AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 19, 2001
REG. NO. 333-
Post-Effective Amendment No. 2 To Registration Statement No. 333-94393
Post-Effective Amendment No. 3 To Registration Statement No. 333-70639
Post-Effective Amendment No. 4 To Registration Statement No. 333-56573
Post-Effective Amendment No. 5 To Registration Statement No. 33-64261
Post-Effective Amendment No. 7 To Registration Statement No. 33-49965
Post-Effective Amendment No. 9 To Registration Statement No. 33-57104
Post-Effective Amendment No. 8 To Registration Statement No. 33-47105
Post-Effective Amendment No. 9 To Registration Statement No. 33-45228
Post-Effective Amendment No. 8 To Registration Statement No. 33-15230
--------------------------------------------------------------------------------
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
J.P. MORGAN CHASE & CO.
(Exact Name of Registrant, as Specified in Charter)
J.P. MORGAN CHASE & CO.
270 PARK AVENUE
NEW YORK, NY 10017
(212) 270-6000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
ANTHONY J. HORAN
CORPORATE SECRETARY
J.P. MORGAN CHASE & CO.
270 PARK AVENUE
NEW YORK, NY 10017
(212) 270-6000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES OF ALL COMMUNICATIONS TO:
NEILA B. RADIN, ESQ.
J.P. MORGAN CHASE & CO.
270 PARK AVENUE
NEW YORK, NY 10017
(212) 270-6000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box: [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
(continued on next page)
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--------------------------------------------------------------------------------
(continued from previous page)
CALCULATION OF REGISTRATION FEE
(1) If any debt securities are issued at an original issue discount, then such
greater principal amount as shall result in an aggregate initial offering
price of $20,000,000,000. In no event will the aggregate initial offering
price of debt securities, debt warrants, preferred stock, depositary shares,
preferred stock warrants, common stock, common stock warrants and currency
warrants issued under this registration statement and not previously
registered under the Securities Act of 1933, as amended (the "Securities
Act"), exceed $20,000,000,000 or the equivalent thereof in one or more
foreign currencies or composite currencies, including the euro.
(2) Not specified as to each class of securities to be registered pursuant to
General Instruction II.D of Form S-3 under the Securities Act.
(3) The proposed maximum offering price per unit or share will be determined
from time to time by the registrant in connection with, and at the time of,
the issuance by the registrant of the securities registered hereunder.
(4) Estimated solely for the purposes of computing the registration fee pursuant
to Rule 457(o) of the Rules and Regulations of the Securities and Exchange
Commission under the Securities Act.
(5) Such indeterminate number of depositary shares to be evidenced by depositary
receipts issued pursuant to a deposit agreement. In the event the registrant
elects to offer to the public fractional interests in shares of the
preferred stock registered hereunder, depositary receipts will be
distributed to those persons purchasing such fractional interests and such
shares will be issued to the depositary under the deposit agreement.
(6) No separate consideration will be received for any securities registered
hereunder that are issued in exchange for, or upon conversion of, other
securities registered hereunder.
(7) This registration statement also covers an indeterminate amount of debt
securities and warrants that may be offered by affiliates of the registrant,
including J.P. Morgan Securities Inc., in connection with offers and sales
related to secondary market transactions in securities that have previously
been registered by the registrant or its predecessors pursuant to the below-
referenced registration statements. Accordingly, this amendment constitutes
Post-Effective Amendment No. 2 to Registration Statement No. 333-94393, Post
Effective Amendment No. 3 to Registration Statement No. 333-70639,
Post-Effective Amendment No. 4 to Registration Statement No. 333-56573,
Post-Effective Amendment No. 5 to Registration Statement No. 33-64261,
Post-Effective Amendment No. 7 to Registration Statement No. 33-49965,
Post-Effective Amendment No. 9 to Registration Statement No. 33-57104,
Post-Effective Amendment No. 8 to Registration Statement No. 33-47105,
Post-Effective Amendment No. 9 to Registration Statement No. 33-45228 and
Post-Effective Amendment No. 8 to Registration Statement No. 33-15230. This
registration statement also covers an indeterminate amount of debt
securities that may be offered by affiliates of the registrant, including
J.P. Morgan Securities Inc., in connection with offers and sales relating to
secondary market transactions in securities previously registered by
predecessors of the registrant, including pursuant to the registration
statements filed by The Chase Manhattan Corporation designated by the
following registration file numbers: Nos. 33-58144, 33-55295, 33-45266,
33-40485 and 33-20950; and pursuant to the registration statements filed by
J.P. Morgan & Co. Incorporated designated by the following file numbers:
333-85283, 333-64193, 333-51961, 333-47753, 333-40447, 333-37315, 33-55851,
33-49775, 33-45651 and 33-41006.
(8) Pursuant to Rule 429 of the Rules and Regulations of the Securities and
Exchange Commission under the Securities Act, this amendment contains a
prospectus that also relates to the $5,503,535,414 of debt securities, debt
warrants, preferred stock, depositary shares, preferred stock warrants,
common stock, common stock warrants and currency warrants registered on the
Registration Statement on Form S-3 (No. 333-94393) (relating to an aggregate
$15,000,000,000 of debt securities, debt warrants, preferred stock,
depositary shares, preferred stock warrants, common stock, common stock
warrants and currency warrants) previously filed by the registrant and
declared effective on February 11, 2000 and as to which a filing fee of
$3,960,000 was paid. This amendment constitutes Post-Effective Amendment No.
1 to the registrant's Registration Statement on Form S-3 (No. 333-94393) and
such post-effective amendment shall hereafter become effective concurrently
with the effectiveness of this registration statement and in accordance with
Section 8(c) of the Securities Act.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act, or until this registration statement shall become effective on
such date as the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
EXPLANATORY NOTE
The second prospectus filed with this registration statement is a form of market
maker prospectus intended for use by direct or indirect wholly-owned
subsidiaries of the registrant, including J.P. Morgan Securities Inc., in
connection with offers and sales related to secondary market transactions in
debt securities, preferred stock, depositary shares and warrants that have been
previously registered by the registrant or its predecessors under the Securities
Act of 1933 pursuant to the registration statements referred to in footnote 7 on
the cover page of this registration statement and in certain debt securities,
preferred stock, depositary shares and warrants that are initially offered and
sold by or on behalf of the registrant after the effective date of this
registration statement. The market maker prospectus is in addition to, and not
in substitution for, the prospectuses of the registrant relating to the
above-referenced registration statements currently on file with the Securities
and Exchange Commission.
[JPMorganChase Logo]
J.P. MORGAN CHASE & CO.
DEBT SECURITIES
PREFERRED STOCK
DEPOSITARY SHARES
COMMON STOCK
WARRANTS
------------------------
WE WILL PROVIDE SPECIFIC TERMS OF THE ABOVE SECURITIES IN SUPPLEMENTS TO THIS
PROSPECTUS.
YOU SHOULD READ THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT CAREFULLY BEFORE
YOU INVEST.
------------------------
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER FEDERAL
AGENCY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAVE THESE ORGANIZATIONS
DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SEC IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND WE ARE
NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
------------------------
THIS PROSPECTUS IS DATED , 2001
SUMMARY
This summary highlights selected information from this document and may not
contain all of the information that is important to you. To understand the terms
of our securities, you should carefully read:
- this prospectus, which explains the general terms of the securities we may
offer;
- the attached prospectus supplement, which gives the specific terms of the
particular securities we are offering and may change or update information in
this prospectus; and
- the documents we have referred you to in "Where You Can Find More Information
About J.P. Morgan Chase" on page 5 for information about our company and our
financial statements.
Certain capitalized terms used in this summary are defined elsewhere in this
prospectus.
J.P. MORGAN CHASE & CO.
J.P. Morgan Chase & Co. ("J.P. Morgan Chase," which may be referred to as "we"
or "us") is a financial holding company incorporated under Delaware law in 1968.
As of June 30, 2001, we had approximately $713 billion in assets and
approximately $42 billion in stockholders' equity.
THE SECURITIES WE MAY OFFER
This prospectus is part of a registration statement (No. 333---) (the
"registration statement") that we filed with the SEC utilizing a "shelf"
registration process. Under this shelf process, we may offer from time to time
up to a total of $25,503,535,414 of any of the following securities, either
separately or in units:
- debt;
- preferred stock;
- depositary shares;
- common stock; and
- warrants.
This prospectus provides you with a general description of the securities we may
offer. Each time we offer securities, we will provide you with a prospectus
supplement that will describe the specific amounts, prices and terms of the
securities being offered. The prospectus supplement may also add to, update or
change information contained in this prospectus.
DEBT SECURITIES
We may use this prospectus and an applicable prospectus supplement to offer our
unsecured general obligations, which may be senior or subordinated. The senior
debt securities will have the same rank as all of our other unsecured,
unsubordinated debt. The subordinated debt securities will be entitled to
payment only after payment on our "Senior Indebtedness," which includes the
senior debt securities. In addition, under certain circumstances relating to our
dissolution, winding-up, liquidation or reorganization, the subordinated debt
securities will be entitled to payment only after the payment of claims relating
to "Additional Senior Obligations." For the definitions of Senior Indebtedness
and Additional Senior Obligations, see "Description of Debt
Securities -- Subordinated Debt Securities -- Subordination" below.
The senior debt securities will be issued under an indenture, dated as of
December 1, 1989, as amended, between us and Bankers Trust Company, as trustee.
The subordinated debt securities will be issued under an indenture, as amended
and restated as of December 15, 1992, as amended, between us and U.S. Bank Trust
National Association, as trustee. We have summarized certain general features of
the debt securities from the indentures. We encourage you to read the
indentures, which are exhibits to the registration statement, and our recent
periodic and current reports filed with the SEC. Directions on how you can get
copies of these reports are provided on page 5 of this prospectus.
We are a holding company that conducts substantially all of our operations
through subsidiaries. As a result, claims of the holders of the debt securities
will generally have a junior position to claims of creditors of our
subsidiaries, except to the extent that J.P. Morgan Chase may be recognized, and
receives payment, as a creditor of those subsidiaries. Claims of our
subsidiaries' creditors other than J.P. Morgan Chase include substantial amounts
of long-term debt, deposit liabilities, federal funds purchased, securities sold
2
under repurchase agreements, commercial paper and other short-term borrowings.
GENERAL INDENTURE PROVISIONS THAT APPLY TO THE
SENIOR DEBT SECURITIES AND THE SUBORDINATED DEBT SECURITIES
- Each indenture allows us to issue different types of debt securities,
including indexed securities.
- Neither of the indentures limits the amount of debt that we may issue or
provides you with any protection should there be a highly leveraged
transaction, recapitalization or restructuring involving J.P. Morgan Chase.
- The indentures allow us to merge or consolidate with another company, or to
sell all or substantially all of our assets to another company. If one of
these events occurs, the other company will be required to assume our
responsibilities relating to the debt securities, and we will be released from
all liabilities and obligations.
- The indentures provide that holders of a majority of the total principal
amount of outstanding debt securities of any series may vote to change certain
of our obligations or certain of your rights concerning the debt securities of
that series. However, to change the amount or timing of principal, interest or
other payments under the debt securities of a series, every holder in the
series must consent.
- If an event of default (as described below) occurs with respect to any series
of debt securities, the trustee or holders of 25% of the outstanding principal
amount of that series may declare the principal amount of the series
immediately payable. However, holders of a majority of the principal amount
may rescind this action.
GENERAL INDENTURE PROVISIONS THAT APPLY
ONLY TO SENIOR DEBT SECURITIES
We have agreed in the indenture applicable to the senior debt securities, which
we refer to as the "senior indenture," that we and our subsidiaries will not
sell the voting stock of The Chase Manhattan Bank ("Chase Bank"), and that Chase
Bank will not issue its voting stock, unless the sale or issuance is for fair
market value and we and our subsidiaries would own at least 80% of the voting
stock of Chase Bank following the sale or issuance. This covenant would not
prevent us from completing a merger, consolidation or sale of substantially all
of our assets. In addition, this covenant would not prevent the merger or
consolidation of Chase Bank into another domestic bank if J.P. Morgan Chase and
its subsidiaries would own at least 80% of the voting stock of the successor
entity after the merger or consolidation. We currently expect that our
wholly-owned subsidiary, Morgan Guaranty Trust Company of New York ("Morgan
Bank") will merge with Chase Bank on November 10, 2001 and that, following
completion of the merger, Chase Bank will change its name to "JPMorgan Chase
Bank." All references herein to Chase Bank shall also refer to JPMorgan Chase
Bank after the merger on November 10, 2001.
If we satisfy certain conditions in the senior indenture, we may discharge that
indenture at any time by depositing with the trustee sufficient funds or
government obligations to pay the senior debt securities when due.
Events of Default. The senior indenture provides that the following are events
of default:
- We fail to pay interest for 30 days after the due date.
- We fail to pay principal or premium when due.
- We fail to make a sinking fund payment within 5 days after due date.
- We breach any other covenant and that breach continues for 60 days after
notice.
- We default in paying principal when due on J.P. Morgan Chase debt, including
senior debt securities of other series, having an aggregate principal amount
of more than $25,000,000, and the default is not rescinded within the later of
final maturity or any applicable grace period.
- More than $25,000,000 aggregate principal amount of J.P. Morgan Chase debt,
including senior debt securities of other series, is accelerated and the
acceleration is not rescinded within 30 days after notice.
- Specified bankruptcy or insolvency events occur.
- Any other event of default specified in the prospectus supplement occurs.
GENERAL INDENTURE PROVISIONS THAT APPLY
ONLY TO SUBORDINATED DEBT SECURITIES
The subordinated debt securities will be subordinated to all "Senior
Indebtedness," which includes all indebtedness for money borrowed by us, except
3
indebtedness that is stated not to be superior to, or to have the same rank as,
the subordinated debt securities.
Upon our dissolution, winding-up, liquidation or reorganization, creditors
holding "Additional Senior Obligations" would also be entitled to full payment
before we could distribute any amounts to holders of the subordinated debt
securities. Additional Senior Obligations include indebtedness for claims under
derivative products, including interest and foreign exchange and commodity
contracts, but exclude claims under Senior Indebtedness or claims under
subordinated obligations.
At June 30, 2001, approximately $48 billion of Senior Indebtedness and
Additional Senior Obligations were outstanding.
Events of Default. The indenture for the subordinated debt securities, which we
refer to as the "subordinated indenture," provides that the following are events
of default:
- Specified bankruptcy or insolvency events occur.
- Any other event of default specified in the prospectus supplement occurs.
PREFERRED STOCK AND DEPOSITARY SHARES
We may use this prospectus and an applicable prospectus supplement to offer our
preferred stock, par value $1 per share, in one or more series. We will
determine the dividend, voting, conversion and other rights of the series being
offered, and the terms and conditions relating to the offering and sale of the
series, at the time of the offer and sale. We may also issue fractional shares
of preferred stock that will be represented by depositary shares and depositary
receipts.
COMMON STOCK
We may use this prospectus and an applicable prospectus supplement to offer our
common stock, par value $1 per share. Subject to the rights of holders of our
preferred stock, holders of our common stock are entitled to receive dividends
when declared by our board of directors (which may also refer to a board
committee). Each holder of common stock is entitled to one vote per share. The
holders of common stock have no preemptive rights or cumulative voting rights.
WARRANTS
We may use this prospectus and an applicable prospectus supplement to offer
warrants for the purchase of debt securities, preferred stock or common stock,
which we refer to as "securities warrants." We may also offer warrants for the
cash value in U.S. dollars of the right to purchase or sell foreign or composite
currencies, which we refer to as "currency warrants." We may issue warrants
independently or together with other securities.
4
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDEND REQUIREMENTS
Our consolidated ratios of earnings to fixed charges and our consolidated ratios
of earnings to combined fixed charges and preferred stock dividend requirements
are as follows:
For purposes of computing the above ratios, earnings represent net income from
continuing operations plus total taxes based on income and fixed charges. Fixed
charges, excluding interest on deposits, include interest expense (other than on
deposits), one-third (the proportion deemed representative of the interest
factor) of rents, net of income from subleases, and capitalized interest. Fixed
charges, including interest on deposits, include all interest expense, one-third
(the proportion deemed representative of the interest factor) of rents, net of
income from subleases, and capitalized interest.
WHERE YOU CAN FIND MORE INFORMATION
ABOUT J.P. MORGAN CHASE
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
at the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" into this prospectus the
information in documents we file with it, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be a part of this
prospectus, and later information that we file with the SEC will update and
supersede this information.
We incorporate by reference (i) the documents listed below, (ii) all reports
that we file with the SEC after the date of the initial filing of the
registration statement and prior to effectiveness of the registration statement
and (iii) any future filings we make with the SEC after the date of this
prospectus under Section 13(a), 13(c), 14, or 15(d) of the Securities Exchange
Act of 1934 until our offering is completed:
(a) Our Annual Report on Form 10-K for the year ended December 31,
2000;
(b) Our Quarterly Reports on Form 10-Q for the quarters ended March
31, 2001 and June 30, 2001;
(c) Our Current Reports on Form 8-K filed on January 4, 2001, January
24, 2001, January 31, 2001, April 5, 2001, April 27, 2001, June 6, 2001,
July 20, 2001 and October 19, 2001; and
(d) The descriptions of our common stock and preferred stock contained
in our registration statements filed under Section 12 of the Securities
Exchange Act of 1934 and any amendment or report filed for the purpose of
updating that description.
You may request a copy of these filings, at no cost, by writing to or
telephoning us at the following address:
Office of the Secretary
J.P. Morgan Chase & Co.
270 Park Avenue
New York, NY 10017
212-270-4040
YOU SHOULD RELY ONLY ON THE INFORMATION PROVIDED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS AND THE PROSPECTUS SUPPLEMENT. WE HAVE NOT AUTHORIZED ANYONE TO
PROVIDE YOU WITH ANY OTHER INFORMATION. WE ARE NOT MAKING AN OFFER OF SECURITIES
IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE
INFORMATION IN THIS PROSPECTUS, THE PROSPECTUS SUPPLEMENT OR ANY DOCUMENT
INCORPORATED BY REFERENCE IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE
FRONT OF THE APPLICABLE DOCUMENT.
5
J.P. MORGAN CHASE & CO.
J.P. Morgan Chase is a financial holding company incorporated under Delaware law
in 1968. As of June 30, 2001, we had approximately $713 billion in assets and
approximately $42 billion in stockholders' equity.
We are a global financial services firm with operations in over 60 countries.
Our principal bank subsidiaries are Chase Bank and Morgan Bank, each of which is
a New York banking corporation headquartered in New York City; and Chase
Manhattan Bank USA, National Association ("Chase USA"), headquartered in
Delaware. Our principal non-bank subsidiary is our investment bank subsidiary,
J.P. Morgan Securities Inc. ("J.P. Morgan Securities"). We currently expect
Chase Bank to merge with Morgan Bank on November 10, 2001 and that, following
completion of the merger, Chase Bank will change its name to "JPMorgan Chase
Bank". All references herein to Chase Bank shall also refer to JPMorgan Chase
Bank after the merger on November 10, 2001.
Our activities are internally organized, for management reporting purposes, into
five major businesses: Investment Bank, Investment Management & Private Banking,
Treasury & Securities Services, JPMorgan Partners and Retail & Middle Market
Financial Services. We have presented a brief description of those businesses
below.
INVESTMENT BANK
The Investment Bank includes our securities underwriting and financial advisory,
trading, mergers and acquisitions advisory and corporate lending and syndication
businesses.
INVESTMENT MANAGEMENT & PRIVATE BANKING
Investment Management & Private Banking includes our asset management
businesses, including our mutual funds; our institutional money management and
cash management businesses; and our private bank, which provides wealth
management solutions for a global client base of high net worth individuals and
families.
TREASURY & SECURITIES SERVICES
Treasury & Securities Services is a recognized leader in information and
transaction processing services, moving trillions of dollars daily in securities
and cash for its wholesale clients. Treasury & Securities Services includes our
custody, cash management, and trust and other fiduciary services businesses.
JPMORGAN PARTNERS
JPMorgan Partners is one of the world's largest and most diversified private
equity investment firms with total funds under management of approximately $20
billion.
RETAIL & MIDDLE MARKET FINANCIAL SERVICES
Retail & Middle Market Financial Services serves more than 30 million consumers,
small businesses and middle-market customers nationwide. Retail & Middle Market
Financial Services offers a wide range of financial products and services,
including consumer banking, credit cards, mortgage services and consumer finance
services, through a diverse array of distribution channels, including the
internet and branch and ATM networks.
USE OF PROCEEDS
Unless otherwise specified in the applicable prospectus supplement, we will use
the net proceeds we receive from the sale of the securities offered by this
prospectus and the applicable prospectus supplement for general corporate
purposes. General corporate purposes may include the repayment of debt,
investments in or extensions of credit to our subsidiaries, redemption of
preferred stock, or the financing of possible acquisitions or business
expansion. We may invest the net proceeds temporarily or apply them to repay
short-term debt until we are ready to use them for their stated purpose.
DESCRIPTION OF DEBT SECURITIES
GENERAL
We have described below some general terms that may apply to the debt securities
we may offer by use of this prospectus and an applicable prospectus supplement.
We will describe the particular terms of any debt securities we offer to you in
the prospectus supplement relating to those debt securities.
The debt securities will be either senior debt securities or subordinated debt
securities. We will
6
issue the senior debt securities under the senior indenture referred to above
between us and Bankers Trust Company, as trustee. We will issue the subordinated
debt securities under the subordinated indenture between us and U.S. Bank Trust
National Association, as trustee.
The following summary is not complete. You should refer to the indentures,
copies of which are exhibits to the registration statement. Section references
below are to the sections of the applicable indenture.
Neither of the indentures limits the amount of debt securities that we may
issue. Each of the indentures provides that we may issue debt securities up to
the principal amount we authorize from time to time. The senior debt securities
will be unsecured and will have the same rank as all of our other unsecured and
unsubordinated debt. The subordinated debt securities will be unsecured and will
be subordinated and junior to all Senior Indebtedness as defined below under
"-- Subordinated Debt Securities -- Subordination". In addition, under certain
circumstances relating to our dissolution, winding-up, liquidation or
reorganization, the subordinated debt securities will be junior to all
Additional Senior Obligations, as defined and to the extent set forth below
under "-- Subordinated Debt Securities -- Subordination".
We are a holding company that conducts substantially all of our operations
through subsidiaries. As a result, claims of the holders of the debt securities
will generally have a junior position to claims of creditors of our
subsidiaries, except to the extent that J.P. Morgan Chase is recognized, and
receives payment, as a creditor of those subsidiaries. Claims of our
subsidiaries' creditors other than J.P. Morgan Chase include substantial amounts
of long-term debt, deposit liabilities, federal funds purchased, securities sold
under repurchase agreements, commercial paper and other short-term borrowings.
We may issue the debt securities in one or more separate series of senior debt
securities and/or subordinated debt securities. We will specify in the
prospectus supplement relating to the particular series of debt securities being
offered the particular amounts, prices and terms of those debt securities. These
terms may include:
- the title and type of the debt securities;
- any limit on the aggregate principal amount or aggregate initial offering
price of the debt securities;
- the purchase price of the debt securities;
- the dates on which the principal of the debt securities will be payable and
the amount payable upon acceleration;
- the interest rates of the debt securities, including the interest rates, if
any, applicable to overdue payments, or the method for determining those
rates, and the interest payment dates for the debt securities;
- the places where payments may be made on the debt securities;
- any mandatory or optional redemption provisions applicable to the debt
securities;
- any sinking fund or similar provisions applicable to the debt securities;
- the authorized denominations of the debt securities, if other than $1,000 and
integral multiples of $1,000;
- if denominated in a currency other than U.S. dollars, the currency or
currencies, including the euro or other composite currencies, in which
payments on the debt securities will be payable (which currencies may be
different for principal, premium and interest payments);
- any conversion or exchange provisions applicable to the debt securities;
- any events of default applicable to the debt securities not described in this
prospectus; and
- any other specific terms of the debt securities.
We may issue some of the debt securities as original issue discount debt
securities. Original issue discount debt securities will bear no interest or
will bear interest at a below-market rate and will be sold at a discount below
their stated principal amount. The prospectus supplement will contain any
special tax, accounting or other information relating to original issue discount
debt securities. If we offer other kinds of debt securities, including debt
securities linked to an index or
7
payable in currencies other than U.S. dollars, the prospectus supplement
relating to those debt securities will also contain any special tax, accounting
or other information relating to those debt securities.
We will issue the debt securities only in registered form without coupons. The
indentures permit us to issue debt securities of a series in certificated form
or in permanent global form. You will not be required to pay a service charge
for any transfer or exchange of debt securities, but we may require payment of
any taxes or other governmental charges.
We will pay principal of, and premium, if any, and interest, if any, on the debt
securities at the corporate trust office of Chase Bank in New York City. You may
also make transfers or exchanges of debt securities at that location. We also
have the right to pay interest on any debt securities by check mailed to the
registered holders of the debt securities at their registered addresses. In
connection with any payment on a debt security, we may require the holder to
certify information to J.P. Morgan Chase. In the absence of that certification,
we may rely on any legal presumption to enable us to determine our
responsibilities, if any, to deduct or withhold taxes, assessments or
governmental charges from the payment.
Neither of the indentures limits our ability to enter into a highly leveraged
transaction or provides you with any special protection in the event of such a
transaction. In addition, neither of the indentures provides special protection
in the event of a sudden and dramatic decline in our credit quality resulting
from a takeover, recapitalization or similar restructuring of J.P. Morgan Chase.
We may issue debt securities upon the exercise of securities warrants or upon
exchange or conversion of exchangeable or convertible debt securities. The
prospectus supplement will describe the specific terms of any of those
securities warrants or exchangeable or convertible securities. It will also
describe the specific terms of the debt securities issuable upon the exercise,
exchange or conversion of those securities. See "Description of Securities
Warrants" below.
SENIOR DEBT SECURITIES
The senior debt securities will be direct, unsecured general obligations of J.P.
Morgan Chase, will constitute Senior Indebtedness of J.P. Morgan Chase, and will
have the same rank as our other Senior Indebtedness. For a definition of "Senior
Indebtedness," see "-- Subordinated Debt Securities -- Subordination" below.
Limitation on Disposition of Stock of Chase Bank. The senior indenture contains
a covenant by us that, so long as any of the senior debt securities are
outstanding, neither we nor any Intermediate Subsidiary (as defined below) will
dispose of any shares of voting stock of Chase Bank, or any securities
convertible into, or options, warrants or rights to purchase shares of voting
stock of Chase Bank, except to J.P. Morgan Chase or an Intermediate Subsidiary.
In addition, the covenant provides that neither we nor any Intermediate
Subsidiary will permit Chase Bank to issue any shares of its voting stock, or
securities convertible into, or options, warrants or rights to purchase shares
of its voting stock, nor will we permit any Intermediate Subsidiary to cease to
be an Intermediate Subsidiary.
The above covenant is subject to our rights in connection with a consolidation
or merger of J.P. Morgan Chase with or into another person or a sale of our
assets. The covenant also will not apply if both:
(1) the disposition in question is made for fair market value, as
determined by the board of directors of J.P. Morgan Chase or the
Intermediate Subsidiary; and
(2) after giving effect to the disposition, we and any one or more of
our Intermediate Subsidiaries will collectively own at least 80% of the
issued and outstanding voting stock of Chase Bank or any successor to Chase
Bank, free and clear of any security interest.
The above covenant also does not restrict Chase Bank from being consolidated
with or merged into another domestic banking corporation, if after the merger or
consolidation, (A) J.P. Morgan Chase, or its successor, and any one or more
Intermediate Subsidiaries own at least 80% of the voting stock of the resulting
bank and (B) no event of default, and no event which, after notice or lapse of
time or both, would become an event of default, shall have happened and be
continuing.
