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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
-----------------------------------------------
For the fiscal year ended December 27, 1996
MERRILL LYNCH PREFERRED CAPITAL TRUST I
(Exact name of Registrant as specified in its certificate of trust)
COMMISSION FILE NO.: 1-7182-01
Delaware 13-7102991
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
World Financial Center
North Tower
New York, New York 10281
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 449-1000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
7-3/4% Trust Originated Preferred New York Stock Exchange
Securities ("TOPrS")(and the
related guarantee)
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
MERRILL LYNCH PREFERRED FUNDING I, L.P.
(Exact name of Registrant as specified in its
certificate of limited partnership)
COMMISSION FILE NO.: 1-7182-02
Delaware 13-3917686
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
World Financial Center
North Tower
New York, New York 10281
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 449-1000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
7-3/4% Partnership Preferred New York Stock Exchange
Securities (and the related guarantee)
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark whether the Registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrants were required to file such reports), and (2) have been subject to
such requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrants' knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
As of March 26, 1997, no voting stock was held by non-affiliates of the
Registrants.
Documents Incorporated By Reference:
Prospectus, dated December 11, 1996, filed pursuant to Rule 424(b) in connection
with Registration Statement on Form S-3 (No. 333-16603) filed by the Registrants
and Merrill Lynch & Co., Inc. - Incorporated by reference in Part I
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<PAGE>
PART I
------
ITEM 1. BUSINESS
--------
MERRILL LYNCH PREFERRED CAPITAL TRUST I
Merrill Lynch Preferred Capital Trust I (the "Trust") is a statutory
business trust formed under the Delaware Business Trust Act, as amended,
pursuant to a declaration of trust and the filing of a certificate of trust with
the Secretary of State on November 20, 1996, which was subsequently amended by
an amended and restated declaration of trust dated as of December 11, 1996. The
Trust exists for the exclusive purposes of (i) issuing trust securities,
consisting of 7-3/4% Trust Originated Preferred Securities (the "TOPrS") and
trust common securities (the "Trust Common Securities"), representing undivided
beneficial ownership interests in the assets of the Trust, (ii) investing the
gross proceeds of the trust securities in 7-3/4% Partnership Preferred
Securities (the "Partnership Preferred Securities") issued by Merrill Lynch
Preferred Funding I, L.P. (the "Partnership"), and (iii) engaging in only those
other activities necessary or incidental thereto.
MERRILL LYNCH PREFERRED FUNDING I, L.P.
The Partnership is a limited partnership formed under the Delaware
Revised Uniform Limited Partnership Act, as amended, pursuant to an agreement of
limited partnership and the filing of a certificate of limited partnership with
the Secretary of State on November 20, 1996, which was subsequently amended by
an amended and restated agreement of limited partnership dated December 17,
1996. Merrill Lynch & Co., Inc. (the "Company") is the sole general partner of
the Partnership. The Partnership is managed by the general partner and exists
for the exclusive purposes of (i) issuing its partnership interests, consisting
of the Company's general partner interest and the Partnership Preferred
Securities, (ii) investing the proceeds thereof in certain eligible securities
of the Company and wholly owned subsidiaries of the Company (the "Affiliate
Investment Instruments") and certain eligible debt securities and (iii) engaging
in only those other activities necessary or incidental thereto.
The information set forth under the headings "Merrill Lynch Preferred
Capital Trust I", "Merrill Lynch Preferred Funding I, L.P.", "Description of the
Trust Preferred Securities", "Description of the Trust Guarantee", "Description
of the Partnership Preferred Securities", "Description of the Partnership
Guarantee", and "Use of Proceeds" in the Prospectus dated December 11, 1996 of
the Trust and the Partnership is incorporated by reference herein.
ITEM 2. PROPERTIES
----------
Not Applicable.
ITEM 3. LEGAL PROCEEDINGS
-----------------
The Registrants know of no material legal proceedings involving the
Trust, the Partnership or the assets of either of them.
2
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
No matter was submitted to a vote of holders of any securities of the
Trust or the Partnership during the fiscal year covered by this report.
PART II
-------
ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
---------------------------------------------------------------------
(a) There is no established public market for the Trust Common
Securities or the general partnership interest in the Partnership.
(b) All of the Trust Common Securities and the entire general
partnership interest in the Partnership are owned of record and beneficially by
the Company.
(c) The Company, as holder of the Trust Common Securities, is entitled
to receive cumulative cash distributions accumulating from December 17, 1996 and
payable quarterly in arrears on each March 30, June 30, September 30 and
December 30, commencing December 30, 1996, at an annual rate of 7-3/4% of the
liquidation amount per annum. Distributions not paid on the scheduled payment
date will accumulate and compound quarterly at a rate per annum equal to 7-3/4%.
The certificate of limited partnership of the Partnership does not require any
regular periodic distributions to be made to the general partner; however, to
the extent that aggregate payments to the Partnership on the Affiliate
Investment Instruments and on certain eligible debt securities exceed
distributions accumulated or payable with respect to the Partnership Preferred
Securities, the Partnership may at times have excess funds which shall be
allocated to and may, in the general partner's sole discretion, be distributed
to the general partner.
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
The Registrants' activities are limited to issuing securities and
investing the proceeds as described in ITEM 1. - Business above. Accordingly,
the financial statements included herein in response to ITEM 8. - Financial
Statements and Supplementary Data are incorporated by reference in response to
this item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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The Registrants' activities are limited to issuing securities and
investing the proceeds as described in ITEM 1. - Business above. Since the Trust
was organized on November 20, 1996, its activities, as specified in its
declaration of trust, have been limited to the issuance of the TOPrS and the
Trust Common Securities, the investing of the proceeds in the Partnership
Preferred Securities, and the payment of distributions on the TOPrS and the
Trust Common Securities in accordance with their terms. Since the Partnership
was organized on November 20, 1996, its activities, as specified in its
3
<PAGE>
agreement of limited partnership, have been limited to the issuance of the
Partnership Preferred Securities, the receipt of a capital contribution from the
Company, as general partner, the investment of the proceeds in Affiliate
Investment Instruments and certain eligible debt securities, and the payment of
distributions on the Partnership Preferred Securities.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
In response to this ITEM 8, the financial statements and notes thereto
and the independent auditors' reports set forth on pages F-1 through F-15 are
incorporated by reference herein.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
---------------------------------------------------------------
None.
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
The Trustees of the Trust are as follows:
Regular Trustees: Theresa Lang
Stanley Schaefer
Property Trustee: The Chase Manhattan Bank
Delaware Trustee: Chase Manhattan Bank Delaware
Theresa Lang is Senior Vice President and Treasurer of the Company. Stanley
Schaefer is the Company's Director of Corporate Taxation. Each of them has
served in that or another capacity with the Company for the last five years.
Each Trustee has served since the Trust was organized on November 20, 1996. The
Trustees serve at the pleasure of the Company, as the holder of the Trust Common
Securities.
The Partnership has no directors or executive officers.
4
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
----------------------
Neither the Trust nor the Partnership has any executive officers. No
employee of the Company receives any compensation for serving as a Regular
Trustee or acting in any capacity for the Trust or the Partnership separate from
his or her compensation as an employee of the Company.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
The information in ITEM 1. - Business and ITEM 5. - Market for
Registrants' Common Equity and Related Stockholder Matters with respect to
ownership of the Trust Common Securities is incorporated by reference in
response to this item.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
None.
PART IV
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ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
---------------------------------------------------------------
(A) DOCUMENTS FILED AS PART OF THIS REPORT:
---------------------------------------
1. Financial Statements
The contents of the financial statements are listed on page F-1
hereof, and the financial statements and accompanying independent
auditors' reports appear on pages F-2 through F-15.
2. Financial Statement Schedules
None.
3. Exhibits
Certain of the following exhibits were previously filed as exhibits to
other reports or registration statements filed by the Registrants and
are incorporated herein by reference to such reports or registration
statements as indicated parenthetically below by the appropriate
report reference date or registration statement number.
4.1 Certificate of Trust dated November 20, 1996, of the Trust
(incorporated by reference to Exhibit 4.1 to Registration
Statement on Form S-3 (No. 333-16603) (the "Registration
Statement"))
4.2 Amended and Restated Declaration of Trust of the Trust
4.3 Certificate of Limited Partnership, dated as of November 20,
1996, of the Partnership (incorporated by reference to
Exhibit 4.3 to Registration Statement)
5
<PAGE>
4.4 Amended and Restated Agreement of Limited Partnership of the
Partnership
4.5 Form of Trust Preferred Securities Guarantee Agreement
between the Company and The Chase Manhattan Bank, as
guarantee trustee (incorporated by reference to Exhibit 4.5
to the Registration Statement)
4.6 Form of Partnership Preferred Securities Guarantee Agreement
between the Company and The Chase Manhattan Bank, as
guarantee trustee (incorporated by reference to Exhibit 4.6
to the Registration Statement)
4.7 Form of Subordinated Debenture Indenture between the Company
and The Chase Manhattan Bank, as trustee (incorporated by
reference to Exhibit 4.7 to the Registration Statement)
4.8 Form of Affiliate Debenture Guarantee Agreement between the
Company and The Chase Manhattan Bank, as guarantee trustee
(incorporated by reference to Exhibit 4.8 to the
Registration Statement)
4.9 Form of Trust Preferred Security (included in Exhibit 4.2
above)
4.10 Form of Partnership Preferred Security (included in Exhibit
4.4 above)
4.11 Form of Subordinated Debenture (incorporated by reference to
Exhibit 4.11 to the Registration Statement)
12 Computation of Ratios of Earnings to Combined Fixed Charges
and Preferred Securities Dividends
23 Consent of Deloitte & Touche LLP
24 Powers of Attorney
27 Financial Data Schedules*
------------------
*The Financial Data Schedules to be contained in Exhibit 27 are
required to be submitted only in the Registrants' electronic
filing of this Form 10-K by means of the EDGAR system.
6
<PAGE>
INDEX TO FINANCIAL STATEMENTS
ITEM 14(a)(1)
FINANCIAL STATEMENTS PAGE
- -------------------- ----
MERRILL LYNCH PREFERRED CAPITAL TRUST I
Balance Sheet, December 27, 1996 F-2
Statement of Earnings for the Period December 17, 1996
to December 27, 1996 F-3
Statement of Changes in Stockholders' Equity for the Period
December 17, 1996 to December 27, 1996 F-4
Statement of Cash Flows for the Period December 17, 1996
to December 27, 1996 F-5
Notes to Financial Statements F-6
Independent Auditors' Report F-8
MERRILL LYNCH PREFERRED FUNDING I, L.P.
Balance Sheet, December 27, 1996 F-9
Statement of Earnings for the Period December 17, 1996
to December 27, 1996 F-10
Statement of Changes in Partners' Capital for the Period
December 17, 1996 to December 27, 1996 F-11
Statement of Cash Flows for the Period December 17, 1996
to December 27, 1996 F-12
Notes to Financial Statements F-13
Independent Auditors' Report F-15
F-1
<PAGE>
MERRILL LYNCH PREFERRED CAPITAL TRUST I
BALANCE SHEET
DECEMBER 27, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investment in partnership preferred securities $283,505,200
Income receivable 671,356
------------
Total Assets $284,176,556
============
LIABILITY AND STOCKHOLDERS' EQUITY
Distributions payable $ 671,356
------------
Stockholders' equity:
Preferred securities (7-3/4% Trust Originated Preferred Securities;
11,000,000 authorized, issued, and outstanding; $25 liquidation
amount per security) 275,000,000
Common securities (7-3/4% Trust Common Securities; 340,208 authorized,
issued, and outstanding; $25 liquidation amount per security) 8,505,200
Undistributed earnings --
------------
Total stockholders' equity 283,505,200
------------
Total Liability and Stockholders' Equity $284,176,556
============
See Notes to Financial Statements
</TABLE>
F-2
<PAGE>
MERRILL LYNCH PREFERRED CAPITAL TRUST I
STATEMENT OF EARNINGS
FOR THE PERIOD DECEMBER 17, 1996 TO DECEMBER 27, 1996
- --------------------------------------------------------------------------------
EARNINGS:
Income on partnership preferred securities $ 671,356
=========
See Notes to Financial Statements
F-3
<PAGE>
MERRILL LYNCH PREFERRED CAPITAL TRUST I
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD DECEMBER 17, 1996 TO DECEMBER 27, 1996
- --------------------------------------------------------------------------------
PREFERRED SECURITIES
Issuance of preferred securities $275,000,000
------------
Balance at December 27, 1996 275,000,000
------------
COMMON SECURITIES
Issuance of common securities 8,505,200
------------
Balance at December 27, 1996 8,505,200
------------
UNDISTRIBUTED EARNINGS
Earnings 671,356
Distributions payable (671,356)
------------
Balance at December 27, 1996 --
------------
Total Stockholders' Equity $283,505,200
============
See Notes to Financial Statements
F-4
<PAGE>
MERRILL LYNCH PREFERRED CAPITAL TRUST I
STATEMENT OF CASH FLOWS
FOR THE PERIOD DECEMBER 17, 1996 TO DECEMBER 27, 1996
- --------------------------------------------------------------------------------
EARNINGS $ 671,356
CASH FLOWS FROM OPERATING ACTIVITIES
Increase in income receivable (671,356)
-------------
Cash provided by operating activities --
-------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of partnership preferred securities (283,505,200)
-------------
Cash used in investing activities (283,505,200)
-------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of preferred securities 275,000,000
Proceeds from issuance of common securities 8,505,200
-------------
Cash provided by financing activities 283,505,200
-------------
INCREASE IN CASH --
CASH, BEGINNING OF PERIOD --
-------------
CASH, END OF PERIOD $ --
=============
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS:
Distributions of $671,356 were accrued to the record date of December 27, 1996.
See Notes to Financial Statements
F-5
<PAGE>
MERRILL LYNCH PREFERRED CAPITAL TRUST I
NOTES TO FINANCIAL STATEMENTS
DECEMBER 27, 1996
- --------------------------------------------------------------------------------
1. ORGANIZATION AND PURPOSE
Merrill Lynch Preferred Capital Trust I (the "Trust") is a statutory
business trust formed under the laws of the State of Delaware on November
20, 1996 for the exclusive purposes of (i) issuing its preferred and common
securities (the "Trust Preferred Securities" and the "Trust Common
Securities", respectively), (ii) purchasing partnership preferred
securities (the "Partnership Preferred Securities"), representing the
limited partnership interest of Merrill Lynch Preferred Funding I, L.P.
(the "Partnership"), with the proceeds from the sale of Trust Preferred and
Common Securities, and (iii) engaging in only those other activities
necessary or incidental thereto.
Merrill Lynch & Co., Inc. (the "Company") has paid compensation to the
underwriters of the offering of the Trust Preferred Securities. The Company
also has agreed to (i) pay all fees and expenses related to the
organization and operations of the Trust (including taxes, duties,
assessments, or government charges of whatever nature (other than
withholding taxes) imposed by the United States or any other domestic
taxing authority upon the Trust) and the offering of the Trust Preferred
Securities and (ii) be responsible for all debts and other obligations of
the Trust (other than with respect to the Trust Preferred and Common
Securities). The Company has agreed to indemnify the trustees and certain
other persons.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements are presented in accordance with generally
accepted accounting principles, which require management to make estimates
that affect reported amounts and disclosure of contingencies in the
financial statements. As such, actual results could differ from those
estimates.
INVESTMENT
The investment in Partnership Preferred Securities represents a limited
partnership interest in the Partnership and is recorded at cost. As of year
end, the carrying value of the investment approximates its fair value.
Income on the Partnership Preferred Securities is accrued when earned.
INCOME TAXES
The Trust does not incur any income tax liabilities. Such liabilities are
incurred directly by the security holders.
F-6
<PAGE>
MERRILL LYNCH PREFERRED CAPITAL TRUST I
NOTES TO FINANCIAL STATEMENTS
DECEMBER 27, 1996
- --------------------------------------------------------------------------------
3. INVESTMENT IN PARTNERSHIP PREFERRED SECURITIES
The Trust holds 11,340,208 7-3/4% Partnership Preferred Securities, $25
liquidation preference per security. The interest payment dates and
redemption provisions of the Partnership Preferred Securities, which are
redeemable after December 30, 2006 at the option of the Partnership,
correspond to the distribution payment dates and redemption provisions of
the Trust Preferred Securities. Upon any redemption of the Partnership
Preferred Securities, the Trust Preferred Securities will be redeemed. The
Company has guaranteed, on a subordinated basis, the payment of
distributions by the Partnership on the Partnership Preferred Securities
if, as, and when declared out of funds legally available and payments upon
liquidation of the Partnership or the redemption of the Partnership
Preferred Securities to the extent of funds legally available.
4. STOCKHOLDERS' EQUITY
TRUST PREFERRED SECURITIES
The Trust issued 11,000,000 7-3/4% Trust Preferred Securities, $25
liquidation amount per security in a public offering on December 17, 1996.
The Trust Preferred Securities are redeemable on or after December 30, 2006
at the option of the Trust, in whole or in part, at a redemption price
equal to $25 per security. Distributions on the Trust Preferred Securities
are cumulative from the date of original issue and are payable quarterly
if, as, and when the Trust has funds available for payment. Holders of the
Trust Preferred Securities have limited voting rights and are not entitled
to vote to appoint, remove or replace, or to increase or decrease the
number of, trustees, which voting rights are vested exclusively in the
holder of the Trust Common Securities. Under certain circumstances, the
Trust Preferred Securities have preferential rights to payment relative to
the Trust Common Securities.
The Company has guaranteed, on a subordinated basis, the payment in full of
all distributions and other payments on the Trust Preferred Securities to
the extent that the Trust has funds legally available. This guarantee and
the partnership distribution guarantee are subordinated to all other
liabilities of the Company and rank pari passu with the most senior
preferred stock of the Company.
TRUST COMMON SECURITIES
The Trust issued 340,208 7-3/4% Trust Common Securities, $25 liquidation
amount per security, to the Company on December 17, 1996. The Trust Common
Securities are redeemable on or after December 30, 2006 at the option of
the Trust, in whole or in part, at a redemption price equal to $25 per
security.
F-7
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees of
Merrill Lynch Preferred Capital Trust I
We have audited the accompanying balance sheet of Merrill Lynch Preferred
Capital Trust I (the "Trust") as of December 27, 1996, and the related
statements of earnings, changes in partners' stockholders' equity and cash flows
for the period then ended. These financial statements are the responsibility of
the Trust's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Trust at December 27, 1996, and the
results of its operations and its cash flows for the period then ended in
conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
New York, New York
March 26, 1997
F-8
<PAGE>
MERRILL LYNCH PREFERRED FUNDING I, L.P.
BALANCE SHEET
DECEMBER 27, 1996
- --------------------------------------------------------------------------------
ASSETS
Cash $ 8,805
------------
Investments:
Affiliate debentures 330,055,000
U.S. Treasury bills 3,476,024
------------
Total 333,531,024
Interest receivable 781,589
------------
Total Assets $334,321,418
============
LIABILITY AND PARTNERS' CAPITAL
Preferred distribution payable $ 671,356
Partners' capital: ------------
Limited partnership interest 283,505,200
General partnership interest 50,144,862
------------
Total partners' capital 333,650,062
------------
Total Liability and Partners' Capital $334,321,418
============
See Notes to Financial Statements
F-9
<PAGE>
MERRILL LYNCH PREFERRED FUNDING I, L.P.
STATEMENT OF EARNINGS
FOR THE PERIOD DECEMBER 17, 1996 TO DECEMBER 27, 1996
- --------------------------------------------------------------------------------
Interest income:
Affiliate debentures $781,589
U.S. Treasury bills 4,229
--------
Earnings $785,818
========
See Notes to Financial Statements
F-10
<PAGE>
MERRILL LYNCH PREFERRED FUNDING I, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE PERIOD DECEMBER 17, 1996 TO DECEMBER 27, 1996
- --------------------------------------------------------------------------------
LIMITED PARTNER'S CAPITAL
Issuance of preferred securities $ 283,505,200
Net income allocated to limited partner 671,356
Preferred distribution payable (671,356)
-------------
Balance at December 27, 1996 283,505,200
-------------
GENERAL PARTNER'S CAPITAL
Capital contribution 50,030,400
Net income allocated to general partner 114,462
-------------
Balance at December 27, 1996 50,144,862
-------------
TOTAL PARTNERS' CAPITAL $ 333,650,062
=============
See Notes to Financial Statements
F-11
<PAGE>
MERRILL LYNCH PREFERRED FUNDING I, L.P.
STATEMENT OF CASH FLOWS
FOR THE PERIOD DECEMBER 17, 1996 TO DECEMBER 27, 1996
- --------------------------------------------------------------------------------
EARNINGS $ 785,818
CASH FLOWS FROM OPERATING ACTIVITIES
Noncash item included in earnings:
Accretion of U.S. Treasury bills (4,229)
Increase in interest receivable (781,589)
-------------
Cash provided by operating activities --
-------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of affiliate debentures (330,055,000)
Purchase of U.S. Treasury bills (3,471,795)
-------------
Cash used in investing activities (333,526,795)
-------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of preferred securities 283,505,200
Capital contribution - general partner 50,030,400
-------------
Cash provided by financing activities 333,535,600
-------------
INCREASE IN CASH 8,805
CASH, BEGINNING OF PERIOD --
-------------
CASH, END OF PERIOD $ 8,805
=============
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS:
Preferred distribution of $671,356 was accrued to the declaration date of
December 27, 1996.
See Notes to Financial Statements
F-12
<PAGE>
MERRILL LYNCH PREFERRED FUNDING I, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 27, 1996
- --------------------------------------------------------------------------------
1. ORGANIZATION AND PURPOSE
Merrill Lynch Preferred Funding I, L.P. (the "Partnership") is a limited
partnership that was formed under the Delaware Revised Uniform Limited
Partnership Act on November 20, 1996 for the exclusive purpose of
purchasing certain eligible debt instruments of Merrill Lynch & Co., Inc.
(the "Company") and wholly-owned subsidiaries of the Company with the
proceeds from the sale of (i) its preferred securities (the "Partnership
Preferred Securities"), representing a limited partner interest, to Merrill
Lynch Preferred Capital Trust I (the "Trust") and (ii) a capital
contribution from the Company in exchange for the general partnership
interest in the Partnership.
The Company, in its capacity as sole general partner of the Partnership,
has agreed to (i) pay all fees and expenses related to the organization and
operations of the Partnership (including taxes, duties, assessments, or
government charges (other than withholding taxes) imposed by the United
States or any other domestic taxing authority upon the Partnership) and
(ii) be responsible for all debts and other obligations of the Partnership
(other than with respect to the Partnership Preferred Securities). The
Company has also agreed to indemnify certain officers and agents of the
Partnership.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements are presented in accordance with generally
accepted accounting principles, which require management to make estimates
that affect reported amounts and disclosure of contingencies in the
financial statements. As such, actual results could differ from those
estimates.
INVESTMENTS
The Partnership's investments in affiliate debentures and U.S. Treasury
bills are classified as held-to-maturity and are recorded at accreted cost.
As of year end, the carrying value of these investments approximates their
fair value.
INCOME TAXES
The Partnership does not incur any income tax liabilities. Such liabilities
are incurred directly by the partners.
F-13
<PAGE>
3. INVESTMENT IN AFFILIATE DEBENTURES
The Partnership holds debentures of the Company and a wholly-owned
subsidiary of the Company. The debentures have a term of approximately 20
years and bear interest at 7-3/4% per annum. The interest payment dates and
redemption provisions of the debentures, which are redeemable at the option
of the Company and its subsidiary on or after December 30, 2006, correspond
to the distribution payment dates and redemption provisions of the
Partnership Preferred Securities. Interest and redemption payments on the
subsidiary debenture are guaranteed by the Company on a subordinated basis.
4. PARTNERS' CAPITAL
The Partnership issued 11,340,208 7-3/4% Partnership Preferred Securities,
$25 liquidation preference per security, to the Trust on December 17, 1996.
Distributions on the Partnership Preferred Securities are cumulative from
the date of original issue and are payable quarterly if, as, and when
declared by the general partner. The Partnership Preferred Securities are
redeemable on or after December 30, 2006 at the option of the Partnership,
at a redemption price equal to $25 per security. Except as provided in the
Limited Partnership Agreement and Partnership Preferred Securities
Guarantee Agreement, and as otherwise provided by law, the holders of the
Partnership Preferred Securities have no voting rights.
The Company has guaranteed the payment of distributions by the Partnership
on the Partnership Preferred Securities if, as, and when declared out of
funds legally available and payments upon liquidation of the Partnership or
the redemption of the Partnership Preferred Securities to the extent of
funds legally available. This guarantee is subordinated to all other
liabilities of the Company and ranks pari passu with the most senior
preferred stock of the Company.
F-14
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the General Partner and Limited Partner of
Merrill Lynch Preferred Funding I, L.P.
We have audited the accompanying balance sheet of Merrill Lynch Preferred
Funding I, L.P. (the "Partnership") as of December 27, 1996, and the related
statements of earnings, changes in partners' capital and cash flows for the
period then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership at December 27, 1996, and
the results of its operations and its cash flows for the period then ended in
conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
New York, New York
March 26, 1997
F-15
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrants have duly caused this report to be signed on their
behalf by the undersigned, thereunto duly authorized on the 26th day of March,
1997.
MERRILL LYNCH PREFERRED CAPITAL TRUST I
By: /s/ THERESA LANG
----------------------------------------------
Name: Theresa Lang
Title: Regular Trustee
By: /s/ STANLEY SCHAEFER
----------------------------------------------
Name: Stanley Schaefer
Title: Regular Trustee
MERRILL LYNCH PREFERRED FUNDING I, L.P.
By: MERRILL LYNCH & CO., INC., as General Partner
By: /s/ THERESA LANG
----------------------------------------------
Name: Theresa Lang
Title: Senior Vice President and Treasurer, and as
Attorney-in-Fact for a majority of the Board
of Directors*
- ----------
* Pursuant to Powers of Attorney filed as Exhibits hereto, for Herbert M.
Allison, Jr., William O. Bourke, W.H. Clark, Jill K. Conway, Stephen L.
Hammerman, Earle H. Harbison, Jr., George B. Harvey, William R. Hoover,
David H. Komansky, Robert P. Luciano, David K. Newbigging, Aulana L.
Peters, John J. Phelan, Jr., John L. Steffens, Daniel P. Tully, and William
L. Weiss, directors of Merrill Lynch & Co., Inc.
================================================================================
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
MERRILL LYNCH PREFERRED CAPITAL TRUST I
Dated as of December 11, 1996
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions........................................ 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application................... 12
SECTION 2.2 Lists of Holders of Trust Securities............... 12
SECTION 2.3 Reports by the Property Trustee.................... 13
SECTION 2.4 Periodic Reports to Property Trustee............... 13
SECTION 2.5 Evidence of Compliance with Conditions
Precedent.......................................... 13
SECTION 2.6 Trust Enforcement Events; Waiver................... 13
SECTION 2.7 Trust Enforcement Event; Notice.................... 15
ARTICLE III
ORGANIZATION
SECTION 3.1 Name............................................... 16
SECTION 3.2 Office............................................. 16
SECTION 3.3 Purpose............................................ 16
SECTION 3.4 Authority.......................................... 16
SECTION 3.5 Title to Property of the Trust..................... 17
SECTION 3.6 Powers and Duties of the Regular Trustees.......... 17
SECTION 3.7 Prohibition of Actions by the Trust and
the Trustees....................................... 20
SECTION 3.8 Powers and Duties of the Property Trustee.......... 22
SECTION 3.9 Certain Duties and Responsibilities of
the Property Trustee............................... 24
SECTION 3.10 Certain Rights of Property Trustee................. 26
SECTION 3.11 Delaware Trustee................................... 29
SECTION 3.12 Execution of Documents............................. 29
SECTION 3.13 Not Responsible for Recitals or Issuance
of Trust Securities................................ 29
SECTION 3.14 Duration of Trust.................................. 29
SECTION 3.15 Mergers............................................ 29
i
<PAGE>
Page
----
ARTICLE IV
SPONSOR
SECTION 4.1 Responsibilities of the Sponsor.................... 32
SECTION 4.2 Indemnification and Expenses of the
Trustee............................................ 32
ARTICLE V
TRUST COMMON SECURITIES HOLDER
SECTION 5.1 Company's Purchase of Trust Common Securities...... 33
SECTION 5.2 Covenants of the Trust Common Securities
Holder............................................. 33
ARTICLE VI
TRUSTEES
SECTION 6.1 Number of Trustees................................. 33
SECTION 6.2 Delaware Trustee................................... 34
SECTION 6.3 Property Trustee; Eligibility...................... 34
SECTION 6.4 Qualifications of Regular Trustees and
Delaware Trustee Generally......................... 35
SECTION 6.5 Regular Trustees................................... 35
SECTION 6.6 Delaware Trustee................................... 36
SECTION 6.7 Appointment, Removal and Resignation of
Trustees........................................... 36
SECTION 6.8 Vacancies among Trustees........................... 38
SECTION 6.9 Effect of Vacancies................................ 38
SECTION 6.10 Meetings........................................... 38
SECTION 6.11 Delegation of Power................................ 39
Section 6.12 Merger, Conversion, Consolidation or
Succession to Business............................. 39
ARTICLE VII
DISTRIBUTIONS
SECTION 7.1 Distributions...................................... 40
ARTICLE VIII
ISSUANCE OF TRUST SECURITIES
SECTION 8.1 Designation and General Provisions Regarding
Trust Securities................................... 41
SECTION 8.2 Redemption of Trust Securities..................... 43
SECTION 8.3 Redemption Procedures.............................. 45
ii
<PAGE>
Page
----
SECTION 8.4 Voting Rights of Trust Preferred Securities........ 47
SECTION 8.5 Voting Rights of Trust Common Securities........... 50
SECTION 8.6 Paying Agent....................................... 52
SECTION 8.7 Listing............................................ 53
SECTION 8.8 Acceptance of Guarantee and Agreements,
Limited Partnership Agreement...................... 53
ARTICLE IX
TERMINATION AND LIQUIDATION OF THE TRUST
SECTION 9.1 Termination of Trust............................... 53
SECTION 9.2 Liquidation Distribution Upon Termination
and Dissolution of the Trust....................... 54
ARTICLE X
TRANSFER OF INTERESTS
SECTION 10.1 Transfer of Trust Securities....................... 56
SECTION 10.2 Transfer of Certificates........................... 56
SECTION 10.3 Deemed Security Holders............................ 56
SECTION 10.4 Book Entry Interests............................... 57
SECTION 10.5 Notices to Clearing Agency......................... 58
SECTION 10.6 Appointment of Successor Clearing Agency........... 58
SECTION 10.7 Definitive Trust Preferred Security Certificates... 58
SECTION 10.8 Mutilated, Destroyed, Lost or Stolen
Certificates....................................... 59
ARTICLE XI
LIMITATION OF LIABILITY OF
HOLDERS OF TRUST SECURITIES, TRUSTEES OR OTHERS
SECTION 11.1 Liability.......................................... 60
SECTION 11.2 Exculpation........................................ 60
SECTION 11.3 Fiduciary Duty..................................... 61
SECTION 11.4 Indemnification.................................... 62
SECTION 11.5 Outside Businesses................................. 65
ARTICLE XII
ACCOUNTING
SECTION 12.1 Fiscal Year........................................ 66
SECTION 12.2 Certain Accounting Matters......................... 66
iii
<PAGE>
Page
----
SECTION 12.3 Banking............................................ 67
SECTION 12.4 Withholding........................................ 67
ARTICLE XIII
AMENDMENTS AND MEETINGS
SECTION 13.1 Amendments......................................... 68
SECTION 13.2 Meetings of the Holders of Trust Securities;
Action by Written Consent.......................... 71
ARTICLE XIV
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 14.1 Representations and Warranties of Property
Trustee............................................ 73
SECTION 14.2 Representations and Warranties of Delaware
Trustee............................................ 74
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices............................................ 75
SECTION 15.2 Governing Law...................................... 76
SECTION 15.3 Intention of the Parties........................... 76
SECTION 15.4 Headings........................................... 76
SECTION 15.5 Successors and Assigns............................. 76
SECTION 15.6 Partial Enforceability............................. 76
SECTION 15.7 Counterparts....................................... 77
EXHIBIT A-1 FORM OF PREFERRED SECURITY
CERTIFICATE...............................A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE.........A2-1
EXHIBIT B PURCHASE AGREEMENT...........................B-1
iv
<PAGE>
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- -----------
310(a)............................................. 6.3(a)
310(c)............................................. Inapplicable
311(c)............................................. Inapplicable
312(a)............................................. 2.2(a)
312(b)............................................. 2.2(b)
313................................................ 2.3
314(a)............................................. 2.4
314(b)............................................. Inapplicable
314(c)............................................. 2.5
314(d)............................................. Inapplicable
314(f)............................................. Inapplicable
315(a)............................................. 3.9(b)
315(c)............................................. 3.9(a)
315(d)............................................. 3.9(a)
316(a)............................................. Annex I
316(c)............................................. 3.6(e)
- ----------
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
v
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
MERRILL LYNCH PREFERRED CAPITAL TRUST I
December 11, 1996
AMENDED AND RESTATED DECLARATION OF TRUST (the "Declaration") dated
and effective as of December 11, 1996, by the Trustees (as defined herein), by
the Sponsor (as defined herein) and by the Holders, from time to time, of
undivided beneficial interests in the Trust to be issued pursuant to this
Declaration;
WHEREAS, certain of the Trustees and the Sponsor established MERRILL
LYNCH PREFERRED CAPITAL TRUST I (the "Business Trust"), a trust under the
Delaware Business Trust Act (the "Trust Act"), pursuant to a Declaration of
Trust dated as of November 20, 1996 (the "Original Declaration") and a
Certificate of Trust filed with the Secretary of State of the State of Delaware
on November 20, 1996, for the sole purpose of issuing and selling certain
securities representing undivided beneficial interests in the assets of the
Trust and investing the proceeds thereof in the Partnership Preferred
Securities;
WHEREAS, as of the date hereof, no interests in the Trust have been
issued; and
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration.
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the Holders, from time to time, of the securities
representing undivided beneficial ownership interests in the assets of the Trust
issued hereunder, subject to the provisions of this Declaration.
<PAGE>
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration
or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa;
and
(g) a term used in this Agreement and not otherwise defined herein
shall have the meaning ascribed to such term in the Partnership Agreement.
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act of 1933, as amended, or any successor rule thereunder.
"Affiliate Investment Instruments" has the meaning set forth in
Section 7.1 of the Limited Partnership Agreement.
"Authorized Officer" of a Person means any Person that is authorized
to bind such Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as set forth in Section 10.4 of this
Declaration.
2
<PAGE>
"Business Day" means any day other than a day on which banking
institutions in The City of New York are authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. Section 3801 et seq., as it may be amended from time to time,
or any successor legislation.
"Certificate" means a Trust Common Security Certificate or a Trust
Preferred Security Certificate.
