As filed with the Securities and Exchange Commission on November 17, 1999
Registration No. 333-78253
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Amendment No. 3 to
Form S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CVS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 5912 05-0494040
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
incorporation or Classification Code Number) Identification No.)
organization)
One CVS Drive
Woonsocket, RI 02895
(401) 765-1500
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Charles C. Conaway
President and Chief Operating Officer
One CVS Drive
Woonsocket, RI 02895
(401) 765-1500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
Deanna L. Kirkpatrick
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
(212) 450-4000
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Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box: o
<TABLE>
CALCULATION OF REGISTRATION FEE
==================================================================================================================================
Proposed Maximum
Title of Each Class Amount to be Proposed Maximum Aggregate Offering Amount of
of Securities to be Registered Registered Offering Price(1) Price(1) Registration Fee(2)
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<S> <C> <C> <C> <C>
5 1/2% Exchange Notes due February
15, 2004............................. $300,000,000 100% $300,000,000 $83,400
==================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee.
(2) Previously paid on May 11, 1999.
-----------------------
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, as amended or until the
Registration Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
================================================================================
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED NOVEMBER 17, 1999
PROSPECTUS
CVS Corporation
Offer to Exchange
5 1/2% Notes Due February 15, 2004
for
5 1/2% Exchange Notes Due February 15, 2004
We are offering to exchange up to $300,000,000 of our new 5 1/2% Exchange
Notes due February 15, 2004 for up to $300,000,000 of our existing 5 1/2%
Notes due February 15, 2004. The terms of the new notes are identical in all
material respects to the terms of the old notes, except that the new notes
have been registered under the Securities Act, and the transfer restrictions
and registration rights relating to the old notes do not apply to the new
notes.
To exchange your old notes for new notes:
o you are required to make the representations described on page 31 to
us
o you must complete and send the letter of transmittal that
accompanies this prospectus to the exchange agent, The Bank of New
York, by 5:00 p.m., New York time, on , 1999
o you should read the section called "The Exchange Offer" for further
information on how to exchange your old notes for new notes
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the notes to be issued in the
exchange offer or passed upon the adequacy or accuracy of this prospectus. Any
representation to the contrary is a criminal offense.
The date of this prospectus is , 1999.
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the U.S. Securities and Exchange Commission. Our SEC filings
are available to the public over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file at 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 on the public reference rooms. In addition, because our common
stock is listed on the New York Stock Exchange, reports and other information
concerning CVS can also be inspected at the office of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005.
This prospectus is a part of a registration statement filed by us with
the SEC under the Securities Act. As allowed by SEC rules, this prospectus
does not contain all of the information that you can find in the registration
statement or the exhibits to the registration statement.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference
includes important business and financial information that is not included in
this document and is an important part of this prospectus, and information
that we file later with the SEC will automatically update and supersede the
information in this prospectus. We incorporate by reference the documents
listed below and any future filings made with the SEC under Sections 13(a),
13(c), 14, or 15(d) of the Exchange Act until the termination of the offering
under this prospectus.
(1) CVS' Annual Report on Form 10-K (as
amended on November 17, 1999)........ Year ended December 31, 1998;
(2) CVS' Quarterly Reports on Form 10-Q.. Filed on May 11, 1999 (as
amended on November 17,
1999), August 10, 1999 (as
amended on November 17, 1999)
and November 5, 1999 (as
amended on November 17,
1999); and
(3) CVS' Current Reports on Form 8-K..... Filed on February 9, 1999,
February 11, 1999, August 12,
1999 and November 15, 1999.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Nancy R. Christal
Vice President, Investor Relations
CVS Corporation
670 White Plains Road, Suite 210
Scarsdale, New York, 10583
(800) 201-0938
To obtain timely delivery of copies of these filings, you must make your request
no later than .
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<PAGE>
CVS CORPORATION
CVS Corporation is a leader in the chain drugstore industry in the United
States with approximately $15.3 billion in revenue in 1998. As of September
25, 1999, we operated 4,089 stores in 24 states in the Northeast,
Mid-Atlantic, Midwest and Southeast regions and in the District of Columbia,
making us one of the largest drugstore chains in the nation in terms of store
count. We have the number one market share position in six of the top ten
drugstore markets. We are also among the industry leaders in terms of store
productivity and operating profit margin.
Our principal executive offices are located at One CVS Drive, Woonsocket,
Rhode Island 02895, telephone (401) 765-1500.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
In the documents we have incorporated by reference into this prospectus,
we make forward-looking statements. These statements are subject to risks and
uncertainties. Forward-looking statements include the information concerning:
o our future operating performance, including sales and earnings per
common share growth and cost savings and synergies following the
Revco and Arbor mergers;
o our ability to elevate the performance level of Revco stores following
the Revco merger;
o our belief that we have sufficient cash flows to support working
capital needs, capital expenditures and debt service requirements;
o our belief that we can continue to improve operating performance by
relocating existing stores to freestanding locations;
o our belief that we can continue to reduce selling, general and
administrative expenses as a percentage of net sales;
o our belief that we can continue to reduce inventory levels; and
o our belief that we will incur only minimal business disruption and
financial impact as a result of the Year 2000 issue.
In addition, statements that include the words "believes," "expects,"
"anticipates," "intends," "estimates" or other similar expressions are
forward-looking statements. For those statements, we claim the protection of
the safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995.
What Factors Could Affect the Outcome of Our Forward-Looking Statements?
You should understand that the following important factors, in addition
to those discussed elsewhere in the documents which are incorporated by
reference could affect the future results of CVS and could cause those results
or other outcomes to differ materially from those expressed in our
forward-looking statements.
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<PAGE>
Industry and Market Factors
o changes in economic conditions generally or in the markets served by
CVS;
o future federal or state regulatory and legislative actions,
including accounting standards and taxation requirements, affecting
CVS or the chain-drug industry;
o consumer preferences and spending patterns;
o competition from other drugstore chains, from alternative
distribution channels, including supermarkets, membership clubs,
mail order companies and internet companies, and from third party
plans; and
o the continued efforts of health maintenance organizations, managed
care organizations, pharmacy benefit management companies and other
third party payors to reduce prescription drug costs.
Operating Factors
o our ability to combine the businesses of CVS, Revco and Arbor while
maintaining current operating performance levels during the
integration period(s) and the challenges inherent in diverting CVS
management's focus and resources from other strategic opportunities
and from operational matters for an extended period of time;
o our ability to implement new computer systems and technologies;
o our ability to continue to secure suitable new store locations on
favorable lease terms as we seek to open new stores and relocate a
portion of our existing store base to freestanding locations;
o the creditworthiness of the purchasers of former businesses whose
store leases are guaranteed by CVS;
o fluctuations in the cost and availability of inventory and our ability
to maintain favorable supplier arrangements and relationships;
o our ability to attract, hire and retain suitable pharmacists and
management personnel;
o our ability and the ability of our key business partners to replace,
modify or upgrade computer systems in ways that adequately address
the Year 2000 issue. Given the numerous and significant
uncertainties involved, there can be no assurances that Year 2000
related estimates and anticipated results will be achieved as actual
results could differ materially; and
o our ability to establish effective advertising, marketing and
promotional programs, including pricing strategies, in the different
geographic markets in which we operate.
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the new notes.
The new notes will be exchanged for old notes as described in this prospectus
upon our receipt of old notes. We will cancel all of the old notes surrendered
in exchange for the new notes.
Our net proceeds from the sale of the old notes were approximately $297
million, after deduction of the initial purchasers' discounts and commissions
and other expenses of the offering. We used those net proceeds to repay
outstanding commercial paper.
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SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
Our selected consolidated financial and operating data as of and for the
years ended December 31, 1996, 1997 and 1998 has been derived from our
consolidated financial statements, which have been audited by KPMG LLP,
independent accountants. You should not take historical results as necessarily
indicative of the results that may be expected for any future period. You
should read this selected consolidated financial and operating data in
conjunction with our Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1998 and our Quarterly Report on Form 10-Q/A for the quarterly
period ended September 25, 1999.
The selected consolidated financial and operating data as of and for the
nine months ended September 26, 1998 and September 25, 1999 and for the years
ended December 31, 1994 and 1995 has been derived from our unaudited
consolidated financial statements. In the opinion of management, the
consolidated financial statements include all adjustments necessary for a fair
presentation of the results of operations, financial position, and cash flows
for those periods. The results for the nine months ended September 25, 1999
are not necessarily indicative of results that may be expected for the entire
fiscal year.
<TABLE>
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Year Ended December 31, Nine Months Ended
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As As
Restated Restated
As As September September
Dollars in millions, except per share Restated Restated 26, 25,
amounts 1994 1995 1996 1997(1) 1998(1) 1998(1) 1999
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<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations:(7)
Net sales.............................. $9,469.1 $10,513.1 $11,831.6 13,749.6 $15,273.6 $11,082.5 $12,914.7
Gross margin(2)........................ 2,707.3 2,960.0 3,300.9 3,718.3 4,129.2 3,022.7 3,501.0
Selling, general & administrative(3)... 2,290.5 2,522.8 2,696.2 3,014.2 3,198.7 2,359.3 2,697.9
Merger, restructuring and other
nonrecurring charges................ -- 165.5 12.8 422.4 178.6 176.7 --
Operating profit(4).................... 416.8 271.7 591.9 281.7 751.9 486.7 803.1
Other expense (income), net............ 86.6 114.0 (51.5) 44.1 60.9 45.2 42.5
Income tax provision................... 144.3 74.3 271.0 149.2 306.5 201.7 311.8
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Earnings from continuing operations
before extraordinary item(5)........ $ 185.9 $ 83.4 $ 372.4 $ 88.4 384.5 $ 239.9 $ 448.8
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Per Common Share Data:
Earnings from continuing operations
before extraordinary item:(5)
Basic............................... $ 0.47 $ 0.18 $ 0.98 $ 0.20 $ 0.96 $ 0.0 $ 1.12
Diluted............................. 0.47 0.18 0.95 0.19 0.95 0.58 1.10
Cash dividends per common share........ 0.7600 0.7600 0.2200 0.2200 0.2250 0.1675 0.1725
- ------------------------------------------------------------------------------------------------------------------------------
Other Operating Data:
Ratio of earnings to fixed charges(6).. 2.68x 1.67x 3.96x 2.12x 3.87x 3.42x 4.81x
Pharmacy sales as a percentage of total
sales(8)............................ -- -- 51.6% 54.7% 57.6% 57.8% 58.8%
Total same store sales(8).............. -- -- 8.9% 9.7% 10.8% 10.0% 12.4%
Pharmacy same store sales(8)........... -- -- 13.5% 16.5% 16.5% 15.8% 19.3%
Third party sales as percentage of
pharmacy sales(8)................... -- -- 79.8% 80.8% 83.7% 83.3% 86.2%
Number of stores (at end of period).... 3,617 3,715 4,204 4,094 4,122 4,094 4,089
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Balance Sheet Data: (At End of Period)
Working capital........................ $1,552.7 $ 1,429.6 $ 1,540.3 1,043.4 1,215$9 1,113.$ 1,669.1
Total assets........................... 7,202.9 6,614.4 6,014.9 5,920.5 6,686.2 6,459.2 7,174.3
Total long-term debt................... 1,012.3 1,056.3 1,204.8 290.4 275.7 289.6 575.2
Total shareholders equity.............. 3,341.4 2,567.4 2,413.8 2,626.5 3,110.6 2,973.4 3,514.0
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</TABLE>
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(1) The selected consolidated financial and operating data as of December 31,
1997 and for the years ended December 31, 1997 and 1998 has been
restated. For more information, please read Notes 15 and 16 to the
consolidated financial statements, which are contained in our Annual
Report on Form 10-K/A for the fiscal year ended December 31, 1998.
