[FORM OF] NOTE AGREEMENT (this "Note") made as of ,
199[ ], between MORGAN GUARANTY TRUST COMPANY OF NEW YORK, a
trust company with full banking powers organized under the
laws of the State of New York (the "Bank") and J.P. MORGAN
INDEX FUNDING COMPANY, LLC, a Delaware limited liability
Company (the "Company").
WHEREAS, the Company has issued and sold certain of its common
limited liability company interests (the "Common Securities") and certain
of its preferred limited liability company interests (the "Preferred
Securities") having an aggregate initial principal amount of [ ] and
bearing interest at a rate of [ %] per annum, and with such rights,
preferences, privileges, limitations and restrictions as are set forth in a
written resolution or resolutions (each, a "Written Action") dated [ , 199
] by the Managing Members of the Company providing for the issuance of such
series of Preferred Securities and related Common Securities; and
WHEREAS, the Company desires to loan the proceeds of such
issuance and sale of Preferred Securities and Common Securities
(collectively, the "Related Securities") to the Bank on the terms and
conditions set forth herein, which terms and conditions shall substantially
mirror the Company's obligations under the Related Securities.
NOW, THEREFORE, in consideration of the loan of such proceeds,
which the Bank hereby acknowledges to be adequate and sufficient, the Bank
executes and delivers this Note for the benefit of the Company.
1. General. (a) This Note is a duly authorized debt security of
the Bank, designated as its [ ]% Note Due [ , ] (the "Stated Maturity") in
an initial principal amount of $[ ].
(b) THIS NOTE IS NOT A DEPOSIT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
(c) This Note is non-transferable and shall be registered in the
name of J.P. Morgan Index Funding Company, LLC (the "Company"). The Company
may (to the fullest extent permitted by applicable laws) be treated at all
times, by
all persons and for all purposes as the absolute owner of this Note
regardless of any notice of ownership, theft or loss or of any writing
thereon.
2. Payments and Paying Agencies. (a) The amount of principal
payable at any time upon any redemption or at the Stated Maturity of this
Note, as applicable, shall be the aggregate outstanding principal amount
payable at the applicable time with respect to all Related Securities the
proceeds of the sale of which were loaned to the Bank in consideration of
this Note, determined in accordance with the Written Action relating
thereto, attached hereto as Annex I.
(b) Interest shall accrue on this Note at a rate of [ ]% per
annum and shall be payable at the dates (each such date, an "Interest
Payment Date") and times set forth in the Written Action attached hereto as
Annex I, subject to the terms and conditions contained therein.
(c) The Bank hereby promises to pay all amounts referred to in
paragraphs (a) and (b) of this Section 2 when and as the corresponding
amounts are due and payable by the Company to the holders of Related
Securities pursuant to the terms thereof. Principal of this Note will be
payable against surrender of this Note, and interest will be payable at the
corporate trust office of the Bank located at 55 Exchange Place, New York,
New York 10280-0023.
3. Redemption. This Note matures on the Stated Maturity and will
be subject to redemption prior to maturity as described below.
The Company shall have the right to call the principal amount of
this Note for redemption prior to each [ ] of each year prior to the Stated
Maturity in an aggregate principal amount sufficient to allow the Company
to pay to any or all of the holders of the Preferred Securities who have
exercised their right to redeem the Preferred Securities and, if
applicable, a pro rata portion of the related Common Securities, an amount
equal to the Early Redemption Value (as defined in the Prospectus
Supplement described below) plus accrued and unpaid dividends on such
Related Securities to but excluding the date of redemption. In addition,
within 90 days following the occurrence and during the continuance of
certain taxrelated events (a "Tax Event") or events related to the
Investment Company Act of 1940, as amended (an "Investment Company Event",
and together with a Tax Event, a "Special Event"), the Bank shall have the
right to redeem this Note in whole or in an amount sufficient to cause the
discontinuance of such Special Event, in either case in cash, or, in the
case of a Tax Event, to allow this Note to remain outstanding and to
indemnify the Company for any taxes payable by the Company as a result of
such Tax Event. In the event that the Bank shall redeem this Note in whole
or in part, the Company will redeem a principal amount of the Preferred
Securities and the related Common Securities equal to the principal amount
of this Note so redeemed. If a Tax Event shall have occurred and be
continuing and J.P. Morgan & Co. Incorporated ("J.P. Morgan") shall have
elected to direct the Bank to allow this Note to remain outstanding and
provided that the Company shall received indemnification by J.P. Morgan for
all taxes payable by the Company as a result of such Tax Event, then the
Company may allow the Preferred Securities and the related Common
Securities to remain outstanding. Notwithstanding the foregoing, if there
is available to the Company the opportunity to eliminate, within such
90-day period, the Special Event by taking some ministerial action, such as
filing a form or making an election, or pursuing some other similar
reasonable measure, that has no adverse effect on the Company, J.P. Morgan,
the Bank or the holders of the Preferred Securities, the Company will
pursue such measure in lieu of redemption; provided that the Bank shall
have no right to redeem this Note while the Company is pursuing any such
ministerial action or reasonable measure unless the Special Event shall not
have been so eliminated by the 85th day following the occurrence thereof,
in which case J.P. Morgan shall be permitted to direct the Bank to provide,
and the Bank shall be permitted to so provide, notice to the Company of the
redemption of this Note. The parties hereto agree that the terms Tax Event
and Investment Company Event shall have the meanings assigned to such terms
in the Prospectus Supplement dated [ ], 199[ ] (the "Prospectus
Supplement") relating to the Preferred Securities and filed with the
Securities and Exchange Commission (the "SEC") to the Prospectus dated
November 18, 1996 and filed with the SEC (Registration Nos. 333-01121 and
333-01121-01) and that such definitions are hereby incorporated herein by
reference and made a part of this Note.
