AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 26, 1999
REGISTRATION NO. 333-68747
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
AND
POST-EFFECTIVE AMENDMENTS
UNDER
THE SECURITIES ACT OF 1933
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MERRILL LYNCH & CO., INC. DELAWARE 13-2740599
(Exact name of registrant as specified in charter) (State of incorporation) (I.R.S. employer identification number)
MERRILL LYNCH PREFERRED FUNDING VI, L.P. DELAWARE 13-4034253
(Exact name of registrant as specified in (State of organization) (I.R.S. employer identification number)
certificate of limited partnership)
MERRILL LYNCH PREFERRED CAPITAL TRUST VI DELAWARE 13-7174482
(Exact name of registrant as specified in (State of organization) (I.R.S. employer identification number)
certificate of trust)
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WORLD FINANCIAL CENTER
NORTH TOWER
NEW YORK, NEW YORK 10281-1334
(212)449-1000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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MARK B. GOLDFUS, ESQ.
GENERAL COUNSEL
CORPORATE LAW
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)
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Copies to:
NORMAN D. SLONAKER, ESQ. DONALD R. CRAWSHAW, ESQ. RICHARD T. PRINS, ESQ.
BROWN & WOOD LLP SULLIVAN & CROMWELL SKADDEN, ARPS, SLATE,
ONE WORLD TRADE CENTER 125 BROAD STREET MEAGHER & FLOM LLP
NEW YORK, NEW YORK 10048 NEW YORK, NEW YORK 10004 919 THIRD AVENUE
NEW YORK, NEW YORK 10022
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time after the effective date of this Registration Statement as determined by
market conditions.
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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. / /
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 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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EXPLANATORY NOTE
This registration statement contains:
(a) a prospectus which is to be used by Merrill Lynch & Co., Inc.
("ML&Co.") in connection with offerings of its:
o debt securities;
o warrants;
o common stock;
o preferred stock; and
o depositary shares;
(b) a prospectus which is to be used by ML&Co. in connection with offerings
of its Structured Yield Product Exchangeable for Stock; and
(c) a prospectus including alternate pages, which is to be used in
connection with offerings of
o the preferred securities of Merrill Lynch Preferred Capital Trust
VI ("ML Trust");
o the preferred securities of Merrill Lynch Preferred Funding VI,
L.P. ("ML Partnership");
o the subordinated debentures of ML&Co.; and
o the guarantees of ML&Co. of:
o the preferred securities of ML Trust;
o the preferred securities of ML Partnership; and
o specified debentures issued by ML&Co.'s affiliates
Additionally, there is a prospectus supplement relating to ML&Co.'s medium-term
notes, a prospectus to be used by ML&Co.'s wholly-owned subsidiary, Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated in connection
with market-making transactions and a form of prospectus supplement for the
offering of ML&Co.'s Market Index Target-Term Securities. This amendment does
not include all of the prospectuses to be used in connection with market-making
transactions.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
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Subject to Completion
Preliminary Prospectus dated February 26, 1999
PROSPECTUS
[LOGO]
Merrill Lynch & Co., Inc.
Debt Securities, Warrants, Preferred Stock,
Depositary Shares and Common Stock
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o By this prospectus, we may offer o When we offer securities, we will provide you
from time to time up to $ of our: with a prospectus supplement or a term sheet
describing the terms of the specific issue of
o debt securities; securities including the offering price of the
securities.
o warrants;
o You should read this prospectus and the
o common stock; prospectus supplement or the term sheet relating
to the specific issue of securities carefully
o preferred stock; and before you invest.
o depositary shares.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is , 199 .
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MERRILL LYNCH & CO., INC.
We are a holding company that, through our U.S. and non U.S. subsidiaries
and affiliates such as Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Merrill Lynch Government Securities Inc., Merrill Lynch Capital Services, Inc.,
Merrill Lynch International, Merrill Lynch Capital Markets Bank Ltd., Merrill
Lynch Asset Management L.P. and Merrill Lynch Mercury Asset Management, provides
investment, financing, advisory, insurance, and related products on a global
basis, including:
o securities brokerage, trading and underwriting;
o investment banking, strategic services, including mergers and
acquisitions and other corporate finance advisory activities;
o asset management and other investment advisory and recordkeeping
services;
o trading and brokerage of swaps, options, forwards, futures and other
derivatives;
o securities clearance services;
o equity, debt and economic research;
o banking, trust and lending services, including mortgage lending and
related services; and
o insurance sales and underwriting services.
We provide these products and services to a wide array of clients,
including individual investors, small businesses, corporations, governments,
governmental agencies and financial institutions.
Our principal executive office is located at World Financial Center, North
Tower, 250 Vesey Street, New York, New York 10281; our telephone number is (212)
449-1000.
If you want to find more information about us, please see the sections
entitled "Where You Can Find More Information" and "Incorporation of Information
We File with the SEC" in this prospectus.
In this prospectus, references to "ML&Co.", "we", "us" and "our" refer
specifically to Merrill Lynch & Co., Inc., the holding company. ML&Co. is the
issuer of all the securities offered under this prospectus.
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USE OF PROCEEDS
We intend to use the net proceeds from the sale of the securities for
general corporate purposes, unless otherwise specified in the prospectus
supplement or term sheet relating to a specific issue of securities. Our general
corporate purposes may include financing the activities of our subsidiaries,
financing our assets and those of our subsidiaries, the lengthening of the
average maturity of our borrowings, and financing acquisitions. Until we use the
net proceeds from the sale of any of our securities for general corporate
purposes, we will use the net proceeds to reduce our short-term indebtedness or
for temporary investments. We expect that we will, on a recurrent basis, engage
in additional financings as the need arises to finance our growth, through
acquisitions or otherwise, or to lengthen the average maturity of our
borrowings. To the extent that securities being purchased for resale by our
subsidiary, Merrill Lynch Pierce, Fenner & Smith Incorporated, referred to in
this prospectus as MLPF&S, are not resold, the aggregate proceeds that we and
our subsidiaries would receive would be reduced.
RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
In 1998, we acquired the outstanding shares of Midland Walwyn, Inc.,
in a transaction accounted for as a pooling-of-interests. The following
information has been restated as if the two entities had always been combined.
The following table sets forth our historical ratios of earnings to fixed
charges and ratios of earnings to combined fixed charges and preferred stock
dividends for the periods indicated:
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Year Ended Last Friday in December
1994 1995 1996 1997 1998
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Ratio of earnings to fixed charges (a)................. 1.2 1.2 1.2 1.2 1.1
Ratio of earnings to combined fixed charges
and preferred stock dividends (a)............... 1.2 1.2 1.2 1.2 1.1
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For the purpose of calculating the ratio of earnings to fixed charges,
"earnings" consist of earnings from continuing operations before income taxes
and fixed charges, excluding capitalized interest and preferred security
dividend requirements of subsidiaries. "Fixed charges" consist of interest
costs, the interest factor in rentals, amortization of debt issuance costs,
preferred security dividend requirements of subsidiaries, and capitalized
interest.
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THE SECURITIES
ML&Co. intends to sell its securities from time to time. These securities
may include the following, in each case, as specified by ML&Co. at the time of
offering:
o common stock;
o preferred stock;
o depositary shares representing preferred stock;
o debt securities, comprising senior debt securities and subordinated
debt securities, each of which may be convertible into common stock or
preferred stock;
o warrants to purchase debt securities;
o warrants to purchase shares of common stock;
o warrants to purchase shares of preferred stock;
o warrants entitling the holders to receive from ML&Co. a payment or
delivery determined by reference to decreases or increases in the
level of an index or portfolio ("Index Warrants") based on:
o one or more equity or debt securities;
o any statistical measure of economic or financial performance such
as a currency or a consumer price or mortgage index; or
o the price or value of any commodity or any other item or index;
o warrants to receive from ML&Co. the cash value in U.S. dollars of the
right to purchase ("Currency Call Warrants") or to sell ("Currency Put
Warrants" and, together with the Currency Call Warrants, the "Currency
Warrants") specified foreign currencies or units of two or more
specified foreign currencies;
o shares of preferred stock which may be:
o convertible into preferred stock or common stock or
o exchangeable for debt securities, preferred stock or depositary
shares representing preferred stock
The warrants to purchase debt securities, common stock, preferred stock and
depositary shares representing preferred stock, the Index Warrants and the
Currency Warrants are collectively referred to as the "Warrants", and the debt
securities, the Warrants, the preferred stock, the depositary shares and the
common stock are collectively called the "Securities".
We may offer the Securities independently or together with other Securities
and the Securities may be attached to, or separate from other Securities. We
will offer the Securities to the public on terms determined by market conditions
at the time of sale and set forth in a prospectus supplement or term sheet
relating to the specific issue of Securities.
The Securities offered by this prospectus may be offered separately or
together in one or more series of up to $ aggregate public offering price or its
equivalent in such foreign currencies or units of two or more currencies, based
on the applicable exchange rate at the time of offering, as shall be designated
by ML&Co. at the time of offering, subject to reduction on account of the sale
of other securities under the registration statement of which this prospectus is
a part.
DESCRIPTION OF DEBT SECURITIES
Unless otherwise specified in a prospectus supplement, the senior debt
securities are to be issued under an indenture (the "1983 Indenture"), dated as
of April 1, 1983, as amended and restated and as further amended, between ML&Co.
and The Chase Manhattan Bank, as trustee or issued under an indenture (the "1993
Indenture"), dated as of October 1, 1993, as amended, between ML&Co. and The
Chase Manhattan Bank, as trustee (each, a "Senior Debt Trustee"). The 1983
Indenture and the 1993 Indenture are referred to as the "Senior Indentures".
Unless otherwise specified in a prospectus supplement, the subordinated debt
securities are to be issued under an indenture (the "Subordinated Indenture"),
between ML&Co. and The Chase Manhattan Bank, as trustee (the "Subordinated Debt
Trustee"). The Senior Debt Securities and Subordinated Debt Securities may also
be issued under one or more other indentures (each, a "Subsequent Indenture")
and have one or more other trustees (each, a "Subsequent Trustee"). Any
Subsequent Indenture relating to senior debt securities will have terms and
conditions identical in all material respects to the above-referenced Senior
Indentures and any Subsequent Indenture relating to subordinated debt securities
will have terms and conditions identical in all material respects to the
above-referenced Subordinated Indenture, including, but not limited to, the
applicable terms and conditions described below. Any Subsequent Indenture
relating to a series of debt securities, and the applicable trustee, will be
identified in the applicable prospectus supplement or term sheet. The Senior
Indentures, the Subordinated Indenture and any Subsequent Indentures (whether
senior or subordinated) are referred to herein as the "Indentures"; and the
Senior Debt Trustees, the Subordinated Debt Trustee and any Subsequent Trustees
are referred to herein as the "Trustees". A copy of each Indenture is filed (or,
in the case of a Subsequent Indenture, will be filed) as an exhibit to the
registration statement relating to the Securities. The following summaries of
certain provisions of the Indentures are not complete and are subject to, and
are qualified in their entirety by reference to, all provisions of the
respective Indentures, including the definitions of terms.
Terms of the Debt Securities
ML&Co. may issue the debt securities from time to time, without limitation
as to aggregate principal amount and in one or more series. ML&Co. may issue
debt securities upon the satisfaction of conditions, including the delivery to
the applicable Trustee of a resolution of the Board of Directors of ML&Co., or a
committee of the Board of Directors, or a certificate of an officer of ML&Co.
who has been authorized by the Board of Directors to take that kind of action,
which fixes or establishes the terms of the debt securities being issued. Any
resolution or officer's certificate approving the issuance of any issue of debt
securities will include the terms of that issue of debt securities, including:
o the aggregate principal amount and whether there is any limit upon the
aggregate principal amount that may be subsequently issued;
o the stated maturity date;
o the principal amount payable whether at maturity or upon earlier
acceleration, and whether the principal amount will be determined with
reference to an index, formula or other method;
o any fixed or variable interest rate or rates per annum;
o any interest payment dates;
o any provisions for redemption, the redemption price and any
remarketing arrangements;
o any sinking fund requirements;
o whether the debt securities are denominated or payable in United
States dollars or a foreign currency or units of two or more foreign
currencies;
o the form in which the debt securities may be issued, whether
registered, bearer or both, and any restrictions applicable to the
exchange of one form for another and to the offer, sale and delivery
of the debt securities in either form;
o whether and under what circumstances ML&Co. will pay additional
amounts ("Additional Amounts") under any debt securities held by a
person who is not a U.S. person for specified taxes, assessments or
other governmental charges and whether ML&Co. has the option to redeem
the affected debt securities rather than pay any Additional Amounts;
o whether the debt securities are to be issued in global form;
o the title and series designation;
o the minimum denominations;
o whether, and the terms and conditions relating to when, ML&Co. may
satisfy all or part of its obligations with regard to payment upon
maturity, or any redemption or required repurchase or in connection
with any exchange provisions by delivering to the Holders of the debt
securities, other securities, which may or may not be issued by or are
obligations of ML&Co., or a combination of cash, other securities
and/or property ("Maturity Consideration");
o any additions or deletions in the terms of the debt securities with
respect to the Events of Default set forth in the respective
Indentures;
o the terms, if any, upon which the debt securities may be convertible
into common stock or preferred stock of ML&Co. and the terms and
conditions upon which any conversion will be effected, including the
initial conversion price or rate, the conversion period and any other
provisions in addition to or instead of those described in this
prospectus;
o whether, and the terms and conditions relating to when, the debt
securities may be transferred separately from Warrants if the debt
securities and Warrants are issued together; and
o any other terms of the debt securities which are not inconsistent with
the provisions of the applicable Indentures.
Please see the accompanying prospectus supplement or the terms sheet you
have received or will receive for the terms of the specific debt securities
being offered. This prospectus may be delivered before or concurrently with the
delivery of a terms sheet. Debt securities may also be issued under the
Indentures upon the exercise of warrants to purchase debt securities. See
"Description of Debt Warrants". Nothing in the Indentures or in the terms of the
debt securities will prohibit the issuance of securities representing
subordinated indebtedness that is senior or junior to the subordinated debt
securities.
Prospective purchasers of debt securities should be aware that special U.S.
Federal income tax, accounting and other considerations may be applicable to
instruments such as the debt securities. The prospectus supplement relating to
an issue of debt securities will describe these considerations.
Each series of debt securities will be issued, as described in the
prospectus supplement, in fully registered form without coupons, and/or in
bearer form with or without coupons, and in denominations set forth in the
prospectus supplement. No service charge will be made for any registration of
transfer of registered debt securities or exchange of debt securities, but
ML&Co. may require payment of a sum sufficient to cover any tax or other
governmental charges that may be imposed in connection with any registration of
transfer or exchange. Each Indenture provides that debt securities may be issued
in global form. If any series of debt securities is issuable in global form, the
applicable prospectus supplement will describe the circumstances, if any, under
which beneficial owners of interest in any of those global debt securities may
exchange their interests for debt securities of that series and of like tenor
and principal amount in any authorized form and denomination. Principal of, and
any premium, Additional Amounts, Maturity Consideration and interest on, a
global debt security will be payable or deliverable in the manner described in
the applicable prospectus supplement.
The provisions of the Indentures permit ML&Co., without the consent of
holders of any debt securities, to issue additional debt securities with terms
different from those of debt securities previously issued and to reopen a
previous issue of a series of debt securities and issue additional debt
securities of that series.
The senior debt securities will be unsecured and will rank equally with all
other unsecured and unsubordinated indebtedness of ML&Co. The subordinated debt
securities will be unsecured and will be subordinated to all existing and future
Senior Indebtedness of ML&Co., as defined below. Because ML&Co. is a holding
company, the right of ML&Co. and its creditors, including the holders of the
debt securities, to participate in any distribution of the assets of any
subsidiary upon its liquidation or reorganization or otherwise is necessarily
subject to the prior claims of creditors of the subsidiary, except to the extent
that claims of ML&Co. itself as a creditor of the subsidiary may be recognized.
In addition, dividends, loans and advances from certain subsidiaries, including
MLPF&S, to ML&Co. are restricted by net capital requirements under the
Securities Exchange Act of 1934, as amended, and under rules of certain
exchanges and other regulatory bodies.
ML&Co. will pay or deliver principal and any premium, Additional Amounts,
Maturity Consideration and interest in the manner, at the places and subject to
the restrictions set forth in the applicable Indenture, the debt securities and
the applicable prospectus supplement. However, payment of any interest and any
Additional Amounts may be made at the option of ML&Co. by check mailed to the
holders of registered debt securities at their registered addresses.
Debt securities may be presented for exchange, and registered debt
securities may be presented for transfer, in the manner, at the places and
subject to the restrictions set forth in the applicable Indenture, the debt
securities and the applicable prospectus supplement. Debt securities in bearer
form and the coupons, if any, pertaining to the debt securities will be
transferable by delivery. No service charge will be made for any transfer or
exchange of debt securities, but ML&Co. may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection with a
transfer or exchange.
Unless otherwise indicated in the applicable prospectus supplement, the
debt securities will be issued under the Indentures. If so specified in a
prospectus supplement, ML&Co. may issue subordinated debt securities under a
separate indenture which provides for a single issue of zero coupon convertible
subordinated debt securities, a form of which is filed as an exhibit to the
registration statement of which this prospectus is a part. If ML&Co. issues debt
securities under any indenture, the applicable prospectus supplement will set
forth the terms of the debt securities and will identify the applicable
indenture and trustee.
Merger and Consolidation
ML&Co. may consolidate or merge with or into any other corporation, and
ML&Co. may sell, lease or convey all or substantially all of its assets to any
corporation, provided that:
o the resulting corporation, if other than ML&Co., is a corporation
organized and existing under the laws of the United States of America
or any U.S. state and assumes all of ML&Co.'s obligations:
o pay or deliver the principal of, and any premium, Additional Amounts,
Maturity Consideration or interest on, the debt securities; and
o perform and observe all of the obligations and conditions of the
Indentures to be performed or observed by ML&Co., and
o ML&Co. or any successor corporation, as the case may be, is not,
immediately after any consolidation or merger, in default under the
Indentures.
Modification and Waiver
Each Indenture may be modified and amended by ML&Co. and the applicable
Trustee with the consent of holders of at least 66 2/3% in principal amount or
aggregate issue price of each series of debt securities affected. However,
without the consent of each holder of any debt security affected, no amendment
or modification to any Indenture may:
o change the stated maturity of the principal or Maturity Consideration
of, or any installment of interest or Additional Amounts on, any debt
security or any premium payable on redemption, or change the
Redemption Price;
o reduce the principal amount of, or the interest or Additional Amounts
payable on, or reduce the amount or change the type of Maturity
Consideration deliverable on, any debt security or reduce the amount
of principal or Maturity Consideration which could be declared due and
payable before the stated maturity;
o change the place or currency of any delivery or payment of principal
or Maturity Consideration of, or any premium, interest or Additional
Amounts on any debt security;
o impair the right to institute suit for the enforcement of any delivery
or payment on any debt security;
o reduce the percentage in principal amount or aggregate issue price of
the outstanding debt securities of any series, the consent of whose
holders is required to modify or amend the applicable Indenture; or
o modify the foregoing requirements or reduce the percentage in
principal amount or aggregate issue price of outstanding debt
securities necessary to waive any past default to less than a
majority.
No modification or amendment of the Subordinated Indenture or any
Subsequent Indenture for subordinated debt securities may adversely affect the
rights of any holder of ML&Co.'s Senior Indebtedness without the consent of each
holder affected. The holders of at least a majority in principal amount or
aggregate issue price of the outstanding debt securities of any series may, with
respect to that series, waive past defaults under the applicable Indenture and
waive compliance by ML&Co. with certain provisions of that Indenture, except as
described under "-Events of Default".
Events of Default
Each of the following will be an Event of Default with respect to each
series of debt securities issued under each Indenture:
o default in the payment of any interest or Additional Amounts when due,
and continuing for 30 days;
o default in the payment of any principal or premium, when due;
o default in the delivery or payment of the Maturity Consideration when
due;
o default in the deposit of any sinking fund payment, when due;
o default in the performance of any other obligation of ML&Co. contained
in the applicable Indenture for the benefit of that series or in the
debt securities of that series, and continuing for 60 days after
written notice as provided in the applicable Indenture;
o specified events in bankruptcy, insolvency or reorganization of ML&Co.
and
o any other Event of Default provided with respect to debt securities of
that series.
If an Event of Default occurs and is continuing for any series of debt
securities, other than as a result of the bankruptcy, insolvency or
reorganization of ML&Co., the applicable Trustee or the holders of at least 25%
in principal amount or aggregate issue price of the outstanding debt securities
of that series may declare all amounts, or any lesser amount provided for in the
debt securities of that series, due and payable or deliverable immediately. At
any time after the applicable Trustee or the holders have made a declaration of
acceleration with respect to the debt securities of any series but before the
applicable Trustee has obtained a judgment or decree for payment of money due,
the holders of a majority in principal amount or aggregate issue price of the
outstanding debt securities of that series may rescind any declaration of
acceleration and its consequences, provided that all payments and/or deliveries
due, other than those due as a result of acceleration, have been made and all
Events of Default have been remedied or waived.
Any Event of Default with respect to any series of debt securities may be
waived by the holders of a majority in principal amount or aggregate issue price
of the outstanding debt securities of that series, except a default:
o in the payment of any amounts due and payable or deliverable under the
debt securities of that series; or
o in respect of an obligation of ML&Co. contained in, or a provision of,
any Indenture which cannot be modified under the terms of that
Indenture without the consent of each holder of each series of debt
securities affected.
The holders of a majority in principal amount or aggregate issue price of
the outstanding debt securities of a series may direct the time, method and
place of conducting any proceeding for any remedy available to the applicable
Trustee or exercising any trust or power conferred on the Trustee with respect
to debt securities of that series, provided that any direction is not in
conflict with any rule of law or the applicable Indenture. Subject to the
provisions of each Indenture relating to the duties of the appropriate Trustee,
before proceeding to exercise any right or power under an Indenture at the
direction of the holders, the applicable Trustee is entitled to receive from
those holders reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in complying with any direction.
Any series of debt securities issued under any Indenture will not have the
benefit of any cross-default provisions with other indebtedness of ML&Co.
ML&Co. will be required to furnish to each Trustee annually a statement as
to the fulfillment by ML&Co. of all of its obligations under the applicable
Indenture.
Special Terms Relating to the Senior Debt Securities
Limitations Upon Liens
ML&Co. may not, and may not permit any Subsidiary to, create, assume, incur
or permit to exist any indebtedness for borrowed money secured by a pledge, lien
or other encumbrance, other than any lien specifically permitted by the Senior
Indentures, on the Voting Stock owned directly or indirectly by ML&Co. of any
Subsidiary, other than a Subsidiary which, at the time of incurrence of the
secured indebtedness, has a net worth of less than $3,000,000, unless the
outstanding senior debt securities are secured equally and ratably with the
secured indebtedness.
"Subsidiary" is defined in the Senior Indentures as any corporation of
which at the time of determination, ML&Co. and/or one or more subsidiaries of
ML&Co. owns or controls directly or indirectly 50% of the shares of Voting Stock
of the corporation.
"Voting Stock" is defined in the Senior Indentures as the stock of the
class or classes having general voting power under ordinary circumstances to
elect at least a majority of the board of directors, managers or trustees of a
corporation provided that, for the purposes of the Senior Indentures, stock that
carries only the right to vote conditionally on the occurrence of an event is
not considered voting stock whether or not the event has happened.
Limitations on Disposition of Voting Stock of, and Merger and Sale of
Assets by, MLPF&S
ML&Co. may not sell, transfer or otherwise dispose of any Voting Stock of
MLPF&S or permit MLPF&S to issue, sell or otherwise dispose of any of its Voting
Stock, unless, after giving effect to the transaction, MLPF&S remains a
Controlled Subsidiary.
"Controlled Subsidiary" is defined in the Senior Indentures to mean a
corporation more than 80% of the outstanding shares of Voting Stock of which are
owned directly or indirectly by ML&Co.
In addition, ML&Co. may not permit MLPF&S to:
o merge or consolidate, unless the surviving company is a Controlled
Subsidiary, or
o convey or transfer its properties and assets substantially as an
entirety, except to one or more Controlled Subsidiaries.
Special Terms Relating to the Subordinated Debt Securities
Upon any distribution of assets of ML&Co. resulting from any dissolution,
winding up, liquidation or reorganization, payments on subordinated debt
securities are subordinated to the extent provided in the Subordinated Indenture
in right of payment to the prior payment in full of all Senior Indebtedness, but
the obligation of ML&Co. to make payments on the subordinated debt securities
will not otherwise be affected. No payment on subordinated debt securities may
be made at any time when there is a default in the payment or delivery of any
amounts due on any Senior Indebtedness, including payment of any sinking fund.
Because the subordinated debt securities are subordinated in right of payment to
any Senior Indebtedness, in the event of a distribution of assets upon
insolvency, some creditors of ML&Co. may recover more, ratably, than holders of
subordinated debt securities. Holders of subordinated debt securities will be
subrogated to the rights of holders of Senior Indebtedness to the extent of
payments made on Senior Indebtedness upon any distribution of assets in any
proceedings in respect of subordinated debt securities.
Unless otherwise specified in the prospectus supplement relating to any
series of subordinated debt securities, Senior Indebtedness means any payment in
respect of indebtedness of ML&Co. for borrowed money, other than indebtedness
that is by its terms subordinated to or ranks equally with securities issued
under the Subordinated Indenture. As of September 25, 1998, a total of
approximately $83.7 billion of ML&Co.'s indebtedness would have been Senior
Indebtedness.
Special Terms Relating to Convertible Debt Securities
The following provisions will apply to debt securities that will be
convertible into common stock or preferred stock of ML&Co. unless otherwise
provided in the prospectus supplement relating to the specific issue of debt
securities.
The holder of any convertible debt securities will have the right,
exercisable at any time during the time period specified in the applicable
prospectus supplement, unless previously redeemed, to convert convertible debt
securities into shares of common stock or preferred stock of ML&Co. as specified
in the prospectus supplement, at the conversion rate per principal amount of
convertible debt securities set forth in the applicable prospectus supplement.
In the case of convertible debt securities called for redemption, conversion
rights will expire at the close of business on the date fixed for the redemption
specified in the applicable prospectus supplement, except that, in the case of
redemption at the option of the holder, if applicable, the conversion right will
terminate upon receipt of written notice of the exercise of the option.
For each series of convertible debt securities, the conversion price or
rate will be subject to adjustment as contemplated in the applicable Indenture.
Unless otherwise provided in the applicable prospectus supplement, these
adjustments may occur as a result of:
o the issuance of shares of ML&Co. common stock as a dividend;
o subdivisions and combinations of ML&Co. common stock;
o the issuance to all holders of ML&Co. common stock of rights or
warrants entitling holders to subscribe for or purchase shares of
ML&Co. common stock at a price per share less than the current market
price per share; and
o the distribution to all holders of ML&Co. common stock of:
o shares of ML&Co. capital stock other than common stock;
o evidences of indebtedness of ML&Co. or assets other than cash
dividends paid from retained earnings and dividends payable in
common stock referred to above; or
o subscription rights or warrants other than those referred to
above.
In any case, no adjustment of the conversion price or rate will be required
unless an adjustment would require a cumulative increase or decrease of at least
1% in such price or rate. Fractional shares of ML&Co. common stock will not be
issued upon conversion, but, instead, ML&Co. will pay a cash adjustment. If
indicated in the applicable prospectus supplement, convertible debt securities
convertible into common stock of ML&Co. which are surrendered for conversion
between the record date for an interest payment, if any, and the interest
payment date, other than convertible debt securities called for redemption on a
redemption date during that period, must be accompanied by payment of an amount
equal to interest which the registered holder is entitled to receive.
The adjustment provisions for convertible debt securities will be
determined at the time of issuance of each series of convertible debt securities
and will be set forth in the applicable prospectus supplement.
Except as set forth in the applicable prospectus supplement, any
convertible debt securities called for redemption, unless surrendered for
conversion on or before the close of business on the redemption date, are
subject to being purchased from the holder of the convertible debt securities by
one or more investment banking firms or other purchasers who may agree with
ML&Co. to purchase convertible debt securities and convert them into common
stock or preferred stock of ML&Co., as the case may be.
Governing Law
The Indentures and the debt securities will be governed by, and construed
in accordance with, the laws of the State of New York.
DESCRIPTION OF DEBT WARRANTS
ML&Co. may issue warrants for the purchase of debt securities ("Debt
Warrants"). The Debt Warrants are to be issued under debt warrant agreements
(each a "Debt Warrant Agreement") to be entered into between ML&Co. and a bank
or trust company, as Debt Warrant Agent as set forth in the prospectus
supplement relating to the specific issue of Debt Warrants being offered. We
have filed a copy of the form of Debt Warrant Agreement, including the form of
warrant certificates representing the Debt Warrants (the "Debt Warrant
Certificates"), reflecting the alternative provisions to be included in the Debt
Warrant Agreements that will be entered into with respect to particular
offerings of Debt Warrants, as an exhibit to the registration statement of which
this prospectus is a part. The following summaries of certain provisions of the
Debt Warrant Agreement and the Debt Warrant Certificates are not complete and
are subject to, and are qualified in their entirety by reference to, all the
provisions of the Debt Warrant Agreement and the Debt Warrant Certificates,
respectively, including the definitions of terms.
Terms of the Debt Warrants
The applicable prospectus supplement will describe the terms of the
specific issue of Debt Warrants being offered, the Debt Warrant Agreement
relating to the Debt Warrants and the Debt Warrant Certificates representing the
Debt Warrants, including the following:
o the designation and aggregate principal amount debt securities that
may be purchased upon exercise of the Debt Warrants and the price at
which the purchase may be made;
o the terms of the debt securities purchasable upon exercise of the Debt
Warrants, including whether the debt securities will be senior debt
securities or subordinated debt securities;
o the procedures and conditions relating to the exercise of the Debt
Warrants;
o the designation and terms of any debt securities with which the Debt
Warrants are issued, including whether the debt securities will be
senior debt securities or subordinated debt securities and under which
Indenture the debt securities will be issued;
o the number of Debt Warrants issued with each debt security;
o any date on and after which the Debt Warrants and any related debt
securities will be separately transferable;
o the date on which the right to exercise the Debt Warrants begins;
o date on which the right to exercise the Debt Warrants expires;
o whether the Debt Warrants represented by the Debt Warrant Certificates
will be issued in registered or bearer form, and, if registered, where
they may be transferred and registered;
o any circumstances which will cause the Debt Warrants to be deemed to
be automatically exercised;
o any material risk factors relating to the Debt Warrants;
o the identity of the Debt Warrant Agent; and
o any other terms of the Debt Warrants which are not inconsistent with
the provisions of the Debt Warrant Agreement.
Debt Warrant Certificates may be exchangeable for new Debt Warrant
Certificates of different denominations. Debt Warrants may be exercised at the
corporate trust office of the Debt Warrant Agent or any other office indicated
in the applicable prospectus supplement. Before the exercise of their Debt
Warrants, holders of Debt Warrants will not have any of the rights of holders of
the debt securities that may be purchased upon exercise of the Debt Warrants and
will not be entitled to payment or delivery of any amounts which may be due on
the Debt Securities purchasable upon exercise of the Debt Warrants.
Prospective purchasers of Debt Warrants should be aware that special U.S.
Federal income tax, accounting and other considerations may be applicable to
instruments such as Debt Warrants and to the Debt Securities purchasable upon
exercise of the Debt Warrants. The prospectus supplement relating to any issue
of Debt Warrants will describe these considerations.
Book-Entry Procedures
Except as may otherwise be provided in the applicable prospectus
supplement, the Debt Warrants will be issued in the form of global Debt Warrant
Certificates, registered in the name of a depositary or its nominee. Except as
may otherwise be provided in the applicable prospectus supplement, beneficial
owners will not be entitled to receive definitive certificates representing Debt
Warrants unless the depositary is unwilling or unable to continue as depositary
or ML&Co. decides to have the Debt Warrants represented by definitive
certificates. A beneficial owner's interest in a Debt Warrant will be recorded
on or through the records of the brokerage firm or other entity that maintains
the beneficial owner's account. In turn, the total number of Debt Warrants held
by an individual brokerage firm for its clients will be maintained on the
records of the depositary in the name of the brokerage firm or its agent.
Transfer of ownership of any Debt Warrant will be effected only through the
selling beneficial owner's brokerage firm.
Exercise of Debt Warrants
Each Debt Warrant will entitle the holder to purchase for cash a principal
amount of debt securities at the exercise price set forth in, or determined in
manner set forth in, the applicable prospectus supplement. Debt Warrants may be
exercised at any time up to the close of business on the expiration date set
forth in the applicable prospectus supplement. After the close of business on
the expiration date, unexercised Debt Warrants will become void.
Debt Warrants may be exercised in the manner described in the applicable
prospectus supplement. Upon receipt of payment and the Debt Warrant Certificate
properly completed and duly executed at the corporate trust office of the Debt
Warrant Agent or any other office indicated in the applicable prospectus
supplement, ML&Co. will, as soon as practicable, forward the debt securities
purchased upon exercise. If less than all of the Debt Warrants represented by
any Debt Warrant Certificate are exercised, a new Debt Warrant Certificate will
be issued for the remaining amount of Debt Warrants.
Listing
ML&Co. may list an issue of Debt Warrants on a national securities
exchange. Any listing will be specified in the applicable prospectus supplement.
DESCRIPTION OF CURRENCY WARRANTS
ML&Co. may issue Currency Warrants either in the form of:
o Currency Put Warrants entitling the holders to receive from ML&Co. the
cash settlement value in U.S. dollars of the right to sell a specified
amount of a specified foreign currency or currency units for a
specified amount of U.S. dollars, or
o Currency Call Warrants entitling the holders to receive from ML&Co.
the cash settlement value in U.S. dollars of the right to purchase a
specified amount of a specified foreign currency or units of two or
more currencies for a specified amount of U.S. dollars.
The Currency Warrants will be issued under a currency put warrant agreement
or a currency call warrant agreement, as applicable (each a "Currency Warrant
Agreement"), to be entered into between ML&Co. and a bank or trust company, as
Currency Warrant Agent as set forth in the applicable prospectus supplement
relating to Currency Warrants being offered. Copies of the forms of Currency
Put Warrant Agreement and Currency Call Warrant Agreement, including the forms
of certificates representing the Currency Put Warrants and Currency Call
Warrants (the "Currency Warrant Certificates"), reflecting the provisions to be
included in the Currency Warrant Agreements that will be entered into with
respect to particular offerings of Currency Warrants, are filed as exhibits to
the registration statement of which this prospectus is a part. The following
summaries of provisions of the Currency Warrant Agreements and the Currency
Warrant Certificates are not complete and are subject to, and are qualified in
their entirety by reference to, all the provisions of the Currency Warrant
Agreements and the Currency Warrant Certificates, respectively, including the
definitions of terms.
Terms of the Currency Warrants
The applicable prospectus supplement will describe the terms of the
specific issue of Currency Warrants being offered, the Currency Warrant
Agreement relating to the Currency Warrants and the Currency Warrant
Certificates representing the Currency Warrants, including the following:
o whether the Currency Warrants are Currency Put Warrants, Currency Call
Warrants, or both;
o the formula for determining the cash settlement value of each Currency
Warrant;
o the procedures and conditions relating to the exercise of the Currency
Warrants;
o any circumstances that will cause the Currency Warrants to be deemed
to be automatically exercised;
o any minimum number of Currency Warrants which must be exercised at any
one time, other than upon automatic exercise;
o the date on which the right to exercise the Currency Warrants begins
and the date on which the right to exercise the Currency Warrants
expires which may be the same date;
o any material risk factors relating to the Currency Warrants;
o the identity of the Currency Warrant Agent; and
o any other terms of the Currency Warrants that are not inconsistent
with the provisions of the applicable Currency Warrant Agreement.
Prospective purchasers of Currency Warrants should be aware that special
U.S. Federal income tax, accounting and other considerations may be applicable
to instruments such as Currency Warrants. The prospectus supplement relating to
any issue of Currency Warrants will describe these considerations.
Book-Entry Procedures
Except as may otherwise be provided in the applicable prospectus
supplement, the Currency Warrants will be issued in the form of global Currency
Warrant Certificates, registered in the name of a depositary or its nominee.
Except as may otherwise be provided in the applicable prospectus supplement,
beneficial owners will not be entitled to receive definitive certificates
representing Currency Warrants unless the depositary is unwilling or unable to
continue as depositary or ML&Co. decides to have the Currency Warrants
represented by definitive certificates. A beneficial owner's interest in a
Currency Warrant will be recorded on or through the records of the brokerage
firm or other entity that maintains a beneficial owner's account. In turn, the
total number of Currency Warrants held by an individual brokerage firm for its
clients will be maintained on the records of the depositary in the name of the
brokerage firm or its agent. Transfer of ownership of any Currency Warrant will
be effected only through the selling beneficial owner's brokerage firm.
Exercise of Currency Warrants
Each Currency Warrant will entitle the holder to the cash settlement value
of that Currency Warrant on the applicable exercise date as described in the
applicable prospectus supplement. If a Currency Warrant has more than one
exercise date and is not exercised before the time specified in the applicable
prospectus supplement, on the fifth New York Business Day preceding the
expiration date, the Currency Warrants will be deemed automatically exercised.
Listing
Each issue of Currency Warrants will be listed on a national securities
exchange, subject only to official notice of issuance, as a condition of sale of
the Currency Warrants. In the event that the Currency Warrants are delisted
from, or permanently suspended from trading on, any exchange, the expiration
date for the exercise of the Currency Warrants will be the date the delisting or
trading suspension becomes effective and Currency Warrants not previously
exercised will be deemed automatically exercised on the business day immediately
preceding the expiration date. Under the applicable Currency Warrant Agreement,
ML&Co. will agree not to seek delisting of the Currency Warrants, or suspension
of their trading, on any exchange.
<PAGE>
DESCRIPTION OF INDEX WARRANTS
ML&Co. may issue from time to time Index Warrants consisting of Index Put
Warrants or Index Call Warrants. Subject to applicable law, ML&Co. will pay or
deliver consideration on each Index Warrant in an amount determined by reference
to the level or value of an Index such as:
o an equity or debt security, or a portfolio or basket of indices or
securities, which may include the price or yield of securities;
o any statistical measure of economic or financial performance, which
may include any currency or consumer price, or mortgage index; or
o the price or value of any commodity or any other item or index or any
combination.
The payment or delivery of any consideration on any Index Put Warrant will
be determined by the decrease in the level or value of the applicable Index and
the payment or delivery of any consideration on any Index Call Warrant will be
determined by the increase in the level or value of the applicable Index.
Unless otherwise specified in the accompanying prospectus supplement,
payments, if any, upon exercise of the Index Warrants will be made in U.S.
dollars. The Index Warrants will be offered on terms to be determined at the
time of sale.
Terms of the Index Warrants
The applicable prospectus supplement will describe the specific issue of
Index Warrants being offered, the indenture or agreement under which the Index
Warrants will be issued, as the case may be, and the Index Warrant Certificates
representing the Index Warrants, including the following:
o whether the Index Warrants to be issued will be Index Put Warrants,
Index Call Warrants or both;
o the aggregate number and initial public offering price or purchase
price;
o the applicable Index;
o whether the Index Warrants will be deemed exercised as of a specified
date or whether the Index Warrants may be exercised during a period
and the date on which the right to exercise the Index Warrants
commences and the date on which the exercise right expires;
o the manner in which the Index Warrants may be exercised and any
restrictions on, or other special provisions relating to, the exercise
of the Index Warrants;
o any minimum number of the Index Warrants exercisable at any one time;
o any maximum number of the Index Warrants that may, subject to ML&Co.'s
election, be exercised by all Index Warrantholders, or by any person
or entity, on any day;
o any provisions permitting an Index Warrantholder to condition an
exercise notice on the absence of certain specified changes in the
level of the applicable Index after the exercise date, any provisions
permitting ML&Co. to suspend exercise of the Index Warrants based on
market conditions or other circumstances and any other special
provision relating to the exercise of the Index Warrants;
o any provisions for the automatic exercise of the Index Warrants other
than at the expiration date;
o any provisions permitting ML&Co. to cancel the Index Warrants upon the
occurrence of certain events;
o any additional circumstances that would constitute an Event of Default
under the Index Warrants;
o the method of determining:
o the payment or delivery, if any, to be made in connection with
the exercise or deemed exercise of the Index Warrants (the
"Settlement Value"),
o the minimum payment or delivery, if any, to be made upon
expiration of the Index Warrants (the "Minimum Expiration
Value"),
o the payment or delivery to be made upon the exercise of any right
which ML&Co. may have to cancel the Index Warrants, and
o the value of the Index;
o in the case of Index Warrants relating to an Index for which the
trading prices of underlying securities, commodities or rates are
expressed in a foreign currency, the method of converting amounts in
the relevant foreign currency or currencies into U.S. dollars, or any
other currency or composite currency in which the Index Warrants are
payable;
o any method of providing for a substitute index or otherwise
determining the payment or delivery to be made in connection with the
exercise of the Index Warrants if the Index changes or ceases to be
made available by its publisher;
o any time or times at which payment or delivery will be made on the
Index Warrants following exercise or deemed exercise;
o any provisions for issuing the Index Warrants in other than book-entry
form;
o if the Index Warrants are not issued in book-entry form, any place or
places at which payment or delivery on cancellation and any Minimum
Expiration Value of the Index Warrants is to be made by ML&Co.;
o any circumstances that will cause the Index Warrants to be deemed to
be automatically exercised;
o any material risk factors relating to the Index Warrants;
o the identity of the Index Warrant Agent; and
o any other terms of the Index Warrants which are not inconsistent with
the provisions of the Index Warrant Agreement.
Prospective purchasers of Index Warrants should be aware that special U.S.
Federal income tax, accounting and other considerations may be applicable to
instruments such as the Index Warrants. The prospectus supplement relating to
any issue of Index Warrants will describe these considerations.
Except as otherwise provided in the applicable prospectus supplement, each
issue of Index Warrants will contain the terms set forth below.
Index Warrants issued without a Minimum Expiration Value will be issued
under one or more Index Warrant Agreements to be entered into between ML&Co. and
a bank or trust company, as Warrant Agent, all as described in the prospectus
supplement relating to the specific issue of Index Warrants. The Index Warrant
Agent will act solely as the agent of ML&Co. under the applicable Index Warrant
Agreement and will not assume any obligation or relationship of agency or trust
for or with any Index Warrantholders. A single bank or trust company may act as
Index Warrant Agent for more than one issue of Index Warrants.
Index Warrants issued with a Minimum Expiration Value will be issued under
one or more Index Warrant Trust Indentures to be entered into between ML&Co. and
a corporation or other person permitted to so act by the Trust Indenture Act of
1939, as amended from time to time, to act as Index Warrant Trustee, all as
described in the prospectus supplement relating to the Index Warrants. Any Index
Warrant Trust Indenture will be qualified under the Trust Indenture Act. To the
extent allowed by the Trust Indenture Act, a single qualified corporation may
act as Index Warrant Trustee for more than one issue of Index Warrants.
ML&Co. has filed forms of Index Warrant Agreement and Index Warrant Trust
Indenture and the related global Index Warrant Certificates as exhibits to the
registration statement of which this prospectus is a part. The summaries set
forth in this section of certain provisions of the Index Warrant Agreement, the
Index Warrant Trust Indenture and global index warrant certificates are not
complete, are subject to, and are qualified in their entirety by reference to,
all the provisions of the Index Warrant Agreement, the Index Warrant Trust
Indenture and global Index Warrant Certificates, respectively.
ML&Co. will have the right to reopen a previous issue of Index Warrants and
to issue additional Index Warrants of that issue without the consent of any
Index Warrantholder.
The Index Warrants involve a high degree of risk, including the risk that
the Index Warrants will expire without value other than any Minimum Expiration
Value. Investors should therefore be prepared to sustain a total loss of the
purchase price of the Index Warrants, other than any applicable Minimum
Expiration Value. Investors who consider purchasing Index Warrants should be
experienced with respect to options and option transactions and reach an
investment decision only after carefully considering the suitability of the
Index Warrants in light of their particular circumstances and the information
set forth below as well as additional information contained in the prospectus
supplement relating to the Index Warrants.
If specified, and under the circumstances described in the prospectus
supplement, ML&Co. will pay or deliver to each Index Warrantholder an amount
equal to the greater of the applicable Settlement Value and a Minimum Expiration
Value of the Index Warrants. In addition, if specified in the applicable
prospectus supplement, ML&Co. will pay or deliver to each Index Warrantholder an
amount specified in the prospectus supplement upon cancellation of the Index
Warrants by ML&Co. which may occur upon specified events. In addition, if so
specified in the applicable prospectus supplement, following the occurrence of
an extraordinary event, the Settlement Value of an Index Warrant may, at the
option of ML&Co., be determined on a different basis, including in connection
with automatic exercise at expiration.
Unless otherwise specified in the related prospectus supplement, the Index
Warrants will be deemed to be automatically exercised upon expiration or any
earlier date that may be specified. Upon any automatic exercise, ML&Co. will
deliver or pay to each Index Warrantholder an amount equal to the Settlement
Value of the Index Warrants, except that holders of Index Warrants having a
Minimum Expiration Value will be entitled to receive a payment or delivery equal
to the greater of the Settlement Value and the applicable Minimum Expiration
Value. The Minimum Expiration Value may be either a predetermined payment or
delivery or a payment or delivery that varies during the term of the Index
Warrants in accordance with a schedule or formula. Any Minimum Expiration Value
applicable to an issue of Index Warrants, as well as any additional
circumstances resulting in the automatic exercise of the Index Warrants, will be
specified in the applicable prospectus supplement.
If so specified in the applicable prospectus supplement, ML&Co. may cancel
the Index Warrants. In addition, ML&Co. may delay or postpone the exercise or
valuation of, or payment or delivery for, the Index Warrants upon the occurrence
of an extraordinary event. Any extraordinary events relating to an issue of
Index Warrants will be described in the applicable prospectus supplement. Upon
cancellation, the related Index Warrantholders will be entitled to receive only
the applicable payment or delivery on cancellation specified in the applicable
prospectus supplement. The payment or delivery on cancellation may be either a
predetermined payment or delivery or a payment or delivery that varies during
the term of the Index Warrants in accordance with a schedule or formula.
If ML&Co. defaults with respect to any of its obligations under any Index
Warrants issued with a Minimum Expiration Value under an Index Warrant Trust
Indenture, the default may be waived by the Index Warrantholders of a majority
in interest of all outstanding Index Warrants, except a default:
o in the payment or delivery of the Settlement Value, Minimum Expiration
Value or payment or delivery of any amount upon cancellation of the
Index Warrants; or
o in respect of a covenant or provision of the applicable Index Warrant
Trust Indenture which cannot be modified or amended without the
consent of each Index Warrantholder of each outstanding Index Warrant
affected.
The Index Warrants are unsecured contractual obligations of ML&Co. and will
rank equally with its other unsecured contractual obligations and with its
unsecured and unsubordinated debt. Because ML&Co. is a holding company, the
right of ML&Co. and its creditors, including the Index Warrantholders, to
participate in any distribution of the assets of any subsidiary upon its
liquidation or reorganization or otherwise is necessarily subject to the prior
claims of creditors of the subsidiary, except to the extent that claims of
ML&Co. itself as a creditor of the subsidiary may be recognized. In addition,
dividends, loans and advances from certain subsidiaries, including MLPF&S, to
ML&Co. are restricted by net capital requirements under the Exchange Act and
under rules of certain exchanges and other regulatory bodies.
Book-Entry Procedures
Except as may otherwise be provided in the applicable prospectus
supplement, the Index Warrants will be issued in book-entry form and represented
by global Index Warrants, registered in the name of a depositary or its nominee.
Except as may otherwise be provided in the applicable prospectus supplement,
Index Warrantholders will not be entitled to receive definitive certificates
representing Index Warrants, unless the depositary is unwilling or unable to
continue as depositary or ML&Co. decides to have the Index Warrants represented
by definitive certificates. A beneficial owner's interest in an Index Warrant
represented by a global Index Warrant will be recorded on or through the records
of the brokerage firm or other entity that maintains the beneficial owner's
account. In turn, the total number of Index Warrants held by an individual
brokerage firm or other entity for its clients will be maintained on the records
of the depositary in the name of the brokerage firm or other entity or its
agent. Transfer of ownership of any Index Warrant will be effected only through
the selling beneficial owner's brokerage firm.
Listing
ML&Co. may list an issue of Index Warrants on a national securities
exchange. Any listing will be specified in the applicable prospectus supplement.
Modification
ML&Co. and the Index Warrant Agent or Index Warrant Trustee, as the case
may be, may amend any Index Warrant Agreement or Index Warrant Indenture and the
terms of the related Index Warrants by a supplemental agreement or supplemental
indenture (each, a "Supplemental Agreement"), without the consent of the holders
of any Index Warrants, for the purpose of:
o curing any ambiguity, or of curing, correcting or supplementing any
defective or inconsistent provision, or of making any other provisions
with respect to matters or questions arising under the Index Warrant
Agreement or Index Warrant Trust Indenture, as the case may be, which
are not inconsistent with the provisions of the respective agreement
or indenture or of the Index Warrants,
o evidencing the succession to ML&Co. and the assumption by the
successor of ML&Co.'s covenants contained in the Index Warrant
Agreement or the Index Warrant Trust Indenture, as the case may be,
and the Index Warrants,
o appointing a successor depository,
o evidencing and providing for the acceptance of appointment by a
successor Index Warrant Agent or Index Warrant Trustee with respect to
the Index Warrants, as the case may be,
o adding to the covenants of ML&Co., for the benefit of the Index
Warrantholders or surrendering any right or power conferred upon
ML&Co. under the Index Warrant Agreement or Index Warrant Trust
Indenture, as the case may be,
o issuing Index Warrants in definitive form, or
o amending the Index Warrant Agreement or Index Warrant Trust Indenture,
as the case may be, in any manner which ML&Co. may deem to be
necessary or desirable and which will not materially and adversely
affect the interests of the Index Warrantholders.
ML&Co. and the Index Warrant Agent may also amend any Index Warrant
Agreement or Index Warrant Trust Indenture, as the case may be, and the terms of
the related Index Warrants, by a Supplemental Agreement, with the consent of the
Index Warrantholders holding not less than 66 2/3% in number of the then
outstanding unexercised Index Warrants affected by the amendment, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of the Index Warrant Agreement or Index Warrant Trust
Indenture, as the case may be, or of modifying in any manner the rights of the
Index Warrantholders. However, without the consent of each Index Warrantholder
affected, no amendment may be made that:
o changes the determination, or any aspects of the determination, of the
Settlement Value or any payment or delivery to be made on
cancellation, or any Minimum Expiration Value of the Index Warrants so
as to reduce the payment or delivery to be made upon exercise or
deemed exercise,
o shortens the period of time during which the Index Warrants may be
exercised, or otherwise materially and adversely affects the exercise
rights of the Index Warrantholders, or
o reduces the number of outstanding Index Warrants, the consent of whose
holders is required for amendment of the Index Warrant Agreement, the
Index Warrant Trust Indenture or the terms of the related Index
Warrants.
Events of Default
Specified events in bankruptcy, insolvency or reorganization of ML&Co. will
constitute Events of Default with respect to Index Warrants having a Minimum
Expiration Value which are issued under an Index Warrant Trust Indenture. Upon
the occurrence of an Event of Default, the holders of 25% of unexercised Index
Warrants may elect to receive a settlement payment or delivery for any
unexercised Index Warrants. Any settlement payment or delivery will immediately
become due to the Index Warrantholders upon any election. Assuming ML&Co. is
able to satisfy its obligations when due under the Index Warrants, the
settlement payment or delivery will be an amount equal to the market value of
the Index Warrants as of the date ML&Co. is notified of the intended
liquidation. The market value of the Index Warrants will be determined by a
nationally recognized securities broker-dealer unaffiliated with ML&Co. and
mutually selected by ML&Co. and the Index Warrant Trustee.
Merger, Consolidation, Sale, Lease or Other Dispositions
ML&Co. may consolidate or merge with or into any other corporation and
ML&Co. may sell, lease or convey all or substantially all of its assets to any
corporation, provided that:
o the resulting corporation, if other than ML&Co., is a corporation
organized and existing under the laws of the United States of America
or any U.S. state and assumes all of ML&Co.'s obligations to:
o pay or deliver the Settlement Value, any Minimum Expiration Value or
any consideration payable or deliverable upon cancellation, if
applicable with respect to all the unexercised Index Warrants; and
o perform and observe all of the obligations and conditions of the Index
Warrant Agreement or Index Warrant Trust Indenture, as the case may
be, to be performed or observed by ML&Co.; and
o ML&Co. or the successor corporation, as the case may be, is not,
immediately after any merger or consolidation, in default under the
Index Warrant Agreement or Index Warrant Trust Indenture, as the case
may be.
Enforceability of Rights by Index Warrantholders
Any Index Warrantholder may, without the consent of the related Index
Warrant Agent, enforce by appropriate legal action, in and for its own behalf,
its right to exercise, and receive payment or delivery for, its Index Warrants.
DESCRIPTION OF PREFERRED STOCK
The following description sets forth certain general terms of preferred
stock which ML&Co. may issue. The terms of any series of the preferred stock
will be described in the applicable prospectus supplement relating to the
preferred stock being offered. The description set forth below and in any
prospectus supplement is not complete, and is subject to, and qualified in its
entirety by reference to, ML&Co.'s Restated Certificate of Incorporation, as
amended (the "Certificate of Incorporation"), which is filed as an exhibit to
the registration statement of which this prospectus is a part, and the
certificate of designations relating to each particular series of the preferred
stock, which was or will be filed with the SEC at or before the issuance of the
series of preferred stock.
Terms of the Preferred Stock
Under the Certificate of Incorporation, ML&Co. is authorized to issue up to
25,000,000 shares of preferred stock, par value $1.00 per share. The Board of
Directors of ML&Co. has the authority, without approval of the stockholders, to
issue all of the shares of preferred stock which are currently authorized in one
or more series and to fix the number of shares and the rights, preferences,
privileges, qualifications, restrictions and limitations of each series. As of
September 25, 1998, ML&Co. had 24,957,500 shares of preferred stock available
for issuance.
ML&Co. has authorized the issuance of shares of Series A junior preferred
stock, par value $1.00 per share (the "Series A Junior Preferred Stock"), of
ML&Co. upon exercise of preferred share purchase rights associated with each
share of common stock outstanding. See "Description of Common Stock--Rights
Agreement".
In addition, as described under "Description of Depositary Shares", ML&Co.,
at its option, instead of offering full shares of any series of preferred stock,
may offer depositary shares evidenced by depositary receipts, each representing
a fraction of a share of the particular series of preferred stock issued and
deposited with a depositary. The fraction of a share of preferred stock which
each depositary share represents will be set forth in the prospectus supplement
relating to the depositary shares.
The applicable prospectus supplement will describe the terms of each series
of preferred stock, including, where applicable, the following:
o the designation, stated value, liquidation preference and number of
shares offered;
o the offering price or prices;
o the dividend rate or rates, or method of calculation, the dividend
periods, the date on which dividends shall be payable and whether such
dividends are cumulative or noncumulative and, if cumulative, the
dates from which dividends begin to cumulate;
o any redemption or sinking fund provisions;
o any conversion or exchange provisions;
o any voting rights;
o to the extent permitted by applicable law, whether the preferred stock
will be issued in certificated or book-entry form;
o whether the preferred stock will be listed on a national securities
exchange;
o information with respect to any book-entry procedures; and
o any additional rights, preferences, privileges, limitations and
restrictions of the preferred stock which are not inconsistent with
the provisions of the Certificate of Incorporation.
The preferred stock will be, when issued against payment, fully paid and
nonassessable. Holders will have no preemptive rights to subscribe for any
additional securities which may be issued by ML&Co. Unless otherwise specified
in the applicable prospectus supplement, the shares of each series of preferred
stock will rank equally with all other outstanding series of preferred stock
issued by ML&Co. as to payment of dividends, other than with respect to
cumulation of dividends, and as to the distribution of assets upon liquidation,
dissolution, or winding up of ML&Co. As of September 25, 1998, there were 42,500
shares of ML&Co. 9% Cumulative Preferred Stock, Series A (the "9% Preferred
Stock") represented by 17,000,000 depositary shares and one Special Voting Share
outstanding. See "--Outstanding Preferred Stock". Each series of preferred stock
will rank senior to the common stock, and any other stock of ML&Co. that is
expressly made junior to that series of preferred stock.
Unless otherwise specified in the applicable prospectus supplement,
Citibank, N.A., will be the transfer agent, dividend disbursing agent and
registrar for the shares of the preferred stock.
Because ML&Co. is a holding company, its rights and the rights of holders
of its securities, including the holders of preferred stock, to participate in
the distribution of assets of any subsidiary of ML&Co. upon its liquidation or
recapitalization will be subject to the prior claims of the subsidiary's
creditors and preferred stockholders, except to the extent ML&Co. may itself be
a creditor with recognized claims against the subsidiary or a holder of
preferred stock of the subsidiary.
Dividends and Distributions
Holders of shares of the preferred stock will be entitled to receive, as,
if and when declared by the Board of Directors of ML&Co., or a duly authorized
committee of the Board of Directors, out of funds legally available for the
payment of dividends, cash dividends at the rate set forth in, or calculated in
accordance with the formula set forth in, the prospectus supplement relating to
the preferred stock being offered.
Dividends on the preferred stock may be cumulative or noncumulative as
provided in the applicable prospectus supplement. Unless otherwise provided in
the applicable prospectus supplement, dividends on the cumulative preferred
stock will accumulate from the date of original issue and will be payable
quarterly in arrears on the dates specified in the applicable prospectus
supplement. Unless otherwise provided in the applicable prospectus supplement,
if any date so specified as a dividend payment date is not a business day,
declared dividends on the preferred stock will be paid on the immediately
succeeding business day, without interest. The applicable prospectus supplement
will set forth the applicable dividend period with respect to a dividend payment
date. If the Board of Directors of ML&Co. or a duly authorized committee of the
Board of Directors, fails to declare a dividend on any series of noncumulative
preferred stock for any dividend period, ML&Co. will have no obligation to pay a
dividend for that period, whether or not dividends on that series of
noncumulative preferred stock are declared for any future dividend period.
Dividends on the preferred stock will be payable to record holders as they
appear on the stock books of ML&Co. on each record date, not more than 30 nor
less than 15 days preceding the applicable payment date, as shall be fixed by
the Board of Directors of ML&Co. or a duly authorized committee of the Board of
Directors.
