<PAGE>
RULE NO. 424(b)(5)
REGISTRATION NO. 333-38792
PROSPECTUS SUPPLEMENT
(To prospectus dated June 15, 2000)
$17,939,515,000
[LOGO]
Merrill Lynch & Co., Inc.
Medium-Term Notes, Series B
Due Nine Months or More from Date of Issue
---------------
The notes:
. We will offer notes from time to time and specify the terms and
conditions of each issue of notes in a pricing supplement.
. 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.
. The notes will be senior unsecured debt securities of ML&Co.
. The notes will have stated maturities of nine months or more from the
date they are originally issued.
. 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.
. We will pay amounts due on the notes in U.S. dollars or any other
consideration described in the applicable pricing supplement.
Investing in the notes involves risks that are described in the "Risk
Factors" section beginning on page S-3 of this prospectus supplement.
---------------
<TABLE>
<CAPTION>
Per Note Total
-------- -----
<S> <C> <C>
Public offering price... 100% $17,939,515,000
Agent's discounts and
commissions............ 0.05%-.60% $8,969,757.50-$107,637,090
Proceeds, before
expenses, to ML&Co. ... 99.95%-99.40% $17,930,545,242.50-$17,831,877,910
</TABLE>
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.
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 June 16, 2000.
<PAGE>
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
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<S> <C>
Risk Factors............................................................... S-3
Description of the Notes................................................... S-4
United States Federal Income Taxation...................................... S-24
Plan of Distribution....................................................... S-31
Validity of the Notes...................................................... S-32
</TABLE>
Prospectus
<TABLE>
<CAPTION>
Page
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<S> <C>
Merrill Lynch & Co., Inc. ............................................... 2
Use of Proceeds.......................................................... 2
Ratio of Earnings to Fixed Charges and Ratios of Earnings to Combined
Fixed Charges and Preferred Stock Dividends............................. 3
The Securities........................................................... 3
Description of Debt Securities........................................... 4
Description of Debt Warrants............................................. 10
Description of Currency Warrants......................................... 12
Description of Index Warrants............................................ 14
Description of Preferred Stock........................................... 19
Description of Depositary Shares......................................... 24
Description of Preferred Stock Warrants.................................. 28
Description of Common Stock.............................................. 30
Description of Common Stock Warrants..................................... 34
Plan of Distribution..................................................... 36
Where You Can Find More Information...................................... 37
Incorporation of Information We File With the SEC........................ 37
Experts.................................................................. 38
</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.
S-2
<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 their significant
components and interrelationships.
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 we may choose to redeem your
notes at times when prevailing interest rates are relatively low. In addition,
if your notes are subject to mandatory redemption, we may be required to redeem
your notes at times when prevailing interest rates are also relatively low. As
a result, 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 Not Be Any Trading Market for Your Notes; Many Factors Affect the
Trading Market and Value of Your Notes
We cannot assure you a trading market for your notes will ever develop or
be maintained. In addition to our own creditworthiness, many other factors may
affect the trading market value of, and trading market for, your notes. These
factors include:
. the complexity and volatility of the index or formula
applicable to your notes,
. the method of calculating the principal, premium and interest
in respect of your notes,
. the time remaining to the maturity of your notes,
. the outstanding amount of your notes,
. any redemption features of your notes,
. the amount of other securities linked to the index or formula
applicable to your notes, and
. the level, direction and volatility of market interest rates
generally.
In addition, notes that are designed for specific investment objectives
or strategies often experience a more limited trading market and more price
volatility. There may be a limited number of buyers when you decide to sell
your notes. This may affect the price you receive for your notes or your
ability to sell your notes at all. You should not purchase notes unless you
understand and know you can bear all of the investment risks related to your
notes.
S-3
<PAGE>
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.
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. 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 the material 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.
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.
The following description of notes will apply unless otherwise specified
in an 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 a bankruptcy court may recognize the claims of ML&Co. itself as a
creditor of that subsidiary. 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 $17,939,515,000
aggregate principal amount of notes offered by this prospectus supplement. As
of March 31, 2000, ML&Co. had approximately $19.9 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.
S-4
<PAGE>
The notes will be offered on a continuing basis and will mature on a day
nine months or more from the date of their issue (the "stated maturity date"),
as selected by the purchaser and agreed to by ML&Co., 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., notice of 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"). Interest-bearing notes will bear
interest at either fixed or floating rates as specified in the applicable
pricing supplement. Some notes may not bear interest. In addition, notes may be
issued at significant discounts from their principal amount payable at
Maturity.
Unless otherwise specified in the applicable pricing supplement, the
notes will be denominated in United States dollars and ML&Co. will make
payments of principal of, and premium, if any, and interest on, the notes in
United States dollars.
Interest rates offered by ML&CO. with respect to the notes may differ
depending upon, among other factors, the aggregate principal amount of notes
purchased in any single transaction. ML&Co. may offer notes with similar
variable terms but different interest rates concurrently at any time. ML&Co.
also may concurrently offer notes having different variable terms to different
investors. 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 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.
Notes in book-entry form may be transferred or exchanged only through a
participating member of The Depository Trust Company, also known as DTC, or any
other depository as is identified in an applicable pricing supplement. See "--
Book-Entry Notes". Registration of transfer of notes in certificated form will
be made at the corporate trust office of the trustee. There will be no service
charge 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 "--Book-Entry Notes". 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 that 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 date, 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, due at 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 of the notes in certificated form will be made to the person to whom
payment of the principal thereof 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
S-5
<PAGE>
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 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 applicable 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 Banking Day. "London Banking Day" means a day on which commercial banks
are open for business, including dealings in the LIBOR Currency, as defined
below, in London.
