<PAGE>
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: April 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the transition period from ___________ to ______________
Commission file number 1-11507
JOHN WILEY & SONS, INC.
(Exact name of Registrant as specified in its charter)
NEW YORK 13-5593032
State or other jurisdiction of I.R.S. Employer
incorporation or organization identification No.
605 Third Avenue, New York, NY 10158-0012
Address of principal executive offices Zip Code
offices
Registrant's telephone number (212) 850-6000
including area code
Securities registered pursuant to Section
12(b) of the Act:
Class A Common Stock, par value $1.00 per share
Title of Class
Class B Common Stock, par value $1.00 per share
Title of Class
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-
K or any amendment to this Form 10-K
The number of shares outstanding of the Registrant's Class A
and Class B Common Stock, par value $1.00 per share as of May 31,
1995, was 6,314,492 and 1,646,150 respectively, and the
aggregate market value of such shares of Common Stock held by
non-affiliates of the Registrant as of such date was
$359,982,873 based upon the market price of $57 per share of
Class A and Class B Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's Definitive proxy Statement to be filed with
the Commission on or about August 8, 1995 for the Annual
Meeting of Shareholders to be held on September 21, 1995,
(the "1995 Proxy Statement") is, to the extent noted below,
incorporated by reference in Part III.
<PAGE>
PART I
Item 1. Business
The Company is a New York corporation incorporated on
January 15, 1904. (As used herein the term "Company" means John
Wiley & Sons, Inc., and its subsidiaries and affiliated
companies, unless the context indicates otherwise).
The Company operates in one business segment, namely
publishing, which develops, publishes, and markets products
in print and electronic formats including textbooks, professional and
reference works, consumer books, journals, and other
subscription-based products, for the educational, scientific,
technical, professional and trade markets in the United States
and internationally.
Textbooks are produced primarily for use in formal
instruction in the college and university markets, as well as
the secondary school market in Australia, while professional
and reference books, encyclopedias, dictionaries, and
periodicals are intended primarily for practicing and research
professionals and for libraries. Some of these, as well as
nonfiction consumer publications, are also marketed to the
general public. In addition, the Company markets and
distributes books from other publishers. The Company also
develops and markets electronic versions of certain of its print
products, as well as computer software and electronic data
bases for educational use and professional research and
training. Book publications are primarily in the areas of
pure and applied science, engineering, architecture, the
social sciences, biomedicine, accounting, law, computer
science and business administration. Journal publications are
primarily in the scientific and technical, and biomedical
research areas.
In fiscal 1995, the Company acquired the publishing
business of Executive Enterprises, Inc., consisting of
books, journals and newsletters for environmental management,
accounting, law and human resource professionals; ValuSource,
which produces specialized business valuation software for
accountants, entrepreneurs and corporations; the college engineering
list of Houghton Mifflin; the book publishing program of Oliver
Wight Publications, Inc. consisting of general management and
manufacturing/quality titles; and the OS/2 computer-book
list of Van Nostrand Reinhold. Early in fiscal 1996, the Company
entered into an agreement in principle to acquire Preservation
Press consisting of architectural heritage books, technical
preservation guides and children's architecture books.
The company is on the Internet with a World Wide Web
site located at http://www.wiley.com.
<PAGE>
Domestic Publishing Operations
Adopted textbooks (i.e., textbooks prescribed for course
use) are sold primarily to bookstores serving educational institutions
in the United States (i.e., college bookstores). The Company
employs college sales representatives who call upon
faculty members responsible for selecting books to be used in
courses, and upon the college bookstores which serve such
institutions and their students. Approximately 3,000 college
bookstores are active customers. Textbook sales are generally
made on a fully returnable basis.
The textbook business is seasonal with the majority of
textbook sales occurring during June through August and November through
January. Significant amounts of inventory are acquired prior
to those periods in order to meet customer delivery requirements.
There is an active used textbook market which negatively affects
the sales of new textbooks.
Professional and consumer book sales consist of sales to
trade bookstores serving the general public, to wholesalers who
supply such bookstores, to certain college bookstores for
their non-textbook requirements, to individual professional
practitioners, and to research institutions, jobbers,
libraries (including public, professional, academic, and
other special libraries), industrial organizations, and
governmental agencies. The Company employs sales
representatives who call upon independent bookstores, along
with national and regional chain bookstores, wholesalers and
jobbers in the United States. Trade sales to bookstores,
wholesalers and jobbers are generally made on a fully returnable
basis.
Sales of professional and consumer books also result from
direct mail campaigns, telemarketing, and advertising and
reviews in periodicals. The mailings and advertising are intended
to promote sales through bookstores and jobbers, as well as to solicit
sales directly.
Journal subscriptions result primarily from direct mail
and other advertising and promotional campaigns, renewals which are
solicited annually either directly or by companies commonly
referred to as independent subscription agents, and
memberships in the professional societies for those journals
that are sponsored by such societies.
The Company also receives licensing revenues from
photocopies and electronic reproductions of journal articles and
other materials.
Domestic publishing products, other than journals,
are distributed from a Company operated warehouse located in
Somerset, New Jersey. Journals are mailed to subscribers directly
from the independent printers.
<PAGE>
International Publishing Operations
The Company's publications are sold throughout most of the
world through subsidiaries located in Europe, Canada, Australia,
and Asia, or through agents, or directly from New York.
These subsidiaries market their own indigenous publications, as
well as publications produced by the domestic operations and
other subsidiaries and affiliates.
The Export Sales Department in New York markets the
Company's publications through agents as well as foreign sales
representatives in countries not served by a foreign
subsidiary. The International Rights Department sells foreign
reprint and translations rights. The Company publishes, or
licenses others to publish, its products which are distributed
throughout the world in 40 foreign languages.
Approximately 40% of the Company's fiscal 1995 revenues
were derived from non-U.S. markets.
Publishing Procedures
The Company usually enters into agreements with authors
which state the terms and conditions under which the respective
authors' materials will be published and under which other
related rights may be exercised, the name in which the copyright
will be registered, the basis for any royalties, and other
matters. The Company continues to add new titles, revise
existing titles, and discontinue the sale of others in the
normal course of its business.
Most of the authors of the books and other products
published are compensated by royalties which vary with the
nature of the product and its anticipated sales potential. In
general, royalties for textbooks and consumer books are
higher than royalties for research and reference works. The
Company makes advances against future royalties to authors of
certain of its publications.
Materials for publication are obtained from authors
throughout most of the world through the efforts of an editorial
staff, outside editorial advisors, and advisory boards. Most
materials originate with their authors, but many are prepared
as a result of suggestions or solicitations by editors or
advisors. The Company's general practice is to revise its basic
textbooks every three to five years, if
warranted, and to revise other titles as appropriate.
Approximately 35% of the Company's fiscal 1995 domestic
book publishing revenues were from titles published or revised
in that fiscal year. Subscription-based products, other than
journals, are updated more frequently on a regular schedule.
<PAGE>
Most journals are owned by the Company, in which case they
may or may not be sponsored by a professional society. Some are
owned by such societies and published by the Company under
an agreement. Societies which sponsor or own such journals
generally receive a royalty and/or other consideration which
varies with the nature of the relationship. The Company
usually enters into agreements with the editors of journals
which state the duties of the editors, and the fees and
expenses for their services. Contributions of journal articles
transfer publication rights to the Company or professional
society, as applicable. Journal revenues represented
approximately 29% of the Company's fiscal 1995 revenues.
The Company's publishing business is not dependent upon a
single customer, the loss of whom could have a material
adverse effect. Approximately 90% of the Company's journal
subscription business is sourced through independent
subscription agents, and represents approximately 25% of total
consolidated revenues. These companies facilitate the journal
ordering process by consolidating
the subscription orders/billings of each subscriber. Monies
are collected in advance from subscribers by the subscription agents
and are remitted to the journal publishers, including the
Company, generally prior to the commencement of the
subscription. Cash receipts from subscription agents are
highly dependent on their financial position and liquidity.
No one agent accounts for more than 6% of total consolidated
revenues.
The Company performs marketing and distribution services
for other publishers under agency arrangements. It also engages
in copublishing of titles with foreign publishers and in
publication of adaptations of works from other publishers for
particular markets.
Like most other publishers, the Company generally
contracts with independent printers and binderies for their services.
The Company purchases its paper from printers and from independent
suppliers. Paper prices have increased steadily over the past year. The
Company believes that adequate printing and binding facilities,
and sources of paper and other required materials are available
to it, and that it is not dependent upon any single supplier.
The Company produces electronic versions of some of its
products including software, video, CD-ROM, and through on-
line services. Approximately 170 products are available in
electronic formats. The Company believes that the demand for
new electronic technology products will increase steadily.
Accordingly, to properly service its customers and to remain
competitive, the Company anticipates it will be necessary to
increase its expenditures related to such new technologies over the
next several years.
<PAGE>
Copyrights, Patents, Trademarks, and Environment
Substantially all of the Company's publications are
protected by copyright, either in its own name, in the name of
the author of the work, or in the name of the sponsoring
professional society. Such copyrights protect the Company's
exclusive right to publish the work in the United States and
in many countries abroad for specified periods: in most cases
the author's life plus 50 years, but in any event a minimum of
28 years for works published prior to 1978 and 35 years for
works published thereafter.
The Company does not own any other material patents,
franchises, or concessions, but does have registered trademarks
and service marks in connection with its publishing businesses.
The Company's operations are generally not affected by environmental
legislation.
Competition Within the Publishing Industry
The sectors of the publishing industry in which the Company
is engaged are highly competitive. The principal competitive
criteria for the publishing industry are believed to be
product quality, suitability of format and subject matter,
author reputation, price, timely availability of both new
titles and revisions of existing texts and, for textbooks and
certain trade books, timely delivery of products to retail
outlets. Recent years have seen a consolidation trend within
the publishing industry, with several publishing companies
having been acquired by larger publishers and other
companies.
Based upon currently available industry statistics, the
Company believes that of books published and sold in the United
States, it accounts for approximately 3% of the total sales of
such university and college textbooks, and approximately 3% of
the total sales of such professional books.
The Company knows of no reliable industry statistics which
would enable it to determine its share of the various foreign
markets in which its operates. The Company believes that the
percentage of its total book publishing sales in markets
outside the United States is higher than that of most of the
United States publishers. The Company also believes
it is one of the four largest publishers of scientific and
technical journals worldwide, and one of
the two largest such domestic publishers, and one of the
four largest publishers of university and college textbooks for
the "hardside" disciplines, i.e. engineering, sciences and
mathematics.
Employees
As of April 30, 1995, the Company employed approximately
1,770 persons on a full-time basis worldwide, none of whom are
unionized. Management considers relations with its employees to
be generally satisfactory.
<PAGE>
Financial Information About Industry Segments
The note entitled - "Segment Information" of the Notes
to Consolidated Financial Statements listed in the attached
index is incorporated herein by reference.
Financial Information about Foreign and
Domestic Operations and Export Sales
The note entitled - "Segment Information" of the Notes to
Consolidated Financial Statements listed in the attached index
is incorporated herein by reference.
<PAGE>
Executive Officers
Set forth below are the names and ages of all executive officers
of the Company, the period during which they have been officers,
and the offices presently held by each of them.
Name and Age Officer Present Office
Since
Bradford Wiley II 1993 Chairman of the Board since January 1993
54 and a Director (previously Editor,
College Division)
Charles R. Ellis 1988 President and Chief Executive Officer
60 and a Director since June 1990
(previously Executive Vice
President/Group President
Publishing)
Stephen A. Kippur 1986 Senior Vice President, Professional,
48 Reference & Trade Publishing Group since
July 1990 (previously Group Vice
President, Professional & Trade)
William J. Pesce 1989 Senior Vice President, Educational
44 Publishing Group since July 1990
(previously Group Vice President,
Educational Group)
Richard S. Rudick 1978 Senior Vice President, General Counsel
56 since June 1989 (previously Vice
President, General Counsel and
Secretary)
Robert D. Wilder 1986 Senior Vice President, Chief Financial
47 Officer since June 1990 (previously Vice
President, Publishing Financial &
Administrative Services)
William Arlington 1990 Vice President, Human Resources since
46 June 1990 (previously Director, Human
Resources, Publishing Group)
Peter W. Clifford 1989 Vice President, Finance and Controller
49 since November 1991 (previously Vice
President, Controller)
Deborah E. Wiley 1982 Vice President and Director of Corporate
49 Communications since June 1994 and a
Director (previously Vice Chairman
of the Board)
Each of the officers listed above will serve until the next
organizational meeting of the Board of Directors of the Company and
until each of the respective successors is duly elected and
qualified. Deborah E. Wiley is the sister of Bradford Wiley II.
There is no other family relationship among any of the aforementioned
individuals.
<PAGE>
Item 2. Properties
The Company's publishing businesses occupy office, warehouse,
and distribution centers in various parts of the world, as
listed below (excluding those locations with less than 10,000
square feet of floor area, none of which is considered material
property).
Location Purpose Approx. Sq. Lease Expiration
Ft. Date
Leased-
Domestic:
New York, Executive and 230,000 2003
New York Editorial
Offices
Somerset, Distribution 170,000 1998
New Jersey Center and
Office
Somerset, Warehouse 50,000 2000
New Jersey
Colorado Office 15,000 2000
Springs,
Colorado
Leased-
Foreign:
Brisbane, Office 16,000 1998
Australia Warehouse 26,000 1996
Toronto, Office 14,000 2001
Canada Warehouse 41,000 1996
Chichester, Office 52,000 2009
England Warehouse 70,000 2012
Singapore Office 53,000 1997
and Warehouse
All of the buildings and the equipment owned or leased
are believed to be in good condition and are generally fully
utilized. The Company considers its facilities overall to be
adequate for its present and near-term anticipated needs.
<PAGE>
Item 3. Legal Proceedings
The Company is involved in routine litigation in the
ordinary course of its business. In the opinion of management,
the ultimate resolution of all pending litigation will not have
a material effect upon the financial condition or results of
operations of the Company.
Item 4. Submission of Matters to a
Vote of Security Holders
No matters were submitted to the Company's security
holders during the last quarter of the fiscal year ended April,
30, 1995.
PART II
Item 5. Market for the Company's Common
Equity and Related Stockholder Matters
The Quarterly Share Prices, Dividends and Related
Stockholder Matters listed in the attached index are
incorporated herein by reference.
Item 6. Selected Financial Data
The Selected Financial Data listed in the attached
index is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Management's Discussion and Analysis of Financial
Condition and Results of Operations listed in the attached
index is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The financial statements and supplementary data listed
in the attached index are incorporated herein by reference.
<PAGE>
Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers
The information regarding the Board of Directors on pages 3
to 11 of the 1995 Proxy Statement is incorporated herein by
reference, and information regarding Executive Officers appears
in Part I of this report.
Item 11. Executive Compensation
The information on pages 11 to 18 of the 1995 Proxy
Statement is incorporated herein by reference.
Item 12. Security Ownership of Certain
Beneficial Owners and Management
The information on pages 2 to 9 of the 1995 Proxy Statement
is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
The information on pages 11 to 18 of the 1995 Proxy
Statement is incorporated herein by reference.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement
Schedules and Reports on Form 8-K
(a) Financial Statements and Schedules
(1) List of Financial Statements filed.
The financial statements listed in the attached
index are filed as part of this Report.
(2) List of Financial Statement Schedules filed.
The financial statement schedules listed in the attached
index are filed as part of this Report.
(b) Reports on Form 8-K.
The Company filed a Form 8-K on April 28, 1995 related
to the prepayment of the remaining balance of its 10.31% Notes
in the amount of $26 million.
(c) Exhibits
3.1 Restated Certificate of Incorporation (incorporated by
reference to the Company's report of Form 10-K for the
year ended April 30, 1992).
3.2 Restated By-Laws as of July 1994.
4.1 Form of agreement between the Company and certain employees
restricting transfer of Class B Common Stock
(incorporated by reference to the Company's Report on Form 10-Q
for the quarterly period ended January 31, 1986).
10.1 Credit Agreement dated as of March 30, 1995 among the
Company, Morgan Guaranty Trust Company of New York,
Chemical Bank, Corestates Bank, N.A., and Morgan
Guaranty Trust Company of New York, as Agent.
10.2 1991 Key Employee Stock Plan (incorporated by reference to
the Company's Definitive Proxy Statement dated August 8, 1991).
10.3 1982 and 1987 Incentive Stock Option and Performance Stock
Plans (incorporated by reference to the Company's
Definitive Proxy Statements dated July 30, 1982 and August
10, 1987).
10.4 Amendment to 1982 Stock Option and Performance Stock Plan
dated as of September 19, 1985 (incorporated by
reference to the Company's Report on Form 8-K dated as of
September 19, 1985).
<PAGE>
10.5 Amendment to 1982 Incentive Stock Option and Performance
Stock Plan dated as of March 2, 1989 (incorporated by
reference to the Company's Report on Form 10-K
for the year ended April 30, 1989).
10.6 Amendment to 1987 Incentive Stock Option and Performance
Stock Plan dated as of March 2, 1989
(incorporated by reference to the Company's
Report on 10-K for the year ended April 30, 1989).
10.7 1990 Director Stock Plan (incorporated by reference to the
Company's Definitive Proxy Statement dated August 7, 1990).
10.8 1989 Supplemental Executive Retirement Plan (incorporated by
reference to the Company's Report on Form 10-K for
the year ended April 30, 1989).
10.9 Agreement of Lease dated as of May 16, 1985 between Fisher
40th & 3rd Company and Hawaiian Realty, Inc.,
Landlord, and the Company, Tenant (incorporated by reference
to the Company's Report on Form 10-K for the year ended April
30, 1985).
10.10 Form of the Fiscal Year 1995 Executive Long-Term Incentive
Plan (incorporated by reference to the Company's Report on
Form 10-K for the year ended April 30, 1994).
10.11 Form of the Fiscal Year 1995 Executive Annual Incentive Plan
(incorporated by reference to the Company's Report on
Form 10-K for the year ended April 30, 1994).
10.12 Form of the Fiscal Year 1996 Executive Annual Incentive Plan.
10.13 Form of the Fiscal Year 1996 Executive Long-Term Incentive Plan.
10.14 Senior Executive Employment Agreement amended as of March 29,
1995 between Charles R. Ellis and the Company.
10.15 Restricted Stock Award Agreement dated as of June 23, 1994
between Charles R. Ellis and the Company.
(incorporated by reference to the Company's Report on
Form 10-Q for the quarterly period ended July 31, 1994).
10.16 Senior Executive Employment Agreement dated as of
July 1, 1994 between Stephen A. Kippur and the
Company. (incorporated by reference to the Company's Report on
Form 10-Q for the quarterly period ended July 31, 1994).
10.17 Amendment No. 1 to Stephen A. Kippur's Senior Executive
Employment Agreement. (incorporated by reference to
the Company's Report on Form 10-Q for the quarterly
period ended July 31, 1994).
10.18 Restricted Stock Award Agreement dated as of June 23, 1994
between Stephen A. Kippur and the Company. (incorporated by
reference to the Company's Report on Form 10-Q for the
quarterly period ended July 31, 1994).
<PAGE>
10.19 Senior Executive Employment Agreement dated as of July 1,
1994 between William J. Pesce and the Company.
(incorporated by reference to the Company's Report on
Form 10-Q for the quarterly period ended July 31, 1994).
10.20 Amendment No. 1 to William J. Pesce's Senior Executive
Employment Agreement. (incorporated by reference to the Company's
Report on Form 10-Q for the quarterly period ended July 31, 1994).
10.21 Restricted Stock Award Agreement dated as of June 23, 1994
between William J. Pesce and the Company.
(incorporated by reference to the Company's Report on
Form 10-Q for the quarterly period ended July 31, 1994).
10.22 Senior Executive Employment Agreement dated as of
July 1, 1994 between Robert D. Wilder and
the Company. (incorporated by reference to the
Company's Report on Form 10-Q for the quarterly
period ended July 31, 1994).
10.23 Amendment No. 1 to Robert D. Wilder's Senior Executive
Employment Agreement. (incorporated by reference to
the Company's Report on Form 10-Q for the quarterly
period ended July 31, 1994).
10.24 Restricted Stock Award Agreement dated as of June 23, 1994
between Robert D. Wilder and the Company.
(incorporated by reference to the Company's Report on Form 10-
Q for the quarterly period ended July 31, 1994).
10.25 Agreement dated as of January 1, 1993 between W. Bradford
Wiley, a former Director, and the Company
(incorporated by reference to the Company's Report on
Form 10-K for the year ended April 30, 1993).
13-P Annual Report to Shareholders for Fiscal Year Ended April 30,
1995 (to be filed by amendment on or about July 26, 1995).
22 List of Subsidiaries of the Company.
24 Consent of Independent Public Accountants (included in
this report as listed in the attached index).
27 Financial Data Schedule.
<PAGE>
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
The following financial statements and information
are filed as part of this Report:
Report of Independent Public Accountants and
Consent of Independent Public Accountants
Consolidated Statements of Financial Position
as of April 30, 1995 and 1994
Consolidated Statements of Income and Retained Earnings
for the years ended April 30, 1995, 1994 and 1993
Consolidated Statements of Cash Flows for
the years ended April 30, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results by Quarter (Unaudited)
Quarterly Share Prices, Dividends and Related
Stockholders Matters
Selected Financial Data
Schedule II - Valuation and Qualifying Accounts
Other schedules are omitted because of absence of
conditions under which they apply or because the
information required is included in the Notes to the
Consolidated Financial Statements.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and the Shareholders
of John Wiley & Sons, Inc.:
We have audited the accompanying consolidated statements
of financial position of John Wiley & Sons, Inc. (a New
York corporation), and subsidiaries as of April 30, 1995 and
1994, and the related consolidated statements of income and
retained earnings and cash flows for each of the three years in
the period ended April 30, 1995. These financial statements
and the schedule referred to below aret the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and the schedule based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the financial
position of John Wiley & Sons, Inc., and subsidiaries as of
April 30, 1995 and 1994, and the results of their operations
and their cash flows for each of the three years in the
period ended April 30, 1995 in conformity with generally
accepted accounting principles.
Our audits were made for the purpose of forming an opinion
on the basic financial statements taken as a whole. The schedule
listed in the Index to Consolidated Financial Statements and
Schedules is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of
the basic financial statements. This schedule has been subjected
to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
New York, New York
June 7, 1995
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to
the incorporation of our report included in the John Wiley &
Sons, Inc. Form 10-K for the year ended April 30, 1995, into
the Company's previously filed Registration Statement File Nos.
3360268, 2-65296, 2-95104 and 33-29372.
