AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 2003
REGISTRATION NO. 333-
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SCHOLASTIC CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 2731 13-3385513
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
557 BROADWAY
NEW YORK, NEW YORK 10012
(212) 343-6100
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
CHARLES B. DEULL, ESQ.
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
SCHOLASTIC CORPORATION
557 BROADWAY
NEW YORK, NEW YORK 10012
(212) 343-6100
(Name, address, including zip code, and telephone number, including area code, of agent for service)
------------------------------
COPY TO:
THEODORE N. FARRIS, ESQ.
Coudert Brothers LLP
1114 Avenue of the Americas
New York, New York 10036
(212) 626-4400
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this registration
statement.
------------------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
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. / /
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CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT OFFERING PRICE(1) REGISTRATION FEE
5% Notes Due 2013......................... $175,000,000 100% $175,000,000 $--(2)
(1) Estimated in accordance with Rule 457(f) under the Securities Act, solely
for purposes of calculating the registration fee.
(2) The filing fee for this registration statement, in the amount of $14,157.50,
has been paid by crediting $14,157.50 paid as part of the filing fee for
securities registered under Registration Statement No. 333-55238, initially
filed by Scholastic Corporation on February 8, 2001. The offering under that
prior registration statement has been completed and terminated and pursuant
to Rule 457(p) of the Securities Act, $14,157.50 of the $25,000 filing fee
paid with respect to the $100,000,000 of securities remaining unsold at such
completion and termination that were registered under that prior
registration statement has been carried forward for use in connection with
this registration statement.
------------------------------
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 THIS 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 WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED APRIL 29, 2003
SCHOLASTIC CORPORATION
OFFER TO EXCHANGE UP TO
$175,000,000
OF
5% NOTES DUE 2013
WHICH HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933
FOR
ALL OUTSTANDING UNREGISTERED
5% NOTES DUE 2013
We are offering to exchange new 5% Notes Due 2013, which we have registered
under the Securities Act of 1933, for all of our outstanding 5% Notes Due 2013,
which were previously issued in a private placement pursuant to an exemption
from registration under the Securities Act in April 2003. We refer to these
registered notes as the new notes and the outstanding unregistered notes as the
old notes.
THE EXCHANGE OFFER
- We will exchange an equal principal amount of new notes that are freely
tradeable for all old notes that are validly tendered and not validly
withdrawn.
- You may withdraw tenders of outstanding old notes at any time prior to the
expiration of the exchange offer.
- The exchange offer is subject to the satisfaction of limited, customary
conditions.
- The exchange offer expires at 5:00 p.m., New York City time, on
____________, 2003, unless extended.
- The exchange of old notes for new notes in the exchange offer will not be
a taxable event for U.S. Federal income tax purposes.
- We will not receive any proceeds from the exchange offer.
THE NEW NOTES
- We are offering the new notes in order to satisfy our obligations under
the registration rights agreement entered into in connection with the
private placement of the old notes.
- The terms of the new notes to be issued in the exchange offer are
substantially identical to the terms of the old notes, except that the new
notes are registered under the Securities Act and have no transfer
restrictions, rights to special interest or registration rights except in
limited circumstances.
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 8 TO READ ABOUT FACTORS YOU SHOULD CONSIDER
IN CONNECTION WITH THE EXCHANGE OFFER.
If you are a broker-dealer that receives new notes for your own account
pursuant to the exchange offer, you must acknowledge that you will deliver a
prospectus in connection with any resale of the new notes. The letter of
transmittal accompanying this prospectus states that by so acknowledging and by
delivering a prospectus, you will not be deemed to admit that you are an
"underwriter" within the meaning of the Securities Act. You may use this
prospectus, as we may amend or supplement it from time to time, for your resales
of new notes received in exchange for old notes where such old notes were
acquired as a result of market-making activities or other trading activities. We
have agreed that, starting on the expiration date and ending on the close of
business 180 days after the expiration date, we will make this prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution."
------------------------
Neither the Securities and Exchange Commission, any state securities
commission nor any other U.S. regulatory authority has approved or disapproved
of the new notes nor have any of the foregoing authorities passed upon or
endorsed the merits of this offering or the accuracy or adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
------------------------
The date of this prospectus is April __, 2003
TABLE OF CONTENTS
PAGE
--------
PROSPECTUS SUMMARY.......................................... 4
RISK FACTORS................................................ 8
FORWARD-LOOKING STATEMENTS.................................. 8
USE OF PROCEEDS............................................. 9
CAPITALIZATION.............................................. 10
SELECTED CONSOLIDATED FINANCIAL DATA........................ 11
RATIO OF EARNINGS TO FIXED CHARGES.......................... 12
THE EXCHANGE OFFER.......................................... 12
DESCRIPTION OF NOTES........................................ 20
IMPORTANT FEDERAL INCOME TAX CONSIDERATIONS................. 30
PLAN OF DISTRIBUTION........................................ 31
VALIDITY OF THE NOTES....................................... 31
EXPERTS..................................................... 31
AVAILABLE INFORMATION....................................... 32
REFERENCES TO "SCHOLASTIC" IN THIS PROSPECTUS AND TO "WE," "US" AND "OUR" IN
THIS PROSPECTUS ARE REFERENCES TO SCHOLASTIC CORPORATION, EXCEPT THAT SUCH
REFERENCES WILL INCLUDE SCHOLASTIC'S CONSOLIDATED SUBSIDIARIES WHERE WE DESCRIBE
OUR BUSINESS ACTIVITIES. WHEN WE REFER IN THIS PROSPECTUS TO THE 5% NOTES DUE
2013 ISSUED ON APRIL 4, 2003, WE MAY REFER TO THEM AS THE "OLD NOTES." WHENEVER
WE REFER IN THIS PROSPECTUS TO THE REGISTERED 5% NOTES DUE 2013, WE WILL REFER
TO THEM AS THE "NEW NOTES." THE OLD NOTES AND THE NEW NOTES ARE COLLECTIVELY
REFERRED TO AS THE "NOTES." REFERENCES TO "$" AND "DOLLARS" ARE TO UNITED STATES
DOLLARS.
This document incorporates by reference important business, financial and
other information about Scholastic that is not included in or delivered with
this document. See "AVAILABLE INFORMATION" on page 32 for a list of the
documents that have been incorporated by reference.
You can request copies of these documents at no cost upon your written or
oral request to Raymond Marchuk, our Senior Vice President, Finance and Investor
Relations, 557 Broadway, New York, New York 10012, telephone number:
(212) 343-6741.
IN ORDER TO ENSURE TIMELY DELIVERY OF THE REQUESTED DOCUMENTS, REQUESTS
SHOULD BE MADE NO LATER THAN ______, 2003 [FIVE BUSINESS DAYS BEFORE EXPIRATION
OF THE EXCHANGE OFFER]. In the event that we extend the exchange offer, you must
submit your request at least five business days before the expiration date, as
extended.
3
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROSPECTUS
AND DOES NOT CONTAIN ALL OF THE INFORMATION THAT YOU SHOULD CONSIDER BEFORE
PARTICIPATING IN THIS EXCHANGE OFFER. YOU SHOULD READ THE ENTIRE PROSPECTUS,
ACCOMPANYING LETTER OF TRANSMITTAL AND DOCUMENTS INCORPORATED BY REFERENCE
CAREFULLY.
SCHOLASTIC CORPORATION
Scholastic is a global children's publishing and media company. We believe
that we are the world's largest publisher and distributor of children's books.
Scholastic creates quality educational and entertaining materials and products
for use in school and at home, including children's books, textbooks, magazines,
technology-based products, teacher materials, television programming, videos and
toys. We distribute our products and services through a variety of channels,
including school-based book clubs, school-based book fairs, school-based and
direct-to-home continuity programs, retail stores, schools, libraries,
television networks and the Internet. Our web site, Scholastic.com, is a leading
site for teachers, classrooms and parents and an award-winning destination for
children. With the June 2000 acquisition of Grolier Incorporated, we became the
leading operator in the United States of direct-to-home book clubs primarily
serving children age five and under, and the leading print and on-line publisher
of children's non-fiction and reference products sold primarily to United States
school libraries. Internationally, Scholastic has long-established operations in
Canada, the United Kingdom, Australia and New Zealand, and newer operations in
Argentina, Hong Kong, India, Ireland and Mexico. The Grolier acquisition
expanded our international operations in Canada, the United Kingdom, Australia
and Southeast Asia.
During our 83 years of operation, we have emphasized quality products and a
dedication to learning. Scholastic was incorporated under the laws of Delaware
in 1986 and, through predecessor entities, has been in business since 1920.
Grolier, through its predecessor entities, has been in business since 1895.
Our principal executive offices are located at 557 Broadway, New York, NY
10012; our telephone number is (212) 343-6100. Information contained on our
Internet worldwide web site or any other Internet worldwide web site is not part
of this offering memorandum.
THE EXCHANGE OFFER
Background..................... On April 4, 2003, we completed a private placement of our
unregistered notes. We refer to these as the "old notes." In
connection with that private placement, we entered into a
registration rights agreement in which we agreed to deliver
this prospectus to you and to make an exchange offer.
The Exchange Offer............. We are offering to exchange up to $175 million principal
amount of our new notes, which we have registered under the
Securities Act, for up to $175 million principal amount of
our old notes. We refer to the registered notes as "new
notes." You may tender old notes only in integral multiples
of $1,000 principal amount. You should read the discussion
under the heading "THE EXCHANGE OFFER" beginning on page 12
for further information about the exchange offer and resale
of the new notes.
Resale of New Notes............ Based on existing interpretations of the Securities Act
contained in several "no action" letters from the SEC staff
to third parties, we believe that you may resell and
transfer the new notes without compliance with the
registration and prospectus delivery provisions of the
Securities Act, if:
- you are acquiring the new notes in the ordinary course of
your business;
4
- you have no arrangement or understanding with any person
to participate in the distribution of the new notes; and
- you are not our affiliate as defined under Rule 405 of
the Securities Act.
If you fail to satisfy any of these conditions, you must
comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a
resale of the new notes.
Broker-dealers that acquired old notes directly from us, but
not as a result of market-making activities or other trading
activities, must comply with the registration and prospectus
delivery requirements of the Securities Act in connection
with a resale of the new notes.
Each broker-dealer that receives new notes for its own
account pursuant to the exchange offer in exchange for old
notes that it acquired as a result of market-making or other
trading activities must deliver this prospectus in
connection with any resale of the new notes and provide us
with a signed acknowledgement of this obligation.
Consequences If You Do Not
Exchange Your Old Notes...... Old notes that are not tendered in the exchange offer or are
not accepted for exchange will continue to bear legends
restricting their transfer. You will not be able to offer or
sell the old notes unless:
- an exemption from the requirements of the Securities Act
is available to you;
- you sell the old notes outside the United States in
accordance with the SEC's Regulation S; or
- you sell the old notes pursuant to an effective
registration statement.
Remaining old notes will continue to be subject to
restrictions on transfer. See "THE EXCHANGE
OFFER--CONSEQUENCES OF FAILURES TO PROPERLY TENDER OLD NOTES
IN THE EXCHANGE," beginning on page 20.
Expiration Date................ 5:00 p.m., New York City time, on , 2003, unless we extend
the exchange offer.
Conditions to the Exchange
Offer........................ The exchange offer is subject to limited, customary
conditions, which we may waive.
Procedures for Tendering Old
Notes........................ If you wish to accept the exchange offer, the following must
be delivered to the exchange agent:
- for old notes tendered electronically, an agent's message
from The Depository Trust Company, which we refer to as
"DTC," stating that the tendering participant agrees to
be bound by the letter of transmittal sent to you with
this prospectus and the terms of the exchange offer
contained herein and in that letter;
- your old notes by timely confirmation of book entry
transfer through DTC; and
5
- all other documents required by the letter of
transmittal.
These actions must be completed before the expiration of the
exchange offer.
If you hold old notes through DTC, you must comply with
their standard procedures for electronic tenders, by which
you will agree to be bound by the letter of transmittal.
By signing, or by agreeing to be bound by the letter of
transmittal, you will be representing to us that:
- you will be acquiring the new notes in the ordinary
course of your business;
- you have no arrangement or understanding with any person
to participate in the distribution of the new notes;
- you are not our affiliate as defined under Rule 405 of
the Securities Act;
- you have full power and authority to tender, exchange and
transfer the old notes; and
- we will acquire good title to the old notes free and
clear of any liens, encumbrances, adverse claims or other
restrictions.
Guaranteed Delivery Procedures
for Tendering Old Notes...... If you cannot meet the expiration deadline, deliver any
necessary documentation or comply with the applicable
procedures under DTC standard operating procedures for
electronic tenders in a timely fashion, you may tender your
old notes according to the guaranteed delivery procedures
set forth under "THE EXCHANGE OFFER--GUARANTEED DELIVERY
PROCEDURES," beginning on page 18.
Withdrawal Rights.............. You may withdraw your tender of old notes any time before
the exchange offer expires by following the withdrawal
procedures described under "THE EXCHANGE OFFER--WITHDRAWAL
OF TENDERS," beginning on page 19 and in Instruction 4 of
the letter of transmittal.
Tax Consequences............... The exchange pursuant to the exchange offer generally will
not be a taxable event for U.S. Federal income tax purposes.
See "IMPORTANT FEDERAL INCOME TAX CONSIDERATIONS."
Use of Proceeds................ We will not receive any proceeds from the exchange or the
issuance of new notes in connection with the exchange offer.
Exchange Agent................. Citibank, N.A. is serving as exchange agent in connection
with the exchange offer. The address and telephone number of
the exchange agent are set forth under "THE EXCHANGE
OFFER--EXCHANGE AGENT."
Risk Factors................... See "RISK FACTORS" on page 8 for a discussion of various
material risks relating to the exchange offer.
6
SUMMARY DESCRIPTION OF THE NEW NOTES
The form and terms of the new notes are the same as the form and terms of
the old notes, except that:
- the new notes will be registered under the Securities Act and will
therefore not bear legends restricting their transfer; and
- the provisions for payment of special interest in case of non-registration
will be eliminated.
The new notes will evidence the same debt as the old notes and will rank
equally with the old notes. The same indenture will govern both the old notes
and the new notes.
You should read the discussion under the heading "DESCRIPTION OF NOTES"
beginning on page 20 for further information about the new notes.
TERMS OF THE NEW NOTES
The specific financial terms of the new notes are as follows:
- Title: 5% Notes Due 2013.
- Issuer: Scholastic Corporation.
- Total principal amount being issued: up to $175,000,000.
- Due date for principal: April 15, 2013.
- Interest rate: 5% annually.
- Due dates for interest: every April 15 and October 15, beginning
October 15, 2003.
- Regular record dates for interest: every April 1 and October 1.
- Ratings: "Baa2" by Moody's and "BBB" by Standard & Poor's. A rating is not
a recommendation to buy, sell or hold new notes and may be suspended,
reduced or withdrawn at any time by Moody's and Standard & Poor's if,
among other things, our financial condition or results of operations
change. Each rating should also be evaluated independently of any other
rating.
- Optional Redemption: at any time at our option at a redemption price (plus
accrued interest to the date of redemption) equal to the greater of 100%
of the principal amount of the notes to be redeemed or the sum of the
present values of the remaining scheduled payments of principal and
interest thereon discounted to the date of redemption on a semiannual
basis, assuming a 360-day year consisting of twelve 30-day months, at the
applicable treasury yield plus 20 basis points.
- Repayment at option of Holder: none.
- The covenants, events of default and other provisions of the new notes are
identical to those contained in the old notes.
7
RISK FACTORS
RISKS RELATING TO THE EXCHANGE OFFER
IF YOU WISH TO TENDER YOUR OLD NOTES FOR EXCHANGE, YOU MUST COMPLY WITH THE
REQUIREMENTS DESCRIBED IN THIS PROSPECTUS.
We will only issue new notes in exchange for old notes that are timely
received by the exchange agent together with all required documents, including a
properly completed and signed letter of transmittal. Therefore, you should allow
sufficient time to ensure timely delivery of the old notes and you should
carefully follow the instructions on how to tender your old notes. Neither we
nor the exchange agent are required to tell you of any defects or irregularities
with respect to your tender of the old notes. If you do not tender your old
notes or if we do not accept your old notes because you did not tender your old
notes properly, then, after we consummate the exchange offer, you will continue
to hold old notes that are subject to the existing transfer restrictions. In
addition, upon completion of the exchange offer, special rights under the
registration rights agreement, including registration rights and rights to
additional interest, will be either limited or eliminated.
After the exchange offer is consummated, if you continue to hold any old
notes, you may have difficulty selling them because there will be less old notes
outstanding and therefore a less liquid market for the old notes or a lower
market price of the old notes.
In addition, if you tender your old notes for the purpose of participating
in a distribution of the new notes, you will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale of the new notes. If you are a broker-dealer that
receives new notes for your own account in exchange for old notes that you
acquired as a result of market-making activities or any other trading
activities, you will be required to acknowledge that you will deliver a
prospectus in connection with any resale of such new notes.
THERE MAY NOT BE A LIQUID MARKET FOR THE RESALE OF NEW NOTES.
The new notes are a new issue of securities with no existing trading market.
Although the initial purchasers of the old notes have informed us that they
intend to make a market in the new notes, they are not obligated to do so and
any such market-making may be discontinued at any time without notice. In
addition, market-making activity may be limited during the pendency of the
exchange offer.
If a large amount of old notes are not tendered or are tendered improperly,
the limited amount of new notes that would be issued and outstanding after we
consummate the exchange offer could result in a less liquid market for the new
notes or lower the market price of such new notes.
Accordingly, there can be no assurance as to the development or liquidity of
any market for the new notes. We do not intend to apply for listing of the new
notes on any securities exchange or for quotation through the Nasdaq National
Market System.
FORWARD-LOOKING STATEMENTS
This prospectus and documents incorporated by reference in this prospectus
contain or incorporate statements that are "forward-looking statements" within
the meaning of Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act of 1934. Those statements can be identified by the use
of forward-looking language such as "will likely result," "may," "are expected
to," "is anticipated," "estimate," "projected," "intends to," or other similar
words. Our actual results, performance or achievements could be significantly
different from the results expressed in, or implied by, those forward-looking
statements. These statements are subject to certain risks and uncertainties,
including the conditions of the children's book and instructional materials
markets and acceptance of our products within those markets, geopolitical
events, and other risks and factors identified in our filings
8
with the SEC incorporated by reference herein. When considering those
forward-looking statements, you should keep in mind the risks, uncertainties and
other cautionary statements made in this prospectus and in the reports
incorporated by reference in those documents. You should not place undue
reliance on any forward-looking statement, which speaks only as of the date
made.
USE OF PROCEEDS
We will not receive any proceeds from the exchange offer. In consideration
for issuing the new notes, we will receive old notes from you in the same
principal amount. The old notes surrendered in exchange for the new notes will
be retired and canceled and cannot be reissued. Accordingly, issuance of the new
notes will not result in any change in our indebtedness.
9
CAPITALIZATION
The following table shows our consolidated capitalization (i) on an actual
basis as of May 31, 2002 and as of February 28, 2003 and (ii) as adjusted as of
February 28, 2003 to give effect to the sale of the old notes in April 2003 and
the application of the net proceeds therefrom as described in footnote (a). The
table should be read together with the consolidated financial statements, notes
and other financial information included in the documents incorporated by
reference in this prospectus.
FEBRUARY 28, 2003
----------------------
MAY 31, 2002 ACTUAL AS ADJUSTED
------------ -------- -----------
(AUDITED) (UNAUDITED)
(IN MILLIONS)
SHORT-TERM DEBT:
Lines of credit and other debt............................ $ 23.5 $ 30.2 $ 30.2
Grolier Facility(a)....................................... -- 30.0 --
7% Notes due 2003, net of discount -- 125.0 125.0
-------- -------- --------
Total short-term debt..................................... 23.5 185.2 155.2
-------- -------- --------
LONG-TERM DEBT:
Grolier Facility(a)....................................... 50.0 -- --
Loan Agreement and Revolver(a)............................ 50.0 186.9 45.7
7% Notes due 2003, net of discount........................ 124.9 -- --
5 3/4% Notes due 2007, net of discount.................... 300.7 307.5 307.5
5% Notes due 2013, net of discount........................ -- -- 172.6
Other debt................................................ 0.2 0.4 0.4
-------- -------- --------
Total long-term debt...................................... 525.8 494.8 526.2
-------- -------- --------
Total debt.................................................. $ 549.3 $ 680.0 $ 681.4
-------- -------- --------
STOCKHOLDERS' EQUITY:
Preferred Stock, $1.00 par value.......................... $ -- $ -- $ --
Class A Stock, $.01 par value............................. 0.0 0.0 0.0
Common Stock, $.01 par value.............................. 0.4 0.4 0.4
Additional paid-in capital................................ 373.7 379.1 379.1
Deferred compensation..................................... (0.4) (1.2) (1.2)
Accumulated other comprehensive loss...................... (27.4) (25.7) (25.7)
Retained earnings......................................... 372.6 402.5 402.5
-------- -------- --------
Total stockholders' equity................................ $ 718.9 $ 755.1 $ 755.1
======== ======== ========
TOTAL CAPITALIZATION........................................ $1,268.2 $1,435.1 $1,436.5
======== ======== ========
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(a) The net proceeds of $171.2 million from the sale of the old notes on
April 4, 2003 (after deducting purchaser discount and estimated expenses)
were used to retire all outstanding indebtedness of $36.0 million under the
Grolier Facility on that date, which was then cancelled, and to reduce
$135.2 million of indebtedness outstanding under the Loan Agreement and
Revolver. We expect to repay $125.0 million of our 7% Notes due 2003,
principally using available borrowings under the Loan Agreement and Revolver
made possible by the issuance of the old notes.
10
SELECTED CONSOLIDATED FINANCIAL DATA
You should read our selected consolidated financial data together with the
financial statements, notes thereto and other financial information included in
the documents incorporated by reference in this prospectus. We have derived the
selected consolidated financial data for each of the five years in the period
ended May 31, 2002 from our consolidated financial statements, which have been
audited by Ernst & Young LLP, our independent auditors. We have derived the data
presented for the nine-month periods ended February 28, 2003 and 2002 from our
unaudited consolidated condensed financial statements that include, in our
opinion, all adjustments necessary to present fairly the data for such periods.
On June 22, 2000, Scholastic acquired all of the issued and outstanding capital
stock of Grolier for $400 million in cash. Grolier's operating results are
included in our consolidated results of operations since the date of the
acquisition. Our results for the nine-month period ended February 28, 2003 may
not be indicative of the results to be expected for the full fiscal year.
NINE MONTHS
ENDED
FEBRUARY 28, FISCAL YEAR ENDED MAY 31,
------------------- -------------------------------------------------------------
2003(A) 2002(A) 2002 2001 2000 1999 1998
-------- -------- -------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE DATA)
STATEMENT OF INCOME DATA:
Total Revenues......................... $1,400.9 $1,376.0 $1,917.0 $1,962.3 $1,402.5 $1,165.5 $1,069.8
Cost of goods sold..................... 640.3 634.1 852.1 899.7 692.8 586.1 560.4
Cost of goods sold--Special Literacy
Place and other charges.............. -- -- -- 72.9(b) -- -- --
Selling, general and administrative
expenses............................. 607.0 567.1 773.7 773.1 557.6 462.1 413.5
Bad debt expense....................... 53.6 51.6 68.7 75.5 20.5 17.0 14.6
Other operating costs:
Depreciation and amortization........ 32.9 26.0 36.6 42.4 24.1 22.4 21.7
Litigation and other charges......... 1.9 -- 1.2 -- 8.5(c) -- 11.4(d)
Operating income....................... 65.2 97.2 184.7 98.7 99.0 77.9 48.2
Gain on sale of investment............. 2.9 -- -- -- -- -- --
Gain on sale of the SOHO Group......... -- -- -- -- -- -- 10.0(d)
Interest expense, net.................. 23.3 24.3 31.4 41.6 18.6 19.0 20.1
Net income before cumulative effect of
accounting change.................... 29.9 46.7 98.7 36.3 51.4 36.8 23.6
Cumulative effect of accounting change,
net.................................. -- 5.2(e) 5.2(e) -- -- -- --
Net income............................. 29.9 41.5(e) 93.5(e) 36.3(b) 51.4(c) 36.8 23.6(d)
Earnings per share:
Basic................................ $ 0.76 $ 1.15(e) $ 2.55(e) $ 1.05(b) $ 1.54(c) $ 1.13 $ 0.73(d)
Diluted.............................. $ 0.74 $ 1.09(e) $ 2.38(e) $ 1.01(b) $ 1.48(c) $ 1.10 $ 0.72(d)
Weighted average shares outstanding:
Basic................................ 39.1 36.0 36.7 34.7 33.4 32.8 32.4
Diluted.............................. 40.3 39.9 40.1 36.1 37.1 33.4 32.8
BALANCE SHEET DATA AT PERIOD END:
Working capital........................ $ 388.1 $ 410.5 $ 466.8 $ 394.6 $ 253.9 $ 222.4 $ 201.0
Total assets........................... 1,824.5 1,630.6 1,629.6 1,501.8 983.2 842.3 763.6
Long-term debt......................... 494.8 471.2 525.8 585.3 241.1 248.0 243.5
Total stockholders' equity............. 755.1 668.0 718.9 493.7 430.0 361.4 318.1
- ------------------------------
(a) Results for the three months ended February 28, 2003 reflect revenues of
$433.7 million and net loss of $0.5 million compared to revenues of
$432.7 million and net income of $11.9 million for the three months ended
February 28, 2002.
(b) In fiscal 2001, Scholastic announced its decision not to update SCHOLASTIC
LITERACY PLACE-REGISTERED TRADEMARK-. This decision resulted in a
$72.9 million pre-tax special charge recorded in cost of goods sold. The
impact on earnings per diluted share of this charge was $1.20.
(c) Fiscal 2000 included non-recurring pre-tax charges related to the
establishment of a litigation reserve of $6.7 million and the liquidation of
certain stock options of $1.8 million. The impact on earnings per diluted
share of these charges was $0.15.
(d) Fiscal 1998 included non-recurring pre-tax charges related to the impairment
of certain assets of $11.4 million and the non-operating gain of
$10.0 million related to the sale of the SOHO Group. The impact on earnings
per diluted share of these items was $0.03.
(e) Net income includes the cumulative effect of an accounting change of
$5.2 million related to the adoption of Statement of Position No. 00-2,
"Accounting by Producers and Distributors of Films." The impact on earnings
per diluted share of this charge was $0.13.
Certain prior year amounts have been reclassified to conform with the
present year presentation and the share amounts have been adjusted for a
2-for-1 stock split on January 16, 2001.
11
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratios of earnings to fixed charges for
the fiscal periods indicated. For purposes of the ratio of earnings to fixed
charges, "earnings" represent earnings plus fixed charges less interest
capitalized and "fixed charges" represent interest expense plus the portion of
rent expense that, in our opinion, approximates the interest factor included in
rent expense plus interest capitalized. As of the date of this prospectus, we
have no preferred stock outstanding.
FISCAL YEAR ENDED MAY 31,
NINE MONTHS ENDED --------------------------------------------------------
FEBRUARY 28, 2003 2002 2001 2000 1999 1998
----------------- -------- -------- -------- -------- --------
RATIO OF EARNINGS OF FIXED CHARGES..... 2.23x 4.05x 1.90x(a) 3.43x 2.91x 2.31x
- ------------------------
(a) In fiscal 2001, Scholastic announced its decision not to update SCHOLASTIC
LITERACY PLACE. This decision resulted in a $72.9 million pre-tax special
charge recorded in cost of goods sold, which had the effect of lowering the
ratio by 1.22x.
THE EXCHANGE OFFER
THE FOLLOWING SUMMARY OF THE REGISTRATION RIGHTS AGREEMENT AND LETTER OF
TRANSMITTAL IS NOT COMPLETE AND IS SUBJECT TO, AND IS QUALIFIED IN ITS ENTIRETY
BY, ALL OF THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT AND THE LETTER OF
TRANSMITTAL.
PURPOSE AND EFFECT OF EXCHANGE OFFER; REGISTRATION RIGHTS
We sold the old notes on April 4, 2003 in an unregistered private placement
to a group of investment banks that served as the initial purchasers. The
initial purchasers resold the old notes under an offering circular dated
April 2, 2003, in reliance on SEC Rule 144A under the Securities Act.
As a condition to the initial sale of the old notes, we and the initial
purchasers entered into a registration rights agreement. Pursuant to that
agreement, we agreed to file, at our cost, on or before June 3, 2003, with the
SEC a registration statement under the Securities Act with regard to registered
notes, called new notes, to be exchanged for the old notes and to use our
reasonable best efforts to cause this registration statement to become effective
not later than October 1, 2003. As a result, we filed the registration
statement, of which this prospectus is a part, on April 29, 2003.
The exchange offer will be open for a period of at least 20 business days
and not more than 45 business days (or longer if required by applicable law)
after the date notice of the exchange offer is mailed to the holders of the old
notes. During this period, we will agree to exchange the new notes for all old
notes properly surrendered and not withdrawn before the expiration date of this
period.
In the event that
- there is a change in law or applicable interpretations of the law by the
staff of the SEC that do not permit us to effect such a registered
exchange offer; or
- for any other reason the exchange offer registration statement is not
declared effective by October 1, 2003 or the registered exchange offer is
not consummated by November 15, 2003; or
- any initial purchaser so requests with respect to old notes that are not
eligible to be exchanged for new notes; or
- any holder of the old notes is not eligible to participate in the
registered exchange offer; or
- any holder of the old notes does not receive fully transferable new notes
in the registered exchange offer,
12
we will, at our cost,
- as promptly as practicable, but in no event later than (a) October 31,
2003 or (b) the 60th day after such filing obligation arises, whichever is
later, file a registration statement under the Securities Act covering
continuous resales of the old notes or the new notes, as the case may be
(which is called a "shelf registration statement");
- use our reasonable best efforts to cause the shelf registration statement
to be declared effective by the SEC no later than November 30, 2003; and
- use our reasonable best efforts to keep the shelf registration statement
effective through April 4, 2005, or, if earlier, until all of the old
notes covered by the shelf registration statement are sold thereunder or
are already freely tradable pursuant to SEC Rule 144(k) under the
Securities Act.
In the event a shelf registration statement is filed, we will provide to
each holder for whom the shelf registration was filed copies of the prospectus
that is a part of the shelf registration statement, notify each such holder when
the shelf registration statement has become effective and take other actions as
are required to permit unrestricted resales of the old notes or the new notes,
as the case may be.
A holder of the old notes that sells old notes or new notes pursuant to the
shelf registration statement generally (i) would be required to be named as a
selling security holder in the related prospectus and to deliver that prospectus
to purchasers, (ii) will be subject to applicable civil liability provisions
under the Securities Act in connection with sales of that kind and (iii) will be
bound by the provisions of the registration rights agreement that are applicable
to that holder (including certain indemnification obligations).
TERMS OF THE EXCHANGE OFFER
For each of the old notes properly surrendered and not withdrawn before the
expiration date of the exchange offer, a new note having a principal amount
equal to that of the surrendered old note will be issued.
The form and terms of the new notes will be the same as the form and terms
of the old notes except that:
- the new notes will be registered under the Securities Act and, therefore,
the global securities representing the new notes will not bear legends
restricting the transfer of interests in the new notes; and
- the provisions for payment of special interest in case of non-registration
will be eliminated.
The new notes will evidence the same indebtedness as the old notes they
replace, and will be issued under, and be entitled to the benefits of, the same
indenture that authorized the issuance of the old notes. As a result, the old
notes and the new notes will be treated as a single class of notes under the
indenture.
We intend to conduct the exchange offer in accordance with the provisions of
the registration rights agreement and the applicable requirements of the
Securities Act and the related rules and regulations of the SEC.
Under existing SEC interpretations, the new notes would generally be freely
transferable after the exchange offer without further registration under the
Securities Act, except that broker-dealers receiving the new notes in the
exchange offer will be subject to a prospectus delivery requirement with respect
to their resale. This view is based on interpretations by the staff of the SEC
in no-action letters issued to third parties in exchange offers like this one.
We have not, however, asked the SEC to consider this particular exchange offer
in the context of a no-action letter. Therefore, the SEC might
13
not treat it in the same way it has treated other exchange offers in the past.
You will be relying on the no-action letters that the SEC has issued to third
parties in circumstances that we believe are similar to ours. Based on these
no-action letters, the following conditions must be met:
- you must acquire the new notes in the ordinary course of your business;
- you must have no arrangement or understanding with any person to
participate in the distribution of the new notes within the meaning of the
Securities Act; and
- you must not be an "affiliate" of ours, as defined in Rule 405 of the
Securities Act.
If you wish to exchange old notes for new notes in the exchange offer, you
must represent to us that you satisfy all of above listed conditions. If you do
not satisfy all of the above listed conditions:
- you cannot rely on the position of the SEC set forth in the no-action
letters referred to above; and
- you must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with a resale of the new notes.
The SEC considers broker-dealers that acquired old notes directly from us,
but not as a result of market-making activities or other trading activities, to
be making a distribution of the new notes if they participate in the exchange
offer. Consequently, these broker-dealers must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
resale of the new notes.
A broker-dealer that has bought old notes for market-making or other trading
activities must deliver a prospectus in order to resell any new notes it
receives for its own account in the exchange offer. The SEC has taken the
position in the no-action letters to third parties that broker-dealers may
fulfill their prospectus delivery requirements with respect to the new notes by
delivering the prospectus contained in the registration statement for the
exchange offer. Therefore, this prospectus may be used by a broker-dealer that
bought old notes for market-making or other trading activities to resell any of
its new notes. We have agreed in the registration rights agreement to send this
prospectus to any broker-dealer that requests copies in the notice and
questionnaire included in the letter of transmittal accompanying this prospectus
for a period of up to 180 days after the date of expiration of this exchange
offer.
Unless you are required to do so because you are a broker-dealer, or you do
not meet the conditions that the SEC has established in the no-action letters to
third parties described above, you may not use this prospectus for an offer to
resell, resale or other transfer of new notes. We are not making this exchange
offer to, nor will we accept tenders for exchange from, holders of old notes in
any jurisdiction in which the exchange offer or the acceptance of it would not
be in compliance with the securities or blue sky laws of that jurisdiction.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The expiration date for the exchange offer is 5:00 p.m., New York City time,
on ______, 2003. We may extend this expiration date in our sole discretion, but
in no event to a date later than ______, 2003. If we extend the expiration date,
the term "expiration date" shall mean the latest date and time to which we
extend the exchange offer.
We reserve the right, in our sole discretion:
- to delay accepting any old notes;
- to extend the exchange offer;
14
- to terminate the exchange offer if, in our sole judgment, any of the
conditions described below under "CONDITIONS TO THE EXCHANGE OFFER" have
not been satisfied; or
- to amend the terms of the exchange offer in any way we determine is
advantageous to holders of the old notes or which is not a material change
to the terms of the exchange offer.
We will give oral or written notice of any delay, extension or termination
of the exchange offer to the exchange agent. In addition, we will give, as
promptly as practicable, oral or written notice regarding any delay in
acceptance, extension or termination of the exchange offer to the registered
holders of old notes. If we amend the exchange offer in a manner that we
determine to constitute a material change, or if we waive a material condition,
we will promptly disclose the amendment or waiver in a manner reasonably
calculated to inform the holders of old notes of the amendment, and extend the
offer if required by law.
Without limiting the manner in which we may choose to make public
announcements of any delay in acceptance, extension, termination, amendment or
waiver regarding the exchange offer, we have no obligation to publish, advertise
or otherwise communicate any public announcement, other than by making a timely
release to a financial news service.
INTEREST ON THE NEW NOTES
Interest on the new notes will accrue at the rate of 5% per annum on the
principal amount, from the later of April 4, 2003, which is the date of issuance
of the old notes, or the last interest payment date to which interest has been
paid on the old notes, payable semiannually in arrears on April 15 and
October 15.
CONDITIONS TO THE EXCHANGE OFFER
Despite any other term of the exchange offer, we will not be required to
accept for exchange, or exchange new notes for, any old notes, and we may
terminate the exchange offer as provided in this prospectus before the
acceptance of the old notes, if:
- the exchange offer, or the making of any exchange by a holder, violates,
in our good faith determination or on the advice of counsel, any
applicable law, rule or regulation or any applicable interpretation of the
staff of the SEC;
- any action or proceeding is instituted or threatened in any court or by
the SEC or any other governmental agency with respect to the exchange
offer that, in our judgment, would impair our ability to proceed with the
exchange offer; or
- we have not obtained any governmental approval that we, in our sole
discretion, consider necessary for the completion of the exchange offer as
contemplated by this prospectus.
The conditions listed above are for our sole benefit, and we may assert them
regardless of the circumstances giving rise to any of these conditions. We may
waive these conditions in our sole discretion in whole or in part at any time
and from time to time. A failure on our part to exercise any of the above rights
shall not constitute a waiver of that right, and that right shall be considered
an ongoing right that we may assert at any time and from time to time.
If we determine in our sole discretion that any of the events listed above
has occurred, we may, subject to applicable law:
- refuse to accept any old notes and return all tendered old notes to the
tendering holders;
- extend the exchange offer and retain all old notes tendered before the
expiration of the exchange offer, subject, however, to the rights of
holders to withdraw these old notes; or
15
- waive unsatisfied conditions relating to the exchange offer and accept all
properly tendered old notes that have not been withdrawn.
Any determination by us concerning the above events will be final and
binding.
In addition, we reserve the right in our sole discretion to:
- purchase or make offers for any old notes that remain outstanding
subsequent to the expiration date; and
- to the extent permitted by applicable law, purchase old notes in the open
market, in privately negotiated transactions or otherwise.
The terms of any such purchases or offers may differ from the terms of the
exchange offer.
PROCEDURES FOR TENDERING
Except in limited circumstances, only a DTC participant listed on a DTC
securities position listing with respect to the old notes may tender old notes
in the exchange offer. To tender old notes in the exchange offer:
- you must instruct DTC and a DTC participant, by completing the form
"INSTRUCTION TO REGISTERED HOLDER FROM BENEFICIAL OWNER" accompanying this
prospectus, as to whether or not you wish to tender your old notes for new
notes; or
- you must comply with the guaranteed delivery procedures described below;
and
- DTC participants in turn must follow the procedures for book-entry
transfer as set forth below under "BOOK-ENTRY TRANSFER" and in the letter
of transmittal.
By tendering, you will make the representations described below under
"REPRESENTATIONS ON TENDERING OLD NOTES." In addition, each participating
broker-dealer must acknowledge that it will deliver a prospectus in connection
with any resale of the new notes. See "PLAN OF DISTRIBUTION."
The tender by a holder of old notes will constitute an agreement between
that holder and us in accordance with the terms and subject to the conditions
set forth in this prospectus and in the letter of transmittal. If old notes are
delivered to the exchange agent by book-entry transfer, only the entire amount
of old notes held by a holder may be tendered for exchange.
THE METHOD OF DELIVERY OF OLD NOTES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS OR TRANSMISSION OF AN AGENT'S MESSAGE, AS DESCRIBED BELOW
UNDER "BOOK-ENTRY TRANSFER," TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE TENDERING HOLDER OF OLD NOTES. INSTEAD OF DELIVERY BY MAIL, WE RECOMMEND
THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY TO THE EXCHANGE AGENT PRIOR TO
THE EXPIRATION OF THE EXCHANGE OFFER. NO LETTERS OF TRANSMITTAL OR OLD NOTES
SHOULD BE SENT TO US OR DTC. DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH ITS
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Signatures on a letter of transmittal or a notice of withdrawal, as
described in "WITHDRAWAL OF TENDERS" below, must be guaranteed by a member firm
of a registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States, or an "eligible guarantor institution,"
within the meaning of Rule 17Ad-15 under the Exchange Act, which we refer to in
this prospectus as an eligible institution, unless the old notes are tendered
for the account of an eligible institution.
We will determine in our sole discretion all questions as to the validity,
form, eligibility, including time of receipt, and acceptance and withdrawal of
tendered old notes. We reserve the absolute right to reject any and all old
notes not properly tendered or any old notes whose acceptance by us would, in
the opinion of our counsel, be unlawful. We also reserve the right to waive any
defects, irregularities or conditions of tender as to any particular old notes
either before or after the expiration date. Our
16
interpretation of the terms and conditions of the exchange offer, including the
instructions in the letter of transmittal, will be final and binding on all
parties. Unless waived, holders must cure any defects or irregularities in
connection with tenders of old notes within a period we will determine. Although
we intend to request the exchange agent to notify holders of defects or
irregularities relating to tenders of old notes, neither we, the exchange agent
nor any other person will have any duty or incur any liability for failure to
give this notification. We will not consider tenders of old notes to have been
made until these defects or irregularities have been cured or waived. The
exchange agent will return any old notes that are not properly tendered and as
to which the defects or irregularities have not been cured or waived to the
tendering holders, unless otherwise provided in the letter of transmittal, as
soon as practicable following the expiration date.
BOOK-ENTRY TRANSFER
We understand that the exchange agent will make a request promptly after the
date of this prospectus to establish accounts with respect to the old notes at
DTC for the purpose of facilitating the exchange offer. Any financial
institution that is a participant in DTC's system may make book-entry delivery
of old notes by causing DTC to transfer such old notes into the exchange agent's
DTC account in accordance with DTC's electronic Automated Tender Offer Program
procedures for such transfer. The exchange of new notes for tendered old notes
will only be made after timely:
- confirmation of book-entry transfer of the old notes into the exchange
agent's account; and
- receipt by the exchange agent of an executed and properly completed letter
of transmittal or an "agent's message" and all other required documents
specified in the letter of transmittal.
The confirmation, letter of transmittal, or agent's message and any other
required documents must be received at the exchange agent's address listed below
under "EXCHANGE AGENT" on or before 5:00 p.m., New York time, on the expiration
date of the exchange offer or, if the guaranteed delivery procedures described
below are complied with, within the time period provided under those procedures.
As indicated above, DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH ITS
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
The term "agent's message" means a message, transmitted by DTC and received
by the exchange agent and forming part of the confirmation of a book-entry
transfer, which states that DTC has received an express acknowledgment from a
participant in DTC tendering old notes stating:
- the aggregate principal amount of old notes which have been tendered by
the participant;
- that such participant has received an appropriate letter of transmittal
and agrees to be bound by the terms of the letter of transmittal and the
terms of the exchange offer; and
- that we may enforce such agreement against the participant.
Delivery of an agent's message will also constitute an acknowledgment from
the tendering DTC participant that the representations contained in the letter
of transmittal and described below under "REPRESENTATIONS ON TENDERING OLD
NOTES" are true and correct.
REPRESENTATIONS ON TENDERING OLD NOTES
By surrendering old notes in the exchange offer, you will be representing
that, among other things:
- you are acquiring the new notes issued in the exchange offer in the
ordinary course of your business;
17
- you are not participating, do not intend to participate, and have no
arrangement or understanding with any person to participate in the
distribution of the new notes issued to you in the exchange offer;
- you are not an "affiliate," as defined in Rule 405 under the Securities
Act, of our company;
- you have full power and authority to tender, exchange, assign and transfer
the old notes tendered;
- we will acquire good, marketable and unencumbered title to the old notes
being tendered, free and clear of all security interests, liens,
restrictions, charges, encumbrances or other obligations relating to their
sale or transfer, and not subject to any adverse claim when the old notes
are accepted by us; and
- you acknowledge and agree that if you are a broker-dealer registered under
the Exchange Act or you are participating in the exchange offer for the
purposes of distributing the new notes, you must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale of the new notes, and you cannot rely
on the position of the SEC's staff in their no-action letters to third
parties that are described above under "TERMS OF THE EXCHANGE OFFER." If
you are a broker-dealer and you will receive new notes for your own
account in exchange for old notes that were acquired as a result of
market-making activities or other trading activities, you will be required
to acknowledge in the letter of transmittal that you will deliver a
prospectus in connection with any resale of the new notes. The letter of
transmittal states that, by delivering a copy of this prospectus, a
broker-dealer will not be deemed to be an "underwriter" within the meaning
of the Securities Act. See also "PLAN OF DISTRIBUTION" below.
