AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 11, 2004
Registration No. 333-113222
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SCHERING-PLOUGH CORPORATION
(Exact name of registrant as specified in its charter)
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NEW JERSEY 22-1918501
(State or other (I.R.S. Employer
jurisdiction of Identification Number)
incorporation or
organization)
2000 GALLOPING HILL ROAD
KENILWORTH, NJ 07033
(908) 298-4000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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SUSAN ELLEN WOLF, ESQ.
STAFF VICE PRESIDENT, SECRETARY AND ASSOCIATE GENERAL COUNSEL
2000 GALLOPING HILL ROAD
KENILWORTH, NJ 07033
(908) 298-4000
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, check the following
box. [ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED
MAXIMUM
AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED (1) (1)(2) FEE (3)
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Senior Debt Securities(4)............
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Subordinated Debt Securities(4)......
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Common Shares, par value $0.50
per share(4)(5).....................
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Preferred Shares, par value
$1.00 per share(4)..................
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Depositary Shares(4)................
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Warrants(4)(6)......................
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Stock Purchase Contracts and
Stock Purchase Units(4)............ (7) (7) (7)
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Total............................... $2,000,000,000(8) $2,000,000,000 $253,400(9)
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(1) There are being registered under this registration statement such
indeterminate number of common shares, preferred shares, such
indeterminate principal amount of debt securities, which may be senior or
subordinated, of the registrant and such indeterminate number of warrants,
depository shares, stock purchase contracts and stock purchase units of
the registrant as shall have an aggregate initial offering price not to
exceed $2,000,000,000 or the equivalent amount denominated in one or more
foreign currencies, currency units or composite currencies. Any
securities registered under this registration statement may be sold
separately or as units with other securities registered under this
registration statement.
(2) Estimated for the sole purpose of computing the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933, as amended (the
"Securities Act"). The proposed maximum initial offering price per
security will be determined, from time to time, by the registrant in
connection with the sale by the registrant of the securities registered
under this registration statement.
(3) Calculated pursuant to Rule 457(o) under the Securities Act.
(4) The amount of securities being registered hereunder also includes such
indeterminate number of common shares, preferred shares, depositary
shares, warrants, stock purchase contracts and stock purchase units and
such indeterminate principal amount of debt securities, in each case, as
may be issued upon conversion of, or in exchange for, or upon exercise of,
convertible or exchangeable securities as may be offered pursuant to the
prospectus filed with this registration statement.
(5) Each of the registrant's common shares being registered hereunder, if
issued prior to the termination by the registrant of its rights agreement,
includes Series A Junior Participating Preferred Stock purchase rights.
Prior to the occurrence of certain events, the Series A Junior
Participating Preferred Stock purchase rights will not be exercisable or
evidenced separately from the registrant's common shares and will have no
value except as reflected in the market price of the shares to which they
are attached.
(6) Warrants to purchase the above-referenced securities may be offered and
sold separately or together with other securities.
(7) Omitted pursuant to General Instruction II(D) of Form S-3 under the
Securities Act.
(8) Such amount represents (i) whether issued separately or as part of a
stock purchase unit, (a) the initial offering price of any common shares,
(b) the liquidation preference, or, if different, the initial offering
price of any preferred shares, (c) the principal amount of the debt
securities, and the issue price rather than the principal amount of any
such securities listed at original issue discount, (d) the initial
offering price of any warrants or depositary shares, (e) the purchase
price of any common or preferred shares under any stock purchase contract,
and (f) the initial offering price of any stock purchase units.
(9) A filing fee in the amount of $253,400 was paid in connection with the
original filing of the Registration Statement on Form S-3 on March 2, 2004.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer and sale is not permitted.
SUBJECT TO COMPLETION, DATED MAY 11, 2004.
PROSPECTUS
SCHERING-PLOUGH CORPORATION
$2,000,000,000
COMMON SHARES
PREFERRED SHARES
DEPOSITARY SHARES
SENIOR DEBT SECURITIES
SUBORDINATED DEBT SECURITIES
WARRANTS
STOCK PURCHASE CONTRACTS
STOCK PURCHASE UNITS
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The securities covered by this prospectus may be sold from time to time by
SCHERING-PLOUGH CORPORATION. We may offer the securities independently or
together in any combination, called "units," for sale directly to purchasers or
through underwriters, dealers or agents to be designated at a future date.
We will provide the specific terms and prices of these securities in
supplements to this prospectus. The prospectus supplements may also add to,
update or change information contained in this prospectus. You should read this
prospectus and the applicable prospectus supplement carefully before you invest.
IN PARTICULAR YOU SHOULD READ THE RISK FACTORS ON PAGE 7.
THIS PROSPECTUS MAY NOT BE USED TO OFFER OR SELL ANY SECURITIES UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
Our common shares are traded on the New York Stock Exchange under the
symbol "SGP." On May 10, 2004 the last reported sale price of our common shares
as reported on the New York Stock Exchange was $16.18 per share.
As used in this prospectus, the terms "Schering-Plough Corporation,"
"Schering-Plough," "we," "us," "our" and "the company" refer to Schering-Plough
Corporation, unless the context clearly indicates otherwise.
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We may sell securities to or through underwriters, dealers or agents. For
additional information on the method of sale, you should refer to the section
entitled "Plan of Distribution." The names of any underwriters, dealers or
agents involved in the sale of any securities and the specific manner in which
they may be offered will be set forth in the prospectus supplement covering the
sale of those securities.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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THE DATE OF THIS PROSPECTUS IS , 2004
TABLE OF CONTENTS
PAGE
About This Prospectus........................................................3
Where You Can Find More Information..........................................5
Forward-Looking Statements...................................................7
Risk Factors.................................................................7
The Company..................................................................9
Ratio of Earnings to Fixed Charges..........................................10
Use of Proceeds.............................................................10
Description of Debt Securities..............................................10
Description of Capital Stock................................................20
Description of Depositary Shares............................................29
Description of Warrants.....................................................32
Description of Stock Purchase Contracts and Stock Purchase Units............33
Plan of Distribution........................................................34
Validity of Securities......................................................37
Experts.....................................................................37
ABOUT THIS PROSPECTUS
The information contained in this prospectus is not complete and may be
changed. You should rely only on the information provided in or incorporated by
reference in this prospectus or any prospectus supplement. We have not
authorized anyone else to provide you with different information. We are not
making an offer of any securities in any state where the offer is not permitted.
You should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front cover of
those documents and that any information we have incorporated by reference is
accurate as of any date other than the date of the document incorporated by
reference or such other date referred to in such document, regardless of the
time of delivery of this prospectus or any sale or issuance of a security.
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission (SEC) using a "shelf" registration process.
Under this shelf registration process, we may sell or issue, in one or more
offerings up to a total amount of $2,000,000,000, our:
o common shares;
o preferred shares;
o depositary shares;
o debt securities, in one or more series, which may be senior debt
securities or subordinated debt securities;
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o warrants;
o stock purchase contracts;
o stock purchase units; and
o units consisting of any combination of these securities.
This prospectus provides you with a general description of the securities
we may offer. Each time we sell or issue securities, we will provide a
prospectus supplement that will contain specific information about the terms of
that specific offering of securities and the specific manner in which they may
be offered. The prospectus supplement may also add to, update or change any of
the information contained in this prospectus. The prospectus supplement may also
contain information about any material federal income tax considerations
relating to the securities described in the prospectus supplement. You should
read both this prospectus and the applicable prospectus supplement together with
the additional information described under "Where You Can Find More
Information." THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE A SALE OF SECURITIES
UNLESS IT IS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
This prospectus contains summaries of certain provisions contained in some
of the documents described herein, but reference is made to the actual documents
for complete information. All of the summaries are qualified in their entirety
by the actual documents. Copies of some of the documents referred to herein have
been filed, will be filed or incorporated by reference as exhibits to the
registration statement of which this prospectus is a part, and you may obtain
copies of those documents as described below under "Where You Can Find More
Information."
The registration statement that contains this prospectus (including the
exhibits to the registration statement) contains additional information about us
and the securities offered under this prospectus. That registration statement
can be read at the SEC web site (www.sec.gov) or at the SEC offices mentioned
under the heading "Where You Can Find More Information."
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file at the SEC's public reference room at 450 Fifth Street,
N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room. Such information may also be inspected
at The New York Stock Exchange, 20 Broad Street, New York, New York 10005. You
can also find information about us by visiting our website at
www.schering-plough.com. Information on our website does not form part of this
prospectus.
The SEC allows us to incorporate by reference the information we file with
it into this prospectus, which means that we can disclose important information
to you by referring you to those documents. The information incorporated by
reference is considered to be part of this prospectus, and information that we
file later with the SEC will automatically update and supersede the previously
filed information. We incorporate by reference the documents listed below and
any future filings made with the SEC under Sections 13(a), 13(c), 14, or 15(d)
of the Securities Exchange Act of 1934, as amended, until we complete our
offerings of the securities:
o our Annual Report on Form 10-K, as amended by our Form 10-K/A, for the
year ended December 31, 2003;
o our Quarterly Report on Form 10-Q for the quarter ended March 31,
2004;
o our Current Reports on Form 8-K dated January 26, 2004, February 19,
2004, March 15, 2004, April 22, 2004, and May 6, 2004;
o the information provided under the headings: "Proposal One: Election
of Directors - Nominees for Director," "--Directors Continuing in
Office," "--Directors' Compensation," "--Certain Transactions," "Stock
Ownership" and "Executive Compensation," as set forth in our
definitive Proxy Statement on Schedule 14A on March 15, 2004;
o the description of our common shares contained in Form 8-A filed on
March 16, 1979, and any amendment or report filed for the purpose of
updating such description; and
o our description of the preferred stock purchase rights associated with
our common shares, as set forth on Form 8-A filed on June 30, 1997 and
Form 8-A/A filed on October 1, 1998.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Investor Relations
Schering-Plough Corporation
2000 Galloping Hill Road
5
Kenilworth, NJ 07033
Telephone: (908) 298-4000
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FORWARD-LOOKING STATEMENTS
This prospectus, the prospectus supplement, the documents incorporated by
reference in this prospectus and other written reports and oral statements made
from time to time by the company may contain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements relate to expectations or forecasts of future events.
They use words such as "anticipate," "believe," "could," "estimate," "expect,"
"forecast," "project," "intend," "plan," "potential," "will," and other words
and terms of similar meaning in connection with a discussion of potential future
events, circumstances or future operating or financial performance. You can also
identify forward-looking statements by the fact that they do not relate strictly
to historical or current facts.
In particular, forward-looking statements include statements relating to
future actions, ability to access the capital markets, prospective products, the
status of product approvals, future performance or results of current and
anticipated products, sales efforts, development programs, expenses and programs
to reduce expenses, the cost of and savings from reductions in work force, the
outcome of contingencies such as litigation and investigations, growth strategy
and financial results.
Any or all of our forward-looking statements here or in other publications
may turn out to be wrong. Our actual results may vary materially from those
anticipated in such forward-looking statements as a result of several factors,
some of which are more fully described in the following "Risk Factor" section
and in the accompanying prospectus supplement and our reports to the SEC
incorporated by reference into this prospectus, and there are no guarantees
about the performance of the company. The company does not assume the obligation
to update any forward-looking statement for any reason.
