Exhibit 4.2
FORM OF CERTIFICATE OF DESIGNATIONS
OF
__________ [CONVERTIBLE] [NONCUMULATIVE] [CUMULATIVE]
PREFERRED STOCK
OF
J.P. MORGAN CHASE & CO.
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
J.P. MORGAN CHASE & CO., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), HEREBY CERTIFIES that the
following resolutions were duly adopted by the Board of Directors of the
Corporation on ___________ and by the Stock Committee of the Board of Directors
on ___________, respectively, pursuant to authority conferred upon the Board of
Directors by the provisions of the Restated Certificate of Incorporation of the
Corporation which authorize the issuance of up to 200,000,000 shares of
preferred stock of $1 par value per share (the "Preferred Stock"), and pursuant
to authority conferred upon the Stock Committee of the Board of Directors by
Section 141(c) of the General Corporation Law of the State of Delaware, by the
By-Laws of the Corporation and by the resolutions of the Board of Directors
adopted at a meeting duly convened and held on __________, _____:
1. The Board of Directors on ____________, _____ adopted, among other
resolutions, the following resolutions authorizing a Stock Committee of the
Board of Directors to act on behalf of the Board of Directors in connection with
the issuance of the Preferred Stock and fixing the voting rights of the
Preferred Stock:
"RESOLVED, that, subject to the limitations set forth herein, the Stock
Committee may from time to time during the Stock Committee Term authorize the
issuance and sale of securities, for cash or other property, as determined by
the Stock Committee, which securities shall consist of any or all of the
following: (i) one or more series of the Corporation's preferred stock, $1 par
value per share (the "Preferred Stock"); (ii) depositary shares each
representing a fraction of a share of Preferred Stock or other security
("Depositary Shares"); (iii) warrants to purchase any shares of Preferred Stock
or Depositary Shares; (iv) warrants to purchase shares of Common Stock; (v)
shares of Preferred Stock or Common Stock or other securities into which or for
which any of the foregoing may be exchangeable, convertible, or issuable upon
exercise; and (vi) securities (or units or combinations of securities) that the
Corporation deems functionally equivalent to Preferred Stock by reason of such
securities (or units or combinations of securities) counting as "Tier 1 capital"
of the Corporation according to applicable bank regulatory
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requirements; provided, however, that "Guaranteed SPE Securities" (as defined in
the Borrowings Committee Resolutions adopted by the Board of Directors on the
date hereof) shall be authorized by action of the Borrowings Committee rather
than the Stock Committee, and shall not be deemed Preferred Shares; unless the
context shall otherwise require, the securities in clauses (i) through (vi)
shall be referred to hereinafter collectively as "Preferred Shares"; and the
Preferred Shares and the Common Stock shall be referred to hereinafter
collectively as "Securities";
RESOLVED, that the Preferred Shares may be sold through agents, through
underwriters, through dealers and directly to purchasers, in one or more
offerings registered under the Securities Act of 1933 (the "Act") or in
transactions not required to be registered under the Act, all as shall be
determined by the Stock Committee; and the Stock Committee shall have full
authority to take any and all actions necessary to effect the intent of this
resolution; and all Preferred Shares so issued will be deemed duly authorized,
validly issued, fully paid and nonassessable;
RESOLVED that, without limiting the generality of the preceding
resolutions, the Stock Committee is hereby expressly authorized during the Stock
Committee Term:
(i) to determine whether the Preferred Shares will be issued
in one or more series and the number of shares of any such series;
(ii) to fix the dividend rate or rates of any such Preferred
Shares and/or the methods of determining dividends and the dates on
which dividends shall be payable;
(iii) to determine whether dividends of any series of
Preferred Shares shall be cumulative or noncumulative and, if
cumulative, the dates from which dividends shall commence to cumulate;
(iv) to determine the conversion or exchange provisions, if
any, of the shares of any series of the Preferred Shares, including
without limitation, the class and series of capital stock or other
securities of the Corporation into which such shares shall be
convertible or exchangeable;
(v) to determine whether the Corporation shall elect to offer
(a) warrants for such Preferred Shares ("Warrants") or (b) Depositary
Shares evidenced by depositary receipts, each representing a fraction
(to be determined by the Stock Committee) of a share of a particular
series of the Preferred Stock or other securities, which shares of
Preferred Stock or other securities will be issued and deposited with a
depositary, in each case, in lieu of offering full shares of such
series of the Preferred Stock or other securities;
(vi) to fix the liquidation preference of the shares of any
series of the Preferred Shares, subject to the limitation that the
aggregate liquidation preference over Common Stock of all the Preferred
Shares issued during the Stock Committee Term shall not exceed $1.5
billion (the "Preferred Stock Maximum Amount");
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(vii) to determine whether any warrants for Preferred Stock,
Depositary Shares or Common Stock shall be issued, whether alone or in
connection with any other Preferred Shares, and the terms and
conditions of any such warrants;
(viii) to determine whether the shares of any series of the
Preferred Shares shall be subject to redemption, optional or mandatory
or pursuant to a sinking fund, and, if such series shall be subject to
redemption, the redemption provisions of such series; and
(ix) to fix or determine any additional dividend, liquidation,
redemption, sinking fund and other rights, preferences, privileges,
limitations and restrictions thereof;
RESOLVED, that the Stock Committee shall have authority, from time to
time during the Stock Committee Term, without the necessity of further action of