No dividends will be declared or paid or set apart for payment on the
preferred stock of any series ranking, as to dividends, equally with or junior
to any other series of preferred stock for any period unless dividends have been
or are contemporaneously declared and paid or declared and a sum sufficient for
the payment of those dividends has been set apart for,
o in the case of cumulative preferred stock, all dividend periods
terminating on or before the date of payment of full cumulative
dividends, or
o in the case of noncumulative preferred stock, the immediately
preceding dividend period.
When dividends are not paid in full upon any series of preferred stock, and
any other preferred stock ranking equally as to dividends with that series of
preferred stock, all dividends declared upon shares of that series of preferred
stock and any other preferred stock ranking equally as to dividends will be
declared pro rata so that the amount of dividends declared per share on that
series of preferred stock and any other preferred stock ranking equally as to
dividends will in all cases bear to each other the same ratio that accrued
dividends per share on the shares of that series of preferred stock and the
other preferred stock bear to each other. In the case of noncumulative preferred
stock, any accrued dividends described in the immediately preceding paragraph
will not include any cumulation in respect of unpaid dividends for prior
dividend periods.
Except as provided in the immediately preceding paragraph, unless full
dividends on all outstanding shares of any series of preferred stock have been
declared and paid,
o in the case of a series of cumulative preferred stock, for all past
dividend periods, or
o in the case of noncumulative preferred stock, for the immediately
preceding dividend period,
then:
o ML&Co. may not declare dividends or pay or set aside for payment or
other distribution on any of its capital stock ranking junior to or
equally with that series of preferred stock as to dividends or upon
liquidation, other than dividends or distributions paid in shares of,
or options, warrants or rights to subscribe for or purchase shares of,
the common stock of ML&Co. or other capital stock of ML&Co. ranking
junior to that series of preferred stock as to dividends and upon
liquidation, and
o other than in connection with the distribution or trading of any of
its capital stock, ML&Co. may not redeem, purchase or otherwise
acquire any of its capital stock ranking junior to or equally with
that series of preferred stock as to dividends or upon liquidation,
for any consideration or any moneys paid to or made available for a
sinking fund for the redemption of any shares of any of its capital
stock, except by conversion or exchange for capital stock of ML&Co.
ranking junior to that series of preferred stock as to dividends and
upon liquidation.
Unless otherwise specified in the applicable prospectus supplement, the
amount of dividends payable for any period shorter than a full dividend period
shall be computed on the basis of twelve 30-day months, a 360-day year and the
actual number of days elapsed in any period of less than one month.
As of the date of this prospectus, subsidiaries of ML&Co. have issued
$2.575 billion of perpetual Trust Originated Preferred Securities/SM/ ("TOPrS").
In connection with the issuance of the TOPrS, ML&Co. has agreed, among other
things, that if full distributions on the TOPrS have not been paid or set apart
for payment or if ML&Co. is in default of their related guarantee obligations,
ML&Co., with certain exceptions, will not declare or pay dividends, make
distributions with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to any of its capital stock, including the
preferred stock.
___________________
/SM/ Service mark of Merrill Lynch & Co., Inc.
Liquidation Preference
Upon any voluntary or involuntary liquidation, dissolution or winding up of
ML&Co., the holders of the preferred stock will have preference and priority
over the common stock of ML&Co. and any other class of stock of ML&Co. ranking
junior to the preferred stock upon liquidation, dissolution or winding up, for
payments out of or distributions of the assets of ML&Co. or proceeds from any
liquidation, whether from capital or surplus, of the amount per share set forth
in the applicable prospectus supplement plus all accrued and unpaid dividends,
whether or not earned or declared, to the date of final distribution to such
holders. After any liquidating payment, the holders of preferred stock will be
entitled to no other payments. If, in the case of any liquidation, dissolution
or winding up of ML&Co., the assets of ML&Co. or the proceeds from any
liquidation should be insufficient to make the full liquidation payment in the
amount per share set forth in the applicable prospectus supplement relating to a
series of preferred stock, plus all accrued and unpaid dividends on that
preferred stock, and liquidating payments on any other preferred stock ranking
as to liquidation, dissolution or winding up equally with that preferred stock,
then any assets and proceeds will be distributed among the holders of the
preferred stock and any other preferred stock ratably in accordance with the
respective amounts which would be payable on those shares of preferred stock and
any other preferred stock if all amounts payable were paid in full. In the case
of noncumulative preferred stock, accrued and unpaid dividends will not include
cumulation of unpaid dividends from prior dividend periods. A consolidation or
merger of ML&Co. with one or more corporations will not be deemed to be a
liquidation, dissolution or winding up, voluntary or involuntary, of ML&Co.
Redemption
If specified in the prospectus supplement relating to a series of preferred
stock being offered, ML&Co. may, at its option, at any time or from time to time
on not less than 30 nor more than 60 days notice, redeem that series of
preferred stock in whole or in part at the redemption prices and on the dates
set forth in the applicable prospectus supplement.
If less than all outstanding shares of a series of preferred stock are to
be redeemed, the selection of the shares to be redeemed shall be determined by
lot or pro rata as may be determined by the Board of Directors of ML&Co. or a
duly authorized committee of the Board of Directors to be equitable. From and
after the redemption date, unless ML&Co. is in default in providing for the
payment of the redemption price, dividends shall cease to accrue on the shares
of that series of preferred stock called for redemption and all rights of the
holders shall cease, other than the right to receive the redemption price.
Voting Rights
Unless otherwise described in the applicable prospectus supplement, holders
of the preferred stock will have no voting rights except as set forth below or
as otherwise required by law.
Whenever dividends payable on the preferred stock are in arrears for a
number of dividend periods, whether or not consecutive, which in the aggregate
is equivalent to six calendar quarters, the holders of outstanding shares of the
preferred stock, voting as a class with holders of shares of all other series of
preferred stock ranking equally with the preferred stock either as to dividends
or the distribution of assets upon liquidation, dissolution or winding up and
upon which like voting rights have been conferred and are exercisable, will be
entitled to vote for the election of two additional directors on the terms set
forth below. These voting rights will continue, in the case of any series of
cumulative preferred stock, until all past dividends accumulated on shares of
cumulative preferred stock are paid in full and, in the case of noncumulative
preferred stock, until all dividends on shares of noncumulative preferred stock
are paid in full for at least one calendar year. Upon payment in full of these
dividends, the voting rights will terminate except as expressly provided by law.
These voting rights are subject to re-vesting in the event of each and every
subsequent default in the payment of dividends. Holders of all series of
preferred stock which are granted these voting rights and which rank equally
with the preferred stock will vote as a class, and, unless otherwise specified
in the applicable prospectus supplement, each holder of shares of the preferred
stock will have one vote for each share of stock held and each other series will
have the number of votes, if any, for each share of stock held as may be granted
to them. In the event that the holders of shares of the preferred stock are
entitled to vote as described in this paragraph, the Board of Directors of
ML&Co. will be increased by two directors, and the holders of the preferred
stock will have the exclusive right as members of that class, as outlined above,
to elect two directors at the next annual meeting of stockholders.
Upon termination of the right of the holders of the preferred stock to vote
for directors as discussed in the preceding paragraph, the term of office of all
directors then in office elected by those holders will terminate immediately.
Whenever the term of office of the directors elected by those holders ends and
the related special voting rights expire, the number of directors will
automatically be decreased to the number of directors as would otherwise
prevail.
So long as any shares of preferred stock remain outstanding, ML&Co. shall
not, without the affirmative vote or consent of the holders of at least
two-thirds of the shares of the preferred stock outstanding at the time, voting
as a class with all other series of preferred stock ranking equally with the
preferred stock either as to dividends or the distribution of assets upon
liquidation, dissolution or winding up and upon which like voting rights have
been conferred and are exercisable, given in person or by proxy, either in
writing or at a meeting:
o authorize, create or issue, or increase the authorized or issued
amount of, any class or series of stock ranking senior to the
preferred stock with respect to payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up of
ML&Co.; or
o amend, alter or repeal, whether by merger, consolidation or otherwise,
the provisions of the Certificate of Incorporation or the certificate
of designations of the preferred stock so as to materially and
adversely affect any right, preference, privilege or voting power of
the preferred stock or the holders of the preferred stock;
provided, however, that any increase in the amount of authorized preferred stock
or the creation and issuance, or an increase in the authorized or issued amount,
of other series of preferred stock, or any increase in the amount of authorized
shares of preferred stock, in each case ranking equally with or junior to the
preferred stock with respect to the payment of dividends and the distribution of
assets upon liquidation, dissolution or winding of ML&Co. up will not be deemed
to materially and adversely affect these rights, preferences, privileges or
voting powers.
The foregoing voting provisions will not apply if all outstanding shares of
preferred stock have been redeemed or sufficient funds have been deposited in
trust to effect such a redemption which is scheduled to be consummated within
three months after the time that such rights would otherwise be exercisable.
Conversion or Exchange Rights
The prospectus supplement relating to a series of preferred stock that is
convertible or exchangeable will state the terms on which shares of that series
are convertible or exchangeable into common stock, another series of preferred
stock or debt securities.
Outstanding Preferred Stock
At September 25, 1998, there were 42,500 shares of 9% Preferred Stock
represented by 17,000,000 depositary shares and one Special Voting Share
outstanding.
9% Preferred Stock
The 9% Preferred Stock has preference over ML&Co.'s common stock and the
Series A Junior Preferred Stock issuable under the Rights Plan described under
"Description of Common Stock" with respect to the payment of dividends and the
distribution of assets in the event of liquidation, dissolution or winding up of
ML&Co. Holders of the 9% Preferred Stock do not have any preemptive rights to
subscribe for any additional securities which may be issued by ML&Co. Dividends
on the 9% Preferred Stock are cumulative and payable quarterly at the rate per
annum of 9% of the $10,000 liquidation preference per share. Holders of the 9%
Preferred Stock have no voting rights except as set forth above under "--Voting
Rights" above. In the event of any voluntary or involuntary liquidation,
dissolution or winding up of ML&Co., the holders of outstanding shares of 9%
Preferred Stock are entitled to receive out of assets of ML&Co. available for
distribution to stockholders a distribution of $10,000 per share, plus
accumulated and unpaid dividends, if any. The 9% Preferred Stock is not
redeemable before December 30, 2004. On and after that date, the 9% Preferred
Stock is redeemable at the option of ML&Co., in whole at any time or from time
to time in part, upon not less than 30 nor more than 60 days notice, at a
redemption price of $10,000 per share, plus accumulated and unpaid dividends, if
any.
Special Voting Stock
In connection with the acquisition of Midland Walwyn Inc. by ML&Co. in
August 1998, ML&Co. issued a single share of preferred stock with special voting
rights (the "Special Voting Share"), under the terms of a Voting and Exchange
Trust Agreement entered into by Merrill Lynch & Co., Canada Ltd. ("ML Canada"),
ML&Co. and Montreal Trust Company of Canada, as trustee (the "Voting Trust
Agreement"). The Special Voting Share possesses a number of votes equal to the
number of exchangeable shares of ML Canada (the "Exchangeable Shares") issued
and outstanding from time to time that are not owned by ML&Co. or its
affiliates, which votes may be exercised for the election of directors and on
all other matters submitted to a vote of ML&Co.'s stockholders. The holders of
ML&Co.'s common stock and the holder of the Special Voting Share vote together
as a class on all matters. See "Description of Common Stock--Voting Rights". The
Special Voting Share was issued to the trustee under the Voting Trust Agreement.
The holder of the Special Voting Share is not entitled to receive dividends,
and, in the event of any liquidation, dissolution or winding up of ML&Co., will
receive an amount equal to the par value of the Special Voting Share. When the
Special Voting Share has no votes attached to it because there are no
Exchangeable Shares outstanding not owned by ML&Co. or any of its affiliates,
the Special Voting Share will cease to have any rights.
DESCRIPTION OF DEPOSITARY SHARES
ML&Co. may issue depositary receipts evidencing depositary shares, each of
which will represent a fraction of a share of preferred stock. Shares of
preferred stock of each class or series represented by depositary shares will be
deposited under Deposit Agreements to be entered into among ML&Co., a bank or
trust company, as depositary (the "Depositary"), and the holders from time to
time of the depositary receipts. A copy of the form of Deposit Agreement,
including the form of certificates representing the depositary receipts (the
"Depositary Receipt Certificates"), is filed as an exhibit to the registration
statement of which this prospectus is a part. The following summaries of certain
provisions of the Deposit Agreements and the Depositary Receipt Certificates are
not complete, are subject to, and are qualified in their entirety by reference
to, all the provisions of the Deposit Agreement and the Depositary Receipt
Certificates, respectively, including the definitions of terms.
Terms of the Depositary Shares
The depositary shares will be evidenced by depositary receipts issued under
the applicable Deposit Agreement. Immediately following the issuance and
delivery of the preferred stock by ML&Co. to the Depositary, ML&Co. will cause
the Depositary to issue, on behalf of ML&Co., the depositary receipts. Subject
to the terms of the applicable Deposit Agreement, each holder of a depositary
receipt will be entitled, in proportion to the fraction of a share of preferred
stock represented by the applicable depositary share, to all the rights and
preferences of the preferred stock being represented , including dividend,
voting, conversion, redemption and liquidation rights, all as will be set forth
in the prospectus supplement relating to the depositary receipts being offered.
The depositary shares will have the dividend, liquidation, redemption,
voting and conversion or exchange rights set forth below unless otherwise
specified in the applicable prospectus supplement. The applicable prospectus
supplement will describe the terms of the specific issue of the depositary
shares being offered, the Deposit Agreement relating to the depositary shares
and the Depositary Receipt Certificates evidencing the depositary shares,
including the following:
o the designation, stated value and liquidation preference of the
depositary shares and the number of shares offered;
o the offering price or prices;
o the dividend rate or rates, or method of calculation, the dividend
periods, the dates on which dividends will be payable and whether
dividends are cumulative or noncumulative and, if cumulative, the
dates from which dividends will begin to cumulate;
o any redemption or sinking fund provisions;
o any conversion or exchange provisions;
o any material risk factors relating to the depositary shares;
o the identity of the Depositary; and
o any other terms of the depositary shares which are not inconsistent
with the provisions of the Deposit Agreement.
Book-Entry Procedures
Except as may otherwise be provided in the applicable prospectus
supplement, the depositary shares will be issued in the form of global
Depositary Receipt Certificates, registered in the name of a depositary or its
nominee. Except as may otherwise be provided in the applicable prospectus
supplement, beneficial owners will not be entitled to receive definitive
certificates representing depositary shares unless the depositary is unwilling
or unable to continue as depositary or ML&Co. decides to have the depositary
shares represented by definitive certificates. A beneficial owner's interest in
a depositary share will be recorded on or through the records of the brokerage
firm or other entity that maintains the beneficial owner's account. In turn, the
total number of depositary shares held by an individual brokerage firm for its
clients will be maintained on the records of the depositary in the name of the
brokerage firm or its agent. Transfer of ownership of any depositary share will
be effected only through the selling beneficial owner's brokerage firm.
Dividends and Other Distributions
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the preferred stock to the record holders
of depositary receipts in proportion to the number of depositary shares owned by
those holders, subject to the obligations of holders to file proofs,
certificates and other information and to pay certain charges and expenses to
the Depositary.
In the event of a distribution in respect of the preferred stock other than
in cash, the Depositary will distribute property it receives to the record
holders of the depositary shares, subject to certain obligations of holders to
file proofs, certificates and other information and to pay certain charges and
expenses to the Depositary, unless the Depositary, after consultation with
ML&Co., determines that it is not feasible to make the distribution, in which
case the Depositary may, with the approval of ML&Co., sell any property and
distribute the net proceeds from the sale to the holders.
Withdrawal of Stock
Unless the related depositary shares have been previously called for
redemption, upon surrender of the depositary receipts at the corporate trust
office of the Depositary, the holder of the depositary shares will be entitled
to delivery, at the corporate trust office of the Depositary to or upon his
order, of the number of whole shares of the preferred stock and any money or
other property represented by the depositary shares. Holders of depositary
receipts will be entitled to receive whole shares of the preferred stock on the
basis of the proportion of preferred stock represented by each depositary share
as specified in the applicable prospectus supplement, provided, however, once
these holders receive whole shares of preferred stock, they will not be entitled
to receive depositary shares representing the shares of preferred stock. If the
depositary receipts delivered by the holder evidence a number of depositary
shares in excess of the number of depositary shares representing the number of
whole shares of preferred stock to be withdrawn, the Depositary will deliver to
the holder at the same time a new depositary receipt evidencing the excess
number of depositary shares. In no event will fractional shares of preferred
stock be delivered upon surrender of depositary receipts to the Depositary.
Redemption of Depositary Shares
Whenever ML&Co. redeems shares of preferred stock held by the Depositary,
the Depositary will redeem as of the same redemption date the number of
depositary shares representing shares of the preferred stock so redeemed,
provided ML&Co. has paid in full to the Depositary the redemption price of the
preferred stock to be redeemed plus an amount equal to any accumulated and
unpaid dividends on the preferred stock to the date fixed for redemption. The
redemption price per depositary share will be equal to the redemption price and
any other amounts per share payable with respect to the preferred stock
multiplied by the fraction of a share of preferred stock represented by one
depositary share. If less than all the depositary shares are to be redeemed, the
depositary shares to be redeemed will be selected by the lot or pro rata as may
be determined by the Depositary.
After the date fixed for redemption, depositary shares called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of depositary shares called for redemption will cease, except the right
to receive any moneys payable upon redemption and any money or other property to
which the holders of the depositary shares were entitled upon redemption upon
surrender to the Depositary of the depositary receipts evidencing the depositary
shares.
Voting the Preferred Stock
Upon receipt of notice of any meeting at which the holders of the preferred
stock are entitled to vote, the Depositary will mail the information contained
in the notice of meeting to the record holders of the depositary receipts
relating to that preferred stock. The record date for the depositary receipts
relating to the preferred stock will be the same date as the record date for the
preferred stock. Each record holder of the depositary shares on the record date
will be entitled to instruct the Depositary as to the exercise of the voting
rights pertaining to the amount of preferred stock represented by that holder's
depositary receipts. The Depositary will endeavor, insofar as practicable, to
vote the amount of preferred stock represented by the depositary shares in
accordance with those instructions, and ML&Co. will agree to take all reasonable
action which may be deemed necessary by the Depositary in order to enable the
Depositary to do so. The Depositary will not vote any shares of preferred stock
to the extent it does not receive specific instructions from the holders of
depositary receipts representing shares of preferred stock.
Exchange of Preferred Stock
Whenever ML&Co. exchanges all of the shares of a series of preferred stock
held by the Depositary for debt securities, common stock or other shares of
preferred stock, the Depositary will exchange as of the same exchange date the
number of depositary shares representing all of the shares of the preferred
stock so exchanged for debt securities, common stock or other shares of
preferred stock, provided ML&Co. has issued and deposited with the Depositary,
debt securities, common stock or other shares of preferred stock, as applicable,
for all of the shares of the preferred stock to be exchanged. The exchange rate
per depositary share will be equal to the exchange rate per share of preferred
stock multiplied by the fraction of a share of preferred stock represented by
one depositary share, plus all money and other property, if any, represented by
those depositary shares, including all amounts paid by ML&Co. in respect of
dividends which on the exchange date have accumulated on the shares of preferred
stock to be so exchanged and have not already been paid.
Conversion of Preferred Stock
The depositary shares are not convertible or exchangeable into common stock
or any other securities or property of ML&Co. Nevertheless, if so specified in
the applicable prospectus supplement, each depositary receipt may be
surrendered by its holder to the Depositary with written instructions to the
Depositary to instruct ML&Co. to cause conversion or exchange of the preferred
stock represented by the depositary shares evidenced by that depositary receipt
into whole shares of common stock, other shares of preferred stock or debt
securities of ML&Co. ML&Co. has agreed that upon the receipt of any instructions
to convert or exchange any depositary shares and the payment of any fees or
other amounts applicable to any conversion or exchange, it will convert or
exchange the depositary shares using the same procedures as those provided for
delivery of preferred stock to effect conversions or exchange. If the depositary
shares represented by a depositary receipt are converted in part only, a new
depositary receipt or receipts will be issued for any depositary shares not
converted or exchanged.
Amendment and Termination of the Deposit Agreement
The form of depositary receipt evidencing the depositary shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between ML&Co. and the Depositary. However, any amendment that materially and
adversely alters the rights of the holders of depositary receipts will not be
effective unless it has been approved by the holders of at least a majority of
the depositary shares then outstanding. No amendment to the form of depositary
receipt or any provision of the Deposit Agreement relating to or affecting
rights to receive dividends or distributions or voting, redemption or conversion
rights will be effective unless approved by the holders of at least two-thirds
of the depositary shares then outstanding.
ML&Co. may terminate the Deposit Agreement at any time upon 60 days prior
written notice to the Depositary, in which case the Depositary will deliver to
the record holders, upon surrender of the depositary receipts, the number of
whole or fractional shares of preferred stock as is represented by those
depositary receipts. The Deposit Agreement will automatically terminate if:
o all outstanding depositary shares have been redeemed,
o all shares of preferred stock deposited with the Depositary in
accordance with the terms of the Deposit Agreement and all money and
other property relating to those shares of preferred stock have been
withdrawn in accordance with the terms of the Deposit Agreement, or
o there has been a final distribution in respect of the preferred stock
in connection with any liquidation, dissolution or winding up of
ML&Co. and the distribution has been distributed to the holders of
depositary receipts.
Charges of Depositary
ML&Co. will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. ML&Co. will
pay the fees and expenses of the Depositary in connection with the performance
of its duties under the Deposit Agreement. Holders of depositary receipts will
pay transfer and other taxes and governmental charges and any other charges that
are expressly provided in the Deposit Agreement to be for their accounts. The
Depositary may refuse to effect any transfer of a depositary receipt or any
withdrawals of preferred stock evidenced by a depositary receipt until all taxes
and charges with respect to the depositary receipt or preferred stock are paid
by their holders.
Resignation and Removal of Depositary
The Depositary may resign at any time by delivering to ML&Co. notice of its
election to do so, and ML&Co. may remove the Depositary at any time. Any
resignation or removal of the Depositary will take effect upon the appointment
of a successor Depositary, which successor Depositary must be appointed within
60 days after delivery of the notice of resignation or removal and must be a
bank or trust company having its principal office in the United States and
having a combined capital and surplus of at least $50,000,000.
Notices
The Depositary will forward to holders of depositary receipts all reports
and communications received from ML&Co. and the Depositary and which ML&Co. is
required to furnish to holders of the related underlying preferred stock. The
Depositary will also, promptly after its receipt, transmit to the holders of
depositary receipts, copies of all notices and reports required by law, the
rules of any national securities exchange or the Certificate of Incorporation to
be furnished to the record holders of depositary receipts.
Limitation of Liability
Neither the Depositary nor ML&Co. will assume any obligation or be subject
to any liability under the Deposit Agreement to holders of depositary receipts
other than for negligence, willful misconduct or bad faith. The Depositary will
not be obligated to prosecute or defend any legal proceeding in respect of any
depositary shares or any shares of preferred stock unless it is furnished with
satisfactory indemnification. ML&Co. and the Depositary may rely on written
advice of counsel or accountants, or information provided by persons presenting
shares of preferred stock for deposit, holders of depositary receipts or other
persons believed to be competent and on documents believed to be genuine.
Neither the Depositary nor ML&Co. will be liable if it is prevented from or
delayed, by law, by provision of the Certificate of Incorporation or any
circumstances beyond its control, in performing its obligations under the
Deposit Agreement.
DESCRIPTION OF PREFERRED STOCK WARRANTS
ML&Co. may issue warrants for the purchase of preferred stock ("Preferred
Stock Warrants"). Each series of Preferred Stock Warrants is to be issued under
a Preferred Stock Warrant Agreement to be entered into between ML&Co. and a bank
or trust company, as Preferred Stock Warrant Agent, as described in the
applicable prospectus supplement relating to the Preferred Stock Warrants being
offered. A copy of the form of Preferred Stock Warrant Agreement, including the
form of warrant certificates representing the Preferred Stock Warrants (the
"Preferred Stock Warrant Certificates"), is filed as an exhibit to the
registration statement of which this prospectus is a part. The following
summaries of certain provisions of the Preferred Stock Warrant Agreement and
Preferred Stock Warrant Certificates are not complete and are subject to and are
qualified in their entirety by reference to, all the provisions of the Preferred
Stock Warrant Agreement and the Preferred Stock Warrant Certificates,
respectively, including the definitions of terms.
Terms of the Preferred Stock Warrants
The applicable prospectus supplement will describe the terms of the
specific issue of Preferred Stock Warrants being offered thereby, the Preferred
Stock Warrant Agreement relating to the Preferred Stock Warrants and the
Preferred Stock Warrant Certificates representing the Preferred Stock Warrants,
including the following:
o the offering price or prices;
o designation, aggregate number and terms of the series of preferred
stock that may be purchased upon exercise of the Preferred Stock
Warrants and the minimum number of Preferred Stock Warrants that are
exercisable;
o any designation and terms of the Securities with which the Preferred
Stock Warrants are being offered and the number of Preferred Stock
Warrants being offered with each Security;
o any date on and after which the Preferred Stock Warrants and the
related Securities will be transferable separately;
o the number and stated values of the series of preferred stock that may
be purchased upon exercise of each Preferred Stock Warrant and the
price at which the shares of preferred stock of that series may be
purchased upon exercise, and events or conditions under which the
number of shares that may be purchased may be adjusted;
o the date on which the right to exercise the Preferred Stock Warrants
will begin and the date on which the right to exercise will expire;
o any circumstances that will cause the Preferred Stock Warrants to be
deemed to be automatically exercised;
o any material risk factors relating to the Preferred Stock Warrants;
o the identity of the Preferred Stock Warrant Agent; and
o any other terms of the Preferred Stock Warrants which are not
inconsistent with the provisions of the Preferred Stock Warrant
Agreement.
Preferred Stock Warrant Certificates may be exchanged for new Preferred
Stock Warrant Certificates of different denominations, may, if in registered
form, be presented for registration of transfer, and may be exercised at the
corporate trust office of the Preferred Stock Warrant Agent or any other office
indicated in the applicable prospectus supplement. Before the exercise of any
Preferred Stock Warrant, a holder will not have the rights of a holder of shares
of the preferred stock that may be purchased upon exercise of the Preferred
Stock Warrant, including the right to receive payment of dividends, if any, on
the underlying preferred stock or the right to vote the underlying preferred
stock.
Prospective purchasers of Preferred Stock Warrants should be aware that
special U.S. Federal income tax, accounting and other considerations may be
applicable to instruments such as Preferred Stock Warrants. The prospectus
supplement relating to any issue of Preferred Stock Warrants will describe these
considerations.
Book-Entry Procedures
Except as may otherwise be provided in the applicable prospectus
supplement, the Preferred Stock Warrants will be issued in the form of global
Preferred Stock Warrant Certificates, registered in the name of a depositary or
its nominee. Except as may otherwise be provided in the applicable prospectus
supplement, beneficial owners will not be entitled to receive definitive
certificates representing Preferred Stock Warrants unless the depositary is
unwilling or unable to continue as depositary, specified events of bankruptcy or
insolvency occur with respect to ML&Co. or ML&Co. decides to have the Preferred
Stock Warrants represented by definitive certificates. A beneficial owner's
interest in a Preferred Stock Warrant will be recorded on or through the records
of the brokerage firm or other entity that maintains the beneficial owner's
account. In turn, the total number of Preferred Stock Warrants held by an
individual brokerage firm for its clients will be maintained on the records of
the depositary in the name of the brokerage firm or its agent. Transfer of
ownership of any Preferred Stock Warrant will be effected only through the
selling beneficial owner's brokerage firm.
Exercise of Preferred Stock Warrants
Each Preferred Stock Warrant will entitle its holder to purchase a number
of shares of preferred stock at the exercise price described in the applicable
prospectus supplement. After the close of business on the date the right to
exercise the Preferred Stock Warrants expires, or any later date if extended by
ML&Co., unexercised Preferred Stock Warrants will become void.
The Preferred Stock Warrants may be exercised in the manner set forth in
the applicable prospectus supplement. Upon receipt of payment and the Preferred
Stock Warrant Certificate properly completed and duly executed at the corporate
trust office of the Preferred Stock Warrant Agent or any other office indicated
in the applicable prospectus supplement, ML&Co. will, as soon as practicable,
issue and deliver the shares of preferred stock purchased upon exercise. If less
than all of the Preferred Stock Warrants represented by any Preferred Stock
Warrant Certificate are exercised, a new Preferred Stock Warrant Certificate
will be issued for the remaining number of Preferred Stock Warrants.
Listing
ML&Co. may list an issue of Preferred Stock Warrants on a national
securities exchange. Any listing will be specified in the applicable prospectus
supplement.
Modifications
ML&Co. and the Preferred Stock Warrant Agent may amend any Preferred Stock
Warrant Agreement and the terms of the related Preferred Stock Warrants, without
the consent of the holders of the Preferred Stock Warrants, for the purpose of
curing any ambiguity, or of curing, correcting or supplementing any defective or
inconsistent provision, or in any other manner which ML&Co. may deem necessary
or desirable and which will not materially and adversely affect the interests of
the Preferred Stock Warrantholders.
ML&Co. and the Preferred Stock Warrant Agent also may amend any Preferred
Stock Warrant Agreement and the terms of the related Preferred Stock Warrants,
with the consent of the holders of not less than a majority in number of the
then outstanding unexercised Preferred Stock Warrants affected by the amendment.
However, without the consent of each of the Preferred Stock Warrantholders
affected, no amendment will be effective that:
o shortens the period of time during which the Preferred Stock Warrants
may be exercised;
o otherwise materially and adversely affects the exercise rights of the
Preferred Stock Warrantholders; or
o reduces the number of outstanding Preferred Stock Warrants the consent
of whose holders is required to approve an amendment of the Preferred
Stock Warrant Agreement or the terms of the related Preferred Stock
Warrants.
Enforceability of Rights by Preferred Stock Warrantholders
Any Preferred Stock Warrantholder may, without the consent of the related
Preferred Stock Warrant Agent, enforce by appropriate legal action, in and of
its own behalf, its right to exercise its Preferred Stock Warrants.
DESCRIPTION OF COMMON STOCK
The following description sets forth the general terms of common stock
which may be issued by ML&Co. The description set forth below and in any
prospectus supplement is not complete, is subject to, and is qualified in its
entirety by reference to, the Certificate of Incorporation which is filed as an
exhibit to the registration statement of which this prospectus is a part.
Terms of the Common Stock
Under the Certificate of Incorporation, ML&Co. is authorized to issue up to
1,000,000,000 shares of common stock, par value $1.331/3 per share. As of
December 3, 1998, there were 355,360,925 shares of common stock outstanding. The
common stock is traded on the New York Stock Exchange under the symbol "MER" and
also on the Chicago Stock Exchange, the Pacific Exchange, the Paris Bourse, the
London Stock Exchange and the Tokyo Stock Exchange.
The common stock has the dividend, voting, liquidation and preemptive
rights set forth below unless otherwise specified in the prospectus supplement
being used to offer the common stock. The applicable prospectus supplement will
describe the terms of the common stock including, where applicable, the
following:
o the number of shares to be offered;
o the offering price or prices;
o to the extent permitted by applicable law, whether the Common Stock
will be issued in certificated or book-entry form;
o information with respect to any book-entry procedures; and
o any additional terms of the common stock which are not inconsistent
with the provisions of the Certificate of Incorporation.
The common stock will be, when issued against payment therefor, fully paid
and nonassessable. Holders of the common stock will have no preemptive rights to
subscribe for any additional securities which may be issued by ML&Co. The rights
of holders of common stock will be subject to, and may be adversely affected by,
the rights of holders of any preferred stock that has been issued and may be
issued in the future. As of September 25, 1998, 17,000,000 depositary shares,
each representing a one-four-hundredth interest in a share of 9% Preferred
Stock, and one Special Voting Share were outstanding. See "Description of
Preferred Stock--Outstanding Preferred Stock" for a description of that
preferred stock. The Board of Directors of ML&Co. may issue additional shares
of preferred stock to obtain additional financing, in connection with
acquisitions, to officers, directors and employees of ML&Co. and its
subsidiaries pursuant to benefit plans or otherwise and for other proper
corporate purposes.
ML&Co. is the principal transfer agent for the common stock.
Because ML&Co. is a holding company, its rights, and the rights of holders
of its securities, including the holders of common stock, to participate in the
distribution of assets of any subsidiary of ML&Co. upon the subsidiary's
liquidation or recapitalization will be subject to the prior claims of the
subsidiary's creditors and preferred stockholders, except to the extent ML&Co.
may itself be a creditor with recognized claims against the subsidiary or a
holder of preferred stock of the subsidiary.
Dividends
ML&Co. may pay dividends on the common stock out of funds legally available
for the payment of dividends as, if and when declared by the Board of Directors
of ML&Co. or a duly authorized committee of the Board of Directors.
As of the date of this prospectus, subsidiaries of ML&Co. have issued
$2.575 billion of perpetual TOPrS. In connection with the issuance of the TOPrS,
ML&Co. has agreed, among other things, that if full distributions on the TOPrS
have not been paid or set apart for payment or ML&Co. is in default of its
related guarantee obligations, ML&Co., with certain exceptions, will not declare
or pay dividends, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to any of its capital stock,
including the common stock.
Liquidation Rights
Upon any voluntary or involuntary liquidation, dissolution, or winding up
of ML&Co., the holders of its common stock will be entitled to receive, after
payment of all of its debts, liabilities and of all sums to which holders of any
preferred stock may be entitled, all of the remaining assets of ML&Co.
Voting Rights
Except as described under "Description of Preferred Stock--Outstanding
Preferred Stock", the holders of the common stock currently possess exclusive
voting rights in ML&Co. The Board of Directors of ML&Co. may, however, give
voting power to any preferred stock which may be issued in the future. Each
holder of common stock is entitled to one vote per share with respect to all
matters. There is no cumulative voting in the election of directors. Actions
requiring approval of stockholders generally require approval by a majority vote
of outstanding shares.
The Board of Directors of ML&Co. is currently comprised of 14 directors,
divided into three classes, the precise number of members to be fixed from time
to time by the Board of Directors. The directors of the class elected at each
annual election hold office for a term of three years, with the term of each
class expiring at successive annual meetings of stockholders.
Rights to Purchase Series A Junior Preferred Stock
On December 2, 1997, the Board of Directors of ML&Co. approved and adopted
the Amended and Restated Rights Agreement, which amends and restates the plan
that had originally been adopted in December 1987 (the "Rights Agreement").
Under the Rights Agreement, preferred purchase rights were distributed to
holders of common stock. The preferred purchase rights will separate from the
common stock ten days following the earlier of:
o an announcement of an acquisition by a person or group of 15% or more
of the outstanding common stock of ML&Co.; or
o the commencement of a tender or exchange offer for 15% or more of the
shares of common stock of ML&Co. outstanding.
The preferred purchase rights are attached to each outstanding share of
common stock and will attach to all subsequently issued shares, including common
stock that may be offered by ML&Co. pursuant to an applicable prospectus
supplement. The preferred purchase rights entitle the holder to purchase
fractions of a share ("Units") of Series A Junior Preferred Stock at an exercise
price of $300 per Unit, subject to adjustment from time to time as provided in
the Rights Agreement. The exercise price and the number of Units issuable are
subject to adjustment to prevent dilution.
If, after the preferred purchase rights have separated from the common
stock,
o ML&Co. is the surviving corporation in a merger with an acquiring
party,
o a person becomes the beneficial owner of 15% or more of the common
stock,
o an acquiring party engages in one or more defined "self-dealing"
transactions, or
o an event occurs which results in such acquiring party's ownership
interest being increased by more than 1%,
then, in each case, each holder of a preferred purchase right will have the
right to purchase Units of Series A Junior Preferred Stock having a value equal
to two times the exercise price of the preferred purchase right. In addition,
preferred purchase rights held by or transferred in certain circumstances by an
acquiring party may immediately become void.
In the event that, at any time,
o ML&Co. is acquired in a merger or other business combination
transaction and ML&Co. is not the surviving corporation, or
o any person consolidates or merges with ML&Co. and all or part of
ML&Co.'s common stock is converted or exchanged for securities, cash
or property of any other person or
o 50% or more of ML&Co.'s assets or earning power is sold or
transferred,
each holder of a right shall thereafter have the right to purchase, upon
exercise, common stock of the acquiring party having a value equal to two times
the exercise price of the preferred purchase right.
The preferred purchase rights expire on December 2, 2007. The preferred
purchase rights are redeemable at the option of a majority of the independent
directors of ML&Co. at $.01 per right at any time until the tenth day following
an announcement of the acquisition of 15% or more of the common stock.
The foregoing provisions of the Rights Agreement may have the effect of
delaying, deferring or preventing a change in control of ML&Co.
The Certificate of Designations of the Series A Junior Preferred Stock
provides that the holders of Units of the Series A Junior Preferred Stock will
be entitled to receive quarterly dividends in an amount to be determined in
accordance with the formula set forth in the related Certificate of
Designations. These dividend rights are cumulative. The Series A Junior
Preferred Stock rank junior in right of payment of dividends to the 9% Preferred
Stock and to all other preferred stock issued by ML&Co., unless the terms of any
other preferred stock provide otherwise. The holders of Units of the Series A
Junior Preferred Stock will have one vote per Unit on all matters submitted to
the stockholders of ML&Co., subject to adjustment. If at any time dividends on
any Units of the Series A Junior Preferred Stock are in arrears for a number of
periods, whether or not consecutive, which in the aggregate is equivalent to six
calendar quarters, then during that period of default, the holders of all Units,
voting separately as a class, will have the right to elect two directors to the
Board of Directors of ML&Co. Additionally, whenever quarterly dividends or other
dividends or distributions payable on the Series A Junior Preferred Stock are in
arrears, ML&Co. shall not, among other things, declare or pay dividends on or
make any other distributions on, or redeem or purchase or otherwise acquire for
consideration any shares or capital stock of ML&Co. which ranks junior in right
of payment to the Series A Junior Preferred Stock, including the common stock.
In the event of any voluntary or involuntary liquidation, dissolution or winding
up of ML&Co., the holders of outstanding Units of the Series A Junior Preferred
Stock will be entitled to receive a distribution in an amount to be determined
in accordance with the formula set forth in the Series A Certificate of
Designations before the payment of any distribution to the holders of common
stock. The Units of Series A Junior Preferred Stock are not redeemable. As of
the date of this prospectus, there are no shares of Series A Junior Preferred
Stock outstanding.
Certain Charter Provisions
The Certificate of Incorporation provides that, except under specified
circumstances, ML&Co. may not merge or consolidate with any one or more
corporations, joint-stock associations or non-stock corporations; sell, lease or
exchange all or substantially all of its property and assets or dissolve without
the affirmative vote of two-thirds of the entire Board of Directors of ML&Co.
and the holders of a majority of the outstanding shares of common stock entitled
to vote. Additionally, the Certificate of Incorporation provides that specified
business combinations involving ML&Co. and an interested stockholder or an
affiliate or associate of such stockholder must be approved by 80% of the voting
power of the outstanding shares of capital stock of ML&Co. entitled to vote
generally in the election of directors. The vote of 80% of the voting power of
the voting stock referred to in the immediately preceding sentence is required
for amendment of these provisions. The Certificate of Incorporation also
provides that only the Board of Directors of ML&Co. has the authority to call
special stockholder meetings.
The foregoing provisions of the Certificate of Incorporation may have the
effect of delaying, deferring or preventing a change in control of ML&Co.
DESCRIPTION OF COMMON STOCK WARRANTS
ML&Co. may issue warrants for the purchase of common stock ("Common Stock
Warrants"). Each series of Common Stock Warrants will be issued under a Common
Stock Warrant Agreement to be entered into between ML&Co. and a bank or trust
company, as Common Stock Warrant Agent, all as set forth in the applicable
prospectus supplement. A copy of the form of Common Stock Warrant Agreement,
including the form of warrant certificates representing the Common Stock
Warrants (the "Common Stock Warrant Certificates"), reflecting the provisions to
be included in the Common Stock Warrant Agreements that will be entered into
with respect to particular offerings of Common Stock Warrants, is filed as an
exhibit to the registration statement of which this prospectus is a part. The
following summaries of certain provisions of the Common Stock Warrant Agreement
and Common Stock Warrant Certificates are not complete, are subject to, and are
qualified in their entirety by reference to, all of the provisions of the Common
Stock Warrant Agreement and the Common Stock Warrant Certificates, including the
definitions of terms.
Terms of the Common Stock Warrants
The applicable prospectus supplement will describe the terms of the Common
Stock Warrants being offered, the Common Stock Warrant Agreement relating to the
Common Stock Warrants and the Common Stock Warrant Certificates, including the
following:
o the offering price or prices;
o the aggregate number of shares of common stock that may be purchased
upon exercise of the Common Stock Warrants and minimum number of
Common Stock Warrants that are exercisable;
o the number of Securities, if any, with which the Common Stock Warrants
are being offered and the number of the Common Stock Warrants being
offered with each Security;
o the date on and after which the Common Stock Warrants and the related
Securities, if any, will be transferable separately;
o the number of shares of common stock purchasable upon exercise of each
Common Stock Warrant and the price at which the common stock may be
purchased upon exercise, and events or conditions under which the
number of shares purchasable may be subject to adjustment;
o the date on which the right to exercise the Common Stock Warrants will
begin and the date on which the right to exercise will expire;
o the circumstances, if any, which will cause the Common Stock Warrants
to be deemed to be automatically exercised;
o any material risk factors relating to the Common Stock Warrants;
o the identity of the Common Stock Warrant Agent; and
o any other terms of such Common Stock Warrants which are not
inconsistent with the provisions of the Common Stock Warrant
Agreement).
Common Stock Warrant Certificates may be exchanged for new Common Stock
Warrant Certificates of different denominations, if in registered form, may be
presented for registration of transfer, and may be exercised at the corporate
trust office of the Common Stock Warrant Agent or any other office indicated in
the applicable prospectus supplement. Before the exercise of any Common Stock
Warrants to purchase common stock, holders of the Common Stock Warrants will not
have any rights of holders of common stock purchasable upon exercise of the
Common Stock Warrants, including the right to receive payments of dividends, if
any, on the common stock purchasable upon any exercise or the right to vote the
underlying common stock.
Prospective purchasers of Common Stock Warrants should be aware that
special U.S. Federal income tax, accounting and other considerations may be
applicable to instruments such as Common Stock Warrants. The prospectus
supplement relating to any issue of Common Stock Warrants will describe these
considerations.
Book-Entry Procedures
Except as may otherwise be provided in the applicable prospectus
supplement, the Common Stock Warrants will be issued in the form of global
Common Stock Warrant Certificates, registered in the name of a depositary or its
nominee. Except as may otherwise be provided in the applicable prospectus
supplement, beneficial owners will not be entitled to receive definitive
certificates representing Common Stock Warrants unless the depositary is
unwilling or unable to continue as depositary, certain specified events of
bankruptcy or insolvency occur with respect to ML&Co. or ML&Co. decides to have
the Common Stock Warrants represented by definitive certificates. A beneficial
owner's interest in a Common Stock Warrant will be recorded on or through the
records of the brokerage firm or other entity that maintains a beneficial
owner's account. In turn, the total number of Common Stock Warrants held by an
individual brokerage firm for its clients will be maintained on the records of
the depositary in the name of the brokerage firm or its agent. Transfer of
ownership of any Common Stock Warrant will be effected only through the selling
beneficial owner's brokerage firm.
Exercise of Common Stock Warrants
Each Common Stock Warrant will entitle its holder to purchase a specific
number of shares of common stock at the exercise price described in the
applicable prospectus supplement. After the close of business on the date the
right to exercise the Common Stock Warrants expires, or any later date if
extended by ML&Co., unexercised Common Stock Warrants will become void.
Common Stock Warrants may be exercised as set forth in the applicable
prospectus supplement. Upon receipt of payment and the Common Stock Warrant
Certificate properly completed and duly executed at the corporate trust office
of the Common Stock Warrant Agent or any other office indicated in the
applicable prospectus supplement, ML&Co. will, as soon as practicable, issue and
deliver the shares of common stock purchased upon exercise. If less than all of
the Common Stock Warrants represented by any Common Stock Warrant Certificate
are exercised, a new Common Stock Warrant Certificate will be issued for the
remaining amount of Common Stock Warrants.
Listing
ML&Co. may list an issue of Common Stock Warrants on a national securities
exchange. Any listing will be specified in the applicable prospectus supplement.
Modifications
ML&Co. and the Common Stock Warrant Agent may amend any Common Stock
Warrant Agreement and the terms of the related Common Stock Warrants, without
the consent of the holders of the Common Stock Warrants, for the purpose of
curing any ambiguity, or of curing, correcting or supplementing any defective or
inconsistent provision, or in any other manner which ML&Co. may deem necessary
or desirable and which will not materially and adversely affect the interests of
the Common Stock Warrantholders.
ML&Co. and the Common Stock Warrant Agent also may amend any Common Stock
Warrant Agreement and the terms of the related Common Stock Warrants, with the
consent of the holders of not less than a majority in number of the then
outstanding unexercised Common Stock Warrants affected by amendment. However,
without the consent of each of the Common Stock Warrantholders affected, no
amendment will be effective that:
o shortens the period of time during which the Common Stock Warrants may
be exercised;
o otherwise materially and adversely affects the exercise rights of the
Common Stock Warrantholders; or
o reduces the number of outstanding Common Stock Warrants the consent of
whose holders is required to approve an amendment of the Common Stock
Warrant Agreement or the terms of the related Common Stock Warrants.
Enforceability of Rights by Common Stock Warrantholders
Any Common Stock Warrantholder may, without the consent of the related
Common Stock Warrant Agent, enforce by appropriate legal action, in and for its
own behalf, its right to exercise its Common Stock Warrant.
<PAGE>
PLAN OF DISTRIBUTION
ML&Co. may sell Securities:
o to the public through MLPF&S, or through a group of underwriters
managed or co-managed by, one or more underwriters, including MLPF&S,
o through MLPF&S as agent, or
o directly to purchasers.
The prospectus supplement with respect to the Securities of a particular
series describes the terms of the offering of such Securities, including the
name of the agent or the name or names of any underwriters, the public offering
or purchase price, any discounts and commissions to be allowed or paid to the
agent or underwriters, all other items constituting underwriting compensation,
any discounts and commissions to be allowed or paid to dealers and any exchanges
on which the Securities will be listed. Only the agents or underwriters so named
in the prospectus supplement are agents or underwriters in connection with the
Securities being offered. Under certain circumstances, ML&Co. may repurchase
Securities and reoffer them to the public as set forth above. ML&Co. may also
arrange for repurchases and resales of the Securities by dealers.
If so indicated in the prospectus supplement, ML&Co. will authorize
underwriters to solicit offers by certain institutions to purchase debt
securities from ML&Co. pursuant to delayed delivery contracts providing for
payment and delivery on the date stated in the prospectus supplement. Each
contract will be for an amount not less than, and, unless ML&Co. otherwise
agrees, the aggregate principal amount of debt securities sold pursuant to the
contracts shall not be more than, the respective amounts stated in the
prospectus supplement. Institutions with whom the contracts, when authorized,
may be made include commercial and savings banks, insurance companies, pension
funds, investment companies, educational and charitable institutions, and other
institutions, but shall in all cases be subject to the approval of ML&Co.
Delayed delivery contracts will not be subject to any conditions except that the
purchase by an institution of the debt securities covered under that contract
shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which that institution is subject.
ML&Co. has agreed to indemnify the agent and the several underwriters
against certain civil liabilities, including liabilities under the Securities
Act or contribute to payments the agent or the underwriters may be required to
make.
The distribution of Securities will conform to the requirements set forth
in the applicable sections of Rule 2720 of the Conduct Rules of the National
Association of Securities Dealers, Inc.
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the SEC. Our
SEC filings are also available over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file by visiting
the SEC's public reference rooms in Washington, D.C., New York, New York, and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
about the public reference rooms. You may also inspect our SEC reports and other
information at the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005.
We have filed a registration statement on Form S-3 with the SEC covering
the Securities. For further information on ML&Co. and the Securities, you should
refer to our registration statement and its exhibits. This prospectus summarizes
material provisions of contracts and other documents that we refer you to.
Because the prospectus may not contain all the information that you may find
important, you should review the full text of these documents. We have included
copies of these documents as exhibits to our registration statement.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to incorporate by reference the information we file with
them, which means:
o incorporated documents are considered part of the prospectus;
o we can disclose important information to you by referring you to those
documents; and
o information that we file with the SEC will automatically update and
supersede this incorporated information.
We incorporate by reference the documents listed below which were filed
with the SEC under the Exchange Act:
o annual report on Form 10-K for the year ended December 26, 1997
(excluding the financial information which was restated in Exhibit
99(i) to our current report on Form 8-K dated December 10, 1998);
o quarterly reports on Form 10-Q for the quarters ended March 27, 1998,
June 26, 1998 and September 25, 1998; and
o current reports on Form 8-K dated January 20, 1998, January 30, 1998,
February 4, 1998, February 12, 1998, February 23, 1998, March 19,
1998, April 13,1998, April 29, 1998, May 19, 1998, June 2, 1998,
June 3, 1998, June 15, 1998, June 24, 1998, June 26, 1998, July 2,
1998, July 14, 1998, July 15, 1998, July 29, 1998, September 3, 1998,
September 8, 1998, September 29, 1998, October 13, 1998, October 21,
1998, October 28, 1998, November 3, 1998, November 24, 1998,
December 1, 1998, December 10, 1998, December 28, 1998, January 19,
1999, February 17, 1999, February 18, 1999, February 22, 1999 and
February 23, 1999.
We also incorporate by reference each of the following documents that we
will file with the SEC after the date of this prospectus until this offering is
completed or after the date of this initial registration statement and prior to
effectiveness of the registration statement:
o reports filed under Sections 13(a) and (c) of the Exchange Act;
o definitive proxy or information statements filed under Section 14 of
the Exchange Act in connection with any subsequent stockholders'
meeting; and
o any reports filed under Section 15(d) of the Exchange Act.
You should rely only on information contained or incorporated by reference
in this prospectus. We have not, and the dealer has not, authorized any other
person to provide you with different information. If anyone provides you with
different or inconsistent information, you should not rely on it. We are not,
and the dealer is not, making an offer to sell these Securities in any
jurisdiction where the offer or sale is not permitted.
You should assume that the information appearing in this prospectus is
accurate as of the date of this prospectus only. Our business, financial
condition and results of operations may have changed since that date.
You may request a copy of any filings referred to above (excluding
exhibits), at no cost, by contacting us at the following address: Mr. Lawrence
M. Egan, Jr., Corporate Secretary's Office, Merrill Lynch & Co., Inc., 100
Church Street, New York, New York 10080-6512, Telephone: (212) 602-8435.
EXPERTS
The consolidated financial statements of ML&Co. and its subsidiaries
included in its current report on Form 8-K dated December 10, 1998 and related
financial statement schedules of ML&Co. and its subsidiaries included in the
1997 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 in this prospectus. 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 26, 1997 included in the current report on Form 8-K dated December 10,
1998, and incorporated by reference in this prospectus, has been derived from
consolidated financial statements audited by Deloitte & Touche LLP, as set forth
in their reports included or incorporated by reference in this prospectus. These
consolidated financial statements and related financial statement schedules, and
Selected Financial Data incorporated by reference in this prospectus and the
registration statement of which this prospectus is a part, have been
incorporated by reference in reliance upon such reports of Deloitte & Touche LLP
given upon their authority as experts in accounting and auditing.
With respect to unaudited interim financial information for the periods
included in the quarterly reports on Form 10-Q which are incorporated in this
prospectus 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 reports included in these quarterly reports on Form
10-Q and incorporated by reference in this prospectus, they did not audit and
they do not express an opinion on this interim financial information.
Accordingly, the degree of reliance on their reports on this information should
be restricted in light of the limited nature of the review procedures applied.
Deloitte & Touche LLP are not subject to the liability provisions of Section 11
of the Securities Act for any report on unaudited interim financial information
because any 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 Securities Act.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to Completion
Preliminary Prospectus dated February 26, 1999
PROSPECTUS
- ----------
[LOGO]
Merrill Lynch & Co., Inc.
Structured Yield Product Exchangeable for Stocks SM
STRYPES SM
----------------------
<TABLE>
<CAPTION>
Offering of the STRYPES: Distributions at Maturity:
<S> <C> <C> <C>
o We will offer from time to time our STRYPES, which o On the stated maturity date of each series of
are senior debt securities of ML&Co. that are STRYPES, or any earlier date described in the
exchangeable into the common stock or other discharge the strypes by delivering to you a
securities of an unaffiliated company. number of shares of common stock or other
securities of an unaffiliated company or property
o We will offer the STRYPES in series and on terms determined in accordance with a payment formula
determined by market conditions at the time of all as described in the prospectus supplement.
sale . We will describe these terms in the
prospectus supplement used to offer the specific o Instead of delivering shares of common stock or
series of STRYPES. other securities or property, we may deliver cash,
or a combination of cash and the common stock or
o Each series of STRYPES may be listed on a national other securities, with an equal value.
securities exchange described in the prospectus
supplement.
</TABLE>
The value of any common stock, other securities or cash that you may
receive on the stated maturity date, or any earlier date, in connection with
your investment in the STRYPES may be less than the price that you paid for
your STRYPES and may result in a loss to you .
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
------------------------
The date of this prospectus is , 199 .
- -----------
SM Service mark of Merrill Lynch & Co., Inc.
<PAGE>
MERRILL LYNCH & CO., INC.
We are a holding company that, through our U.S. and non-U.S. subsidiaries
and affiliates such as Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Merrill Lynch Government Securities Inc., Merrill Lynch Capital Services, Inc.,
Merrill Lynch International, Merrill Lynch Asset Management L.P. and Merrill
Lynch Mercury Asset Management, provides investment, financing, advisory,
insurance, and related products on a global basis, including:
o securities brokerage, trading and underwriting;
o investment banking, strategic services, including mergers and
acquisitions and other corporate finance advisory activities;
o asset management and other investment advisory and recordkeeping
services;
o trading and brokerage of swaps, options, forwards, futures and other
derivatives;
o securities clearance services;
o equity, debt and economic research;
o banking, trust and lending services, including mortgage lending and
related services; and
o insurance sales and underwriting services.
We provide these products and services to a wide array of clients, including
individual investors, small businesses, corporations, governments,
governmental agencies and financial institutions.
Our principal executive office is located at World Financial Center,
North Tower, 250 Vesey Street, New York, New York 10281; our telephone number
is (212) 449-1000.
If you want to find more information about us, please see the sections
entitled "Where You Can Find More Information" and "Incorporation of
Information We File with the SEC" in this prospectus.
In this prospectus, references to "ML&Co.", "we", "us" and "our" refer
specifically to Merrill Lynch & Co., Inc., the holding company. ML&Co. is the
issuer of the STRYPES described in this prospectus.
<PAGE>
USE OF PROCEEDS
We intend to use the net proceeds from the sale of the STRYPES for general
corporate purposes, unless otherwise specified in the prospectus supplement
relating to a specific issue of STRYPES. Our general corporate purposes may
include financing the activities of our subsidiaries, financing our assets and
those of our subsidiaries, the lengthening of the average maturity of our
borrowings, and financing acquisitions. until we use the net proceeds from the
sale of any of our securities for general corporate purposes, we will use the
net proceeds to reduce our short-term indebtedness or for temporary investments.
We expect that we will, on a recurrent basis, engage in additional financings as
the need arises to finance our growth, through acquisitions or otherwise, or to
lengthen the average maturity of our borrowings. To the extent that STRYPES
being purchased for resale by our subsidiary, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, referred to in this prospectus as MLPF&S, are not resold,
the aggregate proceeds that we and our subsidiaries would receive would be
reduced.
RATIO OF EARNINGS TO FIXED CHARGES
In 1998, we acquired the outstanding shares of Midland Walwyn, Inc., a
transaction accounted for as a pooling-of-interests. The following information
has been restated as if the two entities had always been combined.
<TABLE>
<CAPTION>
YEAR ENDED LAST FRIDAY IN DECEMBER
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges (a)... 1.2 1.2 1.2 1.2 1.1
</TABLE>
(a) The effect of combining Midland Walwyn did not change the ratios
reported for the fiscal years 1994 through 1997
For the purpose of calculating the ratio of earnings to fixed charges,
"earnings" consist of earnings from continuing operations before income taxes
and fixed charges, excluding capitalized interest and preferred security
dividend requirements of subsidiaries. "Fixed charges" consist of interest
costs, the interest factor in rentals, amortization of debt issuance costs,
preferred security dividend requirements of subsidiaries, and capitalized
interest.
DESCRIPTION OF THE STRYPES
Each issue of STRYPES will be a series of senior debt securities of
ML&Co. to be issued under an indenture (the "1983 Indenture"), dated as of
April 1, 1983, as amended and restated, between ML&CO. and The Chase Manhattan
Bank, as trustee (the "Trustee"). For each series of STRYPES, ML&Co. and the
Trustee will enter into a supplemental indenture which will further amend and
supplement the 1983 Indenture. Any supplemental indenture relating to a
specific series of STRYPES and the 1983 Indenture are collectively referred to
as the "Indenture". The following summary of certain provisions of the
Indenture is not complete and is qualified in its entirety by reference to the
Indenture. All capitalized terms not otherwise defined in this section have
the meanings specified in the Indenture. Whenever any defined term of the
Indenture IS referred to in this section, the defined term IS incorporated by
reference in this section.
<PAGE>
TERMS OF THE STRYPES
The supplemental indenture will provide that STRYPES of the related
series may be issued from time to time under the Indenture, up to a specified
aggregate issue price, upon the satisfaction of certain conditions before
issuance. The supplemental indenture will establish the terms of the related
series of STRYPES, including:
o the issue price per STRYPES; o the date on which the STRYPES will
mature;
o the consideration deliverable or payable with respect to each STRYPES,
whether at maturity or upon earlier acceleration, and the formula or
other method by which the amount of any consideration deliverable or
payable will be determined;
o any fixed or variable rate or rates per annum;
o the interest payment dates;
o any provisions for redemption, the redemption price and any
remarketing arrangements;
o any sinking fund requirements;
o whether the STRYPES are denominated or provide for payment in United
States dollars or a foreign currency or units of two or more foreign
currencies;
o whether and under what circumstances ML&Co. will pay additional
amounts ("Additional Amounts") under any STRYPES held by a person who
is not a U.S. person FOR specified taxes, assessments or other
governmental charges and whether ML&Co. has the option to redeem the
affected STRYPES rather than pay any Additional Amounts;
o the title and series designation;
o whether the STRYPES are to be issued in global form;
o the obligation of ML&Co. to pay and discharge the STRYPES at maturity
by delivery of a number of shares of common stock or other securities
or property (the "Underlying Securities") of an unaffiliated
corporation or cash or a combination of cash and Underlying Securities
with an equal value;
o the formula or other method by which the consideration deliverable or
payable at maturity of the STRYPES or any earlier date will be
determined and the terms and conditions upon which any payment and
discharge of the STRYPES will be effected.