RISK FACTORS
Our business faces significant risks. Before you invest in any of our
securities, in addition to the other information in this prospectus and in the
accompanying prospectus supplement, you should carefully consider the risks and
uncertainties described in the accompanying prospectus supplement and our
reports to the SEC incorporated by reference into this prospectus and the
accompanying prospectus supplement, including the risks and uncertainties
identified under the "Legal, Environmental and Regulatory Matters" footnote
included in the financial statements, and under the captions "Executive
Summary," "Additional Factors Influencing Operations," "Market Risk
Disclosures," and "Cautionary Factors that May Affect Future Results" in the
"Management's Discussion and Analysis of Financial Condition and Results of
Operation" section, in each case, in our quarterly report on Form 10-Q for the
quarter ended March 31, 2004 and in our subsequent reports to the SEC
incorporated by reference into this prospectus and the accompanying prospectus
supplement, as the same may be updated from time to time, and under the caption
"Item 1. Business," in our annual report on Form 10-K for the year ended
December 31, 2003 and in our subsequent reports to the SEC incorporated by
reference into this prospectus and the accompanying prospectus supplement, as
the same may be updated from time to time. These risks may not be the only risks
we face. Additional risks that we do not yet know of or that we currently
believe are immaterial or are based on assumptions that are later determined to
be inaccurate also may impair our business. If any of the risks described in the
accompanying
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prospectus supplement or our reports to the SEC actually occur, our business and
operating results could be materially harmed. This could cause the value of the
purchased securities to decline, and you may lose all or part of your
investment.
8
THE COMPANY
As a worldwide, research-based pharmaceutical company, we and our
subsidiaries are engaged in the discovery, development, manufacturing and
marketing of new therapies and treatment programs that can improve people's
health and extend their lives.
Our and our subsidiaries' primary business involves prescription products
in core product categories, including:
o Allergy and respiratory;
o Anti-infective and anticancer;
o Cardiovasculars;
o Dermatologicals; and
o Central nervous system and other disorders.
We, through various subsidiaries, also have a global animal health business
and leading consumer brands of foot care, over-the-counter and sun care
products.
All references to "Schering-Plough Corporation," "Schering-Plough," "we,"
"us," "our" and "the company" in this prospectus refer to Schering-Plough
Corporation, unless the context clearly indicates otherwise.
Our principal executive offices are located at 2000 Galloping Hill Road,
Kenilworth, NJ 07033, and our telephone number is (908) 298-4000. We were
incorporated in New Jersey in 1970.
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RATIO OF EARNINGS TO FIXED CHARGES
Our consolidated ratio of earnings to fixed charges for the three months
ended March 31, 2004 and for each of the fiscal years ended December 31, 1999
through 2003 is set forth below. For the purpose of computing these ratios,
"earnings" consist of income (loss) before income taxes and equity income from
our cholesterol joint venture with Merck & Co., Inc., plus fixed charges (other
than capitalized interest) and distributed income from the joint venture. "Fixed
charges" consist of interest expense, capitalized interest and one-third of
rentals which we believe to be a reasonable estimate of the interest component
within leases. The ratio was calculated by dividing the sum of the fixed charges
into the sum of the earnings before taxes and fixed charges.
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(Unaudited)
Three
Months Ended
March 31, YEAR ENDED DECEMBER 31,
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2004 2003 2002 2001 2000 1999
---- ---- ---- ---- ---- ----
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Ratio of
earnings to
fixed charges (1.3)x* 0.4x** 33.2x 29.1x 37.1x 45.3x
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*For the quarter ended March 31, 2004, earnings were insufficient to cover fixed
charges by $140 million.
**For the year ended December 31, 2003, earnings were insufficient to cover
fixed charges by $70 million.
USE OF PROCEEDS
Unless the applicable prospectus supplement indicates otherwise, we
currently intend to use the net proceeds from any sale of the offered securities
for general corporate purposes, which may include, among other things,
refinancing of short-term debt or commercial paper, the funding of operating
expenses, capital expenditures, licensing fees and milestone payments and the
payment of settlement amounts, fines, penalties and other investigatory and
litigation costs and expenses. We may temporarily invest funds that are not
immediately needed for these general corporate purposes. If we intend to use the
proceeds to repay outstanding debt, we will provide details about the debt that
is being repaid in the applicable prospectus supplement.
DESCRIPTION OF DEBT SECURITIES
This section contains a description of the general terms and provisions of
the debt securities that may be offered by this prospectus. We may issue senior
debt securities and subordinated debt securities. The debt securities will be
issued in one or more series under an indenture to be entered into between us
and The Bank of New York, as trustee. The indenture may be supplemented from
time to time.
This prospectus briefly outlines some of the indenture provisions. The
following summary of the material provisions of the indenture is qualified in
its entirety by the provisions of the indenture, including definitions of
certain terms used in the indenture. Wherever we refer to particular sections or
defined terms of the indenture, those sections or defined terms are incorporated
by reference in this prospectus or prospectus supplement. You should review the
indenture that is filed as an exhibit to the registration statement for
additional information.
In addition, the material specific financial, legal and other terms as well
as federal income tax consequences particular to securities of each series will
be described in the prospectus supplement relating to the securities of that
series. The prospectus supplement may or may not
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modify the general terms found in this prospectus and will be filed with the
SEC. For a complete description of the terms of a particular series of debt
securities, you should read both this prospectus and the prospectus supplement
relating to that particular series.
GENERAL
The indenture does not limit the amount of debt that we may issue under the
indenture or otherwise. Under the indenture, we may issue the securities in one
or more series with the same or various maturities, at par or a premium, or with
original issue discount. We may also reopen a previous issue of securities and
issue additional securities of the series.
The debt securities covered by this prospectus will be our direct unsecured
obligations. Senior debt securities will rank equally with our other unsecured
and unsubordinated indebtedness. Subordinated debt securities will be unsecured
and subordinated in right of payment to the prior payment in full of all of our
unsecured and senior indebtedness. See "-- Subordination" below. Any of our
secured indebtedness will rank ahead of the debt securities to the extent of the
assets securing such indebtedness. Also, we conduct operations primarily through
our subsidiaries and substantially all of our consolidated assets are held by
our subsidiaries. Accordingly, our cash flow and our ability to meet our
obligations under the debt securities will be largely dependent on the earnings
of our subsidiaries and the distribution or other payment of these earnings to
us in the form of dividends or loans or advances and repayment of loans and
advances from us. Our subsidiaries are separate and distinct legal entities and
have no obligation to pay the amounts which will be due on our debt securities
or to make any funds available for payment of amounts which will be due on our
debt securities. Because we are a holding company, our obligations under our
debt securities will be effectively subordinated to all existing and future
liabilities of our subsidiaries, including, for example, the interest rate swap
contracts described in the discussion of cash management strategies in the
"Liquidity and Financial Resources" section of the Annual Report on Form 10-K
for the year ended December 31, 2003. Therefore, our rights, and the rights of
our creditors, including the rights of the holders of the debt securities to
participate in any distribution of assets of any of our subsidiaries, if such
subsidiary were to be liquidated or reorganized, is subject to the prior claims
of the subsidiary's creditors. To the extent that we may be a creditor with
recognized claims against our subsidiaries, our claims will still be effectively
subordinated to any security interest in, or mortgages or other liens on, the
assets of the subsidiary that are senior to us.
The prospectus supplement relating to any series of debt securities being
offered will include specific terms relating to the offering. These terms will
include, among other terms, some or all of the following, as applicable:
o the title and type of the series of debt securities;
o the total principal amount of the series of debt securities;
o the percentage of the principal amount at which the series of debt
securities will be issued and any payments due if the maturity of the
debt securities is accelerated;
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o the date or dates on which the principal of the debt securities will
be payable;
o the interest rate or rates, if any, and/or the method of determining
such interest rate or rates, if any, which the series of debt
securities will bear;
o the date or dates from which any interest will accrue, or the method
of determining such date or dates, the interest payment date or dates
for the series of debt securities and the regular record date for any
interest payable on any interest payment date;
o any optional or mandatory redemption periods;
o any sinking fund or other provisions that would obligate us to
repurchase or otherwise redeem the series of debt securities;
o whether the series of debt securities will be denominated in, and
whether the principal of and any premium and any interest on the
series of debt securities will be payable in, U.S. dollars or any
foreign currency, currency unit or composite currency;
o any index or other special method we will use to determine the amount
of principal or any premium or interest we will pay on the debt
securities of the series;
o whether the series of debt securities are to be issued in individual
certificates to each holder or in the form of global securities held
by a depositary on behalf of holders;
o any addition to, or modification or deletion of, any event of default
or any covenant specified in the indenture;
o any special tax implications of the series of debt securities,
including provisions for original issue discount securities, if
offered;
o any provisions for convertibility or exchangeability of the debt
securities into or for any other securities;
o whether the debt securities are subject to subordination and the terms
of such subordination; and
o any other specific terms of the series of debt securities.
The prospectus supplement relating to a series of debt securities being
offered pursuant to this prospectus will be attached to the front of this
prospectus.
We may in the future issue debt securities other than the debt securities
described in this prospectus. There is no requirement that any other debt
securities that we issue be issued under
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the indenture. Thus, any other debt securities that we may issue may be issued
under other indentures or documentation containing provisions different from
those included in the indenture or applicable to one or more issues of the debt
securities described in this prospectus.
CONSOLIDATION, MERGER OR SALE
Under the indenture, we have agreed not to consolidate with or merge into
any other corporation or convey or transfer or lease substantially all of our
properties and assets to any person, unless:
o the person is a corporation or limited liability company organized and
validly existing under the laws of the United States or any state
thereof or the District of Columbia;
o the successor corporation expressly assumes by a supplemental
indenture the due and punctual payment of the principal of and any
premium or any interest on all the debt securities and the performance
of every covenant in the indenture that we would otherwise have to
perform as if it were an original party to the indenture;
o immediately after giving effect to the consolidation, merger,
conveyance, transfer or lease, no default or event of default shall
have occurred and be continuing; and
o we deliver to the trustee an officers' certificate and an opinion of
counsel, each stating that the consolidation, merger, conveyance,
transfer or lease and the supplemental indenture comply with these
provisions.
The successor corporation will assume all our obligations under the
indenture as if it were an original party to the indenture. After assuming the
obligations, the successor corporation will have all our rights and powers under
the indenture.