GUARANTEED DELIVERY PROCEDURES
The following guaranteed delivery procedures are intended for holders who
wish to tender their old notes but:
- the holders cannot deliver the letter of transmittal or any required
documents specified in the letter of transmittal before the expiration
date of the exchange offer; or
- the holders cannot complete the procedure under the respective DTC
standard operating procedures for electronic tenders before expiration of
the exchange offer.
The conditions that must be met to tender old notes through the guaranteed
delivery procedures are:
- the tender must be made through an eligible institution;
- before expiration of the exchange offer, the exchange agent must receive
from the eligible institution either a properly completed and duly
executed notice of guaranteed delivery in the form accompanying this
prospectus, by facsimile transmission, mail or hand delivery, or a
properly transmitted agent's message in lieu of notice of guaranteed
delivery:
-- setting forth the name and number of the account at DTC and the
principal amount of old notes tendered;
-- stating that the tender of old notes is being made by guaranteed
delivery; and
- guaranteeing that, within five business days after expiration of the
exchange offer, the letter of transmittal, or facsimile of the letter of
transmittal, or an agent's message and a confirmation of a book-entry
transfer of the old notes into the exchange agent's account at DTC, and
any other documents required by the letter of transmittal will be
deposited by the eligible institution with the exchange agent; and
18
- the exchange agent must receive the properly completed and executed letter
of transmittal, or facsimile of the letter of transmittal or an agent's
message in the case of a book-entry transfer, as well as a confirmation of
book-entry transfer of the old notes into the exchange agent's account,
and any other documents required by the letter of transmittal, within five
business days after expiration of the exchange offer.
Upon request to the exchange agent, a notice of guaranteed delivery will be
sent to holders who wish to tender their old notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Your tender of old notes pursuant to the exchange offer is irrevocable
except as otherwise provided in this section. You may withdraw tenders of old
notes at any time prior to 5:00 p.m., New York time, on the expiration date.
For a withdrawal by DTC participants to be effective, holders must comply
with their respective standard operating procedures for electronic tenders and
the exchange agent must receive an electronic notice of withdrawal from DTC.
Any notice of withdrawal must specify the name and number of the account at
DTC to be credited with the withdrawn old notes and otherwise comply with the
procedures of the applicable facility. We will determine in our sole discretion
all questions as to the validity, form and eligibility, including time of
receipt, for such withdrawal notices, and our determination shall be final and
binding on all parties. Any old notes so withdrawn will be deemed not to have
been validly tendered for purposes of the exchange offer, and no new notes will
be issued with respect to them unless the old notes so withdrawn are validly
retendered. Any old notes that have been tendered but that are not accepted for
exchange for any reason will be returned to the holder without cost to such
holder as soon as practicable after withdrawal, rejection of tender or
termination of the exchange offer. Properly withdrawn old notes may be
retendered by following the procedures described above under "PROCEDURES FOR
TENDERING" at any time prior to the expiration date.
EXCHANGE AGENT
We have appointed Citibank, N.A. as exchange agent in connection with the
exchange offer. Holders of old notes should direct questions and requests for
assistance and for additional copies of this prospectus, the letter of
transmittal or notices of guaranteed delivery to the exchange agent addressed as
follows:
BY MAIL, HAND DELIVERY OR OVERNIGHT COURIER: BY FACSIMILE TRANSMISSION:
Citibank, N.A. (212) 825-3483
111 Wall Street, 15th Floor Confirm by Telephone
New York, New York 10043 (800) 422-2066
Attention: Agency & Trust Services
Delivery of a letter of transmittal to any address or facsimile number other
than the one set forth above will not constitute a valid delivery.
FEES AND EXPENSES
We will not make any payments to brokers, dealers or other persons
soliciting acceptances of the exchange offer. We will, however, pay the exchange
agent reasonable and customary fees for its services and will pay the exchange
agent for its related reasonable out-of-pocket expenses, including accounting
and legal fees. We may also pay brokerage houses and other custodians, nominees
and fiduciaries the reasonable out-of-pocket expenses incurred by them in
forwarding copies of this prospectus, letters of transmittal and related
documents to the beneficial owners of the old notes and in handling or
forwarding tenders for exchange.
19
Holders who tender their old notes for exchange will not be obligated to pay
any transfer taxes. If, however, a transfer tax is imposed for any reason other
than the exchange of old notes in connection with the exchange offer, then the
tendering holder must pay the amount of any transfer taxes due, whether imposed
on the registered holder or any other persons. If the tendering holder does not
submit satisfactory evidence of payment of these taxes or exemption from them
with the letter of transmittal, the amount of these transfer taxes will be
billed directly to the tendering holder.
CONSEQUENCES OF FAILURE TO PROPERLY TENDER OLD NOTES IN THE EXCHANGE
We will issue the new notes in exchange for old notes under the exchange
offer only after timely receipt by the exchange agent of the old notes, a
properly completed and duly executed letter of transmittal and all other
required documents. Therefore, holders of the old notes desiring to tender old
notes in exchange for new notes should allow sufficient time to ensure timely
delivery. We are under no duty to give notification of defects or irregularities
of tenders of old notes for exchange. Old notes that are not tendered or that
are tendered but not accepted by us will, following completion of the exchange
offer, continue to be subject to the existing restrictions upon transfer under
the Securities Act. Upon completion of the exchange offer, specified rights
under the registration rights agreement, including registration rights and any
right to additional interest, will be either limited or eliminated.
Participation in the exchange offer is voluntary. In the event the exchange
offer is completed, we will not be required to register the remaining old notes.
Remaining old notes will continue to be subject to the following restrictions on
transfer:
- holders may resell old notes only if an exemption from registration is
available or, outside the U.S., to non-U.S. persons in accordance with the
requirements of Regulation S under the Securities Act; and
- the remaining old notes will bear a legend restricting transfer in the
absence of registration or an exemption.
To the extent that old notes are tendered and accepted in connection with
the exchange offer, any trading market for remaining old notes could be
adversely affected.
DESCRIPTION OF NOTES
GENERAL
The new notes will be issued under an indenture, dated as of April 4, 2003,
between us and Citibank, N.A., as trustee. The old notes and new notes will
constitute a single series for all purposes under the indenture. The following
summaries of certain provisions of the new notes and the indenture do not
purport to be complete and are subject, and qualified in their entirety by
reference, to all of the provisions of the new notes and the indenture,
including the definitions of terms therein.
The notes will be issued in fully registered form in denominations of $1,000
and integral multiples thereof.
Definitions of certain capitalized terms used below can be found at the end
of this section under "CERTAIN DEFINITIONS."
PRINCIPAL, MATURITY AND INTEREST
The new notes will be issued in an aggregate principal amount of up to
$175,000,000. We may, without the consent of the holders of the notes, increase
such principal amount in the future on the same terms and conditions and with
the same CUSIP number as the new notes being offered in this prospectus. The new
notes will bear interest at 5% and will mature on April 15, 2013. Interest will
be payable on the new notes semiannually in arrears on April 15 and October 15
of each year,
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commencing on October 15, 2003, and will be computed on the basis of a 360-day
year comprised of twelve 30-day months. Interest on the new notes will accrue
from the most recent date to which interest has been paid on the old notes or,
if no interest has been paid, from April 4, 2003, which is the date that the old
notes were issued. Interest will be paid to holders of record on the April 1 and
October 1 immediately before the interest payment date. On the maturity date of
the new notes, holders will be entitled to receive 100% of the principal amount
of the new notes. We may redeem the new notes at any time at their principal
amount, plus any applicable premium and accrued interest. The new notes do not
provide for any sinking fund.
For so long as the new notes are issued in book-entry form, payments of
principal and interest shall be made in immediately available funds by wire
transfer to DTC or its nominee. We may issue new notes in definitive form in the
limited circumstances set forth in "BOOK-ENTRY SYSTEM" below. If we issue new
notes in definitive form, principal of and interest on the new notes will be
payable in the manner described below, and the transfer of the new notes will be
registrable at the office of Citibank, N.A., the paying agent and registrar for
the new notes, currently located at 111 Wall Street, 14th Floor, New York, New
York 10043. Payments of principal and interest shall be made by check mailed to
each holder of new notes at such holder's registered address. Default interest
will be paid in the same manner to holders as of a special record date
established in accordance with the indenture.
OPTIONAL REDEMPTION
We may at any time, at our option, redeem all or any portion of the new
notes at a redemption price (plus accrued interest to the date of redemption)
equal to the greater of:
1. 100% of the principal amount of the new notes to be redeemed; or
2. the sum of the present values of the remaining scheduled payments of
principal and interest on the new notes to be redeemed, discounted to the
date of redemption on a semiannual basis, assuming a 360-day year
consisting of twelve 30-day months, at the applicable treasury yield plus
0.20%.
HOW THE OPTIONAL REDEMPTION CALCULATION WILL APPLY TO THE NEW NOTES
The present value of the remaining payments on the new notes, as determined
by clause (2), will increase as interest rates on U.S. Treasury securities
decline, since the interest on the new notes that we pay to you will be
comparatively more valuable compared to the lower interest rates then being paid
on comparable securities. The present value will decline as interest rates
increase. We will always pay you at least 100% of the principal amount of your
new notes, even if interest rates have dramatically increased and the present
value of the remaining payments is less than that. However, clause (2) seeks to
ensure that you will capture the benefit of the increased value of your new
notes as interest rates decline by requiring us to pay you an amount equal to
the present value of remaining payments, as determined in clause (2).
HOW THE OPTIONAL REDEMPTION PAYMENT IN CLAUSE (2) IS CALCULATED
In connection with any redemption date, the "treasury yield" will be an
annual rate equal to the semiannual equivalent yield to maturity of the
comparable U.S. Treasury security. In calculating the yield to maturity of the
comparable U.S. Treasury security, we will assume a price for the comparable
U.S. Treasury security, expressed as a percentage of its principal amount, equal
to the applicable comparable Treasury price for that redemption date.
Independent investment bankers will select as the comparable U.S. Treasury
security a United States Treasury security that has a maturity comparable to the
remaining term of the notes that would be used, at the time of selection and in
accordance with customary financial practice, in pricing new
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issues of corporate debt securities of comparable maturity to the remaining term
of the new notes. Salomon Smith Barney Inc., Credit Suisse First Boston LLC and
J.P. Morgan Securities Inc. will act as the independent investment bankers. If
these firms are unwilling or unable to select a comparable U.S. Treasury
security, the trustee will appoint another independent investment banking
institution of national standing to act as the independent investment banker.
NOTICES OF REDEMPTION
Holders of the new notes to be redeemed will receive notice of the
redemption by first-class mail at least 30 and not more than 60 days prior to
the date fixed for redemption.
NO REDEMPTION AT HOLDER'S OPTION
The new notes are not redeemable at the holder's option.
MERGERS AND CONSOLIDATIONS
We will agree in the indenture not to consolidate with or merge with another
person, or sell, convey, transfer or lease our properties and assets
substantially as an entirety to any person, and not to permit any person to
consolidate with or merge with or into us, unless:
- we are the surviving or continuing corporation, or the surviving,
continuing or acquiring corporation is incorporated in the United States
and expressly assumes by means of a supplemental indenture the payment and
performance of all of our obligations under the indenture and the new
notes.
- immediately following such consolidation, merger, sale, conveyance,
transfer or lease, no event of default under the indenture shall have
occurred and be continuing. An event of default for this purpose would
also include any event that would be an event of default if the
requirements for giving us a notice of default or for our default having
to continue for a specific period of time were disregarded.
- if, as a result of such consolidation or merger, sale, conveyance,
transfer or lease, properties or assets become subject to a mortgage or
other lien rights in such property or assets not permitted by the
indenture, we take such steps as shall be necessary to secure the new
notes equally and ratably with (or prior to) all indebtedness secured by
such liens.
- we deliver to the trustee an officers' certificate and opinion of counsel
confirming that the merger, sale or lease of assets or other transaction
complies with the above conditions.
RESTRICTIONS ON LIENS
Under the indenture, we or a restricted subsidiary (as defined below) are
not permitted to create a lien on any principal property (as defined below), or
any shares of stock or indebtedness of any restricted subsidiary, whether
existing now or in the future, UNLESS an equivalent or higher-ranking lien is
granted to all holders of the new notes, except for the following:
- liens on any acquired property that existed prior to our contemplation of
the acquisition of such property,
- liens existing on property, shares, indebtedness or other assets of a
corporation that became a restricted subsidiary and which were not created
in anticipation of that corporation becoming a restricted subsidiary,
- liens on acquired property, shares or indebtedness existing at the time of
acquisition of such property by us or a restricted subsidiary,
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- liens on acquired property, shares or indebtedness to secure payment of
their purchase price,
- liens on property, shares or indebtedness to secure any indebtedness
incurred to facilitate construction or improvements to property or to
enable commencement of commercial operations,
- liens to secure debts owed to us or to a restricted subsidiary,
- liens existing at the date of the indenture,
- liens existing on the property of a corporation at the time of its
business combination with us or a restricted subsidiary, and which were
not created in anticipation of the business combination,
- liens created in favor of Federal, State or local authorities to secure
statutory or contractual obligations or to secure any indebtedness
incurred to finance the purchase price or the cost of constructing or
improving the property subject to those liens,
- liens created in connection with asset acquisitions or project financings
involving non-recourse obligations (as defined below), or
- extensions, renewals, refinancings or replacements of any of the
above-listed liens.
In addition, we or a restricted subsidiary may also create other liens on
our respective properties, without granting an equivalent or higher-ranking lien
to holders of the new notes, if the total amount of debt secured by those liens
is at that time not more than 15% of our consolidated net tangible assets (as
defined below).
RESTRICTIONS ON SALE AND LEASE-BACK TRANSACTIONS
We shall not, and shall not permit any restricted subsidiary to, enter into
any sale and lease-back transaction (as defined below) relating to any principal
property, except transactions with a lease term of less than three years,
transactions between us and a restricted subsidiary, or transactions between
restricted subsidiaries, unless:
- we or the restricted subsidiary are permitted under the indenture to incur
debt, secured by a lien on the principal property involved in the sale and
lease-back transaction, in an amount equal to the attributable debt (as
defined below), without granting an equivalent or higher-ranking lien to
holders of new notes, or
- we use an amount equal to the attributable debt or the net proceeds of the
sale within 180 days voluntarily to retire certain debt.
EVENTS OF DEFAULT
You will have special rights if an event of default occurs and is not cured,
as described later in this subsection. The term "event of default" means any of
the following:
- we fail to pay the principal or any premium on a new note on the due date,
- we fail to pay interest on a new note within 30 days from the relevant due
date,
- we remain in breach of certain covenants in the indenture for 60 days
after we receive a notice of default stating that we are in breach. The
notice must be sent by the trustee or by holders of at least 25% in
principal amount of the new notes,
- a court enters a decree of bankruptcy, insolvency or reorganization
against us, or
- we file voluntary proceedings under bankruptcy, insolvency or
reorganization laws.
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If an event of default occurs and continues, the trustee or the holders of
at least 25% of the principal amount of the new notes may require us to repay
the entire principal amount of the new notes immediately, which is called a
"repayment acceleration." In most instances, the holders of at least a majority
in aggregate principal amount of the new notes may rescind a previously
triggered repayment acceleration. However, if an event of default results from a
failure to pay unaccelerated principal and premium or interest, a repayment
acceleration may be rescinded only if we have first cured the default by
depositing with the trustee enough money to pay all unaccelerated past due
amounts and any penalties.
The trustee must notify the holders of the new notes of such default unless
such default has been cured or waived; however, with respect to a default in the
performance or breach of certain covenants, no notice shall be given by the
trustee until at least 30 days after such default occurs. We are required to
file an annual certificate with the trustee, signed by an officer, concerning
any default under any provisions of the indenture.
Subject to the provisions of the indenture relating to the trustee's duties
in case of default, the trustee shall be under no obligation to exercise any of
its rights or powers under the indenture at the request, order or direction of
any holders unless such holders offer the trustee reasonable indemnity. Subject
to the provisions for indemnification, the holders of a majority in principal
amount of the new notes may direct the time, method and place of conducting any
proceedings for any remedy available to, or exercising any trust or power
conferred on, the trustee with respect to the new notes.
Before you bypass the trustee and bring your own lawsuit or other formal
legal action or take other steps to enforce your rights or protect your
interests relating to the new notes, the following must occur:
- you must give the trustee written notice that an event of default has
occurred and remains uncured,
- the holders of 25% in principal amount of all outstanding new notes must
make a written request that the trustee take action because of the default
and must offer reasonable indemnity to the trustee against the cost and
other liabilities of taking that action,
- the trustee must have not taken action for 60 days after receipt of the
above notice and offer of indemnity, and
- no inconsistent direction must have been given to the trustee during the
60-day period from the holders of a majority in principal amount of the
outstanding new notes.
MODIFICATION OF INDENTURE
Under the indenture, our rights and obligations and the rights of the
holders of any new notes may be changed. Any change affecting the rights of the
holders of new notes requires the consent of the holders of not less than a
majority in aggregate principal amount of the outstanding new notes affected by
the change, voting as one class. However, we cannot change the terms of payment
of principal or interest, or reduce the percentage required for changes or a
waiver of default with respect to any new note unless each affected holder
consents. We may take other action that does not affect the rights of holders by
executing supplemental indentures without the consent of any new note holder.
DEFEASANCE
We, at our election, may at any time terminate all of our obligations with
respect to the new notes, called a "defeasance" (except for certain obligations,
including those regarding any trust established for a defeasance and obligations
to register the transfer or exchange of the new notes, to replace mutilated,
destroyed, lost or stolen new notes as required by the indenture and to maintain
agencies in respect of
24
the new notes). We may also at any time terminate our obligations under certain
restrictive covenants set forth in the indenture and any omission to comply with
such obligations shall not constitute an event of default with respect to the
new notes, which is called a "covenant defeasance." To exercise either
defeasance or covenant defeasance, there must be deposited in trust, for the
benefit of the holders of the new notes, with the trustee, sufficient cash or
U.S. government securities, or a combination thereof, in such amounts as will be
sufficient to pay the principal of, and premium, if any, and interest on the new
notes and any other sums due to the stated maturity date or a redemption date of
the new notes and there must be delivered to the trustee an opinion of counsel
stating that the federal income tax obligations of new note holders will not
change as a result.
SATISFACTION AND DISCHARGE
The indenture will be discharged and will cease to be of further effect,
except as to surviving rights or registration of transfer or exchange of new
notes, as to all outstanding new notes when:
- either (a) all such new notes theretofore authenticated and delivered
(except lost, stolen or destroyed new notes that have been replaced or
paid and new notes for whose payment money has been deposited in trust or
segregated and held in trust by us and repaid to us or discharged from
such trust) have been delivered to the trustee for cancellation or
(b) all such new notes not theretofore delivered to the trustee for
cancellation have become due and payable, will become due and payable at
the stated maturity date within one year, or are to be called for
redemption within one year under arrangements satisfactory to the trustee
for the giving of notice of redemption by the trustee in our name, and at
our expense, and there have been deposited with the trustee as trust
funds, for this purpose, sufficient cash or U.S. government obligations in
such amounts sufficient to pay and discharge the entire indebtedness on
the new notes not theretofore delivered to the trustee for cancellation,
for principal amount, premium, if any, and interest to the date of such
deposit (in the case of new notes which have become due and payable) or to
the stated maturity date or a redemption date, as the case may be;
- there have been paid all other sums payable by us under the indenture; and
- there have been delivered (a) irrevocable instructions to the trustee to
apply the deposited money toward the payment of the new notes at the
stated maturity or on a redemption date, as the case may be, and (b) an
officers' certificate and an opinion of counsel stating that all
conditions precedent to satisfaction and discharge have been complied
with.
CONCERNING THE TRUSTEE
We and our affiliates use or will use some of the banking services of the
trustee in the normal course of business. The trustee is also trustee under an
indenture with us, dated as of January 23, 2002, with respect to our 5.75% Notes
due 2007.
GOVERNING LAW
The indenture and the new notes will be governed by the laws of the State of
New York.
BOOK-ENTRY SYSTEM
Upon issuance, all new notes will be represented by a single global note.
The global note will be deposited on behalf of DTC and registered in the name of
Cede & Co., which we refer to as Cede, as DTC's nominee. Beneficial interests in
the global note will be represented through book-entry accounts of financial
institutions acting on behalf of beneficial owners as direct and indirect
participants in DTC (the "Participants"). Investors may elect to hold interests
in the global note through either DTC (in the United States), or Clearstream
Banking, S.A. ("Clearstream") or the Euroclear System ("Euroclear")
25
(in Europe) if they are participants of those systems, or, indirectly, through
organizations that are participants in those systems. Clearstream and Euroclear
will hold interests on behalf of their participants through customers'
securities accounts in Clearstream's and Euroclear's names on the books of their
respective depositaries, which in turn will hold such interests in customers'
securities accounts in the depositaries' names on the books of DTC.
DTC has advised us as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Exchange Act. DTC was created to hold securities for its
participants and to facilitate the clearance and settlement of securities
transactions, such as transfers and pledges, among participants in deposited
securities through electronic book-entry charges to accounts of its
participants, thereby eliminating the need for physical movement of securities
certificates. Participants include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. Certain of
such participants (or other representatives), together with other entities, own
DTC. The rules applicable to DTC and its participants are on file with the SEC.
Clearstream has advised us that it is incorporated under the laws of
Luxembourg as a professional depositary. Clearstream holds securities for its
participating organizations ("Clearstream Participants") and facilitates the
clearance and settlement of securities transactions between Clearstream
Participants through electronic book-entry changes in accounts of Clearstream
Participants, thereby eliminating the need for physical movement of
certificates. Clearstream provides to Clearstream Participants, among other
things, services for safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing.
Clearstream interfaces with domestic markets in several countries. As a
professional depositary, Clearstream is subject to regulation by the Luxembourg
Monetary Institute. Clearstream Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations and may include the initial purchasers or their affiliates.
Indirect access to Clearstream is also available to others, such as banks,
brokers, dealers and trust companies that clear through, or maintain a custodial
relationship with, a Clearstream Participant either directly or indirectly.
Distributions with respect to the new notes held beneficially through
Clearstream will be credited to cash accounts of Clearstream Participants in
accordance with its rules and procedures, to the extent received by the U.S.
depositary for Clearstream.
Euroclear has advised us that it was created in 1968 to hold securities for
its participants ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Euroclear provides various other services, including securities lending
and borrowing, and interfaces with domestic markets in several countries. The
Euroclear System is operated by Euroclear Bank S.A./ N.V., a bank incorporated
under the laws of the Kingdom of Belgium as the "Euroclear operator."
The Euroclear operator holds securities and book-entry interests in
securities for participating organizations and facilitates the clearance and
settlement of securities transactions between Euroclear Participants, and
between Euroclear Participants and participants of certain other securities
intermediaries through electronic book-entry changes in accounts of such
participants or other securities intermediaries.
The Euroclear operator provides Euroclear Participants, among other things,
with safekeeping, administration, clearance and settlement, securities lending
and borrowing, and related services.
26
Non-participants of Euroclear may hold and transfer book-entry interests in
the securities through accounts with a direct participant of Euroclear or any
other securities intermediary that holds a book-entry interest in the securities
through one or more securities intermediaries standing between such other
securities intermediary and the Euroclear operator.
Securities clearance accounts and cash accounts with the Euroclear operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian law
(the "Terms and Conditions"). The Terms and Conditions govern transfers of
securities and cash within Euroclear, withdrawals of securities and cash from
Euroclear, and receipts of payments with respect to securities in Euroclear. All
securities in Euroclear are held on a fungible basis without attribution of
specific certificates to specific securities clearance accounts. The Euroclear
operator acts under the Terms and Conditions only on behalf of Euroclear
Participants, and has no record of, or relationship with, persons holding
through Euroclear Participants.
Distributions with respect to the new notes held beneficially through
Euroclear will be credited to the cash accounts of Euroclear Participants in
accordance with the Terms and Conditions, to the extent received by the U.S.
depositary for Euroclear.
The trustee (or any registrar or paying agent) will not have any
responsibility for the performance by DTC, Clearstream or Euroclear or any
Participants, Clearstream Participants or Euroclear Participants of their
respective obligations under the rules and procedures governing their
operations. DTC has advised us that it will take any action permitted to be
taken by a holder of new notes only at the direction of one or more Participants
whose accounts are credited with DTC interests in a global note.
DTC has advised that, pursuant to procedures established by it: (1) upon the
issuance by us of the global note representing the new notes, DTC or its nominee
will credit the accounts of Participants with the aggregate principal amount of
the individual beneficial interest represented by the global note; and
(2) ownership of beneficial interests in the new notes will be shown on, and the
transfer of that ownership will be effected only through, records maintained by
DTC with respect to its Participants' interests (both its direct and indirect
Participants). The laws of some jurisdictions require that certain persons take
physical delivery in definitive form of securities that they own. Consequently,
the ability to transfer beneficial interests in the global note is limited to
such extent.
So long as a nominee of DTC is the registered owner of the global note, such
nominee will be considered the sole owner or holder of the global note for all
purposes under the indenture. Except as provided below, owners of beneficial
interests in the global note will not be entitled to have the new notes
registered in their names, will not receive or be entitled to receive physical
delivery of the new notes in definitive form and will not be considered the
owners or holders thereof under the indenture.
Neither we, the trustee, any paying agent nor the registrar will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the global note,
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Title to book-entry interests in the new notes will pass by book-entry
registration of the transfer within the records of Clearstream, Euroclear or
DTC, as the case may be, in accordance with their respective procedures.
Book-entry interests in the new notes may be transferred within Clearstream and
within Euroclear and between Clearstream and Euroclear in accordance with
procedures established for these purposes by Clearstream and Euroclear.
Book-entry interests in the new notes may be transferred within DTC in
accordance with procedures established for this purpose by DTC. Transfers of
book-entry interests in the new notes among Clearstream and Euroclear and DTC
may be effected in accordance with procedures established for this purpose by
Clearstream, Euroclear and DTC.
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Principal and interest payments on the new notes will be made to DTC by wire
transfer of immediately available funds. DTC's practice is to credit
Participants' accounts on the payable date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe that it will
not receive payment on the payable date. Payments by Participants to beneficial
owners will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer form or
registered in "street name" and will be the responsibility of such Participant
and not of DTC or us, subject to any statutory or regulatory requirements as may
be in effect from time to time. Payment of principal and interest to DTC is our
responsibility, disbursement of such payments to Participants shall be the
responsibility of DTC, and disbursement of such payments to the beneficial
owners shall be the responsibility of Participants and indirect Participants in
DTC. Neither we, the trustee nor any initial purchaser will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the global notes
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
DTC may discontinue providing its services as securities depositary with
respect to the notes at any time by giving reasonable notice to us.
New notes represented by the global note will be exchangeable for note
certificates with the same terms in authorized denominations only if:
- DTC notifies us that it is unwilling or unable to continue as depositary
or if DTC ceases to be a clearing agency registered under applicable law
and a successor depositary is not appointed by us within 90 days;
- we determine not to require all of the new notes to be represented by the
global note and notify the trustee of our decision; or
- there shall have occurred and be continuing an event of default or any
event that after notice or lapse of time or both would be an event of
default with respect to the notes.
In any such instance, an owner of a beneficial interest in the global note
will be entitled to physical delivery in definitive form of new notes
represented by the global note equal in principal amount to such beneficial
interest and to have such notes registered in its name. New notes so issued in
definitive form will be issued as registered notes in denominations of $1,000
and integral multiples thereof, unless otherwise specified by us. Our definitive
notes can be transferred by presentation for registration to the registrar at
its New York offices and must be duly endorsed by the holder or the holder's
attorney duly authorized in writing, or accompanied by a written instrument or
instruments of transfer in form satisfactory to us or the trustee duly executed
by the holder or the holder's attorney duly authorized in writing. We may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any exchange or registration of
transfer of definitive notes.
GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES
Secondary market trading between Participants will occur in the ordinary way
in accordance with DTC's rules and will be settled in immediately available
funds using DTC's Same-Day Funds Settlement System. Secondary market trading
between Clearstream Participants and Euroclear Participants will occur in the
ordinary way in accordance with the applicable rules and operating procedures of
Clearstream and Euroclear and will be settled using the procedures applicable to
conventional eurobonds in immediately available funds.
Cross-market transfers between DTC, on the one hand, and directly or
indirectly through Euroclear or Clearstream Participants, on the other, will be
effected in DTC in accordance with DTC rules on behalf of Euroclear or
Clearstream, as the case may be, by its U.S. depositary; however, such
cross-market transactions will require delivery of instructions to Euroclear or
Clearstream, as the case
28
may be, by the counterparty in such system in accordance with its rules and
procedures and within its established deadlines. Euroclear or Clearstream, as
the case may be, will, if the transaction meets its settlement requirements,
deliver instructions to its U.S. depositary to take action to effect final
settlement on its behalf by delivering or receiving beneficial interests in the
global note in DTC, and making or receiving payment in accordance with normal
procedures for same-day funds settlement applicable to DTC. Clearstream
Participants and Euroclear Participants may not deliver instructions directly to
its U.S. depositaries.
Because of time zone differences, the securities account of a Euroclear
Participant or Clearstream Participant purchasing a beneficial interest in a
global note from a Participant will be credited during the securities settlement
processing day immediately following the DTC settlement date and such credit of
any transactions in beneficial interests in such global note settled during such
processing will be reported to the relevant Euroclear Participant or Clearstream
Participant on such business day. Cash received in Euroclear or Clearstream as a
result of sales of beneficial interests in a global note by or through a
Euroclear Participant or Clearstream Participant to a DTC Participant will be
received with value on the DTC settlement date but will be available in the
relevant Euroclear or Clearstream cash account only as of the business day
following settlement in DTC.
Although DTC, Clearstream and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of securities among participants in
DTC, Clearstream and Euroclear, they are under no obligation to perform or
continue to perform such procedures and they may discontinue the procedures at
any time.
CERTAIN DEFINITIONS
Set forth below are definitions of some of the terms used in this
description of the new notes.
The term "attributable debt" when used in connection with a sale and
lease-back transaction involving a principal property means, at the time of
determination, the lesser of:
- the fair value of that property (as determined in good faith by our board
of directors), or
- the present value of the total net amount of rent to be paid during the
term of the lease, including any renewal or extension of the lease,
discounted at the rate of interest embedded in the lease or, if it is
impractical to determine this rate, the weighted average annual interest
rate on all outstanding notes, compounded semi-annually.
For purposes of this definition, rent does not include amounts paid by the
lessee for maintenance and repairs, insurance, taxes, assessments, water rates
and similar charges.
The term "business day," when used with respect to any place of payment,
means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on
which banking institutions in that place of payment are authorized or obligated
by law or executive order to close.
The term "consolidated net tangible assets" means, at any particular time,
total assets (excluding applicable reserves and other properly deductible items)
less:
- total current liabilities, except for notes and loans payable, current
maturities of long-term debt, and current maturities of obligations under
capital leases, and
- goodwill, patents and trademarks, to the extent included in total assets,
all as presented on our most recent consolidated balance sheet and computed in
accordance with generally accepted accounting principles.
29
The term "non-recourse obligation" means indebtedness or other obligations
substantially related to:
- the acquisition of assets not previously owned by us or any restricted
subsidiary, or
- the financing of a project involving the development or expansion of
properties owned by us or any restricted subsidiary, under which the
person extending the indebtedness or obligation has no recourse to us or
any restricted subsidiary or any assets of ours or any restricted
subsidiary other than the assets acquired with the proceeds of the
transaction, the project financed with the proceeds of the transaction and
the proceeds of the project.
The term "place of payment" means the place or places where the principal of
and any premium and interest on the securities are payable as specified in
section 301 of the indenture.
The term "principal property" means the land, land improvements, buildings
and fixtures comprising the principal corporate office, any manufacturing
facility or any distribution center, whether now owned or acquired in the
future, which:
- is owned by us or any subsidiary (as defined below);
- is located within any of the 50 states of the United States or the
District of Columbia;
- is not determined in good faith by our board of directors to be immaterial
to the overall business of us and our subsidiaries taken as a whole; and
- has a market value on the date as of which the determination is being made
of more than 4.0% of our consolidated net tangible assets.
However, the addition at 557 Broadway, New York, New York to our world
headquarters and our principal distribution and warehouse center located in
Jefferson City, Missouri are not considered principal properties for purposes of
the indenture only.
The term "restricted subsidiary" means any subsidiary that owns any
principal property.
The term "sale and lease-back transaction" means any arrangement with any
person providing for the leasing by us or a restricted subsidiary of a principal
property where the principal property is sold or transferred by us or the
restricted subsidiary to that person.
The term "subsidiary" means any corporation of which we directly or
indirectly own at least a majority of the outstanding voting stock having the
authority to elect a majority of the board of directors. For the purposes of
this definition, "voting stock" means stock that ordinarily has voting power for
the election of directors.
IMPORTANT FEDERAL INCOME TAX CONSIDERATIONS
The exchange of old notes for new notes will not be treated as a taxable
transaction for U.S. Federal income tax purposes because the terms of the new
notes will not be considered to differ materially in kind or extent from the
terms of the old notes. Rather, the new notes you receive will be treated as a
continuation of your investment in the old notes. As a result, you will not have
any material U.S. Federal income tax consequences if you exchange your old notes
for new notes.
IF YOU ARE THINKING ABOUT EXCHANGING YOUR OLD NOTES FOR NEW NOTES, YOU
SHOULD CONSULT YOUR OWN TAX ADVISORS CONCERNING THE TAX CONSEQUENCES ARISING
UNDER STATE, LOCAL OR FOREIGN LAWS.
30
PLAN OF DISTRIBUTION
Each broker-dealer that receives new notes for its own account in connection
with the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of those new notes. A broker-dealer may use this
prospectus, as amended or supplemented from time to time, in connection with
resales of new notes received in exchange for old notes where such broker-dealer
acquired old notes as a result of market-making activities or other trading
activities. We have agreed that, for a period of 180 days after the expiration
date of the exchange offer, we will make available a prospectus, as amended or
supplemented, meeting the requirements of the Securities Act to any
broker-dealer for use in connection with those resales.
We will not receive any proceeds from any sale of new notes by
broker-dealers. Broker-dealers may sell new notes received by them for their own
account pursuant to the exchange offer from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the new notes or a combination of those methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any broker-dealer or
the purchasers of any new notes.
Any broker-dealer that resells new notes that were received by it for its
own account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of such new notes may be deemed to be an
"underwriter" within the meaning of the Securities Act. A profit on any such
resale of new notes and any commission or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The letter of transmittal states that, by acknowledging that it will deliver and
by delivering this prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the expiration date of the exchange offer, we
will promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests these documents
in the letter of transmittal. We have agreed to pay all expenses incident to the
exchange offer, including the expenses of one counsel for the holders of the old
notes, other than commission or concessions of any brokers or dealers and will
indemnify the holders of the old notes, including any brokers or dealers,
against specified liabilities, including liabilities under the Securities Act.
VALIDITY OF THE NOTES
The validity of the new notes will be passed upon for us by Coudert Brothers
LLP, New York, New York. Andrew S. Hedden, a partner of Coudert Brothers LLP, is
a director of Scholastic and owns 2,000 shares of our common stock.
EXPERTS
The consolidated financial statements of Scholastic Corporation included in
Scholastic Corporation's Annual Report (Form 10-K) for the year ended May 31,
2002, have been audited by Ernst & Young LLP, independent auditors, as set forth
in their reports thereon included therein and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
31
AVAILABLE INFORMATION
We have filed a registration statement on Form S-4 with the SEC in
connection with this exchange offer. This prospectus is part of that
registration statement. We are required to file annual, quarterly and current
reports, proxy statements and other information with the SEC. You may read and
copy any documents filed by us at the SEC's public reference room at 450 Fifth
Avenue, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the operation of the public reference room. Our filings
with the SEC are also available to the public through the SEC's Internet site at
http://www.sec.gov and through the Nasdaq Stock Market, 9801 Washingtonian
Boulevard, Gaithersburg, Maryland 20878, on which our common stock is listed.
We are "incorporating by reference" specified documents that we file with
the SEC, which means that we can disclose important information to you by
referring you to those documents that are considered part of this prospectus.
Later information that we file with the SEC will automatically update, and where
applicable, supersede any information contained in this prospectus or
incorporated by reference in this prospectus.
We incorporate by reference the documents listed below and any future
filings made with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act by us until the exchange offer is completed.
(1) Annual Report on Form 10-K for the fiscal year ended May 31, 2002,
(2) Quarterly Report on Form 10-Q for the quarter ended August 31, 2002,
(3) Quarterly Report on Form 10-Q for the quarter ended November 30, 2002,
(4) Quarterly Report on Form 10-Q for the quarter ended February 28, 2003,
(5) Current Report on Form 8-K, dated August 1, 2002,
(6) Current Report on Form 8-K, dated August 22, 2002, and
(7) Current Report on Form 8-K, dated April 3, 2003.
You can request copies of these documents and any other document
incorporated by reference herein, but not delivered with this prospectus, at no
cost upon your written or oral request to Raymond Marchuk, our Senior Vice
President, Finance and Investor Relations, 557 Broadway, New York, New York
10012, telephone number: (212) 343-6741.
IN ORDER TO ENSURE TIMELY DELIVERY OF THE REQUESTED DOCUMENTS, REQUESTS
SHOULD BE MADE NO LATER THAN ______, 2003 [FIVE BUSINESS DAYS PRIOR TO
EXPIRATION OF EXCHANGE OFFER]. In the event that we extend the exchange offer,
you must submit your request at least five business days before the expiration
date, as extended.
32
SCHOLASTIC CORPORATION
OFFER TO EXCHANGE UP TO
$175,000,000
OF
5% NOTES DUE 2013
WHICH HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933
FOR
ALL OUTSTANDING UNREGISTERED
5% NOTES DUE 2013
------------------------
PROSPECTUS
, 2003
------------------------
UNTIL ____________, 2003, ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law empowers a Delaware
corporation to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of such corporation) by reason of the fact that such person
is or was a director, officer, employee or agent of such corporation or is or
was serving at the request of such corporation as a director, officer, employee
or agent of another corporation or enterprise. A corporation may indemnify such
person against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
A Delaware corporation may indemnify officers and directors in an action by or
in the right of a corporation to procure a judgment in its favor under the same
conditions, except that no indemnification is permitted without judicial
approval if the officer or director is adjudged to be liable to the corporation.
Where an officer or director is successful on the merits or otherwise in the
defense of any action referred to above, the corporation must indemnify him or
her against the expenses (including attorneys' fees) which he or she actually
and reasonably incurred in connection therewith. The indemnification provided is
not deemed to be exclusive of any other rights to which an officer or director
may be entitled under any by-law, agreement, vote or otherwise.
Article FIFTH of the Amended and Restated Certificate of Incorporation of
the registrant and Article VII of the By-laws of the Registrant contain
provisions for the indemnification of directors, officers and employees within
the limitations permitted by Section 145 of the Delaware General Corporation
Law. In addition, as authorized by Section 145 of the Delaware General
Corporation Law, Article FIFTH of the registrant's Amended and Restated
Certificate of Incorporation eliminates the personal liability of its directors
to the registrant or its stockholders for monetary damages for any breach of
fiduciary duty as a director, except for (i) any breach of the duty of loyalty
to the registrant or its stockholders, (ii) acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law,
(iii) liability under Section 174 of the Delaware General Corporation Law or
(iv) any transaction from which the director derived an improper personal
benefit.
The Company currently maintains an insurance policy under which the Company
and the directors and officers of the Company are insured, within the limits of
the policy, against certain expenses in connection with the defense of actions,
suits or proceedings, and certain liabilities which might be imposed as a result
of such actions, suits or proceedings, to which directors and officers of the
Company are parties by reason of being or having been such directors or
officers.
II-1
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS
EXHIBITS DESCRIPTION
- -------- -----------
1.1 Purchase Agreement, dated April 2, 2003, between Scholastic
Corporation and Salomon Smith Barney Inc., Credit Suisse
First Boston LLC and J.P. Morgan Securities Inc., as
representatives of the Initial Purchasers.
4.1 Indenture dated April 4, 2003, between Scholastic
Corporation and Citibank, N.A., as trustee.
4.2 Registration Rights Agreement, dated April 4, 2003, between
Scholastic Corporation and Salomon Smith Barney Inc., Credit
Suisse First Boston LLC and J.P. Morgan Securities Inc., as
representatives of the Initial Purchasers.
4.3 Form of New Global Note.
5.1 Opinion of Coudert Brothers LLP.
12.1 Computation in Support of Ratio of Earnings to Fixed
Charges.
23.1 Consent of Coudert Brothers LLP (included in Exhibit 5.1).
23.2 Consent of Ernst & Young LLP.
25.1 Statement of Eligibility of Citibank, N.A., as Trustee on
Form T-1.
99.1 Form of Letter to Registered Holders.
99.2 Form of Letter of Transmittal to Tender for Exchange.
99.3 Form of Notice of Guaranteed Delivery.
99.4 Form of Instruction to Registered Holder from Beneficial
Owner.
99.5 Form of Letter to Clients.
99.6 Form of Letter to Depository Trust Company Participants.
99.7 Form of Exchange Agent Agreement.
ITEM 22. 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 require any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information 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
II-2
(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) of this section do
not apply if the registration statement is on Form S-3 or Form S-8 or
Form F-3, and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unexchanged at the
termination of the offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant
to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(6) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this
Form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request.
(7) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in The City of New York, State of New
York, on April 29, 2003.
SCHOLASTIC CORPORATION
By: /s/ RICHARD ROBINSON
-----------------------------------------------
Name: Richard Robinson
Title: CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE
OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on April 29, 2003.
SIGNATURE TITLE
--------- -----
/s/ RICHARD ROBINSON Chairman, President and Chief Executive
------------------------------------------- Officer (Principal Executive Officer)
(Richard Robinson)
/s/ KEVIN J. MCENERY Executive Vice President and Chief Financial
------------------------------------------- Officer (Principal Financial Officer)
(Kevin J. McEnery)
/s/ KAREN A. MALONEY Vice President, Corporate Controller
------------------------------------------- (Principal Accounting Officer)
(Karen A. Maloney)
/s/ REBECA M. BARRERA Director
-------------------------------------------
(Rebeca M. Barrera)
/s/ RAMON C. CORTINES Director
-------------------------------------------
(Ramon C. Cortines)
/s/ JOHN L. DAVIES Director
-------------------------------------------
(John L. Davies)
/s/ CHARLES T. HARRIS III Director
-------------------------------------------
(Charles T. Harris III)
II-4
SIGNATURE TITLE
--------- -----
/s/ ANDREW S. HEDDEN Director
-------------------------------------------
(Andrew S. Hedden)
/s/ MAE C. JEMISON Director
-------------------------------------------
(Mae C. Jemison)
/s/ LINDA B. KEENE Director
-------------------------------------------
(Linda B. Keene)
/s/ PETER M. MAYER Director
-------------------------------------------
(Peter M. Mayer)
/s/ JOHN G. MCDONALD Director
-------------------------------------------
(John G. McDonald)
/s/ AUGUSTUS K. OLIVER, II Director
-------------------------------------------
(Augustus K. Oliver, II)
/s/ RICHARD M. SPAULDING Director
-------------------------------------------
(Richard M. Spaulding)
II-5
INDEX TO EXHIBITS
(A) EXHIBITS
EXHIBITS DESCRIPTION
- -------- ------------------------------------------------------------
1.1 Purchase Agreement, dated April 2, 2003, between Scholastic
Corporation and Salomon Smith Barney Inc., Credit Suisse
First Boston LLC and J.P. Morgan Securities Inc., as
representatives of the Initial Purchasers.
4.1 Indenture dated April 4, 2003, between Scholastic
Corporation and Citibank, N.A., as trustee.
4.2 Registration Rights Agreement, dated April 4, 2003, between
Scholastic Corporation and Salomon Smith Barney Inc., Credit
Suisse First Boston LLC and J.P. Morgan Securities Inc., as
representatives of the Initial Purchasers.
4.3 Form of New Global Note.
5.1 Opinion of Coudert Brothers LLP.
12.1 Computation in Support of Ratio of Earnings to Fixed
Charges.
23.1 Consent of Coudert Brothers LLP (included in Exhibit 5.1).
23.2 Consent of Ernst & Young LLP.
25.1 Statement of Eligibility of Citibank, N.A., as Trustee on
Form T-1.
99.1 Form of Letter to Registered Holders.
99.2 Form of Letter of Transmittal to Tender for Exchange.
99.3 Form of Notice of Guaranteed Delivery.
99.4 Form of Instruction to Registered Holder from Beneficial
Owner.
