Exhibit 1.1
EXECUTION COPY
SCHERING-PLOUGH CORPORATION
5.300% Notes due 2013
6.500% Notes due 2033
TERMS AGREEMENT
November 21, 2003
Schering-Plough Corporation
2000 Galloping Hill Road
Kenilworth, New Jersey 07033
Dear Sirs:
We (the "Representative") understand that Schering-Plough Corporation (the
"Company") proposes to issue and sell (1) $1,250,000,000 aggregate principal
amount of its 5.300% Notes due 2013 and (2) $1,150,000,000 aggregate principal
amount of its 6.500% Notes due 2033 (together, the "Underwritten Securities").
Subject to the terms and conditions set forth or incorporated by reference
herein, the Company has agreed to sell to the underwriters named below (the
"Underwriters"), and the Underwriters have agreed, severally and not jointly, to
purchase from the Company, the principal amount of Underwritten Securities set
forth below opposite their respective names at the purchase price set forth
below.
Principal Amount of Principal Amount of
5.300% 6.500%
Underwriter Notes due 2013 Notes due 2033
----------- -------------- ------------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated $ 361,500,000 $ 332,580,000
Citigroup Global Markets Inc. 361,500,000 332,580,000
Banc of America Securities LLC 232,250,000 213,670,000
Credit Suisse First Boston LLC 232,250,000 213,670,000
BNP Paribas Securities Corp. 12,500,000 11,500,000
BNY Capital Markets, Inc. 12,500,000 11,500,000
ING Financial Markets LLC 12,500,000 11,500,000
Mellon Financial Markets, LLC 12,500,000 11,500,000
The Williams Capital Group, L.P. 12,500,000 11,500,000
Total $1,250,000,000 $1,150,000,000
============== ==============
The Underwritten Securities shall have the following terms:
Title of Underwritten Securities: 5.300% Notes due 2013 (the "10-Year Notes"), and
6.500% Notes due 2033 (the "30-Year Notes").
Principal amount to be issued: $1,250,000,000 for the 10-Year Notes and
$1,150,000,000 for the 30-Year Notes.
Current ratings: Moody's Investors Service, Inc.: A3;
Standard & Poor's Rating Services: A+;
Fitch, Inc.: A-.
Interest rate: 5.300% per annum for the 10-Year Notes; and
6.500% per annum for the 30-Year Notes.
Interest Payment Dates: June 1 and December 1, commencing
June 1, 2004
Maturity Date: 2013 for the 10-Year Notes, and
2033 for the 30-Year Notes.
Redemption provisions: Each of the Underwritten Securities will be
redeemable as a whole or in part, at the
Company's option at any time, at a
redemption price equal to the greater of (A)
100% of the principal amount of such
Underwritten Securities and (B) the sum of
the present values of the remaining
scheduled payments of principal and interest
thereon (exclusive of interest accrued to
the date of redemption) discounted to the
redemption date on a semiannual basis
(assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate
(to be defined in the supplementary
indenture under which the Underwritten
Securities will be issued) plus, in the case
of the 10-Year Notes, 25 basis points, and,
in case of the 30-Year Notes, 35 basis
points, plus, in each case, accrued and
unpaid interest thereon to the date of
redemption.
Sinking fund requirements: The Underwritten Securities will not be
entitled to the benefit of a sinking fund.
Initial public offering price: 99.631% (which equals $1,245,387,500), in
the case of the 10-Year Notes, and 99.281%
(which equals $1,141,731,500), in the case
of the 30-Year Notes, plus, in each case,
accrued interest, if any, from November 26,
2003.
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Purchase price: 98.981% (which equals $1,237,262,500), in
the case of the 10-Year Notes, and 98.406%
(which equals, $1,131,669,000), in the case
of the 30-Year Notes, plus, in each case,
accrued interest, if any, from November 26,
2003 (payable in same-day funds).
Form: Global Notes through the facilities of The
Depository Trust Company
Closing Date and Location: November 26, 2003, 9:00 a.m., New York City time
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
All of the provisions contained in the document attached as Annex A hereto
entitled "Schering-Plough Corporation-Debt Securities - Underwriting Agreement
Basic Provisions" (the "Basic Provisions") are hereby incorporated by reference
in their entirety herein and shall be deemed to be a part of this Terms
Agreement to the same extent as if such provisions had been set forth in full
herein. Terms defined in the Basic Provisions are used herein as therein
defined.
Please accept this offer by signing a copy of this Terms Agreement in the
space set forth below and returning the signed copy to us.
Very truly yours,
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Citigroup Global Markets Inc.
Banc of America Securities LLC
Credit Suisse First Boston LLC
BNP Paribas Securities Corp.
BNY Capital Markets, Inc.
ING Financial Markets LLC
Mellon Financial Markets, LLC
The Williams Capital Group, L.P.
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By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Richard Luciano
-------------------------------------
Title:
On behalf of themselves and the other
Underwriters named above
Accepted:
SCHERING-PLOUGH CORPORATION
By: /s/ E. Kevin Moore
----------------------------
Title: Vice President and
Treasurer
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EXECUTION COPY
ANNEX A
SCHERING-PLOUGH CORPORATION
(A NEW JERSEY CORPORATION)
DEBT SECURITIES - UNDERWRITING AGREEMENT BASIC PROVISIONS
Schering-Plough Corporation (the "Company") proposes to issue and sell up
to $2,400,000,000 aggregate initial public offering price of its debt securities
(the "Securities"), from time to time on terms to be determined at the time of
sale. The Securities will be issued under an indenture dated as of November 26,
2003 (the "Base Indenture") and a supplemental indenture dated as of November
26, 2003 (the "Supplemental Indenture" which, together with the Base Indenture,
is referred to as the "Indenture") between the Company and The Bank of New York,
trustee. Each issue of Securities may vary, as applicable, as to aggregate
principal amount, maturity date, interest rate or formula and timing of payments
thereof, redemption provisions and sinking fund requirements, if any, and any
other variable terms which the Indenture contemplates may be set forth in the
Securities as issued from time to time.
