RULE NO. 424(b)(5)
REGISTRATION NO. 333-68747
P R O S P E C T U S
MERRILL LYNCH & CO., INC.
NIKKEI 225 MARKET INDEX TARGET-TERM SECURITIES(R) DUE JUNE 14, 2002
"MITTS(R) SECURITIEs"
$10 PRINCIPAL AMOUNT PER UNIT
This prospectus is to be used by Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, our wholly-owned subsidiary, when making
offers and sales related to market-making transactions in the MITTS Securities.
THE MITTS SECURITIES: PAYMENT AT MATURITY:
o 100% principal protection at maturity o On the maturity date, for
o No payments before maturity each unit of the MITTS
o Senior unsecured debt securities of Securities you own, we will
Merrill Lynch & Co., Inc. pay you an amount equal to the
o Linked to the value of the Nikkei Stock sum of the principal amount
Average of each unit and an
o The MITTS Securities are listed on the additional amount based on
New York Stock Exchange under the symbol the product of the
"MLN" percentage change in the
value of the index and 140%
o You will receive no less than
the principal amount of your
MITTS Securities
INVESTING IN THE MITTS SECURITIES INVOLVES RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 3.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
The sale price of the MITTS Securities will be the prevailing market
price at the time of sale.
MERRILL LYNCH & CO.
The date of this prospectus is June 24, 1999.
"MITTS" and "Market Index Target-Term Securities" are registered service
marks of Merrill Lynch & Co., Inc.
TABLE OF CONTENTS
PAGE
RISK FACTORS................................................................3
MERRILL LYNCH & CO., INC....................................................7
RATIO OF EARNINGS TO FIXED CHARGES..........................................8
DESCRIPTION OF THE MITTS SECURITIES.........................................9
THE INDEX..................................................................17
OTHER TERMS................................................................20
PROJECTED PAYMENT SCHEDULE.................................................23
WHERE YOU CAN FIND MORE INFORMATION........................................24
INCORPORATION OF INFORMATION WE FILE WITH THE SEC..........................24
PLAN OF DISTRIBUTION.......................................................25
EXPERTS....................................................................25
RISK FACTORS
Your investment in MITTS Securities will involve risks. You should
carefully consider the following discussion of risks before investing in the
MITTS Securities. In addition, you should reach an investment decision with
regard to the MITTS Securities only after consulting with your legal and tax
advisers and considering the suitability of the MITTS Securities in the light
of your particular circumstances.
YOU MAY NOT EARN A RETURN ON YOUR INVESTMENT.
You should be aware that at maturity we will pay you no more than $10
for each unit of the MITTS Securities you own if the average value of the index
over five trading days shortly before the maturity date is less than 20,351.34,
the value of the index on the date the MITTS Securities were priced. This will
be true even if at some time during the life of the MITTS Securities, the value
of the index, as adjusted, was higher than 20,351.34 but later falls below
20,351.34.
YOUR YIELD MAY BE LOWER THAN THE YIELD ON A STANDARD DEBT SECURITY OF
COMPARABLE MATURITY.
The amount we pay you at maturity may be less than the return you
could earn on other investments. Your yield may be less than the yield you
would earn if you bought a standard senior non-callable debt security of
Merrill Lynch & Co., Inc. with the same maturity date. Your investment may not
reflect the full opportunity cost to you when you consider inflation or other
factors that affect the time value of money.
YOUR RETURN WILL NOT REFLECT THE RETURN OF OWNING THE STOCKS INCLUDED IN THE
INDEX.
Your return will not reflect the return you would realize if you
actually owned the stocks underlying the index and received the dividends paid
on those stocks. This is because the value of the index is calculated by
reference to the prices of the common stocks included in the index without
taking into consideration the value of dividends paid on those stocks.
YOUR RETURN WILL BE AFFECTED BY CURRENCY EXCHANGE RATES.
Although the stocks included in the index are traded in Japanese Yen
and the MITTS Securities are denominated in U.S. Dollars, we will not adjust
any amounts payable on the MITTS Securities for the currency exchange rate in
effect at maturity. Any amount in addition to the principal amount of each unit
payable to you at maturity is based solely upon the percentage increase in the
index. Changes in the exchange rate, however, may reflect changes in the
Japanese economy that may affect the value of the index and the MITTS
Securities.
YOUR RETURN MAY BE AFFECTED BY FACTORS AFFECTING THE VALUE OF JAPANESE STOCKS.
Because the underlying stocks included in the index have been issued
by Japanese companies, risks relating to an investment in Japanese equity
securities may affect the return on your MITTS Securities. The Japanese
securities markets may be more volatile than U.S. or other securities markets
and market developments can effect the Japanese markets in different ways than
U.S. or other securities markets. Direct or indirect government intervention to
stabilize the Japanese securities markets and cross-shareholdings in Japanese
companies on those markets may affect prices and volume of trading on those
markets. Also, there is generally less publicly available information about
Japanese companies than about those U.S. companies that are subject to the
reporting requirements of the U.S. Securities and Exchange Commission, and
Japanese companies are subject to accounting, auditing and financial reporting
standards and requirements that differ from those applicable to U.S.
reporting companies.
Securities prices in Japan are subject to political, economic,
financial and social factors that apply in Japan. In addition, recent or future
changes in the Japanese government's economic and fiscal policies, the possible
imposition of, or changes in, currency exchange laws or other Japanese laws or
restrictions applicable to Japanese companies or investments in Japanese equity
securities and fluctuations in the rate of exchange between currencies may
negatively affect the Japanese securities markets. Moreover, the Japanese
economy may differ favorably or unfavorably from the U.S. economy in economic
factors such as growth in gross national product, rates of inflation, capital
reinvestment, resources and self-sufficiency.
THERE MAY BE AN UNCERTAIN TRADING MARKET FOR THE MITTS SECURITIES IN THE
FUTURE.
Although the MITTS Securities are listed on the NYSE under the symbol
"MLN," you cannot assume that a trading market will continue to exist for the
MITTS Securities. If a trading market in the MITTS Securities continues to
exist, you cannot assume that there will be liquidity in the trading market.
The continued existence of a trading market for the MITTS Securities will
depend on our financial performance and other factors such as the appreciation,
if any, of the value of the index.
If a limited trading market for the MITTS Securities exists, and you
do not wish to hold your investment until maturity, fewer buyers may want to
purchase your MITTS Securities. This may affect the price you receive if you
sell before maturity.
MANY FACTORS AFFECT THE TRADING VALUE OF THE MITTS SECURITIES; THESE FACTORS
INTERRELATE IN COMPLEX WAYS AND THE EFFECT OF ANY ONE FACTOR MAY OFFSET OR
MAGNIFY THE EFFECT OF ANOTHER FACTOR.
The trading value of the MITTS Securities will be affected by factors
that interrelate in complex ways. It is important for you to understand that
the effect of one factor may offset the increase in the trading value of the
MITTS Securities caused by another factor and that the effect of one factor may
magnify the decrease in the trading value of the MITTS Securities caused by
another factor. For example, an increase in U.S. interest rates may offset some
or all of any increase in the trading value of the MITTS Securities
attributable to another factor, such as an increase in the value of the index.
The following paragraphs describe the expected impact on the trading value of
the MITTS Securities given a change in a specific factor, assuming all other
conditions remain constant.