5
<PAGE>
(2) Gross margin includes the pre-tax effect of the following nonrecurring
charges: (i) in 1998, $10.0 million ($5.9 million after-tax) related to
the markdown of noncompatible Arbor merchandise and (ii) in 1997, $75.0
million ($49.9 million after-tax) related to the markdown of
noncompatible Revco merchandise.
(3) Includes depreciation and amortization.
(4) Operating profit includes the pre-tax effect of the charges discussed in
Note (2) above and the following merger, restructuring and other
nonrecurring charges: (i) in 1998, $147.3 million ($101.3 million
after-tax) related to the merger of CVS and Arbor and $31.0 million
($18.4 million after-tax) of nonrecurring costs incurred in connection
with eliminating Arbor's information technology systems and removing
Revco's noncompatible store merchandise fixtures, (ii) in 1997, $337.1
million ($229.8 million after-tax) related to the merger of CVS and
Revco, $54.3 million ($32.0 million after-tax) of nonrecurring costs
incurred in connection with eliminating Revco's information technology
systems and removing Revco's noncompatible store merchandise fixtures and
$31.0 million ($19.1 million after-tax) related to the restructuring of
Big B, Inc., (iii) in 1996, $12.8 million ($6.5 million after-tax)
related to the write-off of costs incurred in connection with the failed
merger of Rite Aid Corporation and Revco and (iv) in 1995, $165.5 million
($97.7 million after-tax) related to our strategic restructuring program
and the early adoption of SFAS No. 121, and $49.5 million ($29.1 million
after-tax) related to CVS changing its policy from capitalizing internally
developed software costs to expensing the costs as incurred, outsourcing
certain technology functions and retaining former employees until their
respective job functions were transitioned.
(5) Earnings from continuing operations before extraordinary item and
earnings per common share from continuing operations before extraordinary
item includes the after-tax effect of the charges discussed in Notes (2)
and (4) above and a $121.4 million ($72.1 million after-tax) gain
realized during 1996 upon the sale of equity securities received
from the sale of Marshalls.
(6) For purposes of computing our ratio of earnings to fixed charges,
earnings consist of earnings from continuing operations before income
taxes and extraordinary item and fixed charges (excluding capitalized
interest). Fixed charges consist of interest, capitalized interest and
one-third of rental expense, which is deemed representative of the
interest factor.
(7) Prior to the mergers, Arbor's fiscal year ended on July 31 and Revco's
fiscal year ended on the Saturday closest to May 31. In recording the
business combinations, Arbor's and Revco's historical stand-alone
consolidated financial statements have been restated to a December 31
year-end, to conform to CVS' fiscal year-end. As permitted by the rules
and regulations of the Securities and Exchange Commission, Arbor's fiscal
year ended July 31, 1995 and Revco's fiscal year ended June 3, 1995 have
been combined with CVS' fiscal year ended December 31, 1994.
(8) Data is unavailable for periods prior to 1996 due to numerous acquisitions
subsequent to such periods.
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<PAGE>
DESCRIPTION OF NOTES
The notes were issued under an indenture dated as of February 11, 1999
between CVS and The Bank of New York as trustee. The following summary
highlights material terms of the indenture. Because this is a summary, it does
not contain all of the information that is included in the indenture. You
should read the entire indenture, including the definitions of the terms used
below. We define some of the terms used below in the section called "Defined
terms." We indicate those terms by placing them in bold the first time that
they are used. The indenture is subject to and governed by the Trust Indenture
Act of 1939, as amended. We have filed a copy of the indenture as an exhibit
to the registration statement to which this prospectus relates. See "Where You
Can Find More Information."
The terms of the new notes are identical in all material respects to the
terms of the old notes, except that the transfer restrictions and registration
rights relating to the old notes do not apply to the new notes. Since we did
not complete the exchange offer by September 19, 1999, holders of old notes
that have complied with their obligations under the registration rights
agreement will be entitled to liquidated damages in an amount equal to a rate
of 0.5% per year on the notes after that date and until the consummation of
the exchange offer.
General
The notes:
o are our unsecured senior obligations
o mature on February 15, 2004
o bear interest at the rate of 5 1/2% per year from February 11, 1999,
or from the most recent interest payment date to which interest has
been paid or provided for
o will not be listed on a national securities exchange
Because the notes are not secured, your claim against the assets of our
company will be junior to the extent we have granted liens on our assets to
the holders of other indebtedness. In addition, the notes are not guaranteed
by any of our subsidiaries, so you will not have any claim as a creditor
against our subsidiaries, and the claims of creditors, including trade
creditors, of our subsidiaries against our subsidiaries will be senior to your
claims against them. At September 25, 1999:
o we had $17.3 million of secured debt, including capitalized leases
o our subsidiaries had $3.7 billion of liabilities, including trade
payables
We may, without the consent of the holders of the notes, issue an
unlimited amount of additional notes under the indenture having the same terms
in all respects as the notes, except for possible differences as to payment of
interest on the notes:
(1) scheduled and paid prior to the date of issuance of those additional
notes or
(2) payable on the first interest payment date following the date of
issuance of those additional notes.
The notes and any additional notes would be treated as a single class for all
purposes under the indenture and will vote together as one class on all
matters with respect to the notes.
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Payment of principal and interest
We will pay interest on February 15 and August 15 every year, beginning
August 15, 1999, to the person in whose name each note, or any predecessor
note, is registered at the close of business on the February 1 or August 1
preceding the relevant interest payment date.
Interest on the notes will be computed on the basis of a 360-day year
consisting of twelve 30-day months.
We will pay principal, any premium, and interest on the notes at the
office we maintain in New York City for those purposes, which is currently the
corporate trust office of the trustee. The corporate trust office of the
trustee is located at 101 Barclay Street in The City of New York. You may
exchange your notes or register any transfer of notes at that office as well.
Optional Redemption
We may at any time, at our option, redeem all or any portion of the
notes, at a redemption price equal to the greater of:
(1) 100% of their principal amount or
(2) the sum of the present values of the remaining scheduled payments of
principal and interest thereon discounted to the date of redemption on a
semiannual basis, assuming a 360-day year consisting of twelve 30-day months,
at the applicable treasury yield plus 0.125%
plus any accrued interest.
How the optional redemption calculation will apply to the notes
The present value of the remaining payments, as determined by clause (2),
will increase as interest rates on U.S. Treasury securities decline, since the
interest that we pay to you will be comparatively valuable compared to the
lower interest rates then being paid on comparable securities. The present
value will decline as interest rates increase. We will always pay you at least
100% of the principal amount of your notes, even if interest rates have
dramatically increased and the present value of the remaining payments is less
than that. However, clause (2) seeks to ensure that you will capture the
benefit of the increased value of your note as interest rates decline by
requiring us to pay you an amount equal to the present value of remaining
payments, as determined in clause (2).
How the optional redemption payment in clause (2) is calculated
In connection with any redemption date, the "treasury yield" will be an
annual rate equal to the semiannual equivalent yield to maturity of the
comparable U.S. Treasury security. In calculating the yield to maturity of the
comparable U.S. Treasury security, we will assume a price for the comparable
U.S. Treasury security, expressed as a percentage of its principal amount,
equal to the applicable comparable Treasury price for that redemption date.
An independent investment banker will select as the comparable U.S.
Treasury security a United States Treasury security that has a maturity
comparable to the remaining term of the notes that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the notes. Credit Suisse First Boston Corporation will act
as the independent investment banker. If that firm is unwilling or unable to
select a comparable U.S. Treasury security, the trustee will appoint another
independent investment banking institution of national standing to act as the
independent investment banker.
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Notices of Redemption
Holders of the notes to be redeemed will receive notice of the redemption
by first-class mail at least 30 and not more than 60 days prior to the date
fixed for redemption.
No Redemption at Holder's Option
The notes are not redeemable at the holder's option.
Restrictive Covenants
Summary of the principal restrictive covenants
The indenture governing the notes limits the ability of CVS and its
restricted subsidiaries to
o secure debt with security interests on our principal property or
securities of our restricted subsidiaries unless the notes are
equally and ratably secured or
o engage in sale and leaseback transactions with respect to our
principal property, as we describe below.
You should read the sections called "--Detailed explanation of
restrictions on secured debt" and "--Detailed explanation of limitation on
sale/leaseback transactions" for a more detailed explanation of these
covenants and the exceptions to them.
Our "principal property" includes:
o any real and tangible property owned and operated, currently or in
the future, by CVS or any of our restricted subsidiaries that
constitute a part of any store, warehouse or distribution center
located within the United States of America or its territories or
possessions
o but excluding
o current assets
o motor vehicles
o mobile materials-handling equipment and other rolling stock
o cash registers and other point-of-sale recording devices and
o related equipment and data processing and other office equipment,
o if the net book value of that store, warehouse or distribution
center, including leasehold improvements and store fixtures
constituting a part of that store, warehouse or distribution center,
as of the date on which the determination is being made is more than
1.0% of our consolidated net tangible assets.
As of the date of this prospectus, none of our stores falls within this
definition of principal property.
