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Pursuant to Rule 424(b)(5)
Registration No. 33-60322
PROSPECTUS SUPPLEMENT
(To Prospectus dated April 16, 1993)
$250,000,000
[Logo] Merck & Co., Inc.
6.30% DEBENTURES DUE 2026
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Interest payable January 1 and July 1
------------------------
THE DEBENTURES WILL MATURE ON JANUARY 1, 2026 AND ARE NOT REDEEMABLE PRIOR TO
MATURITY. THE DEBENTURES WILL BE REPRESENTED BY A GLOBAL SECURITY REGISTERED
IN THE NAME OF A NOMINEE OF THE DEPOSITORY TRUST COMPANY, AS DEPOSITARY.
BENEFICIAL INTERESTS IN THE DEBENTURES WILL BE SHOWN ON, AND TRANSFERS
THEREOF WILL BE EFFECTED ONLY THROUGH, RECORDS MAINTAINED BY THE
DEPOSITARY (WITH RESPECT TO PARTICIPANTS' INTERESTS) AND ITS
PARTICIPANTS. EXCEPT AS DESCRIBED IN THE ACCOMPANYING PROSPECTUS,
DEBENTURES IN CERTIFICATED FORM WILL NOT BE ISSUED IN EXCHANGE
FOR THE GLOBAL SECURITY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The Underwriter has agreed to purchase the Debentures from the Company at
98.58% of their principal amount ($246,450,000 aggregate proceeds to the
Company, before deducting expenses payable by the Company estimated at
$195,000), subject to the terms and conditions set forth in the Underwriting
Agreement.
The Underwriter proposes to offer the Debentures from time to time for sale
in one or more negotiated transactions, or otherwise, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. For further information with respect to the plan
of distribution and any discounts, commissions or profits on resale that may be
deemed underwriting discounts or commissions, see "The Underwriter" herein.
------------------------
The Debentures are offered, subject to prior sale, when, as and if accepted
by the Underwriter and subject to approval of certain legal matters by Davis
Polk & Wardwell, counsel for the Underwriter. It is expected that delivery of
the Debentures will be made on or about January 8, 1996 through the book-entry
facilities of The Depository Trust Company against payment therefor in
immediately available funds.
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MORGAN STANLEY & CO.
Incorporated
January 3, 1996
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE COMPANY
The Company is a worldwide research-intensive health products company that
discovers, develops, produces, and markets human and animal health products and
services. The Company's dominant industry segment is the Human and Animal
Products and Services segment, in which Merck-Medco Managed Care, Inc., a
company acquired in November 1993, also participates.
Human health products include therapeutic and preventive agents, generally
sold by prescription, for the treatment of human disorders. Among these are
cardiovascular products, of which Vasotec (enalapril maleate), Mevacor
(lovastatin), Zocor (simvastatin), Prinivil (lisinopril), and Vaseretic
(enalapril maleate-hydrochlorothiazide) are the largest-selling; anti-ulcerants,
of which Pepcid (famotidine) and Prilosec (omeprazole) (through October 31,
1994; on November 1, 1994, marketing of Prilosec was transferred to Astra Merck,
Inc., a joint venture between the Company and Astra AB) are the largest-selling
antibiotics, of which Primaxin (imipenem-cilastatin sodium), Noroxin
(norfloxacin), and Mefoxin (cefoxitin sodium) are the largest-selling;
vaccines/biologicals, of which M-M-R II (measles, mumps, rubella virus vaccine
live) and Recombivax HB (hepatitis B vaccine recombinant) are the
largest-selling; opthalmologicals, of which Timoptic (timolol maleate) is the
largest-selling; anti-inflammatory/analgesic products, of which Indocin
(indomethacin), Cilnoril (sulindac), and Dolobid (diflunisal) are the
largest-selling; and other Company human health products which include Proscar
(finasteride), a treatment for symptomatic benign prostate enlargement,
antiparkinsonism products, psychotherapeutics, and a muscle relaxant.
Animal health/crop protection products include animal medicinals used for
control and alleviation of disease in livestock, small animals, and poultry.
These products are primarily antiparasites, of which Ivomec (ivermectin) for the
control of internal and external parasites in livestock and Heartgard-30
(ivermectin) for the prevention of canine heartworm disease are the
largest-selling; crop protection products, of which abemectin-based
miticides/insecticides are the largest-selling; coccidiostats for the treatment
of poultry disease; and poultry breeding stock.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the consolidated ratio of earnings to fixed
charges for the Company for the periods indicated.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER
30, YEAR ENDED DECEMBER 31,
----------- --------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges................ 38 28 28 27 34 32 29
</TABLE>
For the purpose of calculating the ratio of earnings to fixed charges,
earnings consist of income before income taxes and fixed charges. Fixed charges
for the purpose of calculating the ratio of earnings to fixed charges consist
solely of interest expenses, capitalized interest and that portion of rentals
representative of an interest factor.
