<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 5, 1998
REGISTRATION NO. 333-42859
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
<TABLE>
<S> <C> <C>
MERRILL LYNCH & CO., INC. DELAWARE
(Exact name of registrant as specified in charter) (State of incorporation)
MERRILL LYNCH PREFERRED FUNDING III, L.P. DELAWARE
MERRILL LYNCH PREFERRED FUNDING IV, L.P. DELAWARE
(Exact name of registrant as specified (State of organization)
in certificate of limited partnership)
MERRILL LYNCH PREFERRED CAPITAL TRUST III DELAWARE
MERRILL LYNCH PREFERRED CAPITAL TRUST IV DELAWARE
(Exact name of registrant as specified in certificate of (State of incorporation)
trust)
<CAPTION>
MERRILL LYNCH & CO., INC. 13-2740599
<S> <C>
(Exact name of registrant as specified in charter) (I.R.S. employer identification number)
MERRILL LYNCH PREFERRED FUNDING III, L.P. 13-3982448
MERRILL LYNCH PREFERRED FUNDING IV, L.P. 13-3982446
(Exact name of registrant as specified (I.R.S. employer identification number)
in certificate of limited partnership)
MERRILL LYNCH PREFERRED CAPITAL TRUST III 13-7139561
MERRILL LYNCH PREFERRED CAPITAL TRUST IV 13-7139562
(Exact name of registrant as specified in certificate of (I.R.S. employer identification number)
trust)
</TABLE>
----------------------------------
WORLD FINANCIAL CENTER
NORTH TOWER
NEW YORK, NEW YORK 10281
(212) 449-1000
(Address, including zip code, and telephone number, including area code, of
registrants' principal executive offices)
----------------------------------
MARK F. GOLDFUS, ESQ.
ASSOCIATE GENERAL COUNSEL
MERRILL LYNCH & CO., INC.
WORLD FINANCIAL CENTER
NORTH TOWER
NEW YORK, NEW YORK 10281-1334
(212) 449-6990
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------------------------
COPIES TO:
NORMAN D. SLONAKER, ESQ.
BROWN & WOOD LLP
ONE WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(212) 839-5300
RICHARD T. PRINS, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 735-3000
----------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: /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/
----------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE(1)
<S> <C> <C> <C>
Trust Originated Preferred Securities of Merrill Lynch
Preferred Capital Trust III and Merrill Lynch Preferred
Capital Trust IV (the "Trusts") (including such
securities sold in market-making transactions) (the
"Trust Preferred Securities")(2)....................... 30,000,000 $25 $750,000,000
Partnership Preferred Securities of Merrill Lynch
Preferred Funding III, L.P. and Merrill Lynch Preferred
Funding IV, L.P. (each, a "Partnership") (including
such securities sold in market-making transactions)
(the "Partnership Preferred Securities")(2)(3)......... 30,000,000 $25 $750,000,000
Guarantees of Merrill Lynch & Co., Inc. with respect to
Trust Preferred Securities(4).......................... -- -- --
Guarantees of Merrill Lynch & Co., Inc. with respect to
Partnership Preferred Securities(4).................... -- -- --
Guarantees of Merrill Lynch & Co., Inc. with respect to
certain debentures of its wholly owned subsidiaries
(the "Affiliate Debentures")(4)........................ -- -- --
Subordinated Debentures of Merrill Lynch & Co.,
Inc.(4)................................................ -- -- --
Totals.............................................
<CAPTION>
TITLE OF EACH CLASS OF AMOUNT OF
SECURITIES TO BE REGISTERED REGISTRATION FEE
<S> <C>
Trust Originated Preferred Securities of Merrill Lynch
Preferred Capital Trust III and Merrill Lynch Preferred
Capital Trust IV (the "Trusts") (including such
securities sold in market-making transactions) (the
"Trust Preferred Securities")(2)....................... $221,250
Partnership Preferred Securities of Merrill Lynch
Preferred Funding III, L.P. and Merrill Lynch Preferred
Funding IV, L.P. (each, a "Partnership") (including
such securities sold in market-making transactions)
(the "Partnership Preferred Securities")(2)(3)......... --
Guarantees of Merrill Lynch & Co., Inc. with respect to
Trust Preferred Securities(4).......................... --
Guarantees of Merrill Lynch & Co., Inc. with respect to
Partnership Preferred Securities(4).................... --
Guarantees of Merrill Lynch & Co., Inc. with respect to
certain debentures of its wholly owned subsidiaries
(the "Affiliate Debentures")(4)........................ --
Subordinated Debentures of Merrill Lynch & Co.,
Inc.(4)................................................ --
Totals............................................. $221,250(5)
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457.
(2) This Registration Statement also registers an indeterminate amount of
securities registered hereunder to be sold by Merrill Lynch, Pierce, Fenner
& Smith Incorporated in market-making transactions.
(3) The Partnership Preferred Securities will be purchased by one of the Trusts
with the proceeds of the sale of the Trust Preferred Securities, together
with the proceeds received from Merrill Lynch & Co., Inc. in respect of the
common securities to be issued by such Trust. No separate consideration will
be received for the Partnership Preferred Securities.
(4) No separate consideration will be received for (i) guarantees of Merrill
Lynch & Co., Inc. with respect to the Trust Preferred Securities, the
Partnership Preferred Securities or the Affiliate Debentures or (ii) the
Subordinated Debenture. The Subordinated Debenture and the Affiliate
Debentures will be purchased by the Partnership with proceeds of the sale of
the Partnership Preferred Securities, together with a capital contribution
from Merrill Lynch & Co., Inc.
(5) Previously paid on December 19, 1997.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Registration Statement contains one form of Prospectus to be used in
connection with offerings of preferred securities of Merrill Lynch Preferred
Capital Trust III and Merrill Lynch Preferred Capital Trust IV (the "Trusts"),
severally; preferred securities of Merrill Lynch Preferred Funding III, L.P. and
Merrill Lynch Preferred Funding IV, L.P. (the "Partnerships"), severally;
subordinated debentures of Merrill Lynch & Co., Inc.; and guarantees by Merrill
Lynch & Co., Inc. of preferred securities issued severally by the Trusts, of
preferred securities issued severally by the Partnerships, and of certain
debentures issued severally by wholly-owned subsidiaries of Merrill Lynch & Co.,
Inc. The Prospectus is in the form which will be used in connection with the
offering relating to Merrill Lynch Preferred Capital Trust III. Certain
alternate pages to be used in connection with the offering relating to Merrill
Lynch Preferred Capital Trust IV are also included in this filing.
The complete Prospectus for the offering of any of the securities listed
above will indicate the relevant Trust and Partnership to which it relates and
will be filed with the Securities and Exchange Commission pursuant to Rule 424
of the Securities Act of 1933, as amended.
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS, DATED JANUARY 5, 1998
PROSPECTUS
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
[LOGO]
16,000,000 TRUST PREFERRED SECURITIES
MERRILL LYNCH PREFERRED CAPITAL TRUST III
% TRUST ORIGINATED PREFERRED SECURITIES-SM- ("TOPRS-SM-")
(LIQUIDATION AMOUNT $25 PER TRUST PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
MERRILL LYNCH & CO., INC.
------------------
The % Trust Originated Preferred Securities-SM- (the "TOPrS-SM-" or "Trust
Preferred Securities") offered hereby represent preferred undivided beneficial
ownership interests in the assets of Merrill Lynch Preferred Capital Trust III,
a statutory business trust formed under the laws of the State of Delaware (the
"Trust"). Merrill Lynch & Co., Inc., a Delaware corporation (the "Company" or
"Merrill Lynch"), will own all the common securities (the "Trust Common
Securities" and, together with the Trust Preferred Securities, the "Trust
Securities") representing undivided beneficial ownership interests in the assets
of the Trust. The Trust exists for the sole purpose of issuing the Trust
Securities and investing the proceeds as described below and engaging in
activities incident thereto. The proceeds from the sale of the Trust Securities
will be used by the Trust to purchase Partnership Preferred Securities
("Partnership Preferred Securities"), representing the limited partner interests
of Merrill Lynch Preferred Funding III, L.P., a Delaware limited partnership
(the "Partnership"). The general partner interest, which constitutes all of the
interest in the Partnership other than the limited partner interests represented
by the Partnership Preferred Securities, is owned by the Company, which is the
sole general partner of the Partnership (in such capacity, the "General
Partner"). Substantially all of the proceeds from the sale of the Partnership
Preferred Securities, together with the capital contribution from the General
Partner, will be used by the Partnership to purchase Debentures (as defined
herein), which consist of debt instruments of the Company and one or more of its
eligible controlled affiliates. In addition, approximately one percent of the
proceeds from the sale of the Partnership Preferred Securities and the capital
contribution from the General Partner will be used to purchase Eligible Debt
Securities (as defined herein). See "Description of the Partnership Preferred
Securities -- Partnership Investments".
(CONTINUED ON NEXT PAGE)
SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE TRUST PREFERRED
SECURITIES, INCLUDING CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
Application will be made to list the Trust Preferred Securities on the New
York Stock Exchange, Inc. (the "New York Stock Exchange"). If approved for
listing, trading of the Trust Preferred Securities on the New York Stock
Exchange is expected to commence within the 30-day period after the initial
delivery of the Trust Preferred Securities. See "Underwriting".
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO PUBLIC (1) COMMISSION (2)
<S> <C> <C>
Per Trust Preferred Security...................................... $25 (3)
Total............................................................. $400,000,000 (3)
<CAPTION>
PROCEEDS TO
THE TRUST(3)(4)
<S> <C>
Per Trust Preferred Security...................................... $25
Total............................................................. $400,000,000
</TABLE>
(1) Plus accumulated distributions, if any, from January , 1998.
(2) The Trust, the Partnership and the Company have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting".
(3) In view of the fact that the proceeds of the sale of the Trust Preferred
Securities will be ultimately invested in debt securities of the Company and
its subsidiaries, the Company has agreed to pay to the Underwriters as
compensation (the "Underwriters' Compensation") $ per Trust Preferred
Security (or $ in the aggregate); provided that such compensation for
sales of more than 10,000 Trust Preferred Securities to a single purchaser
will be $ per Trust Preferred Security. Therefore, to the extent of such
sales, the actual amount of Underwriters' Compensation will be less than the
aggregate amount specified in the preceding sentence. See "Underwriting".
(4) Expenses of the offering payable by the Company are estimated to be $ .
------------------------------
The Trust Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that delivery of the Trust Preferred Securities will be made only in book-entry
form through the facilities of The Depository Trust Company ("DTC") on or about
January , 1998.
This Prospectus may be used by Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("MLPF&S") in connection with offers and sales
related to market-making transactions in the Trust Preferred Securities. MLPF&S
may act as principal or agent in such transactions. Such sales will be made at
prices related to prevailing market prices at the time of sale.
------------------------------
MERRILL LYNCH & CO.
A.G. EDWARDS & SONS, INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES
INCORPORATED
SALOMON SMITH BARNEY
------------------------------
THE DATE OF THIS PROSPECTUS IS JANUARY , 1998.
-SM-"TRUST ORIGINATED PREFERRED SECURITIES" AND "TOPRS" ARE SERVICE MARKS OF
MERRILL LYNCH & CO., INC.
<PAGE>
(CONTINUED FROM COVER PAGE)
Holders of the Trust Preferred Securities will be entitled to receive
cumulative cash distributions accumulating from the date of original issuance
and payable quarterly in arrears on each March 30, June 30, September 30 and
December 30, commencing March 30, 1998, at an annual rate of % of the
liquidation amount of $25 per Trust Preferred Security (equivalent to $ per
Trust Preferred Security per annum), if, as and when the Trust has funds
available for payment. See "Description of the Trust Preferred Securities --
Distributions." Distributions not paid on the scheduled payment date will
accumulate and compound quarterly at a rate per annum equal to %. The
distribution rate and the distribution payment dates and other payment dates for
the Trust Preferred Securities will correspond to the distribution rate and
distribution payment dates and other payment dates for the Partnership Preferred
Securities, which are the sole assets of the Trust. As described above, the
assets of the Partnership will initially consist only of the Debentures and, to
a limited extent, Eligible Debt Securities.
The payment of distributions by the Trust and payments on liquidation of the
Trust or the redemption of Trust Preferred Securities, as described below, are
guaranteed on a subordinated basis by the Company (the "Trust Guarantee") to the
extent the Trust has funds available therefor as described under "Description of
the Trust Guarantee". The payment of distributions by the Partnership (if, as
and when declared) on the Partnership Preferred Securities and payments on
liquidation of the Partnership or the redemption of Partnership Preferred
Securities, as described below, are also guaranteed on a subordinated basis by
the Company (the "Partnership Guarantee") to the extent the Partnership has
funds available therefor as described under "Description of the Partnership
Guarantee". In addition, payments in respect of the Debentures (other than the
Company Debenture (as defined herein)) will be fully and unconditionally
guaranteed, on a subordinated basis, by the Company (the "Investment
Guarantees") for the benefit of the holders of the Partnership Preferred
Securities. The Trust Guarantee, the Partnership Guarantee and the Investment
Guarantees (collectively, the "Guarantees"), when taken together with the
Company Debenture and the Company's obligations to pay all fees and expenses of
the Trust and the Partnership, constitute a guarantee to the extent set forth
herein by the Company of the distribution, redemption and liquidation payments
payable to the holders of the Trust Preferred Securities. The Guarantees do not
apply to current distributions by the Partnership unless and until such
distributions are declared by the Partnership out of funds legally available for
payment or to liquidating distributions unless there are assets available for
payment in the Partnership, each as more fully described in the next succeeding
paragraph and under "Risk Factors -- Insufficient Income or Assets Available to
Partnership". The Company's obligations under the Guarantees are subordinate and
junior in right of payment to all other liabilities of the Company and rank PARI
PASSU with the most senior preferred stock issued from time to time by the
Company, with similar guarantees issued by the Company in connection with the
$275,000,000 aggregate liquidation amount of 7 3/4% Trust Originated Preferred
Securities issued by Merrill Lynch Preferred Capital Trust I and the
$300,000,000 aggregate liquidation amount of 8% Trust Originated Preferred
Securities issued by Merrill Lynch Preferred Capital Trust II, and with any
guarantee now or hereafter entered into by the Company in respect of any
preferred stock of any other Finance Subsidiary (as defined below). The
Company's obligations under the Company Debenture are subordinate and junior in
right of payment to all Senior Indebtedness of the Company. At September 26,
1997, the Company had outstanding Senior Indebtedness aggregating approximately
$77.4 billion, which would have ranked senior to the Company's obligations under
the Guarantees and the Company Debenture. See "Risk Factors -- Ranking of
Subordinate Obligations Under the Guarantees and the Company Debenture". The
term "Senior Indebtedness" means any payment in respect of indebtedness of the
Company for money borrowed, except for any such indebtedness that is by its
terms subordinated to or PARI PASSU with the Company Debenture, as the case may
be.
Distributions on the Partnership Preferred Securities will be declared and
paid only as determined in the sole discretion of the Company in its capacity as
the General Partner of the Partnership. In addition, the General Partner is not
obligated to declare distributions on the Partnership Preferred Securities at
any time, including upon or following a Partnership Enforcement Event (as
defined herein). To the extent that
2
<PAGE>
the issuers (including, where applicable, the Company, as guarantor) of the
securities in which the Partnership invests defer or fail to make any payments
in respect of such securities (or, if applicable, guarantees), the Partnership
will not have sufficient funds to pay and will not declare or pay distributions
on the Partnership Preferred Securities. In addition, as described under "Risk
Factors -- Insufficient Income or Assets Available to Partnership", the
Partnership may not have sufficient funds to pay current or liquidating
distributions on the Partnership Preferred Securities if (i) at any time that
the Partnership is receiving current payments in respect of the securities held
by the Partnership (including the Debentures), the General Partner, in its sole
discretion, does not declare distributions on the Partnership Preferred
Securities and the Partnership receives insufficient amounts to pay the
additional compounded distributions that will accumulate in respect of the
Partnership Preferred Securities, (ii) the Partnership reinvests the proceeds
received in respect of the Debentures upon their retirement or at their
maturities in Affiliate Investment Instruments (as defined herein) and Eligible
Debt Securities that do not generate income in an amount that is sufficient to
pay full distributions in respect of the Partnership Preferred Securities or
(iii) the Partnership invests in debt securities of Investment Affiliates that
are not guaranteed by the Company and that cannot be liquidated by the
Partnership for an amount sufficient to pay such distributions in full. The
Debentures will provide that payments of interest may be deferred at any time,
and from time to time, by the relevant issuer for a period not exceeding six
consecutive quarters. If an issuer were to so defer the payment of interest,
interest would continue to accrue and compound at the stated interest rate on
such Debenture. If the Partnership does not declare and pay distributions on the
Partnership Preferred Securities out of funds legally available for
distribution, the Trust will not have sufficient funds to make distributions on
the Trust Preferred Securities, in which event the Trust Guarantee will not
apply to such distributions until the Trust has sufficient funds available
therefor. See "Risk Factors -- Distributions Payable Only if Declared by General
Partner; Restrictions on Certain Payments; Tax Consequences", "-- Insufficient
Income or Assets Available to Partnership", "Description of the Trust Preferred
Securities -- Distributions" and "Description of the Partnership Preferred
Securities -- Distributions".
The Partnership may, from time to time and subject to the restrictions
described herein, reinvest payments received with respect to the Affiliate
Investment Instruments (including the Debentures) and the Eligible Debt
Securities, in additional Affiliate Investment Instruments and Eligible Debt
Securities. As of the date of this Prospectus, the Company, as the General
Partner, does not intend to cause the Partnership to reinvest regularly
scheduled periodic payments of interest or dividends received by the Partnership
in the manner described herein, although there can be no assurance that the
General Partner's intention in respect of such reinvestments will not change in
the future.
If (a) for any distribution period, full distributions on a cumulative basis
on any Trust Preferred Securities have not been paid or set apart for payment,
(b) an Investment Event of Default by any Investment Affiliate in respect of any
Affiliate Investment Instrument has occurred and is continuing or (c) the
Company is in default of its obligations under any Guarantee, then during such
period (i) the Company shall not declare or pay dividends on, make distributions
with respect to, or redeem, purchase or acquire, or make a liquidation payment
with respect to, any of its capital stock or comparable equity interest (except
for (x) dividends or distributions in shares of, or options, warrants or rights
to subscribe for or purchase shares of, its capital stock, and conversions or
exchanges of common stock of one class into common stock of another class, (y)
redemptions or purchases of any rights pursuant to the Amended and Restated
Rights Agreement dated as of December 2, 1997 between the Company and The Chase
Manhattan Bank (successor by merger to Manufacturers Hanover Trust Company), or
any successor to such Rights Agreement (the "Rights Agreement") and the issuance
of preferred stock pursuant to such rights and (z) purchases or acquisitions by
the Company or its affiliates in connection with transactions effected by or for
the account of customers of the Company or any of its subsidiaries or in
connection with the distribution or trading of such capital stock or comparable
equity interest) and (ii) the Company shall not make, permit any Finance
Subsidiary to make, or make any payments that would enable any Finance
Subsidiary to make, any payment of any dividends on, any distribution with
respect to, or any redemption,
3
<PAGE>
purchase or other acquisition of, or any liquidation payment with respect to,
any preferred security or comparable equity interest of any Finance Subsidiary.
"Finance Subsidiary" means Merrill Lynch Preferred Capital Trust I, Merrill
Lynch Preferred Capital Trust II and any other wholly-owned subsidiary of the
Company the principal purpose of which is to raise capital for the Company by
issuing securities that are guaranteed by the Company and the proceeds of which
are loaned to or invested in the Company or one or more of its affiliates.
The Partnership Preferred Securities are redeemable by the Partnership, in
whole or in part, from time to time, on or after March 30, 2008 at an amount per
Partnership Preferred Security equal to $25 plus accumulated and unpaid
distributions thereon to the date fixed for redemption. The Partnership
Preferred Securities may also be redeemed, in whole but not in part, at any time
upon the occurrence of a Partnership Special Event (as defined herein). If the
Partnership redeems the Partnership Preferred Securities, the Trust must redeem
Trust Securities on a PRO RATA basis having an aggregate liquidation amount
equal to the aggregate liquidation preference of the Partnership Preferred
Securities so redeemed at a redemption price of $25 per Partnership Preferred
Security plus all accumulated and unpaid distributions thereon to the date fixed
for redemption (the "Redemption Price"). See "Description of the Trust Preferred
Securities -- Mandatory Redemption". Neither the Partnership Preferred
Securities nor the Trust Preferred Securities have any scheduled maturity or are
redeemable at any time at the option of the holders thereof.
The Trust will be dissolved upon the occurrence of a Trust Special Event (as
defined herein). Upon dissolution of the Trust, the Partnership Preferred
Securities will be distributed to the holders of the Trust Securities, on a PRO
RATA basis, in lieu of any cash distribution, unless the Partnership Preferred
Securities are redeemed in the limited circumstances described herein. If the
Partnership Preferred Securities are distributed to the holders of the Trust
Securities, the Company will use its best efforts to cause the Partnership
Preferred Securities to be listed on the New York Stock Exchange or such other
national securities exchange or similar organization as the Trust Preferred
Securities are then listed or quoted. See "Description of the Trust Preferred
Securities -- Trust Special Event Redemption or Distribution" and "Description
of the Partnership Preferred Securities".
In the event of any liquidation, dissolution, winding up or termination of
the Trust, the holders of the Trust Preferred Securities will be entitled to
receive for each Trust Preferred Security a liquidation amount of $25 plus
accumulated and unpaid distributions thereon, except to the extent, in
connection with such dissolution, Partnership Preferred Securities are
distributed to the holders of the Trust Preferred Securities. Upon (i) the
occurrence of an Investment Event of Default by an Investment Affiliate in
respect of any Affiliate Investment Instrument or (ii) default by the Company on
any of its obligations under any Guarantee, the holders of the Trust Preferred
Securities will have a preference over the holders of the Trust Common
Securities with respect to payments upon liquidation of the Trust. Under no
circumstances will the investment instruments held by the Partnership be
distributed in kind to the holders of the Trust Preferred Securities or
Partnership Preferred Securities. See "Description of the Trust Preferred
Securities -- Liquidation Distribution Upon Dissolution".
Certain persons participating in this offering may engage in transactions
that stabilize, maintain or otherwise affect the price of the Trust Preferred
Securities. Such transactions may include stabilizing, the purchase of Trust
Preferred Securities to cover syndicate short positions and the imposition of
penalty bids. For a description of these activities, see "Underwriting".
AVAILABLE INFORMATION
The Company, the Trust and the Partnership have filed with the Securities
and Exchange Commission (the "Commission") a Registration Statement on Form S-3
(the "Registration Statement", which term shall include all amendments, exhibits
and schedules thereto), pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations promulgated thereunder, with
respect to the Trust Preferred Securities offered hereby (as well as the
Partnership Preferred Securities, the Trust Guarantee, the Partnership
Guarantee, the Investment Guarantees and the Company Debenture). This
4
<PAGE>
Prospectus, which constitutes a part of the Registration Statement, does not
contain all the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission, and to which reference is hereby made.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Commission. Except for
the listing of Trust Preferred Securities that is expected to be made on the New
York Stock Exchange, neither the Trust nor the Partnership has any securities
that are listed on any national securities exchange. The Registration Statement,
as well as reports, proxy and information statements and other information filed
by the Company can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following Regional Offices of the Commission: Northeast
Regional Office, Seven World Trade Center, New York, New York 10048 and Midwest
Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2551. Copies of such material can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. Reports, proxy and information statements and other
information concerning the Company may also be inspected at the offices of the
New York Stock Exchange, the American Stock Exchange, the Chicago Stock Exchange
and the Pacific Exchange. The Commission maintains a Web site at
http://www.sec.gov containing reports, proxy and information statements and
other information regarding registrants, including the Company, that file
electronically with the Commission.
Statements made in this Prospectus concerning the provisions of any
contract, agreement or other document referred to herein are not necessarily
complete. With respect to each such statement concerning a contract, agreement
or other document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission, reference is made to such exhibit or other filing for
a more complete description of the matter involved, and each such statement is
qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 27,
1996 (the "1996 Form 10-K"), Quarterly Reports on Form 10-Q for the periods
ended March 28, 1997, June 27, 1997 and September 26, 1997, and Current Reports
on Form 8-K dated January 13, 1997, January 27, 1997, February 25, 1997, March
14, 1997, April 15, 1997, May 2, 1997, May 30, 1997, June 3, 1997, July 16,
1997, July 30, 1997, August 1, 1997, September 24, 1997, September 29, 1997,
October 15, 1997, October 29, 1997, November 20, 1997, November 26, 1997,
December 2, 1997, December 16, 1997 and December 23, 1997 filed pursuant to
Section 13 of the Exchange Act, are hereby incorporated by reference into this
Prospectus.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Trust Preferred Securities, or subsequent
to the date of the initial Registration Statement and prior to effectiveness of
the Registration Statement, shall be deemed to be incorporated by reference in
this Prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, ON WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY
(WITHOUT EXHIBITS OTHER THAN EXHIBITS SPECIFICALLY INCORPORATED BY REFERENCE) OF
ANY OR ALL DOCUMENTS INCORPORATED BY REFERENCE INTO THIS PROSPECTUS. REQUESTS
FOR SUCH COPIES SHOULD BE DIRECTED TO MR. LAWRENCE M. EGAN, JR., CORPORATE
SECRETARY'S OFFICE, MERRILL LYNCH & CO., INC., 100 CHURCH STREET, 12TH FLOOR,
NEW YORK, NEW YORK 10080-6512; TELEPHONE NUMBER (212) 602-8435.
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SUMMARY
THE FOLLOWING SUMMARY DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN
ITS ENTIRETY BY THE MORE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS
PROSPECTUS. CERTAIN TERMS USED IN THIS SUMMARY ARE DEFINED ELSEWHERE IN THIS
PROSPECTUS. SEE "INDEX OF DEFINED TERMS" FOR A CROSS REFERENCE TO THE LOCATION
IN THIS PROSPECTUS WHERE SUCH TERMS ARE DEFINED.
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The Trust.................... Merrill Lynch Preferred Capital Trust III, a Delaware
statutory business trust. The sole assets of the Trust will
be the Partnership Preferred Securities.
The Partnership.............. Merrill Lynch Preferred Funding III, L.P., a Delaware
limited partnership. The assets of the Partnership will
initially consist of the Debentures and certain Eligible
Debt Securities.
Securities Offered........... 16,000,000 of % Trust Preferred Securities.
Distributions................ Distributions on the Trust Preferred Securities will
accumulate from the date of original issuance of the Trust
Preferred Securities and will be payable at the annual rate
of % of the liquidation amount of $25 per Trust Preferred
Security if, as and when the Trust has funds available for
payment. Distributions will be payable quarterly in arrears
on each March 30, June 30, September 30 and December 30,
commencing March 30, 1998. Distributions not made on the
scheduled payment date will accumulate and compound
quarterly at a rate per annum equal to %. The
distributions payable with respect to March 30, 1998 will
represent distributions accumulated from January , 1998
and will equal $ for each $25 Trust Preferred Security.
The ability of the Trust to pay distributions on the Trust
Preferred Securities is entirely dependent on its receipt of
corresponding distributions with respect to the Partnership
Preferred Securities. The ability of the Partnership to pay
distributions on the Partnership Preferred Securities is, in
turn, dependent on its receipt of payments with respect to
the Debentures and the Eligible Debt Securities held by the
Partnership. The Debentures will provide that payments of
interest may be deferred at any time, and from time to time,
by the relevant issuer for a period not exceeding six
consecutive quarters. Distributions on the Partnership
Preferred Securities will be declared and paid only as
determined in the sole discretion of the Company in its
capacity as the General Partner of the Partnership. See
"Risk Factors -- Distributions Payable Only if Declared by
General Partner; Restrictions on Certain Payments; Tax
Consequences," "Description of the Trust Preferred
Securities -- Distributions" and "Description of the
Partnership Preferred Securities -- Distributions" and "--
Partnership Investments".
Rights Upon Non-Payment of
Distributions and Certain
Defaults; Covenants of the
Company.................... If, at any time, (i) arrearages on distributions on the
Trust Preferred Securities shall exist for six consecutive
quarterly distribution periods, (ii) an Investment Event of
Default occurs and is continuing on any
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Affiliate Investment Instrument or (iii) the Company is in
default on any of its obligations under the Trust Guarantee
or the Partnership Guarantee, then (a) the Property Trustee,
as the holder of the Partnership Preferred Securities, will
have the right to enforce the terms of the Partnership
Preferred Securities, including the right to direct the
Special Representative (as defined herein) to enforce (1)
the Partnership's creditors' rights and other rights with
respect to the Affiliate Investment Instruments and the
Investment Guarantees and (2) the rights of the holders of
the Partnership Preferred Securities to receive
distributions (only if, as and when declared) on the
Partnership Preferred Securities, and (b) the Trust
Guarantee Trustee or the Special Representative, as the
holders of the Trust Guarantee and the Partnership
Guarantee, respectively, shall have the right to enforce
such Guarantees, including the right to enforce the covenant
restricting certain payments by the Company and Finance
Subsidiaries described below.
Under no circumstances, however, shall the Special
Representative have authority to cause the General Partner
to declare distributions on the Partnership Preferred
Securities. If the Partnership does not declare and pay
distributions on the Partnership Preferred Securities out of
funds legally available for distribution, the Trust will not
have sufficient funds to make distributions on the Trust
Preferred Securities. See "Risk Factors -- Insufficient
Income or Assets Available to Partnership", "Description of
the Trust Preferred Securities -- Trust Enforcement Events"
and "Description of the Partnership Preferred Securities --
Partnership Enforcement Events".
The Company has agreed that if (a) for any distribution
period, full distributions on a cumulative basis on any
Trust Preferred Securities have not been paid or set apart
for payment, (b) an Investment Event of Default by any
Investment Affiliate in respect of any Affiliate Investment
Instrument has occurred and is continuing or (c) the Company
is in default on any of its obligations under the Trust
Guarantee, the Partnership Guarantee or any Investment
Guarantee, then, during such period (i) the Company shall
not declare or pay dividends on, make distributions with
respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to any of its capital stock
or comparable equity interest (except for (x) dividends or
distributions in shares of, or options, warrants or rights
to subscribe for or purchase shares of, its capital stock
and conversions or exchanges of common stock of one class
into common stock of another class, (y) redemptions or
purchases of any rights pursuant to the Rights Agreement and
the issuance of preferred stock pursuant to such rights and
(z) purchases or acquisitions by the Company or its
affiliates in connection with transactions effected by or
for the account of customers of the Company or any of its
subsidiaries or in connection with the distribution or
trading of such capital stock or comparable equity interest)
and (ii) the Company shall not make, permit any Finance
Subsidiary to make, nor make any payments that would enable
any Finance Subsidiary to make, any payment of any dividends
on, any distribution with respect to, or any redemption,
purchase or
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other acquisition of, or any liquidation payment with
respect to, any preferred security or comparable equity
interest of any Finance Subsidiary.
Liquidation Amount........... In the event of any liquidation of the Trust, holders will
be entitled to receive $25 per Trust Preferred Security plus
an amount equal to any accumulated and unpaid distributions
thereon to the date of payment (such amount being the "Trust
Liquidation Distribution"), unless Partnership Preferred
Securities are distributed to such holders in connection
with a Trust Special Event. If upon a liquidation of the
Trust (in which the Partnership Preferred Securities are not
distributed to holders of the Trust Securities), the Trust
Liquidation Distribution can be paid only in part because
the Trust has insufficient assets available to pay in full
the aggregate Trust Liquidation Distribution, then the
amounts payable directly by the Trust on the Trust Preferred
Securities shall be paid on a PRO RATA basis. The holders of
the Trust Common Securities will be entitled to receive
distributions upon any such liquidation PRO RATA with the
holders of the Trust Preferred Securities, except that upon
(i) the occurrence of an Investment Event of Default by an
Investment Affiliate (including the Company) in respect of
any Affiliate Investment Instrument or (ii) default by the
Company on any of its obligations under any Guarantee, the
holders of the Trust Preferred Securities will have a
preference over the holders of the Trust Common Securities
with respect to payments upon liquidation of the Trust. See
"Description of the Trust Preferred Securities --
Liquidation Distribution Upon Dissolution".
Optional Redemption.......... The Partnership Preferred Securities will be redeemable for
cash, at the option of the Partnership, in whole or in part,
from time to time, after March 30, 2008 at an amount per
Partnership Preferred Security equal to $25 plus accumulated
and unpaid distributions thereon. Upon any redemption of the
Partnership Preferred Securities, the Trust Preferred
Securities will be redeemed, in whole or in part, as
applicable, at the Redemption Price. See "Description of the
Partnership Preferred Securities--Optional Redemption" and
"Description of the Trust Preferred Securities -- Mandatory
Redemption". Neither the Partnership Preferred Securities
nor the Trust Preferred Securities have any scheduled
maturity or are redeemable at any time at the option of the
holders thereof.
Guarantees................... The Company will irrevocably guarantee, on a subordinated
basis, the payment in full of (i) any accumulated and unpaid
distributions on the Trust Preferred Securities to the
extent of funds of the Trust legally available therefor,
(ii) the amount payable upon redemption of the Trust
Preferred Securities to the extent of funds of the Trust
legally available therefor and (iii) generally, the
liquidation amount of the Trust Preferred Securities to the
extent of the assets of the Trust legally available for
distribution to holders of Trust Preferred Securities. See
"Description of the Trust Guarantee".
The Company will also irrevocably guarantee, on a
subordinated basis and to the extent set forth herein, the
payment in full of (i) any
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accumulated and unpaid distributions on the Partnership
Preferred Securities if, as and when declared out of funds
legally available therefor, (ii) the amount payable upon
redemption of the Partnership Preferred Securities to the
extent of funds of the Partnership legally available
therefor and (iii) generally, the liquidation preference of
the Partnership Preferred Securities to the extent of the
assets of the Partnership legally available for distribution
to holders of Partnership Preferred Securities. See
"Description of the Partnership Guarantee".
The Company will fully and unconditionally guarantee, on a
subordinated basis, payments in respect of the Debentures
(other than the Company Debenture) for the benefit of the
holders of the Partnership Preferred Securities, to the
extent described under "Description of the Partnership
Preferred Securities -- Investment Guarantees". The
Guarantees, when taken together with the Company Debenture
and the Company's obligations to pay all fees and expenses
of the Trust and the Partnership, constitute a guarantee to
the extent set forth herein by the Company of the
distribution, redemption and liquidation amounts payable to
the holders of the Trust Preferred Securities. The
Guarantees do not apply, however, to current distributions
by the Partnership unless and until such distributions are
declared by the Partnership out of funds legally available
for payment or to liquidating distributions unless there are
assets available for payment in the Partnership, each as
more fully described under "Risk Factors -- Insufficient
Income or Assets Available to Partnership". The Company's
obligations under the Guarantees are subordinate and junior
in right of payment to all other liabilities of the Company
and rank PARI PASSU with the most senior preferred stock
issued from time to time by the Company, with similar
guarantees issued by the Company in connection with the
$275,000,000 aggregate liquidation amount of 7 3/4% Trust
Originated Preferred Securities issued by Merrill Lynch
Preferred Capital Trust I and the $300,000,000 aggregate
liquidation amount of 8% Trust Originated Preferred
Securities issued by Merrill Lynch Preferred Capital Trust
II, and with any guarantee now or hereafter entered into by
the Company in respect of any preferred stock of any other
Finance Subsidiary.
Voting Rights................ Generally, holders of the Trust Preferred Securities will
not have any voting rights. The holders of a majority in
liquidation amount of the Trust Preferred Securities,
however, have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the
Property Trustee, or direct the exercise of any trust or
power conferred upon the Property Trustee under the
Declaration, including the right to direct the Property
Trustee, as holder of the Partnership Preferred Securities,
(i) to exercise its rights in the manner described above
under "Rights Upon Non-Payment of Distributions and Certain
Defaults; Covenants of the Company" and (ii) to consent to
any amendment, modification or termination of the Limited
Partnership Agreement or the Partnership Preferred
Securities where such consent shall be required. See
"Description of the Trust Preferred Securities -- Voting
Rights".
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Special Event Redemptions or
Distributions.............. Upon the occurrence of a Trust Tax Event (which event will
generally be triggered upon the occurrence of certain
adverse tax consequences or the denial of an interest
deduction on the Debentures held by the Partnership) or a
Trust Investment Company Event (which event will generally
be triggered if the Trust is considered an "investment com-
pany" under the Investment Company Act of 1940, as amended
(the "1940 Act")), except in certain limited circumstances,
the Regular Trustees (as defined herein) will have the right
to liquidate the Trust and cause Partnership Preferred
Securities to be distributed to the holders of the Trust
Preferred Securities. In certain circumstances involving a
Partnership Tax Event (which event will generally be
triggered upon the occurrence of certain adverse tax
consequences or the denial of an interest deduction on the
Debentures held by the Partnership) or a Partnership
Investment Company Event (which event will generally be
triggered if the Partnership is considered an "investment
company" under the 1940 Act), the Partnership will have the
right to redeem the Partnership Preferred Securities, in
whole (but not in part), at $25 per Partnership Preferred
Security plus accumulated and unpaid distributions thereon,
regardless of the occurrence of any Trust Tax Event or Trust
Investment Company Event and in lieu of any distribution of
the Partnership Preferred Securities required in connection
therewith, in which event the Trust Securities will be
redeemed at the Redemption Price. See "Description of the
Trust Preferred Securities -- Trust Special Event Redemption
or Distribution" and "Description of the Partnership
Preferred Securities -- Partnership Special Event
Redemption".
Form of Trust Preferred
Securities................. The Trust Preferred Securities will be represented by a
global certificate or certificates registered in the name of
Cede & Co., as nominee for DTC. Beneficial interests in the
Trust Preferred Securities will be evidenced by, and
transfers thereof will be effected only through, records
maintained by the participants in DTC. Except as described
herein, Trust Preferred Securities in certificated form will
not be issued in exchange for the global certificate or
certificates. See "Description of the Trust Preferred
Securities -- Book-Entry Only Issuance -- The Depository
Trust Company".
Use of Proceeds.............. All of the proceeds from the sale of the Trust Securities
will be invested by the Trust in the Partnership Preferred
Securities. The Partnership will use the funds to make
investments in Debentures and certain Eligible Debt
Securities. The Company and the subsidiaries of the Company
which are the issuers of the Debentures will use the
proceeds from the sale of such Debentures primarily to fund
the proposed acquisition of Mercury Asset Management Group
plc, for other general corporate purposes, and to repay
certain intercompany indebtedness. See "Use of Proceeds".
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RISK FACTORS
PROSPECTIVE PURCHASERS OF THE TRUST PREFERRED SECURITIES SHOULD CONSIDER
CAREFULLY THE RISK FACTORS SET FORTH BELOW, AS WELL AS ALL OTHER INFORMATION
CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, IN EVALUATING AN
INVESTMENT IN THE TRUST PREFERRED SECURITIES.
DISTRIBUTIONS PAYABLE ONLY IF DECLARED BY GENERAL PARTNER; RESTRICTIONS ON
CERTAIN PAYMENTS; TAX CONSEQUENCES
Distributions on the Partnership Preferred Securities will be payable only
if, as and when declared by the General Partner in its sole discretion. The
Company is the sole General Partner of the Partnership, and the Debentures will
constitute obligations of the Company and its affiliates. If interest payments
on the Debentures are deferred as permitted thereby, or if such interest
payments are not paid to the Partnership according to their terms (and guarantee
payments on the Investment Guarantees are not made by the Company), the
Partnership will generally lack funds to pay distributions on the Partnership
Preferred Securities. If the Partnership does not make current distributions on
the Partnership Preferred Securities, either because the General Partner does
not declare distributions to be made or because the Partnership lacks sufficient
funds, the Trust will not have funds available to make current distributions on
the Trust Preferred Securities. As described under "Description of the Trust
Guarantee -- Covenants of the Company", in certain circumstances, the Company
will be restricted from, among other things, paying any dividends on its Common
Stock.
Should the Partnership fail to pay current distributions on the Partnership
Preferred Securities, each holder of Trust Preferred Securities will generally
be required to accrue income, for United States federal income tax purposes, in
respect of the cumulative deferred distributions (including interest thereon)
allocable to its proportionate share of the Partnership Preferred Securities. As
a result, each holder of Trust Preferred Securities will recognize income for
United States federal income tax purposes in advance of the receipt of cash and
will not receive the cash from the Trust related to such income if such holder
disposes of its Trust Preferred Securities prior to the record date for the date
on which distributions of such amounts are made by the Trust. See "Certain
Federal Income Tax Considerations".
INSUFFICIENT INCOME OR ASSETS AVAILABLE TO PARTNERSHIP
The Trust Preferred Securities are subject to the risk of a current or
liquidating distribution rate mismatch between the rate paid on the Trust
Preferred Securities and the rate paid on the securities held by the
Partnership, including the Debentures and any additional securities acquired by
the Partnership in the future. Such mismatch could occur if (i) at any time that
the Partnership is receiving current payments in respect of the securities held
by the Partnership (including the Debentures), the General Partner, in its sole
discretion, does not declare distributions on the Partnership Preferred
Securities and the Partnership receives insufficient amounts to pay the
additional compounded distributions that will accumulate in respect of the
Partnership Preferred Securities, (ii) the Partnership reinvests the proceeds
received in respect of the Debentures upon their retirement or at their
maturities in Affiliate Investment Instruments or Eligible Debt Securities that
do not generate income in an amount that is sufficient to pay full distributions
in respect of the Partnership Preferred Securities at a rate of % per annum or
(iii) the Partnership invests in debt securities of Investment Affiliates that
are not guaranteed by the Company and that cannot be liquidated by the
Partnership for an amount sufficient to pay such distributions in full. If the
reinvestments in the securities of the Investment Affiliates contemplated by the
General Partner do not meet the eligibility criteria for Affiliate Investment
Instruments described under "Description of the Partnership Preferred Securities
- -- Partnership Investments," the Partnership shall invest funds available for
reinvestment in Eligible Debt Securities. To the extent that the Partnership
lacks sufficient funds to make current or liquidating distributions on the
Partnership Preferred Securities in full, the Trust will not
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have sufficient funds available to pay full current or liquidating distributions
on the Trust Preferred Securities.
DEPENDENCE ON AFFILIATE INVESTMENT INSTRUMENTS
Approximately 99% of the proceeds from the issuance of the Partnership
Preferred Securities and the General Partner's capital contribution will be
invested in Debentures, which consist of debt instruments of the Company and one
or more eligible controlled affiliates. See "Description of the Partnership
Preferred Securities -- Partnership Investments".
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence of a Trust Special Event or a Partnership Special Event
(each of which will generally be triggered either upon (i) the occurrence of
certain adverse tax consequences to the Trust or the Partnership, as the case
may be, or the denial of an interest deduction by the related Investment
Affiliate on the Debentures held by the Partnership or (ii) the Trust or
Partnership being considered an "investment company" under the 1940 Act) (each,
a "Special Event"), the Trust will be dissolved with the result that, except in
the limited circumstances described below, the Partnership Preferred Securities
would be distributed to the holders of the Trust Securities in connection with
the liquidation of the Trust. In certain circumstances, the Partnership shall
have the right to redeem the Partnership Preferred Securities, in whole (but not
in part), in lieu of a distribution of the Partnership Preferred Securities by
the Trust, in which event the Trust will redeem the Trust Preferred Securities
for cash. See "Description of the Trust Preferred Securities -- Trust Special
Event Redemption or Distribution" and "Description of the Partnership Preferred
Securities -- Partnership Special Event Redemption".
Unless the liquidation of the Trust occurs as a result of the Trust being
subject to United States federal income tax with respect to income on the
Partnership Preferred Securities, a distribution of the Partnership Preferred
Securities upon the dissolution of the Trust would not be a taxable event to
holders of the Trust Preferred Securities. If, however, the liquidation of the
Trust were to occur because the Trust is subject to United States federal income
tax with respect to income accrued or received on the Partnership Preferred
Securities, the distribution of Partnership Preferred Securities to holders by
the Trust would likely be a taxable event to each such holder, and a holder
would recognize gain or loss as if the holder had exchanged its Trust Preferred
Securities for the Partnership Preferred Securities it received upon the
liquidation of the Trust. Similarly, the holders of the Trust Preferred
Securities would recognize gain or loss if the Trust dissolves upon an
occurrence of a Partnership Special Event and the holders of Trust Preferred
Securities receive cash in exchange for their Trust Preferred Securities. See
"Certain Federal Income Tax Considerations -- Redemption of Trust Preferred
Securities for Cash".
There can be no assurance as to the market prices for the Partnership
Preferred Securities that may be distributed in exchange for Trust Preferred
Securities if a dissolution or liquidation of the Trust were to occur.
Accordingly, the Partnership Preferred Securities that a holder of Trust
Preferred Securities may receive upon dissolution and liquidation of the Trust
may trade at a discount to the price that the investor paid to purchase the
Trust Preferred Securities offered hereby. Because holders of Trust Preferred
Securities may receive Partnership Preferred Securities upon the occurrence of a
Special Event, prospective purchasers of Trust Preferred Securities also are
making an investment decision with regard to the Partnership Preferred
Securities and should carefully review all the information regarding the
Partnership Preferred Securities contained herein. See "Description of the
Partnership Preferred Securities -- Partnership Special Event Redemption" and
"-- General".
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEES AND THE COMPANY
DEBENTURE
The Company's obligations under the Trust Guarantee, the Partnership
Guarantee and the Investment Guarantees are subordinate and junior in right of
payment to all liabilities of the Company and will
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rank PARI PASSU with the most senior preferred stock, if any, issued from time
to time by the Company, with similar guarantees issued by the Company in
connection with the $275,000,000 aggregate liquidation amount of 7 3/4% Trust
Originated Preferred Securities issued by Merrill Lynch Preferred Capital Trust
I and the $300,000,000 aggregate liquidation amount of 8% Trust Originated
Preferred Securities issued by Merrill Lynch Preferred Capital Trust II, and
with any guarantee now or hereafter entered into by the Company in respect of
any preferred stock of any other Finance Subsidiary, and the Company's
obligations under the Company Debenture are subordinate and junior in right of
payment to all Senior Indebtedness. At September 26, 1997, the Company had
outstanding Senior Indebtedness aggregating approximately $77.4 billion which
would have ranked senior to the Company's obligations under the Guarantees and
the Company Debenture. There are no terms in the Trust Preferred Securities, the
Partnership Preferred Securities, the Guarantees or the Debentures that limit
the Company's ability to incur additional indebtedness, including indebtedness
that ranks senior to the Guarantees. See "Description of the Partnership
Preferred Securities -- Partnership Investments" and "-- Investment Guarantees",
"Description of the Trust Guarantee" and "Description of the Partnership
Guarantee".
ENFORCEMENT OF CERTAIN RIGHTS BY OR ON BEHALF OF HOLDERS OF TRUST PREFERRED
SECURITIES
If a Trust Enforcement Event occurs and is continuing, then (a) the holders
of Trust Preferred Securities would rely on the enforcement by the Property
Trustee of its rights, as a holder of the Partnership Preferred Securities,
against the Company, including the right to direct the Special Representative to
enforce (i) the Partnership's creditors' rights and other rights with respect to
the Affiliate Investment Instruments and the Investment Guarantees, (ii) the
rights of the holders of the Partnership Preferred Securities under the
Partnership Guarantee, and (iii) the rights of the holders of the Partnership
Preferred Securities to receive distributions (only if and to the extent
declared out of funds legally available therefor) on the Partnership Preferred
Securities, and (b) the Trust Guarantee Trustee shall have the right to enforce
the terms of the Trust Guarantee, including the right to enforce the covenant
restricting certain payments by the Company and Finance Subsidiaries. Under no
circumstances, however, shall the Special Representative have authority to cause
the General Partner to declare distributions on the Partnership Preferred
Securities. As a result, although the Special Representative may be able to
enforce the Partnership's creditors' rights to accelerate and receive payments
in respect of the Affiliate Investment Instruments and the Investment
Guarantees, the Partnership would be entitled to reinvest such payments in
additional Affiliate Investment Instruments, subject to satisfying the
reinvestment criteria described under "Description of the Partnership Preferred
Securities -- Partnership Investments", and the Eligible Debt Securities, rather
than declaring and making distributions on the Partnership Preferred Securities.
See "Description of the Trust Preferred Securities -- Trust Enforcement Events".
LIMITED VOTING RIGHTS
Holders of the Trust Preferred Securities will have limited voting rights
and will not be entitled to vote to appoint, remove or replace, or to increase
or decrease the number of, Trustees, which voting rights are vested exclusively
in the holder of the Trust Common Securities. See "Description of the Trust
Preferred Securities -- Voting Rights".
TRADING CHARACTERISTICS OF TRUST PREFERRED SECURITIES
The price at which the Trust Preferred Securities may trade may not fully
reflect the value of the accumulated but unpaid distributions on the Trust
Preferred Securities (which will equal the accumulated but unpaid distributions
on the Partnership Preferred Securities). In addition, as a result of the right
of the General Partner not to declare current distributions on the Partnership
Preferred Securities, the market price of the Trust Preferred Securities (which
represent undivided beneficial ownership interests in the Partnership Preferred
Securities) may be more volatile than other similar securities where there is no
such right to defer current distributions. A holder who disposes of its Trust
Preferred Securities will be required
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to include for United States federal income tax purposes accumulated but unpaid
distributions on the Partnership Preferred Securities through the date of
disposition in income as ordinary income, and to add such amount to its adjusted
tax basis in its pro rata share of the Partnership Preferred Securities deemed
disposed of. To the extent the selling price is less than the holder's adjusted
tax basis (which will include all accumulated but unpaid distributions), a
holder will recognize a capital loss. Subject to certain limited exceptions,
capital losses cannot be applied to offset ordinary income for United States
federal income tax purposes. See "Certain Federal Income Tax Considerations".
NO PRIOR MARKET FOR THE TRUST PREFERRED SECURITIES
The Trust Preferred Securities constitute a new issue of securities with no
established trading market. Application will be made to list the Trust Preferred
Securities on the New York Stock Exchange. There can be no assurance that an
active market for the Trust Preferred Securities will develop or be sustained in
the future on the New York Stock Exchange. Although the Underwriters have
indicated to the Company that they intend to make a market in the Trust
Preferred Securities, as permitted by applicable laws and regulations, they are
not obligated to do so and may discontinue any such market-making at any time
without notice. Accordingly, no assurance can be given as to the liquidity of,
or trading markets for, the Trust Preferred Securities.
The Trust Preferred Securities will only be sold to those investors for whom
such Trust Preferred Securities are considered suitable in light of their
particular circumstances.
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MERRILL LYNCH & CO., INC.
Merrill Lynch & Co., Inc. is a holding company that, through its
subsidiaries and affiliates, provides investment, financing, insurance, and
related services on a global basis. Its principal subsidiary, MLPF&S, one of the
largest securities firms in the world, is a leading broker in securities,
options contracts, and commodity and financial futures contracts; a leading
dealer in options and in corporate and municipal securities; a leading
investment banking firm that provides advice to, and raises capital for, its
clients; and an underwriter of selected insurance products. Other subsidiaries
provide financial services on a global basis similar to those of MLPF&S and are
engaged in such other activities as international banking, lending, and
providing other investment and financing services. Merrill Lynch International
Incorporated, through subsidiaries and affiliates, provides investment,
financing, and related services outside the United States and Canada. Merrill
Lynch Asset Management, LP and Fund Asset Management, LP together constitute one
of the largest mutual fund managers in the world and provide investment advisory
services. Merrill Lynch Government Securities Inc. is a primary dealer in
obligations issued or guaranteed by the U.S. Government and its agencies.
Merrill Lynch Capital Services, Inc., Merrill Lynch Derivative Products AG, and
Merrill Lynch International 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
currency 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 proceeds to be received by the Trust from the sale of the Trust
Preferred Securities and the Trust Common Securities will be used by the Trust
to purchase Partnership Preferred Securities, and will be applied by the
Partnership to invest in Debentures and Eligible Debt Securities. See
"Description of the Partnership Preferred Securities -- Partnership
Investments". The Company and the subsidiaries of the Company which are the
issuers of the Debentures will use the proceeds from the sale of such Debentures
to the Partnership of $400,000,000 primarily to fund the acquisition of Mercury
Asset Management Group plc described below under "Recent Developments", for
other general corporate purposes, and to repay certain intercompany
indebtedness. To the extent that Trust Preferred Securities being purchased for
resale by MLPF&S are not resold, the aggregate proceeds to the Company and its
subsidiaries would be reduced.
15
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the historical ratios of earnings to fixed
charges of the Company for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED LAST FRIDAY IN DECEMBER
---------------------------------------------------------------
1992 1993 1994 1995 1996
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges.................... 1.3 1.4 1.2 1.2 1.2
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 26, 1997
---------------------
<S> <C>
Ratio of earnings to fixed charges.................... 1.2
</TABLE>
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.
RECENT DEVELOPMENTS
On November 19, 1997, the Company, through ML Invest plc, an indirect,
wholly owned subsidiary, offered (the "Offer") to acquire all of the outstanding
share capital of Mercury Asset Management Group plc ("MAM") at a price of L 17
per share, with an aggregate offer value for the outstanding shares of
approximately L 3.1 billion (approximately $5.3 billion). On December 22, 1997,
the Company announced that its Offer had become unconditional in all respects.
As of January 5, 1998, ML Invest plc has acquired more than 84 percent of the
outstanding shares of MAM. The Offer will remain open for acceptances until
further notice. Once requisite ownership thresholds have been attained, the
Company will commence the statutory procedure to compulsorily acquire all MAM
shares not tendered into the Offer.
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MERRILL LYNCH PREFERRED CAPITAL TRUST III
Merrill Lynch Preferred Capital Trust III (the "Trust") is a statutory
business trust formed under the Delaware Business Trust Act, as amended (the
"Trust Act"), pursuant to a declaration of trust and the filing of a certificate
of trust with the Secretary of State of the State of Delaware on December 19,
1997; such declaration will be amended and restated in its entirety (as so
amended and restated, the "Declaration") substantially in the form filed as an
exhibit to the Registration Statement of which this Prospectus forms a part. The
Declaration will be qualified as an indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). Upon issuance of the Trust
Preferred Securities, the purchasers thereof will own all the Trust Preferred
Securities. See "Description of the Trust Preferred Securities". The Company
will acquire Trust Common Securities in an amount equal to at least 3% of the
total capital of the Trust. The Trust will use all the proceeds derived from the
issuance of the Trust Securities to purchase the Partnership Preferred
Securities from the Partnership and, accordingly, the assets of the Trust will
consist solely of the Partnership Preferred Securities. The Trust exists for the
exclusive purpose of (i) issuing the Trust Securities representing undivided
beneficial ownership interests in the assets of the Trust, (ii) investing the
gross proceeds of the Trust Securities in the Partnership Preferred Securities,
and (iii) engaging in only those other activities necessary or incidental
thereto.
Pursuant to the Declaration, there will initially be four trustees (the
"Trustees") for the Trust. Two of the Trustees will be individuals who are
employees or officers of or who are affiliated with the Company (the "Regular
Trustees"). The third trustee will be a financial institution that is
unaffiliated with the Company and is indenture trustee for purposes of
compliance with the provisions of the Trust Indenture Act (the "Property
Trustee"). The fourth trustee will be an entity that maintains its principal
place of business in the State of Delaware (the "Delaware Trustee"). Initially,
The Chase Manhattan Bank, a New York banking corporation, will act as Property
Trustee, and its affiliate, Chase Manhattan Bank Delaware, a Delaware
corporation, will act as Delaware Trustee until, in each case, removed or
replaced by the holder of the Trust Common Securities. For purposes of
compliance with the Trust Indenture Act, The Chase Manhattan Bank will also act
as trustee under the Trust Guarantee (the "Trust Guarantee Trustee"), as
Property Trustee under the Declaration and as trustee under the indenture
applicable to the Company Debenture.
The Property Trustee will hold title to the Partnership Preferred Securities
for the benefit of the holders of the Trust Securities, and the Property Trustee
will have the power to exercise all rights, powers and privileges with respect
to the Partnership Preferred Securities under the Amended and Restated Agreement
of Limited Partnership to be entered into by the Company and the Trust (the
"Limited Partnership Agreement") as the holder of the Partnership Preferred
Securities. In addition, the Property Trustee will maintain exclusive control of
a segregated non-interest bearing bank account (the "Property Account") to hold
all payments made in respect of the Partnership Preferred Securities for the
benefit of the holders of the Trust Securities. The Trust Guarantee Trustee will
hold the Trust Guarantee for the benefit of the holders of the Trust Preferred
Securities. The Company, as the holder of all the Trust Common Securities, will
have the right to appoint, remove or replace any of the Trustees and to increase
or decrease the number of trustees, provided that at least one trustee shall be
a Delaware Trustee, at least one trustee shall be the Property Trustee and at
least one Trustee shall be a Regular Trustee. The Company will pay all fees and
expenses related to the organization and operations of the Trust (including any
taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed by the United States or any other domestic
taxing authority upon the Trust) and the offering of the Trust Preferred
Securities and be responsible for all debts and obligations of the Trust (other
than with respect to the Trust Securities).
For so long as the Trust Preferred Securities remain outstanding, the
Company will covenant (i) to maintain directly 100% ownership of the Trust
Common Securities, (ii) to cause the Trust to remain a statutory business trust
and not to voluntarily dissolve, wind-up, liquidate or be terminated, except as
permitted by the Declaration of the Trust and (iii) to use its commercially
reasonable efforts to ensure that
17
<PAGE>
the Trust will not be (A) an "investment company" for purposes of the 1940 Act
or (B) classified as other than a grantor trust for United States federal income
tax purposes.
The rights of the holders of the Trust Preferred Securities, including
economic rights, rights to information and voting rights, are as set forth in
the Declaration and the Trust Act. See "Description of the Trust Preferred
Securities". The Declaration and the Trust Guarantee also incorporate by
reference the terms of the Trust Indenture Act.
The location of the principal executive office of the Trust is c/o Merrill
Lynch & Co., Inc., World Financial Center, North Tower, 250 Vesey Street, New
York, New York 10281, and its telephone number is (212) 449-1000.
MERRILL LYNCH PREFERRED FUNDING III, L.P.
Merrill Lynch Preferred Funding III, L.P. (the "Partnership") is a limited
partnership that was formed under the Delaware Revised Uniform Limited
Partnership Act, as amended (the "Partnership Act"), on December 19, 1997 for
the exclusive purposes of purchasing certain eligible debt securities of the
Company and wholly-owned subsidiaries of the Company (the "Affiliate Investment
Instruments") with the proceeds from the sale of Partnership Preferred
Securities to the Trust and a capital contribution from the Company in exchange
for the general partner interest in the Partnership. Pursuant to the certificate
of limited partnership, as amended, and the Limited Partnership Agreement, the
Company is the sole general partner of the Partnership (in such capacity the
"General Partner"). Upon the issuance of the Partnership Preferred Securities,
which securities represent limited partner interests in the Partnership, the
Trust will be the sole limited partner of the Partnership. Contemporaneously
with the issuance of the Partnership Preferred Securities, the General Partner
will contribute capital to the Partnership in an amount sufficient to establish
its initial capital account at an amount equal to at least 15% of the total
capital of the Partnership.
The Partnership is managed by the General Partner and exists for the sole
purpose of (i) issuing its partnership interests, (ii) investing the proceeds
thereof in Affiliate Investment Instruments and Eligible Debt Securities and
(iii) engaging in only those other activities necessary or incidental thereto.
To the extent that aggregate payments to the Partnership on the Affiliate
Investment Instruments and on Eligible Debt Securities exceed distributions
accumulated or payable with respect to the Partnership Preferred Securities, the
Partnership may at times have excess funds which shall be allocated to and may,
in the General Partner's sole discretion, be distributed to the General Partner.
For so long as the Partnership Preferred Securities remain outstanding, the
General Partner will covenant in the Limited Partnership Agreement (i) to remain
the sole general partner of the Partnership and to maintain directly 100%
ownership of the General Partner's interest in the Partnership, which interest
will at all times represent at least 1% of the total capital of the Partnership,
(ii) to cause the Partnership to remain a limited partnership and not to
voluntarily dissolve, liquidate, wind-up or be terminated, except as permitted
by the Limited Partnership Agreement and (iii) to use its commercially
reasonable efforts to ensure that the Partnership will not be (A) an "investment
company" for purposes of the 1940 Act or (B) an association or a publicly traded
partnership taxable as a corporation for United States federal income tax
purposes. The Company or the then General Partner may transfer its obligations
as General Partner to a wholly-owned direct or indirect subsidiary of the
Company provided that (i) such successor entity expressly accepts such transfer
of the obligations as General Partner and (ii) prior to such transfer, the
Company has received an opinion of nationally recognized independent counsel to
the Partnership experienced in such matters to the effect that (A) the
Partnership will be treated as a partnership for United States federal income
tax purposes, (B) such transfer would not cause the Trust to be classified as an
association taxable as a corporation for United States federal income tax
purposes, (C) following such transfer, the Company and such successor entity
will be in compliance with the 1940 Act
18
<PAGE>
without registering thereunder as an investment company, and (D) such transfer
will not adversely affect the limited liability of the holders of the
Partnership Preferred Securities.
The rights of the holders of the Partnership Preferred Securities, including
economic rights, rights to information and voting rights, are set forth in the
Limited Partnership Agreement and the Partnership Act. See "Description of the
Partnership Preferred Securities".
The Limited Partnership Agreement provides that the General Partner will
have liability for the fees and expenses of the Partnership (including any
taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed by the United States or any other domestic
taxing authority upon the Partnership) and be responsible for all debts and
obligations of the Partnership (other than with respect to the Partnership
Preferred Securities). Under Delaware law, assuming a limited partner in a
Delaware limited partnership such as the Partnership (I.E., a holder of the
Partnership Preferred Securities) does not participate in the control of the
business of the limited partnership, such limited partner will not be personally
liable for the debts, obligations and liabilities of such limited partnership,
whether arising in contract, tort or otherwise, solely by reason of being a
limited partner of such limited partnership (subject to any obligation such
limited partner may have to repay any funds that may have been wrongfully
distributed to it). The Partnership's business and affairs will be conducted by
the General Partner.
The location of the principal executive offices of the Partnership is c/o
Merrill Lynch & Co., Inc., World Financial Center, North Tower, 250 Vesey
Street, New York, New York 10281 and its telephone number is (212) 449-1000.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
The Trust Preferred Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Property Trustee, The Chase Manhattan Bank, will act as
trustee for the Trust Preferred Securities under the Declaration for purposes of
compliance with the provisions of the Trust Indenture Act. The terms of the
Trust Preferred Securities will include those stated in the Declaration and
those made part of the Declaration by the Trust Indenture Act. The following
summary of the material terms and provisions of the Trust Preferred Securities
does not purport to be complete and is subject to, and qualified in its entirety
by reference to, the Declaration, a copy of which is filed as an exhibit to the
Registration Statement of which this Prospectus is a part, the Trust Act and the
Trust Indenture Act.
GENERAL
The Trust Preferred Securities will be issued in fully registered form
without coupons. Trust Preferred Securities will not be issued in bearer form.
See "-- Book-Entry Only Issuance -- The Depository Trust Company".
The Declaration authorizes the Regular Trustees of the Trust to issue the
Trust Securities, which represent undivided beneficial ownership interests in
the assets of the Trust. Title to the Partnership Preferred Securities will be
held by the Property Trustee for the benefit of the holders of the Trust
Securities. The Declaration does not permit the Trust to acquire any assets
other than the Partnership Preferred Securities or the issuance by the Trust of
any securities other than the Trust Securities or the incurrence of any
indebtedness by the Trust. The payment of distributions out of money held by the
Trust, and payments out of money held by the Trust upon redemption of the Trust
Preferred Securities or liquidation of the Trust, are guaranteed by the Company
to the extent described under "Description of the Trust Guarantee". The Trust
Guarantee will be held by The Chase Manhattan Bank, the Trust Guarantee Trustee,
for the benefit of the holders of the Trust Preferred Securities. The Trust
Guarantee does not cover payment of distributions when the Trust does not have
sufficient available funds to pay such
19
<PAGE>
distributions. In such event, holders of Trust Preferred Securities will have
the remedies described below under "-- Trust Enforcement Events".
DISTRIBUTIONS
The distribution rate on Trust Preferred Securities will be fixed at a rate
per annum of % of the stated liquidation amount of $25 per Trust Preferred
Security and will be paid if, as and when the Trust has funds available for
payment. Distributions not paid on the scheduled payment date will accumulate
and compound quarterly at a rate per annum equal to %. The term "distribution"
as used herein includes any such compounded amounts unless otherwise stated or
the context otherwise requires. The amount of distributions payable for any
period will be computed on the basis of a 360-day year of twelve 30-day months.
Distributions on the Trust Preferred Securities will be cumulative, will
accumulate from the date of initial issuance and will be payable quarterly in
arrears on each March 30, June 30, September 30 and December 30, commencing
March 30, 1998, if, as and when available for payment, by the Property Trustee,
except as otherwise described below. If distributions are not paid when
scheduled, the accumulated distributions shall be paid to the holders of record
of Trust Preferred Securities as they appear on the books and records of the
Trust on the record date with respect to the payment date for the Trust
Preferred Securities which corresponds to the payment date fixed by the
Partnership with respect to the payment of cumulative distributions on the
Partnership Preferred Securities.
Distributions on the Trust Preferred Securities will be made to the extent
that the Trust has funds available for the payment of such distributions in the
Property Account. Amounts available to the Trust for distribution to the holders
of the Trust Preferred Securities will be limited to payments received by the
Trust from the Partnership with respect to the Partnership Preferred Securities
or from the Company on the Partnership Guarantee or the Trust Guarantee.
Distributions on the Partnership Preferred Securities will be paid only if, as
and when declared in the sole discretion of the Company, as the General Partner
of the Partnership. Pursuant to the Limited Partnership Agreement, the General
Partner is not obligated to declare distributions on the Partnership Preferred
Securities at any time, including upon or following a Partnership Enforcement
Event. See "Description of Partnership Preferred Securities -- Partnership
Enforcement Events".
The assets of the Partnership will consist only of Affiliate Investment
Instruments (which initially will be the Debentures) and Eligible Debt
Securities. To the extent that the issuers (and, where applicable, the Company,
as guarantor) of the securities in which the Partnership invests defer or fail
to make any payment in respect of such securities (or, if applicable, such
guarantees), the Partnership will not have sufficient funds to pay and will not
declare or pay distributions on the Partnership Preferred Securities. If the
Partnership does not declare and pay distributions on the Partnership Preferred
Securities out of funds legally available for distribution, the Trust will not
have sufficient funds to make distributions on the Trust Preferred Securities,
in which event the Trust Guarantee will not apply to such distributions until
the Trust has sufficient funds available therefor. See "Description of the
Partnership Preferred Securities -- Distributions" and "Description of the Trust
Guarantee". In addition, as described under "Risk Factors -- Insufficient Income
or Assets Available to Partnership", the Partnership may not have sufficient
funds to pay current or liquidating distributions on the Partnership Preferred
Securities if (i) at any time that the Partnership is receiving current payments
in respect of the securities held by the Partnership (including the Debentures),
the General Partner, in its sole discretion, does not declare distributions on
the Partnership Preferred Securities and the Partnership receives insufficient
amounts to pay the additional compounded distributions that will accumulate in
respect of the Partnership Preferred Securities, (ii) the Partnership reinvests
the proceeds received in respect of the Debentures upon their retirement or at
their maturities in Affiliate Investment Instruments that do not generate income
in an amount that is sufficient to pay full distributions in respect of the
Partnership Preferred Securities or (iii) the Partnership invests in debt
20
<PAGE>
securities of Investment Affiliates that are not guaranteed by the Company and
that cannot be liquidated by the Partnership for an amount sufficient to pay
such distributions in full.
Distributions on the Trust Preferred Securities will be payable to the
holders thereof as they appear on the books and records of the Trust on the
relevant record dates, which will be one Business Day (as defined herein) prior
to the relevant payment dates. Such distributions will be paid through the
Property Trustee who will hold amounts received in respect of the Partnership
Preferred Securities in the Property Account for the benefit of the holders of
the Trust Securities. Subject to any applicable laws and regulations and the
provisions of the Declaration, each such payment will be made as described under
"-- Book-Entry Only Issuance -- The Depository Trust Company" below. In the
event that the Trust Preferred Securities do not remain in book-entry only form,
the relevant record dates shall be the 15th day of the month of the relevant
payment dates. In the event that any date on which distributions are payable on
the Trust Preferred Securities is not a Business Day, payment of the
distribution payable on such date will be made on the next succeeding day which
is a Business Day (without any interest or other payment in respect of the
distribution subject to such delay) except that, if such Business Day is in the
next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. A "Business Day" shall mean any day other than a day on which
banking institutions in The City of New York are authorized or required by law
to close.
TRUST ENFORCEMENT EVENTS
The occurrence, at any time, of (i) arrearages on distributions on the Trust
Preferred Securities that shall exist for six consecutive quarterly distribution
periods, (ii) a default by the Company in respect of any of its obligations
under the Trust Guarantee or (iii) a Partnership Enforcement Event under the
Limited Partnership Agreement, will constitute an enforcement event under the
Declaration with respect to the Trust Securities (a "Trust Enforcement Event");
PROVIDED, that pursuant to the Declaration, the holder of the Trust Common
Securities will be deemed to have waived any Trust Enforcement Event with
respect to the Trust Common Securities until all Trust Enforcement Events with
respect to the Trust Preferred Securities have been cured, waived or otherwise
eliminated. Until such Trust Enforcement Events with respect to the Trust
Preferred Securities have been so cured, waived or otherwise eliminated, the
Property Trustee will be deemed to be acting solely on behalf of the holders of
the Trust Preferred Securities and only the holders of the Trust Preferred
Securities will have the right to direct the Property Trustee with respect to
certain matters under the Declaration and, in the case of a Partnership
Enforcement Event, the Special Representative with respect to certain matters
under the Limited Partnership Agreement. See "Description of the Partnership
Preferred Securities -- Partnership Enforcement Events" for a description of the
events which will trigger the occurrence of a Partnership Enforcement Event.
Upon the occurrence of a Trust Enforcement Event, (a) the Property Trustee,
as the holder of the Partnership Preferred Securities, shall have the right to
enforce the terms of the Partnership Preferred Securities, including the right
to direct the Special Representative to enforce (i) the Partnership's creditors'
rights and other rights with respect to the Affiliate Investment Instruments and
the Investment Guarantees, (ii) the rights of the holders of the Partnership
Preferred Securities under the Partnership Guarantee and (iii) the rights of the
holders of the Partnership Preferred Securities to receive distributions (only
if and to the extent declared out of funds legally available therefor) on the
Partnership Preferred Securities, and (b) the Trust Guarantee Trustee shall have
the right to enforce the terms of the Trust Guarantee, including the right to
enforce the covenant restricting certain payments by the Company and Finance
Subsidiaries.
If the Property Trustee fails to enforce its rights under the Partnership
Preferred Securities after a holder of Trust Preferred Securities has made a
written request, such holder of record of Trust Preferred Securities may
directly institute a legal proceeding against the Partnership and the Special
Representative to enforce the Property Trustee's rights under the Partnership
Preferred Securities without first instituting any legal proceeding against the
Property Trustee, the Trust or any other person or entity. In addition, for
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<PAGE>
so long as the Trust holds any Partnership Preferred Securities, if the Special
Representative fails to enforce its rights on behalf of the Partnership under
the Affiliate Investment Instruments after a holder of Trust Preferred
Securities has made a written request, a holder of record of Trust Preferred
Securities may on behalf of the Partnership directly institute a legal
proceeding against the Investment Affiliates under the Affiliate Investment
Instruments, without first instituting any legal proceeding against the Property
Trustee, the Trust, the Special Representative or the Partnership. In any event,
for so long as the Trust is the holder of any Partnership Preferred Securities,
if a Trust Enforcement Event has occurred and is continuing and such event is
attributable to the failure of an Investment Affiliate to make any required
payment when due on any Affiliate Investment Instrument or the failure of the
Company to make any required payment when due on any Investment Guarantee, then
a holder of Trust Preferred Securities may on behalf of the Partnership directly
institute a proceeding against such Investment Affiliate with respect to such
Affiliate Investment Instrument or against the Company with respect to any such
Investment Guarantee, in each case for enforcement of payment.
Under no circumstances, however, shall the Special Representative have
authority to cause the General Partner to declare distributions on the
Partnership Preferred Securities. As a result, although the Special
Representative may be able to enforce the Partnership's creditors' rights to
accelerate and receive payments in respect of the Affiliate Investment
Instruments and the Investment Guarantees, the Partnership would be entitled to
reinvest such payments in additional Affiliate Investment Instruments, subject
to satisfying the reinvestment criteria described under "Description of the
Partnership Preferred Securities -- Partnership Investments", and Eligible Debt
Securities, rather than declaring and making distributions on the Partnership
Preferred Securities.
The Company and the Trust are each required to file annually with the
Property Trustee an officer's certificate as to its compliance with all
conditions and covenants under the Declaration.
MANDATORY REDEMPTION
The Partnership Preferred Securities may be redeemed by the Partnership at
the option of the General Partner, in whole or in part, at any time on or after
March 30, 2008 or at any time in certain circumstances upon the occurrence of a
Partnership Special Event. Upon such redemption of the Partnership Preferred
Securities (either at the option of the General Partner or pursuant to a
Partnership Special Event), the proceeds from such repayment shall
simultaneously be applied to redeem Trust Securities having an aggregate
liquidation amount equal to the Partnership Preferred Securities so redeemed at
an amount per Trust Security equal to $25 plus accumulated and unpaid
distributions thereon; PROVIDED, that holders of the Trust Securities shall be
given not less than 30 nor more than 60 days notice of such redemption. See
"Description of the Partnership Preferred Securities -- General" and "--
Optional Redemption".
TRUST SPECIAL EVENT REDEMPTION OR DISTRIBUTION
If, at any time, a Trust Tax Event or a Trust Investment Company Event (each
as hereinafter defined, and each, a "Trust Special Event") shall occur and be
continuing, the Regular Trustees shall, unless the Partnership Preferred
Securities are redeemed in the limited circumstances described below, within 90
days following the occurrence of such Trust Special Event elect to either (i)
dissolve the Trust upon not less than 30 nor more than 60 days notice with the
result that, after satisfaction of creditors of the Trust, if any, Partnership
Preferred Securities would be distributed on a PRO RATA basis to the holders of
the Trust Preferred Securities and the Trust Common Securities in liquidation of
such holders' interests in the Trust; PROVIDED, HOWEVER, that if at the time
there is available to the Trust the opportunity to eliminate, within such 90-day
period, the Trust Special Event by taking some ministerial action, such as
filing a form or making an election, or pursuing some other similar reasonable
measure which in the sole judgment of the Company has or will cause no adverse
effect on the Trust, the Partnership, the Company or the holders of the Trust
Securities and will involve no material cost, the Trust will pursue such measure
in lieu of dissolution or (ii)
22
<PAGE>
cause the Trust Preferred Securities to remain outstanding, provided that in the
case of this clause (ii), the Company shall pay any and all expenses incurred by
or payable by the Trust attributable to the Trust Special Event. Furthermore, if
in the case of the occurrence of a Trust Tax Event, the Regular Trustees have
received an opinion (a "Trust Redemption Tax Opinion") of nationally recognized
independent tax counsel experienced in such matters that there is more than an
insubstantial risk that interest payable by one or more of the Investment
Affiliates with respect to the Debentures issued by such Investment Affiliate is
not, or will not be, deductible by such Investment Affiliate for United States
federal income tax purposes even if the Partnership Preferred Securities were
distributed to the holders of the Trust Securities in liquidation of such
holders' interests in the Trust as described above, then the General Partner
shall have the right, within 90 days following the occurrence of such Trust Tax
Event, to elect to cause the Partnership to redeem the Partnership Preferred
Securities in whole (but not in part) for cash upon not less than 30 nor more
than 60 days notice and promptly following such redemption, the Trust Preferred
Securities and Trust Common Securities will be redeemed by the Trust at the
Redemption Price.
"Trust Tax Event" means that the Company shall have requested and received
and shall have delivered to the Regular Trustees an opinion of nationally
recognized independent tax counsel experienced in such matters (a "Trust
Dissolution Tax Opinion") to the effect that there has been (a) an amendment to,
change in or announced proposed change in the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein, (b) a judicial decision interpreting, applying, or
clarifying such laws or regulations, (c) an administrative pronouncement or
action that represents an official position (including a clarification of an
official position) of the governmental authority or regulatory body making such
administrative pronouncement or taking such action, or (d) a threatened
challenge asserted in connection with an audit of the Company or any of its
subsidiaries, the Partnership, or the Trust, or a threatened challenge asserted
in writing against any other taxpayer that has raised capital through the
issuance of securities that are substantially similar to the Debentures, the
Partnership Preferred Securities, or the Trust Preferred Securities, which
amendment or change is adopted or which proposed change, decision or
pronouncement is announced or which action, clarification or challenge occurs on
or after the date of this Prospectus (collectively a "Tax Action"), which Tax
Action relates to any of the items described in (i) through (iii) below, and
that following the occurrence of such Tax Action there is more than an
insubstantial risk that (i) the Trust is, or will be, subject to United States
federal income tax with respect to income accrued or received on the Partnership
Preferred Securities, (ii) the Trust is, or will be, subject to more than a DE
MINIMIS amount of other taxes, duties or other governmental charges or (iii)
interest payable by an Investment Affiliate with respect to the Debenture issued
by such Investment Affiliate is not, or will not be, deductible by such
Investment Affiliate for United States federal income tax purposes.
"Trust Investment Company Event" means that the Company shall have requested
and received and shall have delivered to the Regular Trustees an opinion of
nationally recognized independent legal counsel experienced in such matters to
the effect that as a result of the occurrence on or after the date hereof of a
change in law or regulation or a change in interpretation or application of law
or regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), the Trust is or will be considered an
"investment company" which is required to be registered under the 1940 Act.
If the Partnership Preferred Securities are distributed to the holders of
the Trust Preferred Securities, the Company will use its best efforts to cause
the Partnership Preferred Securities to be listed on the New York Stock Exchange
or on such other national securities exchange or similar organization as the
Trust Preferred Securities are then listed or quoted.
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<PAGE>
On the date fixed for any distribution of Partnership Preferred Securities,
upon dissolution of the Trust, (i) the Trust Preferred Securities and the Trust
Common Securities will no longer be deemed to be outstanding and (ii)
certificates representing Trust Securities will be deemed to represent the
Partnership Preferred Securities having a liquidation preference equal to the
stated liquidation amount of such Trust Securities until such certificates are
presented to the Company or its agent for transfer or reissuance.
There can be no assurance as to the market price for the Partnership
Preferred Securities which may be distributed in exchange for Trust Preferred
Securities if a dissolution and liquidation of the Trust were to occur.
Accordingly, the Partnership Preferred Securities which an investor may
subsequently receive on dissolution and liquidation of the Trust may trade at a
discount to the price of the Trust Preferred Securities exchanged.
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding Trust Preferred
Securities unless all accumulated and unpaid distributions have been paid on all
Trust Preferred Securities for all quarterly distribution periods terminating on
or prior to the date of redemption.
If the Trust gives a notice of redemption in respect of Trust Preferred
Securities (which notice will be irrevocable), and if the Company has paid to
the Property Trustee a sufficient amount of cash in connection with the related
redemption of the Partnership Preferred Securities, then, by 12:00 noon, New
York time, on the redemption date, the Trust will irrevocably deposit with DTC
funds sufficient to pay the amount payable on redemption of all book-entry
certificates and will give DTC irrevocable instructions and authority to pay
such amount to holders of the Trust Preferred Securities. See "-- Book-Entry
Only Issuance -- The Depository Trust Company". If notice of redemption shall
have been given and funds are deposited as required, then upon the date of such
deposit, all rights of holders of such Trust Preferred Securities so called for
redemption will cease, except the right of the holders of such Trust Preferred
Securities to receive the Redemption Price, but without interest on such
Redemption Price. In the event that any date fixed for redemption of Trust
Preferred Securities is not a Business Day, then payment of the amount payable
on such date will be made on the next succeeding day which is a Business Day
(without any interest or other payment in respect of the amount payable subject
to such delay), except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day. In
the event that payment of the Redemption Price in respect of Trust Preferred
Securities is improperly withheld or refused and not paid either by the Trust or
by the Company pursuant to the Trust Guarantee described under "Description of
the Trust Guarantee", distributions on such Trust Preferred Securities will
continue to accumulate from the original redemption date to the date of payment.
In the event that fewer than all of the outstanding Trust Preferred
Securities are to be redeemed, the Trust Preferred Securities will be redeemed
in accordance with the procedures of DTC. See "-- Book-Entry Only Issuance --
The Depository Trust Company". In the event that the Trust Preferred Securities
do not remain in book-entry only form and fewer than all of the outstanding
Trust Preferred Securities are to be redeemed, the Trust Preferred Securities
shall be redeemed on a PRO RATA basis or pursuant to the rules of any securities
exchange on which the Trust Preferred Securities are listed.