All of our subsidiaries are currently restricted subsidiaries. However,
our board of directors may designate any of our subsidiaries as an
"unrestricted subsidiary" and therefore not subject to the covenants. However,
our board may not
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o designate as an unrestricted subsidiary any subsidiary that owns any
principal property or any stock of a restricted subsidiary
o continue the designation of any subsidiary as an unrestricted
subsidiary at any time that it owns any principal property or
o cause or permit any restricted subsidiary to transfer or otherwise
dispose of any principal property to any unrestricted subsidiary,
unless
(1) that unrestricted subsidiary will be redesignated as a
restricted subsidiary and
(2) any pledge, mortgage, security interest or other lien
arising in connection with any indebtedness of that
unrestricted subsidiary does not extend to any principal
property, except if the existence of that pledge,
mortgage, security interest or other lien would otherwise
be permitted under the indenture.
There are many transactions not restricted by the Indenture
The indenture does not contain any provisions that would
o limit our ability to incur indebtedness
o require the maintenance of financial ratios or specified levels of net
worth or liquidity
o afford holders of the notes protection in the event of a highly
leveraged transaction, change in credit rating or other similar
occurrence
o require us to repurchase or redeem or otherwise modify the terms of
any of the notes upon a change in control or other event involving
us which may adversely affect the creditworthiness of the notes
o limit our ability to pay dividends to our shareholders
Detailed explanation of the restrictions on secured debt
We will not, and we will not permit any of our restricted subsidiaries
to, incur, issue, assume, guarantee or create any secured debt, unless we
provide that the notes, together with, if we so choose, any other indebtedness
of CVS or the applicable restricted subsidiary which is not subordinated to
the notes, whether then existing or thereafter created, will be secured
equally and ratably with, or prior to, that secured debt,
unless
taking account of the proposed secured debt, the sum of
o the aggregate amount of all outstanding secured debt of CVS and our
restricted subsidiaries plus
o all attributable debt in respect of sale and leaseback transactions
relating to a principal property, with the exception of attributable
debt which is excluded as provided by clauses (1) to (8) described
under "Detailed explanation of limitations on sale/leaseback
transactions" below
would not exceed 15% of consolidated net tangible assets.
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This restriction will not apply to, and there will be excluded from
secured debt in any computation under this restriction and under "Detailed
explanation of limitation on sale/leaseback transactions" below, indebtedness,
secured by:
(1) liens on property, shares of capital stock or indebtedness
of any corporation existing at the time that corporation becomes a
subsidiary;
(2) liens on property, shares of capital stock or indebtedness
if those liens
o existed at the time of acquisition, including, without
limitation, by way of merger or consolidation, of that
property, shares of capital stock or indebtedness or
o were incurred within 360 days of the time of that
acquisition by CVS or any restricted subsidiary;
(3) liens on property, shares of capital stock or indebtedness
acquired or constructed by CVS or any restricted subsidiary and
created
(a) prior to, at the time of, or within 360 days after,
o that acquisition, including, without limitation,
acquisition through merger or consolidation, or
o the completion of construction or commencement of
commercial operation of that property,
whichever is later or
(b) thereafter, if the lien is provided for by a binding
commitment entered into prior to, at the time of or within
360 days after the acquisition, completion of construction
or commencement of commercial operation referred to in
clause (a),
to secure or provide for the payment of all or any part of the
purchase price or the construction price of that property, capital
stock or indebtedness;
(4) liens in favor of CVS or any restricted subsidiary;
(5) liens in favor of the United States of America, any State
or the District of Columbia or any foreign government, or any
agency, department or other instrumentality of the United States of
America, any State or the District of Columbia, to secure partial,
progress, advance or other payments as provided by any contract or
provisions of any statute;
(6) liens incurred or assumed in connection with the issuance
of revenue bonds the interest on which is exempt from Federal income
taxation as provided by Section 103(b) of the Internal Revenue Code;
(7) liens securing the performance of any contract or
undertaking not directly or indirectly in connection with the
borrowing of money, the obtaining of advances or credit or the
securing of indebtedness, if made and continuing in the ordinary
course of business;
(8) liens incurred, no matter when created, in connection with
CVS's or a restricted subsidiary's engaging in leveraged or
single-investor lease transactions; provided, however, that the
instrument creating or evidencing any borrowings secured by that
lien will provide that those
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borrowings are payable solely out of the income and proceeds of the
property subject to that lien and are not a general obligation of
CVS or that restricted subsidiary;
(9) liens in favor of a governmental agency to qualify CVS or
any restricted subsidiary to do business, maintain self insurance or
obtain other benefits, or liens under workers' compensation laws,
unemployment insurance laws or similar legislation,
(10) good faith deposits in connection with bids, tenders,
contracts or deposits to secure public or statutory obligations of
CVS or any restricted subsidiary, or deposits of cash or obligations
of the United States of America to secure surety and appeal bonds to
which CVS or any restricted subsidiary is a party or in lieu of
those bonds, or pledges or deposits for similar purposes in the
ordinary course of business,
(11) liens imposed by law, including laborers' or other
employees', carriers', warehousemen's, mechanics', materialmen's and
vendors' liens,
(12) liens arising out of judgments or awards against CVS or
any restricted subsidiary with respect to which CVS or that
restricted subsidiary at the time shall be prosecuting an appeal or
proceedings for review or liens arising out of individual final
judgments or awards in amounts of less than $100,000; provided that
the aggregate amount of all those individual final judgments or
awards shall not at any one time exceed $1,000,000,
(13) liens for taxes, assessments, governmental charges or
levies not yet subject to penalties for nonpayment or the amount or
validity of which is being in good faith contested by appropriate
proceedings by CVS or any restricted subsidiary, as the case may be,
(14) minor survey exceptions, minor encumbrances, easements or
reservations of, or rights of others for, rights of way, sewers,
electric lines, telegraph and telephone lines and other similar
purposes, or zoning or other restrictions or liens as to the use of
real properties, which liens, exceptions, encumbrances, easements,
reservations, rights and restrictions do not, in the opinion of CVS,
in the aggregate materially detract from the value of said
properties or materially impair their use in the operation of the
business of CVS and its restricted subsidiaries;
(15) liens incurred to finance all or any portion of the cost
of construction, alteration or repair of any principal property or
improvements thereto created
(a) prior to or within 360 days after completion of that
construction, alteration or repair; or
(b) thereafter, if that lien is created as provided by a
binding commitment to lend entered into prior to, at the
time of, or within 360 days after completion of that
construction, alteration or repair;
(16) liens existing on the date of the indenture;
(17) liens created in connection with a project financed with,
and created to secure, a nonrecourse obligation; or
(18) any extension, renewal, refunding or replacement of the
foregoing, provided that
(a) the extension, renewal, refunding or replacement lien
shall be limited to all or a part of the same property
that secured the lien extended, renewed, refunded or
replaced, plus improvements on that property, and
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(b) the funded debt secured by that lien is not increased.
Detailed explanation of limitation on sale/leaseback transactions
We will not, and we will not permit any restricted subsidiary to, enter
into any arrangement with any person providing for the leasing by CVS or any
restricted subsidiary of any principal property of CVS or any restricted
subsidiary:
o if the lease is required by GAAP to be capitalized on the balance
sheet of the lessee, and
o if the principal property has been or is to be sold or transferred by
CVS or that restricted subsidiary to that person
unless, taking account of the proposed sale and leaseback, the aggregate amount
of
(1) all attributable debt with respect to all sale and leaseback
transactions as described above plus
(2) all secured debt, other than secured debt which is excluded as
provided by clauses (1) to (18) described under "Detailed
explanation of restrictions on secured debt" above
would not exceed 15% of consolidated net tangible assets.
This covenant will not apply to, and there will be excluded from
attributable debt in any computation under this restriction or under "Detailed
explanation of restrictions on secured debt" above, attributable debt with
respect to any sale and leaseback transaction if:
(1) CVS or a restricted subsidiary is permitted to create
funded debt secured by a lien as provided by clauses (1) to (18)
inclusive described under "Detailed explanation of restrictions on
secured debt" above on the principal property to be leased, in an
amount equal to the attributable debt with respect to that sale and
leaseback transaction, without equally and ratably securing the
notes;
(2) the property leased as provided by that arrangement
(a) is sold for a price at least equal to that property's fair
market value, as determined by the chief executive
officer, the president, the chief financial officer, the
treasurer or the controller of CVS, and
(b) within 360 days after the sale, CVS or a restricted
subsidiary, shall apply the proceeds to the retirement of
indebtedness or funded debt of CVS or any restricted
subsidiary, other than indebtedness or funded debt owned
by CVS or any restricted subsidiary.
However, no retirement referred to in this clause (2) may be
effected by payment at maturity or by any mandatory sinking fund
payment provision of indebtedness;
(3) CVS or a restricted subsidiary applies the net proceeds of
the sale or transfer of the leased principal property to the
purchase of assets and the cost of construction of assets within 360
days prior or subsequent to that sale or transfer;
(4) the effective date of the arrangement or the purchaser's
commitment therefor is within 36 months prior or subsequent to
o the acquisition of the principal property, including,
without limitation, acquisition by merger or consolidation,
or
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o the completion of construction and commencement of
operation of the principal property, which, in the case of
a retail store, is the date of opening to the public,
whichever is later;
(5) the lease in the sale and leaseback transaction is for a
term, including renewals, of not more than three years;
(6) the sale and leaseback transaction is entered into between
CVS and a restricted subsidiary or between restricted subsidiaries;
(7) the lease secures or relates to industrial revenue or
pollution control bonds; or
(8) the lease payment is created in connection with a project
financed with, and the obligation constitutes, a nonrecourse
obligation.
Merger, Consolidation and Disposition of Assets
CVS will not:
o consolidate with any person, or merge with or into any person, other
than a restricted subsidiary, or
o sell, convey, transfer, lease or otherwise dispose of all or
substantially all of its property and assets as an entirety or
substantially as an entirety in one transaction or a series of
related transactions to, any person other than to a subsidiary,
o or permit any person to merge with or into CVS
unless:
(a) either (1) CVS shall be the continuing person or
(2) the person, if other than CVS, formed by that
consolidation or into which CVS is merged or that
acquired or leased the property and assets of CVS
shall
o be a corporation organized and validly existing
under the laws of the United States of America
or any jurisdiction inside the United States of
America and
o expressly assume, by a supplemental indenture,
executed and delivered to the trustee, all of
the obligations of CVS under the notes and the
indenture, and
CVS shall have delivered to the trustee an opinion of
counsel stating that:
o the consolidation, merger or transfer and the
supplemental indenture complies with this
provision
o all conditions precedent provided for in the
indenture relating to that transaction have been
complied with
o the supplemental indenture constitutes the legal
valid and binding obligation of CVS or the
successor, enforceable against that entity in
accordance with its terms, subject to customary
exceptions; and
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(b) CVS shall have delivered to the trustee an officers' certificate to
the effect that immediately after, and taking into account, that
transaction, no default shall have occurred and be continuing.
