession; provided that you may work for a government,
education or Not-for-Profit Organization. |
||
You must notify JPMorgan Chase in writing if you perform services during the period specified above
that do not meet the foregoing criteria. |
||
In the event that you meet the requirements for both job elimination and retirement as described above, you will be accorded retirement treatment for the purposes of your award. However, the retirement employment restrictions will not apply to you. | ||
The definitions of Cause, Cumulative Service, Competitor and Not-for-Profit Organization are found on page 5. | ||
Release/Certification
|
Upon the termination of your employment you must timely execute and deliver a release of claims in favor of the Firm, having such form and terms as the Firm shall specify, to have all or any portion of your award remain outstanding after termination of your employment under any of the foregoing circumstances. | |
Additionally, in the case of Retirement, you must certify on the authorized form of the Firm at the time of any exercise of your Stock Appreciation Awards that you have complied with the employment restrictions and otherwise complied with the terms of the Award Agreement. (See Your Obligations.) | ||
If JPMorgan Chase in its sole discretion determines that you are not in compliance with any of the foregoing employment restrictions applicable to you or if you fail to return the required release within the specified deadline or fail to certify your compliance with the Award Agreement as described above, your outstanding Stock Appreciation Awards will be cancelled. If the Firm discovers after shares have been distributed to you that you were not in compliance with such restrictions during any applicable time period, then you will be required to repay the gain on exercise (as of the exercise date) less withholding taxes or the number of any shares distributed to you. | ||
Death or Disability
|
If you die while employed by the Firm with outstanding Stock Appreciation Awards, then such outstanding Stock Appreciation Awards (whether or not exercisable as of the date of death) will become exercisable as of the date of death and will remain exercisable by your designated beneficiary until their Expiration Date. | |
If you die after your employment terminates, then any Stock Appreciation Awards then outstanding to you (whether or not exercisable as of the date of death) will become exercisable as of the date of death and may be exercised by your designated beneficiary for the period that you could have exercised such Stock Appreciation Awards. | ||
For these purposes, your beneficiary is the designated beneficiary on file with the Human Resources Department, or if no beneficiary has been designated or survives you, then your estate. | ||
In the event your employment terminates as a result of your permanent and total disability as defined in the JPMorgan Chase & Co. Long Term Disability Plan (or for non-U.S. employees the equivalent local country plan), your outstanding Stock Appreciation Awards will continue to be subject to the same employment restrictions as described above for Retirement and your award will become exercisable on the date(s) specified in your Award Agreement and will remain exercisable up to its Expiration Date. |
January 20, 2005 Stock Appreciation
Awards (continued...) |
||
Your Obligations
|
As consideration for the grant of this award, you agree to comply with and be bound by the following: | |
· Non-Solicitation of
Employees and
Customers:
|
During your employment by the Firm and for the one year period following the termination of your employment, or if longer, during the period that your Stock Appreciation Awards remain outstanding, you will not directly or indirectly, whether on your own behalf or on behalf of any other party, without the prior written consent of the Director Human Resources of JPMorgan Chase: (i) solicit or encourage any of the Firms then current employees to leave the Firm or to apply for employment elsewhere; (ii) hire any employee or former employee who was employed by the Firm at the date your employment terminated, unless the individuals employment terminated more than six months before the date of hire or because his or her job was eliminated; or (iii) solicit or induce or attempt to induce to leave the Firm, or divert or attempt to divert from doing business with the Firm, any then current customers, suppliers or other persons or entities that were serviced by you or whose names became known to you by virtue of your employment with the Firm, or otherwise interfere with the relationship between the Firm and such customers, suppliers or other persons or entities. This does not apply to publicly known institutional customers that you service after your employment with the Firm without the use of the Firms confidential or proprietary information. | |
These restrictions do not apply to authorized actions you take in the normal course of your employment with the Firm, such as employment decisions with respect to employees you supervise or business referrals in accordance with the Firms policies. | ||
· Confidential Information:
|
You may not, either during your employment with the Firm or thereafter, directly or indirectly use or disclose to anyone any confidential information related to the Firms business, except as explicitly permitted by the JPMorgan Chase Code of Conduct and applicable policies or law or legal process. Confidential information shall have the same meaning for the Award Agreement as it has in the JPMorgan Chase Code of Conduct. | |
· Non-Disparagement:
|
You may not, either during your employment with the Firm or thereafter, make or encourage others to make any statement or release any information that is intended to, or reasonably could be foreseen to, embarrass or criticize the Firm or its employees, directors or shareholders as a group. This shall not preclude you from responding truthfully to questions or requests for information to the government, a regulator or in a court of law in connection with a legal or regulatory investigation or proceeding. | |
· Compliance with Award Agreement:
|
You agree that you will provide the Firm with any information reasonably requested to determine compliance with the Award Agreement, and you authorize the Firm to disclose the terms of the Award Agreement to any third party who might be affected thereby, including your prospective employer. | |
Remedies
|
If you violate any of the provisions as set forth above in Your Obligations, all outstanding Stock Appreciation Awards under your award will be immediately cancelled. | |
In addition, if you received shares under this award during the one year prior to (i) the violation of any of these obligations or (ii) the termination of your employment for Cause, you will be required to pay the Firm liquidated damages by returning to the Firm either (i) a cash amount equal to the gain on exercise (as of the exercise date) less withholding taxes, or (ii) the net number of shares of Common Stock that were distributed pursuant to the exercise. | ||
You agree that this payment will be liquidated damages and is not to be construed in any manner as a penalty. You acknowledge that a violation or attempted violation of these obligations will cause immediate and irreparable damage to the Firm, and therefore agree that the Firm shall be entitled as a matter of right to an injunction, from any court of competent jurisdiction, restraining any violation or further violation of such terms; such right to an injunction, however, shall be cumulative and in addition to whatever other remedies the Firm may have under law or equity. In any action or proceeding by the Firm to enforce the terms and conditions of this Award Agreement where the Firm is the prevailing party, the Firm shall be entitled to recover from you its reasonable attorneys fees and expenses incurred in such action or proceeding. |
January 20, 2005 Stock Appreciation
Awards (continued...) |
||
Not a Shareholder Until Exercise
|
You shall not be deemed for any purpose to be or have rights as a shareholder of JPMorgan Chase with respect to the shares of Common Stock subject to Stock Appreciation Awards until such Stock Appreciation Awards are exercised. No adjustments shall be made for cash dividends or distributions or other rights for which the record date is prior to the date you become a shareholder of record of JPMorgan Chase. Shares upon exercise will be issued in accordance with JPMorgan Chases procedures for issuing stock. | |
Administrative Provisions
|
The Award Agreement will be binding upon any successor in interest to JPMorgan Chase, by merger or otherwise. | |
The exercise of Stock Appreciation Awards shall be in accordance with the Firms procedures for exercises of such awards. The date of exercise shall be the date when the properly completed notice of exercise is received and accepted by the Firm or its designee in accordance with the Firms procedures. | ||