LIMITATIONS ON LIENS
Subject to the exceptions described below and those described under the
section of this prospectus captioned "Exempted Indebtedness" below, we may not,
and may not permit any restricted subsidiary to, create any lien on any
principal property or shares of capital stock of any restricted subsidiary
without equally and ratably securing the debt securities. This restriction will
not apply to permitted liens, including:
o liens on principal property existing at the time of its acquisition or
to secure the payment of all or part of the purchase price;
o with respect to any series of debt securities, any lien existing on
the date of issuance of the debt securities;
o liens on property or shares of capital stock, or securing
indebtedness, of any corporation existing at the time the corporation
becomes a restricted subsidiary or is merged into us or into a
restricted subsidiary;
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o liens which secure debt of a restricted security that is owed to us or
to another subsidiary or our debt that is owed to a restricted
subsidiary;
o liens in connection with the issuance of certain tax-exempt industrial
development or pollution control bonds or other similar bonds;
o liens in favor of any customer arising in respect of payments made by
or on behalf of a customer for goods produced for, or services
rendered to, customers in the ordinary course of business not
exceeding the amount of those payments;
o any extension, renewal or replacement of any lien referred to in any
of the previous paragraphs; and
o statutory liens, liens for taxes or assessments or governmental
charges or levies not yet due or delinquent or which can be paid
without penalty or are being contested in good faith, landlord's liens
on leased property, easements and other liens of a similar nature as
those described above.
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS
Subject to the exceptions described below and those described under the
section of this prospectus captioned "Exempted Indebtedness," sale and leaseback
transactions by us or any restricted subsidiary of any principal property are
prohibited under capital leases (except for leases for a term, including any
renewal thereof, of not more than three years and except for leases between us
and a subsidiary or between subsidiaries) unless:
o after giving effect to the application of proceeds from the sale and
leaseback transaction, we or the restricted subsidiary could incur a
mortgage on the property under the restrictions described above
under the section of this prospectus captioned "Limitations on
Liens" in an amount equal to the attributable debt with respect to
the sale and leaseback transaction without equally and ratably
securing the debt securities; or
o we, within 120 days after the sale or transfer by us or any
restricted subsidiary, apply to the retirement of our funded debt
(which is defined as indebtedness for borrowed money having a
maturity of, or by its terms extendible or renewable for, a period
of more than 12 months after the date of determination of the
amount) an amount equal to the greater of:
(1) the net proceeds of the sale of the principal domestic
property sold and leased under such arrangement; or
(2) the fair market value of the principal domestic property
sold and leased, subject to credits for certain voluntary
retirements of funded debt.
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EXEMPTED INDEBTEDNESS
We or any restricted subsidiary may create or assume liens or enter into
sale and leaseback transactions not otherwise permitted under the provisions
regarding limitations on liens and sale and leaseback transactions described
above, so long as at that time and immediately after giving effect to the lien
or sale and leaseback transaction, the sum of our and our consolidated
subsidiaries' aggregate outstanding indebtedness incurred after the date of the
indenture and secured by the liens relating to principal properties plus that
related to sale and leaseback transactions does not exceed 10% of consolidated
net tangible assets.
CERTAIN DEFINITIONS
The following are the meanings of terms that are important in understanding
the covenants previously described:
o "ATTRIBUTABLE DEBT" means the present value (discounted at a specified
rate each year to be determined by the company to be appropriate and
consistent with U.S. generally accepted accounting principles) of the
obligations for rental payments required to be paid during the
remaining term of any lease of more than 12 months.
o "CONSOLIDATED NET TANGIBLE ASSETS" means the total assets of us and
our consolidated subsidiaries as shown on or reflected in our most
recent quarterly or annual, as applicable, balance sheet, less (1) all
current liabilities, excluding current liabilities which could be
classified as long-term debt under U.S. generally accepted accounting
principles and current liabilities which are by their terms extendible
or renewable at the obligor's option to a time more than 12 months
after the time as of which the amount of current liabilities is being
computed; (2) advances to entities accounted for on the equity method
of accounting; and (3) intangible assets. In this context, "intangible
assets" means the aggregate value, net of any applicable reserves, as
shown on or reflected in our balance sheet, of (a) all trade names,
trademarks, licenses, patents, copyrights and goodwill; (b)
organizational and development costs; (c) deferred charges, other than
prepaid items such as insurance, taxes, interest, commissions, rents
and similar items and tangible assets being amortized; and (d)
unamortized debt discount and expense, less unamortized premium.
o "PRINCIPAL PROPERTY" means any manufacturing facility having a gross
book value in excess of 1% of conSolidated net tangible assets that we
or any restricted subsidiary owns and located within the United
States, excluding its territories and possessions and Puerto Rico,
other than any facility or portion of a facility which our board of
directors reasonably determines is not material to the business
conducted by us and our subsidiaries as a whole.
o "RESTRICTED SUBSIDIARY" means any subsidiary (1) of which
substantially all of the property of is located, and substantially all
of the business is carried on, within the United States, excluding its
territories and possessions and Puerto Rico; and (2)
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which owns or operates one or more principal properties (however,
"restricted subsidiary" does not include subsidiaries primarily
engaged in the business of a finance or insurance company and their
branches).
o "SUBSIDIARY" means each corporation of which more than 50% of the
outstanding voting stock is owned, directly or indirectly, by us or
one or more of our subsidiaries.
EVENTS OF DEFAULT
When we use the term "event of default" in the indenture, here are some
examples of what we mean. An event of default occurs if:
o we fail to make the principal or any premium payment on any debt
security when due;
o we fail to pay interest on any debt security for 45 days after payment
was due;
o we fail to make any sinking fund payment when due;
o we fail to perform any other covenant in the indenture and this
failure continues for 90 days after we receive written notice of it;
or
o we or a court take certain actions relating to the bankruptcy,
insolvency or reorganization of our company.
The supplemental indenture or the form of security for a particular series
of debt securities may include additional events of default or changes to the
events of default described above. The events of default applicable to a
particular series of debt securities will be discussed in the prospectus
supplement relating to such series. A default under our other indebtedness will
not be a default under the indenture for the debt securities covered by this
prospectus, and a default under one series of debt securities will not
necessarily be a default under another series. The trustee may withhold notice
to the holders of debt securities of any default (except for defaults that
involve our failure to pay principal or interest) if it considers such
withholding of notice to be in the best interests of the holders.
If an event of default with respect to outstanding debt securities of any
series occurs and is continuing, then the trustee or the holders of at least 25%
in principal amount of outstanding debt securities of that series may declare,
in a written notice, the principal amount (or specified amount) plus accrued and
unpaid interest on all debt securities of that series to be immediately due and
payable. At any time after a declaration of acceleration with respect to debt
securities of any series has been made, the holders of a majority in principal
amount (or specified amount) of the outstanding debt securities of that series,
by written notice to us and the trustee, may rescind and annul such declaration
and its consequences if:
o we have paid or deposited with the trustee a sum sufficient to pay
overdue interest and overdue principal other than the accelerated
interest and principal; and
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o we have cured or the holders have waived all events of default, other
than the non-payment of accelerated principal and interest with
respect to debt securities of that series, as provided in the
indenture.
We refer you to the prospectus supplement relating to any series of debt
securities that are discount securities for the particular provisions relating
to acceleration of a portion of the principal amount of the discount securities
upon the occurrence of an event of default.
If a default in the performance or breach of the indenture shall have
occurred and be continuing, the holders of not less than a majority in principal
amount of the outstanding securities of all series, by notice to the trustee,
may waive any past event of default or its consequences under the indenture.
However, an event of default cannot be waived with respect to any series of
securities in the following two circumstances:
o a failure to pay the principal of, and premium, if any, or interest on
any security; or
o a covenant or provision that cannot be modified or amended without the
consent of each holder of outstanding securities of that series.
Other than its duties in case of a default, the trustee is not obligated to
exercise any of its rights or powers under the indenture at the request, order
or direction of any holders, unless the holders offer the trustee reasonable
indemnity. If they provide this reasonable indemnity, the holders of a majority
in principal amount outstanding of any series of debt securities may, subject to
certain limitations, direct the time, method and place of conducting any
proceeding or any remedy available to the trustee, or exercising any power
conferred upon the trustee, for any series of debt securities.
We are required to deliver to the trustee an annual statement as to our
fulfillment of all of our obligations under the indenture.
MODIFICATION OF INDENTURE
Under the indenture, our rights and obligations and the rights of the
holders may be modified if the holders of a majority in aggregate principal
amount of the outstanding debt securities of each series affected by the
modification consent to it. However, no modification of the maturity date or
principal or interest payment terms, no modification of the currency for
payment, no impairment of the right to sue for the enforcement of payment at the
maturity of the debt security, no modification of any conversion rights and no
modification reducing the percentage required for modifications or modifying the
foregoing requirements or reducing the percentage required to waive certain
specified covenants is effective against any holder without its consent. In
addition, no supplemental indenture shall adversely affect the rights of any
holder of senior indebtedness with respect to subordination without the consent
of such holder.
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SUBORDINATION
The extent to which a particular series of subordinated debt securities may
be subordinated to our unsecured and unsubordinated indebtedness will be set
forth in the prospectus supplement for any such series and the indenture may be
modified by a supplemental indenture to reflect such subordination provisions.
PAYMENT AND TRANSFER
We will pay principal, interest and any premium on fully registered
securities at the place or places designated by us for such purposes. We will
make payment to the persons in whose names the debt securities are registered on
the close of business on the day or days specified by us. Any other payments
will be made as set forth in the applicable prospectus supplement.
Holders may transfer or exchange fully registered securities at the
corporate trust office of the trustee or at any other office or agency
maintained by us for such purposes, without the payment of any service charge
except for any tax or governmental charge.
GLOBAL SECURITIES
We may issue the securities in whole or in part in the form of one or more
global securities that will be deposited with, or on behalf of, a depositary
identified in the applicable prospectus supplement. We may issue the global
securities in either registered or bearer form, in either temporary or permanent
form.
You may transfer or exchange certificated securities at any office we
maintain for this purpose in accordance with the terms of the indenture. We will
not charge a service fee for any transfer or exchange of certificated
securities, but we may require payment of a sum sufficient to cover any tax or
other governmental charge we are required to pay in connection with a transfer
or exchange.
You may effect the transfer of certificated securities and the right to
receive the principal, premium and interest on certificated securities only by
surrendering the certificate representing those certificated securities and
either reissuance by us or the trustee of the certificate to the new holder or
the issuance by us or the trustee of a new certificate to the new holder.
We are not required to:
o register, transfer or exchange securities of any series during a
period beginning at the opening of business 15 days before the day we
transmit a notice of redemption of securities of the series selected
for redemption and ending at the close of business on the day of the
transmission; or
o register, transfer or exchange any security so selected for redemption
in whole or in part, except the unredeemed portion of any security
being redeemed in part.
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The applicable prospectus supplement will describe the specific terms of
the depositary arrangement with respect to the applicable securities of that
series. We anticipate that the following provisions will apply to all depositary
arrangements.
Once a global security is issued, the depositary will credit on its
book-entry system the respective principal amounts of the individual securities
represented by that global security to the accounts of institutions that have
accounts with the depositary. These institutions are known as participants. The
underwriters for the securities will designate the accounts to be credited.
However, if we have offered or sold the securities either directly or through
agents, we or the agents will designate the appropriate accounts to be credited.
Ownership of beneficial interest in a global security will be limited to
participants or persons that may hold beneficial interests through participants.
Ownership of beneficial interest in a global security will be shown on, and the
transfer of that ownership will be effected only through, records maintained by
the depositary's participants or persons that hold through participants. The
laws of some states require that certain purchasers of securities take physical
delivery of securities. Such limits and such laws may limit the market for
beneficial interests in a global security.