The indenture does not restrict, or require us to redeem or permit
holders to cause a redemption of notes in the event of,
(1) a consolidation, merger, sale of assets or other similar transaction
that may adversely affect the creditworthiness of CVS or its
successor or combined entity,
(2) a change in control of CVS or
(3) a highly leveraged transaction involving CVS, whether or not
involving a change in control.
Accordingly, you will not have protection in the event of a highly leveraged
transaction, reorganization, restructuring, merger or similar transaction
involving CVS that may adversely affect the holders of notes. The existing
protective covenants applicable to the notes would continue to apply to CVS,
or its successor, in the event of such a transaction but may not prevent that
transaction from taking place.
Events of Default, Waiver and Notice
The following events are considered events of defaults:
(a) CVS defaults in the payment of all or any part of the principal
of the notes when the same becomes due and payable;
(b) CVS defaults in the payment of any interest on the notes when
the same becomes due and payable, and that default continues
for a period of 30 days;
(c) CVS defaults in the performance of or breaches any other
covenant or agreement of CVS in the indenture and that default
or breach continues for a period of 60 consecutive days after
written notice of that default or breach has been given
o to CVS by the trustee or
o to CVS and the trustee by the holders of 25% or more in
aggregate principal amount of the notes;
(d) events of bankruptcy or insolvency with respect to CVS;
(e) (1) an event of default as defined in any one or more
indentures or instruments evidencing or under which CVS
has outstanding an aggregate of at least $25,000,000
aggregate principal amount of indebtedness for borrowed
money, shall happen and be continuing and
(2) that indebtedness shall have been accelerated so that it
shall be or become due and payable prior to the date on
which the same would otherwise have become due and
payable, and
(3) that acceleration shall not be rescinded or annulled
within ten days after notice of that acceleration shall
have been given
o to CVS by the trustee, or
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o to CVS and the trustee by the holders of at least 25%
in aggregate principal amount of the notes at the time
outstanding; or
(f) (1) failure by CVS to make any payment at maturity,
including any applicable grace period, in respect of at
least $25,000,000 aggregate principal amount of
indebtedness for borrowed money and
(2) that failure shall have continued for a period of ten days
after notice of that failure shall have been given
o to CVS by the trustee, or
o to CVS and the trustee by the holders of at least 25%
in aggregate principal amount of the notes at the time
outstanding
o If an event of default occurs and is continuing, then, either the
trustee or the holders of not less than 25% in aggregate principal
amount of the notes then outstanding by notice in writing to CVS,
and to the trustee if given by holders, may declare the entire
principal amount of all notes, and accrued and unpaid interest, to
be due and payable immediately. Upon this declaration, the principal
of and interest on the notes shall become immediately due and
payable.
o If an event of default described in clause (d) occurs and is
continuing, then the principal amount of all the notes then
outstanding and accrued and unpaid interest shall be and become
immediately due and payable, without any notice or other action by
any holder or the trustee to the full extent permitted by applicable
law.
o If an event of default described in clause (e) or (f) occurs and is
continuing, if the acceleration of other indebtedness or failure to
pay other indebtedness shall be
(1) remedied or cured by CVS or
(2) waived by the holders of that indebtedness,
then the event of default under that clause shall automatically be
remedied, cured or waived without further action upon the part of
either the trustee or any of the holders.
Holders of a majority in principal amount of the notes may control remedies
upon an event of default and waivers of an event of default
Subject to provisions in the indenture for the indemnification of the
trustee and other limitations described in the indenture, the holders of at
least a majority in aggregate principal amount of the outstanding notes 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 by the indenture.
However, the trustee may refuse to follow any direction that:
o conflicts with law or the indenture
o may involve the trustee in personal liability, or
o the trustee determines in good faith may be unduly prejudicial to
the rights of holders not joining in the giving of that direction.
In addition, the trustee may take any other action it believes is proper that
is not inconsistent with any directions received from holders of notes as
provided by this paragraph.
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Subject to various provisions in the indenture, the holders of at least a
majority in principal amount of the outstanding notes, by notice to the
trustee, may waive an existing default or event of default and its
consequences, except
o a default in the payment of principal of or interest on any note as
specified in clauses (a) or (b) of "--Events of Default" or
o in respect of a covenant or provision of the indenture which cannot
be modified or amended without the consent of the holder of each
outstanding note affected.
Upon any waiver, the default shall cease to exist, and any event of default
arising therefrom shall automatically be cured, for every purpose of the
indenture; but no waiver shall extend to any subsequent or other default or
event of default or impair any right consequent thereto.
No holder of any notes may institute any proceeding, judicial or
otherwise, with respect to the indenture or the notes, or for the appointment
of a receiver or trustee, or for any other remedy under the indenture, unless:
(1) that holder has previously given to the trustee written notice
of a continuing event of default;
(2) the holders of at least 25% in aggregate principal amount of
outstanding notes shall have made written request to the
trustee to institute proceedings in respect of that event of
default in its own name as trustee under the indenture;
(3) that holder or holders have offered to the trustee indemnity
reasonably satisfactory to the trustee against any costs,
liabilities or expenses to be incurred in compliance with that
request;
(4) the trustee for 60 days after its receipt of the notice,
request and offer of indemnity has failed to institute that
proceeding; and
(5) during that 60-day period, the holders of a majority in
aggregate principal amount of the outstanding notes have not
given the trustee a direction that is inconsistent with that
written request.
A holder may not use the indenture to prejudice the rights of another holder
or to obtain a preference or priority over any other holder.
However, notwithstanding any of the provisions described above, the right
of any holder of a note to receive payment of principal, premium, if any, and
interest on or after their respective due dates or to bring suit for the
enforcement of any of those payments on or after those dates, may not be
impaired or affected without the consent of that holder.
Information
Whether or not required by the rules and regulations of the SEC, we have
agreed that, so long as any notes are outstanding, we will furnish to the
trustee, within 15 days after we are or would have been required to file with
the SEC, and to furnish to the holders of the notes thereafter:
(1) all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms 10-Q
and 10-K if we were required to file those Forms, including a
"Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to the annual
information only, a report thereon by our certified independent
accountants, and
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(2) all current reports that would be required to be filed with the
SEC on Form 8-K if we were required to file those reports.
In addition, whether or not required by the rules and regulations of the
SEC, at any time after we file a registration statement with respect to an
exchange offer or a registration statement permitting resales of the notes, we
will file a copy of all that information and reports with the SEC for public
availability and make that information available to securities analysts and
prospective investors upon request.
In addition, we have agreed that, for so long as any notes remain
outstanding, we will furnish to the holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered by Rule 144A(d)(4) under the Securities Act. Requests should be
directed to the address referred to under "Where You Can Find More
Information." Under Rule 144A(d)(4), we are not required to deliver any
information so long as we continue to be a reporting company under the
Exchange Act.
We will be required to file with the trustee annually, within four months
of the end of each fiscal year, a certificate as to the compliance with all
conditions and covenants of the indenture.
Discharge of the Notes
We may terminate our obligations under the notes and the indenture if:
(1) all notes previously authenticated and delivered, other than notes
that were mutilated or lost, have been delivered to the trustee for
cancellation and we have paid all sums payable by us under the
indenture; or
(2) (a) the notes
o mature within one year or
o all of them are to be called for redemption within one year
under arrangements satisfactory to the trustee for giving
the notice of redemption,
(b) we irrevocably deposit in trust with the trustee, as trust
funds solely for the benefit of the holders of the notes for
that purpose, money or U.S. government obligations or a
combination sufficient, without consideration of any
reinvestment, to pay the principal of and interest on the notes
to maturity or redemption, as relevant, and to pay all other
sums payable by us under the indenture, and
(c) we deliver to the trustee an officers' certificate and an
opinion of counsel, in each case stating that all conditions
precedent provided for in the indenture relating to the
satisfaction and discharge of the indenture have been complied
with.
If all notes previously authenticated and delivered have been cancelled
as provide in clause (1), the only obligations we will continue to have under
the indenture will be to compensate and indemnify the trustee.
If we have complied with the requirements of clause (2), the only
obligations we will continue to have under the indenture until the notes are
no longer outstanding, will be to:
o maintain an office or agency in respect of the notes
o have moneys held for payment in trust, although the indenture
permits us to recover from the trustee moneys held in trust if those
moneys have been unclaimed for two years
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o register the transfer or exchange of the notes
o deliver notes for replacement or to be canceled
o compensate and indemnify the trustee
o appoint a successor trustee
Defeasance
We:
(1) will be considered to have paid and will be discharged from all
obligations in respect of the notes, and the provisions of the
indenture will, except as noted below, no longer be in effect
with respect to the notes or
(2) need not comply with any specific covenant which may be
defeased under the indenture, and our non-compliance will not
be an event of default under clause (c) of "--Events of
Default"
if we satisfy the following conditions:
(a) we irrevocably deposit in trust with the trustee as trust funds
solely for the benefit of the holders of the notes, for payment
of the principal of and interest on the notes, money or U.S.
government obligations or a combination sufficient, without
consideration of any reinvestment, to pay and discharge the
principal of and accrued interest on the outstanding notes
o to maturity or
o to a specific redemption date, if we make irrevocable
arrangements satisfactory to the trustee to ensure that
the redemption will occur on that date;
(b) the deposit will not result in a breach or violation of, or
constitute a default under, the indenture or any other material
agreement or instrument to which we are a party or by which we
are bound;
(c) no default with respect to the notes has occurred and is
continuing on the date of that deposit;
(d) we deliver to the trustee an opinion of counsel that
(1) the holders of the notes
o will not recognize income, gain or loss for Federal
income tax purposes as a result of our election to
defease the notes and
o will be subject to Federal income tax on the same
amount, in the same manner and at the same times as
would have been the case if that deposit and
defeasance had not occurred and
(2) the holders of the notes have a valid security interest in
the trust funds, and
(e) we deliver to the trustee an officers' certificate and an
opinion of counsel, in each case stating that all conditions
precedent have been complied with.
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o In the case of legal defeasance under clause (1) above, the opinion of
counsel referred to in clause (d)(1) above may be replaced by a ruling
directed to the trustee received from the Internal Revenue Service to the
same effect.
o If we select the covenant defeasance option under clause (2) above, we
will continue to be bound by all of the other terms of the indenture
other than the specified covenant(s) that is defeased.
o After the notes are no longer outstanding, the only obligations we will
have under the indenture will be to compensate and indemnify the trustee,
and we will have the right to recover excess money held by the trustee.