the Board of Directors, to authorize (i) the creation of one or more subsidiary
or affiliated corporations, partnerships, limited liability companies, trusts or
other affiliated or unaffiliated entities ("special purpose entities") in
connection with the creation, issuance and sale of Preferred Shares, (ii) the
initial capitalization thereof, (iii) the preparation, execution and filing of
any documents necessary or appropriate in connection with the organization or
activities of such subsidiary or affiliated or unaffiliated corporation or
entity, and (iv) the payment of all related fees and expenses, in each case, as
the Stock Committee in its judgment shall deem necessary or advisable;
RESOLVED, that the Stock Committee shall have authority, from time to
time during the Stock Committee Term, to authorize the issuance and sale of any
debt obligation, guarantee or other security of the Corporation or any special
purpose entities which shall be issuable in support of any Preferred Shares;
RESOLVED, that, if required with respect to any series of Preferred
Stock, a certificate shall be prepared and filed on behalf of the Corporation
with the Secretary of State of the State of Delaware pursuant to Section 151 of
the General Corporation Law of the State of Delaware (a "Certificate of
Designation"); that each such Certificate of Designation be in such form as is
approved by action of the Board of Directors or the Stock Committee; and that
the proper officers of the Corporation be and hereby are authorized to execute
and file each such Certificate of Designation pursuant to the General
Corporation Law of the State of Delaware;
RESOLVED, that the Certificate of Designation for each series of the
Preferred Stock shall provide that the shares of such series shall not have any
voting powers either general or special, except that
(i) If at the time of any annual meeting of the Corporation's
stockholders for the election of directors there is a default in
preference dividends on the Preferred Stock, the number of directors
constituting the Board of Directors of the Corporation shall be
increased by two, and the holders of the Preferred Stock of all series
(whether or not the holders of such series of Preferred Stock would be
entitled to vote for the election of directors if such default in
preference dividends did not exist), shall have the right at such
meeting, voting together as a single class without regard to series, to
the exclusion of the holders of common stock, par value $1 per share,
of the Corporation, to elect two
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directors of the Corporation to fill such newly created directorships.
Such right shall continue until there are no dividends in arrears upon
the Preferred Stock. Each director elected by the holders of shares of
Preferred Stock (a "Preferred Director") shall continue to serve as
such director for the full term for which he or she shall have been
elected, notwithstanding that prior to the end of such term a default
in preference dividends shall cease to exist. Any Preferred Director
may be removed by, and shall not be removed except by, the vote of the
holders of record of the outstanding shares of Preferred Stock, voting
together as a single class without regard to series, at a meeting of
the Corporation's stockholders, or of the holders of shares of
Preferred Stock, called for the purpose. So long as a default in any
preference dividends on the Preferred Stock shall exist, (a) any
vacancy in the office of a Preferred Director may be filled (except as
provided in the following clause (b)) by an instrument in writing
signed by the remaining Preferred Director and filed with the
Corporation and (b) in the case of the removal of any Preferred
Director, the vacancy may be filled by the vote of the holders of the
outstanding shares of Preferred Stock, voting together as a single
class without regard to series, at the same meeting at which such
removal shall be voted. Each director appointed as aforesaid by the
remaining Preferred Director shall be deemed, for all purposes hereof,
to be a Preferred Director. Whenever the term of office of the
Preferred Directors shall end and a default in preference dividends
shall no longer exist, the number of directors constituting the Board
of Directors of the Corporation shall be reduced by two. For the
purposes hereof, a "default in preference dividends" on the Preferred
Stock shall be deemed to have occurred whenever the amount of accrued
dividends upon any series of the Preferred Stock shall be equivalent to
six full quarter-yearly dividends or more, and, having so occurred,
such default shall be deemed to exist thereafter until, but only until,
all accrued dividends on all shares of Preferred Stock of each and
every series then outstanding shall have been paid to the end of the
last preceding dividend period; and
(ii) Without the consent of the holders of shares entitled to
cast at least two-thirds of the votes entitled to be cast by the
holders of the total number of shares of Preferred Stock then
outstanding, voting as a class without regard to series, the holders of
shares of this series being entitled to cast one vote per share
thereon, the Corporation may not: (a) create any class or series of
stock which shall have preference as to dividends or distribution of
assets over any outstanding series of the Preferred Stock other than a
series which shall not have any right to object to such creation or (b)
alter or change the provisions of the Corporation's Certificate of
Incorporation so as to adversely affect the voting power, preferences
or special rights of the holders of Preferred Stock; provided, however,
that if such creation or such alteration or change would adversely
affect the voting power, preferences or special rights of one or more,
but not all, series of Preferred Stock at the time outstanding, consent
of the holders of shares entitled to cast at least two-thirds of the
votes entitled to be cast by the holders of all of the shares of all
such series so affected, voting as a class, shall be required in lieu
of the consent of the holders of shares entitled to cast at least
two-thirds of the votes entitled to be cast by the holders of the total
number of shares of Preferred Stock, at the time outstanding.