So long as the depositary for a global security, or its nominee, is the
registered owner of a global security, the depositary or nominee will be
considered the sole owner or holder of the securities represented by the global
security for all purposes under the indenture. Except as provided in the
applicable prospectus supplement, owners of beneficial interests in a global
security:
o will not be entitled to have securities represented by global
securities registered in their names;
o will not receive or be entitled to receive physical delivery of
securities in definitive form; and
o will not be considered owners or holders of these securities under the
indenture.
Payments of principal, any premium and interest on the individual
securities registered in the name of the depositary or its nominee will be made
to the depositary or its nominee as the holder of that global security. Neither
we nor the trustee will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests of a global security, or for maintaining, supervising or reviewing any
records relating to beneficial ownership interests and each of us and the
trustee may act or refrain from acting without liability on any information
provided by the depositary.
We expect that the depositary, after receiving any payment of principal,
any premium or interest in respect of a global security, will immediately credit
the accounts of the participants with payment in amounts proportionate to their
respective holdings in principal amount of beneficial interest in a global
security as shown on the records of the depositary. We also expect that payments
by participants to owners of beneficial interests in a global security will be
governed by standing customer instructions and customary practices, as is now
the case with
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securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such participants.
Debt securities represented by a global security will be exchangeable for
debt securities in definitive form of like tenor in authorized denominations
only if the depositary notifies us that it is unwilling or unable to continue as
the depositary and a successor depositary is not appointed by us within 90 days
or we, in our discretion, determine not to require all of the debt securities of
a series to be represented by a global security and notify the trustee of our
decision.
DEFEASANCE
When we use the term "defeasance," we mean discharge from some or all of
our obligations under the indenture. If we deposit with the trustee sufficient
cash or government securities to pay the principal, any premium, interest and
any other sums due to the stated maturity date or a redemption date of the
securities of a particular series, then at our option:
o we will be discharged from our obligations with respect to the
securities of such series; or
o we will no longer be under any obligation to comply with certain
restrictive covenants under the indenture, and certain events of
default will no longer apply to us.
If this happens, the holders of the securities of the affected series will
not be entitled to the benefits of the indenture except for registration of
transfer and exchange of debt securities and replacement of lost, stolen or
mutilated securities. Such holders may look only to such deposited funds or
obligations for payment.
To exercise our defeasance option, we must deliver to the trustee an
opinion of counsel to the effect that the deposit and related defeasance would
not cause the holders of the securities to recognize income, gain or loss for
federal income tax purposes. We must also deliver any ruling to such effect
received from or published by the United States Internal Revenue Service if we
are discharged from our obligations with respect to the securities.
CONCERNING THE TRUSTEE
The trustee, The Bank of New York, and certain of its affiliates have in
the past and currently do provide banking, investment and other services to us,
including acting as a lender under our revolving credit agreement, acting as
trustee under the indenture, dated as of November 26, 2003, acting as a transfer
agent for our common shares and providing cash management services, and may do
so in the future as a part of its regular business.
DESCRIPTION OF CAPITAL STOCK
This section contains a description of our capital stock and stockholder
rights plan. The following summary of the terms of our capital stock and
stockholder rights plan is not meant to be complete and is qualified by
reference to our certificate of incorporation, as amended, our by-
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laws, as amended, and our stockholder rights plan, which are incorporated by
reference as exhibits into the registration statement of which this prospectus
is a part.
As of March 31, 2004, our authorized capital stock consisted of: (i)
2,400,000,000 common shares, par value $0.50 per share, of which 1,471,856,132
were issued and outstanding, 557,830,245 were issued and held in treasury, and
72,000,000 were reserved for issuance under stock incentive plans; and (ii)
50,000,000 preferred shares, par value $1.00 per share, consisting of 1,500,000
shares designated as Series A Junior Participating Preferred Stock ("Series A
preferred stock") and 48,500,000 shares whose designations have not yet been
determined. As of March 31, 2004, no preferred shares were issued and
outstanding.
COMMON SHARES
Holders of our common shares, subject to any preferential rights of the
holders of any preferred shares, are entitled to participate equally and ratably
in dividends when and as declared by our board of directors. In the event of the
liquidation or dissolution of Schering-Plough, holders of our common shares are
entitled to share ratably in the remaining assets of Schering-Plough available
for distribution, subject to prior or equal distribution rights of any holders
of preferred shares. Record holders of common shares are entitled to one vote
per share for the election of directors and upon all matters on which holders of
common shares are entitled to vote. Holders of our common shares do not have
cumulative voting rights. There are no preemptive or conversion rights
applicable to our common shares. All outstanding shares of our common shares are
fully paid and non-assessable.
Each common share has attached thereto a right to purchase 1/200th of a
share of our Series A preferred stock, par value $1.00 per share, at a price of
$100 per 1/200th of a share of Series A preferred stock, subject to adjustment.
For a description and terms of the Rights, see " -- Antitakeover Protections --
Rights Plan."
PREFERRED SHARES
Our certificate of incorporation, as amended, provides that our board of
directors is authorized to issue preferred shares from time to time in one or
more series without stockholder approval. Subject to limitations prescribed by
law and our certificate of incorporation, our board of directors may fix for any
series of preferred shares the number of shares of such series and the voting
powers, designations, preferences, rights, qualifications, limitations and
restrictions of such series. There are currently no preferred shares
outstanding.
Our certificate of incorporation provides that whenever we are in default
as to accrued dividends on preferred shares in an amount equivalent to six
quarterly dividends, the holders of preferred shares, voting separately as a
class, will be entitled to elect two directors at the next annual or special
meeting of our shareholders. The right of holders of preferred shares to elect
two directors will continue until dividends in default on the preferred shares
have been paid in full or declared and a sum sufficient for the payment thereof
has been set aside. During any time that the holders of preferred shares, voting
as a class, are entitled to elect two directors, as described in this paragraph,
the holders of any series of preferred shares normally entitled to
21
participate with the holders of the common shares in the election of directors
shall not be entitled to participate with the holders of the common shares in
the election of such directors.
For any series of preferred shares that we may issue pursuant to this
registration statement, our board of directors will determine and the prospectus
supplement relating to such series will describe:
o The designation and number of shares of such series;
o The rate and time at which, and the preferences and conditions under
which, any dividends will be paid on shares of such series, as well as
whether such dividends are cumulative or non-cumulative and
participating or non-participating;
o Any provisions relating to convertibility or exchangeability of the
shares of such series;
o The rights and preferences, if any, of holders of shares of such
series upon our liquidation, dissolution or winding up of our affairs;
o The voting powers, if any, of the holders of shares of such series;
o Any provisions relating to the redemption of the shares of such
series;
o Whether and upon what terms a sinking fund will be used to purchase or
redeem the shares;
o Any limitations on our ability to pay dividends or make distributions
on, or acquire or redeem, other securities while shares of such series
are outstanding;
o Any conditions or restrictions on our ability to issue additional
shares of such series or other securities;
o Any other relative power, preferences and participating, optional or
special rights of shares of such series, and the qualifications,
limitations or restrictions thereof.
When we issue preferred shares under this prospectus and any applicable
prospectus supplement, the shares will be fully paid and non-assessable and will
not have, or be subject to, any preemptive or similar rights.
SERIES A PREFERRED STOCK
There are currently no shares of our Series A preferred stock, par value
$1.00 per share outstanding. The issuance of Series A preferred stock is
contingent on the satisfaction of certain conditions precedent as described in
"-- Antitakeover Protections -- Rights Plan," below. The description of the
Series A preferred stock reflects corresponding adjustments pursuant to the
anti-dilution provisions of the Series A preferred stock.
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Holders of each share of Series A preferred stock will be entitled to a
minimum preferential quarterly dividend payment of $1.00 per share, but will be
entitled to an aggregate dividend of 200 times the dividend declared per share
of our common shares since the previous quarterly dividend payment. In the event
of liquidation, the holders of Series A preferred stock will be entitled to a
minimum preferential liquidation payment of $100 per share plus accrued and
unpaid dividends, but will be entitled to an aggregate payment of 200 times the
payment made per share of our common shares. Each share of Series A preferred
stock will have 200 votes, voting together with the common shares. Finally, in
the event of any merger, consolidation or other transaction in which our common
shares are exchanged, each share of Series A preferred stock will be entitled to
receive 200 times the amount received per share of common shares. These rights
are protected by customary antidilution provisions. Series A preferred stock
purchasable upon exercise of the Rights (as defined in "-- Antitakeover
Protections -- Rights Plan" below) will not be redeemable.
Because of the nature of the Series A preferred stock's dividend,
liquidation and voting rights, the value of the 1/200th interest in a share of
Series A preferred stock purchasable upon exercise of each Right should
approximate the value of one of our common shares.
If we are in default as to dividend payments or distributions on Series A
preferred stock, we may not declare or pay dividends or make any other
distributions on any shares of stock (i) ranking junior to the Series A
preferred stock (including common shares) or (ii) ranking on a parity with
Series A preferred stock, except for dividends paid ratably on the Series A
preferred stock and the other shares of equal rank thereto; and we may not
redeem, purchase or otherwise acquire for consideration any shares of stock (i)
ranking junior to the Series A preferred stock, except that we may at any time
redeem, purchase or otherwise acquire shares of any such junior stock in
exchange for shares of other junior stock, or (ii) on a parity with Series A
preferred stock, except in accordance with a purchase offer made to all holders
of such shares upon such terms as our board of directors shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes being redeemed or repurchased.
Our certificate of incorporation may not be amended in any manner which
would materially alter or change the powers, preferences or special rights of
Series A preferred stock so as to affect them adversely without the affirmative
vote of the holders of at least 2/3rds of the outstanding Series A preferred
stock, voting together as a single class.
ANTITAKEOVER PROTECTIONS
The following discussion summarizes certain provisions of the New Jersey
Business Corporation Act, as amended (the "NJBCA") and of our certificate of
incorporation and by-laws, which may have the effect of prohibiting, raising the
costs of, or otherwise impeding, a change of control of us, whether by merger,
consolidation or sale of assets or stock (by tender offer or otherwise), or by
other methods.
CLASSIFIED BOARD OF DIRECTORS
Pursuant to our certificate of incorporation and by-laws, our board of
directors is divided into three classes, and the directors are elected by
classes to staggered three-year terms, so that
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one of the three classes of the directors will be elected at each annual meeting
of our shareholders.
Our certificate of incorporation and by-laws further require that any
proposal to either remove a director during his term of office (other than
pursuant to the rights, if any, of the holders of any series of preferred shares
then outstanding) or amend our certificate of incorporation or by-laws with
respect to, among other things, the classification, number, removal, and filling
of vacancies, of directors be approved by the affirmative vote of the holders of
not less than 80% of the voting power of all of the shares entitled to vote
generally in the election of directors, voting together as a single class.
Subject to the rights of the holders of any series of outstanding preferred
shares, any vacancies in our board of directors may be filled by the remaining
directors.