S-2
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DESCRIPTION OF DEBENTURES
The following description of the particular terms of the 6.30% Debentures
Due 2026 (the "Debentures") offered hereby (referred to in the Prospectus as the
"Debt Securities") supplements, and to the extent inconsistent therewith
replaces, the description of the general terms and provisions of the Debt
Securities set forth in the Prospectus, to which description reference is hereby
made. The following summary of the Debentures is qualified in its entirety by
reference to the Indenture referred to in the Prospectus.
GENERAL
The Debentures will be limited to $250,000,000 in aggregate principal
amount and will mature on January 1, 2026. The Debentures will constitute part
of the senior debt of the Company and will rank pari passu will all other
unsecured and unsubordinated debt of the Company. Each Debenture will bear
interest from January 1, 1996 at the applicable annual rate set forth on the
cover page of this Prospectus Supplement, payable semiannually on January 1 and
July 1, commencing July 1, 1996, to the person in whose name such Debenture is
registered at the close of business on the preceding December 15 or June 15. The
Debentures will be issued in fully registered form only, in denominations of
$1,000 and multiples thereof. Principal of and interest on the Debentures will
be payable, and the transfer of Debentures will be registrable, through the
Depositary as described under "Book-Entry Procedures."
The Debentures will not be redeemable prior to maturity and will not be
subject to any sinking fund.
The Indenture permits the defeasance of the Debentures upon the
satisfaction of the conditions described under "Description of Debt
Securities -- Defeasance and Covenant Defeasance" in the Prospectus. The
Debentures are subject to these defeasance provisions.
BOOK-ENTRY PROCEDURES
Upon issuance, all Debentures will be represented by a fully registered
global security (the "Global Security"). The Global Security will be deposited
with, or on behalf of, The Depository Trust Company, as Depositary (the
"Depositary"), and registered in the name of the Depositary or a nominee
thereof. Unless and until it is exchanged in whole or in part for Debentures in
definitive form, the Global Security may not be transferred except as a whole by
the Depositary to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary.
The Depositary has advised the Company as follows: The Depositary is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. The Depositary
was created to hold securities of its participants and to facilitate the
clearance and settlement of transactions among its participants in such
securities through electronic book-entry changes in accounts of the participant,
thereby eliminating the need for physical movement of securities certificates.
The Depositary's participants include securities brokers and dealers (including
the Underwriter), banks, trust companies, clearing corporations and certain
other organizations, some of whom (and/or their representatives) own the
Depositary. Access to the Depositary book-entry system is also available to
others, such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly.
A further description of the Depositary's procedures with respect to the
Global Security is set forth in the Prospectus under "Description of Debt
Securities -- Book-Entry Debt Securities." The Depositary has confirmed to the
Company, the Underwriter and the Trustee that it intends to follow such
procedures.
THE TRUSTEE
First Trust of New York, National Association will act as Trustee under the
Indenture.
S-3
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UNDERWRITER
Under the terms and subject to the conditions contained in a Pricing
Agreement dated the date hereof, Morgan Stanley & Co. Incorporated (the
"Underwriter") has agreed to purchase, and the Company has agreed to sell to the
Underwriter, $250,000,000 principal amount of the Debentures.
The Pricing Agreement provides that the obligations of the Underwriter to
pay for and accept delivery of the Debentures are subject to the approval of
certain legal matters by their counsel and to certain other conditions. The
Underwriter is committed to take and pay for all of the Debentures if any are
taken.
The distribution of the Debentures by the Underwriter is being effected
from time to time in negotiated transactions or otherwise at varying prices to
be determined at the time of each sale. In connection with the sale of any
Debentures, the Underwriter may be deemed to have received compensation from the
Company equal to the difference between the amount received by the Underwriter
upon the sale of such Debentures and the price at which the Underwriter
purchased such Debentures from the Company. In addition, the Underwriter may
sell Debentures to or through certain dealers, and dealers may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Underwriter and/or any purchasers of Debentures for whom it may act as
agent (which compensation may be in excess of customary commissions). The
Underwriter may also receive compensation from the purchasers of Debentures for
whom it may act as agent.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribute to payments the Underwriter may be required to make in respect
thereof.
The Company does not intend to apply for listing of the Debentures on a
national securities exchange, but has been advised by the Underwriter that it
presently intends to make a market in the Debentures as permitted by applicable
laws and regulations. The Underwriter is not obligated, however, to make a
market in the Debentures and any such market-making may be discontinued at any
time at the sole discretion of the Underwriter. Accordingly, no assurance can be
given as to the liquidity of, or trading market for, the Debentures.
