<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 11, 1996
REGISTRATION NO. 333-16603
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
<TABLE>
<S> <C>
MERRILL LYNCH & CO., INC. MERRILL LYNCH
PREFERRED FUNDING I, L.P.
(Exact name of registrant as (Exact name of registrant as specified
specified in charter) in certificate of limited partnership)
DELAWARE DELAWARE
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
13-2740599 13-3917686
(I.R.S. employer identification number) (I.R.S. employer identification number)
<CAPTION>
MERRILL LYNCH
PREFERRED CAPITAL TRUST I
(Exact name of registrant as specified in
certificate of trust)
DELAWARE
(State or other jurisdiction of
incorporation or organization)
13-7102991
(I.R.S. employer identification number)
<CAPTION>
</TABLE>
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WORLD FINANCIAL CENTER
NORTH TOWER
NEW YORK, NEW YORK 10281
(212) 449-1000
(Address, including zip code, and telephone number, including area code, of
registrants' principal executive offices)
----------------------------------
ROSEMARY T. BERKERY, ESQ.
ASSOCIATE GENERAL COUNSEL
MERRILL LYNCH & CO., INC.
WORLD FINANCIAL CENTER
NORTH TOWER
NEW YORK, NEW YORK 10281-1334
(212) 449-6990
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------------------------
COPIES TO:
<TABLE>
<S> <C>
NORMAN D. SLONAKER, ESQ. RICHARD T. PRINS, ESQ.
BROWN & WOOD LLP SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
ONE WORLD TRADE CENTER 919 THIRD AVENUE
NEW YORK, NEW YORK 10048 NEW YORK, NEW YORK 10022
(212) 839-5300 (212) 735-3000
</TABLE>
----------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: / /
- --------------------
If this Form is a post-effective amendment filed pursuant to Rule
462(c)under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering: / /
- --------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: /X/
----------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE(1)
<S> <C> <C> <C>
Trust Originated Preferred Securities of Merrill Lynch
Preferred Capital Trust I (including such securities
sold in market-making transactions)(3)................. 11,000,000 $25 $275,000,000
Partnership Preferred Securities of Merrill Lynch
Preferred Funding I, L.P. (including such securities
sold in market-making transactions)(3)(4).............. 11,000,000 $25 $275,000,000
Guarantee of Merrill Lynch & Co., Inc. with respect to
Trust Preferred Securities(5).......................... -- -- --
Guarantee of Merrill Lynch & Co., Inc. with respect to
Partnership Preferred Securities(5).................... -- -- --
Guarantees of Merrill Lynch & Co., Inc. with respect to
certain debentures of its wholly owned subsidiaries
(the "Affiliate Debentures")(5)........................ -- -- --
Subordinated Debenture of Merrill Lynch & Co., Inc.(5)... -- -- --
Totals.............................................
<CAPTION>
TITLE OF EACH CLASS OF AMOUNT OF
SECURITIES TO BE REGISTERED REGISTRATION FEE(2)
<S> <C>
Trust Originated Preferred Securities of Merrill Lynch
Preferred Capital Trust I (including such securities
sold in market-making transactions)(3)................. $83,335
Partnership Preferred Securities of Merrill Lynch
Preferred Funding I, L.P. (including such securities
sold in market-making transactions)(3)(4).............. --
Guarantee of Merrill Lynch & Co., Inc. with respect to
Trust Preferred Securities(5).......................... --
Guarantee of Merrill Lynch & Co., Inc. with respect to
Partnership Preferred Securities(5).................... --
Guarantees of Merrill Lynch & Co., Inc. with respect to
certain debentures of its wholly owned subsidiaries
(the "Affiliate Debentures")(5)........................ --
Subordinated Debenture of Merrill Lynch & Co., Inc.(5)... --
Totals............................................. $83,335
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457.
(2) Of which, $60,607 has been previously paid on November 22, 1996 and $22,728
is paid herewith.
(3) This Registration Statement also registers an indeterminate amount of
securities registered hereunder to be sold by Merrill Lynch, Pierce, Fenner
& Smith Incorporated in market-making transactions.
(4) The Partnership Preferred Securities will be purchased by the Trust with the
proceeds of the sale of the Trust Preferred Securities, together with the
proceeds received from Merrill Lynch & Co., Inc. in respect of the common
securities to be issued by the Trust. No separate consideration will be
received for the Partnership Preferred Securities.
(5) No separate consideration will be received for (i) guarantees of Merrill
Lynch & Co., Inc. with respect to the Trust Preferred Securities, the
Partnership Preferred Securities or the Affiliate Debentures or (ii) the
Subordinated Debenture. The Subordinated Debenture and the Affiliate
Debentures will be purchased by the Partnership with proceeds of the sale of
the Partnership Preferred Securities, together with a capital contribution
from Merrill Lynch & Co., Inc.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS, DATED DECEMBER 11, 1996
PROSPECTUS
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
[LOGO]
11,000,000 TRUST PREFERRED SECURITIES
MERRILL LYNCH PREFERRED CAPITAL TRUST I
% TRUST ORIGINATED PREFERRED SECURITIES-SM- ("TOPRS-SM-")
(LIQUIDATION AMOUNT $25 PER TRUST PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
MERRILL LYNCH & CO., INC.
------------------
The % Trust Originated Preferred Securities-SM- (the "TOPrS-SM-" or
"Trust Preferred Securities") offered hereby represent preferred undivided
beneficial ownership interests in the assets of Merrill Lynch Preferred Capital
Trust I, a statutory business trust formed under the laws of the State of
Delaware (the "Trust"). Merrill Lynch & Co., Inc., a Delaware corporation (the
"Company" or "Merrill Lynch"), will own all the common securities (the "Trust
Common Securities" and, together with the Trust Preferred Securities, the "Trust
Securities") representing undivided beneficial ownership interests in the assets
of the Trust. The Trust exists for the sole purpose of issuing the Trust
Securities and investing the proceeds as described below and engaging in
activities incident thereto. The proceeds from the sale of the Trust Securities
will be used by the Trust to purchase Partnership Preferred Securities
("Partnership Preferred Securities"), representing the limited partner interests
of Merrill Lynch Preferred Funding I, L.P., a Delaware limited partnership (the
"Partnership"). The general partner interest, which constitutes all of the
interest in the Partnership other than the limited partner interests represented
by the Partnership Preferred Securities, is owned by the Company, which is the
sole general partner of the Partnership (in such capacity, the "General
Partner"). Substantially all of the proceeds from the sale of the Partnership
Preferred Securities, together with the capital contribution from the General
Partner, will be used by the Partnership to purchase Debentures (as defined
herein), which consist of debt instruments of the Company and one or more of its
eligible controlled affiliates. In addition, approximately one percent of the
proceeds from the sale of the Partnership Preferred Securities and the capital
contribution from the General Partner will be used to purchase Eligible Debt
Securities (as defined herein). See "Description of the Partnership Preferred
Securities -- Partnership Investments."
(CONTINUED ON NEXT PAGE)
SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE TRUST PREFERRED
SECURITIES, INCLUDING CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
Application will be made to list the Trust Preferred Securities on the New
York Stock Exchange, Inc. (the "New York Stock Exchange"). If approved for
listing, trading of the Trust Preferred Securities on the New York Stock
Exchange is expected to commence within the 30-day period after the initial
delivery of the Trust Preferred Securities. See "Underwriting".
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO PUBLIC (1) COMMISSION (2)
<S> <C> <C>
Per Trust Preferred Security...................................... $25 (3)
Total............................................................. $ (3)
<CAPTION>
PROCEEDS TO
THE TRUST(3)(4)
<S> <C>
Per Trust Preferred Security...................................... $
Total............................................................. $
</TABLE>
(1) Plus accumulated distributions, if any, from December , 1996.
(2) The Trust, the Partnership and the Company have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting".
(3) In view of the fact that the proceeds of the sale of the Trust Preferred
Securities will be ultimately invested in investment instruments of the
Company and its subsidiaries, the Company has agreed to pay to the
Underwriters as compensation (the "Underwriters' Compensation") $
per Trust Preferred Security (or $ in the aggregate); provided that
such compensation for sales of more than 10,000 Trust Preferred Securities
to a single purchaser will be $ per Trust Preferred Security.
Therefore, to the extent of such sales, the actual amount of Underwriters'
Compensation will be less than the aggregate amount specified in the
preceding sentence. See "Underwriting".
(4) Expenses of the offering payable by the Company are estimated to be
$700,000.
------------------------------
The Trust Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that delivery of the Trust Preferred Securities will be made only in book-entry
form through the facilities of The Depository Trust Company ("DTC") on or about
December , 1996.
This Prospectus may be used by Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("MLPF&S") in connection with offers and sales
related to market-making transactions in the Trust Preferred Securities. MLPF&S
may act as principal or agent in such transactions. Such sales will be made at
prices related to prevailing market prices at the time of sale.
------------------------------
MERRILL LYNCH & CO.
DEAN WITTER REYNOLDS INC.
A.G. EDWARDS & SONS, INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES
INCORPORATED
SMITH BARNEY INC.
------------------------------
THE DATE OF THIS PROSPECTUS IS DECEMBER , 1996.
-SM-"TRUST ORIGINATED PREFERRED SECURITIES" AND "TOPRS" ARE SERVICE MARKS OF
MERRILL LYNCH & CO., INC.
<PAGE>
(CONTINUED FROM COVER PAGE)
Holders of the Trust Preferred Securities will be entitled to receive
cumulative cash distributions accumulating from the date of original issuance
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 % of the
liquidation amount of $25 per Trust Preferred Security (equivalent to $
per Trust Preferred Security per annum), if, as and when the Trust has funds
available for payment. See "Description of the Trust Preferred Securities --
Distributions." Distributions not paid on the scheduled payment date will
accumulate and compound quarterly at a rate per annum equal to %. The
distribution rate and the distribution payment dates and other payment dates for
the Trust Preferred Securities will correspond to the distribution rate and
distribution payment dates and other payment dates for the Partnership Preferred
Securities, which are the sole assets of the Trust. As described above, the
assets of the Partnership will initially consist only of the Debentures and, to
a limited extent, Eligible Debt Securities.
The payment of distributions by the Trust and payments on liquidation of the
Trust or the redemption of Trust Preferred Securities, as described below, are
guaranteed on a subordinated basis by the Company (the "Trust Guarantee") to the
extent the Trust has funds available therefor as described under "Description of
the Trust Guarantee". The payment of distributions by the Partnership (if, as
and when declared) and payments on liquidation of the Partnership or the
redemption of Partnership Preferred Securities, as described below, are also
guaranteed on a subordinated basis by the Company (the "Partnership Guarantee")
to the extent the Partnership has funds available therefor as described under
"Description of the Partnership Guarantee". In addition, payments in respect of
the Debentures (other than the Company Debenture (as defined herein)) will be
fully and unconditionally guaranteed, on a subordinated basis, by the Company
(the "Investment Guarantees") for the benefit of the holders of the Partnership
Preferred Securities. The Trust Guarantee, the Partnership Guarantee and the
Investment Guarantees (collectively, the "Guarantees"), when taken together with
the Company Debenture and the Company's obligations to pay all fees and expenses
of the Trust and the Partnership, constitute a guarantee to the extent set forth
herein by the Company of the distribution, redemption and liquidation payments
payable to the holders of the Trust Preferred Securities. The Guarantees do not
apply to current distributions by the Partnership unless and until such
distributions are declared by the Partnership out of funds legally available for
payment or to liquidating distributions unless there are assets available for
payment in the Partnership, each as more fully described in the next succeeding
paragraph and under "Risk Factors -- Insufficient Income or Assets Available to
Partnership". The Company's obligations under the Guarantees are subordinate and
junior in right of payment to all other liabilities of the Company and rank PARI
PASSU with the most senior preferred stock issued from time to time by the
Company and with any guarantee now or hereafter entered into by the Company in
respect of any preferred stock of any Finance Subsidiary (as defined below) and
its obligations under the Company Debenture are subordinate and junior in right
of payment to all Senior Indebtedness of the Company. At September 27, 1996, the
Company had outstanding Senior Indebtedness aggregating approximately $47.7
billion, which would have ranked senior to the Company's obligations under the
Guarantees and the Company Debenture. See "Risk Factors -- Ranking of
Subordinate Obligations Under the Guarantees and the Company Debenture". The
term "Senior Indebtedness" means any payment in respect of indebtedness of the
Company for money borrowed, except for any such indebtedness that is by its
terms subordinated to or PARI PASSU with the Company Debenture, as the case may
be.
Distributions on the Partnership Preferred Securities will be declared and
paid only as determined in the sole discretion of the Company in its capacity as
the General Partner of the Partnership. In addition, the General Partner is not
obligated to declare distributions on the Partnership Preferred Securities at
any time, including upon or following a Partnership Enforcement Event (as
defined herein). To the extent that the issuers (including, where applicable,
the Company, as guarantor) of the securities in which the Partnership invests
defer or fail to make any payments in respect of such securities (or, if
applicable, guarantees), the Partnership will not have sufficient funds to pay
and will not declare or pay distributions on the Partnership Preferred
Securities. In addition, as described under "Risk Factors -- Insufficient
2
<PAGE>
Income or Assets Available to Partnership", the Partnership may not have
sufficient funds to pay current or liquidating distributions on the Partnership
Preferred Securities if (i) at any time that the Partnership is receiving
current payments in respect of the securities held by the Partnership (including
the Debentures), the General Partner, in its sole discretion, does not declare
distributions on the Partnership Preferred Securities and the Partnership
receives insufficient amounts to pay the additional compounded distributions
that will accumulate in respect of the Partnership Preferred Securities, (ii)
the Partnership reinvests the proceeds received in respect of the Debentures
upon their retirement or at their maturities in Affiliate Investment Instruments
(as defined herein) and Eligible Debt Securities that do not generate income in
an amount that is sufficient to pay full distributions in respect of the
Partnership Preferred Securities or (iii) the Partnership invests in equity or
debt securities of Investment Affiliates that are not guaranteed by the Company
and that cannot be liquidated by the Partnership for an amount sufficient to pay
such distributions in full. The Debentures will provide that payments of
interest may be deferred at any time, and from time to time, by the relevant
issuer for a period not exceeding six consecutive quarters. If an issuer were to
so defer the payment of interest, interest would continue to accrue and compound
at the stated interest rate on such Debenture. If the Partnership does not
declare and pay distributions on the Partnership Preferred Securities out of
funds legally available for distribution, the Trust will not have sufficient
funds to make distributions on the Trust Preferred Securities, in which event
the Trust Guarantee will not apply to such distributions until the Trust has
sufficient funds available therefor. See "Risk Factors -- Distributions Payable
Only if Declared by General Partner; Restrictions on Certain Payments; Tax
Consequences", "-- Insufficient Income or Assets Available to Partnership",
"Description of the Trust Preferred Securities -- Distributions" and
"Description of the Partnership Preferred Securities -- Distributions".
The Partnership may, from time to time and subject to the restrictions
described herein, reinvest payments received with respect to the Affiliate
Investment Instruments (including the Debentures) and the Eligible Debt
Securities, in additional Affiliate Investment Instruments and Eligible Debt
Securities. As of the date of this Prospectus, the Company, as the General
Partner, does not intend to cause the Partnership to reinvest regularly
scheduled periodic payments of interest or dividends received by the Partnership
in the manner described herein, although there can be no assurance that the
General Partner's intention in respect of such reinvestments will not change in
the future.
If (a) for any distribution period, full distributions on a cumulative basis
on any Trust Preferred Securities have not been paid or set apart for payment,
(b) an Investment Event of Default by any Investment Affiliate in respect of any
Affiliate Investment Instrument has occurred and is continuing or (c) the
Company is in default of its obligations under any Guarantee, then during such
period (i) the Company shall not declare or pay dividends on, make distributions
with respect to, or redeem, purchase or acquire, or make a liquidation payment
with respect to, any of its capital stock or comparable equity interest (except
for (x) dividends or distributions in shares of, or options, warrants or rights
to subscribe for or purchase shares of, its capital stock, and conversions or
exchanges of common stock of one class into common stock of another class, (y)
redemptions or purchases of any rights pursuant to the Rights Agreement dated as
of December 16, 1987 between the Company and The Chase Manhattan Bank (successor
by merger to Manufacturers Hanover Trust Company), or any successor to such
Rights Agreement (the "Rights Agreement") and the issuance of preferred stock
pursuant to such rights and (z) purchases or acquisitions 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 capital stock or comparable equity interest) and
(ii) the Company shall not make, permit any Finance Subsidiary to make, or make
any payments that would enable any Finance Subsidiary to make, any payment of
any dividends on, any distribution with respect to, or any redemption, purchase
or other acquisition of, or any liquidation payment with respect to, any
preferred security or comparable equity interest of any Finance Subsidiary.
"Finance Subsidiary" means any wholly-owned subsidiary of the Company the
principal purpose of which is to raise capital for the Company by issuing
3
<PAGE>
securities 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.
The Partnership Preferred Securities are redeemable by the Partnership, in
whole or in part, from time to time, on or after December 30, 2006 at an amount
per Partnership Preferred Security equal to $25 plus accumulated and unpaid
distributions thereon to the date fixed for redemption. The Partnership
Preferred Securities may also be redeemed, in whole but not in part, at any time
upon the occurrence of a Partnership Special Event (as defined herein). If the
Partnership redeems the Partnership Preferred Securities, the Trust must redeem
Trust Securities on a PRO RATA basis having an aggregate liquidation amount
equal to the aggregate liquidation preference of the Partnership Preferred
Securities so redeemed at a redemption price of $25 per Partnership Preferred
Security plus all accumulated and unpaid distributions thereon to the date fixed
for redemption (the "Redemption Price"). See "Description of the Trust Preferred
Securities -- Mandatory Redemption". Neither the Partnership Preferred
Securities nor the Trust Preferred Securities have any scheduled maturity or are
redeemable at any time at the option of the holders thereof.
The Trust will be dissolved upon the occurrence of a Trust Special Event (as
defined herein). Upon dissolution of the Trust, the Partnership Preferred
Securities will be distributed to the holders of the Trust Securities, on a PRO
RATA basis, in lieu of any cash distribution, unless the Partnership Preferred
Securities are redeemed in the limited circumstances described herein. If the
Partnership Preferred Securities are distributed to the holders of the Trust
Securities, the Company will use its best efforts to cause the Partnership
Preferred Securities to be listed on the New York Stock Exchange or such other
national securities exchange or similar organization as the Trust Preferred
Securities are then listed or quoted. See "Description of the Trust Preferred
Securities -- Trust Special Event Redemption or Distribution" and "Description
of the Partnership Preferred Securities".
In the event of any liquidation, dissolution, winding up or termination of
the Trust, the holders of the Trust Preferred Securities will be entitled to
receive for each Trust Preferred Security a liquidation amount of $25 plus
accumulated and unpaid distributions thereon, except to the extent, in
connection with such dissolution, Partnership Preferred Securities are
distributed to the holders of the Trust Preferred Securities. Upon (i) the
occurrence of an Investment Event of Default by an Investment Affiliate in
respect of any Affiliate Investment Instrument or (ii) default by the Company on
any of its obligations under any Guarantee, the holders of the Trust Preferred
Securities will have a preference over the holders of the Trust Common
Securities with respect to payments upon liquidation of the Trust. Under no
circumstances will the investment instruments held by the Partnership be
distributed in kind to the holders of the Trust Preferred Securities or
Partnership Preferred Securities. See "Description of the Trust Preferred
Securities -- Liquidation Distribution Upon Dissolution".
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAYBE
DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company, the Trust and the Partnership have filed with the Securities
and Exchange Commission (the "Commission") a Registration Statement on Form S-3
(the "Registration Statement", which term shall include all amendments, exhibits
and schedules thereto), pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations promulgated thereunder, with
respect to the Trust Preferred Securities offered hereby (as well as the
Partnership Preferred Securities, the Trust Guarantee, the Partnership
Guarantee, the Investment Guarantees and the Company Debenture). This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all the information set
4
<PAGE>
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission, and to which
reference is hereby made.
The Company is subject to the informational and reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Commission.
Except for the listing of Trust Preferred Securities that is expected to be made
on the New York Stock Exchange, neither the Trust nor the Partnership has any
securities that are listed on any national securities exchange. The Registration
Statement, as well as reports, proxy and information statements and other
information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of
the Commission: Northeast Regional Office, Seven World Trade Center, New York,
New York 10048 and Midwest Regional Office, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2551. Copies of such material can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Reports, proxy and information
statements and other information concerning the Company may also be inspected at
the offices of the New York Stock Exchange, the American Stock Exchange, the
Chicago Stock Exchange and the Pacific Stock Exchange. The Commission maintains
a Web site at http:// www.sec.gov containing reports, proxy and information
statements and other information regarding registrants, including the Company,
that file electronically with the Commission.
Statements made in this Prospectus concerning the provisions of any
contract, agreement or other document referred to herein are not necessarily
complete. With respect to each such statement concerning a contract, agreement
or other document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission, reference is made to such exhibit or other filing for
a more complete description of the matter involved, and each such statement is
qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 29,
1995 (the "1995 Form 10-K"), Quarterly Reports on Form 10-Q for the periods
ended March 29, 1996, June 28, 1996 and September 27, 1996, and Current Reports
on Form 8-K dated January 17, 1996, January 22, 1996, February 7, 1996, February
29, 1996, March 1, 1996, March 12, 1996, March 18, 1996, April 1, 1996, April
15, 1996, May 1, 1996, May 13, 1996, May 15, 1996, May 28, 1996 (as amended by
Form 8-K/A filed June 7, 1996), July 9, 1996, July 16, 1996, July 31, 1996,
August 12, 1996, October 15, 1996 and October 30, 1996 filed pursuant to Section
13 of the Exchange Act, are hereby incorporated by reference into this
Prospectus.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Trust Preferred Securities shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on written or oral request of such person, a copy
(without exhibits other than exhibits specifically incorporated by reference) of
any or all documents incorporated by reference into this Prospectus. Requests
for such copies should be directed to Mr. Gregory T. Russo, Secretary, Merrill
Lynch & Co., Inc., 100 Church Street, 12th Floor, New York, New York 10080-6512;
telephone number (212) 602-8435.
5
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SUMMARY
THE FOLLOWING SUMMARY DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN
ITS ENTIRETY BY THE MORE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS
PROSPECTUS. CERTAIN TERMS USED IN THIS SUMMARY ARE DEFINED ELSEWHERE IN THIS
PROSPECTUS. SEE "INDEX OF DEFINED TERMS" FOR A CROSS REFERENCE TO THE LOCATION
IN THIS PROSPECTUS WHERE SUCH TERMS ARE DEFINED.
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The Trust.................... Merrill Lynch Preferred Capital Trust I, a Delaware
statutory business trust. The sole assets of the Trust will
be the Partnership Preferred Securities.
The Partnership.............. Merrill Lynch Preferred Funding I, L.P., a Delaware limited
partnership. The assets of the Partnership will initially
consist of Debentures and certain Eligible Debt Securities.
Securities Offered........... 11,000,000 of % Trust Preferred Securities.
Distributions................ Distributions on the Trust Preferred Securities will
accumulate from the date of original issuance of the Trust
Preferred Securities and will be payable at the annual rate
of % of the liquidation amount of $25 per Trust Preferred
Security if, as and when the Trust has funds available for
payment. Distributions will be payable quarterly in arrears
on each March 30, June 30, September 30, and December 30,
commencing December 30, 1996. Distributions not made on the
scheduled payment date will accumulate and compound
quarterly at a rate per annum equal to %. The
distributions payable with respect to December 30, 1996 will
represent distributions accumulated from December , 1996
and will equal $ for each $25 Trust Preferred
Security.
The ability of the Trust to pay distributions on the Trust
Preferred Securities is entirely dependent on its receipt of
corresponding distributions with respect to the Partnership
Preferred Securities. The ability of the Partnership to pay
distributions on the Partnership Preferred Securities is, in
turn, dependent on its receipt of payments with respect to
the Debentures and the Eligible Debt Securities held by the
Partnership. The Debentures will provide that payments of
interest may be deferred at any time, and from time to time,
by the relevant issuer for a period not exceeding six
consecutive quarters. Distributions on the Partnership
Preferred Securities will be declared and paid only as
determined in the sole discretion of the Company in its
capacity as the General Partner of the Partnership. See
"Risk Factors -- Distributions Payable Only if Declared by
General Partner; Restrictions on Certain Payments; Tax
Consequences," "Description of the Trust Preferred
Securities -- Distributions" and "Description of the
Partnership Preferred Securities -- Distributions" and "--
Partnership Investments".
Rights Upon Non-Payment of
Distributions and Certain
Defaults; Covenants of the
Company.................... If, at any time, (i) arrearages on distributions on the
Trust Preferred Securities shall exist for six consecutive
quarterly distribution periods,
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(ii) an Investment Event of Default occurs and is continuing
on any Affiliate Investment Instrument or (iii) the Company
is in default on any of its obligations under the Trust
Guarantee or the Partnership Guarantee, then (a) the
Property Trustee, as the holder of the Partnership Preferred
Securities, will have the right to enforce the terms of the
Partnership Preferred Securities, including the right to
direct the Special Representative (as defined herein) to
enforce (1) the Partnership's creditors' rights and other
rights with respect to the Affiliate Investment Instruments
and the Investment Guarantees and (2) the rights of the
holders of the Partnership Preferred Securities to receive
distributions (only if, as and when declared) on the
Partnership Preferred Securities, and (b) the Trust
Guarantee Trustee or the Special Representative, as the
holders of the Trust Guarantee and the Partnership
Guarantee, respectively, shall have the right to enforce
such Guarantees, including the right to enforce the covenant
restricting certain payments by the Company and Finance
Subsidiaries described below.
Under no circumstances, however, shall the Special
Representative have authority to cause the General Partner
to declare distributions on the Partnership Preferred
Securities. If the Partnership does not declare and pay
distributions on the Partnership Preferred Securities out of
funds legally available for distribution, the Trust will not
have sufficient funds to make distributions on the Trust
Preferred Securities. See "Risk Factors -- Insufficient
Income or Assets Available to Partnership", "Description of
the Trust Preferred Securities -- Trust Enforcement Events"
and "Description of the Partnership Preferred Securities --
Partnership Enforcement Events".
The Company has agreed that if (a) for any distribution
period, full distributions on a cumulative basis on any
Trust Preferred Securities have not been paid or set apart
for payment, (b) an Investment Event of Default by any
Investment Affiliate in respect of any Affiliate Investment
Instrument has occurred and is continuing or (c) the Company
is in default of its obligations under the Trust Guarantee,
the Partnership Guarantee or any Investment Guarantee, then,
during such period (i) the Company shall not declare or pay
dividends on, make distributions with respect to, or redeem,
purchase or acquire, or make a liquidation payment with
respect to any of its capital stock or comparable equity
interest (except for (x) dividends or distributions in
shares of, or options, warrants or rights to subscribe for
or purchase shares of, its capital stock and conversions or
exchanges of common stock of one class into common stock of
another class, (y) redemptions or purchases of any rights
pursuant to the Rights Agreement and the issuance of
preferred stock pursuant to such rights and (z) purchases or
acquisitions by the Company or its affiliates in connection
with transactions effected by or for the account of custom-
ers of the Company or any of its subsidiaries or in
connection with the distribution or trading of such capital
stock or comparable equity interest) and (ii) the Company
shall not make, permit any Finance Subsidiary to make, nor
make any payments that would enable any Finance Subsidiary
to make, any payment of any dividends on, any
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distribution with respect to, or any redemption, purchase or
other acquisition of, or any liquidation payment with
respect to, any preferred security or comparable equity
interest of any Finance Subsidiary.
Liquidation Amount........... In the event of any liquidation of the Trust, holders will
be entitled to receive $25 per Trust Preferred Security plus
an amount equal to any accumulated and unpaid distributions
thereon to the date of payment (such amount being the "Trust
Liquidation Distribution"), unless Partnership Preferred
Securities are distributed to such holders in connection
with a Trust Special Event. If upon a liquidation of the
Trust (in which the Partnership Preferred Securities are not
distributed to holders of the Trust Securities), 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 Preferred
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 liquidation PRO RATA with the
holders of the Trust Preferred Securities, except that upon
(i) the occurrence of an Investment Event of Default by an
Investment Affiliate (including the Company) in respect of
any Affiliate Investment Instrument or (ii) default by the
Company on any of its obligations under any Guarantee, the
holders of the Trust Preferred Securities will have a
preference over the holders of the Trust Common Securities
with respect to payments upon liquidation of the Trust. See
"Description of the Trust Preferred Securities --
Liquidation Distribution Upon Dissolution".
Optional Redemption.......... The Partnership Preferred Securities will be redeemable for
cash, at the option of the Partnership, in whole or in part,
from time to time, after December 30, 2006 at an amount per
Partnership Preferred Security equal to $25 plus accumulated
and unpaid distributions thereon. Upon any redemption of the
Partnership Preferred Securities, the Trust Preferred
Securities will be redeemed, in whole or in part, as
applicable, at the Redemption Price. See "Description of the
Partnership Preferred Securities -- Optional Redemption" and
"Description of the Trust Preferred Securities -- Mandatory
Redemption". Neither the Partnership Preferred Securities
nor the Trust Preferred Securities have any scheduled
maturity or are redeemable at any time at the option of the
holders thereof.
Guarantees................... The Company will irrevocably guarantee, on a subordinated
basis, the payment in full of (i) any accumulated and unpaid
distributions on the Trust Preferred Securities to the
extent of funds of the Trust legally available therefor,
(ii) the amount payable upon redemption of the Trust
Preferred Securities to the extent of funds of the Trust
legally available therefor and (iii) generally, the
liquidation amount of the Trust Preferred Securities to the
extent of the assets of the Trust legally available for
distribution to holders of Trust Preferred Securities. See
"Description of the Trust Guarantee".
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The Company will also irrevocably guarantee, on a
subordinated basis and to the extent set forth herein, the
payment in full of (i) any accumulated and unpaid
distributions on the Partnership Preferred Securities if, as
and when declared out of funds legally available therefor,
(ii) the amount payable upon redemption of the Partnership
Preferred Securities to the extent of funds of the
Partnership legally available therefor and (iii) generally,
the liquidation preference of the Partnership Preferred
Securities to the extent of the assets of the Partnership
legally available for distribution to holders of Partnership
Preferred Securities. See "Description of the Partnership
Guarantee".
The Company will fully and unconditionally guarantee, on a
subordinated basis, payments in respect of the Debentures
(other than the Company Debenture) for the benefit of the
holders of the Partnership Preferred Securities, to the
extent described under "Description of the Partnership
Preferred Securities -- Investment Guarantees". The
Guarantees, when taken together with the Company Debenture
and the Company's obligations to pay all fees and expenses
of the Trust and the Partnership, constitute a guarantee to
the extent set forth herein by the Company of the
distribution, redemption and liquidation amounts payable to
the holders of the Trust Preferred Securities. The
Guarantees do not apply, however, to current distributions
by the Partnership unless and until such distributions are
declared by the Partnership out of funds legally available
for payment or to liquidating distributions unless there are
assets available for payment in the Partnership, each as
more fully described under "Risk Factors -- Insufficient
Income or Assets Available to Partnership". The Company's
obligations under the Guarantees are subordinate and junior
in right of payment to all other liabilities of the Company
and rank PARI PASSU with the most senior preferred stock
issued from time to time by the Company and with any
guarantee now or hereafter entered into by the Company in
respect of any preferred stock of any Finance Subsidiary.
Voting Rights................ Generally, holders of the Trust Preferred Securities will
not have any voting rights. The holders of a majority in
liquidation amount of the Trust Preferred Securities,
however, 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,
(i) to exercise its rights in the manner described above
under "Rights Upon Non-Payment of Distributions and Certain
Defaults; Covenants of the Company" and (ii) to consent to
any amendment, modification or termination of the Limited
Partnership Agreement or the Partnership Preferred
Securities where such consent shall be required. See
"Description of the Trust Preferred Securities -- Voting
Rights".
Special Event Redemptions or
Distributions.............. Upon the occurrence of a Trust Tax Event (which event will
generally be triggered upon the occurrence of certain
adverse tax consequences
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or the denial of an interest deduction on the Debentures
held by the Partnership) or a Trust Investment Company Event
(which event will generally be triggered if the Trust is
considered an "investment company" under the Investment
Company Act of 1940, as amended (the "1940 Act")), except in
certain limited circumstances, the Regular Trustees (as
defined herein) will have the right to liquidate the Trust
and cause Partnership Preferred Securities to be distributed
to the holders of the Trust Preferred Securities. In certain
circumstances involving a Partnership Tax Event (which event
will generally be triggered upon the occurrence of certain
adverse tax consequences or the denial of an interest
deduction on the Debentures held by the Partnership) or a
Partnership Investment Company Event (which event will
generally be triggered if the Partnership is considered an
"investment company" under the 1940 Act), the Partnership
will have the right to redeem the Partnership Preferred
Securities, in whole (but not in part), at $25 per
Partnership Preferred Security plus accumulated and unpaid
distributions thereon, regardless of the occurrence of any
Trust Tax Event or Trust Investment Company Event and in
lieu of any distribution of the Partnership Preferred
Securities required in connection therewith, in which event
the Trust Securities will be redeemed at the Redemption
Price. See "Description of the Trust Preferred Securities --
Trust Special Event Redemption or Distribution" and
"Description of the Partnership Preferred Securities --
Partnership Special Event Redemption".
Form of Trust Preferred
Securities................. The Trust Preferred Securities will be represented by a
global certificate or certificates registered in the name of
Cede & Co., as nominee for DTC. Beneficial interests in the
Trust Preferred Securities will be evidenced by, and
transfers thereof will be effected only through, records
maintained by the participants in DTC. Except as described
herein, Trust Preferred Securities in certificated form will
not be issued in exchange for the global certificate or
certificates. See "Description of the Trust Preferred
Securities -- Book-Entry Only Issuance -- The Depository
Trust Company".
Use of Proceeds.............. All of the proceeds from the sale of the Trust Securities
will be invested by the Trust in the Partnership Preferred
Securities. The Partnership will use the funds to make
investments in Debentures and certain Eligible Debt
Securities. See "Use of Proceeds".
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RISK FACTORS
PROSPECTIVE PURCHASERS OF THE TRUST PREFERRED SECURITIES SHOULD CONSIDER
CAREFULLY THE RISK FACTORS SET FORTH BELOW, AS WELL AS ALL OTHER INFORMATION
CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, IN EVALUATING AN
INVESTMENT IN THE TRUST PREFERRED SECURITIES.
DISTRIBUTIONS PAYABLE ONLY IF DECLARED BY GENERAL PARTNER; RESTRICTIONS ON
CERTAIN PAYMENTS; TAX CONSEQUENCES
Distributions on the Partnership Preferred Securities will be payable only
if, as and when declared by the General Partner in its sole discretion. The
Company is the sole General Partner of the Partnership, and the Debentures will
constitute obligations of the Company and its affiliates. If interest payments
on the Debentures are deferred as permitted thereby, or if such interest
payments are not paid to the Partnership according to their terms (and guarantee
payments on the Investment Guarantees are not made by the Company), the
Partnership will generally lack funds to pay distributions on the Partnership
Preferred Securities. If the Partnership does not make current distributions on
the Partnership Preferred Securities, either because the General Partner does
not declare distributions to be made or because the Partnership lacks sufficient
funds, the Trust will not have funds available to make current distributions on
the Trust Preferred Securities. As described under "Description of the Trust
Guarantee -- Covenants of the Company", in certain circumstances, the Company
will be restricted from, among other things, paying any dividends on its Common
Stock.
Should the Partnership fail to pay current distributions on the Partnership
Preferred Securities, each holder of Trust Preferred Securities will generally
be required to accrue income, for United States federal income tax purposes, in
respect of the cumulative deferred distributions (including interest thereon)
allocable to its proportionate share of the Partnership Preferred Securities. As
a result, each holder of Trust Preferred Securities will recognize income for
United States federal income tax purposes in advance of the receipt of cash and
will not receive the cash from the Trust related to such income if such holder
disposes of its Trust Preferred Securities prior to the record date for the date
on which distributions of such amounts are made by the Trust. See "Certain
Federal Income Tax Considerations".
INSUFFICIENT INCOME OR ASSETS AVAILABLE TO PARTNERSHIP
The Trust Preferred Securities are subject to the risk of a current or
liquidating distribution rate mismatch between the rate paid on the Trust
Preferred Securities and the rate paid on the securities held by the
Partnership, including the Debentures and any additional securities acquired by
the Partnership in the future. Such mismatch could occur if (i) at any time that
the Partnership is receiving current payments in respect of the securities held
by the Partnership (including the Debentures), the General Partner, in its sole
discretion, does not declare distributions on the Partnership Preferred
Securities and the Partnership receives insufficient amounts to pay the
additional compounded distributions that will accumulate in respect of the
Partnership Preferred Securities, (ii) the Partnership reinvests the proceeds
received in respect of the Debentures upon their retirement or at their
maturities in Affiliate Investment Instruments or Eligible Debt Securities that
do not generate income in an amount that is sufficient to pay full distributions
in respect of the Partnership Preferred Securities at a rate of % per annum
or (iii) the Partnership invests in equity or debt securities of Investment
Affiliates that are not guaranteed by the Company and that cannot be liquidated
by the Partnership for an amount sufficient to pay such distributions in full.
If the reinvestments in the securities of the Investment Affiliates contemplated
by the General Partner do not meet the eligibility criteria for Affiliate
Investment Instruments described under "Description of the Partnership Preferred
Securities -- Partnership Investments," the Partnership shall invest funds
available for reinvestment in Eligible Debt Securities. To the extent that the
Partnership lacks sufficient funds to make current or liquidating distributions
on the Partnership Preferred Securities in full,
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the Trust will not have sufficient funds available to pay full current or
liquidating distributions on the Trust Preferred Securities.
DEPENDENCE ON AFFILIATE INVESTMENT INSTRUMENTS
Approximately 99% of the proceeds from the issuance of the Partnership
Preferred Securities and the General Partner's capital contribution will be
invested in Debentures, which consist of debt instruments of the Company and one
or more eligible controlled affiliates. See "Description of the Partnership
Preferred Securities -- Partnership Investments".
PROPOSED TAX LEGISLATION
On March 19, 1996, as part of President Clinton's Fiscal 1997 Budget
Proposal, the Treasury Department proposed legislation (the "Proposed
Legislation") that would, among other things, deny the borrower an interest
deduction with respect to certain types of debt instruments that are payable in
stock of the issuer or a related party. The Proposed Legislation also would
treat as equity for United States federal income tax purposes instruments with a
maximum term of more than 20 years that are not shown as indebtedness on the
consolidated balance sheet of the issuer. On March 29, 1996, Senate Finance
Committee Chairman William V. Roth and House Ways and Means Committee Chairman
Bill Archer issued a joint statement (the "Joint Statement") indicating their
intent that certain legislative proposals initiated by the Clinton
administration, including the Proposed Legislation, that may be adopted by
either of the tax-writing committees of Congress, would have an effective date
that is no earlier than the date of "appropriate Congressional action". In
addition, subsequent to the publication of the Joint Statement, Senator Daniel
Patrick Moynihan and Representatives Sam M. Gibbons and Charles B. Rangel wrote
letters to Treasury Department officials concurring with the view expressed in
the Joint Statement (the "Democrat Letters"). If the principles contained in the
Joint Statement and the Democrat Letters were followed and the Proposed
Legislation were enacted, such legislation would not apply to the Debentures.
There can be no assurances, however, that legislation enacted after the date
hereof will not adversely affect the tax treatment of the Debentures, or whether
such tax treatment would cause a Partnership Tax Event or a Trust Tax Event that
may result in the redemption of the Partnership Preferred Securities and,
consequently, the Trust Preferred Securities.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence of a Trust Special Event or a Partnership Special Event
(each of which will generally be triggered either upon (i) the occurrence of
certain adverse tax consequences to the Trust or the Partnership, as the case
may be, or the denial of an interest deduction by the related Investment
Affiliate on the Debentures held by the Partnership or (ii) the Trust or
Partnership being considered an "investment company" under the 1940 Act) (each,
a "Special Event"), the Trust will be dissolved with the result that, except in
the limited circumstances described below, the Partnership Preferred Securities
would be distributed to the holders of the Trust Securities in connection with
the liquidation of the Trust. In certain circumstances, the Partnership shall
have the right to redeem the Partnership Preferred Securities, in whole (but not
in part), in lieu of a distribution of the Partnership Preferred Securities by
the Trust, in which event the Trust will redeem the Trust Preferred Securities
for cash. See "Description of the Trust Preferred Securities -- Trust Special
Event Redemption or Distribution" and "Description of the Partnership Preferred
Securities -- Partnership Special Event Redemption".
Unless the liquidation of the Trust occurs as a result of the Trust being
subject to United States federal income tax with respect to income on the
Partnership Preferred Securities, a distribution of the Partnership Preferred
Securities upon the dissolution of the Trust would not be a taxable event to
holders of the Trust Preferred Securities. If, however, the liquidation of the
Trust were to occur because the Trust is subject to United States federal income
tax with respect to income accrued or received on the Partnership Preferred
Securities, the distribution of Partnership Preferred Securities to holders by
the Trust would likely be a
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taxable event to each such holder, and a holder would recognize gain or loss as
if the holder had exchanged its Trust Preferred Securities for the Partnership
Preferred Securities it received upon the liquidation of the Trust. Similarly,
the holders of the Trust Preferred Securities would recognize gain or loss if
the Trust dissolves upon an occurrence of a Partnership Special Event and the
holders of Trust Preferred Securities receive cash in exchange for their Trust
Preferred Securities. See "Certain Federal Income Tax Considerations --
Redemption of Trust Preferred Securities for Cash".
There can be no assurance as to the market prices for the Partnership
Preferred Securities that may be distributed in exchange for Trust Preferred
Securities if a dissolution or liquidation of the Trust were to occur.
Accordingly, the Partnership Preferred Securities that a holder of Trust
Preferred Securities may receive upon dissolution and liquidation of the Trust
may trade at a discount to the price that the investor paid to purchase the
Trust Preferred Securities offered hereby. Because holders of Trust Preferred
Securities may receive Partnership Preferred Securities upon the occurrence of a
Special Event, prospective purchasers of Trust Preferred Securities also are
making an investment decision with regard to the Partnership Preferred
Securities and should carefully review all the information regarding the
Partnership Preferred Securities contained herein. See "Description of the
Partnership Preferred Securities -- Partnership Special Event Redemption" and
"-- General".
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEES AND THE COMPANY
DEBENTURE
The Company's obligations under the Trust Guarantee, the Partnership
Guarantee and the Investment Guarantees are subordinate and junior in right of
payment to all liabilities of the Company and will rank PARI PASSU with the most
senior preferred stock, if any, issued from time to time by the Company and with
any guarantee now or hereafter entered into by the Company in respect of any
preferred stock of any Finance Subsidiary, and its obligations under the Company
Debenture are subordinate and junior in right of payment to all Senior
Indebtedness. At September 27, 1996, the Company had outstanding Senior
Indebtedness aggregating approximately $47.7 billion which would have ranked
senior to the Company's obligations under the Guarantees and the Company
Debenture. There are no terms in the Trust Preferred Securities, the Partnership
Preferred Securities, the Guarantees or the Debentures that limit the Company's
ability to incur additional indebtedness, including indebtedness that ranks
senior to the Guarantees. See "Description of the Partnership Preferred
Securities -- Partnership Investments" and "-- Investment Guarantees",
"Description of the Trust Guarantee" and "Description of the Partnership
Guarantee".
ENFORCEMENT OF CERTAIN RIGHTS BY OR ON BEHALF OF HOLDERS OF TRUST PREFERRED
SECURITIES
If a Trust Enforcement Event occurs and is continuing, then (a) the holders
of Trust Preferred Securities would rely on the enforcement by the Property
Trustee of its rights, as a holder of the Partnership Preferred Securities,
against the Company, including the right to direct the Special Representative to
enforce (i) the Partnership's creditors' rights and other rights with respect to
the Affiliate Investment Instruments and the Investment Guarantees, (ii) the
rights of the holders of the Partnership Preferred Securities under the
Partnership Guarantee, and (iii) the rights of the holders of the Partnership
Preferred Securities to receive distributions (only if and to the extent
declared out of funds legally available therefor) on the Partnership Preferred
Securities, and (b) the Trust Guarantee Trustee shall have the right to enforce
the terms of the Trust Guarantee, including the right to enforce the covenant
restricting certain payments by 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. As a result, although the Special Representative may be able to
enforce the Partnership's creditors' rights to accelerate and receive payments
in respect of the Affiliate Investment Instruments and the Investment
Guarantees, the Partnership would be entitled to reinvest such payments in
additional Affiliate Investment Instruments, subject to satisfying the
reinvestment criteria described under "Description of the Partnership Preferred
Securities -- Partnership Investments", and the Eligible
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Debt Securities, rather than declaring and making distributions on the
Partnership Preferred Securities. See "Description of the Trust Preferred
Securities -- Trust Enforcement Events".
LIMITED VOTING RIGHTS
Holders of the Trust Preferred Securities will have limited voting rights
and will not be 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. See "Description of the Trust
Preferred Securities -- Voting Rights".
TRADING CHARACTERISTICS OF TRUST PREFERRED SECURITIES
The price at which the Trust Preferred Securities may trade may not fully
reflect the value of the accumulated but unpaid distributions on the Trust
Preferred Securities (which will equal the accumulated but unpaid distributions
on the Partnership Preferred Securities). In addition, as a result of the right
of the General Partner not to declare current distributions on the Partnership
Preferred Securities, the market price of the Trust Preferred Securities (which
represent undivided beneficial ownership interests in the Partnership Preferred
Securities) may be more volatile than other similar securities where there is no
such right to defer current distributions. A holder who disposes of its Trust
Preferred Securities will be required to include for United States federal
income tax purposes accumulated but unpaid distributions on the Partnership
Preferred Securities through the date of disposition in income as ordinary
income, and to add such amount to its adjusted tax basis in its pro rata share
of the Partnership Preferred Securities deemed disposed of. To the extent the
selling price is less than the holder's adjusted tax basis (which will include
all accumulated but unpaid distributions), a holder will recognize a capital
loss. Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United States federal income tax purposes. See
"Certain Federal Income Tax Considerations".
NO PRIOR MARKET FOR THE TRUST PREFERRED SECURITIES
The Trust Preferred Securities constitute a new issue of securities with no
established trading market. Application will be made to list the Trust Preferred
Securities on the New York Stock Exchange. There can be no assurance that an
active market for the Trust Preferred Securities will develop or be sustained in
the future on the New York Stock Exchange. Although the Underwriters have
indicated to the Company that they intend to make a market in the Trust
Preferred Securities, as permitted by applicable laws and regulations, they are
not obligated to do so and may discontinue any such market-making at any time
without notice. Accordingly, no assurance can be given as to the liquidity of,
or trading markets for, the Trust Preferred Securities.
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MERRILL LYNCH & CO., INC.
Merrill Lynch & Co., Inc. is a holding company that, through its
subsidiaries and affiliates, provides investment, financing, insurance, and
related services on a global basis. Its principal subsidiary, MLPF&S, one of the
largest securities firms in the world, is a leading broker in securities,
options contracts, and commodity and financial futures contracts; a leading
dealer in options and in corporate and municipal securities; a leading
investment banking firm that provides advice to, and raises capital for, its
clients; and an underwriter of selected insurance products. Other subsidiaries
provide financial services on a global basis similar to those of MLPF&S and are
engaged in such other activities as international banking, lending, and
providing other investment and financing services. Merrill Lynch International
Incorporated, through subsidiaries and affiliates, provides investment,
financing, and related services outside the United States and Canada. Merrill
Lynch Asset Management, LP and Fund Asset Management, LP together constitute one
of the largest mutual fund managers in the world and provide investment advisory
services. Merrill Lynch Government Securities Inc. is a primary dealer in
obligations issued or guaranteed by the U.S. Government and its agencies.
Merrill Lynch Capital Services, Inc., Merrill Lynch Derivative Products AG, and
Merrill Lynch Capital Markets PLC are the Company's primary derivative product
dealers and enter into interest rate and currency swaps and other derivative
transactions as intermediaries and as principals. The Company's insurance
underwriting operations consist of the underwriting of life insurance and
annuity products. Banking, trust, and mortgage lending operations conducted
through subsidiaries of the Company include issuing certificates of deposit,
offering money market deposit accounts, making secured loans, and providing
foreign exchange facilities and other related services.
The principal executive office of the Company is located at World Financial
Center, North Tower, 250 Vesey Street, New York, New York 10281; its telephone
number is (212) 449-1000.
USE OF PROCEEDS
The proceeds to be received by the Trust from the sale of the Trust
Preferred Securities and the Trust Common Securities will be used by the Trust
to purchase Partnership Preferred Securities, and will be applied by the
Partnership to invest in Debentures and Eligible Debt Securities. See
"Description of the Partnership Preferred Securities -- Partnership
Investments". After payment of the Underwriters' Compensation (as defined under
"Underwriting") and other expenses of this offering, the Company and the
subsidiaries of the Company which are the issuers of the Debentures will use the
proceeds from the sale of such Debentures to the Partnership of $
million for general corporate purposes and to repay certain intercompany
indebtedness. To the extent that Trust Preferred Securities being purchased for
resale by MLPF&S are not resold, the aggregate proceeds to the Company and its
subsidiaries would be reduced.
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SUMMARY FINANCIAL INFORMATION
The following summary of consolidated financial information was derived
from, and is qualified in its entirety by reference to, the financial statements
and other information and data contained in the Company's Annual Report on Form
10-K for the year ended December 29, 1995 and Quarterly Report on Form 10-Q for
the period ended September 27, 1996 (the "Quarterly Report"). See "Incorporation
of Certain Documents by Reference". The condensed consolidated financial
statements contained in the Quarterly Report are unaudited; however, in the
opinion of management of the Company, all adjustments (consisting only of normal
recurring accruals) necessary for a fair statement of the results of operations
have been included. The year-end results include 52 weeks for 1991, 1992, 1994,
and 1995 and 53 weeks for 1993.
The Company conducts its business in highly volatile markets. Consequently,
the Company's results can be affected by many factors, including general market
conditions, the liquidity of secondary markets, the level and volatility of
interest rates and currency values, the valuation of securities positions,
competitive conditions, and the size, number, and timing of transactions. In
periods of unfavorable market activity, profitability can be adversely affected
because certain expenses remain relatively fixed. As a result, net earnings and
revenues can vary significantly from period to period. Thus, interim results may
not necessarily be representative of full year results of operations.
<TABLE>
<CAPTION>
YEAR ENDED LAST FRIDAY IN DECEMBER NINE MONTHS ENDED
--------------------------------------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SEPTEMBER 29, SEPTEMBER 27,
1991 1992 1993 1994 1995 1995 1996
--------- ---------- ---------- ---------- ---------- ------------- -------------
<CAPTION>
(IN MILLIONS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues.......................... $ 12,353 $ 13,413 $ 16,588 $ 18,234 $ 21,513 $ 16,220 $ 18,410
Net revenues(1)................... $ 7,246 $ 8,577 $ 10,558 $ 9,625 $ 10,265 $ 7,652 $ 9,735
Earnings before income taxes and
cumulative effect of changes in
accounting principles(2)........ $ 1,017 $ 1,621 $ 2,425 $ 1,730 $ 1,811 $ 1,329 $ 1,891
Cumulative effect of changes in
accounting principles (net of
applicable income taxes)(2)..... -- $ (58) $ (35) -- -- -- --
Net earnings(2)................... $ 696 $ 894 $ 1,359 $ 1,017 $ 1,114 $ 810 $ 1,174
Ratio of earnings to fixed
charges(3)...................... 1.2 1.3 1.4 1.2 1.2 1.2 1.2
Total assets(4)................... $ 86,259 $ 107,024 $ 152,910 $ 163,749 $ 176,857 $ 185,473 $ 207,911
Long-term borrowings(5)........... $ 7,964 $ 10,871 $ 13,469 $ 14,863 $ 17,340 $ 16,156 $ 24,098
Stockholders' equity.............. $ 3,818 $ 4,569 $ 5,486 $ 5,818 $ 6,141 $ 6,077 $ 6,618
</TABLE>
- ------------------------
(1) Net revenues are revenues net of interest expense.
(2) Net earnings for 1992 have been reduced by $58 million to reflect the
adoption of Statement of Financial Accounting Standards ("SFAS") No. 106,
EMPLOYERS' ACCOUNTING FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS, and
SFAS No. 109, ACCOUNTING FOR INCOME TAXES. Net earnings for 1993 have been
reduced by $35 million to reflect the adoption of SFAS No. 112, EMPLOYERS'
ACCOUNTING FOR POSTEMPLOYMENT BENEFITS.
(3) For the purpose of calculating the ratio of earnings to fixed charges,
"earnings" consists of earnings from continuing operations before income
taxes and fixed charges. "Fixed charges" consists of interest costs,
amortization of debt expense, preferred stock dividend requirements of
majority-owned subsidiaries, and that portion of rentals estimated to be
representative of the interest factor.
16
<PAGE>
(4) In 1994, the Company adopted Financial Accounting Standards Board ("FASB")
Interpretation No. 39, OFFSETTING OF AMOUNTS RELATED TO CERTAIN CONTRACTS,
and FASB Interpretation No. 41, OFFSETTING OF AMOUNTS RELATED TO CERTAIN
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS, which increased assets and
liabilities at December 30, 1994 by approximately $8,500 million.
(5) To finance its diverse activities, the Company and certain of its
subsidiaries borrow substantial amounts of short-term funds on a regular
basis. Although the amount of short-term borrowings varies significantly
with the level of general business activity, on September 27, 1996, $2,659
million of bank loans and $20,208 million of commercial paper were
outstanding. In addition, certain of the Company's subsidiaries lend
securities and enter into repurchase agreements to obtain financing. At
September 27, 1996, cash deposits for securities loaned and securities sold
under agreements to repurchase amounted to $5,067 million and $65,123
million, respectively. From September 28, 1996 to December 6, 1996,
long-term borrowings, net of repayments and repurchases, increased by
approximately $1,828 million.
FISCAL YEAR 1995
Global financial markets, which steadily weakened during most of 1994,
generally improved during 1995, led by a more stable U.S. economy, declining
interest rates, and heightened investor activity. Inflationary fears eased
throughout 1995 as key U.S. economic statistics indicated slow to moderate
growth. The Federal Reserve decreased short-term interest rates in July and
December 1995 following seven rate increases between February 1994 and February
1995. Investors reacted favorably to these events and were more active in stock
and bond markets during 1995. Net earnings for the 1995 fourth quarter were $303
million, up 1% from the 1995 third quarter and up 88% from the 1994 fourth
quarter.
Net earnings for 1995 were $1,114 million, up 10% from 1994 net earnings of
$1,017 million. Earnings per common share were $5.44 primary and $5.42 fully
diluted in 1995, compared with $4.75 primary and $4.74 fully diluted in 1994.
Total revenues were a record $21,513 million, up 18% from 1994. Net revenues
(revenues after interest expense) totaled $10,265 million in 1995, up 7% from
1994.
Commission revenues increased 9% to a record $3,126 million from $2,871
million in 1994, due primarily to higher levels of listed and over-the-counter
securities transactions and mutual fund commissions, partially offset by lower
revenues from commodities. Commissions from listed and over-the-counter
securities increased due primarily to higher trading volumes on most major U.S.
and international exchanges. Mutual fund commissions increased due primarily to
higher distribution and redemption fees. Distribution fees from deferred-charge
funds increased due to strong fund sales in prior periods and higher asset
levels. Redemption fees increased as clients repositioned invested assets.
Interest and dividend revenues increased 28% to $12,221 million from $9,578
million in 1994. Interest expense, which includes dividend expense, increased
31% from 1994 to $11,248 million. Net interest and dividend profit was $973
million, virtually unchanged from $969 million in 1994, with increases in net
interest-earning assets offset by declining interest spreads due to the
flattening of the U.S. Treasury yield curve. The change in the yield curve
resulted from long-term interest rates falling more than short-term rates during
1995.
Principal transactions revenues increased 8% from 1994 to $2,519 million in
1995. Increases in equities and equity derivatives and taxable fixed-income
trading revenues were partially offset by decreases in trading revenues from
municipal securities, foreign exchange and commodities, and interest rate and
currency swaps. Equities and equity derivatives trading revenues, in the
aggregate, increased 46% to $912 million, due primarily to improved volumes in
the convertible, over-the-counter, and international equities markets, partially
offset by lower equity derivatives trading revenues. Taxable fixed-income
trading revenues increased 10% to $516 million due, in part, to higher revenues
from corporate bonds and
17
<PAGE>
preferred stock, high-yield bonds, and non-U.S. governments and agencies
securities. Trading revenues from mortgage-backed products were negatively
affected by reduced market liquidity, leading to a loss. Nevertheless, trading
results from mortgage-backed products, which include related net interest
revenues, were positive. U.S. Government and agencies securities trading
revenues were down from 1994 due to tighter spreads between U.S. Treasury
securities and related futures hedges, as well as reduced retail investor demand
attributable to lower interest rates. Municipal securities revenues decreased
28% to $273 million as a result of decreased investor demand for tax-exempt
investments as investors remained wary of potential tax law changes and sought
higher returns in equity and taxable fixed-income securities. Foreign exchange
and commodities revenues, in the aggregate, declined 22% to $86 million.
Commodities trading revenues decreased due to lower volumes. Increases in
foreign exchange trading revenues resulted from higher customer volume caused by
the strengthening of the U.S. dollar versus other major currencies during 1995.
Interest rate and currency swaps revenues declined 2% to $732 million. Decreases
in U.S. dollar-denominated transactions were substantially offset by increased
revenues in non-dollar-denominated transactions, particularly in Japanese and
European markets.
Investment banking revenues were $1,308 million, up 5% from $1,240 million
in 1994. Strategic services revenues, which include fees for merger and
acquisition activity, debt restructuring, and other advisory services,
increased, as companies worldwide sought strategic partners to promote growth
while cutting costs and increasing efficiencies. Underwriting revenues were
down, as lower revenues from equities, private placements, high-yield debt, and
mortgage-backed securities underwriting were partially offset by increased
underwriting revenues from corporate bonds and preferred stock and defined asset
funds.
Asset management and portfolio service fees rose 9% in 1995 to a record
$1,890 million from $1,739 million in 1994, as a result of higher fees earned
from asset management and other fee-based services. Other revenues decreased 5%
from 1994 to $449 million, due to lower net realized investment gains in 1995
compared with 1994.
Non-interest expenses were $8,454 million, up 7% from $7,895 million in the
year-ago period. Compensation and benefits expense, which represented
approximately 62% of non-interest expenses, increased 6% due primarily to
increased production-related and incentive compensation and the addition of
Smith New Court PLC ("Smith New Court") employees. Compensation and benefits
expense as a percentage of net revenues was 51.3% in 1995, compared with 51.5%
in 1994.
Occupancy costs increased 3% from 1994 primarily due to international
growth. Other facilities-related costs, which include communications and
equipment rental expense and depreciation and amortization expenses, rose 13%
primarily due to expanded use of market data services, as well as higher
depreciation expense from the purchase of technology-related assets over the
past year.
Professional fees increased 16% from the year-ago period, due to higher
legal fees and systems development costs related to upgrading technology and
processing capabilities in customer, trading, and transaction processing
systems. Advertising and market development expenses increased 6% from 1994 as a
result of increased advertising, international travel, and sales promotion
primarily related to international growth. Brokerage, clearing, and exchange
fees increased 7% as a result of higher securities volume, particularly in
international markets. Other expenses increased 4% from 1994, due primarily to a
$26 million first quarter charge for the write-off of assets related to a
technology contract and $14 million of goodwill amortization related to Smith
New Court.
