Rule No. 424(b)(3)
Registration No. 33-19975
PROSPECTUS
MERRILL LYNCH & CO., INC.
REMARKETED PREFERRED STOCK, SERIES C
LIQUIDATION PREFERENCE $100,000 PER SHARE
["RP"(R)]
Merrill Lynch & Co., Inc. (the "Company") has issued 3,000 shares of its
Remarketed Preferred Stock, Series C, $100,000 liquidation preference per share
(the "Remarketed Preferred Stock" or "RP"(R)).
Dividends on each share of RP are cumulative from the Date of Original
Issue and are payable, when, as and if declared, on each Dividend Payment Date
for each such share. Except as otherwise provided herein, each subsequent
Dividend Period with respect to each share of RP will be, at the election of the
holder of such share, a 7-day Dividend Period, a 49-day Dividend Period or such
other Optional Dividend Period as may be specified by the Company, and dividends
on each share of RP will accumulate at the Applicable Dividend Rate with respect
to such share in effect from time to time and will be payable on the day
following the last day of such Dividend Period, provided that if the Company has
designated such Dividend Period as a Special Dividend Period, the holder of such
share will not have such an election with respect to such Dividend Period, and
such Dividend Period will be a Special Dividend Period. The Applicable Dividend
Rates for any Dividend Period (other than the Initial Dividend Periods), subject
to certain exceptions, will be those rates determined by the Remarketing Agents
in advance of such Dividend Period, as more fully described herein.
The shares of RP are redeemable at the option of the Company at $100,000
per share, plus accumulated but unpaid dividends, as described herein under
"Description of RP--Redemption."
Each share of RP subject to Tender and Dividend Reset may be tendered for
remarketing by submitting to a Remarketing Agent no later than 1:00 p.m., New
York City time, on the Tender Date an order to sell such share on the next
Dividend Reset Date. There can be no assurance that all shares so tendered can
be sold in a Remarketing. Prospective purchasers should carefully review the
remarketing procedures described herein.
Each prospective purchaser of shares of RP in a Remarketing or outside a
Remarketing will be required, among other things, to agree, subject to certain
exceptions, to (i) transfer shares of RP only pursuant to a Remarketing or to a
person that has delivered a signed Master Purchaser's Letter as provided therein
and (ii) have ownership of shares of RP maintained in book entry form by or
through the Securities Depository. See "Remarketing--Restrictions on Transfer."
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------
This Prospectus has been prepared in connection with the shares of RP and
is to be used by Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"),
a wholly-owned subsidiary of the Company, in connection with offers and sales
related to market-making transactions in the shares of RP. Such sales will be
made at prevailing prices at the time of sale. The distribution of the RP will
conform to the requirements set forth in the applicable sections of Schedule E
to the By-Laws of the National Association of Securities Dealers, Inc. This
Prospectus also will be used by each of the Remarketing Agents in connection
with Remarketings of the shares of RP. See "Remarketing."
__________
(R) Registered trademark of Merrill Lynch & Co., Inc.
The date of this Prospectus is December 11, 1995
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSIONER
OF INSURANCE FOR THE STATE OF NORTH CAROLINA, NOR HAS THE COMMISSIONER OF
INSURANCE RULED UPON THE ACCURACY OR THE ADEQUACY OF THIS DOCUMENT.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy and information statements and
other information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of
the Commission: Midwest Regional Office, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511 and Northeast Regional Office, Seven World Trade
Center, New York, New York 10048. Copies of such material can be obtained from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Reports, proxy and information
statements and other information concerning the Company may also be inspected at
the offices of the New York Stock Exchange, the American Stock Exchange, the
Chicago Stock Exchange and the Pacific Stock Exchange.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 30,
1994, Quarterly Reports on Form 10-Q for the periods ended March 31, 1995 and
June 30, 1995, and Quarterly Report on Form 10-Q for the period ended September
29, 1995, as amended by Form 10-Q/A (Amendment No. 1), and Current Reports on
Form 8-K dated January 12, 1995, January 23, 1995, February 8, 1995, February 9,
1995, March 3, 1995, March 9, 1995, April 18, 1995, May 2, 1995, May 23, 1995,
July 18, 1995, July 21, 1995, August 1, 1995, August 2, 1995, September 19,
1995, October 17, 1995, November 2, 1995, and November 27, 1995 filed pursuant
to Section 13 of the Exchange Act, are hereby incorporated by reference into
this Prospectus.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the RP shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY
(WITHOUT EXHIBITS OTHER THAN EXHIBITS SPECIFICALLY INCORPORATED BY REFERENCE) OF
ANY OR ALL DOCUMENTS INCORPORATED BY REFERENCE INTO THIS PROSPECTUS. REQUESTS
FOR SUCH COPIES SHOULD BE DIRECTED TO MR. GREGORY T. RUSSO, SECRETARY, MERRILL
LYNCH & CO., INC., 100 CHURCH STREET, 12TH FLOOR, NEW YORK, NEW YORK 10080-6512;
TELEPHONE NUMBER (212) 602-8435.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT
RELATES OR AN OFFER TO, OR A SOLICITATION OF AN OFFER TO BUY FROM, ANY PERSON IN
ANY JURISDICTION WHERE SUCH OFFER WOULD BE UNLAWFUL. THE DELIVERY OF THIS
PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT INFORMATION HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO ITS DATE.
2
MERRILL LYNCH & CO., INC.
Merrill Lynch & Co., Inc. is a holding company that, through its
subsidiaries and affiliates, provides investment, financing, insurance, and
related services on a global basis. Its principal subsidiary, MLPF&S, one of
the largest securities firms in the world, is a leading broker in securities,
options contracts, and commodity and financial futures contracts; a leading
dealer in options and in corporate and municipal securities; a leading
investment banking firm that provides advice to, and raises capital for, its
clients; and an underwriter of selected insurance products. Other subsidiaries
provide financial services on a global basis similar to those of MLPF&S and are
engaged in such other activities as international banking, lending, and
providing other investment and financing services. Merrill Lynch International
Incorporated, through subsidiaries and affiliates, provides investment,
financing, and related services outside the United States and Canada. Merrill
Lynch Government Securities Inc. is a primary dealer in obligations issued or
guaranteed by the U.S. Government and by Federal agencies or instrumentalities.
Merrill Lynch Capital Services, Inc., Merrill Lynch Derivative Products, Inc.,
and Merrill Lynch Capital Markets PLC are the Company's primary derivative
product dealers and enter into interest rate and currency swaps and other
derivative transactions as intermediaries and as principals. Merrill Lynch
Asset Management, L.P., with its related affiliates, is one of the largest
mutual fund managers in the world and provides investment advisory services.
The Company's insurance underwriting operations consist of the underwriting of
life insurance and annuity products. Banking, trust, and mortgage lending
operations conducted through subsidiaries of the Company include issuing
certificates of deposit, offering money market deposit accounts, making secured
loans, and providing foreign exchange facilities and other related services.
The principal executive office of the Company is located at World Financial
Center, North Tower, 250 Vesey Street, New York, New York 10281; its telephone
number is (212) 449-1000.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDEND
REQUIREMENTS
NINE MONTHS
YEAR ENDED LAST FRIDAY IN DECEMBER ENDED
1990 1991 1992 1993 1994 SEPTEMBER 29, 1995
---- ---- ---- ---- ---- ------------------
Ratio of earnings to combined
fixed charges and preferred
stock dividend requirements 1.1 1.2 1.3 1.4 1.2 1.2
For the purpose of calculating the ratio of earnings to combined fixed
charges and preferred stock dividend requirements, "earnings" consists of
earnings from continuing operations before income taxes and fixed charges.
"Fixed charges" consists of interest costs, that portion of rentals estimated to
be representative of the interest factor, amortization of debt expense and
preferred stock dividend requirements of majority-owned subsidiaries.
3
DESCRIPTION OF RP
The following is a brief description of the terms and provisions of the
shares of RP. This description does not purport to be complete and is subject
to and qualified by reference to the Certificate of Designation. A copy of the
form of Certificate of Designation is filed as an Exhibit to the Registration
Statement of which this Prospectus is a part and may be inspected, and copies
thereof may be obtained, as described under "Available Information," and also
may be obtained from the Company on request. Terms used herein and not
otherwise defined shall have the meanings ascribed to them in the Glossary
immediately preceding the Appendices hereto.
GENERAL
At September 29, 1995, the Company's authorized capital stock consisted of
500,000,000 shares of common stock, par value $1.33 1/3 per share (the "Common
Stock"), and 25,000,000 shares of preferred stock, par value $1.00 per share
(the "Preferred Stock"). The Company's Stockholder Rights Plan provides for the
distribution of preferred purchase rights ("Rights") to holders of Common Stock
upon an announcement of an acquisition of a specified percentage of the
outstanding shares of Common Stock by a person or group or the commencement of a
tender or exchange offer for a specified percentage of outstanding shares of
Common Stock. The Rights entitle the holder to purchase fractions of a share of
Series A Junior Preferred Stock, par value $1.00.
The Board of Directors of the Company has the authority, without approval
of the stockholders, to issue shares of Preferred Stock from time to time in one
or more series and to fix the number of shares and the rights, preferences,
privileges, qualifications, restrictions and limitations of each series. The
Preferred Stock ranks prior to the Common Stock and any other stock of the
Company that is expressly made junior to the Preferred Stock as to the payment
of dividends and distribution of assets upon dissolution, liquidation or winding
up of the Company. As of September 29, 1995, there were 3,000 shares of
Preferred Stock issued as RP of which 1,938 shares were outstanding, and 42,500
shares of Preferred Stock issued as 9% Cumulative Preferred Stock, Series A (the
"9% Preferred Stock") represented by 17,000,000 Depositary Shares. As of
September 29, 1995, MLPF&S held approximately 160,400 Depository Shares in
connection with its market-making transactions in the Depositary Shares. The 9%
Preferred Stock and RP have dividend and liquidation preference over the Common
Stock and over the Series A Junior Preferred Stock issuable pursuant to the
Rights Agreement.
The shares of RP are fully paid and nonassessable, are not convertible into
Common Stock or other capital stock of the Company and have no preemptive
rights. The shares of RP are not subject to any sinking fund but are redeemable
under the circumstances described under "Redemption."
Citibank, N.A., is the Paying Agent for the shares of RP. The Paying
Agent's duties include sending notice of any redemption in whole of shares of RP
to the Securities Depository and to the holders of shares of RP and performing
such other duties as the Certificate of Designation or the Paying Agent
Agreement provides.
The Company may in the future propose amendments to the Certificate of
Designation to provide that dividends, redemption prices, liquidation
preferences and/or prices per share at which Remarketings will be conducted with
respect to shares of RP may be expressed or fixed in terms of any currency,
currencies and/or composites of currencies (such as the European Currency Unit).
DIVIDENDS
General. The Certificate of Designation provides that holders of shares of
RP are entitled to receive, when, as and if declared by the Board of Directors,
out of funds legally available therefor, cumulative cash dividends, except as
described below, at the Applicable Dividend Rate or Rates for the applicable
Dividend Periods, payable on the applicable Dividend Payment Dates and set by
the Remarketing Agents in accordance with the remarketing procedures described
under "Remarketing." See "Remarketing--Determination of Applicable Dividend
Rates."