The terms of the specific series of STRYPES being offered will be
described in the applicable prospectus supplement.
Under the Indenture, ML&Co., without the consent of holders of any
STRYPES, is permitted to issue STRYPES with terms different from those of
STRYPES previously issued and to reopen a previous series of STRYPES and issue
additional STRYPES of that series.
Issue price and interest, premium and Additional Amounts, if any, and
Underlying Securities will be payable or deliverable in the manner, at the
places and subject to the restrictions set forth in the Indenture, the
applicable supplemental indenture, the form of the STRYPES and the applicable
prospectus supplement, provided that payment of any interest and any
Additional Amounts may be made at the option of ML&Co. by check mailed to the
holders of registered STRYPES at their registered addresses.
<PAGE>
STRYPES may be presented for exchange, and registered STRYPES may be
presented for transfer, in the manner, at the places and subject to the
restrictions set forth in the Indenture, the applicable supplemental
indentures the form of the STRYPES and the applicable prospectus supplement.
No service charge will be made for any transfer or exchange of STRYPES, but
ML&Co. may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection with a transfer or exchange.
RANKING
The STRYPES will be unsecured obligations and will rank equally with all
other unsecured and unsubordinated indebtedness of ML&Co. Because ML&Co. is a
holding company, the rights of ML&Co. and its creditors, including the holders
of the STRYPES, to participate in any distribution of the assets of any
subsidiary upon its liquidation or reorganization or otherwise is necessarily
subject to the prior claims of creditors of the subsidiary, except to the
extent that claims of ML&Co. itself as a creditor of the subsidiary may be
recognized. In addition, dividends, loans and advances from certain
subsidiaries, including MLPF&S, to ML&Co. are restricted by net capital
requirements under the Securities Exchange Act of 1934 and under rules of
exchanges and other regulatory bodies.
MERGER AND CONSOLIDATION
ML&Co. may consolidate or merge with or into any other corporation and
ML&Co. may sell, lease or convey all or substantially all of its assets to any
corporation, provided that:
o the resulting corporation, if other than ML&Co., IS a corporation
organized and existing under the laws of the United States of America
or any U.S. state and assumes all of ML&Co.'s obligations to:
o pay or deliver the Underlying Securities, cash with an equal value
or a combination of both in respect of, any interest and
Additional Amounts on, and any other amounts payable with respect
to, the STRYPES of each series; and
o perform and observe all of the obligations and conditions of the
Indenture to be performed or observed by ML&Co., and
o ML&Co. or the successor corporation, as the case may be, is not,
immediately after any consolidation or merger, in default under the
Indenture.
LIMITATIONS UPON LIENS
ML&Co. may not, and may not permit any Subsidiary to, create, assume,
incur or permit to exist any indebtedness for borrowed money secured by a
pledge, lien or other encumbrance, other than any liens specifically permitted
by the Indenture, on the Voting Stock owned directly or indirectly by ML&Co.
of any Subsidiary, other than a Subsidiary which, at the time of incurrence of
the secured indebtedness, has a net worth of less than $3,000,000, unless the
outstanding STRYPES are secured equally and ratably with the secured
indebtedness.
"Subsidiary" is defined in the indenture as any corporation of which at
the time of determination, ML&Co. and/or one or more subsidiaries of ML&Co.
owns or controls directly or indirectly 50% of the shares of Voting Stock.
<PAGE>
"Voting Stock" is defined in the Indenture as the stock of the class or
classes having general voting power under ordinary circumstances to elect at
least a majority of the board of directors, managers or trustees of a
corporation provided that, for the purposes of the indenture, stock that
carries only the right to vote conditionally on the occurrence of an event is
not considered voting stock whether or not the event has happened.
LIMITATIONS ON DISPOSITION OF VOTING STOCK OF, AND MERGER AND SALE OF ASSETS
BY, MLPF&S
ML&Co. may not sell, transfer or otherwise dispose of any Voting Stock of
MLPF&S or permit MLPF&S to issue, sell or otherwise dispose of any of its
Voting Stock, unless, after giving effect to the transaction, MLPF&S remains a
Controlled Subsidiary.
"Controlled Subsidiary" is defined in the Indenture to mean a corporation
more than 80% of the outstanding shares of Voting Stock of which are owned
directly or indirectly by ML&Co.
In addition, ML&Co. may not permit MLPF&S to:
o merge or consolidate, unless the surviving company is a Controlled
Subsidiary, or
o convey or transfer its properties and assets substantially as an
entirety, except to one or more Controlled Subsidiaries.
EVENTS OF DEFAULT
Unless otherwise specified in a prospectus supplement, each of the
following will be an Event of Default under the Indenture with respect to each
series of STRYPES:
o failure to pay and discharge the STRYPES of that series with the
Underlying Securities or, if ML&Co. so elects, to pay an equivalent
amount in cash instead of underlying securities when due,
o failure to pay the redemption price or any redemption premium with
respect to any STRYPES of that series when due;
o failure to deposit any sinking fund payment, when and as due by the
terms of any STRYPES of that series;
o failure to pay any interest on or any Additional Amounts in respect
of any STRYPES of that series when due, and continuing for 30 days;
o failure to perform any other obligation of ML&Co. contained in the
Indenture for the benefit of that series or in the STRYPES of that
series, continuing for 60 days after written notice has been given to
ML&Co. by the Trustee, or to ML&Co. and the Trustee by the holders of
at least 10% of the aggregate issue price of the outstanding STRYPES
of that series, as provided in the Indenture;
o specified events in bankruptcy, insolvency or reorganization of
ML&Co.; and
o any other Event of Default provided with respect to STRYPES of that
series.
Unless otherwise specified in a prospectus supplement, if an Event of
Default occurs and is continuing for any series of STRYPES, other than as a
result of the bankruptcy, insolvency or reorganization of ML&Co., the Trustee
or the holders of at least 25% in aggregate issue price of the outstanding
STRYPES of that series, by notice as provided in the Indenture, may declare an
amount equal to the aggregate issue price of all the STRYPES of that series,
the accrued interest on the STRYPES and all Additional Amounts payable with
respect to the STRYPES of that series immediately due and payable in
<PAGE>
cash. The Trustee or the holders of at least 25% in aggregate issue price of
the outstanding STRYPES may declare these amounts due immediately as described
in the preceding sentence without any other declaration or other action BY the
Trustee or any holder. At any time after a declaration of acceleration, but
before the Trustee has obtained a judgment or decree based on acceleration,
the holders of a majority of the aggregate issue price of the outstanding
STRYPES of that series may, under certain circumstances, rescind and annul any
acceleration if all Events of Default, other than the non-payment of the
amount equal to the aggregate issue price of all the STRYPES of that series
due by reason of acceleration, have been cured or waived as provided in the
Indenture. See "Modification and Waiver" below.
The holders of a majority in aggregate issue price of the outstanding
STRYPES of a series may direct the time, method and place of conducting any
proceeding for any remedy available to the trustee or exercising any trust
power conferred on the Trustee with respect to the STRYPES of that series,
provided that any direction is not in conflict with any rule of law or the
Indenture. Subject to the provisions of the Indenture relating to the duties
of the Trustee, in case an Event of Default shall occur and be continuing, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any of the holders of
STRYPES of any series, unless the holders of that series shall have offered to
the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with any request or
direction.
The STRYPES and other series of senior debt securities issued under the
Indenture will not have the benefit of any cross-default provisions with other
indebtedness of ML&Co.
ML&Co. will be required to furnish to the Trustee annually a statement as
to the fulfillment by ML&Co. of its obligations under the Indenture.
MODIFICATION AND WAIVER
Unless otherwise specified in a prospectus supplement, provisions in the
Indenture affecting a series of STRYPES may be modified and amended by ML&Co.
and the Trustee with the consent of holders of at least 66 2/3% in aggregate
issue price of the series of STRYPES affected. However, without the consent of
each holder of any STRYPES affected, no amendment or modification to any
Indenture may:
o change the maturity date or the stated maturity date or any
installment of interest or Additional Amounts on any STRYPES or any
premium payable on redemption, or change the redemption price,
o reduce the amount of Underlying Securities payable with respect to
any STRYPES or reduce the amount of cash, or cash and Underlying
Securities, payable instead of Underlying Securities,
o reduce the amount of interest or Additional Amounts payable on any
STRYPES or reduce the amount of cash payable with respect to any
STRYPES upon acceleration ,
o change the place or currency of payment of interest or Additional
Amounts on, or any amount of cash payable with respect to, any
STRYPES,
o impair the right to institute suit for the enforcement of any payment
on any STRYPES, including the payment of Underlying Securities with
respect to any STRYPES,
o reduce the percentage of the aggregate issue price of outstanding
STRYPES of that series, the consent of whose holders is required to
modify or amend the Indenture,
o reduce the percentage of the aggregate issue price of outstanding
STRYPES of that series necessary for waiver of compliance with
certain provisions of the Indenture or for waiver of certain defaults
or
<PAGE>
o modify the provisions with respect to modification and waiver.
Except as provided in the Indenture, no modification of or amendment to
the Indenture may adversely affect the rights of a holder of any other Senior
Debt Security without the consent of each holder affected.
The holders of a majority of the aggregate issue price of each series of
STRYPES may waive compliance by ML&Co. with certain restrictive provisions of
the Indenture. Any past default with respect to any series of STRYPES may BE
waived by the holders of a majority in aggregate issue price of the
outstanding STRYPES of that series, except a default:
o in the payment of the Underlying Securities or any other amounts due
and payable or deliverable under the STRYPES of that series; or
o in respect of an obligation of ML&Co. contained in, or a provision
of, the Indenture which cannot be modified under the terms of that
Indenture without the consent of each holder of each outstanding
series of STRYPES affected.
GOVERNING LAW
The Indenture and the STRYPES will be governed by, and construed in
accordance with, the laws of the State of New York.
<PAGE>
PLAN OF DISTRIBUTION
ML&Co. may sell STRYPES to the public through MLPF&S. The accompanying
prospectus supplement describes the terms of the STRYPES being offered ,
including the public offering or purchase price, any discounts and commissions
to be allowed or paid, all other items constituting underwriting compensation,
the discounts and commissions to be allowed or paid to dealers, if any, and
the exchanges, if any, on which the STRYPES will be listed. Under certain
circumstances, ML&Co. may repurchase STRYPES and reoffer them to the public as
set forth above. ML&Co. may also arrange for repurchases and resales of the
STRYPES by dealers.
The underwriting of STRYPES will conform to the requirements set forth in
the applicable sections of Rule 2720 of the Conduct Rules of the National
Association of Securities Dealers, Inc.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the SEC. Our
SEC filings are also available over the internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file by
visiting the SEC's public reference rooms in Washington, D.C., New York, New
York, and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information about the public reference rooms. You may also inspect our SEC
reports and other information at the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005.
We have filed a registration statement on Form S-3 with the SEC covering
the STRYPES and other securities. for further information on ML&Co. and the
STRYPES, you should refer to our registration statement and its exhibits. This
prospectus summarizes material provisions of contracts and other documents
that we refer you to. Because the prospectus may not contain all the
information that you may find important, you should review the full text of
these documents. We have included copies of these documents as exhibits to our
registration statement.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to incorporate by reference the information we file
with them, which means:
o incorporated documents are considered part of the prospectus;
o we can disclose important information to you by referring you to
those documents; and
o information that we file with the SEC will automatically update and
supersede this incorporated information.
We incorporate by reference the documents listed below which were filed
with the SEC under the Exchange Act:
o annual report on Form 10-K for the year ended December 26, 1997
(excluding the financial information which was restated in Exhibit
99(i) to our current report on Form 8-K dated December 10, 1998);
o quarterly reports on Form 10-Q for the quarters ended March 27, 1998,
June 26, 1998 and September 25, 1998; and
o current reports on Form 8-K dated January 20, 1998, January 30, 1998,
February 4, 1998, February 12, 1998, February 23, 1998, March 19,
1998, April 13,1998, April 29, 1998, May 19, 1998, June 2, 1998, June
3, 1998, June 15, 1998, June 24, 1998, June 26, 1998, July 2,
<PAGE>
1998, July 14, 1998, July 15, 1998, July 29, 1998, September 3, 1998,
September 8,1998, September 29, 1998, October 13, 1998, October 21,
1998, October 28, 1998, November 3, 1998, November 24, 1998, December
1, 1998, December 10, 1998, December 28, 1998, January 19, 1999,
February 17, 1999, February 18, 1999, February 22, 1999 and February
23, 1999.
We also incorporate by reference each of the following documents that we
will file with the SEC after the date of this prospectus until this offering
is completed or after the date of this initial registration statement and
prior to effectiveness of the registration statement:
o reports filed under Sections 13(a) and (c) of the Exchange Act;
o definitive proxy or information statements filed under Section 14 of
the Exchange Act in connection with any subsequent stockholders'
meeting; and
o any reports filed under Section 15(d) of the Exchange Act.
You should rely only on information contained or incorporated by
reference in this prospectus. We have not, and the dealer has not, authorized
any other person to provide you with different information. If anyone provides
you with different or inconsistent information, you should not rely on it. We
are not, and the dealer is not, making an offer to sell these securities in
any jurisdiction where the offer or sale is not permitted.
You should assume that the information appearing in this prospectus is
accurate as of the date of this prospectus only. Our business, financial
condition and results of operations may have changed since that date.
You may request a copy of any filings referred to above (excluding
exhibits), at no cost, by contacting us at the following address: Mr. Lawrence
M. Egan, Jr., Corporate Secretary's Office, Merrill Lynch & Co., Inc., 100
Church Street, New York, New York 10080-6512, Telephone: (212) 602-8435.
EXPERTS
The consolidated financial statements of ML&Co. and its subsidiaries
included in its current report on Form 8-K dated December 10, 1998 and related
financial statement schedules of ML&Co. and its subsidiaries included in the
1997 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 in this prospectus. 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 26, 1997 included in the current report on Form 8-K dated
December 10, 1998, and incorporated by reference in this prospectus, has been
derived from consolidated financial statements audited by Deloitte & Touche
LLP, as set forth in their reports included or incorporated by reference in
this prospectus. These consolidated financial statements and related financial
statement schedules, and Selected Financial Data incorporated by reference in
this prospectus and the registration statement of which this prospectus is a
part, have been incorporated in this prospectus by reference in reliance upon
the 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 in this
prospectus 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 reports included in these quarterly reports on Form
10-Q and incorporated by reference in this prospectus, they did not audit and
they do not express an opinion on any interim financial information.
Accordingly, the degree of reliance on their reports on this information should
be restricted in light of the limited nature of the review procedures applied.
Deloitte & Touche LLP are not subject to the liability provisions of Section 11
of the Securities Act of 1933, as amended for any report on unaudited interim
financial information because any 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 Securities Act.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
<PAGE>
Subject to Completion
Preliminary Prospectus dated February 26, 1999
PROSPECTUS
- ----------
[LOGO]
% Trust Originated Preferred Securities
Merrill Lynch Preferred Capital Trust VI
Liquidation Amount $25 per TOPrS
guaranteed to the extent described in this prospectus by
Merrill Lynch & Co., Inc.
------------------------------
<PAGE>
The TOPrS:
o TOPrS represent preferred ownership interests in the assets of ML
Trust. The sole assets of ML Trust will be the partnership preferred
securities of ML Partnership which represent preferred ownership
interests in the assets of ML Partnership.
o The TOPrS and the partnership preferred securities do not have any
stated maturity.
o The sole assets of ML Partnership will be the debentures issued by
ML&Co. and its affiliates and cash and other permitted securities
described in this prospectus.
o ML Trust will apply to have the TOPrS trade on the New York Stock
Exchange starting within 30 days after the TOPrS are issued.
o Closing:
Distributions on the TOPrS:
o Each TOPrS pays a quarterly distribution at the rate of ____%, or $__
per TOPrS per year, if ML Partnership pays distributions on the
partnership preferred securities.
o ML Trust and ML Partnership may redeem the TOPrS and the partnership
preferred securities as described in this prospectus. If ML Trust and
ML Partnership redeem the TOPrS and the partnership preferred
securities, you will receive $25 plus accumulated distributions for
each TOPrS you own. If ML Trust redeems the TOPrS or is liquidated, but
ML Partnership does not redeem the partnership preferred securities,
you will receive the partnership preferred securities rather than cash.
o ML&Co. will guarantee, to the extent described in this prospectus,
o the quarterly distributions declared on and the liquidation amount
of the TOPrS;
o distributions declared by ML Partnership to ML Trust on the
partnership preferred securities; and
o obligations of its affiliates on the debentures held by ML
Partnership.
Investing in the TOPrS involves risks.
Please see "Risk Factors" on page 6.
Per TOPrS Total
--------- -----
Public offering price.......................... $25.00 $
Proceeds to ML Trust........................... $25.00 $
Purchasers of the TOPrS will be required to pay accumulated
distributions from ____________, 1999, if settlement occurs after that date.
Expenses of the offering and underwriting commissions of $____ per TOPrS, or
$_____ per TOPrS for sales of more than 10,000 TOPrS to a single purchaser,
will be paid by ML&Co.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
------------------------------
Merrill Lynch & Co.
------------------------------
The date of this prospectus is , 199 .
SM TOPrS" and "Trust Originated Preferred Securities" are service
marks owned by Merrill Lynch & Co., Inc.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
SUMMARY INFORMATION--Q&A.......................................................................................3
RISK FACTORS...................................................................................................7
MERRILL LYNCH & CO., INC......................................................................................11
USE OF PROCEEDS...............................................................................................11
RATIO OF EARNINGS TO FIXED CHARGES............................................................................12
MERRILL LYNCH PREFERRED CAPITAL TRUST VI......................................................................13
MERRILL LYNCH PREFERRED FUNDING VI, L.P......................................................................15
DESCRIPTION OF THE TOPRS......................................................................................17
DESCRIPTION OF THE TRUST GUARANTEE............................................................................31
DESCRIPTION OF THE PARTNERSHIP PREFERRED SECURITIES...........................................................34
DESCRIPTION OF THE PARTNERSHIP GUARANTEE......................................................................48
UNITED STATES FEDERAL INCOME TAXATION.........................................................................51
UNDERWRITING..................................................................................................55
LEGAL MATTERS.................................................................................................58
EXPERTS.......................................................................................................59
INDEX OF CERTAIN DEFINED TERMS................................................................................60
INDEX TO FINANCIAL STATEMENTS................................................................................F-1
INDEPENDENT AUDITORS' REPORT.................................................................................F-2
NOTES TO BALANCE SHEET OF MERRILL LYNCH PREFERRED FUNDING VI, L.P............................................F-3
INDEPENDENT AUDITORS' REPORT.................................................................................F-4
NOTES TO BALANCE SHEET OF MERRILL LYNCH PREFERRED CAPITAL TRUST VI...........................................F-5
</TABLE>
<PAGE>
SUMMARY INFORMATION--Q&A
<PAGE>
This summary includes questions and answers that highlight selected
information from the prospectus to help you understand the TOPrS. This summary
may not contain all the information that may be important to you. You should
carefully read this prospectus to fully understand the terms of the TOPrS, as
well as the tax and other considerations that should be important to you in
making a decision about whether to invest in the TOPrS. You should pay special
attention to the "Risk Factors" section to determine whether an investment in
the TOPrS is appropriate for you.
In this prospectus:
o references to "ML&Co.", "we", "us" and "our" are to Merrill Lynch &
Co., Inc.,
o references to "ML Trust " are to Merrill Lynch Capital Preferred
Trust VI, and
o references to "ML Partnership " are to Merrill Lynch Preferred
Funding VI, L.P.
What are the TOPrS?
Each TOPrS is a preferred interest in the assets of ML Trust. We will
own all of the common securities of ML Trust. The sole assets of ML Trust will
be the partnership preferred securities issued by ML Partnership, which
represent preferred ownership interests in the assets of ML Partnership. ML
Partnership will use substantially all of the proceeds from the sale of its
partnership preferred securities and our capital contribution as general
partner of ML Partnership to purchase debentures from us and one or more of our
affiliates.
What is the ML Trust?
ML Trust is a business trust established under Delaware law that
exists for the sole purpose of issuing the TOPrS and investing the proceeds and
engaging in incidental activities.
What is ML Partnership?
ML Partnership is a limited partnership established under Delaware
law. The assets of ML Partnership will be:
o the debentures issued by us and our affiliates; and
o cash and securities not issued by us or our affiliates.
We are the general partner of ML Partnership.
What distributions will I receive on the TOPrS?
The TOPrS provide for a quarterly cash distribution at the rate of %
or $___ per year for each TOPrS you own. Distributions are payable on each , ,
and , beginning ______, . Distributions will accumulate from the date ML Trust
originally issues the TOPrS. Because the sole assets of ML Trust will be the
partnership preferred securities of ML Partnership and substantially all of ML
Partnership's assets will be the debentures issued by us and our affiliates, ML
Trust's ability to pay distributions on the TOPrS is ultimately dependent upon
our and our affiliates' ability to make interest payments on those debentures.
If we or our affiliates exercise our right to defer making an interest payment
on our debentures then held by ML Partnership, ML Partnership will not be able
to pay any distributions on its preferred partnership securities and ML Trust
will not be able to pay quarterly distributions to you until we resume making
interest payments on those debentures.
In addition, ML Partnership is required to pay dividends on its
partnership preferred securities only if they are declared by us as general
partner of ML Partnership. As a result, you may not receive any distributions
on your TOPrS if ML Trust does not receive dividends on the partnership
preferred securities.
What are the debentures?
The debentures are long term loans made by ML Partnership to us or our
affiliates from time to time. These debentures will be substantially all of ML
Partnership's assets. The debentures that we issue to ML Partnership will be
senior unsecured obligations of ours and will rank equally with all of our
other senior unsecured obligations. The debentures issued by our affiliates to
ML Partnership will be unsecured obligations of our affiliates and we will
guarantee those obligations on a subordinated basis . We and our affiliates may
exercise our right to defer interest payments on the debentures for a period of
not more than six consecutive calendar quarters.
Can the TOPrS be redeemed?
Yes. If ML Partnership redeems the partnership preferred securities,
each TOPrS will be redeemed for $25 plus any accumulated and unpaid
distributions to the date of redemption. ML Partnership can redeem the
partnership preferred securities in whole or in part from time to time on or
after.
The trustees of ML Trust can elect to liquidate ML Trust and
distribute the partnership preferred securities to you if at any time the
specified changes in U.S. tax law or U.S. investment company law described in
this prospectus occur.
Additionally, we, as general partner of ML Partnership, have the right
to redeem the partnership preferred securities and you will receive cash from
the subsequent automatic redemption of the TOPrS if at any time the specified
changes in U.S. tax law or U.S. investment company law described in this
prospectus occur.
Neither the partnership preferred securities nor the TOPrS can be
redeemed at any time at the option of their holders. Neither the TOPrS nor the
partnership preferred securities have any scheduled maturity.
Are there any risks associated with my investment?
Yes, an investment in the TOPrS is subject to risk. Please refer to
the section entitled "Risk Factors" in this prospectus for a description of
these risks.
What happens if ML Trust doesn't pay distributions on the TOPrS?
If at any time you have not received a distribution on the TOPrS for
six consecutive calendar quarters, during that period until all scheduled
quarterly distributions are paid or set aside for payment to you, we may not
declare or pay dividends on, acquire, or make a liquidation payment with
respect to, any of our outstanding capital stock. In addition, during that
period, we will not permit any of our finance subsidiaries to make any dividend
payment on, any distribution with respect to, any acquisition of or any
liquidation payment with respect to, any of their outstanding preferred
securities.
This limitation prevents us from paying cash or other dividends to the
shareholders of our capital stock if payments are not being made on the TOPrS,
any debenture issued by us or our affiliates and held by ML Partnership or the
guarantees. However, these provisions will not restrict:
o our ability to pay dividends or distributions on our capital stock in
shares of, or options, warrants or rights to subscribe for or
purchase shares of our capital stock;
o our ability to convert or exchange our common stock of one class into
our common stock of another class;
o our ability to redeem or purchase any rights under a rights agreement
described in this prospectus or issue preferred stock under those
rights; and
o the ability of us and our affiliates to purchase our capital stock in
connection with transactions for the account of customers of ours or
our affiliates or in connection with the distribution or trading of
our capital stock.
What are the guarantees?
We will guarantee, to the extent described in this prospectus:
o declared distributions by ML Partnership to ML Trust and distribution
of quarterly payments on the TOPrS by ML Trust to you to the extent
ML Trust receives distributions on the partnership preferred
securities;
o the redemption amount due to you if ML Trust redeems the TOPrS;
o the liquidation amount of the TOPrS if ML Trust is liquidated; and
o interest payments on debentures issued by our affiliates and held by
ML Partnership.
o However, these guarantees do not apply to either:
o current distributions on the partnership preferred securities unless
and until ML Partnership declares distributions out of funds legally
available for payment; or
o liquidating distributions on the partnership preferred securities
unless ML Partnership has assets available for payment.
If ML Partnership does not declare distributions on the partnership
preferred securities, ML Trust will not have sufficient funds to pay
distributions on the TOPrS. In that case, you will have no right to receive
those distributions because our guarantee does not cover the non-payment of
distributions on the partnership preferred securities unless the distributions
are declared.
Our obligations under the guarantees are subordinate and junior in
right of payment to all other of our liabilities and rank equally with our most
senior preferred stock and similar guarantees of ours with respect to previous
and future issues of TOPrS and other preferred stock by any other of our
finance subsidiaries.
What happens if ML Trust is liquidated?
If ML Trust is liquidated, other than in connection with any change in
U.S. tax or investment company law described above, for each TOPrS you own, you
will be entitled to receive $25 plus any accumulated and unpaid distributions
per TOPrS.
Do I have voting rights?
Generally, you will not have any voting rights, except under the
limited circumstances described below. The holders of a majority of the TOPrS,
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.
In what form will the TOPrS be issued?
The TOPrS will be issued in the form of a global certificate or
certificates registered in the name of Cede & Co., as nominee for The
Depository Trust Company also known as DTC. This means you will not receive a
certificate for your TOPrS. Your interests in the TOPrS will be evidenced by,
and transfers of the TOPrS will be effected only through, records maintained by
the participants in DTC.
Can you tell me more about ML&Co.?
Merrill Lynch & Co., Inc. is a holding company. Our subsidiary and
affiliated companies provide investment, financing, insurance and related
products on a global basis. Our principal executive offices are located at
World Financial Center, North Tower, 250 Vesey Street, New York, New York
10281. Our telephone number is (212) 449-1000. For information about us , see
the section "Merrill Lynch & Co., Inc." in this prospectus. You should also
read the other documents we have filed with the SEC, which you can find by
referring to the section entitled "Where You Can Find More Information" in this
prospectus.
Will the TOPrS be listed on an exchange?
ML Trust has applied to list the TOPrS on the NYSE under the trading
symbol " ". If approved for listing, trading on the NYSE will begin within 30
days after the TOPrS are issued. The listing of the TOPrS will not necessarily
ensure that a liquid trading market will be available for the TOPrS.
<PAGE>
RISK FACTORS
Your investment in the TOPrS will involve risks. You should carefully
consider the following discussion of risks before deciding whether an
investment in the TOPrS is suitable for you.
You will only receive distributions if distributions on the partnership
preferred securities are declared
ML Trust's ability to pay distributions on the TOPrS to you is
dependent upon its receipt of distributions on the partnership preferred
securities. If we or our affiliates defer or fail to make interest or principal
payments on the debentures and we fail to make guarantee payments on the
guarantees, ML Partnership will lack the funds necessary to pay distributions
on the partnership preferred securities. If ML Partnership does not pay current
distributions on the partnership preferred securities, either because we, as
the general partner, do not declare distributions to be made or because ML
Partnership lacks sufficient funds, ML Trust will not have funds to make
current distributions on the TOPrS. If ML Trust does not make payments to you
on the TOPrS, we will be restricted from, among other things, paying cash or
certain other dividends on our capital stock.
There may be tax consequences to you if we fail to pay you distributions
As a holder of the TOPrS, each of which represents a preferred
ownership interest in the assets of ML Trust, even if ML Partnership fails to
pay current distributions on the partnership preferred securities, you will be
required to accrue income, for U.S. federal income tax purposes, on the
cumulative deferred distributions and accumulated interest allocable to your
proportionate share of the partnership preferred securities held by ML Trust.
As a result, you will recognize income for U.S. federal income tax purposes in
advance of the receipt of cash and will not receive the cash from ML Trust
related to that distribution if you dispose of your TOPrS before the record
date for the date on which those distributions are made.
You may not receive full distributions if ML Partnership has insufficient
income or assets
You are subject to the risk that the quarterly or liquidating
distributions paid on the TOPrS will not match the rate paid on the assets held
by ML Partnership, including the debentures and any other securities acquired
by ML Partnership in the future.
This mismatch could occur if:
o we, as the general partner of ML Partnership, in our sole
discretion, do not declare distributions on the partnership
preferred securities or if ML Partnership receives insufficient
amounts from its investments to pay the additional compounded
distributions that will accumulate on any unpaid distributions,
o ML Partnership reinvests the proceeds received from the assets
it initially holds upon their retirement or at their maturities
in other assets which do not generate income sufficient to pay
full dividends in respect of the partnership preferred securities
at a rate of % per annum, or
o ML Partnership invests in assets that are not guaranteed by us
and that cannot be liquidated by ML Partnership for an amount
sufficient to pay any distributions on the partnership preferred
securities in full or if ML Partnership does not make any
distributions.
ML Trust will not have sufficient funds available to pay you full
quarterly or liquidating distributions on the TOPrS if ML Partnership lacks
sufficient funds to make quarterly or liquidating distributions on the
partnership preferred securities in full.
Our obligations under the guarantees and our debentures are subordinated
Our obligations under the guarantees are unsecured and will rank in
priority of payment:
o subordinate and junior in right of payment to all of our other
liabilities; and
o equally with:
o any of our most senior preferred stock issued from time to time,
and
o similar guarantees of ours with respect to previous and
future issues of TOPrS and other series of preferred
stock by any of our finance subsidiaries.
This means that our obligations under the guarantees will not be paid unless we
can satisfy in full all of our other obligations ranking senior to the
guarantees.
Our obligations under our debentures issued to ML Partnership are
subordinate and junior in right of payment to all of our senior indebtedness.
At September 25, 1998, we had outstanding senior indebtedness aggregating
approximately $83.7 billion which would have ranked senior to our obligations
under the guarantees and our debentures.
There are no terms in the TOPrS, the partnership preferred securities,
the guarantees or the debentures that limit our ability to incur additional
indebtedness, including indebtedness that ranks senior to the guarantees.
ML Trust's and ML Partnership's investments are not diversified
Because the investments of ML Trust and ML Partnership are not
diversified, you are subject to a greater risk that their assets will not
generate sufficient income to pay current and liquidating distributions on the
TOPrS and the partnership preferred securities than you would with a vehicle
whose investments were diversified and less exposed to the risk that
non-payment on any particular investment asset would impair its ability to pay
distributions to holders of its capital stock.
Redemption of the TOPrS or the partnership preferred securities may affect your
return
Your TOPrS may be redeemed for cash or you may receive the partnership
preferred securities in exchange for your TOPrS in the event that:
(1) a change in U.S. tax law occurs which causes:
o ML Trust to be subject to U.S. federal income tax on the
distributions it receives or accrues on the partnership
preferred securities;
o ML Partnership to be subject to U.S. federal income tax on the
income or interest payments it receives or accrues on the
investments it holds;
o ML Trust or ML Partnership to be subject to more than a minimal
amount of other taxes, duties or governmental charges; or
o interest payable by us or any of our affiliates on the
debentures then held by ML Partnership to not be deductible for
U.S. federal income tax purposes; or
(2) a change in U.S. investment company law occurs which requires ML
Trust or ML Partnership to register as an investment company.
If your TOPrS are exchanged for the partnership preferred securities,
o the trading value of the partnership preferred securities may be
lower than the trading value of the TOPrS which may result in a
lower return upon your sale of the partnership preferred
securities; and
o you may incur an additional tax liability in excess of what you
originally contemplated.
Because you may receive partnership preferred securities upon the
occurrence of one of the events described above, in connection with your
investment decision with regard to the TOPrS, you are also making an investment
decision with regard to the partnership preferred securities. You should
carefully review all the information regarding the partnership preferred
securities contained in this prospectus. There can be no assurance as to the
market prices for the partnership preferred securities that may be distributed
in exchange for TOPrS if a liquidation of ML Trust were to occur. Accordingly,
the partnership preferred securities that you may receive may trade at a
discount to the purchase price of the TOPrS and affect your expected return
substantially.
Unless the liquidation of ML Trust occurs as a result of it being
subject to U.S. federal income tax with respect to the distributions received
or accrued on the partnership preferred securities, a distribution of the
partnership preferred securities upon the liquidation of ML Trust would not be
a taxable event to holders of the TOPrS. If as a consequence of ML Trust
becoming subject to U.S. federal income tax with respect to distributions
received or accrued on the partnership preferred securities, your receipt of
the partnership preferred securities from ML Trust would likely cause you to
recognize a gain or loss as if you had exchanged TOPrS for the partnership
preferred securities. Similarly, you would recognize a gain or loss if, upon
the occurrence of one of the events described above, ML Partnership redeems the
partnership preferred securities for cash and as a result, ML Trust
automatically redeems the TOPrS for cash.
Enforcement of certain rights by or on your behalf is limited
The special representative's ability to take action on your behalf
under our guarantee of the partnership preferred securities is limited, and it
is uncertain that you would receive a distribution on the TOPrS even if the
special representative took any action or was successful in recovering funds
under our guarantee. This is because under no circumstances will 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 ML Partnership's creditors'
rights to accelerate and receive payments in respect of our and our affiliates'
debenture and our guarantee of those debentures, rather than being required to
declare and make distributions on the partnership preferred securities, ML
Partnership would be entitled to reinvest those payments in additional
debentures of ours and our affiliates, subject to satisfying the reinvestment
criteria.
If at any time:
o you have not received a distribution on the TOPrS for six
consecutive calendar quarters;
o an event of default occurs and is continuing on any debenture
issued by us or our affiliates and then held by ML Partnership;
and
o we default on our obligations under our guarantee of the TOPrS
or the partnership preferred securities;
then:
o you would rely on the enforcement by the property trustee of its
rights, as a holder of the partnership preferred securities,
against us, as guarantor of the partnership preferred securities,
including the right to direct the special representative to
enforce
(1) ML Partnership's creditors' rights and other rights with
respect to our and our affiliate's debentures and our
guarantee of those debentures,
(2) the rights of the holders of the partnership preferred
securities under our guarantee of the partnership
preferred securities, 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 for
payment, on the partnership preferred securities, and
o ML Trustee under our guarantee of the TOPrS will have the right
to enforce the terms of the guarantee.
You have limited voting rights
As a holder of the TOPrS you will have limited voting rights and will
not be entitled to vote to appoint, change, or to increase or decrease the
number of trustees of ML Trust. As holder of all of ML Trust's common
securities, those rights are ours exclusively.
The trading value of the TOPrS may be volatile
The price at which your TOPrS may trade may not fully reflect the
value of the accumulated but unpaid distributions on the TOPrS, which will
equal the accumulated but unpaid distributions on the partnership preferred
securities. In addition, because the market price of the TOPrS may be more
volatile than other similar securities where there is no right not to pay
current distributions:
o we, as general partner of ML Partnership, have the right not to
declare current distributions on the partnership preferred
securities, and
o the TOPrS represent preferred ownership interests in the
partnership preferred securities.
If you dispose of your TOPrS, you will be required to include for U.S.
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 your adjusted tax basis in your pro
rata share of the partnership preferred securities deemed disposed of. To the
extent the selling price is less than your adjusted tax basis, which will
include all accumulated but unpaid distributions, you will recognize a capital
loss. Subject to certain limited exceptions, you cannot apply capital losses to
offset ordinary income for U.S. federal income tax purposes.
There is no prior market for the TOPrS
This series of TOPrS constitutes a new issue of securities with no
established trading market. ML Trust has applied to list the TOPrS on the NYSE.
There can be no assurance that an active market for the TOPrS will develop or
be sustained in the future on the NYSE. Although the underwriters have
indicated to us that they intend to make a market in the TOPrS, as permitted by
applicable laws and regulations, they are not obligated to do so and may
discontinue any market-making activities at any time without notice.
Accordingly, no assurance can be given as to the liquidity of, or trading
markets for, the TOPrS.
We will only sell the TOPrS to those investors for whom the TOPrS are
considered suitable in light of their particular circumstances.
<PAGE>
MERRILL LYNCH & CO., INC.
We are a holding company that, through our U.S. and non-U.S. subsidiaries
and affiliates such as Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Merrill Lynch Government Securities Inc., Merrill Lynch Capital Services, Inc.,
Merrill Lynch International, Merrill Lynch Asset Management L.P. and Merrill
Lynch Mercury Asset Management, provides investment, financing, advisory,
insurance, and related products on a global basis, including:
o securities brokerage, trading and underwriting;
o investment banking, strategic services, including mergers and
acquisitions and other corporate finance advisory activities;
o asset management and other investment advisory and recordkeeping
services;
o trading and brokerage of swaps, options, forwards, futures and other
derivatives;
o securities clearance services;
o equity, debt and economic research;
o banking, trust and lending services, including mortgage lending and
related services; and
o insurance sales and underwriting services.
We provide these products and services to a wide array of clients, including
individual investors, small businesses, corporations, governments, governmental
agencies and financial institutions.
Our principal executive office is located at World Financial Center,
North Tower, 250 Vesey Street, New York, New York 10281; our telephone number
is (212) 449-1000.
If you want to find more information about us, please see the sections
entitled "Where You Can Find More Information" and "Incorporation of
Information We File with the SEC" in this prospectus.
USE OF PROCEEDS
ML Trust will use the proceeds that it receives from the sale of the
TOPrS and its common securities to purchase the partnership preferred
securities, and those proceeds will be used by ML Partnership to invest in
debentures and other permitted investments. See "Description of the Partnership
Preferred Securities--Partnership Investments". We and our affiliates, the
issuers of the debentures, intend to use the net proceeds from the sale of the
debentures for general corporate purposes. Our general corporate purposes may
include financing the activities of our subsidiaries, financing our assets and
those of our subsidiaries, the lengthening of the average maturity of our
borrowings, and financing acquisitions. Until we use the net proceeds from the
sale of any of our securities for general corporate purposes, we will use the
net proceeds to reduce our short-term indebtedness or for temporary
investments. We expect that we will, on a recurrent basis, engage in additional
financings as the need arises to finance our growth, through acquisitions or
otherwise, or to lengthen the average maturity of our borrowings. To the extent
that TOPrS being purchased for resale by MLPF&S are not resold, the aggregate
proceeds that we and our subsidiaries would receive would be reduced.
RATIO OF EARNINGS TO FIXED CHARGES
In 1998, we acquired the outstanding shares of Midland Walwyn, Inc., in a
transaction accounted for as a pooling-of-interests. The following information
has been restated as if the two entities had always been combined.
The following table sets forth our historical ratios of earnings to fixed
charges for the periods indicated:
<TABLE>
<CAPTION>
Year Ended Last Friday in December
1994 1995 1996 1997 1998
---- ---- --- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges(a)........ 1.2 1.2 1.2 1.2 1.1
</TABLE>
(a) The effect of combining Midland Walwyn did not change the ratios
reported for the fiscalyears 1994 through 1997.
For the purpose of calculating the ratio of earnings to fixed charges,
"earnings" consist of earnings from continuing operations before income taxes
and fixed charges, excluding capitalized interest and preferred security
dividend requirements of subsidiaries. "Fixed charges" consist of interest
costs, the interest factor in rentals, amortization of debt issuance costs,
preferred security dividend requirements of subsidiaries, and capitalized
interest.
<PAGE>
MERRILL LYNCH PREFERRED CAPITAL TRUST VI
Merrill Lynch Preferred Capital Trust VI is a statutory business trust
formed under the Delaware Business Trust Act, as amended, pursuant to a
declaration of trust and the filing of a certificate of trust with the
Secretary of State of the State of Delaware on December 7, 1998; the
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 is a part. The declaration
will be qualified as an indenture under the Trust Indenture Act of 1939, as
amended. Upon issuance of the TOPrS, the purchasers of the TOPrS will own all
the TOPrS issued by ML Trust. See "Description of the TOPrS". ML&Co. will
acquire ML Trust's common securities in an amount equal to at least 3% of the
total capital of ML Trust. ML Trust will use all the proceeds derived from the
issuance of the TOPrS and the common securities (collectively, the "Trust
Securities") to purchase the partnership preferred securities from ML
Partnership and, accordingly, the assets of ML Trust will consist solely of the
partnership preferred securities. ML Trust exists for the exclusive purpose of:
o issuing the Trust Securities representing undivided beneficial
ownership interests in the assets of ML Trust,
o investing the gross proceeds of the Trust Securities in the
partnership preferred securities, and
o engaging in only those other activities necessary or incidental
to the foregoing purposes.
Under the declaration, there will initially be four trustees for ML
Trust.
o Two of the trustees will be individuals who are employees or
officers of or who are affiliated with ML&Co. (the "Regular
Trustees").
o The third trustee will be a financial institution that is
unaffiliated with ML&Co. and is the indenture trustee for
purposes of compliance with the provisions of the Trust
Indenture Act (the "Property Trustee").
o 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 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 under
which the ML&Co. Debenture, as defined in this prospectus, is issued.
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
ML&Co. and ML 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 TOPrS. ML&Co., as the holder of all the 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.
ML&Co. will pay all fees and expenses related to the organization and
operations of ML Trust, including any taxes, duties, assessments or
governmental charges of whatever nature imposed by the United States or any
other domestic taxing authority upon ML Trust, other than withholding taxes,
and the offering of the TOPrS and be responsible for all debts and obligations
of ML Trust, other than those obligations with respect to the Trust Securities.
For so long as the TOPrS remain outstanding, ML&Co. will be obligated
to:
o maintain 100% direct ownership of the common securities,
o cause ML Trust to remain a statutory business trust and not to
voluntarily dissolve, wind-up, liquidate or be terminated,
except as permitted by the declaration, and
o use its commercially reasonable efforts to ensure that ML Trust
will not be
(A) an investment company for purposes of the Investment Company
Act of 1940, as amended, or
(B) classified as other than a grantor trust for United States
Federal income tax purposes.
The rights of the holders of the TOPrS, including economic rights,
rights to information and voting rights, are as set forth in the declaration
and the Delaware Trust Act. See "Description of the TOPrS". 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 ML 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.
<PAGE>
MERRILL LYNCH PREFERRED FUNDING VI, L.P.
Merrill Lynch Preferred Funding VI, L.P. is a limited partnership that
was formed under the Delaware Revised Uniform Limited Partnership Act, as
amended, on December 7, 1998 for the exclusive purposes of purchasing debt
securities of ML&Co. and wholly-owned subsidiaries of ML&Co. (the "Affiliate
Investment Instruments") and other permitted investments, with the proceeds
from the sale of partnership preferred securities to ML Trust and a capital
contribution from ML&Co. in exchange for the general partner interest in ML
Partnership. Pursuant to the certificate of limited partnership, as amended,
and the Limited Partnership Agreement, ML&Co. is the sole general partner of ML
Partnership (in such capacity, the "General Partner"). Upon the issuance of the
partnership preferred securities, which securities represent limited partner
interests in ML Partnership, ML Trust will be the sole limited partner of ML
Partnership. Contemporaneously with the issuance of the partnership preferred
securities, the General Partner will contribute capital to ML Partnership in an
amount sufficient to establish its initial capital account at an amount equal
to at least 15% of the total capital of ML Partnership.
ML Partnership is managed by the General Partner and exists for the
sole purpose of:
o issuing its partnership interests,
o investing the proceeds from the sale of the partnership
preferred securities in Affiliate Investment Instruments and
Eligible Debt Securities, as defined in this prospectus, and
o engaging in only those other activities necessary or incidental
for these purposes.
To the extent that aggregate payments to ML Partnership on the
Affiliate Investment Instruments and on Eligible Debt Securities exceed
distributions accumulated or payable with respect to the partnership preferred
securities, ML 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 be obligated under the Limited
Partnership Agreement:
o to remain the sole general partner of the Partnership and to
maintain 100% direct ownership of the General Partner's interest
in ML Partnership, which interest will at all times represent at
least 1% of the total capital of ML Partnership,
o to cause ML 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
o to use its commercially reasonable efforts to ensure that ML
Partnership will not be,
o an investment company for purposes of the Investment Company
Act or
o an association or a publicly traded partnership taxable as a
corporation for United States Federal income tax purposes.
ML&Co. or the then General Partner may transfer its obligations as
General Partner to a wholly-owned direct or indirect subsidiary of ML&Co.
provided that:
o the successor entity expressly accepts the transfer of the
obligations as General Partner, and
o before any transfer, ML&Co. has received an opinion of
nationally recognized independent counsel to ML Partnership
experienced in these matters to the effect that:
(A) ML Partnership will be treated as a partnership for United
States Federal income tax purposes;
(B) any transfer would not cause ML Trust to be classified as an
association taxable as a corporation for United States Federal
income tax purposes;
(C) following any transfer, ML&Co. and the successor entity will
be in compliance with the Investment Company Act without being
subject to registration as an investment company; and
(D) any 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 Delaware Limited 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 ML Partnership, including any
taxes, duties, assessments or governmental charges of whatever nature imposed
by the United States or any other domestic taxing authority upon ML
Partnership, other than withholding taxes, and be responsible for all debts and
obligations of ML Partnership, other than with respect to the partnership
preferred securities. Under Delaware law, assuming a limited partner in a
Delaware limited partnership such as ML Partnership, i.e., a holder of the
partnership preferred securities, does not participate in the control of the
business of the limited partnership, that limited partner will not be
personally liable for the debts, obligations and liabilities of the limited
partnership, whether arising in contract, tort or otherwise, solely by reason
of being a limited partner of the limited partnership, subject to any
obligation such limited partner may have to repay any funds that may have been
wrongfully distributed to it. ML Partnership's business and affairs will be
conducted by the General Partner.
The location of the principal executive offices of ML 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.
<PAGE>
DESCRIPTION OF THE TOPRS
The TOPrS will be issued under 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
TOPrS under the declaration for purposes of compliance with the provisions of
the Trust Indenture Act. The terms of the TOPrS 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 TOPrS is
not 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 Delaware Trust Act and the
Trust Indenture Act.
The TOPrS will be issued in fully registered form without coupons. The
TOPrS will not be issued in bearer form. See "--Book-Entry Only Issuance--The
Depository Trust Company".
The declaration authorizes the Regular Trustees of ML Trust to issue
the Trust Securities, which represent undivided beneficial ownership interests
in the assets of ML 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 ML Trust to:
o acquire any assets other than the partnership preferred
securities,
o issue any securities other than the Trust Securities, or
o incur any indebtedness.
o The payment of distributions out of money held by ML
Trust, and payments out of money held by ML Trust
upon redemption of the TOPrS or liquidation of ML
Trust, are guaranteed by ML&Co. 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 TOPrS. The Trust
Guarantee does not cover payment of distributions when ML Trust does not have
sufficient available funds to pay such distributions. In any event of
non-payment, holders of the TOPrS will have the remedies described below under
"--Trust Enforcement Events".
Distributions
The distribution rate on the TOPrS will be fixed at a rate per annum
of % of the stated liquidation amount of $25 per TOPrS and will be paid if, as
and when ML Trust has funds available for distribution. 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 in this prospectus
includes any 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 TOPrS will be cumulative, will accumulate from
the date of initial issuance and will be payable quarterly in arrears on each ,
, and , commencing , 199 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 the TOPrS as they appear on the books and records of ML Trust on the
record date with respect to the payment date for the TOPrS which corresponds to
the payment date fixed by ML Partnership with respect to the payment of
cumulative distributions on the partnership preferred securities.
Distributions on the TOPrS will be made to the extent that ML Trust
has funds available for the payment of the distributions in the Property
Account. Amounts available to ML Trust for distribution to the holders of the
TOPrS will be limited to payments received by ML Trust from ML Partnership with
respect to the partnership preferred securities or from ML&Co. on ML&Co.'s
guarantee on the TOPrS (the "Trust Guarantee") or its guarantee on the
partnership preferred securities (the "Partnership Guarantee") as described in
this prospectus. Distributions on the partnership preferred securities will be
paid only if, as and when declared in the sole discretion of ML&Co., as the
General Partner of ML Partnership. Under 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 ML 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, ML&Co., as
guarantor, of the securities in which ML Partnership invests defer or fail to
make any payment in respect of the securities or, if applicable, the
guarantees, ML Partnership will not have sufficient funds to pay and will not
declare or pay distributions on the partnership preferred securities. If ML
Partnership does not declare and pay distributions on the partnership preferred
securities out of funds legally available for distribution, ML Trust will not
have sufficient funds to make distributions on the TOPrS, in which event the
Trust Guarantee will not apply to those distributions until ML Trust has
sufficient funds available to pay those distributions. See "Description of the
Partnership Preferred Securities--Distributions" and "Description of The Trust
Guarantee". In addition, ML Partnership may not have sufficient funds to pay
current or liquidating distributions on the partnership preferred securities
if:
o at any time that ML Partnership is receiving current payments in
respect of the securities held by ML Partnership, including the
debentures, the General Partner, in its sole discretion, does not
declare distributions on the partnership preferred securities and
ML Partnership receives insufficient amounts to pay the
additional compounded distributions that will accumulate in
respect of the partnership preferred securities,
o ML 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
o ML Partnership invests in debt securities of Investment
Affiliates that are not guaranteed by ML&Co. and that cannot be
liquidated by ML Partnership for an amount sufficient to pay the
distributions in full.
Distributions on the TOPrS will be payable to their holders as they
appear on the books and records of ML Trust on the relevant record dates, which
will be one Business Day, as defined below, before the relevant payment dates.
These 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 payment will be made as described under "--Book-Entry Only
Issuance--The Depository Trust Company" below. In the event that the TOPrS 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 TOPrS is not a Business Day, payment of
the distribution payable on that 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 delay, except that, if that Business Day falls in
the next succeeding calendar year, the relevant payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on that 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:
o the non-payment of distributions on the TOPrS for six
consecutive quarterly distribution periods,
o a default by ML&Co. in respect of any of its obligations under
the Trust Guarantee, or
o 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 under the
declaration, the holder of the common securities will be deemed to have waived
any Trust Enforcement Event with respect to the common securities until all
Trust Enforcement Events with respect to the TOPrS have been cured, waived or
otherwise eliminated. Until any Trust Enforcement Event with respect to the
TOPrS 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 TOPrS and
only the holders of the TOPrS 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,
o 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:
o ML Partnership's creditors' rights and other rights with respect
to the Affiliate Investment Instruments and ML&Co.'s guarantee
of the Affiliate Investment Instruments (the "Investment
Guarantees", and together with the Trust Guarantee and the
Partnership Guarantee, the "Guarantees"),
o the rights of the holders of the partnership preferred
securities under the Partnership Guarantee, and
o the rights of the holders of the partnership preferred
securities to receive distributions on the partnership preferred
securities, only if and to the extent declared out of funds
legally available for the payment of distributions, and
o the Trust Guarantee Trustee shall have the right to enforce the
terms of the Trust Guarantee, including the right to enforce the
restriction on the payment of distributions by ML&Co. and its
finance subsidiaries on its securities as described in the Trust
Guarantee.
If the Property Trustee fails to enforce its rights under the
partnership preferred securities after a holder of the TOPrS has made a written
request, that holder may directly institute a legal proceeding against ML
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, ML Trust or any other person or
entity. In addition, for so long as ML Trust holds any partnership preferred
securities, if the Special Representative fails to enforce its rights on behalf
of ML Partnership under the Affiliate Investment Instruments after a holder of
the TOPrS has made a written request, any holder may on behalf of ML
Partnership directly institute a legal proceeding against the Investment
Affiliates, as defined below, under the Affiliate Investment Instruments,
without first instituting any legal proceeding against the Property Trustee, ML
Trust, the Special Representative or ML Partnership. In any event, for so long
as ML 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 ML&Co. to make any
required payment when due on any Investment Guarantee, then a holder of the
TOPrS may on behalf of ML Partnership directly institute a proceeding against
the Investment Affiliate with respect to any Affiliate Investment Instrument or
against ML&Co. with respect to any the 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 ML Partnership's creditors' rights to
accelerate and receive payments in respect of the Affiliate Investment
Instruments and the Investment Guarantees, subject to satisfying the
reinvestment criteria described under "Description of the Partnership Preferred
Securities--Partnership Investments", ML Partnership would be entitled to
reinvest any payments in additional Affiliate Investment Instruments and
Eligible Debt Securities, rather than declaring and making distributions on the
Partnership preferred securities.
ML&Co. and ML Trust are each required to file annually with the
Property Trustee an officer's certificate as to its compliance with all
conditions and obligations under the declaration.
Mandatory Redemption
The partnership preferred securities may be redeemed by ML Partnership
at the option of the General Partner, in whole or in part, at any time on or
after , or at any time in certain circumstances upon the occurrence of a
Partnership Special Event. Upon the redemption of the partnership preferred
securities either at the option of the General Partner or pursuant to a
Partnership Special Event, the proceeds from the 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;
provided, that holders of the Trust Securities shall be given not less than 30
nor more than 60 days notice of any 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 defined below, 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:
(1) dissolve ML Trust upon not less than 30 nor more than 60
days notice with the result that, after satisfaction of
creditors of ML Trust, if any, partnership preferred
securities would be distributed on a pro rata basis to
the holders of the TOPrS and the common securities in
liquidation of the holders' interests in ML Trust;
provided, however, that if at the time there is available
to ML Trust the opportunity to eliminate, within the
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 ML&Co. has or will
cause no adverse effect on ML Trust, ML Partnership,
ML&Co. or the holders of the Trust Securities and will
involve no material cost, ML Trust will pursue that
measure in lieu of dissolution or
(2) cause the TOPrS to remain outstanding, provided that in
the case of this clause (2), ML&Co. shall pay any and all
expenses incurred by or payable by ML Trust attributable
to ML 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 these 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 any
Investment Affiliate is not, or will not be, deductible by any 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 the holders' interests in ML Trust as described above, then the
General Partner shall have the right, within 90 days following the occurrence
of the Trust Tax Event, to elect to cause ML 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 any
redemption, the Trust Securities will be redeemed by ML Trust at the redemption
price.
"Trust Tax Event" means that ML&Co. shall have requested and received
and shall have delivered to the Regular Trustees an opinion of nationally
recognized independent tax counsel experienced in these matters (a "Trust
Dissolution Tax Opinion") to the effect that there has been:
o an amendment to, change in or announced proposed change in the
laws, or any regulations under those laws of the United States
or any political subdivision or taxing authority of that
jurisdiction,
o a judicial decision interpreting, applying, or clarifying these
laws or regulations,
o 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 the administrative pronouncement or taking any action, or
o a threatened challenge asserted in connection with an audit of
ML&Co. or any of its subsidiaries, ML Partnership, or ML 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 TOPrS, 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 (1) through (3) below, and that
following the occurrence of any Tax Action there is more than an
insubstantial risk that:
(1) ML Trust is, or will be, subject to United States federal
income tax with respect to income accrued or received on the
partnership preferred securities,
(2) ML Trust is, or will be, subject to more than a minimal
amount of other taxes, duties or other governmental charges or
(3) interest payable by an Investment Affiliate with respect to
the Affiliate Investment Instrument issued by the Investment
Affiliate is not, or will not be, deductible by the
Investment Affiliate for United States federal income tax
purposes.
Recently, the Internal Revenue Service asserted that the interest
payable on a security issued in circumstances with certain similarities to the
issuance of the debentures issued by the Investment Affiliates to ML
Partnership was not deductible for United States Federal income tax purposes.
The taxpayer in that case has filed a petition in the United States Tax Court
challenging the IRS's position on this matter. If this matter were to be
litigated and the Tax Court were to sustain the IRS's position on this matter,
the judicial decision could constitute a Trust Tax Event, which could result in
an early redemption of the TOPrS.
"Trust Investment Company Event" means that ML&Co. shall have
requested and received and shall have delivered to the Regular Trustees an
opinion of nationally recognized independent legal counsel experienced in these
matters to the effect that as a result of the occurrence on or after the date
of this prospectus 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 Investment
Company Act Law"), ML Trust is or will be considered an investment company
which is required to be registered under the Investment Company Act.
If the partnership preferred securities are distributed to the holders
of the TOPrS, ML&Co. will use its best efforts to cause the partnership
preferred securities to be listed on the NYSE or on any other national
securities exchange or similar organization as the TOPrS are then listed or
quoted.
On the date fixed for any distribution of partnership preferred
securities, upon dissolution of ML Trust,
o the Trust Securities will no longer be deemed to be outstanding,
and
o certificates representing the Trust Securities will be deemed to
represent the partnership preferred securities having a
liquidation preference equal to the stated liquidation amount of
the Trust Securities until the certificates are presented to
ML&Co. 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 TOPrS if a
dissolution and liquidation of ML Trust were to occur. Accordingly, the
partnership preferred securities which an investor may subsequently receive on
dissolution and liquidation of ML Trust may trade at a discount to the price of
the TOPrS exchanged.
Redemption Procedures
ML Trust may not redeem fewer than all of the outstanding TOPrS unless
all accumulated and unpaid distributions have been paid on all TOPrS for all
quarterly distribution periods terminating on or before the date of redemption.
If ML Trust gives a notice of redemption in respect of the TOPrS,
which notice will be irrevocable, and if ML&Co. 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 City
time, on the redemption date, ML 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
the redemption amount to holders of the TOPrS. 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 deposit,
all rights of holders of any TOPrS so called for redemption will cease, except
the right of the holders of those TOPrS to receive the redemption price (the
"Redemption Price"), but without interest. In the event that any date fixed for
redemption of the TOPrS is not a Business Day, then payment of the amount
payable on that 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 delay, except that, if that Business Day falls in the next
calendar year, the payment will be made on the immediately preceding Business
Day. In the event that payment of the Redemption Price in respect of the TOPrS
is improperly withheld or refused and not paid either by ML Trust or by ML&Co.
under the Trust Guarantee described under "Description of the Trust Guarantee",
distributions on the TOPrS will continue to accumulate from the original
redemption date to the date of payment.
In the event that fewer than all of the outstanding TOPrS are to be
redeemed, the TOPrS will be redeemed in accordance with the procedures of DTC.