This is to confirm the arrangements with respect to the purchase of the
Underwritten Securities from the Company by the Representative and the several
Underwriters listed in the applicable terms agreement entered into between the
Representative and the Company of which this Underwriting Agreement is Annex A
thereto (the "Terms Agreement"). With respect to any particular Terms Agreement,
the Terms Agreement, together with the provisions hereof incorporated therein by
reference, is herein referred to as the "Agreement". Terms defined in the Terms
Agreement are used herein as therein defined.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-102970) in respect
of certain of the Company's securities and has filed such amendments thereto as
may have been required to the date of the Terms Agreement. Such registration
statement, as amended, has been declared effective by the Commission, and the
Indenture has been qualified under the Trust Indenture Act of 1939, as amended
(the "1939 Act"). Such registration statement, as amended, and the prospectuses
constituting a part thereof, as from time to time amended or supplemented
pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"),
the Securities Act of 1933, as amended (the "1933 Act"), or otherwise, and
including any registration statement filed pursuant to Rule 462(b) of the 1933
Act, are collectively referred to herein as the "Registration Statement" and the
"Prospectus", respectively; provided, however, that all references to the
"Registration Statement" and the "Prospectus" will include all documents
incorporated therein by reference and filed prior to the execution of the
applicable Terms Agreement, and provided further, that a supplement of the
Prospectus contemplated by Section 3(a) (a "Prospectus Supplement") shall be
deemed to have supplemented the Prospectus only with respect to the offering of
Underwritten Securities to which it relates.
SECTION 1. Representations and Warranties. The Company represents and
warrants to the Representative and to each Underwriter named in a Terms
Agreement as of the date thereof (the "Representation Date"), as follows:
(a) The Registration Statement and the Prospectus, at the time the
Registration Statement became effective and as of the applicable
Representation Date, complied in all material respects with the
requirements of the 1933 Act, the rules and regulations thereunder (the
"Regulations") and the 1939 Act. The Registration Statement, at the time
the Registration Statement became effective and as of the applicable
Representation Date, did not, and will not, contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
The Prospectus, at the time the Registration Statement became effective
and as of the applicable Representation Date, did not, and will not,
contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
Notwithstanding the foregoing, the representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by any
Underwriter expressly for use in the Registration Statement or Prospectus
or to that part of the Registration Statement which shall constitute the
Statement of Eligibility under the 1939 Act (Form T-1) of the Trustees
under the Indenture.
(b) The financial statements (as supplemented by the related notes
and schedules) included in the Registration Statement and Prospectus
present fairly the financial position of the Company and its consolidated
subsidiaries on a consolidated basis, as at the dates indicated, and the
respective results of operations for the periods specified therein, and
have been prepared in conformity with U.S. generally accepted accounting
principles applied on a consistent basis during the periods involved.
(c) The documents incorporated by reference in the Prospectus, at
the time they were or hereafter are filed with the Commission, complied or
will comply, as the case may be, in all material respects with the
requirements of the 1934 Act and the rules and regulations thereunder,
and, when read together and with the other information in the Prospectus,
at the time the Registration Statement became effective and at the time
any amendments thereto become effective or hereafter during the period
specified in Section 3(b), did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they are made, not misleading.
(d) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as may otherwise be
disclosed or incorporated in or contemplated by the Registration Statement
and Prospectus as of the date of the applicable Terms Agreement: (i) there
has not been any material adverse change in the financial condition, or in
the results of operations, of the Company and its subsidiaries considered
as one enterprise, whether or not arising in the ordinary course of
business (a "Material Adverse Effect") and (ii) there have not been any
transactions
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entered into by the Company or its subsidiaries not in the ordinary course
of business including borrowings for the acquisition of receivables and
other operations other than transactions that are not material in relation
to the Company and its subsidiaries considered as one enterprise.
(e) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of New
Jersey with power and authority to own, lease and operate its properties
and conduct its business as described in the Registration Statement.
(f) The execution and delivery of this Agreement and the
Indenture, and the consummation of the transactions contemplated herein
and therein, have been duly authorized by all necessary corporate action
and will not result in any breach of any of the terms, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets
of the Company pursuant to any indenture, loan agreement, contract or
other agreement or instrument to which the Company is a party or by which
the Company may be bound or to which any of the property or assets of the
Company is subject, except for such breaches, defaults, liens, charges or
encumbrances that individually or in the aggregate would not reasonably be
expected to result in a Material Adverse Effect, nor, to its knowledge,
will such action result in any material violation of any applicable law,
order, rule or regulation applicable to the Company of any court or of any
federal, state or other regulatory authority or other governmental body
having jurisdiction over the Company, except for such violations that
individually or in the aggregate would not reasonably be expected to
result in a Material Adverse Effect, and nor will such action result in
any violation of the provisions of the charter or by-laws of the Company.
(g) The applicable Indenture has been, or prior to the issuance of
the Securities thereunder will have been, duly authorized, executed and
delivered by the Company and, upon such authorization, execution and
delivery, will constitute a valid and binding agreement of the Company,
enforceable in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally or by general equitable principles (regardless of whether
enforcement is considered in a proceeding in equity or at law) and except
as enforcement thereof may be limited by requirements that a claim with
respect to any Securities payable in a foreign or composite currency (or a
foreign or composite currency judgment in respect of such claim) be
converted into U.S. dollars at an exchange rate prevailing on a date
determined pursuant to applicable law or by governmental authority to
limit, delay or prohibit the making of payment outside the United States.