The senior indenture defines an "Intermediate Subsidiary" as a subsidiary (1)
that is organized under the laws of any domestic jurisdiction and
8
(2) of which all the shares of capital stock, and all securities convertible
into, and options, warrants and rights to purchase shares of capital stock, are
owned directly by J.P. Morgan Chase, free and clear of any security interest. As
used above, "voting stock" means a class of stock having general voting power
under ordinary circumstances irrespective of the happening of a contingency. The
above covenant would not prevent Chase Bank from engaging in a sale of assets to
the extent otherwise permitted by the senior indenture. (Section 1006)
Events of Default. The senior indenture defines an event of default with
respect to any series of senior debt securities as any one of the following
events:
(1) default in the payment of interest on any senior debt security of
that series and continuance of that default for 30 days;
(2) default in the payment of principal of, or premium, if any, on,
any senior debt security of that series at maturity;
(3) default in the deposit of any sinking fund payment and continuance
of that default for five days;
(4) failure by us for 60 days after notice to perform any of the other
covenants or warranties in the senior indenture applicable to that series;
(5) (A) failure by us to pay indebtedness for money borrowed by us,
including senior debt securities of other series, in an aggregate principal
amount exceeding $25,000,000, at the later of final maturity or the
expiration of any applicable grace period or (B) acceleration of the
maturity of any indebtedness for money borrowed by us, including senior
debt securities of other series, in an aggregate principal amount exceeding
$25,000,000, if that failure to pay or acceleration results from a default
under the instrument giving rise to or securing the indebtedness for money
borrowed by us and is not rescinded or annulled within 30 days after due
notice, unless the default is contested in good faith by appropriate
proceedings;
(6) specified events of bankruptcy, insolvency or reorganization of
J.P. Morgan Chase or Chase Bank; and
(7) any other event of default specified with respect to senior debt
securities of that series. (Section 501)
If any event of default with respect to senior debt securities of any series
occurs and is continuing, either the trustee or the holders of not less than 25%
in principal amount of the outstanding senior debt securities of that series may
declare the principal amount (or, if the senior debt securities of that series
are original issue discount senior debt securities, a specified portion of the
principal amount) of all senior debt securities of that series to be due and
payable immediately. No such declaration is required upon specified events of
bankruptcy. Subject to the conditions set forth in the indenture, the holders of
a majority in principal amount of the outstanding senior debt securities of that
series may annul the declaration and waive past defaults, except uncured payment
defaults and other specified defaults. (Sections 502 and 513)
We will describe in the prospectus supplement any particular provisions relating
to the acceleration of the maturity of a portion of the principal amount of
original issue discount senior debt securities upon an event of default.
The senior indenture requires the trustee, within 90 days after the occurrence
of a default known to it with respect to any outstanding series of senior debt
securities, to give the holders of that series notice of the default if uncured
or not waived. The trustee may withhold the notice if it determines in good
faith that the withholding of the notice is in the interest of those holders.
However, the trustee may not withhold the notice in the case of a payment
default. The trustee may not give the above notice until 60 days after the
occurrence of a default in the performance of a covenant in the senior
indenture, other than a covenant to make payment. The term "default" for the
purpose of this provision means any event that is, or after notice or lapse of
time or both would become, an event of default with respect to senior debt
securities of that series. (Section 602)
Other than the duty to act with the required standard of care during a default,
the trustee is not obligated to exercise any of its rights or
9
powers under the senior indenture at the request or direction of any of the
holders of senior debt securities, unless the holders have offered to the
trustee reasonable security or indemnity. The senior indenture provides that the
holders of a majority in principal amount of outstanding senior debt securities
of any series may direct the time, method and place of conducting any proceeding
for any remedy available to the trustee for that series, or exercising any trust
or other power conferred on the trustee. However, the trustee may decline to act
if the direction is contrary to law or the senior indenture. (Section 512)
The senior indenture includes a covenant requiring us to file annually with the
trustee a certificate of no default, or specifying any default that exists.
(Section 1007)
Defeasance and Covenant Defeasance. The senior indenture contains a provision
that, if made applicable to any series of senior debt securities, permits us to
elect:
- defeasance, which would discharge us from all of our obligations (subject to
limited exceptions) with respect to any senior debt securities of that series
then outstanding, and/or
- covenant defeasance, which would release us from our obligations under
specified covenants and the consequences of the occurrence of an event of
default resulting from a breach of those covenants or a cross-default.
To make either of the above elections, we must deposit in trust with the trustee
money and/or U.S. government obligations (as defined below) which through the
payment of principal and interest in accordance with their terms will provide
sufficient money, without reinvestment, to repay in full those senior debt
securities. As used in the senior indenture, "U.S. government obligations" are:
(1) direct obligations of the United States or of an agency or
instrumentality of the United States, in either case that are, or are
guaranteed as, full faith and credit obligations of the United States and
that are not redeemable by the issuer; and
(2) certain depositary receipts with respect to an obligation referred
to in clause (1).
As a condition to defeasance or covenant defeasance, we must deliver to the
trustee an opinion of counsel that the holders of the senior debt securities
will not recognize income, gain, or loss for federal income tax purposes as a
result of the defeasance or covenant defeasance and will be subject to federal
income tax on the same amount, in the same manner and at the same times as would
have been the case if defeasance or covenant defeasance had not occurred. That
opinion, in the case of defeasance, but not covenant defeasance, must refer to
and be based upon a ruling received by us from the Internal Revenue Service or
published as a revenue ruling or upon a change in applicable federal income tax
law.
If we exercise our covenant defeasance option with respect to a particular
series of senior debt securities, then even if there were a default under the
related covenant, payment of those senior debt securities could not be
accelerated. We may exercise our defeasance option with respect to a particular
series of senior debt securities even if we previously had exercised our
covenant defeasance option. If we exercise our defeasance option, payment of
those senior debt securities may not be accelerated because of any event of
default. If we exercise our covenant defeasance option and an acceleration were
to occur, the realizable value at the acceleration date of the money and U.S.
government obligations in the defeasance trust could be less than the principal
and interest then due on those senior debt securities.
Modification of the Senior Indenture. We and the trustee may modify the senior
indenture with the consent of the holders of not less than a majority in
principal amount of each series of outstanding senior debt securities affected
by the modification. However, without the consent of each affected holder, no
such modification may:
- change the stated maturity of any senior debt security;
- reduce the principal amount of, or premium, if any, on, any senior debt
security;
- reduce the rate of payment of interest on any senior debt security, or change
other specified provisions relating to the yield of any senior debt security;
- change the currency or currencies in which any senior debt security is
payable;
10
- reduce the percentage of holders of outstanding senior debt securities of any
series required to consent to any modification, amendment or any waiver under
the senior indenture; or
- change the provisions in the senior indenture that relate to its modification
or amendment. (Section 902)
We and the trustee may amend the senior indenture without the consent of the
holders of senior debt securities in the event we merge with another person, to
replace the trustee, to effect modifications that do not affect any outstanding
series of senior debt securities, and for other specified purposes.
Consolidation, Merger and Sale of Assets. We may, without the consent of the
holders of any senior debt securities, consolidate or merge with any other
person or transfer or lease all or substantially all of our assets to another
person or permit another corporation to merge into J.P. Morgan Chase, provided
that:
(1) the successor is a person organized under U.S. laws;
(2) the successor, if not us, assumes our obligations on the senior
debt securities and under the senior indenture;
(3) after giving effect to the transaction, no event of default, and
no event which, after notice or lapse of time or both, would become an
event of default, shall have occurred and be continuing; and
(4) other specified conditions are met. (Section 801)
SUBORDINATED DEBT SECURITIES
The subordinated debt securities will be direct, unsecured general obligations
of J.P. Morgan Chase. The subordinated debt securities will be subordinate and
junior in right of payment to all Senior Indebtedness and, in certain
circumstances described below relating to our dissolution, winding-up,
liquidation or reorganization, to all Additional Senior Obligations. The
subordinated indenture does not limit the amount of debt, including Senior
Indebtedness or Additional Senior Obligations, we may incur. As of June 30,
2001, Senior Indebtedness and Additional Senior Obligations totaled
approximately $48 billion.
Unless otherwise specified in the prospectus supplement, the maturity of the
subordinated debt securities will be subject to acceleration only upon our
bankruptcy or reorganization. See "-- Defaults and Waivers" below.
The holders of subordinated debt securities of a series that is specified to be
convertible into our common stock will be entitled as specified in the
applicable prospectus supplement to convert those convertible subordinated debt
securities into common stock, at the conversion price set forth in the
prospectus supplement.
The holders of subordinated debt securities of any series may be obligated at
maturity, or at any earlier time specified in the applicable prospectus
supplement, to exchange that series of subordinated debt securities for capital
securities. "Capital securities" may consist of our common stock, perpetual
preferred stock or other capital securities of J.P. Morgan Chase acceptable to
our primary federal banking regulator, which currently is the Board of Governors
of the Federal Reserve System (the "Federal Reserve Board"). We will describe
the terms of any such exchange and of the capital securities that will be issued
upon that exchange in the applicable prospectus supplement. Whenever
subordinated debt securities are exchangeable for capital securities, we will be
obligated to deliver capital securities with a market value equal to the
principal amount of those subordinated debt securities. In addition, we will
unconditionally undertake, at our expense, to sell the capital securities in a
secondary offering on behalf of any holders who elect to receive cash for the
capital securities.
Subordination. The subordinated debt securities will be subordinate and junior
in right of payment to all Senior Indebtedness and, under certain circumstances
described below, to all Additional Senior Obligations.
The subordinated indenture defines "Senior Indebtedness" to mean the principal
of, and premium, if any, and interest on all indebtedness for money borrowed by
us, whether outstanding on the date the subordinated indenture became effective
or created, assumed or incurred after that date, including all indebtedness for
money borrowed by another person that we guarantee. However, Senior Indebtedness
does not include indebtedness that is stated not to be superior to or to have
the same rank as the subordinated debt
11
securities. In particular, Senior Indebtedness does not include (A) Antecedent
Subordinated Indebtedness (as defined below), (B) subordinated debt securities
issued under the subordinated indenture on or after December 15, 1992, (C)
Assumed Heritage Chase Subordinated Indebtedness (as defined below), (D)
Antecedent Heritage JPM Subordinated Indebtedness (as defined below), (E) Other
Assumed Heritage JPM Subordinated Indebtedness (as defined below) and (F) other
debt of J.P. Morgan Chase that is expressly stated to have the same rank as or
not to rank superior to the subordinated debt securities (we refer to that other
debt as "Other Subordinated Indebtedness").
The subordinated indenture defines "Additional Senior Obligations" to mean all
indebtedness of J.P. Morgan Chase for claims in respect of derivative products,
such as interest and foreign exchange rate contracts, commodity contracts and
similar arrangements, except Senior Indebtedness and except obligations that are
expressly stated to have the same rank as or not to rank senior to the
subordinated debt securities. For purposes of this definition, claim shall have
the meaning assigned in Section 101(4) of the United States Bankruptcy Code and
in effect on the date of execution of the subordinated indenture.
"Antecedent Subordinated Indebtedness" means all outstanding subordinated debt
securities issued by Chemical Banking Corporation prior to December 15, 1992.
"Assumed Heritage Chase Subordinated Indebtedness" means all outstanding
subordinated indebtedness that we assumed as a result of our merger with The
Chase Manhattan Corporation.
"Antecedent Heritage JPM Subordinated Indebtedness" means all outstanding
subordinated indebtedness issued by heritage J.P. Morgan prior to March 1, 1993
that we assumed as a result of our merger with heritage J.P. Morgan.
"Other Assumed Heritage JPM Subordinated Indebtedness" means all outstanding
subordinated indebtedness issued by heritage J.P. Morgan on or after March 1,
1993 that we assumed as a result of our merger with heritage J.P. Morgan.
Under the subordinated indenture, we may not make any payment on the
subordinated debt securities or exchange any subordinated debt securities for
capital securities in the event:
- we have failed to make full payment of all amounts of principal, and premium,
if any, and interest, if any, due on all Senior Indebtedness; or
- there shall exist any event of default on any Senior Indebtedness or any event
which, with notice or lapse of time or both, would become such an event of
default.
In addition, upon our dissolution, winding-up, liquidation or reorganization:
- we must pay to the holders of Senior Indebtedness the full amounts of
principal of, and premium, if any, and interest, if any, on the Senior
Indebtedness before any payment or distribution is made on the subordinated
debt securities, and
- if, after we have made those payments on the Senior Indebtedness, there are
amounts available for payment on the subordinated debt securities and
creditors in respect of Additional Senior Obligations have not received their
full payments,
then we will first use amounts available for payment on the subordinated debt
securities, other than Antecedent Subordinated Indebtedness, to pay in full all
Additional Senior Obligations before we may make any payment on the subordinated
debt securities.
No series of our subordinated debt securities described above is subordinated to
any other series of subordinated debt securities or to any other subordinated
indebtedness of J.P. Morgan Chase referred to above (other than our junior
subordinated indebtedness). However, Antecedent Subordinated Indebtedness is
subordinated only to Senior Indebtedness, while the subordinated debt securities
and Other Subordinated Indebtedness (other than junior subordinated
indebtedness) are subordinated to Senior Indebtedness and, in specified
circumstances relating to our dissolution, winding-up, liquidation or
reorganization, to Additional Senior Obligations. Antecedent Heritage JPM
Subordinated Indebtedness is subordinated only to "Senior Indebtedness" as
defined in the indenture governing the Antecedent Heritage JPM Indebtedness (the
meaning of which term is substantially identical to Senior Indebtedness as
12
defined above). The Other Assumed Heritage JPM Subordinated Indebtedness (other
than junior subordinated indebtedness) is subordinated to Senior Indebtedness
and, in specified circumstances relating to our dissolution, winding-up,
liquidation or reorganization, to Derivative Obligations (the meaning of which
term is substantially identical to Additional Senior Obligations). Assumed
Heritage Chase Subordinated Indebtedness is subordinated to all of our
obligations to our creditors, including Senior Indebtedness, Additional Senior
Obligations and Derivative Obligations, except any obligation that is expressly
stated to have the same rank as, or not to rank senior to, the Assumed Heritage
Chase Subordinated Indebtedness.
As a result of the above-described differences in the subordination provisions
applicable to the various series of subordinated indebtedness issued by J.P.
Morgan Chase and our predecessors, in the event of our dissolution, winding-up,
liquidation or reorganization, the holders of the subordinated debt securities,
Other Subordinated Indebtedness and Other Assumed Heritage JPM Subordinated
Indebtedness (other than junior subordinated indebtedness) may receive less,
proportionately, than the holders of Antecedent Subordinated Indebtedness and
Antecedent Heritage JPM Subordinated Indebtedness, but more, proportionately,
than the holders of Assumed Heritage Chase Subordinated Indebtedness.
Holders of the subordinated debt securities may not accelerate the maturity of
the subordinated debt securities, except in the event of our bankruptcy or
reorganization. Holders may not accelerate the subordinated debt securities if
we fail to pay interest or fail to perform any other agreement in the
subordinated debt securities or the subordinated indenture. See "--Defaults and
Waivers" below.
Limitation on Disposition of Voting Stock of Chase Bank. Except as noted below,
the subordinated indenture does not contain a covenant prohibiting us from
selling or otherwise disposing of any shares of voting stock of Chase Bank, or
securities convertible into, or options, warrants or rights to purchase shares
of voting stock of Chase Bank. The subordinated indenture also does not prohibit
Chase Bank from issuing any shares of its voting stock or securities convertible
into, or options, warrants or rights to purchase shares of its voting stock.
However, the subordinated indenture does contain a covenant, which is for the
exclusive benefit of holders of the Antecedent Subordinated Indebtedness and
which is subject to the provisions described below under "-- Consolidation,
Merger and Sale of Assets," that we will not sell or otherwise dispose of any
shares of voting stock of Chase Bank, or securities convertible into, or
options, warrants or rights to purchase shares of, voting stock of Chase Bank,
nor will we permit Chase Bank to issue any shares of its voting stock or
securities convertible into, or options, warrants or rights to purchase shares
of its voting stock. However, that covenant does not prohibit:
- issuances or sales of directors' qualifying shares;
- issuances or sales of shares to us;
- sales or other dispositions or issuances for fair market value, as determined
by our board of directors, so long as we would continue to own directly or
indirectly not less than 80% of the issued and outstanding shares of the
voting stock of Chase Bank;
- sales or other dispositions or issuances made in compliance with an order or
direction of a court or regulatory authority of competent jurisdiction; and
- sales of voting stock by Chase Bank to its shareholders if those sales do not
reduce the percentage of shares of voting stock owned by us. (Section 5.07)
Defaults and Waivers. The subordinated indenture defines an event of default
with respect to any series of subordinated debt securities as follows:
- any one of certain events of bankruptcy or reorganization affecting J.P.
Morgan Chase;
- any other event specified with respect to subordinated debt securities of that
series. (Section 7.01)
If an event of default occurs and is continuing with respect to any outstanding
series of subordinated debt securities, the trustee or the holders of at least
25% in aggregate principal amount of that outstanding series may declare the
principal (or, in the case of original issue discount subordinated debt
securities, a specified amount of principal) of all subordinated debt securities
of that series to be
13
due and payable immediately in cash. Subject to specified conditions, the
holders of not less than a majority in aggregate principal amount of the
subordinated debt securities of that series may annul the declaration and waive
certain past defaults. (Section 7.01) The right of the holders of the
subordinated debt securities of a series to demand payment in cash upon the
occurrence and continuance of an event of default will continue to exist so long
as the subordinated debt securities of that series have not been exchanged or
converted. In the event of the bankruptcy or reorganization of J.P. Morgan
Chase, any right to enforce that payment in cash would be subject to the broad
equity powers of a federal bankruptcy court and to its determination of the
nature and status of the payment claims of the holders of the subordinated debt
securities. Prior to any declaration of acceleration, the holders of a majority
in aggregate principal amount of the applicable series of subordinated debt
securities may waive any past default or event of default, except a payment
default. (Section 7.07)
Unless otherwise provided in the terms of a series of subordinated debt
securities, there will be no right of acceleration of the payment of principal
of the subordinated debt securities of that series upon a default in the payment
of principal or interest or a default in the performance of any covenant or
agreement in the subordinated debt securities or the subordinated indenture. In
the event of a default in the payment of interest or principal, including a
default in the delivery of any capital securities in exchange for subordinated
debt securities, or in the performance of any covenant or agreement in the
subordinated debt securities or the subordinated indenture, the trustee may,
subject to specified limitations and conditions, seek to enforce that payment or
delivery or the performance of that covenant or agreement.
The subordinated indenture requires the trustee, within 90 days after the
occurrence of a default with respect to subordinated debt securities of any
series, to give the holders of that series notice of all uncured defaults known
to it. However, except in certain cases involving our bankruptcy or
reorganization, a payment default or a default in the obligation to deliver
capital securities in exchange for subordinated debt securities, the trustee may
withhold the notice if it determines in good faith that the withholding of the
notice is in the interest of those holders. The term "default" for purposes of
this provision includes the events of default specified above without grace
periods or notice. (Section 7.08) We are required to furnish to the trustee
annually an officers' certificate as to the absence of defaults under the
subordinated indenture. (Section 5.06)
Other than the duties of the trustee to act with the required standard of care
during a default, the trustee is not obligated to exercise any of its rights or
powers under the subordinated indenture at the request or direction of any of
the holders of the subordinated debt securities, unless those holders have
offered the trustee reasonable security or indemnity. Subject to that provision
for security or indemnity, the holders of a majority in principal amount of the
subordinated debt securities of any series then outstanding have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to, or exercising any trust or power conferred on, the trustee with
respect to the subordinated debt securities of that series. (Sections 7.07 and
8.02)
Modification of the Subordinated Indenture. The subordinated indenture contains
provisions permitting us and the trustee to modify the subordinated indenture or
the rights of the holders of the subordinated debt securities with the consent
of the holders of not less than a majority in principal amount of each
outstanding series of the subordinated debt securities affected by the
modification. However, no such modification may, without the consent of each
holder of subordinated debt securities affected by the modification:
- change the stated maturity date of the principal of, or any installment of
principal of or interest on, any subordinated debt security;
- reduce the principal amount of, or premium, if any, or interest, if any, on,
any subordinated debt security;
- reduce the portion of the principal amount of an original issue discount
subordinated debt security payable upon acceleration of the maturity of that
subordinated debt security;
- reduce any amount payable upon redemption of any subordinated debt security;
- change the place or places where, or the currency in which, any subordinated
debt security or any premium or interest is payable;
14
- change the definition of market value;
- impair the right of any holders of subordinated debt securities of any series
to receive on any exchange date for subordinated debt securities of that
series capital securities with a market value equal to that required by the
terms of the subordinated debt securities;
- impair the conversion rights, if any, of any holders;
- impair the right of a holder to institute suit for the enforcement of any
payment on or with respect to any subordinated debt security, including any
right of redemption at the option of the holder of that subordinated debt
security, or impair any rights to the delivery of capital securities in
exchange for any subordinated debt security or to require us to sell capital
securities in a secondary offering or to require the delivery of common stock,
debt securities or other property upon conversion of subordinated debt
securities;
- reduce the above-stated percentage of subordinated debt securities of any
series the consent of the holders of which is necessary to modify or amend the
subordinated indenture, or reduce the percentage of subordinated debt
securities of any series the holders of which are required to waive any past
default or event of default; or
- modify the above requirements. (Section 11.02)
The subordinated indenture permits us and the trustee to amend the subordinated
indenture without the consent of the holders of subordinated debt securities in
the event of the merger of J.P. Morgan Chase, the replacement of the trustee, to
effect modifications that do not affect any outstanding series of subordinated
debt securities and for other specified purposes. (Section 11.01)
Consolidation, Merger and Sale of Assets. We may not merge or consolidate with
any other corporation or sell or convey all or substantially all of our assets
to any other corporation, unless:
- we are the continuing corporation or the successor corporation expressly
assumes the payment of the principal of (including issuance and delivery of
capital securities), and premium, if any, and interest, if any, on, the
subordinated debt securities and the performance and observance of all the
covenants and conditions of the subordinated indenture binding upon us; and
- immediately after the merger, consolidation, sale or conveyance, we or the
successor corporation shall not be in default in the performance of any such
covenant or condition. (Article Twelve)
INFORMATION CONCERNING THE TRUSTEES
J.P. Morgan Chase and some of our subsidiaries may maintain deposits or conduct
other banking transactions with the trustees under the senior indenture and the
subordinated indenture in the ordinary course of business. U.S. Bank Trust
National Association is also trustee under a subordinated indenture, dated as of
May 1, 1987, as amended and restated as of September 1, 1993 that we assumed in
our merger with The Chase Manhattan Corporation, and under the following
indentures that we assumed in our merger with heritage J.P. Morgan: a senior
indenture, dated as of August 15, 1982, a subordinated indenture, dated as of
December 1, 1986, a subordinated indenture, dated as of March 1, 1993 and a
junior subordinated indenture, dated as of November 10, 1996, in each case, as
amended. Bankers Trust Company is also trustee under a senior indenture, dated
as of July 1, 1986, as amended, that we assumed in our merger with The Chase
Manhattan Corporation.
DESCRIPTION OF PREFERRED STOCK
GENERAL
Under our certificate of incorporation, our board of directors is authorized,
without further stockholder action, to issue up to 200,000,000 shares of
preferred stock, $1 par value per share, in one or more series, and to determine
the voting powers and the designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions of each series. We may amend our certificate of incorporation to
increase the number of authorized shares of preferred stock in a manner
permitted by our certificate of incorporation and the Delaware General
Corporation Law.
We will describe the particular terms of any series of preferred stock being
offered in the prospectus
15
supplement relating to that series of preferred stock. Those terms may include:
- the number of shares being offered;
- the title and liquidation preference per share;
- the purchase price;
- the dividend rate or method for determining that rate;
- the dates on which dividends will be paid;
- whether dividends will be cumulative or noncumulative and, if cumulative, the
dates from which dividends will begin to accumulate;
- any applicable redemption or sinking fund provisions;
- any applicable conversion provisions;
- whether we have elected to offer depositary shares with respect to that series
of preferred stock; and
- any additional dividend, liquidation, redemption, sinking fund and other
rights and restrictions applicable to that series of preferred stock.
If the terms of any series of preferred stock being offered differ from the
terms set forth below, we will also disclose those different terms in the
prospectus supplement relating to that series of preferred stock. The following
summary is not complete. You should also refer to our certificate of
incorporation and to the certificate of designations relating to the series of
the preferred stock being offered for the complete terms of that series of
preferred stock. Our certificate of incorporation and a form of certificate of
designations are filed as exhibits to the registration statement. We will file
the certificate of designations with the SEC promptly after the offering of the
preferred stock.
The preferred stock will, when issued, be fully paid and nonassessable. Unless
otherwise specified in the prospectus supplement, in the event we liquidate,
dissolve or wind-up our business, each series of preferred stock being offered
will have the same rank as to dividends and distributions as our currently
outstanding preferred stock and each other series of preferred stock we may
offer in the future by use of this prospectus and an applicable prospectus
supplement. The preferred stock will have no preemptive rights.
DIVIDEND RIGHTS
If you purchase preferred stock offered by use of this prospectus and an
applicable prospectus supplement, you will be entitled to receive, when, as and
if declared by our board of directors, cash dividends at the rates and on the
dates set forth in the prospectus supplement. Dividend rates may be fixed or
variable or both. Different series of preferred stock may be entitled to
dividends at different dividend rates or based upon different methods of
determination. We will pay each dividend to the holders of record as they appear
on our stock books (or, if applicable, the records of the depositary referred to
below under "-- Depositary Shares") on record dates determined by our board of
directors. Dividends on any series of preferred stock may be cumulative or
noncumulative, as specified in the prospectus supplement. If our board of
directors fails to declare a dividend on any series of preferred stock for which
dividends are noncumulative, then your right to receive that dividend will be
lost, and we will have no obligation to pay the dividend for that dividend
period, whether or not we declare dividends for any future dividend period.
Unless otherwise specified in the applicable prospectus supplement, each series
of preferred stock that we offer by use of this prospectus and an applicable
prospectus supplement will provide that we may not declare or pay or set apart
for payment dividends on any series of preferred stock ranking, as to dividends,
equally with or junior to the series of preferred stock we are offering unless
we have previously declared and paid or set apart for payment, or we
contemporaneously declare and pay or set apart for payment, full dividends
(including cumulative dividends still owing, if any) on the series of preferred
stock we are offering for all dividend periods terminating on or prior to the
dividend payment date for all equally or junior ranking series. If we fail to
pay dividends in full as stated above, we may only declare dividends on equally
ranking series pro rata so that the amount of dividends declared per share on
the series of preferred stock we are offering and the equally ranking series
bear to each other the same ratio that accrued and unpaid dividends per share on
the series being offered and the other series bear to each other. We will not
pay interest or any sum of money instead of interest on any dividend payment
that may be in arrears on any series of preferred stock we are offering.
Unless otherwise specified in the applicable prospectus supplement, the
preferred stock we offer by use of this prospectus and an applicable prospectus
supplement will also provide that, unless we have paid or declared and set aside
for
16
payment full dividends, including cumulative dividends owing, if any, on that
preferred stock for all past dividend periods, we will not:
- declare or make any dividend payment or distribution on any junior ranking
stock, other than a dividend paid in junior ranking stock, or
- redeem, purchase, otherwise acquire or set apart money for a sinking fund for
the redemption of any junior or equally ranking stock, except by conversion
into or exchange for junior ranking stock.
Unless otherwise specified in the applicable prospectus supplement, we will
compute the amount of dividends payable by annualizing the applicable dividend
rate and dividing by the number of dividend periods in a year, except that the
amount of dividends payable for the initial dividend period or any period
shorter than a full dividend period will be computed on the basis of a 360 day
year consisting of twelve 30-day months and, for any period less than a full
month, the actual number of days elapsed in the period.
