RULE NO. 424(b)(5)
REGISTRATION NO. 333-68747
P R O S P E C T U S
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MERRILL LYNCH & CO., INC.
7 7/8% STRUCTURED YIELD PRODUCT EXCHANGEABLE FOR STOCK SM
DUE FEBRUARY 1, 2001
"STRYPES SM "
PAYABLE WITH SHARES OF COMMON STOCK OF CIBER, INC.
OR CASH WITH AN EQUAL VALUE
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Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, our wholly-owned subsidiary, will use this prospectus when making
offers and sales related to market-making transactions in the STRYPES.
The issue price of each STRYPES was $54.125, which was the last sale
price of one share of common stock, par value $.01 per share, of CIBER on
January 26, 1998, as reported on the New York Stock Exchange. The STRYPES will
mature on February 1, 2001.
WHAT YOU WILL RECEIVE BEFORE THE MATURITY DATE:
o On each February 1, May 1, August 1 and November 1, beginning May 1, 1998,
we will pay you interest on the STRYPES in cash at the rate of 7 7/8% per
year.
WHAT YOU WILL RECEIVE ON THE MATURITY DATE:
o For each STRYPES you own, you will receive a number of shares of common
stock of CIBER or an equivalent amount of cash according to the maturity
price. The maturity price is the average closing price per share of common
stock of CIBER on a number of days before the maturity date. The amount you
will receive is also subject to adjustments, which are more fully described
in this prospectus.
IF THE MATURITY PRICE IS: YOU WILL RECEIVE:
(a) greater than $91.4713 .7692 shares of common stock of CIBER
(b) less than $91.4713 but greater than a fractional share of the common stock of
$70.3625 CIBER equal to $70.3625 one
(c) less than $70.3625 but greater than or one share of common stock of CIBER
equal to $54.125
(d) less than $54.125 but greater than a number of shares of common stock
$51.4188 equal to $54.125, based on the maturity
price
(e) less than $51.4188 1.0526 shares of common stock of CIBER
INVESTING IN THE STRYPES INVOLVES RISKS, INCLUDING
THE RISK THAT YOUR INVESTMENT MAY RESULT IN A LOSS.
SEE "RISK FACTORS" BEGINNING ON PAGE 3.
The STRYPES are listed on the NYSE under the trading symbol "BOB".
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 STRYPES will be the prevailing price at the time
of sale.
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MERRILL LYNCH & CO.
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The date of this prospectus is June 24, 1999.
"STRYPES" and "Structured Yield Product Exchangeable for Stock" are registered
service marks owned by ML&Co.
TABLE OF CONTENTS
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Page
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RISK FACTORS.............................................................3
MERRILL LYNCH & CO., INC.................................................7
RATIO OF EARNINGS TO FIXED CHARGES.......................................8
CIBER, INC...............................................................9
DESCRIPTION OF THE STRYPES...............................................9
OTHER TERMS.............................................................18
CERTAIN ARRANGEMENTS WITH THE CONTRACTING STOCKHOLDER...................22
WHERE YOU CAN FIND MORE INFORMATION.....................................22
INCORPORATION OF INFORMATION WE FILE WITH THE SEC.......................24
PLAN OF DISTRIBUTION....................................................24
EXPERTS.................................................................25
RISK FACTORS
Your investment in the STRYPES will involve risks. You should carefully
consider the following discussion of risks before investing in the STRYPES. In
addition, you should reach an investment decision with regard to the STRYPES
only after consulting with your legal and tax advisers and considering the
suitability of the STRYPES in the light of your particular circumstances.
YOU MAY SUFFER A LOSS ON YOUR INVESTMENT
You should be aware that at maturity the amount you will receive may be
less than the amount you paid for the STRYPES, which was $54.125 per STRYPES.
Although your investment in the STRYPES may be protected from a depreciation in
the value of the common stock of CIBER, if the maturity price does not fall
below the downside protection threshold price of $51.4188, you will have only
limited protection from a depreciation below 95% of the initial price of
$54.125. If the maturity price of the common stock of CIBER is less than the
downside protection threshold price, the amount you may receive on the maturity
date will be less than the issue price you paid for the STRYPES and, therefore,
your investment in the STRYPES will result in a loss to you. Accordingly, you
assume the risk that the market value of the common stock of CIBER may decline
below 95% of the initial price of $54.125, and that the decline could be
substantial.
YOUR INVESTMENT IN THE STRYPES MAY DIFFER FROM AN INVESTMENT IN OTHER DEBT
SECURITIES
The terms of the STRYPES differ from those of ordinary debt securities
because the value of the common stock of CIBER or the equivalent amount in cash
that you will receive on the maturity date is not fixed, but is based on the
maturity price of the common stock of CIBER. Please review the section entitled
"Description of the STRYPES".
THERE MAY BE A LIMITED OPPORTUNITY FOR EQUITY APPRECIATION
Your opportunity for equity appreciation may be greater if you made a
direct investment in the common stock of CIBER because the amount you may
receive on the maturity date will exceed the initial appreciation cap of
$70.3625, which represents an appreciation of 30% over the initial price of
$54.125, only if the maturity price of the common stock of CIBER exceeds the
threshold appreciation price of $91.4713, which represents an appreciation of
69% over the initial price. Moreover, you will be entitled to receive on the
maturity date only 76.92%, which is the percentage equal to the initial
appreciation cap of $70.3625 divided by the threshold appreciation price of
$91.4713, of any appreciation of the value of common stock of CIBER above the
threshold appreciation price.
Because the price of the common stock of CIBER is subject to market
fluctuations, the value of the common stock of CIBER or the amount of cash you
may receive on the maturity date may be more or less than the issue price of the
STRYPES. If the maturity price is less than the downside protection threshold
price, you will have only limited protection from a depreciation below 95% of
the initial price of $54.125. Please review the section entitled "Description of
the STRYPES".
THERE ARE MANY FACTORS AFFECTING THE TRADING PRICES OF THE STRYPES
The trading prices of the STRYPES in the secondary market will be
directly affected by the trading prices of the common stock of CIBER in the
secondary market. It is impossible to predict whether the price of the common
stock of CIBER will rise or fall because several factors may influence the
trading prices of the common stock of CIBER. These factors include:
o CIBER 's operating results and prospects,
o complex and interrelated political, economic, financial and other
factors and market conditions that can affect (1) the capital
markets generally, (2) the market segment of which CIBER is a
part, or (3) the NYSE, on which the common stock of CIBER is
traded, including the level of, and fluctuations in, the trading
prices of stocks generally and sales of substantial amounts of the
common stock of CIBER in the market subsequent to the offering of
the STRYPES or the perception that these sales could occur, and
o other events that are difficult to predict and are beyond our
control.