"Principal Financial Center" means:
(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,
Italian lire, South African rand and Swiss francs, the "Principal
Financial Center" will be The City of New York, Sydney and
Melbourne, Toronto, Frankfurt, Amsterdam, Milan, 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,
Australian dollars, Canadian dollars, Deutsche marks, Dutch
guilders, Italian lire, Portuguese escudos, South African rand
and Swiss francs, the "Principal Financial Center" will be The
City of New York, Sydney, Toronto, Frankfurt, Amsterdam, Milan,
London, Johannesburg and Zurich, respectively.
Redemption at the Option of ML&Co.
The notes will not be subject to any sinking fund. ML&Co. may redeem the
notes at its option before their stated maturity date only if an initial
redemption date is specified in the applicable pricing supplement. If so
indicated in the applicable pricing supplement, ML&Co. may redeem the notes at
its option 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, ML&Co. may redeem the related note at any time in
whole or from time to time in part at its option 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. ML&Co. will redeem the notes 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, ML&Co. will repay
the notes in whole or in part at the option of the holders of the notes on any
optional repayment date specified in the applicable pricing
S-6
<PAGE>
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
date. 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, the particular note being
repaid:
. in the case of a note in certificated form, the form entitled
"Option to Elect Repayment" duly completed, or
. in the case of a note in book-entry form, instructions to that
effect from the applicable beneficial owner thereof 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 "--Book-Entry Notes".
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 interest-bearing note will bear interest from the date of issue at
the rate per annum, in the case of a fixed rate note, or pursuant to the
interest rate formula, in the case of a floating rate note, in each case as
stated 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 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.
S-7
<PAGE>
Fixed Rate Notes
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 applicable 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.
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.
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:
. the CD Rate,
. the CMT Rate,
. the Commercial Paper Rate,
. the Eleventh District Cost of Funds Rate,
. the Federal Funds Rate,
. LIBOR,
. the Prime Rate,
. the Treasury Rate, or
. 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.
Each applicable pricing supplement will specify certain terms of the
floating rate note being delivered, including:
. whether the floating rate note is
. a "Regular Floating Rate Note",
. a "Inverse Floating Rate Note" or
. a "Floating Rate/Fixed Rate Note",
. the Interest Rate Basis or Bases,
. the Initial Interest Rate,
. the Interest Reset Dates,
. the interest payment dates,
S-8
<PAGE>
. 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"),
. the Maximum Interest Rate and Minimum Interest Rate, if any,
. the number of basis points to be added to or subtracted from the
related Interest Rate Basis or Bases (the "Spread"),
. 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"), and
. if one or more of the specified Interest Rate Bases is LIBOR, the
LIBOR Currency, the Index Maturity and the Designated LIBOR Page.
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 will bear
interest at the rate determined by reference to the applicable Interest Rate
Basis or Bases:
. plus or minus the applicable Spread, if any, and/or
. multiplied by the applicable Spread Multiplier, if any.
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:
. plus or minus the applicable Spread, if any, and/or
. multiplied by the applicable Spread Multiplier, if any.
Commencing on the first Interest Reset Date, the rate at which interest on the
Floating Rate/Fixed 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, and
. 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" 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:
. plus or minus the applicable Spread, if any, and/or
. multiplied by the applicable Spread Multiplier, if any;
provided, however, that 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 Inverse Floating Rate
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<PAGE>
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.
The interest rate derived from an Interest Rate Basis will be determined
in accordance with the applicable provisions below. The interest rate in effect
on each day will be based on:
. 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
. if the day is not an Interest Reset Date, the interest rate
determined as of the Interest Determination Date immediately
preceding the most recent 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"). The Interest Reset Date will be, in the
case of floating rate notes which reset:
. daily--each Business Day;
. 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 under "--Interest Determination
Dates";
. 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;
. quarterly--the third Wednesday of March, June, September and December
of each year;
. semiannually--the third Wednesday of the two months specified in the
applicable pricing supplement; and
. 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 applicable 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:
. a maximum numerical limitation, or ceiling, on the rate at which
interest may accrue during any interest period (a "Maximum Interest
Rate"), and
. 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
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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. The interest payment dates with respect
to floating rate notes will be, in the case of floating rate notes which reset:
. 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;
. quarterly--the third Wednesday of March, June, September and December
of each year;
. semiannually--the third Wednesday of the two months of each year
specified in the applicable pricing supplement;
. annually--the third Wednesday of the month of each year specified in
the applicable pricing supplement; and
. 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 any 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 principal 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.
. 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.
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. 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.
. 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".
. The Interest Determination Date with respect to the Federal Funds
Rate and the Prime Rate will be the Business Day immediately
preceding the related Interest Reset Date.
. 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 the related Interest Reset Date.
. 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 the related 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 Banking Day preceding the related Interest Reset Date.
. 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
Interest Reset Date, the related Interest Determination Date will be
the preceding Friday.
. 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 related 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. 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:
. 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
. the Business Day preceding the applicable Interest Payment Date or
Maturity, as the case may be.
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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
as published in H.15(519), as defined below, under the heading
"CDs (secondary market)", or
(2) if the rate referred to in clause (1) is not 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, as defined below, 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 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, which may include the agent or
its affiliates, 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 and in any applicable pricing supplement.