The purpose of these provisions is to prevent directors from being removed
from office prior to the expiration of their respective terms, thus protecting
the safeguards inherent in the classified board structure unless dissatisfaction
with the performance of one or more directors is widely shared by holders of our
common shares. However, these provisions could also have the effect of
increasing from one year to two or three years (depending upon the number of our
common shares held) the amount of time required for an acquiror to obtain
control of us by electing a majority of our board of directors and may also make
the removal of incumbent management more difficult and discourage or render more
difficult certain mergers, tender offers, proxy contests, or other potential
takeover proposals. To the extent that these provisions have the effect of
giving management more bargaining power in negotiations with a potential
acquiror, they could result in management's using the bargaining power not only
to try to negotiate a favorable price for an acquisition, but also to negotiate
more favorable terms for management.
LIMITS ON SHAREHOLDER ACTION BY WRITTEN CONSENT; SPECIAL MEETINGS
Our certificate of incorporation and by-laws provide that, subject to the
rights of the holders of any series of preferred shares then outstanding, any
action required or permitted to be taken by our shareholders must be effected at
a duly called annual or special meeting of shareholders and may not be effected
by any consent in writing by such shareholders unless all of the shareholders
entitled to vote on the matter consent in writing. Our certificate of
incorporation and by-laws also provide that, the affirmative vote of the holders
of not less than 80% of the voting power of all of the shares entitled to vote
generally in the election of directors, voting together as a single class, will
be required to amend our certificate of incorporation or by-laws with respect to
shareholder action by written consent.
Except as otherwise provided by the NJBCA, under our by-laws, a special
meeting of our shareholders may only be called by the Chairman of our board of
directors, our company President or our board of directors and shall be held at
such time and such place and for such purpose(s) as stated in the notice of the
meeting. No business other than that stated in the notice of meeting may be
transacted at any special meeting.
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The above provisions may have the effect of delaying consideration of a
stockholder proposal until the next annual meeting unless a special meeting is
called by the Chairman of our board of directors, our company President or our
board of directors.
CORPORATION'S BEST INTEREST
Under the NJBCA, the director of a New Jersey corporation may consider, in
discharging his or her duties to the corporation and in determining what he or
she reasonably believes to be in the best interest of the corporation, any of
the following (in addition to the effects of any action on shareholders): (i)
the effects of the action on the corporation's employees, suppliers, creditors
and customers, (ii) the effects of the action on the community in which the
corporation operates, and (iii) the long-term as well as the short-term interest
of the corporation and its shareholders, including the possibility that these
interests may be best served by the continued independence of the corporation.
If, on the basis of any of the foregoing factors, the board of directors
determines that any proposal or offer to acquire the corporation is not in the
best interest of the corporation, it may reject such proposal or offer, in which
event the board of directors will have no duty to remove any obstacles to, or
refrain from impeding, such proposal or offer.
REQUIRED VOTE FOR AUTHORIZATION OF CERTAIN ACTIONS; ANTI-GREENMAIL PROVISIONS
Under the NJBCA, the consummation of a merger or consolidation of a New
Jersey corporation organized subsequent to January 1, 1969, such as us, requires
the approval of such corporation's board of directors and the affirmative vote
of a majority of the votes cast by each of the holders of shares of the
corporation entitled to vote thereon and any class or series entitled to vote
thereon as a class, unless such corporation is the surviving corporation, and:
(i) such corporation's certificate of incorporation is not amended, (ii) the
stockholders of the surviving corporation whose shares were outstanding
immediately before the effective date of the merger will hold the same number of
shares, with identical designations, preferences, limitations, and rights,
immediately after the merger or consolidation, as the case may be, and (iii) the
number of voting shares and participating shares outstanding after the merger
will not exceed by more than 40% the total number of voting or participating
shares of the surviving corporation immediately before the merger. Similarly, in
the case of a New Jersey corporation organized subsequent to 1969, such as us, a
sale of all or substantially all of a corporation's assets other than in the
ordinary course of business, or a voluntary dissolution of a corporation,
requires the approval of such corporation's board of directors and the
affirmative vote of a majority of the votes cast by each of the holders of
shares of the corporation entitled to vote thereon and any class or series
entitled to vote thereon as a class.
Our certificate of incorporation contains an "anti-greenmail" provision
pursuant to which we or our subsidiaries may not purchase shares of voting stock
from a 5% or greater shareholder at a per share price in excess of the market
price unless (a) approved by the affirmative vote of the holders of the amount
of voting power of the voting stock equal to the sum of the voting power of such
5% or greater shareholder and a majority of the voting power of the remaining
outstanding shares of voting stock, voting together as a single class, or (b)
the purchase is made pursuant to an offer made available to all holders of the
same class of stock or an open market purchase.
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RESTRICTIONS ON BUSINESS COMBINATIONS WITH CERTAIN STOCKHOLDERS
The NJBCA provides that no corporation organized under the laws of New
Jersey with its principal executive offices or significant operations located in
New Jersey (a "resident domestic corporation") may engage in any "business
combination" (as defined in the NJBCA) with any interested stockholder
(generally, a 10% or greater stockholder) of such corporation for a period of
five years following such interested stockholder's stock acquisition, unless
such business combination is approved by the board of directors of such
corporation prior to the stock acquisition. A resident domestic corporation,
such as us, cannot opt out of the foregoing provisions of the NJBCA.
In addition, no resident domestic corporation may engage, at any time, in
any business combination with any interested stockholder of such corporation
other than: (i) a business combination approved by the board of directors of
such corporation prior to the stock acquisition, (ii) a business combination
approved by the affirmative vote of the holders of two-thirds of the voting
stock not beneficially owned by such interested stockholder at a meeting called
for such purpose, or (iii) a business combination in which the interested
stockholder pays a formula price designed to ensure that all other stockholders
receive at least the highest price per share paid by such interested
stockholder.
In connection with business combinations with any ten percent stockholder,
our certificate of incorporation contains provisions requiring the approval of
at least 80% of the voting power of all of the then outstanding shares of
capital stock of the corporation entitled to vote in the election of directors
voting together as a single class; provided, however, that such higher vote
requirements do not apply if the business combination (i) is approved by a
majority of directors in office prior to the stock acquisition and not
affiliated with the interested stockholders or by their successors recommended
by a majority of such unaffiliated, pre-stock-acquisition date directors, or
(ii) meets certain fair price formulas set forth in our certificate of
incorporation. Any amendments or repeal of the business combination provisions
require the affirmative vote of the holders of 80% or more of the voting power
of all of the shares entitled to vote, voting together as a single class.
RIGHTS PLAN
On June 24, 1997, our board of directors declared a dividend of one
preferred share purchase right (a "Right") for each of our common shares
outstanding at the close of business on July 10, 1997 (the "Record Date") to the
stockholders of record on that date. Each Right entitles the registered holder
to purchase from us 1/200th of a share of our Series A preferred stock, at a
price of $100 per 1/200th of a share of Series A preferred stock (the "Purchase
Price"), subject to adjustment. The description and terms of the Rights are set
forth in a Rights Agreement (the "Rights Agreement"), dated as of June 24, 1997,
between us and The Bank of New York, as Rights Agent (the "Rights Agent"). This
summary description of the Rights and the Rights Agreement does not purport to
be complete and is qualified in its entirety by reference to the Rights
Agreement, and the certificates of adjustments with respect thereto, each of
which is incorporated by reference into this prospectus.
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Until the earlier to occur of: (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") have acquired beneficial ownership of 20% or more of the outstanding
common shares, or (ii) 10 business days (or such later date as may be determined
by action of our board of directors prior to such time as any person or group of
affiliated persons becomes an Acquiring Person) following the commencement of,
or announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 20% or more of the outstanding common shares (the earlier of such dates
being called the "Distribution Date"), the Rights will be evidenced, with
respect to any of our common share certificates outstanding as of the Record
Date, by such common share certificate with a copy of the summary of Rights
attached thereto.
The Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferred with and
only with common shares. Until the Distribution Date (or earlier redemption or
expiration of the Rights), new common share certificates issued after the Record
Date upon transfer or new issuance of our common shares will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date (or
earlier redemption or expiration of the Rights), the surrender for transfer of
any certificates for our common shares outstanding as of the Record Date, even
without such notation or a copy of the summary of Rights being attached thereto,
will also constitute the transfer of the Rights associated with the common
shares represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of our common shares as of
the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on July 10, 2007 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by us, in each case, as described below.
The Purchase Price payable, and the number of shares of Series A preferred
stock, or other securities or property, issuable upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution: (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of,
Series A preferred stock, (ii) upon the grant to holders of Series A preferred
stock of certain rights or warrants to subscribe for or purchase Series A
preferred stock at a price, or securities convertible into Series A preferred
stock with a conversion price, less than the then-current market price of Series
A preferred stock, or (iii) upon the distribution to holders of Series A
preferred stock of evidences of indebtedness or assets (excluding regular
periodic cash dividends paid out of earnings or retained earnings or dividends
payable in Series A preferred stock) or of subscription rights or warrants
(other than those referred to above).
The number of outstanding Rights and the number of 1/200ths of a share of
Series A preferred stock issuable upon exercise of each Right are also subject
to adjustment in the event of a stock split of or a stock dividend on our common
shares payable in our common shares or subdivisions, consolidations or
combinations of our common shares occurring, in any such case, prior to the
Distribution Date.
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In the event that we are acquired in a merger or other business combination
transaction or 50% or more of our consolidated assets or earning power are sold
after a person or group has become an Acquiring Person, proper provision will be
made so that each holder of a Right will thereafter have the right to receive,
upon the exercise thereof at the then current exercise price of the Right, that
number of shares of common stock of the acquiring company which at the time of
such transaction will have a market value of two times the exercise price of the
Right. In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, proper provision shall be made so that each holder
of a Right, other than Rights beneficially owned by the Acquiring Person (which
will thereafter be void), will thereafter have the right to receive upon
exercise that number of common shares having a market value of two times the
exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the outstanding
common shares, our board of directors may exchange the Rights (other than Rights
owned by such person or group which will have become void), in whole or in part,
at an exchange ratio of one common share, or 1/200th of a share of Series A
preferred stock (or of a share of a class or series of our preferred shares
having equivalent rights, preferences and privileges), per Right (subject to
adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Series A preferred stock will be
issued (other than fractions which are integral multiples of 1/100th of a share
of Series A preferred stock, which may, at our election, be evidenced by
depositary receipts) and in lieu thereof, a payment in cash will be made based
on the market price of Series A preferred stock on the last trading day prior to
the date of exercise.
At any time prior to the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 20% or more of the outstanding
common shares, our board of directors may redeem the Rights in whole, but not in
part, at a price of $0.005 per Right (the "Redemption Price"). The redemption of
the Rights may be made effective at such time on such basis with such conditions
as our board of directors in its sole discretion may establish. Immediately upon
any redemption of the Rights, the right to exercise the Rights will terminate
and the only right of the holders of Rights will be to receive the Redemption
Price.