(h) The Underwritten Securities have been duly authorized for
issuance and sale pursuant to this Agreement (or will have been so
authorized prior to each issuance of Underwritten Securities) and, when
issued, authenticated and delivered pursuant to the provisions of this
Agreement and of the Indenture against payment of the consideration
therefor in accordance with this Agreement, the Underwritten Securities
will be valid
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and legally binding obligations of the Company enforceable in accordance
with their terms, except as enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating
to fraudulent transfers), reorganization, moratorium or other laws
relating to or affecting enforcement of creditors' rights or by general
equity principles (regardless of whether enforcement is considered in a
proceeding in equity or at law) and will be entitled to the benefits of
the Indenture and the Underwritten Securities and except as enforcement
thereof may be limited by requirements that a claim with respect to any
Securities payable in a foreign or composite currency (or a foreign or
composite currency judgment in respect of such claim) be converted into
U.S. dollars at an exchange rate prevailing on a date determined pursuant
to applicable law or by governmental authority to limit, delay or prohibit
the making of payment outside the United States.
(i) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign, is necessary or required for the
due authorization, execution and delivery by the Company of this
Underwriting Agreement or the applicable Terms Agreement or for the use of
proceeds by the Company described under the Prospectus or for the
performance by the Company of the transactions contemplated by this
Underwriting Agreement, such Terms Agreement or any applicable Indenture,
except (1) such as have been already made, obtained or rendered, as
applicable, (2) as may be required under state securities or blue sky
laws, or (3) as disclosed in or incorporated by reference into the
Registration Statement or the Prospectus.
(j) Except as disclosed in or incorporated by reference into the
Registration Statement or the Prospectus, there is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or to the
knowledge of the Company threatened in writing, against or affecting the
Company or any of its subsidiaries that is required to be disclosed in the
Registration Statement and the Prospectus (other than as stated therein),
or that would reasonably be expected to result in a Material Adverse
Effect, or that would reasonably be expected to materially and adversely
affect the consummation of the transactions contemplated under this
Underwriting Agreement, the applicable Terms Agreement or any applicable
Indenture or the performance by the Company of its obligations hereunder
and thereunder. Except for such proceedings, investigations and claims
disclosed in or incorporated by reference into the Registration Statement
or the Prospectus, the aggregate of all pending legal or governmental
proceedings to which the Company or any of its subsidiaries is a party or
of which any of their respective assets, properties or operations is the
subject would not reasonably be expected to result in a Material Adverse
Effect.
(k) Deloitte & Touche LLP are independent certified public
accountants as required by the 1933 Act and the Regulations.
(l) The Company is not, and upon issuance and sale of the
Underwritten Securities as herein contemplated and the application of the
net proceeds therefrom as described in the Prospectus will not be, an
"investment company" within the meaning of the Investment Company Act of
1940, as amended (the "1940 Act").
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Any certificate signed by any officer of the Company and delivered to the
Representative or counsel for the Underwriters in connection with an offering of
Underwritten Securities shall be deemed a representation and warranty by the
Company, as to the matters covered thereby and as of the date of such
certificate, to each Underwriter participating in such offering.
SECTION 2. Purchase and Sale. The obligations of the Underwriters to
purchase, and the Company to sell, the Underwritten Securities shall be
evidenced by the Terms Agreement. Unless otherwise specified therein, the Terms
Agreement specifies the principal amount of the Securities, the names of the
Underwriters participating in the offering (subject to substitution as provided
in Section 10 hereof) and the principal amount of Underwritten Securities which
each Underwriter severally has agreed to purchase, the purchase price to be paid
by the Underwriters for the Underwritten Securities, the initial public offering
price, if any, of the Underwritten Securities and any terms of the Underwritten
Securities not already specified in the Indenture, pursuant to which they are
being issued (including, but not limited to, designations, denominations,
current ratings, interest rates or formulas and payment dates, maturity dates,
redemption provisions and sinking fund requirements).
The several commitments of the Underwriters to purchase Underwritten
Securities pursuant to the Terms Agreement shall be deemed to have been made on
the basis of the representations and warranties herein contained and shall be
subject to the terms and conditions herein set forth.
Payment of the purchase price for, and delivery of, any Underwritten
Securities to be purchased by the Underwriters shall be made at the office of
Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022, or at such
other place as shall be agreed upon by the Representative and the Company, at
9:00 A.M., New York City time, on the third business day (unless postponed in
accordance with the provisions of Section 10) following the date of the Terms
Agreement or such other time as shall be agreed upon by the Representative and
the Company (each such time and date being referred to as a "Closing Time").
Unless otherwise specified in the Terms Agreement, payment shall be made to the
Company by wire transfer of immediately available funds to such account(s) as
the Company may designate in writing against delivery to the Representative for
the respective accounts of the Underwriters of the Underwritten Securities to be
purchased by them. The Underwritten Securities or the certificates therefor
shall be in such denominations and registered in such names as the
Representative may request in writing at least two business days prior to the
applicable Closing Time. The Underwritten Securities or the certificates
therefor, which may be in temporary form, will be made available for examination
and packaging by the Representative on or before the first business day prior to
Closing Time.