99.5 Form of Letter to Clients.
99.6 Form of Letter to Depository Trust Company Participants.
99.7 Form of Exchange Agent Agreement.
II-6
EXHIBIT 1.1
Execution Copy
SCHOLASTIC CORPORATION
$175,000,000
5% NOTES DUE 2013
PURCHASE AGREEMENT
April 2, 2003
Salomon Smith Barney Inc.
Credit Suisse First Boston LLC
J.P. Morgan Securities Inc.
As Representatives of the Initial Purchasers
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
INTRODUCTORY. Scholastic Corporation, a Delaware corporation ("COMPANY"),
proposes to issue and sell to the several parties named in Schedule I hereto
(the "INITIAL PURCHASERS"), for whom you (the "REPRESENTATIVES") are acting as
representatives, $175,000,000 principal amount of its 5% Notes Due 2013 (the
"SECURITIES"). The Securities are to be issued under an indenture (the
"INDENTURE") to be dated as of April 4, 2003, between the Company and Citibank,
N.A., as trustee (the "TRUSTEE"). The Securities have the benefit of a
registration rights agreement (the "REGISTRATION RIGHTS AGREEMENT"), to be dated
as of April 4, 2003, between the Company and the Initial Purchasers, pursuant to
which the Company has agreed, among other things, to file a registration
statement with the Commission, registering the Securities or the Exchange
Securities (as defined in the Registration Rights Agreement) under the Act, and
the Company will agree to conduct the Exchange Offer (as defined in the
Registration Rights Agreement) pursuant to the terms thereof. To the extent
there are no additional parties listed on Schedule I other than you, the term
Representatives as used herein shall mean you as the Initial Purchasers, and the
terms Representatives and Initial Purchasers shall mean either the singular or
plural as the context requires. The use of the neuter in this Agreement shall
include the feminine and masculine wherever appropriate. Certain terms used
herein are defined in Section 16 hereof.
The sale of the Securities to the Initial Purchasers will be made without
registration of the Securities under the Act in reliance upon exemptions from
the registration requirements of the Act.
In connection with the sale of the Securities, the Company will prepare an
offering memorandum, dated April 2, 2003, (as amended or supplemented at the
Execution Time, including any and all exhibits thereto and any information
incorporated by reference therein, the "OFFERING MEMORANDUM"). The Offering
Memorandum sets forth certain information concerning the Company and the
Securities. The Company hereby confirms that it has authorized the use of the
Offering Memorandum, and any amendment or supplement thereto, in connection with
the offer and sale of the Securities by the Initial Purchasers. Unless stated to
the contrary, any references herein to the terms "amend", "amendment" or
"supplement" with respect to the
Offering Memorandum shall be deemed to refer to and include any information
filed under the Exchange Act subsequent to the Execution Time which is
incorporated by reference therein.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to, and agrees with, each Initial Purchaser that:
(a) At the Execution Time, on the Closing Date (as defined in Section 4)
and on any settlement date, the Offering Memorandum did not, and will not
(and any amendment or supplement thereto, at the date thereof, at the
Closing Date and on any settlement date, will not), contain any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that the Company
makes no representation or warranty as to the information contained in or
omitted from the Offering Memorandum, or any amendment or supplement
thereto, in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of the Initial Purchasers through
the Representatives specifically for inclusion therein.
(b) Neither the Company, nor any of its Affiliates, nor any person
acting on its or their behalf has, directly or indirectly, made offers or
sales of any security, or solicited offers to buy any security, under
circumstances that would require the registration of the Securities under
the Act.
(c) Neither the Company, nor any of its Affiliates, nor any person
acting on its or their behalf has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with any offer or sale of the Securities in the United States.
(d) The Securities satisfy the eligibility requirements of
Rule 144A(d)(3) under the Act.
(e) Neither the Company, nor any of its Affiliates, nor any person
acting on its or their behalf has engaged in any directed selling efforts
with respect to the Securities, and each of them has complied with the
offering restrictions requirement of Regulation S. Terms used in this
paragraph have the meanings given to them by Regulation S.
(f) The Company has not paid or agreed to pay to any person any
compensation for soliciting another to purchase any securities of the
Company (except as contemplated by this Agreement).
(g) The Company has not taken, directly or indirectly, any action
designed to cause or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in the
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Securities.
(h) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the Offering Memorandum; and the Company is
duly qualified to do business as a foreign corporation in good standing in
all other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification.
(i) Each of the material subsidiaries of the Company listed on Exhibit A
hereto (the "MATERIAL SUBSIDIARIES") has been duly incorporated and is an
existing corporation in good standing under the laws of its jurisdiction of
incorporation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Offering
Memorandum; and each Material Subsidiary of the Company is duly qualified
to do business as a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or the conduct of
its business requires such qualification, except where the failure to be so
qualified would not have a Material Adverse Effect (as defined below); all
of the issued and outstanding capital stock of each Material
2
Subsidiary of the Company has been duly authorized and validly issued and
is fully paid and nonassessable; and the capital stock of each Material
Subsidiary owned by the Company, directly or through subsidiaries, is owned
free from liens, encumbrances and defects.
(j) This Agreement and the Registration Rights Agreement have been duly
authorized, executed and delivered by the Company and the Registration
Rights Agreement constitutes a valid and legally binding obligation of the
Company, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(k) The Indenture has been duly authorized and, assuming due
authorization, execution and delivery thereof by the Trustee, when executed
and delivered by the Company, will constitute, and the Securities have been
duly authorized and when executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the Initial
Purchasers, will have been duly executed and delivered by the Company and
will constitute, valid and legally binding obligations of the Company,
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles; and the Securities will conform in all
material respects to the description thereof contained in the Offering
Memorandum.
(l) No consent, approval, authorization, or order of, or filing with,
any governmental agency or body or any court is required for the
consummation of the transactions contemplated by this Agreement, the
Registration Rights Agreement or the Indenture, as the case may be, in
connection with the issuance and sale of the Securities by the Company,
except such as will be obtained and made under the Act and the Trust
Indenture Act and such as may be required under state securities laws.
(m) The execution, delivery and performance of this Agreement, the
Registration Rights Agreement, and the Indenture and the issuance and sale
of the Securities and compliance with the terms and provisions thereof will
not result in a breach or violation of any of the terms and provisions of,
or constitute a default under, any statute, any rule, regulation or order
of any governmental agency or body or any court, domestic or foreign,
having jurisdiction over the Company or any Material Subsidiary of the
Company or any of their properties, or any agreement or instrument to which
the Company or any Material Subsidiary is a party or by which the Company
or any Material Subsidiary is bound or to which any of the properties of
the Company or any Material Subsidiary is subject, or the charter or
by-laws of the Company or any Material Subsidiary, except for such breaches
or violations that will not have a Material Adverse Effect (as defined
below); and the Company has full power and authority to authorize, issue
and sell the Securities as contemplated by this Agreement.
(n) The Company and its Material Subsidiaries own, possess or can
acquire on reasonable terms, adequate trademarks, trade names and other
rights to inventions, know-how, patents, copyrights, confidential
information and other intellectual property, except such rights as are not,
individually or in the aggregate, materially important to the business
conducted or proposed to be conducted by them as described in the Offering
Memorandum (collectively, "INTELLECTUAL PROPERTY RIGHTS"), necessary to
conduct the business now operated by them, or presently employed by them,
and have not received any notice of infringement of or conflict with
asserted rights of others with respect to any intellectual property rights
that would individually or in the aggregate be reasonably likely to have a
material adverse effect on the financial condition, business, properties or
results of operations of the Company and its subsidiaries taken as a whole
("MATERIAL ADVERSE EFFECT").
(o) Except as disclosed in the Offering Memorandum, there are no pending
actions, suits or proceedings against or affecting the Company, any of its
Material Subsidiaries or any of their respective properties that would
individually or in the aggregate be reasonably likely to have a
3
Material Adverse Effect, or would materially and adversely affect the
ability of the Company to perform its obligations under this Agreement, the
Registration Rights Agreement and the Indenture or which are otherwise
material in the context of the sale of the Securities; and no such actions,
suits or proceedings are threatened or, to the Company's knowledge,
contemplated.
(p) Except as disclosed in the Offering Memorandum, since the date of
the latest audited financial statements included in the Offering Memorandum
there has been no material adverse change, nor any development or event
involving a prospective material adverse change, in the financial
condition, business, properties or results of operations of the Company and
its subsidiaries taken as a whole, and, except as disclosed in or
contemplated by the Offering Memorandum, there has been no dividend or
distribution of any kind declared, paid or made by the Company on any class
of its capital stock.
(q) The Company is not and, after giving effect to the offering and sale
of the Securities and the application of the proceeds thereof as described
in the Offering Memorandum, will not be an "investment company" or an
entity "controlled" by an "investment company", as such terms are defined
in the Investment Company Act.
3. PURCHASE AND SALE. Subject to the terms and conditions and in reliance
upon the representations and warranties herein set forth, the Company agrees to
sell to each Initial Purchaser, and each Initial Purchaser agrees, severally and
not jointly, to purchase from the Company, at a purchase price of 97.977% of the
principal amount thereof, plus accrued interest, if any, from April 2, 2003 to
the Closing Date, the principal amount of Securities set forth opposite such
Initial Purchaser's name in Schedule I hereto.
4. DELIVERY AND PAYMENT. Delivery of and payment for the Securities shall
be made at 10:00 A.M., New York City time, on April 4, 2003, or at such time on
such later date (not later than April 11, 2003) as the Representatives shall
designate, which date and time may be postponed by agreement between the
Representatives and the Company or as provided in Section 9 hereof (such date
and time of delivery and payment for the Securities being herein called the
"CLOSING DATE"). Delivery of the Securities shall be made to the Representatives
for the respective accounts of the several Initial Purchasers against payment by
the several Initial Purchasers through the Representatives of the purchase price
thereof to or upon the order of the Company by wire transfer payable in
immediately available funds to the account specified by the Company. Delivery of
the Securities shall be made through the facilities of The Depository Trust
Company unless the Representatives shall otherwise instruct.
5. OFFERING BY INITIAL PURCHASERS. Each Initial Purchaser, severally and
not jointly, represents and warrants to and agrees with the Company that:
(a) It has not offered or sold, and will not offer or sell, any Securities
except (i) to those it reasonably believes to be qualified institutional buyers
(as defined in Rule 144A under the Act) and that, in connection with each such
sale, it has taken or will take reasonable steps to ensure that the purchaser of
such Securities is aware that such sale is being made in reliance on Rule 144A;
or (ii) in accordance with the restrictions set forth in Exhibit B hereto.
(b) Neither it nor any person acting on its behalf has made or will make
offers or sales of the Securities in the United States by means of any form of
general solicitation or general advertising (within the meaning of Regulation D)
in the United States.
(c) It is a "qualified institutional buyer" within the meaning of Rule 144A
under the Act and an "accredited investor" within the meaning of Rule 501(a)
under the Act.
6. CERTAIN AGREEMENTS OF THE COMPANY. The Company agrees with the several
Initial Purchasers that:
4
(a) The Company will advise the Representatives promptly of any proposal
to amend or supplement the Offering Memorandum and will afford the
Representatives a reasonable opportunity to comment on any such proposed
amendment or supplement.
(b) If, at any time prior to the completion of the sale of Securities by
the Initial Purchasers (as determined by the Representatives), any event
occurs as a result of which the Offering Memorandum as then amended or
supplemented would include an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or
if it is necessary at any time to amend the Offering Memorandum to comply
with applicable law, the Company promptly will notify the Representatives
of such event and will promptly prepare at its own expense, an amendment or
supplement which will correct such statement or omission or an amendment
which will effect such compliance. Neither the Representatives' consent to,
nor the Initial Purchasers' delivery of, any such amendment or supplement
shall constitute a waiver of any of the conditions set forth in Section 7
hereof.
(c) The Company will furnish to the Initial Purchasers copies of the
Offering Memorandum, including all amendments and supplements thereto, in
each case as soon as available and in such quantities as the
Representatives reasonably request. The Company will pay the expenses of
printing and distributing to the Initial Purchasers all such documents.
(d) The Company will arrange for the qualification of the Securities for
sale and the determination of their eligibility for investment under the
laws of such jurisdictions as the Representatives designate and will
continue such qualifications in effect so long as required for the
distribution.
(e) The Company will not, and will not permit any of its Affiliates to,
resell any Securities that have been acquired by any of them.
(f) Neither the Company, nor any of its Affiliates, nor any person
acting on its or their behalf will, directly or indirectly, make offers or
sales of any security, or solicit offers to buy any security, under
circumstances that would require the registration of the Securities under
the Act.
(g) Neither the Company, nor any of its Affiliates, nor any person
acting on its or their behalf will engage in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with any offer or sale of the Securities in the United States.
(h) So long as any of the Securities are "restricted securities" within
the meaning of Rule 144(a)(3) under the Act, the Company will, during any
period in which it is not subject to and in compliance with Section 13 or
15(d) of the Exchange Act or it is not exempt from such reporting
requirements pursuant to and in compliance with Rule 12g3-2(b) under the
Exchange Act, provide to each holder of such restricted securities and to
each prospective purchaser (as designated by such holder) of such
restricted securities, upon the request of such holder or prospective
purchaser, any information required to be provided by Rule 144A(d)(4) under
the Act. This covenant is intended to be for the benefit of the holders,
and the prospective purchasers designated by such holders, from time to
time of such restricted securities.
(i) Neither the Company, nor any of its Affiliates, nor any person
acting on its or their behalf will engage in any directed selling efforts
with respect to the Securities, and each of them will comply with the
offering restrictions requirement of Regulation S. Terms used in this
paragraph have the meanings given to them by Regulation S.
(j) The Company will not take, directly or indirectly, any action
designed to or which has constituted or which might reasonably be expected
to cause or result, under the Exchange Act or
5
otherwise, in stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities.
(k) The Company will pay all expenses incident to the performance of its
obligations under the Purchase Agreement (including the provisions of this
Agreement), the preparation, printing and reproduction of the Offering
Memorandum and each amendment or supplement thereto, the issuance of the
Securities and the fees of the Trustee, for any filing fees or other
expenses (including fees and disbursements of counsel) in connection with
qualification of the Securities for sale or any determination of their
eligibility for investment under the laws of such jurisdictions as the
Representatives may designate and the printing of memoranda relating
thereto, for any fees charged by investment rating agencies for the rating
of the Securities, for any travel expenses of the Company's officers and
employees and any other expenses of the Company in connection with
attending or hosting meetings with prospective purchasers of Securities and
for expenses incurred in distributing the Offering Memorandum or any
amendments or supplements to the Offering Memorandum to the Initial
Purchasers.
7. CONDITIONS OF THE OBLIGATIONS OF THE INITIAL PURCHASERS. The obligations
of the several Initial Purchasers to purchase and pay for the Securities will be
subject to the accuracy of the representations and warranties on the part of the
Company herein at the Execution Time, the Closing Date and any settlement date
pursuant to Section 4 hereof, to the accuracy of the statements of Company
officers made pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions
precedent:
(a) On or prior to the date of this Agreement, the Representatives
shall have received a letter, dated the date of delivery thereof, of Ernst
& Young, LLP, confirming that they are independent public accountants
within the meaning of the Act and the applicable published Rules and
Regulations thereunder and stating to the effect that:
(i) in their opinion the financial statements and any
schedules and any summary of earnings examined by them and included in
the Offering Memorandum comply as to form in all material respects
with the applicable accounting requirements of the Act and the related
published Rules and Regulations;
(ii) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review of
interim financial information as described in Statement of Auditing
Standards No. 71, Interim Financial Information, on any unaudited
financial statements included in the Offering Memorandum;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial statements
of the Company, inquiries of officials of the Company who have
responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that caused them
to believe that:
(A) the unaudited financial statements, if any, and
any summary of earnings included in the Offering Memorandum do
not comply as to form in all material respects with the
applicable accounting requirements of the Act and the related
published Rules and Regulations or any material modifications
should be made to such unaudited financial statements and
summary of earnings for them to be in conformity with
generally accepted accounting principles;
(B) if any unaudited "capsule" information is
contained in the Offering Memorandum, the unaudited
consolidated net sales, net operating income, net income and
net income per share amounts or other amounts constituting
such
6
"capsule" information and described in such letter do not
agree with the corresponding amounts set forth in the
unaudited consolidated financial statements or were not
determined on a basis substantially consistent with that of
the corresponding amounts in the audited statements of income;
(C) at the date of the latest available balance sheet
read by such accountants, or at a subsequent specified date
not more than three business days prior to the date of the
such letter, there was any change in the capital stock or any
increase in short-term indebtedness or long-term debt of the
Company and its consolidated subsidiaries or, at the date of
the latest available balance sheet read by such accountants,
there was any decrease in consolidated net assets, as compared
with amounts shown on the latest balance sheet included in the
Offering Memorandum; or
(D) for the period from the closing date of the latest
income statement included in the Offering Memorandum to the
closing date of the latest available income statement read by
such accountants there were any decreases, as compared with
the corresponding period of the previous year and with the
period of corresponding length ended the date of the latest
income statement included in the Offering Memorandum, in
consolidated net sales, net operating income or net income or
in the ratio of earnings to fixed charges;
except in all cases set forth in clauses (C) and (D) above for
changes, increases or decreases which the Offering Memorandum
discloses have occurred or may occur or which are described in such
letter;
(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information contained in the Offering Memorandum (in each case to the
extent that such dollar amounts, percentages and other financial
information are derived from the general accounting records of the
Company and its subsidiaries subject to the internal controls of the
Company's accounting system or are derived directly from such records
by analysis or computation) with the results obtained from inquiries,
a reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts,
percentages and other financial information to be in agreement with
such results, except as otherwise specified in such letter.
All financial statements and schedules included in material incorporated by
reference into the Offering Memorandum shall be deemed included in the
Offering Memorandum for purposes of this subsection.
(b) Subsequent to the Execution Time, there shall not have occurred
(i) any change, or any development or event involving a prospective change,
in the condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as one enterprise
which, in the judgment of a majority in interest of the Initial Purchasers
including any Representatives, is material and adverse and makes it
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Securities; (ii) any
downgrading in the rating of any debt securities of the Company by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act), or any public announcement that any
such organization has under surveillance or review its rating of any debt
securities of the Company (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); (iii) any material suspension or material
limitation of trading in securities generally on the New York Stock
Exchange, or any setting of minimum prices for trading on such exchange, or
any suspension of trading of any securities of the Company on any exchange
or
7
in the over-the-counter market; (iv) any banking moratorium declared by
U.S. Federal or New York authorities and any major disruption of
settlements of securities or clearance services in the United States; or
(v) any outbreak or escalation of major hostilities in which the United
States is involved, any declaration of war by Congress or any other
substantial national or international calamity or emergency if, in the
judgment of a majority in interest of the Initial Purchasers, including the
Representatives, the effect of any such outbreak, escalation, declaration,
calamity or emergency makes it impractical or inadvisable to proceed with
completion of the offering or the sale of and payment for the Securities.
(c) The Representatives shall have received an opinion, dated the
Closing Date, of Coudert Brothers LLP, counsel for the Company, to the
effect that:
(i) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own its properties and
conduct its business as described in the Offering Memorandum;
(ii) Each of Scholastic Inc. and Grolier Incorporated
has been duly incorporated and is validly existing as a corporation in
good standing under the laws of its state of incorporation; and all of
the issued shares of capital stock of each such subsidiary have been
duly and validly authorized and issued, are fully paid and
non-assessable and (except for directors' qualifying shares and except
as otherwise set forth in the Offering Memorandum) are owned directly
or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims;
(iii) This Agreement and the Registration Rights
Agreement have been duly authorized, executed and delivered by the
Company and the Registration Rights Agreement constitutes a valid and
legally binding obligation of the Company enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to
general equity principles;
(iv) The Indenture under which the Securities are
issued has been duly authorized, executed and delivered by the Company
and constitute, and the Securities have been duly authorized and when
executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Initial Purchasers,
will have been duly executed and delivered by the Company and will
constitute, valid and legally binding obligations of the Company
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and the Securities
conform in all material respects to the description thereof contained
in the Offering Memorandum;
(v) No consent, approval, authorization or order of,
or filing with, any New York or United States federal governmental
agency or body or any court is required for the consummation of the
transactions contemplated by this Agreement, the Registration Rights
Agreement or the Indenture, as the case may be, in connection with the
issuance or sale of the Securities by the Company, except such as will
be obtained and made under the Act and the Trust Indenture Act and
such as may be required under state securities laws;
(vi) The execution, delivery and performance of this
Agreement, the Registration Rights Agreement and the Indenture and the
issuance and sale of the Securities and compliance with the terms and
provisions thereof will not result in a breach or violation
8
of any of the terms and provisions of, or constitute a default under,
any New York or United States Federal statute or the General
Corporation Law of Delaware, any rule, regulation or order of any New
York or United States Federal governmental agency or body or any
court, having jurisdiction over the Company or any of its Material
Subsidiaries or any of their properties, or any indenture, mortgage,
deed of trust, loan agreement or other material agreement or
instrument known to such counsel to which the Company or a Material
Subsidiary is a party or by which the Company is bound or to which any
of the properties of the Company or any of its Material Subsidiaries
is subject, or the charter or by-laws of the Company, except for any
breaches or violations that will not have a Material Adverse Effect;
and the Company has full corporate power and authority to authorize,
issue and sell the Securities as contemplated by this Agreement;
(vii) Scholastic Inc. is the registered owner of the
trademark "Scholastic"; to the best knowledge of such counsel, neither
the Company nor any of its Material Domestic Subsidiaries has received
any notice of infringement of or conflict with (or knows of any such
infringement or conflict with) asserted rights of others with respect
to such trademark, other than such infringements or conflicts that
would not, individually or in the aggregate, have a Material Adverse
Effect on the business conducted or proposed to be conducted by the
Company and its Material Domestic Subsidiaries as described in the
Offering Memorandum;
(viii) The Company is not an "investment company" or
an entity "controlled" by an "investment company", as such terms are
defined in the Investment Company Act required to be registered as
such; and
(ix) The descriptions in the Offering Memorandum of
statutes, legal and governmental proceedings and contracts and other
documents are accurate and fairly present the information required to
be shown.
In addition, such counsel shall state in such opinion
that during the course of the preparation of the Offering Memorandum,
they reviewed the Offering Memorandum, participated in conferences
with representatives of the Company, its accountants and with
representatives of and counsel for the Initial Purchasers, at which
the contents of the Offering Memorandum and related matters were
discussed, and advised the Company as to the requirements of the Act
and the applicable published rules and regulations thereunder. Such
counsel shall state that between the date of the Offering Memorandum
and the time of delivery of their letter, they have participated in
further conferences with representatives of the Company, its
accountants and with representatives of the Initial Purchasers (and
their counsel), at which the contents of certain portions of the
Offering Memorandum and related matters were discussed, and they
reviewed certificates of certain officers of the Company and letters
from the Company's independent accountants.
Although such counsel may state that they are not
passing upon or assuming any responsibility for the accuracy,
completeness or fairness of any of the statements made in the Offering
Memorandum, on the basis of the information which they gained in the
course of rendering the services referred to above, considered in
light of such counsel's understanding of the applicable law and the
experience such counsel has gained through such counsel's practice in
this field, they advise the Initial Purchasers that nothing which has
come to the attention of such counsel in the course of such review has
caused them to believe that the Offering Memorandum contained an
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. Notwithstanding the foregoing, such counsel may state
that they are not
9
expressing any opinion or belief as to the financial statements or
other financial or related statistical data contained in the Offering
Memorandum or the material incorporated therein by reference. Such
counsel may also rely on opinions of other counsel as to matters of
law other than New York law, the Delaware General Corporation Law and
the federal laws of the United States.
(e) The Representatives shall have received from Sullivan & Cromwell
LLP, counsel for the Initial Purchasers, such opinion or opinions, dated
the Closing Date, with respect to the incorporation of the Company, the
validity of the Securities, the Indenture, the Registration Rights
Agreement and the Offering Memorandum and other related matters as the
Representatives may require, and the Company shall have furnished to such
counsel such documents as they request for the purpose of enabling them to
pass upon such matters.
(f) The Representatives shall have received a certificate, dated the
Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Company in which such officers, to
the best of their knowledge after reasonable investigation, shall state
that the representations and warranties of the Company in this Agreement
are true and correct, that the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to the Closing Date, that, subsequent to the date of the most
recent financial statements in the Offering Memorandum, there has been no
material adverse change, nor any development or event involving a
prospective material adverse change, in the financial condition, business,
properties or results of operations of the Company and its subsidiaries
taken as a whole except as set forth in or contemplated by the Offering
Memorandum or as described in such certificate.
(g) The Representatives shall have received a letter, dated the
Closing Date, of Ernst & Young LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred to
in such subsection will be a date not more than three days prior to the
Closing Date for the purposes of this subsection.
The Company will furnish the Representatives with such conformed copies of such
opinions, certificates, letters and documents as the Representatives reasonably
request. The Representatives may in their sole discretion waive on behalf of the
Initial Purchasers compliance with any conditions to the obligations of the
Initial Purchasers under this Agreement.
8. INDEMNIFICATION AND CONTRIBUTION. (a) The Company will indemnify and
hold harmless each Initial Purchaser, its partners, directors and officers and
each person, if any, who controls such Initial Purchaser within the meaning of
Section 15 of the Act, against any losses, claims, damages or liabilities, joint
or several, to which such Initial Purchaser may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Offering Memorandum, or
any amendment or supplement thereto, or any information provided by the Company
to any holder or prospective purchaser of Securities pursuant to Section 6(h),
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each Initial Purchaser for
any legal or other expenses reasonably incurred by such Initial Purchaser in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with written information furnished
to the Company by any Initial Purchaser through the Representatives, if any,
specifically for use therein.
10
(b) Each Initial Purchaser will severally and not jointly indemnify and
hold harmless the Company, its directors and officers and each person, if any,
who controls the Company within the meaning of Section 15 of the Act, against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Offering Memorandum, or any amendment or supplement thereto, or arise out of
or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Initial Purchaser through the Representatives,
if any, specifically for use therein, and will reimburse any legal or other
expenses reasonably incurred by the Company in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred. The Company acknowledges that the statements set forth in the last
paragraph of the cover page regarding the delivery of the Securities, under the
heading "Plan of Distribution", the paragraphs related to stabilization,
syndicate covering transactions and market-making, and the names of the Initial
Purchasers in the Offering Memorandum, constitute the only information furnished
in writing by or on behalf of the Initial Purchasers for inclusion in the
Offering Memorandum (or in any amendment or supplement thereto).
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement (i) includes
an unconditional release of such indemnified party from all liability on any
claims that are the subject matter of such action and (ii) does not include a
statement as to, or an admission of, fault, culpability or a failure to act by
or behalf of an indemnified party.
(d) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Initial Purchasers on the other from the offering of the
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Initial Purchasers on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Initial Purchasers on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Initial Purchasers. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the Initial
Purchasers and
11
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim which is
the subject of this subsection (d). Notwithstanding the provisions of this
subsection (d), no Initial Purchaser shall be required to contribute any amount
in excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Initial Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Initial Purchasers' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section shall be in addition
to any liability which the Company may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any Initial
Purchaser within the meaning of the Act; and the obligations of the Initial
Purchasers under this Section shall be in addition to any liability which the
respective Initial Purchasers may otherwise have and shall extend, upon the same
terms and conditions, to each director and officer of the Company, and to each
person, if any, who controls the Company within the meaning of the Act.
9. DEFAULT OF INITIAL PURCHASERS. If any Initial Purchaser or Initial
Purchasers default in their obligations to purchase Securities agreed to be
purchased by such Initial Purchaser hereunder and the aggregate principal amount
of Securities that such defaulting Initial Purchaser or Initial Purchasers
agreed but failed to purchase does not exceed 10% of the total principal amount
of Securities, the Representatives may make arrangements satisfactory to the
Company for the purchase of such Securities by other persons, including any of
the Initial Purchasers, but if no such arrangements are made by the Closing
Date, the non-defaulting Initial Purchasers shall be obligated severally, in
proportion to their respective commitments under this Agreement, to purchase the
Securities that such defaulting Initial Purchasers agreed but failed to
purchase. If any Initial Purchaser or Initial Purchasers so default and the
aggregate principal amount of Securities with respect to which such default or
defaults occur exceeds 10% of the total principal amount of Securities and
arrangements satisfactory to the Representatives and the Company for the
purchase of such Securities by other persons are not made within 36 hours after
such default, this Agreement will terminate without liability on the part of any
non-defaulting Initial Purchaser or the Company, except as provided in
Section 10. As used in this Agreement, the term "Initial Purchaser" includes any
person substituted for an Initial Purchaser under this Section.
10. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the several Initial Purchasers set forth in or
made pursuant to this Agreement will remain in full force and effect, regardless
of any investigation, or statement as to the results thereof, made by or on
behalf of any Initial Purchaser, the Company or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Securities. If this Agreement is
terminated pursuant to Section 9 or if for any reason the purchase of the
Securities by the Initial Purchasers is not consummated, the Company shall
remain responsible for the expenses to be paid or reimbursed by it pursuant to
Section 6 and the respective obligations of the Company and the Initial
Purchasers pursuant to Section 8 shall remain in effect. If the purchase of the
Securities by the Initial Purchasers is not consummated for any reason other
than solely because of the termination of this Agreement pursuant to Section 9
or the occurrence of any event specified in clause (iii), (iv) or (v) of
Section 7(b), the Company will reimburse the Initial Purchasers for all
out-of-pocket expenses (including fees and disbursements of counsel) reasonably
incurred by them in connection with the offering of the Securities.
11. NOTICES. All communications hereunder will be in writing and, if sent
to the Initial Purchasers, will be mailed, delivered or telegraphed and
confirmed to them at their address furnished to the Company in writing for the
purpose of communications hereunder or, if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it at 557 Broadway, New York, New York
10012, Attention: Charles B. Deull, Esq.
12
12. SUCCESSORS. This Agreement will inure to the benefit of and be binding
upon the Company and the Initial Purchasers and their respective successors and
the officers and directors and controlling persons referred to in Section 8,
and, except as expressly set forth in Section 6(h) hereof, no other person will
have any right or obligation hereunder.
13. REPRESENTATION OF INITIAL PURCHASERS. Any Representatives will act for
the Initial Purchasers in connection with the financing described herein, and
any action under this Agreement taken by the Representatives jointly or
individually will be binding upon all the Initial Purchasers.
14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
15. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
The Company hereby submits to the non-exclusive jurisdiction of the Federal
and state courts in the Borough of Manhattan in The City of New York in any suit
or proceeding arising out of or relating to the Purchase Agreement or the
transactions contemplated thereby.
16. DEFINITIONS. The terms which follow, when used in this Agreement, shall
have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"Affiliate" shall have the meaning specified in Rule 501(b) of Regulation D.
"Business Day" shall mean any day other than a Saturday, a Sunday or a legal
holiday or a day on which banking institutions or trust companies are authorized
or obligated by law to close in The City of New York.
"Commission" shall mean the Securities and Exchange Commission.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Execution Time" shall mean, the date and time that this Agreement is executed
and delivered by the parties hereto.
"Investment Company Act" shall mean the Investment Company Act of 1940, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Regulation D" shall mean Regulation D under the Act.
"Regulation S" shall mean Regulation S under the Act.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as amended,
and the rules and regulations of the Commission promulgated thereunder.
13
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
Agreement and your acceptance shall represent a binding agreement between the
Company and the several Initial Purchasers.
Very truly yours,
Scholastic Corporation
By /s/ Kevin J. Mcenery
------------------------------
Name: Kevin J. McEnery
Title: Chief Financial Officer
and Executive Vice President
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Smith Barney Inc.
Credit Suisse First Boston LLC
J.P. Morgan Securities Inc.
By: Salomon Smith Barney Inc.
By /s/ Celine M. Armstrong
----------------------------
Name: Celine M. Armstrong
Title: Vice President
For themselves and the other several Initial
Purchasers named in Schedule I to
the foregoing Agreement.
14
SCHEDULE I
Principal Amount of
Firm Securities
Initial Purchasers to be Purchased
- -------------------------------------------------------------- -------------------
Salomon Smith Barney Inc. .................................... $ 68,250,000
Credit Suisse First Boston LLC ............................... $ 49,875,000
J.P. Morgan Securities Inc. .................................. $ 17,500,000
Deutsche Bank Securities Inc. ................................ $ 13,125,000
Fleet Securities, Inc. ....................................... $ 13,125,000
Sun Trust Capital Markets, Inc. .............................. $ 13,125,000
- -------------------------------------------------------------- -------------------
Total................................................ $ 175,000,000
- -------------------------------------------------------------- -------------------
15
EXHIBIT A
MATERIAL SUBSIDIARIES
MATERIAL DOMESTIC SUBSIDIARIES
Scholastic Inc.
Scholastic Book Clubs, Inc.
Grolier Incorporated
MATERIAL FOREIGN SUBSIDIARIES
None
16
EXHIBIT B
SELLING RESTRICTIONS FOR OFFERS AND SALES OUTSIDE THE UNITED STATES
(1)(a) The Securities have not been and will not be registered under the
Act and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except in accordance with Regulation S under
the Act or pursuant to an exemption from the registration requirements of the
Act. Each Initial Purchaser represents and agrees that, except as otherwise
permitted by Section 5(a)(i) of the Agreement to which this is an exhibit, it
has offered and sold the Securities, and will offer and sell the Securities, (i)
as part of their distribution at any time; and (ii) otherwise until 40 days
after the later of the commencement of the offering and the Closing Date, only
in accordance with Rule 903 of Regulation S under the Act. Accordingly, each
Initial Purchaser represents and agrees that neither it, nor any of its
Affiliates nor any person acting on its or their behalf has engaged or will
engage in any directed selling efforts with respect to the Securities, and that
it and they have complied and will comply with the offering restrictions
requirement of Regulation S. Each Initial Purchaser agrees that, at or prior to
the confirmation of sale of Securities (other than a sale of Securities pursuant
to Section 5(a)(i) of the Agreement to which this is an exhibit), it shall have
sent to each distributor, dealer or person receiving a selling concession, fee
or other remuneration that purchases Securities from it during the distribution
compliance period a confirmation or notice to substantially the following
effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Act") and may not be offered or sold within
the United States or to, or for the account or benefit of, U.S. persons (i)
as part of their distribution at any time or (ii) otherwise until 40 days
after the later of the commencement of the offering and [specify closing
date of the offering], except in either case in accordance with
Regulation S or Rule 144A under the Act. Terms used above have the meanings
given to them by Regulation S."
(b) Each Initial Purchaser also represents and agrees that it has not
entered and will not enter into any contractual arrangement with any distributor
with respect to the distribution of the Securities, except with its Affiliates
or with the prior written consent of the Company.
(c) Terms used in this section have the meanings given to them by
Regulation S.
(2) Each Initial Purchaser represents and agrees that (i) it has not
offered or sold and, prior to the date six months after the date of issuance of
the Securities, will not offer or sell any Securities to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or as agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995; (ii) it
has complied and will comply with all applicable provisions of the Financial
Services Act 1986 of the United Kingdom with respect to anything done by it in
relation to the Securities in, from or otherwise involving the United Kingdom;
and (iii) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issue of the
Securities to a person who is of a kind described in Article 9(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996
or is a person to whom the document may otherwise lawfully be issued or passed
on.
17
EXHIBIT 4.1
Execution Copy
================================================================================
Scholastic Corporation
TO
Citibank, N.A.
TRUSTEE
----------
INDENTURE
Dated as of April 4, 2003
----------
5% Notes Due 2013
================================================================================
TABLE OF CONTENTS
PAGE
----
RECITALS OF THE COMPANY...................................................................... 1
ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.......................................................................3
Act...........................................................................4
Affiliate.....................................................................4
Agent Member..................................................................4
Attributable Debt.............................................................4
Authenticating Agent..........................................................4
Beneficial Owner..............................................................5
Board of Directors............................................................5
Board Resolution..............................................................5
Business Day..................................................................5
Commission....................................................................5
Company.......................................................................5
Company Request...............................................................5
Company Order.................................................................5
Comparable Treasury Issue.....................................................5
Comparable Treasury Price.....................................................5
Consolidated Net Tangible Assets..............................................5
Corporate Trust Office........................................................5
corporation...................................................................6
Covenant Defeasance...........................................................6
Debt..........................................................................6
Defaulted Interest............................................................6
Defeasance....................................................................6
Depositary....................................................................6
Event of Default..............................................................6
Exchange Act..................................................................6
Exchange Offer................................................................6
Exchange Registration Statement...............................................7
Exchange Security.............................................................7
Expiration Date...............................................................7
Global Security...............................................................7
Holder........................................................................7
Indenture.....................................................................7
Independent Investment Banker.................................................7
Initial Purchasers............................................................7
Interest Payment Date.........................................................7
Investment Company Act........................................................7
Lien..........................................................................7
Maturity......................................................................7
- ----------
NOTE: This table of contents shall not, for any purpose, be deemed to
be a part of the Indenture.
-i-
Nonrecourse Obligation........................................................7
Notice of Default.............................................................8
Officers' Certificate.........................................................8
Opinion of Counsel............................................................8
Outstanding...................................................................8
Paying Agent..................................................................9
Person 9
Place of Payment..............................................................9
Predecessor Security..........................................................9
Principal Property............................................................9
Purchase Agreement............................................................9
Redemption Date...............................................................9
Redemption Price..............................................................9
Reference Treasury Dealer.....................................................9
Reference Treasury Dealer Quotations.........................................10
Registered Securities........................................................10
Registration Default.........................................................10
Registration Rights Agreement................................................10
Regular Record Date..........................................................10
Regulation S.................................................................10
Regulation S Certificate.....................................................10
Regulation S Global Security.................................................10
Regulation S Legend..........................................................10
Regulation S Securities......................................................10
Resale Registration Statement................................................10
Registration Statement.......................................................10
Responsible Officer..........................................................10
Restricted Global Security...................................................10
Restricted Period............................................................11
Restricted Securities........................................................11
Restricted Securities Certificate............................................11
Restricted Securities Legend.................................................11
Rule 144A....................................................................11
Rule 144A Securities.........................................................11
Restricted Subsidiary........................................................11
Sale and Leaseback Transaction...............................................11
Securities...................................................................11
Securities Act...............................................................11
Securities Act Legend........................................................11
Security Register............................................................11
Security Registrar...........................................................11
Special Interest.............................................................11
Special Record Date..........................................................11
Stated Maturity..............................................................12
Step-Down Date...............................................................12
Step-Up......................................................................12
Subsidiary...................................................................12
Successor Security...........................................................12
- ----------
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
-ii-
Treasury Yield...............................................................12
Trust Indenture Act..........................................................12
Trustee......................................................................12
Government Securities........................................................12
U.S. Government Obligation...................................................12
Vice President...............................................................13
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.............................................13
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE...........................................13
SECTION 104. ACTS OF HOLDERS; RECORD DATES....................................................14
SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY............................................16
SECTION 106. NOTICE TO HOLDERS; WAIVER........................................................16
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT................................................17
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.........................................17
SECTION 109. SUCCESSORS AND ASSIGNS...........................................................17
SECTION 110. SEPARABILITY CLAUSE..............................................................17
SECTION 111. BENEFITS OF INDENTURE............................................................17
SECTION 112. GOVERNING LAW....................................................................17
SECTION 113. LEGAL HOLIDAYS...................................................................18
ARTICLE TWO SECURITY FORMS
SECTION 201. FORMS GENERALLY..................................................................18
SECTION 202. FORM OF FACE OF SECURITY.........................................................19
SECTION 203. FORM OF REVERSE OF SECURITY......................................................22
SECTION 204. FORM OF LEGEND FOR GLOBAL SECURITIES.............................................25
SECTION 205. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION..................................26
ARTICLE THREE THE SECURITIES
SECTION 301. TITLE AND TERMS..................................................................26
SECTION 302. DENOMINATIONS....................................................................27
- ----------
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
-iii-
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING...................................28
SECTION 304. TEMPORARY SECURITIES.............................................................29
SECTION 305. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE..............................29
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.................................33
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED...................................34
SECTION 308. PERSONS DEEMED OWNERS............................................................35
SECTION 309. CANCELLATION.....................................................................35
SECTION 310. COMPUTATION OF INTEREST..........................................................35
SECTION 311. CUSIP NUMBERS....................................................................36
ARTICLE FOUR SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE..........................................36
SECTION 402. APPLICATION OF TRUST MONEY.......................................................37
ARTICLE FIVE REMEDIES
SECTION 501. EVENTS OF DEFAULT................................................................37
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT...............................38
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE..................39
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.................................................40
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES......................40
SECTION 506. APPLICATION OF MONEY COLLECTED...................................................41
SECTION 507. LIMITATION ON SUITS..............................................................41
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST.............................................................42
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES...............................................42
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE...................................................42
- ----------
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
-iv-
SECTION 511. DELAY OR OMISSION NOT WAIVER.....................................................42
SECTION 512. CONTROL BY HOLDERS...............................................................43
SECTION 513. WAIVER OF PAST DEFAULTS..........................................................43
SECTION 514. UNDERTAKING FOR COSTS............................................................43
SECTION 515. WAIVER OF USURY, STAY OR EXTENSION LAWS..........................................43
ARTICLE SIX THE TRUSTEE
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES..............................................44
SECTION 602. NOTICE OF DEFAULTS...............................................................44
SECTION 603. CERTAIN RIGHTS OF TRUSTEE........................................................44
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES...........................46
SECTION 605. MAY HOLD SECURITIES AND ACT AS TRUSTEE UNDER OTHER INDENTURES....................46
SECTION 606. MONEY HELD IN TRUST..............................................................46
SECTION 607. COMPENSATION AND REIMBURSEMENT...................................................46
SECTION 608. CONFLICTING INTERESTS............................................................47
SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY..........................................47
SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR................................48
SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR...........................................49
SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS......................49
SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY................................50
SECTION 614. APPOINTMENT OF AUTHENTICATING AGENT..............................................50
ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS........................52
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS...........................52
SECTION 703. REPORTS BY TRUSTEE...............................................................52
- ----------
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
-v-
SECTION 704. REPORTS BY COMPANY...............................................................53
ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.............................53
SECTION 802. SUCCESSOR SUBSTITUTED............................................................54
ARTICLE NINE SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS...............................55
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS..................................55
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.............................................56
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES................................................56
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT..............................................57
SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES...............................57
ARTICLE TEN COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.......................................57
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY..................................................57
SECTION 1003. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST................................58
SECTION 1004. STATEMENT BY OFFICERS AS TO DEFAULT..............................................59
SECTION 1005. EXISTENCE........................................................................59
SECTION 1006. MAINTENANCE OF PROPERTIES........................................................59
SECTION 1007. PAYMENT OF TAXES AND OTHER CLAIMS................................................59
SECTION 1008. LIMITATION ON LIENS..............................................................60
SECTION 1009. LIMITATIONS ON SALE AND LEASEBACK TRANSACTIONS...................................61
SECTION 1010. WAIVER OF CERTAIN COVENANTS......................................................62
ARTICLE ELEVEN REDEMPTION OF SECURITIES
SECTION 1101. APPLICABILITY OF ARTICLE.........................................................63
- ----------
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
-vi-
SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE............................................63
SECTION 1104. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED................................63
SECTION 1105. NOTICE OF REDEMPTION.............................................................64
SECTION 1106. DEPOSIT OF REDEMPTION PRICE......................................................64
SECTION 1107. SECURITIES PAYABLE ON REDEMPTION DATE............................................65
SECTION 1108. SECURITIES REDEEMED IN PART......................................................65
ARTICLE TWELVE DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1201. COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT DEFEASANCE.....................65
SECTION 1202. DEFEASANCE AND DISCHARGE.........................................................65
SECTION 1203. COVENANT DEFEASANCE..............................................................66
SECTION 1204. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE..................................66
SECTION 1205. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE
HELD IN TRUST; MISCELLANEOUS PROVISIONS..........................................68
SECTION 1206. REINSTATEMENT....................................................................69
- ----------
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
-vii-
PAGE
----
- ----------
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
-viii-
PAGE
----
- ----------
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
-viii-
PAGE
----
- ----------
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
-ix-
PAGE
----
- ----------
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
-x-
PAGE
----
- ----------
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
-xi-
CERTAIN SECTIONS OF THIS INDENTURE RELATING TO SECTIONS 310 THROUGH 318,
INCLUSIVE, OF THE TRUST INDENTURE ACT OF 1939:
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
Section 310(a)(1)......................................................... 609
(a)(2) ........................................................ 609
(a)(3) ........................................................ Not Applicable
(a)(4) ........................................................ Not Applicable
(b) ........................................................ 608
610
Section 311(a) ........................................................ 613
(b) ........................................................ 613
Section 312(a) ........................................................ 701
702
(b) ........................................................ 702
(c) ........................................................ 702
Section 313(a) ........................................................ 703
(b) ........................................................ 703
(c) ........................................................ 703
(d) ........................................................ 703
Section 314(a) ........................................................ 704
(a)(4) ........................................................ 101
1004
(b) ........................................................ Not Applicable
(c)(1) ........................................................ 102
(c)(2) ........................................................ 102
(c)(3) ........................................................ Not Applicable
(d) ........................................................ Not Applicable
(e) ........................................................ 102
Section 315(a) ........................................................ 601
(b) ........................................................ 602
(c) ........................................................ 601
(d) ........................................................ 601
(e) ........................................................ 514
Section 316(a) ....................................................... 101
(a)(1)(A) ..................................................... 502
512
(a)(1)(B) ..................................................... 513
(a)(2) .................................................... Not Applicable
(b) .................................................... 508
(c) .................................................... 104
Section 317(a)(1) ........................................................ 503
(a)(2) ........................................................ 504
(b) ........................................................ 1003
Section 318(a) ........................................................ 107
-1-
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
-2-
INDENTURE, dated as of April 4, 2003, between Scholastic Corporation,
a corporation duly organized and existing under the laws of the State of
Delaware (herein called the "Company"), having its principal executive office at
557 Broadway, New York, New York 10012, and Citibank, N.A., a national banking
association duly organized and existing under the laws of the United States of
America, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance of its 5% Notes Due 2013 (herein called
the "Original Securities"), of substantially the tenor and amount hereinafter
set forth to be issued as provided in this Indenture. The Securities may consist
of Original Securities and/or Exchange Securities, each as defined herein. The
Original Securities and the Exchange Securities shall for all purposes
constitute a single series of securities and shall rank equally in right of
payment with all existing and future unsecured and unsubordinated obligations of
the Company.