Income tax expense totaled $697 million in 1995. The effective tax rate in
1995 was 38.5%, compared with 41.2% in 1994. The decrease in the effective tax
rate was attributable to lower state income taxes, expanded international
business activities in jurisdictions with lower tax rates, and increases in
deductions for dividends received.
18
<PAGE>
In 1995 the Company acquired Smith New Court, a U.K.-based global securities
firm, for approximately $800 million. The Company recorded approximately $530
million of goodwill related to the acquisition, which is being amortized on a
straight-line basis over 15 years. The Company's 1995 results include those of
Smith New Court since mid-August 1995.
CERTAIN BALANCE SHEET INFORMATION AS OF DECEMBER 29, 1995
The Company believes that its equity base is adequate relative to the level
and composition of its assets and the mix of its business.
In the normal course of business, the Company underwrites, trades, and holds
non-investment grade securities in connection with its investment banking,
market-making, and derivative structuring activities. These activities are
subject to risks related to the creditworthiness of the issuers of, and the
liquidity of the market for, such securities, in addition to the usual risks
associated with investing in, financing, underwriting, and trading in investment
grade instruments.
At December 29, 1995, the fair value of long and short non-investment grade
trading inventories amounted to $5,489 million and $353 million, respectively,
and in the aggregate (I.E. the sum of long and short trading inventories)
represented 6.3% of aggregate consolidated trading inventories.
At December 29, 1995, the carrying value of extensions of credit provided to
corporations entering into leveraged transactions aggregated $489 million
(excluding unutilized revolving lines of credit and other lending commitments of
$127 million), consisting primarily of senior term and subordinated financings
to 30 medium-sized corporations. At December 29, 1995, the Company had no bridge
loans outstanding. Loans to highly leveraged corporations are carried at unpaid
principal balances less a reserve for estimated losses. The allowance for loan
losses is estimated based on a review of each loan, and consideration of
economic, market, and credit conditions. Direct equity investments made in
conjunction with the Company's investment and merchant banking activities
aggregated $211 million at December 29, 1995, representing investments in 62
enterprises. Equity investments in privately-held companies for which sale is
restricted by government or contractual requirements are carried at the lower of
cost or estimated net realizable value. At December 29, 1995, the Company held
interests in partnerships, totaling $91 million (recorded on the cost basis),
that invest in highly leveraged transactions and non-investment grade
securities. At December 29, 1995, the Company also committed to invest an
additional $79 million in partnerships that invest in leveraged transactions.
The Company's insurance subsidiaries hold non-investment grade securities.
Non-investment grade securities were 4.2% of total insurance investments at
December 29, 1995. Non-investment grade securities of insurance subsidiaries are
classified as available-for-sale and are carried at fair value.
At December 29, 1995, the largest non-investment grade concentration
consisted of various issues of a South American sovereign totaling $674 million,
of which $672 million represented on-balance-sheet hedges for off-balance-sheet
financial instruments. No one industry sector accounted for more than 35% of
total non-investment grade positions. At December 29, 1995, the Company held an
aggregate carrying value of $164 million in debt and equity securities of
issuers in various stages of bankruptcy proceedings or in default, of which 75%
resulted from the Company's market-making activities in such securities.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 27, 1996
Global financial markets were affected by a slowdown during the 1996 third
quarter after a strong first half. A brief midsummer U.S. stock market
correction combined with increased uncertainty over the direction of U.S.
interest rates led to lower trading and underwriting volumes, particularly in
equities, compared to the first six months of 1996. As a result, industrywide
revenues from such activities declined from first-half highs. Nevertheless,
issuer and investor demand was stronger than in the year-ago quarter.
19
<PAGE>
Net earnings for the first nine months of 1996 were a record $1,174 million,
up 45% from the $810 million reported in the comparable 1995 period. Third
quarter net earnings of $331 million were down 24% from record second quarter
1996 net earnings of $433 million. Earnings per common share were $5.91 primary
and $5.89 fully diluted, compared with $3.95 primary and $3.90 fully diluted in
the first nine months of 1995. Total revenues for the first nine months of 1996
were a record $18,410 million, up 14% from $16,220 million in the comparable
1995 period. Net revenues (revenues after interest expense) totaled $9,735
million up 27% from the year-ago period.
Commission revenues rose 24% during the first nine months of 1996 to $2,819
million from $2,279 million in the comparable 1995 period. Commissions revenues
from listed securities increased due to higher trading volumes on most major
U.S. and international exchanges. Mutual fund commissions advanced to a record
level due to strong sales of U.S. and offshore funds and increased distribution
fees.
Interest and dividend revenues for the first nine months of 1996 increased
to $9,407 million, up 1% from $9,329 million in the first nine months of 1995.
Interest expense, which includes dividend expense, was $8,675 million up 1% from
$8,568 million in the year-ago period. Net interest and dividend profit was $732
million, down 4% from $761 million in 1995 as a result of reduced levels of net
interest-earning assets.
Principal transactions revenues increased 39% from the first nine months of
1995 to $2,709 million, as increased client activity led to higher revenues in
most product categories. Equities and equity derivatives trading revenues, in
the aggregate, were up 35% to $874 million. International equities trading
revenues benefited from the addition of trading activity related to Smith New
Court, which was acquired in the 1995 third quarter. Over-the-counter equity
trading revenues rose due to increased client order flow. Taxable fixed-income
trading revenues rose 76% to $771 million primarily due to higher revenues from
mortgage-backed products, non-U.S. governments and agencies securities, and
money market instruments. Mortgage-backed securities trading revenues advanced
due primarily to improved liquidity and increased customer demand compared with
the year-ago period. Trading revenues for non-U.S. governments and agencies
securities benefited from higher demand for emerging market securities. Trading
revenues from money market instruments rose due to increased floating-rate note
activity in European markets. Interest rate and currency swap trading revenues
increased 19% to $698 million due to higher revenues from both U.S. and non-U.S.
dollar-denominated transactions. Municipal securities revenues increased 22% to
$257 million, largely due to increased investor demand for tax-advantaged
products. Foreign exchange and commodities trading revenues, in the aggregate,
rose 67% from the first nine months of 1995 to $109 million. Strong customer
activity attributable to increased volatility in exchange rates contributed to
higher foreign exchange trading revenues.
Investment banking revenues were $1,428 million, up 52% from $938 million in
the first nine months of 1995. Underwriting fees were higher in virtually all
products, particularly equity securities, due to increased transaction volume.
Strategic services revenues benefited from improved market share for mergers and
acquisitions activity.
Asset management and portfolio service fees were $1,661 million for the
first nine months of 1996, up 19% from $1,397 million in the year-ago period, as
a result of strong inflows of client assets and net asset appreciation. Other
revenues were $386 million, up 19% from $325 million in the first nine months of
1995 primarily due to gains on sales from Real Estate Mortgage Investment
Conduit ("REMIC") transactions and partnership investments.
20
<PAGE>
Non-interest expenses were $7,844 million, up 24% from $6,323 million in the
year-ago period. Compensation and benefits expense, which represented
approximately 64% of non-interest expenses, increased 27% during the first nine
months of 1996 due primarily to higher incentive and production-related
compensation as well as a 7% increase in the number of full-time employees, due
in part to acquisitions. Compensation and benefits expense was 51.8% of net
revenues for the first nine months of 1996, compared with 51.9% in the 1995
period.
Non-interest expenses excluding compensation and benefits, rose 19% to
$2,800 million. A significant component of this increase relates to strategic
investments in technology such as the Trusted Global Advisor ("TGA") initiative,
a new technology platform that will enable Financial Consultants to provide
enhanced services to clients. These technology-related expenses primarily
affected communications and equipment rental, depreciation and amortization, and
professional fees which, in the aggregate, increased 21% from the comparable
1995 period to $1,131 million.
Occupancy costs increased 4% from the first nine months of 1995 due to
international growth, including the addition of Smith New Court facilities.
Advertising and market development expenses increased 28% from the first nine
months of 1995 due to increased international travel and higher
promotion-related recognition costs. Brokerage, clearing, and exchange fees
increased 17% as a result of higher trading volume, particularly in
international markets. Other expenses increased 22% from the first nine months
of 1995, primarily due to provisions related to various business activities and
nine months of goodwill amortization primarily related to Smith New Court.
Income tax expense totaled $717 million for the first nine months of 1996.
The effective tax rate in the 1996 period was 37.9%, compared with 39.0% a year
ago. The decrease in the effective tax rate was primarily attributable to
expanded international business activities.
CERTAIN BALANCE SHEET INFORMATION AS OF SEPTEMBER 27, 1996
The Company believes that its equity base is adequate relative to the level
and composition of its assets and the mix of its business.
In the normal course of business, the Company underwrites, trades, and holds
non-investment grade securities in connection with its investment banking,
market making, and derivative activities. These activities are subject to risks
related to the creditworthiness of the issuers of, and the liquidity of the
market for, such securities, in addition to the usual risks associated with
investing in, financing, underwriting, and trading in investment grade
instruments.
At September 27, 1996, the fair value of long and short non-investment grade
trading inventories amounted to $8,912 million and $879 million, respectively,
and in the aggregate (I.E. the sum of long and short trading inventories),
represented 8.5% of aggregate consolidated trading inventories.
At September 27, 1996, the carrying value of extensions of credit provided
to corporations entering into leveraged transactions aggregated $269 million
(excluding unutilized revolving lines of credit and other lending commitments of
$109 million), consisting primarily of senior term and subordinated financing to
38 large- and medium-sized corporations. At September 27, 1996, the Company had
no bridge loans outstanding but had two bridge loan commitments at September 27,
1996 that were subsequently canceled by the counterparties. Subsequent to
quarter-end, the Company entered into a bridge loan commitment for $90 million
to a non-investment grade counterparty. The Company intends to syndicate the
loan, if extended, and may retain a residual portion. Loans to highly leveraged
corporations are carried at unpaid principal balances less a reserve for
estimated losses. The allowance for loan losses is estimated based on a review
of each loan, and a consideration of economic, market, and credit conditions.
Direct equity investments made in conjunction with the Company's investment
and merchant banking activities aggregated $153 million at September 27, 1996,
representing investments in 61 enterprises. Equity investments in privately-held
companies for which sale is restricted by government or contractual
21
<PAGE>
requirements are carried at the lower of cost or estimated net realizable value.
At September 27, 1996, the Company held interests in partnerships, totaling $112
million (recorded on the cost basis), that invest in highly leveraged
transactions and non-investment grade securities. At September 27, 1996, the
Company also committed to invest an additional $74 million in partnerships that
invest in leveraged transactions.
The Company's insurance subsidiaries hold non-investment grade securities.
Non-investment grade securities were 4.7% of total insurance investments at
September 27, 1996. Non-investment grade securities of insurance subsidiaries
are classified as available-for-sale and are carried at fair value.
At September 27, 1996, the largest non-investment grade concentration
consisted of various sovereign and corporate issues of a South American country
totaling $1,186 million, which primarily represented hedges of other financial
instruments. No one industry sector accounted for more than 20% of total non-
investment grade positions. At September 27, 1996, the Company held an aggregate
carrying value of $144 million in debt and equity securities of issuers in
various stages of bankruptcy proceedings or in default, of which 50% resulted
from the Company's market making activities in such instruments. In addition,
the Company held distressed bank loans totaling $385 million at quarter-end.
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 (the
"Trust Act"), pursuant to a declaration of trust and the filing of a certificate
of trust with the Secretary of State of the State of Delaware on November 20,
1996; such declaration will be amended and restated in its entirety (as so
amended and restated, the "Declaration") substantially in the form filed as an
exhibit to the Registration Statement of which this Prospectus forms a part. The
Declaration will be qualified as an indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). Upon issuance of the Trust
Preferred Securities, the purchasers thereof will own all the Trust Preferred
Securities. See "Description of the Trust Preferred Securities". The Company
will acquire Trust Common Securities in an amount equal to at least 3% of the
total capital of the Trust. The Trust will use all the proceeds derived from the
issuance of the Trust Securities to purchase the Partnership Preferred
Securities from the Partnership and, accordingly, the assets of the Trust will
consist solely of the Partnership Preferred Securities. The Trust exists for the
exclusive purpose of (i) issuing the Trust Securities representing undivided
beneficial ownership interests in the assets of the Trust, (ii) investing the
gross proceeds of the Trust Securities in the Partnership Preferred Securities,
and (iii) engaging in only those other activities necessary or incidental
thereto.
Pursuant to the Declaration, there will initially be four trustees (the
"Trustees") for the Trust. Two of the Trustees will be individuals who are
employees or officers of or who are affiliated with the Company (the "Regular
Trustees"). The third trustee will be a financial institution that is
unaffiliated with the Company and is indenture trustee for purposes of
compliance with the provisions of the Trust Indenture Act (the "Property
Trustee"). The fourth trustee will be an entity that maintains its principal
place of business in the State of Delaware (the "Delaware Trustee"). Initially,
The Chase Manhattan Bank, a national banking association, will act as Property
Trustee, and its affiliate, Chase Manhattan Bank Delaware, a Delaware
corporation, will act as Delaware Trustee until, in each case, removed or
replaced by the holder of the Trust Common Securities. For purposes of
compliance with the Trust Indenture Act, The Chase Manhattan Bank will also act
as trustee under the Trust Guarantee (the "Trust Guarantee Trustee"), as
Property Trustee under the Declaration and as trustee under the indenture
applicable to the Company Debenture.
The Property Trustee will hold title to the Partnership Preferred Securities
for the benefit of the holders of the Trust Securities, and the Property Trustee
will have the power to exercise all rights, powers and privileges with respect
to the Partnership Preferred Securities under the Amended and Restated Agreement
of Limited Partnership to be entered into by the Company and the Trust (the
"Limited Partnership Agreement") as the holder of the Partnership Preferred
Securities. In addition, the Property
22
<PAGE>
Trustee will maintain exclusive control of a segregated non-interest bearing
bank account (the "Property Account") to hold all payments made in respect of
the Partnership Preferred Securities for the benefit of the holders of the Trust
Securities. The Trust Guarantee Trustee will hold the Trust Guarantee for the
benefit of the holders of the Trust Preferred Securities. The Company, as the
holder of all the Trust Common Securities, will have the right to appoint,
remove or replace any of the Trustees and to increase or decrease the number of
trustees, provided that at least one trustee shall be a Delaware Trustee, at
least one trustee shall be the Property Trustee and at least one Trustee shall
be a Regular Trustee. The Company will pay all fees and expenses related to the
organization and operations of the Trust (including 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 upon
the Trust) and the offering of the Trust Preferred Securities and be responsible
for all debts and obligations of the Trust (other than with respect to the Trust
Securities).
For so long as the Trust Preferred Securities remain outstanding, the
Company will covenant (i) to maintain directly 100% 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 the Declaration of the Trust and (iii) to use its commercially
reasonable efforts to ensure that the Trust will not be (A) an "investment
company" for purposes of the 1940 Act or (B) classified as other than a grantor
trust for United States federal income tax purposes.
The rights of the holders of the Trust Preferred Securities, including
economic rights, rights to information and voting rights, are as set forth in
the Declaration and the Trust Act. See "Description of the Trust Preferred
Securities". The Declaration and the Trust Guarantee also incorporate by
reference the terms of the Trust Indenture Act.
The location of the principal executive office of the Trust is c/o Merrill
Lynch & Co., Inc., World Financial Center, North Tower, 250 Vesey Street, New
York, New York 10281, and its telephone number is (212) 449-1000.
MERRILL LYNCH PREFERRED FUNDING I, L.P.
Merrill Lynch Preferred Funding I, L.P. (the "Partnership") is a limited
partnership that was formed under the Delaware Revised Uniform Limited
Partnership Act, as amended (the "Partnership Act"), on November 20, 1996 for
the exclusive purposes of purchasing certain eligible securities of the Company
and wholly owned subsidiaries of the Company (the "Affiliate Investment
Instruments") with the proceeds from the sale of Partnership Preferred
Securities to the Trust and a capital contribution from the Company in exchange
for the general partner interest in the Partnership. Pursuant to the certificate
of limited partnership, as amended, and the Limited Partnership Agreement, the
Company is the sole general partner of the Partnership (in such capacity the
"General Partner"). Upon the issuance of the Partnership Preferred Securities,
which securities represent limited partner interests in the Partnership, the
Trust will be the sole limited partner of the Partnership. Contemporaneously
with the issuance of the Partnership Preferred Securities, the General Partner
will contribute capital to the Partnership in an amount sufficient to establish
its initial capital account at an amount equal to at least 15% of the total
capital of the Partnership.
The Partnership is managed by the General Partner and exists for the sole
purpose of (i) issuing its partnership interests, (ii) investing the proceeds
thereof in Affiliate Investment Instruments and Eligible Debt Securities and
(iii) engaging in only those other activities necessary or incidental thereto.
To the extent that aggregate payments to the Partnership on the Affiliate
Investment Instruments and on 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.
23
<PAGE>
For so long as the Partnership Preferred Securities remain outstanding, the
General Partner will covenant in the Limited Partnership Agreement (i) 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. The Company or the then General Partner may transfer its obligations
as General Partner to a wholly-owned direct or indirect subsidiary of the
Company provided that (i) such successor 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.
The rights of the holders of the Partnership Preferred Securities, including
economic rights, rights to information and voting rights, are set forth in the
Limited Partnership Agreement and the Partnership Act. See "Description of the
Partnership Preferred Securities".
The Limited Partnership Agreement provides that the General Partner will
have liability for the fees and expenses of the Partnership (including 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 upon the Partnership) and be responsible for all debts and
obligations of the Partnership (other than with respect to the Partnership
Preferred Securities). Under Delaware law, assuming a limited partner in a
Delaware limited partnership such as the Partnership (I.E., a holder of the
Partnership Preferred Securities) does not participate in the control of the
business of the limited partnership, such limited partner will not be personally
liable for the debts, obligations and liabilities of such limited partnership,
whether arising in contract, tort or otherwise, solely by reason of being a
limited partner of such limited partnership (subject to any obligation such
limited partner may have to repay any funds that may have been wrongfully
distributed to it). The Partnership's business and affairs will be conducted by
the General Partner.
The location of the principal executive offices of the Partnership is c/o
Merrill Lynch & Co., Inc., World Financial Center, North Tower, 250 Vesey
Street, New York, New York 10281 and its telephone number is (212) 449-1000.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
The Trust Preferred Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Property Trustee, The Chase Manhattan Bank, will act as
trustee for the Trust Preferred Securities under the Declaration for purposes of
compliance with the provisions of the Trust Indenture Act. The terms of the
Trust Preferred Securities will include those stated in the Declaration and
those made part of the Declaration by the Trust Indenture Act. The following
summary of the material terms and provisions of the Trust Preferred Securities
does not purport to be complete and is subject to, and qualified in its entirety
by reference to, the Declaration, a copy of which is filed as an exhibit to the
Registration Statement of which this Prospectus is a part, the Trust Act and the
Trust Indenture Act.
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GENERAL
The Trust Preferred Securities will be issued in fully registered form
without coupons. Trust Preferred Securities will not be issued in bearer form.
See "-- Book-Entry Only Issuance -- The Depository Trust Company".
The Declaration authorizes the Regular Trustees of the Trust to issue the
Trust Securities, which represent undivided beneficial ownership interests in
the assets of the Trust. Title to the Partnership Preferred Securities will be
held by the Property Trustee for the benefit of the holders of the Trust
Securities. The Declaration does not permit the Trust to acquire any assets
other than the Partnership Preferred Securities or the issuance by the Trust of
any securities other than the Trust Securities or the incurrence of any
indebtedness by the Trust. The payment of distributions out of money held by the
Trust, and payments out of money held by the Trust upon redemption of the Trust
Preferred Securities or liquidation of the Trust, are guaranteed by the Company
to the extent described under "Description of the Trust Guarantee". The Trust
Guarantee will be held by The Chase Manhattan Bank, the Trust Guarantee Trustee,
for the benefit of the holders of the Trust Preferred Securities. The Trust
Guarantee does not cover payment of distributions when the Trust does not have
sufficient available funds to pay such distributions. In such event, holders of
Trust Preferred Securities will have the remedies described below under "--
Trust Enforcement Events".
DISTRIBUTIONS
The distribution rate on Trust Preferred Securities will be fixed at a rate
per annum of % of the stated liquidation amount of $25 per Trust Preferred
Security and will be paid if, as and when the Trust has funds available for
payment. Distributions not paid on the scheduled payment date will accumulate
and compound quarterly at a rate per annum equal to %. The term
"distribution" as used herein includes any such compounded amounts unless
otherwise stated or the context otherwise requires. The amount of distributions
payable for any period will be computed on the basis of a 360-day year of twelve
30-day months.
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 each March 30, June 30, September 30 and December 30, commencing
December 30, 1996, if, as and when 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 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.
Distributions on the Trust Preferred Securities will be made to the extent
that the Trust has funds available for the payment of such distributions in the
Property Account. 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 with respect to the Partnership Preferred Securities
or from the Company on the Partnership Guarantee or the Trust 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. Pursuant to the Limited Partnership Agreement, the General
Partner is not obligated to declare distributions on the Partnership Preferred
Securities at any time, including upon or following a Partnership Enforcement
Event. See "Description of Partnership Preferred Securities -- Partnership
Enforcement Events".
The assets of the Partnership will consist only of Affiliate Investment
Instruments (which initially will be Debentures) and Eligible Debt Securities.
To the extent that the issuers (and, where applicable, the Company, as
guarantor) of the securities in which the Partnership invests defer or fail to
make any payment in respect of such securities (or, if applicable, such
guarantees), the Partnership will not have
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sufficient funds to pay and will not declare or pay distributions on the
Partnership Preferred Securities. If the Partnership does not declare and pay
distributions on the Partnership Preferred Securities out of funds legally
available for distribution, the Trust will not have sufficient funds to make
distributions on the Trust Preferred Securities, in which event the Trust
Guarantee will not apply to such distributions until the Trust has sufficient
funds available therefor. See "Description of the Partnership Preferred
Securities -- Distributions" and "Description of the Trust Guarantee". In
addition, as described under "Risk Factors -- Insufficient Income or Assets
Available to Partnership", the Partnership may not have sufficient funds to pay
current or liquidating distributions on the Partnership Preferred Securities if
(i) at any time that the Partnership is receiving current payments in respect of
the securities held by the Partnership (including the Debentures), the General
Partner, in its sole discretion, does not declare distributions on the
Partnership Preferred Securities and the Partnership receives insufficient
amounts to pay the additional compounded distributions that will accumulate in
respect of the Partnership Preferred Securities, (ii) the Partnership reinvests
the proceeds received in respect of the Debentures upon their retirement or at
their maturities in Affiliate Investment Instruments that do not generate income
in an amount that is sufficient to pay full distributions in respect of the
Partnership Preferred Securities or (iii) the Partnership invests in equity or
debt securities of Investment Affiliates that are not guaranteed by the Company
and that cannot be liquidated by the Partnership for an amount sufficient to pay
such distributions in full.
Distributions on the Trust Preferred 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 will be one Business Day (as defined herein) 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. Subject to any applicable laws and regulations and the
provisions of the Declaration, each such payment will be made as described under
"-- Book-Entry Only Issuance -- The Depository Trust Company" below. 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 Preferred 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 the
distribution subject to 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. A "Business Day" shall mean any day other than a day on which
banking institutions in The City of New York are authorized or required by law
to close.
TRUST ENFORCEMENT EVENTS
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 under the
Limited Partnership Agreement, will constitute an enforcement event under the
Declaration with respect to the Trust Securities (a "Trust Enforcement Event");
PROVIDED, that pursuant to the Declaration, the holder of the Trust Common
Securities will be deemed to have waived any Trust Enforcement Event with
respect to the Trust Common Securities until all Trust Enforcement Events with
respect to the Trust Preferred Securities have been cured, waived or otherwise
eliminated. Until such Trust Enforcement Events with respect to the Trust
Preferred Securities 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 with respect to
certain matters under the Declaration and, in the case of a Partnership
Enforcement Event, the Special Representative with respect to certain matters
under the Limited Partnership Agreement. See "Description of the Partnership
Preferred Securities -- Partnership Enforcement Events" for a description of the
events which will trigger the occurrence of a Partnership Enforcement Event.
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Upon the occurrence of a Trust Enforcement Event, (a) the Property Trustee,
as the holder of the Partnership Preferred Securities, shall have the right to
enforce the terms of the Partnership Preferred Securities, including the right
to direct the Special Representative to enforce (i) the Partnership's creditors'
rights and other rights with respect to the Affiliate Investment Instruments and
the Investment Guarantees, (ii) the rights of the holders of the Partnership
Preferred Securities under the Partnership Guarantee and (iii) the rights of the
holders of the Partnership Preferred Securities to receive distributions (only
if and to the extent declared out of funds legally available therefor) on the
Partnership Preferred Securities, and (b) the Trust Guarantee Trustee shall have
the right to enforce the terms of the Trust Guarantee, including the right to
enforce the covenant restricting certain payments by the Company and Finance
Subsidiaries.
If the Property Trustee fails to enforce its rights under the Partnership
Preferred Securities after a holder of Trust Preferred Securities has made a
written request, such holder of record of Trust Preferred Securities may
directly institute a legal proceeding against the Partnership and 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, the Trust or any other person or entity. In addition, 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 Preferred
Securities has made a written request, a holder of record of Trust Preferred
Securities may 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
a holder of Trust Preferred Securities may 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, however, shall the Special Representative have
authority to cause the General Partner to declare distributions on the
Partnership Preferred Securities. As a result, although the Special
Representative may be able to enforce the Partnership's creditors' rights to
accelerate and receive payments in respect of the Affiliate Investment
Instruments and the Investment Guarantees, the Partnership would be entitled to
reinvest such payments in additional Affiliate Investment Instruments, subject
to satisfying the reinvestment criteria described under "Description of the
Partnership Preferred Securities -- Partnership Investments", and Eligible Debt
Securities, rather than declaring and making distributions on the Partnership
Preferred Securities.
The Company and the Trust are each required to file annually with the
Property Trustee an officer's certificate as to its compliance with all
conditions and covenants under the Declaration.
MANDATORY REDEMPTION
The Partnership Preferred Securities may be redeemed by the Partnership at
the option of the General Partner, in whole or in part, at any time on or after
December 30, 2006 or at any time in certain circumstances upon the occurrence of
a Partnership Special Event. Upon such redemption of the Partnership Preferred
Securities (either at the option of the General Partner or pursuant to a
Partnership Special Event), the proceeds from such repayment shall
simultaneously be applied to redeem Trust Securities having an aggregate
liquidation amount equal to the Partnership Preferred Securities so redeemed at
an amount per Trust Security equal to $25 plus accumulated and unpaid
distributions thereon; PROVIDED, that holders of the Trust Securities shall be
given not less than 30 nor more than 60 days
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notice of such redemption. See "Description of the Partnership Preferred
Securities -- General" and "-- Optional Redemption".
TRUST SPECIAL EVENT REDEMPTION OR DISTRIBUTION
If, at any time, a Trust Tax Event or a Trust Investment Company Event (each
as hereinafter defined, and each, 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 notice with the
result that, after satisfaction of creditors of the Trust, if any, 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 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, 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 Company 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 an opinion (a "Trust Redemption
Tax Opinion") of nationally recognized independent tax counsel experienced in
such matters that there is more than an insubstantial risk that interest payable
by one or more of the Investment Affiliates with respect to the Debentures
issued by such Investment Affiliate 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 as described
above, 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 Preferred Securities and Trust Common Securities will be
redeemed by the Trust at the Redemption Price.
"Trust Tax Event" means that the Company shall have requested and received
and shall have delivered to the Regular Trustees an opinion of nationally
recognized independent tax counsel experienced in such matters (a "Trust
Dissolution Tax Opinion") to the effect that there has been (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 proposed change, decision or
pronouncement is announced or which action, clarification or challenge occurs on
or after the date of this Prospectus (collectively a "Tax Action"), which Tax
Action relates to any of the items described in (i) through (iii) below, and
that following the occurrence of such Tax Action 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 an Investment Affiliate with respect to the Debenture issued
by such Investment Affiliate is not, or will not be, deductible by such
Investment Affiliate for United States federal income tax purposes.
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"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 the occurrence on or after the date hereof 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 (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.
If the Partnership Preferred Securities are distributed to the holders of
the Trust Preferred Securities, the Company 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.
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 Company or its agent for transfer or reissuance.
There can be no assurance as to the market price for the Partnership
Preferred Securities which may be distributed in exchange for Trust Preferred
Securities if a dissolution and liquidation of the Trust were to occur.
Accordingly, the Partnership Preferred Securities which an investor may
subsequently receive on dissolution and liquidation of the Trust may trade at a
discount to the price of the Trust Preferred Securities exchanged.
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding Trust Preferred
Securities 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.
If the Trust gives a notice of redemption in respect of Trust Preferred
Securities (which notice will be irrevocable), and if the Company has paid to
the Property Trustee a sufficient amount of cash in connection with the related
redemption of the Partnership Preferred Securities, then, by 12:00 noon, New
York time, on the redemption date, the Trust will irrevocably deposit with DTC
funds sufficient to pay the amount payable on redemption of all book-entry
certificates and will give DTC irrevocable instructions and authority to pay
such amount to holders of the Trust Preferred Securities. See "-- Book-Entry
Only Issuance -- The Depository Trust Company". If notice of redemption shall
have been given and funds are deposited as required, then upon the date of such
deposit, all rights of holders of such Trust Preferred Securities so called for
redemption will cease, except the right of the holders of such Trust Preferred
Securities to receive the Redemption Price, but without interest on such
Redemption Price. In the event that any date fixed for redemption of Trust
Preferred Securities is not a Business Day, then payment of the amount 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 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
the event that payment of the Redemption Price in respect of Trust Preferred
Securities is improperly withheld or refused and not paid either by the Trust or
by the Company pursuant to the Trust Guarantee described under "Description of
the Trust Guarantee", distributions on such Trust Preferred Securities will
continue to accumulate from the original redemption date to the date of payment.
In the event that fewer than all of the outstanding Trust Preferred
Securities are to be redeemed, the Trust Preferred Securities will be redeemed
in accordance with the procedures of DTC. See "-- Book-Entry Only Issuance --
The Depository Trust Company". In the event that the Trust Preferred Securities
do not remain in book-entry only form and fewer than all of the outstanding
Trust Preferred Securities are to be redeemed, the Trust Preferred Securities
shall be redeemed on a PRO RATA basis or pursuant to the rules of any securities
exchange on which the Trust Preferred Securities are listed.
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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.
SUBORDINATION OF TRUST COMMON SECURITIES
Payment of amounts upon liquidation of the Trust Securities shall be made
PRO RATA based on the liquidation amount of the Trust Securities; PROVIDED,
HOWEVER, that upon (i) the occurrence of an Investment Event of Default by an
Investment Affiliate (including the Company) in respect of any Affiliate
Investment Instrument or (ii) default by the Company on any of its obligations
under any Guarantee, the holders of the Trust Preferred Securities will have a
preference over the holders of the Trust Common Securities with respect to
payments upon liquidation of the Trust.
In the case of any Trust Enforcement Event, the holder of Trust Common
Securities will be deemed to have waived any such Trust Enforcement Event until
all such Trust Enforcement Events with respect to the Trust Preferred Securities
have been cured, waived or otherwise eliminated. Until all Trust Enforcement
Events with respect to the Trust Preferred Securities have been so cured, waived
or otherwise eliminated, the Property Trustee shall act solely on behalf of the
holders of the Trust Preferred Securities and not on behalf of the holder of the
Trust Common Securities, and only the holders of the Trust Preferred Securities
will have the right to direct the Property Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
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 will be entitled to receive out of the assets
of the Trust, after satisfaction of liabilities to 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 Preferred Security plus
accumulated and unpaid distributions thereon to the date of payment (the "Trust
Liquidation Distribution"), unless, in connection with such Trust Liquidation,
Partnership Preferred Securities have been distributed on a PRO RATA basis to
the holders of the Trust Securities.
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 Preferred 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 liquidation PRO RATA with the holders of the
Trust Preferred Securities, except in the limited circumstances described above
under "-- Subordination of Trust Common Securities".
Pursuant to the Declaration, the Trust shall terminate (i) upon the
bankruptcy of the Company, (ii) upon the filing of a certificate of dissolution
or the equivalent with respect to the Company, 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 charter of the Company and the expiration of 90 days after the date of
revocation without a reinstatement thereof, (iii) upon the distribution of all
of the Partnership Preferred Securities upon the occurrence of a Trust Special
Event, (iv) upon the entry of a decree of a judicial dissolution of the Company
or the Trust, or (v) upon the redemption of all the Trust Securities.
VOTING RIGHTS
Except as described herein, under the Trust Act, the Trust Indenture Act and
under "Description of the Trust Guarantee -- Amendments and Assignment", and as
otherwise required by law and the Declaration, the holders of the Trust
Preferred Securities will have no voting rights.
Subject to the requirement of the Property Trustee obtaining a tax opinion
as set forth in the last sentence of this paragraph, 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
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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 to exercise its rights in the manner described above under "--
Trust Enforcement Events" and (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 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 on behalf of the Trust. See "Description of the
Partnership Preferred Securities -- Voting Rights". 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 as described above, the
Property Trustee shall be under no obligation to take any of the actions
described in clauses (i) or (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 of
Trust Securities will continue to be treated as owning an undivided beneficial
ownership interest in the Partnership Preferred Securities.
A waiver of a Partnership Enforcement Event with respect to the Partnership
Preferred Securities held by the Property Trustee will constitute a waiver of
the corresponding Trust Enforcement Event.
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. 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.
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 Preferred 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.
The procedures by which holders of Trust Preferred Securities represented by
the global certificates may exercise their voting rights are described below.
See "-- Book-Entry Only Issuance -- The Depository Trust Company".
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Holders of the Trust Preferred Securities will have no rights to appoint or
remove the Regular Trustees, who may be appointed, removed or replaced solely by
the Company, as the holder of all of the Trust Common Securities.
MERGER, CONSOLIDATION OR AMALGAMATION OF THE TRUST
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 corporation or other entity, except as
described below. The Trust may, with the consent of a majority of the Regular
Trustees and without the consent of the holders of the Trust Securities, the
Property Trustee or the Delaware Trustee consolidate, amalgamate, merge with or
into, or be replaced by 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 either (x) expressly assumes all of the obligations of the
Trust under the Trust Securities or (y) substitutes for the Trust Preferred
Securities other securities having substantially the same terms as the Trust
Preferred Securities (the "Successor Securities"), so long as the Successor
Securities rank the same as the Trust Securities rank with respect to
distributions, assets and payments, (ii) the Company expressly acknowledges a
trustee of such successor entity possessing the same powers and duties as the
Property Trustee as the holder of the Partnership Preferred Securities, (iii)
the Trust Preferred Securities or any Successor Securities are listed, or any
Successor 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 or replacement does not cause the Trust Preferred Securities
(including any Successor Securities) to be downgraded by any nationally
recognized statistical rating organization, (v) such merger, consolidation,
amalgamation or replacement does not adversely affect the rights, preferences
and privileges of the holders of the Trust Preferred Securities (including any
Successor Securities) in any material respect, (vi) such successor entity has a
purpose substantially identical to that of the Trust, (vii) the Company
guarantees the obligations of such successor entity under the Successor
Securities to the same extent as provided by the Trust Guarantee and (viii)
prior to such merger, consolidation, amalgamation or replacement, the Company
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 or replacement will not adversely affect the rights,
preferences and privileges of the holders of the Trust Preferred Securities
(including any Successor 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 or replacement, neither the
Trust nor such 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 such successor trust) will not be
treated 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. Notwithstanding the
foregoing, 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 the
successor entity to be classified as an association or a publicly traded
partnership taxable as a corporation for United States federal income tax
purposes.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by a majority of the
Regular Trustees (and in certain circumstances the Property Trustee and the
Delaware Trustee), PROVIDED, that if any proposed amendment provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Trust
Securities, whether by way of amendment to the Declaration or otherwise or (ii)
the dissolution, winding-up or termination of the Trust other than pursuant to
the terms of the Declaration, then the holders of the Trust Securities voting
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together as a single 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 at least a majority in liquidation amount of the Trust Securities
affected thereby; PROVIDED, FURTHER that if any amendment or proposal referred
to in clause (i) above 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.
The Declaration may be amended without the consent of the holders of the
Trust Securities to (i) cure any ambiguity, (ii) correct or supplement any
provision in the Declaration that may be defective or inconsistent with any
other provision of the Declaration, (iii) add to the covenants, restrictions or
obligations of the Sponsor, (iv) conform to any change in the 1940 Act, the
Trust Indenture Act or the rules or regulations of either such Act and (v)
modify, eliminate and add to any provision of the Declaration to such extent as
may be necessary or desirable; PROVIDED that no such amendment shall have a
material adverse effect on the rights, preferences or privileges of the holders
of the Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
fail to be classified as a grantor trust for United States federal income tax
purposes, (ii) cause the Partnership to be classified as an association or
publicly traded partnership taxable as a corporation for such purposes, (iii)
reduce or otherwise adversely affect the powers of the Property Trustee or (iv)
cause the Trust or the Partnership to be deemed an "investment company" which is
required to be registered under the 1940 Act.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depository (the
"Depository") for the Trust Preferred Securities and, to the extent distributed
to the holders of Trust Preferred Securities, the Partnership Preferred
Securities. The Trust Preferred Securities will be issued only as
fully-registered securities registered in the name of Cede & Co. (DTC's
nominee). One or more fully-registered global Trust Preferred Securities
certificates ("Global Certificates"), representing the total aggregate number of
Trust Preferred Securities, will be issued and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Participants in DTC
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. DTC is owned by a number of its
Participants and by the New York Stock Exchange, the American Stock Exchange,
Inc., and the National Association of Securities Dealers, Inc. Access to the DTC
system is also available to others such as securities brokers and dealers, banks
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly ("Indirect Participants"). The
rules applicable to DTC and its Participants are on file with the Commission.
Purchases of Trust Preferred Securities within the DTC system must be made
by or through Participants, which will receive a credit for the Trust Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
Trust Preferred Securities ("Beneficial Owner") is in turn to be recorded on the
Participants' and Indirect Participants' records. Beneficial Owners will not
receive written confirmation from DTC of their purchases, but Beneficial Owners
are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the
Participants or Indirect Participants through which the Beneficial Owners
purchased Trust Preferred Securities. Transfers of ownership interests in the
Trust Preferred Securities are to be accomplished by
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entries made on the books of Participants and Indirect Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in Trust Preferred Securities, except in
the event that use of the book-entry system for the Trust Preferred Securities
is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Trust Preferred
Securities; DTC's records reflect only the identity of the Participants to whose
accounts such Trust Preferred Securities are credited, which may or may not be
the Beneficial Owners. The Participants and Indirect Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
So long as DTC, or its nominee, is the registered owner or holder of a
Global Certificate, DTC or such nominee, as the case may be, will be considered
the sole owner or holder of the Trust Preferred Securities represented thereby
for all purposes under the Declaration and the Trust Preferred Securities. No
beneficial owner of an interest in a Global Certificate will be able to transfer
that interest except in accordance with DTC's applicable procedures, in addition
to those provided for under the Declaration.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Trust Preferred Securities (including the presentation of
Trust Preferred Securities for exchange as described below) only at the
direction of one or more Participants to whose account the DTC interests in the
Global Certificates are credited and only in respect of such portion of the
aggregate liquidation amount of Trust Preferred Securities as to which such
Participant or Participants has or have given such direction. Also, if there is
a Trust Enforcement Event under the Trust Preferred Securities, DTC will
exchange the Global Certificates for Certificated Securities, which it will
distribute to its Participants in accordance with its customary procedures.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants, and by Participants and Indirect
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Redemption notices in respect of the Trust Preferred Securities held in
book-entry form will be sent to Cede & Co. If less than all of the Trust
Preferred Securities are being redeemed, DTC will determine the amount of the
interest of each Participant to be redeemed in accordance with its procedures.
Although voting with respect to the Trust Preferred Securities is limited,
in those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Trust Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to the Trust as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Participants to whose accounts the Trust Preferred
Securities are allocated on the record date (identified in a listing attached to
the Omnibus Proxy).
Distributions on the Trust Preferred Securities held in book-entry form will
be made to DTC in immediately available funds. DTC's practice is to credit
Participants' accounts on the relevant payment date in accordance with their
respective holdings shown on DTC's records unless DTC has reason to believe that
it will not receive payments on such payment date. Payments by Participants and
Indirect Participants to Beneficial Owners will be governed by standing
instructions and customary practices and will be the responsibility of such
Participants and Indirect Participants and not of DTC, the Trust or the Company,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of any distributions to DTC is the responsibility of the
Trust, disbursement of such payments to Participants is the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners is the
responsibility of Participants and Indirect Participants.
Except as described, a Beneficial Owner of an interest in a Global
Certificate will not be entitled to receive physical delivery of Trust Preferred
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC to exercise any rights under the Trust Preferred Securities.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Certificates among Participants of DTC, DTC
is under no obligation to perform or continue to
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perform such procedures, and such procedures may be discontinued at any time.
Neither the Company nor the Trust will have any responsibility for the
performance by DTC or its Participants or Indirect Participants under the rules
and procedures governing DTC. DTC may discontinue providing its services as
securities depository with respect to the Trust Preferred Securities at any time
by giving notice to the Trust. Under such circumstances, in the event that a
successor securities depository is not obtained, Trust Preferred Security
certificates are required to be printed and delivered to the Property Trustee.
Additionally, the Trust (with the consent of the Company) may decide to
discontinue use of the system of book-entry transfers through DTC or any
successor depository. In that event, certificates for the Trust Preferred
Securities will be printed and delivered to the Property Trustee. In each of the
above circumstances, the Company will appoint a paying agent with respect to the
Trust Preferred Securities.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in the global Trust Preferred
Securities as represented by a Global Certificate.
PAYMENT
Payments in respect of the Trust Preferred Securities represented by the
Global Certificates shall be made to DTC, which shall credit the relevant
accounts at DTC on the scheduled payment dates or, in the case of certificated
securities, if any, such payments shall be made by check mailed to the address
of the holder entitled thereto as such address shall appear on the register. The
Paying Agent shall be permitted to resign as Paying Agent upon 30 days written
notice to the Regular Trustees. In the event that The Chase Manhattan Bank shall
no longer be the Paying Agent, the Regular Trustees shall appoint a successor to
act as Paying Agent (which shall be a bank or trust company).
REGISTRAR, TRANSFER AGENT, AND PAYING AGENT
The Property Trustee will act as Registrar, Transfer Agent and Paying Agent
for the Trust Preferred Securities.
Registration of transfers of Trust Preferred Securities will be effected
without charge by or on behalf of the Trust, but upon payment (with the giving
of such indemnity as the Trust or the Company may require) in respect of any tax
or other government charges which may be imposed in relation to it.
The Trust will not be required to register or cause to be registered the
transfer of Trust Preferred Securities after such Trust Preferred Securities
have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, prior to the occurrence of a default with respect to
the Trust Securities, undertakes to perform only such duties as are specifically
set forth in the Declaration and, after default, shall exercise the same degree
of care as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provisions, the Property Trustee is under no obligation
to exercise any of the powers vested in it by the Declaration at the request of
any holder of Trust Preferred Securities, unless offered reasonable indemnity by
such holder against the costs, expenses and liabilities which might be incurred
thereby. The holders of Trust Preferred Securities will not be required to offer
such indemnity in the event such holders, by exercising their voting rights,
direct the Property Trustee to take any action following a Trust Enforcement
Event.
GOVERNING LAW
The Declaration and the Trust Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
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MISCELLANEOUS
The Regular Trustees are authorized and directed to conduct the affairs of
and to operate the Trust in such a way that the Trust will not be deemed to be
an "investment company" required to be registered under the 1940 Act or
characterized as other than a grantor trust for United States federal income tax
purposes. In this connection, the Regular Trustees are authorized to take any
action, not inconsistent with applicable law, the certificate of trust or the
Declaration that the Regular Trustees determine in their discretion to be
necessary or desirable for such purposes as long as such action does not
adversely affect the interests of the holders of the Trust Preferred Securities.
Holders of the Trust Preferred Securities have no preemptive rights.
DESCRIPTION OF THE TRUST GUARANTEE
Set forth below is a summary of information concerning the Trust Guarantee
which will be executed and delivered by the Company for the benefit of the
holders from time to time of Trust Preferred Securities. The summary does not
purport to be complete and is subject in all respects to the provisions of, and
is qualified in its entirety by reference to, the Trust Guarantee, which is
filed as an exhibit to the Registration Statement of which this Prospectus is a
part. The Trust Guarantee incorporates by reference the terms of, and will be
qualified as an indenture under, the Trust Indenture Act. The Chase Manhattan
Bank, as the Trust Guarantee Trustee, will hold the Trust Guarantee for the
benefit of the holders of the Trust Preferred Securities and will act as
indenture trustee for the purposes of compliance with the Trust Indenture Act.
GENERAL
Pursuant to the Trust Guarantee, the Company will irrevocably agree, on a
subordinated basis and to the extent set forth therein, to pay in full to the
holders of the Trust Preferred Securities (except to the extent paid by the
Trust), as and when due, regardless of any defense, right of set off or
counterclaim which the Trust may have or assert, the following payments (the
"Trust Guarantee Payments"), without duplication: (i) any accumulated and unpaid
distributions on the Trust Preferred Securities to the extent the Trust has
funds available therefor, (ii) the Redemption Price with respect to any Trust
Preferred Securities called for redemption by the Trust, to the extent the Trust
has funds available therefor and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Trust (other than in connection
with the distribution of Partnership Preferred Securities to the holders of
Trust Preferred Securities or the redemption of all of the Trust Preferred
Securities), the lesser of (a) the aggregate of the liquidation amount and all
accumulated and unpaid distributions on the Trust Preferred Securities and (b)
the amount of assets of the Trust remaining available for distribution to
holders of Trust Preferred Securities upon the liquidation of the Trust. The
Company's obligation to make a Trust Guarantee Payment may be satisfied by
direct payment of the required amounts by the Company to the holders of Trust
Preferred Securities or by causing the Trust to pay such amounts to such
holders.
The Trust Guarantee will be a guarantee on a subordinated basis with respect
to the Trust Preferred Securities from the time of issuance of such Trust
Preferred Securities but will only apply to any payment of distributions or
Redemption Price, or to payments upon the dissolution, winding-up or termination
of the Trust, to the extent the Trust shall have funds available therefor. If
the Partnership fails to declare distributions on Partnership Preferred
Securities, the Trust would lack available funds for the payment of
distributions or amounts payable on redemption of the Trust Preferred Securities
or otherwise, and in such event holders of the Trust Preferred Securities would
not be able to rely upon the Trust Guarantee for payment of such amounts.
Instead, holders of the Trust Preferred Securities will have the remedies
described herein under "Description of the Trust Preferred Securities -- Trust
Enforcement Events", including the right to direct the Trust Guarantee Trustee
to enforce the covenant restricting certain payments by the Company and Finance
Subsidiaries. See "-- Covenants of the Company" below.
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The Guarantees, when taken together with the Company Debenture and the
Company's obligations to pay all fees and expenses of the Trust and the
Partnership, constitute a guarantee to the extent set forth herein by the
Company of the distribution, redemption and liquidation payments payable to the
holders of the Trust Preferred Securities. The Guarantees do not apply, however,
to current distributions by the Partnership unless and until such distributions
are declared by the Partnership out of funds legally available for payment or to
liquidating distributions unless there are assets available for payment in the
Partnership, each as more fully described under "Risk Factors -- Insufficient
Income or Assets Available to Partnership".
COVENANTS OF THE COMPANY
The Company will covenant in the Trust Guarantee that, if (a) for any
distribution period, full distributions on a cumulative basis on any Trust
Preferred Securities have not been paid, (b) an Investment Event of Default by
any Investment Affiliate in respect of any Affiliate Investment Instrument has
occurred and is continuing or (c) the Company is in default of its obligations
under the Trust Guarantee, the Partnership Guarantee or any Investment
Guarantee, then, during such period (i) the Company shall not declare or pay
dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital stock
or comparable equity interest (except for (x) dividends or distributions in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, its capital stock, and conversions or exchanges of common stock of one class
into common stock of another class, (y) redemptions or purchases of any rights
pursuant to the Rights Agreement and the issuance of preferred stock pursuant to
such rights and (z) purchases or acquisitions 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 capital stock or comparable equity interest) and (ii) the
Company shall not make, permit any Finance Subsidiary to make, or make any
payments that would enable any Finance Subsidiary to make, any payment of any
dividends on, any distribution with respect to, or any redemption, purchase or
other acquisition of, or any liquidation payment with respect to, any preferred
security or comparable equity interest of any Finance Subsidiary.
EVENTS OF DEFAULT; ENFORCEMENT OF TRUST GUARANTEE
An event of default under the Trust Guarantee will occur upon the failure of
the Company to perform any of its payment or other obligations thereunder.
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 Trust Guarantee Trustee or to direct
the exercise of any trust or power conferred upon the Trust Guarantee Trustee
under the Trust Guarantee. If the Trust Guarantee Trustee fails to enforce its
rights under the Trust Guarantee after a holder of Trust Preferred Securities
has made a written request, such holder may institute a legal proceeding
directly against the Company to enforce the Trust Guarantee Trustee's rights
under the Trust Guarantee, without first instituting a legal proceeding against
the Trust, the Trust Guarantee Trustee or any other person or entity. In any
event, if the Company has failed to make a guarantee payment under the Trust
Guarantee, a holder of Trust Preferred Securities may directly institute a
proceeding in such holder's own name against the Company for enforcement of the
Trust Guarantee for such payment.
STATUS OF THE TRUST GUARANTEE; SUBORDINATION
The Trust Guarantee will constitute an unsecured obligation of the Company
and will rank subordinate and junior in right of payment to all other
liabilities of the Company and will rank PARI PASSU with the most senior
preferred stock, if any, issued from time to time by the Company and with any
guarantee now or hereafter entered into by the Company in respect of any
preferred stock of any Finance Subsidiary. Accordingly, the rights of the
holders of Trust Preferred Securities to receive payments under
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the Trust Guarantee will be subject to the rights of the holders of any
obligations of the Company that are senior in priority to the obligations under
the Trust Guarantee. Furthermore, the holders of obligations of the Company that
are senior to the obligations under the Trust Guarantee (including, but not
limited to, obligations constituting Senior Indebtedness) will be entitled to
the same rights in payment default or dissolution, liquidation and
reorganization in respect of the Trust Guarantee that inure to the holders of
Senior Indebtedness as against the holders of the Company Debentures. The terms
of the Trust Preferred Securities, provide that each holder of Trust Preferred
Securities, by acceptance thereof, agrees to the subordination provisions and
other terms of the Trust Guarantee.
The Trust Guarantee will constitute a guarantee of payment and not of
collection (that is, the guaranteed party may directly institute a legal
proceeding against the Company to enforce its rights under the Trust Guarantee
without instituting a legal proceeding against any other person or entity).
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely affect
the rights of holders of Trust Preferred Securities (in which case no vote will
be required), the Trust Guarantee may be amended only with the prior approval of
the holders of at least a majority in liquidation amount of all the outstanding
Trust Preferred Securities. The manner of obtaining any such approval of holders
of the Trust Preferred Securities will be as set forth under "Description of the
Trust Preferred Securities -- Voting Rights". All guarantees and agreements
contained in the Trust Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Company and shall inure to the benefit of
the holders of the Trust Preferred Securities then outstanding. Except in
connection with permitted merger or consolidation of the Company with or into
another entity or permitted sale, transfer or lease of the Company's assets to
another entity in which the surviving corporation (if other than the Company)
assumes the Company's obligations under the Trust Guarantee, the Company may not
assign its rights or delegate its obligations under the Trust Guarantee without
the prior approval of the holders of at least a majority of the aggregate stated
liquidation amount of the Trust Preferred Securities then outstanding.
TERMINATION OF THE TRUST GUARANTEE
The Trust Guarantee will terminate as to each holder of Trust Preferred
Securities upon (i) full payment of the Redemption Price of all Trust Preferred
Securities, (ii) distribution of the Partnership Preferred Securities held by
the Trust to the holders of the Trust Preferred Securities or (iii) full payment
of the amounts payable in accordance with the Declaration upon liquidation of
the Trust. The Trust Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of Trust Preferred
Securities must restore payment of any sum paid under such Trust Preferred
Securities or such Trust Guarantee.
INFORMATION CONCERNING THE TRUST GUARANTEE TRUSTEE
The Trust Guarantee Trustee, prior to the occurrence of a default with
respect to the Trust Guarantee, undertakes to perform only such duties as are
specifically set forth in the Trust Guarantee and, after default with respect to
the Trust Guarantee, shall exercise the same degree of care as a prudent man
would exercise in the conduct of his own affairs. Subject to such provision, the
Trust Guarantee Trustee is under no obligation to exercise any of the powers
vested in it by the Trust Guarantee at the request of any holder of Trust
Preferred Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby.
GOVERNING LAW
The Guarantee will be governed by, and construed in accordance with, the
internal laws of the State of New York.
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DESCRIPTION OF THE PARTNERSHIP PREFERRED SECURITIES
GENERAL
All of the partnership interests in the Partnership other than the
Partnership Preferred Securities acquired by the Trust are owned directly by the
Company. Initially, the Company will be the sole General Partner of the
Partnership. The Limited Partnership Agreement authorizes and creates the
Partnership Preferred Securities, which represent limited partner interests in
the Partnership. The limited partner interests represented by the Partnership
Preferred Securities will have a preference with respect to distributions and
amounts payable on redemption or liquidation over the General Partner's interest
in the Partnership. Except as otherwise described herein or provided in the
Limited Partnership Agreement, the Limited Partnership Agreement does not permit
the issuance of any additional partnership interests, or the incurrence of any
indebtedness by the Partnership.
The summary of certain material terms and provisions of the Partnership
Preferred Securities set forth below does not purport to be complete and is
subject to, and qualified in its entirety by reference to, the Limited
Partnership Agreement, which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part, and the Partnership Act.
DISTRIBUTIONS
Holders of Partnership Preferred Securities will be entitled to receive
cumulative cash distributions, if, as and when declared by the General Partner
in its sole discretion out of assets of the Partnership legally available for
payment. The distributions payable on each Partnership Preferred Security will
be fixed at a rate per annum of % of the stated liquidation preference of $25
per Partnership Preferred Security. Distributions not paid on the scheduled
payment date will accumulate and compound quarterly at the rate per annum equal
to %. The amount of distributions payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months.
Distributions on the Partnership Preferred Securities will be payable
quarterly in arrears on March 30, June 30, September 30, and December 30 of each
year, commencing December 30, 1996. If distributions are not declared and paid
when scheduled, the accumulated distributions shall be paid to the holders of
record of Partnership Preferred Securities as they appear on the books and
records of the Partnership on the record date with respect to the payment date
for the Partnership Preferred Securities.
The Partnership's earnings available for distribution to the holders of the
Partnership Preferred Securities will be limited to payments made on the
Affiliate Investment Instruments and Investment Guarantees and payments on
Eligible Debt Securities in which the Partnership has invested from time to
time. See "-- Partnership Investments". To the extent that the issuers (and,
where applicable, the Company, as guarantor) of the securities in which the
Partnership invests fail to make any payment in respect of such securities (or,
if applicable, such guarantees), the Partnership will not have sufficient funds
to pay and will not declare or pay distributions on the Partnership Preferred
Securities, in which event the Partnership Guarantee will not apply to such
distributions until the Partnership has sufficient funds available therefor. See
"Description of the Partnership Guarantee". In addition, distributions on the
Partnership Preferred Securities may be declared and paid only as determined in
the sole discretion of the General Partner of the Partnership. If the
Partnership fails to declare and pay distributions on the Partnership Preferred
Securities out of funds legally available for distribution, the Trust will not
have sufficient funds to make distributions on the Trust Preferred Securities,
in which event the Trust Guarantee will not apply to such distributions until
the Trust has sufficient funds available therefor. In addition, as described
under "Risk Factors -- Insufficient Income or Assets Available to Partnership",
the Partnership may not have sufficient funds to pay current or liquidating
distributions on the Partnership Preferred Securities if (i) at any time that
the Partnership is receiving current payments in respect of the securities held
by the Partnership (including the Debentures), the General Partner, in its sole
discretion, does not declare distributions on the Partnership Preferred
Securities and the Partnership receives insufficient
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amounts to pay the additional compounded distributions that will accumulate in
respect of the Partnership Preferred Securities, (ii) the Partnership reinvests
the proceeds received in respect of the Debentures upon their retirement or at
their maturities in Affiliate Investment Instruments that do not generate income
in an amount that is sufficient to pay full distributions in respect of the
Partnership Preferred Securities or (iii) the Partnership invests in equity or
debt securities of Investment Affiliates that are not guaranteed by the Company
and that cannot be liquidated by the Partnership for an amount sufficient to pay
such distributions in full.
Distributions on the Partnership Preferred Securities will be payable to the
holders thereof as they appear on the books and records of the Partnership on
the relevant record dates, which, 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, will be one Business Day prior to the relevant payment
dates. In the event 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
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
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 that
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.
PARTNERSHIP ENFORCEMENT EVENTS
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 any Investment Guarantee or (iii) an
Investment Event of Default occurs and is continuing on any Affiliate Investment
Instrument, then the Property Trustee, for so long as the Partnership Preferred
Securities are held by the Property Trustee, will have the right, or holders of
the Partnership Preferred Securities will be entitled by the vote of a majority
in aggregate liquidation preference of such holders (a) under the Limited
Partnership Agreement to enforce the terms of the Partnership Preferred
Securities, including the right to appoint and authorize a special
representative of the Partnership and the limited partners (a "Special
Representative") to enforce (1) 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 distributions (only if and to
the extent declared 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 by the Company and Finance Subsidiaries.
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 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 on behalf of
the Partnership directly institute a proceeding against such Investment
Affiliate with respect to such Affiliate Investment Instrument for enforcement
of payment. A holder of Partnership Preferred Securities may also bring a direct
action against the Company to enforce such holder's right under the
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Partnership Guarantee. See "Description of the Partnership Guarantee -- Events
of Default; Enforcement of Partnership Guarantee".
Under no circumstances, however, shall the Special Representative have
authority to cause the General Partner to declare distributions on the
Partnership Preferred Securities. As a result, although the Special
Representative may be able to enforce the Partnership's creditors' rights to
accelerate and receive payments in respect of the Affiliate Investment
Instruments and the Investment Guarantees, the Partnership would be entitled to
reinvest such payments in additional Affiliate Investment Instruments, subject
to satisfying the reinvestment criteria described under "-- Partnership
Investments", and Eligible Debt Securities, rather than declaring and making
distributions on the Partnership Preferred Securities. The Special
Representative shall not, by virtue of acting in such capacity, be admitted as a
general partner in the Partnership or otherwise be deemed to be a general
partner in the Partnership and shall have no liability for the debts,
obligations or liabilities of the Partnership.
PARTNERSHIP INVESTMENTS
Approximately 99% of the proceeds from the issuance of the Partnership
Preferred Securities and the General Partner's contemporaneous capital
contribution (the "Initial Partnership Proceeds") will be used by the
Partnership to purchase the Debentures and the remaining 1% of the Initial
Partnership Proceeds will be used to purchase Eligible Debt Securities. The
purchase of the Debentures by the Partnership will occur contemporaneously with
the issuance of the Partnership Preferred Securities.
The initial Affiliate Investment Instruments purchased by the Partnership
will consist of two or more debt instruments (the "Debentures"). Approximately
85% of the Initial Partnership Proceeds will be used to purchase a Debenture of
the Company (the "Company Debenture"), and approximately 14% of the Initial
Partnership Proceeds will be used to purchase Debentures of one or more eligible
controlled affiliates of the Company (the "Affiliate Debentures"). Each
Debenture is expected to have a term of 20 years and to provide for interest
payable on March 30, June 30, September 30 and December 30 of each year,
commencing December 30, 1996, at market rates for such Debentures. The
Debentures will be general unsecured debt obligations of the relevant issuer,
except that the Company Debenture will rank subordinate and junior to all Senior
Indebtedness of the Company.