LEGAL MATTERS
The validity of the Debentures will be passed upon for the Company by Bert
I. Weinstein, Assistant General Counsel of the Company. Mr. Weinstein is the
beneficial owner of 1,664 shares (including shares held in a savings plan
account) of the common stock of the Company and holds options, which are
exercisable within 60 days, to acquire 23,765 shares. Certain legal matters
relating to the Debentures will be passed upon for the Underwriter by Davis Polk
& Wardwell.
S-4
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PROSPECTUS
$1,000,000,000
[Logo] MERCK & CO., INC.
DEBT SECURITIES
---------------------
Merck & Co., Inc. (the "Company") may offer from time to time in one or
more series its debt securities (the "Debt Securities") at an aggregate initial
offering price not to exceed $1,000,000,000 (or the equivalent in foreign
denominated currency or currency units). The Company will offer Debt Securities
to the public on terms determined by market conditions.
---------------------
The accompanying Prospectus Supplement sets forth the specific designation,
aggregate principal amount, purchase price, maturity, interest rate (or manner
of calculation thereof), time of payment of interest (if any), listing (if any)
on a securities exchange, the form of the Debt Securities (which may be in
registered form or book-entry form) and any other specific terms of the Debt
Securities and the name of and compensation to each dealer, underwriter, or
agent (if any) involved in the sale of the Debt Securities covered by the
Prospectus Supplement.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
---------------------
Debt Securities may be offered through dealers, through underwriters, or
through agents designated from time to time, as set forth in the Prospectus
Supplement, and Debt Securities may be offered to other purchasers directly or
through agents. Net proceeds to the Company will be the purchase price in the
case of a purchaser or dealer, the public offering price less discount in the
case of an underwriter, or the purchase price less commission in the case of an
agent -- in each case, less other expenses attributable to issuance and
distribution. See "Plan of Distribution" for possible indemnification
arrangements for dealers, underwriters, and agents.
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THE DATE OF THIS PROSPECTUS IS APRIL 16, 1993.
<PAGE> 6
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND ANY
ACCOMPANYING PROSPECTUS SUPPLEMENT IN CONNECTION WITH THE OFFERING DESCRIBED
HEREIN AND THEREIN, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR BY ANY UNDERWRITER, DEALER OR AGENT. NEITHER THIS PROSPECTUS NOR ANY
PROSPECTUS SUPPLEMENT SHALL CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OFFERED HEREUNDER IN ANY JURISDICTION TO ANY PERSON
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION OR SALE IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT NOR ANY SALE MADE HEREUNDER IMPLIES THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY AT ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission").
All such reports, proxy and information statements and other information,
including the documents incorporated by reference herein, can be inspected and
copied at prescribed rates at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549; and at the
Commission's regional offices at 7 World Trade Center, 13th floor, New York, New
York 10048 and 1400 Northwestern Atrium Center, 500 West Madison, Suite 1400,
Chicago, Illinois 60661-2511. Such material can also be inspected at the office
of the New York Stock Exchange, 20 Broad Street, New York, New York 10005 and at
the office of the Philadelphia Stock Exchange, 1900 Market Street, Philadelphia,
Pennsylvania 19130.
The Company has filed a registration statement on Form S-3 (herein,
together with all amendments and exhibits, referred to as the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the securities offered hereby. This Prospectus does not contain
all of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement and the exhibits filed as a part thereof. Statements contained herein
concerning any document filed as an exhibit are not necessarily complete and, in
each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement. Each such statement is qualified in its
entirety by such reference.
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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company (Exchange Act File No. 1-3305)
with the Securities and Exchange Commission are incorporated herein by reference
and made a part hereof:
(a) Annual Report on Form 10-K, dated March 25, 1993, for the fiscal
year ended December 31, 1992.
(b) Current Reports on Form 8-K, filed on January 21, 1993, February
25, 1993 and March 26, 1993.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act, after the date of this Prospectus and prior to the
termination of the offering of the Debt Securities hereby shall be deemed to be
incorporated herein by reference.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus and the Registration Statement of which it is a
part to the extent that a statement contained herein or in any other
subsequently filed document which is also incorporated or deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus or such Registration
Statement.
The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, upon written or oral request of such person,
a copy of any or all of the documents which have been or may be incorporated
herein by reference, other than exhibits to such documents (unless such exhibits
are specifically incorporated by reference to such documents). Requests for such
copies should be directed to the Office of the Secretary, Merck & Co., Inc.,
P.O. Box 100, One Merck Drive, Whitehouse Station, New Jersey 08889-0100,
telephone number (908) 423-4042.
3
<PAGE> 8
THE COMPANY
The Company is a worldwide organization engaged primarily in the business
of discovering, developing, producing, and marketing products and services for
the maintenance or restoration of health. The Company's business is divided into
two industry segments: Human and Animal Health Products and Specialty Chemical
Products.