Modification and Waiver
Amendments without the consent of any holder
CVS and the trustee may amend or supplement the indenture or the notes
without notice to or the consent of any holder:
(1) to cure any ambiguity, defect or inconsistency in the indenture;
provided that those amendments or supplements do not materially and
adversely affect the interests of the holders;
(2) to comply with the provisions of the indenture in connection
with a consolidation or merger of CVS or the sale, conveyance, transfer,
lease or other disposal of all or substantially all of the property and
assets of CVS;
(3) to comply with any requirements of the SEC in connection with
the qualification of the indenture under the Trust Indenture Act;
(4) to evidence and provide for the acceptance of appointment under
the indenture by a successor trustee; or
(5) to make any change that does not materially and adversely affect
the rights of any holder.
Amendments with the consent of the holders
Majority consent is usually sufficient
CVS and the trustee may amend the indenture and the outstanding notes
with the written consent of the holders of a majority in principal amount of
the notes then outstanding, and the holders of a majority in principal amount
of the outstanding notes by written notice to the trustee may waive future
compliance by CVS with any provision of the indenture or the notes.
The following provisions require the consent of all holders affected
thereby
Notwithstanding the preceding paragraphs, without the consent of each
holder affected thereby, an amendment or waiver may not:
(a) extend the stated maturity of the principal of, or any
installment of interest on, that holder's notes, or reduce the
principal of or the rate of interest on the notes, or any
premium payable with respect to the notes,
(b) change any place or currency of payment where any note or any
premium or interest is payable,
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(c) impair the right to institute suit for the enforcement of any
payment on or after the due date therefor,
(d) reduce the percentage in principal amount of outstanding notes
the consent of whose holders is required for any supplemental
indenture, for any waiver of
o compliance with the provisions of the indenture or
o defaults and the consequences of those defaults established
in the indenture,
(e) waive a default in the payment of principal of or interest on
any note of a holder; or
(f) modify this provision of the indenture, except to increase any
percentage or to provide that other provisions of the indenture
cannot be modified or waived without the consent of the holder
of each outstanding note thereunder affected thereby.
The consent of any holder need not approve the particular form of any
proposed amendment, supplement or waiver, so long as the consent approves the
substance of the amendment. After an amendment, supplement or waiver becomes
effective, we will give to the holders affected thereby a notice briefly
describing the amendment, supplement or waiver. We will mail supplemental
indentures to holders upon request. Any failure of CVS to mail that notice, or
any defect therein, shall not, however, in any way impair or affect the
validity of any supplemental indenture or waiver.
Governing Law
The indenture and the notes will be governed by the laws of the State of
New York.
The Trustee
We and our subsidiaries maintain ordinary banking and trust relationships
with The Bank of New York, which is the trustee for the notes, and its
affiliates. The Bank of New York also acts as the registrar and transfer agent
for our common stock, and BONY Capital Markets, Inc., an affiliate of the
trustee, acted as an initial purchaser of the old notes.
Book-Entry; Delivery and Form
The certificates representing the new notes will be issued in fully
registered form, without coupons. Except as described below, the new notes
will be deposited with, or on behalf of, The Depository Trust Company, New
York, New York, and registered in the name of Cede & Co. as DTC's nominee, in
the form of a global note.
The Global Note. CVS expects that in accordance with procedures established
by DTC
(a) upon deposit of the global note, DTC or its custodian will credit on
its internal system interests in the global notes to the accounts of
persons, or "participants", who have accounts with DTC
(b) holders of the notes that are not participants in DTC will have
their ownership interests reflected on the records of their
participant.
Any transfer of ownership interests held by a participant will be made
through records maintained by DTC or its nominee, and transfers of interests
held indirectly through participants will be made through the records of
participants. You will not be able to own an interest in the global note
unless you are a participant or hold an interest through a participant.
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So long as DTC or its nominee is the registered owner or holder of the
new notes, DTC or its nominee will be considered the sole owner or holder of
the new notes represented by the global note for all purposes under the
indenture. You will not be able to transfer your interest in the global note
except in accordance with DTC's procedures, in addition to those provided for
under the indenture with respect to the new notes.
We will make payments on the global note to DTC or its nominee, as the
registered owner of the note. None of CVS, the trustee or any paying agent
under the indenture will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests in the global note or for maintaining, supervising or reviewing any
records relating to beneficial ownership interests.
We expect that DTC or its nominee, upon receipt of any payment of the
principal of or premium and interest on the global note, will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the global note as
shown on the records of DTC or its nominee. We also expect that payments by
participants to owners of beneficial interests in the global note held through
them will be governed by standing instructions and customary practice as is
now the case with securities held for the account of customers registered in
the names of nominees for those customers. Such payments will be the
responsibility of the participants.
Transfers between participants in DTC will be effected in accordance with
DTC rules and will be settled in immediately available funds. If a holder
requires physical delivery of a certificated note for any reason, including to
sell new notes to persons in states which require physical delivery of the new
notes or to pledge them, the holder must transfer its interest in the global
note in accordance with the normal procedures of DTC and with the procedures
set forth in the indenture.
DTC has advised us that DTC will take any action permitted to be taken by
a holder of new notes only at the direction of one or more participants to
whose account at DTC interests in the global note are credited and only in
respect of that portion of the aggregate principal amount of new notes as to
which the participant or participants has or have given such direction.
However, if there is an event of default under the indenture, DTC will
exchange the global note for certificated notes, which it will distribute to
its participants.
DTC has advised us that it is
o a limited purpose trust company organized under the laws of the State
of New York,
o a member of the Federal Reserve System,
o a "clearing corporation" within the meaning of the Uniform Commercial
Code
o a "clearing agency" registered in accordance with the provisions of
Section 17A of the Exchange Act.
DTC was created to hold securities for its participants and facilitate the
clearance and settlement of securities transactions between participants
through electronic book-entry changes in accounts of its participants, thereby
eliminating the need for physical movement of certificates. Participants
include securities brokers and dealers, banks, trust companies and clearing
corporations and other organizations. Indirect access to the DTC system is
available to others, including banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a participant,
either directly or indirectly.
Although DTC has agreed to the foregoing procedures in order to
facilitate transfers of interests in the global notes among participants, it
is under no obligation to perform these procedures, and these procedures may
be discontinued at any time. Neither CVS nor the trustee will have any
responsibility for the
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performance by DTC or its participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations.
Certificated Notes. Interests in the global notes will be exchangeable or
transferable, as the case may be, for certificated notes if
(1) DTC notifies us that it is unwilling or unable to continue as
depositary for the global notes, or DTC ceases to be a "clearing agency"
registered under the Exchange Act, and a successor depositary is not
appointed by CVS within 90 days, or
(2) CVS in its discretion at any time determines not to have all the
notes represented by the global notes, or
(3) an event of default has occurred and is continuing with respect
to the new notes.
Upon the occurrence of any of the events described in the preceding
sentence, CVS will cause the appropriate certificated notes to be delivered.
Defined terms
The following terms referred to in this "Description of Notes" are
defined in the indenture as follows:
"attributable debt" means, in connection with any sale and leaseback
transaction under which either CVS or any restricted subsidiary is at the time
liable as lessee for a term of more than 12 months and at any date as of which
the amount thereof is to be determined, the lesser of
(A) total net obligations of the lessee for rental payments during the
remaining term of the lease discounted from the respective due dates
of the payments to the determination date at a yearly rate
equivalent to the greater of
(1) the weighted average yield to maturity of the notes, the
average being weighted by the principal amount of the notes and
(2) the interest rate inherent in the lease, as determined in good
faith by CVS,
both to be compounded semi-annually or
(B) the sale price for the assets so sold and leased multiplied by a
fraction the numerator of which is the remaining portion of the base
term of the lease included in the transaction and the denominator of
which is the base term of the lease.
"capital lease obligations" means with respect to any person any
obligation which is required to be classified and accounted for as a capital
lease on the face of a balance sheet of such person prepared in accordance
with GAAP.
"comparable treasury price" means, in connection with any redemption date
applicable to the notes,
(1) the average of the applicable reference dealer quotations for
that redemption date, after excluding the highest and lowest
applicable reference dealer quotations, or
(2) if the trustee obtains fewer than four reference dealer
quotations, the average of all quotations.
"consolidated net tangible assets" means, at any date,
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o the total assets appearing on the most recent consolidated balance
sheet of CVS and its restricted subsidiaries as at the end of the
fiscal quarter of CVS ending not more than 135 days prior to the
date, prepared in accordance with U.S. generally accepted accounting
principles, less
o all current liabilities due within one year as shown on that balance
sheet,
o investments in and advances to unrestricted subsidiaries and
o intangible assets and liabilities relating thereto.
"funded debt" means
o any indebtedness of CVS or a restricted subsidiary maturing more than
12 months after the time of computation
o guarantees of funded debt or of dividends of others, except
guarantees in connection with the sale or discount of accounts
receivable, trade acceptances and other paper arising in the
ordinary course of business,
o in the case of any restricted subsidiary, all of its preferred stock
having mandatory redemption provisions as reflected on its balance
sheet prepared in accordance with U.S. generally accepted accounting
principles, and
o all capital lease obligations.
"indebtedness" means, at any date, without duplication, all obligations
for borrowed money of CVS or a restricted subsidiary.
"intangible assets" means, at any date, the value, as shown on or
reflected in the most recent consolidated balance sheet of CVS and its
restricted subsidiaries as at the end of the fiscal quarter of CVS ending not
more than 135 days prior to the date, prepared in accordance with generally
accepted accounting principles, of:
(1) all trade names, trademarks, licenses, patents, copyrights, service
marks, goodwill and other like intangibles;
(2) organizational and development costs;
(3) deferred charges, other than prepaid items, including insurance,
taxes, interest, commissions, rents, pensions, compensation and
similar items and tangible assets being amortized; and
(4) unamortized debt discount and expense, less unamortized premium.
"liens" means pledges, mortgages, security interests and other liens on
any principal property of CVS or a restricted subsidiary which secure secured
debt.
"nonrecourse obligation" means indebtedness or lease payment obligations
substantially related to
(1) the acquisition of assets not previously owned by CVS or any
restricted subsidiary or
(2) the financing of a project involving the development or expansion of
properties of CVS or any restricted subsidiary,
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as to which the obligee with respect to the indebtedness or obligation has no
recourse to CVS or any restricted subsidiary or any assets of CVS or any
subsidiary other than the assets which were acquired with the proceeds of the
transaction or the project financed with the proceeds of the transaction and
the proceeds of that asset or project.
"principal property" is defined in the section called "Restrictive
Covenants--Summary of the principal restrictive covenants."