The payment of interest on each of the Debentures may be deferred at any
time, and from time to time, by the relevant issuer for a period not exceeding
six consecutive quarters. If an issuer were to so defer the payment of interest,
interest would continue to accrue and compound at the stated interest rate on
such Debenture. The Debentures will contain covenants appropriate for unsecured
debt securities issued or guaranteed by similar borrowers pursuant to a public
offering or private placement under Rule 144A of the Securities Act of a
comparable debt security, including a limitation on consolidation, merger, sale
or conveyance of assets. The Debentures will contain redemption provisions that
correspond to the redemption provisions applicable to the Partnership Preferred
Securities, including an option to redeem the Debentures by the relevant issuer,
in whole or in part, from time to time, on or after December 30, 2006, and
following the occurrence of a Partnership Special Event, in each case, in the
same manner described under "-- Optional Redemption" and "-- Partnership Special
Event Redemption". The Debentures, and any other Affiliate Investment
Instruments that are debt instruments acquired by the Partnership in the future,
will also contain customary events of default (the "Investment Events of
Default"), including events of default for defaults in payments on such
securities when due (provided that no default shall occur upon a valid deferral
of an interest payment by an issuer), defaults in the performance of the
relevant issuer's obligations under its Debenture or Affiliate Investment
Instruments, as the case may be, and certain bankruptcy, insolvency or
reorganization events (subject to customary exceptions and grace periods).
The payment of interest and principal when due and other payment terms of
the Debentures (other than the Company Debenture), will be guaranteed to the
extent described herein (each, an "Investment Guarantee") by the Company for the
benefit of the holders of Partnership Preferred Securities. See "-- Investment
Guarantees".
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Approximately 1% of the Initial Partnership Proceeds will be invested in
Eligible Debt Securities. "Eligible Debt Securities" means cash or book-entry
securities, negotiable instruments, or other securities of entities not
affiliated with the Company which evidence 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 and having, at the time of the investment or contractual
commitment to invest therein, a rating from each of Standard & Poor's Ratings
Services, a division of the McGraw-Hill Companies, Inc. ("S&P") and Moody's
Investors Service, Inc. ("Moody's") in the highest investment 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 Federal Deposit Insurance Corporation ("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 (as defined herein) 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) a depository institution organized under
the laws of the United States 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+ by S&P and P-1 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.
The Partnership may, from time to time and subject to the restrictions
described below, reinvest payments received with respect to the Affiliate
Investment Instruments (including the Debentures) and the Eligible Debt
Securities in additional Affiliate Investment Instruments and Eligible Debt
Securities. As of the date of this Prospectus, the Company, as the General
Partner, does not intend to cause the Partnership to reinvest regularly
scheduled, periodic payments of interest or dividends received by the
Partnership in the manner described below, although there can be no assurance
that the General Partner's intention in respect of such reinvestments will not
change in the future.
The fairness of specific terms of all Affiliate Investment Instruments
(including the Debentures) will be passed upon by a nationally recognized
accounting firm, bank or investment banking firm that 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 (the
"Independent Financial Advisor").
The Partnership may reinvest in additional Affiliate Investment Instruments
only if certain procedures and criteria are satisfied with respect to such
Affiliate Investment Instrument, including the satisfaction of the following
conditions: (i) the Partnership did not hold debt or equity securities of the
issuer of the proposed Affiliate Investment Instrument within the three-year
period ending on the date of such proposed investment; (ii) there was never a
default on any debt obligation of, or arrearages of dividends on preferred stock
issued by, the issuer of the proposed Affiliate Investment Instrument that was
previously or is currently owned by the Partnership; (iii) the applicable terms
and provisions with respect to the proposed Affiliate Investment Instrument have
been determined by the Independent Financial Advisor to be at least as favorable
as terms which could be obtained by the Partnership in a public offering or
private placement under Rule 144A of the Securities Act of a comparable security
issued by the relevant Investment Affiliate and guarantees, if any, included
therein; and (iv) the requesting Investment Affiliate 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
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the Commission. The term "Investment Affiliate" means the Company or any
corporation, partnership, limited liability company or other entity (other than
the Partnership or the Trust) that is controlled by the Company. If the
Partnership is unable to reinvest payments and proceeds from Affiliate
Investment Instruments in additional Affiliate Investment Instruments meeting
the above criteria, the Partnership may only invest such funds in Eligible Debt
Securities (subject to restrictions of applicable law, including the 1940 Act).
INVESTMENT GUARANTEES
GENERAL
The Company will agree to execute and deliver an Investment Guarantee, on a
subordinated basis, for the benefit of the holders of Partnership Preferred
Securities with respect to each Debenture issued by an Investment Affiliate
(other than the Company Debenture) to the extent set forth below. The Investment
Guarantees shall be enforceable regardless of any defense, right of set-off or
counterclaim that the Company may have or assert. The Investment Guarantees will
be full and unconditional guarantees, to the extent set forth therein, with
respect to the applicable Debentures from the time of issuance. To the extent
that, as described above, the Partnership invests in additional Affiliate
Investment Instruments, the determination as to whether such Affiliate
Investment Instrument will contain an Investment Guarantee will be made at the
date of its issuance and will be based, among other things, upon its approval by
the Independent Financial Advisor in accordance with the reinvestment criteria
described above.
The Investment Guarantees will constitute guarantees of payment and not of
collection (that is, the guaranteed party may directly institute a legal
proceeding against the Company to enforce its rights under the applicable
Investment Guarantee without instituting a legal proceeding against any other
person or entity). If no Special Representative has been appointed to enforce
any Investment Guarantee, the General Partner has the right to enforce such
Investment Guarantee on behalf of the holders of the Partnership Preferred
Securities. The holders of not less than a majority in aggregate liquidation
preference of the Partnership Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available in
respect of any Investment Guarantee, including the giving of directions to the
General Partner or the Special Representative, as the case may be. If the
General Partner or the Special Representative fails to enforce any Investment
Guarantee as above provided, any holder of Trust Preferred Securities may
institute its own legal proceeding to enforce such Investment Guarantee. No
Investment Guarantee will be discharged except by payment in full of all amounts
guaranteed by such Investment Guarantee (without duplication of amounts
theretofore paid by the relevant Investment Affiliate).
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Partnership Preferred Securities (in which case no consent will be
required), the Investment Guarantees may be amended only with the prior approval
of the holders of not less than a majority in liquidation preference of the
outstanding Partnership Preferred Securities, PROVIDED that for so long as the
Property Trustee of the Trust is the holder of the Partnership Preferred
Securities, such amendment will not be effective without the prior written
approval of a majority in liquidation amount of the outstanding Trust Preferred
Securities. All guarantees and agreements contained in the Investment Guarantees
shall bind the successors, assigns, receivers, trustees and representatives of
the Company and shall inure to the benefit of the holders of Partnership
Preferred Securities. Except in connection with any permitted merger or
consolidation of the Company with or into another entity or any permitted sale,
transfer or lease of the Company's assets to another entity in which the
surviving corporation (if other than the Company) assumes the Company's
obligations under the Investment Guarantees, the Company may not assign its
rights or delegate its obligations under the Investment Guarantees without the
prior approval of the holders of at
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least a majority of the aggregated stated liquidation preference of the
Partnership Preferred Securities then outstanding.
STATUS OF THE INVESTMENT GUARANTEES
The Company's obligations under the Investment Guarantees will constitute
unsecured obligations of the Company and will rank subordinate and junior in
right of payment to all other liabilities of the Company and will rank PARI
PASSU with the most senior preferred stock, if any, issued from time to time by
the Company and with any guarantee now or hereafter entered into by the Company
in respect of any preferred stock of any affiliate of the Company. Accordingly,
the rights of the holders of the Debentures to receive payments under the
Investment Guarantees will be subject to the rights of the holders of any
obligations which are senior in priority to the obligations under the Investment
Guarantees. Furthermore, the holders of obligations of the Company that are
senior to the obligations under the Investment Guarantees (including, but not
limited to, obligations constituting Senior Indebtedness) will be entitled to
the same rights in payment default or dissolution, liquidation and
reorganization in respect of the Investment Guarantees that inure to the holders
of Senior Indebtedness as against the holders of the Company Debentures. The
terms of the Debentures provide that each holder of Debentures, by acceptance
thereof, agrees to the subordination provisions and other terms of the
Investment Guarantees.
GOVERNING LAW
The Investment Guarantees will be governed by and construed in accordance
with the internal laws of the State of New York.
OPTIONAL REDEMPTION
The Partnership Preferred Securities are 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 Security equal to $25 plus accumulated and unpaid
distributions thereon. If the Partnership redeems Partnership Preferred
Securities in accordance with the terms thereof, Trust Securities will be
mandatorily redeemed at the Redemption Price. If a partial redemption 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.
PARTNERSHIP SPECIAL EVENT REDEMPTION
If, at any time, a Partnership Tax Event or a Partnership Investment Company
Event (each as hereinafter defined, and each 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 such measure that in the sole judgment of
the Company 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
attributable to the Partnership Special Event.
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"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 Debenture issued by such Investment
Affiliate to the Partnership is not, or will not be, deductible by such
Investment Affiliate for United States federal income tax purposes.
"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.
REDEMPTION PROCEDURES
The Partnership may not redeem fewer than all the outstanding Partnership
Preferred Securities unless all accumulated and unpaid distributions have been
paid on all Partnership Preferred Securities for all quarterly distribution
periods terminating on or prior to the date of redemption.
If the Partnership gives a notice of redemption in respect of Partnership
Preferred Securities (which notice will be irrevocable) then, by 12:00 noon, New
York City time, on the redemption date, the Partnership (i) if the Partnership
Preferred Securities are in book entry 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 (ii) if the Partnership Preferred Securities are held in certificated form,
will deposit with the paying agent for the Partnership Preferred Securities
funds sufficient to pay such amount in respect of any Partnership Preferred
Securities in certificated form and will give such paying agent irrevocable
instructions and authority to pay such amounts to the holders of Partnership
Preferred Securities upon surrender of their certificates. See "Description of
the Trust Preferred Securities -- Book-Entry-Only Issuance -- The Depository
Trust Company".
If notice of redemption shall have been given and funds deposited as
required, then upon the date of such deposit, all rights of holders of such
Partnership Preferred Securities so called for redemption will cease, except the
right of the holders of such Partnership Preferred Securities to receive the
Redemption Price, but without interest on such Redemption Price. 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 day that is a Business Day (and without any interest
or other payment 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 in respect of Partnership Preferred Securities is improperly withheld or
refused and not paid either by the Partnership or by the Company pursuant to the
Partnership Guarantee described under "Description of the Partnership
Guarantee," distributions on such Partnership Preferred Securities will continue
to accumulate, from the original redemption date to the date of payment.
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), 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.
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LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary dissolution, winding-up or
termination of the Partnership, the holders of the Partnership Preferred
Securities at the time will be entitled to receive out of the assets of the
Partnership available for distribution to partners after satisfaction of
liabilities of creditors as required by the Partnership Act, before any
distribution of assets is made to the General Partner, an amount equal to, in
the case of holders of Partnership Preferred Securities, the aggregate of the
stated liquidation preference of $25 per Partnership Preferred Security plus
accumulated and unpaid distributions thereon to the date of payment (such amount
being the "Partnership Liquidation Distribution").
Pursuant to the Limited Partnership Agreement, the Partnership shall be
dissolved and its affairs shall be wound up: (i) upon the bankruptcy 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 the Limited
Partnership 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 Partnership Act, unless the business of the
Partnership is continued in accordance with the Partnership Act, (iii) if the
Partnership has redeemed or otherwise purchased all the Partnership Preferred
Securities, (iv) upon the entry of a decree of judicial dissolution or (v) upon
the written consent of all partners of the Partnership.
VOTING RIGHTS
Except as provided below and under "Description of the Partnership Guarantee
- -- Amendments and Assignment" and as otherwise required by law and the Limited
Partnership Agreement, the holders of the Partnership Preferred Securities will
have no voting rights.
Not later than 30 days after any Partnership Enforcement Event occurs, the
General Partner will convene a meeting for the purpose of appointing a Special
Representative. If the General Partner fails to convene such meeting within such
30-day period, the holders of 10% in liquidation preference of the outstanding
Partnership Preferred Securities will be entitled to convene such meeting. The
provisions of the Limited Partnership Agreement relating to the convening and
conduct of the 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 aggregate 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 the limited partners if (1) 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, (2) such
Investment Event of Default, as the case may be, shall have been cured, and (3)
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 business of the Partnership without dissolution. Notwithstanding
the appointment of any such Special Representative, the Company shall continue
as General Partner and shall retain all rights under the Limited Partnership
Agreement, including the right to declare, in its sole discretion, the payment
of distributions on the Partnership Preferred Securities for which the failure
of such declaration would not constitute a default under the Limited Partnership
Agreement.
If any proposed amendment to the Limited Partnership Agreement provides for,
or the General Partner otherwise proposes to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Partnership
Preferred Securities, whether by way of amendment to the Limited Partnership
Agreement or otherwise (including, without limitation, the authorization or
issuance of any
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limited partner interests in the Partnership ranking, as to participation in the
profits or distributions or in the assets of the Partnership, senior to the
Partnership Preferred Securities), or (ii) the dissolution, winding-up or
termination of the Partnership, other than (x) in connection with the occurrence
of a Partnership Special Event or (y) as described under "Merger, Consolidation
or Amalgamation of the Partnership" below, 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 the 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 clauses (x) and (y) above shall not be effective
without the prior or concurrent approval of the holders of a majority in
liquidation amount of the outstanding Trust Preferred Securities having a right
to vote on such matters.
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 which are debt instruments shall be due and
payable, (iv) waive the breach of the covenant by the Company 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, HOWEVER, 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 such revocation by a majority in
liquidation preference of the outstanding 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.
Any required approval of holders of Partnership Preferred Securities may be
given at a separate meeting of holders of Partnership Preferred Securities
convened for such purpose, at a meeting of all of the partners in the
Partnership or pursuant to written consent. The Partnership will cause a notice
of any meeting at which holders of Partnership 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 Partnership Preferred
Securities. Each such notice will include a statement setting forth (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 matters upon which written consent
is sought and (iii) instruction 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 the Limited Partnership Agreement.
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 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
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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.
Holders of the Partnership Preferred Securities will have no rights to
remove or replace the General Partner.
MERGER, CONSOLIDATION OR AMALGAMATION OF THE PARTNERSHIP
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
described below. 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 or any Successor
Securities are listed, or any Successor Securities 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 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 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, (B) such merger,
consolidation, amalgamation or replacement 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 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.
BOOK-ENTRY AND SETTLEMENT
If the Partnership Preferred Securities are distributed to holders of Trust
Preferred Securities 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, the Partnership Preferred Securities will
be issued in the form of one or more global certificates (each a "Global
Partnership Security") registered in the name of DTC as the depository or its
nominee. For a description of DTC and the specific terms of the Depository
arrangements, see "Description of the Trust Preferred Securities -- Book-Entry
Only Issuance -- The
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Depository Trust Company". As of the date of this Prospectus, the description
therein of DTC's book-entry system and DTC's practices as they relate to
purchases, transfers, notices and payments with respect to the Trust Preferred
Securities apply in all material respects to any Partnership Preferred
Securities represented by one or more Global Partnership Securities.
REGISTRAR, TRANSFER AGENT AND PAYING AGENT
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. In the event the Partnership
Preferred Securities are distributed in connection with a Trust Special Event
and the book-entry system for the Partnership Preferred Securities is
discontinued, it is anticipated that The Chase Manhattan Bank or one of its
affiliates will act as registrar, transfer agent and paying agent for the
Partnership Preferred Securities.
Registration of transfers of Partnership Preferred Securities will 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
in relation to it.
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.
MISCELLANEOUS
The General Partner is authorized and directed to conduct its affairs and to
operate the Partnership in such a way that (i) the Partnership will not be
deemed to be an "investment company" required to be registered under the 1940
Act or characterized as an association taxable as a corporation for United
States federal income tax purposes, (ii) the Affiliate Investment Instruments
that are debt instruments will be treated as indebtedness of the issuer of such
debt instruments for United States federal income tax purposes and (iii) the
Partnership will not be treated as an association or as a "publicly traded
partnership" (within the meaning of Section 7704 of the Code) taxable as a
corporation. In this connection, the General Partner is authorized to take any
action, not inconsistent with applicable law, the certificate of limited
partnership of the Partnership or the Limited Partnership Agreement, that the
General Partner determines in its discretion to be necessary or desirable for
such purposes as long as such action does not adversely affect the interests of
the holders of the Partnership Preferred Securities.
DESCRIPTION OF THE PARTNERSHIP GUARANTEE
Set forth below is a summary of information concerning the Partnership
Guarantee that will be executed and delivered by the Company for the benefit of
the holders from time to time of Partnership Preferred Securities. The summary
does not purport to be complete and is subject in all respects to the provisions
of, and is qualified in its entirety by reference to, the Partnership Guarantee,
which is filed as an exhibit to the Registration Statement of which this
Prospectus is a part. The General Partner will hold the Partnership Guarantee
for the benefit of the holders of the Partnership Preferred Securities.
GENERAL
Pursuant to the Partnership Guarantee, the Company will irrevocably agree,
on a subordinated basis to the extent set forth therein, to pay in full to the
holders of the Partnership Preferred Securities (without duplication of amounts
theretofore paid by the Partnership), as and when due, regardless of any
defense, right of set-off or counterclaim that the Partnership may have or
assert, the following payments (the
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"Partnership Guarantee Payments"): (i) any accumulated and unpaid distributions
that have theretofore been declared on the Partnership Preferred Securities out
of funds legally available therefor, (ii) the redemption price with respect to
any Partnership Preferred Securities called for redemption by the Partnership
out of funds legally available therefor, and (iii) upon a liquidation of the
Partnership, the lesser of (a) the aggregate of the liquidation preference and
all accumulated and unpaid distributions on the Partnership Preferred Securities
to the date of payment and (b) the amount of assets of the Partnership, after
satisfaction of all liabilities, remaining available for distribution to holders
of Partnership Preferred Securities in liquidation of the Partnership. The
Company's obligation to make a Partnership Guarantee Payment may be satisfied by
direct payment of the required amounts by the Company to the holders of
Partnership Preferred Securities or by causing the Partnership to pay such
amounts to such holders.
The Partnership Guarantee will be a guarantee on a subordinated basis with
respect to the Partnership Preferred Securities from the time of issuance of
such Partnership Preferred Securities but will not apply to any payment of
distributions or Redemption Price, or to payments upon the dissolution,
winding-up or termination of the Trust, except to the extent the Partnership
shall have funds available therefor. If Investment Affiliates (including, where
applicable, the Company, as guarantor) of the Affiliate Investment Instruments
in which the Partnership invests fail to make any payment in respect of such
securities (or, if applicable, guarantees), the Partnership may not declare or
pay dividends on the Partnership Preferred Securities. In such event, holders of
the Partnership Preferred Securities would not be able to rely upon the
Partnership Guarantee for payment of such amounts. Instead, holders of the
Partnership Preferred Securities will have the remedies described herein under
"Description of the Partnership Preferred Securities -- Partnership Enforcement
Events," including the right to direct the General Partner or the Special
Representative, as the case may be, to enforce the covenant restricting certain
payments by the Company and Finance Subsidiaries. See "-- Covenants of the
Company" below.
The Guarantees, when taken together with the Company Debenture and the
Company's obligations to pay all fees and expenses of the Trust and the
Partnership, constitute a guarantee to the extent set forth herein by the
Company of the distribution, redemption and liquidation payments payable to the
holders of the Trust Preferred Securities. The Guarantees do not apply, however,
to current distributions by the Partnership unless and until such distributions
are declared by the Partnership out of funds legally available for payment or to
liquidating distributions unless there are assets available for payment in the
Partnership, each as more fully described under "Risk Factors--Insufficient
Income or Assets Available to Partnership".
COVENANTS OF THE COMPANY
The Company will covenant in the Partnership Guarantee that if (a) for any
distribution period, full distributions on a cumulative basis on any Partnership
Preferred Securities have not been paid or declared and set apart for payment,
(b) an Investment Event of Default by any Investment Affiliate in respect of any
Affiliate Investment Instrument has occurred and is continuing or (c) the
Company is in default of its obligations under the Trust Guarantee, the
Partnership Guarantee or any Investment Guarantee, then, during such period (i)
the Company shall not declare or pay dividends on, make distributions with
respect to, or redeem, purchase or acquire, or make a liquidation payment with
respect to, any of its capital stock or comparable equity interest (except for
(x) dividends or distributions in shares of, or options, warrants or rights to
subscribe for or purchase shares of, its capital stock, and conversions or
exchanges of common stock of one class into common stock of another class, (y)
redemptions or purchases of any rights pursuant to the Rights Agreement and the
issuance of preferred stock pursuant to such rights and (z) purchases or
acquisitions 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 capital
stock or comparable equity interest) and (ii) the Company shall not make, permit
any Finance Subsidiary to make, or make any payments that would enable any
Finance Subsidiary to make, any payment of any dividends on, any distribution
with respect to, or any redemption, purchase or other
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acquisition of, or any liquidation payment with respect to, any preferred
security or comparable equity interest of any Finance Subsidiary.
EVENTS OF DEFAULT; ENFORCEMENT OF PARTNERSHIP GUARANTEE
An event of default under the Partnership Guarantee will occur upon the
failure of the Company to perform any of its payment or other obligations
thereunder.
The holders of a majority in liquidation amount of the Partnership Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Special Representative in respect of
the Partnership Guarantee or to direct the exercise of any trust or power
conferred upon the Special Representative under the Partnership Guarantee. If
the Special Representative fails to enforce its rights under the Partnership
Guarantee, after a holder of Partnership Preferred Securities has made a written
request, such holder of Partnership Preferred Securities may institute a legal
proceeding directly against the Company to enforce the Special Representative's
rights under the Partnership Guarantee without first instituting a legal
proceeding against the Partnership, the Special Representative or any other
person or entity. Notwithstanding the foregoing, if the Company has failed to
make a guarantee payment, a holder of Partnership Preferred Securities may
directly institute a proceeding against the Company for enforcement of the
Partnership Guarantee for such payment.
STATUS OF THE PARTNERSHIP GUARANTEE; SUBORDINATION
The Partnership Guarantee will constitute an unsecured obligation of the
Company and will rank subordinate and junior in right of payment to all other
liabilities of the Company and will rank PARI PASSU with the most senior
preferred stock issued from time to time by the Company and with any guarantee
now or hereafter entered into by the Company in respect of any preferred stock
of any Finance Subsidiary. Accordingly, the rights of the holders of Partnership
Preferred Securities to receive payments under the Partnership Guarantee will be
subject to the rights of the holders of any obligations of the Company that are
senior in priority to the obligations under the Partnership Guarantee.
Furthermore, the holders of obligations of the Company that are senior to the
obligations under the Partnership Guarantee (including, but not limited to,
obligations constituting Senior Indebtedness) will be entitled to the same
rights in payment default or dissolution, liquidation and reorganization in
respect of the Partnership Guarantee that inure to the holders of Senior
Indebtedness as against the holders of the Company Debenture. The Limited
Partnership Agreement provides that each holder of Partnership Preferred
Securities, by acceptance thereof, agrees to the subordination provisions and
other terms of the Partnership Guarantee.
The Partnership Guarantee will constitute a guarantee of payment and not of
collection (that is, the guaranteed party may directly institute a legal
proceeding against the Company to enforce its rights under the Partnership
Guarantee without instituting a legal proceeding against any other person or
entity).
The Partnership Guarantee will be deposited with the General Partner to be
held for the benefit of the holders of the Partnership Preferred Securities. In
the event of the appointment of a Special Representative to, among other things,
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 holders of the Partnership Preferred Securities.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Partnership Preferred Securities (in which case no consent will be
required), the Partnership Guarantee may be amended only with the prior approval
of the holders of not less than a majority in liquidation preference of the
outstanding Partnership Preferred Securities. All guarantees and agreements
contained in the Partnership Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of the Company and shall inure to the
benefit of the holders of the Partnership Preferred Securities then outstanding.
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Except in connection with any permitted merger or consolidation of the Company
with or into another entity or any permitted sale, transfer or lease of the
Company's assets to another entity in which the surviving corporation (if other
than the Company) assumes the Company's obligations under the Partnership
Guarantee, the Company may not assign its rights or delegate its obligations
under the Partnership Guarantee without the prior approval of the holders of at
least a majority of the aggregate stated liquidation preference of the
Partnership Preferred Securities then outstanding.
TERMINATION OF THE PARTNERSHIP GUARANTEE
The Partnership Guarantee will terminate and be of no further force and
effect as to the Partnership Preferred Securities upon (i) full payment of the
redemption price of all Partnership Preferred Securities or (ii) full payment of
the amounts payable in accordance with the Limited Partnership Agreement upon
liquidation of the Partnership. The Partnership Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any holder
of Partnership Preferred Securities must in accordance with the Partnership Act
restore payment of any sums paid under the Partnership Preferred Securities or
the Partnership Guarantee. The Partnership Act provides that a limited partner
of a limited partnership who wrongfully receives a distribution may be liable to
the limited partnership for the amount of such distribution.
GOVERNING LAW
The Partnership Guarantee will be governed by and construed in accordance
with the internal laws of the State of New York.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
In the opinion of Brown & Wood LLP, tax counsel to the Company, the Trust
and the Partnership ("Tax Counsel"), the following summary accurately describes
the material United States federal income tax consequences that may be relevant
to the purchase, ownership and disposition of Trust Preferred Securities. Unless
otherwise stated, this summary deals only with Trust Preferred Securities held
as capital assets by United States Persons (defined herein) who purchase the
Trust Preferred Securities upon original issuance. As used herein, a "United
States Person" means a person that is a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in or
under the laws of the United States or any political subdivision thereof, or an
estate or trust as defined in section 7701(a)(30) of the Internal Revenue Code
of 1986, as amended (the "Code"). The tax treatment of a holder may vary
depending on its particular situation. This summary does not address all the tax
consequences that may be relevant to holders who may be subject to special tax
treatment, such as banks, real estate investment trusts, regulated investment
companies, insurance companies, dealers in securities or currencies, tax-exempt
investors, or foreign investors. This summary does not include any description
of any alternative minimum tax consequences or the tax laws of any state or
local government or of any foreign government that may be applicable to the
Trust Preferred Securities. This summary is based on the Code, the Treasury
regulations promulgated thereunder and administrative and judicial
interpretations thereof, as of the date hereof, all of which are subject to
change, possibly on a retroactive basis.
The Trust Preferred Securities are not being marketed to persons that are
not United States Persons ("non-United States Persons") and, consequently, the
following discussion does not discuss the tax consequences that might be
relevant to non-United States Persons. Moreover, in order to protect the Trust
and the Partnership from potential adverse consequences, non-United States
Persons will be subject to withholding on distributions on the Trust Preferred
Securities held by such non-United States Persons at a rate of 30%. In
determining a holder's status, the United States entity otherwise required to
withhold taxes may rely on an IRS form W-8, an IRS form W-9, or a holder's
certification of its non-foreign status signed under penalty of perjury.
NON-UNITED STATES PERSONS SHOULD CONSULT THEIR TAX ADVISORS AS TO THE SPECIFIC
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP, AND
DISPOSITION OF TRUST PREFERRED SECURITIES.
Tax Counsel has advised that there is no authority directly on point dealing
with securities such as the Trust Preferred Securities or transactions of the
type described herein and that the opinions of Tax Counsel are not binding on
the Internal Revenue Service ("IRS") or the courts, either of which could take a
contrary position. No rulings have been or will be sought from the IRS.
Accordingly, there can be no assurance that the IRS will not challenge the
opinions expressed herein or that a court would not sustain such a challenge.
Nevertheless, Tax Counsel has advised that it is of the view that, if
challenged, the opinions expressed herein would be sustained by a court with
jurisdiction in a properly presented case.
HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE TRUST
PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN, AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES
FEDERAL OR OTHER TAX LAWS. FOR A DISCUSSION OF THE POSSIBLE REDEMPTION OF THE
TRUST PREFERRED SECURITIES OR REDEMPTION OF THE PARTNERSHIP PREFERRED SECURITIES
UPON THE OCCURRENCE OF CERTAIN TAX EVENTS SEE "DESCRIPTION OF THE TRUST
PREFERRED SECURITIES -- TRUST SPECIAL EVENT REDEMPTION OR DISTRIBUTION" AND
"DESCRIPTION OF THE PARTNERSHIP PREFERRED SECURITIES -- PARTNERSHIP SPECIAL
EVENT REDEMPTION" RESPECTIVELY.
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CLASSIFICATION OF THE TRUST
Tax Counsel is of the opinion that, under current law, and based on certain
representations, facts and
assumptions set forth in such opinion, the Trust will be classified for United
States federal income tax purposes as a grantor trust and not as an association
taxable as a corporation. Accordingly, for United States federal income tax
purposes, each holder of Trust Preferred Securities will be considered the owner
of an undivided interest in the Partnership Preferred Securities held by the
Trust, and each holder will be required to include in its gross income its
distributive share of income attributable to the Partnership, which generally
will be equal to such holder's allocable share of amounts accrued on the
Partnership Preferred Securities. Unless the Partnership invests in the stock of
certain Investment Affiliates (for example, after repayment of the Debentures),
no amount included in income with respect to the Trust Preferred Securities will
be eligible for the corporate dividends-received deduction.
CLASSIFICATION OF THE PARTNERSHIP
Tax Counsel is of the opinion that, under current law, and based on certain
representations, facts and assumptions set forth in such opinion, the
Partnership will be classified for United States federal income tax purposes as
a partnership and not as an association or publicly traded partnership taxable
as a corporation.
Tax Counsel's opinion is based on certain factual assumptions relating to
the organization and operation of the Partnership and is conditioned upon
certain representations made by the General Partner and the Partnership as to
factual matters, such as the organization and the operation of the Partnership
and the type and frequency of investments made by the Partnership.
The General Partner has represented that it intends to operate the
Partnership in a manner such that it will continue to constitute a partnership
for all future taxable periods in which any Partnership Preferred Securities
remain outstanding. In particular, pursuant to the Limited Partnership
Agreement, the General Partner is prohibited from taking any action that would
cause the Partnership to constitute a "publicly traded partnership" taxable as a
corporation under section 7704(a) of the Code. Accordingly, it is expected that
the Partnership will continue to qualify as a partnership, and therefore will
not constitute a publicly traded partnership taxable as a corporation, for all
taxable years in which the Partnership Preferred Securities remain outstanding.
CLASSIFICATION OF THE DEBENTURES
The Partnership, the Company, the relevant Investment Affiliates and the
holders of the Trust Securities (by acceptance of a beneficial interest in a
Trust Security) will agree to treat the Debentures as indebtedness of the
relevant issuer for all United States tax purposes. In connection with the
issuance of the Debentures, Tax Counsel will issue its opinion that, under
current law, and based on certain representations, facts and assumptions set
forth in such opinion, the Debentures will be classified as indebtedness of the
relevant issuer for United States federal income tax purposes.
INCOME AND DEDUCTIONS
A holder's distributive share of income attributable to the Partnership
generally will be substantially equal to the amount of the cash distributions
that accumulate with respect to the Trust Preferred Securities. Accordingly, if
quarterly distributions on the Trust Preferred Securities are paid currently,
the amount of income recognized by a holder during a taxable year generally will
be substantially equal to the cash distributions received by the holder with
respect to its Trust Preferred Securities.
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The nature and timing of the income that is allocated to holders of Trust
Preferred Securities will, however, depend on the United States federal income
tax characterization of the investments held by the Partnership during the
period in question. Because the Partnership will be an accrual basis taxpayer
for United States federal income tax purposes, income will accrue on the Trust
Preferred Securities and will be allocated to holders of Trust Preferred
Securities on a daily accrual basis, generally at a rate that is expected to be
equal to (and that will not be greater than) the distribution rate on the Trust
Preferred Securities, regardless of the holders' method of accounting. Actual
cash distributions on the Trust Preferred Securities will not, however, be
separately reported as taxable income to the holders at the time they are
received.
If distributions on the Partnership Preferred Securities are not made
currently, the corresponding distributions on the Trust Preferred Securities
will not be made currently. Because the Partnership is an accrual basis taxpayer
it can be expected that during a period in which interest payments on the
Debentures or distributions on the Partnership Preferred Securities are deferred
(for whatever reason), holders will generally recognize income in advance of
their receipt of any cash distributions with respect to their Trust Preferred
Securities. The amount of income that will be allocated to holders of Trust
Preferred Securities during any such deferral period will equal their pro rata
share of the amount of distributions accruing on the Partnership Preferred
Securities during such deferral period.
The Partnership does not presently intend to make an election under Section
754 of the Code. Accordingly, a subsequent purchaser of Trust Preferred
Securities will not be permitted to adjust the tax basis in his allocable share
of the Partnership's assets so as to reflect any difference between his purchase
price for the Trust Preferred Securities and his share of the Partnership's
underlying tax basis in its assets. As a result, a holder of Trust Preferred
Securities may be required to report a larger or smaller amount of income from
holding the Trust Preferred Securities than would otherwise be appropriate based
upon the holder's purchase price for the Trust Preferred Securities.
RECEIPT OF PARTNERSHIP PREFERRED SECURITIES UPON LIQUIDATION OF THE TRUST
Under certain circumstances, as described under the caption "Description of
the Trust Preferred Securities -- Trust Special Event Redemption or
Distribution", Partnership Preferred Securities may be distributed to holders of
Trust Preferred Securities in exchange for their Trust Preferred Securities and
in liquidation of the Trust. Unless the liquidation of the Trust occurs as a
result of the Trust being subject to United States federal income tax with
respect to income accrued or received on the Partnership Preferred Securities,
such a distribution to holders would, for United States federal income tax
purposes, be treated as a nontaxable event to each holder, each holder would
receive an aggregate tax basis in the Partnership Preferred Securities equal to
such holder's aggregate tax basis in its Trust Preferred Securities, and a
holder's holding period in the Partnership Preferred Securities so received in
liquidation of the Trust would include the period during which the Trust
Preferred Securities were held by such holder. If, however, the liquidation of
the Trust were to occur because the Trust is subject to United States federal
income tax with respect to income accrued or received on the Partnership
Preferred Securities, the distribution of Partnership Preferred Securities to
holders by the Trust would likely be a taxable event to each holder, and a
holder would recognize gain or loss as if the holder had exchanged its Trust
Preferred Securities for the Partnership Preferred Securities it received upon
the liquidation of the Trust. Such gain or loss would be equal to the difference
between the holder's aggregate tax basis in its Trust Preferred Securities
surrendered in the exchange and the aggregate fair market value of the
Partnership Preferred Securities received in the exchange.
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REDEMPTION OF TRUST PREFERRED SECURITIES FOR CASH
Under certain circumstances, as described under the caption "Description of
the Trust Preferred Securities -- Optional Redemption", "Description of the
Trust Preferred Securities -- Trust Special Event Redemption or Distribution"
and "Description of the Partnership Preferred Securities -- Partnership Special
Event Redemption", the General Partner may cause the Partnership to redeem the
Partnership Preferred Securities for cash, in which event the Trust would use
the proceeds of such redemption to redeem the Trust Preferred Securities. Under
current law, such a redemption would constitute, for United States federal
income tax purposes, a taxable disposition, and a holder would recognize gain or
loss as if it sold the holder's proportionate interest in the redeemed
Partnership Preferred Securities for an amount of cash equal to the proceeds
received upon redemption. See "-- Disposition of Trust Preferred Securities".
DISPOSITION OF TRUST PREFERRED SECURITIES
A holder that sells Trust Preferred Securities will recognize gain or loss
equal to the difference between the amount realized on the sale of the Trust
Preferred Securities and the holder's adjusted tax basis in such Trust Preferred
Securities. Such gain or loss will be a capital gain or loss and will be a long-
term capital gain or loss if the Trust Preferred Securities have been held for
more than one year at the time of the sale. A holder will be required to include
accumulated but unpaid distributions on the Partnership Preferred Securities
through the date of disposition in income as ordinary income, and to add such
amount to the adjusted tax basis of its Trust Preferred Securities.
A holder's tax basis in its Trust Preferred Securities generally will equal
(i) the amount paid by such holder for its Trust Preferred Securities, (ii)
increased by the amount includible in income by such holder with respect to its
Trust Preferred Securities, and (iii) reduced by the amount of cash or other
property distributed to such holder with respect to its Trust Preferred
Securities. A holder who acquires Trust Preferred Securities at different prices
may be required to maintain a single aggregate adjusted tax basis in all of his
Trust Preferred Securities and, upon sale or other disposition of some of such
Trust Preferred Securities, to allocate a PRO RATA portion of such aggregate tax
basis to the Trust Preferred Securities sold (rather than maintaining a separate
tax basis in each Trust Preferred Security for purposes of computing gain or
loss on a sale of that Trust Preferred Security).
OTHER PARTNERSHIP PROVISIONS
SECTION 708. Under Section 708 of the Code, the Partnership will be deemed
to terminate for United States federal income tax purposes if 50% or more of the
capital and profits interests in the Trust are sold or exchanged within a
12-month period. If such a deemed termination were to occur, the Partnership
would be considered to have distributed its assets to the partners who would
then be treated as having recontributed those assets to a new partnership. If
any such constructive termination occurs, the General Partner does not intend to
comply with certain technical requirements that might be applicable for various
reasons including the likely lack of relevant data. As a result, the Partnership
may be subject to certain tax penalties and may incur additional expenses, which
would be the obligation of the General Partner. Proposed Treasury regulations,
should they become effective, would mitigate some of the effects of a
constructive termination.
SECTION 701. The Department of Treasury has promulgated regulations under
Section 701 of the Code that permit it to recast a transaction or disregard a
partnership if a partnership is "formed or availed of in connection with a
transaction a principal purpose of which is to reduce substantially the present
value of the partners' aggregate federal tax liability in a manner that is
inconsistent with the intent of [the partnership provisions of the Code]." The
Partnership has been formed for, and will engage in, activities typical for
partnerships. Although there is no precedent that applies to the transactions
contemplated
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herein, Tax Counsel believes that the Partnership is not of the type intended to
fall within the scope of these regulations.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Income on the Trust Preferred Securities will be reported to holders on an
IRS Form 1099, which form should be mailed to holders of Trust Preferred
Securities by January 31 following each calendar year. Payments made on and
proceeds from the sale of Trust Preferred Securities may be subject to a
"back-up" withholding tax of 31% unless the holder complies with certain
identification requirements. Any withheld amount generally will be allowed as a
credit against the holder's United States federal income tax, provided the
required information is timely filed with the IRS.
PROPOSED LEGISLATION
On March 19, 1996, as part of President Clinton's Fiscal 1997 Budget
Proposal, the Treasury Department proposed legislation that would, among other
things, deny the borrower an interest deduction with respect to certain types of
debt instruments that are payable in stock of the issuer or a related party. The
Proposed Legislation also would treat as equity for United States federal income
tax purposes instruments with a maximum term of more than 20 years that are not
shown as indebtedness on the consolidated balance sheet of the issuer. On March
29, 1996, Senate Finance Committee Chairman William V. Roth and House Ways and
Means Committee Chairman Bill Archer issued a joint statement indicating their
intent that certain legislative proposals initiated by the Clinton
administration, including the Proposed Legislation, that may be adopted by
either of the tax-writing committees of Congress, would have an effective date
that is no earlier than the date of "appropriate Congressional action". In
addition, subsequent to the publication of the Joint Statement, Senator Daniel
Patrick Moynihan and Representatives Sam M. Gibbons and Charles B. Rangel wrote
letters to Treasury Department officials concurring with the view expressed in
the Joint Statement. If the principles contained in the Joint Statement and the
Democrat Letters were followed and the Proposed Legislation were enacted, such
legislation would not apply to the Debentures. There can be no assurances,
however, that legislation enacted after the date hereof will not adversely
affect the tax treatment of the Debentures, or whether such tax treatment would
cause a Partnership Tax Event or a Trust Tax Event that may result in the
redemption of the Partnership Preferred Securities and, consequently, the Trust
Preferred Securities.
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UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"Purchase Agreement"), the Trust has agreed to sell to each of the Underwriters
named below, and each of the Underwriters, for whom Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Dean Witter Reynolds Inc., A.G. Edwards & Sons,
Inc., PaineWebber Incorporated, Prudential Securities Incorporated and Smith
Barney Inc. are acting as representatives (the "Representatives"), has severally
agreed to purchase the number of Trust Preferred Securities set forth opposite
its name below. In the Purchase Agreement, the several Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all the Trust
Preferred Securities offered hereby if any of the Trust Preferred Securities are
purchased. In the event of default by an Underwriter, the Purchase Agreement
provides that, in certain circumstances, the purchase commitments of the
non-defaulting Underwriters may be increased or the Purchase Agreement may be
terminated.
<TABLE>
<CAPTION>
NUMBER OF TRUST
PREFERRED
UNDERWRITERS SECURITIES
- ---------------------------------------------------------------------------------- ------------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................................................
Dean Witter Reynolds Inc..........................................................
A.G. Edwards & Sons, Inc..........................................................
PaineWebber Incorporated..........................................................
Prudential Securities Incorporated................................................
Smith Barney Inc..................................................................
------------------
Total................................................................... 11,000,000
------------------
------------------
</TABLE>
The Underwriters propose to offer the Trust Preferred Securities, in part,
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus, and, in part, to certain securities dealers at
such price less a concession of $ per Trust Preferred Security. The
Underwriters may allow, and such dealers may re-allow, a concession not in
excess of $ per Trust Preferred Security to certain brokers and dealers. After
the Trust Preferred Securities are released for sale to the public, the offering
price and other selling terms may from time to time be varied by the
Representatives.
58
<PAGE>
In view of the fact that the proceeds of the sale of the Trust Preferred
Securities will ultimately be used to purchase the investment instruments of the
Company and its subsidiaries, the Purchase Agreement provides that the Company
will pay as compensation ("Underwriters' Compensation") to the Underwriters, an
amount in immediately available funds of $ per Trust Preferred Security
(or $ in the aggregate) for the accounts of the several Underwriters;
provided that, such compensation for sales of 10,000 or more Trust Preferred
Securities to any single purchaser will be $ per Trust Preferred
Security. Therefore, to the extent of such sales, the actual amount of
Underwriters' Compensation will be less than the aggregate amount specified in
the preceding sentence.
Application will be made to list the Trust Preferred Securities on the New
York Stock Exchange. Trading of the Trust Preferred Securities on the New York
Stock Exchange is expected to commence within a 30-day period after the initial
delivery of the Trust Preferred Securities. The Representatives have advised the
Trust that they intend to make a market in the Trust Preferred Securities prior
to the commencement of trading on the New York Stock Exchange. The
Representatives will have no obligation to make a market in the Trust Preferred
Securities, however, and may cease market making activities, if commenced, at
any time.
Prior to this offering there has been no public market for the Trust
Preferred Securities. In order to meet one of the requirements for listing the
Trust Preferred Securities on the New York Stock Exchange, the Underwriters will
undertake to sell lots of 100 or more Trust Preferred Securities to a minimum of
400 beneficial holders.
The Trust, the Company, and the Partnership have agreed to indemnify the
Underwriters against, or contribute to payments that the Underwriters may be
required to make in respect of, certain liabilities, including liabilities under
the Securities Act of 1933, as amended.
Because Merrill Lynch, Pierce, Fenner & Smith Incorporated, one of the
Underwriters in the offering, is an affiliate of the Company and a member of the
National Association of Dealers, Inc. ("NASD"), the offering of Trust Preferred
Securities will be conducted pursuant to Rule 2720 of the Conduct Rules of the
NASD. The Underwriters may not confirm sales to any discretionary account
without the prior specific written approval of the customer.
LEGAL MATTERS
Certain matters of Delaware law relating to the legality of the Trust
Preferred Securities, the validity of the Trust Agreement, the formation of the
Trust and the Partnership and the legality under state law of the Trust
Preferred Securities and the Partnership Preferred Securities are being passed
upon by Skadden, Arps, Slate, Meagher & Flom LLP, special Delaware counsel to
the Trust, the Partnership and the Company. The legality under state law of the
Trust Guarantee, the Partnership Guarantee, the Company Debenture and the
Investment Guarantees with respect to the Affiliate Debentures will be passed
upon on behalf of the Trust, the Partnership and the Company by Brown & Wood
LLP, New York, New York. The validity of the Trust Preferred Securities, the
Partnership Preferred Securities and the Trust Guarantee and the Partnership
Guarantee will be passed upon on behalf of the Underwriters by Skadden, Arps,
Slate, Meagher & Flom LLP, New York, New York, counsel to the Underwriters.
EXPERTS
The consolidated financial statements and related financial statement
schedules of the Company and its subsidiaries included or incorporated by
reference in the Company's 1995 Annual Report on Form 10-K, and incorporated by
reference in this Prospectus, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports incorporated by reference
herein. The information under the caption "Summary Financial Information" for
each of the five years in the period ended December 29, 1995 included in this
Prospectus and the Selected Financial Data under the captions "Operating
Results", "Financial Position" and "Common Share Data" for each of the five
years in the period ended December 29, 1995 included in the 1995 Annual Report
to Stockholders of the Company and incorporated by
59
<PAGE>
reference herein, has been derived from consolidated financial statements
audited by Deloitte & Touche LLP, as set forth in their reports incorporated by
reference herein. Such consolidated financial statements and related financial
statement schedules, such Summary Financial Information and Selected Financial
Data appearing or incorporated by reference in this Prospectus and the
Registration Statement of which this Prospectus is a part, have been included or
incorporated herein by reference in reliance upon such reports of Deloitte &
Touche LLP given upon their authority as experts in accounting and auditing. The
balance sheets of Merrill Lynch Preferred Funding I, L.P. and Merrill Lynch
Preferred Capital Trust I included in this Prospectus have also been audited by
Deloitte & Touche LLP and have been included in reliance upon such reports of
Deloitte & Touche LLP given upon their authority as experts in accounting and
auditing.
With respect to unaudited interim financial information for the periods
included in the Quarterly Reports on Form 10-Q which are incorporated herein by
reference, Deloitte & Touche LLP have applied limited procedures in accordance
with professional standards for a review of such information. However, as stated
in their report included in such Quarterly Report on Form 10-Q and incorporated
by reference herein, they did not audit and they do not express an opinion on
such interim financial information. Accordingly, the degree of reliance on their
reports on such information should be restricted in light of the limited nature
of the review procedures applied. Deloitte & Touche LLP are not subject to the
liability provisions of Section 11 of the Act for any such report on unaudited
interim financial information because any such report is not a "report" or a
"part" of the registration statement prepared or certified by an accountant
within the meaning of Sections 7 and 11 of the Act.
60
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
DEFINED TERMS PAGE NO.
- -------------------------------------------------------------------------------------------------------- -------------
<S> <C>
Affiliate Debentures.................................................................................... 41
Affiliate Investment Instruments........................................................................ 23
Beneficial Owner........................................................................................ 33
Business Day............................................................................................ 26
Change in 1940 Act Law.................................................................................. 29
Code.................................................................................................... 53
Commission.............................................................................................. 4
Company................................................................................................. 1
Company Debenture....................................................................................... 41
Debentures.............................................................................................. 41
Declaration............................................................................................. 22
Delaware Trustee........................................................................................ 22
Democrat Letters........................................................................................ 12
Depository.............................................................................................. 33
DTC..................................................................................................... 1
Eligible Institution.................................................................................... 42
Eligible Debt Securities................................................................................ 42
Exchange Act............................................................................................ 5
FASB.................................................................................................... 17
FDIC.................................................................................................... 42
Finance Subsidiary...................................................................................... 3
General Partner......................................................................................... 1
Global Certificates..................................................................................... 33
Global Partnership Security............................................................................. 48
Guarantees.............................................................................................. 2
Independent Financial Advisor........................................................................... 42
Indirect Participants................................................................................... 33
Initial Partnership Proceeds............................................................................ 41
Investment Affiliate.................................................................................... 42
Investment Events of Default............................................................................ 41
Investment Guarantee.................................................................................... 41
IRS..................................................................................................... 53
Joint Statement......................................................................................... 12
Limited Partnership Agreement........................................................................... 22
Merrill Lynch........................................................................................... 1
MLPF&S.................................................................................................. 1
Moody's................................................................................................. 42
NASD.................................................................................................... 59
New York Stock Exchange................................................................................. 1
1940 Act................................................................................................ 10
Non-United States Persons............................................................................... 53
Participants............................................................................................ 33
Partnership............................................................................................. 1
Partnership Act......................................................................................... 23
Partnership Enforcement Event........................................................................... 40
Partnership Guarantee................................................................................... 2
Partnership Guarantee Payments.......................................................................... 50
Partnership Investment Company Event.................................................................... 45
Partnership Liquidation Distribution.................................................................... 46
</TABLE>
61
<PAGE>
<TABLE>
<CAPTION>
DEFINED TERMS PAGE NO.
- -------------------------------------------------------------------------------------------------------- -------------
<S> <C>
Partnership Preferred Securities........................................................................ 1
Partnership Special Event............................................................................... 44
Partnership Successor Securities........................................................................ 48
Partnership Tax Event................................................................................... 45
Property Account........................................................................................ 23
Property Trustee........................................................................................ 22
Proposed Legislation.................................................................................... 12
Purchase Agreement...................................................................................... 58
Quarterly Report........................................................................................ 16
Redemption Price........................................................................................ 4
Registration Statement.................................................................................. 4
Regular Trustees........................................................................................ 22
REMIC................................................................................................... 20
Representatives......................................................................................... 58
S&P..................................................................................................... 42
Securities Act.......................................................................................... 4
Senior Indebtedness..................................................................................... 2
SFAS.................................................................................................... 16
Smith New Court......................................................................................... 18
Special Event........................................................................................... 12
Special Representative.................................................................................. 40
Successor Securities.................................................................................... 32
Tax Action.............................................................................................. 28
Tax Counsel............................................................................................. 53
TGA..................................................................................................... 21
Trust................................................................................................... 1
Trust Act............................................................................................... 22
Trust Common Securities................................................................................. 1
Trust Dissolution Tax Opinion........................................................................... 28
Trust Enforcement Event................................................................................. 26
Trust Guarantee......................................................................................... 2
Trust Guarantee Payments................................................................................ 36
Trust Guarantee Trustee................................................................................. 22
Trust Indenture Act..................................................................................... 22
Trust Investment Company Event.......................................................................... 29
Trust Liquidation....................................................................................... 30
Trust Liquidation Distribution.......................................................................... 30
Trust Preferred Securities.............................................................................. 1
Trust Redemption Tax Opinion............................................................................ 28
Trust Securities........................................................................................ 1
Trust Special Event..................................................................................... 28
Trust Tax Event......................................................................................... 28
Trustees................................................................................................ 22
Underwriters' Compensation.............................................................................. 1
United States Person.................................................................................... 53
</TABLE>
62
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE NO.
-------------
<S> <C>
MERRILL LYNCH PREFERRED FUNDING I, L.P.
Independent Auditors' Report.......................................................................... F-2
Balance Sheet......................................................................................... F-3
Notes to Balance Sheet................................................................................ F-3
MERRILL LYNCH PREFERRED CAPITAL TRUST I
Independent Auditors' Report.......................................................................... F-4
Balance Sheet......................................................................................... F-5
Notes to Balance Sheet................................................................................ F-5
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the General Partner and Initial 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 November 20, 1996. This balance sheet
is the responsibility of the Partnership's management. Our responsibility is to
express an opinion on this balance sheet 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 balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit of the balance sheet provides a reasonable basis for our
opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of the Partnership as of November 20,
1996, in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
December 4, 1996
New York, New York
F-2
<PAGE>
BALANCE SHEET OF
MERRILL LYNCH PREFERRED FUNDING I, L.P.
OPENING BALANCE SHEET
NOVEMBER 20, 1996
<TABLE>
<S> <C>
Assets............................................................... $ --
---------
---------
Partnership securities
Limited partner interest........................................... $ 85
General partner interest........................................... 15
---------
$ 100
Less: Receivables from partners for subscribed partnership
interests.......................................................... (100)
---------
--
---------
---------
</TABLE>
NOTES TO BALANCE SHEET OF MERRILL LYNCH PREFERRED FUNDING I, L.P.
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 purposes of purchasing
certain eligible debt instruments of Merrill Lynch & Co., Inc. (the "Company")
and wholly owned subsidiaries of the Company (the "Affiliate Investment
Instruments") with the proceeds from the sale of Partnership Preferred
Securities (the "Partnership Preferred Securities") to Merrill Lynch Preferred
Capital Trust I (the "Trust") and a capital contribution from the Company in
exchange for the general partnership interest in the Partnership (collectively,
the "Partnership Proceeds").
The Partnership Preferred Securities will be redeemable for cash, at the
option of the Partnership, in whole or in part, from time to time, after
December 30, 2006. 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 will have no voting
rights.
The Partnership Proceeds will be used initially to purchase debt instruments
from the Company and certain domestic wholly owned subsidiaries of the Company,
retaining 1% in unaffiliated debt securities. The Partnership shall have a
perpetual existence subject to certain termination events. The Company serves as
the sole general partner of the Partnership. The Company, in its capacity as
General Partner of the Partnership, has agreed to pay all fees and expenses
related to the organization and operations of the Partnership (including any
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 Partnership) and the offering of the Partnership Preferred
Securities and be responsible for all debts and other obligations of the
Partnership (other than with respect to the Partnership Preferred Securities).
The General Partner has agreed to indemnify certain officers and agents of the
Partnership.
F-3
<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 November 20, 1996. This balance sheet is
the responsibility of the Trust's management. Our responsibility is to express
an opinion on this balance sheet 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 balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit of the balance sheet provides a reasonable basis for our
opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of the Trust as of November 20, 1996,
in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
December 4, 1996
New York, New York
F-4
<PAGE>
BALANCE SHEET OF
MERRILL LYNCH PREFERRED CAPITAL TRUST I
OPENING BALANCE SHEET
NOVEMBER 20, 1996
<TABLE>
<S> <C>
Assets................................................................. $ 0
--
--
Trust securities....................................................... $ 0
--
--
</TABLE>
NOTES TO BALANCE SHEET OF MERRILL LYNCH PREFERRED CAPITAL TRUST I
Merrill Lynch Preferred Capital Trust I (the "Trust") is a statutory
business trust formed on November 20, 1996 under the laws of the State of
Delaware for the exclusive purposes of (i) issuing the Trust Originated
Preferred Securities (the "Trust Preferred Securities") and the Trust Common
Securities (together with the Trust Preferred Securities, the "Trust
Securities") representing undivided beneficial ownership interests in the assets
of the Trust, (ii) purchasing Partnership Preferred Securities (the "Partnership
Preferred Securities") representing the limited partnership interests of Merrill
Lynch Preferred Funding I, L.P. (the "Partnership") with the proceeds from the
sale of the Trust Securities, and (iii) engaging in only those other activities
necessary or incidental thereto. The Trust has a perpetual existence, subject to
certain termination events as provided in the Declaration of Trust under which
it was formed. Subsequent to November 20, 1996, the Trust intends to issue and
sell its Trust Preferred Securities in a public offering and to issue and sell
its Trust Common Securities to Merrill Lynch & Co., Inc. (the "Company"). No
Trust Preferred Securities have been issued as of November 20, 1996.
The proceeds from the Trust's sale of the Trust Securities will be used to
purchase the Partnership Preferred Securities from the Partnership. The
Partnership Preferred Securities will be redeemable for cash, at the option of
the Partnership, in whole or in part, from time to time, after December 30,
2006. Upon any redemption of the Partnership Preferred Securities, the Trust
Preferred Securities will be redeemed, in whole or in part, as applicable.
Holders of the Trust Preferred Securities will have limited voting rights and
will not be 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.
The Company will be obligated to pay compensation to the underwriters of the
offering of the Trust Preferred Securities. The Company will pay all fees and
expenses related to the organization and operations of the Trust (including 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 upon the Trust) and the offering of the Trust Preferred
Securities and be responsible for all debts and other obligations of the Trust
(other than the Trust Securities). The Company has also agreed to indemnify the
Trustees and certain other persons.
F-5
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING COVERED BY THIS
PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, THE TRUST PREFERRED SECURITIES IN ANY JURISDICTION WHERE, OR TO ANY
PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE
DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Available Information........................... 4
Incorporation of Certain Documents by
Reference..................................... 5
Summary......................................... 6
Risk Factors.................................... 11
Merrill Lynch & Co., Inc........................ 15
Use of Proceeds................................. 15
Summary Financial Information................... 16
Merrill Lynch Preferred Capital Trust I......... 22
Merrill Lynch Preferred Funding I, L.P.......... 23
Description of the Trust Preferred Securities... 24
Description of the Trust Guarantee.............. 36
Description of the Partnership Preferred
Securities.................................... 39
Description of the Partnership Guarantee........ 49
Certain Federal Income Tax Considerations....... 53
Underwriting.................................... 58
Legal Matters................................... 59
Experts......................................... 59
Index of Defined Terms.......................... 61
Index to Financial Statements................... F-1
</TABLE>
[LOGO]
11,000,000
TRUST PREFERRED SECURITIES
MERRILL LYNCH PREFERRED
CAPITAL TRUST I
% TRUST ORIGINATED
PREFERRED SECURITIES-SM- ("TOPRS-SM-")
GUARANTEED TO THE EXTENT SET
FORTH HEREIN BY
MERRILL LYNCH & CO., INC.
---------------------
PROSPECTUS
---------------------
MERRILL LYNCH & CO.
DEAN WITTER REYNOLDS INC.
A.G. EDWARDS & SONS, INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY INC.
DECEMBER , 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below are other expenses of issuance and distribution, all of
which will be paid by the Company:
<TABLE>
<S> <C>
Securities and Exchange Commission Filing Fee..................... $ 83,335
NASD Filing Fee................................................... 28,000
Printing and Distributing Registration Statement, Prospectus, and
Miscellaneous Material.......................................... 100,000
Accountant's Fee.................................................. 75,000
Legal Fees and Expenses........................................... 250,000
New York Stock Exchange Listing Fee............................... 68,800
Rating Agency Fees................................................ 25,000
Miscellaneous Expenses............................................ 69,865
---------
Total......................................................... $ 700,000
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of Delaware and the Company's
Restated Certificate of Incorporation and By-Laws provide for the
indemnification of directors and officers of the Company under certain
circumstances, and on a case by case basis, against expenses reasonably incurred
in connection with a civil or criminal action to which they were a party, or
threatened to be made a party, by reason of being a director or officer. The
Company's Restated Certificate of Incorporation and By-Laws provide for
indemnity of directors and officers to the fullest extent permitted by law.
The Amended and Restated Declaration of Trust of the Trust provides, to the
fullest extent permitted by applicable law, for indemnity of the Regular
Trustees, any Affiliate of any Regular Trustee, any officer, director,
shareholder, member, partner, employee, representative or agent of any Regular
Trustee, or any officer, director, shareholder, member, partner, employee,
representative or agent of the Trust or its Affiliates (each a "Company
Indemnified Person"), from and against losses and expenses incurred by such
Company Indemnified Person in connection with any action, suit or proceeding,
except that if such action, suit or proceeding is by or in the right of the
Trust, the indemnity shall be limited to expenses of such Company Indemnified
Person.
The Limited Partnership Agreement of the Partnership provides that to the
fullest extent permitted by applicable law, the Partnership shall indemnify and
hold harmless each of the General Partner, and any Special Representative, any
Affiliate of the General Partner or any Special Representative, any officer,
director, shareholder, member, partner, employee, representative or agent 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 (each
a "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 the Limited Partnership 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. The Limited Partnership Agreement also provides that, 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
II-1
<PAGE>
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 the Limited Partnership Agreement.