Human and animal health products include therapeutic and preventive agents
for the treatment of human disorders, which are generally sold by prescription,
and for the control and alleviation of disease in livestock, small animals, and
poultry. Human and animal health products also include poultry breeding stock
and crop protection products.
Human health products include cardiovascular products, antibiotics,
anti-ulcerants, anti-inflammatory/ analgesic products, ophthalmologicals and
vaccines/biologicals. The Company also markets a wide range of prescription
products in other therapeutic classes, including antiparkinsonism products,
psychotherapeutics, a muscle relaxant and a treatment for symptomatic benign
prostate enlargement.
Animal health/crop protection products include miticides/insecticides,
coccidiostats and poultry breeding stock.
The Company's specialty chemical products have a wide variety of
applications such as use in health care, food processing, oil exploration and
personal care.
The Company was incorporated in the State of New Jersey in 1927 and
maintains its principal offices at Whitehouse Station, New Jersey. The Company's
address is P.O. Box 100, One Merck Drive, Whitehouse Station, New Jersey
08889-0100 and its telephone number is (908) 423-1000.
USE OF PROCEEDS
Except as otherwise described in the applicable Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Debt Securities for
general corporate purposes, including the reduction of short-term debt. Funds
not required immediately for such purposes may be invested temporarily in
short-term marketable securities.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an Indenture (the "Indenture"),
between the Company and Morgan Guaranty Trust Company of New York, as Trustee
(the "Trustee"), a copy of which is filed as an exhibit to the Registration
Statement. The following summaries of certain provisions of the Indenture do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of the Indenture, including the definitions
therein of certain terms. Wherever particular Sections or defined terms of the
Indenture are referred to, such Sections or defined terms are incorporated
herein by reference.
The following sets forth certain general terms and provisions of the Debt
Securities offered hereby. The particular terms of the Debt Securities offered
by any Prospectus Supplement (the "Offered Debt Securities") will be described
in the Prospectus Supplement relating to such Offered Debt Securities (the
"Applicable Prospectus Supplement").
GENERAL
The Indenture does not limit the amount of Debt Securities that may be
issued thereunder and Debt Securities may be issued thereunder from time to time
in one or more series. The Debt Securities will be unsecured and unsubordinated
obligations of the Company and will rank equally and ratably with other
unsecured and unsubordinated obligations of the Company.
Unless otherwise indicated in the Applicable Prospectus Supplement,
principal of, premium, if any, and interest on the Debt Securities will be
payable, and the transfer of Debt Securities will be registrable, at the office
or agency to be maintained by the Company in The City of New York and at any
other office or agency
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<PAGE> 9
maintained by the Company for such purpose. (Sections 301, 305 and 1002) The
Debt Securities will be issued only in fully registered form without coupons
and, unless otherwise indicated in the Applicable Prospectus Supplement, in
denominations of $100,000 or integral multiples thereof. (Section 302) No
service charge will be made for any registration of transfer or exchange of the
Debt Securities, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge imposed in connection therewith.
(Section 305)
The Applicable Prospectus Supplement will describe the following terms of
the Offered Debt Securities: (1) the title of the Offered Debt Securities; (2)
any limit on the aggregate principal amount of the Offered Debt Securities; (3)
the Person to whom any interest on the Offered Debt Securities shall be payable,
if other than the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest; (4) the date or dates on which the principal of the Offered
Debt Securities is payable; (5) the rate or rates at which the Offered Debt
Securities shall bear interest, if any, the date or dates from which any such
interest shall accrue, the Interest Payment Dates on which any such interest
shall be payable and the Regular Record Date for the interest payable on any
Interest Payment Date; (6) the place or places where the principal of and any
premium and interest on the Offered Debt Securities shall be payable; (7) the
period or periods within which, the price or prices at which and the terms and
conditions upon which the Offered Debt Securities may be redeemed, in whole or
in part, at the option of the Company; (8) the obligation, if any, of the
Company to redeem or purchase the Offered Debt Securities pursuant to any
sinking fund or analogous provisions or at the option of a Holder thereof and
the period or periods within which, the price or prices at which and the terms
and conditions upon which the Offered Debt Securities shall be redeemed or
purchased, in whole or in part, pursuant to such obligation; (9) if other than
denominations of $100,000 and any integral multiple thereof, the denominations
in which the Offered Debt Securities shall be issuable; (10) the currency,
currencies or currency units in which payment of the principal of and any
premium and interest on any Offered Debt Securities shall be payable if other
than the currency of the United States of America; (11) if the amount of
payments of principal of or any premium or interest on any Offered Debt
Securities may be determined with reference to an index or formula, the manner
in which such amounts shall be determined; (12) if the principal of or any
premium or interest on any Offered Debt Securities is to be payable, at the
election of the Company or a Holder thereof, in one or more currencies or