ARTHUR ANDERSEN LLP
New York, New York
July 18, 1995
<PAGE>
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
April 30
-----------------
John Wiley & Sons, Inc. and Subsidiaries Dollars in thousands 1995 1994
=====================================================================================
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents.......................................$ 34,410 $ 57,457
Accounts receivable............................................. 52,562 45,998
Inventories..................................................... 41,535 37,281
Deferred income tax benefits.................................... 8,004 9,246
Prepaid expenses................................................ 4,680 3,642
-----------------
Total Current Assets............................................ 141,191 153,624
-----------------
Product Development Assets.......................................... 24,509 20,433
Property and Equipment.............................................. 21,244 19,623
Intangible Assets................................................... 53,351 43,701
Other Assets........................................................ 7,186 6,559
-----------------
Total Assets....................................................$247,481 $ 243,940
=================
Liabilities and Shareholders' Equity
Current Liabilities
Notes payable and current portion of long-term debt.............$ 621 $ 6,079
Accounts and royalties payable................................... 34,273 25,619
Deferred subscription revenues................................... 65,749 56,420
Accrued income taxes............................................. 4,227 4,607
Other accrued liabilities........................................ 25,080 25,840
-----------------
Total Current Liabilities........................................129,950 118,565
-----------------
Long-Term Debt...................................................... - 26,000
Other Long-Term Liabilities......................................... 13,818 12,953
Deferred Income Taxes............................................... 4,881 4,092
Shareholders' Equity
Common stock issued
Class A (8,086,635 and 8,045,212 shares)......................... 8,087 8,045
Class B (2,084,230 and 2,091,002 shares)......................... 2,084 2,091
Additional paid-in capital....................................... 35,616 33,008
Retained earnings................................................ 87,541 74,024
Cumulative translation adjustment................................ (2,411) (3,805)
Unearned deferred compensation................................... (1,547) -
-----------------
129,370 113,363
Less Treasury shares at cost (Class A-1,775,941 and 1,826,636;
Class B-435,512 and 434,640)................................(30,538) (31,033)
-----------------
Total Shareholders' Equity....................................... 98,832 82,330
-----------------
Total Liabilities and Shareholders' Equity......................$247,481 $ 243,940
=================
=====================================================================================
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
AND RETAINED EARNINGS
<TABLE>
<CAPTION>
For the years ended April 30
----------------------------
John Wiley & Sons, Inc. and Subsidiaries Dollars in thousands except per share data 1995 1994 1993
===============================================================================================================
<S> <C> <C> <C>
Revenues...........................................................................$331,091 $ 294,289 $ 272,894
Costs and Expenses
Cost of sales....................................................................113,142 99,683 92,234
Operating and administrative expenses............................................186,984 170,000 162,422
Amortization of intangibles...................................................... 4,086 5,723 5,222
---------------------------
Total Costs and Expenses.........................................................304,212 275,406 259,878
---------------------------
Operating Income.................................................................... 26,879 18,883 13,016
Interest Income and Other........................................................... 1,768 1,821 1,551
Interest Expense.................................................................... (2,854) (3,638) (3,996)
---------------------------
Interest Income (Expense)-Net....................................................... (1,086) (1,817) (2,445)
---------------------------
Income Before Taxes................................................................. 25,793 17,066 10,571
Provision for Income Taxes.......................................................... 7,482 4,949 2,853
---------------------------
Net Income.......................................................................... 18,311 12,117 7,718
---------------------------
Retained Earnings at Beginning of Year.............................................. 74,024 66,080 62,468
Cash Dividends
Class A Common ($.62, $.55 and $.55 per share)................................... 3,885 3,358 3,288
Class B Common ($.55, $.49 and $.49 per share)................................... 909 815 818
---------------------------
Total Dividends.................................................................. 4,794 4,173 4,106
---------------------------
Retained Earnings at End of Year...................................................$ 87,541 $ 74,024 $ 66,080
===========================
Income Per Share
Primary.........................................................................$ 2.25 $ 1.52 $ 1.00
Fully Diluted...................................................................$ 2.23 $ 1.51 $ 0.99
===============================================================================================================
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the years ended April 30
---------------------------
John Wiley & Sons, Inc. and Subsidiaries Dollars in thousands 1995 1994 1993
===============================================================================================
<S> <C> <C> <C>
Operating Activities
Net Income.........................................................$ 18,311 $ 12,117 $ 7,718
Non-cash Items
Amortization of intangibles...................................... 4,086 5,723 5,222
Amortization of composition costs................................ 12,285 11,979 10,997
Depreciation of property and equipment........................... 6,589 6,075 5,266
Reserves for returns, doubtful accounts and obsolescence......... 4,321 3,679 4,932
Deferred income taxes............................................ 2,094 (1,499) (1,321)
Other............................................................ 5,155 3,295 3,200
Changes in Operating Assets and Liabilities
Increase in receivables.......................................... (8,337) (11,863) (1,860)
Decrease (increase) in inventories............................... (3,962) 758 (3,709)
Increase (decrease) in accounts and royalties payable............ 6,951 5,594 (2,019)
Increase in deferred subscription revenues....................... 7,596 6,132 5,468
Net change in other operating assets and liabilities............. (3,198) (2,256) 2,801
---------------------------
Cash Provided by Operating Activities............................ 51,891 39,734 36,695
---------------------------
Investing Activities
Additions to product development assets..........................(19,705) (16,827) (16,596)
Additions to property and equipment.............................. (7,876) (6,504) (7,072)
Proceeds from sale of publishing lines........................... - 9,210 1,900
Acquisition of publishing assets.................................(12,268) (8,305) (416)
---------------------------
Cash Used for Investing Activities...............................(39,849) (22,426) (22,184)
---------------------------
Financing Activities
Purchase of treasury shares...................................... (212) - -
Repayment of long-term debt......................................(32,000) (4,000) (4,000)
Net borrowings (repayments) of short-term debt................... 522 (21) 33
Cash dividends................................................... (4,794) (4,173) (4,106)
Proceeds from exercise of stock options.......................... 590 2,815 1,157
---------------------------
Cash Used for Financing Activities...............................(35,894) (5,379) (6,916)
---------------------------
Effects of Exchange Rate Changes on Cash......................... 805 (787) (1,314)
---------------------------
Cash and Cash Equivalents
Increase (Decrease) for Year.....................................(23,047) 11,142 6,281
Balance at Beginning of Year..................................... 57,457 46,315 40,034
---------------------------
Balance at End of Year..........................................$ 34,410 $ 57,457 $ 46,315
===========================
Cash Paid During the Year for
Interest........................................................$ 3,807 $ 3,674 $ 4,092
Income Taxes....................................................$ 6,886 $ 3,715 $ 3,007
===============================================================================================
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
<PAGE>
Notes to Consolidated Financial Statements
Summary of Significant Accounting Policies
Principles of Consolidation: The consolidated financial
statements include the accounts of John Wiley & Sons, Inc., and
its majority owned subsidiaries ("the Company"). All significant
intercompany items have been eliminated. Certain prior year
amounts have been reclassified to conform to the current year's
presentation.
Sales Returns and Doubtful Accounts: The Company provides an
estimated allowance for doubtful accounts and for future returns
on sales made during the year. The allowance for doubtful
accounts and returns (estimated returns net of inventory and
royalty costs) is shown as a reduction of receivables in the
accompanying consolidated balance sheets and amounted to $22.6
and $19.9 million at April 30, 1995 and 1994, respectively.
Depreciation and Amortization: Furniture and equipment is
depreciated principally on the straight-line method over
estimated useful lives ranging from 3 to 10 years. Leasehold
improvements and capital leases are amortized over the lesser of
the estimated useful lives of the assets or the duration of the
various leases, using the straight-line method. Composition
costs representing the costs incurred to bring an edited
manuscript to publication including typesetting, proofreading,
design and illustration, etc. are capitalized and amortized over
estimated useful lives representative of product revenue
patterns, generally 3 years.
Intangible Assets: Intangible assets consist of: acquired
publication rights, which are principally amortized based on the
projected revenues of titles acquired; non-compete agreements,
which are amortized over the term of such agreements; and
goodwill and other intangibles, which are amortized on a straight-
line basis over periods ranging from 10 to 40 years. If facts
and circumstances indicate that intangible assets may be
permanently impaired, it is the Company's policy to assess the
carrying value and recoverability of such assets based on an
analysis of undiscounted future cash flows of the related operations. Any
resulting reduction in carrying value would be charged to
operating results.
Income Per Share: Income per share is determined by dividing
income by the weighted average number of common shares
outstanding and common stock equivalents resulting from the
assumed exercise of outstanding dilutive stock options and other
stock awards less shares assumed to be repurchased with the
related proceeds at the average market price for the period for
primary earnings per share, and at the higher of the average or
end of period market price for fully diluted earnings per share.
Subscription Revenues: Subscription revenues are generally
collected in advance. These revenues are deferred and recognized
as earned when the related issue is shipped to the subscriber.
<PAGE>
Foreign Exchange Contracts: The Company, from time to time,
enters into forward exchange contracts as a hedge against its
overseas subsidiaries' non-functional currency asset, liability,
and commitment exposures. Such exposures include anticipated
annual journal subscription revenues, as well as that portion of
the revenues and related receivables on sales of book products,
that are denominated in U.S. dollars, while the foreign
subsidiaries' expense structure is denominated in their own
functional currencies. Realized and unrealized gains and losses
are deferred and taken into income over the lives of the hedged
items if permitted by generally accepted accounting principles;
otherwise the contracts are marked to market with any gains and
losses reflected in operating expenses. There were no open foreign
exchange contracts, and no gains or losses were deferred at
April 30, 1995 or 1994.
Cash Equivalents: Cash equivalents consist primarily of highly
liquid investments with a maturity of three months or less and
are stated at cost plus accrued interest which approximates
market value.
Adoption of New Accounting Standards: The Company adopted the
following Statements of Financial Accounting Standards (SFAS)
effective as of the beginning of fiscal 1994:
- - Employer's Accounting for Postretirement Benefits Other Than
Pensions - SFAS No. 106
- - Accounting for Income Taxes - SFAS No. 109
- - Employer's Accounting for Postemployment Benefits - SFAS No.
112
The Postretirement Benefits standard changed the method of
accounting for retiree life insurance and health care benefits
from the current practice of expensing the cost of such benefits
on a pay as-you-go, cash basis to expensing the cost over the
years the employees render service. The cumulative effect of
adopting this standard amounted to a charge of approximately $.2
million, or $.1 million after taxes, in fiscal 1994.
The Income Tax standard changed the method of accounting for
income taxes from the deferred method to the liability method,
under which deferred tax assets and liabilities are now measured
based on the enacted tax rates and laws that will be in effect
when the deferred tax items are expected to reverse. The change
had the effect of increasing net deferred tax benefits, resulting
in a cumulative effect of approximately $1.3 million of income in
fiscal 1994.
The Postemployment Benefit standard requires the accrual of
costs related to health care benefits provided to former or
inactive employees prior to retirement. The cumulative effect of
adopting this standard amounted to a charge of approximately $1.6
million, or $1.1 million after taxes, in fiscal 1994.
The net cumulative effect of adopting these new standards as
of the beginning of fiscal 1994 was not material. Prior period
financial statements have not been restated.
<PAGE>
Acquisitions
In fiscal 1995, the Company acquired the publishing business of
Executive Enterprises, Inc., consisting of books, journals and
newsletters for environmental management, accounting, law and
human resource professionals; ValuSource, which produces
specialized business valuation software for accountants,
entrepreneurs and corporations; the college engineering list of
Houghton Mifflin; the book publishing program of Oliver Wight
Publications, Inc., consisting of general management and
manufacturing/quality titles; the OS/2 computer-book list of Van
Nostrand Reinhold, Inc., and other smaller publishing lists, for
purchase prices aggregating $12.3 million in cash plus assumed
liabilities of $2.9 million. The excess of cost over the fair
value of the tangible assets acquired amounted to approximately
$13.5 million, of which $6.7 million related to acquired
publication rights, $.5 million related to non-compete
agreements, and $6.3 million represented goodwill and other
intangibles which are being amortized over 10 to 15 years.
In fiscal 1994, the Company acquired the professional computer
book line of QED Information Services in the United States;
Belhaven Press, which publishes earth and environmental science
titles in the United Kingdom; and the Company's joint venture
partner's 30% minority interest in Protocols, which publishes
life science continuity products, for purchase prices aggregating
$8.3 million. The excess of cost over the fair value of the
tangible assets acquired amounted to approximately $6.9 million,
of which $.5 million related to acquired publication rights, $.3
million related to noncompete agreements, and $6.1 million
represented goodwill and other intangibles which are being
amortized over 15 years.
These acquisitions have been accounted for by the purchase
method, and the accompanying financial statements include their
results of operations since their respective dates of
acquisition. The pro forma effects on the results of operations
for these acquisitions were not material.
Divested and Restructured Operations
In fiscal 1994, the Company divested its Canadian high school
and Australian primary school and certain agency lines for
aggregate proceeds of $9.2 million, resulting in a gain of $1.8
million, or $1.3 million after taxes. In addition, in a cost
saving initiative, the Company restructured and consolidated
certain distribution and information technology support functions
which resulted in an unusual charge of $1.8 million, or $1.1
million after taxes. The net effect of the divestitures and
restructurings amounted to an after-tax gain of $.2 million, or
$.03 per share, in fiscal 1994.
<PAGE>
Inventories
Inventories at April 30 were as follows:
Dollars in thousands 1995 1994
Finished Goods $ 36,467 $31,536
Work-in-Process 5,762 6,795
Paper, Cloth and Other 2,769 1,539
44,998 39,870
LIFO Reserve (3,463) (2,589)
Total $ 41,535 $37,281
Domestic book inventories aggregating $29.0 and $25.6
million at April 30, 1995 and 1994, respectively, are stated at
cost or market, whichever is lower, using the last-in, first-out
method. All other inventories are stated at cost or market,
whichever is lower, using the first-in, first-out method.
Product Development Assets
Product development assets consisted of the following at April 30:
Dollars in thousands 1995 1994
Composition Costs $ 16,685 $ 13,796
Royalty Advances 7,824 6,637
Total $ 24,509 $ 20,433
Composition costs are net of accumulated amortization of $23,014
in 1995 and $21,654 in 1994.
Property and Equipment
Property and equipment consisted of the following at April 30:
Dollars in thousands 1995 1994
Furniture and Equipment $ 42,974 $ 36,642
Leasehold Improvements 11,382 9,877
54,356 $ 46,519
Accumulated Depreciation (33,112) (26,896)
Total $ 21,244 $ 19,623
Intangible Assets
Intangible assets are stated at cost, net of
accumulated amortization, and consisted of the
following at April 30:
Dollars in thousands 1995 1994
Goodwill and Other Intantibles $ 43,273 $ 38,773
Acquired Publication Rights 9,037 3,537
Noncompete Agreements 1,041 1,391
Total $ 53,351 $ 43,701
Other Accrued Liabilities
Included in other accrued liabilities is accrued compensation
of approximately $13.3 and $12.1 million for 1995 and 1994,
respectively.
<PAGE>
Income Taxes
The provision for income taxes was as follows:
Dollars in thousands 1995 1994 1993
Currently Payable
Federal $ 1,184 $ 1,471 $ 708
Foreign 3,675 4,772 2,943
State and local 314 115 515
Total Current Provision 5,173 6,358 4,166
Deferred Provision
Federal 1,716 (174) 59
Foreign 451 (1,277) (1,372)
State and Local 142 42 _
Total Deferred Provision
(Benefit) 2,309 (1,409) (1,313)
Total Provision $ 7,482 $ 4,949 $ 2,853
The Company's effective income tax rate as a percent of pretax
income differed from the U.S. federal statutory rate as shown
below:
1995 1994 1993
U.S. Federal Statutory Rate 35.0% 35.0% 34.0%
State and Local Income Taxes
Net of Federal Income Tax Benefit .8 .4 3.2
Tax Benefit Derived from FSC Income (6.1) (4.8) (6.1)
Foreign Source Earnings Taxed at
Other than U.S. Statutory Rate (1.0) (2.1) (5.6)
Nondeductible Amortization
of Intangibles 1.1 1.7 2.6
Other-Net (.8) (1.2) (1.1)
Effective Income Tax Rate 29.0% 29.0% 27.0%
Deferred taxes result from timing differences in the
recognition of revenue and expense for tax and financial
reporting purposes. The components of the provision for deferred
taxes were as follows:
Dollars in thousands 1995 1994 1993
Depreciation and Amortization $1,451 $6 $(251)
Accrued Expenses 1,197 715 (921)
Circulation Costs 1,614 (1,800) 1,177
Provision for Sales Returns
and Doubtful Accounts (255) 547 (779)
Inventory (1,150) 1,076 69
Retirement Benefits (224) 116 (615)
Alternative Minimum Tax Credit
and Other Carryforwards (722) (1,770) 1,129
Tax Law Rate Change _ (470) _
Other-Net 398 171 (1,122)
Total Deferred Provision (Benefit) $2,309 $(1,409) $(1,313)
<PAGE>
The significant components of deferred tax assets and liabilities
were as follows:
1995 1994
Dollars in thousands Current Long-Term Current Long-Term
Deferred Tax Assets
Reserve for sales returns
and doubtful accounts $5,603 $ _ $5,455 $ _
Circulation and other costs
capitalized for taxes _ 3,624 _ 4,865
Retirement and post-
employment benefits _ 2,510 _ 2,337
Alternative minimum
tax credit and other
carryforwards 1,315 _ 827 _
Accrued compensation 1,592 2,005 _
Accrued liabilities and other 213 1,568
Total Deferred Tax Assets 8,723 6,134 9,855 7,202
Deferred Tax Liabilities
Depreciation and amortization _ (6,954) _ (5,487)
Divested operations _ (2,156) _ (2,400)
Long-term liabilities and other (719) (1,905) (609) (3,407)
Total Deferred Tax liabilities (719) (11,015) (609) (11,294)
Net Deferred Tax Asset
(Liability) $8,004 $(4,881) $9,246 $(4,092)
The Company has filed amended U.S. federal income tax
returns for prior years primarily related to timing differences
and resulting in potential refund claims, which are subject to
Internal Revenue Service approval.
In general, the Company plans to continue to invest the
undistributed earnings of its foreign subsidiaries in those
businesses and therefore, no provision is made for taxes which
would be payable if such earnings were distributed. At April 30,
1995, the undistributed earnings of foreign subsidiaries
approximated $22.4 million and, if remitted currently, would
result in additional taxes approximating $1.5 million.
Notes Payable and Debt
Long-term debt consisted of the following at April 30:
Dollars in thousands 1995 1994
10.31% unsecured notes due
Through July 1998 $ _ $ 32,000
Less current maturities _ (6,000)
Long-term debt $ _ $ 26,000
In fiscal 1995, the Company prepaid the remaining $26
million of the 10.31% notes outstanding. Although the Company
incurred prepayment costs of $1.6 million, which is included in
interest income and other, the Company benefits by eliminating
the negative interest rate spread between the higher interest
rate on the debt retired compared with the current interest rates
being earned on short-term investments. Also included in
interest income and other is a gain of $1.5 million related to
the sale of shares of Nippon Wilson Learning which were received
in connection with the sale of the Company's training business in
fiscal 1991.
<PAGE>
The Company has a new revolving credit agreement with three
banks providing a line of credit of $50 million until March 30,
2000. The Company has the option of borrowing Eurodollars at a
rate based on the London Interbank Offered Rate (LIBOR) or
dollars at the banks' prime rate or at a rate based on the
current certificate of deposit rate. A facility fee ranging from
.125% to .25% depending on certain coverage ratios is charged on
the total commitment. In the event of a change of control,
as defined, the banks have the option to terminate the agreement
and require repayment of any amounts outstanding. The Company and
its subsidiaries also have other short term lines of credit
aggregating $51 million at various interest rates. Information
relating to short-term lines of credit follows:
Dollars in thousands 1995 1994 1993
End of Year
Amount outstanding $ 621 $ 79 $ 97
Weighted average interest rate 8.5% 7.3% 10.0%
During the Year
Maximum amount outstanding $ 1,351 $ 7,390 $ 960
Average amount outstanding $ 529 $ 1,184 $ 394
Weighted average interest rate 8.7% 7.0% 9.6%
The Company's revolving credit agreement contains certain
restrictive covenants related to minimum net worth, funded debt
levels, financial ratios, restricted payments, including a
cumulative limitation for dividends paid. Under the most
restrictive covenant, approximately $36 million was available for
the payment of future dividends.
Retirement Plans
The Company and its principal subsidiaries have contributory
and noncontributory retirement plans which cover substantially
all employees. The plans generally provide for employee
retirement between the ages of 60 to 65 and benefits based on
length of service and final average compensation, as defined. In
fiscal 1995, the domestic plan was amended to provide that final
average compensation be based on the highest three consecutive
years ended December 31, 1993. The Company may, but is not
required to, update from time to time the ending date for the
three-year period used to determine final average compensation.
The amendment had the effect of increasing pension expense for
fiscal 1995 by approximately $.2 million. Funds are contributed
as necessary to provide for current service and for a portion of
any unfunded projected benefit obligation. To the extent these
requirements are exceeded by plan assets, a contribution may not
be made in a particular year. Plan assets consist principally of
investments in corporate stocks and bonds and government
obligations.
Pension costs for the defined benefit plans were as follows:
Dollars in thousands 1995 1994 1993
Service Cost $ 2,418 $ 2,095 $ 2,008
Interest Cost on Projected
Benefit Obligation 3,440 3,073 2,978
Return on Assets (2,937) (3,685) (3,584)
Net Amortization and Deferral (1,764) (731) (800)
Net Periodic Pension Expense $ 1,157 $ 752 $ 602
<PAGE>
The net pension expense included above for the international
plans amounted to approximately $1.0 million for 1995, 1994, and
1993, respectively.
The following table sets forth the status of the plans and the
amounts recognized in the Company's consolidated statements of
financial position.
1995 1994
Domestic Int'l Domestic Int'l.
Dollars in thousands Plan Plans Plan Plans
Fair Value of Plan Assets $ 37,340 $15,978 $ 36,083 $14,350
Accumulated Benefit Obligation
Vested Benefits (29,758) (11,579) (26,804) (10,518)
Nonvested Benefits (2,456) (91) (2,183) (76)
(32,214) (11,670) (28,987) (10,594)
Projected Compensation Increases (728) (2,696) (172) (2,738)
Projected Benefit Obligation (32,942) (14,366) (29,159) (13,332)
Funded Status 4,398 1,612 6,924 1,018
Unrecognized Net Asset (3,590) (1,737) (4,189) (1,877)
Unrecognized Prior Service Cost 105 1,456 (270) 1,489
Unrecognized Net Loss (Gain) 362 (2,408) (1,111) (1,954)
Prepaid (Accrued) Pension Cost $ 1,275 $(1,077) $1,354 $(1,324)
The range of assumptions used in 1995 and 1994 were:
1995 1994
Domestic Int'l. Domestic Int'l.