Except as provided in the next succeeding sentence, Stock Appreciation Awards shall not be assignable or transferable or subject to any lien, obligation or liability. You may make a gift of unexpired, unexercised Stock Appreciation Awards, subject to the Firms prior consent, to an immediate family member or a trust (or similar vehicle) for the benefit of these immediate family members (or beneficiaries) as defined below. JPMorgan Chase may condition its prior consent to receipt of an agreement by you and proposed transferee containing such terms and conditions and undertakings as JPMorgan Chase deems appropriate in its sole and absolute discretion. No attempted transfer will be valid without the Firms prior consent. Immediate family members include your parents, parents-in-law, children (including adopted children), grandchildren, and siblings or a trust exclusively for the benefit of one or more of these immediate family members. Your spouse is an Immediate Family Member but only if Stock Appreciation Awards are transferred to a trust (or similar vehicle) for the benefit of such spouse, which trust includes one or more other Immediate Family Members as beneficiaries. | ||
JPMorgan Chase may, in its sole discretion and for any reason, cancel outstanding unexercised Stock Appreciation Awards and substitute an equal number of non-qualified stock options to purchase the same number of shares of common stock of JPMorgan Chase represented by the cancelled Stock Appreciation Awards. Such substituted options shall have the same exercise price, Expiration Date and other terms and conditions that were applicable to the Stock Appreciation Awards; provided that the method of exercise and the payment of exercise price, as well as the method of payment of withholding taxes, may be changed by JPMorgan Chase. | ||
Nothing contained in the Award Agreement constitutes a contract of continued employment. Employment is at-will and may be terminated by either you or JPMorgan Chase for any reason at any time. | ||
The Award Agreement, the Plan and Prospectus supercede any other agreement, whether written or oral, that may have been entered into by the Firm and you relating to this award. This Award Agreement may not be amended except in writing signed by the Director Human Resources of JPMorgan Chase. | ||
If any portion of the above provisions is found to be unenforceable, any court of competent jurisdiction may reform the restrictions as to time, geographical area or scope to the extent required to make the provision enforceable under applicable law. | ||
JPMorgan Chases failure to enforce any provision of the Award Agreement or similar awards and agreements, either with respect to you or other former or current employees, will not constitute a waiver of its right to enforce the Award Agreement with respect to any prior or subsequent breach of the Award Agreement, including the right to pursue any and all available remedies for the breach. | ||
To the extent not preempted by federal law, the laws of the state of New York (without reference to conflict of law principles) will apply to this award and the Plan. |
January 20, 2005 Stock Appreciation
Awards (continued...) |
||
The Director Human Resources has sole and complete authority to interpret and administer this Award Agreement, including, without limitation, the power to (i) interpret the Plan and the terms of this Award Agreement; (ii) determine the reason for termination of employment and application of the employment restrictions; (iii) decide all claims arising with respect to this Award; and (iv) delegate such authority as he deems appropriate. Any determination by the Director Human Resources shall be binding on all parties. | ||
The Board of JPMorgan Chase and the Compensation and Management Development Committee of the Board reserve the right to amend this Award Agreement at any time and for any reason before a change in control of JPMorgan Chase, as such term is defined by the Board from time to time. After a change in control of JPMorgan Chase, this Award Agreement may not be amended in any way that is adverse to your interests without your prior written consent. | ||
Definitions
|
Cause means (i) breach of any rule or regulation of any regulatory authority having jurisdiction over the Firm; (ii) indictment or conviction of a felony or for any fraudulent act, embezzlement, theft or a crime of moral turpitude; (iii) failure to perform your duties or abide by the work ethic of the Firm or to follow reasonable directives of your manager within the scope of your duties; (iv) a violation of the JPMorgan Chase Code of Conduct or human resources policies; (v) any act or failure to act that is injurious to the Firm, monetarily or otherwise, in each case as determined in the sole discretion of the Director Human Resources or his delegate. | |
Competitor means a business enterprise that engages in any activity or owns or controls a significant interest in any entity that engages in any activity that, in either case, competes with any activity in which the Firm is engaged in any place in the world. The determination of whether you are working for a Competitor is in the Firms sole discretion. | ||
Cumulative Service has the meaning set forth in the JPMorgan Chase Retirement Plan. | ||
A Not-for-Profit Organization means an entity exempt from tax under state law and exempt from tax under Section 501(c)(3) of the Internal Revenue Code. Section 501(c)(3) includes entities organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes, or to foster national or international amateur sports competition or for the prevention of cruelty to children or animals. |
Subject to acceptance of this Award Agreement including its Terms and Conditions, you are awarded below stock appreciation rights referred to as Stock Appreciation Awards. Stock Appreciation Awards entitle you, upon exercise, to receive from JPMorgan Chase without payment a number of shares of JPMorgan Chase Common Stock, the Fair Market Value of which, as of the exercise date, is equal to the excess of the Fair Market Value of one share of such Common Stock on such exercise date over the Exercise Price per Stock Appreciation Award (set forth below) multiplied by the number of Stock Appreciation Awards being exercised. |
Grant Date: | October 20, 2005 | The exercisable schedule for this award is as follows: | ||||
Number Granted:
|
Number | Exercisable Dates | ||||
Exercise Price:
|
$34.78 | October 20, 2008 | ||||
Expiration Date:
|
October 20, 2015 | October 20, 2009 October 20, 2010 |
Grantee:
|
JPMorgan Chase & Co. | |
Date:
|
/s/ John J. Farrell |
Award Agreement
|
These terms and conditions are made part of the Award Agreement dated as of October 20, 2005 (Grant Date) awarding stock appreciation rights (referred to as Stock Appreciation Awards) pursuant to the terms of the JPMorgan Chase & Co. 2005 Long-Term Incentive Plan (Plan). To the extent the terms of the Award Agreement (all references to which will include these terms and conditions) conflict with the Plan, the Plan will govern. The Award Agreement, the Plan and Prospectus supercede any other agreement, whether written or oral, that may have been entered into by the Firm and you relating to this award. | |
The grant of this award is contingent upon your acceptance of this Award Agreement. Unless you decline by the deadline and in the manner specified in the Award Agreement, you will have accepted this award and be bound by these terms and conditions, effective as of the Grant Date. If you decline the award, the award will not become effective and will be cancelled as of the Grant Date. | ||
Capitalized terms that are not defined in the Award Agreement will have the same meaning as set forth in the Plan. | ||
JPMorgan Chase & Co. will be referred to throughout the Award Agreement as JPMorgan Chase, and together with its subsidiaries as the Firm. | ||
Form and Purpose of Award
|
Stock Appreciation Awards represent the right, following exercise, to receive (without payment), a number of shares of JPMorgan Chase Common Stock, the Fair Market Value of which, as of the date of exercise, is equal to the excess of the Fair Market Value of one share of such Common Stock on such exercise date over the Exercise Price, multiplied by the number of Stock Appreciation Awards being exercised. The Firm will retain from each distribution the number of shares of Common Stock required to satisfy tax withholding obligations. | |
The purpose of this award is to motivate your future performance and to align your interests with those of the Firm and its shareholders. | ||
Exercisable Dates/Expiration Date
|
Your award will become exercisable on the Exercisable Dates set forth in your Award Agreement, provided that you are continuously employed by the Firm from the date of grant through the relevant Exercisable Date or you meet the requirements to allow your award to remain outstanding upon termination of employment as described below. Your award will remain exercisable until the earlier of the tenth anniversary of the Grant Date (the Expiration Date) or the date the award is cancelled pursuant to this Award Agreement. No Stock Appreciation Award may be exercised after its Expiration Date. | |
Termination of Employment
|
Except as explicitly set forth below, any Stock Appreciation Awards outstanding under this award will be cancelled effective on the date your employment with the Firm terminates for any reason. | |
Job Elimination: | ||
In the event that the Director Human Resources of the Firm or his nominee in his sole discretion determines that the Firm terminated your employment because your job was eliminated, then any Stock Appreciation Awards that were exercisable on your termination date will remain exercisable for the ninety day period immediately following your termination date, but in no event beyond the Expiration Date. In the case of a job elimination as described above, if your termination date is on or after October 20, 2006 and prior to October 20, 2008, then twenty percent of your Stock Appreciation Award will become exercisable on |
October 20, 2005 Stock
Appreciation Awards (continued...)
