<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 20, 1996
REGISTRATION NO. 33-65135
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
POST-EFFECTIVE AMENDMENT NO. 5
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
MERRILL LYNCH & CO., INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 13-2740599
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION OR ORGANIZATION)
WORLD FINANCIAL CENTER
NORTH TOWER
NEW YORK, NEW YORK 10281-1334
(212) 449-1000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S 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)
COPY TO:
NORMAN D. SLONAKER, ESQ.
BROWN & WOOD
ONE WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
----------------
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. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
-----------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
----------------
THIS POST-EFFECTIVE AMENDMENT NO. 5 TO THE REGISTRATION STATEMENT SHALL
HEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES
ACT OF 1933 OR ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(a), MAY DETERMINE.
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<PAGE>
EXPLANATORY NOTE
This Post-Effective Amendment No. 5 contains only a form of prospectus
supplement and prospectus to be used in connection with an underwritten
offering of the Registrant's Structured Yield Product Exchangeable for
Stock/SM/, % STRYPES /SM/ Due , 2001, payable at maturity with shares of
common stock of IMC Global Inc. and/or, in the circumstances described herein,
other Reference Property. Copies of various prospectuses that were included in
the Registration Statement on Form S-3 (No. 33-65135) as originally filed by
the Registrant with the Securities and Exchange Commission are not included
herein.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A POST- +
+EFFECTIVE AMENDMENT TO THE 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 POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT BECOMES +
+EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE 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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, ISSUE DATE: JUNE 20, 1996
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 1996)
5,661,119 STRYPES SM
MERRILL LYNCH & CO., INC.
[ MERRILL LYNCH LOGO] % STRYPES SM DUE , 2001 [LOGO] IMC GLOBAL
PAYABLE WITH SHARES OF COMMON STOCK OF
IMC GLOBAL INC.
(OR CASH WITH AN EQUAL VALUE)
----------
The issue price of each Structured Yield Product Exchangeable for Stock SM,
% STRYPES SM Due , 2001 (each, a "STRYPES") of Merrill Lynch & Co.,
Inc. (the "Company") being offered hereby is $ , which amount is equal to
the last sale price of the common stock, par value $1.00 per share (the "IMC
Common Stock" ), of IMC Global Inc., a Delaware corporation ("IMC"), on ,
1996, as reported on the New York Stock Exchange (the "Initial Price"). The
STRYPES will mature on , 2001 (the "Maturity Date"). Interest on the
STRYPES, at the rate of % of the issue price per annum, is payable in cash
quarterly in arrears on , , and ,
beginning , 1996. The STRYPES are not subject to redemption or any
sinking fund. The STRYPES will be unsecured obligations of the Company ranking
pari passu with all of its other unsecured and unsubordinated indebtedness. In
addition, the STRYPES will not restrict the Company's ability to incur
additional indebtedness ranking senior to, or pari passu with, the STRYPES. See
"Supplemental Description of the STRYPES--Ranking."
On the Maturity Date, the Company will pay and discharge each STRYPES by
delivering to the holder thereof a percentage of each type of Reference
Property (subject to the Company's right to deliver, with respect to all, but
not less than all, Reference Property deliverable on the Maturity Date, cash
with an equal value) determined in accordance with the following formula: (a)
if the Reference Property Value (as defined herein) is greater than or equal to
$ (the "Threshold Appreciation Price"), % of each type of Reference
Property, (b) if the Reference Property Value is less than the Threshold
Appreciation Price but is greater than $ (the "Initial Price"), a percentage
of each type of Reference Property, allocated as proportionately as
practicable, so that the aggregate value thereof is equal to the Initial Price
and (c) if the Reference Property Value is less than or equal to the Initial
Price, 100% of each type of Reference Property. The term "Reference Property"
shall mean initially one share of IMC Common Stock and shall be subject to
adjustment from time to time prior to the Maturity Date to reflect the addition
or substitution of any cash, securities and/or other property resulting from
the application of the adjustment provisions described herein. AS DESCRIBED
HEREIN, THE REFERENCE PROPERTY VALUE WILL REPRESENT A DETERMINATION OF THE
VALUE OF THE REFERENCE PROPERTY IMMEDIATELY PRIOR TO THE MATURITY DATE.
ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE AMOUNT RECEIVABLE BY HOLDERS OF
THE STRYPES ON THE MATURITY DATE WILL BE EQUAL TO OR GREATER THAN THE ISSUE
PRICE OF THE STRYPES. IF THE REFERENCE PROPERTY VALUE IS LESS THAN THE INITIAL
PRICE, SUCH AMOUNT RECEIVABLE ON THE MATURITY DATE WILL BE LESS THAN THE ISSUE
PRICE PAID FOR THE STRYPES, IN WHICH CASE AN INVESTMENT IN THE STRYPES WILL
RESULT IN A LOSS. See "Supplemental Description of the STRYPES."
Reference is made to the accompanying prospectus of IMC covering the shares
of IMC Common Stock (including the preferred stock purchase rights associated
therewith) which may be received by a holder of the STRYPES on the Maturity
Date. IMC is not affiliated with the Company, will not receive any of the
proceeds from the sale of the STRYPES and will have no obligations with respect
to the STRYPES.
SEE "RISK FACTORS" BEGINNING ON PAGE S-8 OF THIS PROSPECTUS SUPPLEMENT FOR
CERTAIN CONSIDERATIONS RELEVANT TO AN INVESTMENT IN THE STRYPES.
For a discussion of certain United States Federal income tax consequences for
holders of the STRYPES, see "Certain United States Federal Income Tax
Considerations."
The IMC Common Stock is listed on the New York Stock Exchange ("NYSE") under
the symbol "IGL." The STRYPES have been approved for listing on the NYSE,
subject to official notice of issuance.
----------
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 SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(3)
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<S> <C> <C> <C>
Per STRYPES.................................. $ $ $
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Total(4)..................................... $ $ $
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</TABLE>
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(1) Plus accrued interest, if any, from , 1996 to the date of delivery.
(2) The Company, IMC and GVI Holdings, Inc. have agreed to indemnify the
Underwriter against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(3) Before deducting expenses payable by the Company.
(4) The Company has granted the Underwriter an option for 30 days to purchase
up to an additional 849,167 STRYPES at the initial public offering price
per STRYPES, less the underwriting discount, solely to cover over-
allotments. If such over-allotment option is exercised in full, the total
Price to Public, Underwriting Discount and Proceeds to Company will be
$ , $ and $ , respectively. See "Underwriting."
----------
The STRYPES are offered by the Underwriter, subject to prior sale, when, as
and if issued to and accepted by the Underwriter, and subject to certain other
conditions. The Underwriter reserves the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of the STRYPES will be made in New York, New York, on or about ,
1996.
This Prospectus may be used by the Underwriter in connection with offers and
sales related to market-making transactions in the STRYPES. The Underwriter 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.
- -----
(SM) Service mark of Merrill Lynch & Co., Inc.
----------
MERRILL LYNCH & CO.
----------
The date of this Prospectus Supplement is , 1996.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE STRYPES AND
THE IMC COMMON STOCK AT LEVELS ABOVE THOSE 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,
MAY BE DISCONTINUED AT ANY TIME.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSIONER OF
INSURANCE FOR THE STATE OF NORTH CAROLINA, NOR HAS THE COMMISSIONER PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS.
S-2
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the information
included and incorporated by reference in the accompanying Prospectus (the
"ML&Co. Prospectus") and by the more detailed information included elsewhere in
this Prospectus Supplement. Unless otherwise indicated, the information
contained in this Prospectus Supplement assumes that the Underwriter's over-
allotment option is not exercised. Unless the context otherwise requires, the
following summary assumes that on the Maturity Date the Reference Property
consists only of shares of IMC Common Stock (including the preferred stock
purchase rights associated therewith).
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, Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("MLPF&S"), is one of the largest securities firms in the
world.
IMC GLOBAL INC.
IMC is one of the world's leading producers of crop nutrients for the
international agricultural community and is one of the largest distributors in
the United States of crop nutrients and related products through its retail and
wholesale distribution networks. IMC mines, processes and distributes potash in
the United States and Canada, and is a joint venture partner in IMC-Agrico
Company, a leading producer, marketer and distributor of phosphate crop
nutrients and a leading producer and marketer of animal feed ingredients. IMC's
retail distribution network, which extends principally to corn and soybean
farmers in the Midwestern and Southeastern United States, is one of the largest
distributors of crop nutrients and related products in the United States. IMC
also manufactures nitrogen-based and other high-value crop nutrients which are
marketed on a wholesale basis principally in the Midwestern and Southeastern
United States. In addition, IMC sells specialty lawn and garden, turf, and
nursery products on a national basis and ice-melter products in the Midwest and
Eastern snow-belt states.
Reference is made to the accompanying prospectus of IMC (the "IMC
Prospectus") covering the shares of IMC Common Stock (including the preferred
stock purchase rights associated therewith) which may be received by a holder
of STRYPES on the Maturity Date. IMC is not affiliated with the Company, will
not receive any of the proceeds from the sale of the STRYPES and will have no
obligations with respect to the STRYPES. THE IMC PROSPECTUS IS BEING ATTACHED
HERETO AND DELIVERED TO PROSPECTIVE PURCHASERS OF STRYPES TOGETHER WITH THIS
PROSPECTUS SUPPLEMENT AND THE ML&CO. PROSPECTUS FOR CONVENIENCE OF REFERENCE
ONLY. THE IMC PROSPECTUS DOES NOT CONSTITUTE A PART OF THIS PROSPECTUS
SUPPLEMENT OR THE ML&CO. PROSPECTUS, NOR IS IT INCORPORATED BY REFERENCE HEREIN
OR THEREIN.
THE STRYPES
OFFERING.................... 5,661,119 STRYPES
ISSUE PRICE................. $ per STRYPES
MATURITY DATE............... , 2001
INTEREST RATE............... % of the issue price per annum, or $ per
STRYPES per quarter, payable in cash quarterly in
arrears
INTEREST PAYMENT DATES...... , , and , beginning , 1996
S-3
<PAGE>
PAYMENT AT MATURITY.........
On the Maturity Date, the Company will pay and
discharge each STRYPES by delivering to the holder
thereof a percentage of each type of Reference
Property (subject to the Company's right to
deliver, with respect to all, but not less than
all, Reference Property deliverable on the
Maturity Date, cash with an equal value)
determined in accordance with the following
formula: (a) if the Reference Property Value (as
defined herein) is greater than or equal to $
(the "Threshold Appreciation Price"), % of each
type of Reference Property, (b) if the Reference
Property Value is less than the Threshold
Appreciation Price but is greater than $ (the
"Initial Price"), a percentage of each type of
Reference Property, allocated as proportionately
as practicable, so that the aggregate value
thereof is equal to the Initial Price and (c) if
the Reference Property Value is less than or equal
to the Initial Price, 100% of each type of
Reference Property. The term "Reference Property"
shall mean initially one share of IMC Common Stock
and shall be subject to adjustment from time to
time prior to the Maturity Date to reflect the
addition or substitution of any cash, securities
and/or other property resulting from the
application of the adjustment provisions described
herein. AS DESCRIBED HEREIN, THE REFERENCE
PROPERTY VALUE WILL REPRESENT A DETERMINATION OF
THE VALUE OF THE REFERENCE PROPERTY IMMEDIATELY
PRIOR TO THE MATURITY DATE. ACCORDINGLY, THERE CAN
BE NO ASSURANCE THAT THE AMOUNT RECEIVABLE BY
HOLDERS OF THE STRYPES ON THE MATURITY DATE WILL
BE EQUAL TO OR GREATER THAN THE ISSUE PRICE OF THE
STRYPES. IF THE REFERENCE PROPERTY VALUE IS LESS
THAN THE INITIAL PRICE, SUCH AMOUNT RECEIVABLE ON
THE MATURITY DATE WILL BE LESS THAN THE ISSUE
PRICE PAID FOR THE STRYPES, IN WHICH CASE AN
INVESTMENT IN THE STRYPES WILL RESULT IN A LOSS.
See "Supplemental Description of the STRYPES--
General."
NO REDEMPTION, SINKING FUND
OR PAYMENT PRIOR TO
MATURITY...................
The STRYPES are not subject to redemption by the
Company prior to the Maturity Date and do not
contain any sinking fund or other mandatory
redemption provisions. The STRYPES are not subject
to payment prior to the Maturity Date at the
option of the holder.
RANKING..................... The STRYPES will be unsecured obligations of the
Company ranking pari passu with all of its other
unsecured and unsubordinated indebtedness. See
"Supplemental Description of the STRYPES--Ranking"
herein and "Description of the STRYPES--Ranking"
in the ML&Co. Prospectus.
RELATIONSHIP TO IMC COMMON
STOCK......................
The STRYPES will bear interest at % of the
issue price per annum, a yield substantially in
excess of the % dividend yield of IMC Common
Stock based on the last sale price of the IMC
Common Stock on , 1996, as reported on the
NYSE, and the recent $.08 per share quarterly
dividend paid on the IMC Common Stock. However,
the opportunity for equity appreciation
S-4
<PAGE>
afforded by an investment in the STRYPES is less
than the opportunity for equity appreciation
afforded by a direct investment in the IMC Common
Stock because the amount receivable by a holder of
a STRYPES on the Maturity Date will only exceed
the issue price of such STRYPES if the Reference
Property Value exceeds the Threshold Appreciation
Price (which represents an appreciation of %
over the Initial Price). Moreover, holders of the
STRYPES will only be entitled to receive on the
Maturity Date % (the percentage equal to the
Initial Price divided by the Threshold
Appreciation Price) of any appreciation of the
value of Reference Property in excess of the
Threshold Appreciation Price. Holders of the
STRYPES will not be entitled to any rights with
respect to the Reference Property (including,
without limitation, voting rights and rights to
receive any dividends, interest or other
distributions in respect thereof) unless and until
such time, if any, as the Company shall have
delivered the Reference Property for STRYPES on
the Maturity Date, and unless the applicable
record date, if any, for the exercise of such
rights occurs after such delivery. See "Risk
Factors--Limitations on Opportunity for Equity
Appreciation" and "--No Stockholder's Rights."
TRADING PRICES.............. The trading prices of the STRYPES in the secondary
market will be directly affected by the trading
prices of the IMC Common Stock in the secondary
market. It is impossible to predict whether the
price of IMC Common Stock will rise or fall. In
addition, any market that develops for the STRYPES
is likely to influence the market for IMC Common
Stock. For example, the price of IMC Common Stock
could be depressed by investors' anticipation of
the potential distribution into the market of
substantial amounts of IMC Common Stock on the
Maturity Date, by possible sales of IMC Common
Stock by investors who view the STRYPES as a more
attractive means of equity participation in IMC,
and by hedging or arbitrage trading activity that
may develop involving the STRYPES and the IMC
Common Stock. See "Risk Factors--Factors Affecting
Trading Prices" and "--Impact of the STRYPES on
the Market for IMC Common Stock."
DILUTION....................
The Reference Property (or the amount of cash)
that holders of the STRYPES are entitled to
receive upon payment and discharge on the Maturity
Date will not be adjusted for certain events, such
as offerings of IMC Common Stock for cash or in
connection with acquisitions. IMC is not
restricted from issuing additional IMC Common
Stock during the term of the STRYPES and has no
obligation to consider the interests of holders of
STRYPES for any reason. Additional issuances of
shares of IMC Common Stock may materially and
adversely affect the price of IMC Common Stock
and, because of the relationship of the percentage
of the Reference Property (or cash amount) to be
received upon payment and
S-5
<PAGE>
discharge to the price of the IMC Common Stock,
such other events may adversely affect the trading
price of the STRYPES. See "Risk Factors--Dilution
of IMC Common Stock."
PURCHASE AGREEMENT WITH
GVI HOLDINGS, INC.....
Pursuant to an agreement (the "Purchase
Agreement") among the Company, Merrill Lynch
Mortgage Capital Inc., a wholly owned subsidiary
of the Company (the "ML&Co. Subsidiary"), and GVI
Holdings, Inc. ("GVI"), a wholly-owned subsidiary
of Great American Management and Investment, Inc.,
GVI is obligated to deliver to the ML&Co.
Subsidiary immediately prior to the Maturity Date
the Reference Property required by the Company to
pay and discharge all of the STRYPES (including
any STRYPES issued pursuant to the over-allotment
option granted by the Company to the Underwriter).
In lieu of delivering the Reference Property
immediately prior to the Maturity Date, GVI has
the right to satisfy its obligation under the
Purchase Agreement by delivering at such time cash
in an amount equal to the value of such Reference
Property immediately prior to the Maturity Date.
Such right, if exercised by GVI, must be exercised
with respect to all of the Reference Property
deliverable pursuant to the Purchase Agreement.
Under the Purchase Agreement, the Company has
agreed to pay and discharge the STRYPES by
delivering to the holders thereof on the Maturity
Date the form of consideration that the ML&Co.
Subsidiary receives from GVI. The consideration to
be paid by the ML&Co. Subsidiary under the
Purchase Agreement is $ in the aggregate, and
is payable to GVI on or about , 1996. No
other consideration is payable by the ML&Co.
Subsidiary to GVI in connection with its
acquisition of the Reference Property pursuant to
the Purchase Agreement or the performance of the
Purchase Agreement by GVI.
GVI has no obligations with respect to the STRYPES
or amounts to be paid to holders thereof,
including any obligation to take the needs of the
Company or of holders of the STRYPES into
consideration in determining whether to deliver
the Reference Property or cash or for any other
reason. The Purchase Agreement among the Company,
the ML&Co. Subsidiary and GVI is a commercial
transaction and does not create any rights in, or
for the benefit of, any holder of STRYPES. See
"Certain Arrangements with GVI."
CERTAIN UNITED STATES
FEDERAL INCOME TAX
CONSIDERATIONS.............. Prospective investors in the STRYPES should be
aware that there exists uncertainty concerning the
proper United States Federal income tax
characterization and treatment of the STRYPES.
Accordingly, prospective investors should consider
the tax consequences of investing in the STRYPES.
See "Risk Factors--Tax Matters" and "Certain
United States Federal Income Tax Considerations."
S-6
<PAGE>
GLOBAL NOTES................ Upon issuance, all STRYPES will be represented by
one or more global securities deposited with, and
registered in the name of, The Depository Trust
Company, as Securities Depository (the "Securities
Depository"), or a nominee thereof. As a result,
the Securities Depository, or its nominee, will be
considered the sole owner of the STRYPES under the
Indenture (as defined herein). Ownership interests
of actual purchasers of STRYPES will be recorded
on the records of participants in the Securities
Depository. See "Description of the STRYPES--
Securities Depository" in the ML&Co. Prospectus.
USE OF PROCEEDS.............
The net proceeds to the Company from the sale of
the STRYPES are expected to be $ , $ of
which will be used to purchase an obligation of
the ML&Co. Subsidiary and the remainder of which
will be used for general corporate purposes. The
ML&Co. Subsidiary will use a portion of the
consideration that it receives from the Company to
pay to GVI the consideration due under the
Purchase Agreement.
S-7
<PAGE>
RISK FACTORS
Prospective purchasers should read carefully this entire Prospectus
Supplement and the ML&Co. Prospectus and should consider, among other things,
the factors set forth below and under "Risk Factors" in the IMC Prospectus.
Unless the context otherwise requires, the following discussion assumes that on
the Maturity Date the Reference Property consists only of shares of IMC Common
Stock (including the preferred stock purchase rights associated therewith).
COMPARISON TO OTHER DEBT SECURITIES; RELATIONSHIP TO IMC COMMON STOCK
The terms of the STRYPES differ from those of ordinary debt securities in
that the value of the Reference Property (or, pursuant to the option of the
Company, the amount of cash) that a holder of a STRYPES will receive on the
Maturity Date is not fixed, but is based on the Reference Property Value (see
"Supplemental Description of the STRYPES"). THERE CAN BE NO ASSURANCE THAT SUCH
AMOUNT RECEIVABLE BY THE HOLDER ON THE MATURITY DATE WILL BE EQUAL TO OR
GREATER THAN THE ISSUE PRICE OF THE STRYPES. IF THE REFERENCE PROPERTY VALUE IS
LESS THAN THE INITIAL PRICE, SUCH AMOUNT RECEIVABLE ON THE MATURITY DATE WILL
BE LESS THAN THE ISSUE PRICE PAID FOR THE STRYPES, IN WHICH CASE AN INVESTMENT
IN STRYPES WILL RESULT IN A LOSS. ACCORDINGLY, A HOLDER OF STRYPES ASSUMES THE
RISK THAT THE MARKET VALUE OF THE REFERENCE PROPERTY MAY DECLINE, AND THAT SUCH
DECLINE COULD BE SUBSTANTIAL. THE IMC PROSPECTUS COVERS THE SHARES OF IMC
COMMON STOCK (INCLUDING THE PREFERRED STOCK PURCHASE RIGHTS ASSOCIATED
THEREWITH) WHICH MAY BE RECEIVED BY A HOLDER OF THE STRYPES ON THE MATURITY
DATE.
LIMITATION ON OPPORTUNITY FOR EQUITY APPRECIATION
The opportunity for equity appreciation afforded by an investment in the
STRYPES is less than the opportunity for equity appreciation afforded by a
direct investment in the IMC Common Stock because the amount receivable by a
holder of a STRYPES on the Maturity Date will only exceed the issue price of
such STRYPES if the Reference Property Value exceeds the Threshold Appreciation
Price (which represents an appreciation of % over the Initial Price).
Moreover, holders of the STRYPES will only be entitled to receive on the
Maturity Date % (the percentage equal to the Initial Price divided by the
Threshold Appreciation Price) of any appreciation of the value of the Reference
Property in excess of the Threshold Appreciation Price. See "Supplemental
Description of the STRYPES." Because the price of the Reference Property is
subject to market fluctuations, the value of the Reference Property (or,
pursuant to the option of the Company, the amount of cash) received by a holder
of a STRYPES on the Maturity Date, determined as described herein, may be more
or less than the issue price of the STRYPES.
FACTORS AFFECTING TRADING PRICES
The trading prices of the STRYPES in the secondary market will be directly
affected by the trading prices of the IMC Common Stock in the secondary market.
It is impossible to predict whether the price of IMC Common Stock will rise or
fall. Trading prices of IMC Common Stock will be influenced by IMC's operating
results and prospects, by complex and interrelated political, economic,
financial and other factors and market conditions that can affect the capital
markets generally, the market segment of which IMC is a part, the NYSE (on
which the IMC Common Stock is traded), including the level of, and fluctuations
in, the trading prices of stocks generally and sales of substantial amounts of
IMC Common Stock in the market subsequent to the offering of the STRYPES or the
perception that such sales could occur, and by other events that are difficult
to predict and are beyond the Company's control.
IMPACT OF STRYPES ON THE MARKET FOR IMC COMMON STOCK
It is not possible to predict accurately how or whether the STRYPES will
trade in the secondary market or whether such market will be liquid. Any market
that develops for the STRYPES is likely to influence and be influenced by the
market for IMC Common Stock. For example, the price of IMC Common Stock could
become more volatile and could be depressed by investors' anticipation of the
potential distribution into the market of substantial amounts of IMC Common
Stock on the Maturity Date, by possible sales of IMC Common Stock by investors
who view the STRYPES as a more attractive means of equity participation in IMC,
and by hedging or arbitrage trading activity that may develop involving the
STRYPES and the IMC
S-8
<PAGE>
Common Stock. In addition, if the Underwriter's over-allotment option is not
exercised in full, GVI will continue to own shares of the IMC Common Stock that
are not subject to the Purchase Agreement. GVI is not precluded from selling
any such shares of IMC Common Stock, either pursuant to Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), or by exercising its
registration rights. Any such sales could have an adverse effect on the market
price of IMC Common Stock and/or the STRYPES and could affect the percentage of
the Reference Property (or cash amount) that a holder of a STRYPES will receive
on the Maturity Date.
POSSIBLE ILLIQUIDITY OF THE SECONDARY MARKET
It is not possible to predict how the STRYPES will trade in the secondary
market or whether such market will be liquid or illiquid. The STRYPES are novel
securities and there is currently no secondary market for the STRYPES. The
STRYPES have been approved for listing on the NYSE, subject to official notice
of issuance. However there can be no assurance that an active trading market
for the STRYPES will develop, that such listing will provide the holders of the
STRYPES with liquidity of investment, or that the STRYPES will not later be
delisted or that trading of the STRYPES on the NYSE will not be suspended. In
the event of a delisting or suspension of trading on the NYSE, the Company will
apply for listing of the STRYPES on another national securities exchange or for
quotation on another trading market. If the STRYPES are not listed or traded on
any securities exchange or trading market, or if trading of the STRYPES is
suspended, pricing information for the STRYPES may be more difficult to obtain
and the liquidity of the STRYPES may be adversely affected.
NO STOCKHOLDER'S RIGHTS
Holders of the STRYPES will not be entitled to any rights with respect to the
Reference Property (including, without limitation, voting rights and rights to
receive any dividends, interest or other distributions in respect thereof)
unless and until such time, if any, as the Company shall have delivered the
Reference Property for STRYPES on the Maturity Date, and unless the applicable
record date, if any, for the exercise of such rights occurs after such
delivery. For example, in the event that an amendment is proposed to the
Restated Certificate of Incorporation of IMC and the record date for
determining the stockholders of record entitled to vote on such amendment
occurs prior to such delivery, holders of the STRYPES will not be entitled to
vote on such amendment.
NO AFFILIATION BETWEEN THE COMPANY AND IMC
The Company has no affiliation with IMC, and IMC has no obligations with
respect to the STRYPES or amounts to be paid to holders thereof, including any
obligation to take the needs of the Company or of holders of the STRYPES into
consideration for any reason. IMC will not receive any of the proceeds of the
offering of the STRYPES made hereby and is not responsible for, and has not
participated in, the determination of the timing of, prices for or quantities
of the STRYPES to be issued, or the determination or calculation of the amount
receivable by holders of the STRYPES on the Maturity Date. IMC is not involved
with the administration or trading of the STRYPES and has no obligations with
respect to the amount receivable by holders of the STRYPES on the Maturity
Date.
DILUTION OF IMC COMMON STOCK
The Reference Property (or, pursuant to the option of the Company, the amount
of cash) that holders of the STRYPES are entitled to receive on the Maturity
Date is subject to adjustment for certain events arising from, among others, a
merger or consolidation in which IMC is not the surviving or resulting
corporation and the liquidation, dissolution, winding up or bankruptcy of IMC,
as well as stock splits and combinations, stock dividends and certain other
actions of IMC that modify its capital structure. See "Supplemental Description
of the STRYPES--Reference Property Adjustments." Such Reference Property (or
cash amount) to be received by such holders on the Maturity Date will not be
adjusted for other events,
S-9
<PAGE>
such as offerings of IMC Common Stock for cash or in connection with
acquisitions. IMC is not restricted from issuing additional shares of IMC
Common Stock during the term of the STRYPES and has no obligation to consider
the interests of the holders of the STRYPES for any reason. Additional
issuances may materially and adversely affect the price of the IMC Common Stock
and, because of the relationship of the percentage of the Reference Property
(or cash amount) to be received on the Maturity Date to the price of the IMC
Common Stock, such other events may adversely affect the trading price of the
STRYPES.
TAX MATTERS
Because of an absence of authority as to the proper characterization of the
STRYPES, their ultimate tax treatment is uncertain. Accordingly, no assurances
can be given that any particular characterization and treatment of the STRYPES
will be accepted by the Internal Revenue Service ("IRS") or upheld by a court.
However, it is the opinion of Brown & Wood, counsel to the Company, that the
characterization and tax treatment of the STRYPES described herein (and
described in greater detail under "Certain United States Federal Income Tax
Considerations"), while not the only reasonable characterization and tax
treatment, is based on reasonable interpretations of law currently in effect
and, even if successfully challenged by the IRS, will not result in the
imposition of penalties. The Indenture will require that any holder subject to
U.S. Federal income tax include currently in income, for U.S. Federal income
tax purposes, payments denominated as interest that are made with respect to a
STRYPES in accordance with such holder's regular method of tax accounting. The
Indenture also requires the Company and holders to treat each STRYPES for tax
purposes as a unit (a "Unit") consisting of (i) a debt instrument (the "Debt
Instrument") with a fixed principal amount unconditionally payable on the
Maturity Date equal to the issue price of the STRYPES and bearing interest at
the stated interest rate on the STRYPES and (ii) a forward purchase contract
(the "Forward Contract") pursuant to which the holder agrees to use the
principal payment due on the Debt Instrument to purchase on the Maturity Date
the Reference Property which the Company is obligated under the STRYPES to
deliver at that time (subject to the Company's right to deliver cash in lieu of
the Reference Property). The Indenture also requires that upon the acquisition
of a STRYPES and upon a holder's sale or other disposition of a STRYPES prior
to the Maturity Date, the amount paid or realized by the holder be allocated by
the holder between the Debt Instrument and the Forward Contract based upon
their relative fair market values (as determined on the date of acquisition or
disposition). For these purposes, with respect to acquisitions of STRYPES in
connection with the original issuance thereof, the Company and each holder
agrees, pursuant to the terms of the Indenture, to allocate $ of the
entire initial purchase price of a STRYPES (i.e., the issue price of a STRYPES)
to the Debt Instrument and to allocate the remaining $ of the entire
initial purchase price of a STRYPES to the Forward Contract. As previously
mentioned, the appropriate character and timing of income, gain or loss to be
recognized on a STRYPES is uncertain and investors should consult their own tax
advisers concerning the application of the United States Federal income tax
laws to their particular situations as well as any consequences of the
purchase, ownership and disposition of the STRYPES arising under the laws of
any other taxing jurisdiction. The tax consequences of investing in the STRYPES
are described in greater detail under "Certain United States Federal Income Tax
Considerations."
HOLDING COMPANY STRUCTURE
Since the Company is a holding company, the right of the Company, and hence
the right of creditors of the Company (including the holders of the STRYPES),
to participate in any distribution of the assets of any subsidiary upon its
liquidation or reorganization or otherwise is necessarily subject to the prior
claims of creditors of the subsidiary, except to the extent that claims of the
Company itself as a creditor of the subsidiary may be recognized. In addition,
dividends, loans and advances from certain subsidiaries, including MLPF&S, to
the Company are restricted by net capital requirements under the Exchange Act
and under rules of certain exchanges and other regulatory bodies.
S-10
<PAGE>
IMC GLOBAL INC.
IMC is one of the world's leading producers of crop nutrients for the
international agricultural community and is one of the largest distributors in
the United States of crop nutrients and related products through its retail and
wholesale distribution networks. IMC mines, processes and distributes potash in
the United States and Canada, and is a joint venture partner in IMC-Agrico
Company, a leading producer, marketer and distributor of phosphate crop
nutrients and a leading producer and marketer of animal feed ingredients. IMC's
retail distribution network, which extends principally to corn and soybean
farmers in the Midwestern and Southeastern United States, is one of the largest
distributors of crop nutrients and related products in the United States. IMC
also manufactures nitrogen-based and other high-value crop nutrients which are
marketed on a wholesale basis principally in the Midwestern and Southeastern
United States. In addition, IMC sells specialty lawn and garden, turf, and
nursery products on a national basis and ice-melter products in the Midwest and
Eastern snow-belt states.
IMC is subject to the informational requirements of the Exchange Act.
Accordingly, IMC files reports, proxy and information statements and other
information with the Commission. Copies of such material can be inspected and
copied at the public reference facilities maintained by the Commission at the
addresses specified under "Available Information" in the IMC Prospectus.
Reports, proxy and information statements and other information concerning IMC
may also be inspected at the offices of the NYSE.
THE COMPANY IS NOT AFFILIATED WITH IMC, AND IMC HAS NO OBLIGATIONS WITH
RESPECT TO THE STRYPES. THIS PROSPECTUS SUPPLEMENT AND THE ML&CO. PROSPECTUS
RELATE ONLY TO THE STRYPES OFFERED HEREBY AND DO NOT RELATE TO THE IMC COMMON
STOCK. IMC HAS FILED A REGISTRATION STATEMENT ON FORM S-3 WITH THE COMMISSION
COVERING THE SHARES OF IMC COMMON STOCK (INCLUDING THE PREFERRED STOCK PURCHASE
RIGHTS ASSOCIATED THEREWITH) THAT MAY BE RECEIVED BY A HOLDER OF STRYPES ON THE
MATURITY DATE. THE PROSPECTUS OF IMC CONSTITUTING A PART OF SUCH REGISTRATION
STATEMENT INCLUDES INFORMATION RELATING TO IMC AND THE IMC COMMON STOCK
(INCLUDING THE PREFERRED STOCK PURCHASE RIGHTS ASSOCIATED THEREWITH), AS WELL
AS A DISCUSSION OF CERTAIN FACTORS RELEVANT TO AN INVESTMENT IN IMC COMMON
STOCK. THE IMC PROSPECTUS IS BEING ATTACHED HERETO AND DELIVERED TO PROSPECTIVE
PURCHASERS OF STRYPES TOGETHER WITH THIS PROSPECTUS SUPPLEMENT AND THE ML&CO.
PROSPECTUS FOR CONVENIENCE OF REFERENCE ONLY. THE IMC PROSPECTUS DOES NOT
CONSTITUTE A PART OF THIS PROSPECTUS SUPPLEMENT OR THE ML&CO. PROSPECTUS, NOR
IS IT INCORPORATED BY REFERENCE HEREIN OR THEREIN.
S-11
<PAGE>
PRICE RANGE OF IMC COMMON STOCK AND DIVIDENDS
The IMC Common Stock is listed and traded on the NYSE under the symbol "IGL."
The following table sets forth the high and low sale prices of the IMC Common
Stock for the periods indicated, as reported on the NYSE Composite Tape, and
the cash dividends per share of IMC Common Stock declared and paid during such
periods. Data reflected in the table for periods prior to IMC's 2-for-1 stock
split in November 1995 have been adjusted to reflect such stock split.
<TABLE>
<CAPTION>
DIVIDENDS
PERIOD HIGH LOW PER SHARE
------ ---- --- ---------
<S> <C> <C> <C>
FISCAL YEAR 1995
Quarter ended September 30................... $22.313 $17.063 $ --
Quarter ended December 31.................... 22.375 18.125 0.05
Quarter ended March 31....................... 26.250 20.625 0.05
Quarter ended June 30........................ 27.313 22.250 0.05
FISCAL YEAR 1996
Quarter ended September 30................... 33.313 27.000 0.05
Quarter ended December 31.................... 40.875 30.313 0.08
Quarter ended March 31....................... 43.250 33.625 0.08
Quarter ended June 30 (through June 17,
1996)....................................... 39.875 32.250 0.08(1)
</TABLE>
(1)IMC declared a quarterly dividend of $0.08 per share on April 18, 1996,
payable on June 28, 1996 to stockholders of record at the close of business
on June 14, 1996.
As of June 17, 1996, there were approximately 475 record holders of the IMC
Common Stock. On June 17, 1996, the last reported sale price of the IMC Common
Stock on the NYSE was $39.25 per share.
In April 1993, IMC's Board of Directors reduced cash dividend payments on the
IMC Common Stock in light of financial demands of litigation arising out of an
explosion at a nitroparaffins plant operated by IMC in Sterlington, Louisiana,
and weakness in concentrated phosphate prices. Although IMC has paid cash
dividends in recent quarters, any future payment of cash dividends is subject
to the discretion of IMC's Board of Directors and will be dependent on IMC's
results of operations, financial condition, cash requirements and other
relevant factors. Since substantially all of IMC's operations are conducted
through subsidiaries, IMC cash flow, and consequently its future ability to pay
dividends, will be dependent upon the earnings of its subsidiaries and the
payment of funds by those subsidiaries to IMC in the form of loans, dividends
or otherwise. Certain of IMC's debt agreements contain restrictions on the
payment of dividends by IMC's subsidiaries.
The Company makes no representation as to the amount of dividends, if any,
that IMC will pay in the future. In any event, holders of STRYPES will not be
entitled to receive any dividends or interest that may be payable on IMC Common
Stock or other Reference Property until such time as the Company, if it so
elects, delivers the Reference Property on the Maturity Date of the STRYPES,
and then only with respect to dividends having a record date on or after the
date of delivery thereof. See "Supplemental Description of the STRYPES."
SUPPLEMENTAL USE OF PROCEEDS
The net proceeds to the Company from the sale of the STRYPES are expected to
be $ , $ of which will be used to purchase an obligation of the ML&Co.
Subsidiary and the remainder of which will be used for general corporate
purposes. The ML&Co. Subsidiary will use a portion of the consideration that it
receives from the Company to pay to GVI the consideration due under the
Purchase Agreement.
S-12
<PAGE>
SUPPLEMENTAL DESCRIPTION OF THE STRYPES
The STRYPES are a series of Senior Debt Securities to be issued under an
indenture, dated as of April 1, 1983 and restated as of April 1, 1987, as
amended and supplemented as of , 1996 (the indenture dated as of April 1,
1983 and restated as of April 1, 1987, as amended and supplemented from time to
time, the "Indenture") between the Company and Chemical Bank (successor by
merger to Manufacturers Hanover Trust Company), as trustee (the "Trustee").
Certain provisions of the Indenture are summarized in the ML&Co. Prospectus.
All capitalized terms not otherwise defined herein have the meanings specified
in the Indenture.
GENERAL
The aggregate number of STRYPES to be issued under the Indenture will be
limited to 5,661,119, plus such additional number of STRYPES as may be issued
pursuant to the over-allotment option granted by the Company to the
Underwriter. See "Underwriting." No fractional STRYPES will be issued.
Each STRYPES, which will be issued at a price of $ , will bear interest at
the rate of % of the issue price per annum (or $ per annum) from , 1996,
or from the most recent Interest Payment Date to which interest has been paid
or provided for, until the Maturity Date or such earlier date on which such
STRYPES is repaid pursuant to the terms thereof. Interest on the STRYPES will
be payable in cash quarterly in arrears on , , and ,
beginning , 1996, and on the Maturity Date (each, an "Interest Payment
Date"), to the persons in whose names the STRYPES are registered at the close
of business on the fifteenth calendar day (whether or not a Business Day)
immediately preceding such Interest Payment Date. Interest on the STRYPES will
be computed on the basis of a 360-day year of twelve 30-day months. If an
Interest Payment Date falls on a day that is not a Business Day, the interest
payment to be made on such Interest Payment Date will be made on the next
succeeding Business Day with the same force and effect as if made on such
Interest Payment Date, and no additional interest will accrue as a result of
such delayed payment.
The STRYPES will mature on , 2001. On the Maturity Date, the Company
will pay and discharge each STRYPES by delivering to the holder thereof a
percentage of each type of Reference Property (subject to the Company's right
to deliver, with respect to all, but not less than all, Reference Property
deliverable on the Maturity Date, cash with an equal value) determined in
accordance with the following formula: (a) if the Reference Property Value (as
defined below) is greater than or equal to the Threshold Appreciation Price,
% of each type of Reference Property, (b) if the Reference Property Value is
less than the Threshold Appreciation Price but is greater than the Initial
Price, a percentage of each type of Reference Property, allocated as
proportionately as practicable, so that the aggregate value thereof is equal to
the Initial Price and (c) if the Reference Property Value is less than or equal
to the Initial Price, 100% of each type of Reference Property. ACCORDINGLY,
THERE CAN BE NO ASSURANCE THAT THE AMOUNT RECEIVABLE BY HOLDERS OF THE STRYPES
ON THE MATURITY DATE WILL BE EQUAL TO OR GREATER THAN THE ISSUE PRICE OF THE
STRYPES. IF THE REFERENCE PROPERTY VALUE IS LESS THAN THE INITIAL PRICE, SUCH
AMOUNT RECEIVABLE ON THE MATURITY DATE WILL BE LESS THAN THE ISSUE PRICE PAID
FOR THE STRYPES, IN WHICH CASE AN INVESTMENT IN STRYPES WILL RESULT IN A LOSS.
Notwithstanding the foregoing, the Company may, in lieu of delivering the
applicable percentage of each type of Reference Property, deliver cash in an
amount equal to the sum of (a) for any portion of the Reference Property
consisting of cash that is otherwise deliverable on the Maturity Date, the
amount of such cash, without interest thereon, (b) for any portion of the
Reference Property consisting of property other than cash or Reference
Securities that is otherwise deliverable on the Maturity Date, the fair market
value (as determined by a nationally recognized independent investment banking
firm retained for this purpose by the Company) as of the third Trading Day
preceding the Maturity Date of such property, and (c) for any portion of the
Reference Property consisting of a Reference Security (as defined below) that
is otherwise deliverable
S-13
<PAGE>
on the Maturity Date (except as described under "Reference Property
Adjustments" below), an amount equal to the average Closing Price (as defined
below) per unit of such Reference Security on the 20 Trading Days immediately
prior to, but not including, the second Trading Day preceding the Maturity Date
multiplied by the number of units of such Reference Security constituting part
of the Reference Property, subject to the Company's agreement contained in the
Purchase Agreement to deliver on the Maturity Date the form of consideration
that the ML&Co. Subsidiary receives from GVI. Such right, if exercised by the
Company, must be exercised with respect to all Reference Property otherwise
deliverable on the Maturity Date in payment of all outstanding STRYPES. On or
prior to the sixth Business Day prior to the Maturity Date, the Company will
notify The Depository Trust Company and the Trustee and publish a notice in The
Wall Street Journal or another daily newspaper of national circulation stating
whether the STRYPES will be paid and discharged by delivery of the applicable
percentage of each type of Reference Property or cash. At the time such notice
is published, the Reference Property Value will not have been determined. If
the Company elects to deliver Reference Property, holders of the STRYPES will
be responsible for the payment of any and all brokerage costs upon the
subsequent sale thereof.
The term "Reference Property" initially means one share of IMC Common Stock
and shall be subject to adjustment from time to time prior to the Maturity Date
to reflect the addition or substitution of any cash, securities and/or other
property resulting from the application of the adjustment provisions described
herein. See "--Reference Property Adjustments" below. The term "Reference
Security" means, at any time, any security (as defined in Section 2(1) of the
Securities Act) then constituting part of the Reference Property. The term
"Reference Property Value" means, subject to the adjustment provisions
described below, the sum of (a) for any portion of the Reference Property
consisting of cash, the amount of such cash, (b) for any portion of the
Reference Property consisting of property other than cash or Reference
Securities, the fair market value (as determined by a nationally recognized
independent investment banking firm retained for this purpose by the Company)
as of the third Trading Day preceding the Maturity Date of such property, and
(c) for any portion of the Reference Property consisting of a Reference
Security, an amount equal to the average Closing Price per unit of such
Reference Security on the 20 Trading Days immediately prior to, but not
including, the second Trading Day preceding the Maturity Date multiplied by the
number of units of such Reference Security constituting part of the Reference
Property. The "Closing Price" of any Reference Security on any date of
determination means the closing sale price (or, if no closing price is
reported, the last reported sale price) of such Reference Security on the NYSE
on such date or, if such Reference Security is not listed for trading on the
NYSE on any such date, as reported in the composite transactions for the
principal United States securities exchange on which such Reference Security is
so listed, or if such Reference Security is not so listed on a United States
national or regional securities exchange, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System, or, if such
Reference Security is not so reported, the last quoted bid price for such
Reference Security in the over-the-counter market as reported by the National
Quotation Bureau or similar organization, or, if such bid price is not
available, the market value of such Reference Security on such date as
determined by a nationally recognized independent investment banking firm
retained for this purpose by the Company. A "Trading Day" is defined as a day
on which the Reference Security the Closing Price of which is being determined
(A) is not suspended from trading on any national or regional securities
exchange or association or over-the-counter market at the close of business and
(B) has traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of such Reference Security.