Non-Payment Period; Late Charge. In the event that the Company fails to
(i) declare, prior to 12:00 noon, New York City time, on any Dividend Payment
Date, for payment on or within three Business Days after such Dividend Payment
Date to the persons who held shares of RP as of 12:00 noon, New York City time,
on the Business Day preceding such Dividend Payment Date, the full amount of any
dividend on any shares of RP payable on such Dividend Payment Date or (ii)
deposit, irrevocably in trust, in same-day funds, with the Paying Agent by 12:00
noon, New York City time, (A) on or within three Business Days after any
Dividend Payment Date the full amount of any dividend (whether or not earned or
declared) payable on such Dividend Payment Date or (B) on or within three
Business Days after any redemption date, the redemption price of any shares of
RP to be redeemed on such redemption date plus the full amount of any dividends
thereon (whether or not earned or declared) accumulated to but unpaid through
such redemption date after a Notice of Redemption with respect to such shares of
RP has been given pursuant to the Certificate of Designation, a Non-Payment
Period shall commence. Such Non-Payment Period shall consist of the period
commencing on and including the aforementioned Dividend Payment Date or
redemption date, as the case may be and ending on and including the Business Day
on which, by 12:00 noon, New York City time, all unpaid dividends and unpaid
redemption prices shall have been so deposited or shall have otherwise been made
available to holders in same-day funds; provided that a Non-Payment Period shall
not end during the first seven days thereof unless the Company shall have given
at least three days' written notice to the
4
Paying Agent, the Remarketing Agents and the Securities Depository and
thereafter shall not end unless the Company shall have given at least 14 days'
written notice to the Paying Agent, the Remarketing Agents, the Securities
Depository and all holders. During a Non-Payment Period, (i) the Applicable
Dividend Rate for each Dividend Period commencing during a Non-Payment Period
shall be equal to the rate set forth in the applicable Prospectus Supplement,
(ii) any share of RP for which an Optional Dividend Period of more than 98 days
or Special Dividend Period of more than 98 days would otherwise be in effect for
the Dividend Period commencing on the Dividend Payment Date first referred to in
this sentence shall have, instead, a 7-day Dividend Period and (iii) each
Dividend Period commencing after the first day of, and during, a Non-Payment
Period shall be a 49-day Dividend Period. Any amount of such dividend (if,
prior to 12:00 noon, New York City time, on any Dividend Payment Date, the
Company has declared such dividend payable on or within three Business Days
after such Dividend Payment Date to the persons who held shares of RP as of
12:00 noon, New York City time, on the Business Day preceding such Dividend
Payment Date) or redemption price not paid to such persons when due but paid to
such persons in the same fashion by 12:00 noon, New York City time, on any of
the first three Business Days after such due date shall incur a late charge to
be paid therewith to such persons and calculated for such period of non-payment
at the rate set forth under "Remarketing--Determination of Applicable Dividend
Rates" applied to the amount of such non-payment. For the purposes of the
foregoing, payment to a person in same-day funds on any Business Day at any time
shall be considered equivalent to payment to that person in New York Clearing
House (next-day) funds at the same time on the preceding Business Day, and any
payment made after 12:00 noon, New York City time, on any Business Day, shall be
considered to have been made instead in the same fashion and to the same person
before 12:00 noon, New York City time, on the next Business Day.
Dividend Periods. Dividends for each Dividend Period are payable, when, as
and if declared, on each Dividend Payment Date for such share, subject to
certain exceptions. A 7-day Dividend Period or 49-day Dividend Period (or
Optional Dividend Period if made available, or Special Dividend Period if
designated, by the Board of Directors as described herein) with respect to each
share of RP shall commence on each (but not the last) Dividend Payment Date for
such share (which, except during a Non-Payment Period, shall be a Settlement
Date for such share). Each such Dividend Period will comprise, beginning with
and including the day upon which it commences, seven consecutive days in the
case of a 7-day Dividend Period; 49 consecutive days (or such other number of
consecutive days as specified by the Board of Directors in the event of a change
in law altering the Minimum Holding Period, as provided herein) in the case of a
49-day Dividend Period; or such number of consecutive days as shall be
designated by the Board of Directors in the case of any Optional Dividend Period
or Special Dividend Period at the time such Optional Dividend Period is made
available or the Board of Directors designates a Special Dividend Period, as the
case may be. Notwithstanding the foregoing, any adjustment of the remarketing
schedule by the Remarketing Agents which includes an adjustment of a Settlement
Date will lengthen or shorten Dividend Periods by causing them always to end on
and include the day before the Settlement Date as so adjusted.
Except during a Non-Payment Period, at the end of each Dividend Period
applicable to a share of RP, (i) the holder of each share of RP that is not
tendering such share of RP may, unless the Board of Directors has designated a
Special Dividend Period commencing on the Settlement Date next following such
Tender Date, elect to hold such share of RP for a 7-day Dividend Period, a 49-
day Dividend Period or any available Optional Dividend Period; provided,
however, that in the event that (a) such holder of RP elects an available
Optional Dividend Period of more than 98 days or the Board of Directors has
designated the next succeeding Dividend Period as a Special Dividend Period of
more than 98 days with respect to such share and (b) there is no Remarketing
Agent, MLPF&S is the sole Remarketing Agent at a time when it is prohibited from
acting as such, none of the Remarketing Agents conducts a Remarketing or the
Remarketing Agents are unable to remarket in the Remarketing on the Dividend
Reset Date following such Tender Date all shares of RP tendered to them at a
price of $100,000 per share, then the Dividend Period in respect of such share
will be a 7-day Dividend Period and the Applicable Dividend Rate will be the
Maximum Dividend Rate for a 7-day Dividend Period; (ii) the holder of each share
of RP that fails to tender or to make such election at the end of a Dividend
Period will continue to hold such share at the Applicable Dividend Rate
determined in such Remarketing for a Dividend Period of the same type as the
prior Dividend Period for such shares; provided, however, that (a) if such
previous Dividend Period was an Optional Dividend Period of 98 or fewer days
which is not then available, such holder shall hold such share for a 7-day
Dividend Period, (b) in the event that such previous Dividend Period was an
Optional Dividend Period of 98 or fewer days which is then available and the
circumstances specified in clause (i)(b) above apply, such holder shall hold
such share for a 7-day Dividend Period and the Applicable Dividend Rate will be
the applicable Maximum Dividend Rate for a 7-day Dividend Period and (c) if such
previous Dividend Period was an Optional Dividend Period of more than 98 days or
a Special Dividend Period, or the succeeding Dividend Period has been designated
by the Board of Directors as a Special Dividend Period, then holders of shares
of RP that fail to tender or make an election at the end of such Dividend Period
shall be deemed to have elected to tender such shares; (iii) the holder of each
share of RP that is tendered (or deemed tendered) but not sold in such
Remarketing will hold such share at the applicable Maximum Dividend Rate for a
7-day Dividend Period; and (iv) the next Dividend Period for each share of RP
purchased in a Remarketing shall be a Dividend Period of the type elected by the
purchaser of such share in such Remarketing or the Special Dividend Period
designated by the Board of Directors with respect to such share, as the case may
be, at the Applicable Dividend Rate therefor, except that, under the
circumstances specified in clause (i)(b) above, no purchaser will be permitted
in such Remarketing to acquire shares having an Optional Dividend Period of more
than 98 days or a Special Dividend Period of more than 98 days.
Notwithstanding the foregoing, in the event of a change in law altering the
Minimum Holding Period, the Board of Directors may increase or decrease the
period of time between Dividend Payment Dates so as to adjust
5
uniformly the number of days in all 49-day Dividend Periods commencing after the
date of such change in law to equal or exceed the then current Minimum Holding
Period; provided that the number of days as so adjusted shall not exceed 98 and
shall be evenly divisible by seven (except as required from time to time by
adjustments in the remarketing schedule as described herein). Upon any such
adjustment by the Board of Directors, the Company will notify the Remarketing
Agents and the Paying Agent, and the Paying Agent will in turn notify the
Securities Depository and, if there is no Securities Depository, the holders of
all shares of RP of such adjustment. During a Non-Payment Period, the Company
will also notify the holders of shares of RP directly of such adjustment.
Optional Dividend Periods. Except during a Non-Payment Period, the Board
of Directors may at any time and from time to time institute one or more
Optional Dividend Periods with such number of days as the Board of Directors
shall specify; provided that (i) in respect of any Optional Dividend Period of
more than 98 days, the Board of Directors shall also determine a Maximum
Dividend Rate or Rates in respect of such period, as described under
"Remarketing--Determination of Applicable Dividend Rates," which rate or rates,
as determined from time to time by formula or other means, may be fixed or
variable and (ii) in respect of any Optional Dividend Period of 365 or more
days, the Remarketing Agents may establish Specific Redemption Provisions as
described under "Redemption" below. Any designation of any type of Optional
Dividend Period shall be effective after seven days' written notice thereof and,
if applicable, of the Maximum Dividend Rate or Rates and Specific Redemption
Provisions, if any, in respect thereof shall have been given to the Remarketing
Agents, the Paying Agent and the Securities Depository. The Company also will
publish promptly notice of any designation of a specified Optional Dividend
Period, and Maximum Dividend Rate or Rates and Specific Redemption Periods, if
any, at least once in an Authorized Newspaper, but the failure so to publish
such notice will not affect the validity or effectiveness of any such
designation or determination. After the designation of any type of Optional
Dividend Period by the Board of Directors becomes elective, an Optional Dividend
Period of such type will commence on each Settlement Date and continue until
rescinded by the Board of Directors which rescission will be effective after
seven days' written notice thereof shall have been given to the Remarketing
Agents, the Paying Agent, the Securities Depository and the holders of shares of
RP. The rescission or existence of any Optional Dividend Period will not affect
any current Dividend Period or prevent the Company from establishing other
Optional Dividend Periods of similar duration or in any way restrict the Maximum
Dividend Rate or Rates or Specific Redemption Provision; which may be designated
in connection with any other Optional Dividend Period.
Special Dividend Periods. The Board of Directors may at any time designate
a subsequent Dividend Period, with respect to all shares of RP that will be
eligible for Tender and Dividend Reset on the Tender Date next preceding the
commencement of such Dividend Period, as a Special Dividend Period with such
number of days as the Board of Directors shall specify; provided, however, that
(i) written notice of any such designation, of the Maximum Dividend Rate or
Rates, if applicable, and Specific Redemption Provisions, if applicable, in
respect thereof and of the consequences of failure to tender, or to elect to
hold, shares must be given at least seven days prior to such Tender Date to the
Remarketing Agents, the Paying Agent, the Securities Depository and the holders
of shares of RP which are to be subject to such Special Dividend Period; (ii) no
Special Dividend Period may commence for any share of RP during a Non-Payment
Period; (iii) if such Special Dividend Period contains 365 or more days, the
shares of RP subject to such Special Dividend Period shall have an aggregate
liquidation preference (exclusive of accumulated but unpaid dividends) of at
least $35,000,000, and the shares, if any, of RP not subject to such Special
Dividend Period or any other Special Dividend Period shall have an aggregate
liquidation preference (exclusive of accumulated but unpaid dividends) of at
least $35,000,000; (iv) in respect of any Special Dividend Period of more than
98 days, the Board of Directors shall also determine a Maximum Dividend Rate or
Rates in respect of such Dividend Period, as described under "Remarketing--
Determination of Applicable Dividend Rates," which rate or rates, as determined
from time to time by formula or other means, may be fixed or variable; and (v)
in respect of any Special Dividend Period of 365 or more days, the Remarketing
Agents may establish Specific Redemption Provisions as described under
"Redemption" below. The existence or rescission of any Special Dividend Period
shall not affect any current Dividend Period or prevent the Company from
establishing other Special Dividend Periods of similar duration or in any way
restrict the Maximum Dividend Rate or Rates or Specific Redemption Provisions
which may be designated in connection with any other Special Dividend Period.
If the Remarketing Agents are unable to remarket sufficient shares of RP at
the commencement of a Special Dividend Period to satisfy the requirement
described in clause (iii) of the preceding paragraph, then the Dividend Period
in respect of any share of RP which otherwise would have been subject to such
Special Dividend Period will be a 7-day Dividend Period, and an Applicable
Dividend Rate will be set by the Remarketing Agents in accordance with the
remarketing procedures.