RIGHTS UPON LIQUIDATION
In the event we liquidate, dissolve or wind-up our affairs, either voluntarily
or involuntarily, you will be entitled to receive liquidating distributions in
the amount set forth in the prospectus supplement applicable to the series of
preferred stock you hold, plus accrued and unpaid dividends, if any, before we
make any distribution of assets to the holders of our common stock. If we fail
to pay in full all amounts payable with respect to preferred stock offered by
use of this prospectus and an applicable prospectus supplement, and any stock
having the same rank as that series of preferred stock, the holders of the
preferred stock and of that other stock will share in any distribution of assets
in proportion to the full respective preferential amounts to which they are
entitled. After the holders of each series of preferred stock and any stock
having the same rank as their preferred stock are paid in full, they will have
no right or claim to any of our remaining assets. For any series of preferred
stock offered by use of this prospectus and an applicable prospectus supplement,
neither the sale of all or substantially all of our property or business nor a
merger or consolidation by us with any other corporation will be considered a
dissolution, liquidation or winding-up of our business or affairs.
REDEMPTION
The applicable prospectus supplement will indicate whether the series of
preferred stock offered by use of this prospectus and an applicable prospectus
supplement is subject to redemption, in whole or in part, whether at our option
or mandatorily and whether or not pursuant to a sinking fund. The redemption
provisions that may apply to a series of preferred stock offered, including the
redemption dates, the redemption prices for that series and whether those
redemption prices will be paid in cash, stock or a combination of cash and
stock, will be set forth in the prospectus supplement. If the redemption price
is to be paid only from the proceeds of the sale of our capital stock, the terms
of the series of preferred stock may also provide that, if our capital stock is
not sold or if the amount of cash received is insufficient to pay in full the
redemption price then due, the series of preferred stock will automatically be
converted into shares of the applicable capital stock pursuant to conversion
provisions specified in the prospectus supplement.
If we are redeeming fewer than all the outstanding shares of preferred stock of
any series, whether by mandatory or optional redemption, our board of directors
will determine the method for selecting the shares to be redeemed, which may be
by lot or pro rata or by any other method the board of directors determines to
be equitable. From and after the redemption date, dividends will cease to accrue
on the shares of preferred stock called for redemption and all rights of the
holders of those shares, except the right to receive the redemption price, will
cease.
In the event that we fail to pay full dividends, including accrued but unpaid
dividends, if any, on any series of preferred stock offered, we may not redeem
that series in part and we may not purchase or acquire any shares of that series
of preferred stock, except by an offer made on the same terms to all holders of
that series of preferred stock.
CONVERSION RIGHTS
The prospectus supplement will state the terms, if any, on which shares of the
series of preferred stock offered by use of this prospectus and an applicable
prospectus supplement are convertible into shares of our common stock or other
securities. As described under "-- Redemption" above,
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under certain circumstances, preferred stock may be mandatorily convertible into
our common stock or another series of our preferred stock.
VOTING RIGHTS
Except as indicated below or in the applicable prospectus supplement, or except
as expressly required by applicable law, the holders of the preferred stock
offered by use of this prospectus and an applicable prospectus supplement will
not be entitled to vote. Except as indicated in the prospectus supplement, in
the event we offer full shares of any series of preferred stock, each share will
be entitled to one vote on matters on which holders of that series of preferred
stock are entitled to vote. However, as more fully described below under
"-- Depositary Shares," if we use this prospectus and an applicable prospectus
supplement to offer depositary shares representing a fraction of a share of a
series of preferred stock, each depositary share, in effect, will be entitled to
that fraction of a vote, rather than a full vote. Because each full share of any
series of preferred stock offered will be entitled to one vote, the voting power
of that series will depend on the number of shares in that series, and not on
the aggregate liquidation preference or initial offering price of the shares of
that series of preferred stock.
If, at the time of any annual meeting of our stockholders, the equivalent of six
quarterly dividends payable on any series of preferred stock being offered is in
default, the number of directors constituting our board of directors will be
increased by two and the holders of all the outstanding series of preferred
stock, voting together as a single class, will be entitled to elect those
additional two directors at that annual meeting. Each director elected by the
holders of shares of the outstanding preferred stock will continue to serve as a
director for the full term for which he or she was elected, even if prior to the
end of that term we have paid in full the amount of dividends that had been in
arrears. For purposes of this paragraph, "default" means that accrued and unpaid
dividends on the applicable series are equal to or greater than the equivalent
of six quarterly dividends.
Unless otherwise specified in the applicable prospectus supplement, the terms of
each series of preferred stock being offered will state that the approval of at
least two-thirds of the outstanding shares of preferred stock will be required
to:
- create any class or series of stock having a preference over any outstanding
series of preferred stock; or
- change the provisions of our certificate of incorporation in a manner that
would adversely affect the voting powers or other rights of the holders of a
series of preferred stock.
The terms of the preferred stock offered will also state that if the amendment
will not adversely affect all series of outstanding preferred stock, then the
amendment will only need to be approved by holders of at least two-thirds of the
shares of the series of preferred stock adversely affected.
Under regulations adopted by the Federal Reserve Board, if the holders of any
series of our preferred stock become entitled to vote for the election of
directors because dividends on that series are in arrears, that series may then
be deemed a "class of voting securities." In such a case, a holder of 25% or
more of the series, or a holder of 5% or more if that holder would also be
considered to exercise a "controlling influence" over J.P. Morgan Chase, may
then be subject to regulation as a bank holding company in accordance with the
Bank Holding Company Act. In addition, (1) any other bank holding company may be
required to obtain the prior approval of the Federal Reserve Board to acquire or
retain 5% or more of that series, and (2) any person other than a bank holding
company may be required to obtain the approval of the Federal Reserve Board to
acquire or retain 10% or more of that series.
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OUTSTANDING PREFERRED STOCK
As of the date of this prospectus, we have issued and outstanding the series of
preferred stock described in the following table:
---------------
(a) Redemption price is price indicated on table, plus accrued but unpaid
dividends, if any.
(b) Floating rates are based on specified U.S. Treasury rates. The minimum and
maximum annual rates are 5.00% and 11.50%, respectively.
(c) Shares of this series are represented by depositary shares, each
representing a one-tenth interest in a share of preferred stock of the
series.
(d) Floating rates are based on specified U.S. Treasury rates. The minimum and
maximum annual rates for each series are 4.50% and 10.50%, respectively.
(e) Dividends on this series for dividend periods commencing on or after July 1,
2003 will be at a floating rate based on specified U.S. Treasury rates (but
subject to a minimum rate of 5.46% and a maximum rate of 11.46%). The amount
of dividends payable may be adjusted, and the stock may be redeemed earlier
than June 30, 2003, in the event of specified amendments to the Internal
Revenue Code of 1986 relating to the dividends-received deduction.
Ranking. All the outstanding series of preferred stock have the same rank. All
the outstanding series of preferred stock have preference over our common stock
with respect to the payment of dividends and the distribution of assets in the
event of our liquidation or dissolution.
Dividends. Dividends payable on each series of outstanding preferred stock are
payable quarterly, when and as declared by the board of directors, in the
amounts determined as set forth in the above table, on each March 31, June 30,
September 30 and December 31.
Dividends on each series of outstanding preferred stock, other than our
Fixed/Adjustable preferred stock, are cumulative. If we fail to declare a
dividend on our Fixed/Adjustable preferred stock for any dividend period,
holders of that series will have no right to receive a dividend for that
dividend period, whether or not we declare dividends on that series for any
future dividend period.
We may not declare or pay any dividends on any series of preferred stock, unless
we have previously declared and paid or we contemporaneously declare and pay
full dividends (and cumulative dividends still owing, if any) on all other
series of preferred stock that have the same rank as, or rank senior to, that
series of preferred stock. If we do not pay full dividends on the
equally-ranking series as described above, we may only declare dividends pro
rata, so that the amount of dividends declared per share on that series of
preferred stock and on each other equally-ranking series of preferred stock will
bear to each other the same ratio that accrued dividends per share on that
series of preferred stock and those other
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series bear to each other. In addition, generally, unless we have paid full
dividends, including cumulative dividends still owing, if any, on all
outstanding shares of any series of preferred stock, we may not declare or pay
dividends on our common stock and generally we may not redeem or purchase any
common stock (except by payment of shares of common stock or other junior
securities). We will not pay interest or any sum of money instead of interest on
any dividend payment or payments that may be in arrears.
Rights Upon Liquidation; Redemption. In the event of our liquidation,
dissolution or winding-up, the holders of each outstanding series of preferred
stock would be entitled to receive liquidating distributions in the amount set
forth opposite the applicable series in the table above, plus accrued and unpaid
dividends, if any, before we make any distribution of our assets to the holders
of our common stock.
Each of our outstanding series of preferred stock is redeemable at our option on
or after the applicable date set forth opposite that series in the table above
at a redemption price per share equal to the redemption price set forth opposite
that series in the table above, plus accrued but unpaid dividends, if any.
Voting Rights. Holders of shares of our outstanding preferred stock have no
voting rights, except as described below or as required by the Delaware General
Corporation Law.
All of our currently outstanding series of preferred stock provide that if, at
the time of any annual meeting of our stockholders, the equivalent of six
quarterly dividends payable on any series of outstanding cumulative preferred
stock is in default, the number of directors constituting our board of directors
will be increased by two and the holders of all the outstanding preferred stock,
voting together as a single class, will be entitled to elect those additional
two directors at that annual meeting. In accordance with the requirements of our
Series L preferred stock, Series N preferred stock and Fixed/Adjustable
preferred stock, each director elected by the holders of shares of the
outstanding preferred stock will continue to serve as director for the full term
for which he or she was elected, even if prior to the end of that term we have
paid in full the amount of dividends that had been in arrears. For purposes of
this paragraph, "default" means that accrued and unpaid dividends on the
applicable series are equal to or greater than the equivalent of six quarterly
dividends.
Under regulations adopted by the Federal Reserve Board, if the holders of any
series of our preferred stock become entitled to vote for the election of
directors because dividends on that series are in arrears, that series may then
be deemed a "class of voting securities." In such a case, a holder of 25% or
more of the series, or a holder of 5% or more if the holder would also be
considered to exercise a "controlling influence" over J.P. Morgan Chase, may
then be subject to regulation as a bank holding company in accordance with the
Bank Holding Company Act. In addition, (1) any other bank holding company may be
required to obtain the prior approval of the Federal Reserve Board to acquire or
retain 5% or more of that series, and (2) any person other than a bank holding
company may be required to obtain the approval of the Federal Reserve Board to
acquire or retain 10% or more of that series.
Our Series N preferred stock and Fixed/Adjustable preferred stock provide that
the affirmative vote of the holders of at least two-thirds of the shares of all
outstanding series of preferred stock, voting together as a single class without
regard to series, will be required to:
- create any class or series of stock having a preference over any outstanding
series of preferred stock; or
- change the provisions of our certificate of incorporation in a manner that
would adversely affect the voting powers or other rights of the holders of a
series of preferred stock.
Those series also state that if the amendment will not adversely affect all
series of outstanding preferred stock, then the amendment will only need to be
approved by holders of at least two-thirds of the shares of the series of
preferred stock adversely affected.
Our Series L preferred stock provides as follows:
- the consent of the holders of at least two-thirds of the outstanding shares of
the particular series, voting as a separate class, is required for any
amendment of our certificate of incorporation that would adversely affect the
powers, preferences, privileges or rights of that series; and
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- the consent of the holders of at least two-thirds of the voting power of that
series and of each series of preferred stock having the same rank, voting
together as a single class without regard to series, is required to create,
authorize or issue, or reclassify any stock into any additional class or
series of, stock ranking prior to that series as to dividends or upon
liquidation, or any other security or obligation convertible into or
exerciseable for any such prior-ranking stock.
Our Series A preferred stock and 6 5/8% preferred stock provide that a vote of
at least two-thirds of the voting power of all outstanding shares of the
applicable series, and all outstanding shares of our preferred stock having the
same rank as that series, voting together as a single class without regard to
series, will be necessary in order to:
- authorize or issue any capital stock that will be senior to that series of
preferred stock as to dividends or upon liquidation; or
- amend, alter or repeal any of the provisions of our certificate of
incorporation, including the certificate of designations relating to that
series, in such a way as to adversely affect (or materially adversely affect,
in the case of our 6 5/8% preferred stock) the preferences, rights, powers or
privileges of the preferred stock of that series.
Miscellaneous. No series of our outstanding preferred stock is convertible into
shares of our common stock or other securities of J.P. Morgan Chase. No series
of our outstanding preferred stock is subject to preemptive rights.
Transfer Agent and Registrar. Mellon Investor Services, LLC is the transfer
agent, registrar and dividend disbursement agent for our outstanding preferred
stock and depositary shares. The registrar will send notices to the holders of
the preferred stock or depositary shares of any meetings at which those holders
will have the right to elect directors or to vote on any other matter.
Depositary Shares for 6 5/8% Preferred Stock. Our 6 5/8% preferred stock is
represented by depositary shares, each representing a one-tenth interest in a
share of that preferred stock. The material terms of the deposit agreement
between us and Morgan Bank, as depositary, with respect to those depositary
shares are substantially the same as those described under "--Depositary Shares"
below.
DEPOSITARY SHARES
General. We may, at our option, elect to offer fractional shares of preferred
stock, rather than full shares of preferred stock. If we do, we will issue to
the public receipts for depositary shares, and each of these depositary shares
will represent a fraction of a share of a particular series of preferred stock.
We will specify that fraction in the prospectus supplement.
The shares of any series of preferred stock underlying the depositary shares
offered by use of this prospectus and an applicable prospectus supplement will
be deposited under a deposit agreement between us and a depositary selected by
us. The depositary will be a bank or trust company and will have its principal
office in the United States and a combined capital and surplus of at least $50
million. Subject to the terms of the deposit agreement, each owner of a
depositary share will be entitled, in proportion to the applicable fractional
interest in the share of preferred stock underlying that depositary share, to
all the rights and preferences of the preferred stock underlying that depositary
share. Those rights include dividend, voting, redemption, conversion and
liquidation rights.
The depositary shares offered by use of this prospectus and an applicable
prospectus supplement will be evidenced by depositary receipts issued under the
deposit agreement. We will issue depositary receipts to those persons who
purchase the fractional interests in the preferred stock underlying the
depositary shares, in accordance with the terms of the offering. The following
summary of the deposit agreement, the depositary shares and the depositary
receipts is not complete. You should refer to the forms of the deposit agreement
and depositary receipts that are filed as exhibits to the registration
statement.
Dividends and Other Distributions. The depositary will distribute all cash
dividends or other cash distributions received in respect of the preferred stock
to the record holders of related depositary shares in proportion to the number
of depositary shares owned by those holders.
If we make a distribution other than in cash, the depositary will distribute
property received by it to the record holders of depositary shares that are
entitled to receive the distribution, unless the depositary determines that it
is not feasible to
21
make the distribution. If this occurs, the depositary may, with our approval,
sell the property and distribute the net proceeds from the sale to the
applicable holders.
Redemption of Depositary Shares. Upon redemption, in whole or in part, of
shares of any series preferred stock that are held by the depositary, the
depositary will redeem, as of the same redemption date, the number of depositary
shares representing the shares of preferred stock so redeemed. The redemption
price per depositary share will be equal to the applicable fraction of the
redemption price per share payable with respect to that series of the preferred
stock.
Depositary shares called for redemption will no longer be outstanding after the
applicable redemption date, and all rights of the holders of those depositary
shares will cease, except the right to receive any money, securities, or other
property upon surrender to the depositary of the depositary receipts evidencing
those depositary shares.
Voting the Preferred Stock. Upon receipt of notice of any meeting at which the
holders of preferred stock are entitled to vote, the depositary will mail the
information contained in the notice of meeting to the record holders of the
depositary shares underlying that preferred stock. Each holder of those
depositary shares on the record date, which will be the same date as the record
date for the preferred stock, will be entitled to instruct the depositary as to
the exercise of the voting rights pertaining to the amount of the preferred
stock underlying that holder's depositary shares. The depositary will try, as
far as practicable, to vote the number of shares of preferred stock underlying
those depositary shares in accordance with those instructions, and we will agree
to take all action that the depositary deems necessary in order to enable the
depositary to do so. The depositary will not vote the shares of preferred stock
to the extent it does not receive specific instructions from the holders of
depositary shares underlying the preferred stock.
Amendment and Termination of the Deposit Agreement. We and the depositary may
amend the form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement at any time regarding any depositary shares
offered by use of this prospectus and an applicable prospectus supplement.
However, any amendment that materially and adversely alters the rights of the
holders of depositary shares will not be effective unless the amendment has been
approved by the holders of at least a majority of the depositary shares then
outstanding. The deposit agreement may be terminated by us or by the depositary
only if:
- all outstanding depositary shares have been redeemed; or
- there has been a final distribution of the underlying preferred stock in
connection with our liquidation, dissolution or winding up and the preferred
stock has been distributed to the holders of depositary receipts.
Charges of Depositary. We will pay all transfer and other taxes and
governmental charges arising solely from the existence of the depositary
arrangements regarding any depositary shares offered by use of this prospectus
and an applicable prospectus supplement. We will also pay charges of the
depositary in connection with the initial deposit of the preferred stock and any
redemption of the preferred stock. Holders of depositary receipts will pay
transfer and other taxes and governmental charges and other charges as are
expressly provided in the deposit agreement to be for their accounts.
Resignation and Removal of Depositary. The depositary for the depositary shares
offered by use of this prospectus and an applicable prospectus supplement may
resign at any time by delivering a notice to us of its election to do so. We may
remove the depositary at any time. Any such resignation or removal will take
effect upon the appointment of a successor depositary and its acceptance of its
appointment. We must appoint a successor depositary within 60 days after
delivery of the notice of resignation or removal. The successor depositary must
be a bank or trust company having its principal office in the United States and
having a combined capital and surplus of at least $50 million.
Miscellaneous. The depositary will forward to holders of depositary receipts
all reports and communications from us that we deliver to the depositary and
that we are required to furnish to the holders of the preferred stock.
Neither we nor the depositary will be liable if either of us is prevented or
delayed by law or any circumstance beyond our control in performing our
respective obligations under the deposit agree-
22
ment. Our obligations and those of the depositary will be limited to performing
in good faith our respective duties under the deposit agreement. Neither we nor
the depositary will be obligated to prosecute or defend any legal proceeding
relating to any depositary shares or preferred stock unless satisfactory
indemnity is furnished. We and the depositary may rely upon written advice of
counsel or accountants, or upon information provided by persons presenting
preferred stock for deposit, holders of depositary receipts or other persons we
believe to be competent, and on documents we believe to be genuine.
DESCRIPTION OF COMMON STOCK
As of the date of this prospectus, we are authorized to issue up to
4,500,000,000 shares of common stock. As of June 30, 2001, we had 1,989,576,087
(including 391,153 shares held in treasury) and had reserved approximately
319,699,675 shares of common stock for issuance under various employee or
director incentive, compensation and option plans.
The following summary is not complete. You should refer to the applicable
provisions of our certificate of incorporation and to the Delaware General
Corporation Law for a complete statement of the terms and rights of our common
stock.
Dividends. Holders of common stock are entitled to receive dividends when, as
and if declared by our board of directors out of funds legally available for
payment, subject to the rights of holders of our preferred stock.
Voting Rights. Each holder of common stock is entitled to one vote per share.
Subject to the rights, if any, of the holders of any series of preferred stock
under its applicable certificate of designations and applicable law, all voting
rights are vested in the holders of shares of our common stock. Holders of
shares of our common stock have noncumulative voting rights, which means that
the holders of more than 50% of the shares voting for the election of directors
can elect 100% of the directors and the holders of the remaining shares will not
be able to elect any directors.
Rights Upon Liquidation. In the event of our voluntary or involuntary
liquidation, dissolution or winding up, the holders of our common stock will be
entitled to share equally in any of our assets available for distribution after
we have paid in full all of our debts and after the holders of all series of our
outstanding preferred stock have received their liquidation preferences in full.
Miscellaneous. The issued and outstanding shares of common stock are fully paid
and nonassessable. Holders of shares of our common stock are not entitled to
preemptive rights. Our common stock is not convertible into shares of any other
class of our capital stock. Mellon Investor Services, LLC is the transfer agent,
registrar and dividend disbursement agent for our common stock.
DESCRIPTION OF SECURITIES WARRANTS
We may issue securities warrants for the purchase of debt securities, preferred
stock or common stock. We may issue securities warrants independently or
together with debt securities, preferred stock, common stock or other
securities. Each series of securities warrants will be issued under a separate
securities warrant agreement to be entered into between us and Chase Bank or
another bank or trust company, as warrant agent. The warrant agent will act
solely as our agent in connection with the securities warrants and will not
assume any obligation to, or relationship of agency or trust for or with, any
registered holders or beneficial owners of securities warrants. This summary of
certain provisions of the securities warrants and the securities warrant
agreement is not complete. You should refer to the securities warrant agreement
relating to the specific securities warrants being offered, including the forms
of securities warrant certificates representing those securities warrants, for
the complete terms of the securities warrant agreement and the securities
warrants. Forms of those documents are filed as exhibits to the registration
statement.
Each securities warrant will entitle the holder to purchase the principal amount
of debt securities or the number of shares of preferred stock or common stock at
the exercise price set forth in, or calculable as set forth in, the prospectus
supplement. The exercise price may be subject to adjustment upon the occurrence
of certain events, as set forth in the prospectus supplement. We will
23
also specify in the prospectus supplement the place or places where, and the
manner in which, securities warrants may be exercised. After the close of
business on the expiration date of the securities warrants, unexercised
securities warrants will become void.
Prior to the exercise of any securities warrants, holders of the securities
warrants will not have any of the rights of holders of the debt securities,
preferred stock or common stock, as the case may be, purchasable upon exercise
of those securities warrants, including, (1) in the case of securities warrants
for the purchase of debt securities, the right to receive payments of principal
of, and premium, if any, or interest, if any, on those debt securities or to
enforce covenants in the senior indenture or subordinated indenture, as the case
may be, or (2) in the case of securities warrants for the purchase of preferred
stock or common stock, the right to receive payments of dividends, if any, on
that preferred stock or common stock or to exercise any applicable right to
vote.
DESCRIPTION OF CURRENCY WARRANTS
We have described below certain general terms and provisions of the currency
warrants that we may offer. We will describe the particular terms of the
currency warrants and the extent, if any, to which the general provisions
described below do not apply to the currency warrants offered in the applicable
prospectus supplement. The following summary is not complete. You should refer
to the currency warrants and the currency warrant agreement relating to the
specific currency warrants being offered for the complete terms of those
currency warrants. Forms of those documents are filed as exhibits to the
registration statement.
We will issue each issue of currency warrants under a currency warrant agreement
to be entered into between us and Chase Bank or another bank or trust company,
as warrant agent. The warrant agent will act solely as our agent under the
applicable currency warrant agreement and will not assume any obligation to, or
relationship of agency or trust for or with, any holders of currency warrants.
We may issue currency warrants either in the form of:
- currency put warrants, which entitle the holders to receive from us the cash
settlement value in U.S. dollars of the right to sell a specified amount of a
specified foreign currency or composite currency (the "designated currency")
for a specified amount of U.S. dollars; or
- currency call warrants, which entitle the holders to receive from us the cash
settlement value in U.S. dollars of the right to purchase a specified amount
of a designated currency for a specified amount of U.S. dollars.
As a prospective purchaser of currency warrants, you should be aware of special
United States federal income tax considerations applicable to instruments such
as the currency warrants. The prospectus supplement relating to each issue of
currency warrants will describe those tax considerations.
Unless otherwise specified in the applicable prospectus supplement, we will
issue the currency warrants in the form of global currency warrant certificates,
registered in the name of a depositary or its nominee. See "Book-Entry Issuance"
below.
Each issue of currency warrants will be listed on a national securities
exchange, subject only to official notice of issuance, as a condition of sale of
that issue of currency warrants. In the event that the currency warrants are
delisted from, or permanently suspended from trading on, the applicable national
securities exchange, the expiration date for those currency warrants will be the
date the delisting or trading suspension becomes effective, and currency
warrants not previously exercised will be deemed automatically exercised on that
expiration date. The applicable currency warrant agreement will contain a
covenant from us that we will not seek to delist the currency warrants or
suspend their trading on the applicable national securities exchange unless we
have concurrently arranged for listing on another national securities exchange.
Currency warrants involve a high degree of risk, including risks arising from
fluctuations in the price of the underlying currency, foreign exchange risks and
the risk that the currency warrants will expire worthless. Further, the cash
settlement value of currency warrants at any time prior to exercise or
expiration may be less than the trading value of the currency warrants. The
trading value of the currency warrants will fluctuate because that value is
dependent, at any time, on a number of factors, including the time remaining to
exercise the currency warrants, the relationship be-
24
tween the exercise price of the currency warrants and the price of the
designated currency, and the exchange rate associated with the designated
currency. Because currency warrants are unsecured obligations of J.P. Morgan
Chase, changes in our perceived creditworthiness may also be expected to affect
the trading prices of currency warrants. Finally, the amount of actual cash
settlement of a currency warrant may vary as a result of fluctuations in the
price of the designated currency between the time you give instructions to
exercise the currency warrant and the time the exercise is actually effected.
As a prospective purchaser of currency warrants you should be prepared to
sustain a loss of some or all of the purchase price of your currency warrants.
You should also be experienced with respect to options and option transactions
and should reach an investment decision only after careful consideration with
your advisers of the suitability of the currency warrants in light of your
particular financial circumstances. You should also consider the information set
forth under "Risk Factors" in the prospectus supplement relating to the
particular issue of currency warrants being offered and to the other information
regarding the currency warrants and the designated currency set forth in the
prospectus supplement.
BOOK-ENTRY ISSUANCE
We may issue series of any securities as global securities and deposit them with
a depositary with respect to that series. Unless otherwise indicated in the
prospectus supplement, the following is a summary of the depositary arrangements
applicable to securities issued in permanent global form and for which The
Depository Trust Company ("DTC") will act as depositary (the "global
securities").
Each global security will be deposited with, or on behalf of, DTC, as
depositary, or its nominee and registered in the name of a nominee of DTC.
Except under the limited circumstances described below, global securities will
not be exchangeable for certificated securities.
Only institutions that have accounts with DTC or its nominee ("DTC
participants") or persons that may hold interests through DTC participants may
own beneficial interests in a global security. DTC will maintain records
evidencing ownership of beneficial interests by DTC participants in the global
securities and transfers of those ownership interests. DTC participants will
maintain records evidencing ownership of beneficial interests in the global
securities by persons that hold through those DTC participants and transfers of
those ownership interests within those DTC participants. DTC has no knowledge of
the actual beneficial owners of the securities. You will not receive written
confirmation from DTC of your purchase, but we do expect that you will receive
written confirmations providing details of the transaction, as well as periodic
statements of your holdings from the DTC participant through which you entered
the transaction. The laws of some jurisdictions require that certain purchasers
of securities take physical delivery of those securities in certificated form.
Those laws may impair your ability to transfer beneficial interests in a global
security.
DTC has advised us that upon the issuance of a global security and the deposit
of that global security with DTC, DTC will immediately credit, on its book-entry
registration and transfer system, the respective principal amounts or number of
shares represented by that global security to the accounts of DTC participants.
We will make payments on securities represented by a global security to DTC or
its nominee, as the case may be, as the registered owner and holder of the
global security representing those securities. DTC has advised us that upon
receipt of any payment on a global security, DTC will immediately credit
accounts of DTC participants with payments in amounts proportionate to their
respective beneficial interests in that security, as shown in the records of
DTC. Standing instructions and customary practices will govern payments by DTC
participants to owners of beneficial interests in a global security held through
those DTC participants, as is now the case with securities held for the accounts
of customers in bearer form or registered in "street name." Those payments will
be the sole responsibility of those DTC participants, subject to any statutory
or regulatory requirements in effect from time to time.