The terms of the Rights may be amended by our board of directors without
the consent of the holders of the Rights, including an amendment to lower
certain thresholds described above to not less than the greater of: (i) the sum
of .001% and the largest percentage of the outstanding common shares then known
to us to be beneficially owned by any person or group of affiliated or
associated persons, and (ii) 10%, except that from and after such time as any
person or group of affiliated or associated persons becomes an Acquiring Person
no such amendment may adversely affect the interests of the holders of the
Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as one of our stockholders, including, without limitation, the right to
vote or to receive dividends.
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The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire us on terms
not approved by our board of directors, except pursuant to an offer conditioned
on a substantial number of Rights being acquired. The Rights should not
interfere with any merger or other business combination approved by our board of
directors since the Rights may be redeemed by us at the Redemption Price prior
to the time that a person or group has acquired beneficial ownership of 20% or
more of our common shares.
DESCRIPTION OF DEPOSITARY SHARES
We may elect to offer fractional shares of preferred shares rather than
full shares of preferred shares. In that event, we will issue receipts for
depositary shares, and each of these depositary shares will represent a fraction
(to be set forth in the applicable prospectus supplement) of a share of a
particular series of preferred shares.
The shares of any series of preferred shares underlying the depositary
shares will be deposited under a deposit agreement between us and a bank or
trust company selected by us. The depositary will have its principal office in
the United States and a combined capital and surplus of at least $50,000,000.
Subject to the terms of the deposit agreement, each owner of a depositary share
will be entitled, in proportion to the applicable fraction of a share of
preferred shares underlying the depositary share, to all the rights and
preferences of the preferred shares underlying that depositary share. Those
rights may include dividend, voting, redemption, conversion and liquidation
rights.
The depositary shares will be evidenced by depositary receipts issued under
a deposit agreement. Depositary receipts will be distributed to those persons
purchasing the fractional shares of preferred shares underlying the depositary
shares, in accordance with the terms of the offering. The following description
of the material terms of the deposit agreement, the depositary shares and the
depositary receipts is only a summary and you should refer to the forms of the
deposit agreement and depositary receipts that will be filed with the SEC in
connection with the offering of the specific depositary shares for more complete
information.
Pending the preparation of definitive engraved depositary receipts, the
depositary may, upon our written order, issue temporary depositary receipts
substantially identical to the definitive depositary receipts but not in
definitive form. These temporary depositary receipts entitle their holders to
all the rights of definitive depositary receipts. Temporary depositary receipts
will then be exchangeable for definitive depositary receipts at our expense.
DIVIDENDS AND OTHER DISTRIBUTIONS
The depositary will distribute all cash dividends or other cash
distributions received with respect to the underlying stock to the record
holders of depositary shares in proportion to the number of depositary shares
owned by those holders.
If there is a distribution other than in cash, the depositary will
distribute property received by it to the record holders of depositary shares
that are entitled to receive the distribution, unless the depositary determines
that it is not feasible to make the distribution. If this occurs, the
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depositary may, with our approval, sell the property and distribute the net
proceeds from the sale to the applicable holders.
WITHDRAWAL OF UNDERLYING PREFERRED SHARES
Unless we say otherwise in a prospectus supplement, holders may surrender
depositary receipts at the principal office of the depositary and, upon payment
of any unpaid amount due to the depositary, be entitled to receive the number of
whole shares of underlying preferred shares and all money and other property
represented by the related depositary shares. We will not issue any partial
shares of preferred shares. If the holder delivers depositary receipts
evidencing a number of depositary shares that represent more than a whole number
of shares of preferred shares, the depositary will issue a new depositary
receipt evidencing the excess number of depositary shares to that holder.
REDEMPTION OF DEPOSITARY SHARES
If a series of preferred shares represented by depositary shares is subject
to redemption, the depositary shares will be redeemed from the proceeds received
by the depositary resulting from the redemption, in whole or in part, of that
series of underlying stock held by the depositary. The redemption price per
depositary share will be equal to the applicable fraction of the redemption
price per share payable with respect to that series of underlying stock.
Whenever we redeem shares of underlying stock that are held by the depositary,
the depositary will redeem, as of the same redemption date, the number of
depositary shares representing the shares of underlying stock so redeemed. If
fewer than all the depositary shares are to be redeemed, the depositary shares
to be redeemed will be selected by lot or proportionately or other equitable
method, as may be determined by the depositary.
VOTING
Upon receipt of notice of any meeting at which the holders of the
underlying stock are entitled to vote, the depositary will mail the information
contained in the notice to the record holders of the depositary shares
underlying the preferred shares. Each record holder of the depositary shares on
the record date (which will be the same date as the record date for the
underlying stock) will be entitled to instruct the depositary as to the exercise
of the voting rights pertaining to the amount of the underlying stock
represented by that holder's depositary shares. The depositary will then try, as
far as practicable, to vote the number of shares of preferred shares underlying
those depositary shares in accordance with those instructions, and we will agree
to take all reasonable actions which may be deemed necessary by the depositary
to enable the depositary to do so. The depositary will not vote the underlying
shares to the extent it does not receive specific instructions with respect to
the depositary shares representing the preferred shares.
CONVERSION OR EXCHANGE OF PREFERRED SHARES
If the deposited preferred shares are convertible into or exchangeable for
other securities, the following will apply. The depositary shares, as such, will
not be convertible into or exchangeable for such other securities. Rather, any
holder of the depositary shares may
30
surrender the related depositary receipts, together with any amounts payable by
the holder in connection with the conversion or the exchange, to the depositary
with written instructions to cause conversion or exchange of the preferred
shares represented by the depositary shares into or for such other securities.
If only some of the depositary shares are to be converted or exchanged, a new
depositary receipt or receipts will be issued for any depositary shares not to
be converted or exchanged.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement may at any time be amended by agreement
between us and the depositary. However, any amendment which materially and
adversely alters the rights of the holders of depositary shares will not be
effective unless the amendment has been approved by the holders of at least a
majority of the depositary shares then outstanding. The deposit agreement may be
terminated by us upon not less than 60 days' notice whereupon the depositary
shall deliver or make available to each holder of depositary shares, upon
surrender of the depositary receipts held by such holder, the number of whole or
fractional shares of preferred shares represented by such receipts. The deposit
agreement will automatically terminate if (a) all outstanding depositary shares
have been redeemed or converted into or exchanged for any other securities into
or for which the underlying preferred shares are convertible or exchangeable or
(b) there has been a final distribution of the underlying stock in connection
with our liquidation, dissolution or winding up and the underlying stock has
been distributed to the holders of depositary receipts.
CHARGES OF DEPOSITARY
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We will also pay
charges of the depositary in connection with its duties in accordance with the
deposit agreement. Holders of depositary receipts will pay transfer and other
taxes and governmental and other charges, including a fee for any permitted
withdrawal of shares of underlying stock upon surrender of depositary receipts,
as are expressly provided in the deposit agreement to be for their accounts.
REPORTS
The depositary will forward to holders of depositary receipts all reports
and communications from us that we deliver to the depositary and that we are
required to furnish to the holders of the underlying stock.
LIMITATION ON LIABILITY
Neither we nor the depositary will be liable if either of us is prevented
or delayed by law or any circumstance beyond our control in performing our
respective obligations under the deposit agreement. Our obligations and those of
the depositary will be limited to performance in good faith of our respective
duties under the deposit agreement. Neither we nor the depositary will be
obligated to prosecute or defend any legal proceeding in respect of any
depositary shares or underlying stock unless satisfactory indemnity is
furnished. We and the depositary may rely upon written advice of counsel or
accountants, or upon information provided by persons
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presenting underlying stock for deposit, holders of depositary receipts or other
persons believed to be competent and on documents believed to be genuine.
In the event the depositary receives conflicting claims, requests or
instructions from any holders of depositary shares, on the one hand, and us, on
the other, the depositary will act on our claims, requests or instructions.
RESIGNATION AND REMOVAL OF DEPOSITARY
The depositary may resign at any time by delivering notice to us of its
election to resign. We may remove the depositary at any time. Any resignation or
removal will take effect upon the appointment of a successor depositary and its
acceptance of the appointment. The successor depositary must be appointed within
60 days after delivery of the notice of resignation or removal and must be a
bank or trust company having its principal office in the United States and
having a combined capital and surplus of at least $50,000,000.
DESCRIPTION OF WARRANTS
The following is a general description of the terms of the warrants we may
issue from time to time. This description is subject to the detailed provisions
of a warrant agreement to be entered into between us and a warrant agent we
select at the time of issue and the description in the prospectus supplement
relating to the applicable series of warrants.
GENERAL
We may issue warrants to purchase debt securities, preferred shares,
depositary shares, common shares or any combination thereof. Such warrants may
be issued independently or together with any such securities and may be attached
or separate from such securities. We may issue each series of warrants under a
separate warrant agreement to be entered into between a warrant agent and us.
The warrant agent will act solely as our agent and will not assume any
obligation or relationship of agency for or with holders or beneficial owners of
warrants.
A prospectus supplement will describe the particular terms of any series of
warrants we may issue, including the following:
o the title of such warrants;
o the aggregate number of such warrants;
o the price or prices at which such warrants will be issued;
o the currency or currencies, including composite currencies, in which
the price of such warrants may be payable;
o the designation and terms of the securities purchasable upon exercise
of such warrants and the number of such securities issuable upon
exercise of such warrants;
32
o the price at which and the currency or currencies, including composite
currencies, in which the securities purchasable upon exercise of such
warrants may be purchased;
o the date on which the right to exercise such warrants shall commence
and the date on which such right will expire;
o whether such warrants will be issued in registered form or bearer
form;
o if applicable, the minimum or maximum amount of such warrants which
may be exercised at any one time;
o if applicable, the designation and terms of the securities with which
such warrants are issued and the number of such warrants issued with
each such security;
o if applicable, the date on and after which such warrants and the
related securities will be separately transferable;
o information with respect to book-entry procedures, if any;
o if applicable, a discussion of certain U.S. federal income tax
considerations; and
o any other terms of such warrants, including terms, procedures and
limitations relating to the exchange and exercise of such warrants.
AMENDMENTS AND SUPPLEMENTS TO WARRANT AGREEMENT
We and the warrant agent may amend or supplement the warrant agreement for
a series of warrants without the consent of the holders of the warrants issued
thereunder to effect changes that are not inconsistent with the provisions of
the warrants and that do not materially and adversely affect the interests of
the holders of the warrants.
DESCRIPTION OF STOCK PURCHASE CONTRACTS
AND STOCK PURCHASE UNITS
The following is a general description of the terms of the stock purchase
contracts and stock purchase units we may issue from time to time.
The applicable prospectus supplement will describe the terms of any stock
purchase contracts or stock purchase units and, if applicable, prepaid stock
purchase contracts. The description in the prospectus supplement will be
qualified in its entirety by reference to (1) the stock purchase contracts, (2)
the collateral arrangements and depositary arrangements, if applicable, relating
to such stock purchase contracts or stock purchase units and (3) if applicable,
the prepaid stock purchase contracts and the document pursuant to which such
prepaid stock purchase contracts will be issued.