THE VALUE OF THE INDEX IS EXPECTED TO AFFECT THE TRADING VALUE OF THE
MITTS SECURITIES. We expect that the market value of the MITTS Securities will
depend substantially on the amount by which the index exceeds 20,351.34. If you
choose to sell your MITTS Securities when the value of the Index exceeds
20,351.34, you may receive substantially less than the amount that would be
payable at maturity based on that index value because of the expectation that
the index will continue to fluctuate until shortly before the maturity date
when the average value of the index over five trading days is determined. If
you choose to sell your MITTS Securities when the value of the index is below
20,351.34, you may receive less than the $10 principal amount per Unit of MITTS
Securities. In general, rising Japanese dividend rates, or dividends per share,
may increase the value of the index while falling Japanese dividend rates may
decrease the value of the Index. Political, economic and other developments
that affect the stocks underlying the index may also affect the value of the
index and the value of the MITTS Securities.
CHANGES IN THE LEVELS OF INTEREST RATES ARE EXPECTED TO AFFECT THE
TRADING VALUE OF THE MITTS Securities. Because we will pay, at a minimum, the
principal amount per unit of the MITTS Securities at maturity, we expect that
changes in interest rates will affect the trading value of the MITTS
Securities. In general, if U.S. interest rates increase, we expect that the
trading value of the MITTS Securities will decrease and, conversely, if U.S.
interest rates decrease, we expect the trading value of the MITTS Securities
will increase. In general, if interest rates in Japan increase, we expect that
the trading value of the MITTS Securities will increase. If interest rates in
Japan decrease, we expect the trading value of the MITTS Securities will
decrease. However, interest rates in Japan may also affect the Japanese economy
and, in turn, the value of the index. Rising interest rates in Japan may lower
the value of the Index and the MITTS Securities. Falling interest rates in
Japan may increase the value of the Index and the value of the MITTS
Securities.
CHANGES IN THE VOLATILITY OF THE INDEX ARE EXPECTED TO AFFECT THE
TRADING VALUE OF THE MITTS SECURITIES. Volatility is the term used to describe
the size and frequency of market fluctuations. If the volatility of the Index
increases, we expect that the trading value of the Securities will increase. If
the volatility of the Index decreases, we expect that the trading value of the
MITTS Securities will decrease.
AS THE TIME REMAINING TO MATURITY OF THE MITTS SECURITIES DECREASES,
THE "TIME PREMIUM" ASSOCIATED WITH THE MITTS SECURITIES WILL DECREASE. We
anticipate that prior to the maturity of the MITTS Securities, the MITTS
Securities may trade at a value above that which would be expected based on the
level of interest rates and the index. This difference will reflect a "time
premium" due to expectations concerning the value of the index during the
period prior to maturity of the MITTS Securities. However, as the time
remaining to maturity of the MITTS Securities decreases, we expect that this
time premium will decrease, lowering the trading value of the MITTS Securities.
CHANGES IN DIVIDEND YIELDS OF THE STOCKS INCLUDED IN THE INDEX ARE
EXPECTED TO AFFECT THE TRADING VALUE OF THE MITTS SECURITIES. If dividend
yields on the stocks comprising the index increase, we expect that the value of
the MITTS Securities will decrease. Conversely, if dividend yields on the
stocks comprising the index decrease, we expect that the value of the MITTS
Securities will increase.
CHANGES IN OUR CREDIT RATINGS MAY AFFECT THE TRADING VALUE OF THE
MITTS SECURITIES. Our credit ratings are an assessment of our ability to pay
our obligations. Consequently, real or anticipated changes in our credit
ratings may affect the trading value of the MITTS Securities. However, because
your return on your MITTS Securities is dependent upon factors in addition to
our ability to pay our obligations under the MITTS Securities, such as the
percentage increase in the value of the index at maturity, an improvement in
our credit ratings will not reduce investment risks related to the MITTS
Securities.
In general, assuming all relevant factors are held constant, we expect
that the effect on the trading value of the MITTS Securities of a given change
in most of the factors listed above will be less if it occurs later in the term
of the MITTS Securities than if it occurs earlier in the term of the MITTS
Securities except that we expect that the effect on the trading value of the
MITTS Securities of a given increase in the value of the index will be greater
if it occurs later in the term of the MITTS Securities than if it occurs
earlier in the term of the MITTS Securities.
AMOUNTS PAYABLE ON THE MITTS SECURITIES MAY BE LIMITED BY STATE LAW.
New York State laws govern the indenture under which the MITTS
Securities are issued. New York has usury laws that limit the amount of
interest that can be charged and paid on loans, which includes debt securities
like the MITTS Securities. Under present New York law, the maximum rate of
interest is 25% per annum on a simple interest basis. This limit may not apply
to debt securities in which 2,500,000 or more has been invested.
While we believe that New York law would be given effect by a state or
Federal court sitting outside of New York, many other states also have laws
that regulate the amount of interest that chargeable to and payable by a
borrower. We will promise, for the benefit of the MITTS Securities holders, to
the extent permitted by law, not to voluntarily claim the benefits of any laws
concerning usurious rates of interest.
PURCHASES AND SALES BY US AND OUR AFFILIATES MAY AFFECT YOUR RETURN.
We, MLPF&S, and our affiliates may from time to time buy or sell the
stocks underlying the index for our own accounts for business reasons or in
connection with hedging our obligations under the MITTS Securities. These
transactions could affect the price of these stocks and the value of the index
in a manner that would be adverse to your investment in the MITTS Securities.
POTENTIAL CONFLICTS OF INTEREST
Our subsidiary, Merrill Lynch, Pierce, Fenner & Smith Incorporated or
MLPF&S, is our agent for the purposes of calculating the value of the index and
the amount payable to you at maturity. In some circumstances, MLPF&S's role as
our subsidiary and its responsibilities as calculation agent for the MITTS
Securities could give rise to conflicts of interests. These conflicts could
occur, for instance, in connection with its determination as to whether the
value of the index can be calculated on a particular trading day, or in
connection with judgments that it would be required to make in the event of a
discontinuance of the index. See "Description of the MITTS
Securities--Adjustments to the Index; Market Disruption Events" and
"--Discontinuance of the Index" in this prospectus. MLPF&S is required to carry
out its duties as calculation agent in good faith and using its reasonable
judgment. However, you should be aware that because we control MLPF&S,
potential conflicts of interest could arise.
We have entered into an arrangement with one of our subsidiaries to
hedge the market risks associated with our obligation to pay amounts due at
maturity on the MITTS Securities. This subsidiary expects to make a profit in
connection with this arrangement. We did not seek competitive bids for this
arrangement from unaffiliated parties.
MERRILL LYNCH & CO., INC.
We are a holding company that, through our U.S. and non-U.S.
subsidiaries and affiliates such as Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Merrill Lynch Government Securities Inc., Merrill Lynch Capital
Services, Inc., Merrill Lynch International, Merrill Lynch Capital Markets Bank
Ltd., Merrill Lynch Asset Management L.P. and Merrill Lynch Mercury Asset
Management, provides investment, financing, advisory, insurance, and related
products on a global basis, including:
o securities brokerage, trading and underwriting;
o investment banking, strategic services, including mergers and
acquisitions and other corporate finance advisory activities;
o asset management and other investment advisory and recordkeeping
services;
o trading and brokerage of swaps, options, forwards, futures and other
derivatives;
o securities clearance services;
o equity, debt and economic research;
o banking, trust and lending services, including mortgage lending and
related services; and
o insurance sales and underwriting services.