For illustrative purposes only, the following table shows the number of
shares of IMC Common Stock or the amount of cash that a holder of STRYPES would
receive for each STRYPES at various Reference Property Values. The table
assumes that there will be no Reference Property adjustments as described below
and, accordingly, that on the Maturity Date the Reference Property will consist
of one share of IMC Common Stock. There can be no assurance that the Reference
Property Value will be within the range set forth below. Given the Initial
Price of $ and the Threshold Appreciation Price of $ , a STRYPES
holder would receive on the Maturity Date the following number of shares of IMC
Common Stock or amount of cash (if the Company elects to pay and discharge the
STRYPES with cash) per STRYPES:
S-14
<PAGE>
<TABLE>
<CAPTION>
REFERENCE NUMBER OF
PROPERTY SHARES OF IMC AMOUNT
VALUE COMMON STOCK OF CASH
--------- ------------- --------
<S> <C> <C>
$ $
</TABLE>
REFERENCE PROPERTY ADJUSTMENTS
The Reference Property is subject to adjustment if an issuer of a Reference
Security shall: (i) subdivide or split the outstanding units of such Reference
Security into a greater number of units; (ii) combine the outstanding units of
such Reference Security into a smaller number of units; (iii) issue by
reclassification of units of such Reference Security any units of another
security of such issuer; (iv) issue rights or warrants to all holders of such
Reference Security entitling them, for a period expiring prior to the fifteenth
calendar day following the Maturity Date, to subscribe for or purchase any of
its securities or other property (other than rights to purchase units of such
Reference Security pursuant to a plan for the reinvestment of dividends or
interest); or (v) pay a dividend or make a distribution to all holders of such
Reference Security of cash, securities or other property (excluding any cash
dividend on any Reference Security consisting of capital stock that does not
constitute an Extraordinary Cash Dividend (as defined below), excluding any
payment of interest on any Reference Security consisting of an evidence of
indebtedness and excluding any dividend or distribution referred to in clause
(i), (ii), (iii) or (iv) above) or issue to all holders of such Reference
Security rights or warrants to subscribe for or purchase any of its securities
or other property (other than those referred to in clause (iv) above) (any of
the foregoing cash, securities or other property or rights or warrants are
referred to as the "Distributed Assets").
In the case of the events referred to in clauses (i), (ii) and (iii) above,
the Reference Property shall be adjusted to include the number of units of such
Reference Security and/or other security of such issuer which a holder of units
of such Reference Security would have owned or been entitled to receive
immediately following any such event had such holder held, immediately prior to
such event, the number of units of such Reference Security constituting part of
the Reference Property immediately prior to such event. Each such adjustment
shall become effective immediately after the effective date for such
subdivision, split, combination or reclassification, as the case may be. Each
such adjustment shall be made successively.
In the case of the event referred to in clause (iv) above, the Reference
Property shall be adjusted to include an amount in cash equal to the fair
market value (determined as described below), as of the fifth Business Day
(except as provided below) following the date on which such rights or warrants
are received by securityholders entitled thereto (the "Receipt Date"), of each
such right or warrant multiplied by the product of (A) the number of such
rights or warrants issued for each unit of such Reference Security and (B) the
number of units of such Reference Security constituting part of the Reference
Property on the date of issuance of such rights or warrants, immediately prior
to such issuance, without interest thereon. For purposes of the foregoing, the
fair market value of each such right or warrant shall be the quotient of (x)
the highest net bid, as of approximately 10:00 A.M., New York City time, on the
fifth Business Day following the Receipt Date for settlement three Business
Days later, by a recognized securities dealer in The City of New York selected
by or on behalf of the Company (from three (or such fewer number of dealers as
may be providing such bids) such recognized dealers selected by or on behalf of
the Company), for the purchase by such quoting dealer of the number of rights
or warrants (the "Aggregate Number") that a holder of such Reference Security
would receive if such holder held, as of the record date for determination of
stockholders entitled to receive such rights or warrants, a number of units of
such Reference Security equal to the product of (1) the aggregate number of
Outstanding STRYPES as of such record date and (2) the number of units of such
Reference Security constituting part of the Reference Property, divided by (y)
the Aggregate Number. Each such adjustment shall become effective on the fifth
Business Day following the Receipt Date of such rights or warrants. If for any
reason the Company is unable to obtain the required bid on the fifth Business
Day following the Receipt Date, it shall attempt to obtain such bid at
successive intervals of three months thereafter and on the third Trading Day
prior to the Maturity Date until it is able to obtain the required bid. From
the date of issuance of such rights or warrants until the required bid is
obtained, the Reference Property shall include the number of such rights or
warrants issued for each unit of such Reference Security multiplied
S-15
<PAGE>
by the number of units of such Reference Security constituting part of the
Reference Property on the date of issuance of such rights or warrants,
immediately prior to such issuance, and such rights or warrants constituting
part of the Reference Property shall be deemed for all purposes hereof to have
a fair market value of zero.
In the case of the event referred to in clause (v) above, the Reference
Property shall be adjusted to include, from and after such dividend,
distribution or issuance, (x) in respect of that portion, if any, of the
Distributed Assets consisting of cash, the amount of such Distributed Assets
consisting of cash received for each unit of such Reference Security multiplied
by the number of units of such Reference Security constituting part of the
Reference Property on the date of such dividend, distribution or issuance,
immediately prior to such dividend, distribution or issuance, without interest
thereon, plus (y) in respect of that portion, if any, of the Distributed Assets
which are other than cash, the number or amount of each type of Distributed
Assets other than cash received with respect to each unit of such Reference
Security multiplied by the number of units of such Reference Security
constituting part of the Reference Property on the date of such dividend,
distribution or issuance, immediately prior to such dividend, distribution or
issuance.
An "Extraordinary Cash Dividend" means, with respect to any consecutive 12-
month period, the amount, if any, by which the aggregate amount of all cash
dividends on any Reference Security consisting of capital stock occurring in
such 12-month period (or, if such Reference Security was not outstanding at the
commencement of such 12-month period, occurring in such shorter period during
which such Reference Security was outstanding) exceeds on a per share basis 12%
of the average of the Closing Prices per share of such Reference Security over
such 12-month period (or such shorter period during which such Reference
Security was outstanding); provided that, for purposes of the foregoing
definition, the amount of cash dividends paid on a per share basis will be
appropriately adjusted to reflect the occurrence during such period of any
stock dividend or distribution of shares of capital stock of the issuer of such
Reference Security or any subdivision, split, combination or reclassification
of shares of such Reference Security.
In the event of (A) any consolidation or merger of an issuer of a Reference
Security with or into another entity (other than a merger or consolidation in
which such issuer is the continuing corporation and in which the Reference
Security outstanding immediately prior to the merger or consolidation is not
exchanged for cash, securities or other property of such issuer or another
entity), (B) any statutory exchange of securities of an issuer of a Reference
Security with another entity (other than in connection with a merger or
acquisition) or (C) any liquidation, dissolution, winding up or bankruptcy of
an issuer of a Reference Security (excluding any distribution in such event
referred to in clause (v) above) (any such event described in clause (A), (B)
or (C), a "Reorganization Event"), the Reference Property shall be adjusted to
include, from and after the effective date for such Reorganization Event, in
lieu of the number of units of such Reference Security constituting part of the
Reference Property immediately prior to the effective date for such
Reorganization Event, the amount or number of any cash, securities and/or other
property owned or received in such Reorganization Event with respect to each
unit of such Reference Security multiplied by the number of units of such
Reference Security constituting part of the Reference Property immediately
prior to the effective date for such Reorganization Event.
No adjustments will be made for certain other events, such as offerings of
IMC Common Stock by IMC for cash or in connection with acquisitions. Likewise,
no adjustments will be made for any sales of IMC Common Stock by GVI.
The Company is required, within ten Business Days following the occurrence of
an event that requires an adjustment to the Reference Property (or if the
Company is not aware of such occurrence, as soon as practicable after becoming
so aware), to provide written notice to the Trustee and to the holders of the
STRYPES of the occurrence of such event and a statement in reasonable detail
setting forth the amount or number of each type of Reference Security and other
property then constituting part of the Reference Property.
S-16
<PAGE>
FRACTIONAL INTERESTS
No fractional units of any Reference Security will be delivered if the
Company pays and discharges the STRYPES by delivering Reference Property. In
lieu of any fractional unit otherwise deliverable in respect of all STRYPES of
any holder on the Maturity Date, such holder shall be entitled to receive an
amount in cash equal to the value of such fractional unit based on the average
Closing Price per unit of such Reference Security on the 20 Trading Days
immediately prior to, but not including, the second Trading Day preceding the
Maturity Date.
To the extent practicable, the Company will deliver fractional interests of
any Reference Property other than cash or a Reference Security if the Company
pays and discharges the STRYPES by delivering Reference Property. If such
delivery is not practicable, in lieu of delivering any such fractional interest
otherwise deliverable in respect of all STRYPES of any holder on the Maturity
Date, such holder shall be entitled to receive an amount in cash equal to the
value of such fractional interest based on the fair market value (as determined
by a nationally recognized independent investment banking firm retained for
this purpose by the Company) as of the third Trading Day preceding the Maturity
Date of such Reference Property other than cash or a Reference Security.
REDEMPTION, SINKING FUND AND PAYMENT PRIOR TO MATURITY
The STRYPES are not subject to redemption by the Company prior to the
Maturity Date and do not contain sinking fund or other mandatory redemption
provisions. The STRYPES are not subject to payment prior to the Maturity Date
at the option of the holder.
RANKING
The STRYPES will be unsecured obligations and will rank pari passu with all
other unsecured and unsubordinated indebtedness of the Company. At March 29,
1996, the Company had long-term borrowings outstanding of $20,226 million. In
addition, at March 29, 1996, there were $526 million of bank loans and $17,222
million of commercial paper outstanding.
The Company had no secured debt at March 29, 1996. At such date,
collateralized financing transactions of the Company's subsidiaries consisted
of $3,768 million of cash deposits for securities loaned and $61,657 million of
securities sold under agreements to repurchase. See Note 4 to "Summary
Financial Information" in the ML&Co. Prospectus.
There are no contractual restrictions on the ability of the Company or its
subsidiaries to incur additional secured or unsecured debt. However, borrowings
by certain subsidiaries, including MLPF&S, are restricted by net capital
requirements under the Exchange Act and under rules of certain exchanges and
other regulatory bodies. See "Description of the STRYPES--Ranking" in the
ML&Co. Prospectus.
PURCHASE AGREEMENT
Pursuant to the Purchase Agreement described under "Certain Arrangements with
GVI," GVI is obligated to deliver to the ML&Co. Subsidiary immediately prior to
the Maturity Date the Reference Property required by the Company to pay and
discharge all of the STRYPES (including any STRYPES issued pursuant to the
over-allotment option granted by the Company to the Underwriter). In lieu of
delivering the Reference Property immediately prior to the Maturity Date, GVI
has the right to satisfy its obligation under the Purchase Agreement by
delivering at such time cash in an amount equal to the value of such Reference
Property immediately prior to the Maturity Date. Such right, if exercised by
GVI, must be exercised with respect to all of the Reference Property
deliverable pursuant to the Purchase Agreement.
LISTING
The STRYPES have been approved for listing on the NYSE, subject to official
notice of issuance.
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CERTAIN ARRANGEMENTS WITH GVI
Pursuant to the Purchase Agreement, GVI is obligated to deliver to the ML&Co.
Subsidiary immediately prior to the Maturity Date the Reference Property
required by the Company to pay and discharge all of the STRYPES (including any
STRYPES issued pursuant to the over-allotment option granted by the Company to
the Underwriter). In lieu of delivering the Reference Property immediately
prior to the Maturity Date, GVI has the right to satisfy its obligation under
the Purchase Agreement by delivering at such time cash in an amount equal to
the value of such Reference Property immediately prior to the Maturity Date.
Such right, if exercised by GVI, must be exercised with respect to all of the
Reference Property deliverable pursuant to the Purchase Agreement. Under the
Purchase Agreement, the Company has agreed to pay and discharge the STRYPES by
delivering to the holders thereof on the Maturity Date the form of
consideration that the ML&Co. Subsidiary receives from GVI. The consideration
to be paid by the ML&Co. Subsidiary under the Purchase Agreement is $ in the
aggregate, and is payable to GVI on or about , 1996. No other
consideration is payable by the ML&Co. Subsidiary to GVI in connection with its
acquisition of the Reference Property pursuant to the Purchase Agreement or the
performance of the Purchase Agreement by GVI. The Company has agreed with GVI
that, without the prior consent of GVI, it will not amend the Indenture in any
respect that would adversely affect any obligation of GVI under the Purchase
Agreement, including, without limitation, increasing the consideration that GVI
is obligated to deliver pursuant to the Purchase Agreement.
Until such time, if any, as GVI shall have delivered the Reference Property
to the ML&Co. Subsidiary pursuant to the terms of the Purchase Agreement, GVI
will retain all ownership rights with respect to the Reference Property held by
it (including, without limitation, voting rights and rights to receive any
dividends, interest or other distributions in respect thereof).
GVI has no obligations with respect to the STRYPES or amounts to be paid to
holders thereof, including any obligation to take the needs of the Company or
of holders of the STRYPES into consideration in determining whether to deliver
the Reference Property or cash or for any other reason. The Purchase Agreement
among the Company, the ML&Co. Subsidiary and GVI is a commercial transaction
and does not create any rights in, or for the benefit of, any holder of
STRYPES.
In the event GVI does not perform under the Purchase Agreement, the Company
will be required to otherwise acquire the Reference Property for delivery to
the holders of the STRYPES on the Maturity Date, unless it elects to exercise
its option to deliver cash with an equal value.
For more information regarding the relationship between GVI and IMC and the
IMC Common Stock (including the preferred stock purchase rights associated
therewith) that may be delivered to the holders of STRYPES on the Maturity
Date, see the IMC Prospectus which accompanies this Prospectus Supplement and
the ML&Co. Prospectus.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
Set forth in full below is the opinion of Brown & Wood, counsel to the
Company, as to certain United States Federal income tax consequences of the
purchase, ownership and disposition of the STRYPES. Such opinion is based upon
laws, regulations, rulings and decisions now in effect (or, in the case of
certain regulations, in proposed form or in final form but not yet effective),
all of which are subject to change (including retroactive changes in effective
dates) or possible differing interpretations. The discussion below deals only
with STRYPES held as capital assets and does not purport to deal with persons
in special tax situations, such as financial institutions, insurance companies,
regulated investment companies, dealers in securities or currencies, tax-exempt
entities, or persons holding STRYPES as a hedge against currency risks or as a
position in a "straddle" for tax purposes. It also does not deal with holders
of STRYPES other than original purchasers thereof (except where otherwise
specifically noted herein). The following discussion also does not address the
tax consequences of investing in the STRYPES arising under the laws of any
state, local or foreign jurisdiction. Persons considering the purchase of the
STRYPES should consult their own tax advisors concerning the application of the
United States Federal income tax laws to their particular situations as well as
any consequences of the purchase, ownership and disposition of the STRYPES
arising under the laws of any other taxing jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of a STRYPES
that is for United States Federal income tax purposes (i) a citizen or resident
of the United States, (ii) a corporation, partnership or other entity created
or organized in or under the laws of the United States or of any political
subdivision thereof, (iii) an estate or trust the income of which is subject to
United States Federal income taxation regardless of its source or (iv) any
other person whose income or gain in respect of a STRYPES is effectively
connected with the conduct of a United States trade or business. As used
herein, the term "non-U.S. Holder" means a beneficial owner of a STRYPES that
is not a U.S. Holder.
GENERAL
There are no statutory provisions, regulations (except possibly the Treasury
Regulations as described below), published rulings or judicial decisions
addressing or involving the characterization, for United States Federal income
tax purposes, of the STRYPES or securities with terms substantially the same as
the STRYPES. Accordingly, the proper United States Federal income tax
characterization and treatment of the STRYPES is uncertain. Pursuant to the
terms of the Indenture, the Company and any holder of a STRYPES agree to treat
each STRYPES as a unit (a "Unit") consisting of (i) a debt instrument (the
"Debt Instrument") with a fixed principal amount unconditionally payable on the
Maturity Date equal to the issue price of the STRYPES and bearing interest at
the stated interest rate on the STRYPES and (ii) a forward purchase contract
(the "Forward Contract") pursuant to which the holder agrees to use the
principal payment due on the Debt Instrument to purchase on the Maturity Date
the Reference Property which the Company is obligated to deliver at that time
(subject to the Company's right to deliver cash in lieu of the Reference
Property). Therefore, the Company currently intends to treat each STRYPES as a
Unit consisting of the Debt Instrument and the Forward Contract for United
States Federal income tax purposes and, where required, intends to file
information returns with the Internal Revenue Service ("IRS") in accordance
with such treatment, in the absence of any change or clarification in the law,
by regulation or otherwise, requiring a different characterization and
treatment of the STRYPES for United States Federal income tax purposes. In the
opinion of Brown & Wood, counsel to the Company, such characterization and tax
treatment of the STRYPES, although not the only reasonable characterization and
tax treatment, is based on reasonable interpretations of law currently in
effect and, even if successfully challenged by the IRS, will not result in the
imposition of penalties.
Prospective investors in the STRYPES should be aware, however, that no ruling
is being requested from the IRS with respect to the STRYPES, the IRS is not
bound by the characterization of each STRYPES by the Company and the holders
thereof as a Unit consisting of the Debt Instrument and the Forward Contract,
and the IRS could possibly assert a different position as to the proper United
States Federal income tax characterization and treatment of the STRYPES. For
instance, it is possible that the IRS could assert that
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each STRYPES should be treated entirely as a single debt instrument of the
Company for United States Federal income tax purposes. Except where otherwise
specifically provided herein, the following discussion of the principal United
States Federal income tax consequences of the purchase, ownership and
disposition of the STRYPES is based upon the assumption that each STRYPES will
be characterized and treated as a Unit consisting of the Debt Instrument and
the Forward Contract for United States Federal income tax purposes. As
discussed in greater detail herein, if the STRYPES are not in fact ultimately
characterized and treated as a Unit consisting of the Debt Instrument and the
Forward Contract for United States Federal income tax purposes, then the United
States Federal income tax treatment of the purchase, ownership and disposition
of the STRYPES could significantly differ from the treatment discussed
immediately below with the result that the timing and character of income, gain
or loss recognized on a STRYPES could significantly differ from the timing and
character of income, gain or loss recognized on a STRYPES had each STRYPES in
fact been characterized and treated as a Unit consisting of the Debt Instrument
and the Forward Contract for United States Federal income tax purposes.
U.S. HOLDERS
As previously discussed, pursuant to the terms of the Indenture, the Company
and any holder of a STRYPES agree to treat each STRYPES as a Unit consisting of
the Debt Instrument and the Forward Contract. Consistent with this treatment of
the STRYPES, pursuant to the terms of the Indenture, a U.S. Holder of a STRYPES
will be required to include currently in income payments denominated as
interest that are made with respect to a STRYPES in accordance with such U.S.
Holder's regular method of tax accounting. Furthermore, pursuant to the
agreement contained in the Indenture to treat each STRYPES as a Unit consisting
of the Debt Instrument and the Forward Contract, any holder of a STRYPES agrees
to allocate the purchase price paid by such holder to acquire the STRYPES
between the two components of the Unit (i.e., the Debt Instrument and the
Forward Contract) based upon their relative fair market values (as determined
on the purchase date). The portion of the total purchase price so allocated by
the holder to each component of the Unit will generally constitute the holder's
initial tax basis for each such component of the Unit. Accordingly, in the
event that the fair market value of the Debt Instrument (as determined on the
purchase date) exceeds the purchase price paid by the holder to acquire the
STRYPES, the holder would be deemed to have acquired the Debt Instrument for an
amount equal to the fair market value of the Debt Instrument (as determined on
the purchase date) and would be deemed to have assumed the Forward Contract
component of the STRYPES in exchange for a payment in an amount equal to the
excess of the fair market value of the Debt Instrument (as determined on the
purchase date) over the purchase price paid by the holder to acquire the
STRYPES. In such event, such deemed payment received by the holder in respect
of the Forward Contract should only be taken into account by the holder as an
additional amount realized with respect to the Forward Contract on the earlier
of the sale or other disposition of the STRYPES by the holder or the Maturity
Date (which would either reduce the holder's tax basis in any Reference
Property received thereby or, if the STRYPES are paid in cash on the Maturity
Date or sold prior to the Maturity Date, increase the amount of gain or
decrease the amount of loss realized with respect to the Forward Contract).
Pursuant to the terms of the Indenture, with respect to acquisitions of STRYPES
in connection with the original issuance thereof, the Company and the holders
agree to allocate $ of the entire initial purchase price of a
STRYPES (i.e., the issue price of a STRYPES) to the Debt Instrument component
and to allocate the remaining $ of the entire initial purchase price
of a STRYPES to the Forward Contract component. Based upon the foregoing,
pursuant to the agreement to treat each STRYPES as a Unit consisting of the
Debt Instrument and the Forward Contract, a holder who acquires a STRYPES in
connection with the original issuance thereof, will have agreed to treat such
acquisition of the STRYPES by the holder as a purchase of the Debt Instrument
by the holder for $ and the making of an initial payment by the
holder with respect to the Forward Contract of $ .
Under general principles of current United States Federal income tax law,
payments of interest on a debt instrument (e.g., the Debt Instrument) generally
will be taxable to a U.S. Holder as ordinary interest income at the time such
payments are accrued or are received (in accordance with the U.S. Holder's
regular
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method of tax accounting). In addition, a debt instrument will be treated as
having been issued with original issue discount for United States Federal
income tax purposes to the extent that the stated redemption price at maturity
of the debt instrument (generally the debt instrument's stated principal
amount) exceeds the debt instrument's issue price, if such excess equals or
exceeds a de minimis amount (generally 1/4 of 1% of the debt instrument's
stated redemption price at maturity multiplied by the number of complete years
to maturity from its issue date). Pursuant to the agreement to treat each
STRYPES as a Unit consisting of the Debt Instrument and the Forward Contract,
each such Debt Instrument component will be treated, for these purposes as
having an issue price equal to $ . Since the stated redemption price
at maturity of each such Debt Instrument component (i.e., $ ) does not
exceed its issue price (i.e., $ ) by an amount that is equal to or
greater than $ (i.e., the applicable de minimis amount), the Debt
Instrument component of each Unit will not be treated as having been issued
with any original issue discount.
Under the foregoing principles and in accordance with the agreement to treat
each STRYPES as a Unit consisting of the Debt Instrument and the Forward
Contract, the quarterly interest payments payable with respect to the STRYPES
at the stated interest rate of % of the issue price of the STRYPES per annum
(the "Interest Payments") generally will be taxable to a U.S. Holder as
ordinary interest income on the respective dates that such Interest Payments
are accrued or are received (in accordance with the U.S. Holder's regular
method of tax accounting). On the Maturity Date, pursuant to the agreement to
treat each STRYPES as a Unit consisting of the Debt Instrument and the Forward
Contract, a U.S. Holder will recognize capital gain or loss with respect to the
Debt Instrument in an amount equal to the difference, if any, between the
principal amount of the Debt Instrument (i.e., the issue price of the STRYPES)
and such U.S. Holder's adjusted tax basis in the Debt Instrument. Such capital
gain or loss will generally be long-term capital gain or loss if the STRYPES
has been held by the U.S. Holder for more than one year as of the Maturity
Date. In addition, pursuant to the agreement to treat each STRYPES as a Unit
consisting of the Debt Instrument and the Forward Contract, on the Maturity
Date, if the Company delivers Reference Property upon payment of the STRYPES, a
U.S. Holder will generally not realize any taxable gain or loss on the
exchange, pursuant to the Forward Contract, of the principal amount of the Debt
Instrument for the Reference Property. However, a U.S. Holder will generally be
required to recognize taxable gain or loss with respect to any cash received in
lieu of fractional interests and any Reference Property consisting of cash. The
amount of such gain or loss recognized by a U.S. Holder will be equal to the
difference, if any, between the amount of cash received by the U.S. Holder and
the portion of the sum of the principal amount of the Debt Instrument and the
U.S. Holder's tax basis in the Forward Contract that is allocable to the
fractional interests and any Reference Property consisting of cash. Any such
taxable gain or loss attributable to cash received in lieu of fractional
interests will be treated as short-term capital gain or loss, and, because the
matter is uncertain, any such taxable gain or loss attributable to any
Reference Property consisting of cash could be treated as short-term capital
gain or loss, as long-term or short-term capital gain or loss (depending upon
the U.S. Holder's holding period for the STRYPES), or as ordinary income or
loss. A U.S. Holder will have an initial tax basis (as allocated among the
Reference Property in accordance with the relative fair market values thereof,
as determined on the Maturity Date) in any Reference Property (other than any
cash received in lieu of fractional interests and any Reference Property
consisting of cash) received on the Maturity Date in an amount equal to the sum
of the principal amount of the Debt Instrument and the U.S. Holder's tax basis
in the Forward Contract less the portion of such sum that is allocable to any
fractional interests and any Reference Property consisting of cash (as
described above) and will realize taxable gain or loss with respect to such
Reference Property received on the Maturity Date only upon the subsequent sale
or disposition by the U.S. Holder of such Reference Property. In addition, a
U.S. Holder's holding period for any Reference Property received by such U.S.
Holder on the Maturity Date will begin on the day immediately following the
Maturity Date and will not include the period during which the U.S. Holder held
such STRYPES.
Alternatively, pursuant to the agreement to treat the STRYPES as a Unit
consisting of the Debt Instrument and the Forward Contract, if the Company pays
the STRYPES in cash on the Maturity Date, a U.S. Holder will recognize taxable
gain or loss on the Maturity Date with respect to the Forward Contract (in
addition to any gain or loss recognized with respect to the Debt Instrument as
described above) in an
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<PAGE>
amount equal to the difference, if any, between the total amount of cash
received by such U.S. Holder on the Maturity Date and an amount equal to the
sum of the principal amount of the Debt Instrument and the U.S. Holder's tax
basis in the Forward Contract. It is uncertain whether such gain or loss would
be treated as capital or ordinary gain or loss. If such gain or loss is
properly treated as capital gain or loss, then such gain or loss generally will
be treated as long-term capital gain or loss if the STRYPES has been held by
the U.S. Holder for more than one year as of the Maturity Date. If such gain or
loss is properly treated as ordinary gain or loss, it is possible that the
deductibility of any loss recognized on the Maturity Date with respect to the
Forward Contract by a U.S. Holder who is an individual could be subject to the
limitations applicable to miscellaneous itemized deductions provided for under
Section 67(a) of the Internal Revenue Code of 1986, as amended (the "Code"). In
general, Section 67(a) of the Code provides that an individual may only deduct
miscellaneous itemized deductions for a particular taxable year to the extent
that the aggregate amount of the individual's miscellaneous itemized deductions
for such taxable year exceed two percent of the individual's adjusted gross
income for such taxable year (although, the miscellaneous itemized deductions
allowable to high-income individuals are generally subject to further
limitations). Prospective investors in the STRYPES are urged to consult their
own tax advisors concerning the character of any gain or loss realized on the
Maturity Date with respect to the Forward Contract in the event that either (i)
the Reference Property consists of cash, securities (other than IMC Common
Stock) or other property or (ii) the Company elects to pay the STRYPES in cash
on the Maturity Date as well as the deductibility of any such loss.
Pursuant to the agreement to treat each STRYPES as a Unit consisting of the
Debt Instrument and the Forward Contract, upon the sale or other disposition of
a STRYPES prior to the Maturity Date, a U.S. Holder generally will be required
to allocate the total amount realized by such U.S. Holder upon such sale or
other disposition (other than amounts representing accrued and unpaid Interest
Payments) between the two components of the Unit (i.e., the Debt Instrument and
the Forward Contract) based upon their relative fair market values (as
determined on the date of disposition). Accordingly, in the event that the fair
market value of the Debt Instrument (as determined on the date of disposition)
exceeds the actual amount realized by the U.S. Holder upon the sale or other
disposition of a STRYPES prior to the Maturity Date, the U.S. Holder would be
deemed to have sold the Debt Instrument for an amount equal to the fair market
value of the Debt Instrument (as determined on the date of disposition) and
would be deemed to have made a payment to the purchaser of the STRYPES in
exchange for such purchaser's assumption of the Forward Contract in an amount
equal to the excess of the fair market value of the Debt Instrument (as
determined on the date of disposition) over the actual amount realized by the
U.S. Holder upon such sale or disposition of the STRYPES. A U.S. Holder will
generally be required to recognize taxable gain or loss with respect to each
such component in an amount equal to the difference, if any, between (or, in
some cases, the sum of) the amount realized (or paid) with respect to each such
component upon the sale or disposition of the STRYPES (as determined in the
manner described above) and the U.S. Holder's adjusted tax basis in each such
component (or, the amount deemed to have been realized by the U.S. Holder in
respect of the Forward Contract). Any such gain or loss will generally be
treated as long-term capital gain or loss if the U.S. Holder has held the
STRYPES for more than one year at the time of disposition.
As previously discussed, prospective investors in the STRYPES should be aware
that the IRS is not bound by the characterization of the STRYPES by the Company
and the holders thereof as a Unit consisting of the Debt Instrument and the
Forward Contract, and the IRS could possibly assert a different position as to
the proper United States Federal income tax characterization and treatment of
the STRYPES. For instance, it is possible that the IRS could assert that each
STRYPES should be treated entirely as a single debt instrument of the Company
for United States Federal income tax purposes.
If the STRYPES were ultimately characterized and treated entirely as debt
instruments of the Company for United States Federal income tax purposes, then
the timing and character of income, gain or loss recognized on a STRYPES would
differ from the timing and character of income, gain or loss recognized on a
STRYPES had each STRYPES in fact been characterized and treated for United
States Federal income tax purposes as a Unit consisting of the Debt Instrument
and the Forward Contract. If the STRYPES were
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ultimately characterized and treated entirely as indebtedness of the Company
for United States Federal income tax purposes, under general principles of
current United States Federal income tax law, the Interest Payments generally
would be taxable to a U.S. Holder as ordinary interest income on the respective
dates that such Interest Payments are accrued or are received (in accordance
with the U.S. Holder's regular method of tax accounting). Under this same
analysis and treatment of each STRYPES as a single debt instrument of the
Company for United States Federal income tax purposes, under general principles
of current United States Federal income tax law, if the fair market value (as
determined on the Maturity Date) of the amount of Reference Property or cash in
lieu thereof payable on the Maturity Date with respect to a STRYPES exceeds the
issue price thereof, such excess could be treated as contingent interest and,
if so treated, generally would be includible in income by a U.S. Holder as
ordinary interest on the Maturity Date (regardless of the U.S. Holder's regular
method of tax accounting). In addition, if the fair market value (as determined
on the Maturity Date) of the Reference Property or cash in lieu thereof payable
on the Maturity Date with respect to a STRYPES exceeds the issue price thereof,
then such STRYPES would be treated as having been retired on the Maturity Date
in exchange for an amount equal to the issue price thereof. If, however, the
fair market value (as determined on the Maturity Date) of the Reference
Property or cash in lieu thereof payable on the Maturity Date with respect to a
STRYPES is equal to or less than the issue price thereof, then such STRYPES
would be treated as having been retired on the Maturity Date in exchange for an
amount equal to the fair market value (as determined on the Maturity Date) of
the entire amount payable on the Maturity Date with respect to such STRYPES and
no portion of the amount payable on the Maturity Date with respect to such
STRYPES would be treated as contingent interest. A U.S. Holder's initial tax
basis in any Reference Property received by such U.S. Holder on the Maturity
Date of a STRYPES would equal the fair market value (as determined on the
Maturity Date) of the Reference Property received by such U.S. Holder.
Furthermore, a U.S. Holder's holding period for any Reference Property received
by such U.S. Holder on the Maturity Date of a STRYPES would begin on the day
immediately following the Maturity Date and would not include the period during
which the U.S. Holder held such STRYPES.
Moreover, under this analysis and treatment of each STRYPES as a single debt
instrument of the Company for United States Federal income tax purposes, upon
the sale, exchange or retirement of a STRYPES, a U.S. Holder generally would
recognize taxable gain or loss in an amount equal to the difference, if any,
between the amount realized on the sale, exchange or retirement (other than
amounts representing accrued and unpaid Interest Payments) and such U.S.
Holder's adjusted tax basis in the STRYPES. A U.S. Holder's adjusted tax basis
in a STRYPES generally would equal such U.S. Holder's initial investment in the
STRYPES (as adjusted pursuant to the market discount and bond premium rules
described below). Such gain or loss generally would be long-term capital gain
or loss if the STRYPES were held by the U.S. Holder for more than one year
(subject to the market discount rules, as discussed below). It is possible,
however, that under this analysis and treatment of the STRYPES the IRS could
assert that any amounts realized upon the sale or exchange of a STRYPES prior
to the Maturity Date in excess of the STRYPES issue price constitutes ordinary
interest income (subject to the bond premium rules, as discussed below).
Nonetheless, if the STRYPES were ultimately characterized and treated entirely
as indebtedness of the Company for United States Federal income tax purposes,
although the matter is not free from doubt, in the opinion of Brown & Wood,
counsel to the Company, under current law, any gain realized upon the sale or
exchange of a STRYPES prior to the Maturity Date should be treated entirely as
capital gain (subject to the market discount rules, as discussed below).
Prospective investors in the STRYPES should also be aware that on June 11,
1996, the Treasury Department issued final regulations (the "Treasury
Regulations") concerning the proper United States Federal income tax treatment
of contingent payment debt instruments. In the event that the STRYPES were
characterized and treated entirely as debt instruments of the Company for
United States Federal income tax purposes, the STRYPES would be treated as
contingent payment debt instruments. The Treasury Regulations, however, only
apply to debt instruments issued on or after August 13, 1996. Accordingly, due
to the effective date of the Treasury Regulations, the Treasury Regulations
will not apply to the STRYPES even if the STRYPES were characterized and
treated entirely as debt instruments of the Company for United
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States Federal income tax purposes. In general, the Treasury Regulations would
cause the timing and character of income, gain or loss reported on a contingent
payment debt instrument to substantially differ from the timing and character
of income, gain or loss reported on a contingent payment debt instrument under
general principles of current United States Federal income tax law (as
described immediately above). The Treasury Regulations provide no definitive
guidance as to whether or not an instrument is properly characterized as a
single debt instrument for United States Federal income tax purposes.
Prospective investors in the STRYPES are urged to consult their own tax
advisors concerning the effect, if any, of the Treasury Regulations on their
investment in the STRYPES.
Prospective investors in the STRYPES should also be aware that it is possible
that the ultimate characterization and treatment of the STRYPES for United
States Federal income tax purposes could differ from the possible
characterizations and treatments described herein with the result that the
ultimate United States Federal income tax treatment of the purchase, ownership
and disposition of the STRYPES could significantly differ from any of the
treatments described herein.
Despite the foregoing, as previously discussed, pursuant to the agreement
contained in the Indenture to treat each STRYPES as a Unit consisting of the
Debt Instrument and the Forward Contract, the Company, where required,
currently intends to file information returns with the IRS treating each
STRYPES as a Unit consisting of the Debt Instrument and the Forward Contract
for United States Federal income tax purposes (as described above), in the
absence of any change or clarification in the law, by regulation or otherwise,
requiring another characterization and treatment of the STRYPES for United
States Federal income tax purposes.
MARKET DISCOUNT AND PREMIUM
In general, if a U.S. Holder purchases a debt instrument (e.g., the Debt
Instrument component of a Unit) for an amount that is less than the principal
amount thereof, the amount of the difference will be treated as "market
discount," unless such difference is less than a specified de minimis amount
(generally 1/4 of 1% of the debt instrument's stated principal amount
multiplied by the number of complete years to maturity from the date the U.S.
Holder purchased such debt instrument).
Under the market discount rules, a U.S. Holder will be required to treat any
gain realized on the sale, exchange, retirement or other disposition of a debt
instrument as ordinary income to the extent of the lesser of (i) the amount of
such realized gain or (ii) the market discount which has not previously been
included in income and is treated as having accrued on such debt instrument at
the time of such payment or disposition. Market discount will be considered to
accrue ratably during the period from the date of acquisition to the maturity
of the debt instrument, unless the U.S. Holder elects to accrue market discount
on the basis of semiannual compounding.
A U.S. Holder may be required to defer the deduction of all or a portion of
the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry a debt instrument with market discount until the maturity of
the debt instrument or its earlier disposition in a taxable transaction and
certain nontaxable transactions, because a current deduction is only allowed to
the extent that the interest expense exceeds an allocable portion of the market
discount. A U.S. Holder may elect to include market discount in income
currently as it accrues (on either a ratable or semiannual compounding basis),
in which case the rules described above regarding the deferral of interest
deductions will not apply. Generally, such currently included market discount
is treated as ordinary interest income for United States Federal income tax
purposes and a U.S. Holder would increase its tax basis in a debt instrument by
the amount of any such currently included market discount. Such an election
will apply to all debt instruments acquired by the U.S. Holder on or after the
first day of the first taxable year to which such election applies and may be
revoked only with the consent of the IRS.
In general, if a U.S. Holder purchases a debt instrument for an amount that
is greater than the principal amount thereof, such U.S. Holder will be
considered to have purchased the debt instrument with
S-24
<PAGE>
"amortizable bond premium" equal in amount to such excess. A U.S. Holder may
elect to amortize such premium using a constant yield method over the remaining
term of the debt instrument and may offset ordinary interest otherwise required
to be included in respect of the debt instrument during any taxable year by the
amortized amount of such premium for such year (or, prior years, if such
amortized premium for prior years has not yet offset interest) and would reduce
its tax basis in the debt instrument by the amount of any such interest offset
taken. Such election, if made, would apply to all debt instruments held by the
U.S. Holder at the beginning of the taxable year to which such election applies
and to all debt instruments acquired by the U.S. Holder thereafter. Such
election would also be irrevocable once made, unless the U.S. Holder making
such an election obtains the express written consent of the IRS to revoke such
election.
MISCELLANEOUS TAX MATTERS
Special tax rules may apply to persons holding a STRYPES as part of a
"synthetic security" or other integrated investment, or as part of a straddle,
hedging transaction or other combination of offsetting positions. For instance,
Section 1258 of the Code may possibly require certain U.S. Holders of the
STRYPES who enter into hedging transactions or offsetting positions with
respect to the STRYPES to treat all or a portion of any gain realized on the
STRYPES as ordinary income in instances where such gain may have otherwise been
treated as capital gain. U.S. Holders hedging their positions with respect to
the STRYPES or otherwise holding their STRYPES in a manner described above
should consult their own tax advisors regarding the applicability of Section
1258 of the Code, or any other provision of the Code, to their investment in
the STRYPES.
NON-U.S. HOLDERS
Based on the treatment of each STRYPES as a Unit consisting of the Debt
Instrument and the Forward Contract, in the case of a non-U.S. Holder, payments
made with respect to the STRYPES should not be subject to United States
withholding tax, provided that such non-U.S. Holder complies with applicable
certification requirements. Any capital gain realized upon the sale or other
disposition of a STRYPES by a non-U.S. Holder will generally not be subject to
United States Federal income tax if (i) such gain is not effectively connected
with a United States trade or business of such non-U.S. Holder and (ii) in the
case of an individual non-U.S. Holder, such individual is not present in the
United States for 183 days or more in the taxable year of the sale or other
disposition, or the gain is not attributable to a fixed place of business
maintained by such individual in the United States and such individual does not
have a "tax home" (as defined for United States Federal income tax purposes) in
the United States.
As discussed above, alternative characterizations of the STRYPES for United
States Federal income tax purposes are possible. Should an alternative
characterization of the STRYPES, by reason of a change or clarification of the
law, by regulation or otherwise, cause payments with respect to the STRYPES to
become subject to withholding tax, the Company will withhold tax at the
statutory rate. Prospective non-U.S. Holders of the STRYPES should consult
their own tax advisors in this regard.
BACKUP WITHHOLDING AND INFORMATION REPORTING
A beneficial owner of a STRYPES may be subject to information reporting and
to backup withholding at a rate of 31 percent of certain amounts paid to the
beneficial owner unless such beneficial owner provides proof of an applicable
exemption or a correct taxpayer identification number, and otherwise complies
with applicable requirements of the backup withholding rules.
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
S-25
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
the Company has agreed to sell to Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriter"), and the Underwriter has agreed to purchase
from the Company, 5,661,119 STRYPES. Under the terms and conditions of the
Underwriting Agreement, the Underwriter is committed to take and pay for all of
the STRYPES, if any are taken.
The Underwriter has advised the Company that it proposes initially to offer
the STRYPES directly to the public at the public offering price set forth on
the cover page of this Prospectus Supplement, and to certain dealers at such
price less a concession not to exceed $ per STRYPES. The Underwriter may
allow, and such dealers may reallow, a discount not to exceed $ per STRYPES
to certain other dealers. After the initial public offering, the public
offering price, concession and discount may be changed.
The Company has granted the Underwriter an option exercisable for 30 days
after the date of this Prospectus Supplement to purchase up to an aggregate of
849,167 additional STRYPES at the public offering price set forth on the cover
page of this Prospectus Supplement, less the underwriting discount. The
Underwriter may exercise this option only to cover over-allotments, if any,
made on the sale of the STRYPES offered hereby.
IMC and its directors and certain officers have agreed not to offer, sell,
contract to sell or otherwise dispose of, directly or indirectly, or file a
registration statement under the Securities Act with respect to, any shares of
IMC Common Stock, securities convertible into, exchangeable for or repayable
with such shares or rights or warrants to acquire such shares, for a period of
90 days after the date of this Prospectus Supplement without the prior written
consent of the Underwriter, subject to certain exceptions. GVI has agreed not
to offer, sell, contract to sell or otherwise dispose of, directly or
indirectly, or cause to be filed a registration statement under the Securities
Act with respect to, any shares of IMC Common Stock, securities convertible
into, exchangeable for or repayable with such shares or rights or warrants to
acquire such shares, for a period of 90 days after the date of this Prospectus
Supplement without the prior written consent of the Underwriter.
The underwriting of the STRYPES will conform to the requirements set forth in
the applicable sections of Schedule E to the By-Laws of the National
Association of Securities Dealers, Inc.