|
the date your employment terminates and will remain exercisable for the ninety day period following your employment termination date. | |
You must timely execute and deliver a release of claims in favor of the Firm, having such form and terms as the Firm shall specify, to have all or any portion of your award remain exercisable for such ninety day period. If you fail to return the required release within the specified deadline, your outstanding Stock Appreciation Awards will be cancelled. In the event that you meet the requirements for both job elimination and retirement as described in the following section, you will be accorded job elimination treatment for the purposes of your award. | ||
Retirement: | ||
If your employment terminates for reasons other than Cause after you reach age 55 and complete at least 15 years of Cumulative Service of which at least the 5 years immediately preceding termination of employment are continuous, then any Stock Appreciation Awards that were exercisable as of the date of your termination will remain exercisable for a ninety day period following your termination date but in no event beyond the Expiration Date. | ||
Death or Total Disability: | ||
In lieu of the number of Stock Appreciation Awards that become exercisable as set forth in your Award Agreement, if you die while employed by the Firm, or in the event your employment terminates as a result of your permanent and total disability as defined in the JPMorgan Chase & Co. Long Term Disability Plan (or for non-U.S. employees the equivalent local country plan), then twenty percent of your award will become exercisable for each completed year of service from the Grant Date to the date of your termination of employment. Such outstanding Stock Appreciation Awards will remain exercisable by you (or your beneficiary in the case of your death) for a ninety-day period following the date of termination of your employment but in no event beyond the Expiration Date. In the case of death, your beneficiary is the designated beneficiary on file with the Human Resources Department, or if no beneficiary has been designated or survives you, then your estate. | ||
Any Stock Appreciation Awards that are not exercised within the applicable 90-day period set forth above will be cancelled. | ||
The definitions of Cause and Cumulative Service are found on page 5. | ||
Restriction on Disposition of Shares
Derived from an Exercise Under this
Award
|
If you exercise any part of your award before the fifth anniversary of the Grant Date, then you may not sell, assign, transfer, pledge or encumber the net number of shares of Common Stock derived from such exercise until the fifth anniversary of the Grant Date. Notwithstanding the foregoing, this restriction on disposition and transfer of shares shall not apply to your beneficiary in the event of your death. | |
Your Obligations
|
As consideration for the grant of this award, you agree to comply with and be bound by the following: | |
Non-Solicitation of
Employees and Customers:
|
During your employment by the Firm and for one year following the termination of your employment, you will not directly or indirectly, whether on your own behalf or on behalf of any other party, without the prior written consent of the Director Human Resources of JPMorgan Chase: (i) solicit or encourage any of the Firms then current employees to leave the Firm or to apply for employment elsewhere; |
3
October 20, 2005 Stock
Appreciation Awards (continued...)
|
||
(ii) hire any employee or former employee who was employed by the Firm at the date your employment terminated, unless the individuals employment terminated more than six months before the date of hire or because his or her job was eliminated; or (iii) solicit or induce or attempt to induce to leave the Firm, or divert or attempt to divert from doing business with the Firm, any then current customers, suppliers or other persons or entities that were serviced by you or whose names became known to you by virtue of your employment with the Firm, or otherwise interfere with the relationship between the Firm and such customers, suppliers or other persons or entities. This does not apply to publicly known institutional customers that you service after your employment with the Firm without the use of the Firms confidential or proprietary information. | ||
These restrictions do not apply to authorized actions you take in the normal course of your employment with the Firm, such as employment decisions with respect to employees you supervise or business referrals in accordance with the Firms policies. | ||
Confidential Information:
|
You may not, either during your employment with the Firm or thereafter, directly or indirectly use or disclose to anyone any confidential information related to the Firms business, except as explicitly permitted by the JPMorgan Chase Code of Conduct and applicable policies or law or legal process. Confidential information shall have the same meaning for the Award Agreement as it has in the JPMorgan Chase Code of Conduct. | |
Non-Disparagement:
|
You may not, either during your employment with the Firm or thereafter, make or encourage others to make any public statement or release any information that is intended to, or reasonably could be foreseen to, embarrass or criticize the Firm or its employees, directors or shareholders as a group. This shall not preclude you from reporting to the Firms management or directors or to the government or a regulator conduct you believe to be in violation of the law or the Firms Code of Conduct or responding truthfully to questions or requests for information to the government, a regulator or in a court of law in connection with a legal or regulatory investigation or proceeding. | |
Compliance with
Award Agreement:
|
You agree that you will provide the Firm with any information reasonably requested to determine compliance with the Award Agreement, and you authorize the Firm to disclose the terms of the Award Agreement to any third party who might be affected thereby, including your prospective employer. | |
Remedies
|
If you violate any of the provisions as set forth above in Your Obligations all outstanding Stock Appreciation Awards under your award and any shares that are subject to the restriction on disposition of shares described above will be immediately cancelled. | |
In addition, if you do not have shares subject to the restriction on disposition of shares but you received shares under this award resulting from an exercise during the one year prior to (i) the violation of any of these obligations or (ii) the termination of your employment for Cause, you will be required to pay the Firm liquidated damages by returning to the Firm either (i) a cash amount equal to the gain on exercise (as of the exercise date) less withholding taxes, or (ii) the net number of shares of Common Stock that were distributed pursuant to the exercise. | ||
You agree that this payment will be liquidated damages and is not to be construed in any manner as a penalty. You acknowledge that a violation or attempted violation of these obligations will cause immediate and irreparable damage to the Firm, and therefore agree that the Firm shall be entitled as a matter of right to an |
4
October 20, 2005 Stock
Appreciation Awards (continued...)
|
||
injunction, from any court of competent jurisdiction, restraining any violation or further violation of such terms; such right to an injunction, however, shall be cumulative and in addition to whatever other remedies the Firm may have under law or equity. In any action or proceeding by the Firm to enforce the terms and conditions of this Award Agreement where the Firm is the prevailing party, the Firm shall be entitled to recover from you its reasonable attorneys fees and expenses incurred in such action or proceeding. | ||
Not a Shareholder Until Exercise
|
You shall not be deemed for any purpose to be or have rights as a shareholder of JPMorgan Chase with respect to the shares of Common Stock subject to Stock Appreciation Awards until such Stock Appreciation Awards are exercised. No adjustments shall be made for cash dividends or distributions or other rights for which the record date is prior to the date you become a shareholder of record of JPMorgan Chase. Shares upon exercise will be issued in accordance with JPMorgan Chases procedures for issuing stock. | |
Administrative
Provisions
|
The Award Agreement will be binding upon any successor in interest to JPMorgan Chase, by merger or otherwise. | |
The exercise of Stock Appreciation Awards shall be in accordance with the Firms procedures for exercises of such awards. The date of exercise shall be the date when the properly completed notice of exercise is received and accepted by the Firm or its designee in accordance with the Firms procedures. If, according to local country tax regulations, a withholding tax liability arises at a time after the date of exercise, JPMorgan Chase may implement any procedures necessary to ensure that the withholding obligation is fully satisfied, including, but not limited to, restricting transferability of the shares. | ||
Except as provided in the next succeeding sentence, Stock Appreciation Awards shall not be assignable or transferable or subject to any lien, obligation or liability. You may make a gift of unexpired, unexercised Stock Appreciation Awards, subject to the Firms prior consent, to an immediate family member or a trust (or similar vehicle) for the benefit of these immediate family members (or beneficiaries) as defined below. JPMorgan Chase may condition its prior consent to receipt of an agreement by you and proposed transferee containing such terms and conditions and undertakings as JPMorgan Chase deems appropriate in its sole and absolute discretion. No attempted transfer will be valid without the Firms prior consent. Immediate family members include your parents, parents-in-law, children (including adopted children), grandchildren, and siblings or a trust exclusively for the benefit of one or more of these immediate family members. Your spouse is an Immediate Family Member but only if Stock Appreciation Awards are transferred to a trust (or similar vehicle) for the benefit of such spouse, which trust includes one or more other Immediate Family Members as beneficiaries. | ||
JPMorgan Chase may, in its sole discretion and for any reason, cancel outstanding unexercised Stock Appreciation Awards and substitute an equal number of non-qualified stock options to purchase the same number of shares of common stock of JPMorgan Chase represented by the cancelled Stock Appreciation Awards. Such substituted options shall have the same exercise price, Expiration Date and other terms and conditions that were applicable to the Stock Appreciation Awards; provided that the method of exercise and the payment of exercise price, as well as the method of payment of withholding taxes, may be changed by JPMorgan Chase. | ||
In the event you are approved for a voluntary discretionary leave in excess of one month, and any equivalent leaves globally as determined by region HR management (e.g., leaves that do not qualify as FMLA, Medical or Disability), |
5
October 20, 2005 Stock
Appreciation Awards (continued...)