Dividend Payment Dates. Dividends on each share of RP will accumulate from
the Date of Original Issue thereof and be payable when, as and if declared by
the Board of Directors on the applicable Dividend Payment Dates. The Dividend
Payment Dates will be: (i) with respect to any Optional Dividend Period or
Special Dividend Period of more than 91 and fewer than 365 days, the 92nd day
thereof, the 183rd day thereof, if any, the 274th day thereof, if any, and the
day next succeeding the last day thereof; (ii) with respect to any Optional
Dividend Period of 365 or more days or Special Dividend Period of 365 or more
days, the third Monday of each January, April, July and October therein and the
day next succeeding the last day thereof and (iii) with respect to any other
Dividend Period, the day next succeeding the last day thereof. Notwithstanding
the foregoing, if any such date shall not be a Business Day, the Dividend
Payment Date will be the Business Day next succeeding such day, except for the
purpose of determining the length of a Dividend Period.
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Dividend Payments. Each dividend will be paid to the Securities Depository
(or its nominee) if it is the record owner of all shares of RP. The Securities
Depository will credit the accounts of the Agent Members of the beneficial
owners of RP in accordance with the Securities Depository's normal procedures.
Each Agent Member will be responsible for holding or disbursing such payments to
the beneficial owners of the shares of RP for which it is acting in accordance
with the instructions of such beneficial owners. If neither the Securities
Depository nor its nominee is the record owner of a share of RP, each dividend
shall be paid in same-day funds directly to the record owner thereof in
accordance with the instructions of such owner. Dividends on any share in
arrears with respect to any past Dividend Payment Date may be declared and paid
at any time, without reference to any regular Dividend Payment Date, to the
holder thereof on a date not exceeding five Business Days preceding the payment
thereof as may be fixed by the Board of Directors. Any dividend payment made on
shares of RP will first be credited against the dividends accumulated but unpaid
with respect to the earliest Dividend Payment Date on which dividends were not
paid. Holders of shares of RP are not entitled to any dividends on shares of
RP, whether payable in cash, property or stock, in excess of full cumulative
dividends thereon. Except for the late charge specified under "Dividends--
General" above, holders of shares of RP will not be entitled to any interest or
other additional amount on any dividend payment on the shares of RP which may be
in arrears.
The amount of dividends for each share of RP payable on each Dividend
Payment Date in respect of a 7-day Dividend Period, 49-day Dividend Period or
any Optional Dividend Period of fewer than 365 days or Special Dividend Period
of fewer than 365 days will be computed by multiplying the Applicable Dividend
Rate in effect with respect to dividends payable on such share on such Dividend
Payment Date by a fraction the numerator of which shall be the number of days
such share was outstanding from and including the Date of Original Issue or the
preceding Dividend Payment Date, as the case may be, and including the last day
of such Dividend Period and the denominator of which shall be 360, and then
multiplying the percentage so obtained by $100,000. The amount of dividends for
each share of RP payable on each Dividend Payment Date in respect of an Optional
Dividend Period of 365 or more days or a Special Dividend Period of 365 or more
days will be computed on the basis of a 360-day year of twelve 30-day months.
So long as any shares of RP are outstanding, no dividend or other
distribution (other than dividends in Common Stock) may be declared, paid, set
aside for payment or made upon the Common Stock, or any other class or series of
stock of the Company ranking junior to the RP, nor may any Common Stock or
shares of any other class of stock of the Company ranking junior to the RP be
redeemed, purchased or otherwise acquired for any consideration by the Company,
unless, in any case, full cumulative dividends on all shares of RP then
outstanding shall have been declared through the most recently ended Dividend
Period with respect thereto and paid or set aside for payment.
Under Delaware law, dividends may only be paid out of surplus (as defined
in the General Corporation Laws of the State of Delaware) or, in case there is
no surplus, out of net profits for the fiscal year in which the dividend is
declared and/or the preceding fiscal year. No corporation may pay any dividend
if it is insolvent or would thereby be made insolvent.
REDEMPTION
Upon giving a Notice of Redemption, as provided below, the Company at its
option may redeem shares of RP, in whole or in part, on the next succeeding
scheduled Dividend Payment Date applicable to those shares of RP called for
redemption, out of funds legally available therefor, at a redemption price per
share of $100,000 plus the premium, if any, resulting from the designation of a
Premium Call Period, plus an amount equal to dividends thereon (whether or not
earned or declared) accumulated to but unpaid through the date fixed for
redemption; provided, however, that no share of RP may be redeemed on any
Dividend Payment Date (i) during a Non-Call Period to which it is subject or
(ii) if such share is subject to any Optional Dividend Period or Special
Dividend Period containing at least as many days as the then Minimum Holding
Period at the time such Optional Dividend Period or Special Dividend Period was
selected if a redemption at such time would have the effect that a holder who
purchased such share in the preceding Remarketing therefor would not satisfy
such Minimum Holding Period solely by reason of such redemption, but such share
will instead be redeemed on a date specified by the Board of Directors at least
five days in advance thereof when such condition will no longer apply, but in no
event later than the next succeeding Dividend Payment Date upon which such
holder would not fail to satisfy such Minimum Holding Period solely by reason of
such redemption.
At least two Business Days prior to sending written notice of an Optional
Dividend Period of 365 or more days or a Special Dividend Period of 365 or more
days as described above under "Dividends--Optional Dividend Periods" and "--
Special Dividend Periods," the Company will notify the Remarketing Agents of the
duration of the proposed Dividend Period. The Remarketing Agents may designate
Specific Redemption Provisions with respect to such proposed Dividend Period by
notifying the Company of Specific Redemption Provisions for such proposed
Dividend Period prior to the close of business on the Business Day following
receipt of such notice. In establishing Specific Redemption Provisions, the
Remarketing Agents will (i) take into account current market conditions and
analogous provisions contained in recently issued comparable debt, and equity
securities with maturities or dividend periods, as the case may be, similar in
duration to that of the proposed Dividend Period and (ii) establish Specific
Redemption Provisions which will enable the Remarking Agents to remarket on
behalf of the holders thereof shares tendered to the Remarketing Agents in the
next Remarketing at a price of $100,000 per share, provided that (x) with
7
respect to Specific Redemption Provisions for a Dividend Period of two years or
less, there shall be a Non-Call Period of at least one year, and (y) with
respect to Specific Redemption Provisions for a Dividend Period of more than two
years, there shall be a Non-Call Period of at least one year and there shall be
a Premium Call Period of at least one year.
Shares of RP, the holders of which shall have been given Notice of
Redemption, shall not be subject to transfer outside of a Remarketing.
Allocation. If fewer than all the outstanding shares of RP are to be
redeemed, the number of shares of RP to be so redeemed will be determined by the
Board of Directors, and the Company will give a Notice of Redemption. Unless
certificates representing shares of RP are held by holders other than the
Securities Depository or its nominee, the Paying Agent will then determine the
number of shares of RP to be redeemed pro rata from each current Dividend
Period; provided, however, that no share of RP will be redeemed on any Dividend
Payment Date (i) during a Non-Call Period to which it is subject or (ii) if such
share is subject to any current Optional Dividend Period or Special Dividend
Period containing at least as many days as the then Minimum Holding Period at
the time such Optional Dividend Period or Special Dividend Period was selected
if a redemption at such time would have the effect that a holder who purchased
such shares in the preceding Remarketing therefor would not satisfy such Minimum
Holding Period solely by reason of such redemption. The Paying Agent will give
notice of such determination to the Securities Depository, and the Securities
Depository will then determine by lot on a Dividend Period basis the number of
shares of RP to be redeemed from the account of each Agent Member (which may
include an Agent Member holding shares for its own account, including the
Remarketing Agents) and give notice of such determination to the Paying Agent.
The Paying Agent, upon receipt of such notice, will in turn determine by lot the
number of shares of RP from each Dividend Period to be redeemed from the
accounts of the holders of the shares of RP whose Agent Members have been
selected by the Securities Depository. In doing so, the Paying Agent may
determine that shares of RP will be redeemed from the accounts of some holders,
which may include the Remarketing Agents, without shares of RP being redeemed
from the accounts of other holders. Notwithstanding the foregoing, if the
redemption is to take place during a Non-Payment Period or there is no
Securities Depository, the particular shares to be redeemed will be selected by
the Board of Directors pro rata from among current Dividend Periods and by lot
from among shares within each current Dividend Period.
Notice of Redemption. Any Notice of Redemption will be given by the
Company to the Paying Agent, the Securities Depository (and any other registered
holder of shares of RP) and the Remarketing Agents, by telephone, not later than
3:00 p.m. New York City time (and later confirmed in writing) on (i) the
Settlement Date in the case of a partial redemption of the shares of RP, (ii)
the Tender Date in the case of a redemption in whole of the shares of RP or
(iii) during a Non-Payment Period, the later of the Dividend Payment Date and
the seventh day in each case prior to the earliest date upon which any such
redemption will occur. In the case of a partial redemption of the shares of RP
eligible for redemption, the Remarketing Agents will use reasonable efforts to
provide telephonic notice to each holder of shares of RP called for redemption
not later than the close of business on the Business Day on which the
Remarketing Agents receive notice from the Paying Agent of the Securities
Depository's determination of the Agent Members from which shares are to be
redeemed and the Paying Agent's determination of the number of shares of RP from
each Dividend Period to be redeemed, both as described above (or, during a Non-
Payment Period, not later than the close of business on the Business Day
immediately following the day on which the Remarketing Agents receive a Notice
of Redemption from the Company). In the case of a redemption in whole of the
shares of RP eligible for redemption, the Paying Agent will use reasonable
efforts to provide telephonic notice to each holder of shares of RP not later
than the close of business on the Business Day immediately following the day on
which it receives a Notice of Redemption from the Company. In any such case,
such telephonic notice will be confirmed promptly in writing not later than the
close of business on the third Business Day preceding the redemption date by
notice sent by the Remarketing Agents or the Paying Agent, as the case may be,
to each holder of record of shares of RP called for redemption, the Paying Agent
or the Remarketing Agents, as the case may be, and the Securities Depository.
Every Notice of Redemption and other redemption notice will state: (a) the
redemption date, (b) the number of shares of RP to be redeemed, (c) the
redemption price and (d) the dividends on the shares of RP to be redeemed will
cease to accumulate as of such redemption date. No defect in the Notice of
Redemption or other redemption notice or in the transmittal or the mailing
thereof will affect the validity of the redemption proceedings, except as
required by applicable law. The Paying Agent will use reasonable efforts to
cause the publication of a redemption notice in an Authorized Newspaper within
two Business Days of the date of the Notice of Redemption, but failure so to
publish such notification shall not affect the validity or the effectiveness of
any such redemption proceedings.
Other Redemption Procedures. To the extent that any redemption for which
Notice of Redemption has been given is not made by reason of the absence of
legally available funds therefor, such redemption shall be made as soon as
practicable to the extent such funds become available. Failure to redeem shares
of RP shall be deemed to exist any time after the date specified for redemption
in a Notice of Redemption when the Company shall have failed, for any reason
whatsoever, to deposit funds with the Paying Agent with respect to any shares
for which such Notice of Redemption has been given. Notwithstanding the fact
that the Company may not have redeemed shares of RP for which a Notice of
Redemption has been given, dividends may be declared and paid on shares to RP
and shall include those shares of RP for which a Notice of Redemption has been
given.