The directors and officers of the Company and the Regular Trustees of the
Trust are covered by insurance policies indemnifying them against certain
liabilities, including certain liabilities arising under the Securities Act of
1933, as amended (the "Act"), which might be incurred by them in such capacities
and against which they cannot be indemnified by the Company or the Trust. Any
agents, dealers or underwriters who execute the agreement filed as Exhibit 1 of
this Registration Statement will agree to indemnify the Company's directors and
their officers and the Trustees who signed the Registration Statement against
certain liabilities that may arise under the Securities Act with respect to
information furnished to the Company or the Trust by or on behalf of any such
indemnifying party.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO.
<C> <S>
1.1 --Form of Purchase Agreement for the offering of the Preferred Securities being
registered under this Registration Statement.
4.1* --Certificate of Trust dated November 20, 1996, of Merrill Lynch Preferred Capital
Trust I.
4.2 --Form of Amended and Restated Declaration of Trust, of Merrill Lynch Preferred
Capital Trust I.
4.3* --Certificate of Limited Partnership, dated as of November 20, 1996, of Merrill
Lynch Preferred Funding I, L.P.
4.4 --Form of Amended and Restated Limited Partnership Agreement of Merrill Lynch
Preferred Funding I, L.P.
4.5 --Form of Trust Preferred Securities Guarantee Agreement between Merrill Lynch &
Co., Inc. and The Chase Manhattan Bank, as guarantee trustee.
4.6 --Form of Partnership Preferred Securities Guarantee Agreement by Merrill Lynch &
Co., Inc. and The Chase Manhattan Bank, as guarantee trustee.
4.7 --Form of Subordinated Debenture Indenture between Merrill Lynch & Co., Inc. and The
Chase Manhattan Bank, as trustee.
4.8 --Form of Affiliate Debenture Guarantee Agreement by Merrill Lynch & Co., Inc. and
The Chase Manhattan Bank, as guarantee trustee.
4.9 --Form of Trust Preferred Security (included in Exhibit 4.2 above).
4.10 --Form of Partnership Preferred Security (included in Exhibit 4.5 above).
4.11 --Form of Subordinated Debenture.
5.1 --Opinion of Brown & Wood LLP.
5.2 --Opinion of Brown & Wood LLP.
5.3 --Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
12 --Computation of Ratio of Earnings to Fixed Charges of Merrill Lynch & Co., Inc.
(incorporated by reference to Exhibit 12 to the Company's Registration Statement
(File No. 333-13649).
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO.
23.1* --Consents of Deloitte & Touche LLP.
<C> <S>
23.2 --Consent of Brown & Wood LLP (to be contained in Exhibit No. 5.1).
24.1* --Powers of Attorney.
25 --Form T-1, Statement of Eligibility Under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, under the Declaration of Trust (contained in
Exhibit 4.2); Trust Preferred Securities Guarantee Agreement (contained in Exhibit
4.5); Subordinated Indenture (contained in Exhibit 4.7); and Affiliate Debenture
Guarantee Agreements (contained in Exhibit 4.8).
</TABLE>
- ------------------------
* Previously filed.
ITEM 17. UNDERTAKINGS.
The undersigned registrants hereby undertake:
1. that for purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrants pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective;
2. that for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at the time shall be deemed
to be the initial bona fide offering thereof; and
3. that for purposes of determining any liability under the Securities Act
of 1933, each filing of the Company's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in this registration statement shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of a
registrant pursuant to the foregoing provisions or otherwise, the registrants
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by a registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted against a
registrant by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in The City of New York and State of New York on the 11th day
of December, 1996.
MERRILL LYNCH & CO., INC.
By /s/ JOSEPH T. WILLETT
-----------------------------------------
Joseph T. Willett
(SENIOR VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on the 11th day of December, 1996.
SIGNATURE TITLE
- ------------------------------ --------------------------
* Chairman of the Board,
- ------------------------------ Chief Executive Officer
(Daniel P. Tully) and Director
*
- ------------------------------ President, Chief Operating
(David H. Komansky) Officer and Director
Senior Vice President and
/s/ JOSEPH T. WILLETT Chief Financial Officer
- ------------------------------ (Principal Financial
(Joseph T. Willett) Officer)
* Senior Vice President and
- ------------------------------ Controller (Principal
(Michael J. Castellano) Accounting Officer)
*
- ------------------------------ Director
(William O. Bourke)
*
- ------------------------------ Director
(W.H. Clark)
*
- ------------------------------ Director
(Jill K. Conway)
*
- ------------------------------ Director
(Stephen L. Hammerman)
II-4
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SIGNATURE TITLE
- ------------------------------ --------------------------
*
- ------------------------------ Director
(Earle H. Harbison, Jr.)
*
- ------------------------------ Director
(George B. Harvey)
*
- ------------------------------ Director
(William R. Hoover)
*
- ------------------------------ Director
(Robert P. Luciano)
*
- ------------------------------ Director
(David K. Newbigging)
*
- ------------------------------ Director
(Aulana L. Peters)
*
- ------------------------------ Director
(John J. Phelan, Jr.)
*
- ------------------------------ Director
(William L. Weiss)
*By: /s/ JOSEPH T. WILLETT
-------------------------
Joseph T. Willett
(ATTORNEY-IN-FACT)
</TABLE>
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement or amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, on the 11th day of December, 1996.
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
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement or amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, on the 11th day of December, 1996.
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
II-7
<PAGE>
Exhibit 1.1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MERRILL LYNCH & CO., INC.
(a Delaware corporation)
MERRILL LYNCH PREFERRED FUNDING I, L.P.
(a Delaware limited partnership)
MERRILL LYNCH PREFERRED CAPITAL TRUST I
(a Delaware business trust)
Trust Originated Preferred Securities ("TOPrS")-SM-
PURCHASE AGREEMENT
Dated: December ___, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. Representations and Warranties................................ 5
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY...................... 5
(i) Compliance with Registration Requirements..................... 5
(ii) Incorporated Documents........................................ 6
(iii) Independent Accountants.................................. 6
(iv) Financial Statements.......................................... 6
(v) No Material Adverse Change in Business........................ 6
(vi) Good Standing of the Company.................................. 7
(vii) Good Standing of Subsidiaries............................ 7
(viii) Authorization of Agreement............................... 8
(ix) Authorization of the Debentures and Indentures................ 8
(x) Authorization of Investment Guarantees........................ 8
(xi) Absence of Defaults and Conflicts; Absence of Further
Requirements.................................................. 9
(xii) Absence of Defaults and Conflicts........................ 9
(xiii) Absence of Labor Dispute.................................10
(xiv) Absence of Proceedings...................................10
(xv) Exhibits......................................................11
(xvi) Absence of Further Requirements..........................11
(xvii) Possession of Intellectual Property......................11
(xviii) Possession of Licenses and Permits.......................11
(xix) Title to Property........................................12
(xx) Compliance with Cuba Act......................................12
(b) OFFICERS' CERTIFICATES.............................................12
(c) REPRESENTATIONS AND WARRANTIES BY THE TRUST,
PARTNERSHIP AND COMPANY............................................13
(i) Good Standing of Trust........................................13
(ii) Authorization of Declaration..................................13
(iii) Authorization of Trust Common Securities.................13
(iv) Authorization of Trust Preferred Securities...................14
(v) Authorization of Trust Guarantee..............................14
(vi) Regular Trustees..............................................14
(vii) Good Standing of the Partnership.........................14
(viii) Authorization of Partnership Agreement...................15
(ix) Authorization of Partnership Preferred Securities.............15
(x) Authorization of Partnership Guarantee........................15
(xi) General Partner Status........................................15
(xii) Investment Company Act...................................15
(xiii) Absence of Conflicts.....................................16
(xiv) Absence of Further Requirements..........................16
(xv) Absence of Proceedings........................................16
i
<PAGE>
TABLE OF CONTENTS (CONT'D)
Page
----
SECTION 2. Sale and Delivery to Underwriters; Closing....................17
(a) SECURITIES.........................................................17
(b) PAYMENT............................................................17
(c) DENOMINATIONS; REGISTRATION........................................18
SECTION 3. Covenants of the Offerors.....................................18
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS.....18
(b) FILING OF AMENDMENTS...............................................19
(c) DELIVERY OF REGISTRATION STATEMENTS................................19
(d) DELIVERY OF PROSPECTUSES...........................................19
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS..........................20
(f) BLUE SKY QUALIFICATIONS............................................20
(g) RULE 158...........................................................21
(h) USE OF PROCEEDS....................................................21
(i) LISTING............................................................21
(j) RESTRICTION ON SALE OF SECURITIES..................................21
(k) REPORTING REQUIREMENTS.............................................21
SECTION 4. Payment of Expenses...........................................21
(a) EXPENSES...........................................................21
(b) TERMINATION OF AGREEMENT...........................................22
SECTION 5. Conditions of Underwriters' Obligations.......................22
(a) EFFECTIVENESS OF REGISTRATION STATEMENT............................22
(b) OPINION OF COUNSEL FOR COMPANY.....................................23
(c) OPINION OF COUNSEL FOR UNDERWRITERS................................23
(d) OPINION OF COUNSEL FOR THE PROPERTY OF TRUSTEE.....................23
(e) OFFICERS' CERTIFICATE..............................................23
(f) ACCOUNTANT'S COMFORT LETTER........................................24
(g) BRING-DOWN COMFORT LETTER..........................................24
(h) MAINTENANCE OF RATING..............................................24
(i) APPROVAL OF LISTING................................................25
(j) ADDITIONAL DOCUMENTS...............................................25
(k) TERMINATION OF AGREEMENT...........................................25
SECTION 6. Indemnification...............................................25
(a) INDEMNIFICATION OF UNDERWRITERS....................................25
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS.................26
(c) ACTIONS AGAINST PARTIES; NOTIFICATION..............................27
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE.................27
SECTION 7. Contribution..................................................28
ii
<PAGE>
TABLE OF CONTENTS (CONT'D)
Page
----
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery...............................................................29
SECTION 9. Termination of Agreement......................................30
(a) TERMINATION; GENERAL...............................................30
(b) LIABILITIES........................................................30
SECTION 10. Default by One or More of the Underwriters....................30
SECTION 11. Notices.......................................................31
SECTION 12. Parties.......................................................31
SECTION 13. GOVERNING LAW AND TIME........................................32
SECTION 14. Effect of Headings............................................32
SCHEDULE A........................................................Schedule A-1
SCHEDULE B........................................................Schedule B-1
EXHIBIT A..................................................................A-1
EXHIBIT B..................................................................B-1
EXHIBIT C..................................................................C-1
iii
<PAGE>
MERRILL LYNCH & CO., INC.
(a Delaware corporation)
MERRILL LYNCH PREFERRED FUNDING I, L.P.
(a Delaware limited partnership)
MERRILL LYNCH PREFERRED CAPITAL TRUST I
(a Delaware business trust)
Trust Preferred Securities
____% Trust Originated Preferred Securities ("TOPrS")
(Liquidation Amount of $25 per Preferred Security)
PURCHASE AGREEMENT
December ___, 1996
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
A.G. Edwards & Sons, Inc.
Dean Witter Reynolds Inc.
PaineWebber Incorporated
Prudential Securities Incorporated
Smith Barney Inc.
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Merrill Lynch Preferred Capital Trust I (the "Trust"), a statutory
business trust organized under the Business Trust Act (the "Delaware Trust Act")
of the State of Delaware (Chapter 38,
- -------------------------
" "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
<PAGE>
Title 12, of the Delaware Code, 12 Del. C. Sections 3801 ET SEQ.), Merrill Lynch
Preferred Funding I, L.P. (the "Partnership"), a limited partnership organized
under the Revised Uniform Limited Partnership Act (the "Delaware Partnership
Act") of the State of Delaware (Chapter 17, Title 6, of the Delaware Code, 6
Del. C. Sections 17101 ET SEQ.), and Merrill Lynch & Co., Inc., a Delaware
corporation (the "Company" and, together with the Trust and the Partnership, the
"Offerors"), confirm their agreement (the "Agreement") with Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and each of
the other Underwriters named in Schedule A hereto (collectively, the
"Underwriters", which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), for whom Merrill Lynch, A.G. Edwards
& Sons, Inc., Dean Witter Reynolds Inc., PaineWebber Incorporated, Prudential
Securities Incorporated and Smith Barney Inc., are acting as representatives (in
such capacity, they shall hereinafter be referred to as the "Representatives"),
with respect to the issue and sale by the Trust and the purchase by the
Underwriters, acting severally and not jointly, of the respective numbers of
____% Trust Originated Preferred Securities (liquidation amount of $25 per
preferred security) representing preferred undivided beneficial ownership
interests in the assets of the Trust ("TOPrS" or the "Trust Preferred
Securities") set forth in said Schedule A. The Company will own all the common
securities (the "Trust Common Securities" and, together with the Trust
Partnership Securities, the "Trust Securities"), representing undivided
beneficial ownership interests in the assets of the Trust. The Trust Preferred
Securities and the Trust Common Securities will be issued pursuant to the
amended and restated declaration of trust of the Trust, dated as of December
___, 1996 (the "Declaration"), among the Company, as Sponsor, Theresa Lang and
Stanley Schaefer, as regular trustees (the "Regular Trustees"), The Chase
Manhattan Bank, a national banking association, as institutional trustee (the
"Property Trustee") and Chase Manhattan Bank Delware, a Delaware corporation, as
Delaware trustee (the "Delaware Trustee" and, together with the Regular Trustees
and the Property Trustee, the "Issuer Trustees"), and the holders from time to
time of undivided beneficial interests in the assets of the Trust. The Trust
Preferred Securities will be guaranteed by the Company, to the extent set forth
in the Prospectus with respect to distributions and payments upon liquidation,
redemption and otherwise pursuant to the Trust Preferred Securities Guarantee
Agreement (the "Trust Guarantee"), dated as of December __, 1996, between the
Company and The Chase Manhattan Bank, as trustee (the "Guarantee Trustee").
The proceeds from the sale of the Trust Securities will be used by the
Trust to purchase partnership preferred securities ("Partnership Preferred
Securities"), representing all of the
2
<PAGE>
limited partner interests of the Partnership. All of the general partner
interests will be owned by the Company, which shall be sole general partner (in
such capacity, the "General Partner"). The Partnership Preferred Securities
will be issued pursuant to an amended and restated agreement of limited
partnership, dated as of _______ ___, 1996 (the "Partnership Agreement"), among
the Company, as general partner, and Merrill Lynch Group, Inc., as initial
limited partner, and such other persons who become limited partners thereto, and
will be guaranteed by the Company, to the extent set forth in the Prospectus,
with respect to distributions and payments upon liquidation and redemption
pursuant to the Partnership Guarantee Agreement (the "Partnership Guarantee"
and, together with the Trust Guarantee, the "Guarantees"). The Trust Preferred
Securities and the related Trust Guarantee, together with the Partnership
Preferred Securities and the related Partnership Guarantee, are referred to
herein as the "Offered Securities."
The Partnership will use the proceeds from the sale of the Partnership
Preferred Securities and the capital contribution of the General Partner to
acquire, among other things, (i) a subordinated debenture (the "Company
Debenture") of the Company and (ii) senior debentures of one or more
wholly-owned subsidiaries of the Company (the "Investment Subsidiaries", and
together with the Company, the "Investment Affiliates"). The debentures to be
issued by the Investment Subsidiaries (collectively, the "Subsidiary Debentures"
and, together with the Company Debenture, the "Debentures") are to be fully and
unconditionally guaranteed by the Company (the "Investment Guarantees"). Each
of the Debentures shall be issued pursuant to an indenture (each an
"Indenture"), to be dated as of _______ ___, 1996, among the applicable
Investment Affiliate, The Chase Manhattan Bank, as trustee (the "Debt Trustee"),
and with respect to the Debentures issued by the Investment Subsidiaries, the
Company, as guarantor (the "Debenture Guarantor").
The Offerors understand that the Underwriters propose to make a public
offering of the Offered Securities as soon as the Representatives deem advisable
after this Agreement has been executed and delivered and the Declaration, Trust
Guarantee, Indenture relating to the Company Debenture and the Investment
Guarantees have been qualified under the Trust Indenture Act of 1939, as amended
(the "1939 Act").
The Offerors have filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (No. 333-16603) covering
the registration under the Securities Act of 1933, as amended (the "1933 Act"),
of (i) the Trust Preferred Securities, (ii) the Trust Guarantee, (iii) the
Partnership Preferred Securities, (iv) the Partnership Guarantee,
3
<PAGE>
(v) the Company Debenture, and (vi) the Investment Guarantees. Promptly after
execution and delivery of this Agreement, the Offerors will either (i) prepare
and file a prospectus in accordance with the provisions of Rule a ("Rule 430A")
of the rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of the 1933 Act
Regulations or (ii) if the Company has elected to rely upon Rule 434 ("Rule
434") of the 1933 Act Regulations, prepare and file a term sheet (a "Term
Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). The
information included in such prospectus or in such Term Sheet, as the case may
be, that was omitted from such registration statement at the time it became
effective but that is deemed to be part of such registration statement at the
time it became effective (a) pursuant to paragraph (b) of Rule 430A is referred
to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 is
referred to as "Rule 434 Information." Each prospectus used before such
registration statement became effective, and any prospectus that omitted, as
applicable, the Rule 430A Information or the Rule 434 Information, that was used
after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto, schedules thereto, if any, and the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final prospectus,
including the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the 1933 Act, in the form first furnished to the Underwriters for
use in connection with the offering of the Securities is herein called the
"Prospectus." If Rule 434 is relied on, the term "Prospectus" shall refer to the
preliminary prospectus dated December 5, 1996 together with the Term Sheet and
all references in this Agreement to the date of the Prospectus shall mean the
date of the Term Sheet. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the Prospectus or any Term
Sheet or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("EDGAR").
All references in this Agreement to financial state-meats and
schedules and other information which is "contained,"
4
<PAGE>
"included" or "stated" in the Registration Statement, any preliminary prospectus
or the Prospectus (or other references of like import) shall be deemed to mean
and include all such financial statements and schedules and other information
which is incorporated by reference in the Registration Statement, any
preliminary prospectus or the Prospectus, as the case may be; and all references
in this Agreement to amendments or supplements to the Registration Statement,
any preliminary prospectus or the Prospectus shall be deemed to mean and include
the filing of any document under the Securities Exchange Act of 1934 (the "1934
Act") which is incorporated by reference in the Registration Statement, such
preliminary prospectus or the Prospectus, as the case may be.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company represents
and warrants to each Underwriter as of the date hereof, and as of the Closing
Time referred to in Section 2(b) hereof, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Offerors
meet the requirements for use of Form S-3 under the 1933 Act. Each of the
Registration Statement and any Rule 462(b) Registration Statement has become
effective under the 1933 Act and no stop order suspending the effectiveness of
the Registration Statement or any Rule 462(b) Registration Statement has been
issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are contemplated
by the Commission, and any request on the part of the Commission for additional
information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time, the Registration Statement, any Rule 462(b)
Registration Statement and any amendments and supplements thereto complied and
will comply in all material respects with the requirements of the 1933 Act and
the 1933 Act Regulations and the 1939 Act and the rules and regulations of the
Commission under the 1939 Act (the "1939 Act Regulations"), and did not and will
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading. At the date of the Prospectus and at the Closing Time, the
Prospectus and any amendments or supplements thereto did not and will not
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If Rule 434 is used,
5
<PAGE>
the Offerors will comply with the requirements of Rule 434. The representations
and warranties in this subsection shall not apply to (A) statements in or
omissions from the Registration Statement or Prospectus made in reliance upon
and in conformity with information furnished to the Company in writing by any
Underwriter through Merrill Lynch expressly for use in the Registration
Statement or Prospectus or (B) that part of the Registration Statement that
constitutes the Statement of Eligibility on Form T-1 (the "Form T-1") under the
1939 Act of a trustee.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment thereto,
or filed pursuant to Rule 424 under the 1933 Act, complied when so filed in all
material respects with the 1933 Act Regulations and each preliminary prospectus
and the Prospectus delivered to the Underwriters for use in connection with this
offering was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(ii) INCORPORATED DOCUMENTS. The documents incorporated or
deemed to be incorporated by reference in the Registration Statement and the
Prospectus, at the time they were or hereafter are filed with the Commission,
complied and will comply in all material respects with the requirements of the
1934 Act and the rules and regulations of the Commission thereunder (the "1934
Act Regulations"), and, when read together with the other information in the
Prospectus, at the time the Registration Statement became effective, at the time
the Prospectus was issued and at the Closing Time, did not and will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading.
(iii) INDEPENDENT ACCOUNTANTS. The accountants who certified the
financial statements and any supporting Schedules thereto included in the
Registration Statement and the Prospectus are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.
(iv) FINANCIAL STATEMENTS. The financial statements of the
Company included in the Registration Statement and the Prospectus, together with
the related schedules and notes, present fairly the financial position of the
Company and its consolidated subsidiaries at the dates indicated and the
statements of consolidated earnings, consolidated stockholders' equity and
consolidated cash flows of the Company and its consolidated subsidiaries for the
periods specified; said financial statements have been prepared in conformity
with
6
<PAGE>
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved. The supporting schedules, if any, included in
the Registration Statement present fairly in accordance with GAAP the
information of the Company required to be stated therein. The selected
financial data and the summary financial information included in the
Registration Statement and the Prospectus present fairly the information shown
therein and have been compiled on a basis consistent with that of the audited
financial statements incorporated by reference in the Registration Statement and
the Prospectus.
(v) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (A) there has been no material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business (a "Material Adverse Effect"), (B) there have been no transactions
entered into by the Company or any of its subsidiaries, other than those arising
in the ordinary course of business, which are material with respect to the
Company and its subsidiaries considered as one enterprise and (C) except for
regular quarterly dividends on its outstanding common stock par value $1.33 1/3
per share of the Company and regular dividends on its outstanding preferred
stock in amounts per share that are consistent with the terms of such preferred
stock, there has been no dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock.
(vi) GOOD STANDING OF THE COMPANY. The Company has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware and has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this Purchase
Agreement; and the Company is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in which
such qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify or
be in good standing would not result in a Material Adverse Effect.
(vii) GOOD STANDING OF SUBSIDIARIES. Each subsidiary of the
Company which is a "significant subsidiary" as defined in Rule 1-02 of
Regulation S-X under the 1933 Act (each a "Subsidiary" and, collectively, the
"Subsidiaries") has been duly organized and is validly existing as a corporation
in good
7
<PAGE>
standing under the laws of the jurisdiction of its incorporation, has corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and is duly qualified as a foreign
corporation to transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure to so
qualify or be in good standing would not result in a Material Adverse Effect;
except as otherwise disclosed in the Registration Statement, all of the issued
and outstanding capital stock of each Subsidiary has been duly authorized and
validly issued and is fully paid and non-assessable and is owned by the Company,
directly or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity; and none of the
outstanding shares of capital stock of any Subsidiary was issued in violation of
preemptive or similar rights of any securityholder of such Subsidiary. The only
subsidiaries of the Company are (A) the subsidiaries listed in Exhibit 21 to the
Annual Report on Form 10-K of the Company filed with the Commission under
Section 13 of the 1934 Act and (B) certain other subsidiaries which, considered
in the aggregate as a single subsidiary, do not constitute a "significant
subsidiary" as defined in Rule 1-02 of Regulation S-X under the 1933 Act.
(viii) AUTHORIZATION OF AGREEMENT. This Agreement has been duly
authorized, executed and delivered by the Offerors.
(ix) AUTHORIZATION OF THE DEBENTURES AND INDENTURES. Each
Indenture has been duly authorized, and at the Closing Time, will have been duly
executed and delivered by the applicable Investment Affiliate and, when duly
executed and delivered by the Debt Trustee, will constitute a valid and binding
agreement of such Investment Affiliate enforceable against such Investment
Affiliate in accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law) (the "Bankruptcy
Exceptions"). The Indenture of the Company has been duly qualified under the
1939 Act. The Debentures have been duly authorized for issuance and sale
pursuant to this Agreement and, at the Closing Time, will have been duly
executed by the applicable Investment Affiliate and, when authenticated, issued
and delivered in the manner provided for in the applicable Indenture and
delivered against payment of the purchase price therefor as provided in this
Agreement, will constitute valid and legally binding obligations
8
<PAGE>
of such Investment Affiliate, enforceable against such Investment Affiliate in
accordance with their terms, except as the enforcement thereof may be limited by
the Bankruptcy Exceptions.
(x) AUTHORIZATION OF INVESTMENT GUARANTEES. The Investment
Guarantees have been duly authorized and, at the Closing Time, will have been
duly executed and delivered by the Debenture Guarantor, and, when authenticated
in the manner provided in the Investment Guarantee, will constitute a valid and
binding obligation of the Debenture Guarantor, enforceable against the Debenture
Guarantor in accordance with its terms, except to the extent that enforcement
thereof may be limited by the Bankruptcy Exceptions. The Investment Guarantees
have been duly qualified under the 1939 Act.
(xi) ONE AUTHORIZATION OF ADDITIONAL AGREEMENTS. Each of the
Trust Guarantee, Partnership Guarantee and Investment Guarantees (the
"Transaction Documents") and the Debentures and Indentures has been duly
authorized, executed and delivered by the Company or the Applicable Investment
Affiliate, as the case may be, and each agreement constitutes a valid and
binding agreement of the Company or the Applicable Investment Affiliate, as the
case may be, except as enforcement thereof may be limited by the Bankruptcy
Exceptions.
(xii) DESCRIPTION OF ADDITIONAL AGREEMENTS. The offered
Securities and the Declaration, the Partnership Agreement, the Trust Guarantee
and the Partnership Guarantee will conform in all material respects to the
respective statements relating thereto contained in the Prospectus and will be
in substantially the respective forms filed or incorporated by reference, as the
case may be, as exhibits to the Registration Statement.
(xiii) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company nor
any of its subsidiaries is in violation of its charter or by-laws or in default
in the performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which it or any of them may
be bound, or to which any of the property or assets of the Company or any
subsidiary is subject (collectively, "Agreements and Instruments"), except for
such defaults that would not result in a Material Adverse Effect; and the
execution, delivery and performance of the Transaction Documents by the Company,
the Debentures and the Indentures by the applicable Investment Subsidiary and
any other agreement or instrument entered into or issued or to be entered into
or issued by the Company in connection with the transactions contemplated hereby
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or thereby or in the Registration Statement and the Prospectus (including the
issuance and sale of the Offered Securities and the use of the proceeds from the
sale of the Offered Securities as described in the Prospectus under the caption
"Use of Proceeds") and the consummation of the transactions contemplated herein
and in the Registration Statement and the Prospectus and compliance by the
Company with its obligations hereunder and thereunder do not and will not,
whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or a default or Repayment Event (as
defined below) under or result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of the Company or any subsidiary of
the Company pursuant to, the Agreements and Instruments (except for such
conflicts, breaches, defaults, events, liens, charges or encumbrances that would
not result in a Material Adverse Effect), nor will such action result in any
violation of the provisions of the charter or by-laws of the Company or any
Subsidiary or any applicable law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over the Company or any Subsidiary or any of
their assets, properties or operations. As used herein, a "Repayment Event"
means any event or condition which gives the holder of any note, debenture or
other evidence of indebtedness of the Company or any of its subsidiaries (or any
person acting on such holder's behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the Company
or any of its subsidiaries.
(xiv) ABSENCE OF LABOR DISPUTE. No labor dispute with the
employees of the Company or any of its subsidiaries exists or, to the knowledge
of the Company, is imminent, which may reasonably be expected to result in a
Material Adverse Effect.
(xv) ABSENCE OF PROCEEDINGS. There is not any action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or any of
its subsidiaries, which is required to be disclosed in the Registration
Statement and the Prospectus (other than as stated therein), or which might
reasonably be expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the assets,
properties, or operations thereof or the consummation of the transactions
contemplated in the Transaction Documents and the Debentures and the Indentures
or the performance by the Company and the applicable Investment Affiliate,
respectively, of their obligations hereunder and thereunder; and the aggregate
of all
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pending legal or governmental proceedings to which the Company or any of its
subsidiaries is a party or of which any of their respective assets, property, or
operations is the subject which are not described in the Registration Statement
and the Prospectus, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a Material Adverse
Effect.
(xvi) EXHIBITS. There are no contracts or documents which are of
a character required to be described in the Registration Statement, the
Prospectus or the documents incorporated by reference therein or to be filed as
exhibits thereto which have not been so described and filed as required.
(xvii) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency is necessary or
required for the performance by the Company of its obligations under this
Agreement or in connection with the transactions contemplated under this
Agreement, any Indenture except such as have been already obtained or as may be
required under the 1933 Act or the 1933 Act Regulations or state securities
laws.
(xviii) POSSESSION OF INTELLECTUAL PROPERTY. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms, adequate
trademarks, service marks, trade names and other intellectual property
(collectively, "Intellectual Property") necessary to carry on the business now
operated by them, except where the failure to own or possess or the lack of
ability to acquire such Intellectual Property, singly or in the aggregate, would
not result in a Material Adverse Effect, and neither the Company nor any of its
subsidiaries has received any notice or is otherwise aware of any infringement
of or conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any Intellectual
Property invalid or inadequate to protect the interest of the Company or any of
its subsidiaries therein, and which infringement or conflict (if the subject of
any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly
or in the aggregate, would result in a Material Adverse Effect.
(xix) POSSESSION OF LICENSES AND PERMITS. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the appropriate
federal, state, local or foreign regulatory agencies or bodies necessary to
conduct the business now operated by them, except where the failure to so
possess such Governmental Licenses would not, singly or in the aggregate, have a
Material Adverse Effect; the
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Company and its subsidiaries are in compliance with the terms and conditions of
all such Governmental Licenses, except where the failure so to comply would not,
singly or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except where the
invalidity of such Governmental Licenses or the failure of such Governmental
Licenses to be in full force and effect would not have a Material Adverse
Effect; and neither the Company nor any of its subsidiaries has received any
notice of proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material Adverse
Effect.
(xx) TITLE TO PROPERTY. The Company and its subsidiaries have
good and marketable title to all real property owned by the Company and its
subsidiaries and good title to all other properties owned by them, in each case,
free and clear of all mortgages, pledges, liens, security interests, claims,
restrictions or encumbrances of any kind, except such as (A) are described in
the Registration Statement and the Prospectus or (B) do not, singly or in the
aggregate, materially affect the value of such property, do not interfere with
the use made and proposed to be made of such property by the Company or any of
its subsidiaries and do not, singly or in the aggregate have a Material Adverse
Effect; and all of the leases and subleases material to the business of the
Company and its subsidiaries, considered as one enterprise, and under which the
Company or any of its subsidiaries holds properties described in the Prospectus,
are in full force and effect, except where the failure of such leases or
subleases to be in full force and effect would not have a Material Adverse
Effect, and neither the Company nor any subsidiary has any notice of any
material claim of any sort that has been asserted by anyone adverse to the
rights of the Company or any subsidiary under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the Company or such
subsidiary of the continued possession of the leased or subleased premises under
any such lease or sublease.
(xxi) COMPLIANCE WITH CUBA ACT. The Company has complied with,
and is and will be in compliance with, the provisions of that certain Florida
act relating to disclosure of doing business with Cuba, codified as Section
517.075 of the Florida statutes, and the rules and regulations thereunder or is
exempt therefrom.
(xxii) AUTHORIZATION OF TRUST GUARANTEE. The Trust Guarantee has
been duly authorized by the Company and, when validly executed and delivered by
the Company, and, assuming due authorization, execution and delivery of the
Trust Guarantee by
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the Guarantee Trustee, will constitute a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms except to
the extent that enforcement thereof may be limited by the Bankruptcy Exceptions,
the Trust Guarantee will conform to all statements relating thereto contained in
the Prospectus; and the Trust Preferred Guarantee Agreement, at the Closing
Time, will have been duly qualified under the 1939 Act.
(xxiii) AUTHORIZATION OF PARTNERSHIP GUARANTEE. The Partnership
Guarantee has been duly authorized by the Company and, when validly executed and
delivered by the Company will constitute a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms except to
the extent that enforcement thereof may be limited by the Bankruptcy Exceptions.
(b) OFFICERS' CERTIFICATES. Any certificate signed by any officer of the
Company or any of its subsidiaries and delivered to any Underwriter or to
counsel for the Underwriters in connection with the offering of the Underwritten
Securities shall be deemed a representation and warranty by the Company to each
Underwriter as to the matters covered thereby on the date of such certificate
and, unless subsequently amended or supplemented, at each Representation Date
subsequent thereto.
(c) REPRESENTATIONS AND WARRANTIES BY THE TRUST, PARTNERSHIP AND COMPANY.
The Offerors, jointly and severally, represent and warrant to each Underwriter
as of the date hereof, and as of the Closing Time referred to in Section 2(b)
herein. as follows:
(i) GOOD STANDING OF TRUST. The Trust has been duly created and
is validly existing in good standing as a business trust under the Delaware
Trust Act with the power and authority to own property and to conduct its
business as described in the Registration Statement and Prospectus and to enter
into and perform its obligations under this Agreement, the Trust Preferred
Securities, the Trust Common Securities and the Declaration; the Trust is duly
qualified to transact business as a foreign business trust and is in good
standing in any other jurisdiction in which such qualification is necessary,
except to the extent that the failure to so qualify or be in good standing would
not have a material adverse effect on the Trust; the Trust is not a party to or
otherwise bound by any agreement other than those described in the Prospectus;
and the Trust is and will be treated as a consolidated subsidiary of the Company
pursuant to generally accepted accounting principles.
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(ii) AUTHORIZATION OF DECLARATION. The Declaration has been duly
authorized by the Company and, at the Closing Time, will have been duly executed
and delivered by the Company, as Sponsor, and the Trustees, and assuming due
authorization, execution and delivery of the Declaration by the Property
Trustee, the Declaration will, at the Closing Time, be a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions, and will conform to all statements relating thereto in
the Prospectus; and at the Closing Time, the Declaration will have been duly
qualified under the 1939 Act.
(iii) AUTHORIZATION OF TRUST COMMON SECURITIES. The Trust Common
Securities have been duly authorized by the Declaration and, when issued and
delivered by the Trust to the Company against payment therefor as described in
the Registration Statement and Prospectus, will be validly issued and (subject
to the terms of the Declaration) fully paid undivided beneficial interests in
the assets of the Trust and will conform to all statements relating thereto
contained in the Prospectus; the issuance of the Trust Common Securities is not
subject to preemptive or other similar rights; and at the Closing Time all of
the issued and outstanding Trust Common Securities of the Trust will be directly
owned by the Company free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity.
(iv) AUTHORIZATION OF TRUST PREFERRED SECURITIES. The Trust
Preferred Securities have been duly authorized by the Declaration and, when
issued and delivered against payment of the consideration set forth in this
Agreement, will be validly issued and (subject to the terms of the Declaration)
fully paid and nonassessable undivided beneficial interests in the Trust, will
be entitled to the benefits of the Declaration and will conform to all
statements relating thereto contained in the Prospectus; the issuance of the
Trust Preferred Securities is not subject to preemptive or other similar rights;
and (subject to the terms of the Declaration) holders of Trust Preferred
Securities will be entitled to the same limitation of personal liability under
Delaware law as extended to stockholders of private corporations for profit.
(v) REGULAR TRUSTEES. Each of the Regular Trustees of the Trust
is an employee of the Company; the Declaration has been duly executed and
delivered by the Regular Trustees and is a valid and binding obligation of each
Regular Trustee, enforceable against such Regular Trustee in accordance with its
terms except to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions.
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(vi) GOOD STANDING OF THE PARTNERSHIP. The Partnership has been
duly formed and is validly existing in good standing as a limited partnership
under the Delaware Partnership Act with the power and authority to own property
and to conduct its business as described in the Registration Statement and
Prospectus and to enter into and perform its obligations under this Agreement,
the Partnership Preferred Securities and the Partnership Agreement; the
Partnership is duly qualified to transact business as a foreign limited
partnership and is in good standing in any other jurisdiction in which such
qualification is necessary, except to the extent that the failure to so qualify
or be in good standing would not have a material adverse effect on the
Partnership; the Partnership is not a party to or otherwise bound by any
agreement other than those described in the Prospectus; and the Partnership is
and will be treated as a consolidated subsidiary of the Company pursuant to
generally accepted accounting principles.
(vii) AUTHORIZATION OF PARTNERSHIP AGREEMENT. The Partnership
Agreement has been duly authorized by the Company as general partner and, on the
Closing Date, will have been duly executed and delivered by the Company, and
will be a valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms, except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions, and will
conform to the description thereof in the Prospectus.
(viii) AUTHORIZATION OF PARTNERSHIP PREFERRED SECURITIES. The
Partnership Preferred Securities have been duly authorized by the Partnership
Agreement and, when issued and delivered pursuant to the Partnership Agreement
against payment of the consideration set forth therein, will be duly issued and
fully paid and not subject to assessment for additional capital contributions,
will be entitled to the benefits of the Partnership Agreement and will conform
to the description thereof in the Prospectus; the issuance of the Partnership
Preferred Securities is not subject to preemptive or other similar rights;
assuming that the holders of Partnership Preferred Securities in their
capacities as such do not participate in the control of the business of the
Company, the holders of the Partnership Preferred Securities, in their
capacities as such, will have no liability in excess of their obligations to
make payments provided for in the Limited Partnership Agreement (subject to the
obligation of a holder of Partnership Preferred Securities to repay any funds
distributed to it).
(ix) GENERAL PARTNER STATUS. The Company is the sole general
partner of the Partnership.
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(x) INVESTMENT COMPANY ACT. Neither the Trust nor the
Partnership is and, after giving effect to the offering and sale of the Trust
Preferred Securities and the application of the proceeds thereof as described in
the Prospectus, neither will be an "investment company" under the 1940 Act.
(xi) ABSENCE OF CONFLICTS. The Trust is not in violation of the
Declaration or its certificate of trust filed with the State of Delaware, dated
November 20, 1996 (the "Certificate of Trust"); the Partnership is not in
violation of the Partnership Agreement or the certificate of limited
partnership, dated November 20, 1996 (the "Certificate of Partnership"); and the
execution, delivery and performance of applicable Transaction Documents by the
Partnership and the Trust and the consummation of the transactions contemplated
herein and therein and compliance by the Partnership and the Trust with their
respective obligations hereunder and thereunder have been duly authorized by all
necessary action on the part of the Partnership and the Trust and do not and
will not result in any violation of the Declaration or Certificate of Trust or
the Partnership Agreement or the Certificate of Partnership and do not and will
not conflict with, or result in a breach of any of the terms or provisions of,
or constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Trust or the
Partnership under any existing applicable law, rule, regulation, judgment, order
or decree of any government, governmental instrumentality or court, domestic or
foreign, or any regulatory body or administrative agency or other governmental
body having jurisdiction over the Trust or the Partnership of their respective
properties.
(xii) ABSENCE OF FURTHER REQUIREMENTS. No authorization,
approval, consent or order of any court or governmental authority or agency is
necessary in connection with the issuance, offer and sale of the Trust
Securities and the Partnership Preferred Securities, the consummation of the
transactions contemplated by this Agreement by the Partnership or the Trust, or
the execution, delivery, and performance by the Partnership or the Trust of the
applicable Transaction Documents, except such as may be required under the 1933
Act or the 1933 Act Regulations, the 1934 Act or the 1934 Act Regulations or
state securities laws and the qualification of the Declaration and the Trust
Guarantee under the 1939 Act.
(xiii) ABSENCE OF PROCEEDINGS. Except as disclosed in the
Prospectus, there is no action, suit or proceeding before or by any government,
governmental instrumentality or court, domestic or foreign, now pending or, to
the knowledge of the Trust or the Partnership, threatened against or affecting
the
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Trust or the Partnership that is required to be disclosed in the Prospectus or
that would result in any material adverse change in the condition (financial or
otherwise), earnings or business affairs of the Trust or the Company and its
subsidiaries, taken as a whole, or that would materially and adversely affect
the properties or assets of the Trust or the Partnership, or that could
adversely affect the consummation of the transactions contemplated in this
Agreement.
SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING.
(a) SECURITIES. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Trust
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Trust, at
the initial public offering price set forth in Schedule B, the number of Trust
Preferred Securities set forth in Schedule A opposite the name of such
Underwriter, plus any additional number of Trust Preferred Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(b) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Trust Preferred Securities shall be made at the offices of
(i) ________________, or at such other place as shall be agreed upon by the
Representatives and the Company, at 9:00 A.M. (Eastern time) on the third
(fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any given day)
business day after the date hereof (unless postponed in accordance with the
provisions of Section 10), or such other time not later than ten business days
after such date as shall be agreed upon by the Representatives and the Company
(such time and date of payment and delivery being herein called "Closing Time").
Payment shall be made to the Trust by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
such persons designated by the Representatives for the respective accounts of
the Underwriters of a certificate in global form for the Trust Preferred
Securities to be purchased by them. It is understood that each Underwriter has
authorized the Representatives, for its account, to accept delivery of, receipt
for, and make payment of the purchase price for, the Trust Preferred Securities
which it has agreed to purchase. Merrill Lynch, individually and not as
representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the Trust Preferred Securities to be purchased
by any Underwriter whose funds have not been received by the Closing Time, but
such
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payment shall not relieve such Underwriter from its obligations hereunder.
The purchase price per Trust Preferred Security to be paid by the
several Underwriters for the Trust Preferred Securities shall be an amount equal
to the initial public offering price as set forth in Schedule B. The initial
public offering price per Trust Preferred Security shall be a fixed price to be
determined by agreement between the Representatives and the Offerors. The
initial public offering price and the purchase price, when so determined, shall
be set forth in Schedule B.
As compensation to the Underwriters for their commitments hereunder
and in view of the fact that the proceeds of the sale of the Trust Preferred
Securities will ultimately be used to purchase the Debentures of the Company and
the Investment Subsidiaries, the Company hereby agrees to pay at Closing Time to
the Representatives, for the accounts of the several Underwriters, a commission
per Trust Preferred Security set forth on Schedule B.
At the Closing Time, the Company will pay, or cause to be paid, the
commission payable at such time to the Underwriters under Section 2 hereof by
wire transfer of immediately available funds to a bank account designated by
Merrill Lynch, Pierce, Fenner & Smith Incorporated for the account of the
Underwriters.
(c) DENOMINATIONS; REGISTRATION. Certificates for the Trust Preferred
Securities shall be in such denominations and registered in such names as the
Representatives may request in writing at least two full business days before
the Closing Time. The Trust Preferred Securities will be made available for
examination and packaging by the Representatives in The City of New York not
later than 9:00 A.M. (Eastern time) on one business day prior to the Closing
Time.
SECTION 3. COVENANTS OF THE OFFERORS. The Offerors covenant with each
Underwriter as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS. The
Offerors, subject to Section 3(b), will comply with the requirements of Rule
430A or Rule 434, as applicable, and will notify the Representatives
immediately, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement shall become effective, or any
supplement to the Prospectus or any amended Prospectus shall have been filed,
(ii) of the receipt of any comments from the Commission, (iii) of any request by
the Commission for any amendment to the Registration Statement or any amendment
or supplement to the
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Prospectus or for additional information, and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus, or of the suspension of the qualification of the Offered Securities
for offering or sale in any jurisdiction, or of the initiation or threatening of
any proceedings for any of such purposes. The Offerors will promptly effect the
filings necessary pursuant to Rule 424(b) and will take such steps they deem
necessary to ascertain promptly whether the form of prospectus transmitted for
filing under Rule 424(b) was received for filing by the Commission and, in the
event that it was not, it will promptly file such prospectus. The Company will
make every reasonable effort to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof at the earliest possible
moment.
(b) FILING OF AMENDMENTS. During the period when the Underwriters are
required to deliver a prospectus with respect to the Offered Securities, the
Offerors will give the Representatives notice of their intention to file or
prepare any amendment to the Registration Statement (including any filing under
Rule 462(b)), any Term Sheet or any amendment, supplement or revision to either
the prospectus included in the Registration Statement at the time it became
effective or to the Prospectus, whether pursuant to the 1933 Act, the 1934 Act
or otherwise, will furnish the Representatives with copies of any such documents
a reasonable amount of time prior to such proposed filing or use, as the case
may be, and will not file or use any such document to which the Representatives
or counsel for the Underwriters shall reasonably object.
(c) DELIVERY OF REGISTRATION STATEMENTS. The Offerors have furnished or
will deliver to the Representatives and counsel for the Underwriters, without
charge, conformed copies of the Registration Statement as originally filed and
of each amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated or deemed to be incorporated by
reference therein) and conformed copies of all consents and certificates of
experts, and will also deliver to the Representatives, without charge, a
conformed copy of the Registration Statement as originally filed and of each
amendment thereto (without exhibits) for each of the Underwriters. The copies
of the Registration Statement and each amendment thereto furnished to the
Underwriters will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
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(d) DELIVERY OF PROSPECTUSES. The Offerors have delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably requested, and the Offerors hereby consent to the
use of such copies for purposes permitted by the 1933 Act. The Offerors will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such
number of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Offerors will comply
with the 1933 Act and the 1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations and the 1939 Act and the 1939 Act Regulations with respect to the
offer of the Offered Securities so as to permit the completion of the
distribution of the Trust Preferred Securities as contemplated in this Agreement
and in the Prospectus. If at any time when a prospectus is required by the 1933
Act to be delivered in connection with sales of the Trust Preferred Securities,
any event shall occur or condition shall exist as a result of which it is
necessary, in the opinion of counsel for the Underwriters and for the Company,
to amend the Registration Statement or amend or supplement the Prospectus in
order that the Prospectus will not include any untrue statements of a material
fact or omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing at the time it
is delivered to a purchaser, or if it shall be necessary, in the opinion of such
counsel, at any such time to amend the Registration Statement or amend or
supplement the Prospectus in order to comply with the requirements of the 1933
Act or the 1933 Act Regulations, the Company will promptly prepare and file with
the Commission, subject to Section 3(b), such amendment or supplement as may be
necessary to correct such statement or omission or to make the Registration
Statement or the Prospectus comply with such requirements, and the Company will
furnish to the Underwriters such number of copies of such amendment or
supplement as the Underwriters may reasonably request.
(f) BLUE SKY QUALIFICATIONS. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Offered Securities for
offering and sale under the applicable securities laws of such states and other
jurisdictions as the Representatives may designate and to maintain such
qualifications in effect for a period of not less than one year from the later
of the effective date of the Registration Statement and any Rule
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462(b) Registration Statement; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Offered Securities have been so qualified, the Company
will file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not less
than one year from the effective date of the Registration Statement and any Rule
462(b) Registration Statement.
(g) RULE 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) USE OF PROCEEDS. The Company will use or cause to be used the net
proceeds received by and from the sale of the Offered Securities in the manner
specified in the Prospectus under "Use of Proceeds".
(i) LISTING. The Company will use its best efforts to effect the listing
of the Trust Preferred Securities on the New York Stock Exchange.
(j) REPORTING REQUIREMENTS. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
SECTION 4. PAYMENT OF EXPENSES.
(a) EXPENSES. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of this
Agreement, the Declaration, the Partnership Agreement, and the Indentures and
such other documents as may be required in connection with the offering,
purchase, sale, issuance or delivery of the Securities, (iii) the preparation,
issuance and delivery of the certificates for the Trust Preferred Securities to
the Underwriters, (iv) the fees and disbursements of the Company's counsel,
accountants and other advisors, (v) the
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qualification of the Offered Securities under securities laws in accordance with
the provisions of Section 3(f) hereof, including filing fees and the reasonable
fees and disbursements of counsel for the Underwriters in connection therewith
and in connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, any Term Sheets and of the Prospectus and any amendments
or supplements thereto, (vii) the preparation, printing and delivery to the
Underwriters of copies of the Blue Sky Survey and any supplement thereto, (viii)
the fees and expenses of the Property Trustee, the Regular Trustees, the
Delaware Trustee and the Trust Guarantee Trustee, including the fees and
disbursements of counsel for the Trustees in connection with the Indentures, the
Investment Guarantees and the Debentures, (ix) any fees payable in connection
with the rating of the Trust Preferred Securities, and (x) the fees and expenses
incurred in connection with the listing of the Offered Securities on the New
York Stock Exchange; provided, however that the Underwriters shall reimburse the
Company for certain expenses incurred in connection with the transactions
contemplated by this Agreement as may be agreed upon in writing.
(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Offerors contained in Section 1 hereof or
in certificates of any officer of the Company, the Trust, the Partnership or any
subsidiary of the Company delivered pursuant to the provisions hereof, to the
performance by the Offerors of their covenants and other obligations hereunder,
and to the following further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the Underwriters. A prospectus containing
the Rule 430A Information shall have been filed with the Commission in
accordance with Rule 424(b) (or a post-effective amendment providing such
information
22
<PAGE>
shall have been filed and declared effective in accordance with the requirements
of Rule 430A) or, if the Company has elected to rely upon Rule 434, a Term Sheet
shall have been filed with the Commission in accordance with Rule 424(b).
(b) OPINION OF COUNSEL FOR COMPANY. At Closing Time, the Representatives
shall have received the favorable opinion, dated as of Closing Time, of (i)
Brown & Wood LLP, counsel to the Company, the Trust and the Partnership, in form
and substance satisfactory to counsel for the Underwriters, together with signed
or reproduced copies of such letter for each of the other Underwriters to the
effect set forth in Exhibit A hereto and (ii) Skadden, Arps, Slate, Meagher &
Flom, special Delaware counsel to the Company, the Trust, and the Partnership,
in form and substance satisfactory to counsel for the Underwriters, together
with signed or reproduced copies of such letter for the Company and each of the
Underwriters to the effect set forth in Exhibit B hereto. Such counsel may also
state that, insofar as such opinion involves factual matters, they have relied,
to the extent they deem proper, upon certificates of officers of the Company and
its subsidiaries and certificates of public officials.
(c) OPINION OF COUNSEL FOR UNDERWRITERS. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the other
Underwriters in form and substance satisfactory to the Underwriters. In giving
such opinion such counsel may rely, as to all matters governed by the laws of
jurisdictions other than the law of the State of New York and the federal law of
the United States and the General Corporation Law of the State of Delaware, upon
the opinions of counsel satisfactory to the Representatives. Such counsel may
also state that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of the
Company and its subsidiaries and certificates of public officials.
(d) OPINION OF COUNSEL FOR THE PROPERTY TRUSTEE. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Seward & Kissel, counsel for the Property Trustee in form and substance
satisfactory to counsel for the Underwriters, together with signed or reproduced
copies of such letters for each of the other Underwriters to the effect set
forth in Exhibit C hereto and to such further effect as counsel to the
Underwriters may reasonably request.
23
<PAGE>
(e) OFFICERS' CERTIFICATE. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus except as stated therein, any material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries taken as a whole, whether
or not arising in the ordinary course of business, and the Representatives shall
have received a certificate of the President or a Vice President of the Company
and of the chief financial or chief accounting officer of the Company, dated as
of Closing Time, to the effect that (i) there has been no such material adverse
change, (ii) the representations and warranties in Section l(a) hereof are true
and correct in all material respects with the same force and effect as though
expressly made at and as of Closing Time, (iii) the Company has complied with
all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to Closing Time, and (iv) no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or are contemplated by the
Commission.
(f) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of this
Agreement, the Representatives shall have received from Deloitte & Touche LLP, a
letter dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such letter for
each of the other Underwriters containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus in a form acceptable to the
Representatives.
(g) BRING-DOWN COMFORT LETTER. At Closing Time, the Representatives shall
have received from Deloitte & Touche LLP a letter, dated as of Closing Time, to
the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (f) of this Section, except that the specified date
referred to shall be a date not more than three business days prior to Closing
Time.
(h) MAINTENANCE OF RATING. At Closing Time, the Trust Preferred
Securities shall be rated at least "___" by Moody's Investors Service Inc. and
"__" by Standard & Poor's Ratings Services, a division of McGraw-Hill Companies,
Inc. and the Company shall have delivered to the Representatives a letter dated
on or prior to the Closing Time, from each such rating agency, or other evidence
satisfactory to the Representatives, confirming that the Trust Preferred
Securities have such ratings; and since the date of this Agreement, there shall
not have
24
<PAGE>
occurred a downgrading in the rating assigned to the Trust Preferred Securities
or the Company's debt securities by any "nationally recognized statistical
rating agency," as that term is defined by the Commission for purposes of Rule
436(g)(2) under the 1933 Act, and no such organization shall have publicly
announced that it has under surveillance or review, its rating of the Trust
Preferred Securities or any of the Company's debt securities.
(i) APPROVAL OF LISTING. At Closing Time, the Trust Preferred Securities
shall have been approved for listing on the New York Stock Exchange, subject
only to official notice of issuance.
(j) ADDITIONAL DOCUMENTS. At Closing Time, counsel for the Underwriters
shall have been furnished with such documents and opinions as they may
reasonably require for the purpose of enabling them to pass upon the issuance
and sale of the Securities as herein contemplated, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment of any
of the conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Securities as herein contemplated
shall be reasonably satisfactory in form and substance to the Representatives
and counsel for the Underwriters.
(k) TERMINATION OF AGREEMENT. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Representatives by notice to the Company at
any time at or prior to Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 6, 7 and 8 shall survive any such termination and remain
in full force and effect.
SECTION 6. INDEMNIFICATION.
(a) INDEMNIFICATION OF UNDERWRITERS. The Offerors agree jointly and
severally to indemnify and hold harmless each Underwriter and each person, if
any, who controls any Underwriter within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement (or
any amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or the omission or alleged omission therefrom of a
material fact required to be stated therein or
25
<PAGE>
necessary to make the statements therein not misleading or arising out of any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission; provided that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the fees and disbursements of
counsel chosen by Merrill Lynch), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense is not
paid under (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Offerors by any
Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(b) INDEMNIFICATION OF OFFERORS, DIRECTORS AND OFFICERS. Each Underwriter
severally agrees to indemnify and hold harmless the Offerors, directors of the
Company, the General Partner of the Partnership, the Issuer Trustees of the
Trust, each of the officers of the Offerors who signed the Registration
Statement, and each person, if any, who controls any of the Offerors within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any
and all loss, liability, claim, damage and expense described in the indemnity
contained in subsection (a) of this Section, as incurred, but only with respect
to untrue
26
<PAGE>
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter through Merrill Lynch expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
27
<PAGE>
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for reasonable fees and expenses of counsel, such indemnifying
party agrees that it shall be liable for any settlement of the nature
contemplated by Section 6(a)(ii) effected without its written consent if (i)
such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
SECTION 7. CONTRIBUTION. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Offeror on the one
hand and the Underwriters on the other hand from the offering of the Trust
Preferred Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Offerors on the one hand and of the
Underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.
The relative benefits received by the Offerors on the one hand and the
Underwriters on the other hand in connection with the offering of the Trust
Preferred Securities pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the
Trust Preferred Securities pursuant to this Agreement (before deducting expenses
but after deducting the total underwriting commission received by the
Underwriters) received by the Offerors and the total underwriting commission
received by the Underwriters, in each case as set forth on the cover of the
Prospectus, or, if Rule 434 is used, the corresponding location on the Term
Sheet, bear to the aggregate initial public offering price of the Trust
Preferred Securities as set forth on such cover.
28
<PAGE>
The relative fault of the Offerors on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Offerors or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Offerors and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Trust Preferred Securities underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of any such untrue
or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, the General Partner of the Partnership, the Issuer
Trustees of the Trust, each officer of the Offerors who signed the Registration
Statement, and each person, if any, who controls any of the Offerors within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have
the same rights to contribution as the Company. The Underwriters' respective
obligations to contribute pursuant to this Section 7 are several
29
<PAGE>
in proportion to the principal amount of Securities set forth opposite their
respective names in Schedule A hereto and not joint.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Offerors or any of its subsidiaries submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any Underwriter or controlling
person, or by or on behalf of the Offerors, and shall survive delivery of the
Trust Preferred Securities to the Underwriters.
SECTION 9. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus any material
adverse change in the condition, financial or otherwise, or in the earnings or
business affairs or business prospects of the Company and its subsidiaries taken
as a whole, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Representatives, impracticable to
market the Trust Preferred Securities or to enforce contracts for the sale of
the Trust Preferred Securities, or (iii) if trading in any securities of the
Company has been suspended or materially limited by the Commission or the New
York Stock Exchange or if trading generally on the American Stock Exchange or
the New York Stock Exchange or in the Nasdaq National Market has been suspended
or materially limited, or minimum or maximum prices for trading have been fixed,
or maximum ranges for prices have been required, by any of said exchanges or by
such system or by order of the Commission, the National Association of
Securities Dealers, Inc. or any other governmental authority, or (iv) if a
banking moratorium has been declared by either Federal or New York State
authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4
30
<PAGE>
hereof, and provided further that Sections 1, 6, 7 and 8 shall survive such
termination and remain in full force and effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one or more of
the Underwriters shall fail at Closing Time to purchase the Trust Preferred
Securities which it or they are obligated to purchase under this Agreement (the
"Defaulted Securities"), the Representatives shall have the right, within 24
hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:
if the number of Defaulted Securities does not exceed 10% of the aggregate
number of the Securities to be purchased hereunder, each of the
non-defaulting Underwriters shall be obligated, severally and not jointly,
to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Underwriters, or
if the number of Defaulted Securities exceeds 10% of the aggregate number
of the Securities to be purchased hereunder, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the Representatives or the Company shall
have the right to postpone Closing Time for a period not exceeding seven days in
order to effect any required changes in the Registration Statement or Prospectus
or in any other documents or arrangements. As used herein, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 10.
SECTION 11. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if mailed or transmitted
by any standard form of telecommunication. Notices to the Underwriters shall be
directed to the Representatives at North Tower, World Financial Center, New
York, New York 10281-1201, attention of Office of IBK Counsel; and notice to the
Offerors shall be directed to it at 100 Church Street, 12th Floor, New York,
New York 10080-6512, attention of the Secretary with a copy to the Treasurer at
World
31
<PAGE>
Financial Center, South Tower, 225 Liberty Street, New York, New York
10080-0736.
SECTION 12. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Underwriters and the Offerors and their respective successors.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other than the Underwriters
and the Offerors and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Underwriters and the Offerors and their respective
successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Trust Preferred Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. EFFECT OF HEADINGS. The Article and Section headings herein and
the Table of Contents are for convenience only and shall not affect the
construction hereof.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the Underwriters and the Offerors in accordance with its terms.
Very truly yours,
MERRILL LYNCH & CO., INC.
By:
--------------------
Name:
Title:
MERRILL LYNCH PREFERRED
FUNDING I, L.P.
By: MERRILL LYNCH & CO., INC.,
32
<PAGE>
as General Partner
By:
--------------------
Name:
Title:
MERRILL LYNCH PREFERRED
CAPITAL TRUST I
By:
--------------------
Name:
Title: Regular Trustee
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
A.G. EDWARDS & SONS, INC.
DEAN WITTER REYNOLDS INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
-----------------------------------
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
33
<PAGE>
SCHEDULE A
Number of
Trust Preferred
Name of Underwriter Securities
------------------- --------------
Merrill Lynch, Pierce, Fenner & Smith Incorporated
A.G. Edwards & Sons, Inc.
Dean Witter Reynolds Inc.
PaineWebber Incorporated
Prudential Securities Incorporated
Smith Barney Inc.
Total......................................................
---------
---------
Schedule A-1
<PAGE>
SCHEDULE B
1. The initial public offering price per security for the Trust Preferred
Securities, determined as provided in said Section 2, shall be $25.00.
2. The purchase price per security for the Trust Preferred Securities to
be paid by the several Underwriters shall be $25.00, being an amount equal to
the initial public offering price set forth above.