THERE MAY BE ILLIQUIDITY OF THE STRYPES IN THE SECONDARY MARKET
It is not possible to predict how the STRYPES will trade in the
secondary market or whether the secondary market for the STRYPES will be liquid
or illiquid. The STRYPES are novel securities and there is currently no
secondary market for the STRYPES. Although the STRYPES are listed on the NYSE
under the symbol "BOB", you cannot assume
o that an active trading market for the STRYPES will develop,
o that listing on the NYSE will provide you with liquidity of investment,
o that the STRYPES will not later be delisted or
o that trading of the STRYPES on the NYSE will not be suspended.
If the NYSE delists the STRYPES or suspends the trading of the STRYPES,
we will apply for listing of the STRYPES on another national securities exchange
or for quotation on another trading market. If the STRYPES are not listed or
traded on any securities exchange or trading market, or if trading of the
STRYPES is suspended, it may be more difficult to obtain pricing information for
the STRYPES and the liquidity of the STRYPES may be adversely affected.
INVESTING IN THE STRYPES MAY AFFECT THE MARKET FOR THE COMMON STOCK OF CIBER
Any market that develops for the STRYPES is likely to influence and be
influenced by the market for common stock of CIBER. For example, the price of
common stock of CIBER could become more volatile and could be depressed
o by investors' anticipation of the potential distribution into the
market of substantial amounts of common stock of CIBER on the
maturity date,
o by possible sales of common stock of CIBER by investors who view
the STRYPES as a more attractive means of equity participation in
CIBER, and
o by hedging or arbitrage trading activity that may develop
involving the STRYPES and the common stock of CIBER.
AS A HOLDER OF STRYPES, YOU HAVE NO STOCKHOLDER'S RIGHTS WITH RESPECT TO THE
COMMON STOCK OF CIBER
You will not be entitled to any rights, including voting rights and
rights to receive any dividends, interest or other distributions, with respect
to the common stock of CIBER until we have delivered the shares of common stock
of CIBER on the maturity date. In addition, you will not be entitled to any
rights if the applicable record date for the exercise of any rights occurs
before we deliver the shares. For example, if an amendment is proposed to the
amended and restated certificate of incorporation of CIBER and the record date
for determining the stockholders of record entitled to vote on the amendment
occurs before we deliver the shares of common stock of CIBER, you, as a holder
of the STRYPES, will not be entitled to vote on the proposed amendment.
CIBER HAS NO OBLIGATIONS WITH RESPECT TO THE STRYPES
We are not affiliated with CIBER. CIBER has no obligations with respect
to the STRYPES or amounts to be paid to you, including any obligation to take
our needs or yours, as a holder of the STRYPES, into consideration for any
reason. CIBER will not receive any of the proceeds of this offering of the
STRYPES. CIBER is not responsible for, and has not participated in, the
determination of the timing of, prices for or quantities of the STRYPES to be
issued, or the determination or calculation of the amount you will receive, as a
holder of the STRYPES, on the maturity date. In addition, CIBER is not involved
with the administration or trading of the STRYPES.
THERE MAY BE A DILUTION OF COMMON STOCK OF CIBER
The number of shares of common stock of CIBER or the equivalent amount
of cash that you are entitled to receive on the maturity date is subject to
adjustment for events such as:
o a merger or consolidation in which CIBER is not the surviving or
resulting corporation,
o a sale or transfer of substantially all of the assets of CIBER,
o the liquidation, dissolution, winding up or bankruptcy of CIBER,
o stock splits and combinations, stock dividends, and
o other actions of CIBER that modify its capital structure.
Please review the section entitled "Description of the STRYPES--Dilution
Adjustments".
The number of shares of common stock of CIBER or the cash amount that
you may receive as a holder of the STRYPES on the maturity date will not be
adjusted for other events not specifically provided, such as offerings of common
stock of CIBER by CIBER for cash or in connection with acquisitions.
In addition, no adjustments will be made for any sales of common stock
of CIBER by any principal stockholder of CIBER, including the contracting
stockholder. The contracting stockholder is Bobby G. Stevenson, who individually
and as settlor, beneficiary and trustee of the 1998 Bobby G. Stevenson Revocable
Trust, is the contracting stockholder. At December 31, 1997, the contracting
stockholder owned beneficially approximately 27% of the outstanding common stock
of CIBER. CIBER is not restricted from issuing additional shares of common stock
of CIBER during the term of the STRYPES. Because the contracting stockholder can
exercise significant influence on the business and affairs of CIBER, any
decision to issue additional shares of common stock of CIBER will be influenced
by the contracting stockholder. The principal stockholders of CIBER, including
the contracting stockholder, are also not precluded from selling shares of
common stock of CIBER under Rule 144 under the Securities Act or by causing
CIBER to register shares.
Neither CIBER nor any stockholder of CIBER, including the contracting
stockholder, has any duty or obligation to consider the interests of the holders
of the STRYPES for any reason. Additional issuances or sales may materially and
adversely affect the price of the common stock of CIBER. Because of the
relationship of the number of shares of common stock of CIBER or the cash amount
you will receive on the maturity date to the price of the common stock of CIBER,
other events may adversely affect the trading price of the STRYPES. You cannot
assume that CIBER will not take any of the foregoing actions or that CIBER or
any of its principal stockholders, including the contracting stockholder, it
will not make offerings of, or that will not sell any, common stock of CIBER in
the future, or as to the amount of any such offerings or sales.