8
Upon the deposit with the Paying Agent of funds sufficient to redeem the
shares of RP and the giving of a Notice of Redemption, all rights of the holders
of the shares of RP so called for redemption will cease and terminate, except
the right of the holders thereof to receive the redemption price thereof plus
accumulated but unpaid dividends through the redemption date, but without any
interest or other additional amount (except for the late charge described above
under "Dividends--General"), and such shares will no longer be deemed
outstanding for any purpose. The Company will be entitled to receive from the
Paying Agent, promptly after the date fixed for redemption, any cash deposited
with the Paying Agent as aforesaid in excess of the sum of (i) the aggregate
redemption price of the shares of RP called for redemption on such date and (ii)
all other amounts to which holders of shares of RP called for redemption may be
entitled. Any funds so deposited that are unclaimed at the end of 90 days from
such redemption date will, to the extent permitted by law, be repaid to the
Company after which time the holders of shares of RP so called for redemption
will look only to the Company for payment of the redemption price and all other
amounts to which they may be entitled. The Company will be entitled to receive,
from time to time after the date fixed for redemption, any interest on the funds
so deposited.
Notwithstanding the foregoing, (i) no share of RP may be redeemed unless
the full amount of accumulated and unpaid dividends to the date fixed for
redemption for each share of RP called for redemption shall have been declared,
and (ii) no share of RP may be redeemed unless all outstanding shares of RP are
simultaneously redeemed, nor may any shares of RP be purchased or otherwise
acquired by the Company except in accordance with a purchase offer made on
substantially equivalent terms by the Company for all outstanding shares of RP,
unless, in each such instance, dividends on all outstanding shares of RP through
their most recently ended respective Dividend Periods (or, if such transaction
is on a Dividend Payment Date, through the Dividend Period ending on such
Dividend Payment Date) shall have been paid or shall have been declared and
sufficient funds for the payment thereof deposited with the Paying Agent.
Except as described above with respect to redemptions, nothing contained in
the Certificate of Designation limits any legal right of the Company or any
affiliate of the Company to purchase or otherwise acquire any shares of RP at
any price.
Shares of RP that have been redeemed or otherwise acquired by the Company
or any affiliate thereof may be resold. The Company also has the right to
arrange for others to purchase from the holders thereof shares of RP which are
to be redeemed as described above.
In the event a purchaser of shares of RP does not initially select a
Dividend Period containing more than 45 days (or such other number of days as
may be necessary to satisfy the Minimum Holding Period), a redemption may occur
with respect to such shares of RP before they have been held by such purchaser
for the Minimum Holding Period.
The Remarketing Agents may, after consultation with the Company, unless
reasonably objected to by the Company, modify the procedures concerning
notification of redemption set forth above so long as any such modification does
not adversely affect the holders of the shares of RP and, provided further, that
no such modification which affects the rights, duties or obligations of the
Paying Agent (other than modifications which relieve the Paying Agent of any
duty or obligation) shall bind the Paying Agent without its prior written
consent.
LIQUIDATION
Upon a liquidation, dissolution or winding up of the affairs of the
Company, whether voluntary or involuntary, the holders of shares of RP then
outstanding will be entitled, whether from capital or surplus, before any assets
of the Company shall be distributed among or paid over to the holders of the
Common Stock or any other class of stock of the Company junior to the RP as to
liquidation payments, to be paid an amount equal to the liquidation preference
with respect to such shares of RP. The liquidation preference for shares of RP
is $100,000 per share plus an amount equal to all dividends thereon (whether or
not earned or declared) accumulated to but unpaid through the date of final
distribution. After any such payment, the holders of shares of RP will not be
entitled to any further participation in any distribution of assets of the
Company If, upon any such liquidation, dissolution or winding up of the
Company, the assets of the Company shall be insufficient to make such full
payments to the holders of shares of RP and to the holders of any preferred
stock ranking, as to liquidation, dissolution or winding up, on a parity with
the RP, then such asset shall be distributed pro rata among the holders of
shares of RP and any other such preferred stock.
Neither the sale, lease or exchange (for cash, shares of stock, securities
or other consideration) of all or any part of the property and assets of the
Company, nor the consolidation or the merger of any other corporation with or
into the Company nor a reorganization of the Company will be deemed to be a
dissolution, liquidation or winding up of the Company.
VOTING RIGHTS
Holders of RP will not have any voting rights except as set forth below or
as otherwise required by applicable law.
9
So long as any shares of RP remain outstanding, the Company will not,
without the affirmative vote or consent of the holders of at least two-thirds of
the shares of RP outstanding at the time, given in person or by proxy, either in
writing or at a meeting (voting separately as one class with holders of all
other series of Preferred Stock that rank on a parity with the RP either as to
dividends or upon liquidation and upon which like voting rights have been
conferred and are exercisable): (i) authorize, create or issue, or increase the
authorized or issued amount, of any class or series of stock ranking prior to
the RP with respect to payment of dividends or the distribution of assets on
liquidation or (ii) amend, alter or repeal the provisions of the resolutions
contained in the Certificate of Designation, whether by merger, consolidation or
otherwise, so as to affect materially and adversely any right, preference,
privilege or voting power of such shares of RP or the holders thereof. In the
limited circumstances described above, holders of shares of RP will be entitled
to 4,000 votes per share.
The voting provisions described above will not apply if, at or prior to the
time when the act with respect to which such vote would otherwise be required
shall be effected, all outstanding shares of RP shall have been redeemed or
notice of such redemption shall have been given and sufficient funds shall have
been deposited in trust to effect such redemption.
REMARKETING
GENERAL
The Certificate of Designation provides that the Applicable Dividend Rate
per annum for each share of RP for each Dividend Period after the Initial
Dividend Period (i) will be equal to the rate per annum that the Remarketing
Agents advise results on the Dividend Reset Date preceding the first day of such
Dividend Period from implementation of the remarketing procedures set forth in
the Certificate of Designation or (ii) during a Non-Payment Period, will be
equal to a rate specified under "Determination of Applicable Dividend Rates."
During a Non-Payment Period, each Dividend Period commencing after the first day
thereof will be a 49-day Dividend Period, the shares of RP will not be subject
to Tender and Dividend Reset and the holders of shares of RP will not be able to
tender their shares in a Remarketing. See "Description of RP--General" and "--
Dividends."
Pursuant to a Paying Agent Agreement between the Company and Citibank,
N.A., the Paying Agent (i) will act as transfer agent, registrar, dividend and
redemption price disbursing agent, settlement agent and agent for certain
notifications with respect to the shares of RP and (ii) will carry out certain
other procedures provided in the Certificate of Designation and Paying Agent
Agreement. See "Description of RP--Redemption."
REMARKETING SCHEDULE
Each Remarketing will take place over a three Business Day period
consisting of the Tender Date (normally a Friday), the Dividend Reset Date
(normally a Monday) and the Settlement Date (normally a Tuesday).
If the following days of a particular week are not Business Days, the
normal remarketing schedule will be adjusted as follows: (i) if Tuesday is not
a Business Day, the Settlement Date which would have fallen on such Tuesday will
instead fall on the following Wednesday; (ii) if Wednesday is not a Business
Day, the Tender Date, Dividend Reset Date and Settlement Date which would have
otherwise fallen on the preceding Friday, Monday and Tuesday, respectively, will
instead fall on the preceding Thursday, Friday and Monday, respectively; (iii)
if Friday is not a Business Day, the Tender Date which would have otherwise
fallen on such Friday will instead fall on the preceding Thursday; and (iv) if
Monday is not a Business Day, the Dividend Reset Date and Settlement Date which
would have otherwise fallen on such Monday and the following Tuesday,
respectively, will instead fall on the following Tuesday and Wednesday,
respectively. If Optional Dividend Periods or Special Dividend Periods having a
number of days that is not an integral multiple of seven so require, or if a 49-
day Dividend Period would, as a result of the application of the foregoing,
contain fewer days than the Minimum Holding Period, or if there are fewer than
four Business Days in any 7-day period, such that none of the foregoing clauses
can be given effect with beneficial owners of RP whose shares have been sold in
a Remarketing receiving same-day funds for the price thereof on the day
following the Settlement Date (because the Tender Date, the Dividend Reset Date,
the Settlement Date or the day following the Settlement Date would fall on a day
which is not a Business Day), the Remarketing Agents will in their sole
discretion adjust the remarketing schedule as appropriate. If the procedures of
the Securities Depository are changed to provide for payment in same-day funds,
the Remarketing Agents may, in their sole discretion, disregard the adjustment
in the normal remarketing schedule described in clause (ii) of the preceding
sentence.
An example of the time sequence of the events in a normal remarketing
schedule is provided in Appendix A hereto.
10
THE REMARKETING AGENTS
The Remarketing Agents currently are MLPF&S; the First Boston Corporation;
Goldman, Sachs & Co.; Lehman Brothers Inc.; Morgan Stanley & Co. Incorporated;
and PaineWebber Incorporated. In accordance with Schedule E of the By-laws of
the National Association of Securities Dealers, Inc. (the "NASD"), MLPF&S may
not act as the sole Remarketing Agent unless the shares of RP are rated "baa3"
or better by Moody's or BBB- or better by S&P or rated in a comparable category
by another rating service acceptable to the NASD. The Company has entered into
a Remarketing Agreement with the Remarketing Agents which provides, among other
things, that the Remarketing Agents will follow certain procedures for
remarketing as provided in the Certificate of Designation for the purpose of
determining the Applicable Dividend Rate or Rates that will enable the
Remarketing Agents to remarket shares of RP tendered to it at a price of
$100,000 per share for a 7-day Dividend Period, for a 49-day Dividend Period and
for any available Optional Dividend Period or Periods or designated Special
Dividend Period, as determined by the Remarketing Agents. See "Determination of
Applicable Dividend Rates." Each periodic operation of such procedures is
referred to as a "Remarketing." Under certain circumstances, shares of RP
tendered in a Remarketing may be purchased by the Remarketing Agents. See
"Tender by Holders."
For their services in determining the Applicable Dividend Rate or Rates and
remarketing shares of RP, the Remarketing Agents receive a fee (payable in
arrears on the first Settlement Date and on the same day in every seventh week
thereafter, or the next Business Day if such day is not a Business Day) from the
Company equal, in the aggregate, to 0.25 percent per annum of the weighted
average aggregate liquidation preference (exclusive of accumulated but unpaid
dividends) of the shares of RP outstanding during each 7-week period; provided,
however, that if the Dividend Period with respect to any share is an Optional
Dividend Period of 365 days or more or Special Dividend Period of 365 days or
more, then during such Dividend Period such share will not be counted in
determining the aforesaid 0.25 percent fee, and, with respect to such share, the
Company instead will pay to the Remarketing Agents a fee, determined by mutual
consent of the Company and the Remarketing Agents, based on the selling
concession that would be applicable to an underwriting of a fixed or variable
rate preferred stock issue with a similar adjustable dividend period at the
commencement of such Dividend Period. The Remarketing Agents may pay to
selected broker-dealers a pro rata portion of the 0.25 percent per annum fee and
any fee for remarketing shares of RP into a Dividend Period of 365 days or more,
both as described above, reflecting shares sold through such dealers to
purchasers in Remarketings.
The Company has agreed to indemnify the Remarketing Agents against certain
liabilities, including liabilities under the Securities Act of 1933, arising out
of or in connection with their duties under the Remarketing Agreement.