Plan Plans Plan Plans
Discount Rate 7.5% 8.5% 7.5% 8.5%
Expected Long-Term Rate of
Return on Plan Assets 8.0% 7.0-8.0% 8.0% 7.0-8.0%
Rate of Increase in
Compensation Levels -% 5.5-7.0% -% 5.5-7.0%
The Company has agreements with certain officers and senior
management personnel that provide for the payment of
supplemental retirement benefits during each of the 10 years after the
termination of employment. Under certain circumstances, including
a change of control as defined, the payment of such amounts could
be accelerated on a present value basis. The cost of these
benefits is being charged to expense on a present value basis
over the estimated term of employment and amounted to
approximately $.9, $.7 and $.7 million in 1995, 1994 and 1993,
respectively.
The Company provides life insurance and health care
benefits, subject to certain dollar limitations and retiree
contributions, for substantially all of its retired domestic
employees. The cost of such benefits is expensed over the years
that the employees render service and are funded on a pay-as-you-
go, cash basis. The accumulated postretirement benefit
obligation amounted to $.2 million at April 30, 1995 and 1994 and
the amount expensed in fiscal 1995 and prior years was not
material.
<PAGE>
Commitments and Contingencies
The following schedule shows the composition of rent expense
for operating leases:
Dollars in thousands 1995 1994 1993
Minimum Rental $12,202 $11,885 $11,009
Lease Escalation 1,848 1,756 1,156
Less: Sublease Rentals (63) (55) (43)
Total $13,987 $13,586 $12,122
Future minimum payments under operating leases aggregated
$111.1 million at April 30, 1995. Annual payments under these
leases are $14.4, $14.2, $13.2, $12.9 and $12.7 million for
fiscal years 1996 through 2000, respectively. The Company is
guarantor through 1998 of certain lease obligations assumed by
the buyer of the domestic training operations which were divested
in fiscal 1991, aggregating approximately $4.2 million, which is
net of the 50% guarantee provided by the parent of the buyer.
The Company is involved in routine litigation in the ordinary
course of its business. In the opinion of management, the
ultimate resolution of all pending litigation will not have a
material effect upon the financial condition or results of
operations of the Company.
Segment Information
The Company operates in one business segment, namely
publishing, and develops, publishes and markets products in print
and electronic formats including textbooks, professional and
reference works, consumer books, and periodicals including
journals and other subscription-based products, for the
educational, scientific, technical, professional and trade
markets around the world.
The Company's international operations are located in Europe,
Canada, Australia and Asia. The following table presents
revenues, operating income and identifiable assets for the
domestic and international operations.
Dollars in thousands 1995 1994 1993
Revenues
Domestic $258,464 $229,061 $208,787
International 102,907 89,235 87,170
Interarea transfers (30,280) (24,007) (23,063)
Total $331,091 $294,289 $272,894
Operating Income(1)
Domestic $15,242 $ 8,957 $ 8,898
International 11,637 9,926 4,396
Interarea profit
elimination _ _ (278)
Total $26,879 $18,883 $13,016
Identifiable Assets
Domestic $166,478 $144,624 $127,490
International 46,593 41,859 46,788
Corporate 34,410 57,457 46,315
Total $247,481 $243,940 $220,593
(1) Includes pretax unusual items gain of $1,819 in
international operations and a pretax unusual items charge of
$1,768 in domestic operations for 1994.
<PAGE>
Transfers between geographic areas are generally made at a fixed
discount from list price and principally represent sales from the
United States to the Company's international operations. Export
sales from the United States to unaffiliated international
customers amounted to approximately $41.2, $33.9 and $28.2
million in 1995, 1994 and 1993, respectively. The pretax income
for consolidated international operations was approximately
$11.6, $10.0 and $3.8 million in 1995, 1994 and 1993,
respectively.
Included in operating and administrative expenses were net
foreign exchange gains (losses) of approximately $(.2), $.2 and
$.1 million in 1995, 1994 and 1993, respectively.
Changes in the cumulative translation adjustment account
were as follows:
Dollars in thousands 1995 1994
Balance, May 1 $ (3,805) $ (2,734)
Aggregate Translation Adjustments
for the Year 1,394 (1,071)
Balance, April 30 $ (2,411) $ (3,805)
Stock Option and Other Plans
Options were granted on the Company's Class A Common stock
and are exercisable, in part or in full, over a maximum period of
10 years from the date of grant under various stock option plans.
Outstanding options were granted at prices not less than 100% of
the fair market value of the stock at the date the options were
granted. Under certain circumstances relating to a change of
control, as defined, the right to exercise options outstanding
could be accelerated.
Option activity under existing plans was as follows:
1995 1994
Outstanding at Beginning of Year 439,096 587,936
Granted 142,900 28,076
Exercised (34,701) (161,114)
Canceled (12,276) (15,802)
Outstanding at End of Year 535,019 439,096
Exercisable at End of Year 297,877 272,382
Available for Future Grant 678,284 808,908
Price Range of Options Exercised $14.00 to 41.38 $14.00 to 24.50
Price Range of Options
Outstanding $13.50 to 52.50 $13.50 to 30.00
Under the terms of the Company's executive long-term
incentive plans, upon the achievement of certain three-year
financial performance based targets, awards will be payable in
cash and/or restricted shares of the Company's Class A Common
stock based on the market value at the end of the plan cycle. The
restricted shares vest equally as to 50% on the first and second
anniversary date after the date of the award. The amount charged
to expense for such plans was approximately $.8, $.7 and $.8
million in 1995, 1994 and 1993, respectively. Restricted shares
issued under the plans amounted to 5,542, 16,820 and 10,966 in
1995, 1994 and 1993, respectively.
<PAGE>
In fiscal 1995, the Company granted a total of 45,000
restricted shares of the Company's Class A Common stock to four
key executive officers in connection with their employment
agreements. The restricted shares vest one-third at the end of
the third, fourth and fifth years, respectively, following the
date of the grant. Under certain circumstances relating to a change
of control or termination, as defined, the restrictions would lapse
and shares would vest earlier. Compensation expense aggregating $1.9
million will be charged to earnings ratably over five years, or
sooner if vesting is accelerated, from the date of grant, and
amounted to $.3 million in fiscal 1995. A second grant of an
additional 45,000 restricted shares with similar terms and
conditions was made subsequent to the fiscal 1995 year-end.
Under the terms of the Company's Director Stock Plan, each
member of the Board of Directors who is not an employee of the
Company is awarded Class A Common stock equal to 50% of the board
member's cash compensation, based on the market value of the
stock on the date of the shareholders' meeting. The compensation
cost related to this plan and charged to expense amounted to
approximately $.2, $.2 and $.1 million in 1995, 1994 and 1993,
respectively. Under this plan 4,331, 6,846 and 4,068 shares were
issued in 1995, 1994 and 1993, respectively.
Capital Stock and Changes in Capital Accounts
Preferred stock consists of 2,000,000 authorized shares with
$1 par value. To date, no preferred shares have been issued. The
Common stock consists of 10,000,000 authorized shares of Class A
Common, $1 par value, and 4,000,000 authorized shares of Class B
Common, $1 par value.
Each share of the Company's Class B Common stock is convertible
into one share of Class A Common stock. The holders of Class A
stock are entitled to elect 30% of the entire Board of Directors
and the holders of Class B stock are entitled to elect the
remainder. On all other matters, each share of Class A stock is
entitled to one-tenth of one vote and each share of Class B stock
is entitled to one vote.
In fiscal 1995, the Board of Directors declared a 2-for-1 stock
split of its Class A and Class B Common stock to shareholders of
record as of July 6, 1994.
<PAGE>
Changes in selected capital accounts were as follows:
Additional
Common Stock Paid-In Treasury
Dollars in thousands Class A Class B Capital Stock
Balance
May 1, 1992 $3,907 $1,053 $32,694 $(31,280)
Director Stock Plan Issuance _ _ 36 63
Executive Long-Term
Incentive Plan Issuance _ _ 71 150
Proceeds from Exercise
of Stock Options 30 1 1,218 (92)
Other (1) (3) 83 _
Retroactive effect of
2 for 1 stock split $3,937 $1,051 $(4,988) _
Balance
April 30, 1993 $7,873 $2,102 $29,114 $(31,159)
Director Stock Plan Issuance _ _ 64 94
Executive Long-Term
Incentive Plan Issuance _ _ 174 230
Proceeds from Exercise
of Stock Options 161 _ 2,852 (198)
Other 11 (11) 804 _
Balance
April 30, 1994 $8,045 $2,091 $33,008 $(31,033)
Restricted Share Issuance _ _ 1,266 618
Director Stock Plan Issuance _ _ 124 59
Executive Long-Term
Incentive Plan Issuance _ _ 162 76
Proceeds from Exercise
of Stock Options 35 _ 601 (46)
Purchase of Treasury Shares _ _ _ (212)
Other 7 (7) 455 _
Balance
April 30, 1995 $8,087 $2,084 $35,616 $(30,538)
Management's Discussion and Analysis of
Financial Condition and Results of
Operations
Results of Operations:
Fiscal 1995 Compared to Fiscal 1994
In 1995, the Company continued to grow its core businesses
through a combination of internal development and acquisitions,
while at the same time improving its profitability and return on
investment.
The Company invested $12.3 million during the year to
acquire: the publishing business of Executive Enterprises, Inc.,
consisting of books, journals and newsletters for environmental
management, accounting, law and human resource professionals;
ValuSource, which produces specialized business valuation
software for accountants, entrepreneurs and corporations; the
college engineering list of Houghton Mifflin; the book publishing
program of Oliver Wight Publications, Inc., consisting of general
management and manufacturing/quality titles; and the OS/2
computer-book list of Van Nostrand Reinhold, Inc.
Revenues for the year advanced 13% to $331.1 million led by
the domestic professional and trade division, where revenues
increased 20% based on the strength of the business and computer
book lines. The domestic scientific, technical and medical
division registered a 10% improvement attributable to increased
journal revenues. The domestic college division increased its
market share and outperformed the industry as a whole in what was
considered a difficult market environment. International
revenues reflected significant increases over the prior year led
by the Company's European and Asian operations.
<PAGE>
Cost of sales as a percentage of revenues was 34.2% in 1995
compared with 33.9% in the prior year primarily reflecting
increased paper costs.
Operating and administrative expenses as a percentage of
revenues declined to 56.5% in 1995 from 57.8% as the rate of
growth in expenses was contained at less than the revenue growth
rate. This improvement was offset to some degree by unfavorable
foreign exchange rates.
Operating income increased 43% over the prior year to $26.9
million primarily due to the effects of the higher revenue base
coupled with a cost contained infrastructure.
Interest expense declined by $.8 million due to the
repayment of long-term debt. The effective tax rate was 29% in
both years due to the benefits derived from lower taxed foreign
source earnings.
Net income increased 51% over 1994 due to the operating income
gains and lower interest expense.
<PAGE>
Results of Operations:
Fiscal 1994 Compared to Fiscal 1993
The Company acquired several publishing businesses during the
year, for purchase prices aggregating $8.3 million including: the
professional computer book line of QED Information Services; the
Belhaven Press, which publishes earth and environmental science
titles in the United Kingdom; and the Protocols joint venture
partner's 30% minority interest, thereby giving the Company total
ownership of this publisher of life science continuity products.
During fiscal 1994, the Company divested its Canadian high
school and Australian primary school and certain agency lines for
$9.2 million in aggregate proceeds, which resulted in a net gain
after taxes of $1.3 million. In addition, in a cost-saving
initiative, certain distribution and information technology
support functions were restructured and consolidated, resulting
in an after tax charge of $1.1 million. The net effect of the
above amounted to an after-tax gain of $.2 million, or $.03 per
share.
Revenues of $294.3 million for 1994 increased 8% over the
prior year. The domestic college division achieved revenue
growth of 13% over the prior year by increasing market share
through the publication of new and revised editions in its key
disciplines, as well as through sales of a stronger backlist.
The domestic professional and trade division registered a 13%
increase paced by increased sales and marketing efforts both here
and abroad, expansion of its continuity product base in
accounting and architecture books, acquisition of a computer book
line, and the publication of tax guides resulting from the new
tax law, as well as new business and investment books. The domestic
scientific, technical and medical division posted an 8% increase in revenues
attributable to higher journal revenues. Revenue improvement was
also noteworthy in our Asian operations due to expanded marketing
efforts in that region, and in the United Kingdom due to higher
journal revenues.
Cost of sales as a percentage of revenues was 33.9% in 1994,
approximately the same as the prior year.
Operating and administrative expenses as a percentage of
revenues declined to 57.8% in 1994 from 59.5% due mainly to cost
containment measures as well as favorable foreign exchange
effects.
Operating income of $18.9 million was approximately 45%
higher than the prior year, as the revenue growth mentioned above
more than compensated for the planned increases in the expense
structure.
<PAGE>
Interest expense declined $.4 million due to repayments on
long term debt. Interest income increased by $.3 million from the
prior year due to higher cash balances, offset to some degree by
lower rates.
The effective tax rate was 29% in 1994, compared with 27% in
1993. The increase is primarily due to higher domestic tax rates
and a lower proportion of foreign source income in 1994, which is
taxed at rates lower than the U.S. federal statutory rate.
Net income increased 57% over the prior year, as operating
income gains and increases in net interest income more than
offset a slightly higher effective tax rate.
Effective as of the beginning of fiscal 1994, the Company,
adopted SFAS No. 106 - Employer's Accounting for Postretirement
Benefits Other Than Pensions, SFAS No. 109 - Accounting for
Income Taxes and SFAS No. 112 - Employer's Accounting for
Postemployment Benefits. The net cumulative effect of adopting
these new standards and the ongoing effect on fiscal 1994 results
of operations was not material.
Liquidity and Capital Resources
The Company's cash and cash equivalents balance was $34.4
million at the end of fiscal 1995, compared with $57.5 at the end
of the prior year. The decrease is primarily attributable to the
prepayment of the outstanding balance of long-term debt, which
benefits the Company by eliminating the negative interest rate
spread between the higher interest rate on the debt retired
compared with the current interest rates being earned on short-
term investments. Cash provided by operating activities was $51.9
million in fiscal 1995, an increase of $12.2 million over the
prior year.
The Company's operating cash flow is strongly affected by the
seasonality of its domestic college business and receipts from
its journal subscriptions. Receipts from journal subscriptions
occur primarily during November and December from companies
commonly referred to as independent subscription agents. These
companies facilitate the journal ordering process by
consolidating the subscription orders/billings of each
subscriber. Monies are collected in advance from subscribers by
the subscription agents and are remitted to the journal
publishers, including the Company, generally prior to the
commencement of the subscription. Remittances are highly
dependent upon the financial position and liquidity of such
companies.
Sales to the domestic college market tend to be concentrated in
June through August, and again in November through January. Cash
disbursements for inventory are relatively large during the
spring in anticipation of these college sales. The Company
normally requires increased funds for working capital from the
beginning of the fiscal year into September. Subject to
variations that may be caused by fluctuations in inventory
accumulation or in patterns of customer payments, the Company's
normal operating cash flow is not expected to vary materially in
the near term.
To finance its short-term seasonal working capital requirements
and its growth opportunities, the Company has adequate cash and
cash equivalents available, as well as both domestic and foreign
shortterm lines of credit, as more fully described in the note to
the consolidated financial statements entitled "Notes Payable and
Debt".
<PAGE>
The capital expenditures of the Company consist primarily of
investments in product development and property and equipment.
Capital expenditures for fiscal 1996 are expected to increase
approximately 25% over 1995, primarily representing increased
investments in product development, including electronic media
products, and computer equipment upgrades to support the higher
volume of business to ensure efficient quality-driven customer
service. These investments will be funded primarily from internal
cash generation or from the liquidation of cash equivalents.
Effects of Inflation and Cost Increases
Although the impact of inflation is somewhat minimized, as
the business does not require a high level of investment in
property and equipment, the Company does experience continuing
cost increases reflecting, in part, general inflationary factors.
Fiscal 1995 witnessed an increase in paper prices ranging from
10% to 100% depending on the grade, after years of a stable to
decreasing price environment. Although results for fiscal 1995
were slightly affected, it is anticipated that these increases
will have a greater impact on fiscal 1996 results. To mitigate
the effects of paper and other cost increases, the Company has
taken a number of initiatives including various steps to lower
overall production and manufacturing costs including substitution
of paper grades. In addition, selling prices have been
selectively increased as competitive conditions permit. The
Company anticipates that it will be able to continue this
approach in the future.
<PAGE>
Results by Quarter (Unaudited)
John Wiley & Sons, Inc. and Subsidiaries
Dollars in thousands except per share data 1995 1994
Revenues
First quarter $80,787 $74,608
Second quarter 78,558 67,682
Third quarter 91,930 79,480
Fourth quarter 79,816 72,519
Fiscal year $331,091 $ 294,289
Operating Income (Loss)
First quarter $10,450 $8,951
Second quarter(1) 5,652 5,335
Third quarter(2) 10,240 5,377
Fourth quarter 537 (780)
Fiscal year $26,879 $18,883
Net Income
First quarter $6,067 $5,051
Second quarter(1) 3,082 2,796
Third quarter(2) 6,530 3,503
Fourth quarter 2,632 767
Fiscal year $18,311 $ 12,117
Income Per Share
Primary
First quarter $ .75 $ .65
Second quarter(1) .38 .36
Third quarter(2) .80 .44
Fourth quarter .32 .10
Fiscal year $2.25 $ 1.52
Fully Diluted
First quarter $.75 $ .65
Second quarter(1) .38 .35
Third quarter (2) .80 .44
Fourth quarter .32 .10
Fiscal year $2.23 $ 1.51
(1) Includes pretax unusual items gain of $2,075, or $1,285 after
taxes, equal to $.16 per share in 1994.
(2) Includes pretax unusual items charge of $1,901, or $1,085
after taxes, equal to $.13 per share in 1994.
<PAGE>
Effective July 12, 1995, the Company's Class A and Class B
shares are listed on the New York Stock Exchange under the symbols
JW.A and JW.B, respectively. Prior to that, the Company's Class A
shares were listed on the Nasdaq Stock Market's National Market
under the symbol WILLA; Class B shares were listed on the Nasdaq
Stock Market's SmallCap Market under the symbol WILLB. Dividends
per share and the market price range by fiscal quarter for the past two
fiscal years were as follows:
Class A Common Stock Class B Common Stock
Divi- Market Price Divi- Market Price
dends High Low dends High Low
1995
First quarter $.155 $43.25 $41.00 $.1375 $42.50 $41.00
Second quarter .155 44.25 40.25 .1375 43.50 40.75
Third quarter .155 51.50 42.75 .1375 51.25 42.75
Fourth quarter .155 56.00 50.25 .1375 55.50 50.50
1994
First quarter $.1375 $24.13 $21.00 $.1225 $24.63 $23.00
Second quarter .1375 31.25 21.38 .1225 31.25 24.00
Third quarter .1375 38.00 31.50 .1225 37.00 31.25
Fourth quarter .1375 46.00 37.50 .1225 46.50 37.00
As of April 30, 1995, the approximate number of holders of
the Company's Class A and Class B Common Stock were 1,460 and 400,
respectively, based on the holders of record and other information
available to the Company.
The Company's revolving credit agreements contain certain restrictive
covenants related to the payment of dividends. Under the most
restrictive covenant, approximately $36 million was available for the
payment of future dividends. Subject to the foregoing, the Board of
Directors considers quarterly the payment of cash dividends based
upon its review of earnings, the financial position of the Company
and other relevant factors. In fiscal 1995, the Board of Directors
approved a 2 for 1 stock split.
<PAGE>
Selected Financial Data
John Wiley & Sons, Inc. and Subsidiaries
Dollars in thousands except per share data
For the years ended April 30
_________________________________________________
1995 1994 1993 1992 1991
Revenues $331,091 $294,289 $272,894 $248,151 $236,859
Income From Continuing
Operations(1) 18,311 12,117 7,718 3,576 3,567
Net Gain from Discontinued
Operation _ _ _ _ 484
Extraordinary Item _ _ _ (495) _
Net Income 18,311 12,117 7,718 3,081 4,051
Working Capital 11,241 35,059 31,804 30,800 70,273
Total Assets 247,481 243,940 220,593 213,744 251,318
Long-Term Debt _ 26,000 32,000 36,000 40,000
Shareholders' Equity 98,832 82,330 71,276 69,552 94,905
___________________________________________________________________________
Per Share Data
Income From Continuing Operations(1)
Primary 2.25 1.52 1.00 .46 .41
Fully diluted 2.23 1.51 .99 .46 .41
Net Income
Primary 2.25 1.52 1.00 .39 .46
Fully diluted 2.23 1.51 .99 .39 .46
Cash Dividends
Class A Common .62 .55 .55 .55 .55
Class B Common .55 .49 .49 .49 .49
Book Value-End of Year 12.42 10.46 9.26 9.12 10.79
___________________________________________________________________________
(1) Includes after-tax unusual items gain of $324, or $.04 per share, in 1991.
<PAGE>
Schedule II
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED APRIL 30, 1995, 1994 AND 1993
(Dollars in Thousands)
Balance at Additions Deductions Balance
Beginning Charged to From at End of
Description of Period Income Reserves Period
Year Ended April 30, 1995
Allowance for sales returns(1) $15,558 $16,110 $14,149 $17,519
Allowance for doubtful accounts $ 4,385 $ 4,014 $ 3,285(2) $ 5,114
Year Ended April 30, 1994
Allowance for sales returns(1) $13,424 $13,470 $11,336 $15,558
Allowance for doubtful accounts $ 3,409 $ 4,081 $ 3,105(2) $ 4,385
Year Ended April 30, 1993
Allowance for sales returns(1) $11,969 $12,963 $11,508 $13,424
Allowance for doubtful accounts $ 2,512 $ 3,603 $ 2,706(2) $ 3,409
________________________________________
(1) Allowance for sales returns represents anticipated returns
and royalty costs.
(2) Accounts written off, less recoveries.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
JOHN WILEY & SONS, INC.
(Company)
By: /s/ Charles R. Ellis
Charles R. Ellis
President and Chief Executive Officer
By: /s/ Robert D. Wilder
Robert D. Wilder
Senior Vice President and
Chief Financial Officer
By: /s/ Peter W. Clifford
Peter W. Clifford
Vice President, Finance and
Controller and Chief Accounting Officer
Dated: June 22, 1995
<PAGE>
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons constituting all the directors of the Company on June 22,
1995.