"reference dealer quotations" means, with respect to each reference
dealer and any redemption date for the notes, the average, as determined by
the trustee, of the bid and asked prices for the comparable U.S. Treasury
security for the notes, expressed in each case as a percentage of its
principal amount, quoted in writing to the trustee by that reference dealer at
5:00 p.m., New York City time, on the third business day preceding the
redemption date. Credit Suisse First Boston Corporation will be a reference
dealer but, if it ceases to be a primary U.S. Government securities dealer in
New York City, CVS will substitute another primary U.S. Government securities
dealer to act as a reference dealer.
"restricted subsidiary" is any subsidiary other than an unrestricted
subsidiary.
"secured debt" means funded debt which is secured by any pledge of, or
mortgage, security interest or other lien on any
(1) principal property, whether owned on the date of the indenture or
thereafter acquired or created,
(2) shares of stock owned by CVS or a subsidiary in a restricted
subsidiary or
(3) indebtedness of a restricted subsidiary.
"stated maturity" of a security means the date specified in that security
as the fixed date on which the principal of that security is due and payable,
including pursuant to any mandatory redemption provision but excluding any
provision providing for the repurchase of such security at the option of the
holder upon the happening of any contingency, unless that contingency has
occurred.
"subsidiary" means any corporation of which at least a majority of the
outstanding stock, which, under ordinary circumstances not dependent upon the
happening of a contingency, has voting power to elect a majority of the board
of directors of that corporation or similar management body, is owned directly
or indirectly by CVS and/or by one or more subsidiaries of CVS.
"treasury yield" is defined in the section called "Optional Redemption--
How the optional redemption payment in clause (2) is calculated."
"unrestricted subsidiary" is defined in the section called "Restrictive
Covenants--Summary of the principal restrictive covenants."
THE EXCHANGE OFFER
In a registration rights agreement between CVS and the initial purchasers
of the old notes, we agreed
(1) to file a registration statement on or prior to 90 days after the
closing of the offering of the old notes with respect to an offer to
exchange the old notes for a new issue of notes, with terms substantially
the same as of the old notes but registered under the Securities Act,
(2) to use our best efforts to cause the registration statement to be
declared effective by the SEC on or prior to 180 days after the closing
of the old notes offering and
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(3) use our best efforts to consummate the exchange offer and issue
the new notes within 30 business days after the registration statement is
declared effective.
The registration rights agreement provides that, in the event we fail to
file the registration statement within 90 days after the closing date or
consummate the exchange offer within 220 days, we will be required to pay
additional interest on the old notes over and above the regular interest on
the notes. Once we complete this exchange offer, we will no longer be required
to pay additional interest on the old notes.
The exchange offer is not being made to, nor will we accept tenders for
exchange from, holders of old notes in any jurisdiction in which the exchange
offer or acceptance of the exchange offer would violate the securities or blue
sky laws of that jurisdiction.
Terms of the Exchange Offer; Period for Tendering Old Notes
This prospectus and the accompanying letter of transmittal contain the
terms and conditions of the exchange offer. Upon the terms and subject to the
conditions included in this prospectus and in the accompanying letter of
transmittal, which together are the exchange offer, we will accept for
exchange old notes which are properly tendered on or prior to the expiration
date, unless you have previously withdrawn them.
o When you tender to us old notes as provided below, our acceptance of
the old notes will constitute a binding agreement between you and us
upon the terms and subject to the conditions in this prospectus and
in the accompanying letter of transmittal.
o For each $1,000 principal amount of old notes surrendered to us in the
exchange offer, we will give you $1,000 principal amount of new notes.
o We will keep the exchange offer open for not less than 30 days, or
longer if required by applicable law, after the date that we first
mail notice of the exchange offer to the holders of the old notes.
We are sending this prospectus, together with the letter of
transmittal, on or about the date of this prospectus to all of the
registered holders of old notes at their addresses listed in the
trustee's security register with respect to old notes.
o The exchange offer expires at 5:00 p.m., New York City time, on ,
1999; provided, however, that we, in our sole discretion, may extend
the period of time for which the exchange offer is open. The term
"expiration date" means , 1999 or, if extended by us, the latest
time and date to which the exchange offer is extended.
o As of the date of this prospectus, $300,000,000 in aggregate
principal amount of the old notes were outstanding. The exchange
offer is not conditioned upon any minimum principal amount of old
notes being tendered.
o Our obligation to accept old notes for exchange in the exchange
offer is subject to the conditions that we describe in the section
called "Conditions to the Exchange Offer" below.
o We expressly reserve the right, at any time, to extend the period of
time during which the exchange offer is open, and thereby delay
acceptance of any old notes, by giving oral or written notice of an
extension to the exchange agent and notice of that extension to the
holders as described below. During any extension, all old notes
previously tendered will remain subject to the exchange offer unless
withdrawal rights are exercised. Any old notes not accepted for
exchange for any reason will be returned without expense to the
tendering holder as promptly as practicable after the expiration or
termination of the exchange offer.
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<PAGE>
o We expressly reserve the right to amend or terminate the exchange
offer, and not to accept for exchange any old notes that we have not
yet accepted for exchange, if any of the conditions of the exchange
offer specified below under "Conditions to the Exchange Offer" are
not satisfied.
o We will give oral or written notice of any extension, amendment,
termination or non-acceptance described above to holders of the old
notes as promptly as practicable. If we extend the expiration date,
we will give notice by means of a press release or other public
announcement no later than 9:00 a.m., New York City time, on the
business day after the previously scheduled expiration date. Without
limiting the manner in which we may choose to make any public
announcement and subject to applicable law, we will have no
obligation to publish, advertise or otherwise communicate any public
announcement other than by issuing a release to the Dow Jones News
Service.
o Holders of old notes do not have any appraisal or dissenters' rights
in connection with the exchange offer.
o Old notes which are not tendered for exchange or are tendered but
not accepted in connection with the exchange offer will remain
outstanding and be entitled to the benefits of the indenture, but
will not be entitled to any further registration rights under the
registration rights agreement.
o We intend to conduct the exchange offer in accordance with the
applicable requirements of the Exchange Act and the rules and
regulations of the SEC thereunder.
o By executing, or otherwise becoming bound by, the letter of
transmittal, you will be making the representations described below
to us. See "--Resales of the New Notes."
Important rules concerning the exchange offer
You should note that:
o All questions as to the validity, form, eligibility, time of receipt
and acceptance of old notes tendered for exchange will be determined
by CVS in its sole discretion, which determination shall be final
and binding.
o We reserve the absolute right to reject any and all tenders of any
particular old notes not properly tendered or to not accept any
particular old notes which acceptance might, in our judgment or the
judgment of our counsel, be unlawful.
o We also reserve the absolute right to waive any defects or
irregularities or conditions of the exchange offer as to any
particular old notes either before or after the expiration date,
including the right to waive the ineligibility of any holder who
seeks to tender old notes in the exchange offer. Unless we agree to
waive any defect or irregularity in connection with the tender of
old notes for exchange, you must cure any defect or irregularity
within any reasonable period of time as we shall determine.
o Our interpretation of the terms and conditions of the exchange offer
as to any particular old notes either before or after the expiration
date shall be final and binding on all parties.
o Neither CVS, the exchange agent nor any other person shall be under
any duty to give notification of any defect or irregularity with
respect to any tender of old notes for exchange, nor shall any of
them incur any liability for failure to give any notification.
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Procedures for Tendering Old Notes
What to submit and how
If you, as the registered holder of an old note, wish to tender your old
notes for exchange in the exchange offer, you must transmit a properly
completed and duly executed letter of transmittal to The Bank of New York at
the address set forth below under "Exchange Agent" on or prior to the
expiration date.
In addition,
(1) certificates for old notes must be received by the exchange agent
along with the letter of transmittal, or
(2) a timely confirmation of a book-entry transfer of old notes, if
such procedure is available, into the exchange agent's account at DTC using
the procedure for book-entry transfer described below, must be received
by the exchange agent prior to the expiration date or
(3) you must comply with the guaranteed delivery procedures described
below.
The method of delivery of old notes, letters of transmittal and notices
of guaranteed delivery is at your election and risk. If delivery is by mail,
we recommend that registered mail, properly insured, with return receipt
requested, be used. In all cases, sufficient time should be allowed to assure
timely delivery. No letters of transmittal or old notes should be sent to CVS.
How to sign your letter of transmittal and other documents
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the old notes being surrendered for
exchange are tendered
(1) by a registered holder of the old notes who has not completed the
box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on the letter of transmittal or
(2) for the account of an eligible institution.
If signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, are required to be guaranteed, the guarantees must be by any of
the following eligible institutions:
o a firm which is a member of a registered national securities exchange
or a member of the National Association of Securities Dealers, Inc.
or
o a commercial bank or trust company having an office or correspondent
in the United States
If the letter of transmittal is signed by a person or persons other than
the registered holder or holders of old notes, the old notes must be endorsed
or accompanied by appropriate powers of attorney, in either case signed
exactly as the name or names of the registered holder or holders that appear
on the old notes and with the signature guaranteed.
If the letter of transmittal or any old notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers or corporations or others acting in a fiduciary or representative
capacity, the person should so indicate when signing and, unless waived by
CVS, proper evidence satisfactory to CVS of its authority to so act must be
submitted.
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Acceptance of Old Notes for Exchange; Delivery of New Notes
Once all of the conditions to the exchange offer are satisfied or waived,
we will accept, promptly after the expiration date, all old notes properly
tendered and will issue the new notes promptly after acceptance of the old
notes. See "Conditions to the Exchange Offer" below. For purposes of the
exchange offer, our giving of oral or written notice of our acceptance to the
exchange agent will be considered our acceptance of the exchange offer.
In all cases, we will issue new notes in exchange for old notes that are
accepted for exchange only after timely receipt by the exchange agent of:
o certificates for old notes, or
o a timely book-entry confirmation of transfer of old notes into the
exchange agent's account at DTC using the book-entry transfer
procedures described below, and
o a properly completed and duly executed letter of transmittal.
If we do not accept any tendered old notes for any reason included in the
terms and conditions of the exchange offer or if you submit certificates
representing old notes in a greater principal amount than you wish to
exchange, we will return any unaccepted or non-exchanged old notes without
expense to the tendering holder or, in the case of old notes tendered by
book-entry transfer into the exchange agent's account at DTC using the
book-entry transfer procedures described below, non-exchanged old notes will
be credited to an account maintained with DTC as promptly as practicable after
the expiration or termination of the exchange offer.