See "--Book-Entry Only Issuance--The Depository Trust Company". In the event
that the TOPrS do not remain in book-entry only form and fewer than all of the
outstanding TOPrS are to be redeemed, the TOPrS shall be redeemed on a pro rata
basis or pursuant to the rules of any securities exchange on which the TOPrS
are listed.
Subject to the foregoing and applicable law, including, without
limitation, United States Federal securities laws, ML&Co. or its subsidiaries
may at any time and from time to time purchase outstanding TOPrS by tender, in
the open market or by private agreement.
Subordination of the 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:
o the occurrence of an Investment Event of Default by an
Investment Affiliate, including ML&Co., in respect of any
Affiliate Investment Instrument, or
o default by ML&Co. on any of its obligations under any guarantee
described in this prospectus, the holders of the TOPrS will have
a preference over the holders of the common securities with
respect to payments upon liquidation of ML Trust.
In the case of any Trust Enforcement Event, the holder of the common
securities will be deemed to have waived the Trust Enforcement Event until all
Trust Enforcement Events with respect to the TOPrS have been cured, waived or
otherwise eliminated. Until all Trust Enforcement Events with respect to the
TOPrS have been so cured, waived or otherwise eliminated, the Property Trustee
shall act solely on behalf of the holders of the TOPrS and not on behalf of the
holder of the common securities, and only the holders of the TOPrS 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 ML Trust (each a "Trust Liquidation"), the holders
of the TOPrS will be entitled to receive out of the assets of ML 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 TOPrS plus accumulated and unpaid distributions
to the date of payment (the "Trust Liquidation Distribution"), unless, in
connection with the Trust Liquidation, partnership preferred securities have
been distributed on a pro rata basis to the holders of the Trust Securities.
If, upon any Trust Liquidation, the Trust Liquidation Distribution can
be paid only in part because ML Trust has insufficient assets available to pay
in full the aggregate Trust Liquidation Distribution, then the amounts payable
directly by ML Trust on the TOPrS shall be paid on a pro rata basis. The
holders of the common securities will be entitled to receive distributions upon
liquidation pro rata with the holders of the TOPrS, except in the limited
circumstances described above under "--Subordination of the Common Securities".
Pursuant to the declaration, ML Trust shall terminate:
(1) upon the bankruptcy of ML&Co.,
(2) upon the filing of a certificate of dissolution or the
equivalent with respect to ML&Co., the filing of a
certificate of cancellation with respect to ML 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 ML&Co. and the expiration
of 90 days after the date of revocation without
reinstatement,
(3) upon the distribution of all of the partnership preferred
securities upon the occurrence of a Trust Special Event,
(4) upon the entry of a decree of a judicial dissolution of ML&Co.
or ML Trust, or
(5) upon the redemption of all the Trust Securities.
Voting Rights
Except as described in this prospectus, under the Delaware 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 TOPrS 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 TOPrS 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:
o 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
o consent to any amendment, modification, or termination of the
Limited Partnership Agreement or the partnership preferred
securities where consent is 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, 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 consent or take action on behalf of ML Trust. See
"Description of the Partnership Preferred Securities--Voting
Rights".
The Property Trustee shall notify all holders of the TOPrS 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. The notice shall state that the 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 immediately preceding clauses above unless the
Property Trustee has obtained an opinion of independent tax counsel to the
effect that as a result of such action, ML 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 the TOPrS may be
given at a separate meeting of holders of the TOPrS convened for that 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 the TOPrS are entitled to vote, or of any matter upon which action
by written consent of the holders is to be taken, to be mailed to each holder
of record of the TOPrS. Each such notice will include a statement setting forth
the following information:
(1) the date of the meeting or the date by which any action is to
be taken;
(2) a description of any resolution proposed for adoption at the
meeting on which the holders are entitled to vote or of the
matter upon which written consent is sought; and
(3) instructions for the delivery of proxies or consents.
No vote or consent of the holders of the TOPrS will be required for ML Trust to
redeem and cancel the TOPrS or distribute partnership preferred securities in
accordance with the declaration.
Notwithstanding that holders of the TOPrS are entitled to vote or
consent under any of the circumstances described above, any of the Trust
Securities that are beneficially owned at that time by ML&Co. or any entity
directly or indirectly controlled by, or under direct or indirect common
control with, ML&Co., except for TOPrS purchased or acquired by ML&Co. or its
affiliates in connection with transactions effected by or for the account of
customers of ML&Co. or any of its subsidiaries or in connection with the
distribution or trading of the TOPrS, shall not be entitled to vote or consent
and shall, for purposes of any vote or consent, be treated as if the Trust
Securities were not outstanding; provided, however, that persons, other than
affiliates of ML&Co., to whom ML&Co. or any of its subsidiaries have pledged
the TOPrS may vote or consent with respect to the pledged TOPrS pursuant to the
terms of the pledge.
The procedures by which holders of the TOPrS 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 TOPrS will have no rights to appoint or remove the
Regular Trustees, who may be appointed, removed or replaced solely by ML&Co.,
as the holder of all of the common securities.
Merger, Consolidation or Amalgamation of ML Trust
ML 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. ML 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:
(1) if ML Trust is not the surviving entity, the successor entity
either:
o expressly assumes all of the obligations of ML Trust under
the Trust Securities, or
o substitutes for the TOPrS other securities having
substantially the same terms as the TOPrS (the "Successor
Securities"), so long as the Successor Securities rank the
same as ML Trust Securities rank with respect to
distributions, assets and payments,
(2) ML&Co. expressly acknowledges a trustee of the successor
entity possessing the same powers and duties as the Property
Trustee as the holder of the partnership preferred securities,
(3) the TOPrS 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 TOPrS are then listed or quoted,
(4) any merger, consolidation, amalgamation or replacement does
not cause the TOPrS, including any Successor Securities, to be
downgraded by any nationally recognized statistical rating
organization,
(5) any merger, consolidation, amalgamation or replacement does
not adversely affect the rights, preferences and privileges of
the holders of the TOPrS, including any Successor Securities,
in any material respect,
(6) the successor entity has a purpose substantially identical to
that ML Trust,
(7) ML&Co. guarantees the obligations of the successor entity
under the Successor Securities to the same extent as provided
by the Trust Guarantee and
(8) before any merger, consolidation, amalgamation or
replacement, ML&Co. has received an opinion of a nationally
recognized independent counsel to ML Trust experienced in
these matters to the effect that:
o any merger, consolidation, amalgamation or replacement
will not adversely affect the rights, preferences and
privileges of the holders of the TOPrS, including any
Successor Securities, in any material respect, other than
with respect to any dilution of the holders' interest in
the new entity,
o following any merger, consolidation, amalgamation or
replacement, neither ML Trust nor the successor entity
will be required to register as an investment company
under the Investment Company Act,
o following any merger, consolidation, amalgamation or
replacement, ML Trust, or any 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
o following any merger, consolidation, amalgamation or
replacement, ML 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, ML Trust shall not, except with the consent of
holders of 100% in liquidation amount of the TOPrS, 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 any
consolidation, amalgamation, merger or replacement would cause ML 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 the circumstances described in the declaration,
the Property Trustee and the Delaware Trustee. However, if any proposed
amendment provides for, or the Regular Trustees otherwise propose to effect,
(1) 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
(2) the dissolution, winding-up or termination of ML Trust other
than under the terms of the declaration,
then, in each case, the holders of the Trust Securities voting together as a
single class will be entitled to vote on the amendment or proposal and the
amendment or proposal shall not be effective except with the approval of at
least a majority in liquidation amount of the Trust Securities affected;
provided, further that if any amendment or proposal referred to in clause (2)
above would adversely affect only the TOPrS or the common securities, then only
the affected class will be entitled to vote on the amendment or proposal and
the amendment or proposal shall not be effective except with the approval of a
majority in liquidation amount of that class of Trust Securities.
The declaration may be amended without the consent of the holders of
the Trust Securities to:
o cure any ambiguity,
o correct or supplement any provision in the declaration that may
be defective or inconsistent with any other provision of the
declaration,
o add to the restrictions or obligations of the sponsor,
o conform to any change in the Investment Company Act, the Trust
Indenture Act or the rules or regulations under either law and
o modify, eliminate and add to any provision of the declaration to
the extent as may be necessary or desirable;
provided that no 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 the amendment or modification would:
o cause ML Trust to fail to be classified as a grantor trust for
United States Federal income tax purposes,
o cause ML Partnership to be classified as an association or
publicly traded partnership taxable as a corporation for those
purposes,
o reduce or otherwise adversely affect the powers of the Property
Trustee, or
o cause ML Trust or ML Partnership to be deemed an investment
company which is required to be registered under the Investment
Company Act.
Book-Entry Only Issuance--The Depository Trust Company
Description of the Global Certificates
DTC will act as securities depository (the "Depository") for the TOPrS
and, to the extent distributed to the holders of the TOPrS, the partnership
preferred securities. The TOPrS will be issued only as fully-registered
securities registered in the name of Cede & Co. (DTC's nominee). One or more
fully-registered global certificates, representing the total aggregate number
of TOPrS, will be issued and will be deposited with DTC.
DTC Procedures
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 Securities
Exchange Act of 1934, as amended. DTC holds securities that its 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 NYSE, 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. The rules
applicable to DTC and its participants are on file with the SEC.
Purchases of the TOPrS within the DTC system must be made by or
through participants, which will receive a credit for the TOPrS on DTC's
records. The ownership interest of each beneficial owner of the TOPrS 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 TOPrS. Transfers of ownership interests in the
TOPrS are to be accomplished by entries made on the books of participants and
indirect participants acting on behalf of beneficial owners. Beneficial owners
will not receive certificates representing their ownership interests in the
TOPrS, except in the event that use of the book-entry system for the TOPrS is
discontinued.
DTC has no knowledge of the actual beneficial owners of the TOPrS;
DTC's records reflect only the identity of the participants to whose accounts
the TOPrS 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 TOPrS being represented for all purposes under
the declaration and the TOPrS. 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 ML&Co. that it will take any action permitted to be
taken by a holder of the TOPrS, including the presentation of the TOPrS 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 the
TOPrS as to which the participant or participants has or have given the
direction. Also, if there is a Trust Enforcement Event under the TOPrS, 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 TOPrS held in book-entry form
will be sent to Cede & Co. If less than all of the TOPrS 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 TOPrS is limited, in those cases
where a vote is required, neither DTC nor Cede & Co. will itself consent or
vote with respect to the TOPrS. Under its usual procedures, DTC would mail an
omnibus proxy to ML 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 TOPrS are allocated on the record date
identified in a listing attached to the omnibus proxy.
Distributions on the TOPrS 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 the 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 the participants and
indirect participants and not of DTC, ML Trust or ML&Co., 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 ML Trust,
disbursement of those payments to participants is the responsibility of DTC,
and disbursement of those 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 the TOPrS.
Accordingly, each beneficial owner must rely on the procedures of DTC to
exercise any rights under the TOPrS.
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 ML&Co.
nor ML 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 TOPrS at any time by giving notice to ML Trust. Under such
circumstances, in the event that a successor securities depository is not
obtained, the TOPrS certificates are required to be printed and delivered to
the Property Trustee. Additionally, ML Trust, with the consent of ML&Co., may
decide to discontinue use of the system of book-entry transfers through DTC or
any successor depository. In that event, certificates for the TOPrS will be
printed and delivered to the Property Trustee. In each of the above
circumstances, ML&Co. will appoint a paying agent with respect to the TOPrS.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. These laws
may impair the ability to transfer beneficial interests in the global TOPrS as
represented by a global certificate.
Year 2000 Compliance
DTC management is aware that some computer applications, systems, and
the like for processing data ("Systems") that are dependent upon calendar
dates, including dates before, on, and after January 1, 2000, may encounter
"Year 2000 problems." DTC has informed its participants and other members of
the financial community (the "Industry") that it has developed and is
implementing a program so that its Systems, as the same relate to the timely
payment of distributions, including principal and interest payments, to
securityholders, book-entry deliveries, and settlement of trades within DTC
("DTC Services"), continue to function appropriately. This program includes a
technical assessment and a remediation plan, each of which is complete.
Additionally, DTC's plan includes a testing phase, which is expected to be
completed within appropriate time frames.
However, DTC's ability to perform properly its services is also
dependent upon other parties, including, but not limited to, issuers and their
agents, as well as DTC's participants, third party vendors from whom DTC
licenses software and hardware, and third party vendors on whom DTC relies for
information or the provision of services, including telecommunication and
electrical utility service providers, among others. DTC has informed the
Industry that it is contacting (and will continue to contact) third party
vendors from whom DTC acquires services to:
o impress upon them the importance of such services being Year
2000 compliant; and
o determine the extent of their efforts for Year 2000
remediation and, as appropriate, testing of their services.
In addition, DTC is in the process of developing such contingency
plans as it deems appropriate.
According to DTC, the information in the preceding two paragraphs with
respect to DTC has been provided to the Industry for informational purposes
only and is not intended to serve as a representation, warranty, or contract
modification of any kind.
The information in this section concerning DTC and DTC's system has
been obtained from sources that ML&Co. believes to be reliable, but ML&Co. takes
no responsibility for the accuracy of the information.
Payment
Payments in respect of the TOPrS 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, payments shall be made by check mailed to the address of the holder
entitled to receive the payment as the holder's 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 TOPrS.
Registration of transfers of the TOPrS will be effected without charge
by or on behalf of ML Trust, but upon payment and with the giving of any
indemnity as ML Trust or ML&Co. may require, in respect of any tax or other
government charges which may be imposed in relation to it.
ML Trust will not be required to register or cause to be registered
the transfer of the TOPrS after the TOPrS have been called for redemption.
Information Concerning the Property Trustee
The Property Trustee, before the occurrence of a default with respect
to the Trust Securities, undertakes to perform only the 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 the TOPrS, unless offered
reasonable indemnity by the holder against the costs, expenses and liabilities
which might be incurred in connection with the exercise of any powers. The
holders of the TOPrS will not be required to offer any indemnity in the event
the 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 TOPrS will be governed by, and construed in
accordance with, the internal laws of the State of Delaware.
Miscellaneous
The Regular Trustees are authorized and directed to conduct the
affairs of and to operate ML Trust in such a way that ML Trust will not be
deemed to be an investment company required to be registered under the
Investment Company 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 those purposes
as long as such action does not adversely affect the interests of the holders
of the TOPrS.
Holders of the TOPrS 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 ML&Co. for the benefit of the
holders from time to time of the TOPrS. The summary is not 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 TOPrS and will act as indenture trustee for the purposes of compliance
with the Trust Indenture Act.
Under the Trust Guarantee, ML&Co. will irrevocably agree, on a
subordinated basis and to the extent set forth in the Trust Guarantee, to pay
in full to the holders of the TOPrS, except to the extent paid by ML Trust, as
and when due, regardless of any defense, right of set off or counterclaim which
ML Trust may have or assert, the following payments (the "Trust Guarantee
Payments"), without duplication:
o any accumulated and unpaid distributions on the TOPrS to the
extent ML Trust has funds available for distribution,
o the Redemption Price with respect to any TOPrS called for
redemption by ML Trust, to the extent ML Trust has funds
available for payment, and
o upon a voluntary or involuntary dissolution, winding-up or
termination of ML Trust, other than in connection with the
distribution of partnership preferred securities to the
holders of the TOPrS or the redemption of all of the TOPrS,
the lesser of:
(1) the aggregate of the liquidation amount and all
accumulated and unpaid distributions on the TOPrS and
(2) the amount of assets of ML Trust remaining available for
distribution to holders of the TOPrS upon the liquidation of
ML Trust.
ML&Co.'s obligation to make a Trust Guarantee Payment may be satisfied by
direct payment of the required amounts by ML&Co. to the holders of the TOPrS or
by causing ML Trust to pay these amounts to holders.
The Trust Guarantee will be a guarantee on a subordinated basis with
respect to the TOPrS from the time of issuance of the TOPrS but will only apply
to any payment of distributions or the Redemption Price, or to payments upon
the dissolution, winding-up or termination of ML Trust, to the extent ML Trust
shall have funds available. If ML Partnership fails to declare distributions on
the partnership preferred securities, ML Trust would lack available funds for
the payment of distributions or amounts payable on redemption of the TOPrS or
otherwise, and in such event holders of the TOPrS would not be able to rely
upon the Trust Guarantee for payment of these amounts. Instead, holders of the
TOPrS will have the remedies described under "Description of the TOPrS--Trust
Enforcement Events", including the right to direct the Trust Guarantee Trustee
to enforce the restriction of payments by ML&Co. and its finance subsidiaries
on its capital stock. See "-- Obligations of ML&Co." below.
The Guarantees, when taken together with ML&Co. Debenture and ML&Co.'s
obligations to pay all fees and expenses of ML Trust and ML Partnership,
constitute a guarantee to the extent set forth in this prospectus by ML&Co. of
the distribution, redemption and liquidation payments payable to the holders of
the TOPrS. The Guarantees do not apply, however, to current distributions by ML
Partnership unless and until these distributions are declared by ML Partnership
out of funds legally available for payment or to liquidating distributions
unless there are assets available for payment in ML Partnership, each as more
fully described under "Risk Factors--Insufficient Income or Assets Available to
Partnership".
Obligations of ML&Co.
Under the Trust Guarantee, ML&Co. will agree that, if
o for any distribution period, full distributions on a
cumulative basis on any TOPrS have not been paid,
o an Investment Event of Default by any Investment Affiliate in
respect of any Affiliate Investment Instrument has occurred
and is continuing, or
o it is in default of its obligations under the Trust
Guarantee, the Partnership Guarantee or any Investment
Guarantee,
then, during that period:
o it may 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:
(1) 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,
(2) redemptions or purchases of any rights pursuant to the rights
agreement dated as of December 2, 1997 between ML&Co. and The
Chase Manhattan Bank (the "Rights Agreement") and the
issuance of preferred stock under those rights and
(3) purchases or acquisitions by ML&Co. or its affiliates in
connection with transactions effected by or for the account
of customers of ML&Co. or any of its subsidiaries or in
connection with the distribution or trading of its capital
stock or comparable equity interest; and
o it may 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 ML&Co. to perform any of its payment or other obligations set forth
in the Trust Guarantee.
The holders of a majority in liquidation amount of the TOPrS 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 the TOPrS has made a written request, the
holder may institute a legal proceeding directly against ML&Co. to enforce the
Trust Guarantee Trustee's rights under the Trust Guarantee, without first
instituting a legal proceeding against ML Trust, the Trust Guarantee Trustee or
any other person or entity. In any event, if ML&Co. has failed to make a
guarantee payment under the Trust Guarantee, a holder of the TOPrS may directly
institute a proceeding in the holder's own name against ML&Co. for enforcement
of the Trust Guarantee for payment.
Status of The Trust Guarantee; Subordination
The Trust Guarantee will constitute an unsecured obligation of ML&Co.
and will rank subordinate and junior in right of payment to all other
liabilities of ML&Co. and will rank equally with the most senior preferred
stock, if any, issued from time to time by ML&Co., with similar guarantees
issued by ML&Co. in connection with:
o the $275,000,000 aggregate liquidation amount of 7 3/4% Trust
Originated Preferred Securities issued by Merrill Lynch
Preferred Capital Trust I,
o the $300,000,000 aggregate liquidation amount of 8% Trust
Originated Preferred Securities issued by Merrill Lynch
Preferred Capital Trust II,
o the $750,000,000 aggregate liquidation amount of 7% Trust
Originated Preferred Securities issued by Merrill Lynch
Preferred Capital Trust III,
o the $400,000,000 aggregate liquidation amount of 7.12% Trust
Originated Preferred Securities issued by Merrill Lynch
Preferred Capital Trust IV,
o the $850,000,000 aggregate liquidation amount of 7.28% Trust
Originated Preferred Securities issued by Merrill Lynch
Preferred Capital Trust V, and
o with any guarantee now or hereafter entered into by ML&Co. in
respect of any preferred stock of any other Finance
Subsidiary.
"Finance Subsidiary" means Merrill Lynch Preferred Capital Trust I,
Merrill Lynch Preferred Capital Trust II, Merrill Lynch Preferred Capital Trust
III, Merrill Lynch Preferred Capital Trust IV, Merrill Lynch Preferred Capital
Trust V and any other wholly-owned subsidiary of ML&Co. the principal purpose
of which is to raise capital for ML&Co. by issuing securities that are
guaranteed by ML&Co. and the proceeds of which are loaned to or invested in
ML&Co. or one or more of its affiliates.
Accordingly, the rights of the holders of the TOPrS to receive
payments under the Trust Guarantee will be subject to the rights of the holders
of any obligations of ML&Co. that are senior in priority to the obligations
under the Trust Guarantee. Furthermore, the holders of obligations of ML&Co.
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 ML&Co. Debenture. The terms of
the TOPrS that each holder of the TOPrS, by acceptance , 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 ML&Co. 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 the TOPrS, 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
TOPrS. The manner of obtaining any approval of holders of the TOPrS will be as
set forth under "Description of the TOPrS--Voting Rights". All guarantees and
agreements contained in the Trust Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of ML&Co. and shall inure to the
benefit of the holders of the TOPrS then outstanding. Except in connection with
permitted merger or consolidation of ML&Co. with or into another entity or
permitted sale, transfer or lease of ML&Co.'s assets to another entity in which
the surviving corporation, if other than ML&Co., assumes ML&Co.'s obligations
under the Trust Guarantee, ML&Co. 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 TOPrS
then outstanding.
Termination of The Trust Guarantee
The Trust Guarantee will terminate as to each holder of the TOPrS
upon:
o full payment of the Redemption Price of all the TOPrS,
o distribution of the partnership preferred securities held by
ML Trust to the holders of the TOPrS or
o full payment of the amounts payable in accordance with the
declaration upon liquidation of ML 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 the TOPrS must
restore payment of any sum paid under the TOPrS or the Trust Guarantee.
Information Concerning the Trust Guarantee Trustee
The Trust Guarantee Trustee, before the occurrence of a default with
respect to the Trust Guarantee, undertakes to perform only those 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 that 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
TOPrS unless it is offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred in connection with the exercise of those
powers.
Governing Law
The Trust 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
All of the partnership interests in ML Partnership, other than the
partnership preferred securities acquired by ML Trust, are owned directly by
ML&Co.. Initially, ML&Co. will be the sole General Partner of ML Partnership.
The Limited Partnership Agreement authorizes and creates the partnership
preferred securities, which represent limited partner interests in ML
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 ML Partnership.
Except as otherwise described in this prospectus or provided in the
Limited Partnership Agreement, the Limited Partnership Agreement does not
permit ML Partnership to issue any additional partnership interests or to incur
any indebtedness .
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 Delaware Limited
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 ML 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 , , , and of each year,
commencing , 199 . 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
ML Partnership on the record date with respect to the payment date for the
partnership preferred securities.
ML 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 ML Partnership has invested from time to
time. See "--Partnership Investments". To the extent that the issuers and,
where applicable, ML&Co., as guarantor, of the securities in which ML
Partnership invests fail to make any payment in respect of the securities or,
if applicable, the guarantees, ML 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 those
distributions until ML Partnership has sufficient funds available for
distribution. 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 ML
Partnership. If ML Partnership fails to declare and pay distributions on the
partnership preferred securities out of funds legally available for
distribution, ML Trust will not have sufficient funds to make distributions on
the TOPrS, in which event the Trust Guarantee will not apply to those
distributions until ML Trust has sufficient funds available . In addition, ML
Partnership may not have sufficient funds to pay current or liquidating
distributions on the partnership preferred securities if:
o at any time that ML Partnership is receiving current payments in
respect of the securities held by ML Partnership including the
debentures, the General Partner, in its sole discretion, does not
declare distributions on the partnership preferred securities and
ML Partnership receives insufficient amounts to pay the
additional compounded distributions that will accumulate in
respect of the partnership preferred securities,
o ML 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
o ML Partnership invests in debt securities of Investment
Affiliates that are not guaranteed by ML&Co. and that cannot be
liquidated by ML Partnership for an amount sufficient to pay any
distributions in full.
Distributions on the partnership preferred securities will be payable
to holders as they appear on the books and records of ML Partnership on the
relevant record dates, which, as long as the TOPrS remain or, in the event that
ML 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 before the relevant payment dates. In the event the TOPrS, or in
the event that ML 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 that 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 delay, except that, if that Business Day is
in the next succeeding calendar year, that payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on that date.
Partnership Enforcement Events
If one or more of the following events shall occur and be continuing
(each a "Partnership Enforcement Event"):
o The non-payment of distributions on the partnership preferred
securities for six consecutive quarterly periods,
o ML&Co. is in default on any of its obligations under the
Partnership Guarantee or any Investment Guarantee or
o 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 the holders:
o 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 ML Partnership
and the limited partners (a "Special Representative") to enforce:
(1) ML 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 on the partnership
preferred securities, only if and to the extent declared out
of funds legally available for distribution, and
o under the Partnership Guarantee to enforce the terms of the
Partnership Guarantee, including the right to enforce the
covenant restricting certain payments by ML&Co. 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, the holder of record of partnership
preferred securities may directly institute a legal proceeding against ML&Co.
to enforce the rights of the Special Representative and ML Partnership under
the Affiliate Investment Instruments without first instituting any legal
proceeding against the Special Representative, ML Partnership or any other
person or entity. In any event, if a Partnership Enforcement Event has occurred
and is continuing and this event is attributable to the failure of an
Investment Affiliate to make any required payment when due on any Affiliate
Investment Instrument, then a holder of partnership preferred securities may on
behalf of ML Partnership directly institute a proceeding against the Investment
Affiliate with respect to the Affiliate Investment Instrument for enforcement
of payment. A holder of partnership preferred securities may also bring a
direct action against ML&Co. to enforce the 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 ML Partnership's creditors' rights to
accelerate and receive payments in respect of the Affiliate Investment
Instruments and the Investment Guarantees, ML Partnership would be entitled to
reinvest those 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 ML Partnership or otherwise be deemed to be a general
partner in ML Partnership and shall have no liability for the debts,
obligations or liabilities of ML 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 ML
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 ML 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").
ML&Co. anticipates that approximately 85% of the Initial Partnership Proceeds
will be used to purchase a Debenture of ML&Co. (the "ML&Co. Debenture"), and
approximately 14% of the Initial Partnership Proceeds will be used to purchase
Debentures of one or more eligible controlled affiliates of ML&Co. (the
"Affiliate Debentures"). Each Debenture is expected to have a term of 20 years
and to provide for interest payable on , , and of each year, commencing , at
market rates for the Debentures. The Debentures will be general unsecured debt
obligations of the relevant issuer, except that the ML&Co. Debenture will rank
subordinate and junior to all Senior Indebtedness of ML&Co.
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 defer the payment of
interest, interest would continue to accrue and compound at the stated interest
rate on the 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 , , 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 ML Partnership in the future,
will also contain customary events of default (the "Investment Events of
Default"), including:
o events of default for defaults in payments on the securities
when due, provided that no default shall occur upon a valid
deferral of an interest payment by an issuer,
o defaults in the performance of the relevant issuer's
obligations under its Debenture or Affiliate Investment
Instruments, as the case may be, and
o certain bankruptcy, insolvency or reorganization events,
subject to customary exceptions and grace periods.
The payment of interest and principal when due and other payment terms
of the Debentures other than ML&Co. Debenture, will be guaranteed to the extent
described in this prospectus (each, an "Investment Guarantee") by ML&Co. 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 ML&Co. which evidence any of the following:
o 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;
o 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;
o demand deposits, time deposits and certificates of deposit
which are fully insured by the Federal Deposit Insurance
Corporation;
o repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the Government
of the United States of America or any agency or
instrumentality thereof, the obligations of which are backed
by the full faith and credit of the United States of America,
in either case entered into with a depository institution or
trust company which is an Eligible Institution and the
deposits of which are insured by the FDIC; and
o any other security which is identified as a permitted
investment of a finance subsidiary pursuant to Rule 3a-5
under the Investment Company Act at the time it is acquired
by ML Partnership.
"Eligible Institution" means, 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), which has either:
o a long-term unsecured debt rating of AA or better by S&P and
Aa or better by Moody's or
o 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 whose deposits are insured by the FDIC or whose the parent has a long-term
or short-term unsecured debt rating which signifies investment grade and whose
deposits are insured by the FDIC.
ML Partnership may, from time to time and subject to the restrictions
described below, reinvest payments received with respect to the Affiliate
Investment Instruments and the Eligible Debt Securities in additional Affiliate
Investment Instruments and Eligible Debt Securities. As of the date of this
prospectus, ML&Co., as the General Partner, does not intend to cause ML
Partnership to reinvest regularly scheduled, periodic payments of interest or
dividends received by ML Partnership in the manner described below, although
there can be no assurance that the General Partner's intention in respect of
any reinvestments will not change in the future.
The fairness of specific terms of all Affiliate Investment Instruments
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
ML&Co. or any of its subsidiaries (the "Independent Financial Advisor").
ML Partnership may reinvest in additional Affiliate Investment
Instruments only if certain procedures and criteria are satisfied with respect
to each Affiliate Investment Instrument, including the satisfaction of the
following conditions:
(1) ML 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 proposed investment;
(2) 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 ML Partnership;
(3) 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 ML Partnership
in a public offering or private placement under Rule 144A of
the Securities Act of a comparable security issued by the
relevant Investment Affiliate and guarantees, if any; and
(4) the requesting Investment Affiliate shall not be deemed
to be an investment company by reason of Section 3(a) or 3(b)
of the Investment Company Act or is otherwise an eligible
recipient of funds directly or indirectly from ML Trust
pursuant to an order issued by the SEC.
The term "Investment Affiliate" means ML&Co. or any corporation,
partnership, limited liability company or other entity that is controlled by
ML&Co., other than ML Partnership or ML Trust. If ML Partnership is unable to
reinvest payments and proceeds from Affiliate Investment Instruments in
additional Affiliate Investment Instruments meeting the above criteria, ML
Partnership may only invest those funds in Eligible Debt Securities, subject to
restrictions of applicable law, including the Investment Company Act.
Investment Guarantees
ML&Co. 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 ML&Co. Debenture, to the extent set forth below. The Investment
Guarantees shall be enforceable regardless of any defense, right of set-off or
counterclaim that ML&Co. may have or assert. The Investment Guarantees will be
full and unconditional guarantees, to the extent set forth in this prospectus,
with respect to the applicable Debentures from the time of issuance. To the
extent that, as described above, ML Partnership invests in additional Affiliate
Investment Instruments, the determination as to whether the 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 ML&Co. 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 the
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 the TOPrS may institute its own
legal proceeding to enforce that 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 previously 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 ML Trust is the holder of the partnership preferred
securities, no amendment will be effective without the prior written approval
of a majority in liquidation amount of the outstanding TOPrS. All guarantees
and agreements contained in the Investment Guarantees shall bind the
successors, assigns, receivers, trustees and representatives of ML&Co. and
shall inure to the benefit of the holders of partnership preferred securities.
Except in connection with any permitted merger or consolidation of ML&Co. with
or into another entity or any permitted sale, transfer or lease of ML&Co.'s
assets to another entity in which the surviving corporation, if other than
ML&Co., assumes ML&Co.'s obligations under the Investment Guarantees, ML&Co.
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
ML&Co.'s obligations under the Investment Guarantees will constitute
unsecured obligations of ML&Co. and will rank subordinate and junior in right
of payment to all other liabilities of ML&Co. and will rank equally with the
most senior preferred stock, if any, issued from time to time by ML&Co., with
similar guarantees issued by ML&Co. in connection with:
o the $275,000,000 aggregate liquidation amount of 7 3/4% Trust
Originated Preferred Securities issued by Merrill Lynch
Preferred Capital Trust I,
o the $300,000,000 aggregate liquidation amount of 8% Trust
Originated Preferred Securities issued by Merrill Lynch
Preferred Capital Trust II,
o the $750,000,000 aggregate liquidation amount of 7% Trust
Originated Preferred Securities issued by Merrill Lynch
Preferred Capital Trust III,
o the $400,000,000 aggregate liquidation amount of 7.12% Trust
Originated Preferred Securities issued by Merrill Lynch
Preferred Capital Trust IV,
o the $850,000,000 aggregate liquidation amount of 7.28% Trust
Originated Preferred Securities issued by Merrill Lynch
Preferred Capital Trust V and
o with any guarantee now or hereafter entered into by ML&Co. 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 ML&Co.
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 ML&Co. 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 , ,
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 ML Partnership redeems partnership preferred
securities in accordance with their terms , ML Trust will redeem the Trust
Securities at the Redemption Price. If:
o a partial redemption would result in the delisting of the
TOPrS,
o ML Trust is liquidated in connection with a Trust Special
Event, or
o a partial redemption would result in the delisting of the
partnership preferred securities,
then, in each case, ML 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 defined below, 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:
o 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 ML Partnership the opportunity to eliminate,
within the 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 ML&Co. has or will cause
no adverse effect on ML Partnership, ML Trust or ML&Co., the
General Partner will pursue that measure in lieu of
redemption; or
o cause the partnership preferred securities to remain
outstanding, provided that in the case of this clause, the
General Partner shall pay any and all costs and expenses
incurred by or payable by ML Partnership attributable to the
Partnership Special Event.
"Partnership Tax Event" means that the General Partner shall have
requested and received an opinion of nationally recognized independent tax
counsel experienced in these matters to the effect that there has been a Tax
Action which affects any of the events described in (1) through (3) below and
that there is more than an insubstantial risk that:
(1) ML 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,
(2) ML Partnership is, or will be, subject to more than a
minimal amount of other taxes, duties or other governmental
charges or
(3) interest payable by an Investment Affiliate with respect
to the Affiliate Investment Instrument issued by such
Investment Affiliate to ML Partnership is not, or will not
be, deductible by the Investment Affiliate for United States
Federal income tax purposes.
Recently, the IRS asserted that the interest payable on a security
issued in similar circumstances as the issuance of the Debentures by the
Investment Affiliates to ML Partnership was not deductible for United States
Federal income tax purposes. The taxpayer in that case has filed a petition in
the United States Tax Court challenging the IRS's position on this matter. If
this matter were to be litigated and the Tax Court were to sustain the IRS's
position on this matter, the judicial decision could constitute a Partnership
Tax Event, which could result in an early redemption of the partnership
preferred securities.
"Partnership Investment Company Event" means that the General Partner
shall have requested and received an opinion of nationally recognized
independent legal counsel experienced in these matters to the effect that as a
result of the occurrence on or after the date hereof of a Change in Investment
Company Act Law, ML Partnership is or will be considered an investment company
which is required to be registered under the Investment Company Act.
Redemption Procedures
ML 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 before the date of redemption.
If ML 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, ML Partnership:
o 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
o 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 any amount in
respect of any partnership preferred securities in certificated
form and will give the paying agent irrevocable instructions and
authority to pay these amounts to the holders of partnership
preferred securities upon surrender of their certificates.
See "Description of the TOPrS--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 the 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 that 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 delay, except that, if that
Business Day falls in the next calendar year, the payment will be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on the 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 ML Partnership or by ML&Co. under
the Partnership Guarantee described under "Description of the Partnership
Guarantee," distributions on the 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, ML&Co. 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.
Liquidation Distribution Upon Dissolution
In the event of any voluntary or involuntary dissolution, winding-up
or termination of ML Partnership, the holders of the partnership preferred
securities at the time will be entitled to receive out of the assets of ML
Partnership available for distribution to partners after satisfaction of
liabilities of creditors as required by the Delaware 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 on the partnership preferred
securities to the date of payment (this amount is the "Partnership Liquidation
Distribution").
Under the Limited Partnership Agreement, ML Partnership shall be
dissolved and its affairs shall be wound up:
o upon the bankruptcy of the General Partner,
o upon the assignment by the General Partner of its entire
interest in ML Partnership when the assignee is not admitted
to ML Partnership as a general partner of ML 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 ML Partnership under the Delaware Limited
Partnership Act, unless the business of the Partnership is
continued in accordance with the Delaware Limited Partnership
Act,
o if ML Partnership has redeemed or otherwise purchased all the
partnership preferred securities,
o upon the entry of a decree of judicial dissolution or
o upon the written consent of all partners of ML 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 a meeting
within the 30-day period, the holders of 10% in liquidation preference of the
outstanding partnership preferred securities will be entitled to convene a
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 meeting. In the event that, at any 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 the appointment, no Special Representative shall be appointed. Any
Special Representative appointed shall cease to be a Special Representative of
ML Partnership and the limited partners if:
o ML Partnership, or ML&Co. pursuant to the Partnership
Guarantee, shall have paid in full all accumulated and unpaid
distributions on the partnership preferred securities,
o any Investment Event of Default, as the case may be, shall
have been cured, and
o ML&Co. is in compliance with all its obligations under the
Partnership Guarantee and ML&Co., in its capacity as the
General Partner, shall continue the business of ML
Partnership without dissolution.
o Notwithstanding the appointment of the Special
Representative, ML&Co. 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 to declare
distributions 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,
o 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 limited
partner interests in ML Partnership ranking, as to
participation in the profits or distributions or in the
assets of ML Partnership, senior to the partnership preferred
securities, or
o the dissolution, winding-up or termination of ML Partnership,
other than:
(A) in connection with the occurrence of a Partnership
Special Event or
(B) 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 any amendment or proposal of the General Partner, but not
on any other amendment or proposal, as a class, and no amendment or proposal
shall be effective without the approval of the holders of a majority in
liquidation preference of the outstanding partnership preferred securities
having a right to vote on the matter; provided, however, that if the Property
Trustee on behalf of ML Trust is the holder of the partnership preferred
securities, any amendment or proposal not excepted by clauses (A) and (B) above
shall not be effective without the prior or concurrent approval of the holders
of a majority in liquidation amount of the outstanding TOPrS having a right to
vote on the matters.
The General Partner shall not
o direct the time, method and place of conducting any
proceeding for any remedy available,
o waive any Investment Event of Default that is waivable under
the Affiliate Investment Instruments,
o exercise any right to rescind or annul a declaration that the
principal of any Affiliate Investment Instruments shall be
due and payable,
o waive the breach of the obligation by ML&Co. to restrict
certain payments by ML&Co., or
o 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 ML Trust is the
holder of the partnership preferred securities, any 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 TOPrS having a right to vote on these 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 the
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 that purpose, at a meeting of all of the partners in ML
Partnership or pursuant to written consent. ML 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 the
holders is to be taken, to be mailed to each holder of record of partnership
preferred securities. Each notice will include a statement setting forth
o the date of the meeting or the date by which action is to be
taken,
o a description of any resolution proposed for adoption at the
meeting on which holders are entitled to vote or of the
matters upon which written consent is sought and
o instruction for the delivery of proxies or consents.
No vote or consent of the holders of partnership preferred securities
will be required for ML 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 ML&Co. or by any entity directly or indirectly controlled by, or under
direct or indirect common control with, ML&Co., except for partnership
preferred securities purchased or acquired by ML&Co. or its affiliates in
connection with transactions effected by or for the account of customers of
ML&Co. 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 any vote or consent, be treated as if
they were not outstanding, provided, however, that persons, other than
affiliates of ML&Co., to whom ML&Co. or any of its subsidiaries have pledged
partnership preferred securities may vote or consent with respect to the
pledged partnership preferred securities under the terms of the pledge.
Holders of the partnership preferred securities will have no rights to
remove or replace the General Partner.
Merger, Consolidation or Amalgamation of ML Partnership
ML 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. ML 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:
o the successor entity either:
(A) expressly assumes all of the obligations of ML
Partnership under the partnership preferred securities or
(B) 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,
o the Investment Affiliates expressly acknowledge the successor
entity as the holder of the Affiliate Investment Instruments,
o 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,
o the merger, consolidation, amalgamation or replacement does
not cause the TOPrS or, in the event that ML Trust is
liquidated in connection with a Trust Special Event, the
partnership preferred securities or any Partnership Successor
Securities, to be downgraded by any nationally recognized
statistical rating organization,
o the merger, consolidation, amalgamation or replacement does
not adversely affect the powers, preferences and other
special rights of the holders of the TOPrS 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,
o the successor entity has a purpose substantially identical to
that of ML Partnership,
o before the merger, consolidation, amalgamation or
replacement, ML&Co. has received an opinion of nationally
recognized independent counsel to ML Partnership experienced
in these matters to the effect that:
(A) the successor entity will be treated as a partnership for
United States Federal income tax purposes,
(B) the merger, consolidation, amalgamation or replacement
would not cause ML Trust to be classified as an association
taxable as a corporation for United States Federal income tax
purposes,
(C) following the merger, consolidation, amalgamation or
replacement, ML&Co. and such successor entity will be in
compliance with the Investment Company Act without
registering as an investment company, and
(D) the merger, consolidation, amalgamation or replacement
will not adversely affect the limited liability of the
holders of the partnership preferred securities and
o ML&Co. guarantees the obligations of the 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
the TOPrS in connection with the involuntary or voluntary dissolution,
winding-up or liquidation of ML 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 TOPrS--Book-Entry Only Issuance--The 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 TOPrS 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 ML Trust or, if ML 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 ML Partnership, but upon payment,
with the giving of such indemnity as ML Partnership or the General Partner may
require, in respect of any tax or other governmental charges that may be
imposed in relation to it.
ML 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 ML Partnership in such a way that:
o ML Partnership will not be deemed to be an investment company
required to be registered under the Investment Company Act or
characterized as an association taxable as a corporation for
United States Federal income tax purposes,
o the Affiliate Investment Instruments will be treated as
indebtedness of their respective issuers for United States
Federal income tax purposes and
o ML 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 ML
Partnership or the Limited Partnership Agreement, that the General Partner
determines in its discretion to be necessary or desirable for the foregoing
purposes as long as any action does not adversely affect the interests of the
holders of the partnership preferred securities.
<PAGE>
DESCRIPTION OF THE PARTNERSHIP GUARANTEE
Set forth below is a summary of information concerning the Partnership
Guarantee (the "Partnership Guarantee") that will be executed and delivered by
ML&Co. for the benefit of the holders from time to time of partnership
preferred securities. The summary is not 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.
Terms of the Partnership Guarantee
Under the Partnership Guarantee, ML&Co. will irrevocably agree, on a
subordinated basis to the extent set forth in this prospectus, to pay in full
to the holders of the partnership preferred securities, without duplication of
amounts previously paid by ML Partnership, as and when due, regardless of any
defense, right of set-off or counterclaim that ML Partnership may have or
assert, the following payments (the "Partnership Guarantee Payments"):
o any accumulated and unpaid distributions that previously have
been declared on ML Partnership preferred securities out of
funds legally available for distribution,
o the redemption price with respect to any partnership
preferred securities called for redemption by ML Partnership
out of funds legally available for that purpose, and
o upon a liquidation of ML 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 ML Partnership, after satisfaction
of all liabilities, remaining available for distribution to
holders of partnership preferred securities in liquidation of
ML Partnership.
ML&Co.'s obligation to make a Partnership Guarantee Payment may be satisfied by
direct payment of the required amounts by ML&Co. to the holders of partnership
preferred securities or by causing ML Partnership to pay these amounts to
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 the partnership preferred securities but will not apply to any payment of
distributions or the Redemption Price, or to payments upon the dissolution,
winding-up or termination of ML Trust, except to the extent ML Partnership
shall have funds available for these purposes. If Investment Affiliates,
including, where applicable, ML&Co., as guarantor, of the Affiliate Investment
Instruments in which ML Partnership invests fail to make any payment in respect
of the securities or, if applicable, guarantees, ML 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 these amounts. Instead, holders of the
partnership preferred securities will have the remedies described in this
prospectus 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 ML&Co. and Finance Subsidiaries.
See "--Covenants of ML&Co." below.
The Guarantees, when taken together with ML&Co. Debenture and ML&Co.'s
obligations to pay all fees and expenses of ML Trust and the Partnership,
constitute a guarantee to the extent set forth in this prospectus by ML&Co. of
the distribution, redemption and liquidation payments payable to the holders of
the TOPrS. The Guarantees do not apply, however, to current distributions by ML
Partnership unless and until 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 ML Partnership.
Obligations of ML&Co.
Under the Partnership Guarantee, ML&Co. will agree that if:
o 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,
o an Investment Event of Default by any Investment Affiliate in
respect of any Affiliate Investment Instrument has occurred
and is continuing, or
o ML&Co. is in default of its obligations under any Guarantee,
then, during that period,
o ML&Co. may 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:
o 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,
o redemptions or purchases of any rights pursuant to the Rights
Agreement and the issuance of preferred stock pursuant to
those rights and
o purchases or acquisitions by ML&Co. or its affiliates in
connection with transactions effected by or for the account
of customers of ML&Co. or any of its subsidiaries or in
connection with the distribution or trading of such capital
stock or comparable equity interest and
o ML&Co. may 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 Partnership Guarantee
An event of default under the Partnership Guarantee will occur upon
the failure of ML&Co. 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 ML&Co. to enforce
the Special Representative's rights under the Partnership Guarantee without
first instituting a legal proceeding against ML Partnership, the Special
Representative or any other person or entity. Notwithstanding the foregoing, if
ML&Co. has failed to make a guarantee payment, a holder of partnership
preferred securities may directly institute a proceeding against ML&Co. for
enforcement of the Partnership Guarantee for the payment.
Status of the Partnership Guarantee; Subordination
The Partnership Guarantee will constitute an unsecured obligation of
ML&Co. and will rank subordinate and junior in right of payment to all other
liabilities of ML&Co. and will rank equally with the most senior preferred
stock issued from time to time by ML&Co., with similar guarantees issued by
ML&Co. in connection with
o the $275,000,000 aggregate liquidation amount of 7 3/4% Trust
Originated Preferred Securities issued by Merrill Lynch
Preferred Capital Trust I,
o the $300,000,000 aggregate liquidation amount of 8% Trust
Originated Preferred Securities issued by Merrill Lynch
Preferred Capital Trust II,
o the $750,000,000 aggregate liquidation amount of 7% Trust
Originated Preferred Securities issued by Merrill Lynch
Preferred Capital Trust III,
o the $400,000,000 aggregate liquidation amount of 7.12% Trust
Originated Preferred Securities issued by Merrill Lynch
Preferred Capital Trust IV,
o the $850,000,000 aggregate liquidation amount of 7.28% Trust
Originated Preferred Securities issued by Merrill Lynch
Preferred Capital Trust V and
o with any guarantee now or hereafter entered into by ML&Co. 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 ML&Co. that are senior in
priority to the obligations under the Partnership Guarantee. Furthermore, the
holders of obligations of ML&Co. 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 ML&Co. Debenture. The Limited Partnership Agreement provides
that each holder of partnership preferred securities, by their acceptance ,
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 ML&Co. to enforce its rights under the Partnership Guarantee
without instituting a legal proceeding against any other person or entity.
The Partnership Guarantee will be deposited with the General Partner
to be held for the benefit of the holders of the partnership preferred
securities. In the event of the appointment of a Special Representative to,
among other things, enforce the Partnership Guarantee, the Special
Representative may take possession of the Partnership Guarantee for such
purpose. If no Special Representative has been appointed to enforce the
Partnership Guarantee, the General Partner has the right to enforce the
Partnership Guarantee on behalf of the holders of the partnership preferred
securities.
Amendments and Assignment
Except with respect to any changes that do not adversely affect the
rights of holders of partnership preferred securities, in which case no consent
will be required, the Partnership Guarantee may be amended only with the prior
approval of the holders of not less than a majority in liquidation preference
of the outstanding partnership preferred securities. All guarantees and
agreements contained in the Partnership Guarantee shall bind the successors,
assigns, receivers, trustees and representatives of ML&Co. 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
ML&Co. with or into another entity or any permitted sale, transfer or lease of
ML&Co.'s assets to another entity in which the surviving corporation, if other
than ML&Co., assumes ML&Co.'s obligations under the Partnership Guarantee,
ML&Co. 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:
o full payment of the redemption price of all partnership
preferred securities, or
o full payment of the amounts payable in accordance with the
Limited Partnership Agreement upon liquidation of ML
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 Delaware Limited Partnership Act restore
payment of any sums paid under the partnership preferred securities or the
Partnership Guarantee. The Delaware Limited 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.
UNITED STATES FEDERAL INCOME TAXATION
In the opinion of Brown & Wood LLP, tax counsel to ML&Co., ML Trust
and ML 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 the TOPrS. Unless otherwise
stated, this summary deals only with the TOPrS held as capital assets by United
States Persons (defined herein) who purchase the TOPrS upon original issuance.
As used in this prospectus, a "United States Person" means a person that is a
(1) citizen or resident of the United States, (2) a corporation or a
partnership (including an entity treated as a corporation or partnership for
United States Federal income tax purposes) created or organized in or under the
laws of the United States, any state thereof or the District of Columbia
(unless, in the case of a partnership, Treasury regulations are adopted that
provide otherwise), (3) an estate whose income is subject to United States
federal income tax regardless of its source, or (4) a trust if a court within
the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust. Notwithstanding
clause (4) of the previous sentence, to the extent provided in Treasury
regulations, certain trusts in existence on August 20, 1996, and treated as
United States persons prior to such date, that elect to continue to be treated
as United States persons will also be a United States Person. 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 TOPrS.
This summary is based on the Internal Revenue Code of 1986 as amended (the
"Code"), the Treasury regulations promulgated under the Code and administrative
and judicial interpretations of the Code, as of the date of this prospectus,
all of which are subject to change, possibly on a retroactive basis.
The TOPrS 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 ML Trust and ML
Partnership from potential adverse consequences, non-United States Persons will
be subject to withholding on distributions on the TOPrS 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 TOPrS.
Tax Counsel has advised that there is no authority directly on point
dealing with securities similar to the TOPrS or transactions of the type
described in this prospectus and that the opinions of Tax Counsel are not
binding on the 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 in this tax section or that a court would not sustain a challenge to
these opinions. Nevertheless, Tax Counsel has advised that it is of the view
that, if challenged, the opinions expressed in this tax section 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 TOPRS,
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 TOPRS OR REDEMPTION OF THE
PARTNERSHIP PREFERRED SECURITIES UPON THE OCCURRENCE OF CERTAIN TAX EVENTS SEE
"DESCRIPTION OF THE TOPRS--TRUST SPECIAL EVENT REDEMPTION OR DISTRIBUTION" AND
"DESCRIPTION OF THE PARTNERSHIP PREFERRED SECURITIES--PARTNERSHIP SPECIAL EVENT
REDEMPTION" RESPECTIVELY.
Classification of ML Trust
Tax Counsel is of the opinion that, under current law, and based on
certain representations made by ML Trust as well as certain facts and
assumptions with respect to the transaction described in this prospectus, ML
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 the TOPrS will be
considered the owner of an undivided interest in the partnership preferred
securities held by ML Trust. As a result of this treatment, each holder of the
TOPRs will be required to include in its gross income its distributive share of
income attributable to ML Partnership. This amount will generally be equal to a
holder's allocable share of amounts accrued on the partnership preferred
securities. No amount included in income with respect to the TOPrS 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 made by the ML Trust as well as certain facts and
assumptions with respect to the transaction described in this prospectus, ML
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 ML Partnership and is conditioned upon
certain representations made by the General Partner and ML Partnership as to
factual matters, including the organization and the operation of ML Partnership
and the type and frequency of investments made by ML Partnership.
The General Partner has represented that it intends to operate ML
Partnership in a manner that will enable ML Partnership to be classified as 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 cannot take any action that would
cause ML Partnership to constitute a "publicly traded partnership" taxable as a
corporation . Accordingly, it is expected that ML 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 any
partnership preferred securities remain outstanding.
Classification of the Debentures
ML Partnership, ML&Co., 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 to be
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
Because ML Trust will be classified as a grantor trust for United
States federal income tax purposes, holders of TOPrS will be considered to own
an undivided interest in the partnership preferred securities held by ML Trust.
As a result of this treatment, a holder of TOPrS will be required to take into
income their proportionate share of income attributable to ML Partnership. A
holder's distributive share of income attributable to ML Partnership generally
will be substantially equal to the amount of the cash distributions that
accumulate with respect to the TOPrS. Accordingly, if quarterly distributions
on the TOPrS 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 of the TOPrS.
The nature and timing of the income that is allocated to holders of
the TOPrS will, however, depend on the United States Federal income tax
characterization of the investments held by ML Partnership during the relevant
period . Because ML Partnership will be an accrual basis taxpayer for United
States Federal income tax purposes, income will accrue on the TOPrS and will be
allocated to holders of the TOPrS 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 TOPrS, regardless of the holders' method of
accounting. Actual cash distributions on the TOPrS 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 TOPrS will not be made
currently. Because ML Partnership is an accrual basis taxpayer it can be
expected that during a period in which interest payments on the Debentures or
distributions on ML 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 TOPrS. The amount of income that
will be allocated to holders of TOPrS during any such deferral period will
equal their pro rata share of the amount of distributions accruing on the
partnership preferred securities during the deferral period.
ML Partnership does not presently intend to make a Section 754
election. Accordingly, a subsequent purchaser of the TOPrS who does not
purchase the TOPrS at intitial issuance will not be permitted to adjust the tax
basis in his allocable share of ML Partnership's assets so as to reflect any
difference between his purchase price for the TOPrS and his share of ML
Partnership's underlying tax basis in its assets. As a result, a holder of the
TOPrS may be required to report a larger or smaller amount of income from
holding the TOPrS than would otherwise be appropriate based upon the holder's
purchase price for the TOPrS.
Receipt of Partnership Preferred Securities Upon Liquidation of ML Trust
Under certain circumstances, as described under the caption
"Description of the TOPrS--Trust Special Event Redemption or Distribution",
partnership preferred securities may be distributed to holders of The TOPrS in
exchange for their TOPrS and in liquidation of ML Trust. Unless the liquidation
of ML Trust occurs as a result of ML Trust being subject to United States
Federal income tax with respect to income accrued or received on the
partnership preferred securities, a distribution to holders under these
circumstances would, for United States Federal income tax purposes, be treated
as a nontaxable event to each holder. Each holder would receives an aggregate
tax basis in the partnership preferred securities equal to the holder's
aggregate tax basis in its TOPrS with a holding period in the partnership
preferred securities so received in liquidation of ML Trust that would include
the period during which the TOPrS were held . If, however, the liquidation of
ML Trust were to occur because ML 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 ML 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 TOPrS
for the partnership preferred securities it received upon the liquidation of ML
Trust. Gain or loss to each holder would be equal to the difference between the
holder's aggregate tax basis in its TOPrS surrendered in the exchange and the
aggregate fair market value of the partnership preferred securities received in
the exchange.
Redemption of TOPrS for Cash
Under certain circumstances, as described under the caption
"Description of the TOPrS--Mandatory Redemption", "Description of the
TOPrS--Trust Special Event Redemption or Distribution" and "Description of the
Partnership preferred securities--Partnership Special Event Redemption", the
General Partner may cause ML Partnership to redeem the partnership preferred
securities for cash, in which event ML Trust shall simultaneously apply the
cash received to redeem the TOPrS. Under current law, this redemption of the
TOPrS 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 TOPrS".
Disposition of TOPrS
A holder that sells TOPrS will recognize gain or loss equal to the
difference between the amount realized on the sale of the TOPrS and the
holder's adjusted tax basis in the TOPrS sold. Gain or loss to the Seller will
be a capital gain or loss and will be a long-term capital gain or loss if the
TOPrS 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 this amount to the adjusted tax basis of its TOPrS.
A holder's tax basis in its TOPrS generally will equal
o the amount paid by the holder for its TOPrS,
o increased by the amount includible in income by the holder
with respect to its TOPrS, and
o reduced by the amount of cash or other property distributed
to the holder with respect to its TOPrS.
A holder who acquires TOPrS at different prices may be required to maintain a
single aggregate adjusted tax basis in all of his TOPrS and, upon sale or other
disposition of some of his TOPrS, to allocate a pro rata portion of such
aggregate tax basis to the TOPrS sold (rather than maintaining a separate tax
basis in each TOPrS for purposes of computing gain or loss on a sale of that
TOPrS).
Other Partnership Provisions
Section 708. Under Section 708 of the Code, ML Partnership will be
deemed to terminate for United States Federal income tax purposes if 50% or
more of the capital and profits interests in ML Trust are sold or exchanged
within a 12-month period. Pursuant to final Treasury regulations issued on May
9, 1997, if a deemed termination under Section 708 were to occur, ML
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. ML Partnership has been formed for, and
will engage in, activities typical for partnerships. Although there is no
precedent that applies to the transactions contemplated herein, Tax Counsel
believes that ML Partnership is not of the type intended to fall within the
scope of these regulations.
Information Reporting and Backup Withholding
Income on the TOPrS will be reported to holders on an IRS Form 1099,
which form should be mailed to holders of TOPrS by January 31 following each
calendar year. Payments made on and proceeds from the sale of TOPrS 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, 1999, subject to certain transition rules. Prospective
investors are urged to consult their own tax advisors regarding the New
Regulations.
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement
(the "Purchase Agreement"), ML Trust has agreed to sell to each of the
underwriters named below, and each of the underwriters, for whom MLPF&S and are
acting as representatives (the "Representatives"), has severally agreed to
purchase the number of TOPrS 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 TOPrS offered hereby if any
of the TOPrS 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.
Number of Trust
Underwriters Preferred Securities
------------ --------------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..............................
Total
Commission and Discounts
The underwriters propose to offer the TOPrS to the public at the
public offering price set forth on the cover page of this prospectus, and, to
certain dealers at that price less a concession not in excess of $ per TOPrS;
provided, that such concession for sales of 10,000 or more TOPrS to any single
purchaser will be $ per TOPrS. The underwriters may allow, and such dealers may
reallow, a discount not in excess of $ per TOPrS to certain brokers and
dealers. After the TOPrS are released for sale to the public, the offering
price, concession and discount may be changed. Proceeds to be received by
ML&Co. will be net of the underwriting discount and expenses payable by ML&Co.
In view of the fact that the proceeds of the sale of the TOPrS will
ultimately be used to purchase the investment instruments of ML&Co. and its
subsidiaries, the Purchase Agreement provides that ML&Co. will pay as
compensation (the "underwriters' compensation") to the underwriters, an amount
in immediately available funds of $ per TOPrS (or $ in the aggregate) for the
accounts of the several underwriters; provided that, such compensation for
sales of 10,000 or more TOPrS to any single purchaser will be $ per TOPrS.
Therefore, to the extent of any sales, the actual amount of underwriters'
compensation will be less than the aggregate amount specified in the preceding
sentence.
Listing
Application will be made to list the TOPrS on the NYSE. Trading of the
TOPrS on the NYSE is expected to commence within a 30-day period after the
initial delivery of the TOPrS. The Representatives have advised ML Trust that
they intend to make a market in the TOPrS prior to the commencement of trading
on the NYSE. The Representatives will have no obligation to make a market in
the TOPrS, however, and may cease market making activities, if commenced, at
any time.