|
||
the Exercisable Date of any outstanding Stock Appreciation Award will be extended by the length of the leave (rounded to full months) in accordance with the Firms policy for such leaves. | ||
Nothing contained in the Award Agreement constitutes a contract of continued employment. Employment is at-will and may be terminated by either you or JPMorgan Chase for any reason at any time. | ||
This Award Agreement may not be amended except in writing signed by the Director Human Resources of JPMorgan Chase. | ||
If any portion of the above provisions is found to be unenforceable, any court of competent jurisdiction may reform the restrictions as to time, geographical area or scope to the extent required to make the provision enforceable under applicable law. | ||
JPMorgan Chases failure to enforce any provision of the Award Agreement or similar awards and agreements, either with respect to you or other former or current employees, will not constitute a waiver of its right to enforce the Award Agreement with respect to any prior or subsequent breach of the Award Agreement, including the right to pursue any and all available remedies for the breach. | ||
To the extent not preempted by federal law, the laws of the state of New York (without reference to conflict of law principles) will apply to this award and the Plan. | ||
The Director Human Resources has sole and complete authority to interpret and administer this Award Agreement, including, without limitation, the power to (i) interpret the Plan and the terms of this Award Agreement; (ii) determine the reason for termination of employment and application of the post-employment obligations; (iii) decide all claims arising with respect to this Award; and (iv) delegate such authority as he deems appropriate. Any determination by the Director Human Resources shall be binding on all parties. | ||
The Board of JPMorgan Chase and the Compensation and Management Development Committee of the Board reserve the right to amend this Award Agreement at any time and for any reason before a change in control of JPMorgan Chase, as such term is defined by the Board from time to time. After a change in control of JPMorgan Chase, this Award Agreement may not be amended in any way that is adverse to your interests without your prior written consent. | ||
Definitions
|
Cause means (i) breach of any rule or regulation of any regulatory authority having jurisdiction over the Firm; (ii) indictment or conviction of a felony or for any fraudulent act, embezzlement, theft or a crime of moral turpitude; (iii) failure to perform your duties or abide by the work ethic of the Firm or to follow reasonable directives of your manager within the scope of your duties; (iv) a violation of the JPMorgan Chase Code of Conduct or human resources policies; (v) any act or failure to act that is injurious to the Firm, monetarily or otherwise, in each case as determined in the sole discretion of the Director Human Resources or his delegate. | |
Cumulative Service has the meaning set forth in the JPMorgan Chase Retirement Plan. |
6
| Upon any termination of employment with the Company (other than a termination by the Company for Cause) following the effective date, (1) all outstanding stock options granted prior to the effective date vest in full and become immediately exercisable (2) Company options granted prior to the effective date remain exercisable for not less than three years following the date of termination (or longer period as per terms, e.g., if executive satisfied retirement rule), but in no event longer than the original full term, and (3) non-compete provision of the restrictive covenants in the Company equity awards granted prior to the effective date lapses. |
| Without Cause by the Company or by the Executive for Good Reason: |
1. | Full vesting of all equity incentive awards including the initial restricted stock award granted July 1, 2004 (with other post-effective date awards vesting in accordance with their terms), with the Company options granted prior to the effective date remaining exercisable for three years following the date of termination (or longer period as per terms, e.g., if executive satisfies retirement rule), but in no event beyond the original full term and post-effective date option grants remaining exercisable in accordance with their terms unless a longer period is provided for pursuant to the terms of the JPMorgan Chase Executive Severance Policy; and | ||
2. | All other benefits provided under the JPMorgan Chase Executive Severance Policy to similarly-situated executives. Under JPMorgan Chases current severance policy, which as you know is subject to change at the discretion of the Company, you will be eligible for severance in case of involuntary termination, except for Cause, in an amount equal to two times current base salary, plus a further amount determined at the discretion of JPMorgan Chase. |
| For this purpose, Cause shall mean: (1) continued failure to perform duties or continued failure to abide by the written policies of the Company after notice and a reasonable opportunity to cure (provided that such written policies have been previously provided to |
Page 1 of 2
the executive); (2) gross misconduct which is demonstrably injurious to the Company; or (3) conviction or plea of guilty or nolo contendere to the commission of a felony. | |||
| For this purpose, Good Reason shall mean relocation from the location set forth above. | ||
| Death or Involuntary Termination due to Disability: full vesting of all equity incentive awards, with the Company options granted prior to the effective date remaining exercisable for not less than three years following the date of termination (or longer period as per terms, e.g., death, disability or retirement rule) and post-effective date grants remaining exercisable in accordance with their terms, but not beyond the original full term; other vested benefits. | ||
| Excise Tax Gross-Up: If any payments under this Agreement or otherwise are subject to Section 4999 of the Code, the executive will be paid an additional payment such that the executive will be placed in the same after-tax position as if no excise tax had been imposed, if the net after-tax benefit to the executive exceeds $100,000. |
| No mitigation or offset. | ||
| Governed by New York law. |
Page 2 of 2
Year ended December 31, 2005 (in millions, except ratios) | ||||
Excluding interest on deposits |
||||
Income before income taxes |
$ | 12,215 | ||
Fixed charges: |
||||
Interest expense |
15,074 | |||
One-third of rents, net of income from subleases(a) |
359 | |||
Total fixed charges |
15,433 | |||
Add: equity in undistributed loss of affiliates |
107 | |||
Earnings before taxes and fixed charges, excluding capitalized interest |
$ | 27,755 | ||
Fixed charges, as above |
$ | 15,433 | ||
Ratio of earnings to fixed charges |
1.80 | |||
Including interest on deposits |
||||
Fixed charges, as above |