Neither we, the trustees, nor any of our respective agents will have any
responsibility or liability for any aspect of the records of DTC, any nominee or
any DTC participant relating to, or payments made on account of, beneficial
interests in a global security or for maintaining, supervising or review-
25
ing any of the records of DTC, any nominee or any DTC participant relating to
those beneficial interests.
A global security is exchangeable for certificated securities registered in the
name of a person other than DTC or its nominee only if:
- DTC notifies us that it is unwilling or unable to continue as depositary for
that global security or DTC ceases to be registered under the Securities
Exchange Act of 1934;
- we determine in our discretion that the global security will be exchangeable
for certificated securities in registered form; or
- if applicable to the particular type of security, there shall have occurred
and be continuing an event of default or an event which, with notice or the
lapse of time or both, would constitute an event of default under the
securities.
Any global security that is exchangeable as described in the preceding sentence
will be exchangeable in whole for certificated securities in registered form,
and, in the case of global debt securities, of like tenor and of an equal
aggregate principal amount as the global security, in denominations of $1,000
and integral multiples of $1,000 (or in denominations and integral multiples as
otherwise specified in the applicable prospectus supplement). The registrar will
register the certificated securities in the name or names instructed by DTC. We
expect that those instructions may be based upon directions received by DTC from
DTC participants with respect to ownership of beneficial interests in the global
security. In the case of global debt securities, we will make payment of any
principal and interest on the certificated securities and will register
transfers and exchanges of those certificated securities at the corporate trust
office of Chase Bank in the Borough of Manhattan, The City of New York. However,
we may elect to pay interest by check mailed to the address of the person
entitled to that interest payment as of the record date, as shown on the
register for the securities.
Except as provided above, as an owner of a beneficial interest in a global
security, you will not be entitled to receive physical delivery of securities in
certificated form and will not be considered a holder of securities for any
purpose under either of the indentures. No global security will be exchangeable
except for another global security of like denomination and tenor to be
registered in the name of DTC or its nominee. Accordingly, you must rely on the
procedures of DTC and the DTC participant through which you own your interest to
exercise any rights of a holder under the global security or the applicable
indenture.
We understand that, under existing industry practices, in the event that we
request any action of holders, or an owner of a beneficial interest in a global
security desires to take any action that a holder is entitled to take under the
securities or the indentures, DTC would authorize the DTC participants holding
the relevant beneficial interests to take that action, and those DTC
participants would authorize beneficial owners owning through those DTC
participants to take that action or would otherwise act upon the instructions of
beneficial owners owning through them.
DTC has advised us that DTC is a limited purpose trust company organized under
the New York Banking Law, a "banking organization" within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered under the Securities Exchange Act of 1934. DTC
holds securities that DTC participants deposit with DTC. DTC also facilitates
the settlement of securities transactions among DTC participants in deposited
securities, such as transfers and pledges, through electronic computerized
book-entry changes in accounts of the DTC participants, thereby eliminating the
need for physical movement of securities certificates. DTC participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. DTC is owned by a number of DTC participants
and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and
the National Association of Securities Dealers, Inc. (the "NASD"). Access to
DTC's system is also available to others, such as securities brokers and
dealers, banks and trust companies that clear through or maintain a custodial
relationship with a DTC participant, either directly or indirectly. The rules
applicable to DTC and DTC participants are on file with the SEC.
If specified in the applicable prospectus supplement, investors may elect to
hold interests in the offered securities outside the United States through
Clearstream Banking, societe anonyme
26
("Clearstream") or Euroclear Bank, S.A./N.V., as operator of the Euroclear
System ("Euroclear"), if they are participants in those systems, or indirectly
through organizations that are participants in those systems. Clearstream and
Euroclear will hold interests on behalf of their participants through customers'
securities accounts in Clearstream's and Euroclear's names on the books of their
respective depositaries. Those depositaries in turn hold those interests in
customers' securities accounts in the depositaries' names on the books of DTC.
Unless otherwise specified in the prospectus supplement, Chase Bank will act as
depositary for each of Clearstream and Euroclear.
Clearstream has advised us that it is incorporated under the laws of Luxembourg
as a bank. Clearstream holds securities for its customers and facilitates the
clearance and settlement of securities transactions between its customers
through electronic book-entry transfers between their accounts. Clearstream
provides its customers with, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Clearstream interfaces with domestic
securities markets in over 30 countries through established depository and
custodial relationships. As a bank, Clearstream is subject to regulation by the
Luxembourg Commission for the Supervision of the Financial Sector, also known as
the Commission de Surveillance du Secteur Financier. Its customers are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and other organizations. Its customers in the United States are limited to
securities brokers and dealers and banks. Indirect access to Clearstream is also
available to other institutions such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with
Clearstream customers.
Distributions with respect to interests in global securities held through
Clearstream will be credited to cash accounts of its customers in accordance
with its rules and procedures, to the extent received by the U.S. depositary for
Clearstream.
Euroclear has advised us that it was created in 1968 to hold securities for its
participants and to clear and settle transactions between Euroclear participants
through simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk from
lack of simultaneous transfers of securities and cash. Euroclear provides
various other services, including securities lending and borrowing, and
interfaces with domestic markets in several countries. Euroclear is operated by
Euroclear Bank S.A./N.V. (the "Euroclear operator"). Euroclear Clearance Systems
S.C. establishes policy for Euroclear on behalf of Euroclear participants.
Euroclear participants include banks, including central banks, securities
brokers and dealers and other professional financial intermediaries. Indirect
access to Euroclear is also available to other firms that clear through or
maintain a custodial relationship with a Euroclear participant, either directly
or indirectly.
Securities clearance accounts and cash accounts with the Euroclear operator are
governed by the terms and conditions governing use of Euroclear and the related
operating procedures of Euroclear and applicable Belgian law. These terms,
conditions and procedures govern transfers of securities and cash within
Euroclear, withdrawals of securities and cash from Euroclear, and receipts of
payments with respect to securities in Euroclear. All securities in Euroclear
are held on a fungible basis without attribution of specific certificates to
specific securities clearance accounts. The Euroclear operator acts under the
terms and conditions governing use of Euroclear only on behalf of Euroclear
participants and has no record of or relationship with persons holding through
Euroclear participants.
Distributions with respect to interests in global securities held beneficially
through Euroclear will be credited to the cash accounts of Euroclear
participants in accordance with Euroclear's terms and conditions and operating
procedures and applicable Belgian law, to the extent received by the U.S.
depositary for Euroclear.
Euroclear has further advised that investors that acquire, hold and transfer
interests in global securities by book-entry through accounts with the Euroclear
operator or any other securities intermediary are subject to the laws and
contractual provisions governing their relationship with their intermediary, as
well as the laws and contractual provisions governing the relationship between
that intermediary and each other intermediary, if any,
27
standing between themselves and the Euroclear operator.
The Euroclear operator has advised that under Belgian law, investors that are
credited with securities on the records of the Euroclear operator have a
co-property right in the fungible pool of interests in securities on deposit
with the Euroclear operator in an amount equal to the amount of interests in
securities credited to their accounts. In the event of the insolvency of the
Euroclear operator, Euroclear participants would have a right under Belgian law
to the return of the amount and type of interests credited to their accounts
with the Euroclear operator. If the Euroclear operator did not have on deposit a
sufficient amount of securities of a particular type to cover the claims of all
participants credited with such interests in securities on the Euroclear
operator's records, all participants having an amount of interests in securities
of such type credited to their accounts with the Euroclear operator would have
the right under Belgian law to the return of their pro rata share of the amount
of securities actually on deposit.
Under Belgian law, the Euroclear operator is required to pass on the benefits of
ownership in any interests in securities on deposit with it, such as dividends,
voting rights and other entitlements, to any person credited with such interests
in securities on its records.
GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES
Unless otherwise specified in a prospectus supplement with respect to a
particular series of global securities, initial settlement for global securities
will be made in immediately available funds. DTC participants will conduct
secondary market trading with other DTC participants in the ordinary way in
accordance with DTC rules. Thereafter, secondary market trades will settle in
immediately available funds using DTC's same day funds settlement system.
If the prospectus supplement specifies that interests in the global securities
may be held through Clearstream or Euroclear, Clearstream customers and/or
Euroclear participants will conduct secondary market trading with other
Clearstream customers and/or Euroclear participants in the ordinary way in
accordance with the applicable rules and operating procedures of Clearstream and
Euroclear. Thereafter, secondary market trades will settle in immediately
available funds.
Cross-market transfers between persons holding directly or indirectly through
DTC on the one hand, and directly or indirectly through Clearstream customers or
Euroclear participants, on the other, will be effected in DTC in accordance with
DTC's rules on behalf of the relevant European international clearing system by
the U.S. depositary for that system; however, those cross-market transactions
will require delivery by the counterparty in the relevant European international
clearing system of instructions to that system in accordance with its rules and
procedures and within its established deadlines (European time). The relevant
European international clearing system will, if the transaction meets its
settlement requirements, deliver instructions to the U.S. depositary for that
system to take action to effect final settlement on its behalf by delivering or
receiving interests in global securities in DTC, and making or receiving payment
in accordance with normal procedures for same-day funds settlement applicable to
DTC. Clearstream customers and Euroclear participants may not deliver
instructions directly to DTC.
Because of time-zone differences, credits of interests in global securities
received in Clearstream or Euroclear as a result of a transaction with a DTC
participant will be made during subsequent securities settlement processing and
will be credited the business day following the DTC settlement date. Those
credits or any transactions in global securities settled during that processing
will be reported to the relevant Euroclear participants or Clearstream customers
on that business day. Cash received in Clearstream or Euroclear as a result of
sales of interests in global securities by or through a Clearstream customer or
a Euroclear participant to a DTC participant will be received with value on the
DTC settlement date but will be available in the relevant Clearstream or
Euroclear cash account only as of the business day following settlement in DTC.
Although DTC, Clearstream and Euroclear have agreed to the procedures described
above in order to facilitate transfers of interests in global securities among
DTC participants, Clearstream and Euroclear, they are under no obligation to
perform those procedures and those procedures may be discontinued at any time.
28
PLAN OF DISTRIBUTION
We may sell the debt securities, preferred stock, depositary shares, common
stock, securities warrants or currency warrants being offered by use of this
prospectus and an applicable prospectus supplement:
- through underwriters;
- through dealers;
- through agents; or
- directly to purchasers.
We will set forth the terms of the offering of any securities being offered in
the applicable prospectus supplement.
If we utilize underwriters in an offering of securities using this prospectus,
we will execute an underwriting agreement with those underwriters. The
underwriting agreement will provide that the obligations of the underwriters
with respect to a sale of the offered securities are subject to certain
conditions precedent and that the underwriters will be obligated to purchase all
the offered securities if any are purchased. Underwriters may sell those
securities to or through dealers. The underwriters may change any initial public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers from time to time. If we utilize underwriters in an offering of
securities using this prospectus, the applicable prospectus supplement will
contain a statement regarding the intention, if any, of the underwriters to make
a market in the offered securities.
If we utilize a dealer in an offering of securities using this prospectus, we
will sell the offered securities to the dealer, as principal. The dealer may
then resell those securities to the public at a fixed price or at varying prices
to be determined by the dealer at the time of resale.
We may also use this prospectus to offer and sell securities through agents
designated by us from time to time. Unless otherwise indicated in the prospectus
supplement, any agent will be acting on a reasonable efforts basis for the
period of its appointment.
Underwriters, dealers or agents participating in a distribution of securities by
use of this prospectus and an applicable prospectus supplement may be deemed to
be underwriters, and any discounts and commissions received by them and any
profit realized by them on resale of the offered securities, whether received
from us or from purchasers of offered securities for whom they act as agent, may
be deemed to be underwriting discounts and commissions under the Securities Act.
Under agreements that we may enter into, underwriters, dealers or agents who
participate in the distribution of securities by use of this prospectus and an
applicable prospectus supplement may be entitled to indemnification by us
against certain liabilities, including liabilities under the Securities Act, or
to contribution with respect to payments that those underwriters, dealers or
agents may be required to make.
We may offer to sell securities either at a fixed price or at prices that may be
changed, at market prices prevailing at the time of sale, at prices related to
prevailing market prices or at negotiated prices.
Underwriters, dealers, agents or their affiliates may be customers of, engage in
transactions with, or perform services for, us, Chase Bank, Morgan Bank, Chase
USA, J.P. Morgan Securities or our other subsidiaries in the ordinary course of
business.
Under Rule 2720 of the Conduct Rules of the NASD, when an NASD member, such as
J.P. Morgan Securities, participates in the distribution of an affiliated
company's securities, the offering must be conducted in accordance with the
applicable provisions of Rule 2720. J.P. Morgan Securities is considered to be
an "affiliate" (as that term is defined in Rule 2720) of ours by virtue of the
fact that we own all of the outstanding equity securities of J.P. Morgan
Securities. Any offer and sale of offered securities will comply with the
requirements of Rule 2720 regarding the underwriting of securities of affiliates
and with any restrictions that may be imposed on J.P. Morgan Securities or our
other affiliates by the Federal Reserve Board.
Our direct or indirect wholly-owned subsidiaries, including J.P. Morgan
Securities, may use this prospectus and the applicable prospectus supplement in
connection with offers and sales of securities in the secondary market. Those
subsidiaries may act as principal or agent in those transactions. Secondary
market sales will be made at prices related to prevailing market prices at the
time of sale.
29
We may also use this prospectus to directly solicit offers to purchase
securities. Except as set forth in the applicable prospectus supplement, none of
our directors, officers, or employees nor those of our bank subsidiaries will
solicit or receive a commission in connection with those direct sales. Those
persons may respond to inquiries by potential purchasers and perform ministerial
and clerical work in connection with direct sales.
We may authorize underwriters, dealers and agents to solicit offers by certain
institutions to purchase securities pursuant to delayed delivery contracts
providing for payment and delivery on a future date specified in the prospectus
supplement. Institutions with which delayed delivery contracts may be made
include commercial and savings banks, insurance companies, educational and
charitable institutions and other institutions that we may approve. The
obligations of any purchaser under any delayed delivery contract will not be
subject to any conditions except that any related sale of offered securities to
underwriters shall have occurred and the purchase by an institution of the
securities covered by its delayed delivery contract shall not at the time of
delivery be prohibited under the laws of any jurisdiction in the United States
to which that institution is subject.
EXPERTS
The financial statements incorporated in this prospectus by reference to our
Annual Report on Form 10-K for the year ended December 31, 2000 have been
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of that firm as experts in
auditing and accounting.
LEGAL OPINIONS
Simpson Thacher & Bartlett, New York, New York, will provide an opinion for us
regarding the validity of the offered securities and Cravath, Swaine & Moore,
New York, New York will provide such an opinion for the underwriters. Cravath,
Swaine & Moore acts as legal counsel to us and our subsidiaries in a substantial
number of matters on a regular basis.
30
[J.P. MORGAN CHASE & CO. LOGO]
DEBT SECURITIES
PREFERRED STOCK
DEPOSITARY SHARES
WARRANTS
Affiliates of J.P. Morgan Chase & Co., including J.P. Morgan Securities Inc.,
may use this prospectus in connection with offers and sales in the secondary
market of senior or subordinated debt securities, preferred stock or depositary
shares of J.P. Morgan Chase & Co. or warrants to purchase those debt securities,
shares of preferred stock or depository shares. These affiliates may act as
principal or agent in those transactions. Secondary market sales made by them
will be made at prices related to market prices at the time of sale.
LISTED DEBT SECURITIES
Of the series of debt securities issued and outstanding as of the date of this
prospectus that may be offered by use of this prospectus, the following are
listed on the New York Stock Exchange and have the following ticker symbols:
Of the series of debt securities issued and outstanding as of the date of this
prospectus that may be offered by use of this prospectus, the following is
listed on the American Stock Exchange and has the following ticker symbol:
LISTED PREFERRED STOCK
Of the series of preferred stock issued and outstanding as of the date of this
prospectus that may be offered by use of this prospectus, the following are
listed on the New York Stock Exchange and have the following ticker symbols:
LISTED DEPOSITARY SHARES
Of the series of the depositary shares representing shares of preferred stock
issued and outstanding as of the date of this prospectus that may be offered by
use of this prospectus, the following are listed on the New York Stock Exchange
and have the following ticker symbols:
THESE SECURITIES HAVE NOT BEEN APPROVED BY THE SEC OR ANY STATE SECURITIES
COMMISSION, NOR HAVE THESE ORGANIZATIONS DETERMINED THAT THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SEC IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND WE ARE
NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
This prospectus is dated --, 2001.
IN MAKING YOUR INVESTMENT DECISION, YOU SHOULD RELY ONLY ON THE INFORMATION
CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR ANY SUPPLEMENT TO
THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH ANY OTHER
INFORMATION.
WE ARE OFFERING TO SELL THESE SECURITIES ONLY IN PLACES WHERE SALES ARE
PERMITTED.
YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED OR INCORPORATED IN THIS
PROSPECTUS AND ANY SUPPLEMENT TO THIS PROSPECTUS IS ACCURATE AS OF ANY DATE
OTHER THAN ITS DATE.
TABLE OF CONTENTS
2
WHERE YOU CAN FIND MORE
INFORMATION ABOUT J.P. MORGAN CHASE & CO.
J.P. Morgan Chase & Co. ("J.P. Morgan Chase," which may be referred to as "we"
or "us") files annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
at the SEC's website at http://www.sec.gov.
The SEC allows us to "incorporate by reference" into this prospectus the
information in documents we file with it, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be a part of this
prospectus, and later information that we file with the SEC will update and
supersede this information.
We incorporate by reference (i) the documents listed below, (ii) all reports
that we file with the SEC after the date of the initial filing of the
registration statement and prior to effectiveness of the registration statement,
and (iii) any future filings made with the SEC under Section 13(a), 13(c), 14,
or 15(d) of the Securities Exchange Act of 1934 until our offering is completed:
(a) Our Annual Report on Form 10-K for the year ended December 31,
2000;
(b) Our Quarterly Report on Form 10-Q for the quarters ended March 31,
2001, and June 30, 2001;
(c) Our Current Reports on Form 8-K filed on January 4, 2001, January
24, 2001, January 31, 2001, April 5, 2001, April 27, 2001, June 6, 2001,
July 20, 2001 and October 19, 2001; and
(d) The descriptions of our common stock and preferred stock contained
in our registration statements filed under Section 12 of the Securities
Exchange Act of 1934 and any amendment or report filed for the purpose of
updating that description.
You may request a copy of these filings, at no cost, by writing to or
telephoning us at the following address:
Office of the Secretary
J.P. Morgan Chase & Co.
270 Park Avenue
New York, NY 10017
212-270-4040
3
J.P. MORGAN CHASE & CO.
J.P. Morgan Chase is a financial holding company incorporated under Delaware law
in 1968. As of June 30, 2001, we had approximately $713 billion in assets and
approximately $42 billion in stockholders' equity.
We are a global financial services firm with operations in over 60 countries.
Our principal bank subsidiaries are The Chase Manhattan Bank ("Chase Bank") and
Morgan Guaranty Trust Company of New York ("Morgan Bank"), each of which is a
New York banking corporation headquartered in New York city; and Chase Manhattan
Bank USA, National Association ("Chase USA"), headquartered in Delaware. Our
principal non-bank subsidiary is our investment bank subsidiary, J.P. Morgan
Securities Inc. ("J.P. Morgan Securities"). We currently expect Chase Bank to
merge with Morgan Bank on November 10, 2001 and that, following completion of
the merger, Chase Bank will change its name to "JPMorgan Chase Bank". All
references herein to Chase Bank shall also refer to JPMorgan Chase Bank after
the merger November 10, 2001.
Our activities are internally organized, for management reporting purposes, into
five major businesses: Investment Bank, Investment Management & Private Banking,
Treasury & Securities Services, JPMorgan Partners and Retail & Middle Market
Financial Services. We have presented a brief description of those businesses
below.
Investment Bank
The Investment Bank includes our securities underwriting and financial advisory,
trading, mergers, and acquisitions advisory and corporate lending and
syndication business.
Investment Management & Private Banking
Our Investment Management & Private Banking includes our asset management
businesses, including our mutual funds; our institutional money management and
cash management businesses; and our private bank, which provides wealth
management solutions for a global client base of high net worth individuals and
families.
Treasury & Securities Services
Treasury & Securities Services is a recognized leader in information and
transaction processing services, moving trillions of dollars daily in securities
and cash for its wholesale clients. Treasury & Securities Services includes our
custody, cash management, trust and other fiduciary services businesses.
JPMorgan Partners
JPMorgan Partners is one of the world's largest and most diversified private
equity investment firms with total funds under management of approximately $20
billion.
Retail & Middle Market Financial Services
Retail & Middle Market Financial Services serves more than 30 million consumer,
small businesses and middle-market companies across the United States. Retail &
Middle Market Financial Services offers a wide range of financial products and
services, including consumer banking, credit cards, mortgage services and
consumer finance services, through a diverse array of distribution channels,
including the internet and branch and ATM networks.
4
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDEND REQUIREMENTS
Our consolidated ratios of earnings to fixed charges and consolidated ratios of
earnings to combine fixed charges and preferred stock dividend requirements are
as follows:
For purposes of computing the above ratios, earnings represent net income from
continuing operations plus total taxes based on income and fixed charges. Fixed
charges, excluding interest on deposits, include interest expense (other than on
deposits), one-third (the proportion deemed representative of the interest
factor) of rents, net of income from subleases, and capitalized interest. Fixed
charges, including interest on deposits, include all interest expense, one-third
(the proportion deemed representative of the interest factor) of rents, net of
income from subleases, and capitalized interest.
DESCRIPTION OF
DEBT SECURITIES
Our outstanding senior and subordinated securities offered by use of this
prospectus (the "Debt Securities") have been issued under a number of
indentures, some of which were initially executed by our predecessor
institutions and assumed by us in connection with various mergers.
None of our indentures limits the amount of debt securities that we may issue.
Each indenture provides that we may issue debt securities up to the principal
amount we authorize from time to time. In addition, none of our subordinated
indentures limits the amount of senior indebtedness we may incur.
We are a holding company that conducts substantially all of our operations
through subsidiaries. As a result, claims of the holders of our debt securities
will generally have a junior position to claims of creditors of our
subsidiaries, except to the extent that J.P. Morgan Chase is recognized, and
receives payment, as a creditor of those subsidiaries. Claims of our
subsidiaries' creditors other than J.P. Morgan Chase include substantial amounts
of long-term debt, deposit liabilities, federal funds purchased, securities sold
under repurchase agreements, commercial paper and other short-term borrowings.
None of our indentures limits our ability to enter into a highly leveraged
transaction or provides you with any special protection in the event of such a
transaction. In addition, none of our indentures provides special protection in
the event of a sudden and dramatic decline in our credit quality resulting from
a takeover, recapitalization or similar restructuring.
We may have issued some of the Debt Securities as original issue discount Debt
Securities. Original issue discount Debt Securities bear no interest or bear
interest at a below-market rate and are sold at a discount below their stated
principal amount. Persons considering the purchase, ownership or disposition of
original issue discount Debt Securities should consult their own tax advisors
concerning the United States Federal income tax consequences to them with regard
to the purchase, ownership or disposition of those securities in light of their
particular situations, as well as any consequences arising under the laws of any
other taxing jurisdiction.
Unless otherwise indicated in a supplement to this prospectus, we have issued
the Debt Securities only in registered form without coupons. We may have issued
some of the Debt Securities only as permanent global securities. See "Book-Entry
Issuance" below. You will not be required to pay a service charge for any
transfer or exchange of the
5
Debt Securities, but we may require payment of any taxes or other governmental
charges.
Unless a particular issue of Debt Securities is represented by a permanent
global note, we will pay the principal of, and premium, if any, and interest, if
any, on the Debt Securities at the corporate trust office of the applicable
paying agent. That paying agent, in the case of the Company Debt Securities and
Heritage Chase Debt Securities referred to below, is Chase Bank in New York City
and, in the case of the Heritage J.P. Morgan Debt Securities referred to below,
is U.S. Bank Trust National Association in New York City. You may also make
transfers or exchanges of the Debt Securities at those respective locations. We
also have the right to pay interest on any Debt Securities by check mailed to
the registered holders of the Debt Securities at their registered addresses.
In connection with any payment on a Debt Security, we may require the holder to
certify information to J.P. Morgan Chase. In the absence of that certification,
we may rely on any legal presumption to determine our responsibilities, if any,
to deduct or withhold taxes, assessments or governmental charges from the
payment.
COMPANY DEBT SECURITIES
J.P. Morgan Chase (which, for purposes of this portion of the prospectus,
includes Chase prior to its merger with heritage J.P. Morgan, and Chemical
Banking Corporation prior to its merger with The Chase Manhattan Corporation)
has issued Debt Securities (the "Company Debt Securities") from time to time
under the indentures referred to in the following paragraph (the "Company
Indentures"). The following summary of the provisions of the Company Debt
Securities and the Company Indentures is not complete. You should refer to the
Company Indentures, copies of which are exhibits to the registration statement
(File No. 333---) of which this prospectus is a part (the "registration
statement").
We have issued senior Company Debt Securities (the "Company Senior Securities")
under an Indenture, dated as of December 1, 1989 (as amended, the "Company
Senior Indenture"), between us and Bankers Trust Company, as trustee. We have
issued subordinated Company Debt Securities (the "Company Subordinated
Securities") under an Indenture, as amended and restated as of December 15, 1992
(as amended, the "Company Subordinated Indenture"), between us and U.S. Bank
Trust National Association, as trustee. The Company Debt Securities may be
offered together with warrants to purchase the Company Debt Securities, warrants
to purchase shares of common stock, warrants to purchase shares of preferred
stock or currency warrants entitling the holder to receive the cash value in
U.S. dollars of the right to purchase or the right to sell foreign currencies or
composite currencies.
COMPANY SENIOR SECURITIES
The Company Senior Securities are our direct, unsecured general obligations and
constitute Company Senior Indebtedness having the same rank as our other senior
indebtedness. For a definition of Company Senior Indebtedness, see "Company Debt
Securities -- Company Subordinated Securities -- Subordination" below.
Limitation on Disposition of Stock of Chase Bank. The Company Senior Indenture
contains a covenant by us that, so long as any of the Company Senior Securities
are outstanding, neither we nor any Intermediate Subsidiary, as defined below,
will dispose of any shares of voting stock of Chase Bank, or any securities
convertible into, or options, warrants or rights to purchase shares of voting
stock of Chase Bank, except to J.P. Morgan Chase or an Intermediate Subsidiary.
In addition, the covenant provides that neither we nor any Intermediate
Subsidiary will permit Chase Bank to issue any shares of its voting stock, or
securities convertible into, or options, warrants or rights to purchase shares
of its voting stock, nor will we permit any Intermediate Subsidiary to cease to
be an Intermediate Subsidiary.
The above covenant is subject to our rights in connection with a consolidation
or merger of J.P. Morgan Chase with or into another person or a sale of our
assets. The covenant also will not apply if both:
(1) the disposition in question is made for fair market value, as
determined by the board of directors J.P. Morgan Chase or the Intermediate
Subsidiary; and
(2) after giving effect to the disposition, we and any one or more of
our Intermediate
6
Subsidiaries will collectively own at least 80% of the issued and
outstanding voting stock of Chase Bank or any successor to Chase Bank free
and clear of any security interest.
The above covenant also does not restrict Chase Bank from being consolidated
with or merged into another domestic banking corporation, if after the merger or
consolidation, (A) J.P. Morgan Chase, or its successor, and any one or more
Intermediate Subsidiaries own at least 80% of the voting stock of the resulting
bank and (B) no event of default, and no event which, after notice or lapse of
time or both, would become an event of default, shall have happened and be
continuing.
The Company Senior Indenture defines an "Intermediate Subsidiary" as a
subsidiary (1) that is organized under the laws of any domestic jurisdiction and
(2) of which all the shares of capital stock, and all securities convertible
into, and options, warrants and rights to purchase shares of capital stock, are
owned directly by J.P. Morgan Chase, free and clear of any security interest. As
used above, "voting stock" means a class of stock having general voting power
under ordinary circumstances irrespective of the happening of a contingency. The
above covenant would not prevent Chase Bank from engaging in a sale of assets to
the extent otherwise permitted by the Company Senior Indenture.