"Change in 1940 Act Law" means, as a result of the occurrence on or
after the date of the issuance of the Trust Preferred Securities of a change in
law or regulation or a change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority, the Trust is or will be considered an "investment company" which is
required to be registered under the 1940 Act.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the Trust Preferred Securities and in whose name or in the name of a nominee
of that organization shall be registered a Global Certificate and which shall
undertake to effect book entry transfers and pledges of beneficial interests in
the Trust Preferred Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of interest in securities
deposited with the Clearing Agency.
"Closing Date" means December 17, 1996.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation.
"Commission" means the United States Securities and Exchange
Commission.
"Common Security Holder of the Trust" means the Company in its
capacity as Holder of the Trust Common Security.
"Company" means Merrill Lynch & Co., Inc.
"Company Indemnified Person" means (a) any Regular Trustee; (b) any
Affiliate of any Regular Trustee; (c) any officers, directors, shareholders,
members, partners, employees,
3
<PAGE>
representatives or agents of any Regular Trustee; or (d) any officer, director,
shareholder, member, partner, employee, representative or agent of the Trust or
its Affiliates.
"Compounded Distributions" has the meaning set forth in Section
7.1(a) of this Declaration.
"Corporate Trust Office" means the principal corporate trust office
of the Property Trustee in the Borough of Manhattan, the City of New York, which
office at the date hereof is called the Global Trust Services Office and is
located at 450 West 33rd Street, 15th Floor, New York, New York 10001.
"Covered Person" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Trust Securities.
"Definitive Trust Preferred Security Certificates" has the meaning
set forth in Section 10.4 of this Declaration.
"Delaware Trustee" has the meaning set forth in Section 6.2 of this
Declaration.
"Distribution" has the meaning set forth in Section 7.1(a) of this
Declaration.
"DTC" means The Depository Trust Company, the initial Clearing
Agency.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in Section
11.4(b) of this Declaration.
"Fiscal Period" has the meaning set forth in Section 1.1 of the
Limited Partnership Agreement.
"Fiscal Year" has the meaning set forth in Section 12.1 of this
Declaration.
"General Partner" means Merrill Lynch & Co., Inc., in its capacity
as the general partner of the Partnership, its permitted successors, or any
successor general partner in the Partnership admitted as such pursuant to the
Limited Partnership Agreement.
4
<PAGE>
"Global Certificate" has the meaning set forth in Section 10.4 of
this Declaration.
"Holder" means a Person in whose name a Certificate representing a
Trust Security is registered, such Person being a beneficial owner within the
meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Initial Debentures" has the meaning set forth in Section 7.1(b) of
the Limited Partnership Agreement.
"Investment Affiliate" means the Company or any corporation,
partnership, limited liability company or other entity (other than the
Partnership or the Trust) that (i) is controlled by the Company and (ii) is not
an investment company by reason of Section 3(a) or 3(b) of the 1940 Act or is
otherwise an eligible recipient of funds directly or indirectly from the Trust
pursuant to an order issued by the Securities and Exchange Commission.
"Investment Company" means an investment company as defined in the
1940 Act.
"Investment Guarantee" means any guarantee on a subordinated basis
by the Company with respect to (1) payment of interest, principal and other
payment terms of Affiliate Investment Instruments that are debt securities of an
Investment Affiliate and (2) the payment of dividends, distributions and other
payment terms of Affiliate Investment Instruments that are preferred or
preference stock of an Investment Affiliate when, as and if declared by such
Investment Affiliate.
"Legal Action" has the meaning set forth in Section 3.6(h) of this
Declaration.
"Limited Partnership Agreement" means the Amended and Restated
Agreement of Limited Partnership of Merrill Lynch Preferred Funding I, L.P.
dated as of December 17, 1996.
"List of Holders" has the meaning set forth in Section 2.2(a) of
this Declaration.
"Majority in liquidation amount of the Trust Securities" means,
except as provided in the terms of the Trust Preferred Securities or by the
Trust Indenture Act, Holder(s) of outstanding Trust Securities voting together
as a single class or, as the context may require, Holders of outstanding Trust
Preferred Securities or Holders of outstanding Trust Common
5
<PAGE>
Securities voting separately as a class, who are the record owners of more than
50% of the aggregate liquidation amount of all outstanding Trust Securities of
the relevant class.
"Ministerial Action" means, a ministerial action (such as filing a
form or making an election or pursuing some other similar reasonable measure)
which in the sole judgment of the Company has or will cause no adverse effect on
the Trust, the Partnership, the Company or the holders of the Trust Securities
and will involve no material cost.
"Nasdaq" means the National Association of Securities Dealers
Automated Quotation System.
"1940 Act" means the Investment Company Act of 1940, as amended from
time to time, or any successor legislation.
"Officers' Certificate" means, with respect to any Person (who is
not an individual), a certificate signed by the Chairman of the Board, the
President, a vice President or the Treasurer, and by an Assistant Treasurer, the
Secretary or an Assistant Secretary of such Person. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Declaration shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Partnership" means Merrill Lynch Preferred Funding I, L.P., a
Delaware limited partnership formed pursuant to the Limited Partnership
Agreement.
"Partnership Enforcement Event" has the meaning set forth in Section
6.2(h)(i) of the Limited Partnership Agreement.
6
<PAGE>
"Partnership Guarantee" means the Partnership Guarantee Agreement
dated as of December 17, 1996, by the Company in favor of the Partnership
Preferred Security Holders with respect to the Partnership Preferred Securities,
as amended or supplemented from time to time.
"Partnership Preferred Securities" has the meaning set forth in
Section 1.1 of the Limited Partnership Agreement.
"Partnership Special Event" has the meaning set forth in Section 1.1
of the Limited Partnership Agreement.
"Payment Amount" has the meaning set forth in Section 7.1(a) of this
Declaration.
"Paying Agent" has the meaning set forth in Section 3.8(g) of this
Declaration.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Security Beneficial Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, or each case in accordance
with the rules of such Clearing Agency).
"Property Account" has the meaning set forth in Section 3.8(c) of
this Declaration.
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 6.3 of this Declaration.
"Pro Rata" means, in reference to any distributions on or
redemptions of Trust Securities or the distribution of Partnership Preferred
Securities or any other payment with respect to Trust Securities in connection
with a Trust Special Event or liquidation of the Trust, pro rata to each Holder
of Trust Securities according to the aggregate liquidation amount of the Trust
Securities held by the relevant Holder in relation to the aggregate liquidation
amount of all Trust Securities outstanding.
7
<PAGE>
"Quorum" means a majority of the Regular Trustees or, if there are
only two Regular Trustees, both of them.
"Redemption Price" has the meaning set forth in Section 8.2(a) of
this Declaration.
"Regular Trustee" has the meaning set forth in Section 6.1 of this
Declaration.
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Trust Preferred
Guarantee Trustee, the chairman or vice-chairman of the board of directors, the
chairman or vice-chairman of the executive committee of the board of directors,
the president, any vice president (whether or not designated by a number or a
word or words added before or after the title "vice president"), the secretary,
any assistant secretary, the treasurer, any assistant treasurer, the cashier,
any assistant cashier, any trust officer or assistant trust officer, or any
other officer of the Trust Preferred Guarantee Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Rule 3a-5" means Rule 3a-5 under the 1940 Act.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor legislation.
"Special Representative" has the meaning set forth in Section
6.2(h)(i) of the Limited Partnership Agreement.
"Sponsor" means the Company or any successor entity in a merger,
consolidation or amalgamation, in its capacity as sponsor of the Trust.
"Successor Delaware Trustee" has the meaning set forth in Section
6.7(b) of this Declaration.
"Successor Entity" has the meaning set forth in Section 3.15 of this
Declaration.
"Successor Property Trustee" has the meaning set forth in Section
6.7(b) of this Declaration.
8
<PAGE>
"Successor Trust Securities" has the meaning set forth in Section
3.15 of this Declaration.
"Super Majority" has the meaning set forth in Section 2.6(a)(ii)
of this Declaration.
"Tax Action" means (a) an amendment to, change in or announced
proposed change in the laws (or any regulations thereunder) of the United States
or any political subdivision or taxing authority thereof or therein, (b) a
judicial decision interpreting, applying or clarifying such laws or regulations,
(c) an administrative pronouncement or action that represents an official
position (including a clarification of an official position) of the governmental
authority or regulatory body making such administrative pronouncement or taking
such action, or (d) a threatened challenge asserted in connection with an audit
of the Company or any of its subsidiaries, the Partnership, or the Trust, or a
threatened challenge asserted in writing against any other taxpayer that has
raised capital through the issuance of securities that are substantially similar
to the Debentures, the Partnership Preferred Securities, or the Trust Preferred
Securities, which amendment or change is adopted or which decision,
pronouncement or proposed change is announced or which action, clarification or
challenge occurs on or after the date of the prospectus related to the issuance
of the Trust Preferred Securities.
"10% in liquidation amount of the Trust Securities" means, except as
provided in the terms of the Trust Preferred Securities or by the Trust
Indenture Act, Holder(s) of outstanding Trust Securities voting together as a
single class or, as the context may require, Holders of outstanding Trust
Preferred Securities or Holders of outstanding Trust Common Securities voting
separately as a class, who are the record owners of 10% or more of the aggregate
liquidation amount of all outstanding Trust Securities of the relevant class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury Department, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trust Common Security" has the meaning set forth in Section 8.1 of
this Declaration.
"Trust Common Security Certificate" means a definitive certificate
in fully registered form representing a Common Security substantially in the
form of Exhibit A-2.
9
<PAGE>
"Trust Common Securities Guarantee" means the Trust Common
Securities Guarantee Agreement dated as of December 17, 1996, entered into by
the Company, as Guarantor, for the benefit of the holders of the Trust Common
Securities.
"Trust Dissolution Tax Opinion" means an opinion of nationally
recognized independent tax counsel experienced in such matters to the effect
that there has been a Trust Tax Event.
"Trust Enforcement Event" means the occurrence, at any time, of (i)
arrearages on distributions on the Trust Preferred Securities that shall exist
for six consecutive quarterly distribution periods, (ii) a default by the
Company in respect of any of its obligations under the Trust Guarantee or (iii)
a Partnership Enforcement Event (as defined in the Limited Partnership
Agreement).
"Trust Guarantees" means the Trust Common Securities Guarantee and
The Trust Preferred Securities Guarantee, collectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
"Trust Investment Company Event" means that the Company shall have
requested and received and shall have delivered to the Regular Trustees an
opinion of nationally recognized independent legal counsel experienced in such
matters to the effect that as a result of a Change in 1940 Act Law, the Trust is
or will be considered an "investment company" which is required to be registered
under the 1940 Act.
"Trust Liquidation" has the meaning set forth in Section 9.2(a) of
this Declaration.
"Trust Preferred Securities Guarantee" has the meaning set forth in
Section 1.1 of the Limited Partnership Agreement.
"Trust Liquidation Distribution" has the meaning set forth in
Section 9.2(a) of this Declaration.
"Trust Preferred Security" has the meaning set forth in Section
8.1(a) of this Declaration.
"Trust Preferred Security Beneficial Owner" means, with respect to a
Book Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency
10
<PAGE>
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).
"Trust Preferred Security Certificate" means a certificate
representing a Preferred Security substantially in the form of Exhibit A-1.
"Trust Redemption Tax Opinion" means an opinion of nationally
recognized independent tax counsel experienced in such matters that there has
been a Trust Tax Event, and following such Trust Tax Event there is more than an
insubstantial risk that interest payable by one or more of the Investment
Affiliates with respect to the Debentures is not, or will not be, deductible by
such Investment Affiliate for United States federal income tax purposes even if
the Partnership Preferred Securities were distributed to the Holders of the
Trust Securities in liquidation of such Holders' interests in the Trust.
"Trust Securities" means the Trust Common Securities and the Trust
Preferred Securities.
"Trust Special Event" means a Trust Tax Event or a Trust Investment
Company Event.
"Trust Tax Event" means that there has been a Tax Action which
relates to any of the items described in (i) through (iii) below, and that there
is more than an insubstantial risk that (i) the Trust is, or will be subject to
United States federal income tax with respect to income accrued or received on
the Partnership Preferred Securities, (ii) the Trust is, or will be, subject to
more than a de minimis amount of other taxes, duties or other governmental
charges or (iii) interest payable by one or more of the Investment Affiliates
with respect to the Debentures is not, or will not be, deductible by such
Investment Affiliate for United States federal income tax purposes.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
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ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Trust Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Trust Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide the Property Trustee (i) within 14 days after each record
date for payment of Distributions, a list, in such form as the Property Trustee
may reasonably require, of the names and addresses of the Holders of the Trust
Securities ("List of Holders") as of such record date, provided, that neither
the Sponsor nor the Regular Trustees on behalf of the Trust shall be obligated
to provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Property Trustee by the
Sponsor and the Regular Trustees on behalf of the Trust, and (ii) at any other
time, within 30 days of receipt by the Trust of a written request for a List of
Holders as of a date no more than 14 days before such List of Holders is given
to the Property Trustee. The Property Trustee shall preserve, in as current a
form as is reasonably practicable, all information contained in Lists of Holders
given to it or which it receives in the capacity as Paying Agent (if acting in
such capacity), provided, that the Property Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under
Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
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SECTION 2.3 Reports by the Property Trustee.
Within 60 days after May 15 of each year commencing May 15, 1997,
the Property Trustee shall provide to the Holders of the Trust Preferred
Securities such reports as are required by Section 313 of the Trust Indenture
Act, if any, in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Property Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Property Trustee.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information as
are required by Section 314 of the Trust Indenture Act (if any) and the
compliance certificate required by Section 314 of the Trust Indenture Act in the
form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent provided for in this Declaration that relate to any of the
matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate
or opinion required to be given by an officer pursuant to Section 314(c)(1) may
be given in the form of an Officers' Certificate.
SECTION 2.6 Trust Enforcement Events; Waiver.
(a) The Holders of a Majority in liquidation amount of Trust
Preferred Securities may, by vote, on behalf of the Holders of all of the Trust
Preferred Securities, waive any past Trust Enforcement Event in respect of the
Trust Preferred Securities and its consequences, provided, that if the
underlying event of default or Partnership Enforcement Event:
(i) is not waivable under the Trust Preferred Securities Guarantee
or the Limited Partnership Agreement, the Trust Enforcement Event under
this Declaration shall also not be waivable; or
(ii) requires the consent or vote of the Holders of greater than a
Majority in liquidation amount of the Trust Preferred Securities to be
waived under the Trust Preferred
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Securities Guarantee or the Partnership Preferred Securities to be waived
under the Limited Partnership Agreement (a "Super Majority"),
the Trust Enforcement Event under this Declaration may only be waived by the
vote of the Holders of at least the relevant Super Majority in liquidation
amount of the Trust Preferred Securities.
The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Trust Securities, as permitted by the Trust Indenture Act. Upon such waiver, any
such default shall cease to exist, and any Trust Enforcement Event with respect
to the Trust Preferred Securities arising therefrom shall be deemed to have been
cured, for every purpose of this Declaration, but no such waiver shall extend to
any subsequent or other default or Trust Enforcement Event with respect to the
Trust Preferred Securities or impair any right consequent thereon. Any waiver by
the Holders of the Trust Preferred Securities of Trust Enforcement Events with
respect to the Trust Preferred Securities shall also be deemed to constitute a
waiver by the Holders of the Trust Common Securities of any such Trust
Enforcement Event with respect to the Trust Common Securities for all purposes
of this Declaration without any further act, vote, or consent of the Holders of
the Trust Common Securities.
(b) The Holders of a Majority in liquidation amount of the Trust
Common Securities may, by vote, on behalf of the Holders of all of the Trust
Common Securities, waive any past Trust Enforcement Event with respect to the
Trust Common Securities and its consequences, provided, that if the underlying
event of default or Partnership Enforcement Event:
(i) is not waivable under the Trust Common Securities Guarantee or
the Limited Partnership Agreement, except where the Holders of the Trust
Common Securities are deemed to have waived such Trust Enforcement Event
under this Declaration as provided below in this Section 2.6(b), the Trust
Enforcement Event under this Declaration shall also not be waivable; or
(ii) requires the consent or vote of the Holders of a Super Majority
to be waived, except where the Holders of the Trust Common Securities are
deemed to have waived such Trust Enforcement Event under the Declaration
as provided below in this Section 2.6(b), the Trust Enforcement Event
under this Declaration may only be waived by the vote of the
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Holders of at least the relevant Super Majority in liquidation amount of
the Trust Common Securities;
provided, further, each Holder of Trust Common Securities will be deemed to have
waived any such Trust Enforcement Event and all Trust Enforcement Events with
respect to the Trust Common Securities and its consequences if all Trust
Enforcement Events with respect to the Trust Preferred Securities have been
cured, waived or otherwise eliminated, and until such Trust Enforcement Events
have been so cured, waived or otherwise eliminated, the Property Trustee will be
deemed to be acting solely on behalf of the Holders of the Trust Preferred
Securities and only the Holders of the Trust Preferred Securities will have the
right to direct the Property Trustee in accordance with the terms of the Trust
Securities. The foregoing provisions of this Section 2.6(b) shall be in lieu of
Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such
Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby
expressly excluded from this Declaration and the Trust Securities, as permitted
by the Trust Indenture Act. Subject to the foregoing provisions of this Section
2.6(b), upon such waiver, any such default shall cease to exist and any Trust
Enforcement Event with respect to the Trust Common Securities arising therefrom
shall be deemed to have been cured for every purpose of this Declaration, but no
such waiver shall extend to any subsequent or other default or Trust Enforcement
Event with respect to the Trust Common Securities or impair any right consequent
thereon.
(c) A waiver of Partnership Enforcement Events under the Limited
Partnership Agreement by the Property Trustee at the direction of the Holders of
the Trust Preferred Securities constitutes a waiver of the corresponding Trust
Enforcement Event under this Declaration. The foregoing provisions of this
Section 2.6(c) shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture
Act and such Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly
excluded from this Declaration and the Trust Securities, as permitted by the
Trust Indenture Act.
SECTION 2.7 Trust Enforcement Event; Notice.
The Property Trustee shall, within 90 days after the occurrence of a
Trust Enforcement Event, transmit by mail, first class postage prepaid, to the
Holders of the Trust Securities, notices of all defaults with respect to the
Trust Securities actually known to a Responsible Officer of the Property
Trustee, unless such defaults have been cured before the giving of such notice
(the term "defaults" for the purposes of this Section 2.7 being hereby defined
to be defaults as defined in the Trust Guarantees or the Limited Partnership
Agreement, not including
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any periods of grace provided for therein and irrespective of the giving of any
notice provided therein); provided, that except for a default in the payment of
principal of (or premium, if any) or interest on any of the Affiliate Investment
Instruments or in the payment of any sinking fund installment established for
the Affiliate Investment Instruments, the Property Trustee shall be fully
protected in withholding such notice if and so long as a Responsible Officer of
the Property Trustee in good faith determines that the withholding of such
notice is in the interests of the Holders of the Trust Securities.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "Merrill Lynch Preferred Capital Trust I," as
such name may be modified from time to time by the Regular Trustees following
written notice to the Holders of Trust Securities. The Trust's activities may be
conducted under the name of the Trust or any other name deemed advisable by the
Regular Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o Merrill
Lynch & Co., Inc., World Financial Center, North Tower, 250 Vesey Street, New
York, New York 10281. On ten Business Days written notice to the Holders of
Trust Securities, the Regular Trustees may designate another principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to issue
the Trust Securities, (b) investing the proceeds from such sale of the Trust
Securities to acquire the Partnership Preferred Securities, and (c) except as
otherwise limited herein, to engage in only those other activities necessary or
incidental thereto. The Trust shall not borrow money, issue debt or reinvest
proceeds derived from investments, mortgage or pledge any of its assets, or
otherwise undertake (or permit to be undertaken) any activity that would cause
the Trust not to be classified for United States federal income tax purposes as
a grantor trust.
SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Regular
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Trustees shall have exclusive and complete authority to carry out the purposes
of the Trust. An action taken by the Regular Trustees in accordance with their
powers shall constitute the act of and serve to bind the Trust and an action
taken by the Property Trustee on behalf of the Trust in accordance with its
powers shall constitute the act of and serve to bind the Trust. In dealing with
the Trustees acting on behalf of the Trust, no person shall be required to
inquire into the authority of the Trustees to bind the Trust. Persons dealing
with the Trust are entitled to rely conclusively on the power and authority of
the Trustees as set forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the Partnership
Preferred Securities and the Property Account or as otherwise provided in this
Declaration, legal title to all assets of the Trust shall be vested in the
Trust. The Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial ownership interest in the assets
of the Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Trust Preferred Securities and the Trust
Common Securities in accordance with this Declaration; provided, however,
that the Trust may issue no more than one series of Trust Preferred
Securities and no more than one series of Trust Common Securities, and,
provided, further, that there shall be no interests in the Trust other
than the Trust Securities, and the issuance of Trust Securities shall be
limited to a one-time, simultaneous issuance of both Trust Preferred
Securities and Trust Common Securities on the Closing Date;
(b) in connection with the issue and sale of the Trust Preferred
Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission the registration
statement on Form S-3 prepared by the Sponsor, including any
amendments thereto, pertaining to the Trust Preferred Securities;
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(ii) execute and file any documents prepared by the
Sponsor, or take any acts as determined by the Sponsor to be
necessary in order to qualify or register all or part of the Trust
Preferred Securities in any State in which the Sponsor has
determined to qualify or register such Trust Preferred Securities
for sale;
(iii) execute and file an application, prepared by the
Sponsor, to the New York Stock Exchange, Inc. or any other national
stock exchange or the Nasdaq National Market System for listing upon
notice of issuance of any Trust Preferred Securities;
(iv) execute and file with the Commission a registration
statement, including any amendments thereto, prepared by the
Sponsor, relating to the registration of the Trust Preferred
Securities, the Partnership Preferred Securities, the Trust
Preferred Securities Guarantee and the Partnership Guarantee under
Section 12(b) of the Exchange Act; and
(v) execute and enter into an underwriting agreement
providing for the sale of the Trust Preferred Securities and perform
the duties and obligations of the Trust thereunder;
(c) to acquire the Partnership Preferred Securities with the
proceeds of the sale of the Trust Preferred Securities and the Trust
Common Securities; provided, however, that the Regular Trustees shall
cause legal title to the Partnership Preferred Securities to be held of
record in the name of the Property Trustee for the benefit of the Holders
of the Trust Preferred Securities and the Holders of Trust Common
Securities;
(d) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Trust Special Event; provided, that the
Regular Trustees shall consult with the Sponsor and the Property Trustee
before taking or refraining from taking any Ministerial Action in relation
to a Trust Special Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and
with respect to, for the purposes of Section 316(c) of the Trust Indenture
Act, Distributions, voting rights, redemptions and exchanges, and to issue
relevant notices to the Holders of Trust Preferred Securi-
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ties and Holders of Trust Common Securities as to such actions and
applicable record dates;
(f) to give prompt written notice to the Holders of the Trust
Securities of any notice received from the Partnership of the General
Partner's election not to make a current, quarterly distribution on the
Partnership Preferred Securities under the Limited Partnership Agreement;
(g) to take all actions and perform such duties as may be required
of the Regular Trustees pursuant to the terms of the Trust Securities;
(h) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action, or otherwise adjust claims or demands of or against the
Trust ("Legal Action"), unless pursuant to Section 3.8(f), the Property
Trustee has the exclusive power to bring such Legal Action;
(i) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors,
and consultants and pay reasonable compensation for such services;
(j) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(k) to give the certificate required by Section 314(a)(4) of the
Trust Indenture Act to the Property Trustee, which certificate may be
executed by any Regular Trustee;
(l) to incur expenses that are necessary or incidental to carry
out any of the purposes of the Trust;
(m) to act as, or appoint another Person to act as, registrar and
transfer agent for the Trust Securities;
(n) to execute all documents or instruments, perform all duties
and powers, and do all things for and on behalf of the Trust in all
matters necessary or incidental to the foregoing;
(o) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of
the State of Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the
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Holders of the Trust Preferred Securities or to enable the Trust to effect
the purposes for which the Trust was created;
(p) to take any action, or to take no action, not inconsistent with
this Declaration or with applicable law, that the Regular Trustees
determine in their discretion to be necessary or desirable in carrying out
the activities of the Trust as set out in this Section 3.6, including, but
not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the 1940 Act; and
(ii) taking no action which would be reasonably likely to
cause the Trust to be classified as an association or a publicly
traded partnership taxable as a corporation for United States
federal income tax purposes;
provided, that such action does not adversely affect the interests of
Holders; and
(q) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to
the Trust to be duly prepared and filed by the Regular Trustees, on behalf
of the Trust.
The Regular Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Regular Trustees shall not take any
action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this
Section 3.6 shall be reimbursed by the Partnership pursuant to Section 9.1 of
the Limited Partnership Agreement.
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SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including the Property
Trustee) shall cause the Trust not to, engage in any activity other than as
required or authorized by this Declaration. In particular, the Trust shall not
and the Trustees (including the Property Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding the
Partnership Preferred Securities, but shall distribute all such proceeds
to Holders of Trust Securities pursuant to the terms of this Declaration
and of the Trust Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness or acquire any
securities other than the Partnership Preferred Securities;
(v) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Trust Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial ownership
of, or beneficial interest in, the Trust other than the Trust Securities;
(vii) other than as set forth herein, (A) cause the Special
Representative to direct the time, method and place of conducting any
proceeding for any remedy available to the Special Representative or
exercising any trust or power conferred upon the Special Representative
with respect to the Partnership Preferred Securities, the Affiliate
Investment Instruments, and the Investment Guarantees, (B) cause the
Special Representative to waive any past default that is waivable under
the Limited Partnership Agreement, the Affiliate Investment Instruments or
the Investment Guarantees, (C) cause the Special Representative to
exercise any right to rescind or annul any declaration that the principal
of, or other amounts in respect of, any Affiliate Investment Instrument is
due and payable or (D) consent to any amendment, modification or
termination of the Limited Partnership
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Agreement or the Partnership Preferred Securities where such
consent shall be required; and
(viii) other than in connection with the liquidation of the Trust
pursuant to a Trust Special Event or upon redemption of all the Trust
Securities, file a certificate of cancellation of the Trust.
SECTION 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Partnership Preferred Securities shall be
owned by and held of record in the name of the Property Trustee in trust for the
benefit of the Holders of the Trust Securities. The right, title and interest of
the Property Trustee to the Partnership Preferred Securities shall vest
automatically in each Person who may hereafter be appointed as Property Trustee
in accordance with Section 6.7. Such vesting and cessation of title shall be
effective whether or not conveyancing documents with regard to the Partnership
Preferred Securities have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Partnership Preferred Securities to the Regular Trustees or to
the Delaware Trustee (if the Property Trustee does not also act as Delaware
Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Property Account") in the name of and under the exclusive
control of the Property Trustee on behalf of the Holders of the Trust
Securities and, upon the receipt of payments of funds made in respect of
the Partnership Preferred Securities held by the Property Trustee, deposit
such funds into the Property Account and make payments to the Holders of
the Trust Preferred Securities and Holders of the Trust Common Securities
from the Property Account in accordance with Section 7.1. Funds in the
Property Account shall be held uninvested until disbursed in accordance
with this Declaration. The Property Account shall be an account that is
maintained with a banking institution (including the Property Trustee if
it qualifies hereunder) authorized to exercise corporate trust powers and
having a combined capital and surplus of at least $50,000,000 and subject
to supervision or examination by Federal or state authority;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the
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Trust Preferred Securities and the Trust Common Securities to the extent
the Partnership Preferred Securities are redeemed; and
(iii) upon written notice of distribution issued by the Regular
Trustees in accordance with the terms of the Trust Securities, engage in
such ministerial activities as shall be necessary or appropriate to effect
the distribution of the Partnership Preferred Securities to Holders of
Trust Securities upon the occurrence of a Trust Special Event.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of the Trust Securities.
(e) The Property Trustee shall take any Legal Action which arises
out of or in connection with a Trust Enforcement Event of which a Responsible
Officer of the Property Trustee has actual knowledge or the Property Trustee's
duties and obligations under this Declaration or the Trust Indenture Act.
(f) The Property Trustee shall have the legal power to exercise all
of the rights, powers and privileges of a Holder of Partnership Preferred
Securities and, if a Trust Enforcement Event occurs and is continuing, the
Property Trustee shall, for the benefit of Holders of the Trust Securities,
enforce its rights as Holder of the Partnership Preferred Securities subject to
the rights of the Holders pursuant to the terms of such Trust Securities.
(g) The Property Trustee may authorize one or more Persons (each, a
"Paying Agent") to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all Trust Securities and any
such Paying Agent shall comply with Section 317(b) of the Trust Indenture Act.
Any Paying Agent may be removed by the Property Trustee at any time and a
successor Paying Agent or additional Paying Agents may be appointed at any time
by the Property Trustee.
(h) The Property Trustee shall continue to serve as a Trustee until
either:
(i) the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders of Trust Securities pursuant to the
terms of the Trust Securities; or
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(ii) a Successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 6.7.
(i) Subject to this Section 3.8, the Property Trustee shall have
none of the duties, liabilities, powers or the authority of the Regular Trustees
set forth in Section 3.6.
The Property Trustee must exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Property Trustee shall not take any
action that is inconsistent with the purposes and functions of the Trust set out
in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee.
(a) The Property Trustee, before the occurrence of any Trust
Enforcement Event and after the curing or waiver of all Trust Enforcement Events
that may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Declaration and no implied covenants shall be
read into this Declaration against the Property Trustee. In case a Trust
Enforcement Event has occurred (that has not been cured or waived pursuant to
Section 2.6) of which a Responsible Officer of the Property Trustee has actual
knowledge, the Property Trustee shall exercise such of the rights and powers
vested in it by this Declaration, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of a Trust Enforcement Event and after
the curing or waiving of all such Trust Enforcement Events that may have
occurred:
(A) the duties and obligations of the Property Trustee
shall be determined solely by the express provisions of this
Declaration and the Property Trustee shall not be liable except for
the performance of such duties and obligations as are specifically
set forth in this Declaration, and no implied covenants or
obligations shall be read into this Declaration against the Property
Trustee; and
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(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Property
Trustee and conforming to the requirements of this Declaration; but
in the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to the
Property Trustee, the Property Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the Property Trustee was negligent
in ascertaining the pertinent facts;
(iii) subject to the requirement of the Property Trustee receiving a
tax opinion as set forth in Section 8.4(d) or 8.5(c), as the case may be,
the Property Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a Majority in liquidation amount
of the Trust Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Property
Trustee, or exercising any trust or power conferred upon the Property
Trustee under this Declaration;
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that the repayment of such funds or protection from
such liability is not reasonably assured to it under the terms of this
Declaration or indemnity reasonably satisfactory to the Property Trustee
against such risk or liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Partnership Preferred
Securities and the Property Account shall be to deal with such property in
a similar manner as the Property Trustee deals with similar property for
its own account, subject to the protections and limita-
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tions on liability afforded to the Property Trustee under this Declaration
and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability for or
with respect to the value, genuineness, existence or sufficiency of the
Partnership Preferred Securities or the payment of any taxes or
assessments levied thereon or in connection therewith;
(vii) money held by the Property Trustee need not be segregated from
other funds held by it except in relation to the Property Account
maintained by the Property Trustee pursuant to Section 3.8(c)(i) and
except to the extent otherwise required by law; and
(viii) the Property Trustee shall not be responsible for monitoring
the compliance by the Regular Trustees or the Sponsor with their
respective duties under this Declaration, nor shall the Property Trustee
be liable for any default or misconduct of the Regular Trustees or the
Sponsor.
SECTION 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Regular Trustees
acting on behalf of the Trust contemplated by this Declaration shall be
sufficiently evidenced by an Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the
Property Trustee (unless other evidence is herein specifically prescribed)
may, in the absence of bad faith on its part, request and conclusively
rely upon an Officers' Certificate which, upon receipt of such request,
shall be promptly delivered by the Sponsor or the Regular Trustees;
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(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or securities
laws) or any rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel or other experts
and the advice or opinion of such counsel and experts with respect to
legal matters or advice within the scope of such experts' area of
expertise shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion; such counsel may be
counsel to the Sponsor or any of its Affiliates, and may include any of
its employees. The Property Trustee shall have the right at any time to
seek instructions concerning the administration of this Declaration from
any court of competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Declaration at the
request or direction of any Holder, unless (a) such Holder shall have
provided to the Property Trustee security and indemnity, reasonably
satisfactory to the Property Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the Property
Trustee's agents, nominees or custodians) and liabilities that might be
incurred by it in complying with such request or direction, including such
reasonable advances as may be requested by the Property Trustee and (b)
the Property Trustee has obtained the legal opinions, if any, required by
Section 8.4(d) or 8.5(c), as the case may be, of this Agreement; provided,
that, nothing contained in this Section 3.10(a)(vi) shall be taken to
relieve the Property Trustee, upon the occurrence of a Trust Enforcement
Event, of its obligation to exercise the rights and powers vested in it by
this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Property Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder
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either directly or by or through agents, custodians, nominees or attorneys
and the Property Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the Trust Securities,
and the signature of the Property Trustee or its agents alone shall be
sufficient and effective to perform any such action and no third party
shall be required to inquire as to the authority of the Property Trustee
to so act or as to its compliance with any of the terms and provisions of
this Declaration, both of which shall be conclusively evidenced by the
Property Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the
Property Trustee (i) may request instructions from the Holders of the
Trust Securities which instructions may only be given by the Holders of
the same proportion in liquidation amount of the Trust Securities as would
be entitled to direct the Property Trustee under the terms of the Trust
Securities in respect of such remedy, right or action, (ii) may refrain
from enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be fully protected in
conclusively relying on or acting in or accordance with such instructions;
provided, however, that the Property Trustee shall not be required to take
any action unless it shall have obtained such legal opinions, if any,
required by Sections 8.4(d) or 8.5(c), as the case may be, of this
Agreement; and
(xi) except as otherwise expressly provided by this Declaration, the
Property Trustee shall not be under any obligation to take any action that
is discretionary under the provisions of this Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority
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available to the Property Trustee shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any provision of this Declaration other than Section
6.2, the Delaware Trustee shall not be entitled to exercise any powers, nor
shall the Delaware Trustee have any of the duties and responsibilities of the
Regular Trustees or the Property Trustee described in this Declaration. Except
as set forth in Section 6.2, the Delaware Trustee shall be a Trustee for the
sole and limited purpose of fulfilling the requirements of Section 3807 of the
Business Trust Act.
SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act, any Regular Trustee is authorized
to execute on behalf of the Trust any documents that the Regular Trustees have
the power and authority to cause the Trust to execute pursuant to Section 3.6;
provided, that the registration statement referred to in Section 3.6(b)(i),
including any amendments thereto, shall be signed by or on behalf of a majority
of the Regular Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Trust Securities.