Any Remarketing Agent may resign and be discharged from its duties under
the Remarketing Agreement by giving 60 days' prior notice in writing to the
Company, the Securities Depository, the Paying Agent and the other Remarketing
Agents, and the Company may remove a Remarketing Agent, provided that the
Company gives at least 60 days' prior notice to such Remarketing Agent, the
Securities Depository, the Paying Agent and the other Remarketing Agents of such
removal or appointment; provided, further, that, if (i) the resigning or removed
Remarketing Agent shall then be the sole Remarketing Agent, (ii) MLPF&S would
thereupon become the sole Remarketing Agent at a time when it is prohibited from
acting as such or (iii) all other Remarketing Agents elect to resign or are
removed within one week of delivery of such notice, then no such resignation or
removal shall be effective until the Company shall have entered into an
agreement with a successor Remarketing Agent to conduct Remarketings in
accordance with the terms and conditions of the Certificate of Designation
(which the Company has agreed to use its best efforts to do as soon as
reasonably practicable). The successor Remarketing Agent must be a nationally
recognized broker-dealer and, if clause (ii) is applicable, must also be a
"qualified independent underwriter" pursuant to Schedule E of the By-laws of the
NASD.
The Remarketing Agents may also terminate the Remarketing Agreement or a
Remarketing Agent may resign by giving notice in writing to the Company, the
Securities Depository, the other Remarketing Agents, if any, and the Paying
Agent if certain conditions have not been met or if any of the following events
has occurred and has not been cured prior to the proposed date of such
termination or resignation (in each case, for a period of 30 days after the
Remarketing Agents have given notice thereof to the Company specifying the
condition or event): (i) the rating of the shares of RP shall have been
downgraded or withdrawn by a national rating service, the effect of which, in
the opinion of the Remarketing Agents (or the resigning Remarketing Agent) is to
affect materially and adversely the market price of the shares of RP or the
ability of the Remarketing Agents (or the resigning Remarketing Agent) to
remarket the shares of RP; (ii) all of the shares of RP shall have been called
for redemption; or (iii) without the prior written consent of the Remarketing
Agents (or the resigning Remarketing Agent), the Certificate of Designation, the
By-laws of the Company or the Paying Agent Agreement shall have been amended in
any manner that in the opinion of the Remarketing Agents (or the resigning
Remarketing Agent) materially changes the nature of the shares of RP or the
remarketing procedures.
The Remarketing Agents are not obligated to set the Applicable Dividend
Rate or Rates on the shares of RP or to remarket shares of RP during a Non-
Payment Period as provided in the Certificate of Designation or at any time that
any of the conditions noted in the second preceding paragraph or events set
forth in clause (i), (ii) or (iii) of the immediately preceding paragraph have
occurred.
11
Any action to be taken by the Remarketing Agents may be taken jointly by
the Remarketing Agents or, to the extent permitted by law and the By-laws of the
NASD, by MLPF&S on behalf of all the Remarketing Agents. If there is only one
Remarketing Agent, it will conduct the Remarketings alone, except that MLPF&S is
not permitted to act as the sole Remarketing Agent if it is not then permitted
to do so by Schedule E of the By-laws of the NASD.
RESTRICTIONS ON TRANSFER
Master Purchaser's Letter. As a condition precedent to purchasing shares
of RP in any offering, in any Remarketing or outside any Remarketing, each
purchaser of shares of RP will be required to sign and deliver a copy of a
letter, substantially in the form attached to this Prospectus as Appendix B (the
"Master Purchaser's Letter"), the sufficiency of any Master Purchaser's Letter
to be determined by the Remarketing Agents in their sole discretion, in which
such purchaser will agree, among other things, (i) unless the Company has
elected, during a Non-Payment Period, to waive this requirement, to have its
ownership of such shares of RP maintained in book-entry form by the Securities
Depository, initially DTC, in the account of a designated Agent Member which, in
turn, will maintain records of such purchaser's beneficial ownership, (ii) to be
conclusively bound by the remarketing procedures, including the Remarketing
Agents' determination of the Applicable Dividend Rates and the applicable
Dividend Periods pursuant to the remarketing procedures, (iii) to the payment of
dividends at different rates to different holders of shares of RP depending on
the type of Dividend Period selected by such holders, (iv) that its notice to
tender shares of RP in a Remarketing will constitute an irrevocable offer,
except as set forth in such Master Purchaser's Letter, to sell the shares
specified in such notice and authorization to the Remarketing Agents to sell,
transfer or otherwise dispose of such shares as set forth in the Certificate of
Designation and (v) unless the Company shall have elected, during a Non-Payment
Period, to waive this requirement, to sell, transfer or otherwise dispose of any
share of RP held by it only pursuant to orders placed in a Remarketing or to a
person that has signed and delivered a Master Purchaser's Letter as provided
herein, and, in the case of any transfer other than pursuant to a Remarketing,
to ensure that an Agent Member advises the Remarketing Agents of such transfer.
The Agent Member will be authorized and instructed to disclose to the
Remarketing Agents and/or the Paying Agent such information with respect to such
purchaser's beneficial ownership as the Remarketing Agents or Paying Agent shall
request.
An execution copy of the Master Purchaser's Letter to be addressed to the
Company, the Remarketing Agents, the Paying Agent and the Agent Member, to be
delivered as provided in such copy, is included inside the back cover of this
Prospectus. Execution and delivery of a Master Purchaser's Letter is not a
commitment to purchase shares of RP in a Remarketing or otherwise but is a
condition precedent to purchasing or owning shares of RP. In addition,
acceptance of a Master Purchaser's Letter is not a guarantee that shares of RP
will be available for purchase.
Securities Depository. DTC acts as Securities Depository for the Agent
Members with respect to shares of RP. An appropriate number of certificates for
all of the shares of RP have been issued to the Securities Depository and
registered in its name or the name of its nominee. Additional certificates may
be issued as necessary to represent shares of RP having Optional Dividend
Periods or Special Dividend Periods. All such certificates bear or will bear a
legend to the effect that such certificates are issued subject to the provisions
contained in the Certificate of Designation and in each Master Purchaser's
Letter. Unless the Company shall have elected, during a Non-Payment Period, to
waive this requirement, the Company will issue stop-transfer instructions to the
Paying Agent for such shares of RP. So long as DTC is the Securities
Depository, Cede will be the registered holder of all shares of RP and
beneficial owners of shares of RP will not receive certificates representing
their ownership interests in such shares. DTC, which is a New York-chartered
limited purpose trust company, performs services for its participants (including
the Agent Members), some of whom (and/or their representatives) own DTC. DTC
maintains lists of its participants and will maintain the positions (ownership
interests) held by each Agent Member in the shares of RP, whether as a holder
for its own account or as a nominee for another holder.
Secondary Market. In addition to their participation in the remarketing
process, the Remarketing Agents have advised the Company that they intend to
make a secondary market in the shares of RP. However, the Remarketing Agents
have no obligation to do so, and there can be no assurance that a secondary
market for the shares of RP will provide holders with liquidity of investment.
If a Remarketing Agent purchases shares of RP in the secondary market or in a
Remarketing, it may be in the position of owning shares of RP at the time it
determines the Applicable Dividend Rate or Rates in a Remarketing and may tender
its shares in a Remarketing. This Prospectus will be used by MLPF&S in
connection with offers and sales related to market-making transactions in the
shares of RP. Such sales will be made at prevailing market prices at the time
of sale. MLPF&S may act as principal or agent in such transaction.
TENDER BY HOLDERS
Each share of RP is subject to Tender and Dividend Reset only at the end of
each Dividend Period applicable to such share. At the end of each 7-day
Dividend Period, 49-day Dividend Period and Optional Dividend Period, if any,
and Special Dividend Period, if any, thereafter, each holder of shares of RP
subject to Tender and Dividend Reset can elect on a share-by-share basis to
tender some or all of its shares of RP to a Remarketing Agent
12
for remarketing at a price of $100,000 per share, or to hold some or all of its
shares of RP and elect on a share-by-share basis a 7-day Dividend Period, a 49-
day Dividend Period or, if available, a specific Optional Dividend Period,
unless the Board of Directors has designated a Special Dividend Period which
applies to such shares. However, in the event that (i) a holder shall on any
Tender Date select an Optional Dividend Period, or the Dividend Period
subsequent to such Tender Date is a Special Dividend Period, in either case, of
more than 98 days and (ii) there is no Remarketing Agent, MLPF&S is the sole
Remarketing Agent at a time when it is prohibited from acting as such, the
Remarketing Agents are not required to conduct a Remarketing or the Remarketing
Agents are unable to remarket in the Remarketing on the Dividend Reset Date
following such Tender Date all shares of RP tendered to them at a price of
$100,000 per share, then the next succeeding Dividend Period for such particular
share or shares will be a 7-day Dividend Period, and the Applicable Dividend
Rate will be the applicable Maximum Dividend Rate for a 7-day Dividend Period.
Shares of RP may be tendered in a Remarketing only on the Tender Date
immediately prior to the end of the current Dividend Period with respect
thereto. By 12:00 noon, New York City time, on the Tender Date, the Remarketing
Agents will, after canvassing the market and considering prevailing market
conditions at the time for shares of RP and similar securities, provide to
holders of shares of RP non-binding indications of Applicable Dividend Rates for
the next succeeding 7-day Dividend Period, 49-day Dividend Period and any
Optional Dividend Period or designated Special Dividend Period. THE ACTUAL
APPLICABLE DIVIDEND RATES FOR SUCH DIVIDEND PERIODS MAY BE GREATER THAN OR LESS
THAN THE RATES INDICATED IN SUCH NON-BINDING INDICATIONS (BUT NOT GREATER THAN
THE APPLICABLE MAXIMUM DIVIDEND RATES) AND WILL NOT BE DETERMINED BY THE
REMARKETING AGENTS UNTIL AFTER A HOLDER IS REQUIRED TO ELECT TO HOLD OR SELL ITS
SHARES OF RP AND A NEW PURCHASER IS REQUIRED TO AGREE TO PURCHASE SHARES OF RP.
See "Remarketing Schedule."
By 1:00 p.m., New York City time, on such Tender Date, each holder of
shares of RP subject to Tender and Dividend Reset, must notify a Remarketing
Agent of its desire (on a share-by-share basis) either to tender such share at a
price of $100,000 per share or to continue to hold such share for either a 7-day
Dividend Period, a 49-day Dividend Period or a specific available Optional
Dividend Period or, if applicable, accept a designated Special Dividend Period,
at the new Applicable Dividend Rate for the selected or designated, as the case
may be, Dividend Period. Holders and prospective purchasers may informally
indicate to the Remarketing Agents their preferences for Applicable Dividend
Rates. However, any notice given to a Remarketing Agent to tender or hold
shares for a particular Dividend Period is irrevocable and may not be
conditioned upon the level at which the Applicable Dividend Rate or Rates are
established. Accordingly, the Applicable Dividend Rate or Rates may be greater
than or less than any rate preferences indicated by holders and prospective
purchasers of shares of RP. Any such notice may not be waived by the
Remarketing Agents, except that prior to 4:00 p.m., New York City time, on the
Dividend Reset Date, a Remarketing Agent may, in its sole discretion, (i) at the
request of a holder that has tendered to such Remarketing Agent, contingently
waive such holder's tender, and thereby enable such holder to continue to hold
the share or shares in question for a 7-day Dividend Period, 49-day Dividend
Period or available Optional Dividend Period or designated Special Dividend
Period as agreed to by such holder and such Remarketing Agent at such time, so
long as such tendering holder has indicated to such Remarketing Agent that it
would accept the new Applicable Dividend Rate for such Dividend Period, such
waiver to be contingent upon the Remarketing Agents' ability to remarket all
shares of RP tendered in such Remarketing, and (ii) at the request of a holder
that has elected to hold its shares of RP, waive such holder's election.