/s/ Franklin E. Agnew /s/ Chester O. Macey
Franklin E. Agnew Chester O. Macey
/s/ Warren J. Baker /s/ William R. Sutherland
Warren J. Baker William R. Sutherland
/s/ Charles R. Ellis /s/ Thomas M. Taylor
Charles R. Ellis Thomas M. Taylor
/s/ H. Allen Fernald /s/ Leo J. Thomas
H. Allen Fernald Leo J. Thomas
/s/ Gary J. Fernandes /s/ Bradford Wiley II
Gary J. Fernandes Bradford Wiley II
/s/ Larry D. Franklin /s/ Deborah E. Wiley
Larry D. Franklin Deborah E. Wiley
/s/ John S. Herrington /s/ Peter Booth Wiley
John S. Herington Peter Booth Wiley
/s/ Nils A. Kindwall
Nils A. Kindwall
<PAGE>
Exhibit 22
SUBSIDIARIES OF JOHN WILEY & SONS, INC.(1)
Jurisdiction Percent
In Which Of Voting
Incorporated Control
Wiley Europe Limited England 100%
Wiley Heyden Limited England 100% (2)
John Wiley & Sons Limited England 100% (2)
Chancery Law Publishing Limited England 100% (2)
Jacaranda Wiley Limited Australia 100%
Jacaranda Wiley (H.K.) Limited Hong Kong 100%
Wiley Intersciences, Inc. New York 100%
John Wiley & Sons International Rights, Inc. Delaware 100%
Wiley-Liss, Inc. Delaware 100%
Wiley Publishing Services, Inc. Delaware 100%
Wiley Subscription Services, Inc. Delaware 100%
John Wiley & Sons Canada Limited Canada 100%
Wiley Foreign Sales Corporation Barbados 100%
John Wiley & Sons, (SEA) Pte Ltd. Singapore 100%
Scripta Technica, Inc. District of Columbia 100%
_______________________________________
(1) The name of other subsidaries which would not constitute a
significant subsidary in the aggregate have been omitted.
(2) Wholly-owned subsidiary of Wiley Europe Limited.
Exhibit 3.2
BY-LAWS
JOHN WILEY & SONS, INC.
July 1994
<PAGE>
By-Laws
As Amended July 1994
John Wiley & Sons, Inc.
Article I
Offices
Section 1. Offices. The principle office of the Corporation
shall be in the City, County and State of New York. The
Corporation may also have offices and places of business at
such other places within or without the State of New York as
the Board of Directors may from time to time determine or
the business of the Corporation may require.
Article II
Shareholders
Section 1. Annual Meeting. The annual meeting of the
shareholders of the Corporation shall be held on the third
Thursday of September, in each year or, if a legal holiday,
on the next business day, or (whether or not a legal
holiday) on such other day in September as may be fixed by
resolution of the Board of Directors or by the chairman, at
which the shareholders shall elect a Board of Directors and
transact such other business as may properly come before the
meeting.
Section 2. Special Meeting. Special meetings of the
shareholders for any purpose or purposes, unless otherwise
prescribed by statute, may be called by resolution of the
Board of Directors or by the chairman, and shall be called
by the chairman or by the president at the request in
writing of a majority of the Board of Directors. Such
request shall state the purpose of the proposed meeting.
Section 3. Time and Place of Meeting. Meetings of the
shareholders shall be held at such time and place within or
without the State of New York as the Board of Directors may
determine, or as shall be stated in the notices of the
meeting.
Section 4. Notice of Meeting. Written notice of every
meeting of shareholders, stating the purpose or purposes for
which the meeting is called and the place, date and hour of
the meeting, and unless the notice pertains to the annual
meeting, indicating that it is being issued by or at the
direction of the persons calling the meeting, shall be
given, personally or by mail, no less than ten nor more than
fifty days before the date of the meeting, to each
shareholder entitled to vote at such meeting. If mailed,
such notice shall be directed to the shareholder at the
shareholder's address as it appears on the Corporation's
record of shareholders, unless such shareholder shall have
filed with the Secretary of the Corporation a written
request that notices be mailed to some other address, in
which event the notice shall be directed to the shareholder
at such other address. Notice of meeting need not be given
to any shareholder who submits a waiver of notice, signed in
person or by proxy, whether before or after the meeting. The
attendance of any shareholder at a meeting, in person or by
proxy, without protest as to the sufficiency of notice of
such meeting, shall constitute a waiver by such shareholder
of such notice.
Section 5. Quorum. Except as otherwise prescribed by
statute, the holders of a majority of the shares of each
class issued and outstanding and entitled to vote thereat,
present in person or represented by proxy, shall be
requisite to and shall constitute a quorum at all meetings
of the shareholders for the transaction of each item of
business required to be voted on by a class voting as a
class. Except as otherwise provided by statute, the holders
of shares issued and outstanding and entitled to vote
thereat of a majority of the votes accorded to holders of
all shares, present in person or represented by proxy, shall
be requisite to and shall constitute a quorum at all
meetings of the shareholders for the transactions of any
items of business not required to be voted on separately by
a class. If a quorum shall not be present or represented,
the shareholders entitled to vote thereat, present in person
or represented by proxy, shall have power to adjourn the
-1-
<PAGE>
meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present
and represented. At such adjourned meetings at which a
quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting
as originally noticed.
Section 6. Voting. Except as otherwise prescribed by
statute, each shareholder of record having the right to
vote, in respect of each share of stock standing in that
shareholder's name on the books of the Corporation, shall be
entitled at every meeting of the shareholders of the
Corporation to such voting rights as are specified in the
Certificate of Incorporation of the Corporation. Such voting
rights may be exercised in person or by proxy. All elections
shall be determined by a plurality of the class of shares
voting thereon, and, except as otherwise prescribed by
statute, all other matters shall be determined by vote of
the majority of votes cast by shareholders present or
represented at such meeting and voting on such question.
Section 7. Introduction of Business at an Annual Meeting of
Shareholders. Except as otherwise provided by law, at any
meeting of shareholders only such business shall be
conducted as shall have been properly brought before the
meeting. In order to be properly brought before the meeting,
such business must have either been (a) specified in the
written notice of the meeting (or any supplement thereto)
given to shareholders of record on the record date for such
meeting by or at the direction of the Board of Directors,
(b) brought before the meeting at the direction of the Board
of Directors or the presiding officer of the meeting, or (c)
specified in a written notice given by or on behalf of a
shareholder of record on the record date for such meeting
entitled to vote thereat or a duly authorized proxy for such
shareholder, provided that such shareholder continues to be
a shareholder of record at the time of such meeting in
accordance with all of the following requirements. A notice
referred to in clause (c) hereof must be delivered
personally, or mailed to and received at, the principal
executive office of the Corporation, addressed to the
attention of the secretary, not less than 120 calendar days
in advance of the date in the then current year
corresponding to the date the Corporation's proxy statement
was released to shareholders in connection with the previous
year's annual meeting of shareholders, except that if the
date of the annual meeting has been changed by more than 30
calendar days from any date contemplated at the time of the
previous year's proxy statement, the notice must be received
by the Corporation a reasonable time before such new date
for the annual meeting of shareholders. Such notice referred
to in clause (c) hereof shall set forth (i) a full
description of each such item of business proposed to be
brought before the meeting, (ii) the name and address of the
person proposing to bring such business before the meeting,
(iii) the class and number of shares held of record, held
beneficially and represented by proxy by such person as of
the record date for the meeting (if such date has then been
made publicly available) and as of the date of such notice,
(iv) if any item of such business involves a nomination for
director, all information regarding each such nominee that
would be required to be set forth in a definitive proxy
statement filed with the Securities and Exchange Commission
(the "SEC") pursuant to Section 14 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or
any successor thereto, and the written consent of each such
nominee to serve if elected, and (v) if so requested by the
Corporation, all other information that would be required to
be filed with the SEC if, with respect to the business
proposed to be brought before the meeting, the person
proposing such business was a participant in a solicitation
subject to Section 14 of the Exchange Act or any successor
thereto. No business shall be brought before any meeting of
shareholders of the Corporation otherwise than as provided
in this Section. Notwithstanding the foregoing provision,
unless otherwise required by law, the Board of Directors
shall not be obligated to include information as to any
nominee for director in any proxy statement or other
communication sent to shareholders. The presiding officer of
the meeting may, if the facts warrant, determine and declare
to the meeting that any proposed item of business was not
brought before the meeting in accordance with the foregoing
procedures, and if he or she should so determine, he or she
shall so declare at the meeting and the defective item of
business shall be disregarded.
-2-
<PAGE>
Article III
Board of Directors
Section 1. Number of Directors; Election; Tenure. The
number of directors which shall constitute the Board of
Directors shall not be less than ten (10) nor more than
twenty (20) members. Within these limits the number of
directors constituting the Board shall be determined from
time to time by resolution of the Board of Directors, or by
the shareholders at an annual or special meeting. Except as
otherwise hereinafter provided in the case of vacancies, the
directors shall be elected by the shareholders at the annual
meeting. The holders of Class A Common Stock voting as a
separate class shall be entitled to elect that number of
directors which constitutes 30% of the authorized number of
members of the Board of Directors and, if 30% of the
authorized number of directors is not a whole number, the
holders of Class A Common Stock shall be entitled to elect
the nearest higher whole number of directors that is a least
30% of such membership. Holders of Class B Common Stock
voting as a separate class shall be entitled to elect the
remaining directors. Each director shall hold office until
the election and qualification of his or her successor.
Section 2. Qualification of Directors. A director must be
at least 18 years of age and not have attained age 70 on the
first day of the month in which the annual meeting occurs.
Notwithstanding the foregoing, the Board of Directors may in
its discretion vote to nominate for election a person who by
reason of having attained age 70 would otherwise cease to be
qualified under this provision, if it deems that special
circumstances justify such action.
Section 3. Nomination of Directors. Nominations for
election to the Board of Directors of the Corporation at a
meeting of the shareholders may be made only by the Board,
or on behalf of the Board by any nominating committee
appointed by the Board, or by any shareholder of the
Corporation entitled to vote for the election of directors
of the class for which such nomination is submitted who
complies with the notice procedures set forth in the By
laws.
Section 4. Director Emeritus. The Board of Directors may
designate one or more former directors as director emeritus,
which position shall be entirely honorary and shall not
confer upon the director emeritus any of the powers, duties,
rights or liabilities of a director.
Section 5. Vacancies. If any vacancy occurs in the Board
of Directors by reason of the death, resignation,
retirement, or removal from office of any director with or
without cause, or if any new directorship is created, such
vacancy shall be filled by the holders of the class of stock
entitled to elect a director to fill such a vacancy or by a
majority of the directors then in office of the class in
which such a vacancy occurs, though less than a quorum, all
in manner prescribed by the Certificate of Incorporation of
the Corporation.
Section 6. Regular Meetings of the Board. The first regular
meeting of each newly elected Board of Directors shall be
held as soon as practicable after the annual meeting of the
shareholders for the purpose of the election or appointment
of officers and the transaction of other business. Other
regular meetings of the Board of Directors may be held
without notice at such time and place as shall, from time to
time, be determined by the Board.
Section 7. Special Meetings; Notice. Special meetings
of the Board of Directors may be called by the Chairman of
the Board or by the president at any time, and shall be
called
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by the chairman, president, or secretary at the written
request of two members of the Board. Notice of a special
meeting shall be given to each director in writing either
personally, by next day courier delivery service, by
telegram at least two days prior to the meeting, or by mail
at least four days prior to the meeting. If mailed, such
notice shall be deemed given when deposited properly stamped
and addressed in the United States mail. If telegraphed or
by next day delivery service, such notice shall be deemed
given when delivered properly addressed to the telegraph or
courier company. Notice of meeting need not be given to a
director who submits a signed waiver of notice either before
or after the meeting. The attendance of a director at a
meeting without protest as to the sufficiency of notice of
such meeting shall constitute a waiver by such director of
such notice.
Section 8. Quorum. At all meetings of the Board of
Directors, a majority of the entire Board shall be requisite
to and shall constitute a quorum for the transaction of
business. If a quorum shall not be present at any meeting of
the Board of Directors, a majority of those present may
adjourn the meeting from time to time until a quorum shall
be present.
Section 9. Executive and Policy Committee. The Board of
Directors may elect from among its members, by resolution
adopted by a majority of the entire Board of Directors, an
Executive and Policy Committee consisting of four or more
members of the Board (at least one of whom shall be a
director elected by the holders of Class A common shares and
none of whom shall be an employee of the Corporation or any
of its subsidiaries). From among such committee members, the
Board shall elect a chairman of such committee.
Section 10. Duties of Executive and Policy Committee. (a)
During the intervals between meetings of the Board of
Directors, the Executive and Policy Committee shall, subject
to any limitations imposed by law or the Board of Directors,
possess and it may exercise all the powers of the Board of
Directors in the management and direction of the Corporation
in such manner as the Executive and Policy Committee shall
deem best for the interests of the Corporation. (b) The
Executive and Policy Committee shall also have
responsibility, together with the Chairman of the Board, for
review of corporate objectives and strategies and policies
formulated by senior management to attain them. It is
authorized to assist management in developing and refining
such policies as it deems appropriate, to monitor their
implementation, and to evaluate the chief executive
officer's performance in connection therewith. The Executive
and Policy Committee shall monitor and report to the Board
its recommendations and observations in respect of all
matters within its charge and shall also serve as a focal
point for communication between non-committee directors as
their duties relate to the matters described in the
preceding sentence.
Section 11. Other Committees. The Board of Directors may
also elect from among its members, by resolutions adopted by
a majority of the entire Board of Directors, such other
committee or committees as the Board of Directors shall
determine, each such committee to consist of at least three
members of the Board. The Board shall elect a chairman of
each such committee, shall fix the number and elect the
other members thereof, and shall establish the duties and
authority thereof, subject to such limitations as may be
required by law.
Section 12. Committee Vacancies. The Board of Directors
shall fill any vacancies on any committee established under
this Article, with the objective of keeping the membership
of each such committee at the authorized level.
Section 13. Action by Committees. All action by any
committee of the Board of Directors shall be referred to the
Board of Directors at its meeting next succeeding such
action, and shall be subject to revision or alteration by
the Board of Directors, provided that no rights or acts of
third parties shall be affected by any such revision or
alteration. Subject to such applicable resolutions as may be
adopted by the Board, each committee shall fix its own rules
of procedure as deemed appropriate, but in any case, except
as the Board explicitly otherwise provides, the presence of
a majority shall be necessary to constitute a quorum.
Section 14. Action of the Board. All corporate action
taken by the Board of Directors or any committee thereof
shall be taken at a meeting of such Board or committee, as
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<PAGE>
the case may be, except that any action required or
permitted to be taken at a meeting of the Board or any
committee may be taken without a meeting, if all members
of the Board or committee, as the case may be, consent
in writing to such action and the writing or writings
are filed with the minutes of the proceedings of the
Board or committee. Any one or more members of the
Board of Directors or any committee thereof may
participate in a meeting of the Board or such committee
by means of a conference telephone or similar
communications equipment allowing all persons
participating in the meeting to hear each other.
Participation by such means shall constitute presence in
person at such meeting. Except as otherwise provided with
respect to the election of a director or as otherwise
provided by law, the vote of a majority of all directors
present at the time of the vote, voting together as a single
class, if a quorum is present at such time, shall be the act
of the Board or any committee.
Article IV
Officers
Section 1. Officers. The executive officers of the
Corporation shall be a chairman, a president, one or more
vice presidents (one or more of whom may be designated as
executive, senior or other class of vice president or
designated as chief operating officer, chief financial
officer or chief accounting officer), a secretary, and a
treasurer. There may also be such assistant vice presidents,
assistant secretaries, and assistant treasurers as the Board
of Directors may from time to time deem advisable. The Board
of Directors shall fix the authority and duties of the
officers to the extent not provided herein. Any two or more
offices may be held by the same person at the same time
except that neither the chairman nor the president may hold
the offices of vice president, treasurer or secretary.
Section 2. Election of Officers; Term of Office;
Removal. The officers shall be elected or appointed by the
Board of Directors at the first meeting of the Board
following the annual meeting of the shareholders, and shall
hold office until their respective successors have been
elected or appointed and have qualified. Any officer may be
removed with or without cause at any time by the Board. If
an office becomes vacant for any reason, the Board of
Directors shall fill such vacancy.
Section 3. Chairman. The chairman shall preside at all
meetings of the shareholders and the Board of Directors;
shall provide leadership to the Board of Directors and
advice and counsel to the president of the Corporation; and
shall perform such other duties as may be prescribed by the
Board of Directors.
Section 4. President. The president shall be the chief
executive officer of the Corporation; shall administer and
implement the policies and decisions of the Corporation and
see that all orders and resolutions of the Board of
Directors are carried into effect; shall have general and
active management of the business and affairs of the
Corporation subject to the control of the Board of
Directors; and shall have such other powers and perform such
other duties as the Board of Directors may from time to time
prescribe. In the absence of the chairman, the president
shall preside at meetings of shareholders and of the Board
of Directors.
Section 5. Vice Presidents. In the absence or disability
of the chairman and of the president, the vice presidents,
in the order designated by the Board of Directors or in
the absence of such designation, then in the order of
their election, shall exercise the duties and have the
powers of the chairman and of the president and shall
perform such other duties as may be prescribed by the
chairman, the president, or by the Board of Directors.
Section 6. Secretary. The secretary shall attend all
meetings of the Board of Directors and of the shareholders
and record all votes and the minutes of all proceedings of
the Board of Directors and of the shareholders in a book to
be kept for that purpose; shall give or cause to be given
notice of meetings of the Board of Directors and of the
shareholders and shall have custody of the certificate books
and shareholder records and such other books as the Board
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may direct; shall have custody of the seal of the
Corporation and, when authorized by the Board, shall affix
it to any instrument requiring the corporate seal; and shall
perform all other duties incident to the office of the
secretary and such other duties as may from time to time be
prescribed by the Board of Directors, by the chairman, or by
the president.
Section 7. Chief Financial Officer and Chief Accounting
Officer. The Board shall designate a chief financial officer
and a chief accounting officer who may be a single officer
or two officers and who may hold the office of treasurer (if
chief financial officer) or controller (if chief accounting
officer). The chief financial officer shall advise the Board
and the officers regarding financial requirements of the
Corporation and the financial impact of events affecting the
Corporation or action proposed to be taken by the
Corporation; shall have principal responsibility, subject to
the authority of the Board and the president, for the
development and implementation of financial planning for the
Corporation and its subsidiaries, including matters
pertaining to the capital and debt structure of the
Corporation and its subsidiaries and the allocation of
capital resources among the operations of the Corporation
and its subsidiaries; shall have the right to require, from
time to time, reports or statements giving such information
as he or she may desire with respect to any and all
financial transactions of the Corporation from the officers
or agents transacting the same; and shall cause taxes and
assessments to be paid and tax returns and reports to be
prepared and filed as required by law. The chief accounting
officer shall make and keep, or cause to be made and kept
under his or her authority, books, records, and accounts
which, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the
Corporation; shall prepare or cause to be prepared under his
or her authority financial statements and other reports of
the financial condition and results of operations of the
Corporation and its subsidiaries; shall issue and file such
statements and render such reports when and in the form and
manner required by law; shall advise the Board and the
officers regarding accounting policies and procedures to be
adopted or adhered to in the reporting of the financial
condition and results of operations of the Corporation and
its subsidiaries; shall be responsible for the development
and implementation of internal accounting controls necessary
and appropriate to the management of the operations and
activities of the Corporation and its subsidiaries; shall
prepare or cause to be prepared such financial forecasts as
may be requested from time to time by the president or the
Board of Directors and shall develop and supervise
procedures facilitating the preparation of such forecasts;
and shall exhibit at all reasonable times the books of
account and other records caused by him or her to be kept to
any of the directors upon application at the office of the
Corporation where such books and records are kept.
The chief financial officer and the chief accounting
officer shall also, in general, perform (or cause to be
performed subject to their authority and direction) all
duties incident to the offices and functions of chief
financial officer and chief accounting officer and such
other duties as from time to time may be assigned to them by
the president or the Board of Directors.
Section 8. Treasurer. The Treasurer shall have charge and
custody of, and be responsible for, all funds, securities,
and notes of the Corporation; receive and give receipts for
moneys due and payable to the Corporation from any sources
whatsoever; deposit all such moneys in the name of the
Corporation in such banks, trust companies, and other
depositories as shall be selected by the Board of Directors
against proper vouchers, cause such funds to be disbursed by
checks or drafts on the authorized depositories of the
Corporation signed in such manner as shall be determined in
accordance with resolutions of the Board of Directors and be
responsible for the accuracy of the amounts of all moneys so
disbursed; and in general, perform all duties incident to
the office of treasurer and such other duties as from time
to time may be assigned to him or her by the president, the
chief financial officer, or the Board of Directors.
Section 9. Divisional Officers. The Board of Directors or
the president may establish from time to time one or more
divisions for the consolidation of all or part of the
operations or administration of the Corporation and in
connection therewith may appoint such officers and other
agents of such divisions as the Board or the president may
determine. Such divisional officers and agents as such shall
not be deemed officers of the Corporation but shall have as
between themselves and the Corporation such authority and
perform such duties in the management of the division in
which they are appointed as the Board may from time to time
determine, and shall have such authority as between
themselves and third parties to bind the Corporation in
matters respecting the ordinary course of business of the
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<PAGE>
division for which they are appointed, as would generally be
incident to the offices to which they are appointed if such
a division were a separate corporation wholly owned by the
Corporation and such offices were held in such subsidiary.
Section 10. Controller. The Board of Directors or the chief
financial officer may elect or appoint a controller. The
controller shall have principal responsibility for
implementation of accounting policies and procedures,
including the preparation of financial statements and
reports, under the supervisory authority of the chief
accounting officer. The controller shall have such
responsibilities in the areas of development and
implementation of internal accounting controls and financial
forecasting as may be assigned to him or her from time to
time by the president, the chief accounting officer, or the
Board of Directors. The controller as such shall not be
deemed an officer of the Corporation.
Section 11. Assistant Officer. Each assistant vice
president, each assistant secretary and each assistant
treasurer shall have such powers and shall perform such
duties as may be prescribed by the Board of Directors or by
the appropriate executive officer, as the case may be.
Section 12. Compensation. The compensation of all executive
officers of the Corporation shall be fixed by the Board of
Directors. The compensation of division officers, assistant
officers, if any, and of other employees shall be fixed by
the appropriate officers.
Article V
Certificates of Stock
Section 1. Description of Stock Certificates. The
certificates of stock of this Corporation shall be
consecutively numbered by class and shall be entered on
books of the Corporation as they are issued. They shall show
the holder's name and the number of shares and shall be
signed by the chairman of the Board, the president, or a
vice president, and countersigned by the secretary or
treasurer, and shall have the seal of the Corporation, which
may be a facsimile, affixed thereto. Whenever any
certificate is countersigned by a transfer agent, or
registered by a registrar, other than the Corporation itself
or an employee of the Corporation, the signatures of
officers of the Corporation upon such certificate may be
facsimiles. If an officer who has signed or whose facsimile
signature has been placed upon a certificate shall no longer
hold such office when the certificate is issued, the
certificate may nevertheless be issued by the Corporation
with the same effect as if the officer were still holding
such office at the date of the issue.
Section 2. Transfer of Stock. Upon surrender to the
Corporation or any transfer agent of the Corporation of a
certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to
transfer, together with all necessary federal and state
transfer tax stamps affixed thereto, it shall be the duty of
the Corporation or such transfer agent to issue a new
certificate to the person entitled thereto, cancel the old
certificate, and record the transaction upon its books.