All things necessary to make the Securities, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
-3-
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as
are generally accepted at the date of such computation;
(4) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may
be, of this Indenture; and
(5) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Act", when used with respect to any Holder, has the meaning specified
in Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent Member" means any member of, or participant in, the Depositary.
"Attributable Debt" means, in respect of a Sale and Leaseback
Transaction involving a Principal Property, at the time of determination, the
lesser of: (a) the fair value of such property (as determined in good faith by
the Board of Directors); or (b) the present value of the total net amount of
rent required to be paid under such lease during the remaining term thereof
(including any renewal term or period for which such lease has been extended),
discounted at the rate of interest set forth or implicit in the terms of such
lease or, if not practicable to determine such rate, the weighted average
interest rate per annum borne by the Securities of each series outstanding
pursuant to this Indenture compounded semi-annually. For purposes of the
foregoing definition, rent shall not include amounts required to be paid by the
lessee, whether or not designated as rent or additional rent, on account of or
contingent upon maintenance and repairs, insurance, taxes, assessments, water
rates and similar charges. In the case of any lease which is terminable by the
lessee upon the payment of a penalty, such net amount shall be the lesser of the
net amount determined assuming termination upon the first date such lease may be
terminated (in which case the net amount shall also include the amount of the
penalty, but no rent shall be considered as required to be paid under such lease
subsequent to the first date upon which it may be so terminated) and the net
amount determined assuming no such termination.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities of one or more series.
-4-
"Beneficial Owner" means, for Securities in book-entry form, the person
who acquires an interest in the Securities which is reflected on the records of
the Depositary through its participants.
"Board of Directors" means either the board of directors of the Company
or any duly authorized committee of that board empowered to act for it with
respect to this Indenture.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment, means
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by law
or executive order to close.
"Commission" means the Securities and Exchange Commission, from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Company" means the corporation named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President or a Vice President, and by its principal
financial officer, its Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary, and delivered to the Trustee.
"Comparable Treasury Issue" has the meaning set forth in the form of the
Securities contained in Section 203.
"Comparable Treasury Price" has the meaning set forth in the form of the
Securities contained in Section 203.
"Consolidated Net Tangible Assets" means, as of the time of
determination, total assets (excluding applicable reserves and other property
deductible items) less: (a) total current liabilities, except for (1) notes and
loans payable, (2) current maturities of long-term debt and (3) current
maturities of obligations under capital leases; and (b) goodwill, patents and
trademarks, to the extent included in total assets, all as set forth on the most
recent consolidated balance sheet of the Company and its Subsidiaries and
computed in accordance with generally accepted accounting principles.
"Corporate Trust Office" means the corporate trust office of the Trustee
at Citibank Agency and Trust, 111 Wall Street, 14th Floor, New York, New York,
10043 or the office or
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agency of the Trustee at which at any particular time its corporate trust
business shall be principally administered.
"corporation" means a corporation, association, company, joint-stock
company or business trust.
"Covenant Defeasance" has the meaning specified in Section 1203.
"Debt" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person and whether or not
contingent, (i) every obligation of such Person for money borrowed, (ii) every
obligation of such Person evidenced by bonds, debentures, notes or other similar
instruments, including obligations incurred in connection with the acquisition
of property, assets or businesses, (iii) every reimbursement obligation of such
Person with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person, (iv) every obligation of such
Person issued or assumed as the deferred purchase price of property or services
(but excluding trade accounts payable or accrued liabilities arising in the
ordinary course of business), (v) the maximum fixed redemption or repurchase
price of redeemable stock of such Person at the time of determination, (vi)
every obligation to pay rent or other payment amounts of such Person with
respect to any Sale and Leaseback Transaction to which such Person is a party
and (vii) every obligation of the type referred to in Clauses (i) through (vi)
of another Person and all dividends of another Person the payment of which, in
either case, such Person has guaranteed or is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise.
"Defaulted Interest" has the meaning specified in Section 307.
"Defeasance" has the meaning specified in Section 1202.
"Depositary" means, with respect to the Securities issuable or issued in
whole or in part in the form of one or more Global Securities, DTC for so long
as it shall be a clearing agency registered under the Exchange Act, or such
successor (which shall be a clearing agency registered under the Exchange Act)
as the Issuer shall designate from time to time in an Officers' Certificate
delivered to the Trustee.
"DTC" means The Depository Trust Company.
"Euroclear" means Euroclear Bank SA/NV as operator of the Euroclear
system.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.
"Exchange Offer" has the meaning set forth in the form of the Securities
contained in Section 202.
-6-
"Exchange Registration Statement" has the meaning set forth in the form
of the Securities contained in Section 202.
"Exchange Security" means any Security issued in exchange for an
Original Security or Original Securities pursuant to the Exchange Offer and any
Security with respect to which the next preceding Predecessor Security of such
Security was an Exchange Security.
"Expiration Date" has the meaning specified in Section 104.
"Global Security" means a Security in the form prescribed in Section 204
evidencing all or part of the Securities, issued to the Depositary or its
nominee, and registered in the name of such Depositary or its nominee.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed and as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Independent Investment Banker" has the meaning set forth in the form of
the Securities contained in Section 203.
"Initial Purchasers" has the meaning specified in the Purchase
Agreement.
"Interest Payment Date" means the Stated Maturity of an instalment of
interest on the Securities.
"Investment Company Act" means the Investment Company Act of 1940 and
any statute successor thereto, in each case as amended from time to time.
"Lien" means any mortgage, security interest, pledge, lien, charge or
other encumbrance.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security or an instalment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Nonrecourse Obligation" means indebtedness or other obligations
substantially related to (i) the acquisition of assets not previously owned by
the Company or any Restricted Subsidiary or (ii) the financing of a project
involving the development or expansion of properties of the Company or any
Restricted Subsidiary, as to which the obligee with respect to such indebtedness
or obligation has no recourse to the Company or any Restricted Subsidiary or any
assets of the Company or any Restricted Subsidiary other than the assets
-7-
which were acquired with the proceeds of such transaction or the project
financed with the proceeds of such transaction (and the proceeds thereof).
"Notice of Default" means a written notice of the kind specified in
Section 501(3).
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, a Vice Chairman of the Board, the President or a Vice President, and
by the principal financial officer, the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary, of the Company, and delivered to the
Trustee. One of the officers signing an Officers' Certificate given pursuant to
Section 1004 shall be the principal executive, financial or accounting officer
of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for, or an employee of, the Company.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, EXCEPT:
(1) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(2) Securities for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying Agent) for the
Holders of such Securities; PROVIDED that, if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made;
(3) Securities as to which Defeasance has been effected pursuant to
Section 1202; and
(4) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, Securities owned by the Company or any other
obligor upon the Securities or any Affiliate of the Company or of such other
obligor shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent, waiver or other
action, only Securities which a Responsible Officer of the Trustee actually
knows to be so owned shall be so disregarded.
-8-
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities and that the pledgee
is not the Company or any other obligor upon the Securities or any Affiliate of
the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Securities on behalf of the
Company.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Place of Payment" means the place or places where the principal of and
any premium and interest on the Securities are payable as specified in
Section 301.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Principal Property" means the land, land improvements, buildings and
fixtures (to the extent they constitute real property interests, including any
leasehold interest therein) constituting the principal corporate office, any
manufacturing facility or any distribution center (whether now owned or
hereafter acquired) which: (a) is owned by the Company or any Subsidiary; (b) is
located within any of the present 50 states of the United States (or the
District of Columbia); (c) has not been determined in good faith by the Board of
Directors not to be materially important to the total business conducted by the
Company and its Subsidiaries taken as a whole; and (d) has a market value on the
date as of which the determination is being made in excess of 4.0% of
Consolidated Net Tangible Assets of the Company as most recently determined on
or prior to such date; PROVIDED that (i) the real property located at 557
Broadway, New York, New York and (ii) the real property comprising the
distribution center located in Jefferson City, Missouri shall each be deemed not
to be a Principal Property.
"Purchase Agreement" means the Purchase Agreement, dated April 2, 2003,
among the Company and the Initial Purchasers named therein.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Reference Treasury Dealer" has the meaning set forth in the form of the
Securities contained in Section 203.
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"Reference Treasury Dealer Quotations" has the meaning set forth in the
form of the Securities contained in Section 203.
"Registered Securities" means the Exchange Securities and all other
Securities sold or otherwise disposed of pursuant to an effective registration
statement under the Securities Act, together with their respective Successor
Securities.
"Registration Default" has the meaning set forth in the form of Security
contained in Section 202.
"Registration Rights Agreement" means the Registration Rights Agreement
among the Company and the Initial Purchasers dated April 2, 2003, as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the date specified for that purpose as contemplated by Section 301.
"Regulation S" means Regulation S under the Securities Act (or any
successor provision), as it may be amended from time to time.
"Regulation S Certificate" means a certificate substantially in the form
set forth in Annex B.
"Regulation S Global Security" has the meaning specified in Section 201.
"Regulation S Legend" means a legend substantially in the form of the
legend required in the form of Security set forth in Section 202 to be placed
upon each Regulation S Security.
"Regulation S Securities" means all Securities required pursuant to
Section 305(b) to bear a Regulation S Legend. Such term includes the Regulation
S Global Security.
"Resale Registration Statement" has the meaning set forth in the form of
the Securities contained in Section 202.
"Registration Statement" means the Exchange Registration Statement and
the Resale Registration Statement.
"Responsible Officer" when used with respect to the Trustee, means any
vice president, any assistant vice president, any senior trust officer or
assistant trust officer, any trust officer, or any other officer associated with
the corporate trust department of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of such person's knowledge of and
familiarity with the particular subject.
"Restricted Global Security" has the meaning specified in Section 201.
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"Restricted Period" means the period of 41 consecutive days beginning on
and including the later of (i) the day on which Securities are first offered to
persons other than distributors (as defined in Regulation S) in reliance on
Regulation S and (ii) the day on which the closing of the offering of Securities
pursuant to the Purchase Agreement occurs.
"Restricted Securities" means all Securities required pursuant to
Section 305(c) to bear the Restricted Securities Legend. Such term includes the
Restricted Global Security.
"Restricted Securities Certificate" means a certificate substantially in
the form set forth in Annex A.
"Restricted Securities Legend" means a legend substantially in the form
of the legend required in the form of Security set forth in Section 202 to be
placed upon each Restricted Security.
"Rule 144A" means Rule 144A under the Securities Act (or any successor
provision), as it may be amended from time to time.
"Rule 144A Securities" means all Securities initially distributed in
connection with the offering of the Securities by the Initial Purchasers in
reliance upon Rule 144A.
"Restricted Subsidiary" means any Subsidiary that owns any Principal
Property.
"Sale and Leaseback Transaction" means any arrangement with any person
providing for the leasing by the Company or any Restricted Subsidiary of any
Principal Property which property has been or is to be sold or transferred by
the Company or such Restricted Subsidiary to such person.
"Securities" means the Original Securities and the Exchange Securities.
"Securities Act" means the Securities Act of 1933 and any statute
successor thereto, in each case as amended from time to time.
"Securities Act Legend" means the Restricted Securities Legend and/or
the Regulation S Legend.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Special Interest" has the meaning set forth in the form of Security
contained in Section 202. Unless the context otherwise requires, references
herein to "interest" on the Securities shall include Special Interest.
"Special Interest Notice" has the meaning specified in Section 301.
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"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
instalment of principal thereof or interest thereon, means the date specified in
such Security as the fixed date on which the principal of such Security or such
instalment of principal or interest is due and payable.
"Step-Down Date" has the meaning set forth in the form of the Security
contained in Section 202.
"Step-Up" has the meaning set forth in the form of the Security
contained in Section 202.
"Subsidiary" means a corporation of which at least a majority of the
outstanding voting stock having the power to elect a majority of the board of
directors of such corporation is at the time owned, directly or indirectly, by
the Company or by one or more other Subsidiaries, or by the Company and one or
more other Subsidiaries. For the purposes of this definition, "voting stock"
means stock which ordinarily has voting power for the election of directors,
whether at all times or only so long as no senior class of stock has such voting
power by reason of any contingency.
"Successor Security" of any particular Security means every Security
issued after, and evidencing all or a portion of the same debt as that evidenced
by, such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 306 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Treasury Yield" has the meaning set forth in the form of the Securities
contained in Section 203.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed; PROVIDED, HOWEVER, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first paragraph
of this instrument until a successor Trustee shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall mean
or include each Person who is then a Trustee hereunder, and if at any time there
is more than one such Person, "Trustee" as used with respect to the Securities
of any series shall mean the Trustee with respect to Securities of that series.
"U.S. Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which obligations
or guarantee the full faith and credit of the United States is pledged and which
have a remaining weighted average life to maturity of not more than 18 months
from the date of Investment therein.
-12-
"U.S. Government Obligation" has the meaning specified in Section 1204.
"Vice President", when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an
Officers' Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth in
this Indenture.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include,
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he or
she has made such examination or investigation as is necessary to enable
him or her to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or
-13-
opinion or representations with respect to the matters upon which his or her
certificate or opinion is based are erroneous. Any such certificate or opinion
of counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Company stating that the information with respect to such factual matters is in
the possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. ACTS OF HOLDERS; RECORD DATES.
Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given, made or
taken by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. The
Trustee shall promptly deliver to the Company copies of all such instrument or
instruments and records delivered to the Trustee. Such instrument or instruments
(and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Indenture and (subject to
Section 601) conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section.
The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him or her the execution thereof. Where such
execution is by a signer acting in a capacity other than his or her individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his or her authority. The fact and date of the execution of any such
instrument or writing, or the authority of the Person executing the same, may
also be proved in any other manner which the Trustee deems sufficient.
The ownership of Securities shall be proved by the Security Register.
Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the
-14-
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, vote, notice, consent, waiver or
other action provided or permitted by this Indenture to be given, made or taken
by Holders of Outstanding Securities, PROVIDED that the Company may not set a
record date for, and the provisions of this paragraph shall not apply with
respect to, the giving or making of any notice, declaration, request or
direction referred to in the next paragraph. If any record date is set pursuant
to this paragraph, the Holders of Outstanding Securities on such record date,
and no other Holders, shall be entitled to take the relevant action, whether or
not such Holders remain Holders after such record date; PROVIDED that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities on such record date. Nothing in this paragraph shall be construed to
prevent the Company from setting a new record date for any action for which a
record date has previously been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with no action by any Person
be cancelled and of no effect), and nothing in this paragraph shall be construed
to render ineffective any action taken by Holders of the requisite principal
amount of Outstanding Securities on the date such action is taken. Promptly
after any record date is set pursuant to this paragraph, the Company, at its own
expense, shall cause notice of such record date, the proposed action by Holders
and the applicable Expiration Date to be given to the Trustee in writing and to
each Holder of Securities in the manner set forth in Section 106.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to join in the giving
or making of (i) any Notice of Default, (ii) any declaration of acceleration
referred to in Section 502, (iii) any request to institute proceedings referred
0to in Section 507(2) or (iv) any direction referred to in Section 512. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities on such record date, and no other Holders, shall be entitled to join
in such notice, declaration, request or direction, whether or not such Holders
remain Holders after such record date; PROVIDED that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by Holders of the requisite principal amount of Outstanding Securities on such
record date. Nothing in this paragraph shall be construed to prevent the Trustee
from setting a new record date for any action for which a record date has
previously been set pursuant to this paragraph (whereupon the record date
previously set shall automatically and with no action by any Person be cancelled
and of no effect), and nothing in this paragraph shall be construed to render
ineffective any action taken by Holders of the requisite principal amount of
Outstanding Securities on the date such action is taken. Promptly after any
record date is set pursuant to this paragraph, the Trustee, at the Company's
expense, shall cause notice of such record date, the proposed action by Holders
and the applicable Expiration Date to be given to the Company in writing and to
each Holder of Securities in the manner set forth in Section 106.
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With respect to any record date set pursuant to this Section, the party
hereto which sets such record dates may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day; PROVIDED that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of Securities in the manner set forth in Section 106, on or prior
to the existing Expiration Date. If an Expiration Date is not designated with
respect to any record date set pursuant to this Section, the party hereto which
set such record date shall be deemed to have initially designated the 180th day
after such record date as the Expiration Date with respect thereto, subject to
its right to change the Expiration Date as provided in this paragraph.
Notwithstanding the foregoing, no Expiration Date shall be later than the 180th
day after the applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Security may do so with regard to
all or any part of the principal amount of such Security or by one or more duly
appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
(or by facsimile transmission (212) 657-4009), provided that oral
confirmation of receipt shall have been received) to or with the Trustee at
its Corporate Trust Office, Attention: Citibank Agency and Trust, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this instrument or at any other address previously
furnished in writing to the Trustee by the Company, Attention: Chief
Financial Officer.
SECTION 106. NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at its address as it appears in the Security Register, not later
than the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. In any case where notice to Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders.
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Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason
of any other cause it shall be impracticable to give such notice by mail, then
such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with a provision
of the Trust Indenture Act which is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
which may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 109. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
SECTION 110. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and the Holders, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
-17-
SECTION 112. GOVERNING LAW.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
SECTION 113. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or of the Securities
(other than a provision of any Security which specifically states that such
provision shall apply in lieu of this Section)) payment of interest or principal
(and premium, if any) need not be made at such Place of Payment on such date,
but may be made on the next succeeding Business Day at such Place of Payment
with the same force and effect as if made on the Interest Payment Date or
Redemption Date, at the Stated Maturity, as the case may be.
ARTICLE TWO
SECURITY FORMS
SECTION 201. FORMS GENERALLY.
The Securities shall be in substantially the form set forth in this
Article, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or Depositary therefor or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution thereof.
Upon their original issuance, the Rule 144A Securities and the
Regulation S Securities shall be issued in the form of separate Global
Securities registered in the name of the Depositary or its nominee and deposited
with the Trustee, as custodian for the Depositary, for credit by the Depositary
to the respective accounts of Beneficial Owners of the Securities represented
thereby (or such other accounts as they may direct). Each such Global Security
will constitute a single Security for all purposes of this Indenture. The Global
Security representing Rule 144A Securities, together with its Successor
Securities which are Global Securities other than Regulation S Global
Securities, are collectively herein called the "Restricted Global Security". The
Global Security representing Regulation S Securities, together with its
Successor Securities which are Global Securities other than Restricted Global
Securities, are collectively herein called the "Regulation S Global Security".
-18-
The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.
SECTION 202. FORM OF FACE OF SECURITY.
[IF THE SECURITY IS A GLOBAL SECURITY, INSERT THE LEGENDS REQUIRED BY
SECTION 204 OF THE INDENTURE.]
[IF RESTRICTED SECURITIES, INSERT -- THIS SECURITY (OR ITS PREDECESSOR)
WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM AND IN ANY EVENT MAY BE SOLD
OR OTHERWISE TRANSFERRED ONLY IN ACCORDANCE WITH THE INDENTURE, COPIES OF WHICH
ARE AVAILABLE FOR INSPECTION AT THE CORPORATE TRUST OFFICE OF THE INDENTURE
TRUSTEE IN NEW YORK.
EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER MAY
BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
ACT PROVIDED BY RULE 144A THEREUNDER. EACH HOLDER OF THIS SECURITY REPRESENTS TO
SCHOLASTIC CORPORATION THAT (a) SUCH HOLDER WILL NOT SELL, PLEDGE OR OTHERWISE
TRANSFER THIS SECURITY (WITHOUT THE CONSENT OF SCHOLASTIC CORPORATION) OTHER
THAN (i) TO A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION COMPLYING WITH
RULE 144A UNDER THE SECURITIES ACT, (ii) IN ACCORDANCE WITH RULE 144 UNDER THE
SECURITIES ACT, (iii) OUTSIDE THE UNITED STATES IN A TRANSACTION MEETING THE
REQUIREMENTS OF REGULATION S UNDER THE SECURITIES ACT, (iv) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, SUBJECT, IN THE
CASE OF CLAUSES (ii), (iii) OR (iv), TO THE RECEIPT BY SCHOLASTIC CORPORATION OF
AN OPINION OF COUNSEL OR SUCH OTHER EVIDENCE ACCEPTABLE TO SCHOLASTIC
CORPORATION THAT SUCH RESALE, PLEDGE OR TRANSFER IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR (v) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND THAT (b) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY PURCHASER OF THIS SECURITY OF THE RESALE RESTRICTIONS REFERRED TO
HEREIN AND DELIVER TO THE TRANSFEREE (OTHER THAN A QUALIFIED INSTITUTIONAL
BUYER) PRIOR TO THE SALE A COPY OF THE TRANSFER RESTRICTIONS APPLICABLE HERETO
(COPIES OF WHICH MAY BE OBTAINED FROM THE INDENTURE TRUSTEE).]
-19-
[IF REGULATION S SECURITIES, INSERT -- THIS SECURITY HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, ANY U.S. PERSON IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER
SUCH LAWS.]
SCHOLASTIC CORPORATION
5% Notes Due 2013
CUSIP NO.
No. _________ $ ________
Scholastic Corporation, a corporation duly organized and existing under
the laws of Delaware (herein called the "Company", which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to ___________________________________________,
or registered assigns, the principal sum of ____________________________________
dollars on April 15, 2013, and to pay interest thereon from April 4, 2003 or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, semi-annually on April 15 and October 15 in each year,
commencing October 15, 2003, at the rate of 5% per annum, until the principal
hereof is paid or made available for payment [IF ORIGINAL SECURITIES, INSERT --
; PROVIDED, HOWEVER, that if (i) on or prior to the 60th day following the
original issue date of the Securities, a registration statement (the "Exchange
Registration Statement") under the Securities Act, registering a security
substantially identical to this Security (except that such Security will not
contain terms with respect to the Special Interest payments described below or
transfer restrictions) pursuant to an exchange offer (the "Exchange Offer"), or,
on or prior to the later of (a) the 210th day following the original issue date
of the Securities or (b) the 60th day after required or requested pursuant to
the Registration Rights Agreement (as defined in the Indenture), a registration
statement registering this Security for resale (the "Resale Registration
Statement"), has not been filed with the Securities and Exchange Commission (the
"Commission"); or (ii) on or prior to the 180th day following the original issue
date of the Securities, the Exchange Registration Statement, or, on or prior to
the 240th day following the original issue date of the Securities, the Resale
Registration Statement, has not become or been declared effective; or (iii) on
or prior to the 225th day following the date of original issue of the
Securities, neither the Exchange Registration Statement has been consummated
nor, if applicable, the Resale Registration Statement has been filed or declared
effective; or (iv) either the Exchange Registration Statement or, if applicable,
the Resale Registration Statement is filed and declared effective (except as
specifically permitted therein) but shall
-20-
thereafter cease to be effective without being succeeded promptly by an
additional registration statement filed and declared effective, in each case (i)
through (iv) upon the terms and conditions set forth in the Registration Rights
Agreement (each such event referred to in clauses (i) through (iv), a
"Registration Default"), then interest will accrue (in addition to any stated
interest on the Securities) (the "Step-Up") at a rate of 0.25% per annum,
determined daily, on the principal amount of the Securities, for the 90-day
period immediately following the occurrence of the Registration Default, which
rate shall be increased by 0.25% per annum at the beginning of each subsequent
90-day period (provided that the rate at which such additional interest accrues
shall not exceed 0.50% per annum in the aggregate) and interest shall be payable
at such increased rate until such time (the "Step-Down Date") as no Registration
Default is in effect (after which such interest rate will be restored to its
initial rate) or the first date the Securities become freely tradeable under
Rule 144(k) of the Securities Act. Interest accruing as a result of the Step-Up
(which shall be computed on the basis of a 365-day year and the actual number of
days elapsed) is referred to herein as "Special Interest." Accrued Special
Interest, if any, shall be paid semi-annually on April 15 and October 15 in each
year. Any accrued and unpaid interest (including Special Interest) on this
Security upon the issuance of an Exchange Security (as defined in the Indenture)
in exchange for this Security shall cease to be payable to the Holder hereof but
such accrued and unpaid interest (including Special Interest) shall be payable
on the next Interest Payment Date for such Exchange Security to the Holder
thereof on the related Regular Record Date.]
The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the April 1 or October 1 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities not less than 10 days prior to such Special
Record Date, or be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Securities may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in The City of New York, in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts [IF NOT A GLOBAL SECURITY, INSERT -- ; PROVIDED, HOWEVER, that at
the option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register].
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
-21-
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
SCHOLASTIC CORPORATION
By
---------------------
Attest:
- ----------------------------------
SECTION 203. FORM OF REVERSE OF SECURITY.
This Security is one of a duly authorized issue of securities of the
Company designated as its 5% Notes Due 2013 (herein called the "Securities"),
issued and to be issued under an Indenture, dated as of April 4, 2003 (herein
called the "Indenture", which term shall have the meaning assigned to it in such
instrument), between the Company and Citibank, N.A., as Trustee (herein called
the "Trustee", which term includes any successor trustee under the Indenture),
and reference is hereby made to the Indenture and all indentures supplemental
thereto for a statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Company, the Trustee and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. [IF ORIGINAL SECURITIES, INSERT -- The Company may
register, or cause to be registered, a security substantially identical to this
Security (except that such Security will not contain terms with respect to the
payment of Special Interest (as described on the face of this Security) or
transfer restrictions) pursuant to an Exchange Offer or, in lieu thereof, a
Resale Registration Statement.] Reference is hereby made to the Indenture and
all indentures supplemental thereto for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered.
The Company, at its option, may at any time redeem all or any portion of
the Securities, at a Redemption Price plus accrued interest to the Redemption
Date, equal to the greater of (1) 100% of the principal amount or (2) the sum of
the present values of the remaining scheduled payments of principal and interest
thereon discounted to the Redemption Date on a semiannual basis assuming a
360-day year consisting of twelve 30-day months at the applicable Treasury Yield
plus 20 basis points.
-22-
"Comparable Treasury Issue" means, with respect to this Security, the
United States Treasury security selected by the Independent Investment Bankers
as having a maturity comparable to the remaining term of this Security that
would be utilized, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of
comparable maturity to the remaining term of this Security.
"Comparable Treasury Price" means, with respect to any Redemption Date,
(i) the average of the applicable Reference Treasury Dealer Quotations for such
Redemption Date, after excluding the highest and lowest such applicable
Reference Treasury Dealer Quotations, or (ii) if the Trustee obtains fewer than
four such Reference Treasury Dealer Quotations, the average of all such
Quotations.
"Independent Investment Banker" means Salomon Smith Barney Inc., Credit
Suisse First Boston LLC and J.P. Morgan Securities Inc. or, if such firms are
unwilling or unable to select the applicable Comparable Treasury Issue, an
independent investment banking institution of national standing appointed by the
Trustee.
"Reference Treasury Dealer" means Salomon Smith Barney Inc., Credit
Suisse First Boston LLC and J.P. Morgan Securities Inc.; PROVIDED, HOWEVER, that
if the foregoing shall cease to be a primary U.S. Government Securities dealer
in New York City (a "Primary Treasury Dealer"), the Company shall substitute
therefor another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue for
the Notes (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third business day preceding such Redemption Date.
"Treasury Yield" means, with respect to any Redemption Date, the rate
per annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the applicable Comparable
Treasury Price for such Redemption Date.
In the event of redemption of this Security in part only, a new Security
or Securities and of like tenor for the unredeemed portion hereof will be issued
in the name of the Holder hereof upon the cancellation hereof.
The Indenture contains provisions for defeasance at any time of the
entire indebtedness of this Security or certain restrictive covenants and Events
of Default with respect to this Security, in each case upon compliance with
certain conditions set forth in the Indenture.
Unless the context otherwise requires, the Original Securities (as
defined in the Indenture) and the Exchange Securities (as defined in the
Indenture) shall constitute one
-23-
series for all purposes under the Indenture, including without limitation,
amendments, waivers and redemptions.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities at any time by the
Company and the Trustee with the consent of the Holders of more than 50% in
principal amount of the Securities at the time Outstanding. The Indenture also
contains provisions permitting the Holders of specified percentages in principal
amount of the Securities at the time Outstanding, on behalf of the Holders of
all Securities, to waive compliance by the Company with certain provisions of
the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default, the Holders of not
less than 25% in principal amount of the Securities at the time Outstanding
shall have made written request to the Trustee to institute proceedings in
respect of such Event of Default as Trustee and offered the Trustee reasonable
indemnity, and the Trustee shall not have received from the Holders of a
majority in principal amount of Securities at the time Outstanding a direction
inconsistent with such request, and shall have failed to institute any such
proceeding, for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder of
this Security for the enforcement of any payment of principal hereof or any
premium or interest hereon on or after the respective due dates expressed
herein.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and any premium and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or its
attorney duly authorized in writing, and thereupon one or more new Securities of
like tenor, of authorized denominations
-24-
and for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of like tenor
of a different authorized denomination, as requested by the Holder surrendering
the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
Interest [IF AN ORIGINAL SECURITY, INSERT -- (other than Special
Interest)] on this Security shall be computed on the basis of a 360-day year of
twelve 30-day months.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
SECTION 204. FORM OF LEGEND FOR GLOBAL SECURITIES.
Any Global Security issued hereunder shall, in addition to the
provisions contained in Sections 202 and 203, bear a legend in substantially the
following form:
[IF A GLOBAL SECURITY, INSERT -- THIS SECURITY IS A GLOBAL SECURITY
WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN
THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS
SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER
THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE.]
[IF A GLOBAL SECURITY TO BE HELD BY THE DEPOSITORY TRUST COMPANY, INSERT
- -- UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY SECURITY ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED
-25-
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
SECTION 205. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
The Trustee's certificates of authentication shall be in substantially
the following form:
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: Citibank, N.A.,
------------- AS TRUSTEE
By
-----------------------------
AUTHORIZED SIGNATORY
ARTICLE THREE
THE SECURITIES
SECTION 301. TITLE AND TERMS.
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is unlimited.
The Company may issue Exchange Securities from time to time pursuant to
an Exchange Offer, subject to Section 303, in authorized denominations in
exchange for a like principal amount of Original Securities. Upon any such
exchange the Original Securities shall be canceled in accordance with
Section 309 and shall no longer be deemed Outstanding for any purpose.
The Securities shall be known and designated as the "5% Notes Due 2013"
of the Company. Their Stated Maturity shall be April 15, 2013, and they shall
bear interest from April 4, 2003, or from the most recent Interest Payment Date
to which interest has been paid or duly provided for, as the case may be, at a
per annum interest rate of 5%, until the principal thereof is paid or made
available for payment; PROVIDED, HOWEVER, with respect to Original Securities,
if there has been a Registration Default, a Step-Up will occur and the Original
-26-
Securities will from then bear Special Interest until the Step-Down Date.
Accrued Special Interest, if any, shall be paid in cash in arrears semi-annually
on April 15 and October 15 in each year, and the amount of accrued Special
Interest shall be determined on the basis of a 365-day year and the number of
days actually elapsed. In connection with the cash payment of any Special
Interest, the Company shall notify the Trustee (the "Special Interest Notice")
on or before the later to occur of (i) the Regular Record Date preceding such
payment of any Special Interest, and (ii) the date on which any such Additional
Interest begins to accrue, of the amount of Special Interest to be paid by the
Company on the next Interest Payment Date. In the event of the occurrence of a
Step-Down Date during the period between the date on which the Special Interest
Notice is given and the next Interest Payment Date, the Company shall so notify
the Trustee and shall provide the Trustee with the revised amount of Special
Interest to be paid by the Company on such Interest Payment Date.
The principal of (and premium, if any) and interest on the Securities
shall be payable at the office or agency of the Company in The City of New York,
New York maintained for such purpose and at any other office or agency
maintained by the Company for such purpose; PROVIDED, HOWEVER, that at the
option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register.
If the Securities are issued in the form of a Global Security, payments
of the principal of (and premium, if any) and interest on the Securities shall
be made in immediately available funds to the Depositary. If the Securities are
issued in certificated form, the principal of and premium, if any, and interest
on the Securities shall be payable at the corporate trust office of the Trustee
in The City of New York, New York, maintained for such purpose and at any other
office or agency maintained by the Company for such purpose; PROVIDED, HOWEVER,
that at the option of the Company payment of interest may be made by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register.
The Securities shall be redeemable as provided in Article Eleven.
The Securities shall not have the benefit of any sinking fund
obligations.
The Securities shall be subject to defeasance at the option of the
Company as provided in Article Twelve.
Unless the context otherwise requires, the Original Securities and the
Exchange Securities shall constitute one series for all purposes under this
Indenture, including without limitation, amendments, waivers and redemptions.
SECTION 302. DENOMINATIONS.
The Securities shall be issuable only in registered form without coupons
and only in denominations of $1000 and any integral multiple thereof.
-27-
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its principal executive
officer, its President or one of its Vice Presidents, under its corporate seal
reproduced thereon attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers and the corporate seal on
the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with the Company Order shall authenticate and deliver such Securities as in this
Indenture provided and not otherwise. In authenticating such Securities, and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive, and (subject to
Section 601) shall be fully protected in relying upon, an Opinion of Counsel
stating, that such Securities, when authenticated and delivered by the Trustee
and issued by the Company in the manner and subject to any conditions specified
in such Opinion of Counsel, will constitute valid and legally binding
obligations of the Company enforceable in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
At any time and from time to time after the execution and delivery of
this Indenture and after the effectiveness of a Registration Statement under the
Securities Act with respect thereto, the Company may deliver Exchange Securities
executed by the Company to the Trustee for authentication, together with a
Company Order for the authentication and delivery of such Exchange Securities
and a like principal amount of Original Securities for cancellation in
accordance with Section 309 of this Indenture, and the Trustee in accordance
with the Company Order shall authenticate and deliver such Securities as in this
Indenture provided and not otherwise. In authenticating such Exchange
Securities, and accepting the additional responsibilities under this Indenture
in relation to such Exchange Securities, the Trustee shall be entitled to
receive, and (subject to Section 601) shall be fully protected in relying upon,
an Opinion of Counsel stating,
(a) that such Exchange Securities have been duly and validly
issued in accordance with the terms of this Indenture, and are
entitled to all the rights and benefits set forth herein; and
(b) that the issuance of the Exchange Securities in exchange for
the Original Securities has been effected in compliance with the
Securities Act.
-28-
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder. Notwithstanding the
foregoing, if any Security shall have been authenticated and delivered hereunder
but never issued and sold by the Company, and the Company shall deliver such
Security to the Trustee for cancellation as provided in Section 309, for all
purposes of this Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.
SECTION 304. TEMPORARY SECURITIES.
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the office
or agency of the Company in a Place of Payment, without charge to the Holder.
Upon surrender for cancellation of any one or more temporary Securities, the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor one or more definitive Securities of any authorized denominations and
of like tenor and aggregate principal amount. Until so exchanged, the temporary
Securities shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities.
SECTION 305. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE.
(a) The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided.
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Such Security Register shall distinguish between Original Securities and
Exchange Securities.
Subject to other provisions of this Indenture regarding restrictions on
transfer, upon surrender for registration of transfer of any Security at the
office or agency of the Company in a Place of Payment, the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Securities, of any
authorized denominations and of like tenor and aggregate principal amount.
At the option of the Holder and subject to the provisions of this
Section 305, Securities may be exchanged for other Securities of any authorized
denominations and of like tenor and aggregate principal amount and bearing the
applicable legends set forth in Section 202, upon surrender of the Securities to
be exchanged at such office or agency. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange is
entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or its attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906 or 1108 not involving any transfer.
If the Securities are to be redeemed in part, the Company shall not be
required (A) to issue, register the transfer of or exchange any Securities
during a period beginning at the opening of business 15 days before the day of
the mailing of a notice of redemption of any such Securities selected for
redemption under Section 1104 and ending at the close of business on the day of
such mailing, or (B) to register the transfer of or exchange any Security so
selected for redemption in whole or in part, except the unredeemed portion of
any Security being redeemed in part.
(b) CERTAIN TRANSFERS AND EXCHANGES. Notwithstanding any other provision
of this Indenture or the Securities, transfers and exchanges of Securities and
beneficial interests in a Global Security of the kinds specified in this
Section 305(b) shall be made only in accordance with this Section 305(b).
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(i) NON-GLOBAL SECURITY TO NON-GLOBAL SECURITY. A Security that
is not a Global Security may be transferred, in whole or in part, to
a Person who takes delivery in the form of another Security that is
not a Global Security as provided in Section 305(a), PROVIDED that,
if the Security to be transferred in whole or in part is a Restricted
Security, or is a Regulation S Security and the transfer is to occur
during the Restricted Period, then the Trustee shall have received
(i) a Restricted Securities Certificate, satisfactory to the Trustee
and duly executed by the transferor Holder or his attorney duly
authorized in writing, in which case the transferee Holder shall take
delivery in the form of a Restricted Security or (ii) a Regulation S
Certificate, satisfactory to the Trustee and duly executed by the
transferor Holder or his attorney duly authorized in writing, in
which case the transferee Holder shall take delivery in the form of a
Regulation S Security.
(ii) EXCHANGES OF BOOK-ENTRY SECURITIES FOR CERTIFICATED
SECURITIES. A beneficial interest in a Global Security may not be
exchanged for a Security in certificated form unless (i) DTC (x)
notifies the Company that it is unwilling or unable to continue as
Depositary for the Global Security or (y) has ceased to be a clearing
agency registered under the Exchange Act, and in either case the
Company thereupon fails to appoint a successor Depositary within 90
days, (ii) the Company, at its option, notifies the Trustee in
writing that it elects to cause the issuance of the Securities in
certificated form or (iii) there shall have occurred and be
continuing an Event of Default or any event which after notice or
lapse of time or both would be an Event of Default with respect to
the Securities. In all cases, certificated Securities delivered in
exchange for any Global Security or beneficial interests therein will
be registered in the names, and issued in any approved denominations,
requested by or on behalf of the Depositary (in accordance with its
customary procedures). Any certificated Security issued in exchange
for an interest in a Global Security will bear the legend restricting
transfers that is borne by such Global Security. Any such exchange
will be effected through DTC's DWAC System and an appropriate
adjustment will be made in the records of the Security Registrar to
reflect a decrease in the principal amount of the relevant Global
Security.
(iii) RESTRICTED GLOBAL SECURITY TO REGULATION S GLOBAL SECURITY.
If the owner of a beneficial interest in the Restricted Global
Security wishes at any time to transfer such interest to a Person who
wishes to acquire the same in the form of a beneficial interest in
the Regulation S Global Security, such transfer may be effected only
in accordance with the provisions of this Section 305(b)(iii) and
Section 305(b)(v) below and subject to the Applicable Procedures.
Upon receipt by the Trustee, as Security Registrar, of (i) an order
given by the Depositary or its authorized representative directing
that a beneficial interest in the Regulation S Global Security in a
specified principal amount be credited to a specified Agent Member's
account and that a beneficial interest in the Restricted Global
Security in an equal amount be debited from another specified Agent
Member's account and (ii) a Regulation S Certificate, satisfactory to
the Trustee and duly executed by the Holder of such Restricted Global
Security or his attorney in fact duly authorized in writing, then the
Trustee, as Security Registrar but subject to Section 305(b)(v)
below, shall reduce the
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principal amount of such Restricted Global Security and increase the
principal amount of such Regulation S Global Security by such
specified principal amount.
(iv) REGULATION S GLOBAL SECURITY TO RESTRICTED GLOBAL SECURITY.
If the owner of a beneficial interest in the Regulation S Global
Security wishes at any time to transfer such interest to a Person who
wishes to acquire the same in the form of a beneficial interest in
the Restricted Global Security, such transfer may be effected only in
accordance with this Section 305 (b)(iv) and subject to the
applicable procedures. Upon receipt by the Trustee, as Security
Registrar, of (i) an order given by the Depositary or its authorized
representative directing that a beneficial interest in the Restricted
Global Security in a specified principal amount be credited to a
specified Agent Member's account and that a beneficial interest in
the Regulation S Global Security in an equal principal amount be
debited from another specified Agent Member's account and (ii) if
such transfer is to occur during the Restricted Period, a Restricted
Securities Certificate, satisfactory to the Trustee and duly executed
by the Holder of such Regulation S Global Security or his attorney in
fact duly authorized in writing, then the Trustee, as Security
Registrar, shall reduce the principal amount of such Regulation S
Global Security and increase the principal amount of such Restricted
Global Security by such specified principal amount.
(v) REGULATION S GLOBAL SECURITY TO BE HELD THROUGH EUROCLEAR [OR
CLEARSTREAM] DURING RESTRICTED PERIOD. The Company shall use its best
efforts to cause the Depositary to ensure that, until the expiration
of the Restricted Period, beneficial interests in the Regulation S
Global Security may be held only in or through accounts maintained at
the Depositary by Euroclear [and Clearstream] (or by Agent Members
acting for the account thereof), and no person shall be entitled to
effect any transfer or exchange that would result in any such
interest being held otherwise than in or through such an account;
PROVIDED that this Section 305(b)(v) shall not prohibit any transfer
or exchange of such an interest in accordance with Section 305(b)(iv)
above.
(c) SECURITIES ACT LEGENDS. Rule 144A Securities and their Successor
Securities shall bear the Restricted Securities Legend and Regulation S
Securities and their Successor Securities shall bear the Regulation S Legend,
subject to the following:
(i) subject to the following Clauses of this Section 305(c), a
Security or any portion thereof which is exchanged, upon transfer or
otherwise, for a Global Security or any portion thereof shall bear
the Securities Act Legend borne by such Global Security while
represented thereby;
(ii) subject to the following Clauses of this Section 305(c), a
new Security which is not a Global Security and is issued in exchange
for another Security (including a Global Security) or any portion
thereof, upon transfer or otherwise, shall bear the Securities Act
Legend borne by such other Security, PROVIDED that, if such new
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Security is required pursuant to Section 305(b)(ii) to be issued in
the form of a Restricted Security, it shall bear the Restricted
Securities Legend and, if such new Security is so required to be
issued in the form of a Regulation S Security, it shall bear the
Regulation S Legend;
(iii) a new Security which does not bear a Securities Act Legend
may be issued in exchange for or in lieu of a Security (other than a
Global Security) or any portion thereof which bears such a legend if,
in the judgment of the Company, placing such a legend upon such new
Security is not necessary to ensure compliance with the registration
requirements of the Securities Act, and the Trustee, at the direction
of the Company, shall authenticate and deliver such a new Security as
provided in this Article Three; and
(iv) notwithstanding the foregoing provisions of this
Section 305(c), a Successor Security of a Security that does not bear
a particular form of Securities Act Legend shall not bear such form
of legend unless the Company has reasonable cause to believe that
such Successor Security is a "restricted security" within the meaning
of Rule 144, in which case the Trustee, at the direction of the
Company, shall authenticate and deliver a new Security bearing the
Restricted Securities Legend in exchange for such Successor Security
as provided in this Article Three.