The STRYPES have been approved for listing on the NYSE, subject to official
notice of issuance.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act relating to this
Prospectus Supplement and the ML&Co. Prospectus (including the documents
incorporated by reference therein).
VALIDITY OF THE STRYPES
The validity of the STRYPES offered hereby will be passed upon for the
Company and for the Underwriter by Brown & Wood, New York, New York.
S-26
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A POST- +
+EFFECTIVE AMENDMENT TO THE 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 POST-EFFECTIVE AMENDMENT TO 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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, ISSUE DATE: JUNE 20, 1996
PROSPECTUS
[LOGO]
MERRILL LYNCH & CO., INC.
STRYPES /SM/
PAYABLE WITH SHARES OF COMMON STOCK OR OTHER SECURITIES
OF THE UNDERLYING ISSUER
(OR CASH WITH AN EQUAL VALUE)
-----------
Merrill Lynch & Co., Inc. (the "Company") intends to sell from time to time
its Structured Yield Product Exchangeable for Stock SM, STRYPES SM. The STRYPES
will be offered to the public in series and on terms determined by market
conditions at the time of sale and set forth in the accompanying prospectus
supplement (the "Prospectus Supplement"). The STRYPES will be unsecured
obligations of the Company ranking pari passu with all of its other unsecured
and unsubordinated indebtedness. See "Description of the STRYPES--Ranking."
On the maturity date of each series of STRYPES (the "Maturity Date"), the
Company will pay and discharge such STRYPES by delivering to the holder thereof
a number of shares of common stock or other securities (the "Underlying
Securities") of the unaffiliated corporation identified in the Prospectus
Supplement (the "Underlying Issuer") determined in accordance with a payment
rate formula specified in the Prospectus Supplement (subject to the Company's
right to deliver, with respect to all, but not less than all, STRYPES of such
series, cash with an equal value). THERE CAN BE NO ASSURANCE THAT THE VALUE OF
THE UNDERLYING SECURITIES (OR CASH) PAYABLE TO HOLDERS OF A SERIES OF STRYPES
ON THE MATURITY DATE WILL BE EQUAL TO OR GREATER THAN THE ISSUE PRICE OF SUCH
STRYPES. IF THE VALUE OF THE UNDERLYING SECURITIES (OR CASH) RECEIVED ON THE
MATURITY DATE OF A SERIES OF STRYPES IS LESS THAN THE ISSUE PRICE PAID FOR SUCH
STRYPES, AN INVESTMENT IN STRYPES WILL RESULT IN A LOSS. SEE "DESCRIPTION OF
THE STRYPES."
Each series of STRYPES may vary, where applicable, as to aggregate issue
price, Maturity Date, Underlying Issuer, Underlying Securities deliverable upon
maturity, formula or other method by which the amount of such Underlying
Securities will be determined, public offering or purchase price, interest rate
or rates, if any, and timing of payments thereof, provision for redemption,
currencies of denomination or currencies otherwise applicable thereto and any
other variable terms and method of distribution. The accompanying Prospectus
Supplement sets forth the specific terms with regard to the series of STRYPES
in respect of which this Prospectus is being delivered.
Reference is made to any accompanying prospectus of the Underlying Issuer
covering the Underlying Securities which may be received by holders of a series
of STRYPES on the Maturity Date.
-----------
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.
-----------
The STRYPES may be sold through Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("MLPF&S"). STRYPES may not be sold without
delivery of a Prospectus Supplement describing such issue of STRYPES and the
method and terms of offering thereof, and any accompanying prospectus of the
Underlying Issuer covering the Underlying Securities which may be received by
holders of a series of STRYPES on the Maturity Date.
- -----
/SM/ Service mark of Merrill Lynch & Co., Inc.
-----------
The date of this Prospectus is , 1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). 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: Midwest Regional Office, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511 and Northeast Regional Office, Seven
World Trade Center, New York, New York 10048. 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.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 29,
1995, Quarterly Report on Form 10-Q for the period ended March 29, 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 and May
28, 1996 (as amended by Form 8-K/A filed June 7, 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 STRYPES shall be deemed to be
incorporated by reference into 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.
----------------
THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA HAS NOT APPROVED
OR DISAPPROVED THE OFFERING OF THE SECURITIES MADE HEREBY NOR HAS THE
COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
2
<PAGE>
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, Inc.,
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 trading 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 Company intends to use the net proceeds from the sale of the STRYPES for
general corporate purposes. Such uses may include the funding of investments
in, or extensions of credit to, its subsidiaries, the funding of assets held by
the Company or its subsidiaries, including securities inventories, customer
receivables and loans (including business loans, home equity loans, and loans
in connection with investment banking-related merger and acquisition
activities), and the refunding of maturing indebtedness. The precise amount and
timing of investments in, and extensions of credit to, its subsidiaries will
depend upon their funding requirements and the availability of other funds to
the Company and its subsidiaries. Pending such applications, the net proceeds
will be temporarily invested or applied to the reduction of short-term
indebtedness. Management of the Company expects that it will, on a recurrent
basis, engage in additional financings as the need arises to finance the growth
of the Company or to lengthen the average maturity of its borrowings. To the
extent that STRYPES being purchased for resale by MLPF&S are not resold, the
aggregate proceeds to the Company and its subsidiaries would be reduced.
3
<PAGE>
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 March 29, 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.
<TABLE>
<CAPTION>
YEAR ENDED LAST FRIDAY IN DECEMBER THREE MONTHS ENDED
--------------------------------------------- -------------------
MARCH 31, MARCH 29,
1991 1992 1993 1994 1995 1995 1996
------- -------- -------- -------- -------- --------- ---------
(IN MILLIONS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................ $12,353 $ 13,413 $ 16,588 $ 18,234 $ 21,513 $ 5,204 $ 6,019
Net revenues............ $ 7,246 $ 8,577 $ 10,558 $ 9,625 $ 10,265 $ 2,421 $ 3,261
Earnings before income
taxes and cumulative
effect of changes in
accounting princi-
ples(1)................ $ 1,017 $ 1,621 $ 2,425 $ 1,730 $ 1,811 $ 380 $ 671
Cumulative effect of
changes in accounting
principles (net of
applicable income
taxes)(1).............. -- $ (58) $ (35) -- -- -- --
Net earnings(1)......... $ 696 $ 894 $ 1,359 $ 1,017 $ 1,114 $ 228 $ 409
Ratio of earnings to
fixed charges(2)....... 1.2 1.3 1.4 1.2 1.2 1.1 1.2
Total assets(3)......... $86,259 $107,024 $152,910 $163,749 $176,857 $176,733 $195,884
Long-term borrowings(4). $ 7,964 $ 10,871 $ 13,469 $ 14,863 $ 17,340 $ 14,485 $ 20,226
Stockholders' equity.... $ 3,818 $ 4,569 $ 5,486 $ 5,818 $ 6,141 $ 5,704 $ 6,364
</TABLE>
- --------
(1) 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 were reduced
by $35 million to reflect the adoption of SFAS No. 112, Employers' Accounting
for Postemployment Benefits.
(2) 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.
(3) 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.
(4) 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 March 29, 1996, $526 million of
bank loans and $17,222 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 March 29, 1996, cash
deposits for securities loaned and securities sold under agreements to
repurchase amounted to $3,768 million and $61,657 million, respectively. From
March 30, 1996 to June 14, 1996, long-term borrowings, net of repayments and
repurchases, increased by approximately $1,683 million.
4
<PAGE>
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 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.
5
<PAGE>
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.
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.
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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.
FIRST QUARTER 1996
Global financial markets were generally strong during 1995, led by a stable
U.S. economy, declining interest rates, and heightened investor activity.
Market expectations for additional declines in interest rates continued through
February 1996, fueling further market advances, strong investor and issuer
activity, higher fee-based revenues, and improved trading profits industrywide.
In March 1996, inflationary fears were stirred by the release of U.S. economic
statistics indicating stronger than anticipated growth and the Federal
Reserve's decision to hold short-term interest rates at current levels. This
led to increases in long-term interest rates and greater market volatility,
although interest rates remained low relative to the year-ago period.
Net earnings for the 1996 first quarter were a record $409 million, up 80%
from 1995 first quarter net earnings of $228 million. Earnings per common share
were $2.03 primary and fully diluted in the 1996 first quarter, compared with
$1.08 primary and fully diluted in the 1995 first quarter. Total revenues were
a record $6,019 million in the first quarter of 1996, up 16% from the 1995
first quarter. Net revenues (revenues after interest expense) totaled $3,261
million in the first quarter of 1996, up 35% from the 1995 first quarter.
Commissions revenues rose 44% to a record $989 million from $685 million in
the 1995 first quarter. Commissions revenues from listed and over-the-counter
securities increased to record levels due to higher trading volumes on most
major U.S. and international exchanges. Mutual fund commissions advanced to
record levels due to strong sales of both domestic and offshore funds.
Interest and dividend revenues decreased to $3,010 million from $3,030
million in the 1995 first quarter. Interest expense, which includes dividend
expense, decreased to $2,758 million from $2,783 million in the year-ago
quarter. Net interest and dividend profit was $252 million, up slightly from
$247 million in 1995, with increases in net interest-earning assets
substantially offset by the effect of lower interest rates.
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Principal transactions revenues increased 46% from the 1995 first quarter to
a record $982 million, as higher investor activity and market volatility led to
increases in virtually all trading products. Equities and equity derivatives
trading revenues, in the aggregate, were up 109% to $347 million. Trading
revenues from most equity products increased, due primarily to higher trading
volume and rising stock prices. International equities trading revenues, in
particular, benefited from the addition of Smith New Court trading activity.
Taxable fixed-income trading revenues rose 62% to $265 million due primarily to
higher revenues from non-U.S. governments and agencies, mortgage-backed
securities, and high-yield bonds. Non-U.S. governments and agencies trading
revenues advanced due to improved results from trading of Japanese Government
Bonds, as well as increased trading volume in certain Latin American emerging
markets as credit ratings improved and investors sought higher returns.
Mortgage-backed securities trading revenues increased due primarily to improved
liquidity and increased customer demand compared with the year-ago period.
Trading revenues from high-yield bonds were up due to lower interest rates and
improved credit ratings of certain issuers. Interest rate and currency swap
trading revenues increased 9% to $255 million due to higher trading revenues
from non-U.S. dollar-denominated transactions, partially offset by decreases in
revenues from U.S. dollar-denominated transactions. Foreign exchange and
commodities trading revenues, in the aggregate, rose 94% from the 1995 first
quarter to $40 million, as foreign exchange trading revenues continued to
benefit from the strengthening of the U.S. dollar versus other major
currencies. Municipal securities trading revenues declined 17% to $75 million,
primarily due to continued weak investor demand for tax-exempt investments.
Investment banking revenues were $378 million, up 52% from $249 million in
the 1995 first quarter. Underwriting revenues increased 82%, benefiting from
strong levels of debt and equity underwriting industrywide, with higher fees
from convertibles, corporate bonds and preferred stock, equities, and high-
yield securities. Strategic services revenues were down slightly from a year
ago, but remained comparable to record 1995 levels, benefiting from continued
strong merger and acquisition activity.
Asset management and portfolio service fees rose 20% in 1996 to a record $538
million from $448 million in the first quarter of 1995, primarily as a result
of strong inflows of client assets. Other revenues were $122 million, up 4%
from $117 million reported in the 1995 first quarter.
Non-interest expenses were $2,590 million, up 27% from $2,041 million in the
year-ago period. Compensation and benefits expense, which represented
approximately 65% of non-interest expenses, increased 33% due primarily to
higher incentive and production-related compensation as well as a 6% increase
in the number of full-time employees, largely due to acquisitions. Compensation
and benefits expense as a percentage of net revenues was 51.8% in the first
quarter of 1996, compared with 52.5% in the 1995 first quarter.
Occupancy costs increased 5% from the 1995 first quarter primarily due to
international growth. Other facilities-related costs, which include
communications and equipment rental expense and depreciation and amortization
expense, rose 16% primarily due to higher levels of business activity and
increased 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 32% from the year ago period, primarily as a
result of higher systems development costs related to upgrading technology and
processing capabilities. Advertising and market development expenses increased
33% from the 1995 first quarter. Increased international travel and higher
advertising and client promotion costs contributed to this advance. Brokerage,
clearing, and exchange fees rose 27% as a result of higher trading volume,
particularly in international markets. Other expenses increased 4% from 1995,
primarily due to goodwill amortization related to Smith New Court.
Income tax expense totaled $262 million in the 1996 first quarter. The
effective tax rate in the 1996 first quarter was 39.0%, compared with 40.0% in
the first quarter of 1995. The decrease in the effective tax rate was primarily
attributable to increases in dividends qualifying for the Federal dividends
received deduction, lower state taxes, and expanded international business
activities.
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CERTAIN BALANCE SHEET INFORMATION AS OF MARCH 29, 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 structuring activities. These activities are
subject to additional risks related to the creditworthiness of the issuers and
the liquidity of the market for such securities.
At March 29, 1996, the fair value of long and short non-investment grade
trading inventories amounted to $6,026 million and $529 million, respectively,
and in the aggregate (i.e., the sum of long and short trading inventories)
represented 6.6% of aggregate consolidated trading inventories.
At March 29, 1996, the carrying value of extensions of credit provided to
corporations entering into leveraged transactions aggregated $517 million
(excluding unutilized revolving lines of credit and other lending commitments
of $75 million), consisting primarily of senior term and subordinated
financings to 34 medium-sized corporations. In addition, at March 29, 1996, the
Company had an outstanding bridge loan of $90 million, and as of May 6, 1996,
the Company had an outstanding bridge loan commitment for $100 million. Direct
equity investments made in conjunction with the Company's investment and
merchant banking activities aggregated $189 million at March 29, 1996,
representing investments in 62 enterprises. At March 29, 1996, the Company held
interests in partnerships, totaling $82 million, that invest in highly
leveraged transactions and non-investment grade securities. At March 29, 1996,
the Company also committed to invest an additional $83 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
March 29, 1996. Non-investment grade securities of insurance subsidiaries are
classified as available-for-sale and are carried at fair value.
At March 29, 1996, the largest non-investment grade concentration consisted
of various issues of a South American sovereign totaling $764 million, which
primarily represented on-balance-sheet hedges for off-balance-sheet financial
instruments. No one industry sector accounted for more than 31% of total non-
investment grade positions. At March 29, 1996, the Company held an aggregate
carrying value of $169 million in debt and equity securities of issuers in
various stages of bankruptcy proceedings or in default, of which 80% resulted
from the Company's market-making activities in such securities.
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DESCRIPTION OF THE STRYPES
Each issue of STRYPES will be a series of Senior Debt Securities to be issued
under an indenture (the "Chemical Indenture"), dated as of April 1, 1983, as
amended and restated, between the Company and Chemical Bank (successor by
merger to Manufacturers Hanover Trust Company), as trustee (the "Trustee"), as
further amended and supplemented by a supplemental indenture to be entered into
by the Company and the Trustee relating to each series of STRYPES (the
"Supplemental Indenture") (the Chemical Indenture, as so amended and
supplemented by the Supplemental Indenture with respect to each series of
STRYPES, the "Indenture"). The following summary of certain provisions of the
Indenture does not purport to be complete and is qualified in its entirety by
reference to the Indenture. All capitalized terms not otherwise defined herein
have the meanings specified in the Indenture. Whenever defined terms of the
Indenture are referred to herein, such defined terms are incorporated by
reference herein.
GENERAL
The Supplemental Indenture will provide that STRYPES of the related series
may be issued from time to time under the Indenture, up to a specified
aggregate issue price, upon satisfaction of certain conditions precedent. The
Supplemental Indenture will establish the terms of the related series of
STRYPES, including: (1) the issue price per STRYPES; (2) the date on which such
STRYPES will mature; (3) the consideration deliverable or payable with respect
to such STRYPES, whether at maturity or upon earlier acceleration, and the
formula or other method by which the amount of such consideration will be
determined; (4) the rate or rates per annum (which may be fixed or variable) at
which such STRYPES will bear interest, if any; (5) the dates on which such
interest, if any, will be payable; (6) the provisions for redemption of such
STRYPES, if any, the redemption price and any remarketing arrangements relating
thereto; (7) the sinking fund requirements, if any, with respect to such
STRYPES; (8) whether such STRYPES are denominated or provide for payment in
United States dollars or a foreign currency or units of two or more of such
foreign currencies; (9) whether and under what circumstances the Company will
pay additional amounts ("Additional Amounts") in respect of such STRYPES held
by a person who is not a U.S. person (as defined in the Prospectus Supplement,
as applicable) in respect of specified taxes, assessments or other governmental
charges and whether the Company has the option to redeem the affected STRYPES
rather than pay such Additional Amounts; (10) the title of the STRYPES and the
series of which such STRYPES shall be a part; and (11) the obligation of the
Company to pay and discharge such STRYPES at maturity by delivery of Underlying
Securities (or, cash with an equal value), the formula or other method by which
the amount of such Underlying Securities will be determined, and the terms and
conditions upon which such payment and discharge shall be effected. Reference
is made to the Prospectus Supplement for the terms of the STRYPES being offered
thereby.
Under the Indenture, the Company will have the ability, in addition to the
ability to issue STRYPES with terms different from those of STRYPES previously
issued, to "reopen" a previous series of STRYPES and issue additional STRYPES
of such series.
Issue price and interest, premium and Additional Amounts, if any, and
Underlying Securities will be payable or deliverable in the manner, at the
places and subject to the restrictions set forth in the Indenture, the STRYPES
and the Prospectus Supplement relating thereto, provided that payment of any
interest and any Additional Amounts may be made at the option of the Company by
check mailed to the holders of registered STRYPES at their registered
addresses.
STRYPES may be presented for exchange, and registered STRYPES may be
presented for transfer, in the manner, at the places and subject to the
restrictions set forth in the Indenture, the STRYPES and the Prospectus
Supplement relating thereto. No service charge will be made for any transfer or
exchange of STRYPES, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
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RANKING
The STRYPES will be unsecured obligations and will rank pari passu with all
other unsecured and unsubordinated indebtedness of the Company. Since the
Company is a holding company, the right of the Company, and hence the right of
creditors of the Company (including the holders of the STRYPES), to participate
in any distribution of the assets of any subsidiary upon its liquidation or
reorganization or otherwise is necessarily subject to the prior claims of
creditors of the subsidiary, except to the extent that claims of the Company
itself as a creditor of the subsidiary may be recognized. In addition,
dividends, loans and advances from certain subsidiaries, including MLPF&S, to
the Company are restricted by net capital requirements under the Exchange Act
and under rules of certain exchanges and other regulatory bodies.
SECURITIES DEPOSITORY
Upon issuance, each series of STRYPES will be represented by one or more
fully registered global securities (the "Global Notes"). Each such Global Note
will be deposited with, or on behalf of, The Depository Trust Company, as
Securities Depository (the "Securities Depository"), and registered in the name
of the Securities Depository or a nominee thereof. Unless and until it is
exchanged in whole or in part for STRYPES in definitive form under the limited
circumstances described below, no Global Note may be transferred except as a
whole by the Securities Depository to a nominee of such Securities Depository
or by a nominee of such Securities Depository to such Securities Depository or
another nominee of such Securities Depository or by such Securities Depository
or any such nominee to a successor of such Securities Depository or a nominee
of such successor.
The Securities Depository has advised the Company as follows: The Securities
Depository is a limited-purpose trust company organized under the Banking Law
of the State of New York, 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
Securities Exchange Act of 1934, as amended. The Securities Depository was
created to hold securities of its participants ("Participants") and to
facilitate the clearance and settlement of securities transactions among its
Participants in such securities through electronic book-entry changes in
accounts of the Participants, thereby eliminating the need for physical
movement of securities certificates. The Securities Depository's Participants
include securities brokers and dealers (including MLPF&S), banks, trust
companies, clearing corporations, and certain other organizations.
The Securities Depository is owned by a number of Participants and by the New
York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc. Access to the Securities Depository's
book-entry system is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship
with a Participant, either directly or indirectly ("Indirect Participants").
Purchases of STRYPES must be made by or through Participants, which will
receive a credit on the records of the Securities Depository. The ownership
interest of each actual purchaser of each STRYPES ("Beneficial Owner") is in
turn to be recorded on the Participants' or Indirect Participants' records.
Beneficial Owners will not receive written confirmations from the Securities
Depository of their purchase, but Beneficial Owners are expected to receive
written confirmation providing details of the transaction, as well as periodic
statements of their holdings, from the Participant or Indirect Participant
through which the Beneficial Owner entered into the transaction. Ownership of
beneficial interest in such Global Note will be shown on, and the transfer of
such ownership interests will be effected only through, records maintained by
the Securities Depository (with respect to interests of Participants) and on
the records of Participants (with respect to interests of persons held through
Participants). The laws of some states may require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to own, transfer or pledge
beneficial interests in Global Notes.
So long as the Securities Depository, or its nominee, is the registered owner
of a Global Note, the Securities Depository or its nominee, as the case may be,
will be considered the sole owner or holder of the STRYPES
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represented by such Global Note for all purposes under the Indenture. Except as
provided below, Beneficial Owners in a Global Note will not be entitled to have
the STRYPES represented by such Global Notes registered in their names, will
not receive or be entitled to receive physical delivery of the STRYPES in
definitive form and will not be considered the owners or holders thereof under
the Indenture. Accordingly, each Person owning a beneficial interest in a
Global Note must rely on the procedures of the Securities Depository and, 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 Indenture. The Company understands that under existing industry practices,
in the event that the Company requests any action of holders or that an owner
of a beneficial interest in such a Global Note desires to give or take any
action which a holder is entitled to give or take under the Indenture, the
Securities Depository would authorize the Participants holding the relevant
beneficial interests to give or take such action, and such Participants would
authorize Beneficial Owners owning through such Participants to give or take
such action or would otherwise act upon the instructions of Beneficial Owners.
Conveyance of notices and other communications by the Securities Depository 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.
Payment of any amount with respect to STRYPES registered in the name of the
Securities Depository or its nominee will be made to the Securities Depository
or its nominee, as the case may be, as the holder of the Global Notes
representing such STRYPES. None of the Company, the Trustee or any other agent
of the Company or agent of the Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests or for supervising or reviewing any records
relating to such beneficial ownership interests. The Company expects that the
Securities Depository, upon receipt of any payment in respect of a Global Note,
will credit the accounts of the Participants with payment in amounts
proportionate to their respective holdings of beneficial interest in such
Global Note as shown on the records of the Securities Depository. The Company
also expects that payments by Participants to Beneficial Owners will be
governed by standing customer instructions and customary practices, as is now
the case with securities held for the accounts of customers in bearer form or
registered in "street name", and will be the responsibility of such
Participants.
If, with respect to a series of STRYPES, (x) 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, (y) the
Company executes and delivers to the Trustee a Company Order to the effect that
the Global Notes shall be exchangeable or (z) an Event of Default has occurred
and is continuing with respect to any STRYPES of that series, the Company will
issue STRYPES in definitive form in exchange for all of the Global Notes
representing the STRYPES of that series. Such definitive STRYPES shall be
registered in such name or names as the Securities Depository shall instruct
the Trustee. It is expected that such instructions may be based upon directions
received by the Securities Depository from Participants with respect to
ownership of beneficial interests in such Global Notes.
MERGER AND CONSOLIDATION
The Company may consolidate or merge with or into any other corporation, and
the Company may sell, lease or convey all or substantially all of its assets to
any corporation, provided that (i) the corporation (if other than the Company)
formed by or resulting from any such consolidation or merger or which shall
have received such assets shall be a corporation organized and existing under
the laws of the United States of America or a state thereof and shall assume
the due and punctual delivery or payment of the Underlying Securities (or cash
with an equal value) in respect of, any interest and Additional Amounts on, and
any other amounts payable with respect to, the STRYPES of each series and the
due and punctual performance and observance of all of the covenants and
conditions of the Indenture to be performed or observed by the Company, and
(ii) the Company or such successor corporation, as the case may be, shall not
immediately thereafter be in default under the Indenture.
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LIMITATIONS UPON LIENS
The Indenture provides that the Company may not, and may not permit any
Subsidiary (defined in the Indenture as any corporation of which at the time of
determination the Company and/or one or more Subsidiaries owns or controls
directly or indirectly 50% of the shares of Voting Stock of such corporation)
to, create, assume, incur or permit to exist any indebtedness for borrowed
money secured by a pledge, lien or other encumbrance (except for certain liens
specifically permitted by the Indenture) on the Voting Stock owned directly or
indirectly by the Company of any Subsidiary (other than a Subsidiary which, at
the time of incurrence of such secured indebtedness, has a net worth of less
than $3,000,000) without making effective provision whereby the Outstanding
STRYPES will be secured equally and ratably with such secured indebtedness.
LIMITATIONS ON DISPOSITION OF VOTING STOCK OF, AND MERGER AND SALE OF ASSETS
BY, MLPF&S
The Indenture provides that the Company may not sell, transfer or otherwise
dispose of any Voting Stock of MLPF&S or permit MLPF&S to issue, sell or
otherwise dispose of any of its Voting Stock, unless, after giving effect to
any such transaction, MLPF&S remains a Controlled Subsidiary (defined in the
Indenture to mean a corporation more than 80% of the outstanding shares of
Voting Stock of which are owned directly or indirectly by the Company). In
addition, the Indenture provides that the Company may not permit MLPF&S to (i)
merge or consolidate, unless the surviving company is a Controlled Subsidiary,
or (ii) convey or transfer its properties and assets substantially as an
entirety, except to one or more Controlled Subsidiaries.
EVENTS OF DEFAULT
Unless otherwise specified in a Prospectus Supplement, each of the following
will constitute an Event of Default under the Indenture with respect to each
series of STRYPES: (a) failure to pay and discharge the STRYPES of that series
with the Underlying Securities or, if the Company so elects, to pay an
equivalent amount in cash in lieu thereof when due; (b) failure to pay the
Redemption Price or any redemption premium with respect to any STRYPES of that
series when due; (c) failure to deposit any sinking fund payment, when and as
due by the terms of any STRYPES of that series; (d) failure to pay any interest
on or any Additional Amounts in respect of any STRYPES of that series when due,
continued for 30 days; (e) failure to perform any other covenant of the Company
contained in the Indenture for the benefit of that series or in the STRYPES of
that series, continued for 60 days after written notice has been given to the
Company by the Trustee, or to the Company and the Trustee by the holders of at
least 10% of the aggregate issue price of the Outstanding STRYPES of that
series, as provided in the Indenture; (f) certain events in bankruptcy,
insolvency or reorganization of the Company; and (g) any other Event of Default
provided with respect to STRYPES of that series.
Unless otherwise specified in a Prospectus Supplement, if an Event of Default
(other than an Event of Default described in clause (f) of the immediately
preceding paragraph) with respect to the STRYPES of any series shall occur and
be continuing, either the Trustee or the holders of at least 25% of the
aggregate issue price of the Outstanding STRYPES of that series by notice as
provided in the Indenture may declare an amount equal to the aggregate issue
price of all the STRYPES of that series and the interest accrued thereon and
Additional Amounts payable in respect thereof, if any, to be immediately due
and payable in cash. If an Event of Default described in said clause (f) shall
occur, an amount equal to the aggregate issue price of all the STRYPES of that
series and the interest accrued thereon and Additional Amounts payable in
respect thereof, if any, will become immediately due and payable in cash
without any declaration or other action on the part of the Trustee or any
holder. After such acceleration, but before a judgment or decree based on
acceleration, the holders of a majority of the aggregate issue price of the
Outstanding STRYPES of that series may, under certain circumstances, rescind
and annul such acceleration if all Events of Default, other than the non-
payment of the amount equal to the aggregate issue price of all the STRYPES of
that series due by reason of such acceleration, have been cured or waived as
provided in the Indenture. See "Modification and Waiver" below.
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Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the holders of STRYPES of any
series, unless such holders of that series 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.
Subject to such provisions for the indemnification of the Trustee, the holders
of a majority of the aggregate issue price of the STRYPES of any series will
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 STRYPES of that series.
The Company will be required to furnish to the Trustee annually a statement
by certain of its officers as to whether or not the Company, to their
knowledge, is in default in the fulfillment of any of its obligations under the
Indenture and, if so, specifying all such known defaults.
The STRYPES and other series of Senior Debt Securities issued under the
Indenture will not have the benefit of any cross-default provisions with other
indebtedness of the Company.
MODIFICATION AND WAIVER
Unless otherwise specified in a Prospectus Supplement, modifications of and
amendments to the Indenture affecting a series of STRYPES may be made by the
Company and the Trustee with the consent of the holders of 66 2/3% of the
aggregate issue price of the Outstanding STRYPES of such series; provided,
however, that no such modification or amendment may, without the consent of the
holder of each Outstanding STRYPES of such series affected thereby, (a) change
the Maturity Date or the Stated Maturity of any installment of interest or
Additional Amounts on any STRYPES or any premium payable on the redemption
thereof, or change the Redemption Price, (b) reduce the amount of Underlying
Securities payable with respect to any STRYPES (or reduce the amount of cash
payable in lieu thereof), (c) reduce the amount of interest or Additional
Amounts payable on any STRYPES or reduce the amount of cash payable with
respect to any STRYPES upon acceleration of the maturity thereof, (d) change
the place or currency of payment of interest or Additional Amounts on, or any
amount of cash payable with respect to, any STRYPES, (e) impair the right to
institute suit for the enforcement of any payment on or with respect to any
STRYPES, including the payment of Underlying Securities with respect to any
STRYPES, (f) reduce the percentage of the aggregate issue price of Outstanding
STRYPES of such series, the consent of whose holders is required to modify or
amend the Indenture, (g) reduce the percentage of the aggregate issue price of
Outstanding STRYPES of such series necessary for waiver of compliance with
certain provisions of the Indenture or for waiver of certain defaults or (h)
modify such provisions with respect to modification and waiver. Except as
provided in the Indenture, no modification of or amendment to the Indenture may
adversely affect the rights of a holder of any other Senior Debt Security
without the consent of such holder.
The holders of a majority of the aggregate issue price of each series of
STRYPES may waive compliance by the Company with certain restrictive provisions
of the Indenture. The holders of a majority of the aggregate issue price of
each series of STRYPES may waive any past default under the Indenture, except a
default in the payment of the Underlying Securities with respect to any STRYPES
of that series, or of cash payable in lieu thereof, or in the payment of any
premium, interest or Additional Amounts on any STRYPES of that series for which
payment had not been subsequently made or in respect of a covenant and
provision of the Indenture which cannot be modified or amended without the
consent of the holder of each Outstanding STRYPES of such series affected.
GOVERNING LAW
The Indenture and the STRYPES will be governed by, and construed in
accordance with, the laws of the State of New York.
14
<PAGE>
PLAN OF DISTRIBUTION
The Company may sell STRYPES to the public through MLPF&S. The accompanying
Prospectus Supplement describes the terms of the STRYPES offered thereby,
including the public offering or purchase price, any discounts and commissions
to be allowed or paid to MLPF&S, all other items constituting underwriting
compensation, the discounts and commissions to be allowed or paid to dealers,
if any, and the exchanges, if any, on which the STRYPES will be listed. Only
MLPF&S will act as an underwriter in connection with the STRYPES. Under certain
circumstances, the Company may repurchase STRYPES and reoffer them to the
public as set forth above. The Company may also arrange for repurchases and
resales of such STRYPES by dealers.
The underwriting of STRYPES will conform to the requirements set forth in the
applicable sections of Schedule E to the By-Laws of the National Association of
Securities Dealers, Inc.
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 reference herein, has been
derived from consolidated financial statements audited by Deloitte & Touche
LLP, as set forth in their reports included as an exhibit to the Registration
Statement or 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.
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 any 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 Securities Act of
1933, as amended, (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.
15
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR IN-
CORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFERING DESCRIBED HEREIN, AND, IF GIVEN OR MADE, SUCH IN-
FORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE PROSPEC-
TUS DO NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY,
ANY SECURITIES OTHER THAN THOSE SPECIFICALLY OFFERED HEREBY OR OF ANY SECURI-
TIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE AN OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER AND
THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT
THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSE-
QUENT TO ITS DATE.
---------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary.................................................................... S-3
Risk Factors............................................................... S-8
IMC Global Inc. ........................................................... S-11
Price Range of IMC Common Stock and Dividends.............................. S-12
Supplemental Use of Proceeds............................................... S-12
Supplemental Description of the STRYPES.................................... S-13
Certain Arrangements With GVI.............................................. S-18
Certain United States Federal Income Tax Considerations.................... S-19
Underwriting............................................................... S-26
Validity of the STRYPES.................................................... S-26
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by
Reference................................................................. 2
Merrill Lynch & Co., Inc. ................................................. 3
Use of Proceeds............................................................ 3
Summary Financial Information.............................................. 4
Description of the STRYPES................................................. 10
Plan of Distribution....................................................... 15
Experts.................................................................... 15
</TABLE>
PROSPECTUS RELATING TO COMMON STOCK OF IMC GLOBAL INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
5,661,119 STRYPES
[LOGO]
MERRILL LYNCH & CO., INC.
% STRYPES SM
DUE , 2001
PAYABLE WITH SHARES OF COMMON STOCK OF
LOGO IMC GLOBAL INC.
(OR CASH WITH AN EQUAL VALUE)
----------------------
PROSPECTUS SUPPLEMENT
----------------------
MERRILL LYNCH & CO.
, 1996
SMService mark of Merrill Lynch & Co., Inc.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware, as
amended, provides that under certain circumstances a corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation or
is or was serving at its request in such capacity in another corporation or
business association, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding if such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such person's
conduct was unlawful.
Article XIII, Section 2 of the Restated Certificate of Incorporation of the
Registrant provides in effect that, subject to certain limited exceptions, the
Registrant shall indemnify its directors and officers to the extent authorized
or permitted by the General Corporation Law of the State of Delaware.
The Form of Underwriting Agreement filed as Exhibit 1(a) provides for the
indemnification of the Registrant, its controlling persons, its directors and
certain of its officers by the Underwriter against certain liabilities,
including liabilities under the Securities Act of 1933, as amended. The Form of
Registration Agreement filed as Exhibit 1(b) provides for the indemnification
of the Registrant and its controlling persons by IMC Global Inc. against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended.
The directors and officers of the Registrant are insured under policies of
insurance maintained by the Registrant, subject to the limits of the policies,
against certain losses arising from any claim made against them by reason of
being or having been such directors or officers. In addition, the Registrant
has entered into contracts with all of its directors providing for
indemnification of such persons by the Registrant to the full extent authorized
or permitted by law, subject to certain limited exceptions.
II-1
<PAGE>
ITEM 16. LIST OF EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1(a) --Form of Underwriting Agreement among the Company, GVI Holdings, Inc.
and the Underwriter.
1(b) --Form of Registration Agreement among the Company, IMC Global Inc.
and the Underwriter.
4(a) --Senior Indenture, dated as of April 1, 1983, as amended and
restated, between the Company and Chemical Bank (successor by merger
to Manufacturers Hanover Trust Company), incorporated herein by
reference to Exhibit 99(c) to Registrant's Registration Statement on
Form 8-A dated July 20, 1992.
4(b) --Form of Tenth Supplemental Indenture to the Senior Indenture between
the Company and Chemical Bank (successor by merger to Manufacturers
Hanover Trust Company).
4(c) --Form of certificate representing the STRYPES.
5 --Opinion of Brown & Wood.
10 --Form of Purchase Agreement among the Company, Merrill Lynch Mortgage
Capital Inc. and GVI Holdings, Inc. relating to shares of IMC Common
Stock.
23(b) --Consent of Brown & Wood (included in Exhibit 5).
</TABLE>
II-2
<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 Post-Effective
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 20th day of June, 1996.
MERRILL LYNCH & CO., INC.
/s/ Joseph T. Willett
By __________________________________
JOSEPH T. WILLETT
(Senior Vice President and Chief
Financial Officer)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS POST-
EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED ON THE 20TH DAY OF JUNE, 1996.
SIGNATURE TITLE
Daniel P. Tully* Chairman of the Board,
- ------------------------------------- Chief Executive Officer
(DANIEL P. TULLY) and Director
David H. Komansky* President, Chief
- ------------------------------------- Operating Officer and
(DAVID H. KOMANSKY) Director
Joseph T. Willett* Senior Vice President
- ------------------------------------- and Chief Financial
(JOSEPH T. WILLETT) Officer (Principal
Financial Officer)
Michael J. Castellano* Senior Vice President
- ------------------------------------- and Controller
(MICHAEL J. CASTELLANO)
William O. Bourke* Director
- -------------------------------------
(WILLIAM O. BOURKE)
Worley H. Clark* Director
- -------------------------------------
(WORLEY H. CLARK)
Jill K. Conway* Director
- -------------------------------------
(JILL K. CONWAY)
II-3
<PAGE>
SIGNATURE TITLE
Stephen L. Hammerman* Director
- -------------------------------------
(STEPHEN L. HAMMERMAN)
Earle H. Harbison, Jr.* Director
- -------------------------------------
(EARLE H. HARBISON, JR.)
George B. Harvey* Director
- -------------------------------------
(GEORGE B. HARVEY)
William R. Hoover* Director
- -------------------------------------
(WILLIAM R. HOOVER)
Robert P. Luciano* Director
- -------------------------------------
(ROBERT P. LUCIANO)
Aulana L. Peters* Director
- -------------------------------------
(AULANA L. PETERS)
John J. Phelan, Jr.* Director
- -------------------------------------
(JOHN J. PHELAN, JR.)
William L. Weiss* Director
- -------------------------------------
(WILLIAM L. WEISS)
/s/ Joseph T. Willett
*By: ________________________________
JOSEPH T. WILLETT
(ATTORNEY-IN-FACT)
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------
<C> <S> <C>
1(a) --Form of Underwriting Agreement among the Company, GVI
Holdings, Inc. and the Underwriter.
1(b) --Form of Registration Agreement among the Company, IMC
Global Inc. and the Underwriter.
4(a) --Senior Indenture, dated as of April 1, 1983, as
amended and restated, between the Company and Chemical
Bank (successor by merger to Manufacturers Hanover
Trust Company), incorporated herein by reference to
Exhibit 99(c) to Registrant's Registration Statement
on Form 8-A dated July 20, 1992.
4(b) --Form of Tenth Supplemental Indenture to the Senior
Indenture between the Company and Chemical Bank
(successor by merger to Manufacturers Hanover Trust
Company).
4(c) --Form of certificate representing the STRYPES.
5 --Opinion of Brown & Wood.
10 --Form of Purchase Agreement among the Company, Merrill
Lynch Mortgage Capital Inc. and GVI Holdings, Inc.
relating to shares of IMC Common Stock.
23(b) --Consent of Brown & Wood (included in Exhibit 5).
</TABLE>
<PAGE>
EXHIBIT 1(a)
DRAFT
6/13/96
_____________________________________________________________________________
______________________________________________________________________________
MERRILL LYNCH & CO., INC.
(a Delaware corporation)
UNDERWRITING AGREEMENT
----------------------
Dated: __________, 1996
______________________________________________________________________________
______________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 1. Representations and Warranties................. 4
(a) Representations and Warranties by the Company.. 4
(i) Compliance with Registration Requirements...... 4
(ii) Incorporated Documents......................... 5
(iii) Independent Accountants........................ 5
(iv) Financial Statements........................... 5
(v) No Material Adverse Change in Business......... 6
(vi) Good Standing of the Company................... 6
(vii) Good Standing of Subsidiaries.................. 6
(viii) Authorization of Agreement..................... 7
(ix) Authorization of the Indenture................. 7
(x) Authorization of the Securities................ 7
(xi) Authorization of the Purchase Agreement........ 7
(xii) Description of Securities, Indenture and
Purchase Agreement............................. 8
(xiii) Absence of Defaults and Conflicts.............. 8
(xiv) Absence of Labor Dispute....................... 9
(xv) Absence of Proceedings......................... 9
(xvi) Exhibits....................................... 9
(xvii) Possession of Intellectual Property............ 9
(xviii) Absence of Further Requirements................ 9
(xix) Possession of Licenses and Permits.............10
(xx) Title to Property..............................10
(xxi) Compliance with Cuba Act.......................10
(b) Representations and Warranties by GVI..........10
(i) Good Standing of GVI...........................11
(ii) Delivery of IMC Common Stock...................11
(iii) Authorization of Agreement.....................11
(iv) Authorization of the Purchase Agreement........11
(v) Absence of Defaults and Conflicts..............11
(vi) Absence of Further Requirements................12
(vii) IMC Registration Statement and Prospectus......12
(c) Officer's Certificates.........................12
SECTION 2. Sale and Delivery to Underwriter; Closing......13
(a) Initial Securities.............................13
(b) Option Securities..............................13
(c) Payment........................................13
(d) Denominations; Registration....................13
SECTION 3. Covenants......................................14
(a) Covenants of the Company.......................14
(i) Compliance with Securities Regulations and
Commission Requests..................................14
(ii) Filing of Amendments.................................14
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
(iii) Delivery of ML&Co. Registration Statements...........14
(iv) Delivery of ML&Co. Prospectuses......................15
(v) Continued Compliance with Securities Laws............15
(vi) Blue Sky Qualifications..............................15
(vii) Rule 158.............................................16
(viii) Use of Proceeds......................................16
(ix) Listing..............................................16
(x) Reporting Requirements...............................16
(b) Covenant of GVI......................................16
SECTION 4. Payment of Expenses..................................16
(a) Expenses Payable by the Company......................16
(b) Expenses Payable by GVI..............................17
(c) Termination of Agreement.............................17
SECTION 5. Conditions...........................................18
(a) Conditions of Underwriter's Obligations..............18
(1) Effectiveness of ML&Co. Registration Statement.......18
(2) Effectiveness of IMC Registration Statement..........18
(3) Opinion of Counsel for the Company...................18
(4) Opinion of Counsel for IMC...........................18
(5) Opinion of Counsel for GVI...........................18
(6) Company Officers' Certificate........................18
(7) IMC Officers' Certificate............................18
(8) GVI Officer's Certificate............................19
(9) Company Accountant's Comfort Letter..................19
(10) IMC Accountant's Comfort Letters.....................19
(11) Company Bring-down Comfort Letter....................19
(12) IMC Bring-down Comfort Letter........................20
(13) Maintenance of Rating................................20
(14) Approval of Listing..................................20
(15) No Objection.........................................20
(16) Lock-up Agreements...................................20
(17) Conditions to Purchase of Option Securities..........20
(18) Additional Documents.................................21
(b) Conditions of the Company's Obligations..............21
(1) Effectiveness of IMC Registration Statement..........22
(2) Opinion of Counsel for the Company...................22
(3) Opinion of Counsel for IMC...........................22
(4) Opinion of Counsel for GVI...........................22
(5) IMC Officers' Certificate............................22
(6) GVI Officer's Certificate............................22
(7) IMC Accountant's Comfort Letters.....................22
(8) IMC Bring-down Comfort Letter........................22
(9) Conditions to Sale of Option Securities..............23
(c) Termination of Agreement.............................23
SECTION 6. Indemnification......................................24
(a) Indemnification of the Underwriter by the Company....24
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
(b) Indemnification of the Underwriter and the
Company by GVI.........................................25
(c) Indemnification of the Company, Directors and Officers.26
(d) Actions against Parties; Notification..................26
(e) Settlement without Consent if Failure to Reimburse.....27
SECTION 7. Contribution...........................................27
SECTION 8. Representations, Warranties and Agreements to
Survive Delivery ..................................... 29
SECTION 9. Termination of Agreement.............................. 29
(a) Termination; General.................................. 29
(b) Liabilities........................................... 30
SECTION 10. Notices............................................... 30
SECTION 11. Parties............................................... 30
SECTION 12. GOVERNING LAW AND TIME................................ 31
SECTION 13. Effect of Headings.................................... 31
</TABLE>
iii
<PAGE>
MERRILL LYNCH & CO., INC.