THE TAX TREATMENT OF STRYPES IS UNCERTAIN
Because of an absence of authority as to the proper characterization of
the STRYPES, their ultimate tax treatment is uncertain. Accordingly, you cannot
assume that any particular characterization and tax treatment of the STRYPES
will be accepted by the Internal Revenue Service or upheld by a court. However,
it is the opinion of Brown & Wood LLP, counsel to ML&Co., that the
characterization and tax treatment of the STRYPES described in this prospectus,
while not the only reasonable characterization and tax treatment, is based on
reasonable interpretations of law currently in effect and, even if successfully
challenged by the IRS, will not result in the imposition of penalties. Under the
1983 indenture, which is more fully described in this prospectus, if you are
subject to United States Federal income tax, you must include currently in
income, for United States Federal income tax purposes, payments denominated as
interest that are made with respect to a STRYPES in accordance with your regular
method of tax accounting. In addition, ML&Co. and you, as a holder of the
STRYPES, are required to treat each STRYPES for tax purposes as a unit
consisting of:
o a debt instrument with a fixed principal amount unconditionally
payable on the maturity date equal to the issue price of the
STRYPES and bearing interest at the stated interest rate on the
STRYPES and
o a forward purchase contract under which you agree to use the
principal payment due on the debt instrument to purchase on the
maturity date the common stock of CIBER which ML&Co. is obligated
to deliver at that time, subject to ML&Co.'s right to deliver cash
instead of common stock of CIBER.
Upon the acquisition of a STRYPES and upon your sale or other
disposition of a STRYPES before the maturity date, the amount paid or realized
be allocated between the debt instrument and the forward contract based upon
their relative fair market values, as determined on the date of acquisition or
disposition. For these purposes, with respect to acquisitions of STRYPES in
connection with the original issuance thereof, ML&Co. and you agree, under the
terms of the 1983 indenture, to assign $56.78 or 104.91% of the initial purchase
price of a STRYPES to the debt instrument and to assign $2.655 or 4.91% of the
initial purchase price of a STRYPES to the forward contract.
Because the appropriate character and timing of income, gain or loss to
be recognized on a STRYPES is uncertain, you should consult your own tax
advisors concerning the application of the United States Federal income tax laws
to your particular situation and any consequences of the purchase, ownership and
disposition of the STRYPES arising under the laws of any other taxing
jurisdiction.
OUR HOLDING COMPANY STRUCTURE MAY AFFECT YOUR RIGHT TO PARTICIPATE IN ANY
DISTRIBUTION OF ASSETS OF ANY SUBSIDIARY
Since we are a holding company, our right and the right of our
creditors, including you, as a holder of STRYPES, to participate in any
distribution of the assets of any subsidiary upon its liquidation or
reorganization or otherwise is necessarily subject to the prior claims of
creditors of the subsidiary, except to the extent a bankruptcy court may
recognize our claims as a creditor of the subsidiary. In addition, dividends,
loans and advances from certain subsidiaries, including MLPF&S, to us are
restricted by net capital requirements under the Exchange Act and under rules of
exchanges and other regulatory bodies.
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
STRYPES 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
YEAR ENDED LAST FRIDAY IN DECEMBER MONTHS ENDED
1994 1995 1996 1997 1998 MARCH 26, 1999
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Ratio of earnings to fixed charges(a)......... 1.2 1.2 1.2 1.2 1.1 1.3
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(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.
CIBER, INC.
CIBER is a nationwide provider of information technology consulting,
including application software staff supplementation, management consulting
solutions for "business/IT" problems, package software implementation services,
system life-cycle project responsibility, millennium date change conversion
services and networking procurement and engineering services. CIBER's revenues
are generated from two areas, the CIBER Information Services ("CIS") Division
and CIBER's Solutions Consulting Group ("CIBER Solutions"). The CIS Division
provides application software development and maintenance services and, through
its CIBR2000 Division, millennium date change solutions. CIBER Solutions
provides services through CIBER's wholly-owned subsidiaries Spectrum Technology
Group, Inc. ("Spectrum"), Business Information Technology, Inc. ("BIT") and
CIBER Network Services, Inc. ("CNSI"). Spectrum provides information technology
consulting solutions to business problems, specifically in the areas of data
warehousing, data modeling and enterprise architecture, as well as project
management and system integration services. BIT specializes in the
implementation and integration of human resource and financial software
application products, plus workflow automation and manufacturing/distribution
software systems, primarily for client/server networks. A substantial portion of
BIT's revenues is derived from assisting clients implementing PeopleSoft, Inc.
software. CNSI provides a wide range of local-area and wide-area network
solutions, from design and procurement to installation and maintenance, with
services including Internet and intranet connectivity.
CIBER is subject to the informational requirements of the Exchange Act.
Accordingly, CIBER files reports, proxy and information statements and other
information with the SEC. Copies of such material can be inspected and copied at
the public reference facilities maintained by the SEC. Reports, proxy and
information statements and other information concerning CIBER may also be
inspected at the offices of the NYSE. The SEC maintains a Web site at
http://www.sec.gov containing reports, proxy and information statements and
other information regarding registrants, including CIBER, that file
electronically with the SEC.
ML&CO. IS NOT AFFILIATED WITH CIBER, AND CIBER HAS NO OBLIGATIONS WITH
RESPECT TO THE STRYPES. THIS PROSPECTUS RELATES ONLY TO THE STRYPES OFFERED
HEREBY AND DOES NOT RELATE TO THE COMMON STOCK OF CIBER. CIBER HAS FILED A
REGISTRATION STATEMENT ON FORM S-3 WITH THE SEC WITH RESPECT TO THE SHARES OF
COMMON STOCK OF CIBER THAT MAY BE RECEIVED BY A HOLDER OF STRYPES ON THE
MATURITY DATE. THE PROSPECTUS OF CIBER CONSTITUTING A PART OF SUCH REGISTRATION
STATEMENT INCLUDES INFORMATION RELATING TO CIBER AND THE COMMON STOCK OF CIBER,
AS WELL AS A DISCUSSION OF CERTAIN RISK FACTORS RELEVANT TO AN INVESTMENT IN
COMMON STOCK OF CIBER. THE PROSPECTUS OF CIBER DOES NOT CONSTITUTE A PART OF
THIS PROSPECTUS NOR IS IT INCORPORATED BY REFERENCE IN THIS PROSPECTUS.
DESCRIPTION OF THE STRYPES
ML&Co. issued the STRYPES as a series of Senior Debt Securities issued
under the 1983 indenture, which is more fully described in this prospectus. The
following summary of material provisions of the 1983 indenture does not purport
to be complete and is qualified in its entirety by reference to the 1983
indenture. A copy of the 1983 indenture is filed as an exhibit to the
registration statement of which this prospectus is a part.