The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Security (including any transfers between or among Depositary
participants or beneficial owners of interests in any Global Security) other
than to require delivery of such certificates and other documentation or
evidence as are expressly required by, and to do so if and when expressly
required by the terms of, this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements hereof.
Neither the Trustee nor any Agent shall have any responsibility for any
actions taken or not taken by the Depositary.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of like tenor and principal amount and bearing a number not contemporaneously
outstanding.
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In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.
Any interest (including Special Interest) on any Security which is
payable, but is not punctually paid or duly provided for, on any Interest
Payment Date (herein called "Defaulted Interest") shall forthwith cease to be
payable to the Holder on the relevant Regular Record Date by virtue of having
been such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in Clause (1) or (2) below:
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(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be
paid on each Security and the date of the proposed payment, and at the
same time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as in this Clause provided.
Thereupon the Trustee shall fix a Special Record Date for the payment of
such Defaulted Interest which shall be not more than 15 days and not
less than 10 days prior to the date of the proposed payment and not less
than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be given to each Holder of
Securities in the manner set forth in Section 106, not less than 10 days
prior to such Special Record Date. Notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor having been
so mailed, such Defaulted Interest shall be paid to the Persons in whose
names the Securities (or their respective Predecessor Securities) are
registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest on the
Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustee of the proposed payment
pursuant to this Clause, such manner of payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Security is registered as the owner of such Security
for the purpose of receiving payment of principal of and any premium and
(subject to Section 307) any interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
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SECTION 309. CANCELLATION.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by it. The Company may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other Person for delivery
to the Trustee) for cancellation any Securities previously authenticated
hereunder which the Company has not issued and sold, and all Securities so
delivered shall be promptly cancelled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section, except as expressly permitted by this Indenture. All cancelled
Securities held by the Trustee shall be disposed of by the Trustee in its
customary manner.
SECTION 310. COMPUTATION OF INTEREST.
Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months, except that Special Interest shall be computed on
the basis of a 360-day year and the actual number of days elapsed.
SECTION 311. CUSIP NUMBERS.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; PROVIDED that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Trustee of any change in the "CUSIP" numbers.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly
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provided for), and the Trustee, at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture,
when
(1) either
(A) all Securities theretofore authenticated and delivered (other than
(i) Securities which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 306 and (ii) Securities for
whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust, as provided in Section 1003) have
been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within
one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of (i), (ii) or (iii) above, has deposited
or caused to be deposited with the Trustee as trust funds in trust for
the purpose money in an amount sufficient to pay and discharge the
entire indebtedness on such Securities not theretofore delivered to the
Trustee for cancellation, for principal and any premium and interest to
the date of such deposit (in the case of Securities which have become
due and payable) or to the Stated Maturity or Redemption Date, as the
case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Trustee to any Authenticating Agent under Section 614 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive such satisfaction and discharge.
SECTION 402. APPLICATION OF TRUST MONEY.
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Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and any premium and
interest for whose payment such money has been deposited with the Trustee.
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT.
"Event of Default", wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of any interest upon any Security when it
becomes due and payable, and continuance of such default for a period of 30
days; or
(2) default in the payment of the principal of or any premium on any
Security at its Maturity; or
(3) default in the performance, or breach, of any covenant or warranty
of the Company in this Indenture (other than a covenant or warranty a
default in whose performance or whose breach is elsewhere in this Section)
and continuance of such default or breach for a period of 60 days after
there has been given, by registered or certified mail, to the Company by
the Trustee or to the Company and the Trustee by the Holders of at least
25% in principal amount of the Outstanding Securities a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
(4) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case
or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable Federal or State law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial
part of its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for relief or any
such other decree or order unstayed and in effect for a period of 90
consecutive days; or
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(5) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or the filing
by it of a petition or answer or consent seeking reorganization or relief
under any applicable Federal or State law, or the consent by it to the
filing of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of its property,
or the making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally as
they become due, or the taking of corporate action by the Company in
furtherance of any such action.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default (other than an Event of Default specified in
Section 501(4) or 501(5)) occurs and is continuing, then in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities may declare the principal amount of all the Securities to
be due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by Holders), and upon any such declaration such principal
amount shall become immediately due and payable. If an Event of Default
specified in Section 501(4) or 501(5) occurs, the principal amount of all the
Securities shall automatically, and without any declaration or other action on
the part of the Trustee or any Holder, become immediately due and payable.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article provided, the Holders of a majority
in principal amount of the Outstanding Securities, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the Trustee a sum sufficient
to pay
(A) all overdue interest on all Securities,
(B) the principal of (and premium, if any, on) any Securities which
have become due otherwise than by such declaration of acceleration and
any interest thereon at the rate or rates prescribed therefor in such
Securities,
(C) to the extent that payment of such interest is lawful, interest
upon overdue interest at the rate or rates prescribed therefor in such
Securities, and
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(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all Events of Default, other than the non-payment of the principal
of Securities which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.
The Company covenants that if
(1) default is made in the payment of any interest on any Security when
such interest becomes due and payable and such default continues for a
period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and any premium and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal and premium and on any overdue interest, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders of Securities by such appropriate judicial proceedings as the Trustee
shall deem necessary to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of any judicial proceeding relative to the Company (or any other
obligor upon the Securities), its property or its creditors, the Trustee shall
be entitled and empowered, by intervention in such proceeding or otherwise, to
take any and all actions authorized under the Trust Indenture Act in order to
have claims of the Holders and the Trustee allowed in any such proceeding. In
particular, the Trustee shall be authorized to collect and receive any
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moneys or other property payable or deliverable on any such claims and to
distribute the same; and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee and, in the event
that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 607.
No provision of this Indenture shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding; PROVIDED,
HOWEVER, that the Trustee may, on behalf of the Holders, vote for the election
of a trustee in bankruptcy or similar official and be a member of a creditors'
or other similar committee.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or any premium
or interest, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 607;
SECOND: To the payment of the amounts then due and unpaid for principal
of and any premium, if any, and interest on the Securities in respect of
which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due
and payable on such Securities for principal and any premium, if any, and
interest, respectively; and
THIRD: To the Company.
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SECTION 507. LIMITATION ON SUITS.
No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity satisfactory to it against the costs, expenses and liabilities to
be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND
INTEREST.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and any premium and (subject to Section 307)
interest on such Security on the respective Stated Maturities expressed in such
Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
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If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 306, no right or remedy herein conferred upon or reserved to the Trustee
or to the Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Securities
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee subject to the limitations
contained in this Indenture or by the Holders, as the case may be.
SECTION 512. CONTROL BY HOLDERS.
The Holders of a majority in principal amount of the Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, PROVIDED that
(1) such direction shall not be in conflict with any rule of law or with
this Indenture, and
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction or this Indenture.
SECTION 513. WAIVER OF PAST DEFAULTS.
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The Holders of not less than a majority in principal amount of the
Outstanding Securities may on behalf of the Holders of all the Securities waive
any past default hereunder and its consequences, except a default
(1) in the payment of the principal of or any premium or interest on any
Security, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 514. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs
(including legal fees and expenses) against any such party litigant, in the
manner and to the extent provided in the Trust Indenture Act; PROVIDED that
neither this Section nor the Trust Indenture Act shall be deemed to authorize
any court to require such an undertaking or to make such an assessment in any
suit instituted by the Company.
SECTION 515. WAIVER OF USURY, STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.
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The duties and responsibilities of the Trustee shall be as provided by
the Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers. Whether or not therein
expressly so provided, every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
SECTION 602. NOTICE OF DEFAULTS.
The Trustee shall give the Holders of Securities notice of such default
as and to the extent provided by the Trust Indenture Act; PROVIDED, HOWEVER,
that in the case of any default of the character specified in Section 501(3), no
such notice to Holders shall be given until at least 30 days after the
occurrence thereof. For the purpose of this Section, the term "default" means
any event which is, or after notice or lapse of time or both would become, an
Event of Default.
SECTION 603. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 601:
(1) the Trustee may conclusively rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document (whether in its original or facsimile form)
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order, and any
resolution of the Board of Directors shall be sufficiently evidenced by a
Board Resolution;
(3) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel of its own selection and the
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or
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indemnity satisfactory to it against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney at the expense of the Company
and shall incur no liability or additional liability of any kind by reason
of such inquiry or investigation;
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder;
(8) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(9) the Trustee shall not be liable for any action taken, suffered, or
omitted to be taken by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Indenture;
(10) the Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact
such a default is received by the Trustee at the Corporate Trust Office of
the Trustee, and such notice references the Securities and this Indenture;
and
(11) the rights, privileges, protections, immunities and benefits given
to the Trustee, including, without limitation, its right to be indemnified,
are extended to, and shall be enforceable by, the Trustee in each of its
capacities hereunder, and to each agent, custodian and other Person
employed to act hereunder.
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Securities. Neither the
Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Securities or the proceeds thereof.
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SECTION 605. MAY HOLD SECURITIES AND ACT AS TRUSTEE UNDER OTHER INDENTURES.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to
Sections 608 and 613, may otherwise deal with the Company with the same rights
it would have if it were not Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other agent.
Subject to the limitations imposed by the Trust Indenture Act, nothing
in this Indenture shall prohibit the Trustee from becoming and acting as trustee
under other indentures under which other securities, or certificates of interest
of participation in other securities, of the Company are outstanding in the same
manner as if it were not Trustee hereunder.
SECTION 606. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company.
SECTION 607. COMPENSATION AND REIMBURSEMENT.
The Company agrees
(1) to pay to the Trustee as agreed upon in writing from time to time
reasonable compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as shall be determined by a court of competent
jurisdiction to have been caused by its own negligence or willful
misconduct; and
(3) to fully indemnify the Trustee for, and to hold it harmless against,
any and all loss, liability, claim, damage or expense incurred without
negligence or willful misconduct on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder.
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The benefits of this Section shall survive the termination of this
Indenture and the resignation or removal of the Trustee.
SECTION 608. CONFLICTING INTERESTS.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture. To the extent
permitted by such Act, the Trustee shall not be deemed to have a conflicting
interest by virtue of being a trustee under that certain indenture dated January
23, 2002 between the Company and the Trustee with respect to the Company's
unsecured debentures, notes and other evidences of indebtedness and that certain
indenture dated December 15, 1996 between the Company and the Trustee with
respect to the 7% Notes due December 15, 2003.
SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be one (and only one) Trustee hereunder which
shall be a Person that is eligible pursuant to the Trust Indenture Act to act as
such and has a combined capital and surplus of at least $50,000,000. If any such
Person publishes reports of condition at least annually, pursuant to law or to
the requirements of its supervising or examining authority, then for the
purposes of this Section and to the extent permitted by the Trust Indenture Act,
the combined capital and surplus of such Person shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.
The Trustee may resign at any time by giving written notice thereof to
the Company. If the instrument of acceptance by a successor Trustee required by
Section 611 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition at
the expense of the Company any court of competent jurisdiction for the
appointment of a successor Trustee.
The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Securities, delivered to the
Trustee and to the Company. If the instrument of acceptance by a successor
Trustee required by Section 611 shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the
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removed Trustee may petition at the expense of the Company any court of
competent jurisdiction for the appointment of a successor Trustee.
If at any time:
(1) the Trustee shall fail to comply with Section 608 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and shall
fail to resign after written request therefor by the Company or by any such
Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property shall
be appointed or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (A) the Company by a Board Resolution may remove the
Trustee, or (B) subject to Section 514, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the Company,
by a Board Resolution, shall promptly appoint a successor Trustee and shall
comply with the applicable requirements of Section 611. If, within one year
after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee shall be appointed by Act of the Holders of a
majority in principal amount of the Outstanding Securities delivered to the
Company and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment in accordance with the
applicable requirements of Section 611, become the successor Trustee and to that
extent supersede the successor Trustee appointed by the Company. If no successor
Trustee shall have been so appointed by the Company or the Holders and accepted
appointment in the manner required by Section 611, any Holder who has been a
bona fide Holder of a Security for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction
for the appointment of a successor Trustee.
The Company shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee to all Holders of
Securities in the manner provided in Section 106. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
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Every such successor Trustee so appointed shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder.
Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to in the
first or second preceding paragraph, as the case may be.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
SECTION 614. APPOINTMENT OF AUTHENTICATING AGENT.
The Trustee may appoint an Authenticating Agent or Agents which shall be
authorized to act on behalf of the Trustee to authenticate Securities issued
upon original issue and upon exchange, registration of transfer or partial
redemption thereof or pursuant to Section 306, and
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Securities so authenticated shall be entitled to the benefits of this Indenture
and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States of America, any State thereof or the
District of Columbia, authorized under such laws to act as Authenticating Agent,
having a combined capital and surplus of not less than $50,000,000 and subject
to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 106 to all Holders of Securities.
Any successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 607.
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If an appointment is made pursuant to this Section 614, the Securities
may have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: Citibank, N.A.,
---------- AS TRUSTEE
By
---------------------------
AS AUTHENTICATING AGENT
By
---------------------------
AUTHORIZED OFFICER
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ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Company will furnish or cause to be furnished to the Trustee
(1) semi-annually, not later than 15 days after the Regular Record Date,
a list, in such form as the Trustee may reasonably require, of the names
and addresses of the Holders as of such Regular Record Date, and
(2) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
EXCLUDING from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Securities, and the corresponding
rights and privileges of the Trustee, shall be as provided by the Trust
Indenture Act.
Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
SECTION 703. REPORTS BY TRUSTEE.
The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto.
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Reports so required to be transmitted at stated intervals of not more
than 12 months shall be transmitted no later than July 1 in each calendar year,
commencing with the first July 1 after the first issuance of Securities pursuant
to this Indenture.
A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when any Securities are listed on any stock exchange or
delisted therefrom.
SECTION 704. REPORTS BY COMPANY.
The Company shall file with the Trustee and the Commission, and transmit
to Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times and
in the manner provided pursuant to the Trust Indenture Act; PROVIDED that any
such information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, and the Company shall not permit any Person to consolidate with
or merge into the Company or convey, transfer or lease its properties and assets
substantially as an entirety to the Company, unless:
(1) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, the Person formed by such consolidation or
into which the Company is merged or the Person which acquires by conveyance
or transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a corporation, partnership or trust,
shall be organized and validly existing under the laws of the United States
of America, any
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State thereof or the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, the due and punctual payment of the
principal of and any premium and interest on all the Securities and the
performance or observance of every covenant of this Indenture on the part
of the Company to be performed or observed, by supplemental indenture
satisfactory in form to the Trustee, executed and delivered to the Trustee,
by the Person (if other than the Company) formed by such consolidation or
into which the Company shall have been merged or by the Person which shall
have acquired the Company's assets;
(2) immediately after giving effect to such transaction and treating any
indebtedness which becomes an obligation of the Company or any Subsidiary
as a result of such transaction as having been incurred by the Company or
such Subsidiary at the time of such transaction, no Event of Default, and
no event which, after notice or lapse of time or both, would become an
Event of Default, shall have happened and be continuing;
(3) if, as a result of any such consolidation or merger or such
conveyance, transfer or lease, properties or assets of the Company or any
Restricted Subsidiary would become subject to a Lien which would not be
permitted by this Indenture, the Company or such successor Person, as the
case may be, shall take such steps as shall be necessary effectively to
secure the Securities equally and ratably with (or prior to) all
indebtedness secured thereby; and
(4) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required
in connection with such transaction, such supplemental indenture comply
with this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.
SECTION 802. SUCCESSOR SUBSTITUTED.
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease of the properties
and assets of the Company substantially as an entirety in accordance with
Section 801, the successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein, and thereafter, except in the case
of a lease, the predecessor Person shall be relieved of all obligations and
covenants under this Indenture and the Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
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SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and the
assumption by any such successor of the covenants of the Company herein and
in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company; or
(3) to secure the Securities, pursuant to the provisions of Section 1008
or otherwise; or
(4) to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee; or
(5) to cure any ambiguity, to correct or supplement any provision herein
which may be defective or inconsistent with any other provision herein, or
to make any other provisions with respect to matters or questions arising
under this Indenture, PROVIDED that such action pursuant to this Clause (5)
shall not adversely affect the interests of the Holders of Securities in
any material respect; or
(6) to supplement any of the provisions of the Indenture to such extent
as shall be necessary to permit or facilitate the defeasance and discharge
of Securities pursuant to Articles Four and Twelve, PROVIDED that any such
action shall not adversely affect the interests of the Holders of
Securities.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of a majority in principal amount of the
Outstanding Securities, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders under this Indenture; PROVIDED, HOWEVER, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Security
affected thereby,
(1) change the Stated Maturity of the principal of, or any installment
of principal of or interest on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable upon
the redemption thereof, or change any Place of Payment where, or the coin
or currency in which, any Security or any premium or interest
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thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity thereof
(or, in the case of redemption, on or after the Redemption Date), or
(2) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture,
or
(3) modify any of the provisions of this Section, Section 513 or
Section 1010, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby; PROVIDED, HOWEVER, that this clause shall not be deemed to require
the consent of any Holder with respect to changes in the references to "the
Trustee" and concomitant changes in this Section and Section 1010, or the
deletion of this proviso, in accordance with the requirements of
Sections 611 and 901(8).
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Sections 601 and 603) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
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SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company covenants and agrees for the benefit of Securities that it
will duly and punctually pay the principal of and premium, if any, and interest
(including Special Interest) on the Securities in accordance with the terms of
the Securities and this Indenture.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in each Place of Payment for Securities an
office or agency where Securities may be presented or surrendered for payment,
where Securities may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Company in respect of the Securities
and this Indenture may be served. The Company will give prompt written notice to
the Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
PROVIDED, HOWEVER, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in each
Place of Payment for Securities for such purposes. The Company will give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
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SECTION 1003. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent, it will,
on or before each due date of the principal of or any premium or interest on any
of the Securities, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal and any premium and
interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will promptly notify the Trustee of
its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will,
prior to each due date of the principal of or any premium or interest on any
Securities, deposit with a Paying Agent a sum sufficient to pay such amount,
such sum to be held as provided by the Trust Indenture Act, and (unless such
Paying Agent is the Trustee) the Company will promptly notify the Trustee of its
action or failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will (1) comply with the provisions of the Trust Indenture Act
applicable to it as a Paying Agent and (2) during the continuance of any default
by the Company (or any other obligor upon the Securities) in the making of any
payment in respect of the Securities, upon the written request of the Trustee,
forthwith pay to the Trustee all sums held in trust by such Paying Agent for
payment.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of or any premium or
interest on any Security and remaining unclaimed for two years after such
principal, premium or interest has become due and payable shall be paid to the
Company on Company Request, or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Security shall thereafter, as an
unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; PROVIDED, HOWEVER, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in each Place of
Payment, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.
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SECTION 1004. STATEMENT BY OFFICERS AS TO DEFAULT.
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.
SECTION 1005. EXISTENCE.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; PROVIDED, HOWEVER, that the
Company shall not be required to preserve any such right or franchise if the
Board of Directors, or the principal executive officer and principal financial
officer of the Company acting jointly, shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
that the loss thereof is not disadvantageous in any material respect to the
Holders.
SECTION 1006. MAINTENANCE OF PROPERTIES.
The Company will cause all properties used or useful in the conduct of
its business or the business of any Subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; PROVIDED, HOWEVER, that
nothing in this Section shall prevent the Company from discontinuing the
operation or maintenance of any of such properties if such discontinuance is, in
the judgment of the Company, desirable in the conduct of its business or the
business of any Subsidiary and not disadvantageous in any material respect to
the Holders.
SECTION 1007. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary, and (2)
all lawful claims for labor, materials and supplies which, if unpaid, might by
law become a lien upon the property of the Company or any Subsidiary; PROVIDED,
HOWEVER, that the Company shall not be required to pay or discharge or cause to
be
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paid or discharged any such tax, assessment, charge or claim (i) whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings or (ii) if the failure to pay or discharge would not have a material
adverse effect on the assets, business, operations, properties or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole.
SECTION 1008. LIMITATION ON LIENS.
The Company will not issue, incur, create, assume or guarantee, and will
not permit any Restricted Subsidiary to issue, incur, create, assume or
guarantee, any debt for borrowed money secured by a mortgage, security interest,
pledge, lien, charge or other encumbrance ("mortgages") upon any Principal
Property of the Company or any Restricted Subsidiary or upon any shares of stock
or indebtedness of any Restricted Subsidiary (whether such Principal Property,
shares or indebtedness are now existing or owned or hereafter created or
acquired) without in any such case effectively providing concurrently with the
issuance, incurrence, creation, assumption or guarantee of any such secured
debt, or the grant of a mortgage with respect to any such indebtedness, that the
Securities (together with, if the Company shall so determine, any other
indebtedness of or guarantee by the Company or such Restricted Subsidiary
ranking equally with the Securities) shall be secured equally and ratably with
(or, at the option of the Company, prior to) such secured debt. The foregoing
restriction, however, will not apply to:
(1) mortgages on property existing at the time of acquisition thereof by
the Company or any Subsidiary, PROVIDED that such mortgages were in
existence prior to the contemplation of such acquisitions;
(2) mortgages on property, shares of stock or indebtedness or other
assets of any corporation existing at the time such corporation becomes a
Restricted Subsidiary, PROVIDED that such mortgages are not incurred in
anticipation of such corporation becoming a Restricted Subsidiary;
(3) mortgages on property, shares of stock or indebtedness existing at
the time of acquisition thereof by the Company or a Restricted Subsidiary
or mortgages thereon to secure the payment of all or any part of the
purchase price thereof, or mortgages on property, shares of stock or
indebtedness to secure any indebtedness for borrowed money incurred prior
to, at the time of or within 270 days after, the latest of the acquisition
thereof, or, in the case of property, the completion of construction, the
completion of improvements, or the commencement of substantial commercial
operation of such property for the purpose of financing all or any part of
the purchase price thereof, such construction, or the making of such
improvements;
(4) mortgages to secure indebtedness owing to the Company or to a
Restricted Subsidiary:
(5) mortgages existing at the date of this Indenture;
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(6) mortgages on property of a corporation existing at the time such
corporation is merged into or consolidated with the Company or a Restricted
Subsidiary or at the time of a sale, lease or other disposition of the
properties of a corporation as an entirety or substantially as an entirety
to the Company or a Restricted Subsidiary, PROVIDED that such mortgage was
not incurred in anticipation of such merger or consolidation or sale, lease
or other disposition;
(7) mortgages in favor of the United States or any State, territory or
possession thereof (or the District of Columbia), or any department,
agency, instrumentality or political subdivision of the United States or
any State, territory or possession thereof (or the District of Columbia),
to secure partial, progress, advance or other payments pursuant to any
contract or statute or to secure any indebtedness incurred for the purpose
of financing all or any part of the purchase price or the cost of
constructing or improving the property subject to such mortgages;
(8) mortgages created in connection with the acquisition of assets or a
project financed with, and created to secure, a Nonrecourse Obligation;
(9) extensions, renewals, refinancings or replacements of any mortgage
referred to in the foregoing clauses (1), (2), (3), (4), (5), (6), (7) and
(8) PROVIDED, HOWEVER, that any mortgages permitted by any of the foregoing
clauses (1), (2), (3), (4), (5), (6), (7) and (8) shall not extend to or
cover any property of the Company or such Restricted Subsidiary, as the
case may be, other than the property, if any, specified in such clauses and
improvements thereto, and PROVIDED FURTHER that any refinancing or
replacement of any mortgages permitted by the foregoing clauses (7) and (8)
shall be of the type referred to in such clauses (7) or (8), as the case
may be.
Notwithstanding the restrictions set forth in the preceding paragraph,
the Company or any Restricted Subsidiary will be permitted to issue, incur,
create, assume or guarantee debt secured by a mortgage which would otherwise be
subject to such restrictions, without equally and ratably securing the
Securities, PROVIDED that after giving effect thereto, the aggregate amount of
all debt so secured by mortgages (not including mortgages permitted under
clauses (1) through (9) above) does not exceed 15% of the Consolidated Net
Tangible Assets of the Company as most recently determined on or prior to such
date.
SECTION 1009. LIMITATIONS ON SALE AND LEASEBACK TRANSACTIONS.
The Company will not, nor will it permit any Restricted Subsidiary to,
enter into any Sale and Leaseback Transaction with respect to any Principal
Property, other than any such transaction involving a lease for a term of not
more than three years or any such transaction between the Company and a
Restricted Subsidiary or between Restricted Subsidiaries, unless: (1) the
Company or such Restricted Subsidiary would be entitled to incur indebtedness
secured by a mortgage on the Principal Property involved in such transaction at
least equal in amount to the Attributable Debt with respect to such Sale and
Leaseback Transaction, without equally and ratably securing the Securities,
pursuant to Section 1008; or (2) the Company
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shall apply an amount equal to the greater of the net proceeds of such sale or
the Attributable Debt with respect to such Sale and Leaseback Transaction within
180 days of such sale to either (or a combination of) the retirement (other than
mandatory retirement, mandatory prepayment or sinking fund payment or by a
payment at maturity) of debt for borrowed money of the Company or a Restricted
Subsidiary that matures more than 12 months after the creation of such
indebtedness or the purchase, construction or development of other comparable
property.
SECTION 1010. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Article Eight or in Sections 1005 to 1009
inclusive, if before the time for such compliance the Holders of at least a
majority in principal amount of the Outstanding Securities shall, by Act of such
Holders, either waive such compliance in such instance or generally waive
compliance with such term, provision or condition, but no such waiver shall
extend to or affect such term, provision or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the obligations
of the Company and the duties of the Trustee in respect of any such term,
provision or condition shall remain in full force and effect.
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ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. APPLICABILITY OF ARTICLE.
The Securities may be redeemed at the election of the Issuer, in whole
or in part, at the Redemption Price equal to the greater of (a) 100% of the
principal amount of the outstanding Securities, plus accrued interest to the
Redemption Date, or (b) as determined by the Reference Treasury Dealer, the sum
of the present values of the remaining scheduled payments of principal and
interest on the Securities (not including any portion of payments of interest
accrued as of the Redemption Date), discounted to the Redemption Date on a
semi-annual basis at the applicable Treasury Yield plus 20 basis points, plus
accrued interest to the Redemption Date.
SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Securities shall be evidenced
by a Board Resolution. In case of any redemption at the election of the Company
of less than all the Securities, the Company shall, at least 60 days prior to
the Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date, of the
principal amount of Securities to be redeemed and, if applicable, of the tenor
of the Securities to be redeemed.
SECTION 1103. APPLICABILITY OF ARTICLE.
Securities which are redeemable before their Stated Maturity shall be
redeemable in accordance with their terms and (except as otherwise specified as
contemplated by Section 301 for such Securities) in accordance with this
Article.
SECTION 1104. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.
If less than all the Securities are to be redeemed (unless all the
Securities of a specified tenor are to be redeemed), the particular Securities
to be redeemed shall be selected not more than 60 days prior to the Redemption
Date by the Trustee, from the Outstanding Securities not previously called for
redemption, by such method as the Trustee shall deem fair and appropriate and
which may provide for the selection for redemption of a portion of the principal
amount of any Security, PROVIDED that the unredeemed portion of the principal
amount of any Security shall be in an authorized denomination (which shall not
be less than the minimum authorized denomination) for such Security. If less
than all the Securities of a specified tenor are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding
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Securities of such specified tenor not previously called for redemption in
accordance with the preceding sentence.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption as aforesaid and, in case of any Securities
selected for partial redemption as aforesaid, the principal amount thereof to be
redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 1105. NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at its address appearing in
the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price (including accrued interest, if any),
(3) that on the Redemption Date the Redemption Price will become due and
payable upon each such Security to be redeemed and, if applicable, that
interest thereon will cease to accrue on and after said date,
(4) the place or places where each such Security is to be surrendered
for payment of the Redemption Price, and
(5) the applicable CUSIP Number or Numbers of the Securities being
redeemed.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.
SECTION 1106. DEPOSIT OF REDEMPTION PRICE.
Prior to any Redemption Date, the Company shall deposit with the Trustee
or with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 1003) an amount of money
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Securities which
are to be redeemed on that date.
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SECTION 1107. SECURITIES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; PROVIDED, HOWEVER, that, unless otherwise specified as
contemplated by Section 301, installments of interest whose Stated Maturity is
on or prior to the Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall, until
paid, bear interest from the Redemption Date at the rate prescribed therefor in
the Security.
SECTION 1108. SECURITIES REDEEMED IN PART.
Any Security which is to be redeemed only in part shall be surrendered
at a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or its attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of like tenor, of any authorized
denomination as requested by such Holder, in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal of the Security so
surrendered.
ARTICLE TWELVE
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1201. COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT DEFEASANCE.
The Company may elect, at its option at any time, to have Section 1202
or Section 1203 applied to the Securities pursuant to such Section 1202 or 1203,
upon compliance with the conditions set forth below in this Article.
SECTION 1202. DEFEASANCE AND DISCHARGE.
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Upon the Company's exercise of its option to have this Section applied
to the Securities, the Company shall be deemed to have been discharged from its
obligations with respect to such Securities as provided in this Section on and
after the date the conditions set forth in Section 1204 are satisfied
(hereinafter called "Defeasance"). For this purpose, such Defeasance means that
the Company shall be deemed to have paid and discharged the entire indebtedness
represented by such Securities and to have satisfied all its other obligations
under such Securities and this Indenture insofar as such Securities are
concerned (and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging the same), subject to the following which shall
survive until otherwise terminated or discharged hereunder: (1) the rights of
Holders of such Securities to receive, solely from the trust fund described in
Section 1204 and as more fully set forth in such Section, payments in respect of
the principal of and any premium and interest on such Securities when payments
are due, (2) the Company's obligations with respect to such Securities under
Sections 304, 305, 306, 1002 and 1003, (3) the rights, powers, trusts, duties
and immunities of the Trustee hereunder and (4) this Article. Subject to
compliance with this Article, the Company may exercise its option to have this
Section applied to any Securities notwithstanding the prior exercise of its
option to have Section 1203 applied to such Securities.
SECTION 1203. COVENANT DEFEASANCE.
Upon the Company's exercise of its option to have this Section applied
to the Securities, (1) the Company shall be released from its obligations under
Section 801(3), Sections 1006 through 1009, inclusive, and (2) the occurrence of
any event specified in Section 501(3) (with respect to any of Section 801(3) and
Sections 1006 through 1009, inclusive) shall be deemed not to be or result in an
Event of Default, in each case with respect to such Securities as provided in
this Section on and after the date the conditions set forth in Section 1204 are
satisfied (hereinafter called "Covenant Defeasance"). For this purpose, such
Covenant Defeasance means that, with respect to such Securities, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such specified Section (to the extent
so specified in the case of Section 501(3)), whether directly or indirectly by
reason of any reference elsewhere herein to any such Section or by reason of any
reference in any such Section to any other provision herein or in any other
document, but the remainder of this Indenture and such Securities shall be
unaffected thereby.
SECTION 1204. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of Section 1202
or Section 1203 to the Securities:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee which satisfies the
requirements contemplated by Section 609 and agrees to comply with the
provisions of this Article applicable to it) as trust funds in trust for
the purpose of making the following payments, specifically pledged as
security for, and dedicated solely to, the benefits of the Holders of such
Securities, (A) money in an
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amount, or (B) U.S. Government Obligations which through the scheduled
payment of principal and interest in respect thereof in accordance with
their terms will provide, not later than one day before the due date of any
payment, money in an amount, or (C) a combination thereof, in each case
sufficient, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered
to the Trustee, to pay and discharge, and which shall be applied by the
Trustee (or any such other qualifying trustee) to pay and discharge, the
principal of and any premium and interest on such Securities on the
respective Stated Maturities, in accordance with the terms of this
Indenture and such Securities. As used herein, "U.S. Government Obligation"
means (x) any security which is (i) a direct obligation of the United
States of America for the payment of which the full faith and credit of the
United States of America is pledged or (ii) an obligation of a Person
controlled or supervised by and acting as an agency or instrumentality of
the United States of America the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case (i) or (ii), is not callable or redeemable
at the option of the issuer thereof, and (y) any depositary receipt issued
by a bank (as defined in Section 3(a)(2) of the Securities Act) as
custodian with respect to any U.S. Government Obligation which is specified
in Clause (x) above and held by such bank for the account of the holder of
such depositary receipt, or with respect to any specific payment of
principal of or interest on any U.S. Government Obligation which is so
specified and held, PROVIDED that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable
to the holder of such depositary receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific
payment of principal or interest evidenced by such depositary receipt.
(2) In the event of an election to have Section 1202 apply to the
Securities, the Company shall have delivered to the Trustee an Opinion of
Counsel stating that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the date
of this instrument, there has been a change in the applicable Federal
income tax law, in either case (A) or (B) to the effect that, and based
thereon such opinion shall confirm that, the Holders of such Securities
will not recognize gain or loss for Federal income tax purposes as a result
of the deposit, Defeasance and discharge to be effected with respect to
such Securities and will be subject to Federal income tax on the same
amount, in the same manner and at the same times as would be the case if
such deposit, Defeasance and discharge were not to occur.
(3) In the event of an election to have Section 1203 apply to the
Securities, the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that the Holders of such Securities will not
recognize gain or loss for Federal income tax purposes as a result of the
deposit and Covenant Defeasance to be effected with respect to such
Securities and will be subject to Federal income tax on the same amount, in
the same manner and at the same times as would be the case if such deposit
and Covenant Defeasance were not to occur.
-68-
(4) The Company shall have delivered to the Trustee an Officer's
Certificate to the effect that neither such Securities nor any other
Securities of the same series, if then listed on any securities exchange,
will be delisted as a result of such deposit.
(5) No event which is, or after notice or lapse of time or both would
become, an Event of Default with respect to such Securities shall have
occurred and be continuing at the time of such deposit or, with regard to
any such event specified in Sections 501(4) and (5), at any time on or
prior to the 90th day after the date of such deposit (it being understood
that this condition shall not be deemed satisfied until after such 90th
day).
(6) Such Defeasance or Covenant Defeasance shall not cause the Trustee
to have a conflicting interest within the meaning of the Trust Indenture
Act (assuming all Securities are in default within the meaning of such
Act).
(7) Such Defeasance or Covenant Defeasance shall not result in a breach
or violation of, or constitute a default under, any other agreement or
instrument to which the Company is a party or by which it is bound.
(8) Such Defeasance or Covenant Defeasance shall not result in the trust
arising from such deposit constituting an investment company within the
meaning of the Investment Company Act unless such trust shall be registered
under such Act or exempt from registration thereunder.
(9) The Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Defeasance or Covenant Defeasance have been
complied with.
SECTION 1205. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD IN
TRUST; MISCELLANEOUS PROVISIONS.
Subject to the provisions of the last paragraph of Section 1003, all
money and U.S. Government Obligations (including the proceeds thereof) deposited
with the Trustee or other qualifying trustee (solely for purposes of this
Section and Section 1206, the Trustee and any such other trustee are referred to
collectively as the "Trustee") pursuant to Section 1204 in respect of any
Securities shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Securities and this Indenture, to the payment, either
directly or through any such Paying Agent (including the Company acting as its
own Paying Agent) as the Trustee may determine, to the Holders of such
Securities, of all sums due and to become due thereon in respect of principal
and any premium and interest, but money so held in trust need not be segregated
from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 1204 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of Outstanding Securities.
-69-
Anything in this Article to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon Company Request any
money or U.S. Government Obligations held by it as provided in Section 1204 with
respect to any Securities which, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect the Defeasance or Covenant Defeasance, as
the case may be, with respect to such Securities.
SECTION 1206. REINSTATEMENT.
If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article with respect to any Securities by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, then the obligations under this
Indenture and such Securities from which the Company has been discharged or
released pursuant to Section 1202 or 1203 shall be revived and reinstated as
though no deposit had occurred pursuant to this Article with respect to such
Securities, until such time as the Trustee or Paying Agent is permitted to apply
all money held in trust pursuant to Section 1205 with respect to such Securities
in accordance with this Article; PROVIDED, HOWEVER, that if the Company makes
any payment of principal of or any premium or interest on any such Security
following such reinstatement of its obligations, the Company shall be subrogated
to the rights (if any) of the Holders of such Securities to receive such payment
from the money so held in trust.
-70-
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
SCHOLASTIC CORPORATION
By. /s/ Kevin J. Mcenery
Attest:
/s/ Teresa Connelly
Authorized Officer
CITIBANK, N.A.,
By /s/ WAFAA ORFY...
Attest:
/s/ Teresa Connelly
Authorized Officer
-71-
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 4th day of April, 2003, before me personally came KEVIN J.
MCENERY to me known, who, being by me duly sworn, did depose and say that he is
CHIEF FINANCIAL OFFICER AND EXECUTIVE VICE PRESIDENT of Scholastic Corporation,
one of the corporations described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by authority of
the Board of Directors of said corporation; and that he signed his name thereto
by like authority.
../s/ Paul Marcotrigiano..
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 4th day of April, 2003, before me personally came WAFAA ORFY, to
me known, who, being by me duly sworn, did depose and say that she is Vice
President of Citibank, N.A., one of the corporations described in and which
executed the foregoing instrument; that sh] knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation; and that she
signed her name thereto by like authority.
../s/ Nanette Murphy...
-72-
ANNEX A -- Form of Restricted
Securities Certificate
RESTRICTED SECURITIES CERTIFICATE
(For transfers pursuant to
Section 305(b)(i) and (iv) of the Indenture)
Citibank, N.A.,
as Trustee
111 Wall Street, 14th Floor
New York, New York
10043
Attention: Citibank Agency and Trust
Re: 5% NOTES DUE 2013 OF SCHOLASTIC CORPORATION (THE "SECURITIES")
Reference is made to the Indenture, dated as of April 4, 2003 (the
"Indenture"), between Scholastic Corporation (the "Company") and Citibank, N.A.,
as Trustee. Terms used herein and defined in the Indenture or in Rule 144 under
the U.S. Securities Act of 1933, as amended (the "Securities Act") are used
herein as so defined.
This certificate relates to U.S. $_____________ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s).
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that (i) it is the sole beneficial owner of the Specified
Securities, (ii) it is acting on behalf of all the beneficial owners of the
Specified Securities and is duly authorized by them to do so or (iii) it is the
Holder of a Global Security and has received a certification to the effect set
forth below. Such beneficial owner or owners are referred to herein collectively
as the "Owner". If the Specified Securities are represented by a Global
Security, they are held through the Depositary or an Agent Member in the name of
the Undersigned, as or on behalf of the Owner. If the Specified Securities are
not represented by a Global Security, they are registered in the name of the
Undersigned, as or on behalf of the Owner.
The Owner has requested that the Specified Securities be transferred to
a person (the "Transferee") who will take delivery in the form of a Restricted
Security. In connection with such transfer, the Owner hereby certifies that,
unless such transfer is being effected pursuant to an effective registration
statement under the Securities Act, it is being effected in accordance with
Rule 144A or Rule 144 under the Securities Act and all applicable securities
laws of the states of the United States and other jurisdictions. Accordingly,
the Owner hereby further certifies as follows:
(1) RULE 144A TRANSFERS. If the transfer is being effected in
accordance with Rule 144A:
A-1
(A) the Specified Securities are being transferred to a person
that the Owner and any person acting on its behalf reasonably
believe is a "qualified institutional buyer" within the meaning of
Rule 144A, acquiring for its own account or for the account of a
qualified institutional buyer; and
(B) the Owner and any person acting on its behalf have taken
reasonable steps to ensure that the Transferee is aware that the
Owner may be relying on Rule 144A in connection with the transfer;
and
(2) Rule 144 Transfers. If the transfer is being effected pursuant
to Rule 144:
the transfer is occurring after a holding period of at least
one year (computed in accordance with paragraph (d) of
Rule 144) has elapsed since the Specified Securities were last
acquired from the Company or from an affiliate of the Company,
whichever is later, and is being effected in accordance with
the applicable amount, manner of sale and notice requirements
of Rule 144.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and the Purchasers.
Dated:
-----------------------------------------------------
(Print the name of the Undersigned, as such term is
defined in the second paragraph of this certificate.)
By:
---------------------------------------------------
Name:
Title:
(If the Undersigned is a corporation, partnership or
fiduciary, the title of the person signing on behalf
of the Undersigned must be stated.)
A-2
ANNEX B -- Form of
Regulation S Certificate
REGULATION S CERTIFICATE
(For transfers pursuant to Section 305(c)(i) and (iii)
of the Indenture)
Citibank, N.A.,
as Trustee
111 Wall Street, 14th Floor
New York, New York
10043
Attention: Citibank Agency and Trust
Re: 5% NOTES DUE 2013 OF SCHOLASTIC CORPORATION (THE "SECURITIES")
Reference is made to the Indenture, dated as of April 4, 2003 (the
"Indenture"), between Scholastic Corporation (the "Company") and Citibank, N.A.,
as Trustee. Terms used herein and defined in the Indenture or in Regulation S or
Rule 144 under the U.S. Securities Act of 1933, as amended (the "Securities
Act") are used herein as so defined.
This certificate relates to U.S. $_____________ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s).
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the
"Undersigned") hereby certifies that (i) it is the sole beneficial owner of the
Specified Securities, (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so or (iii) it
is the Holder of a Global Security and has received a certification to the
effect set forth below. Such beneficial owner or owners are referred to herein
collectively as the "Owner". If the Specified Securities are represented by a
Global Security, they are held through the Depositary or an Agent Member in the
name of the Undersigned, as or on behalf of the Owner. If the Specified
Securities are not represented by a Global Security, they are registered in the
name of the Undersigned, as or on behalf of the Owner.
The Owner has requested that the Specified Securities be
transferred to a person (the "Transferee") who will take delivery in the form of
a Regulation S Security. In connection with such transfer, the Owner hereby
certifies or has certified that, unless such transfer is being effected pursuant
to an effective registration statement under the Securities Act, it is being
effected in accordance with Rule 904 of Regulation S or Rule 144 under the
Securities Act and with all applicable securities laws of the states of the
United States and
B-1
other jurisdictions. Accordingly, the Owner hereby further certifies or has
certified as follows:
(1) Rule 904 Transfers. If the transfer is being effected in
accordance with Rule 904 of Regulation S:
(A) the Owner is not a distributor of the Securities, an
affiliate of the Company or any such distributor or a person acting on
behalf of any of the foregoing;
(B) the offer of the Specified Securities was not made to a
person in the United States or for the account or benefit of a U.S.
Person;
(C) either:
(i) at the time the buy order was originated, the
Transferee was outside the United States or the Owner and any
person acting on its behalf reasonably believed that the
Transferee was outside the United States, or
(ii) the transaction is being executed in, on or through
the facilities of the Eurobond market, as regulated by the
International Securities Market Association or another
designated offshore securities market and neither the Owner
nor any person acting on its behalf knows that the transaction
has been prearranged with a buyer in the United States;
(D) no directed selling efforts have been made in the United
States by or on behalf of the Owner or any affiliate thereof;
(E) if the Owner is a dealer in securities or has received a
selling concession, fee or other remuneration in respect of the
Specified Securities, and the transfer is to occur during the Restricted
Period, then the requirements of Rule 904(c)(1) have been satisfied; and
(F) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act.
(2) RULE 144 TRANSFERS. If the transfer is being effected pursuant
to Rule 144:
the transfer is occurring after a holding period of at least one
year (computed in accordance with paragraph (d) of Rule 144) has
elapsed since the Specified Securities were last acquired from the
Company or from an affiliate of the Company, whichever is later,
and is being effected in accordance with the applicable amount,
manner of sale and notice requirements of Rule 144.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company and the Purchasers.
B-2
Dated:
---------------------------------------------------------------
(Print the name of the Undersigned, as such term is defined
in the second paragraph of this certificate.)