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), the Company or its subsidiaries may at
any time and from time to time purchase outstanding Trust Preferred Securities
by tender, in the open market or by private agreement.
SUBORDINATION OF TRUST COMMON SECURITIES
Payment of amounts upon liquidation of the Trust Securities shall be made
PRO RATA based on the liquidation amount of the Trust Securities; PROVIDED,
HOWEVER, that upon (i) the occurrence of an Investment Event of Default by an
Investment Affiliate (including the Company) in respect of any Affiliate
Investment Instrument or (ii) default by the Company on any of its obligations
under any Guarantee, the
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holders of the Trust Preferred Securities will have a preference over the
holders of the Trust Common Securities with respect to payments upon liquidation
of the Trust.
In the case of any Trust Enforcement Event, the holder of Trust Common
Securities will be deemed to have waived any such Trust Enforcement Event until
all such Trust Enforcement Events with respect to the Trust Preferred Securities
have been cured, waived or otherwise eliminated. Until all Trust Enforcement
Events with respect to the Trust Preferred Securities have been so cured, waived
or otherwise eliminated, the Property Trustee shall act solely on behalf of the
holders of the Trust Preferred Securities and not on behalf of the holder of the
Trust Common Securities, and only the holders of the Trust Preferred Securities
will have the right to direct the Property Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust (each a "Trust Liquidation"), the holders
of the Trust Preferred Securities will be entitled to receive out of the assets
of the Trust, after satisfaction of liabilities to creditors, distributions in
cash or other immediately available funds in an amount equal to the aggregate of
the stated liquidation amount of $25 per Trust Preferred Security plus
accumulated and unpaid distributions thereon to the date of payment (the "Trust
Liquidation Distribution"), unless, in connection with such Trust Liquidation,
Partnership Preferred Securities have been distributed on a PRO RATA basis to
the holders of the Trust Securities.
If, upon any such Trust Liquidation, the Trust Liquidation Distribution can
be paid only in part because the Trust has insufficient assets available to pay
in full the aggregate Trust Liquidation Distribution, then the amounts payable
directly by the Trust on the Trust Preferred Securities shall be paid on a PRO
RATA basis. The holders of the Trust Common Securities will be entitled to
receive distributions upon any such liquidation PRO RATA with the holders of the
Trust Preferred Securities, except in the limited circumstances described above
under "-- Subordination of Trust Common Securities".
Pursuant to the Declaration, the Trust shall terminate (i) upon the
bankruptcy of the Company, (ii) upon the filing of a certificate of dissolution
or the equivalent with respect to the Company, the filing of a certificate of
cancellation with respect to the Trust after having obtained the consent of at
least a majority in liquidation amount of the Trust Securities, voting together
as a single class, to file such certificate of cancellation, or the revocation
of the charter of the Company and the expiration of 90 days after the date of
revocation without a reinstatement thereof, (iii) upon the distribution of all
of the Partnership Preferred Securities upon the occurrence of a Trust Special
Event, (iv) upon the entry of a decree of a judicial dissolution of the Company
or the Trust, or (v) upon the redemption of all the Trust Securities.
VOTING RIGHTS
Except as described herein, under the Trust Act, the Trust Indenture Act and
under "Description of the Trust Guarantee -- Amendments and Assignment", and as
otherwise required by law and the Declaration, the holders of the Trust
Preferred Securities will have no voting rights.
Subject to the requirement of the Property Trustee obtaining a tax opinion
as set forth in the last sentence of this paragraph, the holders of a majority
in liquidation amount of the Trust Preferred Securities have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Property Trustee, or direct the exercise of any trust or power conferred
upon the Property Trustee under the Declaration, including the right to direct
the Property Trustee, as holder of the Partnership Preferred Securities, to (i)
exercise the remedies available to it under the Limited Partnership Agreement as
a holder of the Partnership Preferred Securities, including the right to direct
the Special Representative to exercise its rights in the manner described above
under "-- Trust Enforcement Events" and (ii) consent to any amendment,
modification, or termination of the Limited Partnership Agreement or the
Partnership Preferred Securities where such consent shall be required; PROVIDED,
HOWEVER, that where a
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consent or action under the Limited Partnership Agreement would require the
consent or act of the holders of more than a majority of the aggregate
liquidation preference of Partnership Preferred Securities affected thereby,
only the holders of the percentage of the aggregate stated liquidation amount of
the Trust Securities which is at least equal to the percentage required under
the Limited Partnership Agreement may direct the Property Trustee to give such
consent or take such action on behalf of the Trust. See "Description of the
Partnership Preferred Securities -- Voting Rights". The Property Trustee shall
notify all holders of the Trust Preferred Securities of any notice of any
Partnership Enforcement Event received from the General Partner with respect to
the Partnership Preferred Securities and the Affiliate Investment Instruments.
Such notice shall state that such Partnership Enforcement Event also constitutes
a Trust Enforcement Event. Except with respect to directing the time, method,
and place of conducting a proceeding for a remedy as described above, the
Property Trustee shall be under no obligation to take any of the actions
described in clauses (i) or (ii) above unless the Property Trustee has obtained
an opinion of independent tax counsel to the effect that as a result of such
action, the Trust will not fail to be classified as a grantor trust for United
States federal income tax purposes and that after such action each holder of
Trust Securities will continue to be treated as owning an undivided beneficial
ownership interest in the Partnership Preferred Securities.
A waiver of a Partnership Enforcement Event with respect to the Partnership
Preferred Securities held by the Property Trustee will constitute a waiver of
the corresponding Trust Enforcement Event.
Any required approval or direction of holders of Trust Preferred Securities
may be given at a separate meeting of holders of Trust Preferred Securities
convened for such purpose, at a meeting of all of the holders of Trust
Securities or pursuant to written consent. The Regular Trustees will cause a
notice of any meeting at which holders of Trust Preferred Securities are
entitled to vote, or of any matter upon which action by written consent of such
holders is to be taken, to be mailed to each holder of record of Trust Preferred
Securities. Each such notice will include a statement setting forth the
following information: (i) the date of such meeting or the date by which such
action is to be taken; (ii) a description of any resolution proposed for
adoption at such meeting on which such holders are entitled to vote or of such
matter upon which written consent is sought; and (iii) instructions for the
delivery of proxies or consents. No vote or consent of the holders of Trust
Preferred Securities will be required for the Trust to redeem and cancel Trust
Preferred Securities or distribute Partnership Preferred Securities in
accordance with the Declaration.
Notwithstanding that holders of Trust Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the Trust
Securities that are beneficially owned at such time by the Company or any entity
directly or indirectly controlled by, or under direct or indirect common control
with, the Company, except for Trust Preferred Securities purchased or acquired
by the Company or its affiliates in connection with transactions effected by or
for the account of customers of the Company or any of its subsidiaries or in
connection with the distribution or trading of such Trust Preferred Securities,
shall not be entitled to vote or consent and shall, for purposes of such vote or
consent, be treated as if such Trust Securities were not outstanding; PROVIDED,
HOWEVER, that persons (other than affiliates of the Company) to whom the Company
or any of its subsidiaries have pledged Trust Preferred Securities may vote or
consent with respect to such pledged Trust Preferred Securities pursuant to the
terms of such pledge.
The procedures by which holders of Trust Preferred Securities represented by
the global certificates may exercise their voting rights are described below.
See "-- Book-Entry Only Issuance -- The Depository Trust Company".
Holders of the Trust Preferred Securities will have no rights to appoint or
remove the Regular Trustees, who may be appointed, removed or replaced solely by
the Company, as the holder of all of the Trust Common Securities.
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MERGER, CONSOLIDATION OR AMALGAMATION OF THE TRUST
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any corporation or other entity, except as
described below. The Trust may, with the consent of a majority of the Regular
Trustees and without the consent of the holders of the Trust Securities, the
Property Trustee or the Delaware Trustee consolidate, amalgamate, merge with or
into, or be replaced by a trust organized as such under the laws of any State of
the United States; PROVIDED, that (i) if the Trust is not the survivor, such
successor entity either (x) expressly assumes all of the obligations of the
Trust under the Trust Securities or (y) substitutes for the Trust Preferred
Securities other securities having substantially the same terms as the Trust
Preferred Securities (the "Successor Securities"), so long as the Successor
Securities rank the same as the Trust Securities rank with respect to
distributions, assets and payments, (ii) the Company expressly acknowledges a
trustee of such successor entity possessing the same powers and duties as the
Property Trustee as the holder of the Partnership Preferred Securities, (iii)
the Trust Preferred Securities or any Successor Securities are listed, or any
Successor Securities will be listed upon notification of issuance, on any
national securities exchange or with another organization on which the Trust
Preferred Securities are then listed or quoted, (iv) such merger, consolidation,
amalgamation or replacement does not cause the Trust Preferred Securities
(including any Successor Securities) to be downgraded by any nationally
recognized statistical rating organization, (v) such merger, consolidation,
amalgamation or replacement does not adversely affect the rights, preferences
and privileges of the holders of the Trust Preferred Securities (including any
Successor Securities) in any material respect, (vi) such successor entity has a
purpose substantially identical to that of the Trust, (vii) the Company
guarantees the obligations of such successor entity under the Successor
Securities to the same extent as provided by the Trust Guarantee and (viii)
prior to such merger, consolidation, amalgamation or replacement, the Company
has received an opinion of a nationally recognized independent counsel to the
Trust experienced in such matters to the effect that: (A) such merger,
consolidation, amalgamation or replacement will not adversely affect the rights,
preferences and privileges of the holders of the Trust Preferred Securities
(including any Successor Securities) in any material respect (other than with
respect to any dilution of the holders' interest in the new entity), (B)
following such merger, consolidation, amalgamation or replacement, neither the
Trust nor such successor entity will be required to register as an investment
company under the 1940 Act, (C) following such merger, consolidation,
amalgamation or replacement, the Trust (or such successor trust) will not be
classified as an association or a publicly traded partnership taxable as a
corporation for United States federal income tax purposes and (D) following such
merger, consolidation, amalgamation or replacement, the Partnership will not be
classified as an association or a publicly traded partnership taxable as a
corporation for United States federal income tax purposes. Notwithstanding the
foregoing, the Trust shall not, except with the consent of holders of 100% in
liquidation amount of the Trust Preferred Securities, consolidate, amalgamate,
merge with or into, or be replaced by any other entity or permit any other
entity to consolidate, amalgamate, merge with or into, or replace it, if such
consolidation, amalgamation, merger or replacement would cause the Trust or the
successor entity to be classified as an association or a publicly traded
partnership taxable as a corporation for United States federal income tax
purposes.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by a majority of the
Regular Trustees (and in certain circumstances the Property Trustee and the
Delaware Trustee), PROVIDED, that if any proposed amendment provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Trust
Securities, whether by way of amendment to the Declaration or otherwise or (ii)
the dissolution, winding-up or termination of the Trust other than pursuant to
the terms of the Declaration, then the holders of the Trust Securities voting
together as a single class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of at least a majority in liquidation amount of the Trust Securities
affected thereby; PROVIDED, FURTHER that if any amendment or proposal referred
to in clause
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(i) above would adversely affect only the Trust Preferred Securities or the
Trust Common Securities, then only the affected class will be entitled to vote
on such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of a majority in liquidation amount of such
class of Trust Securities.
The Declaration may be amended without the consent of the holders of the
Trust Securities to (i) cure any ambiguity, (ii) correct or supplement any
provision in the Declaration that may be defective or inconsistent with any
other provision of the Declaration, (iii) add to the covenants, restrictions or
obligations of the Sponsor, (iv) conform to any change in the 1940 Act, the
Trust Indenture Act or the rules or regulations of either such Act and (v)
modify, eliminate and add to any provision of the Declaration to such extent as
may be necessary or desirable; PROVIDED that no such amendment shall have a
material adverse effect on the rights, preferences or privileges of the holders
of the Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
fail to be classified as a grantor trust for United States federal income tax
purposes, (ii) cause the Partnership to be classified as an association or
publicly traded partnership taxable as a corporation for such purposes, (iii)
reduce or otherwise adversely affect the powers of the Property Trustee or (iv)
cause the Trust or the Partnership to be deemed an "investment company" which is
required to be registered under the 1940 Act.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depository (the
"Depository") for the Trust Preferred Securities and, to the extent distributed
to the holders of Trust Preferred Securities, the Partnership Preferred
Securities. The Trust Preferred Securities will be issued only as
fully-registered securities registered in the name of Cede & Co. (DTC's
nominee). One or more fully-registered global Trust Preferred Securities
certificates ("Global Certificates"), representing the total aggregate number of
Trust Preferred Securities, will be issued and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Participants in DTC
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. DTC is owned by a number of its
Participants and by the New York Stock Exchange, the American Stock Exchange,
Inc., and the National Association of Securities Dealers, Inc. Access to the DTC
system is also available to others such as securities brokers and dealers, banks
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly ("Indirect Participants"). The
rules applicable to DTC and its Participants are on file with the Commission.
Purchases of Trust Preferred Securities within the DTC system must be made
by or through Participants, which will receive a credit for the Trust Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
Trust Preferred Securities ("Beneficial Owner") is in turn to be recorded on the
Participants' and Indirect Participants' records. Beneficial Owners will not
receive written confirmation from DTC of their purchases, but Beneficial Owners
are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the
Participants or Indirect Participants through which the Beneficial Owners
purchased Trust Preferred Securities. Transfers of ownership interests in the
Trust Preferred Securities are to be accomplished by entries made on the books
of Participants and Indirect Participants acting on behalf of Beneficial Owners.
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Beneficial Owners will not receive certificates representing their ownership
interests in Trust Preferred Securities, except in the event that use of the
book-entry system for the Trust Preferred Securities is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Trust Preferred
Securities; DTC's records reflect only the identity of the Participants to whose
accounts such Trust Preferred Securities are credited, which may or may not be
the Beneficial Owners. The Participants and Indirect Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
So long as DTC, or its nominee, is the registered owner or holder of a
Global Certificate, DTC or such nominee, as the case may be, will be considered
the sole owner or holder of the Trust Preferred Securities represented thereby
for all purposes under the Declaration and the Trust Preferred Securities. No
beneficial owner of an interest in a Global Certificate will be able to transfer
that interest except in accordance with DTC's applicable procedures, in addition
to those provided for under the Declaration.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Trust Preferred Securities (including the presentation of
Trust Preferred Securities for exchange as described below) only at the
direction of one or more Participants to whose account the DTC interests in the
Global Certificates are credited and only in respect of such portion of the
aggregate liquidation amount of Trust Preferred Securities as to which such
Participant or Participants has or have given such direction. Also, if there is
a Trust Enforcement Event under the Trust Preferred Securities, DTC will
exchange the Global Certificates for Certificated Securities, which it will
distribute to its Participants in accordance with its customary procedures.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants, and by Participants and Indirect
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Redemption notices in respect of the Trust Preferred Securities held in
book-entry form will be sent to Cede & Co. If less than all of the Trust
Preferred Securities are being redeemed, DTC will determine the amount of the
interest of each Participant to be redeemed in accordance with its procedures.
Although voting with respect to the Trust Preferred Securities is limited,
in those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Trust Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to the Trust as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Participants to whose accounts the Trust Preferred
Securities are allocated on the record date (identified in a listing attached to
the Omnibus Proxy).
Distributions on the Trust Preferred Securities held in book-entry form will
be made to DTC in immediately available funds. DTC's practice is to credit
Participants' accounts on the relevant payment date in accordance with their
respective holdings shown on DTC's records unless DTC has reason to believe that
it will not receive payments on such payment date. Payments by Participants and
Indirect Participants to Beneficial Owners will be governed by standing
instructions and customary practices and will be the responsibility of such
Participants and Indirect Participants and not of DTC, the Trust or the Company,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of any distributions to DTC is the responsibility of the
Trust, disbursement of such payments to Participants is the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners is the
responsibility of Participants and Indirect Participants.
Except as described, a Beneficial Owner of an interest in a Global
Certificate will not be entitled to receive physical delivery of Trust Preferred
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC to exercise any rights under the Trust Preferred Securities.
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Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Certificates among Participants of DTC, DTC
is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. Neither the Company nor the
Trust will have any responsibility for the performance by DTC or its
Participants or Indirect Participants under the rules and procedures governing
DTC. DTC may discontinue providing its services as securities depository with
respect to the Trust Preferred Securities at any time by giving notice to the
Trust. Under such circumstances, in the event that a successor securities
depository is not obtained, Trust Preferred Security certificates are required
to be printed and delivered to the Property Trustee. Additionally, the Trust
(with the consent of the Company) may decide to discontinue use of the system of
book-entry transfers through DTC or any successor depository. In that event,
certificates for the Trust Preferred Securities will be printed and delivered to
the Property Trustee. In each of the above circumstances, the Company will
appoint a paying agent with respect to the Trust Preferred Securities.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in the global Trust Preferred
Securities as represented by a Global Certificate.
PAYMENT
Payments in respect of the Trust Preferred Securities represented by the
Global Certificates shall be made to DTC, which shall credit the relevant
accounts at DTC on the scheduled payment dates or, in the case of certificated
securities, if any, such payments shall be made by check mailed to the address
of the holder entitled thereto as such address shall appear on the register. The
Paying Agent shall be permitted to resign as Paying Agent upon 30 days written
notice to the Regular Trustees. In the event that The Chase Manhattan Bank shall
no longer be the Paying Agent, the Regular Trustees shall appoint a successor to
act as Paying Agent (which shall be a bank or trust company).
REGISTRAR, TRANSFER AGENT, AND PAYING AGENT
The Property Trustee will act as Registrar, Transfer Agent and Paying Agent
for the Trust Preferred Securities.
Registration of transfers of Trust Preferred Securities will be effected
without charge by or on behalf of the Trust, but upon payment (with the giving
of such indemnity as the Trust or the Company may require) in respect of any tax
or other government charges which may be imposed in relation to it.
The Trust will not be required to register or cause to be registered the
transfer of Trust Preferred Securities after such Trust Preferred Securities
have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, prior to the occurrence of a default with respect to
the Trust Securities, undertakes to perform only such duties as are specifically
set forth in the Declaration and, after default, shall exercise the same degree
of care as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provisions, the Property Trustee is under no obligation
to exercise any of the powers vested in it by the Declaration at the request of
any holder of Trust Preferred Securities, unless offered reasonable indemnity by
such holder against the costs, expenses and liabilities which might be incurred
thereby. The holders of Trust Preferred Securities will not be required to offer
such indemnity in the event such holders, by exercising their voting rights,
direct the Property Trustee to take any action following a Trust Enforcement
Event.
GOVERNING LAW
The Declaration and the Trust Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
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MISCELLANEOUS
The Regular Trustees are authorized and directed to conduct the affairs of
and to operate the Trust in such a way that the Trust will not be deemed to be
an "investment company" required to be registered under the 1940 Act or
characterized as other than a grantor trust for United States federal income tax
purposes. In this connection, the Regular Trustees are authorized to take any
action, not inconsistent with applicable law, the certificate of trust or the
Declaration that the Regular Trustees determine in their discretion to be
necessary or desirable for such purposes as long as such action does not
adversely affect the interests of the holders of the Trust Preferred Securities.
Holders of the Trust Preferred Securities have no preemptive rights.
DESCRIPTION OF THE TRUST GUARANTEE
Set forth below is a summary of information concerning the Trust Guarantee
which will be executed and delivered by the Company for the benefit of the
holders from time to time of Trust Preferred Securities. The summary does not
purport to be complete and is subject in all respects to the provisions of, and
is qualified in its entirety by reference to, the Trust Guarantee, which is
filed as an exhibit to the Registration Statement of which this Prospectus is a
part. The Trust Guarantee incorporates by reference the terms of, and will be
qualified as an indenture under, the Trust Indenture Act. The Chase Manhattan
Bank, as the Trust Guarantee Trustee, will hold the Trust Guarantee for the
benefit of the holders of the Trust Preferred Securities and will act as
indenture trustee for the purposes of compliance with the Trust Indenture Act.
GENERAL
Pursuant to the Trust Guarantee, the Company will irrevocably agree, on a
subordinated basis and to the extent set forth therein, to pay in full to the
holders of the Trust Preferred Securities (except to the extent paid by the
Trust), as and when due, regardless of any defense, right of set off or
counterclaim which the Trust may have or assert, the following payments (the
"Trust Guarantee Payments"), without duplication: (i) any accumulated and unpaid
distributions on the Trust Preferred Securities to the extent the Trust has
funds available therefor, (ii) the Redemption Price with respect to any Trust
Preferred Securities called for redemption by the Trust, to the extent the Trust
has funds available therefor and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Trust (other than in connection
with the distribution of Partnership Preferred Securities to the holders of
Trust Preferred Securities or the redemption of all of the Trust Preferred
Securities), the lesser of (a) the aggregate of the liquidation amount and all
accumulated and unpaid distributions on the Trust Preferred Securities and (b)
the amount of assets of the Trust remaining available for distribution to
holders of Trust Preferred Securities upon the liquidation of the Trust. The
Company's obligation to make a Trust Guarantee Payment may be satisfied by
direct payment of the required amounts by the Company to the holders of Trust
Preferred Securities or by causing the Trust to pay such amounts to such
holders.
The Trust Guarantee will be a guarantee on a subordinated basis with respect
to the Trust Preferred Securities from the time of issuance of such Trust
Preferred Securities but will only apply to any payment of distributions or
Redemption Price, or to payments upon the dissolution, winding-up or termination
of the Trust, to the extent the Trust shall have funds available therefor. If
the Partnership fails to declare distributions on Partnership Preferred
Securities, the Trust would lack available funds for the payment of
distributions or amounts payable on redemption of the Trust Preferred Securities
or otherwise, and in such event holders of the Trust Preferred Securities would
not be able to rely upon the Trust Guarantee for payment of such amounts.
Instead, holders of the Trust Preferred Securities will have the remedies
described herein under "Description of the Trust Preferred Securities -- Trust
Enforcement Events", including the right to direct the Trust Guarantee Trustee
to enforce the covenant restricting certain payments by the Company and Finance
Subsidiaries. See "-- Covenants of the Company" below.
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The Guarantees, when taken together with the Company Debenture and the
Company's obligations to pay all fees and expenses of the Trust and the
Partnership, constitute a guarantee to the extent set forth herein by the
Company of the distribution, redemption and liquidation payments payable to the
holders of the Trust Preferred Securities. The Guarantees do not apply, however,
to current distributions by the Partnership unless and until such distributions
are declared by the Partnership out of funds legally available for payment or to
liquidating distributions unless there are assets available for payment in the
Partnership, each as more fully described under "Risk Factors -- Insufficient
Income or Assets Available to Partnership".
COVENANTS OF THE COMPANY
The Company will covenant in the Trust Guarantee that, if (a) for any
distribution period, full distributions on a cumulative basis on any Trust
Preferred Securities have not been paid, (b) an Investment Event of Default by
any Investment Affiliate in respect of any Affiliate Investment Instrument has
occurred and is continuing or (c) the Company is in default of its obligations
under the Trust Guarantee, the Partnership Guarantee or any Investment
Guarantee, then, during such period (i) the Company shall not declare or pay
dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital stock
or comparable equity interest (except for (x) dividends or distributions in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, its capital stock, and conversions or exchanges of common stock of one class
into common stock of another class, (y) redemptions or purchases of any rights
pursuant to the Rights Agreement and the issuance of preferred stock pursuant to
such rights and (z) purchases or acquisitions by the Company or its affiliates
in connection with transactions effected by or for the account of customers of
the Company or any of its subsidiaries or in connection with the distribution or
trading of such capital stock or comparable equity interest) and (ii) the
Company shall not make, permit any Finance Subsidiary to make, or make any
payments that would enable any Finance Subsidiary to make, any payment of any
dividends on, any distribution with respect to, or any redemption, purchase or
other acquisition of, or any liquidation payment with respect to, any preferred
security or comparable equity interest of any Finance Subsidiary.
EVENTS OF DEFAULT; ENFORCEMENT OF TRUST GUARANTEE
An event of default under the Trust Guarantee will occur upon the failure of
the Company to perform any of its payment or other obligations thereunder.
The holders of a majority in liquidation amount of the Trust Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trust Guarantee Trustee or to direct
the exercise of any trust or power conferred upon the Trust Guarantee Trustee
under the Trust Guarantee. If the Trust Guarantee Trustee fails to enforce its
rights under the Trust Guarantee after a holder of Trust Preferred Securities
has made a written request, such holder may institute a legal proceeding
directly against the Company to enforce the Trust Guarantee Trustee's rights
under the Trust Guarantee, without first instituting a legal proceeding against
the Trust, the Trust Guarantee Trustee or any other person or entity. In any
event, if the Company has failed to make a guarantee payment under the Trust
Guarantee, a holder of Trust Preferred Securities may directly institute a
proceeding in such holder's own name against the Company for enforcement of the
Trust Guarantee for such payment.
STATUS OF THE TRUST GUARANTEE; SUBORDINATION
The Trust Guarantee will constitute an unsecured obligation of the Company
and will rank subordinate and junior in right of payment to all other
liabilities of the Company and will rank PARI PASSU with the most senior
preferred stock, if any, issued from time to time by the Company, with similar
guarantees issued by the Company in connection with the $275,000,000 aggregate
liquidation amount of 7 3/4% Trust Originated Preferred Securities issued by
Merrill Lynch Preferred Capital Trust I and the $300,000,000 aggregate
liquidation amount of 8% Trust Originated Preferred Securities issued by Merrill
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Lynch Preferred Capital Trust II, and with any guarantee now or hereafter
entered into by the Company in respect of any preferred stock of any other
Finance Subsidiary. Accordingly, the rights of the holders of Trust Preferred
Securities to receive payments under the Trust Guarantee will be subject to the
rights of the holders of any obligations of the Company that are senior in
priority to the obligations under the Trust Guarantee. Furthermore, the holders
of obligations of the Company that are senior to the obligations under the Trust
Guarantee (including, but not limited to, obligations constituting Senior
Indebtedness) will be entitled to the same rights upon payment default or
dissolution, liquidation and reorganization in respect of the Trust Guarantee
that inure to the holders of Senior Indebtedness as against the holders of the
Company Debenture. The terms of the Trust Preferred Securities provide that each
holder of Trust Preferred Securities, by acceptance thereof, agrees to the
subordination provisions and other terms of the Trust Guarantee.
The Trust Guarantee will constitute a guarantee of payment and not of
collection (that is, the guaranteed party may directly institute a legal
proceeding against the Company to enforce its rights under the Trust Guarantee
without instituting a legal proceeding against any other person or entity).
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely affect
the rights of holders of Trust Preferred Securities (in which case no vote will
be required), the Trust Guarantee may be amended only with the prior approval of
the holders of at least a majority in liquidation amount of all the outstanding
Trust Preferred Securities. The manner of obtaining any such approval of holders
of the Trust Preferred Securities will be as set forth under "Description of the
Trust Preferred Securities -- Voting Rights". All guarantees and agreements
contained in the Trust Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Company and shall inure to the benefit of
the holders of the Trust Preferred Securities then outstanding. Except in
connection with permitted merger or consolidation of the Company with or into
another entity or permitted sale, transfer or lease of the Company's assets to
another entity in which the surviving corporation (if other than the Company)
assumes the Company's obligations under the Trust Guarantee, the Company may not
assign its rights or delegate its obligations under the Trust Guarantee without
the prior approval of the holders of at least a majority of the aggregate stated
liquidation amount of the Trust Preferred Securities then outstanding.
TERMINATION OF THE TRUST GUARANTEE
The Trust Guarantee will terminate as to each holder of Trust Preferred
Securities upon (i) full payment of the Redemption Price of all Trust Preferred
Securities, (ii) distribution of the Partnership Preferred Securities held by
the Trust to the holders of the Trust Preferred Securities or (iii) full payment
of the amounts payable in accordance with the Declaration upon liquidation of
the Trust. The Trust Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of Trust Preferred
Securities must restore payment of any sum paid under such Trust Preferred
Securities or such Trust Guarantee.
INFORMATION CONCERNING THE TRUST GUARANTEE TRUSTEE
The Trust Guarantee Trustee, prior to the occurrence of a default with
respect to the Trust Guarantee, undertakes to perform only such duties as are
specifically set forth in the Trust Guarantee and, after default with respect to
the Trust Guarantee, shall exercise the same degree of care as a prudent man
would exercise in the conduct of his own affairs. Subject to such provision, the
Trust Guarantee Trustee is under no obligation to exercise any of the powers
vested in it by the Trust Guarantee at the request of any holder of Trust
Preferred Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby.
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GOVERNING LAW
The Guarantee will be governed by, and construed in accordance with, the
internal laws of the State of New York.
DESCRIPTION OF THE PARTNERSHIP PREFERRED SECURITIES
GENERAL
All of the partnership interests in the Partnership, other than the
Partnership Preferred Securities acquired by the Trust, are owned directly by
the Company. Initially, the Company will be the sole General Partner of the
Partnership. The Limited Partnership Agreement authorizes and creates the
Partnership Preferred Securities, which represent limited partner interests in
the Partnership. The limited partner interests represented by the Partnership
Preferred Securities will have a preference with respect to distributions and
amounts payable on redemption or liquidation over the General Partner's interest
in the Partnership. Except as otherwise described herein or provided in the
Limited Partnership Agreement, the Limited Partnership Agreement does not permit
the issuance of any additional partnership interests, or the incurrence of any
indebtedness by the Partnership.
The summary of certain material terms and provisions of the Partnership
Preferred Securities set forth below does not purport to be complete and is
subject to, and qualified in its entirety by reference to, the Limited
Partnership Agreement, which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part, and the Partnership Act.
DISTRIBUTIONS
Holders of Partnership Preferred Securities will be entitled to receive
cumulative cash distributions, if, as and when declared by the General Partner
in its sole discretion out of assets of the Partnership legally available for
payment. The distributions payable on each Partnership Preferred Security will
be fixed at a rate per annum of % of the stated liquidation preference of $25
per Partnership Preferred Security. Distributions not paid on the scheduled
payment date will accumulate and compound quarterly at the rate per annum equal
to %. The amount of distributions payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months.
Distributions on the Partnership Preferred Securities will be payable
quarterly in arrears on March 30, June 30, September 30 and December 30 of each
year, commencing March 30, 1998. If distributions are not declared and paid when
scheduled, the accumulated distributions shall be paid to the holders of record
of Partnership Preferred Securities as they appear on the books and records of
the Partnership on the record date with respect to the payment date for the
Partnership Preferred Securities.
The Partnership's earnings available for distribution to the holders of the
Partnership Preferred Securities will be limited to payments made on the
Affiliate Investment Instruments and Investment Guarantees and payments on
Eligible Debt Securities in which the Partnership has invested from time to
time. See "-- Partnership Investments". To the extent that the issuers (and,
where applicable, the Company, as guarantor) of the securities in which the
Partnership invests fail to make any payment in respect of such securities (or,
if applicable, such guarantees), the Partnership will not have sufficient funds
to pay and will not declare or pay distributions on the Partnership Preferred
Securities, in which event the Partnership Guarantee will not apply to such
distributions until the Partnership has sufficient funds available therefor. See
"Description of the Partnership Guarantee". In addition, distributions on the
Partnership Preferred Securities may be declared and paid only as determined in
the sole discretion of the General Partner of the Partnership. If the
Partnership fails to declare and pay distributions on the Partnership Preferred
Securities out of funds legally available for distribution, the Trust will not
have sufficient funds to make distributions on the Trust Preferred Securities,
in which event the Trust Guarantee will not apply to such distributions until
the Trust has sufficient funds available therefor. In addition, as described
under "Risk Factors -- Insufficient Income or Assets Available to Partnership",
the Partnership
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may not have sufficient funds to pay current or liquidating distributions on the
Partnership Preferred Securities if (i) at any time that the Partnership is
receiving current payments in respect of the securities held by the Partnership
(including the Debentures), the General Partner, in its sole discretion, does
not declare distributions on the Partnership Preferred Securities and the
Partnership receives insufficient amounts to pay the additional compounded
distributions that will accumulate in respect of the Partnership Preferred
Securities, (ii) the Partnership reinvests the proceeds received in respect of
the Debentures upon their retirement or at their maturities in Affiliate
Investment Instruments that do not generate income in an amount that is
sufficient to pay full distributions in respect of the Partnership Preferred
Securities or (iii) the Partnership invests in debt securities of Investment
Affiliates that are not guaranteed by the Company and that cannot be liquidated
by the Partnership for an amount sufficient to pay such distributions in full.
Distributions on the Partnership Preferred Securities will be payable to the
holders thereof as they appear on the books and records of the Partnership on
the relevant record dates, which, as long as the Trust Preferred Securities
remain (or, in the event that the Trust is liquidated in connection with a Trust
Special Event, as long as the Partnership Preferred Securities remain) in
book-entry only form, will be one Business Day prior to the relevant payment
dates. In the event the Trust Preferred Securities (or in the event that the
Trust is liquidated in connection with a Trust Special Event, the Partnership
Preferred Securities) shall not continue to remain in book-entry only form, the
relevant record dates shall be the 15th day of the month of the relevant payment
dates. In the event that any date on which distributions are payable on the
Partnership Preferred Securities is not a Business Day, then payment of the
distribution payable on such date will be made on the next succeeding day that
is a Business Day (and without any interest or other payment in respect of any
such delay) except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
PARTNERSHIP ENFORCEMENT EVENTS
If one or more of the following events shall occur and be continuing (each a
"Partnership Enforcement Event"): (i) arrearages on distributions on the
Partnership Preferred Securities shall exist for six consecutive quarterly
distribution periods, (ii) the Company is in default on any of its obligations
under the Partnership Guarantee or any Investment Guarantee or (iii) an
Investment Event of Default occurs and is continuing on any Affiliate Investment
Instrument, then the Property Trustee, for so long as the Partnership Preferred
Securities are held by the Property Trustee, will have the right, or holders of
the Partnership Preferred Securities will be entitled by the vote of a majority
in aggregate liquidation preference of such holders (a) under the Limited
Partnership Agreement to enforce the terms of the Partnership Preferred
Securities, including the right to appoint and authorize a special
representative of the Partnership and the limited partners (a "Special
Representative") to enforce (1) the Partnership's creditors' rights and other
rights with respect to the Affiliate Investment Instruments and the Investment
Guarantees, (2) the rights of the holders of the Partnership Preferred
Securities under the Partnership Guarantee and (3) the rights of the holders of
the Partnership Preferred Securities to receive distributions (only if and to
the extent declared out of funds legally available therefor) on the Partnership
Preferred Securities, and (b) under the Partnership Guarantee to enforce the
terms of the Partnership Guarantee, including the right to enforce the covenant
restricting certain payments by the Company and Finance Subsidiaries.
If the Special Representative fails to enforce its rights under the
Affiliate Investment Instruments after a holder of Partnership Preferred
Securities has made a written request, such holder of record of Partnership
Preferred Securities may directly institute a legal proceeding against the
Company to enforce the rights of the Special Representative and the Partnership
under the Affiliate Investment Instruments without first instituting any legal
proceeding against the Special Representative, the Partnership or any other
person or entity. In any event, if a Partnership Enforcement Event has occurred
and is continuing and such event is attributable to the failure of an Investment
Affiliate to make any required payment when due on any Affiliate Investment
Instrument, then a holder of Partnership Preferred Securities may on
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behalf of the Partnership directly institute a proceeding against such
Investment Affiliate with respect to such Affiliate Investment Instrument for
enforcement of payment. A holder of Partnership Preferred Securities may also
bring a direct action against the Company to enforce such holder's right under
the Partnership Guarantee. See "Description of the Partnership Guarantee --
Events of Default; Enforcement of Partnership Guarantee".
Under no circumstances, however, shall the Special Representative have
authority to cause the General Partner to declare distributions on the
Partnership Preferred Securities. As a result, although the Special
Representative may be able to enforce the Partnership's creditors' rights to
accelerate and receive payments in respect of the Affiliate Investment
Instruments and the Investment Guarantees, the Partnership would be entitled to
reinvest such payments in additional Affiliate Investment Instruments, subject
to satisfying the reinvestment criteria described under "-- Partnership
Investments", and Eligible Debt Securities, rather than declaring and making
distributions on the Partnership Preferred Securities. The Special
Representative shall not, by virtue of acting in such capacity, be admitted as a
general partner in the Partnership or otherwise be deemed to be a general
partner in the Partnership and shall have no liability for the debts,
obligations or liabilities of the Partnership.
PARTNERSHIP INVESTMENTS
Approximately 99% of the proceeds from the issuance of the Partnership
Preferred Securities and the General Partner's contemporaneous capital
contribution (the "Initial Partnership Proceeds") will be used by the
Partnership to purchase the Debentures and the remaining 1% of the Initial
Partnership Proceeds will be used to purchase Eligible Debt Securities. The
purchase of the Debentures by the Partnership will occur contemporaneously with
the issuance of the Partnership Preferred Securities.
The initial Affiliate Investment Instruments purchased by the Partnership
will consist of two or more debt instruments (the "Debentures"). The Company
anticipates that approximately 85% of the Initial Partnership Proceeds will be
used to purchase a Debenture of the Company (the "Company Debenture"), and
approximately 14% of the Initial Partnership Proceeds will be used to purchase
Debentures of one or more eligible controlled affiliates of the Company (the
"Affiliate Debentures"). Each Debenture is expected to have a term of 20 years
and to provide for interest payable on March 30, June 30, September 30 and
December 30 of each year, commencing March 30, 1998, at market rates for such
Debentures. The Debentures will be general unsecured debt obligations of the
relevant issuer, except that the Company Debenture will rank subordinate and
junior to all Senior Indebtedness of the Company.
The payment of interest on each of the Debentures may be deferred at any
time, and from time to time, by the relevant issuer for a period not exceeding
six consecutive quarters. If an issuer were to so defer the payment of interest,
interest would continue to accrue and compound at the stated interest rate on
such Debenture. The Debentures will contain covenants appropriate for unsecured
debt securities issued or guaranteed by similar borrowers pursuant to a public
offering or private placement under Rule 144A of the Securities Act of a
comparable debt security, including a limitation on consolidation, merger and
sale or conveyance of assets. The Debentures will contain redemption provisions
that correspond to the redemption provisions applicable to the Partnership
Preferred Securities, including an option to redeem the Debentures by the
relevant issuer, in whole or in part, from time to time, on or after March 30,
2008, and following the occurrence of a Partnership Special Event, in each case,
in the same manner described under "-- Optional Redemption" and "-- Partnership
Special Event Redemption". The Debentures, and any other Affiliate Investment
Instruments that are debt instruments acquired by the Partnership in the future,
will also contain customary events of default (the "Investment Events of
Default"), including events of default for defaults in payments on such
securities when due (provided that no default shall occur upon a valid deferral
of an interest payment by an issuer), defaults in the performance of the
relevant issuer's obligations under its Debenture or Affiliate Investment
Instruments, as the case may be, and certain bankruptcy, insolvency or
reorganization events (subject to customary exceptions and grace periods).
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The payment of interest and principal when due and other payment terms of
the Debentures (other than the Company Debenture), will be guaranteed to the
extent described herein (each, an "Investment Guarantee") by the Company for the
benefit of the holders of Partnership Preferred Securities. See "-- Investment
Guarantees".
Approximately 1% of the Initial Partnership Proceeds will be invested in
Eligible Debt Securities. "Eligible Debt Securities" means cash or book-entry
securities, negotiable instruments, or other securities of entities not
affiliated with the Company which evidence any of the following: (a) any
security issued or guaranteed as to principal or interest by the United States,
or by a person controlled or supervised by and acting as an instrumentality of
the Government of the United States pursuant to authority granted by the
Congress of the United States, or any certificate of deposit for any of the
foregoing; (b) commercial paper issued pursuant to Section 3(a)(3) of the
Securities Act and having, at the time of the investment or contractual
commitment to invest therein, a rating from each of Standard & Poor's Ratings
Services, a division of the McGraw-Hill Companies, Inc. ("S&P") and Moody's
Investors Service, Inc. ("Moody's") in the highest investment rating category
granted by such rating agency and having a maturity not in excess of nine
months; (c) demand deposits, time deposits and certificates of deposit which are
fully insured by the Federal Deposit Insurance Corporation ("FDIC"); (d)
repurchase obligations with respect to any security that is a direct obligation
of, or fully guaranteed by, the Government of the United States of America or
any agency or instrumentality thereof, the obligations of which are backed by
the full faith and credit of the United States of America, in either case
entered into with a depository institution or trust company which is an Eligible
Institution (as defined herein) and the deposits of which are insured by the
FDIC; and (e) any other security which is identified as a permitted investment
of a finance subsidiary pursuant to Rule 3a-5 under the 1940 Act at the time it
is acquired by the Partnership.
"Eligible Institution" means (a) a depository institution organized under
the laws of the United States or any one of the states thereof or the District
of Columbia (or any domestic branch of a foreign bank), (1) (i) which has either
(A) a long-term unsecured debt rating of AA or better by S&P and Aa or better by
Moody's or (B) a short-term unsecured debt rating or a certificate of deposit
rating of A-1+ by S&P and P-1 by Moody's and (ii) whose deposits are insured by
the FDIC or (2) (i) the parent of which has a long-term or short-term unsecured
debt rating which signifies investment grade and (ii) whose deposits are insured
by the FDIC.
The Partnership may, from time to time and subject to the restrictions
described below, reinvest payments received with respect to the Affiliate
Investment Instruments (including the Debentures) and the Eligible Debt
Securities in additional Affiliate Investment Instruments and Eligible Debt
Securities. As of the date of this Prospectus, the Company, as the General
Partner, does not intend to cause the Partnership to reinvest regularly
scheduled, periodic payments of interest or dividends received by the
Partnership in the manner described below, although there can be no assurance
that the General Partner's intention in respect of such reinvestments will not
change in the future.
The fairness of specific terms of all Affiliate Investment Instruments
(including the Debentures) will be passed upon by a nationally recognized
accounting firm, bank or investment banking firm that does not (and whose
directors, officers, employees and affiliates do not) have a direct or indirect
material equity interest in the Company or any of its subsidiaries (the
"Independent Financial Advisor").
The Partnership may reinvest in additional Affiliate Investment Instruments
only if certain procedures and criteria are satisfied with respect to each such
Affiliate Investment Instrument, including the satisfaction of the following
conditions: (i) the Partnership did not hold debt securities of the issuer of
the proposed Affiliate Investment Instrument within the three-year period ending
on the date of such proposed investment; (ii) there was never a default on any
debt obligation of, or arrearages of dividends on preferred stock issued by, the
issuer of the proposed Affiliate Investment Instrument that was previously or is
currently owned by the Partnership; (iii) the applicable terms and provisions
with respect to the proposed Affiliate Investment Instrument have been
determined by the Independent Financial Advisor to be at least as favorable as
terms which could be obtained by the Partnership in a public offering or private
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placement under Rule 144A of the Securities Act of a comparable security issued
by the relevant Investment Affiliate and guarantees, if any, included therein;
and (iv) the requesting Investment Affiliate shall not be deemed to be an
investment company by reason of Section 3(a) or 3(b) of the 1940 Act or is
otherwise an eligible recipient of funds directly or indirectly from the Trust
pursuant to an order issued by the Commission. The term "Investment Affiliate"
means the Company or any corporation, partnership, limited liability company or
other entity (other than the Partnership or the Trust) that is controlled by the
Company. If the Partnership is unable to reinvest payments and proceeds from
Affiliate Investment Instruments in additional Affiliate Investment Instruments
meeting the above criteria, the Partnership may only invest such funds in
Eligible Debt Securities (subject to restrictions of applicable law, including
the 1940 Act).
INVESTMENT GUARANTEES
GENERAL
The Company will agree to execute and deliver an Investment Guarantee, on a
subordinated basis, for the benefit of the holders of Partnership Preferred
Securities with respect to each Debenture issued by an Investment Affiliate
(other than the Company Debenture) to the extent set forth below. The Investment
Guarantees shall be enforceable regardless of any defense, right of set-off or
counterclaim that the Company may have or assert. The Investment Guarantees will
be full and unconditional guarantees, to the extent set forth therein, with
respect to the applicable Debentures from the time of issuance. To the extent
that, as described above, the Partnership invests in additional Affiliate
Investment Instruments, the determination as to whether such Affiliate
Investment Instrument will contain an Investment Guarantee will be made at the
date of its issuance and will be based, among other things, upon its approval by
the Independent Financial Advisor in accordance with the reinvestment criteria
described above.
The Investment Guarantees will constitute guarantees of payment and not of
collection (that is, the guaranteed party may directly institute a legal
proceeding against the Company to enforce its rights under the applicable
Investment Guarantee without instituting a legal proceeding against any other
person or entity). If no Special Representative has been appointed to enforce
any Investment Guarantee, the General Partner has the right to enforce such
Investment Guarantee on behalf of the holders of the Partnership Preferred
Securities. The holders of not less than a majority in aggregate liquidation
preference of the Partnership Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available in
respect of any Investment Guarantee, including the giving of directions to the
General Partner or the Special Representative, as the case may be. If the
General Partner or the Special Representative fails to enforce any Investment
Guarantee as above provided, any holder of Trust Preferred Securities may
institute its own legal proceeding to enforce such Investment Guarantee. No
Investment Guarantee will be discharged except by payment in full of all amounts
guaranteed by such Investment Guarantee (without duplication of amounts
theretofore paid by the relevant Investment Affiliate).
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Partnership Preferred Securities (in which case no consent will be
required), the Investment Guarantees may be amended only with the prior approval
of the holders of not less than a majority in liquidation preference of the
outstanding Partnership Preferred Securities, PROVIDED that for so long as the
Property Trustee of the Trust is the holder of the Partnership Preferred
Securities, such amendment will not be effective without the prior written
approval of a majority in liquidation amount of the outstanding Trust Preferred
Securities. All guarantees and agreements contained in the Investment Guarantees
shall bind the successors, assigns, receivers, trustees and representatives of
the Company and shall inure to the benefit of the holders of Partnership
Preferred Securities. Except in connection with any permitted merger or
consolidation of the Company with or into another entity or any permitted sale,
transfer or lease of the Company's
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assets to another entity in which the surviving corporation (if other than the
Company) assumes the Company's obligations under the Investment Guarantees, the
Company may not assign its rights or delegate its obligations under the
Investment Guarantees without the prior approval of the holders of at least a
majority of the aggregate stated liquidation preference of the Partnership
Preferred Securities then outstanding.
STATUS OF THE INVESTMENT GUARANTEES
The Company's obligations under the Investment Guarantees will constitute
unsecured obligations of the Company and will rank subordinate and junior in
right of payment to all other liabilities of the Company and will rank PARI
PASSU with the most senior preferred stock, if any, issued from time to time by
the Company, with similar guarantees issued by the Company in connection with
the $275,000,000 aggregate liquidation amount of 7 3/4% Trust Originated
Preferred Securities issued by Merrill Lynch Preferred Capital Trust I and the
$300,000,000 aggregate liquidation amount of 8% Trust Originated Preferred
Securities issued by Merrill Lynch Preferred Capital Trust II, and with any
guarantee now or hereafter entered into by the Company in respect of any
preferred stock of any other Finance Subsidiary. Accordingly, the rights of the
holders of the Debentures to receive payments under the Investment Guarantees
will be subject to the rights of the holders of any obligations that are senior
in priority to the obligations under the Investment Guarantees. Furthermore, the
holders of obligations of the Company that are senior to the obligations under
the Investment Guarantees (including, but not limited to, obligations
constituting Senior Indebtedness) will be entitled to the same rights upon
payment default or dissolution, liquidation and reorganization in respect of the
Investment Guarantees that inure to the holders of Senior Indebtedness as
against the holders of the Company Debenture. The terms of the Debentures
provide that each holder of Debentures, by acceptance thereof, agrees to the
subordination provisions and other terms of the Investment Guarantees.
GOVERNING LAW
The Investment Guarantees will be governed by and construed in accordance
with the internal laws of the State of New York.
OPTIONAL REDEMPTION
The Partnership Preferred Securities are redeemable, at the option of the
General Partner, in whole or in part, from time to time, on or after March 30,
2008, upon not less than 30 nor more than 60 days notice, at an amount per
Partnership Preferred Security equal to $25 plus accumulated and unpaid
distributions thereon. If the Partnership redeems Partnership Preferred
Securities in accordance with the terms thereof, Trust Securities will be
mandatorily redeemed at the Redemption Price. If a partial redemption would
result in the delisting of the Trust Preferred Securities (or, if the Trust is
liquidated in connection with a Trust Special Event, or if a partial redemption
would result in the delisting of the Partnership Preferred Securities), the
Partnership may only redeem the Partnership Preferred Securities in whole.
PARTNERSHIP SPECIAL EVENT REDEMPTION
If, at any time, a Partnership Tax Event or a Partnership Investment Company
Event (each as hereinafter defined, and each a "Partnership Special Event")
shall occur and be continuing, the General Partner shall, within 90 days
following the occurrence of such Partnership Special Event, elect to either (i)
redeem the Partnership Preferred Securities in whole (but not in part), upon not
less than 30 or more than 60 days notice at the Redemption Price, PROVIDED that,
if at the time there is available to the Partnership the opportunity to
eliminate, within such 90-day period, the Partnership Special Event by taking
some ministerial action, such as filing a form or making an election, or
pursuing some other similar reasonable such measure that in the sole judgment of
the Company has or will cause no adverse effect on the Partnership, the Trust or
the Company, the General Partner will pursue such measure in lieu of redemption;
or (ii) cause the Partnership Preferred Securities to remain outstanding,
PROVIDED that in the case of this clause (ii), the General Partner shall pay any
and all costs and expenses incurred by or payable by the Partnership
attributable to the Partnership Special Event.
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"Partnership Tax Event" means that the General Partner shall have requested
and received an opinion of nationally recognized independent tax counsel
experienced in such matters to the effect that there has been a Tax Action which
affects any of the events described in (i) through (iii) below and that there is
more than an insubstantial risk that (i) the Partnership is, or will be, subject
to United States federal income tax with respect to income accrued or received
on the Affiliate Investment Instruments or the Eligible Debt Securities, (ii)
the Partnership is, or will be, subject to more than a DE MINIMIS amount of
other taxes, duties or other governmental charges or (iii) interest payable by
an Investment Affiliate with respect to the Debenture issued by such Investment
Affiliate to the Partnership is not, or will not be, deductible by such
Investment Affiliate for United States federal income tax purposes.
"Partnership Investment Company Event" means that the General Partner shall
have requested and received an opinion of nationally recognized independent
legal counsel experienced in such matters to the effect that as a result of the
occurrence on or after the date hereof of a Change in 1940 Act Law, the
Partnership is or will be considered an "investment company" which is required
to be registered under the 1940 Act.
REDEMPTION PROCEDURES
The Partnership may not redeem fewer than all the outstanding Partnership
Preferred Securities unless all accumulated and unpaid distributions have been
paid on all Partnership Preferred Securities for all quarterly distribution
periods terminating on or prior to the date of redemption.
If the Partnership gives a notice of redemption in respect of Partnership
Preferred Securities (which notice will be irrevocable) then, by 12:00 noon, New
York City time, on the redemption date, the Partnership (i) if the Partnership
Preferred Securities are in book entry form with DTC, will deposit irrevocably
with DTC funds sufficient to pay the applicable Redemption Price and will give
DTC irrevocable instructions and authority to pay the Redemption Price in
respect of the Partnership Preferred Securities held through DTC in global form
or (ii) if the Partnership Preferred Securities are held in certificated form,
will deposit with the paying agent for the Partnership Preferred Securities
funds sufficient to pay such amount in respect of any Partnership Preferred
Securities in certificated form and will give such paying agent irrevocable
instructions and authority to pay such amounts to the holders of Partnership
Preferred Securities upon surrender of their certificates. See "Description of
the Trust Preferred Securities -- Book-Entry-Only Issuance -- The Depository
Trust Company".
If notice of redemption shall have been given and funds deposited as
required, then upon the date of such deposit, all rights of holders of such
Partnership Preferred Securities so called for redemption will cease, except the
right of the holders of such Partnership Preferred Securities to receive the
Redemption Price, but without interest on such Redemption Price. In the event
that any date fixed for redemption of Partnership Preferred Securities is not a
Business Day, then payment of the Redemption Price payable on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. In the event that payment of the Redemption
Price in respect of Partnership Preferred Securities is improperly withheld or
refused and not paid either by the Partnership or by the Company pursuant to the
Partnership Guarantee described under "Description of the Partnership
Guarantee," distributions on such Partnership Preferred Securities will continue
to accumulate, from the original redemption date to the date of payment.
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), the Company or any of its subsidiaries
may at any time and from time to time purchase outstanding Partnership Preferred
Securities by tender, in the open market or by private agreement.
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LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary dissolution, winding-up or
termination of the Partnership, the holders of the Partnership Preferred
Securities at the time will be entitled to receive out of the assets of the
Partnership available for distribution to partners after satisfaction of
liabilities of creditors as required by the Partnership Act, before any
distribution of assets is made to the General Partner, an amount equal to, in
the case of holders of Partnership Preferred Securities, the aggregate of the
stated liquidation preference of $25 per Partnership Preferred Security plus
accumulated and unpaid distributions thereon to the date of payment (such amount
being the "Partnership Liquidation Distribution").
Pursuant to the Limited Partnership Agreement, the Partnership shall be
dissolved and its affairs shall be wound up: (i) upon the bankruptcy of the
General Partner, (ii) upon the assignment by the General Partner of its entire
interest in the Partnership when the assignee is not admitted to the Partnership
as a general partner of the Partnership in accordance with the Limited
Partnership Agreement, or the filing of a certificate of dissolution or its
equivalent with respect to the General Partner, or the revocation of the General
Partner's charter and the expiration of 90 days after the date of notice to the
General Partner of revocation without a reinstatement of its charter, or if any
other event occurs that causes the General Partner to cease to be a general
partner of the Partnership under the Partnership Act, unless the business of the
Partnership is continued in accordance with the Partnership Act, (iii) if the
Partnership has redeemed or otherwise purchased all the Partnership Preferred
Securities, (iv) upon the entry of a decree of judicial dissolution or (v) upon
the written consent of all partners of the Partnership.
VOTING RIGHTS
Except as provided below and under "Description of the Partnership Guarantee
- -- Amendments and Assignment" and as otherwise required by law and the Limited
Partnership Agreement, the holders of the Partnership Preferred Securities will
have no voting rights.
Not later than 30 days after any Partnership Enforcement Event occurs, the
General Partner will convene a meeting for the purpose of appointing a Special
Representative. If the General Partner fails to convene such meeting within such
30-day period, the holders of 10% in liquidation preference of the outstanding
Partnership Preferred Securities will be entitled to convene such meeting. The
provisions of the Limited Partnership Agreement relating to the convening and
conduct of the meetings of the partners will apply with respect to any such
meeting. In the event that, at any such meeting, holders of less than a majority
in aggregate liquidation preference of Partnership Preferred Securities entitled
to vote for the appointment of a Special Representative vote for such
appointment, no Special Representative shall be appointed. Any Special
Representative appointed shall cease to be a Special Representative of the
Partnership and the limited partners if (1) the Partnership (or the Company
pursuant to the Partnership Guarantee) shall have paid in full all accumulated
and unpaid distributions on the Partnership Preferred Securities, (2) such
Investment Event of Default, as the case may be, shall have been cured, and (3)
the Company is in compliance with all its obligations under the Partnership
Guarantee and the Company, in its capacity as the General Partner, shall
continue the business of the Partnership without dissolution. Notwithstanding
the appointment of any such Special Representative, the Company shall continue
as General Partner and shall retain all rights under the Limited Partnership
Agreement, including the right to declare, in its sole discretion, the payment
of distributions on the Partnership Preferred Securities for which the failure
of such declaration would not constitute a default under the Limited Partnership
Agreement.
If any proposed amendment to the Limited Partnership Agreement provides for,
or the General Partner otherwise proposes to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Partnership
Preferred Securities, whether by way of amendment to the Limited Partnership
Agreement or otherwise (including, without limitation, the authorization or
issuance of any
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limited partner interests in the Partnership ranking, as to participation in the
profits or distributions or in the assets of the Partnership, senior to the
Partnership Preferred Securities), or (ii) the dissolution, winding-up or
termination of the Partnership, other than (x) in connection with the occurrence
of a Partnership Special Event or (y) as described under "Merger, Consolidation
or Amalgamation of the Partnership" below, then the holders of outstanding
Partnership Preferred Securities will be entitled to vote on such amendment or
proposal of the General Partner (but not on any other amendment or proposal) as
a class, and such amendment or proposal shall not be effective except with the
approval of the holders of a majority in liquidation preference of such
outstanding Partnership Preferred Securities having a right to vote on the
matter; PROVIDED, HOWEVER, that if the Property Trustee on behalf of the Trust
is the holder of the Partnership Preferred Securities, any such amendment or
proposal not excepted by clauses (x) and (y) above shall not be effective
without the prior or concurrent approval of the holders of a majority in
liquidation amount of the outstanding Trust Preferred Securities having a right
to vote on such matters.
The General Partner shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available, (ii) waive any Investment
Event of Default that is waivable under the Affiliate Investment Instruments,
(iii) exercise any right to rescind or annul a declaration that the principal of
any Affiliate Investment Instruments shall be due and payable, (iv) waive the
breach of the covenant by the Company to restrict certain payments by the
Company, or (v) consent to any amendment, modification or termination of any
Affiliate Investment Instrument, where such consent shall be required from the
investor, without, in each case, obtaining the prior approval of the holders of
at least a majority in liquidation preference of the Partnership Preferred
Securities; PROVIDED, HOWEVER, that if the Property Trustee on behalf of the
Trust is the holder of the Partnership Preferred Securities, such waiver,
consent or amendment or other action shall not be effective without the prior or
concurrent approval of at least a majority in liquidation amount of the
outstanding Trust Preferred Securities having a right to vote on such matters.
The General Partner shall not revoke any action previously authorized or
approved by a vote of the holders of the Partnership Preferred Securities
without the approval of such revocation by a majority in liquidation preference
of the outstanding Partnership Preferred Securities. The General Partner shall
notify all holders of the Partnership Preferred Securities of any notice of an
Investment Event of Default received with respect to any Affiliate Investment
Instrument.
Any required approval of holders of Partnership Preferred Securities may be
given at a separate meeting of holders of Partnership Preferred Securities
convened for such purpose, at a meeting of all of the partners in the
Partnership or pursuant to written consent. The Partnership will cause a notice
of any meeting at which holders of Partnership Preferred Securities are entitled
to vote, or of any matter upon which action by written consent of such holders
is to be taken, to be mailed to each holder of record of Partnership Preferred
Securities. Each such notice will include a statement setting forth (i) the date
of such meeting or the date by which such action is to be taken, (ii) a
description of any resolution proposed for adoption at such meeting on which
such holders are entitled to vote or of such matters upon which written consent
is sought and (iii) instruction for the delivery of proxies or consents.
No vote or consent of the holders of Partnership Preferred Securities will
be required for the Partnership to redeem and cancel Partnership Preferred
Securities in accordance with the Limited Partnership Agreement.
Notwithstanding that holders of Partnership Preferred Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Partnership Preferred Securities at such time that are beneficially owned
by the Company or by any entity directly or indirectly controlled by, or under
direct or indirect common control with, the Company, except for Partnership
Preferred Securities purchased or acquired by the Company or its affiliates in
connection with transactions effected by or for the account of customers of the
Company or any of its subsidiaries or in connection with the distribution or
trading of such Partnership Preferred Securities; shall not be entitled to vote
or consent and shall, for purposes of such vote or consent, be treated as if
they were not outstanding, PROVIDED, HOWEVER, that persons (other than
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affiliates of the Company) to whom the Company or any of its subsidiaries have
pledged Partnership Preferred Securities may vote or consent with respect to
such pledged Partnership Preferred Securities pursuant to the terms of such
pledge.
Holders of the Partnership Preferred Securities will have no rights to
remove or replace the General Partner.
MERGER, CONSOLIDATION OR AMALGAMATION OF THE PARTNERSHIP
The Partnership may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any corporation or other body, except as
described below. The Partnership may, without the consent of the holders of the
Partnership Preferred Securities, consolidate, amalgamate, merge with or into,
or be replaced by a limited partnership, limited liability company or trust
organized as such under the laws of any state of the United States of America,
provided that (i) such successor entity either (x) expressly assumes all of the
obligations of the Partnership under the Partnership Preferred Securities or (y)
substitutes for the Partnership Preferred Securities other securities having
substantially the same terms as the Partnership Preferred Securities (the
"Partnership Successor Securities") so long as the Partnership Successor
Securities are not junior to any other equity securities of the successor
entity, with respect to participation in the profits and distributions, and in
the assets, of the successor entity, (ii) the Investment Affiliates expressly
acknowledge such successor entity as the holder of the Affiliate Investment
Instruments, (iii) the Partnership Preferred Securities or any Partnership
Successor Securities are listed, or any Partnership Successor Securities will be
listed upon notification of issuance, on any national securities exchange or
other organization on which the Partnership Preferred Securities, if so listed,
are then listed, (iv) such merger, consolidation, amalgamation or replacement
does not cause the Trust Preferred Securities (or, in the event that the Trust
is liquidated in connection with a Trust Special Event, the Partnership
Preferred Securities (including any Partnership Successor Securities)) to be
downgraded by any nationally recognized statistical rating organization, (v)
such merger, consolidation, amalgamation or replacement does not adversely
affect the powers, preferences and other special rights of the holders of the
Trust Preferred Securities or Partnership Preferred Securities (including any
Partnership Successor Securities) in any material respect (other than, in the
case of the Partnership Preferred Securities, with respect to any dilution of
the holders' interest in the new resulting entity), (vi) such successor entity
has a purpose substantially identical to that of the Partnership, (vii) prior to
such merger, consolidation, amalgamation or replacement, the Company has
received an opinion of nationally recognized independent counsel to the
Partnership experienced in such matters to the effect that (A) such successor
entity will be treated as a partnership for United States federal income tax
purposes, (B) such merger, consolidation, amalgamation or replacement would not
cause the Trust to be classified as an association taxable as a corporation for
United States federal income tax purposes, (C) following such merger,
consolidation, amalgamation or replacement, the Company and such successor
entity will be in compliance with the 1940 Act without registering thereunder as
an investment company, and (D) such merger, consolidation, amalgamation or
replacement will not adversely affect the limited liability of the holders of
the Partnership Preferred Securities and (viii) the Company guarantees the
obligations of such successor entity under the Partnership Successor Securities
at least to the extent provided by the Partnership Guarantee.
BOOK-ENTRY AND SETTLEMENT
If the Partnership Preferred Securities are distributed to holders of Trust
Preferred Securities in connection with the involuntary or voluntary
dissolution, winding-up or liquidation of the Trust as a result of the
occurrence of a Trust Special Event, the Partnership Preferred Securities will
be issued in the form of one or more global certificates (each a "Global
Partnership Security") registered in the name of DTC as the depository or its
nominee. For a description of DTC and the specific terms of the Depository
arrangements, see "Description of the Trust Preferred Securities -- Book-Entry
Only Issuance -- The
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Depository Trust Company". As of the date of this Prospectus, the description
therein of DTC's book-entry system and DTC's practices as they relate to
purchases, transfers, notices and payments with respect to the Trust Preferred
Securities apply in all material respects to any Partnership Preferred
Securities represented by one or more Global Partnership Securities.
REGISTRAR, TRANSFER AGENT AND PAYING AGENT
The General Partner will act as registrar, transfer agent and paying agent
for the Partnership Preferred Securities for so long as the Partnership
Preferred Securities are held by the Trust or, if the Trust is liquidated in
connection with a Trust Special Event, for so long as the Partnership Preferred
Securities remain in book-entry only form. In the event the Partnership
Preferred Securities are distributed in connection with a Trust Special Event
and the book-entry system for the Partnership Preferred Securities is
discontinued, it is anticipated that The Chase Manhattan Bank or one of its
affiliates will act as registrar, transfer agent and paying agent for the
Partnership Preferred Securities.
Registration of transfers of Partnership Preferred Securities will be
effected without charge by or on behalf of the Partnership, but upon payment
(with the giving of such indemnity as the Partnership or the General Partner may
require) in respect of any tax or other governmental charges that may be imposed
in relation to it.
The Partnership will not be required to register or cause to be registered
the transfer of Partnership Preferred Securities after such Partnership
Preferred Securities have been called for redemption.
MISCELLANEOUS
The General Partner is authorized and directed to conduct its affairs and to
operate the Partnership in such a way that (i) the Partnership will not be
deemed to be an "investment company" required to be registered under the 1940
Act or characterized as an association taxable as a corporation for United
States federal income tax purposes, (ii) the Affiliate Investment Instruments
will be treated as indebtedness of the issuer of such debt instruments for
United States federal income tax purposes and (iii) the Partnership will not be
treated as an association or as a "publicly traded partnership" (within the
meaning of Section 7704 of the Code) taxable as a corporation. In this
connection, the General Partner is authorized to take any action, not
inconsistent with applicable law, the certificate of limited partnership of the
Partnership or the Limited Partnership Agreement, that the General Partner
determines in its discretion to be necessary or desirable for such purposes as
long as such action does not adversely affect the interests of the holders of
the Partnership Preferred Securities.
DESCRIPTION OF THE PARTNERSHIP GUARANTEE
Set forth below is a summary of information concerning the Partnership
Guarantee that will be executed and delivered by the Company for the benefit of
the holders from time to time of Partnership Preferred Securities. The summary
does not purport to be complete and is subject in all respects to the provisions
of, and is qualified in its entirety by reference to, the Partnership Guarantee,
which is filed as an exhibit to the Registration Statement of which this
Prospectus is a part. The General Partner will hold the Partnership Guarantee
for the benefit of the holders of the Partnership Preferred Securities.
GENERAL
Pursuant to the Partnership Guarantee, the Company will irrevocably agree,
on a subordinated basis to the extent set forth therein, to pay in full to the
holders of the Partnership Preferred Securities (without duplication of amounts
theretofore paid by the Partnership), as and when due, regardless of any
defense, right of set-off or counterclaim that the Partnership may have or
assert, the following payments (the
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"Partnership Guarantee Payments"): (i) any accumulated and unpaid distributions
that have theretofore been declared on the Partnership Preferred Securities out
of funds legally available therefor, (ii) the redemption price with respect to
any Partnership Preferred Securities called for redemption by the Partnership
out of funds legally available therefor, and (iii) upon a liquidation of the
Partnership, the lesser of (a) the aggregate of the liquidation preference and
all accumulated and unpaid distributions on the Partnership Preferred Securities
to the date of payment and (b) the amount of assets of the Partnership, after
satisfaction of all liabilities, remaining available for distribution to holders
of Partnership Preferred Securities in liquidation of the Partnership. The
Company's obligation to make a Partnership Guarantee Payment may be satisfied by
direct payment of the required amounts by the Company to the holders of
Partnership Preferred Securities or by causing the Partnership to pay such
amounts to such holders.
The Partnership Guarantee will be a guarantee on a subordinated basis with
respect to the Partnership Preferred Securities from the time of issuance of
such Partnership Preferred Securities but will not apply to any payment of
distributions or Redemption Price, or to payments upon the dissolution,
winding-up or termination of the Trust, except to the extent the Partnership
shall have funds available therefor. If Investment Affiliates (including, where
applicable, the Company, as guarantor) of the Affiliate Investment Instruments
in which the Partnership invests fail to make any payment in respect of such
securities (or, if applicable, guarantees), the Partnership may not declare or
pay dividends on the Partnership Preferred Securities. In such event, holders of
the Partnership Preferred Securities would not be able to rely upon the
Partnership Guarantee for payment of such amounts. Instead, holders of the
Partnership Preferred Securities will have the remedies described herein under
"Description of the Partnership Preferred Securities -- Partnership Enforcement
Events," including the right to direct the General Partner or the Special
Representative, as the case may be, to enforce the covenant restricting certain
payments by the Company and Finance Subsidiaries. See "-- Covenants of the
Company" below.
The Guarantees, when taken together with the Company Debenture and the
Company's obligations to pay all fees and expenses of the Trust and the
Partnership, constitute a guarantee to the extent set forth herein by the
Company of the distribution, redemption and liquidation payments payable to the
holders of the Trust Preferred Securities. The Guarantees do not apply, however,
to current distributions by the Partnership unless and until such distributions
are declared by the Partnership out of funds legally available for payment or to
liquidating distributions unless there are assets available for payment in the
Partnership, each as more fully described under "Risk Factors--Insufficient
Income or Assets Available to Partnership".
COVENANTS OF THE COMPANY
The Company will covenant in the Partnership Guarantee that if (a) for any
distribution period, full distributions on a cumulative basis on any Partnership
Preferred Securities have not been paid or declared and set apart for payment,
(b) an Investment Event of Default by any Investment Affiliate in respect of any
Affiliate Investment Instrument has occurred and is continuing or (c) the
Company is in default of its obligations under the Trust Guarantee, the
Partnership Guarantee or any Investment Guarantee, then, during such period (i)
the Company shall not declare or pay dividends on, make distributions with
respect to, or redeem, purchase or acquire, or make a liquidation payment with
respect to, any of its capital stock or comparable equity interest (except for
(x) dividends or distributions in shares of, or options, warrants or rights to
subscribe for or purchase shares of, its capital stock, and conversions or
exchanges of common stock of one class into common stock of another class, (y)
redemptions or purchases of any rights pursuant to the Rights Agreement and the
issuance of preferred stock pursuant to such rights and (z) purchases or
acquisitions by the Company or its affiliates in connection with transactions
effected by or for the account of customers of the Company or any of its
subsidiaries or in connection with the distribution or trading of such capital
stock or comparable equity interest) and (ii) the Company shall not make, permit
any Finance Subsidiary to make, or make any payments that would enable any
Finance Subsidiary to make, any payment of any dividends on, any distribution
with respect to, or any redemption, purchase or other
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acquisition of, or any liquidation payment with respect to, any preferred
security or comparable equity interest of any Finance Subsidiary.
EVENTS OF DEFAULT; ENFORCEMENT OF PARTNERSHIP GUARANTEE
An event of default under the Partnership Guarantee will occur upon the
failure of the Company to perform any of its payment or other obligations
thereunder.
The holders of a majority in liquidation amount of the Partnership Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Special Representative in respect of
the Partnership Guarantee or to direct the exercise of any trust or power
conferred upon the Special Representative under the Partnership Guarantee. If
the Special Representative fails to enforce its rights under the Partnership
Guarantee, after a holder of Partnership Preferred Securities has made a written
request, such holder of Partnership Preferred Securities may institute a legal
proceeding directly against the Company to enforce the Special Representative's
rights under the Partnership Guarantee without first instituting a legal
proceeding against the Partnership, the Special Representative or any other
person or entity. Notwithstanding the foregoing, if the Company has failed to
make a guarantee payment, a holder of Partnership Preferred Securities may
directly institute a proceeding against the Company for enforcement of the
Partnership Guarantee for such payment.
STATUS OF THE PARTNERSHIP GUARANTEE; SUBORDINATION
The Partnership Guarantee will constitute an unsecured obligation of the
Company and will rank subordinate and junior in right of payment to all other
liabilities of the Company and will rank PARI PASSU with the most senior
preferred stock issued from time to time by the Company, with similar guarantees
issued by the Company in connection with the $275,000,000 aggregate liquidation
amount of 7 3/4% Trust Originated Preferred Securities issued by Merrill Lynch
Preferred Capital Trust I and the $300,000,000 aggregate liquidation amount of
8% Trust Originated Preferred Securities issued by Merrill Lynch Preferred
Capital Trust II, and with any guarantee now or hereafter entered into by the
Company in respect of any preferred stock of any other Finance Subsidiary.
Accordingly, the rights of the holders of Partnership Preferred Securities to
receive payments under the Partnership Guarantee will be subject to the rights
of the holders of any obligations of the Company that are senior in priority to
the obligations under the Partnership Guarantee. Furthermore, the holders of
obligations of the Company that are senior to the obligations under the
Partnership Guarantee (including, but not limited to, obligations constituting
Senior Indebtedness) will be entitled to the same rights upon payment default or
dissolution, liquidation and reorganization in respect of the Partnership
Guarantee that inure to the holders of Senior Indebtedness as against the
holders of the Company Debenture. The Limited Partnership Agreement provides
that each holder of Partnership Preferred Securities, by acceptance thereof,
agrees to the subordination provisions and other terms of the Partnership
Guarantee.
The Partnership Guarantee will constitute a guarantee of payment and not of
collection (that is, the guaranteed party may directly institute a legal
proceeding against the Company to enforce its rights under the Partnership
Guarantee without instituting a legal proceeding against any other person or
entity).
The Partnership Guarantee will be deposited with the General Partner to be
held for the benefit of the holders of the Partnership Preferred Securities. In
the event of the appointment of a Special Representative to, among other things,
enforce the Partnership Guarantee, the Special Representative may take
possession of the Partnership Guarantee for such purpose. If no Special
Representative has been appointed to enforce the Partnership Guarantee, the
General Partner has the right to enforce the Partnership Guarantee on behalf of
the holders of the Partnership Preferred Securities.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Partnership Preferred Securities (in which case no consent will be
required), the Partnership Guarantee may be
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amended only with the prior approval of the holders of not less than a majority
in liquidation preference of the outstanding Partnership Preferred Securities.
All guarantees and agreements contained in the Partnership Guarantee shall bind
the successors, assigns, receivers, trustees and representatives of the Company
and shall inure to the benefit of the holders of the Partnership Preferred
Securities then outstanding. Except in connection with any permitted merger or
consolidation of the Company with or into another entity or any permitted sale,
transfer or lease of the Company's assets to another entity in which the
surviving corporation (if other than the Company) assumes the Company's
obligations under the Partnership Guarantee, the Company may not assign its
rights or delegate its obligations under the Partnership Guarantee without the
prior approval of the holders of at least a majority of the aggregate stated
liquidation preference of the Partnership Preferred Securities then outstanding.
TERMINATION OF THE PARTNERSHIP GUARANTEE
The Partnership Guarantee will terminate and be of no further force and
effect as to the Partnership Preferred Securities upon (i) full payment of the
redemption price of all Partnership Preferred Securities or (ii) full payment of
the amounts payable in accordance with the Limited Partnership Agreement upon
liquidation of the Partnership. The Partnership Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any holder
of Partnership Preferred Securities must in accordance with the Partnership Act
restore payment of any sums paid under the Partnership Preferred Securities or
the Partnership Guarantee. The Partnership Act provides that a limited partner
of a limited partnership who wrongfully receives a distribution may be liable to
the limited partnership for the amount of such distribution.
GOVERNING LAW
The Partnership Guarantee will be governed by and construed in accordance
with the internal laws of the State of New York.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
In the opinion of Brown & Wood LLP, tax counsel to the Company, the Trust
and the Partnership ("Tax Counsel"), the following summary accurately describes
the material United States federal income tax consequences that may be relevant
to the purchase, ownership and disposition of Trust Preferred Securities. Unless
otherwise stated, this summary deals only with Trust Preferred Securities held
as capital assets by United States Persons (defined herein) who purchase the
Trust Preferred Securities upon original issuance. As used herein, a "United
States Person" means a person that is a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in or
under the laws of the United States or any political subdivision thereof, or an
estate or trust as defined in section 7701(a)(30) of the Internal Revenue Code
of 1986, as amended (the "Code"). The tax treatment of a holder may vary
depending on its particular situation. This summary does not address all the tax
consequences that may be relevant to holders who may be subject to special tax
treatment, such as banks, real estate investment trusts, regulated investment
companies, insurance companies, dealers in securities or currencies, tax-exempt
investors, or foreign investors. This summary does not include any description
of any alternative minimum tax consequences or the tax laws of any state or
local government or of any foreign government that may be applicable to the
Trust Preferred Securities. This summary is based on the Code, the Treasury
regulations promulgated thereunder and administrative and judicial
interpretations thereof, as of the date hereof, all of which are subject to
change, possibly on a retroactive basis.
The Trust Preferred Securities are not being marketed to persons that are
not United States Persons ("non-United States Persons") and, consequently, the
following discussion does not discuss the tax consequences that might be
relevant to non-United States Persons. Moreover, in order to protect the Trust
and the Partnership from potential adverse consequences, non-United States
Persons will be subject to withholding on distributions on the Trust Preferred
Securities held by such non-United States Persons at a rate of 30%. In
determining a holder's status, the United States entity otherwise required to
withhold taxes may rely on an IRS form W-8, an IRS form W-9, or a holder's
certification of its non-foreign status signed under penalty of perjury.
NON-UNITED STATES PERSONS SHOULD CONSULT THEIR TAX ADVISORS AS TO THE SPECIFIC
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP, AND
DISPOSITION OF TRUST PREFERRED SECURITIES.
Tax Counsel has advised that there is no authority directly on point dealing
with securities such as the Trust Preferred Securities or transactions of the
type described herein and that the opinions of Tax Counsel are not binding on
the Internal Revenue Service ("IRS") or the courts, either of which could take a
contrary position. No rulings have been or will be sought from the IRS.
Accordingly, there can be no assurance that the IRS will not challenge the
opinions expressed herein or that a court would not sustain such a challenge.
Nevertheless, Tax Counsel has advised that it is of the view that, if
challenged, the opinions expressed herein would be sustained by a court with
jurisdiction in a properly presented case.
HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE TRUST
PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN, AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES
FEDERAL OR OTHER TAX LAWS. FOR A DISCUSSION OF THE POSSIBLE REDEMPTION OF THE
TRUST PREFERRED SECURITIES OR REDEMPTION OF THE PARTNERSHIP PREFERRED SECURITIES
UPON THE OCCURRENCE OF CERTAIN TAX EVENTS SEE "DESCRIPTION OF THE TRUST
PREFERRED SECURITIES -- TRUST SPECIAL EVENT REDEMPTION OR DISTRIBUTION" AND
"DESCRIPTION OF THE PARTNERSHIP PREFERRED SECURITIES -- PARTNERSHIP SPECIAL
EVENT REDEMPTION" RESPECTIVELY.
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CLASSIFICATION OF THE TRUST
Tax Counsel is of the opinion that, under current law, and based on certain
representations, facts and assumptions set forth in such opinion, the Trust will
be classified for United States federal income tax purposes as a grantor trust
and not as an association taxable as a corporation. Accordingly, for United
States federal income tax purposes, each holder of Trust Preferred Securities
will be considered the owner of an undivided interest in the Partnership
Preferred Securities held by the Trust, and each holder will be required to
include in its gross income its distributive share of income attributable to the
Partnership, which generally will be equal to such holder's allocable share of
amounts accrued on the Partnership Preferred Securities. No amount included in
income with respect to the Trust Preferred Securities will be eligible for the
corporate dividends-received deduction.
CLASSIFICATION OF THE PARTNERSHIP
Tax Counsel is of the opinion that, under current law, and based on certain
representations, facts and assumptions set forth in such opinion, the
Partnership will be classified for United States federal income tax purposes as
a partnership and not as an association or publicly traded partnership taxable
as a corporation.
Tax Counsel's opinion is based on certain factual assumptions relating to
the organization and operation of the Partnership and is conditioned upon
certain representations made by the General Partner and the Partnership as to
factual matters, such as the organization and the operation of the Partnership
and the type and frequency of investments made by the Partnership.
The General Partner has represented that it intends to operate the
Partnership in a manner such that it will continue to constitute a partnership
for all future taxable periods in which any Partnership Preferred Securities
remain outstanding. In particular, pursuant to the Limited Partnership
Agreement, the General Partner is prohibited from taking any action that would
cause the Partnership to constitute a "publicly traded partnership" taxable as a
corporation under section 7704(a) of the Code. Accordingly, it is expected that
the Partnership will continue to qualify as a partnership, and therefore will
not constitute a publicly traded partnership taxable as a corporation, for all
taxable years in which the Partnership Preferred Securities remain outstanding.
CLASSIFICATION OF THE DEBENTURES
The Partnership, the Company, the relevant Investment Affiliates and the
holders of the Trust Securities (by acceptance of a beneficial interest in a
Trust Security) will agree to treat the Debentures as indebtedness of the
relevant issuer for all United States tax purposes. In connection with the
issuance of the Debentures, Tax Counsel will issue its opinion that, under
current law, and based on certain representations, facts and assumptions set
forth in such opinion, the Debentures will be classified as indebtedness of the
relevant issuer for United States federal income tax purposes.
INCOME AND DEDUCTIONS
A holder's distributive share of income attributable to the Partnership
generally will be substantially equal to the amount of the cash distributions
that accumulate with respect to the Trust Preferred Securities. Accordingly, if
quarterly distributions on the Trust Preferred Securities are paid currently,
the amount of income recognized by a holder during a taxable year generally will
be substantially equal to the cash distributions received by the holder with
respect to its Trust Preferred Securities.
The nature and timing of the income that is allocated to holders of Trust
Preferred Securities will, however, depend on the United States federal income
tax characterization of the investments held by the
49
<PAGE>
Partnership during the period in question. Because the Partnership will be an
accrual basis taxpayer for United States federal income tax purposes, income
will accrue on the Trust Preferred Securities and will be allocated to holders
of Trust Preferred Securities on a daily accrual basis, generally at a rate that
is expected to be equal to (and that will not be greater than) the distribution
rate on the Trust Preferred Securities, regardless of the holders' method of
accounting. Actual cash distributions on the Trust Preferred Securities will
not, however, be separately reported as taxable income to the holders at the
time they are received.