Before this offering there has been no public market for the TOPrS. In
order to meet one of the requirements for listing the TOPrS on the NYSE, the
underwriters will undertake to sell lots of 100 or more TOPrS to a minimum of
400 beneficial holders, that there will be at least one million units of TOPrS
outstanding and that the TOPrS will have a minimum market value of $4,000,000.
Price Stabilization, Short Positions and Penalty Bids
In connection with the offering, the underwriters are permitted to
engage in certain transactions that stabilize the market price of the TOPrS.
Such transactions consist of bids or purchases for the purpose of pegging,
fixing or maintaining the market price of the TOPrS. If an underwriter creates
a short position in the TOPrS in connection with the offering, i.e., if it
sells more TOPrS than are set forth on the cover page of this prospectus, the
underwriter may reduce that short position by purchasing TOPrS in the open
market. 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 underwriters may also impose a penalty bid on certain underwriters
and selling group members. This means that if an underwriter purchases TOPrS in
the open market to reduce the underwriter's short position or to stabilize the
price of the TOPrS, they may reclaim the amount of the selling concession from
the underwriters and selling group members who sold those TOPrS as part of the
offering. The imposition of a penalty bid might have an effect on the price of
a security to the extent that it were to discourage resales of the security.
Neither ML&Co. 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 TOPrS. In addition, neither ML&Co.
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.
Miscellaneous
ML Trust, ML&Co., 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.
Because MLPF&S, one of the underwriters in the offering, is an
affiliate of ML&Co. and a member of the National Association of Securities
Dealers, Inc., the offering of TOPrS 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.
Certain of the underwriters and their affiliates engage in
transactions with, and perform services for, ML&Co. in the ordinary course of
business and have engaged, and may in the future engage, in commercial banking
and investment banking transactions with ML&Co. MLPF&S may use this prospectus
for offers and sales related to market-making transactions in the TOPrS. 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.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the SEC.
Our SEC filings are also available over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file by visiting
the SEC's public reference rooms in Washington, D.C., New York, New York, and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information about the public reference rooms. You may also inspect our SEC
reports and other information at the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005.
We have filed a registration statement on Form S-3 with the SEC
covering the TOPrS and other securities. For further information on ML&Co. and
the TOPrS, you should refer to our registration statement and its exhibits.
This prospectus summarizes material provisions of contracts and other documents
that we refer you to. Because the prospectus may not contain all the
information that you may find important, you should review the full text of
these documents. We have included copies of these documents as exhibits to our
registration statement.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to incorporate by reference the information we file
with them, which means:
o incorporated documents are considered part of the prospectus;
o we can disclose important information to you by referring you
to those documents; and
o information that we file with the SEC will automatically
update and supersede this incorporated information.
We incorporate by reference the documents listed below which were
filed with the SEC under the Exchange Act:
o annual report on Form 10-K for the year ended December 26,
1997 (excluding the financial information which was restated
in Exhibit 99(i) to our current report on Form 8-K dated
December 10, 1998);
o quarterly reports on Form 10-Q for the quarters ended March
27, 1998, June 26, 1998 and September 25, 1998; and
o current reports on Form 8-K dated January 20, 1998, January
30, 1998, February 4,1998, February 12, 1998, February 23,
1998, March 19, 1998, April 13,1998, April 29, 1998, May 19,
1998, June 2, 1998, June 3, 1998, June 15, 1998, June 24,
1998, June 26, 1998, July 2, 1998, July 14, 1998, July 15,
1998, July 29, 1998, September 3, 1998, September 8,1998,
September 29, 1998, October 13, 1998, October 21, 1998,
October 28, 1998, November 3, 1998, November 24,1998, December
1, 1998, December 10, 1998, December 28, 1998, January 19,
1999, February 17, 1999, February 18, 1999, February 22, 1999
and February 23, 1999.
We also incorporate by reference each of the following documents that
we will file with the SEC after the date of this prospectus until this offering
is completed or after the date of this initial registration statement and prior
to effectiveness of the registration statement:
o reports filed under Sections 13(a) and (c) of the Exchange
Act;
o definitive proxy or information statements filed under
Section 14 of the Exchange Act in connection with any
subsequent stockholders' meeting; and
o any reports filed under Section 15(d) of the Exchange Act.
You should rely only on information contained or incorporated by
reference in this prospectus. We have not, and the dealer has not, authorized
any other person to provide you with different information. If anyone provides
you with different or inconsistent information, you should not rely on it. We
are not, and the dealer is not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted.
You should assume that the information appearing in this prospectus is
accurate as of the date of this prospectus only. Our business, financial
condition and results of operations may have changed since that date.
You may request a copy of any filings referred to above (excluding
exhibits), at no cost, by contacting us at the following address: Mr. Lawrence
M. Egan, Jr., Corporate Secretary's Office, Merrill Lynch & Co., Inc., 100
Church Street, New York, New York 10080-6512, Telephone: (212) 602-8435.
LEGAL MATTERS
Certain matters of Delaware law relating to the legality of the TOPrS,
the validity of ML Trust Agreement, the formation of ML Trust and the
Partnership and the legality under state law of the TOPrS and the Partnership
preferred securities are being passed upon by Skadden, Arps, Slate, Meagher &
Flom (Delaware), special Delaware counsel to ML Trust, the Partnership and
ML&Co.. The legality under state law of The Trust Guarantee, the Partnership
Guarantee, the ML&Co. Debenture and the Investment Guarantees with respect to
the Affiliate Debentures will be passed upon on behalf of ML Trust, the
Partnership and ML&Co. by Brown & Wood LLP, New York, New York. The validity of
the TOPrS, 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 of ML&Co. and its subsidiaries
included in its current report on Form 8-K dated December 10, 1998 and related
financial statement schedules of ML&Co. and its subsidiaries included in the
1997 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 in this prospectus. 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 26, 1997 included in the current report on Form 8-K dated
December 10, 1998, and incorporated by reference in this prospectus, has been
derived from consolidated financial statements audited by Deloitte & Touche
LLP, as set forth in their reports included or incorporated by reference in
this prospectus. These consolidated financial statements and related financial
statement schedules, and Selected Financial Data incorporated by reference in
this prospectus and the registration statement of which this prospectus is a
part, have been incorporated in this prospectus by reference in reliance upon
the reports of Deloitte & Touche LLP given upon their authority as experts in
accounting and auditing. The balance sheets of Merrill Lynch Preferred Funding
VI, L.P. and Merrill Lynch Preferred Capital Trust VI as of , 1998 included in
this prospectus have also been audited by and have been included in reliance
upon such reports of 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
in this prospectus 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 reports included in these quarterly
reports on Form 10-Q and incorporated by reference in this prospectus, 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 this
information should be restricted in light of the limited nature of the review
procedures applied. Deloitte & Touche LLP are not subject to the liability
provisions of Section 11 of the Securities Act of 1933, as amended 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 Securities Act.
<PAGE>
INDEX OF CERTAIN DEFINED TERMS
<TABLE>
<CAPTION>
Defined Terms Page No.
- ------------- --------
<S> <C>
Affiliate Debentures.................................................................................................
Affiliate Investment Instruments.....................................................................................
Business Day.........................................................................................................
Change in Investment Company Act Law.................................................................................
Code.................................................................................................................
Debentures...........................................................................................................
Delaware Trustee.....................................................................................................
Depository...........................................................................................................
Eligible Institution.................................................................................................
Eligible Debt Securities.............................................................................................
Finance Subsidiary...................................................................................................
General Partner......................................................................................................
Global Partnership Security..........................................................................................
Independent Financial Advisor........................................................................................
Initial Partnership Proceeds.........................................................................................
Investment Affiliate.................................................................................................
Investment Company Act.............................................................................................
Investment Guarantee.................................................................................................
Limited Partnership Agreement........................................................................................
Merrill Lynch........................................................................................................
ML&Co. Debenture.....................................................................................................
ML Partnership.......................................................................................................
MLPF&S...............................................................................................................
Moody's..............................................................................................................
Partnership Enforcement Event........................................................................................
Partnership Guarantee................................................................................................
Partnership Guarantee Payments.......................................................................................
Partnership Investment Company Event.................................................................................
Partnership Liquidation Distribution.................................................................................
Partnership Special Event............................................................................................
Partnership Successor Securities.....................................................................................
Partnership Tax Event................................................................................................
Property Account.....................................................................................................
Property Trustee.....................................................................................................
Purchase Agreement...................................................................................................
Redemption Price.....................................................................................................
Regular Trustees.....................................................................................................
Representatives......................................................................................................
Rights Agreement.....................................................................................................
S&P..................................................................................................................
Senior Indebtedness..................................................................................................
Special Event........................................................................................................
Special Representative.............................................................................................
Successor Securities.................................................................................................
Tax Action...........................................................................................................
Tax Counsel..........................................................................................................
TOPrS................................................................................................................
Trust Dissolution Tax Opinion........................................................................................
Trust Enforcement Event..............................................................................................
Trust Guarantee......................................................................................................
Trust Guarantee Payments.............................................................................................
Trust Guarantee Trustee..............................................................................................
Trust Investment Company Event.......................................................................................
Trust Liquidation....................................................................................................
Trust Liquidation Distribution.......................................................................................
Trust Redemption Tax Opinion.........................................................................................
Trust Securities.....................................................................................................
Trust Special Event..................................................................................................
Trust Tax Event......................................................................................................
Underwriters' Compensation...........................................................................................
United States Person.................................................................................................
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INDEX TO FINANCIAL STATEMENTS
Page No.
<S> <C>
MERRILL LYNCH PREFERRED FUNDING VI, L.P.
Independent Auditors' Report.................................................................................... F-2
Balance Sheet................................................................................................... F-3
Notes to Balance Sheet.......................................................................................... F-3
MERRILL LYNCH PREFERRED CAPITAL TRUST VI
Independent Auditors' Report.................................................................................... F-4
Balance Sheet................................................................................................... F-5
Notes to Balance Sheet.......................................................................................... F-5
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the General Partner and Initial Limited Partner of Merrill Lynch Preferred
Funding VI, L.P.
We have audited the accompanying balance sheet of Merrill Lynch
Preferred Funding VI, L.P. (the "Partnership") as of _________________. 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
_________________, in conformity with generally accepted accounting principles.
, 1999
New York, New York
<PAGE>
BALANCE SHEET
OF MERRILL LYNCH PREFERRED FUNDING VI, L.P.
Balance Sheet
___________, 1998
Assets................................................................ $
Partnership Securities
Limited partner interest.......................................... $---
General partner interest.......................................... ---
---
$---
Less: Receivables from partners for subscribed partnership
interests.................................................... (---)
NOTES TO BALANCE SHEET OF MERRILL LYNCH PREFERRED FUNDING VI, L.P.
Merrill Lynch Preferred Funding VI, L.P. (the "Partnership") is a limited
partnership that was formed under the Delaware Revised Uniform Limited
Partnership Act on December 7, 1998 for the exclusive purposes of purchasing
certain eligible debt instruments of Merrill Lynch & Co., Inc. ("ML&Co.") and
wholly owned subsidiaries of ML&Co. (the "Affiliate Investment Instruments")
with the proceeds from the sale of Partnership Preferred Securities (the
"Partnership Preferred Securities") to Merrill Lynch Preferred Capital Trust VI
(the "Trust") and a capital contribution from ML&Co. 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 ML&Co. and certain domestic wholly owned subsidiaries of
ML&Co., retaining 1% in unaffiliated debt securities. The Partnership shall
have a perpetual existence subject to certain termination events. ML&Co. serves
as the sole general partner of the Partnership. ML&Co., 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.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To ML Trustees of
Merrill Lynch Preferred Capital Trust VI
We have audited the accompanying balance sheet of Merrill Lynch
Preferred Capital Trust VI (the "Trust") as ____________________. This balance
sheet is the responsibility of ML 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 ML Trust as of ____________
____, in conformity with generally accepted accounting principles.
, 1999
New York, New York
<PAGE>
BALANCE SHEET OF
MERRILL LYNCH PREFERRED CAPITAL TRUST VI
Balance Sheet
___________, 1998
Assets.......................................................... $---
Trust securities................................................ $---
NOTES TO BALANCE SHEET OF MERRILL LYNCH PREFERRED CAPITAL TRUST VI
Merrill Lynch Preferred Capital Trust VI (the "Trust") is a statutory
business trust formed on December 7, 1998 under the laws of the State of
Delaware for the exclusive purposes of (i) issuing the Trust Originated
Preferred Securities (the "TOPrS") and the common securities (together with the
TOPrS, the "Trust Securities") representing undivided beneficial ownership
interests in the assets of ML Trust, (ii) purchasing Partnership Preferred
Securities (the "Partnership Preferred Securities") representing the limited
partnership interests of Merrill Lynch Preferred Funding VI, 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
__________________, the Trust intends to issue and sell its TOPrS in a public
offering and to issue and sell its common securities to Merrill Lynch & Co.,
Inc. ("ML&Co."). No TOPrS have been issued as of ___________, 1998.
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 TOPrS will be redeemed, in whole or in part, as applicable. Holders of the
TOPrS 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 common
securities.
ML&Co. will be obligated to pay compensation to the underwriters of
the offering of the TOPrS. ML&Co. 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 TOPrS and be responsible for all debts and
other obligations of the Trust (other than the Trust Securities). ML&Co. has
also agreed to indemnify the Trustees and certain other persons.
<PAGE>
[LOGO]
Merrill Lynch Preferred Capital Trust VI
% Trust Originated Preferred Securities
"TOPrS"
Liquidation Amount $25 per TOPrS
guaranteed to the extent described in this prospectus by
Merrill Lynch & Co., Inc.
----------------
PROSPECTUS
----------------
Merrill Lynch & Co.
, 199
The information contained in this prospectus supplement is not complete
and may be changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus supplement and the accompanying prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these securities in
any state where the offer or sale is not permitted.
Subject to Completion
Preliminary Prospectus Supplement dated February 26, 1999
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 1999)
$
[LOGO]
Merrill Lynch & Co., Inc.
Medium-Term Notes, Series B
Due Nine Months or More from Date of Issue
-------------------------------
The notes:
<PAGE>
o We will offer notes from time to time and specify the terms and conditions
of each issue of notes in a pricing supplement. o The notes will be senior
unsecured debt securities of ML&Co.
o The notes will have stated maturities of nine months or more from the date
they are originally issued.
o We will pay amounts due on the notes in U.S. dollars or any other
consideration described in the applicable pricing supplement.
o The notes may bear interest at fixed or floating rates or may not bear any
interest. If the notes bear interest at a floating rate, the floating rate
may be based on one or more indices or formulas plus or minus a fixed
amount or multiplied by a factor.
o We will specify whether the notes can be redeemed or repaid before their
maturity and whether they are subject to mandatory redemption, redemption
at the option of ML&Co. or repayment at the option of the holder of the
notes.
<PAGE>
Investing in the notes involves certain risks.
See "Risk Factors" on page S-3.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
determined if this prospectus supplement , the accompanying prospectus or any
pricing supplement is truthful or complete. Any representation to the contrary
is a criminal offense.
<TABLE>
<CAPTION>
Public Offering Price Agent's Discounts Proceeds, before expenses,
And Commissions to
Merrill Lynch & Co., Inc.
<S> <C> <C> <C> <C> <C>
Per note................... 100% .05%-.60% 99.95%-99.40%
Total(1)................... $_00,000,000 $ -$ $ -$
</TABLE>
(1) Or the equivalent in one or more foreign or composite currencies.
We may sell notes to the agent referred to below as principal for
resale at varying or fixed offering prices or through the agent as agent using
its reasonable efforts on our behalf. We may also sell notes without the
assistance of the agent, whether acting as principal or as agent.
If we sell other securities referred to in the accompanying
prospectus, the amount of notes that we may offer and sell under this
prospectus supplement may be reduced.
-------------------------------
Merrill Lynch & Co.
-------------------------------
The date of this prospectus supplement is , 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT
Page
<S> <C>
Risk Factors........................................................................ S-3
Ratio of Earnings To Fixed Charges..................................................... S-4
Description of the Notes............................................................... S-5
United States Federal Income Taxation.................................................. S-25
Plan of Distribution................................................................... S-32
Validity of the Notes.................................................................. S-33
</TABLE>
<TABLE>
<CAPTION>
PROSPECTUS
Page
<S> <C>
Merrill Lynch & Co., Inc...............................................................
Use of Proceeds........................................................................
Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividends.........................................
The Securities.........................................................................
Description of Debt Securities.........................................................
Description of Debt Warrants...........................................................
Description of Currency Warrants.....................................................
Description of Index Warrants..........................................................
Description of Preferred Stock.........................................................
Description of Depositary Shares.......................................................
Description of Preferred Stock Warrants................................................
Description of Common Stock............................................................
Description of Common Stock Warrants...................................................
Plan of Distribution...................................................................
Where You Can Find More Information....................................................
Incorporation of Information We File With the SEC......................................
Experts................................................................................
</TABLE>
References in this prospectus supplement to "ML&Co.", "we", "us" and
"our" are to Merrill Lynch & Co., Inc.
References in this prospectus supplement to "MLPF&S" are to the agent,
Merrill Lynch, Pierce, Fenner & Smith Incorporated.
<PAGE>
RISK FACTORS
Your investment in the notes involves certain risks. In consultation
with your own financial and legal advisers, you should carefully consider,
among other matters, the following discussion of risks before deciding whether
an investment in the notes is suitable for you. The notes are not an
appropriate investment for you if you are unsophisticated with respect to the
significant components of their relationships.
Structure Risks of Notes Indexed to Interest Rate, Currency or Other Indices or
Formulas
If you invest in notes indexed to one or more interest rate, currency
or other indices or formulas, there will be significant risks not associated
with a conventional fixed rate or floating rate debt security. These risks
include fluctuation of the indices or formulas and the possibility that you
will receive a lower, or no, amount of principal, premium or interest and at
different times than you expected. We have no control over a number of matters,
including economic, financial and political events, that are important in
determining the existence, magnitude and longevity of these risks and their
results. In addition, if an index or formula used to determine any amounts
payable in respect of the notes contains a multiplier or leverage factor, the
effect of any change in that index or formula will be magnified. In recent
years, values of certain indices and formulas have been volatile and volatility
in those and other indices and formulas may be expected in the future. However,
past experience is not necessarily indicative of what may occur in the future.
Redemption May Adversely Affect Your Return on the Notes
If your notes are redeemable at our option or are otherwise subject to
mandatory redemption, we may, in the case of optional redemption, or must, in
the case of mandatory redemption, choose to redeem your notes at times when
prevailing interest rates may be relatively low. Accordingly, you generally
will not be able to reinvest the redemption proceeds in a comparable security
at an effective interest rate as high as that of the notes.
There May Be an Uncertain Trading Market for Your Notes; Many Factors Affect
the Trading Value of Your Notes
We cannot assure you a trading market for your notes will ever develop
or be maintained. Many factors independent of our creditworthiness may affect
the trading market of your notes. These factors include:
o the complexity and volatility of the index or formula applicable
to the notes,
o the method of calculating the principal, premium and interest in
respect of the notes,
o the time remaining to the maturity of the notes,
o the outstanding amount of the notes,
o the redemption features of the notes,
o the amount of other securities linked to the index or formula
applicable to the notes, and
o the level, direction and volatility of market interest rates
generally.
In addition, because some notes were designed for specific investment
objectives or strategies, these notes will have a more limited trading market
and experience more price volatility. There may be a limited number of buyers
for these notes. This may affect the price you receive for these notes or your
ability to sell these notes at all. You should not purchase notes unless you
understand and know you can bear the related investment risks.
Our Credit Ratings May Not Reflect All Risks of an Investment in the Notes
Our credit ratings are an assessment of our ability to pay our
obligations. Consequently, real or anticipated changes in our credit ratings
will generally affect the market value of your notes. Our credit ratings,
however, may not reflect the potential impact of risks related to structure,
market or other factors discussed above on the value of your notes.
RATIO OF EARNINGS TO FIXED CHARGES
In 1998, we acquird the outstanding shares of Midland Walwyn,Inc., in a
transaction accounted for as a pooling-of-interests. The following information
has been restated as if the two entities had always been combined.
The following table sets forth our historical ratios of earnings to fixed
charges for the periods indicated:
<TABLE>
<CAPTION>
Year Ended Last Friday in December
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges ...... 1.2 1.2 1.2 1.2 1.1
</TABLE>
(a) The effect of combining Midland Walwyn did not change the ratios
reported for the fiscal years 1994 through 1997.
For the purpose of calculating the ratio of earnings to fixed charges,
"earnings" consist of earnings from continuing operations before income taxes
and fixed charges, excluding capitalized interest and preferred security
dividend requirements of subsidiaries. "Fixed charges" consist of interest
costs, the interest factor in rentals, amortization of debt issuance costs,
preferred security dividend requirements of subsidiaries, capitalized interest.
<PAGE>
DESCRIPTION OF THE NOTES
The notes will be issued as a series of debt securities under a senior
indenture, dated as of October 1, 1993, as amended (the "1993 Indenture"),
between ML&Co. and The Chase Manhattan Bank, as trustee (as used in this
prospectus supplement, the "Trustee"). The term "senior debt securities," as
used in this prospectus supplement, refers to all securities issued and
issuable from time to time under ML&Co.'s Senior Indentures and includes the
notes. The senior debt securities and ML&Co.'s Senior Indentures are more fully
described in the accompanying prospectus. The following summary of certain
provisions of the notes and of the 1993 Indenture is not complete and is
qualified in its entirety by reference to the 1993 Indenture, a copy of which
has been filed as an exhibit to the registration statement of which this
prospectus supplement and the accompanying prospectus are a part. Capitalized
terms used but not defined in this prospectus supplement have the meanings
given to them in the 1993 Indenture or the notes, as the case may be.
The following description of notes will apply unless otherwise
specified in an applicable pricing supplement.
You should rely only on the information contained or incorporated by
reference in this prospectus supplement, the accompanying prospectus and any
pricing supplement. Neither we nor MLPF&S has authorized any other person to
provide you with different or additional information. If anyone provides you
with different or additional information, you should not rely on it. Neither we
nor MLPF&S is making an offer to sell these securities in any jurisdiction
where the offer or sale is not permitted. You should assume that the
information contained or incorporated by reference in this prospectus
supplement, the accompanying prospectus and any pricing supplement is accurate
only as of the date on the front cover of the applicable pricing supplement.
Terms of the Notes
All senior debt securities, including the notes, issued and to be
issued under ML&Co.'s Senior Indentures will be unsecured general obligations
of ML&Co. and will rank equally with all other unsecured and unsubordinated
indebtedness of ML&Co. from time to time outstanding. Because ML&Co. is a
holding company, the right of ML&Co. and its creditors, including the holders
of the notes, to participate in any distribution of the assets of any
subsidiary upon its liquidation or reorganization or otherwise is necessarily
subject to the prior claims of creditors of that subsidiary, except to the
extent that claims of ML&Co. itself as a creditor of that subsidiary may be
recognized. In addition, dividends, loans and advances to ML&Co. from certain
subsidiaries, including MLPF&S, are restricted by net capital requirements
under the Securities Exchange Act of 1934, as amended, and under rules of
certain exchanges and other regulatory bodies.
ML&Co.'s Senior Indentures do not limit the aggregate principal amount
of senior debt securities which ML&Co. may issue. ML&Co. may issue its senior
debt securities from time to time as a single series or in two or more separate
series up to the aggregate principal amount from time to time authorized by
ML&Co. for each series. ML&Co. may, from time to time, without the consent of
the holders of the notes, provide for the issuance of notes or other senior
debt securities under its Senior Indentures in addition to the $ aggregate
principal amount of notes offered by this prospectus supplement. As of
September 25, 1998, ML&Co. had $19.5 billion aggregate principal amount of
notes issued and outstanding. The aggregate principal amount of notes which may
be offered and sold by this prospectus supplement may be reduced by the sale by
ML&Co. of other securities under the registration statement of which this
prospectus supplement and the accompanying prospectus are a part.
The notes will be offered on a continuing basis and will mature on a
day nine months or more from the date of issue, as selected by the purchaser
and agreed to by ML&Co. Interest-bearing notes will bear interest at either
fixed or floating rates as specified in the applicable pricing supplement.
Notes may be issued at significant discounts from their principal amount
payable at stated maturity, or on any date before the stated maturity date on
which the principal or an installment of principal of a note becomes due and
payable, whether by the declaration of acceleration, call for redemption at the
option of ML&Co., repayment at the option of the holder or otherwise (the
stated maturity date or such prior date, as the case may be, is referred to as,
a "Maturity"). Some notes may not bear interest.
Unless otherwise indicated in a note and in the applicable pricing
supplement, the notes will be denominated in United States dollars and payments
of principal of, and premium, if any, and interest on, the notes will be made
in United States dollars. If any of the notes to be denominated other than in
United States dollars or if the principal of, and interest on, the notes, and
any premium provided for in any note is to be payable in or by reference to a
currency or in composite currency units or in amounts determined by reference
to one or more currencies other than that in which that note is denominated,
provisions with respect thereto will be set forth in the note and in the
applicable pricing supplement.
Interest rates, interest rate formulae and other variable terms of the
notes are subject to change by ML&Co. from time to time, but no such change
will affect any note already issued or as to which ML&Co. has accepted an offer
to purchase.
Each note will be issued in fully registered book-entry form or
certificated form, in denominations of $1,000 and integral multiples of $1,000,
unless otherwise specified in the applicable pricing supplement. Notes in
book-entry form may be transferred or exchanged only through a participating
member of The Depository Trust Company ("DTC"), or any other depository as is
identified in an applicable pricing supplement (the "Depository"). See "Notes
in Book-Entry Form". Registration of transfer of notes in certificated form
will be made at the corporate trust office of the Trustee. No service charge
will be made for any registration of transfer or exchange of notes, but ML&Co.
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection with any transfer or exchange, other than
exchanges pursuant to the 1993 Indenture not involving any transfer.
ML&Co. will make payments of principal of, and premium and interest,
if any, on notes in book-entry form through the Trustee to the Depository or
its nominee. See "Notes in Book-Entry Form." Unless otherwise specified in the
applicable pricing supplement, a beneficial owner of notes in book-entry form
that are denominated in a currency other than United States dollars (a
"Specified Currency") electing to receive payments of principal or any premium
or interest in such Specified Currency must notify the participant of DTC
through which its interest is held on or before the applicable regular record
date, in the case of a payment of interest, and on or before the sixteenth day,
whether or not a Business Day, as defined below, before its stated maturity, in
the case of principal or premium, of the beneficial owner's election to receive
all or a portion of any payment in a Specified Currency. The participant must
notify the Depository of any election on or before the third Business Day after
the regular record date. The Depository will notify the paying agent of the
election on or before the fifth Business Day after the regular record date. If
complete instructions are received by the participant and forwarded to the
Depository, and forwarded by the Depository to the paying agent, on or before
the relevant dates, the beneficial owner of the notes in book-entry form will
receive payments in the Specified Currency.
In the case of notes in certificated form, ML&Co. will make payment of
principal or premium, if any, at the Maturity of each note in immediately
available funds upon presentation of the note and, in the case of any repayment
on an optional repayment date, upon submission of a duly completed election
form if and as required by the provisions described below, at the corporate
trust office of the Trustee in the Borough of Manhattan, The City of New York,
or at any other place as ML&Co. may designate. Payment of interest due at
Maturity will be made to the person to whom payment of the principal of the
note in certificated form will be made. Payment of interest due on notes in
certificated form other than at Maturity will be made at the corporate trust
office of the Trustee or, at the option of ML&Co., may be made by check mailed
to the address of the person entitled to receive payment as the address shall
appear in the security register. Notwithstanding the immediately preceding
sentence, a holder of $1,000,000 or more in aggregate principal amount of notes
in certificated form, whether having identical or different terms and
provisions, having the same interest payment dates will, at the option of
ML&Co., be entitled to receive interest payments, other than at Maturity, by
wire transfer of immediately available funds if appropriate wire transfer
instructions have been received in writing by the Trustee not less than 15 days
prior to the applicable interest payment date. Any wire instructions received
by the Trustee shall remain in effect until revoked by the holder.
"Business Day" means any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which commercial banks are authorized or
required by law, regulation or executive order to close in The City of New
York; provided, however, that, with respect to non-United States
dollar-denominated notes, the day is also not a day on which commercial banks
are authorized or required by law, regulation or executive order to close in
the Principal Financial Center, as defined below, of the country issuing the
Specified Currency or, if the Specified Currency is Euro, the day is also a day
on which the Trans-European Automated Real-time Gross Settlement Express
Transfer (TARGET) System is open; provided, further, that, with respect to
notes as to which LIBOR is an applicable Interest Rate Basis, the day is also a
London Business Day. "London Business Day" means a day on which commercial
banks are open for business, including dealings in the Index Currency, as
defined below, in London.
"Principal Financial Center" means, unless otherwise specified in the
applicable pricing supplement,
(1) the capital city of the country issuing the Specified
Currency, except that with respect to United States dollars,
Australian dollars, Canadian dollars, Deutsche marks, Dutch
guilders, South African rand and Swiss francs, the "Principal
Financial Center" will be The City of New York, Sydney and
Melbourne, Toronto, Frankfurt, Amsterdam, Johannesburg and
Zurich, respectively, or
(2) the capital city of the country to which the LIBOR Currency
relates, except that with respect to United States dollars,
Canadian dollars, Deutsche marks, Dutch guilders, Portuguese
escudos, South African rand and Swiss francs, the "Principal
Financial Center" will be The City of New York, Toronto,
Frankfurt, Amsterdam, London, Johannesburg and Zurich,
respectively.
Transaction Amount
Interest rates offered by ML&Co. with respect to the notes may differ
depending upon, among other things, the aggregate principal amount of notes
purchased in any transaction. ML&Co. may offer notes with similar variable
terms but different interest rates concurrently at any time. ML&Co. may also
concurrently offer notes having different variable terms to different
investors.
Redemption at the Option of ML&Co.
The notes will not be subject to any sinking fund. The notes will be
redeemable at the option of ML&Co. prior to their stated maturity only if an
initial redemption date is specified in the applicable notes and in the
applicable pricing supplement. If so indicated in the applicable pricing
supplement, notes will be subject to redemption at the option of ML&Co. on any
date on and after the applicable initial redemption date specified in the
applicable pricing supplement. On and after the initial redemption date, if
any, the related note may be redeemed at any time in whole or from time to time
in part at the option of ML&Co. at the applicable redemption price referred to
below together with interest on the principal of the applicable note payable to
the redemption date, on notice given, unless otherwise specified in the
applicable pricing supplement, not more than 60 nor less than 30 days before
the redemption date. The notes will be redeemed in increments of $1,000,
provided that any remaining principal amount will be an authorized denomination
of the applicable note. Unless otherwise specified in the applicable pricing
supplement, the redemption price with respect to a note will initially mean a
percentage, the initial redemption percentage, of the principal amount of the
note to be redeemed specified in the applicable pricing supplement and shall
decline at each anniversary of the initial redemption date by a percentage
specified in the applicable pricing supplement, of the principal amount to be
redeemed until the redemption price is 100% of the principal amount.
Repayment at the Option of the Holder
If so indicated in an applicable pricing supplement, notes will be
repayable by ML&Co. in whole or in part at the option of the holders of the
notes on any optional repayment date specified in the applicable pricing
supplement. If no optional repayment date is indicated with respect to a note,
it will not be repayable at the option of the holder before its stated
maturity. Any repayment in part will be in an amount equal to $1,000 or
integral multiples of $1,000, provided that any remaining principal amount will
be an authorized denomination of the applicable note. The repurchase price for
any note so repurchased will be 100% of the principal amount to be repaid,
together with interest on the principal of the applicable note payable to the
date of repayment. For any note to be repaid, the Trustee must receive, at its
office maintained for such purpose in the Borough of Manhattan, The City of New
York, currently the corporate trust office of the Trustee, not more than 60 nor
less than 30 days before the optional repayment date:
o in the case of a note in certificated form, the note and the form
entitled "Option to Elect Repayment" duly completed, or
o in the case of a note in book-entry form, instructions to that effect
from the applicable beneficial owner of the notes to the Depository
and forwarded by the Depository.
Notices of elections from a holder to exercise the repayment option must be
received by the Trustee by 5:00 p.m., New York City time, on the last day for
giving such notice. Exercise of the repayment option by the holder of a note
will be irrevocable.
Only the Depository may exercise the repayment option in respect of
global securities representing notes in book-entry form. Accordingly,
beneficial owners of global securities that desire to have all or any portion
of the notes in book-entry form represented by global securities repaid must
instruct the participant through which they own their interest to direct the
Depository to exercise the repayment option on their behalf by forwarding the
repayment instructions to the Trustee as discussed above. In order to ensure
that the instructions are received by the Trustee on a particular day, the
applicable beneficial owner must so instruct the participant through which it
owns its interest before that participant's deadline for accepting instructions
for that day. Different firms may have different deadlines for accepting
instructions from their customers. Accordingly, beneficial owners of notes in
book-entry form should consult the participants through which they own their
interest for the respective deadlines . All instructions given to participants
from beneficial owners of notes in book-entry form relating to the option to
elect repayment will be irrevocable. In addition, at the time instructions are
given, each beneficial owner will cause the participant through which it owns
its interest to transfer its interest in the global security or securities
representing the related notes in book-entry form, on the Depository's records,
to the Trustee. See " Notes in Book-Entry Form".
If applicable, ML&Co. will comply with the requirements of Section
14(e) of the Exchange Act and the rules promulgated thereunder and any other
securities laws or regulations in connection with any repayment at the option
of the holder.
ML&Co. may at any time purchase notes at any price or prices in the
open market or otherwise. Notes so purchased by ML&Co. may, at the discretion
of ML&Co., be held, resold or surrendered to the Trustee for cancellation.
Interest
Each note will bear interest from the date of issue at the rate per
annum or, in the case of a floating rate note, pursuant to the interest rate
formula stated in the applicable note and in the applicable pricing supplement
until the principal of the note is paid or made available for payment. Interest
will be payable in arrears on each interest payment date specified in the
applicable pricing supplement on which an installment of interest is due and
payable and at Maturity. The first payment of interest on any note originally
issued between a regular record date and the related interest payment date will
be made on the interest payment date immediately following the next succeeding
regular record date to the registered holder on the next succeeding regular
record date. The regular record date will be the fifteenth calendar day,
whether or not a Business Day, immediately preceding the related interest
payment date.
Fixed Rate Notes
Unless otherwise specified in an applicable pricing supplement, each
fixed rate note will bear interest from, and including, the date of issue, at
the rate per annum stated on the face of the note until the principal amount of
the note is paid or made available for payment. Interest payments on fixed rate
notes will equal the amount of interest accrued from and including the
immediately preceding interest payment date in respect of which interest has
been paid or from and including the date of issue, if no interest has been paid
with respect to the applicable fixed rate notes, to, but excluding, the related
interest payment date or Maturity, as the case may be. Unless otherwise
specified in the applicable pricing supplement, interest on fixed rate notes
will be computed on the basis of a 360-day year of twelve 30-day months.
Unless otherwise specified in the applicable pricing supplement,
interest on fixed rate notes will be payable semiannually on May 15 and
November 15 of each year and at Maturity. If any interest payment date or the
Maturity of a fixed rate note falls on a day that is not a Business Day, the
related payment of principal, premium, if any, or interest will be made on the
next succeeding Business Day as if made on the date the applicable payment was
due, and no interest will accrue on the amount payable for the period from and
after the interest payment date or Maturity, as the case may be.
<PAGE>
Floating Rate Notes
Interest on floating rate notes will be determined by reference to the
applicable Interest Rate Basis or Interest Rate Bases, which may be one or more
of:
o the CD Rate,
o the CMT Rate,
o the Commercial Paper Rate,
o the Eleventh District Cost of Funds Rate,
o the Federal Funds Rate,
o LIBOR,
o the Prime Rate,
o the Treasury Rate, or
o any other Interest Rate Basis or interest rate formula that is
specified in the applicable pricing supplement.
A floating rate note may bear interest with respect to two or more
Interest Rate Bases.
Terms . Each applicable pricing supplement will specify the terms of
the floating rate note being delivered, including:
o whether the floating rate note is
o a "Regular Floating Rate Note",
o a "Inverse Floating Rate Note" or
o a "Floating Rate/Fixed Rate Note",
o the Interest Rate Basis or Bases,
o the Initial Interest Rate,
o the Interest Reset Dates,
o the interest payment dates,
o the period to maturity of the instrument or obligation with
respect to which the Interest Rate Basis or Bases will be
calculated (the "Index Maturity"),
o the Maximum Interest Rate and Minimum Interest Rate, if any,
o the number of basis points to be added to or subtracted from the
related Interest Rate Basis or Bases (the "Spread"),
o the percentage of the related Interest Rate Basis or Bases by
which the Interest Rate Basis or Bases will be multiplied to
determine the applicable interest rate (the "Spread
Multiplier"),
o if one or more of the specified Interest Rate Bases is LIBOR,
the LIBOR Currency, the Index Maturity and the Designated LIBOR
Page , and
o if one or more of the specified Interest Rate Bases is the CMT
Rate, the Designated CMT Telerate Page and Designated CMT
Maturity Index.
The interest rate borne by the floating rate Notes will be determined
as follows:
Regular Floating Rate Notes. Unless a floating rate note is designated
as a Floating Rate/Fixed Rate Note, an Inverse Floating Rate Note or as having
an Addendum attached or as having "Other Provisions" apply relating to a
different interest rate formula, it will be a "Regular Floating Rate Note" and,
except as described below or in an applicable pricing supplement, will bear
interest at the rate determined by reference to the applicable Interest Rate
Basis or Bases:
o plus or minus the applicable Spread, if any, and/or
o multiplied by the applicable Spread Multiplier, if any.
o Commencing on the first Interest Reset Date, the rate at which
interest on the Regular Floating Rate Note will be payable will
be reset as of each Interest Reset Date; provided, however, that
the interest rate in effect for the period from the date of
issue to the first Interest Reset Date will be the Initial
Interest Rate.
Floating Rate/Fixed Rate Notes. If a floating rate note is designated
as a "Floating Rate/Fixed Rate Note", it will bear interest at the rate
determined by reference to the applicable Interest Rate Basis or Bases:
o plus or minus the applicable Spread, if any, and/or
o multiplied by the applicable Spread Multiplier, if any.
o Commencing on the first Interest Reset Date, the rate at which
interest on the applicable Floating Rate/Fixed Rate Note will be
payable will be reset as of each Interest Reset Date; provided,
however, that:
o the interest rate in effect for the period from the date of
issue to the first Interest Reset Date will be the Initial
Interest Rate, and
o the interest rate in effect commencing on, and including, the
date on which interest begins to accrue on a fixed rate basis to
Maturity will be the Fixed Interest Rate, if the rate is
specified in the applicable pricing supplement, or if no Fixed
Interest Rate is specified, the interest rate in effect on the
Floating Rate/Fixed Rate Note on the day immediately preceding
the date on which interest begins to accrue on a fixed rate
basis.
Inverse Floating Rate Notes. If a floating rate note is designated as
an "Inverse Floating Rate Note", except as described below, it will bear
interest equal to the Fixed Interest Rate specified in the related pricing
supplement minus the rate determined by reference to the applicable Interest
Rate Basis or Bases:
o plus or minus the applicable Spread, if any, and/or
o multiplied by the applicable Spread Multiplier, if any;
provided, however, that unless otherwise specified in the applicable pricing
supplement, the interest rate on the applicable Inverse Floating Rate Note will
not be less than zero percent. Commencing on the first Interest Reset Date, the
rate at which interest on the applicable Inverse Floating Rate Note is payable
will be reset as of each Interest Reset Date; provided, however, that the
interest rate in effect for the period from the date of issue to the first
Interest Reset Date will be the Initial Interest Rate.
Each Interest Rate Basis shall be the rate determined in accordance
with the applicable provisions below. Except as set forth above, the interest
rate in effect on each day will be:
o if the day is an Interest Reset Date, the interest rate
determined as of the Interest Determination Date (as defined
below) immediately preceding the applicable Interest Reset Date
or
o if the day is not an Interest Reset Date, the interest rate
determined as of the Interest Determination Date immediately
preceding the applicable Interest Reset Date.
Interest Reset Dates. The applicable pricing supplement will specify
the dates on which the interest rate on the related floating rate note will be
reset (each, an "Interest Reset Date"). Unless otherwise specified in the
applicable pricing supplement, the Interest Reset Date will be, in the case of
floating rate notes which reset:
o daily - each Business Day;
o weekly - the Wednesday of each week, with the exception of
weekly reset Floating Rate Notes as to which the Treasury Rate
is an applicable Interest Rate Basis, which will reset the
Tuesday of each week, except as described below;
o monthly - the third Wednesday of each month, with the exception
of monthly reset Floating Rate Notes as to which the Eleventh
District Cost of Funds Rate is an applicable Interest Rate
Basis, which will reset on the first calendar day of the month;
o quarterly - the third Wednesday of March, June, September and
December of each year;
o semiannually - the third Wednesday of the two months specified
in the applicable pricing supplement; and
o annually - the third Wednesday of the month specified in the
applicable pricing supplement;
provided, however, that with respect to Floating Rate/Fixed Rate Notes, the
rate of interest will not reset after the applicable date on which interest on
a fixed rate basis begins to accrue.
If any Interest Reset Date for any floating rate note would otherwise
be a day that is not a Business Day, the applicable Interest Reset Date will be
postponed to the next succeeding day that is a Business Day, except that in the
case of a floating rate note as to which LIBOR is an applicable Interest Rate
Basis, if the Business Day falls in the next succeeding calendar month, then
the Interest Reset Date will be the immediately preceding Business Day. In
addition, in the case of a floating rate note for which the Treasury Rate is an
applicable Interest Rate Basis if the Interest Determination Date would
otherwise fall on an Interest Reset Date, then the applicable Interest Reset
Date will be postponed to the next succeeding Business Day.
Maximum and Minimum Interest Rates. A floating rate note may also
have either or both of the following:
o a maximum numerical limitation, or ceiling, on the rate at which
interest may accrue during any interest period (a "Maximum Interest
Rate"), and
o a minimum numerical limitation, or floor, on the rate at which
interest may accrue during any period (a "Minimum Interest Rate").
The 1993 Indenture is, and any notes issued under the 1993 Indenture will be,
governed by and construed in accordance with the laws of the State of New York.
Under present New York law, the maximum rate of interest is 25% per annum on a
simple interest basis. This limit may not apply to securities in which
$2,500,000 or more has been invested. While ML&Co. believes that New York law
would be given effect by a state or federal court sitting outside of New York,
state laws frequently regulate the amount of interest that may be charged to
and paid by a borrower, including, in some cases, corporate borrowers. It is
suggested that prospective investors consult their personal advisors with
respect to the applicability of these laws. ML&Co. has agreed for the benefit
of the beneficial owners of the notes, to the extent permitted by law, not to
claim voluntarily the benefits of any laws concerning usurious rates of
interest against a beneficial owner of the notes.
Interest Payments. Each applicable pricing supplement will specify the
dates on which interest will be payable. Each floating rate note will bear
interest from the date of issue at the rates specified in the applicable
floating rate note until the principal of the applicable note is paid or
otherwise made available for payment. Except as provided below or in the
applicable pricing supplement , the interest payment dates with respect to
floating rate notes will be, in the case of floating rate notes which reset:
o daily, weekly or monthly - the third Wednesday of each month or
on the third Wednesday of March, June, September and December
of each year, as specified in the applicable pricing
supplement;
o quarterly - the third Wednesday of March, June, September and
December of each year;
o semiannually - the third Wednesday of the two months of each
year specified in the applicable pricing supplement;
o annually - the third Wednesday of the month of each year
specified in the applicable pricing supplement; and
o at Maturity.
If any interest payment date for any floating rate note, other than an
interest payment date at Maturity, would otherwise be a day that is not a
Business Day, the interest payment date will be postponed to the next
succeeding day that is a Business Day except that in the case of a floating
rate note as to which LIBOR is an applicable Interest Rate Basis, if the
Business Day falls in the next succeeding calendar month, the applicable
interest payment date will be the immediately preceding Business Day. If the
Maturity of a floating rate note falls on a day that is not a Business Day, the
payment of principal, premium, if any, and interest will be made on the next
succeeding Business Day, and no interest on such payment will accrue for the
period from and after the Maturity.
All percentages resulting from any calculation on floating rate notes
will be rounded to the nearest one hundred-thousandth of a percentage point,
with five one-millionths of a percentage point rounded upwards. For example,
9.876545%, or .09876545, would be rounded to 9.87655%, or .0987655. All dollar
amounts used in or resulting from such calculation on floating rate notes will
be rounded to the nearest cent with one-half cent being rounded upward.
Interest payments on floating rate notes will equal the amount of
interest accrued from and including the immediately preceding interest payment
date in respect of which interest has been paid or from and including the date
of issue, if no interest has been paid , to but excluding the related interest
payment date or Maturity.
With respect to each floating rate note, accrued interest is
calculated by multiplying its face amount by an accrued interest factor. The
accrued interest factor is computed by adding the interest factor calculated
for each day in the period for which accrued interest is being calculated.
o In the case of notes for which the Interest Rate Basis is the CD
Rate, the Commercial Paper Rate, the Eleventh District Cost of
Funds Rate, the Federal Funds Rate, LIBOR or the Prime Rate, the
interest factor for each day will be computed by dividing the
interest rate applicable to each day by 360.
o In the case of notes for which the Interest Rate Basis is the
CMT Rate or the Treasury Rate, the interest factor for each day
will be computed by dividing the interest rate applicable to each
day by the actual number of days in the year.
o The interest factor for notes for which the interest rate is
calculated with reference to two or more Interest Rate Bases will
be calculated in each period in the same manner as if only one of
the applicable Interest Rate Bases applied.
Interest Determination Dates. The interest rate applicable to each
interest reset period commencing on the Interest Reset Date with respect to
that interest reset period will be the rate determined as of the applicable
"Interest Determination Date."
o The Interest Determination Date with respect to the CD Rate, the
CMT Rate and the Commercial Paper Rate will be the second
Business Day preceding each Interest Reset Date for the related
note.
o The Interest Determination Date with respect to the Federal
Funds Rate and the Prime Rate, will be the Business Day
immediately preceding each Interest Reset Date.
o The Interest Determination Date with respect to the Eleventh
District Cost of Funds Rate will be the last working day of the
month immediately preceding each Interest Reset Date on which the
Federal Home Loan Bank of San Francisco publishes the Index, as
defined below.
The Interest Determination Date with respect to LIBOR will be
the second London Business Day preceding each Interest Reset Date.
o The Interest Determination Date with respect to the Treasury
Rate will be the day in the week in which the related Interest
Reset Date falls on which day Treasury Bills, as defined below,
are normally auctioned. Treasury Bills are normally sold at
auction on Monday of each week, unless that day is a legal
holiday, in which case the auction is normally held on the
following Tuesday, except that the auction may be held on the
preceding Friday; provided, however, that if an auction is held
on the Friday of the week preceding the related Interest Reset
Date, the related Interest Determination Date will be the
preceding Friday; and provided, further, that if an auction falls
on any Interest Reset Date, then the related Interest Reset Date
will instead be the first Business Day following the auction.
o The Interest Determination Date pertaining to a floating rate
note the interest rate of which is determined with reference to
two or more Interest Rate Bases will be the latest Business Day
which is at least two Business Days before the applicable
Interest Reset Date for the applicable floating rate note on
which each Interest Reset Basis is determinable. Each Interest
Rate Basis will be determined on the Interest Determination Date,
and the applicable interest rate will take effect on the related
Interest Reset Date.
Calculation Date. Unless otherwise provided in the applicable pricing
supplement, MLPF&S will be the calculation agent. Upon the request of the
holder of any floating rate note, the calculation agent will provide the
interest rate then in effect and, if determined, the interest rate that will
become effective as a result of a determination made for the next Interest
Reset Date with respect to that floating rate note. Unless otherwise specified
in the applicable pricing supplement, the calculation date, if applicable,
pertaining to any Interest Determination Date will be the earlier of:
o the tenth calendar day after the applicable Interest
Determination Date, or, if the tenth calendar day is not a
Business Day, the next succeeding Business Day or
o the Business Day preceding the applicable Interest Payment Date
or Maturity, as the case may be.
CD Rate. CD Rate Notes will bear interest at the rates, calculated
with reference to the CD Rate and the Spread and/or Spread Multiplier, if any,
specified in the applicable CD Rate Notes and in any applicable pricing
supplement.
"CD Rate" means:
(1) the rate on the applicable Interest Determination Date for
negotiable United States dollar certificates of deposit
having the Index Maturity specified in the applicable pricing
supplement published in H.15(519) under the heading "CDs
(secondary market)", or
(2) if the rate referred to in clause (1) above is not so
published by 3:00 P.M., New York City time, on the related
calculation date, the rate on the applicable Interest
Determination Date for negotiable United States dollar
certificates of deposit of the Index Maturity specified in
the applicable pricing supplement as published in H.15 Daily
Update, or other recognized electronic source used for the
purpose of displaying the applicable rate, under the caption
"CDs (secondary market)", or
(3) if the rate referred to in clause (2) is not so published by
3:00 P.M., New York City time, on the related calculation
date, the rate on the applicable Interest Determination Date
calculated by the calculation agent as the arithmetic mean of
the secondary market offered rates as of 10:00 A.M., New York
City time, on the applicable Interest Determination Date, of
three leading non-bank dealers in negotiable United States
dollar certificates of deposit in The City of New York
selected by the calculation agent for negotiable United
States dollar certificates of deposit of major United States
money center banks for negotiable certificates of deposit
with a remaining maturity closest to the Index Maturity
specified in the applicable pricing supplement in an amount
that is representative for a single transaction in that
market at that time, or
(4) if the dealers selected by the calculation agent are not
quoting as mentioned in clause (3) above, the CD rate in
effect on the applicable Interest Determination Date.
"H.15(519)" means the weekly statistical release designated as
H.15(519), or any successor publication, published by the Board of Governors of
the Federal Reserve System.
"H.15 Daily Update" means the daily update of H.15(519), available
through the world-wide-web site of the Board of Governors of the Federal
Reserve System at http://www.bog.frb.fed.us/releases/h15/update, or any
successor site or publication.
CMT Rate. CMT Rate Notes will bear interest at the rates, calculated
with reference to the CMT Rate and the Spread and/or Spread Multiplier, if any,
specified in the applicable CMT Rate Notes and in any applicable pricing
supplement.
"CMT Rate" means:
(1) the rate displayed on the Designated CMT Telerate Page under
the caption "...Treasury Constant Maturities... Federal
Reserve Board Release H.15... Mondays Approximately 3:45 P.M.",
under the column for the Designated CMT Maturity Index for:
(a) if the Designated CMT Telerate Page is 7051, the rate
on the applicable Interest Determination Date, and
(b) if the Designated CMT Telerate Page is 7052, the
weekly or the monthly average, as specified in the
applicable pricing supplement, for the week or the
month, as applicable, ended immediately preceding the
week or the month, as applicable, in which the related
Interest Determination Date falls, or
(2) if the rate referred to in clause (1) is no longer displayed
on the relevant page or is not so displayed by 3:00 P.M., New
York City time, on the related calculation date, the treasury
constant maturity rate for the Designated CMT Maturity Index
published in H.15(519), or
(3) if the rate referred to in clause (2) is no longer published
or is not published by 3:00 P.M., New York City time, on the
related calculation date, the treasury constant maturity rate
for the Designated CMT Maturity Index, or other United States
Treasury rate for the Designated CMT Maturity Index, for the
applicable Interest Determination Date with respect to the
applicable Interest Reset Date as may then be published by
either the Board of Governors of the Federal Reserve System
or the United States Department of the Treasury that the
calculation agent determines to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and
published in H.15(519), or
(4) if the rate referred to in clause (4) applicable information
is not so published by 3:00 P.M., New York City time, on the
applicable calculation date, the rate on the applicable
Interest Determination Date calculated by the calculation
agent as a yield to maturity, based on the arithmetic mean of
the secondary market offered rates as of approximately 3:30
P.M., New York City time, on the applicable Interest
Determination Date reported, according to their written
records, by three leading primary United States government
securities dealers in The City of New York, which may include
the agent or its affiliates (each, a "Reference Dealer"),
selected by the calculation agent after eliminating the
highest quotation, or, in the event of equality, one of the
highest, and the lowest quotation or, in the event of
equality, one of the lowest, for the most recently issued
direct noncallable fixed rate obligations of the United
States ("Treasury Notes") with an original maturity of
approximately the Designated CMT Maturity Index and a
remaining term to maturity of not less than such Designated
CMT Maturity Index minus one year, or
(5) if the calculation agent is unable to obtain three applicable
Treasury Note quotations as referred to in clause (4), the
rate on the applicable Interest Determination Date calculated
by the calculation agent as a yield to maturity based on the
arithmetic mean of the secondary market offered rates as of
approximately 3:30 P.M., New York City time, on the
applicable Interest Determination Date of three Reference
Dealers in The City of New York selected by the calculation
agent from five Reference Dealers selected by the calculation
agent after eliminating the highest quotation or, in the
event of equality, one of the highest and the lowest
quotation or, in the event of equality, one of the lowest,
for Treasury Notes with an original maturity of the number of
years that is the next highest to the Designated CMT Maturity
Index and a remaining term to maturity closest to the
Designated CMT Maturity Index and in an amount of at least
$100 million, or
(6) if three or four and not five of Reference Dealers are
quoting as referred to in clause (5) above, the rate will be
calculated by the calculation agent as the arithmetic mean of
the offered rates obtained and neither the highest nor the
lowest of quotes will be eliminated, or
(7) if fewer than three Reference Dealers selected by the
calculation agent are quoting as mentioned in clause (6),
the rate in effect on the applicable Interest Determination
Date.
If two Treasury Notes with an original maturity as described
in clause (6) have remaining terms to maturity equally close to the
Designated CMT Maturity Index, the calculation agent will obtain from
five Reference Dealers quotations for the Treasury Notes with the
shorter remaining term to maturity.
"Designated CMT Telerate Page" means the display on Bridge Telerate,
Inc. or any successor service on the page specified in the applicable pricing
supplement or any other page as may replace the specified page on that service
for the purpose of displaying Treasury Constant Maturities as reported in
H.15(519), or, if no page is specified in the applicable pricing supplement,
page 7052.
"Designated CMT Maturity Index" means the original period to maturity
of the U.S. Treasury securities, either 1, 2, 3, 5, 7, 10, 20 or 30 years,
specified in the applicable pricing supplement with respect to which the CMT
Rate will be calculated or, if no maturity is specified in the applicable
pricing supplement, 2 years.
Commercial Paper Rate. Commercial Paper Rate Notes will bear interest
at the rates, calculated with reference to the Commercial Paper Rate and the
Spread and/or Spread Multiplier, if any, specified in the applicable Commercial
Paper Rate Notes and in any applicable pricing supplement.
"Commercial Paper Rate" means:
(1) the Money Market Yield on the applicable Interest
Determination Date of the rate for commercial paper having
the Index Maturity specified in the applicable pricing
supplement published in H.15(519) under the caption
"Commercial Paper-Nonfinancial", or
(2) if the rate described in clause (1) is not so published by
3:00 P.M., New York City time, on the related calculation
date, the rate on the applicable Interest Determination Date
for commercial paper having the Index Maturity specified in
the applicable pricing supplement published in H.15 Daily
Update, or other recognized electronic source used for the
purpose of displaying the applicable rate, under the caption
"Commercial Paper-Nonfinancial", or
(3) if the rate is referred to in clause (2) is not so published
by 3:00 P.M., New York City time, on the related calculation
date, the rate on the applicable Interest Determination Date
calculated by the calculation agent as the Money Market Yield
of the arithmetic mean of the offered rates at approximately
11:00 A.M., New York City time, on the applicable Interest
Determination Date of three leading dealers of United States
dollar commercial paper in The City of New York, which may
include the agent and its affiliates, selected by the
calculation agent for commercial paper having the Index
Maturity specified in the applicable pricing supplement
placed for industrial issuers whose bond rating is "Aa", or
the equivalent, from a nationally recognized statistical
rating organization, or
(4) if the dealers selected by the calculation agent are not
quoting as mentioned in clause (3), the rate in effect on
the applicable Interest Determination Date .
<PAGE>
"Money Market Yield" means a yield calculated in accordance with the
following formula and expressed as a percentage:
Money Market Yield = D x 360 x 100
----------------------
360 - ( D x M )
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the interest period for which interest is being
calculated.
Eleventh District Cost of Funds Rate. Eleventh District Cost of Funds
Rate Notes will bear interest at the rates, calculated with reference to the
Eleventh District Cost of Funds Rate and the Spread and/or Spread Multiplier,
if any, specified in the applicable Eleventh District Cost of Funds Rate Notes
and in any applicable pricing supplement.
"Eleventh District Cost of Funds Rate" means:
(1) the rate equal to the monthly weighted average cost of funds
for the calendar month immediately preceding the month in
which the applicable Interest Determination Date falls as set
forth under the caption "11th District" on the display on
Bridge Telerate, Inc. or any successor service on page 7058
or any other page as may replace the specified page on that
service ("Telerate Page 7058") as of 11:00 A.M., San
Francisco time, on the applicable Interest Determination
Date, or
(2) if the rate referred to in clause (1) does not appear on
Telerate Page 7058 on the related Interest Determination
Date, the monthly weighted average cost of funds paid by
member institutions of the Eleventh Federal Home Loan Bank
District that was most recently announced (the "Index") by
the Federal Home Loan Bank of San Francisco as the cost of
funds for the calendar month immediately preceding the
applicable Interest Determination Date, or
(3) if the Federal Home Loan Bank of San Francisco fails to
announce the Index on or before the applicable Interest
Determination Date for the calendar month immediately
preceding the applicable Interest Determination Date, the
rate in effect on the applicable Interest Determination Date.
Federal Funds Rate. Federal Funds Rate Notes will bear interest at the
rates, calculated with reference to the Federal Funds Rate and the Spread
and/or Spread Multiplier, if any, specified in the applicable Federal Funds
Rate Notes and in any applicable pricing supplement.
"Federal Funds Rate" means:
(1) the rate on the applicable Interest Determination Date for
United States dollar federal funds as published in H.15(519)
under the heading "Federal Funds (Effective)", as displayed
on Bridge Telerate, Inc. or any successor service on page 120
or any other page as may replace the applicable page on that
service ("Telerate Page 120"), or
(2) if the rate referred to in clause (1) does not appear on
Telerate Page 120 or is not so published by 3:00 P.M., New
York City time, on the related calculation date, the rate on
the applicable Interest Determination Date for United States
dollar federal funds published in H.15 Daily Update, or other
recognized electronic source used for the purpose of
displaying the applicable rate, under the caption "Federal
Funds/Effective Rate", or
(3) if the rate referred to in clause (2) is not so published by
3:00 P.M., New York City time, on the related calculation
date, the rate on the applicable Interest Determination Date
calculated by the calculation agent as the arithmetic mean of
the rates for the last transaction in overnight United States
dollar federal funds arranged by three leading brokers of
United States dollar federal funds transactions in The City
of New York, which may include the agent or its affiliates,
selected by the calculation agent before 9:00 A.M., New York
City time , on the applicable Interest Determination Date, or
(4) if the brokers selected by the calculation agent are not
quoting as mentioned in clause (3), the rate in effect on the
applicable Interest Determination Date.