Section 3. Fixing Record Date. For the purpose of
determining the shareholders entitled to notice of or to
vote at any meeting of shareholders or any adjournment
thereof, or to express consent to or dissent from any
proposal without a meeting, or for the purpose or
determining shareholders entitled to receive payment of any
dividend or the allotment of any rights, or for the purpose
of any other action, the Board of Directors shall fix, in
advance, a date as the record date for any such
determination of shareholders. Such date shall not be more
than fifty nor less than ten days before the date of such
meeting, nor more than fifty days prior to any other action.
Section 4. Registered Shareholders. The Corporation shall
be entitled to recognize the exclusive right of a person,
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registered on its books as the owner of shares, to receive
dividends or other distributions, and vote as such owner and
otherwise treat such person as the owner of such shares and
accordingly shall not be bound to recognize any equitable or
other claim to or interest in such shares on the part of any
other person, whether or not it shall have express or other
notice thereof except as expressly provided by the laws of
the State of New York.
Section 5. Lost Certificates. The Board of Directors may
direct the issuance of a new stock certificate in place of a
certificate theretofore issued by the Corporation which is
alleged to have been lost or destroyed. The person claiming
such loss or destruction shall submit an affidavit of the
fact in form satisfactory to the Board of Directors. The
Board of Directors, in its discretion and as condition
precedent to the issuance of the new certificate, may
require the owner of such lost or destroyed certificate or
his legal representative to give the Corporation a suitable
bond in such sum as it may direct as indemnity against any
claims that may be made against the Corporation with respect
to the certificate alleged to have been lost or destroyed
and to satisfy such other reasonable conditions as it may
impose.
Section 6. Stock Regulations. The Board of Directors shall
have the authority to make all such further rules and
regulations, not inconsistent with the laws of the State of
New York, as it may deem expedient, concerning the issue,
transfer, conversion, and registration of certificates
representing shares of the Corporation, and may appoint one
or more transfer agents and one or more registrars.
Article VI
General Provisions
Section 1. Dividends. Dividends upon the outstanding
shares of the Corporation may be declared by the Board of
Directors at any regular or special meetings in the manner
provided by the Certificate of Incorporation of the
Corporation and pursuant to applicable laws and may be paid
in cash, or in property, or in shares of the Corporation.
Section 2. Fiscal Year. The fiscal year of the Corporation
shall begin on the 1st day of May and end on the 30th day of
April.
Section 3. Corporate Seal. The seal of the Corporation
shall consist of a circular device, having inscribed thereon
the name of the Corporation, the words "Corporate Seal New
York" and the date "1904"; and shall otherwise be in such
form as may be prescribed by the Board of Directors. The
seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced upon the
instrument or writing to be sealed.
Article VII
Indemnification of Officers and Directors
Section 1. General. The Corporation shall, to the fullest
extent permitted by the New York Business Corporation Law as
the same exists or may hereafter be amended, indemnify any
director or officer of the Corporation or any wholly-owned
subsidiary (or the personal representative of such director
or officer) who is or was made or threatened to be made a
party to or is involved in any threatened, pending, or
completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative (including an
action by or in the right of the Corporation or any of its
subsidiaries or any other corporation, domestic or foreign,
or any partnership, joint venture, trust, employee benefit
plan, or other enterprise), by reason of the fact that he or
she is or was a director or officer of the Corporation, or,
at the request of the Corporation, is or was serving such
subsidiary or other corporation, partnership, joint venture,
trust, employee benefit plan, or other enterprise as
director, officer, trustee, or in any other capacity,
against judgments, fines, amounts paid or to be paid in
settlement, excise tax or penalties, and costs, charges and
expenses, including attorneys' fees, incurred in connection
with such action or proceeding or any appeal therein;
provided, however, that no indemnification shall be provided
to any such person if a judgment or other final adjudication
adverse to such person establishes that (i) his or her acts
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(or those of the testator or intestate) were committed
in bad faith or were the result of active and
deliberate dishonesty and, in either case, were material to
the cause of action so adjudicated, or (ii) he or she (or
the testator or intestate) personally gained in fact a
financial profit or other advantage to which he or she
was not legally entitled; provided, further, that where
applicable, payment of such indemnification shall be
made pursuant to the provisions of Section 723 of
the New York Business Corporation Law, as the same may
be amended from time to time.
Section 2. Non-Exclusivity of Rights. The Corporation may
indemnify any person to whom the Corporation is permitted to
provide indemnification or the advancement of expenses by
applicable law, whether pursuant to rights granted to, or
provided by, the New York Business Corporation Law or other
rights created by (i) a resolution of shareholders, (ii) a
resolution of the Board of Directors, or (iii) an agreement
providing for such indemnification. The rights conferred in
this Article VII shall not be exclusive of any other right
of indemnification, or reimbursement or advancement of
expenses which any person may have or hereafter acquire.
Section 3. Expenses. The Corporation shall, from time to
time, reimburse or advance to any person referred to in
Section 1 of this Article VII the funds necessary for
payment of expenses, including attorneys' fees, incurred in
connection with any action or proceeding referred to in
Section 1, upon receipt of a written undertaking by or on
behalf of such person to repay such amount(s) if a judgment
or other final adjudication adverse to the director or
officer establishes that (i) his or her acts were committed
in bad faith or were the result of active and deliberate
dishonesty and, in either case, were material to the cause
of action so adjudicated, or (ii) he or she personally
gained in fact a financial profit or other advantage to
which he or she was not legally entitled.
Section 4. Other Rights. The right to be indemnified or to
the reimbursement or advancement of expenses pursuant to
this Article VII (i) is a contract right pursuant to which
the person entitled thereto may bring suit as if the
provision hereof were set forth in a separate written
contract between the Corporation and the director or
officer, (ii) is intended to be retroactive and shall be
available with respect to events occurring prior to the
adoption thereof and (iii) shall continue to exist after the
rescission or restrictive modification of the provisions of
this Article VII, with respect to events occurring prior
thereto.
Section 5. Insurance. Subject to the provisions of Section
726 of the New York Business Corporation Law, the
Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee, or agent
of the Corporation or another corporation, partnership,
joint venture, trust, or other enterprise against any such
expense, liability, or loss, whether or not the Corporation
would have the power to indemnify such person against such
expense, liability, or loss under the New York Business
Corporation Law.
Section 6. Service with Another Corporation or Employee
Benefit Plan. Any director or officer of the Corporation
serving (i) another corporation of which a majority of the
shares entitled to vote in the election of its directors is
held by the Corporation, or (ii) any employee benefit plan
of the Corporation or any corporation referred to in clause
(i), in any capacity shall, unless and until otherwise
expressly provided by a resolution of the Board of Directors
of the Corporation, be deemed to be doing so at the request
of the Corporation.
Section 7. Action to Enforce Right to Indemnification. If a
request to be indemnified or for the reimbursement or
advancement of expenses pursuant hereto is not paid in full
by the Corporation within thirty days after a written claim
has been received by the Corporation, the claimant may at
any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if entitled,
also to be paid the expenses of prosecuting such claim.
Neither the failure of the Corporation (including its Board
of
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Directors, independent legal counsel, or its
shareholders) to have made a determination prior to the
commencement of such action that indemnification of or
reimbursement or advancement of expenses to the claimant is
proper in the circumstances, nor an actual determination by
the Corporation (including its Board of Directors,
independent legal counsel, or its shareholders) that the
claimant is not entitled to indemnification or to the
reimbursement or advancement of expenses, shall be a defense
to the action or create a presumption that the claimant is
not so entitled.
Section 8. Exclusive Remedy. A person who has been
successful, on the merits or otherwise, in the defense of a
civil or criminal action or proceeding of the character
described in Section 1 shall be entitled to indemnification
only as provided in Sections 1 and 3, notwithstanding any
provision of the New York Business Corporation Law to the
contrary.
Section 9. Separability. If this Article VII or any portion
hereby shall be invalidated on any ground by any court of
competent jurisdiction, then the Corporation shall
nevertheless indemnify each director, officer, employee, or
agent of the Corporation as to costs, charges and expenses
(including attorneys' fees), judgments, fines and amounts
paid in settlement with respect to any action, suit or
proceeding, whether civil, criminal, administrative or
investigative, including an action by or in the right of the
Corporation, to the fullest extent permitted by any
applicable portion of this Article VII that shall not have
been invalidated and to the fullest extent permitted by
applicable law.
Article VIII
Amendments
Section 1. Power to Amend. The By-laws may be amended or
repealed or new by-laws adopted from time to time by the
shareholders or by the Board of Directors.
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Exhibit 10.1
CONFORMED COPY
$50,000,000
CREDIT AGREEMENT
dated as of
March 30, 1995 among
John Wiley & Sons, Inc., The Banks Listed Herein
and
Morgan Guaranty Trust Company of New York,
as Agent
<PAGE>
TABLE OF CONTENTS(1)
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions
SECTION 1.02. Accounting Terms and Determinations
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend
SECTION 2.02. Method of Borrowing
SECTION 2.03. Notes
SECTION 2.04. Maturity of Loans
SECTION 2.05. Interest Rates
SECTION 2.06. Facility Fees
SECTION 2.07. Optional Termination
or Reduction of Commitments
SECTION 2.08. Mandatory Termination
of Commitments
SECTION 2.09. Optional Prepayments
SECTION 2.10. General Provisions
as to Payments
SECTION 2.11. Funding Losses
SECTION 2.12. Computation of
Interest and Fees
SECTION 2.13. Withholding Tax Exemption
SECTION 2.14. Change of Control
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness
SECTION 3.02. Borrowings
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power
SECTION 4.02. Corporate and Governmental
Authorization; No Contravention
SECTION 4.03. Binding Effect
SECTION 4.04. Financial Information
SECTION 4.05. Litigation
SECTION 4.06. Compliance with ERISA
SECTION 4.07. Taxes
SECTION 4.08. Subsidiaries
SECTION 4.09. Not an Investment Company
SECTION 4.10. Status of Notes
SECTION 4.11. Environmental Matters
ARTICLE V
COVENANTS
SECTION 5.01. Information
SECTION 5.02. Payment of Taxes;Insurance;
Maintenance of Corporate Existence
SECTION 5.03. Maintenance of Property; Conduct of Business
SECTION 5.04. Compliance with Laws
SECTION 5.05. Inspection of Property, Books and Records
SECTION 5.06. Limitation on Liens
SECTION 5.07. Consolidations, Mergers and Sales of Assets
SECTION 5.08. Use of Proceeds
SECTION 5.09. Subsidiary Debt
SECTION 5.10. Consolidated Shareholders' Equity
SECTION 5.11. Debt to Subsidiaries
SECTION 5.12. EBIT/TD Ratio
SECTION 5.13. Restricted Paymentsand Guarantees
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default
SECTION 6.02. Notice of Default
<PAGE>
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization
SECTION 7.02. Agent and Affiliates
SECTION 7.03. Action by Agent
SECTION 7.04. Consultation with Experts
SECTION 7.05. Liability of Agent
SECTION 7.06. Indemnification
SECTION 7.07. Credit Decision
SECTION 7.08. Successor Agent
SECTION 7.09. Agent's Fee
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining
Interest Rate Inadequate or Unfair
SECTION 8.02. Illegality
SECTION 8.03. Increased Cost and Reduced Return
SECTION 8.04. Base Rate Loans Substituted
for Affected Fixed Rate Loans
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices
SECTION 9.02. No Waivers
SECTION 9.03. Expenses; Documentary Taxes; Indemnification
SECTION 9.04. Sharing of Set-Offs
SECTION 9.05. Amendments and Waivers
SECTION 9.06. Successors and Assigns
SECTION 9.07. Collateral
SECTION 9.08. New York Law
SECTION 9.09. Counterparts; Integration
Exhibit A - Note
Exhibit B - Opinion of Counsel for the Borrower
Exhibit C - Opinion of Special Counsel for the Agent
(1) The table of contents is not a part of this Agreement.
<PAGE>
CREDIT AGREEMENT
AGREEMENT dated as of March 30, 1995 among JOHN WILEY &
SONS, INC., the BANKS listed on the signature pages hereof
and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used
herein, have the following meanings:
"Adjusted CD Rate" has the meaning set forth in Section
2.05(b).
"Adjusted London Interbank Offered Rate" has the meaning set
forth in Section 2.05(c).
"Administrative Questionnaire" means, with respect to
each Bank, the administrative questionnaire in the form
submitted to such Bank by the Agent and submitted to the
Agent (with a copy to the Borrower) duly completed by such
Bank.
"Agent" means Morgan Guaranty Trust Company of New York
in its capacity as agent for the Banks hereunder, and its
successors in such capacity.
"Applicable Lending Office" means, with respect to any
Bank, (i) in the case of its Domestic Loans, its Domestic
Lending Office and (ii) in the case of its Euro-Dollar
Loans, its Euro-Dollar Lending Office.
"Applicable Margin" has the meaning set forth in Section
2.05(e).
"Assessment Rate" has the meaning set forth in Section
2.05(b).
<PAGE>
"Assignee" has the meaning set forth in Section 9.06(c).
"Bank" means each bank listed on the signature pages hereof,
each Assignee which becomes a Bank pursuant to Section
9.06(c), and their respective successors.
"Base Rate" means, for any day, a rate per annum equal
to the higher of (i) the Prime Rate for such day and (ii)
the sum of 1/2 of 1% plus the Federal Funds Rate for such
day.
"Base Rate Loan" means a Loan to be made by a Bank as a
Base Rate Loan pursuant to the applicable Notice of
Borrowing or Article VIII.
"Benefit Arrangement" means at any time an employee
benefit plan within the meaning of Section 3(3) of ERISA
which is not a Plan or a Multiemployer Plan and which is
maintained or otherwise contributed to by any member of the
ERISA Group.
"Board" means the Board of Directors of the Borrower or
a committee of directors lawfully exercising the relevant
powers of the Board.
"Borrower" means John Wiley & Sons, Inc., a New York
corporation, and its successors.
"Borrower's 1994 Form 10-K" means the Borrower's annual
report on Form 10-K for the fiscal year ended April 30,
1994, as filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934.
"Borrowing" means a borrowing hereunder consisting of
Loans made to the Borrower at the same time by the Banks
pursuant to Article II. A Borrowing is a "Domestic
Borrowing" if such Loans are Domestic Loans or a "EuroDollar
Borrowing" if such Loans are Euro-Dollar Loans. A Domestic
Borrowing is a "CD Borrowing" if such Domestic Loans are CD
Loans or a "Base Rate Borrowing" if such Domestic Loans are
Base Rate Loans.
"Capital Lease" means any lease of property which, in
accordance with GAAP, should be capitalized on the lessee's
balance sheet; and "Capital Lease Obligation" means the
amount of the liability which should be so capitalized.
"CD Base Rate" has the meaning set forth in Section 2.05(b).
<PAGE>
"CD Loan" means a Loan to be made by a Bank as a CD
Loan pursuant to the applicable Notice of Borrowing.
"College Publishing Segment" means the business segment
of the Borrower and its Subsidiaries attributable to
textbooks and other related materials for colleges and
universities.
"Commitment" means, with respect to each Bank, the
amount set forth opposite the name of such Bank on the
signature pages hereof, as such amount may be reduced from
time to time pursuant to Section 2.07.
"Consolidated EBIT" means, for any fiscal period,
Consolidated Net Income for such period plus, to the extent
deducted in determining Consolidated Net Income for such
period, the aggregate amount of (i) Consolidated Interest
Charges and (ii) provision for income taxes.
"Consolidated Interest Charges" means, for any fiscal
period, the aggregate amount of interest charges, whether
expensed or capitalized, incurred or accrued by the Borrower
and its Consolidated Subsidiaries during such period.
"Consolidated Net Income" means the consolidated net
income of the Borrower and its Consolidated Subsidiaries,
determined in accordance with GAAP, excluding
(A) the proceeds of any life insurance policy to the
extent, if any, that such proceeds have been included in
consolidated net income,
(B) after-tax gains arising from (1) the sale or other
disposition of any assets (other than sales in the Ordinary
Course of Business) to the extent that the aggregate amount
of the gain exceeds the aggregate amount of losses from the
sale, abandonment or other disposition of assets (other than
sales in the Ordinary Course of Business), (2) any write-up
of assets to the extent, if any, such write-up has been
included in consolidated net income, or (3) the acquisition
of outstanding Debt securities of the Borrower or any
Subsidiary,
(C) any amount representing any interest in the
undistributed earnings of any other Person (other than a
Subsidiary),
(D) any earnings, prior the date of acquisition, of
any Person acquired in any manner, and any earnings of any
Subsidiary accrued prior to becoming a Subsidiary, to the
<PAGE>
extent, if any, that any such earnings have been included in
consolidated net income,
(E) any earnings of a successor to or transferee
of the assets of the Borrower prior to becoming such
successor or transferee, to the extent, if any, that any
such earnings have been included in consolidated net income,
(F) any deferred credit (or amortization of a deferred
credit) arising from the creation of the negative goodwill
pursuant to the acquisition of any Person, and
(G) any portion of the net income of any Subsidiary
which for any reason is unavailable for payment of
dividends.
"Consolidated Net Worth" means Consolidated
Shareholders' Equity minus the aggregate net book value of
the following to the extent, if any, that such items were
included in consolidated assets or deducted from
consolidated liabilities in computing Consolidated
Shareholders' Equity:
(A) the amount (if any) by which the sum of
(1) the aggregate amount of Investments described in
subsection (C) of the definition of Restricted Investments
plus
(2) other Restricted Investments made after May 1,
1994, exceeds $10,000,000, and
(B) any write-up of assets (other than current assets
and other than any write-up arising from the acquisition of
any Person in the Ordinary Course of Business) made after
May 1, 1994.
"Consolidated Shareholders' Equity" means the
consolidated total shareholders' equity (including capital
stock, additional paid-in capital, retained earnings and any
accumulated translation adjustment as reduced by treasury
stock) in the Borrower and its Consolidated Subsidiaries,
determined in accordance with GAAP.
"Consolidated Subsidiary" means at any date any
Subsidiary or other entity the accounts of which would be
<PAGE>
consolidated with those of the Borrower in its consolidated
financial statements if such statements were prepared as of
such date.
"Debt" means all obligations for borrowed money,
including (A) any obligation owed for all or any part of the
purchase price of property or other assets or for services
or for the cost of property or other assets constructed or
of improvements thereto, other than trade accounts payable
included in current liabilities and incurred in respect of
property or services purchased in the ordinary course of
business that are not more than 90 days overdue, (B) any
Capital Lease Obligation, (C) any obligation (whether fixed
or contingent) to reimburse any bank or other Person in
respect of amounts paid or payable under a standby letter of
credit and (D) any Guarantee with respect to Debt (of the
kind otherwise described in this definition) of another
Person.
"Default" means any condition or event which
constitutes an Event of Default or which with the giving of
notice or lapse of time or both would, unless cured or
waived, become an Event of Default.
"Derivatives Obligations" of any Person means all
obligations of such Person in respect of any rate swap
transaction, basis swap, forward rate transaction, commodity
swap, commodity option, equity or equity index swap, equity
or equity index option, bond option, interest rate option,
foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any
other similar transaction (including any option with respect
to any of the foregoing transactions) or any combination of
the foregoing transactions.
"Designated Business" means the College Publishing
Segment or the Scientific and Technical Publishing Segment.
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in New York
City are authorized by law to close.
"Domestic Lending Office" means, as to each Bank, its office
located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative
Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic
Lending Office by notice to the Borrower and the Agent;
provided that any Bank may so designate separate Domestic
Lending Offices for its Base Rate Loans, on the one
<PAGE>
hand, and its CD Loans, on the other hand, in which case all
references herein to the Domestic Lending Office of such
Bank shall be deemed to refer to either or both of such
offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate Loans or
both.
"Domestic Reserve Percentage" has the meaning set forth
in Section 2.05(b).
"EBIT/TD Ratio" means at any date the ratio (expressed
as a percentage) of (i) Consolidated EBIT for the four
consecutive fiscal quarters of the Borrower and its
Consolidated Subsidiaries ending on such date to (ii) Total
Debt at such date.
"Effective Date" means the date this Agreement becomes
effective in accordance with Section 3.01.
"Environmental Laws" means any and all federal, state,
local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders, decrees, permits, concessions,
grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to
emissions, discharges or releases of pollutants,
contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air,
surface water, ground water, or land, or otherwise relating
to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products,
chemicals or industrial, toxic or hazardous substances or
wastes or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Group" means the Borrower, any Subsidiary and
all members of a controlled group of corporations and all
trades or businesses (whether or not incorporated) under
common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section
414 of the Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business
Day on which commercial banks are open for international
business (including dealings in dollar deposits) in London.
<PAGE>
"Euro-Dollar Lending Office" means, as to each Bank,
ts office, branch or affiliate located at its address set
forth in its Administrative Questionnaire (or identified in
its Administrative Questionnaire as its Euro-Dollar Lending
Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar
Lending Office by notice to the Borrower and the Agent.
"Euro-Dollar Loan" means a Loan to be made by a Bank as a
Euro-Dollar Loan pursuant to the applicable Notice of
Borrowing.
"Euro-Dollar Reserve Percentage" has the meaning set forth
in Section 2.05(c).
"Event of Default" has the meaning set forth in Section
6.01.
"Federal Funds Rate" means, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100th
of 1%) equal to the weighted average of the rates on
overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New
York on the Domestic Business Day next succeeding such day,
provided that (i) if such day is not a Domestic Business
Day, the Federal Funds Rate for such day shall be such rate
on such transactions on the next preceding Domestic Business
Day as so published on the next succeeding Domestic Business
Day, and (ii) if no such rate is so published on such next
succeeding Domestic Business Day, the Federal Funds Rate for
such day shall be the average rate quoted to Morgan Guaranty
Trust Company of New York on such day on such transactions
as determined by the Agent.
"Fixed Rate Borrowing" means a CD Borrowing or a Euro
Dollar Borrowing.
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans
or both.
"GAAP" means generally accepted accounting principles
as in effect at the time of application to the provisions
hereof.
"Guarantee" means any guarantee or other contingent
liability (other than any endorsement for collection or
deposit in the ordinary course of business), direct or
indirect, with respect to any obligation of another Person,
through an agreement or otherwise, including, without
<PAGE>
limitation, (A) any other endorsement or discount with
recourse or undertaking substantially equivalent to or
having economic effect similar to a guarantee in respect of
any such obligation and (B) any agreement (1) to purchase,
or to advance or supply funds for the payment or purchase
of, any such obligation, (2) to purchase, sell or lease
property, products, materials or supplies, or transportation
or services, in respect of enabling such other Person to pay
any such obligation or to assure the owner thereof against
loss regardless of the delivery or nondelivery of the
property, products, materials or supplies or transportation
or services or (3) to make any loan, advance or capital
contribution to or other investment in, or to otherwise
provide funds to or for, such other Person in respect of
enabling such Person to satisfy any obligation (including
any liability for a dividend, stock liquidation payment or
expense) or to assure a minimum equity, working capital or
other balance sheet condition in respect of any such
obligation.