(a Delaware corporation)
____% STRYPES/SM/ DUE ____, 2001
Payable with Shares of Common Stock of IMC Global Inc.
UNDERWRITING AGREEMENT
----------------------
_____________, 1996
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower
New York, New York 10281-1201
Ladies and Gentlemen:
Merrill Lynch & Co., Inc., a Delaware corporation (the "Company"), and GVI
Holdings, Inc., a Delaware corporation ("GVI"), confirm their respective
agreements with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriter") with respect to the issue and sale by the
Company and the purchase by the Underwriter of an aggregate of 5,661,119 of the
Company's Structured Yield Product Exchangeable for Stock/SM/, ____% STRYPES/SM/
Due ____, 2001 (each, a "STRYPES") and with respect to the grant by the Company
to the Underwriter of the option described in Section 2(b) hereof to purchase
all or any part of 849,167 additional STRYPES to cover over-allotments, if any.
The aforesaid 5,661,119 STRYPES (the "Initial Securities") to be purchased by
the Underwriter and all or any part of the 849,167 STRYPES subject to the option
described in Section 2(b) hereof (the "Option Securities") are hereinafter
called, collectively, the "Securities." The Securities are to be issued
pursuant to an indenture, dated as of April 1, 1983 and restated as of April 1,
1987, as amended and supplemented as of __________, 1996 (the "Principal
Indenture"), between the Company and Chemical Bank (successor by merger to
Manufacturers Hanover Trust Company), as trustee (the "Trustee"), as further
amended and supplemented by the Tenth Supplemental Indenture, dated as of June
__, 1996 (the "Supplemental Indenture"), between the Company and the Trustee,
relating to the STRYPES. The Principal Indenture, as amended and supplemented
by the Supplemental Indenture is hereinafter referred to as the "Indenture".
__________________________
/SM/ Service mark of Merrill Lynch & Co., Inc.
1
<PAGE>
The STRYPES will be payable at maturity by delivery of the Maturity
Consideration (as defined in the Supplemental Indenture) subject to the
Company's option to deliver cash with an equal value. The Company, IMC and the
Underwriter are concurrently entering into an agreement dated the date hereof
(the "Registration Agreement") relating to the registration of shares of common
stock, par value $1.00 per share (the "IMC Common Stock"), of IMC Global Inc., a
Delaware corporation ("IMC"), Common Stock that may be deliverable by the
Company pursuant to the STRYPES.
The Company understands that the Underwriter proposes to make a public
offering of the Securities as soon as the Underwriter deems advisable after this
Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 33-65135) for the
registration of debt securities, including the Securities, and warrants under
the Securities Act of 1933, as amended (the "1933 Act"), and the offering
thereof from time to time in accordance with Rule 415 of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations"),
and the Company has filed post-effective amendment no. 3 and post-effective
amendment no. 5 thereto, including a preliminary prospectus and preliminary
prospectus supplement relating to the offering of the Securities. Promptly
after execution and delivery of this Agreement, the Company will either (i)
prepare and file a prospectus and prospectus supplement in accordance with the
provisions of Rule 430A ("Rule 430A") of 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 (an "ML&Co. Term Sheet") in
accordance with the provisions of Rule 434 and Rule 424(b). The information
included in such prospectus and prospectus supplement or in such ML&Co. Term
Sheet, as the case may be, that was omitted from such registration statement (as
so amended) at the time it became effective but that is deemed to be part of
such registration statement (as so amended) at the time it became effective (i)
pursuant to paragraph (b) of Rule 430A is referred to as "Rule 430A Information"
or (ii) pursuant to paragraph (d) of Rule 434 is referred to as "Rule 434
Information." Any prospectus and prospectus supplement relating to the offering
of the Securities used before such registration statement (as so amended) became
effective, and any prospectus and prospectus supplement relating to the offering
of the Securities 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, in each case excluding any IMC
preliminary prospectus (as defined below) attached thereto, are herein called,
collectively, an "ML&Co. preliminary prospectus." Such registration statement
(as so amended), including the exhibits thereto, the 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 "ML&Co. Registration Statement." Any registration statement filed by the
Company pursuant to Rule 462(b) of the 1933 Act Regulations is herein referred
to as the "ML&Co. Rule 462(b) Registration Statement," and after such filing the
term "ML&Co. Registration Statement" shall include the ML&Co. Rule 462(b)
Registration Statement. The final prospectus and final prospectus supplement
relating to the offering of the Securities,
2
<PAGE>
including the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the 1933 Act, but excluding any IMC Prospectus (as defined below)
attached thereto, in the form first furnished to the Underwriter for use in
connection with the offering of the Securities are collectively referred to
herein as the "ML&Co. Prospectus." If Rule 434 is relied on, the term "ML&Co.
Prospectus" shall refer to the ML&Co. preliminary prospectus dated _______, 1996
together with the ML&Co. Term Sheet and all references in this Agreement to the
date of the ML&Co. Prospectus shall mean the date of the ML&Co. Term Sheet. For
purposes of this Agreement, all references to the ML&Co. Registration Statement,
any ML&Co. preliminary prospectus, the ML&Co. Prospectus or any ML&Co. 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 statements and schedules and
other information which is "contained," "included" or "stated" in the ML&Co.
Registration Statement, any ML&Co. preliminary prospectus or the ML&Co.
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 ML&Co. Registration Statement, any ML&Co.
preliminary prospectus or the ML&Co. Prospectus, as the case may be, and shall
be deemed to exclude all financial statements and schedules and other
information which is included or incorporated by reference in any IMC
preliminary prospectus or the IMC Prospectus which is attached to any ML&Co.
preliminary prospectus or the ML&Co. Prospectus; and all references in this
Agreement to amendments or supplements to the ML&Co. Registration Statement, any
ML&Co. preliminary prospectus or the ML&Co. Prospectus shall be deemed to mean
and include the filing of any document under the Securities Exchange Act of
1934, as amended (the "1934 Act"), which is incorporated by reference in the
ML&Co. Registration Statement, such ML&Co. preliminary prospectus or the ML&Co.
Prospectus, as the case may be.
IMC has filed with the Commission a registration statement on Form S-3 (No.
333- ) covering the registration of the shares of IMC Common Stock
deliverable at maturity of the Securities under the 1933 Act, including the
related preliminary prospectus or prospectuses. Each prospectus used before
such registration statement became effective is herein called an "IMC
preliminary prospectus." Such registration statement, including the exhibits
thereto, the 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, is herein called the "IMC Registration Statement."
Any registration statement filed by IMC pursuant to Rule 462(b) of the 1933 Act
Regulations is herein referred to as the "IMC Rule 462(b) Registration
Statement," and after such filing the term "IMC Registration Statement" shall
include the IMC 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 Underwriter for
use in connection with the offering of the Securities is herein called the "IMC
Prospectus." For purposes of this Agreement, all references to the IMC
Registration Statement, any IMC preliminary prospectus, the IMC Prospectus or
any amendment or supplement to any of the foregoing shall be deemed to include
the copy filed with the Commission pursuant to EDGAR.
3
<PAGE>
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the IMC
Registration Statement, any IMC preliminary prospectus or the IMC 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 IMC Registration Statement, any IMC preliminary prospectus
or the IMC Prospectus, as the case may be; and all references in this Agreement
to amendments or supplements to the IMC Registration Statement, any IMC
preliminary prospectus or the IMC Prospectus shall be deemed to mean and include
the filing of any document under the 1934 Act which is incorporated by reference
in the IMC Registration Statement, such IMC preliminary prospectus or the IMC
Prospectus, as the case may be.
Prior to the closing under this Agreement, the Company, Merrill Lynch
Mortgage Capital Inc., a wholly-owned subsidiary of the Company (the "ML&Co.
Subsidiary"), and GVI will enter into a contract (the "Purchase Agreement"),
pursuant to which GVI will be obligated to deliver to the ML&Co. Subsidiary,
immediately prior to the maturity date of the Securities, the Maturity
Consideration required by the Company to pay and discharge all of the Securities
at maturity as described in the ML&Co. Prospectus, subject to GVI's right to
require that the obligations thereunder be satisfied by a cash payment based on
the value of such Maturity Consideration (the "Forward Purchase"). Under the
Purchase Agreement, the Company has agreed to pay and discharge the STRYPES by
delivering to the holders thereof at maturity the form of consideration that the
ML&Co. Subsidiary receives from GVI.
SECTION 1. Representations and Warranties.
------------------------------
(a) Representations and Warranties by the Company. The Company represents
and warrants to the Underwriter as of the date hereof, as of the Closing Time
referred to in Section 2(c) hereof, and as of each Date of Delivery (if any)
referred to in Section 2(b) hereof, and agrees with the Underwriter, as follows:
(i) Compliance with Registration Requirements. The Company meets the
-----------------------------------------
requirements for use of Form S-3 under the 1933 Act. Each of the ML&Co.
Registration Statement and any ML&Co. Rule 462(b) Registration Statement
has become effective under the 1933 Act and no stop order suspending the
effectiveness of the ML&Co. Registration Statement or any ML&Co. 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 ML&Co. Registration Statement, any ML&Co.
Rule 462(b) Registration Statement and any post-effective amendments
thereto became effective and at the Closing Time (and, if any Option
Securities are purchased, at the Date of Delivery), the ML&Co. Registration
Statement, the ML&Co. 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
Trust Indenture Act of 1939, as amended (the "1939 Act"), and the
4
<PAGE>
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.
Neither the ML&Co. Prospectus nor any amendments or supplements thereto, at
the time the ML&Co. Prospectus or any such amendment or supplement was
issued and at the Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery), included or will include an untrue
statement of a material fact or omitted or will 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, the Company 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 ML&Co. Registration Statement or ML&Co.
Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by the Underwriter expressly for use in
the ML&Co. Registration Statement or ML&Co. Prospectus or (B) that part of
the ML&Co. Registration Statement that constitutes the Statement of
Eligibility on Form T-1 (the "Form T-1") under the 1939 Act of the Trustee.
Each ML&Co. preliminary prospectus and the prospectus relating to the
offering of the Securities filed as part of the ML&Co. 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, if applicable, each
ML&Co. preliminary prospectus and the ML&Co. Prospectus delivered to the
Underwriter 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 ML&Co. Registration Statement and the
ML&Co. Prospectus, when they became effective or 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 1933 Act and the 1933 Act
Regulations or the 1934 Act and the rules and regulations of the Commission
thereunder (the "1934 Act Regulations"), as applicable, and, when read
together with the other information in the ML&Co. Prospectus, at the time
the ML&Co. Registration Statement became effective, at the time the ML&Co.
Prospectus was issued and at the Closing Time (and, if any Option
Securities are purchased, at the Date of Delivery), 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 supporting schedules included in the ML&Co.
Registration Statement are independent public accountants as required by
the 1933 Act and the 1933 Act Regulations.
5
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(iv) Financial Statements. The financial statements included in the
--------------------
ML&Co. Registration Statement and the ML&Co. 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
statement of operations, stockholders' equity and cash flows of the Company
and its consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved. The supporting schedules, if any, included in the ML&Co.
Registration Statement present fairly in accordance with GAAP the
information required to be stated therein. The selected financial data and
the summary financial information included in the ML&Co. Prospectus present
fairly the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in the
ML&Co. Registration Statement.
(v) No Material Adverse Change in Business. Since the respective
--------------------------------------
dates as of which information is given in the ML&Co. Registration Statement
and the ML&Co. 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 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 and regular dividends
on its outstanding preferred stock in amounts per share that are consistent
with past practice, 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 ML&Co. Prospectus and to enter into and perform its
obligations under this Agreement, the Indenture and the 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 so to qualify
or to 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 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 ML&Co.
Prospectus and is duly qualified as a foreign corporation to transact
business and is in good standing in each
6
<PAGE>
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 so to qualify or to be in good standing would not result
in a Material Adverse Effect; except as otherwise disclosed in the ML&Co.
Registration Statement, all of the issued and outstanding capital stock of
each such 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 the
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 for the fiscal year ended
December 29, 1995 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 Company.
(ix) Authorization of the Indenture. The Indenture has been duly
------------------------------
authorized by the Company, duly qualified under the 1939 Act and duly
executed and delivered by the Company and (assuming the due authorization,
execution and delivery by the Trustee) will constitute a valid and binding
agreement of the Company, enforceable against the Company in accordance
with its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), 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).
(x) Authorization of the Securities. The Securities have been duly
-------------------------------
authorized by the Company for issuance and sale to the Underwriter pursuant
to this Agreement and, at the Closing Time, will have been duly executed by
the Company and, when authenticated by the Trustee in the manner provided
for in the Indenture and delivered against payment of the purchase price
therefor as provided in this Agreement, will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance
with their terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), 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), and will be
in the form contemplated by, and entitled to the benefits of, the
Indenture.
(xi) Authorization of the Purchase Agreement. The Purchase Agreement
---------------------------------------
has been duly authorized by the Company and the ML&Co. Subsidiary and, at
the Closing
7
<PAGE>
Time, will have been duly executed and delivered by the Company and the
ML&Co. Subsidiary and (assuming the due authorization, execution and
delivery by GVI) will constitute a valid and binding agreement of the
Company and the ML&Co. Subsidiary, enforceable against the Company and the
ML&Co. Subsidiary in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), 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).
(xii) Description of Securities, Indenture and Purchase Agreement.
-----------------------------------------------------------
The Securities, the Indenture and the Purchase Agreement will conform in
all material respects to the respective statements relating thereto
contained in the ML&Co. Prospectus and will be in substantially the
respective forms filed or incorporated by reference, as the case may be, as
exhibits to the ML&Co. 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 (A) the execution, delivery and
performance by the Company of this Agreement, the Indenture, the Securities
and the Purchase Agreement and the consummation of the transactions
contemplated herein, therein and in the ML&Co. Registration Statement
(including the issuance and sale of the Securities and the delivery of
shares of IMC Common Stock pursuant thereto, the consummation of the
Forward Purchase and the use of the proceeds from the sale of the
Securities as described in the ML&Co. Prospectus under the caption
"Supplemental Use of Proceeds") and compliance by the Company with its
obligations hereunder and under the Indenture, the Securities and the
Purchase Agreement and (B) the execution, delivery and performance by the
ML&Co. Subsidiary of the Purchase Agreement and the consummation of the
transactions contemplated therein and compliance by the ML&Co. Subsidiary
with its obligations under the Purchase Agreement have been duly authorized
by all necessary corporate action and 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 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
pursuant to, the Agreements and Instruments (except for such conflicts,
breaches or defaults or 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, to the best of the Company's knowledge, 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
8
<PAGE>
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 subsidiary (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 subsidiary.
(xiv) Absence of Labor Dispute. No labor dispute with the employees
------------------------
of the Company or any subsidiary 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 no 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
subsidiary, which is required to be disclosed in the ML&Co. Registration
Statement (other than as disclosed therein), or which might, individually
or in the aggregate, reasonably be expected to result in a Material Adverse
Effect, or which might, individually or in the aggregate, reasonably be
expected to materially and adversely affect the properties or assets
thereof or the consummation of the transactions contemplated in this
Agreement, the Indenture or the Purchase Agreement (including the issuance
and sale of the Securities and the delivery of shares of IMC Common Stock
pursuant thereto and the consummation of the Forward Purchase) or the
performance by the Company of its obligations hereunder or thereunder or
the performance by the ML&Co. Subsidiary of its obligations under the
Purchase Agreement; the aggregate of all pending legal or governmental
proceedings to which the Company or any subsidiary is a party or of which
any of their respective property or assets is the subject which are not
described in the ML&Co. Registration Statement, 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 ML&Co. Registration Statement,
the ML&Co. Prospectus or the documents incorporated by reference therein or
to be filed as exhibits thereto which have not been so described or filed
as required.
(xvii) 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, 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.
9
<PAGE>
(xviii) 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 (A) for the performance by the Company of its
obligations under this Agreement or the Purchase Agreement or the
consummation by the Company of the transactions contemplated herein or
therein (including the issuance and sale of the Securities and the delivery
of shares of IMC Common Stock pursuant thereto and the consummation of the
Forward Purchase) or for the due execution, delivery or performance of the
Indenture by the Company or (B) for the performance by the ML&Co.
Subsidiary of its obligations under the Purchase Agreement or the
consummation by the ML&Co. Subsidiary of the transactions contemplated
therein, 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 and
except for the qualification of the Indenture under the 1939 Act.
(xix) Possession of Licenses and Permits. The Company and the
----------------------------------
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; the 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 when
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 ML&Co. Prospectus or (B) do not, singly or in the
aggregate, materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company or any of its subsidiaries; 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 ML&Co. Prospectus, are in full force and
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 to the continued possession of the leased or
subleased premises under any such lease or sublease.
10
<PAGE>
(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 regulation thereunder
(collectively, the "Cuba Act") or is exempt therefrom.
(b) Representations and Warranties by GVI. GVI represents and warrants to
each of the Company and the Underwriter as of the date hereof, as of the Closing
Time referred to in Section 2(c) hereof, and as of each Date of Delivery (if
any) referred to in Section 2(b) hereof, and agrees with each of the Company and
the Underwriter, as follows:
(i) Good Standing of GVI. GVI 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 enter into and perform
its obligations under this Agreement and the Purchase Agreement.
(ii) Delivery of IMC Common Stock. At the date hereof, GVI is the
----------------------------
sole registered owner of and has all rights in and to at least 6,510,268
shares of IMC Common Stock, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity (except for the
security interest created under or pursuant to [describe existing bridge
loan], which will have been released at the Closing Time, and such as may
be created under or pursuant to that certain [describe new loan
agreement]). If immediately prior to maturity of the Securities GVI
delivers to the Company shares of IMC Common Stock pursuant to the Purchase
Agreement, upon delivery by GVI to the ML&Co. Subsidiary of such shares of
IMC Common Stock pursuant to the Purchase Agreement, the ML&Co. Subsidiary
will be the sole registered owner of the shares of IMC Common Stock so
delivered and, assuming the ML&Co. Subsidiary purchased for value in good
faith and without notice of any adverse claim, the ML&Co. Subsidiary will
have acquired all rights in and to such shares of IMC Common Stock, free
and clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity. The delivery of shares of IMC Common Stock to the ML&Co.
Subsidiary at maturity of the Securities in accordance with the Purchase
Agreement is not, and at the time of delivery of such shares will not be,
subject to any right of first refusal or similar rights of any person
pursuant to any contract to which GVI or any of its subsidiaries is a party
or by which any of them is bound.
(iii) Authorization of Agreement. This Agreement has been duly
--------------------------
authorized, executed and delivered by GVI.
(iv) Authorization of the Purchase Agreement. The Purchase Agreement
---------------------------------------
has been duly authorized by GVI and, at the Closing Time, will have been
duly executed and delivered by GVI and (assuming the due authorization,
execution and delivery by the Company and the ML&Co. Subsidiary) will
constitute a valid and binding agreement of GVI, enforceable against GVI in
accordance with its terms, except as the enforcement thereof may be limited
by bankruptcy, insolvency (including, without limitation, all laws relating
to fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject
11
<PAGE>
to general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law). Amounts received by GVI
at Closing Time and at each Date of Delivery, if any, pursuant to the
Purchase Agreement will not be used by GVI for the purpose, whether
immediate, incidental or ultimate, of buying or carrying a margin stock, as
such terms are defined in Regulation G promulgated by the Board of
Governors of the Federal Reserve System.
(v) Absence of Defaults and Conflicts. The execution, delivery and
---------------------------------
performance by GVI of this Agreement and the Purchase Agreement and the
consummation by GVI of the transactions contemplated herein and therein and
compliance by GVI with its obligations hereunder and thereunder have been
duly authorized by all necessary corporate action and 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 default or GVI 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 GVI or any of
its subsidiaries pursuant to, any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or any other agreement or
instrument to which GVI 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 GVI or any of its subsidiaries is subject (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would not,
singly or in the aggregate, materially and adversely affect the ability of
GVI to perform its obligations under this Agreement or the Purchase
Agreement), nor will such action result in any violation of the provisions
of the charter or by-laws of GVI or any of its subsidiaries, or any
applicable law, statute, rule or regulation of any government or government
instrumentality having jurisdiction over GVI or any of its subsidiaries or
any of their assets, properties or operations (other than any state
securities or "blue sky" law, statute, rule or regulation, as to which no
representation and warranty is made), or any applicable judgment, order,
writ or decree of any government, government instrumentality or domestic
court having jurisdiction over GVI or any of its subsidiaries or any of
their assets, properties or operations (except in all cases for such
violations that would not, singly or in the aggregate, materially and
adversely affect the ability of GVI to perform its obligations under this
Agreement or the Purchase Agreement). As used herein, a "GVI Repayment
Event" means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (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 GVI or any of its
subsidiaries.
(vi) 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 execution, delivery or performance by GVI
of this Agreement or the Purchase Agreement or the consummation by GVI of
the transactions contemplated by this Agreement or the Purchase Agreement,
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.
12
<PAGE>
(vii) IMC Registration Statement and Prospectus. The IMC
-----------------------------------------
Registration Statement, any IMC Rule 462(b) Registration Statement or any
post-effective amendments thereto, at the respective times the IMC
Registration Statement, any IMC Rule 462(b) Registration Statement or any
post-effective amendments thereto became effective, did 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. The IMC Prospectus or any amendment or supplement thereto,
at the time the IMC Prospectus was issued, at the time any such amended or
supplemented prospectus was issued or at the Closing Time (and, if any
Option Securities are purchased, at the Date of Delivery), did not and will
not include an untrue statement of a material fact and did not and will not
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. The representations and warranties in this subsection shall
apply only to statements in or omissions from the IMC Registration
Statement (or any amendment thereto) or IMC Prospectus (or any amendment or
supplement thereto) made in reliance upon and in conformity with
information furnished to IMC in writing by GVI expressly for use in the IMC
Registration Statement (or any amendment thereto) or IMC Prospectus (or any
amendment or supplement thereto).
(c) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Underwriter shall be deemed
a representation and warranty by the Company to the Underwriter as to the
matters covered thereby. Any certificate signed by any officer of GVI or any of
its subsidiaries delivered to the Underwriter or the Company shall be deemed a
representation and warranty by GVI to the Underwriter or the Company, as the
case may be, as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriter; Closing.
-----------------------------------------
(a) Initial Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to the Underwriter, and the Underwriter agrees to
purchase from the Company, at the price per STRYPES set forth in Schedule A, the
Initial Securities.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the Underwriter to purchase up
to an additional 849,167 STRYPES at the price per STRYPES set forth in Schedule
A. The option hereby granted will expire 30 days after the date hereof and may
be exercised in whole or in part from time to time only for the purpose of
covering over-allotments which may be made in connection with the offering and
distribution of the Initial Securities upon notice by the Underwriter to the
Company setting forth the number of Option Securities as to which the
Underwriter is then exercising the option and the time and date of payment and
delivery for such Option Securities. Any such time and date of delivery (a
"Date of Delivery") shall be determined by the Underwriter, but shall not be
later than seven full business days after the exercise of said option, nor in
any event prior to the Closing Time, as hereinafter defined.
13
<PAGE>
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Brown &
Wood, One World Trade Center, New York, New York 10048, or at such other place
as shall be agreed upon by the Underwriter and the Company, at 10:00 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, or such
other time not later than ten business days after such date as shall be agreed
upon by the Underwriter and the Company (such time and date of payment and
delivery being herein called "Closing Time"). In addition, in the event that
any or all of the Option Securities are purchased by the Underwriter, payment of
the purchase price for, and delivery of certificates for, such Option Securities
shall be made at the above-mentioned offices, or at such other place as shall be
agreed upon by the Underwriter and the Company, on each Date of Delivery as
specified in the notice from the Underwriter to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Underwriter of certificates for the Securities to be purchased by it.
(d) Denominations; Registration. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such denominations and registered
in such names as the Underwriter may request in writing at least one full
business day before the Closing Time or the relevant Date of Delivery, as the
case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Underwriter in The City of New York not later than 10:00 A.M. (Eastern time) on
the business day prior to the Closing Time or the relevant Date of Delivery, as
the case may be.
SECTION 3. Covenants.
---------
(a) Covenants of the Company. The Company covenants with the Underwriter
as follows:
(i) Compliance with Securities Regulations and Commission Requests.
The Company, subject to Section 3(a)(ii), will comply with the requirements
of Rule 430A or Rule 434, as applicable, and will notify the Underwriter
immediately, and confirm the notice in writing, (A) when any post-effective
amendment to the ML&Co. Registration Statement shall become effective, or
any supplement to the ML&Co. Prospectus or any amended ML&Co. Prospectus
shall have been filed, (B) of the receipt of any comments from the
Commission, (C) of any request by the Commission for any amendment to the
ML&Co. Registration Statement or any amendment or supplement to the ML&Co.
Prospectus or for additional information, and (D) of the issuance by the
Commission of any stop order suspending the effectiveness of the ML&Co.
Registration Statement or of any order preventing or suspending the use of
any ML&Co. preliminary prospectus, or of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction,
or of the initiation or threatening of any proceedings for any of such
purposes. The Company will promptly effect the filings necessary pursuant
to Rule 424(b) and will take such steps as it deems necessary to ascertain
promptly whether the form of prospectus transmitted for filing under Rule
424(b) was received for filing by the
14
<PAGE>
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.
(ii) Filing of Amendments. The Company will give the Underwriter
notice of its intention to file or prepare any amendment to the ML&Co.
Registration Statement (including any filing under Rule 462(b)), any ML&Co.
Term Sheet or any amendment, supplement or revision to either the
prospectus relating to the offering of the Securities included in the
ML&Co. Registration Statement at the time it became effective or to the
ML&Co. Prospectus, whether pursuant to the 1933 Act, the 1934 Act or
otherwise, will furnish the Underwriter 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 Underwriter
or counsel for the Underwriter shall reasonably object.
(iii) Delivery of ML&Co. Registration Statements. The Company has
furnished or will deliver to the Underwriter, without charge, signed copies
of the ML&Co. 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 signed copies of all consents and certificates of
experts. If applicable, the copies of the ML&Co. Registration Statement
and each amendment thereto furnished to the Underwriter 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.
(iv) Delivery of ML&Co. Prospectuses. The Company has delivered to
the Underwriter, without charge, as many copies of each ML&Co. preliminary
prospectus as the Underwriter reasonably requested, and the Company hereby
consents to the use of such copies for purposes permitted by the 1933 Act.
The Company will furnish to the Underwriter, without charge, during the
period when the ML&Co. Prospectus is required to be delivered under the
1933 Act or the 1934 Act, such number of copies of the ML&Co. Prospectus
(as amended or supplemented) as the Underwriter may reasonably request. If
applicable, the ML&Co. Prospectus and any amendments or supplements thereto
furnished to the Underwriter 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.
(v) Continued Compliance with Securities Laws. The Company will
comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and
the 1934 Act Regulations so as to permit the completion of the distribution
of the Securities as contemplated in this Agreement and in the ML&Co.
Prospectus. If at any time when a prospectus is required by the 1933 Act
to be delivered in connection with sales of the Securities, any event shall
occur or condition shall exist as a result of which it is necessary, in the
opinion of counsel for the Underwriter or for the Company, to amend the
ML&Co. Registration Statement or amend or supplement the ML&Co. Prospectus
15
<PAGE>
in order that the ML&Co. 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 either such counsel, at any such time
to amend the ML&Co. Registration Statement or amend or supplement the
ML&Co. 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(a)(ii), such amendment or
supplement as may be necessary to correct such statement or omission or to
make the ML&Co. Registration Statement or the ML&Co. Prospectus comply with
such requirements, and the Company will furnish to the Underwriter such
number of copies of such amendment or supplement as the Underwriter may
reasonably request.
(vi) Blue Sky Qualifications. The Company will use its best efforts,
in cooperation with the Underwriter, to qualify the Securities for offering
and sale under the applicable securities laws of such states and other
jurisdictions of the United States as the Underwriter 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 ML&Co. Registration
Statement and any ML&Co. Rule 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 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 ML&Co. Registration Statement and any
ML&Co. Rule 462(b) Registration Statement.
(vii) 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.
(viii) Use of Proceeds. The Company will use the net proceeds
received by it from the sale of the Securities in the manner specified in
the ML&Co. Prospectus under "Supplemental Use of Proceeds."
(ix) Listing. The Company will use its best efforts to effect the
listing of the Securities on the New York Stock Exchange.
(x) Reporting Requirements. The Company, during the period when the
ML&Co. 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.
16
<PAGE>
(b) Covenants of GVI.
(i) Restriction on Sale of Securities. During a period of 90 days
----------------------------------
from the date of the IMC Prospectus, GVI will not, without the prior
written consent of the Underwriter, (x) offer, sell, contract to sell or
otherwise dispose of, directly or indirectly, any shares of IMC Common
Stock, securities convertible into, exchangeable for or repayable with
shares of IMC Common Stock, or rights or warrants to acquire shares of IMC
Common Stock, or (y) cause to be filed any registration statement under the
1933 Act with respect to any shares of IMC Common Stock, securities
convertible into, exchangeable for or repayable with shares of IMC Common
Stock, or rights or warrants to acquire shares of IMC Common Stock. The
foregoing sentence shall not apply to the execution and delivery by GVI of
the Purchase Agreement or the consummation by GVI of the transactions
contemplated therein.
(ii) Purpose Statement. At or prior to Closing Time, GVI will deliver
-----------------
to the ML&Co. Subsidiary a duly executed purpose statement on Form F. R. G-
3 of the Board of Governors of the Federal Reserve System.
SECTION 4. Payment of Expenses. (a) Expenses Payable by the Company.
-------------------
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
ML&Co. Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the preparation, printing
and delivery to the Underwriter of this Agreement, the Indenture, the Purchase
Agreement 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 Securities to the
Underwriter, (iv) the fees and disbursements of the Company's counsel,
accountants and other advisors, (v) the qualification of the Securities under
securities laws in accordance with the provisions of Section 3(a)(vi) hereof,
including filing fees and the reasonable fees and disbursements of the Company's
counsel 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 Underwriter of copies of each ML&Co. preliminary prospectus, any ML&Co. Term
Sheets and of the ML&Co. Prospectus and any amendments or supplements thereto,
(vii) the preparation, printing and delivery to the Underwriter of copies of the
Blue Sky Survey and any supplement thereto, (viii) the fees and expenses of the
Trustee, including the fees and disbursements of counsel for the Trustee in
connection with the Indenture and the Securities, (ix) any fees payable in
connection with the rating of the Securities, (x) the filing fees incident to,
and the reasonable fees and disbursements of counsel to the Underwriter in
connection with, the review by the National Association of Securities Dealers,
Inc. (the "NASD") of the terms of the sale of the Securities and (xi) the fees
and expenses incurred in connection with the listing of the Securities on the
New York Stock Exchange.
(b) Expenses Payable by GVI. GVI will pay all expenses incident to the
performance of its obligations under this Agreement, including the fees and
disbursements of its counsel and advisors.
17
<PAGE>
(c) Termination of Agreement. If this Agreement is terminated by the
Underwriter in accordance with the provisions of Section 5 or Section 9(a)(i)
hereof, the Company shall reimburse the Underwriter for all of its out-of-pocket
expenses, including the reasonable fees and disbursements of counsel for the
Underwriter.
SECTION 5. Conditions.
----------
(a) Conditions of Underwriter's Obligations. The obligations of the
Underwriter hereunder are subject to the accuracy of the representations and
warranties of the Company and GVI contained in Sections 1(a) and 1(b) hereof,
respectively, to the accuracy of the representations and warranties of IMC
contained in the Registration Agreement, to the accuracy of the statements in
certificates of any officer of the Company, IMC or GVI delivered pursuant to the
provisions hereof, to the performance by the Company and GVI of their respective
covenants and other obligations hereunder, to the performance by IMC of its
covenants and other obligations under the Registration Agreement, and to the
following further conditions:
(1) Effectiveness of ML&Co. Registration Statement. The ML&Co.
Registration Statement, including any ML&Co. Rule 462(b) Registration
Statement, has become effective and at Closing Time no stop order
suspending the effectiveness of the ML&Co. 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 Underwriter. 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 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, an ML&Co. Term Sheet shall have been filed with the Commission in
accordance with Rule 424(b).
(2) Effectiveness of IMC Registration Statement. The IMC Registration
Statement, including any IMC Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of
the IMC 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
Underwriter.
(3) Opinion of Counsel for the Company. At Closing Time, the
Underwriter shall have received the favorable opinion, dated as of Closing
Time, of Brown & Wood, counsel for the Company, in form and substance
satisfactory to the Underwriter, to the effect set forth in Exhibit A
hereto and to such further effect as the Underwriter may reasonably
request.
(4) Opinion of Counsel for IMC. At Closing Time, the Underwriter
shall have received the favorable opinion, dated as of Closing Time, of
Sidley & Austin, counsel for IMC, in form and substance satisfactory to the
Underwriter, to the effect set
18
<PAGE>
forth in Exhibit B hereto and to such further effect as the Underwriter may
reasonably request.
(5) Opinion of Counsel for GVI. At Closing Time, the Underwriter
shall have received the favorable opinion, dated as of Closing Time, of
Rosenberg & Liebentritt, P.C., counsel for GVI, in form and substance
satisfactory to the Underwriter, to the effect set forth in Exhibit C
hereto and to such further effect as the Underwriter may reasonably
request.
(6) Company 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 ML&Co. Prospectus, 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
considered as one enterprise, whether or not arising in the ordinary course
of business, and the Underwriter 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 1(a) hereof are true and correct
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 ML&Co. Registration Statement has been issued and no proceedings for
that purpose have been instituted or are pending or are contemplated by the
Commission.
(7) IMC 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 IMC Prospectus, any material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs
or business prospects of IMC and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and
the Underwriter shall have received a certificate of the President or a
Vice President of IMC and of the chief financial or chief accounting
officer of IMC, dated as of Closing Time, to the effect that (i) there has
been no such material adverse change, (ii) the representations and
warranties of IMC contained in Section 1(a) of the Registration Agreement
are true and correct with the same force and effect as though expressly
made at and as of Closing Time, (iii) IMC has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied at or
prior to Closing Time pursuant to the Registration Agreement, and (iv) no
stop order suspending the effectiveness of the IMC Registration Statement
has been issued and no proceedings for that purpose have been instituted
or, to the best of their knowledge, are pending or are contemplated by the
Commission.
(8) GVI Officer's Certificate. At Closing Time, the Underwriter shall
have received a certificate of the President or a Vice President of GVI,
dated as of Closing Time, to the effect that (i) the representations and
warranties of GVI contained in Section 1(b) hereof are true and correct
with the same force and effect as though expressly made
19
<PAGE>
at and as of Closing Time and (ii) GVI has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or
prior to Closing Time.
(9) Company Accountant's Comfort Letter. At the time of the execution
of this Agreement, the Underwriter shall have received from Deloitte &
Touche LLP a letter dated such date, in form and substance satisfactory to
the Underwriter, 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 ML&Co. Registration Statement and the ML&Co. Prospectus.
(10) IMC Accountant's Comfort Letter. At the time of the execution of
this Agreement, the Underwriter shall have received from each of Ernst &
Young LLP and Arthur Andersen LLP a letter dated such date, in form and
substance satisfactory to the Underwriter, 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 IMC Registration Statement
and the IMC Prospectus.
(11) Company Bring-down Comfort Letter. At Closing Time, the
Underwriter 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 by them pursuant to Section 5(a)(9) hereof, except
that the "specified date" referred to shall be a date not more than three
business days prior to Closing Time.
(12) IMC Bring-down Comfort Letter. At Closing Time, the Underwriter
shall have received from Ernst & Young LLP a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished by them pursuant to Section 5(a)(10) hereof, except that the
"specified date" referred to shall be a date not more than three business
days prior to Closing Time.
(13) Maintenance of Rating. Since the date of this Agreement, there
shall not have occurred a downgrading in the rating assigned to any of the
Company's 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 any of the
Company's securities.
(14) Approval of Listing. At Closing Time, the Securities shall have
been approved for listing on the New York Stock Exchange, subject only to
official notice of issuance.
(15) No Objection. The NASD shall not have raised any objection with
respect to the fairness and reasonableness of the underwriting terms and
arrangements.
20
<PAGE>
(16) Lock-up Agreements. At the date of this Agreement, the
Underwriter shall have received an agreement substantially in the form of
Exhibit D hereto signed by each of the persons and entities listed on
Schedule B hereto.
(17) Conditions to Purchase of Option Securities. In the event that
the Underwriter exercises its option provided in Section 2(b) hereof to
purchase all or any portion of the Option Securities, the representations
and warranties of the Company and GVI contained herein, the representations
and warranties of IMC contained in the Registration Agreement and the
statements in any certificates furnished by the Company, IMC or GVI
hereunder shall be true and correct as of each Date of Delivery and, at the
relevant Date of Delivery, the Underwriter shall have received:
(A) Company Officers' Certificate. A certificate, dated such Date of
-----------------------------
Delivery, of the President or a Vice President of the Company and of
the chief financial or chief accounting officer of the Company
confirming that the certificate delivered at Closing Time pursuant to
Section 5(a)(6) hereof is true and correct as of such Date of
Delivery.
(B) IMC Officers' Certificate. A certificate, dated such Date of
-------------------------
Delivery, of the President or a Vice President of IMC and of the chief
financial or chief accounting officer of IMC confirming that the
certificate delivered at Closing Time pursuant to Section 5(a)(7)
hereof is true and correct as of such Date of Delivery.
(C) GVI Officers' Certificate. A certificate, dated such Date of
-------------------------
Delivery, of the President or a Vice President of GVI confirming that
the certificate delivered at Closing Time pursuant to Section 5(a)(8)
hereof is true and correct as of such Date of Delivery.
(D) Opinion of Counsel for the Company. The favorable opinion of
----------------------------------
Brown & Wood, counsel for the Company, in form and substance
satisfactory to the Underwriter, dated such Date of Delivery, relating
to the Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by Section
5(a)(3) hereof.
(E) Opinion of Counsel for IMC. The favorable opinion of Sidley &
--------------------------
Austin, counsel for IMC, in form and substance satisfactory to the
Underwriter, dated such Date of Delivery, to the same effect as the
opinion required by Section 5(a)(4) hereof.
(F) Opinion of Counsel for GVI. The favorable opinion of Rosenberg &
--------------------------
Liebentritt, P.C., counsel for GVI, in form and substance satisfactory
to the Underwriter, dated such Date of Delivery, to the same effect as
the opinion required by Section 5(a)(5) hereof.
21
<PAGE>
(G) Company Bring-down Comfort Letter. A letter from Deloitte &
---------------------------------
Touche LLP, in form and substance satisfactory to the Underwriter and
dated such Date of Delivery, substantially the same in form and
substance as the letter furnished to the Underwriter pursuant to
Section 5(a)(11) hereof, except that the "specified date" in the
letter furnished pursuant to this paragraph shall be a date not more
than five days prior to such Date of Delivery.
(H) IMC Bring-down Comfort Letter. A Letter from Ernst & Young LLP,
-----------------------------
in form and substance satisfactory to the Underwriter and dated such
Date of Delivery, substantially the same in form and substance as the
letter furnished to the Underwriter pursuant to Section 5(a)(12)
hereof, except that the "specified date" in the letter furnished
pursuant to this paragraph shall be a date not more than five days
prior to such Date of Delivery.
(18) Additional Documents. At Closing Time and at each Date of
Delivery, counsel for the Underwriter shall have been furnished with such
documents and opinions as they may 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,
contained herein or in the Registration Agreement; and all proceedings
taken by the Company in connection with the issuance and sale of the
Securities as herein contemplated shall be satisfactory in form and
substance to the Underwriter and counsel for the Underwriter.
(b) Conditions of the Company's Obligations. The obligations of the
Company hereunder are subject to the accuracy of the representations and
warranties of GVI contained in Section 1(b) hereof, to the accuracy of the
representations and warranties of IMC contained in the Registration Agreement,
to the accuracy of the statements in certificates of any officer of IMC or GVI
delivered pursuant to the provisions hereof, to the performance by GVI of its
covenants and other obligations hereunder, to the performance by IMC of its
covenants and other obligations under the Registration Agreement, and to the
following further conditions:
(1) Effectiveness of IMC Registration Statement. The IMC Registration
Statement, including any IMC Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of
the IMC 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
Company.
(2) Opinion of Counsel for the Company. At Closing Time, the Company
shall have received the favorable opinion, dated as of Closing Time, of
Brown & Wood, counsel for the Company, to the same effect as the opinion
required by Section 5(a)(3) hereof.
22
<PAGE>
(3) Opinion of Counsel for IMC. At Closing Time, the Company shall
have received the favorable opinion, dated as of Closing Time, of Sidley &
Austin, counsel for IMC, to the same effect as the opinion required by
Section 5(a)(4) hereof.
(4) Opinion of Counsel for GVI. At Closing Time, the Company shall
have received the favorable opinion, dated as of Closing Time, of Rosenberg
& Liebentritt, P.C., counsel for IMC and GVI, to the same effect as the
opinion required by Section 5(a)(5) hereof.
(5) IMC Officers' Certificate. At Closing Time, the Company shall
have received a certificate of the President or a Vice President of IMC and
of the chief financial or chief accounting officer of IMC, dated as of
Closing Time, to the same effect as the certificate delivered to the
Underwriter pursuant to Section 5(a)(7) hereof.
(6) GVI Officer's Certificate. At Closing Time, the Company shall
have received a certificate of the President or a Vice President of GVI,
dated as of Closing Time, to the same effect as the certificate delivered
to the Underwriter pursuant to Section 5(a)(8) hereof.
(7) IMC Accountant's Comfort Letters. At the time of the execution of
this Agreement, the Company shall have received from each of Ernst & Young
LLP and Arthur Andersen LLP a letter dated such date, in form and substance
satisfactory to the Company, substantially the same in form and substance
as the letter delivered to the Underwriter pursuant to Section 5(a)(10)
hereof.