The recitals contained in this Declaration and the Trust Securities
shall be taken as the statements of the Sponsor, and the Trustees do not assume
any responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Trust Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of Article
VIII hereof, shall have perpetual existence.
SECTION 3.15 Mergers.
(a) The Trust may not consolidate, amalgamate, merge with or into,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, except as described in Section
3.15(b) and (c).
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(b) The Trust may, with the consent of the Regular Trustees or, if
there are more than two, a majority of the Regular Trustees and without the
consent of the Holders of the Trust Securities, the Delaware Trustee or the
Property Trustee, consolidate, amalgamate, merge with or into, or be replaced
by, or convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to a trust organized as such under the laws of any
State of the United States; provided, that:
(i) if the Trust is not the survivor, such successor entity (the
"Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust
under the Trust Securities; or
(B) substitutes for the Trust Preferred Securities other
securities having substantially the same terms as the Trust
Preferred Securities (the "Successor Trust Securities") so long as
the Successor Trust Securities rank the same as the Trust Preferred
Securities rank with respect to Distributions, assets and payments
upon liquidation, redemption and otherwise;
(ii) the Company expressly acknowledges a trustee of the Successor
Entity that possesses the same powers and duties as the Property Trustee
as the Holder of the Partnership Preferred Securities;
(iii) the Successor Trust Securities are listed, or any Successor
Trust Securities will be listed upon notification of issuance, on any
national securities exchange or with another organization on which the
Trust Preferred Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the Trust Preferred
Securities (including any Successor Trust Securities) to be downgraded by
any nationally recognized statistical rating organization;
(v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the Holders of the Trust Preferred
Securities (including any Successor Trust Securities) in any material
respect;
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(vi) such Successor Entity has a purpose identical to that of the
Trust;
(vii) the Company guarantees the obligations of such Successor
Entity under the Successor Trust Securities at least to the extent
provided by the Trust Guarantees; and
(viii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Sponsor has received an
opinion of a nationally recognized independent counsel to the Trust
experienced in such matters to the effect that:
(A) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease will not adversely affect the rights,
preferences and privileges of the Holders of the Trust Preferred
Securities (including any Successor Trust Securities) in any
material respect (other than with respect to any dilution of the
Holders' interest in the new entity);
(B) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor
the Successor Entity will be required to register as an Investment
Company under the 1940 Act;
(C) following such merger, consolidation, amalgamation or
replacement, the Trust (or the Successor Entity) will not be
classified as an association or a publicly traded partnership
taxable as a corporation for United States federal income tax
purposes; and
(D) following such merger, consolidation, amalgamation or
replacement, the Partnership will not be classified as an
association or a publicly traded partnership taxable as a
corporation for United States federal income tax purposes.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except
with the consent of Holders of 100% in liquidation amount of the Trust Preferred
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or Successor Entity or the Partnership to be
classified as an association or a publicly traded partnership taxable as a
corporation for United States federal income tax purposes.
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ARTICLE IV
SPONSOR
SECTION 4.1 Responsibilities of the Sponsor.
In connection with the issue and sale of the Trust Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 in relation to the Trust Preferred
Securities, including any amendments thereto;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Trust Preferred Securities
and to do any and all such acts, other than actions which must be taken by
the Trust, and advise the Trust of actions it must take, and prepare for
execution and filing any documents to be executed and filed by the Trust,
as the Sponsor deems necessary or advisable in order to comply with the
applicable laws of any such States;
(c) to prepare for filing by the Trust an application to the New
York Stock Exchange or any other national stock exchange or the Nasdaq
National Market System for listing upon notice of issuance of any Trust
Preferred Securities, Partnership Preferred Securities, the Trust
Preferred Securities Guarantee and the Partnership Guarantee;
(d) to prepare for filing by the Trust with the Commission a
registration statement relating to the registration of the Trust Preferred
Securities, the Partnership Preferred Securities, the Trust Preferred
Securities Guarantee, and the Partnership Guarantee under Section 12(b) of
the Exchange Act, including any amendments thereto; and
(e) to negotiate the terms of an underwriting agreement and any
pricing agreement providing for the sale of the Trust Preferred
Securities.
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SECTION 4.2 Indemnification and Expenses of the Trustee
The Partnership agrees, and to the extent the Partnership fails to
do so, the Sponsor agrees to indemnify the Property Trustee and the Delaware
Trustee for, and to hold each of them harmless against, any loss, liability or
expense incurred without negligence or bad faith on the part of the Property
Trustee or the Delaware Trustee, as the case may be, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending either of them against
any claim or liability in connection with the exercise or performance of any of
their respective powers or duties hereunder; the provisions of this Section 4.2
shall survive the resignation or removal of the Delaware Trustee or the Property
Trustee or the termination of this Declaration.
ARTICLE V
TRUST COMMON SECURITIES HOLDER
SECTION 5.1 Company's Purchase of Trust Common Securities.
On the Closing Date the Company will purchase all of the Trust
Common Securities issued by the Trust, for an amount at least equal to 3% of the
capital of the Trust, at the same time as the Trust Preferred Securities are
sold.
SECTION 5.2 Covenants of the Trust Common Securities Holder.
For so long as the Trust Preferred Securities remain outstanding,
the Company will covenant (i) to maintain directly 100 percent ownership of the
Trust Common Securities, (ii) to cause the Trust to remain a statutory business
trust and not to voluntarily dissolve, wind up, liquidate, or be terminated,
except as permitted by this Declaration, (iii) to use its commercially
reasonable efforts to ensure that the Trust will not be an investment company
for purposes of the 1940 Act, and (iv) to take no action which would be
reasonably likely to cause the Trust to be classified as an association or a
publicly traded partnership taxable as a corporation for United States federal
income tax purposes.
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ARTICLE VI
TRUSTEES
SECTION 6.1 Number of Trustees.
The number of Trustees initially shall be four (4), and:
(a) at any time before the issuance of any Trust Securities, the
Sponsor may, by written instrument, increase or decrease the number of
Trustees; and
(b) after the issuance of any Trust Securities, the number of
Trustees may be increased or decreased by vote of the Holders of a
Majority in liquidation amount of the Trust Common Securities voting as a
class at a meeting of the Holders of the Trust Common Securities;
provided, however, that the number of Trustees shall in no event be less
than three (3); provided, further, that (1) if required by the Business
Trust Act, one Trustee is the Delaware Trustee; (2) there shall be at
least one Trustee who is an employee or officer of, or is affiliated with
the Company (each, a "Regular Trustee"); and (3) one Trustee shall be the
Property Trustee for so long as this Declaration is required to qualify as
an indenture under the Trust Indenture Act, and such Property Trustee may
also serve as Delaware Trustee if it meets the applicable requirements.
SECTION 6.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place
of business in the State of Delaware, and otherwise meets the requirements
of applicable law,
provided, that if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee may also be the Delaware Trustee (in which case
Section 3.11 shall have no application).
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SECTION 6.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee (the "Property Trustee")
which shall act as Property Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers, having
a combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by Federal,
State, Territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to
the requirements of the supervising or examining authority referred to
above, then for the purposes of this Section 6.3(a)(ii), the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Property Trustee shall cease to be eligible
to so act under Section 6.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 6.7(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Trust Common Securities (as if it were
the obligor referred to in Section 310(b) of the Trust Indenture Act) shall in
all respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
(d) The Trust Guarantee shall be deemed to be specifically described
in this Declaration for purposes of clause (i) of the first provision contained
in Section 310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be:
The Chase Manhattan Bank
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SECTION 6.4 Qualifications of Regular Trustees and Delaware Trustee Generally.
Each Regular Trustee and the Delaware Trustee (unless the Property
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.
SECTION 6.5 Regular Trustees.
The initial Regular Trustees shall be:
Theresa Lang
Stanley Schaefer
(a) Except as expressly set forth in this Declaration and except if
a meeting of the Regular Trustees is called with respect to any matter over
which the Regular Trustees have power to act, any power of the Regular Trustees
may be exercised by, or with the consent of, any one such Regular Trustee.
(b) Unless otherwise determined by the Regular Trustees, and except
as otherwise required by the Business Trust Act or applicable law, any Regular
Trustee is authorized to execute on behalf of the Trust any documents which the
Regular Trustees have the power and authority to cause the Trust to execute
pursuant to Section 3.6, provided, that the registration statement referred to
in Section 3.6(b)(i), including any amendments thereto, shall be signed by or on
behalf of a majority of the Regular Trustees.
SECTION 6.6 Delaware Trustee.
The initial Delaware Trustee shall be:
Chase Manhattan Bank Delaware
SECTION 6.7 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 6.7(b), Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of any Trust Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of any Trust Securities, by vote of the
Holders of a Majority in liquidation amount of
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the Trust Common Securities voting as a class at a meeting of the Holders
of the Trust Common Securities.
(b)(i) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 6.7(a) until a successor Trustee possessing
the qualifications to act as Property Trustee under Section 6.3 (a "Successor
Property Trustee") has been appointed and has accepted such appointment by
written instrument executed by such Successor Property Trustee and delivered to
the Regular Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed
in accordance with Section 6.7(a) until a successor Trustee possessing the
qualifications to act as Delaware Trustee under Sections 6.2 and 6.4 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware
Trustee and delivered to the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided, however,
that:
(i) No such resignation of the Trustee that acts as the Property
Trustee shall be effective:
(A) until a Successor Property Trustee has been appointed
and has accepted such appointment by instrument executed by such
Successor Property Trustee and delivered to the Trust, the Sponsor
and the resigning Property Trustee; or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the Holders of
the Trust Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust, the Sponsor and the
resigning Delaware Trustee.
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(d) The Holders of the Trust Common Securities shall use their best
efforts to promptly appoint a Successor Delaware Trustee or Successor Property
Trustee, as the case may be, if the Property Trustee or the Delaware Trustee
delivers an instrument of resignation in accordance with this Section 6.7.
(e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
6.7 within 60 days after delivery to the Sponsor and the Trust of an instrument
of resignation, the resigning Property Trustee or Delaware Trustee, as
applicable, may petition any court of competent jurisdiction for appointment of
a Successor Property Trustee or Successor Delaware Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper and
prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or successor Delaware
Trustee, as the case may be.
SECTION 6.8 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 6.1, or if the number of Trustees is
increased pursuant to Section 6.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 6.7.
SECTION 6.9 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul the Trust. Whenever a vacancy in the number
of Regular Trustees shall occur, until such vacancy is filled by the appointment
of a Regular Trustee in accordance with Section 6.7, the Regular Trustees in
office, regardless of their number, shall have all the powers granted to the
Regular Trustees and shall discharge all the duties imposed upon the Regular
Trustees by this Declaration.
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SECTION 6.10 Meetings.
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees or any committee thereof shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 24 hours before a meeting. Notices shall contain a brief statement of
the time, place and anticipated purposes of the meeting. The presence (whether
in person or by telephone) of a Regular Trustee at a meeting shall constitute a
waiver of notice of such meeting except where a Regular Trustee attends a
meeting for the express purpose of objecting to the transaction of any activity
on the ground that the meeting has not been lawfully called or convened. Unless
provided otherwise in this Declaration, any action of the Regular Trustees may
be taken at a meeting by vote of a majority of the Regular Trustees present
(whether in person or by telephone) and eligible to vote with respect to such
matter; provided, that a Quorum is present, or without a meeting by the
unanimous written consent of the Regular Trustees. Notwithstanding the
foregoing, any and all actions of the Regular Trustees may be taken by the
unanimous written consent of all Regular Trustees.
SECTION 6.11 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and
(b) the Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or otherwise as the Regular Trustees may deem
expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.
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Section 6.12 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Property Trustee or the Delaware Trustee,
as the case may be, may be merged or converted or with which either may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Property Trustee or the Delaware Trustee, as the case
may be, shall be a party, or any corporation succeeding to all or substantially
all the corporate trust business of the Property Trustee or the Delaware
Trustee, as the case may be, shall be the successor of the Property Trustee or
the Delaware Trustee, as the case may be, hereunder; provided, that such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto.
ARTICLE VII
DISTRIBUTIONS
SECTION 7.1 Distributions.
(a) Holders of Trust Securities shall be entitled to receive
cumulative cash distributions at the rate per annum of 7 3/4% of the stated
liquidation amount of $25 per Trust Security, calculated on the basis of a
360-day year consisting of twelve 30-day months. For any period shorter than a
full 90-day quarter, distributions will be computed on the basis of the actual
number of days elapsed in such 90-day quarter. Distributions shall be made on
the Trust Preferred Securities and the Trust Common Securities on a Pro Rata
basis. Distributions on the Trust Securities shall, from the date of original
issue, accumulate and be cumulative and shall be payable quarterly only to the
extent that the Trust has funds available for the payment of such Distributions
in the Property Account. Distributions not paid on the scheduled payment date
will accumulate and compound quarterly at the rate of 7 3/4% per annum
("Compounded Distributions"). "Distributions" shall mean ordinary cumulative
distributions in respect of each Fiscal Period together with any Compounded
Distributions. If and to the extent that the Partnership makes a distribution on
the Partnership Preferred Securities held by the Property Trustee or the Company
makes a payment under the Partnership Guarantee (the amount of any such
partnership distribution, including any compounded partnership distributions, or
guarantee payment being a "Payment Amount"), the Trust shall and the Property
Trustee is directed, to the extent funds are available for that purpose, to make
a Pro Rata Distribution of the Payment Amount to Holders.
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(b) Distributions on the Trust Securities will be cumulative, will
accumulate from the date of initial issuance and will be payable quarterly in
arrears on each March 30, June 30, September 30 and December 30, commencing
December 30, 1996, when, as and if available for payment, by the Property
Trustee, except as otherwise described below. If Distributions are not paid when
scheduled, the accumulated Distributions shall be paid to the Holders of record
of Trust Securities as they appear on the books and records of the Trust on the
record date as determined under Section 7.1(d) below.
(c) Amounts available to the Trust for distribution to the Holders
of the Trust Securities will be limited to payments received by the Trust from
the Partnership on the Partnership Preferred Securities or from the Company on
the Partnership Guarantees paid by the Company to the Trust. If the Property
Trustee, as the holder of the Partnership Preferred Securities for the benefit
of the Holders of the Trust Securities, receives notice of any determination by
the Partnership not to pay distributions on such Partnership Preferred
Securities, the Property Trustee shall give notice of such determination to the
Holders.
(d) Distributions on the Trust Securities will be payable to the
Holders thereof as they appear on the books and records of the Trust on the
relevant record dates, which relevant record dates, as long as the Trust
Preferred Securities remain in book-entry only form, will be one Business Day
prior to the relevant payment dates. Such distributions will be paid through the
Property Trustee who will hold amounts received in respect of the Partnership
Preferred Securities in the Property Account for the benefit of the Holders of
the Trust Securities. In the event that the Trust Preferred Securities do not
remain in book-entry only form, the relevant record dates shall be the 15th day
of the month of the relevant payment dates. In the event that any date on which
distributions are payable on the Trust Securities is not a Business Day, payment
of the distribution payable on such date will be made on the next succeeding day
which is a Business Day (without any interest or other payment in respect of any
such delay) except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
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ARTICLE VIII
ISSUANCE OF TRUST SECURITIES
SECTION 8.1 Designation and General Provisions Regarding Trust Securities.
(a) The Regular Trustees shall on behalf of the Trust issue one
class of preferred securities representing undivided beneficial ownership
interests in the assets of the Trust and one class of common securities
representing undivided beneficial ownership interests in the assets of the Trust
as follows:
(i) Trust Preferred Securities. 11,000,000 Trust Preferred
Securities of the Trust with an aggregate liquidation amount with respect
to the assets of the Trust of two hundred seventy-five million dollars
($275,000,000) and a liquidation amount with respect to the assets of the
Trust of $25 per preferred security, are hereby designated for the purpose
of identification only as 7 3/4% Trust Originated Preferred SecuritiesSM1
(the "Trust Preferred Securities"). The Trust Preferred Security
Certificates evidencing the Trust Preferred Securities shall be
substantially in the form of Exhibit A-1 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice or to conform to the rules of any stock
exchange on which the Trust Preferred Securities are listed.
(ii) Trust Common Securities. 340,208 Trust Common Securities of the
Trust with an aggregate liquidation amount with respect to the assets of
the Trust of eight million five hundred five thousand two hundred dollars
($8,505,200) and a liquidation amount with respect to the assets of the
Trust of $25 per common security, are hereby designated for the purposes
of identification only as 7 3/4% Trust Common Securities (the "Trust
Common Securities" and, together with the Trust Preferred Securities, the
"Trust Securities"). The Trust Common Security Certificates evidencing the
Trust Common Securities shall be substantially in the form of Exhibit A-2
to the Declaration, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice.
- ----------
1 "Trust Originated Preferred Securities" and "TOPrS" are service
marks of Merrill Lynch & Co., Inc.
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(b) Except as provided in Section 9.2(b) of this Declaration, the
Trust Preferred Securities rank pari passu and payment thereon shall be made Pro
Rata with the Trust Common Securities. The Trust shall issue no securities or
other interests in the assets of the Trust other than the Trust Preferred
Securities and the Trust Common Securities.
(c) Any Regular Trustee shall sign the Trust Securities for the
Trust by manual or facsimile signature. In case any Regular Trustee of the Trust
who shall have signed any of the Trust Securities shall cease to be a Regular
Trustee before the Certificates so signed shall be delivered by the Trust, such
Certificates nevertheless may be delivered as though the person who signed such
Certificates had not ceased to be such Regular Trustee; and any Certificate may
be signed on behalf of the Trust by such persons who, at the actual date of
execution of such Trust Security, shall be the Regular Trustees of the Trust,
although at the date of the execution and delivery of the Declaration any such
person was not such a Regular Trustee. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution thereof, and
may have such letters, numbers or other marks of identification or designation
and such legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule or regulation of
any stock exchange on which Trust Securities may be listed, or to conform to
usage.
A Trust Security shall not be valid until authenticated by the
manual signature of an authorized officer of the Property Trustee. Such
signature shall be conclusive evidence that the Trust Security has been
authenticated under this Declaration.
Upon a written order of the Trust signed by one Regular Trustee, the
Property Trustee shall authenticate the Trust Securities for original issue. The
aggregate number of Trust Securities outstanding at any time shall not exceed
the number set forth in the Terms of the Trust Securities.
The Property Trustee may appoint an authenticating agent acceptable
to the Trust to authenticate Trust Securities. An authenticating agent may
authenticate Trust Preferred Securities whenever the Property Trustee may do so.
Each reference in this Declaration to authentication by the Property Trustee
includes authentication by such agent. An authenticating agent has the same
rights as the Property Trustee to deal with the Sponsor or an Affiliate of the
Sponsor.
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(d) The consideration received by the Trust for the issuance of the
Trust Securities shall constitute a contribution to the capital of the Trust and
shall not constitute a loan to the Trust.
(e) Upon issuance of the Trust Securities as provided in this
Declaration, the Trust Securities so issued shall be deemed to be validly
issued, fully paid and non-assessable, subject to Section 11.1 with respect to
the Trust Common Securities.
(f) Every Person, by virtue of having become a Holder or a Trust
Preferred Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the terms
of, and shall be bound by, this Declaration.
SECTION 8.2 Redemption of Trust Securities.
(a) Upon a purchase of the Partnership Preferred Securities by the
Partnership upon redemption or otherwise, the proceeds from such purchase shall
be simultaneously applied Pro Rata to redeem Trust Securities having an
aggregate liquidation amount equal to the Partnership Preferred Securities so
purchased or redeemed at an amount equal to $25 per Partnership Preferred
Security plus an amount equal to accumulated and unpaid Distributions, including
any Compounded Distributions thereon through the date of the redemption or such
lesser amount as shall be received by the Trust in respect of the Partnership
Preferred Securities so purchased or redeemed (the "Redemption Price"). Holders
will be given not less than 30 nor more than 60 days notice of such redemption.
(b) If fewer than all the outstanding Trust Securities are to be so
redeemed, the Trust Common Securities and the Trust Preferred Securities will be
redeemed Pro Rata and the Trust Preferred Securities to be redeemed will be
redeemed as described in Section 8.3 below; provided, that fewer than all of the
outstanding Trust Preferred Securities may not be redeemed unless all
accumulated and unpaid Distributions have been paid on all Trust Preferred
Securities for all quarterly distribution periods terminating on or prior to the
date of redemption.
(c) If, at any time, a Trust Special Event shall occur and be
continuing, the Regular Trustees shall, unless the Partnership Preferred
Securities are redeemed in the limited circumstances described below, within 90
days following the occurrence of such Trust Special Event elect to either (i)
dissolve the Trust upon not less than 30 nor more than 60 days
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notice with the result that, after satisfaction of creditors, if any, of the
Trust, Partnership Preferred Securities would be distributed on a Pro Rata basis
to the Holders of the Trust Preferred Securities and the Trust Common Securities
in liquidation of such Holders' interests in the Trust; provided, however, that
if at the time there is available to the Trust the opportunity to eliminate,
within such 90-day period, the Trust Special Event by taking some ministerial
action, such as filing a form or making an election, or pursuing some other
similar reasonable measure which in the sole judgment of the Sponsor has or will
cause no adverse effect on the Trust, the Partnership, the Sponsor or the
Holders of the Trust Securities and will involve no material cost, the Trust
will pursue such measure in lieu of dissolution or (ii) cause the Trust
Preferred Securities to remain outstanding; provided, that in the case of this
clause (ii), the Sponsor shall pay any and all expenses incurred by or payable
by the Trust attributable to the Trust Special Event. Furthermore, if in the
case of the occurrence of a Trust Tax Event, the Regular Trustees have received
a Trust Redemption Tax Opinion, then the General Partner shall have the right,
within 90 days following the occurrence of such Trust Tax Event, to elect to
cause the Partnership to redeem the Partnership Preferred Securities in whole
(but not in part) for cash upon not less than 30 nor more than 60 days notice
and promptly following such redemption, the Trust Securities will be redeemed by
the Trust at the Redemption Price.
(d) If the Partnership Preferred Securities are distributed to the
Holders of the Trust Preferred Securities, the Sponsor will use its best efforts
to cause the Partnership Preferred Securities to be listed on the New York Stock
Exchange or on such other national securities exchange or similar organization
as the Trust Preferred Securities are then listed or quoted.
(e) On the date fixed for any distribution of Partnership Preferred
Securities, upon dissolution of the Trust, (i) the Trust Preferred Securities
and the Trust Common Securities will no longer be deemed to be outstanding and
(ii) certificates representing Trust Securities will be deemed to represent the
Partnership Preferred Securities having a liquidation preference equal to the
stated liquidation amount of such Trust Securities until such certificates are
presented to the Sponsor or its agent for transfer or reissuance.
SECTION 8.3 Redemption Procedures.
(a) Notice of any redemption of, or notice of distribution of
Partnership Preferred Securities in exchange for,
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the Trust Securities (a "Redemption/Distribution Notice") will be given by the
Trust by mail to each Holder of Trust Securities to be redeemed or exchanged not
fewer than 30 nor more than 60 days before the date fixed for redemption or
exchange thereof which, in the case of a redemption, will be the date fixed for
redemption of the Partnership Preferred Securities. For purposes of the
calculation of the date of redemption or exchange and the dates on which notices
are given pursuant to this Section 8.3, a Redemption/ Distribution Notice shall
be deemed to be given on the day such notice is first mailed by first-class
mail, postage prepaid, to Holders of Trust Securities. Each
Redemption/Distribution Notice shall be addressed to the Holders of Trust
Securities at the address of each such Holder appearing in the books and records
of the Trust. No defect in the Redemption/Distribution Notice or in the mailing
of either thereof with respect to any Holder shall affect the validity of the
redemption or exchange proceedings with respect to any other Holder.
(b) In the event that fewer than all the outstanding Trust
Securities are to be redeemed, the Trust Securities to be redeemed shall be
redeemed Pro Rata from each Holder of Trust Securities, provided, that in
respect of Preferred Securities registered in the name of and held of record by
DTC or its nominee (or any successor Clearing Agency or its nominee) or any
nominee, the distribution of the proceeds of such redemption will be made to
each Clearing Agency Participant (or Person on whose behalf such nominee holds
such securities) in accordance with the procedures applied by such agency or
nominee. In the event that the Trust Securities do not remain in book-entry only
form and fewer than all of the outstanding Trust Securities are to be redeemed,
the Trust Securities shall be redeemed Pro Rata or pursuant to the rules of any
securities exchange on which the Trust Securities are listed.
(c) If Trust Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued if the
Partnership Preferred Securities are redeemed as set out in this Section 8.3
(which notice will be irrevocable), then (A) while the Trust Preferred
Securities are in book-entry only form, by 12:00 noon, New York City time, on
the redemption date, the Property Trustee will deposit irrevocably with the DTC
or its nominee (or successor Clearing Agency or its nominee) funds sufficient to
pay the applicable Redemption Price with respect to the Trust Preferred
Securities and will give the DTC irrevocable instructions and authority to pay
the Redemption Price to the Holders of the Trust Preferred Securities, and (B)
with respect to Trust Preferred Securities issued in definitive form and Trust
Common Securities, the Property Trustee will pay the relevant Redemption Price
to the Holders of
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such Trust Securities by check mailed to the address of the relevant Holder
appearing on the books and records of the Trust on the redemption date. If a
Redemption/Distribution Notice shall have been given and funds deposited as
required, if applicable, then immediately prior to the close of business on the
date of such deposit, or on the redemption date, as applicable, distributions
will cease to accumulate on the Trust Securities so called for redemption and
all rights of Holders of such Trust Securities will cease, except the right of
the Holders of such Trust Securities to receive the Redemption Price, but
without interest on such Redemption Price. If any date fixed for redemption of
Trust Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of the amount payable
subject to such delay) except that, if such Business Day falls in the next
calendar year, such payment will be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such date fixed
for redemption. If payment of the Redemption Price in respect of any Trust
Securities is improperly withheld or refused and not paid either by the Property
Trustee or by the Sponsor as guarantor pursuant to the relevant Trust Guarantee,
Distributions on such Trust Securities will continue to accumulate at the then
applicable rate from the original redemption date to the actual date of payment,
in which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the Redemption Price. For these purposes,
the applicable Redemption Price shall not include Distributions which are being
paid to Holders who were Holders on a relevant record date. Upon satisfaction of
the foregoing conditions, then immediately prior to the close of business on the
date of such deposit or payment, all rights of Holders of such Trust Preferred
Securities so called for redemption will cease, except the right of the Holders
to have received the Redemption Price, but without interest on such Redemption
Price, and from and after the date fixed for redemption, such Trust Preferred
Securities will not accumulate distributions or bear interest.
Neither the Regular Trustees nor the Trust shall be required to
register or cause to be registered the transfer of any Trust Securities that
have been called for redemption.
(d) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), the Company or its
subsidiaries may at any time and from time to time purchase outstanding Trust
Preferred Securities by tender, in the open market or by private agreement.
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SECTION 8.4 Voting Rights of Trust Preferred Securities.
(a) Except as provided under Sections 6.1(b) and this Article VIII
and as otherwise required by the Business Trust Act, the Trust Indenture Act and
other applicable law, the Holders of the Trust Preferred Securities will have no
voting rights.
(b) Subject to the requirement of the Property Trustee obtaining a
tax opinion in certain circumstances set forth in Section 8.4(d) below, the
Holders of a Majority in liquidation amount of the Trust Preferred Securities
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Property Trustee, or direct the exercise of any
trust or power conferred upon the Property Trustee under the Declaration,
including the right to direct the Property Trustee, as Holder of the Partnership
Preferred Securities, to (i) exercise the remedies available to it under the
Limited Partnership Agreement as a Holder of the Partnership Preferred
Securities, including the right to direct the Special Representative of the
Partnership as elected by the Holders of the Partnership Preferred Securities in
accordance with the Limited Partnership Agreement (A) to enforce the
Partnership's creditors rights and other rights with respect to the Affiliate
Investment Instruments and any Investment Guarantees, (B) to enforce the rights
of the Holders of the Partnership Preferred Securities under the Partnership
Guarantee, and (C) to enforce the rights of the Holders of the Partnership
Preferred Securities to receive distributions (if and to the extent such
distributions have been declared out of funds legally available therefor by the
General Partner in its sole discretion) on the Partnership Preferred Securities
or (ii) consent to any amendment, modification, or termination of the Limited
Partnership Agreement or the Partnership Preferred Securities where such consent
shall be required; provided, however, that where a consent or action under the
Limited Partnership Agreement would require the consent or act of the Holders of
more than a majority of the aggregate liquidation preference of Partnership
Preferred Securities affected thereby, only the Holders of the percentage of the
aggregate stated liquidation amount of the Trust Preferred Securities which is
at least equal to the percentage of aggregate liquidation preference required
under the Limited Partnership Agreement may direct the Property Trustee to give
such consent or take such action.
(c) If the Property Trustee fails to enforce its rights under the
Partnership Preferred Securities after a Holder of record of Trust Preferred
Securities has made a written request, such Holder of record of Trust Preferred
Securities may institute a legal proceeding directly against the General Partner
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or the Special Representative, to enforce the Property Trustee's rights under
the Limited Partnership Agreement without first instituting any legal proceeding
against the Property Trustee or any other person or entity. Notwithstanding the
foregoing, if a Trust Enforcement Event has occurred and is continuing and such
event is attributable to the failure of an Investment Affiliate to make any
required payment when due on any Affiliate Investment Instrument, then a Holder
of Trust Preferred Securities may directly institute a proceeding against such
Investment Affiliate for enforcement of payment with respect to such Affiliate
Investment Instrument.
(d) The Property Trustee shall notify all Holders of the Trust
Preferred Securities of any notice of any Partnership Enforcement Event received
from the General Partner with respect to the Partnership Preferred Securities
and the Affiliate Investment Instruments. Such notice shall state that such
Partnership Enforcement Event also constitutes a Trust Enforcement Event. Except
with respect to directing the time, method, and place of conducting a proceeding
for a remedy, the Property Trustee shall be under no obligation to take any of
the actions described in clause 8.4(b)(i) and (ii) above unless the Property
Trustee has obtained an opinion of independent tax counsel to the effect that as
a result of such action, the Trust will not fail to be classified as a grantor
trust for United States federal income tax purposes and that after such action
each Holder will continue to be treated as owning an undivided beneficial
ownership interest in the Partnership Preferred Securities.
(e) In the event the consent of the Property Trustee, as the Holder
of the Partnership Preferred Securities, is required under the Limited
Partnership Agreement with respect to any amendment, modification or termination
of the Limited Partnership Agreement, the Property Trustee shall request the
direction of the Holders of the Trust Securities with respect to such amendment,
modification or termination and shall vote with respect to such amendment,
modification or termination as directed by a Majority in liquidation amount of
the Trust Securities voting together as a single class; provided, however, that
where a consent under the Limited Partnership Agreement would require the
consent of the Holders of more than a majority of the aggregate liquidation
preference of the Partnership Preferred Securities, the Property Trustee may
only give such consent at the direction of the Holders of at least the same
proportion in aggregate stated liquidation amount of the Trust Securities. The
Property Trustee shall not take any such action in accordance with the
directions of the Holders of the Trust Securities unless the Property Trustee
has obtained an opinion of tax counsel to the effect that, as a result of such
action, the Trust will not
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be classified as other than a grantor trust for United States federal income tax
purposes.
(f) A waiver of a Partnership Enforcement Event with respect to the
Partnership Preferred Securities will constitute a waiver of the corresponding
Trust Enforcement Event.
(g) Any required approval or direction of Holders of Trust Preferred
Securities may be given at a separate meeting of Holders of Trust Preferred
Securities convened for such purpose, at a meeting of all of the Holders of
Trust Securities or pursuant to written consent. The Regular Trustees will cause
a notice of any meeting at which Holders of Trust Preferred Securities are
entitled to vote, or of any matter upon which action by written consent of such
Holders is to be taken, to be mailed to each Holder of record of Trust Preferred
Securities. Each such notice will include a statement setting forth the
following information: (i) the date of such meeting or the date by which such
action is to be taken; (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to vote or of such
matter upon which written consent is sought; and (iii) instructions for the
delivery of proxies or consents.
(h) No vote or consent of the Holders of Trust Preferred Securities
will be required for the Trust to redeem and cancel Trust Preferred Securities
or distribute Partnership Preferred Securities in accordance with the
Declaration.
(i) Notwithstanding that Holders of Trust Preferred Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Trust Securities that are beneficially owned at such time by the Company
or any entity directly or indirectly controlled by, or under direct or indirect
common control with, the Company, shall not be entitled to vote or consent and
shall, for purposes of such vote or consent, be treated as if such Trust
Securities were not outstanding, except for Trust Preferred Securities purchased
or acquired by the Company or its affiliates in connection with transactions
effected by or for the account of customers of the Company or any of its
subsidiaries or in connection with the distribution or trading of such Trust
Securities; provided, however, that persons (other than affiliates of the
Company) to whom the Company or any of its subsidiaries have pledged Trust
Preferred Securities may vote or consent with respect to such pledged Trust
Preferred Securities pursuant to the terms of such pledge.
(j) Holders of the Trust Preferred Securities will have no rights to
appoint or remove the Regular Trustees, who may
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be appointed, removed or replaced solely by the Company, as the Holder of all of
the Trust Common Securities.
SECTION 8.5 Voting Rights of Trust Common Securities.
(a) Except as provided under this Section 8.5 or as otherwise
required by the Business Trust Act, the Trust Indenture Act or other applicable
law or provided by the Declaration, the Holders of the Trust Common Securities
will have no voting rights.
(b) The Holders of the Trust Common Securities are entitled, in
accordance with Article V of the Declaration, to vote to appoint, remove or
replace any Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after all
Trust Enforcement Events with respect to the Trust Preferred Securities have
been cured, waived, or otherwise eliminated and subject to the requirement of
the Property Trustee obtaining a tax opinion in certain circumstances set forth
in this paragraph (c), the Holders of a Majority in liquidation amount of the
Trust Common Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee, or
direct the exercise of any trust or power conferred upon the Property Trustee
under the Declaration, including the right to direct the Property Trustee, as
Holder of the Partnership Preferred Securities, to (i) exercise the remedies
available to it under the Limited Partnership Agreement as a Holder of the
Partnership Preferred Securities, including the right to direct the Special
Representative of the Partnership as elected by the Holders of the Partnership
Preferred Securities in accordance with the Limited Partnership Agreement (A) to
enforce the Partnership's creditors rights and other rights with respect to the
Affiliate Investment Instruments and any Investment Guarantees, (B) to enforce
the rights of the Holders of the Partnership Preferred Securities under the
Partnership Guarantee, and (C) to enforce the rights of the Holders of the
Partnership Preferred Securities to receive distributions (if and to the extent
such distributions have been declared out of funds legally available therefor by
the General Partner in its sole discretion) on the Partnership Preferred
Securities or (ii) consent to any amendment, modification, or termination of the
Limited Partnership Agreement or the Partnership Preferred Securities where such
consent shall be required; provided, however, that where a consent or action
under the Limited Partnership Agreement would require the consent or act of the
Holders of more than a majority of the aggregate liquidation preference of
Partnership Preferred Securities affected thereby, only the Holders
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of the percentage of the aggregate stated liquidation amount of the Trust Common
Securities which is at least equal to the percentage required under the Limited
Partnership Agreement may direct the Property Trustee to give such consent or
take such action. Except with respect to directing the time, method, and place
of conducting a proceeding for a remedy, the Property Trustee shall be under no
obligation to take any of the actions described in clause 8.5(c)(i) and (ii)
above unless the Property Trustee has obtained an opinion of independent tax
counsel to the effect that, as a result of such action, for United States
federal income tax purposes the Trust will not fail to be classified as a
grantor trust and each Holder will be treated as owning an undivided beneficial
ownership interest in the Partnership Preferred Securities.