If distributions on the Partnership Preferred Securities are not made
currently, the corresponding distributions on the Trust Preferred Securities
will not be made currently. Because the Partnership is an accrual basis taxpayer
it can be expected that during a period in which interest payments on the
Debentures or distributions on the Partnership Preferred Securities are deferred
(for whatever reason), holders will generally recognize income in advance of
their receipt of any cash distributions with respect to their Trust Preferred
Securities. The amount of income that will be allocated to holders of Trust
Preferred Securities during any such deferral period will equal their pro rata
share of the amount of distributions accruing on the Partnership Preferred
Securities during such deferral period.
The Partnership does not presently intend to make an election under Section
754 of the Code. Accordingly, a subsequent purchaser of Trust Preferred
Securities will not be permitted to adjust the tax basis in his allocable share
of the Partnership's assets so as to reflect any difference between his purchase
price for the Trust Preferred Securities and his share of the Partnership's
underlying tax basis in its assets. As a result, a holder of Trust Preferred
Securities may be required to report a larger or smaller amount of income from
holding the Trust Preferred Securities than would otherwise be appropriate based
upon the holder's purchase price for the Trust Preferred Securities.
RECEIPT OF PARTNERSHIP PREFERRED SECURITIES UPON LIQUIDATION OF THE TRUST
Under certain circumstances, as described under the caption "Description of
the Trust Preferred Securities -- Trust Special Event Redemption or
Distribution", Partnership Preferred Securities may be distributed to holders of
Trust Preferred Securities in exchange for their Trust Preferred Securities and
in liquidation of the Trust. Unless the liquidation of the Trust occurs as a
result of the Trust being subject to United States federal income tax with
respect to income accrued or received on the Partnership Preferred Securities,
such a distribution to holders would, for United States federal income tax
purposes, be treated as a nontaxable event to each holder, each holder would
receive an aggregate tax basis in the Partnership Preferred Securities equal to
such holder's aggregate tax basis in its Trust Preferred Securities, and a
holder's holding period in the Partnership Preferred Securities so received in
liquidation of the Trust would include the period during which the Trust
Preferred Securities were held by such holder. If, however, the liquidation of
the Trust were to occur because the Trust is subject to United States federal
income tax with respect to income accrued or received on the Partnership
Preferred Securities, the distribution of Partnership Preferred Securities to
holders by the Trust would likely be a taxable event to each holder, and a
holder would recognize gain or loss as if the holder had exchanged its Trust
Preferred Securities for the Partnership Preferred Securities it received upon
the liquidation of the Trust. Such gain or loss would be equal to the difference
between the holder's aggregate tax basis in its Trust Preferred Securities
surrendered in the exchange and the aggregate fair market value of the
Partnership Preferred Securities received in the exchange.
REDEMPTION OF TRUST PREFERRED SECURITIES FOR CASH
Under certain circumstances, as described under the caption "Description of
the Trust Preferred Securities -- Mandatory Redemption", "Description of the
Trust Preferred Securities -- Trust Special
50
<PAGE>
Event Redemption or Distribution" and "Description of the Partnership Preferred
Securities -- Partnership Special Event Redemption", the General Partner may
cause the Partnership to redeem the Partnership Preferred Securities for cash,
in which event the Trust shall simultaneously apply the proceeds of such
redemption to redeem the Trust Preferred Securities. Under current law, such a
redemption would constitute, for United States federal income tax purposes, a
taxable disposition, and a holder would recognize gain or loss as if it sold the
holder's proportionate interest in the redeemed Partnership Preferred Securities
for an amount of cash equal to the proceeds received upon redemption. See "--
Disposition of Trust Preferred Securities".
DISPOSITION OF TRUST PREFERRED SECURITIES
A holder that sells Trust Preferred Securities will recognize gain or loss
equal to the difference between the amount realized on the sale of the Trust
Preferred Securities and the holder's adjusted tax basis in such Trust Preferred
Securities. Such gain or loss will be a capital gain or loss and will be a long-
term capital gain or loss if the Trust Preferred Securities have been held for
more than one year at the time of the sale. A holder will be required to include
accumulated but unpaid distributions on the Partnership Preferred Securities
through the date of disposition in income as ordinary income, and to add such
amount to the adjusted tax basis of its Trust Preferred Securities.
A holder's tax basis in its Trust Preferred Securities generally will equal
(i) the amount paid by such holder for its Trust Preferred Securities, (ii)
increased by the amount includible in income by such holder with respect to its
Trust Preferred Securities, and (iii) reduced by the amount of cash or other
property distributed to such holder with respect to its Trust Preferred
Securities. A holder who acquires Trust Preferred Securities at different prices
may be required to maintain a single aggregate adjusted tax basis in all of his
Trust Preferred Securities and, upon sale or other disposition of some of such
Trust Preferred Securities, to allocate a PRO RATA portion of such aggregate tax
basis to the Trust Preferred Securities sold (rather than maintaining a separate
tax basis in each Trust Preferred Security for purposes of computing gain or
loss on a sale of that Trust Preferred Security).
On August 5, 1997, the Taxpayer Relief Act of 1997 (the "Tax Act"), was
enacted into law. The Tax Act reduces the maximum rates on long-term capital
gains recognized on capital assets held by individual taxpayers for more than
eighteen months as of the date of disposition and would further reduce the
maximum rates on such gains in the year 2001 and thereafter for certain
individual taxpayers who meet specified conditions. Prospective investors should
consult their own tax advisers concerning these tax law changes.
OTHER PARTNERSHIP PROVISIONS
SECTION 708. Under Section 708 of the Code, the Partnership will be deemed
to terminate for United States federal income tax purposes if 50% or more of the
capital and profits interests in the Trust are sold or exchanged within a
12-month period. Pursuant to final Treasury regulations issued on May 9, 1997,
if such a deemed termination were to occur, the Partnership would be considered
to have contributed its assets to a new partnership in return for partnership
interests therein and then to have distributed those new partnership interests
to the partners of the old partnership in liquidation thereof.
SECTION 701. The Department of Treasury has promulgated regulations under
Section 701 of the Code that generally permit it to recast a transaction or
disregard a partnership if a partnership is formed or availed of in connection
with a transaction a principal purpose of which is to reduce substantially the
present value of the partners' aggregate federal tax liability in a manner that
is inconsistent with the intent of the partnership provisions of the Code or to
treat a partnership as an aggregate of its partners as appropriate to carry out
the purpose of any provision of the Code or the Treasury regulations thereunder.
The Partnership has been formed for, and will engage in, activities typical for
partnerships. Although there
51
<PAGE>
is no precedent that applies to the transactions contemplated herein, Tax
Counsel believes that the Partnership is not of the type intended to fall within
the scope of these regulations.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Income on the Trust Preferred Securities will be reported to holders on an
IRS Form 1099, which form should be mailed to holders of Trust Preferred
Securities by January 31 following each calendar year. Payments made on and
proceeds from the sale of Trust Preferred Securities may be subject to a
"back-up" withholding tax of 31% unless the holder complies with certain
identification requirements. Any withheld amount generally will be allowed as a
credit against the holder's United States federal income tax, provided the
required information is timely filed with the IRS.
NEW WITHHOLDING REGULATIONS
On October 6, 1997, the Treasury Department issued new regulations (the "New
Regulations") which make certain modifications to the back-up withholding and
information reporting rules described above. The New Regulations attempt to
unify certification requirements and modify reliance standards. The New
Regulations will generally be effective for payments made after December 31,
1998, subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.
52
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"Purchase Agreement"), the Trust has agreed to sell to each of the Underwriters
named below, and each of the Underwriters, for whom Merrill Lynch, Pierce,
Fenner & Smith Incorporated, A.G. Edwards & Sons, Inc., PaineWebber
Incorporated, Prudential Securities Incorporated and Salomon Brothers Inc are
acting as representatives (the "Representatives"), has severally agreed to
purchase the number of Trust Preferred Securities set forth opposite its name
below. In the Purchase Agreement, the several Underwriters have agreed, subject
to the terms and conditions set forth therein, to purchase all the Trust
Preferred Securities offered hereby if any of the Trust Preferred Securities are
purchased. In the event of default by an Underwriter, the Purchase Agreement
provides that, in certain circumstances, the purchase commitments of the non-
defaulting Underwriters may be increased or the Purchase Agreement may be
terminated.
<TABLE>
<CAPTION>
NUMBER OF TRUST
PREFERRED
UNDERWRITERS SECURITIES
- ---------------------------------------------------------------------------------- ------------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................................................
A.G. Edwards & Sons, Inc..........................................................
PaineWebber Incorporated..........................................................
Prudential Securities Incorporated................................................
Salomon Brothers Inc..............................................................
------------------
Total....................................................................... 16,000,000
------------------
------------------
</TABLE>
The Underwriters propose to offer the Trust Preferred Securities, in part,
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus, and, in part, to certain securities dealers at
such price less a concession of $ per Trust Preferred Security; provided, that
such concession for sales of 10,000 or more Trust Preferred Securities to any
single purchaser will be $ per Trust Preferred Security. The Underwriters may
allow, and such dealers may re-allow, a concession not in excess of $ per Trust
Preferred Security to certain brokers and dealers. After the Trust Preferred
Securities are released for sale to the public, the offering price and other
selling terms may from time to time be varied by the Representatives.
In view of the fact that the proceeds of the sale of the Trust Preferred
Securities will ultimately be used to purchase the investment instruments of the
Company and its subsidiaries, the Purchase Agreement provides that the Company
will pay as compensation (the "Underwriters' Compensation") to the Underwriters,
an amount in immediately available funds of $ per Trust Preferred Security
(or $ in the aggregate) for the accounts of the several Underwriters;
provided that, such compensation for sales of 10,000 or more Trust Preferred
Securities to any single purchaser will be $ per Trust Preferred Security.
Therefore, to the extent of such sales, the actual amount of Underwriters'
Compensation will be less than the aggregate amount specified in the preceding
sentence.
Application will be made to list the Trust Preferred Securities on the New
York Stock Exchange. Trading of the Trust Preferred Securities on the New York
Stock Exchange is expected to commence within
53
<PAGE>
a 30-day period after the initial delivery of the Trust Preferred Securities.
The Representatives have advised the Trust that they intend to make a market in
the Trust Preferred Securities prior to the commencement of trading on the New
York Stock Exchange. The Representatives will have no obligation to make a
market in the Trust Preferred Securities, however, and may cease market making
activities, if commenced, at any time.
Prior to this offering there has been no public market for the Trust
Preferred Securities. In order to meet one of the requirements for listing the
Trust Preferred Securities on the New York Stock Exchange, the Underwriters will
undertake to sell lots of 100 or more Trust Preferred Securities to a minimum of
400 beneficial holders.
The Trust, the Company, and the Partnership have agreed to indemnify the
Underwriters against, or contribute to payments that the Underwriters may be
required to make in respect of, certain liabilities, including liabilities under
the Securities Act of 1933, as amended.
Because MLPF&S, one of the Underwriters in the offering, is an affiliate of
the Company and a member of the National Association of Securities Dealers, Inc.
("NASD"), the offering of Trust Preferred Securities will be conducted pursuant
to the applicable sections of Rule 2810 of the Conduct Rules of the NASD. The
Underwriters may not confirm sales to any discretionary account without the
prior specific written approval of the customer.
The Underwriters are permitted to engage in certain transactions that
stabilize the price of the Trust Preferred Securities. Such transactions consist
of bids or purchases for the purpose of pegging, fixing or maintaining the price
of the Trust Preferred Securities.
If an Underwriter creates a short position in the Trust Preferred Securities
in connection with the offering, I.E., if it sells more Units of the Trust
Preferred Securities than are set forth on the cover page of this Prospectus,
the Underwriter may reduce that short position by purchasing Units of the Trust
Preferred Securities in the open market.
The Underwriters may also impose a penalty bid on certain Underwriters and
selling group members. This means that if an Underwriter purchases Units of the
Trust Preferred Securities in the open market to reduce the Underwriter's short
position or to stabilize the price of the Trust Preferred Securities, they may
reclaim the amount of the selling concession from the Underwriters and selling
group members who sold those Units as part of the offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.
Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Trust Preferred Securities. In
addition, neither the Company nor any of the Underwriters makes any
representation that the Underwriters will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.
MLPF&S may use this Prospectus for offers and sales related to market-making
transactions in the Trust Preferred Securities. MLPF&S may act as principal or
agent in these transactions, and the sales will be made at prices related to
prevailing market prices at the time of sale.
54
<PAGE>
LEGAL MATTERS
Certain matters of Delaware law relating to the legality of the Trust
Preferred Securities, the validity of the Trust Agreement, the formation of the
Trust and the Partnership and the legality under state law of the Trust
Preferred Securities and the Partnership Preferred Securities are being passed
upon by Skadden, Arps, Slate, Meagher & Flom (Delaware), special Delaware
counsel to the Trust, the Partnership and the Company. The legality under state
law of the Trust Guarantee, the Partnership Guarantee, the Company Debenture and
the Investment Guarantees with respect to the Affiliate Debentures will be
passed upon on behalf of the Trust, the Partnership and the Company by Brown &
Wood LLP, New York, New York. The validity of the Trust Preferred Securities,
the Partnership Preferred Securities and the Trust Guarantee and the Partnership
Guarantee will be passed upon on behalf of the Underwriters by Skadden, Arps,
Slate, Meagher & Flom LLP, New York, New York, counsel to the Underwriters.
EXPERTS
The consolidated financial statements and related financial statement
schedules of the Company and its subsidiaries included or incorporated by
reference in the Company's 1996 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 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 27, 1996 included in the 1996 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, and such Selected
Financial Data incorporated by reference in this Prospectus and the Registration
Statement of which this Prospectus is a part, have been included or incorporated
herein by reference in reliance upon such reports of Deloitte & Touche LLP given
upon their authority as experts in accounting and auditing. The balance sheets
of Merrill Lynch Preferred Funding III, L.P. and Merrill Lynch Preferred Capital
Trust III included in this Prospectus have also been audited by Deloitte &
Touche LLP and have been included in reliance upon such reports of Deloitte &
Touche LLP given upon their authority as experts in accounting and auditing.
With respect to unaudited interim financial information for the periods
included in the Quarterly Reports on Form 10-Q which are incorporated herein by
reference, Deloitte & Touche LLP have applied limited procedures in accordance
with professional standards for a review of such information. However, as stated
in their report included in such Quarterly Report on Form 10-Q and incorporated
by reference herein, they did not audit and they do not express an opinion on
such interim financial information. Accordingly, the degree of reliance on their
reports on such information should be restricted in light of the limited nature
of the review procedures applied. Deloitte & Touche LLP are not subject to the
liability provisions of Section 11 of the Act for any such report on unaudited
interim financial information because any such report is not a "report" or a
"part" of the registration statement prepared or certified by an accountant
within the meaning of Sections 7 and 11 of the Act.
55
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
DEFINED TERMS PAGE NO.
- -------------------------------------------------------------------------------------------------------- -------------
<S> <C>
Affiliate Debentures.................................................................................... 36
Affiliate Investment Instruments........................................................................ 18
Beneficial Owner........................................................................................ 28
Business Day............................................................................................ 21
Change in 1940 Act Law.................................................................................. 23
Code.................................................................................................... 48
Commission.............................................................................................. 4
Company................................................................................................. 1
Company Debenture....................................................................................... 36
Debentures.............................................................................................. 36
Declaration............................................................................................. 17
Delaware Trustee........................................................................................ 17
Depository.............................................................................................. 28
DTC..................................................................................................... 1
Eligible Institution.................................................................................... 37
Eligible Debt Securities................................................................................ 37
Exchange Act............................................................................................ 5
FDIC.................................................................................................... 37
Finance Subsidiary...................................................................................... 4
General Partner......................................................................................... 1
Global Certificates..................................................................................... 28
Global Partnership Security............................................................................. 43
Guarantees.............................................................................................. 2
Independent Financial Advisor........................................................................... 37
Indirect Participants................................................................................... 28
Initial Partnership Proceeds............................................................................ 36
Investment Affiliate.................................................................................... 38
Investment Events of Default............................................................................ 36
Investment Guarantee.................................................................................... 37
IRS..................................................................................................... 48
Limited Partnership Agreement........................................................................... 17
MAM..................................................................................................... 16
Merrill Lynch........................................................................................... 1
MLPF&S.................................................................................................. 1
Moody's................................................................................................. 37
NASD.................................................................................................... 54
New Regulations......................................................................................... 52
New York Stock Exchange................................................................................. 1
1940 Act................................................................................................ 10
1996 Form 10-K.......................................................................................... 5
Non-United States Persons............................................................................... 48
Offer................................................................................................... 16
Participants............................................................................................ 28
Partnership............................................................................................. 1
Partnership Act......................................................................................... 18
Partnership Enforcement Event........................................................................... 35
Partnership Guarantee................................................................................... 2
Partnership Guarantee Payments.......................................................................... 45
Partnership Investment Company Event.................................................................... 40
</TABLE>
56
<PAGE>
<TABLE>
<CAPTION>
DEFINED TERMS PAGE NO.
- -------------------------------------------------------------------------------------------------------- -------------
<S> <C>
Partnership Liquidation Distribution.................................................................... 41
Partnership Preferred Securities........................................................................ 1
Partnership Special Event............................................................................... 39
Partnership Successor Securities........................................................................ 43
Partnership Tax Event................................................................................... 40
Property Account........................................................................................ 17
Property Trustee........................................................................................ 17
Purchase Agreement...................................................................................... 53
Redemption Price........................................................................................ 4
Registration Statement.................................................................................. 4
Regular Trustees........................................................................................ 17
Representatives......................................................................................... 53
Rights Agreement........................................................................................ 3
S&P..................................................................................................... 37
Securities Act.......................................................................................... 4
Senior Indebtedness..................................................................................... 2
Special Event........................................................................................... 12
Special Representative.................................................................................. 35
Successor Securities.................................................................................... 27
Tax Act................................................................................................. 51
Tax Action.............................................................................................. 23
Tax Counsel............................................................................................. 48
TOPrS................................................................................................... 1
Trust................................................................................................... 1
Trust Act............................................................................................... 17
Trust Common Securities................................................................................. 1
Trust Dissolution Tax Opinion........................................................................... 23
Trust Enforcement Event................................................................................. 21
Trust Guarantee......................................................................................... 2
Trust Guarantee Payments................................................................................ 31
Trust Guarantee Trustee................................................................................. 17
Trust Indenture Act..................................................................................... 17
Trust Investment Company Event.......................................................................... 23
Trust Liquidation....................................................................................... 25
Trust Liquidation Distribution.......................................................................... 8
Trust Preferred Securities.............................................................................. 1
Trust Redemption Tax Opinion............................................................................ 23
Trust Securities........................................................................................ 1
Trust Special Event..................................................................................... 22
Trust Tax Event......................................................................................... 23
Trustees................................................................................................ 17
Underwriters' Compensation.............................................................................. 1
United States Person.................................................................................... 48
</TABLE>
57
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE NO.
-------------
<S> <C>
MERRILL LYNCH PREFERRED FUNDING III, L.P.
Independent Auditors' Report.......................................................................... F-2
Balance Sheet......................................................................................... F-3
Notes to Balance Sheet................................................................................ F-3
MERRILL LYNCH PREFERRED CAPITAL TRUST III
Independent Auditors' Report.......................................................................... F-4
Balance Sheet......................................................................................... F-5
Notes to Balance Sheet................................................................................ F-5
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the General Partner and Initial Limited Partner of
Merrill Lynch Preferred Funding III, L.P.
We have audited the accompanying balance sheet of Merrill Lynch Preferred
Funding III, L.P. (the "Partnership") as of December 19, 1997. This balance
sheet is the responsibility of the Partnership's management. Our responsibility
is to express an opinion on this balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit of the balance sheet provides a reasonable basis for our
opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of the Partnership as of December 19,
1997, in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
January 5, 1998
New York, New York
F-2
<PAGE>
BALANCE SHEET OF
MERRILL LYNCH PREFERRED FUNDING III, L.P.
OPENING BALANCE SHEET
DECEMBER 19, 1997
<TABLE>
<S> <C>
Assets............................................................... $ --
---------
---------
Partnership securities
Limited partner interest........................................... $ 85
General partner interest........................................... 15
---------
$ 100
Less: Receivables from partners for subscribed partnership
interests.......................................................... (100)
---------
--
---------
---------
</TABLE>
NOTES TO BALANCE SHEET OF MERRILL LYNCH PREFERRED FUNDING III, L.P.
Merrill Lynch Preferred Funding III, L.P. (the "Partnership") is a limited
partnership that was formed under the Delaware Revised Uniform Limited
Partnership Act on December 19, 1997 for the exclusive purposes of purchasing
certain eligible debt instruments of Merrill Lynch & Co., Inc. (the "Company")
and wholly owned subsidiaries of the Company (the "Affiliate Investment
Instruments") with the proceeds from the sale of Partnership Preferred
Securities (the "Partnership Preferred Securities") to Merrill Lynch Preferred
Capital Trust III (the "Trust") and a capital contribution from the Company in
exchange for the general partnership interest in the Partnership (collectively,
the "Partnership Proceeds").
The Partnership Preferred Securities will be redeemable for cash, at the
option of the Partnership, in whole or in part, from time to time, after March
30, 2008. Except as provided in the Limited Partnership Agreement and
Partnership Preferred Securities Guarantee Agreement, and as otherwise provided
by law, the holders of the Partnership Preferred Securities will have no voting
rights.
The Partnership Proceeds will be used initially to purchase debt instruments
from the Company and certain domestic wholly owned subsidiaries of the Company,
retaining 1% in unaffiliated debt securities. The Partnership shall have a
perpetual existence subject to certain termination events. The Company serves as
the sole general partner of the Partnership. The Company, in its capacity as
General Partner of the Partnership, has agreed to pay all fees and expenses
related to the organization and operations of the Partnership (including any
taxes, duties, assessments or government charges of whatever nature (other than
withholding taxes) imposed by the United States or any other domestic taxing
authority upon the Partnership) and the offering of the Partnership Preferred
Securities and be responsible for all debts and other obligations of the
Partnership (other than with respect to the Partnership Preferred Securities).
The General Partner has agreed to indemnify certain officers and agents of the
Partnership.
F-3
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees of
Merrill Lynch Preferred Capital Trust III
We have audited the accompanying balance sheet of Merrill Lynch Preferred
Capital Trust III (the "Trust"), as of December 19, 1997. This balance sheet is
the responsibility of the Trust's management. Our responsibility is to express
an opinion on this balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit of the balance sheet provides a reasonable basis for our
opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of the Trust as of December 19, 1997,
in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
January 5, 1998
New York, New York
F-4
<PAGE>
BALANCE SHEET OF
MERRILL LYNCH PREFERRED CAPITAL TRUST III
OPENING BALANCE SHEET
DECEMBER 19, 1997
<TABLE>
<S> <C>
Assets................................................................. $ 0
--
--
Trust securities....................................................... $ 0
--
--
</TABLE>
NOTES TO BALANCE SHEET OF MERRILL LYNCH PREFERRED CAPITAL TRUST III
Merrill Lynch Preferred Capital Trust III (the "Trust") is a statutory
business trust formed on December 19, 1997 under the laws of the State of
Delaware for the exclusive purposes of (i) issuing the Trust Originated
Preferred Securities (the "Trust Preferred Securities") and the Trust Common
Securities (together with the Trust Preferred Securities, the "Trust
Securities") representing undivided beneficial ownership interests in the assets
of the Trust, (ii) purchasing Partnership Preferred Securities (the "Partnership
Preferred Securities") representing the limited partnership interests of Merrill
Lynch Preferred Funding III, L.P. (the "Partnership") with the proceeds from the
sale of the Trust Securities, and (iii) engaging in only those other activities
necessary or incidental thereto. The Trust has a perpetual existence, subject to
certain termination events as provided in the Declaration of Trust under which
it was formed. Subsequent to December 19, 1997, the Trust intends to issue and
sell its Trust Preferred Securities in a public offering and to issue and sell
its Trust Common Securities to Merrill Lynch & Co., Inc. (the "Company"). No
Trust Preferred Securities have been issued as of December 19, 1997.
The proceeds from the Trust's sale of the Trust Securities will be used to
purchase the Partnership Preferred Securities from the Partnership. The
Partnership Preferred Securities will be redeemable for cash, at the option of
the Partnership, in whole or in part, from time to time, after March 30, 2008.
Upon any redemption of the Partnership Preferred Securities, the Trust Preferred
Securities will be redeemed, in whole or in part, as applicable. Holders of the
Trust Preferred Securities will have limited voting rights and will not be
entitled to vote to appoint, remove or replace, or to increase or decrease the
number of, Trustees, which voting rights are vested exclusively in the holder of
the Trust Common Securities.
The Company will be obligated to pay compensation to the underwriters of the
offering of the Trust Preferred Securities. The Company will pay all fees and
expenses related to the organization and operations of the Trust (including any
taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed by the United States or any other domestic
taxing authority upon the Trust) and the offering of the Trust Preferred
Securities and be responsible for all debts and other obligations of the Trust
(other than the Trust Securities). The Company has also agreed to indemnify the
Trustees and certain other persons.
F-5
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING COVERED BY THIS
PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, THE TRUST PREFERRED SECURITIES IN ANY JURISDICTION WHERE, OR TO ANY
PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE
DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Available Information........................... 4
Incorporation of Certain Documents by
Reference..................................... 5
Summary......................................... 6
Risk Factors.................................... 11
Merrill Lynch & Co., Inc........................ 15
Use of Proceeds................................. 15
Ratio of Earnings to Fixed Charges.............. 16
Recent Developments............................. 16
Merrill Lynch Preferred Capital Trust III....... 17
Merrill Lynch Preferred Funding III, L.P........ 18
Description of the Trust Preferred Securities... 19
Description of the Trust Guarantee.............. 31
Description of the Partnership Preferred
Securities.................................... 34
Description of the Partnership Guarantee........ 44
Certain Federal Income Tax
Considerations................................ 48
Underwriting.................................... 53
Legal Matters................................... 55
Experts......................................... 55
Index of Defined Terms.......................... 56
Index to Financial Statements................... F-1
</TABLE>
[LOGO]
16,000,000
TRUST PREFERRED SECURITIES
MERRILL LYNCH PREFERRED
CAPITAL TRUST III
% TRUST ORIGINATED
PREFERRED SECURITIES-SM- ("TOPRS-SM-")
GUARANTEED TO THE EXTENT SET
FORTH HEREIN BY
MERRILL LYNCH & CO., INC.
---------------------
PROSPECTUS
---------------------
MERRILL LYNCH & CO.
A.G. EDWARDS & SONS, INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SALOMON SMITH BARNEY
JANUARY , 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
(ALTERNATE PAGE FOR OFFERING RELATING TO MERRILL LYNCH CAPITAL TRUST IV)
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS, DATED JANUARY 5, 1998
PROSPECTUS
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
X-1
<PAGE>
[LOGO]
TRUST PREFERRED SECURITIES
MERRILL LYNCH PREFERRED CAPITAL TRUST IV
% TRUST ORIGINATED PREFERRED SECURITIES-SM- ("TOPRS-SM-")
(LIQUIDATION AMOUNT $25 PER TRUST PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
MERRILL LYNCH & CO., INC.
------------------
The % Trust Originated Preferred Securities-SM- (the "TOPrS-SM-" or "Trust
Preferred Securities") offered hereby represent preferred undivided beneficial
ownership interests in the assets of Merrill Lynch Preferred Capital Trust IV, a
statutory business trust formed under the laws of the State of Delaware (the
"Trust"). Merrill Lynch & Co., Inc., a Delaware corporation (the "Company" or
"Merrill Lynch"), will own all the common securities (the "Trust Common
Securities" and, together with the Trust Preferred Securities, the "Trust
Securities") representing undivided beneficial ownership interests in the assets
of the Trust. The Trust exists for the sole purpose of issuing the Trust
Securities and investing the proceeds as described below and engaging in
activities incident thereto. The proceeds from the sale of the Trust Securities
will be used by the Trust to purchase Partnership Preferred Securities
("Partnership Preferred Securities"), representing the limited partner interests
of Merrill Lynch Preferred Funding IV, L.P., a Delaware limited partnership (the
"Partnership"). The general partner interest, which constitutes all of the
interest in the Partnership other than the limited partner interests represented
by the Partnership Preferred Securities, is owned by the Company, which is the
sole general partner of the Partnership (in such capacity, the "General
Partner"). Substantially all of the proceeds from the sale of the Partnership
Preferred Securities, together with the capital contribution from the General
Partner, will be used by the Partnership to purchase Debentures (as defined
herein), which consist of debt instruments of the Company and one or more of its
eligible controlled affiliates. In addition, approximately one percent of the
proceeds from the sale of the Partnership Preferred Securities and the capital
contribution from the General Partner will be used to purchase Eligible Debt
Securities (as defined herein). See "Description of the Partnership Preferred
Securities -- Partnership Investments".
(CONTINUED ON NEXT PAGE)
SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE TRUST PREFERRED
SECURITIES, INCLUDING CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
Application will be made to list the Trust Preferred Securities on the New
York Stock Exchange, Inc. (the "New York Stock Exchange"). If approved for
listing, trading of the Trust Preferred Securities on the New York Stock
Exchange is expected to commence within the 30-day period after the initial
delivery of the Trust Preferred Securities. See "Underwriting".
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO PUBLIC (1) COMMISSION (2)
<S> <C> <C>
Per Trust Preferred Security...................................... $25 (3)
Total............................................................. $ (3)
<CAPTION>
PROCEEDS TO
THE TRUST(3)(4)
<S> <C>
Per Trust Preferred Security...................................... $25
Total............................................................. $
</TABLE>
(1) Plus accumulated distributions, if any, from January , 1998.
(2) The Trust, the Partnership and the Company have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting".
(3) In view of the fact that the proceeds of the sale of the Trust Preferred
Securities will be ultimately invested in debt securities of the Company and
its subsidiaries, the Company has agreed to pay to the Underwriters as
compensation (the "Underwriters' Compensation") $ per Trust Preferred
Security (or $ in the aggregate); provided that such compensation for
sales of more than 10,000 Trust Preferred Securities to a single purchaser
will be $ per Trust Preferred Security. Therefore, to the extent of such
sales, the actual amount of Underwriters' Compensation will be less than the
aggregate amount specified in the preceding sentence. See "Underwriting".
(4) Expenses of the offering payable by the Company are estimated to be $ .
------------------------------
The Trust Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that delivery of the Trust Preferred Securities will be made only in book-entry
form through the facilities of The Depository Trust Company ("DTC") on or about
January , 1998.
This Prospectus may be used by Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("MLPF&S") in connection with offers and sales
related to market-making transactions in the Trust Preferred Securities. MLPF&S
may act as principal or agent in such transactions. Such sales will be made at
prices related to prevailing market prices at the time of sale.
------------------------------
MERRILL LYNCH & CO.
------------------------
THE DATE OF THIS PROSPECTUS IS JANUARY , 1998.
-SM-"TRUST ORIGINATED PREFERRED SECURITIES" AND "TOPRS" ARE SERVICE MARKS OF
MERRILL LYNCH & CO., INC.
X-2
<PAGE>
(ALTERNATE PAGE FOR OFFERING RELATING TO MERRILL LYNCH CAPITAL TRUST IV)
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE NO.
-----------
<S> <C>
MERRILL LYNCH PREFERRED FUNDING IV, L.P.
Independent Auditors' Report.......................................................................... F-2
Balance Sheet......................................................................................... F-3
Notes to Balance Sheet................................................................................ F-3
MERRILL LYNCH PREFERRED CAPITAL TRUST IV
Independent Auditors' Report.......................................................................... F-4
Balance Sheet......................................................................................... F-5
Notes to Balance Sheet................................................................................ F-5
</TABLE>
X-F-1
<PAGE>
(ALTERNATE PAGE FOR OFFERING RELATING TO MERRILL LYNCH CAPITAL TRUST IV)
INDEPENDENT AUDITORS' REPORT
To the General Partner and Initial Limited Partner of
Merrill Lynch Preferred Funding IV, L.P.
We have audited the accompanying balance sheet of Merrill Lynch Preferred
Funding IV, L.P. (the "Partnership") as of December 19, 1997. This balance sheet
is the responsibility of the Partnership's management. Our responsibility is to
express an opinion on this balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit of the balance sheet provides a reasonable basis for our
opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of the Partnership as of December 19,
1997, in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
January 5, 1998
New York, New York
X-F-2
<PAGE>
(ALTERNATE PAGE FOR OFFERING RELATING TO MERRILL LYNCH CAPITAL TRUST IV)
BALANCE SHEET OF
MERRILL LYNCH PREFERRED FUNDING IV, L.P.
OPENING BALANCE SHEET
DECEMBER 19, 1997
<TABLE>
<S> <C>
Assets............................................................... $ --
---------
---------
Partnership securities
Limited partner interest........................................... $ 85
General partner interest........................................... 15
---------
$ 100
Less: Receivables from partners for subscribed partnership
interests.......................................................... (100)
---------
--
---------
---------
</TABLE>
NOTES TO BALANCE SHEET OF MERRILL LYNCH PREFERRED FUNDING IV, L.P.
Merrill Lynch Preferred Funding IV, L.P. (the "Partnership") is a limited
partnership that was formed under the Delaware Revised Uniform Limited
Partnership Act on December 19, 1997 for the exclusive purposes of purchasing
certain eligible debt instruments of Merrill Lynch & Co., Inc. (the "Company")
and wholly owned subsidiaries of the Company (the "Affiliate Investment
Instruments") with the proceeds from the sale of Partnership Preferred
Securities (the "Partnership Preferred Securities") to Merrill Lynch Preferred
Capital Trust IV (the "Trust") and a capital contribution from the Company in
exchange for the general partnership interest in the Partnership (collectively,
the "Partnership Proceeds").
The Partnership Preferred Securities will be redeemable for cash, at the
option of the Partnership, in whole or in part, from time to time, after a
certain date to be determined. Except as provided in the Limited Partnership
Agreement and Partnership Preferred Securities Guarantee Agreement, and as
otherwise provided by law, the holders of the Partnership Preferred Securities
will have no voting rights.
The Partnership Proceeds will be used initially to purchase debt instruments
from the Company and certain domestic wholly owned subsidiaries of the Company,
retaining 1% in unaffiliated debt securities. The Partnership shall have a
perpetual existence subject to certain termination events. The Company serves as
the sole general partner of the Partnership. The Company, in its capacity as
General Partner of the Partnership, has agreed to pay all fees and expenses
related to the organization and operations of the Partnership (including any
taxes, duties, assessments or government charges of whatever nature (other than
withholding taxes) imposed by the United States or any other domestic taxing
authority upon the Partnership) and the offering of the Partnership Preferred
Securities and be responsible for all debts and other obligations of the
Partnership (other than with respect to the Partnership Preferred Securities).
The General Partner has agreed to indemnify certain officers and agents of the
Partnership.
X-F-3
<PAGE>
(ALTERNATE PAGE FOR OFFERING RELATING TO MERRILL LYNCH CAPITAL TRUST IV)
INDEPENDENT AUDITORS' REPORT
To the Trustees of
Merrill Lynch Preferred Capital Trust IV
We have audited the accompanying balance sheet of Merrill Lynch Preferred
Capital Trust IV (the "Trust"), as of December 19, 1997. This balance sheet is
the responsibility of the Trust's management. Our responsibility is to express
an opinion on this balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit of the balance sheet provides a reasonable basis for our
opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of the Trust as of December 19, 1997,
in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
January 5, 1998
New York, New York
X-F-4
<PAGE>
(ALTERNATE PAGE FOR OFFERING RELATING TO MERRILL LYNCH CAPITAL TRUST IV)
BALANCE SHEET OF
MERRILL LYNCH PREFERRED CAPITAL TRUST IV
OPENING BALANCE SHEET
DECEMBER 19, 1997
<TABLE>
<S> <C>
Assets................................................................. $ 0
--
--
Trust securities....................................................... $ 0
--
--
</TABLE>
NOTES TO BALANCE SHEET OF MERRILL LYNCH PREFERRED CAPITAL TRUST IV
Merrill Lynch Preferred Capital Trust IV (the "Trust") is a statutory
business trust formed on December 19, 1997 under the laws of the State of
Delaware for the exclusive purposes of (i) issuing the Trust Originated
Preferred Securities (the "Trust Preferred Securities") and the Trust Common
Securities (together with the Trust Preferred Securities, the "Trust
Securities") representing undivided beneficial ownership interests in the assets
of the Trust, (ii) purchasing Partnership Preferred Securities (the "Partnership
Preferred Securities") representing the limited partnership interests of Merrill
Lynch Preferred Funding IV, L.P. (the "Partnership") with the proceeds from the
sale of the Trust Securities, and (iii) engaging in only those other activities
necessary or incidental thereto. The Trust has a perpetual existence, subject to
certain termination events as provided in the Declaration of Trust under which
it was formed. Subsequent to December 19, 1997, the Trust intends to issue and
sell its Trust Preferred Securities in a public offering and to issue and sell
its Trust Common Securities to Merrill Lynch & Co., Inc. (the "Company"). No
Trust Preferred Securities have been issued as of December 19, 1997.
The proceeds from the Trust's sale of the Trust Securities will be used to
purchase the Partnership Preferred Securities from the Partnership. The
Partnership Preferred Securities will be redeemable for cash, at the option of
the Partnership, in whole or in part, from time to time, after a certain date to
be determined. Upon any redemption of the Partnership Preferred Securities, the
Trust Preferred Securities will be redeemed, in whole or in part, as applicable.
Holders of the Trust Preferred Securities will have limited voting rights and
will not be entitled to vote to appoint, remove or replace, or to increase or
decrease the number of, Trustees, which voting rights are vested exclusively in
the holder of the Trust Common Securities.
The Company will be obligated to pay compensation to the underwriters of the
offering of the Trust Preferred Securities. The Company will pay all fees and
expenses related to the organization and operations of the Trust (including any
taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed by the United States or any other domestic
taxing authority upon the Trust) and the offering of the Trust Preferred
Securities and be responsible for all debts and other obligations of the Trust
(other than the Trust Securities). The Company has also agreed to indemnify the
Trustees and certain other persons.
X-F-5
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below are other expenses of issuance and distribution, all of
which will be paid by the Company:
<TABLE>
<S> <C>
Securities and Exchange Commission Filing Fee................... $ 221,250
NASD Filing Fee................................................. 30,500
Printing and Distributing Registration Statement, Prospectus,
and Miscellaneous Material.................................... 200,000
Accountant's Fee................................................ 75,000
Legal Fees and Expenses......................................... 350,000
New York Stock Exchange Listing Fee............................. 150,000
Rating Agency Fees.............................................. 25,000
Miscellaneous Expenses.......................................... 48,250
---------
Total....................................................... $1,100,000
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of Delaware and the Company's
Restated Certificate of Incorporation and By-Laws provide for the
indemnification of directors and officers of the Company under certain
circumstances, and on a case by case basis, against expenses reasonably incurred
in connection with a civil or criminal action to which they were a party, or
threatened to be made a party, by reason of being a director or officer. The
Company's Restated Certificate of Incorporation and By-Laws provide for
indemnity of directors and officers to the fullest extent permitted by law.
The Declaration of Trust of the Trust provides, to the fullest extent
permitted by applicable law, for indemnity of the Regular Trustees, any
Affiliate of any Regular Trustee, any officer, director, shareholder, member,
partner, employee, representative or agent of any Regular Trustee, or any
officer, director, shareholder, member, partner, employee, representative or
agent of the Trust or its Affiliates (each a "Company Indemnified Person"), from
and against losses and expenses incurred by such Company Indemnified Person in
connection with any action, suit or proceeding, except that if such action, suit
or proceeding is by or in the right of the Trust, the indemnity shall be limited
to expenses of such Company Indemnified Person.
The Limited Partnership Agreement of the Partnership provides that to the
fullest extent permitted by applicable law, the Partnership shall indemnify and
hold harmless each of the General Partner, and any Special Representative, any
Affiliate of the General Partner or any Special Representative, any officer,
director, shareholder, member, partner, employee, representative or agent of the
General Partner or any Special Representative, or any of their respective
Affiliates, or any employee or agent of the Partnership or its Affiliates (each
a "Partnership Indemnified Person"), from and against any loss, damage or claim
incurred by such Partnership Indemnified Person by reason of any act or omission
performed or omitted by such Partnership Indemnified Person in good faith on
behalf of the Partnership and in a manner such Partnership Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Partnership Indemnified Person by the Limited Partnership Agreement, except that
no Partnership Indemnified Person shall be entitled to be indemnified in respect
of any loss, damage or claim incurred by such Partnership Indemnified Person by
reason of gross negligence or willful misconduct with respect to such acts or
omissions. The Limited Partnership Agreement also provides that, to the fullest
extent permitted by applicable law, expenses (including legal fees) incurred by
a Partnership Indemnified Person in defending any claim, demand, action, suit or
proceeding shall, from time to time, be advanced by the
II-1
<PAGE>
Partnership prior to the final disposition of such claim, demand, action, suit
or proceeding upon receipt by the Partnership of an undertaking by or on behalf
of the Partnership Indemnified Person to repay such amount if it shall be
determined that the Partnership Indemnified Person is not entitled to be
indemnified as authorized in the Limited Partnership Agreement.
The directors and officers of the Company and the Regular Trustees of the
Trust are covered by insurance policies indemnifying them against certain
liabilities, including certain liabilities arising under the Securities Act of
1933, as amended (the "Act"), which might be incurred by them in such capacities
and against which they cannot be indemnified by the Company or the Trust. Any
agents, dealers or underwriters who execute the agreement filed as Exhibit 1 of
this Registration Statement will agree to indemnify the Company's directors and
their officers and the Trustees who signed the Registration Statement against
certain liabilities that may arise under the Securities Act with respect to
information furnished to the Company or the Trust by or on behalf of any such
indemnifying party.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO.
- ---------------------------------------------------------------------------------------------------------------------
<C> <S>
1.1 --Form of Purchase Agreement for the offering of the Preferred Securities being registered under this
Registration Statement.
4.1* --Form of Certificate of Trust of Merrill Lynch Preferred Capital Trust III and Merrill Lynch Preferred
Capital Trust IV.
4.2 --Form of Amended and Restated Declaration of Trust, of Merrill Lynch Preferred Capital Trust III and
Merrill Lynch Preferred Capital Trust IV.
4.3* --Form of Certificate of Limited Partnership of Merrill Lynch Preferred Funding III, L.P. and Merrill
Lynch Preferred Funding IV, L.P.
4.4 --Form of Amended and Restated Limited Partnership Agreement of Merrill Lynch Preferred Funding III, L.P.
and Merrill Lynch Preferred Funding IV, L.P.
4.5 --Form of Trust Preferred Securities Guarantee Agreement between Merrill Lynch & Co., Inc. and The Chase
Manhattan Bank, as guarantee trustee.
4.6 --Form of Partnership Preferred Securities Guarantee Agreement by Merrill Lynch & Co., Inc. and The Chase
Manhattan Bank, as guarantee trustee.
4.7 --Form of Subordinated Debenture Indenture between Merrill Lynch & Co., Inc. and The Chase Manhattan Bank,
as trustee (incorporated by reference to Exhibit 4.7 to the Company's Registration Statement on Form S-3
(File No. 333-16603)).
4.8 --Form of Affiliate Debenture Guarantee Agreement by Merrill Lynch & Co., Inc. and The Chase Manhattan
Bank, as guarantee trustee.
4.9 --Form of Trust Preferred Security (to be included in Exhibit 4.2 above).
4.10 --Form of Partnership Preferred Security (to be included in Exhibit 4.5 above).
4.11 --Form of Subordinated Debenture.
5.1 --Opinion of Brown & Wood LLP.
5.2 --Opinion of Brown & Wood LLP.
5.3 --Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO.
- ---------------------------------------------------------------------------------------------------------------------
<C> <S>
12 --Computation of Ratio of Earnings to Fixed Charges of Merrill Lynch & Co., Inc. (incorporated by
reference to Exhibit 12 to the Company's Registration Statement on Form S-3 (File No. 333-28537)).
15 --Letter of Deloitte & Touche LLP regarding unaudited interim financial information.
23.1 --Consent of Deloitte & Touche LLP.
23.2 --Consents of Brown & Wood LLP (to be contained in Exhibit Nos. 5.1 and 5.2).
23.3 --Consent of Skadden, Arps, Slate, Meagher & Flom LLP (to be contained in Exhibit No. 5.3).
24.1* --Powers of Attorney (included on page II-4).
25 --Forms T-1, Statement of Eligibility Under the Trust Indenture Act of 1939, as amended, of The Chase
Manhattan Bank, under the Declaration of Trust (contained in Exhibit 4.2); Trust Preferred Securities
Guarantee Agreement (contained in Exhibit 4.5); Subordinated Indenture (contained in Exhibit 4.7); and
Affiliate Debenture Guarantee Agreements (contained in Exhibit 4.8).
</TABLE>
- ------------------------
* Previously Filed.
ITEM 17. UNDERTAKINGS.
The undersigned registrants hereby undertake:
1. (a)(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) under the Securities Act of 1933 if, in the
aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-3 and the information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof.
II-3
<PAGE>
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
2. that for purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrants pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective;
3. that for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at the time shall be deemed
to be the initial bona fide offering thereof; and
4. that for purposes of determining any liability under the Securities Act
of 1933, each filing of the Company's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in this Registration Statement shall be deemed to be a new
Registration Statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of a
registrant pursuant to the foregoing provisions or otherwise, the registrants
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by a registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted against a
registrant by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in The City of New York and State of New York on the 5th day of
January, 1998.
MERRILL LYNCH & CO., INC.
By /s/ JOSEPH T. WILLETT
-----------------------------------------
Joseph T. Willett
(SENIOR VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER)
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed below by the following persons in
the capacities indicated on the 5th day of January, 1998.
SIGNATURE TITLE
- ------------------------------ --------------------------
* Chairman of the Board,
- ------------------------------ Chief Executive Officer
(David H. Komansky) and Director
*
- ------------------------------ President, Chief Operating
(Herbert M. Allison, Jr.) Officer and Director
Senior Vice President and
/s/ JOSEPH T. WILLETT Chief Financial Officer
- ------------------------------ (Principal Financial
(Joseph T. Willett) Officer)
* Senior Vice President and
- ------------------------------ Controller (Principal
(Michael J. Castellano) Accounting Officer)
*
- ------------------------------ Director
(William O. Bourke)
II-5
<PAGE>
SIGNATURE TITLE
- ------------------------------ --------------------------
*
- ------------------------------ Director
(W.H. Clark)
*
- ------------------------------ Director
(Jill K. Conway)
*
- ------------------------------ Director
(Stephen L. Hammerman)
*
- ------------------------------ Director
(Earle H. Harbison, Jr.)
*
- ------------------------------ Director
(George B. Harvey)
*
- ------------------------------ Director
(William R. Hoover)
*
- ------------------------------ Director
(Robert P. Luciano)
*
- ------------------------------ Director
(David K. Newbigging)
*
- ------------------------------ Director
(Aulana L. Peters)
*
- ------------------------------ Director
(John J. Phelan, Jr.)
*
- ------------------------------ Director
(John L. Steffens)
*
- ------------------------------ Director
(William L. Weiss)
By: /s/ JOSEPH T. WILLETT
-------------------------
Joseph T. Willett
(ATTORNEY-IN-FACT)
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, on the 5th day of January, 1998.
MERRILL LYNCH PREFERRED FUNDING III, L.P.
By: MERRILL LYNCH & CO., INC.,
as General Partner
By: /s/ THERESA LANG
-----------------------------------------
Name: Theresa Lang
Title: Senior Vice President and Treasurer
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, on the 5th day of January, 1998.
MERRILL LYNCH PREFERRED FUNDING IV, L.P.
By: MERRILL LYNCH & CO., INC.,
as General Partner
By: /s/ THERESA LANG
-----------------------------------------
Name: Theresa Lang
Title: Senior Vice President and Treasurer
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, on the 5th day of January, 1998.
MERRILL LYNCH PREFERRED CAPITAL TRUST III
By: /s/ THERESA LANG
-----------------------------------------
Name: Theresa Lang
Title: Regular Trustee
By: /s/ STANLEY SCHAEFER
-----------------------------------------
Name: Stanley Schaefer
Title: Regular Trustee
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, on the 5th day of January, 1998.
MERRILL LYNCH PREFERRED CAPITAL TRUST IV
By: /s/ THERESA LANG
-----------------------------------------
Name: Theresa Lang
Title: Regular Trustee
By: /s/ STANLEY SCHAEFER
-----------------------------------------
Name: Stanley Schaefer
Title: Regular Trustee
II-10
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. PAGE NO.
- --------- -------------
<C> <S> <C>
1.1 --Form of Purchase Agreement for the offering of the Preferred Securities being registered
under this Registration Statement.
4.1* --Form of Certificate of Trust of Merrill Lynch Preferred Capital Trust III and Merrill
Lynch Preferred Capital Trust IV.
4.2 --Form of Amended and Restated Declaration of Trust, of Merrill Lynch Preferred Capital
Trust III and Merrill Lynch Preferred Capital Trust IV.
4.3* --Form of Certificate of Limited Partnership of Merrill Lynch Preferred Funding III, L.P.
4.4 --Form of Amended and Restated Limited Partnership Agreement of Merrill Lynch Preferred
Funding III, L.P. and Merrill Lynch Preferred Funding IV, L.P.
4.5 --Form of Trust Preferred Securities Guarantee Agreement between Merrill Lynch & Co., Inc.
and The Chase Manhattan Bank, as guarantee trustee.
4.6 --Form of Partnership Preferred Securities Guarantee Agreement by Merrill Lynch & Co., Inc.
and The Chase Manhattan Bank, as guarantee trustee.
4.7 --Form of Subordinated Debenture Indenture between Merrill Lynch & Co., Inc. and The Chase
Manhattan Bank, as trustee (incorporated by reference to Exhibit 4.7 to the Company's
Registration Statement on Form S-3 (File No. 333-16603)).
4.8 --Form of Affiliate Debenture Guarantee Agreement by Merrill Lynch & Co., Inc. and The Chase
Manhattan Bank, as guarantee trustee.
4.9 --Form of Trust Preferred Security (to be included in Exhibit 4.2 above).
4.10 --Form of Partnership Preferred Security (to be included in Exhibit 4.5 above).
4.11 --Form of Subordinated Debenture.
5.1 --Opinion of Brown & Wood LLP.
5.2 --Opinion of Brown & Wood LLP.
5.3 --Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
12 --Computation of Ratio of Earnings to Fixed Charges of Merrill Lynch & Co., Inc.
(incorporated by reference to Exhibit 12 to the Company's Registration Statement on Form
S-3 (File No. 333-28537)).
15 --Letter of Deloitte & Touche LLP regarding unaudited interim financial information.
23.1 --Consent of Deloitte & Touche LLP.
23.2 --Consents of Brown & Wood LLP (to be contained in Exhibit Nos. 5.1 and 5.2).
23.3 --Consent of Skadden, Arps, Slate, Meagher & Flom LLP (to be contained in Exhibit No. 5.3).
24.1* --Powers of Attorney (included on page II-4).
25 --Forms T-1, Statement of Eligibility Under the Trust Indenture Act of 1939, as amended, of
The Chase Manhattan Bank, under the Declaration of Trust (contained in Exhibit 4.2); Trust
Preferred Securities Guarantee Agreement (contained in Exhibit 4.5); Subordinated
Indenture (contained in Exhibit 4.7); and Affiliate Debenture Guarantee Agreements
(contained in Exhibit 4.8).
</TABLE>
- ------------------------
* Previously Filed
<PAGE>
Exhibit 1.1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MERRILL LYNCH & CO., INC.
(a Delaware corporation)
MERRILL LYNCH PREFERRED FUNDING , L.P.
(a Delaware limited partnership)
MERRILL LYNCH PREFERRED CAPITAL TRUST
(a Delaware business trust)
% Trust Originated Preferred Securities-SM- ("TOPrS-SM- ")
PURCHASE AGREEMENT
Dated: ________ __, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Table of Contents
-----------------
Page
----
SECTION 1. Representations and Warranties............................... 5
(a) Representations and Warranties by the Company..................... 5
(i) Compliance with Registration Requirements................. 5
(ii) Incorporated Documents.................................... 6
(iii) Independent Accountants................................... 6
(iv) Financial Statements...................................... 6
(v) No Material Adverse Change in Business.................... 7
(vi) Good Standing of the Company.............................. 7
(vii) Good Standing of Subsidiaries............................. 7
(viii) Authorization of Agreement................................ 8
(ix) Authorization of the Debentures and Indentures............ 8
(x) Authorization of Investment Guarantees.................... 8
(xi) Due Authorization of Additional Agreements................ 8
(xii) Description of Additional Agreements...................... 9
(xiii) Absence of Defaults and Conflicts......................... 9
(xiv) Absence of Labor Dispute.................................. 10
(xv) Absence of Proceedings.................................... 10
(xvi) Exhibits.................................................. 10
(xvii) Absence of Further Requirements........................... 10
(xviii) Possession of Intellectual Property....................... 11
(xix) Possession of Licenses and Permits........................ 11
(xx) Title to Property......................................... 11
(xxi) Rating of Securities...................................... 12
(xxii) Investment Company Act.
(xxiii) Authorization of Trust Guarantee.......................... 12
(xxiv) Authorization of Partnership Guarantee.................... 13
(b) Officers' Certificates............................................ 13
(c) Representations and Warranties by the Trust, Partnership and
Company................................................... 13
(i) Good Standing of Trust.................................... 13
(ii) Authorization of Declaration.............................. 13
(iii) Authorization of Trust Common Securities.................. 14
(iv) Authorization of Trust Preferred Securities............... 14
(v) Regular Trustees.......................................... 14
(vi) Good Standing of the Partnership.......................... 14
(vii) Authorization of Partnership Agreement.................... 15
(viii) Authorization of Partnership Preferred
i
<PAGE>
Table of Contents (cont'd)
--------------------------
Page
----
Securities............................................. 15
(ix) General Partner Status.................................... 15
(x) Investment Company Act.................................... 15
(xi) Absence of Conflicts...................................... 15
(xii) Absence of Further Requirements........................... 16
(xiii) Absence of Proceedings.................................... 16
SECTION 2. Sale and Delivery to Underwriters; Closing................... 16
(a) Securities........................................................ 16
(b) Payment........................................................... 17
(c) Denominations; Registration....................................... 18
SECTION 3. Covenants of the Offerors.................................... 18
(a) Compliance with Securities Regulations and Commission Requests.... 18
(b) Filing of Amendments.............................................. 18
(c) Delivery of Registration Statements............................... 19
(d) Delivery of Prospectuses.......................................... 19
(e) Continued Compliance with Securities Laws......................... 19
(f) Blue Sky Qualifications........................................... 20
(g) Rule 158.......................................................... 20
(h) Use of Proceeds................................................... 20
(i) Listing........................................................... 21
(j) Reporting Requirements............................................ 21
SECTION 4. Payment of Expenses.......................................... 21
(a) Expenses.......................................................... 21
(b) Termination of Agreement.......................................... 21
SECTION 5. Conditions of Underwriters' Obligations...................... 22
(a) Effectiveness of Registration Statement........................... 22
(b) Opinion of Counsel for Company.................................... 22
(c) Opinion of Counsel for Underwriters............................... 22
(d) Opinion of Counsel for the Property Trustee....................... 23
(e) Officers' Certificate............................................. 23
(f) Accountant's Comfort Letter....................................... 23
(g) Bring-down Comfort Letter......................................... 24
(h) Maintenance of Rating............................................. 24
(i) Approval of Listing............................................... 24
(j) Additional Documents.............................................. 24
(k) Terminatio Agreement.............................................. 24
(l) No Objection...................................................... 25
ii
<PAGE>
Table of Contents (cont'd)
--------------------------
Page
----
(a) Indemnification of Underwriters................................... 25
(b) Indemnification of Offerors, Directors and Officers............... 26
(c) Actions against Parties; Notification............................. 26
(d) 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. Default by One or More of the Underwriters................... 30
SECTION 11. Notices...................................................... 31
SECTION 12. Parties...................................................... 31
SECTION 13. Governing Law and Time....................................... 31
SECTION 14. Effect of Headings........................................... 31
SCHEDULE A........................................................Schedule A-1
SCHEDULE B........................................................Schedule B-1
EXHIBIT A..................................................................A-1
EXHIBIT B..................................................................B-1
EXHIBIT C..................................................................C-1
iii
<PAGE>
MERRILL LYNCH & CO., INC.
(a Delaware corporation)
MERRILL LYNCH PREFERRED FUNDING , L.P.
(a Delaware limited partnership)
MERRILL LYNCH PREFERRED CAPITAL TRUST
(a Delaware business trust)
__________ Trust Preferred Securities
% Trust Originated Preferred SecuritiesSM ("TOPrSSM")
(Liquidation Amount of $25 per Preferred Security)
PURCHASE AGREEMENT
________ __, 1998
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
[syndicate members]
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Merrill Lynch Preferred Capital Trust (the "Trust"), a statutory
business trust organized under the Business Trust Act (the "Delaware Trust
Act") of the State of Delaware (Chapter 38, Title 12, of the Delaware Code,
12 Del. C. Sections 3801 et seq.), Merrill Lynch Preferred Funding , L.P.
(the "Partnership"), a limited partnership organized under the Revised
Uniform Limited Partnership Act (the "Delaware Partnership Act") of the State
of Delaware (Chapter 17, Title 6, of the Delaware
- -----------------------
- -SM- "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
<PAGE>
Code, 6 Del. C. Sections 17101 et seq.), and Merrill Lynch & Co., Inc., a
Delaware corporation (the "Company" and, together with the Trust and the
Partnership, the "Offerors"), confirm their agreement (the "Agreement") with
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") and each of the other Underwriters named in Schedule A
hereto (collectively, the "Underwriters", which term shall also include any
underwriter substituted as hereinafter provided in Section 10 hereof), for
whom Merrill Lynch, [syndicate members], are acting as representatives (in
such capacity, they shall hereinafter be referred to as the
"Representatives"), with respect to the issue and sale by the Trust and the
purchase by the Underwriters, acting severally and not jointly, of the
respective numbers of % Trust Originated Preferred Securities (liquidation
amount of $25 per preferred security) representing preferred undivided
beneficial ownership interests in the assets of the Trust ("TOPrS" or the
"Trust Preferred Securities") set forth in said Schedule A. The Company will
own all the common securities (the "Trust Common Securities" and, together
with the Trust Partnership Securities, the "Trust Securities"), representing
undivided beneficial ownership interests in the assets of the Trust. The
Trust Preferred Securities and the Trust Common Securities will be issued
pursuant to the amended and restated declaration of trust of the Trust, dated
as of ________ __, 1998 (the "Declaration"), among the Company, as Sponsor,
Theresa Lang and Stanley Schaefer, as regular trustees (the "Regular
Trustees"), The Chase Manhattan Bank, a national banking association, as
institutional trustee (the "Property Trustee") and Chase Manhattan Bank
Delaware, a Delaware corporation, as Delaware trustee (the "Delaware Trustee"
and, together with the Regular Trustees and the Property Trustee, the "Issuer
Trustees"), and the holders from time to time of undivided beneficial
interests in the assets of the Trust. The Trust Preferred Securities will be
guaranteed by the Company, to the extent set forth in the Prospectus with
respect to distributions and payments upon liquidation, redemption and
otherwise pursuant to the Trust Preferred Securities Guarantee Agreement (the
"Trust Guarantee"), to be dated as of ________ __, 1998, between the Company
and The Chase Manhattan Bank, as trustee (the "Guarantee Trustee").
The proceeds from the sale of the Trust Securities will be used by
the Trust to purchase partnership preferred securities ("Partnership
Preferred Securities"), representing all of the limited partner interests of
the Partnership. All of the general partner interests will be owned by the
Company, which initially shall be sole general partner (in such capacity, the
"General Partner"). The Partnership Preferred Securities will be issued
pursuant to an amended and restated agreement of limited partnership, to be
dated as of ________ __, 1998 (the "Partnership Agreement"), among the
Company, as general partner, and Merrill Lynch Group, Inc., as initial
limited partner, and
2
<PAGE>
such other persons who become limited partners thereto, and will be
guaranteed by the Company, to the extent set forth in the Prospectus, with
respect to distributions and payments upon liquidation and redemption
pursuant to the Partnership Guarantee Agreement (the "Partnership Guarantee"
and, together with the Trust Guarantee, the "Guarantees"). The Trust
Preferred Securities and the related Trust Guarantee, together with the
Partnership Preferred Securities and the related Partnership Guarantee, are
referred to herein as the "Offered Securities."
The Partnership will use the proceeds from the sale of the
Partnership Preferred Securities and the capital contribution of the General
Partner to acquire, among other things, (i) a subordinated debenture (the
"Company Debenture") of the Company and (ii) senior debentures of one or more
wholly-owned subsidiaries of the Company (the "Investment Subsidiaries", and
together with the Company, the "Investment Affiliates"). The debentures to
be issued by the Investment Subsidiaries (collectively, the "Subsidiary
Debentures" and, together with the Company Debenture, the "Debentures") are
to be fully and unconditionally guaranteed (the "Investment Guarantees") by
the Company (the "Debenture Guarantor"). Each of the Debentures shall be
issued pursuant to an indenture (each an "Indenture"), dated as of December
17, 1996, among the applicable Investment Affiliate and The Chase Manhattan
Bank, as trustee (the "Debt Trustee").
The Offerors understand that the Underwriters propose to make a
public offering of the Offered Securities as soon as the Representatives deem
advisable after this Agreement has been executed and delivered and the
Declaration, Trust Guarantee, Indenture relating to the Company Debenture and
the Investment Guarantees have been qualified under the Trust Indenture Act
of 1939, as amended (the "1939 Act").
The Offerors have filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (No. 333-42859)
covering the registration under the Securities Act of 1933, as amended (the
"1933 Act"), of (i) the Trust Preferred Securities, (ii) the Trust Guarantee,
(iii) the Partnership Preferred Securities, (iv) the Partnership Guarantee,
(v) the Company Debenture and (vi) the Investment Guarantees. Promptly after
execution and delivery of this Agreement, the Offerors will either (i)
prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933
Act (the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule
424(b)") of the 1933 Act Regulations or (ii) if the Company has elected to
rely upon Rule 434 ("Rule 434") of the 1933 Act Regulations, prepare and file
a term sheet (a "Term Sheet") in accordance with the provisions of Rule 434
and Rule 424(b). The information included in such prospectus or in such Term
Sheet, as
3
<PAGE>
the case may be, that was omitted from such registration statement at the
time it became effective but that is deemed to be part of such registration
statement at the time it became effective (a) pursuant to paragraph (b) of
Rule 430A is referred to as "Rule 430A Information" or (b) pursuant to
paragraph (d) of Rule 434 is referred to as "Rule 434 Information." Each
prospectus used before such registration statement became effective, and any
prospectus that omitted, as applicable, the Rule 430A Information or the Rule
434 Information, that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called a "preliminary
prospectus". Such registration statement, including the exhibits thereto,
schedules thereto, if any, and the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the 1933 Act, at the time it
became effective and including the Rule 430A Information and the Rule 434
Information, as applicable, is herein called the "Registration Statement".
Any registration statement filed pursuant to Rule 462(b) of the 1933 Act
Regulations is herein referred to as the "Rule 462(b) Registration
Statement", and after such filing the term "Registration Statement" shall
include the Rule 462(b) Registration Statement. The final prospectus,
including the documents incorporated by reference therein pursuant to Item 12
of Form S-3 under the 1933 Act, in the form first furnished to the
Underwriters for use in connection with the offering of the Securities is
herein called the "Prospectus". If Rule 434 is relied on, the term
"Prospectus" shall refer to the preliminary prospectus dated _______ __, 1998
together with the Term Sheet and all references in this Agreement to the date
of the Prospectus shall mean the date of the Term Sheet. For purposes of
this Agreement, all references to the Registration Statement, any preliminary
prospectus, the Prospectus or any Term Sheet or any amendment or supplement
to any of the foregoing shall be deemed to include the copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
system ("EDGAR").
All references in this Agreement to financial state-ments and
schedules and other information which are "contained", "included" or "stated"
in the Registration Statement, any preliminary prospectus or the Prospectus
(or other references of like import) shall be deemed to mean and include all
such financial statements and schedules and other information which are
incorporated by reference in the Registration Statement, any preliminary
prospectus or the Prospectus, as the case may be; and all references in this
Agreement to amendments or supplements to the Registration Statement, any
preliminary prospectus or the Prospectus shall be deemed to mean and include
the filing of any document under the Securities Exchange Act of 1934, as
amended (the "1934 Act") which is incorporated by reference in the
Registration Statement, such preliminary prospectus or the Prospectus, as the
case may be.
4
<PAGE>
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company represents
and warrants to each Underwriter as of the date hereof, and as of the Closing
Time referred to in Section 2(b) hereof, and agrees with each underwriter, as
follows:
(i) Compliance with Registration Requirements. The Offerors
meet the requirements for use of Form S-3 under the 1933 Act. Each of the
Registration Statement and any Rule 462(b) Registration Statement has become
effective under the 1933 Act and no stop order suspending the effectiveness of
the Registration Statement or any Rule 462(b) Registration Statement has been
issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are contemplated
by the Commission, and any request on the part of the Commission for additional
information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time, the Registration Statement, any Rule 462(b)
Registration Statement and any amendments and supplements thereto complied and
will comply in all material respects with the requirements of the 1933 Act and
the 1933 Act Regulations and the 1939 Act and the rules and regulations of the
Commission under the 1939 Act (the "1939 Act Regulations"), and did not and will
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading. At the date of the Prospectus and at the Closing Time, the
Prospectus and any amendments or supplements thereto did not and will not
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If Rule 434 is used,
the Offerors will comply with the requirements of Rule 434. The representations
and warranties in this subsection shall not apply to (A) statements in or
omissions from the Registration Statement or Prospectus made in reliance upon
and in conformity with information furnished to the Company in writing by any
Underwriter through Merrill Lynch expressly for use in the Registration
Statement or Prospectus or (B) that part of the Registration Statement that
constitutes the Statement of Eligibility on Form T-1 (the "Form T-1") under the
1939 Act of a trustee.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment thereto,
or filed pursuant to Rule 424 under the 1933 Act, complied when so filed in all
material respects with the 1933 Act Regulations and each preliminary prospectus
and the
5
<PAGE>
Prospectus delivered to the Underwriters for use in connection with this
offering was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(ii) Incorporated Documents. The documents incorporated or
deemed to be incorporated by reference in the Registration Statement and the
Prospectus, at the time they were or hereafter are filed with the Commission,
complied and will comply in all material respects with the requirements of the
1934 Act and the rules and regulations of the Commission thereunder (the "1934
Act Regulations"), and, when read together with the other information in the
Prospectus, at the time the Registration Statement became effective, at the time
the Prospectus was issued and at the Closing Time, did not and will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading.
(iii) Independent Accountants. The accountants who certified the
financial statements and any supporting Schedules thereto included in the
Registration Statement and the Prospectus are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.
(iv) Financial Statements. The financial statements of the
Company included in the Registration Statement and the Prospectus, together with
the related schedules and notes, present fairly the financial position of the
Company and its consolidated subsidiaries at the dates indicated and the
statements of consolidated earnings, consolidated stockholders' equity and
consolidated cash flows of the Company and its consolidated subsidiaries for the
periods specified; said financial statements have been prepared in conformity
with generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods involved. The supporting schedules, if any,
included in the Registration Statement present fairly in accordance with GAAP
the information of the Company required to be stated therein. The selected
financial data and the summary financial information included in the
Registration Statement and the Prospectus present fairly the information shown
therein and have been compiled on a basis consistent with that of the audited
financial statements incorporated by reference in the Registration Statement and
the Prospectus.
(v) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (A) there has been no material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising
6
<PAGE>
in the ordinary course of business (a "Material Adverse Effect"), (B) there have
been no transactions entered into by the Company or any of its subsidiaries,
other than those arising in the ordinary course of business, which are material
with respect to the Company and its subsidiaries considered as one enterprise
and (C) except for regular quarterly dividends on its outstanding common stock,
par value $1.331/3 per share, of the Company and regular dividends on its
outstanding preferred stock in amounts per share that are consistent with the
terms of such preferred stock, there has been no dividend or distribution of any
kind declared, paid or made by the Company on any class of its capital stock.
(vi) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware and has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this Agreement;
and the Company is duly qualified as a foreign corporation to transact business
and is in good standing in each other jurisdiction in which such qualification
is required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify or be in good
standing would not result in a Material Adverse Effect.
(vii) Good Standing of Subsidiaries. Each subsidiary of the
Company which is a "significant subsidiary" as defined in Rule 1-02 of
Regulation S-X under the 1933 Act (each a "Subsidiary" and, collectively, the
"Subsidiaries") has been duly organized and is validly existing as a corporation
in good standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure to so qualify or be in good standing would not result in a Material
Adverse Effect; except as otherwise disclosed in the Registration Statement, all
of the issued and outstanding capital stock of each Subsidiary has been duly
authorized and validly issued and is fully paid and non-assessable and is owned
by the Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; and none of the
outstanding shares of capital stock of any Subsidiary was issued in violation of
preemptive or similar rights of any securityholder of such Subsidiary. The only
subsidiaries of the Company are (A) the subsidiaries listed in Exhibit 21 to the
Annual Report on Form 10-K of the Company filed with the Commission under
Section 13 of the 1934 Act and (B) certain other
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subsidiaries which, considered in the aggregate as a single subsidiary, do not
constitute a "significant subsidiary" as defined in Rule 1-02 of Regulation S-X
under the 1933 Act.
(viii) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Offerors.
(ix) Authorization of the Debentures and Indentures. Each
Indenture has been duly authorized, duly executed and delivered by the
applicable Investment Affiliate and, when duly executed and delivered by the
Debt Trustee, will constitute a valid and binding agreement of such Investment
Affiliate enforceable against such Investment Affiliate in accordance with its
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law) (the "Bankruptcy Exceptions"). The Indenture
of the Company has been duly qualified under the 1939 Act. The Debentures have
been duly authorized for issuance and sale pursuant to this Agreement and, at
the Closing Time, will have been duly executed by the applicable Investment
Affiliate and, when authenticated, issued and delivered in the manner provided
for in the applicable Indenture and delivered against payment of the purchase
price therefor as provided in this Agreement, will constitute valid and legally
binding obligations of such Investment Affiliate, enforceable against such
Investment Affiliate in accordance with their terms, except as the enforcement
thereof may be limited by the Bankruptcy Exceptions.
(x) Authorization of Investment Guarantees. The Investment
Guarantees have been duly authorized and, at the Closing Time, will have been
duly executed and delivered by the Debenture Guarantor, and, when authenticated
in the manner provided in the Investment Guarantee, will constitute a valid and
binding obligation of the Debenture Guarantor, enforceable against the Debenture
Guarantor in accordance with its terms, except to the extent that enforcement
thereof may be limited by the Bankruptcy Exceptions. The Investment Guarantees
have been duly qualified under the 1939 Act.
(xi) Due Authorization of Additional Agreements. Each of the
Trust Guarantee, Partnership Guarantee and Investment Guarantees (the
"Transaction Documents") and the Debentures and Indentures has been duly
authorized, executed and delivered by the applicable Investment Affiliate, and
each agreement constitutes a valid and binding agreement of the applicable
Investment Affiliate, except as enforcement thereof may be limited by the
Bankruptcy Exceptions.
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(xii) Description of Additional Agreements. The Offered
Securities and the Declaration, the Partnership Agreement, the Trust Guarantee
and the Partnership Guarantee will conform in all material respects to the
respective statements relating thereto contained in the Prospectus and will be
in substantially the respective forms filed or incorporated by reference, as the
case may be, as exhibits to the Registration Statement.
(xiii) Absence of Defaults and Conflicts. Neither the Company nor
any of its subsidiaries is in violation of its charter or by-laws or in default
in the performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which it or any of them may
be bound, or to which any of the property or assets of the Company or any
subsidiary is subject (collectively, "Agreements and Instruments"), except for
such defaults that would not result in a Material Adverse Effect; and the
execution, delivery and performance of the Transaction Documents by the Company,
the Debentures and the Indentures by the Company or the applicable Investment
Subsidiary, as the case may be, and any other agreement or instrument entered
into or issued or to be entered into or issued by the Company in connection with
the transactions contemplated hereby or thereby or in the Registration Statement
and the Prospectus and the consummation of the transactions contemplated herein
and in the Registration Statement and the Prospectus (including the issuance and
sale of the Offered Securities and the use of the proceeds from the sale of the
Offered Securities as described in the Prospectus under the caption "Use of
Proceeds") and compliance by the Company with its obligations hereunder and
thereunder do not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, or a default
or Repayment Event (as defined below) under or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any subsidiary of the Company pursuant to, the Agreements and
Instruments (except for such conflicts, breaches, defaults, events, liens,
charges or encumbrances that would not result in a Material Adverse Effect), nor
will such action result in any violation of the provisions of the charter or
by-laws of the Company or any Subsidiary or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any Subsidiary or any of their assets, properties or operations. As
used herein, a "Repayment Event" means any event or condition which gives the
holder of any note, debenture or other evidence of indebtedness of the Company
or any of its subsidiaries (or any person acting on such holder's behalf) the
right to require the
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repurchase, redemption or repayment of all or a portion of such indebtedness by
the Company or any of its subsidiaries.
(xiv) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any of its subsidiaries exists or, to the knowledge
of the Company, is imminent, which may reasonably be expected to result in a
Material Adverse Effect.
(xv) Absence of Proceedings. There is not any action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or any of
its subsidiaries, which is required to be disclosed in the Registration
Statement and the Prospectus (other than as stated therein), or which might
reasonably be expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the assets,
properties, or operations thereof or the consummation of the transactions
contemplated in the Transaction Documents and the Debentures and the Indentures
or the performance by the Company and the applicable Investment Affiliate,
respectively, of their obligations hereunder and thereunder; and the aggregate
of all pending legal or governmental proceedings to which the Company or any of
its subsidiaries is a party or of which any of their respective assets,
property, or operations is the subject which are not described in the
Registration Statement and the Prospectus, including ordinary routine litigation
incidental to the business, could not reasonably be expected to result in a
Material Adverse Effect.
(xvi) Exhibits. There are no contracts or documents which are of
a character required to be described in the Registration Statement, the
Prospectus or the documents incorporated by reference therein or to be filed as
exhibits thereto which have not been so described and filed as required.
(xvii) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency is necessary or
required for the performance by the Company of its obligations under this
Agreement, in connection with the offering, issuance or sale of the Offered
Securities hereunder or the consummation of the transactions contemplated under
this Agreement, or the due execution, delivery or performance of any Indenture
except such as have been already obtained or as may be required under the 1933
Act or the 1933 Act Regulations or state securities laws.
(xviii) Possession of Intellectual Property. The Company and
its subsidiaries own or possess, or can acquire on
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reasonable terms, adequate trademarks, service marks, trade names and other
intellectual property (collectively, "Intellectual Property") necessary to carry
on the business now operated by them, except where the failure to own or possess
or the lack of ability to acquire such Intellectual Property, singly or in the
aggregate, would not result in a Material Adverse Effect, and neither the
Company nor any of its subsidiaries has received any notice or is otherwise
aware of any infringement of or conflict with asserted rights of others with
respect to any Intellectual Property or of any facts or circumstances which
would render any Intellectual Property invalid or inadequate to protect the
interest of the Company or any of its subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable decision, ruling or
finding) or invalidity or inadequacy, singly or in the aggregate, would result
in a Material Adverse Effect.
(xix) Possession of Licenses and Permits. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the appropriate
federal, state, local or foreign regulatory agencies or bodies necessary to
conduct the business now operated by them, except where the failure to so
possess such Governmental Licenses would not, singly or in the aggregate, have a
Material Adverse Effect; the Company and its subsidiaries are in compliance with
the terms and conditions of all such Governmental Licenses, except where the
failure so to comply would not, singly or in the aggregate, have a Material
Adverse Effect; all of the Governmental Licenses are valid and in full force and
effect, except where the invalidity of such Governmental Licenses or the failure
of such Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and neither the Company nor any of its subsidiaries has
received any notice of proceedings relating to the revocation or modification of
any such Governmental Licenses which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
(xx) Title to Property. The Company and its subsidiaries have
good and marketable title to all real property owned by the Company and its
subsidiaries and good title to all other properties owned by them, in each case,
free and clear of all mortgages, pledges, liens, security interests, claims,
restrictions or encumbrances of any kind, except such as (A) are described in
the Registration Statement and the Prospectus or (B) do not, singly or in the
aggregate, materially affect the value of such property, do not interfere with
the use made and proposed to be made of such property by the Company or any
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of its subsidiaries and do not, singly or in the aggregate have a Material
Adverse Effect; and all of the leases and subleases material to the business of
the Company and its subsidiaries, considered as one enterprise, and under which
the Company or any of its subsidiaries holds properties described in the
Prospectus, are in full force and effect, except where the failure of such
leases or subleases to be in full force and effect would not have a Material
Adverse Effect, and neither the Company nor any subsidiary has any notice of any
material claim of any sort that has been asserted by anyone adverse to the
rights of the Company or any subsidiary under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the Company or such
subsidiary to the continued possession of the leased or subleased premises under
any such lease or sublease.
(xxi) Rating of Securities. Subsequent to the execution and
delivery of this Agreement and prior to the Closing Time (i) no downgrading
shall have occurred in the rating accorded the Trust Preferred Securities or the
Company's senior long-term debt securities by any "nationally recognized
statistical rating organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Act and (ii) no such organization shall
have publicly announced that it has under surveillance or review, with possible
negative implications, its rating of the Trust Preferred Securities or any of
the Company's debt securities.
(xxii) Investment Company Act. The Company is not, and upon the
issuance and sale of the Trust Preferred Securities as herein contemplated and
the application of the net proceeds therefrom as described in the Prospectus
will not be, 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 (the "1940 Act").
(xxiii) Authorization of Trust Guarantee. The Trust
Guarantee has been duly authorized by the Company and, when validly executed
and delivered by the Company, and, assuming due authorization, execution and
delivery of the Trust Guarantee by the Guarantee Trustee, will constitute a
valid and binding obligation of the Company, enforceable against the Company
in accordance with its terms except to the extent that enforcement thereof
may be limited by the Bankruptcy Exceptions; the Trust Guarantee will conform
to all statements relating thereto contained in the Prospectus; and the Trust
Preferred Guarantee Agreement, at the Closing Time, will have been duly
qualified under the 1939 Act.
(xxiv) Authorization of Partnership Guarantee. The Partnership
Guarantee has been duly authorized by the Company and, when validly executed and
delivered by the Company will constitute a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms except to
the extent that enforcement thereof may be limited by the Bankruptcy Exceptions.
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(b) Officers' Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries and delivered to any Underwriter or to
counsel for the Underwriters in connection with the offering of the Underwritten
Securities shall be deemed a representation and warranty by the Company to each
Underwriter as to the matters covered thereby on the date of such certificate
and, unless subsequently amended or supplemented, at each Representation Date
subsequent thereto.
(c) Representations and Warranties by the Trust, Partnership and Company.
The Offerors, jointly and severally, represent and warrant to each Underwriter
as of the date hereof, and as of the Closing Time referred to in Section 2(b)
herein, as follows:
(i) Good Standing of Trust. The Trust has been duly created and
is validly existing in good standing as a business trust under the Delaware
Trust Act with the power and authority to own property and to conduct its
business as described in the Registration Statement and Prospectus and to enter
into and perform its obligations under this Agreement, the Trust Preferred
Securities, the Trust Common Securities and the Declaration; the Trust is duly
qualified to transact business as a foreign business trust and is in good
standing in any other jurisdiction in which such qualification is necessary,
except to the extent that the failure to so qualify or be in good standing would
not have a material adverse effect on the Trust; the Trust is not a party to or
otherwise bound by any agreement other than those described in the Prospectus;
and the Trust is and will be treated as a consolidated subsidiary of the Company
pursuant to generally accepted accounting principles.
(ii) Authorization of Declaration. The Declaration has been duly
authorized by the Company and, at the Closing Time, will have been duly executed
and delivered by the Company, as Sponsor, and the Trustees, and assuming due
authorization, execution and delivery of the Declaration by the Property
Trustee, the Declaration will, at the Closing Time, be a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions, and will conform to all statements relating thereto in
the Prospectus; and at the Closing Time, the Declaration will have been duly
qualified under the 1939 Act.
(iii) Authorization of Trust Common Securities. The Trust Common
Securities have been duly authorized by the Declaration and, when issued and
delivered by the Trust to the Company against payment therefor as described in
the Registration Statement and Prospectus, will be validly issued and (subject
to the terms of the Declaration) fully paid undivided beneficial interests in
the assets of the Trust and will conform to all
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statements relating thereto contained in the Prospectus; the issuance of the
Trust Common Securities is not subject to preemptive or other similar rights;
and at the Closing Time all of the issued and outstanding Trust Common
Securities of the Trust will be directly owned by the Company free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or equity.