SECTION 3. Covenants of the Company. The Company covenants with the
Representative, and with each Underwriter participating in the offering of
Underwritten Securities, as follows:
(a) As soon as reasonably practicable following the execution of
the Terms Agreement, the Company will prepare a Prospectus Supplement
setting forth the principal amount of Underwritten Securities and their
terms not otherwise specified in the Indenture pursuant to which the
Underwritten Securities are being issued, the names of
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the Underwriters participating in the offering and the principal amount of
Underwritten Securities which each severally has agreed to purchase, the
name(s) of the Underwriter(s) acting as co-manager(s) in connection with
the offering, the price at which the Underwritten Securities are to be
purchased by the Underwriters from the Company, the initial public
offering price, the selling concession and reallowance, if any, and such
other information as the Representative and the Company deem appropriate
in connection with the offering of the Underwritten Securities. The
Company will promptly transmit copies of the Prospectus Supplement to the
Commission for filing pursuant to Rule 424 of the Regulations and will
furnish to the Underwriters named therein as many copies of the Prospectus
and such Prospectus Supplement as the Representative shall reasonably
request.
(b) If, at any time when the Prospectus is required by the 1933
Act to be delivered in connection with sales of the Underwritten
Securities, any event shall occur or condition exist as a result of which
it is necessary to further amend or supplement the Prospectus in order
that the Prospectus will not include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein not misleading in the light of circumstances existing at the time
it is delivered to a purchaser or if it shall be necessary at any such
time to amend or supplement the Registration Statement or the Prospectus
in order to comply with the requirements of the 1933 Act or the
Regulations, the Company will promptly prepare and file with the
Commission such amendment or supplement, whether by filing documents
pursuant to the 1934 Act or otherwise, as may be necessary so that such
statements will not, in the light of the circumstances at the time the
Prospectus is so required to be delivered, be misleading or so that the
Registration Statement and Prospectus comply with such requirements.
(c) With respect to each sale of Underwritten Securities, the
Company will make generally available to its security holders as soon as
practicable, but not later than 90 days after the close of the period
covered thereby, earning statements (in form complying with the provisions
of Rule 158, or any applicable successor rule, under the 1933 Act)
covering 12-month periods beginning, in each case, not later than the
first day of the Company's fiscal quarter next following the "effective
date" (as defined in Rule 158) of the Registration Statement relating to
Underwritten Securities.
(d) At any time when the Prospectus is required by the 1933 Act to
be delivered in connection with sales of the Underwritten Securities, the
Company will give the Representative notice of its intention to file any
amendment to the Registration Statement or any amendment or supplement to
the Prospectus, whether pursuant to the 1934 Act, the 1933 Act or
otherwise, and will furnish the Representative with copies of any such
amendment or supplement or other documents proposed to be filed a
reasonable time in advance of filing.
(e) At any time when the Prospectus is required by the 1933 Act to
be delivered in connection with sales of the Underwritten Securities, the
Company will notify the Representative promptly of (i) the effectiveness
of any amendment to the Registration Statement, (ii) the mailing or the
delivery to the Commission for filing of any supplement to the Prospectus
or any document to be filed pursuant to the 1934 Act,
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(iii) the receipt of any comments from the Commission with respect to the
Registration Statement, the Prospectus or any supplement to the
Prospectus, (iv) any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or
for additional information, and (v) the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose. The Company will make
every commercially reasonable effort to prevent the issuance of any stop
order and, if any stop order is issued, to promptly obtain the lifting
thereof.
(f) During the period specified in (b) above, the Company will
deliver to the Representative as many signed and conformed copies of the
registration statement (as originally filed) and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein
and documents incorporated by reference in the Prospectus) as the
Representative may reasonably request.
(g) The Company will endeavor in good faith to qualify the
Underwritten Securities for offer and sale under the applicable securities
laws of such jurisdictions as the Representative may reasonably designate;
provided, however, that the Company shall not be obligated to file any
general consent to service or to qualify as a foreign corporation or as a
dealer in securities in any jurisdiction in which it is not so qualified
or to subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject. The Company will
maintain such qualifications in effect for as long as may be reasonably
required for the distribution of the Underwritten Securities, provided,
however, that the Company shall not be obligated to file any general
consent to service or to qualify as a foreign corporation or as a dealer
in securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject.
(h) The Company, during the period when the Prospectus is required
to be delivered under the 1933 Act in connection with the sale of the
Underwritten Securities, will file promptly all documents required to be
filed with the Commission pursuant to Section 13 or 14 of the 1934 Act.
(i) Between the date of the Terms Agreement and the Closing Time
with respect to the Underwritten Securities covered thereby, except for
the issuance of debt securities, the Company will not, without the
Representative's prior consent, offer to sell, or enter into any agreement
to sell, any new issue of debt securities of the Company with a maturity
of more than one year, including additional Securities (other than
borrowings under the Company's revolving credit agreements).
SECTION 4. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase Underwritten Securities pursuant to
the Terms Agreement are subject to the accuracy of the representations and
warranties on the part of the Company contained herein or in certificates of the
Company's officers furnished pursuant to the provisions hereof, to the
performance by the Company of all of its covenants and other obligations
hereunder and to the following further conditions:
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(a) At the applicable Closing Time, (i) no stop order suspending
the effectiveness of the Registration Statement shall have been issued
under the 1933 Act or proceedings therefor initiated or threatened by the
Commission, and (ii) the Underwritten Securities shall have the ratings
accorded by any "nationally recognized statistical rating organization",
as defined by the Commission for purposes of Rule 436(g)(2) of the 1933
Act Regulations, if and as specified in the applicable Terms Agreement,
and the Company shall have delivered to the Representative a letter, dated
as of such date, from each such rating organization, or other evidence
reasonably satisfactory to the Representative, confirming that the
Underwritten Securities have such ratings, and except as stated therein,
since the time of execution of such Terms Agreement, there shall not have
occurred a downgrading in, or withdrawal of, the rating assigned to the
Underwritten Securities or any of the Company's other securities by any
such rating organization, and no such rating organization shall have
publicly announced that it has under surveillance or review its rating of
the Underwritten Securities or any of the Company's other securities other
than an announcement with positive implications of a possible upgrading.