LIBOR. LIBOR Notes will bear interest at the rates, calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any, specified
in the applicable LIBOR Notes and in any applicable pricing supplement.
"LIBOR" means:
(1) if "LIBOR Telerate" is specified in the applicable pricing
supplement or if neither "LIBOR Reuters" nor "LIBOR Telerate"
is specified in the applicable pricing supplement as the
method for calculating LIBOR, LIBOR will be the rate for
deposits in the LIBOR Currency, as defined below, having the
Index Maturity specified in the applicable pricing
supplement, commencing on the second London Business Day
immediately following that Interest Determination Date that
appears on the Designated LIBOR Page as of 11: 00 A.M.,
London time, on the applicable Interest Determination Date,
or
(2) if "LIBOR Reuters" is specified in the applicable pricing
supplement, LIBOR will be the arithmetic mean of the offered
rates for deposits in the LIBOR Currency having the Index
Maturity specified in the applicable pricing supplement,
commencing on the second London Business Day immediately
following that Interest Determination Date, that appear, on
the Designated LIBOR Page specified in the applicable pricing
supplement as of 11: 00 A.M., London time, on the applicable
Interest Determination Date. If the Designated LIBOR Page by
its terms provides only for a single rate, then the single
rate will be used, or
(3) with respect to a LIBOR Interest Determination Date on which
fewer than two offered rates appear, or no rate appears, as
the case may be, on the designated LIBOR Page as specified in
clauses (1) and (2), the rate calculated by the calculation
agent as the arithmetic mean of at least two quotations
obtained by the calculation agent after requesting the
principal London offices of each of four major reference
banks, which may include affiliates of the agent, in the
London interbank market to provide the calculation agent with
its offered quotation for deposits in the LIBOR Currency for
the period of the Index Maturity specified in the applicable
pricing supplement, commencing on the second London Business
Day immediately following the applicable Interest
Determination Date, to prime banks in the London interbank
market at approximately 11: 00 A.M., London time, on the
applicable Interest Determination Date and in a principal
amount that is representative for a single transaction in the
applicable LIBOR Currency in that market at that time, or
(4) if fewer than two quotations referred to in clause (2) are so
provided, the rate on the applicable Interest Determination
Date calculated by the calculation agent as the arithmetic
mean of the rates quoted at approximately 11: 00 A.M., in the
applicable Principal Financial Center(s), on the applicable
Interest Determination Date by three major banks, which may
include affiliates of the agent, in the applicable Principal
Financial Center selected by the calculation agent for loans
in the LIBOR Currency to leading European banks, having the
Index Maturity specified designated in the applicable pricing
supplement and in a principal amount that is representative
for a single transaction in the applicable LIBOR Currency in
that market at that time, or
(5) if the banks so selected by the calculation agent are not
quoting as mentioned in clause (4), the rate in effect on the
applicable Interest Determination Date.
"LIBOR Currency" means the currency specified in the
applicable pricing supplement as to which LIBOR will be
calculated or, if no currency is specified in the applicable
pricing supplement, United States dollars.
"Designated LIBOR Page" means either:
o if "LIBOR Telerate" is designated in the applicable pricing
supplement or neither "LIBOR Reuters" nor "LIBOR Telerate" is
specified in the applicable pricing supplement as the method for
calculating LIBOR, the display on Bridge Telerate, Inc. or any
successor service on the page specified in such pricing
supplement or any page as may replace the specified page on that
service for the purpose of displaying the London interbank rates
of major banks for the applicable LIBOR Currency, or
o if "LIBOR Reuters" is specified in the applicable pricing
supplement, the display on the Reuter Monitor Money Rates Service
or any successor service on the page specified in the applicable
pricing supplement or any other page as may replace the specified
page on that service for the purpose of displaying the London
interbank rates of major banks for the applicable LIBOR Currency.
Prime Rate. Prime Rate Notes will bear interest at the rates,
calculated with reference to the Prime Rate and the Spread and/or Spread
Multiplier, if any, specified in the applicable Prime Rate Notes and any
applicable pricing supplement.
"Prime Rate" means:
(1) the rate on the applicable Interest Determination Date as
published in H.15(519) under the heading "Bank Prime Loan", or
(2) if the rate referred to in clause (1) is not so published by
3:00 P.M., New York City time, on the related calculation
date, the rate on the applicable Interest Determination Date
published in H.15 Daily Update, or such other recognized
electronic source used for the purpose of displaying the
applicable rate under the caption "Bank Prime Loan", or
(3) if the rate referred to in clause (2) is not so published by
3:00 P.M., New York City time, on the related calculation
date, the rate calculated by the calculation agent as the
arithmetic mean of the rates of interest publicly announced
by at least four banks that appear on the Reuters Screen US
PRIME 1 Page as the particular bank's prime rate or base
lending rate as of 11:00 A.M., New York City time, on the
applicable Interest Determination Date, or
(4) if fewer than four rates described in clause (2) by 3:00
P.M., New York City time, on the related calculation date,
the rate on the applicable Interest Determination Date
calculated by the calculation agent as the arithmetic mean of
the prime rates or base lending rates quoted on the basis of
the actual number of days in the year divided by a 360-day
year as of the close of business on the applicable Interest
Determination Date by three major banks, which may include
affiliates of the agent, in The City of New York selected by
the calculation agent, or
(5) if the banks selected by the calculation agent are not
quoting as mentioned in clause (4), the rate in effect on the
applicable Interest Determination Date.
"Reuters Screen US PRIME 1 Page" means the display on the Reuter
Monitor Money Rates Service or any successor service on the "US PRIME 1" Page
or other page as may replace the US PRIME 1 Page on such service for the
purpose of displaying prime rates or base lending rates of major United States
banks.
Treasury Rate. Treasury Rate Notes will bear interest at the rates,
calculated with reference to the Treasury Rate and the Spread and/or Spread
Multiplier, if any, specified in the applicable Treasury Rate Notes and in any
applicable pricing supplement.
"Treasury Rate" means:
(1) the rate from the auction held on the applicable Interest
Determination Date (the "Auction") of direct obligations of
the United States ("Treasury Bills") having the Index
Maturity specified in the applicable pricing supplement under
the caption "INVESTMENT RATE" on the display on Bridge
Telerate, Inc. or any successor service on page 56 or any
other page as may replace page 56 on that service ("Telerate
Page 56") or page 57 or any other page as may replace page 57
on that service ("Telerate Page 57"), or
(2) if the rate described in clause (1) is not so published by
3:00 P.M., New York City time, on the related calculation
date, the Bond Equivalent Yield of the rate for the
applicable Treasury Bills as published in H.15 Daily Update,
or other recognized electronic source used for the purpose of
displaying the applicable rate, under the caption "U.S.
Government Securities/Treasury Bills/Auction High", or
(3) if the rate described in clause (2) is not so published by
3:00 P.M., New York City time, on the related calculation
date, the Bond Equivalent Yield of the auction rate of the
applicable Treasury Bills announced by the United States
Department of the Treasury, or
(4) in the event that the rate referred to in clause (3) is not
announced by the United States Department of the Treasury, or
if the Auction is not held, the Bond Equivalent Yield of the
rate on the applicable Interest Determination Date of
Treasury Bills having the Index Maturity specified in the
applicable Pricing Supplement published in H.15(519) under
the caption "U.S. Government Securities/Treasury
Bills/Secondary Market", or
(5) if the rate referred to in clause (4) is not so published by
3:00 P.M., New York City time, on the related calculation
date, the rate on the applicable Interest Determination Date
of the applicable Treasury Bills as published in H.15 Daily
Update, or other recognized electronic source used for the
purpose of displaying the applicable rate, under the caption
"U.S. Government Securities/Treasury Bills/Secondary Market",
or
(6) if the rate referred to in clause (5) is not so published by
3:00 P.M., New York City time, on the related Calculation
Date, the rate on the applicable Interest Determination Date
calculated by the calculation agent as the Bond Equivalent
Yield of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 P.M., New York City time, on
the applicable Interest Determination Date, of three primary
United States government securities dealers, which may
include the agent or its affiliates, selected by the
calculation agent, for the issue of Treasury Bills with a
remaining maturity closest to the Index Maturity specified in
the applicable pricing supplement, or
(7) if the dealers selected by the calculation agent are not
quoting as mentioned in clause (6), the rate in effect on the
applicable Interest Determination Date .
"Bond Equivalent Yield" means a yield calculated in accordance with
the following formula and expressed as a percentage:
Bond Equivalent Yield = D x N0
-----------
360 - (DxM)
where "D" refers to the applicable per annum rate for Treasury Bills quoted on
a bank discount basis, "N" refers to 365 or 366, as the case may be, and "M"
refers to the actual number of days in the interest period for which interest
is being calculated.
Other Provisions; Addenda
Any provisions with respect to an issue of notes, including the
determination of one or more Interest Rate Bases, the specification of one or
more Interest Rate Bases, the calculation of the interest rate applicable to a
floating rate note, the applicable interest payment dates, the stated maturity
date, any redemption or repayment provisions or any other matter relating to
the applicable notes may be modified by the terms as specified under "Other
Provisions" on the face of the applicable notes or in an Addendum relating to
the applicable notes, if so specified on the face of the applicable notes and
in the applicable pricing supplement.
Original Issue Discount Notes
ML&Co. may from time to time offer notes at a price less than their
redemption price at Maturity, resulting in the applicable notes being treated
as if they were issued with original issue discount for federal income tax
purposes ("Original Issue Discount Notes"). Original Issue Discount Notes may
currently pay no interest or interest at a rate which at the time of issuance
is below market rates. Additional considerations relating to any Original Issue
Discount Notes will be described in the applicable pricing supplement.
Amortizing Notes
ML&Co. may from time to time offer notes ("Amortizing Notes"), with
amounts of principal and interest payable in installments over the term of the
notes. Unless otherwise specified in the applicable pricing supplement,
interest on each Amortizing Note will be computed on the basis of a 360-day
year of twelve 30-day months. Payments with respect to Amortizing Notes will be
applied first to interest due and payable on the Amortizing Notes and then to
the reduction of the unpaid principal amount of the Amortizing Notes. Further
information concerning additional terms and conditions of any issue of
Amortizing Notes will be provided in the applicable pricing supplement. A table
setting forth repayment information in respect of each Amortizing Note will be
included in the applicable note and the applicable pricing supplement.
Linked Notes
ML&Co. may from time to time offer notes ("Linked Notes") the
principal value of which at Maturity will be determined by reference to:
(a) one or more equity or debt securities, including, but not
limited to, the price or yield of such securities,
(b) any statistical measure of economic or financial performance,
including, but not limited to, any currency, consumer price
or mortgage index, or
(c) the price or value of any commodity or any other item or index
or any combination,
(collectively, the "Linked Securities"). The payment or delivery of any
consideration on any Linked Note at Maturity will be determined by the decrease
or increase, as applicable, in the price or value of the applicable Linked
Securities. The terms of and any additional considerations, including any
material tax consequences, relating to any Linked Notes will be described in
the applicable pricing supplement.
Book-Entry Notes
Description of the Global Securities
Upon issuance, all notes in book-entry form having the same date of
issue, Maturity and otherwise having identical terms and provisions will be
represented by one or more fully registered global notes (the "Global Notes").
Each Global Note will be deposited with, or on behalf of, The Depository Trust
Company as Depository registered in the name of the Depository or a nominee of
the Depository. Unless and until it is exchanged in whole or in part for notes
in certificated form, no Global Note may be transferred except as a whole by
the Depository to a nominee of the Depository or by a nominee of the Depository
to the Depository or another nominee of the Depository or by the Depository or
any such nominee to a successor of the Depository or a nominee of the
successor.
DTC Procedures
The following is based on information furnished by the Depository:
The Depository will act as securities depository for the notes in
book-entry form. The notes in book-entry form will be issued as fully
registered securities registered in the name of Cede & Co., the Depository's
partnership nominee. One fully registered Global Note will be issued for each
issue of notes in book-entry form, each in the aggregate principal amount of
the issue, and will be deposited with the Depository. If, however, the
aggregate principal amount of any issue exceeds $200,000,000, one Global Note
will be issued with respect to each $200,000,000 of principal amount and an
additional Global Note will be issued with respect to any remaining principal
amount of the issue.
The Depository 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. The Depository holds securities that its participants deposit
with the Depository. The Depository 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. Direct participants of the Depository include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. The Depository is owned by a number of its
direct participants and by the New York Stock Exchange, Inc., the American
Stock Exchange, Inc., and the National Association of Securities Dealers, Inc.
Access to the Depository's 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 direct participant, either directly or
indirectly. The rules applicable to the Depository and its participants are on
file with the SEC.
Purchasers of notes in book-entry form under the Depository's system
must be made by or through direct participants, which will receive a credit for
those notes in book-entry form on the Depository's records. The ownership
interest of each actual purchaser of each note in book-entry form represented
by a Global Note is, in turn, to be recorded on the records of direct
participants and indirect participants. Beneficial owners in book-entry form
will not receive written confirmation from the Depository of their purchase,
but beneficial owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their holdings,
from the direct participants or indirect participants through which the
beneficial owner entered into the transaction. Transfers of ownership interests
in a Global Note representing notes in book-entry form are to be accomplished
by entries made on the books of participants acting on behalf of beneficial
owners. Beneficial owners of a Global Note representing notes in book-entry
form will not receive notes in certificated form representing their ownership
interests therein, except in the event that use of the book-entry system for
such notes in book-entry form is discontinued.
To facilitate subsequent transfers, all Global Notes representing
notes in book-entry form which are deposited with, or on behalf of, the
Depository are registered in the name of the Depository's nominee, Cede & Co.
The deposit of Global Notes with, or on behalf of, the Depository and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. The Depository has no knowledge of the actual beneficial owners of
the Global Notes representing the notes in book-entry form; the Depository's
records reflect only the identity of the direct participants to whose accounts
such notes in book-entry form are credited, which may or may not be the
beneficial owners. The participants will remain responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by the Depository to
direct participants, by direct participants to indirect participants, and by
direct 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.
Neither the Depository nor Cede & Co. will consent or vote with
respect to the Global Notes representing the notes in book-entry form. Under
its usual procedures, the Depository mails an omnibus proxy to ML&Co. as soon
as possible after the applicable record date. The omnibus proxy assigns Cede &
Co.'s consenting or voting rights to those direct participants, identified in a
listing attached to the omnibus proxy, to whose accounts the notes in
book-entry form are credited on the applicable record date.
ML&Co. will make principal, premium, if any, and/or interest, if any,
payments on the Global Notes representing the notes in book-entry form in
immediately available funds to the Depository. The Depository's practice is to
credit direct participants' accounts on the applicable payment date in
accordance with their respective holdings shown on the Depository's records
unless the Depository has reason to believe that it will not receive payment on
the applicable payment date. Payments by participants to beneficial owners will
be governed by standing instructions and customary practices, as is the case
with securities held for the accounts of customers in bearer form or registered
in "street name", and will be the responsibility of the applicable participant
and not of the Depository, the Trustee or ML&Co., subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
principal, premium, if any, and/or interest, if any, to the Depository is the
responsibility of ML&Co. and the Trustee, disbursement of payments to direct
participants will be the responsibility of the Depository, and disbursement of
payments to the beneficial owners will be the responsibility of direct
participants and indirect participants.
If applicable, redemption notices shall be sent to Cede & Co. If less
than all of the notes in book-entry form of like tenor and terms are being
redeemed, the Depository's practice is to determine by lot the amount of the
interest of each direct participant in the issue to be redeemed.
A beneficial owner will give notice of any option to elect to have its
notes in book-entry form repaid by ML&Co., through its participant, to the
Trustee, and will effect delivery of the applicable notes in book-entry form by
causing the direct participant to transfer the participant's interest in the
Global Note notes in book-entry form, on the Depository's records, to the
Trustee.
The Depository may discontinue providing its services as securities
depository with respect to the notes in book-entry form at any time by giving
reasonable notice to ML&Co. or the Trustee. In the event that a successor
securities depository is not obtained, notes in certificated form are required
to be printed and delivered.
ML&Co. may decide to discontinue use of the system of book-entry
transfers through the Depository or a successor securities depository. In that
event, notes in certificated form will be printed and delivered.
The laws of some states may require that certain purchasers of
securities take physical delivery of securities in definitive form. Such limits
and such laws may impair the ability to own, transfer or pledge beneficial
interests in Global Notes.
So long as the Depository, or its nominee, is the registered owner of
a Global Note, the Depository or its nominee, as the case may be, will be
considered the sole owner or holder of the notes represented by such Global
Note for all purposes under the 1993 Indenture. Except as provided below,
beneficial owners of a Global Note will not be entitled to have the notes
represented by a Global Note registered in their names, will not receive or be
entitled to receive physical delivery of the notes in definitive form and will
not be considered the owners or holders thereof under the 1993 Indenture.
Accordingly, each person owning a beneficial interest in a Global Note must
rely on the procedures of the Depository and, if that person is not a
participant, on the procedures of the participant through which that person
owns its interest, to exercise any rights of a holder under the 1993 Indenture.
ML&Co. understands that under existing industry practices, in the event that
ML&Co. requests any action of holders or that an owner of a beneficial interest
in a Global Note desires to give or take any action which a holder is entitled
to give or take under the 1993 Indenture, the Depository would authorize the
participants holding the relevant beneficial interests to give or take the
desired action, and the participants would authorize beneficial owners owning
through the participants to give or take the desired action or would otherwise
act upon the instructions of beneficial owners.
Year 2000 Compliance
Management of the Depository is aware that some computer applications,
systems and the like for processing data ("Systems") that are dependent upon
calendar dates, including dates before, on, and after January 1, 2000, may
encounter "Year 2000 problems." The Depository has informed direct and indirect
participants and other members of the financial community (the "Industry") that
it has developed and is implementing a program so that its Systems, as the same
relate to the timely payment of distributions (including principal and interest
payments) to securityholders, book-entry deliveries, and settlement of trades
within the Depository, continue to function appropriately. This program
includes a technical assessment and a remediation plan, each of which is
complete. Additionally, the Depository's plan includes a testing phase, which
is expected to be completed within appropriate time frames.
However, the Depository's ability to perform properly its services is
also dependent upon other parties, including, but not limited to, issuers and
their agents, as well as the Depository's direct and indirect participants,
third party vendors from whom the Depository licenses software and hardware,
and third party vendors on whom the Depository relies for information or the
provision of services, including telecommunication and electrical utility
service providers, among others. The Depository has informed the Industry that
it is contacting (and will continue to contact) third party vendors from whom
the Depository acquires services to:
o impress upon them the importance of such services being Year 2000
compliant; and
o determine the extent of their efforts for Year 2000 remediation and,
as appropriate, testing, of their services.
In addition, the Depository is in the process of developing such contingency
plans as it deems appropriate.
According to the Depository, the information in the preceding two
paragraphs with respect to the Depository has been provided to the Industry for
informational purposes only and is not intended to serve as a representation,
warranty, or contract modification of any kind.
Exchange for Notes in Certificated Form
If:
(a) the Depository is at any time unwilling or unable to continue as
Depository and a successor depository is not appointed by ML&Co.
within 60 days,
(b) ML&Co. executes and delivers to the Trustee a company order to
the effect that the Global Notes shall be exchangeable, or
(c) an Event of Default has occurred and is continuing with respect
to the notes,
the Global Note or Global Notes will be exchangeable for notes in certificated
form of like tenor and of an equal aggregate principal amount, in denominations
of $1,000 and integral multiples of $1,000. The certificated notes will be
registered in the name or names as the Depository instructs the Trustee. It is
expected that instructions may be based upon directions received by the
Depository from participants with respect to ownership of beneficial interests
in Global Notes.
The information in this section concerning the Depository and the
Depository's system has been obtained from sources that ML&Co. believes to be
reliable, but ML&Co. takes no responsibility for the accuracy of the
information.
UNITED STATES FEDERAL INCOME TAXATION
The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the notes is based
upon laws, regulations, rulings and decisions now in effect, all of which are
subject to change (including changes in effective dates) or possible differing
interpretations. It deals only with notes held as capital assets and does not
purport to deal with persons in special tax situations, such as financial
institutions, insurance companies, regulated investment companies, dealers in
securities or currencies, persons holding notes as a hedge against currency
risks or as a position in a "straddle" for tax purposes, or persons whose
functional currency is not the United States dollar. It also does not deal with
holders other than original purchasers (except where otherwise specifically
noted). Persons considering the purchase of the notes should consult their own
tax advisors concerning the application of United States Federal income tax
laws to their particular situations as well as any consequences of the
purchase, ownership and disposition of the notes arising under the laws of any
other taxing jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of a
note that is for United States Federal income tax purposes:
(1) a citizen or resident of the United States,
(2) a corporation or a partnership (including an entity treated
as a corporation or a partnership for United States Federal
income tax purposes) created or organized in or under the
laws of the United States, any state thereof or the District
of Columbia (unless, in the case of a partnership, Treasury
regulations are adopted that provide otherwise),
(3) an estate whose income is subject to United States Federal
income tax regardless of its source,
(4) a trust if a court within the United States is able to
exercise primary supervision over the administration of the
trust and one or more United States persons have the
authority to control all substantial decisions of the trust,
or
(5) any other person whose income or gain in respect of a note is
effectively connected with the conduct of a United States
trade or business.
Certain trusts not described in clause (4) above in existence on August 20,
1996 that elect to be treated as a United States person will also be a U.S.
Holder for purposes of the following discussion. As used herein, the term
"non-U.S. Holder" means a beneficial owner of a note that is not a U.S. Holder.
U.S. Holders
Payments of Interest. Payments of interest on a note generally will
be taxable to a U.S. Holder as ordinary interest income at the time such
payments are accrued or are received (in accordance with the U.S. Holder's
regular method of tax accounting).
Original Issue Discount. The following summary is a general discussion
of the United States Federal income tax consequences to U.S. Holders of the
purchase, ownership and disposition of notes issued with original issue
discount ("Discount Notes"). The following summary is based upon final Treasury
regulations (the "OID Regulations") released by the Internal Revenue Service on
January 27, 1994, as amended on June 11, 1996, under the original issue
discount provisions of the Code.
For United States Federal income tax purposes, original issue discount
is the excess of the stated redemption price at maturity of a note over its
issue price, if such excess equals or exceeds a de minimis amount (generally
1/4 of 1% of the note's stated redemption price at maturity multiplied by the
number of complete years to its maturity from its issue date or, in the case of
a note providing for the payment of any amount other than qualified stated
interest (as defined below) prior to maturity, multiplied by the weighted
average maturity of the note). The issue price of each note of an issue of
notes equals the first price at which a substantial amount of the notes has
been sold (ignoring sales to bond houses, brokers, or similar persons or
organizations acting in the capacity of underwriters, placement agents, or
wholesalers). The stated redemption price at maturity of a note is the sum of
all payments provided by the note other than "qualified stated interest"
payments. The term "qualified stated interest" generally means stated interest
that is unconditionally payable in cash or property (other than debt
instruments of the issuer) at least annually at a single fixed rate. In
addition, under the OID Regulations, if a note bears interest for one or more
accrual periods at a rate below the rate applicable for the remaining term of
the note (e.g., notes with teaser rates or interest holidays), and if the
greater of either the resulting foregone interest on the note or any "true"
discount on the note (i.e., the excess of the note's stated principal amount
over its issue price) equals or exceeds a specified de minimis amount, then the
stated interest on the note would be treated as original issue discount rather
than qualified stated interest.
Payments of qualified stated interest on a note are taxable to a U.S.
Holder as ordinary interest income at the time such payments are accrued or are
received (in accordance with the U.S. Holder's regular method of tax
accounting). A U.S. Holder of a Discount Note must include original issue
discount in income as ordinary interest for United States Federal income tax
purposes as it accrues under a constant yield method in advance of receipt of
the cash payments attributable to such income, regardless of the U.S. Holder's
regular method of tax accounting. In general, the amount of original issue
discount included in income by the initial U.S. Holder of a Discount Note is
the sum of the daily portions of original issue discount with respect to the
Discount Note for each day during the taxable year (or portion of the taxable
year) on which the U.S. Holder held the Discount Note. The "daily portion" of
original issue discount on any Discount Note is determined by allocating to
each day in any accrual period a ratable portion of the original issue discount
allocable to that accrual period. An "accrual period" may be of any length and
the accrual periods may vary in length over the term of the Discount Note,
provided that each accrual period is no longer than one year and each scheduled
payment of principal or interest occurs either on the final day of an accrual
period or on the first day of an accrual period. The amount of original issue
discount allocable to each accrual period is generally equal to the difference
between
o the product of the Discount Note's adjusted issue price at the
beginning of such accrual period and its yield to maturity
(determined on the basis of compounding at the close of each
accrual period and appropriately adjusted to take into account
the length of the particular accrual period) and
o the amount of any qualified stated interest payments allocable
to such accrual period.
The "adjusted issue price" of a Discount Note at the beginning of any accrual
period is the sum of the issue price of the Discount Note plus the amount of
original issue discount allocable to all prior accrual periods minus the amount
of any prior payments on the Discount Note that were not qualified stated
interest payments. Under these rules, U.S. Holders generally will have to
include in income increasingly greater amounts of original issue discount in
successive accrual periods.
A U.S. Holder who purchases a Discount Note for an amount that is
greater than its adjusted issue price as of the purchase date and less than or
equal to the sum of all amounts payable on the Discount Note after the purchase
date other than payments of qualified stated interest, will be considered to
have purchased the Discount Note at an "acquisition premium". Under the
acquisition premium rules, the amount of original issue discount which such
U.S. Holder must include in its gross income with respect to such Discount Note
for any taxable year (or portion thereof in which the U.S. Holder holds the
Discount Note) will be reduced (but not below zero) by the portion of the
acquisition premium properly allocable to the period.
Under the OID Regulations, Floating Rate Notes and Indexed Notes
(hereinafter "Variable Notes") are subject to special rules whereby a Variable
Note will qualify as a "variable rate debt instrument" if
o its issue price does not exceed the total noncontingent
principal payments due under the Variable Note by more than a
o specified de minimis amount and
it provides for stated interest, paid or compounded at least
annually, at current values of:
o one or more qualified floating rates,
o a single fixed rate and one or more qualified floating rates,
o a single objective rate, or
o a single fixed rate and a single objective rate that is a
qualified inverse floating rate.
A "qualified floating rate" is any variable rate where variations in
the value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
Variable Note is denominated. Although a multiple of a qualified floating rate
will generally not itself constitute a qualified floating rate, a variable rate
equal to the product of a qualified floating rate and a fixed multiple that is
greater than .65 but not more than 1.35 will constitute a qualified floating
rate. A variable rate equal to the product of a qualified floating rate and a
fixed multiple that is greater than .65 but not more than 1.35, increased or
decreased by a fixed rate, will also constitute a qualified floating rate. In
addition, under the OID Regulations, two or more qualified floating rates that
can reasonably be expected to have approximately the same values throughout the
term of the Variable Note (e.g., two or more qualified floating rates with
values within 25 basis points of each other as determined on the Variable
Note's issue date) will be treated as a single qualified floating rate.
Notwithstanding the foregoing, a variable rate that would otherwise constitute
a qualified floating rate but which is subject to one or more restrictions such
as a maximum numerical limitation (i.e., a cap) or a minimum numerical
limitation (i.e., a floor) may, under certain circumstances, fail to be treated
as a qualified floating rate under the OID Regulations unless such cap or floor
is fixed throughout the term of the note. An "objective rate" is a rate that is
not itself a qualified floating rate but which is determined using a single
fixed formula that is based on objective financial or economic information. A
rate will not qualify as an objective rate if it is based on information that
is within the control of the issuer (or a related party) or that is unique to
the circumstances of the issuer (or a related party), such as dividends,
profits, or the value of the issuer's stock (although a rate does not fail to
be an objective rate merely because it is based on the credit quality of the
issuer). A "qualified inverse floating rate" is any objective rate where such
rate is equal to a fixed rate minus a qualified floating rate, as long as
variations in the rate can reasonably be expected to inversely reflect
contemporaneous variations in the qualified floating rate. The OID Regulations
also provide that if a Variable Note provides for stated interest at a fixed
rate for an initial period of one year or less followed by a variable rate that
is either a qualified floating rate or an objective rate and if the variable
rate on the Variable Note's issue date is intended to approximate the fixed
rate (e.g., the value of the variable rate on the issue date does not differ
from the value of the fixed rate by more than 25 basis points), then the fixed
rate and the variable rate together will constitute either a single qualified
floating rate or objective rate, as the case may be.
If a Variable Note that provides for stated interest at either a
single qualified floating rate or a single objective rate throughout the term
thereof qualifies as a "variable rate debt instrument" under the OID
Regulations, and if the interest on a Variable Note is unconditionally payable
in cash or property (other than debt instruments of the issuer) at least
annually, then all stated interest on the Variable Note will constitute
qualified stated interest and will be taxed accordingly. Thus, a Variable Note
that provides for stated interest at either a single qualified floating rate or
a single objective rate throughout the term thereof and that qualifies as a
"variable rate debt instrument" under the OID Regulations will generally not be
treated as having been issued with original issue discount unless the Variable
Note is issued at a "true" discount (i.e., at a price below the Variable Note's
stated principal amount) in excess of a specified de minimis amount. The amount
of qualified stated interest and the amount of original issue discount, if any,
that accrues during an accrual period on such a Variable Note is determined
under the rules applicable to fixed rate debt instruments by assuming that the
variable rate is a fixed rate equal to
(1) in the case of a qualified floating rate or qualified inverse
floating rate, the value as of the issue date, of the qualified
floating rate or qualified inverse floating rate, or
(2) in the case of an objective rate (other than a qualified inverse
floating rate), a fixed rate that reflects the yield that is
reasonably expected for the Variable Note.
The qualified stated interest allocable to an accrual period is increased (or
decreased) if the interest actually paid during an accrual period exceeds (or
is less than) the interest assumed to be paid during the accrual period
pursuant to the foregoing rules.
In general, any other Variable Note that qualifies as a "variable rate
debt instrument" will be converted into an "equivalent" fixed rate debt
instrument for purposes of determining the amount and accrual of original issue
discount and qualified stated interest on the Variable Note. The OID
Regulations generally require that such a Variable Note be converted into an
"equivalent" fixed rate debt instrument by substituting any qualified floating
rate or qualified inverse floating rate provided for under the terms of the
Variable Note with a fixed rate equal to the value of the qualified floating
rate or qualified inverse floating rate, as the case may be, as of the Variable
Note's issue date. Any objective rate (other than a qualified inverse floating
rate) provided for under the terms of the Variable Note is converted into a
fixed rate that reflects the yield that is reasonably expected for the Variable
Note. In the case of a Variable Note that qualifies as a "variable rate debt
instrument" and provides for stated interest at a fixed rate in addition to
either one or more qualified floating rates or a qualified inverse floating
rate, the fixed rate is initially converted into a qualified floating rate (or
a qualified inverse floating rate, if the Variable Note provides for a
qualified inverse floating rate). Under such circumstances, the qualified
floating rate or qualified inverse floating rate that replaces the fixed rate
must be such that the fair market value of the Variable Note as of the Variable
Note's issue date is approximately the same as the fair market value of an
otherwise identical debt instrument that provides for either the qualified
floating rate or qualified inverse floating rate rather than the fixed rate.
Subsequent to converting the fixed rate into either a qualified floating rate
or a qualified inverse floating rate, the Variable Note is then converted into
an "equivalent" fixed rate debt instrument in the manner described above.
Once the Variable Note is converted into an "equivalent" fixed rate
debt instrument pursuant to the foregoing rules, the amount of original issue
discount and qualified stated interest, if any, are determined for the
"equivalent" fixed rate debt instrument by applying the general original issue
discount rules to the "equivalent" fixed rate debt instrument and a U.S. Holder
of the Variable Note will account for such original issue discount and
qualified stated interest as if the U.S. Holder held the "equivalent" fixed
rate debt instrument. Each accrual period appropriate adjustments will be made
to the amount of qualified stated interest or original issue discount assumed
to have been accrued or paid with respect to the "equivalent" fixed rate debt
instrument in the event that such amounts differ from the actual amount of
interest accrued or paid on the Variable Note during the accrual period.
If a Variable Note does not qualify as a "variable rate debt
instrument" under the OID Regulations, then the Variable Note would be treated
as a contingent payment debt obligation. On June 11, 1996, the Treasury
Department issued final regulations (the "CPDI Regulations") concerning the
proper United States Federal income tax treatment of contingent payment debt
instruments. In general, the CPDI Regulations would cause the timing and
character of income, gain or loss reported on a contingent payment debt
instrument to substantially differ from the timing and character of income,
gain or loss reported on a contingent payment debt instrument under general
principles of current United States Federal income tax law. Specifically, the
CPDI Regulations generally require a U.S. Holder of such an instrument to
include future contingent and noncontingent interest payments in income as such
interest accrues based upon a projected payment schedule. Moreover, in general,
under the CPDI Regulations, any gain recognized by a U.S. Holder on the sale,
exchange, or retirement of a contingent payment debt instrument will be treated
as ordinary income and all or a portion of any loss realized could be treated
as ordinary loss as opposed to capital loss (depending upon the circumstances).
The CPDI Regulations apply to debt instruments issued on or after August 13,
1996. The proper United States Federal income tax treatment of Variable Notes
that are treated as contingent payment debt obligations will be more fully
described in the applicable pricing supplement. Furthermore, any other special
United States Federal income tax considerations, not otherwise discussed
herein, which are applicable to any particular issue of notes will be discussed
in the applicable pricing supplement.
ML&Co. may issue notes which;
o may be redeemable at the option of ML&Co. prior to their stated
maturity (a "call option") and/or
o may be repayable at the option of the holder prior to their
stated maturity (a "put option").
Notes containing such features may be subject to rules that differ from the
general rules discussed above. Investors intending to purchase notes with such
features should consult their own tax advisors, since the original issue
discount consequences will depend, in part, on the particular terms and
features of the purchased notes.
U.S. Holders may generally, upon election, include in income all
interest (including stated interest, acquisition discount, original issue
discount, de minimis original issue discount, market discount, de minimis
market discount, and unstated interest, as adjusted by any amortizable bond
premium or acquisition premium) that accrues on a debt instrument by using the
constant yield method applicable to original issue discount, subject to certain
limitations and exceptions.
Foreign-Currency Notes. The United States Federal income tax
consequences of the purchase, ownership and disposition of notes providing for
payments denominated in a currency other than U.S. dollars will be more fully
described in the applicable pricing supplement.
Short-Term Notes. Notes that have a fixed maturity of one year or less
("Short-Term Notes") will be treated as having been issued with original issue
discount. In general, an individual or other cash method U.S. Holder is not
required to accrue such original issue discount unless the U.S. Holder elects
to do so. If such an election is not made, any gain recognized by the U.S.
Holder on the sale, exchange or maturity of the Short-Term Note will be
ordinary income to the extent of the original issue discount accrued on a
straight-line basis, or upon election under the constant yield method (based on
daily compounding), through the date of sale or maturity, and a portion of the
deductions otherwise allowable to the U.S. Holder for interest on borrowings
allocable to the Short-Term Note will be deferred until a corresponding amount
of income is realized. U.S. Holders who report income for United States Federal
income tax purposes under the accrual method, and certain other holders
including banks and dealers in securities, are required to accrue original
issue discount on a Short-Term Note on a straight-line basis unless an election
is made to accrue the original issue discount under a constant yield method
(based on daily compounding).
Market Discount. If a U.S. Holder purchases a note, other than a
Discount Note, for an amount that is less than its issue price (or, in the case
of a subsequent purchaser, its stated redemption price at maturity) or, in the
case of a Discount Note, for an amount that is less than its adjusted issue
price as of the purchase date, such U.S. Holder will be treated as having
purchased the note at a "market discount", unless such market discount is less
than a specified de minimis amount.
Under the market discount rules, a U.S. Holder will be required to
treat any partial principal payment (or, in the case of a Discount Note, any
payment that does not constitute qualified stated interest) on, or any gain
realized on the sale, exchange, retirement or other disposition of, a note as
ordinary income to the extent of the lesser of:
o the amount of such payment or realized gain or
o the market discount which has not previously been included in
income and is treated as having accrued on the note at the time
of such payment or disposition.
Market discount will be considered to accrue ratably during the period from the
date of acquisition to the maturity date of the note, unless the U.S. Holder
elects to accrue market discount on the basis of semiannual compounding.
A U.S. Holder may be required to defer the deduction of all or a
portion of the interest paid or accrued on any indebtedness incurred or
maintained to purchase or carry a note with market discount until the maturity
of the Note or certain earlier dispositions, because a current deduction is
only allowed to the extent the interest expense exceeds an allocable portion of
market discount. A U.S. Holder may elect to include market discount in income
currently as it accrues (on either a ratable or semiannual compounding basis),
in which case the rules described above regarding the treatment as ordinary
income of gain upon the disposition of the note and upon the receipt of certain
cash payments and regarding the deferral of interest deductions will not apply.
Generally, such currently included market discount is treated as ordinary
interest for United States Federal income tax purposes. Such an election will
apply to all debt instruments acquired by the U.S. Holder on or after the first
day of the taxable year to which such election applies and may be revoked only
with the consent of the IRS.
Premium. If a U.S. Holder purchases a note for an amount that is
greater than the sum of all amounts payable on the note after the purchase date
other than payments of qualified stated interest, the U.S. Holder will be
considered to have purchased the note with "amortizable bond premium" equal in
amount to such excess. A U.S. Holder may elect to amortize such premium using a
constant yield method over the remaining term of the note and may offset
interest otherwise required to be included in respect of the note during any
taxable year by the amortized amount of such excess for the taxable year.
However, if the note may be optionally redeemed after the U.S. Holder acquires
it at a price in excess of its stated redemption price at maturity, special
rules would apply which could result in a deferral of the amortization of some
bond premium until later in the term of the note. Any election to amortize bond
premium applies to all taxable debt obligations then owned and thereafter
acquired by the U.S. Holder and may be revoked only with the consent of the
IRS.
Disposition of a Note. Except as discussed above, upon the sale,
exchange or retirement of a note, a U.S. Holder generally will recognize
taxable gain or loss equal to the difference between the amount realized on the
sale, exchange or retirement (other than amounts representing accrued and
unpaid interest) and the U.S. Holder's adjusted tax basis in the note. A U.S.
Holder's adjusted tax basis in a note generally will equal the U.S. Holder's
initial investment in the note increased by any original issue discount
included in income (and accrued market discount, if any, if the U.S. Holder has
included such market discount in income) and decreased by the amount of any
payments, other than qualified stated interest payments, received and
amortizable bond premium taken with respect to the note. Such gain or loss
generally will be long-term capital gain or loss if the note were held for more
than one year. Long-term capital gains of individuals are subject to reduced
capital gain rates while short-term capital gains are subject to ordinary
income rates. The deductibility of capital losses is subject to certain
limitations. Prospective investors should consult their own tax advisors
concerning these tax law provisions.
Non-U.S. Holders
A non-U.S. Holder will not be subject to United States Federal income
taxes on payments of principal, premium (if any) or interest (including
original issue discount, if any) on a note, unless such non-U.S. Holder is a
direct or indirect 10% or greater shareholder of ML&Co., a controlled foreign
corporation related to ML&Co. or a bank receiving interest described in section
881(c)(3)(A) of the Code. To qualify for the exemption from taxation, the last
United States payor in the chain of payment prior to payment to a non-U.S.
Holder (the "Withholding Agent") must have received in the year in which a
payment of interest or principal occurs, or in either of the two preceding
calendar years, a statement that (1) is signed by the beneficial owner of the
note under penalties of perjury, (2) certifies that such owner is not a U.S.
Holder and (3) provides the name and address of the beneficial owner. The
statement may be made on an IRS Form W-8 or a substantially similar form, and
the beneficial owner must inform the Withholding Agent of any change in the
information on the statement within 30 days of such change. If a note is held
through a securities clearing organization or certain other financial
institutions, the organization or institution may provide a signed statement to
the Withholding Agent. However, in such case, the signed statement must be
accompanied by a copy of the IRS Form W-8 or the substitute form provided by
the beneficial owner to the organization or institution. The Treasury
Department is considering implementation of further certification requirements
aimed at determining whether the issuer of a debt obligation is related to
holders thereof.
On October 6, 1997, the Treasury issued new regulations (the "New
Regulations") which make certain modifications to the withholding, backup
withholding and information reporting rules. 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,
1999, subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.
Generally, a non-U.S. Holder will not be subject to United States
Federal income taxes on any amount which constitutes capital gain upon
retirement or disposition of a note, provided the gain is not effectively
connected with the conduct of a trade or business in the United States by the
non-U.S. Holder. Certain other exceptions may be applicable, and a non-U.S.
Holder should consult its tax advisor in this regard.
The notes will not be includible in the estate of a non-U.S. Holder
unless the individual is a direct or indirect 10% or greater shareholder of
ML&Co. or, at the time of such individual's death, payments in respect of the
notes would have been effectively connected with the conduct by such individual
of a trade or business in the United States.
Backup Withholding
Backup withholding of United States Federal income tax at a rate of
31% may apply to payments made in respect of the notes to registered owners who
are not "exempt recipients" and who fail to provide certain identifying
information (such as the registered owner's taxpayer identification number) in
the required manner.
Generally, individuals are not exempt recipients, whereas corporations
and certain other entities generally are exempt recipients. Payments made in
respect of the notes to a U.S. Holder must be reported to the IRS, unless the
U.S. Holder is an exempt recipient or establishes an exemption. Compliance with
the identification procedures described in the preceding section would
establish an exemption from backup withholding for those non-U.S. Holders who
are not exempt recipients.
In addition, upon the sale of a note to (or through) a broker, the
broker must withhold 31% of the entire purchase price, unless either:
o the broker determines that the seller is a corporation or other
exempt recipient or
o the seller provides, in the required manner, certain identifying
information and, in the case of a non-U.S. Holder, certifies that
such seller is a non-U.S. Holder (and certain other conditions
are met).
Such a sale must also be reported by the broker to the IRS, unless either:
o the broker determines that the seller is an exempt recipient or
o the seller certifies its non-U.S. status (and certain other
conditions are met).
Certification of the registered owner's non-U.S. status would be made normally
on an IRS Form W-8 under penalties of perjury, although in certain cases it may
be possible to submit other documentary evidence. In addition, prospective U.S.
Holders are strongly urged to consult their own tax advisors with respect to
the New Withholding Regulations. See " United States Federal Income
Taxation-Non-U.S. Holders".
Any amounts withheld under the backup withholding rules from a payment
to a beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
PLAN OF DISTRIBUTION
ML&Co. is offering the notes for sale on a continuing basis through
the agent, MLPF&S, who will purchase the notes, as principal, from ML&Co., for
resale to investors and other purchasers at varying prices relating to
prevailing market prices at the time of resale as determined by the agent, or,
if so specified in an applicable pricing supplement, for resale at a fixed
public offering price. Unless otherwise specified in an applicable pricing
supplement, any note sold to the agent as principal will be purchased by the
agent at a price equal to 100% of the principal amount of the note less a
percentage of the principal amount equal to the commission applicable to an
agency sale as described below of a note of identical maturity. If agreed to by
ML&Co. and the agent, the agent may utilize its reasonable efforts on an agency
basis to solicit offers to purchase the notes at 100% of the principal amount
of the notes, unless otherwise specified in an applicable pricing supplement.
ML&Co. will pay a commission to the agent, ranging from .050% to .600% of the
principal amount of a note, depending upon its stated maturity or, with respect
to a note for which the stated maturity is in excess of 30 years, a commission
as agreed upon by ML&Co. and the agent at the time of sale, sold through the
agent.
The agent may sell notes it has purchased from ML&Co. as principal to
other dealers for resale to investors, and may allow any portion of the
discount received in connection with such purchases from ML&Co. to such
dealers. After the initial public offering of notes, the public offering price,
in the case of notes to be resold at a fixed public offering price, the
concession and the discount allowed to dealers may be changed.
ML&Co. reserves the right to withdraw, cancel or modify the offer made
by this prospectus supplement without notice and may reject orders, in whole or
in part, whether placed directly with ML&Co. or through the agent. The agent
will have the right, in its discretion reasonably exercised, to reject in whole
or in part any offer to purchase notes received by the agent.
Unless otherwise specified in an applicable pricing supplement,
payment of the purchase price of the notes will be required to be made in
immediately available funds in U.S. dollars or the Specified Currency, as the
case may be, in New York City on the date of settlement.
No Note will have an established trading market when issued. Unless
specified in the applicable pricing supplement, ML&Co. will not list the notes
on any securities exchange. The agent may from time to time purchase and sell
notes in the secondary market, but the agent is not obligated to do so, and
there can be no assurance that there will be a secondary market for the notes
or liquidity in the secondary market if one develops. From time to time, the
agent may make a market in the notes.
The agent may be deemed to be an "underwriter" within the meaning of
the Securities Act of 1933, as amended. ML&Co. has agreed to indemnify the
agent against or to make contributions relating to certain civil liabilities,
including liabilities under the Securities Act, or to contribute to payments
the agent may be required to make in respect thereof. ML&Co. has agreed to
reimburse the agent for certain expenses.
From time to time, ML&Co. may issue and sell other securities
described in the accompanying prospectus, and the amount of notes that ML&Co.
may offer and sell under this prospectus supplement may be reduced as a result
of such sales.
In connection with the offering of notes purchased by the agent as
principal on a fixed price basis, the agent is permitted to engage in certain
transactions that stabilize the price of the notes. These transactions may
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the notes. If the agent creates a short position in the notes in
connection with the offering (i.e., if it sells notes in an aggregate principal
amount exceeding that set forth in the applicable pricing supplement), then the
agent may reduce that short position by purchasing notes in the open market. In
general, purchases of notes for the purpose of stabilization or to reduce a
short position could cause the price of the notes to be higher than in the
absence of these purchases.
Neither ML&Co. nor the agent make 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 notes. In addition, neither ML&Co. nor the
agent makes any representation that the agent will engage in any such
transactions or that such transactions, once commenced, will not be
discontinued without notice.
The distribution of the notes will conform to the requirements set
forth in the applicable sections of Rule 2720 of the Conduct Rules of the
NASD.
VALIDITY OF THE NOTES
The validity of the notes will be passed upon for ML&Co. and the agent
by Brown & Wood LLP, New York, New York.
<PAGE>
[LOGO]
$
Merrill Lynch & Co., Inc.
Medium-Term Notes,
Series B
--------------------------------
PROSPECTUS SUPPLEMENT
-------------------------------
Merrill Lynch & Co.
________, 1999
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to Completion
Preliminary Prospectus dated February 26, 1999
PROSPECTUS
Merrill Lynch & Co., Inc.
Nikkei 225 Market Index Target-Term Securities(R)
due September 21, 2005
"MITTS(R) Securities"
$10 principal amount per unit
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, our wholly-owned subsidiary, will use this prospectus when making
offers and sales related to market-making transactions in the following
securities.
The MITTS Securities:
o 100% principal protection at maturity
No payments prior to the maturity date
Senior unsecured debt securities of ML & Co.
o Linked to the value of the Nikkei 225 Index that
measures the composite price performance of
selected Japanese stocks.
o The MITTS Securities are listed on the American
Stock Exchange under the symbol "MLN".
Payment at Maturity:
o On the maturity date, for each unit of the MITTS
Securities you own, we will pay you an amount
equal to the sum of the principal amount of each
unit and an additional amount based on any percentage
increase in the value of the index as described in
this prospectus.
o You will receive no less than the principal amount
of your MITTS Securities.
Investing in the MITTS Securities involves risks.
See "Risk Factors" beginning on page 5.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
The sale price of the MITTS Securities will be the prevailing market
price at the time of sale.
----------------
Merrill Lynch & Co.
----------------
The date of this prospectus is , 1999.
"MITTS" and "Market Index Target-Term Securities" are registered service marks
owned by Merrill Lynch & Co., Inc.
<PAGE>
TABLE OF CONTENTS
RISK FACTORS..............................................................2
MERRILL LYNCH & CO., INC..................................................6
RATIO OF EARNINGS TO FIXED CHARGES........................................7
DESCRIPTION OF THE MITTS SECURITIES.......................................7
THE NIKKEI 225 INDEX.....................................................14
OTHER TERMS..............................................................16
UNITED STATES FEDERAL INCOME TAXATION....................................19
WHERE YOU CAN FIND MORE INFORMATION......................................20
INCORPORATION OF INFORMATION WE FILE WITH THE SEC........................20
PLAN OF DISTRIBUTION.....................................................21
EXPERTS..................................................................21
<PAGE>
RISK FACTORS
Your investment in the MITTS Securities will involve risks. You
should carefully consider the following discussion of risks before deciding
whether an investment in the MITTS Securities is suitable for you.
You may not earn a return on your investment
You should be aware that at maturity we will pay you no more than $10
for each unit of the MITTS Securities you own if the average value of the index
over five trading days shortly before the maturity date is less than 14,152.95,
the value of the index on the date the MITTS Securities were priced. This will
be true even if , at some time during the life of the MITTS Securities, the
value of the index was higher than 14,152.95 but later falls below 14,152.95.
Your yield may be lower than the yield on a standard debt security of
comparable maturity
The amount we pay you at maturity may be less than the return you
could earn on other investments. Your yield may be less than the yield you
would earn if you bought a standard senior non-callable Merrill Lynch & Co.,
Inc. debt security with the same maturity date. Your investment may not reflect
the full opportunity cost to you when you take into account factors that affect
the time value of money.
Your return will not reflect the return of owning the stocks included in the
Index
Your return will not reflect the return you would realize if you
actually owned the stocks underlying the index and received the dividends paid
on those stocks. This is because the value of the index is calculated by
reference to the prices of the common stocks included in the index without
taking into consideration the value of dividends paid on those stocks.
Your return may be affected by currency exchange rates
Although the stocks included in the index are traded in Japanese yen
and the MITTS Securities are denominated in U.S. dollars, we will not adjust
the amount payable at maturity for the currency exchange rate in effect at the
maturity of the MITTS Securities. Any amount in addition to the principal
amount of each unit payable to you at maturity is based solely upon the
percentage increase in the index. Changes in the currency exchange rate,
however, may reflect changes in the Japanese economy that may affect the value
of the index and the MITTS Securities.
Your return may be affected by factors affecting the value of Japanese stocks
Because the underlying stocks included in the index have been issued
by Japanese companies, the return on your MITTS Securities will be affected by
risks relating to an investment in Japanese equity securities. The Japanese
securities markets may be more volatile than U.S. or other securities markets
and may be affected by market developments in different ways than U.S. or other
securities markets. Direct or indirect government intervention to stabilize the
Japanese securities markets and cross-shareholdings in Japanese companies on
those markets may affect prices and volume of trading on those markets. Also,
there is generally less publicly available information about Japanese companies
than about those U.S. companies that are subject to the reporting requirements
of the U.S. Securities and Exchange Commission, and Japanese companies are
subject to accounting, auditing and financial reporting standards and
requirements that differ from those applicable to U.S. reporting companies.
Securities prices in Japan are subject to political, economic,
financial and social factors that apply in Japan. In addition, recent or future
changes in the Japanese government's economic and fiscal policies, the possible
imposition of, or changes in, currency exchange laws or other Japanese laws or
restrictions applicable to Japanese companies or investments in Japanese equity
securities and fluctuations in the rate of exchange between currencies may
negatively affect the Japanese securities markets. Moreover, the Japanese
economy may differ favorably or unfavorably from the U.S. economy in economic
factors such as growth in gross national product, rates of inflation, capital
reinvestment, resources and self-sufficiency.
There may be an uncertain trading market for the MITTS Securities in the future
Although the MITTS Securities are listed on the AMEX under the symbol
"MLN," you cannot assume that a trading market will continue to exist for the
MITTS Securities. If a trading market in the MITTS Securities continues to
exist, you cannot assume that there will be liquidity in the trading market. The
continued existence of a trading market for the MITTS Securities will depend on
our financial performance and other factors such as the appreciation, if any, of
the value of the index.
If the trading market for the MITTS Securities is limited and you do
not wish to hold your investment until maturity, there may be a limited number
of buyers for your MITTS Securities. This may affect the price you receive if
you sell before maturity.
There are many factors affecting the trading value of the MITTS Securities
We believe that the trading value of the MITTS Securities will be
affected by the value of the index and by a number of other factors. Some of
these factors are interrelated in complex ways; as a result, the effect of any
one factor may be offset or magnified by the effect of another factor. The
following paragraphs describe the expected impact on the market value of the
MITTS Securities given a change in a specific factor, assuming all other
conditions remain constant.
o The value of the index. The trading value of the MITTS Securities
will depend substantially on the amount by which the value of the
index exceeds or does not exceed 14,152.95, the value of the index on
the pricing date. If you choose to sell your MITTS Securities at a
time when the value of the index exceeds 14,152.95, you may receive
substantially less than the amount that would be payable at maturity
based on that value because of the expectation that the index will
continue to fluctuate until shortly before the maturity date when the
average value of the index over five trading days is determined. If
you choose to sell your MITTS Securities when the value of the index
is below, or not sufficiently above, 14.152.95, you may receive less
than $10 per unit of your MITTS Securities. In general, rising
Japanese dividend rates, or dividends per share, may increase the
value of the index while falling Japanese dividend rates may decrease
the value of the index. Additionally, political, economic and other
developments that affect the stocks underlying the index may also
affect the value of the index and the value of the MITTS Securities.
o Interest rates. Because we will pay, at a minimum, the principal
amount per unit of the MITTS Securities at maturity, we expect that
the trading value of the MITTS Securities will be affected by changes
in interest rates. In general, if U.S. interest rates increase, we
expect that the trading value of the MITTS Securities will decrease
and, conversely, if U.S. interest rates decrease, we expect the
trading value of the MITTS Securities will increase. In general, if
interest rates in Japan increase, we expect that the trading value of
the MITTS Securities will increase and, conversely, if interest rates
in Japan decrease, we expect the trading value of the MITTS
Securities will decrease. However, interest rates in Japan may also
affect the Japanese economy and, in turn, the value of the index.
Rising interest rates in Japan may lower the value of the index and,
as a result, may decrease the value of the MITTS Securities. Falling
interest rates in Japan may increase the value of the index and, as a
result, may increase the value of the MITTS Securities.
o Volatility of the Japanese yen/U.S. dollar exchange rate. The
Japanese yen/U.S. dollar rate is a foreign exchange spot rate that
measures the relative values of two currencies, the Japanese yen and
the U.S. dollar and is expressed as a rate that reflects the amount
of Japanese yen that can be purchased for one U.S. dollar. The
Japanese yen/U.S. dollar rate increases when the U.S. dollar
appreciates relative to the Japanese yen. Volatility is the term used
to describe the size and frequency of market fluctuations. In
general, if the volatility of the Japanese yen/U.S. dollar rate
increases, we expect that the trading value of the MITTS Securities
will increase and, conversely, if the volatility of the Japanese
yen/U.S. dollar rate decreases, we expect that the trading value of
the MITTS Securities will decrease.
o Correlation between the Japanese yen/U.S. dollar exchange rate and
the index. Correlation is the term used to describe the relationship
between the percentage changes in the Japanese yen/U.S. dollar
exchange rate and the percentage changes in the index. In general, if
the correlation between the Japanese yen/U.S. dollar exchange rate
and the index increases, we expect that the trading value of the
MITTS Securities will increase and, conversely, if the correlation
between the Japanese yen/U.S. dollar exchange rate and the index
decreases, we expect that the trading value of the MITTS Securities
will decrease.
o Volatility of the index. Generally, if the volatility of the index
increases, we expect that the trading value of the MITTS Securities
will increase and, conversely, if the volatility of the index
decreases, we expect that the trading value of the MITTS Securities
will decrease.
o Time remaining to maturity. We anticipate that prior to their
maturity , the MITTS Securities may trade at a value above that which
would be expected based on the level of interest rates and the index.
This difference would reflect a "time premium" due to expectations
concerning the value of the index during the period before September
21, 2005, the stated maturity of the MITTS Securities. However, as
the time remaining to the stated maturity of the MITTS Securities
decreases, we expect that this time premium will decrease, lowering
the trading value of the MITTS Securities.
o Dividend Yields. Generally, if dividend yields on the stocks included
in the index increase, we expect that the value of the MITTS
Securities will decrease and, conversely, if dividend yields on the
stocks included in the index decrease, we expect that the value of
the MITTS Securities will increase.
o Changes in our credit ratings. Our credit ratings are an assessment
of our ability to pay our obligations. Consequently, real or
anticipated changes in our credit ratings may affect the trading
value of the MITTS Securities. However, because your return on your
MITTS Securities is dependent upon factors in addition to our ability
to pay our obligations under the MITTS Securities, such as the
percentage increase in the value of the index at maturity, an
improvement in our credit ratings will not reduce investment risks
related to the MITTS Securities.
It is important for you to understand that the impact of one of the
factors specified above, such as an increase in U.S. interest rates or a
reduction in our credit ratings, may offset some or all of any increase in the
trading value of the MITTS Securities attributable to another factor, such as
an increase in the value of the index.
In general, assuming all relevant factors are held constant, we
expect that the effect on the trading value of the MITTS Securities of a given
change in most of the factors listed above will be less if it occurs later in
the term of the MITTS Securities than if it occurs earlier in the term of the
MITTS Securities, except that we expect that the effect on the trading value of
the MITTS Securities of a given increase or decrease in the value of the index
will be greater if it occurs later in the term of the MITTS Securities than if
it occurs earlier in the term of the MITTS Securities.
State law limits on interest paid
The indenture under which the MITTS Securities are issued is governed
by New York State law. New York has usury laws that limit the amount of
interest that can be charged and paid on loans, which includes debt securities
like the MITTS Securities. Under present New York law, the maximum rate of
interest is 25% per annum on a simple interest basis. This limit may not apply
to debt securities in which $2,500,000 or more has been invested.
While we believe that New York law would be given effect by a state
or Federal court sitting outside of New York, many other states also have laws
that regulate the amount of interest that may be charged to and paid by a
borrower. We will promise, for the benefit of the holders of the MITTS
Securities, to the extent permitted by law, not to voluntarily claim the
benefits of any laws concerning usurious rates of interest.