(d) If the Property Trustee fails to enforce its rights under the
Partnership Preferred Securities after a Holder of record of Trust Common
Securities has made a written request, such Holder of record of Trust Common
Securities may directly institute a legal proceeding directly against the
Company, as General Partner of the Partnership or the Special Representative, to
enforce the Property Trustee's rights under the Partnership Preferred Securities
without first instituting any legal proceeding against the Property Trustee or
any other person or entity. Notwithstanding the foregoing, if a Trust
Enforcement Event has occurred and is continuing and such event is attributable
to the failure of an Investment Affiliate to make any required payment when due
on any Affiliate Investment Instrument, then a Holder of Trust Common Securities
may directly institute a proceeding against such Investment Affiliate for
enforcement of payment with respect to such Affiliate Investment Instrument.
(e) A waiver of a Partnership Enforcement Event with respect to the
Partnership Preferred Securities will constitute a waiver of the corresponding
Trust Enforcement Event.
(f) Any required approval or direction of Holders of Trust Common
Securities may be given at a separate meeting of Holders of Trust Common
Securities convened for such purpose, at a meeting of all of the Holders of
Trust Securities or pursuant to written consent. The Regular Trustees will cause
a notice of any meeting at which Holders of Trust Common Securities are entitled
to vote, or of any matter upon which action by written consent of such Holders
is to be taken, to be mailed to each Holder of record of Trust Common
Securities. Each such notice will include a statement setting forth the
following information: (i) the date of such meeting or the date by which such
action is to be taken; (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to
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vote or of such matter upon which written consent is sought; and (iii)
instructions for the delivery of proxies or consents.
(g) No vote or consent of the Holders of the Trust Common Securities
shall be required for the Trust to redeem and cancel Trust Common Securities or
to distribute Partnership Preferred Securities in accordance with the
Declaration and the terms of the Trust Securities.
SECTION 8.6 Paying Agent.
In the event that the Trust Preferred Securities are not in
book-entry only form, the Trust shall maintain in the Borough of Manhattan, City
of New York, State of New York, an office or agency where the Trust Preferred
Securities may be presented for payment ("Paying Agent"). The Trust may appoint
the Paying Agent and may appoint one or more additional paying agents in such
other locations as it shall determine. The term "Paying Agent" includes any
additional paying agent. The Trust may change any Paying Agent without prior
notice to any Holder. The Trust shall notify the Property Trustee of the name
and address of any Paying Agent not a party to this Declaration. If the Trust
fails to appoint or maintain another entity as Paying Agent, the Property
Trustee shall act as such. The Trust or any of its Affiliates may act as Paying
Agent. The Chase Manhattan Bank shall initially act as Paying Agent for the
Trust Preferred Securities and the Trust Common Securities.
SECTION 8.7 Listing
The Sponsor shall use its best efforts to cause the Trust Preferred
Securities to be listed for quotation on the New York Stock Exchange.
SECTION 8.8 Acceptance of Guarantee and Agreements, Limited Partnership
Agreement.
Each Holder of Trust Preferred Securities and Trust Common
Securities, by the acceptance thereof, agrees to the provisions of the
applicable Trust Guarantee, the Partnership Guarantee, and the Investment
Guarantee, respectively, including the subordination provisions therein.
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ARTICLE IX
TERMINATION AND LIQUIDATION OF THE TRUST
SECTION 9.1 Termination of Trust.
(a) The Trust shall terminate:
(i) upon the bankruptcy of the Holder of Trust Common Securities or
the Sponsor;
(ii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Sponsor, the filing of a certificate of
cancellation with respect to the Trust after having obtained the consent
of at least a Majority in Liquidation Amount of the Trust Securities,
voting together as a single class, to file such certificate of
cancellation, or the revocation of the Sponsor's charter and the
expiration of 90 days after the date of revocation without a reinstatement
thereof;
(iii) upon the entry of a decree of judicial dissolution of the
Sponsor or the Trust;
(iv) when all of the Trust Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the Trust
Securities;
(v) upon the election of the Regular Trustees, following the
occurrence and continuation of a Trust Special Event, pursuant to which
the Trust shall have been dissolved in accordance with the terms of the
Trust Securities and all of the Partnership Preferred Securities shall
have been distributed to the Holders of Trust Securities in exchange for
all of the Trust Securities; or
(vi) before the issuance of any Trust Securities, with the consent
of all of the Regular Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 9.1(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article XI shall survive the
termination of the Trust.
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SECTION 9.2 Liquidation Distribution Upon Termination and Dissolution of the
Trust.
(a) In the event of any voluntary or involuntary liquidation,
dissolution, winding-up or termination of the Trust (each a "Trust
Liquidation"), the Holders of the Trust Preferred Securities on the date of the
Trust Liquidation will be entitled to receive, out of the assets of the Trust
available for distribution to Holders of Trust Securities after satisfaction of
the Trusts' liabilities and creditors, distributions in cash or other
immediately available funds in an amount equal to the aggregate of the stated
liquidation amount of $25 per Trust Security plus accumulated and unpaid
Distributions thereon to the date of payment (such amount being the "Trust
Liquidation Distribution"), unless, in connection with such Trust Liquidation,
Partnership Preferred Securities shall be distributed on a Pro Rata basis to the
Holders of the Trust Securities in exchange for such Trust Securities.
(b) If, upon any such Trust Liquidation, the Trust Liquidation
Distribution can be paid only in part because the Trust has insufficient assets
available to pay in full the aggregate Trust Liquidation Distribution, then the
amounts payable directly by the Trust on the Trust Securities shall be paid on a
Pro Rata basis. The Holders of the Trust Common Securities will be entitled to
receive distributions upon any such Trust Liquidation Pro Rata with the Holders
of the Trust Preferred Securities except that if the Company is in default on
any of its obligations under the Trust Preferred Securities Guarantee, the
Partnership Guarantee, or any Investment Guarantee, or any Investment Event of
Default has occurred and is continuing with respect to an Affiliate Investment
Instrument, the Trust Preferred Securities shall have a preference over the
Trust Common Securities with regard to such distributions as provided below.
Such preference is effectuated by the Holder of the Trust Common Securities
hereby agreeing to provide limited recourse guarantees as follows: (i) to the
Holders of the Trust Preferred Securities, of the Company's obligations under
the Trust Preferred Securities Guarantee; (ii) to the Trust and the Holders of
the Trust Preferred Securities, of the Company's obligations under the
Partnership Guarantee; and (iii) to the Partnership and the Holders of the Trust
Preferred Securities, of the Company's obligations under any Investment
Guarantee and/or the obligations of any Investment Affiliate under an Affiliate
Investment Instrument. In the case of the limited recourse guarantee given by
the Holder of the Trust Common Securities to the Partnership and the Holder of
the Trust Preferred Securities in respect of the Company's obligations under any
Investment Guarantee and/or any Investment Affiliate's obligations under an
Affiliate Investment
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Instrument, (i) the Trust Common Securities Holder will be deemed to have
pledged the amount due in respect of its Trust Common Securities upon a
liquidation of the Trust to the Partnership and the Holders of Trust Preferred
Securities; (ii) the Trust Common Securities Holder will be deemed to have paid
such amount to the Partnership in respect of such defaulted Investment Guarantee
and/or Affiliate Investment Instrument, as the case may be; (iii) the
Partnership will be deemed to have paid such amount to the Trust; and (iv) the
Property Trustee is hereby authorized to distribute such amount to the Holders
of Trust Preferred Securities (on a pro rata basis among such Trust Preferred
Securities Holders) in respect of the Trust Common Securities Holder's pledge of
such amounts to such Trust Preferred Securities Holders. In the case of a
limited recourse guarantee given by the Holder of the Trust Common Securities to
the Trust and the Holders of the Trust Preferred Securities in respect of the
Company's obligations under the Partnership Guarantee, (i) the Holder of the
Trust Common Securities will be deemed to have pledged the amount due in respect
of its Trust Common Securities upon a liquidation of the Trust to the Trust and
the Holders of the Trust Preferred Securities; (ii) the Holder of the Trust
Common Securities will be deemed to have paid such amount to the Trust in
respect of its obligations under the Partnership Guarantee; and (iii) the
Property Trustee is hereby authorized to distribute such amount to the Holders
of the Trust Preferred Securities (on a pro rata basis among such Trust
Preferred Securities Holders) in respect of the Trust Common Securities Holder's
pledge of such amount to such Trust Preferred Securities Holders.
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ARTICLE X
TRANSFER OF INTERESTS
SECTION 10.1 Transfer of Trust Securities.
(a) Trust Securities may only be transferred, in whole or in part,
in accordance with the terms and conditions set forth in this Declaration and in
the terms of the Trust Securities. Any transfer or purported transfer of any
Trust Security not made in accordance with this Declaration shall be null and
void.
(b) Subject to this Article X, Trust Preferred Securities shall be
freely transferable.
SECTION 10.2 Transfer of Certificates.
The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges that may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to be
issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Regular Trustees duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall be canceled by
the Regular Trustees. A transferee of a Certificate shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt by
such transferee of a Certificate. By acceptance of a Certificate, each
transferee shall be deemed to have agreed to be bound by this Declaration.
SECTION 10.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Certificate
shall be registered on the books and records of the Trust as the sole Holder of
such Certificate and of the Trust Securities represented by such Certificate for
purposes of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Trust Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.
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SECTION 10.4 Book Entry Interests.
Unless otherwise specified in the terms of the Trust Preferred
Securities, the Trust Preferred Securities Certificates, on original issuance,
will be issued in the form of one or more fully registered, global Trust
Preferred Security Certificates (each a "Global Certificate"), to be delivered
to DTC, the initial Clearing Agency, by, or on behalf of, the Trust. Such Global
Certificates shall initially be registered on the books and records of the Trust
in the name of Cede & Co., the nominee of DTC, and no Trust Preferred Security
Beneficial Owner will receive a definitive Trust Preferred Security Certificate
representing such Trust Preferred Security Beneficial Owner's interests in such
Global Certificates, except as provided in Section 10.7. Unless and until
definitive, fully registered Trust Preferred Security Certificates (the
"Definitive Trust Preferred Security Certificates") have been issued to the
Trust Preferred Security Beneficial Owners pursuant to Section 10.7:
(a) the provisions of this Section 10.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the
payment of Distributions on the Global Certificates and receiving
approvals, votes or consents hereunder) as the Holder of the Trust
Preferred Securities and the sole Holder of the Global Certificates and
shall have no obligation to the Trust Preferred Security Beneficial
Owners;
(c) to the extent that the provisions of this Section 10.4 conflict
with any other provisions of this Declaration, the provisions of this
Section 10.4 shall control; and
(d) the rights of the Trust Preferred Security Beneficial Owners
shall be exercised only through the Clearing Agency and shall be limited
to those established by law and agreements between such Trust Preferred
Security Beneficial Owners and the Clearing Agency and/or the Clearing
Agency Participants and the Clearing Agency shall receive and transmit
payments of Distributions on the Global Certificates to such Clearing
Agency Participants. The Clearing Agency will make book entry transfers
among the Clearing Agency Participants; provided, that solely for the
purposes of determining whether the Holders of the requisite amount of
Trust Preferred Securities have voted on any matter provided for in this
Declaration, so long as Definitive Trust Preferred Security Certificates
have not been issued,
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the Trustees may conclusively rely on, and shall be fully protected in
relying on, any written instrument (including a proxy) delivered to the
Trustees by the Clearing Agency setting forth the Trust Preferred Security
Beneficial Owners' votes or assigning the right to vote on any matter to
any other Persons either in whole or in part.
SECTION 10.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Trust Preferred
Security Holders is required under this Declaration, unless and until Definitive
Trust Preferred Security Certificates shall have been issued to the Trust
Preferred Security Beneficial Owners pursuant to Section 10.7, the Regular
Trustees shall give all such notices and communications specified herein to be
given to the Trust Preferred Security Holders to the Clearing Agency, and shall
have no notice obligations to the Trust Preferred Security Beneficial Owners.
SECTION 10.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Trust Preferred Securities, the
Regular Trustees may, in their sole discretion, appoint a successor Clearing
Agency with respect to such Trust Preferred Securities.
SECTION 10.7 Definitive Trust Preferred Security Certificates.
If:
(a) a Clearing Agency elects to discontinue its services as
securities depositary with respect to the Trust Preferred Securities and a
successor Clearing Agency is not appointed within 90 days after such
discontinuance pursuant to Section 10.6 or
(b) the Regular Trustees elect after consultation with the Sponsor
to terminate the book entry system through the Clearing Agency with
respect to the Trust Preferred Securities,
(c) there is a Trust Enforcement Event,
then:
(d) Definitive Trust Preferred Security Certificates shall be
prepared by the Regular Trustees on behalf of the Trust with respect to
such Trust Preferred Securities; and
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(e) upon surrender of the Global Certificates by the Clearing
Agency, accompanied by registration instructions, the Regular Trustees
shall cause Definitive Trust Preferred Security Certificates to be
delivered to Trust Preferred Security Beneficial Owners in accordance with
the instructions of the Clearing Agency. Neither the Trustees nor the
Trust shall be liable for any delay in delivery of such instructions and
each of them may conclusively rely on and shall be fully protected in
relying on, said instructions of the Clearing Agency. The Definitive Trust
Preferred Security Certificates shall be printed, lithographed or engraved
or may be produced in any other manner as is reasonably acceptable to the
Regular Trustees, as evidenced by their execution thereof, and may have
such letters, numbers or other marks of identification or designation and
such legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which Trust Preferred Securities may be listed, or to
conform to usage.
SECTION 10.8 Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Regular Trustees such security
or indemnity as may be required by them to keep each of them harmless,
then, in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, any Regular Trustee on behalf of the Trust shall execute
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like denomination. In connection
with the issuance of any new Certificate under this Section 10.8, the Regular
Trustees may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute conclusive evidence
of an ownership interest in the relevant Trust Securities, as if originally
issued, whether or not the lost, stolen or destroyed Certificate shall be found
at any time.
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ARTICLE XI
LIMITATION OF LIABILITY OF
HOLDERS OF TRUST SECURITIES, TRUSTEES OR OTHERS
SECTION 11.1 Liability.
(a) Except as expressly set forth in this Declaration, the Trust
Guarantees and the terms of the Trust Securities, the Sponsor and the Trustees
shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the Trust
Securities which shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder of Trust
Securities any deficit upon dissolution of the Trust or otherwise.
(b) Notwithstanding any other provision herein, the Holder of the
Trust Common Securities, by entering into this Agreement, agrees that it shall
be liable directly to any creditor or claimant of or against the Trust for the
entire amount of all of the debts and obligations of the Trust (other than
obligations to the Holders of Trust Securities in their capacities as Holders)
to the extent not satisfied out of the Trust's assets as if the Holder of the
Trust Common Securities were the General Partner of a limited partnership
organized under the Delaware Revised Uniform Limited Partnership Act.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the
Holders of the Trust Preferred Securities shall be entitled to the same
limitation of personal liability extended to shareholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware.
SECTION 11.2 Exculpation.
(a) No Company Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Company Indemnified Person in good faith on behalf of the Trust
and in a manner such Company Indemnified Person reasonably believed to be within
the scope of the authority conferred on such Company Indemnified Person by this
Declaration or by law, except that a Company Indemnified Person shall be liable
for any such loss, damage or claim incurred by reason of such Company
Indemnified Person's gross negligence (or, in the case of the
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Property Trustee, negligence) or willful misconduct with respect to such acts or
omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Trust Securities might properly be paid.
SECTION 11.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Property Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between an
Indemnified Person and any Covered Person; or
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act in a
manner that is, or provides terms that are, fair and reasonable to the
Trust or any Holder of Trust Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term
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so made, taken or provided by the Indemnified Person shall not constitute a
breach of this Declaration or any other agreement contemplated herein or of any
duty or obligation of the Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and
factors as it desires, including its own interests, and shall have no duty
or obligation to give any consideration to any interest of or factors
affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or
by applicable law.
SECTION 11.4 Indemnification.
(a) (i) To the fullest extent permitted by applicable law, the
Sponsor shall indemnify and hold harmless any Company Indemnified 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 the Trust) by reason of the fact that he is or was a
Company Indemnified Person against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere
or its equivalent, shall not, of itself, create a presumption that the
Company Indemnified Person did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of
the Trust, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(ii) The Sponsor shall indemnify, to the fullest extent
permitted by law, any Company Indemnified Person who was or
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is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the Trust to procure a
judgment in its favor by reason of the fact that he is or was a Company
Indemnified Person against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Trust and except that no such indemnification shall be
made in respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to the Trust
unless and only to the extent that the Court of Chancery of Delaware 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 of Chancery or
such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action
without prejudice or the settlement of an action without admission of
liability) in defense of any action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 11.4(a), or in defense of any
claim, issue or matter therein, he shall be indemnified, to the fullest
extent permitted by law, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 11.4(a) (unless ordered by a court) shall be made by the Sponsor
only as authorized in the specific case upon a determination that
indemnification of the Company Indemnified Person is proper in the
circumstances because he has met the applicable standard of conduct set
forth in paragraphs (i) and (ii). Such determination shall be made (1) by
the Regular Trustees by a majority vote of a quorum consisting of such
Regular Trustees who were not parties to such action, suit or proceeding,
(2) if such a quorum is not obtainable, or, even if obtainable, if a
quorum of disinterested Regular Trustees so directs, by independent legal
counsel in a written opinion, or (3) by the Holder of the Trust Common
Securities.
(v) Expenses (including attorneys' fees) incurred by a Company
Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding
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referred to in paragraphs (i) and (ii) of this Section 11.4(a) shall be
paid by the Sponsor in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
Company Indemnified Person to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Sponsor as
authorized in this Section 11.4(a). Notwithstanding the foregoing, no
advance shall be made by the Sponsor if a determination is reasonably and
promptly made (i) by the Regular Trustees by a majority vote of a quorum
of disinterested Regular Trustees, (ii) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested Regular
Trustees so directs, by independent legal counsel in a written opinion or
(iii) the Holder of the Trust Common Securities, that, based upon the
facts known to the Regular Trustees, counsel or the Holder of the Trust
Common Securities at the time such determination is made, such Company
Indemnified Person acted in bad faith or in a manner that such person did
not believe to be in or not opposed to the best interests of the Trust,
or, with respect to any criminal proceeding, that such Company Indemnified
Person believed or had reasonable cause to believe his conduct was
unlawful. In no event shall any advance be made in instances where the
Regular Trustees, independent legal counsel or Holder of the Trust Common
Securities reasonably determine that such person deliberately breached his
duty to the Trust or Holders of Trust Common Securities.
(vi) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 11.4(a) shall
not be deemed exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled under any
agreement, vote of shareholders or disinterested directors of the Sponsor
or Holders of the Trust Preferred Securities or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office. All rights to indemnification under this Section
11.4(a) shall be deemed to be provided by a contract between the Sponsor
and each Company Indemnified Person who serves in such capacity at any
time while this Section 11.4(a) is in effect. Any repeal or modification
of this Section 11.4(a) shall not affect any rights or obligations then
existing.
(vii) The Sponsor or the Trust may purchase and maintain insurance
on behalf of any person who is or was a Company Indemnified Person against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Spon-
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sor would have the power to indemnify him against such liability under the
provisions of this Section 11.4(a).
(viii) For purposes of this Section 11.4(a), references to "the
Trust" shall include, in addition to the resulting or surviving entity,
any constituent entity (including any constituent of a constituent)
absorbed in a consolidation or merger, so that any person who is or was a
director, trustee, officer or employee of such constituent entity, or is
or was serving at the request of such constituent entity as a director,
trustee, officer, employee or agent of another entity, shall stand in the
same position under the provisions of this Section 11.4(a) with respect to
the resulting or surviving entity as he would have with respect to such
constituent entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 11.4(a) shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be
a Company Indemnified Person and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(b) The Sponsor agrees to indemnify the (i) Property Trustee, (ii)
the Delaware Trustee, (iii) any Affiliate of the Property Trustee and the
Delaware Trustee, and (iv) any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or agents of the
Property Trustee and the Delaware Trustee (each of the Persons in (i) through
(iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold
each Fiduciary Indemnified Person harmless against, any loss, damage, claim,
liability or expense including taxes (other than taxes based on the income of
the Trustee) incurred without negligence or bad faith on the part of the Trustee
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or investigating
any claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder. The obligation to indemnify as set forth in this
Section 11.4(b) shall survive the satisfaction and discharge of this
Declaration.
SECTION 11.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Property Trustee may engage in or possess an interest in other business ventures
of any nature or description, indepen-
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dently or with others, similar or dissimilar to the business of the Trust, and
the Trust and the Holders of Trust Securities shall have no rights by virtue of
this Declaration in and to such independent ventures or the income or profits
derived therefrom, and the pursuit of any such venture, even if competitive with
the business of the Trust, shall not be deemed wrongful or improper. No Covered
Person, the Sponsor, the Delaware Trustee, nor the Property Trustee shall be
obligated to present any particular investment or other opportunity to the Trust
even if such opportunity is of a character that, if presented to the Trust,
could be taken by the Trust, and any Covered Person, the Sponsor, the Delaware
Trustee and the Property Trustee shall have the right to take for its own
account (individually or as a partner or fiduciary) or to recommend to others
any such particular investment or other opportunity. Any Covered Person, the
Delaware Trustee and the Property Trustee may engage or be interested in any
financial or other transaction with the Sponsor or any Affiliate of the Sponsor,
or may act as depositary for, trustee or agent for, or act on any committee or
body of Holders of, securities or other obligations of the Sponsor or its
Affiliates.
ARTICLE XII
ACCOUNTING
SECTION 12.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year.
SECTION 12.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The books of account and the records of the Trust shall be
examined by and reported upon as of the end of each Fiscal Year of the Trust by
a firm of independent certified public accountants selected by the Regular
Trustees.
(b) Within 60 days after May 15 of each year commencing May 15,
1997, the Property Trustee shall provide to the Holders of the Trust Securities
such reports as are required by Section 313 of the Trust Indenture Act, if any,
in the form and in the manner provided by Section 313 of the Trust Indenture
Act.
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The Property Trustee shall also comply with the requirements of Section 313(d)
of the Trust Indenture Act.
(c) The Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Trust Securities, any annual United States
federal income tax information statement, required by the Code, containing such
information with regard to the Trust Securities held by each Holder as is
required by the Code and the Treasury Regulations. Notwithstanding any right
under the Code to deliver any such statement at a later date, the Regular
Trustees shall endeavor to deliver all such statements within 30 days after the
end of each Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority, an annual United States federal income
tax return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any state or local taxing
authority.
SECTION 12.3 Banking.
The Trust shall maintain one or more bank accounts in the name and
for the sole benefit of the Trust; provided, however, that all payments of funds
in respect of the Partnership Preferred Securities held by the Property Trustee
shall be made directly to the Property Account and no other funds of the Trust
shall be deposited in the Property Account. The sole signatories for such
accounts shall be designated by the Regular Trustees; provided, however, that
the Property Trustee shall designate the signatories for the Property Account.
SECTION 12.4 Withholding.
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority
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with respect to distributions or allocations to any Holder, the amount withheld
shall be deemed to be a distribution in the amount of the withholding to the
Holder. In the event of any claimed over withholding, Holders shall be limited
to an action against the applicable jurisdiction. If the amount required to be
withheld was not withheld from actual Distributions made, the Trust may reduce
subsequent Distributions by the amount of such withholding. Notwithstanding
anything herein to the contrary, the Trust and the Regular Trustees shall,
absent receipt of an opinion of nationally recognized tax counsel to the
contrary, withhold thirty percent (30%) (or such other rate as may be imposed as
a result of an amendment to the Code or such lower rate as may be imposed under
an applicable income tax treaty) on the gross amount of any Distributions on
Trust Preferred Securities held by a Holder that is not a "United States person"
within the meaning of Section 7701(a)(30) of the Code.
ARTICLE XIII
AMENDMENTS AND MEETINGS
SECTION 13.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Trust Securities, this Declaration may only be amended
by a written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than two Regular
Trustees, a majority of the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the Property Trustee;
and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware Trustee.
(b) No amendment shall be made, and any such purported amendment
shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the Property
Trustee shall have first received an Officers' Certificate from each of
the Trust and the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the terms of the
Trust Securities);
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(ii) unless, in the case of any proposed amendment which affects the
rights, powers, duties, obligations or immunities of the Property Trustee,
the Property Trustee shall have first received an opinion of counsel (who
may be counsel to the Sponsor or the Trust) that such amendment is
permitted by, and conforms to, the terms of this Declaration (including
the terms of the Trust Securities); and
(iii) to the extent the result of such amendment would
be to:
(A) cause the Trust to fail to continue to be classified for
purposes of United States federal income taxation as a grantor
trust;
(B) cause the Partnership to be classified for purposes of
United States federal income tax as an association or publicly
traded partnership taxable as a corporation;
(C) reduce or otherwise adversely affect the powers of the
Property Trustee in contravention of the Trust Indenture Act; or
(D) cause the Trust to be deemed to be an Investment Company
required to be registered under the 1940 Act.
(c) In the event the consent of the Property Trustee, as the Holder
of the Partnership Preferred Securities is required under the Limited
Partnership Agreement with respect to any amendment, modification or termination
of the Limited Partnership Agreement or the Partnership Preferred Securities the
Property Trustee shall request the direction of the Holders of the Trust
Securities with respect to such amendment, modification or termination and shall
vote with respect to such amendment, modification or termination as directed by
a Majority in liquidation amount of the Trust Securities voting together as a
single class; provided, however, that where a consent under the Limited
Partnership Agreement would require the consent of a Super Majority of the
Holders of Partnership Preferred Securities the Property Trustee may only give
such consent at the direction of the Holders of at least the proportion in
liquidation amount of the Trust Securities which the relevant Super Majority
represents of the aggregate liquidation preference of the Partnership Preferred
Securities outstanding; provided, further, that the Property Trustee shall not
be obligated to take any action in accordance with the directions of the Holders
of the Trust Securities under this Section 13.1(c) unless the Property Trustee
has obtained an
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opinion of independent tax counsel to the effect that for United States federal
income tax purposes the Trust will continue to be classified as a grantor trust
after consummation of such action and each Holder will be treated as owning an
undivided beneficial ownership interest in the Partnership Preferred Securities.
(d) At such time after the Trust has issued any Trust Securities
that remain outstanding, any amendment that would (I) adversely affect the
powers, preferences or special rights of the Trust Securities or (II) provide
for the dissolution, winding-up or termination of the Trust other than pursuant
to the terms of this Declaration, may be effected only with the approval of the
Holders of at least a Majority in liquidation amount of the Trust Securities
affected thereby; provided, that if any amendment or proposal referred to in
clause (I) hereof would adversely affect only the Trust Preferred Securities or
the Trust Common Securities, then only the affected class will be entitled to
vote on such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of a Majority in liquidation amount of such
class of Trust Securities;
(e) Section 11.1(c) and this Section 13.1 shall not be amended
without the consent of all of the Holders of the Trust Securities;
(f) Article IV shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Trust Common Securities and;
(g) The rights of the Holders of the Trust Common Securities under
Article V to increase or decrease the number of, and appoint and remove,
Trustees shall not be amended without the consent of the Holders of a Majority
in liquidation amount of the Trust Common Securities; and
(h) Notwithstanding Section 13.1(c), this Declaration may be amended
without the consent of the Holders of the Trust Securities:
(i) to cure any ambiguity;
(ii) to correct or supplement any provision in this Declaration that
may be defective or inconsistent with any other provision of this
Declaration;
(iii) to add to the covenants, restrictions or obligations of the
Sponsor;
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(iv) to conform to any change in the 1940 Act or written change in
interpretation or application of the rules and regulations promulgated
thereunder by any legislative body, court, government agency or regulatory
authority;
(v) to conform to any change in the Trust Indenture Act or written
change in interpretation or application of the rules and regulations
promulgated thereunder by any legislative body, court, government agency
or regulatory authority; and
(vi) to modify, eliminate and add to any provision of this
Declaration to such extent as may be necessary;
provided, that such amendments do not have a material adverse effect on the
rights, preferences or privileges of the Holders.
SECTION 13.2 Meetings of the Holders of Trust Securities; Action by Written
Consent.
(a) Meetings of the Holders of any class of Trust Securities may be
called at any time by the Regular Trustees (or as provided in the terms of the
Trust Securities) to consider and act on any matter on which Holders of such
class of Trust Securities are entitled to act under the terms of this
Declaration, the terms of the Trust Securities, the Limited Partnership
Agreement, the rules of any stock exchange on which the Trust Preferred
Securities are listed or admitted for trading, the Business Trust Act or other
applicable law. The Regular Trustees shall call a meeting of the Holders of such
class if directed to do so by the Holders of at least 10% in liquidation amount
of such class of Trust Securities. Such direction shall be given by delivering
to the Regular Trustees one or more notices in a writing stating that the
signing Holders of Trust Securities wish to call a meeting and indicating the
general or specific purpose for which the meeting is to be called. Any Holders
of Trust Securities calling a meeting shall specify in writing the Certificates
held by the Holders of Trust Securities exercising the right to call a meeting
and only those Trust Securities specified shall be counted for purposes of
determining whether the required percentage set forth in the second sentence of
this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Trust Securities, the following provisions shall apply to meetings of Holders of
Trust Securities:
(i) notice of any such meeting shall be given to all the Holders of
Trust Securities having a right to vote
72
<PAGE>
thereat at least 7 days and not more than 60 days before the date of such
meeting. Any action that may be taken at a meeting of the Holders of Trust
Securities may be taken without a meeting if a consent in writing setting
forth the action so taken is signed by the Holders of Trust Securities
owning not less than the minimum amount of Trust Securities in liquidation
amount that would be necessary to authorize or take such action at a
meeting at which all Holders of Trust Securities having a right to vote
thereon were present and voting. Prompt notice of the taking of action
without a meeting shall be given to the Holders of Trust Securities
entitled to vote who have not consented in writing. The Regular Trustees
may specify that any written ballot submitted to the Holder for the
purpose of taking any action without a meeting shall be returned to the
Trust within the time specified by the Regular Trustees;
(ii) each Holder of a Trust Security may authorize any Person to act
for it by proxy on all matters in which a Holder of Trust Securities is
entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting. No proxy shall be valid after the
expiration of 11 months from the date thereof unless otherwise provided in
the proxy. Every proxy shall be revocable at the pleasure of the Holder of
Trust Securities executing it. Except as otherwise provided herein, all
matters relating to the giving, voting or validity of proxies shall be
governed by the General Corporation Law of the State of Delaware relating
to proxies, and judicial interpretations thereunder, as if the Trust were
a Delaware corporation and the Holders of the Trust Securities were
shareholders of a Delaware corporation;
(iii) each meeting of the Holders of the Trust Securities shall be
conducted by the Regular Trustees or by such other Person that the Regular
Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the terms of
the Trust Securities, the Trust Indenture Act or the listing rules of any
stock exchange on which the Trust Preferred Securities are then listed for
trading, otherwise provides, the Regular Trustees, in their sole
discretion, shall establish all other provisions relating to meetings of
Holders of Trust Securities, including notice of the time, place or
purpose of any meeting at which any matter is to be voted on by any
Holders of Trust Securities, waiver of any such notice, action by consent
without a meeting, the establishment of a record date, quorum require-
73
<PAGE>
ments, voting in person or by proxy or any other matter with respect to
the exercise of any such right to vote.
ARTICLE XIV
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 14.1 Representations and Warranties of Property Trustee.
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) The Property Trustee is a New York banking corporation with
trust powers, duly organized, validly existing and in good standing under
the laws of New York, with trust power and authority to execute and
deliver, and to carry out and perform its obligations under the terms of,
the Declaration;
(b) The execution, delivery and performance by the Property Trustee
of the Declaration has been duly authorized by all necessary corporate
action on the part of the Property Trustee. The Declaration has been duly
executed and delivered by the Property Trustee and constitutes a legal,
valid and binding obligation of the Property Trustee, enforceable against
it in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws affecting
creditors' rights generally and to general principles of equity and the
discretion of the court (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at law);
(c) The execution, delivery and performance of the Declaration by
the Property Trustee does not conflict with or constitute a breach of the
Articles of Organization or By-laws of the Property Trustee;
(d) No consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Property Trustee of this
Declaration; and
74
<PAGE>
(e) The Property Trustee, pursuant to this Declaration, shall hold
legal title to, and a valid ownership interest on behalf of the Holders of
the Trust Securities, in the Partnership Preferred Securities and agrees
that, except as expressly provided or contemplated by this Agreement, it
will not create, incur or assume, or suffer to exist any mortgage, pledge,
hypothecation, encumbrance, lien or other charge or security interest upon
the Partnership Preferred Securities.
SECTION 14.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is a Delaware corporation with, duly
organized, validly existing and in good standing under the laws of the
State of Delaware, with power and authority to execute and deliver, and to
carry out and perform its obligations under the terms of, the Declaration;
(b) The Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and the Declaration. The
Declaration, under Delaware law, constitutes a legal, valid and binding
obligation of the Delaware Trustee, enforceable against it in accordance
with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the
court (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law);
(c) No consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee of the
Declaration; and
(d) The Delaware Trustee is an entity which has its principal place
of business in the State of Delaware.
75
<PAGE>
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices.
All notices provided for in this Declaration shall be in writing,
duly signed by the party giving such notice, and shall be delivered, telecopied
or mailed by registered or certified mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the
Trust may give notice of to the Holders of the Trust Securities):
MERRILL LYNCH PREFERRED CAPITAL TRUST I
c/o Merrill Lynch & Co., Inc.
World Financial Center
South Tower
225 Liberty Street
New York, New York 10080-6105
Attention: Treasurer
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as the Delaware Trustee may give notice
of to the other Trustees):
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
Attention: John J. Cashin
Senior Trust Officer
(c) if given to the Property Trustee, at its Corporate Trust Office
to the attention of James Heaney, Vice President (or such other address as
the Property Trustee may give notice of to the Holders of the Trust
Securities and the other Trustee)
(d) if given to the Holder of the Trust Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as
the Holder of the Trust Common Securities may give notice of to the
Trust):
76
<PAGE>
MERRILL LYNCH PREFERRED CAPITAL TRUST I
c/o Merrill Lynch & Co., Inc.