(b) At the applicable Closing Time, the Representative shall have
received:
(1) The opinion dated as of the applicable Closing Time, of
Wachtell, Lipton, Rosen & Katz, counsel for the Company, in form and
substance reasonably satisfactory to the Representative, to the
effect that:
(i) This Agreement has been duly authorized, executed
and delivered by the Company.
(ii) The Indenture pursuant to which Underwritten
Securities are being issued has been duly authorized, executed
and delivered by the Company and, assuming due authorization,
execution and delivery by the Trustee, constitutes a valid and
binding obligation of the Company, enforceable in accordance
with its terms, except as enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting enforcement of creditors' rights
generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law)
and except as enforcement thereof is subject, in the case of
Underwritten Securities denominated in a foreign currency or
currency unit, to provisions of law that require that a
judgment for money damages rendered by a court in the United
States be expressed only in U.S. dollars.
(iii) The Underwritten Securities have been duly
authorized by the Company and, when executed and authenticated
as specified in the Indenture, and delivered against payment
pursuant to this Agreement, the Underwritten Securities will
be valid and binding obligations of the Company entitled to
the benefits of the Indenture and enforceable in accordance
with their terms, except as enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting enforcement of
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creditors' rights generally and except as enforcement thereof
is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or
at law) and except as enforcement thereof is subject, in the
case of Underwritten Securities denominated in a foreign
currency or currency unit, to provisions of law that require
that a judgment for money damages rendered by a court in the
United States be expressed only in U.S. dollars.
(iv) The Underwritten Securities and the Indenture
conform in all material respects as to legal matters to the
descriptions thereof in the Prospectus.
(v) The Indenture has been duly qualified under the
1939 Act.
(vi) The Registration Statement is effective under the
1933 Act and, to their knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued
under the 1933 Act or proceedings therefor initiated or
threatened by the Commission.
(vii) Except where the failure to file or to obtain such
authorization, approval, consent, license, order,
registration, qualification or decree, individually or in the
aggregate, would not reasonably be expected to result in a
Material Adverse Effect or as disclosed in or incorporated by
reference into the Registration Statement or Prospectus or as
required under state securities or blue sky laws, no filing
with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or
governmental authority or agency, domestic or foreign, is
necessary or required for the due authorization, execution or
delivery by the Company of the Underwriting Agreement or the
applicable Terms Agreement or for the performance by the
Company of the transactions contemplated under the Prospectus,
the Underwriting Agreement, such Terms Agreement or the
Indenture, other than under the 1933 Act, the 1933 Act
Regulations, the 1939 Act and the 1939 Act Regulations, which
have already been made, obtained or rendered, as applicable.
(viii) The execution and delivery of this Agreement, the
fulfillment of the terms herein set forth and the consummation
of the transactions herein contemplated will not conflict with
the charter or by-laws of the Company.
Such opinion shall also state that in the course of such counsel's review
and discussion in connection with the preparation of the Registration Statement
and Prospectus, although such counsel has not independently verified, and is not
passing upon and assumes no responsibility for, the accuracy, completeness or
fairness of, or otherwise verified the statements made therein, other than those
mentioned in (iv) of subsection 4(b)(1) of this Section, no facts have come to
such counsel's attention that lead such counsel to believe (i) that the
Registration Statement or any amendment thereto (except for the financial
statements and other financial data included therein or omitted therefrom
9
and the Statement of Eligibility of the Trustee on Form T-1, as to which such
counsel need not comment), at the time the Registration Statement or any such
amendment became effective or at the time an Annual Report on Form 10-K was
filed (whichever is later), or at the date of the Terms Agreement, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
or (ii) that the Prospectus or any amendment or supplement thereto (except for
the financial statements and other financial data included therein or omitted
therefrom, as to which such counsel need not comment), at the time the
Prospectus was issued, at the time any such amended or supplemented Prospectus
was issued or at the Closing Time, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
In rendering such opinion, such counsel may rely, without independent
verification, (A) as to matters involving the application of laws of any
jurisdiction other than the States of Delaware and New York or the Federal laws
of the United States, to the extent they deem proper and specified in such
opinion, upon the opinion of other counsel of good standing whom they believe to
be reliable and who are reasonably satisfactory to counsel for the Underwriter;
and (B) as to matters of fact, to the extent they deem proper, on certificates
of responsible officers of the Company and public officials. Such counsel may
further state that their opinion and belief are based upon their participation
in the preparation of the Registration Statement and the Prospectus and any
amendments or supplements thereto and review and discussion of the contents
thereof, but are without independent check or verification except as specified.
Such opinion may contain customary assumptions, exceptions, limitations,
qualifications and comments.
(2) The opinion, dated as of the applicable Closing Time, of the
General Counsel or Assistant General Counsel of Schering-Plough
Corporation to the effect that:
(i) The Company is a corporation duly incorporated and
validly existing in good standing under the laws of the State of New
Jersey.
(ii) The Company is duly qualified to transact business and
is in good standing in the States of Arkansas, Georgia, Tennessee
and Texas.
(iii) The execution and delivery of this Agreement, the
Indenture, the fulfillment of the terms herein and therein set forth
and the consummation of the transactions herein and therein
contemplated will not conflict with or constitute a breach of, or
default under, the charter or by-laws of the Company or, except for
such conflicts, breaches or defaults that individually or in the
aggregate would not reasonably be expected to result in a Material
Adverse Effect, any agreement, indenture or other instrument known
to such counsel of which the Company is a party or by which it is
bound, or any law, administrative regulation or administrative or
court order known to him to be applicable to the Company.
10
(iv) Except as disclosed in or incorporated by reference into
the Registration Statement or the Prospectus, to their knowledge,
there is not pending or threatened in writing any action, suit,
proceeding, inquiry or investigation to which the Company or any of
its subsidiaries thereof is a party or to which the assets,
properties or operations of the Company or any of its subsidiaries
thereof is subject, before or by any court or governmental agency or
body, domestic or foreign, which would reasonably be expected to
result in a Material Adverse Effect or which would reasonably be
expected to materially and adversely affect the consummation of the
transactions contemplated under the Underwriting Agreement, the
applicable Terms Agreement or the Indenture or the performance by
the Company of its obligations thereunder.
(v) The Registration Statement and Prospectus, and each
amendment or supplement thereto (except for the financial statements
and other financial data included therein or omitted therefrom and
the Statement of Eligibility of the Trustee on Form T-1, as to which
such counsel need express no opinion), excluding the documents
incorporated by reference therein, as of their respective effective
or issue dates, appear on their face to have been appropriately
responsive in all material respects to the requirements of the 1933
Act, the 1939 Act and the Regulations.
(vi) The documents incorporated by reference in the
Prospectus (except for the financial statements and other financial
data included therein or omitted therefrom, as to which such counsel
need express no opinion), as of the dates they were filed with the
Commission, appear on their face to have been appropriately
responsive in all material respects to the requirements of the 1934
Act and the rules and regulations of the Commission thereunder.
Such opinion shall also state that in the course of such counsel's review
and discussion in connection with the preparation of the Registration Statement
and Prospectus, although such counsel has not independently verified, and is not
passing upon and assumes no responsibility for, the accuracy, completeness or
fairness of, or otherwise verified the statements made therein, no facts have
come to such counsel's attention that lead such counsel to believe (i) that the
Registration Statement or any amendment thereto (except for the financial
statements and other financial data included therein or omitted therefrom and
the Statement of Eligibility of the Trustee on Form T-1, as to which such
counsel need not comment), at the time the Registration Statement or any such
amendment became effective or at the time an Annual Report on Form 10-K was
filed (whichever is later), or at the date of the Terms Agreement, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
or (ii) that the Prospectus or any amendment or supplement thereto (except for
the financial statements and other financial data included therein or omitted
therefrom, as to which such counsel need not comment), at the time the
Prospectus was issued, at the time any such amended or supplemented Prospectus
was issued or at the Closing Time, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the
11
statements therein, in the light of the circumstances under which they were
made, not misleading.
(3) The opinion, dated as of the applicable Closing Time, of
Lowenstein Sandler PC, special counsel of Schering-Plough Corporation to
the effect that:
(i) The Company is a corporation duly incorporated and
validly existing in good standing under the laws of the State of New
Jersey.
(ii) This Agreement has been duly authorized, executed and
delivered by the Company.
(iii) The Indenture pursuant to which Underwritten Securities
are being issued has been duly authorized, executed and delivered by
the Company.
(iv) The Underwritten Securities have been duly authorized by
the Company.
(v) The execution and delivery of this Agreement, the
Indenture, the fulfillment of the terms herein and therein set forth
and the consummation of the transactions herein and therein
contemplated will not conflict with or constitute a breach of, or
default under, the charter or by-laws of the Company or, except for
such conflicts, breaches or defaults that individually or in the
aggregate would not reasonably be expected to result in a Material
Adverse Effect, any agreement, indenture or other instrument known
to such counsel of which the Company is a party or by which it is
bound, or any law, administrative regulation or administrative or
court order known to him to be applicable to the Company.
(vi) Except where the failure to file or to obtain such
authorization, approval, consent, license, order, registration,
qualification or decree, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect or as
disclosed in or incorporated by reference into the Registration
Statement or Prospectus or as required under state securities or
blue sky laws, no filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court
or governmental authority or agency, domestic or foreign, is
necessary or required for the due authorization, execution or
delivery by the Company of the Underwriting Agreement or the
applicable Terms Agreement or for the performance by the Company of
the transactions contemplated under the Prospectus, the Underwriting
Agreement, such Terms Agreement or the Indenture, other than under
the 1933 Act, the 1933 Act Regulations, the 1939 Act and the 1939
Act Regulations, which have already been made, obtained or rendered,
as applicable.
Such opinion may contain customary assumptions, exceptions, limitations,
qualifications and comments.
12
(4) The favorable opinion, dated as of the applicable Closing
Time, of Shearman & Sterling counsel for the Underwriters, with respect to
the matters set forth in (i) to (vii), inclusive, and the last paragraph,
of subsection (b)(1) of this Section.
(c) At the applicable Closing Time, there shall not have been, since the
date of the Terms Agreement or since the respective dates as of which
information is given in the Registration Statement, any Material Adverse Effect
or any development that would likely result in a prospective material adverse
change in the financial condition, or in the results of operations, of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Representative shall have
received a certificate of the President or a Vice President of the Company,
dated as of such Closing Time, to the effect that there has been no such
Material Adverse Effect or any development that would likely result in a
prospective material adverse change in the financial condition, or in the
results of operations, of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and to
the effect that the other representations and warranties of the Company
contained in Section 1 are true and correct with the same force and effect as
though such Closing Time were a Representation Date.