$ | 15,433 | ||
Add: interest on deposits |
10,295 | |||
Total fixed charges and interest on deposits |
$ | 25,728 | ||
Earnings before taxes and fixed charges, excluding capitalized interest, as above |
$ | 27,755 | ||
Add: interest on deposits |
10,295 | |||
Total earnings before taxes, fixed charges and interest on deposits |
$ | 38,050 | ||
Ratio of earnings to fixed charges |
1.48 | |||
(a) | The proportion deemed representative of the interest factor. |
150
Year ended December 31, 2005 (in millions, except ratios) | ||||
Excluding interest on deposits |
||||
Income before income taxes |
$ | 12,215 | ||
Fixed charges: |
||||
Interest expense |
15,074 | |||
One-third of rents, net of income from subleases(a) |
359 | |||
Total fixed charges |
15,433 | |||
Add: equity in undistributed loss of affiliates |
107 | |||
Earnings before taxes and fixed charges, excluding capitalized interest |
$ | 27,755 | ||
Fixed charges, as above |
$ | 15,433 | ||
Preferred stock dividends (pre-tax) |
19 | |||
Fixed charges including preferred stock dividends |
$ | 15,452 | ||
Ratio of earnings to fixed charges and preferred stock dividend requirements |
1.80 | |||
Including interest on deposits |
||||
Fixed charges including preferred stock dividends, as above |
$ | 15,452 | ||
Add: interest on deposits |
10,295 | |||
Total fixed charges including preferred stock dividends and interest on deposits |
$ | 25,747 | ||
Earnings before taxes and fixed charges, excluding capitalized interest, as above |
$ | 27,755 | ||
Add: interest on deposits |
10,295 | |||
Total earnings before taxes, fixed charges and interest on deposits |
$ | 38,050 | ||
Ratio of earnings to fixed charges and preferred stock dividend requirements |
1.48 | |||
(a) | The proportion deemed representative of the interest factor. |
151
JPMorgan Chase had the following subsidiaries at December 31, 2005: | Percentage | |||||
of voting | ||||||
securities | ||||||
owned by | ||||||
Organized under the | immediate | |||||
Name | laws of | parent | ||||
BOI Leasing Corporation |
Indiana | 100 | % | |||
Banc One Building Management Corporation |
Wisconsin | 100 | ||||
Banc One Capital Holdings Corporation |
Ohio | 100 | ||||
BOCP Holdings Corporation |
Ohio | 100 | ||||
BOCF, LLC |
Delaware | 80 | (a) | |||
BOCNY, LLC |
Delaware | 100 | ||||
BOME Investors, Inc. |
Delaware | 100 | ||||
Banc One Capital Partners BC, LLC |
Ohio | 80 | ||||
Banc One Capital BIDCO-1998, LLC |
Louisiana | 100 | ||||
Banc One Capital Partners Holdings, Ltd. |
Ohio | 100 | ||||
Banc One Capital Partners II, LLC |
Delaware | 100 | ||||
Banc One Capital Partners, LLC |
Delaware | 100 | ||||
Banc One Capital Partners IV, Ltd. |
Ohio | 100 | ||||
Banc One Capital Partners V, Ltd. |
Ohio | 100 | ||||
Banc One Capital Partners VI, Ltd. |
Ohio | 100 | ||||
Banc One Stonehenge Capital Fund Wisconsin, LLC |
Delaware | 100 | ||||
Tax Credit Acquisitions II, LLC |
Ohio | 100 | ||||
Banc One Securities Corporation |
Ohio | 100 | ||||
Chase Investment Services Corp. |
Delaware | 100 | ||||
Banc One Deferred Benefits Corporation |
Ohio | 98 | ||||
Banc One Financial LLC |
Delaware | 100 | ||||
JPMorgan Capital Corporation |
Delaware | 100 | ||||
Bank One Investment Corporation |
Delaware | 100 | ||||
OEP Holding Corporation |
Delaware | 100 | ||||
OEP Management LLC |
Delaware | 93.75 | ||||
One Equity Partners II, L.P. |
Cayman Islands, BWI | 99.9 | ||||
One Equity Partners LLC |
Delaware | 99.8 | ||||
First Chicago Capital Corporation |
Delaware | 100 | ||||
JPMorgan Capital (Canada) Corp. |
Canada | 100 | ||||
One Mortgage Partners Corp. |
Vermont | 100 | ||||
First Chicago Equity Corporation |
Illinois | 100 | ||||
First Chicago Leasing Corporation |
Delaware | 100 | ||||
FCL Ship Fifteen, Inc. |
Delaware | 100 | ||||
FCL Ship Fourteen, Inc. |
Delaware | 100 | ||||
FM Holdings I, Inc. |
Delaware | 100 | ||||
FM Holdings II, Inc. |
Delaware | 100 | ||||
First Chicago Lease Holdings, Inc. |
Delaware | 100 | ||||
Palo Verde Leasing Corporation |
Delaware | 100 | ||||
First Chicago Lease Investments, Inc. |
Delaware | 100 | ||||
Fountains FSC, Ltd. |
Bermuda | 100 | ||||
GHML Holdings I, Inc. |
Delaware | 100 | ||||
GHML Holdings II, Inc. |
Delaware | 100 | ||||
GTC Fund III Holdings, Inc. |
Delaware | 100 | ||||
GTC Fund IV Holdings, Inc. |
Delaware | 100 | ||||
GTC Fund V Holdings, Inc. |
Delaware | 100 | ||||
JPMorgan Housing Corporation |
Delaware | 100 | ||||
Cooper Project, L.L.C. |
Delaware | 100 | ||||
NLTC Fund Holdings I, Inc. |
Delaware | 100 | ||||
OX FCL Two, Inc. |
Delaware | 100 | ||||
SAHP 130 Holdings, Inc. |
Delaware | 100 | ||||
JPMorgan Capital Management LLC |
Delaware | 100 |
152
Percentage | ||||||
of voting | ||||||
securities | ||||||
owned by | ||||||
Organized under the | immediate | |||||
Name | laws of | parent | ||||
Banc One Financial Services, Inc. |
Indiana | 100 | ||||
Banc One Insurance Holdings, Inc. |
Arizona | 100 | ||||
Banc One Insurance Company |
Vermont | 100 | ||||
Banc One Life Reinsurance Company |
Arizona | 100 | ||||
Chase Insurance Agency, Inc. |
Wisconsin | 100 | ||||
Chase Insurance Life and Annuity Company |
Illinois | 100 | ||||
Chase Insurance Life Company |
Illinois | 100 | ||||
Chase Insurance Life Company of New York |
New York | 100 | ||||
Banc One Kentucky Insurance Company |
Kentucky | 100 | ||||
Banc One Neighborhood Development Corporation |
Ohio | 100 | ||||
Bank One Trust Company, National Association |
United States | 100 | ||||
Bank One Education Finance Corporation |
Ohio | 100 | ||||
Bridge Acquisition Holdings, Inc. |
Delaware | 100 | ||||
CCC Holding, Inc. |
Delaware | 100 | ||||
Chase Commercial Corporation |
Delaware | 100 | ||||
CMRCC, Inc. |
New York | 100 | ||||
Chase Home Mortgage Corporation of the Southeast |
Florida | 100 | ||||
Chase Lincoln First Commercial Corporation |
Delaware | 100 | ||||
Chase Manhattan Realty Leasing Corporation |
New York | 100 | ||||
PV2-APS 150 Corporation |
Delaware | 100 | ||||
PV2-PNM December 35 Corporation |
Delaware | 100 | ||||
Palo Verde 1-PNM August 50 Corporation |
Delaware | 100 | ||||
Palo Verde 1-PNM December 75 Corporation |
Delaware | 100 | ||||
Chase Shareholder Services of California, Inc. |
Delaware | 100 | ||||
Chatham Ventures, Inc. |
New York | 100 | ||||
J.P. Morgan Partners (BHCA) , L.P. |
California | 80 | (b) | |||
J.P. Morgan Partners (SBIC), LLC |
California | 100 | ||||
Chemical Equity Incorporated |
New York | 100 | ||||
Chemical Investments, Inc. |
Delaware | 100 | ||||
Clintstone Properties Inc. |
New York | 100 | ||||
Hambrecht & Quist Group |
Delaware | 100 | ||||
Hambrecht & Quist California |
California | 100 | ||||
H&Q Holdings Inc. |
Delaware | 100 | ||||
Hambrecht & Quist Guaranty Finance, LLC |
California | 100 | ||||
Hatherley Insurance Ltd. |
Bermuda | 100 | ||||
Homesales, Inc. |
Delaware | 100 | ||||
J.P. Morgan Capital Financing Limited |
England | 100 | ||||
Aldermanbury Investments Limited |
England | 100 | ||||
J.P. Morgan Chase International Financing Limited |
England | 100 | ||||
Robert Fleming Holdings Limited |
England | 100 | ||||
Copthall Overseas Limited |
England | 100 | ||||
Robert Fleming (Luxembourg) (Joint Ventures) Sarl |
Luxembourg | 100 | ||||
Robert Fleming Investment Trust Limited |
England | 100 | ||||
J.P. Morgan Chase Community Development Corporation |
Delaware | 100 | ||||
J.P. Morgan Chase National Corporate Services, Inc. |
New York | 100 | ||||
J.P. Morgan Corporate Services Limited |
England | 100 | ||||
Robert Fleming Holdings Inc. |
Delaware | 100 | ||||
J.P. Morgan Equity Holdings, Inc. |
Delaware | 100 | ||||
CBD Holdings Ltd. |
Delaware | 100 | ||||
Chase Life & Annuity Co. |
Ohio | 100 | ||||
Chase Life & Annuity Company of New York |
New York | 100 | ||||
Great Lakes Insurance Company |
Delaware | 100 | ||||
CMC Holding Delaware Inc. |
Delaware | 100 | ||||
Chase Bank USA, National Association |
United States | 100 | ||||
Card Acquisition Funding LLC |
Delaware | 100 | ||||
Chase BankCard Services, Inc. |
Delaware | 100 | ||||
Chase Data Services Corporation |
Delaware | 100 | ||||
First USA Services, Inc. |
Delaware | 100 | ||||
First USA Management Services, Inc. |
Delaware | 100 | ||||
J.P. Morgan Investor Services Co. |
Delaware | 100 |
153
Percentage | ||||||
of voting | ||||||
securities | ||||||
owned by | ||||||
Organized under the | immediate | |||||
Name | laws of | parent | ||||
JPMorgan Insurance Agency, Inc. |
Delaware | 100 | ||||
Chase Re Limited |
Bermuda | 100 | ||||
J.P. Morgan Personal Wealth Management, Inc. |
Delaware | 100 | ||||
J.P. Morgan Trust Company of Delaware |
Delaware | 100 | ||||
J.P. Morgan Trust Company, National Association |
United States | 100 | ||||
Texas Commerce Shareholders Company |
Texas | 100 | ||||
J.P. Morgan Funding Corp. |
England | 99.99 | ||||
J.P. Morgan Futures Inc. |
Delaware | 100 | ||||
J.P. Morgan GT Corporation |
Delaware | 100 | ||||
J.P. Morgan International Holdings Corp. |
Delaware | 100 | ||||
J.P. Morgan Trust Company (Bahamas) Limited |
Bahamas | 100 | ||||
J.P. Morgan Trust Company (Cayman) Limited |
Cayman Islands, BWI | 100 | ||||
JPMAC Holdings Inc. |
Delaware | 100 | ||||
J.P. Morgan Invest Inc. |
Delaware | 100 | ||||
J.P. Morgan Retirement Plan Services LLC |
Delaware | 100 | ||||
J.P. Morgan Private Investments Inc. |
Delaware | 100 | ||||
J.P. Morgan Services Asia Holdings Limited |
Mauritius | 100 | ||||
J.P. Morgan Services India Private Limited |
India | 100 | ||||
J.P. Morgan Services Inc. |
Delaware | 100 | ||||
J.P. Morgan Ventures Corporation |
Delaware | 100 | ||||
DNT Asset Trust |
Delaware | 100 | ||||
Ventures Business Trust |
Delaware | 100 | ||||
J.P. Morgan Ventures Energy Corporation |
Delaware | 100 | ||||
JPMP Capital Corp. |
New York | 100 | ||||
J.P. Morgan Partners, LLC |
Delaware | 100 | ||||
JPMP Capital, LLC |
Delaware | 100 | ||||
J.P. Morgan Capital, L.P. |
Delaware | 99.5 | ||||
J.P. Morgan SBIC Holdings LLC |
Delaware | 100 | ||||
JPMCC Luxembourg Corporation |
Luxembourg | 100 | ||||
J.P. Morgan Capital Luxembourg S.a.r.l. |
Luxembourg | 100 | ||||
JPMCC Belgium S.P.R.L. |
Belgium | 100 | ||||
JPMCC Belgium (SCA) |
Belgium | 100 | ||||
J.P. Morgan Partnership Capital Corporation |
Delaware | 100 | ||||
J.P. Morgan Partnership Investment Corporation |
Delaware | 100 | ||||
J.P. Morgan Whitney Partnership Corporation |
Delaware | 100 | ||||
Peabody Real Estate Partnership Corporation |
Delaware | 100 | ||||
JPMorgan Asset Management Holdings Inc. |
Delaware | 100 | ||||
Highbridge Capital Management, LLC |
Delaware | 55 | ||||
J.P. Morgan Investment Management Inc. |
Delaware | 100 | ||||
JPMorgan Asset Management (Asia) Inc. |
Delaware | 100 | ||||
J.P. Morgan Fleming Asset Management (Japan) Limited |
Japan | 100 | ||||
JF Asset Management (Singapore) Limited |
Singapore | 100 | ||||
JF Asset Management International Limited |
British Virgin Islands | 100 | ||||
JF Asset Management Limited |
Hong Kong | 100 | ||||
JF Funds Limited |
Hong Kong | 100 | ||||
JF Asset Management (Taiwan) Limited (Chinese char. name prevails) |
Taiwan | 100 | ||||
JFAM Securities Taiwan Limited (Chinese char. name prevails) |
Taiwan | 100 | ||||
JPMorgan Asset Management (Canada) Inc. |
Canada | 100 | ||||
JPMorgan Asset Management International Limited |
England | 100 | ||||
JPMorgan Asset Management Holdings (UK) Limited |
England | 100 | ||||
JPMorgan Asset Management (UK) Limited |
England | 100 | ||||
J.P. Morgan Investment Management Limited |
England | 100 | ||||
JPMorgan Asset Management (London) Limited |
England | 100 | ||||
JPMorgan Asset Management Holdings (Luxembourg ) S.a r.l. |
Luxembourg | 100 | ||||
JPMorgan Asset Management (Europe) S.a.r.l. |
Luxembourg | 100 | ||||
JPMorgan Asset Management France SAS |
France | 100 | ||||
JPMorgan Asset Management Societa di Gestione del Risparmio SpA |
Italy | 99.9 | ||||
JPMorgan Asset Management Luxembourg S.A. |
Luxembourg | 100 | ||||
JPMorgan Asset Management Advisory Company S.a r.l. |
Luxembourg | 99.99 | ||||
JPMorgan Fleming srl |
Italy | 100 | ||||
JPMorgan Asset Management Marketing Limited |
England | 100 | ||||
JPMorgan Equity Plan Managers Limited |
England | 100 |
154
Percentage | ||||||
of voting | ||||||
securities | ||||||
owned by | ||||||
Organized under the | immediate | |||||
Name | laws of | parent | ||||
JPMorgan Funds Limited |
Scotland | 100 | ||||
JPMorgan Invest (UK) Limited |
England | 100 | ||||
JPMorgan Investments Limited |
England | 100 | ||||
Save & Prosper Insurance Limited |
England | 100 | ||||
Save & Prosper Pensions Limited |
England | 100 | ||||
JPMorgan Life Limited |
England | 100 | ||||
JPMorgan Chase Bank, Dearborn |
Michigan | 100 | ||||
Pierpont Real Estate Company |
Delaware | 100 | ||||
JPMorgan Chase Bank, National Association |
United States | 100 | ||||
Anexsys Holdings, Inc. |
Delaware | 100 | ||||
BOILL IHC, Inc. |
Nevada | 100 | ||||
Chase BankCard LLC |
Delaware | 100 | ||||
BONA Capital I, LLC |
Delaware | 100 | ||||
BONA Capital II, LLC |
Delaware | 100 | ||||
BOTAC, Inc. |
Nevada | 100 | ||||
Banc One Acceptance Corporation |
Ohio | 100 | ||||
Banc One Arizona Leasing Corporation |
Arizona | 100 | ||||
Banc One Building Corporation |
Illinois | 100 | ||||
Banc One Community Development Corporation |
Delaware | 100 | ||||
Banc One Equipment Finance, Inc. |
Indiana | 100 | ||||
Banc One Kentucky Vehicle Leasing Company |
Kentucky | 100 | ||||
Bank One International Corporation |
United States | 100 | ||||
Banc One POS Services Corporation |
Ohio | 100 | ||||
Banc One Real Estate Investment Corp. |
Delaware | 100 | ||||
Bank One Auto Securitization LLC |
Delaware | 100 | ||||
Bank One
Equity Investors - BIDCO, Inc. |
Louisiana | 100 | ||||
CSL Leasing Inc. |
Delaware | 100 | ||||
Cedar Hill International Corp. |
Delaware | 100 | ||||
Chase Access Services Corporation |
Delaware | 100 | ||||
Chase Auto Finance Corp. |
Delaware | 100 | ||||