Defaults and Waivers. The Company Senior Indenture defines an event of default
with respect to any series of Company Senior Securities as any one of the
following events:
(1) default in the payment of interest on any Company Senior Security
of that series and continuance of that default for 30 days;
(2) default in the payment of principal of, or premium, if any, on,
any Company Senior Security of that series at maturity;
(3) default in the deposit of any sinking fund payment and continuance
of that default for five days;
(4) failure by us for 60 days after notice to perform any of the other
covenants or warranties in the Company Senior Indenture applicable to that
series;
(5) (A) failure by us to pay indebtedness for money borrowed by us,
including Company Senior Securities of other series, in an aggregate
principal amount exceeding $25,000,000, at the later of final maturity or
the expiration of any applicable grace period or (B) acceleration of the
maturity of any indebtedness for money borrowed by us, including Company
Senior Securities of other series, in an aggregate principal amount
exceeding $25,000,000, if that failure to pay or acceleration results from
a default under the instrument giving rise to or securing the indebtedness
for money borrowed by us and is not rescinded or annulled within 30 days
after due notice, unless the default is contested in good faith by
appropriate proceedings;
(6) specified events of bankruptcy, insolvency or reorganization of
J.P. Morgan Chase or Chase Bank; and
(7) any other event of default specified with respect to Company
Senior Securities of that series.
If any event of default with respect to Company Senior Securities of any series
occurs and is continuing, either the trustee or the holders of not less than 25%
in principal amount of the outstanding Company Senior Securities of that series
may declare the principal amount (or, if the Company Senior Securities of that
series are original issue discount securities, a specified portion of the
principal amount) of all Company Senior Securities of that series to be due and
payable immediately. No such declaration is required upon specified events of
bankruptcy. Subject to the conditions set forth in the indenture, the holders of
a majority in principal amount of the outstanding Company Senior Securities of
that series may annul the declaration and waive past defaults, except uncured
payment defaults and other specified defaults.
The Company Senior Indenture requires the trustee, within 90 days after the
occurrence of a default known to it with respect to any outstanding series of
Company Senior Securities, to give the holders of that series notice of the
default if uncured or not waived. The trustee may withhold the notice if it
determines in good faith that the withholding of the notice is in the interest
of those holders. However, the trustee may not withhold the notice in the case
of a payment default. The trustee may not give the above notice until 60 days
after the occurrence of a default in the
7
performance of a covenant in the Company Senior Indenture, other than a covenant
to make payment. The term "default" for the purpose of this provision only means
any event that is, or after notice or lapse of time or both would become, an
event of default with respect to Company Senior Securities of that series.
Other than the duty to act with the required standard of care during a default,
the trustee is not obligated to exercise any of its rights or powers under the
Company Senior Indenture at the request or direction of any of the holders of
Senior Securities, unless the holders have offered the trustee reasonable
security or indemnity. The Company Senior Indenture provides that the holders of
a majority in principal amount of outstanding Company Senior Securities of any
series may direct the time, method and place of conducting any proceeding for
any remedy available to the trustee for that series, or exercising any trust or
other power conferred on the trustee. However, the trustee may decline to act if
the direction is contrary to law or the Company Senior Indenture.
The Company Senior Indenture includes a covenant requiring us to file annually
with the trustee a certificate of no default, or specifying any default that
exists.
Defeasance and Covenant Defeasance. The Company Senior Indenture contains a
provision that, if made applicable to any series of Company Senior Securities,
permits us to elect:
- defeasance, which would discharge us from all of our obligations (subject to
limited exceptions) with respect to any Company Senior Securities of that
series then outstanding; and/or
- covenant defeasance, which would release us from our obligations under
specified covenants and the consequences of the occurrence of an event of
default resulting from a breach of those covenants or a cross-default.
To make either of the above elections, we must deposit in trust with the trustee
money and/or U.S. government obligations, as defined below, which through the
payment of principal and interest in accordance with their terms will provide
sufficient money, without reinvestment, to repay in full those Company Senior
Securities. As used in the Company Senior Indenture, "U.S. government
obligations" are:
(1) direct obligations of the United States or of an agency or
instrumentality of the United States, in either case that are, or are
guaranteed as a full faith and credit obligation of the United States and
that are not redeemable by the issuer; and
(2) depositary receipts with respect to an obligation referred to in
clause (1).
As a condition to defeasance or covenant defeasance, we must deliver to the
trustee an opinion of counsel that the holders of Company Senior Securities will
not recognize income, gain, or loss for federal income tax purposes as a result
of the defeasance or covenant defeasance and will be subject to federal income
tax on the same amount, in the same manner and at the same times as would have
been the case if defeasance or covenant defeasance had not occurred. That
opinion, in the case of defeasance, but not covenant defeasance, must refer to
and be based upon a ruling received by us from the Internal Revenue Service or
published as a revenue ruling or upon a change in applicable federal income tax
law.
If we exercise our covenant defeasance option with respect to a particular
series of Company Senior Securities, then even if there were a default under the
related covenant, payment of those Company Senior Securities could not be
accelerated. We may exercise our defeasance option with respect to a particular
series of Company Senior Securities even if we previously had exercised our
covenant defeasance option. If we exercise our defeasance option, payment of
those Company Senior Securities may not be accelerated because of any event of
default. If we exercise our covenant defeasance option and an acceleration were
to occur, the realizable value at the acceleration date of the money and U.S.
government obligations in the defeasance trust could be less than the principal
and interest then due on those Company Senior Securities. This is because the
required deposit of money and/or U.S. government obligations in the defeasance
trust is based upon scheduled cash flows rather than market value, which will
vary depending upon interest rates and other factors.
Modification of the Indenture. We and the trustee may modify the Company Senior
Indenture
8
with the consent of the holders of not less than a majority in principal amount
of each series of outstanding Company Senior Securities affected by the
modification. However, without the consent of each affected holder, no such
modification may:
- change the stated maturity of any Company Senior Security;
- reduce the principal amount of, or premium, if any, on, any Company Senior
Security;
- reduce the rate of payment of interest on any Company Senior Security, or
change other specified provisions relating to the yield of the Company Senior
Security;
- change the currency or currencies in which any Company Senior Security is
payable;
- reduce the percentage of holders of outstanding Company Senior Securities of
any series required to consent to any modification, amendment or any waiver
under the Company Senior Indenture; or
- change the provisions in the Company Senior Indenture that relate to its
modification or amendment.
We and the trustee may amend the Company Senior Indenture without the consent of
the holders of the Company Senior Securities in the event we merge with another
person, to replace the trustee, to effect modifications that do not affect any
outstanding series of Company Senior Securities, and for certain other purposes.
Consolidation, Merger and Sale of Assets. We may, without the consent of the
holders of any Company Senior Securities, consolidate or merge with any other
person or transfer or lease all or substantially all of our assets to another
person or permit another corporation to merge into J.P. Morgan Chase, provided
that:
(1) the successor is a person organized under U.S. laws;
(2) the successor, if not us, assumes our obligations on the Company
Senior Securities and under the Company Senior Indenture;
(3) after giving effect to the transaction, no event of default, and
no event which, after notice or lapse of time or both, would become an
event of default, shall have occurred and be continuing; and
(4) other specified conditions are met.
The principal terms of the Company Senior Securities issued and outstanding as
of the date of this prospectus are set forth below. Interest on the below series
accrues at the annual rate indicated in the title of the series and is payable
on the indicated interest payment dates to the registered holders on the
preceding record date.
5 3/4% SENIOR NOTES DUE 2004
- Initial principal amount of series (subject to increase): $500,000,000
- Maturity date: April 15, 2004
- Interest payment dates: April 15 and October 15
- Record dates: April 1 and October 1
- Issuance date: April 26, 1999
- Redemption: Not redeemable prior to maturity and not subject to a sinking
fund.
CONSUMER PRICE INDEXED SECURITIES DUE 2010 (CPIS)
- Initial principal amount of series (subject to increase): $15,000,000
- Maturity date: January 15, 2010
- Other terms:
- The principal amount and issue price of each CPI is $1,250
- Does not pay interest
- No guarantee of return of principal at maturity
- At maturity, a holder will receive $1,948.50 per $1,250 principal amount
plus an amount equal to the product of a multiplier times the difference
between the ending index and the forward index. The multiplier is 57.3069.
The forward index is 208.50. The ending index will be the Reference CPI at
maturity.
- The Reference CPI is the 3-month lagged version of the CPI which is used by
the United States Department of the Treasury to calculate the inflation
indexed principal of its inflation indexed securities.
- Beginning on January 15, 2003, and each January 15 thereafter, the
Securities may be redeemed at the option of the holder for an amount equal
to the discounted present value of the estimated payment at maturity.
9
- The CPIs have been approved for listing on the American Stock Exchange LLC.
5 5/8% NOTES DUE 2006
- Initial principal amount of series (subject to increase): $1,500,000,000
- Maturity date: August 15, 2006
- Interest payment dates: February 15 and August 15
- Record dates: February 1 and August 1
- Issuance date: August 14, 2001
- Redemption: Not redeemable prior to maturity and not subject to a sinking fund
SENIOR MEDIUM-TERM NOTES, SERIES C
As of the date of this prospectus, $12,120,340,000 aggregate principal amount of
our Senior Medium-Term Notes, Series C (the "Senior Series C Notes") is issued
and outstanding. In the table below we specify the following terms of those
Senior Series C Notes:
- Issuance date;
- Principal amount;
- Maturity date;
- Interest rate and redemption dates, if any.
The interest rate bases or formulas applicable to Senior Series C Notes that
bear interest at floating rates are indicated in the table below. The Senior
Series C Notes are not subject to a sinking fund and are not redeemable unless a
redemption date is indicated below. Unless otherwise indicated below, Senior
Series C Notes that are redeemable are redeemable at 100% of their principal
amount, plus accrued and unpaid interest, if any, to the redemption date.
10
COMPANY SUBORDINATED SECURITIES
The Company Subordinated Securities are our direct, unsecured general
obligations. The Company Subordinated Securities are subordinate and junior in
right of payment to all Company Senior Indebtedness and, in certain
circumstances described below relating to our dissolution, winding-
11
up, liquidation or reorganization, to all Additional Senior Obligations. For
definitions of "Company Senior Indebtedness" and "Additional Senior
Obligations", see "-- Subordination" below.
Unless otherwise indicated below with respect to a particular series of Company
Subordinated Securities, the maturity of the Company Subordinated Securities is
subject to acceleration only upon our bankruptcy or reorganization. See
"Defaults and Waivers" below.
If any Company Subordinated Securities are specified to be convertible into our
common stock, the holders will be entitled, as specified, to convert those
convertible Company Subordinated Securities into common stock at the conversion
price specified.
To the extent specified below with respect to a particular series of Company
Subordinated Securities, the holders of the particular series may be obligated
at maturity, or at any earlier time as set forth below, to exchange that series
of Company Subordinated Securities for Capital Securities on terms specified
below. "Capital Securities" may consist of our common stock, perpetual preferred
stock or other capital securities acceptable to our primary Federal banking
regulator, which currently is the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"). Whenever Company Subordinated Securities
are exchangeable for Capital Securities, we will be obligated to deliver Capital
Securities with a market value equal to the principal amount of those Company
Subordinated Securities. In addition, we will unconditionally undertake, at our
expense, to sell the Capital Securities in a secondary offering on behalf of any
holders who elect to receive cash for the Capital Securities.
Subordination. The Company Subordinated Securities are subordinated and junior
in right of payment to all Company Senior Indebtedness and, under certain
circumstances, Additional Senior Obligations. As of June 30, 2001, our Company
Senior Indebtedness and Additional Senior Obligations totaled approximately $48
billion.
As used in this prospectus, "Company Senior Indebtedness" means the principal
of, and premium, if any, and interest on all indebtedness for money borrowed by
us, whether outstanding on the date the Company Subordinated Indenture became
effective or created, assumed or incurred after that date, including all
indebtedness for money borrowed by another person that we guarantee. However,
Company Senior Indebtedness does not include indebtedness that is stated to be
not superior to or to have the same rank as the Company Subordinated Securities.
In particular, Company Senior Indebtedness does not include (A) Antecedent
Company Subordinated Indebtedness (as defined below), (B) Company Subordinated
Securities issued on or after December 15, 1992, (C) Assumed Heritage Chase
Subordinated Indebtedness, as defined below, (D) Antecedent Heritage JPM
Subordinated Indebtedness (as defined below), (E) Other Assumed Heritage JPM
Subordinated Indebtedness (as defined below), and (F) other debt of J.P. Morgan
Chase that is expressly stated to have the same rank as or to not rank superior
to the Company Subordinated Securities (we refer to that other debt as "Other
Subordinated Indebtedness").
The Company Subordinated Indenture defines "Additional Senior Obligations" to
mean all indebtedness of J.P. Morgan Chase for claims in respect of derivative
products, such as interest and foreign exchange rate contracts, commodity
contracts and similar arrangements, except Company Senior Indebtedness and
except obligations that are expressly stated to have the same rank as or to rank
not senior to the Company Subordinated Securities. For purposes of this
definition, "claim" shall have the meaning assigned in Section 101(4) of the
Bankruptcy Code of 1978, as amended and in effect on the date of execution of
the Company Subordinated Indenture.
Antecedent Company Subordinated Indebtedness means all outstanding subordinated
indebtedness issued by Chemical Banking Corporation prior to December 15, 1992,
other than Assumed Heritage Chase Subordinated Indebtedness and Assumed Heritage
JPM Subordinated Indebtedness.
Assumed Heritage Chase Subordinated Indebtedness means all outstanding
subordinated indebtedness that we assumed as a result of our merger with The
Chase Manhattan Corporation.
Antecedent Heritage JPM Subordinated Indebtedness means all outstanding
subordinated indebtedness issued by heritage J.P. Morgan prior to
12
March 1, 1993 that we assumed as a result of our merger with heritage J.P.
Morgan.
Other Assumed Heritage JPM Subordinated Indebtedness means all outstanding
subordinated indebtedness issued by heritage J.P. Morgan on or after March 1,
1993 that we assumed as a result of our merger with J.P. Morgan.
Under the Company Subordinated Indenture, we may not make any payment on the
Company Subordinated Securities or exchange any Company Subordinated Securities
for Capital Securities in the event:
- we have failed to make full payment of all amounts of principal, and premium,
if any, and interest, if any, due on all Company Senior Indebtedness; or
- there shall exist any event of default on any Company Senior Indebtedness or
any event which, with notice or lapse of time or both, would become such an
event of default.
In addition, upon our dissolution, winding-up, liquidation or reorganization:
- we must pay to the holders of Company Senior Indebtedness the full amounts of
principal of, and premium, if any, and interest, if any, on the Company Senior
Indebtedness before any payment or distribution is made on the Company
Subordinated Securities, and
- if, after we have made those payments on the Company Senior Indebtedness,
there are amounts available for payment on the Company Subordinated Securities
and creditors in respect of Additional Senior Obligations have not received
their full payments,
then we will first use amounts available for payment on the Company Subordinated
Securities, other than Antecedent Company Subordinated Indebtedness, to pay in
full all Additional Senior Obligations before we may make any payment on the
Company Subordinated Securities.
For additional information regarding the relationship among the provisions
governing our various series of subordinated debt securities, see "Relationship
Among Subordination Provisions" below.
Limitation on Disposition of Voting Stock of Chase Bank. Except as noted below,
the Company Subordinated Indenture does not contain a covenant prohibiting us
from selling or otherwise disposing of any shares of voting stock of Chase Bank,
or securities convertible into, or options, warrants or rights to purchase
shares of voting stock of Chase Bank. The Company Subordinated Indenture also
does not prohibit Chase Bank from issuing any shares of its voting stock or
securities convertible into, or options, warrants or rights to purchase shares
of its voting stock. However, the Company Subordinated Indenture does contain a
covenant, which is for the exclusive benefit of the holders of the Antecedent
Company Subordinated Indebtedness and which is subject to the provisions
described below under "-- Consolidation, Merger and Sale of Assets," that we
will not sell or otherwise dispose of any shares of voting stock of Chase Bank,
or securities convertible into, or options, warrants or rights to purchase
shares of, voting stock of Chase Bank, nor will we permit Chase Bank to issue
any such shares of its voting stock or securities convertible into, or options,
warrants or rights to purchase shares of its voting stock. However, that
covenant does not prohibit:
- issuances or sales of directors' qualifying shares;
- issuances or sales of shares to us;
- sales or other dispositions or issuances for fair market value, as determined
by our board of directors, so long as we would continue to own directly or
indirectly not less than 80% of the issued and outstanding shares of the
voting stock of Chase Bank;
- sales or other dispositions or issuances made in compliance with an order or
direction of a court or regulatory authority of competent jurisdiction; and
- sales of voting stock by Chase Bank to its shareholders if those sales do not
reduce the percentage of shares of voting stock owned by us.
Defaults and Waivers. The Company Subordinated Indenture defines an event of
default:
- with respect to Antecedent Company Subordinated Indebtedness, as any one of
certain events of bankruptcy, insolvency and reorganization affecting J.P.
Morgan Chase; and
- with respect to Company Subordinated Securities, as any one of certain events
of bankruptcy or reorganization affecting J.P. Morgan Chase and any other
event described below as an event of default for a particular series.
13
If an event of default occurs and is continuing with respect to any outstanding
series of Company Subordinated Securities, the trustee or the holders of at
least 25% in aggregate principal amount of that outstanding series may declare
the principal, or, in the case of original issue discount Company Subordinated
Securities, a specified amount of principal, of all Company Subordinated
Securities of that series to be due and payable immediately in cash. Subject to
specified conditions, the holders of not less than a majority in aggregate
principal amount of the Company Subordinated Securities of that series may annul
the declaration and waive certain past defaults. The right of the holders of the
Company Subordinated Securities of a series to demand payment in cash upon the
occurrence and continuance of an event of default continues to exist so long as
the Company Subordinated Securities of that series have not been exchanged or
converted. Any right to enforce that payment in cash would, in the event of our
bankruptcy or reorganization, be subject to the broad equity powers of a federal
bankruptcy court and to its determination of the nature and status of the
payment claims of the holders of the Company Subordinated Securities. Prior to
any declaration of acceleration, the holders of a majority in aggregate
principal amount of the applicable series of Company Subordinated Securities may
waive any past default or event of default, except a payment default.
Unless otherwise provided in the terms of a series of Company Subordinated
Securities, there is no right of acceleration of the payment of principal of the
Company Subordinated Securities of that series upon a default in the payment of
principal or interest or a default in the performance of any covenant or
agreement in the Company Subordinated Securities or the Company Subordinated
Indenture. In the event of a default in the payment of interest or principal,
including a default in the delivery of any Capital Securities in exchange for
Company Subordinated Securities, or in the performance of any covenant or
agreement in the Company Subordinated Securities or the Company Subordinated
Indenture, the trustee may, subject to specified limitations and conditions,
seek to enforce that payment or delivery or the performance of that covenant or
agreement.
The Company Subordinated Indenture requires the trustee, within 90 days after
the occurrence of a default with respect to Company Subordinated Securities of
any series, to give the holders of that series notice of all uncured defaults
known to it. However, except in cases involving our bankruptcy or
reorganization, a payment default or a default in the obligation to deliver
Capital Securities in exchange for Company Subordinated Securities, the trustee
may withhold the notice if it determines in good faith that the withholding of
the notice is in the interest of those holders. The term "default" for purposes
of this provision includes the events of default specified above without grace
periods or notice. We are required to furnish to the trustee annually an
officers' certificate as to the absence of defaults under the Company
Subordinated Indenture.
Other than the duties of the trustee to act with the required standard of care
during a default, the trustee is not obligated to exercise any of its rights or
powers under the Company Subordinated Indenture at the request or direction of
any of the holders of the Company Subordinated Securities, unless those holders
have offered the trustee reasonable security or indemnity. Subject to that
provision for security or indemnity, the holders of a majority in principal
amount of the Company Subordinated Securities of any series then outstanding
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to, or exercising any trust or power conferred on, the
trustee with respect to the Company Subordinated Securities of that series.
Modification of the Indenture. The Company Subordinated Indenture contains
provisions permitting us and the trustee to modify the Company Subordinated
Indenture or the rights of the holders of the Company Subordinated Securities
with the consent of the holders of not less than a majority in principal amount
of each outstanding series of the Company Subordinated Securities affected by
the modification. However, no such modification may, without the consent of each
holder of Company Subordinated Securities affected by the modification:
- change the stated maturity date of the principal of, or any installment of
principal of or interest on, any Company Subordinated Security;
- reduce the principal amount of, or premium, if any, or interest, if any, on,
any Company Subordinated Security;
- reduce the portion of the principal amount of an original issue discount
Company Subordinated
14
Security payable upon acceleration of the maturity of that Company
Subordinated Security;
- reduce any amount payable upon redemption of any Company Subordinated
Security;
- change the place or places where, or the currency in which, any Company
Subordinated Security or any premium or interest is payable;
- change the definition of market value;
- impair the right of any holders of Company Subordinated Securities of any
series to receive on any exchange date for Company Subordinated Securities of
that series Capital Securities with a market value equal to that required by
the terms of the Company Subordinated Securities;
- impair the conversion rights, if any, of any holders;
- impair the right of a holder to institute suit for the enforcement of any
payment on or with respect to any Company Subordinated Security, including any
right of redemption at the option of the holder of that Company Subordinated
Security, or impair any rights to the delivery of Capital Securities in
exchange for any Company Subordinated Security or to require us to sell
Capital Securities in a secondary offering or to require the delivery of
common stock, Company Debt Securities or other property upon conversion of
Company Subordinated Securities;
- reduce the above-stated percentage of Company Subordinated Securities of any
series the consent of the holders of which is necessary to modify or amend the
Company Subordinated Indenture, or reduce the percentage of Company
Subordinated Securities of any series the holders of which are required to
waive any past default or event of default; or
- modify the above requirements.
The Company Subordinated Indenture permits us and the trustee to amend the
Company Subordinated Indenture without the consent of the holders of Company
Subordinated Securities in the event of the merger of J.P. Morgan Chase, the
replacement of the trustee, to effect modifications that do not affect any
outstanding series of Company Subordinated Securities and for other specified
purposes.
Consolidation, Merger and Sale of Assets. We may not merge or consolidate with
any other corporation or sell or convey all or substantially all of our assets
to any other corporation, unless:
- we are the continuing corporation or the successor corporation expressly
assumes the payment of the principal of (including issuance and delivery of
Capital Securities) and premium, if any, and interest, if any, on the Company
Subordinated Securities and the performance and observance of all the
covenants and conditions of the Company Subordinated Indenture binding upon
us; and
- immediately after the merger, consolidation, sale or conveyance, we or the
successor corporation shall not be in default in the performance of any such
covenant or condition.
The principal terms of the Company Subordinated Securities issued and
outstanding as of the date of this prospectus are set forth below. Unless
otherwise indicated below, interest on each series listed below accrues at the
annual rate indicated in the title of the series and is payable semiannually in
arrears on the indicated interest payment dates to the registered holders on the
preceding record date. Unless otherwise indicated below, Company Subordinated
Securities of the series listed below are not redeemable prior to their stated
maturity and are not subject to a sinking fund.
8 1/2% SUBORDINATED NOTES DUE 2002
- Principal amount of series: $200,000,000
- Maturity date: February 15, 2002
- Interest payment dates: February 15 and August 15
- Record dates: February 1 and August 1
- Issuance date: February 10, 1992
- Other terms: The happening of one or more of the following events will
constitute an event of default:
(1) default for 30 days in the payment of any installment of interest;
(2) default in the payment, when due, of principal;
(3) default, for 60 days after appropriate written notice, in the
observance or performance of any of our other covenants or agreements with
respect to this series; and
(4) certain events of bankruptcy, insolvency and reorganization
affecting us or the Bank.
15
8 5/8% SUBORDINATED DEBENTURES DUE 2002
- Principal amount of series: $150,000,000
- Maturity date: May 1, 2002
- Interest payment dates: May 1 and November 1
- Record dates: April 15 and October 15
- Issuance date: May 6, 1992
8 1/8% SUBORDINATED NOTES DUE JUNE 15, 2002
- Principal amount of series: $100,000,000
- Maturity date: June 15, 2002
- Interest payment dates: June 15 and December 15
- Record dates: June 1 and December 1
- Issuance date: June 23, 1992
7 5/8% SUBORDINATED NOTES DUE 2003
- Principal amount of series: $200,000,000
- Maturity date: January 15, 2003
- Interest payment dates: January 15 and July 15
- Record dates: January 1 and July 1
- Issuance date: January 22, 1993
7 1/8% SUBORDINATED DEBENTURES DUE 2005
- Principal amount of series: $200,000,000
- Maturity date: March 1, 2005
- Interest payment dates: March 1 and September 1
- Record dates: February 15 and August 15
- Issuance date: March 1, 1993
6 1/2% SUBORDINATED DEBENTURES DUE 2009
- Principal amount of series: $200,000,000
- Maturity date: January 15, 2009
- Interest payment dates: January 15 and July 15
- Record dates: January 1 and July 1
- Issuance date: January 25, 1994
7 7/8% SUBORDINATED DEBENTURES DUE 2006
- Principal amount of series: $150,000,000
- Maturity date: July 15, 2006
- Interest payment dates: January 15 and July 15
- Record dates: January 1 and July 1
- Issuance date: July 27, 1994
7 1/8% SUBORDINATED NOTES DUE 2007
- Principal amount of series: $300,000,000
- Maturity date: February 1, 2007
- Interest payment dates: February 1 and August 1
- Record dates: January 15 and July 15
- Issuance date: January 29, 1997
7 1/4% SUBORDINATED NOTES DUE 2007
- Principal amount of series: $300,000,000
- Maturity date: June 1, 2007
- Interest payment dates: June 1 and December 1
- Record dates: May 15 and November 15
- Issuance date: May 21, 1997
7 1/8% SUBORDINATED NOTES DUE 2009
- Principal amount of series: $250,000,000
- Maturity date: June 15, 2009
- Interest payment dates: June 15 and December 15
- Record dates: June 1 and December 1
- Issuance date: June 12, 1997
6 3/8% SUBORDINATED NOTES DUE 2008
- Principal amount of series $200,000,000
- Maturity date: February 15, 2008
- Interest payment dates: February 15 and August 15
- Record dates: February 1 and August 1
- Issuance date: February 11, 1998
6 3/8% SUBORDINATED NOTES DUE APRIL 1, 2008
- Principal amount of series: $250,000,000
- Maturity date: April 1, 2008
- Interest payment dates: April 1 and October 1
- Record dates: March 15 and September 15
- Issuance date: April 7, 1998
6% SUBORDINATED NOTES DUE 2005
- Principal amount of series: $300,000,000
- Maturity date: November 1, 2005
- Interest payment dates: May 1 and November 1
- Record dates: April 15 and October 15
- Issuance date: November 6, 1998
6% SUBORDINATED NOTES DUE 2009
- Initial principal amount of series (subject to increase): $350,000,000
- Maturity date: February 15, 2009
- Interest payment dates: February 15 and August 15
- Record dates: February 1 and August 1
- Issuance date: February 23, 1999
16
7% SUBORDINATED NOTES DUE 2009
- Initial principal amount of series (subject to increase): $500,000,000
- Maturity date: November 15, 2009
- Interest payment dates: May 15 and November 15
- Record dates: May 1 and November 1
- Issuance date: November 22, 1999
7.875% SUBORDINATED NOTES DUE 2010
- Initial principal amount of series (subject to increase): $500,000,000
- Maturity date: June 15, 2010
- Interest payment dates: June 15 and December 15
- Record dates: June 1 and December 1
- Issuance date: June 9, 2000
6.75% SUBORDINATED NOTES DUE 2011
- Initial principal amount of series (subject to increase): $1,500,000,000
- Additional principal amount of series issued June 8, 2001: $500,000,000
- Aggregate principal amount of series (subject to increase): $2,000,000,000
- Maturity date: February 1, 2011
- Interest payment dates: February 1 and August 1
- Record dates: January 15 and July 15
- Initial date: January 30, 2001
SUBORDINATED MEDIUM-TERM NOTES, SERIES A
As of the date of this prospectus, $1,620,000,000 aggregate principal amount of
Subordinated Medium-Term Notes, Series A (the "Subordinated Series A Notes") is
or is scheduled to become issued and outstanding. In the table below we specify
the following terms of those Subordinated Series A Notes:
- Issuance date;
- Principal amount;
- Maturity date;
- Interest rate and redemption dates, if any.