In the event of a Market Disruption Event (as defined in the
Prospectus Supplement and incorporated herein
by reference), under certain circumstances, payment of the Redemption Value
(as defined in the Prospectus Supplement) to the holder of the Preferred
Securities could be delayed for an indefinite period, in which case no
interest or dividends on the Preferred Securities will accrue or be payable
thereon beyond the Stated Maturity. If such circumstances occur, the Stated
Maturity of this Note would be similarly delayed and no interest will be
payable on this Note beyond the Stated Maturity.
4. The indebtedness evidenced by this Note, including the
principal and interest, is pari passu with all unsecured, unsubordinated
creditors of the Bank.
The holder of this Note by its acceptance hereof agrees to and
shall be bound by the provisions of this paragraph 4.
5. Events of Default. The occurrence of any of the following
events shall constitute an event of default (herein referred to as an
"Event of Default") hereunder with respect to this Note:
(a) default in the payment of any interest on this Note as
and when the same shall become due and payable, which default
continues for a period of 30 days; or
(b) default in the due and punctual payment of the principal
of this Note as and when the same shall become due and payable;
or
(c) default on the part of the Bank in the performance of
any other of the covenants or agreements on its part in this Note
or in the Fiscal and Paying Agency Agreement, which default
continues for a period of 90 days after the date on which written
notice, by registered or certified mail, of such failure
requiring the Bank to remedy the same shall have been received by
the Bank from the Company specifying such failure and requiring
the same to be remedied and stating that such is a "notice of
default" hereunder; or
(d) decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment
of a conservator or receiver or liquidator in any insolvency
proceedings,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings of the Bank or of all or substantially all of
its property, or for the winding-up or liquidation of its
affairs, shall have been entered, and such decree or order shall
have remained in force undischarged or unstayed for a period of
60 days; or
(e) the Bank shall have consented to the appointment of a
conservator or receiver or liquidator, in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings of the Bank or of all or substantially all of
its property; or
(f) the Bank shall have filed a petition to take advantage
of any applicable insolvency or reorganization statute or
voluntarily generally suspended payment of its obligations.
In case one or more of the Events of Default specified above
shall have occurred and be continuing with respect to this Note, then and
in each and every such case, unless all the principal of this Note is due
and payable immediately, upon the declaration of the Company the same shall
become and shall be immediately due and payable, anything contained in this
Note to the contrary notwithstanding. In case the Company shall have
proceeded to enforce any right as set forth herein and such proceedings
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Company, then and in every such case the Bank
and the Company shall be restored to their respective several positions and
rights hereunder, and all rights, remedies and powers of the Bank and the
Company shall continue as though no such proceeding had been taken.
The Company shall be entitled to file such proof of claim, claim,
petition or other document as may be necessary or advisable in order to
have the claims of such holder allowed in any insolvency proceedings,
receivership, conservatorship, reorganization, readjustment of debt,
marshalling of assets and liabilities, liquidation, winding-up or other
similar proceedings of the Bank as a whole or affecting its property.
6. Certain Covenants of the Bank. The Bank hereby agrees that,
for so long as this Note shall remain outstanding:
(a) The Bank will maintain an office or agency in the
Borough of Manhattan, The City of New York, where this Note may
be presented for payment and notices and demands to or upon the
Bank in respect of this Note may be served; and
(b) The Bank will not merge or consolidate with or sell or
convey all or substantially all of its assets as an entirety to
any other corporation or association, unless (i) either (A) the
Bank shall be the surviving corporation in the case of a merger
or (B) the surviving, resulting or transferee corporation or
association (the "successor corporation") shall expressly assume
the due and punctual payment of the principal of and interest on
this Note, according to its tenor and the due and punctual
performance of all of the covenants and obligations of the Bank
under this Note and (ii) the Bank or such successor corporation,
as the case may be, shall not, immediately after such merger,
consolidation, sale or conveyance, be in default in the
performance of any covenants or obligations of the Bank under
this Note.