RESOLVED, that the Stock Committee is authorized and empowered
during the Stock Committee Term to approve and authorize on behalf of the
Corporation the repurchase or redemption by the Corporation of any or all the
outstanding shares of any series of the Preferred
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Shares at such times, in such amounts, at such prices, and pursuant to such
arrangements, including arrangements with brokers, dealers or agents, as the
Stock Committee may determine or authorize such repurchases to be effected
pursuant to open market purchases, privately negotiated transactions or such
other means as the Stock Committee may determine or authorize.
2. The Stock Committee of the Board of Directors on ______________,
pursuant to the authority conferred upon the Stock Committee of the Board
Directors by Section 141(c) of the General Corporation Law of the State of
Delaware, by Section 3.03 of the By-Laws of the Corporation and by the
resolutions of the Board of Directors set forth above, adopted the following
resolution:
"RESOLVED that, pursuant to resolutions of the Board of Directors of
J.P. Morgan Chase & Co. (the "Corporation") adopted on ___________, the issue of
_____ shares of ______ [Convertible] [Noncumulative] [Cumulative] Preferred
Stock, $__ stated value per share ($1 par value), of the Corporation ranking on
a parity with the series of Preferred Stock of the Corporation designated as the
Corporation's: 6% Cumulative Preferred Stock; Adjustable Rate Cumulative
Preferred Stock, Series A; Adjustable Rate Cumulative Preferred Stock, Series L;
Adjustable Rate Cumulative Preferred Stock, Series N; 10.84% Cumulative
Preferred Stock; and Fixed/Adjustable Rate Noncumulative Preferred Stock
[designate other parity series, if any] is hereby authorized and the
designation, preferences and privileges, relative, participating, optional and
other special rights, and qualifications, limitations and restrictions of all
_____ shares of this Series, in addition to those set forth in the Restated
Certificate of Incorporation of the Corporation and, with respect to voting
rights, in the resolutions of the Board of Directors of the Corporation adopted
on _________, are hereby fixed as follows:
1. Designation. The designation of this Series shall be _____________
[Convertible] [Noncumulative] [Cumulative] Preferred Stock (hereinafter referred
to as this "Series"), and the number of shares constituting this Series shall be
__________. Shares of this Series shall have a stated value of $_____. The
number of authorized shares of this Series may be reduced by further resolution
duly adopted by the Board of Directors of the Corporation, the Stock Committee
of the Board of Directors or by any other duly authorized committee of the Board
of Directors (collectively, the "Board of Directors") and by the filing of a
certificate pursuant to the provisions of the General Corporation Law of the
State of Delaware stating that such reduction has been so authorized, but the
number of authorized shares of this Series shall not be increased.
2. Dividends. (a) The holders of shares of this Series shall be
entitled to receive cash dividends, when, as and if declared by the Board of
Directors, out of funds legally available for that purpose, in the amounts or at
the rate set forth below in this Section 2. Dividends on the shares of this
Series shall be payable, when, as and if declared by the Board of Directors, on
_________, __________, __________ and __________ of each year (each, a "Dividend
Payment Date"), commencing on _________. Each such dividend shall be paid to the
holders of record of shares of this Series as they appear on the stock register
of the Corporation on such record date, not more than 45 days preceding the
payment date thereof, as shall be fixed by the Board of Directors.
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[IF THIS SERIES HAS FIXED RATE DIVIDENDS, INSERT THE FOLLOWING: (b)
Dividends payable on the shares of this Series for the period from _________
through and including ________________ (the "Initial Dividend Period") shall be
_________ per share. For each quarterly dividend period after the Initial
Dividend Period (each such quarterly dividend period and the Initial Dividend
Period being hereinafter referred to individually as a "Dividend Period"), which
quarterly Dividend Periods shall commence on _________, ___________, ___________
and _____________ of each year and shall end on and include the day next
preceding the first day of the next such Dividend Period, dividends payable on
the shares of this Series shall be payable at ___% per annum of the stated value
thereof. [IF THIS SERIES IS NONCUMULATIVE, INSERT THE FOLLOWING: Dividends on
the shares of this Series shall not be cumulative and no rights shall accrue to
the holders of the shares of this Series if the Corporation fails to declare a
dividend on the shares of this Series with respect to any Dividend Period,
whether or not dividends are declared with respect to any future Dividend
Period.] [IF THIS SERIES IS CUMULATIVE, INSERT THE FOLLOWING: Dividends shall be
cumulative from _____________. Dividends on account of arrears for any past
Dividend Periods may be declared and paid at any time, without reference to any
regular Dividend Payment Date, to holders of record on such date, not more than
45 days preceding the payment date thereof, as may be fixed by the Board of
Directors.]]
[IF THIS SERIES HAS ADJUSTABLE DIVIDENDS, INSERT THE APPROPRIATE CALCULATION OF
SUCH RATE]
[(c)[(i)] Dividends payable on this Series for any period greater or
less than a full Dividend Period, other than the Initial Dividend Period, shall
be computed on the basis of a 360-day year consisting of twelve 30-day months
and, for any period less than one month, the actual number of days elapsed in
the period. [Dividends payable on this Series for each full Dividend Period
shall be computed by annualizing the Dividend Rate and dividing by four.]
[(d)[(j)] No full dividends shall be declared or paid or set apart for
payment on the Preferred Stock of any series ranking, as to dividends, on a
parity with or junior to this Series for any period unless [IF THIS SERIES IS
NONCUMULATIVE, INSERT THE FOLLOWING: full dividends on the shares of this Series
for the Dividend Period commencing on the day following the immediately
preceding Dividend Payment Date have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set apart for such
payment] [IF THIS SERIES IS CUMULATIVE, INSERT THE FOLLOWING: full cumulative
dividends have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for such payment on this Series
for all Dividend Periods terminating on or prior to the date of payment of such
full cumulative dividends]. When dividends are not paid in full, as aforesaid,
upon the shares of this Series and any other series of Preferred Stock ranking
on a parity as to dividends with this Series, all dividends declared upon shares
of this Series and any other series of Preferred Stock ranking on a parity as to
dividends with this Series shall be declared pro rata so that the amount of
dividends declared per share on this Series and such other Preferred Stock shall
in all cases bear to each other the same ratio that accrued and unpaid dividends
per share [IF THIS SERIES IS NONCUMULATIVE, INSERT THE FOLLOWING: (which in the
case of this Series shall include accrued and unpaid dividends for the Dividend
Period commencing on the day following the immediately preceding Dividend
Payment Date but shall not include accumulation of any dividends for prior
Dividend Periods,
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unless previously declared)] on the shares of this Series and such other
Preferred Stock bear to each other. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments on
this Series which may be in arrears.
[(e)][(k)] So long as any shares of this Series are outstanding, no
dividend (other than a dividend in Common Stock or in any other stock ranking
junior to this Series as to dividends and upon liquidation and other than as
provided in paragraph (d) of this Section 2) shall be declared or paid or set
aside for payment or other distribution declared or made upon the Common Stock
or upon any other stock ranking junior to or on a parity with this Series as to
dividends or upon liquidation, nor shall any Common Stock or any other stock of
the Corporation ranking junior to or on a parity with this Series as to
dividends or upon liquidation be redeemed, purchased or otherwise acquired for
any consideration (or any moneys be paid to or made available for a sinking fund
for the redemption of any shares of any such stock) by the Corporation (except
by conversion into or exchange for stock of the Corporation ranking junior to
this Series as to dividends and upon liquidation), unless, in each case, [IF
THIS SERIES IS NONCUMULATIVE, INSERT THE FOLLOWING: full dividends on all
outstanding shares of this Series shall have been paid or declared and set aside
for payment in respect of the Dividend Period commencing on the day following
the immediately preceding Dividend Payment Date] [IF THIS SERIES IS CUMULATIVE,
INSERT THE FOLLOWING: the full cumulative dividends on all outstanding shares of
this Series shall have been paid or declared and set aside for payment for all
past Dividend Periods].
[INSERT ANY OTHER PROVISIONS APPLICABLE TO DIVIDENDS WITH RESPECT TO
THIS SERIES.]
3. Redemption.
[IF THIS SERIES IS REDEEMABLE AT A FIXED PRICE, INSERT THE FOLLOWING:
(a) [The shares of this Series are not redeemable prior to _________________.]
The Corporation, at its option, may redeem shares of this Series, as a whole or
in part, at any time or from time to time, [on or after ________,] at a
redemption price of _____________ per share plus accrued and unpaid dividends
thereon (whether or not declared) [IF THIS SERIES IS NONCUMULATIVE, INSERT THE
FOLLOWING: from the immediately preceding Dividend Payment Date to the date
fixed for redemption (but without any accumulation for unpaid dividends for
prior Dividend Periods on the shares of this Series)].
[IF THIS SERIES IS REDEEMABLE AT VARIABLE PRICES, INSERT THE FOLLOWING:
(a) [The shares of this Series are not redeemable prior to ________________.]