Book-Entry Transfer
The exchange agent will make a request to establish an account with
respect to the old notes at DTC for purposes of the exchange offer promptly
after the date of this prospectus. Any financial institution that is a
participant in DTC's systems may make book-entry delivery of old notes by
causing DTC to transfer old notes into the exchange agent's account in
accordance with DTC's Automated Tender Offer Program procedures for transfer.
However, the exchange for the old notes so tendered will only be made after
timely confirmation of book-entry transfer of old notes into the exchange
agent's account, and timely receipt by the exchange agent of an agent's
message, transmitted by DTC and received by the exchange agent and forming a
part of a book-entry confirmation. The agent's message must state that DTC has
received an express acknowledgment from the participant tendering old notes
that are the subject of that book-entry confirmation that the participant has
received and agrees to be bound by the terms of the letter of transmittal, and
that we may enforce the agreement against that participant.
Although delivery of old notes may be effected through book-entry
transfer into the exchange agent's account at DTC, the letter of transmittal,
or a facsimile copy, properly completed and duly executed, with any required
signature guarantees, must in any case be delivered to and received by the
exchange agent at its address listed under "--Exchange Agent" on or prior to
the expiration date.
If your old notes are held through DTC, you must complete a form called
"instructions to registered holder and/or book-entry participant," which will
instruct the DTC participant through whom you hold your notes of your
intention to tender your old notes or not tender your old notes. Please note
that delivery of documents to DTC in accordance with its procedures does not
constitute delivery to the exchange agent and we will not be able to accept
your tender of notes until the exchange agent receives a letter of transmittal
and a book-entry confirmation from DTC with respect to your notes. A copy of
that form is available from the exchange agent.
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Guaranteed Delivery Procedures
If you are a registered holder of old notes and you want to tender your
old notes but your old notes are not immediately available, or time will not
permit your old notes to reach the exchange agent before the expiration date,
or the procedure for book-entry transfer cannot be completed on a timely
basis, a tender may be effected if
(1) the tender is made through an eligible institution,
(2) prior to the expiration date, the exchange agent receives, by
facsimile transmission, mail or hand delivery, from that eligible
institution a properly completed and duly executed letter of transmittal,
or a facsimile copy, and notice of guaranteed delivery, substantially in
the form provided by us, stating:
o the name and address of the holder of old notes
o the amount of old notes tendered
o the tender is being made by delivering that notice and guaranteeing
that within three New York Stock Exchange trading days after the
date of execution of the notice of guaranteed delivery, the
certificates of all physically tendered old notes, in proper form
for transfer, or a book-entry confirmation, as the case may be, will
be deposited by that eligible institution with the exchange agent,
and
(3) the certificates for all physically tendered old notes, in proper
form for transfer, or a book-entry confirmation, as the case may be, are
received by the exchange agent within three New York Stock Exchange
trading days after the date of execution of the Notice of Guaranteed
Delivery.
Withdrawal Rights
You can withdraw your tender of old notes at any time on or prior to the
expiration date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the exchange agent at one of the addresses listed below under
"Exchange Agent." Any notice of withdrawal must specify:
o the name of the person having tendered the old notes to be withdrawn,
o the old notes to be withdrawn
o the principal amount of the old notes to be withdrawn
o if certificates for old notes have been delivered to the exchange
agent, the name in which the old notes are registered, if different
from that of the withdrawing holder
o if certificates for old notes have been delivered or otherwise
identified to the exchange agent, then, prior to the release of
those certificates, you must also submit the serial numbers of the
particular certificates to be withdrawn and a signed notice of
withdrawal with signatures guaranteed by an eligible institution
unless you are an eligible institution.
o if old notes have been tendered using the procedure for book-entry
transfer described above, any notice of withdrawal must specify the
name and number of the account at DTC to be credited with the
withdrawn old notes and otherwise comply with the procedures of that
facility.
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Please note that all questions as to the validity, form, eligibility and
time of receipt of notices of withdrawal will be determined by us, and our
determination shall be final and binding on all parties. Any old notes so
withdrawn will be considered not to have been validly tendered for exchange
for purposes of the exchange offer.
If you have properly withdrawn old notes and wish to re-tender them, you
may do so by following one of the procedures described under "Procedures for
Tendering Old Notes" above at any time on or prior to the expiration date.
Conditions to the Exchange Offer
Notwithstanding any other provisions of the exchange offer, we will not
be required to accept for exchange, or to issue new notes in exchange for, any
old notes and may terminate or amend the exchange offer, if at any time before
the acceptance of old notes for exchange or the exchange of the new notes for
old notes, that acceptance or issuance would violate applicable law or any
interpretation of the staff of the SEC.
That condition is for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to that condition. Our failure at
any time to exercise the foregoing rights shall not be considered a waiver by
us of that right. Our rights described in the prior paragraph are ongoing
rights which we may assert at any time and from time to time.
In addition, we will not accept for exchange any old notes tendered, and
no new notes will be issued in exchange for any old notes, if at that time any
stop order shall be threatened or in effect with respect to the exchange offer
to which this prospectus relates or the qualification of the indenture under
the Trust Indenture Act.
Exchange Agent
The Bank of New York has been appointed as the exchange agent for the
exchange offer. All executed letters of transmittal should be directed to the
exchange agent at one of the addresses set forth below. Questions and requests
for assistance, requests for additional copies of this prospectus or of the
letter of transmittal and requests for notices of guaranteed delivery should
be directed to the exchange agent, addressed as follows:
Deliver To:
The Bank of New York, Exchange Agent
101 Barclay Street
Floor 7 East
New York New York 10286
Attn: Jennifer Pedi
Facsimile Transmissions:
(212) 815-6339
To Confirm by Telephone
or for Information:
(212) 815-6331
Delivery to an address other than as listed above or transmission of
instructions via facsimile other than as listed above does not constitute a
valid delivery.
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Fees and Expenses
The principal solicitation is being made by mail; however, additional
solicitation may be made by telegraph, telephone or in person by our officers,
regular employees and affiliates. We will not pay any additional compensation
to any of our officers and employees who engage in soliciting tenders. We will
not make any payment to brokers, dealers, or others soliciting acceptances of
the exchange offer. However, we will pay the exchange agent reasonable and
customary fees for its services and will reimburse it for its reasonable
out-of-pocket expenses in connection with the exchange offer.
The estimated cash expenses to be incurred in connection with the
exchange offer, including legal, accounting, SEC filing, printing and exchange
agent expenses, will be paid by us and are estimated in the aggregate to be
$200,000.
Transfer Taxes
Holders who tender their old notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that holders who
instruct us to register new notes in the name of, or request that old notes
not tendered or not accepted in the exchange offer be returned to, a person
other than the registered tendering holder will be responsible for the payment
of any applicable transfer tax thereon.
Resale of the New Notes
Under existing interpretations of the staff of the SEC contained in
several no-action letters to third parties, the new notes would in general be
freely transferable after the exchange offer without further registration
under the Securities Act. The relevant no-action letters include the Exxon
Capital Holdings Corporation letter, which was made available by the SEC on
May 13, 1988, and the Morgan Stanley & Co.
Incorporated letter, made available on June 5, 1991.
However, any purchaser of old notes who is an "affiliate" of CVS or who
intends to participate in the exchange offer for the purpose of distributing
the new notes
(1) will not be able to rely on the interpretation of the staff of the
SEC,
(2) will not be able to tender its old notes in the exchange offer and
(3) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or
transfer of the notes unless that sale or transfer is made using an
exemption from those requirements.
By executing, or otherwise becoming bound by, the Letter of Transmittal
each holder of the old notes will represent that:
(1) it is not our "affiliate";
(2) any new notes to be received by it were acquired in the ordinary
course of its business; and
(3) it has no arrangement with any person to participate in the
"distribution," within the meaning of the Securities Act, of the
new notes.
In addition, in connection with any resales of new notes, any broker-dealer
participating in the exchange offer who acquired notes for its own account as
a result of market-making or other trading activities must deliver a
prospectus meeting the requirements of the Securities Act. The SEC has taken
the position in the Shearman & Sterling no-action letter, which it made
available on July 2, 1993, that participating broker-dealers may fulfill their
prospectus delivery requirements with respect to the new notes, other than a
resale of an unsold allotment from the original sale of the old notes, with
the prospectus contained in the
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exchange offer registration statement. Under the registration rights
agreement, we are required to allow participating broker-dealers and other
persons, if any, subject to similar prospectus delivery requirements to use
this prospectus as it may be amended or supplemented from time to time, in
connection with the resale of new notes.
MATERIAL UNITED STATES TAX CONSEQUENCES OF THE EXCHANGE OFFER
In the opinion of Davis Polk & Wardwell, the exchange of old notes for
new notes in the exchange offer will not result in any United States federal
income tax consequences to holders. When a holder exchanges an old note for a
new note in the exchange offer, the holder will have the same adjusted basis
and holding period in the new note as in the old note immediately before the
exchange.
PLAN OF DISTRIBUTION
Each broker-dealer that receives new notes for its own account in the
exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of new notes. This prospectus, as it may be amended
or supplemented from time to time, may be used by a broker-dealer in
connection with resales of new notes received in exchange for old notes where
old notes were acquired as a result of market-making activities or other
trading activities. We have agreed that, for a period of 135 days after the
expiration date, we will make this prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any resale of new
notes received by it in exchange for old notes.
We will not receive any proceeds from any sale of new notes by
broker-dealers.
New notes received by broker-dealers for their own account in the
exchange offer may be sold from time to time in one or more transactions
o in the over-the-counter market
o in negotiated transactions
o through the writing of options on the new notes or
o a combination of those methods of resale
at market prices prevailing at the time of resale, at prices related to
prevailing market prices or negotiated prices.
Any resale may be made
o directly to purchasers or
o to or through brokers or dealers who may receive compensation in the
form of commissions or concessions from any broker-dealer or the
purchasers of any new notes.
Any broker-dealer that resells new notes that were received by it for its
own account in the exchange offer and any broker or dealer that participates
in a distribution of those new notes may be considered to be an "underwriter"
within the meaning of the Securities Act. Any profit on any resale of those
new notes and any commission or concessions received by any of those persons
may be considered to be underwriting compensation under the Securities Act.
The letter of transmittal states that, by acknowledging that it will deliver
and by delivering a prospectus, a broker-dealer will not be considered to
admit that it is an "underwriter" within the meaning of the Securities Act.
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For a period of 135 days after the expiration date, we will promptly send
additional copies of this prospectus and any amendment or supplement to this
prospectus to any broker-dealer that requests those documents in the letter of
transmittal. We have agreed to pay all expenses incident to the exchange
offer, including the expenses of one counsel for the holders of the notes,
other than commissions or concessions of any brokers or dealers and will
indemnify the holders of the notes, including any broker-dealers, against some
liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
Davis Polk & Wardwell, New York, New York will opine for us on whether
the new notes are valid and binding obligations of CVS.