Upon any merger, consolidation, sale or conveyance as provided
above, the successor corporation shall succeed to and be substituted for,
and may exercise every right and power of and be subject to all the
obligations of the Bank under this Note with the same effect as if the
successor corporation had been named as the Bank herein and, in the case of
any such sale or conveyance of assets, the Bank shall be released from its
liability as obligor under this Note.
7. Replacement of Note. (a) In case this Note shall become
mutilated, defaced or be apparently destroyed, lost or stolen, the Bank
shall execute and the corporate trust office of the Bank shall authenticate
and deliver a new Note in exchange and substitution for the mutilated or
defaced Note, or in lieu and in substitution for the apparently destroyed,
lost or stolen Note. In every such case the Company shall furnish to the
Bank such security or indemnity as may be required by them to indemnify and
defend and to save each of them and any agent of the Bank harmless
and, in every case of destruction, loss or theft evidence to their
satisfaction of the apparent destruction, loss or theft of such Note and of
the ownership thereof. Upon the issuance of any substitute Note, the Bank
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses connected therewith.
8. Modifications and Amendments; Waiver. Modifications and
amendments to these Terms and Conditions may be made without the consent of
the holders of the Preferred Securities, to: (1) evidence succession of
another corporation or association to the Bank and the assumption by such a
party of the obligations of the Bank under this Note in the event in the
event of a merger, consolidation or sale of assets in accordance with the
terms hereof; (2) add further covenants, restrictions or conditions for the
protection of holders of this Note; (3) reduce or increase the principal
amount hereof solely with respect to the portion of this Note relating to
the Common Securities of the Company; or (4) cure ambiguities or correct
this Note in case of defects or inconsistencies in the provisions hereof or
supplement this Note with other provisions, so long as any such cure,
correction or supplement does not adversely affect the interest of the
holder of this Note in any material respect. The Bank and the Company may,
with the consent of the holders of not less than a majority in principal
amount of the outstanding Preferred Securities, enter into written
modifications to this Note; provided, that no such amendment may, without
the consent of the all holders of all Preferred Securities, (1) reduce the
amount of Preferred Securities the holders of which must consent to any
amendment, supplement or waiver of this Note, (2) extend the final maturity
of this Note, or reduce the rate or extend the time of payment of interest
hereon, or reduce the principal amount hereof (except as provided in the
previous sentence), (3) alter the method of calculation of the amount paid
at final maturity hereof or (4) make the principal hereof or interest
hereon payable in any coin or currency other than that provided in this
Note. Any modifications or amendments to these Terms and Conditions as
provided in the clauses above will be conclusive and binding on the holder
of this Note, whether or not its has given consent.
No provision of this Note shall alter or impair the obligation of
the Bank, which is absolute and unconditional, to pay the principal of and
interest on this
Note at the places, at the respective times, at the rate
and in the coin or currency herein prescribed.
9. Non-business Days; Calculation of Interest. (a) In any case
where the date of maturity of the principal of or payment of interest on
this Note shall be, in the Borough of Manhattan, The City of New York, a
Saturday, a Sunday, a legal holiday or a day on which banking institutions
are authorized or obligated by law to close, then payment of principal or
interest on this Note need not be made on such date at such place but may
be made on the next succeeding day which, in the Borough of Manhattan, The
City of New York, is not a Saturday, a Sunday, a legal holiday or a day on
which banking institutions are authorized or obligated by law to close,
with the same force and effect as if made on the date of maturity of the
principal of, or any applicable Interest Payment Date with respect to, this
Note, and no interest shall accrue for the period after such date.
(b) Interest shall be calculated on the basis of 360-day year of
twelve 30-day months.
10. Merger. Upon the merger or consolidation of the Company with
any trust sponsored by J.P. Morgan (the "Trust"), the Trust shall succeed
to all rights of the Company under this Note. Under certain circumstances,
the holders of not less than a majority in principal amount of the
Preferred Securities shall have the right to direct the property trustee of
the Trust to enforce the Trust's rights under this Note.
11. Governing Law. This Note shall be construed in accordance
with and governed by the laws of the State of New York.
12. Descriptive Headings. The descriptive headings appearing in
these Terms and Conditions are for the convenience of reference only and
shall not alter, limit or define the provisions hereof.
IN WITNESS WHEREOF, this Note Agreement is executed and delivered
as of the date first above written.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
by:
--------------------------
Name:
Title:
J.P. MORGAN INDEX FUNDING
COMPANY, LLC,
by J.P. MORGAN & CO.
INCORPORATED, as Managing
Member,
by:
--------------------------
Name:
Title: