EXHIBIT 1.1
Execution Copy
SCHOLASTIC CORPORATION
$175,000,000
5% NOTES DUE 2013
PURCHASE AGREEMENT
April 2, 2003
Xxxxxxx Xxxxx Xxxxxx Inc.
Credit Suisse First Boston LLC
X.X. Xxxxxx Securities Inc.
As Representatives of the Initial Purchasers
c/o Xxxxxxx Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
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
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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
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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:
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(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
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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
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"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
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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 Xxxxxxxxxx Xxx. 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
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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) Xxxxxxxxxx Xxx. 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
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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 Xxxxxxxx & Xxxxxxxx
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 000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxxxx X. Xxxxx, 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/ Xxxxx X. Xxxxxxx
------------------------------
Name: Xxxxx X. XxXxxxx
Title: Chief Financial Officer
and Executive Vice President
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Xxxxxxx Xxxxx Barney Inc.
Credit Suisse First Boston LLC
X.X. Xxxxxx Securities Inc.
By: Xxxxxxx Xxxxx Barney Inc.
By /s/ Xxxxxx X. Xxxxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxxxx
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
-------------------------------------------------------------- -------------------
Xxxxxxx Xxxxx Xxxxxx Inc. .................................... $ 68,250,000
Credit Suisse First Boston LLC ............................... $ 49,875,000
X.X. Xxxxxx 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
Xxxxxxxxxx Xxx.
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 Xxx 0000 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 Xxx 0000 (Investment Advertisements) (Exemptions) Order 1996
or is a person to whom the document may otherwise lawfully be issued or passed
on.
17