We provide these products and services to a wide array of clients, including
individual investors, small businesses, corporations, governments, governmental
agencies and financial institutions.
Our principal executive office is located at World Financial Center,
North Tower, 250 Vesey Street, New York, New York 10281; our telephone number
is (212) 449-1000.
If you want to find more information about us, please see the sections
entitled "Where You Can Find More Information" and "Incorporation of
Information We File with the SEC" in this prospectus.
In this prospectus, "ML&Co.", "we", "us" and "our" refer specifically
to Merrill Lynch & Co., Inc., the holding company. ML&Co. is the issuer of the
MITTS Securities described in this prospectus.
RATIO OF EARNINGS TO FIXED CHARGES
In 1998, we acquired the outstanding shares of Midland Walwyn Inc.,
in a transaction accounted for as a pooling-of-interests. The following
information for the fiscal years 1994 through 1997 has been restated as if the
two entities had always been combined.
The following table sets forth our historical ratios of earnings to
fixed charges for the periods indicated:
FOR THE THREE MONTHS
YEAR ENDED LAST FRIDAY IN DECEMBER ENDED
1994 1995 1996 1997 1998 MARCH 26, 1999
---- ---- ---- ---- ---- --------------
Ratio of earnings to fixed charges(a).......... 1.2 1.2 1.2 1.2 1.1 1.3
- ----------
(a) The effect of combining Midland Walwyn did not change the ratios
reported for the fiscal years 1994 through 1997.
For the purpose of calculating the ratio of earnings to fixed charges,
"earnings" consist of earnings from continuing operations before income taxes
and fixed charges, excluding capitalized interest and preferred security
dividend requirements of subsidiaries. "Fixed charges" consist of interest
costs, the interest factor in rentals, amortization of debt issuance costs,
preferred security dividend requirements of subsidiaries, and capitalized
interest.
DESCRIPTION OF THE MITTS SECURITIES
On June 3, 1997, ML&Co., Inc. issued an aggregate principal amount of
$255,000,000 or 25,500,000 units of the MITTS Securities.
The MITTS Securities were issued as a series of senior debt securities
under the 1983 Indenture which is more fully described in this prospectus.
The MITTS Securities will mature on June 14, 2002.
While at maturity a beneficial owner of a MITTS Security will receive
the principal amount of the MITTS Security plus the Supplemental Redemption
Amount described below, if any, there will be no other payment of interest,
periodic or otherwise. See "- Payment at Maturity" below.
ML&Co., or any beneficial owner, may not redeem the MITTS Securities
before maturity. Upon the occurrence of an Event of Default with respect to the
MITTS Securities, beneficial owners of the MITTS Securities may accelerate the
maturity of the MITTS Securities, as described under "- Events of Default and
Acceleration" and "Other Terms - Events of Default" in this prospectus.
The MITTS Securities were issued in denominations of whole units.
PAYMENT AT MATURITY
At the maturity date, a beneficial owner of a MITTS Security will be
entitled to receive the principal amount of each unit plus the Supplemental
Redemption Amount, if any, all as provided below. If the Supplemental
Redemption Amount is not greater than zero, a beneficial owner of a MITTS
Security will be entitled to receive only the principal amount of its MITTS
Securities.
The "SUPPLEMENTAL REDEMPTION AMOUNT" for a MITTS Security will be
determined by the calculation agent and will equal:
Principal Amount of each MITTS Security ($10 per Unit) X (Ending Index Value-Starting Index Value) X Participation Rate
(---------------------------------------)
( Starting Index Value )
PROVIDED, HOWEVER, that in no event will the Supplemental Redemption
Amount be less than zero.
The "STARTING INDEX VALUE" equals 20,351.34, the closing value of the
Index on the Pricing Date.
The "ENDING INDEX VALUE" will be determined by the calculation agent
and will equal the average or arithmetic mean of the closing values of the
Nikkei 225 Index (the "INDEX") determined on each of the first five Calculation
Days during the Calculation Period. If there are fewer than five Calculation
Days, then the Ending Value will equal the average or arithmetic mean of the
closing values of the Index on these Calculation Days, and if there is only one
Calculation Day, then the Ending Value will equal the closing value of the
Index on that Calculation Day. If no Calculation Days occur during the
Calculation Period, then the Ending Value will equal the closing value of the
Index determined on the last scheduled Index Business Day in the Calculation
Period, regardless of the occurrence of a Market Disruption Event on that day.
The "PARTICIPATION RATE" equals 140%.
The "CALCULATION PERIOD" means the period from and including the
seventh scheduled Index Business Day prior to the maturity date to and
including the second scheduled Index Business Day prior to the maturity date.
"CALCULATION DAY" means any Index Business Day during the Calculation
Period on which a Market Disruption Event has not occurred.
An "INDEX BUSINESS DAY" is a day on which the NYSE and the AMEX are
open for trading and the Index or any Successor Index, as defined on page 12
below, is calculated and published.
All determinations made by the calculation agent shall be at the sole
discretion of the calculation agent and, absent a determination by the
calculation agent of a manifest error, shall be conclusive for all purposes and
binding on ML&Co. and beneficial owners of the MITTS Securities.
HYPOTHETICAL RETURNS
The following table illustrates, for a range of hypothetical Ending Index
Values:
o the percentage change from the Starting Index Value to the Ending
Index Value;
o the total amount payable per unit of MITTS Securities;
o the total rate of return on the MITTS Securities;
o the pretax annualized rate of return on the MITTS Securities; and
o the pretax annualized rate of return of the stocks underlying the
Index, which includes an assumed aggregate dividend yield of .75% per
annum, as more fully described below.
TOTAL AMOUNT PRETAX PRETAX ANNUALIZED
PAYABLE AT MATURITY TOTAL RATE OF ANNUALIZED RATE RATE OF RETURN OF
PERCENTAGE CHANGE PER $10 PRINCIPAL RETURN ON OF RETURN ON STOCKS UNDERLYING
HYPOTHETICAL ENDING OVER THE STARTING AMOUNT OF MITTS THE MITTS THE MITTS THE
INDEX VALUE INDEX VALUE SECURITIES SECURITIES SECURITIES(1) INDEX(1)(2)
8,140.54 -60% $10.00 0.00% 0.00% -17.13%
10,175.67 -50% $10.00 0.00% 0.00% -12.86%
12,210.80 -40% $10.00 0.00% 0.00% -9.33%
14,245.94 -30% $10.00 0.00% 0.00% -6.32%
16,281.07 -20% $10.00 0.00% 0.00% -3.69%
18,316.21 -10% $10.00 0.00% 0.00% -1.35%
20,351.34(3) 0% $10.00 0.00% 0.00% 0.75%
22,386.47 10% $11.40 14.00% 2.62% 2.66%
24,421.61 20% $12.80 28.00% 4.97% 4.42%
26,456.74 30% $14.20 42.00% 7.09% 6.04%
28,491.88 40% $15.60 56.00% 9.04% 7.55%
30,527.01 50% $17.00 70.00% 10.83% 8.96%
32,562.14 60% $18.40 84.00% 12.50% 10.29%
34,597.28 70% $19.80 98.00% 14.05% 11.54%
36,632.41 80% $21.20 112.00% 15.51% 12.72%
38,667.55 90% $22.60 126.00% 16.88% 13.84%
40,702.68 100% $24.00 140.00% 18.18% 14.91%
42,737.81 110% $25.40 154.00% 19.42% 15.92%
44,772.95 120% $26.80 168.00% 20.59% 16.90%
46,808.08 130% $28.20 182.00% 21.71% 17.83%
- ----------
(1) The annualized rates of return specified in the preceding table are
calculated on a semiannual bond equivalent basis.
(2) This rate of return assumes:
(a) an investment of a fixed amount in the stocks underlying the Index
with the allocation of an amount reflecting the current relative
weights of the stocks in the Index; a constant dividend yield of .75%
per annum, paid quarterly from the date of initial delivery of MITTS
Securities, applied to the value of the Index at the end of each
quarter assuming this value increases or decreases linearly from the
Starting Value to the hypothetical Ending Index Value;
(b) a percentage change in the aggregate price of these stocks that
equals the percentage change in the Index from 20,351.34 to the
relevant hypothetical Ending Index Value;
(c) no transaction fees or expenses;
(d) the term of the MITTS Securities is from June 3, 1997 to June 14,
2002;
(e) a final Index value equal to the Ending Index Value. The aggregate
dividend yield of the stocks underlying the Index as of May 28, 1997
was approximately .75%.
(3) The Starting Index Value.
The above figures are for purposes of illustration only. The actual
Supplemental Redemption Amount received by investors and the resulting total
and pretax annualized rate of return will depend entirely on the actual Ending
Index Value determined by the calculation agent as provided in this prospectus.
ADJUSTMENTS TO THE INDEX; MARKET DISRUPTION EVENTS
"MARKET DISRUPTION EVENT" means either of the following events, as
determined by the calculation agent:
(a) a suspension, material limitation or absence of trading on the
Tokyo Stock Exchange (the "TSE") of 20% or more of the underlying
stocks included in the Index or a Successor Index during the
one-half hour period preceding the close of trading on the
applicable exchange; or
(b) the suspension or material limitation on the Singapore
International Monetary Exchange, Ltd. (the "SIMEX"), the Osaka
Securities Exchange (the "OSE") or any other major futures or
securities market from trading in futures or options contracts
related to the Index or a Successor Index during the one-half
hour period preceding the close of trading on the applicable
exchange.
For the purposes of determining whether a Market Disruption Event has occurred:
o a limitation on the hours or number of days of trading will not
constitute a Market Disruption Event if it results from an announced
change in the regular business hours of the relevant exchange,
o a decision to permanently discontinue trading in the relevant futures
or options contract will not constitute a Market Disruption Event,
o a suspension in trading in a futures or options contracts on the
Index by a major securities market by reason of
o a price change violating limits set by that securities market,
o an imbalance of orders relating to futures or options contracts or
o a disparity in bid and ask quotes relating to futures or options
contracts will constitute a suspension or material limitation of
trading in futures or options contracts related to the Index, and,
o an absence of trading on the TSE will not include any time when the
TSE is closed for trading under ordinary circumstances. In some
circumstances, the duties of MLPF&S as calculation agent in
determining the existence of Market Disruption Events could conflict
with the interests of MLPF&S as an affiliate of the issuer of the
MITTS Securities.
DISCONTINUANCE OF THE INDEX
If the publisher of the Nikkei 225 Index, Nihon Keizai Shimbum, Inc.
("NKS"), discontinues publication of the Index and NKS or another entity
publishes a successor or substitute index that the calculation agent
determines, in its sole discretion, to be comparable to the Index (any
successor or substitute index is referred to as a "Successor Index"), then,
upon the calculation agent's notification of its determination to the trustee
and ML&Co., the calculation agent will substitute the Successor Index as
calculated by NKS or other entity for the Index and calculate the Ending Value
as described above under "-Payment at Maturity". Upon any selection by the
calculation agent of a Successor Index, ML&Co. shall cause notice of that
selection to be given to holders of the MITTS Securities.
If NKS discontinues publication of the Index and a Successor Index is
not selected by the calculation agent or is no longer published on any of the
Calculation Days, the value to be substituted for the Index for a Calculation
Day used to calculate the Supplemental Redemption Amount at maturity will be a
value computed by the calculation agent for each Calculation Day in accordance
with the procedures last used to calculate the Index prior to the
discontinuance. If a Successor Index is selected or the calculation agent
calculates a value as a substitute for the Index as described below, the
Successor Index or value shall be substituted for the Index for all purposes,
including for purposes of determining whether a Market Disruption Event exists.
If the calculation agent calculates a value as a substitute for the Index,
"Calculation Day" shall mean any day on which the calculation agent is able to
calculate that value.
If NKS discontinues publication of the Index prior to the period
during which the Supplemental Redemption Amount is to be determined and the
calculation agent determines that no Successor Index is available at that time,
then on each Business Day until the earlier to occur of
o the determination of the Ending Value and
o a determination by the calculation agent that a Successor Index is
available,
the calculation agent shall determine the value that would be used in computing
the Supplemental Redemption Amount as described in the preceding paragraph as
if that day were a Calculation Day. The calculation agent will cause notice of
these values to be published not less often than once each month in THE WALL
STREET JOURNAL, or another newspaper of general circulation, and arrange for
information with respect to these values to be made available by telephone.
Notwithstanding these alternative arrangements, discontinuance of the
publication of the Index may adversely affect trading in the MITTS Securities.
EVENTS OF DEFAULT AND ACCELERATION
If an Event of Default with respect to any MITTS Securities has
occurred and is continuing, the amount payable to a beneficial owner of a MITTS
Security upon any acceleration permitted by the MITTS Securities, with respect
to each $10 principal amount per unit, will be equal to the principal amount
per unit and the Supplemental Redemption Amount, if any, calculated as though
the date of early repayment were the stated maturity date of the MITTS
Securities. See "- Payment at Maturity" in this prospectus. If a bankruptcy
proceeding is commenced in respect of ML&Co., the claim of the beneficial owner
of a MITTS Security may be limited, under Section 502(b)(2) of Title 11 of the
United States Code, to the principal amount per unit of the MITTS Security plus
an additional amount of contingent interest calculated as though the date of
the commencement of the proceeding were the maturity date of the MITTS
Securities.
In case of default in payment of the MITTS Securities, whether at the
stated maturity or upon acceleration, from and after the maturity date the
MITTS Securities shall bear interest, payable upon demand of the beneficial
owners of the MITTS Securities, at the rate of 6.96% per annum, to the extent
that payment of any interest shall be legally enforceable, on the unpaid amount
due and payable on that date in accordance with the terms of the MITTS
Securities to the date payment of any amount has been made or duly provided
for.
GLOBAL SECURITIES
DESCRIPTION OF THE GLOBAL SECURITIES
Beneficial owners of the MITTS Securities may not receive physical
delivery of the MITTS Securities nor may they be entitled to have the MITTS
Securities registered in their names. The MITTS Securities currently are
represented by one or more fully registered global securities. Each global
security was deposited with, or on behalf of, The Depository Trust Company or
DTC, DTC, together with any successor, being a "depositary", as depositary,
registered in the name of Cede & Co., DTC's partnership nominee, unless and
until it is exchanged in whole or in part for MITTS Securities in definitive
form, the global security is not transferrable except as a whole by the
depositary to a nominee of the depositary or by a nominee of the depositary to
the depositary or another nominee of the depositary or by the depositary or any
nominee to a successor of the depositary or a nominee of that successor.