When shares of RP are tendered for Remarketing, the Remarketing Agents will
use their best efforts to remarket such tendered shares on behalf of the holders
thereof, but there is no assurance that the Remarketing Agents will be able to
remarket all shares of RP tendered. See "Allocation of Shares; Failure to
Remarket at $100,000 Per Share." Each holder's right to tender shares of RP is
limited to the extent that (i) the Remarketing Agents conduct a Remarketing
pursuant to the terms of the Remarketing Agreement (see "Concerning the
Remarketing Agents"), (ii) shares tendered have not been called for redemption
and (iii) the Remarketing Agents are able to find purchasers for tendered shares
of RP at the Applicable Dividend Rate or Rates for a 7-day Dividend Period, a
49-day Dividend Period or any Optional Dividend Period or Periods or Special
Dividend Period not in excess of any applicable Maximum Dividend Rate or Rates.
If the Remarketing Agents are unable to find purchasers for all shares of RP
tendered, the shares to be sold in the Remarketing will be selected either pro
rata or by lot from among all the tendered shares. See "Allocation of Shares;
Failure to Remarket at $100,000 Per Share." Each purchase or sale will be made
for settlement on the Settlement Date. See "Notification of Results;
Settlement" and "Remarketing Schedule."
Any share of RP which is not tendered by the holder thereof for any reason
(other than because there is no Remarketing Agent, MLPF&S is the sole
Remarketing Agent at a time when it is prohibited from acting as such or the
Remarketing Agents are not required to conduct a Remarketing pursuant to the
terms of the Remarketing Agreement) according to the tender provisions described
above, and with respect to which no notice to hold has been given, will
automatically accumulate dividends at the new Applicable Dividend Rate
determined in the Remarketing for a Dividend Period of the same type as the
prior Dividend Period for such share and will be subject to Tender and Dividend
Reset at the end of such new Dividend Period; provided, however, that in the
event a holder would be deemed thereby to have selected on any Tender Date an
Optional Dividend Period of 98 or fewer days which is not then available, then
such new Dividend Period for such holder's shares will be a 7-day Dividend
Period; provided further, however, that if the Dividend Period then ending is an
Optional Dividend Period of more than 98 days or a Special Dividend Period, or
the succeeding Dividend Period has been designated by the Board of Directors as
a Special Dividend Period, then holders of shares of RP that fail to elect to
tender or hold such shares of RP will be deemed to have elected to tender such
shares.
13
There is no assurance that the Remarketing Agents will be able to remarket
all shares of RP tendered in a Remarketing. If any shares of RP tendered are
not remarketed, a holder of such shares may be required to continue to hold some
or all of its shares of RP at least until the end of the next 7-day Dividend
Period or to sell such shares outside of a Remarketing. See "Allocation of
Shares; Failure to Remarket at $100,000 Per Share," "Restrictions on Transfer"
and "Concerning the Remarketing Agents."
Tendered shares will also be subject to purchase in a Remarketing by
Remarketing Agents other than MLPF&S. Each such Remarketing Agent may purchase
for its own account shares of RP in a Remarketing, provided that (i) the
Applicable Divided Rate or Rates set in the Remarketing are no higher than the
Applicable Dividend Rate or Rates that would have been established if such
Remarketing Agent had not purchased such shares and (ii) together with the other
Remarketing Agents, it purchases all tendered shares of RP not sold in the
Remarketing to other purchasers. Apart from the foregoing condition to its
purchasing shares of RP, the Remarketing Agents are not obligated to purchase
any shares of RP that would otherwise remain unsold in a Remarketing. If the
Remarketing Agents own any shares of RP immediately prior to a Remarketing and
if all other shares of RP tendered for sale by other holders have been sold in
such Remarketing, then Remarketing Agents may sell such number of their shares
in such Remarketing as there are outstanding orders to purchase that have not
been filled by shares tendered for sale by other holders. See "Restrictions on
Transfer--Secondary Market." None of the Company, the Paying Agent and the
Remarketing Agents is obligated in any case to provide funds to make payment to
a holder upon such holder's tender of its shares of RP for Remarketing. If the
Remarketing Agents purchase shares of RP in the secondary market or in a
Remarketing, they may be in the position of owning shares of RP at a time they
determine the Applicable Dividend Rate or Rates in a Remarketing and may tender
shares in a Remarketing.
DETERMINATION OF APPLICABLE DIVIDEND RATES
Between 1:00 p.m., New York City time, on the Tender Date and 4:00 p.m.,
New York City time, on the Dividend Reset Date, the Remarketing Agents will
determine (i) unless the Board of Directors has designated such next Dividend
Period as a Special Dividend Period, the allocation of tendered shares of RP
among a 7-day Dividend Period, a 49-day Dividend Period, and any available
Optional Dividend Period or Periods, as the case may be (provided that if the
Remarketing Agents are unable to remarket on such Dividend Reset Date all such
tendered shares in a Remarketing at a price of $100,000 per share, then the
Remarketing Agents will allocate no shares to any Optional Dividend Period of
more than 98 days and no share will be assigned to any Special Dividend Period
of more than 98 days) and (ii) the Applicable Dividend Rates to the nearest one-
thousandth (0.001) of one percent per annum for the next 7-day Dividend Period,
the next 49-day Dividend Period and the next Optional Dividend Period or
Periods, or the next designated Special Dividend Period, as the case may be.
The Applicable Dividend Rate for each such Dividend Period will be the rate per
annum that the Remarketing Agents determine, in their sole judgment, to be the
lowest rate, giving effect to such allocation, that will enable them to remarket
on behalf of the holders thereof all shares of RP tendered to them at a price of
$100,000 per share. The Applicable Dividend Rate or Rates, as well as the
allocation of the tendered shares, will be determined as aforesaid by the
Remarketing Agents in their sole discretion (except as otherwise provided in the
Certificate of Designation) and will be conclusive and binding on all holders of
shares of RP. In determining such Applicable Dividend Rate or Rates, and making
such allocation, the Remarketing Agents will, after taking into account market
conditions as reflected in the prevailing yields on fixed and variable rate
taxable and tax-exempt debt securities and the prevailing dividend yields of
fixed and variable rate preferred stock, in providing non-binding indications of
the Applicable Dividend Rates to holders and potential purchasers of shares of
RP, (i) consider the number of shares of RP tendered and the number of shares of
RP potential purchasers are willing to purchase and (ii) contact by telephone,
or otherwise, current and potential holders of shares of RP and ascertain the
dividend rates at which they would be willing to hold shares of RP. If no
Applicable Dividend Rate shall have been set on a Dividend Reset Date in a
Remarketing for a 7-day Dividend Period, 49-day Dividend Period, any Optional
Dividend Period or Periods, or Special Dividend Period, or any or all of the
foregoing, for any reason (other than because there is no Remarketing Agent,
MLPF&S is the sole Remarketing Agent at a time when it is prohibited by
applicable law or regulation from acting as such or the Remarketing Agents are
not required to conduct a Remarketing pursuant to the terms of the Remarketing
Agreement), then the Remarketing Agents, in their sole discretion, will, if
necessary, except during a Non-Payment Period, after taking into account market
conditions as reflected in the prevailing yields on fixed and variable rate
taxable and tax-exempt debt securities and the prevailing dividend yields of
fixed and variable rate preferred stock, determine the Applicable Dividend Rate
or Rates, as the case may be, that would be the initial dividend rate or rates
fixed in an offering on such Dividend Reset Date, assuming in each case a
comparable dividend period or periods, issuer and security. If there are no
Remarketing Agents, MLPF&S is the sole Remarketing Agent at a time when it is
prohibited from acting as such or the Remarketing Agents are not required to
conduct a Remarketing pursuant to the terms of the Remarketing Agreement then,
except during a Non-Payment Period, the Applicable Dividend Rate for each
subsequent Dividend Period for which no Remarketing takes place because of the
foregoing will be the applicable Maximum Dividend Rate for a 7-day Dividend
Period, and the next succeeding Dividend Period will be a 7-day Dividend Period.
In a Remarketing, the Applicable Dividend Rates for different Dividend Periods
need not be equal.
Except during a Non-Payment Period, the Applicable Dividend Rate for any
Dividend Period will not be more than the applicable Maximum Dividend Rate. The
applicable Maximum Dividend Rate will depend on the credit rating or ratings
assigned to the shares of RP. The applicable Maximum Dividend Rate for any 7-
day
14
Dividend Period, 49-day Dividend Period or Optional Dividend Period of 98 or
fewer days or Special Dividend Period of 98 or fewer days at any Dividend Reset
Date will be the Applicable Percentage of the applicable "AA" Composite
Commercial Paper Rate. The Applicable Percentage varies with the lower of the
credit rating or ratings assigned by Moody's and S&P (or if Moody's or S&P or
both shall not make such rating available, the equivalent of either or both of
such ratings by a Substitute Rating Agency or two Substitute Rating Agencies or,
in the event that only one such rating shall be available, such rating) to the
shares of RP on each Dividend Reset Date as follows:
APPLICABLE
CREDIT RATINGS PERCENTAGE
- ---------------------------------- ----------
MOODY'S S&P
- ------------------ --------------
"aa3" or higher AA-- or higher 115%
"a3" to "a1" A-- to A+ 130%
"baa3" to "baa1" BBB-- to BBB+ 175%
Below "baa3" Below BBB-- 250%
The applicable Maximum Dividend Rate for any Optional Dividend Period of
more than 98 days or Special Dividend Period of more than 98 days at any
Dividend Reset Date will be a fixed or variable rate or rates determined from
time to time by formula or other means designated by the Board of Directors in
respect of such Optional Dividend Period or Special Dividend Period.
The Remarketing Agents will round each applicable Maximum Dividend Rate to
the nearest one-thousandth (0.001) of one percent per annum, with any such
number ending in five ten-thousandths of one percent being rounded upwards to
the nearest one-thousandth (0.001) of one percent. The Remarketing Agents will
not round the applicable "AA" Composite Commercial Paper Rate as part of their
calculation of the applicable Maximum Dividend Rate.
The Applicable Dividend Rate for any Dividend Period commencing during a
Non-Payment Period, and the rate used to calculate the late charge described
under "Description of RP--Dividends--Non-Payment Period; Late Charges," will be
250% of the applicable "AA" Composite Commercial Paper Rate.
There is no minimum Applicable Dividend Rate in respect of any Dividend
Period.
ALLOCATION OF SHARES; FAILURE TO REMARKET AT $100,000 PER SHARE
If the Remarketing Agents are unable to remarket by 4:30 p.m., New York
City time, on a Dividend Reset Date all shares of RP tendered to them in a
Remarketing at a price of $100,000 per share, (i) each holder that tendered or
was deemed to have tendered shares of RP for sale will sell a number of shares
of RP on a pro rata basis, to the extent practicable, or by lot, as determined
by the Remarketing Agents in their sole discretion based on the number of orders
to purchase shares of RP in such Remarketing, (ii) the next Dividend Period will
be a 7-day Dividend Period for all tendered or deemed tendered but unsold shares
of RP and for all shares of RP the holders of which shall have elected or been
deemed to have elected to hold such shares for an Optional Dividend Period of
more than 98 days or for which such next Dividend Period has been designated a
Special Dividend Period of more than 98 days and (iii) the Applicable Dividend
Rates for the next 7-day Dividend Period (including the 7-day Dividend Period
referred to in the preceding clause (ii)), next 49-day Dividend Period and, if
applicable, next Optional Dividend Period or Periods of 98 or fewer days or
Special Dividend Period of 98 or fewer days will be the applicable Maximum
Dividend Rates for such Dividend Periods.
If the allocation procedures described above would result in the sale of a
fraction of a share of RP, the Remarketing Agents will, in their sole
discretion, round up or down the number of shares of RP sold by each holder on
such Dividend Reset Date so that each share sold by each holder shall be a whole
share of RP, and the total number of shares sold equals the total number of
shares purchased on such Dividend Reset Date.