currency units other than that or those in which the Securities are stated to be
payable, the currency, currencies or currency units in which payment of the
principal of and any premium and interest on the Offered Debt Securities as to
which such election is made shall be payable, and the periods within which and
the terms and conditions upon which such election is to be made; (13) if other
than the principal amount thereof, the portion of the principal amount of the
Offered Debt Securities which shall be payable upon declaration of acceleration
of the Maturity thereof; (14) the applicability of the provisions described
under "Defeasance and Covenant Defeasance"; (15) if the Offered Debt Securities
will be issuable only in the form of a Book-Entry Security as described under
"Book-Entry Debt Securities," the Depository or its nominee with respect to the
Offered Debt Securities and the circumstances under which the Book-Entry
Security may be registered for transfer or exchange or authenticated and
delivered in the name of a Person other than the Depository or its nominee; and
(16) any other terms of the Offered Debt Securities. (Section 301)
The Debt Securities may be issued as Original Issue Discount Debt
Securities to be offered and sold at a substantial discount below their stated
principal amount. Federal income tax consequences and other special
considerations applicable to Original Issue Discount Debt Securities and any
Debt Securities treated as having been issued with original issue discount for
Federal income tax purposes will be described in the Applicable Prospectus
Supplement. "Original Issue Discount Debt Securities" means any Debt Security
which provides for an amount less than the principal amount thereof to be due
and payable upon the declaration of acceleration of the Maturity thereof upon
the occurrence of an Event of Default and the continuation thereof. (Section
101)
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued in the form of one or more
Book-Entry Securities that will be deposited with a Depository or its nominee
identified in the Applicable Prospectus Supplement. In such a
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<PAGE> 10
case, one or more Book-Entry Securities will be issued in a denomination or
aggregate denominations equal to the portion of the aggregate principal amount
of Outstanding Debt Securities of the series to be represented by such
Book-Entry Security or Securities. Unless and until it is exchanged in whole or
in part for Debt Securities in definitive registered form, a Book-Entry Security
may not be registered for transfer or exchange except as a whole by the
Depository for such Book-Entry Security to a nominee or such Depository and
except in the circumstances described in the Applicable Prospectus Supplement.
(Sections 204 and 305)
The specific terms of the depository arrangement with respect to any
portion of a series of Debt Securities to be represented by a Book-Entry
Security will be described in the Applicable Prospectus Supplement.
CERTAIN COVENANTS OF THE COMPANY
Subsidiaries. The term "Subsidiary" will be defined as a corporation more
than 50% of the outstanding voting stock of which is owned directly or
indirectly by the Company and/or one or more Subsidiaries. The term "Domestic
Subsidiary" will be defined as a Subsidiary substantially all the fixed assets
of which are located, or substantially all the business of which is carried on,
within the United States (including Puerto Rico), or which owns or leases any
Principal Domestic Manufacturing Property, but such term excludes any Subsidiary
the principal business of which is the financing of the operations of the
Company or its Subsidiaries outside the United States (including Puerto Rico)
(but such Subsidiary is excluded only so long as it neither owns nor leases any
Principal Domestic Manufacturing Property). (Section 101)
Restrictions on Secured Debt. If the Company or any Domestic Subsidiary
shall incur, issue, assume or guarantee any Debt secured by a Mortgage on any
Principal Domestic Manufacturing Property of the Company or any Domestic
Subsidiary or on any shares of stock or Debt of any Domestic Subsidiary, the
Company will secure, or cause such Domestic Subsidiary to secure, the
Outstanding Debt Securities equally and ratably with (or prior to) such secured
Debt, unless after giving effect thereto the aggregate amount of all such
secured Debt together with all Attributable Debt of the Company and of any
Domestic Subsidiary in respect of sale and leaseback transactions involving
Principal Domestic Manufacturing Properties would not exceed 10% of the
Consolidated Net Tangible Assets of the Company and its consolidated
Subsidiaries. For the purpose of providing such equal and ratable security, the
principal amount of Outstanding Debt Securities of any series of Original Issue
Discount Securities shall be such portion of the principal amount as specified
in the terms of that series that would be payable upon acceleration of the
Maturity thereof at the time of such determination. This restriction will not
apply to, and there shall be excluded in computing secured Debt for the purpose
of such restriction, Debt secured by (a) Mortgages on property of, or on any
shares of stock or Debt of, any corporation existing at the time such
corporation becomes a Domestic Subsidiary, (b) Mortgages in favor of the Company
or a Domestic Subsidiary, (c) Mortgages in favor of governmental bodies of the
United States or any State or Puerto Rico or any other country or any political
subdivision thereof to secure partial, progress or advance payments, (d)
Mortgages on property, shares of stock or Debt, purchase money Mortgages and
construction Mortgages existing at or incurred within 120 days of the time of
acquisition thereof (including acquisition through merger or consolidation), and
(e) certain extensions, renewals or replacements of Mortgages referred to in the
foregoing clauses (a) through (d) inclusive. (Section 1008) The Indenture will
not restrict the incurrence of unsecured Debt by the Company or its
Subsidiaries.