So long as DTC, or its nominee, is a registered owner of a global
security, DTC or its nominee, as appropriate, will be considered the sole owner
or holder of the MITTS Securities represented by a global security for all
purposes under the 1983 Indenture. Except as provided below, the beneficial
owners of the MITTS Securities represented by a global security will not be
entitled to have the MITTS Securities represented by the global security
registered in their names, will not receive or be entitled to receive physical
delivery of the MITTS Securities in definitive form and will not be considered
the owners or holders under the 1983 Indenture, including for purposes of
receiving any reports delivered by ML&Co. or the trustee under the 1983
Indenture. Accordingly, each person owning a beneficial interest in a global
security must rely on the procedures of DTC and, if that person is not a
participant of DTC on the procedures of the participant through which the
person owns its interest, to exercise any rights of a holder under the 1983
Indenture. ML&Co. understands that under existing industry practices, in the
event that ML&Co. requests any action of holders or that an owner of a
beneficial interest in a global security desires to give or take any action
which a holder is entitled to give or take under the 1983 Indenture, DTC would
authorize the participants holding the relevant beneficial interests to give or
take any action, and the participants would authorize beneficial owners owning
through those participants to give or take action or would otherwise act upon
the instructions of beneficial owners. Arrangements among participants,
indirect participants and beneficial owners, will govern conveyance of notices
and other communications by DTC to participants, by participants to indirect
participants and by participants and indirect participants to beneficial
owners, subject to any statutory or regulatory requirements in effect from time
to time.
DTC PROCEDURES
The following is based on information furnished by DTC:
DTC is the securities depositary for the MITTS Securities. The MITTS
Securities were issued as fully registered securities registered in the name of
Cede & Co., DTC's partnership nominee. One or more fully registered global
securities were issued for the MITTS Securities in the aggregate principal
amount of the MITTS Securities, and were deposited with DTC.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered under to the provisions of Section 17A of the Securities and
Exchange Act of 1934, as amended. DTC holds securities that its participants
deposit with DTC. DTC also facilitates the settlement among participants of
securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in participants' accounts,
thereby eliminating the need for physical movement of securities certificates.
Direct participants of DTC include securities brokers and dealers, banks, trust
companies, clearing corporations and other organizations. DTC is owned by a
number of its direct participants and by the NYSE, the AMEX and the National
Association of Securities Dealers, Inc. Access to DTC's system is also
available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain a custodial relationship with a direct
participant, either directly or indirectly. The rules applicable to DTC and its
participants are on file with the SEC.
Purchases of MITTS Securities under DTC's system must be made by or
through direct participants, which will receive a credit for the MITTS
Securities on DTC's records. The ownership interest of each beneficial owner is
in turn to be recorded on the records of direct and indirect participants.
Beneficial owners will not receive written confirmation from DTC of their
purchase, but beneficial owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the direct participants or indirect participants through which
the beneficial owner entered into the transaction. Transfers of ownership
interests in the MITTS Securities are to be accomplished by entries made on the
books of participants acting on behalf of beneficial owners.
To facilitate subsequent transfers, all MITTS Securities deposited
with DTC are registered in the name of DTC's partnership nominee, Cede & Co.
The deposit of MITTS Securities with DTC and their registration in the name of
Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of
the actual beneficial owners of the MITTS Securities; DTC's records reflect
only the identity of the direct participants to whose accounts the MITTS
Securities are credited, which may or may not be the beneficial owners. The
participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Arrangements among participants, indirect participants and beneficial
owners, will govern conveyance of notices and other communications by DTC to
participants, by participants to indirect participants and by participants and
indirect participants to beneficial owners, subject to any statutory or
regulatory requirements in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the
MITTS Securities. Under its usual procedures, DTC mails an omnibus proxy to
ML&Co. as soon as possible after the applicable record date. The omnibus proxy
assigns Cede & Co.'s consenting or voting rights to those direct participants
identified in a listing attached to the omnibus proxy to whose accounts the
MITTS Securities are credited on the record date identified in a listing
attached to the omnibus proxy.
Principal, premium, if any, and/or interest, if any, payments on the
MITTS Securities will be made in immediately available funds to DTC. DTC's
practice is to credit direct participants' accounts on the applicable payment
date in accordance with their respective holdings shown on the depositary's
records unless DTC has reason to believe that it will not receive payment on
that date. Standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in
"street name", will govern payments by participants to beneficial owners, and
these payments will be the responsibility of the participant and not of DTC,
the trustee or ML&Co., subject to any statutory or regulatory requirements in
effect from time to time. Payment of principal, premium, if any, and/or
interest, if any, to DTC is the responsibility of ML&Co. or the trustee,
disbursement of payments to direct participants is the responsibility of DTC,
and disbursement of payments to the beneficial owners is the responsibility of
direct and indirect participants.
EXCHANGE FOR CERTIFICATED SECURITIES
If:
o the depositary is at any time unwilling or unable to continue as
depositary and a successor depositary is not appointed by ML&Co.
within 60 days,
o ML&Co. executes and delivers to the trustee a company order to the
effect that the global securities shall be exchangeable, or
o an Event of Default under the 1983 Indenture has occurred and is
continuing with respect to the MITTS Securities,
DTC will exchange the global securities for MITTS Securities in definitive form
of like tenor and of an equal aggregate principal amount, in denominations of
$10 and integral multiples of $10. The definitive MITTS Securities will be
registered in the name or names as the depositary shall instruct the trustee.
The depositary expects that these instructions may be based upon directions
received by the depositary from participants with respect to ownership of
beneficial interests in the global securities.
In addition, ML&Co. may decide to discontinue use of the system of
book-entry transfers through the depositary. In that event, MITTS Securities in
definitive form will be printed and delivered to holders.
The information in this section concerning DTC and DTC's system has
been obtained from sources that ML&Co. believes to be reliable, but ML&Co.
takes no responsibility for its accuracy.
SAME-DAY SETTLEMENT AND PAYMENT
ML&Co will make all payments of principal and the Supplemental
Redemption Amount, if any, in immediately available funds so long as the MITTS
Securities are maintained in book-entry form.
THE INDEX
All disclosure contained in this prospectus regarding the Index,
including, without limitation, its make-up, method of calculation and changes
in its components, is derived from publicly available information prepared by
Nihon Keizai Shimbun, Inc. ("NKS").
Unless otherwise stated, all information in this prospectus relating
to the Nikkei 225 Index has been derived from the Stock Market Indices Data
Book published by NKS and other publicly-available sources. This information
reflects the policies of NKS as stated in these sources. These policies are
subject to change at the discretion of NKS.
The Nikkei 225 Index is a stock index calculated, published and
disseminated by NKS that measures the composite price performance of selected
Japanese stocks. The Nikkei 225 Index is currently based on 225 Underlying
Stocks trading on the TSE and represents a broad cross-section of Japanese
industry. All 225 Underlying Stocks are stocks listed in the First Section of
the TSE. Stocks listed in the First Section are among the most actively traded
stocks on the TSE. Futures and options contracts on the Nikkei 225 Index are
traded on the Singapore International Monetary Exchange Ltd., the Osaka
Securities Exchange and the Chicago Mercantile Exchange.
The value of the Nikkei 225 Index is reported on the AMEX under the
symbol "N225", on Bloomberg under the symbol "NKY" and on Reuters under the
symbol ".N225".