Purchases and sales by us and our affiliates may affect your return
We and our affiliates may from time to time buy or sell the stocks
underlying the index for their own accounts, for business reasons or in
connection with hedging our obligations under the MITTS Securities. These
transactions could affect the price of these stocks and the value of the index
in a manner that would be adverse to your investment in the MITTS Securities.
Potential conflicts of interest
Our subsidiary, Merrill Lynch, Pierce, Fenner & Smith Incorporated or
MLPF&S, is our agent for the purposes of calculating the value of the index and
the amount payable to you at maturity. Under certain circumstances, MLPF&S's
role as our subsidiary and its responsibilities as calculation agent for the
MITTS Securities could give rise to conflicts of interests. These conflicts
could occur, for instance, in connection with its determination as to whether
the value of the index can be calculated on a particular trading day, or in
connection with judgments that it would be required to make in the event of a
discontinuance of the index. See "Description of the MITTS
Securities--Adjustments to the Index; Market Disruption Events" and
"--Discontinuance of the Index" in this prospectus. MLPF&S is required to carry
out its duties as calculation agent in good faith and using its reasonable
judgment. However, you should be aware that because we control MLPF&S,
potential conflicts of interest could arise.
We have entered into an arrangement with one of our a subsidiaries to
hedge the market risks associated with our obligation to pay amounts due at
maturity on the MITTS Securities. This subsidiary expects to make a profit in
connection with this arrangement. We did not seek competitive bids for this
arrangement from unaffiliated parties.
Other Considerations
You should reach an investment decision with regard to the MITTS
Securities only after carefully considering the suitability of the MITTS
Securities in the light of your particular circumstances.
You should also consider the tax consequences of investing in the
MITTS Securities and should consult with your tax adviser.
<PAGE>
MERRILL LYNCH & CO., INC.
We are a holding company that, through our U.S. and non-U.S. subsidiaries
and affiliates such as Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Merrill Lynch Government Securities Inc., Merrill Lynch Capital Services, Inc.,
Merrill Lynch International, Merrill Lynch Asset Management L.P. and Merrill
Lynch Mercury Asset Management, provides investment, financing, advisory,
insurance, and related products on a global basis, including:
o securities brokerage, trading and underwriting;
o investment banking, strategic services, including mergers and
acquisitions and other corporate finance advisory activities;
o asset management and other investment advisory and recordkeeping
services;
o trading and brokerage of swaps, options, forwards, futures and other
derivatives;
o securities clearance services;
o equity, debt and economic research;
o banking, trust and lending services, including mortgage lending and
related services; and
o insurance sales and underwriting services.
We provide these products and services to a wide array of clients,
including individual investors, small businesses, corporations, governments,
governmental agencies and financial institutions.
Our principal executive office is located at World Financial Center,
North Tower, 250 Vesey Street, New York, New York 10281; our telephone number
is (212) 449-1000.
If you want to find more information about us, please see the
sections entitled "Where You Can Find More Information" and "Incorporation of
Information We File with the SEC" in this prospectus.
In this prospectus, references to "ML&Co.", "we", "us" and "our" refer
specifically to Merrill Lynch & Co., Inc., the holding company. ML&Co. is the
issuer of the MITTS Securities described in this prospectus.
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
In 1998, we acquired the outstanding shares of Midland Walwyn,Inc., in a
transaction accounted for as a pooling-of-interests. The following information
has been restated as if the two entities had always been combined.
The following table sets forth our historical ratios of earnings to fixed
charges for the periods indicated:
<TABLE>
<CAPTION>
Year Ended Last Friday in December
1994 1995 1996 1997 1998
==== ===== ==== ==== ====
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges..... 1.2 1.2 1.2 1.2 1.1
</TABLE>
(a) The effect of combining Midland Walwyn did not change the ratios
reported for the fiscal years 1994 through 1997.
For the purpose of calculating the ratio of earnings to fixed charges,
"earnings" consist of earnings from continuing operations before income taxes
and fixed charges, excluding capitalized interest and preferred security
dividend requirements of subsidiaries. "Fixed charges" consist of interest
costs, the interest factor in rentals, amortization of debt issuance costs,
preferred security dividend requirements of subsidiaries, and capitalized
interest.
DESCRIPTION OF THE MITTS SECURITIES
On December 28, 1998, ML&Co. issued an aggregate principal amount of
$70,000,000 or 7,000,000 units of the MITTS Securities. The MITTS Securities
were issued as a series of senior debt securities under the 1983 Indenture which
is more fully described in this prospectus.
The MITTS Securities will mature on September 21, 2005.
While at maturity a beneficial owner of a MITTS Security will receive
the principal amount of the MITTS Security plus the Supplemental Redemption
Amount described below, if any, there will be no other payment of interest,
periodic or otherwise. See "- Payment at Maturity" below.
The MITTS Securities are not subject to redemption by ML&Co. or at the
option of any beneficial owner before maturity. Upon the occurrence of an Event
of Default with respect to the MITTS Securities, beneficial owners of the MITTS
Securities may accelerate the maturity of the MITTS Securities, as described
under "- Events of Default and Acceleration" and "Other Terms - Events of
Default" in this prospectus.
The MITTS Securities were issued in denominations of whole units.
Payment at Maturity
At the maturity date, a beneficial owner of a MITTS Security will be
entitled to receive the principal amount of each unit plus the Supplemental
Redemption Amount, if any, all as provided below. If the Supplemental Redemption
Amount is not greater than zero, a beneficial owner of a MITTS Security will be
entitled to receive only the principal amount of its MITTS Securities.
The "Supplemental Redemption Amount" for a MITTS Security will be
determined by the calculation agent and will equal:
(Ending Value - Starting Value)
------------------------------
principal amount of each MITTS Security ($10 per Unit) X (Starting Value)
provided, however, that in no event will the Supplemental Redemption
Amount be less than zero.
The "Starting Value" equals 14,152.95.
The "Ending Value" will be determined by the calculation agent and
will equal the average or arithmetic mean of the closing values of the Nikkei
225 Index (the "Index") determined on each of the first five Calculation Days
during the Calculation Period. If there are fewer than five Calculation Days,
then the Ending Value will equal the average or arithmetic mean of the closing
values of the Index on these Calculation Days, and if there is only one
Calculation Day, then the Ending Value will equal the closing value of the
Index on that Calculation Day. If no Calculation Days occur during the
Calculation Period , then the Ending Value will equal the closing value of the
Index determined on the last scheduled Index Business Day in the Calculation
Period, regardless of the occurrence of a Market Disruption Event on that day.
The "Calculation Period" means the period from and including the
seventh scheduled Index Business Day prior to the maturity date to and
including the second scheduled Index Business Day prior to the maturity date.
"Calculation Day" means any Index Business Day during the Calculation
Period on which a Market Disruption Event has not occurred.
An "Index Business Day" is a day on which the NYSE and the AMEX are
open for trading and the Index or any Successor Index, as defined on page 11
below, is calculated and published.
All determinations made by the calculation agent shall be at the sole
discretion of the calculation agent and, absent a determination by the
calculation agent of a manifest error, shall be conclusive for all purposes and
binding on ML&Co. and beneficial owners of the MITTS Securities.
<PAGE>
Hypothetical Returns
The following table illustrates, for a range of hypothetical Ending
Values:
o the percentage change from the Starting Value to the Ending Value;
o the total amount payable per Unit of MITTS Securities;
o the total rate of return on the MITTS Securities;
o the pretax annualized rate of return on the MITTS Securities; and
o the pretax annualized rate of return of the stocks underlying the
Index, which includes an assumed aggregate dividend yield of 1.04%
per annum, as more fully described below.
<TABLE>
<CAPTION>
Ending Total Amount Pretax
Value Payable at Total Rate of Annualized Pretax Annualized
Percentage Maturity Return Rate of Rate of Return of
Change Over Per Unit of on the Return on the Stocks Underlying
Hypothetical the Starting MITTS MITTS MITTS the
Ending Value Value Securities Securties Securities(1) Index(1)(2)
- ------------- ------- ---------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
7,076.48 -50.00% $ 10.00 0.00% 0.00% -9.00%
8,491.77 -40.00% $ 10.00 0.00% 0.00% -6.41%
9,907.07 -30.00% $ 10.00 0.00% 0.00% -4.20%
11,322.36 -20.00% $ 10.00 0.00% 0.00% -2.25%
12,737.66 -10.00% $ 10.00 0.00% 0.00% -0.52%
14,152.95(3) 0.00% $ 10.00 0.00% 0.00% 1.04%
15,568.25 10.00% $ 11.00 10.00% 1.42% 2.47%
16,983.54 20.00% $ 12.00 20.00% 2.72% 3.79%
18,398.84 30.00% $ 13.00 30.00% 3.93% 5.00%
19,814.13 40.00% $ 14.00 40.00% 5.06% 6.14%
21,229.43 50.00% $ 15.00 50.00% 6.11% 7.20%
22,644.72 60.00% $ 16.00 60.00% 7.10% 8.20%
24,060.02 70.00% $ 17.00 70.00% 8.03% 9.15%
25,475.31 80.00% $ 18.00 80.00% 8.92% 10.04%
26,890.61 90.00% $ 19.00 90.00% 9.76% 10.89%
28,305.90 100.00% $ 20.00 100.00% 10.56% 11.70%
29,721.20 110.00% $ 21.00 110.00% 11.32% 12.48%
31,136.49 120.00% $ 22.00 120.00% 12.05% 13.22%
32,551.79 130.00% $ 23.00 130.00% 12.75% 13.93%
33,967.08 140.00% $ 24.00 140.00% 13.43% 14.61%
35,382.38 150.00% $ 25.00 150.00% 14.07% 15.27%
</TABLE>
(1) The annualized rates of return specified in the preceding table are
calculated on a semiannual bond equivalent basis.
(2) This rate of return assumes:
(a) a constant dividend yield of 1.04% per annum, paid quarterly from the
date of initial delivery of MITTS Securities, applied to the value of
the Index at the end of each quarter assuming the value increases or
decreases linearly from the Starting Value to the hypothetical Ending
Value;
(b) no transaction fees or expenses;
(c) the term of the MITTS Securities is from December 28, 1998 to September
21, 2005; and
(d) a final Index value equal to the hypothetical Ending Value.
(3) The Starting Value of the Index.
The above figures are for purposes of illustration only. The actual
investment term, Supplemental Redemption Amount received by investors, and the
respective total and pretax annualized rate of return will depend entirely on
the Starting Value and the actual Ending Value determined by the calculation
agent as provided herein.
Adjustments to the Index; Market Disruption Events
If at any time the method of calculating the Index, or its value , is
changed in any material respect, or if the Index is in any other way modified so
that the Index does not, in the opinion of the calculation agent, fairly
represent the value of the Index had the changes or modifications not been made,
then, from and after that time, the calculation agent shall, at the close of
business in New York, New York, on each date that the closing value with respect
to the Ending Value is to be calculated, make such adjustments as, in the good
faith judgment of the calculation agent, may be necessary in order to arrive at
a calculation of a value of a stock index comparable to the Index as if the
changes or modifications had not been made, and calculate the closing value with
reference to the Index, as adjusted. Accordingly, if the method of calculating
the Index is modified so that the value of the Index is a fraction or a multiple
of what it would have been if it had not been modified (e.g., due to a split in
the Index), then the calculation agent shall adjust the Index in order to arrive
at a value of the Index as if it had not been modified, e.g., as if the split
had not occurred.
"Market Disruption Event" means either of the following events, as
determined by the calculation agent:
o a suspension, material limitation or absence of trading on the
Tokyo Stock Exchange (the "TSE") of 20% or more of the underlying
stocks which then comprise the Index or a Successor Index during
the one-half hour period preceding the close of trading on the
applicable exchange; or
o the suspension or material limitation on the Singapore
International Monetary Exchange, Ltd. (the "SIMEX"), the Osaka
Securities Exchange (the "OSE") or any other major futures or
securities market from trading in futures or options contracts
related to the Index or a Successor Index during the one-half hour
period preceding the close of trading on the applicable exchange.
For the purposes of determining whether a Market Disruption Event has
occurred:
o a limitation on the hours or number of days of trading will not
constitute a Market Disruption Event if it results from an announced
change in the regular business hours of the relevant exchange,
o a decision to permanently discontinue trading in the relevant futures
or options contract will not constitute a Market Disruption Event,
o a suspension in trading in a futures or options contract on the Index
by a major securities market by reason of
o a price change violating limits set by the securities market,
o an imbalance of orders relating to futures or options contracts or
o a disparity in bid and ask quotes relating to futures or options
contracts will constitute a suspension or material limitation of
trading in futures or options contracts related to the Index, and
o an absence of trading on the TSE will not include any time when the
TSE is closed for trading under ordinary circumstances.
Under certain circumstances, the duties of MLPF&S as calculation agent in
determining the existence of Market Disruption Events could conflict with the
interests of MLPF&S as a subsidiary of ML&Co.
Based on the information currently available to ML&Co., the opening of
trading on the OSE was delayed on January 17, 1995 because of the earthquake in
Kobe. If this delay had occurred during the one-half hour period preceding the
close of trading on the OSE, it would have constituted a Market Disruption
Event. In addition, because of movements in the price for futures contracts for
the Index, the OSE imposed price limits on futures contracts on January 23, 1995
that were in effect during the one-half hour period preceding the close of
trading on the OSE and that would have constituted a Market Disruption Event. On
January 31 and February 1 of 1994, prices for futures contracts for the Index
reached price limits imposed by the OSE, which would have been a Market
Disruption Event. Other than the foregoing events, to ML&Co.'s knowledge no
circumstances have arisen since the inception of the Index that could have
constituted a Market Disruption Event. The existence or nonexistence of these
circumstances, however, is not necessarily indicative of the likelihood of these
circumstances arising or not arising in the future.
Discontinuance of the Index
If the publisher of the Nikkei 225 Index, Nihon Keizai Shimbum, Inc.
("NKS"), discontinues publication of the Index and NKS or another entity
publishes a successor or substitute index that the calculation agent determines,
in its sole discretion, to be comparable to the Index (any successor or
substitute index is referred to as a "Successor Index"), then, upon the
calculation agent's notification of that determination to the Trustee and
ML&Co., the calculation agent will substitute the Successor Index as calculated
by NKS or such other entity for the Index and calculate the Ending Value as
described above under "-Payment at Maturity". Upon any selection by the
calculation agent of a Successor Index, ML&Co. shall cause notice to be given to
holders of the MITTS Securities.
If NKS discontinues publication of the Index and a Successor Index is
not selected by the calculation agent or is no longer published on any of the
Calculation Days, the value to be substituted for the Index for any Calculation
Day used to calculate the Supplemental Redemption Amount at maturity will be a
value computed by the calculation agent for each Calculation Day in accordance
with the procedures last used to calculate the Index before any discontinuance.
If a Successor Index is selected or the calculation agent calculates a value as
a substitute for the Index as described below, that Successor Index or value
shall be substituted for the Index for all purposes, including for purposes of
determining whether a Market Disruption Event exists. If the calculation agent
calculates a value as a substitute for the Index, "Calculation Day" shall mean
any day on which the Calculation Agent is able to calculate a substitute value.
If NKS discontinues publication of the Index before the period during
which the Supplemental Redemption Amount is to be determined and the calculation
agent determines that no Successor Index is available at that time, then on each
Business Day until the earlier to occur of:
o the determination of the Ending Value and
o a determination by the Calculation Agent that a Successor Index is
available,
the calculation agent shall determine the value that would be used in computing
the Supplemental Redemption Amount as described in the preceding paragraph as if
that day were a Calculation Day. The Calculation Agent will cause notice of each
value to be published not less often than once each month in The Wall Street
Journal (or another newspaper of general circulation), and arrange for the
values to be made available by telephone.
Notwithstanding these alternative arrangements, discontinuance of the
publication of the Index may adversely affect trading in the MITTS Securities.
Events of Default and Acceleration
If an Event of Default with respect to any MITTS Securities has
occurred and is continuing, the amount payable to a beneficial owner of a MITTS
Security upon any acceleration permitted by the MITTS Securities, with respect
to each $10 principal amount per unit, will be equal to the principal amount per
unit and the Supplemental Redemption Amount, if any, calculated as though the
date of early repayment were the stated maturity date of the MITTS Securities.
See "- Payment at Maturity" in this prospectus. If a bankruptcy proceeding is
commenced in respect of ML&Co., the claim of the beneficial owner of a MITTS
Security may be limited, under Section 502(b)(2) of Title 11 of the United
States Code, to the principal amount per unit of the MITTS Security plus an
additional amount of contingent interest calculated as though the date of the
commencement of the proceeding were the maturity date of the MITTS Securities.
In case of default in payment of the MITTS Securities, whether at the
stated maturity or upon acceleration, from and after the maturity date the MITTS
Securities shall bear interest, payable upon demand of the beneficial owners ,
at the rate of 6.01% per annum (to the extent that payment of such interest
shall be legally enforceable) on the unpaid amount due and payable on such date
in accordance with the terms of the MITTS Securities to the date payment of that
amount has been made or duly provided for.
<PAGE>
Global Securities
Description of the Global Securities
Beneficial owners of the MITTS Securities may not receive physical
delivery of the MITTS Securities nor may they be entitled to have the MITTS
Securities registered in their names. The MITTS Securities currently are
represented by one or more fully registered global securities. Each global
security was deposited with, or on behalf of, The Depository Trust Company or
DTC (DTC, together with any successor thereto, being a "Depositary"), as
Depositary, registered in the name of Cede & Co. (DTC's partnership nominee).
Unless and until it is exchanged in whole or in part for MITTS Securities in
definitive form, no global security may be transferred except 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 or by the Depositary or any
such nominee to a successor of the Depositary or a nominee of that successor.
So long as DTC, or its nominee, is a registered owner of a global
security, DTC or its nominee, as the case may be, will be considered the sole
owner or Holder of the MITTS Securities represented by a global security for all
purposes under the 1983 Indenture. Except as provided below, the beneficial
owners of the MITTS Securities represented by a global security will not be
entitled to have the MITTS Securities represented by the global security
registered in their names, will not receive or be entitled to receive physical
delivery of the MITTS Securities in definitive form and will not be considered
the owners or Holders under the 1983 Indenture, including for purposes of
receiving any reports delivered by ML&Co. or the Trustee under the 1983
Indenture. Accordingly, each person owning a beneficial interest in a global
security must rely on the procedures of DTC and, if that person is not a
participant of DTC on the procedures of the participant through which such
person owns its interest, to exercise any rights of a Holder under the 1983
Indenture. ML&Co. understands that under existing industry practices, in the
event that ML&Co. requests any action of Holders or that an owner of a
beneficial interest in a global security desires to give or take any action
which a Holder is entitled to give or take under the 1983 Indenture, DTC would
authorize the participants holding the relevant beneficial interests to give or
take any action, and the participants would authorize beneficial owners owning
through those participants to give or take action or would otherwise act upon
the instructions of beneficial owners. 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.
DTC Procedures
The following is based on information furnished by DTC:
DTC is the securities depositary for the MITTS Securities. The MITTS
Securities were issued as fully registered securities registered in the name of
Cede & Co., DTC's partnership nominee. One or more fully registered global
securities were issued for the MITTS Securities in the aggregate principal
amount of the MITTS Securities, and were 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 under to the provisions of Section 17A of the Securities and Exchange
Act of 1934, as amended. DTC holds securities that its 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. Direct
participants of DTC include securities brokers and dealers, banks, trust
companies, clearing corporations and other organizations. DTC is owned by a
number of its direct participants and by the NYSE, the AMEX and the National
Association of Securities Dealers, Inc. Access to the DTC's 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 direct
participant, either directly or indirectly. The rules applicable to DTC and its
participants are on file with the SEC.
Purchases of MITTS Securities under DTC's system must be made by or
through direct participants, which will receive a credit for the MITTS
Securities on DTC's records. The ownership interest of each beneficial owner is
in turn to be recorded on the records of direct and indirect participants.
Beneficial owners will not receive written confirmation from DTC of their
purchase, but beneficial owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the direct participants or indirect participants through which
the beneficial owner entered into the transaction. Transfers of ownership
interests in the MITTS Securities are to be accomplished by entries made on the
books of participants acting on behalf of beneficial owners.
To facilitate subsequent transfers, all MITTS Securities deposited with
DTC are registered in the name of DTC's partnership nominee, Cede & Co. The
deposit of MITTS Securities with DTC and their registration in the name of Cede
& Co. effect no change in beneficial ownership. DTC has no knowledge of the
actual beneficial owners of the MITTS Securities; DTC's records reflect only the
identity of the direct participants to whose accounts the MITTS Securities are
credited, which may or may not be the beneficial owners. The participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants, and by direct 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.
Neither DTC nor Cede & Co. will consent or vote with respect to the
MITTS Securities. Under its usual procedures, DTC mails an omnibus proxy to
ML&Co. as soon as possible after the applicable record date. The omnibus proxy
assigns Cede & Co.'s consenting or voting rights to those direct participants
identified in a listing attached to the omnibus proxy to whose accounts the
MITTS Securities are credited on the record date identified in a listing
attached to the omnibus proxy.
Principal, premium, if any, and/or interest, if any, payments on the
MITTS Securities will be made in immediately available funds to DTC. DTC's
practice is to credit direct participants' accounts on the applicable payment
date in accordance with their respective holdings shown on the Depositary's
records unless DTC has reason to believe that it will not receive payment on
that date. Payments by participants to beneficial owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in "street
name", and will be the responsibility of the participant and not of DTC, the
Trustee or ML&Co., subject to any statutory or regulatory requirements as may be
in effect from time to time. Payment of principal, premium, if any, and/or
interest, if any, to DTC is the responsibility of ML&Co. or the Trustee,
disbursement of payments to direct participants is the responsibility of DTC,
and disbursement of payments to the beneficial owners is the responsibility of
direct and indirect participants.
Year 2000 Compliance
DTC has advised ML&Co. that management of DTC is aware that some
computer applications, systems, and the like for processing data ("Systems")
that are dependent upon calendar dates, including dates before, on, and after
January 1, 2000, may encounter "Year 2000 problems". DTC has informed its direct
and indirect participants and other members of the financial community (the
"Industry") that it has developed and is implementing a program so that its
Systems, as the same relate to the timely payment of distributions (including
principal and interest payments) to securityholders, book-entry deliveries, and
settlement of trades within DTC ("Depositary Services"), continue to function
appropriately. This program includes a technical assessment and a remediation
plan, each of which is complete. Additionally, DTC's plan includes a testing
phase, which is expected to be completed within appropriate time frames.
However, DTC's ability to perform properly its services is also
dependent upon other parties, including, but not limited to, issuers and their
agents, as well as DTC's direct and indirect participants, third party vendors
from whom DTC licenses software and hardware, and third party vendors on whom
DTC relies for information or the provision of services, including
telecommunication and electrical utility service providers, among other. DTC has
informed the Industry that it is contacting (and will continue to contact) third
party vendors from whom DTC acquires services to: (1) impress upon them the
importance of these services being Year 2000 compliant; and (2) determine the
extent of their efforts for Year 2000 remediation (and, as appropriate, testing)
of their services. In addition, DTC is in the process of developing such
contingency plans as it deems appropriate.
According to DTC, the information in the preceding two paragraphs with
respect to DTC has been provided to the Industry for informational purposes only
and is not intended to serve as a representation, warranty, or contract
modification of any kind.
<PAGE>
Exchange for Certificated Securities
If:
o the Depositary is at any time unwilling or unable to continue as
Depositary and a successor depositary is not appointed by ML&Co.
within 60 days,
o ML&Co. executes and delivers to the Trustee a company order to the
effect that the global securities shall be exchangeable, or
o an Event of Default under the 1983 Indenture has occurred and is
continuing with respect to the MITTS Securities,
the global securities will be exchangeable for MITTS Securities in definitive
form of like tenor and of an equal aggregate principal amount, in denominations
of $10 and integral multiples of $10. The definitive MITTS Securities will be
registered in the name or names as the Depositary shall instruct the Trustee. It
is expected that instructions may be based upon directions received by the
Depositary from participants with respect to ownership of beneficial interests
in the global securities.
In addition, ML&Co. may decide to discontinue use of the system of
book-entry transfers through the Depositary. In that event, MITTS Securities in
definitive form will be printed and delivered.
The information in this section concerning DTC and DTC's system has
been obtained from sources that ML&Co. believes to be reliable, but ML&Co.
takes no responsibility for its accuracy.
Same-Day Settlement and Payment
All payments of principal and the Supplemental Redemption Amount, if
any, will be made by ML&Co. in immediately available funds so long as the MITTS
Securities are maintained in book-entry form.
THE NIKKEI 225 INDEX
Unless otherwise stated, all information relating to the Nikkei 225
Index in this prospectus has been derived from the Stock Market Indices Data
Book published by NKS and other publicly-available sources. This information
reflects the policies of NKS as stated in these sources; these policies are
subject to change at the discretion of NKS.
The Nikkei 225 Index is a stock index calculated, published and
disseminated by NKS that measures the composite price performance of selected
Japanese stocks. The Nikkei 225 Index is currently based on 225 underlying
stocks (the "Underlying Stocks") trading on the TSE and represents a broad
cross-section of Japanese industry. All 225 Underlying Stocks are stocks listed
in the First Section of the TSE. Stocks listed in the First Section are among
the most actively traded stocks on the TSE. Futures and options contracts on the
Nikkei 225 Index are traded on the SIMEX, the OSE and the Chicago Mercantile
Exchange.
The Nikkei 225 Index is a modified, price-weighted index (i.e., an
Underlying Stock's weight in the index is based on its price per share rather
than the total market capitalization of the issuer) which is calculated by
o multiplying the per share price of each Underlying Stock by the
corresponding weighting factor for that Underlying Stock (a "Weight
Factor"),
o calculating the sum of all these products, and
o dividing the sum by a divisor.
The divisor, initially set in 1949 at 225, [was 10.052 as of December
21, 1998], and is subject to periodic adjustments as set forth below. Each
Weight Factor is computed by dividing (Y)50 by the par value of the relevant
Underlying Stock, so that the share price of each Underlying Stock when
multiplied by its Weight Factor corresponds to a share price based on a uniform
par value of (Y)50. Each Weight Factor represents the number of shares of the
related Underlying Stock which are included in one trading unit of the Nikkei
225 Index. The stock prices used in the calculation of the Nikkei 225 Index are
those reported by a primary market for the Underlying Stocks, currently the TSE.
The level of the Nikkei 225 Index is calculated once per minute during TSE
trading hours.
In order to maintain continuity in the level of the Nikkei 225 Index in
the event of certain changes due to non-market factors affecting the Underlying
Stocks, such as the addition or deletion of stocks, substitution of stocks,
stock dividends, stock splits or distributions of assets to stockholders, the
divisor used in calculating the Nikkei 225 Index is adjusted in a manner
designed to prevent any instantaneous change or discontinuity in the level of
the Nikkei 225 Index. Thereafter, the divisor remains at the new value until a
further adjustment is necessary as the result of another change. As a result of
each change affecting any Underlying Stock, the divisor is adjusted so that the
sum of all share prices immediately after the change multiplied by the
applicable Weight Factor and divided by the new divisor, which will be the level
of the Nikkei 225 Index immediately after the change, will equal the level of
the Nikkei 225 Index immediately prior to the change.
Underlying Stocks may be deleted or added by NKS. However, to maintain
continuity in the Nikkei 225 Index, the policy of NKS is generally not to alter
the composition of the Underlying Stocks except when an Underlying Stock is
deleted in accordance with the following criteria. Any stock becoming ineligible
for listing in the First Section of the TSE due to any of the following reasons
will be deleted from the Underlying Stocks: bankruptcy of the issuer; merger of
the issuer into, or acquisition of the issuer by, another company; delisting of
the stock or transfer of the stock to the "Seiri-Post" because of excess debt of
the issuer or because of any other reason; or transfer of the stock to the
Second Section of the TSE. Upon deletion of a stock from the Underlying Stocks,
NKS will select, in accordance with criteria established by it, a replacement
for deleted Underlying Stock. In an exceptional case, a newly listed stock in
the First Section of the TSE that is recognized by NKS to be representative of a
market may be added to the Underlying Stocks. In such case, an existing
Underlying Stock with low trading volume and not representative of a market will
be deleted.
NKS is under no obligation to continue the calculation and
dissemination of the Nikkei 225 Index. The MITTS Securities are not sponsored,
endorsed, sold or promoted by NKS. No inference should be drawn from the
information contained in this prospectus that NKS makes any representation or
warranty, implied or express, to ML&Co., the holder of the MITTS Securities or
any member of the public regarding the advisability of investing in securities
generally or in the MITTS Securities in particular or the ability of the Nikkei
225 Index to track general stock market performance. NKS has no obligation to
take the needs of ML&Co. or the holder of the MITTS Securities into
consideration in determining, composing or calculating the Nikkei 225 Index. NKS
is not responsible for, and has not participated in the determination of the
timing of, prices for, or quantities of, the MITTS Securities that have been
issued or in the determination or calculation of the equation by which the MITTS
Securities are to be settled in cash. NKS has no obligation or liability in
connection with the administration or marketing of the MITTS Securities.
The use of and reference to the Nikkei 225 Index in connection with the
MITTS Securities have been consented to by NKS, the publisher of the Nikkei 225
Index.
[Where investors can get information on the historical values, of the
Nikkei 225 Index-to come]
None of ML&Co., the calculation agent and MLPF&S accepts any
responsibility for the calculation, maintenance or publication of the Nikkei 225
Index or any Successor Index. NKS disclaims all responsibility for any errors or
omissions in the calculation and dissemination of the Nikkei 225 Index or the
manner in which the Index is applied in determining any Starting Values or
Ending Values or any Supplemental Redemption Amount upon maturity of the MITTS
Securities.
The Tokyo Stock Exchange
The TSE is one of the world's largest securities exchanges in terms
of market capitalization. Trading hours are currently from 9:00 A.M. to 11:00
A.M. and from 12:30 P.M. to 3:00 P.M., Tokyo time, Monday through Friday.
Due to the time zone difference, on any normal trading day the TSE will
close prior to the opening of business in New York City on the same calendar
day. Therefore, the closing level of the Nikkei 225 Index on such trading day
will generally be available in the United States by the opening of business on
the same calendar day.
The TSE has adopted measures, including daily price floors and ceilings
on individual stocks, intended to prevent any extreme short-term price
fluctuations resulting from order imbalances. In general, any stock listed on
the TSE cannot be traded at a price lower than the applicable price floor or
higher than the applicable price ceiling. Price floors and ceilings are
expressed in absolute Japanese yen, rather than percentage, limits based on the
closing price of the stock on the previous trading day. In addition, when there
is a major order imbalance in a listed stock, the TSE posts a "special bid
quote" or a "special asked quote" for that stock at a specified higher or lower
price level than the stock's last sale price in order to solicit counter-orders
and balance supply and demand for the stock. Prospective investors should also
be aware that the TSE may suspend the trading of individual stocks in limited
and extraordinary circumstances, including, for example, unusual trading
activity in that stock. As a result, changes in the Nikkei 225 Index may be
limited by price limitations or special quotes, or by suspension of trading, on
individual stocks which comprise the Nikkei 225 Index, which limitations may, in
turn, adversely affect the value of the MITTS Securities.
OTHER TERMS
The MITTS Securities were issued as a series of senior debt securities
under the 1983 Indenture, dated as of April 1, 1983, as amended and restated,
between ML&Co. and The Chase Manhattan Bank, as trustee (the "Trustee"). A copy
of the 1983 Indenture is filed as an exhibit to the registration statement
relating to the MITTS Securities of which this prospectus is a part. The
following summaries of certain provisions of the 1983 Indenture are not complete
and are subject to, and qualified in their entirety by reference to, all
provisions of the 1983 Indenture, including the definitions of terms in the 1983
Indenture.
Series of senior debt securities may from time to time be issued under
the 1983 Indenture, without limitation as to aggregate principal amount, in one
or more series and upon terms as ML&Co. may establish under the provisions of
the 1983 Indenture.
The 1983 Indenture and the MITTS Securities are governed by and
construed in accordance with the laws of the State of New York.
ML&Co. may issue senior debt securities with terms different from those
of senior debt securities previously issued, and issue additional senior debt
securities of a previously issued series of senior debt securities.
The senior debt securities are unsecured and rank equally with all
other unsecured and unsubordinated indebtedness of ML&Co. However, because
ML&Co. is a holding company, the rights of ML&Co. and its creditors, including
the holders of senior debt securities, to participate in any distribution of the
assets of any subsidiary upon its liquidation or reorganization or otherwise is
necessarily subject to the prior claims of creditors of the subsidiary, except
to the extent that claims of ML&Co. itself as a creditor of the subsidiary may
be recognized. In addition, dividends, loans and advances from certain
subsidiaries, including MLPF&S, to ML&Co. are restricted by net capital
requirements under the Exchange Act, and under rules of exchanges and other
regulatory bodies.
<PAGE>
Limitations Upon Liens
ML&Co. may not, and may not permit any Subsidiary to, create, assume,
incur or permit to exist any indebtedness for borrowed money secured by a
pledge, lien or other encumbrance, other than those liens specifically permitted
by the 1983 Indenture, on the Voting Stock owned directly or indirectly by
ML&Co. of any Subsidiary, other than a Subsidiary which, at the time of the
incurrence of the secured indebtedness, has a net worth of less than $3,000,000,
unless the outstanding senior debt securities are secured equally and ratably
with the secured indebtedness.
"Subsidiary" is defined in the 1983 Indenture as any corporation of
which at the time of determination, ML&Co. and/or one or more subsidiaries of
ML&Co. owns or controls directly or indirectly 50% of the shares of Voting
Stock of that corporation.
"Voting Stock" is defined in the 1983 Indenture as the stock of the
class or classes having general voting power under ordinary circumstances to
elect at least a majority of the board of directors, managers or trustees of a
corporation provided that, for the purposes of the 1983 Indenture, stock that
carries only the right to vote conditionally on the occurrence of an event is
not considered voting stock whether or not the event has happened.
Limitation on Disposition of Voting Stock of, and Merger and Sale of Assets by,
MLPF&S
ML&Co. may not sell, transfer or otherwise dispose of any Voting Stock
of MLPF&S or permit MLPF&S to issue, sell or otherwise dispose of any of its
Voting Stock, unless, after giving effect to any such transaction, MLPF&S
remains a Controlled Subsidiary.
"Controlled Subsidiary" is defined in the 1983 Indenture to mean a
corporation more than 80% of the outstanding shares of Voting Stock of which are
owned directly or indirectly by ML&Co.
In addition, ML&Co. may not permit MLPF&S to:
o merge or consolidate, unless the surviving company is a Controlled
Subsidiary, or
o convey or transfer its properties and assets substantially as an
entirety, except to one or more Controlled Subsidiaries.
Merger and Consolidation
ML&Co. may consolidate or merge with or into any other corporation
and ML&Co. may sell, lease or convey all or substantially all of its assets to
any corporation, provided that:
o the resulting corporation, if other than ML&Co., is a corporation
organized and existing under the laws of the United States of America
or any U.S. state and assumes all of ML&Co.'s obligations to:
o pay any amounts due and payable or deliverable with respect
to all the Senior Debt Securities ; and
o perform and observe of all of the obligations and
conditions of the 1983 Indenture to be performed or
observed by ML&Co., and
o ML&Co. or the successor corporation, as the case may be, is not,
immediately after any consolidation or merger, in default under the
1983 Indenture.
Modification and Waiver
The 1983 Indenture may be modified and amended by ML&Co. and the
Trustee with the consent of holders of at least 66 2/3% in principal amount of
each outstanding series of debt securities affected. However, without the
consent of each holder of any outstanding debt security affected, no amendment
or modification to any Indenture may:
o change the stated maturity date of the principal of, or any
installment of interest or Additional Amounts payable on, any senior
debt security or any premium payable on redemption , or change the
redemption price;
o reduce the principal amount of, or the interest or Additional Amounts
payable on, any senior debt security or reduce the amount of
principal which could be declared due and payable before the stated
maturity date;
o change the place or currency of any payment of principal or any
premium, interest or Additional Amounts payable on any senior debt
security;
o impair the right to institute suit for the enforcement of any payment
on or with respect to any senior debt security;
o reduce the percentage in principal amount of the outstanding senior
debt securities of any series, the consent of whose holders is
required to modify or amend the 1983 Indenture; or
o modify the foregoing requirements or reduce the percentage of
outstanding senior debt securities necessary to waive any past
default to less than a majority.
No modification or amendment of ML&Co.'s Subordinated Indenture or any
Subsequent Indenture for subordinated debt securities may adversely affect the
rights of any holder of ML&Co.'s Senior Indebtedness without the consent of each
holder affected. The Holders of at least a majority in principal amount of
outstanding senior debt securities of any series may, with respect to that
series, waive past defaults under the Indenture and waive compliance by ML&Co.
with provisions in the 1983 Indenture, except as described under "--Events of
Default".
Events of Default
Each of the following will be Events of Default with respect to
senior debt securities of any series:
o default in the payment of any interest or Additional Amounts payable
when due and continuing for 30 days;
o default in the payment of any principal or premium when due;
o default in the deposit of any sinking fund payment, when due;
o default in the performance of any other obligation of ML&Co.
contained in the Indenture for the benefit of that series or in the
senior debt securities of that series, continuing for 60 days after
written notice as provided in the 1983 Indenture;
o specified events in bankruptcy, insolvency or reorganization of
ML&Co.; and
o any other Event of Default provided with respect to senior debt
securities of that series which are not inconsistent with the 1983
Indenture.
If an Event of Default occurs and is continuing for any series of
senior debt securities, other than as a result of the bankruptcy, insolvency or
reorganization of ML&Co., the Trustee or the holders of at least 25% in
principal amount of the outstanding senior debt securities of that series may
declare all amounts, or any lesser amount provided for in the senior debt
securities, due and payable or deliverable immediately. At any time after a
declaration of acceleration has been made with respect to senior debt securities
of any series but before the Trustee has obtained a judgment or decree for
payment of money , the holders of a majority in principal amount of the
outstanding senior debt securities of that series may rescind any declaration of
acceleration and its consequences, if all payments due, other than those due as
a result of acceleration, have been made and all Events of Default have been
remedied or waived.
Any Event of Default with respect to any series of debt securities may
be waived by the holders of a majority in principal amount or aggregate issue
price of the outstanding debt securities of that series, except a default:
o in the payment of any amounts due and payable or deliverable under
the debt securities of that series; or
o in respect of an obligation or provision of any Indenture which
cannot be modified under the terms of that Indenture without the
consent of each holder of each series of debt securities affected.
The holders of a majority in principal amount of the outstanding senior
debt securities of a series may direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on the Trustee with respect to those senior debt securities,
provided that any direction shall not be in conflict with any rule of law or the
1983 Indenture. Before proceeding to exercise any right or power under the 1983
Indenture at the direction of the holders, the Trustee shall be entitled to
receive from the Holders reasonable security or indemnification against the
costs, expenses and liabilities which might be incurred by it in complying with
any direction.
The MITTS Securities and other series of senior debt securities issued
under the 1983 Indenture do not have the benefit of any cross-default provisions
with other indebtedness of ML&Co.
ML&Co. is required to furnish to the Trustee annually a statement as
to the fulfillment by ML&Co. of all of its obligations under the 1983
Indenture.
UNITED STATES FEDERAL INCOME TAXATION
Solely for purposes of applying the final Treasury Department
Regulations (the "Final Regulations") concerning the United States Federal
income tax treatment of contingent payment debt instruments to the MITTS
Securities, ML&Co. has determined that the projected payment schedule for the
MITTS Securities will consist of payment on the maturity date of the principal
amount and a projected Supplemental Redemption Amount equal to $4.8938 per Unit
(the "Projected Supplemental Redemption Amount"). This represents an estimated
yield on the MITTS Securities equal to 6.01% per annum (compounded
semiannually).
The projected payment schedule (including both the Projected
Supplemental Redemption Amount and the estimated yield on the MITTS Securities)
has been determined solely for United States Federal income tax purposes (i.e.,
for purposes of applying the Final Regulations to the MITTS Securities), and is
neither a prediction nor a guarantee of what the actual Supplemental Redemption
Amount will be, or that the actual Supplemental Redemption Amount will even
exceed zero.
The following table sets forth the amount of interest that will be
deemed to have accrued with respect to each Unit of the MITTS Securities during
each accrual period over the term of the MITTS Securities based upon the
projected payment schedule for the MITTS Securities (including both the
Projected Supplemental Redemption Amount and the estimated yield equal to 6.01%
per annum (compounded semiannually)) as determined by ML&Co. for purposes of
applying the Final Regulations to the MITTS Securities:
<TABLE>
<CAPTION>
Accrual Period Interest Deemed to Total Interest
-------------- Accrue During Deemed to Have Accrued
Accrual Period on the MITTS Securities
(per Unit) as of End of Accrual Period
--------- (per Unit)
---------
<S> <C> <C>
December 28, 1998 through March 21, 1999............ $ 0.1356 $ 0.1356
March 22, 1999 through September 21, 1999........... $ 0.3045 $ 0.4401
September 22, 1999 through March 21, 2000........... $ 0.3138 $ 0.7539
March 22, 2000 through September 21, 2000........... $ 0.3231 $ 1.0770
September 22, 2000 through March 21, 2001........... $ 0.3329 $ 1.4099
March 22, 2001 through September 21, 2001........... $ 0.3428 $ 1.7527
September 22, 2001 through March 21, 2002........... $ 0.3532 $ 2.1059
March 22, 2002 through September 21, 2002........... $ 0.3638 $ 2.4697
September 22, 2002 through March 21, 2003........... $ 0.3747 $ 2.8444
March 22, 2003 through September 21, 2003........... $ 0.3860 $ 3.2304
September 22, 2003 through March 21, 2004........... $ 0.3976 $ 3.6280
March 22, 2004 through September 21, 2004........... $ 0.4095 $ 4.0375
September 22, 2004 through March 21, 2005........... $ 0.4218 $ 4.4593
March 22, 2005 through September 21, 2005........... $ 0.4345 $4.8938
</TABLE>
Projected Supplemental Redemption Amount = $ 4.8938 per Unit.
All prospective investors in the Securities should consult their own
tax advisors concerning the application of the Final Regulations to their
investment in the MITTS Securities. Investors in the MITTS Securities may also
obtain the projected payment schedule, as determined by ML&Co. for purposes of
the application of the Final Regulations to the MITTS Securities, by submitting
a written request to Merrill Lynch & Co., Inc., Attn: Darryl W. Colletti,
Corporate Secretary's Office, 100 Church Street, 12th Floor, New York, New York
10080-6512.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the SEC.
Our SEC filings are also available over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file by visiting
the SEC's public reference rooms in Washington, D.C., New York, New York, and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
about the public reference rooms. You may also inspect our SEC reports and other
information at the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005.
We have filed a registration statement on Form S-3 with the SEC
covering the MITTS Securities and other securities. For further information on
ML&Co. and the MITTS Securities, you should refer to our registration statement
and its exhibits. This prospectus summarizes material provisions of contracts
and other documents that we refer you to. Because the prospectus may not contain
all the information that you may find important, you should review the full text
of these documents. We have included copies of these documents as exhibits to
our registration statement of which this prospectus is a part.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to incorporate by reference the information we file
with them, which means:
o incorporated documents are considered part of the prospectus;
o we can disclose important information to you by referring you to
those documents; and
o information that we file with the SEC will automatically update and
supersede this incorporated information.
We incorporate by reference the documents listed below which were filed
with the SEC under the Exchange Act:
o annual report on Form 10-K for the year ended December 26, 1997
(excluding the financial information which was restated in Exhibit
99(i) to our current report on Form 8-K dated December 10, 1998);
o quarterly reports on Form 10-Q for the quarters ended March 27, 1998,
June 26, 1998 and September 25, 1998; and
o current reports on Form 8-K dated January 20, 1998, January 30, 1998,
February 4,1998, February 12, 1998, February 23, 1998, March 19, 1998,
April 13,1998, April 29, 1998, May 19, 1998, June 2, 1998, June 3,
1998, June 15, 1998, June 24, 1998, June 26, 1998, July 2, 1998, July
14, 1998, July 15, 1998, July 29, 1998, September 3, 1998, September
8,1998, September 29, 1998, October 13, 1998, October 21, 1998,
October 28, 1998, November 3, 1998, November 24,1998, December 1,
1998, December 10, 1998, December 28, 1998, January 19, 1999, February
17, 1999, February 19, 1999, February 22, 1999 and February 23, 1999.
We also incorporate by reference each of the following documents that
we will file with the SEC after the date of this prospectus until this offering
is completed or after the date of this initial registration statement and prior
to effectiveness of the registration statement:
o reports filed under Sections 13(a) and (c) of the Exchange Act;
o definitive proxy or information statements filed under Section 14 of
the Exchange Act in connection with any subsequent stockholders'
meeting; and
o any reports filed under Section 15(d) of the Exchange Act.
You should rely only on information contained or incorporated by
reference in this prospectus. We have not, and MLPF&S has not, authorized any
other person to provide you with different information. If anyone provides you
with different or inconsistent information, you should not rely on it. We are
not, and MLPF&S is not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted.
You should assume that the information appearing in this prospectus is
accurate as of the date of this prospectus only. Our business, financial
condition and results of operations may have changed since that date.
You may request a copy of any filings referred to above (excluding
exhibits), at no cost, by contacting us at the following address: Mr. Lawrence
M. Egan, Jr., Corporate Secretary's Office, Merrill Lynch & Co., Inc., 100
Church Street, New York, New York 10080-6512, Telephone: (212) 602-8435.
PLAN OF DISTRIBUTION
This prospectus has been prepared in connection with secondary sales of
the MITTS Securities and is to be used by MLPF&S when making offers and sales
related to market-making transactions in the MITTS Securities.
MLPF&S may act as principal or agent in these market-making
transactions.
The MITTS Securities may be offered on the AMEX or off the exchange
in negotiated transactions or otherwise.
The distribution of the MITTS Securities will conform to the
requirements set forth in the applicable sections of Rule 2720 of the Conduct
Rules of the NASD.
EXPERTS
The consolidated financial statements of ML&Co. and its subsidiaries
included in ML&Co.'s current report on Form 8-K dated December 10, 1998 and
related financial statement schedules of ML&Co. and its subsidiaries included in
the 1997 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 in this prospectus. 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 26, 1997 included in the current report on Form 8-K dated December 10,
1998, and incorporated by reference in this prospectus, has been derived from
consolidated financial statements audited by Deloitte & Touche LLP, as set forth
in their reports included or incorporated by reference in this prospectus. These
consolidated financial statements and related financial statement schedules, and
Selected Financial Data incorporated by reference in this prospectus and the
registration statement of which this prospectus is a part, have been
incorporated in this prospectus by reference in reliance upon the 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 in this
prospectus 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 reports included in these quarterly reports on Form
10-Q and incorporated by reference in this prospectus, they did not audit and
they do not express an opinion on any interim financial information.
Accordingly, the degree of reliance on their reports on this information should
be restricted in light of the limited nature of the review procedures applied.
Deloitte & Touche LLP are not subject to the liability provisions of Section 11
of the Securities Act of 1933, as amended, for any report on unaudited interim
financial information because any 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 Securities Act.
Subject to Completion
Preliminary Prospectus Supplement, dated, February , 1999
PROSPECTUS SUPPLEMENT [LOGO]
(To pospectus dated )
units
Merrill Lynch & Co., Inc.
Market Index Target-Term Securities SM
due March , 2006
"MITTS(R) Securities"
$10 principal amount per unit
The MITTS Securities:
o 100% principal protection at maturity
o No payments prior to the maturity date o Senior unsecured
debt securities of ML&Co.
o Linked to the value of the Index o We have applied to list
the MITTS Securities on the American Stock Exchange under the
trading symbol " ".
o Closing date: , 1999
Payment at Maturity:
o On the maturity date, for each unit of the MITTS Securities
you own, we will pay you an amount equal to the sum of the
principal amount of each unit and an additional amount based
on the percentage increase, if any, in the value of the
Index adjusted by an adjustment factor as described in
this prospectus.
o You will receive no less than the principal amount of your MITTS
Securities.
<PAGE>
Investing in the MITTS Securities involves risk.
See "Risk Factors"beginning on page S- of this prospectus supplement.
Neither the Securities and Exchange Commission nor any state securities
commission has approved these securities or passed upon the adequacy of this
prospectus supplement or the attached prospectus. Any representation to the
contrary is a criminal offense.
Per unit Total
-------- -----
Public offering price....................................... $10.00 $
Underwriting discountl..................................... $ $
Proceeds, before expenses, to Merrill Lynch & Co., Inc...... $ $
The public offering price and the underwriting discount for any single
transaction to purchase:
(a) between units and units will be $ per unit and $ per unit,
respectively; and
(b) more than units will be $ per unit and $ per unit, respectively.
-------------------
Merrill Lynch & Co.
-------------------
The date of this prospectus supplement is March , 1999.
- ------------------
"MITTS" is a registered service mark and "Market Index Target-Term Securities"
are registered service marks owned by Merrill Lynch & Co., Inc.
<PAGE>
TABLE OF CONTENTS
<PAGE>
SUMMARY INFORMATION--Q&A
<PAGE>
This summary includes questions and answers that highlight selected
information from the prospectus and prospectus supplement to help you
understand the Market Index Target-Term Securities due , or the MITTS
Securities. You should carefully read the accompanying prospectus and this
prospectus supplement to fully understand the terms of the MITTS Securities,
the Index (the " Index" or "Index"), and the tax and other considerations that
are important to you in making a decision about whether to invest in the MITTS
Securities. You should carefully review the "Risk Factors" section, which
highlights certain risks associated with an investment in the MITTS Securities,
to determine whether an investment in the MITTS Securities is appropriate for
you.
References in this prospectus supplement to "ML&Co.", "we", "us" and "our"
are to Merrill Lynch & Co., Inc.
References in this prospectus supplement to "MLPF&S" are to Merrill Lynch,
Pierce, Fenner & Smith Incorporated.
What are the MITTS Securities?
The MITTS Securities are a series of senior debt securities issued by
ML&Co. and are not secured by collateral. The MITTS Securities will rank
equally with all of our other unsecured and unsubordinated debt. The MITTS
Securities will mature on , . We cannot redeem the MITTS Securities at any
earlier date. We will make no payments on the MITTS Securities until maturity.
Each unit of MITTS Securities represents $10 principal amount of MITTS
Securities. You may transfer the MITTS Securities only in whole units. You will
not have the right to receive physical certificates evidencing your ownership
except under limited circumstances. Instead, we will issue the MITTS Securities
in the form of a global certificate, which will be held by The Depository Trust
Company, also known as DTC, or its nominee. Direct and indirect participants in
DTC will record beneficial ownership of the MITTS Securities by individual
investors. You should refer to the section "Description of the MITTS
Securities--Depositary" in this prospectus supplement.
What will I receive at the stated maturity date of the MITTS Securities?
We have designed the MITTS Securities for investors who want to protect
their investment by receiving at least the principal amount of their investment
at maturity and who also want to participate in possible increases in the Index
as reduced by the Adjustment Factor. At the stated maturity date, you will
receive a payment on the MITTS Securities equal to the sum of two amounts: the
"Principal Amount" and the "Supplemental Redemption Amount".
Principal Amount
The Principal Amount per unit is $10.
Supplemental Redemption Amount
The Supplemental Redemption Amount per unit will equal:
$10 X (Adjusted Ending Value - Starting Value)
----------------------------------------------
Starting Value
but will not be less than zero.
"Starting Value", means the closing value of the Index on the date the
MITTS Securities are priced for initial sale to the public. We will disclose
the Starting Value in the final prospectus supplement delivered to you in
connection with sales of the MITTS Securities.
"Adjusted Ending Value" means the average of the values of the Index, as
reduced by the application of the Adjustment Factor, at the close of the market
on five business days before the maturity of the MITTS Securities. We may
calculate the Adjusted Ending Value by reference to fewer than five or even a
single day's closing value if, during the period shortly before the stated
maturity date of the MITTS Securities, there is a disruption in the trading of
the component stocks comprising the Index or certain futures or options
relating to the Index.
The "Adjustment Factor" is expected to be between % and % per year and
will be prorated based on a 365-day year and applied each calendar day to
reduce the value of the Index. We will determine the Adjustment Factor on the
date the securities are priced for initial sale to the public and it will
appear in the final prospectus supplement delivered to you in connection with
sales of the MITTS Securities. As a result of the application of the Adjustment
Factor, the adjusted value of the Index used to calculate your Supplemental
Redemption Amount at the stated maturity of the MITTS Securities will be
approximately % to % less than the actual Index value on any day during the
Calculation Period. For a detailed discussion of how the Adjustment Factor will
affect the value of the Index used to calculate your Supplemental Redemption
Amount (i.e., the Adjusted Ending Value), see "Description of the MITTS
Securities--Payment at Maturity" in this prospectus supplement.
For more specific information about the Supplemental Redemption Amount,
please see the section "Description of the MITTS Securities" in this prospectus
supplement.
We will pay you a Supplemental Redemption Amount only if the Adjusted
Ending Value is greater than the Starting Value. If the Adjusted Ending Value
is less than, or equal to, the Starting Value, the Supplemental Redemption
Amount will be zero. We will pay you the Principal Amount of the MITTS
Securities regardless of whether any Supplemental Redemption Amount is payable.
<PAGE>
- -------------------------------------------------------------------------------
Examples
Here are two examples of Supplemental Redemption Amount calculations
assuming an Adjustment Factor of % (the midpoint of the expected range of % and
%):
Example 1--The Index, as adjusted, is below the Starting Value at maturity:
Hypothetical Starting Value: 1,223.55
Hypothetical closing value of the Index at maturity: 1,468.26
Hypothetical Adjusted Ending Value: 1,177.71
<TABLE>
<S> <C>
Supplemental
= $0.00 Redemption
Supplemental Redemption Amount (per unit) = $10 X (1,177.71-1,223.55 ) Amount cannot
------------------- be less than zero)
1,223.55
</TABLE>
Total payment at maturity (per unit) = $10 + $0 = $10
Example 2--The Index, as adjusted, is above the Starting Value at maturity:
Hypothetical Starting Value: 1,223.55
Hypothetical closing value of the Index at maturity: 2,080.04
Hypothetical Adjusted Ending Value: 1,668.42
(1,668.42-1,223.55)
Supplemental Redemption Amount (per unit) = $10 X ------------------ = $3.64
1,223.55
Total payment at maturity (per unit) = $10 + $3.64 = $13.64
- -------------------------------------------------------------------------------
<PAGE>
Who publishes the Index and what does the Index measure?
[Description of Index].
Please note than an investment in the MITTS Securities does not entitle
you to any ownership interest in the stocks of the companies included in the
Index.
How has the Index performed historically?
Tables showing the year end closing value of the Index for each year from
through 1998 and the month-end closing value of the Index from January 1990
through January 1999 are provided in the section "The Index--Historical Data on
the Index", in this prospectus supplement. We have provided this historical
information to help you evaluate the behavior of the Index in various economic
environments; however, past performance of the Index is not necessarily
indicative of how the Index will perform in the future.
What about taxes?
Each year, you will be required to pay taxes on ordinary income from the
MITTS Securities over their term based upon an estimated yield for the MITTS
Securities, even though you will not receive any payments from us until
maturity. We have determined this estimated yield, in accordance with
regulations issued by the U.S. Treasury Department, solely in order for you to
figure the amount of taxes that you will owe each year as a result of owning a
MITTS Security. This estimated yield is neither a prediction nor a guarantee of
what the actual Supplemental Redemption Amount will be, or that the actual
Supplemental Redemption Amount will even exceed zero. We have determined that
this estimated yield will equal % per annum (compounded semiannually).
Based upon this estimated yield, if you pay your taxes on a calendar year
basis and if you buy a MITTS Security for $10 and hold the MITTS Security until
maturity, you will be required to pay taxes on the following amounts of
ordinary income from the MITTS Securities each year: $ in 1999, $ in 2000, $ in
2001, $ in 2002, $ in 2003, $ in 2004, $ in 2005 and $ in 2006. However, in
2006, the amount of ordinary income that you will be required to pay taxes on
from owning such MITTS Security may be greater or less than $ , depending upon
the Supplemental Redemption Amount, if any, you receive. Also, if the
Supplemental Redemption Amount is less than $ , you may have a loss which you
could deduct against other income you may have in 2006, but under current tax
regulations, you would neither be required nor allowed to amend your tax
returns for prior years. For further information, see "United States Federal
Income Taxation" in this prospectus supplement.
Will the MITTS Securities be listed on a stock exchange?
We have applied to list the MITTS Securities on the AMEX under the trading
symbol "FML". You should be aware that the listing of the MITTS Securities on
the NYSE will not necessarily ensure that a liquid trading market will be
available for the MITTS Securities. You should review "Risk Factors--Uncertain
trading market".
What is the role of MLPF&S?
Our subsidiary, MLPF&S, is the underwriter for the offering and sale of
the MITTS Securities. After the initial offering, MLPF&S intends to buy and
sell MITTS Securities to create a secondary market for holders of the MITTS
Securities, and may stabilize or maintain the market price of the MITTS
Securities during the initial distribution of the MITTS Securities. However,
MLPF&S will not be obligated to engage in any of these market activities or
continue them once it has started.
MLPF&S will also be our agent for purposes of calculating, among other
things, the Adjusted Ending Value and the Supplemental Redemption Amount. Under
certain circumstances, these duties could result in a conflict of interest
between MLPF&S's status as a subsidiary of ML&Co. and its responsibilities as
calculation agent.
Who is ML&Co.?
Merrill Lynch & Co., Inc. is a holding company with various subsidiary and
affiliated companies that provide investment, financing, insurance and related
services on a global basis. For information about ML&Co. see the section
"Merrill Lynch & Co., Inc." in the accompanying prospectus. You should also
read the other documents we have filed with the SEC, which you can find by
referring to the section "Where You Can Find More Information" in this
prospectus supplement.
Are there any risks associated with my investment?
Yes, an investment in the MITTS Securities is subject to risk. Please
refer to the section "Risk Factors" in this prospectus supplement.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses in connection with the issuance
and distribution of the securities being registered. All the amounts shown are
estimates, except the registration fee and the NASD fee.
Registration fee........................................... $4,170,000
Fees and expenses of accountants........................... 400,000
Fees and expenses of counsel............................... 1,500,000
NASD fee................................................... 30,500
Fees and expenses of Trustees and Warrant Agents........... 800,000
Printing expenses.......................................... 800,000
Printing and engraving of securities....................... 100,000
Rating agency fees......................................... 500,000
Stock exchange listing fees................................ 300,000
Miscellaneous.............................................. 4,500
---------
Total................................................. $8,605,000
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware, as
amended, provides that under certain circumstances a corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation or is
or was serving at its request in such capacity in another corporation or
business association, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding if such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, has no reasonable cause to believe such person's
conduct was unlawful.