(8) IMC Bring-down Comfort Letter. At Closing Time, the Company shall
have received from Ernst & Young LLP a letter, dated as of Closing Time, in
form and substance satisfactory to the Company, substantially the same in
form and substance as the letter delivered to the Underwriter pursuant to
Section 5(a)(12) hereof.
(9) Conditions to Sale of Option Securities. In the event that the
Underwriter exercises its option provided in Section 2(b) hereof to
purchase all or any portion of the Option Securities, the representations
and warranties of GVI contained herein, the representations and warranties
of IMC contained in the Registration Agreement and the statements in any
certificates furnished by IMC or GVI hereunder shall be true and correct as
of each Date of Delivery and, at the relevant Date of Delivery, the Company
shall have received:
(A) IMC Officers' Certificate. A certificate, dated such Date of
-------------------------
Delivery, of the President or a Vice President of IMC and of the chief
financial or chief accounting officer of IMC confirming that the
certificate delivered at Closing Time pursuant to Section 5(b)(5)
hereof is true and correct as of such Date of Delivery.
(B) GVI Officers' Certificate. A certificate, dated such Date of
-------------------------
Delivery, of the President or a Vice President of GVI confirming that
the certificate delivered at
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<PAGE>
Closing Time pursuant to Section 5(b)(6) hereof is true and correct as
of such Date of Delivery.
(C) Opinion of Counsel for the Company. The favorable opinion, dated
----------------------------------
such Date of Delivery, of Brown & Wood, counsel for the Company, to
the same effect as the opinion required by Section 5(a)(17)(D) hereof.
(D) Opinion of Counsel for IMC. The favorable opinion, dated such
--------------------------
Date of Delivery, of Sidley & Austin, counsel for IMC, to the same
effect as the opinion required by Section 5(a)(17)(E) hereof.
(E) Opinion of Counsel for GVI. The favorable opinion, dated such
--------------------------
Date of Delivery, of Rosenberg & Liebentritt, P.C., counsel for GVI,
to the same effect as the opinion required by Section 5(a)(17)(F)
hereof.
(F) IMC Bring-down Comfort Letter. A Letter from Ernst & Young LLP,
-----------------------------
in form and substance satisfactory to the Company and dated such Date
of Delivery, substantially the same in form and substance as the
letter furnished to the Underwriter pursuant to Section 5(a)(17)(H)
hereof.
(c) Termination of Agreement. If any condition specified in subsection (a)
of this Section shall not have been fulfilled when and as required to be
fulfilled, this Agreement, or, in the case of any condition to the purchase of
Option Securities on a Date of Delivery which is after the Closing Time, the
obligations of the Underwriter to purchase the relevant Option Securities, may
be terminated by the Underwriter by notice to the Company and GVI at any time at
or prior to Closing Time or such Date of Delivery, as the case may be, 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. If any condition
specified in subsection (b) of this Section shall not have been fulfilled when
and as required to be fulfilled, this Agreement, or, in the case of any
condition to the sale of Option Securities on a Date of Delivery which is after
the Closing Time, the obligations of the Company to sell the relevant Option
Securities, may be terminated by the Company by notice to the Underwriter and
GVI at any time at or prior to Closing Time or such Date of Delivery, as the
case may be, 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 the Underwriter by the Company. The Company agrees
to indemnify and hold harmless the Underwriter and each person, if any, who
controls the 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
24
<PAGE>
fact contained in the ML&Co. 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 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 ML&Co. preliminary
prospectus or the ML&Co. 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, referred to under (i) above; provided
that (subject to Section 6(e) below) any such settlement is effected with
the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by the Underwriter),
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, referred to under (i) above, 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 Company by the
Underwriter expressly for use in the ML&Co. Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any ML&Co. preliminary prospectus or the ML&Co.
Prospectus (or any amendment or supplement thereto).
Insofar as this indemnity agreement may permit indemnification for
liabilities under the 1933 Act of any person who controls an underwriter within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act and who,
at the date of this Agreement, is a director or officer of the Company or
controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act, such indemnity agreement is subject to the undertaking of
the Company in the ML&Co. Registration Statement under Item 17 thereof.
(b) Indemnification of the Underwriter and the Company by GVI. GVI agrees
to indemnify and hold harmless (1) the Underwriter and each person, if any, who
controls the Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act and (2) the Company and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act, as follows:
25
<PAGE>
(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 IMC Registration
Statement (or any amendment thereto), or the omission or alleged omission
therefrom of a material fact required to be stated therein or 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
IMC preliminary prospectus or the IMC 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, referred to under (i) above; provided
that (subject to Section 6(e) below) any such settlement is effected with
the written consent of GVI; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by the Underwriter or the
Company, as the case may be), 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, referred to under (i) above,
to the extent that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall apply only with respect
to untrue statements or omissions, or alleged untrue statements or omissions,
made in the IMC Registration Statement (or any amendment thereto) or any IMC
preliminary prospectus or the IMC Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to IMC by GVI expressly for use in the IMC Registration Statement (or any
amendment thereto) or any IMC preliminary prospectus or the IMC Prospectus (or
any amendment or supplement thereto).
(c) Indemnification of the Company, Directors and Officers. The
Underwriter agrees to indemnify and hold harmless the Company, its directors,
each of its officers who signed the ML&Co. Registration Statement, and each
person, if any, who controls the Company 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 statements or
omissions, or alleged untrue statements or omissions, made in the ML&Co.
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any ML&Co.
preliminary prospectus or the ML&Co. Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by the Underwriter expressly for use in the ML&Co. Registration
Statement (or any
26
<PAGE>
amendment thereto) or such ML&Co. preliminary prospectus or the ML&Co.
Prospectus (or any amendment or supplement thereto).
(d) 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 which it may have otherwise than
on account of this indemnity agreement. In the case of parties indemnified
pursuant to Section 6(a) or clause (1) of Section 6(b) above, counsel to the
indemnified parties shall be selected by the Underwriter, and, in the case of
parties indemnified pursuant to clause (2) of Section 6(b) or Section 6(c)
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.
(e) 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 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) and 6(b)(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.
------------
(a) If the indemnification provided for in Sections 6(a) and 6(c) 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 the Company and the Underwriter 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 Company on the one hand and the
27
<PAGE>
Underwriter on the other hand from the offering of the 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 Company on the one hand and of the Underwriter 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 Company on the
one hand and the Underwriter on the other hand in connection with the offering
of the 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
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Underwriter, in
each case as set forth on the cover of the ML&Co. Prospectus, or, if Rule 434 is
used, the corresponding location on the ML&Co. Term Sheet, bear to the aggregate
initial public offering price of the Securities as set forth on such cover. The
relative fault of the Company on the one hand and the Underwriter 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 Company
or by the Underwriter and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
Notwithstanding the provisions of this Section 7(a), the Underwriter shall
not be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which the
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
The Company and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 7(a) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 7(a). The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 7(a) 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.
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(a), each person, if any, who controls the
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 the Underwriter, and
each director of the Company, each officer of the Company who signed the ML&Co.
Registration Statement, and each person, if any, who controls the Company 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.
28
<PAGE>
(b) If the indemnification provided for in Section 6(b) 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 GVI on the one hand and the Underwriter and the Company on the
other hand 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 GVI on the one hand and by the Underwriter and the Company on the
other hand from the offering of the 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 GVI on
the one hand and of the Underwriter and the Company 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 from the offering of
the Securities pursuant to this Agreement shall be deemed to be such that the
Underwriter and the Company shall be responsible for that portion of the
aggregate amount of such losses, liabilities, claims, damages and expenses
represented by the percentage that the total underwriting discount received by
the Underwriter, as set forth on the cover of the ML&Co. Prospectus, or, if Rule
434 is used, the corresponding location on the ML&Co. Term Sheet, bears to the
aggregate initial public offering price of the Securities as set forth on such
cover and GVI shall be responsible for the balance. The relative fault of GVI
on the one hand and the Underwriter and the Company 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 GVI on the one hand or
by the Underwriter or the Company on the other hand and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
Notwithstanding the provisions of this Section 7(b), the Underwriter and
the Company shall not be required to contribute any amount in excess of the
amount by which the total price at which the Securities underwritten by the
Underwriter and distributed to the public were offered to the public exceeds the
amount of any damages which the Underwriter and the Company have otherwise been
required to pay by reason of any such untrue or alleged untrue statement or
omission or alleged omission.
GVI, the Underwriter and the Company agree that it would not be just and
equitable if contribution pursuant to this Section 7(b) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 7(b). The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 7(b) 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.
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.
29
<PAGE>
For purposes of this Section 7(b), each person, if any, who controls the
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 the Underwriter, and
each person, if any, who controls the Company 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.
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 Company, IMC or GVI submitted pursuant hereto,
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Underwriter or controlling person, or
by or on behalf of the Company or GVI, and shall survive delivery of the
Securities to the Underwriter.
SECTION 9. Termination of Agreement.
------------------------
(a) Termination; General. The Underwriter may terminate this Agreement, by
notice to the Company and GVI, 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 ML&Co. Prospectus, 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 considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) 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 IMC Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of IMC and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, or (iii) if there has
occurred any material adverse change in the financial markets in the United
States, 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 Underwriter,
impracticable to market the Securities or to enforce contracts for the sale of
the Securities, or (iv) if trading in any securities of the Company or in the
IMC Common Stock has been suspended or 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
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 NASD or any other governmental authority, or
(v) if a banking moratorium has been declared by either federal or New York
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 hereof, and provided further that Sections 1, 6,
7 and 8 shall survive such termination and remain in full force and effect.
SECTION 10. 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
30
<PAGE>
form of telecommunication. Notices to the Underwriter shall be directed to it
at Sears Tower Building, Suite 5500, Chicago, Illinois 60606, attention of Todd
Kaplan, Director; notices to the Company shall be directed to it at 100 Church
St., 12th Floor, New York, New York 10007, attention of the Secretary, with a
copy to the Treasurer at World Financial Center, South Tower, New York, New York
10080-6105; and notices to GVI shall be directed to it at Two North Riverside
Plaza, Suite 1100, Chicago, Illinois 60606, attention of Gus Athas.
SECTION 11. Parties. This Agreement shall each inure to the benefit of and
-------
be binding upon each of the Underwriter, the Company and GVI 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 parties hereto 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 parties hereto 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 Securities from the Underwriter shall be deemed to
be a successor by reason merely of such purchase.
SECTION 12. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
----------------------
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 13. 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.
31
<PAGE>
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 Underwriter, the Company and GVI in accordance with its terms.
Very truly yours,
MERRILL LYNCH & CO., INC.
By_________________________________
Name:
Title:
GVI HOLDINGS, INC.
By_________________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By__________________________________
Authorized Signatory
32
<PAGE>
SCHEDULE A
MERRILL LYNCH & CO. INC
____% STRYPES/SM/ DUE ____, 2001
1. The initial public offering price of the Securities shall be
$__________ per STRYPES.
2. The purchase price for the Securities to be paid by the
Underwriter shall be $___________ per STRYPES, being an amount equal to the
initial public offering price set forth above less $_______ per STRYPES.
3. The "Threshold Appreciation Price" with respect to the Securities
shall be $________.
__________________________
/SM/ Service mark of Merrill Lynch & Co., Inc.
Sch A - 1
<PAGE>
[SCHEDULE B]
[List of persons and entities subject to lock-up]
Sch B - 1
<PAGE>
Exhibit A
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(a)(3)
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the ML&Co.
Prospectus and to enter into and perform its obligations under the
Underwriting Agreement.
(iii) 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 so to qualify or
to be in good standing would not result in a Material Adverse Effect.
(iv) 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 ML&Co. 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 the preemptive or similar rights of any
securityholder of MLPF&S.
(v) The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
(vi) The Indenture has been duly authorized, executed and delivered by
the Company and (assuming the due authorization, execution and delivery
thereof by the Trustee) constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except
as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
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).
A-1
<PAGE>
(vii) The Securities are in the form contemplated by the Indenture, have
been duly authorized by the Company and, assuming that the Securities have
been duly authenticated by the Trustee in the manner described in its
certificate delivered to you today (which fact such counsel need not determine
by an inspection of the Securities), the Securities have been duly executed,
issued and delivered by the Company and constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), 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), and will be entitled to the benefits of
the Indenture.
(viii) The Purchase Agreement has been duly authorized, executed and
delivered by the Company and (assuming the due authorization, execution and
delivery thereof by GVI) constitutes a valid and binding agreement of the
Company and the ML&Co. Subsidiary, enforceable against the Company and the
ML&Co. Subsidiary in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), 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).
(ix) The Indenture has been duly qualified under the 1939 Act.
(x) The Securities, the Indenture and the Purchase Agreement conform in
all material respects as to legal matters to the descriptions thereof
contained in the ML&Co. Prospectus.
(xi) The ML&Co. Registration Statement, including any ML&Co. Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act; any
required filing of the ML&Co. 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
ML&Co. Registration Statement or any ML&Co. 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 threatened by the Commission.
(xii) The ML&Co. Registration Statement, including any ML&Co. Rule
462(b) Registration Statement, the Rule 430A Information and the Rule 434
Information, as applicable, the ML&Co. Prospectus, excluding the documents
incorporated by reference therein, and each amendment or supplement to the
ML&Co. Registration Statement and ML&Co. Prospectus, excluding the documents
incorporated by reference therein, as of their respective effective or issue
dates (other than the financial statements and supporting schedules included
therein or omitted therefrom, and the Trustee's Statement of Eligibility on
Form T-1 (the "Form T-1"), as to which we express no opinion) complied as to
form in all material respects with the requirements of the 1933 Act and the
1933 Act Regulations.
A-2
<PAGE>
(xiii) The documents incorporated by reference in the ML&Co. Prospectus
(other than the financial statements and supporting schedules included therein
or omitted therefrom, as to which we express no opinion), when they became
effective or were filed with the Commission, as the case may be, complied as
to form in all material respects with the requirements of the 1933 Act or the
1934 Act, as applicable, and the rules and regulations of the Commission
thereunder.
(xiv) The IMC Registration Statement, including any IMC Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act; any
required filing of the IMC 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 IMC
Registration Statement or any IMC 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 threatened by the Commission.
(xv) The IMC Registration Statement, including any IMC Rule 462(b)
Registration Statement, the IMC Prospectus, excluding the documents
incorporated by reference therein, and each amendment or supplement to the IMC
Registration Statement and IMC Prospectus, excluding the documents
incorporated by reference therein, as of their respective effective or issue
dates (other than the financial statements and supporting schedules included
therein or omitted therefrom, as to which we express no opinion) complied as
to form in all material respects with the requirements of the 1933 Act and the
1933 Act Regulations.
(xvi) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than under the 1933 Act and
the 1933 Act Regulations, which have been obtained, or as may be required
under the securities or blue sky laws of the various states and except for the
qualification of the Indenture under the 1939 Act, as to which we express no
opinion) is necessary or required in connection with the due authorization,
execution and delivery of the Underwriting Agreement by the Company or the due
execution, delivery or performance of the Indenture or the Purchase Agreement
by the Company or for the offering, issuance, sale or delivery of the
Securities or for the due execution, delivery or performance of the Purchase
Agreement by the ML&Co. Subsidiary.
(xvii) The execution, delivery and performance of the Underwriting
Agreement, the Indenture, the Securities and the Purchase Agreement and the
consummation of the transactions contemplated in the Underwriting Agreement,
the Purchase Agreement and in the ML&Co. Registration Statement (including the
issuance and sale of the Securities and the delivery of shares of IMC Common
Stock pursuant thereto, the consummation of the Forward Purchase and the use
of the proceeds from the sale of the Securities as described in the ML&Co.
Prospectus under the caption "Supplemental Use of Proceeds") and compliance by
the Company with its obligations under the Underwriting Agreement, the
Indenture, the Securities and the Purchase Agreement and (B) the execution,
delivery and performance by the ML&Co. Subsidiary of the Purchase Agreement
and the consummation by the ML&Co. Subsidiary of the transactions contemplated
therein and compliance by the ML&Co. Subsidiary with its obligations under the
Purchase Agreement do not and will not, whether with or without the giving of
notice or lapse
A-3
<PAGE>
of time or both, conflict with or constitute a breach of, or default or
Repayment Event (as defined in Section 1(a)(xiii) of the Underwriting
Agreement) 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
pursuant to any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or any other agreement or instrument, known to us, to
which the Company or any subsidiary 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 (except for such conflicts, breaches or defaults or
liens, charges or encumbrances that would not have 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, known to us, of any
government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any subsidiary or any of their respective
properties, assets or operations.
We have participated in conferences with officers and representatives of
the Company and IMC, representatives of the independent accountants of the
Company and IMC, and the Underwriter at which the contents of the ML&Co.
Registration Statement and Prospectus, the contents of the IMC 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 said
Registration Statements and Prospectuses 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 (i) that the ML&Co. Registration
Statement or any amendment thereto, including the Rule 430A Information and
Rule 434 Information (if applicable), (except for financial statements and
schedules and other financial data included or incorporated by reference
therein or omitted therefrom and the Form T-1, as to which we make no
statement), at the time such ML&Co. Registration Statement or any such
amendment became effective or at the date of the Underwriting 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 ML&Co. Prospectus or any
amendment or supplement thereto (except for financial statements and schedules
and other financial data included or incorporated by reference therein or
omitted therefrom, as to which we make no statement), at the time the ML&Co.
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, or (ii) that the IMC Registration
Statement or any amendment thereto, (except for financial statements and
schedules and other financial data included or incorporated by reference
therein or omitted therefrom, as to which we make no statement), at the time
such IMC Registration Statement or any such amendment became effective,
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 IMC Prospectus or any amendment
or supplement thereto (except for financial statements and schedules and other
financial data included or incorporated by reference therein or omitted
therefrom, as to which we make no statement), at the time the IMC 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
A-4
<PAGE>
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.
A-5
<PAGE>
Exhibit B
FORM OF OPINION OF IMC'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(a)(4)
(i) IMC 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 IMC Prospectus and to enter into and
perform its obligations under the Registration Agreement 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 so to qualify or to be in good standing would not result in a Material
Adverse Effect.
(ii) The shares of issued and outstanding capital stock of IMC have been
duly authorized and validly issued and are fully paid and non-assessable; and
none of the outstanding shares of capital stock of IMC was issued in violation
of the preemptive or other similar rights of any securityholder of IMC.
(iii) Each Subsidiary has been duly incorporated and is validly existing
as a corporation in good 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 IMC 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 so to qualify or to be in good standing would not
result in a Material Adverse Effect; except as otherwise disclosed in the IMC
Registration Statement, all of the issued and outstanding capital stock of
each Subsidiary has been duly authorized and validly issued, is fully paid and
non-assessable and, to the best of our knowledge, is owned by IMC, 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 any Subsidiary was issued in violation of the preemptive or
similar rights of any securityholder of such Subsidiary.
(iv) The Registration Agreement has been duly authorized, executed and
delivered by IMC.
(v) The IMC Registration Statement, including any IMC Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act; any
required filing of the IMC 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
B-1
<PAGE>
effectiveness of the IMC Registration Statement or any IMC 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 threatened by the
Commission.
(vi) The IMC Registration Statement, including any IMC Rule 462(b)
Registration Statement, the IMC Prospectus, excluding the documents
incorporated by reference therein, and each amendment or supplement to the IMC
Registration Statement and IMC Prospectus, excluding the documents
incorporated by reference therein, as of their respective effective or issue
dates (other than the financial statements and supporting schedules included
therein or omitted therefrom, as to which we express no opinion) complied as
to form in all material respects with the requirements of the 1933 Act and the
1933 Act Regulations.
(vii) The documents incorporated by reference in the IMC Prospectus
(other than the financial statements and supporting schedules included therein
or omitted therefrom, as to which we express no opinion), when they were filed
with the Commission, complied as to form in all material respects with the
requirements of the 1934 Act and the rules and regulations of the Commission
thereunder.
(viii) The form of certificate used to evidence the IMC Common Stock
complies in all material respects with all applicable statutory requirements,
with any applicable requirements of the charter and by-laws of IMC and the
requirements of the New York Stock Exchange.
(ix) To the best of our knowledge, there is not pending or threatened any
action, suit, proceeding, inquiry or investigation, to which IMC or any
subsidiary is a party, or to which the property of IMC or any subsidiary is
subject, before or brought by any court or governmental agency or body,
domestic or foreign, which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to materially
and adversely affect the properties or assets thereof or the consummation of
the transactions contemplated in the Registration Agreement or the performance
by IMC of its obligations thereunder.
(x) The information in the Prospectus under
"___________________________," "_________________________" and "Description of
Capital Stock," and in the Registration Statement under Items 14 and 15, to
the extent that it constitutes matters of law, summaries of legal matters,
IMC's charter and bylaws or legal proceedings, or legal conclusions, has been
reviewed by us and is correct in all material respects.
(xi) To the best of our knowledge, there are no statutes or regulations,
and no legal or governmental proceedings pending or threatened to which IMC or
any of its subsidiaries is a party or to which any of the properties of IMC or
any of its subsidiaries is subject, that are required to be described in the
IMC Prospectus that are not described as required.
(xii) All descriptions in the IMC Registration Statement of contracts
and other documents to which IMC or its subsidiaries are a party are accurate
in all material respects; to the best of our knowledge, there are no
franchises, contracts, indentures, mortgages, loan agreements, notes, leases
or other instruments required to be described or referred to in the IMC
Registration Statement or to be filed as exhibits thereto other than those
described or referred to
B-2
<PAGE>
therein or filed or incorporated by reference as exhibits thereto, and the
descriptions thereof or references thereto are correct in all material
respects.
(xiii) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign, (other than under the 1933 Act and
the 1933 Act Regulations, which have been obtained, or as may be required
under the securities or blue sky laws of the various states, as to which we
express no opinion) is necessary or required in connection with the due
authorization, execution, and delivery by IMC of the Registration Agreement or
the performance by IMC of its obligations thereunder.
(xiv) The execution, delivery and performance of the Registration
Agreement and the consummation of the transactions contemplated in the
Registration Agreement and in the IMC Registration Statement and compliance by
IMC with its obligations under the Registration Agreement do not and will not,
whether with or without the giving of notice or lapse of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined in Section 1(a)(xi) of the Registration Agreement) under or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of IMC or any subsidiary pursuant to, any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease or
any other agreement or instrument, known to us, to which IMC or any subsidiary
is a party or by which it or any of them may be bound, or to which any of the
property or assets of IMC or any subsidiary is subject (except for such
conflicts, breaches or defaults or liens, charges or encumbrances that would
not have a Material Adverse Effect), nor will such action result in any
violation of the provisions of the charter or by-laws of IMC or any
subsidiary, or any applicable law, statute, rule, regulation, judgment, order,
writ or decree, known to us, of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over IMC or any subsidiary or
any of their respective properties, assets or operations.
[(xv) IMC is not an "investment company" or an entity "controlled" by an
"investment company," as such terms are defined in the 1940 Act.]
We have participated in conferences with officers and representatives of
IMC, representatives of the independent accountants of IMC, and the
Underwriter at which the contents of the IMC Registration Statement and the
IMC 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 IMC
Registration Statement and the IMC Prospectus and have made no independent
check or verification thereof except as described in paragraph (x) above, on
the basis of the foregoing, nothing has come to our attention that would lead
us to believe that the IMC Registration Statement or any amendment thereto
(except for financial statements and schedules and other financial data
included or incorporated by reference therein or omitted therefrom, as to
which we make no statement), at the time such IMC Registration Statement or
any such amendment became effective, 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
IMC Prospectus or any amendment or supplement thereto (except for financial
statements and schedules and other financial data included or incorporated by
reference therein or omitted therefrom, as to which
B-3
<PAGE>
we need make no statement), at the time the IMC 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 (A) as to matters
involving the application of laws other than the laws of the State of New
York, the corporate laws of the State of Delaware or the federal laws of the
United States of America, to the extent such counsel deems proper and
specified in such opinion, upon the opinion of other counsel whom such counsel
believes to be reliable, provided that such counsel furnishes copies thereof
to the Underwriter and states that such opinion of such local counsel is
satisfactory in form and substance and the Underwriter and counsel for the
Underwriter are entitled to rely thereon, and (B) as to matters of fact (but
not as to legal conclusions), to the extent they deem proper, on certificates
of responsible officers of IMC and public officials. As used in this Exhibit
B, the terms "Material Adverse Effect," "Subsidiary" and "Subsidiaries" shall
have the meanings ascribed to them in the Registration Agreement.]
B-4
<PAGE>
Exhibit C
FORM OF OPINION OF GVI'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(a)(5)
(i) GVI has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation and has corporate power and authority to enter into and perform
its obligations under the Underwriting Agreement and the Purchase Agreement.
(ii) GVI is the sole registered owner of and has all rights in and to at
least 6,510,268 shares of IMC Common Stock, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity (except such as
may be created under or pursuant to that certain [describe new loan
agreement]).
(iii) The Underwriting Agreement has been duly authorized, executed and
delivered by GVI.
(iv) The Purchase Agreement has been duly authorized, executed and
delivered by GVI and (assuming the due authorization, execution and delivery
thereof by the Company) constitutes a valid and binding agreement of GVI,
enforceable against GVI in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers),
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).
(v) The execution, delivery and performance by GVI of the Underwriting
Agreement and the Purchase Agreement and the consummation by GVI of the
transactions contemplated therein and compliance by GVI with its obligations
thereunder have been duly authorized by all necessary corporate action and do
not and will not, whether with or without the giving of notice or lapse of
time or both, conflict with or constitute a breach of, or default or GVI
Repayment Event under or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of GVI or any of its
subsidiaries pursuant to, any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or any other agreement or instrument,
known to us, to which GVI 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 GVI
or any of its subsidiaries is subject (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not, singly or in the
aggregate, materially and adversely affect the
C-1
<PAGE>
ability of GVI to perform its obligations under the Underwriting Agreement or
the Purchase Agreement), nor will such action result in any violation of the
provisions of the charter or by-laws of GVI or any of its subsidiaries, or any
applicable law, statute, rule, regulation, judgment, order, writ or decree,
known to us, of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over GVI or any of its subsidiaries or any of
their respective assets, properties or operations (except for such violations
that would not, singly or in the aggregate, materially and adversely affect
the ability of GVI to perform its obligations under the Underwriting Agreement
or the Purchase Agreement).
(vi) To the best of our knowledge, no filing with, or authorization,
approval, consent, license, order, registration, qualification or decree of,
any court or governmental authority or agency (other than under the 1933 Act
and the 1933 Act Regulations, which have been obtained, or as may be required
under the securities or blue sky laws of the various states, as to which we
need express no opinion) is necessary or required in connection with the due
authorization, execution and delivery by GVI of the Underwriting Agreement or
the Purchase Agreement or the performance by GVI of its obligations
thereunder.
We have participated in conferences with officers and representatives of
GVI, IMC and the Underwriter at which the contents of the IMC Registration
Statement and the IMC Prospectus relating to GVI were discussed and, although
we are not passing upon or assuming responsibility for the accuracy,
completeness or fairness of the statements contained in the IMC Registration
Statement and the IMC Prospectus relating to GVI 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 IMC Registration
Statement or any amendment thereto (only with respect to the information
included therein or omitted therefrom relating to GVI), at the time such IMC
Registration Statement or any such amendment became effective, 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 IMC Prospectus or any amendment or supplement thereto
(only with respect to the information included therein or omitted therefrom
relating to GVI), at the time the IMC 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 (A) as to matters
involving the application of laws other than [the laws of the State of New
York,] the laws of the State of Illinois, the corporate laws of the State of
Delaware or the federal laws of the United States of America, to the extent
such counsel deems proper and specified in such opinion, upon the opinion of
other counsel whom such counsel believes to be reliable, provided that such
counsel furnishes copies thereof to the Underwriter and states that such
opinion of such local counsel is satisfactory in form and substance and the
Underwriter and counsel for the Underwriter are entitled to rely thereon, and
(B) as to matters of fact (but not as to legal conclusions), to the extent
they deem proper, on certificates of responsible officers of GVI and public
officials.]
C-2
<PAGE>
[FORM OF LOCK-UP FROM DIRECTORS, OFFICERS OR OTHER
STOCKHOLDERS PURSUANT TO SECTION 5(a)(16)]
Exhibit D
___________, 1996
Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
North Tower
World Financial Center
New York, New York 10281-1209
Re: Proposed Public Offering of STRYPES by Merrill Lynch & Co. Inc.
---------------------------------------------------------------
Ladies and Gentlemen:
The undersigned, a stockholder [and an officer and/or director] of IMC Global
Inc., a Delaware corporation (the "Company"), understands that Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch")
proposes to enter into an Underwriting Agreement (the "Underwriting Agreement")
with Merrill Lynch & Co., Inc. ("ML&Co.") and GVI Holdings, Inc. providing for
the public offering of ML&Co.'s Structured Yield Product Exchangeable for
Stock/sm/, __% STRYPES/sm/ due _________, 2001, payable at maturity with shares
of Common Stock, par value $1.00 per share (the "IMC Common Stock"), of the
Company. For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the undersigned agrees with Merrill Lynch that,
during a period of [90] days from the date of the Underwriting Agreement, the
undersigned will not, without the prior written consent of Merrill Lynch, offer,
sell, contract to sell or otherwise dispose of, directly or indirectly, any
shares of IMC Common Stock or any securities convertible into, exchangeable for
or repayable with shares of IMC Common Stock, whether now owned or hereafter
acquired by the undersigned or with respect to which the undersigned has or
hereafter acquires the power of disposition, or cause to be filed any
registration statement under the Securities Act of 1933, as amended, with
respect to any of the foregoing; provided that, notwithstanding the foregoing,
during such 90-day period the undersigned may sell, without the prior written
consent of Merrill Lynch, the greater of (i) 25,000 shares of IMC Common Stock
and (ii) 25% of the total number of shares of IMC Common Stock which the
undersigned either owns or has the power of disposition as of the date hereof.
Very truly yours,
Signature:
Print Name:
D-1
<PAGE>
EXHIBIT 1(b)
DRAFT
6/13/96
______________________________________________________________________________
______________________________________________________________________________
IMC GLOBAL INC.
(a Delaware corporation)
REGISTRATION AGREEMENT
----------------------
Dated: __________, 1996
______________________________________________________________________________
______________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
REGISTRATION AGREEMENT......................................................... 1
SECTION 1. Representations and Warranties..................... 3
(a) Representations and Warranties by the Company...... 3
(i) Compliance with Registration Requirements.......... 3
(ii) Incorporated Documents............................. 4
(iii) Independent Accountants............................ 4
(iv) Financial Statements............................... 4
(v) No Material Adverse Change in Business............. 4
(vi) Good Standing of the Company....................... 5
(vii) Good Standing of Subsidiaries...................... 5
(viii) Capitalization..................................... 5
(ix) Description of Common Stock........................ 5
(x) Authorization of Agreement......................... 5
(xi) Absence of Defaults and Conflicts.................. 6
(xii) Absence of Labor Dispute........................... 6
(xiii) Absence of Proceedings............................. 6
(xiv) Accuracy of Exhibits............................... 7
(xv) Possession of Intellectual Property................ 7
(xvi) Absence of Further Requirements.................... 7
(xvii) Possession of Licenses and Permits................. 7
(xviii) Title to Property.................................. 7
(xix) Compliance with Cuba Act........................... 8
(xx) Investment Company Act............................. 8
(xxi) Environmental Laws................................. 8
(b) Officer's Certificates............................. 8
SECTION 2. Covenants of the Company........................... 9
(a) Compliance with Securities Regulations and
Commission Requests................................ 9
(b) Filing of Amendments............................... 9
(c) Delivery of IMC Registration Statements............ 9
(d) Delivery of IMC Prospectuses....................... 9
(e) Continued Compliance with Securities Laws.......... 10
(f) Blue Sky Qualifications............................ 10
(g) Rule 158........................................... 10
(h) Restriction on Sale of Securities.................. 11
(i) Reporting Requirements............................. 11
SECTION 3. Payment of Expenses................................ 11
(a) Expenses........................................... 11
SECTION 4. Indemnification.................................... 11
(a) Indemnification of Underwriter and ML&Co........... 11
(b) Indemnification of Company, Directors, Officers.... 12
(c) Actions against Parties; Notification.............. 12
(d) Settlement without Consent if Failure to Reimburse. 13
SECTION 5. Contribution....................................... 13
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 6. Representations, Warranties and Agreements to
Survive Delivery.................................. 15
SECTION 7. Termination....................................... 15
SECTION 8. Notices........................................... 15
SECTION 9. Parties........................................... 15
SECTION 10. GOVERNING LAW..................................... 15
SECTION 11. Effect of Headings................................ 15
</TABLE>
ii
<PAGE>
IMC GLOBAL INC.
(a Delaware corporation)
REGISTRATION AGREEMENT
----------------------
_________, 1996
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
MERRILL LYNCH & CO., INC.
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
IMC Global Inc., a Delaware corporation (the "Company"), confirms its
agreement with Merrill Lynch & Co., Inc., a Delaware corporation ("ML&Co."), and
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated (the
"Underwriter"), in connection with the proposed issue and sale by ML&Co. to the
Underwriter, pursuant to an underwriting agreement, dated the date hereof (the
"Underwriting Agreement"), among ML&Co., GVI Holdings, Inc., a Delaware
corporation ("GVI"), and the Underwriter, of an aggregate of 5,661,119 of
ML&Co.'s Structured Yield Product Exchangeable for Stock/SM/, ___% STRYPES/SM/
Due ________, 2001 (each, a "STRYPES"), payable at maturity by delivery of
shares of common stock, par value $1.00 per share (the "IMC Common Stock"), of
the Company, and, at the option of the Underwriter, all or any part of 849,167
additional STRYPES to cover over-allotments, if any.
_______________
/SM/ Service mark of Merrill Lynch & Co., Inc.
1
<PAGE>
The aforesaid 5,661,119 STRYPES (the "Initial Securities") to be purchased by
the Underwriter and all or any part of the 849,167 STRYPES subject to the option
described in Section 2(b) of the Underwriting Agreement (the "Option
Securities") are hereinafter called, collectively, the "Securities."
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to them in the Underwriting Agreement.
The Company understands that the Underwriter proposes to make a public
offering of the Securities as soon as the Underwriter deems advisable after this
Agreement and the Underwriting Agreement have been executed and delivered. The
Company acknowledges that the execution and delivery of this Agreement is a
condition to the execution and delivery of the Underwriting Agreement by the
Underwriter and ML&Co. and that, in consideration of the execution and delivery
of the Underwriting Agreement by the Underwriter and ML&Co., the Company is
willing to make the representations, warranties and covenants herein contained.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333- ) covering the
registration under the Securities Act of 1933, as amended (the "1933 Act"), of
the shares of IMC Common Stock deliverable upon payment and discharge of the
Securities, including the related preliminary prospectus or prospectuses. Each
prospectus used before such registration statement became effective is herein
called an "IMC preliminary prospectus." Such registration statement, including
the exhibits thereto, the 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, is herein called the "IMC Registration
Statement." Any registration statement filed pursuant to Rule 462(b) of the
rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations") is herein referred to as the "IMC Rule 462(b) Registration
Statement," and after such filing the term "IMC Registration Statement" shall
include the IMC 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 Underwriter for
use in connection with the offering of the Securities is herein called the "IMC
Prospectus." For purposes of this Agreement, all references to the IMC
Registration Statement, any IMC preliminary prospectus, the IMC Prospectus 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 statements and schedules and
other information which are "contained," "included" or "stated" in the IMC
Registration Statement, any IMC preliminary prospectus or the IMC Prospectus (or
other references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which are incorporated
by reference in the IMC Registration Statement, any IMC preliminary prospectus
or the IMC Prospectus, as the case may be; and all references in this Agreement
to amendments or supplements to the IMC Registration Statement, any IMC
preliminary prospectus or the IMC Prospectus shall be deemed to mean and include
the filing of any document under the Securities Exchange Act of 1934, as amended
(the "1934 Act"), which is incorporated by reference in the IMC Registration
Statement, such IMC preliminary prospectus or the IMC Prospectus, as the case
may be.
2
<PAGE>
Prior to the closing under the Underwriting Agreement, ML&Co., Merrill
Lynch Mortgage Capital Inc., a wholly-owned subsidiary of ML&Co., and GVI will
enter into a contract, pursuant to which GVI will agree to sell and ML&Co. will
agree to purchase, immediately prior to the maturity date of the Securities, the
Maturity Consideration (as defined in the Supplemental Indenture) required by
ML&Co. to pay and discharge all of the Securities at maturity as described in
the ML&Co. Prospectus, subject to GVI's right to require that the obligations
thereunder be satisfied by a cash payment based on the value of such Maturity
Consideration.
SECTION 1. Representations and Warranties.
------------------------------
(a) Representations and Warranties by the Company. The Company represents
and warrants to each of the Underwriter and to ML&Co. as of the date hereof, as
of the Closing Time referred to in Section 2(c) of the Underwriting Agreement,
and as of each Date of Delivery (if any) referred to in Section 2(b) of the
Underwriting Agreement, and agrees with each of the Underwriter and ML&Co. as
follows:
(i) Compliance with Registration Requirements. The Company meets the
-----------------------------------------
requirements for the use of Form S-3 under the 1933 Act. Each of the IMC
Registration Statement and any IMC Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the IMC Registration Statement or any IMC 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 IMC Registration Statement, any IMC Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery), the IMC Registration Statement, the
IMC 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 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. Neither the IMC Prospectus nor any
amendments or supplements thereto, at the time the IMC Prospectus or any
such amendment or supplement was issued and at the Closing Time (and, if
any Option Securities are purchased, at the Date of Delivery), included or
will include an untrue statement of a material fact or omitted or will 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. The representations and warranties in this subsection shall
not apply to statements in or omissions from the IMC Registration Statement
or IMC Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by the Underwriter, ML&Co. or GVI
expressly for use in the IMC Registration Statement or IMC Prospectus.
Each IMC preliminary prospectus and the IMC Prospectus filed as part
of the IMC Registration Statement as originally filed or as part of any
amendment thereto, or filed
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pursuant to Rule 424 under the 1933 Act, complied when so filed in all
material respects with the 1933 Act Regulations and, if applicable, each
IMC preliminary prospectus and the IMC Prospectus delivered to the
Underwriter for use in connection with the offering of the Securities 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 IMC Registration Statement and the IMC
Prospectus, when they became effective or 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 IMC Prospectus, at the
time the IMC Registration Statement and any post-effective amendments
thereto became effective, at the time the IMC Prospectus was issued and at
the Closing Time (and if any Option Securities are purchased, at the Date
of Delivery), 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 supporting schedules of the Company and its
subsidiaries, and of The Vigoro Corporation and its subsidiaries
("Vigoro"), included in the IMC Registration Statement are independent
public accountants as required by the 1933 Act and the 1933 Act
Regulations.
(iv) Financial Statements. The financial statements of the Company
--------------------
(including the financial statements giving retroactive effect to the merger
of the Company and Vigoro) included in the IMC Registration Statement and
the IMC 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 statement of operations,
stockholders' equity and cash flows of the Company and its consolidated
subsidiaries for the periods specified; said financial statements have been
prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved.
The financial statements of Vigoro included in the IMC Registration
Statement and the IMC Prospectus, together with the related notes, present
fairly the financial position of Vigoro and its consolidated subsidiaries
at the dates indicated and the statement of operations, stockholders'
equity and cash flows of Vigoro and its consolidated subsidiaries for the
periods specified; said financial statements have been prepared in
conformity with GAAP applied on a consistent basis throughout the periods
involved. The supporting schedules, if any, included in the IMC
Registration Statement present fairly in accordance with GAAP the
information required to be stated therein. The selected consolidated
financial information and the summary selected consolidated financial
information included in the IMC Prospectus present fairly the
information shown therein and have been compiled on a basis consistent with
that of the audited financial statements included in the IMC Registration
Statement. The pro forma financial statements and the other pro forma
financial information of the Company and its subsidiaries and the related
notes thereto included in the IMC Registration Statement
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and the IMC Prospectus present fairly in accordance with GAAP the
information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements and have been properly compiled on the bases described therein,
and the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions
and circumstances referred to therein.
(v) No Material Adverse Change in Business. Since the respective
--------------------------------------
dates as of which information is given in the IMC Registration Statement
and the IMC Prospectus, except as otherwise stated therein or contemplated
thereby, (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, which are material with respect to the
Company and its subsidiaries considered as one enterprise, other than those
in the ordinary course of business, and (C) except for regular quarterly
dividends on its outstanding common 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 IMC Prospectus and to enter into and perform its
obligations under this 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 so to qualify or to be in good standing would not
result in a Material Adverse Effect.
(vii) Good Standing of Subsidiaries. Each "significant subsidiary"
-----------------------------
of the Company (as such term is defined in Rule 1-02 of Regulation S-X)
(each a "Subsidiary" and, collectively, the "Subsidiaries") has been duly
organized and is validly existing as a corporation in good 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 IMC 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 so to qualify or to be in good standing would not result
in a Material Adverse Effect; except as otherwise disclosed in the IMC
Registration Statement, all of the issued and outstanding capital stock of
each such Subsidiary has been duly authorized and validly issued, 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; none of the outstanding shares of
capital stock of any Subsidiary was issued in violation of the preemptive
or similar rights of any securityholder of such Subsidiary. The only
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subsidiaries of the Company are [(A)] the subsidiaries listed on Schedule A
hereto [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].
(viii) Capitalization. The shares of outstanding capital stock of
--------------
the Company have been duly authorized and validly issued and are fully paid
and non-assessable; none of the outstanding shares of capital stock of the
Company was issued in violation of the preemptive or other similar rights
of any securityholder of the Company.
(ix) Description of Common Stock. The IMC Common Stock conforms in
---------------------------
all material respects to the description thereof contained in the IMC
Prospectus and such description conforms to the rights set forth in the
instruments defining the same.
(x) Authorization of Agreement. This Agreement has been duly
--------------------------
authorized, executed and delivered by the Company.
(xi) Absence of Defaults and Conflicts. Neither the Company nor any
---------------------------------
of its subsidiaries is in violation of its charter or bylaws 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 this
Agreement and the consummation of the transactions contemplated herein and
compliance by the Company with its obligations hereunder have been duly
authorized by all necessary corporate action and 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 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 pursuant to, the Agreements and Instruments (except for such
conflicts, breaches or defaults or 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 bylaws of the Company
or any subsidiary or, to the best of the Company's knowledge, 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
subsidiary (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 subsidiary.
(xii) Absence of Labor Dispute. No labor dispute with the employees of
------------------------
the Company or any subsidiary exists or, to the knowledge of the Company,
is imminent, and the Company is not aware of any existing or imminent labor
disturbance by the employees
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of any of its or any subsidiary's principal suppliers, manufacturers,
customers or contractors, which, in either case, may reasonably be expected
to result in a Material Adverse Effect.