Each STRYPES, which was issued at an issue price of $54.125 (the
"INITIAL PRICE"), bears interest at the rate of 7 7/8% of the issue price per
annum, or $4.2623 per annum, from January 30, 1998, or from the most recent
Interest Payment Date to which interest has been paid or provided for, until the
maturity date or the earlier date on which the issue price of the STRYPES is
repaid pursuant to the terms of the STRYPES. Interest on the STRYPES is payable
in cash quarterly in arrears on February 1, May 1, August 1 and November 1,
beginning May 1, 1998, and on the maturity date (each, an "INTEREST PAYMENT
DATE"), to the persons in whose names the STRYPES are registered at the close of
business on the fifteenth calendar day, whether or not a Business Day,
immediately preceding the Interest Payment Date. Interest on the STRYPES will be
computed on the basis of a 360-day year of twelve 30-day months. If an Interest
Payment Date falls on a day that is not a Business Day, the interest payment to
be made on the Interest Payment Date will be made on the next succeeding
Business Day with the same force and effect as if made on the Interest Payment
Date, and no additional interest will accrue as a result of the delayed payment.
The maturity date of the STRYPES is February 1, 2001. On the maturity
date, ML&Co. will pay and discharge each STRYPES by delivering to the holder of
the STRYPES a number of shares of common stock of CIBER, subject to ML&Co.'s
right to deliver, with respect to all, but not less than all, shares of common
stock of CIBER deliverable on the maturity date, cash with an equal value. The
number of shares that ML&Co. will deliver is referred to in this prospectus as
the "PAYMENT RATE". ML&Co. will determine the Payment Rate according to the
following PAYMENT RATE FORMULA, which is subject to adjustment as a result of
dilution events described in this prospectus.
(a) If the Maturity Price (as defined below) is greater than or
equal to $91.4713 (the "THRESHOLD APPRECIATION PRICE"), the
holder of STRYPES will receive 0.7692 shares of common stock
of CIBER per STRYPES;
(b) If the Maturity Price is less than the Threshold Appreciation
Price but is greater than $70.3625 (the "INITIAL APPRECIATION
CAP"), the holder of STRYPES will receive a fractional share
of common stock of CIBER per STRYPES so that the value of the
fractional share, which will be determined based on the
Maturity Price, equals the Initial Appreciation Cap;
(c) If the Maturity Price is less than or equal to the Initial
Appreciation Cap but is greater than or equal to the Initial
Price, the holder of STRYPES will receive one share of common
stock of CIBER per STRYPES;
(d) If the Maturity Price is less than the Initial Price but is
greater than or equal to $51.4188 (the "DOWNSIDE PROTECTION
THRESHOLD PRICE"), the holder of STRYPES will receive a number
of shares of common stock of CIBER per STRYPES so that the
value of the shares, which will be determined based on the
Maturity Price, equals the Initial Price; and
(e) If the Maturity Price is less than the Downside Protection
Threshold Price, the holder of STRYPES will receive 1.0526
shares of common stock of CIBER per STRYPES.
THE MATURITY PRICE WILL REPRESENT A DETERMINATION OF THE VALUE OF A SHARE OF
COMMON STOCK OF CIBER IMMEDIATELY BEFORE THE MATURITY DATE. YOU, AS A HOLDER OF
THE STRYPES, CANNOT ASSUME THAT THE AMOUNT YOU WILL RECEIVE ON THE MATURITY DATE
WILL BE EQUAL TO OR GREATER THAN THE ISSUE PRICE OF THE STRYPES. IF THE MATURITY
PRICE OF THE COMMON STOCK OF CIBER IS LESS THAN THE DOWNSIDE PROTECTION
THRESHOLD PRICE, THE AMOUNT YOU WILL RECEIVE ON THE MATURITY DATE WILL BE LESS
THAN THE ISSUE PRICE PAID FOR THE STRYPES, IN WHICH CASE YOUR INVESTMENT IN
STRYPES WILL RESULT IN A LOSS. The numbers of shares of common stock of CIBER
per STRYPES specified in clauses (a), (c) and (e) of the Payment Rate Formula
are referred to in this prospectus as the "SHARE COMPONENTS".
Notwithstanding the foregoing, ML&Co. may, in lieu of delivering shares
of common stock of CIBER, deliver cash in an amount equal to the value of the
number of shares of common stock of CIBER at the Maturity Price, subject to
ML&Co.'s agreement contained in the forward purchase contract to deliver on the
maturity date the form of consideration that the ML&Co. Subsidiary receives from
the contracting stockholder. The right to deliver cash, if exercised by ML&Co.,
must be exercised with respect to all shares of common stock of CIBER otherwise
deliverable on the maturity date in payment of all Outstanding STRYPES. On or
before the sixth Business Day before the maturity date, ML&Co. will notify the
Securities Depository and the trustee and publish a notice in The Wall Street
Journal or another daily newspaper of national circulation stating whether the
STRYPES will be paid and discharged with shares of common stock of CIBER or
cash. At the time the notice is published, the Maturity Price will not have been
determined. If ML&Co. delivers shares of common stock of CIBER, holders of the
STRYPES will be responsible for the payment of any and all brokerage costs upon
the subsequent sale of the common stock.
The "MATURITY PRICE" means the average Closing Price per share of
common stock of CIBER on the 20 Trading Days immediately before, but not
including, the second Trading Day preceding the maturity date.
The "CLOSING PRICE" of any security on any date of determination means
(1) the closing sale price or, if no closing price is reported, the last
reported sale price, of such security on the NYSE on such date, or (2) if such
security is not listed for trading on the NYSE on any date of determination, as
reported in the composite transactions for the principal United States
securities exchange on which the security is so listed, or (3) if the security
is not so listed on a United States national or regional securities exchange, as
reported by the National Association of Securities Dealers, Inc. Automated
Quotation System, (4) or if the security is not so reported, the last quoted bid
price for the security in the over-the-counter market as reported by the
National Quotation Bureau or similar organization, or (5) if the bid price is
not available, the market value of the security on the date of determination as
determined by a nationally recognized independent investment banking firm
retained for this purpose by ML&Co. In the event that the Payment Rate Formula
is adjusted as described under "-Dilution Adjustments" below, each of the
Closing Prices used in determining the Maturity Price will be similarly adjusted
to derive, for purposes of determining which clause of the Payment Rate Formula
will apply on the maturity date, a Maturity Price stated on a basis comparable
to the Downside Protection Threshold Price, the Initial Price, the Initial
Appreciation Cap and the Threshold Appreciation Price.