Article XIII, Section 2 of the Restated Certificate of Incorporation of the
Company provides in effect that, subject to certain limited exceptions, the
Company shall indemnify its directors and officers to the extent authorized or
permitted by the General Corporation Law of the State of Delaware.
Each of the underwriting and distribution agreements and forms thereof
filed as Exhibit 1 provides for the indemnification of the Company, its
controlling persons, its directors and certain of its officers by the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Act").
The directors and officers of the Company are insured under policies of
insurance maintained by the Company, subject to the limits of the policies,
against certain losses arising from any claim made against them by reason of
being or having been such directors or officers. In addition, the Company has
entered into contracts with all of its directors providing for indemnification
of such persons by the Company to the full extent authorized or permitted by
law, subject to certain limited exceptions.
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, employees, 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 proceedings 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 of 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 Partnership prior to the
final disposition of such claim, demand, action, suit or proceeding upon receipt
by the Partnership of any 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 Regular Trustees of the Trust are covered by insurance policies
indemnifying them against certain liabilities, including certain liabilities
arising under the Act, which might be incurred by them in such capacity and
against which they cannot be indemnified by the Company or the Trust. Any
agents, dealers or underwriters who execute the agreements filed as Exhibit 1 of
this Registration Statement with respect to Trust Originated Preferred
Securities (ServiceMark) will agree to indemnify the Company's directors and
their officers and the Trustees who signed the Registration Statement with
respect to such securities against certain liabilities that may arise under the
Act with respect to information furnished to the Company or the Trust by or on
behalf of any such indemnifying party.
ITEM 16. LIST OF EXHIBITS.
<TABLE>
<CAPTION>
Exhibit Incorporation by Reference
Number Description to Filings Indicated
- ------ ----------- ---------------------------
<S> <C> <C>
1(a) Form of Underwriting Agreement for Debt Securities and Exhibit 1(a) to Company's Registration
Debt, Currency and Index Warrants, including forms of Statement on Form S-3 (No. 333-59997).
Terms Agreement.
1(b) Form of Distribution Agreement, including form of Terms Exhibit 1(b) to Company's Registration
Agreement, relating to Medium-Term Notes, Series B (a Statement on Form S-3 (No. 33-51489).
series of Senior Debt Securities).
1(c) Form of Underwriting Agreement for Preferred Stock and Exhibit 1(c) to Company's Registration
Common Stock Warrants, Preferred Stock, Depositary Shares Statement on Form S-3 (No. 333-59997).
and Common Stock.
1(d) Form of Purchase Agreement relating to the Trust Preferred Exhibit 1.1 to Company's Registration
Securities. Statement on Form S-3 (No. 333-42859).
4(a)(i) Senior Indenture, dated as of April 1, 1983, as amended and Exhibit 99(c) to Company's Registration
restated (the "1983 Senior Indenture"), between the Statement on Form 8-A dated July 20, 1992.
Company and The Chase Manhattan Bank, formerly known as
Chemical Bank (successor by merger to Manufacturers
Hanover Trust Company)
4(a)(ii) Senior Indenture, dated as of October 1, 1993 (the "1993 Exhibit 4 to Company's Current Report on
Senior Indenture"), between the Company and the Chase Form 8-K dated October 7, 1993.
Manhattan Bank (successor by merger to The Chase
Manhattan Bank, N.A.).
4(a)(iii) Form of initial Subsequent Indenture with respect to Senior
Debt Securities.*
4(a)(iv) Form of Subsequent Indenture with respect to Senior Debt
Securities.*
4(b)(i) Supplemental Indenture to the 1983 Senior Indenture, dated Exhibit 99(c) to Company's Registration
March 15, 1990, between the Company and The Chase Statement on Form 8-A dated July 20, 1992.
Manhattan Bank, formerly known as Chemical Bank
(successor by merger to Manufacturers Hanover Trust
Company).
4(b)(ii) Eighth Supplemental Indenture to the 1983 Senior Indenture, Exhibit 4(b) to Post-Effective Amendment
dated March 1, 1996, between the Company and The Chase No. 1 to Company's Registration Statement
Manhattan Bank, formerly known as Chemical Bank on Form S-3 (No. 33-65135).
(successor by merger to Manufacturers Hanover Trust
Company).
4(b)(iii) Ninth Supplemental Indenture to the 1983 Senior Indenture, Exhibit 4(b) to Post-Effective Amendment
dated June 1, 1996, between the Company and The Chase No. 4 to Company's Registration Statement
Manhattan Bank, formerly known as Chemical Bank on Form S-3 (No. 33-65135).
(successor by merger to Manufacturers Hanover Trust
Company).
______________________
* Previously filed.
<PAGE>
Exhibit Incorporation by Reference
Number Description to Filings Indicated
- ------ ----------- ---------------------------
4(b)(iv) Tenth Supplemental Indenture to the 1983 Senior Indenture, Exhibit 4(b) to Post-Effective Amendment
dated July 1, 1996, between the Company and The Chase No. 5 to Company's Registration Statement
Manhattan Bank, formerly known as Chemical Bank on Form S-3 (No. 33-65135).
(successor by merger to Manufacturers Hanover Trust
Company)
4(b)(v) Supplemental Indenture to the 1983 Senior Indenture, dated Exhibit 4(b)(ii) to Company's
October 25, 1993, between the Company and The Chase Registration Statement on Form S-3
Manhattan Bank (successor by merger to The Chase (No. 33-61559).
Manhattan Bank, N.A.).
4(b)(vi) Twelfth Supplemental Indenture to the 1983 Senior Indenture Exhibit 4(a) to Company's Current report
dated as of September 1, 1998 between the Company and The on Form 8-K dated October 21, 1998.
Chase Manhattan Bank, formerly known as Chemical Bank
(successor by merger to Manufacturers Hanover Trust
Company).
4(b)(vii) First Supplemental Indenture to the 1993 Senior Indenture, Exhibit 4(a) to Company's Current Report
dated as of June 1, 1998, between the Company and The on Form 8-K dated July 2, 1998.
Chase Manhattan Bank (successor by merger to The
Chase Manhattan Bank N.A.).
4(c)(i) Form of Subordinated Indenture between the Company and The Exhibit 4.7 to Company's Registration
Chase Manhattan Bank. Statement on Form S-3 (No. 333-16603).
4(c)(ii) Form of Subsequent Indentures with respect to Subordinated
Debt Securities.*
4(d) Form of 7-3/4% Note due March 1, 1999. Exhibit 4 to Company's Current Report on
Form 8-K dated March 2, 1992.
4(e) Form of 6-3/8% Note due March 30, 1999. Exhibit 4 to Company's Current Report on
Form 8-K dated March 30, 1994.
4(f) Form of Equity Participation Security with Minimum Return Exhibit 4(ooo) to Amendment No. 1 to
Protection due June 30, 1999. Company's Registration Statement on
Form S-3 (No. 33-54218).
4(g) Form of European Portfolio Market Index Target-Term Exhibit 4 to Company's Current Report on
Security due June 30, 1999. Form 8-K dated December 30, 1993.
4(h) Form of 8-1/4% Note due November 15, 1999. Exhibit 4(cc) to Company's Registration
Statement on Form S-3 (No. 33-45327).
4(i) Form of Stock Market Annual Reset Term Note due Exhibit 4 to Company's Current Report on
December 31, 1999 (Series A). Form 8-K dated April 29, 1993.
4(j) Form of Japan Index Equity Participation Security with Exhibit 4 to Company's Current Report on
Minimum Return Protection due January 31, 2000. Form 8-K dated January 27, 1994.
4(k) Form of 8-3/8% Note due February 9, 2000. Exhibit 4 to Company's Current Report on
Form 8-K dated February 9, 1995.
4(l) Form of 6.70% Note due August 1, 2000. Exhibit 4 to Company's Report on Form 8-K
dated August 1, 1995.
4(m) Form of AMEX Oil Index Stock Market Annual Reset Term Note Exhibit 4 to Company's Current Report on
due December 29, 2000. Form 8-K dated March 31, 1994.
4(n) Form of 8% Note due February 1, 2002. Exhibit 4 to Company's Current Report on
Form 8-K dated February 4, 1992.
______________________
* Previously filed.
<PAGE>
Exhibit Incorporation by Reference
Number Description to Filings Indicated
- ------ ----------- ---------------------------
4(o) Form of Step-Up Note due April 30, 2002. Exhibit 4 to Company's Current Report on
Form 8-K dated April 30, 1992.
4(p) Form of Step-Up Note due May 6, 2002. Exhibit 4 to Company's Current Report on
Form 8-K dated May 6, 1992.
4(q) Form of 7-3/8% Note due August 17, 2002. Exhibit 4 to Company's Current Report on
Form 8-K dated August 17, 1992.
4(r) Form of Major 8 European Index Market Index Target-Term Exhibit 4 to Company's Current Report on
Security due August 30, 2002. Form 8-K dated August 1, 1997.
4(s) Form of 6.64% Note due September 19, 2002. Exhibit 4 to Company's Current Report on
Form 8-K dated September 19, 1995.
4(t) Form of 8.30% Note due November 1, 2002. Exhibit 4 to Company's Current Report on
Form 8-K dated May 4, 1992.
4(u) Form of Major 11 European Market Index Target-Term Security Exhibit 4 to Company's Current Report on
due December 6, 2002. Form 8-K dated November 26, 1997.
4(v) Form of 6-7/8% Note due March 1, 2003. Exhibit 4 to Company's Current Report on
Form 8-K dated March 1, 1993.
4(w) Form of 7.05% Note due April 15, 2003. Exhibit 4 to Company's Current Report on
Form 8-K dated April 15, 1993.
4(x) Form of 6.55% Note due August 1, 2004. Exhibit 4 to Company's Current Report on
Form 8-K dated August 1, 1997.
4(y) Form of Russell 2000 Index Market Index Target-Term Exhibit 4 to Company's Current Report on
Security due September 30, 2004. Form 8-K dated September 29, 1997.
4(z) Form of 6-1/4% Note due January 15, 2006. Exhibit 4 to Company's Current Report on
Form 8-K dated January 20, 1994.
4(aa) Form of 6-3/8% Note due September 8, 2006. Exhibit 4 to Company's Current Report on
Form 8-K dated September 8, 1993.
4(bb) Form of 8% Note due June 1, 2007. Exhibit 4 to Company's Current Report on
Form 8-K dated June 1, 1992.
4(cc) Form of S&P 500 Inflation Adjusted Market Index Target-Term Exhibit 4 to Company's Current Report on
Security due September 24, 2007. Form 8-K dated September 24, 1997.
4(dd) Form of 7% Note due April 27, 2008. Exhibit 4 to Company's Current Report on
Form 8-K dated April 27, 1993.
4(ee) Form of 6-1/4% Note due October 15, 2008. Exhibit 4 to Company's Current Report on
Form 8-K dated October 15, 1993.
4(ff) Form of 8.40% Note due November 1, 2019. Exhibit 4(z) to Company's Registration
Statement on Form S-3 (No. 33-35456).
4(gg) Form of Fixed Rate Medium-Term Note (without redemption Exhibit 4(kk) to Company's Registration
provisions). Statement on Form S-3 (No. 33-54218).
4(hh) Form of Fixed Rate Medium-Term Note (with redemption Exhibit 4(ll) to Company's Registration
provisions). Statement on Form S-3 (No. 33-54218).
<PAGE>
Exhibit Incorporation by Reference
Number Description to Filings Indicated
- ------ ----------- ---------------------------
4(ii) Form of Fixed Rate Medium-Term Note (without redemption Exhibit 4(d) to Company's Registration
provisions, minimum denomination $1,000). Statement on Form S-3 (No. 33-38879).
4(jj) Form of Fixed Rate Medium-Term Note (with redemption Exhibit 4(c) to Company's Registration
provisions, minimum denominations $1,000). Statement on Form S-3 (No. 33-38879).
4(kk) Form of Fixed Rate Medium-Term Note, Series B. Exhibit 4(xiii) to Company's Quarterly
Report on Form 10-Q for the quarter ended
September 24, 1993.
4(ll) Form of Federal Funds Rate Medium-Term Note. Exhibit 4(oo) to Company's Registration
Statement on Form S-3 (No. 33-54218).
4(mm) Form of Floating Rate Medium-Term Note, Series B. Exhibit 4(xiv) to Company's Quarterly
Report on Form 10-Q for the quarter ended
September 24, 1993.
4(nn) Form of Commercial Paper Rate Medium-Term Note. Exhibit 4(qq) to Company's Registration
Statement on Form S-3 (No. 33-54218).
4(oo) Form of Commercial Paper Index Rate Medium-Term Note. Exhibit 4(i) to Company's Registration
Statement on Form S-3 (File No. 33-38879).
4(pp) Form of Constant Maturity Treasury Rate Indexed Medium-Term Exhibit 4(ccc) to Company's Registration
Note, Series B. Statement on Form S-3 (No. 33-52647).
4(qq) Form of Constant Maturity Treasury Rate Indexed Medium-Term Exhibit 4(xv) to Company's Annual Report
Note II, Series B. on Form 10-K for the year ended
December 30, 1994.
4(rr) Form of JPY Yield Curve Flattening Medium-Term Note, Series Exhibit 4(ddd) to Company's Registration
B. Statement on Form S-3 (No. 33-52647).
4(ss) Form of LIBOR Medium-Term Note. Exhibit 4(pp) to Company's Registration
Statement on Form S-3 (No. 33-54218).
4(tt) Form of Multi-Currency Medium-Term Note, Series B. Exhibit 4(fff) to Company's Registration
Statement on Form S-3 (No. 33-52647).
4(uu) Form of Nine Month Renewable Floating Rate Medium-Term Exhibit 4(ix) to Company's Quarterly
Note, Series B. Report on Form 10-Q for the quarter ended
September 24, 1993.
4(vv) Form of Treasury Rate Medium-Term Note. Exhibit 4(aaa) to Company's Registration
Statement on Form S-3 (No. 33-54218).
4(ww) Form of Collared LIBOR Medium-Term Note due February 14, Exhibit 4(ww) to Company's Registration
2000. Statement on Form S-3 (No. 33-54218).
4(xx) Form of Japanese Yen Swap Rate Linked Medium-Term Note, Exhibit 4(mmm) to Company's Registration
Series B. Statement on Form S-3 (No. 33-52647).
4(yy) Form of Step-Up Medium-Term Note due May 20, 2008. Exhibit 4(ggg) to Amendment No. 1 to
Company's Registration Statement on
Form S-3 (No. 33-54218).
4(zz) Form of Warrant Agreement, including form of Warrant Exhibit 4(aa) to Company's Registration
Certificate. Statement on Form S-3 (No. 33-35456).
<PAGE>
Exhibit Incorporation by Reference
Number Description to Filings Indicated
- ------ ----------- ---------------------------
4(aaa) Form of Currency [Put/Call] Warrant Agreement, including Exhibit 4 to Company's Registration
form of Global Currency Warrant Certificate. Statement on Form S-3 (No. 33-17965).
4(bbb) Form of Index Warrant Agreement, including form of Global Exhibit 4(kkk) to Amendment No. 1 to
Index Warrant Certificate. Company's Registration Statement on
Form S-3 (No. 33-54218).
4(ccc) Form of Index Warrant Trust Indenture, including form of Exhibit 4(lll) to Amendment No. 1 to
Global Index Warrant Certificate. Company's Registration Statement on
Form S-3 (No. 33-54218).
4(ddd) Form of 6-1/2% Note due April 1, 2001. Exhibit 4 to Company's Current Report on
Form 8-K dated April 1, 1996.
4(eee) Form of 6% Note due January 15, 2001. Exhibit 4 to Company's Current Report on
Form 8-K dated January 17, 1996.
4(fff) Form of 6% Note due March 1, 2001. Exhibit 4 to Company's Current Report on
Form 8-K dated February 29, 1996.
4(ggg) Form of 7% Note due March 15, 2006. Exhibit 4 to Company's Current Report on
Form 8-K dated March 18, 1996.
4(hhh) Form of 7-3/8% Note due May 15, 2006. Exhibit 4 to Company's Current Report on
Form 8-K dated May 15, 1996.
4(iii) Form of 6% STRYPES due June 1, 1999. Exhibit 4(c) to Company's Form 8-K/A
dated June 7, 1996.
4(jjj) Form of 7-1/4% STRYPES due June 15, 1999. Exhibit 4(c) to Post-Effective Amendment
No. 4 to Company's Registration Statement
on Form S-3 (33-65135).
4(kkk) Form of 6-1/4% STRYPES due July 1, 2001. Exhibit 4(c) to Company's Current Report
on Form 8-K dated July 9, 1996.
4(lll) Form of S&P 500 Market Index Target-Term Security due Exhibit 4 to Company's Current Report on
May 10, 2001. Form 8-K dated May 13, 1996.
4(mmm) Form of AMEX Hong Kong 30 Index Equity Participation Note Exhibit 4 to Company's Current Report on
due February 16, 1999. Form 8-K dated February 7, 1996.
4(nnn) Form of Technology Market Index Target-Term Security due Exhibit 4(a) to Company's Current Report
August 15, 2001. on Form 8-K dated August 12, 1996.
4(ooo) Form of Top Ten Yield Market Index Target-Term Security due Exhibit 4(b) to Company's Current Report
August 15, 2006. on Form 8-K dated August 12, 1996.
4(ppp) Form of Healthcare/Biotechnology Portfolio Market Index Exhibit 4 to Company's Current Report on
Target-Term Security due October 31, 2001. Form 8-K dated October 30, 1996.
4(qqq) Form of 7% Note due January 15, 2007. Exhibit 4 to Company's Current Report on
Form 8-K dated January 13, 1997.
4(rrr) Form of S&P 500 Market Index Target-Term Security due Exhibit 4 to Company's Current Report on
September 16, 2002. Form 8-K dated March 14, 1997.
4(sss) Form of Nikkei 225 Market Index Target-Term Security due Exhibit 4 to Company's Current Report on
June 14, 2002. Form 8-K dated June 3, 1997.
<PAGE>
Exhibit Incorporation by Reference
Number Description to Filings Indicated
- ------ ----------- ---------------------------
4(ttt) Form of 6.56% Note due December 16, 2007. Exhibit 4 to Company's Current Report on
Form 8-K dated December 16, 1997.
4(uuu) Form of 7-7/8% STRYPES due February 1, 2001 (Payable with Exhibit 4(c) to Company's Current Report
Shares of Common Stock of CIBER, Inc.). on Form 8-K dated January 30, 1998.
4(vvv) Form of Floating Rate Note due February 4, 2003. Exhibit 4 to Company's Current Report on
Form 8-K dated February 4, 1998.
4(www) Form of 6% Note due February 12, 2003. Exhibit 4 to Company's Current Report on
Form 8-K dated February 12, 1998.
4(xxx) Form of Oracle Corporation Indexed Callable Protected Exhibit 4 to Company's Current Report on
Growth Security due March 31, 2003. Form 8-K dated March 19, 1998.
4(yyy) Form of Telebras Indexed Callable Protected Growth Security Exhibit 4 to Company's Current Report on
due May 19, 2005. Form 8-K dated May 19, 1998.
4(zzz) Form of 6-3/4% Note due June 1, 2028. Exhibit 4 to Company's Current Report on
Form 8-K dated June 3, 1998.
4(aaaa) Form of Floating Rate Note due June 24, 2003. Exhibit 4 to Company's Current Report on
Form 8-K dated June 24, 1998.
4(bbbb) Form of S&P 500 Market Index Target-Term Security due Exhibit 4 to Company's Current Report on
July 1, 2005. Form 8-K dated June 26, 1998.
4(cccc) Form of Medium-Term Notes, Series B, 3% Stock Linked Note Exhibit 4 to Company's Current Report on
due June 10, 2000 (Linked to the performance of Honda Form 8-K dated June 10, 1998.
Motor Co., Ltd. Common Stock)
4(dddd) Form of Medium-Term Notes, Series B, 5% Stock Linked Note Exhibit 4(c) to Company's Current Report
due July 3, 2000 (Linked to the performance of the Common on Form 8-K dated July 2, 1998.
Stock of Travelers Group, Inc.).
4(eeee) Form of Medium-Term Notes, Series B, 7% Stock Portfolio
Linked Note due August 18, 2000 (Linked to the
performance of the Common Stock of Intuit Inc., CKS
Group, Inc. and CNET, Inc.).*
4(ffff) Form of Medium-Term Notes, Series B, Single Stock
Linked Note due August 13, 1999 (Linked to the
performance of the Common Stock of Case
Corporation).*
4(gggg) Form of 5-3/4% Stock Return Income DEbt Securities due Exhibit 4 to Company's Current Report on
June 1, 2000. Form 8-K dated December 1, 1998.
4(hhhh) Form of 6% Note due July 15, 2003. Exhibit (4)(a) to Company's Current
Report on Form 8-K dated July 15, 1998.
4(iiii) Form of 6-1/2% Note due July 15, 2018. Exhibit (4)(b) to Company's Current
Report on Form 8-K dated July 15, 1998.
4(jjjj) Form of Preferred Stock and Common Stock Warrant Agreement, Exhibit 4(cccc) to Company's Registration
including forms of Preferred Stock and Common Stock Statement on Form S-3 (File
Warrant Certificates. No. 333-44173).
______________________
* Previously filed.
<PAGE>
Exhibit Incorporation by Reference
Number Description to Filings Indicated
- ------ ----------- ---------------------------
4(kkkk) Form of Deposit Agreement, including form of Depositary Exhibit 4(ffff) to Company's Registration
Receipt Certificate representing the Depositary Shares. Statement on Form S-3 (File
No. 333-44173).
4(llll) Form of Certificate of Trust of Merrill Lynch Preferred
Capital Trust VI.*
4(mmmm) Form of Amended and Restated Declaration of Trust of
Merrill Lynch Preferred Capital Trust VI, including form
of Trust Preferred Security.*
4(nnnn) Form of Certificate of Limited Partnership of Merrill Lynch
Preferred Funding VI, L.P.*
4(oooo) Form of Amended and Restated Limited Partnership Agreement
of Merrill Lynch Preferred Funding VI, L.P.*
4(pppp) Form of Trust Preferred Securities Guarantee
Agreement, between the Company and The Chase
Manhattan Bank, as guarantee trustee, including form
of Partnership Preferred Security.*
4(qqqq) Form of Partnership Preferred Securities Guarantee
Agreement between the Company and The Chase Manhattan
Bank, as guarantee trustee.*
4(rrrr) Form of Subordinated Debenture Indenture between the Exhibit 4 to Registration Statement on
Company and The Chase Manhattan Bank, as guarantee Form S-3 (File No. 333-16603).
trustee.
4(ssss) Form of Affiliate Debenture Guarantee Agreement between the
Company and The Chase Manhattan Bank, as guarantee
trustee.*
4(tttt) Form of Subordinated Debenture.*
4(uuuu) Restated Certificate of Incorporation of the Company, dated Exhibit 3(i) to Company's Quarterly
April 28, 1998. Report on Form 10-Q for the quarter ended
March 27, 1998.
4(vvvv) By-Laws of the Company, effective as of April 15, 1997. Exhibit 3(ii) to Company's Quarterly
Report on Form 10-Q for the quarter ended
March 27, 1997.
4(wwww) Form of Certificate of Designations of the Company Exhibit 4(ssss) to Company's Registration
establishing the rights, preferences, privileges, Statement on Form S-3 (File No.
qualifications, restrictions, and limitations relating to 333-44173).
a series of the Preferred Stock.
4(xxxx) Form of certificate representing Preferred Stock. Exhibit 4(d) to Company's Registration
Statement on Form S-3 (File No. 33-55363).
4(yyyy) Form of certificate representing Common Stock. Exhibit 4(uuuu) to Company's Registration
Statement on Form S-3 (File
No. 333-44173).
4(zzzz) Form of Liquid Yield Option Note Indenture. Exhibit 4(vvvv) to Company's Registration
Statement on Form S-3 (File
No. 333-44173).
4(aaaaa) Form of Subsequent Liquid Yield Option Note Indenture. Exhibit 4(wwww) to Company's Registration
Statement on Form S-3 (File
No. 333-44173).
4(bbbbb) Form of Market Index Target-Term Security based upon the Exhibit 4 to Company's Current Report on
Dow Jones Industrial Average due January 14, 2003. Form 8-K dated December 23, 1997.
______________________
* Previously filed.
<PAGE>
Exhibit Incorporation by Reference
Number Description to Filings Indicated
- ------ ----------- ---------------------------
4(ccccc) Form of Supplemental Indenture to the 1983 Senior Exhibit 4(yyyy) to Company's Registration
Indenture, the 1993 Senior Indenture and the Subordinated Statement on Form S-3 (File
Indenture between the Company and The Chase Manhattan No. 333-44173).
Bank, as trustee.
4(ddddd) Form of Amended and Restated Rights Agreement, dated as of Exhibit 4 to Company's Current Report on
December 2, 1997 between the Company and ChaseMellon Form 8-K dated December 2, 1997.
Shareholder Services, L.L.C., as Rights Agent.
4(eeeee) Certificate of Designations of the Company establishing the Exhibit 3(f) to Company's Registration
rights, preferences, privileges, qualifications, Statement on Form S-3 (File No. 33-19975).
restrictions and limitations relating to the Company's
Series A Junior Preferred Stock.
4(fffff) Form of Amendment No. 1 to the Form of Distribution Exhibit 4(bbbbb) to Company's
Agreement. Registration Statement on Form S-3 (File
No. 333-19975).
4(ggggg) Form of EuroFund Market Index Target-Term Security due Exhibit 4 to Company's Current Report on
February 28, 2006. Form 8-K dated September 3, 1998.
4(hhhhh) Form of S&P 500 Market Index Target-Term Security due Exhibit 4 to Company's Current Report on
September 28, 2005. Form 8-K dated September 29, 1998.
4(iiiii) Form of 6-3/8% Note due October 15, 2008. Exhibit 4 to Company's Current Report on
Form 8-K dated October 28, 1998.
4(jjjjj) Form of 6% Note due November 15, 2004. Exhibit (4)(b) to Company's Current
Report on Form 8-K dated November 24,
1998.
4(kkkkk) Form of 6-7/8% Note due November 15, 2018. Exhibit (4)(c) to Company's Current
Report on Form 8-K dated November 24,
1998.
4(lllll) Form of Medium-Term Notes, Series B, 1.5% Principal Exhibit 99(b) to Company's Registration
Protected Note due December 15, 2005 (Linked to the Statement on Form 8-A dated December 3,
performance of the Dow Jones Euro STOXX 50 Index). 1998.
4(mmmmm) Form of Nikkei 225 Market Index Target-Term Security due Exhibit 4 to Company's Current Report on
September 21, 2005. Form 8-K dated December 28, 1998.
4(nnnnn) Form of 6% Note due February 17, 2009. Exhibit 4 to Company's Current Report on
Form 8-K dated February 17, 1999.
4(ooooo) Form of Energy Select Sector SPDR(R) Fund Market Index Exhibit 4 to Company's Current Report on
Tartget-Term Securities due February 21, 2006. Form 8-K dated February 18, 1999.
5(a) Opinion of Brown & Wood LLP.*
5(b) Opinion of Brown & Wood LLP.*
5(c) Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.*
5(d) Opinion of Brown & Wood LLP.*
12(a) Computation of Ratio of Earnings to Fixed Charges of the Exhibit 12 to Company's Annual Report on
Company. Form 10-K for the year ended December 26,
1997 and Exhibit 12 to Company's Quarterly
Report on Form 10-Q for the quarter
ended September 25, 1998.
<PAGE>
Exhibit Incorporation by Reference
Number Description to Filings Indicated
- ------ ----------- ---------------------------
12(b) Computation of Ratio of Earnings to Combined Fixed Charges Exhibit 12 to Company's Annual Report on
and Preferred Stock Dividends of the Company. Form 10-K for the year ended December 26,
1997 and Exhibit 12 to Company's Quarterly
Report on Form 10-Q for the quarter
ended September 25, 1998.
15 Letter re Unaudited Interim Financial Information.*
23(a) Consents of Brown & Wood LLP. (included as part of Exhibit 5).*
23(b) Consent of Deloitte & Touche LLP.**
24 Power of Attorney of the Company.*
25(a) Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of The Chase Manhattan Bank.*
25(b) Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of The Chase Manhattan Bank under the Amended
and Restated Declaration of Trust (contained in Exhibit
4(mmmm)); Trust Preferred Securities Guarantee Agreement
(contained in Exhibit 4(pppp)); Subordinated Indenture
(contained in Exhibit 4(rrrr)); and Affiliate Debenture
Guarantee Agreement (contained in Exhibit 4(ssss)).*
99(a) Opinion of Deloitte & Touche LLP with respect to
certain financial data appearing in the Registration
Statement.**
99(b) Opinion of Deloitte & Touche LLP with respect to certain
summary financial information and selected financial data
incorporated by reference in the Registration Statement.**
</TABLE>
_________________
* Previously filed.
** To be filed.
<PAGE>
ITEM 17. UNDERTAKINGS
Each of the undersigned registrants hereby undertakes:
(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 Securities and Exchange Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent 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.
(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.
(b) That, for purpose of determining any liability under the
Securities Act of 1933, each filing of such registrant's annual report
pursuant to Section 13(a) or 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 therein and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of such registrant pursuant to the provisions referred
to in Item 15 of this registration statement, or otherwise, such registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in
such Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by such
registrant of expenses incurred or paid by a director, officer or
controlling person of such registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, such
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.
(d) To file an application for the purpose of determining the
eligibility of the trustee to act under subsection (a) of Section 310 of
the Trust Indenture Act (the "Act") in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the
Act.
<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 26th day
of February, 1999.
MERRILL LYNCH & CO., INC.
By: /s/ E. Stanley O'Neal
---------------------------------------------------------
E. Stanley O'Neal
(Executive 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 by the following persons in the
capacities indicated on the 26th day of February, 1999.
<TABLE>
<CAPTION>
Signature Title
- --------- -----
<S> <C>
* Chairman of the Board, Chief Executive Officer and Director
----------------------------------
(David H. Komansky)
* President, Chief Operating Officer and Director
----------------------------------
(Herbert M. Allison, Jr.)
/s/ E. Stanley O'Neal Executive Vice President and Chief Financial Officer (Principal Financial
----------------------------------
(E. Stanley O'Neal) Officer)
* Senior Vice President and Controller (Principal Accounting Officer)
----------------------------------
(Michael J. Castellano)
* 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
----------------------------------
(Aulana L. Peters)
* Director
----------------------------------
(John J. Phelan, Jr.)
* Director
----------------------------------
(John L. Steffens)
<PAGE>
Signature Title
- --------- -----
* Director
----------------------------------
(William L. Weiss)
*By: /s/ E. Stanley O'Neal
- --------------------------------------------
E. Stanley O'Neal
(Attorney-in-Fact)
</TABLE>
<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 26th day of February, 1999.
MERRILL LYNCH PREFERRED FUNDING VI, L.P.
BY: MERRILL LYNCH & CO., INC.,
as General Partner
By: /s/ Theresa Lang
---------------------------------------------
Name: Theresa Lang
Title: Senior Vice President and Treasurer
<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 26th day of February, 1999.
MERRILL LYNCH PREFERRED CAPITAL TRUST VI
By: /s/ Theresa Lang
---------------------------------------------
Name: Theresa Lang
Title: Regular Trustee
By: /s/ Stanley Schaefer
---------------------------------------------
Name: Stanley Schaefer
Title: Regular Trustee
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Incorporation by Reference
Number Description to Filings Indicated
- ------ ----------- --------------------------
<S> <C> <C>
1(a) Form of Underwriting Agreement for Debt Securities and Exhibit 1(a) to Company's Registration
Debt, Currency and Index Warrants, including forms of Statement on Form S-3 (No. 333-59997).
Terms Agreement.
1(b) Form of Distribution Agreement, including form of Terms Exhibit 1(b) to Company's Registration
Agreement, relating to Medium-Term Notes, Series B (a Statement on Form S-3 (No. 33-51489).
series of Senior Debt Securities).
1(c) Form of Underwriting Agreement for Preferred Stock and Exhibit 1(c) to Company's Registration
Common Stock Warrants, Preferred Stock, Depositary Statement on Form S-3 (No. 333-59997).
Shares and Common Stock.
1(d) Form of Purchase Agreement relating to the Trust Preferred Exhibit 1.1 to Company's Registration
Securities. Statement on Form S-3 (No. 333-42859).
4(a)(i) Senior Indenture, dated as of April 1, 1983, as amended Exhibit 99(c) to Company's Registration
and restated (the "1983 Senior Indenture"), between the Statement on Form 8-A dated July 20, 1992.
Company and The Chase Manhattan Bank, formerly known
as Chemical Bank (successor by merger to Manufacturers
Hanover Trust Company).
4(a)(ii) Senior Indenture, dated as of October 1, 1993 (the "1993 Exhibit 4 to Company's Current Report on
Senior Indenture"), between the Company and the Chase Form 8-K dated October 7, 1993.
Manhattan Bank (successor by merger to The Chase
Manhattan Bank, N.A.).
4(a)(iii) Form of initial Subsequent Indenture with respect to
Senior Debt Securities.*
4(a)(iv) Form of Subsequent Indenture with respect to Senior Debt
Securities.*
4(b)(i) Supplemental Indenture to the 1983 Senior Indenture, dated Exhibit 99(c) to Company's Registration
March 15, 1990, between the Company and The Chase Statement on Form 8-A dated July 20, 1992.
Manhattan Bank, formerly known as Chemical Bank
(successor by merger to Manufacturers Hanover Trust
Company).
4(b)(ii) Eighth Supplemental Indenture to the 1983 Senior Exhibit 4(b) to Post-Effective Amendment
Indenture, dated March 1, 1996, between the Company and No. 1 to Company's Registration Statement
The Chase Manhattan Bank, formerly known as Chemical on Form S-3 (No. 33-65135).
Bank (successor by merger to Manufacturers Hanover Trust
Company).
4(b)(iii) Ninth Supplemental Indenture to the 1983 Senior Indenture, Exhibit 4(b) to Post-Effective Amendment
dated June 1, 1996, between the Company and The Chase No. 4 to Company's Registration Statement
Manhattan Bank, formerly known as Chemical Bank on Form S-3 (No. 33-65135).
(successor by merger to Manufacturers Hanover Trust
Company).
4(b)(iv) Tenth Supplemental Indenture to the 1983 Senior Indenture, Exhibit 4(b) to Post-Effective Amendment
dated July 1, 1996, between the Company and The Chase No. 5 to Company's Registration Statement
Manhattan Bank, formerly known as Chemical Bank on Form S-3 (No. 33-65135).
(successor by merger to Manufacturers Hanover Trust
Company).
4(b)(v) Supplemental Indenture to the 1983 Senior Indenture, dated Exhibit 4(b)(ii) to Company's Registration
October 25, 1993, between the Company and The Chase Statement on Form S-3 (No. 33-61559).
Manhattan Bank (successor by merger to The Chase
Manhattan Bank, N.A.).
____________________________
* Previously filed.
<PAGE>
Exhibit Incorporation by Reference
Number Description to Filings Indicated
- ------ ----------- --------------------------
4(b)(vi) Twelfth Supplemental Indenture to the 1983 Senior Exhibit 4(a) to Company's Current report
Indenture dated as of September 1, 1998 between the on Form 8-K dated October 21, 1998.
Company and The Chase Manhattan Bank, formerly known
as Chemical Bank (successor by merger to Manufacturers
Hanover Trust Company).
4(b)(vii) First Supplemental Indenture to the 1993 Senior Indenture, Exhibit 4(a) to Company's Current Report
dated as of June 1, 1998, between the Company and The on Form 8-K dated July 2, 1998.
Chase Manhattan Bank (successor by merger to The Chase
Manhattan Bank N.A.).
4(c)(i) Form of Subordinated Indenture between the Company and The Exhibit 4.7 to Company's Registration
Chase Manhattan Bank. Statement on Form S-3 (No. 333-16603).
4(c)(ii) Form of Subsequent Indentures with respect to Subordinated
Debt Securities.*
4(d) Form of 7-3/4% Note due March 1, 1999. Exhibit 4 to Company's Current Report on
Form 8-K dated March 2, 1992.
4(e) Form of 6-3/8% Note due March 30, 1999. Exhibit 4 to Company's Current Report on
Form 8-K dated March 30, 1994.
4(f) Form of Equity Participation Security with Minimum Return Exhibit 4(ooo) to Amendment No. 1 to
Protection due June 30, 1999. Company's Registration Statement on
Form S-3 (No. 33-54218).
4(g) Form of European Portfolio Market Index Target-Term Exhibit 4 to Company's Current Report on
Security due June 30, 1999. Form 8-K dated December 30, 1993.
4(h) Form of 8-1/4% Note due November 15, 1999. Exhibit 4(cc) to Company's Registration
Statement on Form S-3 (No. 33-45327).
4(i) Form of Stock Market Annual Reset Term Note due Exhibit 4 to Company's Current Report on
December 31, 1999 (Series A). Form 8-K dated April 29, 1993.
4(j) Form of Japan Index Equity Participation Security with Exhibit 4 to Company's Current Report on
Minimum Return Protection due January 31, 2000. Form 8-K dated January 27, 1994.
4(k) Form of 8-3/8% Note due February 9, 2000. Exhibit 4 to Company's Current Report on
Form 8-K dated February 9, 1995.
4(l) Form of 6.70% Note due August 1, 2000. Exhibit 4 to Company's Report on Form 8-K
dated August 1, 1995.
4(m) Form of AMEX Oil Index Stock Market Annual Reset Term Note Exhibit 4 to Company's Current Report on
due December 29, 2000. Form 8-K dated March 31, 1994.
4(n) Form of 8% Note due February 1, 2002. Exhibit 4 to Company's Current Report on
Form 8-K dated February 4, 1992.
4(o) Form of Step-Up Note due April 30, 2002. Exhibit 4 to Company's Current Report on
Form 8-K dated April 30, 1992.
4(p) Form of Step-Up Note due May 6, 2002. Exhibit 4 to Company's Current Report on
Form 8-K dated May 6, 1992.
4(q) Form of 7-3/8% Note due August 17, 2002. Exhibit 4 to Company's Current Report on
Form 8-K dated August 17, 1992.
____________________________
* Previously filed.
<PAGE>
Exhibit Incorporation by Reference
Number Description to Filings Indicated
- ------ ----------- --------------------------
4(r) Form of Major 8 European Index Market Index Target-Term Exhibit 4 to Company's Current Report on
Security due August 30, 2002. Form 8-K dated August 1, 1997.
4(s) Form of 6.64% Note due September 19, 2002. Exhibit 4 to Company's Current Report on
Form 8-K dated September 19, 1995.
4(t) Form of 8.30% Note due November 1, 2002. Exhibit 4 to Company's Current Report on
Form 8-K dated May 4, 1992.
4(u) Form of Major 11 European Market Index Target-Term Exhibit 4 to Company's Current Report on
Security due December 6, 2002. Form 8-K dated November 26, 1997.
4(v) Form of 6-7/8% Note due March 1, 2003. Exhibit 4 to Company's Current Report on
Form 8-K dated March 1, 1993.
4(w) Form of 7.05% Note due April 15, 2003. Exhibit 4 to Company's Current Report on
Form 8-K dated April 15, 1993.
4(x) Form of 6.55% Note due August 1, 2004. Exhibit 4 to Company's Current Report on
Form 8-K dated August 1, 1997.
4(y) Form of Russell 2000 Index Market Index Target-Term Exhibit 4 to Company's Current Report on
Security due September 30, 2004. Form 8-K dated September 29, 1997.
4(z) Form of 6-1/4% Note due January 15, 2006. Exhibit 4 to Company's Current Report on
Form 8-K dated January 20, 1994.
4(aa) Form of 6-3/8% Note due September 8, 2006. Exhibit 4 to Company's Current Report on
Form 8-K dated September 8, 1993.
4(bb) Form of 8% Note due June 1, 2007. Exhibit 4 to Company's Current Report on
Form 8-K dated June 1, 1992.
4(cc) Form of S&P 500 Inflation Adjusted Market Index Exhibit 4 to Company's Current Report on
Target-Term Security due September 24, 2007. Form 8-K dated September 24, 1997.
4(dd) Form of 7% Note due April 27, 2008. Exhibit 4 to Company's Current Report on
Form 8-K dated April 27, 1993.
4(ee) Form of 6-1/4% Note due October 15, 2008. Exhibit 4 to Company's Current Report on
Form 8-K dated October 15, 1993.
4(ff) Form of 8.40% Note due November 1, 2019. Exhibit 4(z) to Company's Registration
Statement on Form S-3 (No. 33-35456).
4(gg) Form of Fixed Rate Medium-Term Note (without redemption Exhibit 4(kk) to Company's Registration
provisions). Statement on Form S-3 (No. 33-54218).
4(hh) Form of Fixed Rate Medium-Term Note (with redemption Exhibit 4(ll) to Company's Registration
provisions). Statement on Form S-3 (No. 33-54218).
4(ii) Form of Fixed Rate Medium-Term Note (without redemption Exhibit 4(d) to Company's Registration
provisions, minimum denomination $1,000). Statement on Form S-3 (No. 33-38879).
4(jj) Form of Fixed Rate Medium-Term Note (with redemption Exhibit 4(c) to Company's Registration
provisions, minimum denominations $1,000). Statement on Form S-3 (No. 33-38879).
4(kk) Form of Fixed Rate Medium-Term Note, Series B. Exhibit 4(xiii) to Company's Quarterly
Report on Form 10-Q for the quarter ended
September 24, 1993.
<PAGE>
Exhibit Incorporation by Reference
Number Description to Filings Indicated
- ------ ----------- --------------------------
4(ll) Form of Federal Funds Rate Medium-Term Note. Exhibit 4(oo) to Company's Registration
Statement on Form S-3 (No. 33-54218).
4(mm) Form of Floating Rate Medium-Term Note, Series B. Exhibit 4(xiv) to Company's Quarterly
Report on Form 10-Q for the quarter ended
September 24, 1993.
4(nn) Form of Commercial Paper Rate Medium-Term Note. Exhibit 4(qq) to Company's Registration
Statement on Form S-3 (No. 33-54218).
4(oo) Form of Commercial Paper Index Rate Medium-Term Note. Exhibit 4(i) to Company's Registration
Statement on Form S-3 (File No. 33-38879).
4(pp) Form of Constant Maturity Treasury Rate Indexed Exhibit 4(ccc) to Company's Registration
Medium-Term Note, Series B. Statement on Form S-3 (No. 33-52647).
4(qq) Form of Constant Maturity Treasury Rate Indexed Exhibit 4(xv) to Company's Annual Report on
Medium-Term Note II, Series B. Form 10-K for the year ended December 30,
1994.
4(rr) Form of JPY Yield Curve Flattening Medium-Term Note, Exhibit 4(ddd) to Company's Registration
Series B. Statement on Form S-3 (No. 33-52647).
4(ss) Form of LIBOR Medium-Term Note. Exhibit 4(pp) to Company's Registration
Statement on Form S-3 (No. 33-54218).
4(tt) Form of Multi-Currency Medium-Term Note, Series B. Exhibit 4(fff) to Company's Registration
Statement on Form S-3 (No. 33-52647).
4(uu) Form of Nine Month Renewable Floating Rate Medium-Term Exhibit 4(ix) to Company's Quarterly Report
Note, Series B. on Form 10-Q for the quarter ended
September 24, 1993.
4(vv) Form of Treasury Rate Medium-Term Note. Exhibit 4(aaa) to Company's Registration
Statement on Form S-3 (No. 33-54218).
4(ww) Form of Collared LIBOR Medium-Term Note due February 14, Exhibit 4(ww) to Company's Registration
2000. Statement on Form S-3 (No. 33-54218).
4(xx) Form of Japanese Yen Swap Rate Linked Medium-Term Note, Exhibit 4(mmm) to Company's Registration
Series B. Statement on Form S-3 (No. 33-52647).
4(yy) Form of Step-Up Medium-Term Note due May 20, 2008. Exhibit 4(ggg) to Amendment No. 1 to
Company's Registration Statement on
Form S-3 (No. 33-54218).
4(zz) Form of Warrant Agreement, including form of Warrant Exhibit 4(aa) to Company's Registration
Certificate. Statement on Form S-3 (No. 33-35456).
4(aaa) Form of Currency [Put/Call] Warrant Agreement, including Exhibit 4 to Company's Registration
form of Global Currency Warrant Certificate. Statement on Form S-3 (No. 33-17965).
4(bbb) Form of Index Warrant Agreement, including form of Global Exhibit 4(kkk) to Amendment No. 1 to
Index Warrant Certificate. Company's Registration Statement on
Form S-3 (No. 33-54218).
<PAGE>
Exhibit Incorporation by Reference
Number Description to Filings Indicated
- ------ ----------- --------------------------
4(ccc) Form of Index Warrant Trust Indenture, including form of Exhibit 4(lll) to Amendment No. 1 to
Global Index Warrant Certificate. Company's Registration Statement on
Form S-3 (No. 33-54218).
4(ddd) Form of 6-1/2% Note due April 1, 2001. Exhibit 4 to Company's Current Report on
Form 8-K dated April 1, 1996.
4(eee) Form of 6% Note due January 15, 2001. Exhibit 4 to Company's Current Report on
Form 8-K dated January 17, 1996.
4(fff) Form of 6% Note due March 1, 2001. Exhibit 4 to Company's Current Report on
Form 8-K dated February 29, 1996.
4(ggg) Form of 7% Note due March 15, 2006. Exhibit 4 to Company's Current Report on
Form 8-K dated March 18, 1996.
4(hhh) Form of 7-3/8% Note due May 15, 2006. Exhibit 4 to Company's Current Report on
Form 8-K dated May 15, 1996.
4(iii) Form of 6% STRYPES due June 1, 1999. Exhibit 4(c) to Company's Form 8-K/A dated
June 7, 1996.
4(jjj) Form of 7-1/4% STRYPES due June 15, 1999. Exhibit 4(c) to Post-Effective Amendment
No. 4 to Company's Registration Statement
on Form S-3 (33-65135).
4(kkk) Form of 6-1/4% STRYPES due July 1, 2001. Exhibit 4(c) to Company's Current Report on
Form 8-K dated July 9, 1996.
4(lll) Form of S&P 500 Market Index Target-Term Security due Exhibit 4 to Company's Current Report on
May 10, 2001. Form 8-K dated May 13, 1996.
4(mmm) Form of AMEX Hong Kong 30 Index Equity Participation Note Exhibit 4 to Company's Current Report on
due February 16, 1999. Form 8-K dated February 7, 1996.
4(nnn) Form of Technology Market Index Target-Term Security due Exhibit 4(a) to Company's Current Report on
August 15, 2001. Form 8-K dated August 12, 1996.
4(ooo) Form of Top Ten Yield Market Index Target-Term Security Exhibit 4(b) to Company's Current Report on
due August 15, 2006. Form 8-K dated August 12, 1996.
4(ppp) Form of Healthcare/Biotechnology Portfolio Market Index Exhibit 4 to Company's Current Report on
Target-Term Security due October 31, 2001. Form 8-K dated October 30, 1996.
4(qqq) Form of 7% Note due January 15, 2007. Exhibit 4 to Company's Current Report on
Form 8-K dated January 13, 1997.
4(rrr) Form of S&P 500 Market Index Target-Term Security due Exhibit 4 to Company's Current Report on
September 16, 2002. Form 8-K dated March 14, 1997.
4(sss) Form of Nikkei 225 Market Index Target-Term Security due Exhibit 4 to Company's Current Report on
June 14, 2002. Form 8-K dated June 3, 1997.
4(ttt) Form of 6.56% Note due December 16, 2007. Exhibit 4 to Company's Current Report on
Form 8-K dated December 16, 1997.
4(uuu) Form of 7-7/8% STRYPES due February 1, 2001 (Payable with Exhibit 4(c) to Company's Current Report on
Shares of Common Stock of CIBER, Inc.) Form 8-K dated January 30, 1998.
4(vvv) Form of Floating Rate Note due February 4, 2003. Exhibit 4 to Company's Current Report on
Form 8-K dated February 4, 1998.
4(www) Form of 6% Note due February 12, 2003. Exhibit 4 to Company's Current Report on
Form 8-K dated February 12, 1998.
<PAGE>
Exhibit Incorporation by Reference
Number Description to Filings Indicated
- ------ ----------- --------------------------
4(xxx) Form of Oracle Corporation Indexed Callable Protected Exhibit 4 to Company's Current Report on
Growth Security due March 31, 2003. Form 8-K dated March 19, 1998.
4(yyy) Form of Telebras Indexed Callable Protected Growth Exhibit 4 to Company's Current Report on
Security due May 19, 2005. Form 8-K dated May 19, 1998.
4(zzz) Form of 6-3/4% Note due June 1, 2028. Exhibit 4 to Company's Current Report on
Form 8-K dated June 3, 1998.
4(aaaa) Form of Floating Rate Note due June 24, 2003. Exhibit 4 to Company's Current Report on
Form 8-K dated June 24, 1998.
4(bbbb) Form of S&P 500 Market Index Target-Term Security due Exhibit 4 to Company's Current Report on
July 1, 2005. Form 8-K dated June 26, 1998.
4(cccc) Form of Medium-Term Notes, Series B, 3% Stock Linked Note Exhibit 4 to Company's Current Report on
due June 10, 2000 (Linked to the performance of Honda Form 8-K dated June 10, 1998.
Motor Co., Ltd. Common Stock).
4(dddd) Form of Medium-Term Notes, Series B, 5% Stock Linked Note Exhibit 4(c) to Company's Current Report on
due July 3, 2000 (Linked to the performance of the Form 8-K dated July 2, 1998.
Common Stock of Travelers Group, Inc.).
4(eeee) Form of Medium-Term Notes, Series B, 7% Stock Portfolio
Linked Note due August 18, 2000 (Linked to the
performance of the Common Stock of Intuit Inc., CKS
Group, Inc. and CNET, Inc.).*
4(ffff) Form of Medium-Term Notes, Series B, Single Stock
Linked Note due August 13, 1999 (Linked to the
performance of the Common Stock of Case Corporation).*
4(gggg) Form of 5-3/4% Stock Return Income DEbt Securities due Exhibit 4 to Company's Current Report on
June 1, 2000. Form 8-K dated December 1, 1998.
4(hhhh) Form of 6% Note due July 15, 2003. Exhibit (4)(a) to Company's Current Report
on Form 8-K dated July 15, 1998.
4(iiii) Form of 6-1/2% Note due July 15, 2018. Exhibit (4)(b) to Company's Current Report
on Form 8-K dated July 15, 1998.
4(jjjj) Form of Preferred Stock and Common Stock Warrant Exhibit 4(cccc) to Company's Registration
Agreement, including forms of Preferred Stock and Common Statement on Form S-3 (File No. 333-44173).
Stock Warrant Certificates.
4(kkkk) [Form of Deposit Agreement, including form of Exhibit 4(ffff) to Company's Registration
Depositary Receipt Certificate representing the Statement on Form S-3 (File No. 333-44173).
Depositary Shares.
4(llll) Form of Certificate of Trust of Merrill Lynch Preferred
Capital Trust VI.*
4(mmmm) Form of Amended and Restated Declaration of Trust of
Merrill Lynch Preferred Capital Trust VI, including form
of Trust Preferred Security.*
4(nnnn) Form of Certificate of Limited Partnership of Merrill
Lynch Preferred Funding VI, L.P.*
____________________________
* Previously filed.
<PAGE>
Exhibit Incorporation by Reference
Number Description to Filings Indicated
- ------ ----------- --------------------------
4(oooo) Form of Amended and Restated Limited Partnership Agreement
of Merrill Lynch Preferred Funding VI, L.P.*
4(pppp) Form of Trust Preferred Securities Guarantee
Agreement, between the Company and The Chase Manhattan
Bank, as guarantee trustee, including form of
Partnership Preferred Security.*
4(qqqq) Form of Partnership Preferred Securities Guarantee
Agreement between the Company and The Chase Manhattan
Bank, as guarantee trustee.*
4(rrrr) Form of Subordinated Debenture Indenture between the Exhibit 4 to Registration Statement on
Company and The Chase Manhattan Bank, as guarantee Form S-3 (File No. 333-16603).
trustee.
4(ssss) Form of Affiliate Debenture Guarantee Agreement between
the Company and The Chase Manhattan Bank, as guarantee
trustee.*
4(tttt) Form of Subordinated Debenture.*
4(uuuu) Restated Certificate of Incorporation of the Company, Exhibit 3(i) to Company's Quarterly Report
dated April 28, 1998. on Form 10-Q for the quarter ended
March 27, 1998.
4(vvvv) By-Laws of the Company, effective as of April 15, 1997. Exhibit 3(ii) to Company's Quarterly Report
on Form 10-Q for the quarter ended
March 27, 1997.
4(wwww) Form of Certificate of Designations of the Company Exhibit 4(ssss) to Company's Registration
establishing the rights, preferences, privileges, Statement on Form S-3 (File No.
qualifications, restrictions, and limitations relating 333-44173).
to a series of the Preferred Stock.
4(xxxx) Form of certificate representing Preferred Stock. Exhibit 4(d) to Company's Registration
Statement on Form S-3 (File No. 33-55363).
4(yyyy) Form of certificate representing Common Stock. Exhibit 4(uuuu) to Company's Registration
Statement on Form S-3 (File No. 333-44173).
4(zzzz) Form of Liquid Yield Option Note Indenture. Exhibit 4(vvvv) to Company's Registration
Statement on Form S-3 (File No. 333-44173).
4(aaaaa) Form of Subsequent Liquid Yield Option Note Indenture. Exhibit 4(wwww) to Company's Registration
Statement on Form S-3 (File No. 333-44173).
4(bbbbb) Form of Market Index Target-Term Security based upon the Exhibit 4 to Company's Current Report on
Dow Jones Industrial Average due January 14, 2003. Form 8-K dated December 23, 1997.
4(ccccc) Form of Supplemental Indenture to the 1983 Senior Exhibit 4(yyyy) to Company's Registration
Indenture, the 1993 Senior Indenture and the Statement on Form S-3 (File No. 333-44173).
Subordinated Indenture between the Company and The Chase
Manhattan Bank, as trustee.
4(ddddd) Form of Amended and Restated Rights Agreement, dated as of Exhibit 4 to Company's Current Report on
December 2, 1997 between the Company and ChaseMellon Form 8-K dated December 2, 1997.
Shareholder Services, L.L.C., as Rights Agent.
4(eeeee) Certificate of Designations of the Company establishing Exhibit 3(f) to Company's Registration
the rights, preferences, privileges, qualifications, Statement on Form S-3 (File No. 33-19975).
restrictions and limitations relating to the Company's
Series A Junior Preferred Stock.
____________________________
* Previously filed.
<PAGE>
Exhibit Incorporation by Reference
Number Description to Filings Indicated
- ------ ----------- --------------------------
4(fffff) Form of Amendment No. 1 to the Form of Distribution Exhibit 4(bbbbb) to Company's Registration
Agreement. Statement on Form S-3 (File No. 333-19975).
4(ggggg) Form of EuroFund Market Index Target-Term Security due Exhibit 4 to Company's Current Report on
February 28, 2006. Form 8-K dated September 3, 1998.
4(hhhhh) Form of S&P 500 Market Index Target-Term Security due Exhibit 4 to Company's Current Report on
September 28, 2005. Form 8-K dated September 29, 1998.
4(iiiii) Form of 6-3/8% Note due October 15, 2008. Exhibit 4 to Company's Current Report on
Form 8-K dated October 28, 1998.
4(jjjjj) Form of 6% Note due November 15, 2004. Exhibit (4)(b) to Company's Current Report
on Form 8-K dated November 24, 1998.
4(kkkkk) Form of 6-7/8% Note due November 15, 2018. Exhibit (4)(c) to Company's Current Report
on Form 8-K dated November 24, 1998.
4(lllll) Form of Medium-Term Notes, Series B, 1.5% Principal Exhibit 99(b) to Company's Registration
Protected Note due December 15, 2005 (Linked to the Statement on Form 8-A dated December 3,
performance of the Dow Jones Euro STOXX 50 Index). 1998.
4(mmmmm) Form of Nikkei 225 Market Index Target-Term Security due Exhibit 4 to Company's Current Report on
September 21, 2005. Form 8-K dated December 28, 1998.
4(nnnnn) Form of 6% Note due February 17, 2009. Exhibit 4 to Company's Current Report on
Form 8-K dated February 17, 1999.
4(ooooo) Form of Energy Select Sector SPDR(R) Fund Market Index Exhibit 4 to Company's Current Report on
Target-Term Securities due February 21, 2006. Form 8-K dated February 18, 1999.
5(a) Opinion of Brown & Wood LLP.*
5(b) Opinion of Brown & Wood LLP.*
5(c) Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.*
5(d) Opinion of Brown & Wood LLP.*
12(a) Computation of Ratio of Earnings to Fixed Charges of the Exhibit 12 to Company's Annual Report on
Company. Form 10-K for the year ended December 26,
1997 and Exhibit 12 to Company's
Quarterly Report on Form 10-Q for the
quarter ended September 25, 1998.
12(b) Computation of Ratio of Earnings to Combined Fixed Charges Exhibit 12 to Company's Annual Report on
and Preferred Stock Dividends of the Company. Form 10-K for the year ended December 26,
1997 and Exhibit 12 to Company's
Quarterly Report on Form 10-Q for the
quarter ended September 25, 1998.
15 Letter re Unaudited Interim Financial Information.*
23(a) Consents of Brown & Wood LLP. (included as part of Exhibit
5).*
____________________________
* Previously filed.
** To be filed.
<PAGE>
Exhibit Incorporation by Reference
Number Description to Filings Indicated
- ------ ----------- --------------------------
23(b) Consent of Deloitte & Touche LLP.**
24 Power of Attorney of the Company (included on page II-16).*
25(a) Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of The Chase Manhattan Bank.*
25(b) Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of The Chase Manhattan Bank under
the Amended and Restated Declaration of Trust (contained
in Exhibit 4(mmmm)); Trust Preferred Securities
Guarantee Agreement (contained in Exhibit 4(pppp));
Subordinated Indenture (contained in Exhibit 4(vvvv));
and Affiliate Debenture Guarantee Agreement (contained
in Exhibit 4(ssss)).*
99(a) [Opinion of Deloitte & Touche LLP with respect to
certain financial data appearing in the Registration
Statement.**
99(b) [Opinion of Deloitte & Touche LLP with respect to
certain summary financial information and selected
financial data incorporated by reference in the
Registration Statement.**
</TABLE>
____________________________
* Previously filed.
** To be filed.