The amount of any Guarantee shall be equal to the
outstanding amount of the obligation directly or indirectly
guaranteed.
"Interest Period" means: (1) with respect to each Euro
Dollar Borrowing, the period commencing on the date of such
Borrowing and ending one, two, three or six months
thereafter, as the Borrower may elect in the applicable
Notice of Borrowing; provided that:
(a) any Interest Period which would otherwise end on a
day which is not a Euro-Dollar Business Day shall be
extended to the next succeeding Euro-Dollar Business Day
unless such Euro-Dollar Business Day falls in another
calendar month, in which case such Interest Period shall end
on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-
Dollar Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall,
subject to clause (c) below, end on the last EuroDollar
Business Day of a calendar month; and
(c) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date.
<PAGE>
(2) with respect to each CD Borrowing, the period
commencing on the date of such Borrowing and ending 30, 60,
90 or 180 days thereafter, as the Borrower may elect in the
applicable Notice of Borrowing; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b) below) which would
otherwise end on a day which is not a EuroDollar Business
Day shall be extended to the next succeeding Euro-Dollar
Business Day; and
(b) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date.
(3) with respect to each Base Rate Borrowing, the
period commencing on the date of such Borrowing and ending
30 days thereafter; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b) below) which would
otherwise end on a day which is not a EuroDollar Business
Day shall be extended to the next succeeding Euro-Dollar
Business Day; and
(b) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date.
"Internal Revenue Code" means the Internal Revenue Code
of 1986, as amended, or any successor statute.
"Investment" means any investment so classified under
GAAP, made by stock purchase, capital contribution, loan or
advance or by purchase of property or otherwise, but in any
event shall include as an investment in any Person the
amount of all Debt owed by such Person and all accounts
receivable from such Person which are not current assets or
did not arise from sales to such Person in the ordinary
course of business.
"Lien" means, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of
any kind in respect of such asset. For the purposes of this
Agreement, the Borrower or any Subsidiary shall be deemed to
own subject to a Lien any asset which it has acquired or
holds subject to the interest of a vendor or lessor under
any conditional sale agreement, capital lease or other title
retention agreement relating to such asset.
<PAGE>
"Loan" means a Domestic Loan or a Euro-Dollar Loan and
"Loans" means Domestic Loans or Euro-Dollar Loans or both.
"London Interbank Offered Rate" has the meaning set
forth in Section 2.05(c).
"Material Debt" means Debt (other than the Notes) of
the Borrower and/or one or more of its Subsidiaries, arising
in one or more related or unrelated transactions, in an
aggregate principal amount exceeding $1,000,000.
"Material Financial Obligations" means a principal or
face amount of Debt and/or payment or collateralization
obligations in respect of Derivatives Obligations of the
Borrower and/or one or more of its Subsidiaries, arising in
one or more related or unrelated transactions, exceeding in
the aggregate $1,000,000.
"Material Plan" means at any time a Plan or Plans
having aggregate Unfunded Liabilities in excess of
$10,000,000.
"Morgan" means Morgan Guaranty Trust Company of New
York; provided that, when used in Section 2.05 or 8.01 with
reference to any Euro-Dollar Loan, the term "Morgan" shall
mean the principal London office of Morgan Guaranty Trust
Company of New York.
"1992 Credit Agreement" means the Credit Agreement
dated as of March 30, 1992, as amended, among the Borrower,
the banks listed on the signature pages thereof and Morgan
Guaranty Trust Company of New York, as agent.
"Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit A hereto, evidencing
the obligation of the Borrower to repay the Loans, and
"Note" means any one of such promissory notes issued hereunder.
"Notice of Borrowing" has the meaning set forth in Section 2.02.
"Operating Lease" means any lease, other than a Capital
Lease, of real or personal property; and "Operating Lease
Rentals" means the sum of the rental and other obligations
required to be paid by the lessees under an Operating Lease
excluding any amount required to be paid by the Lessee
<PAGE>
(whether or not therein designated as rental or additional
rental) on account of maintenance, repairs, insurance,
taxes, assessments, water rates and similar charges.
"Ordinary Course of Business" means the activities,
events and transactions of the Borrower that would
reasonably be expected to recur in the foreseeable future,
do not possess a high degree of abnormality and are not
unrelated to, or only incidentally related to, the
publishing and marketing of books, journals and information
services in all formats and computer software related
thereto; the importing, adapting and marketing of works from
other publishers and the designing and marketing of teaching
and training materials for business and professional users.
For purposes of this Agreement, sales, directly or
indirectly, of book lists, publishing or training product
lines, or other similar forms of publication rights
(excluding sales in one transaction or a series of related
transactions of all or substantially all of any Designated
Business) shall be deemed to be sales in the Ordinary Course
of Business.
"Parent" means, with respect to any Bank, any Person
controlling such Bank.
"Participant" has the meaning set forth in Section
9.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation
or any entity succeeding to any or all of its functions
under ERISA.
"Person" means an individual, a corporation, a
partnership, an association, a trust or any other entity or
organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit
plan (other than a Multiemployer Plan) which is covered by
Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member
of the ERISA Group for employees of any member of the ERISA
Group or (ii) has at any time within the preceding five
years been maintained, or contributed to, by any Person
which was at such time a member of the ERISA Group for
employees of any Person which was at such time a member of
the ERISA Group.
"Prime Rate" means the rate of interest publicly
announced by Morgan Guaranty Trust Company of New York in
New York City from time to time as its Prime Rate.
<PAGE>
"Refunding Borrowing" means a Borrowing which, after
application of the proceeds thereof, results in no net
increase in the outstanding principal amount of Loans made
by any Bank.
"Regulation U" means Regulation U of the Board of
Governors of the Federal Reserve System, as in effect from
time to time.
"Required Banks" means at any time Banks having at
least 66 2/3% of the aggregate amount of the Commitments or,
if the Commitments shall have been terminated, holding Notes
evidencing at least 66 2/3% of the aggregate unpaid
principal amount of the Loans.
"Restricted Guarantee" means any Guarantee of the
Borrower or a Subsidiary in respect of any obligation of
another Person other than
(A) any Guarantee of the Borrower in respect of any
Subsidiary, and
(B) any Guarantee in respect of Debt to the extent such
Debt is secured by a Capital Lease of the Borrower or a Subsidiary.
"Restricted Investment" means any Investment, other
than
(A) any Investment in (1) a marketable obligation,
maturing within one year after acquisition thereof, issued
or guaranteed by the United States of America or an
instrumentality or agency thereof, (2) a certificate of
deposit or other obligation, maturing within one year after
acquisition thereof, issued by a United States national or
state bank or trust company having capital, surplus and
undivided profits of at least $100,000,000, (3) open market
commercial paper, maturing within 270 days after acquisition
thereof, which has the highest credit rating of either
Standard & Poor's Corporation ("S&P") or Moody's Investors
Service, Inc. ("Moody's"), (4) adjustable rate preferred
stocks or money market preferred stocks issued by a
corporation organized under the laws of the United States or
a state thereof which have one of the two highest ratings of
either S&P or Moody's and which mature (or are redeemable at
the option of the holder) within twelve months after the
acquisition thereof and (5) commercial paper or notes issued
by a governmental authority located in the United States,
<PAGE>
which are of credit quality not lower than that of the
investments referred to in clause (4) above and which mature
(or are redeemable at the option of the holder) within
twelve months after the acquisition thereof,
(B) any Investment in a Subsidiary, and
(C) any Investment hereafter acquired in exchange for,
or out of the net cash proceeds from the substantially
concurrent sale of, common shares of the Borrower.
In computing the amount of any Restricted Investment in any
Person, unrealized increases or decreases in value, or write
ups, write-downs or write-offs of Restricted Investments in
the Person shall be disregarded (except to the extent
included in the determination of net income of the Borrower
or a Subsidiary).
"Restricted Payment" means
(A) the declaration of any dividend on, or the
incurrence of any liability to make any other payment or
distribution in respect of, any shares of the Borrower
(other than one payable solely in its common shares), and
(B) any payment or distribution on account of the
purchase, redemption or other retirement of any shares of
the Borrower, or of any warrant, option or other right to
acquire such shares, or any other payment or distribution
(other than pursuant to a dividend theretofore declared or
liability theretofore incurred as specified in Subsection
(A)), made in respect thereof, either directly or
indirectly, except any payment or distribution on account of
(1) the principal of and prepayment charge, if any, on
convertible Debt, or (2) the purchase, redemption or other
retirement of shares of the Borrower in exchange for, or out
of the net cash proceeds received by the Borrower from a
substantially concurrent sale of, other shares of the Borrower.
The amount of the any Restricted Payment in property shall
be deemed to be the greater of its fair value (as determined
by the Board) or its net book value.
"Revolving Credit Period" means the period from and
including the Effective Date to but not including the
Termination Date.
"Scientific and Technical Publishing Segment" means
that portion of the business of the Borrower and its
Subsidiaries attributable to technical and scientific
publications.
<PAGE>
"Subsidiary" of any designated Person means any Person
or other entity at least a majority of the Voting Stock (or
comparable ownership interests) of which is at the time
owned by the designated Person and/or one or more of its
Subsidiaries. Except as otherwise expressly indicated
herein, references to Subsidiaries shall mean Subsidiaries
of the Borrower.
"Subsidiary Debt" means the Debt of all Subsidiaries of
the Borrower, consolidated in accordance with GAAP.
"Termination Date" means March 30, 2000, or, if any
such day is not a Euro-Dollar Business Day, the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar
Business Day falls in another calendar month, in which case
the Termination Date shall be the next preceding Euro-Dollar
Business Day.
"Total Debt" means at any date the aggregate amount of
Debt of the Borrower and its Consolidated Subsidiaries,
determined on a consolidated basis as of such date.
"Unfunded Liabilities" means, with respect to any Plan
at any time, the amount (if any) by which (i) the present
value of all benefits under such Plan exceeds
(ii) the fair market value of all Plan assets allocable to
such benefits (excluding any accrued but unpaid
contributions), all determined as of the then most recent
valuation date for such Plan, but only to the extent that
such excess represents a potential liability of a member of
the ERISA Group to the PBGC or any other Person under Title
IV of ERISA.
"Voting Stock" means shares of a Person of the class or
classes having general voting power (not depending on the
happening of a contingency) under ordinary circumstances to
elect a majority of the Board. As of the date of this
Agreement, the Class B Stock is the Voting Stock of the
Borrower.
SECTION 1.02. Accounting Terms and Determinations. All
financial statements provided for in this Agreement shall be
prepared, all financial computations hereunder shall be
made, and all accounting terms shall have the meanings given
to them, in accordance with GAAP, except as otherwise
provided in this Agreement. Any consolidated or
<PAGE>
consolidating financial statement or financial
computation with respect to the Borrower and its
Subsidiaries required by this Agreement shall be done in
accordance with GAAP, and if at the time that any such
statement or computation is required to be made the Borrower
shall not have any Subsidiary such terms shall mean a
financial statement or a financial computation, as the case
may be, with respect to the Borrower only.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. During the
Revolving Credit Period each Bank severally agrees, on the
terms and conditions set forth in this Agreement, to lend to
the Borrower from time to time amounts not to exceed in the
aggregate at any one time outstanding the amount of its
Commitment. Each Borrowing under this Section 2.01 shall be
in an aggregate principal amount of $2,000,000 or any larger
multiple of $1,000,000 (except that any such Borrowing may
be in the aggregate amount of the unused Commitments) and
shall be made from the several Banks ratably in proportion
to their respective Commitments. Within the foregoing
limits, the Borrower may borrow under this Section 2.01,
repay, or to the extent permitted by Section 2.09, prepay
Loans and reborrow at any time during the Revolving Credit
Period under this Section 2.01.
SECTION 2.02. Method of Borrowing. (a) The
Borrower shall give the Agent notice (a "Notice of
Borrowing") not later than 10:30 A.M. (New York City time)
on (i) the second Domestic Business Day before each CD
Borrowing, (ii) the date of each Base Rate Borrowing, and
(iii) the third Euro-Dollar Business Day before each Euro
Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall
be a Domestic Business Day in the case of a
Domestic Borrowing or a Euro-Dollar Business Day
in the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii)
whether the Loans comprising such Borrowing are
to be CD Loans, Base Rate Loans or Euro-Dollar Loans, and
<PAGE>
(iv) in the case of a Fixed Rate Borrowing, the
duration of the Interest Period applicable thereto, subject
to the provisions of the definition of Interest Period.
(b) Upon receipt of a Notice of Borrowing, the
Agent shall promptly notify each Bank of the contents
thereof and of such Bank's ratable share of such Borrowing
and such Notice of Borrowing shall not thereafter be
revocable by the Borrower.
(c) Not later than 12:00 noon (New York City
time) on the date of each Borrowing, each Bank shall (except
as provided in subsection (d) of this Section) make
available its ratable share of such Borrowing (determined in
accordance with Section 2.01), in Federal or other funds
immediately available in New York City, to the Agent at its
address specified in or pursuant to Section 9.01. Unless
the Agent determines in its reasonable judgment that any
applicable condition specified in Article III has not been
satisfied, the Agent will make the funds so received from
the Banks available to the Borrower at the Agent's aforesaid
address.
(d) If any Bank makes a new Loan hereunder on a day on
which the Borrower is to repay all or any part of an
outstanding Loan from such Bank, such Bank shall apply the
proceeds of its new Loan to make such repayment and only an
amount equal to the difference (if any) between the amount
being borrowed and the amount being repaid shall be made
available by such Bank to the Agent as provided in
subsection (c) of this Section, or remitted by the Borrower
to the Agent as provided in Section 2.10, as the case may
be.
(e) Unless the Agent shall have received notice from a
Bank prior to the date of any Borrowing that such Bank will
not make available to the Agent such Bank's share of such
Borrowing, the Agent may assume that such Bank has made such
share available to the Agent on the date of such Borrowing
in accordance with subsections (c) and (d) of this Section
2.02 and the Agent may, in reliance upon such assumption,
make available to the Borrower on such date a corresponding
amount. If and to the extent that such Bank shall not have
so made such share available to the Agent, such Bank and the
Borrower severally agree to repay to the Agent forthwith on
demand such corresponding amount together with interest
thereon, for each day from the date such amount is made
<PAGE>
available to the Borrower until the date such amount is
repaid to the Agent, at (i) in the case of the Borrower, a
rate per annum equal to the higher of the Federal Funds Rate
and the interest rate applicable thereto pursuant to Section
2.05 and (ii) in the case of such Bank, the Federal Funds
Rate. If such Bank shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute
such Bank's Loan included in such Borrowing for purposes of
this Agreement.
SECTION 2.03. Notes. (a) The Loans of each Bank
shall be evidenced by a single Note payable to the order of
such Bank for the account of its Applicable Lending Office
in an amount equal to the aggregate unpaid principal amount
of such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the
Agent, request that its Loans of a particular type be
evidenced by a separate Note in an amount equal to the
aggregate unpaid principal amount of such Loans. Each such
Note shall be in substantially the form of Exhibit A hereto
with appropriate modifications to reflect the fact that it
evidences solely Loans of the relevant type. Each reference
in this Agreement to the "Note" of such Bank shall be deemed
to refer to and include any or all of such Notes, as the
context may require.
(c) Upon receipt of each Bank's Note pursuant to
Section 3.01(b), the Agent shall forward such Note to such
Bank. Each Bank shall record the date, amount, type and
maturity of each Loan made by it and the date and amount of
each payment of principal made by the Borrower with respect
thereto, and may, if such Bank so elects in connection with
any transfer or enforcement of its Note, endorse on the
schedule forming a part thereof appropriate notations to
evidence the foregoing information with respect to each such
Loan then outstanding; provided that the failure of any Bank
to make any such recordation or endorsement shall not affect
the obligations of the Borrower hereunder or under the
Notes. Each Bank is hereby irrevocably authorized by the
Borrower so to endorse its Note and to attach to and make a
part of its Note a continuation of any such schedule as and
when required.
SECTION 2.04. Maturity of Loans. Each Loan included
in any Borrowing shall mature, and the principal amount
thereof shall be due and payable, on the last day of the
Interest Period applicable to such Borrowing and on the
Termination Date.
SECTION 2.05. Interest Rates. (a) Each Base Rate
Loan shall bear interest on the outstanding principal amount
thereof, for each day from the date such Loan is made until
it becomes due, at a rate per annum equal to the Base Rate
<PAGE>
for such day. Such interest shall be payable for each
Interest Period on the last day thereof. Any overdue
principal of and overdue interest on any Base Rate Loan
shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the sum of 1% plus the
Base Rate for such day.
(b) Each CD Loan shall bear interest on the
outstanding principal amount thereof, for the Interest
Period applicable thereto, at a rate per annum equal to the
sum of the Applicable Margin plus the applicable Adjusted CD
Rate; provided that if any CD Loan shall, as a result of
clause (2)(b) of the definition of Interest Period, have an
Interest Period of less than 30 days, such CD Loan shall
bear interest during such Interest Period at the rate
applicable to Base Rate Loans during such period. Such
interest shall be payable for each Interest Period on the
last day thereof and, if such Interest Period is longer than
90 days, at intervals of 90 days after the first day
thereof. Any overdue principal of and overdue interest on
any CD Loan shall bear interest, payable on demand, for each
day until paid at a rate per annum equal to the sum of 1%
plus the higher of (i) the sum of the Applicable Margin plus
the Adjusted CD Rate applicable to such Loan and (ii) the
Base Rate for such day.
The "Adjusted CD Rate" applicable to any Interest
Period means a rate per annum determined pursuant to the
following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
__________
* The amount in brackets being rounded upwards, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest Period is
the rate of interest determined by the Agent to be the
<PAGE>
prevailing rate per annum bid at 10:00 A.M. (New York City
time) (or as soon thereafter as practicable) on the first
day of such Interest Period by two or more New York
certificate of deposit dealers of recognized standing for
the purchase at face value from Morgan of its certificates
of deposit in an amount comparable to the unpaid principal
amount of the CD Loan of Morgan to which such Interest
Period applies and having a maturity comparable to such
Interest Period.
"Domestic Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on
such day, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining
the maximum reserve requirement (including without
limitation any basic, supplemental or emergency reserves)
for a member bank of the Federal Reserve System in New York
City with deposits exceeding five billion dollars in respect
of new non-personal time deposits in dollars in New York
City having a maturity comparable to the related Interest
Period and in an amount of $100,000 or more. The Adjusted
CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Domestic Reserve
Percentage.
"Assessment Rate" means for any day the annual
assessment rate in effect on such day which is payable by a
member of the Bank Insurance Fund classified as adequately
capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within
the meaning of 12 C.F.R. 327.3(e) (or any successor
provision) to the Federal Deposit Insurance Corporation (or
any successor) for such Corporation's (or such successor's)
insuring time deposits at offices of such institution in the
United States. The Adjusted CD Rate shall be adjusted
automatically on and as of the effective date of any change
in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for the Interest
Period applicable thereto, at a rate per annum equal to the
sum of the Applicable Margin plus the applicable Adjusted
London Interbank Offered Rate. Such interest shall be
payable for each Interest Period on the last day thereof
and, if such Interest Period is longer than three months, at
intervals of three months after the first day thereof.
The "Adjusted London Interbank Offered Rate" applicable
to any Interest Period means a rate per annum equal to the
quotient obtained (rounded upwards, if necessary, to the
next higher 1/100 of 1%) by dividing
(i) the applicable London Interbank Offered Rate by
(ii) 1.00 minus the Euro-Dollar Reserve Percentage.
<PAGE>
The "London Interbank Offered Rate" applicable to any
Interest Period means the rate per annum at which deposits
in dollars are offered to Morgan in the London interbank
market at approximately 11:00 A.M. (London time) two Euro
Dollar Business Days before the first day of such Interest
Period in an amount approximately equal to the principal
amount of the Euro-Dollar Loan of Morgan to which such
Interest Period is to apply and for a period of time
comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on
such day, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining
the maximum reserve requirement for a member bank of the
Federal Reserve System in New York City with deposits
exceeding five billion dollars in respect of "Eurocurrency
liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which
the interest rate on Euro-Dollar Loans is determined or any
category of extensions of credit or other assets which
includes loans by a non-United States office of any Bank to
United States residents). The Adjusted London Interbank
Offered Rate shall be adjusted automatically on and as of
the effective date of any change in the Euro-Dollar Reserve
Percentage.
(d) Any overdue principal of and overdue interest on
any Euro-Dollar Loan shall bear interest, payable on demand,
for each day from and including the date payment thereof was
due to but excluding the date of actual payment, at a rate
per annum equal to the sum of 1% plus the higher of (i) the
sum of the Applicable Margin plus the Adjusted London
Interbank Offered Rate applicable to such Loan and (ii) the
Applicable Margin plus the quotient obtained (rounded
upwards, if necessary, to the next higher 1/100 of 1%) by
dividing (x) the rate per annum at which one day (or, if
such amount due remains unpaid more than three Euro-Dollar
Business Days, then for such other period of time not longer
than six months as the Agent may select) deposits in dollars
in an amount approximately equal to such overdue payment due
to Morgan are offered to Morgan in the London interbank
market for the applicable period determined as provided
above by (y) 1.00 minus the Euro-Dollar Reserve Percentage
(or, if the circumstances described in clause (a) or (b) of
Section 8.01 shall exist, at a rate per annum equal to the
sum of 1% plus the Base Rate for such day).
(e) The "Applicable Margin" for each Fixed Rate Loan
outstanding on any day during any fiscal quarter of the
Borrower is (i) for each day during any fiscal quarter as to
which the EBIT/TD Ratio for the then immediately preceding
<PAGE>
four consecutive fiscal quarters was greater than 75%, the
applicable amount set forth in the table below under the
caption Level I, (ii) for each day during any fiscal quarter
as to which the EBIT/TD Ratio for the then immediately
preceding four consecutive fiscal quarters was equal to or
less than 75% but greater than 40%, the applicable amount
set forth in the table below under the caption Level II, and
(iii) for each day during any fiscal quarter as to which the
EBIT/TD Ratio for the then immediately preceding four
consecutive fiscal quarters was equal to or less than 40%,
the applicable amount set forth in the table below under the
caption Level III.
Level I Level II Level III
Euro-Dollar Loans 0.25% 0.35% 0.5% CD
Loans 0.375% 0.475% 0.675%
For purposes of making interest payments hereunder, the
Applicable Margin for Fixed Rate Loans of any type shall
change only upon delivery of an officer's certificate
pursuant to Section 5.01(e)(iii) setting forth the EBIT/TD
Ratio on the basis of which a change is required pursuant to
this subsection (e). Such change, however, will be
retroactively effective to the first day of the relevant
fiscal quarter, and an appropriate adjustment shall be made
within three Domestic Business Days after the delivery of
such certificate for any resulting change in the amount of
interest accrued from such first day and previously paid.