(iv) Authorization of Trust Preferred Securities. The Trust
Preferred Securities have been duly authorized by the Declaration and, when
issued and delivered against payment of the consideration set forth in this
Agreement, will be validly issued and (subject to the terms of the Declaration)
fully paid and nonassessable undivided beneficial interests in the Trust, will
be entitled to the benefits of the Declaration and will conform to all
statements relating thereto contained in the Prospectus; the issuance of the
Trust Preferred Securities is not subject to preemptive or other similar rights;
and (subject to the terms of the Declaration) holders of Trust Preferred
Securities will be entitled to the same limitation of personal liability under
Delaware law as extended to stockholders of private corporations for profit.
(v) Regular Trustees. Each of the Regular Trustees of the Trust
is an employee of the Company; the Declaration has been duly executed and
delivered by the Regular Trustees and is a valid and binding obligation of each
Regular Trustee, enforceable against such Regular Trustee in accordance with its
terms except to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions.
(vi) Good Standing of the Partnership. The Partnership has been
duly formed and is validly existing in good standing as a limited partnership
under the Delaware Partnership Act with the power and authority to own property
and to conduct its business as described in the Registration Statement and
Prospectus and to enter into and perform its obligations under this Agreement,
the Partnership Preferred Securities and the Partnership Agreement; the
Partnership is duly qualified to transact business as a foreign limited
partnership and is in good standing in any other jurisdiction in which such
qualification is necessary, except to the extent that the failure to so qualify
or be in good standing would not have a material adverse effect on the
Partnership; the Partnership is not a party to or otherwise bound by any
agreement other than those described in the Prospectus; and the Partnership is
and will be treated as a consolidated subsidiary of the Company pursuant to
generally accepted accounting principles.
(vii) Authorization of Partnership Agreement. The Partnership
Agreement has been duly authorized by the Company as general partner and, on the
Closing Date, will have been duly
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executed and delivered by the Company, and will be a valid and legally binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions, and will conform to the description thereof in the
Prospectus.
(viii) Authorization of Partnership Preferred Securities. The
Partnership Preferred Securities have been duly authorized by the Partnership
Agreement and, when issued and delivered pursuant to the Partnership Agreement
against payment of the consideration set forth therein, will be duly issued and
fully paid and not subject to assessment for additional capital contributions,
will be entitled to the benefits of the Partnership Agreement and will conform
to the description thereof in the Prospectus; the issuance of the Partnership
Preferred Securities is not subject to preemptive or other similar rights;
assuming that the holders of Partnership Preferred Securities in their
capacities as such do not participate in the control of the business of the
Company, the holders of the Partnership Preferred Securities, in their
capacities as such, will have no liability in excess of their obligations to
make payments provided for in the Limited Partnership Agreement (subject to the
obligation of a holder of Partnership Preferred Securities to repay any funds
distributed to it).
(ix) General Partner Status. The Company is the sole general
partner of the Partnership.
(x) Investment Company Act. Neither the Trust nor the
Partnership is and, after giving effect to the offering and sale of the Trust
Preferred Securities and the application of the proceeds thereof as described in
the Prospectus, neither will be an "investment company" under the 1940 Act.
(xi) Absence of Conflicts. The Trust is not in violation of the
Declaration or its certificate of trust filed with the State of Delaware, dated
December 19, 1997 (the "Certificate of Trust"); the Partnership is not in
violation of the Partnership Agreement or the certificate of limited
partnership, dated December 19, 1997 (the "Certificate of Partnership"); and the
execution, delivery and performance of applicable Transaction Documents by the
Partnership and the Trust and the consummation of the transactions contemplated
herein and therein and compliance by the Partnership and the Trust with their
respective obligations hereunder and thereunder have been duly authorized by all
necessary action on the part of the Partnership and the Trust and do not and
will not result in any violation of the Declaration or Certificate of Trust or
the Partnership Agreement or the Certificate of Partnership and do not and will
not conflict with, or result in a breach of any of the terms or provisions of,
or constitute a default under, or
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result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Trust or the Partnership under any existing applicable
law, rule, regulation, judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, or any regulatory body or
administrative agency or other governmental body having jurisdiction over the
Trust or the Partnership of their respective properties.
(xii) Absence of Further Requirements. No authorization,
approval, consent or order of any court or governmental authority or agency is
necessary in connection with the issuance, offer and sale of the Trust
Securities and the Partnership Preferred Securities, the consummation of the
transactions contemplated by this Agreement by the Partnership or the Trust, or
the execution, delivery, and performance by the Partnership or the Trust of the
applicable Transaction Documents, except such as may be required under the 1933
Act or the 1933 Act Regulations, the 1934 Act or the 1934 Act Regulations or
state securities laws and the qualification of the Declaration and the Trust
Guarantee under the 1939 Act.
(xiii) Absence of Proceedings. Except as disclosed in the
Prospectus, there is no action, suit or proceeding before or by any government,
governmental instrumentality or court, domestic or foreign, now pending or, to
the knowledge of the Trust or the Partnership, threatened against or affecting
the Trust or the Partnership that is required to be disclosed in the Prospectus
or that would result in any material adverse change in the condition (financial
or otherwise), earnings or business affairs of the Trust or the Company and its
subsidiaries, taken as a whole, or that would materially and adversely affect
the properties or assets of the Trust or the Partnership, or that could
adversely affect the consummation of the transactions contemplated in this
Agreement.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Securities. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Trust
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Trust, at
the initial public offering price set forth in Schedule B, the number of Trust
Preferred Securities set forth in Schedule A opposite the name of such
Underwriter, plus any additional number of Trust Preferred Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Trust Preferred Securities
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shall be made at the offices of (i) Brown & Wood llp, or at such other place as
shall be agreed upon by the Representatives and the Company, at 9:00 A.M.
(Eastern time) on ________ __, 1998 (unless postponed in accordance with the
provisions of Section 10), or such other time not later than ten business days
after such date as shall be agreed upon by the Representatives and the Company
(such time and date of payment and delivery being herein called "Closing Time").
Payment shall be made to the Trust by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
such persons designated by the Representatives for the respective accounts of
the Underwriters of a certificate in global form for the Trust Preferred
Securities to be purchased by them. It is understood that each Underwriter has
authorized the Representatives, for its account, to accept delivery of, receipt
for, and make payment of the purchase price for, the Trust Preferred Securities
which it has agreed to purchase. Merrill Lynch, individually and not as
representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the Trust Preferred Securities to be purchased
by any Underwriter whose funds have not been received by the Closing Time, but
such payment shall not relieve such Underwriter from its obligations hereunder.
The purchase price per Trust Preferred Security to be paid by the
several Underwriters for the Trust Preferred Securities shall be an amount equal
to the initial public offering price as set forth in Schedule B. The initial
public offering price per Trust Preferred Security shall be a fixed price to be
determined by agreement between the Representatives and the Offerors. The
initial public offering price and the purchase price, when so determined, shall
be set forth in Schedule B.
As compensation to the Underwriters for their commitments hereunder
and in view of the fact that the proceeds of the sale of the Trust Preferred
Securities will ultimately be used to purchase the Debentures of the Company and
the Investment Subsidiaries, the Company hereby agrees to pay at Closing Time to
the Representatives, for the accounts of the several Underwriters, a commission
per Trust Preferred Security set forth on Schedule B.
At the Closing Time, the Company will pay, or cause to be paid, the
commission payable at such time to the Underwriters under Section 2 hereof by
wire transfer of immediately available funds to a bank account designated by
Merrill Lynch, Pierce, Fenner & Smith Incorporated for the account of the
Underwriters.
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(c) Denominations; Registration. Certificates for the Trust Preferred
Securities shall be in such denominations and registered in such names as the
Representatives may request in writing at least two full business days before
the Closing Time. The Trust Preferred Securities will be made available for
examination and packaging by the Representatives in The City of New York not
later than 9:00 A.M. (Eastern time) on one business day prior to the Closing
Time.
SECTION 3. Covenants of the Offerors. The Offerors covenant with each
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Offerors, subject to Section 3(b), will comply with the requirements of Rule
430A or Rule 434, as applicable, and will notify the Representatives
immediately, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement shall become effective, or any
supplement to the Prospectus or any amended Prospectus shall have been filed,
(ii) of the receipt of any comments from the Commission, (iii) of any request by
the Commission for any amendment to the Registration Statement or any amendment
or supplement to the Prospectus or for additional information, and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of the Offered
Securities for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes. The Offerors will
promptly effect the filings necessary pursuant to Rule 424(b) and will take such
steps they deem necessary to ascertain promptly whether the form of prospectus
transmitted for filing under Rule 424(b) was received for filing by the
Commission and, in the event that it was not, it will promptly file such
prospectus. The Company will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) Filing of Amendments. During the period when the Underwriters are
required to deliver a prospectus with respect to the Offered Securities, the
Offerors will give the Representatives notice of their intention to file or
prepare any amendment to the Registration Statement (including any filing under
Rule 462(b)), any Term Sheet or any amendment, supplement or revision to either
the prospectus included in the Registration Statement at the time it became
effective or to the Prospectus, whether pursuant to the 1933 Act, the 1934 Act
or otherwise, will furnish the Representatives with copies of any such documents
a reasonable amount of time prior to such proposed filing or use, as the case
may be, and will not file or use any such document to
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which the Representatives or counsel for the Underwriters shall reasonably
object.
(c) Delivery of Registration Statements. The Offerors have furnished or
will deliver to the Representatives and counsel for the Underwriters, without
charge, conformed copies of the Registration Statement as originally filed and
of each amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated or deemed to be incorporated by
reference therein) and conformed copies of all consents and certificates of
experts, and will also deliver to the Representatives, without charge, a
conformed copy of the Registration Statement as originally filed and of each
amendment thereto (without exhibits) for each of the Underwriters. The copies
of the Registration Statement and each amendment thereto furnished to the
Underwriters will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(d) Delivery of Prospectuses. The Offerors have delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably requested, and the Offerors hereby consent to the
use of such copies for purposes permitted by the 1933 Act. The Offerors will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such
number of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Offerors will comply
with the 1933 Act and the 1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations and the 1939 Act and the 1939 Act Regulations with respect to the
offer of the Offered Securities so as to permit the completion of the
distribution of the Trust Preferred Securities as contemplated in this Agreement
and in the Prospectus. If at any time when a prospectus is required by the 1933
Act to be delivered in connection with sales of the Trust Preferred Securities,
any event shall occur or condition shall exist as a result of which it is
necessary, in the opinion of counsel for the Underwriters and for the Company,
to amend the Registration Statement or amend or supplement the Prospectus in
order that the Prospectus will not include any untrue statements of a material
fact or omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing at the time it
is delivered to a purchaser, or if it shall be necessary, in the opinion of such
counsel, at any such time to
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amend the Registration Statement or amend or supplement the Prospectus in order
to comply with the requirements of the 1933 Act or the 1933 Act Regulations, the
Company will promptly prepare and file with the Commission, subject to Section
3(b), such amendment or supplement as may be necessary to correct such statement
or omission or to make the Registration Statement or the Prospectus comply with
such requirements, and the Company will furnish to the Underwriters such number
of copies of such amendment or supplement as the Underwriters may reasonably
request.
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Offered Securities for
offering and sale under the applicable securities laws of such states and other
jurisdictions as the Representatives may designate and to maintain such
qualifications in effect for a period of not less than one year from the later
of the effective date of the Registration Statement and any Rule 462(b)
Registration Statement; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Offered Securities have been so qualified, the Company
will file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not less
than one year from the effective date of the Registration Statement and any Rule
462(b) Registration Statement.
(g) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use or cause to be used the net
proceeds received by and from the sale of the Offered Securities in the manner
specified in the Prospectus under "Use of Proceeds".
(i) Listing. The Company will use its best efforts to effect the listing
of the Trust Preferred Securities on the New York Stock Exchange.
(j) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
20
<PAGE>
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of
this Agreement, the Declaration, the Partnership Agreement, and the
Indentures and such other documents as may be required in connection with the
offering, purchase, sale, issuance or delivery of the Securities, (iii) the
preparation, issuance and delivery of the certificates for the Trust
Preferred Securities to the Underwriters, (iv) the fees and disbursements of
the Company's counsel, accountants and other advisors, (v) the qualification
of the Offered Securities under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the reasonable
fees and disbursements of counsel for the Underwriters in connection
therewith and in connection with the preparation of the Blue Sky Survey and
any supplement thereto, (vi) the printing and delivery to the Underwriters of
copies of each preliminary prospectus, any Term Sheets and of the Prospectus
and any amendments or supplements thereto, (vii) the copying of the Agreement
Among Underwriters (viii) the preparation, printing and delivery to the
Underwriters of copies of the Blue Sky Survey and any supplement thereto,
(ix) the fees and expenses of the Property Trustee, the Regular Trustees, the
Delaware Trustee and the Trust Guarantee Trustee, including the fees and
disbursements of counsel for the Trustees in connection with the Indentures,
the Investment Guarantees and the Debentures, (x) any fees payable in
connection with the rating of the Trust Preferred Securities, and (xi) the
fees and expenses incurred in connection with the listing of the Offered
Securities on the New York Stock Exchange; provided, however that the
Underwriters shall reimburse the Company for certain expenses incurred in
connection with the transactions contemplated by this Agreement as may be
agreed upon in writing.
(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Offerors contained in Section 1 hereof
or in certificates of any officer of the Company, the Trust, the Partnership
or any subsidiary of the Company delivered pursuant to the provisions hereof,
to the performance by the Offerors of their covenants and
21
<PAGE>
other obligations hereunder, and to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission, and any
request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the
Underwriters. A prospectus containing the Rule 430A Information shall have
been filed with the Commission in accordance with Rule 424(b) (or a
post-effective amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430A) or, if
the Company has elected to rely upon Rule 434, a Term Sheet shall have been
filed with the Commission in accordance with Rule 424(b).
(b) Opinion of Counsel for Company. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of
Closing Time, of (i) Brown & Wood llp, counsel to the Company, the Trust and
the Partnership, in form and substance satisfactory to counsel for the
Underwriters, together with signed or reproduced copies of such letter for
each of the other Underwriters to the effect set forth in Exhibit A hereto
and (ii) Skadden, Arps, Slate, Meagher & Flom (Delaware), special Delaware
counsel to the Company, the Trust, and the Partnership, in form and substance
satisfactory to counsel for the Underwriters, together with signed or
reproduced copies of such letter for the Company and each of the Underwriters
to the effect set forth in Exhibit B hereto. Such counsel may also state
that, insofar as such opinion involves factual matters, they have relied, to
the extent they deem proper, upon certificates of officers of the Company and
its subsidiaries and certificates of public officials.
(c) Opinion of Counsel for Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of
Closing Time, of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the
Underwriters, together with signed or reproduced copies of such letter for
each of the other Underwriters in form and substance satisfactory to the
Underwriters. In giving such opinion such counsel may rely, as to all
matters governed by the laws of jurisdictions other than the law of the State
of New York and the federal law of the United States and the General
Corporation Law of the State of Delaware, upon the opinions of counsel
satisfactory to the Representatives. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the
22
<PAGE>
Company and its subsidiaries and certificates of public officials.
(d) Opinion of Counsel for the Property Trustee. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of
Closing Time, of Seward & Kissel, counsel for the Property Trustee in form
and substance satisfactory to counsel for the Underwriters, together with
signed or reproduced copies of such letters for each of the other
Underwriters to the effect set forth in Exhibit C hereto and to such further
effect as counsel to the Underwriters may reasonably request.
(e) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information
is given in the Prospectus except as stated therein, any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries taken as a
whole, whether or not arising in the ordinary course of business, and the
Representatives shall have received a certificate of the President or a Vice
President of the Company or 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 in all material
respects with the same force and effect as though expressly made at and as of
Closing Time, (iii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or prior
to Closing Time, and (iv) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose
have been instituted or are pending or are contemplated by the Commission.
(f) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from Deloitte & Touche
llp, a letter dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such letter for
each of the other Underwriters containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial information
contained in the Registration Statement and the Prospectus in a form
acceptable to the Representatives.
(g) Bring-down Comfort Letter. At Closing Time, the Representatives
shall have received from Deloitte & Touche llp a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (f) of this Section, except that the
specified date
23
<PAGE>
referred to shall be a date not more than three business days prior to
Closing Time.
(h) Maintenance of Rating. At Closing Time, the Trust Preferred
Securities shall be rated at least "aa3" by Moody's Investors Service Inc.
and "A" by Standard & Poor's Ratings Services, a division of the McGraw-Hill
Companies, Inc.; and since the date of this Agreement, there shall not have
occurred a downgrading in the rating assigned to the Trust Preferred
Securities or the Company's debt securities by any "nationally recognized
statistical rating agency," as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the 1933 Act, and no such organization shall
have publicly announced that it has under surveillance or review, its rating
of the Trust Preferred Securities or any of the Company's debt securities.
(i) Approval of Listing. At Closing Time, the Trust Preferred
Securities shall have been approved for listing on the New York Stock
Exchange, subject only to official notice of issuance.
(j) Additional Documents. At Closing Time, counsel for the Underwriters
shall have been furnished with such documents and opinions as they may
reasonably require for the purpose of enabling them to pass upon the issuance
and sale of the Securities as herein contemplated, or in order to evidence
the accuracy of any of the representations or warranties, or the fulfillment
of any of the conditions, herein contained; and all proceedings taken by the
Company in connection with the issuance and sale of the Securities as herein
contemplated shall be reasonably satisfactory in form and substance to the
Representatives and counsel for the Underwriters.
(k) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement may be terminated by the Representatives by notice to the
Company at any time at or prior to Closing Time, and such termination shall
be without liability of any party to any other party except as provided in
Section 4 and except that Sections 1, 6, 7 and 8 shall survive any such
termination and remain in full force and effect.
(l) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Offerors agree jointly and
severally to indemnify and hold harmless each Underwriter and each person, if
any, who controls any Underwriter
24
<PAGE>
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid
in settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section 6(d)
below) any such settlement is effected with the written consent of the
Company; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the fees and disbursements of
counsel chosen by Merrill Lynch), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Offerors by any Underwriter through Merrill Lynch expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
(b) Indemnification of Offerors, Directors and Officers. Each
Underwriter severally agrees to indemnify and hold harmless
25
<PAGE>
the Offerors, directors of the Company, the General Partner of the
Partnership, the Issuer Trustees of the Trust, each of the officers of the
Offerors who signed the Registration Statement, and each person, if any, who
controls any of the Offerors within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act against any and all loss, liability, claim,
damage and expense described in the indemnity contained in subsection (a) of
this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter through Merrill Lynch expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party
of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it
is not materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. In the case of parties indemnified pursuant to
Section 6(a) above, counsel to the indemnified parties shall be selected by
Merrill Lynch, and, in the case of parties indemnified pursuant to Section
6(b) above, counsel to the indemnified parties shall be selected by the
Company. An indemnifying party may participate at its own expense in the
defense of any such action; provided, however, that counsel to the
indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent
to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 6 or Section 7 hereof
(whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising
out
26
<PAGE>
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 reasonable fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a)(ii) effected without its written consent
if (i) such settlement is entered into more than 45 days after receipt by
such indemnifying party of the aforesaid request, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least 30
days prior to such settlement being entered into and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance with
such request prior to the date of such settlement.
SECTION 7. Contribution. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute
to the aggregate amount of such losses, liabilities, claims, damages and
expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Offeror on the one hand and the Underwriters on the other hand from the
offering of the Trust Preferred Securities pursuant to this Agreement or (ii)
if the allocation provided by clause (i) is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Offerors on the one hand and of the Underwriters on the other hand in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Offerors on the one hand and
the Underwriters on the other hand in connection with the offering of the
Trust Preferred Securities pursuant to this Agreement shall be deemed to be
in the same respective proportions as the total net proceeds from the
offering of the Trust Preferred Securities pursuant to this Agreement (before
deducting expenses but after deducting the total underwriting commission
received by the Underwriters) received by the Offerors and the total
underwriting commission received by the Underwriters, in each case as set
forth on the cover of the Prospectus, or, if Rule 434 is used, the
corresponding location on the Term Sheet, bear to the aggregate initial
public offering
27
<PAGE>
price of the Trust Preferred Securities as set forth on such cover.
The relative fault of the Offerors on the one hand and the
Underwriters on the other hand shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact
relates to information supplied by the Offerors or by the Underwriters and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Offerors and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 7.
The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter
shall be required to contribute any amount in excess of the amount by which
the total price at which the Trust Preferred Securities underwritten by it
and distributed to the public were offered to the public exceeds the amount
of any damages which such Underwriter has otherwise been required to pay by
reason of any such untrue or alleged untrue statement or omission or alleged
omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter,
and each director of the Company, the General Partner of the Partnership, the
Issuer Trustees of the Trust, each officer of the Offerors who signed the
Registration Statement, and each person, if any, who controls any of the
Offerors within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as the Company. The
Underwriters' respective
28
<PAGE>
obligations to contribute pursuant to this Section 7 are several in
proportion to the principal amount of Securities set forth opposite their
respective names in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or
in certificates of officers of the Offerors or any of its subsidiaries
submitted pursuant hereto, shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of any
Underwriter or controlling person, or by or on behalf of the Offerors, and
shall survive delivery of the Trust Preferred Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time
(i) if there has been, since the time of execution of this Agreement or since
the respective dates as of which information is given in the Prospectus any
material adverse change in the condition, financial or otherwise, or in the
earnings or business affairs or business prospects of the Company and its
subsidiaries taken as a whole, whether or not arising in the ordinary course
of business, or (ii) if there has occurred any material adverse change in the
financial markets in the United States or the international financial
markets, any outbreak of hostilities or escalation thereof or other calamity
or crisis or any change or development involving a prospective change in
national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the
Representatives, impracticable to market the Trust Preferred Securities or to
enforce contracts for the sale of the Trust Preferred Securities, or (iii) if
trading in any securities of the Company has been suspended or materially
limited by the Commission or the New York Stock Exchange or if trading
generally on the American Stock Exchange or the New York Stock Exchange or in
the Nasdaq National Market has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the National Association of Securities Dealers, Inc.
or any other governmental authority, or (iv) if a banking moratorium has been
declared by either Federal or New York State authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any
other party except as provided in Section 4 hereof, and provided further that
Sections 1, 6, 7 and 8 shall survive such termination and remain in full
force and effect.
29
<PAGE>
SECTION 10. Default by One or More of the Underwriters. If one or more of
the Underwriters shall fail at Closing Time to purchase the Trust Preferred
Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representatives shall have the right,
within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but
not less than all, of the Defaulted Securities in such amounts as may be
agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such
24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
aggregate number of the Securities to be purchased hereunder, each of
the non-defaulting Underwriters shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that
their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Underwriters; or
(b) if the number of Defaulted Securities exceeds 10% of the aggregate
number of the Securities to be purchased hereunder, this Agreement
shall terminate without liability on the part of any non-defaulting
Underwriter.
No action taken pursuant to this Section shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the Representatives or the Company
shall have the right to postpone Closing Time for a period not exceeding
seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements. As used
herein, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 10.
SECTION 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at North Tower, World
Financial Center, New York, New York 10281-1201, attention of Office of IBK
Counsel; and notice to the Offerors shall be directed to it at 100 Church
Street, 12th Floor, New York, New York 10080-6512, attention of the Secretary
with a copy to the Treasurer at World Financial Center, South Tower, 225
Liberty Street, New York, New York 10080-0736.
30
<PAGE>
SECTION 12. Parties. This Agreement shall inure to the benefit of and be
binding upon the Underwriters and the Offerors and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Offerors and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and
7 and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of the Underwriters and the
Offerors and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Trust
Preferred Securities from any Underwriter shall be deemed to be a successor
by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT
AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY
TIME.
SECTION 14. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
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<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 Underwriters and the Offerors in accordance with its terms.
Very truly yours,
MERRILL LYNCH & CO., INC.
By:____________________
Name:
Title:
MERRILL LYNCH PREFERRED
FUNDING , L.P.
By: MERRILL LYNCH & CO., INC.,
as General Partner
By:____________________
Name:
Title:
MERRILL LYNCH PREFERRED
CAPITAL TRUST
By:____________________
Name:
Title: Regular Trustee
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:__________________________________
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
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<PAGE>
SCHEDULE A
Number of
Trust Preferred
Name of Underwriter Securities
- ------------------- ---------------
Merrill Lynch, Pierce, Fenner & Smith Incorporated..............
[syndicate members]
Total...........................................................
Schedule A-1
<PAGE>
SCHEDULE B
1. The initial public offering price per security for the Trust Preferred
Securities, determined as provided in said Section 2, shall be $25.00.
2. The purchase price per security for the Trust Preferred Securities to
be paid by the several Underwriters shall be $25.00, being an amount equal to
the initial public offering price set forth above.
3. The compensation per Trust Preferred Security to be paid by the
Company to the several Underwriters in respect of their commitments hereunder
shall be $ ; provided, however, that the compensation per Trust Preferred
Security for sales of 10,000 or more Trust Preferred Securities to a single
purchaser shall be $ . Merrill Lynch on behalf of the Underwriters will
advise the Company by the close of business one business day prior to the
Closing Time of the number of sales of 10,000 or more Trust Preferred Securities
to a single purchaser.
Schedule A-2
<PAGE>
EXHIBIT A
FORM OF OPINION OF BROWN & WOOD LLP
COMPANY COUNSEL TO BE DELIVERED
PURSUANT TO SECTION 5(b)
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
2. The Company has corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Prospectus and to
enter into and perform its obligations under the Purchase Agreement.
3. The Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify or
be in good standing would not result in a Material Adverse Effect (as defined in
Section 1(a)(v) of the Purchase Agreement).
4. Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S") has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware, has corporate power and authority to
own, lease and operate its properties and to conduct its business as described
in the Prospectus and is duly qualified as a foreign corporation to transact
business and is in good standing in the State of New York; all of the issued and
outstanding capital stock of MLPF&S has been duly authorized and validly issued,
is fully paid and non-assessable and, to the best of our knowledge, is owned by
the Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none of the
outstanding shares of capital stock of MLPF&S was issued in violation of
preemptive or other similar rights of any securityholder of MLPF&S.
5. The Purchase Agreement has been duly authorized, executed and delivered
by the Company.
6. Each Indenture has been duly authorized, executed, and delivered by
the applicable Investment Affiliate and, in the case of the Subsidiary
Debentures, the Debenture Guarantor and, when duly authorized, executed and
delivered by the Debt Trustee, will constitute a valid and legally binding
obligation of such Investment Affiliate and, in the case of the Subsidiary
Debentures, the Debenture Guarantor, enforceable against such Investment
Affiliate and, in the case of the Subsidiary Debentures, the Debenture
Guarantor, in accordance with its terms, except as the enforcement thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether the
enforcement is considered in a proceeding in equity or at law). The Indenture
in respect of the Company Debentures has been duly qualified under the 1939 Act.
(i) The Debentures have been duly authorized, executed and delivered
by the applicable Investment Affiliate and, when duly authenticated by the Debt
Trustee and upon payment and delivery as described in the Purchase Agreement
will constitute valid and legally binding obligations of such Investment
Affiliate enforceable against such Investment Affiliate in accordance with their
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether the enforcement is
considered in a proceeding in equity or at law).
(ii) The Investment Guarantees in respect of each of the Subsidiary
Debentures have been duly authorized, executed and issued by the Debenture
Guarantor and, when duly authorized, executed and delivered by the Debt Trustee
and upon payment and delivery as described in the Purchase Agreement will
constitute valid and legally binding obligations of the Debenture Guarantor
enforceable against the Debenture Guarantor in accordance with their terms
except
A-1
<PAGE>
as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting creditors'
rights generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether the enforcement is considered in a
proceeding in equity or at law). The Investment Guarantee has been duly
qualified under the 1939 Act.
(iii) The Trust Preferred Securities Guarantee Agreement has been duly
authorized, executed and delivered by the Company and assuming due
authorization, execution and delivery by the Guarantee Trustee, will constitute
a valid and legally binding obligation of the Company, enforceable against the
Company in accordance with its terms except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether the
enforcement is considered in a proceeding in equity or at law). The Trust
Preferred Securities Guarantee Agreement has been duly qualified under the 1939
Act.
(iv) The Partnership Guarantee Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and legally
binding obligation of the Company, enforceable against the Company in accordance
with its terms except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether the enforcement is
considered in a proceeding in equity or at law).
(v) The Declaration has been duly authorized, executed and delivered
by the Company and has been duly qualified under the 1939 Act.
(vi) The Partnership Agreement has been duly authorized, executed and
delivered by the Company.
(vii) No consent, approval, authorization, order, registration or
qualification of or with any Federal or New York governmental agency or body or
any Delaware governmental agency or body acting pursuant to the Delaware General
Corporation Law or, to our knowledge, any Federal or New York court or any
Delaware court acting pursuant to the Delaware General Corporation Law is
required for the issue and sale by the Offerors of the Offered Securities, the
issuance by the Investment Affiliates of the Debentures, the issuance of the
Investment Guarantees, the Partnership Guarantee and the Trust Guarantee by the
Company and the compliance by the Offerors with all of the provisions of the
Purchase Agreement, except for (a) the registration under the 1933 Act and the
1934 Act of the Offered Securities and (b) such consents, approvals,
authorizations, registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and distribution of
the Trust Preferred Securities and the Trust Preferred Securities Guarantee by
the Underwriters.
(viii) The statements made in the Prospectus under the captions "Merrill
Lynch Preferred Capital Trust ", "Merrill Lynch Preferred Funding , L.P.",
"Description of Trust Preferred Securities", "Description of Trust Guarantee",
"Description of Partnership Preferred Securities", and "Description of the
Partnership Guarantee", insofar as such statements purport to constitute
summaries of the terms of the Offered Securities, constitute accurate summaries
of the terms of the Offered Securities.
(ix) We hereby confirm (a) our opinions set forth in the Prospectus
under the caption "Certain Federal Income Tax Considerations" and (b) that,
subject to the qualifications set forth therein, the discussion set forth in the
Prospectus under such caption is an accurate summary of the United States
federal income tax matters described therein.
(x) The Registration Statement has been declared effective under the
1933 Act. Any required filing of the Prospectus pursuant to Rule 424(b) has
been made in the manner and within the time period required by Rule 424(b); and
to the best of our knowledge, no stop order suspending the effectiveness of the
A-2
<PAGE>
Registration Statement has been issued under the 1933 Act and no proceedings
for that purpose have been initiated or are pending or threatened by the
Commission.
(xi) Neither the Trust nor the Partnership is required to be
registered as an "investment company" under the 1940 Act.
(xii) Each of the Company and the Investment Subsidiaries is not, and
after giving effect to the offering and sale of the Trust Preferred Securities
and the application of the net proceeds therefrom as described in the Prospectus
will not be, an "investment company" as such term is defined in the 1940 Act.
We have participated in conferences with officers and representatives of
the Company, representatives of the independent accountants of the Company and
the Underwriters at which the contents of the Registration Statement and
Prospectus and related matters were discussed and, although we are not passing
upon or assuming responsibility for the accuracy, completeness or fairness of
the statements contained or incorporated by reference in the Registration
Statement and Prospectus and have made no independent check or verification
thereof, on the basis of the foregoing, nothing has come to our attention that
would lead us to believe that the Registration Statement or any post-effective
amendment thereto (except for financial statements and schedules and other
financial data included or incorporated by reference therein or omitted
therefrom and the Form T-1s, as to which we make no statement), at the time the
Registration Statement or any post-effective amendment thereto (including the
filing of the Company's Annual Report on Form 10-K with the Commission) became
effective or at the date of the applicable Terms Agreement, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus or any amendment or supplement thereto (except for financial
statements and schedules and other financial data included or incorporated
therein or omitted therefrom, as to which we make no statement), at the time the
Prospectus was issued, at the time any such amended or supplemented prospectus
was issued or at the Closing Time, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
In rendering such opinion, such counsel may rely, as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. In
addition, such counsel may rely, as to all matters governed by the laws of
jurisdictions other than the law of the State of New York and the federal law of
the United States and the General Corporation Law of the State of Delaware, upon
the opinions of counsel satisfactory to the Representatives.
A-3
<PAGE>
EXHIBIT B
FORM OF OPINION OF [TO BE DECIDED] (Delaware)
SPECIAL DELAWARE COUNSEL TO THE COMPANY, THE TRUST,
AND THE PARTNERSHIP TO BE DELIVERED
PURSUANT TO SECTION 5(b).
(i) The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Trust Act with the power and
authority to own property and to conduct its business as described in the
Registration Statement and Prospectus and to enter into and perform its
obligations under each of the Purchase Agreement, the Trust Preferred
Securities, the Trust Common Securities and the Declaration; the Trust is duly
qualified to transact business as a foreign company and is in good standing in
any other jurisdiction in which such qualification and good standing is
necessary, except to the extent that the failure to so qualify or be in good
standing would not have a material adverse effect on the Trust; the Trust is not
a party to or otherwise bound by any agreement other than those described in
thee Prospectus.
(ii) The Trust Common Securities have been duly authorized by the
Declaration and, when issued and delivered by the Trust to the Company against
payment therefor as described in the Registration Statement and Prospectus, will
be validly issued and (subject to the terms of the Declaration) fully paid
undivided beneficial interests in the assets of the Trust and will conform to
all statements relating thereto contained in the Prospectus; the issuance of the
Trust Common Securities is not subject to preemptive or other similar rights.
(iii) The Trust Preferred Securities have been duly authorized by the
Declaration and, when issued and delivered against payment of the consideration
as set forth in the Purchase Agreement, will be validly issued and (subject to
the terms of the Declaration) fully paid and non-assessable undivided beneficial
interests in the Trust, will be entitled to the benefits of the Declaration and
will conform to all statements relating thereto contained in the Prospectus;
under the Declaration or Delaware law the Trust Preferred Securities are not
subject to preemptive or other similar rights; and holders of Trust Preferred
Securities will be entitled to the same limitation of personal liability under
Delaware law as extended to stockholders of private corporations for profit.
(iv) The Partnership has been duly created and is validly existing in
good standing as a limited partnership under the Delaware Partnership Act with
the power and authority to own property and to conduct its business as described
in the Registration Statement and Prospectus and to enter into and perform its
obligations under each of the Purchase Agreement, the Partnership Preferred
Securities and the Partnership Agreement; the Partnership is duly qualified to
transact business as a foreign company and is in good standing in any other
jurisdiction in which such qualification is necessary, except to the extent that
the failure to so qualify or be in good standing would not have a material
adverse effect on the Partnership; the Partnership is not a party to or
otherwise bound by any agreement other than those described in the Prospectus.
(v) The Partnership Preferred Securities have been duly authorized
and, when issued and delivered pursuant to the Partnership Agreement against
payment of the consideration set forth therein, will represent valid partnership
interests in the Partnership will be entitled to the benefits of the Partnership
Agreement and will conform to the description thereof in the Prospectus; the
issuance of the Partnership Preferred Securities is not subject to preemptive or
other similar rights; assuming that the holders of Partnership Preferred
Securities in their capacities as such do not participate in the control of the
business of the Partnership, the holders of the Partnership Preferred
Securities, in their capacities as such, will have no liability to third parties
in excess of their obligations to make payments provided for in the Limited
Partnership Agreement; to our knowledge, there are no provisions in the
Partnership Agreement which would permit the holders of Partnership Preferred
Securities in their capacities as such to participate in the control of the
business of the Partnership.
B-1
<PAGE>
(vi) Assuming the Declaration has been duly authorized by the Company,
the Declaration has been duly executed and delivered by the Company and the
Trustees, and assuming due authorization, execution and delivery of the
Declaration by the Institutional Trustee, the Declaration constitutes a valid
and binding obligation of the Company and the Regular Trustees, enforceable
against the Company and the Regular Trustees in accordance with its terms,
except to the extent that enforcement thereof may be limited by the Bankruptcy
Exceptions and conforms to all statements relating thereto in the Prospectus.
(vii) Assuming the Partnership Agreement has been duly authorized by
the Company, the Partnership Agreement has been duly executed and delivered by
the Company and constitutes a valid and legally binding obligation of the
Company, enforceable against the Company in accordance with its terms, except to
the extent that enforcement thereof may be limited by the Bankruptcy Exceptions
and conforms to the description thereof in the Prospectus.
(viii) The execution, delivery and performance of the Transaction
Documents by the Offerors and the consummation of the transactions contemplated
herein and therein and compliance by the Offerors with their respective
obligations do not and will not result in any violation of the Declaration or
Certificate of Trust or the Partnership Agreement or the Certificate of
Partnership and do not and will not conflict with, or result in a breach of any
of the terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Trust or the Partnership under (A) any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or instrument in each
case governed by Delaware law to which the Trust or the Partnership is a party
or by which they may be bound or to which any of their properties may be subject
(except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not have a material adverse effect on the condition
(financial or otherwise), earnings, business affairs or business prospects of
the Company subsidiaries taken as a whole or (B) any existing applicable law,
rule, regulation, judgment, order or decree of any Delaware government,
governmental instrumentality or court, domestic or foreign, or any Delaware
regulatory body or administrative agency or other governmental body having
jurisdiction over the Offerors of their respective properties.
(ix) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any Delaware court or Delaware
governmental authority or agency (other than as may be required under the
securities or blue sky laws of the state of Delaware, as to which we need
express no opinion) is necessary or required in connection with the due
authorization, execution and delivery of the Purchase Agreement or the due
execution, delivery or performance of the Transaction Documents by the Offerors
or for the offering, issuance, sale or delivery of the Offered Securities.
B-2
<PAGE>
EXHIBIT C
FORM OF OPINION OF SEWARD & KISSEL
COUNSEL FOR THE PROPERTY TRUSTEE TO BE
DELIVERED PURSUANT TO SECTION 5(d)
(i) The Chase Manhattan Bank is a national banking association with
trust powers, is duly organized, is validly existing and is in good standing
under the laws of the United States with all necessary power and authority to
execute, deliver and to carry out and perform its obligations under the terms of
the Declaration and each of the Trust Preferred Guarantees.
(ii) Chase Manhattan Bank Delaware is a Delaware banking corporation
with trust powers, is duly organized, is validly existing and is in good
standing under the laws of the State of Delaware with all necessary power and
authority to execute, deliver and to carry out and perform its obligations under
the terms of the Declaration.
(iii) The execution, delivery and performance by the Property Trustee
and the Delaware Trustee of the Declaration and the execution, delivery and
performance by the Guarantee Trustee of the Trust Preferred Guarantee have been
duly authorized by all necessary corporate action on the part of the
Institutional Trustee and the Delaware Trustee, in the case of the Declaration,
and the Guarantee Trustee, in the case of the Trust Preferred Guarantee. The
Declaration and the Trust Preferred Guarantee have been duly executed and
delivered by the Property Trustee and the Delaware Trustee, in the case of the
Declaration, and the Guarantee Trustee, in the case of the Trust Preferred
Guarantee, and constitute the legal, valid and binding obligations of the
Property Trustee and the Delaware Trustee, in the case of the Declaration, and
the Guarantee Trustee, in the case of the Trust Preferred Guarantee, enforceable
against the Property Trustee and the Delaware Trustee, in the case of the
Declaration, and the Guarantee Trustee, in the case of the Trust Preferred
Guarantee, in accordance with their terms, except as enforcement thereof may be
limited by the Bankruptcy Exceptions.
(iv) The execution, delivery and performance of the Declaration and
the Trust Preferred Guarantee by the Property Trustee and the Delaware Trustee,
in the case of the Declaration, and the Guarantee Trustee, in the case of the
Trust Preferred Guarantee, do not conflict with or constitute a breach of the
Articles of Organization or Bylaws of the Property Trustee or the Delaware
Trustee, in the case of the Declaration, or the Guarantee Trustee, in the case
of the Trust Preferred Guarantee.
(v) No consent, approval or authorization of, or registration with or
notice to, any Illinois, Delaware or federal banking authority is required for
the execution, delivery or performance by the Property Trustee or the Delaware
Trustee of the Declaration or by the Guarantee Trustee of the Trust Preferred
Guarantee.
C-1
<PAGE>
Exhibit 4.2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
MERRILL LYNCH PREFERRED CAPITAL TRUST
Dated as of ________ __, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.............................................. 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application......................... 12
SECTION 2.2 Lists of Holders of Trust Securities..................... 12
SECTION 2.3 Reports by the Property Trustee.......................... 13
SECTION 2.4 Periodic Reports to Property Trustee..................... 13
SECTION 2.5 Evidence of Compliance with Conditions Precedent......... 13
SECTION 2.6 Trust Enforcement Events; Waiver......................... 13
SECTION 2.7 Trust Enforcement Event; Notice.......................... 15
ARTICLE III
ORGANIZATION
SECTION 3.1 Name..................................................... 16
SECTION 3.2 Office................................................... 16
SECTION 3.3 Purpose.................................................. 16
SECTION 3.4 Authority................................................ 16
SECTION 3.5 Title to Property of the Trust........................... 17
SECTION 3.6 Powers and Duties of the Regular Trustees................ 17
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees..... 20
SECTION 3.8 Powers and Duties of the Property Trustee................ 22
SECTION 3.9 Certain Duties and Responsibilities of the Property
Trustee.................................................. 24
SECTION 3.10 Certain Rights of Property Trustee....................... 26
SECTION 3.11 Delaware Trustee......................................... 29
SECTION 3.12 Execution of Documents................................... 29
SECTION 3.13 Not Responsible for Recitals or Issuance of Trust
Securities............................................... 29
SECTION 3.14 Duration of Trust........................................ 29
SECTION 3.15 Mergers.................................................. 29
i
<PAGE>
Page
ARTICLE IV
SPONSOR
SECTION 4.1 Responsibilities of the Sponsor.......................... 32
SECTION 4.2 Indemnification and Expenses of the Trustee.............. 32
ARTICLE V
TRUST COMMON SECURITIES HOLDER
SECTION 5.1 Company's Purchase of Trust Common Securities............ 33
SECTION 5.2 Covenants of the Trust Common Securities Holder.......... 33
ARTICLE VI
TRUSTEES
SECTION 6.1 Number of Trustees....................................... 33
SECTION 6.2 Delaware Trustee......................................... 34
SECTION 6.3 Property Trustee; Eligibility............................ 34
SECTION 6.4 Qualifications of Regular Trustees and Delaware Trustee
Generally................................................ 35
SECTION 6.5 Regular Trustees......................................... 35
SECTION 6.6 Delaware Trustee......................................... 36
SECTION 6.7 Appointment, Removal and Resignation of Trustees......... 36
SECTION 6.8 Vacancies among Trustees................................. 38
SECTION 6.9 Effect of Vacancies...................................... 38
SECTION 6.10 Meetings................................................. 38
SECTION 6.11 Delegation of Power...................................... 39
Section 6.12 Merger, Conversion, Consolidation or Succession to
Business................................................. 39
ARTICLE VII
DISTRIBUTIONS
SECTION 7.1 Distributions............................................ 40
ARTICLE VIII
ISSUANCE OF TRUST SECURITIES
SECTION 8.1 Designation and General Provisions
Regarding Trust Securities............................... 41
SECTION 8.2 Redemption of Trust Securities........................... 43
SECTION 8.3 Redemption Procedures.................................... 45
ii
<PAGE>
Page
SECTION 8.4 Voting Rights of Trust Preferred Securities.............. 47
SECTION 8.5 Voting Rights of Trust Common Securities................. 50
SECTION 8.6 Paying Agent............................................. 52
SECTION 8.7 Listing.................................................. 53
SECTION 8.8 Acceptance of Guarantee and Agreements, Limited
Partnership Agreement.................................... 53
ARTICLE IX
TERMINATION AND LIQUIDATION OF THE TRUST
SECTION 9.1 Termination of Trust..................................... 53
SECTION 9.2 Liquidation Distribution Upon Termination and
Dissolution of the Trust................................. 54
ARTICLE X
TRANSFER OF INTERESTS
SECTION 10.1 Transfer of Trust Securities............................. 56
SECTION 10.2 Transfer of Certificates................................. 56
SECTION 10.3 Deemed Security Holders.................................. 56
SECTION 10.4 Book Entry Interests..................................... 57
SECTION 10.5 Notices to Clearing Agency............................... 58
SECTION 10.6 Appointment of Successor Clearing Agency................. 58
SECTION 10.7 Definitive Trust Preferred Security Certificates......... 58
SECTION 10.8 Mutilated, Destroyed, Lost or Stolen Certificates........ 59
ARTICLE XI
LIMITATION OF LIABILITY OF
HOLDERS OF TRUST SECURITIES, TRUSTEES OR OTHERS
SECTION 11.1 Liability................................................ 60
SECTION 11.2 Exculpation.............................................. 60
SECTION 11.3 Fiduciary Duty........................................... 61
SECTION 11.4 Indemnification.......................................... 62
SECTION 11.5 Outside Businesses....................................... 65
ARTICLE XII
ACCOUNTING
SECTION 12.1 Fiscal Year.............................................. 66
SECTION 12.2 Certain Accounting Matters............................... 66
iii
<PAGE>
Page
SECTION 12.3 Banking.................................................. 67
SECTION 12.4 Withholding.............................................. 67
ARTICLE XIII
AMENDMENTS AND MEETINGS
SECTION 13.1 Amendments............................................... 68
SECTION 13.2 Meetings of the Holders of Trust Securities; Action by
Written Consent....................................... 71
ARTICLE XIV
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 14.1 Representations and Warranties of Property Trustee....... 73
SECTION 14.2 Representations and Warranties of Delaware Trustee....... 74
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices.................................................. 75
SECTION 15.2 Governing Law............................................ 76
SECTION 15.3 Intention of the Parties................................. 76
SECTION 15.4 Headings................................................. 76
SECTION 15.5 Successors and Assigns................................... 76
SECTION 15.6 Partial Enforceability................................... 76
SECTION 15.7 Counterparts............................................. 77
EXHIBIT A-1 FORM OF PREFERRED SECURITY CERTIFICATE..................A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE.....................A2-1
EXHIBIT B PURCHASE AGREEMENT.......................................B-1
iv
<PAGE>
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- -----------
310(a) . . . . . . . . . . . . . . . . . . . . . . . . . 6.3(a)
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
313. . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(b)
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . Annex I
316(c) . . . . . . . . . . . . . . . . . . . . . . . . . 3.6(e)
_________________
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
v
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
MERRILL LYNCH PREFERRED CAPITAL TRUST
, 1998
AMENDED AND RESTATED DECLARATION OF TRUST (the "Declaration") dated and
effective as of , 1998, by the Trustees (as defined herein), by the
Sponsor (as defined herein) and by the Holders, from time to time, of undivided
beneficial interests in the Trust to be issued pursuant to this Declaration;
WHEREAS, certain of the Trustees and the Sponsor established MERRILL LYNCH
PREFERRED CAPITAL TRUST (the "Business Trust"), a trust under the Delaware
Business Trust Act (the "Trust Act"), pursuant to a Declaration of Trust dated
as of December 19, 1997 (the "Original Declaration") and a Certificate of Trust
filed with the Secretary of State of the State of Delaware on December 19, 1997,
for the sole purpose of issuing and selling certain securities representing
undivided beneficial interests in the assets of the Trust and investing the
proceeds thereof in the Partnership Preferred Securities;
WHEREAS, as of the date hereof, no interests in the Trust have been issued;
and
WHEREAS, all of the Trustees and the Sponsor, by this Declaration, amend and
restate each and every term and provision of the Original Declaration.
NOW, THEREFORE, it being the intention of the parties hereto to continue the
Trust as a business trust under the Business Trust Act and that this Declaration
constitute the governing instrument of such business trust, the Trustees declare
that all assets contributed to the Trust will be held in trust for the benefit
of the Holders, from time to time, of the securities representing undivided
beneficial ownership interests in the assets of the Trust issued hereunder,
subject to the provisions of this Declaration.
<PAGE>
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 DEFINITIONS.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Declaration unless otherwise defined in this Declaration or
unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa; and
(g) a term used in this Agreement and not otherwise defined herein shall
have the meaning ascribed to such term in the Partnership Agreement.
"Affiliate" has the same meaning as given to that term in Rule 405 under the
Securities Act of 1933, as amended, or any successor rule thereunder.
"Affiliate Investment Instruments" has the meaning set forth in Section 7.1
of the Limited Partnership Agreement.
"Authorized Officer" of a Person means any Person that is authorized to bind
such Person.
"Book Entry Interest" means a beneficial interest in a Global Certificate,
ownership and transfers of which shall be maintained and made through book
entries by a Clearing Agency as set forth in Section 10.4 of this Declaration.
2
<PAGE>
"Business Day" means any day other than a day on which banking institutions
in The City of New York are authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12
Del. C. Section 3801 et seq., as it may be amended from time to time, or any
successor legislation.
"Certificate" means a Trust Common Security Certificate or a Trust Preferred
Security Certificate.
"Change in 1940 Act Law" means, as a result of the occurrence on or after
the date of the issuance of the Trust Preferred Securities of a change in law or
regulation or a change in interpretation or application of law or regulation by
any legislative body, court, governmental agency or regulatory authority, the
Trust is or will be considered an "investment company" which is required to be
registered under the 1940 Act.
"Clearing Agency" means an organization registered as a "Clearing Agency"
pursuant to Section 17A of the Exchange Act that is acting as depositary for the
Trust Preferred Securities and in whose name or in the name of a nominee of that
organization shall be registered a Global Certificate and which shall undertake
to effect book entry transfers and pledges of beneficial interests in the Trust
Preferred Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Clearing Agency
effects book entry transfers and pledges of interest in securities deposited
with the Clearing Agency.
"Closing Date" means , 1998.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation.
"Commission" means the United States Securities and Exchange Commission.
"Common Security Holder of the Trust" means the Company in its capacity as
Holder of the Trust Common Security.
"Company" means Merrill Lynch & Co., Inc.
"Company Indemnified Person" means (a) any Regular Trustee; (b) any
Affiliate of any Regular Trustee; (c) any officers, directors, shareholders,
members, partners, employees,
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representatives or agents of any Regular Trustee; or (d) any officer,
director, shareholder, member, partner, employee, representative or agent of
the Trust or its Affiliates.
"Compounded Distributions" has the meaning set forth in Section 7.1(a) of
this Declaration.
"Corporate Trust Office" means the principal corporate trust office of the
Property Trustee in the Borough of Manhattan, the City of New York, which office
at the date hereof is called the Global Trust Services Office and is located at
450 West 33rd Street, 15th Floor, New York, New York 10001.
"Covered Person" means: (a) any officer, director, shareholder, partner,
member, representative, employee or agent of (i) the Trust or (ii) the Trust's
Affiliates; and (b) any Holder of Trust Securities.
"Definitive Trust Preferred Security Certificates" has the meaning set forth
in Section 10.4 of this Declaration.
"Delaware Trustee" has the meaning set forth in Section 6.2 of this
Declaration.
"Distribution" has the meaning set forth in Section 7.1(a) of this
Declaration.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in Section 11.4(b)
of this Declaration.
"Fiscal Period" has the meaning set forth in Section 1.1 of the Limited
Partnership Agreement.
"Fiscal Year" has the meaning set forth in Section 12.1 of this Declaration.
"General Partner" means Merrill Lynch & Co., Inc., in its capacity as the
general partner of the Partnership, its permitted successors, or any successor
general partner in the Partnership admitted as such pursuant to the Limited
Partnership Agreement.
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"Global Certificate" has the meaning set forth in Section 10.4 of this
Declaration.
"Holder" means a Person in whose name a Certificate representing a Trust
Security is registered, such Person being a beneficial owner within the meaning
of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a Fiduciary
Indemnified Person.
"Initial Debentures" has the meaning set forth in Section 7.1(b) of the
Limited Partnership Agreement.
"Investment Affiliate" means the Company or any corporation, partnership,
limited liability company or other entity (other than the Partnership or the
Trust) that (i) is controlled by the Company and (ii) is not an investment
company by reason of Section 3(a) or 3(b) of the 1940 Act or is otherwise an
eligible recipient of funds directly or indirectly from the Trust pursuant to an
order issued by the Securities and Exchange Commission.
"Investment Company" means an investment company as defined in the 1940 Act.
"Investment Guarantee" means any guarantee on a subordinated basis by the
Company with respect to (1) payment of interest, principal and other payment
terms of Affiliate Investment Instruments that are debt securities of an
Investment Affiliate and (2) the payment of dividends, distributions and other
payment terms of Affiliate Investment Instruments that are preferred or
preference stock of an Investment Affiliate when, as and if declared by such
Investment Affiliate.
"Legal Action" has the meaning set forth in Section 3.6(h) of this
Declaration.
"Limited Partnership Agreement" means the Amended and Restated Agreement of
Limited Partnership of Merrill Lynch Preferred Funding , L.P. dated as of
, 1998.
"List of Holders" has the meaning set forth in Section 2.2(a) of this
Declaration.
"Majority in liquidation amount of the Trust Securities" means, except as
provided in the terms of the Trust Preferred Securities or by the Trust
Indenture Act, Holder(s) of outstanding Trust Securities voting together as a
single class or, as the context may require, Holders of outstanding Trust
Preferred Securities or Holders of outstanding Trust Common
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Securities voting separately as a class, who are the record owners of more
than 50% of the aggregate liquidation amount of all outstanding Trust
Securities of the relevant class.
"Ministerial Action" means, a ministerial action (such as filing a form or
making an election or pursuing some other similar reasonable measure) which in
the sole judgment of the Company has or will cause no adverse effect on the
Trust, the Partnership, the Company or the holders of the Trust Securities and
will involve no material cost.
"Nasdaq" means the National Association of Securities Dealers Automated
Quotation System.
"1940 Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
"Officers' Certificate" means, with respect to any Person (who is not an
individual), a certificate signed by the Chairman of the Board, the President, a
Vice President or the Treasurer, and by an Assistant Treasurer, the Secretary or
an Assistant Secretary of such Person. Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for in this
Declaration shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Partnership" means Merrill Lynch Preferred Funding , L.P., a Delaware
limited partnership formed pursuant to the Limited Partnership Agreement.
"Partnership Enforcement Event" has the meaning set forth in Section
6.2(h)(i) of the Limited Partnership Agreement.
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"Partnership Guarantee" means the Partnership Guarantee Agreement dated as
of , 1998, by the Company in favor of the Partnership Preferred
Security Holders with respect to the Partnership Preferred Securities, as
amended or supplemented from time to time.
"Partnership Preferred Securities" has the meaning set forth in Section 1.1
of the Limited Partnership Agreement.
"Partnership Special Event" has the meaning set forth in Section 1.1 of the
Limited Partnership Agreement.
"Payment Amount" has the meaning set forth in Section 7.1(a) of this
Declaration.
"Paying Agent" has the meaning set forth in Section 3.8(g) of this
Declaration.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Preferred Security Beneficial Owner" means, with respect to a Book Entry
Interest, a Person who is the beneficial owner of such Book Entry Interest, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, or each case in accordance with the
rules of such Clearing Agency).
"Property Account" has the meaning set forth in Section 3.8(c) of this
Declaration.
"Property Trustee" means the Trustee meeting the eligibility requirements
set forth in Section 6.3 of this Declaration.
"Pro Rata" means, in reference to any distributions on or redemptions of
Trust Securities or the distribution of Partnership Preferred Securities or any
other payment with respect to Trust Securities in connection with a Trust
Special Event or liquidation of the Trust, pro rata to each Holder of Trust
Securities according to the aggregate liquidation amount of the Trust Securities
held by the relevant Holder in relation to the aggregate liquidation amount of
all Trust Securities outstanding.
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"Quorum" means a majority of the Regular Trustees or, if there are only two
Regular Trustees, both of them.
"Redemption Price" has the meaning set forth in Section 8.2(a) of this
Declaration.
"Regular Trustee" has the meaning set forth in Section 6.1 of this
Declaration.
"Related Party" means, with respect to the Sponsor, any direct or indirect
wholly owned subsidiary of the Sponsor or any Person that owns, directly or
indirectly, 100% of the outstanding voting securities of the Sponsor.
"Responsible Officer" means, with respect to the Trust Preferred Guarantee
Trustee, the chairman or vice-chairman of the board of directors, the chairman
or vice-chairman of the executive committee of the board of directors, the
president, any vice president (whether or not designated by a number or a word
or words added before or after the title "vice president"), the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any trust officer or assistant trust officer, or any other
officer of the Trust Preferred Guarantee Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Rule 3a-5" means Rule 3a-5 under the 1940 Act.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, or any successor legislation.
"Special Representative" has the meaning set forth in Section 6.2(h)(i) of
the Limited Partnership Agreement.
"Sponsor" means the Company or any successor entity in a merger,
consolidation or amalgamation, in its capacity as sponsor of the Trust.
"Successor Delaware Trustee" has the meaning set forth in Section 6.7(b) of
this Declaration.
"Successor Entity" has the meaning set forth in Section 3.15 of this
Declaration.
"Successor Property Trustee" has the meaning set forth in Section 6.7(b) of
this Declaration.
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"Successor Trust Securities" has the meaning set forth in Section 3.15 of
this Declaration.
"Super Majority" has the meaning set forth in Section 2.6(a)(ii) of this
Declaration.
"Tax Action" means (a) an amendment to, change in or announced proposed
change in the laws (or any regulations thereunder) of the United States or
any political subdivision or taxing authority thereof or therein, (b) a
judicial decision interpreting, applying or clarifying such laws or
regulations, (c) an administrative pronouncement or action that represents an
official position (including a clarification of an official position) of the
governmental authority or regulatory body making such administrative
pronouncement or taking such action, or (d) a threatened challenge asserted
in connection with an audit of the Company or any of its subsidiaries, the
Partnership, or the Trust, or a threatened challenge asserted in writing
against any other taxpayer that has raised capital through the issuance of
securities that are substantially similar to the Debentures, the Partnership
Preferred Securities, or the Trust Preferred Securities, which amendment or
change is adopted or which decision, pronouncement or proposed change is
announced or which action, clarification or challenge occurs on or after the
date of the prospectus related to the issuance of the Trust Preferred
Securities.
"10% in liquidation amount of the Trust Securities" means, except as
provided in the terms of the Trust Preferred Securities or by the Trust
Indenture Act, Holder(s) of outstanding Trust Securities voting together as a
single class or, as the context may require, Holders of outstanding Trust
Preferred Securities or Holders of outstanding Trust Common Securities voting
separately as a class, who are the record owners of 10% or more of the
aggregate liquidation amount of all outstanding Trust Securities of the
relevant class.
"Treasury Regulations" means the income tax regulations, including temporary
and proposed regulations, promulgated under the Code by the United States
Treasury Department, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trust Common Security" has the meaning set forth in Section 8.1 of this
Declaration.
"Trust Common Security Certificate" means a definitive certificate in fully
registered form representing a Common Security substantially in the form of
Exhibit A-2.
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"Trust Common Securities Guarantee" means the Trust Common Securities
Guarantee Agreement dated as of , 1998, entered into by the Company,
as Guarantor, for the benefit of the holders of the Trust Common Securities.
"Trust Dissolution Tax Opinion" means an opinion of nationally recognized
independent tax counsel experienced in such matters to the effect that there has
been a Trust Tax Event.
"Trust Enforcement Event" means the occurrence, at any time, of (i)
arrearages on distributions on the Trust Preferred Securities that shall exist
for six consecutive quarterly distribution periods, (ii) a default by the
Company in respect of any of its obligations under the Trust Guarantee or (iii)
a Partnership Enforcement Event (as defined in the Limited Partnership
Agreement).
"Trust Guarantees" means the Trust Common Securities Guarantee and The Trust
Preferred Securities Guarantee, collectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended from
time to time, or any successor legislation.
"Trust Investment Company Event" means that the Company shall have requested
and received and shall have delivered to the Regular Trustees an opinion of
nationally recognized independent legal counsel experienced in such matters to
the effect that as a result of a Change in 1940 Act Law, the Trust is or will be
considered an "investment company" which is required to be registered under the
1940 Act.
"Trust Liquidation" has the meaning set forth in Section 9.2(a) of this
Declaration.
"Trust Preferred Securities Guarantee" has the meaning set forth in
Section 1.1 of the Limited Partnership Agreement.
"Trust Liquidation Distribution" has the meaning set forth in Section 9.2(a)
of this Declaration.
"Trust Preferred Security" has the meaning set forth in Section 8.1(a) of
this Declaration.
"Trust Preferred Security Beneficial Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency
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Participant or as an indirect participant, in each case in accordance with
the rules of such Clearing Agency).
"Trust Preferred Security Certificate" means a certificate representing a
Preferred Security substantially in the form of Exhibit A-1.
"Trust Redemption Tax Opinion" means an opinion of nationally recognized
independent tax counsel experienced in such matters that there has been a Trust
Tax Event, and following such Trust Tax Event there is more than an
insubstantial risk that interest payable by one or more of the Investment
Affiliates with respect to the Debentures is not, or will not be, deductible by
such Investment Affiliate for United States federal income tax purposes even if
the Partnership Preferred Securities were distributed to the Holders of the
Trust Securities in liquidation of such Holders' interests in the Trust.
"Trust Securities" means the Trust Common Securities and the Trust Preferred
Securities.
"Trust Special Event" means a Trust Tax Event or a Trust Investment Company
Event.
"Trust Tax Event" means that there has been a Tax Action which relates to
any of the items described in (i) through (iii) below, and that there is more
than an insubstantial risk that (i) the Trust is, or will be subject to United
States federal income tax with respect to income accrued or received on the
Partnership Preferred Securities, (ii) the Trust is, or will be, subject to more
than a DE MINIMIS amount of other taxes, duties or other governmental charges or
(iii) interest payable by one or more of the Investment Affiliates with respect
to the Debentures is not, or will not be, deductible by such Investment
Affiliate for United States federal income tax purposes.
"Trustee" or "Trustees" means each Person who has signed this Declaration as
a trustee, so long as such Person shall continue in office in accordance with
the terms hereof, and all other Persons who may from time to time be duly
appointed, qualified and serving as Trustees in accordance with the provisions
hereof, and references herein to a Trustee or the Trustees shall refer to such
Person or Persons solely in their capacity as trustees hereunder.
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ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust Indenture
Act that are required to be part of this Declaration and shall, to the extent
applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a Trustee for
the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration shall
not affect the nature of the Trust Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Trust Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide the Property Trustee (i) within 14 days after each record date
for payment of Distributions, a list, in such form as the Property Trustee
may reasonably require, of the names and addresses of the Holders of the
Trust Securities ("List of Holders") as of such record date, provided, that
neither the Sponsor nor the Regular Trustees on behalf of the Trust shall be
obligated to provide such List of Holders at any time the List of Holders
does not differ from the most recent List of Holders given to the Property
Trustee by the Sponsor and the Regular Trustees on behalf of the Trust, and
(ii) at any other time, within 30 days of receipt by the Trust of a written
request for a List of Holders as of a date no more than 14 days before such
List of Holders is given to the Property Trustee. The Property Trustee shall
preserve, in as current a form as is reasonably practicable, all information
contained in Lists of Holders given to it or which it receives in the
capacity as Paying Agent (if acting in such capacity), provided, that the
Property Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under Sections
311(a), 311(b) and 312(b) of the Trust Indenture Act.
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SECTION 2.3 Reports by the Property Trustee.
Within 60 days after of each year commencing , , the
Property Trustee shall provide to the Holders of the Trust Preferred
Securities such reports as are required by Section 313 of the Trust Indenture
Act, if any, in the form and in the manner provided by Section 313 of the
Trust Indenture Act. The Property Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Property Trustee.
Each of the Sponsor and the Regular Trustees on behalf of the Trust shall
provide to the Property Trustee such documents, reports and information as
are required by Section 314 of the Trust Indenture Act (if any) and the
compliance certificate required by Section 314 of the Trust Indenture Act in
the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the Trust shall
provide to the Property Trustee such evidence of compliance with any
conditions precedent provided for in this Declaration that relate to any of
the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 Trust Enforcement Events; Waiver.
(a) The Holders of a Majority in liquidation amount of Trust Preferred
Securities may, by vote, on behalf of the Holders of all of the Trust
Preferred Securities, waive any past Trust Enforcement Event in respect of
the Trust Preferred Securities and its consequences, provided, that if the
underlying event of default or Partnership Enforcement Event:
(i) is not waivable under the Trust Preferred Securities Guarantee or
the Limited Partnership Agreement, the Trust Enforcement Event under this
Declaration shall also not be waivable; or
(ii) requires the consent or vote of the Holders of greater than a
Majority in liquidation amount of the Trust Preferred Securities to be
waived under the Trust Preferred
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Securities Guarantee or the Partnership Preferred Securities to be waived
under the Limited Partnership Agreement (a "Super Majority"),
the Trust Enforcement Event under this Declaration may only be waived by the
vote of the Holders of at least the relevant Super Majority in liquidation
amount of the Trust Preferred Securities.
The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and
the Trust Securities, as permitted by the Trust Indenture Act. Upon such
waiver, any such default shall cease to exist, and any Trust Enforcement
Event with respect to the Trust Preferred Securities arising therefrom shall
be deemed to have been cured, for every purpose of this Declaration, but no
such waiver shall extend to any subsequent or other default or Trust
Enforcement Event with respect to the Trust Preferred Securities or impair
any right consequent thereon. Any waiver by the Holders of the Trust
Preferred Securities of Trust Enforcement Events with respect to the Trust
Preferred Securities shall also be deemed to constitute a waiver by the
Holders of the Trust Common Securities of any such Trust Enforcement Event
with respect to the Trust Common Securities for all purposes of this
Declaration without any further act, vote, or consent of the Holders of the
Trust Common Securities.
(b) The Holders of a Majority in liquidation amount of the Trust Common
Securities may, by vote, on behalf of the Holders of all of the Trust Common
Securities, waive any past Trust Enforcement Event with respect to the Trust
Common Securities and its consequences, provided, that if the underlying
event of default or Partnership Enforcement Event:
(i) is not waivable under the Trust Common Securities Guarantee or the
Limited Partnership Agreement, except where the Holders of the Trust Common
Securities are deemed to have waived such Trust Enforcement Event under this
Declaration as provided below in this Section 2.6(b), the Trust Enforcement
Event under this Declaration shall also not be waivable; or
(ii) requires the consent or vote of the Holders of a Super Majority to
be waived, except where the Holders of the Trust Common Securities are
deemed to have waived such Trust Enforcement Event under the Declaration as
provided below in this Section 2.6(b), the Trust Enforcement Event under
this Declaration may only be waived by the vote of the
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Holders of at least the relevant Super Majority in liquidation amount
of the Trust Common Securities;
provided, further, each Holder of Trust Common Securities will be deemed to
have waived any such Trust Enforcement Event and all Trust Enforcement Events
with respect to the Trust Common Securities and its consequences if all Trust
Enforcement Events with respect to the Trust Preferred Securities have been
cured, waived or otherwise eliminated, and until such Trust Enforcement
Events have been so cured, waived or otherwise eliminated, the Property
Trustee will be deemed to be acting solely on behalf of the Holders of the
Trust Preferred Securities and only the Holders of the Trust Preferred
Securities will have the right to direct the Property Trustee in accordance
with the terms of the Trust Securities. The foregoing provisions of this
Section 2.6(b) shall be in lieu of Sections 316(a)(1)(A) and 316(a)(1)(B) of
the Trust Indenture Act and such Sections 316(a)(1)(A) and 316(a)(1)(B) of
the Trust Indenture Act are hereby expressly excluded from this Declaration
and the Trust Securities, as permitted by the Trust Indenture Act. Subject to
the foregoing provisions of this Section 2.6(b), upon such waiver, any such
default shall cease to exist and any Trust Enforcement Event with respect to
the Trust Common Securities arising therefrom shall be deemed to have been
cured for every purpose of this Declaration, but no such waiver shall extend
to any subsequent or other default or Trust Enforcement Event with respect to
the Trust Common Securities or impair any right consequent thereon.
(c) A waiver of Partnership Enforcement Events under the Limited
Partnership Agreement by the Property Trustee at the direction of the Holders
of the Trust Preferred Securities constitutes a waiver of the corresponding
Trust Enforcement Event under this Declaration. The foregoing provisions of
this Section 2.6(c) shall be in lieu of Section 316(a)(1)(B) of the Trust
Indenture Act and such Section 316(a)(1)(B) of the Trust Indenture Act is
hereby expressly excluded from this Declaration and the Trust Securities, as
permitted by the Trust Indenture Act.
SECTION 2.7 Trust Enforcement Event; Notice.
The Property Trustee shall, within 90 days after the occurrence of a
Trust Enforcement Event, transmit by mail, first class postage prepaid, to
the Holders of the Trust Securities, notices of all defaults with respect to
the Trust Securities actually known to a Responsible Officer of the Property
Trustee, unless such defaults have been cured before the giving of such
notice (the term "defaults" for the purposes of this Section 2.7 being hereby
defined to be defaults as defined in the Trust Guarantees or the Limited
Partnership Agreement, not including
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any periods of grace provided for therein and irrespective of the giving of
any notice provided therein); provided, that except for a default in the
payment of principal of (or premium, if any) or interest on any of the
Affiliate Investment Instruments or in the payment of any sinking fund
installment established for the Affiliate Investment Instruments, the
Property Trustee shall be fully protected in withholding such notice if and
so long as a Responsible Officer of the Property Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders of the Trust Securities.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "Merrill Lynch Preferred Capital Trust ," as such name
may be modified from time to time by the Regular Trustees following written
notice to the Holders of Trust Securities. The Trust's activities may be
conducted under the name of the Trust or any other name deemed advisable by
the Regular Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o Merrill Lynch &
Co., Inc., World Financial Center, North Tower, 250 Vesey Street, New York,
New York 10281. On ten Business Days written notice to the Holders of Trust
Securities, the Regular Trustees may designate another principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to issue the
Trust Securities, (b) investing the proceeds from such sale of the Trust
Securities to acquire the Partnership Preferred Securities, and (c) except as
otherwise limited herein, to engage in only those other activities necessary
or incidental thereto. The Trust shall not borrow money, issue debt or
reinvest proceeds derived from investments, mortgage or pledge any of its
assets, or otherwise undertake (or permit to be undertaken) any activity that
would cause the Trust not to be classified for United States federal income
tax purposes as a grantor trust.
SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Regular
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Trustees shall have exclusive and complete authority to carry out the
purposes of theTrust. An action taken by the Regular Trustees in accordance
with their powers shall constitute the act of and serve to bind the Trust and
an action taken by the Property Trustee on behalf of the Trust in accordance
with its powers shall constitute the act of and serve to bind the Trust. In
dealing with the Trustees acting on behalf of the Trust, no person shall be
required to inquire into the authority of the Trustees to bind the Trust.
Persons dealing with the Trust are entitled to rely conclusively on the power
and authority of the Trustees as set forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the Partnership
Preferred Securities and the Property Account or as otherwise provided in
this Declaration, legal title to all assets of the Trust shall be vested in
the Trust. The Holders shall not have legal title to any part of the assets
of the Trust, but shall have an undivided beneficial ownership interest in
the assets of the Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and authority
to cause the Trust to engage in the following activities:
(a) to issue and sell the Trust Preferred Securities and the Trust
Common Securities in accordance with this Declaration; provided, however,
that the Trust may issue no more than one series of Trust Preferred
Securities and no more than one series of Trust Common Securities, and,
provided, further, that there shall be no interests in the Trust other
than the Trust Securities, and the issuance of Trust Securities shall be
limited to a one-time, simultaneous issuance of both Trust Preferred
Securities and Trust Common Securities on the Closing Date;
(b) in connection with the issue and sale of the Trust Preferred
Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission the registration
statement on Form S-3 prepared by the Sponsor, including any
amendments thereto, pertaining to the Trust Preferred Securities;
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(ii) execute and file any documents prepared by the Sponsor, or
take any acts as determined by the Sponsor to be necessary in order
to qualify or register all or part of the Trust Preferred Securities
in any State in which the Sponsor has determined to qualify or
register such Trust Preferred Securities for sale;
(iii) execute and file an application, prepared by the Sponsor,
to the New York Stock Exchange, Inc. or any other national stock
exchange or the Nasdaq National Market System for listing upon
notice of issuance of any Trust Preferred Securities;
(iv) execute and file with the Commission a registration
statement, including any amendments thereto, prepared by the
Sponsor, relating to the registration of the Trust Preferred
Securities, the Partnership Preferred Securities, the Trust
Preferred Securities Guarantee and the Partnership Guarantee under
Section 12(b) of the Exchange Act; and
(v) execute and enter into an underwriting agreement providing
for the sale of the Trust Preferred Securities and perform the
duties and obligations of the Trust thereunder;
(c) to acquire the Partnership Preferred Securities with the proceeds
of the sale of the Trust Preferred Securities and the Trust Common
Securities; provided, however, that the Regular Trustees shall cause
legal title to the Partnership Preferred Securities to be held of record
in the name of the Property Trustee for the benefit of the Holders of the
Trust Preferred Securities and the Holders of Trust Common Securities;
(d) to give the Sponsor and the Property Trustee prompt written notice
of the occurrence of a Trust Special Event; provided, that the Regular
Trustees shall consult with the Sponsor and the Property Trustee before
taking or refraining from taking any Ministerial Action in relation to a
Trust Special Event;
(e) to establish a record date with respect to all actions to be taken
hereunder that require a record date be established, including and with
respect to, for the purposes of Section 316(c) of the Trust Indenture
Act, Distributions, voting rights, redemptions and exchanges, and to
issue relevant notices to the Holders of Trust Preferred Securities
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and Holders of Trust Common Securities as to such actions and applicable
record dates;
(f) to give prompt written notice to the Holders of the Trust
Securities of any notice received from the Partnership of the General
Partner's election not to make a current, quarterly distribution on the
Partnership Preferred Securities under the Limited Partnership Agreement;
(g) to take all actions and perform such duties as may be required
of the Regular Trustees pursuant to the terms of the Trust Securities;
(h) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action, or otherwise adjust claims or demands of or against the
Trust ("Legal Action"), unless pursuant to Section 3.8(f), the Property
Trustee has the exclusive power to bring such Legal Action;
(i) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors,
and consultants and pay reasonable compensation for such services;
(j) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(k) to give the certificate required by Section 314(a)(4) of the
Trust Indenture Act to the Property Trustee, which certificate may be
executed by any Regular Trustee;
(l) to incur expenses that are necessary or incidental to carry out
any of the purposes of the Trust;
(m) to act as, or appoint another Person to act as, registrar and
transfer agent for the Trust Securities;
(n) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing;
(o) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of
the State of Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the
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Holders of the Trust Preferred Securities or to enable the Trust to
effect the purposes for which the Trust was created;
(p) to take any action, or to take no action, not inconsistent with
this Declaration or with applicable law, that the Regular Trustees
determine in their discretion to be necessary or desirable in carrying
out the activities of the Trust as set out in this Section 3.6,
including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the 1940 Act; and
(ii) taking no action which would be reasonably likely to cause
the Trust to be classified as an association or a publicly traded
partnership taxable as a corporation for United States federal
income tax purposes;
provided, that such action does not adversely affect the interests of
Holders; and
(q) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to
the Trust to be duly prepared and filed by the Regular Trustees, on
behalf of the Trust.
The Regular Trustees must exercise the powers set forth in this Section
3.6 in a manner that is consistent with the purposes and functions of the
Trust set out in Section 3.3, and the Regular Trustees shall not take any
action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of the
powers or the authority of the Property Trustee set forth in Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this Section 3.6
shall be reimbursed by the Partnership pursuant to Section 9.1 of the Limited
Partnership Agreement.
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SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including the Property
Trustee) shall cause the Trust not to, engage in any activity other than as
required or authorized by this Declaration. In particular, the Trust shall
not and the Trustees (including the Property Trustee) shall cause the Trust
not to:
(i) invest any proceeds received by the Trust from holding the
Partnership Preferred Securities, but shall distribute all such proceeds to
Holders of Trust Securities pursuant to the terms of this Declaration and of
the Trust Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness or acquire any securities
other than the Partnership Preferred Securities;
(v) possess any power or otherwise act in such a way as to vary the Trust
assets or the terms of the Trust Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial ownership of,
or beneficial interest in, the Trust other than the Trust Securities;
(vii) other than as set forth herein, (A) cause the Special
Representative to direct the time, method and place of conducting any
proceeding for any remedy available to the Special Representative or
exercising any trust or power conferred upon the Special Representative with
respect to the Partnership Preferred Securities, the Affiliate Investment
Instruments, and the Investment Guarantees, (B) cause the Special
Representative to waive any past default that is waivable under the Limited
Partnership Agreement, the Affiliate Investment Instruments or the Investment
Guarantees, (C) cause the Special Representative to exercise any right to
rescind or annul any declaration that the principal of, or other amounts in
respect of, any Affiliate Investment Instrument is due and payable or (D)
consent to any amendment, modification or termination of the Limited
Partnership
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Agreement or the Partnership Preferred Securities where such consent shall be
required; and
(viii) other than in connection with the liquidation of the Trust
pursuant to a Trust Special Event or upon redemption of all the Trust
Securities, file a certificate of cancellation of the Trust.
SECTION 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Partnership Preferred Securities shall be
owned by and held of record in the name of the Property Trustee in trust for
the benefit of the Holders of the Trust Securities. The right, title and
interest of the Property Trustee to the Partnership Preferred Securities
shall vest automatically in each Person who may hereafter be appointed as
Property Trustee in accordance with Section 6.7. Such vesting and cessation
of title shall be effective whether or not conveyancing documents with regard
to the Partnership Preferred Securities have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and interest
in the Partnership Preferred Securities to the Regular Trustees or to the
Delaware Trustee (if the Property Trustee does not also act as Delaware
Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Property Account") in the name of and under the exclusive
control of the Property Trustee on behalf of the Holders of the Trust
Securities and, upon the receipt of payments of funds made in respect of
the Partnership Preferred Securities held by the Property Trustee, deposit
such funds into the Property Account and make payments to the Holders of
the Trust Preferred Securities and Holders of the Trust Common Securities
from the Property Account in accordance with Section 7.1. Funds in the
Property Account shall be held uninvested until disbursed in accordance
with this Declaration. The Property Account shall be an account that is
maintained with a banking institution (including the Property Trustee if it
qualifies hereunder) authorized to exercise corporate trust powers and
having a combined capital and surplus of at least $50,000,000 and subject
to supervision or examination by Federal or state authority;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the
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Trust Preferred Securities and the Trust Common Securities to the extent the
Partnership Preferred Securities are redeemed; and
(iii) upon written notice of distribution issued by the Regular Trustees
in accordance with the terms of the Trust Securities, engage in such
ministerial activities as shall be necessary or appropriate to effect the
distribution of the Partnership Preferred Securities to Holders of Trust
Securities upon the occurrence of a Trust Special Event.
(d) The Property Trustee shall take all actions and perform such duties
as may be specifically required of the Property Trustee pursuant to the terms
of the Trust Securities.
(e) The Property Trustee shall take any Legal Action which arises out of
or in connection with a Trust Enforcement Event of which a Responsible
Officer of the Property Trustee has actual knowledge or the Property
Trustee's duties and obligations under this Declaration or the Trust
Indenture Act.
(f) The Property Trustee shall have the legal power to exercise all of
the rights, powers and privileges of a Holder of Partnership Preferred
Securities and, if a Trust Enforcement Event occurs and is continuing, the
Property Trustee shall, for the benefit of Holders of the Trust Securities,
enforce its rights as Holder of the Partnership Preferred Securities subject
to the rights of the Holders pursuant to the terms of such Trust Securities.
(g) The Property Trustee may authorize one or more Persons (each, a
"Paying Agent") to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all Trust Securities and any
such Paying Agent shall comply with Section 317(b) of the Trust Indenture
Act. Any Paying Agent may be removed by the Property Trustee at any time and
a successor Paying Agent or additional Paying Agents may be appointed at any
time by the Property Trustee.
(h) The Property Trustee shall continue to serve as a Trustee until
either:
(i) the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders of Trust Securities pursuant to the
terms of the Trust Securities; or
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(ii) a Successor Property Trustee has been appointed and has accepted
that appointment in accordance with Section 6.7.
(i) Subject to this Section 3.8, the Property Trustee shall have none of
the duties, liabilities, powers or the authority of the Regular Trustees set
forth in Section 3.6.
The Property Trustee must exercise the powers set forth in this Section
3.8 in a manner that is consistent with the purposes and functions of the
Trust set out in Section 3.3, and the Property Trustee shall not take any
action that is inconsistent with the purposes and functions of the Trust set
out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee.