"CMT Rate" means:
(1) if CMT Telerate Page 7051 is specified in the applicable pricing
supplement:
(a) the percentage equal to the yield for United States Treasury
securities at "constant maturity" having the Index Maturity
specified in the applicable pricing supplement as published
in H.15(519) under the caption "Treasury Constant
Maturities", as the yield is displayed on Bridge Telerate,
Inc., or any successor service, on page 7051, or any other
page as may replace page 7051 on that service ("Telerate
Page 7051"), for the applicable Interest Determination Date,
or
(b) if the rate referred to in clause 1(a) does not appear on
Telerate Page 7051, the percentage equal to the yield for
United States Treasury securities at "constant maturity"
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having the Index Maturity specified in the applicable pricing
supplement and for the applicable Interest Determination Date
as published in H.15(519) under the caption "Treasury Constant
Maturities", or
(c) if the rate referred to in clause 1(b) does not appear in
H.15(519), the rate on the applicable Interest Determination
Date for the period of the Index Maturity specified in the
applicable pricing supplement as may then be published by
either the Federal Reserve System Board of Governors or the
United States Department of the Treasury that the calculation
agent determines to be comparable to the rate which would
otherwise have been published in H.15(519), or
(d) if the rate referred to in clause 1(c) is not published, 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 bid prices at
approximately 3:30 P.M., New York City time, on the applicable
Interest Determination Date of 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 from
five Reference Dealers selected by the calculation agent and
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 United States
Treasury securities with an original maturity equal to the
Index Maturity specified in the applicable pricing supplement,
a remaining term to maturity no more than 1 year shorter than
the Index Maturity specified in the applicable pricing
supplement and in a principal amount that is representative
for a single transaction in the securities in the market at
that time, or
(e) if fewer than five but more than two of the prices referred to
in clause 1(d) are provided as requested, the rate on the
applicable Interest Determination Date calculated by the
calculation agent based on the arithmetic mean of the bid
prices obtained and neither the highest nor the lowest of the
quotations shall be eliminated, or
(f) if fewer than three prices referred to in clause 1(d) are
provided as requested, 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 bid prices as of approximately 3:30 P.M., New
York City time, on the applicable Interest Determination Date
of three Reference Dealers selected by the calculation agent
from five Reference Dealers selected by the calculation agent
and 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 United States
Treasury securities with an original maturity greater than the
Index Maturity specified in the applicable pricing supplement,
a remaining term to maturity closest to the Index Maturity
specified in the applicable pricing supplement and in a
principal amount that is representative for a single
transaction in the securities in the market at that time, or
(g) if fewer than five but more than two prices referred to in
clause 1(f) are provided as requested, the rate on the
applicable Interest Determination Date calculated by the
calculation agent based on the arithmetic mean of the bid
prices obtained and neither the highest nor the lowest of the
quotations will be eliminated, or
(h) if fewer than three prices referred to in clause 1(f) are
provided as requested, the CMT Rate in effect on the
applicable Interest Determination Date.
(2) if CMT Telerate Page 7052 is specified in the applicable pricing
supplement:
(a) the percentage equal to the one-week or one-month, as
specified in the applicable pricing supplement, average yield
for United States Treasury securities at "constant maturity"
having the Index Maturity specified in the applicable pricing
supplement as published in
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H.15(519) opposite the caption "Treasury Constant Maturities",
as the yield is displayed on Bridge Telerate, Inc., or any
successor service, on page 7052, or any other page as may
replace page 7052 on that service ("Telerate Page 7052"), for
the week or month, as applicable, ended immediately preceding
the week or month, as applicable, in which the related Interest
Determination Date falls, or
(b) if the rate referred to in clause 2(a) does not appear on
Telerate Page 7052, the percentage equal to the one-week or
one-month, as specified in the applicable CMT Rate Note and
the applicable pricing supplement, average yield for United
States Treasury securities at "constant maturity" having the
Index Maturity specified in the applicable pricing supplement
and for the week or month, as applicable, preceding the
applicable Interest Determination Date as published in
H.15(519) opposite the caption "Treasury Constant Maturities,"
or
(c) if the rate referred to in clause 2(b) does not appear in
H.15(519), the one-week or one-month, as specified, average
yield for United States Treasury securities at "constant
maturity" having the Index Maturity specified in the
applicable pricing supplement as otherwise announced by the
Federal Reserve Bank of New York for the week or month, as
applicable, ended immediately preceding the week or month, as
applicable, in which the related Interest Determination Date
falls, or
(d) if the Federal Reserve Bank of New York does not publish the
rate referred to in clause 2(c), 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 bid prices at approximately 3:30 P.M.,
New York City time, on the applicable Interest Determination
Date of three Reference Dealers selected by the calculation
agent from five Reference Dealers selected by the calculation
agent and 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 United States
Treasury securities with an original maturity equal to the
Index Maturity specified in the applicable pricing supplement,
a remaining term to maturity no more than 1 year shorter than
the Index Maturity specified in the applicable pricing
supplement and in a principal amount that is representative
for a single transaction in the securities in the market at
that time, or
(e) if fewer than five but more than two of the prices referred to
in clause 2(d) are provided as requested, the rate on the
applicable Interest Determination Date calculated by the
calculation agent based on the arithmetic mean of the bid
prices obtained and neither the highest nor the lowest of the
questions shall be eliminated, or
(f) if fewer than three prices referred to in clause 2(d) are
provided as requested, 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 bid prices as of approximately 3:30 P.M., New
York City time, on the applicable Interest Determination Date
of three Reference Dealers selected by the calculation agent
from five Reference Dealers selected by the calculation agent
and 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 United States
Treasury securities with an original maturity greater than the
Index Maturity specified in the applicable CMT Rate Note and
the applicable pricing supplement, a remaining term to
maturity closest to the Index Maturity specified in the
applicable pricing supplement and in a principal amount that
is representative for a single transaction the securities in
the market at the time, or
(g) if fewer than five but more than two prices referred to in
clause 2(f) are provided as requested, the rate will be
calculated by the calculation agent based on the arithmetic
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mean of the bid prices obtained and neither the highest or the
lowest of the quotations will be eliminated, or
(h) if fewer than three prices referred to in clause 2(f) are
provided as requested, the CMT Rate in effect on the
applicable Interest Determination Date.