World Financial Center
South Tower
225 Liberty Street
New York, New York 10080-6105
Attention: Treasurer
(e) if given to any other Holder, at the address set
forth on the books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 15.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be
governed by and construed in accordance with the internal laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 15.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted to further this intention of
the parties.
SECTION 15.4 Headings.
Headings contained in this Declaration are inserted for convenience
of reference only and do not affect the interpretation of this Declaration or
any provision hereof.
SECTION 15.5 Successors and Assigns
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
77
<PAGE>
SECTION 15.6 Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 15.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees and a duly authorized officer of the Sponsor
to one of such counterpart signature pages. All of such counterpart signature
pages shall be read as though one, and they shall have the same force and effect
as though all of the signers had signed a single signature page.
78
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused these
presents to be executed as of the day and year first above written.
/s/ Theresa Lang
---------------------------------------
Theresa Lang, as Regular Trustee
/s/ Stanley Schaefer
---------------------------------------
Stanley Schaefer, as Regular Trustee
CHASE MANHATTAN BANK DELAWARE,
as Delaware Trustee
By: /s/ John H. Cashin
------------------------------------
Name: John H. Cashin
Title: Senior Trust Officer
THE CHASE MANHATTAN BANK,
as Property Trustee
By: /s/ James Heaney
------------------------------------
Name: James Heaney
Title: Vice President
MERRILL LYNCH & CO., INC.,
as Sponsor
By: /s/ Theresa Lang
------------------------------------
Name: Theresa Lang
Title: Senior Vice President and
Treasurer
79
<PAGE>
EXHIBIT A-1
FORM OF PREFERRED SECURITY CERTIFICATE
This Trust Preferred Security is a Global Certificate within the meaning
of the Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depositary") or a nominee of the Depositary. This
Trust Preferred Security is exchangeable for Trust Preferred Securities
registered in the name of a person other than the Depositary or its nominee only
in the limited circumstances described in the Declaration and no transfer of
this Trust Preferred Security (other than a transfer of this Trust Preferred
Security as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the
Depositary) may be registered except in limited circumstances.
Unless this Trust Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York), a New York corporation, to the Trust or its agent for registration of
transfer, exchange or payment, and any Trust Preferred Security issued is
registered in the name of Cede & Co. or such other name as requested by an
authorized representative of the Depositary and any payment hereon is made to
Cede & Co. or such other entity as is requested by an authorized representative
of the Depositary, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
<PAGE>
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Trust Preferred
Security Certificate to:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Insert assignee's social security or tax identification number)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
______________________________________________________________________________
______________________________________________________________________________
_________________________________________________ agent to transfer this Trust
Preferred Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Trust Preferred
Security Certificate)
A1-1
<PAGE>
TP-1 [ ]
CUSIP NO. 589977206
Certificate Evidencing Trust Preferred Securities
of
MERRILL LYNCH PREFERRED CAPITAL TRUST I
7 3/4% Trust Preferred Securities
(liquidation amount $25 per Trust Preferred Security)
MERRILL LYNCH PREFERRED CAPITAL TRUST I, a statutory business trust
formed under the laws of the State of Delaware (the "Trust"), hereby certifies
that Cede & Co. (the "Holder") is the registered owner of __________ preferred
securities of the Trust representing undivided beneficial ownership interests in
the assets of the Trust designated the 7 3/4% Trust Preferred Securities
(liquidation amount $25 per Trust Preferred Security) (the "Trust Preferred
Securities"). The Trust Preferred Securities are freely transferable on the
books and records of the Trust, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form for transfer. The
designation, rights, powers, privileges, restrictions, preferences and other
terms and provisions of the Trust Preferred Securities represented hereby are
set forth in, issued under and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust dated as of December
11, 1996, as the same may be amended from time to time (the "Declaration").
Capitalized terms used herein but not defined shall have the meaning given them
in the Declaration. The Holder is entitled to the benefits of the Trust
Preferred Securities Guarantee to the extent provided therein. Each Holder of a
Trust Preferred Security, by acceptance of this Certificate and each Certificate
owner, by acquisition of a beneficial interest in a Certificate, agrees to treat
the Debentures, and any other Affiliate Investment Instruments that are treated
as debt instruments by the relevant Investment Affiliate and by the Partnership,
as indebtedness for United States federal income tax purposes. The Sponsor will
provide a copy of the Declaration, the Trust Preferred Securities Guarantee and
the Limited Partnership Agreement to a Holder without charge upon written
request to the Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
A1-2
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate this
17th day of December, 1996.
MERRILL LYNCH PREFERRED CAPITAL TRUST I
_______________________________________
Name: Theresa Lang,
as Regular Trustee
(See reverse for additional terms)
A1-3
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is the Trust Preferred Security described in the
within-mentioned Declaration.
THE CHASE MANHATTAN BANK,
as Trustee
By:__________________________________
Authorized Signatory
A1-4
<PAGE>
[FORM OF REVERSE OF SECURITY]
Holders of Trust Preferred Securities shall be entitled to receive
cumulative cash distributions at a rate per annum of 7 3/4% of the stated
liquidation amount of $25 per Trust Preferred Security. Distributions on the
Trust Preferred Securities shall, from the date of original issue, accumulate
and be cumulative and shall be payable quarterly only to the extent that the
Trust has funds available for the payment of such distributions in the Property
Account. Distributions not paid on the scheduled payment date will accumulate
and compound quarterly (to the extent permitted by applicable law) at the rate
of 7 3/4% per annum. The term "Distributions" as used herein shall mean ordinary
cumulative distributions in respect of each Fiscal Period together with any such
Compounded Distributions. Amounts available to the Trust for distribution to the
holders of the Trust Preferred Securities will be limited to payments received
by the Trust from the Partnership on the Partnership Preferred Securities or
from the Company on the Partnership Guarantee. Distributions on the Partnership
Preferred Securities will be paid only if, as and when declared in the sole
discretion of the Company, as the General Partner of the Partnership. If and to
the extent that the Partnership makes a distribution on the Partnership
Preferred Securities held by the Property Trustee or the Company makes a payment
under the Partnership Guarantee (the amount of any such partnership
distribution, including any compounded partnership distributions or guarantee
payment being a "Payment Amount"), the Trust shall and the Property Trustee is
directed, to the extent funds are available for that purpose, to make a Pro Rata
Distribution of the Payment Amount to Holders.
The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full quarterly
Distribution period on the basis of the actual number of days elapsed in a
90-day quarter.
Except as otherwise described herein, distributions on the Trust
Preferred Securities will be cumulative, will accumulate from the date of
initial issuance and will be payable quarterly in arrears, on March 30, June 30,
September 30 and December 30 of each year, commencing on December 30, 1996, if,
as and when available for payment by the Property Trustee. If the Trust
Preferred Securities (or, if the Trust is liquidated, the Partnership Preferred
Securities) are in book-entry-only form, Distributions will be payable to the
Holders of record of Trust Preferred Securities as they appear on the books and
records of the Trust on the relevant record dates, which will be one Business
Day prior to the relevant payment dates. If the Trust Preferred
A1-5
<PAGE>
Securities (or, if the Trust is liquidated, the Partnership Preferred
Securities) do not remain in book-entry-only form, the relevant record dates
shall be the 15th day of the month of the relevant payment dates. In the event
that any date on which distributions are payable is not a Business Day, payment
of such Distribution shall be made on the next succeeding day which is a
Business Day (without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, with
the same force and effect as if made on such date. Payments of accumulated
Distributions will be payable to Holders of record of Trust Preferred Securities
as they appear on the books and records of the Trust on the record date with
respect to the payment date for the Trust Preferred Securities which corresponds
to the payment date fixed by the Partnership with respect to the payment of
cumulative distributions on the Partnership Preferred Securities.
The Trust Preferred Securities shall be redeemable as provided
in the Declaration.
A1-6
<PAGE>
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
CS-1 [ ]
Certificate Evidencing Trust Common Securities
of
MERRILL LYNCH PREFERRED CAPITAL TRUST I
7 3/4% Trust Common Securities
(liquidation amount $25 per Trust Common Security)
MERRILL LYNCH PREFERRED CAPITAL TRUST I, a statutory business trust
formed under the laws of the State of Delaware (the "Trust"), hereby certifies
that Merrill Lynch & Co., Inc., a Delaware corporation (the "Holder") is the
registered owner of 340,208 common securities of the Trust representing
undivided beneficial ownership interests in the assets of the Trust designated
the 7 3/4% Trust Common Securities (liquidation amount $25 per Trust Common
Security) (the "Trust Common Securities"). The designation, rights, powers,
privileges, restrictions, preferences and other terms and provisions of the
Trust Common Securities represented hereby are set forth in, issued under and
shall in all respects be subject to the provisions of the Amended and Restated
Declaration of Trust dated as of December 11, 1996, as the same may be amended
from time to time (the "Declaration"). Capitalized terms used herein but not
defined shall have the meaning given them in the Declaration. The Holder is
entitled to the benefits of the Trust Common Securities Guarantee to the extent
provided therein. Each Holder of a Trust Common Security, by acceptance of this
Certificate, agrees to treat the Debentures, and any other Affiliate Investment
Instruments that are treated as debt instruments by the relevant Investment
Affiliate and by the Partnership, as indebtedness for United States federal
income tax purposes. The Sponsor will provide a copy of the Declaration, the
Trust Common Securities Guarantee and the Limited Partnership Agreement to a
Holder without charge upon written request to the Sponsor at its principal place
of business. THE TRUST COMMON SECURITIES ARE TRANSFERABLE ON THE BOOKS AND
RECORDS OF THE TRUST ONLY IN ACCORDANCE WITH THE TERMS OF THE DECLARATION.
<PAGE>
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, the Trust has executed this certificate this
17th day of December, 1996.
MERRILL LYNCH PREFERRED CAPITAL TRUST I
_______________________________________
Theresa Lang,
as Regular Trustee
(See reverse for additional terms)
A2-2
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is the Trust Common Security described in the within-mentioned
Declaration.
THE CHASE MANHATTAN BANK,
as Trustee
By:____________________________
Authorized Signatory
A2-3
<PAGE>
[FORM OF REVERSE OF SECURITY]
Holders of Trust Common Securities shall be entitled to receive
cumulative cash distributions at a rate per annum of 7 3/4% of the stated
liquidation amount of $25 per Trust Common Security. Distributions on the Trust
Common Securities shall, from the date of original issue, accumulate and be
cumulative and shall be payable quarterly only to the extent that the Trust has
funds available for the payment of such distributions in the Property Account.
Distributions not paid on the scheduled payment date will accumulate and
compound quarterly (to the extent permitted by applicable law) at the rate of 7
3/4% per annum. The term "Distributions" as used herein shall mean ordinary
cumulative distributions in respect of each Fiscal Period together with any such
Compounded Distributions. Amounts available to the Trust for distribution to the
holders of the Trust Common Securities will be limited to payments received by
the Trust from the Partnership on the Partnership Preferred Securities or from
the Company on the Partnership Guarantee. Distributions on the Partnership
Preferred Securities will be paid only if, as and when declared in the sole
discretion of the Company, as the General Partner of the Partnership. If and to
the extent that the Partnership makes a distribution on the Partnership
Preferred Securities held by the Property Trustee or the Company makes a payment
under the Partnership Guarantee (the amount of any such partnership
distribution, including any compounded partnership distributions or guarantee
payment being a "Payment Amount"), the Trust shall and the Property Trustee is
directed, to the extent funds are available for that purpose, to make a Pro Rata
Distribution of the Payment Amount to Holders.
The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full quarterly
Distribution period on the basis of the actual number of days elapsed in a
90-day quarter.
Except as otherwise described herein, distributions on the Trust
Common Securities will be cumulative, will accumulate from the date of initial
issuance and will be payable quarterly in arrears, on March 30, June 30,
September 30 and December 30 of each year, commencing on December 30, 1996 if,
as and when available for payment by the Property Trustee. Distributions will be
payable to the Holders of record of Trust Common Securities as they appear
A2-4
<PAGE>
on the books and records of the Trust on the relevant record dates, which will
be one Business Day prior to the relevant payment dates. In the event that any
date on which distributions are payable is not a Business Day, payment of the
Distribution shall be made on the next succeeding day which is a Business Day
(without any interest or other payment in respect of any such delay) except
that, if such Business Day falls in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date. Payments of accumulated
Distributions will be payable to Holders of record of Trust Common Securities as
they appear on the books and records of the Trust on the record date with
respect to the payment date for the Trust Common Securities which corresponds to
the payment date fixed by the Partnership with respect to the payment of
cumulative distributions on the Partnership Preferred Securities.
The Trust Common Securities shall be redeemable as provided in
the Declaration.
A2-5
<PAGE>
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Trust Common
Security Certificate to:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Insert assignee's social security or tax identification number)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints _____________________________________________________
______________________________________________________________________________
______________________________________________ agent to transfer this Trust
Common Security Certificate on the books of the Trust. The agent may substitute
another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Trust Common
Security Certificate)
A2-6
===============================================
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
MERRILL LYNCH PREFERRED FUNDING I, L.P.
Dated as of December 17, 1996
===============================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINED TERMS
Section 1.1 DEFINITIONS.............................................. 2
ARTICLE II
CONTINUATION OF THE PARTNERSHIP;
ADMISSION OF PARTNERSHIP PREFERRED SECURITIES HOLDERS;
WITHDRAWAL OF INITIAL LIMITED PARTNER
Section 2.1 CONTINUATION OF THE PARTNERSHIP.......................... 11
Section 2.2 NAME..................................................... 11
Section 2.3 PURPOSES OF THE PARTNERSHIP.............................. 12
Section 2.4 TERM..................................................... 12
Section 2.5 REGISTERED AGENT AND OFFICE.............................. 12
Section 2.6 PRINCIPAL PLACE OF ACTIVITY.............................. 12
Section 2.7 NAME AND ADDRESS OF GENERAL PARTNER...................... 13
Section 2.8 QUALIFICATION TO CONDUCT ACTIVITIES...................... 13
Section 2.9 ADMISSION OF HOLDERS OF PARTNERSHIP
PREFERRED SECURITIES; WITHDRAWAL OF
INITIAL LIMITED PARTNER.................................. 13
ARTICLE III
CAPITAL CONTRIBUTIONS; REPRESENTATION OF
PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST;
CAPITAL ACCOUNTS
Section 3.1 CAPITAL CONTRIBUTIONS.................................... 14
Section 3.2 PARTNERSHIP PREFERRED SECURITY HOLDER'S
INTEREST REPRESENTED BY PARTNERSHIP
PREFERRED SECURITIES..................................... 15
Section 3.3 CAPITAL ACCOUNTS......................................... 15
Section 3.4 INTEREST ON CAPITAL CONTRIBUTIONS........................ 16
Section 3.5 WITHDRAWAL AND RETURN OF
CAPITAL CONTRIBUTIONS.................................... 16
ARTICLE IV
ALLOCATIONS
Section 4.1 PROFITS AND LOSSES....................................... 16
Section 4.2 SPECIAL ALLOCATION....................................... 18
Section 4.3 WITHHOLDING.............................................. 19
ARTICLE V
DISTRIBUTIONS
Section 5.1 DISTRIBUTIONS............................................ 20
Section 5.2 LIMITATIONS ON DISTRIBUTIONS............................. 20
i
<PAGE>
Page
----
ARTICLE VI
ISSUANCE OF PARTNERSHIP PREFERRED SECURITIES
Section 6.1 GENERAL PROVISIONS REGARDING PARTNERSHIP
PREFERRED SECURITIES..................................... 21
Section 6.2 PARTNERSHIP PREFERRED SECURITIES......................... 22
ARTICLE VII
PARTNERSHIP INVESTMENTS
Section 7.1 INITIAL AFFILIATE INVESTMENT INSTRUMENTS................. 34
Section 7.2 REINVESTMENT OF PAYMENTS RECEIVED
BY THE PARTNERSHIP....................................... 35
ARTICLE VIII
BOOKS OF ACCOUNT, RECORDS AND REPORTS
Section 8.1 BOOKS AND RECORDS........................................ 37
Section 8.2 ACCOUNTING METHOD........................................ 38
Section 8.3 ANNUAL AUDIT............................................. 38
ARTICLE IX
PAYMENT OF EXPENSES
Section 9.1 PAYMENT OF TRUST EXPENSES AND
PARTNERSHIP TAXES........................................ 38
Section 9.2 PAYMENT OF OTHER PARTNERSHIP EXPENSES.................... 38
ARTICLE X
POWERS, RIGHTS AND DUTIES
OF THE LIMITED PARTNERS
Section 10.1 LIMITATIONS.............................................. 39
Section 10.2 LIABILITY................................................ 39
Section 10.3 PRIORITY................................................. 40
ARTICLE XI
POWERS, RIGHTS AND DUTIES
OF THE GENERAL PARTNER
Section 11.1 AUTHORITY................................................ 40
Section 11.2 POWERS AND DUTIES OF GENERAL PARTNER..................... 40
Section 11.3 OBLIGATIONS AND EXPENSES PAYABLE BY
GENERAL PARTNER.......................................... 43
Section 11.4 LIABILITY................................................ 44
Section 11.5 OUTSIDE ACTIVITIES....................................... 44
Section 11.6 LIMITS ON GENERAL PARTNER'S POWERS....................... 44
Section 11.7 EXCULPATION.............................................. 45
Section 11.8 FIDUCIARY DUTY........................................... 46
Section 11.9 INDEMNIFICATION.......................................... 47
Section 11.10 TAX MATTERS ............................................. 48
Section 11.11 CONSOLIDATION, MERGER OR SALE OF ASSETS.................. 49
ii
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ARTICLE XII
TRANSFERS OF INTERESTS BY PARTNERS
Section 12.1 TRANSFER OF INTERESTS.................................... 50
Section 12.2 TRANSFER OF L.P. CERTIFICATES............................ 51
Section 12.3 DEFINITIVE L.P. CERTIFICATES;
PERSONS DEEMED PARTNERSHIP
PREFERRED SECURITY HOLDERS............................... 52
Section 12.4 BOOK ENTRY PROVISIONS.................................... 53
Section 12.5 REGISTRAR, TRANSFER AGENT AND PAYING AGENT............... 55
ARTICLE XIII
WITHDRAWAL, DISSOLUTION;
LIQUIDATION AND DISTRIBUTION OF ASSETS
Section 13.1 WITHDRAWAL OF PARTNERS................................... 56
Section 13.2 DISSOLUTION OF THE PARTNERSHIP........................... 57
Section 13.3 LIQUIDATION.............................................. 58
Section 13.4 DISTRIBUTION IN LIQUIDATION.............................. 59
Section 13.5 RIGHTS OF LIMITED PARTNERS............................... 59
Section 13.6 TERMINATION.............................................. 60
ARTICLE XIV
AMENDMENTS AND MEETINGS
Section 14.1 AMENDMENTS............................................... 60
Section 14.2 AMENDMENT OF CERTIFICATE................................. 60
Section 14.3 MEETINGS OF PARTNERS..................................... 61
ARTICLE XV
MISCELLANEOUS
Section 15.1 NOTICES.................................................. 62
Section 15.2 POWER OF ATTORNEY........................................ 63
Section 15.3 ENTIRE AGREEMENT......................................... 64
Section 15.4 GOVERNING LAW............................................ 64
Section 15.5 EFFECT................................................... 64
Section 15.6 PRONOUNS AND NUMBER...................................... 64
Section 15.7 CAPTIONS................................................. 64
Section 15.8 PARTIAL ENFORCEABILITY................................... 64
Section 15.9 COUNTERPARTS............................................. 64
Section 15.10 WAIVER OF PARTITION...................................... 65
Section 15.11 REMEDIES................................................. 65
Schedule 1 LIST OF PARTNERS
Annex A FORM OF L.P. CERTIFICATE
Exhibit A FORM OF INDENTURE OF MERRILL LYNCH & CO., INC.
Exhibit B FORM OF INDENTURE FOR SUBSIDIARIES
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
MERRILL LYNCH PREFERRED FUNDING I, L.P.
December 17, 1996
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of Merrill
Lynch Preferred Funding I, L.P., a Delaware limited partnership (the
"Partnership"), dated as of December 17, 1996, among Merrill Lynch & Co., Inc.,
a Delaware corporation (the "Company"), as the general partner, Merrill Lynch
Group, Inc., a Delaware corporation, as the initial limited partner (the
"Initial Limited Partner") and such other Persons (as defined herein) who become
Limited Partners (as defined herein) as provided herein.
WHEREAS, the Company and the Initial Limited Partner entered into an
Agreement of Limited Partnership of Merrill Lynch Preferred Funding I, L.P.
dated as of November 20, 1996 (the "Original Partnership Agreement"), and the
Partners (as defined herein) desire to continue the Partnership under the Act
(as defined herein) and to amend and restate the Original Partnership Agreement
in its entirety;
WHEREAS, the Certificate of Limited Partnership of the Partnership
was filed with the Office of the Secretary of State of the State of Delaware on
November 20, 1996;
NOW, THEREFORE, in consideration of the agreements and obligations
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree to amend
and restate the Original Partnership Agreement as follows:
<PAGE>
ARTICLE I
DEFINED TERMS
Section 1.1 DEFINITIONS. Unless the context otherwise requires, the
terms defined in this Article I shall, for the purposes of this Agreement, have
the meanings herein specified. Terms used in this Agreement and not otherwise
defined herein shall have the meanings ascribed to such terms in the
Declaration.
"Act" means the Delaware Revised Uniform Limited Partnership Act,
Del. Code Ann. tit. 6, ss. 17-101 et seq., as amended from time to time.
"Affiliate" has the meaning set forth in Section 1.1 of the
Declaration.
"Affiliate Investment Instruments" has the meaning set forth in
Section 7.1 of this Agreement.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership, as it may be amended or supplemented from time to time.
"Beneficiaries" has the meaning set forth in Section 11.3 of this
Agreement.
"Book-Entry Interest" means a beneficial interest in the L.P.
Certificates, ownership and transfers of which shall be maintained and made
through book entries of a Clearing Agency as set forth in Section 12.4 of this
Agreement.
"Business Day" means any day other than a day on which banking
institutions in The City of New York are authorized or required by law to close.
"Capital Account" has the meaning set forth in Section 3.3 of this
Agreement.
"Certificate" means the Certificate of Limited Partnership of the
Partnership filed with the Secretary of State of the State of Delaware on
November 20, 1996, as it may be amended and restated from time to time.
"Change in 1940 Act Law" has the meaning set forth in Section 1.1 of
the Declaration.
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"Closing Date" has the meaning set forth in Section 1.1 of the
Declaration.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation.
"Company" means Merrill Lynch & Co., Inc., a Delaware corporation.
"Compounded Distributions" has the meaning set forth in Section 6.2
of this Agreement.
"Declaration" means the Amended and Restated Declaration of Trust by
and among the Company, as Sponsor, the Property Trustee, the Delaware Trustee,
and the Regular Trustees, dated as of December 11, 1996.
"Definitive L.P. Certificates" has the meaning set forth in Section
12.4(a) of this Agreement.
"Delaware Partnership Act" means the Revised Uniform Limited
Partnership Act of the State of Delaware (6 Del. C. ss. 17-101, et seq.).
"Delaware Trustee" has the meaning set forth in Section 6.2 of the
Declaration.
"Distribution Payment Date" has the meaning set forth in Section
6.2(b)(ii) of this Agreement.
"Distributions" means the cumulative cash distributions payable by
the Partnership with respect to the Interests represented by the Partnership
Preferred Securities, which amounts will accumulate on the $25 liquidation
preference of each Partnership Preferred Security from the Closing Date and are
payable quarterly in arrears in accordance with Sections 5.1 and 6.2(b) of this
Agreement.
"DTC" means the Depository Trust Company, the initial Clearing
Agency.
"Eligible Debt Securities" means cash or book-entry securities,
negotiable instruments, or other securities of entities not affiliated with the
Company represented by instruments in registered form which evidence
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any of the following: (a) any security issued or guaranteed as to principal or
interest by the United States, or by a person controlled or supervised by and
acting as an instrumentality of the Government of the United States pursuant to
authority granted by the Congress of the United States, or any certificate of
deposit for any of the foregoing; (b) commercial paper issued pursuant to
Section 3(a)(3) of the Securities Act of 1933 (the "Securities Act") and having,
at the time of the investment or contractual commitment to invest therein, a
rating from each of S&P and Moody's in the highest rating category granted by
such rating agency and having a maturity not in excess of nine months; (c)
demand deposits, time deposits and certificates of deposit which are fully
insured by the FDIC; (d) repurchase obligations with respect to any security
that is a direct obligation of, or fully guaranteed by, the Government of the
United States of America or any agency or instrumentality thereof, the
obligations of which are backed by the full faith and credit of the United
States of America, in either case entered into with a depository institution or
trust company which is an Eligible Institution and the deposits of which are
insured by the FDIC; and (e) any other security which is identified as a
permitted investment of a finance subsidiary pursuant to Rule 3a-5 under the
1940 Act at the time it is acquired by the Partnership.
"Eligible Institution" means a depository institution organized
under the laws of the United States of America or any one of the states thereof
or the District of Columbia (or any domestic branch of a foreign bank), (1)(i)
which has either (A) a long-term unsecured debt rating of AA or better by S&P
and Aa or better by Moody's or (B) a short-term unsecured debt rating or a
certificate of deposit rating of A-1+ or better by S&P and P-1 or better by
Moody's and (ii) whose deposits are insured by the FDIC or (2)(i) the parent of
which has a long-term or short-term unsecured debt rating which signifies
investment grade and (ii) whose deposits are insured by the FDIC.
"FDIC" means the Federal Deposit Insurance Corporation or any
successor thereto.
"Finance Subsidiary" means any wholly-owned subsidiary of the
Company the principal purpose of which is to raise capital for the Company by
issuing securities
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that are guaranteed by the Company and the proceeds of which are loaned to or
invested in the Company or one or more of its affiliates.
"Fiscal Period" means each calendar quarter.
"Fiscal Year" means the calendar year.
"General Partner" means Merrill Lynch & Co., Inc., in its capacity
as the general partner of the Partnership, its permitted successors, or any
successor general partner in the Partnership admitted as such pursuant to the
terms of this Agreement.
"General Partner Capital Contribution" means the contribution by the
General Partner to the Partnership made contemporaneous with the issuance of the
Partnership Preferred Securities.
"General Partner Interest" means the Interest of the General Partner
in the Partnership.
"Holder" or "Partnership Preferred Security Holder" means a Limited
Partner in whose name an L.P. Certificate representing Partnership Preferred
Securities is registered.
"Indentures" means the Indentures between the Company or certain of
its subsidiaries, as the case may be, and The Chase Manhattan Bank, as Indenture
Trustee, dated as of December 17, 1996, forms of which are attached hereto as
Exhibits A and B, respectively.
"Independent Financial Adviser" shall mean a nationally recognized
accounting firm, bank or investment banking firm which shall be designated by
the Company and which firm does not (and whose directors, officers, employees
and affiliates do not) have a direct or indirect material equity interest in the
Company or any of its subsidiaries.
"Initial Affiliate Debentures" has the meaning set forth in Section
7.1(b) of this Agreement.
"Initial Company Debenture" has the meaning set forth in Section
7.1(b) of this Agreement.
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"Initial Debentures" means collectively, the Initial Company
Debenture and the Initial Affiliate Debentures.
"Initial Limited Partner" means Merrill Lynch Group, Inc., a
Delaware corporation.
"Initial Partnership Proceeds" means the aggregate proceeds received
by the Partnership from the sale of the Partnership Preferred Securities and the
General Partner Capital Contribution.
"Interest" means the entire ownership interest of a Partner in the
Partnership at any particular time, including, without limitation, its interest
in the capital, profits, and losses of, and distributions from, the Partnership.
"Investment Affiliate" means the Company or any corporation,
partnership, limited liability company or other entity (other than the
Partnership or the Trust) that (i) is controlled by the Company and (ii) is not
an investment company by reason of Section 3(a) or 3(b) of the 1940 Act or is
otherwise an eligible recipient of funds directly or indirectly from the Trust
pursuant to an order issued by the Securities and Exchange Commission.
"Investment Event of Default" means an event of default under any
Affiliate Investment Instrument that is a debt instrument or the breach by an
Investment Affiliate of its obligations under any Affiliate Investment
Instrument that is an equity instrument.
"Investment Guarantee" has the meaning specified in Section 1.1 of
the Declaration.
"Investment Offer" has the meaning specified in Section 7.2(b) of
this Agreement.
"Limited Partner" means any Person who is admitted to the
Partnership as a limited partner pursuant to the terms of this Agreement, in
such Person's capacity as a limited partner of the Partnership.
"Liquidator" has the meaning specified in Section 13.3 of this
Agreement.
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"L.P. Certificate" means a certificate substantially in the form
attached hereto as Annex A, evidencing the Partnership Preferred Securities held
by a Limited Partner.
"Majority in Liquidation Preference" means Holder(s) of Partnership
Preferred Securities who are the record owners of Partnership Preferred
Securities whose aggregate liquidation preferences represent more than 50% of
the aggregate liquidation preference of all Partnership Preferred Securities
then outstanding.
"Moody's" means Moody's Investors Service, Inc. or any successor
thereto.
"Net Income" and "Net Loss", respectively, for any Fiscal Period
mean the income and loss, respectively, of the Partnership for such Fiscal
Period as determined in accordance with the method of accounting followed by the
Partnership for United States federal income tax purposes, including, for all
purposes, the net income, if any, from the Affiliate Investment Instruments,
Eligible Debt Securities and any income exempt from tax and any noncapital,
nondeductible expenditures of the Partnership which are described in the Code.
"1940 Act" has the meaning set forth in Section 1.1 of the
Declaration.
"Original Partnership Agreement" has the meaning set forth in the
recitals to this Agreement.
"Partners" means the General Partner and the Limited Partners,
collectively, where no distinction is required by the context in which the term
is used.
"Partnership Covered Person" means any Partner, any Affiliate of a
Partner or any officers, directors, shareholders, partners, members, employees,
representatives or agents of a Partner or its respective Affiliates, or any
employee or agent of the Partnership or its Affiliates or any Special
Representative.
"Partnership Enforcement Event" has the meaning set forth in Section
6.2(h)(i) of this Agreement.
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"Partnership Guarantee" means the Partnership Guarantee Agreement
dated as of December 17, 1996 by the Company in favor of the Partnership
Preferred Security Holders with respect to the Partnership Preferred Securities,
as amended or supplemented from time to time.
"Partnership Indemnified Person" means the General Partner, any
Special Representative, any Affiliate of the General Partner or any Special
Representative or any officers, directors, shareholders, members, partners,
employees, representatives or agents of the General Partner or any Special
Representative, or any of their respective Affiliates, or any employee or agent
of the Partnership or its Affiliates.
"Partnership Investment Company Event" means that the General
Partner shall have requested and received an opinion of nationally recognized
independent legal counsel experienced in such matters to the effect that as a
result of the occurrence on or after the date hereof of a Change in 1940 Act
Law, the Partnership is or will be considered an "investment company" which is
required to be registered under the 1940 Act.
"Partnership Liquidation Distribution" has the meaning set forth in
Section 6.2(g) of this Agreement.
"Partnership Preferred Securities" represent the Interests of
Limited Partners and have the preference and designation set forth in Section
6.2(a) of this Agreement.
"Partnership Preferred Securities Purchase Agreement" means the
partnership purchase agreement between the Trust and the Partnership providing
for the purchase of the Partnership Preferred Securities.
"Partnership Preferred Security Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry Interest
as reflected on the books of DTC, or on the books of a Person maintaining an
account with DTC (directly as a participant or as an indirect participant, in
each case in accordance with the rules of DTC or such participant).
8
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"Partnership Special Event" means either a Partnership Tax Event or
a Partnership Investment Company Event.
"Partnership Successor Securities" has the meaning set forth in
Section 11.11 of this Agreement.
"Partnership Tax Event" means that the General Partner shall have
requested and received an opinion of nationally recognized independent tax
counsel experienced in such matters to the effect that there has been a Tax
Action which affects any of the events described in (i) through (iii) below and
that there is more than an insubstantial risk that (i) the Partnership is, or
will be, subject to United States federal income tax with respect to income
accrued or received on the Affiliate Investment Instruments or the Eligible Debt
Securities, (ii) the Partnership is, or will be, subject to more than a de
minimis amount of other taxes, duties or other governmental charges or (iii)
interest payable by an Investment Affiliate with respect to the Initial
Debentures is not, or will not be, deductible by such Investment Affiliate for
United States federal income tax purposes.
"Paying Agent" shall have the meaning set forth in Section 12.5 of
this Agreement.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Power of Attorney" means the Power of Attorney granted pursuant to
Section 15.2 of this Agreement.
"Property Trustee" has the meaning set forth in Section 1.1 of the
Declaration.
"Purchase Agreement" means the Purchase Agreement dated December 11,
1996 among the Company, the Trust, the Partnership and Merrill, Lynch, Pierce,
Fenner & Smith Incorporated, as representatives of the other underwriters named
in Schedule A thereto.
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"Record Date" means (i) as long as the Trust Preferred Securities
remain (or, in the event that the Trust is liquidated in connection with a Trust
Special Event, as long as the Partnership Preferred Securities remain) in
book-entry only form, one Business Day prior to the relevant payment dates and
(ii) in the event that the Trust Preferred Securities (or in the event that the
Trust is liquidated in connection with a Trust Special Event, the Partnership
Preferred Securities) shall not continue to remain in book-entry only form, the
15th day of the month of the relevant payment date.
"Redemption Notice" has the meaning set forth in Section 6.2(e) of
this Agreement.
"Redemption Price" has the meaning set forth in Section 6.2(c) of
this Agreement.
"Registrar" has the meaning set forth in Section 12.5 of this
Agreement.
"Regular Trustees" has the meaning set forth in Section 1.1 of the
Declaration.
"Reinvestment Criteria" has the meaning specified in Section
7.2(c) of this Agreement.
"S&P" means Standard & Poor's Ratings Services or any successor
thereof.
"Special Representative" has the meaning set forth in Section
6.2(h)(i) of this Agreement.
"Tax Action" has the meaning set forth in Section 1.1 of the
Declaration.
"Tax Matters Partner" means the General Partner designated as such
in Section 11.10 of this Agreement.
"10% in Liquidation Preference" means Holder(s) of the Partnership
Preferred Securities voting together as a single class representing 10% of the
aggregate liquidation amount of the Partnership Preferred Securities.
"Treasury Regulations" has the meaning set forth in Section 1.1 of
the Declaration.
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"Trust" means the Merrill Lynch Preferred Capital Trust I, a
Delaware business trust, formed under the Declaration.
"Trust Common Securities" has the meaning specified in Section 8.1
of the Declaration.
"Trust Common Securities Guarantee" means the Trust Common
Securities Guarantee Agreement dated as of December 17, 1996, entered into by
the Company, as Guarantor, for the benefit of the holders of the Trust Common
Securities.