(a) The Property Trustee, before the occurrence of any Trust Enforcement
Event and after the curing or waiver of all Trust Enforcement Events that may
have occurred, shall undertake to perform only such duties as are
specifically set forth in this Declaration and no implied covenants shall be
read into this Declaration against the Property Trustee. In case a Trust
Enforcement Event has occurred (that has not been cured or waived pursuant to
Section 2.6) of which a Responsible Officer of the Property Trustee has
actual knowledge, the Property Trustee shall exercise such of the rights and
powers vested in it by this Declaration, and use the same degree of care and
skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of a Trust Enforcement Event and after the
curing or waiving of all such Trust Enforcement Events that may have
occurred:
(A) the duties and obligations of the Property Trustee shall be
determined solely by the express provisions of this Declaration and the
Property Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Declaration,
and no implied covenants or obligations shall be read into this
Declaration against the Property Trustee; and
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(B) in the absence of bad faith on the part of the Property Trustee,
the Property Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Property Trustee and
conforming to the requirements of this Declaration; but in the case of
any such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Property Trustee, the
Property Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer of the Property Trustee, unless
it shall be proved that the Property Trustee was negligent in ascertaining
the pertinent facts;
(iii) subject to the requirement of the Property Trustee receiving a tax
opinion as set forth in Section 8.4(d) or 8.5(c), as the case may be, the
Property Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of
the Holders of not less than a Majority in liquidation amount of the Trust
Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising
any trust or power conferred upon the Property Trustee under this
Declaration;
(iv) no provision of this Declaration shall require the Property Trustee
to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any
of its rights or powers, if it shall have reasonable grounds for believing
that the repayment of such funds or protection from such liability is not
reasonably assured to it under the terms of this Declaration or indemnity
reasonably satisfactory to the Property Trustee against such risk or
liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the custody, safe
keeping and physical preservation of the Partnership Preferred Securities
and the Property Account shall be to deal with such property in a similar
manner as the Property Trustee deals with similar property for its own
account, subject to the protections and limita-
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tions on liability afforded to the Property Trustee under this Declaration
and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability for or with
respect to the value, genuineness, existence or sufficiency of the
Partnership Preferred Securities or the payment of any taxes or assessments
levied thereon or in connection therewith;
(vii) money held by the Property Trustee need not be segregated from
other funds held by it except in relation to the Property Account
maintained by the Property Trustee pursuant to Section 3.8(c)(i) and except
to the extent otherwise required by law; and
(viii) the Property Trustee shall not be responsible for monitoring the
compliance by the Regular Trustees or the Sponsor with their respective
duties under this Declaration, nor shall the Property Trustee be liable for
any default or misconduct of the Regular Trustees or the Sponsor.
SECTION 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to
have been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Regular Trustees acting
on behalf of the Trust contemplated by this Declaration shall be
sufficiently evidenced by an Officers' Certificate;
(iii) whenever in the administration of this Declaration, the Property
Trustee shall deem it desirable that a matter be proved or established
before taking, suffering or omitting any action hereunder, the Property
Trustee (unless other evidence is herein specifically prescribed) may, in
the absence of bad faith on its part, request and conclusively rely upon an
Officers' Certificate which, upon receipt of such request, shall be
promptly delivered by the Sponsor or the Regular Trustees;
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(iv) the Property Trustee shall have no duty to see to any recording,
filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel or other experts and
the advice or opinion of such counsel and experts with respect to legal
matters or advice within the scope of such experts' area of expertise shall
be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in accordance
with such advice or opinion; such counsel may be counsel to the Sponsor or
any of its Affiliates, and may include any of its employees. The Property
Trustee shall have the right at any time to seek instructions concerning
the administration of this Declaration from any court of competent
jurisdiction;
(vi) the Property Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Declaration at the request or
direction of any Holder, unless (a) such Holder shall have provided to the
Property Trustee security and indemnity, reasonably satisfactory to the
Property Trustee, against the costs, expenses (including attorneys' fees
and expenses and the expenses of the Property Trustee's agents, nominees or
custodians) and liabilities that might be incurred by it in complying with
such request or direction, including such reasonable advances as may be
requested by the Property Trustee and (b) the Property Trustee has obtained
the legal opinions, if any, required by Section 8.4(d) or 8.5(c), as the
case may be, of this Agreement; provided, that, nothing contained in this
Section 3.10(a)(vi) shall be taken to relieve the Property Trustee, upon
the occurrence of a Trust Enforcement Event, of its obligation to exercise
the rights and powers vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Property Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see
fit;
(viii) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder
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either directly or by or through agents, custodians, nominees or attorneys
and the Property Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care
by it hereunder;
(ix) any action taken by the Property Trustee or its agents hereunder
shall bind the Trust and the Holders of the Trust Securities, and the
signature of the Property Trustee or its agents alone shall be sufficient
and effective to perform any such action and no third party shall be
required to inquire as to the authority of the Property Trustee to so act
or as to its compliance with any of the terms and provisions of this
Declaration, both of which shall be conclusively evidenced by the Property
Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the
Property Trustee (i) may request instructions from the Holders of the Trust
Securities which instructions may only be given by the Holders of the same
proportion in liquidation amount of the Trust Securities as would be
entitled to direct the Property Trustee under the terms of the Trust
Securities in respect of such remedy, right or action, (ii) may refrain
from enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be fully protected in
conclusively relying on or acting in or accordance with such instructions;
provided, however, that the Property Trustee shall not be required to take
any action unless it shall have obtained such legal opinions, if any,
required by Sections 8.4(d) or 8.5(c), as the case may be, of this
Agreement; and
(xi) except as otherwise expressly provided by this Declaration, the
Property Trustee shall not be under any obligation to take any action that
is discretionary under the provisions of this Declaration.
(b) No provision of this Declaration shall be deemed to impose any duty
or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it,
in any jurisdiction in which it shall be illegal, or in which the Property
Trustee shall be unqualified or incompetent in accordance with applicable
law, to perform any such act or acts, or to exercise any such right, power,
duty or obligation. No permissive power or authority
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available to the Property Trustee shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any provision of this Declaration other than Section 6.2,
the Delaware Trustee shall not be entitled to exercise any powers, nor shall
the Delaware Trustee have any of the duties and responsibilities of the
Regular Trustees or the Property Trustee described in this Declaration.
Except as set forth in Section 6.2, the Delaware Trustee shall be a Trustee
for the sole and limited purpose of fulfilling the requirements of Section
3807 of the Business Trust Act.
SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act, any Regular Trustee is
authorized to execute on behalf of the Trust any documents that the Regular
Trustees have the power and authority to cause the Trust to execute pursuant
to Section 3.6; provided, that the registration statement referred to in
Section 3.6(b)(i), including any amendments thereto, shall be signed by or on
behalf of a majority of the Regular Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Trust Securities.
The recitals contained in this Declaration and the Trust Securities shall
be taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as
to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of
this Declaration or the Trust Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of Article VIII
hereof, shall have perpetual existence.
SECTION 3.15 Mergers.
(a) The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, except as described in Section
3.15(b) and (c).
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(b) The Trust may, with the consent of the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees and without the consent
of the Holders of the Trust Securities, the Delaware Trustee or the Property
Trustee, consolidate, amalgamate, merge with or into, or be replaced by, or
convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to a trust organized as such under the laws of
any State of the United States; provided, that:
(i) if the Trust is not the survivor, such successor entity (the
"Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust under the
Trust Securities; or
(B) substitutes for the Trust Preferred Securities other securities
having substantially the same terms as the Trust Preferred Securities
(the "Successor Trust Securities") so long as the Successor Trust
Securities rank the same as the Trust Preferred Securities rank with
respect to Distributions, assets and payments upon liquidation,
redemption and otherwise;
(ii) the Company expressly acknowledges a trustee of the Successor Entity
that possesses the same powers and duties as the Property Trustee as the
Holder of the Partnership Preferred Securities;
(iii) the Successor Trust Securities are listed, or any Successor Trust
Securities will be listed upon notification of issuance, on any national
securities exchange or with another organization on which the Trust
Preferred Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not cause the Trust Preferred Securities (including
any Successor Trust Securities) to be downgraded by any nationally
recognized statistical rating organization;
(v) such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not adversely affect the rights, preferences and
privileges of the Holders of the Trust Preferred Securities (including any
Successor Trust Securities) in any material respect;
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(vi) such Successor Entity has a purpose identical to that of the Trust;
(vii) the Company guarantees the obligations of such Successor Entity
under the Successor Trust Securities at least to the extent provided by the
Trust Guarantees; and
(viii) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Sponsor has received an opinion of a
nationally recognized independent counsel to the Trust experienced in such
matters to the effect that:
(A) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease will not adversely affect the rights,
preferences and privileges of the Holders of the Trust Preferred
Securities (including any Successor Trust Securities) in any material
respect (other than with respect to any dilution of the Holders' interest
in the new entity);
(B) following such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, neither the Trust nor the Successor Entity
will be required to register as an Investment Company under the 1940 Act;
(C) following such merger, consolidation, amalgamation or
replacement, the Trust (or the Successor Entity) will not be classified
as an association or a publicly traded partnership taxable as a
corporation for United States federal income tax purposes; and
(D) following such merger, consolidation, amalgamation or
replacement, the Partnership will not be classified as an association or
a publicly traded partnership taxable as a corporation for United States
federal income tax purposes.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except with the
consent of Holders of 100% in liquidation amount of the Trust Preferred
Securities, consolidate, amalgamate, merge with or into, or be replaced by
any other entity or permit any other entity to consolidate, amalgamate, merge
with or into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or Successor Entity or the Partnership to
be classified as an association or a publicly traded partnership taxable as a
corporation for United States federal income tax purposes.
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ARTICLE IV
SPONSOR
SECTION 4.1 Responsibilities of the Sponsor.
In connection with the issue and sale of the Trust Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 in relation to the Trust Preferred
Securities, including any amendments thereto;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Trust Preferred
Securities and to do any and all such acts, other than actions which must
be taken by the Trust, and advise the Trust of actions it must take, and
prepare for execution and filing any documents to be executed and filed
by the Trust, as the Sponsor deems necessary or advisable in order to
comply with the applicable laws of any such States;
(c) to prepare for filing by the Trust an application to the New York
Stock Exchange or any other national stock exchange or the Nasdaq
National Market System for listing upon notice of issuance of any Trust
Preferred Securities, Partnership Preferred Securities, the Trust
Preferred Securities Guarantee and the Partnership Guarantee;
(d) to prepare for filing by the Trust with the Commission a
registration statement relating to the registration of the Trust
Preferred Securities, the Partnership Preferred Securities, the Trust
Preferred Securities Guarantee, and the Partnership Guarantee under
Section 12(b) of the Exchange Act, including any amendments thereto; and
(e) to negotiate the terms of an underwriting agreement and any
pricing agreement providing for the sale of the Trust Preferred
Securities.
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SECTION 4.2 Indemnification and Expenses of the Trustee
The Partnership agrees, and to the extent the Partnership fails to do
so, the Sponsor agrees to indemnify the Property Trustee and the Delaware
Trustee for, and to hold each of them harmless against, any loss, liability
or expense incurred without negligence or bad faith on the part of the
Property Trustee or the Delaware Trustee, as the case may be, arising out of
or in connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending either of them
against any claim or liability in connection with the exercise or performance
of any of their respective powers or duties hereunder; the provisions of this
Section 4.2 shall survive the resignation or removal of the Delaware Trustee
or the Property Trustee or the termination of this Declaration.
ARTICLE V
TRUST COMMON SECURITIES HOLDER
SECTION 5.1 Company's Purchase of Trust Common Securities.
On the Closing Date the Company will purchase all of the Trust Common
Securities issued by the Trust, for an amount at least equal to 3% of the
capital of the Trust, at the same time as the Trust Preferred Securities are
sold.
SECTION 5.2 Covenants of the Trust Common Securities Holder.
For so long as the Trust Preferred Securities remain outstanding, the
Company will covenant (i) to maintain directly 100 percent ownership of the
Trust Common Securities, (ii) to cause the Trust to remain a statutory
business trust and not to voluntarily dissolve, wind up, liquidate, or be
terminated, except as permitted by this Declaration, (iii) to use its
commercially reasonable efforts to ensure that the Trust will not be an
investment company for purposes of the 1940 Act, and (iv) to take no action
which would be reasonably likely to cause the Trust to be classified as an
association or a publicly traded partnership taxable as a corporation for
United States federal income tax purposes.
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ARTICLE VI
TRUSTEES
SECTION 6.1 Number of Trustees.
The number of Trustees initially shall be four (4), and:
(a) at any time before the issuance of any Trust Securities, the
Sponsor may, by written instrument, increase or decrease the number of
Trustees; and
(b) after the issuance of any Trust Securities, the number of
Trustees may be increased or decreased by vote of the Holders of a
Majority in liquidation amount of the Trust Common Securities voting as a
class at a meeting of the Holders of the Trust Common Securities;
provided, however, that the number of Trustees shall in no event be less
than three (3); provided, further, that (1) if required by the Business
Trust Act, one Trustee is the Delaware Trustee; (2) there shall be at
least one Trustee who is an employee or officer of, or is affiliated with
the Company (each, a "Regular Trustee"); and (3) one Trustee shall be the
Property Trustee for so long as this Declaration is required to qualify
as an indenture under the Trust Indenture Act, and such Property Trustee
may also serve as Delaware Trustee if it meets the applicable
requirements.
SECTION 6.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place
of business in the State of Delaware, and otherwise meets the
requirements of applicable law,
provided, that if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee may also be the Delaware Trustee (in which case
Section 3.11 shall have no application).
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SECTION 6.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee (the "Property Trustee")
which shall act as Property Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by Federal,
State, Territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to
the requirements of the supervising or examining authority referred to
above, then for the purposes of this Section 6.3(a)(ii), the combined
capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published.
(b) If at any time the Property Trustee shall cease to be eligible to
so act under Section 6.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 6.7(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act,
the Property Trustee and the Holder of the Trust Common Securities (as if it
were the obligor referred to in Section 310(b) of the Trust Indenture Act)
shall in all respects comply with the provisions of Section 310(b) of the
Trust Indenture Act.
(d) The Trust Guarantee shall be deemed to be specifically described
in this Declaration for purposes of clause (i) of the first provision
contained in Section 310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be:
THE CHASE MANHATTAN BANK
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SECTION 6.4 Qualifications of Regular Trustees and Delaware Trustee Generally.
Each Regular Trustee and the Delaware Trustee (unless the Property
Trustee also acts as Delaware Trustee) shall be either a natural person who
is at least 21 years of age or a legal entity that shall act through one or
more Authorized Officers.
SECTION 6.5 Regular Trustees.
The initial Regular Trustees shall be:
Theresa Lang
Stanley Schaefer
(a) Except as expressly set forth in this Declaration and except if a
meeting of the Regular Trustees is called with respect to any matter over
which the Regular Trustees have power to act, any power of the Regular
Trustees may be exercised by, or with the consent of, any one such Regular
Trustee.
(b) Unless otherwise determined by the Regular Trustees, and except
as otherwise required by the Business Trust Act or applicable law, any
Regular Trustee is authorized to execute on behalf of the Trust any documents
which the Regular Trustees have the power and authority to cause the Trust to
execute pursuant to Section 3.6, provided, that the registration statement
referred to in Section 3.6(b)(i), including any amendments thereto, shall be
signed by or on behalf of a majority of the Regular Trustees.
SECTION 6.6 Delaware Trustee.
The initial Delaware Trustee shall be:
Chase Manhattan Bank Delaware
SECTION 6.7 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 6.7(b), Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of any Trust Securities, by written instrument
executed by the Sponsor; and
(ii) after the issuance of any Trust Securities, by vote of the
Holders of a Majority in liquidation amount of
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the Trust Common Securities voting as a class at a meeting of the Holders
of the Trust Common Securities.
(b) (i) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 6.7(a) until a successor Trustee
possessing the qualifications to act as Property Trustee under Section 6.3 (a
"Successor Property Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Property Trustee
and delivered to the Regular Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed
in accordance with Section 6.7(a) until a successor Trustee possessing
the qualifications to act as Delaware Trustee under Sections 6.2 and 6.4
(a "Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware
Trustee and delivered to the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or
resignation. Any Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing signed by the Trustee and
delivered to the Sponsor and the Trust, which resignation shall take effect
upon such delivery or upon such later date as is specified therein; provided,
however, that:
(i) No such resignation of the Trustee that acts as the Property
Trustee shall be effective:
(A) until a Successor Property Trustee has been appointed and has
accepted such appointment by instrument executed by such Successor
Property Trustee and delivered to the Trust, the Sponsor and the
resigning Property Trustee; or
(B) until the assets of the Trust have been completely liquidated
and the proceeds thereof distributed to the Holders of the Trust
Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by
such Successor Delaware Trustee and delivered to the Trust, the Sponsor
and the resigning Delaware Trustee.
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(d) The Holders of the Trust Common Securities shall use their best
efforts to promptly appoint a Successor Delaware Trustee or Successor
Property Trustee, as the case may be, if the Property Trustee or the Delaware
Trustee delivers an instrument of resignation in accordance with this
Section 6.7.
(e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this
Section 6.7 within 60 days after delivery to the Sponsor and the Trust of an
instrument of resignation, the resigning Property Trustee or Delaware
Trustee, as applicable, may petition any court of competent jurisdiction for
appointment of a Successor Property Trustee or Successor Delaware Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may
deem proper and prescribe, appoint a Successor Property Trustee or Successor
Delaware Trustee, as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or successor
Delaware Trustee, as the case may be.
SECTION 6.8 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 6.1, or if the number of Trustees
is increased pursuant to Section 6.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 6.7.
SECTION 6.9 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee
shall not operate to annul the Trust. Whenever a vacancy in the number of
Regular Trustees shall occur, until such vacancy is filled by the appointment
of a Regular Trustee in accordance with Section 6.7, the Regular Trustees in
office, regardless of their number, shall have all the powers granted to the
Regular Trustees and shall discharge all the duties imposed upon the Regular
Trustees by this Declaration.
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SECTION 6.10 Meetings.
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular
Trustee. Regular meetings of the Regular Trustees may be held at a time and
place fixed by resolution of the Regular Trustees. Notice of any in-person
meetings of the Regular Trustees shall be hand delivered or otherwise
delivered in writing (including by facsimile, with a hard copy by overnight
courier) not less than 48 hours before such meeting. Notice of any telephonic
meetings of the Regular Trustees or any committee thereof shall be hand
delivered or otherwise delivered in writing (including by facsimile, with a
hard copy by overnight courier) not less than 24 hours before a meeting.
Notices shall contain a brief statement of the time, place and anticipated
purposes of the meeting. The presence (whether in person or by telephone) of
a Regular Trustee at a meeting shall constitute a waiver of notice of such
meeting except where a Regular Trustee attends a meeting for the express
purpose of objecting to the transaction of any activity on the ground that
the meeting has not been lawfully called or convened. Unless provided
otherwise in this Declaration, any action of the Regular Trustees may be
taken at a meeting by vote of a majority of the Regular Trustees present
(whether in person or by telephone) and eligible to vote with respect to such
matter; provided, that a Quorum is present, or without a meeting by the
unanimous written consent of the Regular Trustees. Notwithstanding the
foregoing, any and all actions of the Regular Trustees may be taken by the
unanimous written consent of all Regular Trustees.
SECTION 6.11 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his
or her power for the purpose of executing any documents contemplated in
Section 3.6, including any registration statement or amendment thereto filed
with the Commission, or making any other governmental filing; and
(b) the Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust
or the names of the Regular Trustees or otherwise as the Regular Trustees may
deem expedient, to the extent such delegation is not prohibited by applicable
law or contrary to the provisions of the Trust, as set forth herein.
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SECTION 6.12 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Property Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either
may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Property Trustee or the Delaware Trustee, as
the case may be, shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Property Trustee or the
Delaware Trustee, as the case may be, shall be the successor of the Property
Trustee or the Delaware Trustee, as the case may be, hereunder; provided,
that such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on
the part of any of the parties hereto.
ARTICLE VII
DISTRIBUTIONS
SECTION 7.1 Distributions.
(a) Holders of Trust Securities shall be entitled to receive
cumulative cash distributions at the rate per annum of % of the stated
liquidation amount of $25 per Trust Security, calculated on the basis of a
360-day year consisting of twelve 30-day months. For any period shorter than
a full 90-day quarter, distributions will be computed on the basis of the
actual number of days elapsed in such 90-day quarter. Distributions shall be
made on the Trust Preferred Securities and the Trust Common Securities on a
Pro Rata basis. Distributions on the Trust Securities shall, from the date of
original issue, accumulate and be cumulative and shall be payable quarterly
only to the extent that the Trust has funds available for the payment of such
Distributions in the Property Account. Distributions not paid on the
scheduled payment date will accumulate and compound quarterly at the rate of
% per annum ("Compounded Distributions"). "Distributions" shall mean ordinary
cumulative distributions in respect of each Fiscal Period together with any
Compounded Distributions. If and to the extent that the Partnership makes a
distribution on the Partnership Preferred Securities held by the Property
Trustee or the Company makes a payment under the Partnership Guarantee (the
amount of any such partnership distribution, including any compounded
partnership distributions, or guarantee payment being a "Payment Amount"),
the Trust shall and the Property Trustee is directed, to the extent funds are
available for that purpose, to make a Pro Rata Distribution of the Payment
Amount to Holders.
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(b) Distributions on the Trust Securities will be cumulative, will
accumulate from the date of initial issuance and will be payable quarterly in
arrears on each March 30, June 30, September 30 and December 30, commencing
, 1998, when, as and if available for payment, by the Property
Trustee, except as otherwise described below. If Distributions are not paid
when scheduled, the accumulated Distributions shall be paid to the Holders of
record of Trust Securities as they appear on the books and records of the
Trust on the record date as determined under Section 7.1(d) below.
(c) Amounts available to the Trust for distribution to the Holders of
the Trust Securities will be limited to payments received by the Trust from
the Partnership on the Partnership Preferred Securities or from the Company
on the Partnership Guarantees paid by the Company to the Trust. If the
Property Trustee, as the holder of the Partnership Preferred Securities for
the benefit of the Holders of the Trust Securities, receives notice of any
determination by the Partnership not to pay distributions on such Partnership
Preferred Securities, the Property Trustee shall give notice of such
determination to the Holders.
(d) Distributions on the Trust Securities will be payable to the
Holders thereof as they appear on the books and records of the Trust on the
relevant record dates, which relevant record dates, as long as the Trust
Preferred Securities remain in book-entry only form, will be one Business Day
prior to the relevant payment dates. Such distributions will be paid through
the Property Trustee who will hold amounts received in respect of the
Partnership Preferred Securities in the Property Account for the benefit of
the Holders of the Trust Securities. In the event that the Trust Preferred
Securities do not remain in book-entry only form, the relevant record dates
shall be the 15th day of the month of the relevant payment dates. In the
event that any date on which distributions are payable on the Trust
Securities is not a Business Day, payment of the distribution payable on such
date will be made on the next succeeding day which is a Business Day (without
any interest or other payment in respect of any such delay) except that, if
such Business Day is in the next succeeding calendar year, such payment shall
be made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date.
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ARTICLE VIII
ISSUANCE OF TRUST SECURITIES
SECTION 8.1 Designation and General Provisions Regarding Trust Securities.
(a) The Regular Trustees shall on behalf of the Trust issue one class of
preferred securities representing undivided beneficial ownership interests in
the assets of the Trust and one class of common securities representing
undivided beneficial ownership interests in the assets of the Trust as follows:
(i) Trust Preferred Securities. Trust Preferred Securities of the
Trust with an aggregate liquidation amount with respect to the assets
of the Trust of dollars ($ ) and a liquidation amount with
respect to the assets of the Trust of $25 per preferred security, are
hereby designated for the purpose of identification only as % Trust
Originated Preferred Securities-SM-(1) (the "Trust Preferred
Securities"). The Trust Preferred Security Certificates evidencing
the Trust Preferred Securities shall be substantially in the form of
Exhibit A-1 to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by ordinary usage,
custom or practice or to conform to the rules of any stock exchange
on which the Trust Preferred Securities are listed.
(ii) Trust Common Securities. Trust Common Securities of the Trust
with an aggregate liquidation amount with respect to the assets of the
Trust of dollars ($ ) and a liquidation amount with respect to the
assets of the Trust of $25 per common security, are hereby designated for
the purposes of identification only as % Trust Common Securities (the
"Trust Common Securities" and, together with the Trust Preferred
Securities, the "Trust Securities"). The Trust Common Security
Certificates evidencing the Trust Common Securities shall be
substantially in the form of Exhibit A-2 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required
by ordinary usage, custom or practice.
(b) Except as provided in Section 9.2(b) of this Declaration, the Trust
Preferred Securities rank PARI PASSU and
- ------------------------
(1) "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
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payment thereon shall be made Pro Rata with the Trust Common Securities. The
Trust shall issue no securities or other interests in the assets of the Trust
other than the Trust Preferred Securities and the Trust Common Securities.
(c) Any Regular Trustee shall sign the Trust Securities for the Trust by
manual or facsimile signature. In case any Regular Trustee of the Trust who
shall have signed any of the Trust Securities shall cease to be a Regular
Trustee before the Certificates so signed shall be delivered by the Trust, such
Certificates nevertheless may be delivered as though the person who signed such
Certificates had not ceased to be such Regular Trustee; and any Certificate may
be signed on behalf of the Trust by such persons who, at the actual date of
execution of such Trust Security, shall be the Regular Trustees of the Trust,
although at the date of the execution and delivery of the Declaration any such
person was not such a Regular Trustee. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution thereof, and
may have such letters, numbers or other marks of identification or designation
and such legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule or regulation of
any stock exchange on which Trust Securities may be listed, or to conform to
usage.
A Trust Security shall not be valid until authenticated by the manual
signature of an authorized officer of the Property Trustee. Such signature shall
be conclusive evidence that the Trust Security has been authenticated under this
Declaration.
Upon a written order of the Trust signed by one Regular Trustee, the
Property Trustee shall authenticate the Trust Securities for original issue. The
aggregate number of Trust Securities outstanding at any time shall not exceed
the number set forth in the Terms of the Trust Securities.
The Property Trustee may appoint an authenticating agent acceptable to
the Trust to authenticate Trust Securities. An authenticating agent may
authenticate Trust Preferred Securities whenever the Property Trustee may do
so. Each reference in this Declaration to authentication by the Property
Trustee includes authentication by such agent. An authenticating agent has
the same rights as the Property Trustee to deal with the Sponsor or an
Affiliate of the Sponsor.
(d) The consideration received by the Trust for the issuance of the Trust
Securities shall constitute a contribution
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to the capital of the Trust and shall not constitute a loan to the Trust.
(e) Upon issuance of the Trust Securities as provided in this Declaration,
the Trust Securities so issued shall be deemed to be validly issued, fully paid
and non-assessable, subject to Section 11.1 with respect to the Trust Common
Securities.
(f) Every Person, by virtue of having become a Holder or a Trust Preferred
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration.
SECTION 8.2 Redemption of Trust Securities.
(a) Upon a purchase of the Partnership Preferred Securities by the
Partnership upon redemption or otherwise, the proceeds from such purchase shall
be simultaneously applied Pro Rata to redeem Trust Securities having an
aggregate liquidation amount equal to the Partnership Preferred Securities so
purchased or redeemed at an amount equal to $25 per Partnership Preferred
Security plus an amount equal to accumulated and unpaid Distributions, including
any Compounded Distributions thereon through the date of the redemption or such
lesser amount as shall be received by the Trust in respect of the Partnership
Preferred Securities so purchased or redeemed (the "Redemption Price"). Holders
will be given not less than 30 nor more than 60 days notice of such redemption.
(b) If fewer than all the outstanding Trust Securities are to be so
redeemed, the Trust Common Securities and the Trust Preferred Securities will be
redeemed Pro Rata and the Trust Preferred Securities to be redeemed will be
redeemed as described in Section 8.3 below; provided, that fewer than all of the
outstanding Trust Preferred Securities may not be redeemed unless all
accumulated and unpaid Distributions have been paid on all Trust Preferred
Securities for all quarterly distribution periods terminating on or prior to the
date of redemption.
(c) If, at any time, a Trust Special Event shall occur and be continuing,
the Regular Trustees shall, unless the Partnership Preferred Securities are
redeemed in the limited circumstances described below, within 90 days following
the occurrence of such Trust Special Event elect to either (i) dissolve the
Trust upon not less than 30 nor more than 60 days notice with the result that,
after satisfaction of creditors, if any, of the Trust, Partnership Preferred
Securities would be
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distributed on a Pro Rata basis to the Holders of the Trust Preferred
Securities and the Trust Common Securities in liquidation of such Holders'
interests in the Trust; provided, however, that if at the time there is
available to the Trust the opportunity to eliminate, within such 90-day
period, the Trust Special Event by taking some ministerial action, such as
filing a form or making an election, or pursuing some other similar
reasonable measure which in the sole judgment of the Sponsor has or will
cause no adverse effect on the Trust, the Partnership, the Sponsor or the
Holders of the Trust Securities and will involve no material cost, the Trust
will pursue such measure in lieu of dissolution or (ii) cause the Trust
Preferred Securities to remain outstanding; provided, that in the case of
this clause (ii), the Sponsor shall pay any and all expenses incurred by or
payable by the Trust attributable to the Trust Special Event. Furthermore, if
in the case of the occurrence of a Trust Tax Event, the Regular Trustees have
received a Trust Redemption Tax Opinion, then the General Partner shall have
the right, within 90 days following the occurrence of such Trust Tax Event,
to elect to cause the Partnership to redeem the Partnership Preferred
Securities in whole (but not in part) for cash upon not less than 30 nor more
than 60 days notice and promptly following such redemption, the Trust
Securities will be redeemed by the Trust at the Redemption Price.
(d) If the Partnership Preferred Securities are distributed to the
Holders of the Trust Preferred Securities, the Sponsor will use its best
efforts to cause the Partnership Preferred Securities to be listed on the New
York Stock Exchange or on such other national securities exchange or similar
organization as the Trust Preferred Securities are then listed or quoted.
(e) On the date fixed for any distribution of Partnership Preferred
Securities, upon dissolution of the Trust, (i) the Trust Preferred Securities
and the Trust Common Securities will no longer be deemed to be outstanding and
(ii) certificates representing Trust Securities will be deemed to represent the
Partnership Preferred Securities having a liquidation preference equal to the
stated liquidation amount of such Trust Securities until such certificates are
presented to the Sponsor or its agent for transfer or reissuance.
SECTION 8.3 Redemption Procedures.
(a) Notice of any redemption of, or notice of distribution of Partnership
Preferred Securities in exchange for, the Trust Securities (a
"Redemption/Distribution Notice") will be given by the Trust by mail to each
Holder of Trust Securities to
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be redeemed or exchanged not fewer than 30 nor more than 60 days before the
date fixed for redemption or exchange thereof which, in the case of a
redemption, will be the date fixed for redemption of the Partnership
Preferred Securities. For purposes of the calculation of the date of
redemption or exchange and the dates on which notices are given pursuant to
this Section 8.3, a Redemption/ Distribution Notice shall be deemed to be
given on the day such notice is first mailed by first-class mail, postage
prepaid, to Holders of Trust Securities. Each Redemption/Distribution Notice
shall be addressed to the Holders of Trust Securities at the address of each
such Holder appearing in the books and records of the Trust. No defect in the
Redemption/ Distribution Notice or in the mailing of either thereof with
respect to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(b) In the event that fewer than all the outstanding Trust Securities are to
be redeemed, the Trust Securities to be redeemed shall be redeemed Pro Rata from
each Holder of Trust Securities, provided, that in respect of Preferred
Securities registered in the name of and held of record by DTC or its nominee
(or any successor Clearing Agency or its nominee) or any nominee, the
distribution of the proceeds of such redemption will be made to each Clearing
Agency Participant (or Person on whose behalf such nominee holds such
securities) in accordance with the procedures applied by such agency or nominee.
In the event that the Trust Securities do not remain in book-entry only form and
fewer than all of the outstanding Trust Securities are to be redeemed, the Trust
Securities shall be redeemed Pro Rata or pursuant to the rules of any securities
exchange on which the Trust Securities are listed.
(c) If Trust Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued if the
Partnership Preferred Securities are redeemed as set out in this Section 8.3
(which notice will be irrevocable), then (A) while the Trust Preferred
Securities are in book-entry only form, by 12:00 noon, New York City time, on
the redemption date, the Property Trustee will deposit irrevocably with the DTC
or its nominee (or successor Clearing Agency or its nominee) funds sufficient to
pay the applicable Redemption Price with respect to the Trust Preferred
Securities and will give the DTC irrevocable instructions and authority to pay
the Redemption Price to the Holders of the Trust Preferred Securities, and (B)
with respect to Trust Preferred Securities issued in definitive form and Trust
Common Securities, the Property Trustee will pay the relevant Redemption Price
to the Holders of such Trust Securities by check mailed to the address of the
relevant Holder appearing on the books and records of the Trust on
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the redemption date. If a Redemption/Distribution Notice shall have been
given and funds deposited as required, if applicable, then immediately prior
to the close of business on the date of such deposit, or on the redemption
date, as applicable, distributions will cease to accumulate on the Trust
Securities so called for redemption and all rights of Holders of such Trust
Securities will cease, except the right of the Holders of such Trust
Securities to receive the Redemption Price, but without interest on such
Redemption Price. If any date fixed for redemption of Trust Securities is not
a Business Day, then payment of the Redemption Price payable on such date
will be made on the next succeeding day that is a Business Day (and without
any interest or other payment in respect of the amount payable subject to
such delay) except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date fixed for
redemption. If payment of the Redemption Price in respect of any Trust
Securities is improperly withheld or refused and not paid either by the
Property Trustee or by the Sponsor as guarantor pursuant to the relevant
Trust Guarantee, Distributions on such Trust Securities will continue to
accumulate at the then applicable rate from the original redemption date to
the actual date of payment, in which case the actual payment date will be
considered the date fixed for redemption for purposes of calculating the
Redemption Price. For these purposes, the applicable Redemption Price shall
not include Distributions which are being paid to Holders who were Holders on
a relevant record date. Upon satisfaction of the foregoing conditions, then
immediately prior to the close of business on the date of such deposit or
payment, all rights of Holders of such Trust Preferred Securities so called
for redemption will cease, except the right of the Holders to have received
the Redemption Price, but without interest on such Redemption Price, and from
and after the date fixed for redemption, such Trust Preferred Securities will
not accumulate distributions or bear interest.
Neither the Regular Trustees nor the Trust shall be required to register or
cause to be registered the transfer of any Trust Securities that have been
called for redemption.
(d) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), the Company or its
subsidiaries may at any time and from time to time purchase outstanding Trust
Preferred Securities by tender, in the open market or by private agreement.
SECTION 8.4 Voting Rights of Trust Preferred Securities.
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(a) Except as provided under Sections 6.1(b) and this Article VIII and as
otherwise required by the Business Trust Act, the Trust Indenture Act and other
applicable law, the Holders of the Trust Preferred Securities will have no
voting rights.
(b) Subject to the requirement of the Property Trustee obtaining a tax
opinion in certain circumstances set forth in Section 8.4(d) below, the Holders
of a Majority in liquidation amount of the Trust Preferred Securities have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Property Trustee, or direct the exercise of any trust or
power conferred upon the Property Trustee under the Declaration, including the
right to direct the Property Trustee, as Holder of the Partnership Preferred
Securities, to (i) exercise the remedies available to it under the Limited
Partnership Agreement as a Holder of the Partnership Preferred Securities,
including the right to direct the Special Representative of the Partnership as
elected by the Holders of the Partnership Preferred Securities in accordance
with the Limited Partnership Agreement (A) to enforce the Partnership's
creditors rights and other rights with respect to the Affiliate Investment
Instruments and any Investment Guarantees, (B) to enforce the rights of the
Holders of the Partnership Preferred Securities under the Partnership Guarantee,
and (C) to enforce the rights of the Holders of the Partnership Preferred
Securities to receive distributions (if and to the extent such distributions
have been declared out of funds legally available therefor by the General
Partner in its sole discretion) on the Partnership Preferred Securities or (ii)
consent to any amendment, modification, or termination of the Limited
Partnership Agreement or the Partnership Preferred Securities where such consent
shall be required; provided, however, that where a consent or action under the
Limited Partnership Agreement would require the consent or act of the Holders of
more than a majority of the aggregate liquidation preference of Partnership
Preferred Securities affected thereby, only the Holders of the percentage of the
aggregate stated liquidation amount of the Trust Preferred Securities which is
at least equal to the percentage of aggregate liquidation preference required
under the Limited Partnership Agreement may direct the Property Trustee to give
such consent or take such action.
(c) If the Property Trustee fails to enforce its rights under the
Partnership Preferred Securities after a Holder of record of Trust Preferred
Securities has made a written request, such Holder of record of Trust Preferred
Securities may institute a legal proceeding directly against the General Partner
or the Special Representative, to enforce the Property Trustee's rights under
the Limited Partnership Agreement without first
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instituting any legal proceeding against the Property Trustee or any other
person or entity. Notwithstanding the foregoing, if a Trust Enforcement Event
has occurred and is continuing and such event is attributable to the failure of
an Investment Affiliate to make any required payment when due on any Affiliate
Investment Instrument, then a Holder of Trust Preferred Securities may directly
institute a proceeding against such Investment Affiliate for enforcement of
payment with respect to such Affiliate Investment Instrument.
(d) The Property Trustee shall notify all Holders of the Trust Preferred
Securities of any notice of any Partnership Enforcement Event received from the
General Partner with respect to the Partnership Preferred Securities and the
Affiliate Investment Instruments. Such notice shall state that such Partnership
Enforcement Event also constitutes a Trust Enforcement Event. Except with
respect to directing the time, method, and place of conducting a proceeding for
a remedy, the Property Trustee shall be under no obligation to take any of the
actions described in clause 8.4(b)(i) and (ii) above unless the Property Trustee
has obtained an opinion of independent tax counsel to the effect that as a
result of such action, the Trust will not fail to be classified as a grantor
trust for United States federal income tax purposes and that after such action
each Holder will continue to be treated as owning an undivided beneficial
ownership interest in the Partnership Preferred Securities.
(e) In the event the consent of the Property Trustee, as the Holder of the
Partnership Preferred Securities, is required under the Limited Partnership
Agreement with respect to any amendment, modification or termination of the
Limited Partnership Agreement, the Property Trustee shall request the direction
of the Holders of the Trust Securities with respect to such amendment,
modification or termination and shall vote with respect to such amendment,
modification or termination as directed by a Majority in liquidation amount of
the Trust Securities voting together as a single class; provided, however, that
where a consent under the Limited Partnership Agreement would require the
consent of the Holders of more than a majority of the aggregate liquidation
preference of the Partnership Preferred Securities, the Property Trustee may
only give such consent at the direction of the Holders of at least the same
proportion in aggregate stated liquidation amount of the Trust Securities. The
Property Trustee shall not take any such action in accordance with the
directions of the Holders of the Trust Securities unless the Property Trustee
has obtained an opinion of tax counsel to the effect that, as a result of such
action, the Trust will not be classified as other than a grantor trust for
United States federal income tax purposes.
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(f) A waiver of a Partnership Enforcement Event with respect to the
Partnership Preferred Securities will constitute a waiver of the corresponding
Trust Enforcement Event.
(g) Any required approval or direction of Holders of Trust Preferred
Securities may be given at a separate meeting of Holders of Trust Preferred
Securities convened for such purpose, at a meeting of all of the Holders of
Trust Securities or pursuant to written consent. The Regular Trustees will cause
a notice of any meeting at which Holders of Trust Preferred Securities are
entitled to vote, or of any matter upon which action by written consent of such
Holders is to be taken, to be mailed to each Holder of record of Trust Preferred
Securities. Each such notice will include a statement setting forth the
following information: (i) the date of such meeting or the date by which such
action is to be taken; (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to vote or of such
matter upon which written consent is sought; and (iii) instructions for the
delivery of proxies or consents.
(h) No vote or consent of the Holders of Trust Preferred Securities will be
required for the Trust to redeem and cancel Trust Preferred Securities or
distribute Partnership Preferred Securities in accordance with the Declaration.
(i) Notwithstanding that Holders of Trust Preferred Securities are
entitled to vote or consent under any of the circumstances described above,
any of the Trust Securities that are beneficially owned at such time by the
Company or any entity directly or indirectly controlled by, or under direct
or indirect common control with, the Company, shall not be entitled to vote
or consent and shall, for purposes of such vote or consent, be treated as if
such Trust Securities were not outstanding, except for Trust Preferred
Securities purchased or acquired by the Company or its affiliates in
connection with transactions effected by or for the account of customers of
the Company or any of its subsidiaries or in connection with the distribution
or trading of such Trust Securities; provided, however, that persons (other
than affiliates of the Company) to whom the Company or any of its
subsidiaries have pledged Trust Preferred Securities may vote or consent with
respect to such pledged Trust Preferred Securities pursuant to the terms of
such pledge.
(j) Holders of the Trust Preferred Securities will have no rights to appoint
or remove the Regular Trustees, who may be appointed, removed or replaced solely
by the Company, as the Holder of all of the Trust Common Securities.
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SECTION 8.5 Voting Rights of Trust Common Securities.
(a) Except as provided under this Section 8.5 or as otherwise required by
the Business Trust Act, the Trust Indenture Act or other applicable law or
provided by the Declaration, the Holders of the Trust Common Securities will
have no voting rights.
(b) The Holders of the Trust Common Securities are entitled, in accordance
with Article V of the Declaration, to vote to appoint, remove or replace any
Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after all Trust
Enforcement Events with respect to the Trust Preferred Securities have been
cured, waived, or otherwise eliminated and subject to the requirement of the
Property Trustee obtaining a tax opinion in certain circumstances set forth in
this paragraph (c), the Holders of a Majority in liquidation amount of the Trust
Common Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee, or
direct the exercise of any trust or power conferred upon the Property Trustee
under the Declaration, including the right to direct the Property Trustee, as
Holder of the Partnership Preferred Securities, to (i) exercise the remedies
available to it under the Limited Partnership Agreement as a Holder of the
Partnership Preferred Securities, including the right to direct the Special
Representative of the Partnership as elected by the Holders of the Partnership
Preferred Securities in accordance with the Limited Partnership Agreement (A) to
enforce the Partnership's creditors rights and other rights with respect to the
Affiliate Investment Instruments and any Investment Guarantees, (B) to enforce
the rights of the Holders of the Partnership Preferred Securities under the
Partnership Guarantee, and (C) to enforce the rights of the Holders of the
Partnership Preferred Securities to receive distributions (if and to the extent
such distributions have been declared out of funds legally available therefor by
the General Partner in its sole discretion) on the Partnership Preferred
Securities or (ii) consent to any amendment, modification, or termination of the
Limited Partnership Agreement or the Partnership Preferred Securities where such
consent shall be required; provided, however, that where a consent or action
under the Limited Partnership Agreement would require the consent or act of the
Holders of more than a majority of the aggregate liquidation preference of
Partnership Preferred Securities affected thereby, only the Holders of the
percentage of the aggregate stated liquidation amount of the Trust Common
Securities which is at least equal to the percentage required under the Limited
Partnership Agreement may
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direct the Property Trustee to give such consent or take such action. Except
with respect to directing the time, method, and place of conducting a
proceeding for a remedy, the Property Trustee shall be under no obligation to
take any of the actions described in clause 8.5(c)(i) and (ii) above unless
the Property Trustee has obtained an opinion of independent tax counsel to
the effect that, as a result of such action, for United States federal income
tax purposes the Trust will not fail to be classified as a grantor trust and
each Holder will be treated as owning an undivided beneficial ownership
interest in the Partnership Preferred Securities.
(d) If the Property Trustee fails to enforce its rights under the
Partnership Preferred Securities after a Holder of record of Trust Common
Securities has made a written request, such Holder of record of Trust Common
Securities may directly institute a legal proceeding directly against the
Company, as General Partner of the Partnership or the Special Representative, to
enforce the Property Trustee's rights under the Partnership Preferred Securities
without first instituting any legal proceeding against the Property Trustee
or any other person or entity. Notwithstanding the foregoing, if a Trust
Enforcement Event has occurred and is continuing and such event is attributable
to the failure of an Investment Affiliate to make any required payment when due
on any Affiliate Investment Instrument, then a Holder of Trust Common Securities
may directly institute a proceeding against such Investment Affiliate for
enforcement of payment with respect to such Affiliate Investment Instrument.
(e) A waiver of a Partnership Enforcement Event with respect to the
Partnership Preferred Securities will constitute a waiver of the corresponding
Trust Enforcement Event.
(f) Any required approval or direction of Holders of Trust Common Securities
may be given at a separate meeting of Holders of Trust Common Securities
convened for such purpose, at a meeting of all of the Holders of Trust
Securities or pursuant to written consent. The Regular Trustees will cause a
notice of any meeting at which Holders of Trust Common Securities are entitled
to vote, or of any matter upon which action by written consent of such Holders
is to be taken, to be mailed to each Holder of record of Trust Common
Securities. Each such notice will include a statement setting forth the
following information: (i) the date of such meeting or the date by which such
action is to be taken; (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to vote or of such
matter upon which written consent is sought; and (iii) instructions for the
delivery of proxies or consents.
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(g) No vote or consent of the Holders of the Trust Common Securities shall
be required for the Trust to redeem and cancel Trust Common Securities or to
distribute Partnership Preferred Securities in accordance with the Declaration
and the terms of the Trust Securities.
SECTION 8.6 Paying Agent.
In the event that the Trust Preferred Securities are not in book-entry only
form, the Trust shall maintain in the Borough of Manhattan, City of New York,
State of New York, an office or agency where the Trust Preferred Securities may
be presented for payment ("Paying Agent"). The Trust may appoint the Paying
Agent and may appoint one or more additional paying agents in such other
locations as it shall determine. The term "Paying Agent" includes any additional
paying agent. The Trust may change any Paying Agent without prior notice to any
Holder. The Trust shall notify the Property Trustee of the name and address of
any Paying Agent not a party to this Declaration. If the Trust fails to appoint
or maintain another entity as Paying Agent, the Property Trustee shall act as
such. The Trust or any of its Affiliates may act as Paying Agent. The Chase
Manhattan Bank shall initially act as Paying Agent for the Trust Preferred
Securities and the Trust Common Securities.
SECTION 8.7 Listing
The Sponsor shall use its best efforts to cause the Trust Preferred
Securities to be listed for quotation on the New York Stock Exchange.
SECTION 8.8 Acceptance of Guarantee and Agreements, Limited Partnership
Agreement.
Each Holder of Trust Preferred Securities and Trust Common Securities, by
the acceptance thereof, agrees to the provisions of the applicable Trust
Guarantee, the Partnership Guarantee, and the Investment Guarantee,
respectively, including the subordination provisions therein.
ARTICLE IX
TERMINATION AND LIQUIDATION OF THE TRUST
SECTION 9.1 Termination of Trust.
(a) The Trust shall terminate:
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(i) upon the bankruptcy of the Holder of Trust Common Securities or
the Sponsor;
(ii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Sponsor, the filing of a certificate of
cancellation with respect to the Trust after having obtained the consent
of at least a Majority in Liquidation Amount of the Trust Securities,
voting together as a single class, to file such certificate of
cancellation, or the revocation of the Sponsor's charter and the
expiration of 90 days after the date of revocation without a
reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution of the
Sponsor or the Trust;
(iv) when all of the Trust Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the Trust
Securities;
(v) upon the election of the Regular Trustees, following the
occurrence and continuation of a Trust Special Event, pursuant to which
the Trust shall have been dissolved in accordance with the terms of the
Trust Securities and all of the Partnership Preferred Securities shall
have been distributed to the Holders of Trust Securities in exchange for
all of the Trust Securities; or
(vi) before the issuance of any Trust Securities, with the consent of
all of the Regular Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event referred to
in Section 9.1(a), the Trustees shall file a certificate of cancellation with
the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article XI shall survive the
termination of the Trust.
SECTION 9.2 Liquidation Distribution Upon Termination and Dissolution of the
Trust.
(a) In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust (each a "Trust Liquidation"), the Holders
of the Trust Preferred Securities on the date of the Trust Liquidation will be
entitled to receive, out of the assets of the Trust available for distribution
to Holders of Trust Securities after satisfaction of the
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Trusts' liabilities and creditors, distributions in cash or other immediately
available funds in an amount equal to the aggregate of the stated liquidation
amount of $25 per Trust Security plus accumulated and unpaid Distributions
thereon to the date of payment (such amount being the "Trust Liquidation
Distribution"), unless, in connection with such Trust Liquidation,
Partnership Preferred Securities shall be distributed on a Pro Rata basis to
the Holders of the Trust Securities in exchange for such Trust Securities.
(b) If, upon any such Trust Liquidation, the Trust Liquidation Distribution
can be paid only in part because the Trust has insufficient assets available to
pay in full the aggregate Trust Liquidation Distribution, then the amounts
payable directly by the Trust on the Trust Securities shall be paid on a Pro
Rata basis. The Holders of the Trust Common Securities will be entitled to
receive distributions upon any such Trust Liquidation Pro Rata with the Holders
of the Trust Preferred Securities except that if the Company is in default on
any of its obligations under the Trust Preferred Securities Guarantee, the
Partnership Guarantee, or any Investment Guarantee, or any Investment Event of
Default has occurred and is continuing with respect to an Affiliate Investment
Instrument, the Trust Preferred Securities shall have a preference over the
Trust Common Securities with regard to such distributions as provided below.
Such preference is effectuated by the Holder of the Trust Common Securities
hereby agreeing to provide limited recourse guarantees as follows: (i) to the
Holders of the Trust Preferred Securities, of the Company's obligations under
the Trust Preferred Securities Guarantee; (ii) to the Trust and the Holders of
the Trust Preferred Securities, of the Company's obligations under the
Partnership Guarantee; and (iii) to the Partnership and the Holders of the Trust
Preferred Securities, of the Company's obligations under any Investment
Guarantee and/or the obligations of any Investment Affiliate under an Affiliate
Investment Instrument. In the case of the limited recourse guarantee given by
the Holder of the Trust Common Securities to the Partnership and the Holder of
the Trust Preferred Securities in respect of the Company's obligations under any
Investment Guarantee and/or any Investment Affiliate's obligations under an
Affiliate Investment Instrument, (i) the Trust Common Securities Holder will be
deemed to have pledged the amount due in respect of its Trust Common Securities
upon a liquidation of the Trust to the Partnership and the Holders of Trust
Preferred Securities; (ii) the Trust Common Securities Holder will be deemed to
have paid such amount to the Partnership in respect of such defaulted Investment
Guarantee and/or Affiliate Investment Instrument, as the case may be; (iii) the
Partnership will be deemed to have paid such amount to the Trust; and (iv) the
Property Trustee is hereby authorized to
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distribute such amount to the Holders of Trust Preferred Securities (on a pro
rata basis among such Trust Preferred Securities Holders) in respect of the
Trust Common Securities Holder's pledge of such amounts to such Trust
Preferred Securities Holders. In the case of a limited recourse guarantee
given by the Holder of the Trust Common Securities to the Trust and the
Holders of the Trust Preferred Securities in respect of the Company's
obligations under the Partnership Guarantee, (i) the Holder of the Trust
Common Securities will be deemed to have pledged the amount due in respect of
its Trust Common Securities upon a liquidation of the Trust to the Trust and
the Holders of the Trust Preferred Securities; (ii) the Holder of the Trust
Common Securities will be deemed to have paid such amount to the Trust in
respect of its obligations under the Partnership Guarantee; and (iii) the
Property Trustee is hereby authorized to distribute such amount to the
Holders of the Trust Preferred Securities (on a pro rata basis among such
Trust Preferred Securities Holders) in respect of the Trust Common Securities
Holder's pledge of such amount to such Trust Preferred Securities Holders.
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ARTICLE X
TRANSFER OF INTERESTS
SECTION 10.1 Transfer of Trust Securities.
(a) Trust Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Trust Securities. Any transfer or purported transfer of any
Trust Security not made in accordance with this Declaration shall be null and
void.
(b) Subject to this Article X, Trust Preferred Securities shall be freely
transferable.
SECTION 10.2 Transfer of Certificates.
The Regular Trustees shall provide for the registration of Certificates
and of transfers of Certificates, which will be effected without charge but
only upon payment (with such indemnity as the Regular Trustees may require)
in respect of any tax or other government charges that may be imposed in
relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to
be issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by
a written instrument of transfer in form satisfactory to the Regular Trustees
duly executed by the Holder or such Holder's attorney duly authorized in
writing. Each Certificate surrendered for registration of transfer shall be
canceled by the Regular Trustees. A transferee of a Certificate shall be
entitled to the rights and subject to the obligations of a Holder hereunder
upon the receipt by such transferee of a Certificate. By acceptance of a
Certificate, each transferee shall be deemed to have agreed to be bound by
this Declaration.
SECTION 10.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Certificate shall be
registered on the books and records of the Trust as the sole Holder of such
Certificate and of the Trust Securities represented by such Certificate for
purposes of receiving Distributions and for all other purposes whatsoever
and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such Certificate or in the Trust Securities
represented by such Certificate on the part of any Person, whether or not the
Trust shall have actual or other notice thereof.
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SECTION 10.4 Book Entry Interests.
Unless otherwise specified in the terms of the Trust Preferred
Securities, the Trust Preferred Securities Certificates, on original
issuance, will be issued in the form of one or more fully registered, global
Trust Preferred Security Certificates (each a "Global Certificate"), to be
delivered to DTC, the initial Clearing Agency, by, or on behalf of, the
Trust. Such Global Certificates shall initially be registered on the books
and records of the Trust in the name of Cede & Co., the nominee of DTC, and
no Trust Preferred Security Beneficial Owner will receive a definitive Trust
Preferred Security Certificate representing such Trust Preferred Security
Beneficial Owner's interests in such Global Certificates, except as provided
in Section 10.7. Unless and until definitive, fully registered Trust
Preferred Security Certificates (the "Definitive Trust Preferred Security
Certificates") have been issued to the Trust Preferred Security Beneficial
Owners pursuant to Section 10.7:
(a) the provisions of this Section 10.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the payment
of Distributions on the Global Certificates and receiving approvals, votes
or consents hereunder) as the Holder of the Trust Preferred Securities and
the sole Holder of the Global Certificates and shall have no obligation to
the Trust Preferred Security Beneficial Owners;
(c) to the extent that the provisions of this Section 10.4 conflict with
any other provisions of this Declaration, the provisions of this Section
10.4 shall control; and
(d) the rights of the Trust Preferred Security Beneficial Owners shall
be exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Trust Preferred Security
Beneficial Owners and the Clearing Agency and/or the Clearing Agency
Participants and the Clearing Agency shall receive and transmit payments of
Distributions on the Global Certificates to such Clearing Agency
Participants. The Clearing Agency will make book entry transfers among the
Clearing Agency Participants; provided, that solely for the purposes of
determining whether the Holders of the requisite amount of Trust Preferred
Securities have voted on any matter provided for in this Declaration, so
long as Definitive Trust Preferred Security Certificates have not been
issued,
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the Trustees may conclusively rely on, and shall be fully protected
in relying on, any written instrument (including a proxy) delivered to the
Trustees by the Clearing Agency setting forth the Trust Preferred Security
Beneficial Owners' votes or assigning the right to vote on any matter to any
other Persons either in whole or in part.
SECTION 10.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Trust Preferred Security
Holders is required under this Declaration, unless and until Definitive Trust
Preferred Security Certificates shall have been issued to the Trust Preferred
Security Beneficial Owners pursuant to Section 10.7, the Regular Trustees
shall give all such notices and communications specified herein to be given
to the Trust Preferred Security Holders to the Clearing Agency, and shall
have no notice obligations to the Trust Preferred Security Beneficial Owners.
SECTION 10.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as securities
depositary with respect to the Trust Preferred Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency
with respect to such Trust Preferred Securities.
SECTION 10.7 Definitive Trust Preferred Security Certificates.
If:
(a) a Clearing Agency elects to discontinue its services as securities
depositary with respect to the Trust Preferred Securities and a successor
Clearing Agency is not appointed within 90 days after such discontinuance
pursuant to Section 10.6 or
(b) the Regular Trustees elect after consultation with the Sponsor to
terminate the book entry system through the Clearing Agency with respect to
the Trust Preferred Securities,
(c) there is a Trust Enforcement Event, then:
(d) Definitive Trust Preferred Security Certificates shall be prepared
by the Regular Trustees on behalf of the Trust with respect to such Trust
Preferred Securities; and
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(e) upon surrender of the Global Certificates by the Clearing Agency,
accompanied by registration instructions, the Regular Trustees shall cause
Definitive Trust Preferred Security Certificates to be delivered to Trust
Preferred Security Beneficial Owners in accordance with the instructions of
the Clearing Agency. Neither the Trustees nor the Trust shall be liable for
any delay in delivery of such instructions and each of them may conclusively
rely on and shall be fully protected in relying on, said instructions of the
Clearing Agency. The Definitive Trust Preferred Security Certificates shall
be printed, lithographed or engraved or may be produced in any other manner
as is reasonably acceptable to the Regular Trustees, as evidenced by their
execution thereof, and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements as the
Regular Trustees may deem appropriate, or as may be required to comply with
any law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which Trust Preferred Securities
may be listed, or to conform to usage.
SECTION 10.8 Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Regular Trustees such security or
indemnity as may be required by them to keep each of them harmless,
then, in the absence of notice that such Certificate shall have been acquired
by a bona fide purchaser, any Regular Trustee on behalf of the Trust shall
execute and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like
denomination. In connection with the issuance of any new Certificate under
this Section 10.8, the Regular Trustees may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection therewith. Any duplicate Certificate issued pursuant to this
Section shall constitute conclusive evidence of an ownership interest in the
relevant Trust Securities, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time.
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XI LIMITATION OF LIABILITY OF
HOLDERS OF TRUST SECURITIES, TRUSTEES OR OTHERS
SECTION 11.1 Liability.
(a) Except as expressly set forth in this Declaration, the Trust
Guarantees and the terms of the Trust Securities, the Sponsor and the
Trustees shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the Trust Securities
which shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder of Trust Securities
any deficit upon dissolution of the Trust or otherwise.
(b) Pursuant to Section 3803(a) of the Business Trust Act, the Holders of
the Trust Securities shall be entitled to the same limitation of personal
liability extended to shareholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.
SECTION 11.2 Exculpation.
(a) No Company Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed
or omitted by such Company Indemnified Person in good faith on behalf of the
Trust and in a manner such Company Indemnified Person reasonably believed to
be within the scope of the authority conferred on such Company Indemnified
Person by this Declaration or by law, except that a Company Indemnified
Person shall be liable for any such loss, damage or claim incurred by reason
of such Company Indemnified Person's gross negligence (or, in the case of the
Property Trustee, negligence) or willful misconduct with respect to such acts
or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable
care by or on behalf of the Trust, including information, opinions, reports
or statements as to the value and amount of the assets,
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liabilities, profits, losses, or any other facts pertinent to the existence
and amount of assets from which Distributions to Holders of Trust Securities
might properly be paid.
SECTION 11.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person
for its good faith reliance on the provisions of this Declaration. The
provisions of this Declaration, to the extent that they restrict the duties
and liabilities of an Indemnified Person otherwise existing at law or in
equity (other than the duties imposed on the Property Trustee under the Trust
Indenture Act), are agreed by the parties hereto to replace such other duties
and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between an
Indemnified Person and any Covered Person; or
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act in a
manner that is, or provides terms that are, fair and reasonable to the
Trust or any Holder of Trust Securities,
the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative interest
of each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made,
taken or provided by the Indemnified Person shall not constitute a breach of
this Declaration or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted or
required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and
factors as it desires, including
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its own interests, and shall have no duty or obligation to give any
consideration to any interest of or factors affecting the Trust or any
other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or
by applicable law.
SECTION 11.4 Indemnification.
(a) (i) To the fullest extent permitted by applicable law, the
Sponsor shall indemnify and hold harmless any Company Indemnified Person
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by
or in the right of the Trust) by reason of the fact that he is or was a
Company Indemnified Person against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he
acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption
that the Company Indemnified Person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was
unlawful.
(ii) The Sponsor shall indemnify, to the fullest extent permitted by
law, any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Trust to procure a judgment in
its favor by reason of the fact that he is or was a Company Indemnified
Person against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement
of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Trust and except that no such indemnification shall be made in respect of
any claim, issue or matter as to which such Company Indemnified
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Person shall have been adjudged to be liable to the Trust unless and only
to the extent that the Court of Chancery of Delaware or the court in which
such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses which such Court of Chancery or such other
court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be successful
on the merits or otherwise (including dismissal of an action without
prejudice or the settlement of an action without admission of liability) in
defense of any action, suit or proceeding referred to in paragraphs (i) and
(ii) of this Section 11.4(a), or in defense of any claim, issue or matter
therein, he shall be indemnified, to the fullest extent permitted by law,
against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this Section
11.4(a) (unless ordered by a court) shall be made by the Sponsor only as
authorized in the specific case upon a determination that indemnification of
the Company Indemnified Person is proper in the circumstances because he has
met the applicable standard of conduct set forth in paragraphs (i) and (ii).
Such determination shall be made (1) by the Regular Trustees by a majority
vote of a quorum consisting of such Regular Trustees who were not parties to
such action, suit or proceeding, (2) if such a quorum is not obtainable, or,
even if obtainable, if a quorum of disinterested Regular Trustees so
directs, by independent legal counsel in a written opinion, or (3) by the
Holder of the Trust Common Securities.
(v) Expenses (including attorneys' fees) incurred by a Company
Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (i) and
(ii) of this Section 11.4(a) shall be paid by the Sponsor in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Company Indemnified Person to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Sponsor as authorized in this Section 11.4(a).
Notwithstanding the foregoing, no advance shall be made by the Sponsor if a
determination is reasonably and promptly made (i) by the Regular Trustees by
a majority vote of a quorum of disinterested Regular Trustees, (ii) if such
a quorum is
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not obtainable, or, even if obtainable, if a quorum of disinterested Regular
Trustees so directs, by independent legal counsel in a written opinion or
(iii) the Holder of the Trust Common Securities, that, based upon the
facts known to the Regular Trustees, counsel or the Holder of the Trust
Common Securities at the time such determination is made, such Company
Indemnified Person acted in bad faith or in a manner that such person did
not believe to be in or not opposed to the best interests of the Trust,
or, with respect to any criminal proceeding, that such Company
Indemnified Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made in instances
where the Regular Trustees, independent legal counsel or Holder of the
Trust Common Securities reasonably determine that such person
deliberately breached his duty to the Trust or Holders of Trust Common
Securities.
(vi) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 11.4(a) shall not
be deemed exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled under any
agreement, vote of shareholders or disinterested directors of the Sponsor or
Holders of the Trust Preferred Securities or otherwise, both as to action in
his official capacity and as to action in another capacity while holding
such office. All rights to indemnification under this Section 11.4(a) shall
be deemed to be provided by a contract between the Sponsor and each Company
Indemnified Person who serves in such capacity at any time while this
Section 11.4(a) is in effect. Any repeal or modification of this Section
11.4(a) shall not affect any rights or obligations then existing.
(vii) The Sponsor or the Trust may purchase and maintain insurance on
behalf of any person who is or was a Company Indemnified Person against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Sponsor would have the
power to indemnify him against such liability under the provisions of this
Section 11.4(a).
(viii) For purposes of this Section 11.4(a), references to "the Trust"
shall include, in addition to the resulting or surviving entity, any
constituent entity (including any constituent of a constituent) absorbed in
a consolidation or merger, so that any person who is or was a director,
trustee, officer or employee of such constituent entity, or is or was
serving at the request of such constituent entity as a director, trustee,
officer, employee or
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agent of another entity, shall stand in the same position under the
provisions of this Section 11.4(a) with respect to the resulting or
surviving entity as he would have with respect to such constituent entity
if its separate existence had continued.
(ix) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 11.4(a) shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a
Company Indemnified Person and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(b) The Sponsor agrees to indemnify the (i) Property Trustee, (ii) the
Delaware Trustee, (iii) any Affiliate of the Property Trustee and the
Delaware Trustee, and (iv) any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or agents of the
Property Trustee and the Delaware Trustee (each of the Persons in (i) through
(iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold
each Fiduciary Indemnified Person harmless against, any loss, damage, claim,
liability or expense including taxes (other than taxes based on the income of
the Trustee) incurred without negligence or bad faith on the part of the
Trustee arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or
investigating any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 11.4(b) shall survive the satisfaction
and discharge of this Declaration.
SECTION 11.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee may engage in or possess an interest in other business ventures of
any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Trust Securities shall have no rights by virtue of this Declaration in and to
such independent ventures or the income or profits derived therefrom, and the
pursuit of any such venture, even if competitive with the business of the
Trust, shall not be deemed wrongful or improper. No Covered Person, the
Sponsor, the Delaware Trustee, nor the Property Trustee shall be obligated to
present any particular investment or other opportunity to the Trust even if
such opportunity is of a character that, if presented to the Trust, could be
taken by the Trust, and any Covered Person, the Sponsor, the
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Delaware Trustee and the Property Trustee shall have the right to take for
its own account (individually or as a partner or fiduciary) or to recommend
to others any such particular investment or other opportunity. Any Covered
Person, the Delaware Trustee and the Property Trustee may engage or be
interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor, or may act as depositary for, trustee or agent for,
or act on any committee or body of Holders of, securities or other
obligations of the Sponsor or its Affiliates.
ARTICLE XII
ACCOUNTING
SECTION 12.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar year.
SECTION 12.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Regular Trustees
shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each
transaction of the Trust. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted
accounting principles, consistently applied. The books of account and the
records of the Trust shall be examined by and reported upon as of the end of
each Fiscal Year of the Trust by a firm of independent certified public
accountants selected by the Regular Trustees.
(b) Within 60 days after of each year commencing ,
, the Property Trustee shall provide to the Holders of the Trust Securities
such reports as are required by Section 313 of the Trust Indenture Act, if
any, in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Property Trustee shall also comply with the requirements
of Section 313(d) of the Trust Indenture Act.
(c) The Regular Trustees shall cause to be duly prepared and delivered to
each of the Holders of Trust Securities, any annual United States federal
income tax information statement, required by the Code, containing such
information with regard to the Trust Securities held by each Holder as is
required by the Code and the Treasury Regulations. Notwithstanding any right
under the Code to deliver any such statement at a later date, the Regular
Trustees shall endeavor to deliver all such
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statements within 30 days after the end of each Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed with
the appropriate taxing authority, an annual United States federal income tax
return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be filed
by the Regular Trustees on behalf of the Trust with any state or local taxing
authority.
SECTION 12.3 Banking.
The Trust shall maintain one or more bank accounts in the name and for
the sole benefit of the Trust; provided, however, that all payments of funds
in respect of the Partnership Preferred Securities held by the Property
Trustee shall be made directly to the Property Account and no other funds of
the Trust shall be deposited in the Property Account. The sole signatories
for such accounts shall be designated by the Regular Trustees; provided,
however, that the Property Trustee shall designate the signatories for the
Property Account.
SECTION 12.4 Withholding.
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust
shall request, and the Holders shall provide to the Trust, such forms or
certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably
be requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations. The Regular Trustees shall file
required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that
the Trust is required to withhold and pay over any amounts to any authority
with respect to distributions or allocations to any Holder, the amount
withheld shall be deemed to be a distribution in the amount of the
withholding to the Holder. In the event of any claimed over withholding,
Holders shall be limited to an action against the applicable jurisdiction. If
the amount required to be withheld was not withheld from actual Distributions
made, the Trust may reduce subsequent Distributions by the amount of such
withholding. Notwithstanding anything herein to the contrary, the Trust and
the Regular Trustees shall, absent receipt of an opinion of nationally
recognized tax counsel to the contrary, withhold thirty percent (30%) (or
such other rate as may be
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imposed as a result of an amendment to the Code or such lower rate as may be
imposed under an applicable income tax treaty) on the gross amount of any
Distributions on Trust Preferred Securities held by a Holder that is not a
"United States person" within the meaning of Section 7701(a)(30) of the Code.
XIII AMENDMENTS AND MEETINGS
SECTION 13.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any applicable
terms of the Trust Securities, this Declaration may only be amended by a
written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than two Regular
Trustees, a majority of the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties, obligations or
immunities of the Property Trustee, the Property Trustee; and
(iii) if the amendment affects the rights, powers, duties, obligations or
immunities of the Delaware Trustee, the Delaware Trustee.
(b) No amendment shall be made, and any such purported amendment shall be
void and ineffective:
(i) unless, in the case of any proposed amendment, the Property Trustee
shall have first received an Officers' Certificate from each of the Trust
and the Sponsor that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Trust Securities);
(ii) unless, in the case of any proposed amendment which affects the
rights, powers, duties, obligations or immunities of the Property Trustee,
the Property Trustee shall have first received an opinion of counsel (who
may be counsel to the Sponsor or the Trust) that such amendment is permitted
by, and conforms to, the terms of this Declaration (including the terms of
the Trust Securities); and
(iii) to the extent the result of such amendment would be to:
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(A) cause the Trust to fail to continue to be classified for purposes of
United States federal income taxation as a grantor trust;
(B) cause the Partnership to be classified for purposes of United States
federal income tax as an association or publicly traded partnership taxable
as a corporation;
(C) reduce or otherwise adversely affect the powers of the Property
Trustee in contravention of the Trust Indenture Act; or
(D) cause the Trust to be deemed to be an Investment Company required to
be registered under the 1940 Act.
(c) In the event the consent of the Property Trustee, as the Holder of the
Partnership Preferred Securities is required under the Limited Partnership
Agreement with respect to any amendment, modification or termination of the
Limited Partnership Agreement or the Partnership Preferred Securities the
Property Trustee shall request the direction of the Holders of the Trust
Securities with respect to such amendment, modification or termination and shall
vote with respect to such amendment, modification or termination as directed by
a Majority in liquidation amount of the Trust Securities voting together as a
single class; provided, however, that where a consent under the Limited
Partnership Agreement would require the consent of a Super Majority of the
Holders of Partnership Preferred Securities the Property Trustee may only give
such consent at the direction of the Holders of at least the proportion in
liquidation amount of the Trust Securities which the relevant Super Majority
represents of the aggregate liquidation preference of the Partnership Preferred
Securities outstanding; provided, further, that the Property Trustee shall not
be obligated to take any action in accordance with the directions of the Holders
of the Trust Securities under this Section 13.1(c) unless the Property Trustee
has obtained an opinion of independent tax counsel to the effect that for United
States federal income tax purposes the Trust will continue to be classified as a
grantor trust after consummation of such action and each Holder will be treated
as owning an undivided beneficial ownership interest in the Partnership
Preferred Securities.
(d) At such time after the Trust has issued any Trust Securities that remain
outstanding, any amendment that would (I) adversely affect the powers,
preferences or special rights of the Trust Securities or (II) provide for the
dissolution, winding-up or termination of the Trust other than pursuant to the
terms of
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this Declaration, may be effected only with the approval of the Holders of at
least a Majority in liquidation amount of the Trust Securities affected
thereby; provided, that if any amendment or proposal referred to in clause
(I) hereof would adversely affect only the Trust Preferred Securities or the
Trust Common Securities, then only the affected class will be entitled to
vote on such amendment or proposal and such amendment or proposal shall not
be effective except with the approval of a Majority in liquidation amount of
such class of Trust Securities;
(e) Section 11.1(c) and this Section 13.1 shall not be amended without the
consent of all of the Holders of the Trust Securities;
(f) Article IV shall not be amended without the consent of the Holders of a
Majority in liquidation amount of the Trust Common Securities and;
(g) The rights of the Holders of the Trust Common Securities under Article V
to increase or decrease the number of, and appoint and remove, Trustees shall
not be amended without the consent of the Holders of a Majority in liquidation
amount of the Trust Common Securities; and
(h) Notwithstanding Section 13.1(c), this Declaration may be amended without
the consent of the Holders of the Trust Securities:
(i) to cure any ambiguity;
(ii) to correct or supplement any provision in this Declaration that may
be defective or inconsistent with any other provision of this Declaration;
(iii) to add to the covenants, restrictions or obligations of the
Sponsor;
(iv) to conform to any change in the 1940 Act or written change in
interpretation or application of the rules and regulations promulgated
thereunder by any legislative body, court, government agency or regulatory
authority;
(v) to conform to any change in the Trust Indenture Act or written
change in interpretation or application of the rules and regulations
promulgated thereunder by any legislative body, court, government agency or
regulatory authority; and
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(vi) to modify, eliminate and add to any provision of this Declaration
to such extent as may be necessary; provided, that such amendments do not
have a material adverse effect on the rights, preferences or privileges of
the Holders.
SECTION 13.2 Meetings of the Holders of Trust Securities; Action by
Written Consent.
(a) Meetings of the Holders of any class of Trust Securities may be
called at any time by the Regular Trustees (or as provided in the terms of
the Trust Securities) to consider and act on any matter on which Holders of
such class of Trust Securities are entitled to act under the terms of this
Declaration, the terms of the Trust Securities, the Limited Partnership
Agreement, the rules of any stock exchange on which the Trust Preferred
Securities are listed or admitted for trading, the Business Trust Act or
other applicable law. The Regular Trustees shall call a meeting of the
Holders of such class if directed to do so by the Holders of at least 10% in
liquidation amount of such class of Trust Securities. Such direction shall
be given by delivering to the Regular Trustees one or more notices in a
writing stating that the signing Holders of Trust Securities wish to call a
meeting and indicating the general or specific purpose for which the meeting
is to be called. Any Holders of Trust Securities calling a meeting shall
specify in writing the Certificates held by the Holders of Trust Securities
exercising the right to call a meeting and only those Trust Securities
specified shall be counted for purposes of determining whether the required
percentage set forth in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the Trust
Securities, the following provisions shall apply to meetings of Holders of
Trust Securities:
(i) notice of any such meeting shall be given to all the Holders of
Trust Securities having a right to vote thereat at least 7 days and not more
than 60 days before the date of such meeting. Any action that may be taken
at a meeting of the Holders of Trust Securities may be taken without a
meeting if a consent in writing setting forth the action so taken is signed
by the Holders of Trust Securities owning not less than the minimum amount
of Trust Securities in liquidation amount that would be necessary to
authorize or take such action at a meeting at which all Holders of Trust
Securities having a right to vote thereon were present and voting. Prompt
notice of the taking of action without a meeting shall be given to the
Holders of Trust Securities
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entitled to vote who have not consented in writing. The Regular Trustees
may specify that any written ballot submitted to the Holder for the
purpose of taking any action without a meeting shall be returned to the
Trust within the time specified by the Regular Trustees;
(ii) each Holder of a Trust Security may authorize any Person to act for
it by proxy on all matters in which a Holder of Trust Securities is entitled
to participate, including waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid after the expiration of
11 months from the date thereof unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the Holder of Trust
Securities executing it. Except as otherwise provided herein, all matters
relating to the giving, voting or validity of proxies shall be governed by
the General Corporation Law of the State of Delaware relating to proxies,
and judicial interpretations thereunder, as if the Trust were a Delaware
corporation and the Holders of the Trust Securities were shareholders of a
Delaware corporation;
(iii) each meeting of the Holders of the Trust Securities shall be
conducted by the Regular Trustees or by such other Person that the Regular
Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the terms of the
Trust Securities, the Trust Indenture Act or the listing rules of any stock
exchange on which the Trust Preferred Securities are then listed for
trading, otherwise provides, the Regular Trustees, in their sole discretion,
shall establish all other provisions relating to meetings of Holders of
Trust Securities, including notice of the time, place or purpose of any
meeting at which any matter is to be voted on by any Holders of Trust
Securities, waiver of any such notice, action by consent without a meeting,
the establishment of a record date, quorum requirements, voting in person or
by proxy or any other matter with respect to the exercise of any such right
to vote.
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ARTICLE XIV
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 14.1 Representations and Warranties of Property Trustee.
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Property Trustee represents and warrants to the Trust and
the Sponsor at the time of the Successor Property Trustee's acceptance of
its appointment as Property Trustee that:
(a) The Property Trustee is a New York banking corporation with trust
powers, duly organized, validly existing and in good standing under the laws
of New York, with trust power and authority to execute and deliver, and to
carry out and perform its obligations under the terms of, the Declaration;
(b) The execution, delivery and performance by the Property Trustee of
the Declaration has been duly authorized by all necessary corporate action
on the part of the Property Trustee. The Declaration has been duly executed
and delivered by the Property Trustee and constitutes a legal, valid and
binding obligation of the Property Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the
court (regardless of whether the enforcement of such remedies is considered
in a proceeding in equity or at law);
(c) The execution, delivery and performance of the Declaration by the
Property Trustee does not conflict with or constitute a breach of the
Articles of Organization or By-laws of the Property Trustee;
(d) No consent, approval or authorization of, or registration with or
notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Property Trustee of this
Declaration; and
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(e) The Property Trustee, pursuant to this Declaration, shall hold legal
title to, and a valid ownership interest on behalf of the Holders of the
Trust Securities, in the Partnership Preferred Securities and agrees that,
except as expressly provided or contemplated by this Agreement, it will not
create, incur or assume, or suffer to exist any mortgage, pledge,
hypothecation, encumbrance, lien or other charge or security interest upon
the Partnership Preferred Securities.
SECTION 14.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is a Delaware corporation with, duly organized,
validly existing and in good standing under the laws of the State of
Delaware, with power and authority to execute and deliver, and to carry out
and perform its obligations under the terms of, the Declaration;
(b) The Delaware Trustee has been authorized to perform its obligations
under the Certificate of Trust and the Declaration. The Declaration, under
Delaware law, constitutes a legal, valid and binding obligation of the
Delaware Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium, insolvency,
and other similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of whether
the enforcement of such remedies is considered in a proceeding in equity or
at law);
(c) No consent, approval or authorization of, or registration with or
notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee of the
Declaration; and
(d) The Delaware Trustee is an entity which has its principal place of
business in the State of Delaware.
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ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices.
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by registered or certified mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Trust
may give notice of to the Holders of the Trust Securities):
MERRILL LYNCH PREFERRED CAPITAL TRUST
c/o Merrill Lynch & Co., Inc.
World Financial Center
South Tower
225 Liberty Street
New York, New York 10080-6105
Attention: Treasurer
(b) if given to the Delaware Trustee, at the mailing address set forth
below (or such other address as the Delaware Trustee may give notice of to
the other Trustees):
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
Attention: John J. Cashin
Senior Trust Officer
(c) if given to the Property Trustee, at its Corporate Trust Office to
the attention of James Heaney, Vice President (or such other address as the
Property Trustee may give notice of to the Holders of the Trust Securities
and the other Trustee)
(d) if given to the Holder of the Trust Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as the
Holder of the Trust Common Securities may give notice of to the Trust):
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MERRILL LYNCH PREFERRED CAPITAL TRUST
c/o Merrill Lynch & Co., Inc.
World Financial Center
South Tower
225 Liberty Street
New York, New York 10080-6105
Attention: Treasurer
(e) if given to any other Holder, at the address set forth on the books
and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no
notice was given, such notice or other document shall be deemed to have been
delivered on the date of such refusal or inability to deliver.
SECTION 15.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be governed
by and construed in accordance with the internal laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
SECTION 15.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be classified for
United States federal income tax purposes as a grantor trust. The provisions of
this Declaration shall be interpreted to further this intention of the parties.
SECTION 15.4 Headings.
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
SECTION 15.5 Successors and Assigns
Whenever in this Declaration any of the parties hereto is named or referred
to, the successors and assigns of such party shall be deemed to be included, and
all covenants and agreements in this Declaration by the Sponsor and the Trustees
shall bind and inure to the benefit of their respective successors and assigns,
whether so expressed.
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SECTION 15.6 Partial Enforceability.
If any provision of this Declaration, or the application of such provision
to any Person or circumstance, shall be held invalid, the remainder of this
Declaration, or the application of such provision to persons or circumstances
other than those to which it is held invalid, shall not be affected thereby.
ECTION 15.7 Counterparts.
This Declaration may contain more than one counterpart of the signature page
and this Declaration may be executed by the affixing of the signature of each of
the Trustees and a duly authorized officer of the Sponsor to one of such
counterpart signature pages. All of such counterpart signature pages shall be
read as though one, and they shall have the same force and effect as though all
of the signers had signed a single signature page.
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IN WITNESS WHEREOF, each of the undersigned has caused these presents to be
executed as of the day and year first above written.
----------------------------------
Theresa Lang, as Regular Trustee
----------------------------------
Stanley Schaefer, as Regular Trustee
CHASE MANHATTAN BANK DELAWARE,
as Delaware Trustee
By:
------------------------------
Name: John H. Cashin
Title: Senior Trust Officer
THE CHASE MANHATTAN BANK,
as Property Trustee
By:
------------------------------
Name: James Heaney
Title: Vice President
MERRILL LYNCH & CO., INC.,
as Sponsor
By:
------------------------------
Name: Theresa Lang
Title: Senior Vice President
and Treasurer
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EXHIBIT A-1
FORM OF PREFERRED SECURITY CERTIFICATE
This Trust Preferred Security is a Global Certificate within the meaning
of the Declaration hereinafter referred to and is registered in the name of
The Depository Trust Company (the "Depositary") or a nominee of the
Depositary. This Trust Preferred Security is exchangeable for Trust Preferred
Securities registered in the name of a person other than the Depositary or
its nominee only in the limited circumstances described in the Declaration
and no transfer of this Trust Preferred Security (other than a transfer of
this Trust Preferred Security as a whole by the Depositary to a nominee of
the Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary) may be registered except in limited circumstances.
Unless this Trust Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York), a New York corporation, to the Trust or its agent for registration of
transfer, exchange or payment, and any Trust Preferred Security issued is
registered in the name of Cede & Co. or such other name as requested by an
authorized representative of the Depositary and any payment hereon is made to
Cede & Co. or such other entity as is requested by an authorized representative
of the Depositary, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
<PAGE>
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Trust
Preferred Security Certificate to:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- ------------------------------------------------------------- agent to transfer
this Trust Preferred Security Certificate on the books of the Trust. The agent
may substitute another to act for him or her.