"Principal Domestic Manufacturing Property" will be defined to include any
facility (together with the land on which it is erected and fixtures comprising
a part thereof) used primarily for manufacturing, processing or warehousing of
the Company's products and located in the United States (including Puerto Rico),
owned or leased by the Company or a Subsidiary and having a gross book value in
excess of 1% of Consolidated Net Tangible Assets, other than any such facility
or portion thereof (i) which is financed by certain governmental obligations the
interest on which is excludable from gross income of the holder thereof pursuant
to the provisions of Section 103(a) of the Internal Revenue Code or Section 745
of Title 48 of the United States Code or (ii) which in the opinion of the Board
of Directors of the Company is not of material importance to the total business
conducted by the Company and its Subsidiaries as an entirety. "Consolidated Net
Tangible Assets" will be defined as the aggregate amount of all assets (after
deducting intangible assets and the amount of all current liabilities) of the
Company and its consolidated Subsidiaries. "Mortgage" will be defined as any
mortgage, pledge, lien, security interest, conditional sale or other title
retention agreement or
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similar encumbrance. "Attributable Debt" will be defined to mean the total net
amount of rent (discounted at the rate of 1% per annum over the weighted average
Yield to Maturity of the Outstanding Debt Securities compounded semi-annually)
required to be paid during the remaining term of any lease. (Section 101)
Restrictions on Sales and Leaseback Transactions. Neither the Company nor
any Domestic Subsidiary may, after the effective date of the Indenture, enter
into any sale and leaseback transaction involving any Principal Domestic
Manufacturing Property which has been or is to be sold or transferred, more than
120 days after the acquisition thereof or the completion of construction and
commencement of full operations thereof, unless (a) the Company or such Domestic
Subsidiary could create Debt secured by a Mortgage on such property as described
under "Restrictions on Secured Debt" in an amount equal to the Attributable Debt
with respect to the sale and leaseback transaction without equally and ratably
securing the Outstanding Debt Securities or (b) the Company, within 120 days,
applies to the retirement of its Funded Debt which is pari passu (as defined in
the Indenture) with the Outstanding Securities an amount equal to the greater of
(i) the net proceeds of the sale of the Principal Domestic Manufacturing
Property leased pursuant to such arrangement or (ii) the fair market value of
the Principal Domestic Manufacturing Property so leased (subject to credits for
certain voluntary retirements of Funded Debt). (Section 1009) "Funded Debt" will
be defined as indebtedness for money borrowed having a maturity at or being
renewable or extendible to a date more than 12 months from the date of
determination. (Section 101) This restriction will not apply to any sale and
leaseback transaction (a) between the Company and a Subsidiary or between
Subsidiaries, or (b) involving the taking back of a lease for a period of three
years or less. (Section 1009)
Unless otherwise indicated in the Applicable Prospectus Supplement, the
Indenture does not contain covenants specifically designed to protect Holders in
the event of a highly leveraged transaction involving the Company.
EVENTS OF DEFAULT
Any one of the following events will constitute an Event of Default under
the Indenture with respect to Securities of any series: (a) failure to pay any
interest on any Debt Security of that series when due, continued for 30 days;
(b) failure to pay principal of or any premium on any Debt Security of that
series when due; (c) failure to deposit any sinking fund payment, when due, in
respect of any Debt Security of that series; (d) failure to perform, or breach
of any covenant or warranty of the Company in the Indenture (other than a
covenant included in the Indenture solely for the benefit of a series of Debt
Securities thereunder other than that series) continued for 90 days after
written notice as provided in the Indenture; (e) certain events in bankruptcy,
insolvency or reorganization of the Company; or (f) any other Event of Default
provided with respect to Debt Securities of that series. (Section 501)
If any Event of Default with respect to the Debt Securities of any series
at the time Outstanding occurs and is continuing, either the Trustee or the
Holders of at least 25 percent in aggregate principal amount of the Outstanding
Debt Securities of that series may declare the principal amount (or, if the Debt
Securities of that series are Original Issue Discount Debt Securities, such
portion of the principal amount as may be specified in the terms thereof) of all
the Debt Securities of that series to be due and payable immediately. At any
time after a declaration of acceleration with respect to Debt Securities of any
series has been made, but before a judgment or decree based on acceleration has
been obtained, the Holders of a majority in aggregate principal amount of
Outstanding Debt Securities of that series may, under certain circumstances,
rescind and annul such acceleration. (Section 502)
Reference is made to the Applicable Prospectus Supplement relating to any
series of Offered Debt Securities that are Original Issue Discount Debt
Securities for the particular provisions relating to acceleration of the Stated
Maturity of a portion of the principal amount of such series of Original Issue
Discount Debt Securities upon the occurrence of an Event of Default and the
continuation thereof.