(xiii) Absence of Proceedings. There is no 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
subsidiary, which is required to be disclosed in the IMC Registration
Statement (other than as disclosed therein), or which might, individually
or in the aggregate, reasonably be expected to result in a Material Adverse
Effect, or which might, individually or in the aggregate, reasonably be
expected to materially and adversely affect the properties or assets
thereof or the performance by the Company of its obligations hereunder; the
aggregate of all pending legal or governmental proceedings to which the
Company or any subsidiary is a party or of which any of their respective
property or assets is the subject which are not described in the IMC
Registration Statement, including ordinary routine litigation incidental to
the business, could not reasonably be expected to result in a Material
Adverse Effect.
(xiv) Accuracy of Exhibits. There are no contracts or documents
--------------------
which are required to be described in the IMC Registration Statement, the
IMC Prospectus or the documents incorporated by reference therein or to be
filed as exhibits thereto which have not been so described or filed as
required.
(xv) Possession of Intellectual Property. The Company and its
-----------------------------------
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the business
now operated by them, 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.
(xvi) 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 hereunder, except such as has been already obtained or as may
be required under the 1933 Act or the 1933 Act Regulations or state
securities laws.
(xvii) 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
7
<PAGE>
regulatory agencies or bodies necessary to conduct the business now
operated by them; the 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 when 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.
(xviii) Title to Property. The Company and its subsidiaries have
-----------------
good and marketable title to all material real property owned by the
Company and its subsidiaries and good title to all material personal
property 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 IMC Prospectus or (b) do
not, singly or in the aggregate, materially affect the value of such
property and do not materially interfere with the use made and proposed to
be made of such property by the Company or any of its subsidiaries; 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 IMC Prospectus,
are in full force and 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 to the continued possession of the
leased or subleased premises under any such lease or sublease.
(xix) 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
(collectively, the "Cuba Act") or is exempt therefrom.
(xx) Investment Company Act. The Company is not an "investment
----------------------
company" or an entity "controlled" by an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended.
(xxi) Environmental Laws. Except as described in the IMC
------------------
Registration Statement and except as would not, singly or in the aggregate,
result in a Material Adverse Effect, (A) neither the Company nor any of its
subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common
law or any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface
or subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of
8
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chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials
(collectively, "Environmental Laws"), (B) the Company and its subsidiaries
have all permits, authorizations and approvals required under any
applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or threatened administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company or any of its
subsidiaries and (D) there are no events or circumstances that might
reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any of its
subsidiaries relating to Hazardous Materials or any Environmental Laws.
(b) Officer's Certificates. Any certificate signed by any officer of the
Company and delivered to the Underwriter or counsel for the Underwriter or to
ML&Co. or counsel for ML&Co. in connection with the offering of the Securities
shall be deemed a representation and warranty by the Company to the Underwriter
and to ML&Co., as the case may be, as to the matters covered thereby.
SECTION 2. Covenants of the Company. The Company covenants with the
------------------------
Underwriter and with ML&Co. as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 2(b), will notify the Underwriter and ML&Co.
immediately, and confirm the notice in writing, (i) when any post-effective
amendment to the IMC Registration Statement shall become effective, or any
supplement to the IMC Prospectus or any amended IMC 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 IMC Registration Statement or
any amendment or supplement to the IMC Prospectus or for additional information,
and (iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the IMC Registration Statement or of any order preventing or
suspending the use of any IMC preliminary prospectus, or of the suspension of
the qualification of the shares of IMC Common Stock deliverable upon payment and
discharge of the Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes. The
Company will promptly effect the filings necessary pursuant to Rule 424(b) and
will take such steps as it deems 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. The Company will give the Underwriter and ML&Co.
notice of its intention to file or prepare any amendment to the IMC Registration
Statement (including any filing under Rule 462(b)) or any amendment, supplement
or revision to either the
9
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prospectus included in the IMC Registration Statement at the time it became
effective or to the IMC Prospectus, whether pursuant to the 1933 Act, the 1934
Act or otherwise, will furnish the Underwriter and ML&Co. 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
Underwriter or counsel for the Underwriter or ML&Co. or counsel for ML&Co. shall
reasonably object.
(c) Delivery of IMC Registration Statements. The Company has furnished or
will deliver to the Underwriter, counsel for the Underwriter, ML&Co. and counsel
for ML&Co., without charge, signed copies of the IMC 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 signed copies of all
consents and certificates of experts. If applicable, the copies of the IMC
Registration Statement and each amendment thereto furnished to the Underwriter
and ML&Co. 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.
(d) Delivery of IMC Prospectuses. The Company has delivered to the
Underwriter, without charge, as many copies of each IMC preliminary prospectus
as the Underwriter reasonably requested, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to the Underwriter, without charge, during the period when the IMC
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such
number of copies of the IMC Prospectus (as amended or supplemented) as the
Underwriter may reasonably request. If applicable, the IMC Prospectus and any
amendments or supplements thereto furnished to the Underwriter and ML&Co. 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 Company will comply
with the 1933 Act and the 1933 Act Regulations so as to permit the completion of
the distribution of the Securities as contemplated in the Underwriting
Agreement. If at any time when a prospectus is required by the 1933 Act to be
delivered in connection with sales of the Securities, any event shall occur or
condition shall exist as a result of which it is necessary, in the opinion of
counsel for the Underwriter, counsel for ML&Co. or counsel for the Company, to
amend the IMC Registration Statement or amend or supplement the IMC Prospectus
in order that the IMC 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 any such counsel, at any such time to amend the IMC Registration
Statement or amend or supplement the IMC 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 2(b), such
amendment or supplement as may be necessary to correct such statement or
omission or to make the IMC Registration Statement or the IMC Prospectus comply
with such requirements, and the Company will furnish to the Underwriter and
ML&Co. such number of copies of such amendment or supplement as the Underwriter
and ML&Co. may reasonably request.
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(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Underwriter, to qualify the shares of IMC Common Stock
deliverable upon payment and discharge of the Securities for offering and sale
under the applicable securities laws of such states and other jurisdictions of
the United States as the Underwriter may designate and to maintain such
qualifications in effect through the maturity date of the Securities; 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 shares of IMC
Common Stock deliverable upon payment and discharge of the 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 through the maturity date of the Securities.
(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) Restriction on Sale of Securities. During a period of 90 days from the
date of the IMC Prospectus, the Company will not, without the prior written
consent of the Underwriter, (x) offer, sell, contract to sell or otherwise
dispose of, directly or indirectly, any shares of IMC Common Stock, securities
convertible into, exchangeable for or repayable with shares of IMC Common Stock,
or rights or warrants to acquire shares of IMC Common Stock or (y) file any
registration statement under the 1933 Act with respect to any shares of IMC
Common Stock, securities convertible into, exchangeable for or repayable with
shares of IMC Common Stock, or rights or warrants to acquire shares of IMC
Common Stock; provided, however, that nothing contained in this subsection (h)
shall restrict or otherwise limit the Company from (i) calling for redemption in
accordance with their terms any securities convertible into IMC Common Stock,
(ii) issuing shares upon the exercise of employee or director stock options
outstanding at the date of this Agreement, (iii) issuing shares upon the
exercise of rights granted as of the date of this Agreement under the Company's
shareholders' rights plan, (iv) issuing shares in connection with acquisitions
of privately-held companies, provided that the number of shares so issued does
--------
not exceed, in the aggregate, __________ (subject to appropriate adjustment for
stock splits, reverse stock splits and stock dividends) and that upon issuance
all such shares constitute "restricted securities" as defined in Rule 144(a)
under the 1933 Act, or (v) offering shares in connection with any registration
statement on Form S-8.
(i) Reporting Requirements. The Company, during the period when the IMC
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 rules and
regulations of the Commission thereunder.
SECTION 3. 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 IMC Registration
Statement (including financial statements and exhibits) as originally filed and
of each amendment thereto, (ii) the fees and disbursements
11
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of the Company's counsel, accountants and other advisors, (iii) the
qualification of the shares of IMC Common Stock deliverable upon payment and
discharge of the Securities under securities laws in accordance with the
provisions of Section 2(f) hereof, including filing fees and the reasonable fees
and disbursements of counsel for ML&Co. in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplement
thereto, (iv) the printing and delivery to the Underwriter of copies of each IMC
Preliminary Prospectus and of the IMC Prospectus and any amendments or
supplements thereto, (v) the preparation, printing and delivery to the
Underwriter of copies of the Blue Sky Survey and any supplement thereto and (vi)
the filing fees incident to, and the reasonable fees and disbursements of
counsel to the Underwriter in connection with, the review by the National
Association of Securities Dealers, Inc. of the terms of the offering and sale of
the shares of IMC Common Stock deliverable upon payment and discharge of the
Securities.
SECTION 4. Indemnification.
---------------
(a) Indemnification of Underwriter and ML&Co. The Company agrees to
indemnify and hold harmless (1) the Underwriter and each person, if any, who
controls the Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act and (2) ML&Co. and each person, if any, who controls
ML&Co. 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 IMC Registration
Statement (or any amendment thereto) or the omission or alleged omission
therefrom of a material fact required to be stated therein or 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
IMC preliminary prospectus or the IMC 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, referred to under (i) above; provided
that (subject to Section 4(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
the fees and disbursements of counsel chosen by the Underwriter or ML&Co.,
as the case may be), 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,
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<PAGE>
or any such alleged untrue statement or omission, referred to under (i)
above, 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 Company by the
Underwriter, ML&Co. or GVI expressly for use in the IMC Registration Statement
(or any amendment thereto), or any IMC preliminary prospectus or the IMC
Prospectus (or any amendment or supplement thereto).
(b) Indemnification of Company, Directors, Officers. The Underwriter
agrees to indemnify and hold harmless the Company, its directors, each of its
officers who signed the IMC Registration Statement, and each person, if any, who
controls the Company 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 statements or omissions, or alleged
untrue statements or omissions, made in the IMC Registration Statement (or any
amendment thereto), or any IMC preliminary prospectus or the IMC Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by the Underwriter expressly for
use in the IMC Registration Statement (or any amendment thereto) or such IMC
preliminary prospectus or the IMC 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 clause (1) of Section
4(a) above, counsel to the indemnified parties shall be selected by the
Underwriter; in the case of parties indemnified pursuant to clause (2) of
Section 4(a), counsel to the indemnified parties shall be selected by ML&Co.;
and, in the case of parties indemnified pursuant to Section 4(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 4 or Section
5 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
13
<PAGE>
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.
(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 fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 4(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 5. Contribution. If the indemnification provided for in Section 4
------------
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 the Company on the one hand and the
Underwriter and ML&Co. on the other hand 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 Company on the one hand and the
Underwriter and ML&Co. on the other hand from the offering of the Securities 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
Company on the one hand and of the Underwriter and ML&Co. 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 from the offering of the Securities shall be
deemed to be such that the Underwriter and ML&Co. shall be responsible for that
portion of the aggregate amount of such losses, liabilities, claims, damages and
expenses represented by the percentage that the total underwriting discount
received by the Underwriter, as set forth on the cover of the ML&Co. Prospectus,
or, if Rule 434 is used, the corresponding location on the ML&Co. Term Sheet,
bears to the aggregate initial public offering price of the Securities as set
forth on such cover and the Company shall be responsible for the balance.
The relative fault of the Company on the one hand and the Underwriter and
ML&Co. 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 Company or GVI on the one hand or by the Underwriter or ML&Co.
on the other hand and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
Notwithstanding the provisions of this Section 5, the Underwriter and
ML&Co. shall not be required to contribute any amount in excess of the amount by
which the total price at which the Securities underwritten by the Underwriter
and distributed to the public were offered to the
14
<PAGE>
public exceeds the amount of any damages which the Underwriter and ML&Co. have
otherwise been required to pay by reason of any such untrue or alleged untrue
statement or omission or alleged omission.
The Company, the Underwriter and ML&Co. agree that it would not be just and
equitable if contribution pursuant to this Section 5 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 5. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 5 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.
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 5, 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 the Underwriter; each
person, if any, who controls ML&Co. within the meaning of Section 15 of the 1933
Act shall have the same rights to contribution as ML&Co.; and each director of
the Company, each officer of the Company who signed the IMC Registration
Statement, and each person, if any, who controls the Company 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.
SECTION 6. Representations, Warranties and Agreements to Survive Delivery.
--------------------------------------------------------------
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company submitted pursuant to the Underwriting
Agreement, shall remain operative and in full force and effect, regardless of
any investigation made by or on behalf of the Underwriter or controlling person
thereof, or by or on behalf of ML&Co. or controlling person thereof or by or on
behalf of the Company, and shall survive delivery of the Securities to the
Underwriter pursuant to the Underwriting Agreement.
SECTION 7. Termination. In the event that the Underwriter terminates the
-----------
Underwriting Agreement as provided in Section 9 thereof, this Agreement shall
simultaneously terminate, except that the provisions of Section 3, the indemnity
agreements set forth in Section 4, the contribution provisions set forth in
Section 5, and the provisions of Section 6 shall remain in effect.
SECTION 8. 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
Underwriter shall be directed to it at Sears Tower Building, Suite 5500,
Chicago, Illinois 60606, attention of Todd Kaplan, Director; notices to ML&Co.
shall be directed to it at 100 Church St., 12th Floor, New York, New York 10007,
15
<PAGE>
attention of the Secretary, with a copy to the Treasurer at World Financial
Tower, South Tower, New York, New York 10080-6105; notices to the Company shall
be directed to it at 2100 Sanders Road, Northbrook, Illinois 60062, attention of
Corporate Secretary.
SECTION 9. Parties. This Agreement shall inure to the benefit of and be
-------
binding upon each of the Underwriter, ML&Co. and the Company 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 Underwriter, ML&Co. and the Company and their respective successors and
the controlling persons and officers and directors referred to in Sections 4 and
5 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 Underwriter, ML&Co. and the
Company 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 Securities
from the Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 11. 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.
16
<PAGE>
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 between
the Underwriter, ML&Co. and the Company in accordance with its terms.
Very truly yours,
IMC GLOBAL INC.
By______________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By ______________________________________
Authorized Signatory
MERRILL LYNCH & CO., INC.
By ______________________________________
Name:
Title:
17
<PAGE>
EXHIBIT 4(b)
MERRILL LYNCH & CO., INC.
TO
CHEMICAL BANK,
as Trustee
__________________________________
TENTH SUPPLEMENTAL INDENTURE
Dated as of ___________, 1996
__________________________________
Creating a series of Securities designated
Structured Yield Product Exchangeable for Stock/SM/
__% STRYPES/SM/ Due __________, 2001
Supplemental to Indenture
Dated as of April 1, 1983,
as Amended
<PAGE>
TABLE OF CONTENTS
-----------------
ARTICLE ONE
DEFINITIONS
SECTION 101. Definitions................................ 2
-----------
"Business Day"..................................... 2
"Closing Price".................................... 2
"Company".......................................... 3
"Debt Instrument".................................. 3
"Distributed Assets"............................... 3
"Extraordinary Cash Dividend"...................... 3
"Forward Contract"................................. 3
"IMC Global"....................................... 3
"IMC Common Stock"................................. 4
"Indenture"........................................ 4
"Initial Price".................................... 4
"Interest Payment Date"............................ 4
"Maturity Consideration"........................... 4
"Maturity Date".................................... 4
"NYSE"............................................. 4
"Principal Indenture".............................. 4
"Reference Property"............................... 4
"Reference Property Value"......................... 4
"Reference Security"............................... 4
"Regular Record Date".............................. 5
"Reorganization Event"............................. 5
"Securities"....................................... 5
"STRYPES".......................................... 5
"STRYPES Certificates"............................. 5
"Supplemental Indenture"........................... 5
"Threshold Appreciation Price"..................... 5
"Trading Day"...................................... 5
"Trustee".......................................... 5
"Unit"............................................. 5
ARTICLE TWO
THE STRYPES
SECTION 201. Description of the STRYPES................ 5
--------------------------
SECTION 202. Form of STRYPES........................... 6
---------------
i
<PAGE>
ARTICLE THREE
PAYMENT AND DISCHARGE OF STRYPES
SECTION 301. Payment and Discharge on the Maturity
-------------------------------------
Date................................... 7
----
SECTION 302. No Fractional Units.................... 7
-------------------
SECTION 303. Adjustment of Reference Property....... 8
--------------------------------
SECTION 304. Payment and Discharge With Cash........ 10
-------------------------------
SECTION 305. Notice of Adjustments and Certain Other
---------------------------------------
Events................................. 11
------
SECTION 306. Maturity Consideration Free and Clear.. 12
-------------------------------------
SECTION 307. Cancellation of STRYPES Certificates... 13
------------------------------------
ARTICLE FOUR
TAXES
SECTION 401. Documentary, Stamp, Transfer or Similar
---------------------------------------
Taxes................................. 13
-----
SECTION 402. Treatment of STRYPES.................. 13
--------------------
ARTICLE FIVE
AMENDMENT OF CERTAIN PROVISIONS
OF THE PRINCIPAL INDENTURE
SECTION 501. Amendments Relating to the STRYPES..... 14
----------------------------------
SECTION 502. Interpretation of Principal Indenture.. 21
-------------------------------------
ARTICLE SIX
MISCELLANEOUS
SECTION 601. Effect of Supplemental Indenture..... 22
----------------------------------
SECTION 602. Conflict with Trust Indenture Act.... 22
----------------------------------
SECTION 603. Successors and Assigns............... 22
----------------------------------
SECTION 604. Separability Clause.................. 22
----------------------------------
SECTION 605. Benefits of Supplemental Indenture... 22
----------------------------------
SECTION 606. Governing Law........................ 22
----------------------------------
SECTION 607. Execution in Counterparts............ 22
----------------------------------
SECTION 608. Responsibility for Recitals.......... 22
----------------------------------
ii
<PAGE>
Tenth Supplemental Indenture, dated as of __________,1996 (the
"Supplemental Indenture"), by and between Merrill Lynch & Co., Inc., a
corporation organized and existing under the laws of the State of Delaware,
having its principal office at World Financial Center, New York, New York 10281
(the "Company"), and Chemical Bank, a corporation duly organized and existing
under the laws of the State of New York and successor by merger to Manufacturers
Hanover Trust Company, having its Corporate Trust Office at 450 West 33rd
Street, New York, New York 10001, as trustee (the "Trustee").
WHEREAS, the Company has heretofore executed and delivered its Indenture,
dated as of April 1, 1983 and restated as of April 1, 1987 (as amended and
supplemented to the date hereof, the "Principal Indenture"), to the Trustee to
provide for the issuance from time to time of its unsecured and unsubordinated
debentures, notes or other evidences of senior indebtedness (the "Securities"),
unlimited as to principal amount; and
WHEREAS, the Principal Indenture, as amended by the Trust Indenture Reform
Act of 1990, and this Supplemental Indenture are hereinafter collectively
referred to as the "Indenture"; and
WHEREAS, the Company proposes to create and issue a new series of
Securities designated as its Structured Yield Product Exchangeable for
Stock/SM/, ___% STRYPES/SM/ Due _________, 2001 (each such Security being
referred to herein as a "STRYPES"), the terms of which will require the Company
to pay and discharge the STRYPES on their maturity date by delivering to the
Holders thereof a specified percentage of each type of security and other
property then constituting part of the Reference Property (as defined herein)
or, at the option of the Company, cash with an equal value, as provided herein;
WHEREAS, the Reference Property initially will consist of one share of
common stock, par value $1.00 per share ("IMC Common Stock"), of IMC Global
Inc., a Delaware corporation ("IMC Global"), including the preferred stock
purchase right associated therewith, and will be adjusted from time to time
prior to the maturity date of the STRYPES to reflect the addition or
substitution of any cash, Reference Securities and/or other property receivable
in respect of such share of IMC Common Stock (or any other security or property
constituting part of the Reference Property) as a result of any dividend or
distribution (other than cash dividends that do not constitute Extraordinary
Cash Dividends and payments of interest on any evidences of indebtedness) or
issuance of rights or warrants with respect thereto (or any other security or
property constituting part of the Reference Property) or any Reorganization
Event involving IMC
_______________________
/SM/ Service mark of Merrill Lynch & Co., Inc.
<PAGE>
Global (or any issuer of any other security constituting part of the Reference
Property); and
WHEREAS, Section 901 of the Principal Indenture provides that, without the
consent of any Holders, 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 to the Principal Indenture, in form satisfactory to the
Trustee, (a) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301 thereof and (b) to cure any ambiguity, to
correct or supplement any provision in the Principal Indenture which may be
defective or inconsistent with any other provision of the Principal Indenture,
or to make any other provisions with respect to matters or questions arising
under the Principal Indenture which shall not adversely affect the interests of
the Holders of Securities of any series or any related coupons in any material
respect; and
WHEREAS, the Company has duly authorized the execution and delivery of this
Supplemental Indenture, and all things necessary to make this Supplemental
Indenture a valid agreement of the Company, in accordance with its terms, have
been done;
NOW, THEREFORE, the Company and the Trustee, in consideration of the
premises and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, hereby covenant and agree, for the
equal and proportionate benefit of all Holders, as follows:
ARTICLE ONE
DEFINITIONS
SECTION 101. Definitions. For all purposes of the Principal Indenture
-----------
and this Supplemental Indenture relating to the series of Securities (consisting
of STRYPES) created hereby, except as otherwise expressly provided or unless the
context otherwise requires, the terms defined in this Article have the meanings
assigned to them in this Article. Capitalized terms used in the Principal
Indenture and this Supplemental Indenture but not defined herein are used as
they are defined in the Principal Indenture.
"Business Day" means any day that is not a Saturday, a Sunday or a day
on which the New York Stock Exchange, banking institutions or trust
companies in The City of New York are authorized or obligated by law or
executive order to close.
"Closing Price" means, with respect to any Reference Security on any
date of determination, the closing sale price (or, if no closing price is
reported, the last reported sale price) of such Reference Security on the
NYSE
2
<PAGE>
on such date or, if such Reference Security is not listed for trading on
the NYSE on any such date, as reported in the composite transactions for
the principal United States securities exchange on which such Reference
Security is so listed, or if such Reference Security is not so listed on a
United States national or regional securities exchange, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation
System, or, if such Reference Security is not so reported, the last quoted
bid price for such Reference Security in the over-the-counter market as
reported by the National Quotation Bureau or similar organization, or, if
such bid price is not available, the market value of such Reference
Security on such date as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Company.
"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 the Principal
Indenture, and thereafter "Company" shall mean such successor corporation.
"Debt Instrument" has the meaning specified in Section 402.
"Distributed Assets" has the meaning specified in Section 303(c).
"Extraordinary Cash Dividend" means, with respect to any consecutive
12-month period, the amount, if any, by which the aggregate amount of all
cash dividends on any Reference Security consisting of capital stock
occurring in such 12-month period (or, if such Reference Security was not
outstanding at the commencement of such 12-month period, occurring in such
shorter period during which such Reference Security was outstanding)
exceeds on a per share basis 12% of the average of the Closing Prices per
share of such Reference Security over such 12-month period (or such shorter
period during which such Reference Security was outstanding); provided
--------
that, for purposes of the foregoing definition, the amount of cash
dividends paid on a per share basis shall be appropriately adjusted to
reflect the occurrence during such period of any stock dividend or
distribution of shares of capital stock of the issuer of such Reference
Security or any subdivision, split, combination or reclassification of
shares of such Reference Security.
"Forward Contract" has the meaning specified in Section 402.
"IMC Global" has the meaning specified in the fourth recital of the
Company in this instrument.
3
<PAGE>
"IMC Common Stock" has the meaning specified in the fourth recital of the
Company in this instrument.
"Indenture" has the meaning specified in the second recital of the
Company in this instrument.
"Initial Price" has the meaning specified in Section 301.
"Interest Payment Date" has the meaning specified in Section 201.
"Maturity Consideration" means the number or amount of each type of
Reference Security and other property constituting part of the Reference
Property (or, pursuant to the Company's option, the amount of cash in lieu
thereof) deliverable upon payment and discharge of the STRYPES on the
Maturity Date as provided in Article Three.
"Maturity Date" has the meaning specified in Section 201.
"NYSE" means the New York Stock Exchange, Inc.
"Principal Indenture" has the meaning specified in the first recital
of the Company in this instrument.
"Reference Property" has the meaning specified in Section 301.
"Reference Property Value" means, subject to the provisions of Section
303(b), the sum of (a) for any portion of the Reference Property consisting
of cash, the amount of such cash, (b) for any portion of the Reference
Property consisting of property other than cash or Reference Securities,
the fair market value (as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Company) as of the
third Trading Day preceding the Maturity Date of such property, and (c) for
any portion of the Reference Property consisting of a Reference Security
(including IMC Common Stock), an amount equal to the average Closing Price
per unit of such Reference Security on the 20 Trading Days immediately
prior to, but not including, the second Trading Day preceding the Maturity
Date multiplied by the number of units of such Reference Security
constituting part of the Reference Property.
"Reference Security" means, at any time, any security (as defined in
Section 2(1) of the Securities Act of 1933, as amended) then constituting
part of the Reference Property.
4
<PAGE>
"Regular Record Date" has the meaning specified in Section 201.
"Reorganization Event" has the meaning specified in Section 303(d).
"Securities" has the meaning specified in the first recital of the
Company in this instrument.
"STRYPES" has the meaning specified in the third recital of the
Company in this instrument.
"STRYPES Certificates" has the meaning specified in Section 202.
"Supplemental Indenture" has the meaning specified in the first
paragraph of this instrument.
"Threshold Appreciation Price" has the meaning specified in Section
301.
"Trading Day" means, with respect to any Reference Security the
Closing Price of which is being determined, a day on which such Reference
Security (A) is not suspended from trading on any national or regional
securities exchange or association or over-the-counter market at the close
of business and (B) has traded at least once on the national or regional
securities exchange or association or over-the-counter market that is the
primary market for the trading of such Reference Security.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee with respect to the
STRYPES shall have become such pursuant to the applicable provisions of the
Principal Indenture, and thereafter "Trustee" shall mean such successor
Trustee.
"Unit" has the meaning specified in Section 402.
ARTICLE TWO
THE STRYPES
SECTION 201. Description of the STRYPES. The Securities shall be known
--------------------------
and designated as the "Structured Yield Product Exchangeable for Stock, __%
STRYPES Due _________, 2001" of the Company. The aggregate number of STRYPES
which may be authenticated and delivered under this Supplemental Indenture is
limited to 6,510,286 with an issue price of $_____ per STRYPES, or $___________
in the aggregate, except for STRYPES evidenced by STRYPES Certificates
authenticated and delivered upon
5
<PAGE>
registration of transfer of, or in exchange for, or in lieu of, other STRYPES
Certificates evidencing such STRYPES pursuant to Section 304, 305, 306 or 906 of
the Principal Indenture.
The STRYPES shall mature on _________, 2001 (the "Maturity Date"). On the
Maturity Date, the STRYPES shall be paid and discharged as provided in Article
Three of this Supplemental Indenture.
The STRYPES shall bear interest at the rate of __% of the issue price per
annum (or $ ____ per annum), from _______, 1996, or from the most recent
Interest Payment Date to which interest has been paid or duly provided for, as
the case may be, until the Maturity Date or such earlier date on which the issue
price of all STRYPES is repaid in accordance with the provisions of the
Indenture. Interest shall be payable in cash quarterly in arrears on
___________, ___________, ___________ and ___________, beginning ___________,
1996, and on the Maturity Date (each, an "Interest Payment Date"), to the
Persons in whose names the STRYPES are registered at the close of business on
the fifteenth calendar day (whether or not a Business Day) immediately preceding
such Interest Payment Date (each, a "Regular Record Date"). Interest on the
STRYPES shall be computed on the basis of a 360-day year of twelve 30-day
months.
The interest on the STRYPES shall be payable and the Maturity Consideration
shall be deliverable or payable at the office or agency of the Company in the
Borough of Manhattan, The City of New York maintained for such purpose and at
any other office or agency maintained by the Company for such purpose; provided,
however, that at the option of the Company payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register.
The STRYPES shall not be redeemable at the option of the Company, or
payable at the option of the Holders, prior to the Maturity Date.
The STRYPES shall be issuable only in registered form without coupons. The
STRYPES will be issued in any whole numbers. No fractional STRYPES or scrip
representing fractional STRYPES shall be issued.
SECTION 202. Form of STRYPES. The STRYPES shall be evidenced by
---------------
certificates ("STRYPES Certificates") in the form attached hereto as Exhibit A.
6
<PAGE>
ARTICLE THREE
PAYMENT AND DISCHARGE OF STRYPES
SECTION 301. Payment and Discharge on the Maturity Date. On the Maturity
------------------------------------------
Date, the Company shall pay and discharge each STRYPES by delivering to the
Holder thereof: (a) if the Reference Property Value is greater than or equal to
$_____ (the "Threshold Appreciation Price"), ____% of the amount or number of
each type of Reference Security and other property constituting part of the
Reference Property, (b) if the Reference Property Value is less than the
Threshold Appreciation Price but is greater than $_____ (the "Initial Price"), a
percentage of the amount or number of each type of Reference Security and other
property constituting part of the Reference Property, allocated as
proportionately as practicable, so that the aggregate value thereof is equal to
the Initial Price and (c) if the Reference Property Value is less than or equal
to the Initial Price, 100% of the amount or number of each type of Reference
Security and other property constituting part of the Reference Property.
The term "Reference Property" shall initially mean one share of IMC Common
Stock and shall be subject to adjustment from time to time prior to the Maturity
Date to reflect the addition or substitution of any cash, securities and/or
other property resulting from the application of the provisions of Section 303
of this Article Three.
Holders of the STRYPES will be responsible for the payment of any and all
brokerage and transaction costs upon any subsequent sale of any Reference
Security or other property constituting part of the Reference Property received
on the Maturity Date as described above.
SECTION 302. No Fractional Units. No fractional units or scrip
-------------------
representing fractional units of any Reference Security shall be delivered on
the Maturity Date. If more than one STRYPES shall be held at one time by the
same Holder, the number of full units of any Reference Security which shall be
delivered upon payment and discharge of such Holder's STRYPES shall be computed
on the basis of the aggregate number of STRYPES so held on the Maturity Date.
In lieu of any fractional unit of any Reference Security which would otherwise
be deliverable upon payment and discharge of any STRYPES on the Maturity Date,
the Company, through any applicable Paying Agent, shall make a cash payment in
respect of such fractional unit in an amount equal to the value of such
fractional unit based on the average Closing Price per unit of such Reference
Security on the 20 Trading Days immediately prior to, but not including, the
second Trading Day preceding the Maturity Date.
To the extent practicable, the Company will deliver fractional interests of
any Reference Property other than cash or
7
<PAGE>
a Reference Security upon payment and discharge of any STRYPES on the Maturity
Date. If such delivery is not practicable, in lieu of any fractional interest
of any Reference Property other than cash or a Reference Security which would
otherwise be deliverable on the Maturity Date, the Company, through any Paying
Agent, shall make a cash payment in respect of such fractional interest in an
amount equal to the value of such fractional interest based on the fair market
value (as determined by a nationally recognized independent investment banking
firm retained for this purpose by the Company) as of the third Trading Day
preceding the Maturity Date of such Reference Property other than cash or a
Reference Security.
SECTION 303. Adjustment of Reference Property.
--------------------------------
(a) Adjustment for Subdivisions, Splits, Combinations or
----------------------------------------------------
Reclassifications. If an issuer of a Reference Security shall:
- ------------------
(A) subdivide or split the outstanding units of such Reference
Security into a greater number of units;
(B) combine the outstanding units of such Reference Security
into a smaller number of units; or
(C) issue by reclassification of units of such Reference
Security any units of another security of such issuer;
then, in any such event, the Reference Property shall be adjusted to include the
number of units of such Reference Security and/or other security of such issuer
which a holder of units of such Reference Security would have owned or been
entitled to receive immediately following any event described above had such
holder held, immediately prior to such event, the number of units of such
Reference Security constituting part of the Reference Property immediately prior
to such event. Each such adjustment shall become effective immediately after
the effective date for such subdivision, split, combination or reclassification,
as the case may be. Each such adjustment shall be made successively.
(b) Adjustment for Issuance of Certain Rights or Warrants. If an issuer
------------------------------------------------------
of a Reference Security shall issue rights or warrants to all holders of such
Reference Security entitling them, for a period expiring prior to the fifteenth
calendar day following the Maturity Date, to subscribe for or purchase any of
its securities or other property (other than rights to purchase units of such
Reference Security pursuant to a plan for the reinvestment of dividends or
interest), then in each such case, the Reference Property shall be adjusted to
include an amount in cash equal to the fair market value (determined as
described below), as of the fifth Business Day following the date on which such
rights or warrants are received by securityholders entitled thereto (the
"Receipt Date"), of each such right or warrant
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<PAGE>
multiplied by the product of (A) the number of such rights or warrants issued
for each unit of such Reference Security and (B) the number of units of such
Reference Security constituting part of the Reference Property on the date of
issuance of such rights or warrants, immediately prior to such issuance, without
interest thereon. For purposes of this subsection (b), the fair market value of
each such right or warrant shall be determined by the Company and shall be the
quotient of (x) the highest net bid, as of approximately 10:00 A.M., New York
City time, on the fifth Business Day following the Receipt Date for settlement
three Business Days later, by a recognized securities dealer in The City of New
York selected by or on behalf of the Company (from three (or such fewer number
of dealers as may be providing such bids) such recognized dealers selected by or
on behalf of the Company), for the purchase by such quoting dealer of the number
of rights or warrants (the "Aggregate Number") that a holder of such Reference
Security would receive if such holder held, as of the record date for
determination of stockholders entitled to receive such rights or warrants, a
number of units of such Reference Security equal to the product of (1) the
aggregate number of Outstanding STRYPES as of such record date and (2) the
number of units of such Reference Security constituting part of the Reference
Property, divided by (y) the Aggregate Number. Each such adjustment shall
become effective on the fifth Business Day following the Receipt Date of such
rights or warrants. If for any reason the Company is unable to obtain the
required bid on the fifth Business Day following the Receipt Date, it shall
attempt to obtain such bid at successive intervals of three months thereafter
and on the third Trading Day prior to the Maturity Date until it is able to
obtain the required bid. From the date of issuance of such rights or warrants
until the required bid is obtained, the Reference Property shall include the
number of such rights or warrants issued for each unit of such Reference
Security multiplied by the number of units of such Reference Security
constituting part of the Reference Property on the date of issuance of such
rights or warrants, immediately prior to such issuance, and such rights or
warrants constituting part of the Reference Property shall be deemed for
purposes of the definition of Reference Property Value and Section 304 of this
Article Three to have a fair market value of zero.
(c) Adjustment for Distributions. If an issuer of a Reference Security
-----------------------------
shall pay a dividend or make a distribution to all holders of such Reference
Security of cash, securities or other property (excluding any cash dividend on
any Reference Security consisting of capital stock that does not constitute an
Extraordinary Cash Dividend, excluding any payment of interest on any Reference
Security consisting of an evidence of indebtedness and excluding any dividend or
distribution described in subsection (a) or (b) above) or shall issue to all
holders of such Reference Security rights or warrants to subscribe for or
purchase any of its securities or other property (excluding any rights or
warrants referred to in subsection (b) above) (any of
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<PAGE>
the foregoing being referred to herein as "Distributed Assets"), then in each
such case, the Reference Property shall be adjusted to include, from and after
such dividend, distribution or issuance, (x) in respect of that portion, if any,
of the Distributed Assets consisting of cash, the amount of such Distributed
Assets consisting of cash received for each unit of such Reference Security
multiplied by the number of units of such Reference Security constituting part
of the Reference Property on the date of such dividend, distribution or
issuance, immediately prior to such dividend, distribution or issuance, without
interest thereon, plus (y) in respect of that portion, if any, of the
Distributed Assets which are other than cash, the number or amount of each type
of Distributed Assets other than cash received with respect to each unit of such
Reference Security multiplied by the number of units of such Reference Security
constituting part of the Reference Property on the date of such dividend,
distribution or issuance, immediately prior to such dividend, distribution or
issuance.
(d) Adjustment for Consolidation, Merger or Other Reorganization Event.
------------------------------------------------------------------
In the event of (i) any consolidation or merger of an issuer of a Reference
Security with or into another entity (other than a merger or consolidation in
which such issuer is the continuing corporation and in which the Reference
Security outstanding immediately prior to the merger or consolidation is not
exchanged for cash, securities or other property of such issuer or another
entity), (ii) any statutory exchange of securities of an issuer of a Reference
Security with another entity (other than in connection with a merger or
acquisition) or (iii) any liquidation, dissolution, winding up or bankruptcy of
an issuer of a Reference Security (excluding any distribution in such event
referred to in subsection (c) above) (any such event described in clause (i),
(ii) or (iii), a "Reorganization Event"), the Reference Property shall be
adjusted to include, from and after the effective date for such Reorganization
Event, in lieu of the number of units of such Reference Security constituting
part of the Reference Property immediately prior to the effective date for such
Reorganization Event, the amount or number of any cash, securities and/or other
property owned or received in such Reorganization Event with respect to each
unit of such Reference Security multiplied by the number of units of such
Reference Security constituting part of the Reference Property immediately prior
to the effective date for such Reorganization Event.
SECTION 304. Payment and Discharge With Cash. Notwithstanding the
-------------------------------
provisions of Sections 301, 302 and 303 of this Article Three, the Company may,
at its option, in lieu of delivering the applicable percentage of each type of
Reference Security and other property constituting part of the Reference
Property on the Maturity Date, deliver cash in an amount (calculated to the
nearest 1/100th of a dollar per STRYPES or, if there is not a nearest 1/100th of
a dollar, then to the next
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<PAGE>
higher 1/100th of a dollar) equal to the sum of (a) for any portion of the
Reference Property consisting of cash that is otherwise deliverable on the
Maturity Date, the amount of such cash, without interest thereon, (b) for any
portion of the Reference Property consisting of property other than cash or
Reference Securities that is otherwise deliverable on the Maturity Date, the
fair market value (as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Company) as of the
third Trading Day preceding the Maturity Date of such property, and (c) for any
portion of the Reference Property consisting of a Reference Security (including
IMC Common Stock) that is otherwise deliverable on the Maturity Date (except as
provided in Section 303(b)), an amount equal to the average Closing Price per
unit of such Reference Security on the 20 Trading Days immediately prior to, but
not including, the second Trading Day preceding the Maturity Date multiplied by
the number of units of such Reference Security constituting part of the
Reference Property. Such option, if exercised by the Company, must be exercised
with respect to all Reference Securities and other property otherwise
deliverable on the Maturity Date upon payment and discharge of all Outstanding
STRYPES.
SECTION 305. Notice of Adjustments and Certain Other Events.
----------------------------------------------
(a) In case at any time while any of the STRYPES are outstanding the
Company receives notice that:
(i) an issuer of a Reference Security shall declare a dividend (or
any other distribution) on or in respect of such Reference Security to which
Section 303(c) shall apply (other than any cash dividends, if any, paid from
time to time by such issuer that do not constitute Extraordinary Cash
Dividends);
(ii) an issuer of a Reference Security shall authorize the issuance
to all holders of such Reference Security of rights or warrants to subscribe for
or purchase units of such Reference Security or of any other subscription rights
or warrants;
(iii) there shall occur any conversion or reclassification of any
Reference Security (other than a subdivision or combination of outstanding units
of such Reference Security) or any consolidation, merger or reorganization to
which an issuer of a Reference Security is a party and for which approval of any
unitholders of such issuer is required, or the sale or transfer of all or
substantially all of the assets of an issuer of a Reference Security; or
(iv) there shall occur the voluntary or involuntary dissolution,
liquidation, winding up or bankruptcy of an issuer of a Reference Security;
11
<PAGE>
then the Company shall promptly cause to be delivered to the Trustee and any
applicable Paying Agent and filed at the office or agency maintained for the
purpose of payment and discharge of STRYPES on the Maturity Date in the Borough
of Manhattan, The City of New York by the Trustee (or any applicable Paying
Agent), and shall promptly cause to be mailed to the Holders of STRYPES at their
last addresses as they shall appear in the Security Register, at least 10 days
before the date hereinafter specified (or the earlier of the dates hereinafter
specified, in the event that more than one is specified), a notice stating (x)
the date, if known by the Company, on which a record is to be taken for the
purpose of such dividend, distribution or grant of rights or warrants, or, if a
record is not to be taken, the date as of which the holders of such Reference
Security of record to be entitled to such dividend, distribution or grant of
rights or warrants are to be determined, or (y) the date, if known by the
Company, on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation, winding up or bankruptcy is expected to become
effective.
(b) Within 10 Business Days following the occurrence of an event that
requires an adjustment to the Reference Property pursuant to Section 303 of this
Article Three (or if the Company is not aware of such occurrence, as soon as
practicable after becoming so aware), the Company shall provide written notice
to the Trustee and to the Holders of the STRYPES of the occurrence of such event
and a statement setting forth in reasonable detail the amount or number of each
type of Reference Security and other property then constituting part of the
Reference Property.
(c) On or prior to the sixth Business Day preceding the Maturity Date, the
Company will notify The Depository Trust Company and the Trustee and will
publish a notice in The Wall Street Journal or another daily newspaper of
national circulation stating whether the STRYPES will be paid and discharged on
the Maturity Date by delivery of the applicable percentage of each type of
Reference Security and other property constituting part of the Reference
Property or of cash in accordance with this Article Three.
SECTION 306. Maturity Consideration Free and Clear. The Company hereby
-------------------------------------
warrants that upon payment and discharge of a STRYPES on the Maturity Date
pursuant to this Supplemental Indenture, the Holder of a STRYPES shall receive
all rights held by the Company in the Maturity Consideration with which such
STRYPES is at such time payable and dischargeable pursuant to this Supplemental
Indenture, free and clear of any and all liens, claims, charges and
encumbrances, other than any liens, claims, charges and encumbrances which may
have been placed on any Maturity Consideration by the prior owner thereof prior
to the time such Maturity Consideration was acquired by the Company. Except as
provided in Section 401 of Article Four, the Company will pay all taxes and
charges with respect to the delivery of
12
<PAGE>
Maturity Consideration delivered upon payment and discharge of STRYPES
hereunder.
SECTION 307. Cancellation of STRYPES Certificates. Upon receipt by the
------------------------------------
Trustee of a STRYPES Certificate delivered to it for payment and discharge of
the STRYPES evidenced thereby under this Article Three, the Trustee shall cancel
and dispose of the same as provided in Section 309 of the Principal Indenture.
ARTICLE FOUR
TAXES
SECTION 401. Documentary, Stamp, Transfer or Similar Taxes. The Company
---------------------------------------------
will pay any and all documentary, stamp, transfer or similar taxes that may be
payable in respect of the transfer and delivery of the Maturity Consideration
pursuant to this Supplemental Indenture; provided, however, that the Company
shall not be required to pay any such tax which may be payable in respect of any
transfer involved in the delivery of Maturity Consideration in a name other than
that in which the STRYPES so paid and discharged were registered, and no such
transfer or delivery shall be made unless and until the Person requesting such
transfer has paid to the Company the amount of any such tax, or has established,
to the satisfaction of the Company, that such tax has been paid.