By:
------------------------------------------------------------
Name:
Title:
(If the Undersigned is a corporation, partnership or
fiduciary, the title of the person signing on behalf of the
Undersigned must be stated.)
B-3
EXHIBIT 4.2
Execution Copy
SCHOLASTIC CORPORATION
5% NOTES DUE 2013
REGISTRATION RIGHTS AGREEMENT
New York, New York
April 4, 2003
Salomon Smith Barney Inc.
Credit Suisse First Boston LLC
J.P Morgan Securities Inc.
As Representatives of the Initial Purchasers
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
Scholastic Corporation, a corporation organized under the laws of
Delaware (the "Company"), proposes to issue and sell to certain purchasers (the
"Initial Purchasers"), upon the terms set forth in a purchase agreement dated as
of April 2, 2003 (the "Purchase Agreement"), its 5% Notes Due 2013 (the
"Original Securities") relating to the initial placement of the Securities (the
"Initial Placement"). To induce the Initial Purchasers to enter into the
Purchase Agreement and to satisfy a condition of your obligations thereunder,
the Company agrees with you for your benefit and the benefit of the holders from
time to time of the Original Securities (including the Initial Purchasers) (each
a "Holder" and, together, the "Holders"), as follows:
1. DEFINITIONS. Capitalized terms used herein without definition shall
have their respective meanings set forth in the Purchase Agreement. As used in
this Agreement, the following capitalized defined terms shall have the following
meanings:
"Act" shall mean the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
"Affiliate" of any specified Person shall mean any other Person that,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such specified Person. For purposes of this definition, control of
a Person shall mean the power, direct or indirect, to direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise; and the terms "controlling" and "controlled" shall have meanings
correlative to the foregoing.
"Broker-Dealer" shall mean any broker or dealer registered as such
under the Exchange Act.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.
"Commission" shall mean the Securities and Exchange Commission.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Exchange Offer Registration Period" shall mean the 180 day period
following the consummation of the Registered Exchange Offer, exclusive of any
period during which any stop order shall be in effect suspending the
effectiveness of the Exchange Offer Registration Statement.
"Exchange Offer Registration Statement" shall mean a registration
statement of the Company on an appropriate form under the Act with respect to
the Registered Exchange Offer, all amendments and supplements to such
registration statement, including post-effective amendments thereto, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Exchanging Dealer" shall mean any Holder (which may include any
Initial Purchaser) that is a Broker-Dealer and elects to exchange any Original
Securities that it acquired for its own account as a result of market-making
activities or other trading activities (but not directly from the Company or any
Affiliate of the Company) for Exchange Securities.
"Exchange Securities" shall mean debt securities of the Issuer
identical in all material respects to the Original Securities (except that the
cash interest and interest rate step-up provisions and the transfer restrictions
shall be modified or eliminated, as appropriate) and to be issued under the
Indenture.
"Holder" shall have the meaning set forth in the preamble hereto.
"Indenture" shall mean the Indenture relating to the Securities, dated
as of April 4, 2003, between the Company and Citibank, N.A., as trustee, as the
same may be amended from time to time in accordance with the terms thereof.
"Initial Placement" shall have the meaning set forth in the preamble
hereto.
"Initial Purchaser" shall have the meaning set forth in the preamble
hereto.
"Losses" shall have the meaning set forth in Section 6(d) hereof.
"Majority Holders" shall mean the Holders of a majority in aggregate
principal amount of the Original Securities registered under a Registration
Statement.
"Managing Underwriters" shall mean the investment banker or investment
bankers and manager or managers that shall administer an underwritten offering.
2
"Offering Memorandum" shall have the meaning set forth in the Purchase
Agreement.
"Original Securities" shall have the meaning set forth in the preamble
hereto.
"Prospectus" shall mean the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Original Securities or the Exchange Securities
covered by such Registration Statement, and all amendments and supplements
thereto and all material incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth in the preamble
hereto.
"Registered Exchange Offer" shall mean the proposed offer of the
Company to issue and deliver to the Holders of the Original Securities that are
not prohibited by any law or policy of the Commission from participating in such
offer, in exchange for the Original Securities, a like aggregate principal
amount of the Exchange Securities.
"Registration Statement" shall mean any Exchange Offer Registration
Statement or Shelf Registration Statement that covers any of the Original
Securities or the Exchange Securities pursuant to the provisions of this
Agreement, any amendments and supplements to such registration statement,
including post-effective amendments (in each case including the Prospectus
contained therein), all exhibits thereto and all material incorporated by
reference therein.
"Securities" means Original Securities and Exchange Securities.
"Shelf Registration" shall mean a registration effected pursuant to
Section 3 hereof.
"Shelf Registration Period" has the meaning set forth in Section 3(b)
hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 3 hereof which
covers some or all of the Original Securities or Exchange Securities, as
applicable, on an appropriate form under Rule 415 under the Act, or any similar
rule that may be adopted by the Commission, amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Trustee" shall mean the trustee with respect to the Securities under
the Indenture.
"underwriter" shall mean any underwriter of Securities in connection
with an offering of Securities under a Shelf Registration Statement.
3
2. REGISTERED EXCHANGE OFFER. (a) The Company shall prepare and, not
later than 60 days following the date of the original issuance of the Original
Securities (or if such 60th day is not a Business Day, the next succeeding
Business Day), shall file with the Commission the Exchange Offer Registration
Statement with respect to the Registered Exchange Offer. The Company shall use
its reasonable best efforts to cause the Exchange Offer Registration Statement
to become effective under the Act within 180 days of the date of the original
issuance of the Original Securities (or if such 180th day is not a Business Day,
the next succeeding Business Day).
(b) Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Registered Exchange Offer, it
being the objective of such Registered Exchange Offer to enable each Holder
electing to exchange Original Securities for Exchange Securities (assuming that
such Holder is not an Affiliate of the Company, acquires the Exchange Securities
in the ordinary course of such Holder's business, has no arrangements with any
Person to participate in the distribution of the Exchange Securities and is not
prohibited by any law or policy of the Commission from participating in the
Registered Exchange Offer) to trade such Exchange Securities from and after
their receipt without any limitations or restrictions under the Act and without
material restrictions under the securities laws of a substantial proportion of
the several states of the United States.
(c) In connection with the Registered Exchange Offer, the Company
shall:
(i) mail to each Holder a copy of the Prospectus forming
part of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(ii) keep the Registered Exchange Offer open for not less
than 20 Business Days and not more than 45 Business Days after the date
notice thereof is mailed to the Holders (or, in each case, longer if
required by applicable law);
(iii) use its reasonable best efforts to keep the Exchange
Offer Registration Statement continuously effective under the Act,
supplemented and amended as required under the Act, to ensure that it is
available for sales of Exchange Securities by Exchanging Dealers during the
Exchange Offer Registration Period;
(iv) utilize the services of a depositary for the
Registered Exchange Offer with an address in the Borough of Manhattan in
New York City, which may be the Trustee or the Company or an Affiliate of
either of them;
(v) permit Holders to withdraw tendered Original
Securities at any time prior to the close of business, New York time, on
the last Business Day on which the Registered Exchange Offer is open;
(vi) prior to effectiveness of the Exchange Offer
Registration Statement, provide a supplemental letter to the Commission (A)
stating that the Company is conducting the Registered Exchange Offer in
reliance on the position of the Commission in EXXON CAPITAL HOLDINGS
CORPORATION (pub. avail. May 13, 1988) and
4
MORGAN STANLEY AND CO., INC. (pub. avail. June 5, 1991); and (B) including
a representation that the Company has not entered into any arrangement or
understanding with any Person to distribute the Exchange Securities to be
received in the Registered Exchange Offer and that, to the best of the
Company's information and belief, each Holder participating in the
Registered Exchange Offer is acquiring the Exchange Securities in the
ordinary course of business and has no arrangement or understanding with
any Person to participate in the distribution of the Exchange Securities
or, if it is an Affiliate of the Company, it will comply with the
registration and prospectus delivery requirements of the Act to the extent
applicable; and
(vii) comply in all respects with all applicable laws.
(d) As soon as practicable after the close of the Registered
Exchange Offer, the Company shall:
(i) accept for exchange all Original Securities tendered
and not validly withdrawn pursuant to the Registered Exchange Offer;
(ii) deliver the Original Securities for cancellation in
accordance with Section 4(r) all Original Securities so accepted for
exchange; and
(iii) cause the Trustee promptly to authenticate and deliver
to each Holder of Original Securities a principal amount of Exchange
Securities equal to the principal amount of the Original Securities of such
Holder so accepted for exchange.
(e) Each Holder hereby acknowledges and agrees that any
Broker-Dealer and any such Holder using the Registered Exchange Offer to
participate in a distribution of the Exchange Securities (x) could not under
Commission policy as in effect on the date of this Agreement rely on the
position of the Commission in MORGAN STANLEY AND CO., INC. (pub. avail. June 5,
1991) and EXXON CAPITAL HOLDINGS CORPORATION (pub. avail. May 13, 1988), as
interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993
and similar no-action letters; and (y) must comply with the registration and
prospectus delivery requirements of the Act in connection with any secondary
resale transaction and must be covered by an effective registration statement
containing the selling security holder information required by Item 507 or 508,
as applicable, of Regulation S-K under the Act if the resales are of Exchange
Securities obtained by such Holder in exchange for Original Securities acquired
by such Holder directly from the Company or one of its Affiliates. Accordingly,
each Holder participating in the Registered Exchange Offer shall be required to
represent to the Company that, at the time of the consummation of the Registered
Exchange Offer:
(i) any Exchange Securities received by such Holder will
be acquired in the ordinary course of business;
(ii) such Holder will have no arrangement or understanding
with any Person to participate in the distribution of the Original
Securities or the Exchange Securities within the meaning of the Act; and
(iii) such Holder is not an Affiliate of the Company.
5
(f) If any Initial Purchaser determines that it is not eligible to
participate in the Registered Exchange Offer with respect to the exchange of
Original Securities constituting any portion of an unsold allotment, at the
request of such Initial Purchaser, the Company shall issue and deliver to such
Initial Purchaser or the Person purchasing Exchange Securities registered under
a Shelf Registration Statement as contemplated by Section 3 hereof from such
Initial Purchaser, in exchange for such Original Securities, a like principal
amount of Exchange Securities. The Company shall use its reasonable best efforts
to cause the CUSIP Service Bureau to issue the same CUSIP number for such
Exchange Securities as for Exchange Securities issued pursuant to the Registered
Exchange Offer.
3. SHELF REGISTRATION. (a) If (i) due to any change in law or
applicable interpretations thereof by the Commission's staff, the Company
determines upon advice of its outside counsel that it is not permitted to effect
the Registered Exchange Offer as contemplated by Section 2 hereof; (ii) for any
other reason the Registered Exchange Offer is not declared effective within 180
days after the date hereof or consummated within 225 days of the date hereof;
(iii) any Initial Purchaser so requests with respect to Original Securities that
are not eligible to be exchanged for Exchange Securities in the Registered
Exchange Offer and that are held by it following consummation of the Registered
Exchange Offer; (iv) any Holder (other than an Initial Purchaser) is not
eligible to participate in the Registered Exchange Offer; or (v) in the case of
any Initial Purchaser that participates in the Registered Exchange Offer or
acquires Exchange Securities pursuant to Section 2(f) hereof, such Initial
Purchaser does not receive freely tradeable Exchange Securities in exchange for
Original Securities constituting any portion of an unsold allotment (it being
understood that (x) the requirement that an Initial Purchaser deliver a
Prospectus containing the information required by Item 507 or 508 of Regulation
S-K under the Act in connection with sales of Exchange Securities acquired in
exchange for such Original Securities shall result in such Exchange Securities
being not "freely tradeable"; and (y) the requirement that an Exchanging Dealer
deliver a Prospectus in connection with sales of Exchange Securities acquired in
the Registered Exchange Offer in exchange for Original Securities acquired as a
result of market-making activities or other trading activities shall not result
in such Exchange Securities being not "freely tradeable"), the Company shall
effect a Shelf Registration Statement in accordance with subsection (b) below.
(b) (i) The Company shall as promptly as practicable (but in no event
more than (a) 60 days after so required or requested pursuant to this Section 3
or (b) 210 days after the date of the original issuance of the Original
Securities, whichever is later), file with the Commission and thereafter shall
use its reasonable best efforts to cause to be declared effective under the Act,
no later than 240 days after the date of the original issuance of the Original
Securities, a Shelf Registration Statement relating to the offer and sale of the
Securities by the Holders thereof from time to time in accordance with the
methods of distribution elected by such Holders and set forth in such Shelf
Registration Statement; provided, however, that no Holder (other than an Initial
Purchaser) shall be entitled to have the Securities held by it covered by such
Shelf Registration Statement unless such Holder agrees in writing to be bound by
all of the provisions of this Agreement applicable to such Holder; and provided
further, that with respect to Exchange Securities received by an Initial
Purchaser in exchange for Original Securities constituting any portion of an
unsold allotment, the Company may, if permitted by current interpretations by
the Commission's staff, file a post-effective amendment to the Exchange Offer
Registration Statement containing the information required by Item 507 or 508 of
Regulation S-K, as
6
applicable, in satisfaction of its obligations under this subsection with
respect thereto, and any such Exchange Offer Registration Statement, as so
amended, shall be referred to herein as, and governed by the provisions herein
applicable to, a Shelf Registration Statement.
(ii) The Company shall use its reasonable best efforts to
keep the Shelf Registration Statement continuously effective, supplemented
and amended as required by the Act, in order to permit the Prospectus
forming part thereof to be usable by Holders for a period of two years from
the date of the original issuance of the Original Securities or, if
earlier, the Securities becoming freely tradable pursuant to Rule 144(k) of
the Act or until all Securities have been sold under the Shelf Registration
Statement (in any such case, such period being called the "Shelf
Registration Period"). The Company shall be deemed not to have used its
reasonable best efforts to keep the Shelf Registration Statement effective
during the requisite period if it voluntarily takes any action that would
result in Holders of Securities covered thereby not being able to offer and
sell such Securities during that period, unless (A) such action is required
by applicable law; or (B) such action is taken by the Company in good faith
and for valid business reasons (not including avoidance of the Company's
obligations hereunder), including the acquisition or divestiture of assets,
so long as the Company promptly thereafter complies with the requirements
of Section 4(k) hereof, if applicable.
(iii) The Company shall cause the Shelf Registration
Statement and the related Prospectus and any amendment or supplement
thereto, as of the effective date of the Shelf Registration Statement or
such amendment or supplement, (A) to comply in all material respects with
the applicable requirements of the Act and the rules and regulations of the
Commission; and (B) not to contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
4. ADDITIONAL REGISTRATION PROCEDURES. In connection with any Shelf
Registration Statement and, to the extent applicable, any Exchange Offer
Registration Statement, the following provisions shall apply.
(a) The Company shall:
(i) furnish to you, not less than five Business Days prior
to the filing thereof with the Commission, a copy of any Exchange Offer
Registration Statement and any Shelf Registration Statement, and each
amendment thereof and each amendment or supplement, if any, to the
Prospectus included therein (including all documents incorporated by
reference therein after the initial filing) and shall use its reasonable
best efforts to reflect in each such document, when so filed with the
Commission, such comments as you reasonably propose;
(ii) include the information set forth in Annex A hereto on
the facing page of the Exchange Offer Registration Statement, in Annex B
hereto in the forepart of the Exchange Offer Registration Statement in a
section setting forth details of the Exchange Offer, in Annex C hereto in
the underwriting or plan of distribution section of
7
the Prospectus contained in the Exchange Offer Registration Statement, and
in Annex D hereto in the letter of transmittal delivered pursuant to the
Registered Exchange Offer;
(iii) if requested by an Initial Purchaser, include the
information required by Item 507 or 508 of Regulation S-K, as applicable,
in the Prospectus contained in the Exchange Offer Registration Statement;
and
(iv) in the case of a Shelf Registration Statement, include
the names of the Holders that propose to sell Securities pursuant to the
Shelf Registration Statement as selling security holders.
(b) The Company shall ensure that:
(i) any Registration Statement and any amendment thereto
and any Prospectus forming part thereof and any amendment or supplement
thereto complies in all material respects with the Act and the rules and
regulations thereunder; and
(ii) any Registration Statement and any amendment thereto
does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(c) The Company shall advise you, the Holders of Securities
covered by any Shelf Registration Statement and any Exchanging Dealer under any
Exchange Offer Registration Statement that has provided in writing to the
Company a telephone or facsimile number and address for notices, and, if
requested by you or any such Holder or Exchanging Dealer, shall confirm such
advice in writing (which notice pursuant to clauses (ii)-(v) hereof shall be
accompanied by an instruction to suspend the use of the Prospectus until the
Company shall have remedied the basis for such suspension):
(i) when a Registration Statement and any amendment
thereto has been filed with the Commission and when the Registration
Statement or any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for any
post-effective amendment or supplement to the Registration Statement or the
Prospectus or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Securities included
therein for sale in any jurisdiction or the initiation of any proceeding
for such purpose; and
(v) of the happening of any event that requires any change
in the Registration Statement or the Prospectus so that, as of such date,
the statements therein
8
are not misleading and do not omit to state a material fact required to be
stated therein or necessary to make the statements therein (in the case of
the Prospectus, in the light of the circumstances under which they were
made) not misleading.
(d) The Company shall use its reasonable best efforts to obtain
the withdrawal of any order suspending the effectiveness of any Registration
Statement or the qualification of the Securities therein for sale in any
jurisdiction at the earliest possible time.
(e) The Company shall furnish to each Holder of Securities covered
by any Shelf Registration Statement, without charge, at least one copy of such
Shelf Registration Statement and any post-effective amendment thereto, and, if
the Holder so requests in writing, all material incorporated therein by
reference and exhibits thereto (including exhibits incorporated by reference
therein).
(f) The Company shall, during the Shelf Registration Period,
deliver to each Holder of Securities covered by any Shelf Registration
Statement, without charge, as many copies of the Prospectus (including each
preliminary Prospectus) included in such Shelf Registration Statement and any
amendment or supplement thereto as such Holder may reasonably request. The
Company consents to the use of the Prospectus or any amendment or supplement
thereto by each of the selling Holders of Securities in connection with the
offering and sale of the Securities covered by the Prospectus, or any amendment
or supplement thereto, included in the Shelf Registration Statement.
(g) The Company shall furnish to each Exchanging Dealer which so
requests, without charge, at least one copy of the Exchange Offer Registration
Statement and any post-effective amendment thereto, including all material
incorporated by reference therein, and, if the Exchanging Dealer so requests in
writing, all exhibits thereto (including exhibits incorporated by reference
therein).
(h) The Company shall promptly deliver to each Initial Purchaser,
each Exchanging Dealer and each other Person required to deliver a Prospectus
during the Exchange Offer Registration Period, without charge, as many copies of
the Prospectus included in such Exchange Offer Registration Statement and any
amendment or supplement thereto as any such Person may reasonably request. The
Company consents to the use of the Prospectus or any amendment or supplement
thereto by any Initial Purchaser, any Exchanging Dealer and any such other
Person that may be required to deliver a Prospectus following the Registered
Exchange Offer in connection with the offering and sale of the Exchange
Securities covered by the Prospectus, or any amendment or supplement thereto,
included in the Exchange Offer Registration Statement.
(i) Prior to the Registered Exchange Offer or any other offering
of Securities pursuant to any Registration Statement, the Company shall use its
reasonable best efforts to arrange, if necessary, for the qualification of the
Securities for sale under the laws of such jurisdictions as any Holder shall
reasonably request and will maintain such qualification in effect so long as
required; provided that in no event shall the Company be obligated to qualify to
do business in any jurisdiction where it is not then so qualified or to take any
action that would subject it to service of process in suits, other than those
arising out of the Initial Placement, the
9
Registered Exchange Offer or any offering pursuant to a Shelf Registration
Statement, in any such jurisdiction where it is not then so subject.
(j) The Company shall cooperate with the Holders of Securities to
facilitate the timely preparation and delivery of certificates representing
Original Securities or Exchange Securities to be issued or sold pursuant to any
Registration Statement free of any restrictive legends and in such denominations
and registered in such names as Holders may request.
(k) Upon the occurrence of any event contemplated by
subsections (c)(ii) through (v) above, the Company shall promptly prepare any
necessary post-effective amendment to the applicable Registration Statement or
an amendment or supplement to the related Prospectus or file any other required
document so that, as thereafter delivered to Initial Purchasers of the
Securities included therein, the Prospectus will not include an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. In such circumstances, the period of effectiveness of the
Exchange Offer Registration Statement provided for in Section 2 and the Shelf
Registration Statement provided for in Section 3(b) shall each be extended by
the number of days from and including the date of the giving of a notice of
suspension pursuant to Section 4(c) to and including the date when the Initial
Purchasers, the Holders of the Securities and any known Exchanging Dealer shall
have received such amended or supplemented Prospectus pursuant to this Section.
(l) Not later than the effective date of any Registration
Statement, the Company shall provide a CUSIP number for the Original Securities
or the Exchange Securities, as the case may be, registered under such
Registration Statement and provide the Trustee with printed certificates for
such Original Securities or Exchange Securities, in a form eligible for deposit
with The Depository Trust Company.
(m) The Company shall comply with all applicable rules and
regulations of the Commission and shall make generally available to its security
holders as soon as practicable after the effective date of the applicable
Registration Statement an earnings statement satisfying the provisions of
Section 11(a) of the Act.
(n) The Company shall use its reasonable best efforts to cause the
Indenture to be qualified under the Trust Indenture Act in a timely manner.
(o) The Company may require each Holder of Securities to be sold
pursuant to any Shelf Registration Statement to furnish to the Company such
information regarding the Holder and the distribution of such Securities as the
Company may from time to time reasonably require for inclusion in such
Registration Statement. The Company may exclude from such Shelf Registration
Statement the Securities of any Holder that unreasonably fails to furnish such
information within a reasonable time after receiving such request.
(p) In the case of any Shelf Registration Statement, the Company
shall enter into such agreements and take all other appropriate actions
(including if requested an underwriting agreement in customary form) in order to
expedite or facilitate the registration or the disposition of the Securities,
and in connection therewith, if an underwriting agreement is
10
entered into, cause the same to contain indemnification provisions and
procedures no less favorable than those set forth in Section 6 (or such other
provisions and procedures acceptable to the Majority Holders and the Managing
Underwriters, if any, with respect to all parties to be indemnified pursuant to
Section 6.
(q) In the case of any Shelf Registration Statement, the Company
shall:
(i) make reasonably available for inspection by the
Holders of Securities to be registered thereunder, any underwriter
participating in any disposition pursuant to such Registration Statement,
and any attorney, accountant or other agent retained by the Holders or any
such underwriter all relevant financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries;
(ii) cause the Company's officers, directors and employees
to supply all relevant information reasonably requested by the Holders or
any such underwriter, attorney, accountant or agent in connection with any
such Registration Statement as is customary for similar due diligence
examinations; PROVIDED, HOWEVER, that all such information shall be kept
confidential by the Holders or any such underwriter, attorney, accountant
or agent, unless such disclosure is made in connection with a court
proceeding or required by law, or such information is or becomes available
to the public generally other than by or at the direction of such persons
or through a third party without an accompanying obligation of
confidentiality;
(iii) In connection with an underwritten offering or if
requested by the Majority Holders, make such representations and warranties
to the Holders of Securities registered thereunder and the underwriters, if
any, in form, substance and scope as are customarily made by issuers to
underwriters in primary underwritten offerings and covering matters
including, but not limited to, those set forth in the Purchase Agreement;
(iv) In connection with an underwritten offering or if
requested by the Majority Holders, obtain opinions of counsel to the
Company and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the Managing Underwriters,
if any) addressed to each selling Holder and the underwriters, if any,
covering such matters as are customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably
requested by such Holders and underwriters;
(v) In connection with an underwritten offering or if
requested by the Majority Holders, obtain "cold comfort" letters and
updates thereof from the independent certified public accountants of the
Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired by
the Company for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed to each
selling Holder of Securities registered thereunder and the underwriters, if
any, in customary form and covering matters of the type customarily covered
in "cold comfort" letters in connection with primary underwritten
offerings; and
11
(vi) deliver such documents and certificates as may be
reasonably requested by the Majority Holders and the Managing Underwriters,
if any, including those to evidence compliance with Section 4(k) and with
any customary conditions contained in the underwriting agreement or other
agreement entered into by the Company.
The actions set forth in clauses (iii), (iv), (v) and (vi) of this Section shall
be performed at (A) the effectiveness of such Registration Statement and each
post-effective amendment thereto; and (B) each closing under any underwriting or
similar agreement as and to the extent required thereunder.
(r) If a Registered Exchange Offer is to be consummated, upon
delivery of the Original Securities by Holders to the Company (or to such other
Person as directed by the Company) in exchange for the Exchange Securities, the
Company shall mark, or caused to be marked, on the Original Securities so
exchanged that such Original Securities are being canceled in exchange for the
Exchange Securities. In no event shall the Original Securities be marked as paid
or otherwise satisfied.
(s) The Company will use its reasonable best efforts (i) if the
Original Securities have been rated prior to the initial sale of such
Securities, to confirm such ratings will apply to the Original Securities or the
Exchange Securities, as the case may be, covered by a Registration Statement; or
(ii) if the Original Securities were not previously rated, to cause the Original
Securities covered by a Shelf Registration Statement to be rated with at least
one nationally recognized statistical rating agency, if so requested by Majority
Holders with respect to the related Registration Statement or by any Managing
Underwriters.
(t) In the event that any Broker-Dealer shall underwrite any
Original Security or participate as a member of an underwriting syndicate or
selling group or "assist in the distribution" (within the meaning of the Rules
of Fair Practice and the By-Laws of the National Association of Securities
Dealers, Inc.) thereof, whether as a Holder of such Original Securities or as an
underwriter, a placement or sales agent or a broker or dealer in respect
thereof, or otherwise, the Company will assist such Broker-Dealer in complying
with the requirements of such Rules and By-Laws, including, without limitation,
by:
(i) if such Rules or By-Laws shall so require, engaging a
"qualified independent underwriter" (as defined in such Rules) to
participate in the preparation of the Registration Statement, to exercise
usual standards of due diligence with respect thereto and, if any portion
of the offering contemplated by such Registration Statement is an
underwritten offering or is made through a placement or sales agent, to
recommend the yield of such Securities;
(ii) indemnifying any such qualified independent
underwriter to the extent of the indemnification of underwriters provided
in Section 6 hereof; and
(iii) providing such information to such Broker-Dealer as
may be required in order for such Broker-Dealer to comply with the
requirements of such Rules.
12
(iv) The Company shall use its reasonable best efforts to
take all other steps necessary to effect the registration of the Original
Securities or the Exchange Securities, as the case may be, covered by a
Registration Statement.
5. REGISTRATION EXPENSES. The Company shall bear all expenses incurred
in connection with the performance of its obligations under Sections 2, 3 and 4
hereof and, in the event of any Shelf Registration Statement, will reimburse the
Holders for the reasonable fees and disbursements of one firm or counsel
designated by the Majority Holders to act as counsel for the Holders in
connection therewith.
6. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless each Holder of Original Securities or Exchange
Securities, as the case may be, covered by any Registration Statement (including
each Initial Purchaser and, with respect to any Prospectus delivery as
contemplated in Section 4(h) hereof, each Exchanging Dealer), the directors,
officers, employees and agents of each such Holder and each Person who controls
any such Holder within the meaning of either the Act or the Exchange Act against
any and all losses, claims, damages or liabilities, joint or several, to which
they or any of them may become subject under the Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement as
originally filed or in any amendment thereof, or in any preliminary Prospectus
or the Prospectus, or in any amendment thereof or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; PROVIDED, HOWEVER, that the Company will not be liable in
any case to the extent that any such loss, claim, damage or liability arises out
of or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by or on behalf of any such
Holder specifically for inclusion therein. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
The Company also agrees to indemnify or contribute as provided in
Section 6(d) to Losses of any underwriter of Original Securities or Exchange
Securities, as the case may be, registered under a Shelf Registration Statement,
their directors, officers, employees or agents and each Person who controls such
underwriter on substantially the same basis as that of the indemnification of
the Initial Purchasers and the selling Holders provided in this Section 6(a) and
shall, if requested by any Holder, enter into an underwriting agreement
reflecting such agreement, as provided in Section 4(p) hereof.
(b) Each Holder of Securities covered by a Registration Statement
(including each Initial Purchaser and, with respect to any Prospectus delivery
as contemplated in Section 4(h) hereof, each Exchanging Dealer) severally agrees
to indemnify and hold harmless the Company and each of its directors and
officers who signs such Registration Statement and each Person who controls the
Company within the meaning of either the Act or the Exchange Act, to the same
extent as the foregoing indemnity from the Company to each such Holder, but only
13
with reference to written information relating to such Holder furnished to the
Company by or on behalf of such Holder specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 6 or notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section, notify the indemnifying party in writing of the commencement
thereof; but the failure so to notify the indemnifying party (i) will not
relieve it from liability under paragraph (a) or (b) above unless and to the
extent it did not otherwise learn of such action and such failure results in the
forfeiture by the indemnifying party of substantial rights and defenses; and
(ii) will not, in any event, relieve the indemnifying party from any obligations
to any indemnified party other than the indemnification obligation provided in
paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint
counsel of the indemnifying party's choice at the indemnifying party's expense
to represent the indemnified party in any action for which indemnification is
sought (in which case the indemnifying party shall not thereafter be responsible
for the fees and expenses of any separate counsel retained by the indemnified
party or parties except as set forth below); PROVIDED, HOWEVER, that such
counsel shall be satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel if (i) the
use of counsel chosen by the indemnifying party to represent the indemnified
party would present such counsel with a conflict of interest; (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party; (iii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action; or (iv) the indemnifying party shall authorize the indemnified
party to employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or
(b) of this Section is unavailable to or insufficient to hold harmless an
indemnified party for any reason, then each applicable indemnifying party shall
have a joint and several obligation to contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses reasonably
incurred in connection with investigating or defending same) (collectively
"Losses") to which such indemnified party may be subject in such proportion as
is appropriate to reflect the relative benefits received by such indemnifying
party, on the one hand, and such indemnified party, on the other hand, from the
Initial Placement and the Registration Statement which resulted in such Losses;
PROVIDED, HOWEVER, that in no case shall any Initial Purchaser or any
14
subsequent Holder of any Original Security or Exchange Security be responsible,
in the aggregate, for any amount in excess of the purchase discount or
commission applicable to such Original Security, or in the case of an Exchange
Security, applicable to the Original Security that was exchangeable into such
Exchange Security, as set forth on the cover page of the Offering Memorandum,
nor shall any underwriter be responsible for any amount in excess of the
underwriting discount or commission applicable to the Securities purchased by
such underwriter under the Registration Statement which resulted in such Losses.
If the allocation provided by the immediately preceding sentence is unavailable
for any reason, the indemnifying party and the indemnified party shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of such indemnifying party, on the
one hand, and such indemnified party, on the other hand, in connection with the
statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Company shall be
deemed to be equal to the sum of (x) the total net proceeds from the Initial
Placement (before deducting expenses) as set forth on the cover page of the
Offering Memorandum and (y) the total amount of additional interest which the
Company was not required to pay as a result of registering the Securities
covered by the Registration Statement which resulted in such Losses. Benefits
received by the Initial Purchasers shall be deemed to be equal to the total
purchase discounts and commissions as set forth on the cover page of the
Offering Memorandum, and benefits received by any other Holders shall be deemed
to be equal to the value of receiving Original Securities or Exchange
Securities, as applicable, registered under the Act. Benefits received by any
underwriter shall be deemed to be equal to the total underwriting discounts and
commissions, as set forth on the cover page of the Prospectus forming a part of
the Registration Statement which resulted in such Losses. Relative fault shall
be determined by reference to, among other things, whether any alleged untrue
statement or omission relates to information provided by the indemnifying party,
on the one hand, or by the indemnified party, on the other hand, the intent of
the parties and their relative knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The parties agree that
it would not be just and equitable if contribution were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose) or
any other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), no Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section, each Person who controls a Holder within the meaning of either the
Act or the Exchange Act and each director, officer, employee and agent of such
Holder shall have the same rights to contribution as such Holder, and each
Person who controls the Company within the meaning of either the Act or the
Exchange Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable terms and
conditions of this paragraph (d).
(e) The provisions of this Section will remain in full force and
effect, regardless of any investigation made by or on behalf of any Holder or
the Company or any of the officers, directors or controlling Persons referred to
in this Section hereof, and will survive the sale by a Holder of Securities
covered by a Registration Statement.
15
7. UNDERWRITTEN REGISTRATIONS. (a) If any of the Original Securities
or Exchange Securities, as the case may be, covered by any Shelf Registration
Statement are to be sold in an underwritten offering, the Managing Underwriters
shall be selected by the Majority Holders.
(b) No Person may participate in any underwritten offering
pursuant to any Shelf Registration Statement, unless such Person (i) agrees to
sell such Person's Original Securities or Exchange Securities, as the case may
be, on the basis reasonably provided in any underwriting arrangements approved
by the Persons entitled hereunder to approve such arrangements; and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
8. NO INCONSISTENT AGREEMENTS. The Company has not, as of the date
hereof, entered into, nor shall it, on or after the date hereof, enter into, any
agreement with respect to its Securities that is inconsistent with the rights
granted to the Holders herein or otherwise conflicts with the provisions hereof.
9. AMENDMENTS AND WAIVERS. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, qualified, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of the
Majority Holders (or, after the consummation of any Registered Exchange Offer in
accordance with Section 2 hereof, of the holders of the majority of the
aggregate principal amount of Exchange Securities); PROVIDED that, with respect
to any matter that directly or indirectly affects the rights of any Initial
Purchaser hereunder, the Company shall obtain the written consent of each such
Initial Purchaser against which such amendment, qualification, supplement,
waiver or consent is to be effective. Notwithstanding the foregoing (except the
foregoing proviso), a waiver or consent to departure from the provisions hereof
with respect to a matter that relates exclusively to the rights of Holders whose
Original Securities or Exchange Securities, as the case may be, are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect the rights of other Holders may be given by the Majority Holders,
determined on the basis of Original Securities or Exchange Securities, as the
case may be, being sold rather than registered under such Registration
Statement.
10. NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery,
first-class mail, telex, telecopier or air courier guaranteeing overnight
delivery:
(a) if to a Holder, at the most current address given by such
holder to the Company in accordance with the provisions of this Section, which
address initially is, with respect to each Holder, the address of such Holder
maintained by the Registrar under the Indenture, with a copy in like manner to
Salomon Smith Barney Inc;
(b) if to you, initially at the respective addresses set forth in
the Purchase Agreement; and
(c) if to the Company, initially at its address set forth in the
Purchase Agreement.
16
All such notices and communications shall be deemed to have been duly
given when received.
The Initial Purchasers or the Company by notice to the other parties
may designate additional or different addresses for subsequent notices or
communications.
11. SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties, including,
without the need for an express assignment or any consent by the Company
thereto, subsequent Holders of Original Securities and the Exchange Securities.
The Company hereby agrees to extend the benefits of this Agreement to any Holder
of Original Securities and the Exchange Securities, and any such Holder may
specifically enforce the provisions of this Agreement as if an original party
hereto.
12. COUNTERPARTS. This agreement may be in signed counterparts, each
of which shall an original and all of which together shall constitute one and
the same agreement.
13. HEADINGS. The headings used herein are for convenience only and
shall not affect the construction hereof.
14. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed in the State of New York.
15. SEVERABILITY. In the event that any one of more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected
thereby, it being intended that all of the rights and privileges of the parties
shall be enforceable to the fullest extent permitted by law.
16. SECURITIES HELD BY THE COMPANY, ETC. Whenever the consent or
approval of Holders of a specified percentage of principal amount of Original
Securities or Exchange Securities is required hereunder, Original Securities or
Exchange Securities, as applicable, held by the Company or its Affiliates (other
than subsequent Holders of Original Securities or Exchange Securities if such
subsequent Holders are deemed to be Affiliates solely by reason of their
holdings of such Original Securities or Exchange Securities) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
17
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Initial Purchasers.
Very truly yours,
SCHOLASTIC CORPORATION
By: /s/ Kevin J. McEnery
---------------------
Name: Kevin J. McEnery
Title: Executive Vice President and
Chief Financial Officer
The foregoing Agreement is hereby confirmed and
accepted as of the date first above written.
SALOMON SMITH BARNEY INC.
CREDIT SUISSE FIRST BOSTON LLC
J.P. MORGAN SECURITIES INC.
Acting on behalf of themselves and
as Representatives of the Initial Purchasers
By: SALOMON SMITH BARNEY INC.
By: /s/ Celine M. Armstrong
------------------------------
Name: Celine M. Armstrong
Title: Vice President
18
ANNEX A
Each Broker-Dealer that receives Exchange Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. The Letter
of Transmittal states that by so acknowledging and by delivering a prospectus, a
Broker-Dealer will not be deemed to admit that it is an "underwriter": within
the meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a Broker-Dealer in connection
with resales of Exchange Securities received in exchange for Original Securities
where such Original Securities were acquired by such Broker-Dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, starting on the Expiration Date (as defined herein) and ending on the
close of business 180 days after the Expiration Date, it will make this
Prospectus available to any Broker-Dealer for use in connection with any such
resale. See "Plan of Distribution."
A-1
ANNEX B
Each Broker-Dealer that receives Exchange Securities for its own
account in exchange for Original Securities, where such Original Securities were
acquired by such Broker-Dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Securities. See "Plan of
Distribution."
B-1
ANNEX C
PLAN OF DISTRIBUTION
Each Broker-Dealer that receives Exchange Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Broker-Dealer in connection with resales of Exchange Securities received in
exchange for Original Securities where such [Original Securities] were acquired
as a result of market-making activities or other trading activities. The Company
has agreed that, starting on the Expiration Date and ending on the close of
business 180 days after the Expiration Date, it will make this Prospectus, as
amended or supplemented, available to any Broker-Dealer for use in connection
with any such resale. In addition, until __________, 200__, all dealers
effecting transactions in the Exchange Securities may be required to deliver a
prospectus.
The Company will not receive any proceeds from any sale of Exchange
Securities by brokers-dealers. Exchange Securities received by Broker-Dealers
for their own account pursuant to the Exchange Offer may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such Broker-Dealer and/or the purchasers of any such
Exchange Securities. Any Broker-Dealer that resales Exchange Securities that
were received by it for its own account pursuant to the Exchange Offer and any
broker or dealer that participates in a distribution of such Exchange Securities
may be deemed to be an "underwriter" within the meaning of the Securities Act
and any profit of any such resale of Exchange Securities and any commissions or
concessions received by any such Persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a
Broker-Dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any Broker-Dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
holders of the Securities) other than commissions or concessions of any brokers
or dealers and will indemnify the holders of the Original Securities (including
any Broker-Dealers) against certain liabilities, including liabilities under the
Securities Act.
[If applicable, add information required by Regulation S-K Items 507
and/or 508.]
C-1
ANNEX D
RIDER A
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
--------------------------------------------
Address:
--------------------------------------------
--------------------------------------------
RIDER B
If the undersigned is not a Broker-Dealer, the undersigned represents that it
acquired the Exchange Securities in the ordinary course of its business, it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities and it has not arrangements or understandings with any Person to
participate in a distribution of the Exchange Securities. If the undersigned is
a Broker-Dealer that will receive Exchange Securities for its own account in
exchange for Original Securities, it represents that the Original Securities to
be exchanged for Exchange Securities were acquired by it as a result of
market-making activities or other trading activities and acknowledges that it
will deliver a prospectus in connection with any resale of such Exchange
Securities; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
D-1
EXHIBIT 4.3
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY SECURITY ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
SCHOLASTIC CORPORATION
5% Notes Due 2013
CUSIP NO.
No. 1 $ 175,000,000
Scholastic Corporation, a corporation duly organized and existing under the
laws of Delaware (herein called the "Company", which term includes any successor
Person under the Indenture hereinafter referred to), for value received, hereby
promises to pay to Cede & Co., or registered assigns, the principal sum of one
hundred seventy five million dollars on April 15, 2013, and to pay interest
thereon from April 4, 2003 or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, semi-annually on April 15 and
October 15 in each year, commencing October 15, 2003, at the rate of 5% per
annum, until the principal hereof is paid or made available for payment
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in such Indenture, be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the April 1 or October 1 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of
Securities not less than 10 days prior to such Special Record Date, or be paid
at any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in said
Indenture.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in The City of New York, in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: ___, 2003
SCHOLASTIC CORPORATION
By
----------------------------
Name:
Title:
Attest:
- -----------------------------
Trustee's Certificate of Authentication
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: ___, 2003 Citibank, N.A.,
AS TRUSTEE
By
----------------------------
AUTHORIZED SIGNATORY
This Security is one of a duly authorized issue of securities of the
Company designated as its 5% Notes Due 2013 (herein called the "Securities"),
issued and to be issued under an Indenture, dated as of April 4, 2003 (herein
called the "Indenture", which term shall have the meaning assigned to it in such
instrument), between the Company and Citibank, N.A., as Trustee (herein called
the "Trustee", which term includes any successor trustee under the Indenture),
and reference is hereby made to the Indenture and all indentures supplemental
thereto for a statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Company, the Trustee and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. Reference is hereby made to the Indenture and all
indentures supplemental thereto for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered.
The Company, at its option, may at any time redeem all or any portion of
the Securities, at a Redemption Price plus accrued interest to the Redemption
Date, equal to the greater of (1) 100% of the principal amount or (2) the sum of
the present values of the remaining scheduled payments of principal and interest
thereon discounted to the Redemption Date on a semiannual basis assuming a
360-day year consisting of twelve 30-day months at the applicable Treasury Yield
plus 20 basis points.
"Comparable Treasury Issue" means, with respect to this Security, the
United States Treasury security selected by the Independent Investment Bankers
as having a maturity comparable to the remaining term of this Security that
would be utilized, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of
comparable maturity to the remaining term of this Security.
"Comparable Treasury Price" means, with respect to any Redemption Date, (i)
the average of the applicable Reference Treasury Dealer Quotations for such
Redemption Date, after excluding the highest and lowest such applicable
Reference Treasury Dealer Quotations, or (ii) if the Trustee obtains fewer than
four such Reference Treasury Dealer Quotations, the average of all such
Quotations.
"Independent Investment Banker" means Salomon Smith Barney Inc., Credit
Suisse First Boston LLC and J.P. Morgan Securities Inc. or, if such firms are
unwilling or unable to select the applicable Comparable Treasury Issue, an
independent investment banking institution of national standing appointed by the
Trustee.
"Reference Treasury Dealer" means Salomon Smith Barney Inc., Credit Suisse
First Boston LLC and J.P. Morgan Securities Inc.; PROVIDED, HOWEVER, that if the
foregoing shall cease to be a primary U.S. Government Securities dealer in New
York City (a "Primary Treasury Dealer"), the Company shall substitute therefor
another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue for
the Notes (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third business day preceding such Redemption Date.
"Treasury Yield" means, with respect to any Redemption Date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the applicable Comparable
Treasury Price for such Redemption Date.
In the event of redemption of this Security in part only, a new Security or
Securities and of like tenor for the unredeemed portion hereof will be issued in
the name of the Holder hereof upon the cancellation hereof.
The Indenture contains provisions for defeasance at any time of the entire
indebtedness of this Security or certain restrictive covenants and Events of
Default with respect to this Security, in each case upon compliance with certain
conditions set forth in the Indenture.