If two United States Treasury securities with an original maturity
greater than the Index Maturity specified in the applicable CMT Rate Note and
the applicable pricing supplement have remaining terms to maturity equally
close to the Index Maturity specified in the applicable CMT Rate Note and the
applicable pricing supplement, the quotes for the United States Treasury
security with the shorter original remaining term to maturity will be used.
Commercial Paper Rate. "Commercial Paper Rate" means:
(1) the Money Market Yield as defined below on the applicable Interest
Determination Date of the rate for commercial paper having the
Index Maturity specified in the applicable pricing supplement as
published in H.15(519) under the caption "Commercial Paper-
Nonfinancial", or
(2) if the rate referred to in clause (1) is not published by 3:00
P.M., New York City time, on the related calculation date, 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 as 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 referred to in clause (2) is not published by 3:00
P.M., New York City time, on the related calculation date, the
Money Market Yield of the arithmetic mean of the offered rates,
calculated by the calculation agent, at approximately 11:00 A.M.,
New York City time, on the applicable Interest Determination Date
of three leading dealers of United States 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 Commercial Paper Rate in effect on the
applicable Interest Determination Date.
"Money Market Yield" means a yield calculated in accordance with the
following formula and expressed as a percentage:
D X 360
Money Market Yield = ----------- 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" 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 page 7058 on that service
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("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 Eleventh District Cost of Funds
Rate in effect on the applicable Interest Determination Date.
Federal Funds Rate. "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 specified 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 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 as
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 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 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 Federal Funds Rate in effect on
the applicable Interest Determination Date.
LIBOR. "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
related Interest Reset Date, that appears on the Designated LIBOR
Page, as defined below, 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 related Interest Reset 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
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(3) with respect to an 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), respectively, 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 related Interest Reset 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 (3) are
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, 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 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 selected by the calculation agent are not quoting as
mentioned in clause (4), LIBOR 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:
. 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
. 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" 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 published by 3:00
P.M., New York City time, on the related calculation date, the
rate on the applicable Interest Determination Date published as
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 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 each bank that
appears on the Reuters Screen US
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PRIME 1 Page, as defined below, 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 referred to in clause (3) appear on
Reuters Screen US Prime 1 Page 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 Prime 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 that 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 as published 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 referred to in clause (1) is not published by 3:00
P.M., New York City time, on the related calculation date, the
Bond Equivalent Yield, as defined below, 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 referred to in clause (2) is not 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) if 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 the applicable Treasury Bills
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 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 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
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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 Treasury 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 N X 100
-----------
360-(D X M)
where "D" refers to the applicable per annum rate for Treasury Bills quoted on
a bank discount basis and expressed as a decimal, "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 specified 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 specified in the applicable pricing supplement. A
table setting forth repayment information in respect of each Amortizing Note
will be specified in 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,
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(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 specified
in the applicable pricing supplement.
Extendible Maturity Notes
ML&Co. may from time to time offer notes ("Extendible Maturity Notes")
with the option to extend the maturity of the notes to one or more dates
indicated in the notes and the applicable pricing supplement. The terms of and
any additional considerations relating to any Extendible Maturity Notes will
be specified 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 $400,000,000, one Global Note will be
issued with respect to each $400,000,000 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
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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.
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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.
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.
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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 in this prospectus, 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.
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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
. 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
. 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.
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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
. its issue price does not exceed the total noncontingent
principal payments due under the Variable Note by more than a
specified de minimis amount and
. it provides for stated interest, paid or compounded at least
annually, at current values of:
. one or more qualified floating rates,
. a single fixed rate and one or more qualified floating
rates,
. a single objective rate, or
. 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
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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
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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;
. may be redeemable at the option of ML&Co. prior to their stated
maturity (a "call option") and/or
. 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:
. the amount of such payment or realized gain or
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. 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
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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, IRS Form W-8 BEN 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, IRS Form W-8 BEN 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. To claim an exemption from United States
withholding for interest or proceeds from sale paid after December 31, 2000, a
non-U.S. Holder may no longer use the IRS Form W-8 to certify its status as a
non-U.S. Holder.
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,
2000, subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations. After December
31, 2000, interest accrued under the OID Regulations will not be subject to
withholding upon sale or exchange (other than a redemption) of a note unless
the Withholding Agent knows or has reason to know that such instrument was sold
with the principal purpose of avoiding tax.
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:
. the broker determines that the seller is a corporation or other
exempt recipient or
. 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).
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Such a sale must also be reported by the broker to the IRS, unless
either:
. the broker determines that the seller is an exempt recipient or
. the seller certifies its non-U.S. status (and certain other
conditions are met).
After December 31, 2000, interest accrued under the OID Regulations will not be
subject to withholding upon sale or exchange (other than a redemption) of a
note unless the Withholding Agent knows or has reason to know that such
instrument was sold with the principal purpose of avoiding tax. Certification
of the registered owner's non-U.S. status would be made normally on an IRS Form
W-8, IRS Form W-8 BEN under penalties of perjury, although in certain cases it
may be possible to submit other documentary evidence. After December 31, 2000,
a registered owner may no longer use an IRS Form W-8 to certify to its non-U.S.
status. 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
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<PAGE>
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.
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<PAGE>
PROSPECTUS
--------------
[LOGO]
Merrill Lynch & Co., Inc.
Debt Securities, Warrants, Preferred Stock,
Depositary Shares and Common Stock
We may offer from time to time in one or more series, together or
separately:
. debt securities;
. warrants;
. common stock;
. preferred stock; and
. depositary shares.