(f) The Agent shall determine each interest rate
applicable to the Loans hereunder. The Agent shall give
prompt notice to the Borrower and the Banks of each rate of
interest so determined, and its determination thereof shall
be conclusive in the absence of manifest error.
SECTION 2.06. Facility Fees. During the Revolving
Credit Period, the Borrower shall pay to the Agent, for the
account of the Banks ratably in accordance with their
respective Commitments, a facility fee for each day at a
rate per annum equal to (i) 0.125% for any day on which
Level I (as such term is used in Section 2.05) applies, (ii)
0.175% for any day on which Level II (as such term is used
in Section 2.05) applies, and (iii) 0.25% for any day on
which Level III (as such term is used in Section 2.05)
applies, on the aggregate amount of the Commitments (whether
used or unused) on such day. Such facility fees shall
accrue for each day from and including the Effective Date to
but excluding the Termination Date (or earlier date of
termination of the Commitments in their entirety). Accrued
<PAGE>
fees under this Section shall be payable quarterly in
arrears on each March 31, June 30, September 30 and December
31 during the Revolving Credit Period and on the Termination
Date (or earlier date of termination of the Commitments in
their entirety).
SECTION 2.07. Optional Termination or Reduction of
Commitments. During the Revolving Credit Period, the
Borrower may, upon at least three Domestic Business Days'
notice to the Agent, terminate at any time, or
proportionately reduce from time to time by an aggregate
amount of $1,000,000 or any larger multiple of $1,000,000,
the unused portions of the Commitments. If the Commitments
are terminated in their entirety, all accrued fees shall be
payable on the effective date of such termination.
SECTION 2.08. Mandatory Termination of Commitments.
The Commitments shall terminate on the Termination Date and
any Loans then outstanding (together with accrued interest
thereon) shall be due and payable on such date.
SECTION 2.09. Optional Prepayments. (a) The Borrower
may, upon at least one Domestic Business Day's notice to the
Agent, prepay any Base Rate Borrowing in whole at any time,
or from time to time in part in amounts aggregating
$1,000,000 or any larger multiple of $1,000,000, by paying
the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment. Each such
optional prepayment shall be applied to prepay ratably the
Loans of the several Banks included in such Borrowing.
(b) Except as provided in Section 8.02, the Borrower
may not prepay all or any portion of the principal amount of
any Fixed Rate Loan prior to the maturity thereof.
(c) Upon receipt of a notice of prepayment
pursuant to this Section, the Agent shall promptly notify
each Bank of the contents thereof and of such Bank's ratable
share of such prepayment and such notice shall not
thereafter be revocable by the Borrower.
SECTION 2.10. General Provisions as to Payments.
(a) The Borrower shall make each payment of principal of,
and interest on, the Loans and of facility fees hereunder,
not later than 12:00 noon (New York City time) on the date
when due, in Federal or other funds immediately available in
New York City, to the Agent at its address referred to in
Section 9.01. The Agent will promptly distribute to each
Bank its ratable share of each such payment received by the
<PAGE>
Agent for the account of the Banks. Whenever any payment of
principal of, or interest on, the Domestic Loans or of
facility fees shall be due on a day which is not a Domestic
Business Day, the date for payment thereof shall be extended
to the next succeeding Domestic Business Day. Whenever any
payment of principal of, or interest on, the Euro-Dollar
Loans shall be due on a day which is not a Euro-Dollar
Business Day, the date for payment thereof shall be extended
to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in
which case the date for payment thereof shall be the next
preceding Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or
otherwise, interest thereon shall be payable for such
extended time.
(b) Unless the Agent shall have received notice from
the Borrower prior to the date on which any payment is due
to the Banks hereunder that the Borrower will not make such
payment in full, the Agent may assume that the Borrower has
made such payment in full to the Agent on such date and the
Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to
the amount then due such Bank. If and to the extent that
the Borrower shall not have so made such payment, each Bank
shall repay to the Agent forthwith on demand such amount
distributed to such Bank together with interest thereon, for
each day from the date such amount is distributed to such
Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate.
SECTION 2.11. Funding Losses. If the Borrower makes
any payment of principal with respect to any Fixed Rate Loan
(pursuant to Article VI or VIII or otherwise) on any day
other than the last day of the Interest Period applicable
thereto, or the end of an applicable period fixed pursuant
to Section 2.05(d), or if the Borrower fails to borrow any
Fixed Rate Loans after notice has been given to any Bank in
accordance with Section 2.02(b), the Borrower shall
reimburse each Bank within 15 days after demand for any
resulting loss or expense incurred by it (or by an existing
or prospective Participant in the related Loan), including
(without limitation) any loss incurred in obtaining,
liquidating or employing deposits from third parties, but
excluding loss of margin for the period after any such
payment or failure to borrow, provided that such Bank shall
have delivered to the Borrower a certificate as to the
amount of such loss or expense, which certificate shall be
conclusive in the absence of manifest error.
SECTION 2.12. Computation of Interest and Fees.
Interest based on the Prime Rate hereunder and facility fees
shall be computed on the basis of a year of 365 days (or 366
<PAGE>
days in a leap year) and paid for the actual number of days
elapsed (including the first day but excluding the last
day). All other interest shall be computed on the basis of
a year of 360 days and paid for the actual number of days
elapsed (including the first day but excluding the last
day).
SECTION 2.13. Withholding Tax Exemption. At least
five Domestic Business Days prior to the first date on which
interest or fees are payable hereunder for the account of
any Bank, each Bank that is not incorporated under the laws
of the United States of America or a state thereof agrees
that it will deliver to each of the Borrower and the Agent
two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224, certifying in either case that
such Bank is entitled to receive payments under this
Agreement and the Notes without deduction or withholding of
any United States federal income taxes. Each Bank which so
delivers a Form 1001 or 4224 further undertakes to deliver
to each of the Borrower and the Agent two additional copies
of such form (or a successor form) on or before the date
that such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most
recent form so delivered by it, and such amendments thereto
or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Agent, in each case
certifying that such Bank is entitled to receive payments
under this Agreement and the Notes without deduction or
withholding of any United States federal income taxes,
unless an event (including without limitation any change in
treaty, law or regulation) has occurred prior to the date on
which any such delivery would otherwise be required which
renders all such forms inapplicable or which would prevent
such Bank from duly completing and delivering any such form
with respect to it and such Bank advises the Borrower and
the Agent that it is not capable of receiving payments
without any deduction or withholding of United States
federal income tax.
SECTION 2.14. Change of Control. If a Change of
Control shall occur (i) the Borrower will, promptly and in
any event within 20 days after the occurrence thereof, give
each Bank notice thereof and shall describe in reasonable
detail the facts and circumstances giving rise thereto and
(ii) each Bank may, by notice to the Borrower and the Agent
given not later than 20 days after such notice of Change of
Control shall have been given, terminate its Commitment,
which shall be terminated 45 days after such notice of
Change of Control shall have been given, and declare the
Note held by it, together with accrued interest thereon, and
<PAGE>
any other amounts payable hereunder for its account to be,
and such Note and such other amounts shall thereupon become,
due and payable on such forty-fifth day without presentment,
demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower; provided that no Bank
shall be obligated, without its written consent given at the
time, to make a Loan to be included in any Borrowing other
than a Refunding Borrowing during the period from and
including the date of any such Change of Control to and
including the forty-fifth day following such notice of
Change of Control.
For the purposes of this Section, the following terms
have the following meanings:
"Acquiring Person" means any Person
(excluding any trustee of any stock participation plan or
pension plan of the Borrower or any Subsidiary so long as
all such plans in the aggregate hold less than 20% of the
Voting Stock of the Borrower), who along with any Affiliates
or Associates of such Person, becomes the beneficial
owner (within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934, as amended), directly or indirectly,
of more than 10% of the Voting Stock of the Borrower.
"Affiliate" of any designated Person means any Person
that has a relationship with the designated Person whereby
either of such Persons directly or indirectly controls or is
controlled by or is under
common control with the other, or holds or beneficially owns
5% or more of the equity interest in the other or 5% or more
of any class of voting securities of the other. For this
purpose "control" means the power, direct or indirect, of
one Person to direct or cause direction of the management
and policies of another, whether by contract, through voting
securities or otherwise.
"Associate" means, with respect to any
Person, (1) any corporation or organization (other than the
Borrower or a Subsidiary of the Borrower) of which such
Person is an officer, employee or partner or is, directly or
indirectly, the beneficial owner of 10% or more of the
shares of any class, (2) any trust or other estate in which
such Person has a substantial beneficial interest or as to
which such Person serves as trustee or in a similar
fiduciary capacity, and (3) any relative or spouse of such
<PAGE>
Person, or any relative of such spouse, who has the same
home as such Person or who is a director or officer of the
Borrower or any of its Subsidiaries.
"Change in Control" of the Borrower shall be deemed to
have occurred at such time or times as (1) any Person (other
than W. Bradford Wiley, Deborah E. Wiley, Peter Booth Wiley
and William Bradford Wiley II, their Affiliates or
Associates) alone or with any Affiliates or Associates of
such Person, is or becomes the beneficial owner, directly or
indirectly, of 50% or more of the Voting Stock of the
Borrower or (2) individuals who constitute the Continuing
Directors cease for any reason to constitute at least a
majority of the Board.
"Continuing Director" means any member of the Board who
is not an Affiliate or Associate of an Acquiring Person and
who was a member of the Board immediately prior to the time
that any Acquiring Person became an Acquiring Person and any
other director who is not an Affiliate or Associate of an
Acquiring Person and who is recommended to succeed a
Continuing Director by a majority of Continuing Directors
who are then members of the Board.
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness. This Agreement shall
become effective on the date that each of the
following conditions shall have been satisfied (or waived in
accordance with Section 9.05):
(a) receipt by the Agent of counterparts hereof signed
by each of the parties hereto (or, in the case of any party
as to which an executed counterpart shall not have been
received, receipt by the Agent in form satisfactory to it of
telegraphic, telex, facsimile or other written confirmation
from such party of execution of a counterpart hereof by such
party);
(b) receipt by the Agent for the account of each Bank
of a duly executed Note dated on or before the Effective
Date complying with the provisions of Section 2.03;
<PAGE>
(c) receipt by the Agent of an opinion of Richard S.
Rudick, General Counsel for the Borrower, substantially in
the form of Exhibit B hereto and covering such additional
matters relating to the transactions contemplated hereby as
the Required Banks may reasonably request;
(d) receipt by the Agent of an opinion of Davis Polk &
Wardwell, special counsel for the Agent, substantially in
the form of Exhibit C hereto and covering such additional
matters relating to the transactions contemplated hereby as
the Required Banks may reasonably request;
(e) receipt by the Agent of a certificate signed by
the Chief Financial Officer or Treasurer of the Borrower,
dated the Effective Date, to the effect set forth in clauses
(c) and (d) of Section 3.02;
(f) receipt by the Agent of all documents it may
reasonably request relating to the existence of the
Borrower, the corporate authority for and the validity of
this Agreement and the Notes, and any other matters relevant
hereto, all in form and substance satisfactory to the Agent;
and
(g) receipt by the Agent of evidence satisfactory to
it of the payment of all principal of and interest on any
loans outstanding under, and of all other amounts payable
under, the 1992 Credit Agreement;
Provided that this Agreement shall not become effective or
be binding on any party hereto unless all of the foregoing
conditions are satisfied not later than April 15, 1995. The
Agent shall promptly notify the Borrower and the Banks of
the Effective Date, and such notice shall be conclusive and
binding on all parties hereto. The Banks that are parties
to the 1992 Credit Agreement, comprising the "Required
Banks" as defined therein, and the Borrower agree that the
commitments under the 1992 Credit Agreement shall terminate
in their entirety simultaneously with and subject to the
effectiveness of this Agreement and that the Borrower shall
be obligated to pay the accrued commitment and facility fees
thereunder to but excluding the date of such effectiveness.
SECTION 3.02. Borrowings. The obligation of any Bank
to make a Loan on the occasion of any Borrowing is subject
to the satisfaction of the following conditions:
<PAGE>
(a) receipt by the Agent of notice of such Borrowing
as required by Section 2.02;
(b) the fact that, immediately after such Borrowing,
the aggregate outstanding principal amount of the Loans will
not exceed the aggregate amount of the Commitments;
(c) the fact that, immediately before and after such
Borrowing, no Default shall have occurred and be continuing;
and
(d) the fact that the representations and warranties
of the Borrower contained in this Agreement (except, in the
case of a Refunding Borrowing, the representations and
warranties set forth in Sections 4.04(c) and 4.05 as to any
matter which has theretofore been disclosed in writing by
the Borrower to the Banks) shall be true on and as of the
date of such Borrowing.
Each Borrowing hereunder shall be deemed to be a
representation and warranty by the Borrower on the date of
such Borrowing as to the facts specified in clauses (b), (c)
and (d) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The
Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
New York, and has all corporate powers and all material
governmental licenses, authorizations, consents and
approvals required to carry on its business as now
conducted.
SECTION 4.02. Corporate and Governmental
Authorization; No Contravention. The execution, delivery
and performance by the Borrower of this Agreement and the
Notes are within the Borrower's corporate power, have been
duly authorized by all necessary corporate action, require
no action by or in respect of, or filing with, any
governmental body, agency or official and do not contravene,
<PAGE>
or constitute a default under, any provision of applicable
law or regulation or of the Restated Certificate of
Incorporation or by-laws of the Borrower or of any
agreement, judgment, injunction, order, decree or other
instrument binding upon the Borrower or result in the
creation or imposition of any Lien on any asset of the
Borrower or any of its Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement
constitutes a valid and binding agreement of the Borrower
and each Note, when executed and delivered in accordance
with this Agreement, will constitute a valid and binding
obligation of the Borrower, in each case enforceable in
accordance with its terms.
SECTION 4.04. Financial Information.
(a) The consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of April 30,
1994 and the related consolidated statements of income,
retained earnings and cash flows for the fiscal year then
ended, reported on by Arthur Andersen & Co., and set forth
in the Borrower's 1994 Form 10-K, a copy of which has been
delivered to each of the Banks, fairly present, in
conformity with GAAP, the consolidated financial position of
the Borrower and its Consolidated Subsidiaries as of such
date and their consolidated results of operations and
changes in financial position for such fiscal year.
(b) The unaudited consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of January 31,
1995 and the related unaudited consolidated condensed
statements of income for the nine months then ended, set
forth in the Borrower's quarterly report for the fiscal
quarter ended January 31, 1995 as filed with the Securities
and Exchange Commission on Form 10-Q, a copy of which has
been delivered to each of the Banks, fairly present, in
conformity with GAAP applied on a basis consistent with the
financial statements referred to in subsection (a) of this
Section, the consolidated financial position of the Borrower
and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and changes in financial
position for such nine month period (subject to normal year
end adjustments).
(c) Since January 31, 1995 there has been no material
adverse change in the business, financial position, results
of operations or prospects of the Borrower and its
Consolidated Subsidiaries, considered as a whole.
SECTION 4.05. Litigation. There is no action, suit or
proceeding pending against, or to the knowledge of the
Borrower threatened against or affecting, the Borrower or
<PAGE>
any of its Subsidiaries before any court or arbitrator or
any governmental body, agency or official in which there is
a reasonable possibility of an adverse decision which could
materially adversely affect the business, consolidated
financial position or consolidated results of operations of
the Borrower and its Consolidated Subsidiaries or which in
any manner draws into question the validity of this
Agreement or the Notes.
SECTION 4.06. Compliance with ERISA. Each member of
the ERISA Group has fulfilled its obligations under the
minimum funding standards of ERISA and the Internal Revenue
Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions
of ERISA and the Internal Revenue Code with respect to each
Plan. No member of the ERISA Group has (i) sought a waiver
of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to
make any contribution or payment to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement,
or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a
Lien or the posting of a bond or other security under ERISA
or the Internal Revenue Code or (iii) incurred any liability
under Title IV of ERISA other than a liability to the PBGC
for premiums under Section 4007 of ERISA.
SECTION 4.07. Taxes. United States Federal income tax
returns of the Borrower and its Subsidiaries have been
examined and closed through the fiscal year ended April 30,
1989, except for refund claims filed by the Borrower for the
fiscal years ended April 30, 1982 through April 30, 1989 and
currently under examination by the Internal Revenue Service.
The Borrower and its Subsidiaries have filed all United
States Federal income tax returns and all other material tax
returns which are required to be filed by them and have paid
all taxes due pursuant to such returns or pursuant to any
assessment received by the Borrower or any Subsidiary. The
charges, accruals and reserves on the books of the Borrower
and its Subsidiaries in respect of taxes or other
governmental charges are, in the opinion of the Borrower,
adequate.
SECTION 4.08. Subsidiaries. Each of the Borrower's
corporate Subsidiaries is a corporation duly incorporated,
validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate powers
and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as
now conducted.
<PAGE>
SECTION 4.09. Not an Investment Company. The Borrower
is not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
SECTION 4.10. Status of Notes. The obligations of the
Borrower under this Agreement and the Notes to pay the
principal of and interest on the Notes and any and all other
amounts due hereunder constitute direct unconditional and
general obligations of the Borrower and do rank and will
rank at least pari passu in priority of payment and in all
other respects with all other unsecured Indebtedness of the
Borrower now existing.
SECTION 4.11. Environmental Matters. The Borrower has
reasonably concluded that Environmental Laws are unlikely to
have a material adverse effect on the business, financial
condition, results of operations or prospects of the
Borrower and its Subsidiaries, considered as a whole.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has any
Commitment hereunder or any amount payable under any Note
remains unpaid:
SECTION 5.01. Information. The Borrower will deliver
to each of the Banks:
(a) as soon as available and in any event within 90
days after the end of each fiscal year,
a consolidated and consolidating balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of
such fiscal year and the related consolidated and
consolidating statements of income, retained earnings and
cash flows for such year, setting forth in each case in
comparative form the figures for the previous fiscal year,
prepared in accordance with generally accepted accounting
principles consistently applied and, in the case of the
consolidated statements, reported
on by Arthur Andersen & Co. or other independent public
accountants of nationally recognized standing, which report
shall contain no material exceptions or qualifications
except such as are not unacceptable to the Banks;
<PAGE>
(b) as soon as available and in any event within 45
days after the end of each of the first three quarters of
each fiscal year, a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of
such fiscal quarter and the related consolidated statements
of income for such quarter and for the portion of the fiscal
year ended on the last day of such quarter, and of cash
flows for the portion of the fiscal year ended on the last
day of such quarter, setting forth in each case in
comparative form the figures for the corresponding quarter
of the previous fiscal year and the corresponding portion of
the previous fiscal year, prepared in accordance with
generally accepted accounting principles consistently
applied;
(c) promptly upon the filing thereof, copies of all
registration statements (excluding registration statements
on Form S-8 or any successor form) and regular and periodic
reports filed by the Borrower with the Securities and
Exchange Commission (or any governmental agency succeeding
to the functions of said Commission) or with any stock
exchange on which the Borrower's securities are traded;
(d) promptly upon the mailing thereof to the
shareholders of the Borrower, copies of all financial
statements, reports and proxy statements which the Borrower
shall have sent to its shareholders;
(e) simultaneously with each delivery of the financial
statements referred to in subsections (a) and (b) above, a
certificate dated the date of such delivery and signed by
the Treasurer or Chief Financial Officer of the Borrower (i)
stating that such financial statements have been prepared in
conformity with generally accepted accounting principles
applied on a basis which, except as disclosed therein, is
consistent with the preceding year, or the corresponding
portion of the preceding year (subject in the case of
financial statements delivered pursuant to subsection (b)
above, to normal year-end adjustments of which none shall be
material), (ii) stating whether there existed on the date of
such financial statements or exists on the date of such
certificate any Default, and, in the case of any such
Default, specifying the nature and period of existence
<PAGE>
thereof and what action the Borrower is taking and proposes
to take with respect thereto, and (iii) stating that the
Borrower is and at all times during such period has been in
compliance with the covenants set forth in Article V hereof
and setting forth calculations demonstrating compliance with
the covenants set forth in Sections 5.06 and 5.09 through
5.13;
(f) simultaneously with each delivery of the
consolidated financial statements referred to in subsection
(a) above, a written statement of the independent public
accountants reporting on such consolidated financial
statements to the effect that in the course of the
examination upon which their report was based they became
aware of no condition or event involving financial or
accounting matters which constitutes a Default or, if such
accountants did become aware of any such Default, specifying
the nature and period of existence thereof (it being agreed
that such accountants will not be required to conduct any
special or additional audit procedures for the purpose of
enabling them to furnish such written statement);
(g) forthwith upon any officer of the
Borrower becoming aware of any Default, a certificate signed
by the Treasurer or Chief Financial Officer of the Borrower
specifying the nature and period of existence thereof and
the action which the Borrower is taking or proposes to take
with respect thereto;
(h) if and when any member of the ERISA Group (i)
gives or is required to give notice to the PBGC of any
"reportable event" (as defined in Section 4043 of ERISA)
with respect to any Plan which might constitute grounds for
a termination of such Plan under Title IV of ERISA, or knows
that the plan administrator of any Plan has given or is
required to give notice of any such reportable event, a copy
of the notice of such reportable event given or required to
be given to the PBGC; (ii) receives notice of complete or
partial withdrawal liability under Title IV of ERISA or
notice that any Multiemployer Plan is in reorganization, is
insolvent or has been terminated, a copy of such notice;
<PAGE>
(iii) receives notice from the PBGC under Title IV of ERISA
of an intent to terminate, impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or
appoint a trustee to administer any Plan, a copy of such
notice; (iv) applies for a waiver of the minimum funding
standard under Section 412 of the Internal Revenue Code, a
copy of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy of
such notice and other information filed with the PBGC; (vi)
gives notice of withdrawal from any Plan pursuant to Section
4063 of ERISA, a coy of such notice; or (vii) fails to make
any payment or contribution to any Plan or Multiemployer
Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has
resulted or could result in the imposition of a Lien or the
posting of a bond or other security, a certificate of the
chief financial officer or the treasurer of the Borrower
setting forth details as to such occurrence and action, if
any, which the Borrower or applicable member of the ERISA
Group is required or proposes to take;
(i) promptly upon the signing thereof,
notice of any lease of real or personal property under which
the Borrower or any of its Subsidiaries is obligated to make
aggregate payments of $5,000,000 or more over any period of
five years, which notice shall provide for inspection of
such leased property at such times as the Agent or the Banks
may reasonably request; and
(j) such additional information regarding the
business, assets, financial condition, results of operations
or prospects of the Borrower and its Subsidiaries as the
Agent, at the request of any Bank, may reasonably request
from time to time.