SECTION 402. Treatment of STRYPES. The parties hereto hereby agree, and
--------------------
each Holder of a STRYPES by its purchase of a STRYPES hereby agrees:
(a) to treat, for all United States Federal, state and local tax
purposes, each STRYPES as a unit (a "Unit") consisting of (A) a debt
instrument (the "Debt Instrument") with a fixed principal amount
unconditionally payable on the Maturity Date equal to the issue price
of the STRYPES and bearing interest at the stated interest rate on the
STRYPES and (B) a forward purchase contract (the "Forward Contract")
pursuant to which the Holder is irrevocably committed to use the
principal payment due on the Debt Instrument to purchase on the
Maturity Date the Maturity Consideration which the Company is
obligated to deliver at that time (subject to the Company's right to
deliver cash with an equal value), which treatment will require, among
other things, each Holder that is subject to United States Federal
income tax in connection with its ownership of the STRYPES to include
currently in income and ordinary interest payments denominated as
interest that are made with respect to the STRYPES in accordance with
such Holder's regular method of tax accounting;
13
<PAGE>
(b) in the case of purchases of STRYPES in connection with the original
issuance thereof, (A) to allocate $____________ of the entire initial purchase
price of a STRYPES (i.e., the issue price of a STRYPES) to the Debt Instrument
component and to allocate the remaining $___________ of the entire initial
purchase price of a STRYPES to the Forward Contract component and (B) to treat
such acquisition of the STRYPES by the Holder as a purchase of the Debt
Instrument by the Holder for $__________ and the making of an initial payment by
the Holder with respect to the Forward Contract of $__________;
(c) in the case of purchases and sales of STRYPES subsequent to the
original issuance thereof, the purchase price paid (or received) by a
Holder will be allocated by the Holder between the Debt Instrument and
the Forward Contract based upon their relative fair market values (as
determined on the date of acquisition or disposition);
(d) to file all United States Federal, state and local income, franchise
and estate tax returns consistent with the treatment of each STRYPES
as a Unit consisting of the Debt Instrument and the Forward Contract
(in the absence of any change or clarification in applicable law, by
regulation or otherwise, requiring a different characterization or
treatment of the STRYPES).
ARTICLE FIVE
AMENDMENT OF CERTAIN PROVISIONS
OF THE PRINCIPAL INDENTURE
SECTION 501. Amendments Relating to the STRYPES. The Principal
----------------------------------
Indenture is hereby amended, solely with respect to the STRYPES, as follows:
(a) By deleting Section 308 of the Principal Indenture in its entirety
and inserting in its stead the following:
"SECTION 308. Persons Deemed Owners. Prior to due presentment of a STRYPES
Certificate for registration of transfer of STRYPES evidenced thereby, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such STRYPES Certificate is registered as the owner of the
STRYPES evidenced thereby for the purpose of receiving delivery or payment of
the Maturity Consideration in respect of, and (subject to Sections 305 and 307)
interest on, such STRYPES and for all other purposes whatsoever, whether or not
such STRYPES be overdue, and neither the Company, the Trustee nor any agent of
14
<PAGE>
the Company or the Trustee shall be affected by notice to the contrary."
(b) By deleting Section 501 of the Principal Indenture in its entirety and
inserting in its stead the following:
"SECTION 501. Events of Default. "Event of Default", wherever used herein
with respect to STRYPES, 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) failure to deliver or pay the Maturity Consideration on the
Maturity Date; or
(2) failure to pay any interest on any STRYPES when due, and
continuance of such failure for a period of 30 days; or
(3) failure to perform any other covenant of the Company in this
Indenture (other than a covenant a failure in whose performance is
elsewhere in this Section specifically dealt with), and the continuance of
such failure 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% of the aggregate
issue price of the Outstanding STRYPES a written notice specifying such
failure and requiring it to be remedied and stating that such notice is a
"Notice of Default" hereunder; or
(4) 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
(5) 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 fail generally to pay its debts as they
become due or shall take
15
<PAGE>
any corporate action in furtherance of any of the foregoing."
(c) By deleting Section 502 of the Principal Indenture in its entirety
and inserting in its stead the following:
"SECTION 502. Acceleration of Maturity; Rescission and Annulment. If an
Event of Default (other than an Event of Default specified in Section
501(4) or 501(5)) occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% of the aggregate issue price of
the Outstanding STRYPES may declare an amount equal to the issue price of
all the STRYPES 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 amount shall become immediately due and payable in
cash. If an Event of Default specified in Section 501(4) or 501(5) occurs,
an amount equal to the issue price of all the STRYPES shall automatically,
and without any declaration or other action on the part of the Trustee or
any Holder, become immediately due and payable in cash.
At any time after such a declaration of acceleration has been made or an
Event of Default specified in Section 501(4) or 501(5) has occurred, and
before a judgment or decree for payment of the money due has been obtained
by the Trustee as hereinafter provided, the Holders of a majority of the
aggregate issue price of the Outstanding STRYPES, by written notice to the
Company and the Trustee, may rescind and annul such declaration or Event of
Default 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 all STRYPES,
(B) to the extent that payment of such interest is lawful,
interest upon overdue installments of interest at the rate borne
by the STRYPES, and
(C) 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
(2) all Events of Default with respect to the STRYPES, other than the
non-payment of the amount equal to the issue price of all the STRYPES
due solely by reason of such declaration of acceleration or Event of
Default
16
<PAGE>
specified in Section 501(4) or 501(5), have been cured or waived as
provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon."
(d) By deleting the first paragraph of Section 503 of the Principal
Indenture in its entirety and inserting in its stead the following:
"The Company covenants that, if default is made in the payment of any
installment of interest on any STRYPES (other than interest due on the
Maturity Date) when such interest becomes due and payable and such default
continues for a period of 30 days, the Company will, upon demand of the
Trustee, pay to it, for the benefit of the Holders of such STRYPES, an
amount equal to the issue price of all the STRYPES, the whole amount of
interest then due and payable on such STRYPES and, to the extent that
payment of such interest shall be legally enforceable, interest on any
overdue interest, at the rate borne by the STRYPES, 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.
The Company further covenants that, if the Maturity Consideration or
any interest due on the Maturity Date is not delivered or paid in respect
of any STRYPES on the Maturity Date, the Company will, upon demand of the
Trustee, pay to it, for the benefit of the Holders of such STRYPES, the
Maturity Consideration then due and payable on such STRYPES, the whole
amount of interest then due and payable on such STRYPES and, to the extent
that payment of such interest shall be legally enforceable, interest on any
Maturity Consideration that is overdue and on any overdue interest, at the
rate borne by the STRYPES, 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."
(e) By deleting Section 506 of the Principal Indenture in its entirety
and inserting in its stead the following:
"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 the Maturity Consideration or interest, upon
presentation of the relevant STRYPES Certificate and the notation thereon
of the payment if only partially paid and upon surrender thereof if fully
paid:
17
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FIRST: To the payment of all amounts due the Trustee under Section 607;
SECOND: To the payment of any amounts then due and unpaid on the
STRYPES 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 amounts due and payable on such STRYPES; and
THIRD: The balance, if any, to the Person or Persons entitled
thereto."
(f) By deleting Section 508 of the Principal Indenture in its entirety
and inserting in its stead the following:
"SECTION 508. Unconditional Right of Holders to Receive the Maturity
Consideration and Interest. Notwithstanding any other provision in this
Indenture, the Holder of any STRYPES shall have the right, which is
absolute and unconditional, to receive (subject to Section 502) payment of
the Maturity Consideration in respect of and (subject to Sections 305 and
307) interest on such STRYPES and to institute suit for the enforcement of
any such payment, and such right shall not be impaired without the consent
of such Holder."
(g) By deleting the first sentence of Section 513 of the Principal
Indenture in its entirety and inserting in its stead the following:
"The Holders of not less than a majority of the aggregate issue price of
the Outstanding STRYPES may on behalf of the Holders of all STRYPES waive
any past default hereunder and its consequences, except a default
(1) in the delivery or payment of the Maturity Consideration or in the
payment of interest on any STRYPES, 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 STRYPES affected."
(h) By deleting Section 801 of the Principal Indenture in its entirety
and inserting in its stead the following:
"SECTION 801. Consolidations and Mergers of the 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
18
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the United States of America or a State thereof and such successor
corporation shall expressly assume the due and punctual delivery or payment
of the Maturity Consideration in respect of and interest on all the
STRYPES, 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."
(i) By deleting the first sentence of Section 902 of the Principal
Indenture in its entirety and inserting in its stead the following:
"With the consent of the Holders of not less than 66-2/3% of the aggregate
issue price of the Outstanding STRYPES, 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 STRYPES under this
Indenture; provided, however, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding STRYPES affected
thereby,
(1) change the Maturity Date or the Stated Maturity of any installment
of interest on any STRYPES, or reduce the amount of Maturity Consideration
deliverable or payable on the Maturity Date or reduce the amount of
interest payable on any STRYPES or reduce the amount of cash payable with
respect to any STRYPES upon acceleration of the Maturity, or change any
Place of Payment where, or the coin or currency in which, any interest on
or any amount of cash payable with respect to any STRYPES is payable, or
impair the right to institute suit for the enforcement of (i) any payment
on or with respect to any STRYPES or (ii) the delivery or payment of the
Maturity Consideration with respect to any STRYPES, or
(2) reduce the percentage of the aggregate issue price of Outstanding
STRYPES, the consent of whose Holders is required for any such supplemental
indenture, or the consent of whose Holders is required for 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
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(3) modify any of the provisions of this Section, or Section 513, or
Section 1007, 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 STRYPES affected
thereby.
(j) By deleting Section 1001 of the Principal Indenture in its entirety
and inserting in its stead the following:
"SECTION 1001. Delivery and Payment of the Maturity Consideration and
Interest. The Company covenants and agrees for the benefit of the Holders
of the STRYPES that it will duly and punctually deliver or pay the Maturity
Consideration in respect of, and interest on, the STRYPES in accordance
with the terms of the STRYPES and this Indenture."
(k) By deleting Section 1003 of the Principal Indenture in its entirety
and inserting in its stead the following:
"SECTION 1003. Money for Security Payments to Be Held in Trust. If the
Company shall at any time act as its own Paying Agent, it will, on or
before each due date of the Maturity Consideration in respect of, or
interest on, any of the STRYPES, segregate and hold in trust for the
benefit of the Persons entitled thereto consideration in an amount
sufficient to deliver or pay the Maturity Consideration or a sum sufficient
to pay the interest so becoming due until such consideration shall be
delivered or 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, it will, prior
to each due date of the Maturity Consideration in respect of, or interest
on, any STRYPES, deposit with a Paying Agent consideration in an amount
sufficient to deliver or pay the Maturity Consideration or a sum sufficient
to pay the interest so becoming due, such consideration to be held as
provided by the Trust Indenture Act, 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 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 (i) comply with the provisions of the Trust
Indenture Act applicable to it as Paying Agent and (ii) during the
continuance of any default by the Company (or any other obligor upon the
STRYPES) in the making of any payment
20
<PAGE>
in respect of the STRYPES, upon the written request of the Trustee,
forthwith pay to the Trustee all sums held in trust by such Paying Agent as
such.
The Company may at any time, for any 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.
Any consideration deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the interest on or
delivery upon discharge of any STRYPES and remaining unclaimed for two
years after such consideration 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 STRYPES 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 consideration, 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 the
STRYPES, or both, notice that such consideration remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days
from the date of such publication or mailing, any unclaimed balance of such
consideration then remaining will be repaid to the Company."
SECTION 502. Interpretation of Principal Indenture. Except as
-------------------------------------
otherwise specifically provided in this Supplemental Indenture, whenever in the
Principal Indenture there is mentioned, in any context, the principal of or
principal amount of any Security of any series or a percentage in principal
amount of the Outstanding Securities of any series, such mention shall be deemed
to be, solely with respect to the STRYPES, the issue price of the STRYPES or a
percentage of the aggregate issue price of the Outstanding STRYPES.
21
<PAGE>
ARTICLE SIX
MISCELLANEOUS
SECTION 601. Effect of Supplemental Indenture. The Principal
--------------------------------
Indenture, as supplemented and amended by this Supplemental Indenture and all
other indentures supplemental thereto, is in all respects ratified and
confirmed, and the Principal Indenture, this Supplemental Indenture and all
indentures supplemental thereto shall be read, taken and construed as one and
the same instrument.
SECTION 602. 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 Supplemental Indenture by any of the provisions
of the Trust Indenture Act, such required provision shall control.
SECTION 603. Successors and Assigns. All covenants and agreements in
----------------------
this Supplemental Indenture by the Company shall bind its successors and
assigns, whether so expressed or not.
SECTION 604. Separability Clause. In case any provision in this
-------------------
Supplemental Indenture or in the STRYPES shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions (or of the other series of Securities) shall not in any way be
affected or impaired thereby.
SECTION 605. Benefits of Supplemental Indenture. Nothing in this
----------------------------------
Supplemental Indenture, express or implied, shall give to any Person, other than
the parties hereto and their successors hereunder and the Holders of the
STRYPES, any benefit or any legal or equitable right, remedy or claim under this
Supplemental Indenture.
SECTION 606. Governing Law. This Supplemental Indenture and each
-------------
STRYPES shall be deemed to be a contract made under the laws of the State of New
York and this Supplemental Indenture and each such STRYPES shall be governed by
and construed in accordance with the laws of the State of New York.
SECTION 607. Execution in Counterparts. This Supplemental Indenture
-------------------------
may be executed in any number of counterparts, each of which shall be an
original; but such counterparts shall together constitute but one and the same
instrument.
SECTION 608. Responsibility for Recitals. The recitals contained
---------------------------
herein shall be taken as statements of the Company, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of the Principal Indenture or this Supplemental
Indenture.
22
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture 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.
By: ____________________________
Name:
Title:
Chemical Bank, as Trustee
By: ____________________________
Name:
Title:
23
<PAGE>
EXHIBIT A
[Form of Face of STRYPES Certificate]
[THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE THEREOF. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN CERTIFICATED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS
A WHOLE BY THE DEPOSITORY TRUST COMPANY (THE "DEPOSITORY") TO A NOMINEE OF THE
DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS SECURITY IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY), 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.]
No. ____________ ___________ STRYPES
CUSIP NO. ___________
MERRILL LYNCH & CO., INC.
Structured Yield Product Exchangeable for Stock/SM/
__% STRYPES/SM/ Due _________, 2001
(Payable with Shares of Common Stock,
par value $1.00 per share, of IMC Global Inc.)
Issue Price Per STRYPES: $____
Merrill Lynch & Co., Inc., a Delaware corporation (hereinafter called the
"Company", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay and
discharge each STRYPES evidenced hereby on _________, 2001 (the "Maturity Date")
by delivering to _____________________________________, or registered assigns, a
percentage of the amount or number of each type of Reference Security and other
property then constituting part of the Reference Property (as defined below)
determined in accordance with the provisions set forth below, and to pay
interest (computed on the basis of a 360-day year of twelve 30-day months) on
such STRYPES from _______, 1996, or from the most recent Interest Payment Date
to which interest has been paid or duly provided for, on ___________,
___________, __________ and ___________ in each year, commencing
____________,1996 and on the
24
<PAGE>
Maturity Date, at the rate of __% of the Issue Price per annum, until the
Maturity Date or such earlier date on which the Issue Price is repaid in
accordance with the provisions described below. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in said Indenture, be paid to the Person in whose name this STRYPES
Certificate (or one or more Predecessor STRYPES Certificates) is registered at
the close of business on the fifteenth calendar day (whether or not a Business
Day) immediately preceding such Interest Payment Date (each a "Regular Record
Date"). In any case where such Interest Payment Date shall not be a Business
Day, then (notwithstanding any other provision of said Indenture or this STRYPES
Certificate) payment of such interest need not be made on such date, but may be
made on the next succeeding Business Day with the same force and effect as if
made on such date, and, if such payment is so made, no interest shall accrue for
the period from and after such date. Any such interest not so punctually paid
or duly provided for shall forthwith cease to be payable to the registered
Holder on the relevant Regular Record Date, and may be paid to the Person in
whose name this STRYPES Certificate (or one or more Predecessor STRYPES
Certificates) is registered at the close of business on a Special Record Date
for the payment of such interest to be fixed by the Trustee hereinafter referred
to, notice whereof shall be given to Holders of STRYPES not less than 10 days
prior to such Special Record Date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the STRYPES may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in said Indenture.
On the Maturity Date, the Company shall pay and discharge each STRYPES
evidenced hereby by delivering to the Holder: (a) if the Reference Property
Value (as defined below) is greater than or equal to $____ (the "Threshold
Appreciation Price"), _____% of the amount or number of each type of Reference
Security and other property constituting part of the Reference Property, (b) if
the Reference Property Value is less than the Threshold Appreciation Price but
is greater than $_____ (the "Initial Price"), a percentage of the amount or
number of each type of Reference Security and other property constituting part
of the Reference Property, allocated as proportionately as practicable, so that
the aggregate value thereof is equal to the Initial Price and (c) if the
Reference Property Value is less than or equal to the Initial Price, 100% of the
amount or number of each type of Reference Security and other property
constituting part of the Reference Property. Notwithstanding the foregoing, the
Company may, at its option in lieu of delivering the applicable percentage of
each type of Reference Security and other property constituting part of the
Reference Property on the Maturity Date, deliver cash in an amount (calculated
to the nearest 1/100th of a dollar per STRYPES or, if there is not a nearest
1/100th of a dollar, then to the next higher 1/100th of a dollar) equal to the
25
<PAGE>
sum of (a) for any portion of the Reference Property consisting of cash that is
otherwise deliverable on the Maturity Date, the amount of such cash, (b) for any
portion of the Reference Property consisting of property other than cash or
Reference Securities that is otherwise deliverable on the Maturity Date, the
fair market value (as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Company) as of the
third Trading Day preceding the Maturity Date of such property, and (c) for any
portion of the Reference Property consisting of a Reference Security (including
IMC Common Stock) that is otherwise deliverable on the Maturity Date, an amount
equal to the average Closing Price per unit of such Reference Security on the 20
Trading Days immediately prior to, but not including, the second Trading Day
preceding the Maturity Date multiplied by the number of units of such Reference
Security constituting a part of the Reference Property, all as provided in the
Indenture. Such number or amount of each type of Reference Security and other
property constituting part of the Reference Property (or, pursuant to the
Company's option, the amount of cash in lieu thereof) deliverable upon payment
and discharge hereof on the Maturity Date is hereinafter referred to as the
"Maturity Consideration."
The term "Reference Property" initially means one share of common stock,
par value $1.00 per share (the "IMC Common Stock"), of IMC Global Inc., a
Delaware corporation ("IMC Global"), and shall be subject to adjustment from
time to time prior to the Maturity Date to reflect the addition or substitution
of any cash, securities and/or other property as provided for in the Indenture.
The term "Reference Security" means, at any time, any security (as defined in
Section 2(1) of the Securities Act of 1933, as amended) then constituting part
of the Reference Property. The term "Reference Property Value" means, subject
to the provisions of the Indenture, the sum of (a) for any portion of the
Reference Property consisting of cash, the amount of such cash, (b) for any
portion of the Reference Property consisting of property other than cash or
Reference Securities, the fair market value (as determined by a nationally
recognized independent investment banking firm retained for this purpose by the
Company) as of the third Trading Day preceding the Maturity Date of such
property, and (c) for any portion of the Reference Property consisting of a
Reference Security (including IMC Common Stock), an amount equal to the average
Closing Price per unit of such Reference Security on the 20 Trading Days
immediately prior to, but not including, the second Trading Day preceding the
Maturity Date multiplied by the number of units of such Reference Security
constituting part of the Reference Property. The term "Closing Price" means,
with respect to any Reference Security on any date of determination, the closing
sale price (or, if no closing price is reported, the last reported sale price)
of such Reference Security on the NYSE on such date or, if such Reference
Security is not listed for trading on the NYSE on any such date, as reported in
the composite transactions for the principal United
26
<PAGE>
States securities exchange on which such Reference Security is so listed, or if
such Reference Security is not so listed on a United States national or regional
securities exchange, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System, or, if such Reference Security is not
so reported, the last quoted bid price for such Reference Security in the over-
the-counter market as reported by the National Quotation Bureau or similar
organization, or, if such bid price is not available, the market value of such
Reference Security on such date as determined by a nationally recognized
independent investment banking firm retained for this purpose by the Company.
The term "Trading Day" means, with respect to any Reference Security the Closing
Price of which is being determined, a day on which such Reference Security (A)
is not suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (B) has
traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of such Reference Security.
Interest on the STRYPES evidenced hereby will be payable, and delivery of
the Maturity Consideration in payment of the STRYPES evidenced hereby on the
Maturity Date will be made, upon surrender of this STRYPES Certificate, at the
office or agency of the Company maintained for that purpose in the Borough of
Manhattan, The City of New York, and payment of interest on the STRYPES
evidenced by this STRYPES Certificate (and, if the Company elects to deliver
cash in lieu of the applicable percentage of each type of Reference Property on
the Maturity Date, the amount of cash payable on the Maturity Date) will be made
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; provided,
however, that at the option of the Company payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address shall
appear on the Securities Register.
ADDITIONAL PROVISIONS OF THIS STRYPES CERTIFICATE ARE CONTAINED ON THE
REVERSE HEREOF AND SUCH PROVISIONS SHALL HAVE THE SAME EFFECT AS THOUGH FULLY
SET FORTH IN THIS PLACE.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee by manual signature, this STRYPES Certificate shall not be
entitled to any benefit under the Indenture, or be valid or obligatory for any
purpose.
27
<PAGE>
"Structured Yield Product Exchangeable for Stock" and "STRYPES" are service
marks of Merrill Lynch & Co., Inc.
IN WITNESS WHEREOF, Merrill Lynch & Co., Inc. has caused this instrument to
be duly executed under its corporate seal.
Dated:
Merrill Lynch & Co., Inc.
By:_____________________________
Name:
Title:
Attest:________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This certificate evidences Securities of the series designated herein and
referred to in the within-mentioned Indenture.
Chemical Bank, as Trustee
By:_______________________________
Authorized Officer
28
<PAGE>
[Form of Reverse of STRYPES Certificate]
MERRILL LYNCH & CO., INC.
Structured Yield Product Exchangeable for Stock
__% STRYPES Due _________, 2001
(Payable with Shares of Common Stock, par value $1.00 per share,
of IMC Global Inc.)
This STRYPES Certificate evidences part of a duly authorized issue of
unsecured and unsubordinated debentures, notes or other evidences of senior
indebtedness (hereinafter called the "Securities") of the Company of the series
hereinafter specified, all such Securities issued and to be issued under an
indenture dated as of April 1, 1983 and restated as of April 1, 1987, as amended
and supplemented as of _______, 1996, between the Company and Chemical Bank
(successor by merger to Manufacturers Hanover Trust Company), as Trustee (the
indenture dated as of April 1, 1983 and restated as of April 1, 1987, as
amended, restated and supplemented from time to time, the "Indenture"), to which
Indenture and all other indentures supplemental thereto reference is hereby made
for a statement of the rights and limitation of rights thereunder of the Holders
of the Securities and of the rights, obligations, duties and immunities of the
Trustee for each series of Securities and of the Company, and the terms upon
which the Securities are and are to be authenticated and delivered. As provided
in the Indenture, the Securities may be issued in one or more series, which
different series may be issued in various aggregate principal amounts, may be
denominated in currencies other than U.S. Dollars (including composite
currencies), may mature at different times, may bear interest, if any, at
different rates, may be subject to different redemption provisions, if any, may
be subject to different sinking, purchase and analogous funds, if any, may be
subject to different covenants and Events of Default and may otherwise vary as
in the Indenture provided or permitted. This STRYPES Certificate evidences
Securities of the series designated as Structured Yield Product Exchangeable for
Stock, __% STRYPES Due ___________, 2001 (each, a "STRYPES").
The STRYPES are not subject to any sinking fund or other mandatory
redemption provisions. The STRYPES are not payable at the option of the Holders
prior to the Maturity Date.
If an Event of Default with respect to the STRYPES, as defined in the
Indenture, shall occur and be continuing, then an amount equal to the issue
price of all the STRYPES may be declared immediately due and payable in cash in
the manner and with the effect provided in the Indenture.
29
<PAGE>
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the STRYPES under the Indenture at any
time by the Company and the Trustee with the consent of the Holders of 66-2/3%
of the aggregate issue price of the Outstanding STRYPES. The Indenture also
contains provisions permitting the Holders of a majority of the aggregate issue
price of the Outstanding STRYPES, on behalf of the Holders of all STRYPES, to
waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences with respect to
the STRYPES. 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 the
STRYPES evidenced by this STRYPES Certificate and of any STRYPES evidenced by a
STRYPES Certificate issued upon the transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent of waiver is made upon this
STRYPES Certificate.
No reference herein to the Indenture and no provision of this STRYPES
Certificate or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to deliver or pay the interest on,
and Maturity Consideration in respect of, the STRYPES evidenced by this STRYPES
Certificate at the times, place and rate, and in the manner, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the STRYPES evidenced by this STRYPES Certificate are transferable on the
Security Register of the Company, upon surrender of this STRYPES Certificate for
registration of transfer at the office or agency of the Company to be maintained
for that purpose in The City of New York, New York, or at any other office or
agency of the Company maintained for that purpose, 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 STRYPES
Certificates, evidencing the same aggregate number of STRYPES, will be issued to
the designated transferee or transferees.
No service charge shall be made for any such transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection with the registration of such transfer
or exchange, other than certain exchanges not involving any transfer. Certain
terms used in this STRYPES Certificate which are defined in the Indenture have
the meanings set forth therein.
30
<PAGE>
This STRYPES Certificate shall for all purposes be governed by, and
construed in accordance with, the laws of the State of New York. The Company,
the Trustee and any agent of the Company or the Trustee may treat the Person in
whose name this STRYPES Certificate is registered as the owner of the STRYPES
evidenced hereby for the purpose of receiving payment as herein provided and for
all other purposes, whether or not the STRYPES be overdue, and neither the
Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
31
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations.
TEN COM -- as tenants in UNIF GIFT MIN -- _____ Custodian ____
common (Cust) (Minor)
TEN ENT -- as tenants by the Under Uniform Gifts to Minors
entireties Act _________________
(State)
JT TEN -- as joint tenants with
right of survivorship
and not as tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY
OR TAXPAYER I.D. OR OTHER
IDENTIFYING NUMBER OF
ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or typewrite name and address including postal
zip code of assignee)
___________________________ STRYPES and all rights thereunder, hereby
irrevocably constituting and appointing
attorney to transfer said STRYPES on the books of the Company, with full power
of substitution in the premises.
Dated:
----------------------------------------------
NOTICE: The signature to this assignment
must correspond with the name as written upon
on the face of the within Security in every
particular, without alteration or enlargement
or any change whatever.
32
<PAGE>
EXHIBIT 4(c)
[Form of Face of STRYPES Certificate]
[THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE THEREOF. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN CERTIFICATED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS
A WHOLE BY THE DEPOSITORY TRUST COMPANY (THE "DEPOSITORY") TO A NOMINEE OF THE
DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS SECURITY IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY), 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.]
No. ____________ ___________ STRYPES
CUSIP NO. ___________
MERRILL LYNCH & CO., INC.
Structured Yield Product Exchangeable for Stock/SM/
__% STRYPES/SM/ Due _________, 2001
(Payable with Shares of Common Stock,
par value $1.00 per share, of IMC Global Inc.)
Issue Price Per STRYPES: $____
Merrill Lynch & Co., Inc., a Delaware corporation (hereinafter called
the "Company", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay and
discharge each STRYPES evidenced hereby on _________, 2001 (the "Maturity Date")
by delivering to _____________________________________________________, or
registered assigns, a percentage of the amount or number of each type of
Reference Security and other property then constituting part of the Reference
Property (as defined below) determined in accordance with the provisions set
forth below, and to pay interest (computed on the basis of a 360-day year of
twelve 30-day months) on such STRYPES from _______, 1996, or from the most
recent Interest Payment Date to
<PAGE>
which interest has been paid or duly provided for, on ___________, ___________,
__________ and ___________ in each year, commencing ____________,1996 and on the
Maturity Date, at the rate of __% of the Issue Price per annum, until the
Maturity Date or such earlier date on which the Issue Price is repaid in
accordance with the provisions described below. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in said Indenture, be paid to the Person in whose name this STRYPES
Certificate (or one or more Predecessor STRYPES Certificates) is registered at
the close of business on the fifteenth calendar day (whether or not a Business
Day) immediately preceding such Interest Payment Date (each a "Regular Record
Date"). In any case where such Interest Payment Date shall not be a Business
Day, then (notwithstanding any other provision of said Indenture or this STRYPES
Certificate) payment of such interest need not be made on such date, but may be
made on the next succeeding Business Day with the same force and effect as if
made on such date, and, if such payment is so made, no interest shall accrue for
the period from and after such date. Any such interest not so punctually paid
or duly provided for shall forthwith cease to be payable to the registered
Holder on the relevant Regular Record Date, and may be paid to the Person in
whose name this STRYPES Certificate (or one or more Predecessor STRYPES
Certificates) is registered at the close of business on a Special Record Date
for the payment of such interest to be fixed by the Trustee hereinafter referred
to, notice whereof shall be given to Holders of STRYPES not less than 10 days
prior to such Special Record Date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the STRYPES may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in said Indenture.
On the Maturity Date, the Company shall pay and discharge each STRYPES
evidenced hereby by delivering to the Holder: (a) if the Reference Property
Value (as defined below) is greater than or equal to $____ (the "Threshold
Appreciation Price"), _____% of the amount or number of each type of Reference
Security and other property constituting part of the Reference Property, (b) if
the Reference Property Value is less than the Threshold Appreciation Price but
is greater than $_____ (the "Initial Price"), a percentage of the amount or
number of each type of Reference Security and other property constituting part
of the Reference Property, allocated as proportionately as practicable, so that
the aggregate value thereof is equal to the Initial Price and (c) if the
Reference Property Value is less than or equal to the Initial Price, 100% of the
amount or number of each type of Reference Security and other property
constituting part of the Reference Property. Notwithstanding the foregoing, the
Company may, at its option in lieu of delivering the applicable percentage of
each type of Reference Security and other property constituting part of the
Reference Property on the Maturity Date, deliver cash in an amount (calculated
to the nearest 1/100th of a dollar per STRYPES or, if there is not a nearest
1/100th of a dollar, then to the next higher 1/100th of a dollar) equal to the
sum of (a) for any portion of the Reference Property consisting of cash that is
otherwise deliverable on the Maturity Date, the amount of such cash, (b) for any
portion of the Reference Property consisting of property other than cash or
Reference Securities that is otherwise deliverable on the Maturity Date, the
fair market value (as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Company) as of the
third Trading Day preceding the Maturity Date of such property, and (c) for any
portion of the Reference Property consisting of a Reference Security (including
IMC Common Stock) that is otherwise deliverable on the Maturity Date, an amount
equal to the average Closing Price per unit of such Reference Security on the
2
<PAGE>
20 Trading Days immediately prior to, but not including, the second Trading Day
preceding the Maturity Date multiplied by the number of units of such Reference
Security constituting a part of the Reference Property, all as provided in the
Indenture. Such number or amount of each type of Reference Security and other
property constituting part of the Reference Property (or, pursuant to the
Company's option, the amount of cash in lieu thereof) deliverable upon payment
and discharge hereof on the Maturity Date is hereinafter referred to as the
"Maturity Consideration."
The term "Reference Property" initially means one share of common
stock, par value $1.00 per share (the "IMC Common Stock"), of IMC Global Inc., a
Delaware corporation ("IMC Global"), and shall be subject to adjustment from
time to time prior to the Maturity Date to reflect the addition or substitution
of any cash, securities and/or other property as provided for in the Indenture.
The term "Reference Security" means, at any time, any security (as defined in
Section 2(1) of the Securities Act of 1933, as amended) then constituting part
of the Reference Property. The term "Reference Property Value" means, subject
to the provisions of the Indenture, the sum of (a) for any portion of the
Reference Property consisting of cash, the amount of such cash, (b) for any
portion of the Reference Property consisting of property other than cash or
Reference Securities, the fair market value (as determined by a nationally
recognized independent investment banking firm retained for this purpose by the
Company) as of the third Trading Day preceding the Maturity Date of such
property, and (c) for any portion of the Reference Property consisting of a
Reference Security (including IMC Common Stock), an amount equal to the average
Closing Price per unit of such Reference Security on the 20 Trading Days
immediately prior to, but not including, the second Trading Day preceding the
Maturity Date multiplied by the number of units of such Reference Security
constituting part of the Reference Property. The term "Closing Price" means,
with respect to any Reference Security on any date of determination, the closing
sale price (or, if no closing price is reported, the last reported sale price)
of such Reference Security on the NYSE on such date or, if such Reference
Security is not listed for trading on the NYSE on any such date, as reported in
the composite transactions for the principal United States securities exchange
on which such Reference Security is so listed, or if such Reference Security is
not so listed on a United States national or regional securities exchange, as
reported by the National Association of Securities Dealers, Inc. Automated
Quotation System, or, if such Reference Security is not so reported, the last
quoted bid price for such Reference Security in the over-the-counter market as
reported by the National Quotation Bureau or similar organization, or, if such
bid price is not available, the market value of such Reference Security on such
date as determined by a nationally recognized independent investment banking
firm retained for this purpose by the Company. The term "Trading Day" means,
with respect to any Reference Security the Closing Price of which is being
determined, a day on which such Reference Security (A) is not suspended from
trading on any national or regional securities exchange or association or over-
the-counter market at the close of business and (B) has traded at least once on
the national or regional securities exchange or association or over-the-counter
market that is the primary market for the trading of such Reference Security.
Interest on the STRYPES evidenced hereby will be payable, and delivery
of the Maturity Consideration in payment of the STRYPES evidenced hereby on the
Maturity Date will be made, upon surrender of this STRYPES Certificate, at the
office or agency of the Company maintained
3
<PAGE>
for that purpose in the Borough of Manhattan, The City of New York, and payment
of interest on the STRYPES evidenced by this STRYPES Certificate (and, if the
Company elects to deliver cash in lieu of the applicable percentage of each type
of Reference Property on the Maturity Date, the amount of cash payable on the
Maturity Date) will be made 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; provided, however, that at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear on the Securities Register.
ADDITIONAL PROVISIONS OF THIS STRYPES CERTIFICATE ARE CONTAINED ON THE
REVERSE HEREOF AND SUCH PROVISIONS SHALL HAVE THE SAME EFFECT AS THOUGH FULLY
SET FORTH IN THIS PLACE.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee by manual signature, this STRYPES Certificate shall
not be entitled to any benefit under
4
<PAGE>
the Indenture, or be valid or obligatory for any purpose. "Structured Yield
Product Exchangeable for Stock" and "STRYPES" are service marks of Merrill Lynch
& Co., Inc.
IN WITNESS WHEREOF, Merrill Lynch & Co., Inc. has caused this
instrument to be duly executed under its corporate seal.
Dated:
Merrill Lynch & Co., Inc.
By:_____________________________
Name:
Title:
Attest:________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This certificate evidences Securities of the series designated herein
and referred to in the within-mentioned Indenture.
Chemical Bank, as Trustee
By:_______________________________
Authorized Officer
5
<PAGE>
[Form of Reverse of STRYPES Certificate]
MERRILL LYNCH & CO., INC.
Structured Yield Product Exchangeable for Stock
__% STRYPES Due _________, 2001
(Payable with Shares of Common Stock, par value $1.00 per share, of IMC Global
Inc.)
This STRYPES Certificate evidences part of a duly authorized issue of
unsecured and unsubordinated debentures, notes or other evidences of senior
indebtedness (hereinafter called the "Securities") of the Company of the series
hereinafter specified, all such Securities issued and to be issued under an
indenture dated as of April 1, 1983 and restated as of April 1, 1987, as amended
and supplemented as of _______, 1996, between the Company and Chemical Bank
(successor by merger to Manufacturers Hanover Trust Company), as Trustee (the
indenture dated as of April 1, 1983 and restated as of April 1, 1987, as
amended, restated and supplemented from time to time, the "Indenture"), to which
Indenture and all other indentures supplemental thereto reference is hereby made
for a statement of the rights and limitation of rights thereunder of the Holders
of the Securities and of the rights, obligations, duties and immunities of the
Trustee for each series of Securities and of the Company, and the terms upon
which the Securities are and are to be authenticated and delivered. As provided
in the Indenture, the Securities may be issued in one or more series, which
different series may be issued in various aggregate principal amounts, may be
denominated in currencies other than U.S. Dollars (including composite
currencies), may mature at different times, may bear interest, if any, at
different rates, may be subject to different redemption provisions, if any, may
be subject to different sinking, purchase and analogous funds, if any, may be
subject to different covenants and Events of Default and may otherwise vary as
in the Indenture provided or permitted. This STRYPES Certificate evidences
Securities of the series designated as Structured Yield Product Exchangeable for
Stock, __% STRYPES Due ___________, 2001 (each, a "STRYPES").
The STRYPES are not subject to any sinking fund or other mandatory
redemption provisions. The STRYPES are not payable at the option of the Holders
prior to the Maturity Date.
If an Event of Default with respect to the STRYPES, as defined in the
Indenture, shall occur and be continuing, then an amount equal to the issue
price of all the STRYPES may be declared immediately due and payable in cash in
the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the STRYPES under the Indenture at any
time by the Company and the Trustee with the consent of the Holders of 66-2/3%
of the aggregate issue price of the Outstanding STRYPES. The Indenture also
contains provisions permitting the Holders of a
6
<PAGE>
majority of the aggregate issue price of the Outstanding STRYPES, on behalf of
the Holders of all STRYPES, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences with respect to the STRYPES. 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 the STRYPES evidenced by this STRYPES Certificate and
of any STRYPES evidenced by a STRYPES Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent of waiver is made upon this STRYPES Certificate.
No reference herein to the Indenture and no provision of this STRYPES
Certificate or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to deliver or pay the interest on,
and Maturity Consideration in respect of, the STRYPES evidenced by this STRYPES
Certificate at the times, place and rate, and in the manner, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the STRYPES evidenced by this STRYPES Certificate are transferable on the
Security Register of the Company, upon surrender of this STRYPES Certificate for
registration of transfer at the office or agency of the Company to be maintained
for that purpose in The City of New York, New York, or at any other office or
agency of the Company maintained for that purpose, 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 STRYPES
Certificates, evidencing the same aggregate number of STRYPES, will be issued to
the designated transferee or transferees.
No service charge shall be made for any such transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection with the registration of such transfer
or exchange, other than certain exchanges not involving any transfer. Certain
terms used in this STRYPES Certificate which are defined in the Indenture have
the meanings set forth therein.
This STRYPES Certificate shall for all purposes be governed by, and
construed in accordance with, the laws of the State of New York. The Company,
the Trustee and any agent of the Company or the Trustee may treat the Person in
whose name this STRYPES Certificate is registered as the owner of the STRYPES
evidenced hereby for the purpose of receiving payment as herein provided and for
all other purposes, whether or not the STRYPES be overdue, and neither the
Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
7
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations.
TEN COM -- as tenants in UNIF GIFT MIN -- _____ Custodian _______
common (Cust) (Minor)
TEN ENT -- as tenants by the Under Uniform Gifts to Minors
entireties Act _________________
(State)
JT TEN -- as joint tenants with
right of survivorship
and not as tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY
OR TAXPAYER I.D. OR OTHER
IDENTIFYING NUMBER OF
ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or typewrite name and address including postal
zip code of assignee)
___________________________ STRYPES and all rights thereunder, hereby
irrevocably constituting and appointing
attorney to transfer said STRYPES on the books of the Company, with full power
of substitution in the premises.
Dated:
---------------------------------------------------------
NOTICE: The signature to this assignment must correspond
with the name as written upon on the face of the within
Security in every particular, without alteration or
enlargement or any change whatever.
8
<PAGE>
EXHIBIT 5
June 20, 1996
Merrill Lynch & Co., Inc.
World Financial Center
North Tower
New York, New York 10281-1334
Gentlemen:
We have acted as your counsel and are familiar with the corporate
proceedings had in connection with the proposed issuance and sale by Merrill
Lynch & Co., Inc. (the "Company") of up to 6,510,286 of its Structured Yield
Product Exchangeable for Stock, _____% STRYPES Due _________, 2001 (the
"Securities").
We have examined such documents and records as we deemed appropriate,
including the following:
(a) a copy of the Restated Certificate of Incorporation of the
Company, certified by the Secretary of State of the State of Delaware;
(b) a copy of the Company's Registration Statement on Form S-3 (File
No. 33-65135), as amended by Post-Effective Amendment Nos. 3 and 5 thereto,
relating to the Securities (as so amended, the "Registration Statement");
(c) a copy of the indenture with respect to the Company's senior debt
securities between the Company and Chemical Bank (successor by merger to
Manufacturers Hanover Trust Company), as trustee (the "Trustee"), dated as
of April 1, 1983, as amended and restated (the "Principal Indenture"), in
the form executed by the Company and the Trustee; and
(d) a copy of the supplemental indenture with respect to the
Securities between the Company and the Trustee (the "Supplemental
Indenture"), in the form filed as an exhibit to the Registration Statement.
The term "Indenture" shall mean the Principal Indenture as amended by the
Trust Indenture Reform Act of 1990 and as amended and supplemented by the
Supplemental Indenture.
Based upon the foregoing and upon such further investigation as we deem
relevant in the premises, we are of the opinion:
1. The Company has been duly incorporated under the laws of the State of
Delaware.
<PAGE>
2. The Principal Indenture has been duly and validly authorized, executed
and delivered by the Company and, as amended by the Trust Indenture Reform Act
of 1990, constitutes a valid and binding agreement of the Company, enforceable
in accordance with its terms.
3. The Supplemental Indenture has been duly authorized by the Company
and, when the Supplemental Indenture has been duly executed and delivered by the
Company and the Trustee, such Supplemental Indenture will constitute a valid and
binding agreement of the Company, enforceable in accordance with its terms.
4. When appropriate corporate action has been taken to fix the terms of
the Securities and the Supplemental Indenture has been duly executed and
delivered by the Company and the Trustee, and when the Securities shall have
been duly authenticated or countersigned by the Trustee and duly issued under
the Indenture, such Securities will constitute valid and binding obligations of
the Company, enforceable in accordance with their terms.
With respect to enforcement, the above opinions are qualified to the extent
that enforcement of the Principal Indenture, the Supplemental Indenture or the
Securities may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws affecting enforcement of creditors' rights
generally and may be subject to general principles of equity (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, to the quotation in the Registration Statement of our opinion with
respect to certain tax matters and to the use of our name wherever appearing in
the Registration Statement and any amendment thereto.