When we offer securities, we will provide you with a prospectus supplement
or term sheet describing the terms of the specific issue of securities
including the offering price of the securities.
----------------
You should read this prospectus and the prospectus supplement or the term
sheet relating to the specific issue of securities carefully before you invest.
----------------
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 June 15, 2000.
<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 Capital Markets Bank Ltd., Merrill
Lynch Asset Management LP and Mercury Asset Management Ltd, provides
investment, financing, advisory, insurance, and related products on a global
basis, including:
. securities brokerage, trading and underwriting;
. investment banking, strategic services, including mergers and
acquisitions and other corporate finance advisory activities;
. asset management;
. brokerage and related activities in swaps, options, forwards, futures
and other derivatives;
. securities clearance services;
. equity, debt and economic research;
. banking, trust and lending services, including mortgage lending and
related services;
. insurance sales and underwriting services; and
. investment advisory and related record keeping 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 4 World Financial Center, New
York, New York 10080; 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, "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.
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, lengthening
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.
2
<PAGE>
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
for the fiscal years 1995 through 1997 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:
<TABLE>
<CAPTION>
Year Ended Last Friday
in December For the Three
------------------------ Months Ended
1995 1996 1997 1998 1999 March 31, 2000
---- ---- ---- ---- ---- --------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges(a)........................... 1.2 1.2 1.2 1.1 1.3 1.4
Ratio of earnings to combined fixed
charges and preferred stock
dividends(a)......................... 1.2 1.2 1.2 1.1 1.3 1.4
</TABLE>
--------
(a) The effect of combining Midland Walwyn did not change the ratios
reported for the fiscal years 1995 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. "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.
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:
. common stock;
. preferred stock which may be:
. convertible into preferred stock or common stock;
. exchangeable for debt securities, preferred stock or depositary
shares representing preferred stock.
. depositary shares representing preferred stock;
. debt securities, comprising senior debt securities and subordinated debt
securities, each of which may be convertible into common stock or
preferred stock;
. warrants to purchase debt securities;
. warrants to purchase shares of common stock;
. warrants to purchase shares of preferred stock;
. 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:
. one or more equity or debt securities;
. any statistical measure of economic or financial performance such as
a currency or a consumer price or mortgage index; or
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<PAGE>
. the price or value of any commodity or any other item or index; and
. 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.
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.
ML&Co. will offer up to $22,204,215,000 aggregate public offering price of
the securities or its equivalent in 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 through the date of this prospectus
and as it may be further amended in the future, 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 through the date of this
prospectus and as it may be further amended in the future, 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. 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 the material 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:
. the aggregate principal amount and whether there is any limit upon the
aggregate principal amount that ML&Co. may subsequently issue;
. the stated maturity date;
4
<PAGE>
. 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;
. any fixed or variable interest rate or rates per annum and any
contingencies relating to changes in any applicable interest rate;
. any interest payment dates;
. any provisions for redemption, the redemption price and any remarketing
arrangements;
. any sinking fund requirements;
. whether the debt securities are denominated or payable in United States
dollars or a foreign currency or units of two or more foreign
currencies;
. the form in which ML&Co. will issue the debt securities, 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;
. 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;
. whether the debt securities are to be issued in global form;
. the title and series designation;
. the minimum denominations;
. 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 be
obligations of ML&Co., or a combination of cash, other securities and/or
property ("Maturity Consideration");
. any additions or deletions in the terms of the debt securities with
respect to the Events of Default set forth in the respective indentures;
. the terms, if any, upon which the debt securities are 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;
. whether, and the terms and conditions relating to when, holders may
transfer the debt securities separately from warrants if the debt
securities and warrants are issued together; and
. any other terms of the debt securities which are not inconsistent with
the provisions of the applicable indenture.
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. ML&Co. may deliver this prospectus before or concurrently with
the delivery of a terms sheet. ML&Co. may issue debt securities 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, if they apply.
5
<PAGE>
ML&Co. will issue each series of debt securities, 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. There will be no service charge 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 imposed in connection with any registration of transfer or
exchange. Each indenture provides that ML&Co. may issue debt securities in
global form. If any series of debt securities is issued in global form, the
applicable prospectus supplement will describe the circumstances, if any, under
which beneficial owners of interests 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.
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 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. 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 a
bankruptcy court may recognize the claims of ML&Co. itself as a creditor of the
subsidiary. 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, at its option, ML&Co. may pay
any interest and any Additional Amounts by check mailed to the holders of
registered debt securities at their registered addresses.
Holders may present debt securities for exchange, and registered debt
securities for registration of 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. Holders may transfer debt
securities in bearer form and the coupons, if any, pertaining to the debt
securities by delivery. There will be no service charge for any registration of
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, ML&Co.
will issue the debt securities 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:
. 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:
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. pay or deliver the principal of, and any premium, Additional
Amounts, Maturity Consideration or interest on, the debt securities;
and
. perform and observe all of ML&Co.'s other obligations under the
indentures, and
. 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:
. 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;
. 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;
. 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;
. impair the right to institute suit for the enforcement of any delivery
or payment on any debt security;
. 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
. 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:
. default in the payment of any interest or Additional Amounts when due,
and continuing for 30 days;
. default in the payment of any principal or premium, when due;
. default in the delivery or payment of the Maturity Consideration when
due;
. default in the deposit of any sinking fund payment, when due;
. 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;
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. specified events in bankruptcy, insolvency or reorganization of ML&Co.;
and
. 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, 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.
The holders of a majority in principal amount or aggregate issue price of
the outstanding debt securities of any series may waive an Event of Default
with respect to that series, except a default:
. in the payment of any amounts due and payable or deliverable under the
debt securities of that series; or
. 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.
Unless otherwise stated in the applicable prospectus supplement, 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 majority-owned 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 majority-owned subsidiary, other than a majority-owned 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.
"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.
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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:
. merge or consolidate, unless the surviving company is a Controlled
Subsidiary, or
. 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. ML&Co. may not make any payment
on subordinated debt securities 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.
As of March 31, 2000, a total of approximately $85.0 billion of ML&Co.'s
indebtedness was 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:
. the issuance of shares of ML&Co. common stock as a dividend;
. subdivisions and combinations of ML&Co. common stock;
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. 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
. the distribution to all holders of ML&Co. common stock of:
. shares of ML&Co. capital stock other than common stock;
. 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
. 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. ML&Co. will not issue any fractional shares of
ML&Co. common stock 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.
ML&Co. will determine the adjustment provisions for convertible debt
securities at the time of issuance of each series of convertible debt
securities. These adjustment provisions will be described 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 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, 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 the material
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:
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. the designation and aggregate principal amount of the debt securities
that the holder of a Debt Warrant may purchase upon exercise of the Debt
Warrant and the price at which the purchase may be made;
. the designation and terms of any debt securities issued with or
purchasable upon exercise of the Debt Warrants, including whether the
debt securities will be senior debt securities or subordinated debt
securities and under which indenture the debt securities will be issued;
. the procedures and conditions relating to the exercise of the Debt
Warrants;
. the number of Debt Warrants issued with each debt security;
. any date on and after which the Debt Warrants and any related debt
securities are separately transferable;
. the date on which the right to exercise the Debt Warrants begins and
expires;
. 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;
. any circumstances which will cause the Debt Warrants to be deemed to be
automatically exercised;
. the identity of the debt warrant agent; and
. any other terms of the Debt Warrants which are not inconsistent with the
provisions of the debt warrant agreement.
Holders may exchange debt warrant certificates for new debt warrant
certificates of different denominations. Holders may exercise Debt Warrants 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.
Ranking
The Debt 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 debt 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 a bankruptcy
court may recognize claims of ML&Co. itself as a creditor of the subsidiary. 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 Debt Warrants will be issued in the form of global debt warrant
certificates, registered in the name of a depositary or its nominee.
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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
the manner set forth in, the applicable prospectus supplement. Holders may
exercise Debt Warrants 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.
Holders may exercise Debt Warrants in the manner described in the applicable
prospectus supplement. Upon receipt of payment and properly completed and duly
executed debt warrant certificate 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. 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:
. 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
. 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.
ML&Co. may issue the Currency Warrants under a currency put warrant
agreement or a currency call warrant agreement, as applicable, 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, 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 the material 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.
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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:
. whether the Currency Warrants are Currency Put Warrants, Currency Call
Warrants, or both;
. the formula for determining the cash settlement value of each Currency
Warrant;
. the procedures and conditions relating to the exercise of the Currency
Warrants;
. any circumstances other than those described below under "--Exercise of
Currency Warrants" and "--Listing"that will cause the Currency Warrants
to be deemed to be automatically exercised;
. any minimum number of Currency Warrants which must be exercised at any
one time, other than upon automatic exercise;
. the date on which the right to exercise the Currency Warrants begins and
expires;
. the identity of the currency warrant agent; and
. 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, if they
apply.
Ranking
The Currency 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 currency 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 a bankruptcy
court may recognize claims of ML&Co. itself as a creditor of the subsidiary. 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 Currency Warrants will be issued in the form of global currency warrant
certificates, registered in the name of a depositary or its nominee. In that
case, 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.
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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 business day preceding the expiration date,
the Currency Warrants will be deemed automatically exercised.
Listing
ML&Co. will apply to list each issue of Currency Warrants on a national
securities exchange. 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.
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:
. an equity or debt security, or a portfolio or basket of indices or
securities, which may include the price or yield of securities;
. any statistical measure of economic or financial performance, which may
include any currency or consumer price, or mortgage index; or
. 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.
Method of Issuance
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 index 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.
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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 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 the material 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.
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. 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.
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:
. whether the Index Warrants to be issued will be Index Put Warrants,
Index Call Warrants or both;
. the aggregate number and initial public offering price or purchase
price;
. the applicable index;
. whether the Index Warrants will be deemed automatically 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 expires;
. 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;
. any minimum number of the Index Warrants exercisable at any one time;
. 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;
. 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;
. any provisions for the automatic exercise of the Index Warrants other
than at the expiration date;
. any provisions permitting ML&Co. to cancel the Index Warrants upon the
occurrence of certain events;
. any additional circumstances that would constitute an Event of Default
under the Index Warrants;
. the method of determining:
. the payment or delivery, if any, to be made in connection with the
exercise or deemed exercise of the Index Warrants (the "Settlement
Value");
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. the minimum payment or delivery, if any, to be made upon expiration
of the Index Warrants (the "Minimum Expiration Value");
. the payment or delivery to be made upon the exercise of any right
which ML&Co. may have to cancel the Index Warrants; and
. the value of the index;
. 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;
. 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;
. any time or times at which ML&Co. will make payment or delivery on the
Index Warrants following exercise or automatic exercise;
. any provisions for issuing the Index Warrants in other than book-entry
form;
. if the Index Warrants are not issued in book-entry form, any place or
places at which ML&Co. will make payment or delivery on cancellation and
any Minimum Expiration Value of the Index Warrants;
. any circumstances that will cause the Index Warrants to be deemed to be
automatically exercised;
. any material risk factors relating to the Index Warrants;
. the identity of the Index Warrant Agent; and
. 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, if they apply.
Ranking
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 a bankruptcy
court may recognize claims of ML&Co. itself as a creditor of the subsidiary. 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.
Payment and Delivery
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;
. upon cancellation of the Index Warrants by ML&Co. which may occur upon
specified events, ML&Co. will pay or deliver to each index warrantholder
an amount specified in the prospectus supplement; and
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. 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.
Cancellation or Postponement
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 amount payable or
deliverable upon cancellation may be either a predetermined amount or an amount
that varies during the term of the Index Warrants in accordance with a schedule
or formula.
Waiver of Default
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 index warrantholders of a majority in interest of all
outstanding Index Warrants may waive a default, except a default:
. 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
. 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.
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:
. 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;
. 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;
. appointing a successor depositary;
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. 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;
. 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;
. issuing Index Warrants in definitive form; or
. 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:
. 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,
. 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
. 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:
. 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:
. 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
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. 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
. 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.
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. In that
case, 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.
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, 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 ML&Co.'s restated 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 March 31, 2000, 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, of ML&Co. upon exercise of preferred share
purchase rights associated with each share of common stock outstanding. See
"Description of Common Stock--Rights to Purchase Series A Junior Preferred
Stock".
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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:
. the designation, stated value, liquidation preference and number of
shares offered;
. the offering price or prices;
. the dividend rate or rates, or method of calculation, the dividend
periods, the date on which dividends shall be payable and whether
dividends are cumulative or noncumulative and, if cumulative, the dates
from which dividends begin to cumulate;
. any redemption or sinking fund provisions;
. any conversion or exchange provisions;
. any voting rights;
. whether the preferred stock will be issued in certificated or book-entry
form;
. whether the preferred stock will be listed on a national securities
exchange;
. information with respect to any book-entry procedures; and
. 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 ML&Co. may issue. 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 March 31, 2000, there were 42,500 shares of
ML&Co.'s 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.
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Dividends on the preferred stock may be cumulative or noncumulative as
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. 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. Unless otherwise specified in the
applicable prospectus supplement, 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,
. in the case of cumulative preferred stock, all dividend periods
terminating on or before the date of payment of full cumulative
dividends, or
. 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,
. in the case of a series of cumulative preferred stock, for all past
dividend periods, or
. in the case of noncumulative preferred stock, for the immediately
preceding dividend period,
then:
. 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
. 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.
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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 $2.673
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.
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.
SM Service mark of Merrill Lynch & Co., Inc.
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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:
. 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
. amend, alter or repeal, whether by merger, consolidation or otherwise,
the provisions of ML&Co.'s restated 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.
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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 March 31, 2000, 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 Share
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. ML&Co. will
deposit shares of preferred stock of each class or series represented by
depositary shares under deposit agreements to be entered into among ML&Co., a
bank or trust company, as 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, is filed as an
exhibit to the registration statement of which this prospectus is a part. The
following summaries of the material
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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
Depositary receipts issued under the applicable deposit agreement will
evidence the depositary shares. 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 shares, 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 shares 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 receipts evidencing the depositary shares, including the
following:
. the designation, stated value and liquidation preference of the
depositary shares and the number of shares offered;
. the offering price or prices;
. 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;
. any redemption or sinking fund provisions;
. any conversion or exchange provisions;
. any material risk factors relating to the depositary shares;
. the identity of the depositary; and
. 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 evidenced by global depositary receipts,
registered in the name of a depositary or its nominee. In that case, beneficial
owners will not be entitled to receive depositary receipts evidencing their
depositary shares unless the depositary is unwilling or unable to continue as
depositary or ML&Co. decides to have the depositary shares represented by
separate depositary receipts. A beneficial owner's interest in depositary
shares 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 depositary shares 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.
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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 or
her order, of the number of whole shares of the preferred stock and any money
or other property represented by the depositary shares. 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 the depositary deliver fractional shares
of preferred stock upon surrender of depositary receipts.
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 shares. 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 except to the extent it receives specific
instructions from the holders of depositary shares representing that number of
shares of preferred stock.
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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:
. all outstanding depositary shares have been redeemed,
. 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
. 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
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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 ML&Co.'s
appointment of a successor depositary, which 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 ML&Co.'s restated 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 ML&Co.'s
restated 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, is
filed as an exhibit to the registration statement of which this prospectus is a
part. The following summaries of the material 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, 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:
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. the offering price or prices;
. 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;
. 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;
. any date on and after which the Preferred Stock Warrants and the related
securities will be transferable separately;
. 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;
. 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;
. any circumstances that will cause the Preferred Stock Warrants to be
deemed to be automatically exercised;
. any material risk factors relating to the Preferred Stock Warrants;
. the identity of the preferred stock warrant agent; and
. any other terms of the Preferred Stock Warrants which are not
inconsistent with the provisions of the preferred stock warrant
agreement.
Holders may exchange preferred stock warrant certificates for new preferred
stock warrant certificates of different denominations, may, if in registered
form, present for registration of transfer, and exercise the Preferred Stock
Warrants 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. In that case, 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.
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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.
Holders may exercise the Preferred Stock Warrants in the manner set forth in
the applicable prospectus supplement. Upon receipt of payment and a properly
completed and duly executed preferred stock warrant certificate 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, ML&Co. will issue a new
preferred stock warrant certificate 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:
. shortens the period of time during which the Preferred Stock Warrants
may be exercised;
. otherwise materially and adversely affects the exercise rights of the
preferred stock warrantholders; or
. 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
ML&Co. may issue. 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, ML&Co's restated certificate of incorporation which is filed as
an exhibit to the registration statement of which this prospectus is a part.
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Terms of the Common Stock
Under ML&Co.'s restated certificate of incorporation, ML&Co. is authorized
to issue up to 1,000,000,000 shares of common stock, par value $1.33 1/3 per
share. As of May 5, 2000, there were 385,241,585 shares of common stock and
2,634,634 Exchangeable Shares outstanding. The Exchangeable Shares are
exchangeable at any time into common stock on a one-for-one basis and entitle
holders to dividend, voting and other rights equivalent to common stock. 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:
. the number of shares to be offered;
. the offering price or prices;
. to the extent permitted by applicable law, whether the common stock will
be issued in certificated or book-entry form;
. information with respect to any book-entry procedures; and
. any additional terms of the common stock which are not inconsistent with
the provisions of ML&Co.'s restated 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 March 31, 2000, 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 $2.673
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
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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 13 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
Under the Amended and Restated Rights Agreement, adopted on December 2,
1997 (the "Rights Agreement"), preferred purchase rights were distributed to
holders of common stock. 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.
The preferred purchase rights will separate from the common stock ten days
following the earlier of:
. an announcement of an acquisition by a person or group of 15% or more of
the outstanding common stock of ML&Co.; or
. the commencement of a tender or exchange offer for 15% or more of the
shares of common stock of ML&Co. outstanding.
If, after the preferred purchase rights have separated from the common
stock,
. ML&Co. is the surviving corporation in a merger with an acquiring party,
. a person becomes the beneficial owner of 15% or more of the common
stock,
. an acquiring party engages in one or more defined "self-dealing"
transactions, or
. 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.
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In the event that, at any time,
. ML&Co. is acquired in a merger or other business combination transaction
and ML&Co. is not the surviving corporation,
. 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
. 50% or more of ML&Co.'s assets or earning power is sold or transferred,
each holder of a right will have the right to purchase 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 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 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.
Material Charter Provisions
ML&Co.'s restated 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, ML&Co.'s restated certificate of
incorporation provides that specified business combinations involving ML&Co.
and an interested stockholder or an affiliate or associate of that 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. ML&Co.'s restated certificate of incorporation also provides that
only the Board of Directors of ML&Co. has the authority to call special
stockholder meetings.
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The foregoing provisions of ML&Co.'s restated 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, 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 the material
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:
. the offering price or prices;
. 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;
. 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;
. the date on and after which the Common Stock Warrants and the
related securities, if any, will be transferable separately;
. the number of shares of common stock purchasable upon exercise of
each Common Stock Warrant, the price at which the common stock may
be purchased, and events or conditions under which the number of
shares purchasable may be adjusted;
. 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;
. the circumstances, if any, which will cause the Common Stock
Warrants to be deemed to be automatically exercised;
. any material risk factors relating to the Common Stock Warrants;
. the identity of the common stock warrant agent; and
. any other terms of the Common Stock Warrants which are not
inconsistent with the provisions of the common stock warrant
agreement.
Holders may exchange common stock warrant certificates for new common stock
warrant certificates of different denominations, if in registered form, may
present for registration of transfer, and may exercise the Common Stock
Warrants, 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
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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. In
that case, 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 a properly completed and
duly executed common stock warrant certificate 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 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
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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:
. shortens the period of time during which the Common Stock Warrants may
be exercised;
. otherwise materially and adversely affects the exercise rights of the
common stock warrantholders; or
. 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.
PLAN OF DISTRIBUTION
ML&Co. may sell securities:
. to the public through MLPF&S, or through a group of underwriters managed
or co-managed by, one or more underwriters, including MLPF&S,
. through MLPF&S as agent, or
. directly to purchasers.
The prospectus supplement with respect to the securities of a particular
series describes the terms of the offering of the 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 any agent or underwriters against certain
civil liabilities, including liabilities under the Securities Act or contribute
to payments any agent or 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.
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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. The address of the SEC's Internet site is provided solely
for the information of prospective investors and is not intended to be an
active link. 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 and other 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 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:
. incorporated documents are considered part of the prospectus;
. we can disclose important information to you by referring you to those
documents; and
. 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:
. annual report on Form 10-K for the year ended December 31, 1999;
. quarterly report on Form 10-Q for the period ended March 31, 2000; and
. current reports on Form 8-K dated January 25, 2000, March 3, 2000, March
31, 2000, April 17, 2000, May 3, 2000 and May 24, 2000.
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:
. reports filed under Section 13(a) and (c) of the Exchange Act;
. definitive proxy or information statements filed under Section 14 of the
Exchange Act in connection with any subsequent stockholders' meeting;
and
. 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 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 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.
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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., 222
Broadway, 17th Floor, New York, New York 10038, Telephone (212) 670-0432.
EXPERTS
The consolidated financial statements and the related financial statement
schedule incorporated in this prospectus by reference from the Annual Report on
Form 10-K of Merrill Lynch & Co., Inc. and subsidiaries for the year ended
December 31, 1999 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports (each of which express an unqualified
opinion and which report on the consolidated financial statements includes an
explanatory paragraph for the change in accounting method in 1998 for certain
internal-use software development costs to conform with Statement of Position
98-1), which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
With respect to unaudited interim financial information for the periods
included in the Quarterly Reports on Form 10-Q which are incorporated herein by
reference, Deloitte & Touche LLP have applied limited procedures in accordance
with professional standards for a review of such information. However, as
stated in their report included in such Quarterly Reports on Form 10-Q and
incorporated by reference herein, they did not audit and they do not express an
opinion on such interim financial information. Accordingly, the degree of
reliance on their report on such information should be restricted in light of
the limited nature of the review procedures applied. Deloitte & Touche LLP is
not subject to the liability provisions of Section 11 of the Securities Act of
1933, as amended, for their reports on unaudited interim financial information
because 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 of 1933, as amended.
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[LOGO]
$17,939,515,000
Merrill Lynch & Co., Inc.
Medium-Term Notes,
Series B
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PROSPECTUS SUPPLEMENT
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Merrill Lynch & Co.
June 16, 2000
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