3. The compensation per Trust Preferred Security to be paid by the
Company to the several Underwriters in respect of their commitments hereunder
shall be $.____; provided, however, that the compensation per Trust Preferred
Security for sales of 10,000 or more Trust Preferred Securities to a single
purchaser shall be $.___.
Schedule B-1
<PAGE>
EXHIBIT A
FORM OF OPINION OF BROWN & WOOD LLP
COMPANY COUNSEL TO BE DELIVERED
PURSUANT TO SECTION 5(b)
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
2. The Company has corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Prospectus and to
enter into and perform its obligations under the Purchase Agreement.
3. The Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify or
be in good standing would not result in a Material Adverse Effect (as defined in
Section 1(a)(v) of the Purchase Agreement).
4. Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S") has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware, has corporate power and authority to
own, lease and operate its properties and to conduct its business as described
in the Prospectus and is duly qualified as a foreign corporation to transact
business and is in good standing in the State of New York; all of the issued and
outstanding capital stock of MLPF&S has been duly authorized and validly issued,
is fully paid and non-assessable and, to the best of our knowledge, is owned by
the Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none of the
outstanding shares of capital stock of MLPF&S was issued in violation of
preemptive or other similar rights of any securityholder of MLPF&S.
5. The Purchase Agreement has been duly authorized, executed and delivered
by the Company.
6. Each Indenture has been duly authorized, executed, and delivered by
the applicable Investment Affiliate and, in the case of the Subsidiary
Debentures, the Debenture Guarantor and, when duly authorized, executed and
delivered by the Debt Trustee, will constitute a valid and legally binding
obligation of such Investment Affiliate and, in the case of the Subsidiary
Debentures, the Debenture Guarantor, enforceable against such
A-1
<PAGE>
Investment Affiliate and, in the case of the Subsidiary Debentures, the
Debenture Guarantor, in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or affecting creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless of
whether the enforcement is considered in a proceeding in equity or at law). The
Indenture in respect of the Company Debentures has been duly qualified under the
1939 Act.
(i) The Debentures have been duly authorized, executed and delivered
by the applicable Investment Affiliate and, when duly authenticated by the Debt
Trustee and upon payment and delivery as described in the Purchase Agreement
will constitute valid and legally binding obligations of such Investment
Affiliate enforceable against such Investment Affiliate in accordance with their
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether the enforcement is
considered in a proceeding in equity or at law).
(ii) The Investment Guarantees in respect of each of the Subsidiary
Debentures have been duly authorized, executed and issued by the Debenture
Guarantor and, when duly authorized, executed and delivered by the Debt Trustee
and upon payment and delivery as described in the Purchase Agreement will
constitute valid and legally binding obligations of the Debenture Guarantor
enforceable against the Debenture Guarantor in accordance with their terms
except as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting creditors'
rights generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether the enforcement is considered in a
proceeding in equity or at law). The Investment Guarantee has been duly
qualified under the 1939 Act.
(iii) The Trust Preferred Securities Guarantee Agreement has been duly
authorized, executed and delivered by the Company and assuming due
authorization, execution and delivery by the Guarantee Trustee, will constitute
a valid and legally binding obligation of the Company, enforceable against the
Company in accordance with its terms except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether the
enforcement is considered in a proceeding in equity or at law). The Trust
A-2
<PAGE>
Preferred Securities Guarantee Agreement has been duly qualified under the 1939
Act.
(iv) The Partnership Guarantee Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and legally
binding obligation of the Company, enforceable against the Company in accordance
with its terms except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether the enforcement is
considered in a proceeding in equity or at law).
(v) The Declaration has been duly authorized, executed and delivered
by the Company and has been duly qualified under the 1939 Act.
(vi) The Partnership Agreement has been duly authorized, executed and
delivered by the Company.
(vii) No consent, approval, authorization, order, registration or
qualification of or with any Federal or New York governmental agency or body or
any Delaware governmental agency or body acting pursuant to the Delaware General
Corporation Law or, to our knowledge, any Federal or New York court or any
Delaware court acting pursuant to the Delaware General Corporation Law is
required for the issue and sale by the Offerors of the Offered Securities, the
issuance by the Investment Affiliates of the Debentures, the issuance of the
Investment Guarantees, the Partnership Guarantee and the Trust Guarantee by the
Company and the compliance by the Offerors with all of the provisions of the
Purchase Agreement, except for (a) the registration under the 1933 Act and the
1934 Act of the Offered Securities and (b) such consents, approvals,
authorizations, registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and distribution of
the Trust Preferred Securities and the Trust Preferred Securities Guarantee by
the Underwriters.
(viii) The statements made in the Prospectus under the captions "Capital
Preferred Trust", "Capital Preferred Funding, L.P.", "Description of Trust
Preferred Securities", "Description of Trust Guarantee", "Description of
Partnership Preferred Securities", and "Description of the Partnership
Guarantee", insofar as such statements purport to constitute summaries of the
terms of the Offered Securities, constitute accurate summaries of the terms of
the Offered Securities.
A-3
<PAGE>
(ix) We hereby confirm (a) our opinions set forth in the Prospectus
under the caption "Certain Federal Income Tax Considerations" and (b) that,
subject to the qualifications set forth therein, the discussion set forth in the
Prospectus under such caption is an accurate summary of the United States
federal income tax matters described therein.
(x) The Registration Statement has been declared effective under the
1933 Act. Any required filing of the Prospectus pursuant to Rule 424(b) has
been made in the manner and within the time period required by Rule 424(b); and
to the best of our knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued under the 1933 Act and no proceedings for
that purpose have been initiated or are pending or threatened by the Commission.
(xi) Neither the Trust nor the Partnership is required to be
registered as an "investment company" under the 1940 Act.
(xii) Each of the Company and the Investment Subsidiaries is not, and
after giving effect to the offering and sale of the Trust Preferred Securities
and the application of the net proceeds therefrom as described in the Prospectus
will not be, an "investment company" as such term is defined in the 1940 Act.
We have participated in conferences with officers and representatives of
the Company, representatives of the independent accountants of the Company and
the Underwriters at which the contents of the Registration Statement and
Prospectus and related matters were discussed and, although we are not passing
upon or assuming responsibility for the accuracy, completeness or fairness of
the statements contained or incorporated by reference in the Registration
Statement and Prospectus and have made no independent check or verification
thereof, on the basis of the foregoing, nothing has come to our attention that
would lead us to believe that the Registration Statement or any post-effective
amendment thereto (except for financial statements and schedules and other
financial data included or incorporated by reference therein or omitted
therefrom and the Form T-1s, as to which we make no statement), at the time the
Registration Statement or any post-effective amendment thereto (including the
filing of the Company's Annual Report on Form 10-K with the Commission) became
effective or at the date of the applicable Terms Agreement, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus or any amendment or supplement thereto (except for financial
statements and schedules
A-4
<PAGE>
and other financial data included or incorporated therein or omitted therefrom,
as to which we make no statement), at the time the Prospectus was issued, at the
time any such amended or supplemented prospectus was issued or at the Closing
Time, included or includes an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
In rendering such opinion, such counsel may rely, as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. In
addition, such counsel may rely, as to all matters governed by the laws of
jurisdictions other than the law of the State of New York and the federal law of
the United States and the General Corporation Law of the State of Delaware, upon
the opinions of counsel satisfactory to the Representatives.
A-5
<PAGE>
EXHIBIT B
FORM OF OPINION OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM
SPECIAL DELAWARE COUNSEL TO THE COMPANY, THE TRUST, AND THE
PARTNERSHIP TO BE DELIVERED
PURSUANT TO SECTION 5(b).
(i) The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Trust Act with the power and
authority to own property and to conduct its business as described in the
Registration Statement and Prospectus and to enter into and perform its
obligations under each of the Purchase Agreement, the Trust Preferred
Securities, the Trust Common Securities and the Declaration; the Trust is duly
qualified to transact business as a foreign company and is in good standing in
any other jurisdiction in which such qualification and good standing is
necessary, except to the extent that the failure to so qualify or be in good
standing would not have a material adverse effect on the Trust; the Trust is not
a party to or otherwise bound by any agreement other than those described in
thee Prospectus.
(ii) The Trust Common Securities have been duly authorized by the
Declaration and, when issued and delivered by the Trust to the Company against
payment therefor as described in the Registration Statement and Prospectus, will
be validly issued and (subject to the terms of the Declaration) fully paid
undivided beneficial interests in the assets of the Trust and will conform to
all statements relating thereto contained in the Prospectus; the issuance of the
Trust Common Securities is not subject to preemptive or other similar rights.
(iii) The Trust Preferred Securities have been duly authorized by the
Declaration and, when issued and delivered against payment of the consideration
as set forth in the Purchase Agreement, will be validly issued and (subject to
the terms of the Declaration) fully paid and non-assessable undivided beneficial
interests in the Trust, will be entitled to the benefits of the Declaration and
will conform to all statements relating thereto contained in the Prospectus;
under the Declaration or Delaware law the Trust Preferred Securities are not
subject to preemptive or other similar rights; and holders of Trust Preferred
Securities will be entitled to the same limitation of personal liability under
Delaware law as extended to stockholders of private corporations for profit.
(iv) The Partnership has been duly created and is validly existing in
good standing as a limited partnership under the Delaware Partnership Act with
the power and authority to own
C-1
<PAGE>
property and to conduct its business as described in the Registration Statement
and Prospectus and to enter into and perform its obligations under each of the
Purchase Agreement, the Partnership Preferred Securities and the Partnership
Agreement; the Partnership is duly qualified to transact business as a foreign
company and is in good standing in any other jurisdiction in which such
qualification is necessary, except to the extent that the failure to so qualify
or be in good standing would not have a material adverse effect on the
Partnership; the Partnership is not a party to or otherwise bound by any
agreement other than those described in the Prospectus.
(v) The Partnership Preferred Securities have been duly authorized
and, when issued and delivered pursuant to the Partnership Agreement against
payment of the consideration set forth therein, will represent valid partnership
interests in the Partnership will be entitled to the benefits of the Partnership
Agreement and will conform to the description thereof in the Prospectus; the
issuance of the Partnership Preferred Securities is not subject to preemptive or
other similar rights; assuming that the holders of Partnership Preferred
Securities in their capacities as such do not participate in the control of the
business of the Partnership, the holders of the Partnership Preferred
Securities, in their capacities as such, will have no liability to third parties
in excess of their obligations to make payments provided for in the Limited
Partnership Agreement; to our knowledge, there are no provisions in the
Partnership Agreement which would permit the holders of Partnership Preferred
Securities in their capacities as such to participate in the control of the
business of the Partnership.
(vi) Assuming the Declaration has been duly authorized by the Company,
the Declaration has been duly executed and delivered by the Company and the
Trustees, and assuming due authorization, execution and delivery of the
Declaration by the Institutional Trustee, the Declaration constitutes a valid
and binding obligation of the Company and the Regular Trustees, enforceable
against the Company and the Regular Trustees in accordance with its terms,
except to the extent that enforcement thereof may be limited by the Bankruptcy
Exceptions and conforms to all statements relating thereto in the Prospectus.
(vii) Assuming the Partnership Agreement has been duly authorized by
the Company, the Partnership Agreement has been duly executed and delivered by
the Company and constitutes a valid and legally binding obligation of the
Company, enforceable against the Company in accordance with its terms, except to
the extent that enforcement thereof may be limited by the Bankruptcy Exceptions
and conforms to the description thereof in the Prospectus.
C-2
<PAGE>
(viii) The execution, delivery and performance of the Transaction
Documents by the Offerors and the consummation of the transactions contemplated
herein and therein and compliance by the Offerors with their respective
obligations do not and will not result in any violation of the Declaration or
Certificate of Trust or the Partnership Agreement or the Certificate of
Partnership and do not and will not conflict with, or result in a breach of any
of the terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Trust or the Partnership under (A) any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or instrument in each
case governed by Delaware law to which the Trust or the Partnership is a party
or by which they may be bound or to which any of their properties may be subject
(except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not have a material adverse effect on the condition
(financial or otherwise), earnings, business affairs or business prospects of
the Company subsidiaries taken as a whole or (B) any existing applicable law,
rule, regulation, judgment, order or decree of any Delaware government,
governmental instrumentality or court, domestic or foreign, or any Delaware
regulatory body or administrative agency or other governmental body having
jurisdiction over the Offerors of their respective properties.
(ix) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any Delaware court or Delaware
governmental authority or agency (other than as may be required under the
securities or blue sky laws of the state of Delaware, as to which we need
express no opinion) is necessary or required in connection with the due
authorization, execution and delivery of the Purchase Agreement or the due
execution, delivery or performance of the Transaction Documents by the Offerors
or for the offering, issuance, sale or delivery of the Offered Securities.
C-3
<PAGE>
EXHIBIT C
FORM OF OPINION OF SEWARD & KISSEL
COUNSEL FOR THE PROPERTY TRUSTEE TO BE
DELIVERED PURSUANT TO SECTION 5(d)
(i) The Chase Manhattan Bank is a national banking association with
trust powers, is duly organized, is validly existing and is in good standing
under the laws of the United States with all necessary power and authority to
execute, deliver and to carry out and perform its obligations under the terms of
the Declaration and each of the Trust Preferred Guarantees.
(ii) Chase Manhattan Bank Delware is a Delaware banking corporation
with trust powers, is duly organized, is validly existing and is in good
standing under the laws of the State of Delaware with all necessary power and
authority to execute, deliver and to carry out and perform its obligations under
the terms of the Declaration.
(iii) The execution, delivery and performance by the Property Trustee
and the Delaware Trustee of the Declaration and the execution, delivery and
performance by the Guarantee Trustee of the Trust Preferred Guarantee have been
duly authorized by all necessary corporate action on the part of the
Institutional Trustee and the Delaware Trustee, in the case of the Declaration,
and the Guarantee Trustee, in the case of the Trust Preferred Guarantee. The
Declaration and the Trust Preferred Guarantee have been duly executed and
delivered by the Property Trustee and the Delaware Trustee, in the case of the
Declaration, and the Guarantee Trustee, in the case of the Trust Preferred
Guarantee, and constitute the legal, valid and binding obligations of the
Property Trustee and the Delaware Trustee, in the case of the Declaration, and
the Guarantee Trustee, in the case of the Trust Preferred Guarantee, enforceable
against the Property Trustee and the Delaware Trustee, in the case of the
Declaration, and the Guarantee Trustee, in the case of the Trust Preferred
Guarantee, in accordance with their terms, except as enforcement thereof may be
limited by the Bankruptcy Exceptions.
(iv) The execution, delivery and performance of the Declaration and
the Trust Preferred Guarantee by the Property Trustee and the Delaware Trustee,
in the case of the Declaration, and the Guarantee Trustee, in the case of the
Trust Preferred Guarantee, do not conflict with or constitute a breach of the
Articles of Organization or Bylaws of the Property Trustee or the Delaware
Trustee, in the case of the Declaration, or the Guarantee Trustee. in the case
of the Trust Preferred Guarantee
D-1
<PAGE>
(v) No consent, approval or authorization of, or registration with or
notice to, any Illinois, Delaware or federal banking authority is required for
the execution, delivery or performance by the Property Trustee or the Delaware
Trustee of the Declaration or by the Guarantee Trustee of the Trust Preferred
Guarantee.
D-2
<PAGE>
=======================================
AMENDED AND RESTATED DECLARATION
OF TRUST
MERRILL LYNCH PREFERRED CAPITAL TRUST I
Dated as of December __, 1996
=======================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
INTERPRETATION AND DEFINITIONS..................... 2
SECTION 1.1 Definitions........................................ 2
ARTICLE II
TRUST INDENTURE ACT.......................... 12
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.............................. 16
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................................ 32
SECTION 4.1 Responsibilities of the Sponsor.................... 32
SECTION 4.2 Indemnification and Expenses of the
Trustee............................................ 33
ARTICLE V
TRUST COMMON SECURITIES HOLDER..................... 33
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................................ 33
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............................. 40
SECTION 7.1 Distributions...................................... 40
ARTICLE VIII
ISSUANCE OF TRUST SECURITIES...................... 41
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............................................ 52
SECTION 8.8 Acceptance of Guarantee and Agreements,
Limited Partnership Agreement...................... 53
ARTICLE IX
TERMINATION AND LIQUIDATION OF THE TRUST................ 53
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......................... 56
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............ 60
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............................... 66
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........................ 68
SECTION 13.1 Amendments......................................... 68
SECTION 13.2 Meetings of the Holders of Trust Securities;
Action by Written Consent.......................... 72
ARTICLE XIV
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE.......................... 73
SECTION 14.1 Representations and Warranties of
Property Trustee................................... 73
SECTION 14.2 Representations and Warranties of Delaware
Trustee............................................ 74
ARTICLE XV
MISCELLANEOUS............................. 75
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............................. 77
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 __, 1996
AMENDED AND RESTATED DECLARATION OF TRUST (the "Declaration") dated
and effective as of December __, 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 "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 hereof 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 with the result that 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 __, 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.
"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.
"Global Certificate" has the meaning set forth in Section 10.4 of
this Declaration.
"Global Trust Services 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
4
<PAGE>
is located at 450 West 33rd Street, 15th Floor, New York, New York 10001.
"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 __, 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 two authorized officers 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.
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"Partnership Guarantee" means the Partnership Guarantee Agreement
dated as of December __, 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.
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"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 Property Trustee,
any officer within the Global Trust Services Office of the Property Trustee,
including any vice-president, any assistant vice-president, any assistant
secretary, the treasurer, any assistant treasurer or other officer of the Global
Trust Services Office of the Property Trustee customarily performing functions
similar to those performed by any of the above designated officers, who has
direct responsibility for the administration of the Trust, and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's 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.
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"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.
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"Trust Common Securities Guarantee" means the Trust Common
Securities Guarantee Agreement dated as of December __, 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
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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 1 of each year commencing May 1, 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 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 (b) 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.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
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(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 Agreement or the Partnership
Preferred Securities where such consent shall be required; and
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(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 Trust Preferred Securities and
the Trust Common Securities to the extent the Partnership Preferred
Securities are redeemed; and
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(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
(ii) a Successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 6.7.
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(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
(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
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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 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 limitations on liability
afforded to the Property Trustee under this Declaration and the Trust
Indenture Act;
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(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;
(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
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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 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
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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 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 available to the Property Trustee
shall be construed to be a duty.
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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).
(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,
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consolidate, amalgamate, merge with or into, or be replaced by, or convey,
transfer or Lease its properties and assets as an entirety or as an entity 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;
(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
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(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.
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
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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.
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
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(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).
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
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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
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
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(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 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
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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.
(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
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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.
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
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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.
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 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.
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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 ____% 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 __% 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.
(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
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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 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.
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. 8,000,000 Trust Preferred Securities
of the Trust with an aggregate liquidation amount with respect to the
assets of the Trust of two hundred million dollars ($200,000,000) and a
liquidation amount with respect to the assets of the Trust of $25 per
preferred security, are hereby designated for the purpose of
identification only as ____% Trust Originated Preferred
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Securities(SM)(1) (the "Trust Preferred Securities"). The Trust Preferred
Security Certificates evidencing the Trust Preferred Securities shall be
substantially in the form of Exhibit A-1 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice or to conform to the rules of any stock
exchange on which the Trust Preferred Securities are listed.
(ii) Trust Common Securities. Trust Common Securities of the
Trust with an aggregate liquidation amount with respect to the assets of
the Trust of
($ ) 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 ____% 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.
(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
- ----------
(1) "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
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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.
(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
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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.
(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 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
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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 amount 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, 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
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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 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
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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.
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 Guaran-
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tees, (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 amount 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 amount 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
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
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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
amount 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 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.
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(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 the distribution
or trading of such Trust Securities.
(j) Holders of the Trust Preferred Securities will have no rights to
appoint or remove the Regular Trustees, who may 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,
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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 amount of Partnership
Preferred Securities affected thereby, only the Holders 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
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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 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
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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.
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
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(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.
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
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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 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 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 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 (i) the period
commencing upon the formation of the Partnership and ending on the last Friday
in December, 1996, and (ii) any subsequent period commencing on the day
immediately succeeding the last Friday in December of a calendar year and ending
on the last Friday in December of the immediately succeeding 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.
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(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. 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
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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 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'
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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);
(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
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the aggregate liquidation amount 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 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;
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(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;
(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.
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(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 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
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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
requirements, 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 national banking association with
trust powers, duly organized, validly existing and in good standing under
the laws of the United States, 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;
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(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
(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
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(d) The Delaware Trustee is an entity which has its principal place
of business in the State of Delaware.
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 10281
Attention: Theresa Lang
(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 Global Trust Services
Office to the attention of John J. Chashin, Senior Trust Officer (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):
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MERRILL LYNCH PREFERRED CAPITAL TRUST I
c/o Merrill Lynch & Co., Inc.
World Financial Center
South Tower
225 Liberty Street
New York, New York 10281
Attention: Theresa Lang
(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.
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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.
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IN WITNESS WHEREOF, each of the undersigned has caused these
presents to be executed as of the day and year first above written.
-----------------------------------------
Theresa Lang, as Regular Trustee
-----------------------------------------
Stanley Schaefer, as Regular Trustee
Chase Manhattan Bank Delaware,
as Delaware Trustee
By:
-----------------------------------
Name: John J. Cashin
Title: Senior Trust Officer
The Chase Manhattan Bank,
as Property Trustee
By:
-----------------------------------
Name: John J. Cashin
Title: Senior Trust Officer
Merrill Lynch & Co., Inc.,
as Sponsor
By:
--------------------------------------
Name: Theresa Lang
Title: Treasurer
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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>
TP-1 [ ]
CUSIP NO. _________
Certificate Evidencing Trust Preferred Securities
of
MERRILL LYNCH PREFERRED CAPITAL TRUST I
____% 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 ____% 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
__, 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.
2
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate this
____ day of December, 1996.
MERRILL LYNCH PREFERRED CAPITAL TRUST I
-----------------------------------------
Name: Theresa Lang,
as Regular Trustee
(See reverse for additional terms)
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
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 ___% 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 ____% 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
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.
6
<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)
A2-1
<PAGE>
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
CS-1 [ ]
Certificate Evidencing Trust Common Securities
of
MERRILL LYNCH PREFERRED CAPITAL TRUST I
____% 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 _____ common securities of the Trust representing undivided
beneficial ownership interests in the assets of the Trust designated the ____%
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 __, 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.
A2-2
<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
____ day of December, 1996.
MERRILL LYNCH PREFERRED CAPITAL TRUST I
_________________________________________
Theresa Lang,
as Regular Trustee
(See reverse for additional terms)
A2-3
<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
A2-4
<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 ____% 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
____% 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
A2-5
<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.
A2-6
<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)
A2-7
<PAGE>
AMENDED AND RESTATED AGREEMENT
OF
LIMITED PARTNERSHIP
OF
MERRILL LYNCH PREFERRED FUNDING I, L.P.
Dated as of December __, 1996
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINED TERMS
Section 1.1 DEFINITIONS........................................ 1
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 PRE-
FERRED 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 INSTRU-
MENTS.............................................. 35
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.................................. 36
Section 8.2 ACCOUNTING METHOD.................................. 37
Section 8.3 ANNUAL AUDIT....................................... 37
ARTICLE IX
PAYMENT OF EXPENSES
Section 9.1 PAYMENT OF TRUST EXPENSES AND PARTNER-
SHIP 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........................................... 39
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.................................... 42
Section 11.4 LIABILITY.......................................... 43
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............ 48
ii
<PAGE>
Page
----
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.............................. 52
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..................... 56
Section 13.3 LIQUIDATION........................................ 58
Section 13.4 DISTRIBUTION IN LIQUIDATION........................ 59
Section 13.5 RIGHTS OF LIMITED PARTNERS......................... 59
Section 13.6 TERMINATION........................................ 59
ARTICLE XIV
AMENDMENTS AND MEETINGS
Section 14.1 AMENDMENTS......................................... 60
Section 14.2 AMENDMENT OF CERTIFICATE........................... 60
Section 14.3 MEETINGS OF PARTNERS............................... 60
ARTICLE XV
MISCELLANEOUS
Section 15.1 NOTICES............................................ 62
Section 15.2 POWER OF ATTORNEY.................................. 63
Section 15.3 ENTIRE AGREEMENT................................... 63
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................................ 64
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
iii
<PAGE>
AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
MERRILL LYNCH PREFERRED FUNDING I, L.P.
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 __, 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:
ARTICLE I
DEFINED TERMS
Section 1.1 DEFINITIONS. Unless the context otherwise requires, the
terms defined in this Article I
<PAGE>
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.
"Closing Date" has the meaning set forth in Section 1.1 of the
Declaration.
2
<PAGE>
"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 __, 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 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
3
<PAGE>
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 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.
4
<PAGE>
"Fiscal Period" means each calendar quarter.
"Fiscal Year" means (i) the period commencing upon the formation of
the Partnership and ending on the last Friday in December, 1996, and (ii) any
subsequent period commencing on the day immediately succeeding the last Friday
in December of a calendar year and ending on the last Friday in December of the
immediately succeeding 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 __, 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.
5
<PAGE>
"Initial Company Debenture" has the meaning set forth in Section
7.1(b) of this Agreement.
"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.
6
<PAGE>
"Liquidator" has the meaning specified in Section 13.3 of this
Agreement.
"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.
7
<PAGE>
"Partnership Enforcement Event" has the meaning set forth in Section
6.2(h)(i) of this Agreement.
"Partnership Guarantee" means the Partnership Guarantee Agreement
dated as of December __, 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
<PAGE>
"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 __,
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.
9
<PAGE>
"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.
10
<PAGE>
"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 __, 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 __, 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 10281
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.
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(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.
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.
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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.
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
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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.
(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.
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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 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 termi-
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nation 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 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
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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.
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
$206,186,000 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 ac-
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quired by the Partnership shall be canceled. The Partnership 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 more than 50% of which is owned by the Company,
either directly or indirectly, 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;
provided, however, that persons otherwise eligible to vote 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 Partnership Preferred
Securities, liquidation preference $25 per Partnership Preferred Security, are
hereby designated as " % 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 % of the stated liquidation preference of $25
per Partnership Preferred 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. Such Distributions shall, from the date of
original issue, accumulate and be cumulative and shall be payable
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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 __% 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 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
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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.
(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
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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 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
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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.
(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
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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 Distributions (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
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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 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
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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
fullest extent permitted by law on behalf of the Partnership directly institute
a proceeding against such Investment
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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 shall continue as
General Partner and shall retain all rights under this Agreement, including the
right to
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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 Securities and its consequences;
provided that, if the underlying Investment Event of Default:
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(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, however, 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
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not be effective without the prior or concurrent approval of at least a majority
in liquidation preference 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 more than 50% of which is owned by the
Company, either directly or indirectly, 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 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 Preferred
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Securities; provided, however, that persons otherwise eligible to vote 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") in the aggregate principal amount of $_____________
______________ 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 Initial Debentures investment grade at the time such
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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.
(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).
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
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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 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
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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:
(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,
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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.
Section 10.3 PRIORITY. No Limited Partner shall have priority over
any other Limited Partner as to Partnership allocations or distributions.
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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;
(iii) to issue Partnership Preferred Securities and to admit Limited
Partners in connection therewith in accordance with this Agreement;
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(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
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 Part-
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nership 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) 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 assumes 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
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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 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
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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;
(iii) possess Partnership property for other than a Partnership
purpose;
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(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, 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
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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 benefits and burdens relating to
such interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or princi-
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ples. 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.
(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
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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 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
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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 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
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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
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 na-
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tionally 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 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. Certifi-
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cate 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 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
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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 or for
maintaining, supervising or reviewing any records relating to such
beneficial ownership interests; and
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(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 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
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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 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
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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 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
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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.
(c) Upon dissolution of the Partnership, the Liquidator shall
promptly notify the Partners of such dissolution.
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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 normal customary and competitive rates for its
services to the Partnership as reasonably determined by all the Limited
Partners.
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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 meet-
60
<PAGE>
ing of Holders if directed to do so by Holders of no less 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
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<PAGE>
provided in the proxy. Every proxy shall be revocable at 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 10281
Attention: Treasurer
62
<PAGE>
(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 10281
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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<PAGE>
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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<PAGE>
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.
65
<PAGE>
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:___________________________________
Name: Theresa Lang
Title: Senior Vice President
and Treasurer
INITIAL LIMITED PARTNER:
MERRILL LYNCH GROUP, INC.
a Delaware corporation
By:___________________________________
Name: Theresa Lang
Title: President
66
<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.]
<PAGE>
PS-1 [_________________________________]
Certificate Evidencing Partnership Preferred Securities
of
MERRILL LYNCH PREFERRED FUNDING I, L.P.
____% 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 December __, 1996 (the "Holder") is the registered owner of
preferred securities of the Partnership representing limited partner interests
in the Partnership designated the ____% 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 __, 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.
<PAGE>
IN WITNESS WHEREOF, the Partnership has executed this certificate
this __ 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)
2
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Partnership Preferred Security will be
fixed at a rate per annum of ___% 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 9.06 % 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
<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.
2
<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)
<PAGE>
====================================
TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT
Merrill Lynch Preferred Capital Trust I
Dated as of December __, 1996
====================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation....................... 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application..................... 6
SECTION 2.2 Lists of Holders of Securities....................... 6
SECTION 2.3 Reports by the Trust Preferred Guarantee
Trustee.............................................. 7
SECTION 2.4 Periodic Reports to Trust Preferred Guar-
antee Trustee........................................ 7
SECTION 2.5 Evidence of Compliance with Conditions
Precedent............................................ 7
SECTION 2.6 Events of Default; Waiver............................ 8
SECTION 2.7 Event of Default; Notice............................. 8
SECTION 2.8 Conflicting Interests................................ 8
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
TRUST PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Trust Preferred
Guarantee Trustee.................................... 8
SECTION 3.2 Certain Rights of Trust Preferred Guarantee
Trustee.............................................. 11
SECTION 3.3. Not Responsible for Recitals or Issuance
of Trust Preferred Securities Guarantee.............. 13
ARTICLE IV
TRUST PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Trust Preferred Guarantee Trustee; Eligibility....... 13
SECTION 4.2 Appointment, Removal and Resignation of
Trust Preferred Guarantee Trustee.................... 14
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee............................................ 15
SECTION 5.2 Waiver of Notice and Demand.......................... 15
SECTION 5.3 Obligations Not Affected............................. 15
SECTION 5.4 Rights of Holders........................................ 16
SECTION 5.5 Guarantee of Payment..................................... 17
<PAGE>
Page
----
SECTION 5.6 Subrogation.......................................... 17
SECTION 5.7 Independent Obligations.............................. 17
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions........................... 18
SECTION 6.2 Ranking.............................................. 18
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.......................................... 19
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation.......................................... 19
SECTION 8.2 Indemnification...................................... 20
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns............................... 20
SECTION 9.2 Amendments........................................... 20
SECTION 9.3 Notices.............................................. 20
SECTION 9.4 Benefit.............................................. 21
SECTION 9.5 Governing Law........................................ 21
ii
<PAGE>
TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT
This TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT (the "Trust
Preferred Securities Guarantee"), dated as of December __, 1996, is executed and
delivered by Merrill Lynch & Co., Inc., a Delaware corporation (the "Guarantor"
or the "Company"), and The Chase Manhattan Bank, a national banking association,
as trustee (the "Trust Preferred Guarantee Trustee"), for the benefit of the
Holders (as defined herein) from time to time of the Trust Preferred Securities
(as defined herein) of Merrill Lynch Preferred Capital Trust I, a Delaware
statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of December __, 1996, among the trustees of the
Issuer named therein, Merrill Lynch & Co., Inc., as sponsor, and the holders
from time to time of undivided beneficial interests in the assets of the Issuer,
the Issuer is issuing on the date hereof Trust Originated Preferred
Securities, having an aggregate liquidation amount of $ , designated
the ____% Trust Originated Preferred Securities (the "Trust Preferred
Securities");
WHEREAS, as incentive for the Holders to purchase the Trust
Preferred Securities, the Guarantor desires irrevocably and unconditionally to
agree, to the extent set forth in this Trust Preferred Securities Guarantee, to
pay to the Holders of the Trust Preferred Securities the Guarantee Payments (as
defined herein) and to make certain other payments on the terms and conditions
set forth herein and;
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Trust Common Securities Guarantee"), with substantially
identical terms to this Trust Preferred Securities Guarantee for the benefit of
the holders of the Trust Common Securities (as defined herein), 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 default has occurred and is continuing with respect to an Affiliate
Investment Instrument, the rights of holders of the Trust Common Securities to
receive Guarantee Payments under the Trust Common Securities Guarantee are
subordinated, to the extent and in the manner set forth in the Trust Common
Securities Guarantee, to the rights of Holders of Trust Preferred Securities to
receive Guarantee Payments under this Trust Preferred Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Trust Preferred Securities, which purchase the Guarantor hereby acknowledges
shall benefit the Guarantor, the
<PAGE>
Guarantor executes and delivers this Trust Preferred Securities Guarantee for
the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Trust Preferred Securities Guarantee, unless the context
otherwise requires:
(a) Capitalized terms used in this Trust Preferred Securities
Guarantee but not defined in the preamble above have the
respective meanings assigned to them in this Section 1.1;
(b) Capitalized terms used in this Trust Preferred Securities
Guarantee but not otherwise defined herein shall have the
meanings assigned to them in the Declaration or the
Partnership Agreement, as the case may be.
(c) a term defined anywhere in this Trust Preferred Securities
Guarantee has the same meaning throughout;
(d) all references to "the Trust Preferred Securities Guarantee"
or "this Trust Preferred Securities Guarantee" are to this
Trust Preferred Securities Guarantee as modified, supplemented
or amended from time to time;
(e) all references in this Trust Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of this
Trust Preferred Securities Guarantee, unless otherwise
specified;
(f) a term defined in the Trust Indenture Act has the same meaning
when used in this Trust Preferred Securities Guarantee, unless
otherwise defined in this Trust Preferred Securities Guarantee
or unless the context otherwise requires; and
(g) a reference to the singular includes the plural
and vice versa.
"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.
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.
"Global Trust Services Office" means the principal trust office of
the Trust Preferred Guarantee Trustee in the Borough of Manhattan, the City of
New York, which office at the date hereof is located at 450 West 33rd Street,
15th Floor, New York, New York 10001.
"Covered Person" means any Holder or beneficial owner of Trust
Preferred Securities.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Trust Preferred Securities Guarantee.
"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 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.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Trust Preferred Securities, to the
extent not paid or made by the Issuer: (i) any accumulated and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Trust Preferred Securities to the extent the Issuer has funds legally
available therefor at such time, (ii) the redemption price, including all
accumulated and unpaid Distributions to the date of redemption (the "Redemption
Price"), to the extent the Issuer has funds legally available therefor at such
time, with respect to any Trust Preferred Securities called for redemption by
the Issuer, and (iii) upon a voluntary or involuntary termination or liquidation
of the Issuer (other than in connection with the distribution of Partnership
Preferred Securities to the Holders in exchange for Trust Preferred Securities
as provided in the Declaration), the lesser of (a) the aggregate of the
liquidation amount and all accumulated and unpaid Distributions on the Trust
Preferred Securities to the date of payment, to the extent the Issuer has funds
legally available therefor, and (b) the amount of assets of the Issuer, after
satisfaction of all liabilities, remaining available for distribution to Holders
in liquidation of the Issuer (in either case, the "Liquidation Distribution").
"Holder" shall mean any holder, as registered on the books and
records of the Issuer of any Trust Preferred Securities; provided, however,
that, in determining whether the holders of the requisite percentage of Trust
Preferred Securities have given any request, notice, consent or waiver
hereunder, "Holder"
3
<PAGE>
shall not apply to Trust Preferred Securities beneficially owned by the
Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Trust Preferred Guarantee Trustee,
any Affiliate of the Trust Preferred Guarantee Trustee, or any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Trust Preferred Guarantee Trustee.
"Majority in liquidation amount of the Trust Preferred Securities"
means, except as provided by the Trust Indenture Act, a vote by Holder(s) of
Trust Preferred Securities, voting separately as a class, of more than 50% of
the aggregate liquidation amount (including the amount that would be paid on
redemption, liquidation or otherwise, plus accumulated and unpaid Distributions
to the date upon which the voting percentages are determined) of all Trust
Preferred Securities.
"Officers' Certificate" means, with respect to any Person, 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 Trust Preferred
Securities Guarantee shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definition 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.
"Partnership Agreement" means the Amended and Restated Agreement of
Limited Partnership of the Partnership, dated as of December __, 1996, among
Merrill Lynch & Co., Inc., a Delaware corporation, as general partner, Merrill
Lynch Group, Inc.,
4
<PAGE>
Delaware corporation, as initial limited partner and such other persons who
become limited partners as provided therein.
"Partnership Preferred Securities" means those securities
representing limited partnership interests in the Partnership.
"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.
"Responsible Officer" means, with respect to the Trust Preferred
Guarantee Trustee, any officer within the Global Trust Services Office of the
Trust Preferred Guarantee Trustee, including any vice president, any assistant
vice president, any assistant secretary, the treasurer, any assistant treasurer
or other officer of the Global Trust Services Office 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 that officer's knowledge of and familiarity with the
particular subject.
"Rights Agreement" means the Rights Agreement dated as of December
16, 1987 between the Company and The Chase Manhattan Bank (successor by merger
to Manufacturers Hanover Trust Company), or any successor to such Rights
Agreement.
"Successor Trust Preferred Guarantee Trustee" means a successor
Trust Preferred Guarantee Trustee possessing the qualifications to act as Trust
Preferred Guarantee Trustee under Section 4.1.
"Trust Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
"Trust Indenture Act" means the Trust Indenture Act of
1939, as amended.
"Trust Preferred Guarantee Trustee" means The Chase Manhattan Bank,
a national banking association, until a Successor Trust Preferred Guarantee
Trustee has been appointed and has accepted such appointment pursuant to the
terms of this Trust Preferred Securities Guarantee and thereafter means each
such Successor Trust Preferred Guarantee Trustee.
"Trust Securities" means the Trust Common Securities
together with the Trust Preferred Securities.
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ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Trust Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this Trust
Preferred Securities Guarantee and shall, to the extent applicable, be governed
by such provisions; and
(b) if and to the extent that any provision of this Trust Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Trust Guarantee Trustee shall preserve in as current a form
as is reasonably practicable the most recent list available to it of the names
and addresses of Holders of Trust Preferred Securities. If the Trust Guarantee
Trustee is not the Registrar, the Guarantor shall furnish to the Trust Guarantee
Trustee semi-annually on or before June 15 and December 15 in each year, and at
such other times as the Trust Guarantee Trustee may request in writing, a list,
in such form and as of such date as the Trust Guarantee Trustee may require,
containing all the information in the possession or control of the Registrar,
the Guarantor or any of its Paying Agents other than the Trust Guarantee Trustee
as to the names and addresses of Holders of Trust Preferred Securities. If there
are unregistered securities outstanding, even if the Trust Guarantee Trustee is
the Registrar, the Company shall furnish to the Trust Guarantee Trustee such a
list containing such information with respect to Holders of such unregistered
securities only.
(b) The Trust Preferred Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 Reports by the Trust Preferred Guarantee Trustee
Within 60 days after December 15 of each year, commencing December
15, 1997, the Trust Preferred Guarantee 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 Trust Preferred Guarantee Trustee
shall also comply with the requirements of Section 313(d) of the Trust Indenture
Act.
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SECTION 2.4 Periodic Reports to Trust Preferred Guarantee Trustee
The Guarantor shall provide to the Trust Preferred Guarantee Trustee
such documents, reports and information as required by SECTION 314 (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
The Guarantor shall provide to the Trust Preferred Guarantee Trustee
such evidence of compliance with any conditions precedent, if any, provided for
in this Trust Preferred Securities Guarantee 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 Events of Default; Waiver
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 Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Trust Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 2.7 Event of Default; Notice
(a) The Trust Preferred Guarantee Trustee shall, within 90 days
after the occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Trust Preferred Securities, notices of
all Events of Default actually known to a Responsible Officer of the Trust
Preferred Guarantee Trustee, unless such defaults have been cured before the
giving of such notice, provided, that, except in the case of default in any
Guarantee Payment, the Trust Preferred Guarantee Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the Trust
Preferred Guarantee Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders of the Trust Preferred Securities
Trust Preferred Securities.
(b) The Trust Preferred Guarantee Trustee shall not be deemed to
have knowledge of any Event of Default unless the Trust Preferred Guarantee
Trustee shall have received written notice, or a Responsible Officer of the
Trust Preferred Guarantee Trustee
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charged with the administration of the Declaration shall have obtained actual
knowledge of such Event of Default.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described in this
Trust Preferred Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
TRUST PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Trust Preferred Guarantee Trustee
(a) This Trust Preferred Securities Guarantee shall be held by the
Trust Preferred Guarantee Trustee for the benefit of the Holders of the Trust
Preferred Securities, and the Trust Preferred Guarantee Trustee shall not
transfer this Trust Preferred Securities Guarantee to any Person except a Holder
of Trust Preferred Securities exercising his or her rights pursuant to Section
5.4(b) or to a Successor Trust Preferred Guarantee Trustee on acceptance by such
Successor Trust Preferred Guarantee Trustee of its appointment to act as
Successor Trust Preferred Guarantee Trustee. The right, title and interest of
the Trust Preferred Guarantee Trustee shall automatically vest in any Successor
Trust Preferred Guarantee Trustee, and such vesting and succession of title
shall be effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Trust Preferred
Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer
of the Trust Preferred Guarantee Trustee has occurred and is continuing, the
Trust Preferred Guarantee Trustee shall enforce this Trust Preferred Securities
Guarantee for the benefit of the Holders of the Trust Preferred Securities.
(c) The Trust Preferred Guarantee Trustee, before the occurrence of
any Event of Default and after the curing or waiver of all Events of Default
that may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Trust Preferred Securities Guarantee, and no
implied covenants shall be read into this Trust Preferred Securities Guarantee
against the Trust Preferred Guarantee Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6) and is
actually known to a Responsible Officer of the Trust Preferred Guarantee
Trustee, the Trust Preferred Guarantee Trustee shall exercise such of the rights
and
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powers vested in it by this Trust Preferred Securities Guarantee, and use the
same degree of care and skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(d) No provision of this Trust Preferred Securities Guarantee shall
be construed to relieve the Trust Preferred Guarantee 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 any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Trust Preferred
Guarantee Trustee shall be determined solely by the express
provisions of this Trust Preferred Securities Guarantee, and the
Trust Preferred Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set
forth in this Trust Preferred Securities Guarantee, and no implied
covenants or obligations shall be read into this Trust Preferred
Securities Guarantee against the Trust Preferred Guarantee Trustee;
and
(B) in the absence of bad faith on the part of the Trust
Preferred Guarantee Trustee, the Trust Preferred Guarantee 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 Trust Preferred Guarantee Trustee and
conforming to the requirements of this Trust Preferred Securities
Guarantee; but in the case of any such certificates or opinions that
by any provision hereof are specifically required to be furnished to
the Trust Preferred Guarantee Trustee, the Trust Preferred Guarantee
Trustee shall be under a duty to examine the same to determine
whether or not they substantially conform to the requirements of
this Trust Preferred Securities Guarantee;
(ii) the Trust Preferred Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer of the
Trust Preferred Guarantee Trustee, unless it shall be proved that the
Trust Preferred Guarantee Trustee was negligent in ascertaining the
pertinent facts upon which such judgment was made;
(iii) the Trust Preferred Guarantee 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
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of the Holders of a majority in liquidation amount of the Trust Preferred
Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Trust Preferred Guarantee
Trustee, or exercising any trust or power conferred upon the Trust
Preferred Guarantee Trustee under this Trust Preferred Securities
Guarantee; and
(iv) no provision of this Trust Preferred Securities Guarantee shall
require the Trust Preferred Guarantee 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
the Trust Preferred Guarantee Trustee shall have reasonable grounds for
believing that the repayment of such funds or liability is not assured to
it under the terms of this Trust Preferred Securities Guarantee or
indemnity, reasonably satisfactory to the Trust Preferred Guarantee
Trustee, against such risk or liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Trust Preferred Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Trust Preferred Guarantee 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 Guarantor contemplated by this
Trust Preferred Securities Guarantee shall be sufficiently evidenced by an
Officers' Certificate.
(iii) Whenever, in the administration of this Trust Preferred
Securities Guarantee, the Trust Preferred Guarantee Trustee shall deem it
desirable that a matter be proved or established before taking, suffering
or omitting any action hereunder, the Trust Preferred Guarantee 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 Guarantor.
(iv) The Trust Preferred Guarantee Trustee shall have no duty to see
to any recording, filing or registration of
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any instrument (or any rerecording, refiling or registration
thereof).
(v) The Trust Preferred Guarantee Trustee may consult with counsel
of its selection, and the advice or opinion of such counsel with respect
to legal matters 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 Guarantor or any of its Affiliates and may include any
of its employees. The Trust Preferred Guarantee Trustee shall have the
right at any time to seek instructions concerning the administration of
this Trust Preferred Securities Guarantee from any court of competent
jurisdiction.
(vi) The Trust Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Trust Preferred Securities Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Trust Preferred
Guarantee Trustee such security and indemnity, reasonably satisfactory to
the Trust Preferred Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the Preferred
Guarantee 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 Trust
Preferred Guarantee Trustee; provided that, nothing contained in this
Section 3.2(a)(vi) shall be taken to relieve the Trust Preferred Guarantee
Trustee, upon the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Trust Preferred
Securities Guarantee.
(vii) The Trust Preferred Guarantee 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 Trust Preferred Guarantee
Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit.
(viii) The Trust Preferred Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either directly
or by or through agents, nominees, custodians or attorneys, and the Trust
Preferred Guarantee 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.
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(ix) Any action taken by the Trust Preferred Guarantee Trustee or
its agents hereunder shall bind the Holders of the Trust Preferred
Securities, and the signature of the Trust Preferred Guarantee Trustee or
its agents alone shall be sufficient and effective to perform any such
action. No third party shall be required to inquire as to the authority of
the Trust Preferred Guarantee Trustee to so act or as to its compliance
with any of the terms and provisions of this Trust Preferred Securities
Guarantee, both of which shall be conclusively evidenced by the Trust
Preferred Guarantee Trustee or its agent taking such action.
(x) Whenever in the administration of this Trust Preferred
Securities Guarantee the Trust Preferred Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy or
right or taking any other action hereunder, the Trust Preferred Guarantee
Trustee (i) may request instructions from the Holders of a Majority in
liquidation amount of the Trust Preferred Securities, (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 accordance with such instructions.
(xi) The Trust Preferred Guarantee Trustee shall not be liable for
any action taken, suffered, or omitted to be taken by it in good faith,
without negligence, and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Trust
Preferred Securities Guarantee.
(b) No provision of this Trust Preferred Securities Guarantee shall
be deemed to impose any duty or obligation on the Trust Preferred Guarantee
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 Trust Preferred Guarantee 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 available to the Trust Preferred Guarantee Trustee shall be
construed to be a duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of Trust Preferred
Securities Guarantee
The recitals contained in this Trust Preferred Securities Guarantee
shall be taken as the statements of the Guarantor, and the Trust Preferred
Guarantee Trustee does not assume any responsibility for their correctness. The
Trust Preferred Guarantee Trustee makes no representation as to the validity or
sufficiency of this Trust Preferred Securities Guarantee.
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ARTICLE IV
TRUST PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Trust Preferred Guarantee Trustee; Eligibility
(a) There shall at all times be a Trust Preferred Guarantee Trustee
which shall:
(i) not be an Affiliate of the Guarantor; 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
Securities and Exchange 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
5 million U.S. dollars ($5,000,000), 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 4.1(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 Trust Preferred Guarantee Trustee shall cease
to be eligible to so act under Section 4.1(a), the Trust Preferred Guarantee
Trustee shall immediately resign in the manner and with the effect set out in
Section
4.2(c).
(c) If the Trust Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Trust Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 Appointment, Removal and Resignation of Trust Preferred Guarantee
Trustee
(a) Subject to Section 4.2(b), the Trust Preferred Guarantee Trustee
may be appointed or removed without cause at any time by the Guarantor except
during an Event of Default.
(b) The Trust Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Trust Preferred Guarantee
Trustee has been appointed and has accepted
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such appointment by written instrument executed by such Successor Trust
Preferred Guarantee Trustee and delivered to the Guarantor.
(c) The Trust Preferred Guarantee Trustee shall hold office until a
Successor Trust Preferred Guarantee Trustee shall have been appointed or until
its removal or resignation. The Trust Preferred Guarantee Trustee may resign
from office (without need for prior or subsequent accounting) by an instrument
in writing executed by the Trust Preferred Guarantee Trustee and delivered to
the Guarantor, which resignation shall not take effect until a Successor Trust
Preferred Guarantee Trustee has been appointed and has accepted such appointment
by instrument in writing executed by such Successor Trust Preferred Guarantee
Trustee and delivered to the Guarantor and the resigning Trust Preferred
Guarantee Trustee.
(d) If no Successor Trust Preferred Guarantee Trustee shall have
been appointed and accepted appointment as provided in this Section 4.2 within
60 days after delivery of an instrument of removal or resignation, the Trust
Preferred Guarantee Trustee resigning or being removed may petition any court of
competent jurisdiction for appointment of a Successor Trust Preferred Guarantee
Trustee. Such court may thereupon, after prescribing such notice, if any, as it
may deem proper, appoint a Successor Trust Preferred Guarantee Trustee.
(e) No Trust Preferred Guarantee Trustee shall be liable for the
acts or omissions to act of any Successor Trust Preferred Guarantee Trustee.
(f) Upon termination of this Trust Preferred Securities Guarantee or
removal or resignation of the Trust Preferred Guarantee Trustee pursuant to this
Section 4.2, the Guarantor shall pay to the Trust Preferred Guarantee Trustee
all amounts due to the Trust Preferred Guarantee Trustee accumulated to the date
of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), if, as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
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SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Trust
Preferred Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Trust Preferred Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Trust Preferred Securities to be
performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Trust Preferred Securities or the
extension of time for the performance of any other obligation under, arising out
of, or in connection with, the Trust Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Trust Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Issuer or any of the assets of
the Issuer;
(e) any invalidity of, or defect or deficiency in, the Trust
Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of
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a guarantor, it being the intent of this Section 5.3 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
(a) 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 Trust Preferred
Guarantee Trustee in respect of this Trust Preferred Securities Guarantee or
exercising any trust or power conferred upon the Trust Preferred Guarantee
Trustee under this Trust Preferred Securities Guarantee.
(b) If the Trust Preferred Guarantee Trustee fails to enforce its
rights under the Trust Preferred Securities Guarantee after a Holder of Trust
Preferred Securities has made a written request, such Holder of Trust Preferred
Securities may institute a legal proceeding directly against the Guarantor to
enforce the Trust Preferred Guarantee Trustee's rights under this Trust
Preferred Securities Guarantee, without first instituting a legal proceeding
against the Issuer, the Trust Preferred Guarantee Trustee or any other person or
entity. Notwithstanding the foregoing, if the Guarantor has failed to make a
guarantee payment, a Holder of Trust Preferred Securities may directly institute
a proceeding in such Holder's own name against the Guarantor for enforcement of
the Trust Preferred Securities Guarantee for such payment. The Guarantor waives
any right or remedy to require that any action be brought first against the
Issuer or any other person or entity before proceeding directly against the
Guarantor.
SECTION 5.5 Guarantee of Payment
This Trust Preferred Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Trust Preferred Securities against the Issuer in respect of any
amounts paid to such Holders by the Guarantor under this Trust Preferred
Securities Guarantee; provided, however, that the Guarantor shall not (except to
the extent required by mandatory provisions of law) be entitled to enforce or
exercise any right that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under this
Trust Preferred
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Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Trust Preferred Securities Guarantee. If any amount shall
be paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Trust Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Trust
Preferred Securities Guarantee notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Trust Preferred Securities remain outstanding, if (a)
for any distribution period, full distributions on a cumulative basis on any
Trust Preferred Securities have not been paid or declared and set apart for
payment, (b) an Investment Event of Default by any Investment Affiliate in
respect of any Affiliate Investment Instrument has occurred and is continuing,
or (c) the Company is in default of its obligations under the Trust Preferred
Securities Guarantee, the Trust Common Securities Guarantee, the Partnership
Guarantee or any Investment Guarantee, then, during such period the Company
shall not, nor permit any majority owned subsidiary to (i) declare or pay
dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to any of its capital stock
or comparable equity interest (except for (x) dividends or distributions in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, its capital stock and conversions or exchanges of common stock of one class
into common stock of another class, (y) redemptions or purchases of any rights
pursuant to the Rights Agreement and the issuance of preferred stock pursuant to
such rights and (z) purchases or acquisitions 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 capital stock or comparable equity interest) and (ii) permit any
Finance Subsidiary to make, or make any payments that would enable any Finance
Subsidiary to make, any payment of any dividends on, any distribution with
respect to, or any redemption, purchase or other acquisition
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of, or any liquidation payment with respect to any preferred security or
comparable equity interest of any Finance Subsidiary.
SECTION 6.2 Ranking
(a) This Trust Preferred Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to all other liabilities of the Guarantor, (ii) pari passu
with the most senior preferred or preference stock now or hereafter issued by
the Guarantor and with any other guarantee now or hereafter entered into by the
Guarantor in respect of any preferred or preference stock of any Finance
Subsidiary, and (iii) senior to the Guarantor's common stock. Any similar
guarantee given hereafter by the Company with respect to Trust Preferred
Securities that is silent as to seniority will rank pari passu with this Trust
Preferred Securities Guarantee.
(b) The holders of any obligations of the Guarantor which are senior
in priority to the obligations under the Trust Preferred Securities Guarantee
will be entitled to all of the rights inuring to the holders of the "Senior
Indebtedness" under Article Eleven of the Indenture dated as of December __,
1996 between Merrill Lynch & Co., Inc. and The Chase Manhattan Bank, and the
holders of the Trust Preferred Securities will be subject to all the terms and
conditions of such Article Eleven with respect to any claims or rights hereunder
with the same effect as though fully set forth herein.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Trust Preferred Securities Guarantee shall terminate upon (i)
full payment of the Redemption Price of all Trust Preferred Securities, (ii)
upon the distribution of the Partnership Preferred Securities to the Holders of
all of the Trust Preferred Securities or (iii) upon full payment of the amounts
payable in accordance with the Declaration upon liquidation of the Issuer.
Notwithstanding the foregoing, this Trust Preferred Securities Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder of Trust Preferred Securities must restore payment of any sums
paid under the Trust Preferred Securities or under this Trust Preferred
Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
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SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this Trust
Preferred Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Trust Preferred Securities Guarantee or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's gross 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 Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor 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 Guarantor, 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 Preferred
Securities might properly be paid.
SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and
to hold each Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (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 8.2 shall survive the termination of this
Trust Preferred Securities Guarantee or the earlier resignation or removal of
the Trust Preferred Guarantee Trustee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Trust Preferred
Securities Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor
19
<PAGE>
and shall inure to the benefit of the Holders of the Trust Preferred Securities
then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Trust Preferred Securities Guarantee may only be amended with the prior approval
of the Holders of at least a Majority in liquidation amount of the Trust
Preferred Securities (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accumulated and unpaid Distributions
to the date upon which the voting percentages are determined). The provisions of
Section 12.2 of the Declaration with respect to meetings of Holders of the
Securities apply to the giving of such approval.
SECTION 9.3 Notices
All notices provided for in this Trust Preferred Securities
Guarantee shall be in writing, duly signed by the party giving such notice, and
shall be delivered, telecopied or mailed by first class mail, as follows:
(a) If given to the Trust Preferred Guarantee Trustee, at the Trust
Preferred Guarantee Trustee's Global Trust Services Office.
(b) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders of the Trust Preferred Securities):
Merrill Lynch & Co., Inc.
World Financial Center
South Tower
225 Liberty Street
New York, New York 10281
Attention: Treasurer
(c) If given to any Holder of Trust Preferred Securities, at the
address set forth on the books and records of the Issuer.
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.
20
<PAGE>
SECTION 9.4 Benefit
This Trust Preferred Securities Guarantee is solely for the benefit
of the Holders of the Trust Preferred Securities and, subject to Section 3.1(a),
is not separately transferable from the Trust Preferred Securities.
SECTION 9.5 Governing Law
THIS TRUST PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
21
<PAGE>
THIS TRUST PREFERRED SECURITIES GUARANTEE is executed as of the day
and year first above written.
MERRILL LYNCH & CO., INC.
as Guarantor
By:________________________________
Name: Theresa Lang
Title: Senior Vice President
and Treasurer
THE CHASE MANHATTAN BANK, as
Trust Preferred Guarantee Trustee
By:_______________________________
Name:______________________________
Title:______________________________
22
<PAGE>
====================================
PARTNERSHIP PREFERRED SECURITIES GUARANTEE AGREEMENT
Merrill Lynch Preferred Funding I, L.P.
Dated as of December __, 1996
====================================
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I
SECTION 1.1. Definitions......................................... 2
ARTICLE II
SECTION 2.1. Guarantee........................................... 3
SECTION 2.2. Waiver of Notice and Demand......................... 3
SECTION 2.3. Obligations Not Affected............................ 3
SECTION 2.4. Rights of Holders................................... 5
SECTION 2.5. Guarantee of Payment................................ 5
SECTION 2.6. Subrogation......................................... 5
SECTION 2.7. Independent Obligations............................. 6
ARTICLE III
SECTION 3.1. Limitation of Transactions.......................... 6
SECTION 3.2. Ranking............................................. 7
ARTICLE IV
SECTION 4.1. Termination......................................... 7
ARTICLE V
SECTION 5.1. Successors and Assigns.............................. 8
SECTION 5.2. Amendments.......................................... 8
SECTION 5.3. Notices............................................. 8
SECTION 5.4. Benefit............................................. 9
SECTION 5.5. Governing Law....................................... 9
i
<PAGE>
PARTNERSHIP GUARANTEE AGREEMENT
This PARTNERSHIP GUARANTEE AGREEMENT, dated as of December __, 1996,
is executed and delivered by Merrill Lynch & Co., Inc., a Delaware corporation
(the "Company" or the "Guarantor"), for the benefit of the holders from time to
time of the Partnership Preferred Securities (as defined below).
WHEREAS, pursuant to an Amended and Restated Agreement of Limited
Partnership (the "Partnership Agreement"), dated as of the date hereof, of
Merrill Lynch Preferred Funding I, L.P., a Delaware limited partnership (the
"Issuer"), the Issuer may issue a single series of limited partner interests in
the Issuer (the "Partnership Preferred Securities");
WHEREAS, pursuant to the Partnership Agreement, the proceeds
received by the Issuer from the issuance and sale of the Partnership Preferred
Securities will be invested by the Issuer in the Affiliate Investment
Instruments and Eligible Debt Securities (each as defined in the Partnership
Agreement); and
WHEREAS, the Guarantor, as incentive for the Holders (as defined
herein) to purchase Partnership Preferred Securities, desires hereby irrevocably
and unconditionally to agree, to the extent set forth herein, to pay to the
Holders the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Partnership Preferred Securities, which purchase the Guarantor hereby
acknowledges shall directly or indirectly provide at least some material benefit
to the Guarantor, the Guarantor executes and delivers this Guarantee Agreement
for the benefit of the Holders.
<PAGE>
ARTICLE I
SECTION 1.1. Definitions
As used in this Partnership Guarantee Agreement, the terms set forth
below shall, unless the context otherwise requires, have the following meanings.
Capitalized terms used but not otherwise defined herein shall have the meanings
assigned to such terms 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.
"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 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.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Partnership Preferred
Securities, to the extent not paid or made by the Issuer: (i) any accumulated
and unpaid distributions that have theretofore been declared on the Partnership
Preferred Securities out of funds legally available therefor at such time, (ii)
the redemption price, including all accumulated and unpaid Distributions to the
date of redemption (the "Redemption Price"), payable out of funds legally
available therefor at such time, with respect to any Partnership Preferred
Securities called for redemption by the Issuer, and (iii) upon a voluntary or
involuntary termination or liquidation of the Issuer, the lesser of (a) the
aggregate of the liquidation preference and all accumulated and unpaid
distributions on the Partnership Preferred Securities to the date of payment out
of funds legally available therefor and (b) the amount of assets of the Issuer
after satisfaction of all liabilities remaining available for distribution to
Holders in liquidation of the Issuer (in either case, the "Liquidation
Distribution").