A "TRADING DAY" means a day on which the security the Closing Price of
which is being determined (A) is not suspended from trading on any national or
regional securities exchange or association or over-the-counter market at the
close of business and (B) has traded at least once on the national or regional
securities exchange or association or over-the-counter market that is the
primary market for the trading of the security.
The term "BUSINESS DAY" means any day that is not a Saturday, a Sunday
or a day on which the NYSE or banking institutions or trust companies in The
City of New York are authorized or obligated by law or executive order to close.
HYPOTHETICAL PAYMENTS AT MATURITY
For illustrative purposes only, the following table shows the number of
shares of common stock of CIBER or the amount of cash that a holder of STRYPES
would receive for each STRYPES at various hypothetical Maturity Prices. The
table assumes that there will be no dilution adjustments to the Payment Rate
Formula as described below. Given the Downside Protection Threshold Price of
$51.42, the Initial Price of $54.13, the Initial Appreciation Cap of $70.36 and
the Threshold Appreciation Price of $91.47, a STRYPES holder would receive on
the maturity date the following number of shares of common stock of CIBER or, if
ML&Co. elects to pay and discharge the STRYPES with cash, the amount of cash per
STRYPES:
MATURITY PRICE
OF NUMBER OF
COMMON STOCK OF SHARES OF
CIBER COMMON STOCK OF CIBER AMOUNT OF CASH*
--------------- --------------------- ---------------
$45.13 1.0526 $47.50
49.13 1.0526 51.71
51.42 1.0526 54.13
52.13 1.0384 54.13
54.13 1.0000 54.13
59.13 1.0000 59.13
64.13 1.0000 64.13
70.36 1.0000 70.36
74.13 0.9492 70.36
79.13 0.8893 70.36
84.13 0.8364 70.36
91.47 0.7692 70.36
94.13 0.7692 72.40
99.13 0.7692 76.25
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* The preceding table does not take into account interest payable on the
STRYPES. Dollar amounts in the table have been rounded to two decimal
places and share amounts have been rounded to four decimal places.
DILUTION ADJUSTMENTS
The Payment Rate Formula is subject to adjustment if CIBER shall:
(1) pay a stock dividend or make a distribution with respect to
common stock of CIBER in shares of the stock;
(2) subdivide or split the outstanding shares of common stock of
CIBER into a greater number of shares;
(3) combine the outstanding shares of common stock of CIBER
into a smaller number of shares;
(4) issue by reclassification of shares of common stock of CIBER any
shares of common stock of CIBER;
(5) issue rights or warrants to all holders of common stock of
CIBER entitling them to subscribe for or purchase shares of
common stock of CIBER at a price per share less than the then
current market price of the common stock of CIBER, other than
rights to purchase common stock of CIBER pursuant to a plan
for the reinvestment of dividends or interest; or
(6) pay a dividend or make a distribution to all holders of common
stock of CIBER of evidences of its indebtedness or other
assets, excluding any stock dividends or distributions
referred to in clause (1) above or any cash dividends other
than any Extraordinary Cash Dividend (as defined below), or
issue to all holders of common stock of CIBER rights or
warrants to subscribe for or purchase any of its securities,
other than those referred to in clause (5) above.
In the case of the events referred to in clauses (1), (2), (3) and (4)
above, the Payment Rate Formula shall be adjusted so that each holder of any
STRYPES shall thereafter be entitled to receive, upon payment and discharge of
the STRYPES, the number of shares of common stock of CIBER or, in the case of a
reclassification referred to in clause (4) above, the number of shares of other
common stock of CIBER issued pursuant to the reclassification, which the holder
would have owned or been entitled to receive immediately following any event had
the STRYPES been paid and discharged immediately before the event in clauses
(1), (2), (3) and (4) or any record date with respect to the event.
In the case of the event referred to in clause (5) above, the Payment
Rate Formula shall be adjusted by multiplying each of the Share Components in
the Payment Rate Formula in effect immediately before the date of issuance of
the rights or warrants referred to in clause (5) above by a fraction, (A) the
numerator of which shall be the number of shares of common stock of CIBER
outstanding on the date of issuance of the rights or warrants, immediately
before the issuance, plus the number of additional shares of common stock of
CIBER offered for subscription or purchase pursuant to the rights or warrants,
and (B) the denominator of which shall be the number of shares of common stock
of CIBER outstanding on the date of issuance of the rights or warrants,
immediately before the issuance, plus the number of additional shares of common
stock of CIBER which the aggregate offering price of the total number of shares
of common stock of CIBER so offered for subscription or purchase pursuant to the
rights or warrants would purchase at the current market price, which shall be
determined by multiplying the total number of shares by the exercise price of
the rights or warrants and dividing the product so obtained by the current
market price. The current market price shall be the average Closing Price per
share of common stock of CIBER on the 20 Trading Days immediately before the
date the rights or warrants are issued, subject to certain adjustments. To the
extent that shares of common stock of CIBER are not delivered after the
expiration of the rights or warrants, the Payment Rate Formula shall be
readjusted to the Payment Rate Formula which would then be in effect had the
adjustments for the issuance of the rights or warrants been made upon the basis
of delivery of only the number of shares of common stock of CIBER actually
delivered.
In the case of the event referred to in clause (6) above, the Payment
Rate Formula shall be adjusted by multiplying each of the Share Components in
the Payment Rate Formula in effect on the record date referred to below by a
fraction, (A) the numerator of which shall be the market price per share of the
common stock of CIBER on the record date for the determination of stockholders
entitled to receive the dividend or distribution or the rights or warrants
referred to in clause (6) above, and(B) the denominator of which shall be the
market price per share of common stock of CIBER less the fair market value as of
the record date of the portion of the assets or evidences of indebtedness to be
distributed or of the subscription rights or warrants applicable to one share of
common stock of CIBER. The market price in the above fraction shall be the
average Closing Price per share of common stock of CIBER on the 20 Trading Days
immediately before the record date, subject to certain adjustments. The Board of
Directors of ML&Co. shall determine the fair market value in the above fraction;
their determination of the fair market value shall be conclusive and described
in a resolution adopted with respect thereto.