"Trust Preferred Securities" has the meaning specified in Section
8.1 of the Declaration.
"Trust Preferred Securities Guarantee" means the Trust Preferred
Securities Guarantee Agreement dated as of December 17, 1996, entered into by
the Company, as Guarantor, for the benefit of the holders of the Trust
Preferred Securities.
ARTICLE II
CONTINUATION OF THE PARTNERSHIP;
ADMISSION OF PARTNERSHIP PREFERRED SECURITIES HOLDERS;
WITHDRAWAL OF INITIAL LIMITED PARTNER
Section 2.1 CONTINUATION OF THE PARTNERSHIP. The parties hereto
agree to continue the Partnership in accordance with the terms of this
Agreement. The General Partner, for itself and as agent for the Limited
Partners, shall make every reasonable effort to assure that all certificates and
documents are properly executed and shall accomplish all filing, recording,
publishing and other acts necessary or appropriate for compliance with all the
requirements for the continuation of the Partnership as a limited partnership
under the Act and under all other laws of the State of Delaware or such other
jurisdictions in which the General Partner determines that the Partnership may
conduct activities. The rights and duties of the Partners shall be as provided
herein and, subject to the terms hereof, under the Act.
Section 2.2 NAME. The name of the Partnership is "Merrill Lynch
Preferred Funding I, L.P.", as such
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name may be modified from time to time by the General Partner following written
notice to the Limited Partners.
Section 2.3 PURPOSES OF THE PARTNERSHIP. The purposes of the
Partnership are (a) to issue limited partnership interests in the Partnership in
the form of Partnership Preferred Securities, (b) to receive the General Partner
Capital Contribution, (c) to use substantially all of the Initial Partnership
Proceeds to purchase, as an investment, the Initial Debentures, (d) to invest,
at all times, an amount equal to at least 1% of the Initial Partnership Proceeds
in Eligible Debt Securities, (e) to receive interest and other payments on the
Affiliate Investment Instruments and the Eligible Debt Securities held by the
Partnership from time to time, (f) to make Distributions on the Partnership
Preferred Securities and distributions on the General Partner Interest if, as
and when declared by the General Partner in its sole discretion, (g) subject to
the restrictions and conditions contained in this Agreement, to make additional
investments in Affiliate Investment Instruments and Eligible Debt Securities and
to dispose of any such investments and (h) except as otherwise limited herein,
to enter into, make and perform all contracts and other undertakings, and engage
in those activities and transactions as the General Partner may reasonably deem
necessary or advisable for the carrying out of the foregoing purposes of the
Partnership. The Partnership may not engage in any other activities or
operations except as contemplated by the preceding sentence.
Section 2.4 TERM. The term of the Partnership shall commence upon
the filing of the Certificate in the Office of the Secretary of State of the
State of Delaware and shall continue until the Partnership is dissolved in
accordance with the provisions of this Agreement.
Section 2.5 REGISTERED AGENT AND OFFICE. The Partnership's
registered agent and office in Delaware shall be CT Corporation, Corporate Trust
Center, 1209 Orange Street, Wilmington, Delaware 19801. At any time, the General
Partner may designate another registered agent and/or registered office.
Section 2.6 PRINCIPAL PLACE OF ACTIVITY. The principal place of
activity of the Partnership shall be
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c/o Merrill Lynch & Co., Inc., World Financial Center, North Tower, 250 Vesey
Street, New York, New York 10281. Upon ten days' written notice to the Partners,
the General Partner may change the location of the Partnership's principal place
of activity, provided that such change has no material adverse effect upon any
Partner.
Section 2.7 NAME AND ADDRESS OF GENERAL PARTNER. The name and
address of the General Partner are as follows:
Merrill Lynch & Co., Inc.
World Financial Center
South Tower
225 Liberty Street
New York, New York 10080-6105
Attention: Treasurer
The General Partner may change its name or address from time to time, in which
event the General Partner shall promptly notify the Limited Partners of any such
change.
Section 2.8 QUALIFICATION TO CONDUCT ACTIVITIES. The General Partner
shall cause the Partnership to become qualified, formed or registered under the
applicable qualification, fictitious name or similar laws of any jurisdiction in
which the Partnership conducts activities.
Section 2.9 ADMISSION OF HOLDERS OF PARTNERSHIP PREFERRED
SECURITIES; WITHDRAWAL OF INITIAL LIMITED PARTNER.
(a) Without execution of this Agreement, upon the receipt of an L.P.
Certificate by a Person, whether by purchase, gift, devise or other valid
transfer, which receipt shall be deemed to constitute a request by such Person
that the books and records of the Partnership reflect such Person's admission as
a Limited Partner, such Person shall be admitted to the Partnership as a Limited
Partner and shall become bound by this Agreement.
(b) Following the first admission of a Partnership Preferred
Security Holder to the Partnership as a Limited Partner, the Initial Limited
Partner shall withdraw from the Partnership and shall receive the return of its
capital contribution without interest or deduction.
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(c) The name and mailing address of each Partner and the amount
contributed by such Partner to the capital of the Partnership shall be listed on
the books and records of the Partnership. The General Partner shall be required
to update the books and records from time to time as necessary to accurately
reflect such information.
ARTICLE III
CAPITAL CONTRIBUTIONS; REPRESENTATION OF
PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST;
CAPITAL ACCOUNTS
Section 3.1 CAPITAL CONTRIBUTIONS.
(a) The General Partner has, prior to the date hereof, contributed
an aggregate of $15.00 to the capital of the Partnership, which amount is equal
to at least 15% of the total capital contributions to the Partnership, after
taking into account the contribution of the Initial Limited Partner referred to
in Section 3.1(b). Contemporaneous with the issuance of the Partnership
Preferred Securities, the General Partner shall make the General Partner Capital
Contribution. The General Partner shall, from time to time, make such additional
capital contributions as are necessary to maintain at all times a positive
Capital Account balance equal to at least one percent (1%) of the aggregate
positive Capital Account balances of all Partners at the end of such period.
(b) The Initial Limited Partner has, prior to the date hereof,
contributed the amount of $85.00 to the capital of the Partnership, which amount
shall be returned to the Initial Limited Partner as contemplated by Section
2.9(b).
(c) On the Closing Date, the Trust shall, in exchange for a
definitive L.P. Certificate, contribute to the capital of the Partnership on
behalf of the Trust an amount in cash equal to the gross proceeds from the sale
of the Trust Preferred Securities and the Trust Common Securities (such amount
being a capital contribution to the Partnership). On such date, immediately
following the withdrawal of the Initial Limited Partner, the Trust shall be the
sole Limited Partner.
(d) No Limited Partner shall at any time be required to make any
additional capital contributions to the Partnership, except as may be required
by law.
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Section 3.2 PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST
REPRESENTED BY PARTNERSHIP PREFERRED SECURITIES. A Partnership Preferred
Security Holder's Interest shall be represented by the Partnership Preferred
Securities held by or on behalf of such Partner. Each Partnership Preferred
Security Holder's respective ownership of Partnership Preferred Securities shall
be set forth on the books and records of the Partnership. Each Partner hereby
agrees that its Interest in the Partnership shall for all purposes be personal
property. No Partner shall have an interest in specific Partnership property.
Section 3.3 CAPITAL ACCOUNTS.
(a) Establishment and Maintenance of Capital Accounts. The
Partnership shall establish and maintain a separate account (the "Capital
Account") for each Partner. The initial balance of the Capital Account for each
Partner shall be the amount as set out opposite the name of each of the Partners
on Schedule 1 attached hereto. The Capital Account of each Partner shall be
increased by (i) the dollar amount of any additional contributions made by such
Partner and (ii) allocations to such Partner of income and gain (including
income exempt from tax). The Capital Account of each Partner shall be decreased
by (i) the dollar amount of any distributions made to such Partner, and (ii)
allocations to such Partner of loss and deduction (including noncapital,
nondeductible expenditures not deductible in computing the Partnership's income
or loss for United States federal income tax purposes).
(b) Compliance with Regulations. Notwithstanding any other provision
of this Agreement to the contrary, the provisions of Section 3.3(a) hereof
regarding the maintenance of Capital Accounts shall be construed so as to comply
with the Treasury Regulations promulgated under section 704 of the Code. The
General Partner, in its sole discretion, is authorized to modify such provisions
to the minimum extent necessary to comply with such Treasury Regulations.
Section 3.4 INTEREST ON CAPITAL CONTRIBUTIONS. Except as provided
herein, no Partner shall be entitled to interest on or with respect to any
capital contribution to the Partnership.
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Section 3.5 WITHDRAWAL AND RETURN OF CAPITAL CONTRIBUTIONS. Subject
to Section 3.1(b) hereof, no Partner shall be entitled to withdraw any part of
such Partner's capital contribution to the Partnership. No Partner shall be
entitled to receive any distributions from the Partnership, except as provided
in this Agreement.
ARTICLE IV
ALLOCATIONS
Section 4.1 PROFITS AND LOSSES. After giving effect to the special
allocation provisions set forth in Section 4.2 which special allocations shall
take precedence over any allocations made pursuant to this Section 4.1,
(a) the Partnership's Net Income for each Fiscal Period of the
Partnership shall be allocated as follows:
(i) First, to each Holder of a Partnership Preferred Security in an
amount equal to the excess, if any, of (x) all Net Losses, if any,
allocated to each such Holder from the date of issuance of the Partnership
Preferred Security through and including the close of such Fiscal Period
pursuant to Section 4.1(b)(ii) below over (y) the amount of Net Income, if
any, allocated to each such Holder pursuant to this Section 4.1(a)(i) in
all prior Fiscal Periods.
(ii) Second, to the Holders of the Partnership Preferred Securities,
an amount of Net Income equal to the excess of (x) the Distributions
accumulated on the Partnership Preferred Securities from the date of their
issuance through and including the last day of such Fiscal Period,
including any Compounded Distributions payable with respect thereto, over
(y) the amount of Net Income allocated to the Holders of the Partnership
Preferred Securities pursuant to this Section 4.1(a)(ii) in all prior
Fiscal Periods. Amounts allocated to all Partnership Preferred Security
Holders shall be allocated among such Holders in proportion to the number
of Partnership Preferred Securities held by such Holders.
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(iii) Any remaining Net Income shall be allocated to the General
Partner.
(b) The Partnership's Net Loss for any Fiscal Period shall be
allocated as follows:
(i) First, to the General Partner until the balance of the General
Partner's Capital Account is reduced to zero, provided, however, that the
aggregate amount of Net Losses allocated to the General Partner pursuant
to this Section 4.1(b)(i) shall not exceed the sum of 14% of the total
capital contributions of all Partners plus the aggregate Net Income
allocated to the General Partner pursuant to this Section 4.1.
(ii) Second, among the Holders in proportion to their respective
aggregate Capital Account balances, until the Capital Account balances of
such Holders are reduced to zero.
(iii) Any remaining Net Loss shall be allocated to the General
Partner.
(c) DAILY DETERMINATION. For purposes of determining the profits,
losses or any other items allocable to any period, profits, losses and any such
other items shall be determined on a daily basis, unless the General Partner
determines that another method is permissible under Section 704 of the Code and
the Treasury Regulations promulgated thereunder. Unless otherwise specified,
such profits, losses or other items shall be determined for each Fiscal Period.
Section 4.2 SPECIAL ALLOCATION.
(a) All expenditures that are (i) incurred by, or on behalf of, the
Partnership and (ii) paid, or otherwise reimbursed, by the General Partner out
of its own funds shall be allocated entirely to the General Partner.
(b) In the event any Partner unexpectedly receives any adjustments,
allocations or distributions described in Treasury Regulation Section 1.704-
1(b)(2)(ii)(d)(4), (5) or (6), items of the Partnership's income (including
gross income) shall be specially allocated to such Partner in a manner
sufficient to eliminate
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the deficit, if any, in the balance of the Capital Account of such Partner as
quickly as possible. The foregoing is intended to be a "qualified income offset"
provision as described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted and applied in all respects in accordance with such
Treasury Regulation.
(c) SECTION 704 COMPLIANCE. While this Agreement does not
specifically provide for certain provisions required by Treasury Regulation
Sections 1.704-1(b) and 1.704-2 because those provisions apply to transactions
that are not expected to occur as regards the Partnership, the Partners intend
that the allocations under Section 4.1 conform to Treasury Regulations Sections
1.704-1(b) and 1.704-2 (including, without limitation, the minimum gain
chargeback, chargeback of partner nonrecourse debt minimum gain and partner
nonrecourse debt provisions of such Treasury Regulations), and, to the extent
necessary due to the occurrence of unexpected events, the General Partner shall
make such changes in the allocations under Section 4.1 as it believes are
reasonably necessary to meet the requirements of such Treasury Regulations.
(d) ADJUSTMENT OF ALLOCATIONS. If the allocations set forth in
this Article IV are adjusted by the Internal Revenue Service and the Tax Matters
Partner agrees to such adjustments, such allocations shall be amended to the
minimum extent necessary to conform with such adjustments.
(e) ADDITIONAL ALLOCATIONS. Notwithstanding the foregoing, if, upon
the final dissolution and termination of the Partnership and after taking into
account all allocations of Net Income and Net Losses (and other tax items) under
this Article IV, the distributions to be made in accordance with the positive
Capital Account balances would result in a distribution that would be different
from a distribution under Article XIII, then gross items of income and gain (and
other tax items) for the taxable year of the final dissolution and termination
(and, to the extent permitted under section 761(c) of the Code, gross items of
income and gain, and other tax items, for the immediately preceding taxable
year) shall be allocated to the Partners to increase or decrease their
respective Capital Account balances so that the
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final distribution will occur in the same manner as a distribution under Section
13.4.
(f) GENERAL PARTNER ALLOCATIONS. Notwithstanding any provision of
this Agreement to the contrary, the interest of the General Partner in each item
of Partnership income, gain, loss, deduction, or credit shall, at all times
during the existence of the Partnership, be equal to at least (A) at any time
that the aggregate capital contributions to the Partnership are equal to or less
than $50,000,000, one percent (1%) of each such item and (B) at any time that
the aggregate capital contributions to the Partnership are greater than
$50,000,000, at least a percentage equal to the product of (i) one percent (1%)
and (ii) a fraction (not exceeding 1 and not less than 0.2), the numerator of
which is $50,000,000 and the denominator of which is the lesser of (x) the
aggregate Capital Account balances of the Capital Accounts of all Partners at
such time and (y) the aggregate capital contributions to the Partnership of all
Partners at such time.
Section 4.3 WITHHOLDING. The Partnership shall comply with
withholding requirements under Federal, state and local law and shall remit
amounts withheld to and file required forms with applicable jurisdictions. To
the extent that the Partnership is required to withhold and pay over any amounts
to any authority with respect to distributions or allocations to any Partner,
the amount withheld shall be deemed to be a distribution in the amount of the
withholding to the Partner. In the event of any claimed over-withholding,
Partners shall be limited to an action against the applicable jurisdiction. If
the amount withheld was not withheld from actual distributions, the Partnership
may reduce subsequent distributions by the amount of such withholding. Each
Partner agrees to furnish the Partnership with any representations and forms as
shall reasonably be requested by the Partnership to assist it in determining the
extent of, and in fulfilling, its withholding obligations.
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ARTICLE V
DISTRIBUTIONS
Section 5.1 DISTRIBUTIONS. Limited Partners shall receive periodic
Distributions and Compounded Distributions, if any, redemption payments and
liquidation distributions in accordance with the terms of the Partnership
Preferred Securities set forth in Article VI. The General Partner shall in its
sole discretion determine whether and when Distributions shall be payable;
provided, however, that if the General Partner shall determine a Distribution
will not be paid on a scheduled Distribution Payment Date, the General Partner
shall give notice of its determination not to pay such Distribution to Limited
Partners of record as of the Record Date for the payment of such Distribution;
provided, further, however, that the General Partner shall not declare
distributions, and no distributions shall be payable by the Partnership to the
General Partner in respect of its General Partner Interest unless all
accumulated and unpaid Distributions, including any Compounded Distributions,
have been paid in full for all prior Fiscal Periods. Subject to the immediately
preceding sentence, to the extent that the aggregate payments of interest (or
dividends) received by the Partnership in respect of Affiliate Investment
Instruments and Eligible Debt Securities for each Fiscal Period exceed the
amount of Distributions, including any Compounded Distributions, paid on the
Partnership Preferred Securities for such Fiscal Period, the General Partner, in
its sole discretion may declare and distribute such excess funds to the General
Partner in respect of its General Partner Interest.
Section 5.2 LIMITATIONS ON DISTRIBUTIONS. The Partnership shall not
make a Distribution to any Partner on account of such Partner's Interest if such
Distribution would violate Section 17-607 of the Act or other applicable law.
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ARTICLE VI
ISSUANCE OF PARTNERSHIP PREFERRED SECURITIES
Section 6.1 GENERAL PROVISIONS REGARDING PARTNERSHIP PREFERRED
SECURITIES.
(a) There is hereby authorized for issuance and sale Partnership
Preferred Securities having an aggregate liquidation preference not greater than
$283,505,200 and having the designation, annual distribution rate, liquidation
preference, redemption terms, and other powers, preferences and special rights
and limitations set forth in this Article VI.
(b) The payment of Distributions (including payments of
distributions by the Partnership in liquidation or on redemption in respect of
Partnership Preferred Securities) shall be guaranteed by the Company pursuant to
and to the extent set forth in the Partnership Guarantee. The Partnership
Preferred Security Holders hereby authorize the General Partner to hold the
Guarantee on behalf of the Partnership Preferred Security Holders. In the event
of an appointment of a Special Representative pursuant to Section 6.2(i), among
other things, to enforce the Partnership Guarantee, the Special Representative
may take possession of the Partnership Guarantee for such purpose. If no Special
Representative has been appointed to enforce the Partnership Guarantee, the
General Partner has the right to enforce the Partnership Guarantee on behalf of
the Partnership Preferred Security Holders. The Partnership Preferred Security
Holders, by acceptance of such Partnership Preferred Securities, acknowledge and
agree to the subordination provisions in, and other terms of, the Partnership
Guarantee.
(c) The Partnership may not issue any interests in the Partnership
other than the Partnership Preferred Securities and the General Partner
Interest, provided that the Partnership may accept consideration for additional
capital contributions from the General Partner with respect to the General
Partner Interest. All Partnership Preferred Securities shall rank senior to all
other Interests in the Partnership in respect of the right to receive
Distributions. All Partnership Preferred Securities redeemed, purchased or
otherwise acquired by the Partnership shall be canceled. The Part-
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nership Preferred Securities will be issued in registered form only.
(d) No Holder shall be entitled as a matter of right to subscribe
for or purchase, or have any preemptive right with respect to, any part of any
new or additional limited partnership interests, or of securities convertible
into any Partnership Preferred Securities or other limited partnership
interests, whether now or hereafter authorized and whether issued for cash or
other consideration or by way of a distribution.
(e) Any of the Partnership Preferred Securities that are owned by
the Company or by any entity directly or indirectly controlled by, or under
direct or indirect common control with, the Company, shall not be entitled to
vote or consent with respect to any Partnership Preferred Security owned by it,
and shall, for purposes of such vote or consent, be treated as if they were not
outstanding except for Partnership Preferred Securities purchased or acquired by
the Company or its affiliates in connection with transactions effected by or for
the account of customers of the Company or any of its subsidiaries or in
connection with the distribution or trading of such Partnership Preferred
Securities; provided, however, that persons (other than affiliates of the
Company) to whom the Company or any of its subsidiaries have pledged Partnership
Preferred Securities may vote or consent with respect to such pledged
Partnership Preferred Securities under any of the circumstances described in
Section 6.2.
Section 6.2 PARTNERSHIP PREFERRED SECURITIES.
(a) DESIGNATION. A total of 11,340,208 Partnership Preferred
Securities, liquidation preference $25 per Partnership Preferred Security, are
hereby designated as "7 3/4% Partnership Preferred Securities".
(b) DISTRIBUTIONS. (i) Partnership Preferred Security Holders shall
be entitled to receive cumulative Distributions and Compounded Distributions (as
defined below) (if any), if, as and when declared by the General Partner, in its
sole discretion, out of the assets of the Partnership legally available
therefor, at a rate per annum of 7 3/4% of the stated liquidation preference of
$25 per Partnership Preferred Security, calculated on the
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basis of a 360-day year consisting of twelve 30-day months. For any period
shorter than a full 90-day quarter, Distributions will be computed on the basis
of the actual number of days elapsed in such 90-day quarter. Such Distributions
shall, from the date of original issue, accumulate and be cumulative and shall
be payable quarterly, when, if, and as declared by the General Partner on the
dates specified in Section 6.2(b)(ii) below. Distributions and Compounded
Distributions (as defined below) (if any) on the Partnership Preferred
Securities shall be cumulative from the Closing Date. Distributions not paid on
the scheduled Distribution Payment Date will accumulate and compound quarterly
at the rate of 7 3/4% per annum ("Compounded Distributions"). In the event that
any date on which Distributions are payable on the Partnership Preferred
Securities is not a Business Day, then payment of the Distribution payable on
such date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay) except that,
if such Business Day is in the next succeeding calendar year, such payment shall
be made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date.
(ii) Distributions on the Partnership Preferred Securities will be
payable quarterly in arrears if, as and when, declared by the General Partner on
March 30, June 30, September 30 and December 30 of each year, commencing on
December 30, 1996 (each a "Distribution Payment Date").
Distributions will be payable to the Holders as they appear on the
books and records of the Partnership on the relevant Record Date. If the Trust
or the Property Trustee is the Holder of the Partnership Preferred Securities,
all Distributions of cash shall be made by wire transfer of same day funds to
such Holder by 10:00 a.m., New York City time, on the applicable Distribution
Payment Date. Distributions payable on any Partnership Preferred Securities that
are not punctually paid on any Distribution Payment Date will cease to be
payable to the Person in whose name such Partnership Preferred Securities are
registered on the relevant record date, and such Distribution will instead be
payable to the Person in whose name such Partnership Preferred Securities are
registered on the special record date or other specified
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date for payment of such defaulted or accumulated Distribution.
(c) OPTIONAL REDEMPTION. Partnership Preferred Securities shall be
redeemable at the option of the General Partner, in whole or in part, from time
to time, on or after December 30, 2006, upon not less than 30 nor more than 60
days' notice, at an amount per Partnership Preferred Securities equal to $25
plus accumulated and unpaid Distributions thereon, including any Compounded
Distributions (the "Redemption Price"). The Partnership may not redeem the
Partnership Preferred Securities in part unless all accumulated and unpaid
Distributions, including any Compounded Distributions, have been paid in full on
all Partnership Preferred Securities for all Fiscal Periods terminating on or
prior to the date of redemption. If a partial redemption of the Partnership
Preferred Securities would result in the delisting of the Trust Preferred
Securities (or, if the Trust is liquidated in connection with a Trust Special
Event, or if a partial redemption would result in the delisting of the
Partnership Preferred Securities), the Partnership may only redeem the
Partnership Preferred Securities in whole but not in part.
(d) SPECIAL EVENT REDEMPTIONS. (i) If, at any time, a Partnership
Special Event shall occur and be continuing, the General Partner shall, within
90 days following the occurrence of such Partnership Special Event, elect to
either (i) redeem the Partnership Preferred Securities in whole (but not in
part), upon not less than 30 or more than 60 days' notice at the Redemption
Price, provided that if at the time there is available to the Partnership the
opportunity to eliminate, within such 90-day period, the Partnership Special
Event by taking some ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable measure that in the sole
judgment of the General Partner has or will cause no adverse effect on the
Partnership, the Trust, or the Company, the General Partner will pursue such
measure in lieu of redemption; or (ii) cause the Partnership Preferred
Securities to remain outstanding, provided that in the case of this clause (ii),
the General Partner shall pay any and all costs and expenses incurred by or
payable by the Partnership which are attributable to the Partnership Special
Event.
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(e) REDEMPTION PROCEDURES. (i) Notice of any redemption of
Partnership Preferred Securities (a "Redemption Notice") will be given by the
Partnership by mail to each Holder of Partnership Preferred Securities to be
redeemed not fewer than 30 nor more than 60 days before the date fixed for
redemption. For purposes of the calculation of the date of redemption and the
dates on which notices are given pursuant to this Section 6.2(e)(i), a
Redemption Notice shall be deemed to be given on the day such notice is first
mailed, by first-class mail, postage prepaid, to Holders of Partnership
Preferred Securities. Each Redemption Notice shall be addressed to the Holders
of Partnership Preferred Securities at the address of each such Holder appearing
in the books and records of the Partnership. No defect in the Redemption Notice
or in the mailing thereof with respect to any Holder shall affect the validity
of the redemption proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Partnership
Preferred Securities are to be redeemed, the Partnership Preferred Securities to
be redeemed shall be redeemed pro rata provided, that, in the event Partnership
Preferred Securities are held in book-entry only form by DTC or its nominee (or
any successor Clearing Agency or its nominee), DTC will reduce, in accordance
with DTC's customary procedures, the amount of the interest of each Clearing
Agency Participant in the Partnership Preferred Securities to be redeemed;
provided, that if, as a result of such pro rata redemption, Holders would hold
fractional interests in the Partnership Preferred Securities, the General
Partner may adjust the amount of the interest of each Holder to be redeemed to
avoid such fractional interests.
(iii) If the Partnership gives a Redemption Notice (which notice
will be irrevocable), then by 12:00 noon, New York City time, on the redemption
date, the Partnership (A) if the Partnership Preferred Securities are in
book-entry only form with DTC, will deposit irrevocably with DTC funds
sufficient to pay the applicable Redemption Price and will give DTC irrevocable
instructions and authority to pay the Redemption Price in respect of the
Partnership Preferred Securities held through DTC in global form or (B) if the
Partnership Preferred Securities are held in certificated form, will deposit
with the Paying Agent, funds sufficient to pay
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the applicable Redemption Price of the amount of any such Partnership Preferred
Securities and will give to the Paying Agent irrevocable instructions and
authority to pay such amounts to the Holders of Partnership Preferred
Securities, upon surrender of their certificates, by check, mailed to the
address of the relevant Holder appearing on the books and records of the
Partnership on the redemption date; provided, however, that for so long as the
Trust or the Property Trustee of the Trust shall hold the Partnership Preferred
Securities, payment of cash shall be made by wire in same day funds to the
Holder by 12:00 Noon, New York City time, on the redemption date. For these
purposes, the applicable Redemption Price shall not include Distributions which
are being paid to Holders who were Holders on a relevant record date. Upon
satisfaction of the foregoing conditions, then immediately prior to the close of
business on the date of such deposit or payment, all rights of Holders of such
Partnership Preferred Securities so called for redemption will cease, except the
right of the Holders to receive the Redemption Price, but without interest on
such Redemption Price, and from and after the date fixed for redemption, such
Partnership Preferred Securities will not accumulate Distributions or bear
interest.
In the event that any date fixed for redemption of Partnership
Preferred Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding Business Day (and
without any interest in respect of any such delay), except that, if such
Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day in each case, with the same force and effect
as if made on such date fixed for redemption. In the event that payment of the
Redemption Price is improperly withheld or refused and not paid by either the
Partnership or the Company pursuant to the Partnership Guarantee, Distributions
on the Partnership Preferred Securities called for Redemption will continue to
accumulate, to the extent that payment of such interest is legally available,
from the original redemption date until the Redemption Price is actually paid.
The Partnership shall not be required to register or cause to be
registered the transfer of any Partnership Preferred Securities which have been
called for redemption.
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(f) COMPANY PURCHASES. Subject to the provisions of this Section 6.2
and applicable law (including, without limitation, Federal securities laws), if
Partnership Preferred Securities have been distributed to the Holders (as
defined in the Declaration) of Trust Preferred Securities, the Company or any of
its subsidiaries may at any time and from time to time purchase outstanding
Partnership Preferred Securities by tender, in the open market, or by private
agreement.
(g) LIQUIDATION DISTRIBUTION UPON DISSOLUTION. In the event of any
voluntary or involuntary liquidation, dissolution, winding-up or termination of
the Partnership, the Holders of Partnership Preferred Securities at the time
outstanding will be entitled to receive out of the assets of the Partnership
such amount as is determined in accordance with Section 13.4 (the "Partnership
Liquidation Distribution") payable in cash.
(h) VOTING RIGHTS.
(i) SPECIAL REPRESENTATIVE. (1) If one or more of the following
events shall occur and be continuing (each a "Partnership Enforcement Event"):
(i) arrearages on distributions on the Partnership Preferred Securities shall
exist for six consecutive quarterly distribution periods, (ii) the Company is in
default on any of its obligations under the Partnership Guarantee or (iii) an
Investment Event of Default on any Affiliate Investment Instrument or a default
under any Investment Guarantee, as the case may be, occurs and is continuing
then the Property Trustee, for so long as the Partnership Preferred Securities
are held by the Property Trustee, will have the right, or the Holders of the
Partnership Preferred Securities, upon the affirmative vote of at least a
Majority in Liquidation Preference of the Partnership Preferred Securities,
shall have the right, to the exclusion of the General Partner, (a) to appoint
and authorize a special representative of the Partnership and the Limited
Partners (a "Special Representative") to enforce (1) to the maximum extent
permitted by applicable law, the Partnership's creditors' rights and other
rights with respect to the Affiliate Investment Instruments and the Investment
Guarantees, (2) the rights of the Holders of the Partnership Preferred
Securities under the Partnership Guarantee, and (3) the rights of the Holders of
the Partnership Preferred Securities to receive Distri-
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butions (only if, and to the extent, declared by the General Partner, in its
sole discretion, out of funds legally available therefor) on the Partnership
Preferred Securities, and (b) under the Partnership Guarantee to enforce the
terms of the Partnership Guarantee, including the right to enforce the covenant
restricting certain payments of the Company and Finance Subsidiaries. Under no
circumstances, however, shall the Special Representative have authority to cause
the General Partner to declare Distributions on the Partnership Preferred
Securities nor to have any authority concerning the selection of Partnership
Investments. When the Special Representative acts to enforce the Partnership's
creditors' rights and other rights with respect to the Affiliate Investment
Instruments and the Investment Guarantees, the Special Representative acts as an
agent of the Partnership. When the Special Representative acts to enforce the
rights of the Holders of the Partnership Preferred Securities under the
Partnership Guarantee or their rights to receive Distributions on the
Partnership Preferred Securities, the Special Representative acts as an agent of
the Holders of the Partnership Preferred Securities. In addition, the Special
Representative shall not, by virtue of acting in such capacity, be admitted as a
general or limited partner in the Partnership or otherwise be deemed to be a
general or limited partner in the Partnership and shall have no liability for
the debts, obligations, or liabilities of the Partnership.
(2) In furtherance of the foregoing, and without limiting the powers
of any Special Representative so appointed and to avoid any doubt concerning the
powers of the Special Representative, any Special Representative, in its own
name, in the name of the Partnership, in the name of the Limited Partners, or
otherwise, may institute, or cause to be instituted, a proceeding, including,
without limitation, any suit in equity, an action at law or other judicial or
administrative proceeding, to enforce on behalf of the Partnership the
Partnership's rights directly against the Company or any other obligor in
connection with its obligations to the Partnership, and may prosecute such
proceeding to judgment or final decree, and enforce the same against the Company
or any other obligor in connection with such obligations and collect, out of the
property, wherever situated, of the Company or any such other obligor upon such
obligations, the monies adjudged or decreed to be payable in the
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manner provided by law. The General Partner agrees to execute and deliver such
documents as may be necessary, appropriate or convenient for the Special
Representative to enforce the foregoing rights and obligations on behalf and in
the name of the Partnership.
(3) If the Special Representative fails to enforce its rights under
the Affiliate Investment Instruments after a holder of Partnership Preferred
Securities has made a written request, such holder of record of Partnership
Preferred Securities may to the fullest extent permitted by law directly
institute a legal proceeding against the Company to enforce the rights of the
Special Representative and the Partnership under the Affiliate Investment
Instruments without first instituting any legal proceeding against the Special
Representative, the Partnership or any other person or entity. In any event, if
a Partnership Enforcement Event has occurred and is continuing and such event is
attributable to the failure of an Investment Affiliate to make any required
payment when due on any Affiliate Investment Instrument, then a holder of
Partnership Preferred Securities may to the fullest extent permitted by law on
behalf of the Partnership directly institute a proceeding against such
Investment Affiliate with respect to such Affiliate Investment Instrument for
enforcement of payment. In addition, the Partnership acknowledges that, for so
long as the Trust holds any Partnership Preferred Securities, if the Special
Representative fails to enforce its rights on behalf of the Partnership under
the Affiliate Investment Instruments after a holder of Trust Securities has made
a written request, a holder of record of Trust Securities may to the fullest
extent permitted by law on behalf of the Partnership directly institute a legal
proceeding against the Investment Affiliates under the Affiliate Investment
Instruments, without first instituting any legal proceeding against the Property
Trustee, the Trust, the Special Representative or the Partnership. In any event,
for so long as the Trust is the holder of any Partnership Preferred Securities,
if a Trust Enforcement Event has occurred and is continuing and such event is
attributable to the failure of an Investment Affiliate to make any required
payment when due on any Affiliate Investment Instrument or the failure of the
Company to make any required payment when due on any Investment Guarantee, then
the Partnership acknowledges that a holder of Trust Securities may to the full-
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est extent permitted by law on behalf of the Partnership directly institute a
proceeding against such Investment Affiliate with respect to such Affiliate
Investment Instrument or against the Company with respect to any such Investment
Guarantee, in each case for enforcement of payment. Under no circumstances shall
the Special Representative, any holder of Partnership Preferred Securities or
any holder of Trust Preferred Securities have authority to cause the General
Partner to declare distributions on the Partnership Preferred Securities.
(4) For purposes of determining whether the Partnership has deferred
payment of Distributions for six (6) consecutive quarters, Distributions shall
be deemed to remain in arrears, notwithstanding any payments in respect thereof,
until full cumulative Distributions, including Compounded Distributions, have
been or contemporaneously are paid with respect to all quarterly Distribution
periods terminating on or prior to the date of payment of such full cumulative
Distributions. Not later than 30 days after such right to appoint a Special
Representative arises, the General Partner will convene a meeting for election
of a Special Representative. If the General Partner fails to convene such
meeting within such 30-day period, the Holders of not less than 10% in
Liquidation Preference of the Outstanding Partnership Preferred Securities will
be entitled to convene such meeting. The provisions of Section 14.3 relating to
the convening and conduct of meetings of the Partners will apply with respect to
any such meeting. In the event that, at any such meeting, Holders of less than a
Majority in Liquidation Preference of Partnership Preferred Securities entitled
to vote for the appointment of a Special Representative vote for such
appointment, no Special Representative shall be appointed. Any Special
Representative appointed shall cease to be a Special Representative of the
Partnership and/or the Limited Partners if (x) the Partnership (or the Company
pursuant to the Partnership Guarantee) shall have paid in full all accumulated
and unpaid Distributions on the Partnership Preferred Securities, (y) the
relevant Investment Event of Default shall have been cured, and (z) the Company
is in compliance with all its obligations under the Partnership Guarantee, and
the Company, in its capacity as the General Partner, shall continue the
activities of the Partnership without dissolution. Notwithstanding the
appointment of any such Special Representative, the Company
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shall continue as General Partner and shall retain all rights under this
Agreement, including the right to determine whether to declare, in its sole
discretion, the payment of Distributions on the Partnership Preferred
Securities.