(d) The Representative shall have received from Deloitte & Touche LLP or
other independent certified public accountants acceptable to the Representative
a letter, dated as of the date of the Terms Agreement and delivered at such
time, in form heretofore agreed to containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
or incorporated by reference into the Registration Statement and the Prospectus.
(e) The Representative shall have received from Deloitte & Touche LLP or
other independent certified public accountants acceptable to the Representative
a letter, dated as of the applicable Closing Time, reconfirming or updating the
letter required by subsection (d) of this Section to the extent that may be
reasonably requested by the Representative.
(f) At the applicable Closing Time, counsel for the Underwriters shall
have been furnished with such documents as they may reasonably require for the
purpose of enabling them to pass upon the issuance and sale of the Underwritten
Securities as herein contemplated and related proceedings.
If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Representative by notice to the Company at any time at or prior to the
applicable Closing Time, and such termination shall be without liability of any
party to any other party except as provided in Section 5.
SECTION 5. Payment of Expenses. The Company will pay all expenses incident
to the performance of its obligations under this Agreement, including (i) the
printing and filing of the Registration Statement and all amendments thereto,
(ii) the preparation, issuance and delivery of
13
the Underwritten Securities to the Underwriters, (iii) the fees and
disbursements of the Company's counsel and accountants, (iv) the qualification
of the Underwritten Securities under securities laws in accordance with the
provisions of Section 3(g), including filing fees and the fee and disbursements
of counsel for the Underwriters in connection therewith and in connection with
the preparation of any Blue Sky Surveys and Legal Investment Surveys, (v) the
printing and delivery to the Underwriters in quantities as hereinabove stated of
copies of the registration statements and all amendments thereto, of the
Registration Statement and any amendments thereto, and of the Prospectus and any
amendments or supplements thereto, (vi) the printing and delivery to the
Underwriters of copies of the Indenture and any Blue Sky Surveys and Legal
Investment Surveys, (vii) the fees, if any, of rating agencies for rating the
Underwritten Securities and (viii) the fees and expenses, if any, incurred in
connection with the listing of the Underwritten Securities on any national
securities exchange.
If this Agreement is terminated by the Representative in accordance with
the provisions of Section 4 or Section 9(i), the Company shall reimburse the
Underwriters named in the Terms Agreement for all of their reasonable
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
SECTION 6. Indemnification. (a) The Company agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever arising out of any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement (or any
amendment thereto), or any omission or alleged omission therefrom, of a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Prospectus
(or any amendment or supplement thereto), or the omission or alleged
omission therefrom, of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, unless such untrue statement or omission or
such alleged untrue statement or omission was made in reliance upon and in
conformity with written information furnished to the Company by or on
behalf of any Underwriter through the Representative expressly for use in
the Registration Statement (or any amendment thereto) or the Prospectus
(or any amendment or supplement thereto), or was made in reliance upon the
Form T-1 of the Trustees under the Indenture;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever to the extent of the aggregate amount paid in settlement of any
litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue
statement or omission, if such settlement is effected with the prior
written consent of the Company; and
(iii) against any and all expense whatsoever reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or
14
proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made based upon
written information furnished to the Company by any Underwriter through the
Representative, expressly for use in the Registration Statement (or any
amendment thereto), or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) and provided further that the foregoing
indemnity agreement with respect to any preliminary prospectus shall not inure
to the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased Securities, or any person
controlling any Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, within a reasonable period
of time prior to the written confirmation of the sale of the Securities to such
person, and if the Prospectus (as so amended or supplemented) would have cured
the defect giving rise to such losses, claims, damages or liabilities, unless
such failure is the result of noncompliance by the Company with Section 3(a)
hereof.
(b) Each Underwriter severally agrees that it will indemnify and
hold harmless the Company and each of its officers who signs the Registration
Statement and each of its directors and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company, but
only with respect to statements or omissions made in the Prospectus (or any
amendment or supplement thereto) or the Registration Statement (or any amendment
thereto) in reliance upon and in conformity with written information furnished
to the Company by or on behalf of such Underwriter through the Representative
expressly for use in the Registration Statement (or any amendment thereto) or
the Prospectus (or any amendment or supplement thereto). In case any action
shall be brought against the Company or any person so indemnified based on the
Registration Statement (or any amendment thereto) or the Prospectus (or any
amendment or supplement thereto) and in respect of which indemnity may be sought
against any Underwriter, such Underwriter shall have the rights and duties given
to the Company, and the Company and each person so indemnified shall have the
rights and duties given to the Underwriters, by the provisions of subsection (a)
of this Section.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
any liability hereunder to the extent the indemnifying party is not materially
prejudiced as a result thereof and in any event shall not relieve it from any
liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by the Representative, and,
in the case of parties indemnified pursuant to Section 6(b) above, counsel to
the indemnified parties shall be selected by the Company. An indemnifying party
may participate at its own expense in the defense of any such action; provided,
however,
15
that counsel to the indemnifying party shall not (except with the consent of the
indemnified party) also be counsel to the indemnified party. In no event shall
the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. No indemnifying party shall, without the
prior written consent (which consent will not be unreasonably withheld) of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 or Section 7 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
SECTION 7. Contribution. If the indemnification provisions provided in
Section 6 above should under applicable law be unenforceable in respect of any
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and the Underwriters on the other hand from the
offering of the Underwritten Securities or (ii) if the allocation in clause (i)
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) but also the
relative fault of the Company on the one hand and the Underwriters on the other
hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Underwriters on the
other hand shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company
and the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth on the cover of the Prospectus, bear to
the aggregate public offering price of the Underwritten Securities as set forth
on such cover. The relative fault shall be determined by reference to, among
other things, whether the indemnified party failed to give the notice required
under Section 6 above including the consequences of such failure, and whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Underwriters and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission
of the Company and the Underwriters, directly or through the Representative of
the Underwriters. The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 7. The amount
paid or payable by an indemnified party as a result of the losses, liabilities,
claims, damages or expenses (or actions in respect thereof) referred to above in
this Section 7 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
16
defending any such action or claim. Notwithstanding the provisions of this
Section 7, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Underwritten Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this Section 7 to contribute are several in
proportion to their respective underwriting obligations as set forth opposite
their respective names in the applicable Terms Agreement and not joint.