The Indenture provides that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the Holders, unless such Holders shall have
offered to the Trustee reasonable indemnity. (Section 603) Subject to such
provisions for the indemnification of the Trustee
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and to certain other conditions, the Holders of a majority in aggregate
principal amount of the Outstanding Debt Securities of any series will have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee, with respect to the Debt Securities of that series. (Section 512)
No Holder of any series of Debt Securities will have any right to institute
any proceeding with respect to the Indenture or for any remedy thereunder,
unless such Holder shall have previously given to the Trustee written notice of
a continuing Event of Default and unless the Holders of at least 25 percent in
principal amount of the Outstanding Debt Securities of that series shall have
made written request, and offered reasonable indemnity, to the Trustee to
institute such proceeding as trustee, and the Trustee shall not have received
from the Holders of a majority in aggregate principal amount of the Outstanding
Debt Securities of that series a direction inconsistent with such request and
shall have failed to institute such proceeding within 60 days. (Section 507)
However, such limitations do not apply to a suit instituted by a Holder of a
Debt Security for enforcement of payment of the principal of and premium, if
any, or interest on such Debt Security on or after the respective due dates
expressed in such Debt Security. (Section 508)
The Company is required to furnish to the Trustee annually a statement as
to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance. (Section 1004)
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of not less than the majority in
aggregate principal amount of the Outstanding Debt Securities of each series
issued under the Indenture and affected by the modification or amendments;
provided, however, that no such modification or amendment may, without the
consent of the Holders of all Debt Securities affected thereby, (i) change the
Stated Maturity of the principal of, or any installment of principal of or
interest on, any Debt Security; (ii) reduce the principal amount of, or the
premium, if any, or (except as otherwise provided in the Applicable Prospectus
Supplement) interest on, any Debt Security (including in the case of an Original
Issue Discount Debt Security the amount payable upon acceleration of the
maturity thereof); (iii) change the place or currency of payment of principal
of, premium, if any, or interest on any Debt Security; (iv) impair the right to
institute suit for the enforcement of any payment on any Debt Security on or at
the Stated Maturity thereof (or in the case of redemption, on or after the
Redemption Date); or (v) reduce the percentage in principal amount of
Outstanding Debt Securities of any series, the consent of whose Holders is
required for modification or amendment of the Indenture or for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults. (Section 902)
The Holders of at least a majority in aggregate principal amount of the
Outstanding Debt Securities of any series may, on behalf of all Holders of that
series, waive compliance by the Company with certain restrictive provisions of
the Indenture. (Section 1010) The Holders of not less than a majority in
aggregate principal amount of the Outstanding Debt Securities of any series may,
on behalf of all Holders of that series, waive any past default under the
Indenture, except a default in the payment of principal, premium or interest and
in respect of a covenant or provision of the Indenture that cannot be modified
or amended without the consent of the Holder of each Outstanding Debt Security
of such series affected thereby. (Section 513)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may not consolidate with or merge into any other Person or
transfer or lease its assets substantially as an entirety to any Person and may
not permit any Person to merge into or consolidate with the Company or transfer
or lease its assets substantially as an entirety to the Company, unless (i) any
successor or purchaser is a corporation, partnership, or trust organized under
the laws of the United States of America, any State or the District of Columbia,
and any such successor or purchaser expressly assumes the Company's obligations
on the Debt Securities under a supplemental Indenture, (ii) immediately after
giving effect to the transaction no Event of Default, and no event which, after
notice or lapse of time or both, would become an Event of Default, shall have
occurred and be continuing, (iii) if properties or assets of the Company become
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subject to a Mortgage not permitted by the Indenture, the Company or such
successor Person, as the case may be, takes such steps as shall be necessary
effectively to secure the Securities equally and ratably with (or prior to) all
indebtedness secured thereby, and (iv) the Company has delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel stating compliance with these
provisions. (Section 801)
DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides, unless otherwise indicated in the Applicable
Prospectus Supplement with respect to the Offered Debt Securities, that the
Company, at the Company's option, (a) will be discharged from any and all
obligations in respect of the Debt Securities of any series (except for certain
obligations to register the transfer of or exchange of Debt Securities of such
series, replace stolen, lost or mutilated Debt Securities of such series,
maintain paying agencies and hold moneys for payment in trust) or (b) need not
comply with certain restrictive covenants of the Indenture, including those
described under "Certain Covenants," and the occurrence of an event described in
clause (e) under "Events of Default" shall no longer be an Event of Default, in
each case, if the Company deposits, in trust, with the Trustee money or U.S.