Unless the context otherwise requires, the Original Securities (as defined
in the Indenture) and the Exchange Securities (as defined in the Indenture)
shall constitute one series for all purposes under the Indenture, including
without limitation, amendments, waivers and redemptions.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities at any time by the
Company and the Trustee with the consent of the Holders of more than 50% in
principal amount of the Securities at the time Outstanding. The Indenture also
contains provisions permitting the Holders of specified percentages in principal
amount of the Securities at the time Outstanding, on behalf of the Holders of
all Securities, to waive compliance by the Company with certain provisions of
the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default, the Holders of not less
than 25% in principal amount of the Securities at the time Outstanding shall
have made written request to the Trustee to institute proceedings in respect of
such Event of Default as Trustee and offered the Trustee reasonable indemnity,
and the Trustee shall not have received from the Holders of a majority in
principal amount of Securities at the time Outstanding a direction inconsistent
with such request, and shall have failed to institute any such proceeding, for
60 days after receipt of such notice, request and offer of indemnity. The
foregoing shall not apply to any suit instituted by the Holder of this Security
for the enforcement of any payment of principal hereof or any premium or
interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay
the principal of and any premium and interest on this Security at the times,
place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in any place where the principal of and any premium and
interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or its attorney duly
authorized in writing, and thereupon one or more new Securities of like tenor,
of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of like tenor
of a different authorized denomination, as requested by the Holder surrendering
the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
Interest on this Security shall be computed on the basis of a 360-day year
of twelve 30-day months.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
Exhibit 5.1
Coudert Brothers LLP NORTH AMERICA
ATTORNEYS AT LAW LOS ANGELES, NEW YORK, PALO ALTO,
SAN FRANCISCO, WASHINGTON
1114 AVENUE OF THE AMERICAS EUROPE
NEW YORK, NY 10036-7703 ANTWERP, BERLIN, BRUSSELS, FRANKFURT,
TEL: (212) 626-4400 GHENT, LONDON, MILAN, MOSCOW, MUNICH,
FAX: (212) 626-4120 PARIS, ROME, STOCKHOLM, ST. PETERSBURG
WWW.COUDERT.COM
ASIA/PACIFIC
ALMATY, BANGKOK, BEIJING, HONG KONG,
JAKARTA, SHANGHAI, SINGAPORE, SYDNEY, TOKYO
ASSOCIATED OFFICES
BUDAPEST, MEXICO CITY, PRAGUE
April 28, 2003
Scholastic Corporation
557 Broadway
New York, New York 10012
Ladies and Gentlemen:
In connection with the registration under the Securities Act of 1933 (the
"Act") of $175,000,000 principal amount of 5% Notes Due 2013 (the "Exchange
Notes") of Scholastic Corporation, a Delaware corporation (the "Company"), to be
issued in exchange for the Company's outstanding 5% Notes Due 2013 pursuant to
(i) the Indenture, dated as of April 4, 2003 (the "Indenture"), between the
Company and Citibank, N.A., as trustee (the "Trustee"), and (ii) the
Registration Rights Agreement, dated as of April 4, 2003 (the "Registration
Rights Agreement"), between the Company and Salomon Smith Barney Inc., Credit
Suisse First Boston LLC and J.P. Morgan Securities Inc., as representatives of
the initial purchasers referred to therein, we, as your counsel, have examined
such corporate records, certificates and other documents, and such questions of
law, as we have considered necessary or appropriate for the purposes of this
opinion.
Upon the basis of such examination, we advise you that, in our opinion, the
Exchange Notes have been duly authorized by the Company; and when the Securities
and Exchange Commission declares the Company's Registration Statement on Form
S-4 effective and the Exchange Notes have been duly executed, authenticated,
issued and delivered in accordance with the terms of the Registration Rights
Agreement and the Indenture, the Exchange Notes will constitute valid and
legally binding obligations of the Company, enforceable in accordance with their
terms, subject, as to enforcement, to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
The foregoing opinion is limited to the Federal laws of the United States,
the laws of the State of New York and the General Corporation Law of the State
of Delaware, and we are expressing no opinion as to the effect of the laws of
any other jurisdiction.
COUDERT BROTHERS LLP
April 28, 2003
Page 2 of 2
In connection with the foregoing, we have assumed that at the time of the
issuance and delivery of the Exchange Notes there will not have occurred any
change in law affecting the validity, legally binding character or
enforceability of the Exchange Notes and that the issuance and delivery of the
Exchange Notes, all of the terms of the Exchange Notes and the performance by
the Company of its obligations thereunder will comply with applicable law and
with each requirement or restriction imposed by any court or governmental body
having jurisdiction over the Company and will not result in a default under or a
breach of any agreement or instrument then binding upon the Company.
In rendering the foregoing opinion, we have relied as to certain matters on
information obtained from public officials, officers of the Company and other
sources believed by us to be responsible, and we have assumed (i) that the
Indenture has been duly authorized, executed and delivered by the Trustee, (ii)
that the Exchange Notes will conform to the specimens thereof examined by us,
(iii) that the Trustee's certificates of authentication of the Exchange Notes
will be manually signed by one of the Trustee's authorized officers and (iv)
that the signatures on all documents examined by us are genuine, assumptions
which we have not independently verified.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Validity of
the Notes" in the Prospectus. In giving such consent, we do not thereby admit
that we are in the category of persons whose consent is required under Section 7
of the Act.
Very truly yours,
/s/ Coudert Brothers LLP
EXHIBIT 12.1
SCHOLASTIC CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(AMOUNTS IN MILLIONS, EXCEPT RATIO DATA)
Nine Months
Ended
February 28, 2003
-----------------
(Unaudited)
Earnings:
Pretax earnings from continuing operations $ 44.8
Fixed charges 36.4
Less: interest capitalized -
-----------------
Earnings $ 81.2
=================
Fixed Charges:
Interest expensed $ 23.4
Interest capitalized -
-----------------
Interest factor, included in consolidated rental expense 13.0
-----------------
Fixed Charges $ 36.4
=================
Ratio of earnings to fixed charges 2.23
=================
TWELVE MONTHS ENDED MAY 31,
2002 2001 2000 1999 1998
---------- ---------- ---------- ---------- ----------
Earnings:
Pretax earnings from continuing operations $ 153.3 $ 57.1 $ 80.4 $ 58.9 $ 38.1
Fixed charges 49.6 59.9 32.5 30.5 29.0
Less: interest capitalized (1.8) (3.3) (1.4) (0.6) -
---------- ---------- ---------- ---------- ----------
Earnings $ 201.1 $ 113.7 $ 111.5 $ 88.8 $ 67.1
========== ========== ========== ========== ==========
Fixed Charges:
Interest expensed $ 31.6 $ 41.9 $ 19.1 $ 19.2 $ 20.3
Interest capitalized 1.8 3.3 1.4 0.6 -
Interest factor, included in consolidated rental expense 16.2 14.7 12.0 10.7 8.7
---------- ---------- ---------- ---------- ----------
Fixed Charges $ 49.6 $ 59.9 $ 32.5 $ 30.5 $ 29.0
========== ========== ========== ========== ==========
Ratio of earnings to fixed charges 4.05 1.90 3.43 2.91 2.31
========== ========== ========== ========== ==========
Exhibit 23.2
Consent of Independent Auditors
We consent to the reference to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" in the Registration Statement
(Form S-4) and related Prospectus of Scholastic Corporation for the
registration of $175,000,000 5% Notes Due 2013 and to the incorporation by
reference therein of our report dated August 22, 2002, with respect to the
consolidated financial statements and schedule of Scholastic Corporation
included in its Annual Report (Form 10-K) for the year ended May 31, 2002,
filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
New York, New York
April 28, 2003
Exhibit 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an application to determine eligibility of a Trustee
pursuant to Section 305 (b)(2)
----------
CITIBANK, N.A.
(Exact name of trustee as specified in its charter)
13-5266470
(I.R.S. employer
identification no.)
399 Park Avenue, New York, New York 10043
(Address of principal executive office) (Zip Code)
----------
SCHOLASTIC CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 13-3385513
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
557 Broadway
New York, New York 10012
(Address of principal executive offices) (Zip Code)
----------
5% Notes Due 2013
(Title of the indenture securities)
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Name Address
---- -------
Comptroller of the Currency Washington, D.C.
Federal Reserve Bank of New York New York, NY
33 Liberty Street
New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
Item 16. List of Exhibits.
List below all exhibits filed as a part of this Statement of
Eligibility.
Exhibits identified in parentheses below, on file with the
Commission, are incorporated herein by reference as exhibits
hereto.
Exhibit 1 - Copy of Articles of Association of the Trustee, as
now in effect. (Exhibit 1 to T-1 to Registration Statement
No. 2-79983).
Exhibit 2 - Copy of certificate of authority of the Trustee to
commence business. (Exhibit 2 to T-1 to Registration Statement
No. 2-29577).
Exhibit 3 - Copy of authorization of the Trustee to exercise
corporate trust powers. (Exhibit 3 to T-1 to Registration
Statement No. 2-55519).
Exhibit 4 - Copy of existing By-Laws of the Trustee. (Exhibit 4
to T-1 to Registration Statement No. 33-34988).
Exhibit 5 - Not applicable.
Exhibit 6 - The consent of the Trustee required by Section 321(b)
of the Trust Indenture Act of 1939. (Exhibit 6 to T-1 to
Registration Statement No. 33-19227).
Exhibit 7 - Copy of the latest Report of Condition of Citibank,
N.A. (as of December 31, 2002-attached).
Exhibit 8 - Not applicable.
Exhibit 9 - Not applicable.
----------
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Citibank, N.A., a national banking association organized and existing
under the laws of the United States of America, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York and State of New York, on the 28th day
of April, 2003.
CITIBANK, N.A.
By /s/ Wafaa Orfy
------------------------
Wafaa Orfy
Vice President
EXHIBIT 99.1
SCHOLASTIC CORPORATION
OFFER TO EXCHANGE UP TO
$175,000,000 OF 5% NOTES DUE 2013
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR
ALL OUTSTANDING UNREGISTERED
5% NOTES DUE 2013
To Registered Holders:
We are enclosing herewith the material listed below relating to the offer
(the "Exchange Offer") by Scholastic Corporation (the "Company") to exchange up
to $175,000,000 aggregate principal amount of its 5% Notes Due 2013 (the "New
Notes"), which have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), for up to $175,000,000 aggregate principal amount of its
outstanding unregistered 5% Notes Due 2013 (the "Old Notes"), upon the terms and
subject to the conditions set forth in the Prospectus dated April , 2003 and
the related Letter of Transmittal.
Enclosed herewith are copies of the following documents:
1. Prospectus dated April , 2003;
2. Letter of Transmittal;
3. Notice of Guaranteed Delivery;
4. Instruction to Registered Holder from Beneficial Owner;
5. Letter to Clients, which may be sent to your clients for whose account
you hold Old Notes in your name or in the name of your nominee, to accompany the
instruction form referred to above, for obtaining such client's instruction with
regard to the Exchange Offer; and
6. Letter to Depository Trust Company Participants for Tender of All
Outstanding Old Notes for the New Notes.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE EXCHANGE
OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 2003 UNLESS
EXTENDED BY THE COMPANY.
The Exchange Offer is not conditioned upon any minimum number of Old Notes
being tendered.
Pursuant to the Letter of Transmittal, each holder of Old Notes (a "Holder")
will represent to the Company that: (i) the New Notes to be acquired pursuant to
the Exchange Offer will be acquired in the ordinary course of business of the
person acquiring the New Notes, whether or not such person is the Holder;
(ii) neither the Holder nor any person receiving any New Notes directly or
indirectly from the Holder pursuant to the Exchange Offer (if not a
broker-dealer referred to in the last sentence of this paragraph) is engaging or
intends to engage in the distribution of the New Notes and none of them have any
arrangement or understanding with any person to participate in the distribution
of the New Notes; (iii) the Holder and each person receiving any New Notes
directly or indirectly from the Holder pursuant to the Exchange Offer
acknowledge and agree that any person participating in the Exchange Offer for
the purpose of distributing the New Notes (x) must comply with the registration
and prospectus delivery requirements of the Securities Act, in connection with a
secondary resale transaction of the New Notes acquired by such person and
(y) cannot rely on the position of the staff of the Securities and Exchange
Commission (the "Commission") set forth in the Exxon Capital Holdings
Corporation no-action letter (available May 13, 1988) or similar letters;
(iv) the Holder and each person receiving any New Notes directly or indirectly
from the Holder pursuant to the Exchange Offer understand that a secondary
resale transaction described in clause (iii) above should be covered
by an effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation S-K of the
Commission; and (v) neither the Holder nor any person receiving any New Notes
directly or indirectly from the Holder pursuant to the Exchange Offer is an
"affiliate" of the Company, as defined in Rule 405 under the Securities Act. If
the Holder is a broker-dealer that will receive New Notes for its own account in
exchange for Old Notes that were acquired as a result of market making or other
trading activities, it acknowledges that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such New
Notes received in respect of such Old Notes pursuant to the Exchange Offer;
however, by so acknowledging and by delivering a prospectus, the Holder will not
be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
The enclosed Instruction to Registered Holder from Beneficial Owner contains
an authorization by beneficial owner of Old Notes held by you to make the
foregoing representations and warranties on behalf of such beneficial owner.
The Company will not pay any fee or commission to any broker or dealer or to
any other persons (other than the exchange agent for the Exchange Offer) in
connection with the solicitation of tenders of Old Notes pursuant to the
Exchange Offer. The Company will pay all transfer taxes, if any, applicable to
the exchange of Old Notes pursuant to the Exchange Offer, on the transfer of Old
Notes to it, except as otherwise provided in Instruction 7 of the enclosed
Letter of Transmittal.
Any inquiries you may have relating to the procedure for tendering or
withdrawing tenders may be addressed to, and additional copies of the enclosed
materials may be obtained from the Exchange Agent at:
Citibank, N.A.
111 Wall Street, 15th Floor
New York, New York 10043
Attention: Agency & Trust Services
By Facsimile: (212) 825-3483
By Telephone: 1-800-422-2066
All other questions regarding the Exchange Offer should be addressed to
Mr. Raymond Marchuk, Senior Vice President, Finance and Investor Relations of
the Company at telephone number (212) 343-6741.
Very truly yours,
SCHOLASTIC CORPORATION
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR
ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF EITHER
OF THEM IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THE DOCUMENTS ENCLOSED
HEREWITH AND THE STATEMENTS CONTAINED HEREIN.
EXHIBIT 99.2
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
5% NOTES DUE 2013
CUSIP NO. [ ]
OF
SCHOLASTIC CORPORATION
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PURSUANT TO THE EXCHANGE OFFER PROSPECTUS DATED APRIL , 2003. THE EXCHANGE
OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 2003 (THE "EXPIRATION DATE") UNLESS THE EXCHANGE OFFER IS
EXTENDED, IN WHICH CASE THE TERM "EXPIRATION DATE" SHALL MEAN THE LATEST TIME
AND DATE TO WHICH THE EXCHANGE OFFER IS EXTENDED. TENDERS MAY BE WITHDRAWN AT
ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
THE EXCHANGE AGENT IS:
CITIBANK, N.A.
BY MAIL, HAND DELIVERY
OR OVERNIGHT COURIER: BY FACSIMILE TRANSMISSION:
Citibank, N.A. (212) 825-3483
111 Wall Street, 15th Floor Confirm by Telephone:
New York, New York 10043 (800) 422-2066
Attention: Agency & Trust Services
FOR INFORMATION CALL:
1-800-422-2066
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL
IS COMPLETED.
The undersigned acknowledges receipt of the Prospectus dated April , 2003
(the "Prospectus") of Scholastic Corporation (the "Company") and this Letter of
Transmittal (the "Letter of Transmittal"), which, together with the Prospectus,
constitutes the Company's offer (the "Exchange Offer") to exchange up to
$175,000,000 aggregate principal amount of its 5% Notes Due 2013 (the "New
Notes"), which have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), for up to $175,000,000 aggregate principal amount of its
outstanding 5% Notes Due 2013 (the "Old Notes"). Recipients of the Prospectus
should read the requirements described in such Prospectus with respect to
eligibility to participate in the Exchange Offer. Capitalized terms used but not
defined herein have the meaning given to them in the Prospectus.
The undersigned hereby tenders the Old Notes described in the box entitled
"Description of Old Notes" below pursuant to the terms and conditions described
in the Prospectus and this Letter of Transmittal. The undersigned is the
registered owner of all the Old Notes and the undersigned represents that it has
received from each beneficial owner of Old Notes ("Beneficial Owners") a duly
completed and executed form of "Instruction to Registered Holder from Beneficial
Owner"
accompanying this Letter of Transmittal, instructing the undersigned to take the
action described in this Letter of Transmittal.
This Letter of Transmittal is to be used only by a holder of Old Notes
(i) if certificates representing Old Notes are to be forwarded herewith or
(ii) if delivery of Old Notes is to be made by book-entry transfer to the
Exchange Agent's account at The Depository Trust Company (the "Depositary"),
pursuant to the procedures set forth in the section of the Prospectus entitled
"The Exchange Offer--Procedures for Tendering." If delivery of the Old Notes is
to be made by book-entry transfer to the account maintained by the Exchange
Agent at the Depositary, tenders of the Old Notes must be effected in accordance
with the procedures mandated by the Depositary's Automated Tender Offer Program
and the procedures set forth in the Prospectus under the caption "The Exchange
Offer--Book-Entry Transfer."
The undersigned hereby represents and warrants that the information set
forth in the box entitled "Beneficial Owner(s)" is true and correct.
Any Beneficial Owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to tender
should contact such registered holder of Old Notes promptly and instruct such
registered holder of Old Notes to tender on behalf of the Beneficial Owner. If
such Beneficial Owner wishes to tender on its own behalf, such Beneficial Owner
must, prior to completing and executing this Letter of Transmittal and
delivering its Old Notes, either make appropriate arrangements to register
ownership of the Old Notes in such Beneficial Owner's name or obtain a properly
completed bond power from the registered holder of Old Notes. The transfer of
record ownership may take considerable time.
In order to properly complete this Letter of Transmittal, a holder of Old
Notes must (i) complete the box entitled "Description of Old Notes," (ii) if
appropriate, check and complete the boxes relating to book-entry transfer,
guaranteed delivery, Special Issuance Instructions, Special Delivery
Instructions and Beneficial Owner(s), (iii) sign the Letter of Transmittal by
completing the box entitled "Sign Here" and (iv) unless an exemption applies,
complete the Substitute Form W-9. Each holder of Old Notes should carefully read
the detailed instructions below prior to completing the Letter of Transmittal.
Holders of Old Notes who desire to tender their Old Notes for exchange and
(i) whose Old Notes are not immediately available, (ii) who cannot deliver their
Old Notes and all other documents required hereby to the Exchange Agent on or
prior to the Expiration Date or (iii) who are unable to complete the procedure
for book-entry transfer on a timely basis, must tender the Old Notes pursuant to
the guaranteed delivery procedures set forth in the section of the Prospectus
entitled "The Exchange Offer--Guaranteed Delivery Procedures." See Instruction 2
of the Instructions beginning on page 12 hereof.
Holders of Old Notes who wish to tender their Old Notes for exchange must,
at a minimum, complete columns (1), (2) if applicable (see footnote 1 below),
and (3) in the box below entitled "Description of Old Notes" and sign the box on
page 10 under the words "Sign Here." If only those columns are completed, such
holder of Old Notes will have tendered for exchange all Old Notes listed in
column (3) below. If the holder of Old Notes wishes to tender for exchange less
than all of such Old Notes, column (4) must be completed in full. In such case,
such holder of Old Notes should refer to Instruction 5 on page 13.
2
- ------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES
- ------------------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4)
PRINCIPAL AMOUNT
TENDERED FOR
EXCHANGE (ONLY IF
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) OF OLD DIFFERENT AMOUNT
NOTE(S), EXACTLY AS PRINCIPAL AMOUNT TENDERED NAME(S) OLD NOTE FROM COLUMN
APPEAR(S) ON CERTIFICATE(S) FOR OLD NOTE OR AS THE NAME OF THE NUMBERS (ATTACH 3)(MUST BE IN
PARTICIPANT APPEARS ON THE BOOK-ENTRY TRANSFER FACILITY'S SIGNED LIST IF AGGREGATE INTEGRAL MULTIPLES
SECURITY POSITION LISTING (PLEASE FILL IN IF BLANK) NECESSARY) PRINCIPAL AMOUNT OF $1000)
- ------------------------------------------------------------------------------------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
(1) Column (2) need not be completed by holders of Old Notes tendering Old Notes
for exchange by book-entry transfer. Please check the appropriate box on the
next page and provide the requested information.
(2) Column (4) need not be completed by holders of Old Notes who wish to tender
for exchange the principal amount of Old Notes listed in column (3).
Completion of column (4) will indicate that the holder of Old Notes wishes
to tender for exchange only the principal amount of Old Notes indicated in
column (4).
/ / CHECK HERE IF OLD NOTES ARE ENCLOSED HEREWITH.
/ / CHECK HERE IF OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO
THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE DEPOSITARY AND
COMPLETE THE FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS (AS HEREINAFTER
DEFINED) ONLY):
Name of Tendering Institution: _____________________________________________
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE FOLLOWING (FOR USE
BY ELIGIBLE INSTITUTIONS ONLY):
Name of Registered Holder of Old Note(s): __________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Window Ticket Number (if available): _______________________________________
Name of Institution which Guaranteed Delivery: _____________________________
Account Number (if delivered by book-entry transfer): ______________________
________________________________________
3
ATTENTION BROKER-DEALERS: IMPORTANT NOTICE
CONCERNING YOUR ABILITY TO RESELL THE NEW NOTES
IF THE COMPANY OR THE EXCHANGE AGENT DOES NOT RECEIVE ANY LETTERS OF TRANSMITTAL
FROM BROKER-DEALERS REQUESTING ADDITIONAL COPIES OF THE PROSPECTUS FOR USE IN
CONNECTION WITH RESALES OF THE NEW NOTES, THE COMPANY INTENDS TO TERMINATE THE
EFFECTIVENESS OF THE REGISTRATION STATEMENT AS SOON AS PRACTICABLE AFTER THE
CONSUMMATION OR TERMINATION OF THE EXCHANGE OFFER. IF THE EFFECTIVENESS OF THE
REGISTRATION STATEMENT IS TERMINATED, YOU WILL NOT BE ABLE TO USE THE PROSPECTUS
IN CONNECTION WITH RESALES OF NEW NOTES AFTER SUCH TIME. SEE SECTION ENTITLED
"THE EXCHANGE OFFER--TERMS OF THE EXCHANGE OFFER" CONTAINED IN THE PROSPECTUS
FOR MORE INFORMATION.
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE ADDITIONAL COPIES
OF THE PROSPECTUS AND COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO FOR
USE IN CONNECTION WITH RESALES OF NEW NOTES:
Name: ______________________________________________________________________
Address: ___________________________________________________________________
Telephone No. ( ) _________________________________________________________
Number of Additional Copies Desired: _______________________________________
If you requested additional copies of the prospectus, YOU MUST MAIL OR SEND A
PHOTOCOPY OF THIS PAGE to:
BY MAIL: BY FACSIMILE: (212) 343-6933
SCHOLASTIC CORPORATION ATTENTION: RAYMOND MARCHUK
557 BROADWAY
NEW YORK, NEW YORK 10012
ATTENTION: RAYMOND MARCHUK
DO NOT SEND THE LETTER OF TRANSMITTAL TO THE ABOVE ADDRESS AS IT WILL NOT
CONSTITUTE A VALID TENDER OF OLD NOTES UNDER THE TERMS OF THE EXCHANGE OFFER.
CONSULT THE PROSPECTUS FOR PROPER DELIVERY PROCEDURES.
4
- -------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 6, 7, AND 8)
To be completed ONLY (i) if the New Notes issued in exchange for Old
Notes (or if certificates for Old Notes not tendered for exchange for New
Notes) are to be issued in the name of someone other than the undersigned or
(ii) if Old Notes tendered by book-entry transfer that are not exchanged are
to be returned by credit to an account maintained at the Depositary.
Issue to:
Name: ------------------------------
(PLEASE PRINT)
Address:
------------------------------
- --------------------------------------
- --------------------------------------
(INCLUDE ZIP CODE)
- --------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY
NO.)
Credit Old Notes not exchanged and
delivered by book-entry transfer to
the Depositary account set forth
below:
- --------------------------------------
(ACCOUNT NUMBER)
- -------------------------------------------
- -------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 6, 7, AND 8)
To be completed ONLY if the New Notes issued in exchange for Old Notes
(or if certificates for Old Notes not tendered in exchange for New Notes)
are to be mailed or delivered (i) to someone other than the undersigned, or
(ii) to the undersigned at an address other than the address shown below the
undersigned's signature.
Mail or deliver to:
Name: ------------------------------
(PLEASE PRINT)
Address:
------------------------------
- --------------------------------------
- --------------------------------------
(INCLUDE ZIP CODE)
- --------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY
NO.)
- -------------------------------------------
- --------------------------------------------------------------------------------------------
BENEFICIAL OWNER(S)
- --------------------------------------------------------------------------------------------
STATE OF PRINCIPAL RESIDENCE PRINCIPAL AMOUNT OF OLD
OF EACH BENEFICIAL OWNER OF NOTES HELD FOR ACCOUNT
OLD NOTES OF BENEFICIAL OWNER(S)
- --------------------------------------------------------------------------------------------
If delivery of Old Notes is to be made by book-entry transfer to the account
maintained by the Exchange Agent at the Depositary, then tenders of Old Notes
must be effected in accordance with the procedures mandated by the
Depositary's Automated Tender Offer Program and the procedures set forth in
the Prospectus under the caption "The Exchange Offer--Book-Entry Transfer."
- --------------------------------------------------------------------------------
5
SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
LADIES AND GENTLEMEN:
Pursuant to the offer by Scholastic Corporation (the "Company") upon the
terms and subject to the conditions set forth in the Prospectus dated April ,
2003 (the "Prospectus") and this Letter of Transmittal (the "Letter of
Transmittal"), which, together with the Prospectus, constitutes the Company's
offer (as it may be extended or amended, the "Exchange Offer") to exchange up to
$175,000,000 aggregate principal amount of its 5% Notes Due 2013 (the "New
Notes"), which have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), for up to $175,000,000 aggregate principal amount of its
outstanding 5% Notes Due 2013 (the "Old Notes"), the undersigned hereby tenders
to the Company for exchange the Old Notes indicated above.
By executing this Letter of Transmittal and subject to and effective upon
acceptance for exchange of the Old Notes tendered for exchange herewith, the
undersigned (i) acknowledges and agrees that the Company shall have fully
performed all of its obligations under that certain Registration Rights
Agreement dated as of April 4, 2003, among the Company and the initial
purchasers named therein, (ii) will have irrevocably sold, assigned and
transferred to the Company all right, title and interest in, to and under all of
the Old Notes tendered for exchange hereby, and (iii) hereby appoints Citibank,
N.A. as the exchange agent for the Exchange Offer (the "Exchange Agent") as the
true and lawful agent and attorney-in-fact (with full knowledge that the
Exchange Agent also acts as agent of the Company) of such holder of Old Notes
with respect to such Old Notes, with full power of substitution, to (x) deliver
certificates representing such Old Notes, or transfer ownership of such Old
Notes on the account books maintained by The Depository Trust Company (the
"Depositary") (together, in any such case, with all accompanying evidences of
transfer and authenticity), to the Company, (y) present and deliver such Old
Notes for transfer and cancellation on the books of the Company, and
(z) receive all benefits and otherwise exercise all rights and incidents of
ownership with respect to such Old Notes, all in accordance with the terms of
the Exchange Offer. The power of attorney granted in this paragraph shall be
deemed to be irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that (i) the undersigned has
full power and authority to tender, exchange, assign and transfer the Old Notes
tendered hereby, and (ii) when such Old Notes are accepted for exchange by the
Company, the Company will acquire good and marketable title thereto, free and
clear of all liens, security interests, conditional sales agreements,
restrictions, charges and encumbrances or other obligations relating to the sale
or transfer of the Old Notes and not subject to any adverse claims. The
undersigned will, upon receipt, execute and deliver any additional documents
deemed by the Exchange Agent or the Company to be necessary or desirable to
complete the exchange, assignment and transfer of the Old Notes tendered for
exchange hereby. The undersigned accepts and agrees to all of the terms of the
Exchange Offer.
The undersigned hereby further represents to the Company that (i) the New
Notes to be acquired pursuant to the Exchange Offer will be acquired in the
ordinary course of business of the person acquiring the New Notes, whether or
not such person is the undersigned, (ii) neither the undersigned nor any person
receiving any New Notes directly or indirectly from the undersigned pursuant to
the Exchange Offer (if not a broker-dealer referred to in the last sentence of
this paragraph) is engaging or intends to engage in the distribution of the New
Notes and none of them has any arrangement or understanding with any person to
participate in the distribution of the New Notes, (iii) the undersigned and each
person receiving any New Notes directly or indirectly from the undersigned
pursuant to the Exchange Offer acknowledge and agree that any person
participating in the Exchange Offer for the purpose of distributing the New
Notes (x) must comply with the registration and prospectus delivery requirements
of the Securities Act, in connection with a secondary resale transaction of the
New Notes acquired by such person and (y) cannot rely on the position of the
staff of the Securities and Exchange
6
Commission (the "Commission") set forth in the Morgan Stanley and Co., Inc.
no-action letter (available June 5, 1991) or the Exxon Capital Holdings
Corporation no-action letter (available May 13, 1988) or similar letters,
(iv) the undersigned and each person receiving any New Notes directly or
indirectly from the undersigned pursuant to the Exchange Offer understand that a
secondary resale transaction described in clause (iii) above should be covered
by an effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation S-K of the
Commission and (v) neither the undersigned nor any person receiving any New
Notes directly or indirectly from the undersigned pursuant to the Exchange Offer
is an "affiliate" of the Company, as defined under Rule 405 under the Securities
Act. If the undersigned is a broker-dealer that will receive New Notes for its
own account in exchange for Old Notes that were acquired as a result of market
making or other trading activities, it acknowledges that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such New Notes received in respect of such Old Notes pursuant to the
Exchange Offer; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
The undersigned acknowledges that, (i) for purposes of the Exchange Offer,
the Company will be deemed to have accepted for exchange, and to have exchanged,
validly tendered Old Notes if, as and when the Company gives oral or written
notice thereof to the Exchange Agent and (ii) any Old Notes tendered by the
undersigned and not accepted for exchange will be returned to the undersigned at
the address set forth above unless otherwise indicated in the box above entitled
"Special Delivery Instructions." Tenders of Old Notes for exchange may be
withdrawn at any time prior to 5:00 p.m., New York time, on the Expiration Date.
The undersigned acknowledges that the Company's acceptance of Old Notes
validly tendered for exchange pursuant to any one of the procedures described in
the section of the Prospectus entitled "The Exchange Offer" and in the
instructions hereto will constitute a binding agreement among the undersigned
and the Company upon the terms and subject to the conditions of the Exchange
Offer.
Unless otherwise indicated in the box entitled "Special Issuance
Instructions," please return any Old Notes not tendered for exchange in the
name(s) of the undersigned. Similarly, unless otherwise indicated in the box
entitled "Special Delivery Instructions," please mail any certificates for Old
Notes not tendered or exchanged (and accompanying documents, as appropriate) to
the undersigned at the address shown below the undersigned's signature(s). In
the event that either "Special Issuance Instructions" or "Special Delivery
Instructions" are completed, please issue the certificates representing the New
Notes issued in exchange for the Old Notes accepted for exchange in the name(s)
of, and return any Old Notes not tendered for exchange or not exchanged to, the
person(s) so indicated. The undersigned recognizes that the Company has no
obligation pursuant to the "Special Issuance Instructions" and "Special Delivery
Instructions" to transfer any Old Notes from the name of the holder of Old
Note(s) thereof if the Company does not accept for exchange any of the Old Notes
so tendered for exchange or if such transfer would not be in compliance with any
transfer restrictions applicable to such Old Note(s).
In order to validly tender Old Notes for exchange, holders of Old Notes must
complete, execute and deliver this Letter of Transmittal.
Except as may be stated in the Prospectus, all authority herein conferred or
agreed to be conferred shall survive the death or incapacity of the undersigned,
and any obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, executors, administrators, successors, assigns,
trustees in bankruptcy and legal representatives of the undersigned. Except as
otherwise stated in the Prospectus, this tender for exchange of Old Notes is
irrevocable.
7
- --------------------------------------------------------------------------------
SIGN HERE
________________________________________________________________________________
SIGNATURE(S) OF OWNER(S))
Date:
MUST BE SIGNED BY THE REGISTERED HOLDER(S) OF OLD NOTES EXACTLY AS NAME(S)
APPEAR(S) ON CERTIFICATE(S) REPRESENTING THE OLD NOTES OR ON A SECURITY POSITION
LISTING OR BY PERSON(S) AUTHORIZED TO BECOME REGISTERED HOLDER(S) OF OLD NOTES
BY CERTIFICATES AND DOCUMENTS TRANSMITTED HEREWITH. IF SIGNATURE IS BY TRUSTEES,
EXECUTORS, ADMINISTRATORS, GUARDIANS, ATTORNEYS-IN-FACT, OFFICERS OF
CORPORATIONS OR OTHERS ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY, PLEASE
PROVIDE THE FOLLOWING INFORMATION (SEE INSTRUCTION 6).
Name(s): _______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT)
Capacity (Full Title): _________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number: ________________________________________________
Tax Identification or Social Security Number(s): _______________________________
- --------------------------------------------------------------------------------
PLEASE COMPLETE SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
GUARANTEE OF SIGNATURE(S)
SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 1
Authorized Signature: __________________________________________________________
Dated: _________________________________________________________________________
Name and Title: ________________________________________________________________
(PLEASE PRINT)
Name of Firm: __________________________________________________________________
Address: _______________________________________________________________________
Area Code and Telephone Number: ________________________________________________
- --------------------------------------------------------------------------------
8
INSTRUCTIONS
(Forming Part of the Terms and Conditions of the Exchange Offer)
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by an institution
that is an "eligible guarantor institution" within the meaning of Rule 17Ad-15
under the Securities Exchange Act of 1934, as amended, and is a member of one of
the following recognized Signature Guarantee Programs (an "Eligible
Institution"):
(a) The Securities Transfer Agents Medallion Program (STAMP);
(b) The New York Stock Exchange Medallion Signature Program (MSP); or
(c) The Stock Exchange Medallion Program (SEMP).
Signatures on this Letter of Transmittal need not be guaranteed (i) if this
Letter of Transmittal is signed by the registered holder(s) of the Old Notes
tendered herewith and such registered holder(s) have not completed the box
entitled "Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" on this Letter of Transmittal or (ii) if such Old Notes are
tendered for the account of an Eligible Institution. IN ALL OTHER CASES, ALL
SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION.
2. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD NOTES; GUARANTEED
DELIVERY PROCEDURES. This Letter of Transmittal is to be completed by holders
of Old Notes (i) if certificates are to be forwarded herewith or (ii) if tenders
are to be made pursuant to the procedures for tender by book-entry transfer or
guaranteed delivery set forth in the section of the Prospectus entitled "The
Exchange Offer--Guaranteed Delivery Procedures." Certificates for all physically
tendered Old Notes or any confirmation of a book-entry transfer (a "Book-Entry
Confirmation"), as well as a properly completed and duly executed copy of this
Letter of Transmittal or facsimile hereof, and any other documents required by
this Letter of Transmittal, must be received by the Exchange Agent at its
address set forth on the cover of this Letter of Transmittal prior to the
Expiration Date. Holders of Old Notes who elect to tender Old Notes and
(i) whose Old Notes are not immediately available, (ii) who cannot deliver the
Letter of Transmittal, Old Notes or other required documents to the Exchange
Agent prior to the Expiration Date or (iii) who are unable to complete the
procedure for book-entry transfer on a timely basis, may have such tender
effected if:
(a) such tender is made by or through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent has received from such
Eligible Institution a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) and Notice of Guaranteed Delivery
substantially in the form provided by the Company (by facsimile
transmission, mail or hand delivery) setting forth the name and address of
the holder of such Old Notes, the certificate number(s) of such Old Notes
and the principal amount of Old Notes tendered for exchange, stating that
tender is being made thereby and guaranteeing that, within five New York
Stock Exchange trading days after the Expiration Date, this Letter of
Transmittal (or a manually executed facsimile thereof), properly completed
and duly executed, the certificates representing such Old Notes (or a
Book-Entry Confirmation), in proper form for transfer, and any other
documents required by this Letter of Transmittal, will be deposited by such
Eligible Institution with the Exchange Agent; and
(c) a properly completed and duly executed Letter of Transmittal (or a manually
executed facsimile thereof) with certificates for all tendered Old Notes, or
a Book-Entry Confirmation, and any other documents required by this Letter
of Transmittal are received by the Exchange Agent within five New York Stock
Exchange trading days after the Expiration Date.
THE METHOD OF DELIVERY OF OLD NOTES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE
9
TENDERING HOLDER OF OLD NOTES. EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY
WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. NEITHER THIS LETTER OF TRANSMITTAL NOR ANY OLD
NOTES SHOULD BE SENT TO THE COMPANY.
No alternative, conditional or contingent tenders will be accepted. All
tendering holders of Old Notes, by execution of this Letter of Transmittal (or
facsimile hereof, if applicable), waive any right to receive notice of the
acceptance of their Old Notes for exchange.
3. INADEQUATE SPACE. If the space provided in the box entitled
"Description of Old Notes" above is inadequate, the certificate numbers and
principal amounts of the Old Notes being tendered should be listed on a separate
signed schedule affixed hereto.
4. WITHDRAWALS. A tender of Old Notes may be withdrawn at any time prior
to the Expiration Date by delivery of a written or an Automated Tender Offer
Program electronic transmission notice of withdrawal to the Exchange Agent at
the address set forth on the cover of this Letter of Transmittal. To be
effective, a notice of withdrawal of Old Notes must (i) specify the name of the
person who tendered the Old Notes to be withdrawn (the "Depositor"),
(ii) identify the Old Notes to be withdrawn (including the certificate number or
numbers and aggregate principal amount of such Old Notes), (iii) be signed by
the holder of Old Notes in the same manner as the original signature on the
Letter of Transmittal by which such Old Notes were tendered (including any
required signature guarantees) or be accompanied by documents of transfer
sufficient to have the Trustee under the Indenture register the transfer of such
Old Notes into the name of the person withdrawing the tender, (iv) specify the
name in which any such Old Notes are to be registered, if different from that of
the Depositor, and (v) be received by the Exchange Agent prior to the Expiration
Date. Withdrawals of tenders of Old Notes may not be rescinded, and any Old
Notes withdrawn will thereafter be deemed not validly tendered for purposes of
the Exchange Offer, and no New Notes will be issued with respect thereto unless
the Old Notes so withdrawn are validly retendered. Properly withdrawn Old Notes
may be retendered by following one of the procedures described in the section of
the Prospectus entitled "The Exchange Offer--Procedures for Tendering" at any
time prior to the Expiration Date.
5. PARTIAL TENDERS. (Not applicable to holders of Old Notes who tender Old
Notes by book-entry transfer). Tenders of Old Notes will be accepted only in
integral multiples of $1,000 principal amount. If a tender for exchange is to be
made with respect to less than the entire principal amount of any Old Notes,
fill in the principal amount of Old Notes that are tendered for exchange in
column (4) of the box entitled "Description of Old Notes" on page 3, as more
fully described in the footnotes thereto. In case of a partial tender for
exchange, new certificate(s), in fully registered form, for the remainder of the
principal amount of the Old Notes, will be sent to the holder(s) of such Old
Notes, unless otherwise indicated in the appropriate box on this Letter of
Transmittal, as promptly as practicable after the expiration or termination of
the Exchange Offer.
6. SIGNATURES ON THIS LETTER OF TRANSMITTAL, POWERS OF ATTORNEY AND
ENDORSEMENTS.
(a) The signature(s) of the holder of Old Notes on this Letter of Transmittal
must correspond exactly with the name(s) as written on the face of the Old
Notes without alteration, enlargement or any change whatsoever.
(b) If tendered Old Notes are owned of record by two or more joint owners, all
such owners must sign this Letter of Transmittal.
(c) If any tendered Old Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate copies of this Letter of Transmittal and any necessary or required
documents as there are different registrations.
10
(d) When this Letter of Transmittal is signed by the holder of the Old Notes
listed and transmitted hereby, no endorsements of Old Notes or separate
powers of attorney are required. If, however, Old Notes not tendered or not
accepted are to be issued or returned in the name of a person other than the
holder of Old Notes, then the Old Notes transmitted hereby must be endorsed
or accompanied by appropriate powers of attorney in a form satisfactory to
the Company, in either case signed exactly as the name(s) of the holder of
Old Notes appear(s) on the Old Notes. Signatures on such Old Notes or powers
of attorney must be guaranteed by an Eligible Institution (unless signed by
an Eligible Institution). See Instruction 1.
(e) If this Letter of Transmittal or Old Notes or powers of attorney are signed
by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Company of their authority so to act must be submitted.
(f) If this Letter of Transmittal is signed by a person other than the
registered holder of Old Notes listed, the Old Notes must be endorsed or
accompanied by appropriate powers of attorney, in either case signed exactly
as the name(s) of the registered holder of Old Notes appear(s) on the
certificates. Signatures on such Old Notes or powers of attorney must be
guaranteed by an Eligible Institution (unless signed by an Eligible
Institution). See Instruction 1.
7. TRANSFER TAXES. Except as set forth in this Instruction 7, the Company
will pay all transfer taxes, if any, applicable to the transfer and exchange of
Old Notes pursuant to the Exchange Offer. If issuance of New Notes is to be made
to, or Old Notes not tendered for exchange are to be issued or returned in the
name of, any person other than the registered holder of the Old Notes tendered,
or if a transfer tax is imposed for any reason other than the exchange of Old
Notes pursuant to the Exchange Offer, and satisfactory evidence of payment of
such taxes or exemptions therefrom is not submitted with this Letter of
Transmittal, the amount of any transfer taxes payable on account of any such
transfer will be imposed on and payable by the tendering holder of Old Notes
prior to the issuance of the New Notes.
8. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If the New Notes, or if any
Old Notes not tendered for exchange, are to be issued or sent to someone other
than the holder of Old Notes or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed. Holders of
Old Notes tendering Old Notes by book-entry transfer may request that Old Notes
not accepted be credited to such account maintained at the Depositary as such
holder of Old Notes may designate.
9. IRREGULARITIES. All questions as to the form of documents and the
validity, form, eligibility (including time of receipt), acceptance and
withdrawal of Old Notes will be determined by the Company, in its sole
discretion, whose determination shall be final and binding. The Company reserves
the absolute right to reject any or all tenders for exchange of any particular
Old Notes that are not in proper form, or the acceptance of which would, in the
opinion of the Company (or its counsel), be unlawful. The Company reserves the
absolute right to waive any defect, irregularity or condition of tender for
exchange with regard to any particular Old Notes. The Company's interpretation
of the terms of, and conditions to, the Exchange Offer (including the
instructions herein) will be final and binding. Unless waived, any defects or
irregularities in connection with the Exchange Offer must be cured within such
time as the Company shall determine. Neither the Company, the Exchange Agent nor
any other person shall be under any duty to give notice of any defects or
irregularities in Old Notes tendered for exchange, nor shall any of them incur
any liability for failure to give such notice. A tender of Old Notes will not be
deemed to have been made until all defects and irregularities with respect to
such tender have been cured or waived. Any Old Notes received by the Exchange
Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering holders, unless otherwise provided in this Letter of
Transmittal, as soon as practicable following the Expiration Date.
11
10. WAIVER OF CONDITION. The Company reserves the absolute right to waive,
amend or modify any of the specified conditions described under "The Exchange
Offer--Expiration Date; Extensions; Amendments" in the Prospectus in the case of
any Old Notes tendered (except as otherwise provided in the Prospectus).
11. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. If a holder of Old
Notes desires to tender Old Notes pursuant to the Exchange Offer, but any of
such Old Notes has been mutilated, lost, stolen or destroyed, such holder of Old
Notes should contact the Exchange Agent at the address set forth on the cover of
this Letter of Transmittal for further instructions.
12. REQUESTS FOR INFORMATION OR ADDITIONAL COPIES. Requests for
information about the procedure for tendering or for withstanding tenders, or
for additional copies of the Prospectus and this Letter of Transmittal, may be
directed to the Exchange Agent at the address or telephone number set forth on
the cover of this Letter of Transmittal. All other questions about this Exchange
Offer should be addressed to Mr. Raymond Marchuk at the Company (telephone
number 212-343-6857).
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF, IF
APPLICABLE) TOGETHER WITH CERTIFICATES, OR CONFIRMATION OF BOOK-ENTRY OR THE
NOTICE OF GUARANTEED DELIVERY, AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED
BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION
DATE.
IMPORTANT TAX INFORMATION
Each holder of Old Notes must, unless an exemption applies, provide the
Exchange Agent with such holder's correct taxpayer identification number on the
Substitute Form W-9 below, with the required certifications being made under
penalties of perjury. If the Exchange Agent is not provided with the correct
taxpayer identification number, the holder may be subject to a $50 penalty
imposed by the Internal Revenue Service in addition to being subject to backup
withholding.