The Subordinated Series A Notes are not subject to a sinking fund and are not
redeemable unless a redemption date is indicated below. Unless otherwise
indicated below, Subordinated Series A Notes that are redeemable are redeemable
at 100% of their principal amount, plus accrued and unpaid interest, if any, to
the redemption date.
17
SUBORDINATED MEDIUM-TERM NOTES, SERIES B
As of the date of this prospectus, $47,250,000 aggregate principal amount of our
Subordinated Medium-Term Notes, Series B (the "Subordinated Series B Notes") is
issued and outstanding. In the table below we specify the following terms of
those Subordinated Series B Notes:
- Issuance date;
- Principal amount;
- Maturity date;
- Interest rate and redemption dates, if any.
18
The Subordinated Series B Notes are not subject to a sinking fund and are not
redeemable unless a redemption date is indicated below. Unless otherwise
indicated below, Subordinated Series B Notes that are redeemable are redeemable
at 100% of their principal amount, plus accrued and unpaid interest, if any, to
the redemption date.
INFORMATION CONCERNING THE TRUSTEES
J.P. Morgan Chase and some of our subsidiaries maintain deposits and conduct
other banking transactions with the trustees under each of the Company
Indentures in the ordinary course of business. U.S. Bank Trust National
Association is also trustee under the Heritage Chase Subordinated Indenture and
the Heritage JPM Indentures referred to under "Heritage J.P. Morgan Debt
Securities" below and under our Indenture, dated as of November 10, 1996, as
amended, with respect to our junior subordinated indebtedness supporting the
capital securities of Heritage JPM Capital Trust I and Heritage JPM Capital
Trust II (the "Heritage JPM Junior Subordinated Indenture"). Bankers Trust
Company is also trustee under the Heritage Chase Senior Indenture referred to
below.
HERITAGE CHASE DEBT SECURITIES
In connection with our merger with The Chase Manhattan Corporation ("heritage
Chase"), we assumed the obligations of heritage Chase with respect to senior
debt securities described below (the "Heritage Chase Senior Securities") and
subordinated debt securities described below (the "Heritage Chase Subordinated
Securities," and together with the Heritage Chase Senior Securities, the
"Heritage Chase Debt Securities"). The following summary of the provisions of
the Heritage Chase Debt Securities and the indentures under which they were
issued (the "Heritage Chase Indentures") is not complete. You should refer to
the Heritage Chase Indentures, copies of which are exhibits to the registration
statement.
We have issued the Heritage Chase Senior Securities under an Indenture, dated as
of July 1, 1986 (as amended, the "Heritage Chase Senior Indenture"), between us
and Bankers Trust Company, as trustee. We have issued the Heritage Chase
Subordinated Securities under an Indenture, dated as of May 1, 1987, as amended
and restated as of September 1, 1993 (as amended, the "Heritage Chase
Subordinated Indenture"), between us and U.S. Bank Trust National Association,
as trustee.
HERITAGE CHASE SENIOR SECURITIES
The Heritage Chase Senior Securities are our direct, unsecured general
obligations and constitute senior indebtedness having the same rank as our other
senior indebtedness.
Limitation on Disposition of Voting Stock of Chase Bank. The Heritage Chase
Senior Indenture contains a covenant by us that, so long as any Heritage Chase
Senior Securities are outstanding, we will not create a security interest in
more than 20% of the shares of voting stock of Chase Bank, or permit more than
20% of those shares (exclu-
19
sive of directors' qualifying shares) to be held directly or indirectly other
than by (1) us or (2) a corporation that is wholly-owned (except for directors'
qualifying shares) by us.
Defaults and Waivers. The Heritage Chase Senior Indenture defines an event of
default with respect to any series of Heritage Chase Senior Securities as any
one or more of the following events:
(1) default in the payment of interest on any Heritage Chase Senior
Securities of that series for a period of 30 days;
(2) default in the payment of the principal of, or premium, if any,
on, any Heritage Chase Senior Securities of that series;
(3) default in performance of any of our covenants or warranties
contained in the Heritage Chase Senior Indenture for the benefit of
Heritage Chase Senior Securities of that series for a period of 60 days
after notice of the default or breach has been given to us;
(4) certain events of bankruptcy, insolvency or reorganization of J.P.
Morgan Chase; and
(5) any other event of default specified with respect to the Heritage
Chase Senior Securities of that series.
If an event of default occurs and is continuing with respect to the Heritage
Chase Senior Securities of any series, the trustee or the holders of not less
than 25% in principal amount of the Heritage Chase Senior Securities of that
series then outstanding may declare the principal of the Heritage Chase Senior
Securities of that series or, if the Heritage Chase Senior Securities of that
series were issued as original issue discount Heritage Chase Senior Securities,
a specified portion of that principal amount, to be due and payable immediately.
Under specified conditions the holders of not less than a majority in principal
amount of the Heritage Chase Senior Securities of that series may annul the
declaration and waive past defaults.
The Heritage Chase Senior Indenture requires the trustee, within 90 days after
the occurrence of a default known to it with respect to any outstanding series
of Heritage Chase Senior Securities, to give the holders of that series notice
of the default if uncured or not waived. The trustee may withhold the notice if
it determines in good faith that the withholding of the notice is in the
interest of those holders. However, the trustee may not withhold the notice in
the case of a payment default. The trustee may not give the above notice until
30 days after the occurrence of a default in the performance of a covenant in
the Heritage Chase Senior Indenture other than a covenant to make payment. The
term "default" for the purposes of this provision means any event which is, or
after notice or lapse of time or both would become, an event of default with
respect to Heritage Chase Senior Securities of that series.
Other than the duty to act with the required standard of care during a default,
the trustee is not obligated to exercise any of its rights or powers under the
Heritage Chase Senior Indenture at the request or direction of the holders,
unless the holders have offered the trustee reasonable indemnity. Subject to
that requirement for indemnity and other specified conditions, the holders of a
majority in principal amount of the outstanding Heritage Chase Senior Securities
of any series may direct the time, method and place of conducting any proceeding
for any remedy available to, or exercising any trust or power conferred on, the
trustee with respect to the Heritage Chase Senior Securities of that series.
Modification of the Indenture. We and the trustee may modify the Heritage Chase
Senior Indenture with the consent of the holders of not less than 66 2/3% in
principal amount of the outstanding Heritage Chase Senior Securities of each
series affected by the modification. However, no such modification may, without
the consent of the holder of each outstanding Heritage Chase Senior Security
affected by the modification:
- change the stated maturity of the principal of, or any installment of
principal of or interest on, any Heritage Chase Senior Security;
- reduce the principal amount of any Heritage Chase Senior Security or change
the rate of interest or the method of calculation of interest that security,
except as provided in the Heritage Chase Senior Indenture or in the Heritage
Chase Senior Security, or any premium payable upon the redemption of that
security;
- change any obligation of ours to pay additional amounts under the Heritage
Chase Senior Indenture;
- reduce the amount of principal of an original issue discount Heritage Chase
Senior Security
20
payable upon acceleration of the maturity of that security;
- adversely affect the right of repayment, if any, at the option of the holder;
- change the currency in which any Heritage Chase Senior Security or any premium
or any interest on that security is payable;
- impair the right to institute suit for the enforcement of any payment on any
Heritage Chase Senior Security;
- reduce the percentage in principal amount of outstanding Heritage Chase Senior
Securities of any series the consent of whose holders is required for
modification or amendment of or any waiver under the Heritage Chase Senior
Indenture;
- change our obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York, or our obligation, if any, to maintain an
office or agency outside the United States; or
- modify provisions of the Heritage Chase Senior Indenture requiring consent of
specified percentages of holders, except to increase any such percentage.
We and the trustee may modify the Heritage Chase Senior Indenture without the
consent of the holders of the Heritage Chase Senior Securities to evidence the
merger of J.P. Morgan Chase or the replacement of the trustee or to make changes
that do not become effective with respect to previously outstanding series and
for certain other purposes.
Consolidation, Merger and Sale of Assets. We may, without the consent of the
holders of any of the Heritage Chase Senior Securities, consolidate with, merge
into or transfer all or substantially all of our assets to any corporation
organized and existing under the laws of the United States, any state or the
District of Columbia, so long as the successor corporation assumes our
obligations relating to the Heritage Chase Senior Securities and under the
Heritage Chase Senior Indenture and no event of default shall have happened and
be continuing after giving effect to the transaction and so long as other
specified conditions are met.
The principal terms of the Heritage Chase Senior Securities issued and
outstanding as of the date of this prospectus are set forth below.
HERITAGE CHASE SENIOR MEDIUM-TERM NOTES, SERIES B
The only series of Heritage Chase Senior Medium-Term Notes, Series B (the
"Heritage Chase Senior Series B Notes"), issued and outstanding as of the date
of this prospectus is $50,000,000 aggregate principal amount of Heritage Chase
Senior Series B Notes issued on March 29, 1996. Those Heritage Chase Senior
Series B Notes bear interest at an annual rate of 6.85% and mature on March 29,
2006. They are not subject to a sinking fund and are not subject to redemption
prior to maturity.
HERITAGE CHASE SUBORDINATED SECURITIES
The Heritage Chase Subordinated Securities are our direct, unsecured general
obligations. Payment of the principal of the Heritage Chase Subordinated
Securities is subject to acceleration only in the event of our bankruptcy,
insolvency or reorganization.
Subordination. The Heritage Chase Subordinated Securities are subordinated, by
their terms, to all of our obligations to our creditors, including Company
Senior Indebtedness, Heritage JPM Senior Indebtedness (as defined below),
Additional Senior Obligations and Derivative Obligations (as defined below),
except obligations having the same rank as or ranking junior to the Heritage
Chase Subordinated Securities. For purposes of this prospectus we refer to that
senior indebtedness as "Heritage Chase Senior Indebtedness".
We may not make any payment on the Heritage Chase Subordinated Securities, and
no holder of Heritage Chase Subordinated Securities will be entitled to demand
or receive any such payment unless we have paid in full all amounts of
principal, premium, if any, and interest then due on all Heritage Chase Senior
Indebtedness.
See "Company Debt Securities -- Company Subordinated Securities" for the amount
of outstanding of Heritage Chase Senior Indebtedness (which is the same as the
outstanding amount of Company Senior Indebtedness) as of the date of this
prospectus. In addition, for information regarding the relationship among the
subordination provisions governing our various series of subordinated Debt
Securities, see "Relationship Among Subordination Provisions" below.
Limitation on Disposition of Voting Stock of Chase Bank. The Heritage Chase
Subordinated
21
Indenture does not prohibit us from selling or otherwise disposing of shares of
voting stock of Chase Bank.
Defaults and Waivers. The Heritage Chase Subordinated Indenture defines an
event of default with respect to Heritage Chase Subordinated Securities of any
series as certain events involving our bankruptcy, insolvency or reorganization
and any other events established as events of default for any series of Heritage
Chase Subordinated Securities.
If an event of default with respect to any outstanding series of Heritage Chase
Subordinated Securities occurs and is continuing, either the trustee or the
holders of not less than 25% in aggregate principal amount of that series may
declare the principal amount, or, in the case of original issue discount
Heritage Chase Subordinated Securities, a specified portion of the principal
amount, of that series to be due and payable immediately in cash. Any right to
enforce the payment in cash would be subject to the broad equity powers of a
federal bankruptcy court and to its determination of the nature of the rights of
the holders of the Heritage Chase Subordinated Securities of that series. At any
time after a declaration of acceleration has been made, but before a judgment or
decree for payment of the money due has been obtained by the trustee, the
holders of a majority in aggregate principal amount of the outstanding Heritage
Chase Subordinated Securities of that series may, under specified circumstances,
annul the declaration.
The Heritage Chase Subordinated Indenture requires the trustee, within 90 days
after the occurrence of a default known to it with respect to any outstanding
series, to give the holders of that series notice of the default if not cured or
waived. The trustee may withhold the notice if it in good faith determines that
the withholding of the notice is in the interest of those holders. However, the
trustee may not withhold notice of a payment default. The trustee may not give
the above notice until 30 days after the occurrence of a default in the
performance of a covenant, other than a covenant to make payment. The term
"default" for the purposes of this provision means any event that is, or after
notice or lapse or time or both would become, an event of default with respect
to a series of Heritage Chase Subordinated Securities.
Other than the duty of the trustee during the continuance of an event of default
to act with the required standard of care, the trustee is not obligated to
exercise any of its rights or powers under the Heritage Chase Subordinated
Indenture at the request or direction of any of the holders of the Heritage
Chase Subordinated Securities of any series, unless those holders have offered
the trustee reasonable indemnity. Subject to that requirement for indemnity, the
holders of a majority in aggregate principal amount of the outstanding Heritage
Chase Subordinated Securities of any series may direct the time, method and
place of conducting any proceeding for any remedy available to, or exercising
any trust or power conferred on, the trustee with respect to the Heritage Chase
Subordinated Securities of that series.
We are required to file annually with the trustee a written statement of
officers as to the existence or non-existence of defaults.
Modification of the Indenture. We and the trustee may modify the Heritage Chase
Subordinated Indenture with the consent of the holders of not less than 66 2/3%
in principal amount of the outstanding Heritage Chase Subordinated Securities of
each series affected by the modification. However, no such modification may,
without the consent of the holder of each Heritage Chase Subordinated Security
affected by the modification:
- change the fixed maturity of the principal of, or any installment of principal
of or interest on, any Heritage Chase Subordinated Security;
- reduce the principal amount of any Heritage Chase Subordinated Security;
- change the rate or rates, or the method of ascertaining the rate or rates, of
interest on any Heritage Chase Subordinated Security, except as provided in
the Heritage Chase Subordinated Indenture or in the Heritage Chase
Subordinated Securities, or any premium payable upon the redemption of any
Heritage Chase Subordinated Security;
- reduce the portion of the principal amount of any original issue discount
Heritage Chase Subordinated Security payable upon acceleration of maturity;
- change any place where, or the currency in which, the principal amount of, or
any premium
22
or interest on, any Heritage Chase Subordinated Security is payable;
- impair any right to institute suit for the enforcement of any right to receive
payment, or, if applicable, to have delivered capital securities to be
exchanged for a Heritage Chase Subordinated Security and to have those capital
securities sold in a secondary offering to the extent provided in that
Heritage Chase Subordinated Security and in the Heritage Chase Subordinated
Indenture;
- modify the subordination provisions of the Heritage Chase Subordinated
Indenture in a manner adverse to the holders;
- reduce the percentage in principal amount of outstanding Heritage Chase
Subordinated Securities of the series required to approve any modification or
alteration of, or any waiver under, the Heritage Chase Subordinated Indenture;
or
- impair the right of any holder to receive on any exchange date capital
securities with a market value equal to the amount established with respect to
the series.
We and the trustee may modify the Heritage Chase Subordinated Indenture without
the consent of the holders of the Heritage Chase Subordinated Securities to
evidence the merger of J.P. Morgan Chase or the replacement of the trustee or to
make changes that do not become effective with respect to previously outstanding
series and for other specified purposes.
The principal terms of the Heritage Chase Subordinated Securities issued and
outstanding as of the date of this prospectus are set forth below. Unless
otherwise indicated below, interest on each series listed below accrues at the
annual rate indicated in the title of the series and is payable semi-annually in
arrears on the interest payment dates indicated to the registered holders on the
preceding record date indicated. Unless otherwise indicated below, the series
listed below are not redeemable prior to their stated maturity and are not
subject to a sinking fund.
9 3/4% SUBORDINATED NOTES DUE 2001
- Principal amount of series: $150,000,000
- Maturity date: November 1, 2001
- Interest payment dates: May 1 and November 1
- Record dates: April 15 and October 15
- Issuance date: November 13, 1991
7 1/2% SUBORDINATED NOTES DUE 2003
- Principal amount of series: $200,000,000
- Maturity date: February 1, 2003
- Interest payment dates: February 1 and August 1
- Record dates: January 15 and July 15
- Issuance date: February 2, 1993
FLOATING RATE SUBORDINATED NOTES DUE 2003
- Principal amount of series: $150,000,000
- Maturity date: July 15, 2003
- Interest rate: Floating rate reset quarterly based on an annual rate equal to
the greater of (1) LIBOR plus 0.125% and (2) 4.35%, payable quarterly in
arrears
- Interest payment dates: January 15, April 15, July 15 and October 15
- Record dates: January 1, April 1, July 1 and October 1
- Issuance date: July 15, 1993
FLOATING RATE SUBORDINATED NOTES DUE AUGUST 1, 2003
- Principal amount of series: $100,000,000
- Maturity date: August 1, 2003
- Interest rate: Floating rate reset quarterly based on an annual rate equal to
the greater of (1) LIBOR and (2) 4.50%, payable quarterly in arrears
- Interest payment dates: February 1, May 1, August 1 and November 1
- Record dates: January 15, April 15, July 15 and October 15
- Issuance date: August 5, 1993
6 1/2% SUBORDINATED NOTES DUE 2005
- Principal amount of series: $200,000,000
- Maturity date: August 1, 2005
- Interest payment dates: February 1 and August 1
- Record dates: January 15 and July 15
- Issuance date: July 27, 1993
23
6 3/4% SUBORDINATED NOTES DUE 2008
- Principal amount of series: $200,000,000
- Maturity date: August 15, 2008
- Interest payment dates: February 15 and August 15
- Record dates: August 1 and February 1
- Issuance date: August 17, 1993
6 1/8% SUBORDINATED NOTES DUE 2008
- Principal amount of series: $100,000,000
- Maturity date: October 15, 2008
- Interest payment dates: April 15 and October 15
- Record dates: April 1 and October 1
- Issuance date: October 18, 1993
6 1/2% SUBORDINATED NOTES DUE 2009
- Principal amount of series: $150,000,000
- Maturity date: January 15, 2009
- Interest payment dates: January 15 and July 15
- Record dates: January 1 and July 1
- Issuance date: January 24, 1994
6 1/4% SUBORDINATED NOTES DUE 2006
- Principal amount of series: $200,000,000
- Maturity date: January 15, 2006
- Interest payment dates: January 15 and July 15
- Record dates: January 1 and July 1
- Issuance date: January 19, 1996
SUBORDINATED MEDIUM-TERM NOTES, SERIES B
As of the date of this prospectus, $25,000,000 aggregate principal amount of
Heritage Chase Subordinated Medium-Term Notes, Series B (the "Heritage Chase
Subordinated Series B Notes"), is issued and outstanding. In the table below we
specify the following terms of those Heritage Chase Subordinated Series B Notes:
- Issuance date;
- Principal amount;
- Maturity date;
- Interest rate and redemption dates, if any.
The Heritage Chase Subordinated Series B Notes are not subject to a sinking fund
and are not redeemable unless a redemption date is indicated below. Unless
otherwise indicated below, the Heritage Chase Subordinated Series B Notes that
are redeemable are redeemable at 100% of their principal amount, plus accrued
and unpaid interest, if any, to the redemption date.
INFORMATION CONCERNING THE TRUSTEES
J.P. Morgan Chase and some of our subsidiaries maintain deposits and conduct
other banking transactions with the trustees under each of the Heritage Chase
Indentures in the ordinary course of business. U.S. Bank Trust National
Association is also trustee under the Company Subordinated Indenture, the
Heritage JPM Indentures referred to below and under the Heritage JPM Junior
Subordinated Indenture. Bankers Trust Company is also trustee under the Company
Senior Indenture.
HERITAGE J.P. MORGAN DEBT SECURITIES
In connection with our merger with heritage J.P. Morgan, we assumed the
obligations of heritage J.P. Morgan with respect to senior debt securities
described below (the "Heritage JPM Senior Securities") and subordinated
securities described below (the "Heritage JPM Subordinated Securities", and
together with the Heritage JPM Senior Securities, the "Heritage JPM Debt
Securities"). The following summary of the provisions of the Heritage JPM Debt
Securities and the indentures under which they were issued (the "Heritage JPM
Indentures") is not complete. You should refer to the Heritage JPM Indentures,
24
copies of which are exhibits to the registration statement.
We have issued the Heritage JPM Senior Securities under an Indenture, dated as
of August 15, 1982 (as amended, the "Heritage JPM Senior Indenture"), between us
and U.S. Bank Trust National Association, as trustee.
We have issued the Heritage JPM Subordinated Securities under two indentures. We
refer to the Heritage JPM Subordinated Securities issued under the Indenture,
dated as of December 1, 1986 (as amended, the "Heritage JPM 1986 Subordinated
Indenture"), between us and U.S. Bank Trust National Association, as trustee, as
the "Heritage JPM 1986 Subordinated Indenture Securities." We refer to the
Heritage JPM Subordinated Securities issued under the Indenture, dated as of
March 1, 1993 (as amended, the "Heritage JPM 1993 Subordinated Indenture"),
between us and U.S. Bank Trust National Association, as trustee, as the
"Heritage JPM 1993 Subordinated Indenture Securities."
HERITAGE JPM SENIOR SECURITIES
The Heritage JPM Senior Securities are our direct, unsecured obligations. The
Heritage JPM Senior Securities constitute Heritage JPM Senior Indebtedness, as
defined below, under the Heritage JPM 1986 Subordinated Indenture and the
Heritage JPM 1993 Subordinated Indenture and have the same rank as our other
senior indebtedness. For a definition of Heritage JPM Senior Indebtedness, see
"-- Heritage JPM 1986 Subordinated Indenture Securities -- Subordination" below.
Defaults and Waivers. The Heritage JPM Senior Indenture defines an event of
default with respect to any series of Heritage JPM Senior Securities as any one
or more of the following events:
(1) default for 30 days in payment of any interest;
(2) default in payment of principal or premium or any sinking fund
installment when due, either at maturity, upon redemption, by declaration
or otherwise;
(3) default in the performance of any other covenant or warranty
contained in the Heritage JPM Senior Indenture which has not been remedied
for a period of 90 days after notice given as specified in the Heritage JPM
Senior Indenture; and
(4) certain events of bankruptcy, insolvency or reorganization of J.P.
Morgan Chase.
If an event of default as described in clause (1), (2) or (3) above occurs and
is continuing, the trustee or the holders of at least 25% in principal amount of
the Heritage JPM Senior Securities of the affected series then outstanding, with
each series voting as a separate class in the case of an event of default
described in clause (1) or (2) above or together as a single class in the case
of clause (3) above, may declare the principal of all outstanding Heritage JPM
Senior Securities of the affected series and the interest accrued on those
securities, if any, to be due and payable immediately. If an event of default
described in clause (4) occurs and is continuing, either the trustee or the
holders of at least 25% in principal amount of all Heritage JPM Senior
Securities then outstanding may declare the principal then outstanding and
accrued interest, if any, to be due and payable immediately. Under specified
conditions, the holders of a majority in principal amount of the applicable
series may annul the declaration and waive past defaults, except for defaults in
the payment of principal or premium or interest, if any.
The Heritage JPM Senior Indenture requires the trustee to give the holders of
any series notice of all defaults known to it within 90 days after the
occurrence of the default. The trustee may withhold notice of any default,
except a default in payment of principal of or interest or premium, if any, on
the Heritage JPM Senior Securities, if the appropriate representative of the
trustee determines that the withholding of the notice is in the interest of the
holders of the series of Heritage JPM Senior Securities.
The holders of a majority in principal amount of the outstanding Heritage JPM
Senior Securities of each series affected, with each series voting as a separate
class, may direct the time, method and place of conducting any proceeding for
any remedy available to the trustee or any power conferred upon the trustee with
respect to that series, subject to limitations specified in the Heritage JPM
Senior Indenture. However, subject to its duty to act with the required standard
of care during a default, the trustee is under no obligation
25
to exercise any of the powers vested in it at the request of the holders of the
Heritage JPM Senior Securities unless those holders have offered the trustee
reasonable indemnity against expenses and liabilities.
Each year we must deliver to the trustee a written statement as to the absence
of defaults under the Heritage JPM Senior Indenture.
Modification of the Indenture. We and the trustee may modify the Heritage JPM
Senior Indenture or any supplemental indenture or the rights of the holders of
the Heritage JPM Senior Securities with the consent of holders of not less than
66 2/3% in principal amount of the outstanding Heritage JPM Senior Securities of
all series affected by the modification, voting as one class. However, no such
modification may, without the consent of each holder affected:
- extend the final maturity of any Heritage JPM Senior Security;
- reduce the principal amount of any Heritage JPM Senior Security;
- change the method in which the amounts of principal or interest are
determined;
- reduce the rate or extend the time of payment of interest on any Heritage JPM
Senior Security;
- change the currency or currency unit of payment of any Heritage JPM Senior
Security;
- reduce any amount payable upon redemption of any Heritage JPM Senior Security;
- reduce the portion of the principal amount of an original issue discount
Heritage JPM Senior Security due upon acceleration of maturity or provable in
bankruptcy;
- impair or affect the right of a holder to institute suit for the payment of
any Heritage JPM Senior Security, or, if applicable, any right of repayment at
the option of the holder; or
- reduce the percentage of Heritage JPM Senior Securities of any series the
consent of the holders of which is required for any supplemental indenture.
We and the trustee may modify the Heritage JPM Senior Indenture without the
consent of the holders of the Heritage JPM Senior Securities to evidence the
merger of J.P. Morgan Chase or the replacement of the trustee and for other
specified purposes.
Consolidations, Mergers and Sales of Assets. We may not merge or consolidate
with any other corporation or sell or convey all or substantially all of our
assets, unless:
- either we are the continuing corporation or the successor corporation is a
corporation organized under the laws of the United States or any state and
expressly assumes the payment of the principal of and interest on the Heritage
JPM Senior Securities and the performance and observance of all the covenants
and conditions of the Heritage JPM Senior Indenture binding upon us, and
- J.P. Morgan Chase or the successor corporation, as applicable, is not,
immediately after the merger, consolidation, sale or conveyance, in default in
the performance of any covenant or condition of the Heritage JPM Senior
Indenture.
The principal terms of the Heritage JPM Senior Securities issued and outstanding
as of the date of this prospectus are set forth below.
5.75% NOTES DUE FEBRUARY 25, 2004
- Principal amount of series: $1,000,000,000
- Maturity date: February 25, 2004
- Interest payment dates: February 25 and August 25
- Record dates: The fifteenth calendar day prior to the interest payment dates
- Issuance date: February 25, 1999
HERITAGE JPM SENIOR MEDIUM-TERM NOTES, SERIES A
As of the date of this prospectus, $1,117,500,000 aggregate principal amount of
Senior Medium-Term Notes, Series A, originally issued by heritage J.P. Morgan
(the "Heritage JPM Senior Medium-Term Notes") is issued and outstanding. In the
table below we specify the following terms of those Heritage JPM Senior
Medium-Term Notes:
- Issuance date;
- Principal amount;
- Maturity date;
- Interest rate;
26
The Heritage JPM Senior Medium-Term Notes are not subject to a sinking fund.
Unless otherwise indicated below, the Heritage JPM Senior Medium-Term Notes are
not redeemable prior to their stated maturity. Unless otherwise indicated below,
Heritage JPM Senior Medium-Term Notes that are redeemable are redeemable at 100%
of their principal amount, plus accrued and unpaid interest, if any, to the
redemption date.