Date:
---------------------------------
Signature:
----------------------------
(Sign exactly as your name appears on the other side of this Trust Preferred
Security Certificate)
A1-1
<PAGE>
TP-1 [ ]
CUSIP NO.
CERTIFICATE EVIDENCING TRUST PREFERRED SECURITIES
of
MERRILL LYNCH PREFERRED CAPITAL TRUST
% Trust Preferred Securities
(liquidation amount $25 per Trust Preferred Security)
MERRILL LYNCH PREFERRED CAPITAL TRUST , a statutory business
trust formed under the laws of the State of Delaware (the "Trust"), hereby
certifies that Cede & Co. (the "Holder") is the registered owner of
preferred securities of the Trust representing undivided beneficial ownership
interests in the assets of the Trust designated the % Trust Preferred
Securities (liquidation amount $25 per Trust Preferred Security) (the "Trust
Preferred Securities"). The Trust Preferred Securities are freely
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, powers, privileges,
restrictions, preferences and other terms and provisions of the Trust
Preferred Securities represented hereby are set forth in, issued under and
shall in all respects be subject to the provisions of the Amended and
Restated Declaration of Trust dated as of , 1998, as the same may
be amended from time to time (the "Declaration"). Capitalized terms used
herein but not defined shall have the meaning given them in the Declaration.
The Holder is entitled to the benefits of the Trust Preferred Securities
Guarantee to the extent provided therein. Each Holder of a Trust Preferred
Security, by acceptance of this Certificate and each Certificate owner, by
acquisition of a beneficial interest in a Certificate, agrees to treat the
Debentures, and any other Affiliate Investment Instruments that are treated
as debt instruments by the relevant Investment Affiliate and by the
Partnership, as indebtedness for United States federal income tax purposes.
The Sponsor will provide a copy of the Declaration, the Trust Preferred
Securities Guarantee and the Limited Partnership Agreement to a Holder
without charge upon written request to the Trust at its principal place of
business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
A1-2
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate this
day of , 1998.
MERRILL LYNCH PREFERRED
CAPITAL TRUST
-------------------------------------------
Name: Theresa Lang,
as Regular Trustee
(See reverse for additional terms)
A1-3
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is the Trust Preferred Security described in the within-mentioned
Declaration.
THE CHASE MANHATTAN BANK,
as Trustee
By:
-----------------------------------------
Authorized Signatory
A1-4
<PAGE>
[FORM OF REVERSE OF SECURITY]
Holders of Trust Preferred Securities shall be entitled to receive
cumulative cash distributions at a rate per annum of % of the stated
liquidation amount of $25 per Trust Preferred Security. Distributions on the
Trust Preferred Securities shall, from the date of original issue, accumulate
and be cumulative and shall be payable quarterly only to the extent that the
Trust has funds available for the payment of such distributions in the
Property Account. Distributions not paid on the scheduled payment date will
accumulate and compound quarterly (to the extent permitted by applicable law)
at the rate of % per annum. The term "Distributions" as used herein shall
mean ordinary cumulative distributions in respect of each Fiscal Period
together with any such Compounded Distributions. Amounts available to the
Trust for distribution to the holders of the Trust Preferred Securities will
be limited to payments received by the Trust from the Partnership on the
Partnership Preferred Securities or from the Company on the Partnership
Guarantee. Distributions on the Partnership Preferred Securities will be paid
only if, as and when declared in the sole discretion of the Company, as the
General Partner of the Partnership. If and to the extent that the Partnership
makes a distribution on the Partnership Preferred Securities held by the
Property Trustee or the Company makes a payment under the Partnership
Guarantee (the amount of any such partnership distribution, including any
compounded partnership distributions or guarantee payment being a "Payment
Amount"), the Trust shall and the Property Trustee is directed, to the extent
funds are available for that purpose, to make a Pro Rata Distribution of the
Payment Amount to Holders.
The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full quarterly
Distribution period on the basis of the actual number of days elapsed in a
90-day quarter.
Except as otherwise described herein, distributions on the Trust
Preferred Securities will be cumulative, will accumulate from the date of
initial issuance and will be payable quarterly in arrears, on March 30, June
30, September 30 and December 30 of each year, commencing on 30, 1998,
if, as and when available for payment by the Property Trustee. If the Trust
Preferred Securities (or, if the Trust is liquidated, the Partnership
Preferred Securities) are in book-entry-only form, Distributions will be
payable to the Holders of record of Trust Preferred Securities as they appear
on the books and records of the Trust on the relevant record dates, which
will be one Business Day prior to the relevant payment dates. If the Trust
Preferred
A1-5
<PAGE>
Securities (or, if the Trust is liquidated, the Partnership Preferred
Securities) do not remain in book-entry-only form, the relevant record dates
shall be the 15th day of the month of the relevant payment dates. In the
event that any date on which distributions are payable is not a Business Day,
payment of such Distribution shall be made on the next succeeding day which
is a Business Day (without any interest or other payment in respect of any
such delay) except that, if such Business Day falls in the next succeeding
calendar year, such payment shall be made on the immediately preceding
Business Day, with the same force and effect as if made on such date.
Payments of accumulated Distributions will be payable to Holders of record of
Trust Preferred Securities as they appear on the books and records of the
Trust on the record date with respect to the payment date for the Trust
Preferred Securities which corresponds to the payment date fixed by the
Partnership with respect to the payment of cumulative distributions on the
Partnership Preferred Securities.
The Trust Preferred Securities shall be redeemable as provided in
the Declaration.
A1-6
<PAGE>
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
CS-1 [ ]
Certificate Evidencing Trust Common Securities
of
MERRILL LYNCH PREFERRED CAPITAL TRUST
% Trust Common Securities
(liquidation amount $25 per Trust Common Security)
MERRILL LYNCH PREFERRED CAPITAL TRUST , a statutory business trust
formed under the laws of the State of Delaware (the "Trust"), hereby
certifies that Merrill Lynch & Co., Inc., a Delaware corporation (the
"Holder") is the registered owner of common securities of the Trust
representing undivided beneficial ownership interests in the assets of the
Trust designated the % Trust Common Securities (liquidation amount $25 per
Trust Common Security) (the "Trust Common Securities"). The designation,
rights, powers, privileges, restrictions, preferences and other terms and
provisions of the Trust Common Securities represented hereby are set forth
in, issued under and shall in all respects be subject to the provisions of
the Amended and Restated Declaration of Trust dated as of , 1998,
as the same may be amended from time to time (the "Declaration"). Capitalized
terms used herein but not defined shall have the meaning given them in the
Declaration. The Holder is entitled to the benefits of the Trust Common
Securities Guarantee to the extent provided therein. Each Holder of a Trust
Common Security, by acceptance of this Certificate, agrees to treat the
Debentures, and any other Affiliate Investment Instruments that are treated
as debt instruments by the relevant Investment Affiliate and by the
Partnership, as indebtedness for United States federal income tax purposes.
The Sponsor will provide a copy of the Declaration, the Trust Common
Securities Guarantee and the Limited Partnership Agreement to a Holder
without charge upon written request to the Sponsor at its principal place of
business. THE TRUST COMMON SECURITIES ARE TRANSFERABLE ON THE BOOKS AND
RECORDS OF THE TRUST ONLY IN ACCORDANCE WITH THE TERMS OF THE DECLARATION.
<PAGE>
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, the Trust has executed this certificate this
day of , 1998.
MERRILL LYNCH PREFERRED
CAPITAL TRUST
--------------------------------------------
Theresa Lang,
as Regular Trustee
(See reverse for additional terms)
A2-2
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is the Trust Common Security described in the within-mentioned
Declaration.
THE CHASE MANHATTAN BANK,
as Trustee
By:
-----------------------------------------
Authorized Signatory
A2-3
<PAGE>
[FORM OF REVERSE OF SECURITY]
Holders of Trust Common Securities shall be entitled to receive
cumulative cash distributions at a rate per annum of % of the stated
liquidation amount of $25 per Trust Common Security. Distributions on the
Trust Common Securities shall, from the date of original issue, accumulate
and be cumulative and shall be payable quarterly only to the extent that the
Trust has funds available for the payment of such distributions in the
Property Account. Distributions not paid on the scheduled payment date will
accumulate and compound quarterly (to the extent permitted by applicable law)
at the rate of % per annum. The term "Distributions" as used herein shall
mean ordinary cumulative distributions in respect of each Fiscal Period
together with any such Compounded Distributions. Amounts available to the
Trust for distribution to the holders of the Trust Common Securities will be
limited to payments received by the Trust from the Partnership on the
Partnership Preferred Securities or from the Company on the Partnership
Guarantee. Distributions on the Partnership Preferred Securities will be paid
only if, as and when declared in the sole discretion of the Company, as the
General Partner of the Partnership. If and to the extent that the Partnership
makes a distribution on the Partnership Preferred Securities held by the
Property Trustee or the Company makes a payment under the Partnership
Guarantee (the amount of any such partnership distribution, including any
compounded partnership distributions or guarantee payment being a "Payment
Amount"), the Trust shall and the Property Trustee is directed, to the extent
funds are available for that purpose, to make a Pro Rata Distribution of the
Payment Amount to Holders.
The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full quarterly
Distribution period on the basis of the actual number of days elapsed in a
90-day quarter.
Except as otherwise described herein, distributions on the Trust
Common Securities will be cumulative, will accumulate from the date of
initial issuance and will be payable quarterly in arrears, on March 30,
June 30, September 30 and December 30 of each year, commencing on ,
1998 if, as and when available for payment by the Property Trustee.
Distributions will be payable to the Holders of record of Trust Common
Securities as they appear
A2-4
<PAGE>
on the books and records of the Trust on the relevant record dates, which
will be one Business Day prior to the relevant payment dates. In the event
that any date on which distributions are payable is not a Business Day,
payment of the Distribution shall be made on the next succeeding day which is
a Business Day (without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next succeeding
calendar year, such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such
date. Payments of accumulated Distributions will be payable to Holders of
record of Trust Common Securities as they appear on the books and records of
the Trust on the record date with respect to the payment date for the Trust
Common Securities which corresponds to the payment date fixed by the
Partnership with respect to the payment of cumulative distributions on the
Partnership Preferred Securities.
The Trust Common Securities shall be redeemable as provided in the
Declaration.
A2-5
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Trust
Common Security Certificate to:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints -----------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------agent to transfer
this Trust Common Security Certificate on the books of the Trust. The agent
may substitute another to act for him or her.
Date:------------------------------
Signature:-------------------------
(Sign exactly as your name appears on the other side of this Trust Common
Security Certificate)
A2-6
<PAGE>
Exhibit 4.4
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
MERRILL LYNCH PREFERRED FUNDING , L.P.
Dated as of ________ __, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
--------------------
Page
-----
ARTICLE I
DEFINED TERMS
Section 1.1 DEFINITIONS................................................... 2
ARTICLE II
CONTINUATION OF THE PARTNERSHIP;
ADMISSION OF PARTNERSHIP PREFERRED SECURITIES HOLDERS;
WITHDRAWAL OF INITIAL LIMITED PARTNER
Section 2.1 CONTINUATION OF THE PARTNERSHIP............................... 11
Section 2.2 NAME.......................................................... 11
Section 2.3 PURPOSES OF THE PARTNERSHIP................................... 12
Section 2.4 TERM.......................................................... 12
Section 2.5 REGISTERED AGENT AND OFFICE................................... 12
Section 2.6 PRINCIPAL PLACE OF ACTIVITY................................... 12
Section 2.7 NAME AND ADDRESS OF GENERAL PARTNER........................... 13
Section 2.8 QUALIFICATION TO CONDUCT ACTIVITIES........................... 13
Section 2.9 ADMISSION OF HOLDERS OF PARTNERSHIP
PREFERRED SECURITIES; WITHDRAWAL OF
INITIAL LIMITED PARTNER....................................... 13
ARTICLE III
CAPITAL CONTRIBUTIONS; REPRESENTATION OF
PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST;
CAPITAL ACCOUNTS
Section 3.1 CAPITAL CONTRIBUTIONS......................................... 14
Section 3.2 PARTNERSHIP PREFERRED SECURITY HOLDER'S
INTEREST REPRESENTED BY PARTNERSHIP
PREFERRED SECURITIES.......................................... 15
Section 3.3 CAPITAL ACCOUNTS.............................................. 15
Section 3.4 INTEREST ON CAPITAL CONTRIBUTIONS............................. 16
Section 3.5 WITHDRAWAL AND RETURN OF
CAPITAL CONTRIBUTIONS......................................... 16
ARTICLE IV
ALLOCATIONS
Section 4.1 PROFITS AND LOSSES............................................ 16
Section 4.2 SPECIAL ALLOCATION............................................ 18
Section 4.3 WITHHOLDING................................................... 19
ARTICLE V
DISTRIBUTIONS
Section 5.1 DISTRIBUTIONS................................................. 20
Section 5.2 LIMITATIONS ON DISTRIBUTIONS.................................. 20
i
<PAGE>
Page
-----
ARTICLE VI
ISSUANCE OF PARTNERSHIP PREFERRED SECURITIES
Section 6.1 GENERAL PROVISIONS REGARDING PARTNERSHIP
PREFERRED SECURITIES.......................................... 21
Section 6.2 PARTNERSHIP PREFERRED SECURITIES.............................. 22
ARTICLE VII
PARTNERSHIP INVESTMENTS
Section 7.1 INITIAL AFFILIATE INVESTMENT INSTRUMENTS...................... 34
Section 7.2 REINVESTMENT OF PAYMENTS RECEIVED
BY THE PARTNERSHIP............................................ 35
ARTICLE VIII
BOOKS OF ACCOUNT, RECORDS AND REPORTS
Section 8.1 BOOKS AND RECORDS............................................. 37
Section 8.2 ACCOUNTING METHOD............................................. 38
Section 8.3 ANNUAL AUDIT.................................................. 38
ARTICLE IX
PAYMENT OF EXPENSES
Section 9.1 PAYMENT OF TRUST EXPENSES AND
PARTNERSHIP TAXES............................................. 38
Section 9.2 PAYMENT OF OTHER PARTNERSHIP EXPENSES......................... 38
ARTICLE X
POWERS, RIGHTS AND DUTIES
OF THE LIMITED PARTNERS
Section 10.1 LIMITATIONS................................................... 39
Section 10.2 LIABILITY..................................................... 39
Section 10.3 PRIORITY...................................................... 40
ARTICLE XI
POWERS, RIGHTS AND DUTIES
OF THE GENERAL PARTNER
Section 11.1 AUTHORITY..................................................... 40
Section 11.2 POWERS AND DUTIES OF GENERAL PARTNER.......................... 40
Section 11.3 OBLIGATIONS AND EXPENSES PAYABLE BY
GENERAL PARTNER............................................... 43
Section 11.4 LIABILITY..................................................... 44
Section 11.5 OUTSIDE ACTIVITIES............................................ 44
Section 11.6 LIMITS ON GENERAL PARTNER'S POWERS............................ 44
Section 11.7 EXCULPATION................................................... 45
Section 11.8 FIDUCIARY DUTY................................................ 46
Section 11.9 INDEMNIFICATION............................................... 47
Section 11.10 TAX MATTERS .................................................. 48
Section 11.11 CONSOLIDATION, MERGER OR SALE OF ASSETS....................... 49
ii
<PAGE>
Page
-----
ARTICLE XII
TRANSFERS OF INTERESTS BY PARTNERS
Section 12.1 TRANSFER OF INTERESTS......................................... 50
Section 12.2 TRANSFER OF L.P. CERTIFICATES................................. 51
Section 12.3 DEFINITIVE L.P. CERTIFICATES;
PERSONS DEEMED PARTNERSHIP
PREFERRED SECURITY HOLDERS.................................... 52
Section 12.4 BOOK ENTRY PROVISIONS......................................... 53
Section 12.5 REGISTRAR, TRANSFER AGENT AND PAYING AGENT.................... 55
ARTICLE XIII
WITHDRAWAL, DISSOLUTION;
LIQUIDATION AND DISTRIBUTION OF ASSETS
Section 13.1 WITHDRAWAL OF PARTNERS........................................ 56
Section 13.2 DISSOLUTION OF THE PARTNERSHIP................................ 57
Section 13.3 LIQUIDATION................................................... 58
Section 13.4 DISTRIBUTION IN LIQUIDATION................................... 59
Section 13.5 RIGHTS OF LIMITED PARTNERS.................................... 59
Section 13.6 TERMINATION................................................... 60
ARTICLE XIV
AMENDMENTS AND MEETINGS
Section 14.1 AMENDMENTS.................................................... 60
Section 14.2 AMENDMENT OF CERTIFICATE...................................... 60
Section 14.3 MEETINGS OF PARTNERS.......................................... 61
ARTICLE XV
MISCELLANEOUS
Section 15.1 NOTICES....................................................... 62
Section 15.2 POWER OF ATTORNEY............................................. 63
Section 15.3 ENTIRE AGREEMENT.............................................. 64
Section 15.4 GOVERNING LAW................................................. 64
Section 15.5 EFFECT........................................................ 64
Section 15.6 PRONOUNS AND NUMBER........................................... 64
Section 15.7 CAPTIONS...................................................... 64
Section 15.8 PARTIAL ENFORCEABILITY........................................ 64
Section 15.9 COUNTERPARTS.................................................. 64
Section 15.10 WAIVER OF PARTITION........................................... 65
Section 15.11 REMEDIES...................................................... 65
Schedule 1 LIST OF PARTNERS
Annex A FORM OF L.P. CERTIFICATE
Exhibit A FORM OF INDENTURE OF MERRILL LYNCH & CO., INC.
Exhibit B FORM OF INDENTURE FOR SUBSIDIARIES
iii
<PAGE>
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
MERRILL LYNCH PREFERRED FUNDING, L.P.
________ __, 1998
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of Merrill Lynch
Preferred Funding , L.P., a Delaware limited partnership (the "Partnership"),
dated as of ________ __, 1998, among Merrill Lynch & Co., Inc., a Delaware
corporation (the "Company"), as the general partner, Merrill Lynch Group, Inc.,
a Delaware corporation, as the initial limited partner (the "Initial Limited
Partner") and such other Persons (as defined herein) who become Limited Partners
(as defined herein) as provided herein.
WHEREAS, the Company and the Initial Limited Partner entered into an
Agreement of Limited Partnership of Merrill Lynch Preferred Funding , L.P.
dated as of December 19, 1997 (the "Original Partnership Agreement"), and the
Partners (as defined herein) desire to continue the Partnership under the Act
(as defined herein) and to amend and restate the Original Partnership Agreement
in its entirety;
WHEREAS, the Certificate of Limited Partnership of the Partnership was
filed with the Office of the Secretary of State of the State of Delaware on
December 19, 1997;
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree to amend
and restate the Original Partnership Agreement as follows:
<PAGE>
ARTICLE I
DEFINED TERMS
Section 1 DEFINITIONS. Unless the context otherwise requires, the
terms defined in this Article I shall, for the purposes of this Agreement,
have the meanings herein specified. Terms used in this Agreement and not
otherwise defined herein shall have the meanings ascribed to such terms in
the Declaration.
"Act" means the Delaware Revised Uniform Limited Partnership Act,
Del. Code Ann. tit. 6, Section 17-101 et seq., as amended from time to time.
"Affiliate" has the meaning set forth in Section 1.1 of the
Declaration.
"Affiliate Investment Instruments" has the meaning set forth in
Section 7.1 of this Agreement.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership, as it may be amended or supplemented from time to time.
"Beneficiaries" has the meaning set forth in Section 11.3 of this
Agreement.
"Book-Entry Interest" means a beneficial interest in the L.P.
Certificates, ownership and transfers of which shall be maintained and made
through book entries of a Clearing Agency as set forth in Section 12.4 of
this Agreement.
"Business Day" means any day other than a day on which banking
institutions in The City of New York are authorized or required by law to
close.
"Capital Account" has the meaning set forth in Section 3.3 of this
Agreement.
"Certificate" means the Certificate of Limited Partnership of the
Partnership filed with the Secretary of State of the State of Delaware on
December 19, 1997, as it may be amended and restated from time to time.
"Change in 1940 Act Law" has the meaning set forth in Section 1.1 of
the Declaration.
2
<PAGE>
"Closing Date" has the meaning set forth in Section 1.1 of the
Declaration.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation.
"Company" means Merrill Lynch & Co., Inc., a Delaware corporation.
"Compounded Distributions" has the meaning set forth in Section 6.2
of this Agreement.
"Declaration" means the Amended and Restated Declaration of Trust by
and among the Company, as Sponsor, the Property Trustee, the Delaware
Trustee, and the Regular Trustees, dated as of ________ __, 1998.
"Definitive L.P. Certificates" has the meaning set forth in Section
12.4(a) of this Agreement.
"Delaware Partnership Act" means the Revised Uniform Limited
Partnership Act of the State of Delaware (6 Del. C. Section 17-101, et seq.).
"Delaware Trustee" has the meaning set forth in Section 6.2 of the
Declaration.
"Distribution Payment Date" has the meaning set forth in Section
6.2(b)(ii) of this Agreement.
"Distributions" means the cumulative cash distributions payable by
the Partnership with respect to the Interests represented by the Partnership
Preferred Securities, which amounts will accumulate on the $25 liquidation
preference of each Partnership Preferred Security from the Closing Date and
are payable quarterly in arrears in accordance with Sections 5.1 and 6.2(b)
of this Agreement.
"DTC" means the Depository Trust Company, the initial Clearing
Agency.
"Eligible Debt Securities" means cash or book-entry securities,
negotiable instruments, or other securities of entities not affiliated with
the Company represented by instruments in registered form which evidence
3
<PAGE>
any of the following: (a) any security issued or guaranteed as to principal
or interest by the United States, or by a person controlled or supervised by
and acting as an instrumentality of the Government of the United States
pursuant to authority granted by the Congress of the United States, or any
certificate of deposit for any of the foregoing; (b) commercial paper issued
pursuant to Section 3(a)(3) of the Securities Act of 1933 (the "Securities
Act") and having, at the time of the investment or contractual commitment to
invest therein, a rating from each of S&P and Moody's in the highest rating
category granted by such rating agency and having a maturity not in excess of
nine months; (c) demand deposits, time deposits and certificates of deposit
which are fully insured by the FDIC, in no case having a maturity greater
than nine months; (d) repurchase obligations, having a maturity of no greater
than nine months; with respect to any security that is a direct obligation
of, or fully guaranteed by, the Government of the United States of America or
any agency or instrumentality thereof, the obligations of which are backed by
the full faith and credit of the United States of America, in either case
entered into with a depository institution or trust company which is an
Eligible Institution and the deposits of which are insured by the FDIC; and
(e) any other security which is identified as a permitted investment of a
finance subsidiary pursuant to Rule 3a-5 under the 1940 Act at the time it is
acquired by the Partnership.
"Eligible Institution" means a depository institution organized
under the laws of the United States of America or any one of the states
thereof or the District of Columbia (or any domestic branch of a foreign
bank), (1)(i) which has either (A) a long-term unsecured debt rating of AA or
better by S&P and Aa or better by Moody's or (B) a short-term unsecured debt
rating or a certificate of deposit rating of A-1+ or better by S&P and P-1 or
better by Moody's and (ii) whose deposits are insured by the FDIC or (2)(i)
the parent of which has a long-term or short-term unsecured debt rating which
signifies investment grade and (ii) whose deposits are insured by the FDIC.
"FDIC" means the Federal Deposit Insurance Corporation or any
successor thereto.
4
<PAGE>
"Finance Subsidiary" means any wholly-owned subsidiary of the
Company the principal purpose of which is to raise capital for the Company by
issuing securities that are guaranteed by the Company and the proceeds of
which are loaned to or invested in the Company or one or more of its
affiliates.
"Fiscal Period" means each calendar quarter.
"Fiscal Year" means the calendar year.
"General Partner" means Merrill Lynch & Co., Inc., in its capacity
as the general partner of the Partnership, its permitted successors, or any
successor general partner in the Partnership admitted as such pursuant to the
terms of this Agreement.
"General Partner Capital Contribution" means the contribution by the
General Partner to the Partnership made contemporaneous with the issuance of
the Partnership Preferred Securities.
"General Partner Interest" means the Interest of the General Partner
in the Partnership.
"Holder" or "Partnership Preferred Security Holder" means a Limited
Partner in whose name an L.P. Certificate representing Partnership Preferred
Securities is registered.
"Indentures" means the Indentures between the Company or certain of
its subsidiaries, as the case may be, and The Chase Manhattan Bank, as
Indenture Trustee, dated as of December 17, 1996, forms of which are attached
hereto as Exhibits A and B, respectively.
"Independent Financial Adviser" shall mean a nationally recognized
accounting firm, bank or investment banking firm which shall be designated by
the Company and which firm does not (and whose directors, officers, employees
and affiliates do not) have a direct or indirect material equity interest in
the Company or any of its subsidiaries.
"Initial Affiliate Debentures" has the meaning set forth in Section
7.1(b) of this Agreement.
5
<PAGE>
"Initial Company Debenture" has the meaning set forth in Section
7.1(b) of this Agreement.
"Initial Debentures" means collectively, the Initial Company
Debenture and the Initial Affiliate Debentures.
"Initial Limited Partner" means Merrill Lynch Group, Inc., a
Delaware corporation.
"Initial Partnership Proceeds" means the aggregate proceeds received
by the Partnership from the sale of the Partnership Preferred Securities and
the General Partner Capital Contribution.
"Interest" means the entire ownership interest of a Partner in the
Partnership at any particular time, including, without limitation, its
interest in the capital, profits, and losses of, and distributions from, the
Partnership.
"Investment Affiliate" means the Company or any corporation,
partnership, limited liability company or other entity (other than the
Partnership or the Trust) that (i) is controlled by the Company and (ii) is
not an investment company by reason of Section 3(a) or 3(b) of the 1940 Act
or is otherwise an eligible recipient of funds directly or indirectly from
the Trust pursuant to an order issued by the Securities and Exchange
Commission.
"Investment Event of Default" means an event of default under any
Affiliate Investment Instrument that is a debt instrument or the breach by an
Investment Affiliate of its obligations under any Affiliate Investment
Instrument that is an equity instrument.
"Investment Guarantee" has the meaning specified in Section 1.1 of
the Declaration.
"Investment Offer" has the meaning specified in Section 7.2(b) of
this Agreement.
"Limited Partner" means any Person who is admitted to the
Partnership as a limited partner pursuant to the terms of this Agreement, in
such Person's capacity as a limited partner of the Partnership.
6
<PAGE>
"Liquidator" has the meaning specified in Section 13.3 of this
Agreement.
"L.P. Certificate" means a certificate substantially in the form
attached hereto as Annex A, evidencing the Partnership Preferred Securities
held by a Limited Partner.
"Majority in Liquidation Preference" means Holder(s) of Partnership
Preferred Securities who are the record owners of Partnership Preferred
Securities whose aggregate liquidation preferences represent more than 50% of
the aggregate liquidation preference of all Partnership Preferred Securities
then outstanding.
"Moody's" means Moody's Investors Service, Inc. or any successor
thereto.
"Net Income" and "Net Loss", respectively, for any Fiscal Period
mean the income and loss, respectively, of the Partnership for such Fiscal
Period as determined in accordance with the method of accounting followed by
the Partnership for United States federal income tax purposes, including, for
all purposes, the net income, if any, from the Affiliate Investment
Instruments, Eligible Debt Securities and any income exempt from tax and any
noncapital, nondeductible expenditures of the Partnership which are described
in the Code.
"1940 Act" has the meaning set forth in Section 1.1 of the
Declaration.
"Original Partnership Agreement" has the meaning set forth in the
recitals to this Agreement.
"Partners" means the General Partner and the Limited Partners,
collectively, where no distinction is required by the context in which the
term is used.
"Partnership Covered Person" means any Partner, any Affiliate of a
Partner or any officers, directors, shareholders, partners, members,
employees, representatives or agents of a Partner or its respective
Affiliates, or any employee or agent of the Partnership or its Affiliates or
any Special Representative.
7
<PAGE>
"Partnership Enforcement Event" has the meaning set forth in Section
6.2(h)(i) of this Agreement.
"Partnership Guarantee" means the Partnership Guarantee Agreement
dated as of ________ __, 1998 by the Company in favor of the Partnership
Preferred Security Holders with respect to the Partnership Preferred
Securities, as amended or supplemented from time to time.
"Partnership Indemnified Person" means the General Partner, any
Special Representative, any Affiliate of the General Partner or any Special
Representative or any officers, directors, shareholders, members, partners,
employees, representatives or agents of the General Partner or any Special
Representative, or any of their respective Affiliates, or any employee or
agent of the Partnership or its Affiliates.
"Partnership Investment Company Event" means that the General
Partner shall have requested and received an opinion of nationally recognized
independent legal counsel experienced in such matters to the effect that as a
result of the occurrence on or after the date hereof of a Change in 1940 Act
Law, the Partnership is or will be considered an "investment company" which
is required to be registered under the 1940 Act.
"Partnership Liquidation Distribution" has the meaning set forth in
Section 6.2(g) of this Agreement.
"Partnership Preferred Securities" represent the Interests of
Limited Partners and have the preference and designation set forth in Section
6.2(a) of this Agreement.
"Partnership Preferred Securities Purchase Agreement" means the
partnership purchase agreement between the Trust and the Partnership
providing for the purchase of the Partnership Preferred Securities.
"Partnership Preferred Security Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest as reflected on the books of DTC, or on the books of a Person
maintaining an account with DTC (directly as a participant or as an indirect
participant, in each case in accordance with the rules of DTC or such
participant).
8
<PAGE>
"Partnership Special Event" means either a Partnership Tax Event or
a Partnership Investment Company Event.
"Partnership Successor Securities" has the meaning set forth in
Section 11.11 of this Agreement.
"Partnership Tax Event" means that the General Partner shall have
requested and received an opinion of nationally recognized independent tax
counsel experienced in such matters to the effect that there has been a Tax
Action which affects any of the events described in (i) through (iii) below
and that there is more than an insubstantial risk that (i) the Partnership
is, or will be, subject to United States federal income tax with respect to
income accrued or received on the Affiliate Investment Instruments or the
Eligible Debt Securities, (ii) the Partnership is, or will be, subject to
more than a de minimis amount of other taxes, duties or other governmental
charges or (iii) interest payable by an Investment Affiliate with respect to
the Initial Debentures is not, or will not be, deductible by such Investment
Affiliate for United States federal income tax purposes.
"Paying Agent" shall have the meaning set forth in Section 12.5 of
this Agreement.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other
entity of whatever nature.
"Power of Attorney" means the Power of Attorney granted pursuant to
Section 15.2 of this Agreement.
"Property Trustee" has the meaning set forth in Section 1.1 of the
Declaration.
"Purchase Agreement" means the Purchase Agreement dated ________ __,
1998 among the Company, the Trust, the Partnership and Merrill, Lynch,
Pierce, Fenner & Smith Incorporated, as representatives of the other
underwriters named in Schedule A thereto.
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"Record Date" means (i) as long as the Trust Preferred Securities
remain (or, in the event that the Trust is liquidated in connection with a
Trust Special Event, as long as the Partnership Preferred Securities remain)
in book-entry only form, one Business Day prior to the relevant payment dates
and (ii) in the event that the Trust Preferred Securities (or in the event
that the Trust is liquidated in connection with a Trust Special Event, the
Partnership Preferred Securities) shall not continue to remain in book-entry
only form, the 15th day of the month of the relevant payment date.
"Redemption Notice" has the meaning set forth in Section 6.2(e) of
this Agreement.
"Redemption Price" has the meaning set forth in Section 6.2(c) of
this Agreement.
"Registrar" has the meaning set forth in Section 12.5 of this
Agreement.
"Regular Trustees" has the meaning set forth in Section 1.1 of the
Declaration.
"Reinvestment Criteria" has the meaning specified in Section 7.2(c)
of this Agreement.
"S&P" means Standard & Poor's Ratings Services or any successor
thereof.
"Special Representative" has the meaning set forth in Section
6.2(h)(i) of this Agreement.
"Tax Action" has the meaning set forth in Section 1.1 of the
Declaration.
"Tax Matters Partner" means the General Partner designated as such
in Section 11.10 of this Agreement.
"10% in Liquidation Preference" means Holder(s) of the Partnership
Preferred Securities voting together as a single class representing 10% of
the aggregate liquidation amount of the Partnership Preferred Securities.
"Treasury Regulations" has the meaning set forth in Section 1.1 of
the Declaration.
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"Trust" means the Merrill Lynch Preferred Capital Trust , a
Delaware business trust, formed under the Declaration.
"Trust Common Securities" has the meaning specified in Section 8.1
of the Declaration.
"Trust Common Securities Guarantee" means the Trust Common
Securities Guarantee Agreement dated as of ________ __, 1998, entered into by
the Company, as Guarantor, for the benefit of the holders of the Trust Common
Securities.
"Trust Preferred Securities" has the meaning specified in Section
8.1 of the Declaration.
"Trust Preferred Securities Guarantee" means the Trust Preferred
Securities Guarantee Agreement dated as of ________ __, 1998, entered into by
the Company, as Guarantor, for the benefit of the holders of the Trust
Preferred Securities.
ARTICLE II
CONTINUATION OF THE PARTNERSHIP;
ADMISSION OF PARTNERSHIP PREFERRED SECURITIES HOLDERS;
WITHDRAWAL OF INITIAL LIMITED PARTNER
Section 2.1 CONTINUATION OF THE PARTNERSHIP. The parties hereto
agree to continue the Partnership in accordance with the terms of this
Agreement. The General Partner, for itself and as agent for the Limited
Partners, shall make every reasonable effort to assure that all certificates
and documents are properly executed and shall accomplish all filing,
recording, publishing and other acts necessary or appropriate for compliance
with all the requirements for the continuation of the Partnership as a
limited partnership under the Act and under all other laws of the State of
Delaware or such other jurisdictions in which the General Partner determines
that the Partnership may conduct activities. The rights and duties of the
Partners shall be as provided herein and, subject to the terms hereof, under
the Act.
Section 2.2 NAME. The name of the Partnership is "Merrill Lynch
Preferred Funding , L.P.", as such
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name may be modified from time to time by the General Partner following
written notice to the Limited Partners.
Section 2.3 PURPOSES OF THE PARTNERSHIP. The purposes of the
Partnership are (a) to issue limited partnership interests in the Partnership
in the form of Partnership Preferred Securities, (b) to receive the General
Partner Capital Contribution, (c) to use substantially all of the Initial
Partnership Proceeds to purchase, as an investment, the Initial Debentures,
(d) to invest, at all times, an amount equal to at least 1% of the Initial
Partnership Proceeds in Eligible Debt Securities, (e) to receive interest and
other payments on the Affiliate Investment Instruments and the Eligible Debt
Securities held by the Partnership from time to time, (f) to make
Distributions on the Partnership Preferred Securities and distributions on
the General Partner Interest if, as and when declared by the General Partner
in its sole discretion, (g) subject to the restrictions and conditions
contained in this Agreement, to make additional investments in Affiliate
Investment Instruments and Eligible Debt Securities and to dispose of any
such investments and (h) except as otherwise limited herein, to enter into,
make and perform all contracts and other undertakings, and engage in those
activities and transactions as the General Partner may reasonably deem
necessary or advisable for the carrying out of the foregoing purposes of the
Partnership. The Partnership may not engage in any other activities or
operations except as contemplated by the preceding sentence.
Section 2.4 TERM. The term of the Partnership shall commence
upon the filing of the Certificate in the Office of the Secretary of State of
the State of Delaware and shall continue until the Partnership is dissolved
in accordance with the provisions of this Agreement.
Section 2.5 REGISTERED AGENT AND OFFICE. The Partnership's
registered agent and office in Delaware shall be CT Corporation, Corporate
Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. At any time,
the General Partner may designate another registered agent and/or registered
office.
Section 2.6 PRINCIPAL PLACE OF ACTIVITY. The principal place of
activity of the Partnership shall be
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c/o Merrill Lynch & Co., Inc., World Financial Center, North Tower, 250 Vesey
Street, New York, New York 10281. Upon ten days' written notice to the
Partners, the General Partner may change the location of the Partnership's
principal place of activity, provided that such change has no material
adverse effect upon any Partner.
Section 2.7 NAME AND ADDRESS OF GENERAL PARTNER. The name and
address of the General Partner are as follows:
Merrill Lynch & Co., Inc.
World Financial Center
South Tower
225 Liberty Street
New York, New York 10080-6105
Attention: Treasurer
The General Partner may change its name or address from time to time, in
which event the General Partner shall promptly notify the Limited Partners of
any such change.
Section 2.8 QUALIFICATION TO CONDUCT ACTIVITIES. The General
Partner shall cause the Partnership to become qualified, formed or registered
under the applicable qualification, fictitious name or similar laws of any
jurisdiction in which the Partnership conducts activities.
Section 2.9 ADMISSION OF HOLDERS OF PARTNERSHIP PREFERRED
SECURITIES; WITHDRAWAL OF INITIAL LIMITED PARTNER.
(a) Without execution of this Agreement, upon the receipt of an L.P.
Certificate by a Person, whether by purchase, gift, devise or other valid
transfer, which receipt shall be deemed to constitute a request by such
Person that the books and records of the Partnership reflect such Person's
admission as a Limited Partner, such Person shall be admitted to the
Partnership as a Limited Partner and shall become bound by this Agreement.
(b) Following the first admission of a Partnership Preferred
Security Holder to the Partnership as a Limited Partner, the Initial Limited
Partner shall withdraw from the Partnership and shall receive the return of
its capital contribution without interest or deduction.
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(c) The name and mailing address of each Partner and the amount
contributed by such Partner to the capital of the Partnership shall be listed
on the books and records of the Partnership. The General Partner shall be
required to update the books and records from time to time as necessary to
accurately reflect such information.
ARTICLE III
CAPITAL CONTRIBUTIONS; REPRESENTATION OF
PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST;
CAPITAL ACCOUNTS
Section 3.1 CAPITAL CONTRIBUTIONS.
(a) The General Partner has, prior to the date hereof, contributed
an aggregate of $15.00 to the capital of the Partnership, which amount is
equal to at least 15% of the total capital contributions to the Partnership,
after taking into account the contribution of the Initial Limited Partner
referred to in Section 3.1(b). Contemporaneous with the issuance of the
Partnership Preferred Securities, the General Partner shall make the General
Partner Capital Contribution. The General Partner shall, from time to time,
make such additional capital contributions as are necessary to maintain at
all times a positive Capital Account balance equal to at least one percent
(1%) of the aggregate positive Capital Account balances of all Partners at
the end of such period.
(b) The Initial Limited Partner has, prior to the date hereof,
contributed the amount of $85.00 to the capital of the Partnership, which
amount shall be returned to the Initial Limited Partner as contemplated by
Section 2.9(b).
(c) On the Closing Date, the Trust shall, in exchange for a
definitive L.P. Certificate, contribute to the capital of the Partnership on
behalf of the Trust an amount in cash equal to the gross proceeds from the
sale of the Trust Preferred Securities and the Trust Common Securities (such
amount being a capital contribution to the Partnership). On such date,
immediately following the withdrawal of the Initial Limited Partner, the
Trust shall be the sole Limited Partner.
(d) No Limited Partner shall at any time be required to make any
additional capital contributions to the Partnership, except as may be
required by law.
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Section 3.2 PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST
REPRESENTED BY PARTNERSHIP PREFERRED SECURITIES. A Partnership Preferred
Security Holder's Interest shall be represented by the Partnership Preferred
Securities held by or on behalf of such Partner. Each Partnership Preferred
Security Holder's respective ownership of Partnership Preferred Securities
shall be set forth on the books and records of the Partnership. Each Partner
hereby agrees that its Interest in the Partnership shall for all purposes be
personal property. No Partner shall have an interest in specific Partnership
property.
Section 3.3 CAPITAL ACCOUNTS.
(a) Establishment and Maintenance of Capital Accounts. The
Partnership shall establish and maintain a separate account (the "Capital
Account") for each Partner. The initial balance of the Capital Account for
each Partner shall be the amount as set out opposite the name of each of the
Partners on Schedule 1 attached hereto. The Capital Account of each Partner
shall be increased by (i) the dollar amount of any additional contributions
made by such Partner and (ii) allocations to such Partner of income and gain
(including income exempt from tax). The Capital Account of each Partner
shall be decreased by (i) the dollar amount of any distributions made to such
Partner, and (ii) allocations to such Partner of loss and deduction
(including noncapital, nondeductible expenditures not deductible in computing
the Partnership's income or loss for United States federal income tax
purposes).
(b) Compliance with Regulations. Notwithstanding any other
provision of this Agreement to the contrary, the provisions of Section 3.3(a)
hereof regarding the maintenance of Capital Accounts shall be construed so as
to comply with the Treasury Regulations promulgated under section 704 of the
Code. The General Partner, in its sole discretion, is authorized to modify
such provisions to the minimum extent necessary to comply with such Treasury
Regulations.
Section 3.4 INTEREST ON CAPITAL CONTRIBUTIONS. Except as
provided herein, no Partner shall be entitled to interest on or with respect
to any capital contribution to the Partnership.
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Section 3.5 WITHDRAWAL AND RETURN OF CAPITAL CONTRIBUTIONS.
Subject to Section 3.1(b) hereof, no Partner shall be entitled to withdraw
any part of such Partner's capital contribution to the Partnership. No
Partner shall be entitled to receive any distributions from the Partnership,
except as provided in this Agreement.
ARTICLE IV
ALLOCATIONS
Section 4.1 PROFITS AND LOSSES. After giving effect to the
special allocation provisions set forth in Section 4.2 which special
allocations shall take precedence over any allocations made pursuant to this
Section 4.1,
(a) the Partnership's Net Income for each Fiscal Period of the
Partnership shall be allocated as follows:
(i) First, to each Holder of a Partnership Preferred Security in an
amount equal to the excess, if any, of (x) all Net Losses, if any,
allocated to each such Holder from the date of issuance of the Partnership
Preferred Security through and including the close of such Fiscal Period
pursuant to Section 4.1(b)(ii) below over (y) the amount of Net Income, if
any, allocated to each such Holder pursuant to this Section 4.1(a)(i) in
all prior Fiscal Periods.
(ii) Second, to the Holders of the Partnership Preferred Securities,
an amount of Net Income equal to the excess of (x) the Distributions
accumulated on the Partnership Preferred Securities from the date of their
issuance through and including the last day of such Fiscal Period,
including any Compounded Distributions payable with respect thereto, over
(y) the amount of Net Income allocated to the Holders of the Partnership
Preferred Securities pursuant to this Section 4.1(a)(ii) in all prior
Fiscal Periods. Amounts allocated to all Partnership Preferred Security
Holders shall be allocated among such Holders in proportion to the number
of Partnership Preferred Securities held by such Holders.
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(iii) Any remaining Net Income shall be allocated to the General
Partner.
(b) The Partnership's Net Loss for any Fiscal Period shall be
allocated as follows:
(i) First, to the General Partner until the balance of the General
Partner's Capital Account is reduced to zero, provided, however, that the
aggregate amount of Net Losses allocated to the General Partner pursuant to
this Section 4.1(b)(i) shall not exceed the sum of 14% of the total capital
contributions of all Partners plus the aggregate Net Income allocated to
the General Partner pursuant to this Section 4.1.
(ii) Second, among the Holders in proportion to their respective
aggregate Capital Account balances, until the Capital Account balances of
such Holders are reduced to zero.
(iii) Any remaining Net Loss shall be allocated to the General
Partner.
(c) DAILY DETERMINATION. For purposes of determining the profits,
losses or any other items allocable to any period, profits, losses and any
such other items shall be determined on a daily basis, unless the General
Partner determines that another method is permissible under Section 704 of
the Code and the Treasury Regulations promulgated thereunder. Unless
otherwise specified, such profits, losses or other items shall be determined
for each Fiscal Period.
Section 4.2 SPECIAL ALLOCATION.
(a) All expenditures that are (i) incurred by, or on behalf of, the
Partnership and (ii) paid, or otherwise reimbursed, by the General Partner
out of its own funds shall be allocated entirely to the General Partner.
(b) In the event any Partner unexpectedly receives any adjustments,
allocations or distributions described in Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of the Partnership's income
(including gross income) shall be specially allocated to such Partner in a
manner sufficient to eliminate
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the deficit, if any, in the balance of the Capital Account of such Partner as
quickly as possible. The foregoing is intended to be a "qualified income
offset" provision as described in Treasury Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted and applied in all respects in
accordance with such Treasury Regulation.
(c) SECTION 704 COMPLIANCE. While this Agreement does not
specifically provide for certain provisions required by Treasury Regulation
Sections 1.704-1(b) and 1.704-2 because those provisions apply to
transactions that are not expected to occur as regards the Partnership, the
Partners intend that the allocations under Section 4.1 conform to Treasury
Regulations Sections 1.704-1(b) and 1.704-2 (including, without limitation,
the minimum gain chargeback, chargeback of partner nonrecourse debt minimum
gain and partner nonrecourse debt provisions of such Treasury Regulations),
and, to the extent necessary due to the occurrence of unexpected events, the
General Partner shall make such changes in the allocations under Section 4.1
as it believes are reasonably necessary to meet the requirements of such
Treasury Regulations.
(d) ADJUSTMENT OF ALLOCATIONS. If the allocations set forth in this
Article IV are adjusted by the Internal Revenue Service and the Tax Matters
Partner agrees to such adjustments, such allocations shall be amended to the
minimum extent necessary to conform with such adjustments.
(e) ADDITIONAL ALLOCATIONS. Notwithstanding the foregoing, if, upon
the final dissolution and termination of the Partnership and after taking
into account all allocations of Net Income and Net Losses (and other tax
items) under this Article IV, the distributions to be made in accordance with
the positive Capital Account balances would result in a distribution that
would be different from a distribution under Article XIII, then gross items
of income and gain (and other tax items) for the taxable year of the final
dissolution and termination (and, to the extent permitted under section
761(c) of the Code, gross items of income and gain, and other tax items, for
the immediately preceding taxable year) shall be allocated to the Partners to
increase or decrease their respective Capital Account balances so that the
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final distribution will occur in the same manner as a distribution under
Section 13.4.
(f) GENERAL PARTNER ALLOCATIONS. Notwithstanding any provision of
this Agreement to the contrary, the interest of the General Partner in each
item of Partnership income, gain, loss, deduction, or credit shall, at all
times during the existence of the Partnership, be equal to at least (A) at
any time that the aggregate capital contributions to the Partnership are
equal to or less than $50,000,000, one percent (1%) of each such item and (B)
at any time that the aggregate capital contributions to the Partnership are
greater than $50,000,000, at least a percentage equal to the product of (i)
one percent (1%) and (ii) a fraction (not exceeding 1 and not less than 0.2),
the numerator of which is $50,000,000 and the denominator of which is the
lesser of (x) the aggregate Capital Account balances of the Capital Accounts
of all Partners at such time and (y) the aggregate capital contributions to
the Partnership of all Partners at such time.
Section 4.3 WITHHOLDING. The Partnership shall comply with
withholding requirements under Federal, state and local law and shall remit
amounts withheld to and file required forms with applicable jurisdictions.
To the extent that the Partnership is required to withhold and pay over any
amounts to any authority with respect to distributions or allocations to any
Partner, the amount withheld shall be deemed to be a distribution in the
amount of the withholding to the Partner. In the event of any claimed
over-withholding, Partners shall be limited to an action against the
applicable jurisdiction. If the amount withheld was not withheld from actual
distributions, the Partnership may reduce subsequent distributions by the
amount of such withholding. Each Partner agrees to furnish the Partnership
with any representations and forms as shall reasonably be requested by the
Partnership to assist it in determining the extent of, and in fulfilling, its
withholding obligations.
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ARTICLE V
DISTRIBUTIONS
Section 5.1 DISTRIBUTIONS. Limited Partners shall receive
periodic Distributions and Compounded Distributions, if any, redemption
payments and liquidation distributions in accordance with the terms of the
Partnership Preferred Securities set forth in Article VI. The General
Partner shall in its sole discretion determine whether and when Distributions
shall be payable; provided, however, that if the General Partner shall
determine a Distribution will not be paid on a scheduled Distribution Payment
Date, the General Partner shall give notice of its determination not to pay
such Distribution to Limited Partners of record as of the Record Date for the
payment of such Distribution; provided, further, however, that the General
Partner shall not declare distributions, and no distributions shall be
payable by the Partnership to the General Partner in respect of its General
Partner Interest unless all accumulated and unpaid Distributions, including
any Compounded Distributions, have been paid in full for all prior Fiscal
Periods. Subject to the immediately preceding sentence, to the extent that
the aggregate payments of interest (or dividends) received by the Partnership
in respect of Affiliate Investment Instruments and Eligible Debt Securities
for each Fiscal Period exceed the amount of Distributions, including any
Compounded Distributions, paid on the Partnership Preferred Securities for
such Fiscal Period, the General Partner, in its sole discretion may declare
and distribute such excess funds to the General Partner in respect of its
General Partner Interest.
Section 5.2 LIMITATIONS ON DISTRIBUTIONS. The Partnership shall
not make a Distribution to any Partner on account of such Partner's Interest
if such Distribution would violate Section 17-607 of the Act or other
applicable law.
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ARTICLE VI
ISSUANCE OF PARTNERSHIP PREFERRED SECURITIES
Section 6.1 GENERAL PROVISIONS REGARDING PARTNERSHIP PREFERRED
SECURITIES.
(a) There is hereby authorized for issuance and sale Partnership
Preferred Securities having an aggregate liquidation preference not greater than
$ and having the designation, annual distribution rate, liquidation
preference, redemption terms, and other powers, preferences and special rights
and limitations set forth in this Article VI.
(b) The payment of Distributions (including payments of distributions
by the Partnership in liquidation or on redemption in respect of Partnership
Preferred Securities) shall be guaranteed by the Company pursuant to and to the
extent set forth in the Partnership Guarantee. The Partnership Preferred
Security Holders hereby authorize the General Partner to hold the Guarantee on
behalf of the Partnership Preferred Security Holders. In the event of an
appointment of a Special Representative pursuant to Section 6.2(i), among other
things, to enforce the Partnership Guarantee, the Special Representative may
take possession of the Partnership Guarantee for such purpose. If no Special
Representative has been appointed to enforce the Partnership Guarantee, the
General Partner has the right to enforce the Partnership Guarantee on behalf of
the Partnership Preferred Security Holders. The Partnership Preferred Security
Holders, by acceptance of such Partnership Preferred Securities, acknowledge and
agree to the subordination provisions in, and other terms of, the Partnership
Guarantee.
(c) The Partnership may not issue any interests in the Partnership
other than the Partnership Preferred Securities and the General Partner
Interest, provided that the Partnership may accept consideration for additional
capital contributions from the General Partner with respect to the General
Partner Interest. All Partnership Preferred Securities shall rank senior to all
other Interests in the Partnership in respect of the right to receive
Distributions. All Partnership Preferred Securities redeemed, purchased or
otherwise acquired by the Partnership shall be canceled. The Part-
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nership Preferred Securities will be issued in registered form only.
(d) No Holder shall be entitled as a matter of right to subscribe for
or purchase, or have any preemptive right with respect to, any part of any new
or additional limited partnership interests, or of securities convertible into
any Partnership Preferred Securities or other limited partnership interests,
whether now or hereafter authorized and whether issued for cash or other
consideration or by way of a distribution.
(e) Any of the Partnership Preferred Securities that are owned by the
Company or by any entity directly or indirectly controlled by, or under direct
or indirect common control with, the Company, shall not be entitled to vote or
consent with respect to any Partnership Preferred Security owned by it, and
shall, for purposes of such vote or consent, be treated as if they were not
outstanding except for Partnership Preferred Securities purchased or acquired by
the Company or its affiliates in connection with transactions effected by or for
the account of customers of the Company or any of its subsidiaries or in
connection with the distribution or trading of such Partnership Preferred
Securities; provided, however, that persons (other than affiliates of the
Company) to whom the Company or any of its subsidiaries have pledged Partnership
Preferred Securities may vote or consent with respect to such pledged
Partnership Preferred Securities under any of the circumstances described in
Section 6.2.
Section 6.2 PARTNERSHIP PREFERRED SECURITIES.
(a) DESIGNATION. A total of
Partnership Preferred Securities, liquidation preference $25 per Partnership
Preferred Security, are hereby designated as " % Partnership Preferred
Securities".
(b) DISTRIBUTIONS. (i) Partnership Preferred Security Holders shall
be entitled to receive cumulative Distributions and Compounded Distributions (as
defined below) (if any), if, as and when declared by the General Partner, in its
sole discretion, out of the assets of the Partnership legally available
therefor, at a rate per annum of __% of the stated liquidation preference of $25
per Partnership Preferred Security, calculated on the
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basis of a 360-day year consisting of twelve 30-day months. For any period
shorter than a full 90-day quarter, Distributions will be computed on the basis
of the actual number of days elapsed in such 90-day quarter. Such Distributions
shall, from the date of original issue, accumulate and be cumulative and shall
be payable quarterly, when, if, and as declared by the General Partner on the
dates specified in Section 6.2(b)(ii) below. Distributions and Compounded
Distributions (as defined below) (if any) on the Partnership Preferred
Securities shall be cumulative from the Closing Date. Distributions not paid on
the scheduled Distribution Payment Date will accumulate and compound quarterly
at the rate of 8% per annum ("Compounded Distributions"). In the event that any
date on which Distributions are payable on the Partnership Preferred Securities
is not a Business Day, then payment of the Distribution payable on such date
will be made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date.
(ii) Distributions on the Partnership Preferred Securities will be
payable quarterly in arrears if, as and when, declared by the General Partner on
March 30, June 30, September 30 and December 30 of each year, commencing on
__________ 30, 1998 (each a "Distribution Payment Date").
Distributions will be payable to the Holders as they appear on the
books and records of the Partnership on the relevant Record Date. If the Trust
or the Property Trustee is the Holder of the Partnership Preferred Securities,
all Distributions of cash shall be made by wire transfer of same day funds to
such Holder by 10:00 a.m., New York City time, on the applicable Distribution
Payment Date. Distributions payable on any Partnership Preferred Securities
that are not punctually paid on any Distribution Payment Date will cease to be
payable to the Person in whose name such Partnership Preferred Securities are
registered on the relevant record date, and such Distribution will instead be
payable to the Person in whose name such Partnership Preferred Securities are
registered on the special record date or other specified
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date for payment of such defaulted or accumulated Distribution.
(c) OPTIONAL REDEMPTION. Partnership Preferred Securities shall be
redeemable at the option of the General Partner, in whole or in part, from time
to time, on or after ________ __, 2008, upon not less than 30 nor more than 60
days notice, at an amount per Partnership Preferred Securities equal to $25 plus
accumulated and unpaid Distributions thereon, including any Compounded
Distributions (the "Redemption Price"). The Partnership may not redeem the
Partnership Preferred Securities in part unless all accumulated and unpaid
Distributions, including any Compounded Distributions, have been paid in full on
all Partnership Preferred Securities for all Fiscal Periods terminating on or
prior to the date of redemption. If a partial redemption of the Partnership
Preferred Securities would result in the delisting of the Trust Preferred
Securities (or, if the Trust is liquidated in connection with a Trust Special
Event, or if a partial redemption would result in the delisting of the
Partnership Preferred Securities), the Partnership may only redeem the
Partnership Preferred Securities in whole but not in part.
(d) SPECIAL EVENT REDEMPTIONS. (i) If, at any time, a Partnership
Special Event shall occur and be continuing, the General Partner shall, within
90 days following the occurrence of such Partnership Special Event, elect to
either (i) redeem the Partnership Preferred Securities in whole (but not in
part), upon not less than 30 or more than 60 days notice at the Redemption
Price, provided that if at the time there is available to the Partnership the
opportunity to eliminate, within such 90-day period, the Partnership Special
Event by taking some ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable measure that in the sole
judgment of the General Partner has or will cause no adverse effect on the
Partnership, the Trust, or the Company, the General Partner will pursue such
measure in lieu of redemption; or (ii) cause the Partnership Preferred
Securities to remain outstanding, provided that in the case of this clause (ii),
the General Partner shall pay any and all costs and expenses incurred by or
payable by the Partnership which are attributable to the Partnership Special
Event.
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(e) REDEMPTION PROCEDURES. (i) Notice of any redemption of
Partnership Preferred Securities (a "Redemption Notice") will be given by the
Partnership by mail to each Holder of Partnership Preferred Securities to be
redeemed not fewer than 30 nor more than 60 days before the date fixed for
redemption. For purposes of the calculation of the date of redemption and the
dates on which notices are given pursuant to this Section 6.2(e)(i), a
Redemption Notice shall be deemed to be given on the day such notice is first
mailed, by first-class mail, postage prepaid, to Holders of Partnership
Preferred Securities. Each Redemption Notice shall be addressed to the Holders
of Partnership Preferred Securities at the address of each such Holder appearing
in the books and records of the Partnership. No defect in the Redemption Notice
or in the mailing thereof with respect to any Holder shall affect the validity
of the redemption proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Partnership
Preferred Securities are to be redeemed, the Partnership Preferred Securities to
be redeemed shall be redeemed pro rata provided, that, in the event Partnership
Preferred Securities are held in book-entry only form by DTC or its nominee (or
any successor Clearing Agency or its nominee), DTC will reduce, in accordance
with DTC's customary procedures, the amount of the interest of each Clearing
Agency Participant in the Partnership Preferred Securities to be redeemed;
provided, that if, as a result of such pro rata redemption, Holders would hold
fractional interests in the Partnership Preferred Securities, the General
Partner may adjust the amount of the interest of each Holder to be redeemed to
avoid such fractional interests.
(iii) If the Partnership gives a Redemption Notice (which notice will
be irrevocable), then by 12:00 noon, New York City time, on the redemption date,
the Partnership (A) if the Partnership Preferred Securities are in book-entry
only form with DTC, will deposit irrevocably with DTC funds sufficient to pay
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the applicable Redemption Price and will give DTC irrevocable instructions and
authority to pay the Redemption Price in respect of the Partnership Preferred
Securities held through DTC in global form or (B) if the Partnership Preferred
Securities are held in certificated form, will deposit with the Paying Agent,
funds sufficient to pay the applicable Redemption Price of the amount of any
such Partnership Preferred Securities and will give to the Paying Agent
irrevocable instructions and authority to pay such amounts to the Holders of
Partnership Preferred Securities, upon surrender of their certificates, by
check, mailed to the address of the relevant Holder appearing on the books and
records of the Partnership on the redemption date; provided, however, that for
so long as the Trust or the Property Trustee of the Trust shall hold the
Partnership Preferred Securities, payment of cash shall be made by wire in same
day funds to the Holder by 12:00 Noon, New York City time, on the redemption
date. For these purposes, the applicable Redemption Price shall not include
Distributions which are being paid to Holders who were Holders on a relevant
record date. Upon satisfaction of the foregoing conditions, then immediately
prior to the close of business on the date of such deposit or payment, all
rights of Holders of such Partnership Preferred Securities so called for
redemption will cease, except the right of the Holders to receive the Redemption
Price, but without interest on such Redemption Price, and from and after the
date fixed for redemption, such Partnership Preferred Securities will not
accumulate Distributions or bear interest.
In the event that any date fixed for redemption of Partnership
Preferred Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding Business Day (and
without any interest in respect of any such delay), except that, if such
Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day in each case, with the same force and effect
as if made on such date fixed for redemption. In the event that payment of the
Redemption Price is improperly withheld or refused and not paid by either the
Partnership or the Company pursuant to the Partnership Guarantee, Distributions
on the Partnership Preferred Securities called for Redemption will continue to
accumulate, to the extent that payment of such interest is legally available,
from the original redemption date until the Redemption Price is actually paid.
The Partnership shall not be required to register or cause to be
registered the transfer of any Partnership Preferred Securities which have been
called for redemption.
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(f) COMPANY PURCHASES. Subject to the provisions of this Section 6.2
and applicable law (including, without limitation, Federal securities laws), if
Partnership Preferred Securities have been distributed to the Holders (as
defined in the Declaration) of Trust Preferred Securities, the Company or any of
its subsidiaries may at any time and from time to time purchase outstanding
Partnership Preferred Securities by tender, in the open market, or by private
agreement.
(g) LIQUIDATION DISTRIBUTION UPON DISSOLUTION. In the event of any
voluntary or involuntary liquidation, dissolution, winding-up or termination of
the Partnership, the Holders of Partnership Preferred Securities at the time
outstanding will be entitled to receive out of the assets of the Partnership
such amount as is determined in accordance with Section 13.4 (the "Partnership
Liquidation Distribution") payable in cash.
(h) VOTING RIGHTS.
(i) SPECIAL REPRESENTATIVE. (1) If one or more of the following
events shall occur and be continuing (each a "Partnership Enforcement Event"):
(i) arrearages on distributions on the Partnership Preferred Securities shall
exist for six consecutive quarterly distribution periods, (ii) the Company is in
default on any of its obligations under the Partnership Guarantee or (iii) an
Investment Event of Default on any Affiliate Investment Instrument or a default
under any Investment Guarantee, as the case may be, occurs and is continuing
then the Property Trustee, for so long as the Partnership Preferred Securities
are held by the Property Trustee, will have the right, or the Holders of the
Partnership Preferred Securities, upon the affirmative vote of at least a
Majority in Liquidation Preference of the Partnership Preferred Securities,
shall have the right, to the exclusion of the General Partner, (a) to appoint
and authorize a special representative of the Partnership and the Limited
Partners (a "Special Representative") to enforce (1) to the maximum extent
permitted by applicable law, the Partnership's creditors' rights and other
rights with respect to the Affiliate Investment Instruments and the Investment
Guarantees, (2) the rights of the Holders of the Partnership Preferred
Securities under the Partnership Guarantee, and (3) the rights of the Holders of
the Partnership Preferred Securities to receive Distri-
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butions (only if, and to the extent, declared by the General Partner, in its
sole discretion, out of funds legally available therefor) on the Partnership
Preferred Securities, and (b) under the Partnership Guarantee to enforce the
terms of the Partnership Guarantee, including the right to enforce the covenant
restricting certain payments of the Company and Finance Subsidiaries. Under no
circumstances, however, shall the Special Representative have authority to cause
the General Partner to declare Distributions on the Partnership Preferred
Securities nor to have any authority concerning the selection of Partnership
Investments. When the Special Representative acts to enforce the Partnership's
creditors' rights and other rights with respect to the Affiliate Investment
Instruments and the Investment Guarantees, the Special Representative acts as an
agent of the Partnership. When the Special Representative acts to enforce the
rights of the Holders of the Partnership Preferred Securities under the
Partnership Guarantee or their rights to receive Distributions on the
Partnership Preferred Securities, the Special Representative acts as an agent of
the Holders of the Partnership Preferred Securities. In addition, the Special
Representative shall not, by virtue of acting in such capacity, be admitted as a
general or limited partner in the Partnership or otherwise be deemed to be a
general or limited partner in the Partnership and shall have no liability for
the debts, obligations, or liabilities of the Partnership.
(2) In furtherance of the foregoing, and without limiting the powers
of any Special Representative so appointed and to avoid any doubt concerning the
powers of the Special Representative, any Special Representative, in its own
name, in the name of the Partnership, in the name of the Limited Partners, or
otherwise, may institute, or cause to be instituted, a proceeding, including,
without limitation, any suit in equity, an action at law or other judicial or
administrative proceeding, to enforce on behalf of the Partnership the
Partnership's rights directly against the Company or any other obligor in
connection with its obligations to the Partnership, and may prosecute such
proceeding to judgment or final decree, and enforce the same against the Company
or any other obligor in connection with such obligations and collect, out of the
property, wherever situated, of the Company or any such other obligor upon such
obligations, the monies adjudged or decreed to be payable in the
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manner provided by law. The General Partner agrees to execute and deliver such
documents as may be necessary, appropriate or convenient for the Special
Representative to enforce the foregoing rights and obligations on behalf and in
the name of the Partnership.
(3) If the Special Representative fails to enforce its rights under
the Affiliate Investment Instruments after a holder of Partnership Preferred
Securities has made a written request, such holder of record of Partnership
Preferred Securities may to the fullest extent permitted by law directly
institute a legal proceeding against the Company to enforce the rights of the
Special Representative and the Partnership under the Affiliate Investment
Instruments without first instituting any legal proceeding against the Special
Representative, the Partnership or any other person or entity. In any event, if
a Partnership Enforcement Event has occurred and is continuing and such event is
attributable to the failure of an Investment Affiliate to make any required
payment when due on any Affiliate Investment Instrument, then a holder of
Partnership Preferred Securities may to the fullest extent permitted by law on
behalf of the Partnership directly institute a proceeding against such
Investment Affiliate with respect to such Affiliate Investment Instrument for
enforcement of payment. In addition, the Partnership acknowledges that, for so
long as the Trust holds any Partnership Preferred Securities, if the Special
Representative fails to enforce its rights on behalf of the Partnership under
the Affiliate Investment Instruments after a holder of Trust Securities has made
a written request, a holder of record of Trust Securities may to the full-
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est extent permitted by law on behalf of the Partnership directly institute a
legal proceeding against the Investment Affiliates under the Affiliate
Investment Instruments, without first instituting any legal proceeding against
the Property Trustee, the Trust, the Special Representative or the Partnership.
In any event, for so long as the Trust is the holder of any Partnership
Preferred Securities, if a Trust Enforcement Event has occurred and is
continuing and such event is attributable to the failure of an Investment
Affiliate to make any required payment when due on any Affiliate Investment
Instrument or the failure of the Company to make any required payment when due
on any Investment Guarantee, then the Partnership acknowledges that a holder of
Trust Securities may to the fullest extent permitted by law on behalf of the
Partnership directly institute a proceeding against such Investment Affiliate
with respect to such Affiliate Investment Instrument or against the Company with
respect to any such Investment Guarantee, in each case for enforcement of
payment. Under no circumstances shall the Special Representative, any holder of
Partnership Preferred Securities or any holder of Trust Preferred Securities
have authority to cause the General Partner to declare distributions on the
Partnership Preferred Securities.
(4) For purposes of determining whether the Partnership has deferred
payment of Distributions for six (6) consecutive quarters, Distributions shall
be deemed to remain in arrears, notwithstanding any payments in respect thereof,
until full cumulative Distributions, including Compounded Distributions, have
been or contemporaneously are paid with respect to all quarterly Distribution
periods terminating on or prior to the date of payment of such full cumulative
Distributions. Not later than 30 days after such right to appoint a Special
Representative arises, the General Partner will convene a meeting for election
of a Special Representative. If the General Partner fails to convene such
meeting within such 30-day period, the Holders of not less than 10% in
Liquidation Preference of the Outstanding Partnership Preferred Securities will
be entitled to convene such meeting. The provisions of Section 14.3 relating to
the convening and conduct of meetings of the Partners will apply with respect to
any such meeting. In the event that, at any such meeting, Holders of less than
a Majority in Liquidation Preference of Partnership Preferred Securities
entitled to vote for the appointment of a Special Representative vote for such
appointment, no Special Representative shall be appointed. Any Special
Representative appointed shall cease to be a Special Representative of the
Partnership and/or the Limited Partners if (x) the Partnership (or the Company
pursuant to the Partnership Guarantee) shall have paid in full all accumulated
and unpaid Distributions on the Partnership Preferred Securities, (y) the
relevant Investment Event of Default shall have been cured, and (z) the Company
is in compliance with all its obligations under the Partnership Guarantee, and
the Company, in its capacity as the General Partner, shall continue the
activities of the Partnership without dissolution. Notwithstanding the
appointment of any such Special Representative, the Company
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shall continue as General Partner and shall retain all rights under this
Agreement, including the right to determine whether to declare, in its sole
discretion, the payment of Distributions on the Partnership Preferred
Securities.
(ii) CERTAIN AMENDMENTS; WAIVER. (1) If any proposed amendment of
this Agreement provides for, or the General Partner otherwise proposes to
effect, (x) any action that would adversely affect the powers, preferences or
special rights of the Holders of the Partnership Preferred Securities, whether
by way of amendment of this Agreement or otherwise (including, without
limitation, the authorization or issuance of any limited partnership interests
in the Partnership ranking, as to participation in profits or distributions, or
in the assets of the Partnership, senior to the Partnership Preferred
Securities); or (y) the dissolution, winding-up or termination of the
Partnership, other than (1) in connection with the occurrence of a Partnership
Special Event or (2) as described under Sections 11.11 and 13.2 of this
Agreement, then the Holders of outstanding Partnership Preferred Securities will
be entitled to vote on such amendment or proposal of the General Partner (but
not on any other amendment or proposal) as a class and such amendment or
proposal shall not be effective except with the approval of Holders of a
Majority in Liquidation Preference of such outstanding Partnership Preferred
Securities having a right to vote on the matter; provided, however, that if the
Property Trustee on behalf of the Trust is the Holder of the Partnership
Preferred Securities, any such amendment or proposal not excepted by (1) or (2)
above shall not be effective without the prior or concurrent approval of the
Holders of a majority in liquidation preference of the outstanding Trust
Preferred Securities having a right to vote on such matters; provided, further,
that no such approval shall be required if the dissolution, winding-up or
termination of the Partnership is proposed or initiated upon the initiation of
proceedings, or after proceedings have been initiated, for the dissolution,
winding-up, liquidation or termination of the Company.
(2) The Holders of a Majority in Liquidation Preference of Partnership
Preferred Securities may, by vote, on behalf of the Holders of all of the
Partnership Preferred Securities, waive any past Partnership Enforcement Event
with respect to the Partnership Preferred
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Securities and its consequences; provided, that if the underlying Investment
Event of Default:
(A) is not waivable under the related Affiliate Investment Instrument,
such Partnership Enforcement Event shall also not be waivable; or
(B) requires the consent or vote of the Holders of greater than a majority
in principal amount or liquidation preference of the Affiliate
Investment Instruments (a "Super Majority") to be waived under the
related Affiliate Investment Instrument, the Partnership Enforcement
Event may only be waived by the vote of the Holders of the relevant
Super Majority in liquidation preference of the Partnership Preferred
Securities.
Upon such waiver, any such Partnership Enforcement Event shall cease to exist,
and shall be deemed to have been cured, for every purpose of this Agreement, but
no such waiver shall extend to any subsequent or other Partnership Enforcement
Event or impair any right consequent thereon.
(3) A waiver of an Investment Event of Default by the Special
Representative, acting at the direction of the Holders of the Partnership
Preferred Securities, constitutes a waiver of the corresponding Partnership
Enforcement Event.
(iii) GENERAL VOTING. (1) The General Partner shall not (i) direct
the time, method and place of conducting any proceeding for any remedy
available, (ii) waive any Investment Event of Default that is waivable under the
Affiliate Investment Instruments, (iii) exercise any right to rescind or annul a
declaration that the principal of any Affiliate Investment Instruments that are
debt instruments shall be due and payable, (iv) waive the breach of the covenant
by the Company in the Partnership Guarantee to restrict certain payments by the
Company, or (v) consent to any amendment, modification or termination of any
Affiliate Investment Instrument, where such consent shall be required from the
investor, without, in each case, obtaining the prior approval of the Holders of
at least a Majority in Liquidation Preference of the Partnership Preferred
Securities; provided, howev-
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er, that if the Property Trustee on behalf of the Trust is the Holder of the
Partnership Preferred Securities, such waiver, consent or amendment or other
action shall not be effective without the prior or concurrent approval of at
least a majority in liquidation amount of the outstanding Trust Preferred
Securities having a right to vote on such matters. The General Partner shall
not revoke any action previously authorized or approved by a vote of the Holders
of the Partnership Preferred Securities without the approval of a Majority in
Liquidation Preference of the Partnership Preferred Securities. The General
Partner shall notify all Holders of the Partnership Preferred Securities of any
notice of an Investment Event of Default received with respect to any Affiliate
Investment Instrument.
(2) Any required approval of Holders of Partnership Preferred
Securities may be given at a separate meeting of such Holders convened for such
purpose or pursuant to written consent. The General Partner will cause a notice
of any meeting at which Holders of Partnership Preferred Securities are entitled
to vote, or of any matter upon which the action by written consent of such
Holders is to be taken, to be mailed to each Holder of record of Partnership
Preferred Securities. Each such notice will include a statement setting forth
(x) the date of such meeting or the date by which such action is to be taken,
(y) a description of any matter proposed for adoption at such meeting on which
such Holders are entitled to vote or of such matters upon which written consent
is sought and (z) instructions for the delivery of proxies or consents. No vote
or consent of the Holders of Partnership Preferred Securities will be required
for the Partnership to redeem and cancel Partnership Preferred Securities in
accordance with this Agreement.
(3) Notwithstanding that Holders of Partnership Preferred Securities
are entitled to vote or consent under any of the circumstances described above,
any of the Partnership Preferred Securities at such time that are beneficially
owned by the Company or by any entity directly or indirectly controlled by, or
under direct or indirect common control with, the Company, shall not be entitled
to vote or consent and shall, for purposes of such vote or consent, be treated
as if they were not outstanding, except for Partnership Preferred Securities
purchased or acquired by the Company or its affiliates in
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connection with transactions effected by or for the account of customers of the
Company or any of its subsidiaries or in connection with the distribution or
trading of such Partnership Preferred Securities; provided, however, that
persons (other than affiliates of the Company) to whom the Company or any of its
subsidiaries have pledged Partnership Preferred Securities may vote or consent
with respect to such pledged Partnership Preferred Securities pursuant to the
terms of such pledge.
(4) Holders of the Partnership Preferred Securities shall have no
rights to remove or replace the General Partner.
(5) Holders of Partnership Preferred Securities shall have no
preemptive rights.
ARTICLE VII
PARTNERSHIP INVESTMENTS
Section 7.1 INITIAL AFFILIATE INVESTMENT INSTRUMENTS.
(a) All Partnership funds will be invested in the debt securities of
Investment Affiliates (the "Affiliate Investment Instruments") and Eligible Debt
Securities. No more than 99% of the Initial Partnership Proceeds will be used
by the Partnership to purchase the Initial Debentures meeting the criteria set
forth in this Section 7.1. The remaining funds from the Initial Partnership
Proceeds will be used to purchase Eligible Debt Securities in accordance with
the terms of this Agreement.
(b) The Partnership shall apply approximately 99% of the Initial
Partnership Proceeds to purchase (1) a debt instrument of the Company (the
"Initial Company Debenture") and (2) debt instruments of one or more eligible
controlled affiliates of the Company (such debt instruments collectively
referred to as the "Initial Affiliate Debentures"). The Initial Company
Debenture and the Initial Affiliate Debentures are collectively referred to as
the "Initial Debentures". The Initial Affiliate Debentures may each contain a
provision that allows an affiliate of the issuer of such Debenture to assume the
obligations of such issuer subject to certain
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conditions. The Partnership may purchase the Initial Debentures only upon
receipt of an opinion of the Independent Financial Advisor to the effect that
(i) if such Initial Debentures were to be rated, at least one Rating Agency
would rate all the Initial Debentures investment grade at the time such Initial
Debentures are purchased by the Partnership, (ii) the Company and each
Investment Affiliate which is a subsidiary of the Company would have been
capable of issuing and selling debt instruments with the same terms and
conditions as the applicable Initial Debentures to unrelated third party
investors, (iii) the terms and conditions of the Initial Debentures are
consistent with the terms and conditions of a public offering or a private
placement pursuant to Rule 144A under the Securities Act of 1933 of such Initial
Debentures and are no more favorable to the relevant Investment Affiliate than
could have been obtained by such Investment Affiliate from unrelated third party
investors pursuant to such a public offering or private placement of such
Initial Debentures. On the Closing Date, the Partnership shall invest at least
1% of such Initial Partnership Proceeds in Eligible Debt Securities. The terms
of the Initial Debentures will be as set forth in the Indentures attached hereto
as Exhibits A and B.
Section 7.2 REINVESTMENT OF PAYMENTS RECEIVED BY THE PARTNERSHIP.
(a) The Partnership must at all times invest an amount equal to at
least 1% of the Initial Partnership Proceeds in Eligible Debt Securities.
(b) The Partnership may reinvest any payments it receives in respect
of its investments in (i) Eligible Debt Securities without limitation or (ii)
additional Affiliate Investment Instruments but only upon (A) the acceptance of
a written offer setting forth the terms and conditions on which an Investment
Affiliate would be willing to issue an Affiliate Investment Instrument to the
Partnership (an "Investment Offer") and (B) the receipt of an opinion of the
Independent Financial Advisor that the terms of such Affiliate Investment
Instrument set forth in such Investment Offer satisfy the Reinvestment Criteria
(as defined below).
(c) If the Independent Financial Advisor determines that the terms of
an Affiliate Investment In-
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strument (as set forth in the Investment Offer) do not satisfy the Reinvestment
Criteria, the Partnership shall be prohibited from making any investment in such
Affiliate Investment Instrument.
(d) Each Affiliate Investment Instrument shall satisfy the following
criteria (the "Reinvestment Criteria"): (i) the economic terms of each Affiliate
Investment Instrument shall be no less favorable to the Partnership than terms
that would otherwise be obtainable through a public offering or private
placement under Rule 144A of the Securities Act of 1933 of securities by the
requesting Investment Affiliate and the other terms and conditions of each
Affiliate Reinvestment Instrument are substantially similar to the terms and
conditions of similar securities and guarantees, if any, included therein, that
are offered to the public in a public offering or private placement under Rule
144A of the Securities Act of 1933 of such securities; (ii) the Partnership
shall not have held any Affiliate Investment Instruments of the Investment
Affiliate submitting the Investment Offer within the three-year period ending on
the date of the Investment Offer; (iii) there shall not have been a default on
any debt obligation of the Investment Affiliate submitting the Investment Offer
that was owned by the Partnership; (iv) no dividend arrearages shall have
existed on any preferred stock of the Investment Affiliate submitting the
Investment Offer that was owned by the Partnership; and (v) the Investment
Affiliate submitting the Investment Offer shall not be deemed to be an
investment company by reason of Section 3(a) or 3(b) of the 1940 Act or is
otherwise an eligible recipient of funds directly or indirectly from the Trust
pursuant to an order issued by the Securities and Exchange Commission.
(e) Any payments received by the Partnership in respect of its
investments that are not invested in additional Affiliate Investment
Instruments, may be reinvested only in Eligible Debt Securities (subject to
restrictions of applicable law, including the 1940 Act).
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ARTICLE VIII
BOOKS OF ACCOUNT, RECORDS AND REPORTS
Section 8.1 BOOKS AND RECORDS.
(a) Proper and complete records and books of account of the
Partnership shall be kept by the General Partner, in which shall be entered
fully and accurately all transactions and other matters relative to the
Partnership's investments. The books and records of the Partnership, together
with a certified copy of this Agreement and of the Certificate, shall at all
times be maintained at the principal office of the General Partner and shall be
open to the inspection and examination of the Partners or their duly authorized
representatives for any proper purpose reasonably related to its Interest during
reasonable business hours.
(b) Notwithstanding any other provision of this Agreement to the
contrary, the General Partner may, to the maximum extent permitted by applicable
law, keep confidential from the Partners any information with respect to the
Partnership, the disclosure of which the General Partner reasonably believes is
not in the best interests of the Partnership, or is adverse to the interests of
the Partnership, or which the Partnership or the General Partner is required by
law or by an agreement with any Person to keep confidential.
(c)(i) For so long as the Partnership Preferred Securities are held by
the Property Trustee on behalf of the Trust, within one month after the close of
each Fiscal Year, the General Partner shall transmit to each Partner a statement
indicating such Partner's share of each item of Partnership income, gain, loss,
deduction or credit, for United States federal income tax purposes, for such
Fiscal Year.
(ii) In the event that the Partnership Preferred Securities are no
longer held by the Property Trustee on behalf of the Trust, as soon as
reasonably possible after the close of the Fiscal Year, the General Partner
shall transmit to each Partner the statement referred to in Section 8.1(c)(i)
hereof.
Section 8.2 ACCOUNTING METHOD. For both financial and tax
reporting purposes, the books and
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records of the Partnership shall be kept on the accrual method of accounting
applied on a consistent basis and shall reflect all Partnership transactions.
Section 8.3 ANNUAL AUDIT. As soon as practical after the end of
each Fiscal Year, but not later than 90 days after such end, the financial
statements of the Partnership shall be audited by a firm of independent
certified public accountants selected by the General Partner in accordance with
applicable law. The cost of such audits will be an expense of the Partnership
and shall be paid by the General Partner.
ARTICLE IX
PAYMENT OF EXPENSES
Section 9.1 PAYMENT OF TRUST EXPENSES AND PARTNERSHIP TAXES. Since
the Trust is being formed solely to facilitate a direct investment in the
Partnership Preferred Securities, the Partnership hereby agrees, at any time
while the Property Trustee is the Holder of any Partnership Preferred
Securities, to pay all the expenses of the Trust, including, but not limited to,
any taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed on the Trust by the United States, or any other
domestic taxing authority, so that the net amounts received and retained by the
Trust and the Property Trustee after paying such expenses will be equal to the
amounts the Trust and the Property Trustee would have received had no such costs
or expenses been incurred by or imposed on the Trust. The General Partner shall
be liable for, and shall pay all such expenses solely out of its own funds. In
addition, if the Partnership is required to pay any taxes, duties, assessments
or governmental charges of whatever nature (other than withholding taxes)
imposed by the United States, or any other domestic taxing authority, then, in
any case, the General Partner will pay such taxes, duties, assessments or other
governmental charges out of its own funds.