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STOCK PURCHASE CONTRACTS
We may issue stock purchase contracts, including contracts obligating
holders to purchase from us, and obligating us to sell to holders, a fixed or
varying number of common shares, preferred shares or depositary shares at a
future date or dates. The consideration per share of common shares, preferred
shares or depositary shares may be fixed at the time that the stock purchase
contracts are issued or may be determined by reference to a specific formula set
forth in the stock purchase contracts. Any stock purchase contract may include
anti-dilution provisions to adjust the number of shares issuable pursuant to
such stock purchase contract upon the occurrence of certain events.
STOCK PURCHASE UNITS
The stock purchase contracts may be issued separately or as a part of units
("stock purchase units"), consisting of a stock purchase contract and debt
securities, preferred securities or debt or equity obligations of third parties,
including U.S. Treasury securities, in each case securing holders' obligations
to purchase common shares, preferred shares or depositary shares under the stock
purchase contracts. The stock purchase contracts may require us to make periodic
payments to holders of the stock purchase units, or vice versa, and such
payments may be unsecured or prefunded and may be paid on a current or on a
deferred basis. The stock purchase contracts may require holders to secure their
obligations thereunder in a specified manner and in certain circumstances we may
deliver newly issued prepaid stock purchase contracts upon release to a holder
of any collateral securing such holder's obligations under the original stock
purchase contract. Any one or more of the above securities, common shares or the
stock purchase contracts or other collateral may be pledged as security for the
holders' obligations to purchase or sell, as the case may be, the common shares,
preferred shares or depositary shares under the stock purchase contracts. The
stock purchase contracts may also allow the holders, under certain
circumstances, to obtain the release of the security for their obligations under
such contracts by depositing with the collateral agent as substitute collateral,
treasury securities with a principal amount at maturity equal to the collateral
so released or the maximum number of shares deliverable by such holders under
stock purchase contracts requiring the holders to sell common shares, preferred
shares or depositary shares to us.
PLAN OF DISTRIBUTION
We may sell the securities covered by this prospectus in any of three ways
(or in any combination):
o through underwriters, dealers or remarketing firms;
o directly to one or more purchasers, including to a limited number of
institutional purchasers; or
o through agents.
Any such dealer or agent, in addition to any underwriter, may be deemed to
be an underwriter within the meaning of the Securities Act of 1933, as amended
(the "Securities Act").
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Any discounts or commissions received by an underwriter, dealer, remarketing
firm or agent on the sale or resale of securities may be considered by the SEC
to be underwriting discounts and commissions under the Securities Act.
In addition, we may enter into derivative transactions with third parties,
or sell securities not covered by this prospectus to third parties in privately
negotiated transactions. If the applicable prospectus supplement indicates, in
connection with such a transaction, the third parties may, pursuant to this
prospectus and the applicable prospectus supplement, sell securities covered by
this prospectus and the applicable prospectus supplement. If so, the third party
may use securities borrowed from us or others to settle such sales and may use
securities received from us to close out any related short positions. We may
also loan or pledge securities covered by this prospectus and the applicable
prospectus supplement to third parties, who may sell the loaned securities or,
in an event of default in the case of a pledge, sell the pledged securities
pursuant to this prospectus and the applicable prospectus supplement.
The terms of the offering of the securities with respect to which this
prospectus is being delivered will be set forth in the applicable prospectus
supplement and will include among other things:
o the type of and terms of the securities offered;
o the price of the securities;
o the proceeds to us from the sale of the securities;
o the names of the securities exchanges, if any, on which the securities
are listed;
o the name of any underwriters, dealers, remarketing firms or agents and
the amount of securities underwritten or purchased by each of them;
o any over-allotment options under which underwriters may purchase
additional securities from us;
o any underwriting discounts, agency fees or other compensation to
underwriters or agents; and
o any discounts or concessions which may be allowed or reallowed or paid
to dealers.
If underwriters are used in the sale of securities, such securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The securities may be offered to the public either through underwriting
syndicates represented by managing underwriters or directly by one or more
underwriters acting alone. Unless otherwise set forth in the applicable
prospectus supplement, the obligations of the underwriters to purchase the
securities described in the applicable prospectus supplement will be subject to
certain conditions precedent, and the underwriters will
35
be obligated to purchase all such securities if any are purchased by them. Any
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
If dealers acting as principals are used in the sale of any securities,
such securities will be acquired by the dealers, as principals, and may be
resold from time to time in one or more transactions at varying prices to be
determined by the dealer at the time of resale. The name of any dealer and the
terms of the transaction will be set forth in the prospectus supplement with
respect to the securities being offered.
Securities may also be offered and sold, if so indicated in the applicable
prospectus supplement, in connection with a remarketing upon their purchase, in
accordance with a redemption or repayment pursuant to their terms, or otherwise,
by one or more firms, which we refer to herein as the "remarketing firms,"
acting as principals for their own accounts or as our agents, as applicable. Any
remarketing firm will be identified and the terms of its agreement, if any, with
us and its compensation will be described in the applicable prospectus
supplement. Remarketing firms may be deemed to be underwriters, as that term is
defined in the Securities Act in connection with the securities remarketed
thereby.
The securities may be sold directly by us or through agents designated by
us from time to time. In the case of securities sold directly by us, no
underwriters or agents would be involved. Any agents involved in the offer or
sale of the securities in respect of which this prospectus is being delivered,
and any commissions payable by us to such agents, will be set forth in the
applicable prospectus supplement. Unless otherwise indicated in the applicable
prospectus supplement, any such agent will be acting on a best efforts basis for
the period of its appointment.
GENERAL
We may authorize agents, underwriters or dealers to solicit offers by
certain specified institutions to purchase the securities to which this
prospectus and the applicable prospectus supplement relates from us at the
public offering price set forth in the applicable prospectus supplement, plus,
if applicable, accrued interest, pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the future. Such
contracts will be subject only to those conditions set forth in the applicable
prospectus supplement, and the applicable prospectus supplement will set forth
the commission payable for solicitation of such contracts.
Agents, dealers, underwriters and remarketing firms may be entitled, under
agreements entered into with us to indemnification by us against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
to payments they may be required to make in respect thereof. Agents, dealers,
underwriters and remarketing firms may be customers of, engage in transactions
with, or perform services for us or our subsidiaries in the ordinary course of
business.
Unless otherwise indicated in the applicable prospectus supplement, all
securities offered by this prospectus, other than our common shares, which are
listed on the New York Stock Exchange, will be new issues with no established
trading market. We may elect to list any series
36
of securities on an exchange, and in the case of our common shares, on any
additional exchange, but, unless otherwise specified in the applicable
prospectus supplement, we shall not be obligated to do so. In addition,
underwriters will not be obligated to make a market in any securities. No
assurance can be given regarding the activity of trading in, or liquidity of,
any securities.
Any underwriter may engage in overallotment, stabilizing transactions,
short covering transactions and penalty bids in accordance with Regulation M
under the Exchange Act. Overallotment involves sales in excess of the offering
size, which create a short position. Stabilizing transactions permit bids to
purchase the underlying security so long as the stabilizing bids do not exceed a
specified maximum. Short covering transactions involve purchases of the
securities in the open market after the distribution is completed to cover short
positions. Penalty bids permit the underwriters to reclaim a selling concession
from a dealer when the securities originally sold by the dealer are purchased in
a covering transaction to cover short positions. Those activities may cause the
price of the securities to be higher than it would otherwise be. If commenced,
the underwriters may discontinue any of the activities at any time.
VALIDITY OF SECURITIES
Unless otherwise indicated in a supplement to this prospectus, Lowenstein
Sandler PC, Roseland, New Jersey, and Joseph J. LaRosa, Esq., our Vice
President, Legal Affairs, will pass upon the validity of the securities for us.
As of May 6, 2004, Mr. LaRosa owned, directly and indirectly, 15,209 common
shares and options to purchase 160,780 additional common shares, 16,480 deferred
stock units which will vest over time and 16,661.01 units under our Long-Term
Performance Plan which will vest over time and are performance based. Lowenstein
Sandler PC has from time to time provided legal services to us.
EXPERTS
The consolidated financial statements and the related financial statement
schedule incorporated in this prospectus by reference from the Company's Annual
Report on Form 10-K for the year ended December 31, 2003 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
With respect to the unaudited interim financial information for the periods
ended March 31, 2004 and 2003 which is incorporated herein by reference,
Deloitte & Touche LLP have applied limited procedures in accordance with
professional standards for a review of such information. However, as stated in
their report included in the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2004 and incorporated by reference herein, they did not
audit and they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their report on such information should
be restricted in light of the limited nature of the review procedures applied.
Deloitte & Touche LLP are not subject to the liability provisions of Section 11
of the Securities Act of 1933 for their report on the unaudited interim
financial information because that report is not a "report" or a "part" of the
registration statement prepared or certified by an accountant within the meaning
of Sections 7 and 11 of the Securities Act.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses payable by the registrant in connection with the
offering described in this Registration Statement are as follows:
SEC Registration fee................... $ 253,400
Rating Agency fees..................... 350,000
Trustees fees.......................... 20,000
Legal fees and expenses................ 500,000
Blue Sky fees and expenses............. 5,000
Accounting fees and expenses........... 150,000
Printing and duplicating expenses...... 75,000
Miscellaneous expenses................. 50,000
-----------
Total.................................. $ 1,403,400
All fees and expenses in the above table, other than the SEC registration fee,
are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The registrant is organized under the laws of the State of New Jersey. The
New Jersey Business Corporation Act provides that a New Jersey corporation has
the power to indemnify its directors, officers, employees and other agents
against expenses and liabilities in connection with any proceeding involving
such person by reason of his/her being or having been a director, officer,
employee or other agent if he/she acted in good faith and in a manner he/she
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal proceeding, such person had no
reasonable cause to believe his/her conduct was unlawful. Expenses incurred by a
director, officer, employee or other agent in connection with a proceeding may
be, under certain circumstances, paid by the corporation before the final
disposition of the proceeding as authorized by the board of directors. The power
to indemnify and pay expenses under the New Jersey Business Corporation Act does
not exclude other rights, including the right to be indemnified against
liabilities and expenses incurred in proceedings by or in the right of the
corporation, to which a director, officer, employee or other agent of the
corporation may be entitled to under a certificate of incorporation, by-law,
agreement, vote of shareholders, or otherwise; provided that no indemnification
is permitted to be made to or on behalf of such person if a judgment or other
final adjudication adverse to such person establishes that his/her acts or
omissions were in breach of his/her duty of loyalty to the corporation or its
shareholders, were not in good faith or involved a violation of the law, or
resulted in the receipt of such person of an improper personal benefit.
The New Jersey Business Corporation Act further provides that a New Jersey
corporation has the power to purchase and maintain insurance on behalf of any
director, officer, employee or other agent against any expenses incurred in any
proceeding and any liabilities asserted against him/her by reason of his/her
being or having been a director, officer, employee or other agent,
II-1
whether or not the corporation would have the power to indemnify him/her against
such expenses and liabilities under the New Jersey Business Corporation Act.