Government Obligations, which through the payment of interest thereon and
principal thereof in accordance with their terms will provide money, in an
amount sufficient to pay all the principal of and interest on the Debt
Securities of such series on the dates such payments are due (which may include
one or more redemption dates designated by the Company) in accordance with the
terms of the Debt Securities of such series. Such a trust may only be
established if, among other things, (i) no Event of Default or event which with
the giving of notice or lapse of time, or both, would become an Event of Default
under the Indenture shall have occurred and be continuing on the date of such
deposit, (ii) such deposit will not cause the Trustee to have any conflicting
interest with respect to other securities of the Company and (iii) the Company
shall have delivered an Opinion of Counsel to the effect that the Holders will
not recognize income, gain or loss for Federal income tax purposes as a result
of such deposit or defeasance and will be subject to Federal income tax in the
same manner as if such defeasance had not occurred, which Opinion of Counsel, in
the case of clause (a) above, must refer to and be based upon a published ruling
of the Internal Revenue Service, a private ruling of the Internal Revenue
Service addressed to the Company, or otherwise a change in applicable Federal
income tax law occurring after the date of the Indenture. In the event the
Company omits to comply with its remaining obligations under the Indenture after
a defeasance of the Indenture with respect to the Debt Securities of any series
as described under clause (b) above and the Debt Securities of such series are
declared due and payable because of the occurrence of any Event of Default, the
amount of money and U.S. Government Obligations on deposit with the Trustee may
be insufficient to pay amounts due on the Debt Securities of such series at the
time of the acceleration resulting from such Event of Default. However, the
Company will remain liable in respect of such payments. (Article Thirteen)
CONCERNING THE TRUSTEE
Morgan Guaranty Trust Company of New York is Trustee under the Indenture.
The Trustee performs services for the Company in the ordinary course of
business.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities being offered hereby through
agents, through underwriters and through dealers, and Debt Securities may be
sold to other purchasers directly or through agents.
The distribution of the Debt Securities may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed, or
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
Offers to purchase Debt Securities may be solicited by agents designated by
the Company from time to time. Any such agent, who may be deemed to be an
underwriter, as that term is defined in the Securities Act, involved in the
offer or sale of the Debt Securities in respect of which this Prospectus is
delivered will be named, and any commissions payable by the Company to such
agent set forth, in the Prospectus Supplement. Agents may be entitled under
agreements that may be entered into with the Company to indemnification by
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the Company against certain liabilities, including liabilities under the
Securities Act, and such agents or their affiliates may be customers of, extend
credit to or engage in transactions with or perform services for the Company in
the ordinary course of business.
If any underwriters are utilized in the sale, the Company will enter into
an underwriting agreement with such underwriters at the time of sale to them and
the names of the underwriters and the terms of the transaction will be set forth
in the Prospectus Supplement that will be used by the underwriters to make
resales of the Debt Securities in respect of which this Prospectus is delivered
to the public. The underwriters may be entitled under the relevant underwriting
agreement, to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act, and such underwriters or their
affiliates may be customers of, extend credit to or engage in transactions with
or perform services for the Company in the ordinary course of business.
If dealers are utilized in the sale of the Debt Securities in respect of
which this Prospectus is delivered, the Company will sell such Debt Securities
to such dealers, as principal. The dealers may then resell such Debt Securities
to the public at varying prices to be determined by such dealers at the time of
resale. Dealers may be entitled to indemnification by the Company against
certain liabilities, including liabilities under the Securities Act, and such
dealers or their affiliates may be customers of, extend credit to or engage in
transactions with or perform services for the Company in the ordinary course of
business.
The Debt Securities are not proposed to be listed on a securities exchange,
and any underwriters or dealers will not be obligated to make a market in Debt
Securities. The Company cannot predict the activity or liquidity of any trading
in the Debt Securities.
VALIDITY OF DEBT SECURITIES
The validity of Debt Securities offered hereby will be passed upon for the
Company by Mary M. McDonald, Esq., Senior Vice President and General Counsel of
the Company, and for the Underwriters by Sullivan & Cromwell, New York, New
York. Ms. McDonald is the beneficial owner of 4,185 shares of Common Stock and
holds options to acquire 55,550 shares which are exercisable within 60 days.
EXPERTS
The consolidated financial statements of the Company at December 31, 1992
and 1991 and for each of the three years in the period ended December 31, 1992,
appearing in its Annual Report on Form 10-K, for the fiscal year ended December
31, 1992 and incorporated in this Prospectus by reference, have been audited by
Arthur Andersen & Co., independent public accountants, as indicated in their
reports with respect thereto and incorporated by reference herein. The financial
statements referred to above are included in reliance upon the reports of said
firm and upon the authority of said firm as experts in auditing and accounting.
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