The Corporation, at its option, may redeem shares of this Series, as a whole or
in part, at any time or from time to time, [on or after _______,] at the
applicable redemption price set forth below, plus accrued and unpaid dividends
thereon (whether or not declared) [IF THIS SERIES IS NONCUMULATIVE, INSERT THE
FOLLOWING: from the immediately preceding Dividend Payment Date to the date
fixed for redemption (but without any accumulation for unpaid dividends for
prior Dividend Periods on the shares of this Series)]:
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[IF THIS SERIES IS REDEEMABLE PURSUANT TO A SINKING FUND, INSERT THE
FOLLOWING:
(b) So long as any shares of this Series shall be outstanding, the
Corporation shall on each of the dates set forth in the following schedule
("Sinking Fund Payment Dates") set aside an amount sufficient for the redemption
of, and shall redeem, the number of shares of this Series set forth opposite
such Sinking Fund Payment Date:
The redemption price of shares of this Series to be redeemed pursuant to the
aforesaid sinking fund shall be $____ per share, plus accrued and unpaid
dividends thereon (whether or not declared) [IF THIS SERIES IS NONCUMULATIVE,
INSERT THE FOLLOWING: from the immediately preceding Dividend Payment Date to
the date fixed for redemption (but without any accumulation for unpaid dividends
for prior Dividend Periods on the shares of this Series)]. The Corporation may,
at its option, apply toward its sinking fund obligation any shares of this
Series purchased or otherwise acquired by the Corporation or redeemed by the
Corporation otherwise than through the sinking fund which have not previously
been credited toward a sinking fund obligation. The obligation of the
Corporation to redeem shares of this Series shall be cumulative, so that if for
any year or years such requirements shall not be fully discharged as they
accrue, funds legally available therefor, after payment or provision for
dividends, for each year thereafter shall be applied thereto until such
requirements are fully discharged.]
[IF THIS SERIES IS SUBJECT TO EITHER OPTIONAL OR MANDATORY REDEMPTION, INSERT
THE FOLLOWING:
[(b)][(c)] In the event that fewer than all the outstanding shares of
this Series are to be redeemed [(by operation of a sinking fund or otherwise)],
the number of shares to be redeemed shall be determined by the Board of
Directors and the shares to be redeemed shall be determined by lot or pro rata
as may be determined by the Board of Directors or by any other method as may be
determined by the Board of Directors in its sole discretion to be equitable,
provided that such method satisfies any applicable requirements of any
securities exchange on which this Series is listed.
[(c)][(d)] In the event the Corporation shall redeem shares of this
Series [(by operation of a sinking fund or otherwise)], notice of such
redemption shall be given by first class mail, postage prepaid, mailed not less
than 30 or more than 60 days prior to the redemption date, to each holder of
record of the shares to be redeemed, at such holder's address as the same
appears
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on the stock register of the Corporation. Each such notice shall state: (i) the
redemption date; (ii) the number of shares of this Series to be redeemed and, if
fewer than all the shares held by such holder are to be redeemed, the number of
such shares to be redeemed from such holder; (iii) the redemption price; (iv)
the place or places where certificates for such shares are to be surrendered for
payment of the redemption price; [and] (v) that dividends on the shares to be
redeemed shall cease to accrue on the redemption date [IF THIS SERIES IS
CONVERTIBLE, INSERT THE FOLLOWING; and (vi) that such holder has the right to
convert such shares into a number of shares of Common Stock prior to the close
of business on the redemption date].
[(d)][(e)] Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in providing
money for the payment of the redemption price) dividends on the shares of this
Series so called for redemption shall cease to accrue, and said shares shall no
longer be deemed to be outstanding, and all rights of the holders thereof as
stockholders of the Corporation (except the right to receive from the
Corporation the redemption price) shall cease [IF THIS SERIES IS CONVERTIBLE,
INSERT THE FOLLOWING: ; provided that, notwithstanding the foregoing, if notice
of redemption has been given pursuant to this paragraph and any holder of shares
of this Series shall, prior to the close of business on the redemption date,
surrender for conversion any or all of the shares to be redeemed held by such
holder in accordance with Section 4, then the conversion of such shares to be
redeemed shall become effective as provided in Section 4.] Upon surrender in
accordance with said notice of the certificates for any shares so redeemed
(properly endorsed or assigned for transfer, if the Board of Directors shall so
require and the notice shall so state), such shares shall be redeemed by the
Corporation at the redemption price aforesaid. In case fewer than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares without cost to the holder thereof.
[(e)][(f)] Any shares of this Series which shall at any time have been
redeemed shall, after such redemption, have the status of authorized but
unissued shares of Preferred Stock, without designation as to series until such
shares are once more designated as part of a particular series by the Board of
Directors.
[(f)][(g)] Notwithstanding the foregoing provisions of this Section 3,
if full dividends on all outstanding shares of this Series are in arrears, no
shares of this Series shall be redeemed unless all outstanding shares of this
Series are simultaneously redeemed, and the Corporation shall not purchase or
otherwise acquire any shares of this Series; provided, however, that the
foregoing shall not prevent the purchase or acquisition of shares of this Series
pursuant to a purchase or exchange offer made on the same terms to holders of
all outstanding shares of this Series.]
[IF THIS SERIES IS NOT CONVERTIBLE, INSERT THE FOLLOWING:
4. Conversion. The holders of shares of this Series shall not have any
rights to convert such shares into shares of any other class or series of
capital stock of the Corporation.]