27
HERITAGE JPM 1986 SUBORDINATED INDENTURE SECURITIES
The Heritage JPM 1986 Subordinated Indenture Securities are our direct,
unsecured general obligations and are subordinated as described under
"-- Subordination" below.
The Heritage JPM 1986 Subordinated Indenture Securities are subject to
acceleration only upon our bankruptcy, insolvency or reorganization.
Subordination. The Heritage JPM 1986 Subordinated Indenture Securities are
subordinate and junior in right of payment as provided in the Heritage JPM 1986
Subordinated Indenture to all "Heritage JPM Senior Indebtedness," as defined
below. We may not make payment on any Heritage JPM 1986 Subordinated Indenture
Securities, and no holder of the Heritage JPM 1986 Subordinated Indenture
Securities or any related coupon will be entitled to demand or receive any such
payment:
- unless we have paid or duly provided for all amounts of principal, premium, if
any, and interest then due on all Heritage JPM Senior Indebtedness; or
- if, at the time of or immediately after giving effect to that payment there
exists:
- any event of default on any Heritage JPM Senior Indebtedness permitting
the holders of that Heritage JPM Senior Indebtedness to accelerate its
maturity thereof; or
- any event which, with notice or lapse of time, or both, will become such
an event of default.
Upon any distribution of assets upon our dissolution, winding up, liquidation or
reorganization, the holders of Heritage JPM Senior Indebtedness will be entitled
to receive payment in full of all principal, premium, if any, and interest
before we may make any payment on the Heritage JPM 1986 Subordinated Indenture
Securities. The subordination provisions do not prevent the occurrence of any
event of default in respect of the Heritage JPM 1986 Subordinated Indenture
Securities, as described below.
"Heritage JPM Senior Indebtedness" means the principal of, premium, if any, and
interest on (a) all of our indebtedness for money borrowed, whether outstanding
on the date of execution of the Heritage JPM 1986 Subordinated Indenture or
thereafter created, assumed or incurred and (b) any deferrals, renewals or
extensions of any Heritage JPM Senior Indebtedness. Heritage JPM Senior
Indebtedness does not include:
- the Heritage JPM Subordinated Securities;
- the Company Subordinated Securities;
- the Heritage Chase Subordinated Securities; and
- indebtedness that is by its terms expressly stated to be not superior in right
of payment to the Heritage JPM 1986 Subordinated Indenture Securities or to
have the same rank as the Heritage JPM 1986 Subordinated Indenture Securities,
which we refer to in this prospectus as "Other Subordinated Indebtedness".
See "Company Debt Securities -- Company Subordinated Securities" for the amount
of outstanding Heritage JPM Senior Indebtedness, which is the same as the
outstanding amount of Company Senior Indebtedness, as of the date of this
prospectus. In addition, for information regarding the relationship among the
subordination provisions governing our various series of subordinated Debt
Securities, see "Relationship Among Subordination Provisions" below.
Defaults and Waivers. As to any series of Heritage JPM 1986 Subordinated
Indenture Securities, the Heritage JPM 1986 Subordinated Indenture defines an
event of default as:
(1) default for 30 days in payment of any interest on the Heritage JPM
1986 Subordinated Indenture Securities of that series;
(2) default in payment of principal of or premium, if any, on the
Heritage JPM 1986 Subordinated Indenture Securities of that series when due
either at maturity, upon redemption, by declaration or otherwise;
(3) default in the payment of a sinking fund installment, if any, on
the Heritage JPM 1986 Subordinated Indenture Securities of that series;
(4) default by us in the performance of any other covenant or warranty
contained in the Heritage JPM 1986 Subordinated Indenture for the benefit
of that series that has not been remedied for a period of 90 days after
28
notice given as specified in the Heritage JPM 1986 Subordinated Indenture;
or
(5) certain events of bankruptcy, insolvency and reorganization of
J.P. Morgan Chase.
If an event of default described in clause (5) above occurs and is continuing,
either the trustee or the holders of not less than 25% in principal amount of
all Heritage JPM 1986 Subordinated Indenture Securities then outstanding, voting
as one class, by notice in writing to us, and to the trustee if given by the
holders of Heritage JPM 1986 Subordinated Indenture Securities, may declare the
entire principal or, in the case of original issue discount Heritage JPM 1986
Subordinated Indenture Securities, a specified portion of the principal, of all
Heritage JPM 1986 Subordinated Indenture Securities then outstanding and the
interest accrued on those securities, if any, to be due and payable immediately.
Under specified conditions, the holders of a majority in principal amount of all
Heritage JPM 1986 Subordinated Indenture Securities then outstanding may annul
the declaration and waive past defaults, except for defaults in the payment of
principal of or interest or premium, if any.
The Heritage JPM 1986 Subordinated Indenture requires the trustee to give the
holders of any series of Heritage JPM 1986 Subordinated Indenture Securities
notice of all defaults known to it within 90 days after the occurrence of the
default. The Heritage JPM 1986 Subordinated Indenture provides that the trustee
may withhold notice to the holders of Heritage JPM 1986 Subordinated Indenture
Securities of any series of any default, except default in payment of principal
of or interest or premium, if any, on those Heritage JPM 1986 Subordinated
Indenture Securities or in the making of any sinking fund payment with respect
to those Heritage JPM 1986 Subordinated Indenture Securities, if the appropriate
representative of the trustee determines that the withholding of the notice is
in the interest of the holders of the series of Heritage JPM 1986 Subordinated
Indenture Securities.
The holders of a majority in principal amount of the outstanding Heritage JPM
1986 Subordinated Indenture Securities of each series affected, with each series
voting as a separate class, may direct the time, method and place of conducting
any proceeding for any remedy available to the trustee or any power conferred
upon the trustee with respect to that series, subject to limitations specified
in the Heritage JPM 1986 Subordinated Indenture. However, subject to its duty to
act with the required standard of care during a default, the trustee is under no
obligation to exercise any of the powers vested in it at the request of the
holders of the Heritage JPM 1986 Subordinated Indenture Securities unless those
holders have offered the trustee reasonable indemnity against expenses and
liabilities.
Each year we must deliver to the trustee a written statement as to the absence
of defaults under the Heritage JPM 1986 Subordinated Indenture.
Modification of the Indenture. We and the trustee may modify the Heritage JPM
1986 Subordinated Indenture or any supplemental indenture or the rights of the
holders of the Heritage JPM Subordinated Indenture Securities with the consent
of the holders of not less than a majority in principal amount of the
outstanding Heritage JPM 1986 Subordinated Indenture Securities of all series
affected by the modification, voting as one class. However, no such modification
may, without the consent of each holder affected:
- extend the final maturity of any Heritage JPM 1986 Subordinated Indenture
Security;
- reduce the principal amount of any Heritage JPM 1986 Subordinated Indenture
Security;
- change the method in which the amounts of principal or interest are
determined;
- reduce the rate or extend the time of payment of interest on any Heritage JPM
1986 Subordinated Indenture Security;
- change the currency or currency unit of payment of any Heritage JPM 1986
Subordinated Indenture Security;
- reduce any amount payable upon redemption of any Heritage JPM 1986
Subordinated Indenture Security;
- reduce the portion of the principal amount of an original issue discount
Heritage JPM 1986 Subordinated Indenture Security due upon acceleration of
maturity or provable in bankruptcy;
- impair or affect the right of a holder to institute suit for the payment of
any Heritage JPM 1986 Subordinated Indenture Security, or, if applica-
29
ble, any right of repayment at the option of the holder; or
- reduce the percentage of Heritage JPM 1986 Subordinated Indenture Securities
of any series the consent of the holders of which is required for any
supplemental indenture.
We and the trustee may modify the Heritage JPM 1986 Subordinated Indenture
without the consent of the holders of Heritage JPM 1986 Subordinated Indenture
Securities to evidence the merger of J.P. Morgan Chase or the replacement of the
trustee and for other specified purposes.
Consolidations, Mergers and Sales of Assets. We may not merge or consolidate
with any other corporation or sell or convey all or substantially all of our
assets, unless:
- either we are the continuing corporation or the successor corporation is a
corporation organized under the laws of the United States or any state and
expressly assumes the payment of the principal of and interest on the Heritage
JPM 1986 Subordinated Indenture Securities and the performance and observance
of all the covenants and conditions of the Heritage JPM 1986 Subordinated
Indenture binding upon us; and
- J.P. Morgan Chase or the successor corporation, as applicable, is not,
immediately after the merger, consolidation, sale or conveyance, in default in
the performance of any covenant or condition of the Heritage JPM 1986
Subordinated Indenture.
The principal terms of the Heritage JPM 1986 Subordinated Indenture Securities
issued and outstanding as of the date of this prospectus are set forth below.
Interest on each of the below series accrues at the annual rate indicated in the
title of the series and is payable in arrears on the indicated payment dates to
the registered holders on the preceding record date. Unless otherwise indicated
below, the Heritage JPM 1986 Indenture Securities listed below are not
redeemable prior to their stated maturity and are not subject to a sinking fund.
7 1/4% SUBORDINATED NOTES DUE JANUARY 15, 2002
- Principal amount of series: $200,000,000
- Maturity date: January 15, 2002
- Interest payment dates: January 15 and July 15
- Record dates: January 1 and July 1
- Issuance date: January 16, 1992
8 1/2% SUBORDINATED NOTES DUE AUGUST 15, 2003
- Principal amount of series: $150,000,000
- Maturity date: August 15, 2003
- Interest payment dates: February 15 and August 15
- Record dates: February 1 and August 1
- Issuance date: August 8, 1991
HERITAGE JPM 1993 SUBORDINATED INDENTURE
The Heritage JPM 1993 Subordinated Indenture Securities are our direct,
unsecured general obligations and are subordinated as described under
"-- Subordination" below.
The Heritage JPM 1993 Subordinated Indenture Securities are subject to
acceleration only upon our bankruptcy or reorganization.
Subordination. The Heritage JPM 1993 Subordinated Indenture Securities are
subordinate and junior in right of payment as provided in the Heritage JPM 1993
Subordinated Indenture to all Heritage JPM Senior Indebtedness, whether
outstanding as of the date of the Heritage JPM 1993 Subordinated Indenture or
thereafter incurred. We may not make any payment on the Heritage JPM 1993
Subordinated Indenture Securities, and no holder of the Heritage JPM 1993
Subordinated Indenture Securities or any related coupon will be entitled to
demand or receive any such payment:
- unless we have paid or duly provided for all amounts of principal, premium, if
any, and interest then due on all Heritage JPM Senior Indebtedness; or
- if, at the time of or immediately after giving effect to that payment there
exists:
- any event of default on any Heritage JPM Senior Indebtedness permitting
the holders of that Heritage JPM Senior Indebtedness to accelerate its
maturity; or
- any event which, with notice or lapse of time, or both, will become such
an event of default.
Upon any distribution of assets upon our dissolution, winding up, liquidation or
reorganization:
- the holders of Heritage JPM Senior Indebtedness will be entitled to receive
payment in full of principal, premium, if any, and interest before we may make
any payment on the Heritage JPM 1993 Subordinated Indenture Securities; and
30
- if, after giving effect to the operation of the preceding clause, amounts
remain available for payment or distribution on the Heritage JPM 1993
Subordinated Indenture Securities and creditors in respect of Derivative
Obligations have not received payment in full of amounts due or to become due
on those Derivative Obligations,
then we must apply those remaining amounts first to pay or provide for the
payment in full of all Derivative Obligations before we may make any payment on
the Heritage JPM 1993 Subordinated Indenture Securities.
"Derivative Obligations" are defined in the Heritage JPM 1993 Subordinated
Indenture as obligations of J.P. Morgan Chase to make payments on claims in
respect of derivative products such as interest and foreign exchange rate
contracts, commodity contracts and similar arrangements. However, Derivative
Obligations do not include claims in respect of Heritage JPM Senior Indebtedness
or obligations that, by their terms, are expressly stated not to be superior in
right of payment to the Heritage JPM 1993 Subordinated Indenture Securities or
to have the same rank as the Heritage JPM 1993 Subordinated Indenture
Securities. For purposes of this definition, "claim" has the meaning assigned in
Section 101(4) of the United States Bankruptcy Code in effect on the date of the
Heritage JPM 1993 Subordinated Indenture.
See "Company Debt Securities -- Company Subordinated Securities" for the
outstanding amount of Heritage JPM Senior Indebtedness (which is the same as the
outstanding amount of Company Senior Indebtedness) as of the date of this
prospectus. In addition, for information regarding the relationship among the
subordination provisions governing our various series of subordinated Debt
Securities, see "Relationship Among Subordination Provisions" below.
Defaults and Waivers. As to any series of Heritage JPM 1993 Subordinated
Indenture Securities, the Heritage JPM 1993 Subordinated Indenture defines an
event of default as:
(1) default for 30 days in payment of any interest on the Heritage JPM
1993 Subordinated Indenture Securities of that series;
(2) default in payment of principal of or premium, if any, on the
Heritage JPM 1993 Subordinated Indenture Securities of that series when
due, either at maturity, upon redemption, by declaration or otherwise;
(3) default in the payment of a sinking fund installment, if any, on
the Heritage JPM 1993 Subordinated Indenture Securities of that series;
(4) default in the performance of any other covenant or warranty
contained in the Heritage JPM 1993 Subordinated Indenture for the benefit
of that series that has not been remedied for a period of 90 days after
notice given as specified in the Heritage JPM 1993 Subordinated Indenture;
or
(5) certain events of bankruptcy or reorganization of J.P. Morgan
Chase.
If an event of default described in clause (5) above occurs and is continuing,
either the trustee or the holders of at least 25% in principal amount of all
Heritage JPM 1993 Subordinated Indenture Securities then outstanding, voting as
one class, by notice given to us, and to the trustee if given by the holders of
Heritage JPM 1993 Subordinated Indenture Securities, may declare the principal
or, in the case of original issue discount Heritage JPM 1993 Subordinated
Indenture Securities, a specified portion of principal, of all Heritage JPM 1993
Subordinated Indenture Securities then outstanding and the interest accrued on
those securities, if any, to be due and payable immediately. Under specified
conditions, the holders of a majority in principal amount of all Heritage JPM
1993 Subordinated Indenture Securities may annul the declaration and waive past
defaults, except for defaults in the payment of principal, or interest or
premium, if any.
The Heritage JPM 1993 Subordinated Indenture requires the trustee to give the
holders of any series of Heritage JPM 1993 Subordinated Indenture Securities
notice of all defaults known to it within 90 days after the occurrence of the
default. The Heritage JPM 1993 Subordinated Indenture provides that the trustee
may withhold notice to the holders of Heritage JPM 1993 Subordinated Indenture
Securities of any series of any default, except default in payment of principal
of or interest or premium, if any, on those Heritage JPM 1993 Subordinated
Indenture Securities or in the making of any sinking fund payment with respect
to such Heritage JPM 1993 Subordinated Indenture Securities, if the appropriate
representa-
31
tive of the trustee determines that the withholding of the notice is in the
interest of the holders of the series of Heritage JPM 1993 Subordinated
Indenture Securities.
The holders of a majority in principal amount of the outstanding Heritage JPM
1993 Subordinated Indenture Securities of each series affected, with each series
voting as a separate class, may direct the time, method and place of conducting
any proceeding for any remedy available to the trustee or any power conferred
upon the trustee with respect to that series, subject to limitations specified
in the Heritage JPM 1993 Subordinated Indenture. However, subject to its duty to
act with the required standard of care during a default, the trustee is under no
obligation to exercise any of the powers vested in it at the request of the
holders of the Heritage JPM 1993 Subordinated Indenture Securities unless the
holders have offered to the trustee reasonable indemnity against expenses and
liabilities.
Each year we must deliver to the trustee a written statement as to the absence
of defaults under the Heritage JPM 1993 Subordinated Indenture.
Modification of the Indenture. We and the trustee may modify the Heritage JPM
1993 Subordinated Indenture or any supplemental indenture or the rights of the
holders of the Heritage JPM 1993 Subordinated Indenture Securities with the
consent of the holders of not less than a majority in principal amount of the
Heritage JPM 1993 Subordinated Indenture Securities of all series affected by
the modification, voting as one class. However no such modification may, without
the consent of each holder affected:
- extend the final maturity of any Heritage JPM 1993 Subordinated Indenture
Security;
- reduce the principal amount of any Heritage JPM 1993 Subordinated Indenture
Security;
- reduce the rate or extend the time of payment of interest on any Heritage JPM
1993 Subordinated Indenture Security;
- change the currency or currency unit of payment of any Heritage JPM 1993
Subordinated Indenture Security;
- change the method in which amounts of payments of principal or interest on any
Heritage JPM 1993 Subordinated Indenture Security are determined;
- reduce the portion of the principal amount of an original issue discount
Heritage JPM 1993 Subordinated Indenture Security due and payable upon
acceleration or provable in bankruptcy;
- reduce any amount payable upon redemption of any Heritage JPM 1993
Subordinated Indenture Security;
- impair or affect the right of a holder to institute suit for the payment of
any Heritage JPM 1993 Subordinated Indenture Security or, if applicable, any
right of repayment at the option of the holder; or
- reduce the percentage of Heritage JPM 1993 Subordinated Indenture Securities
of any series the consent of the holders of which is required for any
supplemental indenture.
We and the trustee may modify the Heritage JPM 1993 Subordinated Indenture
without the consent of the holders of Heritage JPM 1993 Subordinated Indenture
Securities to evidence the merger of J.P. Morgan Chase or the replacement of the
trustee and for certain other purposes.
Consolidations, Mergers and Sales of Assets. We may not merge or consolidate
with any other corporation or sell or convey all or substantially all of our
assets, unless:
- either we are the continuing corporation or the successor corporation is a
corporation organized under the laws of the United States or any state and
expressly assumes the payment of the principal of and interest on the Heritage
JPM 1993 Subordinated Indenture Securities and the performance and observance
of all the covenants and conditions of the Heritage JPM 1993 Subordinated
Indenture binding upon us; and
- J.P. Morgan Chase or the successor corporation, as applicable, is not,
immediately after the merger, consolidation, sale or conveyance, in default in
the performance of any covenant or condition in the Heritage JPM 1993
Subordinated Indenture.
The principal terms of the Heritage JPM 1993 Subordinated Indenture Securities
issued and outstanding on the date of this prospectus are set forth below.
Interest on each of the below series accrues at the annual rate indicated in the
title of the series and is payable on the indicated payment dates to the holders
on the preceding record date. Unless otherwise indicated below, the Heritage JPM
1993 Subordinated Indenture Securities listed below are not redeemable prior to
their stated maturity and are not subject to a sinking fund.
32
7 5/8% SUBORDINATED NOTES DUE SEPTEMBER 15, 2004
- Principal amount of series: $500,000,000
- Maturity date: September 15, 2004
- Interest payment dates: March 15 and September 15
- Record dates: The fifteenth calendar day prior to each interest payment date.
- Issuance date: September 15, 1994
8% SUBORDINATED NOTES DUE MAY 30, 2005
- Principal amount of series: $100,000,000
- Maturity date: May 30, 2005
- Interest payment dates: May 30 and November 30
- Record dates: The fifteenth calendar day prior to each interest payment date.
- Issuance date: May 30, 1995
6 1/4% SUBORDINATED NOTES DUE DECEMBER 15, 2005
- Principal amount of series: $300,000,000
- Maturity date: December 15, 2005
- Interest payment dates: June 15 and December 15
- Record dates: The fifteenth calendar day prior to each interest payment date.
- Issuance date: December 15, 1995
6.875% SUBORDINATED NOTES DUE JANUARY 15, 2007
- Principal amount of series: $300,000,000
- Maturity date: January 15, 2007
- Interest payment dates: July 15 and January 15
- Record dates: The fifteenth calendar day prior to each interest payment date.
- Issuance date: January 21, 1997
6.70% SUBORDINATED NOTES DUE NOVEMBER 1, 2007
- Principal amount of series: $350,000,000
- Maturity date: November 1, 2007
- Interest payment dates: May 1 and November 1
- Record dates: The fifteenth calendar day prior to each interest payment date.
- Issuance date: October 24, 1997
5 3/4% SUBORDINATED NOTES DUE OCTOBER 15, 2008
- Principal amount of series: $150,000,000
- Maturity date: October 15, 2008
- Interest payment dates: April 15 and October 15
- Record dates: The fifteenth calendar day prior to each interest payment date.
- Issuance date: October 21, 1993
6 1/4% SUBORDINATED NOTES DUE JANUARY 15, 2009
- Principal amount of series: $300,000,000
- Maturity date: January 15, 2009
- Interest payment dates: July 15 and January 15
- Record dates: The fifteenth calendar day prior to each interest payment date.
- Issuance date: January 28, 1994
6.61% SUBORDINATED NOTES DUE DECEMBER 15, 2010
- Principal amount of series: $100,000,000
- Maturity date: December 15, 2010
- Interest payment dates: the fifteenth calendar day prior to each interest
payment date
- Record dates: 1st day of each month
- Issuance date: December 15, 1995
- Redemption: Redeemable at our option on or after December 15, 2000,
semi-annually on each June 15 or December 15, 2000, on at least 30 days'
notice, at a redemption price equal to 100% principal and accrued interest.
6 1/4% SUBORDINATED NOTES DUE FEBRUARY 15, 2011
- Principal amount of series: $100,000,000
- Maturity date: February 15, 2011
- Interest payment dates: February 15 and August 15
- Record dates: The fifteenth calendar day prior to each interest payment date.
- Issuance date: February 15, 1996
33
SUBORDINATED NOTES DUE DECEMBER 24, 2012
- Principal amount of series: $45,000,000
- Maturity date: December 24, 2012
- Interest payment dates: June 24 and December 24
- Record dates: The fifteenth calendar day prior to each interest payment date.
- Issuance date: November 24, 1997
- Interest rate: If the 10-year Treasury rate was greater than or equal to
5.838% on December 17, 1997, the interest rate is 12.773%; if the 10-year
Treasury rate was less than 5.838% on December 17, 1997, the interest rate is
0%.
HERITAGE JPM 1993 SUBORDINATED MEDIUM-TERM NOTES, SERIES A
As of the date of this prospectus, $1,853,913,000 aggregate principal amount of
Subordinated Medium-Term Notes, Series A (the "Heritage JPM 1993 Subordinated
Medium-Term Notes"), originally issued by heritage J.P. Morgan under the
Heritage JPM 1993 Subordinated Indenture is issued and outstanding. In the table
below we specify the following terms of those Heritage JPM 1993 Subordinated
Medium-Term Notes:
- Issuance date;
- Principal amount;
- Maturity date;
- Interest rate;
Unless otherwise indicated below, the Heritage JPM 1993 Subordinated Medium-Term
Notes are not subject to a sinking fund and are not redeemable prior to their
stated maturity.
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INFORMATION CONCERNING THE TRUSTEES
We and some of our other subsidiaries maintain deposits and conduct other
banking transactions with the trustee under the Heritage JPM Indentures in the
ordinary course of business. U.S. Bank Trust National Association is also
trustee under the Company Subordinated Indenture and the Heritage Chase
Subordinated Indenture and under the Heritage JPM Junior Subordinated Indenture.
RELATIONSHIP AMONG SUBORDINATION PROVISIONS
No series of our subordinated Debt Securities is subordinated to any other
series of subordinated Debt Securities or to any other subordinated indebtedness
of J.P. Morgan Chase referred to above (other than our junior subordinated
indebtedness). However, Antecedent Company Subordinated Indebtedness is
subordinated only to Company Senior Indebtedness while the other Company
Subordinated Securities (other than junior subordinated indebtedness) are
subordinated to Company Senior Indebtedness and, in specified circumstances
relating to our dissolution, winding-up, liquidation or reorganization, to
Additional Senior Obligations. Antecedent Heritage JPM Subordinated Indebtedness
is subordinated only to Heritage JPM Senior Indebtedness, while the other
Heritage JPM Subordinated Securities (other than junior subordinated
indebtedness) are subordinated to Heritage JPM Senior Indebtedness and, in
specified circumstances relating to our dissolution, winding-up, liquidation or
reorganization, to Derivative Obligations (the meaning of which term is
substantially identical to Additional Senior Obligations). Heritage Chase
Subordinated Indebtedness is subordinated to all of our obligations to our
creditors, including Company Senior Indebtedness, Heritage JPM Senior
Indebtedness, Additional Obligations and Derivative Obligations, except any
obligation that is expressly stated to have the same rank as, or to rank not
senior to,
35
the Assumed Heritage Chase Subordinated Indebtedness.
As a result of the differences described above between the subordination
provisions applicable to the Antecedent Company Subordinated Indebtedness, the
other Company Subordinated Securities, the Antecedent Heritage JPM Subordinated
Indebtedness, the other Heritage JPM Subordinated Securities and the Assumed
Heritage Chase Subordinated Indebtedness, in the event of our dissolution,
winding-up, liquidation or reorganization, the holders of Company Subordinated
Securities and Heritage JPM Subordinated Securities (other than junior
subordinated indebtedness) may receive less, proportionately, than the holders
of Antecedent Company Subordinated Indebtedness and Antecedent Heritage JPM
Subordinated Indebtedness, but more, proportionately, than the holders of
Assumed Heritage Chase Subordinated Indebtedness.
DESCRIPTION OF CAPITAL STOCK
The following summary is not complete. You should also refer to our certificate
of incorporation, including the certificate of designations pursuant to which
the outstanding series of our preferred stock, par value $1 per share, were
issued. Our certificate of incorporation is filed as an exhibit to the
registration statement. You should also refer to the applicable provisions of
the Delaware General Corporation Law.
COMMON STOCK
As of the date of this prospectus, we are authorized to issue up to
4,500,000,000 shares of our common stock. As of June 30, 2001, we had
1,989,576,087 shares of common stock issued (including 391,153 shares held in
treasury) and had reserved approximately 319,699,675 shares of common stock for
issuance under various employee or director incentive, compensation and option
plans.
Holders of our common stock are entitled to receive dividends when, as and if
declared by our board of directors out of funds legally available for payment
subject to the rights of holders of our preferred stock.
Each holder of our common stock is entitled to one vote per share. Subject to
the rights, if any, of the holders of any of our series of preferred stock under
their respective certificates of designations and applicable law, all voting
rights are vested in the holders of shares of our common stock. Holders of
shares of our common stock have noncumulative voting rights, which means that
the holders of more than 50% of the shares voting for the election of directors
can elect 100% of the directors and the holders of the remaining shares will not
be able to elect any directors.
In the event of our voluntary or involuntary liquidation, dissolution or winding
up, the holders of our common stock will be entitled to share equally in any of
our assets available for distribution after we have paid in full all of our
debts and after the holders of all series of our outstanding preferred stock
have received their liquidation preferences in full.
The issued and outstanding shares of common stock are fully paid and
nonassessable. Holders of shares of our common stock are not entitled to
preemptive rights. Our common stock is not convertible into shares of any other
class of our capital stock. Mellon Investor Services, LLC is the transfer agent,
registrar and dividend disbursement agent for our common stock.
PREFERRED STOCK
Under our certificate of incorporation, our board of directors is authorized,
without further stockholder action, to issue up to 200,000,000 shares of
preferred stock, in one or more series, and to determine the voting powers and
the designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions of each series.
36
Outstanding Preferred Stock. As of the date of this prospectus, we have issued
and outstanding the series of preferred stock described in the following table:
---------------
(a) Redemption price is price indicated in table, plus accrued but unpaid
dividends, if any.
(b) Floating rates are based on specified U.S. Treasury rates. The minimum and
maximum annual rates are 5.00% and 11.50%, respectively.
(c) Shares of this series are represented by depositary shares, each
representing a one-tenth interest in a share of preferred stock of the
series.
(d) Floating rates are based on specified U.S. Treasury rates. The minimum and
maximum annual rates for each series are 4.50% and 10.50%, respectively.