Chase Community Development Corporation |
Delaware | 100 | ||||
Chase Education Holdings, Inc. |
Delaware | 100 | ||||
Chase Equipment Leasing Inc. |
Ohio | 100 | ||||
Chase Funding Corporation |
Delaware | 100 | ||||
Chase Home Finance Inc. |
Delaware | 100 | ||||
Chase Home Finance LLC |
Delaware | 100 | ||||
Chase Merchant Ventures, Inc. |
Delaware | 100 | ||||
Chase Mortgage Holdings, Inc. |
Delaware | 100 | ||||
Chase Preferred Capital Corporation |
Delaware | 100 | ||||
CPCC Delaware Statutory Trust |
Delaware | 100 | ||||
CPCC Texas Limited Partnership |
Texas | 95 | ||||
CPCC Massachusetts Business Trust |
Massachusetts | 100 | ||||
Chase Ventures Holdings, Inc. |
New Jersey | 100 | ||||
The Home Loan Group, LP |
California | 50 | ||||
Colson Services Corp. |
Delaware | 100 | ||||
Cross Country Insurance Company |
Vermont | 100 | ||||
FC Energy Finance I, Inc. |
Delaware | 100 | ||||
FC Energy Finance II, Inc. |
Delaware | 100 | ||||
FNBC Leasing Corporation |
Delaware | 100 | ||||
ICIB Fund I Holdings, Inc. |
Delaware | 100 | ||||
Genesis Holding Corporation |
Delaware | 100 | ||||
Harvest Opportunity Holdings Corp. |
New York | 100 | ||||
Independence Park Building Inc. |
Delaware | 100 | ||||
J.P. Morgan Alternative Asset Management, Inc. |
Delaware | 100 | ||||
J.P. Morgan Chase Custody Services, Inc. |
Delaware | 100 | ||||
J.P. Morgan Electronic Financial Services, Inc. |
New York | 100 | ||||
J.P. Morgan FCS Corporation |
Texas | 100 | ||||
J.P. Morgan International Inc. |
United States | 100 | ||||
Bank One International Holdings Corporation |
United States | 100 | ||||
Bank One Europe Limited |
England | 100 | ||||
J.P. Morgan International Finance Limited |
United States | 100 | ||||
Chase Manhattan Holdings Limitada |
Brazil | 99.99 |
155
Percentage | ||||||
of voting | ||||||
securities | ||||||
owned by | ||||||
Organized under the | immediate | |||||
Name | laws of | parent | ||||
Dearborn Merchant Services, Inc |
Canada | 100 | ||||
Inversiones Y Asesorias Chase Manhattan Limitada |
Chile | 99.94 | ||||
J.P. Morgan & Cie S.A. |
France | 100 | ||||
J.P. Morgan (S.E.A.) Limited |
Singapore | 70 | (c) | |||
J.P. Morgan (Suisse) SA |
Switzerland | 100 | ||||
J.P. Morgan Bank (Ireland) plc |
Republic of Ireland | 100 | ||||
J.P. Morgan Bank International LLC |
Russian Federation | 98 | ||||
J.P. Morgan Bank Luxembourg S.A. |
Luxembourg | 99.99 | ||||
J.P. Morgan Beteiligungs-und Verwaltungsgesellschaft mbH |
Germany | 99.8 | ||||
J.P. Morgan AG |
Germany | 100 | ||||
J.P. Morgan Fonds Services GmbH |
Germany | 100 | ||||
J.P. Morgan Capital Holdings Limited |
England | 72.72 | (d) | |||
CaTO Finance II C.V. |
Netherlands | 98.79 | ||||
CaTO Finance V Limited Partnership |
England | 99 | ||||
J.P. Morgan Chase (UK) Holdings Limited |
England | 100 | ||||
J.P. Morgan Chase International Holdings |
England | 100 | ||||
Crosby Sterling (Holdings) Limited |
England | 100 | ||||
J.P. Morgan EU Holdings Limited |
England | 100 | ||||
J.P. Morgan Equities Limited |
South Africa | 100 | ||||
J.P. Morgan Europe Limited |
England | 91.62 | (e) | |||
J.P. Morgan Markets LLP |
England | 36.02 | (f) | |||
J.P. Morgan Chase Finance Limited |
England | 65 | (g) | |||
J.P. Morgan Securities Ltd. |
England | 98.95 | ||||
Robert Fleming (Overseas) Number 2 Limited |
England | 100 | ||||
J.P. Morgan plc |
England | 100 | ||||
Crosby Sterling Limited |
England | 100 | ||||
J.P. Morgan Trustee and Depositary Company Limited |
England | 100 | ||||
J.P. Morgan Luxembourg International S.a.r.l. |
Luxembourg | 99.99 | ||||
J.P. Morgan Chase Bank Berhad |
Malaysia | 100 | ||||
J.P. Morgan Chile Limitada |
Chile | 99.8 | ||||
J.P. Morgan Funding South East Asia Private Limited |
Singapore | 100 | ||||
J.P. Morgan Grupo Financiero S.A. De C.V. |
Mexico | 99.46 | ||||
Banco J.P. Morgan S.A., Institucion de Banca Multiple, J.P. Morgan Grupo Financiero |
Mexico | 100 | ||||
J.P. Morgan Holdings (Hong Kong) Limited |
Hong Kong | 100 | ||||
Copthall Mauritius Investment Limited |
Mauritius | 100 | ||||
J.P. Morgan Futures (Korea) Limited |
South Korea | 100 | ||||
J.P. Morgan Securities (Far East) Limited |
Hong Kong | 100 | ||||
J.P. Morgan Broking (Hong Kong) Limited |
Hong Kong | 100 | ||||
J.P. Morgan International Derivatives Ltd. |
Channel Islands | 100 | ||||
J.P. Morgan International Holdings Limited |
Cayman Islands, BWI | 100 | ||||
Fledgeling Nominees International Limited |
Cayman Islands, BWI | 100 | ||||
J.P. Morgan India Securities Holdings Limited |
Mauritius | 100 | ||||
J.P. Morgan India Private Limited |
India | 99.99 | ||||
J.P. Morgan Indonesia Holdings (B.V.I.) Limited |
British Virgin Islands | 100 | ||||
J.P. Morgan Securities (Taiwan) Limited |
Taiwan | 80 | (h) | |||
J.P. Morgan Securities Holdings (Bermuda) Limited |
Bermuda | 100 | ||||
J.P. Morgan Securities Singapore Private Limited |
Singapore | 100 | ||||
PGW Limited |
Thailand | 100 | ||||
JPMorgan Securities (Malaysia) Sdn. Bhd. |
Malaysia | 100 | ||||
Jadeling Malaysia Holdings Limited |
British Virgin Islands | 100 | ||||
J.P. Morgan Investimentos e Financas Ltda. |
Brazil | 99.79 | ||||
J.P. Morgan Malaysia Ltd. |
Malaysia | 100 | ||||
J.P. Morgan Overseas Capital Corporation |
Delaware | 100 | ||||
J.P. Morgan Australia Group Pty Limited |
Australia | 100 | ||||
J.P. Morgan Operations Australia Limited |
Australia | 100 | ||||
J.P. Morgan Administrative Services Australia Limited |
Australia | 100 | ||||
J.P. Morgan Australia Limited |
New South Wales | 100 | ||||
J.P. Morgan Financial Services New Zealand Limited |
Australia | 100 | ||||
J.P. Morgan Institutional Services Australia Limited |
Australia | 100 | ||||
J.P. Morgan Nominees Australia Limited |
Australia | 100 | ||||
J.P. Morgan Portfolio Services Limited |
Australia | 100 |
156
Percentage | ||||||
of voting | ||||||
securities | ||||||
owned by | ||||||
Organized under the | immediate | |||||
Name | laws of | parent | ||||
J.P. Morgan Trust Australia Limited |
Australia | 100 | ||||
JFOM Pty Limited |
Australia | 100 | ||||
Edrus Limited |
Australia | 100 | ||||
J.P. Morgan Markets Australia Pty Limited |
Australia | 100 | ||||
J.P. Morgan Espana S.A. |
Spain | 100 | ||||
JPMorgan Gestion, Sociedad Gestora de Instituciones de Inversion Colectiva, S.A. |
Spain | 100 | ||||
JPMorgan Sociedad de Valores, S.A. |
Spain | 79 | (i) | |||
J.P. Morgan International Bank Limited |
England | 100 | ||||
J.P. Morgan Securities Canada Inc. |
Canada | 100 | ||||
J.P. Morgan Whitefriars Inc. |
Delaware | 100 | ||||
J.P. Morgan Whitefriars (UK) |
England | 99.99 | ||||
PT J.P. Morgan Securities Indonesia |
Indonesia | 42.5 | (j) | |||
J.P. Morgan Partners (CMB Reg K GP), Inc. |
Delaware | 100 | ||||
J.P. Morgan Scotland (Services) Ltd. |
England | 100 | ||||
J.P. Morgan Securities (C.I.) Limited |
Channel Islands | 100 | ||||
J.P. Morgan (Jersey) Limited |
Channel Islands | 100 | ||||
J.P. Morgan Securities Asia Private Limited |