[IF THIS SERIES IS CONVERTIBLE FOR SHARES OF COMMON STOCK, INSERT THE FOLLOWING]
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4. Conversion. (a) Subject to and upon compliance with the provisions
of this Section 4, each holder of shares of this Series shall have the right, at
such holder's option, at any time [from and after ______], to convert any or all
of the shares of this Series held by such holder into the number of fully paid
and nonassessable shares of Common Stock (calculated as to each conversion, for
the purpose of determining the amount of any cash payments provided for under
paragraph (c) of this Section 4, to the nearest .01 of a share of Common Stock,
as the case may be, with one-half cent and .005 of a share, respectively, being
rounded upward) obtained by dividing the stated value of a share of this Series
by the Conversion Price (as defined below) and multiplying such resulting number
by the number of shares of this Series to be converted, and by surrender of such
shares of this Series so to be converted, such surrender to be made in the
manner provided in paragraph (b) of this Section 4; provided, however, that the
right to convert shares called for redemption pursuant to Section 3 hereof shall
terminate at the close of business on the date fixed for such redemption unless
the Corporation shall default in making payment of the amount payable upon such
redemption.
The term "Conversion Price" shall mean $_________, as adjusted in
accordance with the provisions of this Section 4.
(b) In order to exercise the conversion privilege, the holder of each
share of this Series to be converted shall surrender the certificate
representing such share at the office of any transfer agent for the Common Stock
and shall give written notice to the Corporation at said office that such holder
elects to convert the same, specifying the name or names and denominations in
which such holder wishes the certificate or certificates for the Common Stock to
be issued (which notice may be in the form of a notice of election to convert
which may be printed on the reverse of the certificates for the shares of this
Series). Unless the shares issuable on conversion are to be issued in the same
name as the name in which such share of this Series is registered, each share
surrendered for conversion shall be accompanied by instruments of transfer, in
form satisfactory to the Corporation, duly executed by the holder or his duly
authorized attorney, and by an amount sufficient to pay any transfer or similar
tax.
The holders of shares of this Series at the close of business on a
dividend payment record date shall be entitled to receive the dividend payable
on such shares (except that holders of shares called for redemption on a
redemption date between such record date and the Dividend Payment Date shall not
be entitled to receive such dividend on such Dividend Payment Date) on the
corresponding dividend payment date notwithstanding the conversion thereof or
the Corporation's default in payment of the dividend due on such Dividend
Payment Date. However, shares of this Series surrendered for conversion during
the period between the close of business on any dividend payment record date and
the opening of business on the corresponding Dividend Payment Date (except
shares called for redemption on a redemption date during such period) must be
accompanied by payment of an amount equal to the dividend payable on such shares
on such Dividend Payment Date. A holder of shares of this Series on a dividend
payment record date who (or whose transferee) tenders any of such shares for
conversion into shares of Common Stock on a Dividend Payment Date will receive
the dividend payable by the Corporation on such shares of this Series on such
date, and the converting holder need not include payment in the amount of such
dividend upon surrender of shares of this Series for conversion. Except as
provided above, the Corporation shall make no payment or allowance for unpaid
dividends,
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whether or not in arrears, on converted shares or for dividends on the shares of
Common Stock issued upon such conversion.
As promptly as practicable after the surrender of the certificates for
shares of this Series as aforesaid, the Corporation shall issue and shall
deliver at the office of any transfer agent for the Common Stock to such holder,
or on his written order, a certificate or certificates for the number of full
shares of Common Stock issuable upon the conversion of such shares in accordance
with the provisions of this Section 4, together with a certificate or
certificates representing any shares of this Series which are not to be
converted but which shall have constituted part of the shares of this Series
represented by the certificate or certificates so surrendered, and any
fractional interest in respect of a share of Common Stock arising upon such
conversion shall be settled as provided in subparagraph (c) of this Section 4.
Each conversion shall be deemed to have been effected immediately prior
to the close of business on the date on which the certificates for shares of
this Series shall have been surrendered and such notice (and, if applicable,
payment of an amount equal to the dividend payable on such shares) 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 issuable
upon such conversion shall be deemed to have become the holder or holders of
record of the shares represented thereby at such time on such date and such
conversion shall be at the Conversion Price in effect at such time on such date,
unless the stock transfer books of the Corporation shall be closed on such date,
in which event such person or persons shall be deemed to have become such holder
or holders of record at the close of business 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 shares shall have been
surrendered and such notice (and, if applicable, payment) received by the
Corporation. All shares of Common Stock delivered upon conversion of the shares
of this Series will upon delivery be duly and validly issued and fully paid and
nonassessable, free of all liens and charges and not subject to any preemptive
rights.
(c) No fractional shares or scrip representing fractions of shares of
Common Stock shall be issued upon conversion of shares of this Series. Instead
of any fractional interest in a share of Common Stock which would otherwise be
deliverable upon the conversion of a share of this Series, the Corporation shall
pay to the holder of such share of this Series an amount in cash (computed to
the nearest cent, with one-half cent being rounded upward) equal to the reported
last sales price (as defined in subparagraph (d)(v) of this Section 4) of the
Common Stock on the Trading Day (as defined in subparagraph (d)(v) of this
Section 4) next preceding the day of conversion multiplied by the fraction of a
share of Common Stock represented by such fractional interest. If more than one
share of this Series shall be surrendered for conversion at one time by the same
holder, the number of full shares of Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate stated value of the
shares of this Series so surrendered.