(e) Dividends on this series for dividend periods commencing on or after July 1,
2003 will be at a floating rate based on specified U.S. Treasury rates (but
subject to a minimum rate of 5.46% and a maximum rate of 11.46%). The amount
of dividends payable may be adjusted, and the stock may be redeemed earlier
than June 30, 2003, in the event of specified amendments to the Internal
Revenue Code of 1986 relating to the dividends-received deduction.
Ranking. All the outstanding series of preferred stock have the same rank. All
the outstanding series of preferred stock have preference over our common stock
with respect to the payment of dividends and the distribution of assets in the
event of our liquidation or dissolution.
Dividends. Dividends payable on each series of outstanding preferred stock are
payable quarterly, when and as declared by the board of directors, in the
amounts determined as set forth in the above table, on each March 31, June 30,
September 30 and December 31.
Dividends on all the outstanding series of our preferred stock, other than our
Fixed/Adjustable preferred stock, are cumulative. If we fail to declare a
dividend on our Fixed/Adjustable preferred stock for any dividend period,
holders of that series will have no right to receive a dividend for that
dividend period, whether or not we declare dividends on that series for any
future dividend period.
We may not declare or pay or set apart any dividends on any series of preferred
stock, unless, for the dividend period commencing after the immediately
preceding dividend payment date, we have previously declared and paid or we
contemporaneously declare and pay full dividends (including cumulative dividends
still owing, if any) on all other series of preferred stock that have the same
rank as, or rank senior to, that series of preferred stock. If we do not pay in
full the dividends on the equally- ranking series as described above, we may
only declare dividends pro rata, so that the amount of dividends declared per
share on that series of preferred stock and on each other equally-ranking series
of preferred stock will bear to each other the same ratio that accrued dividends
per share on that series of preferred stock and those other series bear to each
other. In addition, generally, unless we have paid full dividends, including
cumulative dividends still owing, if any, on all outstanding shares of any
series of preferred stock, we may not declare or
37
pay dividends on our common stock and generally we may not redeem or purchase
any common stock (except by payment of shares of common stock or other junior
securities). We will not pay interest or any sum of money instead of interest on
any dividend payment or payments that may be in arrears.
Rights Upon Liquidation; Redemption. In the event of our liquidation,
dissolution or winding-up, the holders of each outstanding series of preferred
stock would be entitled to receive liquidating distributions in the amount set
forth opposite the applicable series in the table above, plus accrued and unpaid
dividends, if any, before we make any distribution of our assets to the holders
of our common stock.
Each of our outstanding series of preferred stock is redeemable at our option on
or after the applicable date set forth opposite that series in the table above
at a redemption price per share equal to the redemption price set forth opposite
that series in the table above, plus accrued but unpaid dividends, if any.
Voting Rights. Holders of shares of our outstanding preferred stock have no
voting rights, except as described below or as required by the Delaware General
Corporation Law.
All of our currently outstanding series of preferred stock provide that if, at
the time of any annual meeting of our stockholders, the equivalent of six
quarterly dividends payable on any series of outstanding cumulative preferred
stock is in default, the number of directors constituting our board of directors
will be increased by two and the holders of all the outstanding preferred stock,
voting together as a single class, will be entitled to elect those additional
two directors at that annual meeting. In accordance with the requirements of our
Series L preferred stock, Series N preferred stock and Fixed/Adjustable
preferred stock, each director elected by the holders of shares of the
outstanding preferred stock will continue to serve as director for the full term
for which he or she was elected, even if prior to the end of that term we have
paid in full the amount of dividends that had been in arrears. For purposes of
this paragraph, "default" means that accrued and unpaid dividends on the
applicable series are equal to or greater than the equivalent of six quarterly
dividends.
Under regulations adopted by the Federal Reserve Board, if the holders of any
series of our preferred stock become entitled to vote for the election of
directors because dividends on that series are in arrears, that series may then
be deemed a "class of voting securities." In such a case, a holder of 25% or
more of the series, or a holder of 5% or more if that holder would also be
considered to exercise a "controlling influence" over J.P. Morgan Chase, may
then be subject to regulation as a bank holding company in accordance with the
Bank Holding Company Act of 1956. In addition, (1) any other bank holding
company may be required to obtain the prior approval of the Federal Reserve
Board to acquire or retain 5% or more of that series, and (2) any person other
than a bank holding company may be required to obtain the approval of the
Federal Reserve Board to acquire or retain 10% or more of that series.
Our Series N preferred stock and Fixed/Adjustable preferred stock provide that
the affirmative vote of the holders of at least two-thirds of the shares of all
outstanding series of preferred stock, voting together as a single class without
regard to series, will be required to:
- create any class or series of stock having a preference over any outstanding
series of preferred stock; or
- change the provisions of our certificate of incorporation in a manner that
would adversely affect the voting powers or other rights of the holders of a
series of preferred stock.
Those series also state that if the amendment does not adversely affect all
series of outstanding preferred stock, then the amendment will only need to be
approved by holders of at least two thirds of the shares of the series of
preferred stock adversely affected.
Our Series L preferred stock provides as follows:
- the consent of holders of at least two-thirds of the outstanding shares of the
particular series, voting as a separate class, is required for any amendment
of our certificate of incorporation that would adversely affect the powers,
preferences, privileges or rights of that series; and
38
- the consent of the holders of at least two-thirds of the voting power of that
series and of each series of preferred stock having the same rank, voting
together as a single class without regard to series, is required to create,
authorize or issue, or reclassify any stock into any additional class or
series of, stock ranking prior to that series as to dividends or upon
liquidation, or any other security or obligation convertible into or
exercisable for any such prior-ranking stock.
Our Series A preferred stock and 6 5/8% preferred stock each provides that a
vote of at least two-thirds of the voting power of all outstanding shares of the
applicable series, and all outstanding shares of our preferred stock having the
same rank as that series, voting together as a single class without regard to
series, will be necessary in order to:
- authorize or issue any capital stock that will be senior to that series of
preferred stock as to dividends or upon liquidation; or
- amend, alter or repeal any of the provisions of the our certificate of
incorporation, including the certificate of designation relating to that
series, in such a way as to adversely affect (or materially adversely affect,
in the case of our 6 5/8% preferred stock) the preferences, rights, powers or
privileges of the preferred stock of that series.
Miscellaneous. No series of our outstanding preferred stock is convertible into
shares of our common stock or other securities of J.P. Morgan Chase. No series
of our outstanding preferred stock is subject to preemptive rights.
Transfer Agent and Registrar. Mellon Investor Services, LLC is the transfer
agent, registrar and dividend disbursement agent for our outstanding preferred
stock and depositary shares. The registrar will send notices to the holders of
the preferred stock or depositary shares of any meetings at which such holders
will have the right to elect directors or to vote on any other matter.
DEPOSITARY SHARES
Our 6 5/8% preferred stock is represented by depositary shares, each
representing a one-tenth interest in a share of that preferred stock.
The following is a summary of material provisions of the deposit agreement
between us and Morgan Bank, as depositary, with respect to those depositary
shares. This description is qualified by reference to the deposit agreement, a
copy of which is an exhibit to the registration statement.
Dividends and Other Distributions. The depositary will distribute all cash
dividends or other cash distributions received on our 6 5/8% preferred stock to
the record holders of the depositary shares in proportion to the number of
depositary shares owned by those holders. If we make a distribution other than
in cash, the depositary will distribute property received by it to the record
holders of depositary shares that are entitled to receive the distribution,
unless the depositary determines that it is not feasible to make the
distribution. If this occurs, the depositary may, with our approval, sell the
property and distribute the net proceeds from that sale to the holders.
Withdrawal of Stock. A holder of depositary receipts evidencing depositary
shares may, upon surrender of the depositary receipts at the corporate trust
office of the depositary, obtain the number of whole shares of 6 5/8% preferred
stock and any money or other property represented by those depositary shares, by
surrendering his, her or its depositary receipts to the depositary. Holders of
depositary shares will be entitled to receive whole shares of our 6 5/8%
preferred stock, but will not be subsequently entitled to receive depositary
shares with respect to those shares of preferred stock. If the depositary
receipts surrendered by the holder represent more shares of stock than are being
withdrawn by the holder, the depositary will issue a new depositary receipt
representing the excess number of shares.
Redemption of Depositary Shares. Upon redemption by us, in whole or in part, of
our 6 5/8% preferred stock, the depositary will redeem the depositary shares
from the proceeds received by it from that redemption. The redemption price per
depositary share will be equal to one-tenth of the redemption price per share of
our 6 5/8% preferred stock. Whenever we redeem shares of our 6 5/8% preferred
stock, the depositary will redeem, as of the same redemption date, a number of
depositary shares representing the number of shares of our 6 5/8% preferred
stock redeemed.
Voting the 6 5/8% Preferred Stock. Upon receipt of notice of any meeting at
which the holders of our
39
6 5/8% preferred stock are entitled to vote, the depositary will mail the
information contained in the notice of meeting to the record holders of the
depositary shares. Each record holder of those depositary shares on the record
date, which will be the same date as the record date for our 6 5/8% preferred
stock, will be entitled to instruct the depositary as to the exercise of the
voting rights pertaining to the number of shares of our 6 5/8% preferred stock
represented by that holder's depositary shares. The depositary will try, as far
as practicable, to vote the number of shares of our 6 5/8% preferred stock
underlying those depositary shares in accordance with those instructions, and we
will agree to take all action requested by the depositary in order to enable the
depositary to do so. The depositary will not vote shares of our 6 5/8% preferred
stock if it does not receive specific instructions from the holders of
depositary shares relating to those shares.
Amendment and Termination of the Deposit Agreement. The deposit agreement may
be amended at any time by agreement between us and the depositary. However, any
amendment that materially and adversely alters the rights of the holders of
depositary shares will not be effective unless that amendment has been approved
by the holders of at least a majority of the depositary shares then outstanding.
The deposit agreement may be terminated by us or the depositary only if:
- all outstanding depositary shares have been redeemed; or
- there has been a final distribution in respect of our 6 5/8% preferred stock
in connection with any liquidation, dissolution or winding up of J.P. Morgan
Chase and that distribution has been distributed to the holders of depositary
receipts.
Charges of the Depositary. We are responsible for the payment of all transfer
and other taxes and governmental charges arising solely from the existence of
the depositary arrangements. We will also pay charges of the depositary in
connection with any redemption of our 6 5/8% preferred stock. Holders of
depositary receipts must pay transfer and other taxes and governmental charges
and any other charges expressly provided in the deposit agreement to be for
their accounts.
Resignation and Removal of Depositary. The depositary may resign at any time by
delivering a notice to us of its election to do so. We may remove the depositary
at any time. Any resignation or removal will take effect upon the appointment of
a successor depositary and its acceptance of its appointment. The successor
depositary must be appointed within 60 days after delivery of the notice of
resignation or removal and must be a bank or trust company having its principal
office in the United States and having a combined capital and surplus of at
least $50 million.
Miscellaneous. The depositary will forward to holders of depositary receipts
all reports and communications received from us and required to be furnished to
the holders of our 6 5/8% preferred stock. Neither J.P. Morgan Chase nor the
depositary will be liable if prevented or delayed by law or any circumstance
beyond its control in performing its obligations under the deposit agreement. We
and the depositary disclaim any obligation or liability under the deposit
agreement to holders of depositary receipts other than for negligence or willful
misconduct. Neither of us will be obligated to prosecute or defend any legal
proceeding in respect of any depositary shares or our 6 5/8% preferred stock
unless satisfactory indemnity is furnished. We and the depositary may rely upon
written advice of counsel or accountants, or upon information provided by
persons presenting our 6 5/8% preferred stock for deposit, by holders of
depositary receipts or by other persons believed to be competent, and on
documents believed to be genuine. The depositary disclaims responsibility for
the failure to carry out any instructions to vote any of the depositary shares
or for the manner or effect of any vote made, as long as that action or inaction
is in good faith. The depositary will be liable to us for any liability arising
out of acts performed or omitted by the depositary due to its gross negligence
or willful misconduct.
BOOK-ENTRY ISSUANCE
We have issued some series of the various securities as global securities (the
"global securities"). We deposited each global security with, or on behalf of,
The Depository Trust Company ("DTC"), as depositary, or its nominee and
registered it in the name of a nominee of DTC. Except under the limited
circumstances described below, global securities are not exchangeable for
certificated securities.
Only institutions that have accounts with DTC or its nominee ("participants") or
persons that may
40
hold interests through participants may own beneficial interests in a global
security. DTC will maintain records evidencing ownership of beneficial interests
by participants in the global securities and transfers of those ownership
interests. Participants will maintain records evidencing ownership of beneficial
interests in the global securities by persons that hold through those
participants and transfers of those ownership interests within those
participants. DTC has no knowledge of the actual beneficial owners of the
securities. You will not receive written confirmation from DTC of your purchase,
but we do expect that you will receive written confirmations providing details
of the transaction, as well as periodic statements of your holdings from the
participant through which you entered the transaction. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of those securities in certificated form. Those laws may impair your
ability to transfer beneficial interests in a global security.
DTC has advised us that upon the issuance of a global security and the deposit
of that global security with DTC, DTC will immediately credit, on its book-entry
registration and transfer system, the respective principal amounts or number of
shares represented by that global security to the accounts of its participants.
We will make payments on securities represented by a global security to DTC or
its nominee, as the case may be, as the registered owner and holder of the
global security representing those securities. DTC has advised us that upon
receipt of any payment on a global security, DTC will immediately credit
accounts of participants with payments in amounts proportionate to their
respective beneficial interests in that security, as shown in the records of
DTC. Standing instructions and customary practices will govern payments by
participants to owners of beneficial interests in a global security held through
those participants, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name." Those payments will be
the sole responsibility of those participants, subject to any statutory or
regulatory requirements in effect from time to time.
None of J.P. Morgan Chase, the trustees nor any of our respective agents will
have any responsibility or liability for any aspect of the records of DTC, any
nominee or any participant relating to, or payments made on account of,
beneficial interests in a global security or for maintaining, supervising or
reviewing any of the records of DTC, any nominee or any participant relating to
those beneficial interests.
A global security is exchangeable for certificated securities registered in the
name of a person other than DTC or its nominee only if:
- DTC notifies us that it is unwilling or unable to continue as
Depositary for that global security or DTC ceases to be registered under
the Securities Exchange Act of 1934;
- we determine in our discretion that the global security will be
exchangeable for certificated securities in registered form; or
- there has occurred and is continuing an event of default or an event
which, with notice or the lapse of time or both, would constitute an event
of default under the securities.
Any global security that is exchangeable as described in the preceding sentence
will be exchangeable in whole for certificated securities in registered form,
and, in the case of global debt securities, of like tenor and of an equal
aggregate principal amount as the global security, in denominations of $1,000
and integral multiples of $1,000. The registrar will register the certificated
securities in the name or names instructed by DTC. We expect that those
instructions may be based upon directions received by DTC from its participants
with respect to ownership of beneficial interests in the global security. In the
case of global debt securities, we will make payment of any principal and
interest on the certificated securities and will register transfers and
exchanges of those certificated securities at the corporate trust office of the
respective transfer agent and registrar in the Borough of Manhattan, The City of
New York. However, we may elect to pay interest by check mailed to the address
of the person entitled to that interest payment as of the record date, as shown
on the register for the securities.
Except as provided above, as an owner of a beneficial interest in a global
security, you will not be entitled to receive physical delivery of securi-
41
ties in certificated form and will not be considered a holder of securities for
any purpose under the indentures. No permanent global security will be
exchangeable except for another global security of like denomination and tenor
to be registered in the name of DTC or its nominee. Accordingly, you must rely
on the procedures of DTC and the participant through which you own your interest
to exercise any rights of a holder under the global security or the applicable
indenture.
We understand that, under existing industry practices, in the event that we
request any action of holders, or an owner of a beneficial interest in a global
security desires to take any action that a holder is entitled to take under the
securities or the indentures, DTC would authorize the participants holding the
relevant beneficial interests to take that action, and those participants would
authorize beneficial owners owning through those participants to take that
action or would otherwise act upon the instructions of beneficial owners owning
through them.
DTC has advised us that DTC is a limited purpose trust company organized under
the New York Banking Law, a "banking organization" within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered under the Securities Exchange Act of 1934. DTC
holds securities that its participants deposit with DTC. DTC also facilitates
the settlement of securities transactions among its participants in deposited
securities, such as transfers and pledges, through electronic computerized
book-entry changes in accounts of the participants, thereby eliminating the need
for physical movement of securities certificates. DTC's participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. DTC is owned by a number of its participants
and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and
the National Association of Securities Dealers, Inc. Access to DTC's system is
also available to others, such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a participant,
either directly or indirectly. The rules applicable to DTC and its participants
are on file with the SEC.
Investors may elect to hold interests in securities outside the United States
through Clearstream Banking, societe anonyme ("Clearstream") or Euroclear Bank,
S.A./N.V., as operator of the Euroclear System ("Euroclear"), if they are
participants in those systems, or indirectly through organizations that are
participants in those systems. Clearstream and Euroclear will hold interests on
behalf of their participants through customers' securities accounts in
Clearstream's and Euroclear's names on the books of their respective
depositaries. Those depositaries in turn hold those interests in customers'
securities accounts in the depositaries' names on the books of DTC.
Clearstream has advised us that it is incorporated under the laws of Luxembourg
as a bank. Clearstream holds securities for its customers and facilitates the
clearance and settlement of securities transactions between Clearstream, its
customers through electronic book-entry changes in their accounts provides to
Clearstream customers, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Clearstream interfaces with domestic
securities markets in over 30 countries through established depository and
custodial relationships. As a bank, Clearstream is subject to regulation by the
Luxembourg Commission for the Supervision of the Financial Sector, also known as
the Commission de Surveillance du Secteur Financier. Clearstream customers are
financial institutions around the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and other
organizations. Its customers in the United States are limited to securities
brokers and dealers and banks. Indirect access to Clearstream is also available
to other institutions such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with the customer.
Distributions with respect to global securities held beneficially through
Clearstream will be credited to cash accounts of Clearstream customers in
accordance with its rules and procedures, to the extent received by the U.S.
depositary for Clearstream.
Euroclear has advised us that it was created in 1968 to hold securities for its
participants and to clear and settle transactions between Euroclear
42
participants through simultaneous electronic book-entry delivery against
payment, thereby eliminating the need for physical movement of certificates and
any risk from lack of simultaneous transfers of securities and cash. Euroclear
provides various other services, including securities lending and borrowing, and
interfaces with domestic markets in several countries. Euroclear is operated by
Euroclear Bank S.A./N.V. Euroclear Clearance Systems S.C. establishes policy for
Euroclear on behalf of Euroclear participants. Euroclear participants include
banks (including central banks), securities brokers and dealers and other
professional financial intermediaries. Indirect access to Euroclear is also
available to other firms that clear through or maintain a custodial relationship
with a Euroclear participant, either directly or indirectly.
Securities clearance accounts and cash accounts with the Euroclear operator are
governed by the terms and conditions governing use of Euroclear and the related
operating procedures of Euroclear and applicable Belgian law. These terms and
conditions govern transfers of securities and cash within Euroclear, withdrawals
of securities and cash from Euroclear, and receipts of payments with respect to
securities in Euroclear. All securities in Euroclear are held on a fungible
basis without attribution of specific certificates to specific securities
clearance accounts. The Euroclear operator acts under the terms and conditions
governing use of Euroclear only on behalf of Euroclear participants and has no
record of or relationship with persons holding through Euroclear participants.
Distributions with respect to interests in global securities held beneficially
through Euroclear will be credited to the cash accounts of Euroclear
participants in accordance with Euroclear's terms and conditions and operating
procedures and applicable Belgian law, to the extent received by the U.S.
depositary for Euroclear.
Euroclear has further advised that investors that acquire, hold and transfer
interests in global securities by book entry through accounts with the Euroclear
operator or any other securities intermediary are subject to the laws and
contractual provisions governing their relationship with their intermediary, as
well as the laws and contractual provisions governing the relationship between
that intermediary and each other intermediary, if any, standing between
themselves and the Euroclear operator.
The Euroclear operator has advised that under Belgian law, investors that are
credited with securities on the records of the Euroclear operator have a
co-property right in the fungible pool of interests in securities on deposit
with the Euroclear operator in an amount equal to the amount of interests in
securities credited to their accounts. In the event of the insolvency of the
Euroclear operator, Euroclear participants would have a right under Belgian law
to the return of the amount and type of interests credited to their accounts
with the Euroclear operator. If the Euroclear operator did not have on deposit a
sufficient amount of securities of a particular type to cover the claims of all
participants credited with such interests in securities on the Euroclear
operator's records, all participants having an amount of interests in securities
of such type credited to their accounts with the Euroclear operator would have
the right under Belgian law to the return of their pro rata share of the amount
of securities actually on deposit.
Under Belgian Law, the Euroclear operator is required to pass on the benefits of
ownership in any interests in securities on deposit with it, such as dividends,
voting rights and other entitlements, to any person credited with such interests
in securities on its records.
GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES
Unless otherwise specified with respect to a particular series of global
securities, initial settlement for global securities will be made in immediately
available funds. DTC participants will conduct secondary market trading with
other participants in the ordinary way in accordance with DTC rules. Thereafter,
secondary market trades will settle in immediately available funds using DTC's
same day funds settlement system.
If the prospectus supplement specifies that interests in the global securities
may be held through Clearstream or Euroclear, Clearstream customers and/or
Euroclear participants will conduct secondary market trading with other
Clearstream customers and/or Euroclear participants in the ordinary way in
accordance with the applicable rules and operating procedures of Clearstream and
Euroclear. Thereafter, secondary market trades will settle in immediately
available funds.
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Cross-market transfers between persons holding directly or indirectly through
DTC on the one hand, and directly or indirectly through Clearstream customers or
Euroclear participants, on the other, will be effected in DTC in accordance with
DTC's rules on behalf of the relevant European international clearing system by
the U.S. depositary for that system; however, those cross-market transactions
will require delivery by the counterparty in the relevant European international
clearing system of instructions to that system in accordance with its rules and
procedures and within its established deadlines (European time). The relevant
European international clearing system will, if the transaction meets its
settlement requirements, deliver instructions to the U.S. depositary for that
system to take action to effect final settlement on its behalf by delivering or
receiving interests in global securities in DTC, and making or receiving payment
in accordance with normal procedures for same-day funds settlement applicable to
DTC. Clearstream customers and Euroclear participants may not deliver
instructions directly to DTC.
Because of time-zone differences, credits of interests in global securities
received in Clearstream or Euroclear as a result of a transaction with a DTC
participant will be made during subsequent securities settlement processing and
will be credited the business day following the DTC settlement date. Those
credits or any transactions in global securities settled during that processing
will be reported to the relevant Euroclear participants or Clearstream customers
on that business day. Cash received in Clearstream or Euroclear as a result of
sales of interests in global securities by or through a Clearstream customer or
a Euroclear participant to a DTC participant will be received with value on the
DTC settlement date but will be available in the relevant Clearstream or
Euroclear cash account only as of the business day following settlement in DTC.
Although DTC, Clearstream and Euroclear have agreed to the procedures described
above in order to facilitate transfers of interests in global securities among
participants of DTC, Clearstream and Euroclear, they are under no obligation to
perform those procedures and those procedures may be discontinued at any time.
EXPERTS
The financial statements incorporated in this prospectus by reference to our
Annual Report on Form 10-K for the year ended December 31, 2000 have been
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of that firm as experts in
auditing and accounting.
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[J.P. MORGAN CHASE & CO. LOGO]
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses in connection with the issuance and distribution of the
securities being registered other than underwriting compensation are as follows:
---------------
* Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to the Delaware General Corporation Law ("DGCL"), a corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of such corporation) by reason of the fact that the person is or was a
director, officer, employee or agent of such corporation, or serving at the
request of such corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with such action, suit
or proceeding, if such person acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of such
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful.
The DGCL also permits indemnification by a corporation under similar
circumstances for expenses (including attorneys' fees) actually and reasonably
incurred by such persons in connection with the defense or settlement of a
derivative action, except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable to such corporation unless the Delaware Court of Chancery or the court
in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper.
The DGCL provides that the indemnification described above shall not be deemed
exclusive of other indemnification that may be granted by a corporation pursuant
to its by-laws, disinterested directors' vote, stockholders' vote, agreement or
otherwise.
The DGCL also provides corporations with the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability asserted against
him or her in any such capacity, or arising out of his or her status as such,
whether or not the corporation would have the power to indemnify him or her
against such liability as described above.
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The Restated Certificate of Incorporation of J.P. Morgan Chase & Co. (the
"Registrant") provides that, to the fullest extent that the DGCL as from time to
time in effect permits the limitation or elimination of the liability of
directors, no director of the Registrant shall be personally liable to the
Registrant or its stockholders for monetary damages for breach of fiduciary duty
as a director.
The Registrant's Restated Certificate of Incorporation empowers the Registrant
to indemnify any director, officer, employee or agent of the Registrant or any
other person who is serving at the Registrant's request in any such capacity
with another corporation, partnership, joint venture, trust or other enterprise
(including, without limitation, an employee benefit plan) to the fullest extent
permitted under the DGCL as from time to time in effect, and any such
indemnification may continue as to any person who has ceased to be a director,
officer, employee or agent and may inure to the benefit of the heirs, executors
and administrators of such a person.
The Registrant's Restated Certificate of Incorporation also empowers the
Registrant by action of its Board of Directors, notwithstanding any interest of
the directors in the action, to purchase and maintain insurance in such amounts
as the Board of Directors deems appropriate to protect any director, officer,
employee or agent of the Registrant or any other person who is serving at the
Registrant's request in any such capacity with another corporation, partnership,
joint venture, trust or other enterprise (including, without limitation, an
employee benefit plan) against any liability asserted against him or her or
incurred by him or her in any such capacity arising out of his or her status as
such (including, without limitation, expenses, judgments, fines (including any
excise taxes assessed on a person with respect to any employee benefit plan) and
amounts paid in settlement) to the fullest extent permitted under the DGCL as
from time to time in effect, whether or not the Registrant would have the power
or be required to indemnify any such individual under the terms of any agreement
or by-law or the DGCL.
In addition, the Registrant's by-laws require indemnification to the fullest
extent permitted under applicable law, as from time to time in effect. The
by-laws provide a clear and unconditional right to indemnification for expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by any person in connection with any
threatened, pending or completed investigation, claim, action, suit or
proceeding, whether civil, administrative or investigative (including, to the
extent permitted by law, any derivative action) by reason of the fact that such
person is or was serving as a director, officer, employee or agent of the
Registrant or, at the request of the Registrant, of another corporation,
partnership, joint venture, trust or other enterprise (including, without
limitation, an employee benefit plan). The by-laws specify that the right to
indemnification so provided is a contract right, set forth certain procedural
and evidentiary standards applicable to the enforcement of a claim under the
by-laws and entitle the persons to be indemnified to have all expenses incurred
in advance of the final disposition of a proceeding paid by the Registrant. Such
provisions, however, are intended to be in furtherance and not in limitation of
the general right to indemnification provided in the by-laws, which right of
indemnification and of advancement of expenses is not exclusive.
The Registrant's by-laws also provide that the Registrant may enter into
contracts with any director, officer, employee or agent of the Registrant in
furtherance of the indemnification provisions in the by-laws, as well as create
a trust fund, grant a security interest or use other means (including, without
limitation, a letter of credit) to ensure payment of amounts indemnified.
ITEM 16. LIST OF EXHIBITS
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ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing this Registration Statement on Form S-3 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in The City of New York, State of New
York, on October 19, 2001.
J.P. MORGAN CHASE & CO.
(Registrant)
By /s/ ANTHONY J. HORAN
------------------------------------
(Anthony J. Horan, Secretary)
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
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* Anthony J. Horan hereby signs this Registration Statement on behalf of each of
the indicated persons for whom he is attorney-in-fact on October 19, 2001
pursuant to a power of attorney filed herewith.
By /s/ ANTHONY J. HORAN
------------------------------------
Anthony J. Horan
Corporate Secretary
Dated: October 19, 2001
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EXHIBIT INDEX
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