The Nikkei 225 Index is a modified, price-weighted index (i.e., an
Underlying Stock's weight in the index is based on its price per share rather
than the total market capitalization of the issuer) which is calculated by:
o multiplying the per share price of each Underlying Stock by the
corresponding weighting factor for the Underlying Stock (a "WEIGHT
FACTOR"),
o calculating the sum of all these products, and
o dividing this sum by a divisor.
The divisor, initially set in 1949 at 225, was 10.743 as of June 16,
1999, and is subject to periodic adjustments as set forth below. Each Weight
Factor is computed by dividing (Y)50 by the par value of the relevant
Underlying Stock, so that the share price of each Underlying Stock when
multiplied by its Weight Factor corresponds to a share price based on a uniform
par value of (Y)50. Each Weight Factor represents the number of shares of the
related Underlying Stock which are included in one trading unit of the Nikkei
225 Index. The stock prices used in the calculation of the Nikkei 225 Index are
those reported by a primary market for the Underlying Stocks, currently the
TSE. The level of the Nikkei 225 Index is calculated once per minute during TSE
trading hours.
In order to maintain continuity in the level of the Nikkei 225 Index
in the event of certain changes due to non-market factors affecting the
Underlying Stocks, including the addition or deletion of stocks, substitution
of stocks, stock dividends, stock splits or distributions of assets to
stockholders, the divisor used in calculating the Nikkei 225 Index is adjusted
in a manner designed to prevent any instantaneous change or discontinuity in
the level of the Nikkei 225 Index. Thereafter, the divisor remains at the new
value until a further adjustment is necessary as the result of another change.
As a result of each change affecting any Underlying Stock, the divisor is
adjusted so that the sum of all share prices immediately after the change
multiplied by the applicable Weight Factor and divided by the new divisor, the
level of the Nikkei 225 Index immediately after the change, will equal the
level of the Nikkei 225 Index immediately prior to the change.
NKS may delete or add Underlying Stocks. However, to maintain
continuity in the Nikkei 225 Index, the policy of NKS is generally not to alter
the composition of the Underlying Stocks except when an Underlying Stock is
deleted in accordance with the following criteria. NKS will delete from the
Underlying Stocks any stock becoming ineligible for listing in the First
Section of the TSE due to any of the following reasons: bankruptcy of the
issuer; merger of the issuer into, or acquisition of the issuer by, another
company; delisting of the stock or transfer of the stock to the "Seiri-Post"
because of excess debt of the issuer or because of any other reason; or
transfer of the stock to the Second Section of the TSE. Upon deletion of a
stock from the Underlying Stocks, NKS will select, in accordance with certain
criteria established by it, a replacement for the deleted Underlying Stock. In
an exceptional case, NKS may add to the Underlying Stocks a newly listed stock
in the First Section of the TSE that is recognized by NKS to be representative
of a market. In that case, NKS will delete an existing Underlying Stock with
low trading volume that is not representative of a market.
NKS is under no obligation to continue the calculation and
dissemination of the Nikkei 225 Index. The MITTS Securities are not sponsored,
endorsed, sold or promoted by NKS. No inference should be drawn from the
information contained in this prospectus that NKS makes any representation or
warranty, implied or express, to Merrill Lynch & Co., the holders of the MITTS
Securities or any member of the public regarding the advisability of investing
in securities generally or in the MITTS Securities in particular or the ability
of the Nikkei 225 Index to track general stock market performance. NKS has no
obligation to take the needs of ML&Co. or the holders of the MITTS Securities
into consideration in determining, composing or calculating the Nikkei 225
Index. NKS is not responsible for, and has not participated in the
determination of the timing of, prices for, or quantities of, the MITTS
Securities to be issued or in the determination or calculation of the equation
by which the MITTS Securities are to be settled in cash. NKS has no obligation
or liability in connection with the administration, marketing or trading of the
MITTS Securities.
The use of and reference to the Nikkei 225 Index in connection with
the MITTS Securities have been consented to by NKS, the publisher of the Nikkei
225 Index.
None of ML&Co., the calculation agent and the underwriter accepts any
responsibility for the calculation, maintenance or publication of the Nikkei
225 Index or any Successor Index. NKS disclaims all responsibility for any
errors or omissions in the calculation and dissemination of the Nikkei 225
Index or the manner in which the Index is applied in determining any Starting
or Ending Index Values or any Supplemental Redemption Amount upon maturity of
the MITTS Securities.
THE TOKYO STOCK EXCHANGE
The Tokyo Stock Exchange is one of the world's largest securities
exchanges in terms of market capitalization. The TSE market is a two-way,
continuous pure auction market. Trading hours are currently from 9:00 A.M. to
11:00 A.M. and from 12:30 P.M. to 3:00 P.M., Tokyo time, Monday through
Friday.
Due to the time zone difference, on any normal trading day the TSE
will close prior to the opening of business in New York City on the same
calendar day. Therefore, the closing level of the Nikkei 225 Index on a trading
day will generally be available in the United States by the opening of business
on the same calendar day.
THE TSE HAS ADOPTED CERTAIN MEASURES, INCLUDING DAILY PRICE FLOORS AND CEILINGS
ON INDIVIDUAL STOCKS, INTENDED TO PREVENT ANY EXTREME SHORT-TERM PRICE
FLUCTUATIONS RESULTING FROM ORDER IMBALANCES. IN GENERAL, ANY STOCK LISTED ON
THE TSE CANNOT BE TRADED AT A PRICE LOWER THAN THE APPLICABLE PRICE FLOOR OR
HIGHER THAN THE APPLICABLE PRICE CEILING. THESE PRICE FLOORS AND CEILINGS ARE
EXPRESSED IN ABSOLUTE JAPANESE YEN, RATHER THAN PERCENTAGE, LIMITS BASED ON THE
CLOSING PRICE OF THE STOCK ON THE PREVIOUS TRADING DAY. IN ADDITION, WHEN THERE
IS A MAJOR ORDER IMBALANCE IN A LISTED STOCK, THE TSE POSTS A "SPECIAL BID
QUOTE" OR A "SPECIAL ASKED QUOTE" FOR THAT STOCK AT A SPECIFIED HIGHER OR LOWER
PRICE LEVEL THAN THE STOCK'S LAST SALE PRICE IN ORDER TO SOLICIT COUNTER-ORDERS
AND BALANCE SUPPLY AND DEMAND FOR THE STOCK. INVESTORS SHOULD ALSO BE AWARE
THAT THE TSE MAY SUSPEND THE TRADING OF INDIVIDUAL STOCKS IN CERTAIN LIMITED
AND EXTRAORDINARY CIRCUMSTANCES, INCLUDING, FOR EXAMPLE, UNUSUAL TRADING
ACTIVITY IN THAT STOCK. AS A RESULT, CHANGES IN THE NIKKEI 225 INDEX MAY BE
LIMITED BY PRICE LIMITATIONS OR SPECIAL QUOTES, OR BY SUSPENSION OF TRADING, ON
INDIVIDUAL STOCKS WHICH COMPRISE THE NIKKEI 225 INDEX. THESE LIMITATIONS MAY,
IN TURN, ADVERSELY AFFECT THE VALUE OF THE MITTS SECURITIES.