Very truly yours,
/s/ BROWN & WOOD
2
<PAGE>
EXHIBIT 10
6/19/96 DRAFT
PURCHASE AGREEMENT
------------------
THIS AGREEMENT is made as of this ___ day of June, 1996 between MERRILL
LYNCH MORTGAGE CAPITAL INC. ("Purchaser"), a Delaware corporation and a wholly-
owned subsidiary of Merrill Lynch & Co., Inc., a Delaware corporation ("ML &
Co."), ML & Co. and GVI HOLDINGS, INC., a Delaware corporation ("Seller").
WHEREAS, ML & Co. has filed with the Securities and Exchange Commission
(the "SEC") a registration statement on Form S-3 (File No. 33-65135) and Post-
Effective Amendment Nos. 3 and 5 thereto contemplating the offering of up to
6,510,286 of its Structured Yield Product Exchangeable for Stock/SM/, ___%
STRYPES/SM/ Due ___________, 2001 (the "STRYPES"), the terms of which require
ML & Co. to pay and discharge the STRYPES on _____________, 2001 (the "Maturity
Date") by delivering to the holders thereof the Maturity Consideration.
WHEREAS, ML & Co. has agreed, pursuant to an underwriting agreement dated
the date hereof (the "Underwriting Agreement") among ML & Co., Seller and
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated (the
"Underwriter"), to issue and sell to the Underwriter an aggregate of 5,661,119
STRYPES (the "Initial STRYPES") and, at the Underwriter's option, all or any
part of 849,167 additional STRYPES (the "Option STRYPES") to cover over-
allotments, if any.
WHEREAS, the STRYPES are to be issued under an indenture, dated as of April
1, 1983 and restated as of April 1, 1987 (as amended and supplemented, the
"Principal Indenture"), between Purchaser and Chemical Bank (successor by merger
to Manufacturers Hanover Trust Company), as trustee (the "Trustee"), as further
amended and supplemented by the Tenth Supplemental Indenture, dated as of June
___, 1996 (the "Supplemental Indenture"), between ML & Co. and the Trustee,
relating to the STRYPES. The Principal Indenture, as amended and supplemented
by the Supplemental Indenture, is hereinafter referred to as the "Indenture."
WHEREAS, in order to obtain the Maturity Consideration required to satisfy
its obligations under the STRYPES, ML & Co. has agreed to purchase from
Purchaser, and Purchaser has agreed to sell to ML & Co., (i) concurrent with the
issuance and sale of the Initial STRYPES, an obligation of Purchaser in the form
of Exhibit A hereto, the aggregate principal amount of which will be equal to
____% of the net proceeds to ML & Co. from the sale of the Initial STRYPES and
the payment terms (other than the interest rate) of which will be identical to
the payment terms of the Initial STRYPES (the "Initial Subsidiary STRYPES") and
(ii) concurrent with each issuance and sale of any Option STRYPES, an additional
obligation of Purchaser in the form of Exhibit A hereto, the aggregate principal
amount of which will be equal to ____% of the net proceeds to ML & Co. from the
sale of such Option STRYPES and the payment terms (other than the interest rate)
of which will be identical to the payment terms of
- ------------------------------------
/SM/ Service mark of Merrill Lynch & Co., Inc.
1
<PAGE>
such Option STRYPES (an "Option Subsidiary STRYPES"); the Initial Subsidiary
STRYPES and each Option Subsidiary STRYPES are hereinafter collectively referred
to as the "Subsidiary STRYPES."
WHEREAS, in exchange for certain consideration to be paid by Purchaser
hereunder, Purchaser and Seller desire to provide for the future acquisition,
sale and delivery of the aggregate number or amount of each type of Reference
Security and other property constituting part of the Reference Property that
would be required by Purchaser to pay and discharge all of the Subsidiary
STRYPES on the Maturity Date (collectively, the "Subsidiary Maturity
Consideration"), assuming (x) (1) all of the STRYPES are held by the same Holder
at such time and without taking into account any default with respect to the
STRYPES or any acceleration of the maturity of the STRYPES resulting therefrom
and (2) all of the Subsidiary STRYPES are held by the same Holder at such time
and without taking into account any default with respect to the Subsidiary
STRYPES or any acceleration of the maturity of the Subsidiary STRYPES resulting
therefrom and (y) that the fair market value of any Reference Property
consisting of rights or warrants described in Section 303(b) of the Supplemental
Indenture is the value determined pursuant to such Section 303(b), and (z) that
the Purchaser has not elected to deliver cash in lieu of Reference Property
(collectively, the "Contract Consideration") at a price to be established under
this Agreement.
WHEREAS, Seller owns 6,510,286 shares of the common stock, par value $1.00
per share (the "IMC Common Stock"), of IMC Global Inc., a Delaware corporation
("IMC Global").
WHEREAS, Seller and Purchaser desire that, at the option of Seller, the
respective future acquisition, sale and delivery obligations can be settled
entirely, but not less than entirely, through cash payment in lieu of delivery
of the Contract Consideration.
WHEREAS, pursuant to a Pledge Agreement dated as of June __, 1996 (the
"Pledge Agreement"), among Seller, Purchaser and ___________, as Agent (the
"Agent"), ___________ shares of IMC Common Stock initially will be pledged to
secure the obligations of the Seller hereunder.
WHEREAS, Seller and Purchaser desire that ownership of the Contract
Consideration (including, without limitation, voting rights and rights to
receive any dividends, interest, distributions and other payments in respect
thereof, provided that, to the extent constituting part of the Reference
Property, such dividends, interest, distributions and other payments and the
proceeds of any sale required by the provisions hereof shall be retained by the
Agent in accordance with the provisions hereof or of the Pledge Agreement)
remain in Seller unless and until delivery, if any, of such Contract
Consideration to Purchaser pursuant to the provisions of this Agreement.
NOW, THEREFORE, in consideration of their mutual covenants herein
contained, the parties hereto, intending to be legally bound, hereby mutually
covenant and agree as follows:
2
<PAGE>
1.
Definitions
-----------
1.1. Definitions. Capitalized words and phrases used herein and not
-----------
otherwise defined shall have the meanings ascribed to them in the Supplemental
Indenture.
2.
Future Sale of Contract Consideration or Cash Settlement
--------------------------------------------------------
2.1. Sale and Purchase. On the basis of the representations and warranties
-----------------
herein contained and subject to the terms and conditions herein set forth, at
the Closing (as defined in Section 2.3 hereof), Seller agrees to assign,
transfer, convey and deliver to Purchaser, and Purchaser agrees to acquire from
Seller, the Contract Consideration.
2.2. Consideration. (a) The consideration to be paid by Purchaser for
-------------
Seller's obligation hereunder to deliver (or cause to be delivered) the Contract
Consideration in respect of the Initial Subsidiary STRYPES (the "Firm
Consideration Amount") shall be $___________ in cash. Upon the terms and
subject to the conditions of this Agreement, Purchaser shall deliver to Seller
the Firm Consideration Amount on __________, 1996 (the "Firm Payment Date") at
the offices of Brown & Wood, One World Trade Center, New York, New York 10048,
or at such other place as shall be agreed upon by Purchaser and Seller.
(b) ML & Co. shall deliver promptly to Purchaser and Seller notice of any
exercise by the Underwriter of its option to purchase any Option STRYPES,
stating the number of Option STRYPES as to which the Underwriter is then
exercising the option and the time and date of payment and delivery for such
Option STRYPES (any such time and date of delivery, a "Date of Delivery"). The
consideration to be paid by Purchaser in exchange for Seller's obligation
hereunder to deliver (or cause to be delivered) the Contract Consideration in
respect of any Option Subsidiary STRYPES (the "Option Consideration Amount")
shall be an amount in cash equal to ____% of the net proceeds to ML & Co. from
the sale of the related Option STRYPES. Upon the terms and subject to the
conditions of this Agreement, Purchaser shall deliver to Seller the Option
Consideration Amount on the related Date of Delivery at the offices of Brown &
Wood, One World Trade Center, New York, New York 10048, or at such other place
as shall be agreed upon by Purchaser and Seller.
(c) Payment of the Firm Consideration Amount and the Option Consideration
Amount shall be made by Fedwire transfer of immediately available funds to an
account designated by Seller, or such other form of payment specified by Seller,
against delivery by Seller to the Agent of the number of shares of IMC Common
Stock necessary to comply with Seller's obligations under Section 5.1 hereof.
2.3. Delivery Upon Maturity. Consummation of the acquisition, sale and
----------------------
delivery of the Contract Consideration shall take place on a date mutually
agreeable to Purchaser and Seller, not later than one (1) Trading Day prior to
the Maturity Date (the "Closing"). Delivery of the Contract Consideration shall
be made at the offices of MLMC, or at such other place as shall
3
<PAGE>
be agreed upon by Purchaser and Seller. Certificates representing Reference
Securities in registered form that are part of the Contract Consideration shall
be registered in Purchaser's name or in the name of a depositary or a nominee of
a depositary as requested by Purchaser, unless such Reference Securities are
represented by one or more global certificates registered in the name of a
depositary or a nominee of a depositary or are book entry securities, in which
event Purchaser's interest in such securities shall be noted in a manner
satisfactory to Purchaser and its counsel. Other property that is a part of the
Contract Consideration delivered to Purchaser shall be transferable by Purchaser
to the same extent as when received by or on behalf of Seller and shall not be
subjected, by reason of or following receipt by Seller, to any transfer
restrictions not generally applicable to all holders of such other property.
2.4. No Fractional Interests. No fractional units or scrip representing
-----------------------
fractional units of any Reference Security shall be delivered at the Closing.
Instead of any fractional unit of any such Reference Security which would
otherwise be deliverable by Seller at the Closing, Seller shall make a cash
payment in respect of such fractional unit in an amount equal to the value of
such fractional unit based upon the average Closing Price per unit of such
Reference Security on the 20 Trading Days immediately prior to, but not
including, the second Trading Day preceding the Maturity Date. To the extent
practicable, Seller will deliver fractional interests of any Reference Property
other than cash or a Reference Security at the Closing. If such delivery is not
practicable, in lieu of any fractional interest of any Reference Property other
than cash or a Reference Security which would otherwise be deliverable at the
Closing, Seller shall make a cash payment in respect of such fractional interest
in an amount equal to the value of such fractional interest based on the fair
market value (as determined by a nationally recognized independent investment
banking firm retained for this purpose by ML & Co.) as of the third Trading Day
preceding the Maturity Date of such Reference Property other than cash or a
Reference Security.
2.5. Cash Settlement. (a) Notwithstanding the provisions of Sections 2.1,
---------------
2.2, 2.3 and 2.4 hereof, Seller shall have the option, exercisable in its sole
discretion, to require that its obligation contained therein be settled, in
whole, through a cash payment at Closing in lieu of delivery of the Contract
Consideration. The amount of such cash settlement payment shall be equal to the
value of the Subsidiary Maturity Consideration determined in accordance with the
second sentence of the third paragraph of the Subsidiary STRYPES, assuming (x)
(1) all of the STRYPES are held by the same Holder at such time and without
taking into account any default with respect to the STRYPES or any acceleration
of the maturity of the STRYPES resulting therefrom and (2) all of the Subsidiary
STRYPES are held by the same Holder at such time and without taking into account
any default with respect to the Subsidiary STRYPES or any acceleration of the
maturity of the Subsidiary STRYPES resulting therefrom and (y) that the fair
market value of any Reference Property consisting of rights or warrants
described in Section 303(b) of the Supplemental Indenture is the value
determined pursuant to such Section 303(b), and (z) that the Purchaser has not
elected to deliver cash in lieu of Reference Property (the "Maturity Value"). On
or prior to the day seven Business Days preceding the Maturity Date, Seller
shall notify Purchaser whether it will exercise its option to require cash
settlement pursuant to this Section 2.5.
(b) If the Contract Consideration consists of securities and/or other
property other than IMC Common Stock, Seller's right to deliver (or cause to be
delivered) to Purchaser hereunder such securities and/or other property shall be
conditioned upon such securities and/or other property so delivered (i) being
transferable by Purchaser to the same extent as when received by or on behalf of
Seller, and (ii) not being subjected, by reason of or following receipt
4
<PAGE>
by Seller, to any transfer restrictions not generally applicable to all holders
of such securities and/or other property. If the condition set forth in the
preceding sentence shall not be satisfied, then, notwithstanding the provisions
hereof, the parties' respective obligations contained in Sections 2.1, 2.2, 2.3
and 2.4 hereof shall be settled, in whole, through a cash payment at the Closing
in lieu of delivery of the Contract Consideration as provided in Section 2.5(a).
2.6. Seller's Conditions to Closing. Seller's obligation to consummate the
------------------------------
transactions contemplated hereunder is conditioned upon (a) the purchase and
sale of the Initial STRYPES pursuant to the Underwriting Agreement having been
consummated as contemplated therein, (b) Seller having received, at or prior to
the date of Closing, subject to the provisions of Section 7.1 hereof, notice
from Purchaser specifying the Contract Consideration, (c) the representations
and warranties of Purchaser contained in paragraphs (iii) and (iv) of Article 4
hereof being true and correct as of the date of the Closing and (d) the Pledge
Agreement having been executed by the parties thereto and the delivery of the
Collateral thereunder having been made.
2.7. Purchaser's Conditions to Closing. Purchaser's obligation to
---------------------------------
consummate the transactions contemplated hereunder is conditioned upon (a) the
purchase and sale of the Initial STRYPES pursuant to the Underwriting Agreement
having been consummated as contemplated therein, (b) the representations and
warranties of Seller contained in paragraphs (i), (iii)(b), (iv), (v) and (vi)
of Article 3 hereof being true and correct as of the date of the Closing, (c)
the Pledge Agreement having been executed by the parties thereto and the
delivery of the Collateral thereunder having been made and (d) Purchaser having
received a legal opinion of Rosenberg & Liebentritt, P.C., dated the date of
Closing, as to certain insolvency matters, in form and substance satisfactory to
Purchaser.
3.
Representations and Warranties of Seller
----------------------------------------
Seller represents and warrants to Purchaser as of the date hereof and as of
the date of Closing as follows:
(i) Seller 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 enter into and perform its obligations under
this Agreement and the Pledge Agreement. All of the issued common stock of
Seller is owned by Great American Management and Investment, Inc., a Delaware
corporation ("GAMI"), and such common stock is the only capital stock issued by
Seller. Seller's certificate of incorporation limits its activities to
[describe]. Seller is qualified to do business in each jurisdiction in which
the conduct of its business so requires.
5
<PAGE>
(ii) This Agreement and the Pledge Agreement have been duly
authorized, executed and delivered by Seller and (assuming the due
authorization, execution and delivery by the other parties thereto) constitute
valid and binding agreements of Seller, enforceable against Seller in accordance
with their respective terms, except as the enforcement hereof and thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as enforcement
hereof and thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
(iii) (a) At the date hereof, Seller is the sole registered owner of
and has all rights in and to at least 6,510,286 shares of IMC Common Stock, free
and clear of any security interest, mortgage, pledge, lien, encumbrance, claim
or equity, except for the security interest granted to certain banks pursuant to
that certain Credit Agreement, dated May 20, 1996, among GVI, as borrower, and
the banks named as parties therein, which security interest will be released on
the date of the Closing; and (b) to the extent Seller elects to deliver the
Contract Consideration at Closing, upon delivery of such Contract Consideration
against payment therefor pursuant to this Agreement, Purchaser will be the sole
owner of such Contract Consideration and, assuming Purchaser purchased for value
in good faith and without notice of any adverse claim, Purchaser will have
acquired all rights in and to such Contract Consideration, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity.
(iv) 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 execution, delivery or
performance by Seller of this Agreement or the Pledge Agreement or the
consummation by Seller of the transactions contemplated herein and therein,
except such as have been already obtained or as may be required under the 1933
Act or the rules and regulations promulgated thereunder or state securities
laws; and Seller has full right, power and authority to enter into this
Agreement and the Pledge Agreement and to sell, assign, transfer and deliver the
Contract Consideration pursuant to this Agreement.
(v) The execution, delivery and performance by Seller of this
Agreement and the Pledge Agreement and the consummation by Seller of the
transactions contemplated herein and therein and compliance by Seller 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 default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
Seller pursuant to, any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or any other agreement or instrument to which
Seller is a party or by which Seller is bound, or to which any of the property
or assets of Seller is subject (except for such conflicts, breaches or defaults
or liens, charges or encumbrances that would not, singly or in the aggregate,
materially and adversely affect the ability of Seller to perform its obligations
under this Agreement and the Pledge Agreement), nor will such action result in
any violation of the provisions of the charter or by-laws of Seller, or any
applicable law, statute, rule or regulation of any government or government
instrumentality having jurisdiction over Seller or any of its subsidiaries or
any of their assets, properties or operations (other than any state securities
or "blue sky" law, statute, rule or regulation, as to which no representation
and warranty is made), or any applicable judgment, order, writ or decree of any
government, government instrumentality or domestic
6
<PAGE>
court having jurisdiction over Seller or any of its assets, properties or
operations (except in all cases for violations that would not, singly or in the
aggregate, materially and adversely affect the ability of Seller to perform its
obligations under this Agreement and the Pledge Agreement).
(vi) Seller is not an "investment company," or a company "controlled"
by an "investment company," within the meaning of the Investment Company Act of
1940, as amended.
4.
Representations and Warranties of Purchaser
-------------------------------------------
Purchaser represents and warrants to Seller as of the date hereof and as of
the date of Closing as follows:
(i) Purchaser 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 enter into and perform its obligations under
this Agreement and the Pledge Agreement.
(ii) This Agreement and the Pledge Agreement have been duly
authorized, executed and delivered by Purchaser and (assuming the due
authorization, execution and delivery by the other parties thereto) constitute
valid and binding agreements of Purchaser, enforceable against Purchaser in
accordance with their respective terms, except as the enforcement hereof and
thereof may be limited by bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and except as
enforcement hereof and thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
(iii) 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 execution, delivery or
performance by Purchaser of this Agreement or the Pledge Agreement or the
consummation by Purchaser of the transactions contemplated herein and therein,
except such as have been already obtained or as may be required under the 1933
Act or the rules and regulations promulgated thereunder or state securities
laws; and Purchaser has full right, power and authority to enter into this
Agreement and the Pledge Agreement and to purchase the Contract Consideration
pursuant to this Agreement and the Pledge Agreement.
(iv) The execution, delivery and performance by Purchaser of this
Agreement and the Pledge Agreement and the consummation by Purchaser of the
transactions contemplated herein and therein and compliance by Purchaser 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 default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
Purchaser pursuant to, any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or any other agreement or instrument to which
Purchaser is a party or by which Purchaser is bound, or to which any of the
property or assets of Purchaser is subject (except for such conflicts, breaches
7
<PAGE>
or defaults or liens, charges or encumbrances that would not, singly or in the
aggregate, materially and adversely affect the ability of Purchaser to perform
its obligations under this Agreement and the Pledge Agreement), nor will such
action result in any violation of the provisions of the charter or by-laws of
Purchaser, or any applicable law, statute, rule, or regulation of any government
or government instrumentality having jurisdiction over Purchaser or any of its
subsidiaries or any of their assets, properties or operations (other than any
state securities or "blue sky" law, statute, rule or regulation, as to which no
representation and warranty is made), or any applicable judgment, order, writ or
decree of any government, government instrumentality or domestic court having
jurisdiction over Purchaser or any of its assets, properties or operations
(except in all cases for violations that would not, singly or in the aggregate,
materially and adversely affect the ability of Purchaser to perform its
obligations under this Agreement and the Pledge Agreement).
5.
Covenants
---------
5.1. Pledge. (a) Seller shall cause to be held by the Agent during the
------
term of this Agreement an aggregate number of shares of IMC Common Stock and/or
cash, securities and/or other property at least equal to the maximum number or
amount of each type of Reference Security and other property constituting part
of the Reference Property that would be required by Purchaser to pay and
discharge the Subsidiary STRYPES on the Maturity Date, assuming (x) (1) all of
the STRYPES are held by the same Holder at such time and without taking into
account any default with respect to the STRYPES or any acceleration of the
maturity of the STRYPES resulting therefrom and (2) all of the Subsidiary
STRYPES are held by the same Holder at such time and without taking into account
any default with respect to the Subsidiary STRYPES or any acceleration of the
maturity of the Subsidiary STRYPES resulting therefrom and (y) that the fair
market value of any Reference Property consisting of rights or warrants
described in Section 303(b) of the Supplemental Indenture is the value
determined pursuant to such Section 303(b), and (z) that the Purchaser has not
elected to deliver cash in lieu of Reference Property (the "Maximum Maturity
Consideration").
(b) Seller shall direct the Agent to sell (as provided in Section 2(c) of
the Pledge Agreement) any rights or warrants described in Section 303(b) of the
Supplemental Indenture at the net bid received by the Agent in accordance with
the procedures specified in Section 2(c) of the Pledge Agreement and to hold
during the term of this Agreement the proceeds from such sale. If the Agent is
unable to consummate such sale, the rights or warrants shall be held by the
Agent, and neither Seller nor the Agent shall be required to take any action to
sell such rights or warrants other than as specified in such Section 2(c) of the
Pledge Agreement.
5.2. Affirmative Covenants. During the term of this Agreement, Seller
---------------------
covenants and agrees that it will:
(a) Comply in all material respects with all applicable laws, rules,
regulations and orders, such compliance to include, without limitation, paying
before the same become delinquent all taxes, assessments and governmental
charges imposed upon it or upon its property, including the Collateral, except
to the extent contested in good faith.
8
<PAGE>
(b) Furnish to Purchaser as soon as possible and in any event within twenty
days after the president or any vice president of Seller shall become aware of
the occurrence of each failure by Seller to comply with or perform any agreement
or obligation contained in Sections 5.1, 5.2, 5.3 or 5.4 of this Agreement or
Sections 4, 7(a) or 7(b) of the Pledge Agreement continuing on the date of such
statement, a statement of the president or any vice president of Seller
describing such failure and setting forth details of such failure and the action
which the Seller has taken and proposes to take with respect thereto.
(c) Preserve and maintain its corporate existence, rights (charter and
statutory), powers, franchises and qualifications, and limit its activities to
those specifically authorized in its certificate of incorporation.
(d) At any reasonable time and from time to time, upon reasonable notice,
prior to the occurrence of a GVI Termination Event, and upon any notice after
the occurrence of a GVI Termination Event until delivery of the Collateral to
Seller to the extent required in accordance with Section 6.1(a) or (b), as
applicable, permit Purchaser or representatives thereof to examine and make
copies of and abstracts from the records and books of account of, and visit the
offices of, Seller, and to discuss the affairs, finances and accounts of Seller
with any of its officers or directors.
(e) Keep proper books of record and account, in which full and correct
entries shall be made of all financial transactions and the assets and business
of Seller, including the Collateral, in accordance with appropriate accounting
principles consistently applied.
5.3. Negative Covenants. During the term of this Agreement, Seller
------------------
covenants and agrees that it will not:
(a) Except for Permitted Activities and the transactions otherwise
contemplated by this Agreement and the Pledge Agreement, sell, assign, transfer,
exchange or otherwise dispose of, or grant any option with respect to, or
create, incur or suffer to exist any lien, security interest or other charge or
encumbrance, or any other type of preferential arrangement, upon or with respect
to any of its properties, including the Collateral, whether now owned or
hereafter acquired, or assign any right to receive income, in each case to
secure to provide for the payment of any Debt of any Person. "Permitted
Activities" shall mean activities of Seller directly related to: (i) the
ownership of the Collateral, (ii) the receipt of the Firm Consideration Amount
and the Option Consideration Amount; (iii) the receipt pursuant to Section 5 of
the Pledge Agreement of distributions in respect of the Collateral; (iv) the
investment and reinvestment of amounts received pursuant to (ii) and (iii) above
or amounts received from any such investment or reinvestment (which may include
loans to Affiliates); (v) the dividend payment or other distribution of amounts
received pursuant to (ii), (iii) and (iv) or any of its properties other than
the Collateral; and (vi) the payment of its expenses related to the foregoing
and the conduct of its business in accordance with the provisions of its
certificate of incorporation. "Debt" means, without duplication, (i)
indebtedness for borrowed money, (ii) obligations evidenced by bonds,
debentures, notes or other similar instruments, (iii) obligations to pay the
deferred purchase price of property or services, (iv) obligations as lessee
under leases which shall have been or should be, in accordance with generally
accepted accounting principles, recorded as capital leases, and (v) obligations
under direct or indirect guaranties in respect of, and obligations (contingent
or otherwise) to purchase or otherwise acquire, or otherwise to assure a
creditor against loss in respect of, indebtedness or obligations of others of
the kinds referred to in clauses (i) through (iv) above. "Person" means an
individual, partnership, corporation (including a business trust), joint stock
company, trust, unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
(b) Create or suffer to exist any Debt of Seller, other than the Debt
created under this Agreement and the Pledge Agreement.
(c) Except for Permitted Activities and the transactions otherwise
contemplated by this Agreement and the Pledge Agreement, declare or make any
dividend payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of any shares of any class of capital stock
of
9
<PAGE>
Seller, or purchase, redeem or otherwise acquire for value any shares of any
class of capital stock of Seller or any warrants, rights or options to acquire
any such shares, now or hereafter outstanding.
(d) Except for the transactions contemplated by this Agreement and the
Pledge Agreement, merge or consolidate with or into, or convey, transfer, lease
or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets, including the Collateral
(whether now owned or hereafter acquired) to, or acquire all or substantially
all of the assets of, any Person.
(e) Except for Permitted Activities and the transactions otherwise
contemplated by this Agreement and the Pledge Agreement, own any property, incur
any liabilities, make any investment or conduct any business other than the
ownership of the Collateral, this Agreement and the Pledge Agreement, and the
incurrence of the obligations pursuant to this Agreement and the Pledge
Agreement.
5.4. Separate Corporate Existence. Seller acknowledges that Purchaser is
----------------------------
entering into the transactions contemplated by this Agreement and the Pledge
Agreement in reliance upon the Seller's identity as a legal entity that is
separate from GAMI and its other Affiliates. As used in this Agreement, unless
otherwise specifically provided, the term "Affiliate" means, as to any Person,
any other Person that, directly or indirectly, controls, is controlled by or is
under common control with such Person or is a partner in, or a director or
officer of, such Person. The term "control" (including the terms "controlled by"
or "under the common control with") means the possession, direct or indirect, of
the power to vote ten percent or more of the securities having ordinary voting
power for the election of directors of such Person or to direct or cause the
direction of the management and policies of such Person, whether through
ownership of voting securities or by contract or otherwise. Therefore, from and
after the date of execution and delivery of this Agreement, Seller covenants and
agrees to take all reasonable steps, including, without limitation, all steps
that Purchaser may from time to time reasonably request, to maintain Seller's
identity as a separate legal entity and to make it manifest to third parties
that Seller is an entity with assets and liabilities distinct from those of GAMI
and its other Affiliates and not just a division of GAMI. Without limiting the
generality of the foregoing and in addition to the other covenants set forth
herein, Seller covenants and agrees to:
(a) conduct its own business in its own name and, to the extent Seller has
any full-time employees, require that all full-time employees of the Seller
identify themselves as such and not as employees of any Affiliate (including,
without limitation, by means of providing appropriate employees with business or
identification cards identifying such employees as Seller's employees);
(b) compensate all employees, consultants and agents directly, from
Seller's bank accounts, for services provided to Seller by such employees,
consultants and agents, except to the extent that any employee, consultant or
agent of Seller is also an employee, consultant or agent of any Affiliate(s) and
the compensation of such employee, consultant or agent is allocated between
Seller and such Affiliate(s) on a basis which reflects the services rendered to
Seller and such Affiliate(s);
(c) have separate stationery, invoices and checks in its own name;
(d) conduct all transactions with each Affiliate strictly on an arm's-
length basis, allocate all overhead expenses (including, without limitation,
telephone and other utility charges)
10
<PAGE>
for items shared between Seller and such Affiliate on the basis of actual use to
the extent practicable and, to the extent such allocation is not practicable, on
a basis reasonably related to actual use;
(e) observe all corporate formalities as a distinct entity, and ensure that
all appropriate corporate actions are duly authorized by its Board of Directors;
without limiting the generality of the foregoing, Seller's Certificate of
Incorporation shall at all times provide that corporate action to file a
voluntary petition under the federal Bankruptcy Code or consent to the entry of
an order for relief in an involuntary case under the federal bankruptcy laws as
now or hereafter in effect may be authorized only by unanimous vote of its Board
of Directors;
(f) maintain the Seller's books and records separate from those of each
Affiliate and otherwise readily identifiable as its own assets rather than
assets of any Affiliate;
(g) prepare its financial statements separately from those of each
Affiliate and insure that any consolidated statements of any Affiliate that
include Seller have notes clearly indicating that Seller is a separate corporate
entity and that the Collateral will be available first and foremost to satisfy
the claims of Purchaser pursuant to this Agreement;
(h) except as herein specifically otherwise provided, not commingle funds
or other assets, including the Collateral, of Seller with those of any Affiliate
and not maintain bank accounts or other depository accounts to which any
Affiliate is an account party, into which any Affiliate makes deposits or from
which any Affiliate has the power to make withdrawals;
(i) not permit any Affiliate to pay any of the Seller's operating expenses
(except pursuant to allocation arrangements that comply with the requirements of
this Section 5.4);
(j) except for the master or blanket policies covering Seller and any
Affiliate(s) or the property of Seller and such Affiliate(s), the costs of which
are allocated between Seller and such Affiliate(s) on a reasonable basis, not
permit Seller to be named as an insured on the insurance policy covering the
property of any Affiliate or enter into an agreement with the holder of such
policy whereby in the event of a loss in connection with such property, proceeds
are paid to Seller; and
(k) have at least one member of its Board of Directors who is not (i) an
officer or employee of any Affiliate; (ii) a Person related to any officer or
employee of any Affiliate, (iii) a holder (directly or indirectly) of any
securities of any Affiliate, or (iv) a Person related to a holder (directly or
indirectly) of any voting securities of any Affiliate; provided that for
--------
purposes of this clause (k), "Affiliate" shall mean any entity consolidated
under generally accepted accounting principles with Equity Holdings Limited, an
Illinois limited partnership ("EHL") and any trustee, officer, employee or
direct beneficiary of any of EHL's general partners.
5.5. Taxes. Seller shall pay any and all documentary, stamp, transfer or
-----
similar taxes and charges that may be payable in respect of the transfer and
delivery of the Contract Consideration pursuant hereto.
11
<PAGE>
5.6. Amounts Due to Trustee. ML & Co. shall pay any and all amounts due
----------------------
to the Trustee under Section 607 of the Indenture.
5.7. Certain Notices. (a) ML & Co. shall notify Seller of any notice of
---------------
default with respect to the STRYPES received by ML & Co. from the Trustee or any
holders of STRYPES pursuant to the Indenture as promptly as reasonably
practicable after receipt thereof.
(b) In case at any time while any of the STRYPES are outstanding Seller
receives written notice in its capacity as a holder of any Reference Security
that:
(i) an issuer of a Reference Security shall declare a dividend
(or any other distribution) on or in respect of such Reference Security to
which Section 303(c) of the Supplemental Indenture shall apply (other than
any cash dividends, if any, paid from time to time by the issuer of such
Reference Security that do not constitute Extraordinary Cash Dividends);
(ii) an issuer of a Reference Security shall authorize the
issuance to all holders of such Reference Security of rights or warrants to
subscribe for or purchase units of such Reference Security or of any other
subscription rights or warrants;
(iii) there shall occur any conversion or reclassification of
any Reference Security (other than a subdivision or combination of
outstanding units of such Reference Security) or any consolidation, merger
or reorganization to which an issuer of a Reference Security is a party and
for which approval of any unitholders of such issuer is required, or the
sale or transfer of all or substantially all of the assets of an issuer of
a Reference Security; or
(iv) there shall occur the voluntary or involuntary dissolution,
liquidation, winding up or bankruptcy of an issuer of a Reference Security;
then Seller shall promptly notify Purchaser and ML & Co. of such fact and of (x)
the date, if known by Seller, on which a record is to be taken for the purpose
of such dividend, distribution or grant of rights or warrants, or, if a record
is not to be taken, the date as of which the holders of such Reference Security
of record to be entitled to such dividend, distribution or grant of rights or
warrants are to be determined, or (y) the date, if known by Seller, on which
such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation, winding up or bankruptcy is expected to become effective.
5.8. No Supplemental Indentures Without Consent. ML & Co. shall not,
------------------------------------------
without the consent of Seller, enter into any indenture supplemental to the
Indenture or otherwise modify or supplement the Supplemental Indenture which
would have an adverse effect on Seller. ML & Co. and Purchaser shall not,
without the consent of Seller, amend the Subsidiary STRYPES in any respect that
would adversely affect any obligation of Seller hereunder, including, without
limitation, increasing the consideration that Seller is obligated to deliver at
Closing pursuant to this Agreement. In the event that (i) any modification or
indenture supplemental to the Indenture or modification or supplement to the
Supplemental Indenture which would have an adverse effect on Seller is entered
into without Seller's consent or (ii) the Subsidiary STRYPES are amended
12
<PAGE>
in any respect that would adversely affect any obligation of Seller hereunder
without Seller's consent, then, insofar as this Agreement is concerned and
except to the extent thereafter approved by Seller, this Agreement shall be
interpreted and performed as if such modification or indenture supplemental to
the Indenture or modification or supplement to the Supplemental Indenture or
amendment of the Subsidiary STRYPES had never existed and such modification or
indenture supplemental to the Indenture or modification or supplement to the
Supplemental Indenture or amendment of the Subsidiary STRYPES shall have no
effect for purposes of this Agreement.
5.9. Limitations on Trading During Certain Days. Each of Seller and ML &
------------------------------------------
Co. hereby agrees that it will not, and it will cause each of its Affiliates not
to, buy or sell shares of any Reference Security for their own account during
the 20 Trading Days immediately prior to the second Trading Day preceding the
Maturity Date.
5.10. Payment and Discharge of STRYPES. Purchaser agrees that it shall
--------------------------------
pay and discharge its obligations under the Subsidiary STRYPES by delivering to
the holders of the Subsidiary STRYPES on the Maturity Date the form of
consideration that it receives from Seller hereunder. ML & Co. agrees that it
shall pay and discharge its obligations under the STRYPES by delivering to the
holders of the STRYPES on the Maturity Date the form of consideration that it
receives from Purchaser under the Subsidiary STRYPES.
5.11. Further Assurances. From time to time on and after the date hereof
------------------
through the date of Closing, each of the parties hereto shall use its reasonable
best efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper and advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement in accordance with the terms and conditions hereof, including (i)
using reasonable best efforts to remove any legal impediment to the consummation
of such transactions and (ii) the execution and delivery of all such deeds,
agreements, assignments and further instruments of transfer and conveyance
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement in accordance with the terms and conditions
hereof.
6.
Acceleration of Delivery
------------------------
6.1. Delivery. (a) If a GVI Termination Event, within the meaning of the
--------
Pledge Agreement, shall occur following the occurrence of a ML Termination
Event, within the meaning of the Pledge Agreement, or a GVI Termination Event
and a ML Termination Event shall occur simultaneously, then (i) Seller's rights
under Section 2.5 hereof shall terminate immediately, (ii) there shall become
immediately deliverable and payable by Seller to Purchaser (and immediately
deliverable by the Agent under the Pledge Agreement to Purchaser) the following:
(1) if the value of the Collateral (as defined in the Pledge Agreement)
(determined in the manner provided in Section 2.5 hereof for the Maturity Value)
is greater than $ [the aggregate Issue Price], then the greater of (x) a
percentage of the amount or number of each type of Reference Security and other
property then constituting Reference Property, allocated
13
<PAGE>
as proportionately as practicable, so that the aggregate value thereof
(determined in the manner provided in Section 2.5 hereof for the Maturity Value)
is equal to $ [the aggregate Issue Price], and (y) ___% of the amount or number
of each type of Reference Security and other property then constituting
Reference Property, or (2) if the value of the Collateral is less than or equal
to $ [the aggregate Issue Price], then 100% of the Collateral, and (iii) the
balance of the Collateral remaining after the delivery and payment described in
clause (ii) above, if any, shall be retained by Seller (and shall become
immediately deliverable by the Agent under the Pledge Agreement to Seller).
(b) If a GVI Termination Event, within the meaning of the Pledge
Agreement, shall occur prior to the occurrence of a ML Termination Event, within
the meaning of the Pledge Agreement, then (i) Seller's rights under Section 2.5
hereof shall terminate immediately and (ii) all Collateral shall become
immediately deliverable and payable by Seller to Purchaser (and immediately
deliverable by the Agent under the Pledge Agreement to Purchaser).
7.
Miscellaneous
-------------
7.1. Adjustments to Reference Property; Selection of Independent Firm. ML
----------------------------------------------------------------
& Co. shall provide Seller with all notices given by ML & Co. pursuant to
Section 305 of the Supplemental Indenture. ML & Co. shall provide Seller
reasonable opportunity to review the calculations pertaining to any adjustment
of the Reference Property or to any determination of the Maturity Consideration
or the value of the Maturity Consideration made pursuant to Article Three of the
Supplemental Indenture. If the Seller disagrees with any such calculation or
determination or with the determination of the Subsidiary Maturity
Consideration, the Contract Consideration or the Maturity Value, _________ or
such other independent accounting or investment banking firm agreed upon by
Seller and ML & Co. shall be retained to make such calculation, which shall be
binding upon Purchaser, ML & Co. and Seller. The fees and expenses of such firm
shall be borne by Seller if the independent firm agrees with the calculation of
ML & Co. and shall by borne by ML & Co. if the independent firm agrees with the
calculation of Seller. If the independent firm agrees with neither the
calculation of ML & Co. or of Seller, its fees and expenses shall be borne
equally by ML & Co. and Seller. If, pursuant to the terms and conditions of the
Supplemental Indenture and the STRYPES, ML & Co. shall be required to retain a
nationally recognized independent investment banking firm for any purpose
provided in the Supplemental Indenture or the STRYPES, such nationally
recognized independent investment banking firm shall be selected and retained by
ML & Co. only after giving Seller 30 days prior notice (or such shorter notice
as may be reasonably practicable) of the identity of such firm and after
consultation with Seller, and ML & Co. shall not select any firm that is not
reasonably acceptable to Seller. In the event that ML & Co. fails or refuses to
timely make the calculations pertaining to any adjustment of the Reference
Property or to any determination of the Maturity Consideration or the value of
the Maturity Consideration pursuant to Article Three of the Supplemental
Indenture or to notify Seller of such calculations, then Seller may retain
___________________ or a nationally recognized independent investment banking
firm to make such calculations, adjustments or determinations, which shall be
binding on
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<PAGE>
Purchaser, ML & Co. and Seller and shall be used for the purpose of determining
the Contract Consideration under this Agreement or the cash settlement payment
pursuant to Section 2.5 of this Agreement.
7.2. Notices. Notices to Purchaser shall be directed to it at
-------
__________________, attention of ____________; notices to ML & Co. shall be
directed to it at 100 Church Street, 12th Floor, New York, New York 10007,
attention of the Secretary, with a copy to the Treasurer at World Financial
Center, South Tower, New York, New York, 10080-6105; notices to Seller shall be
directed to it at Two North Riverside Plaza, Suite 1100, Chicago, Illinois
60606, attention of General Counsel. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
either (i) personally delivered (including delivery by courier service or by
Federal Express or any other nationally recognized overnight delivery service
for next day delivery) to the offices specified in the preceding sentence, in
which case they shall be deemed received on the first Business Day by which
delivery shall have been made to said offices; or (ii) sent by certified mail,
return receipt requested, in accordance with the preceding sentence, in which
case they shall be deemed received when receipted for unless acknowledgment is
refused (in which case delivery shall be deemed to have been received on the
first Business Day on which such acknowledgment is refused).
7.3. Governing Law; Consent to Jurisdiction. This Agreement shall be
--------------------------------------
governed by and construed in accordance with the laws of the State of New York
applicable to agreements made and to be performed wholly within such State. For
the purpose of any suit, action or proceeding arising out of or relating to this
Agreement, the parties hereto hereby expressly and irrevocably consent and
submit to the non-exclusive jurisdiction of any competent court in the place of
its domicile and any United States Federal court sitting in the Borough of
Manhattan, City and State of New York, and expressly and irrevocably waive, to
the extent permitted under applicable law, any immunity from the jurisdiction
thereof and any claim or defense in such suit, action or proceeding based on a
claim of improper venue, forum non conveniens or any similar basis to which it
might otherwise be entitled.
7.4. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
---------------------
PARTIES HERETO HEREBY WAIVE AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS
PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN
RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR
BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR TORT OR OTHERWISE. EACH
PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE OTHER PARTY HERETO
THAT THE PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH
THE OTHER
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PARTY HERETO HAS RELIED, IS RELYING AND WILL RELY IN ENTERING INTO THIS
AGREEMENT AND ANY DOCUMENT RELATED THERETO. EACH PARTY HERETO MAY FILE AN
ORIGINAL COUNTERPART OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE OTHER PARTY HERETO TO THE WAIVER OF ITS RIGHTS TO TRIAL BY JURY.
7.5. Entire Agreement. Except as expressly set forth herein, this Agreement
----------------
and the Pledge Agreement constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements,
understandings and negotiations, both written and oral, among the parties with
respect to the subject matter of this Agreement.
7.6. Amendments; Waivers. Any provision of this Agreement may be amended
-------------------
or waived prior to the Closing if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by Purchaser, Seller and ML &
Co. or, in the case of a waiver, by the party against whom the waiver is to be
effective. No failure or delay by either party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
7.7. Successors, Assigns. The provisions of this Agreement shall be
-------------------
binding upon and accrue to the benefit of the parties hereto and their
respective heirs, successors and permitted assigns. Notwithstanding the
foregoing, neither this Agreement nor any right, remedy, obligation or liability
arising hereunder or by reason hereof shall be assignable by any party hereto
without the prior written consent of the other parties hereto.
7.8. No Third Party Rights. This Agreement is not intended and shall not
---------------------
be construed to create any rights in any person other than Seller, Purchaser and
ML & Co. and no person shall assert any rights as third party beneficiary
hereunder.
7.9. Application of Bankruptcy Code. The parties hereto acknowledge and
------------------------------
agree that this Agreement is a "securities contract", as such term is defined in
section 741(7) of Title 11 of the United States Code (the "Bankruptcy Code"),
entitled to the protection of Section 555 of the Bankruptcy Code.
7.10. Counterparts. This Agreement may be signed in any number of
------------
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
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IN WITNESS WHEREOF, the parties have signed this Agreement as of the date
and year first above written.
PURCHASER: SELLER:
MERRILL LYNCH MORTGAGE GVI HOLDINGS, INC.
CAPITAL INC.
By: ____________________________ By: ____________________________
Name: Name:
Title: Title:
MERRILL LYNCH & CO., INC.
By______________________________
Name:
Title:
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