Singapore | 78.47 | (k) | |||
J.P. Morgan Securities Holdings (Hong Kong) Limited |
Hong Kong | 86.38 | (l) | |||
J.P. Morgan Securities (Asia Pacific) Limited |
Hong Kong | 100 | ||||
J.P. Morgan Securities Holdings (Caymans) Limited |
Cayman Islands, BWI | 100 | ||||
J.P. Morgan Securities India Private Limited |
India | 99.99 | ||||
J.P. Morgan Securities South Africa (Proprietary) Limited |
South Africa | 100 | ||||
J.P. Morgan Services Japan Ltd. |
Delaware | 100 | ||||
J.P. Morgan Trust Bank Ltd. |
Japan | 72.16 | (m) | |||
J.P. Morgan Trust Company (Jersey) Limited |
Channel Islands | 100 | ||||
JPMorgan Chase Vastera International Corp. |
Delaware | 100 | ||||
Vastera Bermuda LP |
Bermuda | 99.99 | ||||
JPMorgan Securities (Thailand) Limited |
Thailand | 50.1 | (n) | |||
JPMorgan Securities Preparation KK |
Japan | 100 | ||||
NorChem Participacoes e Consultoria S.A. |
Brazil | 50 | ||||
Norchem Holdings e Negocios S.A. |
Brazil | 48.97 | (o) | |||
BOL Canada II Sub, Inc. |
Delaware | 100 | ||||
BOL Canada II Trust |
Delaware | 100 | ||||
BO Leasing II ULC |
Canada | 100 | ||||
BOL Canada I, Inc. |
Delaware | 100 | ||||
BOL Canada I Sub, Inc. |
Delaware | 100 | ||||
BO Leasing I ULC |
Canada | 100 | ||||
BOL Canada III, Inc. |
Delaware | 100 | ||||
BOL Canada III Sub, Inc. |
Delaware | 100 | ||||
BO Leasing III ULC |
Canada | 100 | ||||
Banco J.P. Morgan S.A. |
Brazil | 99.27 | ||||
J.P. Morgan Corretora de Cambio e Valores Mobiliarios S.A. |
Brazil | 100 | ||||
J.P. Morgan S.A. Distribuidora de Titulos e Valores Mobiliarios |
Brazil | 100 | ||||
Bedford Holdings, Inc. |
Delaware | 100 | ||||
Willard Holdings, Inc. |
Delaware | 100 | ||||
Woodward Holdings, Inc. |
Delaware | 100 | ||||
J.P. Morgan Mortgage Acquisition Corp. |
Delaware | 100 | ||||
J.P. Morgan Mortgage Capital Inc. |
Delaware | 100 | ||||
J.P. Morgan Partners (23A SBIC Manager), Inc. |
Delaware | 100 | ||||
J.P. Morgan Partners (23A SBIC), L.P. |
Delaware | 80 | (p) | |||
J.P. Morgan Property Exchange Inc. |
Delaware | 100 | ||||
J.P. Morgan Treasury Technologies Corporation |
Delaware | 100 | ||||
JPMorgan Chase Vastera, Inc. |
Delaware | 100 | ||||
Vastera Solution Services Corporation |
Delaware | 100 | ||||
JPMorgan Investment Advisors Inc. |
Ohio | 100 | ||||
Security Capital Research & Management Incorporated |
Delaware | 100 | ||||
JPMorgan Merger Subsidiary Inc. |
Delaware | 100 | ||||
Kscott Holding Corp. |
Delaware | 100 | ||||
Liberty Payment Services, Inc. |
Kentucky | 100 | ||||
Manufacturers Hanover Leasing International Corp. |
Delaware | 100 | ||||
Chase Leasing of Texas, Inc. |
Delaware | 100 |
157
Percentage | ||||||
of voting | ||||||
securities | ||||||
owned by | ||||||
Organized under the | immediate | |||||
Name | laws of | parent | ||||
Naugatuck Holding Corp. |
Delaware | 100 | ||||
Orcas Island Corp. |
Delaware | 100 | ||||
South Cutler Corporation |
Delaware | 100 | ||||
Systems & Services Technologies, Inc. |
Delaware | 100 | ||||
JPMorgan Distribution Services, Inc. |
Delaware | 100 | ||||
JPMorgan Funds Management, Inc. |
Delaware | 100 | ||||
JPMorgan Mezzanine Corporation |
Delaware | 100 | ||||
JPMorgan Securities Holdings LLC |
Delaware | 100 | ||||
J.P. Morgan Institutional Investments Inc. |
Delaware | 100 | ||||
J.P. Morgan Securities Inc. |
Delaware | 100 | ||||
Neovest Holdings, Inc. |
Delaware | 100 | ||||
Neovest, Inc. |
Utah | 100 | ||||
JPMorgan Special Situations Asia LLC |
Delaware | 100 | ||||
J.P. Morgan Investment Holdings II (Mauritius) Limited |
Mauritius | 67 | ||||
Tong Yuan Asset Management Limited Liability Company |
China | 90 | ||||
Silver Peak Investments (Mauritius) Limited |
Mauritius | 100 | ||||
LabMorgan Corporation |
Delaware | 100 | ||||
LabMorgan Investment Corporation |
Delaware | 100 | ||||
MorServ, Inc. |
Delaware | 100 | ||||
NBD Community Development Corporation |
Michigan | 100 | ||||
Offshore Equities, Inc. |
New York | 100 | ||||
Park Assurance Company |
Vermont | 100 | ||||
Special Situations Investing Inc. |
Delaware | 100 | ||||
Support Development Corporation |
Delaware | 100 | ||||
(a) | JPMorgan Capital Corporation owns 20%. | |
(b) | JPMP Master Fund Manager, L.P. owns 20%. | |
(c) | J.P. Morgan International Finance Limited owns 30%. | |
(d) | J.P. Morgan Overseas Capital Corporation owns 27.27%. | |
(e) | J.P. Morgan International Finance Limited owns 8.38%. | |
(f) | J.P. Morgan plc, J.P. Morgan Securities Ltd. and J.P. Morgan Whitefriars (UK) owns 27.07%, 27.29% and 9.62%, respectively. | |
(g) | J.P. Morgan Securities Ltd. owns 35%. | |
(h) | Robert Fleming Investment Trust Limited and JF Securities Overseas Limited each own 10%. | |
(i) | J.P. Morgan & Cie S.A. and J.P. Morgan Securities Ltd., respectively, own 19% and 2%. | |
(j) | J.P. Morgan Indonesia Holdings (B.V.I.) Limited and J.P. Morgan Securities Asia Private Limited own 42.5% and 13.75%, respectively. | |
(k) | J.P. Morgan Securities Holdings (Bermuda) Limited and J.P. Morgan Luxembourg International S.a.r.l. respectively own 11.53% and 10%. | |
(l) | J.P. Morgan Securities Asia Private Limited owns 10.77%. J.P. Morgan Securities (Far East) Limited owns 2.85%. | |
(m) | J.P. Morgan & Cie S.A. owns 27.84%. | |
(n) | J.P. Morgan International Finance Limited and J.P. Morgan International Holdings Limited own 30.28% and 19.61%, respectively. | |
(o) | Chase Manhattan Holdings Limitada owns 29.27%. | |
(p) | JPMP Master Fund Manager, L.P. owns 20%. |
158
159
1. | I have reviewed this annual report on Form 10-K of JPMorgan Chase & Co.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the Consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b) | Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ William B. Harrison, Jr. | ||||
William B. Harrison, Jr. |
||||
Chairman of the Board | ||||
160
1. | I have reviewed this annual report on Form 10-K of JPMorgan Chase & Co.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the Consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b) | Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ James Dimon | ||||
James Dimon |
||||
President and Chief Executive Officer | ||||
161
1. | I have reviewed this annual report on Form 10-K of JPMorgan Chase & Co.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the Consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b) | Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Michael J. Cavanagh | ||||
Michael J. Cavanagh |
||||
Executive Vice President and Chief Financial Officer | ||||
162
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of JPMorgan Chase & Co. |
Date: March 8, 2006 | By: | /s/ William B. Harrison, Jr. | ||
William B. Harrison, Jr. |
||||
Chairman of the Board | ||||
Date: March 8, 2006 | By: | /s/ James Dimon | ||
James Dimon |
||||
President and Chief Executive Officer | ||||
Date: March 8, 2006 | By: | /s/ Michael J. Cavanagh | ||
Michael J. Cavanagh |
||||
Executive Vice President and Chief Financial Officer | ||||
163