OTHER TERMS
ML&Co. issued the MITTS Securities as a series of senior debt
securities under the 1983 Indenture, dated as of April 1, 1983, as amended and
restated, between ML&Co. and The Chase Manhattan Bank, as trustee. A copy of
the 1983 Indenture is filed as an exhibit to the registration statement
relating to the MITTS Securities of which this prospectus is a part. The
following summaries of the material provisions of the 1983 Indenture are not
complete and are subject to, and qualified in their entirety by reference to,
all provisions of the 1983 Indenture, including the definitions of terms in the
1983 Indenture.
ML&Co. may issue series of senior debt securities from time to time
under the 1983 Indenture, without limitation as to aggregate principal amount,
in one or more series and upon terms as ML&Co. may establish under the
provisions of the 1983 Indenture.
The 1983 Indenture and the MITTS Securities are governed by and
construed in accordance with the laws of the State of New York.
ML&Co. may issue senior debt securities with terms different from
those of senior debt securities previously issued, and issue additional senior
debt securities of a previously issued series of senior debt securities.
The senior debt securities are unsecured and rank equally with all
other unsecured and unsubordinated indebtedness of ML&Co. However, because
ML&Co. is a holding company, the rights of ML&Co. and its creditors, including
the holders of senior debt securities, to participate in any distribution of
the assets of any subsidiary upon its liquidation or reorganization or
otherwise are necessarily subject to the prior claims of creditors of the
subsidiary, except to the extent that a bankruptcy court may recognize claims
of ML&Co. itself as a creditor of the subsidiary. In addition, dividends, loans
and advances from certain subsidiaries, including MLPF&S, to ML&Co. are
restricted by net capital requirements under the Exchange Act, and under rules
of exchanges and other regulatory bodies.
LIMITATIONS UPON LIENS
ML&Co. may not, and may not permit any majority-owned subsidiary to,
create, assume, incur or permit to exist any indebtedness for borrowed money
secured by a pledge, lien or other encumbrance, other than those liens
specifically permitted by the 1983 Indenture, on the Voting Stock owned
directly or indirectly by ML&Co. of any majority-owned subsidiary, other than a
majority-owned subsidiary which, at the time of the incurrence of the secured
indebtedness, has a net worth of less than $3,000,000, unless the outstanding
senior debt securities are secured equally and ratably with the secured
indebtedness.
"Voting Stock" is defined in the 1983 Indenture as the stock of the
class or classes having general voting power under ordinary circumstances to
elect at least a majority of the board of directors, managers or trustees of a
corporation provided that, for the purposes of the 1983 Indenture, stock that
carries only the right to vote conditionally on the occurrence of an event is
not considered voting stock whether or not the event has happened.
LIMITATION ON DISPOSITION OF VOTING STOCK OF, AND MERGER AND
SALE OF ASSETS BY, MLPF&S
ML&Co. may not sell, transfer or otherwise dispose of any Voting Stock
of MLPF&S or permit MLPF&S to issue, sell or otherwise dispose of any of its
Voting Stock, unless, after giving effect to any transaction, MLPF&S remains a
Controlled Subsidiary.
"Controlled Subsidiary" is defined in the 1983 Indenture to mean a
corporation more than 80% of the outstanding shares of Voting Stock of which
are owned directly or indirectly by ML&Co.
In addition, ML&Co. may not permit MLPF&S to:
o merge or consolidate, unless the surviving company is a Controlled
Subsidiary, or
o convey or transfer its properties and assets substantially as an
entirety, except to one or more Controlled Subsidiaries.
MERGER AND CONSOLIDATION
ML&Co. may consolidate or merge with or into any other corporation
and ML&Co. may sell, lease or convey all or substantially all of its assets to
any corporation, provided that:
o the resulting corporation, if other than ML&Co., is a corporation
organized and existing under the laws of the United States of America
or any U.S. state and assumes all of ML&Co.'s obligations to:
o pay any amounts due and payable or deliverable with respect to all
the senior debt securities; and
o perform and observe all of ML&Co.'s obligations under the 1983
Indenture, and
o ML&Co. or the successor corporation, as the case may be, is not,
immediately after any consolidation or merger, in default under the
1983 Indenture.
MODIFICATION AND WAIVER
ML&Co. and the trustee may modify and amend the 1983 Indenture with
the consent of holders of at least 66 2/3% in principal amount of each
outstanding series of senior debt securities affected. However, without the
consent of each holder of any outstanding senior debt security affected, no
amendment or modification to the 1983 Indenture may:
o change the stated maturity date of the principal of, or any
installment of interest or Additional Amounts payable on, any senior
debt security or any premium payable on redemption, or change the
redemption price;
o reduce the principal amount of, or the interest or Additional Amounts
payable on, any senior debt security or reduce the amount of
principal which could be declared due and payable before the stated
maturity date;
o change the place or currency of any payment of principal or any
premium, interest or Additional Amounts payable on any senior debt
security;
o impair the right to institute suit for the enforcement of any payment
on or with respect to any senior debt security;
o reduce the percentage in principal amount of the outstanding senior
debt securities of any series, the consent of whose holders is
required to modify or amend the 1983 Indenture; or
o modify the foregoing requirements or reduce the percentage of
outstanding senior debt securities necessary to waive any past
default to less than a majority.
No modification or amendment of ML&Co.'s Subordinated Indenture or any
Subsequent Indenture for subordinated debt securities may adversely affect the
rights of any holder of ML&Co.'s senior indebtedness without the consent of
each holder affected. The holders of at least a majority in principal amount of
outstanding senior debt securities of any series may, with respect to that
series, waive past defaults under the 1983 Indenture and waive compliance by
ML&Co. with provisions in the 1983 Indenture, except as described under
"--Events of Default".
EVENTS OF DEFAULT
Each of the following will be Events of Default with respect to
senior debt securities of any series:
o default in the payment of any interest or Additional Amounts payable
when due and continuing for 30 days;
o default in the payment of any principal or premium when due;
o default in the deposit of any sinking fund payment, when due;
o default in the performance of any other obligation of ML&Co.
contained in the 1983 Indenture for the benefit of that series or in
the senior debt securities of that series, continuing for 60 days
after written notice as provided in the 1983 Indenture;
o specified events in bankruptcy, insolvency or reorganization of
ML&Co.; and
o any other Event of Default provided with respect to senior debt
securities of that series which are not inconsistent with the 1983
Indenture.
If an Event of Default occurs and is continuing for any series of
senior debt securities, other than as a result of the bankruptcy, insolvency or
reorganization of ML&Co., the trustee or the holders of at least 25% in
principal amount of the outstanding senior debt securities of that series may
declare all amounts, or any lesser amount provided for in the senior debt
securities, due and payable or deliverable immediately. At any time after a
declaration of acceleration has been made with respect to senior debt
securities of any series but before the trustee has obtained a judgment or
decree for payment of money, the holders of a majority in principal amount of
the outstanding senior debt securities of that series may rescind any
declaration of acceleration and its consequences, if all payments due, other
than those due as a result of acceleration, have been made and all Events of
Default have been remedied or waived.
The holders of a majority in principal amount or aggregate issue price
of the outstanding senior debt securities of that series may waive any Event of
Default with respect to that series, except a default:
o in the payment of any amounts due and payable or deliverable under
the debt securities of that series; or
o in respect of an obligation or provision of the 1983 Indenture which
cannot be modified under the terms of that Indenture without the
consent of each holder of each outstanding security of each series of
senior debt securities affected.