Section 9.2 PAYMENT OF OTHER PARTNERSHIP EXPENSES. In connection
with the offering, sale and issuance of the Partnership Preferred Securities by
the Partnership, the General Partner shall:
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(a) pay all costs and expenses of the Partnership (including, but not
limited to, costs and expenses relating to the organization of the Partnership,
the offering, sale and issuance of the Partnership Preferred Securities
(including commissions to the underwriters in connection therewith) the fees and
expenses of the Special Representatives (if any), and the costs and expenses
relating to the operation of the Partnership, including, without limitation,
costs and expenses of accountants, attorneys, statistical or bookkeeping
services, expenses for printing and engraving and computing or accounting
equipment, paying agent(s), registrar(s), transfer agent(s), duplicating, travel
and telephone and other telecommunications expenses; and
(b) be primarily and fully liable for any indemnification obligations
arising with respect to this Agreement.
ARTICLE X
POWERS, RIGHTS AND DUTIES
OF THE LIMITED PARTNERS
Section 10.1 LIMITATIONS. The Limited Partners shall not
participate in the management or control of the Partnership's investment
activity, property or other assets, nor shall the Limited Partners engage in any
activities for the Partnership, nor shall the Limited Partners have the power to
act for or bind the Partnership, such powers being vested solely and exclusively
in the General Partner (and, upon appointment, and to the extent set forth
herein, the Special Representative). The Limited Partners shall have such
rights as are set forth herein and in the Partnership Guarantee. The Limited
Partners shall have no interest in the properties or assets of the General
Partner, or any equity therein, or in any proceeds of any sales thereof (which
sales shall not be restricted in any respect), by virtue of acquiring or owning
an Interest in the Partnership.
Section 10.2 LIABILITY. Subject to the provisions of the Act, no
Limited Partner shall be liable for the repayment, satisfaction or discharge of
any debts or other obligations of the Partnership in excess of the Capital
Account balance of such Limited Partner.
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Section 10.3 PRIORITY. No Limited Partner shall have priority over
any other Limited Partner as to Partnership allocations or distributions.
ARTICLE XI
POWERS, RIGHTS AND DUTIES
OF THE GENERAL PARTNER
Section 11.1 AUTHORITY. Subject to the provisions of Section
6.2(h)(i) with respect to the Special Representative, the General Partner shall
have exclusive and complete authority and discretion to manage the operations
and affairs of the Partnership and to make all decisions regarding the
investment activity of the Partnership. Any action taken by the General Partner
shall constitute the act of and serve to bind the Partnership. In dealing with
the General Partner acting on behalf of the Partnership no Person shall be
required to inquire into the authority of the General Partner to bind the
Partnership. Persons dealing with the Partnership are entitled to rely
conclusively on the power and authority of the General Partner as set forth in
this Agreement.
Section 11.2 POWERS AND DUTIES OF GENERAL PARTNER. (a) Subject to
the provisions of Section 6.2(h)(i) with respect to the Special Representative,
the General Partner shall have all rights and powers of a general partner under
the Act, and shall have all authority, rights and powers in the management of
the Partnership's investment activity to do any and all other acts and things
necessary, proper, convenient or advisable to effectuate the purposes of this
Agreement, including by way of illustration but not by way of limitation, the
following:
(i) to secure the necessary goods and services required in performing
the General Partner's duties for the Partnership;
(ii) to exercise all powers of the Partnership, on behalf of the
Partnership, in connection with enforcing the Partnership's rights under
the Affiliate Investment Instruments and the Partnership Guarantee;
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(iii) to issue Partnership Preferred Securities and to admit Limited
Partners in connection therewith in accordance with this Agreement;
(iv) to act as registrar and transfer agent for the Partnership
Preferred Securities or designate an entity to act as registrar and
transfer agent;
(v) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including with
respect to Distributions and voting rights and to make determinations as to
the payment of Distributions, and make or cause to be made all other
required payments to Holders of the Partnership Preferred Securities and to
the General Partner;
(vi) to open, maintain and close bank accounts and to draw checks and
other orders for the payment of money;
(vii) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action, or otherwise adjust claims or demands of or against the
Partnership;
(viii) to deposit, withdraw, invest, pay, retain and distribute the
Partnership's funds in a manner consistent with the provisions of this
Agreement;
(ix) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Partnership's valid existence,
rights, franchises and privileges as a limited partnership under the laws
of the State of Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the Limited
Partners or to enable the Partnership to invest in the Affiliate Investment
Instruments and Eligible Debt Securities;
(x) to take all action not inconsistent with applicable law, the
Certificate or this Agreement, that the General Partner or, upon
appointment pursuant to Section 6.2(h)(i), the Special Representative
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determines in its sole discretion to be necessary or desirable to ensure,
as long as such action does not adversely affect the interests of the
Partnership Preferred Security Holders, or cause (i) the Partnership to be
deemed to be an "investment company" required to be registered under the
1940 Act, (ii) any Initial Debenture (or any subsequent Affiliate
Investment Instrument that is intended to be classified as debt) to not be
treated as indebtedness for United States federal income tax purposes, or
(iii) the Partnership to be treated as an association, or as a publicly
traded partnership, taxable as a corporation;
(xi) to cause the Partnership to enter into and perform the Purchase
Agreement and the Partnership Preferred Securities Purchase Agreement and
to purchase Eligible Debt Securities and Affiliate Investment Instruments,
as the case may be, without any further act, vote or approval of any
Partner; and
(xii) to execute and deliver any and all documents or instruments,
perform all duties and powers and do all things for and on behalf of the
Partnership in all matters necessary or desirable or incidental to the
foregoing.
(b) For so long as any Partnership Preferred Securities remain
outstanding, the General Partner covenants and agrees (i) subject to Section
12.1(b) hereof, to remain the sole general partner of the Partnership and to
maintain directly 100% ownership of the General Partner's interest in the
Partnership, which interest will at all times represent at least 1% of the total
capital of the Partnership, (ii) to cause the Partnership to remain a limited
partnership and not to voluntarily dissolve, liquidate, wind-up or be
terminated, except as permitted by the Limited Partnership Agreement and (iii)
to use its commercially reasonable efforts to ensure that the Partnership will
not be (A) an "investment company" for purposes of the 1940 Act or (B) an
association or a publicly traded partnership taxable as a corporation for United
States federal income tax purposes.
Section 11.3 OBLIGATIONS AND EXPENSES PAYABLE BY GENERAL PARTNER.
(a) The General Partner hereby as-
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sumes and shall be liable for the debts, obligations and liabilities of the
Partnership, including, but not limited to, any liabilities arising under the
Securities Act or the Exchange Act and all costs and expenses relating to the
investment by the Partnership in any Affiliate Investment Instruments (but not
any losses related to any non-payment with respect to such investments), and
agrees to pay to each Person to whom the Partnership is now or hereafter becomes
indebted or liable (the "Beneficiaries"), whether such indebtedness, obligations
or liabilities arise in contract, tort or otherwise (excluding payment
obligations of the Company to Holders of the Partnership Preferred Securities in
such Holders' capacities as Holders of such Partnership Preferred Securities,
such obligations being separately guaranteed under the Partnership Guarantee),
the full payment of such indebtedness and any and all liabilities, when and as
due. This Agreement is intended to be for the benefit of and to be enforceable
by all such Beneficiaries whether or not such Beneficiaries have received notice
hereof.
(b) The General Partner agrees to pay and be responsible for:
(i) all costs and expenses of the Partnership including, but not
limited to, costs and expenses relating to the organization of the Partnership,
the offering, sale and issuance of Partnership Preferred Securities, the costs
and expenses relating to the operation of the Partnership (including without
limitation, costs and expenses of accountants, attorneys, statistical or
bookkeeping services, expenses for printing and engraving and computing or
accounting equipment, paying agent(s), registrar(s), transfer agents,
duplicating, travel and telephone and other telecommunications expenses) and
costs and expenses incurred in connection with the acquisition, financing, and
disposition of the Partnership's assets; and
(ii) any and all taxes (other than Federal, state and local
withholding taxes) and all liabilities, costs and expenses with respect to such
taxes of the Partnership.
Section 11.4 LIABILITY. Except as expressly set forth in this
Agreement or in the Guarantee Agreements, (a) the General Partner shall not be
personally
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liable for the return of any portion of the capital contributions (or any return
thereon) of the Limited Partners; (b) the return of such capital contributions
(or any return thereon) shall be made solely from assets of the Partnership; and
(c) the General Partner shall not be required to pay to the Partnership or to
any Limited Partner any deficit in any Limited Partner's Capital Account upon
dissolution, winding up or otherwise. Other than as expressly provided in this
Agreement or under the Act, no Limited Partner shall have the right to demand or
receive property other than cash for its respective Interest in the Partnership.
The General Partner shall be liable to an unlimited extent for the debts and
other obligations of the Partnership.
Section 11.5 OUTSIDE ACTIVITIES. Any Partner or Affiliate thereof
may engage in or possess an interest in other ventures of any nature or
description, independently or with others, similar or dissimilar to the
activities of the Partnership, and the Partnership and the Partners shall have
no rights by virtue of this Agreement in and to such independent ventures or the
income or profits derived therefrom, and the pursuit of any such venture, even
if competitive with the activities of the Partnership, shall not be deemed
wrongful or improper. No Partner or Affiliate thereof shall be obligated to
present any particular investment opportunity to the Partnership even if such
opportunity is of a character that, if presented to the Partnership, could be
taken by the Partnership, and any Partner or Affiliate thereof shall have the
right to take for its own account (individually or as a partner or fiduciary) or
to recommend to others any such particular investment opportunity.
Section 11.6 LIMITS ON GENERAL PARTNER'S POWERS. Anything in this
Agreement to the contrary notwithstanding, the General Partner shall not cause
or permit the Partnership to:
(i) acquire any assets other than as expressly provided herein;
(ii) do any act which would make it impractical or impossible to
carry on the ordinary activity of the Partnership as set forth in Section
2.3;
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(iii) possess Partnership property for other than a Partnership
purpose;
(iv) admit a Person as a Partner, except as expressly provided
in this Agreement;
(v) make any advances of funds to the General Partner or its
Affiliates, other than such as represented by the Affiliate Investment
Instruments;
(vi) perform any act that would subject any Limited Partner to
liability as a general partner in any jurisdiction;
(vii) engage in any activity that is not consistent with the
purposes of the Partnership, as set forth in Section 2.3;
(viii) without the written consent of the Holders of 66-2/3% in
liquidation preference of the Partnership Preferred Securities, have an
order for relief entered with respect to the Partnership or commence a
voluntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or consent to the entry of an order for
relief in an involuntary case under any such law, or consent to the
appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of the Partnership's property, or
make any assignment for the benefit of creditors of the Partnership; or
(ix) borrow money or become liable for the borrowings of any
third party or to engage in any financial or other trade or business.
Section 11.7 EXCULPATION. (a) No Partnership Indemnified Person
shall be liable, responsible or accountable in damages or otherwise to the
Partnership or any Partnership Covered Person for any loss, damage or claim
incurred by reason of any act or omission performed or omitted by such
Partnership Indemnified Person in good faith on behalf of the Partnership and in
a manner such Partnership Indemnified Person reasonably believed to be within
the scope of the authority conferred on such Partnership Indemnified Person by
this Agreement or by law,
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except that a Partnership Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Partnership Indemnified Person's
gross negligence or willful misconduct with respect to such acts or omissions.
(b) A Partnership Indemnified Person shall be fully protected in
relying in good faith upon the records of the Partnership and upon such
information, opinions, reports or statements presented to the Partnership by any
Person as to matters the Partnership Indemnified Person reasonably believes are
within such other Person's professional or expert competence and who has been
selected with reasonable care by or on behalf of the Partnership, including
information, opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts pertinent to the
existence and amount of assets from which distributions to Partners might
properly be paid.
Section 11.8 FIDUCIARY DUTY. (a) To the extent that, at law or in
equity, a Partnership Indemnified Person has duties (including fiduciary duties)
and liabilities relating thereto to the Partnership or to any other Partnership
Covered Person, a Partnership Indemnified Person acting under this Agreement
shall not be liable to the Partnership or to any other Partnership Covered
Person for its good faith reliance on the provisions of this Agreement. The
provisions of this Agreement, to the extent that they restrict the duties and
liabilities of a Partnership Indemnified Person otherwise existing at law or in
equity, are agreed by the parties hereto to replace such other duties and
liabilities of such Partnership Indemnified Person.
(b) Unless otherwise expressly provided herein, (i) whenever a
conflict of interest exists or arises between Partnership Covered Persons, or
(ii) whether this Agreement or any other agreement contemplated herein or
therein provides that a Partnership Indemnified Person shall act in a manner
that is, or provides terms that are, fair and reasonable to the Partnership or
any Partner, the Partnership Indemnified Person shall resolve such conflict of
interest, take such action or provide such terms, considering in each case the
relative interest of each party (including its own interest) to such conflict,
agreement, transaction or situation and the
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benefits and burdens relating to such interests, any customary or accepted
industry practices, and any applicable generally accepted accounting practices
or principles. In the absence of bad faith by the Partnership Indemnified
Person, the resolution, action or term so made, taken or provided by the
Partnership Indemnified Person shall not constitute a breach of this Agreement
or any other agreement contemplated herein or of any duty or obligation of the
Partnership Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Agreement a Partnership Indemnified Person is
permitted or required to make a decision (i) in its "discretion" or under a
grant of similar authority, the Partnership Indemnified Person shall be entitled
to consider such interests and factors as it desires, including its own
interest, and shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Partnership or any other Person, or (ii) in
its "good faith" or under another express standard, the Partnership Indemnified
Person shall act under such express standard and shall not be subject to any
other or different standard imposed by this Agreement or by applicable law.
Section 11.9 INDEMNIFICATION. (a) To the fullest extent permitted
by applicable law, the Partnership shall indemnify and hold harmless each
Partnership Indemnified Person from and against any loss, damage or claim
incurred by such Partnership Indemnified Person by reason of any act or omission
performed or omitted by such Partnership Indemnified Person in good faith on
behalf of the Partnership and in a manner such Partnership Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Partnership Indemnified Person by this Agreement, except that no Partnership
Indemnified Person shall be entitled to be indemnified in respect of any loss,
damage or claim incurred by such Partnership Indemnified Person by reason of
gross negligence or willful misconduct with respect to such acts or omissions;
provided, however, that any indemnity under this Section 11.9 shall be provided
out of and to the extent of Partnership assets only, and no Partnership Covered
Person shall have any personal liability on account thereof.
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(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by a Partnership Indemnified Person in defending
any claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Partnership prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Partnership of an
undertaking by or on behalf of the Partnership Indemnified Person to repay such
amount if it shall be determined that the Partnership Indemnified Person is not
entitled to be indemnified as authorized in Section 11.9(a).
Section 11.10 TAX MATTERS
(a) For purposes of section 6231(a)(7) of the Code, the "Tax Matters
Partner" shall be the Company as long as it remains the general partner of the
Partnership. The Tax Matters Partner shall keep the Limited Partners fully
informed of any inquiry, examination or proceeding.
(b) Neither the Partnership, nor the Tax Matters Partner on behalf of
the Partnership, shall make an election under section 754 of the Code.
(c) The General Partner and the Partnership Preferred Security Holders
acknowledge that they intend, for United States federal income tax purposes,
that the Partnership shall be treated as a "partnership" (other than a publicly
traded partnership taxable as a corporation) and that the General Partner and
the Partnership Preferred Security Holders shall be treated as "partners" of the
Partnership.
(d) The General Partner shall retain, at the expense of the
Partnership and at its sole discretion, a nationally recognized firm of
certified public accountants which shall prepare all United States federal,
state, local or other tax and information returns of the Partnership, as
required by law, and the Schedule K-1's or any successor or similar forms or
schedules.
Section 11.11 CONSOLIDATION, MERGER OR SALE OF ASSETS. The
Partnership may not consolidate, amalgamate, merge with or into, or be replaced
by, or convey, transfer or lease its properties and assets substantially as an
entirety to, any corporation or other body, except as
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permitted pursuant to this Section 11.11. The Partnership may, without the
consent of the Holders of the Partnership Preferred Securities, consolidate,
amalgamate, merge with or into, or be replaced by a limited partnership, limited
liability company or trust organized as such under the laws of any state of the
United States of America, provided that (i) such successor entity either (x)
expressly assumes all of the obligations of the Partnership under the
Partnership Preferred Securities or (y) substitutes for the Partnership
Preferred Securities other securities having substantially the same terms as the
Partnership Preferred Securities (the "Partnership Successor Securities") so
long as the Partnership Successor Securities are not junior to any other equity
securities of the successor entity, with respect to participation in the profits
and distributions, and in the assets, of the successor entity, (ii) the
Investment Affiliates expressly acknowledge such successor entity as the holder
of the Affiliate Investment Instruments, (iii) the Partnership Preferred
Securities continue to be or any Partnership Successor Securities are or will be
listed, upon notification of issuance, on any national securities exchange or
other organization on which the Partnership Preferred Securities, if so listed,
are then listed, (iv) such merger, consolidation, amalgamation or replacement
does not cause the Trust Preferred Securities (or, in the event that the Trust
is liquidated in connection with a Trust Special Event, the Partnership
Preferred Securities (including any Partnership Successor Securities)) to be
downgraded by any nationally recognized statistical securities rating
organization, (v) such merger, consolidation, amalgamation or replacement does
not adversely affect the powers, preferences and other special rights of the
holders of the Trust Preferred Securities or the Holders of the Partnership
Preferred Securities (including any Partnership Successor Securities)) in any
material respect (other than, in the case of the Partnership Preferred
Securities, with respect to any dilution of the Holders' interest in the new
resulting entity), (vi) such successor entity has a purpose substantially
identical to that of the Partnership, (vii) prior to such merger, consolidation,
amalgamation or replacement, the Company has received an opinion of nationally
recognized independent counsel to the Partnership experienced in such matters to
the effect that (A) such successor entity will be treated as a "partnership" for
United States federal income tax purposes and
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not as an association or a publicly traded partnership taxable as a corporation,
(B) such merger, consolidation, amalgamation or replacement will not cause the
Trust to be classified as an association or a publicly traded partnership
taxable as a corporation for United States federal income tax purposes, (C)
following such merger, consolidation, amalgamation or replacement, the Company
and such successor entity will be in compliance with the 1940 Act without
registering thereunder as an investment company, and (D) such merger,
consolidation, amalgamation or replacement will not adversely affect the limited
liability of the Holders of the Partnership Preferred Securities and (viii) the
Company guarantees the obligations of such successor entity under the
Partnership Successor Securities at least to the extent provided by the
Partnership Guarantee.
ARTICLE XII
TRANSFERS OF INTERESTS BY PARTNERS
Section 12.1 TRANSFER OF INTERESTS.
(a) Partnership Preferred Securities shall be freely transferable by a
Holder.
(b) Except as provided in the next sentence, the General Partner may
not assign or transfer its Interest in the Partnership in whole or in part
unless, prior to such assignment or transfer, the General Partner has obtained
the consent of the Holders of not less than 66-2/3% in Liquidation Preference of
the Partnership Preferred Securities. The General Partner may assign or
transfer its Interest in the Partnership without such consent to an entity that
is the survivor of a merger or consolidation of the General Partner in a
transaction that meets the requirements of Section 11.11 and only if prior to
such assignment or transfer the Company has received an opinion of nationally
recognized independent tax counsel to the Partnership experienced in such
matters to the effect that after such assignment or transfer the Partnership
will continue to be treated as a partnership for United States federal income
tax purposes and will not be treated as an association or a publicly traded
partnership taxable as a corporation. The General Partner may transfer its
Interest to a wholly-owned direct or indirect subsidiary of the Company provided
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that (i) such entity expressly accepts such transfer of the obligations as
General Partner and (ii) prior to such transfer, the Company has received an
opinion of nationally recognized independent counsel to the Partnership
experienced in such matters to the effect that (A) the Partnership will be
treated as a partnership for United States federal income tax purposes, (B) such
transfer would not cause the Trust to be classified as an association taxable as
a corporation for United States federal income tax purposes, (C) following such
transfer, the Company and such successor entity will be in compliance with the
1940 Act without registering thereunder as an investment company, and (D) such
transfer will not adversely affect the limited liability of the holders of the
Partnership Preferred Securities. "Permitted Successor" shall mean an entity
that is an assignee or transferee of the Interest of the General Partner as
permitted by this Section 12.1(b). The admission of a Permitted Successor as a
general partner of the Partnership shall be effective upon the filing of an
amendment to the Certificate with the Secretary of State of the State of
Delaware which indicates that the Permitted Successor has been admitted as a
general partner of the Partnership. If the General Partner assigns its entire
Interest, the General Partner shall cease to be a general partner of the
Partnership simultaneously with the admission of the Permitted Successor as a
general partner of the Partnership. Any such Permitted Successor is hereby
authorized to and shall continue the business of the Partnership without
dissolution.
(c) Except as provided above, no Interest shall be transferred, in
whole or in part, except in accordance with the terms and conditions set forth
in this Agreement. Any transfer or purported transfer of any Interest not made
in accordance with this Agreement shall be null and void.
Section 12.2 TRANSFER OF L.P. CERTIFICATES. The General Partner
shall provide for the registration of L.P. Certificates and of transfers of L.P.
Certificates. Upon surrender for registration of transfer of any L.P.
Certificate, the General Partner shall cause one or more new L.P. Certificates
to be issued in the name of the designated transferee or transferees. Every
L.P. Certificate surrendered for registration of transfer shall be accompanied
by a written instrument of transfer in form
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satisfactory to the General Partner duly executed by the Partnership Preferred
Security Holder or his or her attorney duly authorized in writing. Each L.P.
Certificate surrendered for registration of transfer shall be cancelled by the
General Partner. A transferee of an L.P. Certificate shall be admitted to the
Partnership as a Limited Partner, shall become bound by this Agreement and shall
be entitled to the rights and subject to the obligations of a Partnership
Preferred Security Holder hereunder upon the receipt by the transferee of an
L.P. Certificate, which receipt shall be deemed to constitute a request by such
transferee that the books and records of the Partnership reflect such
transferee's admission as a limited partner. The transferor of an L.P.
Certificate, in whole, shall cease to be a Limited Partner at the time that the
transferee of such L.P. Certificate is admitted to the Partnership as a Limited
Partner in accordance with this Section 12.2.
Section 12.3 DEFINITIVE L.P. CERTIFICATES; PERSONS DEEMED
PARTNERSHIP PREFERRED SECURITY HOLDERS. (a) DEFINITIVE L.P. CERTIFICATES.
Unless and until the Partnership issues a global L.P. Certificate pursuant to
Section 12.4(a), the Partnership shall only issue definitive L.P. Certificates
to the Partnership Preferred Security Holders. (b) The Partnership may treat
the Person in whose name any L.P. Certificate shall be registered on the books
and records of the Partnership as the sole holder of such L.P. Certificate and
of the Partnership Preferred Securities represented by such L.P. Certificate for
purposes of receiving Distributions and for all other purposes whatsoever
(including without limitation, tax returns and information reports) and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such L.P. Certificate or in the Partnership Preferred Securities
represented by such L.P. Certificate on the part of any other Person, whether or
not the Partnership shall have actual or other notice thereof.
Section 12.4 BOOK ENTRY PROVISIONS.
(a) General. The provisions of this Section 12.4 shall apply only in
the event that the Partnership Preferred Securities are distributed to the
Holders of Trust Securities in connection with the involuntary or voluntary
dissolution, winding up or liquidation of the
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Trust as a result of the occurrence of a Trust Special Event. Upon the
occurrence of such event, a global L.P. Certificate representing the Book-Entry
Interests shall be delivered to DTC, the initial Clearing Agency, by, or on
behalf of, the Partnership and any previously issued and still outstanding
definitive L.P. Certificates shall be of no further force and effect. The
global L.P. Certificate shall initially be registered on the books and records
of the Partnership in the name of Cede & Co., the nominee of DTC, and no Holder
of a Partnership Preferred Security will receive a new definitive L.P.
Certificate representing such Holder's interests in such L.P. Certificate,
except as provided in Section 12.4(c). In connection with the involuntary or
voluntary dissolution, winding up or liquidation of the Trust as a result of the
occurrence of a Trust Special Event, Cede & Co., the nominee of DTC, shall
automatically be admitted to the Partnership as a Limited Partner. Receipt of
the global L.P. Certificate shall be deemed to constitute a request by Cede &
Co., the nominee of DTC, that the books and records of the Partnership reflect
its admission as a Limited Partner. Unless and until new definitive, fully
registered L.P. Certificates (the "Definitive L.P. Certificates") have been
issued to the Partnership Preferred Security Owners pursuant to Section 12.4(c):
(i) The provisions of this Section shall be in full force and effect;
(ii) The Partnership, the General Partner and any Special
Representative shall be entitled to deal with the Clearing Agency for all
purposes of this Agreement (including the payment of Distributions,
Redemption Price and liquidation proceeds on the L.P. Certificates and
receiving approvals, votes or consents hereunder) as the Partnership
Preferred Security Holder and the sole holder of the L.P. Certificates and
shall have no obligation to the Partnership Preferred Security Owners;
(iii) None of the Partnership, the Trust, the General Partner, any
Special Representative or any agents of any of the foregoing shall have any
liability or responsibility for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a global L.P.
Certificate for such beneficial ownership interests
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or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests; and
(iv) Except as provided in Section 12.4(c) below, the Partnership
Preferred Security Owners will not be entitled to receive physical delivery
of the Partnership Preferred Securities in definitive form and will not be
considered Holders thereof for any purpose under this Agreement, and no
global L.P. Certificate representing Partnership Preferred Securities shall
be exchangeable, except for another global L.P. Certificate of like
denomination and tenor to be registered in the name of DTC or Cede & Co.,
or to a successor Depositary or its nominee. Accordingly, each Partnership
Preferred Security Owner must rely on the procedures of DTC or if such
person is not a Participant, on the procedures of the Participant through
which such person owns its interest to exercise any rights of a Holder
under the Agreement.
(b) NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication to the Partnership Preferred Security Holders is required under
this Agreement, unless and until Definitive L.P. Certificates shall have been
issued to the Partnership Preferred Security Owners pursuant to Section 12.4(c),
the General Partner and any Special Representative shall give all such notices
and communications specified herein to be given to the Partnership Preferred
Security Holders to the Clearing Agency, and shall have no obligations to the
Partnership Preferred Security Owners.
(c) DEFINITIVE L.P. CERTIFICATES. Definitive L.P. Certificates shall
be prepared by the Partnership and exchangeable for the global L.P. Certificate
or L.P. Certificates if and only if (i) the Depositary notifies the Company that
it is unwilling or unable to continue its services as a securities depositary
and no successor depositary shall have been appointed, (ii) the Depositary, at
any time, ceases to be a clearing agency registered under the Exchange Act at
such time as the Depositary is required to be so registered to act as such
depositary and no successor depositary shall have been appointed, or (iii) the
Company, in its sole discretion, determines that such global L.P. Certificate
shall be so
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exchangeable. Upon surrender of the global L.P. Certificate or L.P.
Certificates representing the Book-Entry Interests by the Clearing Agency,
accompanied by registration instructions, the General Partner shall cause
Definitive L.P. Certificates to be delivered to Partnership Preferred Security
Owners in accordance with the instructions of the Clearing Agency. Neither the
General Partner nor the Partnership shall be liable for any delay in delivery of
such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions. Any Person receiving a Definitive L.P.
Certificate in accordance with this Section 12.4 shall be admitted to the
Partnership as a Limited Partner upon receipt of such Definitive L.P.
Certificate and shall be registered on the books and records of the Partnership
as a Partnership Preferred Security Holder. The Clearing Agency or the nominee
of the Clearing Agency, as the case may be, shall cease to be a Limited Partner
under this Section 12.4(c) at the time that at least one additional Person is
admitted to the Partnership as a Limited Partner in accordance herewith. The
Definitive L.P. Certificates shall be printed, lithographed or engraved or may
be produced in any other manner as may be required by any national securities
exchange on which Partnership Preferred Securities may be listed and is
reasonably acceptable to the General Partner, as evidenced by its execution
thereof.
Section 12.5 REGISTRAR, TRANSFER AGENT AND PAYING AGENT.
(a) The General Partner will act as Registrar, Transfer Agent and
Paying Agent for the Partnership Preferred Securities for so long as the
Partnership Preferred Securities are held by the Trust or, if the Trust is
liquidated in connection with a Trust Special Event, for so long as the
Partnership Preferred Securities remain in book-entry only form.
(b) Except in such case where the General Partner shall act as
Registrar or Paying Agent pursuant to Section 12.5(a) hereof, the Partnership
shall maintain in the Borough of Manhattan, City of New York, State of New York
(i) an office or agency where Partnership Preferred Securities may be presented
for registration of transfer or for exchange ("Registrar") and (ii) an office or
agency where Partnership Preferred Securities may be
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presented for payment ("Paying Agent"). The Registrar shall keep a register of
the Partnership Preferred Securities and of their transfer and exchange. The
Partnership may appoint the Registrar and the Paying Agent and may appoint one
or more co-registrars and one or more additional paying agents in such other
locations as it shall determine. The term "Paying Agent" includes any
additional paying agent. The Partnership may change any Paying Agent, Registrar
or co-registrar without prior notice to any Holder. If the Partnership fails to
appoint or maintain another entity as Registrar or Paying Agent, the General
Partner shall act as such.
(c) Registration of transfers of Partnership Preferred Securities
shall be effected without charge by or on behalf of the Partnership, but upon
payment (with the giving of such indemnity as the Partnership or the General
Partner may require) in respect of any tax or other governmental charges that
may be imposed.
(d) The Partnership will not be required to register or cause to be
registered the transfer of Partnership Preferred Securities after such
Partnership Preferred Securities have been called for redemption.
ARTICLE XIII
WITHDRAWAL, DISSOLUTION;
LIQUIDATION AND DISTRIBUTION OF ASSETS
Section 13.1 WITHDRAWAL OF PARTNERS. The General Partner shall not
at any time retire or withdraw from the Partnership except as otherwise
permitted hereunder. If the General Partner retires or withdraws in
contravention of this Section 13.1, it shall indemnify, defend and hold harmless
the Partnership and the other Partners from and against any losses, expenses,
judgments, fines, settlements or damages suffered or incurred by the Partnership
or such other Partners arising out of or resulting from such retirement or
withdrawal.
Section 13.2 DISSOLUTION OF THE PARTNERSHIP.
(a) The Partnership shall not be dissolved by the admission of
Partners in accordance with the terms of this Agreement. The death, withdrawal,
bankruptcy or dissolution of a Limited Partner, or the occurrence of
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any other event which terminates the Interest of a Limited Partner in the
Partnership, shall not, in and of itself, cause the Partnership to be dissolved
and its affairs wound up. To the fullest extent permitted by applicable law,
upon the occurrence of any such event, the General Partner may, without any
further act, vote on approval of any Partner, admit any Person to the
Partnership as an additional or substitute limited partner in the Partnership,
which admission shall be effective as of the date of the occurrence of such
event, and the business of the Partnership shall be continued without
dissolution.
(b) The Partnership shall be dissolved and its affairs shall be wound
up upon the earliest to occur of any of the following events:
(i) upon the bankruptcy or insolvency of the General Partner;
(ii) upon the assignment by the General Partner of its entire interest
in the Partnership when the assignee is not admitted to the Partnership as
a general partner of the Partnership in accordance with this Agreement, or
the filing of a certificate of dissolution or its equivalent with respect
to the General Partner, or the revocation of the General Partner's charter
and the expiration of 90 days after the date of notice to the General
Partner of revocation without a reinstatement of its charter, or if any
other event occurs that causes the General Partner to cease to be a general
partner of the Partnership under the Delaware Partnership Act, unless the
business of the Partnership is continued in accordance with the Delaware
Partnership Act;
(iii) the Partnership has redeemed or otherwise purchased all of the
Partnership Preferred Securities;
(iv) upon the entry of a decree of judicial dissolution under Section
17-802 of the Act; or
(v) the written consent of all Partners.
57
<PAGE>
(c) Upon dissolution of the Partnership, the Liquidator shall promptly
notify the Partners of such dissolution.
Section 13.3 LIQUIDATION.
(a) In the event of the dissolution of the Partnership for any reason,
the General Partner (or, if the Partnership is dissolved pursuant to Section
13.2(b)(i) or (ii), then a liquidating agent appointed by Holders of not less
than 66 2/3% in Liquidation Preference of the Partnership Preferred Securities
(the General Partner or such Person so appointed is hereinafter referred to as
the "Liquidator")) shall commence to wind up the affairs of the Partnership and
to liquidate the Partnership's assets; provided, however, that a reasonable time
shall be allowed for the orderly liquidation of the assets of the Partnership
and the satisfaction of liabilities to creditors so as to enable the Partners to
minimize the normal losses attendant upon liquidation. The Partners shall
continue to share all income, losses and distributions during the period of
liquidation in accordance with Articles IV and V. Subject to the provisions of
this Article XIII, the Liquidator shall have full right and unlimited discretion
to determine the time, manner and terms of any sale or sales of Partnership
property pursuant to such liquidation, giving due regard to the activity and
condition of the relevant market and general financial and economic conditions.
(b) The Liquidator shall have all of the rights and powers with
respect to the assets and liabilities of the Partnership in connection with the
liquidation and termination of the Partnership that the General Partner would
have with respect to the assets and liabilities of the Partnership during the
term of the Partnership, and the Liquidator is hereby expressly authorized and
empowered to execute any and all documents necessary or desirable to effectuate
the liquidation and termination of the Partnership and the transfer of any
assets.
(c) Notwithstanding the foregoing, a Liquidator that is not a General
Partner shall not, by virtue of acting in such capacity, be deemed a Partner in
this Partnership and shall not have any of the economic interests in the
Partnership of a Partner; and such Liquidator may be compensated for its
services to the Partnership at
58
<PAGE>
normal customary and competitive rates for its services to the Partnership as
reasonably determined by all the Limited Partners.
Section 13.4 DISTRIBUTION IN LIQUIDATION. The proceeds of
liquidation shall be applied in the following order of priority (and without
regard to the non-mandatory provisions of Section 17-804 of the Act):
(i) first, to creditors of the Partnership, including Partners who are
creditors, to the extent otherwise permitted by law, in satisfaction of the
liabilities of the Partnership (whether by payment or the making of
reasonable provisions for payment thereof), other than liabilities for
distributions (including Distributions) to Partners;
(ii) second, following any allocations required under Section 4.2(e)
of the Agreement, to the Limited Partners, an amount equal to the aggregate
liquidation preference of their Partnership Preferred Securities, plus the
amount of Distributions (including any Compounded Distributions) that are
accumulated and unpaid as of the date of such liquidating distribution; and
(iii) thereafter, to the General Partner.
Section 13.5 RIGHTS OF LIMITED PARTNERS. Each Limited Partner shall
look solely to the assets of the Partnership for all distributions with respect
to the Partnership and such Partner's capital contribution (including returns
thereof), and such Partner's share of profits or losses thereof, and shall have
no recourse therefor (upon dissolution or otherwise) against the General
Partner, except under the Partnership Guarantee. No Partner shall have any
right to demand or receive property other than cash upon dissolution and
termination of the Partnership.
Section 13.6 TERMINATION. The Partnership shall terminate when all
of the assets of the Partnership shall have been disposed of and the assets
shall have been distributed as provided in Section 13.4 and the Liquidator has
executed and caused to be filed a certificate of cancellation of the
Partnership.
59
<PAGE>
ARTICLE XIV
AMENDMENTS AND MEETINGS
Section 14.1 AMENDMENTS. Except as provided by Section 3.3(b) and
Section 6.2(i), this Agreement may be amended by, and only by, a written
instrument executed by the General Partner without the consent of any Limited
Partner; provided, however, that no amendment shall be made, and any such
purported amendment shall be void and ineffective, to the extent the result
thereof would be to (A) cause the Partnership to be treated for United States
federal income tax purposes as an association or a publicly traded
partnership taxable as a corporation, (B) require the Partnership to register
under the 1940 Act or (C) materially adversely affect the rights, privileges
or preferences of the Partnership Preferred Securities. Notwithstanding any
provision to the contrary, in the event of (i) a liquidation of the Trust for
any reason or (ii) any other distribution which effectively causes
Partnership Preferred Securities to be distributed to Holders of Trust
Preferred Securities, the General Partner may amend this Agreement without
the consent of the Limited Partners to provide for (A) orderly dissemination,
purchase, sale, exchange and replacement of such Partnership Preferred
Securities, (B) all other matters to the extent required by or desirable
under then applicable law and (C) such other matters reasonably incidental or
related thereto; provided, however, that no such amendment may materially
adversely affect the rights, privileges, or preferences of the Partnership
Preferred Securities without the consent of a majority in interest of the
Partners so effected.
Section 14.2 AMENDMENT OF CERTIFICATE. In the event this
Agreement shall be amended pursuant to Section 14.1, the General Partner
shall amend the Certificate to reflect such change if it deems such amendment
of the Certificate to be necessary or appropriate.
Section 14.3 MEETINGS OF PARTNERS.
(a) Meetings of the Limited Partners who are Holders may be called
at any time by the General Partner to consider and act on any matter on which
Limited Partners are entitled to act under the terms of this Agreement or the
Act. The General Partner shall call a meeting of Holders if directed to do
so by Holders of no less
60
<PAGE>
than 10% in Liquidation Preference as permitted by this Agreement. Such
direction shall be given by delivering to the General Partner a request in
writing stating that the signing Limited Partners desire to call a meeting
and indicating the general or specific purpose for which the meeting is to be
called. Any Limited Partners calling a meeting shall specify in writing the
L.P. Certificates held by the Limited Partners exercising the right to call a
meeting and only those specified Interests shall be counted for purposes of
determining whether the required percentage set forth in the second sentence
of this paragraph has been met. Except to the extent otherwise provided in
this Agreement, the following provisions shall apply to meetings of Partners.
(b) Notice of any such meeting shall be given to all Limited
Partners having a right to vote thereat not less than seven Business Days nor
more than 60 days prior to the date of such meeting. Each such notice shall
set forth the date, time and place of the meeting, a description of any
matter on which Holders are entitled to vote and instructions for the
delivery of proxies or written consents.
(c) Any action that may be taken at a meeting of the Limited
Partners may be taken without a meeting if a consent in writing setting forth
the action so taken is signed by Limited Partners owning not less than the
minimum Interests that would be necessary to authorize or take such action at
a meeting in which all Limited Partners having a right to vote thereon were
present and voting. Prompt notice of the taking of action without a meeting
shall be given to the Limited Partners entitled to vote who have not
consented in writing. The General Partner may provide that any written
ballot submitted to the Limited Partners for the purpose of taking any action
without a meeting shall be returned to the Partnership within a specified
time.
(d) Each Partner may authorize any Person to act for it by proxy on
all matters as to which a Partner is entitled to participate, including
waiving notice of any meeting, or voting or participating at a meeting.
Every proxy must be signed by the Partner or its attorney-in-fact. No proxy
shall be valid after the expiration of 11 months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be revocable at
61
<PAGE>
the pleasure of the Partner executing it. Except as otherwise provided
herein, or pursuant to Section 14.3(f), all matters relating to the giving,
voting or validity of proxies shall be governed by the General Corporation
Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Partnership were a Delaware corporation
and the Limited Partners were stockholders of a Delaware corporation.
(e) Each meeting of Partners shall be conducted by the General
Partner or by such other Person that the General Partner may designate.
(f) The General Partner may establish all other reasonable
procedures relating to meetings of Limited Partners or the giving of written
consents, in addition to those expressly provided, including notice of time,
place or purpose of any meeting at which any matter is to be voted on by any
Partners, waiver of any such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements, voting in person or by
proxy or any other matter with respect to the exercise of any such right to
vote.
ARTICLE XV
MISCELLANEOUS
Section 15.1 NOTICES. All notices provided for in this Agreement
shall be in writing, and shall be delivered or mailed by first class or
registered or certified mail or, with respect to the Partnership and General
Partner, telecopied, as follows:
(a) if given to the Partnership, in care of the General Partner at
the Partnership's mailing address set forth below:
Merrill Lynch & Co., Inc.
World Financial Center
South Tower
225 Liberty Street
New York, New York 10080-6105
Attention: Treasurer
62
<PAGE>
(b) if given to the General Partner, at its mailing address set forth
below:
Merrill Lynch & Co., Inc.
World Financial Center
South Tower
225 Liberty Street
New York, New York 10080-6105
Attention: Treasurer
(c) if given to any other Partner at the address set forth on the
books and records of the Partnership.
Section 15.2 POWER OF ATTORNEY. Each Holder of a Partnership
Preferred Security does hereby constitute and appoint the General Partner,
and if applicable, any Special Representative appointed pursuant to Section
6.2(h)(i) of this Agreement, as its true and lawful representative and
attorney-in-fact, in its name, place and stead to make, execute, sign,
deliver and file (a) any amendment of the Certificate required because of an
amendment of this Agreement or in order to effect any change in the
Partnership, (b) this Agreement, (c) any amendments to this Agreement and (d)
all such other instruments, documents and certificates which from time to
time may be required by the laws of the United States of America, the State
of Delaware or any other jurisdiction, or any political subdivision or agency
thereof, to effectuate, implement and continue the valid and subsisting
existence of the Partnership or to dissolve the Partnership for any other
purpose consistent with this Agreement and the transactions contemplated
hereby.
The power of attorney granted hereby is coupled with an interest and
shall (a) survive and not be affected by the subsequent death, incapacity,
disability, dissolution, termination, or bankruptcy of the Holder granting
the same or the transfer of all or any portion of such Holder's Interest and
(b) extend to such Holder's successors, assigns and legal representatives.
Section 15.3 ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement among the parties. It supersedes any prior agreement or
understandings among them, and it may not be modified or amended in any
manner other than as set forth herein.
63
<PAGE>
Section 15.4 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE
LAW OF THE STATE OF DELAWARE AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY
SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
Section 15.5 EFFECT. Except as herein otherwise specifically
provided, this Agreement shall be binding upon and inure to the benefit of
the parties and their legal representatives, successors and assigns.
Section 15.6 PRONOUNS AND NUMBER. Wherever from the context it
appears appropriate, each term stated in either the singular or the plural
shall include the singular and the plural, and pronouns stated in either the
masculine, feminine or neuter shall include the masculine, feminine and
neuter.
Section 15.7 CAPTIONS. Captions, headings, and subheadings
contained in this Agreement are included for convenience and identification
purposes only and in no way define, limit or extend the scope or intent of
this Agreement or any provision herein.
Section 15.8 PARTIAL ENFORCEABILITY. If any provision of this
Agreement, or the application of such provision to any Person or
circumstance, shall be held invalid, the remainder of this Agreement, or the
application of such provision to persons or circumstances other than those to
which it is held invalid, shall not be affected thereby.
Section 15.9 COUNTERPARTS. This Agreement may contain more than
one counterpart of the signature page and this Agreement may be executed by
the affixing of the signature of each of the Partners to one of such
counterpart signature pages. All of such counterpart signature pages shall
be read as though one, and they shall have the same force and effect as
though all of the signers had signed a single signature page.
Section 15.10 WAIVER OF PARTITION. Each Partner hereby irrevocably
waives any and all rights (if any) that such Partner may have to maintain any
action for partition of any of the Partnership's property.
64
<PAGE>
Section 15.11 REMEDIES. The failure of any party to seek redress
for violation of, or to insist upon the strict performance of, any provision
of this Agreement shall not prevent a subsequent act, which would have
originally constituted a violation, from having the effect of an original
violation. The rights and remedies provided by this Agreement are cumulative
and the use of any one right or remedy by any party shall not preclude or
waive its right to use any or all other remedies. Said rights and remedies
are given in addition to any other rights the parties may have by law,
statute, ordinance or otherwise.
65
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above stated.
GENERAL PARTNER:
MERRILL LYNCH & CO., INC.
a Delaware corporation
By:
-------------------------------
Name: Theresa Lang
Title: Senior Vice President
and Treasurer
INITIAL LIMITED PARTNER:
MERRILL LYNCH GROUP, INC.
a Delaware corporation
By:
--------------------------------
Name: Theresa Lang
Title: President
66
<PAGE>
SCHEDULE 1
S-1
<PAGE>
ANNEX A
FORM OF L.P. CERTIFICATE
[IF THE PARTNERSHIP PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE
INSERT: This Partnership Preferred Security is a Global Certificate within the
meaning of the Partnership Agreement hereinafter referred to and is registered
in the name of The Depository Trust Company (the "Depositary") or a nominee of
the Depositary. This Partnership Preferred Security is exchangeable for
Partnership Preferred Securities registered in the name of a person other than
the Depositary or its nominee only in the limited circumstances described in the
Partnership Agreement and no transfer of this Partnership Preferred Security
(other than a transfer of this Partnership Preferred Security as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary) may be registered except in
limited circumstances.
Unless this Partnership Preferred Security is presented by an
authorized representative of The Depository Trust Company (55 Water Street,
New York, New York), a New York corporation, to the Partnership or its agent
for registration of transfer, exchange or payment, and any Partnership
Preferred Security issued is registered in the name of Cede & Co. or such
other name as requested by an authorized representative of the Depositary and
any payment hereon is made to Cede & Co. or such other entity as is requested
by an authorized representative of the Depositary, ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an interest herein.]
A-1
<PAGE>
PS-1 [ ]
Certificate Evidencing Partnership Preferred Securities
of
MERRILL LYNCH PREFERRED FUNDING , L.P.
% Partnership Preferred Securities
(liquidation preference $25 per Partnership Preferred Security)
MERRILL LYNCH PREFERRED FUNDING , L.P., a limited partnership
formed under the laws of the State of Delaware (the "Partnership"), hereby
certifies that The Chase Manhattan Bank, a property trustee pursuant to the
Amended and Restated Declaration of Trust of Merrill Lynch Preferred Capital
Trust , dated as of ________ __, 1998 (the "Holder") is the registered
owner of preferred securities of the Partnership representing
limited partner interests in the Partnership designated the % Partnership
Preferred Securities (liquidation preference $25 per Partnership Preferred
Security) (the "Partnership Preferred Securities"). The Partnership
Preferred Securities are freely transferable on the books and records of the
Partnership, in person or by a duly authorized attorney, upon surrender of
this certificate duly endorsed and in proper form for transfer. The
designation, rights, powers, privileges, restrictions, preferences and other
terms and provisions of the Partnership Preferred Securities represented
hereby are set forth in, issued under and shall in all respects be subject to
the provisions of the Amended and Restated Agreement of Limited Partnership
dated as of ________ __, 1998, as the same may be amended from time to time
(the "Partnership Agreement"). Capitalized terms used herein but not defined
shall have the meaning given them in the Partnership Agreement. The Holder
is entitled to the benefits of the Partnership Guarantee to the extent
provided therein. The Partnership will provide a copy of the Partnership
Agreement and the Partnership Guarantee to a Holder without charge upon
written request to the Partnership at its principal place of business.
Upon receipt of this certificate, the Holder is admitted to the
Partnership as a Limited Partner, is bound by the Partnership Agreement and
is entitled to the benefits thereunder. Each Holder of a Partnership
Preferred Security, by acceptance of this Certificate and each Certificate
owner, by acquisition of a beneficial interest in a Certificate, agrees to
treat the Debentures, and any other Affiliate Investment Instruments that are
treated as debt instruments by the relevant Investment Affiliate and by the
Partnership, as indebtedness for United States federal income tax purposes.
A1-1
<PAGE>
IN WITNESS WHEREOF, the Partnership has executed this certificate
this __ day of ________, 1998.
MERRILL LYNCH PREFERRED FUNDING , L.P.
By: MERRILL LYNCH & CO., INC.,
as General Partner
By:
--------------------------------
Name: Theresa Lang
Title: Senior Vice President
and Treasurer
(See reverse for additional terms)
A1-2
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Partnership Preferred Security will be
fixed at a rate per annum of % of the stated liquidation preference of $25
per Partnership Preferred Security. Distributions not paid on the scheduled
payment date will accumulate and compound quarterly (to the extent permitted
by applicable law) at the rate of % per annum. The term "Distributions" as
used herein shall mean ordinary cumulative distributions in respect of each
Fiscal Period together with any such Compounded Distributions. Distributions
on the Partnership Preferred Securities will only be made to the extent that
the Partnership has funds legally available for the payment of such
distributions. Amounts available to the Partnership for Distribution to the
holders of the Partnership Preferred Securities will be limited to payments
received by the Partnership from the Company and certain wholly owned
subsidiaries on the Initial Debentures and Affiliate Investment Instruments
or from the Company on the Partnership Guarantee or on the Eligible Debt
Securities. Distributions on the Partnership Preferred Securities will be
paid only if, as and when declared in the sole discretion of the Company, as
the General Partner of the Partnership. The amount of Distributions payable
for any period will be computed for any full quarterly Distribution period on
the basis of a 360-day year of twelve 30-day months, and for any period
shorter than a full quarterly Distribution period on the basis of the actual
number of days elapsed in a 90-day quarter.
Except as otherwise described herein, Distributions on the Partnership
Preferred Securities will be cumulative, will accumulate from the date of
initial issuance and will be payable quarterly in arrears, on March 30, June
30, September 30 and December 30 of each year, commencing on ________ 30,
1998, if, as and when declared by the General Partner in its sole discretion.
If the Trust Preferred Securities (or, if the Trust is liquidated, the
Partnership Preferred Securities) are in book-entry-only form, Distributions
will be payable to the Holders of record of Partnership Preferred Securities
as they appear on the books and records of the Partnership on the relevant
record dates, which will be one Business Day prior to the relevant payment
dates. If the Trust or the Property Trustee is the Holder of the Partnership
Preferred Securities, all Distributions of cash shall be made by wire
transfer of same day funds to such Holder by 10:00 a.m., New York City time,
on the applicable Distribution Payment Date. Distributions payable on any
Partnership Preferred Securities that are not punctually paid on any
Distribution Payment Date will cease to be payable to the Person in whose
name such Partnership Preferred Securities are registered on the relevant
record date, and
A1-3
<PAGE>
such Distribution will instead be payable to the Person in whose name such
Partnership Preferred Securities are registered on the special record date or
other specified date for payment of such defaulted or accumulated
Distribution. If the Trust Preferred Securities (or, if the Trust is
liquidated, the Partnership Preferred Securities) are not in book-entry-only
form, the relevant record dates shall be the 15th day of the month of the
relevant payment dates. In the event that any date on which Distributions
are payable is not a Business Day, payment of such Distribution shall be made
on the next succeeding day which is a Business Day (without any interest or
other payment in respect of any such delay) except that, if such Business Day
falls in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on such date.
The Partnership Preferred Securities shall be redeemable as provided
in the Partnership Agreement.
A1-4
<PAGE>
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Partnership
Preferred Security Certificate to:
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
(Insert assignee's social security or tax identification number)
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
____________________________________________________________________________
____________________________________________________________________________
_____________________________________________________ agent to transfer this
Partnership Preferred Security Certificate on the books of the Partnership.
The agent may substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Partnership
Preferred Security Certificate)
A1-5
<PAGE>
Exhibit 4.5
====================================
TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT
Merrill Lynch Preferred Capital Trust
Dated as of _________ __, 1998
====================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation........................... 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application......................... 6
SECTION 2.2 Lists of Holders of Securities........................... 6
SECTION 2.3 Reports by the Trust Preferred Guarantee Trustee......... 7
SECTION 2.4 Periodic Reports to Trust Preferred Guarantee Trustee.... 7
SECTION 2.5 Evidence of Compliance with Conditions Precedent......... 7
SECTION 2.6 Events of Default; Waiver................................ 7
SECTION 2.7 Event of Default; Notice................................. 7
SECTION 2.8 Conflicting Interests.................................... 8
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
TRUST PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Trust Preferred
Guarantee Trustee...................................... 8
SECTION 3.2 Certain Rights of Trust Preferred Guarantee Trustee...... 10
SECTION 3.3. Not Responsible for Recitals or Issuance of Trust
Preferred Securities Guarantee......................... 13
ARTICLE IV
TRUST PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Trust Preferred Guarantee Trustee; Eligibility........... 13
SECTION 4.2 Appointment, Removal and Resignation of Trust
Preferred Guarantee Trustee............................ 14
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee................................................ 15
SECTION 5.2 Waiver of Notice and Demand.............................. 15
SECTION 5.3 Obligations Not Affected................................. 15
<PAGE>
Page
SECTION 5.4 Rights of Holders........................................ 16
SECTION 5.5 Guarantee of Payment..................................... 17
SECTION 5.6 Subrogation.............................................. 17
SECTION 5.7 Independent Obligations.................................. 17
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions............................... 17
SECTION 6.2 Ranking.................................................. 18
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.............................................. 19
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation.............................................. 19
SECTION 8.2 Indemnification.......................................... 20
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns................................... 20
SECTION 9.2 Amendments............................................... 20
SECTION 9.3 Consolidations and Mergers............................... 20
SECTION 9.4 Notices.................................................. 21
SECTION 9.5 Benefit.................................................. 21
SECTION 9.6 Governing Law............................................ 22
ii
<PAGE>
TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT
This TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT (the "Trust
Preferred Securities Guarantee"), dated as of ________ __, 1998, is executed and
delivered by Merrill Lynch & Co., Inc., a Delaware corporation (the
"Guarantor"), and The Chase Manhattan Bank, a national banking association, as
trustee (the "Trust Preferred Guarantee Trustee"), for the benefit of the
Holders (as defined herein) from time to time of the Trust Preferred Securities
(as defined herein) of Merrill Lynch Preferred Capital Trust , a Delaware
statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of _________ __, 1998, among the trustees of the Issuer
named therein, Merrill Lynch & Co., Inc., as sponsor, and the holders from time
to time of undivided beneficial interests in the assets of the Issuer, the
Issuer is issuing on the date hereof Trust Originated Preferred
Securities, having an aggregate liquidation amount of $ , designated
the % Trust Originated Preferred Securities (the "Trust Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Trust Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Trust Preferred Securities Guarantee, to pay to the
Holders of the Trust Preferred Securities the Guarantee Payments (as defined
herein) and to make certain other payments on the terms and conditions set forth
herein and;
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Trust Common Securities Guarantee"), with substantially
identical terms to this Trust Preferred Securities Guarantee for the benefit of
the holders of the Trust Common Securities (as defined herein), except that if
the Guarantor is in default on any of its obligations under the Trust Preferred
Securities Guarantee, the Partnership Guarantee, or any Investment Guarantee, or
any default has occurred and is continuing with respect to an Affiliate
Investment Instrument, the rights of holders of the Trust Common Securities to
receive Guarantee Payments under the Trust Common Securities Guarantee are
subordinated, to the extent and in the manner set forth in the Trust Common
Securities Guarantee, to the rights of Holders of Trust Preferred Securities to
receive Guarantee Payments under this Trust Preferred Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Trust Preferred Securities, which purchase the Guarantor hereby acknowledges
shall benefit the Guarantor, the
<PAGE>
Guarantor executes and delivers this Trust Preferred Securities Guarantee for
the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Trust Preferred Securities Guarantee, unless the context
otherwise requires:
(a) Capitalized terms used in this Trust Preferred Securities
Guarantee but not defined in the preamble above have the
respective meanings assigned to them in this Section 1.1;
(b) Capitalized terms used in this Trust Preferred Securities
Guarantee but not otherwise defined herein shall have the
meanings assigned to them in the Declaration or the Partnership
Agreement, as the case may be.
(c) a term defined anywhere in this Trust Preferred Securities
Guarantee has the same meaning throughout;
(d) all references to "the Trust Preferred Securities Guarantee" or
"this Trust Preferred Securities Guarantee" are to this Trust
Preferred Securities Guarantee as modified, supplemented or
amended from time to time;
(e) all references in this Trust Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of this Trust
Preferred Securities Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same meaning
when used in this Trust Preferred Securities Guarantee, unless
otherwise defined in this Trust Preferred Securities Guarantee or
unless the context otherwise requires; and
(g) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act of 1933, as amended, or any successor rule thereunder.
2
<PAGE>
"Business Day" means any day other than a day on which banking
institutions in The City of New York are authorized or required by law to close.
"Corporate Trust Office" means the principal trust office of the Trust
Preferred Guarantee Trustee in the Borough of Manhattan, The City of New York,
which office at the date hereof is located at 450 West 33rd Street, 15th Floor,
New York, New York 10001.
"Covered Person" means any Holder or beneficial owner of Trust
Preferred Securities.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Trust Preferred Securities Guarantee.
"Finance Subsidiary" means any wholly-owned subsidiary of the
Guarantor the principal purpose of which is to raise capital for the Guarantor
by issuing securities that are guaranteed by the Guarantor and the proceeds of
which are loaned to or invested in the Guarantor or one or more of its
affiliates.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Trust Preferred Securities, to the
extent not paid or made by the Issuer: (i) any accumulated and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Trust Preferred Securities, to the extent the Issuer has funds legally
available therefor at such time, (ii) the redemption price, including all
accumulated and unpaid Distributions to the date of redemption (the "Redemption
Price"), to the extent the Issuer has funds legally available therefor at such
time, with respect to any Trust Preferred Securities called for redemption by
the Issuer, and (iii) upon a voluntary or involuntary termination or liquidation
of the Issuer (other than in connection with the distribution of Partnership
Preferred Securities to the Holders in exchange for Trust Preferred Securities
as provided in the Declaration or the redemption of all of the Trust Preferred
Securities), the lesser of (a) the aggregate of the liquidation amount and all
accumulated and unpaid Distributions on the Trust Preferred Securities to the
date of payment, to the extent the Issuer has funds legally available therefor,
and (b) the amount of assets of the Issuer, after satisfaction of all
liabilities, remaining available for distribution to Holders in liquidation of
the Issuer (in either case, the "Liquidation Distribution").
"Holder" shall mean any holder, as registered on the books and records
of the Issuer of any Trust Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Trust Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
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shall not apply to Trust Preferred Securities beneficially owned by the
Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Trust Preferred Guarantee Trustee, any
Affiliate of the Trust Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Trust Preferred Guarantee Trustee.
"Majority in liquidation amount of the Trust Preferred Securities"
means, except as provided by the Trust Indenture Act, a vote by Holder(s) of
Trust Preferred Securities, voting separately as a class, of more than 50% of
the aggregate liquidation amount (including the amount that would be paid on
redemption, liquidation or otherwise, plus accumulated and unpaid Distributions
to the date upon which the voting percentages are determined) of all Trust
Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman of the Board, the President, a Vice President
or the Treasurer, and by an Assistant Treasurer, the Secretary or an Assistant
Secretary of such Person. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Trust Preferred
Securities Guarantee shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definition relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Partnership" means Merrill Lynch Preferred Funding , L.P.
"Partnership Agreement" means the Amended and Restated Agreement of
Limited Partnership of the Partnership, dated as of _________ __, 1998, among
Merrill Lynch & Co., Inc., a Delaware corporation, as general partner, Merrill
Lynch Group, Inc.,
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Delaware corporation, as initial limited partner and such other persons who
become limited partners as provided therein.
"Partnership Preferred Securities" means those securities representing
limited partnership interests in the Partnership.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Responsible Officer" means, with respect to the Trust Preferred
Guarantee Trustee, the chairman or vice-chairman of the board of directors, the
chairman or vice-chairman of the executive committee of the board of directors,
the president, any vice president (whether or not designated by a number or a
word or words added before or after the title "vice president"), the secretary,
any assistant secretary, the treasurer, any assistant treasurer, the cashier,
any assistant cashier, any trust officer or assistant trust officer, or any
other officer of the Trust Preferred Guarantee Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Rights Agreement" means the Amended and Restated Rights Agreement
dated as of December 2, 1997 between the Guarantor and The Chase Manhattan Bank
(successor by merger to Manufacturers Hanover Trust Guarantor), or any successor
to such Rights Agreement.
"Senior Indebtedness" means any payment in respect of indebtedness of
the Guarantor for money borrowed, except for any such indebtedness that is by
its terms subordinated to or pari passu with the debt instrument of the
Guarantor purchased by the Partnership (the "Company Debenture"), as the case
may be.
"Successor Trust Preferred Guarantee Trustee" means a successor Trust
Preferred Guarantee Trustee possessing the qualifications to act as Trust
Preferred Guarantee Trustee under Section 4.1.
"Trust Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
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"Trust Preferred Guarantee Trustee" means The Chase Manhattan Bank, a
national banking association, until a Successor Trust Preferred Guarantee
Trustee has been appointed and has accepted such appointment pursuant to the
terms of this Trust Preferred Securities Guarantee and thereafter means each
such Successor Trust Preferred Guarantee Trustee.
"Trust Securities" means the Trust Common Securities together with the
Trust Preferred Securities.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Trust Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this Trust
Preferred Securities Guarantee and shall, to the extent applicable, be governed
by such provisions; and
(b) if and to the extent that any provision of this Trust Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Trust Guarantee Trustee shall preserve in as current a form
as is reasonably practicable the most recent list available to it of the names
and addresses of Holders of Trust Preferred Securities. If the Trust Guarantee
Trustee is not the Registrar, the Guarantor shall furnish to the Trust Guarantee
Trustee semi-annually on or before June 15 and December 15 in each year, and at
such other times as the Trust Guarantee Trustee may request in writing, a list,
in such form and as of such date as the Trust Guarantee Trustee may require,
containing all the information in the possession or control of the Registrar,
the Guarantor or any of its Paying Agents other than the Trust Guarantee Trustee
as to the names and addresses of Holders of Trust Preferred Securities. If
there are unregistered securities outstanding, even if the Trust Guarantee
Trustee is the Registrar, the Guarantor shall furnish to the Trust Guarantee
Trustee such a list containing such information with respect to Holders of such
unregistered securities only.
(b) The Trust Preferred Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
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SECTION 2.3 Reports by the Trust Preferred Guarantee Trustee
Within 60 days after ________ __ of each year, commencing ________
__, 1998, the Trust Preferred Guarantee Trustee shall provide to the Holders
of the Trust Preferred Securities such reports as are required by Section 313
of the Trust Indenture Act, if any, in the form and in the manner provided by
Section 313 of the Trust Indenture Act. The Trust Preferred Guarantee
Trustee shall also comply with the requirements of Section 313(d) of the
Trust Indenture Act.
SECTION 2.4 Periodic Reports to Trust Preferred Guarantee Trustee
The Guarantor shall provide to the Trust Preferred Guarantee Trustee
such documents, reports and information as required by Section 314 (if any)
and the compliance certificate required by Section 314 of the Trust Indenture
Act in the form, in the manner and at the times required by Section 314 of
the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Trust Preferred Guarantee Trustee
such evidence of compliance with any conditions precedent, if any, provided
for in this Trust Preferred Securities Guarantee that relate to any of the
matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Trust Preferred
Securities may, by vote, on behalf of the Holders of all of the Trust
Preferred Securities, waive any past Event of Default and its consequences.
Upon such waiver, any such Event of Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Trust Preferred Securities Guarantee, but no such
waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent thereon.
SECTION 2.7 Event of Default; Notice
(a) The Trust Preferred Guarantee Trustee shall, within 90 days
after the occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Trust Preferred Securities, notices of
all Events of Default actually known to a Responsible Officer of the Trust
Preferred Guarantee Trustee, unless such defaults have been cured before the
giving of such notice, provided, that, except in the case of
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default in any Guarantee Payment, the Trust Preferred Guarantee Trustee shall be
protected in withholding such notice if and so long as a Responsible Officer of
the Trust Preferred Guarantee Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders of the Trust
Preferred Securities Trust Preferred Securities.
(b) The Trust Preferred Guarantee Trustee shall not be deemed to
have knowledge of any Event of Default unless the Trust Preferred Guarantee
Trustee shall have received written notice, or a Responsible Officer of the
Trust Preferred Guarantee Trustee charged with the administration of the
Declaration shall have obtained actual knowledge, of such Event of Default.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described in this
Trust Preferred Securities Guarantee for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
TRUST PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Trust Preferred Guarantee Trustee
(a) This Trust Preferred Securities Guarantee shall be held by the
Trust Preferred Guarantee Trustee for the benefit of the Holders of the Trust
Preferred Securities, and the Trust Preferred Guarantee Trustee shall not
transfer this Trust Preferred Securities Guarantee to any Person except a
Holder of Trust Preferred Securities exercising his or her rights pursuant to
Section 5.4(b) or to a Successor Trust Preferred Guarantee Trustee on
acceptance by such Successor Trust Preferred Guarantee Trustee of its
appointment to act as Successor Trust Preferred Guarantee Trustee. The
right, title and interest of the Trust Preferred Guarantee Trustee shall
automatically vest in any Successor Trust Preferred Guarantee Trustee, and
such vesting and succession of title shall be effective whether or not
conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Trust Preferred Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer
of the Trust Preferred Guarantee Trustee has occurred and is continuing, the
Trust Preferred Guarantee Trustee shall enforce this Trust Preferred
Securities Guarantee for the benefit of the Holders of the Trust Preferred
Securities.
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(c) The Trust Preferred Guarantee Trustee, before the occurrence of
any Event of Default and after the curing or waiver of all Events of Default
that may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Trust Preferred Securities Guarantee, and no
implied covenants shall be read into this Trust Preferred Securities
Guarantee against the Trust Preferred Guarantee Trustee. In case an Event of
Default has occurred (that has not been cured or waived pursuant to Section
2.6) and is actually known to a Responsible Officer of the Trust Preferred
Guarantee Trustee, the Trust Preferred Guarantee Trustee shall exercise such
of the rights and powers vested in it by this Trust Preferred Securities
Guarantee, and use the same degree of care and skill in its exercise thereof,
as a prudent person would exercise or use under the circumstances in the
conduct of his or her own affairs.
(d) No provision of this Trust Preferred Securities Guarantee shall
be construed to relieve the Trust Preferred Guarantee Trustee from liability
for its own negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Trust Preferred Guarantee
Trustee shall be determined solely by the express provisions of this
Trust Preferred Securities Guarantee, and the Trust Preferred
Guarantee Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this
Trust Preferred Securities Guarantee, and no implied covenants or
obligations shall be read into this Trust Preferred Securities
Guarantee against the Trust Preferred Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Trust
Preferred Guarantee Trustee, the Trust Preferred Guarantee Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates
or opinions furnished to the Trust Preferred Guarantee Trustee and
conforming to the requirements of this Trust Preferred Securities
Guarantee; but in the case of any such certificates or opinions that
by any provision hereof are specifically required to be furnished to
the Trust Preferred Guarantee Trustee, the Trust Preferred Guarantee
Trustee shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Trust Preferred
Securities Guarantee;
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(ii) the Trust Preferred Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the Trust
Preferred Guarantee Trustee, unless it shall be proved that the Trust
Preferred Guarantee Trustee was negligent in ascertaining the pertinent
facts upon which such judgment was made;
(iii)the Trust Preferred Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a Majority in liquidation
amount of the Trust Preferred Securities relating to the time, method and
place of conducting any proceeding for any remedy available to the Trust
Preferred Guarantee Trustee, or exercising any trust or power conferred
upon the Trust Preferred Guarantee Trustee under this Trust Preferred
Securities Guarantee; and
(iv) no provision of this Trust Preferred Securities Guarantee shall
require the Trust Preferred Guarantee Trustee to expend or risk its own
funds or otherwise incur personal financial liability in the performance of
any of its duties or in the exercise of any of its rights or powers, if the
Trust Preferred Guarantee Trustee shall have reasonable grounds for
believing that the repayment of such funds or liability is not assured to
it under the terms of this Trust Preferred Securities Guarantee or
indemnity, reasonably satisfactory to the Trust Preferred Guarantee
Trustee, against such risk or liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Trust Preferred Guarantee
Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Trust Preferred Guarantee Trustee may conclusively rely, and
shall be fully protected in acting or refraining from acting, upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this Trust
Preferred Securities Guarantee shall be sufficiently evidenced by an
Officers' Certificate.
(iii)Whenever, in the administration of this Trust Preferred
Securities Guarantee, the Trust Preferred Guarantee Trustee shall deem it
desirable that a matter be proved or established before taking, suffering
or omitting any
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action hereunder, the Trust Preferred Guarantee Trustee (unless other
evidence is herein specifically prescribed) may, in the absence of bad
faith on its part, request and conclusively rely upon an Officers'
Certificate which, upon receipt of such request, shall be promptly
delivered by the Guarantor.
(iv) The Trust Preferred Guarantee Trustee shall have no duty to see
to any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
(v) The Trust Preferred Guarantee Trustee may consult with counsel of
its selection, and the advice or opinion of such counsel with respect to
legal matters shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion. Such counsel may be
counsel to the Guarantor or any of its Affiliates and may include any of
its employees. The Trust Preferred Guarantee Trustee shall have the right
at any time to seek instructions concerning the administration of this
Trust Preferred Securities Guarantee from any court of competent
jurisdiction.
(vi) The Trust Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Trust Preferred Securities Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Trust Preferred
Guarantee Trustee such security and indemnity, reasonably satisfactory to
the Trust Preferred Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the Preferred
Guarantee Trustee's agents, nominees or custodians) and liabilities that
might be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the Trust
Preferred Guarantee Trustee; provided that, nothing contained in this
Section 3.2(a)(vi) shall be taken to relieve the Trust Preferred Guarantee
Trustee, upon the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Trust Preferred
Securities Guarantee.
(vii) The Trust Preferred Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Trust Preferred Guarantee
Trustee, in its discretion, may make
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such further inquiry or investigation into such facts or matters as it may
see fit.
(viii) The Trust Preferred Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either directly
or by or through agents, nominees, custodians or attorneys, and the Trust
Preferred Guarantee Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
(ix) Any action taken by the Trust Preferred Guarantee Trustee or its
agents hereunder shall bind the Holders of the Trust Preferred Securities,
and the signature of the Trust Preferred Guarantee Trustee or its agents
alone shall be sufficient and effective to perform any such action. No
third party shall be required to inquire as to the authority of the Trust
Preferred Guarantee Trustee to so act or as to its compliance with any of
the terms and provisions of this Trust Preferred Securities Guarantee, both
of which shall be conclusively evidenced by the Trust Preferred Guarantee
Trustee or its agent taking such action.
(x) Whenever in the administration of this Trust Preferred Securities
Guarantee the Trust Preferred Guarantee Trustee shall deem it desirable to
receive instructions with respect to enforcing any remedy or right or
taking any other action hereunder, the Trust Preferred Guarantee Trustee
(i) may request instructions from the Holders of a Majority in liquidation
amount of the Trust Preferred Securities, (ii) may refrain from enforcing
such remedy or right or taking such other action until such instructions
are received, and (iii) shall be fully protected in conclusively relying on
or acting in accordance with such instructions.
(xi) The Trust Preferred Guarantee Trustee shall not be liable for any
action taken, suffered, or omitted to be taken by it in good faith, without
negligence, and reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Trust Preferred
Securities Guarantee.
(b) No provision of this Trust Preferred Securities Guarantee shall
be deemed to impose any duty or obligation on the Trust Preferred Guarantee
Trustee to perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it in any jurisdiction in which it shall
be illegal, or in which the Trust Preferred Guarantee Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts or to exercise any such right, power, duty or obligation.
No permissive power or authority
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available to the Trust Preferred Guarantee Trustee shall be construed to be a
duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of Trust Preferred
Securities Guarantee
The recitals contained in this Trust Preferred Securities Guarantee
shall be taken as the statements of the Guarantor, and the Trust Preferred
Guarantee Trustee does not assume any responsibility for their correctness.
The Trust Preferred Guarantee Trustee makes no representation as to the
validity or sufficiency of this Trust Preferred Securities Guarantee.
ARTICLE IV
TRUST PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Trust Preferred Guarantee Trustee; Eligibility
(a) There shall at all times be a Trust Preferred Guarantee Trustee
which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least 50 million
U.S. dollars ($50,000,000), and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of the supervising or examining authority
referred to above, then, for the purposes of this Section 4.1(a)(ii), the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published.
(b) If at any time the Trust Preferred Guarantee Trustee shall
cease to be eligible to so act under Section 4.1(a), the Trust Preferred
Guarantee Trustee shall immediately resign in the manner and with the effect
set out in Section 4.2(c).
(c) If the Trust Preferred Guarantee Trustee has or shall acquire
any "conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Trust Preferred
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Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of Trust Preferred Guarantee
Trustee
(a) Subject to Section 4.2(b), the Trust Preferred Guarantee
Trustee may be appointed or removed without cause at any time by the
Guarantor except during an Event of Default.
(b) The Trust Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Trust Preferred Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Trust Preferred Guarantee Trustee and
delivered to the Guarantor.
(c) The Trust Preferred Guarantee Trustee shall hold office until a
Successor Trust Preferred Guarantee Trustee shall have been appointed or
until its removal or resignation. The Trust Preferred Guarantee Trustee may
resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Trust Preferred Guarantee Trustee and
delivered to the Guarantor, which resignation shall not take effect until a
Successor Trust Preferred Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Trust Preferred Guarantee Trustee and delivered to the Guarantor and the
resigning Trust Preferred Guarantee Trustee.
(d) If no Successor Trust Preferred Guarantee Trustee shall have
been appointed and accepted appointment as provided in this Section 4.2
within 60 days after delivery of an instrument of removal or resignation, the
Trust Preferred Guarantee Trustee resigning or being removed may petition any
court of competent jurisdiction for appointment of a Successor Trust
Preferred Guarantee Trustee. Such court may thereupon, after prescribing
such notice, if any, as it may deem proper, appoint a Successor Trust
Preferred Guarantee Trustee.
(e) No Trust Preferred Guarantee Trustee shall be liable for the
acts or omissions to act of any Successor Trust Preferred Guarantee Trustee.
(f) Upon termination of this Trust Preferred Securities Guarantee
or removal or resignation of the Trust Preferred Guarantee Trustee pursuant
to this Section 4.2, the Guarantor shall pay to the Trust Preferred Guarantee
Trustee all amounts due to the Trust Preferred Guarantee Trustee accumulated
to the date of such termination, removal or resignation.
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ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), if, as and when due, regardless of any defense, right of
set-off or counterclaim that the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Trust
Preferred Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Trust Preferred Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Trust Preferred Securities to be
performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Trust Preferred Securities or the
extension of time for the performance of any other obligation under, arising out
of, or in connection with, the Trust Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Trust Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
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(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Issuer or any of the assets of
the Issuer;
(e) any invalidity of, or defect or deficiency in, the Trust
Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of the Trust
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trust Preferred
Guarantee Trustee in respect of this Trust Preferred Securities Guarantee or
exercising any trust or power conferred upon the Trust Preferred Guarantee
Trustee under this Trust Preferred Securities Guarantee.
(b) If the Trust Preferred Guarantee Trustee fails to enforce its
rights under the Trust Preferred Securities Guarantee after a Holder of Trust
Preferred Securities has made a written request, such Holder of Trust Preferred
Securities may institute a legal proceeding directly against the Guarantor to
enforce the Trust Preferred Guarantee Trustee's rights under this Trust
Preferred Securities Guarantee, without first instituting a legal proceeding
against the Issuer, the Trust Preferred Guarantee Trustee or any other person or
entity. Notwithstanding the foregoing, if the Guarantor has failed to make a
guarantee payment, a Holder of Trust Preferred Securities may directly institute
a proceeding in such Holder's own name against the Guarantor for enforcement of
the Trust Preferred Securities Guarantee for such payment. The Guarantor waives
any right or remedy to require that any action be brought first against the
Issuer or any other person or entity before proceeding directly against the
Guarantor.
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SECTION 5.5 Guarantee of Payment
This Trust Preferred Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Trust Preferred Securities against the Issuer in respect of any
amounts paid to such Holders by the Guarantor under this Trust Preferred
Securities Guarantee; provided, however, that the Guarantor shall not (except to
the extent required by mandatory provisions of law) be entitled to enforce or
exercise any right that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under this
Trust Preferred Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Trust Preferred Securities Guarantee. If
any amount shall be paid to the Guarantor in violation of the preceding
sentence, the Guarantor agrees to hold such amount in trust for the Holders and
to pay over such amount to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Trust Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Trust
Preferred Securities Guarantee notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Trust Preferred Securities remain outstanding, if (a)
for any distribution period, full distributions on a cumulative basis on any
Trust Preferred Securities have not been paid or declared and set apart for
payment, (b) an Investment Event of Default by any Investment Affiliate in
respect of any Affiliate Investment Instrument has occurred and is continuing,
or (c) the Guarantor is in default of its obligations under the Trust Preferred
Securities Guarantee, the Trust Common Securities Guarantee, the Partnership
Guarantee or any Investment Guarantee, then, during such period (i) the
Guarantor shall not declare or pay dividends on, make distributions with respect
to, or redeem, purchase or acquire, or make a liquidation payment with respect
to any of its capital stock or comparable equity
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interest (except for (x) dividends or distributions in shares of, or options,
warrants or rights to subscribe for or purchase shares of, its capital stock and
conversions or exchanges of common stock of one class into common stock of
another class, (y) redemptions or purchases of any rights pursuant to the Rights
Agreement and the issuance of preferred stock pursuant to such rights and (z)
purchases or acquisitions by the Guarantor or its affiliates in connection with
transactions effected by or for the account of customers of the Guarantor or any
of its subsidiaries or in connection with the distribution or trading of such
capital stock or comparable equity interest) and (ii) the Guarantor shall not
make, or permit any Finance Subsidiary to make, any payments that would enable
any Finance Subsidiary to make, any payment of any dividends on, any
distribution with respect to, or any redemption, purchase or other acquisition
of, or any liquidation payment with respect to, any preferred security or
comparable equity interest of any Finance Subsidiary.
SECTION 2 Ranking
(a) This Trust Preferred Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to all other liabilities of the Guarantor, (ii) pari passu
with the most senior preferred or preference stock now or hereafter issued by
the Guarantor and with any other guarantee now or hereafter entered into by the
Guarantor in respect of any preferred or preference stock of any Finance
Subsidiary, and (iii) senior to the Guarantor's common stock. Any similar
guarantee given hereafter by the Guarantor with respect to Trust Preferred
Securities that is silent as to seniority will rank pari passu with this Trust
Preferred Securities Guarantee.
(b) The holders of obligations of the Guarantor that are senior to
the obligations under the Trust Preferred Securities Guarantee (including, but
not limited to, obligations constituting Senior Indebtedness) will be entitled
to the same rights upon payment default or dissolution, liquidation and
reorganization in respect of the Trust Preferred Securities Guarantee that inure
to the holders of "Senior Indebtedness" under Article Eleven of the Indenture
dated as of December 17, 1996 between Merrill Lynch & Co., Inc. and The Chase
Manhattan Bank as against the holders of the Company Debenture, and the holders
of the Trust Preferred Securities will be subject to all the terms and
conditions of such Article Eleven with respect to any claims or rights hereunder
with the same effect as though fully set forth herein.
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ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Trust Preferred Securities Guarantee shall terminate upon (i)
full payment of the Redemption Price of all Trust Preferred Securities, (ii)
upon the distribution of the Partnership Preferred Securities to the Holders of
all of the Trust Preferred Securities or (iii) upon full payment of the amounts
payable in accordance with the Declaration upon liquidation of the Issuer.
Notwithstanding the foregoing, this Trust Preferred Securities Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder of Trust Preferred Securities must restore payment of any sums
paid under the Trust Preferred Securities or under this Trust Preferred
Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Guarantor or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Indemnified Person in good faith in accordance with this Trust Preferred
Securities Guarantee and in a manner that such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such Indemnified
Person by this Trust Preferred Securities Guarantee or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Indemnified Person's gross negligence or willful misconduct
with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Trust Preferred Securities might properly be
paid.
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SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and to
hold each Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 8.2 shall survive the termination of this
Trust Preferred Securities Guarantee or the earlier resignation or removal of
the Trust Preferred Guarantee Trustee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Trust Preferred
Securities Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Trust Preferred Securities then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not materially adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Trust Preferred Securities Guarantee may only be amended with
the prior approval of the Holders of at least a Majority in liquidation amount
of the Trust Preferred Securities (including the stated amount that would be
paid on redemption, liquidation or otherwise, plus accumulated and unpaid
Distributions to the date upon which the voting percentages are determined).
The provisions of Section 12.2 of the Declaration with respect to meetings of
Holders of the Securities apply to the giving of such approval.
SECTION 9.3 Consolidations and Mergers
The Guarantor 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 Guarantor shall be the
continuing corporation, or the successor corporation shall be a corporation
organized and existing under the laws of the United States of America thereof
and such successor corporation shall expressly assume the due and punctual
payment of the Guarantee Payments payable pursuant to
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Section 5.1 hereof and the due and punctual performance and observance of all of
the covenants and conditions of this Trust Preferred Securities Guarantee to be
performed by the Guarantor by a separate guarantee satisfactory to the Trust
Preferred Guarantee Trustee, executed and delivered to the Trust Preferred
Guarantee Trustee by such corporation, and (ii) the Guarantor or such successor
corporation, as the case may be, shall not, immediately after such merger or
consolidation, or such sale, lease or conveyance, be in default in the
performance of any such covenant or condition.
SECTION 9.4 Notices
All notices provided for in this Trust Preferred Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, as follows:
(a) If given to the Trust Preferred Guarantee Trustee, at the Trust
Preferred Guarantee Trustee's Corporate Trust Office.