(d) 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
12
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 share of this Series thereafter surrendered for conversion shall
be entitled to receive the number of shares of Common Stock of the Corporation
which he would have owned or have been entitled to receive after the happening
of any of the events described above had such share 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 (viii) below, and shall
become effective immediately after the effective date in the case of a
subdivision or combination. No adjustment in the Conversion Price shall be made
if, at the same time as the Corporation shall issue shares of Common Stock as a
dividend or distribution on the outstanding shares of Common Stock which would
otherwise call for an adjustment in the Conversion Price, the Corporation shall
issue shares of Common Stock as a dividend or distribution on the outstanding
shares of this Series equivalent to the number of shares distributable on the
shares of Common Stock into which this Series is then convertible.
(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), at the record date for the
determination of stockholders entitled to receive such rights or warrants, the
Conversion Price in effect after such record date 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 the record date for issuance of such rights or warrants
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 (viii) below, after such record
date. In determining whether any rights or warrants entitled the holders of the
shares of this Series to subscribe for or purchase shares of Common Stock at
less than such current market price, and in determining the aggregate offering
price of such shares of Common Stock, there shall be taken into account any
consideration received by the Corporation for such rights or warrants plus the
exercise price thereof, the value of such consideration or exercised price, as
the case may be, if other than cash, to be determined by the Board of Directors.
(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 "Securities"), then, in each such case, unless the
Corporation elects to reserve such Securities for distribution to the holders of
the shares of this Series upon the conversion of the shares of this Series so
that any
13
such holder converting shares of this Series will receive upon such conversion,
in addition to the shares of the Common Stock to which such holder is entitled,
the amount and kind of such Securities which such holder would have received if
such holder had, immediately prior to the record date for the distribution of
the Securities, converted its shares of this Series into Common Stock, 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 date of 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 on the record date
mentioned above less the then fair market value (as determined by the Board of
Directors, whose determination shall be conclusive) of the portion of the
Securities so distributed applicable to one share of Common Stock, and the
denominator of which shall be the current market price per share (as defined in
subparagraph (v) below) of the Common Stock; provided, however, that in the
event the then fair market value (as so determined) of the portion of the
securities so distributed applicable to one share of Common Stock is equal to or
greater than the current market price per share (as defined in subparagraph (v)
below) of the Common Stock on the record date mentioned above, in lieu of the
foregoing adjustment, adequate provision shall be made so that each holder of
shares of this Series shall have the right to receive the amount and kind of
Securities such holder would have received had such holder converted each such
share of this Series immediately prior to the record date for the distribution
of the Securities. Such adjustment shall become effective immediately, except as
provided in subparagraph (viii) below, after the record date for the
determination of shareholders entitled to receive such distribution.
(iv) If, pursuant to subparagraph (ii) or (iii) above, the
number of shares of Common Stock into which a share of this Series 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 right 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 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 subparagraph (ii)
above, the current market price per share of Common Stock on any date shall be
deemed to be the average of the reported last sales prices for the thirty
consecutive Trading Days (as defined below) commencing forty-five Trading Days
before the date in question. For the purpose of any computation under
subparagraph (iii) above, the current market price per share of Common Stock on
any date shall be deemed to be the average of the reported last sales prices for
the ten consecutive Trading Days before the date in question. The reported last
sales price for each day (whether for purposes of subparagraph (ii) or
subparagraph (iii)) 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 Nasdaq Stock Market ("NASDAQ") or, if the
Common Stock is not quoted on such National Market System, the average of the
closing bid and asked prices on
14
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 Board of Directors 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 Board of Directors. 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 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 (F) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section 4
shall be made to the nearest cent or to the 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 paragraph (d) to the contrary notwithstanding, the
Corporation shall be entitled to make such reductions in the Conversion Price,
in addition to those required by this paragraph (d), 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 than cash dividends) hereafter made by the
Corporation to its stockholders shall not be taxable.
(vii) Whenever the Conversion Price is adjusted as herein
provided, the Corporation shall file with the transfer agent a certificate,
signed by the Chairman of the Board, the President, any Vice Chairman, any
Senior Executive Vice President, Executive Vice President, Senior Vice
President, Managing Director or Vice President of the Corporation, 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
invalidate any corporate action by the Corporation.
(viii) In any case in which this paragraph (d) 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 (y) issuing
to the holder of any share of this Series 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 (z) paying to such holder any amount of cash in
lieu of any fractional share of Common Stock pursuant to paragraph (c) of this
Section 4.
15
(e) Whenever the Conversion Price is adjusted as provided in paragraph
(d), the Corporation shall cause to be mailed to each holder of shares of this
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 invalidate any corporate action by the Corporation.
(f) The Corporation covenants that it will at all times reserve and
keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued shares of Common Stock or its issued shares of Common
Stock held in its treasury, or both, for the purpose of effecting conversions of
shares of this Series, the full number of shares of Common Stock deliverable
upon the conversion of all outstanding shares of this Series not theretofore
converted. For purposes of this paragraph (f), the number of shares of Common
Stock which shall be deliverable upon the conversion of all outstanding shares
of this Series shall be computed as if at the time of computation all such
outstanding shares were held by a single holder.