The holders of a majority in principal amount of the outstanding
senior debt securities of a series may direct the time, method and place of
conducting any proceeding for any remedy available to the trustee or exercising
any trust or power conferred on the trustee with respect to those senior debt
securities, provided that any direction shall not be in conflict with any rule
of law or the 1983 Indenture. Before proceeding to exercise any right or power
under the 1983 Indenture at the direction of the holders, the trustee shall be
entitled to receive from the holders reasonable security or indemnification
against the costs, expenses and liabilities which might be incurred by it in
complying with any direction.
The MITTS Securities and other series of senior debt securities issued
under the 1983 Indenture do not have the benefit of any cross-default
provisions with other indebtedness of ML&Co.
ML&Co. is required to furnish to the trustee annually a statement as
to the fulfillment by ML&Co. of all of its obligations under the 1983
Indenture.
PROJECTED PAYMENT SCHEDULE
Solely for purposes of applying final Treasury regulations (the "Final
Regulations") concerning the United States Federal income tax treatment of
contingent payment debt instruments to the MITTS Securities, ML&Co. has
determined that the projected payment schedule for the MITTS Securities will
consist of payment on the maturity date of the principal amount and a
Supplemental Redemption Amount equal to $4.1078 per Unit. This represents an
estimated yield on the MITTS Securities equal to 6.96% per annum, compounded
semiannually.
The projected payment schedule, including both the projected
Supplemental Redemption Amount and the estimated yield on the MITTS Securities,
has been determined solely for United States Federal income tax purposes, for
purposes of applying the Final Regulations to the MITTS Securities, and is not
a prediction of what the actual Supplemental Redemption Amount will be, or that
the actual Supplemental Redemption Amount will even exceed zero.
The following table sets forth the amount of interest that will be
deemed to have accrued with respect to each Unit of the MITTS Securities during
each accrual period over the term of the Securities based upon the projected
payment schedule for the MITTS Securities, including both the projected
Supplemental Redemption Amount and the estimated yield equal to 6.96% per
annum, compounded semiannually, as determined by ML&Co. for purposes of the
application of the Final Regulations to the MITTS Securities:
INTEREST DEEMED TO TOTAL INTEREST DEEMED
CCRUE DURING ACCRUAL TO HAVE ACCRUED ON
ACCRUAL PERIOD PERIOD (PER UNIT) MITTS SECURITIES AS OF END
(PER UNIT) OF ACCRUAL PERIOD
June 3, 1997 through June 14, 1997................... $0.0206 $0.0206
June 15, 1997 through December 14, 1997.............. $0.3506 $0.3712
December 15, 1997 through June 14, 1998.............. $0.3590 $0.7302
June 15, 1998 through December 14, 1998.............. $0.3734 $1.1036
December 15, 1998 through June 14, 1999.............. $0.3864 $1.4900
June 15, 1999 through December 14, 1999.............. $0.3999 $1.8899
December 15, 1999 through June 14, 2000.............. $0.4138 $2.3037
June 15, 2000 through December 14, 2000.............. $0.4281 $2.7318
June 15, 2001 through December 14, 2001.............. $0.4585 $3.6334
December 15, 2001 through June 14, 2002.............. $0.4744 $4.1078
_______
Projected Supplemental Redemption Amount = $4.1078 per Unit.
Investors in the MITTS Securities may also obtain the projected
payment schedule, as determined by ML&Co. for purposes of the application of
the Final Regulations to the MITTS Securities, by submitting a written request
for such information to Merrill Lynch & Co., Inc., Attn: Darryl W. Colletti,
Office of the Corporate Secretary, 100 Church Street, New York, New York 10080.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the SEC.
Our SEC filings are also available over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file by visiting
the SEC's public reference rooms in Washington, D.C., New York, New York, and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information about the public reference rooms. You may also inspect our SEC
reports and other information at the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005.
We have filed a registration statement on Form S-3 with the SEC
covering the MITTS Securities and other securities. For further information on
ML&Co. and the MITTS Securities, you should refer to our registration statement
and its exhibits. This prospectus summarizes material provisions of contracts
and other documents that we refer you to. Because the prospectus may not
contain all the information that you may find important, you should review the
full text of these documents. We have included copies of these documents as
exhibits to our registration statement of which this prospectus is a part.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to incorporate by reference the information we file
with them, which means:
o incorporated documents are considered part of the prospectus;
o we can disclose important information to you by referring you to
those documents; and
o information that we file with the SEC will automatically update and
supersede this incorporated information.
We incorporate by reference the documents listed below which were
filed with the SEC under the Exchange Act:
o annual report on Form 10-K for the year ended December 25, 1998;
o quarterly report on Form 10-Q for the period ended March 26, 1999; and
o current reports on Form 8-K dated December 28, 1998, January 19,
1999, February 17, 1999, February 18, 1999, February 22, 1999,
February 23, 1999, March 26, 1999, April 13, 1999, April 19, 1999,
May 26, 1999, May 28, 1999 and June 1, 1999.
We also incorporate by reference each of the following documents that
we will file with the SEC after the date of this prospectus until this offering
is completed:
o reports filed under Sections 13(a) and (c) of the Exchange Act;
o definitive proxy or information statements filed under Section 14 of
the Exchange Act in connection with any subsequent stockholders'
meeting; and
o any reports filed under Section 15(d) of the Exchange Act.
You should rely only on information contained or incorporated by
reference in this prospectus. We have not, and MLPF&S has not, authorized any
other person to provide you with different information. If anyone provides you
with different or inconsistent information, you should not rely on it. We are
not, and MLPF&S is not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted.
You should assume that the information appearing in this prospectus is
accurate as of the date of this prospectus only. Our business, financial
condition and results of operations may have changed since that date.
You may request a copy of any filings referred to above (excluding
exhibits), at no cost, by contacting us at the following address: Mr. Lawrence
M. Egan, Jr., Corporate Secretary's Office, Merrill Lynch & Co., Inc., 100
Church Street, New York, New York 10080-6512, Telephone: (212) 602-8435.
PLAN OF DISTRIBUTION
This prospectus has been prepared in connection with secondary sales
of the MITTS Securities and is to be used by MLPF&S when making offers and
sales related to market-making transactions in the MITTS Securities.
MLPF&S may act as principal or agent in these market-making
transactions.
The MITTS Securities may be offered on the NYSE or off the exchange in
negotiated transactions or otherwise.
The distribution of the MITTS Securities will conform to the
requirements set forth in the applicable sections of Rule 2720 of the Conduct
Rules of the NASD.
EXPERTS
The consolidated financial statements and the related financial
statement schedule incorporated in this prospectus by reference from the Annual
Report on Form 10-K of Merrill Lynch & Co., Inc. and subsidiaries have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports (which express an unqualified opinion and which report on the
consolidated financial statements includes an explanatory paragraph for the
change in accounting method for certain internal-use software development
costs), which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
With respect to unaudited interim financial information for the
periods included in the Quarterly Reports on Form 10-Q which are incorporated
herein by reference, Deloitte & Touche LLP have applied limited procedures in
accordance with professional standards for a review of such information.
However, as stated in their reports included in such Quarterly Reports on Form
10-Q and incorporated by reference herein, they did not audit and they do not
express an opinion on such interim financial information. Accordingly, the
degree of reliance on their reports on such information should be restricted in
light of the limited nature of the review procedures applied. Deloitte & Touche
LLP is not subject to the liability provisions of Section 11 of the Securities
Act for any such report on unaudited interim financial information because any
such report is not a "report" or a "part" of the Registration Statement
prepared or certified by an accountant within the meaning of Sections 7 and 11
of the Securities Act.