(b) If given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to the
Holders of the Trust Preferred Securities):
Merrill Lynch & Co., Inc.
World Financial Center
South Tower
225 Liberty Street
New York, New York 10080-6105
Attention: Treasurer
(c) If given to any Holder of Trust Preferred Securities, at the
address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.5 Benefit
This Trust Preferred Securities Guarantee is solely for the benefit of
the Holders of the Trust Preferred Securities and, subject to Section 3.1(a), is
not separately transferable from the Trust Preferred Securities.
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SECTION 9.6 Governing Law
THIS TRUST PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
THIS TRUST PREFERRED SECURITIES GUARANTEE is executed as of the day
and year first above written.
MERRILL LYNCH & CO., INC.
as Guarantor
By:______________________________
Name: Theresa Lang
Title: Senior Vice President
and Treasurer
THE CHASE MANHATTAN BANK, as
Trust Preferred Guarantee Trustee
By:______________________________
Name: James Heaney
Title: Vice President
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Exhibit 4.6
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PARTNERSHIP PREFERRED SECURITIES GUARANTEE AGREEMENT
Merrill Lynch Preferred Funding , L.P.
Dated as of ______ __, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
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Page
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ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions............................................... 2
ARTICLE II
GUARANTEE
SECTION 2.1. Guarantee................................................. 3
SECTION 2.2. Waiver of Notice and Demand............................... 3
SECTION 2.3. Obligations Not Affected.................................. 4
SECTION 2.4. Rights of Holders......................................... 5
SECTION 2.5. Guarantee of Payment...................................... 5
SECTION 2.6. Subrogation............................................... 5
SECTION 2.7. Independent Obligations................................... 6
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1. Limitation of Transactions................................ 6
SECTION 3.2. Ranking................................................... 7
ARTICLE IV
TERMINATION
SECTION 4.1. Termination............................................... 7
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Successors and Assigns.................................... 8
SECTION 5.2. Amendments................................................ 8
SECTION 5.3. Consolidations and Mergers................................ 9
SECTION 5.4. Notices................................................... 9
SECTION 5.5. Benefit.................................................. 10
SECTION 5.6. Governing Law............................................ 10
<PAGE>
PARTNERSHIP PREFERRED SECURITIES GUARANTEE AGREEMENT
This PARTNERSHIP PREFERRED SECURITIES GUARANTEE AGREEMENT (the
"Partnership Guarantee"), dated as of ______ __, 1998, is executed and delivered
by Merrill Lynch & Co., Inc., a Delaware corporation (the "Guarantor"), for the
benefit of the holders from time to time of the Partnership Preferred Securities
(as defined below).
WHEREAS, pursuant to an Amended and Restated Agreement of Limited
Partnership (the "Partnership Agreement"), dated as of the date hereof, of
Merrill Lynch Preferred Funding , L.P., a Delaware limited partnership (the
"Issuer"), the Issuer may issue a single series of limited partner interests in
the Issuer (the "Partnership Preferred Securities");
WHEREAS, pursuant to the Partnership Agreement, the proceeds received
by the Issuer from the issuance and sale of the Partnership Preferred Securities
will be invested by the Issuer in the Affiliate Investment Instruments and
Eligible Debt Securities (each as defined in the Partnership Agreement); and
WHEREAS, the Guarantor, as incentive for the Holders (as defined
herein) to purchase Partnership Preferred Securities, desires hereby irrevocably
and unconditionally to agree, to the extent set forth herein, to pay to the
Holders the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Partnership Preferred Securities, which purchase the Guarantor hereby
acknowledges shall directly or indirectly provide at least some material benefit
to the Guarantor, the Guarantor executes and delivers this Partnership Guarantee
for the benefit of the Holders.
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions
As used in this Partnership Guarantee, the terms set forth below
shall, unless the context otherwise requires, have the following meanings.
Capitalized terms used but not otherwise defined herein shall have the meanings
assigned to such terms in the Partnership Agreement.
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act of 1933, as amended, or any successor rule thereunder.
"Finance Subsidiary" means any wholly-owned subsidiary of the
Guarantor the principal purpose of which is to raise capital for the Guarantor
by issuing securities that are guaranteed by the Guarantor and the proceeds of
which are loaned to or invested in the Guarantor or one or more of its
affiliates.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Partnership Preferred
Securities, to the extent not paid or made by the Issuer: (i) any accumulated
and unpaid distributions that have theretofore been declared on the Partnership
Preferred Securities out of funds legally available therefor at such time, (ii)
the redemption price, including all accumulated and unpaid Distributions to the
date of redemption (the "Redemption Price"), payable out of funds legally
available therefor at such time, with respect to any Partnership Preferred
Securities called for redemption by the Issuer, and (iii) upon a voluntary or
involuntary termination or liquidation of the Issuer, the lesser of (a) the
aggregate of the liquidation preference and all accumulated and unpaid
distributions on the Partnership Preferred Securities to the date of payment out
of funds legally available therefor and (b) the amount of assets of the Issuer
after satisfaction of all liabilities remaining available for distribution to
Holders in liquidation of the Issuer (in either case, the "Liquidation
Distribution").
"Holder" shall mean any holder, as registered on the books and records
of the Issuer, of any Partner-
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ship Preferred Securities; provided, however, that in determining whether the
holders of the requisite percentage of Partnership Preferred Securities have
given any request, notice, consent or waiver hereunder, "Holder" shall not apply
to Partnership Preferred Securities owned beneficially by the Guarantor or any
Affiliate of the Guarantor.
"Rights Agreement" means the Amended and Restated Rights Agreement
dated as of December 2, 1997 between the Guarantor and The Chase Manhattan Bank
(successor by merger to Manufacturers Hanover Trust Company), or any successor
to such Rights Agreement.
"Senior Indebtedness" means any payment in respect of indebtedness of
the Guarantor for money borrowed, except for any such indebtedness that is by
its terms subordinated to or pari passu with the debt instrument of the
Guarantor purchased by the Partnership (the "Company Debenture"), as the case
may be.
ARTICLE II
GUARANTEE
SECTION 2.1. Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments, as and when due (without duplication of
amounts theretofore paid by the Issuer), regardless of any defense, right of
set-off or counterclaim which the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
SECTION 2.2. Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Partnership
Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
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SECTION 2.3. Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Partnership Guarantee shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Partnership
Preferred Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the distributions, Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Partnership Preferred
Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Partnership
Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Partnership
Preferred Securities;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Issuer
or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Partnership
Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor, it being the
intent of this Section 2.3 that the obligations of
4
<PAGE>
the Guarantor hereunder shall be absolute and unconditional under any and
all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain consent
of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 2.4. Rights of Holders
The Guarantor expressly acknowledges that (i) this Partnership
Guarantee will be deposited with the General Partner to be held for the benefit
of the Holders; (ii) in the event of the appointment of a Special Representative
to, among other things, enforce this Partnership Guarantee, the Special
Representative may take possession of this Partnership Guarantee for such
purpose; (iii) if no Special Representative has been appointed, the General
Partner has the right to enforce this Partnership Guarantee on behalf of the
Holders; (iv) the Holders of not less than a majority in aggregate liquidation
preference of the Partnership Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available in
respect of this Partnership Guarantee including the giving of directions to the
General Partner or the Special Representative, as the case may be; and (v) if
the General Partner or Special Representative fails to enforce this Partnership
Guarantee after a Holder has made a written request and as above provided, any
Holder may institute a legal proceeding directly against the Guarantor to
enforce its rights under this Partnership Guarantee, without first instituting a
legal proceeding against the Issuer or any other person or entity.
Notwithstanding the foregoing, if the Guarantor has failed to make a guarantee
payment, a Holder may directly institute a proceeding against Guarantor to
enforce such payment under this Partnership Guarantee.
SECTION 2.5. Guarantee of Payment
This Partnership Guarantee will not be discharged except by payment of
the Guarantee Payments in full to the extent not paid by the Issuer.
5
<PAGE>
SECTION 2.6. Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders against the Issuer in respect of any amounts paid to the Holders by the
Guarantor under this Partnership Guarantee provided, however, that the Guarantor
shall not (except to the extent required by mandatory provisions of law) be
entitled to enforce or exercise any rights which it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Partnership Guarantee, if, at the time of any
such payment, any amounts are due and unpaid under this Partnership Guarantee.
If any amount shall be paid to the Guarantor in violation of the preceding
sentence, the Guarantor agrees to hold such amount in trust for the Holders and
to pay over such amount to the Holders.
SECTION 2.7. Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Partnership
Preferred Securities and that the Guarantor shall be liable as principal and as
debtor hereunder to make Guarantee Payments pursuant to the terms of this
Partnership Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (f), inclusive, of Section 2.3 hereof.
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1. Limitation of Transactions
So long as any Partnership Preferred Securities remain outstanding, if
(a) for any distribution period, full distributions on a cumulative basis on any
Partnership Preferred Securities have not been paid or declared and set apart
for payment (b) there shall have occurred an Event of Default under the
Partnership Agreement or (c) the Guarantor shall be in default with respect to
its payment obligations under this Partnership Guarantee, the Trust Preferred
Securities Guarantee, the Trust Common Securities Guarantee or any Investment
Guarantee then, during such period (i) the Guarantor shall not declare or
6
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pay dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital stock
or comparable equity interest (except for (x) dividends or distributions in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, its capital stock and conversions or exchanges of common stock of one class
into common stock of another class, (y) redemptions or purchases of any rights
pursuant to the Rights Agreement and the issuance of preferred stock pursuant to
such rights and (z) purchases or acquisitions by the Guarantor or its affiliates
in connection with transactions effected by or for the account of customers of
the Guarantor or any of its subsidiaries or in connection with the distribution
or trading of such capital stock or comparable equity interest) and (ii) the
Guarantor shall not make, or permit any Finance Subsidiary to make, any payments
that would enable any Finance Subsidiary to make, any payment of any dividends
on, any distribution with respect to, or any redemption, purchase or other
acquisition of, or any liquidation payment with respect to, any preferred
security or comparable equity interest of any Finance Subsidiary.
SECTION 3.2. Ranking
(a) This Partnership Guarantee will constitute an unsecured obligation
of the Guarantor and will rank (i) subordinate and junior in right of payment to
all other liabilities of the Guarantor, (ii) pari passu with the most senior
preferred or preference stock now or hereafter issued from time to time by the
Guarantor and with any other guarantee now or hereafter entered into by the
Guarantor in respect of any preferred or preference stock of any Finance
Subsidiary, and (iii) senior to the Guarantor's common stock. Any similar
guarantee given hereafter by the Guarantor with respect to Partnership Preferred
Securities that is silent as to seniority will rank pari passu with this
Partnership Guarantee.
(b) The holders of obligations of the Guarantor that are senior to the
obligations under the Partnership Guarantee (including, but not limited to,
obligations constituting Senior Indebtedness) will be entitled to the same
rights upon payment default or dissolution, liquidation and reorganization in
respect of the Partnership Guarantee that inure to the holders of "Senior In-
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debtedness" under Article Eleven of the Indenture dated as of December 17, 1996
between Merrill Lynch & Co., Inc. and The Chase Manhattan Bank as against
holders of the Company Debenture, and the holders of the Partnership Preferred
Securities will be subject to all the terms and conditions of such Article
Eleven with respect to any claims or rights hereunder with the same effect as
though fully set forth herein.
ARTICLE IV
TERMINATION
SECTION 4.1. Termination
This Partnership Guarantee shall terminate and be of no further force
and effect, as to the Partnership Preferred Securities, upon full payment of the
Redemption Price of all Partnership Preferred Securities, and will terminate
completely upon full payment of the amounts payable in accordance with the
Partnership Agreement upon liquidation of the Issuer. This Partnership
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder must, in accordance with Delaware Revised Uniform
Limited Partnership Act, restore payment of any sums paid under any Partnership
Preferred Securities or this Partnership Guarantee.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Successors and Assigns
All guarantees and agreements contained in this Partnership Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders of the Partnership
Preferred Securities then outstanding.
SECTION 5.2. Amendments
Except with respect to any changes which do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Partnership Guarantee may only be amended with the prior approval of
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<PAGE>
the Holders of not less than a majority in aggregate liquidation preference of
all the outstanding Partnership Preferred Securities.
SECTION 5.3. Consolidations and Mergers
The Guarantor 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 Guarantor shall be the
continuing corporation, or the successor corporation shall be a corporation
organized and existing under the laws of the United States of America thereof
and such successor corporation shall expressly assume the due and punctual
payment of the Guarantee Payments payable pursuant to Section 5.1 hereof and the
due and punctual performance and observance of all of the covenants and
conditions of this Partnership Guarantee to be performed by the Guarantor by a
separate guarantee satisfactory to the Trust Preferred Guarantee Trustee (as
defined in the Trust Preferred Securities Guarantee Agreement dated as of ______
__, 1998), executed and delivered to the Trust Preferred Guarantee Trustee by
such corporation, and (ii) the Guarantor or such successor corporation, as the
case may be, shall not, immediately after such merger or consolidation, or such
sale, lease or conveyance, be in default in the performance of any such covenant
or condition.
SECTION 5.4. Notices
Any notice, request or other communication required or permitted to be
given hereunder to the Guarantor shall be given in writing by delivering the
same against receipt therefor by facsimile transmission (confirmed by mail),
addressed to the Guarantor, as follows (and if so given, shall be deemed given
when mailed):
Merrill Lynch & Co., Inc.
World Financial Center
South Tower
225 Liberty Street
New York, New York 10080-6105
Attention: Treasurer
Any notice, request or other communication required or permitted to be
given hereunder to the Holders shall be given by the Guarantor in the same
manner as notices sent by the Issuer to the Holders.
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SECTION 5.5. Benefit
This Partnership Guarantee is solely for the benefit of the Holders
and is not separately transferable from the Partnership Preferred Securities.
SECTION 5.6. Governing Law
THIS PARTNERSHIP GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
THIS PARTNERSHIP GUARANTEE is executed as of the day and year first
above written.
MERRILL LYNCH & CO., INC.
By: _______________________
Name: Theresa Lang
Title: Senior Vice President
and Treasurer
10
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Exhibit 4.8
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AFFILIATE DEBENTURE GUARANTEE AGREEMENT
Merrill Lynch & Co., Inc., as Guarantor
Merrill Lynch International Incorporated, as Issuer
Dated as of ________ __, 1998
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<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and
Interpretation......................................... 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application....................... 5
SECTION 2.2 Lists of Holders of Securities......................... 5
SECTION 2.3 Reports by the Investment Guarantee
Trustee............................................. 5
SECTION 2.4 Periodic Reports to Investment Guarantee
Trustee................................................ 6
SECTION 2.5 Evidence of Compliance with Conditions
Precedent........................................... 6
SECTION 2.6 Events of Default; Waiver.............................. 6
ARTICLE III
POWERS, DUTIES AND RIGHTS OF INVESTMENT GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Investment
Guarantee Trustee................................... 7
SECTION 3.2 Certain Rights of Investment Guarantee
Trustee............................................. 9
SECTION 3.3 Not Responsible for Recitals or Issuance
of Investment Guarantee............................. 11
ARTICLE IV
INVESTMENT GUARANTEE TRUSTEE
SECTION 4.1 Investment Guarantee Trustee;
Eligibility......................................... 11
SECTION 4.2 Appointment, Removal and Resignation of
Investment Guarantee Trustee........................ 12
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee.............................................. 13
SECTION 5.2 Waiver of Notice and Demand............................ 13
SECTION 5.3 Obligations Not Affected............................... 14
SECTION 5.4 Rights of Holders...................................... 15
SECTION 5.5 Guarantee of Payment................................... 15
SECTION 5.6 Subrogation............................................ 15
SECTION 5.7 Independent Obligations................................ 16
i
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Page
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ARTICLE VI
SUBORDINATION
SECTION 6.1 Ranking................................................ 16
ARTICLE VII
TERMINATION
SECTION 7.1 Termination............................................ 16
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation............................................ 17
SECTION 8.2 Indemnification........................................ 17
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns................................. 17
SECTION 9.2 Amendments............................................. 18
SECTION 9.3 Consolidations and Mergers............................. 18
SECTION 9.4 Notices................................................ 18
SECTION 9.5 Benefit................................................ 19
SECTION 9.6 Governing Law.......................................... 19
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AFFILIATE DEBENTURE GUARANTEE AGREEMENT (this "Investment
Guarantee"), dated as of ________ __, 1998, is executed and delivered by
Merrill Lynch & Co., Inc., a Delaware corporation (the "Guarantor"), and The
Chase Manhattan Bank, as trustee (the "Investment Guarantee Trustee"), for
the benefit of the Holder (as defined herein) of the Affiliate Debenture (as
defined herein) of Merrill Lynch International Incorporated, a Delaware
corporation (the "Issuer").
WHEREAS, pursuant to an Indenture (the "Affiliate Indenture"), dated
as of December 17, 1996, between the Issuer and The Chase Manhattan Bank, as
indenture trustee (in such capacity, the "Indenture Trustee"), the Issuer is
issuing to the Holder on the date hereof its % Debenture Due 201_ (the
"Affiliate Debenture");
WHEREAS, as incentive for the Holder to purchase the Affiliate
Debenture, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Investment Guarantee, to make Guarantee Payments
(as defined herein) to the Holder of the Affiliate Debenture on the terms and
conditions set forth herein; and
NOW, THEREFORE, in consideration of the purchase by the Holder of
the Affiliate Debenture, which purchase the Guarantor hereby acknowledges
shall benefit the Guarantor, the Guarantor executes and delivers this
Investment Guarantee for the benefit of the Holder.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Investment Guarantee, unless the context otherwise requires:
(a) Capitalized terms used in this Investment Guarantee but not
defined in the Preamble above have the respective meanings
assigned to them in this Section 1.1;
(b) Capitalized terms used in this Investment Guarantee but not
otherwise defined herein shall have the meanings assigned to them
in the Affiliate Indenture.
(c) a term defined anywhere in this Investment Guarantee has the same
meaning throughout;
(d) all references to "the Investment Guarantee" or "this Investment
Guarantee" are to this Investment
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Guarantee as modified, supplemented or amended from time to time;
(e) all references in this Investment Guarantee to Articles and
Sections are to Articles and Sections of this Investment
Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same meaning
when used in this Investment Guarantee, unless otherwise defined
in this Investment Guarantee or unless the context otherwise
requires; and
(g) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act of 1933, as amended, or any successor rule
thereunder.
"Business Day" means any day other than a day on which banking
institutions in The City of New York are authorized or required by law to
close.
"Company Debenture" means the series of debt securities issued on
________ __, 1998 under the Company Indenture.
"Company Indenture" means the Indenture between Merrill Lynch &
Co., Inc. and The Chase Manhattan Bank, dated as of December 17, 1996.
"Corporate Trust Office" means the office of the Investment
Guarantee Trustee at which the corporate trust business of the Investment
Guarantee Trustee shall, at any particular time, be principally administered,
which office at the date of execution of this Agreement is located at 450
West 33rd Street, 15th Floor, New York, New York 10001, Attention: Corporate
Trust Services Division.
"Covered Person" means the Holder or any beneficial owner of the
Affiliate Debenture.
"Declaration" means the Amended and Restated Declaration of Trust by
and among the Guarantor and certain Trustees, dated as of ________ __, 1998.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Investment Guarantee.
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"Guarantee Payments" means, without duplication, with respect to the
Affiliate Debenture, to the extent not paid or made by the Issuer, the due
and punctual payment of the principal of, premium, if any, and interest on
the Affiliate Debenture, when and as the same shall become due and payable,
whether at maturity or upon declaration of acceleration or otherwise,
according to the terms of the Affiliate Debenture and of the Affiliate
Indenture.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer of the Affiliate Debenture. The initial Holder of the
Affiliate Debenture is the Partnership.
"Holder of Partnership Preferred Securities" shall have the meaning
specified in the Partnership Agreement.
"Indemnified Person" means the Investment Guarantee Trustee, any
Affiliate of the Investment Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Investment Guarantee Trustee.
"Investment Guarantee Trustee" means The Chase Manhattan Bank, until
a Successor Investment Guarantee Trustee has been appointed and has accepted
such appointment pursuant to the terms of this Investment Guarantee and
thereafter means each such Successor Investment Guarantee Trustee.
"Majority in aggregate principal amount of the Affiliate Debenture"
means, except as provided by the Trust Indenture Act, a vote by Holder(s) of
the Affiliate Debenture, voting separately as a class, of more than 50% of
the outstanding aggregate principal amount of the Affiliate Debenture plus
accrued and unpaid interest to the date upon which the voting percentages are
determined.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two authorized officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Investment Guarantee shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definition relating
thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the
Officers' Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's
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opinion, is necessary to enable such officer to express an
informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition of covenant has been complied with.
"Partnership" means Merrill Lynch Preferred Funding , L.P.
"Partnership Agreement" means the Amended and Restated Agreement of
Limited Partnership of the Partnership, dated as of ________ __, 1998, among
Merrill Lynch & Co., Inc., a Delaware corporation, as general partner,
Merrill Lynch Group, Inc., a Delaware corporation, as initial limited partner
and such other persons who become limited partners as provided therein.
"Partnership Preferred Securities" means those securities
representing limited partnership interests in the Partnership.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other
entity of whatever nature.
"Property Trustee" shall have the meaning specified in the
Declaration.
"Responsible Officer" means, with respect to the Investment
Guarantee Trustee, any officer within the Corporate Trust Office of the
Investment Guarantee Trustee, including any vice president, any assistant
vice president, any assistant secretary, the treasurer, any assistant
treasurer or other officer of the Corporate Trust Office of the Investment
Guarantee Trustee customarily performing functions similar to those performed
by any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.
"Senior Indebtedness" shall have the meaning specified in the
Company Indenture.
"Successor Investment Guarantee Trustee" means a Successor
Investment Guarantee Trustee possessing the qualifications to act as
Investment Guarantee Trustee under Section 4.1.
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"Trust" means the Merrill Lynch Preferred Capital Trust , a
Delaware business Trust, formed under the Declaration.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Trust Preferred Securities" shall have the meaning specified in the
Declaration.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Investment Guarantee is subject to the provisions of the
Trust Indenture Act that are required to be part of this Investment Guarantee
and shall, to the extent applicable, be governed by such provisions; and
(b) if and to the extent that any provision of this Investment
Guarantee limits, qualifies or conflicts with the duties imposed by Sections
310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control;
SECTION 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Investment Guarantee Trustee
(unless the Investment Guarantee Trustee is otherwise the Security Registrar
of the Affiliate Debenture) with a list, in such form as the Investment
Guarantee Trustee may reasonably require, of the names and addresses of the
Holder(s) of the Affiliate Debenture ("List of Holders") as of such date, (i)
within one (1) Business Day after June 15 and December 15 of each year, and
(ii) at any other time within 30 days of receipt by the Guarantor of a
written request for a List of Holders as of a date no more than 14 days
before such List of Holders is given to the Investment Guarantee Trustee
provided, that the Guarantor shall not be obligated to provide such List of
Holders at any time the List of Holders does not differ from the most recent
List of Holders given to the Investment Guarantee Trustee by the Guarantor.
The Investment Guarantee Trustee may destroy any List of Holders previously
given to it on receipt of a new List of Holders.
(b) The Investment Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
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SECTION 2.3 Reports by the Investment Guarantee Trustee
Within 60 days after ________ __ of each year, commencing ________ __,
____ the Investment Guarantee Trustee shall provide to the Holders of the
Affiliate Debenture such reports as are required by Section 313 of the Trust
Indenture Act, if any, in the form and in the manner provided by Section 313 of
the Trust Indenture Act. The Investment Guarantee Trustee shall also comply
with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Investment Guarantee Trustee
The Guarantor shall provide to the Investment Guarantee Trustee such
documents, reports and information as required by Section 314 (if any) and the
compliance certificate required by Section 314 of the Trust Indenture Act in the
form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Investment Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Investment Guarantee that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of an
Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in aggregate principal amount of the
Affiliate Debenture may, by vote, on behalf of the Holders of the Affiliate
Debenture, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Investment Guarantee, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.
SECTION 2.7 Event of Default; Notice
(a) The Investment Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Affiliate Debenture, notices of all Events of
Default actually known to a Responsible Officer of the Investment Guarantee
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Trustee, unless such defaults have been cured before the giving of such notice,
provided, that, except in the case of default of any Guaranty Payment, the
Investment Guarantee Trustee shall be protected in withholding such notice if
and so long as a Responsible Officer of the Investment Guarantee Trustee in good
faith determines that the withholding of such notice is in the interests of the
Holders of the Affiliate Debenture.
(b) The Investment Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Investment Guarantee Trustee shall
have received written notice, or a Responsible Officer of the Investment
Guarantee Trustee charged with the administration of the Affiliate Debenture
shall have obtained actual knowledge, of such Event of Default.
SECTION 2.8 Conflicting Interests
The Affiliate Debenture shall be deemed to be specifically described
in this Investment Guarantee for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF INVESTMENT GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Investment Guarantee Trustee
(a) This Investment Guarantee shall be held by the Investment
Guarantee Trustee for the benefit of the Holders of the Affiliate Debenture, and
the Investment Guarantee Trustee shall not transfer this Investment Guarantee to
any Person except a Holder of the Affiliate Debenture exercising his or her
rights pursuant to Section 5.4(b) or to a Successor Investment Guarantee Trustee
on acceptance by such Successor Investment Guarantee Trustee of its appointment
to act as Successor Investment Guarantee Trustee. The right, title and interest
of the Investment Guarantee Trustee shall automatically vest in any Successor
Investment Guarantee Trustee, and such vesting and succession of title shall be
effective whether or not conveyancing documents have been executed and delivered
pursuant to the appointment of such Successor Investment Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer of
the Investment Guarantee Trustee has occurred and is continuing, the Investment
Guarantee Trustee shall enforce this Investment Guarantee for the benefit of the
Holders of the Affiliate Debenture.
(c) The Investment Guarantee Trustee, before the occurrence of any
Event of Default and after the curing or waiver
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of all Events of Default that may have occurred, shall undertake to perform only
such duties as are specifically set forth in this Investment Guarantee, and no
implied covenants shall be read into this Investment Guarantee against the
Investment Guarantee Trustee. In case an Event of Default has occurred (that
has not been cured or waived pursuant to Section 2.6) and is actually known to a
Responsible Officer of the Investment Guarantee Trustee, the Investment
Guarantee Trustee shall exercise such of the rights and powers vested in it by
this Investment Guarantee, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Investment Guarantee shall be construed to
relieve the Investment Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Investment Guarantee
Trustee shall be determined solely by the express provisions of this
Investment Guarantee, and the Investment Guarantee Trustee shall not
be liable except for the performance of such duties and obligations as
are specifically set forth in this Investment Guarantee, and no
implied covenants or obligations shall be read into this Investment
Guarantee against the Investment Guarantee Trustee; and
(B) in the absence of bad faith on the part of the
Investment Guarantee Trustee, the Investment Guarantee Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates
or opinions furnished to the Investment Guarantee Trustee and
conforming to the requirements of this Investment Guarantee; but in
the case of any such certificates or opinions that by any provision
hereof are specifically required to be furnished to the Investment
Guarantee Trustee, the Investment Guarantee Trustee shall be under a
duty to examine the same to determine whether or not they conform to
the requirements of this Investment Guarantee;
(ii) the Investment Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Investment Guarantee Trustee, unless it shall be proved that the Investment
Guarantee
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Trustee was negligent in ascertaining the pertinent facts upon which such
judgment was made;
(iii) the Investment Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a Majority in aggregate
principal amount of the Affiliate Debenture relating to the time, method
and place of conducting any proceeding for any remedy available to the
Investment Guarantee Trustee, or exercising any trust or power conferred
upon the Investment Guarantee Trustee under this Investment Guarantee; and
(iv) no provision of this Investment Guarantee shall require the
Investment Guarantee Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if the Investment
Guarantee Trustee shall have reasonable grounds for believing that the
repayment of such funds or liability is not reasonably assured to it under
the terms of this Investment Guarantee or indemnity, reasonably
satisfactory to the Investment Guarantee Trustee, against such risk or
liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Investment Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Investment Guarantee Trustee may conclusively rely, and
shall be fully protected in acting or refraining from acting, upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Investment Guarantee shall be sufficiently evidenced by an Officers'
Certificate.
(iii) Whenever, in the administration of this Investment
Guarantee, the Investment Guarantee Trustee shall deem it desirable that a
matter be proved or established before taking, suffering or omitting any
action hereunder, the Investment Guarantee Trustee (unless other evidence
is herein specifically prescribed) may, in the absence of bad faith on its
part, request and conclusively rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the Guarantor.
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(iv) The Investment Guarantee Trustee shall have no duty to see
to any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
(v) The Investment Guarantee Trustee may consult with counsel of
its selection, and the advice or opinion of such counsel with respect to
legal matters shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion. Such counsel may be
counsel to the Guarantor or any of its Affiliates and may include any of
its employees. The Investment Guarantee Trustee shall have the right at
any time to seek instructions concerning the administration of this
Investment Guarantee from any court of competent jurisdiction.
(vi) The Investment Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Investment Guarantee at the request or direction of any Holder, unless such
Holder shall have provided to the Investment Guarantee Trustee such
security and indemnity, reasonably satisfactory to the Investment Guarantee
Trustee, against the costs, expenses (including attorneys' fees and
expenses and the expenses of the Investment Guarantee Trustee's agents,
nominees or custodians) and liabilities that might be incurred by it in
complying with such request or direction, including such reasonable
advances as may be requested by the Investment Guarantee Trustee; provided
that, nothing contained in this Section 3.2(a)(vi) shall be taken to
relieve the Investment Guarantee Trustee, upon the occurrence of an Event
of Default, of its obligation to exercise the rights and powers vested in
it by this Investment Guarantee.
(vii) The Investment Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Investment Guarantee
Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit.
(viii) The Investment Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either directly
or by or through agents, nominees, custodians or attorneys, and the
Investment Guarantee Trustee shall not be responsible for any
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misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder.
(ix) Any action taken by the Investment Guarantee Trustee or its
agents hereunder shall bind the holders of the Affiliate Debenture, and the
signature of the Investment Guarantee Trustee or its agents alone shall be
sufficient and effective to perform any such action. No third party shall
be required to inquire as to the authority of the Investment Guarantee
Trustee to so act or as to its compliance with any of the terms and
provisions of this Investment Guarantee, both of which shall be
conclusively evidenced by the Investment Guarantee Trustee or its agent
taking such action.
(x) whenever in the administration of this Investment Guarantee
the Investment Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking any
other action hereunder, the Investment Guarantee Trustee (i) may request
instructions from the Holders of a Majority in aggregate principal amount
of the Affiliate Debenture, (ii) may refrain from enforcing such remedy or
right or taking such other action until such instructions are received, and
(iii) shall be fully protected in conclusively relying on or acting in
accordance with such instructions.
(xi) The Investment Guarantee Trustee shall not be liable for any
action taken, suffered, or omitted to be taken by it in good faith, without
negligence, and reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Investment
Guarantee.
(b) No provision of this Investment Guarantee shall be deemed to
impose any duty or obligation on the Investment Guarantee Trustee to perform any
act or acts or exercise any right, power, duty or obligation conferred or
imposed on it in any jurisdiction in which it shall be illegal, or in which the
Investment Guarantee Trustee shall be unqualified or incompetent in accordance
with applicable law, to perform any such act or acts or to exercise any such
right, power, duty or obligation. No permissive power or authority available to
the Investment Guarantee Trustee shall be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of Investment
Guarantee
The recitals contained in this Investment Guarantee shall be taken as
the statements of the Guarantor, and the Investment Guarantee Trustee does not
assume any responsibility for their correctness. The Investment Guarantee
Trustee makes no
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representation as to the validity or sufficiency of this Investment Guarantee.
ARTICLE IV
INVESTMENT GUARANTEE TRUSTEE
SECTION 4.1 Investment Guarantee Trustee; Eligibility
(a) There shall at all times be an Investment Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws
of the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least 50 million
U.S. dollars ($50,000,000), and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of the supervising or examining authority
referred to above, then, for the purposes of this Section 4.1(a)(ii), the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published.
(b) If at any time the Investment Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Investment Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).
(c) If the Investment Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Investment Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 Appointment, Removal and Resignation of Investment
Guarantee Trustee
(a) Subject to Section 4.2(b), the Investment Guarantee Trustee may
be appointed or removed without cause at any time by the Guarantor except during
a default or an Event of Default.
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(b) The Investment Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Investment Guarantee Trustee
has been appointed and has accepted such appointment by written instrument
executed by such Successor Investment Guarantee Trustee and delivered to the
Guarantor.
(c) The Investment Guarantee Trustee shall hold office until a
Successor Investment Guarantee Trustee shall have been appointed or until its
removal or resignation. The Investment Guarantee Trustee may resign from office
(without need for prior or subsequent accounting) by an instrument in writing
executed by the Investment Guarantee Trustee and delivered to the Guarantor,
which resignation shall not take effect until a Successor Investment Guarantee
Trustee has been appointed and has accepted such appointment by instrument in
writing executed by such Successor Investment Guarantee Trustee and delivered to
the Guarantor and the resigning Investment Guarantee Trustee.
(d) If no Successor Investment Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 30
days after delivery of an instrument of removal or resignation, the Investment
Guarantee Trustee resigning or being removed may petition any court of competent
jurisdiction for appointment of a Successor Investment Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Investment Guarantee Trustee.
(e) No Investment Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Investment Guarantee Trustee.
(f) Upon termination of this Investment Guarantee or removal or
resignation of the Investment Guarantee Trustee pursuant to this Section 4.2,
the Guarantor shall pay to the Investment Guarantee Trustee all amounts due to
the Investment Guarantee Trustee accrued to the date of such termination,
removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), as and when due, regardless of any defense, right of
set-off or counterclaim that the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
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SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Investment
Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer
or any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Investment Guarantee shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Affiliate Debenture to be performed
or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the interest, principal or premium, if any, or any other sums payable
under the terms of the Affiliate Debenture or the extension of time for the
performance of any other obligation under, arising out of, or in connection
with, the Affiliate Debenture (other than an extension of time for payment of
interest during an Extension Period, as defined in the Affiliate Debenture,
permitted by the Affiliate Indenture);
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Affiliate Debenture, or
any action on the part of the Issuer granting indulgence or extension of any
kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Issuer or any of the assets of
the Issuer;
(e) any invalidity of, or defect or deficiency in, the Affiliate
Debenture;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
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(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in aggregate principal amount of the
Affiliate Debenture have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Investment Guarantee
Trustee in respect of this Investment Guarantee or exercising any trust or power
conferred upon the Investment Guarantee Trustee under this Investment Guarantee.
(b) If the Investment Guarantee Trustee fails to enforce its rights
under the Investment Guarantee after a Holder of the Affiliate Debenture has
made a written request, such Holder of the Affiliate Debenture may institute a
legal proceeding directly against the Guarantor to enforce the Investment
Guarantee Trustee's rights under this Investment Guarantee, without first
instituting a legal proceeding against the Issuer, the Investment Guarantee
Trustee or any other Person. Notwithstanding the foregoing, if the Guarantor
has failed to make a Guarantee Payment, a Holder of the Affiliate Debenture may
directly institute a proceeding in such Holder's own name against the Guarantor
for enforcement of the Investment Guarantee for such payment. The Guarantor
waives any right or remedy to require that any action be brought first against
the Issuer or any other person or entity before proceeding directly against the
Guarantor.
SECTION 5.5 Guarantee of Payment
This Investment Guarantee creates a guarantee of payment and not of
collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Affiliate Debenture against the Issuer in respect of any amounts paid
to such Holders by the Guarantor under this Investment Guarantee; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any right that
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of
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<PAGE>
payment under this Investment Guarantee, if, at the time of any such payment,
any amounts are due and unpaid under this Investment Guarantee. If any amount
shall be paid to the Guarantor in violation of the preceding sentence, the
Guarantor agrees to hold such amount in trust for the Holders and to pay over
such amount to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Affiliate
Debenture, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Investment
Guarantee notwithstanding the occurrence of any event referred to in subsections
(a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
SUBORDINATION
SECTION 6.1 Ranking
This Investment Guarantee will constitute an unsecured obligation of
the Guarantor and will rank (i) subordinate and junior in right of payment to
all other liabilities of the Guarantor, (ii) pari passu with the most senior
preferred or preference stock now or hereafter issued by the Guarantor and with
any other guarantee now or hereafter entered into by the Guarantor in respect of
any preferred or preference stock of any Affiliate of the Guarantor, and (iii)
senior to the Guarantor's common stock. The holders of obligations of the
Guarantor that are senior to the obligations under the Investment Guarantee
(including, but not limited to, obligations constituting Senior Indebtedness)
shall be entitled to the same rights in payment default or dissolution,
liquidation and reorganization in respect of this Investment Guarantee that
inure to the holders of Senior Indebtedness as against the holders of the
Company Debenture specified in Sections 1102, 1103 and 1105 of the Company
Indenture.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Investment Guarantee shall terminate upon the repayment in full
(whether at maturity, upon redemption or otherwise) of all of the principal of,
premium, if any, and interest on (including all accrued and unpaid interest
thereon) and any other amounts payable in respect of the Affiliate Debenture.
Notwithstanding the foregoing, this Investment Guarantee will continue to be
effective or will be reinstated, as
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the case may be, if at any time any Holder of the Affiliate Debenture must
restore payment of any sums paid under the Affiliate Debenture or under this
Investment Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Guarantor or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Indemnified Person in good faith in accordance with this Investment
Guarantee and in a manner that such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Investment Guarantee or by law, except that an Indemnified Person shall be
liable for any such loss, damage or claim incurred by reason of such Indemnified
Person's gross negligence or willful misconduct with respect to such acts or
omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which principal, premium, interest or other payments to Holders of the Affiliate
Debenture might properly be paid.
SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and to
hold each Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 8.2 shall survive the termination of this
Investment Guarantee.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Investment Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders of the Partnership
Preferred Securities then outstanding. The Company may not assign its rights or
delegate its obligations hereunder without the prior approval of the Holders of
at least a majority of the aggregated stated liquidation preference of the
Partnership Preferred Securities then outstanding, except that 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 either the Company shall be the continuing corporation, or the
successor corporation shall expressly assume the obligations of the Guarantor
hereunder.
SECTION 9.2 Amendments
Except with respect to any changes that do not adversely affect the
rights of Holders of Partnership Preferred Securities (in which case no consent
will be required), this Investment Guarantee may be amended only with the prior
approval of the Holders of not less than a majority in liquidation preference of
the outstanding Partnership Preferred Securities, provided that so long as the
Property Trustee of the Trust is the Holder of the Partnership Preferred
Securities, such amendment will not be effective without the prior written
approval of a majority in liquidation amount of the outstanding Trust Preferred
Securities.
SECTION 9.3 Consolidations and Mergers
The Guarantor 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 Guarantor shall be the
continuing corporation, or the successor corporation shall be a corporation
organized and existing under the laws of the United States of America thereof
and such successor corporation shall expressly assume the due and punctual
payment of the Guarantee Payments payable pursuant to Section 5.1 hereof and the
due and punctual performance and observance of all of the covenants and
conditions of this Investment Guarantee to be performed by the Guarantor by a
separate guarantee satisfactory to the Investment Guarantee Trustee (as defined
in this Investment Guarantee dated as of ________ __, 1998), executed and
delivered to the Investment Guarantee Trustee by such corporation, and (ii) the
Guarantor or
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<PAGE>
such successor corporation, as the case may be, shall not, immediately after
such merger or consolidation, or such sale, lease or conveyance, be in default
in the performance of any such covenant or condition.
SECTION 9.4 Notices
All notices provided for in this Investment Guarantee shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by first class mail, as follows:
(a) If given to the Investment Guarantee Trustee, at the Investment
Guarantee Trustee's Corporate Trust Office, Attention: James Heaney, Telecopy:
(212) 946-8158 (or such other address as the Investment Guarantee Trustee may
give notice of to the Holders of the Affiliate Debenture); and
(b) If given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to the
Holders of the Affiliate Debenture):
Merrill Lynch & Co., Inc.
World Financial Center
South Tower
225 Liberty Street
New York, New York 10080-6105
Attention: Treasurer
(c) If given to any Holder of Affiliate Debenture, at the address set
forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.5 Benefit
This Investment Guarantee is solely for the benefit of the Holders of
the Affiliate Debenture and, subject to Section 3.1(a), is not separately
transferable from the Affiliate Debenture.
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SECTION 9.6 Governing Law
THIS INVESTMENT GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
This Investment Guarantee is executed as of the day and year first
above written.
MERRILL LYNCH & CO., INC., as
Guarantor
By: _____________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as
Investment Guarantee Trustee
By: ______________________________
Name:
Title:
20
<PAGE>
Exhibit 4.11
MERRILL LYNCH & CO., INC.
__% Subordinated Debenture Due ______
No. R- $___________
MERRILL LYNCH & CO., INC., a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Company", which
term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to MERRILL LYNCH
PREFERRED FUNDING , L.P., or registered assigns, the principal sum of
____________________________DOLLARS ($___________) on ________ __, ____ and
to pay interest on said principal sum from _________ __, 1998 or from the
most recent interest payment date (each such date, an "Interest Payment
Date") to which interest has been paid or duly provided for, quarterly
(subject to deferral as set forth herein) in arrears on March 30, June 30,
September 30 and December 30 of each year, commencing ______ 30, _____, at
the rate of __% per annum plus Additional Interest, if any, until the
principal hereof shall have become due and payable, and on any overdue
principal. The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months. In the event that any
date on which interest is payable on this Security is not a Business Day,
then a payment of the interest payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is
in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on the date the payment was originally payable. A "Business
Day" shall mean any day other than a day on which banking institutions in The
City of New York are authorized or required by law to close. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities, as
defined in the Indenture) is registered at the close of business on the
Regular Record Date for such interest installment, which shall be the close
of business on the Business Day next preceding such Interest Payment Date.
Any such interest installment not so punctually paid or duly provided for
shall forthwith cease to be payable to the Holder on such Regular Record Date
and may either be paid to the Person in whose name this security (or one or
more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest
<PAGE>
to be fixed by the Trustee, notice whereof shall be given to Holders of
Securities not less than 10 days prior to such Special Record Date, or be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture.
The Company shall have the right at any time during the term of this
Security, from time to time, to extend the interest payment period of such
Security for a period not exceeding six consecutive quarters from the date of
issue or the most recent date that interest has been paid or been duly
provided for (an "Extension Period"). During any Extension Period, interest
will compound quarterly and the Company shall have the right to make partial
payments of interest on any Interest Payment Date. At the end of any
Extension Period the Company shall pay all interest then accrued and unpaid
(together with Additional Interest thereon to the extent that payment of such
interest is permitted by applicable law). "Additional Interest" means
interest that shall accrue on any interest on the Securities that is in
arrears for more than one quarter or not paid during an Extension Period,
which in either case shall accrue at __% per annum compounded quarterly.
Prior to the termination of any such Extension Period, the Company may
further extend the interest payment period, provided that such Extension
Period together with all such previous and further extensions thereof shall
not exceed six consecutive quarters or extend beyond the Maturity of this
Security. Upon the termination of any Extension Period and upon the payment
of all accrued and unpaid interest and any Additional Interest then due, the
Company may select a new Extension Period, subject to the foregoing
requirements. No interest shall be due and payable during an Extension
Period except at the end thereof and no default under this security or Event
of Default shall be deemed to occur solely as a result of an Extension
Period. The Company shall give the Holder of this Security and the Trustee
notice of its selection of an Extension Period at least one Business Day
prior to the earlier of (i) the Interest Payment Date or (ii) the date
Merrill Lynch Preferred Capital Trust is required to give notice to the New
York Stock Exchange or other applicable self-regulatory organization or to
holders of the Trust Preferred Securities of the record date or the date such
distributions are payable, but in any event not less than one Business Day
prior to such record date.
Payment of the principal of and interest on this Security will be
made at the office or agency of the Company maintained for that purpose in
New York, New York, in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts;
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<PAGE>
provided, however, that at the option of the Company payment of interest may
be made (i) by check mailed to the address of the Person entitled thereto as
such address shall appear in the Security Register or (ii) by wire transfer
in immediately available funds at such place and to such account as may be
designated by the Person entitled thereto as specified in the Security
Register.
The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each Holder
of this Security, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to effectuate the
subordination so provided and (c) appoints the Trustee his attorney-in-fact
for any and all such purposes. Each Holder hereof, by his acceptance hereof,
waives all notice of the acceptance of the subordination provisions contained
herein and in the Indenture of each holder of Senior Indebtedness, whether
now outstanding or hereafter incurred, and waives reliance by each such
holder upon said provisions.
Reference is hereby made to the further provisions of the Indenture
summarized on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
3
<PAGE>
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, Merrill Lynch & Co., Inc. has caused this
instrument to be duly executed under its corporate seal.
Dated: ___________ __, 1998
MERRILL LYNCH & CO., INC.
By:________________________________
Name:
Title:
4
<PAGE>
Reverse of Security.
This Security is one of a duly authorized issue of Securities of the
Company, designated as its __% Subordinated Debentures Due _____ (herein
called the "Securities"), limited in aggregate principal amount to
$______________ issued under an Indenture, dated as of December 17, 1996
(herein called the "Indenture"), between the Company and The Chase Manhattan
Bank, as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Trustee, the Company and the Holders of the Securities, and of the terms
upon which the securities are, and are to be, authenticated and delivered.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
At any time on or after ______ __, ____, the Company shall have the
right to redeem the Securities, in whole or in part, from time to time, at a
Redemption Price equal to 100% of the principal amount of Securities to be
redeemed plus accrued but unpaid interest, including any Additional Interest,
if any, to the Redemption Date.
If, at any time, a Partnership Tax Event or a Partnership Investment
Company Event (each a "Partnership Special Event") shall occur and be
continuing, the Company may, within 90 days following the occurrence of such
Partnership Special Event, elect to redeem the Securities in whole (but not
in part), upon not less than 30 or more than 60 days notice at the Redemption
Price, provided that, if at the time there is available to the Company or the
Partnership the opportunity to eliminate, within such 90-day period, the
Partnership Special Event by taking some ministerial action, such as filing a
form or making an election, or pursuing some other similar reasonable such
measure that in the sole judgment of the Company has or will cause no adverse
effect on the Partnership, the Trust or the Company, and will involve no
material cost, the Company will pursue such measure in lieu of redemption.
"Partnership Investment Company Event" means that Merrill Lynch &
Co., Inc., in its capacity as general partner of Merrill Lynch Preferred
Funding , L.P. (the "Partnership"), shall have requested and received an
opinion of nationally recognized independent legal counsel experienced in
such matters to the effect that as a result of the occurrence on or after
_______ __, 1998 of a change in law or regulation or a change in
5
<PAGE>
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, the Partnership is or
will be considered an "investment company" which is required to be registered
under the Investment Company Act of 1940.
"Partnership Tax Event" means that the Merrill Lynch & Co., Inc. in
its capacity as general partner of the Partnership, shall have requested and
received an opinion of nationally recognized independent tax counsel
experienced in such matters to the effect that there has been a Tax Action
which affects any of the events described in (i) through (iii) below and that
there is more than an insubstantial risk that (i) the Partnership is, or will
be subject to United States federal income tax with respect to income accrued
or received on the Affiliate Investment Instruments or the Eligible Debt
Securities (each as defined in the Limited Partnership Agreement), (ii) the
Partnership is, or will be subject to more than a de minimis amount of other
taxes, duties or other governmental charges or (iii) interest payable by one
or more of the obligors with respect to the Affiliate Investment Instruments
(as defined in the Amended and Restated Agreement of Limited Partnership of
Merrill Lynch Preferred Funding , L.P.) to the Partnership is not, or will
not be, deductible by the Company for United States federal income tax
purposes.
"Tax Action" means (a) an amendment to, change in or announced
proposed change in the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein,
(b) a judicial decision interpreting, applying or clarifying such laws or
regulations, (c) an administrative pronouncement or action that represents an
official position (including a clarification of an official position) of the
governmental authority or regulatory body making such administrative
pronouncement or taking such action, or (d) a threatened challenge asserted
in connection with an audit of the Company or any of its subsidiaries, the
Partnership, or the Trust, or a threatened challenge asserted in writing
against any other taxpayer that has raised capital through the issuance of
securities that substantially similar to the Securities, the Partnership
Preferred Securities, or the Trust Preferred Securities, which amendment or
change is adopted or which decision, pronouncement or proposed change is
announced or which action, clarification or challenge occurs on or after the
date of the prospectus related to the issuance of the Trust Preferred
Securities.
"Limited Partnership Agreement" means the amended and restated
agreement of Limited Partnership, dated as of ________ __, 1998, of the
Partnership as amended, modified or otherwise
6
<PAGE>
supplemented from time to time. If the Securities are only partially
redeemed by the Company, the Securities will be redeemed pro rata, by lot or
in such other manner as the Trustee shall deem appropriate and fair in its
discretion and that may provide for the selection of a portion or portions
(equal to twenty-five U.S. dollars ($25) or any integral multiple thereof) of
the principal amount of any Security.
In the event of redemption of this Security in part only, a new
Security or Securities for the unredeemed portion hereof will be issued in
the name of the Holder hereof upon the cancellation hereof.
If an Event of Default with respect to the Securities shall occur
and be continuing, the principal of the Securities may be declared due and
payable in the manner, with the effect and subject to the conditions provided
in the Indenture.
The Indenture contains provisions for satisfaction and discharge at
any time of the entire indebtedness of this Security upon compliance by the
Company with certain conditions set forth in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of Holders of not less than 66 2/3% in principal
amount of the Outstanding Securities, to modify the Indenture in a manner
affecting the rights of the Holders of the Securities; provided that no such
modification may, without the consent of the Holder of each Outstanding
Security, (i) extend the fixed maturity of the Securities, or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon, or reduce any premium payable upon the redemption thereof,
or (ii) reduce the percentage of principal amount of the Securities, the
Holders of which are required to consent to any such modification of the
Indenture. The Indenture also contains provisions permitting Holders of
specified percentages in principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all Securities, to waive compliance
by the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon
such Holder and upon all future Holders of this Security and of any Security
issued upon the registration of transfer hereof or in exchange herefor or in
lieu hereof, whether or not notation of such consent or waiver is made upon
this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional,
7
<PAGE>
to pay the principal of and interest on this Security at the times, place and
rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the
Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in New York, New York, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one
or more new Securities, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees. No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any of their respective agents may
treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security shall be overdue, and
neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary.
The Securities are issuable only in registered form without coupons
in denominations of $25 and any integral multiple thereof. As provided in
the Indenture and subject to certain limitations therein set forth,
Securities are exchangeable for a like aggregate principal amount of
Securities of a different authorized denomination, as requested by the Holder
surrendering the same.
THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES THEREOF.
8
<PAGE>
Exhibit 5.1
[LETTERHEAD OF BROWN & WOOD LLP]
January 5, 1998
Merrill Lynch & Co., Inc.
World Financial Center
North Tower
250 Vesey Street
New York, New York 10281
<TABLE>
<S> <C>
Merrill Lynch Preferred Funding III, L.P. Merrill Lynch Preferred Funding IV, L.P.
c/o Merrill Lynch & Co., Inc. c/o Merrill Lynch & Co., Inc.
World Financial Center World Financial Center
North Tower North Tower
250 Vesey Street 250 Vesey Street
New York, New York 10281 New York, New York 10281
Merrill Lynch Preferred Capital Trust III Merrill Lynch Preferred Capital Trust IV
c/o Merrill Lynch & Co., Inc. c/o Merrill Lynch & Co., Inc.
World Financial Center World Financial Center
North Tower North Tower
250 Vesey Street 250 Vesey Street
New York, New York 10281 New York, New York 10281
</TABLE>
Ladies and Gentlemen:
We have acted as counsel to Merrill Lynch & Co., Inc., a Delaware
corporation (the "Company"), Merrill Lynch Preferred Funding III, L.P., and
Merrill Lynch Preferred Funding IV, L.P., Delaware limited partnerships
(each, a "Partnership"), and Merrill Lynch Preferred Capital Trust III and
Merrill Lynch Preferred Capital Trust IV, statutory business trusts formed
under the laws of the State of Delaware (each, a "Trust"), in connection with
the preparation and filing by the Company, the Partnerships and the Trusts
with the Securities and Exchange Commission (the "Commission") of a
Registration Statement on Form S-3 (Registration No. 333-42859) (the
"Registration Statement") under the Securities Act of 1933, as amended, with
respect to (i) the guarantee (each, a "Trust Guarantee") to be issued by the
Company to The Chase Manhattan Bank, as trustee, for the benefit of the
holders of the Trust Originated Preferred Securities to be issued by each
Trust (the "Trust Preferred Securities"), (ii) the guarantee (each, a
"Partnership Guarantee") to be issued by the Company with respect to the
<PAGE>
Partnership Preferred Securities to be issued by each Partnership (the
"Partnership Preferred Securities"), (iii) the guarantees (the "Investment
Guarantees") to be issued by the Company for the benefit of the holders of
the Partnership Preferred Securities with respect to certain debentures (the
"Debentures") to be issued by one or more of the Company's eligible
controlled affiliates and (iv) the subordinated debentures (the "Company
Debentures") to be issued by the Company to the Partnerships pursuant to
respective indentures (the "Company Indentures") between the Company and The
Chase Manhattan Bank, as trustee (the "Debenture Trustee"), each in the form
filed as exhibits to the Registration Statement. The Trust Guarantees, the
Partnership Guarantees and the Investment Guarantees are hereinafter
collectively referred to as the "Guarantees".
We have reviewed the corporate action of the Company in connection
with the giving of the Guarantees and the issuance and sale of the Company
Debentures by the Company and have examined, and have relied as to matters of
fact upon, originals or copies certified or otherwise identified to our
satisfaction, of such corporate records, agreements, documents and other
instruments and such certificates or comparable documents of public officials
and of officers and representatives of the Company, and have made such other
and further investigations as we have deemed relevant and necessary as a
basis for the opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents
of all documents submitted to us certified or photostatic copies, and the
authenticity of the originals of such latter documents.
Based upon the foregoing, and subject to the qualifications and
limitations stated herein, we are of the opinion:
1. When a Trust Guarantee has been duly authorized, executed and
delivered by the Company, and upon the issuance and sale of the related Trust
Preferred Securities to the holders of the Trust Preferred Securities in
accordance with the Registration Statement, such Trust Guarantee will
constitute a valid and legally binding obligation of the Company enforceable
against the Company in accordance with its terms.
2. When a Partnership Guarantee has been duly authorized,
executed and delivered by the Company, and upon the issuance and sale of the
related Partnership Preferred Securities to the holders of the Partnership
Preferred Securities in accordance with the Registration Statement, such
Partnership Guarantee will constitute a valid and legally binding obligation
of the Company enforceable against the Company in accordance with its terms.
3. When the Investment Guarantees have been duly authorized,
executed and delivered by the Company, and upon the issuance and sale of the
related Debentures to a Partnership in accordance with the Registration
Statement, such Investment Guarantees will constitute valid and legally
binding obligations of the Company enforceable against the Company in
accordance with their terms.
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<PAGE>
4. When the Company Debenture has been duly authorized, executed
and issued by the Company and upon the issuance and sale of the Company
Debentures to a Partnership in accordance with the Registration Statement
(assuming due authorization, execution and delivery of the Company Indenture
by the Debenture Trustee and due authentication of the Company Debenture by
the Debenture Trustee), such Company Debenture will constitute a valid and
legally binding obligation of the Company enforceable against the Company in
accordance with its terms.
With respect to enforcement, the above opinions are qualified to
the extent that enforcement of the Guarantees or the Company Debentures may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or affecting creditors' rights generally and except as
enforcement thereof is subject to general equity principles (regardless of
whether enforcement is considered in a proceeding in equity or at law).
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name wherever appearing in the
Registration Statement and any amendment thereto.
Very truly yours,
/s/ Brown & Wood LLP
3
<PAGE>
EXHIBIT 5.2
[LETTERHEAD OF BROWN & WOOD LLP]
January 5, 1997
Merrill Lynch & Co., Inc.
World Financial Center
North Tower
New York, New York 10281
Merrill Lynch Preferred Funding Merrill Lynch Preferred Funding
III, L.P . IV, L.P.
World Financial Center World Financial Center
North Tower North Tower
New York, New York 10281 New York, New York 10281
Merrill Lynch Preferred Capital Merrill Lynch Preferred Capital
Trust III Trust IV
World Financial Center World Financial Center
North Tower North Tower
New York, New York 10281 New York, New York 10281
Re: Merrill Lynch Preferred Capital Trust III and IV Trust
Originated Preferred Securities ("TOPrS")
Ladies and Gentlemen:
We have acted as tax counsel ("Tax Counsel") to Merrill Lynch & Co.,
Inc., a Delaware corporation ("Company"), Merrill Lynch Preferred Funding III,
L.P. and Merrill Lynch Preferred Funding IV, L.P., limited partnerships formed
under the Delaware Revised Uniform Limited Partnership Act, as amended
("Partnerships"), and Merrill Lynch Preferred Capital Trust III and Merrill
Lynch Preferred Capital Trust IV, statutory business trusts formed under the
Delaware Business Trust Act, as amended ("Trusts"), in connection with the
preparation and filing by Company, Partnerships and Trusts with the Securities
and Exchange Commission ("Commission") of a Registration Statement on Form S-3
(Registration No. 333-42859) (as amended, "Registration Statement") under the
Securities Act of 1933, as amended, and with respect to: (i) the issuance and
sale of subordinated debentures ("Company Subordinated Debentures") by Company
pursuant to a form of Indenture ("Company Indenture"), between Company and The
Chase Manhattan Bank, a New York banking corporation, as trustee ("Indenture
Trustee") in the form filed as an
<PAGE>
exhibit to the Registration Statement; (ii) the issuance and sale of one or
more debentures (each a "Guaranteed Investment Affiliate Debenture",
collectively "Investment Affiliate Debentures") by one or more eligible
controlled affiliates of Company (each an "Investment Affiliate"), pursuant to
forms of Indenture (each an "Investment Affiliate Indenture"), from each such
Investment Affiliate and Company to Indenture Trustee (Company Subordinated
Debenture and Investment Affiliate Debentures are collectively referred to
hereinafter as the "Debentures" and the forms of Company Indenture and the
Investment Affiliate Indentures are collectively referred to hereinafter as
the "Indentures"), each of which is guaranteed by Company pursuant to a form
of Affiliate Debenture Guarantee Agreement in the form filed as an exhibit to
the Registration Statement; (iii) the issuance and sale of Partnership
Preferred Securities by Partnerships to Trusts pursuant to the Amended and
Restated Agreement of Limited Partnership ("Partnership Agreement") in the
form filed as an exhibit to the Registration Statement; and (iv) the issuance
and sale of Trust Preferred Securities and Trust Common Securities
(collectively, "Trust Securities") pursuant to Trusts' Amended and Restated
Declaration of Trust ("Declaration") in the form filed as an exhibit to the
Registration Statement. The Trust Preferred Securities will be offered for
sale to investors pursuant to the Registration Statement.
All capitalized terms used in this opinion letter and not otherwise
defined herein shall have the meaning ascribed to such terms in the
Registration Statement.
In delivering this opinion letter, we have reviewed and relied upon:
(i) the Registration Statement; (ii) forms of the Indentures; (iii) forms of
the Debentures; (iv) the forms of the Partnership Agreement; (v) the forms of
the Declaration; (vi) the forms of (A) the Partnership Guarantee Agreements,
(B) the Trust Preferred Securities Guarantee Agreements, (C) the Trust Common
Securities Guarantee Agreements and (D) the Affiliate Debenture Guarantee
Agreements, each filed as exhibits to the Registration Statement; and (vii) the
forms of (A) the Partnership Preferred Securities and (B) the Trust
Securities, each filed as exhibits to the Registration Statement. In
addition, we have examined, and relied as to matters of fact upon, certain
certificates and comparable documents of Company and certain eligible
controlled affiliates of Company, from which Company will select Investment
Affiliates. Further, we have relied upon certain other statements and
representations made by officers of Company. We also have examined and relied
upon original or copies, certified or otherwise identified to our
satisfaction, of such records of Company, Partnerships and Trusts and such
other documents, certificates and records as we have deemed necessary or
appropriate as a basis for the opinions set forth herein.
In our examination of such material, we have assumed the genuineness
of all signatures, the authenticity of all documents submitted to us as
originals and the conformity to original documents of all copies of documents
submitted to us. In addition, we also have assumed (i) that the transactions
related to the issuance of the Debentures, Partnership Preferred Securities
and Trust Securities will be consummated in accordance with the terms
2
<PAGE>
of the documents and forms of documents described herein and (ii) on the
closing date, an Independent Financial Advisor will deliver the opinion
required under Section 7.1(b) of the Partnership Agreements.
On the basis of the foregoing and assuming that Partnerships and
Trusts were formed and will be maintained in compliance with the terms of the
Partnership Agreements and the Declarations, respectively, we hereby confirm (i)
our opinions set forth in the Registration Statement under the caption
"Certain Federal Income Tax Considerations" and (ii) that, subject to the
qualifications set forth therein, the discussion set forth in the Registration
Statement under such caption is an accurate summary of the United States
federal income tax matters described therein.
We express no opinion with respect to the transactions referred to
herein or in the Registration Statement other than as expressly set forth
herein. Moreover, we note that there is no authority directly on point
dealing with securities such as the Trust Preferred Securities or transactions
of the type described herein and that our opinions are not binding on the
Internal Revenue Service ("IRS") or the courts, either of which could take a
contrary position. Nevertheless, we believe that if challenged, the opinions
we express herein would be sustained by a court with jurisdiction in a
properly presented case.
Our opinions are based upon the Code, the Treasury regulations
promulgated thereunder and other relevant authorities and law, all as in
effect on the date hereof. Consequently, future changes in the law may cause
the tax treatment of the transactions referred to herein to be materially
different from that described above.
The opinions we express herein are limited solely to matters
governed by the federal income tax laws of the United States.
We hereby consent to the use of this opinion for filing as Exhibit
5.2 to the Registration Statement and the use of our name in the Registration
Statement under the captions "Certain Federal Income Tax Considerations" and
"Legal Matters".
Very truly yours,
/s/ Brown & Wood LLP
3
<PAGE>
EXHIBIT 5.3
January 5, 1998
Merrill Lynch Preferred Capital Trust III
Merrill Lynch Preferred Funding III, L.P.
Merrill Lynch & Co., Inc.
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281
Re: MERRILL LYNCH & CO., INC.;
MERRILL LYNCH PREFERRED FUNDING
III, L.P.; MERRILL LYNCH
PREFERRED CAPITAL TRUST III;
REGISTRATION STATEMENT ON FORM S-3
(REGISTRATION NO. 333-42859)
Ladies and Gentlemen:
We have acted as special Delaware counsel to Merrill Lynch Preferred
Capital Trust III, a statutory business trust created under the Business Trust
Act of the State of Delaware (Del. Code Ann., tit. 12, Sections 3801 et seq.)
(the "Trust"), and Merrill Lynch Preferred Funding III, L.P., a limited
partnership formed under the Revised Uniform Limited Partnership Act of the
State of Delaware (6 Del. C. Section 17-101, et seq.)(the "Partnership"), in
connection with the preparation of the Registration Statement on Form S-3 filed
by Merrill Lynch & Co., Inc. (the "Company"), a corporation organized under the
laws of the State of Delaware, the Trust and the Partnership for the
registration under the Securities Act of 1933, as amended (the "Act"), of, among
other securities, Trust Preferred Securities (the "Trust Preferred Securities")
of the Trust and Partnership Preferred Securities (the "Partnership Preferred
Securities") of the Partnership.
The Trust Preferred Securities are to be issued pursuant to an Amended
and Restated Declaration of Trust of the Trust (the "Declaration"), among the
Company, as sponsor of the Trust, Chase Manhattan Bank Delaware, as Delaware
trustee (the "Delaware Trustee"), The Chase Manhattan Bank, as property trustee
(the "Property Trustee"),
<PAGE>
Merrill Lynch Capital Trust III
Merrill Lynch & Co., Inc.
January 5, 1998
Page 2
and Theresa Lang and Stanley Schaefer, as regular trustees (the "Regular
Trustees"). The Partnership Preferred Securities will be issued pursuant to the
Amended and Restated Agreement of Limited Partnership of the Partnership (the
"Limited Partnership Agreement") between the Company, as the general partner (in
such capacity, the "General Partner"), and Merrill Lynch Group, Inc., a Delaware
corporation, as the initial limited partner.
This opinion is being delivered in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Act. Capitalized terms used but not
otherwise defined herein have the meanings ascribed to them in the Registration
Statement.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the Registration
Statement on Form S-3 (Registration No. 333-42859) filed by the Company, the
Partnership and the Trust with the Securities and Exchange Commission (the
"Commission") on December 19, 1997 under the Act and Amendment No. 1 thereto
filed with the Commission on January 5, 1998 (such Registration Statement, as so
amended, being hereinafter referred to as the "Registration Statement"); (ii)
the Certificate of Trust of the Trust filed with the Secretary of State of the
State of Delaware on December 19, 1997; (iii) the form of the Declaration
(including the designation of the terms of the Trust Preferred Securities
annexed thereto); (iv) the form of the Trust Preferred Securities and specimen
certificates thereof; (v) the form of the Purchase Agreement (the "Purchase
Agreement") proposed to be entered into among the Company, the Partnership, the
Trust and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, A.G. Edwards & Sons, Inc., PaineWebber Incorporated, Prudential
Securities Incorporated and Salomon Brothers Inc, as representatives (the
"Representatives") for the Underwriters named in Schedule A thereto
(collectively, the "Underwriters") relating to, among other things, the sale of
the Trust Preferred Securities; (vi) the Certificate of Limited Partnership of
the Partnership filed with the Secretary of State of the State of Delaware on
December 19, 1997; (vii) the form of the Limited Partnership Agreement
(including the designation of the terms of the
<PAGE>
Merrill Lynch Capital Trust III
Merrill Lynch & Co., Inc.
January 5, 1998
Page 3
Partnership Preferred Securities annexed thereto); and (viii) the form of the
Partnership Preferred Securities and specimen certificates thereof. We have
also examined originals or copies, certified or otherwise identified to our
satisfaction, of such other documents, certificates and records as we have
deemed necessary or appropriate as a basis for the opinions set forth herein.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies. In making our examination of
documents executed, or to be executed, by parties other than the Partnership and
the Trust, we have assumed that such parties had, or will have, the power,
corporate or other, to enter into and perform all obligations thereunder and
have also assumed the due authorization by all requisite action, corporate or
other, and execution and delivery by such parties of such documents and that
such documents constitute valid and binding obligations of such parties. In
addition, we have assumed that the Declaration, the Preferred Securities, the
Limited Partnership Agreement and the Partnership Preferred Securities when
executed will be in substantially the forms reviewed by us. With respect to the
opinion set forth in paragraph (2) below, we have assumed that, except for the
exercise of rights and powers expressly permitted by the Limited Partnership
Agreement, the holders of Partnership Preferred Securities will not participate
in the control of the business of the Partnership. As to any facts material to
the opinions expressed herein which were not independently established or
verified, we have relied upon oral or written statements and representations of
officers, trustees and other representatives of the Company, the Partnership,
the Trust and others.
We do not express any opinion as to the laws of any jurisdiction other
than the laws of the State of Delaware.
Based on and subject to the foregoing and to the other qualifications
and limitations set forth
<PAGE>
Merrill Lynch Capital Trust III
Merrill Lynch & Co., Inc.
January 5, 1998
Page 4
herein, we are of the following opinions when (i) the Registration Statement
becomes effective; (ii) the Declaration, the Purchase Agreement and the Limited
Partnership Agreement have been duly executed and delivered by the parties
thereto; (iii) the terms of the Trust Preferred Securities have been duly
established in accordance with the Declaration and the Trust Preferred
Securities have been duly executed and authenticated in accordance with the
Declaration and delivered to and paid for by the Underwriters as contemplated by
the Purchase Agreement; and (iv) the terms of the Partnership Preferred
Securities have been duly established in accordance with the Limited Partnership
Agreement and the Partnership Preferred Securities have been duly executed in
accordance with the terms of the Limited Partnership Agreement and delivered to
and paid for by the Trust as contemplated by the Purchase Agreement:
1. The Trust Preferred Securities will have been duly authorized for
issuance and will be validly issued, fully paid and nonassessable, representing
undivided beneficial ownership interests in the assets of the Trust; and the
holders of such Preferred Securities will be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware. We bring
to your attention, however, that the holders of Preferred Securities may be
obligated, pursuant to the Declaration, to (i) provide indemnity and/or security
in connection with and pay taxes or governmental charges arising from transfers
of Preferred Securities and (ii) provide security and indemnity in connection
with the requests of or directions to the Property Trustee to exercise its
rights and powers under the Declaration.
2. The Partnership Preferred Securities will have been authorized
for issuance and will represent valid partnership interests in the Partnership,
and the holders of Partnership Preferred Securities, as limited partners of the
Partnership, will not be liable to third parties for the obligations of the
Partnership. We bring to your attention, however, that the holders of
Partnership Preferred Securities may be obligated, pursuant to the Limited
Partnership Agreement, to (i) provide indemnity
<PAGE>
Merrill Lynch Capital Trust III
Merrill Lynch & Co., Inc.
January 5, 1998
Page 5
and/or security in connection with and pay taxes or governmental charges arising
from transfers of Partnership Preferred Securities and the issuance of
replacement Partnership Preferred Securities, and (ii) provide security and
indemnity in connection with requests of or directions to the Special
Representative (as defined in the Limited Partnership Agreement) to exercise its
rights and powers under the Limited Partnership Agreement.
We hereby consent to the use of our name under the heading "Legal
Matters" in the prospectus which forms a part of the Registration Statement. We
also hereby consent to the filing of this opinion with the Commission as an
exhibit to the Registration Statement. In giving this consent, we do not
thereby admit that we are within the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations of the
Commission promulgated thereunder. This opinion is expressed as of the date
hereof unless otherwise expressly stated and we disclaim any undertaking to
advise you of any subsequent changes in the facts stated or assumed herein or of
any subsequent changes in applicable law.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher & Flom LLP
<PAGE>
EXHIBIT 15
January 5, 1998
- ---------------
Merrill Lynch & Co., Inc.
World Financial Center
North Tower, 31st Floor
New York, NY 10281
We have made a review, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited interim
consolidated financial information of Merrill Lynch & Co., Inc. and
subsidiaries as of March 28, 1997, June 27, 1997, and September 26, 1997 and
for the three-month periods ended March 28, 1997 and March 29, 1996 and the
three- and six-month periods ended June 27, 1997 and June 28,
1996 and for the three- and nine-month periods ended September 26, 1997 and
September 27, 1996 as indicated in our reports dated May 9, 1997, August 8,
1997 and November 7, 1997, respectively; because we did not perform an audit,
we expressed no opinion on that information.
We are aware that such reports referred to above, which are included in your
Quarterly Reports on Form 10-Q for the quarters ended March 28, 1997, June 27,
1997 and September 26, 1997, are incorporated by reference in this
Registration Statement.
We also are aware that the aforementioned reports, pursuant to Rule 436(c)
under the Securities Act of 1933, are not considered a part of the
Registration Statement prepared or certified by an accountant or a report
prepared or certified by an accountant within the meaning of Sections 7 and
11 of that Act.
/s/ Deloitte & Touche LLP
New York, New York
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
- -----------------------------
We consent to the incorporation by reference in this Registration Statement
of Merrill Lynch & Co., Inc. (the "Company") on Form S-3 of our reports dated
February 24, 1997 appearing in or incorporated by reference in the Annual
Report on Form 10-K of the Company for the year ended December 27, 1996 and
to the reference to us under the heading "Experts" in the Prospectus, which
is a part of this Registration Statement. We also consent to the inclusion in
this Registration Statement of our reports dated January 5, 1998 relating to
the audits of the balance sheets of Merrill Lynch Preferred Funding III, L.P.
and Merrill Lynch Preferred Capital Trust III, and Merrill Lynch Preferred
Funding IV, L.P. and Merrill Lynch Preferred Capital Trust IV, appearing in
this prospectus, which is included in this Registration Statement.
/s/ Deloitte & Touche LLP
January 5, 1998
New York, New York
<PAGE>
Exhibit 25
-----------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
----------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
-------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
----------------------------------------
MERRILL LYNCH & CO., INC.
(Exact name of obligor as specified in its charter)
DELAWARE 13-2740599
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
MERRILL LYNCH PREFERRED FUNDING III, L.P.
(Exact name of obligor as specified in its certificate of limited partnership)
DELAWARE APPLIED FOR
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
MERRILL LYNCH PREFERRED CAPITAL TRUST III
(Exact name of obligor as specified in its certificate of trust)
DELAWARE APPLIED FOR
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
WORLD FINANCIAL CENTER
NORTH TOWER
NEW YORK, NEW YORK 10281-1334
(Address of principal executive offices) (Zip Code)
------------------------------------------------------------
TRUST ORIGINATED PREFERRED SECURITIES OF MERRILL LYNCH PREFERRED CAPITAL TRUST
III PARTNERSHIP PREFERRED SECURITIES OF MERRILL LYNCH PREFERRED FUNDING III,
L.P. GUARANTEE OF MERRILL LYNCH & CO., INC. WITH RESPECT TO TRUST PREFERRED
SECURITIES
GUARANTEE OF MERRILL LYNCH & CO., INC. WITH RESPECT TO PARTNERSHIP PREFERRED
SECURITIES
GUARANTEES OF MERRILL LYNCH & CO., INC. WITH RESPECT TO CERTAIN DEBENTURES
OF ITS WHOLLY OWNED SUBSIDIARIES (THE "AFFILIATED DEBENTURES")
SUBORDINATED DEBENTURE OF MERRILL LYNCH & CO., INC.
(Title of the indenture securities)
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
New York State Banking Department, Suite 2310, 5 Empire State Plaza,
Albany, New York 12223.
Board of Governors of the Federal Reserve System, 20th and C Street
NW, Washington, D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street,
New York, N.Y.
Federal Deposit Insurance Corporation, 550 Seventeenth Street,
Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
-2-
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996,
in connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 11th day of December, 1997
THE CHASE MANHATTAN BANK
By /s/ James D. Heaney
---------------------------------
James D. Heaney, Vice President
-3-
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business September 30, 1997, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
DOLLAR AMOUNTS
ASSETS IN MILLIONS
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ...................................... $ 11,760
Interest-bearing balances .............................. 4,343
Securities: .................................................
Held to maturity securities.................................. 2,704
Available for sale securities................................ 37,885
Federal funds sold and securities purchased under
agreements to resell ................................... 27,358
Loans and lease financing receivables:
Loans and leases, net of unearned income $127,370
Less: Allowance for loan and lease losses 2,760
Less: Allocated transfer risk reserve ........ 13
--------
Loans and leases, net of unearned income,
allowance, and reserve ................................. 124,597
Trading Assets .............................................. 64,630
Premises and fixed assets (including capitalized
leases)................................................. 2,925
Other real estate owned ..................................... 286
Investments in unconsolidated subsidiaries and
associated companies.................................... 232
Customers' liability to this bank on acceptances
outstanding ............................................ 2,212
Intangible assets .............................................................
1,480
Other assets ................................................ 11,117
--------
TOTAL ASSETS................................................. $291,529
========
- 4 -
<PAGE>
LIABILITIES
Deposits
In domestic offices .................................... $ 86,574
Noninterest-bearing .................................... $ 31,818
Interest-bearing ....................................... 54,756
--------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's............................................... 69,887
Noninterest-bearing ......................................... $ 3,777
Interest-bearing ....................................... 66,110
Federal funds purchased and securities sold under agree-
ments to repurchase
............................................................. 45,307
Demand notes issued to the U.S. Treasury .................... 161
Trading liabilities ......................................... 47,406
Other borrowed money (includes mortgage indebtedness
and obligations under capitalized leases):
With a remaining maturity of one year or less .......... 4,578
With a remaining maturity of more than one year
through three years.............................. 261
With a remaining maturity of more than three years..... 131
Bank's liability on acceptances executed and outstanding..... 2,212
Subordinated notes and debentures ........................... 5,715
Other liabilities ........................................... 12,355
TOTAL LIABILITIES ........................................... 274,587
--------
EQUITY CAPITAL
Perpetual preferred stock and related surplus................ 0
Common stock ................................................ 1,211
Surplus (exclude all surplus related to preferred stock).... 10,294
Undivided profits and capital reserves ...................... 5,414
Net unrealized holding gains (losses)........................
on available-for-sale securities ............................ 7
Cumulative foreign currency translation adjustments ......... 16
TOTAL EQUITY CAPITAL ........................................ 16,942
______
TOTAL LIABILITIES AND EQUITY CAPITAL ........................ $291,529
========
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
-5-
<PAGE>
-----------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
----------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
-------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
----------------------------------------
MERRILL LYNCH & CO., INC.
(Exact name of obligor as specified in its charter)
DELAWARE 13-2740599
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
MERRILL LYNCH PREFERRED FUNDING IV, L.P.
(Exact name of obligor as specified in its certificate of limited partnership)
DELAWARE APPLIED FOR
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
MERRILL LYNCH PREFERRED CAPITAL TRUST IV
(Exact name of obligor as specified in its certificate of trust)
DELAWARE APPLIED FOR
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
WORLD FINANCIAL CENTER
NORTH TOWER
NEW YORK, NEW YORK 10281-1334
(Address of principal executive offices) (Zip Code)
------------------------------------------------------------
TRUST ORIGINATED PREFERRED SECURITIES OF MERRILL LYNCH PREFERRED CAPITAL TRUST
IV PARTNERSHIP PREFERRED SECURITIES OF MERRILL LYNCH PREFERRED FUNDING IV,
L.P. GUARANTEE OF MERRILL LYNCH & CO., INC. WITH RESPECT TO TRUST PREFERRED
SECURITIES
GUARANTEE OF MERRILL LYNCH & CO., INC. WITH RESPECT TO PARTNERSHIP PREFERRED
SECURITIES
GUARANTEES OF MERRILL LYNCH & CO., INC. WITH RESPECT TO CERTAIN DEBENTURES
OF ITS WHOLLY OWNED SUBSIDIARIES (THE "AFFILIATED DEBENTURES")
SUBORDINATED DEBENTURE OF MERRILL LYNCH & CO., INC.
(Title of the indenture securities)
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GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
New York State Banking Department, Suite 2310, 5 Empire State Plaza,
Albany, New York 12223.
Board of Governors of the Federal Reserve System, 20th and C Street
NW, Washington, D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street,
New York, N.Y.
Federal Deposit Insurance Corporation, 550 Seventeenth Street,
Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
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Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996,
in connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 11th day of December, 1997
THE CHASE MANHATTAN BANK
By /s/ James D. Heaney
---------------------------------
James D. Heaney, Vice President
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Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business September 30, 1997, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
DOLLAR AMOUNTS
ASSETS IN MILLIONS
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ...................................... $ 11,760
Interest-bearing balances .............................. 4,343
Securities: .................................................
Held to maturity securities.................................. 2,704
Available for sale securities................................ 37,885
Federal funds sold and securities purchased under
agreements to resell ................................... 27,358
Loans and lease financing receivables:
Loans and leases, net of unearned income $127,370
Less: Allowance for loan and lease losses 2,760
Less: Allocated transfer risk reserve ........ 13
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Loans and leases, net of unearned income,
allowance, and reserve ................................. 124,597
Trading Assets .............................................. 64,630
Premises and fixed assets (including capitalized
leases)................................................. 2,925
Other real estate owned ..................................... 286
Investments in unconsolidated subsidiaries and
associated companies.................................... 232
Customers' liability to this bank on acceptances
outstanding ............................................ 2,212
Intangible assets .......................................... 1,480
Other assets ................................................ 11,117
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TOTAL ASSETS................................................. $291,529
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LIABILITIES
Deposits
In domestic offices .................................... $ 86,574
Noninterest-bearing .................................... $ 31,818
Interest-bearing ....................................... 54,756
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In foreign offices, Edge and Agreement subsidiaries,
and IBF's............................................... 69,887
Noninterest-bearing ......................................... $ 3,777
Interest-bearing ....................................... 66,110
Federal funds purchased and securities sold under agree-
ments to repurchase
............................................................. 45,307
Demand notes issued to the U.S. Treasury .................... 161
Trading liabilities ......................................... 47,406
Other borrowed money (includes mortgage indebtedness
and obligations under capitalized leases):
With a remaining maturity of one year or less .......... 4,578
With a remaining maturity of more than one year
through three years.............................. 261
With a remaining maturity of more than three years..... 131
Bank's liability on acceptances executed and outstanding..... 2,212
Subordinated notes and debentures ........................... 5,715
Other liabilities ........................................... 12,355
TOTAL LIABILITIES ........................................... 274,587
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EQUITY CAPITAL
Perpetual preferred stock and related surplus................ 0
Common stock ................................................ 1,211
Surplus (exclude all surplus related to preferred stock).... 10,294
Undivided profits and capital reserves ...................... 5,414
Net unrealized holding gains (losses)........................
on available-for-sale securities ............................ 7
Cumulative foreign currency translation adjustments ......... 16
TOTAL EQUITY CAPITAL ........................................ 16,942
______
TOTAL LIABILITIES AND EQUITY CAPITAL ........................ $291,529
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I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
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