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Partnership Preferred Securities; provided,
however, that in
2
<PAGE>
determining whether the holders of the requisite percentage of Partnership
Preferred Securities have given any request, notice, consent or waiver
hereunder, "Holder" shall not apply to Partnership Preferred Securities owned
beneficially by the Guarantor or any Affiliate of the Guarantor.
"Rights Agreement" means the rights Agreement dated as of December
16, 1987 between the Company and The Chase Manhattan Bank (successor by merger
to Manufacturers Hanover Trust Company), or any successor to such Rights
Agreement.
ARTICLE II
SECTION 2.1. Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments, as and when due (without duplication of
amounts theretofore paid by the Issuer), regardless of any defense, right of
set-off or counterclaim which the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
SECTION 2.2. Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Partnership
Guarantee Agreement and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
SECTION 2.3. Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Partnership Guarantee Agreement shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
3
<PAGE>
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Partnership
Preferred Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Partnership
Preferred Securities or the extension of time for the performance of any
other obligation under, arising out of, or in connection with, the
Partnership Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Partnership
Preferred Securities;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Partnership
Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 2.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation of the Holders to give notice to, or obtain consent
of, the Guarantor with respect to the happening of any of the foregoing.
4
<PAGE>
SECTION 2.4. Rights of Holders
The Guarantor expressly acknowledges that (i) this Partnership
Guarantee Agreement will be deposited with the General Partner to be held for
the benefit of the Holders; (ii) in the event of the appointment of a Special
Representative to, among other things, enforce this Partnership Guarantee
Agreement, the Special Representative may take possession of this Partnership
Guarantee Agreement for such purpose; (iii) if no Special Representative has
been appointed, the General Partner has the right to enforce this Partnership
Guarantee Agreement on behalf of the Holders; (iv) the Holders of not less than
a majority in aggregate liquidation preference of the Partnership Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available in respect of this Partnership Guarantee
Agreement including the giving of directions to the General Partner or the
Special Representative, as the case may be; and (v) if the General Partner or
Special Representative fails to enforce this Partnership Guarantee Agreement as
above provided, any Holder may institute a legal proceeding directly against the
Guarantor to enforce its rights under this Partnership Guarantee Agreement,
without first instituting a legal proceeding against the Issuer or any other
person or entity. Notwithstanding the foregoing, if the Guarantor has failed to
make a guarantee payment, a Holder may directly institute a proceeding against
Guarantor to enforce such payment under this Partnership Guarantee Agreement.
SECTION 2.5. Guarantee of Payment
This Partnership Guarantee Agreement will not be discharged except
by payment of the Guarantee Payments in full to the extent not paid by the
Issuer.
SECTION 2.6. Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders against the Issuer in respect of any amounts paid to the Holders by the
Guarantor under this Partnership Guarantee Agreement provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any rights which it may acquire by
5
<PAGE>
way of subrogation or any indemnity, reimbursement or other agreement, in all
cases as a result of payment under this Partnership Guarantee Agreement, if, at
the time of any such payment, any amounts are due and unpaid under this
Partnership Guarantee Agreement. If any amount shall be paid to the Guarantor in
violation of the preceding sentence, the Guarantor agrees to hold such amount in
trust for the Holders and to pay over such amount to the Holders.
SECTION 2.7. Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Partnership
Preferred Securities and that the Guarantor shall be liable as principal and as
debtor hereunder to make Guarantee Payments pursuant to the terms of this
Partnership Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (f), inclusive, of Section 2.3 hereof.
ARTICLE III
SECTION 3.1. Limitation of Transactions
So long as any Partnership Preferred Securities remain outstanding,
if (a) for any distribution period, full distributions on a cumulative basis on
any Partnership Preferred Securities have not been paid or declared and set
apart for payment (b) there shall have occurred an Event of Default under the
Partnership Agreement or (c) the Guarantor shall be in default with respect to
its payment obligations under this Partnership Guarantee Agreement, the Trust
Preferred Securities Guarantee, the Trust Common Securities Guarantee or any
Investment Guarantee then, during such period the Company shall not, nor permit
any majority owned subsidiary to (i) declare or pay dividends on, make
distributions with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to any of its capital stock or comparable
equity interest (except for (x) dividends or distributions in shares of, or
options, warrants or rights to subscribe for or purchase shares of, its capital
stock and conversions or exchanges of common stock of one class into common
stock of another class, (y) redemp-
6
<PAGE>
tions or purchases of any rights pursuant to the Rights Agreement and the
issuance of preferred stock pursuant to such rights and (z) purchases or
acquisitions 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 capital
stock or comparable equity interest) and (ii) permit any Finance Subsidiary to
make, or make any payments that would enable any Finance Subsidiary to make, any
payment of any dividends on, any distribution with respect to, or any
redemption, purchase or other acquisition of, or any liquidation payment with
respect to any preferred security or comparable equity interest of any Finance
Subsidiary.
SECTION 3.2. Ranking
This Partnership Guarantee Agreement will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor, (ii) pari passu with the most
senior preferred or preference stock now or hereafter issued from time to time
by the Guarantor and with any other guarantee now or hereafter entered into by
the Guarantor in respect of any preferred or preference stock of any Finance
Subsidiary, and (iii) senior to the Guarantor's common stock. Any similar
guarantee given hereafter by the Company with respect to Partnership Preferred
Securities that is silent as to seniority will rank pari passu with this
Partnership Guarantee Agreement.
ARTICLE IV
SECTION 4.1. Termination
This Partnership Guarantee Agreement shall terminate and be of no
further force and effect, as to the Partnership Preferred Securities, upon full
payment of the Redemption Price of all Partnership Preferred Securities, and
will terminate completely upon full payment of the amounts payable in accordance
with the Partnership Agreement upon liquidation of the Issuer. This Partnership
Guarantee Agreement will continue to be effective or will be reinstated, as the
case may be, if at any time any Holder must, in accordance with Delaware
7
<PAGE>
Revised Uniform Limited Partnership Act, restore payment of any sums paid under
any Partnership Preferred Securities or this Partnership Guarantee Agreement.
ARTICLE V
SECTION 5.1. Successors and Assigns
All guarantees and agreements contained in this Partnership
Guarantee Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Partnership Preferred Securities then outstanding.
SECTION 5.2. Amendments
Except with respect to any changes which do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Partnership Guarantee Agreement may only be amended with the prior approval of
the Holders of not less than a majority in aggregate liquidation preference of
all the outstanding Partnership Preferred Securities.
SECTION 5.3. Notices
Any notice, request or other communication required or permitted to
be given hereunder to the Guarantor shall be given in writing by delivering the
same against receipt therefor by facsimile transmission (confirmed by mail),
addressed to the Guarantor, as follows (and if so given, shall be deemed given
when mailed):
Merrill Lynch & Co., Inc.
World Financial Center
South Tower
225 Liberty Street
New York, New York 10281
Attention: Treasurer
Any notice, request or other communication required or permitted to
be given hereunder to the Holders shall be given by the Guarantor in the same
manner as notices sent by the Issuer to the Holders.
8
<PAGE>
SECTION 5.4. Benefit
This Partnership Guarantee Agreement is solely for the benefit of
the Holders and is not separately transferable from the Partnership Preferred
Securities.
SECTION 5.5. Governing Law
THIS PARTNERSHIP GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
9
<PAGE>
THIS PARTNERSHIP GUARANTEE AGREEMENT is executed as of the day and
year first above written.
MERRILL LYNCH & CO., INC.
By: _______________________
Name: Theresa Lang
Title: Senior Vice President
and Treasurer
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MERRILL LYNCH & CO., INC.
AND
THE CHASE MANHATTAN BANK, TRUSTEE
---------------
INDENTURE
---------------
DATED AS OF DECEMBER, 1996
SUBORDINATED DEBT SECURITIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
MERRILL LYNCH & CO., INC.
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939 AND
INDENTURE, DATED AS OF DECEMBER , 1996
TRUST INDENTURE ACT SECTION INDENTURE SECTION
- --------------------------- -----------------
Section 310(a)(1) ...........................................................608
(a)(2) ..................................................................608
(a)(3) .......................................................Not Applicable
(a)(4) .......................................................Not Applicable
(a)(5)...................................................................608
Section 311(a) ..............................................................609
(b) .....................................................................605
Section 312(a) .........................................................605, 703
(b).................................................................701, 702
(c)......................................................................702
Section 313(a)............................................................703(a)
(b)(1)........................................................Not Applicable
(b)(2)................................................................703(b)
(c)...................................................................703(c)
(d)...................................................................703(c)
Section 314(a)(1)............................................................704
(a)(2)...................................................................704
(a)(3)...................................................................704
(a)(4)..................................................................1005
(b)...........................................................Not Applicable
(c)(1)...................................................................102
(c)(2)...................................................................102
(c)(3)........................................................Not Applicable
(d)...........................................................Not Applicable
(e)......................................................................102
Section 315(a)............................................................601(a)
(b)......................................................................602
(c)...................................................................601(b)
(d)...................................................................601(c)
(d)(1).....................................................601(a)(1), (c)(1)
(d)(2).............................................................601(c)(2)
(d)(3).............................................................601(c)(3)
(e)......................................................................514
Section 316(a)(1)(A)....................................................502, 512
(a)(1)(B)................................................................513
(a)(2)........................................................Not Applicable
(b)......................................................................508
(c)...........................................................Not Applicable
Section 317(a)(1)............................................................503
(a)(2)...................................................................504
(b).....................................................................1003
Section 318(a)...............................................................108
__________________
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
<PAGE>
TABLE OF CONTENTS
---------------
PAGE
----
PARTIES.................................................................... 1
RECITALS................................................................... 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.................................................. 1
Act.................................................................... 2
Additional Amounts..................................................... 2
Affiliate.............................................................. 2
Authenticating Agent................................................... 2
Authorized Newspaper................................................... 2
Bearer Security........................................................ 2
Board of Directors..................................................... 2
Board Resolution....................................................... 2
Business Day........................................................... 2
Commission............................................................. 2
Company................................................................ 2
Company Request; Company Order......................................... 2
Controlled Subsidiary.................................................. 3
Corporate Trust Office................................................. 3
corporation............................................................ 3
coupon................................................................. 3
Defaulted Interest..................................................... 3
Dollars; $............................................................. 3
Event of Default....................................................... 3
Holder................................................................. 3
Indenture.............................................................. 3
interest............................................................... 3
Interest Payment Date.................................................. 3
Maturity............................................................... 3
MLPF&S................................................................. 3
Officers' Certificate.................................................. 3
Opinion of Counsel..................................................... 3
Original Issue Discount Security....................................... 3
Outstanding............................................................ 4
Paying Agent........................................................... 4
Person................................................................. 4
Place of Payment....................................................... 4
Predecessor Security................................................... 4
Redemption Date........................................................ 5
Redemption Price....................................................... 5
Registered Security.................................................... 5
Regular Record Date.................................................... 5
Responsible Officer.................................................... 5
Security; Securities................................................... 5
i
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Security Register; Security Registrar................................. 5
Senior Indebtedness................................................... 5
Special Record Date................................................... 5
Stated Maturity....................................................... 5
Subsidiary............................................................ 5
Trustee............................................................... 5
Trust Indenture Act................................................... 5
United States......................................................... 6
United States Alien................................................... 6
U.S. Depository; Depository........................................... 6
Vice President........................................................ 6
Voting Stock.......................................................... 6
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS........................ 6
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE...................... 7
SECTION 104. ACTS OF HOLDERS............................................. 7
SECTION 105. NOTICES ETC. TO TRUSTEE AND COMPANY......................... 9
SECTION 106. NOTICE TO HOLDERS OF SECURITIES; WAIVER..................... 9
SECTION 107. LANGUAGE OF NOTICES, ETC.................................... 10
SECTION 108. CONFLICT WITH TRUST INDENTURE ACT........................... 10
SECTION 109. EFFECT OF HEADINGS AND TABLE OF CONTENTS.................... 10
SECTION 110. SUCCESSORS AND ASSIGNS...................................... 10
SECTION 111. SEPARABILITY CLAUSE......................................... 10
SECTION 112. BENEFITS OF INDENTURE....................................... 10
SECTION 113. GOVERNING LAW............................................... 10
SECTION 114. LEGAL HOLIDAYS.............................................. 10
ARTICLE TWO
SECURITY FORMS
SECTION 201. FORMS GENERALLY............................................. 11
SECTION 202. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION............. 11
ARTICLE THREE
THE SECURITIES
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES........................ 11
SECTION 302. DENOMINATIONS............................................... 14
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.............. 14
SECTION 304. TEMPORARY SECURITIES........................................ 15
SECTION 305. REGISTRATION, TRANSFER AND EXCHANGE......................... 15
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES............ 18
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.............. 18
SECTION 308. PERSONS DEEMED OWNERS....................................... 20
SECTION 309. CANCELLATION................................................ 20
SECTION 310. COMPUTATION OF INTEREST..................................... 20
ARTICLE FOUR
ii
<PAGE>
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE..................... 20
SECTION 402. APPLICATION OF TRUST MONEY.................................. 22
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT........................................... 22
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.......... 23
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
BY TRUSTEE.................................................. 23
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM............................ 24
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES
OR COUPONS.................................................. 25
SECTION 506. APPLICATION OF MONEY COLLECTED.............................. 25
SECTION 507. LIMITATION ON SUITS......................................... 25
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST........................................ 26
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.......................... 26
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.............................. 26
SECTION 511. DELAY OR OMISSION NOT WAIVER................................ 26
SECTION 512. CONTROL BY HOLDERS OF SECURITIES............................ 26
SECTION 513. WAIVER OF PAST DEFAULTS..................................... 27
SECTION 514. UNDERTAKING FOR COSTS....................................... 27
SECTION 515. WAIVER OF STAY OR EXTENSION LAWS............................ 27
ARTICLE SIX
THE TRUSTEE
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES......................... 28
SECTION 602. NOTICE OF DEFAULTS.......................................... 29
SECTION 603. CERTAIN RIGHTS OF TRUSTEE................................... 29
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES...... 30
SECTION 605. MAY HOLD SECURITIES......................................... 30
SECTION 606. MONEY HELD IN TRUST......................................... 30
SECTION 607. COMPENSATION AND REIMBURSEMENT.............................. 30
SECTION 608. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY..................... 31
SECTION 609. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR........... 31
SECTION 610. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR...................... 32
SECTION 611. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. 33
SECTION 612. APPOINTMENT OF AUTHENTICATING AGENT......................... 33
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS... 35
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS...... 35
SECTION 703. REPORTS BY TRUSTEE.......................................... 35
SECTION 704. REPORTS BY COMPANY.......................................... 36
iii
<PAGE>
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE
SECTION 801. CONSOLIDATIONS AND MERGERS OF COMPANY AND SALES, LEASES AND
CONVEYANCES PERMITTED SUBJECT TO CERTAIN CONDITIONS............ 36
SECTION 802. RIGHTS AND DUTIES OF SUCCESSOR CORPORATION..................... 36
SECTION 803. OFFICERS' CERTIFICATE AND OPINION OF COUNSEL................... 37
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS............. 37
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS................ 38
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES........................... 39
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.............................. 39
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT............................ 39
SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES............. 39
ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST........... 39
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY............................... 40
SECTION 1003. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST............. 40
SECTION 1004. ADDITIONAL AMOUNTS............................................ 41
SECTION 1005. STATEMENT AS TO COMPLIANCE; NOTICE OF CERTAIN DEFAULTS........ 42
SECTION 1006. WAIVER OF CERTAIN COVENANTS................................... 42
ARTICLE ELEVEN
SUBORDINATION OF SECURITIES
SECTION 1101 AGREEMENT TO SUBORDINATE....................................... 43
SECTION 1102 DISTRIBUTION ON DISSOLUTION, LIQUIDATION AND REORGANIZATION;
SUBROGATION OF SECURITIES...................................... 43
SECTION 1103 NO PAYMENT ON SECURITIES IN EVENT OF DEFAULT ON SENIOR
INDEBTEDNESS................................................... 45
SECTION 1104 PAYMENTS ON SECURITIES PERMITTED............................... 45
SECTION 1105 AUTHORIZATION OF HOLDERS OF SECURITIES TO TRUSTEE TO EFFECT
SUBORDINATION.................................................. 45
SECTION 1106 NOTICES TO TRUSTEE............................................. 45
SECTION 1107 TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS....................... 46
SECTION 1108 MODIFICATION OF TERMS OF SENIOR INDEBTEDNESS................... 46
ARTICLE TWELVE
REDEMPTION OF SECURITIES
SECTION 1202. ELECTION TO REDEEM; NOTICE TO TRUSTEE......................... 46
SECTION 1203. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED............. 46
SECTION 1204. NOTICE OF REDEMPTION.......................................... 47
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SECTION 1205. DEPOSIT OF REDEMPTION PRICE................................... 48
SECTION 1206. SECURITIES PAYABLE ON REDEMPTION DATE......................... 48
SECTION 1207. SECURITIES REDEEMED IN PART................................... 48
ARTICLE THIRTEEN
SINKING FUNDS
SECTION 1301. APPLICABILITY OF ARTICLE...................................... 49
SECTION 1302. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES......... 49
SECTION 1303. REDEMPTION OF SECURITIES FOR SINKING FUND..................... 49
ARTICLE FOURTEEN
REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1401. APPLICABILITY OF ARTICLE...................................... 50
ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1501. PURPOSES FOR WHICH MEETINGS MAY BE CALLED..................... 50
SECTION 1502. CALL, NOTICE AND PLACE OF MEETINGS............................ 50
SECTION 1503. PERSONS ENTITLED TO VOTE AT MEETINGS.......................... 51
SECTION 1504. QUORUM; ACTION................................................ 51
SECTION 1505. DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT OF
MEETINGS..................................................................... 52
SECTION 1506. COUNTING VOTES AND RECORDING ACTION OF MEETINGS............... 52
ARTICLE SIXTEEN
MISCELLANEOUS PROVISIONS
SECTION 1601 SECURITIES IN FOREIGN CURRENCIES............................... 53
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INDENTURE, dated as of December , 1996, between MERRILL LYNCH & CO.,
INC., a Delaware corporation (hereinafter called the "Company"), having its
principal office at World Financial Center, North Tower, 250 Vesey Street, New
York, New York 10281 and THE CHASE MANHATTAN BANK, a New York corporation, as
Trustee (hereinafter called the "Trustee") having its Corporate Trust Office at
450 West 33rd Street, 15th Floor, New York, New York 10001.
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its subordinated
debentures, notes or other evidences of subordinated indebtedness (hereinafter
called the "Securities"), unlimited as to principal amount, to bear such rates
of interest, to mature at such time or times, to be issued in one or more series
and to have such other provisions as shall be fixed as hereinafter provided.
The Company has duly authorized the execution and delivery of this
Indenture and all things necessary to make this Indenture a valid agreement of
the Company, in accordance with its terms, have been done.
NOW, THEREFORE, in consideration of the premises and the sum of one dollar
duly paid by the Company to the Trustee, the receipt of which is hereby
acknowledged, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders, as follows:
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities or of series thereof, as
follows
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as
are generally accepted at the date of such computation; and
(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in that
Article.
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"ACT" when used with respect to any Holder has the meaning specified in
Section 104.
"ADDITIONAL AMOUNTS" means any additional amounts which are required by a
Security or by or pursuant to a Board Resolution, under circumstances specified
therein, to be paid by the Company in respect of certain matters, including,
without limitation, taxes imposed on certain Holders, and which are owing to
such Holders.
"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.
"AUTHENTICATING AGENT" means any Person authorized by the Trustee pursuant
to Section 612 to act on behalf of the Trustee to authenticate Securities of one
or more series.
"AUTHORIZED NEWSPAPER" means a newspaper, in an official language of the
country of publication or in the English language, customarily published on each
Business Day, whether or not published on Saturdays, Sundays or holidays, and of
general circulation in the place in connection with which the term is used or in
the financial community of such place. Where successive publications are
required to be made in Authorized Newspapers, the successive publications may be
made in the same or in different newspapers in the same city meeting the
foregoing requirements and in each case on any Business Day.
"BEARER SECURITY" means any Security in the form established pursuant to
Section 201 which is payable to bearer.
"BOARD OF DIRECTORS" means either the Board of Directors of the Company or
the Executive Committee thereof.
"BOARD RESOLUTION" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"BUSINESS DAY" 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, except as
may otherwise be provided in the form of Securities of any particular series
pursuant to the provisions of this Indenture.
"COMMISSION" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or if at
any time after the execution of this instrument such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties on such date.
"COMPANY" means the Person named as the "Company" in the first paragraph of
this instrument until a successor corporation shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor corporation.
"COMPANY REQUEST" and "COMPANY ORDER" mean, respectively, a written request
or order signed in the name of the Company by the Chairman of the Board, the
President, a Vice President or by the Treasurer, and by an Assistant Treasurer,
the Secretary or an Assistant Secretary of the Company, and delivered to the
Trustee.
"CONTROLLED SUBSIDIARY" means any corporation more than 80% of the
outstanding Voting Stock, except for qualifying shares, of which shall at the
time be owned directly or indirectly by the Company.
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"CORPORATE TRUST OFFICE" means the office of the Trustee at which at any
particular time its corporate trust business shall be administered.
"CORPORATION" includes corporations, associations, companies and business
trusts.
"COUPON" means any interest coupon appertaining to a Bearer Security.
"DEFAULTED INTEREST" has the meaning specified in Section 307.
"DOLLARS" or "$" or any similar reference shall mean the currency of the
United States, except as may otherwise be provided in the form of Securities of
any particular series pursuant to the provisions of this Indenture.
"EVENT OF DEFAULT" has the meaning specified in Section 501.
"HOLDER", when used with respect to any Security, means in the case of a
Registered Security, the Person in whose name the Security is registered in the
Security Register and in the case of a Bearer Security, the bearer thereof and,
when used with respect to any coupon, means the bearer thereof.
"INDENTURE" means this instrument as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof, and shall include each
Officers' Certificate delivered to the Trustee pursuant to Section 303.
"INTEREST", when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity, and, when used with respect to a Security which provides for the
payment of Additional Amounts pursuant to Section 1004, includes such Additional
Amounts.
"INTEREST PAYMENT DATE" means the Stated Maturity of an instalment of
interest on the applicable Securities.
"MATURITY" when used with respect to any Security means the date on which
the principal of such Security or an instalment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, notice of redemption, request for redemption or
otherwise.
"MLPF&S" means Merrill Lynch, Pierce, Fenner & Smith Incorporated, a
Delaware corporation.
"OFFICERS' CERTIFICATE" means 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 the Company, and delivered
to the Trustee.
"OPINION OF COUNSEL" means a written opinion of counsel, who may (except as
otherwise expressly provided in this Indenture) be an employee of or counsel for
the Company, or other counsel acceptable to the Trustee.
"ORIGINAL ISSUE DISCOUNT SECURITY" means a Security issued pursuant to this
Indenture which provides for declaration of an amount less than the principal
thereof to be due and payable upon acceleration pursuant to Section 502.
"OUTSTANDING" when used with respect to Securities means, as of the date of
determination, all Securities theretofore authenticated and delivered under this
Indenture, except:
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(i) Securities theretofore cancelled by the Trustee or delivered
to the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its
own Paying Agent) for the Holders of such Securities and any coupons
thereto appertaining, provided that, if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor satisfactory to the Trustee has
been made; and
(iii) Securities which have been paid pursuant to Section 306 or
in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by
a bona fide purchaser in whose hands such Securities are valid
obligations of the Company;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or are present at
a meeting of Holders of Securities for quorum purposes, the principal amount of
an Original Issue Discount Security that may be counted in making such
determination and that shall be deemed to be Outstanding for such purposes shall
be equal to the amount of the principal thereof that could be declared to be due
and payable pursuant to the terms of such Original Issue Discount Security at
the time the taking of such action by the Holders of such requisite principal
amount is evidenced to the Trustee as provided in Section 104(a), and, PROVIDED
FURTHER, that Securities owned beneficially by the Company or any other obligor
upon the Securities or any Affiliate of the Company or such other obligor, other
than Securities purchased in connection with the distribution or trading
thereof, shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Securities which the Trustee knows to be so owned shall be so disregarded.
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities and that the pledgee
is not the Company or any other obligor upon the Securities or any Affiliate of
the Company or such other obligor.
"PAYING AGENT" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"PLACE OF PAYMENT" when used with respect to the Securities of any series,
means the place or places where the principal of (and premium, if any) and
interest on the Securities of that series are payable as specified as provided
pursuant to Section 301.
"PREDECESSOR SECURITY" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
lost, destroyed, mutilated or stolen Security or a Security to which a
mutilated, destroyed, lost or stolen coupon appertains shall be deemed to
evidence the same debt as the lost, destroyed, mutilated or stolen Security or
the Security to which a mutilated, destroyed, lost or stolen coupon appertains.
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"REDEMPTION DATE" when used with respect to any Security to be redeemed
means the date fixed for such redemption by or pursuant to this Indenture.
"REDEMPTION PRICE" when used with respect to any Security to be redeemed
means the price at which it is to be redeemed as determined pursuant to the
provisions of this Indenture.
"REGISTERED SECURITY" means any Security established pursuant to Section
201 which is registered in the Security Register.
"REGULAR RECORD DATE" for the interest payable on a Registered Security on
any Interest Payment Date means the date, if any, specified in such Security as
the "Regular Record Date".
"RESPONSIBLE OFFICER" when used with respect to the Trustee means 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 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.
"SECURITY" or "SECURITIES" means any Security or Securities, as the case
may be, authenticated and delivered under this Indenture.
"SECURITY REGISTER" and "SECURITY REGISTRAR" have the respective meanings
specified in Section 305.
"SENIOR INDEBTEDNESS" means any payment in respect of indebtedness of the
Company for money borrowed, except for any such indebtedness that is by its
terms subordinated to or pari passu with the Securities.
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest on the
Registered Securities of any series means a date fixed by the Trustee pursuant
to Section 307.
"STATED MATURITY" when used with respect to any Security or any instalment
of principal thereof or interest thereon means the date specified in such
Security or a coupon representing such instalment of interest as the fixed date
on which the principal of such Security or such instalment of principal or
interest is due and payable.
"SUBSIDIARY" means any corporation of which at the time of determination
the Company and/or one or more Subsidiaries owns or controls directly or
indirectly more than 50% of the shares of Voting Stock. "Wholly-owned", when
used with reference to a Subsidiary, means a Subsidiary of which all of the
outstanding capital stock (except for qualifying shares) is owned by the Company
or by one or more wholly-owned Subsidiaries.
"TRUSTEE" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such with respect to
one or more series of Securities pursuant to the applicable provisions of this
Indenture, and thereafter "Trustee" shall mean each Person who is then a Trustee
hereunder, and if at any time there is more than one such Person, "Trustee" as
used with respect to the Securities of any series shall mean the Trustee with
respect to the Securities of that series.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as amended,
and any reference herein to the Trust Indenture Act or a particular provision
thereof shall mean such Act or provision, as the case may be,
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as amended or replaced from time to time or as supplemented from time to time by
rules or regulations adopted by the Commission under or in furtherance of the
purposes of such Act or provision, as the case may be.
"UNITED STATES" means the United States of America (including the States
and the District of Columbia), its territories and possessions and other areas
subject to its jurisdiction.
"UNITED STATES ALIEN" means any Person who, for United States Federal
income tax purposes, is a foreign corporation, a non-resident alien individual,
a non-resident alien fiduciary of a foreign estate or trust, or a foreign
partnership one or more of the members of which is, for United States Federal
income tax purposes, a foreign corporation, a non-resident alien individual or a
nonresident alien fiduciary of a foreign estate or trust.
"U.S. DEPOSITORY" or "DEPOSITORY" means, with respect to the Securities of
any series issuable or issued in whole or in part in the form of one or more
global Securities, the Person designated as U.S. Depository by the Company
pursuant to Section 301, which must be a clearing agency registered under the
Securities Exchange Act of 1934, as amended, and, if so provided pursuant to
Section 301 with respect to the Securities of any series, any successor to such
Person. If at any time there is more than one such Person, "U.S. Depository"
shall mean, with respect to any series of Securities, the qualifying entity
which has been appointed with respect to the Securities of that series.
"VICE PRESIDENT" when used with respect to the Company shall mean any Vice
President of the Company whether or not designated by a number or a word or
words added before or after the title "Vice President".
"VOTING STOCK" means stock of the class or classes having general voting
power under ordinary circumstances to elect at least a majority of the board of
directors, managers or trustees of such corporation provided that, for the
purposes hereof, stock, which carries only the right to vote conditionally on
the happening of an event shall not be considered voting stock whether or not
such event shall have happened.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such condition or covenant
has been complied with; and
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(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent
duly appointed in writing. If, but only if, Securities of a series are
issuable as Bearer Securities, any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this
Indenture to be given or taken by Holders of Securities of such series may,
alternatively, be embodied in and evidenced by the record of Holders of
Securities of such series voting in favor thereof, either in person or by
proxies duly appointed in writing, at any meeting of Holders of Securities
of such series duly called and held in accordance with the provisions of
Article Fifteen, or a combination of such instruments and any such record.
Except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments or record or both are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments and any such record (and the
action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holders signing such instrument or
instruments and so voting at any such meeting. Proof of execution of any
such instrument or of a writing appointing any such agent, or of the
holding by any Person of a Security, shall be sufficient for any purpose of
this Indenture and (subject to Section 601) conclusive in favor of the
Trustee and the Company and any agent of the Trustee or the Company, if
made in the manner provided in this Section. The record of any meeting of
Holders of Securities shall be proved in the manner provided in Section
1506.
Without limiting the generality of this Section 104, unless otherwise
established in or pursuant to a Board Resolution or set forth or determined
in an Officers' Certificate, or established in one or more indentures
supplemental hereto, pursuant to Section 301, a Holder, including a U.S.
Depository that is a Holder of a global Security, may make, give or take,
by a proxy, or proxies, duly appointed in writing, any request, demand,
authorization, direction, notice, consent, waiver or other action provided
in this Indenture to be made, given or taken by Holders, and a U.S.
Depository that is a Holder of a
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global Security may provide its proxy or proxies to the beneficial owners
of interests in any such global Security through such U.S. Depository's
standing instructions and customary practices.
The Trustee shall fix a record date for the purpose of determining the
Persons who are beneficial owners of interest in any permanent global
Security held by a U.S. Depository entitled under the procedures of such
U.S. Depository to make, give or take, by a proxy or proxies duly appointed
in writing, any request, demand, authorization, direction, notice, consent,
waiver or other action provided in this Indenture to be made, given or
taken by Holders. If such a record date is fixed, the Holders on such
record date or their duly appointed proxy or proxies, and only such Persons
shall be entitled to make, give or take such request, demand,
authorization, direction, notice, consent, waiver or other action, whether
or not such Holders remain Holders after such record date. No such
request, demand, authorization, direction, notice, consent, waiver or other
action shall be valid or effective if made, given or taken more than 90
days after such record date.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any reasonable manner which the
Trustee deems sufficient and in accordance with such reasonable rules as
the Trustee may determine; and the Trustee may in any instance require
further proof with respect to any of the matters referred to in this
Section.
(c) The ownership of Registered Securities and the principal amount
and serial numbers of Registered Securities held by any Person, and the
date of holding the same, shall be proved by the Security Register.
(d) The principal amount and serial numbers of Bearer Securities held
by any Person, and the date of holding the same, may be proved by the
production of such Bearer Securities or by a certificate executed, as
depositary, by any trust company, bank, banker or other depositary
reasonably acceptable to the Company, wherever situated, if such
certificate shall be deemed by the Trustee to be satisfactory, showing that
at the date therein mentioned such Person had on deposit with such
depositary, or exhibited to it, the Bearer Securities therein described; or
such facts may be proved by the certificate or affidavit of the Person
holding such Bearer Securities, if such certificate or affidavit is deemed
by the Trustee to be satisfactory. The Trustee and the Company may assume
that such ownership of any Bearer Security continues until (1) another
certificate or affidavit bearing a later date issued in respect of the same
Bearer Security is produced, or (2) such Bearer Security is produced to the
Trustee by some other Person, or (3) such Bearer Security is surrendered in
exchange for a Registered Security, or (4) such Bearer Security is no
longer Outstanding. The principal amount and serial numbers of Bearer
Securities held by the Person so executing such instrument or writing and
the date of holding the same may also be proved in any other manner which
the Trustee deems sufficient.
(e) If the Company shall solicit from the Holders of any Registered
Securities any request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company may, at its option, by Board Resolution,
fix in advance a record date for the determination of Holders of Registered
Securities entitled to give such request, demand, authorization, direction,
notice, consent, waiver or other Act, but the Company shall have no
obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of Registered
Securities of record at the close of business on such record date shall be
deemed to be Holders for the purposes of determining whether Holders of the
requisite proportion of Outstanding Securities have authorized or agreed or
consented to such request, demand, authorization, direction, notice,
consent, waiver or other Act, and for that purpose the Outstanding
Securities shall be computed as of such record date; provided that no such
authorization, agreement or consent by the Holders of Registered Securities
on such record date shall be deemed effective unless it shall become
effective pursuant to the provisions of this Indenture not later than six
months after the record date.
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(f) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued
upon the registration of transfer thereof or in exchange therefor or in
lieu thereof in respect of anything done or suffered to be done by the
Trustee, any Security Registrar, any Paying Agent or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
SECTION 105. NOTICES ETC. TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company
addressed to the attention of its Treasurer at the address of its principal
office specified in the first paragraph of this instrument or at any other
address previously furnished in writing to the Trustee by the Company.
SECTION 106. NOTICE TO HOLDERS OF SECURITIES; WAIVER.
Except as otherwise expressly provided herein or in the form of Securities
of any particular series pursuant to the provisions of this Indenture, where
this Indenture provides for notice to Holders of Securities of any event,
(1) such notice shall be sufficiently given to Holders of Registered
Securities if in writing and mailed, first-class postage prepaid, to each
Holder of a Registered Security affected by such event, at his address as
it appears in the Security Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such
Notice; and
(2) such notice shall be sufficiently given to Holders of Bearer
Securities, if any, if published in an Authorized Newspaper in The City of
New York and, if the Securities of such series are then listed on any stock
exchange outside the United States, in an Authorized Newspaper in such city
as the Company shall advise the Trustee that such stock exchange so
requires, on a Business Day at least twice, the first such publication to
be not earlier than the earliest date and not later than the latest date
prescribed for the giving of such notice.
In any case where notice to Holders of Registered Securities is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder of a Registered Security shall affect the
sufficiency of such notice with respect to other Holders of Registered
Securities or the sufficiency of any notice to Holders of Bearer Securities
given as provided herein. In case by reason of the suspension of regular mail
service or by reason of any other cause it shall be impracticable to give such
notice by mail, then such notification as shall be made with the approval of the
Trustee shall constitute a sufficient notification for every purpose hereunder.
In case by reason of the suspension of publication of any Authorized
Newspaper or Authorized Newspapers or by reason of any other cause it shall be
impracticable to publish any notice to Holders of Bearer Securities as provided
above, then such notification to Holders of Bearer Securities as shall be given
with the approval of the Trustee shall constitute sufficient notice to such
Holders for every purpose hereunder. Neither
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failure to give notice by publication to Holders of Bearer Securities as
provided above, nor any defect in any notice so published, shall affect the
sufficiency of any notice mailed to Holders of Registered Securities as provided
above.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be equivalent of such notice. Waivers
of notice by Holders of Securities shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
SECTION 107. LANGUAGE OF NOTICES, ETC.
Any request, demand, authorization, direction, notice, consent, election or
waiver required or permitted under this Indenture shall be in the English
language, except that, if the Company so elects, any published notice may be in
an official language of the country of publication.
SECTION 108. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Indenture by any of
the provisions of the Trust Indenture Act, such required provisions shall
control.
SECTION 109. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 110. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
SECTION 111. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Securities or coupons
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 112. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Securities or coupons, express or
implied, shall give to any Person, other than the parties hereto, any Security
Registrar, any Paying Agent and their successors hereunder and the Holders of
Securities or coupons, any benefit or any legal or equitable right, remedy or
SECTION 113. GOVERNING LAW.
This Indenture and the Securities and coupons shall be governed by and
controlled in accordance with the laws of the State of New York.
SECTION 114. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture
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or the Securities or coupons other than a provision in the Securities which
specifically states that such provision shall apply in lieu of this Section)
payment of interest or any Additional Amounts or principal (and premium, if any)
need not be made at such Place of Payment on such date, but may be made on the
next succeeding Business Day at such Place of Payment with the same force and
effect as if made on the Interest Payment Date or Redemption Date, or at the
Stated Maturity, and no interest shall accrue on the amount so payable for the
period from and after such Interest Payment Date, Redemption Date or Stated
Maturity, as the case may be.
ARTICLE TWO
SECURITY FORMS
SECTION 201. FORMS GENERALLY.
The Registered Securities, if any, of each series and the Bearer
Securities, if any, of each series, related coupons, if any, and temporary
global Securities, if any, shall be in the form established by or pursuant to a
Board Resolution or in one or more indentures supplemental hereto, shall have
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture or any indenture supplemental hereto and
may have such letters, numbers or other marks of identification and such legends
or endorsements placed thereon as may, consistently herewith, be determined by
the officers executing such Securities, as evidenced by their execution of such
Securities.
Unless otherwise provided as contemplated by Section 301 with respect to
any series of Securities, the Securities of each series shall be issuable in
registered form without coupons. If so provided as contemplated by Section 301,
the Securities of a series also shall be issuable in bearer form, with or
without interest coupons attached.
The definitive Securities and coupons shall be printed, lithographed or
engraved or produced by any combination of these methods on a steel engraved
border or steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities, as evidenced by their
execution of such Securities or coupons.
SECTION 202. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK,
as Trustee
By....................................
Authorized Officer
ARTICLE THREE
THE SECURITIES
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
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The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution, and set forth in an Officers'
Certificate, or established in one or more indentures supplemental hereto:
(1) the title of the Securities and the series in which such
Securities shall be included;
(2) any limit upon the aggregate principal amount of the Securities of
such title or the Securities of such series which may be authenticated and
delivered under this Indenture (except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu
of, other Securities of the series pursuant to Section 304, 305, 306, 906
or 1107);
(3) whether Securities of the series are to be issuable as Registered
Securities, Bearer Securities (with or without coupons) or both; any
restrictions applicable to the offer, sale or delivery of Bearer Securities
and the terms upon which Bearer Securities of the series may be exchanged
for Registered Securities of the series and vice versa; and whether any
Securities of the series are to be issuable initially in global form and,
if so, (i) whether beneficial owners of interests in any such global
Security may exchange such interests for Securities of such series and of
like tenor of any authorized form and denomination and the circumstances
under which any such exchanges may occur, if other than in the manner
specified in Section 305 and (ii) the name of the depository or the U.S.
Depository, as the case may be, with respect to any global Security;
(4) the date as of which any Bearer Securities of the series and any
temporary global Security representing Outstanding Securities of the series
shall be dated if other than the date of original issuance of the first
Security of the series to be issued;
(5) if Securities of the series are to be issuable as Bearer
Securities, whether interest in respect of any portion of a temporary
Bearer Security in global form (representing all of the Outstanding Bearer
Securities of the series) payable in respect of an Interest Payment Date
prior to the exchange of such temporary Bearer Security for definitive
Securities of the series shall be paid to any clearing organization with
respect to the portion of such temporary Bearer Security held for its
account and, in such event, the terms and conditions (including any
certification requirements) upon which any such interest payment received
by a clearing organization will be credited to the Persons entitled to
interest payable on such Interest Payment Date;
(6) the date or dates on which the principal of such Securities is
payable;
(7) the rate or rates at which such Securities shall bear interest, if
any, or any method by which such rate or rates shall be determined, the
date or dates from which such interest shall accrue, the Interest Payment
Dates on which such interest shall be payable and the Regular Record Date
for the interest payable on Registered Securities on any Interest Payment
Date, whether and under what circumstances Additional Amounts on such
securities shall be payable in respect of specified taxes, assessments or
other governmental charges withheld or deducted and, if so, whether the
Company has the option to redeem the affected Securities rather than pay
such Additional Amounts, and the basis upon which interest shall be
calculated if other than that of a 360 day year of twelve 90-day months;
(8) the place or places, if any, in addition to or other than the
Borough of Manhattan, The City of New York, where the principal of (and
premium, if any) and interest on or Additional Amounts, if any, payable in
respect of such Securities shall be payable;
(9) the period or periods within which, the price or prices at which
and the terms and conditions upon which such Securities may be redeemed, in
whole or in part, at the option of the Company;
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(10) the obligation, if any, of the Company to redeem or purchase such
Securities pursuant to any sinking fund or analogous provisions or at the
option of a Holder thereof and the period or periods within which, the
price or prices at which and the terms and conditions upon which such
Securities shall be redeemed or purchased, in whole or in part, pursuant to
such obligation, and any provisions for the remarketing of such Securities;
(11) the denominations in which Registered Securities of the series,
if any, shall be issuable if other than denominations of $1,000 and any
integral multiple thereof, and the denominations in which Bearer Securities
of the series, if any, shall be issuable if other than the denomination of
$5,000;
(12) if other than the principal amount thereof, the portion of the
principal amount of such Securities which shall be payable upon declaration
of acceleration of the Maturity thereof pursuant to Section 502;
(13) if other than such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public or
private debts, the coin or currency, including composite currencies, in
which payment of the principal of (and premium, if any) and interest, if
any, on, and Additional Amounts in respect of such Securities shall be
payable;
(14) if the principal of (and premium, if any) or interest, if any,
on, and Additional Amounts in respect of, such Securities are to be
payable, at the election of the Company or a Holder thereof, in a coin or
currency, including composite currencies, other than that in which the
Securities are stated to be payable, the period or periods within which,
and the terms and conditions upon which, such election may be made;
(15) if the amount of payments of principal of (and premium, if any)
or interest, if any, on, and Additional Amounts in respect of, such
Securities may be determined with reference to an index, formula or other
method or based on a coin or currency other than that in which the
Securities are stated to be payable, the manner in which such amounts shall
be determined;
(16) the right, if any, to defer payments of interest by extending the
interest payment periods and specify the duration of such extension, the
Interest Payment Dates on which such interest shall be payable and whether
and under what circumstances Additional Amounts on such securities shall be
payable in respect thereof;
(17) if the Securities of such series are to be issuable in definitive
form (whether upon original issue or upon exchange of a temporary Security
of such series) only upon receipt of certain certificates or other
documents or satisfaction of other conditions, then the form and terms of
such certificates, documents or conditions; and
(18) any other terms of such Securities (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series and the coupons appertaining to Bearer
Securities of such series, if any, shall be substantially identical except as to
denomination and the rate or rates of interest, if any, and Stated Maturity, the
date from which interest, if any, shall accrue and except as may otherwise be
provided in or pursuant to such Board Resolution and set forth in such Officers'
Certificate or in any such indenture supplemental hereto. All Securities of any
one series need not be issued at the same time, and unless otherwise provided, a
series may be reopened for issuances of additional Securities of such series.
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If any of the terms of the Securities of any series are established by
action taken pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of such series.
SECTION 302. DENOMINATIONS.
Unless other denominations and amounts may from time to time be fixed by or
pursuant to a Board Resolution, the Registered Securities of each series, if
any, shall be issuable in registered form without coupons in denominations of
$25,000 and any integral multiple thereof and the Bearer Securities of each
series, if any, shall be issuable in the denomination of $5,000, or in such
other denominations and amounts as may from time to time be fixed by or pursuant
to a Board Resolution.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Securities shall be executed on behalf of the Company by its Chairman
of the Board, President, Vice President serving as Chief Financial Officer or
its Treasurer under its corporate seal reproduced thereon and attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Securities may be manual or facsimile. Coupons shall bear the
facsimile signature of the Treasurer or any Assistant Treasurer of the Company.
Securities and coupons bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series, together with any
coupons appertaining thereto, executed by the Company to the Trustee for
authentication, together with the Board Resolution and Officers' Certificate or
supplemental indenture with respect to such Securities referred to in Section
301 and a Company Order for the authentication and delivery of such Securities,
and the Trustee in accordance with the Company Order and subject to the
provisions hereof shall authenticate and deliver such Securities. In
authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive, and (subject to Section 601) shall be fully protected in
relying upon, an Opinion of Counsel stating,
(a) the form and terms of such Securities and coupons, if any, have
been established in conformity with the provisions of this Indenture;
(b) that all conditions precedent to the authentication and delivery
of such Securities, together with the coupons, if any, appertaining
thereto, have been complied with and that such Securities and coupons, when
authenticated and delivered by the Trustee and issued by the Company in the
manner and subject to any conditions specified in such Opinion of Counsel,
will constitute valid and legally binding obligations of the Company,
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, reorganization and other laws of general applicability relating
to or affecting the enforcement of creditors' rights and to general equity
principles,
(c) that all laws and requirements in respect of the execution and
delivery by the Company of such Securities and coupons, if any, have been
complied with; and
(d) as to such other matters as the Trustee may reasonably request.
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The Trustee shall not be required to authenticate such Securities if the
issue of such Securities pursuant to this Indenture will affect the Trustee's
own rights, duties or immunities under the Securities and this Indenture or
otherwise in a manner which is not reasonably acceptable to the Trustee or if
the Trustee being advised by counsel determines that such action may not
lawfully be taken.
Each Registered Security shall be dated the date of its authentication.
Each Bearer Security and any temporary Bearer Security in global form shall be
dated as of the date specified as contemplated by Section 301.
No Security or coupon appertaining thereto shall be entitled to any benefit
under this Indenture or be valid or obligatory for any purpose, unless there
appears on such Security a certificate of authentication substantially in the
form provided for in Section 202 or 615 executed by or on behalf of the Trustee
by the manual signature of one of its authorized signers, and such certificate
upon any Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder. Except as
permitted by Section 306 or 307, the Trustee shall not authenticate and deliver
any Bearer Security unless all appurtenant coupons for interest then matured
have been detached and cancelled.
SECTION 304. TEMPORARY SECURITIES.
Pending the preparation of definitive Securities of any series, the Company
may execute and deliver to the Trustee, and upon Company Order the Trustee shall
authenticate and deliver, in the manner provided in Section 303, temporary
Securities of such series which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued, in registered form, or, if authorized, in bearer form with one or
more coupons or without coupons, and with such appropriate insertions,
omissions, substitutions and other variations as the officers executing such
Securities may determine, as evidenced by their execution of such Securities.
In the case of Bearer Securities of any series, such temporary Securities may be
in global form, representing all of the Outstanding Bearer Securities of such
series.
Except in the case of temporary Securities in global form, which shall be
exchanged in accordance with the provisions thereof, if temporary Securities of
any series are issued, the Company will cause definitive Securities of that
series to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities of such series shall be
exchangeable for definitive Securities of such series containing identical terms
and provisions upon surrender of the temporary Securities of such series at an
office or agency of the Company maintained for such purpose pursuant to Section
1002, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities of any series (accompanied by any unmatured coupons
appertaining thereto) the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of authorized denominations of the same series containing
identical terms and provisions; PROVIDED, HOWEVER, that no definitive Bearer
Security, except as provided pursuant to Section 301, shall be delivered in
exchange for a temporary Registered Security; and PROVIDED, FURTHER, that a
definitive Bearer Security shall be delivered in exchange for a temporary Bearer
Security only in compliance with the conditions set forth therein. Unless
otherwise specified as contemplated by Section 301 with respect to a temporary
global Security, until so exchanged the temporary Securities of any series shall
in all respects be entitled to the same benefits under this Indenture as
definitive Securities of such series.
SECTION 305. REGISTRATION, TRANSFER AND EXCHANGE.
With respect to the Registered Securities of each series, if any, the
Company shall cause to be kept at an office or agency of the Company maintained
pursuant to Section 1002, a register (herein sometimes referred to as the
"Security Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of the Registered
Securities of each series and of transfers of the Registered Securities of each
series. Such office or agency shall be the "Security Registrar" for the
Registered Securities,
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if any, of each series of Securities. In the event that the Trustee shall not
be the Security Registrar, it shall have the right to examine the Security
Register at all reasonable times.
Upon surrender for registration of transfer of any Registered Security of
any series at any office or agency of the Company maintained for that series
pursuant to Section 1002, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Registered Securities of the same series, of any
authorized denominations, of a like aggregate principal amount bearing a number
not contemporaneously outstanding and containing identical terms and provisions.
At the option of the Holder, Registered Securities of any series may be
exchanged for other Registered Securities of the same series containing
identical terms and provisions, in any authorized denominations, and of a like
aggregate principal amount, upon surrender of the Securities to be exchanged at
any such office or agency. Whenever any Registered Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Registered Securities which the holder making the
exchange is entitled to receive.
At the option of the Holder, Bearer Securities of any series may be
exchanged for Registered Securities of the same series containing identical
terms and provisions, of any authorized denominations and aggregate principal
amount, upon surrender of the Bearer Securities to be exchanged at any such
office or agency, with all unmatured coupons and all matured coupons in default
thereto appertaining. If the Holder of a Bearer Security is unable to produce
any such unmatured coupon or coupons or matured coupon or coupons in default,
such exchange may be effected if the Bearer Securities are accompanied by
payment in funds acceptable to the Company and the Trustee in an amount equal to
the face amount of such missing coupon or coupons, or the surrender of such
missing coupon or coupons may be waived by the Company and the Trustee if there
is furnished to them such security or indemnity as they may require to save each
of them and any Paying Agent harmless. If thereafter the Holder of such
Security shall surrender to any Paying Agent any such missing coupon in respect
of which such a payment shall have been made, such Holder shall be entitled to
receive the amount of such payment; PROVIDED, HOWEVER, that, except as otherwise
provided in Section 1002, interest represented by coupons shall be payable only
upon presentation and surrender of those coupons at an office or agency located
outside the United States. Notwithstanding the foregoing, in case a Bearer
Security of any series is surrendered at any such office or agency in exchange
for a Registered Security of the same series and like tenor after the close of
business at such office or agency on (i) any Regular Record Date and before the
opening of business at such office or agency on the relevant Interest Payment
Date, or (ii) any Special Record Date and before the opening of business at such
office or agency on the related date for payment of Defaulted Interest, such
Bearer Security shall be surrendered without the coupon relating to such
Interest Payment Date or proposed date of payment, as the case may be (or, if
such coupon is so surrendered with such Bearer Security, such coupon shall be
returned to the person so surrendering the Bearer Security), and interest or
Defaulted Interest, as the case may be, will not be payable on such Interest
Payment Date or proposed date for payment, as the case may be, in respect of the
Registered Security issued in exchange for such Bearer Security, but will be
payable only to the Holder of such coupon when due in accordance with the
provisions of this Indenture.
If expressly provided with respect to the Securities of any series, at the
option of the Holder, Registered Securities of such series may be exchanged for
Bearer Securities upon such terms and conditions as may be provided with respect
to such series.
Whenever any Securities are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive.
Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 301, any global Security shall be exchangeable only if
(i) the Securities Depository is at any time unwilling or unable to continue as
Securities Depository and a successor depository is not appointed by the Company
within 60 days, (ii) the Company executes and delivers to the Trustee a Company
Order to the effect that such global Security
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shall be so exchangeable, or (iii) an Event of Default has occurred and is
continuing with respect to the Securities. If the beneficial owners of
interests in a global Security are entitled to exchange such interests for
Securities of such series and of like tenor and principal amount of any
authorized form and denomination, as specified as contemplated by Section 301,
then without unnecessary delay but in any event not later than the earliest date
on which such interests may be so exchanged, the Company shall deliver to the
Trustee definitive Securities of that series in aggregate principal amount equal
to the principal amount of such global Security, executed by the Company. On or
after the earliest date on which such interests may be so exchanged, such global
Securities shall be surrendered from time to time by the U.S. Depository or such
other depository as shall be specified in the Company Order with respect
thereto, and in accordance with instructions given to the Trustee and the U.S.
Depository or such depository, as the case may be (which instructions shall be
in writing but need not comply with Section 102 or be accompanied by an Opinion
of Counsel), as shall be specified in the Company Order with respect thereto to
the Trustee, as the Company's agent for such purpose, to be exchanged, in whole
or in part, for definitive Securities of the same series without charge. The
Trustee shall authenticate and make available for delivery, in exchange for each
portion of such surrendered global Security, a like aggregate principal amount
of definitive Securities of the same series of authorized denominations and of
like tenor as the portion of such global Security to be exchanged which (unless
the Securities of the series are not issuable both as Bearer Securities and as
Registered Securities, in which case the definitive Securities exchanged for the
global Security shall be issuable only in the form in which the Securities are
issuable, as specified as contemplated by Section 301) shall be in the form of
Bearer Securities or Registered Securities, or any combination thereof, as shall
be specified by the beneficial owner thereof; PROVIDED, HOWEVER, that no such
exchanges may occur during a period beginning at the opening of business 15 days
before any selection of Securities of that series to be redeemed and ending on
the relevant Redemption Date; and PROVIDED, FURTHER, that (unless otherwise
specified as contemplated by Section 301) no Bearer Security delivered in
exchange for a portion of a global Security shall be mailed or otherwise
delivered to any location in the United States. Promptly following any such
exchange in part, such global Security shall be returned by the Trustee to such
depository or the U.S. Depository, as the case may be, or such other depository
or U.S. Depository referred to above in accordance with the instructions of the
Company referred to above. If a Registered Security is issued in exchange for
any portion of a global Security after the close of business at the office or
agency where such exchange occurs on (i) any Regular Record Date and before the
opening of business at such office or agency on the relevant Interest Payment
Date, or (ii) any Special Record Date and before the opening of business at such
office or agency on the related proposed date for payment of interest or
Defaulted Interest, as the case may be, interest will not be payable on such
Interest Payment Date or proposed date for payment, as the case may be, in
respect of such Registered Security, but will be payable on such Interest
Payment Date or proposed date for payment, as the case may be, only to the
Person to whom interest in respect of such portion of such global Security is
payable in accordance with the provisions of this Indenture.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Registered Security presented or surrendered for registration of
transfer, or for exchange or redemption shall (if so required by the Company or
the Security Registrar for such series of Security presented) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Company and such Security Registrar duly executed, by the Holder thereof or
his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange, or redemption of Securities, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 304, 906 or 1206 not involving any transfer.
The Company shall not be required (i) to issue, register the transfer of or
exchange any Securities of any series during a period beginning at the opening
of business 15 days before the day of the mailing of a notice
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of redemption of Securities of that series selected for redemption under Section
1103 and ending at the close of business on the day of such mailing, or (ii) to
register the transfer of or exchange any Registered Security so selected for
redemption in whole or in part, except, in the case of any Security to be
redeemed in part, the portion thereof not to be redeemed, or (iii) to exchange
any Bearer Security so selected for redemption except that such a Bearer
Security may be exchanged for a Registered Security of that series, provided
that such Registered Security shall be immediately surrendered for redemption
with written instruction for payment consistent with the provisions of this
Indenture.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.
If any mutilated Security or a Security with a mutilated coupon
appertaining to it is surrendered to the Trustee, the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a new Security
of the same series containing identical terms and of like principal amount and
bearing a number not contemporaneously outstanding, with coupons corresponding
to the coupons, if any, appertaining to the surrendered Securities.
If there be delivered to the Company and to the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security or coupon,
and (ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice to
the Company or the Trustee that such Security or coupon has been acquired by a
bona fide purchaser, the Company shall execute and upon its request the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security or in exchange for the Security to which a destroyed, lost or stolen
coupon appertains (with all appurtenant coupons not destroyed, lost or stolen),
a new Security of the same series containing identical terms and of like
principal amount and bearing a number not contemporaneously outstanding, with
coupons corresponding to the coupons, if any, appertaining to such destroyed,
lost or stolen Security or to the Security to which such destroyed, lost or
stolen coupon appertains.
In case any such mutilated, destroyed, lost or stolen Security or coupon
has become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security or coupon; PROVIDED,
HOWEVER, that payment of principal of (and premium, if any) and any interest on
Bearer Securities shall, except as otherwise provided in Section 1002, be
payable only at an office or agency located outside the United States and,
unless otherwise specified as contemplated by Section 301, any interest on
Bearer Securities shall be payable only upon presentation and surrender of the
coupons appertaining thereto.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Security of any series, with its coupons, if any, issued pursuant
to this Section in lieu of any destroyed, lost or stolen Security, or in
exchange for a Security to which a destroyed, lost or stolen coupon appertains,
shall constitute an original additional contractual obligation of the Company,
whether or not the destroyed, lost or stolen Security and its coupons, if any,
or the destroyed, lost or stolen coupon shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities of that series and their
coupons, if any, duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities or coupons.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED
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Interest on any Registered Security which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall, if so provided in
such Security, be paid to the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest. In case a Bearer Security of any series is
surrendered in exchange for a Registered Security of such series after the close
of business (at an office of agency in a Place of Payment for such series) on
any Regular Record Date and before the opening of business (at such office or
agency) on the next succeeding Interest Payment Date, such Bearer Security shall
be surrendered without the coupon relating to such Interest Payment Date and
interest will not be payable on such Interest Payment Date in respect of the
Registered Security issued in exchange for such Bearer Security, but will be
payable only to the Holder of such coupon when due in accordance with the
provisions of this Indenture.
Any interest on any Registered Security of any series which is payable, but
is not punctually paid or duly provided for, on any Interest Payment Date for
such Registered Security (herein called "Defaulted Interest") shall forthwith
cease to be payable to the Holder on the relevant Regular Record Date by virtue
of having been such Holder, and such Defaulted Interest may be paid by the
Company, at its election in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Registered Securities affected (or their
respective Predecessor Securities) are registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each such Registered Security and the date of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this Clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted Interest
which shall be not more than 15 days and not less than 10 days prior to the
date of the proposed payment and not less than 10 days after the receipt by
the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date and, in the name
and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor to
be mailed, first-class postage prepaid, to each Holder of such Registered
Securities at his address as it appears in the Security Register not less
than 10 days prior to such Special Record Date. The Trustee may, in its
discretion, in the name and at the expense of the Company, cause a similar
notice to be published at least once in a newspaper, customarily published
in the English language on each Business Day and of general circulation in
the Borough of Manhattan, The City of New York, but such publication shall
not be a condition precedent to the establishment of such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the Persons in whose names such
Registered Securities (or their respective Predecessor Securities) are
registered at the close of business on such Special Record Date and shall
no longer be payable pursuant to the following Clause (2). In case a
Bearer Security of any series is surrendered at the office or agency in a
Place of Payment for such series in exchange for a Registered Security of
such series after the close of business at such office or agency on any
Special Record Date and before the opening of business at such office or
agency on the related proposed date for payment of Defaulted Interest, such
Bearer Security shall be surrendered without the coupon relating to such
proposed date of payment and Defaulted Interest will not be payable on such
proposed date of payment in respect of the Registered Security issued in
exchange for such Bearer Security, but will be payable only to the Holder
of such coupon when due in accordance with the provisions of this
Indenture.
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(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which such Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this Clause,
such payment shall be deemed practicable by the Trustee.
At the option of the Company, interest on Registered Securities of any
series that bear interest may be paid by mailing a check to the address of the
person entitled thereto as such address shall appear in the Security Register.
Subject to the foregoing provisions of this Section and Section 305, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.