If backup withholding applies, the Company is required to withhold 30% of
any payment made to the holder of Old Notes or other payee pursuant to the
exchange. Backup withholding is not an additional federal income tax. Rather,
the federal income tax liability of persons subject to backup withholding will
be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained from the Internal Revenue
Service.
Certain holders of Old Notes (including, among others, most corporations and
certain foreign individuals) are not subject to these backup withholding
requirements with respect to interest payments. A foreign individual may qualify
as an exempt recipient by submitting to the Exchange Agent a properly completed
Internal Revenue Service Form W-8BEN, Form W-8ECI or Form W-8IMY, as applicable
(the terms of which the Exchange Agent will provide upon request), signed under
penalty of perjury, attesting to the holder's exempt status. For payees exempt
from backup withholding, see the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 (the "Guidelines") below.
The holder of Old Notes is required to give the Exchange Agent the Taxpayer
Identification Number ("TIN") (e.g., social security number ("SSN") or employer
identification number ("EIN")) of the record owner of the Old Notes. If the Old
Notes are held in more than one name or are not held in the name of the actual
owner, consult the enclosed Guidelines for additional guidance regarding which
number to report.
12
A holder of Old Notes should consult his or her tax advisor as to his or her
qualification for exemption from the backup withholding requirements and the
procedure for obtaining an exemption.
PAYER'S NAME: CITIBANK, N.A.
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
PART 1--PLEASE PROVIDE YOUR TIN IN SOCIAL SECURITY NUMBER
SUBSTITUTE THE BOX AT RIGHT AND CERTIFY BY
SIGNING AND DATING BELOW ------------------------
OR
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE ------------------------
EMPLOYER IDENTIFICATION NUMBER
----------------------------------------------------------------------------
PAYER'S REQUEST FOR PART 2--CERTIFICATION--Under Penalties of Perjury, I certify that:
TAXPAYER IDENTIFICATION (1) The number shown on this form is my correct
NO. ("TIN") taxpayer identification number (or I am
waiting for a number to be issued to me),
and
(2) I am not subject to backup withholding
because (a) I am exempt from backup withholding
or (b) I have not been notified by the
Internal Revenue Service (the "IRS") that I
am subject to backup withholding as a result
of a failure to report all interest or
dividends, or (c) the IRS has notified me
that I am no longer subject to backup
withholding, and
PART 3 --Awaiting TIN [ ]
(3) I am a U.S. person.
- ----------------------------------------------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding
because of underreporting interest or dividends on your tax return. However,
if after being notified by the IRS that you are subject to backup withholding
you received another notification from the IRS stating that you are no longer
subject to backup withholding, do not cross out item (2).
- --------------------------------------------------------------------------------
SIGNATURE ________________________________ DATE ________________________________
NAME ___________________________________________________________________________
ADDRESS ________________________________________________________________________
CITY ______________________________ STATE _____________________________ ZIP CODE
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A BACKUP
WITHHOLDING OF 30% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE EXCHANGE
OFFER. PLEASE RETURN THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
13
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF
THE SUBSTITUTE FORM W-9.
PAYER'S NAME: CITIBANK, N.A.
- --------------------------------------------------------------------------------
CERTIFICATION OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration office or
(b) I intend to mail or deliver an application in the near future. I understand
that if I do not provide a taxpayer identification number within sixty
(60) days, 30% of all reportable payments made to me thereafter will be withheld
until I provide such a number.
Signature: _____________________________ Date: _____________________________
FOR ANY QUESTIONS REGARDING THIS LETTER OF TRANSMITTAL OR FOR ANY ADDITIONAL
INFORMATION, YOU MAY CONTACT THE EXCHANGE AGENT BY TELEPHONE AT (800) 422-2066
OR BY FACSIMILE AT (212) 825-3483.
- --------------------------------------------------------------------------------
14
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. The taxpayer identification number for an individual is the individual's
Social Security number. Social Security numbers have nine digits separated by
two hyphens: E.G., 000-00-0000. The taxpayer identification number for an entity
is the entity's Employer Identification number. Employer Identification numbers
have nine digits separated by one hyphen: E.G., 00-0000000. The table below will
help determine the number to give the payer.
- --------------------------------------------------
GIVE THE NAME
AND SOCIAL
FOR THIS TYPE OF SECURITY
ACCOUNT: NUMBER OF--
- --------------------------------------------------
1. Individual The Individual
2. Two or more The actual owner of the
individuals (joint account or, if combined
account) funds, the first
individual on the
account (1)
3. Custodian account of The minor (2)
a minor (Uniform Gift
to Minors Act)
4. a. the usual The grantor-trustee (1)
revocable savings
trust (grantor is
also trustee)
b. b. So-called trust The actual owner (1)
account that is not
a legal or valid
trust under state
law
5. Sole proprietorship The owner (3)
- --------------------------------------------------
GIVE THE
AND EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------------
6. A valid trust, estate The legal entity (4)
or pension trust
7. Corporate The corporation
8. Association, club, The organization
religious,
charitable,
educational or other
tax-exempt
organization
9. Partnership The partnership
10. A broker or The broker or nominee
registered nominee
11. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
state or local
government, school
district, or prison)
that receives
agricultural program
payments
- --------------------------------------------------------------------------------
1. List first and circle the name of the person whose number you furnish.
2. Circle the minor's name and furnish the minor's social security number.
3. You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your SSN or TIN (if you have
one).
4. List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the TIN of the personal representative or trustee unless the
legal entity itself is not designated in the account title.)
NOTE: IF NO NAME IS CIRCLED WHEN MORE THAN ONE NAME IS LISTED, THE NUMBER WILL
BE CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.
15
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service (the "IRS") and
apply for a number.
In some cases, individuals who become U.S. resident aliens for tax purposes
are not eligible to obtain an SSN. This includes certain resident aliens who
must receive information returns but who cannot obtain an SSN. These individuals
must apply for an Individual Taxpayer Identification Number ("ITIN") on
Form W-7, Application for IRS Individual Taxpayer Identification Number, unless
they have an application pending for an SSN. Individuals who have an ITIN must
provide it on Form W-9.
To complete the Substitute Form W-9, if you do not have a taxpayer
identification number, write "Applied For" in the space for the taxpayer
identification number, sign and date the Form, and give it to the requester. If
the requester does not receive your taxpayer identification number within
60 days, backup withholding, if applicable, will begin and will continue until
you furnish your taxpayer identification number to the requester.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
The following is a list of payees exempt from backup withholding and for
which no information reporting is required. For interest and dividends, all
listed payees are exempt except item (9). For broker transactions, payees listed
in (1) through (13) and a person registered under the Investment Advisers Act of
1940 who regularly acts as a broker are exempt. Payments subject to reporting
under sections 6041 and 6041A are generally exempt from backup withholding only
if made to payees described in items (1) through (7), except that a corporation
that provides medical and health care services or bills and collects payments
for such services is not exempt from backup withholding or information
reporting. Only payees described in items (2) through (6) are exempt from backup
withholding for barter exchange transactions, patronage dividends and payments
by certain fishing boat operators.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an individual
retirement plan ("IRA"), or a custodial account under section 403(b)(7), if
the account satisfies the requirements of section 401(1)(2).
(3) The United States or any of its agencies or instrumentalities.
(4) A State, the District of Columbia, a possession of the United States or any
of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies or
instrumentalities.
(6) An international organization or any of its agencies or instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the United
States, the District of Columbia or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures Trading
Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the Investment
Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
(15) A trust exempt from tax under section 664 or described in section 4947.
Payments of dividends and patronage dividends generally not subject to
backup withholding also include the following:
(1) Payments to nonresident aliens subject to withholding under section 1441.
(2) Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident partner.
(3) Payments of patronage dividends not paid in money.
(4) Payments made by certain foreign organizations.
(5) Section 404(k) distributions made by an ESOP.
Payments of interest generally not subject to backup withholding include the
following:
(1) Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
(2) Payments of tax-exempt interest (including exempt interest dividends under
section 852).
(3) Payments described in section 6049(b)(5) to nonresident aliens.
(4) Payments on tax-free covenant bonds under section 1451.
(5) Payments made by certain foreign organizations.
(6) Mortgage interest paid by you.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A and 6050N and the regulations under such sections.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE FORM W-9 TO AVOID POSSIBLE
ERRONEOUS BACKUP WITHHOLDING. ENTER YOUR TAXPAYER IDENTIFICATION NUMBER. WRITE
"EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE
PAYER.
PRIVACY ACT NOTICES
Section 6109 requires you to give your correct taxpayer identification
number to persons who must file information returns with the IRS to report
interest, dividends, and certain other income paid to you, mortgage interest you
paid, the acquisition or abandonment of secured property, cancellation of debt
or contributions you made to an IRA. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. The IRS may also
provide this information to the Department of Justice for civil and criminal
litigation and to cities, states and the District of Columbia to carry out their
tax laws. You must provide your taxpayer identification number whether or not
you are qualified to file a tax return. Payers must generally withhold 30% of
taxable interest, dividend, and certain other payments to a payee who does not
furnish a taxpayer identification number to a payer. Certain penalties may also
apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. If you
fail to furnish your correct taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION
CONTACT YOUR TAX CONSULTANT OR
THE INTERNAL REVENUE SERVICE.
16
EXHIBIT 99.3
NOTICE OF GUARANTEED DELIVERY
WITH RESPECT TO
5% NOTES DUE 2013
CUSIP NO. 807066 AF 2
OR
CUSIP NO. U8066P AB 1
OF
SCHOLASTIC CORPORATION
This form must be used by a holder of unregistered 5% Notes Due 2013 (the
"Old Notes") of Scholastic Corporation (the "Company"), who wishes to tender Old
Notes to the Exchange Agent in exchange for 5% Notes Due 2013 (the "New Notes"),
which have been registered under the Securities Act of 1933, as amended,
pursuant to the guaranteed delivery procedures described in the "The Exchange
Offer--Guaranteed Delivery Procedures" of the Prospectus, dated April , 2003
(the "Prospectus"), and in Instruction 2 to the related Letter of Transmittal.
Any holder who wishes to tender Old Notes pursuant to such guaranteed delivery
procedures must ensure that the Exchange Agent receives this Notice of
Guaranteed Delivery prior to the Expiration Date of the Exchange Offer.
Capitalized terms not defined herein have the meanings ascribed to them in the
Prospectus or the Letter of Transmittal.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON , 2003 (THE "EXPIRATION DATE") UNLESS THE EXCHANGE OFFER IS
EXTENDED, IN WHICH CASE THE TERM "EXPIRATION DATE" SHALL MEAN THE LATEST TIME
AND DATE TO WHICH THE EXCHANGE OFFER IS EXTENDED. TENDERS MAY BE WITHDRAWN AT
ANY TIME PRIOR TO THE EXPIRATION DATE.
To: Citibank, N.A.
(the "Exchange Agent")
BY MAIL, HAND DELIVERY OR BY FACSIMILE TRANSMISSION:
OVERNIGHT COURIER: (212) 825-3483
Citibank, N.A. Confirm by Telephone
111 Wall Street, 15th Floor (800) 422-2066
New York, New York 10043
Attention: Agency & Trust Services
FOR INFORMATION CALL: 1-800-422-2066
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS SET FORTH IN THIS
NOTICE OF GUARANTEED DELIVERY AND IN THE LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS NOTICE OF GUARANTEED DELIVERY AND THE LETTER OF
TRANSMITTAL ARE COMPLETED.
This form is not to be used to guarantee signatures. If a signature on the
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and subject to
the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Old Notes set forth below pursuant to the guaranteed delivery procedures set
forth in the Prospectus and in Instruction 2 of the Letter of Transmittal.
The undersigned understands that tenders of Old Notes will be accepted only
in authorized denominations. The undersigned understands that tenders of Old
Notes pursuant to the Exchange Offer may not be withdrawn after the Expiration
Date. Tenders of Old Notes may be withdrawn at any time prior to the Expiration
Date or if the Exchange Offer is terminated or as otherwise provided in the
Prospectus.
All authority herein conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death or incapacity of the undersigned and
every obligation of the undersigned under this Notice of Guaranteed Delivery
shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.
The undersigned hereby tenders the Old Notes listed below:
- --------------------------------------------------------------------------------
CERTIFICATE NUMBER(S) (IF KNOWN) OF OLD AGGREGATE AGGREGATE
NOTES, OR IF OLD NOTES WILL BE DELIVERED BY PRINCIPAL PRINCIPAL
BOOK-ENTRY TRANSFER AT THE DEPOSITARY TRUST AMOUNT AMOUNT
COMPANY, INSERT ACCOUNT NUMBER REPRESENTED TENDERED
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
PLEASE SIGN AND COMPLETE
- --------------------------------------------------------------------------------
Signature of Registered Holder(s) or
Authorized Signatory: Date: , 2003
---------------------
Address:
- --------------------------------------------------------- ---------------------
Name of Registered Holder(s):
-------------------------------
Area Code and Telephone Number:
- ---------------------------------------------------------
- --------------------------------------------------------- -------------------------------
This Notice of Guaranteed Delivery must be signed by the holder(s) exactly
as the name(s) appear(s) on certificates for Old Notes or on a security position
listing as the owner of Old Notes, or by person(s) authorized to become
holder(s) by endorsements and documents transmitted with this Notice of
Guaranteed Delivery. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, such person must provide the following
information.
Please print name(s) and address(es).
Name(s):
------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
Capacity (Full Title):
------------------------------------------------------------
- --------------------------------------------------------------------------------------
Address(es):
------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a recognized signature
guarantee medallion program and is an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, hereby guarantees deposit with the Exchange Agent of the executed and
property completed Letter of Transmittal (or facsimile thereof), together with
the Old Notes tendered hereby in proper form for transfer (or confirmation of
the book-entry transfer of such Old Notes into the Exchange Agent's account at
the Depository Trust Company pursuant to the procedures described in the
Prospectus under the caption "The Exchange Offer--Guaranteed Delivery
Procedures" and in the Letter of Transmittal) and any other required documents,
all by 5:00 p.m., New York City time, on the third New York Stock Exchange
trading day following the date of execution of this Notice of Guaranteed
Delivery.
Name of
Firm:
------------------------------------ -------------------------------------------
(Authorized Signature)
- ---------------------------------------------
Address: Name:
------------------------------------ ------------------------------------
Title:
- --------------------------------------------- ------------------------------------
Area Code and Telephone No.:
- ---------------------------------------------
Date: , 2003
- ---------------------------------------------------------------------------------------------
DO NOT SEND OLD NOTES WITH THIS FORM. ACTUAL SURRENDER OF OLD NOTES MUST BE MADE
PURSUANT TO, AND BE ACCOMPANIED BY, AN EXECUTED LETTER OF TRANSMITTAL.
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY. A properly completed
and duly executed copy of this Notice of Guaranteed Delivery and any other
documents required by this Notice of Guaranteed Delivery must be received by the
Exchange Agent at its address set forth herein prior to the Expiration Date. The
method of delivery of this Notice of Guaranteed Delivery and any other required
documents to the Exchange Agent is at the election and sole risk of the holder,
and the delivery will be deemed made only when actually received by the Exchange
Agent. If delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended. As an alternative to delivery by mail, the
holders may wish to consider using an overnight or hand delivery service. In all
cases, sufficient time should be allowed to assure timely delivery. For a
description of the guaranteed delivery procedures, see Instruction 2 of the
Letter of Transmittal.
2. SIGNATURES ON THIS NOTICE OF GUARANTEED DELIVERY. If this Notice of
Guaranteed Delivery is signed by the registered holder(s) of the Old Notes
referred to herein, the signature must correspond with the name(s) written on
the face of the Old Notes without alteration, enlargement, or any change
whatsoever. If this Notice of Guaranteed Delivery is signed by a participant of
the Book-Entry Transfer Facility whose name appears on a security position
listing as the owner of Old Notes, the signature must correspond with the name
shown on the security position listing as the owner of the Old Notes.
If this Notice of Guaranteed Delivery is signed by a person other than the
registered holder(s) of any Old Notes listed or a participant of the Book-Entry
Transfer Facility, this Notice of Guaranteed Delivery must be accompanied by
appropriate bond powers, signed as the name of the registered holder(s) appears
on the Old Notes or signed as the name of the participant shown on the
Book-Entry Transfer Facility's security position listing.
If this Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing and submit with the Notice of Guaranteed Delivery evidence
satisfactory to the Company and the Guarantor of such person's authority to so
act.
3. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance and requests for additional copies of the Prospectus may be
directed to the Exchange Agent at the address specified in the Prospectus.
Holders may also contact their broker, dealer, commercial bank, trust company,
or other nominee for assistance concerning the Exchange Offer.
EXHIBIT 99.4
INSTRUCTION TO REGISTERED HOLDER
FROM BENEFICIAL OWNER
OF
5% NOTES DUE 2013
OF
SCHOLASTIC CORPORATION
TO REGISTERED HOLDER:
The undersigned hereby acknowledges receipt of the Prospectus dated April
, 2003 (the "Prospectus") of Scholastic Corporation (the "Company") and
accompanying Letter of Transmittal (the "Letter of Transmittal") that together
constitute the Company's offer (the "Exchange Offer") to exchange $1,000
principal amount of 5% Notes Due 2013 registered under the Securites Act of
1933, as amended (the "Securities Act") (the "New Notes"), of the Company for
each $1,000 principal amount of outstanding unregistered 5% Notes Due 2013 (the
"Old Notes") of the Company. Capitalized terms used but not defined have the
meanings ascribed to them in the Prospectus.
This will instruct you, the registered holder, as to the action to be taken
by you relating to the Exchange Offer with respect to the Old Notes held by you
for the account of the undersigned.
The aggregate face amount of the Old Notes held by you for the account of
the undersigned is (fill in amount): $____________
With respect to the Exchange Offer, the undersigned hereby instructs you
(check one of the following boxes):
[ ] To TENDER the following Old Notes held by you for the account of the
undersigned
(insert principal amount of Old Notes to be tendered (if any)):
$____________ of Old Notes.*
or
[ ] NOT to TENDER any Old Notes held by you for the account of the undersigned.
* New Notes and the untendered portion of Old Notes must be in minimum
denominations of integral multiples of $1,000. Unless otherwise indicated,
it will be assumed that the entire principal amount of Old Notes held by us
for your account are to be tendered.
If the undersigned instructs you to tender Old Notes held by you for the
account of the undersigned, it is understood that you are authorized to make on
behalf of the undersigned (and the undersigned, by its signature below, hereby
makes to you), the representations and warranties contained in the Letter of
Transmittal that are to be made with respect to the undersigned as a beneficial
owner, including but not limited to the representations that (i) the New Notes
to be acquired pursuant to the Exchange Offer will be acquired in the ordinary
course of business of the person acquiring the New Notes, whether or not such
person is the undersigned, (ii) neither the undersigned nor any person receiving
any New Notes directly or indirectly from the undersigned pursuant to the
Exchange Offer (if not a broker-dealer referred to in the last sentence of this
paragraph) is engaging or intends to engage in the distribution of the New Notes
and none of them have any arrangement or understanding with any person to
participate in the distribution of the New Notes, (iii) the undersigned and each
person receiving any New Notes directly or indirectly from the undersigned
pursuant to the Exchange Offer acknowledge and agree that any person
participating in the Exchange Offer for the purpose of distributing the New
Notes (x) must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with a secondary resale transaction of the
New Notes acquired by such person and (y) cannot rely on the position of the
staff of the Securities and Exchange
Commission (the "Commission") set forth in the Exxon Capital Holdings
Corporation no-action letter (available May 13, 1988) or similar letters,
(iv) the undersigned and each person receiving any New Notes directly or
indirectly from the undersigned pursuant to the Exchange Offer understand that a
secondary resale transaction described in clause (iii) above should be covered
by an effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation S-K of the
Commission and (v) neither the undersigned nor any person receiving any New
Notes directly or indirectly from the undersigned pursuant to the Exchange Offer
is an "affiliate" of the Company, as defined under Rule 405 under the Securities
Act. If the undersigned is a broker-dealer that will receive New Notes for its
own account in exchange for Old Notes that were acquired as a result of market
making or other trading activities, it acknowledges that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such New Notes received in respect of such Old Notes pursuant to the
Exchange Offer; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
SIGN HERE
- ------------------------------------------------------------
SIGNATURE(S) OF OWNER(S))
Date:
MUST BE SIGNED BY THE REGISTERED HOLDER(S) OF OLD NOTES EXACTLY AS NAME(S)
APPEAR(S) ON CERTIFICATE(S) REPRESENTING THE OLD NOTES OR ON A SECURITY POSITION
LISTING OR BY PERSON(S) AUTHORIZED TO BECOME REGISTERED OLD NOTE HOLDER(S) BY
CERTIFICATES AND DOCUMENTS TRANSMITTED HEREWITH. IF SIGNATURE IS BY TRUSTEES,
EXECUTORS, ADMINISTRATORS, GUARDIANS, ATTORNEYS-IN-FACT, OFFICERS OF
CORPORATIONS OR OTHERS ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY, PLEASE
PROVIDE THE FOLLOWING INFORMATION.
Name(s):
--------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (Full Title):
------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Address:
--------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
----------------------------------------------------------
Tax Identification or Social Security
Number(s):
-----------------------------------------------
The method of delivery of this document is at the option and risk of the
tendering holder of Old Notes. In all cases, sufficient time should be allowed
for delivery.
EXHIBIT 99.5
SCHOLASTIC CORPORATION
OFFER TO EXCHANGE UP TO
$175,000,000 OF 5% NOTES DUE 2013
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR
ALL OUTSTANDING UNREGISTERED
5% NOTES DUE 2013
To Our Clients:
We are enclosing herewith (i) a Prospectus dated April , 2003 (the
"Prospectus") of Scholastic Corporation (the "Company"), (ii) a related Letter
of Transmittal (which together with the Prospectus constitute the "Exchange
Offer") relating to the offer by the Company to exchange up to $175,000,000
aggregate principal amount of its 5% Notes Due 2013 (the "New Notes"), which
have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), for $175,000,000 aggregate principal amount of its issued and
outstanding unregistered 5% Notes Due 2013 (the "Old Notes"), upon the terms and
subject to the conditions set forth in the Exchange Offer and (iii) an
Instruction to Registered Holder from Beneficial Owner (the "Instruction
Letter").
PLEASE NOTE THAT THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 2003 UNLESS EXTENDED. THE EXCHANGE OFFER IS NOT
CONDITIONED UPON ANY MINIMUM NUMBER OF OLD NOTES BEING TENDERED.
We are the holder of record of Old Notes for your account. A tender of such
Old Notes can be made only by us as the record holder pursuant to your
instructions. The Letter of Transmittal is furnished to you for your information
only and cannot be used by you to tender Old Notes held by us for your account.
We request instructions as to whether you wish to tender any or all of the
Old Notes held by us for your account pursuant to the terms and conditions of
the Exchange Offer. We also request that you confirm that we may make on your
behalf the representations and warranties contained in the Letter of
Transmittal. In this regard, please complete the enclosed Instruction Letter and
return it to us as soon as practicable.
Pursuant to the Letter of Transmittal, each holder of Old Notes (a "Holder")
will represent to the Company that (i) the New Notes to be acquired pursuant to
the Exchange Offer will be acquired in the ordinary course of business of the
person acquiring the New Notes, whether or not such person is the Holder,
(ii) neither the Holder nor any person receiving any New Notes directly or
indirectly from the Holder pursuant to the Exchange Offer (if not a
broker-dealer referred to in the last sentence of this paragraph) is engaging or
intends to engage in the distribution of the New Notes and none of them have any
arrangement or understanding with any person to participate in the distribution
of the New Notes, (iii) the Holder and each person receiving any New Notes
directly or indirectly from the Holder pursuant to the Exchange Offer
acknowledge and agree that any person participating in the Exchange Offer for
the purpose of distributing the New Notes (x) must comply with the registration
and prospectus delivery requirements of the Securities Act, in connection with a
secondary resale transaction of the New Notes acquired by such person and
(y) cannot rely on the position of the staff of the Securities and Exchange
Commission (the "Commission") set forth in the Exxon Capital Holdings
Corporation no-action letter (available May 13, 1988) or similar letters,
(iv) the Holder and each person receiving any New Notes directly or indirectly
from the Holder pursuant to the Exchange Offer understand that a secondary
resale transaction described in clause (iii) above should be covered by an
effective registration statement containing the selling security holder
information required by Item 507 or 508 of Regulation S-K of the Commission and
(v) neither the Holder nor any person receiving any New Notes directly or
indirectly from the Holder pursuant to the Exchange Offer is an
"affiliate" of the Company, as defined under Rule 405 under the Securities Act.
If the Holder is a broker-dealer that will receive New Notes for its own account
in exchange for Old Notes that were acquired as a result of market making or
other trading activities, it acknowledges that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such New Notes received in respect of such Old Notes pursuant to the Exchange
Offer; however, by so acknowledging and by delivering a prospectus, the Holder
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
Very truly yours,
--------------------------------------
EXHIBIT 99.6
SCHOLASTIC CORPORATION
LETTER TO
DEPOSITORY TRUST COMPANY PARTICIPANTS
FOR
TENDER OF ALL OUTSTANDING
5% NOTES DUE 2013
IN EXCHANGE FOR
REGISTERED
5% NOTES DUE 2013
- --------------------------------------------------------------------------------
EACH EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ,
2003, UNLESS EXTENDED (THE "EXPIRATION DATE"). OUTSTANDING NOTES TENDERED IN
SUCH EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK
CITY TIME, ON THE EXPIRATION DATE FOR SUCH EXCHANGE OFFER.
- --------------------------------------------------------------------------------
To Depository Trust Company Participants:
We are enclosing herewith the material listed below relating to the offer by
Scholastic Corporation (the "Company") to exchange up to $175,000,000 aggregate
principal amount of its 5% Notes Due 2013 (the "New Notes"), which have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
for a like principal amount of its issued and outstanding unregistered 5% Notes
Due 2013 (the "Old Notes"), respectively, which offer consists of separate,
independent offers to exchange the New Notes for Old Notes (each an "Exchange
Offer" and sometimes collectively referred to herein as the "Exchange Offer"),
upon the terms and subject to the conditions set forth in the Company's
prospectus dated April , 2003 and the related Letter of Transmittal.
We are enclosing copies of the following documents:
1. Prospectus dated April , 2003;
2. Letter of Transmittal;
3. Notice of Guaranteed Delivery;
4. Letter to Clients (of the Registered Holder); and
5. Instruction to Registered Holder from Beneficial Owner.
We urge you to contact your clients promptly. Please note that each Exchange
Offer will expire at 5:00 p.m., New York City time, on , 2003,
unless extended.
No Exchange Offer for Old Notes is conditioned upon any minimum aggregate
principal amount of Old Notes being tendered for exchange or upon the
consummation of any other Exchange Offer.
Pursuant to the Letter of Transmittal, each holder of Old Notes will
represent to the Company that (i) any New Notes received are being acquired in
the ordinary course of business of the person receiving such New Notes,
(ii) such person does not have an arrangement or understanding with any person
to participate in the distribution of the Old Notes or the New Notes within the
meaning of the Securities Act and (iii) such person is not an "affiliate," as
defined in Rule 405 under the Securities
Act, of the Company or, if it is such an affiliate, it will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable. In addition, each holder of Old Notes will represent to the
Company that (i) if such person is not a broker-dealer, it is not engaged in,
and does not intend to engage in, a distribution of New Notes and (ii) if such
person is a broker-dealer that will receive New Notes for its own account in
exchange for Old Notes that were acquired as a result of market-making
activities or other trading activities, it will deliver a prospectus in
connection with any resale of such New Notes; however, by so acknowledging and
by delivering a prospectus, it will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
The enclosed Letter to Clients contains an authorization by the beneficial
owners of the Old Notes for you to make the foregoing representations.
The Company will not pay any fee or commission to any broker or dealer or to
any other person (other than the Exchange Agent) in connection with the
solicitation of tenders of Old Notes pursuant to the Exchange Offer. The Company
will pay or cause to be paid any transfer taxes payable on the transfer of Old
Notes to it, except as otherwise provided in Instruction 7 of the enclosed
Letter of Transmittal.
Additional copies of the enclosed material may be obtained from us.
Very truly yours,
--------------------------------------
Scholastic Corporation
Exhibit 99.7
April __, 2003
EXCHANGE AGENT AGREEMENT
Citibank, N.A.
111 Wall Street, 15th Floor
New York, New York 10043
Attention: Agency & Trust Services
Ladies and Gentlemen:
Scholastic Corporation, a Delaware corporation (the "Company"),
proposes to make an offer (the "Exchange Offer") to exchange all of its
outstanding 5% Notes Due 2013 (the "Old Notes") for its registered 5% Notes Due
2013 (the "New Notes"). The terms and conditions of the Exchange Offer as
currently contemplated are set forth in a prospectus, dated April __, 2003 (the
"Prospectus"), proposed to be distributed to all record holders of the Old
Notes. The Old Notes and the New Notes are collectively referred to herein as
the "Notes."
The Company hereby appoints Citibank, N.A. to act as exchange agent
(the "Exchange Agent") in connection with the Exchange Offer. References
hereinafter to "you" shall refer to Citibank, N.A.
The Exchange Offer is expected to be commenced by the Company on or
about ____, 2003. The Letter of Transmittal accompanying the Prospectus (or in
the case of book-entry securities, the Automated Tender Offer Program ("ATOP")
of the Book-Entry Transfer Facility (as defined below)) is to be used by the
holders of the Old Notes to accept the Exchange Offer and contains instructions
with respect to the delivery of certificates for Old Notes tendered in
connection therewith.
The Exchange Offer shall expire at 5:00 p.m., New York City time, on
____, 2003 or on such subsequent date or time to which the Company may extend
the Exchange Offer (the "Expiration Date"). Subject to the terms and conditions
set forth in the Prospectus, the Company expressly reserves the right to extend
the Exchange Offer from time to time and may extend the Exchange Offer by giving
oral (promptly
confirmed in writing) or written notice to you before 9:00 a.m., New York City
time, on the business day following the previously scheduled Expiration Date.
The Company expressly reserves the right to amend or terminate the
Exchange Offer, and not to accept for exchange any Old Notes not theretofore
accepted for exchange, upon the occurrence of any of the conditions of the
Exchange Offer specified in the Prospectus under the caption "The Exchange
Offer -- Conditions to the Exchange Offer." The Company will give oral
(promptly confirmed in writing) or written notice of any amendment,
termination or nonacceptance to you as promptly as practicable.
In carrying out your duties as Exchange Agent, you are to act in
accordance with the following instructions:
1. You will perform such duties and only such duties as are
specifically set forth in the section of the Prospectus captioned "The Exchange
Offer" or as specifically set forth herein; PROVIDED, HOWEVER, that in no way
will your general duty to act in good faith be discharged by the foregoing.
2. You will establish a book-entry account with respect to the Old
Notes at The Depository Trust Company (the "Book-Entry Transfer Facility") for
purposes of the Exchange Offer within two business days after the date of the
Prospectus, and any financial institution that is a participant in the
Book-Entry Transfer Facility's systems may make book-entry delivery of the Old
Notes by causing the Book-Entry Transfer Facility to transfer such Old Notes
into your account in accordance with the Book-Entry Transfer Facility's
procedure for such transfer.
3. You are to examine each of the Letters of Transmittal and
certificates for Old Notes (or confirmation of book-entry transfer into your
account at the Book-Entry Transfer Facility) and any other documents delivered
or mailed to you by or for holders of the Old Notes to ascertain whether: (i)
the Letters of Transmittal and any such other documents are duly executed and
properly completed in accordance with instructions set forth therein; and (ii)
the Old Notes have otherwise been properly tendered. In each case where the
Letter of Transmittal or any other document has been improperly completed or
executed or any of the certificates for Old Notes are not in proper form for
transfer or some other irregularity in connection with the acceptance of the
Exchange Offer exists, you will endeavor to inform the presenters of the need
for fulfillment of all requirements and to take any other action as may be
reasonably necessary or advisable to cause such irregularity to be corrected.
4. With the approval of the President, Executive Vice President,
Senior Vice President or any Vice President of the Company (such approval, if
given orally, to be promptly confirmed in writing) or any other party
designated in writing, by such an officer, you are authorized to waive any
irregularities in connection with any tender of Old Notes pursuant to the
Exchange Offer.
- 2 -
5. Tenders of Old Notes may be made only as set forth in the Letter
of Transmittal and in the section of the Prospectus captioned "The Exchange
Offer -- Procedures for Tendering," and Old Notes shall be considered properly
tendered to you only when tendered in accordance with the procedures set forth
therein.
Notwithstanding the provisions of this Section 5, Old Notes which
the President, Executive Vice President, Senior Vice President or any Vice
President of the Company shall approve as having been properly tendered shall
be considered to be properly tendered (such approval, if given orally, shall
be promptly confirmed in writing).
6. You shall advise the Company with respect to any Old Notes
received subsequent to the Expiration Date and accept its instructions with
respect to disposition of such Old Notes.
7. You shall accept tenders:
(a) in cases where the Old Notes are registered in two or
more names only if signed by all named holders;
(b) in cases where the signing person (as indicated on the
Letter of Transmittal) is acting in a fiduciary or a representative capacity
only when proper evidence of his or her authority so to act is submitted; and
(c) from persons other than the registered holder of Old
Notes, provided that customary transfer requirements, including payment of any
applicable transfer taxes, are fulfilled.
You shall accept partial tenders of Old Notes where so indicated and
as permitted in the Letter of Transmittal and deliver certificates for Old Notes
to the registrar for split-up and return any untendered Old Notes to the holder
(or such other person as may be designated in the Letter of Transmittal) as
promptly as practicable after expiration or termination of the Exchange Offer.
8. Upon satisfaction or waiver of all of the conditions to the
Exchange Offer, the Company will notify you (such notice, if given orally, to be
promptly confirmed in writing) of its acceptance, promptly after the Expiration
Date, of all Old Notes properly tendered and you, on behalf of the Company, will
exchange such Old Notes for New Notes and cause such Old Notes to be cancelled.
Delivery of New Notes will be made on behalf of the Company by you at the rate
of $1,000 principal amount of New Notes for each $1,000 principal amount of the
corresponding series of Old Notes tendered promptly after notice (such notice if
given orally, to be promptly confirmed in writing) of acceptance of said Old
Notes by the Company; provided, however, that in all cases, Old Notes tendered
pursuant to the Exchange Offer will be exchanged only after timely receipt by
you of certificates for such Old Notes (or confirmation of book-entry transfer
into your account at the Book-Entry Transfer
- 3 -
Facility), a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof) with any required signature guarantees and
any other required documents. You shall issue New Notes only in denominations of
$1,000 or any integral multiple thereof.
9. Tenders pursuant to the Exchange Offer are irrevocable, except
that, subject to the terms and upon the conditions set forth in the Prospectus
and the Letter of Transmittal, Old Notes tendered pursuant to the Exchange Offer
may be withdrawn at any time prior to the Expiration Date.
10. The Company shall not be required to exchange any Old Notes
tendered if any of the conditions set forth in the Exchange Offer are not met.
Notice of any decision by the Company not to exchange any Old Notes tendered
shall be given (if given orally, to be promptly confirmed in writing) by the
Company to you.
11. If, pursuant to the Exchange Offer, the Company does not accept
for exchange all or part of the Old Notes tendered because of an invalid tender,
the occurrence of certain other events set forth in the Prospectus under the
caption "The Exchange Offer -- Conditions to the Exchange Offer" or otherwise,
you shall as soon as practicable after the expiration or termination of the
Exchange Offer return those certificates for unaccepted Old Notes (or effect
appropriate book-entry transfer), together with any related required documents
and the Letters of Transmittal relating thereto that are in your possession, to
the persons who deposited them.
12. All certificates for reissued Old Notes, unaccepted Old Notes or
for New Notes shall be forwarded by first-class mail.
13. You are not authorized to pay or offer to pay any concessions,
commissions or solicitation fees to any broker, dealer, bank or other persons or
to engage or utilize any person to solicit tenders.
14. As Exchange Agent hereunder you:
(a) shall not be liable for any action or omission to act
unless the same constitutes your own gross negligence, willful misconduct or bad
faith, and in no event shall you be liable to a securityholder, the Company or
any third party for special, indirect or consequential damages, or lost profits,
arising in connection with this Agreement;
(b) shall have no duties or obligations other than those
specifically set forth herein or as may be subsequently agreed to in writing
between you and the Company;
(c) will be regarded as making no representations and having
no responsibilities as to the validity, sufficiency, value or genuineness of any
of the
- 4 -
certificates or the Old Notes represented thereby deposited with you pursuant to
the Exchange Offer, and will not be required to and will make no representation
as to the validity, value or genuineness of the Exchange Offer;
(d) shall not be obligated to take any legal action hereunder
which might in your judgment involve any expense or liability, unless you shall
have been furnished with indemnity satisfactory to you;
(e) may conclusively rely on and shall be protected in acting
in reliance upon any certificate, instrument, opinion, notice, letter, telegram
or other document or security delivered to you and believed by you to be genuine
and to have been signed or presented by the proper person or persons;
(f) may act upon any tender, statement, request, document,
agreement, certificate or other instrument whatsoever not only as to its due
execution and validity and effectiveness of its provisions, but also as to the
truth and accuracy of any information contained therein, which you shall in good
faith believe to be genuine or to have been signed or presented by the proper
person or persons;
(g) may conclusively rely on and shall be protected in acting
upon written or oral instructions from any authorized officer of the Company;
(h) may consult with counsel of your selection with respect
to any questions relating to your duties and responsibilities and the advice or
opinion of such counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted to be taken by you hereunder
in good faith and in accordance with the advice or opinion of such counsel; and
(i) shall not advise any person tendering Old Notes pursuant
to the Exchange Offer as to the wisdom of making such tender or as to the market
value or decline or appreciation in market value of any Old Notes or New Notes.
15. You shall take such action as may from time to time be requested
by the Company (and such other action as you may deem appropriate) to furnish
copies of the Prospectus, Letter of Transmittal and the Notice of Guaranteed
Delivery (as defined in the Prospectus) or such other forms as may be approved
from time to time by the Company, to all persons requesting such documents and
to accept and comply with telephone requests for information relating to the
Exchange Offer, provided that such information shall relate only to the
procedures for accepting (or withdrawing from) the Exchange Offer. The Company
will furnish you with copies of such documents on your request. All other
requests for information relating to the Exchange Offer shall be directed to the
Company, Attention: Raymond Marchuk, Senior Vice President, Finance and Investor
Relations, (212) 343-6741.
- 5 -
16. You shall advise by facsimile transmission Vincent Marzano, the
Vice President and Treasurer of the Company (at the facsimile number
212-343-6998), and such other person or persons as the Company may request,
daily (and more frequently during the week immediately preceding the Expiration
Date if requested) up to and including the Expiration Date, as to the number of
Old Notes which have been tendered pursuant to the Exchange Offer and the items
received by you pursuant to this Agreement, separately reporting and giving
cumulative totals as to items properly received and items improperly received.
In addition, you will also inform, and cooperate in making available to, the
Company or any such other person or persons upon oral request made from time to
time prior to the Expiration Date of such other information as they may
reasonably request. Such cooperation shall include, without limitation, the
granting by you to the Company and such person as the Company may request of
access to those persons on your staff who are responsible for receiving tenders,
in order to ensure that immediately prior to the Expiration Date the Company
shall have received information in sufficient detail to enable it to decide
whether to extend the Exchange Offer. You shall prepare a final list of all
persons whose tenders were accepted, the aggregate principal amount of Old Notes
tendered, and the aggregate principal amount of Old Notes accepted and deliver
said list to the Company.
17. Letters of Transmittal and Notices of Guaranteed Delivery shall
be stamped by you as to the date and, after the expiration of the Exchange
Offer, the time, of receipt thereof and shall be preserved by you for a period
of time at least equal to the period of time you preserve other records
pertaining to the transfer of securities. You shall dispose of unused Letters of
Transmittal and other surplus materials by returning them to the Company.
18. For services rendered as Exchange Agent hereunder, you shall be
entitled to such compensation as set forth on Schedule I attached hereto. The
provisions of this section shall survive the termination of this Agreement.
19. You hereby acknowledge receipt of the Prospectus and the Letter
of Transmittal. Any inconsistency between this Agreement, on the one hand, and
the Prospectus and the Letter of Transmittal (as they may be amended from time
to time), on the other hand, shall be resolved in favor of the latter two
documents, except with respect to your duties, liabilities and indemnification
as Exchange Agent.
20. The Company covenants and agrees to fully indemnify and hold you
harmless against any and all loss, liability, cost or expense, including
attorneys' fees and expenses, incurred without gross negligence or willful
misconduct on your part, arising out of or in connection with any act, omission,
delay or refusal made by you in reliance upon any signature, endorsement,
assignment, certificate, order, request, notice, instruction or other instrument
or document believed by you to be valid, genuine and sufficient and in accepting
any tender or effecting any transfer of Old Notes believed by you in good faith
to be authorized, and in delaying or refusing in good faith to accept any
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tenders or effect any transfer of Old Notes. In each case, the Company shall be
notified by you, by letter or facsimile transmission, of the written assertion
of a claim against you or of any other action commenced against you, promptly
after you shall have received any such written assertion or shall have been
served with a summons in connection therewith. The Company shall be entitled to
participate at its own expense in the defense of any such claim or other action
and, if the Company so elects, the Company shall assume the defense of any suit
brought to enforce any such claim. In the event that the Company shall assume
the defense of any such suit, the Company shall not be liable for the fees and
expenses of any additional counsel thereafter retained by you, so long as the
Company shall retain counsel satisfactory to you to defend such suit, and so
long as you have not determined, in your reasonable judgment, that a conflict of
interest exists between you and the Company. The provisions of this section
shall survive the termination of this Agreement.
21. You shall arrange to comply with all requirements under the tax
laws of the United States, including those relating to missing Tax
Identification Numbers, and shall file any appropriate reports with the Internal
Revenue Service.
22. You shall deliver or cause to be delivered, in a timely manner to
each governmental authority to which any transfer taxes are payable in respect
of the exchange of Old Notes, the Company's check in the amount of all transfer
taxes so payable; provided, however, that you shall reimburse the Company for
amounts refunded to you in respect of your payment of any such transfer taxes,
at such time as such refund is received by you.
23. This Agreement and your appointment as Exchange Agent hereunder
shall be construed and enforced in accordance with the laws of the State of New
York applicable to agreements made and to be performed entirely within such
state, and without regard to conflicts of law principles, and shall inure to the
benefit of, and the obligations created hereby shall be binding upon, the
successors and assigns of each of the parties hereto.
24. This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original and all of which together shall
constitute one and the same agreement.
25. In case any provision of this Agreement shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
26. This Agreement shall not be deemed or construed to be modified,
amended, rescinded, cancelled or waived, in whole or in part, except by a
written instrument signed by a duly authorized representative of the party to be
charged. This Agreement may not be modified orally.
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27. Unless otherwise provided herein, all notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
or similar writing) and shall be given to such party, addressed to it, at its
address or telecopy number set forth below:
If to the Company:
Scholastic Corporation
557 Broadway
New York, New York 10012
Facsimile: (212) 343-6965
Attention: Charles B. Deull, Esq.
General Counsel
If to the Exchange Agent:
Citibank, N.A.
111 Wall Street, 15th Floor
New York, New York 10043
Facsimile: (212) 825-3483
Attention: Agency & Trust Services
28. Unless terminated earlier by the parties hereto, this Agreement
shall terminate 90 days following the Expiration Date. Notwithstanding the
foregoing, Sections 18 and 20 shall survive the termination of this Agreement.
Upon any termination of this Agreement, you shall promptly deliver to the
Company any certificates for Notes, funds or property then held by you as
Exchange Agent under this Agreement.
29. This Agreement shall be binding and effective as of the date
hereof.
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Please acknowledge receipt of this Agreement and confirm the
arrangements herein provided by signing and returning the enclosed copy.
SCHOLASTIC CORPORATION
By:
-------------------------------
Name: Charles B. Deull
Title: Senior Vice President
Accepted as of the date
first above written:
CITIBANK, N.A., as Exchange Agent
By:
-------------------------------
Name: Wafaa Orfy
Title: Vice President
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