NOTIFICATION OF RESULTS; SETTLEMENT
By telephone at approximately 4:30 p.m., New York City time, on each
Dividend Reset Date, the Remarketing Agents will advise each holder of tendered
shares and each purchaser thereof (or the Agent Member thereof, which in turn
will advise such holder or purchaser) (i) of the number of shares such holder or
purchaser is to sell or purchase and (ii) to give instructions to its Agent
Member to deliver such shares against payment therefor or to pay the purchase
price against delivery as appropriate. The Remarketing Agents will also advise
each holder or purchaser that is to continue to hold, or to purchase, shares
with Dividend Periods beginning on the Business Day following such Dividend
Reset Date of the lengths of such Dividend Periods and the Applicable Dividend
Rates for such shares.
15
In accordance with the Securities Depositor's normal procedures, on the
Settlement Date the transactions described above will be executed through the
Securities Depository, if the Securities Depository or its nominee holds or is
to hold the certificates relating to the shares to be purchased and the accounts
of the respective Agent Members of the Securities Depository will be debited and
credited and shares delivered by book entry as necessary to effect the purchases
and sales of shares of RP and changes in the types of Dividend Periods as
determined in the Remarketing. Purchasers of shares of RP will make payment
through their Agent Members in New York Clearing House (next-day) funds to the
Securities Depository against delivery by book entry of shares of RP through
their Agent Members. The Securities Depository will make payment in accordance
with its normal procedures, which now provide for payment in New York Clearing
House (next-day) funds. If the procedures of the Securities Depository shall be
changed to provide for payment in same-day funds, then purchasers will be
required to make payment in same-day funds. If the certificates for shares of
RP are not held by the Securities Depository or its nominee, payment will be
made in same-day funds to the Paying Agent against delivery of such
certificates.
If any holder selling shares of RP in a Remarketing fails to deliver such
shares, the Agent Member of such selling holder and of any other person that was
to have purchased shares of RP in such Remarketing may deliver to any such other
person a number of whole shares of RP that is less than the number of shares
that otherwise was to be purchased by such person. In such event, the number of
shares of RP to be so delivered shall be determined by such Agent Member.
Delivery of such lesser number of shares of RP will constitute good delivery.
As long as the Securities Depository or any other nominee therefor holds
the certificates representing the shares of RP, no share certificates will need
to be delivered by any selling holder to reflect any transfer of shares of RP
effected by a Remarketing.
The Remarketing Agents may, in their sole discretion, after consultation
with the Company, unless reasonably objected to by the Company, modify the
settlement procedures set forth above so long as any such modification does not
adversely affect the holders of the shares of RP and provided that no such
modification which affects the rights, duties or obligations of the Paying Agent
(other than modifications which relieve the Paying Agent of any duty or
obligation) shall bind the Paying Agent without its prior written consent.
EXPERTS
The consolidated financial statements and related financial statement
schedules of the Company and its subsidiaries included or incorporated by
reference in the Company's 1994 Annual Report on Form 10-K and incorporated by
reference in this Prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports incorporated by reference
herein. The Selected Financial Data under the captions "Operating Results",
"Financial Position" and "Common Share Data" for each of the five years in the
period ended December 30, 1994 included in the 1994 Annual Report to
Stockholders of the Company and incorporated by reference herein, has been
derived from consolidated financial statements audited by Deloitte & Touche LLP,
as set forth in their reports incorporated by reference herein. Such
consolidated financial statements and related financial statement schedules, and
such Selected Financial Data incorporated by reference in this Prospectus and
the Registration Statement of which this Prospectus is a part, have been
included or incorporated herein by reference in reliance upon such reports of
Deloitte & Touche LLP given upon their authority as experts in accounting and
auditing.
With respect to unaudited interim financial information for the periods
included in any of the Quarterly Reports on Form 10-Q (including any amendments
applicable thereto) which may be incorporated herein by reference, Deloitte &
Touche LLP have applied limited procedures in accordance with professional
standards for a review of such information. However, as stated in their report
included in any such Quarterly Report on Form 10-Q (including any amendments
applicable thereto) and incorporated by reference herein, they did not audit and
they do not express an opinion on such interim financial information.
Accordingly, the degree of reliance on their reports on such information should
be restricted in light of the limited nature of the review procedures applied.
Deloitte & Touche LLP are not subject to the liability provisions of Section 11
of the Securities Act of 1933, as amended, (the "Act") for any such report on
unaudited interim financial information because any such report is not a
"report" or a "part" of the registration statement prepared or certified by an
accountant within the meaning of Sections 7 and 11 of the Act.
16
GLOSSARY
"`AA' Composite Commercial Paper Rate," on any date, means (i) the Interest
Equivalent of the rate on commercial paper placed for the number of days
specified in the succeeding sentence on behalf of issuers whose corporate bonds
are rated "AA" by S&P and "Aa" by Moody's, or the equivalent of such rating by
another rating agency, as such rate is made available by the Federal Reserve
Bank of New York on a discount basis or otherwise for the Business Day
immediately preceding such date, or (ii) if the Federal Reserve Bank of New York
does not make available such a rate, then the arithmetic average of the Interest
Equivalent of such rates on commercial paper placed on behalf of such issuers,
as quoted on a discount basis or otherwise by the Commercial Paper Dealers to
the Remarketing Agents for the close of business on the Business Day immediately
preceding such date. In respect of any Dividend Period (or other period) of 98
or fewer days (determined without regard to any adjustment in the remarketing
schedule in respect of non-Business Days as provided herein), the "AA" Composite
Commercial Paper Rate shall be as follows: if the number of days in such
Dividend Period is (i) less than 8, the Interest Equivalent of the 5-day rate,
(ii) 8 or more but less than 20, the Interest Equivalent of the 15-day rate,
(iii) 20 or more but less than 49, the Interest Equivalent of the 30-day rate,
(iv) 49 or more but less than 70, the Interest Equivalent of the 60-day rate,
(v) 70 or more but less than 85, the arithmetic average of the Interest
Equivalent of the 60-day and 90-day rates and (vi) 85 or more but less than 99,
the Interest Equivalent of the 90-day rate. If any Commercial Paper Dealer does
not quote a rate required to determine the "AA" Composite Commercial Paper Rate,
the "AA" Composite Commercial Paper Rate shall be determined on the basis of the
quotation or quotations furnished by the remaining Commercial Paper Dealer or
Dealers or, if none of the Commercial Paper Dealers quotes such a rate, by any
Substitute Commercial Paper Dealer or Dealers selected by the Company to provide
such rate or rates not being supplied by any Commercial Paper Dealer.
"Agent Member" means a designated member of the Securities Depository that
will maintain records for the beneficial owners of shares of RP that have
identified such Agent Member in their Master Purchaser's Letters and that will
be authorized and instructed to disclose information to the Remarketing Agents
and the Paying Agent with respect to such beneficial owners.
"Applicable Dividend Rate" means the dividend rate per annum, as determined
by the Remarketing Agents, that (i) will be equal to the rate per annum that the
Remarketing Agents advise results on the Dividend Reset Date preceding the first
day of such Dividend Period from implementation of the remarketing procedures
described herein under "Remarketing" or (ii) during a Non-Payment Period, will
be a rate determined by the Board of Directors prior to the issuance of such
share.
"Applicable Percentage" has the meaning described on pages 14 and 15 of
this Prospectus.
"Authorized Newspaper" means a newspaper of general circulation in the
English language generally published on Business Days in The City of New York.
"Board of Directors" or "Board" means either the Board of Directors of the
Company, the Executive Committee, the Preferred Stock Dividend Committee or any
other duly authorized committee thereof.
"Business Day" means a day on which the New York Stock Exchange, Inc. is
open for trading, and is not a day on which banks in The City of New York are
authorized or obligated by law to close.
"Cede" means Cede & Co., the nominee of DTC.
"Certificate of Designation" means the Certificate of Designation relating
to the shares of RP, to which this Prospectus relates, as it may be supplemented
from time to time.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Commercial Paper Dealers" means MLPF&S and such other Commercial Paper
Dealer or Dealers as the Board of Directors may from time to time appoint, or,
in lieu of any thereof, their respective affiliates or successors.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the shares of common stock of the Company, par value
$1.33 1/3 per share.
"Company" means Merrill Lynch & Co., Inc., a Delaware corporation.
"Date of Original Issue" means, with respect to any share of RP, March 30,
1988.
"Dividend Payment Date" has the meaning set forth on page 6 of this
Prospectus.
"Dividend Period" has the meaning set forth on pages 5, 6 and 7 of this
Prospectus.
i
"Dividend Reset Date" means the first Business Day following a Tender Date
and immediately preceding a Settlement Date.
"Dividend-Received Deduction" means the deduction allowed to corporate
holders of preferred stock with respect to dividends received on such stock by
Section 243 of the Code, or any successor to Section 243 of the Code.
"DTC" means The Depository Trust Company, a New York-chartered limited
purpose trust company.
"49-day Dividend Period" means (i) a Dividend Period designated as such by
a holder of a share of RP or (ii) any Dividend Period commencing after the first
day of, and during, a Non-Payment Period, and, in all such cases, generally
containing 49 days.
"Initial Dividend Period," with respect to any share of RP, means the
period commencing on and including the date of Original Issue thereof and ending
on the date designated by the Board of Directors and set forth on the cover of
the applicable Prospectus Supplement.
"Interest Equivalent" means the equivalent yield on a 360-day basis of a
discount basis security to an interest-bearing security.
"IRS" means the Internal Revenue Service.
"Master Purchaser's Letter" means a letter substantially in the form
attached as Appendix B to this Prospectus, which is required to be executed by
each purchaser of shares of RP.
"Maximum Dividend Rate" has the meaning set forth on pages 14 and 15 of
this Prospectus.
"Minimum Holding Period" means 46 days or such other minimum holding period
required for corporate taxpayers to be entitled to the Dividends-Received
Deduction as provided in Section 246(c) of the Code or any successor thereto.
"Moody's" means Moody's Investors Service, Inc.
"Non-Call Period" has the meaning set forth under "Specific Redemption
Provisions" below.
"Non-Payment Period" has the meaning set forth on pages 4 and 5 of this
Prospectus.
"Notice of Redemption" has the meaning set forth on pages 7 and 8 of this
Prospectus.
"Optional Dividend Period" means any Dividend Period other than a 7-day
Dividend Period, a 49-day Dividend Period or a Special Dividend Period in
respect of which the Board of Directors designates the number of days,
instituted by the Board of Directors as set forth on page 6 of this Prospectus.
"Paying Agent" means Citibank, N.A. or any successor company or entity,
which has entered into a Paying Agent Agreement with the Company to act for the
Company, among other things, as the transfer agent, registrar, dividend and
redemption price disbursing agent, settlement agent and agent for certain
notifications in connection with the shares of RP in accordance with such
agreement.
"Paying Agent Agreement" means an agreement to be entered into between the
Company and the Paying Agent.
"Premium Call Period" has the meaning set forth under "Specific Redemption
Provisions" below.
"Remarketing" means each periodic operation of the process for remarketing
as described in this Prospectus.
"Remarketing Agents" means the broker-dealers named as such on page 11 of
this Prospectus and such other Remarketing Agent or Agents as the Board of
Directors may from time to time appoint, and any successor companies or entities
which have entered into an agreement with the Company to carry out the
remarketing procedures for the purpose of determining the Applicable Dividend
Rate or Rates.
"RP" means the Remarketed Preferred Stock, par value $1.00 per share,
liquidation preference $100,000 per share, of the Company to be issued pursuant
to the Certificate of Designation.
"S&P" means Standard & Poor's Group, a division of McGraw-Hill, Inc.