An "EXTRAORDINARY CASH DIVIDEND" means, with respect to any consecutive
12-month period, the amount, if any, by which the aggregate amount of all cash
dividends on the common stock of CIBER occurring in the 12-month period,
excluding any the dividends occurring in the period for which a prior adjustment
to the Payment Rate Formula was previously made, exceeds on a per share basis
10% of the average of the Closing Prices per share of the common stock of CIBER
over the 12-month period. All adjustments to the Payment Rate Formula will be
calculated to the nearest 1/10,000th of a share of common stock of CIBER or, if
there is not a nearest 1/10,000th of a share, to the next lower 1/10,000th of a
share. No adjustment in the Payment Rate Formula shall be required unless the
adjustment would require an increase or decrease of at least one percent
therein; provided, however, that any adjustments which by reason of the
foregoing are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. If an adjustment is made to the Payment
Rate Formula as described above, an adjustment will also be made to the Maturity
Price solely to determine which clause of the Payment Rate Formula will apply on
the maturity date. The required adjustment to the Maturity Price will be made by
multiplying each of the Closing Prices used in determining the Maturity Price by
a fraction, the numerator of which shall be the Share Component in clause (c) of
the Payment Rate Formula immediately after the adjustment described above, and
the denominator of which shall be the Share Component in clause (c) of the
Payment Rate Formula immediately before the adjustment described above. Each
adjustment to the Payment Rate Formula shall be made successively.
In the event of a "REORGANIZATION EVENT", which is
(A) any consolidation or merger of CIBER, or any surviving entity
or subsequent surviving entity of CIBER (a "CIBER Successor"),
with or into another entity, other than a consolidation or
merger in which CIBER is the continuing corporation and in
which the common stock of CIBER outstanding immediately before
the consolidation or merger is not exchanged for cash,
securities or other property of CIBER or another corporation,
(B) any sale, transfer, lease or conveyance to another entity of
the property of CIBER or any CIBER Successor as an entirety or
substantially as an entirety,
(C) any statutory exchange of securities of CIBER or any CIBER
Successor with another entity, other than in connection with a
merger or acquisition, or
(D) any liquidation, dissolution, winding up or bankruptcy of
CIBER or any CIBER Successor,
the Payment Rate Formula used to determine the amount payable on the maturity
date for each STRYPES will be adjusted to provide that each holder of STRYPES
will receive cash on the maturity date for each STRYPES. The holder will
receive cash in an amount equal to
(a) if the Transaction Value (as defined below) is greater than or
equal to the Threshold Appreciation Price, 0.7692, subject to
adjustment in the same manner and to the same extent as the
Share Components in the Payment Rate Formula are adjusted as
described above, multiplied by the Transaction Value,
(b) if the Transaction Value is less than the Threshold
Appreciation Price but greater than the Initial Appreciation
Cap, the Initial Appreciation Cap,
(c) if the Transaction Value is less than or equal to the Initial
Appreciation Cap but is greater than or equal to the Initial
Price, the Transaction Value,
(d) if the Transaction Value is less than the Initial Price but is
greater than or equal to the Downside Protection Threshold
Price, the Initial Price and
(e) if the Maturity Price is less than the Downside Protection
Threshold Price, 1.0526, subject to adjustment in the same
manner and to the same extent as the Share Components in the
Payment Rate Formula are adjusted as described above,
multiplied by the Transaction Value.
"TRANSACTION VALUE" means (1) for any cash received in any the
Reorganization Event, the amount of cash received per share of common stock of
CIBER, (2) for any property other than cash or securities received in any
Reorganization Event, an amount equal to the market value on the third Business
Day preceding the maturity date of the property received per share of common
stock of CIBER as determined by a nationally recognized independent investment
banking firm retained for this purpose by ML&Co. and (3) for any securities
received in any Reorganization Event, an amount equal to the average Closing
Price per unit of the securities on the 20 Trading Days immediately before, but
not including, the second Trading Day preceding the maturity date multiplied by
the number of the securities, subject to adjustment on a basis consistent with
the adjustment provisions described above, received for each share of common
stock of CIBER; provided, however, if one or more adjustments to the Payment
Rate Formula shall have become effective before the effective date for the
Reorganization Event, then the Transaction Value determined in accordance with
the foregoing shall be adjusted by multiplying the Transaction Value by the
Share Component in clause (c) of the Payment Rate Formula immediately before the
effective date for the Reorganization Event. Notwithstanding the foregoing, if
any Marketable Securities (as defined below) are received by holders of common
stock of CIBER in the Reorganization Event, then in lieu of delivering cash as
provided above, ML&Co. may at its option deliver a proportional amount of the
Marketable Securities. If ML&Co. elects to deliver Marketable Securities,
holders of the STRYPES will be responsible for the payment of any and all
brokerage and other transactional costs upon the sale of the securities.
"MARKETABLE SECURITIES" means any securities listed on a U.S. national
securities exchange or reported by NASDAQ.
No adjustments will be made for other events, such as offerings of
common stock of CIBER by CIBER for cash or in connection with acquisitions.
Likewise, no adjustments will be made for any sales of common stock of CIBER by
any principal stockholder of CIBER, including the contracting stockholder.
ML&Co. is required, within ten Business Days following the occurrence
of an event that requires an adjustment to the Payment Rate Formula or, if
ML&Co. is not aware of the occurrence of an event, as soon as practicable after
becoming so aware, to provide written notice to the trustee and to the holders
of the STRYPES of the occurrence of the event and a statement in reasonable
detail setting forth the adjusted Payment Rate Formula and the method by which
the adjustment to the Payment Rate Formula was determined; provided that, in
respect of any adjustment to the Maturity Price, the notice will only disclose
the factor by which each of the Closing Prices used in determining the Maturity
Price is to be multiplied in order to determine the Payment Rate on the maturity
date. Until the maturity date, the Payment Rate itself cannot be determined.
SECURITIES DEPOSITORY
Description of the Global Securities
The STRYPES are represented by one or more fully registered global
securities. Each global security has been deposited with, or on behalf of, The
Depository Trust Company or DTC (DTC, together with any successor thereto, being
a "depositary"), as depositary, registered in the name of Cede & Co. (DTC's
partnership nominee). Unless and until it is exchanged in whole or in part for
STRYPES in definitive form, no global security may be transferred except as a
whole by the depositary to a nominee of the depositary or by a nominee of the
depositary to the depositary or another nominee of the depositary or by the
depositary or any nominee to a successor of the depositary or a nominee of the
successor.