The registrant's Certificate of Incorporation provides that directors and
officers of the registrant shall not be personally liable (in the case of
officers, for the duration of any time permitted by law) to the registrant or
its shareholders for damages for breach of any duty owed to the registrant or
its shareholders, except for liability for any breach of duty based upon an act
or omission (i) in breach of such persons' duty of loyalty to the registrant or
its shareholders, (ii) not in good faith or involving a knowing violation of law
or (iii) resulting in receipt by such persons of an improper personal benefit.
The Certificate of Incorporation of the registrant also provides that each
person who was or is made a party or is threatened to be made a party to or who
is involved in any pending, threatened or completed civil, criminal,
administrative or arbitrative action, suit or proceeding, or any appeal therein
or any inquiry or investigation which could lead to such action, suit or
proceeding (a "proceeding"), by reason of his/her being or having been a
director, officer, employee, or agent of the registrant or of any constituent
corporation absorbed by the registrant in a consolidation or merger, or by
reason of his/her being or having been a director, officer, trustee, employee or
agent of any other corporation (domestic or foreign) or of any partnership,
joint venture, sole proprietorship, trust, employee benefit plan or other
enterprise (whether or not for profit), serving as such at the request of the
registrant or of any such constituent corporation, or the legal representative
of any such director, officer, trustee, employee or agent, shall be indemnified
and held harmless by the registrant to the fullest extent permitted by the New
Jersey Business Corporation Act, as the same exists or may be amended (but, in
the case of any such amendment, only to the extent that such amendment permits
the registrant to provide broader indemnification rights than said Act permitted
prior to such amendment), from and against any and all reasonable costs,
disbursements and attorneys' fees, and any and all amounts paid or incurred in
satisfaction of settlements, judgments, fines and penalties, incurred or
suffered in connection with any such proceeding, and such indemnification shall
continue as to a person who has ceased to be a director, officer, trustee,
employee or agent and shall inure to the benefit of his/her heirs, executors,
administrators and assigns; provided, however, that, the registrant shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was specifically authorized by the Board of Directors of the
registrant. The Certificate of Incorporation provides that such right to
indemnification shall be a contract right and shall include the right to be paid
by the registrant the expenses incurred in connection with any proceeding before
the final disposition of such proceeding as authorized by the Board of
Directors; provided, however, that, if the New Jersey Business Corporation Act
so requires, the payment of such expenses before the final disposition of a
proceeding shall be made only upon receipt by the registrant of an undertaking,
by or on behalf of such director, officer, employee, or agent to reimburse the
amounts so paid if it is not ultimately determined that such person is entitled
to be indemnified under the Certificate of Incorporation or otherwise. The right
to indemnification and payment of expenses provided by or granted pursuant to
the Certificate of Incorporation shall not exclude or be exclusive of any other
rights to which any person may be entitled under a certificate of incorporation,
by-law, agreement, vote of shareholders or otherwise, provided that no
indemnification shall be made to or on behalf of such person if a judgment or
other final
II-2
adjudication adverse to such person establishes that such person has not met the
applicable standard of conduct required to be met under the New Jersey Business
Corporation Act.
The registrant may purchase and maintain insurance on behalf of any
director, officer, employee or agent of the registrant or another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
against any expenses incurred in any proceeding and any liabilities asserted
against him/her by reason of such person's being or having been such a director,
officer, employee or agent, whether or not the registrant would have the power
to indemnify such person against such expenses and liabilities under the
provisions of the Certificate of Incorporation or otherwise. The registrant
maintains such insurance on behalf of its directors and officers.
The foregoing statements are subject to the detailed provisions of the New
Jersey Business Corporation Act and the registrant's Certificate of
Incorporation. The Form of Underwriting Agreement contained in Exhibit 1.1
provides for indemnification of the directors and officers signing the
Registration Statement and certain controlling persons of the registrant against
certain liabilities, including certain liabilities under the Securities Act in
certain instances by the Underwriters.
For information concerning the registrant's undertaking to submit to
adjudication the issue of indemnification for violation of the securities laws,
see Item 17 hereof.
ITEM 16. EXHIBITS.
1.1 - Form of Underwriting Agreement.*
3.1 - Certificate of Incorporation of Schering-Plough Corporation, as
amended and currently in effect (incorporated by reference to (1)
Exhibit 3(i) to the Company's Quarterly Report for the period
ended June 30, 1995 on Form 10-Q; (2) Exhibit 3 to the Company's
Quarterly Report for the period ended June 30, 1997 on Form 10-Q;
and (3) Exhibit 3(a) to the Company's Quarterly Report for the
period ended March 31, 1999 on Form 10-Q, File No. 1-6571).
3.2 - By-Laws, as amended and currently in effect (incorporated by
reference to (1) Exhibit 4(2) to the Company's Registration
Statement on Form S-3, File No. 333-853; (2) Exhibit 4 to the
Company's Quarterly Report for the period ended September 30,
1998 on Form 10-Q; (3) Exhibit 4 to the Company's Quarterly
Report for the period ended March 31, 2001 on Form 10-Q; and (4)
Exhibit 3(b) to the Company's Annual Report for 2001 on Form
10-K, File No. 1-6571).
4.1 - Specimen Common Share Certificate.**
4.2 - Form of Certificate of Amendment for Preferred Shares.*
4.3 - Rights Agreement between the Company and The Bank of New York,
dated June 24, 1997 and Certificate of Adjustment, dated
September 25, 1998 (incorporated by reference to Exhibit 1 to
Form 8-A filed on June 30, 1997 and
II-3
Exhibit 2 to Form 8-A/A filed on October 1, 1998, of the Company,
respectively).
4.4 - Form of Indenture (including the form of debt security).**
4.5 - Form of Deposit Agreement with respect to the depositary shares
(including the form of depositary receipt).*
4.6 - Form of Warrant Agreement (including form of Warrant).*
4.7 - Form of Stock Purchase Contract (including form of stock purchase
contract certificate) and, if applicable, Pledge Agreement.*
4.8 - Form of Unit Agreement (including form of unit certificate).*
5.1 - Opinion of Joseph J. LaRosa, Esq.**
5.2 - Opinion of Lowenstein Sandler PC.**
12.1 - Computation of Ratio of Earnings to Fixed Charges.
15.1 - Acknowledgment of Deloitte & Touche LLP.
23.1 - Consent of Deloitte & Touche LLP.
23.2 - Consent of Joseph J. LaRosa, Esq. (included in Exhibit 5.1).**
23.3 - Consent of Lowenstein Sandler PC (included in Exhibit 5.2).**
24.1 - Powers of Attorney (included on signature page).**
25.1 - Statement of Eligibility of The Bank of New York, as Trustee for
the senior debt securities.**
25.2 - Statement of Eligibility of The Bank of New York, as Trustee for
the subordinated debt securities.**
* To be filed.
** Previously filed
Item 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
II-4
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply if
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are
incorporated by reference in the registration statement;
(2) that, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof; and
(3) to remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions set forth in response to Item 15, or
otherwise, the registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by
II-5
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
The undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Trust
Indenture Act.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Schering-Plough Corporation certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of Kenilworth, State of New Jersey, on May
11, 2004.
SCHERING-PLOUGH CORPORATION
By: /s/ Robert Bertolini
--------------------------------------
Robert Bertolini
Executive Vice President and Chief
Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE CAPACITY DATE
/s/ Fred Hassan
---------------------------- May 11, 2004
Fred Hassan Chairman of the Board,
Chief Executive Officer,
President and Director
and Principal Executive
Officer
/s/ Robert Bertolini
---------------------------- May 11, 2004
Robert Bertolini Executive Vice President
and Chief Financial
Officer
/s/ Thomas H. Kelly May 11, 2004
----------------------------
Thomas H. Kelly Vice President and
Controller and Principal
Accounting Officer
* May 11, 2004
----------------------------
Hans W. Becherer Director
* May 11, 2004
----------------------------
Philip Leder, M.D. Director
II-7
* May 11, 2004
----------------------------
Eugene R. McGrath Director
* May 11, 2004
----------------------------
Carl E. Mundy, Jr. Director
* May 11, 2004
----------------------------
Richard de J. Osborne Director
* May 11, 2004
----------------------------
Patricia F. Russo Director
* May 11, 2004
----------------------------
Kathryn C. Turner Director
* May 11, 2004
----------------------------
Robert F. W. van Oordt Director
* May 11, 2004
----------------------------
Arthur F. Weinbach Director
By: /s/ E. Kevin Moore
---------------------------- May 11, 2004
E. Kevin Moore
Attorney-in-fact
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
1.1 - Form of Underwriting Agreement.*
3.1 - Certificate of Incorporation of Schering-Plough Corporation, as
amended and currently in effect (incorporated by reference to (1)
Exhibit 3(i) to the Company's Quarterly Report for the period
ended June 30, 1995 on Form 10-Q; (2) Exhibit 3 to the Company's
Quarterly Report for the period ended June 30, 1997 on Form 10-Q;
and (3) Exhibit 3(a) to the Company's Quarterly Report for the
period ended March 31, 1999 on Form 10-Q, File No. 1-6571).
3.2 - By-Laws, as amended and currently in effect (incorporated by
reference to (1) Exhibit 4(2) to the Company's Registration
Statement on Form S-3, File No. 333-853; (2) Exhibit 4 to the
Company's Quarterly Report for the period ended September 30,
1998 on Form 10-Q; (3) Exhibit 4 to the Company's Quarterly
Report for the period ended March 31, 2001 on Form 10-Q; and (4)
Exhibit 3(b) to the Company's Annual Report for 2001 on Form
10-K, File No. 1-6571).
4.1 - Specimen Common Stock Certificate.**
4.2 - Form of Certificate of Amendment for Preferred Shares.*
4.3 - Rights Agreement between the Company and The Bank of New York,
dated June 24, 1997 and Certificate of Adjustment, dated
September 25, 1998 (incorporated by reference to Exhibit 1 to
Form 8-A filed on June 30, 1997 and Exhibit 2 to Form 8-A/A filed
on October 1, 1998, of the Company, respectively).
4.4 - Form of Indenture (including the form of debt security).**
4.5 - Form of Deposit Agreement with respect to the depositary shares
(including the form of depositary receipt).*
4.6 - Form of Warrant Agreement (including form of Warrant).*
4.7 - Form of Stock Purchase Contract (including form of stock purchase
contract certificate) and, if applicable, Pledge Agreement.*
4.8 - Form of Unit Agreement (including form of unit certificate).*
5.1 - Opinion of Joseph J. LaRosa, Esq.**
5.2 - Opinion of Lowenstein Sandler PC.**
12.1 - Computation of Ratio of Earnings to Fixed Charges.
15.1 - Acknowledgment of Deloitte & Touche LLP.
II-9
23.1 - Consent of Deloitte & Touche LLP.
23.2 - Consent of Joseph J. LaRosa, Esq. (included in Exhibit 5.1).**
23.3 - Consent of Lowenstein Sandler PC (included in Exhibit 5.2).**
24.1 - Powers of Attorney (included on signature page).**
25.1 - Statement of Eligibility of The Bank of New York, as Trustee for
the senior debt securities.**
25.2 - Statement of Eligibility of The Bank of New York, as Trustee for
the subordinated debt securities.**
* To be filed.
** Previously filed
II-10