(ii) CERTAIN AMENDMENTS; WAIVER. (1) If any proposed amendment of
this Agreement provides for, or the General Partner otherwise proposes to
effect, (x) any action that would adversely affect the powers, preferences or
special rights of the Holders of the Partnership Preferred Securities, whether
by way of amendment of this Agreement or otherwise (including, without
limitation, the authorization or issuance of any limited partnership interests
in the Partnership ranking, as to participation in profits or distributions, or
in the assets of the Partnership, senior to the Partnership Preferred
Securities); or (y) the dissolution, winding-up or termination of the
Partnership, other than (1) in connection with the occurrence of a Partnership
Special Event or (2) as described under Sections 11.11 and 13.2 of this
Agreement, then the Holders of outstanding Partnership Preferred Securities will
be entitled to vote on such amendment or proposal of the General Partner (but
not on any other amendment or proposal) as a class and such amendment or
proposal shall not be effective except with the approval of Holders of a
Majority in Liquidation Preference of such outstanding Partnership Preferred
Securities having a right to vote on the matter; provided, however, that if the
Property Trustee on behalf of the Trust is the Holder of the Partnership
Preferred Securities, any such amendment or proposal not excepted by (1) or (2)
above shall not be effective without the prior or concurrent approval of the
Holders of a majority in liquidation preference of the outstanding Trust
Preferred Securities having a right to vote on such matters; provided, further,
that no such approval shall be required if the dissolution, winding-up or
termination of the Partnership is proposed or initiated upon the initiation of
proceedings, or after proceedings have been initiated, for the dissolution,
winding-up, liquidation or termination of the Company.
(2) The Holders of a Majority in Liquidation Preference of
Partnership Preferred Securities may, by vote, on behalf of the Holders of all
of the Partnership Preferred Securities, waive any past Partnership Enforcement
Event with respect to the Partnership Preferred
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Securities and its consequences; provided, that if the underlying Investment
Event of Default:
(A) is not waivable under the related Affiliate Investment Instrument,
such Partnership Enforcement Event shall also not be waivable; or
(B) requires the consent or vote of the Holders of greater than a
majority in principal amount or liquidation preference of the
Affiliate Investment Instruments (a "Super Majority") to be waived
under the related Affiliate Investment Instrument, the Partnership
Enforcement Event may only be waived by the vote of the Holders of
the relevant Super Majority in liquidation preference of the
Partnership Preferred Securities.
Upon such waiver, any such Partnership Enforcement Event shall cease to exist,
and shall be deemed to have been cured, for every purpose of this Agreement, but
no such waiver shall extend to any subsequent or other Partnership Enforcement
Event or impair any right consequent thereon.
(3) A waiver of an Investment Event of Default by the Special
Representative, acting at the direction of the Holders of the Partnership
Preferred Securities, constitutes a waiver of the corresponding Partnership
Enforcement Event.
(iii) GENERAL VOTING. (1) The General Partner shall not (i) direct
the time, method and place of conducting any proceeding for any remedy
available, (ii) waive any Investment Event of Default that is waivable under the
Affiliate Investment Instruments, (iii) exercise any right to rescind or annul a
declaration that the principal of any Affiliate Investment Instruments that are
debt instruments shall be due and payable, (iv) waive the breach of the covenant
by the Company in the Partnership Guarantee to restrict certain payments by the
Company, or (v) consent to any amendment, modification or termination of any
Affiliate Investment Instrument, where such consent shall be required from the
investor, without, in each case, obtaining the prior approval of the Holders of
at least a Majority in Liquidation Preference of the Partnership Preferred
Securities; provided, howev-
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er, that if the Property Trustee on behalf of the Trust is the Holder of the
Partnership Preferred Securities, such waiver, consent or amendment or other
action shall not be effective without the prior or concurrent approval of at
least a majority in liquidation amount of the outstanding Trust Preferred
Securities having a right to vote on such matters. The General Partner shall not
revoke any action previously authorized or approved by a vote of the Holders of
the Partnership Preferred Securities without the approval of a Majority in
Liquidation Preference of the Partnership Preferred Securities. The General
Partner shall notify all Holders of the Partnership Preferred Securities of any
notice of an Investment Event of Default received with respect to any Affiliate
Investment Instrument.
(2) Any required approval of Holders of Partnership Preferred
Securities may be given at a separate meeting of such Holders convened for such
purpose or pursuant to written consent. The General Partner will cause a notice
of any meeting at which Holders of Partnership Preferred Securities are entitled
to vote, or of any matter upon which the action by written consent of such
Holders is to be taken, to be mailed to each Holder of record of Partnership
Preferred Securities. Each such notice will include a statement setting forth
(x) the date of such meeting or the date by which such action is to be taken,
(y) a description of any matter proposed for adoption at such meeting on which
such Holders are entitled to vote or of such matters upon which written consent
is sought and (z) instructions for the delivery of proxies or consents. No vote
or consent of the Holders of Partnership Preferred Securities will be required
for the Partnership to redeem and cancel Partnership Preferred Securities in
accordance with this Agreement.
(3) Notwithstanding that Holders of Partnership Preferred Securities
are entitled to vote or consent under any of the circumstances described above,
any of the Partnership Preferred Securities at such time that are beneficially
owned by the Company or by any entity directly or indirectly controlled by, or
under direct or indirect common control with, the Company, shall not be entitled
to vote or consent and shall, for purposes of such vote or consent, be treated
as if they were not outstanding, except for Partnership Preferred Securities
purchased or acquired by the Company or its affiliates in
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connection with transactions effected by or for the account of customers of the
Company or any of its subsidiaries or in connection with the distribution or
trading of such Partnership Preferred Securities; provided, however, that
persons (other than affiliates of the Company) to whom the Company or any of its
subsidiaries have pledged Partnership Preferred Securities may vote or consent
with respect to such pledged Partnership Preferred Securities pursuant to the
terms of such pledge.
(4) Holders of the Partnership Preferred Securities shall have no
rights to remove or replace the General Partner.
(5) Holders of Partnership Preferred Securities shall have no
preemptive rights.
ARTICLE VII
PARTNERSHIP INVESTMENTS
Section 7.1 INITIAL AFFILIATE INVESTMENT INSTRUMENTS.
(a) All Partnership funds will be invested in the securities of
Investment Affiliates (the "Affiliate Investment Instruments") and Eligible Debt
Securities. No more than 99% of the Initial Partnership Proceeds will be used by
the Partnership to purchase the Initial Debentures meeting the criteria set
forth in this Section 7.1. The remaining funds from the Initial Partnership
Proceeds will be used to purchase Eligible Debt Securities in accordance with
the terms of this Agreement.
(b) The Partnership shall apply approximately 99% of the Initial
Partnership Proceeds to purchase (1) a debt instrument of the Company (the
"Initial Company Debenture") and (2) debt instruments of one or more eligible
controlled affiliates of the Company (such debt instruments collectively
referred to as the "Initial Affiliate Debentures"). The Initial Company
Debenture and the Initial Affiliate Debentures are collectively referred to as
the "Initial Debentures". The Partnership may purchase the Initial Debentures
only upon receipt of an opinion of the Independent Financial Advisor to the
effect that (i) if such Initial Debentures were to be rated, at least one Rating
Agency would rate all the
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Initial Debentures investment grade at the time such Initial Debentures are
purchased by the Partnership, (ii) the Company and each Investment Affiliate
which is a subsidiary of the Company would have been capable of issuing and
selling debt instruments with the same terms and conditions as the applicable
Initial Debentures to unrelated third party investors, (iii) the terms and
conditions of the Initial Debentures are consistent with the terms and
conditions of a public offering or a private placement pursuant to Rule 144A
under the Securities Act of 1933 of such Initial Debentures and are no more
favorable to the relevant Investment Affiliate than could have been obtained by
such Investment Affiliate from unrelated third party investors pursuant to such
a public offering or private placement of such Initial Debentures. On the
Closing Date, the Partnership shall invest at least 1% of such Initial
Partnership Proceeds in Eligible Debt Securities. The terms of the Initial
Debentures will be as set forth in the Indentures attached hereto as Exhibits A
and B.
Section 7.2 REINVESTMENT OF PAYMENTS RECEIVED BY THE PARTNERSHIP.
(a) The Partnership must at all times invest an amount equal to at
least 1% of the Initial Partnership Proceeds in Eligible Debt Securities.
(b) The Partnership may reinvest any payments it receives in respect
of its investments in (i) Eligible Debt Securities without limitation or (ii)
additional Affiliate Investment Instruments but only upon (A) the acceptance of
a written offer setting forth the terms and conditions on which an Investment
Affiliate would be willing to issue an Affiliate Investment Instrument to the
Partnership (an "Investment Offer") and (B) the receipt of an opinion of the
Independent Financial Advisor that the terms of such Affiliate Investment
Instrument set forth in such Investment Offer satisfy the Reinvestment Criteria
(as defined below).
(c) If the Independent Financial Advisor determines that the terms
of an Affiliate Investment Instrument (as set forth in the Investment Offer) do
not satisfy the Reinvestment Criteria, the Partnership shall be prohibited from
making any investment in such Affiliate Investment Instrument.
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(d) Each Affiliate Investment Instrument shall satisfy the following
criteria (the "Reinvestment Criteria"): (i) the economic terms of each Affiliate
Investment Instrument shall be no less favorable to the Partnership than terms
that would otherwise be obtainable through a public offering or private
placement under Rule 144A of the Securities Act of 1933 of securities by the
requesting Investment Affiliate and the other terms and conditions of each
Affiliate Reinvestment Instrument are substantially similar to the terms and
conditions of similar securities and guarantees, if any, included therein, that
are offered to the public in a public offering or private placement under Rule
144A of the Securities Act of 1933 of such securities; (ii) the Partnership
shall not have held any Affiliate Investment Instruments of the Investment
Affiliate submitting the Investment Offer within the three-year period ending on
the date of the Investment Offer; (iii) there shall not have been a default on
any debt obligation of the Investment Affiliate submitting the Investment Offer
that was owned by the Partnership; (iv) no dividend arrearages shall have
existed on any preferred stock of the Investment Affiliate submitting the
Investment Offer that was owned by the Partnership; and (v) the Investment
Affiliate submitting the Investment Offer shall not be deemed to be an
investment company by reason of Section 3(a) or 3(b) of the 1940 Act or is
otherwise an eligible recipient of funds directly or indirectly from the Trust
pursuant to an order issued by the Securities and Exchange Commission.
(e) Any payments received by the Partnership in respect of its
investments that are not invested in additional Affiliate Investment
Instruments, may be reinvested only in Eligible Debt Securities (subject to
restrictions of applicable law, including the 1940 Act).
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ARTICLE VIII
BOOKS OF ACCOUNT, RECORDS AND REPORTS
Section 8.1 BOOKS AND RECORDS.
(a) Proper and complete records and books of account of the
Partnership shall be kept by the General Partner, in which shall be entered
fully and accurately all transactions and other matters relative to the
Partnership's investments. The books and records of the Partnership, together
with a certified copy of this Agreement and of the Certificate, shall at all
times be maintained at the principal office of the General Partner and shall be
open to the inspection and examination of the Partners or their duly authorized
representatives for any proper purpose reasonably related to its Interest during
reasonable business hours.
(b) Notwithstanding any other provision of this Agreement to the
contrary, the General Partner may, to the maximum extent permitted by applicable
law, keep confidential from the Partners any information with respect to the
Partnership, the disclosure of which the General Partner reasonably believes is
not in the best interests of the Partnership, or is adverse to the interests of
the Partnership, or which the Partnership or the General Partner is required by
law or by an agreement with any Person to keep confidential.
(c) (i) For so long as the Partnership Preferred Securities are held
by the Property Trustee on behalf of the Trust, within one month after the close
of each Fiscal Year, the General Partner shall transmit to each Partner a
statement indicating such Partner's share of each item of Partnership income,
gain, loss, deduction or credit, for United States federal income tax purposes,
for such Fiscal Year.
(ii) In the event that the Partnership Preferred Securities are no
longer held by the Property Trustee on behalf of the Trust, as soon as
reasonably possible after the close of the Fiscal Year, the General Partner
shall transmit to each Partner the statement referred to in Section 8.1(c)(i)
hereof.
Section 8.2 ACCOUNTING METHOD. For both financial and tax reporting
purposes, the books and
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records of the Partnership shall be kept on the accrual method of accounting
applied on a consistent basis and shall reflect all Partnership transactions.
Section 8.3 ANNUAL AUDIT. As soon as practical after the end of each
Fiscal Year, but not later than 90 days after such end, the financial statements
of the Partnership shall be audited by a firm of independent certified public
accountants selected by the General Partner in accordance with applicable law.
The cost of such audits will be an expense of the Partnership and shall be paid
by the General Partner.
ARTICLE IX
PAYMENT OF EXPENSES
Section 9.1 PAYMENT OF TRUST EXPENSES AND PARTNERSHIP TAXES. Since
the Trust is being formed solely to facilitate a direct investment in the
Partnership Preferred Securities, the Partnership hereby agrees, at any time
while the Property Trustee is the Holder of any Partnership Preferred
Securities, to pay all the expenses of the Trust, including, but not limited to,
any taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed on the Trust by the United States, or any other
domestic taxing authority, so that the net amounts received and retained by the
Trust and the Property Trustee after paying such expenses will be equal to the
amounts the Trust and the Property Trustee would have received had no such costs
or expenses been incurred by or imposed on the Trust. The General Partner shall
be liable for, and shall pay all such expenses solely out of its own funds. In
addition, if the Partnership is required to pay any taxes, duties, assessments
or governmental charges of whatever nature (other than withholding taxes)
imposed by the United States, or any other domestic taxing authority, then, in
any case, the General Partner will pay such taxes, duties, assessments or other
governmental charges out of its own funds.
Section 9.2 PAYMENT OF OTHER PARTNERSHIP EXPENSES. In connection
with the offering, sale and issuance of the Partnership Preferred Securities by
the Partnership, the General Partner shall:
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(a) pay all costs and expenses of the Partnership (including, but
not limited to, costs and expenses relating to the organization of the
Partnership, the offering, sale and issuance of the Partnership Preferred
Securities (including commissions to the underwriters in connection therewith)
the fees and expenses of the Special Representatives (if any), and the costs and
expenses relating to the operation of the Partnership, including, without
limitation, costs and expenses of accountants, attorneys, statistical or
bookkeeping services, expenses for printing and engraving and computing or
accounting equipment, paying agent(s), registrar(s), transfer agent(s),
duplicating, travel and telephone and other telecommunications expenses; and
(b) be primarily and fully liable for any indemnification
obligations arising with respect to this Agreement.
ARTICLE X
POWERS, RIGHTS AND DUTIES
OF THE LIMITED PARTNERS
Section 10.1 LIMITATIONS. The Limited Partners shall not participate
in the management or control of the Partnership's investment activity, property
or other assets, nor shall the Limited Partners engage in any activities for the
Partnership, nor shall the Limited Partners have the power to act for or bind
the Partnership, such powers being vested solely and exclusively in the General
Partner (and, upon appointment, and to the extent set forth herein, the Special
Representative). The Limited Partners shall have such rights as are set forth
herein and in the Partnership Guarantee. The Limited Partners shall have no
interest in the properties or assets of the General Partner, or any equity
therein, or in any proceeds of any sales thereof (which sales shall not be
restricted in any respect), by virtue of acquiring or owning an Interest in the
Partnership.
Section 10.2 LIABILITY. Subject to the provisions of the Act, no
Limited Partner shall be liable for the repayment, satisfaction or discharge of
any debts or other obligations of the Partnership in excess of the Capital
Account balance of such Limited Partner.
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Section 10.3 PRIORITY. No Limited Partner shall have priority over
any other Limited Partner as to Partnership allocations or distributions.
ARTICLE XI
POWERS, RIGHTS AND DUTIES
OF THE GENERAL PARTNER
Section 11.1 AUTHORITY. Subject to the provisions of Section
6.2(h)(i) with respect to the Special Representative, the General Partner shall
have exclusive and complete authority and discretion to manage the operations
and affairs of the Partnership and to make all decisions regarding the
investment activity of the Partnership. Any action taken by the General Partner
shall constitute the act of and serve to bind the Partnership. In dealing with
the General Partner acting on behalf of the Partnership no Person shall be
required to inquire into the authority of the General Partner to bind the
Partnership. Persons dealing with the Partnership are entitled to rely
conclusively on the power and authority of the General Partner as set forth in
this Agreement.
Section 11.2 POWERS AND DUTIES OF GENERAL PARTNER. (a) Subject to
the provisions of Section 6.2(h)(i) with respect to the Special Representative,
the General Partner shall have all rights and powers of a general partner under
the Act, and shall have all authority, rights and powers in the management of
the Partnership's investment activity to do any and all other acts and things
necessary, proper, convenient or advisable to effectuate the purposes of this
Agreement, including by way of illustration but not by way of limitation, the
following:
(i) to secure the necessary goods and services required in
performing the General Partner's duties for the Partnership;
(ii) to exercise all powers of the Partnership, on behalf of the
Partnership, in connection with enforcing the Partnership's rights under
the Affiliate Investment Instruments and the Partnership Guarantee;
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(iii) to issue Partnership Preferred Securities and to admit Limited
Partners in connection therewith in accordance with this Agreement;
(iv) to act as registrar and transfer agent for the Partnership
Preferred Securities or designate an entity to act as registrar and
transfer agent;
(v) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including with
respect to Distributions and voting rights and to make determinations as
to the payment of Distributions, and make or cause to be made all other
required payments to Holders of the Partnership Preferred Securities and
to the General Partner;
(vi) to open, maintain and close bank accounts and to draw checks
and other orders for the payment of money;
(vii) to bring or defend, pay, collect, compromise, arbitrate,
resort to legal action, or otherwise adjust claims or demands of or
against the Partnership;
(viii) to deposit, withdraw, invest, pay, retain and distribute the
Partnership's funds in a manner consistent with the provisions of this
Agreement;
(ix) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Partnership's valid existence,
rights, franchises and privileges as a limited partnership under the laws
of the State of Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the Limited
Partners or to enable the Partnership to invest in the Affiliate
Investment Instruments and Eligible Debt Securities;
(x) to take all action not inconsistent with applicable law, the
Certificate or this Agreement, that the General Partner or, upon
appointment pursuant to Section 6.2(h)(i), the Special Representative
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determines in its sole discretion to be necessary or desirable to ensure,
as long as such action does not adversely affect the interests of the
Partnership Preferred Security Holders, or cause (i) the Partnership to be
deemed to be an "investment company" required to be registered under the
1940 Act, (ii) any Initial Debenture (or any subsequent Affiliate
Investment Instrument that is intended to be classified as debt) to not be
treated as indebtedness for United States federal income tax purposes, or
(iii) the Partnership to be treated as an association, or as a publicly
traded partnership, taxable as a corporation;
(xi) to cause the Partnership to enter into and perform the Purchase
Agreement and the Partnership Preferred Securities Purchase Agreement and
to purchase Eligible Debt Securities and Affiliate Investment Instruments,
as the case may be, without any further act, vote or approval of any
Partner; and
(xii) to execute and deliver any and all documents or instruments,
perform all duties and powers and do all things for and on behalf of the
Partnership in all matters necessary or desirable or incidental to the
foregoing.
(b) For so long as any Partnership Preferred Securities remain
outstanding, the General Partner covenants and agrees (i) subject to Section
12.1(b) hereof, to remain the sole general partner of the Partnership and to
maintain directly 100% ownership of the General Partner's interest in the
Partnership, which interest will at all times represent at least 1% of the total
capital of the Partnership, (ii) to cause the Partnership to remain a limited
partnership and not to voluntarily dissolve, liquidate, wind-up or be
terminated, except as permitted by the Limited Partnership Agreement and (iii)
to use its commercially reasonable efforts to ensure that the Partnership will
not be (A) an "investment company" for purposes of the 1940 Act or (B) an
association or a publicly traded partnership taxable as a corporation for United
States federal income tax purposes.
Section 11.3 OBLIGATIONS AND EXPENSES PAYABLE BY GENERAL PARTNER.
(a) The General Partner hereby as-
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sumes and shall be liable for the debts, obligations and liabilities of the
Partnership, including, but not limited to, any liabilities arising under the
Securities Act or the Exchange Act and all costs and expenses relating to the
investment by the Partnership in any Affiliate Investment Instruments (but not
any losses related to any non-payment with respect to such investments), and
agrees to pay to each Person to whom the Partnership is now or hereafter becomes
indebted or liable (the "Beneficiaries"), whether such indebtedness, obligations
or liabilities arise in contract, tort or otherwise (excluding payment
obligations of the Company to Holders of the Partnership Preferred Securities in
such Holders' capacities as Holders of such Partnership Preferred Securities,
such obligations being separately guaranteed under the Partnership Guarantee),
the full payment of such indebtedness and any and all liabilities, when and as
due. This Agreement is intended to be for the benefit of and to be enforceable
by all such Beneficiaries whether or not such Beneficiaries have received notice
hereof.
(b) The General Partner agrees to pay and be responsible for:
(i) all costs and expenses of the Partnership including, but
not limited to, costs and expenses relating to the organization of the
Partnership, the offering, sale and issuance of Partnership Preferred
Securities, the costs and expenses relating to the operation of the Partnership
(including without limitation, costs and expenses of accountants, attorneys,
statistical or bookkeeping services, expenses for printing and engraving and
computing or accounting equipment, paying agent(s), registrar(s), transfer
agents, duplicating, travel and telephone and other telecommunications expenses)
and costs and expenses incurred in connection with the acquisition, financing,
and disposition of the Partnership's assets; and
(ii) any and all taxes (other than Federal, state and local
withholding taxes) and all liabilities, costs and expenses with respect to such
taxes of the Partnership.
Section 11.4 LIABILITY. Except as expressly set forth in this
Agreement or in the Guarantee Agreements, (a) the General Partner shall not be
personally
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liable for the return of any portion of the capital contributions (or any return
thereon) of the Limited Partners; (b) the return of such capital contributions
(or any return thereon) shall be made solely from assets of the Partnership; and
(c) the General Partner shall not be required to pay to the Partnership or to
any Limited Partner any deficit in any Limited Partner's Capital Account upon
dissolution, winding up or otherwise. Other than as expressly provided in this
Agreement or under the Act, no Limited Partner shall have the right to demand or
receive property other than cash for its respective Interest in the Partnership.
The General Partner shall be liable to an unlimited extent for the debts and
other obligations of the Partnership.
Section 11.5 OUTSIDE ACTIVITIES. Any Partner or Affiliate thereof
may engage in or possess an interest in other ventures of any nature or
description, independently or with others, similar or dissimilar to the
activities of the Partnership, and the Partnership and the Partners shall have
no rights by virtue of this Agreement in and to such independent ventures or the
income or profits derived therefrom, and the pursuit of any such venture, even
if competitive with the activities of the Partnership, shall not be deemed
wrongful or improper. No Partner or Affiliate thereof shall be obligated to
present any particular investment opportunity to the Partnership even if such
opportunity is of a character that, if presented to the Partnership, could be
taken by the Partnership, and any Partner or Affiliate thereof shall have the
right to take for its own account (individually or as a partner or fiduciary) or
to recommend to others any such particular investment opportunity.
Section 11.6 LIMITS ON GENERAL PARTNER'S POWERS. Anything in this
Agreement to the contrary notwithstanding, the General Partner shall not cause
or permit the Partnership to:
(i) acquire any assets other than as expressly provided
herein;
(ii) do any act which would make it impractical or impossible
to carry on the ordinary activity of the Partnership as set forth in
Section 2.3;
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(iii) possess Partnership property for other than a
Partnership purpose;
(iv) admit a Person as a Partner, except as expressly provided
in this Agreement;
(v) make any advances of funds to the General Partner or its
Affiliates, other than such as represented by the Affiliate
Investment Instruments;
(vi) perform any act that would subject any Limited Partner to
liability as a general partner in any jurisdiction;
(vii) engage in any activity that is not consistent with the
purposes of the Partnership, as set forth in Section 2.3;
(viii) without the written consent of the Holders of 66-2/3%
in liquidation preference of the Partnership Preferred Securities,
have an order for relief entered with respect to the Partnership or
commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or
consent to the entry of an order for relief in an involuntary case
under any such law, or consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a
substantial part of the Partnership's property, or make any
assignment for the benefit of creditors of the Partnership; or
(ix) borrow money or become liable for the borrowings of any
third party or to engage in any financial or other trade or
business.
Section 11.7 EXCULPATION. (a) No Partnership Indemnified Person
shall be liable, responsible or accountable in damages or otherwise to the
Partnership or any Partnership Covered Person for any loss, damage or claim
incurred by reason of any act or omission performed or omitted by such
Partnership Indemnified Person in good faith on behalf of the Partnership and in
a manner such Partnership Indemnified Person reasonably believed to be within
the scope of the authority conferred on such Partnership Indemnified Person by
this Agreement or by law,
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except that a Partnership Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Partnership Indemnified Person's
gross negligence or willful misconduct with respect to such acts or omissions.
(b) A Partnership Indemnified Person shall be fully protected in
relying in good faith upon the records of the Partnership and upon such
information, opinions, reports or statements presented to the Partnership by any
Person as to matters the Partnership Indemnified Person reasonably believes are
within such other Person's professional or expert competence and who has been
selected with reasonable care by or on behalf of the Partnership, including
information, opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts pertinent to the
existence and amount of assets from which distributions to Partners might
properly be paid.
Section 11.8 FIDUCIARY DUTY. (a) To the extent that, at law or in
equity, a Partnership Indemnified Person has duties (including fiduciary duties)
and liabilities relating thereto to the Partnership or to any other Partnership
Covered Person, a Partnership Indemnified Person acting under this Agreement
shall not be liable to the Partnership or to any other Partnership Covered
Person for its good faith reliance on the provisions of this Agreement. The
provisions of this Agreement, to the extent that they restrict the duties and
liabilities of a Partnership Indemnified Person otherwise existing at law or in
equity, are agreed by the parties hereto to replace such other duties and
liabilities of such Partnership Indemnified Person.
(b) Unless otherwise expressly provided herein, (i) whenever a
conflict of interest exists or arises between Partnership Covered Persons, or
(ii) whether this Agreement or any other agreement contemplated herein or
therein provides that a Partnership Indemnified Person shall act in a manner
that is, or provides terms that are, fair and reasonable to the Partnership or
any Partner, the Partnership Indemnified Person shall resolve such conflict of
interest, take such action or provide such terms, considering in each case the
relative interest of each party (including its own interest) to such conflict,
agreement, transaction or situation and the
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benefits and burdens relating to such interests, any customary or accepted
industry practices, and any applicable generally accepted accounting practices
or principles. In the absence of bad faith by the Partnership Indemnified
Person, the resolution, action or term so made, taken or provided by the
Partnership Indemnified Person shall not constitute a breach of this Agreement
or any other agreement contemplated herein or of any duty or obligation of the
Partnership Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Agreement a Partnership Indemnified Person is
permitted or required to make a decision (i) in its "discretion" or under a
grant of similar authority, the Partnership Indemnified Person shall be entitled
to consider such interests and factors as it desires, including its own
interest, and shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Partnership or any other Person, or (ii) in
its "good faith" or under another express standard, the Partnership Indemnified
Person shall act under such express standard and shall not be subject to any
other or different standard imposed by this Agreement or by applicable law.
Section 11.9 INDEMNIFICATION. (a) To the fullest extent permitted by
applicable law, the Partnership shall indemnify and hold harmless each
Partnership Indemnified Person from and against any loss, damage or claim
incurred by such Partnership Indemnified Person by reason of any act or omission
performed or omitted by such Partnership Indemnified Person in good faith on
behalf of the Partnership and in a manner such Partnership Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Partnership Indemnified Person by this Agreement, except that no Partnership
Indemnified Person shall be entitled to be indemnified in respect of any loss,
damage or claim incurred by such Partnership Indemnified Person by reason of
gross negligence or willful misconduct with respect to such acts or omissions;
provided, however, that any indemnity under this Section 11.9 shall be provided
out of and to the extent of Partnership assets only, and no Partnership Covered
Person shall have any personal liability on account thereof.
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(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by a Partnership Indemnified Person in defending
any claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Partnership prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Partnership of an
undertaking by or on behalf of the Partnership Indemnified Person to repay such
amount if it shall be determined that the Partnership Indemnified Person is not
entitled to be indemnified as authorized in Section 11.9(a).
Section 11.10 TAX MATTERS
(a) For purposes of section 6231(a)(7) of the Code, the "Tax Matters
Partner" shall be the Company as long as it remains the general partner of the
Partnership. The Tax Matters Partner shall keep the Limited Partners fully
informed of any inquiry, examination or proceeding.
(b) Neither the Partnership, nor the Tax Matters Partner on behalf
of the Partnership, shall make an election under section 754 of the Code.
(c) The General Partner and the Partnership Preferred Security
Holders acknowledge that they intend, for United States federal income tax
purposes, that the Partnership shall be treated as a "partnership" (other than a
publicly traded partnership taxable as a corporation) and that the General
Partner and the Partnership Preferred Security Holders shall be treated as
"partners" of the Partnership.
(d) The General Partner shall retain, at the expense of the
Partnership and at its sole discretion, a nationally recognized firm of
certified public accountants which shall prepare all United States federal,
state, local or other tax and information returns of the Partnership, as
required by law, and the Schedule K-1's or any successor or similar forms or
schedules.
Section 11.11 CONSOLIDATION, MERGER OR SALE OF ASSETS. The
Partnership may not consolidate, amalgamate, merge with or into, or be replaced
by, or convey, transfer or lease its properties and assets substantially as an
entirety to, any corporation or other body, except as
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permitted pursuant to this Section 11.11. The Partnership may, without the
consent of the Holders of the Partnership Preferred Securities, consolidate,
amalgamate, merge with or into, or be replaced by a limited partnership, limited
liability company or trust organized as such under the laws of any state of the
United States of America, provided that (i) such successor entity either (x)
expressly assumes all of the obligations of the Partnership under the
Partnership Preferred Securities or (y) substitutes for the Partnership
Preferred Securities other securities having substantially the same terms as the
Partnership Preferred Securities (the "Partnership Successor Securities") so
long as the Partnership Successor Securities are not junior to any other equity
securities of the successor entity, with respect to participation in the profits
and distributions, and in the assets, of the successor entity, (ii) the
Investment Affiliates expressly acknowledge such successor entity as the holder
of the Affiliate Investment Instruments, (iii) the Partnership Preferred
Securities continue to be or any Partnership Successor Securities are or will be
listed, upon notification of issuance, on any national securities exchange or
other organization on which the Partnership Preferred Securities, if so listed,
are then listed, (iv) such merger, consolidation, amalgamation or replacement
does not cause the Trust Preferred Securities (or, in the event that the Trust
is liquidated in connection with a Trust Special Event, the Partnership
Preferred Securities (including any Partnership Successor Securities)) to be
downgraded by any nationally recognized statistical securities rating
organization, (v) such merger, consolidation, amalgamation or replacement does
not adversely affect the powers, preferences and other special rights of the
holders of the Trust Preferred Securities or the Holders of the Partnership
Preferred Securities (including any Partnership Successor Securities)) in any
material respect (other than, in the case of the Partnership Preferred
Securities, with respect to any dilution of the Holders' interest in the new
resulting entity), (vi) such successor entity has a purpose substantially
identical to that of the Partnership, (vii) prior to such merger, consolidation,
amalgamation or replacement, the Company has received an opinion of nationally
recognized independent counsel to the Partnership experienced in such matters to
the effect that (A) such successor entity will be treated as a "partnership" for
United States federal income tax purposes and
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not as an association or a publicly traded partnership taxable as a corporation,
(B) such merger, consolidation, amalgamation or replacement will not cause the
Trust to be classified as an association or a publicly traded partnership
taxable as a corporation for United States federal income tax purposes, (C)
following such merger, consolidation, amalgamation or replacement, the Company
and such successor entity will be in compliance with the 1940 Act without
registering thereunder as an investment company, and (D) such merger,
consolidation, amalgamation or replacement will not adversely affect the limited
liability of the Holders of the Partnership Preferred Securities and (viii) the
Company guarantees the obligations of such successor entity under the
Partnership Successor Securities at least to the extent provided by the
Partnership Guarantee.
ARTICLE XII
TRANSFERS OF INTERESTS BY PARTNERS
Section 12.1 TRANSFER OF INTERESTS.
(a) Partnership Preferred Securities shall be freely transferable by
a Holder.
(b) Except as provided in the next sentence, the General Partner may
not assign or transfer its Interest in the Partnership in whole or in part
unless, prior to such assignment or transfer, the General Partner has obtained
the consent of the Holders of not less than 66-2/3% in Liquidation Preference
of the Partnership Preferred Securities. The General Partner may assign or
transfer its Interest in the Partnership without such consent to an entity that
is the survivor of a merger or consolidation of the General Partner in a
transaction that meets the requirements of Section 11.11 and only if prior to
such assignment or transfer the Company has received an opinion of nationally
recognized independent tax counsel to the Partnership experienced in such
matters to the effect that after such assignment or transfer the Partnership
will continue to be treated as a partnership for United States federal income
tax purposes and will not be treated as an association or a publicly traded
partnership taxable as a corporation. The General Partner may transfer its
Interest to a wholly-owned direct or indirect subsidiary of the Company provided
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that (i) such entity expressly accepts such transfer of the obligations as
General Partner and (ii) prior to such transfer, the Company has received an
opinion of nationally recognized independent counsel to the Partnership
experienced in such matters to the effect that (A) the Partnership will be
treated as a partnership for United States federal income tax purposes, (B) such
transfer would not cause the Trust to be classified as an association taxable as
a corporation for United States federal income tax purposes, (C) following such
transfer, the Company and such successor entity will be in compliance with the
1940 Act without registering thereunder as an investment company, and (D) such
transfer will not adversely affect the limited liability of the holders of the
Partnership Preferred Securities. "Permitted Successor" shall mean an entity
that is an assignee or transferee of the Interest of the General Partner as
permitted by this Section 12.1(b). The admission of a Permitted Successor as a
general partner of the Partnership shall be effective upon the filing of an
amendment to the Certificate with the Secretary of State of the State of
Delaware which indicates that the Permitted Successor has been admitted as a
general partner of the Partnership. If the General Partner assigns its entire
Interest, the General Partner shall cease to be a general partner of the
Partnership simultaneously with the admission of the Permitted Successor as a
general partner of the Partnership. Any such Permitted Successor is hereby
authorized to and shall continue the business of the Partnership without
dissolution.