EXPERTS
The historical consolidated financial statements of CVS Corporation and
its subsidiaries as of December 31, 1997 and 1998 and for the three years
ended December 31, 1998 and the related consolidated financial statement
schedule have been incorporated by reference in this prospectus in reliance
upon the reports of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and given upon the authority of said firm as
experts in accounting and auditing.
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<TABLE>
<S> <C>
============================================= ============================================
You should rely only on the information
contained in this document or that we have
referred you to. We have not authorized
anyone to provide you with information that
is different. We are not making an offer of
these securities in any state where the offer $300,000,000
is not permitted. You should not
assume that the information in this
prospectus or any prospectus supplement is
accurate as of any date other than the CVS
date on the front of those Corporation
documents.
[GRAPHIC OMITTED]
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TABLE OF CONTENTS
5 1/2% Exchange Notes due
Page February 15, 2004
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Where You Can Find More Information.............2
CVS Corporation.................................3 Prospectus
Cautionary Statement Concerning Forward-
Looking Statements...........................3 -------------------
Use of Proceeds.................................4
Selected Consolidated Financial Data............5
Description of Notes............................7
The Exchange Offer.............................25
Material United States Tax Consequences of the
Exchange Offer.................................32
Plan of Distribution...........................32
Legal Matters..................................33
Experts........................................33
, 1999
============================================= ============================================
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Exculpation. Section 102(b)(7) of the Delaware General Corporations Law
("Delaware Law") permits a corporation to include in its certificate of
incorporation a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, provided that such provision may not
eliminate or limit the liability of a director for any breach of the
director's duty of loyalty to the corporation or its stockholders, for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, for the payment of unlawful dividends, or for any
transaction from which the director derived an improper personal benefit.
The CVS certificate of incorporation (the "CVS Charter") limits the
personal liability of a director to CVS and its stockholders for monetary
damages for a breach of fiduciary duty as a director to the fullest extent
permitted by law.
Indemnification. Section 145 of the Delaware Law permits a corporation to
indemnify any of its directors or officers who was or is a party, or is
threatened to be made a party to any third party proceeding by reason of the
fact that such person is or was a director or officer of the corporation,
against expenses (including attorney's fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reason to believe that such person's conduct was
unlawful. In a derivative action, i.e., one by or in the right of a
corporation, the corporation is permitted to indemnify directors and officers
against expenses (including attorneys' fees) actually and reasonably incurred
by them in connection with the defense or settlement of an action or suit if
they acted in good faith and in a manner that they reasonably believed to be
in or not opposed to the best interests of the corporation, except that no
indemnification shall be made if such person shall have been adjudged liable
to the corporation, unless and only to the extent that the court in which the
action or suit was brought shall determine upon application that the defendant
directors or officers are fairly and reasonably entitled to indemnity for such
expenses despite such adjudication of liability.
Expenses, including attorneys' fees, incurred by any such person in
defending any such action, suit or proceeding shall be paid or reimbursed by
CVS in advance of the final disposition of such action, suit or proceeding
upon receipt by it of an undertaking of such person to repay such expenses if
it shall ultimately be determined that such person is not entitled to be
indemnified by CVS.
The CVS Charter provides for indemnification of directors and officers of
CVS against liability they may incur in their capacities as such to the
fullest extent permitted under the Delaware Law.
Insurance. CVS has in effect Directors and Officers Liability Insurance
with a limit of $100,000,000 and pension trust liability insurance with a
limit of $50,000,000. The pension trust liability insurance covers actions of
directors and officers as well as other employees with fiduciary
responsibilities under ERISA.
Revco Directors and Officers. The Revco merger agreement provides that
CVS will cause Revco and its Subsidiaries to indemnify (including the payment
of reasonable fees and expenses of legal counsel) the current or former
directors or officers of Revco to the fullest extent permitted by law for
damages and liabilities arising out of facts and circumstances occurring at or
prior to the merger. The Revco merger agreement also provides that for a
period of six years after the merger CVS will cause to be maintained in effect
Revco's existing policies of directors' and officers' liability insurance as
in effect on February 6, 1997 (provided that CVS may substitute policies with
reputable and financially sound carriers having at least the same coverage and
amounts and containing terms and conditions that are no less advantageous)
II-1
<PAGE>
with respect to facts or circumstances occurring at or prior to the merger;
provided that if the annual premium for such insurance during such six-year
period exceeds 200% of the annual premiums paid by Revco as of February 6,
1997 for such insurance (such 200% amount, the "Maximum Premium") then CVS
will cause Revco to provide the most advantageous directors' and officers'
insurance coverage then available for an annual premium equal to the Maximum
Premium.
Arbor Directors and Officers. The Arbor merger agreement provides that
after the Effective Time (as defined in the Arbor merger agreement), CVS will
cause Arbor to indemnify (including the payment of reasonable fees and
expenses of legal counsel) each person who was a director or officer of Arbor
or its subsidiaries at or prior to the date of the Arbor merger agreement to
the fullest extent permitted by law for damages and liabilities arising out of
facts and circumstances occurring at or prior to the Effective Time. The Arbor
merger agreement also provides that, for a period of six years after the
Effective Time, CVS will maintain in effect Arbor's existing policies of
directors' and officers' liability insurance as in effect on February 8, 1998
(provided that CVS may substitute policies with reputable and financially
sound carriers having at least the same coverage and amounts and containing
terms and conditions that are no less advantageous to the covered persons)
with respect to facts or circumstances occurring at or prior to the Effective
Time; provided that if the aggregate annual premium for such insurance during
such six-year period exceeds 200% of the aggregate annual premium paid by
Arbor as of February 8, 1998 for such insurance, then CVS will cause Arbor to
provide the most advantageous directors' and officers' insurance coverage then
available for an annual premium equal to such 200% of the February 8, 1998
premiums.
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits (see index to exhibits at E-1).
Item 22. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file during any period in which offers or sales are being
made, a post-effective amendment to this registration statement: (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act of
1933; (ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent no
more than a 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement; and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
II-2
<PAGE>
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b) or 11 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
(e) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and CVS
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, CVS
Corporation certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-4 and has duly caused this
amendment to the registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Woonsocket, state of
Rhode Island, on November 17, 1999.
CVS CORPORATION
By: /s/ Thomas M. Ryan
-----------------------------------
Thomas M. Ryan
Chairman of the Board and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the registration statement has been signed by the following
persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Thomas M. Ryan
- ------------------------- Chairman of the Board and Chief November 17, 1999
Thomas M. Ryan Executive Officer (Principal
Executive Officer)
*
- ------------------------- Vice President and Controller November 17, 1999
Larry D. Solberg (Principal Financial and
Accounting officer)
*
- ------------------------- Director November 17, 1999
Eugene Applebaum
*
- ------------------------- Director November 17, 1999
Allan J. Bloostein
*
- ------------------------- Director November 17, 1999
W. Don Cornwell
*
- ------------------------- Director November 17, 1999
Thomas P. Gerrity
*
- ------------------------- Director November 17, 1999
Stanley P. Goldstein
II-4
<PAGE>
/s/ Marian L. Heard
- ------------------------- Director November 17, 1999
Marian L. Heard
*
- ------------------------- Director November 17, 1999
William H. Joyce
*
- ------------------------- Director November 17, 1999
Terry R. Lautenbach
*
- ------------------------- Director November 17, 1999
Terrence Murray
*
- ------------------------- Director November 17, 1999
Sheli Z. Rosenberg
*
- ------------------------- Director November 17, 1999
Ivan G. Seidenberg
By: /s/ Thomas Ryan
- ------------------------- November 17, 1999
Thomas Ryan
Attorney-in-fact
II-5
<PAGE>
EXHIBIT INDEX
Exhibit No. Document
----------- --------
1.1* Registration Rights Agreement dated as of February 8,
1999 between CVS and Credit Suisse First Boston
Corporation, Bear, Stearns & Co. Inc. and BNY
Capital Markets, Inc., as Initial Purchasers
4.1* Indenture, dated as of February 11, 1999 between CVS and
the Trustee
5.1* Opinion of Davis Polk & Wardwell with respect to the
new notes
8.1** Tax opinion of Davis Polk & Wardwell
12.1* Computation of Ratio of Earnings to Fixed Charges
23.1* Consent of Davis Polk & Wardwell (contained in their
opinion filed as Exhibit 5.1).
23.2** Consent of KPMG LLP.
24.1* Power of Attorney
25.1* Statement of Eligibility of The Bank of New York on Form T-1.
99.1* Form of Letter of Transmittal
99.2* Form of Notice of Guaranteed Delivery
99.3* Form of Letter to Clients
99.4* Form of Letter to Nominees
99.5* Form of Instructions to Registered Holder and/or Book-Entry
Transfer Participant from Owner
- -------------------
* Previously filed.
** Filed herewith.
E-1
Exhibit 8.1
DAVIS POLK & WARDWELL
450 Lexington Avenue
New York, NY 10017
212-450-4606
August 16, 1999
Re: CVS Corporation 5 1/2% Exchange Notes Due February 15, 2004
CVS Corporation
One CVS Drive
Woonsocket, RI 02895
Dear Sirs:
We have acted as special tax counsel for CVS Corporation ("CVS") in
connection with the offer to exchange 5 1/2% Notes Due February 15, 2004 for
5 1/2% Exchange Notes Due February 15, 2004. We hereby confirm the opinion set
forth under the caption "Material United States Tax Consequences of the Exchange
Offer" in the prospectus that is part of the Registration Statement on Form S-4,
Registration No. 333-78253, filed by CVS with the Securities and Exchange
Commission.
Very truly yours,
/s/ Davis Polk & Wardwell
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
Board of Directors
CVS Corporation
We consent to the incorporation by reference in the Registration Statement on
Form S-4 of our reports dated January 27, 1999, except for Note 15, to which
the date is November 12, 1999, included in the Annual Report on Form 10-K/A of
CVS Corporation for the year ended December 31, 1998 and the reference to our
firm under the heading "Experts" in the prospectus.
The consolidated balance sheet as of December 31, 1997 and the related
consolidated statements of operations, shareholders' equity and cash flows for
the years ended December 31, 1998 and 1997, have been restated as discussed in
Note 15 to the consolidated financial statements.
/s/ KMPG LLP
- ---------------
KMPG LLP
Providence, Rhode Island
November 16, 1999