So long as DTC, or its nominee, is a registered owner of a global
security, DTC or its nominee, as the case may be, will be considered the sole
owner or holder of the STRYPES represented by a global security for all purposes
under the 1983 indenture. Except as provided below, the beneficial owners of the
STRYPES represented by a global security are not entitled to have the STRYPES
represented by the global security registered in their names, will not receive
or be entitled to receive physical delivery of the STRYPES in definitive form
and are not considered the owners or holders under the 1983 indenture, including
for purposes of receiving any reports delivered by ML&Co. or the trustee
pursuant to the 1983 indenture. Accordingly, each person owning a beneficial
interest in a global security must rely on the procedures of DTC and, if the
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 action, and the participants would authorize beneficial owners owning
through the participants to give or take the action or would otherwise act upon
the instructions of beneficial owners. Conveyance of notices and other
communications by DTC to participants, by participants to indirect participants
and by participants and indirect participants to beneficial owners are governed
by arrangements among them, subject to any statutory or regulatory requirements
as may be in effect from time to time.
DTC Procedures
The following is based on information furnished by DTC:
DTC is the securities depositary for the STRYPES. The STRYPES have been
issued as fully registered securities registered in the name of Cede & Co.
(DTC's partnership nominee). One or more fully registered global securities have
been issued for the STRYPES in the aggregate principal amount of such issue, and
has been deposited with DTC.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the 1934 Act. 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 certain other organizations. DTC is owned by a number of its direct
participants and by the NYSE, the AMEX and the National Association of
Securities Dealers, Inc. Access to the DTC's system is also available to others
such as securities brokers and dealers, banks and trust companies that clear
through or maintain a custodial relationship with a direct participant, either
directly or indirectly. The rules applicable to DTC and its participants are on
file with the SEC.
Purchases of STRYPES under DTC's system must be made by or through
direct participants, which will receive a credit for the STRYPES 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 such beneficial owner
entered into the transaction. Transfers of ownership interests in the STRYPES
are to be accomplished by entries made on the books of participants acting on
behalf of beneficial owners.
To facilitate subsequent transfers, all STRYPES deposited with DTC are
registered in the name of DTC's partnership nominee, Cede & Co. The deposit of
STRYPES 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 STRYPES; DTC's records reflect only the identity of the direct
participants to whose accounts such STRYPES are credited, which may or may not
be the beneficial owners. The participants are responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants, and by direct and
indirect participants to beneficial owners are governed by arrangements among
them, subject to any statutory or regulatory requirements as may be in effect
from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the
STRYPES. 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 STRYPES are
credited on the record date.
Principal, premium, if any, and/or interest, if any, payments on the
STRYPES 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 such date.
Payments by participants to beneficial owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name", and
will be the responsibility of such participant and not of DTC, the trustee or
ML&Co., subject to any statutory or regulatory requirements as may be in effect
from time to time. Payment of principal, premium, if any, and/or interest, if
any, to DTC is the responsibility of ML&Co. or the trustee, disbursement of such
payments to direct participants is the responsibility of DTC, and disbursement
of such payments to the beneficial owners is the responsibility of direct and
indirect participants.
EXCHANGE FOR CERTIFICATED SECURITIES
If
(a) 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,
(b) ML&Co. executes and delivers to the trustee a company order to the
effect that the global securities shall be exchangeable, and
(c) an Event of Default under the 1983 indenture has occurred and is
continuing with respect to the STRYPES,
the global securities will be exchangeable for STRYPES in definitive form of
like tenor and of an equal aggregate principal amount. The definitive STRYPES
will be registered in such name or names as the depositary shall instruct the
trustee. It is expected that such 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, STRYPES in
definitive form will be printed and delivered.
The information in this section concerning DTC and DTC's system has
been obtained from sources that ML&Co. believes to be reliable, but ML&Co. takes
no responsibility for its accuracy.
FRACTIONAL SHARES
No fractional shares of common stock of CIBER will be delivered if
ML&Co. pays and discharges the STRYPES by delivering shares of common stock of
CIBER. In lieu of any fractional share otherwise deliverable in respect of all
STRYPES of any holder on the maturity date, the holder shall be entitled to
receive an amount in cash equal to the value of the fractional share at the
Maturity Price.
NO REDEMPTION, SINKING FUND OR PAYMENT BEFORE MATURITY
The STRYPES are not subject to redemption before the maturity date at
the option of ML&Co. and do not contain sinking fund or other mandatory
redemption provisions. The STRYPES are not subject to payment before the
maturity date at the option of the holder.
RANKING
The STRYPES are unsecured obligations and rank equally with all other
unsecured and unsubordinated indebtedness of ML&Co.
There are no contractual restrictions on the ability of ML&Co. or its
subsidiaries to incur additional secured or unsecured debt. However, borrowings
by certain subsidiaries, including MLPF&S, are restricted by net capital
requirements under the Exchange Act and under rules of exchanges and other
regulatory bodies.
LISTING
The STRYPES are listed on the NYSE under the trading symbol "BOB".
OTHER TERMS
ML&Co. issued the STRYPES 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 STRYPES 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 STRYPES 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 such transaction, MLPF&S
remains a Controlled Subsidiary.
"Controlled Subsidiary" is defined in the 1983 indenture to mean a
corporation more than 80% of the outstanding shares of Voting Stock of which are
owned directly or indirectly by ML&Co.
In addition, ML&Co. may not permit MLPF&S to:
o merge or consolidate, unless the surviving company is a Controlled
Subsidiary, or
o convey or transfer its properties and assets substantially as an
entirety, except to one or more Controlled Subsidiaries.