The obligations of the Company under this Section 7 shall be in addition
to any liability which the Company may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of Section 15 of the 1933 Act; and the obligations of the
Underwriters under this Section 7 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer who signs the Registration Statement and
each director of the Company and to each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act.
SECTION 8. Agreements to Survive Delivery. All agreements contained in
this Agreement, or contained in certificates of officers of the Company
submitted pursuant hereto, shall remain operative and in full force and effect,
regardless of any termination of this Agreement, or any investigation made by or
on behalf of any Underwriter or controlling person, or by or on behalf of the
Company, and shall survive delivery of any Underwritten Securities to the
Underwriters.
SECTION 9. Termination. The Representative may terminate this Agreement,
immediately upon notice to the Company, at any time prior to the applicable
Closing Time (i) if there has been, since the date of the Terms Agreement or
since the respective dates as of which information is given in the Registration
Statement, any Material Adverse Effect or any development that would likely
result in a prospective material adverse change in the financial condition, or
in the results of operations, of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the financial markets
in the United States or in the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the reasonable judgment of the Representative,
impracticable or inadvisable to market the Underwritten Securities or enforce
contracts for the sale of the Underwritten Securities, or (iii) if trading on
the New York Stock Exchange has been suspended or materially limited and such
suspension or limitation makes it, in the reasonable judgment of the
Representative, impracticable or inadvisable to market the Underwritten
Securities or enforce contracts for the sale of the Underwritten Securities, or
(iv) if a banking moratorium has been declared by either Federal or New York
authorities, or (v) a material disruption has occurred in commercial banking or
securities settlement or clearance services in the United States. In the event
of any such termination, (x) the covenants set forth in Section 3 with respect
to any offering of
17
Underwritten Securities shall remain in effect so long as any Underwriter
retains beneficial ownership of any such Underwritten Securities purchased from
the Company pursuant to the applicable Terms Agreement and (y) the covenant set
forth in Section 3(c) (to the extent there has been a sale of securities), the
provisions of Section 5, the indemnity agreement set forth in Section 6, the
contribution agreement set forth in Section 7 and the provisions of Sections 8
and 13 shall remain in effect.
SECTION 10. Default. If one or more of the Underwriters participating in
an offering of Securities shall fail at the applicable Closing Time to purchase
the Underwritten Securities which it is or they are obligated to purchase under
the applicable Terms Agreement (the "Defaulted Securities"), then the
Representative shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth. If, however, during such 24 hours the Representative shall not have
completed such arrangements for the purchase of all of the Defaulted Securities,
then:
(a) if the aggregate principal amount of Defaulted Securities does
not exceed 10% of the aggregate principal amount of the Underwritten
Securities to be purchased pursuant to the Terms Agreement, the
non-defaulting Underwriters named in such Terms Agreement shall be
obligated to purchase the full amount thereof in the proportions that
their respective underwriting obligations thereunder bear to the aggregate
underwriting obligations of all such non-defaulting Underwriters, or
(b) if the aggregate principal amount of Defaulted Securities
exceeds 10% of the aggregate principal amount of the Underwritten
Securities to be purchased pursuant to such Terms Agreement and
arrangements satisfactory to the Representative and the Company for the
purchase of such Defaulted Securities are not made within 24 hours after
such default, the Terms Agreement shall terminate without any liability on
the part of any non-defaulting Underwriters or the Company.
As used in this Section only, the aggregate amount or aggregate principal
amount of Underwritten Securities shall mean the aggregate principal amount of
any Securities.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement and the Terms Agreement.
In the event of a default by any Underwriter or Underwriters as set forth
in this Section, either the Representative or the Company shall have the right
to postpone the applicable Closing Time for a period ending as soon as
practicable after the original Closing Time, but in any event not exceeding
seven days after the original Closing Time, in order that any required changes,
if any, in the Registration Statement or Prospectus or in any other documents or
arrangements may be effected.
SECTION 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard
18
form of telecommunication. Notices to the Underwriters shall be directed to the
Representative; notices to the Company shall be directed to it at 2000 Galloping
Hill Road, Kenilworth, New Jersey 07033, Attention: Mr. Joseph LaRosa, Secretary
and Associate General Counsel.
SECTION 12. Parties. This Agreement shall inure to the benefit of and be
binding upon the Company and any Underwriter who becomes a party hereto, and
their respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the parties hereto or thereto and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the parties and their respective
successors and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Underwritten Securities from any Underwriter shall
be deemed to be a successor by reason merely of such purchase.
SECTION 13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in said State.
SECTION 14. Counterparts. The Terms Agreement may be executed in one or
more counterparts each of which shall be an original, and if executed in more
than one counterpart the executed counterparts shall constitute a single
instrument with the same effect as if the signatures thereto and hereto were
upon the same instrument.
SECTION 15. Effect of Headings. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.
19