SECTION 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a Registered Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Registered Security is registered as the
owner of such Registered Security for the purpose of receiving payment of
principal of (and premium, if any), and (subject to Sections 305 and 307)
interest on and Additional Amounts with respect to, such Registered Security and
for all other purposes whatsoever, whether or not such Registered Security be
overdue, and neither the Company, the Trustee nor any agent of the Company or
the Trustee shall be affected by notice to the contrary.
The Company, the Trustee and any agent of the Company or the Trustee may
treat the bearer of any Bearer Security and the bearer of any coupon as the
absolute owner of such Security or coupon for the purpose of receiving payment
thereof or on account thereof and for all other purposes whatsoever, whether or
not such Security or coupon be overdue, and neither the Company, the Trustee nor
any agent of the Company or the Trustee shall be affected by notice to the
contrary.
SECTION 309. CANCELLATION.
All Securities and coupons surrendered for payment, redemption,
registration of transfer or exchange or for credit against any sinking fund
payment shall, if surrendered to any Person other than the Trustee, be delivered
to the Trustee, and any such Securities and coupons and Securities and coupons
surrendered directly to the Trustee for any such purpose shall be promptly
cancelled by it. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder
which the Company may have acquired in any manner whatsoever, and all Securities
so delivered shall be promptly cancelled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section, except as expressly permitted by this Indenture. All cancelled
Securities and coupons held by the Trustee shall be destroyed by it unless by a
Company Order the Company directs their return to it.
SECTION 310. COMPUTATION OF INTEREST.
Except as otherwise specified as contemplated by Section 301 for Securities
of any series, interest on the Securities of each series shall be computed on
the basis of a 360 day year of twelve 30-day months.
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ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
Upon the direction of the Company by a Company Order this Indenture shall
cease to be of further effect (except as to any surviving rights of registration
of transfer or exchange of Securities herein expressly provided for and any
right to receive Additional Amounts, as provided in Section 1004), and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered and
all coupons appertaining thereto (other than (i) coupons appertaining
to Bearer Securities surrendered for exchange for Registered
Securities and maturing after such exchange, whose surrender is not
required or has been waived as provided in Section 305, (ii)
Securities and coupons which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 306, (iii)
coupons appertaining to Securities called for redemption and maturing
after the relevant Redemption Date, whose surrender has been waived as
provided in Section 1106, and (iv) Securities and coupons for whose
payment money has theretofore been deposited in trust or segregated
and held in trust by the Company and thereafter repaid to the Company
or discharged from such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(B) all such Securities and, in the case of (i) or (ii) below,
any such coupons appertaining thereto not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) if redeemable at the option of the Company, are to
be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company, and the Company, in the case of (i), (ii) or (iii)
above, has deposited or caused to be deposited with the Trustee
as trust funds in trust for the purpose an amount sufficient to
pay and discharge the entire indebtedness on such Securities and
coupons not theretofore delivered to the Trustee for
cancellation, for principal (and premium, if any) and interest,
and any Additional Amounts with respect thereto, to the date of
such deposit (in the case of Securities which have become due and
payable) or to the Stated Maturity or Redemption Date, as the
case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
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In the event there are Securities of two or more series hereunder, the
Trustee shall be required to execute an instrument acknowledging satisfaction
and discharge of this Indenture only if requested to do so with respect to
Securities of all series as to which it is Trustee and if the other conditions
thereto are met. In the event there are two or more Trustees hereunder, then
the effectiveness of any such instrument shall be conditioned upon receipt of
such instrument from all Trustees hereunder.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities, the coupons
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and any interest and Additional Amounts for whose payment such money has
been deposited with the Trustee; but such money need not be segregated from
other funds except to the extent required by law.
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT.
"Event of Default", wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon or any Additional
Amounts payable in respect of any Security of that series when such
interest or Additional Amounts becomes due and payable, and continuance of
such default for a period of 30 days; PROVIDED, HOWEVER, that a valid
extension of an interest payment period by the Company in accordance with
the terms of the Securities of such series shall not constitute a default
in the payment of interest for this purpose; or
(2) default in the payment of the principal of (and premium, if any,
on) any Security of that series when it becomes due and payable at
Maturity; or
(3) default in the deposit of any sinking fund payment, when and as
due by the terms of a Security of that series; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with or which has been expressly included
in this Indenture solely for the benefit of series of Securities other than
that series), and continuance of such default or breach for a period of 60
days after there has been given, by registered or certified mail, to the
Company by the Trustee or to the Company and the Trustee by the Holders of
at least 10% in principal amount of the Outstanding Securities of that
series a written notice specifying such default or breach and requiring it
to be remedied and stating that such notice is a "Notice of Default"
hereunder; or
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(5) a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of the Company in an involuntary case under
any applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of the Company or for any
substantial part of its property, or ordering the winding-up or liquidation
of its affairs, and such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or
(6) the Company shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or similar official) of the Company or for any substantial
part of its property, or shall make any general assignment for the benefit
of creditors, or shall fail generally to pay its debts as they become due
or shall take any corporate action in furtherance of any of the foregoing;
or
(7) any other Event of Default provided with respect to Securities of
that series.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default with respect to Securities of any series at the time
Outstanding occurs and is continuing, then and in every such case the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal of all the Securities of
that series, or such lesser amount as may be provided for in the Securities of
that series, to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by the Holders), and upon any such
declaration such principal or such lesser amount shall become immediately due
and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue installments of interest on and any Additional
Amounts payable in respect of all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities of
that series which have become due otherwise than by such declaration
of acceleration and interest thereon at the rate or rates borne by or
provided for in such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue installments of interest and Additional Amounts
at the rate or rates borne by or provided for in such Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
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(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series
which has become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
The Company covenants that if
(1) default is made in the payment of any instalment of interest on
or any Additional Amounts payable in respect of any Security when such
interest or Additional Amounts shall have become due and payable and such
default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium,
if any, on) any Security at its Maturity.
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities and coupons, the whole amount then due and payable on
such Securities and coupons for principal (and premium, if any) and interest and
Additional Amounts, if any, with interest upon the overdue principal (and
premium, if any) and, to the extent that payment of such interest shall be
legally enforceable, upon overdue installments of interest or any Additional
Amounts, at the rate or rates borne by or provided for in such Securities, and,
in addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series and any
related coupons by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount, or such lesser
amount as may be provided for in the Securities of that series, of
principal (and premium, if any) and interest and any Additional Amounts
owing and unpaid in respect of the Securities and to file such other papers
or documents as
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may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents or counsel) and of
the Holders allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, liquidator, sequestrator (or other similar
official) in any such judicial proceeding is hereby authorized by each Holder of
Securities and coupons to make such payments to the Trustee and, in the event
that the Trustee shall consent to the making of such payments directly to the
Holders of Securities and coupons, to pay to the Trustee any amount due to it
for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel and any other amounts due the Trustee under
Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Security
or coupon any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or coupons or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder of a
Security or coupon in any such proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES
OR COUPONS.
All rights of action and claims under this Indenture or any of the
Securities or coupons may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or coupons or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery or judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Holders of the Securities and
coupons in respect of which such judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (and premium,
if any), interest or any Additional Amounts, upon presentation of the Securities
or coupons, or both, as the case may be, and the notation thereon of the payment
if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
607;
SECOND: To the payment of the amounts then due and unpaid upon the
Securities and coupons for principal (and premium, if any) and interest and
any Additional Amounts payable in respect of which or for the benefit of
which such money has been collected, ratably, without preference or
priority of any kind, according to the aggregate amounts due and payable on
such Securities and coupons for principal (and premium, if any), interest
and Additional Amounts, respectively;
THIRD: The balance, if any, to the Person or Persons entitled thereto.
SECTION 507. LIMITATION ON SUITS.
No Holder of any Security of any series or any related coupons shall have
any right to institute any proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless
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(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities of that
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other such
Holders or Holders of any other series, or to obtain or to seek to obtain
priority or preference over any other Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all such Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM
AND INTEREST.
Notwithstanding any other provision in this Indenture, the Holder of any
Security or coupon shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Sections 305 and 307) interest on and any Additional Amounts in respect of such
Security or payment of such coupon on the respective Stated Maturity or
Maturities expressed in such Security or coupon (or, in the case of redemption,
on the Redemption Date) and to institute suit for the enforcement of any such
payment, and such right shall not be impaired without the consent of such
Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder of a Security or coupon has instituted any
proceeding to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case the Company, the Trustee and the Holders of Securities and coupons shall,
subject to any determination in such proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities or coupons in the last paragraph
of Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders of Securities or coupons is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion of employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER.
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No delay or omission of the Trustee or of any Holder of any Security or
coupon to exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders of Securities or coupons may
be exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders of Securities or coupons, as the case may be.
SECTION 512. CONTROL BY HOLDERS OF SECURITIES.
The Holders of a majority in principal amount of the Outstanding Securities
of any series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee with respect to the Securities of
such series, PROVIDED that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and
(3) such direction is not unduly prejudicial to the rights of other
Holders of Securities of such series.
SECTION 513. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series and any related coupons waive any past default
hereunder with respect to such series and its consequences, except a default
(1) in the payment of the principal of (and premium, if any) or
interest on or Additional Amounts payable in respect of any Security of
such series, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 514. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Security or
coupon by his acceptance thereof shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any party litigant in
such suit, other than the Trustee, of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
including the Trustee, having due regard to the merits and good faith of the
claims or defenses made by such party litigant, but the provisions of this
Section shall not apply to any suit instituted by the Company, the Trustee or by
any Holder, or group of Holders, holding in the aggregate more than 10% in
principal amount of the Outstanding Securities of any series, or to any suit
instituted by any Holder of any Security or coupon for the enforcement of the
payment of the principal of (and premium, if any) or interest on or any
Additional Amounts in respect of any Security or
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the payment of any coupon on or after the respective Stated Maturities expressed
in such Security (or, in the case of redemption, on or after the Redemption
Date) or interest on any overdue principal of any Security.
SECTION 515. WAIVER OF STAY, EXTENSION OR USERY LAWS.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usery law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties, and only such
duties, as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture; but in the case of any such certificates or
opinions which by any provisions hereof are specifically required to
be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as
a prudent man would exercise or use under the circumstances in the conduct
of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act, or its own wilful misconduct, EXCEPT that
(1) this Subsection shall not be construed to limit the effect
of Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of a majority in principal amount of the
Outstanding Securities of any series, relating to the time, method and
place of conducting any proceeding for any remedy available to the
Trustee, or exercising any
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trust or power conferred upon the Trustee, under this Indenture with
respect to the Securities of such series; and
(4) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to
it.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
this Section.
SECTION 602. NOTICE OF DEFAULTS.
Within 90 days after the occurrence of any default hereunder with respect
to the Securities of any series, the Trustee shall transmit by mail to all
Holders of Securities of such series entitled to receive reports pursuant to
Section 703(c), notice of such default hereunder known to the Trustee, unless
such default shall have been cured or waived, PROVIDED, HOWEVER, that, except in
the case of a default in the payment of the principal of (and premium, if any)
or interest on, or any Additional Amounts with respect to, any Security of such
series or in the payment of any sinking fund instalment with respect to
Securities of such series, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or a
trust committee of directors and/or Responsible Officers of the Trustee in good
faith determine that the withholding of such notice is in the interests of the
Holders of Securities and coupons of such series; and PROVIDED, FURTHER, that in
the case of any default of the character specified in Section 501(4) with
respect to Securities of such series, no such notice to Holders shall be given
until at least 30 days after the occurrence thereof. For the purpose of this
Section, the term "default" means any event which is, or after notice or lapse
of time or both would become, an Event of Default with respect to Securities of
such series.
SECTION 603. CERTAIN RIGHTS OF TRUSTEE.
Except as otherwise provided in Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, or other paper or document reasonably believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order (other than
delivery of any Security to the Trustee for authentication and delivery
pursuant to Section 303 which shall be sufficiently evidenced as provided
therein) and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
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(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders of Securities of any series or any related coupons
pursuant to this Indenture, unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request
or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or
attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Securities, except the Trustee's
certificate of authentication, and in any coupons shall be taken as the
statements of the Company, and the Trustee or any Authenticating Agent assumes
no responsibility for their correctness. The Trustee makes no representations
as to the validity or sufficiency of this Indenture or of the Securities or
coupons. The Trustee or any Authenticating Agent shall not be accountable for
the use or application by the Company of Securities or the proceeds thereof.
SECTION 605. MAY HOLD SECURITIES.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and coupons and, subject
to Sections 310(b) and 311 of the Trust Indenture Act, may otherwise deal with
the Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Security Registrar or such other agent.
SECTION 606. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company.
SECTION 607. COMPENSATION AND REIMBURSEMENT.
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the
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expenses and disbursements of its agents and counsel), except any such
expense, disbursements or advance as may be attributable to its negligence
or bad faith; and
(3) to indemnify the Trustee and its agents for, and to hold them
harmless against, any loss, liability or expense incurred without
negligence or bad faith on their part, arising out of or in connection with
the acceptance or administration of the trust or trusts hereunder,
including the costs and expenses of defending themselves against any claim
or liability in connection with the exercise or performance of any of their
powers or duties hereunder.
As security for the performance of the obligations of the Company under
this Section the Trustee shall have a lien prior to the Securities of any series
upon all property and funds held or collected by the Trustee as such, except
funds held in trust for the payment of principal of (or premium, if any) or
interest on Securities.
SECTION 608. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder that is a corporation (or
other person permitted to so act by the Commission permitted by the Trust
Indenture Act to act as trustee under an indenture qualified under the Trust
Indenture Act and that has a combined capital and surplus (computed in
accordance with Section 310(a)(2) of the Trust Indenture Act) of at least
$50,000,000. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section or Section 310(a)(5) of the Trust
Indenture Act, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
SECTION 609. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 610.
(b) The Trustee may resign at any time with respect to the Securities
of one or more series giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 610
shall not have been delivered to the Trustee within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition
any court of competent jurisdiction for the appointment of a successor
Trustee with respect to such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal
amount of the Outstanding Securities of such series, delivered to the
Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the obligations
imposed upon it under Section 310(b) of the Trust Indenture Act with
respect to Securities of any series after written request therefor by
the Company or by any Holder of a Security who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 608 and
shall fail to resign after written request therefor by the Company or
by any such Holder of a Security, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation ,conservation or liquidation,
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then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to all Securities or the Securities of such series, or (ii)
subject to Section 315(e) of the Trust Indenture Act, any Holder of a Security
who has been a bona fide Holder of a Security of any series for at least six
months may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee with respect to
all Securities of such series and the appointment of a successor Trustee or
Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause,
with respect to the Securities of one or more series, the Company, by a
Board Resolution, shall promptly appoint a successor Trustee or Trustees
with respect to the Securities of that or those series (it being understood
that any such successor Trustee may be appointed with respect to the
Securities of one or more or all of such series and that at any time there
shall be only one Trustee with respect to the Securities of any particular
series) and shall comply with the applicable requirements of Section 610.
If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee with respect to the
Securities of any series shall be appointed by Act of the Holders of a
majority in principal amount of the Outstanding Securities of such series
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of Section 610, become the
successor Trustee with respect to the Securities of such series and to that
extent supersede the successor Trustee appointed by the Company. If no
successor Trustee with respect to the Securities of any series shall have
been so appointed by the Company or the Holders of Securities and accepted
appointment in the manner required by Section 610, any Holder of a Security
who has been a bona fide Holder of a Security of such series for at least
six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a
successor Trustee with respect to the Securities of such series.
(f) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and
each appointment of a successor Trustee with respect to the Securities of
any series by mailing written notice of such event by first-class mail,
postage prepaid, to the Holders of Registered Securities, if any, of such
series as their names and addresses appear in the Security Register and, if
Securities of such series are issued as Bearer Securities, by publishing
notice of such event once in an Authorized Newspaper in each Place of
Payment located outside the United States. Each notice shall include the
name of the successor Trustee with respect to the Securities of such series
and the address of its Corporate Trust Office.
SECTION 610. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee
an instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested
with all the rights, powers, trusts and duties of the retiring Trustee;
but, on the request of the Company or the successor Trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers
and trusts of the retiring Trustee and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such
retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company,
the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such
appointment and which (1) shall
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contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of
that or those series to which the appointment of such successor Trustee
relates, (2) if the retiring Trustee is not retiring with respect to all
Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series as
to which the retiring Trustee is not retiring shall continue to be vested
in the retiring Trustee, and (3) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one
Trustee, it being understood that nothing herein or in such supplemental
indenture shall constitute such Trustees co-trustees of the same trust,
that each such Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any
other such Trustee and that no Trustee shall be responsible for any notice
given to, or received by, or any act or failure to act on the part of any
other Trustee hereunder, and upon the execution and delivery of such
supplemental indenture the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein, such retiring
Trustee shall with respect to the Securities of that or those series to
which the appointment of such successor Trustee relates have no further
responsibility for the exercise of rights and powers or for the performance
of the duties and obligations vested in the Trustee under this Indenture
other than as hereinafter expressly set forth, and each such successor
Trustee without any further act, deed or conveyance, shall become vested
with all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series to which the appointment
of such successor Trustee relates; but, on request of the Company or any
successor Trustee, such retiring Trustee shall duly assign, transfer and
deliver to such successor Trustee, to the extent contemplated by such
supplemental indenture, the property and money held by such retiring
Trustee hereunder with respect to the Securities of that or those series to
which the appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts
referred to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 611. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
SECTION 612. APPOINTMENT OF AUTHENTICATING AGENT.
The Trustee may appoint an Authenticating Agent or Agents with respect to
one or more series of Securities which shall be authorized to act on behalf of
the Trustee to authenticate Securities of such series issued upon original issue
or exchange, registration of transfer or partial redemption thereof or pursuant
to Section 306, and Securities so authenticated shall be entitled to the
benefits of this Indenture and shall be valid and obligatory for all purposes as
if authenticated by the Trustee hereunder. Wherever reference is made in this
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Indenture to the authentication and delivery of Securities by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
an Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice
of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall (i) mail written notice
of such appointment by first-class mail, postage prepaid, to all Holders of
Registered Securities, if any, of the series with respect to which such
Authenticating Agent will serve, as their names and addresses appear in the
Security Register, and (ii) if Securities of the series are issued as Bearer
Securities, publish notice of such appointment at least once in an Authorized
Newspaper in the place where such successor Authenticating Agent has its
principal office if such office is located outside the United States. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Trustee agrees to pay each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 607.
The provisions of Sections 308, 604 and 605 shall be applicable to each
Authenticating Agent.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternate
certificate of authentication in the following form.
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
................................
As Trustee
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BY .............................
As Authenticating Agent
BY .............................
Authorized Signatory
If all of the Securities of any series may not be originally issued at one
time, and if the Trustee does not have an office capable of authenticating
Securities upon original issuance located in a Place of Payment where the
Company wishes to have Securities of such series authenticated upon original
issuance, the Trustee, if so requested in writing (which writing need not comply
with Section 102) by the Company, shall appoint in accordance with this Section
612 an Authenticating Agent having an office in a Place of Payment designated by
the Company with respect to such series of Securities.
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not later than fifteen days after the Regular
Record Date for interest for each series of Securities, a list, in such
form as the Trustee may reasonably require, of the names and addresses of
the Holders of Registered Securities of such series as of such Regular
Record Date, or if there is no Regular Record Date for interest for such
series of Securities, semi-annually, upon such dates as are set forth in
the Board Resolution or indenture supplemental hereto authorizing such
series, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished,
PROVIDED, HOWEVER, that, so long as the Trustee is the Security Registrar, no
such list shall be required to be furnished.
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
The Trustee shall comply with the obligations imposed upon it pursuant to
Section 312 of the Trust Indenture Act.
Every Holder of Securities or coupons, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company, the Trustee,
any Paying Agent or any Security Registrar shall be held accountable by reason
of the disclosure of any information as to the names and addresses of the
Holders of Securities in accordance with Section 312 of the Trust Indenture Act,
regardless of the source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing any material pursuant
to a request made under Section 312(b) of the Trust Indenture Act.
SECTION 703. REPORTS BY TRUSTEE.
(a) Within 60 days after May 15 of each year commencing with the
first May 15 following the first issuance of Securities pursuant to Section
301, if required by Section 313(a) of the Trust Indenture Act, the Trustee
shall transmit, pursuant to Section 313(c) of the Trust Indenture Act, a
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brief report dated as of such May 15 with respect to any of the events
specified in said Section 313(a) which may have occurred since the later of
the immediately preceding May 15 and the date of this Indenture.
(b) The Trustee shall transmit the reports required by Section 313(b)
of the Trust Indenture Act at the times specified therein.
(c) Reports pursuant to this Section shall be transmitted in the
manner and to the Persons required by Sections 313(c) and 313(d) of the
Trust Indenture Act. The Company will notify the Trustee when any series
of Securities are listed on any securities exchange.
SECTION 704. REPORTS BY COMPANY.
The Company shall:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to file
with the Commission pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934; or, if the Company is not required to file
information, documents or reports pursuant to either of said sections, then
it shall file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Securities Exchange Act of 1934 in
respect of a security listed and registered on a national securities
exchange as may be prescribed from time to time in such rules and
regulations;
(2) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Company with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and
(3) transmit within 30 days after the filing thereof with the
Trustee, in the manner and to the extent provided in Section 703(c) with
respect to reports pursuant to Section 703(a), such summaries of any
information, documents and reports required to be filed by the Company
pursuant to paragraphs (1) and (2) of this Section as may be required by
rules and regulations prescribed from time to time by the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE
SECTION 801. CONSOLIDATIONS AND MERGERS OF COMPANY AND SALES, LEASES AND
CONVEYANCES PERMITTED SUBJECT TO CERTAIN CONDITIONS.
The Company may consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into any other corporation,
PROVIDED that in any such case, (i) either the Company shall be the continuing
corporation, or the successor corporation shall be a corporation organized and
existing under the laws of the [United States of America or a State](1) thereof
and such successor corporation shall expressly
- ----------------------
(1) Adjust for non-U.S. obligor
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assume the due and punctual payment of the principal of (and premium, if any),
any interest on, and any Additional Amounts payable pursuant to Section 1004
with respect to, all the Securities, according to their tenor, and the due and
punctual performance and observance of all of the covenants and conditions of
this Indenture to be performed by the Company by supplemental indenture
satisfactory to the Trustee, executed and delivered to the Trustee by such
corporation, and (ii) the Company or such successor corporation, as the case may
be, shall not, immediately after such merger or consolidation, or such sale,
lease or conveyance, be in default in the performance of any such covenant or
condition.
SECTION 802. RIGHTS AND DUTIES OF SUCCESSOR CORPORATION.
In case of any such consolidation, merger, sale, lease or conveyance and
upon any such assumption by the successor corporation, such successor
corporation shall succeed to and be substituted for the Company, with the same
effect as if it had been named herein as the party of the first part, and the
predecessor corporation, except in the event of a lease, shall be relieved of
any further obligation under this Indenture and the Securities and coupons.
Such successor corporation thereupon may cause to be signed, and may issue
either in its own name or in the name of the Company, any or all of the
Securities and coupons issuable hereunder which theretofore shall not have been
signed by the Company and delivered to the Trustee; and, upon the order of such
successor corporation, instead of the Company, and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee shall
authenticate and shall deliver any Securities and coupons which previously shall
have been signed and delivered by the officers of the Company to the Trustee for
authentication, and any Securities or coupons which such successor corporation
thereafter shall cause to be signed and delivered to the Trustee for that
purpose. All the Securities and coupons so issued shall in all respects have
the same legal rank and benefit under this Indenture as the Securities and
coupons theretofore or thereafter issued in accordance with the terms of this
Indenture as though all of such Securities and coupons had been issued at the
date of the execution hereof.
In case of any such consolidation, merger, sale, lease or conveyance, such
changes in phraseology and form (but not in substance) may be made in the
Securities and coupons thereafter to be issued as may be appropriate.
SECTION 803. OFFICERS' CERTIFICATE AND OPINION OF COUNSEL.
The Trustee, subject to the provisions of Sections 601 and 603, may receive
an Officers' Certificate and an Opinion of Counsel as conclusive evidence that
any such consolidation, merger, sale, lease or conveyance, and any such
assumption, complies with the provisions of this Article.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders of Securities or coupons, the Company,
when authorized by a Board Resolution, and the Trustee, at any time and from
time to time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to the Company,
and the assumption by any such successor of the covenants of the Company
herein and in the Securities contained; or
(2) to add to the covenants of the Company, for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be
for the benefit of less than all series of Securities,
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stating that such covenants are expressly being included solely for the
benefit of such series) or to surrender any right or power herein conferred
upon the Company; or
(3) to add to or change any of the provisions of this Indenture to
provide that Bearer Securities may be registrable as to principal, to
change or eliminate any restrictions on the payment of principal (or
premium, if any) on Registered Securities or of principal (or premium, if
any) or any interest on Bearer Securities, to permit Registered Securities
to be exchanged for Bearer Securities or to permit the issuance of
Securities in uncertificated form, PROVIDED any such action shall not
adversely affect the interests of the Holders of Securities of any series
or any related coupons in any material respect; or
(4) to establish the form of terms of Securities of any series as
permitted by Sections 201 and 301; or
(5) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this Indenture
as shall be necessary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee, pursuant to the requirements
of Section 610 (b); or
(6) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be inconsistent with
the provisions of this Indenture which shall not adversely affect the
interest of the Holders of Securities of any series or any related coupons
in any material respect; or
(7) to add to, delete from or revise the conditions, limitations and
restrictions on the authorized amount, terms or purposes of issue,
authentication and delivery of Securities, as herein set forth; or
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than 66-2/3% in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities of such series under this Indenture; PROVIDED, HOWEVER,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any instalment
of interest on, any Security, or reduce the principal amount thereof or the
rate of interest thereon or any Additional Amounts payable in respect
thereof, or any premium payable upon the redemption thereof, or change the
obligation of the Company to pay Additional Amounts pursuant to Section
1004 (except as contemplated by Section 801(i) and permitted by Section
901(1)), or reduce the amount of the principal of an Original Issue
Discount Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 502, or change any
Place of Payment where, or the coin or currency in which, any Security or
any premium or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date), or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose
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Holders is required for any waiver (of compliance with certain provisions
of this Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture, or reduce the requirements of Section 1404
for quorum or voting, or
(3) modify any of the provisions of this Section, or Section 513,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected thereby.
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders of Securities under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
and of any coupons appertaining thereto shall be bound thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities of any series authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article may, and shall if required
by the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.
ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST.
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The Company covenants and agrees for the benefit of the Holders of each
series of Securities that it will duly and punctually pay the principal of (and
premium, if any), interest on and any Additional Amounts payable in respect of
the Securities of that series in accordance with the terms of such series of
Securities, any coupons appertaining thereto and this Indenture. Any interest
due on and any Additional Amounts payable in respect of Bearer Securities on or
before Maturity, other than Additional Amounts, if any, payable as provided in
Section 1004 in respect of principal of (or premium, if any, on) such a
Security, shall be payable only upon presentation and surrender of the several
coupons for such interest installments as are evidenced thereby as they
severally mature.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series (but not Bearer
Securities, except as otherwise provided below, unless such Place of Payment is
located outside the United States) may be presented or surrendered for payment,
where Securities of that series may be surrendered for registration of transfer
or exchange and where notices and demands to or upon the Company in respect of
the Securities of that series and this Indenture may be served. If Securities
of a series are issuable as Bearer Securities, the Company will maintain,
subject to any laws or regulations applicable thereto, an office or agency in a
Place of Payment for such series which is located outside the United States
where Securities of such series and the related coupons may be presented and
surrendered for payment (including payment of any Additional Amounts payable on
Securities of such series pursuant to Section 1004); PROVIDED, HOWEVER, that if
the Securities of such series are listed on The Stock Exchange of the United
Kingdom and the Republic of Ireland or the Luxembourg Stock Exchange or any
other stock exchange located outside the United States and such stock exchange
shall so require, the Company will maintain a Paying Agent in London, Luxembourg
or any other required city located outside the United States, as the case may
be, so long as the Securities of such series are listed on such exchange. The
Company will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, except that Bearer Securities of that series and the related coupons
may be presented and surrendered for payment (including payment of any
Additional Amounts payable on Bearer Securities of that series pursuant to
Section 1004) at the place specified for the purpose pursuant to Section 301,
and the Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
Except as otherwise provided in the form of Bearer Security of any
particular series pursuant to the provisions of this Indenture, no payment of
principal, premium or interest on Bearer Securities shall be made at any office
or agency of the Company in the United States or by check mailed to any address
in the United States or by transfer to an account maintained with a bank located
in the United States; PROVIDED, HOWEVER, payment of principal of and any premium
and interest in U.S. dollars (including Additional Amounts payable in respect
thereof) on any Bearer Security may be made at the Corporate Trust Office of the
Trustee in the Borough of Manhattan, The City of New York if (but only if)
payment of the full amount of such principal, premium, interest or Additional
Amounts at all offices outside the United States maintained for the purpose by
the Company in accordance with this Indenture is illegal or effectively
precluded by exchange controls or other similar restrictions.
The Company may also from time to time designate one or more other offices
or agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; PROVIDED, HOWEVER, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in each Place of Payment for Securities of any series for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency. Unless otherwise set forth in a Board Resolution or indenture
supplemental hereto with respect to a series of Securities, the Company hereby
designates as the Place of Payment for each series of Securities the Borough of
Manhattan,
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The City of New York, and initially appoints the Trustee at its Corporate Trust
Office as the Company's office or agency for each of such purposes in such City.
SECTION 1003. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any), or interest on, any of the Securities of
that series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided, and will promptly notify the Trustee of its
action or failure so to act
Whenever the Company shall have one or more Paying Agents for any series of
Securities, it will, on or prior to each due date of the principal of (and
premium, if any), or interest on, any Securities of that series, deposit with a
Paying Agent a sum sufficient to pay the principal (and premium, if any) or
interest so becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal, premium or interest, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of its action
or failure so to act.
The Company will cause each Paying Agent for any series of Securities other
than the Trustee to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee, subject to the provisions of
this Section, that such Paying Agent will
(1) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Securities of that series in trust for the
benefit of the Persons entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities of that series) in the making of any
payment of principal (and premium, if any) or interest on the Securities of
that series; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or of any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Except as otherwise provided in the form of Securities of any particular
series pursuant to the provisions of this Indenture, any money deposited with
the Trustee or any Paying Agent, or then held by the Company, in trust for the
payment of the principal of (and premium, if any) or interest on any Security of
any series and remaining unclaimed for two years after such principal (and
premium, if any) or interest has become due and payable shall be paid to the
Company on Company Request, or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Security or any coupon appertaining
thereto shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in an Authorized Newspaper in
each Place of Payment or to be mailed to Holders of Registered Securities, or
both, notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of
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such publication or mailing, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 1004. ADDITIONAL AMOUNTS.
If the Securities of a series provide for the payment of Additional
Amounts, the Company will pay to the Holder of any Security of any series or any
coupon appertaining thereto Additional Amounts as provided therein. Whenever in
this Indenture there is mentioned, in any context, the payment of the principal
of (or premium, if any) or interest on, or in respect of, any Security of any
series or any related coupon or the net proceeds received on the sale or
exchange of any Security of any series, such mention shall be deemed to include
mention of the payment of Additional Amounts provided for in this Section to the
extent that, in such context, Additional Amounts are, were or would be payable
in respect thereof pursuant to the provisions of this Section and express
mention of the payment of Additional Amounts (if applicable) in any provisions
hereof shall not be construed as excluding Additional Amounts in those
provisions hereof where such express mention is not made.
If the Securities of a series provide for the payment of Additional
Amounts, at least 10 days prior to the first Interest Payment Date with respect
to that series of Securities (or if the Securities of that series will not bear
interest prior to Maturity, the first day on which a payment of principal (and
premium, if any) is made), and at least 10 days prior to each date of payment of
principal (and premium, if any) or interest if there has been any change with
respect to the matters set forth in the below-mentioned Officers' Certificate,
the Company will furnish the Trustee and the Company's principal Paying Agent or
Paying Agents, if other than the Trustee, with an Officers' Certificate
instructing the Trustee and such Paying Agent or Paying Agents whether such
payment of principal (and premium, if any) or interest on the Securities of that
series shall be made to Holders of Securities of that series or the related
coupons who are United States Aliens without withholding for or on account of
any tax, assessment or other governmental charge described in the Securities of
that Series. If any such withholding shall be required, then such Officers'
Certificate shall specify by country the amount, if any, required to be withheld
on such payments to such Holders of Securities or coupons and the Company will
pay to the Trustee or such Paying Agent the Additional Amounts required by this
Section. The Company covenants to indemnify the Trustee and any Paying Agent
for, and to hold them harmless against, any loss, liability or expense
reasonably incurred without negligence or bad faith on their part arising out of
or in connection with actions taken or omitted by any of them in reliance on any
Officers' Certificate furnished pursuant to this Section.
SECTION 1005. STATEMENT AS TO COMPLIANCE; NOTICE OF CERTAIN DEFAULTS.
(a) The Company will deliver to the Trustee, within 120 days after
the end of each fiscal year, a written statement, which need not comply
with Section 102, signed by the Chairman of the Board, the President or a
Vice President and by the Treasurer, an Assistant Treasurer, the Controller
or an Assistant Controller of the Company, stating, as to each signer
thereof, that
(1) a review of the activities of the Company during such year
and of performance under this Indenture has been made under his
supervision, and
(2) to the best of his knowledge, based on such review, (a) the
Company has fulfilled all of its obligations under this Indenture
throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known
to him and the nature and status thereof, and (b) no event has
occurred and is continuing which is, or after notice or lapse of time
or both would become, an Event of Default, or, if such an event has
occurred and is continuing, specifying each such event known to him
and the nature and status thereof.
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(b) The Company will deliver to the Trustee within five days after
the occurrence thereof, written notice of any event which after notice or
lapse of time or both would become an Event of Default pursuant to Clause
(4) of Section 501.
SECTION 1006. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Sections 1004 to 1005, inclusive, with
respect to the Securities of any series if before the time for such compliance
the Holders of at least a majority in principal amount of the Outstanding
Securities of such series shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such term,
provision or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such term, provision or condition shall remain in
full force and effect.
ARTICLE ELEVEN
SUBORDINATION OF SECURITIES
SECTION 1101 AGREEMENT TO SUBORDINATE.
The Company, for itself, its successors and assigns, covenants and agrees,
and each Holder of Securities, by his acceptance thereof, likewise covenants and
agrees, that the payment of the principal of (and premium, if any), interest on
and any Additional Amounts payable in respect of each and all of the Securities
is hereby expressly subordinated, to the extent and in the manner hereinafter
set forth, in right of payment to the prior payment in full of all Senior
Indebtedness.
SECTION 1102 DISTRIBUTION ON DISSOLUTION, LIQUIDATION AND REORGANIZATION;
SUBROGATION OF SECURITIES.
Upon any distribution of assets of the Company upon any dissolution,
winding up, liquidation or reorganization of the Company, whether in bankruptcy,
insolvency, reorganization or receivership proceedings or upon an assignment for
the benefit of creditors or any other marshalling of the assets and liabilities
of the Company or otherwise (subject to the power of a court of competent
jurisdiction to make other equitable provision reflecting the rights conferred
in this Indenture upon the Senior Indebtedness and the holders thereof with
respect to the Securities and the Holders thereof by a lawful plan or
reorganization under applicable bankruptcy law),
(1) the holders of all Senior Indebtedness shall be entitled to
receive payment in full of the principal thereof, premium, if any, interest
or additional amounts required in respect of certain taxes, and any
interest thereon, due thereon before the Holders of the Securities are
entitled to receive any payment upon the principal, premium, interest or
Additional Amounts of or on the Securities or interest on overdue amounts
thereof; and
(2) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to which the Holders
of the Securities or the Trustee would be entitled except for the
provisions of this Article Eleven shall be paid by the liquidating trustee
or agent or other person making such payment or distribution, whether a
trustee in bankruptcy, a receiver or liquidating trustee or otherwise,
directly to the holders of Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture under
which any instruments evidencing any of such Senior Indebtedness may have
been issued, ratably according to the aggregate amounts remaining unpaid on
account of the principal of, premium, if any, interest or additional
amounts
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required in respect of certain taxes, and any interest thereon, on the
Senior Indebtedness held or represented by each, to the extent necessary to
make payment in full of all Senior Indebtedness remaining unpaid, after
giving effect to any concurrent payment or distribution to the holders of
such Senior Indebtedness; and
(3) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities, shall be received by the Trustee or the
Holders of the Securities before all Senior Indebtedness is paid in full,
such payment or distribution shall be paid over to the holders of such
Senior Indebtedness or their representative or representatives or to the
trustee or trustees under any indenture under which any instruments
evidencing any of such Senior Indebtedness may have been issued, ratably as
aforesaid, for application to the payment of all Senior Indebtedness
remaining unpaid until all such Senior Indebtedness shall have been paid in
full, after giving effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the Holders of the
Securities shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of cash, property or
securities of the Company applicable to Senior Indebtedness until the principal,
premium, interest or Additional Amounts, and any interest thereon, of or on the
Securities shall be paid in full and no such payments or distributions to the
Holders of the Securities of cash, property or securities otherwise
distributable to the Senior Indebtedness shall, as between the Company, its
creditors other than the holders of Senior Indebtedness, and the Holders of the
Securities, be deemed to be a payment by the Company to or on account of the
Securities. It is understood that the provisions of this Article Eleven are and
are intended solely for the purpose of defining the relative rights of the
Holders of the Securities, on the one hand, and the holders of Senior
Indebtedness, on the other hand. Nothing contained in this Article Eleven or
elsewhere in this Indenture or in the Securities is intended to or shall impair,
as between the Company, its creditors other than the holders of Senior
Indebtedness, and the Holders of the Securities, the obligation of the Company,
which is unconditional and absolute, to pay to the Holders of the Securities the
principal, premium, interest or Additional Amounts, and any interest thereon, of
or on the Securities as and when the same shall become due and payable in
accordance with their terms, or to affect the relative rights of the Holders of
the Securities and creditors of the Company other than the holders of Senior
Indebtedness, nor shall anything herein or in the Securities prevent the Trustee
or the Holder of any Security from exercising all remedies otherwise permitted
by applicable law upon default under this Indenture, subject to the rights, if
any, under this Article Eleven of the holders of Senior Indebtedness in respect
of cash, property or securities of the Company received upon the exercise of any
such remedy. Upon any payment or distribution of assets of the Company referred
to in this Article Eleven, the Trustee shall be entitled to rely upon a
certificate of the liquidating trustee or agent or other person making any
distribution to the Trustee for the purpose of ascertaining the persons entitled
to participate in such distribution, the holders of Senior Indebtedness and
other indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon, and all other facts pertinent
thereto or to this Article Eleven.
The Trustee, however, shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness. The Trustee shall not be liable to any such
holder if it shall pay over or distribute to or on behalf of Holders of
Securities or the Company moneys or assets to which any holder of Senior
Indebtedness shall be entitled by virtue of this Article Eleven. The rights and
claims of the Trustee under Section 607 shall not be subject to the provisions
of this Article Eleven.
If the Trustee or any Holder of Securities does not file a proper claim or
proof of debt in the form required in any proceeding referred to above prior to
30 days before the expiration of the time to file such claim in such proceeding,
then the holder of any Senior Indebtedness is hereby authorized, and has the
right, to file an appropriate claim or claims for or on behalf of such Holder of
Securities.
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SECTION 1103 NO PAYMENT ON SECURITIES IN EVENT OF DEFAULT ON SENIOR
INDEBTEDNESS.
No payment by the Company on account of principal, premium, interest or
Additional Amounts, and any interest thereon, of or on the Securities shall be
made unless full payment of amounts then due for principal, premium, if any,
sinking funds, and interest or Additional Amounts on Senior Indebtedness has
been made or duly provided for in money or money's worth.
SECTION 1104 PAYMENTS ON SECURITIES PERMITTED.
Nothing contained in this Indenture or in any of the Securities shall (a)
affect the obligation of the Company to make, or prevent the Company from
making, at any time except as provided in Sections 1102 and 1103, payments of
principal, premium, interest or Additional Amounts, and any interest thereon, of
or on the Securities or (b) prevent the application by the Trustee of any moneys
deposited with it hereunder to the payment of or on account of the principal,
premium, interest or Additional Amounts, and any interest thereon, of or on the
Securities unless the Trustee shall have received at its Corporate Trust Office
written notice of any event prohibiting the making of such payment more than two
Business Days prior to the date fixed for such payment or prior to the execution
of an instrument to satisfy and discharge this Indenture based upon the deposit
of funds under Section 401(1)(B).
SECTION 1105 AUTHORIZATION OF HOLDERS OF SECURITIES TO TRUSTEE TO EFFECT
SUBORDINATION.
Each Holder of Securities by his acceptance thereof authorizes and directs
the Trustee on his behalf to take such action as may be necessary or appropriate
to effectuate the subordination as provided in this Article Eleven and appoints
the Trustee his attorney-in-fact for any and all such purposes.
SECTION 1106 NOTICES TO TRUSTEE.
The Company shall give prompt written notice to a Responsible Officer of
the Trustee located at the Corporate Trust Office of the Trustee of any fact
known to the Company which would prevent the making of any payment to or by the
Trustee in respect of the Securities. Notwithstanding the provisions of this
Article or any other provisions of this Indenture, neither the Trustee nor any
Paying Agent (other than the Company) shall be charged with knowledge of the
existence of any Senior Indebtedness or of any event which would prohibit the
making of any payment of moneys to or by the Trustee or such Paying Agent,
unless and until the Trustee or such Paying Agent shall have received (in the
case of the Trustee, at its Corporate Trust Office) written notice thereof from
the Company or from the holder of any Senior Indebtedness or from the trustee
for any such holder, together with proof satisfactory to the Trustee of such
holding of Senior Indebtedness or of the authority of such trustee; PROVIDED,
HOWEVER, that if at least two Business Days prior to the date upon which by the
terms hereof any such moneys may become payable for any purpose (including,
without limitation, the payment of the principal, premium, interest or
Additional Amounts, of or on any Security, or any interest thereon) or the date
on which the Trustee shall execute an instrument acknowledging satisfaction and
discharge of this Indenture, the Trustee shall not have received with respect to
such moneys or the moneys deposited with it as a condition to such satisfaction
and discharge the notice provided for in this Section 1106, then, anything
herein contained to the contrary notwithstanding, the Trustee shall have full
power and authority to receive such moneys and to apply the same to the purpose
for which they were received, and shall not be affected by any notice to the
contrary, which may be received by it on or after such two Business Days prior
to such date. The Trustee shall be entitled to rely on the delivery to it of a
written notice by a person representing himself to be a holder of Senior
Indebtedness (or a trustee on behalf of such holder) to establish that such a
notice has been given by a holder of Senior Indebtedness or a trustee on behalf
of any such holder. In the event that the Trustee determines in good faith that
further evidence is required with respect to the right of any Person as a holder
of Senior Indebtedness to participate in any payment or distribution pursuant to
this Article Eleven, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in
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such payment or distribution and any other facts pertinent to the rights of such
Person under this Article Eleven and, if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
SECTION 1107 TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS.
The Trustee shall be entitled to all the rights set forth in this Article
Eleven in respect of any Senior Indebtedness at any time held by it to the same
extent as any other holder of Senior Indebtedness and nothing in Section 613 or
elsewhere in this Indenture shall be construed to deprive the Trustee of any of
its rights as such holder.
SECTION 1108 MODIFICATION OF TERMS OF SENIOR INDEBTEDNESS.
Any renewal or extension of the time of payment of any Senior Indebtedness
or the exercise by the holders of Senior Indebtedness of any of their rights
under any instrument creating or evidencing Senior Indebtedness, including
without limitation the waiver of default thereunder, may be made or done all
without notice to or assent from Holders of the Securities or the Trustee.
No compromise, alteration, amendment, modification, extension, renewal or
other change of, or waiver, consent or other action in respect of, any liability
or obligation under or in respect of, or of any of the terms, covenants or
conditions of any indenture or other instrument under which any Senior
Indebtedness is outstanding or of such Senior Indebtedness, whether or not such
release is in accordance with the provisions of any applicable document, shall
in any way alter or affect any of the provisions of this Article Eleven or of
the Securities relating to the subordination thereof.
ARTICLE TWELVE
REDEMPTION OF SECURITIES
SECTION 1201. APPLICABILITY OF ARTICLE.
Redemption of Securities of any series at the option of the Company as
permitted or required by the terms of such Securities shall be made in
accordance with the terms of such Securities and this Article.
SECTION 1202. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Securities shall be evidenced by
a Company Order. In case of any redemption at the election of the Company of
less than all of the Securities of any series with the same issue date, interest
rate and Stated Maturity, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Securities of such series to be redeemed.
SECTION 1203. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.
If less than all the Securities of any series with the same issue date,
interest rate and Stated Maturity are to be redeemed, the particular Securities
to be redeemed shall be selected not more than 60 days prior to the Redemption
Date by the Trustee, from the Outstanding Securities of such series not
previously called for redemption, by such method as the Trustee shall deem fair
and appropriate and which may provide for the selection for redemption of
portions of the principal amount of Registered Securities of such series;
PROVIDED, HOWEVER, that no such partial redemption shall reduce the portion of
the principal amount of a Registered Security of such series not redeemed to
less than the minimum denomination for a Security of that series established
pursuant to Section 302.
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The Trustee shall promptly notify the Company and the Security Registrar
(if other than itself) in writing of the Securities selected for redemption and,
in the case of any Securities selected for partial redemption, the principal
amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal of such Securities which has been or is to be redeemed.
SECTION 1204. NOTICE OF REDEMPTION.
Notice of redemption shall be given in the manner provided in Section 106,
not less than 30 nor more than 60 days prior to the Redemption Date, unless a
shorter period is specified in the Securities to be redeemed, to the Holders of
Securities to be redeemed. Failure to give notice by mailing in the manner
herein provided to the Holder of any Registered Securities designated for
redemption as a whole or in part, or any defect in the notice to any such
Holder, shall not affect the validity of the proceedings for the redemption of
any other Securities or portion thereof.
Any notice that is mailed to the Holder of any Registered Securities in the
manner herein provided shall be conclusively presumed to have been duly given,
whether or not such Holder receives the notice.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all Outstanding Securities of any series are to be
redeemed, the identification (and, in the case of partial redemption, the
principal amount) of the particular Securities to be redeemed,
(4) in case any Registered Security is to be redeemed in part only,
the notice which relates to such Security shall state that on and after the
Redemption Date, upon surrender of such Security, the Holder of such
Security will receive, without charge, a new Registered Security or
Registered Securities of authorized denominations for the principal amount
thereof remaining unredeemed,
(5) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed, and, if applicable,
that interest thereon shall cease to accrue on and after said date,
(6) the place or places where such Securities, together in the case
of Bearer Securities with all coupons appertaining thereto, if any,
maturing after the Redemption Date, are to be surrendered for payment of
the Redemption Price, and
(7) that the redemption is for a sinking fund, if such is the case.
A notice of redemption published as contemplated by Section 106 need not
identify particular Registered Securities to be redeemed.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
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SECTION 1205. DEPOSIT OF REDEMPTION PRICE.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on and any Additional
Amounts with respect thereto, all the Securities or portions thereof which are
to be redeemed on that date.
SECTION 1206. SECURITIES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest and the coupons for such
interest appertaining to any Bearer Securities so to be redeemed, except to the
extent provided below, shall be void. Upon surrender of any such Security for
redemption in accordance with said notice, together with all coupons, if any,
appertaining thereto maturing after the Redemption Date, such Security shall be
paid by the Company at the Redemption Price, together with accrued interest (and
any Additional Amounts) to the Redemption Date; PROVIDED, HOWEVER, that
installments of interest on Bearer Securities whose Stated Maturity is on or
prior to the Redemption Date shall be payable only upon presentation and
surrender of coupons for such interest (at an office or agency located outside
the United States except as otherwise provided in Section 1002), and PROVIDED,
FURTHER, that installments of interest on Registered Securities whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant Record Dates according to their terms and
the provisions of Section 307.
If any Bearer Security surrendered for redemption shall not be accompanied
by all appurtenant coupons maturing after the Redemption Date, such Security may
be paid after deducting from the Redemption Price an amount equal to the face
amount of all such missing coupons, or the surrender of such missing coupon or
coupons may be waived by the Company and the Trustee if there be furnished to
them such security or indemnity as they may require to save each of them and any
Paying Agent harmless. If thereafter the Holder of such Security shall
surrender to the Trustee or any Paying Agent any such missing coupon in respect
of which a deduction shall have been made from the Redemption Price, such Holder
shall be entitled to receive the amount so deducted; PROVIDED, HOWEVER, that
interest (and any Additional Amounts) represented by coupons shall be payable
only upon presentation and surrender of those coupons at an office or agency
located outside of the United States except as otherwise provided in Section
1002.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate prescribed therefor in the
Security.
SECTION 1207. SECURITIES REDEEMED IN PART.
Any Registered Security which is to be redeemed only in part shall be
surrendered at any office or agency of the Company maintained for that purpose
pursuant to Section 1002 (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing) and the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Security without service charge,
a new Registered Security or Securities of the same series, containing identical
terms and provisions, of any authorized denomination as requested by such Holder
in aggregate principal amount equal to and in exchange for the unredeemed
portion of the principal of the Security so surrendered. If a Security in
global form is so surrendered, the Company shall execute, and the Trustee shall
authenticate and deliver to the U.S. Depository or other depository for such
Security in global form as shall be specified in the Company
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Order with respect thereto to the Trustee, without service charge, a new
Security in global form in a denomination equal to and in exchange for the
unredeemed portion of the principal of the Security in global form so
surrendered.
ARTICLE THIRTEEN
SINKING FUNDS
SECTION 1301. APPLICABILITY OF ARTICLE.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of a series, except as otherwise permitted or
required by any form of Security of such series issued pursuant to this
Indenture.
The minimum amount of any sinking fund payment provided for by the terms of
Securities of any series is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
terms of Securities of such series is herein referred to as an "optional sinking
fund payment". If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 1302. Each sinking fund payment shall be applied to the redemption
of Securities of any series as provided for by the terms of Securities of such
series.
SECTION 1302. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.
The Company may, in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of such series to be made pursuant to the
terms of such Securities as provided for by the terms of such series (1) deliver
Outstanding Securities of such series (other than any of such Securities
previously called for redemption or any of such Securities in respect of which
cash shall have been released to the Company), together in the case of any
Bearer Securities of such series with all unmatured coupons appertaining
thereto, and (2) apply as a credit Securities of such series which have been
redeemed either at the election of the Company pursuant to the terms of such
series of Securities or through the application of permitted optional sinking
fund payments pursuant to the terms of such Securities, PROVIDED that such
series of Securities have not been previously so credited. Such Securities
shall be received and credited for such purpose by the Trustee at the Redemption
Price specified in such Securities for redemption through operation of the
sinking fund and the amount of such sinking fund payment shall be reduced
accordingly. If as a result of the delivery or credit of Securities of any
series in lieu of cash payments pursuant to this Section 1302, the principal
amount of Securities of such series to be redeemed in order to exhaust the
aforesaid cash payment shall be less than $100,000, the Trustee need not call
Securities of such series for redemption, except upon Company Request, and such
cash payment shall be held by the Trustee or a Paying Agent and applied to the
next succeeding sinking fund payment, PROVIDED, HOWEVER, that the Trustee or
such Paying Agent shall at the request of the Company from time to time pay over
and deliver to the Company any cash payment so being held by the Trustee or such
Paying Agent upon delivery by the Company to the Trustee of Securities of that
series purchased by the Company having an unpaid principal amount equal to the
cash payment requested to be released to the Company.
SECTION 1303. REDEMPTION OF SECURITIES FOR SINKING FUND.
Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing mandatory sinking fund
payment for that series pursuant to the terms of that series, the portion
thereof, if any, which is to be satisfied by payment of cash and the portion
thereof, if any, which is to be satisfied by delivering and crediting of
Securities of that series pursuant to Section 1302, and the optional amount, if
any, to be added in cash to the next ensuing mandatory sinking fund payment, and
will also deliver to the Trustee any Securities
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to be so credited and not theretofore delivered. If such Officers' Certificate
shall specify an optional amount to be added in cash to the next ensuing
mandatory sinking fund payment, the Company shall thereupon be obligated to pay
the amount therein specified. Not less than 30 days before each such sinking
fund payment date the Trustee shall select the Securities to be redeemed upon
such sinking fund payment date in the manner specified in Section 1203 and cause
notice of the redemption thereof to be given in the name of and at the expense
of the Company in the manner provided in Section 1204. Such notice having been
duly given, the redemption of such Securities shall be made upon the terms and
in the manner stated in Sections 1206 and 1207.
ARTICLE FOURTEEN
REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1401. APPLICABILITY OF ARTICLE.
Securities of any series which are repayable at the option of the Holders
thereof before their Stated Maturity shall be repaid in accordance with the
terms of the Securities of such series. The repayment of any principal amount
of Securities pursuant to such option of the Holder to require repayment of
Securities before their Stated Maturity, for purposes of Section 309, shall not
operate as a payment, redemption or satisfaction of the indebtedness represented
by such Securities unless and until the Company, at its option, shall deliver or
surrender the same to the Trustee with a directive that such Securities be
cancelled. Notwithstanding anything to the contrary contained in this Article
Thirteen, in connection with any repayment of Securities, the Company may
arrange for the purchase of any Securities by an agreement with one or more
investment bankers or other purchasers to purchase such Securities by paying to
the Holders of such Securities on or before the close of business on the
repayment date an amount not less than the repayment price payable by the
Company on repayment of such Securities, and the obligation of the Company to
pay the repayment price of such Securities shall be satisfied and discharged to
the extent such payment is so paid by such purchasers.
ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1501. PURPOSES FOR WHICH MEETINGS MAY BE CALLED.
If Securities of a series are issuable as Bearer Securities, a meeting
of Holders of Securities of such series may be called at any time and from time
to time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities of such
series.
SECTION 1502. CALL, NOTICE AND PLACE OF MEETINGS.
(a) The Trustee may at any time call a meeting of Holders of
Securities of any series for any purpose specified in Section 1501, to be
held at such time and at such place in the Borough of Manhattan, The City
of New York, or in London as the Trustee shall determine. Notice of every
meeting of Holders of Securities of any series, setting forth the time and
the place of such meeting and in general terms the action proposed to be
taken at such meeting, shall be given, in the manner provided in Section
106, not less than 21 nor more than 180 days prior to the date fixed for
the meeting.
(b) In case at any time the Company, pursuant to a Board Resolution,
or the Holders of at least 10% in principal amount of the Outstanding
Securities of any series shall have requested the Trustee to call a meeting
of the Holders of Securities of such series for any purpose specified in
Section 1501, by written request setting forth in reasonable detail the
action proposed to be taken at the
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meeting, and the Trustee shall not have the first publication of the notice
of such meeting within 21 days after receipt of such request or shall not
thereafter proceed to cause the meeting to be held as provided herein, then
the Company or the Holders of Securities of such series in the amount above
specified, as the case may be, may determine the time and the place in the
Borough of Manhattan, The City of New York, or in London for such meeting
and may call such meeting for such purposes by giving notice thereof as
provided in subsection (a) of this Section.
SECTION 1503. PERSONS ENTITLED TO VOTE AT MEETINGS.
To be entitled to vote at any meeting of Holders of Securities of any
series, a Person shall be (1) a Holder of one or more Outstanding Securities of
such series, or (2) a Person appointed by an instrument in writing as proxy for
a Holder or Holders of one or more Outstanding Securities of such series by such
Holder or Holders. The only Persons who shall be entitled to be present or to
speak at any meeting of Holders of Securities of any series shall be the Persons
entitled to vote at such meeting and their counsel, any representatives of the
Trustee and its counsel and any representatives of the Company and its counsel.
SECTION 1504. QUORUM; ACTION.
The Persons entitled to vote a majority in principal amount of the
Outstanding Securities of a series shall constitute a quorum for a meeting of
Holders of Securities of such series; PROVIDED, HOWEVER, that if any action is
to be taken at such meeting with respect to a consent or waiver which this
Indenture expressly provides may be given by the Holders of not less than
66-2/3% in principal amount of the Outstanding Securities of a series, the
Persons entitled to vote 66-2/3% in principal amount of the Outstanding
Securities of such series shall constitute a quorum. In the absence of a quorum
within 30 minutes of the time appointed for any such meeting, the meeting shall,
if convened at the request of Holders of Securities of such series, be
dissolved. In any other case the meeting may be adjourned for a period of not
less than 10 days as determined by the chairman of the meeting prior to the
adjournment of such meeting. In the absence of a quorum at any such adjourned
meeting, such adjourned meeting may be further adjourned for a period of not
less than 10 days as determined by the chairman of the meeting prior to the
adjournment of such adjourned meeting. Notice of the reconvening of any
adjourned meeting shall be given as provided in Section 1502(a), except that
such notice need be given only once not less than five days prior to the date on
which the meeting is scheduled to be reconvened. Notice of the reconvening of
an adjourned meeting shall state expressly the percentage, as provided above, of
the principal amount of the Outstanding Securities of such series which shall
constitute a quorum.
Except as limited by the proviso to Section 902, any resolution presented
to a meeting or adjourned meeting duly reconvened at which a quorum is present
as aforesaid may be adopted only by the affirmative vote of the Holders of a
majority in principal amount of the Outstanding Securities of that series;
PROVIDED, HOWEVER, that, except as limited by the proviso to Section 902, any
resolution with respect to any consent or waiver which this Indenture expressly
provides may be given by the Holders of not less than 66-2/3% in principal
amount of the Outstanding Securities of a series may be adopted at a meeting or
an adjourned meeting duly convened and at which a quorum is present as aforesaid
only by the affirmative vote of the Holders of 66-2/3% in principal amount of
the Outstanding Securities of that series; and PROVIDED, FURTHER, that, except
as limited by the proviso to Section 902, any resolution with respect to any
request, demand, authorization, direction, notice, consent, waiver or other
action which this Indenture expressly provides may be made, given or taken by
the Holders of a specified percentage, which is less than a majority, in
principal amount of the Outstanding Securities of a series may be adopted at a
meeting or an adjourned meeting duly reconvened and at which a quorum is present
as aforesaid by the affirmative vote of the Holders of such specified percentage
in principal amount of the Outstanding Securities of that series.
Any resolution passed or decision taken at any meeting of Holders of
Securities of any series duly held in accordance with this Section shall be
binding on all the Holders of Securities of such series and the related coupons,
whether or not present or represented at the meeting.
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SECTION 1505. DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT OF
MEETINGS.
(a) Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for
any meeting of Holders of Securities of such series in regard to proof of
the holding of Securities of such series and of the appointment of proxies
and in regard to the appointment and duties of inspectors of votes, the
submission and examination or proxies, certificates and other evidence of
the right to vote, and such other matters concerning the conduct of the
meeting as it shall deem appropriate. Except as otherwise permitted or
required by any such regulations, the holding of Securities shall be proved
in the manner specified in Section 104 and the appointment of any proxy
shall be proved in the manner specified in Section 104 or by having the
signature of the person executing the proxy witnessed or guaranteed by any
trust company, bank or banker authorized by Section 104 to certify to the
holding of Bearer Securities. Such regulations may provide that written
instruments appointing proxies, regular on their face, may be presumed
valid and genuine without the proof specified in Section 104 or other
proof.
(b) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been
called by the Company or by Holders of Securities as provided in Section
1502(b), in which case the Company or the Holders of Securities of the
series calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the Persons entitled
to vote a majority in principal amount of the Outstanding Securities of
such series represented at the meeting.
(c) At any meeting each Holder of a Security of such series or proxy
shall be entitled to one vote for each $1,000 principal amount of
Securities of such series held or represented by him; PROVIDED, HOWEVER,
that no vote shall be cast or counted at any meeting in respect of any
Security challenged as not Outstanding and ruled by the chairman of the
meeting to be not Outstanding. The chairman of the meeting shall have no
right to vote, except as a Holder of a Security of such series or proxy.