MERGER AND CONSOLIDATION
ML&Co. may consolidate or merge with or into any other corporation and
ML&Co. may sell, lease or convey all or substantially all of its assets to any
corporation, provided that:
o the resulting corporation, if other than ML&Co., is a corporation
organized and existing under the laws of the United States of
America or any U.S. state and assumes all of ML&Co.'s obligations
to:
o pay any amounts due and payable or deliverable with respect to all
the Senior Debt Securities; and
o perform and observe 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 debt securities affected. However, without the consent of each holder
of any outstanding debt security affected, no amendment or modification to any
Indenture may:
o change the stated maturity date of the principal of, or any
installment of interest or Additional Amounts payable on, any
senior debt security or any premium payable on redemption, or
change the redemption price;
o reduce the principal amount of, or the interest or Additional
Amounts payable on, any senior debt security or reduce the amount
of principal which could be declared due and payable before the
stated maturity date;
o change the place or currency of any payment of principal or any
premium, interest or Additional Amounts payable on any senior debt
security;
o impair the right to institute suit for the enforcement of any
payment on or with respect to any senior debt security;
o reduce the percentage in principal amount of the outstanding
senior debt securities of any series, the consent of whose holders
is required to modify or amend the 1983 indenture; or
o modify the foregoing requirements or reduce the percentage of
outstanding senior debt securities necessary to waive any past
default to less than a majority.
No modification or amendment of ML&Co.'s Subordinated Indenture or any
Subsequent Indenture for subordinated debt securities may adversely affect the
rights of any holder of ML&Co.'s senior indebtedness without the consent of each
holder affected. The holders of at least a majority in principal amount of
outstanding senior debt securities of any series may, with respect to that
series, waive past defaults under the 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 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 any Indenture which
cannot be modified under the terms of that Indenture without the
consent of each holder of each series of debt securities affected.
The holders of a majority in principal amount of the outstanding senior
debt securities of a series may direct the time, method and place of conducting
any proceeding for any remedy available to the trustee or exercising any trust
or power conferred on the trustee with respect to those senior debt securities,
provided that any direction shall not be in conflict with any rule of law or the
1983 indenture. Before proceeding to exercise any right or power under the 1983
indenture at the direction of the holders, the trustee shall be entitled to
receive from the holders reasonable security or indemnification against the
costs, expenses and liabilities which might be incurred by it in complying with
any direction.
The STRYPES 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.
CERTAIN ARRANGEMENTS WITH THE CONTRACTING STOCKHOLDER
Pursuant to the forward purchase contract, the contracting stockholder
is obligated to deliver to the ML&Co. Subsidiary on the Business Day immediately
preceding the maturity date a number of shares of common stock of CIBER equal to
the number required by ML&Co. to pay and discharge all of the STRYPES, including
any STRYPES issued pursuant to the over-allotment option granted by ML&Co. to
the Underwriter. In lieu of delivering shares of common stock of CIBER on the
Business Day immediately preceding the maturity date, the contracting
stockholder has the right to satisfy his obligation under the forward purchase
contract by delivering cash in an amount equal to the value of the number of
shares of common stock of CIBER at the Maturity Price. The right to deliver
cash, if exercised by the contracting stockholder, must be exercised with
respect to all shares of common stock of CIBER then deliverable pursuant to the
forward purchase contract. Under the forward purchase contract, ML&Co. has
agreed to pay and discharge the STRYPES by delivering to the holders thereof on
the maturity date the form of consideration that the ML&Co. Subsidiary receives
from the contracting stockholder.
The consideration to be paid by the ML&Co. Subsidiary under the forward
purchase contract is $71,315,820 in the aggregate which was paid to the
contracting stockholder on January 30, 1998. No other consideration is payable
by the ML&Co. Subsidiary to the contracting stockholder in connection with its
acquisition of the common stock of CIBER or the performance of the forward
purchase contract by the contracting stockholder. ML&Co. has agreed with the
contracting stockholder that, without the prior consent of the contracting
stockholder, it will not amend, modify or supplement the 1983 indenture or the
STRYPES in any respect that would adversely affect any obligation of the
contracting stockholder under the forward purchase contract, including, without
limitation, increasing the consideration that the contracting stockholder is
obligated to deliver pursuant to the forward purchase contract.
Until such time, if any, as the contracting stockholder shall have
delivered shares of common stock of CIBER to the ML&Co. Subsidiary pursuant to
the terms of the forward purchase contract, the contracting stockholder will
retain all ownership rights with respect to the common stock of CIBER held by
him. The ownership rights include, among others, voting rights and rights to
receive any dividends or other distributions.
The contracting stockholder has no duties or obligations with respect
to the STRYPES or amounts to be paid to holders thereof, including any duty or
obligation to take the needs of ML&Co. or holders of the STRYPES into
consideration in determining whether to deliver shares of common stock of CIBER
or cash or for any other reason. The forward purchase contract among ML&Co., the
ML&Co. Subsidiary, The Bank of New York, as agent for and on behalf of the
ML&Co. Subsidiary, and the contracting stockholder is a commercial transaction
and does not create any rights in, or for the benefit of, any third party,
including any holder of STRYPES.
To the extent that the contracting stockholder does not perform under
the forward purchase contract, ML&Co. will be required to otherwise acquire
shares of common stock of CIBER for delivery to holders of the STRYPES on the
maturity date, unless, in the case of shares deliverable on the maturity date,
it elects to exercise its option to deliver cash with an equal value.
Merrill Lynch Capital Corporation, a wholly owned subsidiary of ML&Co.,
has entered into a secured loan agreement with Bobby G. Stevenson, as trustee of
the 1998 Bobby G. Stevenson Revocable Trust. Under the loan agreement, Mr.
Stevenson, as trustee of the 1998 Bobby G. Stevenson Revocable Trust, will
borrow approximately $20,567,930 for a term of three years.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the SEC.
Our SEC filings are also available over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file by visiting
the SEC's public reference rooms in Washington, D.C., New York, New York, and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
about the public reference rooms. You may also inspect our SEC reports and other
information at the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005.
We have filed a registration statement on Form S-3 with the SEC
covering the STRYPES and other securities. For further information on ML&Co. and
the STRYPES, you should refer to our registration statement and its exhibits.
This prospectus summarizes material provisions of contracts and other documents
that we refer you to. Because the prospectus may not contain all the information
that you may find important, you should review the full text of these documents.
We have included copies of these documents as exhibits to our registration
statement 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 STRYPES and is to be used by MLPF&S when making offers and sales related to
market-making transactions in the STRYPES.
MLPF&S may act as principal or agent in these market-making
transactions.
The STRYPES may be offered on the NYSE or off the exchange in
negotiated transactions or otherwise.
The distribution of the STRYPES 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.