(g) The Corporation will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of shares of
Common Stock on conversions of shares of this Series pursuant hereto; provided,
however, that the Corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issue or delivery of shares
of Common Stock in a name other than that of the holder of shares of this Series
to be converted and no such issue or delivery shall be made unless and until the
person requesting such issue or delivery has paid to the Corporation the amount
of any such tax or has established, to the satisfaction of the Corporation, that
such tax has been paid.
(h) Notwithstanding any other provision herein to the contrary, if any
of the following events occur, namely (w) 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), (x) 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 (y) any sale or conveyance of the properties and assets of
the Corporation as, or substantially as, an entirety 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
the holder of each share of this Series then outstanding shall have the right to
convert such share into 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 share of this Series immediately prior to
such reclassification, change, consolidation, merger, combination, sale or
conveyance. The adjustments described in this paragraph (h) shall be subject to
further adjustments as appropriate that shall be as nearly equivalent as may be
practicable to the relevant adjustment provided for in this paragraph (h). If,
in the case of any such consolidation, merger, combination, sale or conveyance,
the stock or other securities and property receivable thereupon by a holder of
shares of Common Stock includes shares of stock, securities or other property or
assets (including cash) of an entity other
16
than the successor or acquiring entity, as the case may be, in such
consolidation, merger, combination, sale or conveyance, then the Corporation
shall enter into an agreement with such other entity for the benefit of the
holders of this Series that shall contain such provisions to protect the
interests of such holders as the Board of Directors shall reasonably consider
necessary by reason of the foregoing.
(i) Upon any conversion of shares of this Series, the shares of this
Series so converted shall have the status of authorized and unissued shares of
Preferred Stock, without designation as to series until such shares are once
more designated as part of a particular series by the Board of Directors.
5. Liquidation Rights. (a) Upon the voluntary or involuntary
dissolution, liquidation or winding up of the Corporation, the holders of the
shares of this Series shall be entitled to receive and to be paid out of the
assets of the Corporation available for distribution to its stockholders, before
any payment or distribution shall be made on the Common Stock or on any other
class of stock ranking junior to this Series upon liquidation, the amount of
$___ per share, plus accrued and unpaid dividends thereon (whether or not
declared) [IF THIS SERIES IS NONCUMULATIVE, INSERT THE FOLLOWING: from the
immediately preceding Dividend Payment Date, to the date of the liquidating
distribution (but without any accumulation of unpaid dividends for prior
Dividend Periods)].
(b) After the payment to the holders of the shares of this Series of
the full preferential amounts provided for in this Section 5, the holders of
this Series as such shall have no right or claim to any of the remaining assets
of the Corporation.
(c) If, upon any voluntary or involuntary dissolution, liquidation, or
winding up of the Corporation, the amounts payable with respect to the shares of
this Series and any other shares of stock of the Corporation ranking as to any
such distribution on a parity with the shares of this Series are not paid in
full, the holders of the shares of this Series and of such other shares shall
share ratably in any such distribution of assets of the Corporation in
proportion to the full respective distributions to which they are entitled.
(d) Neither the sale of all or substantially all the property or
business of the Corporation, nor the merger or consolidation of the Corporation
into or with any other corporation or the merger or consolidation of any other
corporation into or with the Corporation, shall be deemed to be a dissolution,
liquidation or winding up, voluntary or involuntary, for the purposes of this
Section 5.
6. Ranking. For purposes of this resolution, any stock of any class or
classes of the Corporation shall be deemed to rank:
(a) prior to the shares of this Series, either as to dividends or upon
liquidation, if the holders of such class or classes shall be entitled to the
receipt of dividends or of amounts distributable upon dissolution, liquidation
or winding up of the Corporation, as the case may be, in preference or priority
to the holders of shares of this Series;
(b) on a parity with shares of this Series, either as to dividends or
upon liquidation, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per
17
share or sinking fund provisions, if any, be different from those of this Series
(and whether or not such dividends shall accumulate), if the holders of such
stock shall be entitled to the receipt of dividends or of amounts distributable
upon dissolution, liquidation or winding up of the Corporation, as the case may
be, without preference or priority, one over the other, as between the holders
of such stock and the holders of shares of this Series; and
(c) junior to shares of this Series, either as to dividends or upon
liquidation, if such class shall be Common Stock or if the holders of shares of
this Series shall be entitled to receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in preference or priority to the holders of shares of such
class or classes.
7. Voting Rights. The shares of this Series shall have the voting
rights set forth in the resolutions of the Board of Directors adopted on
__________________.
IN WITNESS WHEREOF, J.P. Morgan Chase & Co. has caused its corporate
seal to be hereunto affixed and this Certificate to be signed by its Corporate
Secretary, [name], this ____ day of ____________________, 2001.
J.P. MORGAN CHASE & CO.
By:
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Corporate Secretary