"Securities Depository" means DTC or any successor securities depository
selected by the Company for the shares of RP that agrees to follow the
procedures required to be followed by such securities depository in connection
with the shares of RP and its successors and assigns.
ii
"Settlement Date" means the first Business Day after the Dividend Reset
Date applicable to a share of RP.
"7-day Dividend Period" means a Dividend Period designated as such by a
holder of shares of RP and generally containing seven days.
"Special Dividend Period" means any Dividend Period other than a 7-day
Dividend Period, a 49-day Dividend Period or an Optional Dividend Period, in
respect of which the Board of Directors designates the number of days,
instituted by the Board of Directors as set forth on pages 6 and 7 of this
Prospectus.
"Specific Redemption Provisions" means with respect to any Optional
Dividend Period of 365 or more days or Special Dividend Period of 365 or more
days, either, or any combination of, (i) a period (a "Non-Call Period")
determined by the Remarketing Agents during which the shares subject to such
Dividend Period are not subject to redemption at the option of the Company and
(ii) a period (a "Premium Call Period") consisting of a number of whole years
and determined by the Remarketing Agents, during each year of which the shares
subject to such Dividend Period shall be redeemable at the Company's option at a
price per share equal to $100,000 plus accumulated but unpaid dividends plus a
premium expressed as a percentage of the liquidation preference of such share.
Such percentage, in the first year of such Premium Call Period, shall be two-
thirds of the Applicable Dividend Rate for such Dividend Period and, for each
year thereafter, shall be calculated by multiplying two-thirds of such
Applicable Dividend Rate by a fraction, the numerator of which shall be the
number of years remaining in such Premium Call Period (including such year) and
the denominator of which shall be the number of years comprising such Premium
Call Period, provided that such percentage shall be rounded as described herein
for Maximum Dividend Rates.
"Substitute Commercial Paper Dealers" means such substitute Commercial
Paper Dealer or Dealers as the Company may from time to time appoint or, in lieu
of any thereof, their respective affiliates or successors.
"Substitute Rating Agency" and "Substitute Rating Agencies" shall mean a
nationally recognized securities rating agency and two nationally recognized
securities rating agencies, respectively, selected by the Company to act as the
substitute rating agency or substitute rating agencies, as the case may be, to
determine the credit ratings of the shares of RP.
"Tender and Dividend Reset" means the process pursuant to which shares of
RP may be tendered or deemed tendered in a Remarketing or held and become
subject to the new Applicable Dividend Rate or Rates determined by the
Remarketing Agent in the Remarketing.
"Tender Date" means the first Business Day preceding the Dividend Reset
Date.
iii
APPENDIX A
NORMAL SCHEDULE FOR REMARKETING SHARES OF RP
This Appendix assumes that there are no Optional Dividend Periods or
Special Dividend Periods. the normal schedule for remarketing shares of RP is
described below. As described in this Prospectus, the events occurring on each
day of a normal remarketing schedule are subject to change in the event that
certain days are not Business Days. All references herein to a particular time
of day shall be to New York City time.
Tender Date
12:00 noon Deadline for the Remarketing Agents to make available to
holders of shares of RP non-binding indications of the range
of Applicable Dividend Rates for the next succeeding 7-day
Dividend Period and 49-day Dividend Period.
1:00 p.m. Deadline for each holder of shares of RP to provide to any
Remarketing Agent irrevocable telephonic notice of intent to
tender shares of RP for sale in the current Remarketing or
to change Dividend Periods for shares. Remarketing of
tendered shares of RP formally commences.
Dividend Reset Day Remarketing of tendered shares continues
(Following
Business Day)
4:00 p.m. Deadline for completion of Remarketing. The Remarketing
Agents determine the Applicable Dividend Rates for the 7-day
Dividend Period and the 49-day Dividend Period. Such 7-day
Dividend Period will end seven days later, and such 49-day
Dividend Period will end 49 days later.
4:30 p.m. The Remarketing Agents notify holders, purchasers and
tendering holders of shares of RP by telephone, telex or
otherwise of the results of the Remarketing. Applicable
Dividend Rates are announced.
Settlement Date New 7-day Dividend Period and new 49-day Dividend Period begin.
In addition, shares of RP which have been tendered and sold in
a Remarketing are delivered through the Securities Depository.
A-1
APPENDIX B
To Be Submitted to Your Broker-Dealer
Who Will Then Deliver Copies
On Your Behalf to the Respective Trust Company
MASTER PURCHASER'S LETTER
Relating to Securities Involving Rate Settings
Through Auctions or Remarketings
THE COMPANY
THE REMARKETING AGENTS
THE TRUST COMPANY
A BROKER-DEALER
AN AGENT MEMBER
OTHER PERSONS
Dear Sirs:
1. This letter is designed to apply to auctions for publicly or privately
offered debt or equity securities ("Securities") of any issuer ("Company") which
are described in any final prospectus or other offering materials relating to
such Securities as the same may be amended or supplemented (collectively, with
respect to the particular Securities concerned, the "Prospectus") and which
involve periodic rate settings through auctions ("Auctions") or remarketing
procedures ("Remarketings"). This letter shall be for the benefit of any
Company and of any trust company, auction agent, paying agent (collectively,
"trust company"), remarketing agent, broker-dealer, agent member, securities
depository or other interested person in connection with any Securities and
related Auctions or Remarketings (it being understood that such persons may be
required to execute specified agreements and nothing herein shall alter such
requirements). The terminology used herein is intended to be general in its
application and not to exclude any Securities in respect of which (in the
Prospectus or otherwise) alternative terminology is used.
2. We may from time to time offer to purchase, purchase, offer to sell
and/or sell Securities of any Company as described in the Prospectus relating
thereto. We agree that this letter shall apply to all such purchasers, sales
and offers and to Securities owned by us. We understand that the
dividend/interest rate on Securities may be based from time to time on the
results of Auctions or Remarketings as set forth in the Prospectus.
3. We agree that any bid or sell order placed by us in an Auction shall
constitute an irrevocable offer (except as otherwise described in the
Prospectus) by us to purchase or sell the Securities subject to such bid or sell
order, or such lesser amount of Securities as we shall be required to sell or
purchase as a result of such Auction, at the applicable price, all as set forth
in the Prospectus and that if we fail to place a bid or sell order with respect
to Securities owned by us with a broker-dealer on any Auction date, or a broker-
dealer to which we communicate a bid or sell order fails to submit such bid or
sell order to the trust company concerned, we shall be deemed to have placed a
hold order with respect to such Securities as described in the Prospectus. We
authorize any broker-dealer that submits a bid or sell order as our agent in
Auctions to execute contracts for the sale of securities covered by such bid or
sell order. We recognize that the payment by such broker-dealer for Securities
purchased on our behalf shall not relieve us of any liability to such broker-
dealer for payment for such Securities.
4. We understand that in a Remarketing the dividend or interest rate or
rates on the Securities and the allocation of Securities tendered for sale
between dividend or interest periods of different lengths will be based from
time to time on the determinations of one or more remarketing agents, and we
agree to be conclusively bound by such determinations. We further agree to the
payment of different dividend or interest rates to different holders of
Securities depending on the length of the dividend or interest period elected by
such holders. We agree that any notice given by us to a remarketing agent (or
to a broker-dealer for transmission to a remarketing agent) of our desire to
tender Securities in a Remarketing shall constitute an irrevocable (except to
the limited extent set forth in the Prospectus) offer by us to sell the
Securities specified in such notice, or such lesser number of Securities as we
shall be required to sell as a result of such Remarketing, in accordance with
the terms set forth in the Prospectus, and we authorize the remarketing agent to
sell, transfer or otherwise dispose of such Securities as set forth in the
Prospectus.
5. We agree that, during the applicable period as described in the
Prospectus, dispositions of Securities can be made only in the denominations set
forth in the Prospectus and we will sell, transfer or otherwise dispose of any
Securities held by us from time to time only pursuant to a bid or sell order
placed in an Auction, in a Remarketing, to or through a broker-dealer or, when
permitted in the Prospectus, to a person that has signed and delivered to the
applicable trust company or a remarketing agent a letter substantially in the
form of this letter (or other applicable purchaser's letter), provided that in
the case of all transfers other than pursuant to Auctions or Remarketings we or
our broker-dealer or our agent member shall advise such trust company or a
remarketing agent of such transfer. We understand that a restrictive legend
will be placed on certificates representing the Securities and stop-transfer
instructions will be issued to the transfer agent and/or registrar, all as set
forth in the Prospectus.
B-1
6. We agree that, during the applicable period as described in the
Prospectus, ownership of Securities shall be represented by one or more global
certificates registered in the name of the applicable securities depository or
its nominee, that we will not be entitled to receive any certificate
representing the Securities and that our ownership of any Securities will be
maintained in book entry form by the securities depository for the account of
our agent member, which in turn will maintain records of our beneficial
ownership. We authorize and instruct our agent member to disclose to the
applicable trust company or remarketing agent such information concerning our
beneficial ownership of Securities as such trust company or remarketing agent
shall request.
7. We acknowledge that partial deliveries of Securities purchased in
Auctions or Remarketings may be made to us and such deliveries shall constitute
good delivery as set forth in the Prospectus.
8. THIS LETTER IS NOT A COMMITMENT BY US TO PURCHASE ANY SECURITIES.
9. This letter supersedes any prior-dated version of this master
purchaser's letter, and supplements any prior- or post-dated purchaser's letter
specific to particular Securities, and this letter may only be revoked by a
signed writing delivered to the original recipients hereof.
10. The descriptions of Auction or Remarketing procedures set forth in
each applicable Prospectus are incorporated by reference herein and in case of
any conflict between this letter, any purchaser's letter specific to particular
Securities and any such description, such description shall control.
11. Any xerographic or other copy of this letter shall be deemed of equal
effect as a signed original.
12. Our agent member of The Depository Trust Company currently is
.
13. Our personnel authorized to place orders with broker-dealers for the
purpose set forth in the Prospectus in Auctions or Remarketings currently is/are
, telephone number ( ).
14. Our taxpayer identification number is .
15. In the case of each offer to purchase, purchase, offer to sell or sale
by as of Securities not registered under the Securities Act of 1933, as amended
(the "Act"), we represent and agree as follows:
A. We understand and expressly acknowledge that the Securities have
not been and will not be registered under the Act and, accordingly, the
Securities may not be reoffered, resold or otherwise pledged, hypothecated
or transferred unless an applicable exemption from the registration
requirements of the Act is available.
B. We hereby confirm that any purchase of Securities made by us will
be for our own account, or for the account of one or more parties for which
we are acting as trustee or agent with complete investment discretion and
with authority to bind such parties, and not with a view to any public
resale or distribution thereof. We and each other party for which we are
acting which will acquire Securities will be "accredited investors" within
the meaning of Regulation D under the Act with respect to the Securities to
be purchased by us or such party, as the case may be, will have previously
invested in similar types of instruments and will be able and prepared to
bear the economic risk of investing in and holding such Securities.
C. We acknowledge that prior to purchasing any Securities we shall
have received a Prospectus (or private placement memorandum) with respect
thereto and acknowledge that we will have had access to such financial and
other information, and have been afforded the opportunity to ask such
questions of representatives of the Company and receive answers thereto, as
we deem necessary in connection with our decision to purchase Securities.
D. We recognize that the Company and broker-dealers will rely upon
the truth and accuracy of the foregoing investment representations and
agreements and we agree that each of our purchases of Securities now or in
the future shall be deemed to constitute our concurrence in all of the
foregoing which shall be binding on us and each party for which we are
acting as set forth in Subparagraph B above.
Dated___________________________ _____________________________
Mailing Address of Purchaser (Name of Purchaser)
________________________________ By:__________________________
________________________________ Printed Name:________________
________________________________ Title:_______________________
B-2