(d) Any meeting of Holders of Securities of any series duly called
pursuant to Section 1402 at which a quorum is present may be adjourned from
time to time by Persons entitled to vote a majority in principal amount of
the Outstanding Securities of such series represented at the meeting; and
the meeting may be held as so adjourned without further notice.
SECTION 1506. COUNTING VOTES AND RECORDING ACTION OF MEETINGS.
The vote upon any resolution submitted to any meeting of Holders of
Securities of any series shall be by written ballots on which shall be
subscribed the signatures of the Holders of Securities of such series or of
their representatives by proxy and the principal amounts and serial numbers of
the Outstanding Securities of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified
written reports in triplicate of all votes cast at the meeting. A record, at
least in triplicate, of the proceedings of each meeting of Holders of Securities
of any series shall be prepared by the secretary of the meeting and there shall
be attached to said record the original reports of the inspectors of votes on
any vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 1502 and, if
applicable, Section 1504. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
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ARTICLE SIXTEEN
MISCELLANEOUS PROVISIONS
SECTION 1601 SECURITIES IN FOREIGN CURRENCIES.
Whenever this Indenture provides for (i) any action by, or the
determination of any of the rights of, Holders of Securities of any series in
which not all of such Securities are denominated in the same currency, or (ii)
any distribution to Holders of Securities, in the absence of any provision to
the contrary in the form of Security of any particular series, any amount in
respect of any Security denominated in a currency other than United States
dollars shall be treated for any such action or distribution as that amount of
United States dollars that could be obtained for such amount on such reasonable
basis of exchange and as of the record date with respect to Registered
Securities of such series (if any) for such action, determination of rights or
distribution (or, if there shall be no applicable record date, such other date
reasonably proximate to the date of such action, determination of rights or
distribution) as the Company may specify in a written notice to the Trustee or,
in the absence of such written notice, as the Trustee may determine.
* * * * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture, dated as
of December , 1996 to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, all as of the day and year first above
written
MERRILL LYNCH & CO., INC.
[CORPORATE SEAL] By
----------------------------
Senior Vice President and
Treasurer
Attest:
- --------------------------
SECRETARY
THE CHASE MANHATTAN BANK
[CORPORATE SEAL]
By
----------------------------
VICE PRESIDENT
Attest:
- --------------------------
ASSISTANT SECRETARY
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- --------------------------------------------------------------------------------
AFFILIATE DEBENTURE GUARANTEE AGREEMENT
Merrill Lynch & Co., Inc., as Guarantor
[Merrill Lynch Affiliate], as Issuer
Dated as of December , 1996
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions and Interpretation . . . . . . . . . . . . . 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application . . . . . . . . . . . . 4
SECTION 2.2. Lists of Holders of Securities . . . . . . . . . . . . . 5
SECTION 2.3. Reports by the Investment Guarantee Trustee. . . . . 5
SECTION 2.4. Periodic Reverts to Investment Guarantee Trustee . . . . 5
SECTION 2.5. Evidence of Compliance with Conditions Precedent . . . . 6
SECTION 2.6. Events of Default; Waiver. . . . . . . . . . . . . . . . 6
ARTICLE III
POWERS, DUTIES AND RIGHTS OF INVESTMENT GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Investment Guarantee Trustee. . 7
SECTION 3.2. Certain Rights of Investment Guarantee Trustee. . . . . 9
SECTION 3.3. Not Responsible for Recitals or Issuance of Investment
Guarantee. . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV
INVESTMENT GUARANTEE TRUSTEE
SECTION 4.1. Investment Guarantee Trustee;
Eligibility. . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.2. Appointment, Removal and Resignation of Investment
Guarantee Trustee. . . . . . . . . . . . . . . . . . . . 12
ARTICLE V
GUARANTEE
SECTION 5.1. Guarantee. . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.2. Waiver of Notice and Demand. . . . . . . . . . . . . . . 13
SECTION 5.3. Obligations Not Affected . . . . . . . . . . . . . . . . 13
SECTION 5.4. Rights of Holders. . . . . . . . . . . . . . . . . . . . 14
SECTION 5.5. Guarantee of Payment . . . . . . . . . . . . . . . . . . 15
SECTION 5.6. Subrogation. . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.7. Independent Obligations. . . . . . . . . . . . . . . . . 15
ARTICLE VI
SUBORDINATION
SECTION 6.1. Ranking. . . . . . . . . . . . . . . . . . . . . . . . . 15
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ARTICLE VII
TERMINATION
SECTION 7.1. Termination. . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1. Exculpation. . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 8.2. Indemnification. . . . . . . . . . . . . . . . . . . . . 16
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Successors and Assigns . . . . . . . . . . . . . . . . . 17
SECTION 9.2. Amendments . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 9.3. Notices. . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 9.4. Benefit. . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 9.5. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . 18
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AFFILIATE DEBENTURE GUARANTEE AGREEMENT (this "Investment Guarantee"),
dated as of December , 1996, is executed and delivered by Merrill Lynch & Co.,
Inc., a Delaware corporation (the "Guarantor"), and The Chase Manhattan Bank, as
trustee (the "Investment Guarantee Trustee"), for the benefit of the Holder (as
defined herein) of the Affiliate Debenture (as defined herein) of [Merrill Lynch
Affiliate], a Delaware corporation (the "Issuer").
WHEREAS, pursuant to an Indenture (the "Affiliate Indenture"), dated
as of December , 1996, between the Issuer and The Chase Manhattan Bank, as
indenture trustee (in such capacity, the "Indenture Trustee"), the Issuer is
issuing to the Holder on the date hereof its % Debenture Due 2016 (the
"Affiliate Debenture");
WHEREAS, as incentive for the Holder to purchase the Affiliate
Debenture, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Investment Guarantee, to make Guarantee Payments
(as defined herein) to the Holder of the Affiliate Debenture on the terms and
conditions set forth herein; and
NOW, THEREFORE, in consideration of the purchase by the Holder of the
Affiliate Debenture, which purchase the Guarantor hereby acknowledges shall
benefit the Guarantor, the Guarantor executes and delivers this Investment
Guarantee for the benefit of the Holder.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 DEFINITIONS AND INTERPRETATION
In this Investment Guarantee, unless the context otherwise requires:
(a) Capitalized terms used in this Investment Guarantee but not
defined in the Preamble above have the respective meanings
assigned to them in this Section 1.1;
(b) Capitalized terms used in this Investment Guarantee but not
otherwise defined herein shall have the meanings assigned to them
in the Affiliate Indenture.
(c) a term defined anywhere in this Investment Guarantee has the same
meaning throughout;
(d) all references to "the Investment Guarantee" or "this Investment
Guarantee" are to this Investment
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Guarantee as modified, supplemented or amended from time to time;
(e) all references in this Investment Guarantee to Articles and
Sections are to Articles and Sections of this Investment
Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same meaning
when used in this Investment Guarantee, unless otherwise defined
in this Investment Guarantee or unless the context otherwise
requires; and
(g) a reference to the singular includes the plural and vice versa.
"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.
"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.
"CORPORATE TRUST OFFICE" means the office of the Investment Guarantee
Trustee at which the corporate trust business of the Investment Guarantee
Trustee shall, at any particular time, be principally administered, which office
at the date of execution of this Agreement is located at _______________________
_________________________________________________________________, Attention:
Corporate Trust Services Division.
"COVERED PERSON" means the Holder or any beneficial owner of the
Affiliate Debenture.
"EVENT OF DEFAULT" means a default by the Guarantor on any of its
payment or other obligations under this Investment Guarantee.
"GUARANTEE PAYMENTS" means, without duplication, with respect to the
Affiliate Debenture, to the extent not paid or made by the Issuer, the due and
punctual payment of the principal of, premium, if any, and interest on the
Affiliate Debenture, when and as the same shall become due and payable, whether
at maturity or upon declaration of acceleration or otherwise, according to the
terms of the Affiliate Debenture and of the Affiliate Indenture.
"HOLDER" shall mean any holder, as registered on the books and records
of the Issuer of the Affiliate Debenture. The initial Holder of the Affiliate
Debenture is the Partnership.
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"INDEMNIFIED PERSON" means the Investment Guarantee Trustee, any
Affiliate of the Investment Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Investment Guarantee Trustee.
"MAJORITY IN AGGREGATE PRINCIPAL AMOUNT OF THE AFFILIATE DEBENTURE"
means, except as provided by the Trust Indenture Act, a vote by Holder(s) of the
Affiliate Debenture, voting separately as a class, of more than 50% of the
outstanding aggregate principal amount of the Affiliate Debenture plus accrued
and unpaid interest to the date upon which the voting percentages are
determined.
"OFFICERS' CERTIFICATE" means, with respect to any Person, a
certificate signed by two authorized officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Investment Guarantee shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definition 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 of covenant has been complied with.
"PARTNERSHIP" means Merrill Lynch Preferred Funding I, L.P.
"PARTNERSHIP AGREEMENT" means the Amended and Restated Agreement of
Limited Partnership of the Partnership, dated as of December , 1996, among
Merrill Lynch & Co., Inc., a Delaware corporation, as general partner, Merrill
Lynch Group, Inc., a Delaware corporation, as initial limited partner and such
other persons who become limited partners as provided therein.
"PARTNERSHIP PREFERRED SECURITIES" means those securities representing
limited partnership interests in the Partnership.
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"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.
"RESPONSIBLE OFFICER" means, with respect to the Investment Guarantee
Trustee, any officer within the Corporate Trust Office of the Investment
Guarantee Trustee, including any vice president, any assistant vice president,
any assistant secretary, the treasurer, any assistant treasurer or other officer
of the Corporate Trust Office of the Investment 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 that officer's
knowledge of and familiarity with the particular subject.
"SUCCESSOR INVESTMENT GUARANTEE TRUSTEE" means a Successor Investment
Guarantee Trustee possessing the qualifications to act as Investment Guarantee
Trustee under Section 4.1.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as
amended.
"INVESTMENT GUARANTEE TRUSTEE" means The Chase Manhattan Bank, until a
Successor Investment Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Investment Guarantee and thereafter
means each such Successor Investment Guarantee Trustee.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION
(a) This Investment Guarantee is subject to the provisions of the
Trust Indenture Act that are required to be part of this Investment Guarantee
and shall, to the extent applicable, be governed by such provisions; and
(b) if and to the extent that any provision of this Investment
Guarantee limits, qualifies or conflicts with the duties imposed by Section 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control;
SECTION 2.2 LISTS OF HOLDERS OF SECURITIES
(a) The Guarantor shall provide the Investment Guarantee Trustee
(unless the Investment Guarantee Trustee is
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otherwise the Security Registrar of the affiliate Debenture) with a list, in
such form as the Investment Guarantee Trustee may reasonably require, of the
names and addresses of the Holder(s) of the Affiliate Debenture ("List of
Holders") as of such date, (i) within one (1) Business Day after June 15 and
December 15 of each year, and (ii) at any other time within 30 days of receipt
by the Guarantor 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 Investment Guarantee
Trustee PROVIDED, that the Guarantor shall not 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 Investment Guarantee Trustee by the Guarantor. The
Investment Guarantee Trustee may destroy any List of Holders previously given to
it on receipt of a new List of Holders.
(b) The Investment Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 REPORTS BY THE INVESTMENT GUARANTEE TRUSTEE
Within 60 days after December 15 of each year, commencing December 15,
1997 the Investment Guarantee Trustee shall provide to the Holders of the
Affiliate Debenture 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 Investment Guarantee Trustee shall also comply
with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 PERIODIC REPORTS TO INVESTMENT GUARANTEE TRUSTEE
The Guarantor shall provide to the Investment Guarantee Trustee such
documents, reports and information as required by Section 314 (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
The Guarantor shall provide to the Investment Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Investment Guarantee 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.
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SECTION 2.6 EVENTS OF DEFAULT; WAIVER
The Holders of a Majority in aggregate principal amount of the
Affiliate Debenture may, by vote, on behalf of the Holders of the Affiliate
Debenture, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Investment Guarantee, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.
SECTION 2.7 EVENT OF DEFAULT; NOTICE
(a) The Investment Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Affiliate Debenture, notices of all Events of
Default actually known to a Responsible Officer of the Investment Guarantee
Trustee, unless such defaults have been cured before the giving of such notice,
provided, that, except in the case of default of any Guaranty payment, the
Investment Guarantee Trustee shall be protected in withholding such notice if
and so long as a Responsible Officer of the Investment Guarantee Trustee in good
faith determines that the withholding of such notice is in the interests of the
Holders of the Affiliate Debenture.
(b) The Investment Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Investment Guarantee Trustee shall
have received written notice, or a Responsible Officer of the Investment
Guarantee Trustee charged with the administration of the Affiliate Debenture
shall have obtained actual knowledge, of such Event of Default.
SECTION 2.8 CONFLICTING INTERESTS
The Affiliate Debenture shall be deemed to be specifically described
in this Investment Guarantee for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF INVESTMENT GUARANTEE TRUSTEE
SECTION 3.1 POWERS AND DUTIES OF THE INVESTMENT GUARANTEE TRUSTEE
(a) This Investment Guarantee shall be held by the Investment
Guarantee Trustee for the benefit of the Holders of the Affiliate Debenture, and
the Investment Guarantee Trustee shall not transfer this Investment Guarantee to
any Person except a Holder of the Affiliate Debenture exercising his or her
rights
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pursuant to Section 5.4(b) or to a Successor Investment Guarantee Trustee on
acceptance by such Successor Investment Guarantee Trustee of its appointment to
act as Successor Investment Guarantee Trustee. The right, title and interest of
the Investment Guarantee Trustee shall automatically vest in any Successor
Investment Guarantee Trustee, and such vesting and succession of title shall be
effective whether or not conveyancing documents have been executed and delivered
pursuant to the appointment of such Successor Investment Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer of
the Investment Guarantee Trustee has occurred and is continuing, the Investment
Guarantee Trustee shall enforce this Investment Guarantee for the benefit of the
Holders of the Affiliate Debenture.
(c) The Investment Guarantee Trustee, before the occurrence of any
Event of Default and after the curing or waiver of all Events of Default that
may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Investment Guarantee, and no implied covenants
shall be read into this Investment Guarantee against the Investment Guarantee
Trustee. In case an Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.6) and is actually known to a Responsible Officer
of the Investment Guarantee Trustee, the Investment Guarantee Trustee shall
exercise such of the rights and powers vested in it by this Investment
Guarantee, and use the same degree of care and skill in its exercise thereof, as
a prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(d) No provision of this Investment Guarantee shall be construed to
relieve the Investment Guarantee 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 any Event of Default and after
the curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Investment Guarantee
Trustee shall be determined solely by the express provisions of this
Investment Guarantee, and the Investment Guarantee Trustee shall not
be liable except for the performance of such duties and obligations as
are specifically set forth in this Investment Guarantee, and no
implied covenants or obligations shall be read into this Investment
Guarantee against the Investment Guarantee Trustee; and
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(B) in the absence of bad faith on the part of the
Investment Guarantee Trustee, the Investment Guarantee 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 Investment Guarantee Trustee and
conforming to the requirements of this Investment Guarantee; but in
the case of any such certificates or opinions that by any provision
hereof are specifically required to be furnished to the Investment
Guarantee Trustee, the Investment Guarantee Trustee shall be under a
duty to examine the same to determine whether or not they conform to
the requirements of this Investment Guarantee;
(ii) the Investment Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Investment Guarantee Trustee, unless it shall be proved that the Investment
Guarantee Trustee was negligent in ascertaining the pertinent facts upon
which such judgment was made;
(iii) the Investment Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a Majority in aggregate
prinicpal amount of the Affiliate Debenture relating to the time, method
and place of conducting any proceeding for any remedy available to the
Investment Guarantee Trustee, or exercising any trust or power conferred
upon the Investment Guarantee Trustee under this Investment Guarantee; and
(iv) no provision of this Investment Guarantee shall require the
Investment Guarantee 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 the Investment
Guarantee Trustee shall have reasonable grounds for believing that the
repayment of such funds or liability is not reasonably assured to it under
the terms of this Investment Guarantee or indemnity, reasonably
satisfactory to the Investment Guarantee Trustee, against such risk or
liability is not reasonably assured to it.
SECTION 3.2 CERTAIN RIGHTS OF INVESTMENT GUARANTEE TRUSTEE
(a) Subject to the provisions of Section 3.1:
(i) The Investment Guarantee Trustee may conclusively rely, and
shall be fully protected in acting or refraining from acting, upon any
resolution, certificate,
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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 Guarantor contemplated by this
Investment Guarantee shall be sufficiently evidenced by an Officers'
Certificate.
(iii) Whenever, in the administration of this Investment
Guarantee, the Investment Guarantee Trustee shall deem it desirable that a
matter be proved or established before taking, suffering or omitting any
action hereunder, the Investment Guarantee 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 Guarantor.
(iv) The Investment Guarantee Trustee shall have no duty to see
to any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
(v) The Investment Guarantee Trustee may consult with counsel of
its selection, and the advice or opinion of such counsel with respect to
legal matters 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 Guarantor or any of its Affiliates and may include any of
its employees. The Investment Guarantee Trustee shall have the right at
any time to seek instructions concerning the administration of this
Investment Guarantee from any court of competent jurisdiction.
(vi) The Investment Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Investment Guarantee at the request or direction of any Holder, unless such
Holder shall have provided to the Investment Guarantee Trustee such
security and indemnity, reasonably satisfactory to the Investment Guarantee
Trustee, against the costs, expenses (including attorneys' fees and
expenses and the expenses of the Preferred Guarantee 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 Investment Guarantee Trustee; provided
that, nothing contained in this Section 3.2(a)(vi) shall be taken to
relieve the Investment
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Guarantee Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by this
Investment Guarantee.
(vii) The Investment Guarantee 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 Investment Guarantee
Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit.
(viii) The Investment Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either directly
or by or through agents, nominees, custodians or attorneys, and the
Investment Guarantee 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 Investment Guarantee Trustee or its
agents hereunder shall bind the holders of the Affiliate Debenture, and the
signature of the Investment Guarantee Trustee or its agents alone shall be
sufficient and effective to perform any such action. No third party shall
be required to inquire as to the authority of the Investment Guarantee
Trustee to so act or as to its compliance with any of the terms and
provisions of this Investment Guarantee, both of which shall be
conclusively evidenced by the Investment Guarantee Trustee or its agent
taking such action.
(x) whenever in the administration of this Investment Guarantee
the Investment Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking any
other action hereunder, the Investment Guarantee Trustee (i) may request
instructions from the Holders of a Majority in aggregate principal amount
of the Affiliate Debenture, (ii) may refrain from enforcing such remedy or
right or taking such other action until such instructions are received, and
(iii) shall be protected in conclusively relying on or acting in accordance
with such instructions.
(xi) The Investment Guarantee Trustee shall not be liable for any
action taken, suffered, or omitted to be taken by it in good faith, without
negligence, and reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Investment
Guarantee.
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(b) No provision of this Investment Guarantee shall be deemed to
impose any duty or obligation on the Investment Guarantee 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
Investment Guarantee 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 available to
the Investment Guarantee Trustee shall be construed to be a duty.
SECTION 3.3 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF INVESTMENT
GUARANTEE
The recitals contained in this Investment Guarantee shall be taken as
the statements of the Guarantor, and the Investment Guarantee Trustee does not
assume any responsibility for their correctness. The Investment Guarantee
Trustee makes no representation as to the validity or sufficiency of this
Investment Guarantee.
ARTICLE IV
INVESTMENT GUARANTEE TRUSTEE
SECTION 4.1 INVESTMENT GUARANTEE TRUSTEE; ELIGIBILITY
(a) There shall at all times be an Investment Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; 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
Securities and Exchange 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 5 million
U.S. dollars ($5,000,000), 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 4.1(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 Investment Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the
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Investment Guarantee Trustee shall immediately resign in the manner and with the
effect set out in Section 4.2(c).
(c) If the Investment Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Investment Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 APPOINTMENT, REMOVAL AND RESIGNATION OF INVESTMENT
GUARANTEE TRUSTEE
(a) Subject to Section 4.2(b), the Investment Guarantee Trustee may
be appointed or removed without cause at any time by the Guarantor except during
an Event of Default.
(b) The Investment Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Investment Guarantee Trustee
has been appointed and has accepted such appointment by written instrument
executed by such Successor Investment Guarantee Trustee and delivered to the
Guarantor.
(c) The Investment Guarantee Trustee shall hold office until a
Successor Investment Guarantee Trustee shall have been appointed or until its
removal or resignation. The Investment Guarantee Trustee may resign from office
(without need for prior or subsequent accounting) by an instrument in writing
executed by the Investment Guarantee Trustee and delivered to the Guarantor,
which resignation shall not take effect until a Successor Investment Guarantee
Trustee has been appointed and has accepted such appointment by instrument in
writing executed by such Successor Investment Guarantee Trustee and delivered to
the Guarantor and the resigning Investment Guarantee Trustee.
(d) If no Successor Investment Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 30
days after delivery of an instrument of removal or resignation, the Investment
Guarantee Trustee resigning or being removed may petition any court of competent
jurisdiction for appointment of a Successor Investment Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Investment Guarantee Trustee.
(e) No Investment Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Investment Guarantee Trustee.
(f) Upon termination of this Investment Guarantee or removal or
resignation of the Investment Guarantee Trustee pursuant to this Section 4.2,
the Guarantor shall pay to the Investment Guarantee Trustee all amounts due to
the Investment
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Guarantee Trustee accrued to the date of such termination, removal or
resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 GUARANTEE
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), as and when due, regardless of any defense, right of
set-off or counterclaim that the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
SECTION 5.2 WAIVER OF NOTICE AND DEMAND
The Guarantor hereby waives notice of acceptance of this Investment
Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer
or any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.
SECTION 5.3 OBLIGATIONS NOT AFFECTED
The obligations, covenants, agreements and duties of the Guarantor
under this Investment Guarantee shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Affiliate Debenture to be performed
or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the interest, principal or premium, if any, or any other sums payable
under the terms of the Affiliate Debenture or the extension of time for the
performance of any other obligation under, arising out of, or in connection
with, the Affiliate Debenture (other than an extension of time for payment of
interest during an Extension Period, as defined in the Affiliate Debenture,
permitted by the Affiliate Indenture);
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders
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pursuant to the terms of the Affiliate Debenture, or any action on the part of
the Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Issuer or any of the assets of
the Issuer;
(e) any invalidity of, or defect or deficiency in, the Affiliate
Debenture;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 RIGHTS OF HOLDERS
(a) The Holders of a Majority in aggregate principal amount of the
Affiliate Debenture have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Investment Guarantee
Trustee in respect of this Investment Guarantee or exercising any trust or power
conferred upon the Investment Guarantee Trustee under this Investment Guarantee.
(b) If the Investment Guarantee Trustee fails to enforce its rights
under the Investment Guarantee after a Holder of the Affiliate Debenture has
made a written request, such Holder of the Affiliate Debenture may institute a
legal proceeding directly against the Guarantor to enforce the Investment
Guarantee Trustee's rights under this Investment Guarantee, without first
instituting a legal proceeding against the Issuer, the Investment Guarantee
Trustee or any other Person. Notwithstanding the foregoing, if the Guarantor
has failed to make a Guarantee Payment, a Holder of the Affiliate Debenture may
directly institute a proceeding in such Holder's own name against the Guarantor
for enforcement of the Investment Guarantee for such payment. The Guarantor
waives any right or remedy to require that any action be brought first against
the Issuer or
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any other person or entity before proceeding directly against the Guarantor.
SECTION 5.5 GUARANTEE OF PAYMENT
This Investment Guarantee creates a guarantee of payment and not of
collection.
SECTION 5.6 SUBROGATION
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Affiliate Debenture against the Issuer in respect of any amounts paid
to such Holders by the Guarantor under this Investment Guarantee; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any right that
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Investment Guarantee,
if, at the time of any such payment, any amounts are due and unpaid under this
Investment Guarantee. If any amount shall be paid to the Guarantor in violation
of the preceding sentence, the Guarantor agrees to hold such amount in trust for
the Holders and to pay over such amount to the Holders.
SECTION 5.7 INDEPENDENT OBLIGATIONS
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Affiliate
Debenture, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Investment
Guarantee notwithstanding the occurrence of any event referred to in subsections
(a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
SUBORDINATION
SECTION 6.1 RANKING
This Investment Guarantee will constitute an unsecured obligation of
the Guarantor and will rank (i) subordinate and junior in right of payment to
all other liabilities of the Guarantor, (ii) pari passu with the most senior
preferred or preference stock now or hereafter issued by the Guarantor and with
any other guarantee now or hereafter entered into by the Guarantor in respect of
any preferred or preference stock of any Affiliate of the Guarantor, and (iii)
senior to the Guarantor's common stock.
ARTICLE VII
TERMINATION
15
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SECTION 7.1 TERMINATION
This Investment Guarantee shall terminate upon the repayment in full
(whether at maturity, upon redemption or otherwise) of all of the principal of,
premium, if any, and interest on (including all accrued and unpaid interest
thereon) and any other amounts payable in respect of the Affiliate Debenture.
Notwithstanding the foregoing, this Investment Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any Holder
of the Affiliate Debenture must restore payment of any sums paid under the
Affiliate Debenture or under this Investment Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 EXCULPATION
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Guarantor or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Indemnified Person in good faith in accordance with this Investment
Guarantee and in a manner that such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Investment Guarantee or by law, except that an Indemnified Person shall be
liable for any such loss, damage or claim incurred by reason of such Indemnified
Person's gross 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 Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor 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 Guarantor, 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 principal, premium, interest or other payments to Holders of the Affiliate
Debenture might properly be paid.
SECTION 8.2 INDEMNIFICATION
The Guarantor agrees to indemnify each Indemnified Person for, and to
hold each Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
16
<PAGE>
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 8.2 shall survive the termination of this
Investment Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 SUCCESSORS AND ASSIGNS
All guarantees and agreements contained in this Investment Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders of the Affiliate
Debenture then outstanding.
SECTION 9.2 AMENDMENTS
Except with respect to any changes that do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Investment Guarantee may only be amended with the prior approval of the Holders
of at least a majority in aggregate principal amount of the Affiliate Debenture.
SECTION 9.3 NOTICES
All notices provided for in this Investment Guarantee shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by first class mail, as follows:
(a) If given to the Investment Guarantee Trustee, at the Investment
Guarantee Trustee's Corporate Trust Office, Attention: , Telecopy:
(212) (or such other address as the Investment Guarantee Trustee may
give notice of to the Holders of the Affiliate Debenture); and
(b) If given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to the
Holders of the Affiliate Debenture):
Merrill Lynch & Co., Inc.
World Financial Center
South Tower
225 Liberty Street
New York, New York 10281
Attention: Treasurer
17
<PAGE>
(c) If given to any Holder of Affiliate Debenture, at the address set
forth on the books and records of the Issuer.
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 9.4 BENEFIT
This Investment Guarantee is solely for the benefit of the Holders of
the Affiliate Debenture and, subject to Section 3.1(a), is not separately
transferable from the Affiliate Debenture.
SECTION 9.5 GOVERNING LAW
THIS INVESTMENT GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
18
<PAGE>
This Investment Guarantee is executed as of the day and year first
above written.
MERRILL LYNCH & CO., INC., as
Guarantor
By:
-------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
Investment Guarantee Trustee
By:
-------------------------------
Name:
Title:
19
<PAGE>
Exhibit 4.11
[FORM OF SUBORDINATED DEBENTURE]
MERRILL LYNCH & CO., INC.
____% Subordinated Debenture Due 2016
No. $_________
MERRILL LYNCH & CO., INC., a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Company", which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to __________________, or registered
assigns, the principal sum of ____________ DOLLARS ($_________) on
_____________, 2016 and to pay interest on said principal sum from December ___,
1996 or from the most recent interest payment date (each such date, an "Interest
Payment Date") to which interest has been paid or duly provided for, quarterly
(subject to deferral as set forth herein) in arrears on March 30, June 30,
September 30 and December 30 of each year, commencing December 30, 1996, at the
rate of ____% per annum plus Additional Interest, if any, until the principal
hereof shall have become due and payable, and on any overdue principal. The
amount of interest payable for any period will be computed on the basis of a
360-day year of twelve 30-day months. In the event that any date on which
interest is payable on this Security is not a Business Day, then a payment of
the interest 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 the date the
payment was originally payable. A "Business Day" shall mean any day other than
a day on which banking institutions in the City of New York are authorized or
required by law to close. The interest installment so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities, as defined in the Indenture) is registered at the close
of business on the Regular Record Date for such interest installment, which
shall be the close of business on the Business Day next preceding such Interest
Payment Date. Any such interest installment not so punctually paid or duly
provided for shall forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this security (or
one or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be
<PAGE>
fixed by the Trustee, notice whereof shall be given to Holders of Securities not
less than 10 days prior to such Special Record Date, or be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture.
The Company shall have the right at any time during the term of this
Security, from time to time, to extend the interest payment period of such
Security for a period not exceeding six consecutive quarters from the date of
issue or most recent date that interest has been paid or been duly provided for
(an "Extension Period"). During any Extension Period, interest will compound
quarterly and the Company shall have the right to make partial payments of
interest on any Interest Payment Date. At the end of any Extension Period the
Company shall pay all interest then accrued and unpaid (together with Additional
Interest thereon to the extent that payment of such interest is permitted by
applicable law). "Additional Interest" means interest that shall accrue on any
interest on the Securities that is in arrears for more than one quarter or not
paid during an Extension Period, which in either case shall accrue at __% per
annum compounded quarterly. Prior to the termination of any such Extension
Period, the Company may further extend the interest payment period, PROVIDED
that such Extension Period together with all such previous and further
extensions thereof shall not exceed six consecutive quarters or extend beyond
the Maturity of this Security. Upon the termination of any Extension Period and
upon the payment of all accrued and unpaid interest and any Additional Interest
then due, the Company may select a new Extension Period, subject to the
foregoing requirements. No interest shall be due and payable during an
Extension Period except at the end thereof and no default under this security or
Event of Default shall be deemed to occur solely as a result of an Extension
Period. The Company shall give the Holder of this Security and the Trustee
notice of its selection of an Extension Period at least one Business Day prior
to the earlier of (i) the Interest Payment Date or (ii) the date Merrill Lynch
Preferred Capital Trust I is required to give notice to the New York Stock
Exchange or other applicable self-regulatory organization or to holders of the
Trust Preferred Securities of the record date or the date such distributions are
payable, but in any event not less than one Business Day prior to such record
date.
Payment of the principal of and interest on this Security will be made
at the office or agency of the Company maintained for that purpose in New York,
New York, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts;
2
<PAGE>
PROVIDED, HOWEVER, that at the option of the Company payment of interest may be
made (i) by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register or (ii) by wire transfer in
immediately available funds at such place and to such account as may be
designated by the Person entitled thereto as specified in the Security Register.
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and subject in right of payment to the prior
payment in full of all Senior Indebtedness, and this Security is issued subject
to the provisions of the Indenture with respect thereto. Each Holder of this
Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes. Each Holder hereof, by his acceptance hereof, waives all notice of
the acceptance of the subordination provisions contained herein and in the
Indenture of each holder of Senior Indebtedness, whether now outstanding or
hereafter incurred, and waives reliance by each such holder upon said
provisions.
Reference is hereby made to the further provisions of the Indenture
summarized on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
3
<PAGE>
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, Merrill Lynch & Co., Inc. has caused this
instrument to be duly executed under its corporate seal.
Dated: December ___, 1996
MERRILL LYNCH & CO., INC.
By:
---------------------------------------
Name:
Title:
Attest:
- -------------------------
4
<PAGE>
REVERSE OF SECURITY.
This Security is one of a duly authorized issue of Securities of the
Company, designated as its ____% Subordinated Debentures Due 2016 (herein called
the "Securities"), limited in aggregate principal amount to $_________ issued
under an Indenture, dated as of December ___, 1996 (herein called the
"Indenture"), between the Company and The Chase Manhattan Bank, as Trustee
(herein called the "Trustee", which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Trustee, the Company and the
Holders of the Securities, and of the terms upon which the securities are, and
are to be, authenticated and delivered.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
At any time on or after December __, 2006, the Company shall have the
right to redeem the Securities, in whole or in part, from time to time, at a
Redemption Price equal to 100% of the principal amount of Securities to be
redeemed plus accrued but unpaid interest, including any Additional Interest, if
any, to the Redemption Date.
If, at any time, a Partnership Tax Event or a Partnership Investment
Company Event (each a "Partnership Special Event") shall occur and be
continuing, the Company may, within 90 days following the occurrence of such
Partnership Special Event, elect to redeem the 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 Company or 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 such
measure that in the sole judgment of the Company has or will cause no adverse
effect on the Partnership, the Trust or the Company, the Company will pursue
such measure in lieu of redemption.
"Partnership Investment Company Event" means that Merrill Lynch & Co.,
Inc., in its capacity as general partner of Merrill Lynch Preferred Capital
Funding, I, L.P. (the "Partnership"), 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 law or regulation or a change in interpretation or
application of law or regulation by
5
<PAGE>
any legislative body, court, governmental agency or regulatory authority, the
Partnership is or will be considered an "investment company" which is required
to be registered under the Investment Company Act of 1940.
"Partnership Tax Event" means that the Merrill Lynch & Co., Inc. in
its capacity as general partner of the Partnership, 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 (each as
defined in the Limited Partnership Agreement), (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 one or more of the obligors
with respect to the Affiliate investment Instruments to the Partnership is not,
or will not be, deductible by the Company for United States federal income tax
purposes.
"Limited Partnership Agreement" means the amended and restated
agreement of Limited Partnership, dated as of December __, 1996, of the
Partnership as amended, modified or otherwise supplemented from time to time.
If the Securities are only partially redeemed by the Company, the Securities
will be redeemed pro rata, by lot or in such other manner as the Trustee shall
deem appropriate and fair in its discretion and that may provide for the
selection of a portion or portions (equal to twenty-five U.S. dollars ($25) or
any integral multiple thereof) of the principal amount of any Security.
In the event of redemption of this Security in part only, a new
Security or Securities for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof.
If an Event of Default with respect to the Securities shall occur and
be continuing, the principal of the Securities may be declared due and payable
in the manner, with the effect and subject to the conditions provided in the
Indenture.
The Indenture contains provisions for satisfaction and discharge at
any time of the entire indebtedness of this Security upon compliance by the
Company with certain conditions set forth in the Indenture.
6
<PAGE>
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of Holders of not less than a majority in principal
amount of the Outstanding Securities, to modify the Indenture in a manner
affecting the rights of the Holders of the Securities; PROVIDED that no such
modification may, without the consent of the Holder of each Outstanding
Security, (i) extend the fixed maturity of the Securities, or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon, or reduce any premium payable upon the redemption thereof, or
(ii) reduce the percentage of principal amount of the Securities, the Holders of
which are required to consent to any such modification of the Indenture. The
Indenture also contains provisions permitting Holders of specified percentages
in principal amount of the Securities at the time Outstanding, on behalf of the
Holders of all Securities, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all future Holders of
this Security and of any Security issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and interest on this
Security at the times, place and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in New York, New York, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities,
of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees. No service charge shall be
made for any such registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any of their respective agents may treat
the Person in whose name this
7
<PAGE>
Security is registered as the owner hereof for all purposes, whether or not this
Security shall be overdue, and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.
The Securities are issuable only in registered form without coupons in
denominations of $25 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of a different
authorized denomination, as requested by the Holder surrendering the same.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES THEREOF.
8
<PAGE>
EXHIBIT 5.1
December 11, 1996
Merrill Lynch & Co., Inc.
World Financial Center
North Tower
250 Vesey Street
New York, New York 10281
Merrill Lynch Preferred Funding I, L.P.
c/o Merrill Lynch & Co., Inc.
World Financial Center
North Tower
250 Vesey Street
New York, New York 10281
Merrill Lynch Preferred Capital Trust I
c/o Merrill Lynch & Co., Inc.
World Financial Center
North Tower
250 Vesey Street
New York, New York 10281
Ladies and Gentlemen:
We have acted as counsel to Merrill Lynch & Co., Inc., a Delaware
corporation (the "Company"), Merrill Lynch Preferred Funding I, L.P., a Delaware
limited partnership (the "Partnership"), and Merrill Lynch Preferred Capital
Trust I, a statutory business trust formed under the laws of the State of
Delaware (the "Trust"), in connection with the preparation and filing by the
Company, the Partnership and the Trust with the Securities and Exchange
Commission (the "Commission") of a Registration Statement on Form S-3
(Registration No. 333-16603) (the "Registration Statement") under the Securities
Act of 1933, as amended, with respect to (i) the guarantee (the "Trust
Guarantee") to be issued by the Company to The Chase Manhattan Bank, as trustee,
for the benefit of the holders of the Trust Originated Preferred Securities to
be issued by the Trust (the "Trust Preferred Securities"),(ii) the guarantee
(the "Partnership Guarantee") to be issued by the Company with respect to the
Partnership Preferred Securities to be issued by the
<PAGE>
Partnership (the "Partnership Preferred Securities"),(iii) the guarantees (the
"Investment Guarantees") with respect to certain debentures (the "Debentures")
to be issued by the Company and one or more of its eligible controlled
affiliates to be issued by the Company for the benefit of the holders of the
Partnership Preferred Securities and (iv) the subordinated debenture (the
"Company Debenture") to be issued by the Company to the Partnership pursuant to
an indenture (the "Company Indenture") between the Company and The Chase
Manhattan Bank, as trustee (the "Debenture Trustee"), each in the form filed as
exhibits to the Registration Statement. The Trust Guarantee, the Partnership
Guarantee and the Investment Guarantee are hereinafter collectively referred to
as the "Guarantees".
We have reviewed the corporate action of the Company in connection with the
giving of the Guarantees and the issuance and sale of the Company Debenture by
the Company and have examined, and have relied as to matters of fact upon,
originals or copies certified or otherwise identified to our satisfaction, of
such corporate records, agreements, documents and other instruments and such
certificates or comparable documents of public officials and of officers and
representatives of the Company, and have made such other and further
investigations as we have deemed relevant and necessary as a basis for the
opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all signatures, the
legal capacity of natural persons, the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as certified or photostatic copies, and the authenticity of the
originals of such latter documents.
Based upon the foregoing, and subject to the qualifications and limitations
stated herein, we are of the opinion:
1. The Trust Guarantee has been duly authorized by the Company and when
executed and delivered by the Company, and upon the issuance and sale of the
Trust Preferred Securities to the holders of the Trust Preferred Securities in
accordance with the Registration Statement, will constitute a valid and legally
binding obligation of the Company enforceable against the Company in accordance
with its terms.
2. The Partnership Guarantee has been duly authorized by the Company and
when executed and delivered by the Company, and upon the issuance and sale of
the Partnership Preferred Securities to the holders of the Partnership Preferred
Securities in accordance with the Registration Statement, will constitute a
valid and legally binding obligation of the Company enforceable against the
Company in accordance with its terms.
2
<PAGE>
3. The Investment Guarantees have been duly authorized by the Company and
when executed and delivered by the Company, and upon the issuance and sale of
the Debentures to the Partnership in accordance with the Registration Statement,
will constitute valid and legally binding obligations of the Company enforceable
against the Company in accordance with their terms.
4. The Company Debenture has been duly authorized by the Company and when
executed and issued by the Company and upon due execution and delivery of the
Company Indenture by the Company and the issuance and sale of the Company
Debenture to the Partnership in accordance with the Registration Statement
(assuming due authorization, execution and delivery of the Company Indenture by
the Debenture Trustee and due authentication of the Company Debenture by the
Debenture Trustee), will constitute a valid and legally binding obligation of
the Company enforceable against the Company in accordance with its terms.
With respect to enforcement, the above opinions are qualified to the extent
that enforcement of the Guarantees or the Company Debenture may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or affecting creditors' rights generally and except as enforcement thereof is
subject to general equity principles (regardless of whether enforcement is
considered in a proceeding in equity or at law).
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of our name wherever appearing in the Registration
Statement and any amendment thereto.
Very truly yours,
Brown & Wood LLP
3
<PAGE>
EXHIBIT 5.2
[LETTERHEAD OF BROWN & WOOD LLP]
December 11, 1996
Merrill Lynch & Co., Inc.
World Financial Center
North Tower
New York, New York 10281
Merrill Lynch Preferred Funding I, L.P.
World Financial Center
North Tower
New York, New York 10281
Merrill Lynch Preferred Capital Trust I
World Financial Center
North Tower
New York, New York 10281
Re: Merrill Lynch Preferred Capital Trust I's
Issuance and Sale of Trust
Originated Preferred Securities ("TOPrS")
Ladies and Gentlemen:
We have acted as tax counsel ("Tax Counsel") to Merrill Lynch & Co.,
Inc., a Delaware corporation ("Company"), Merrill Lynch Preferred Funding I,
L.P., a limited partnership formed under the Delaware Revised Uniform Limited
Partnership Act, as amended ("Partnership"), and Merrill Lynch Preferred
Capital Trust I, a statutory business trust formed under the Delaware
Business Trust Act, as amended ("Trust"), in connection with the preparation
and filing by the Company, the Partnership and the Trust with the Securities
and Exchange Commission ("Commission") of a Registration Statement on Form
S-3 (Registration No. 333-16603) (as amended, "Registration Statement") under
the Securities Act of 1933, as amended, and with respect to: (i) the issuance
and sale of a subordinated debenture due 2016 ("Company Subordinated
Debenture") by the Company pursuant to a form of Indenture ("Company
Indenture"), between the Company and The Chase Manhattan Bank, a New York
banking corporation, as trustee ("Indenture Trustee") in the form filed as an
exhibit to the Registration Statement;
<PAGE>
(ii) the issuance and sale of one or more debentures due 2016 (each a
"Guaranteed Investment Affiliate Debenture", collectively "Investment
Affiliate Debentures") by one or more eligible controlled affiliates of the
Company (each an "Investment Affiliate"), pursuant to forms of Indenture
(each an "Investment Affiliate Indenture"), from each such Investment
Affiliate and the Company to the Indenture Trustee (Company Subordinated
Debenture and Investment Affiliate Debentures are collectively referred to
hereinafter as the "Debentures" and the forms of Company Indenture and the
Investment Affiliate Indentures are collectively referred to hereinafter as
the "Indentures"), each of which is guaranteed by the Company pursuant to a
form of Affiliate Debenture Guarantee Agreement in the form filed as an
exhibit to the Registration Statement; (iii) the issuance and sale of
Partnership Preferred Securities by the Partnership to the Trust pursuant to
the Amended and Restated Agreement of Limited Partnership ("Partnership
Agreement") in the form filed as an exhibit to the Registration Statement;
(iv) the issuance and sale of Trust Preferred Securities and Trust Common
Securities (collectively, "Trust Securities") pursuant to the Trust's Amended
and Restated Declaration of Trust, to be dated as of December __, 1996
("Declaration") in the form filed as an exhibit to the Registration
Statement. The Trust Preferred Securities will be offered for sale to
investors pursuant to the Registration Statement.
All capitalized terms used in this opinion letter and not otherwise
defined herein shall have the meaning ascribed to such terms in the
Registration Statement.
In delivering this opinion letter, we have reviewed and relied upon:
(i) the Registration Statement; (ii) forms of the Indentures; (iii) forms of
the Debentures; (iv) the form of the Partnership Agreement; (v) the form of
the Declaration; (vi) the forms of (A) the Partnership Guarantee Agreement,
(B) the Trust Preferred Securities Guarantee Agreement, (C) the Trust Common
Securities Guarantee Agreement and (D) the Affiliate Debenture Guarantee
Agreement, each filed as exhibits to the Registration Statement; and (vii)
the forms of (A) the Partnership Preferred Securities and (B) the Trust
Securities, each filed as exhibits to the Registration Statement. In
addition, we have examined, and relied as to matters of fact upon, certain
certificates and comparable documents of the Company and certain eligible
controlled affiliates of the Company, from which the Company will select
Investment Affiliates. Further, we have relied upon certain other statements
and representations made by officers of the Company. We also have examined
and relied upon originals or copies, certified or otherwise identified to our
satisfaction, of such records of the Company, the Partnership and the Trust and
such other documents, certificates and records as we have deemed necessary or
appropriate as a basis for the opinions set forth herein.
In our examination of such material, we have assumed the genuineness
of all signatures, the authenticity of all documents submitted to us as
originals and the conformity to original documents of all copies of documents
submitted to us. In addition, we also have assumed (i) that the transactions
related to the issuance of the Debentures, Partnership Preferred Securities
and Trust Securities will be consummated in accordance with the terms
2
<PAGE>
of the documents and forms of documents described herein and (ii) on the
closing date, an Independent Financial Advisor will deliver the opinion
required under Section 7.1(b) of the Partnership Agreement.
On the basis of the foregoing and assuming that the Partnership and
the Trust were formed and will be maintained in compliance with the terms of
the Partnership Agreement and the Declaration, respectively, we hereby
confirm (i) our opinions set forth in the Registration Statement under the
caption "Certain Federal Income Tax Considerations" and (ii) that, subject to
the qualifications set forth therein, the discussion set forth in the
Registration Statement under such caption is an accurate summary of the
United States federal income tax matters described therein.
We express no opinion with respect to the transactions referred to
herein or in the Registration Statement other than as expressly set forth
herein. Moreover, we note that there is no authority directly on point
dealing with securities such as the Trust Preferred Securities or
transactions of the type described herein and that our opinions are not
binding on the Internal Revenue Service or the courts, either of which could
take a contrary position. Nevertheless, we believe that if challenged, the
opinions we express herein would be sustained by a court with jurisdiction in
a properly presented case.
Our opinions are based upon the Code, the Treasury regulations
promulgated thereunder and other relevant authorities and law, all as in
effect on the date hereof. Consequently, future changes in the law may cause
the tax treatment of the transactions referred to herein to be materially
different from that described above.
The opinions we express herein are limited solely to matters governed
by the federal law of the United States.
We hereby consent to the use of this opinion for filing as Exhibit 5.2
to the Registration Statement and the use of our name in the Registration
Statement under the captions "Certain Federal Income Tax Considerations" and
"Legal Matters".
Very truly yours,
Brown & Wood LLP
3
<PAGE>
Exhibit 5.3
December 11, 1996
Merrill Lynch Capital Trust I
Merrill Lynch Preferred Funding I, L.P.
Merrill Lynch & Co., Inc.
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281
Re: Merrill Lynch & Co., Inc.;
Merrill Lynch Preferred Funding I, L.P.;
Merrill Lynch Capital Trust I;
Registration Statement on Form S-3
(Registration No. 333-16603)
-----------------------------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel to Merrill Lynch Capital
Trust I, a statutory business trust created under the Business Trust Act of
the State of Delaware (Del. Code Ann., tit. 12, Section 3810) (the "Trust"),
and Merrill Lynch Preferred Funding I, L.P. (the "Partnership"), a limited
partnership formed under the Revised Uniform Limited Partnership Act of the
State of Delaware (6 Del. C. Section 17-101, et seq.), in connection with
the preparation of the Registration Statement on Form S-3 filed by Merrill
Lynch & Co., Inc. (the "Company"), a corporation organized under the laws of
the State of Delaware, the Trust and the Partnership for the registration
under the Securities Act of 1933, as amended (the "Act"), of, among other
securities, Trust Preferred Securities (the "Trust Preferred Securities") of
the Trust and Partnership Preferred Securities (the "Partnership Preferred
Securities") of the Partnership.
The Trust Preferred Securities are to be issued pursuant to an
Amended and Restated Declaration of Trust of the Trust (the "Declaration"),
among the Company, as sponsor of the Trust, Chase Manhattan Bank Delaware, as
Delaware trustee (the "Delaware Trustee"), The Chase Manhattan Bank, as
property trustee (the "Property Trust-
<PAGE>
Merrill Lynch Capital Trust I
Merrill Lynch & Co., Inc.
December 11, 1996
Page 2
ee"), and Theresa Lang and Stanley Schaefer, as regular trustees (the
"Regular Trustees"). The Partnership Preferred Securities will be issued
pursuant to the Amended and Restated Agreement of Limited Partnership (the
"Limited Partnership Agreement") between the Company, as the general partner
(in such capacity, the "General Partner"), and Merrill Lynch Group, Inc., a
Delaware corporation, as the initial limited partner.
This opinion is being delivered in accordance with the requirements
of Item 601(b)(5) of Regulation S-K under the Act. Capitalized terms used
but not otherwise defined herein have the meanings ascribed to them in the
Registration Statement.
In connection with this opinion, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of (i) the
Registration Statement on Form S-3 (Registration No. 333-16603) filed by the
Company, the Partnership and the Trust with the Securities and Exchange
Commission (the "Commission") on November 21, 1996 under the Act, Amendment
No. 1 thereto filed with the Commission on December 5, 1996, and Amendment
No. 2 thereto filed with the Commission on December 11, 1996 (such
Registration Statement, as so amended, being hereinafter referred to as the
"Registration Statement"); (ii) the Certificate of Trust of the Trust filed
with the Secretary of State of the State of Delaware on November 20, 1996;
(iii) the form of the Declaration (including the designations of the terms of
the Trust Preferred Securities annexed thereto); (iv) the form of the Trust
Preferred Securities and specimen certificates thereof; (v) the form of the
Purchase Agreement (the "Purchase Agreement") proposed to be entered into
among the Company, the Partnership, the Trust and Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Dean Witter Reynolds
Inc., A.G. Edwards & Sons, Inc., PaineWebber Incorporated, Prudential
Securities and Smith Barney Inc., as representatives (the "Representatives")
for the Underwriters named in Schedule A thereto (collectively, the
"Underwriters") relating to, among other things, the sale of the Trust
Preferred Securities; (vi) the Certificate of Limited Partnership of the
Partnership filed with the Secretary of State of the State of Delaware on
November 20, 1996; (vii) the form of the
2
<PAGE>
Merrill Lynch Capital Trust I
Merrill Lynch & Co., Inc.
December 11, 1996
Page 3
Limited Partnership Agreement (including the designations of the terms of the
Partnership Preferred Securities annexed thereto); and (viii) the form of the
Partnership Preferred Securities and specimen certificates thereof. We have
also examined originals or copies, certified or otherwise identified to our
satisfaction, of such other documents, certificates and records as we have
deemed necessary or appropriate as a basis for the opinions set forth herein.
In our examination, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents
of all documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies. In making our examination of
documents executed by parties other than the Partnership and the Trust, we
have assumed that such parties had the power, corporate or other, to enter
into and perform all obligations thereunder and have also assumed the due
authorization by all requisite action, corporate or other, and execution and
delivery by such parties of such documents and that such documents constitute
valid and binding obligations of such parties. In addition, we have assumed
that the Declaration, the Preferred Securities, the Limited Partnership
Agreement and the Partnership Preferred Securities when executed will be in
substantially the forms reviewed by us. With respect to the opinion set
forth in paragraph (2) below, we have assumed that, except for the exercise
of rights and powers expressly permitted by the Limited Partnership
Agreement, the holders of Partnership Preferred Securities will not
participate in the control of the business of the Partnership. As to any
facts material to the opinions expressed herein which were not independently
established or verified, we have relied upon oral or written statements and
representations of officers, trustees and other representatives of the
Company, the Partnership, the Trust and others.
We do not express any opinion as to the laws of any jurisdiction
other than the laws of the State of Delaware.
3
<PAGE>
Merrill Lynch Capital Trust I
Merrill Lynch & Co., Inc.
December 11, 1996
Page 4
Based on and subject to the foregoing and to the other
qualifications and limitations set forth herein, we are of the opinion that
when (i) the Registration Statement becomes effective; (ii) the Declaration,
the Purchase Agreement and the Limited Partnership Agreement have been duly
executed and delivered by the parties thereto; (iii) the terms of the Trust
Preferred Securities have been duly established in accordance with the
Declaration and the Trust Preferred Securities have been duly executed and
authenticated in accordance with the Declaration and delivered to and paid
for by the Underwriters as contemplated by the Purchase Agreement; and (iv)
the terms of the Partnership Preferred Securities have been duly established
in accordance with the Limited Partnership Agreement and the Partnership
Preferred Securities have been duly executed in accordance with the terms of
the Limited Partnership Agreement and delivered to and paid for by the Trust
as contemplated by the Purchase Agreement:
1. The Trust Preferred Securities will have been duly authorized
for issuance and will be validly issued, fully paid and nonassessable,
representing undivided beneficial ownership interests in the assets of the
Trust; and the holders of such Preferred Securities will be entitled to the
same limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the
State of Delaware. We bring to your attention, however, that the holders of
Preferred Securities may be obligated, pursuant to the Declaration, to (i)
provide indemnity and/or security in connection with and pay taxes or
governmental charges arising from transfers of Preferred Securities and (ii)
provide security and indemnity in connection with the requests of or
directions to the Property Trustee to exercise its rights and powers under
the Declaration.
2. The Partnership Preferred Securities will have been authorized
for issuance and will represent valid partnership interests in the
Partnership. The holders of Partnership Preferred Securities, as limited
partners of the Partnership, will not be liable to third parties for the
obligations of the Partnership. We bring to your attention, however, that
the holders of Partner-
4
<PAGE>
Merrill Lynch Capital Trust I
Merrill Lynch & Co., Inc.
December 11, 1996
Page 5
ship Preferred Securities may be obligated, pursuant to the Limited
Partnership Agreement, to (i) provide indemnity and/or security in connection
with and pay taxes or governmental charges arising from transfers of
Partnership Preferred Securities and the issuance of replacement Partnership
Preferred Securities, and (ii) provide security and indemnity in connection
with requests of or directions to the Special Representative (as defined in
the Limited Partnership Agreement) to exercise its rights and powers under
the Limited Partnership Agreement.
We hereby consent to the use of our name under the heading "Legal
Matters" in the prospectus which forms a part of the Registration Statement.
We also hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement. In giving this consent, we do not
thereby admit that we are within the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations of the
Commission promulgated thereunder. This opinion is expressed as of the date
hereof unless otherwise expressly stated and we disclaim any undertaking to
advise you of the facts stated or assumed herein or any subsequent changes in
applicable law.
Very truly yours,
Skadden, Arps, Slate, Meagher &
Flom (Delaware)
5
<PAGE>
___________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
___________________________________________
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
________________________________________
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
_____________________________________________
MERRILL LYNCH & CO., INC.
(Exact name of obligor as specified in its charter)
DELAWARE 13-2740599
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
MERRILL LYNCH PREFERRED FUNDING I, L.P.
(Exact name of obligor as specified in its charter)
DELAWARE 13-3917686
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
MERRILL LYNCH PREFERRED CAPITAL TRUST I
(Exact name of obligor as specified in its charter)
DELAWARE 13-7102991
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
WORLD FINANCIAL CENTER
NORTH TOWER
NEW YORK, NEW YORK 10281
(Address of obligors' principal executive offices) (Zip Code)
___________________________________________
TRUST ORIGINATED PREFERRED SECURITIES OF MERRILL LYNCH PREFERRED CAPITAL TRUST I
PARTNERSHIP PREFERRED SECURITIES OF MERRILL LYNCH PREFERRED FUNDING I, L.P.
GUARANTEE OF MERRILL LYNCH & CO., INC. WITH RESPECT TO
TRUST PREFERRED SECURITIES
GUARANTEE OF MERRILL LYNCH & CO., INC. WITH RESPECT TO PARTNERSHIP
PREFERRED SECURITIES
GUARANTEES OF MERRILL LYNCH & CO., INC. WITH RESPECT TO CERTAIN DEBENTURES
OF ITS WHOLLY OWNED SUBSIDIARIES (THE "AFFILIATE DEBENTURES")
SUBORDINATED DEBENTURE OF MERRILL LYNCH & CO., INC.
(Title of the indenture securities)
_____________________________________________________
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street,
New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of
Amendment dated February 17, 1969, August 31, 1977, December 31, 1980, September
9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which
is incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996,
in connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee,
published pursuant to law or the requirements of its supervising or examining
authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 10TH day of DECEMBER, 1996.
THE CHASE MANHATTAN BANK
By /s/ James D. Heaney
--------------------------------
James D. Heaney
Vice President
- 3 -
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business September 30, 1996, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
DOLLAR AMOUNTS
ASSETS IN MILLIONS
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin . . . . . . . . . . . . . . $ 11,095
Interest-bearing balances . . . . . . . . . . 4,998
Securities: . . . . . . . . . . . . . . . . . . .
Held to maturity securities. . . . . . . . . . . . 3,231
Available for sale securities. . . . . . . . . . . 38,078
Federal Funds sold and securities purchased under
agreements to resell in domestic offices of the
bank and of its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds sold. . . . . . . . . . . . . . 8,018
Securities purchased under agreements to resell 731
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . $130,513
Less: Allowance for loan and lease losses . . 2,938
Less: Allocated transfer risk reserve . . . . 27
Loans and leases, net of unearned income, --------
allowance, and reserve. . . . . . . . . . . . 127,548
Trading Assets . . . . . . . . . . . . . . . . . . 48,576
Premises and fixed assets (including capitalized
leases). . . . . . . . . . . . . . . . . . . . . . 2,850
Other real estate owned. . . . . . . . . . . . . . 300
Investments in unconsolidated subsidiaries and
associated companies. . . . . . . . . . . . . 92
Customer's liability to this bank on acceptances
outstanding . . . . . . . . . . . . . . . . . 2,777
Intangible assets. . . . . . . . . . . . . . . . . 1,361
Other assets . . . . . . . . . . . . . . . . . . . 12,204
------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . $261,859
-----------
-----------
- 4 -
<PAGE>
LIABILITIES
Deposits
In domestic offices . . . . . . . . . . . . . $80,163
Noninterest-bearing . . . . . . . . . . . . . $30,596
Interest-bearing. . . . . . . . . . . . . . . 49,567
In foreign offices, Edge and Agreement subsidiaries,
and IBF's . . . . . . . . . . . . . . . . . . 65,173
Noninterest-bearing. . . . . . . . . . . . . . . . $ 3,616
Interest-bearing. . . . . . . . . . . . . . . 61,557
Federal funds purchased and securities sold under agree-
ments to repurchase in domestic offices of the bank and
of its Edge and Agreement subsidiaries, and in IBF's
Federal funds purchased . . . . . . . . . . . 14,594
Securities sold under agreements to repurchase 14,110
Demand notes issued to the U.S. Treasury . . . . . 2,200
Trading liabilities. . . . . . . . . . . . . . . . 30,136
Other Borrowed money:
With a remaining maturity of one year or less 16,895
With a remaining maturity of more than one year 449
Mortgage indebtedness and obligations under capitalized
leases. . . . . . . . . . . . . . . . . . . . 49
Bank's liability on acceptances executed and outstanding 2,764
Subordinated notes and debentures. . . . . . . . . 5,471
Other liabilities. . . . . . . . . . . . . . . . . 13,997
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . 246,001
-------
Limited-Life Preferred stock and related surplus . 550
EQUITY CAPITAL
Common stock . . . . . . . . . . . . . . . . . . . 1,209
Surplus. . . . . . . . . . . . . . . . . . . . . . 10,176
Undivided profits and capital reserves . . . . . . 4,385
Net unrealized holding gains (Losses)
on available-for-sale securities . . . . . . . . . (481)
Cumulative foreign currency translation adjustments 19
TOTAL EQUITY CAPITAL . . . . . . . . . . . . . . . 15,308
-------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED
STOCK AND EQUITY CAPITAL. . . . . . . . . . . $261,859
--------
--------
I, Joseph L. Sclafani, S.V.P. & Controller of the
above-named bank, do hereby declare that this Report of
Condition has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true to the best of my knowledge and
belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness
of this Report of Condition and declare that it has been
examined by us, and to the best of our knowledge and
belief has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true and correct.
WALTER V. SHIPLEY )
EDWARD D. MILLER )DIRECTORS
THOMAS G. LABRECQUE )
- 5 -