(c) Except as provided above, no Interest shall be transferred, in
whole or in part, except in accordance with the terms and conditions set forth
in this Agreement. Any transfer or purported transfer of any Interest not made
in accordance with this Agreement shall be null and void.
Section 12.2 TRANSFER OF L.P. CERTIFICATES. The General Partner
shall provide for the registration of L.P. Certificates and of transfers of L.P.
Certificates. Upon surrender for registration of transfer of any L.P.
Certificate, the General Partner shall cause one or more new L.P. Certificates
to be issued in the name of the designated transferee or transferees. Every L.P.
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form
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satisfactory to the General Partner duly executed by the Partnership Preferred
Security Holder or his or her attorney duly authorized in writing. Each L.P.
Certificate surrendered for registration of transfer shall be cancelled by the
General Partner. A transferee of an L.P. Certificate shall be admitted to the
Partnership as a Limited Partner, shall become bound by this Agreement and shall
be entitled to the rights and subject to the obligations of a Partnership
Preferred Security Holder hereunder upon the receipt by the transferee of an
L.P. Certificate, which receipt shall be deemed to constitute a request by such
transferee that the books and records of the Partnership reflect such
transferee's admission as a limited partner. The transferor of an L.P.
Certificate, in whole, shall cease to be a Limited Partner at the time that the
transferee of such L.P. Certificate is admitted to the Partnership as a Limited
Partner in accordance with this Section 12.2.
Section 12.3 DEFINITIVE L.P. CERTIFICATES; PERSONS DEEMED
PARTNERSHIP PREFERRED SECURITY HOLDERS. (a) DEFINITIVE L.P. CERTIFICATES. Unless
and until the Partnership issues a global L.P. Certificate pursuant to Section
12.4(a), the Partnership shall only issue definitive L.P. Certificates to the
Partnership Preferred Security Holders. (b) The Partnership may treat the Person
in whose name any L.P. Certificate shall be registered on the books and records
of the Partnership as the sole holder of such L.P. Certificate and of the
Partnership Preferred Securities represented by such L.P. Certificate for
purposes of receiving Distributions and for all other purposes whatsoever
(including without limitation, tax returns and information reports) and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such L.P. Certificate or in the Partnership Preferred Securities
represented by such L.P. Certificate on the part of any other Person, whether or
not the Partnership shall have actual or other notice thereof.
Section 12.4 BOOK ENTRY PROVISIONS.
(a) General. The provisions of this Section 12.4 shall apply only in
the event that the Partnership Preferred Securities are distributed to the
Holders of Trust Securities in connection with the involuntary or voluntary
dissolution, winding up or liquidation of the
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Trust as a result of the occurrence of a Trust Special Event. Upon the
occurrence of such event, a global L.P. Certificate representing the Book-Entry
Interests shall be delivered to DTC, the initial Clearing Agency, by, or on
behalf of, the Partnership and any previously issued and still outstanding
definitive L.P. Certificates shall be of no further force and effect. The global
L.P. Certificate shall initially be registered on the books and records of the
Partnership in the name of Cede & Co., the nominee of DTC, and no Holder of a
Partnership Preferred Security will receive a new definitive L.P. Certificate
representing such Holder's interests in such L.P. Certificate, except as
provided in Section 12.4(c). In connection with the involuntary or voluntary
dissolution, winding up or liquidation of the Trust as a result of the
occurrence of a Trust Special Event, Cede & Co., the nominee of DTC, shall
automatically be admitted to the Partnership as a Limited Partner. Receipt of
the global L.P. Certificate shall be deemed to constitute a request by Cede &
Co., the nominee of DTC, that the books and records of the Partnership reflect
its admission as a Limited Partner. Unless and until new definitive, fully
registered L.P. Certificates (the "Definitive L.P. Certificates") have been
issued to the Partnership Preferred Security Owners pursuant to Section 12.4(c):
(i) The provisions of this Section shall be in full force and
effect;
(ii) The Partnership, the General Partner and any Special
Representative shall be entitled to deal with the Clearing Agency for all
purposes of this Agreement (including the payment of Distributions,
Redemption Price and liquidation proceeds on the L.P. Certificates and
receiving approvals, votes or consents hereunder) as the Partnership
Preferred Security Holder and the sole holder of the L.P. Certificates and
shall have no obligation to the Partnership Preferred Security Owners;
(iii) None of the Partnership, the Trust, the General Partner, any
Special Representative or any agents of any of the foregoing shall have
any liability or responsibility for any aspect of the records relating to
or payments made on account of beneficial ownership interests in a global
L.P. Certificate for such beneficial ownership interests
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or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests; and
(iv) Except as provided in Section 12.4(c) below, the Partnership
Preferred Security Owners will not be entitled to receive physical
delivery of the Partnership Preferred Securities in definitive form and
will not be considered Holders thereof for any purpose under this
Agreement, and no global L.P. Certificate representing Partnership
Preferred Securities shall be exchangeable, except for another global L.P.
Certificate of like denomination and tenor to be registered in the name of
DTC or Cede & Co., or to a successor Depositary or its nominee.
Accordingly, each Partnership Preferred Security Owner must rely on the
procedures of DTC or if such person is not a Participant, on the
procedures of the Participant through which such person owns its interest
to exercise any rights of a Holder under the Agreement.
(b) NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication to the Partnership Preferred Security Holders is required under
this Agreement, unless and until Definitive L.P. Certificates shall have been
issued to the Partnership Preferred Security Owners pursuant to Section 12.4(c),
the General Partner and any Special Representative shall give all such notices
and communications specified herein to be given to the Partnership Preferred
Security Holders to the Clearing Agency, and shall have no obligations to the
Partnership Preferred Security Owners.
(c) DEFINITIVE L.P. CERTIFICATES. Definitive L.P. Certificates shall
be prepared by the Partnership and exchangeable for the global L.P. Certificate
or L.P. Certificates if and only if (i) the Depositary notifies the Company that
it is unwilling or unable to continue its services as a securities depositary
and no successor depositary shall have been appointed, (ii) the Depositary, at
any time, ceases to be a clearing agency registered under the Exchange Act at
such time as the Depositary is required to be so registered to act as such
depositary and no successor depositary shall have been appointed, or (iii) the
Company, in its sole discretion, determines that such global L.P. Certificate
shall be so
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exchangeable. Upon surrender of the global L.P. Certificate or L.P. Certificates
representing the Book-Entry Interests by the Clearing Agency, accompanied by
registration instructions, the General Partner shall cause Definitive L.P.
Certificates to be delivered to Partnership Preferred Security Owners in
accordance with the instructions of the Clearing Agency. Neither the General
Partner nor the Partnership shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Any Person receiving a Definitive L.P. Certificate in
accordance with this Section 12.4 shall be admitted to the Partnership as a
Limited Partner upon receipt of such Definitive L.P. Certificate and shall be
registered on the books and records of the Partnership as a Partnership
Preferred Security Holder. The Clearing Agency or the nominee of the Clearing
Agency, as the case may be, shall cease to be a Limited Partner under this
Section 12.4(c) at the time that at least one additional Person is admitted to
the Partnership as a Limited Partner in accordance herewith. The Definitive L.P.
Certificates shall be printed, lithographed or engraved or may be produced in
any other manner as may be required by any national securities exchange on which
Partnership Preferred Securities may be listed and is reasonably acceptable to
the General Partner, as evidenced by its execution thereof.
Section 12.5 REGISTRAR, TRANSFER AGENT AND PAYING AGENT.
(a) The General Partner will act as Registrar, Transfer Agent and
Paying Agent for the Partnership Preferred Securities for so long as the
Partnership Preferred Securities are held by the Trust or, if the Trust is
liquidated in connection with a Trust Special Event, for so long as the
Partnership Preferred Securities remain in book-entry only form.
(b) Except in such case where the General Partner shall act as
Registrar or Paying Agent pursuant to Section 12.5(a) hereof, the Partnership
shall maintain in the Borough of Manhattan, City of New York, State of New York
(i) an office or agency where Partnership Preferred Securities may be presented
for registration of transfer or for exchange ("Registrar") and (ii) an office or
agency where Partnership Preferred Securities may be
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presented for payment ("Paying Agent"). The Registrar shall keep a register of
the Partnership Preferred Securities and of their transfer and exchange. The
Partnership may appoint the Registrar and the Paying Agent and may appoint one
or more co-registrars and one or more additional paying agents in such other
locations as it shall determine. The term "Paying Agent" includes any additional
paying agent. The Partnership may change any Paying Agent, Registrar or
co-registrar without prior notice to any Holder. If the Partnership fails to
appoint or maintain another entity as Registrar or Paying Agent, the General
Partner shall act as such.
(c) Registration of transfers of Partnership Preferred Securities
shall be effected without charge by or on behalf of the Partnership, but upon
payment (with the giving of such indemnity as the Partnership or the General
Partner may require) in respect of any tax or other governmental charges that
may be imposed.
(d) The Partnership will not be required to register or cause to be
registered the transfer of Partnership Preferred Securities after such
Partnership Preferred Securities have been called for redemption.
ARTICLE XIII
WITHDRAWAL, DISSOLUTION;
LIQUIDATION AND DISTRIBUTION OF ASSETS
Section 13.1 WITHDRAWAL OF PARTNERS. The General Partner shall not
at any time retire or withdraw from the Partnership except as otherwise
permitted hereunder. If the General Partner retires or withdraws in
contravention of this Section 13.1, it shall indemnify, defend and hold harmless
the Partnership and the other Partners from and against any losses, expenses,
judgments, fines, settlements or damages suffered or incurred by the Partnership
or such other Partners arising out of or resulting from such retirement or
withdrawal.
Section 13.2 DISSOLUTION OF THE PARTNERSHIP.
(a) The Partnership shall not be dissolved by the admission of
Partners in accordance with the terms of this Agreement. The death, withdrawal,
bankruptcy or dissolution of a Limited Partner, or the occurrence of
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any other event which terminates the Interest of a Limited Partner in the
Partnership, shall not, in and of itself, cause the Partnership to be dissolved
and its affairs wound up. To the fullest extent permitted by applicable law,
upon the occurrence of any such event, the General Partner may, without any
further act, vote on approval of any Partner, admit any Person to the
Partnership as an additional or substitute limited partner in the Partnership,
which admission shall be effective as of the date of the occurrence of such
event, and the business of the Partnership shall be continued without
dissolution.
(b) The Partnership shall be dissolved and its affairs shall be
wound up upon the earliest to occur of any of the following events:
(i) upon the bankruptcy or insolvency of the General Partner;
(ii) upon the assignment by the General Partner of its entire
interest in the Partnership when the assignee is not admitted to the
Partnership as a general partner of the Partnership in accordance with
this Agreement, or the filing of a certificate of dissolution or its
equivalent with respect to the General Partner, or the revocation of the
General Partner's charter and the expiration of 90 days after the date of
notice to the General Partner of revocation without a reinstatement of its
charter, or if any other event occurs that causes the General Partner to
cease to be a general partner of the Partnership under the Delaware
Partnership Act, unless the business of the Partnership is continued in
accordance with the Delaware Partnership Act;
(iii) the Partnership has redeemed or otherwise purchased all of
the Partnership Preferred Securities;
(iv) upon the entry of a decree of judicial dissolution under
Section 17-802 of the Act; or
(v) the written consent of all Partners.
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(c) Upon dissolution of the Partnership, the Liquidator shall
promptly notify the Partners of such dissolution.
Section 13.3 LIQUIDATION.
(a) In the event of the dissolution of the Partnership for any
reason, the General Partner (or, if the Partnership is dissolved pursuant to
Section 13.2(b)(i) or (ii), then a liquidating agent appointed by Holders of not
less than 66 2/3% in Liquidation Preference of the Partnership Preferred
Securities (the General Partner or such Person so appointed is hereinafter
referred to as the "Liquidator")) shall commence to wind up the affairs of the
Partnership and to liquidate the Partnership's assets; provided, however, that a
reasonable time shall be allowed for the orderly liquidation of the assets of
the Partnership and the satisfaction of liabilities to creditors so as to enable
the Partners to minimize the normal losses attendant upon liquidation. The
Partners shall continue to share all income, losses and distributions during the
period of liquidation in accordance with Articles IV and V. Subject to the
provisions of this Article XIII, the Liquidator shall have full right and
unlimited discretion to determine the time, manner and terms of any sale or
sales of Partnership property pursuant to such liquidation, giving due regard to
the activity and condition of the relevant market and general financial and
economic conditions.
(b) The Liquidator shall have all of the rights and powers with
respect to the assets and liabilities of the Partnership in connection with the
liquidation and termination of the Partnership that the General Partner would
have with respect to the assets and liabilities of the Partnership during the
term of the Partnership, and the Liquidator is hereby expressly authorized and
empowered to execute any and all documents necessary or desirable to effectuate
the liquidation and termination of the Partnership and the transfer of any
assets.
(c) Notwithstanding the foregoing, a Liquidator that is not a
General Partner shall not, by virtue of acting in such capacity, be deemed a
Partner in this Partnership and shall not have any of the economic interests in
the Partnership of a Partner; and such Liquidator may be compensated for its
services to the Partnership at
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normal customary and competitive rates for its services to the Partnership as
reasonably determined by all the Limited Partners.
Section 13.4 DISTRIBUTION IN LIQUIDATION. The proceeds of
liquidation shall be applied in the following order of priority (and without
regard to the non-mandatory provisions of Section 17-804 of the Act):
(i) first, to creditors of the Partnership, including Partners who
are creditors, to the extent otherwise permitted by law, in satisfaction
of the liabilities of the Partnership (whether by payment or the making of
reasonable provisions for payment thereof), other than liabilities for
distributions (including Distributions) to Partners;
(ii) second, following any allocations required under Section 4.2(e)
of the Agreement, to the Limited Partners, an amount equal to the
aggregate liquidation preference of their Partnership Preferred
Securities, plus the amount of Distributions (including any Compounded
Distributions) that are accumulated and unpaid as of the date of such
liquidating distribution; and
(iii) thereafter, to the General Partner.
Section 13.5 RIGHTS OF LIMITED PARTNERS. Each Limited Partner shall
look solely to the assets of the Partnership for all distributions with respect
to the Partnership and such Partner's capital contribution (including returns
thereof), and such Partner's share of profits or losses thereof, and shall have
no recourse therefor (upon dissolution or otherwise) against the General
Partner, except under the Partnership Guarantee. No Partner shall have any right
to demand or receive property other than cash upon dissolution and termination
of the Partnership.
Section 13.6 TERMINATION. The Partnership shall terminate when all
of the assets of the Partnership shall have been disposed of and the assets
shall have been distributed as provided in Section 13.4 and the Liquidator has
executed and caused to be filed a certificate of cancellation of the
Partnership.
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ARTICLE XIV
AMENDMENTS AND MEETINGS
Section 14.1 AMENDMENTS. Except as provided by Section 3.3(b) and
Section 6.2(i), this Agreement may be amended by, and only by, a written
instrument executed by the General Partner without the consent of any Limited
Partner; provided, however, that no amendment shall be made, and any such
purported amendment shall be void and ineffective, to the extent the result
thereof would be to (A) cause the Partnership to be treated for United States
federal income tax purposes as an association or a publicly traded partnership
taxable as a corporation, (B) require the Partnership to register under the 1940
Act or (C) materially adversely affect the rights, privileges or preferences of
the Partnership Preferred Securities. Notwithstanding any provision to the
contrary, in the event of (i) a liquidation of the Trust for any reason or (ii)
any other distribution which effectively causes Partnership Preferred Securities
to be distributed to Holders of Trust Preferred Securities, the General Partner
may amend this Agreement without the consent of the Limited Partners to provide
for (A) orderly dissemination, purchase, sale, exchange and replacement of such
Partnership Preferred Securities, (B) all other matters to the extent required
by or desirable under then applicable law and (C) such other matters reasonably
incidental or related thereto; provided, however, that no such amendment may
materially adversely affect the rights, privileges, or preferences of the
Partnership Preferred Securities without the consent of a majority in interest
of the Partners so effected.
Section 14.2 AMENDMENT OF CERTIFICATE. In the event this Agreement
shall be amended pursuant to Section 14.1, the General Partner shall amend the
Certificate to reflect such change if it deems such amendment of the Certificate
to be necessary or appropriate.
Section 14.3 MEETINGS OF PARTNERS.
(a) Meetings of the Limited Partners who are Holders may be called
at any time by the General Partner to consider and act on any matter on which
Limited Partners are entitled to act under the terms of this Agreement or the
Act. The General Partner shall call a meeting of Holders if directed to do so by
Holders of no less
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than 10% in Liquidation Preference as permitted by this Agreement. Such
direction shall be given by delivering to the General Partner a request in
writing stating that the signing Limited Partners desire to call a meeting and
indicating the general or specific purpose for which the meeting is to be
called. Any Limited Partners calling a meeting shall specify in writing the L.P.
Certificates held by the Limited Partners exercising the right to call a meeting
and only those specified Interests shall be counted for purposes of determining
whether the required percentage set forth in the second sentence of this
paragraph has been met. Except to the extent otherwise provided in this
Agreement, the following provisions shall apply to meetings of Partners.
(b) Notice of any such meeting shall be given to all Limited
Partners having a right to vote thereat not less than seven Business Days nor
more than 60 days prior to the date of such meeting. Each such notice shall set
forth the date, time and place of the meeting, a description of any matter on
which Holders are entitled to vote and instructions for the delivery of proxies
or written consents.
(c) Any action that may be taken at a meeting of the Limited
Partners may be taken without a meeting if a consent in writing setting forth
the action so taken is signed by Limited Partners owning not less than the
minimum Interests that would be necessary to authorize or take such action at a
meeting in which all Limited Partners having a right to vote thereon were
present and voting. Prompt notice of the taking of action without a meeting
shall be given to the Limited Partners entitled to vote who have not consented
in writing. The General Partner may provide that any written ballot submitted to
the Limited Partners for the purpose of taking any action without a meeting
shall be returned to the Partnership within a specified time.
(d) Each Partner may authorize any Person to act for it by proxy on
all matters as to which a Partner is entitled to participate, including waiving
notice of any meeting, or voting or participating at a meeting. Every proxy must
be signed by the Partner or its attorney-in-fact. No proxy shall be valid after
the expiration of 11 months from the date thereof unless otherwise provided in
the proxy. Every proxy shall be revocable at
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the pleasure of the Partner executing it. Except as otherwise provided herein,
or pursuant to Section 14.3(f), all matters relating to the giving, voting or
validity of proxies shall be governed by the General Corporation Law of the
State of Delaware relating to proxies, and judicial interpretations thereunder,
as if the Partnership were a Delaware corporation and the Limited Partners were
stockholders of a Delaware corporation.
(e) Each meeting of Partners shall be conducted by the General
Partner or by such other Person that the General Partner may designate.
(f) The General Partner may establish all other reasonable
procedures relating to meetings of Limited Partners or the giving of written
consents, in addition to those expressly provided, including notice of time,
place or purpose of any meeting at which any matter is to be voted on by any
Partners, waiver of any such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements, voting in person or by
proxy or any other matter with respect to the exercise of any such right to
vote.
ARTICLE XV
MISCELLANEOUS
Section 15.1 NOTICES. All notices provided for in this Agreement
shall be in writing, and shall be delivered or mailed by first class or
registered or certified mail or, with respect to the Partnership and General
Partner, telecopied, as follows:
(a) if given to the Partnership, in care of the General Partner at
the Partnership's mailing address set forth below:
Merrill Lynch & Co., Inc.
World Financial Center
South Tower
225 Liberty Street
New York, New York 10080-6105
Attention: Treasurer
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(b) if given to the General Partner, at its mailing address set
forth below:
Merrill Lynch & Co., Inc.
World Financial Center
South Tower
225 Liberty Street
New York, New York 10080-6105
Attention: Treasurer
(c) if given to any other Partner at the address set forth on the
books and records of the Partnership.
Section 15.2 POWER OF ATTORNEY. Each Holder of a Partnership
Preferred Security does hereby constitute and appoint the General Partner, and
if applicable, any Special Representative appointed pursuant to Section
6.2(h)(i) of this Agreement, as its true and lawful representative and
attorney-in-fact, in its name, place and stead to make, execute, sign, deliver
and file (a) any amendment of the Certificate required because of an amendment
of this Agreement or in order to effect any change in the Partnership, (b) this
Agreement, (c) any amendments to this Agreement and (d) all such other
instruments, documents and certificates which from time to time may be required
by the laws of the United States of America, the State of Delaware or any other
jurisdiction, or any political subdivision or agency thereof, to effectuate,
implement and continue the valid and subsisting existence of the Partnership or
to dissolve the Partnership for any other purpose consistent with this Agreement
and the transactions contemplated hereby.
The power of attorney granted hereby is coupled with an interest and
shall (a) survive and not be affected by the subsequent death, incapacity,
disability, dissolution, termination, or bankruptcy of the Holder granting the
same or the transfer of all or any portion of such Holder's Interest and (b)
extend to such Holder's successors, assigns and legal representatives.
Section 15.3 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties. It supersedes any prior agreement or understandings
among them, and it may not be modified or amended in any manner other than as
set forth herein.
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Section 15.4 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE
LAW OF THE STATE OF DELAWARE AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY
SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
Section 15.5 EFFECT. Except as herein otherwise specifically
provided, this Agreement shall be binding upon and inure to the benefit of the
parties and their legal representatives, successors and assigns.
Section 15.6 PRONOUNS AND NUMBER. Wherever from the context it
appears appropriate, each term stated in either the singular or the plural shall
include the singular and the plural, and pronouns stated in either the
masculine, feminine or neuter shall include the masculine, feminine and neuter.
Section 15.7 CAPTIONS. Captions, headings, and subheadings contained
in this Agreement are included for convenience and identification purposes only
and in no way define, limit or extend the scope or intent of this Agreement or
any provision herein.
Section 15.8 PARTIAL ENFORCEABILITY. If any provision of this
Agreement, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Agreement, or the application of
such provision to persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.
Section 15.9 COUNTERPARTS. This Agreement may contain more than one
counterpart of the signature page and this Agreement may be executed by the
affixing of the signature of each of the Partners to one of such counterpart
signature pages. All of such counterpart signature pages shall be read as though
one, and they shall have the same force and effect as though all of the signers
had signed a single signature page.
Section 15.10 WAIVER OF PARTITION. Each Partner hereby irrevocably
waives any and all rights (if any) that such Partner may have to maintain any
action for partition of any of the Partnership's property.
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Section 15.11 REMEDIES. The failure of any party to seek redress for
violation of, or to insist upon the strict performance of, any provision of this
Agreement shall not prevent a subsequent act, which would have originally
constituted a violation, from having the effect of an original violation. The
rights and remedies provided by this Agreement are cumulative and the use of any
one right or remedy by any party shall not preclude or waive its right to use
any or all other remedies. Said rights and remedies are given in addition to any
other rights the parties may have by law, statute, ordinance or otherwise.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above stated.
GENERAL PARTNER:
MERRILL LYNCH & CO., INC.
a Delaware corporation
By: /s/ Theresa Lang
-------------------------------------
Name: Theresa Lang
Title: Senior Vice President
and Treasurer
INITIAL LIMITED PARTNER:
MERRILL LYNCH GROUP, INC.
a Delaware corporation
By: /s/ Theresa Lang
-------------------------------------
Name: Theresa Lang
Title: President
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SCHEDULE 1
S-1
<PAGE>
ANNEX A
FORM OF L.P. CERTIFICATE
[IF THE PARTNERSHIP PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE
INSERT: This Partnership Preferred Security is a Global Certificate within the
meaning of the Partnership Agreement hereinafter referred to and is registered
in the name of The Depository Trust Company (the "Depositary") or a nominee of
the Depositary. This Partnership Preferred Security is exchangeable for
Partnership Preferred Securities registered in the name of a person other than
the Depositary or its nominee only in the limited circumstances described in the
Partnership Agreement and no transfer of this Partnership Preferred Security
(other than a transfer of this Partnership Preferred Security as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary) may be registered except in
limited circumstances.
Unless this Partnership Preferred Security is presented by an
authorized representative of The Depository Trust Company (55 Water Street, New
York, New York), a New York corporation, to the Partnership or its agent for
registration of transfer, exchange or payment, and any Partnership Preferred
Security issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of the Depositary and any payment
hereon is made to Cede & Co. or such other entity as is requested by an
authorized representative of the Depositary, ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.]
A-1
<PAGE>
PS-1 [ ]
Certificate Evidencing Partnership Preferred Securities
of
MERRILL LYNCH PREFERRED FUNDING I, L.P.
7 3/4% Partnership Preferred Securities
(liquidation preference $25 per Partnership Preferred Security)
MERRILL LYNCH PREFERRED FUNDING I, L.P., a limited partnership
formed under the laws of the State of Delaware (the "Partnership"), hereby
certifies that The Chase Manhattan Bank, a property trustee pursuant to the
Amended and Restated Declaration of Trust of Merrill Lynch Preferred Capital
Trust I, dated as of December 11, 1996 (the "Holder") is the registered owner of
preferred securities of the Partnership representing limited partner interests
in the Partnership designated the 7 3/4% Partnership Preferred Securities
(liquidation preference $25 per Partnership Preferred Security) (the
"Partnership Preferred Securities"). The Partnership Preferred Securities are
freely transferable on the books and records of the Partnership, in person or by
a duly authorized attorney, upon surrender of this certificate duly endorsed and
in proper form for transfer. The designation, rights, powers, privileges,
restrictions, preferences and other terms and provisions of the Partnership
Preferred Securities represented hereby are set forth in, issued under and shall
in all respects be subject to the provisions of the Amended and Restated
Agreement of Limited Partnership dated as of December 17, 1996, as the same may
be amended from time to time (the "Partnership Agreement"). Capitalized terms
used herein but not defined shall have the meaning given them in the Partnership
Agreement. The Holder is entitled to the benefits of the Partnership Guarantee
to the extent provided therein. The Partnership will provide a copy of the
Partnership Agreement and the Partnership Guarantee to a Holder without charge
upon written request to the Partnership at its principal place of business.
Upon receipt of this certificate, the Holder is admitted to the
Partnership as a Limited Partner, is bound by the Partnership Agreement and is
entitled to the benefits thereunder. Each Holder of a Partnership Preferred
Security, by acceptance of this Certificate and each Certificate owner, by
acquisition of a beneficial interest in a Certificate, agrees to treat the
Debentures, and any other Affiliate Investment Instruments that are treated as
debt instruments by the relevant Investment Affiliate and by the Partnership, as
indebtedness for United States federal income tax purposes.
A1-1
<PAGE>
IN WITNESS WHEREOF, the Partnership has executed this certificate
this 17th day of December, 1996.
MERRILL LYNCH PREFERRED FUNDING I, L.P.
By: MERRILL LYNCH & CO., INC.,
as General Partner
By: _____________________________________
Name: Theresa Lang
Title: Senior Vice President
and Treasurer
(See reverse for additional terms)
A1-2
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Partnership Preferred Security will be
fixed at a rate per annum of 7 3/4% of the stated liquidation preference of $25
per Partnership Preferred Security. Distributions not paid on the scheduled
payment date will accumulate and compound quarterly (to the extent permitted by
applicable law) at the rate of 7 3/4% per annum. The term "Distributions" as
used herein shall mean ordinary cumulative distributions in respect of each
Fiscal Period together with any such Compounded Distributions. Distributions on
the Partnership Preferred Securities will only be made to the extent that the
Partnership has funds legally available for the payment of such distributions.
Amounts available to the Partnership for Distribution to the holders of the
Partnership Preferred Securities will be limited to payments received by the
Partnership from the Company and certain wholly owned subsidiaries on the
Initial Debentures and Affiliate Investment Instruments or from the Company on
the Partnership Guarantee or on the Eligible Debt Securities. Distributions on
the Partnership Preferred Securities will be paid only if, as and when declared
in the sole discretion of the Company, as the General Partner of the
Partnership. The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full quarterly
Distribution period on the basis of the actual number of days elapsed in a
90-day quarter.
Except as otherwise described herein, Distributions on the
Partnership Preferred Securities will be cumulative, will accumulate from the
date of initial issuance and will be payable quarterly in arrears, on March 30,
June 30, September 30 and December 30 of each year, commencing on December 30,
1996, if, as and when declared by the General Partner in its sole discretion. If
the Trust Preferred Securities (or, if the Trust is liquidated, the Partnership
Preferred Securities) are in book-entry-only form, Distributions will be payable
to the Holders of record of Partnership Preferred Securities as they appear on
the books and records of the Partnership on the relevant record dates, which
will be one Business Day prior to the relevant payment dates. If the Trust or
the Property Trustee is the Holder of the Partnership Preferred Securities, all
Distributions of cash shall be made by wire transfer of same day funds to such
Holder by 10:00 a.m., New York City time, on the applicable Distribution Payment
Date. Distributions payable on any Partnership Preferred Securities that are not
punctually paid on any Distribution Payment Date will cease to be payable to the
Person in whose name such Partnership Preferred Securities are registered on the
relevant record date, and
A1-3
<PAGE>
such Distribution will instead be payable to the Person in whose name such
Partnership Preferred Securities are registered on the special record date or
other specified date for payment of such defaulted or accumulated Distribution.
If the Trust Preferred Securities (or, if the Trust is liquidated, the
Partnership Preferred Securities) are not in book-entry-only form, the relevant
record dates shall be the 15th day of the month of the relevant payment dates.
In the event that any date on which Distributions are payable is not a Business
Day, payment of such Distribution shall be made on the next succeeding day which
is a Business Day (without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
The Partnership Preferred Securities shall be redeemable as provided
in the Partnership Agreement.
A1-4
<PAGE>
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Partnership
Preferred Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
_________________________________________________________ agent to transfer this
Partnership Preferred Security Certificate on the books of the Partnership. The
agent may substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Partnership
Preferred Security Certificate)
A1-5
EXHIBIT 12
MERRILL LYNCH PREFERRED CAPITAL TRUST I
MERRILL LYNCH PREFERRED FUNDING I, L.P.
COMPUTATION OF RATIOS OF EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED SECURITIES DIVIDENDS
(Dollars in Millions)
<TABLE>
<CAPTION>
PERIOD DECEMBER 17 TO DECEMBER 27, 1996
-------------------------------------------------
MERRILL LYNCH PREFERRED MERRILL LYNCH PREFERRED
CAPITAL TRUST I FUNDING I, L.P.
----------------------- -----------------------
<S> <C> <C>
Earnings $671,356 $785,818
======== ========
Fixed charges $ -- $ --
Preferred securities dividend
requirements 651,215 671,356
-------- --------
Total combined fixed charges and
preferred securities dividends $651,215 $671,356
======== ========
Ratio of earnings to combined
fixed charges and preferred
securities dividends 1.03 1.17
</TABLE>
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
333-16603 of Merrill Lynch & Co., Inc. on Form S-3 of our reports dated March
26, 1997 appearing in this Annual Report on Form 10-K of Merrill Lynch
Preferred Capital Trust I and Merrill Lynch Preferred Funding I, L.P. for the
period ended December 27, 1996.
/s/ Deloitte & Touche LLP
New York, New York
March 26, 1997
Exhibit 24
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below, each of whom is a director and/or officer of Merrill Lynch & Co.,
Inc., the general partner of Merrill Lynch Preferred Funding I, L.P. and Merrill
Lynch Preferred Funding II, L.P. (the "Partnerships"), constitutes and appoints
Joseph T. Willett, Theresa Lang, Michael J. Castellano and Rosemary T. Berkery,
and each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to approve and sign any and all reports or
filings to be filed pursuant to the Securities and Exchange Act of 1934 or the
requirements of any other regulatory agency or body or stock exchange on behalf
of the Partnerships, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission
or such other agency or body or stock exchange, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
This Power of Attorney has been signed below by the following persons
in the capacities indicated on the 26th day of March, 1997.
Signature Title
--------- -----
/s/ DANIEL P. TULLY Chairman of the Board
- -------------------------------------- and Director
(Daniel P. Tully)
/s/ DAVID H. KOMANSKY Chief Executive Officer, President,
- -------------------------------------- Chief Operating Officer and Director
(David H. Komansky)
/s/ JOSEPH T. WILLETT Senior Vice President and Chief
- -------------------------------------- Financial Officer (Principal
Financial Officer)
(Joseph T. Willett)
/s/MICHAEL J. CASTELLANO Senior Vice President and Controller
- -------------------------------------- (Principal Accounting Officer)
(Michael J. Castellano)
/s/ HERBERT M. ALLISON, JR. Director
- --------------------------------------
(Herbert M. Allison, Jr.)
<PAGE>
/s/ WILLIAM O. BOURKE Director
- --------------------------------------
(William O. Bourke)
/s/ W. H. CLARK Director
- --------------------------------------
(W. H. Clark)
/s/ JILL K. CONWAY Director
- --------------------------------------
(Jill K. Conway)
/s/ STEPHEN L. HAMMERMAN Director
- --------------------------------------
(Stephen L. Hammerman)
/s/ EARLE H. HARBISON, JR. Director
- --------------------------------------
(Earle H. Harbison, Jr.)
/s/ GEORGE B. HARVEY Director
- --------------------------------------
(George B. Harvey)
/s/ WILLIAM R. HOOVER Director
- --------------------------------------
(William R. Hoover)
/s/ ROBERT P. LUCIANO Director
- --------------------------------------
(Robert P. Luciano)
/s/ DAVID K. NEWBIGGING Director
- --------------------------------------
(David K. Newbigging)
/s/ AULANA L. PETERS Director
- --------------------------------------
(Aulana L. Peters)
/s/ JOHN J. PHELAN, JR. Director
- --------------------------------------
(John J. Phelan, Jr.)
/s/ JOHN L. STEFFENS Director
- --------------------------------------
(John L. Steffens)
/s/ WILLIAM L. WEISS Director
- --------------------------------------
(William L. Weiss)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001027342
<NAME> ML Pfd. Capital Trust I
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-27-1996
<PERIOD-START> DEC-17-1996
<PERIOD-END> DEC-27-1996
<CASH> 0
<SECURITIES> 283505200
<RECEIVABLES> 671356
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 671356
<PP&E> 0
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<TOTAL-ASSETS> 284176556
<CURRENT-LIABILITIES> 671356
<BONDS> 0
0
275000000
<COMMON> 8505200
<OTHER-SE> 0
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<CHANGES> 0
<NET-INCOME> 671356
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001027343
<NAME> ML Pfd. Funding I, L.P.
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-27-1996
<PERIOD-START> DEC-17-1996
<PERIOD-END> DEC-27-1996
<CASH> 8805
<SECURITIES> 3476024
<RECEIVABLES> 330836589
<ALLOWANCES> 0
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<CURRENT-ASSETS> 4266418
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<TOTAL-ASSETS> 334321418
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0
283505200
<COMMON> 50144862
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<CHANGES> 0
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</TABLE>