SECTION 5.02. Payment of Taxes; Insurance; Maintenance
of Corporate Existence. The Borrower will and will cause
each Subsidiary to:
(a) pay or discharge promptly when due and payable all
taxes, assessments and other governmental charges imposed
upon it or any of its property; provided that neither the
Borrower nor any Subsidiary shall be required to pay any
such tax, assessment or governmental charge if the amount,
applicability or validity thereof is being contested in good
<PAGE>
faith by appropriate proceedings (or payment may be made
without penalty) and a reserve, if appropriate, has been
established with respect thereto;
(b) maintain adequate insurance with financially sound
and reputable insurers covering all such properties and
risks as are customarily insured by, and in such amounts as
are customarily carried by, firms engaged in similar
businesses and similarly situated; and
(c) do all things necessary to preserve and keep in
full force and effect the corporate existence, rights and
franchises of the Borrower and its Subsidiaries; provided
that this Section 5.02(c) shall not prevent the Borrower or
any Subsidiary from abandoning or disposing of any of its
property or abandoning or terminating any right or franchise
if (i) such abandonment, disposition or termination does not
violate any other provision of this Agreement, (ii) in the
opinion of the Board of Directors of the Borrower, such
abandonment, disposition or termination is in the best
interest of the Borrower and is not detrimental in any
respect to the holder of any Note and (iii) all such
abandonments, dispositions and terminations do not in the
aggregate materially and adversely affect the business,
assets, financial condition, results of operations or
prospects of the Borrower and its Consolidated Subsidiaries,
taken as a whole.
SECTION 5.03. Maintenance of Property; Conduct of
Business. (a) The Borrower will keep, and will cause each
Subsidiary to keep, all property useful and necessary in its
business in good working order and condition, ordinary wear
and tear excepted.
(b) The Borrower will continue, and will cause
each Subsidiary to continue, to engage in business of the
same general type as now conducted by the Borrower and its
Subsidiaries.
SECTION 5.04. Compliance with Laws. The Borrower
will comply, and cause each Subsidiary to comply, in all
material respects with all applicable laws, ordinances,
rules, regulations, and requirements of governmental
authorities (including, without limitation, Environmental
Laws and ERISA and the rules and regulations thereunder)
except where the necessity of compliance therewith is
contested in good faith by appropriate proceedings.
<PAGE>
SECTION 5.05. Inspection of Property, Books and
Records. The Borrower will keep, and will cause each
Subsidiary to keep, proper books of record and account in
which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and
activities; and will permit, and will cause each Subsidiary
to permit, representatives of any Bank at such Bank's
expense to visit and inspect any of their respective
properties, to examine and make abstracts from any of their
respective books and records and to discuss their respective
affairs, finances and accounts with their respective
officers, employees and independent public accountants, all
at such reasonable times and as often as may reasonably be
desired.
SECTION 5.06. Limitation on Liens. The Borrower
will not, and will not permit any Subsidiary to, create,
assume or suffer to be created, assumed or incurred or to
exist any Lien upon any property or assets of the Borrower
or any Subsidiary (whether now owned or hereafter acquired)
other than:
(a) Liens securing taxes, assessments or
other governmental charges to the extent
non-payment thereof is permitted by Section
5.02(a);
(b) Liens incurred in the ordinary course of business
in connection with the workmen's compensation, unemployment
insurance and other social security obligations;
(c) Liens incurred in the ordinary course of business
but not incurred in connection with the borrowing of money,
the incurrence of Derivatives Obligations, the obtaining of
advances or the payment of the deferred purchase price of
any property or assets, including, without limitation, Liens
securing:
(i) claims of mechanics, workmen,
materialmen or other similar persons in respect of
obligations not yet due or being contested in good faith by
appropriate proceedings, or
(ii) the performance of bids, tenders or contracts
which in the aggregate do not detract in any material
<PAGE>
respect from the value of the property or assets of the
Borrower or any Subsidiary or impair in any material respect
the use thereof in the operation of the business of the
Borrower or any Subsidiary, or
(iii) leases (including equipment leases), public or
statutory obligations (other than the obligations referred
to in paragraph (a) above), surety and appeal bonds or other
similar obligations, provided that the aggregate obligations
secured by such Liens shall not exceed $15,000,000;
(d) Liens existing as of the date of this Agreement;
provided that no such Lien shall extend
to any property other than the property as to
which such Lien was in effect as of such date and the Debt
secured by such Lien shall not be increased, renewed or
extended;
(e) Liens on property to secure the payment of all or
any part of the purchase price thereof or to secure any
Debt, incurred prior to, at the time of, or within 90 days
after the acquisition of such property, for the purpose of
financing all or any part of the purchase price of such
property; provided (i) that in no event shall the amount of
Debt secured by any such Lien exceed 75% of the purchase
price or fair market value at the time of acquisition of the
property subject to such Lien, whichever is less, (ii) that
any such Lien does not extend to property other than the
property purchased or financed in connection with which such
Lien was created and (iii) that the aggregate outstanding
principal amount of all such Debt shall not exceed
$10,000,000;
(f) Liens on property or assets of any Subsidiary
operating outside the United States securing Debt of such
Subsidiary;
(g) Liens on fixed assets securing Debt not otherwise
permitted; provided that the aggregate outstanding principal
amount of all Debt secured by Liens permitted by this
paragraph and by paragraphs (d) and (e) above shall not
exceed the greater of (i) $4,000,000 or (ii) 25% of the
excess of consolidated net fixed assets over net fixed
assets subject to Liens permitted by paragraph (f) above;
<PAGE>
(h) Liens on cash and cash equivalents securing
Derivatives Obligations, provided that the aggregate amount
of cash and cash equivalents subject to such Liens may at no
time exceed $1,000,000; and
(i) Liens not otherwise permitted by the foregoing
clauses of this Section securing Debt in an aggregate
principal amount at any time outstanding not to exceed 5% of
Consolidated Net Worth.
SECTION 5.07. Consolidations, Mergers and Sales of
Assets. The Borrower will not (i) consolidate or merge with
or into any other Person or (ii) sell, lease or otherwise
transfer, directly or indirectly, all or any substantial
part of the assets of the Borrower and its Subsidiaries,
taken as a whole, to any other Person (other than property
held for sale in the ordinary course of business); provided
that the Borrower may merge with another Person if (A) the
Borrower is the corporation surviving such
merger and (B) immediately after giving effect to such
merger, no Default shall have occurred and be continuing.
SECTION 5.08. Use of Proceeds. The proceeds of
the Loans made under this Agreement will be used by the
Borrower for its general corporate purposes. None of such
proceeds will be used in violation of any applicable law or
regulation.
SECTION 5.09. Subsidiary Debt. Subsidiary
Debt will at no time exceed an amount equal to (i) 25% of
Consolidated Net Worth at such time minus (ii) the aggregate
principal amount of Debt of the Borrower outstanding at such
time secured by a Lien permitted solely under paragraph (i)
of Section 5.06.
SECTION 5.10. Consolidated Shareholders' Equity.
Consolidated Shareholders' Equity will at no time be less
than $60,000,000.
SECTION 5.11. Debt to Subsidiaries. The Borrower
will not incur any Debt owing to any Subsidiary unless the
same shall be for cash advances from such Subsidiary and
shall be subordinated and subject in right to the prior
payment in full of the Notes.
SECTION 5.12. EBIT/TD Ratio. The EBIT/TD Ratio
will not, for any period of four consecutive fiscal
quarters, be less than 20%.
<PAGE>
SECTION 5.13. Restricted Payments and Guarantees.
The Borrower will not, directly or indirectly, make any
Restricted Payment and will not, and will not permit any
Subsidiary to, make any Restricted Guarantee unless, after
giving effect to any such action,
(i) the aggregate amount of all (A) Restricted
Payments made during the period commencing on May 1, 1994
and ending on and including the date of such action
("Computation Period") and (B) Restricted Guarantees of the
Borrower and its Subsidiaries existing on the date of such
action, shall not exceed $25,000,000 plus 85% (or in the
case of a net loss, minus 100%) of Consolidated Net Income
accumulated for the Computation Period, and
(ii) no Default shall have occurred and be continuing.
The Borrower will not declare any dividend on any of its
shares payable more than 90 days after the declaration date.
The Borrower will not permit any Subsidiary to make any
Restricted Payment.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more
of the following events ("Events of Default") shall have
occurred and be continuing:
(a) the Borrower shall fail to pay when due any
principal of any Loan or shall fail to pay within five
Domestic Business Days of the due date thereof any interest,
fees or other amount payable hereunder;
(b) the Borrower shall fail to observe or perform any
covenant contained in Sections 5.06 to 5.13, inclusive; (c)
the Borrower shall fail to observe or perform any
covenant or agreement contained in this Agreement (other
than those covered by clause (a) or (b) above) for 30 days
after notice thereof has been given to the Borrower by the
Agent at the request of any Bank;
<PAGE>
(d) any representation, warranty, certification or
statement made by the Borrower in this Agreement or in any
certificate, financial statement or other document delivered
pursuant to this Agreement shall prove to have been
incorrect in any material respect when made (or deemed
made);
(e) the Borrower or any Subsidiary shall fail to pay
when due, or within any applicable period of grace, any
obligation with respect to Material Debt or Material
Financial Obligations; or any event or condition referred to
in any instrument or agreement evidencing or securing or
relating to any obligation with respect to Material Debt or
Material Financial Obligations of the Borrower or any
Subsidiary shall have occurred and be continuing which would
cause, or would permit (assuming the giving of appropriate
notice if required) any Person to cause, such obligation to
become due and payable prior to its stated maturity or the
obligations of the Borrower or any Subsidiary under any
obligation with respect to Material Debt or Material
Financial Obligations to become due and payable;
(f) the Borrower or any Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary
case or other proceeding commenced against it, or shall make
a general assignment for the benefit of creditors, or shall
fail generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the foregoing;
(g) an involuntary case or other proceeding shall be
commenced against the Borrower or any Subsidiary seeking
liquidation, reorganization or other relief with respect to
it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its
property, and such involuntary case or other proceeding
<PAGE>
shall remain undismissed and unstayed for a period of 60
days; or an order for relief shall be entered against the
Borrower or any Subsidiary under the federal
bankruptcy laws as now or hereafter in effect;
(h) any member of the ERISA Group shall fail to pay
within 30 days of the date when due an amount or amounts
aggregating in excess of $1,000,000 which it shall have
become liable to pay under Title IV of ERISA; or notice of
intent to terminate a Material Plan shall be filed under
Title IV of ERISA by any member of the ERISA Group, any plan
administrator or any combination of the foregoing; or the
PBGC shall institute proceedings under Title IV of ERISA to
terminate, to impose liability (other than for premiums
under Section 4007 of ERISA) in respect of, or to cause a
trustee to be appointed to administer any Material Plan; or
a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any Material
Plan must be terminated; or there shall occur a complete or
partial withdrawal from, or a default, within the meaning of
Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more members of
the ERISA Group to incur a current payment obligation in
excess of $10,000,000; or
(i) a judgment or order for the payment of money in
excess of $1,000,000 shall be rendered against the Borrower
or any Subsidiary and such judgment or order shall continue
unsatisfied and unstayed for a period of 30 days;
then, and in every such event, the Agent shall (i) if
requested by Banks having more than 66 2/3% in aggregate
amount of the Commitments, by notice to the Borrower
terminate the Commitments and they shall thereupon
terminate, and (ii) if requested by Banks holding Notes
evidencing more than 66 2/3% in aggregate principal amount
of the Loans, by notice to the Borrower declare the Notes
(together with accrued interest thereon) to be, and the
Notes shall thereupon become, immediately due and payable
without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower;
provided that in the case of any of the Events of Default
specified in clause (f) or (g) above with respect to the
Borrower, without any notice to the Borrower or any other
act by the Agent or the Banks, the Commitments shall
thereupon terminate and the Notes (together with accrued
interest thereon) shall become immediately due and payable
without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.
<PAGE>
SECTION 6.02. Notice of Default. The Agent shall give
notice to the Borrower under Section 6.01(c) promptly upon
being requested to do so by any Bank and shall thereupon
notify all the Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization. Each Bank
irrevocably appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers
under this Agreement and the Notes as are delegated to the
Agent by the terms hereof or thereof, together with
all such powers as are reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Morgan and its
affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with the Borrower
or any Subsidiary or affiliate of the Borrower as if it were
not the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations of the
Agent hereunder are only those expressly set forth herein.
Without limiting the generality of the foregoing, the Agent
shall not be required to take any action with respect to any
Default, except as expressly provided in Article VI.
SECTION 7.04. Consultation with Experts. The Agent
may consult with legal counsel (who may be counsel for the
Borrower), independent public accountants and other experts
selected by it and shall not be liable for any action taken
or omitted to be taken by it in good faith in accordance
with the advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Agent. Neither the Agent
nor any of its affiliates nor any of their respective
directors, officers, agents or employees shall be liable for
any action taken or not taken by it in connection herewith
(i) with the consent or at the request of the Required Banks
or (ii) in the absence of its own gross negligence or
willful misconduct. Neither the Agent nor any of its
affiliates nor any of their respective directors, officers,
agents or employees shall be responsible for or have any
duty to ascertain, inquire into or verify (i) any statement,
<PAGE>
warranty or representation made in connection with this
Agreement or any borrowing hereunder; (ii) the performance
or observance of any of the covenants or agreements of the
Borrower; (iii) the satisfaction of any condition specified
in Article III, except receipt of items required to be
delivered to the Agent; or (iv) the validity, effectiveness
or genuineness of this Agreement, the Notes or any other
instrument or writing furnished in connection herewith. The
Agent shall not incur any liability by acting in reliance
upon any notice, consent, certificate, statement, or other
writing (which may be a bank wire, telex, facsimile or
similar writing) believed by it to be genuine or to be
signed by the proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall,
ratably in accordance with its Commitment, indemnify the
Agent, its affiliates and their respective directors,
officers, agents and employees (to the extent not reimbursed
by the Borrower) against any cost, expense (including
counsel fees and disbursements), claim, demand, action, loss
or liability (except such as result from such indemnitees'
gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with this
Agreement or any action taken or omitted by such indemnitees
hereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges
that it has, independently and without reliance upon the
Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement.
Each Bank also acknowledges that it will, independently and
without reliance upon the Agent or any
other Bank, and based on such documents and information as
it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking any action
under this Agreement.
SECTION 7.08. Successor Agent. The Agent may resign
at any time by giving notice thereof to the Banks and the
Borrower. Upon any such resignation, the Required Banks
shall have the right, subject to approval by the Borrower,
to appoint a successor Agent, provided that approval of such
successor Agent by the Borrower shall not be unreasonably
withheld. If no successor Agent shall have been so
appointed by the Required Banks, and shall have accepted
such appointment, within 30 days after the retiring Agent
gives notice of resignation, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, which shall
be a commercial bank organized or licensed under the laws of
the United States of America or of any State thereof and
<PAGE>
having a combined capital and surplus of at least
$50,000,000. Upon the acceptance of its appointment as
Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the
rights and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation hereunder
as Agent, the provisions of this Article shall inure to its
benefit as to any actions taken or omitted to be taken by it
while it was Agent.
SECTION 7.09. Agent's Fee. The Borrower shall pay to
the Agent for its own account fees in the amounts and at the
times previously agreed upon between the Borrower and the
Agent.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair. If on or prior to the first day of
any Interest Period for any Fixed Rate Borrowing:
(a) the Agent is advised by Morgan that deposits in
dollars (in the applicable amounts)
are not being offered to Morgan in the relevant
market for such Interest Period, or
(b) Banks having 50% or more of the aggregate amount
of the Commitments advise the Agent that the Adjusted CD
Rate or the Adjusted London Interbank Offered Rate, as the
case may be, as determined by the Agent will not adequately
and fairly reflect the cost to such Banks of funding their
CD Loans or Euro-Dollar Loans, as the case may be, for such
Interest Period,
the Agent shall forthwith give notice thereof to the
Borrower and the Banks, whereupon until the Agent notifies
the Borrower that the circumstances giving rise to such
suspension no longer exist, the obligations of the Banks to
make CD Loans or Euro-Dollar Loans, as the case may be,
shall be suspended. Unless the Borrower notifies the Agent
at least two Domestic Business Days before the date of any
Fixed Rate Borrowing for which a Notice of Borrowing has
previously been given that it elects not to borrow on such
date, such Borrowing shall instead be made as a Base Rate
Borrowing.
<PAGE>
SECTION 8.02. Illegality. If, on or after the date of
this Agreement, the adoption of any applicable law, rule or
regulation, or any change in any applicable law, rule or
regulation, or any change in the interpretation or
administration thereof by any governmental authority,
central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by
any Bank (or its Euro-Dollar Lending Office) with any
request or directive (whether or not having the force of
law) of any such authority, central bank or comparable
agency shall make it unlawful or impossible for any Bank (or
its Euro-Dollar Lending Office) to make, maintain or fund
its Euro-Dollar Loans and such Bank shall so notify the
Agent, the Agent shall forthwith give notice thereof to the
other Banks and the Borrower, whereupon until such Bank
notifies the Borrower and the Agent that the circumstances
giving rise to such suspension no longer exist, the
obligation of such Bank to make Euro-Dollar Loans shall be
suspended. Before giving any notice to the Agent pursuant
to this Section, such Bank shall designate a different Euro
Dollar Lending Office if such designation will avoid the
need for giving such notice and will not, in the judgment of
such Bank, be otherwise disadvantageous to such Bank. If
such Bank shall determine that it may not lawfully continue
to maintain and fund any of its outstanding Euro-Dollar
Loans to maturity and shall so specify in such notice, the
Borrower shall immediately prepay in full the then
outstanding principal amount of each such Euro-Dollar Loan,
together with accrued interest thereon. Concurrently with
prepaying each such Euro-Dollar Loan, the Borrower shall
borrow a Base Rate Loan in an equal principal amount from
such Bank (on which interest and principal shall be payable
contemporaneously with the related Euro-Dollar Loans of the
other Banks), and such Bank shall make such a Base Rate
Loan.
SECTION 8.03. Increased Cost and Reduced Return. (a)
If on or after the date hereof, the adoption of any
applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance
by any Bank (or its Applicable Lending Office) with any
request or directive (whether or not having the force of
law) of any such authority, central bank or comparable
agency:
(i) shall subject any Bank (or its
Applicable Lending Office) to any tax, duty or
<PAGE>
other charge with respect to its Fixed Rate Loans, its Notes
or its obligation to make Fixed Rate Loans, or shall change
the basis of taxation of payments to any Bank (or its
Applicable Lending Office) of the principal of or interest
on its Fixed Rate Loans or any other amounts due under this
Agreement in respect of its Fixed Rate Loans or its
obligation to make Fixed Rate Loans (except for changes in
the rate of tax on the overall net income of such Bank or
its Applicable Lending Office imposed by the jurisdiction in
which such Bank's principal executive office or Applicable
Lending Office is located); or
(ii) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement (including,
without limitation, any such requirement imposed by the
Board of Governors of the Federal Reserve System, but
excluding (A) with respect to any CD Loan any such requirement
included in an applicable Domestic Reserve Percentage and
(B) with respect to any Euro-Dollar Loan any such
requirement included in an applicable Euro-Dollar Reserve
Percentage) against assets of, deposits with or for the
account of, or credit extended by, any Bank (or its
Applicable Lending Office) or shall impose on any Bank (or
its Applicable Lending Office) or on the United States
market for certificates of deposit or the London interbank
market any other condition affecting its Fixed Rate Loans,
its Notes or its obligation to make Fixed Rate Loans;
and the result of any of the foregoing is to increase the
cost to such Bank (or its Applicable Lending Office) of
making or maintaining any Fixed Rate Loan, or to reduce the
amount of any sum received or receivable by such Bank (or
its Applicable Lending Office) under this Agreement or under
its Notes with respect thereto, by an amount deemed by such
Bank to be material, then, within 15 days after demand by
such Bank (with a copy to the Agent), the Borrower shall pay
to such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction.
(b) If any Bank shall have determined that, after
the date hereof, the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change in any
such law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental
<PAGE>
authority, central bank or comparable agency charged with
the interpretation or administration thereof, or any request
or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank
or comparable agency, has or would have the effect of
reducing the rate of return on capital of such Bank (or its
Parent) as a consequence of such Bank's obligations
hereunder to a level below that which such Bank (or its
Parent) could have achieved but for such adoption, change or
compliance (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by such
Bank to be material, then from time to time, within 15 days
after demand by such Bank (with a copy to the Agent), the
Borrower shall pay to such Bank such additional amount or
amounts as will compensate such Bank (or its Parent) for
such reduction.
(c) Each Bank will promptly notify the Borrower
and the Agent of any event of which it has knowledge,
occurring after the date hereof, which will entitle such
Bank to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such
designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. A
certificate of any Bank claiming compensation under this
Section and setting forth the additional amount or amounts
to be paid to it hereunder shall be conclusive in the
absence of manifest error. In determining such amount, such
Bank may use any reasonable averaging and attribution
methods.
SECTION 8.04. Base Rate Loans Substituted for Affected
Fixed Rate Loans. If (i) the obligation of any Bank to make
Euro-Dollar Loans has been suspended pursuant to Section
8.02 or (ii) any Bank has demanded compensation under
Section 8.03(a) and the Borrower shall, by at least five
Euro-Dollar Business Days' prior notice to such Bank through
the Agent, have elected that the provisions of this Section
shall apply to such Bank, then, unless and until such Bank
notifies the Borrower that the circumstances giving rise to
such suspension or demand for compensation no longer apply:
(a) all Loans which would otherwise be made
by such Bank as CD Loans or Euro-Dollar Loans, as
the case may be, shall be made instead as Base
Rate Loans (on which interest and principal shall be payable
contemporaneously with the related Fixed Rate Loans of the
other Banks), and
<PAGE>
(b) after each of its CD Loans or Euro-Dollar Loans,
as the case may be, has been repaid, all payments of
principal which would otherwise be applied to repay such
Fixed Rate Loans shall be applied to repay its Base Rate
Loans instead.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and
other communications to any party hereunder shall be in
writing (including bank wire, telex, facsimile transmission
or similar writing) and shall be given to such party: (x)
in the case of the Borrower or the Agent, at its address or
facsimile number set forth on the signature pages hereof,
(y) in the case of any Bank, at its address or telex or
facsimile number set forth in its Administrative
Questionnaire or (z) in the case of any party, such other
address or telex or facsimile number as such party may
hereafter specify for the purpose by notice to the Agent and
the Borrower. Each such notice, request or other
communication shall be effective (i) if given by telex, when
such telex is transmitted to the telex number specified in
this Section and the appropriate answerback is received,
(ii) if given by mail, 72 hours after such communication is
deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means,
when received at the address specified in this Section;
provided that notices to the Agent under Article II or
Article VIII shall not be effective until received.
SECTION 9.02. No Waivers. No failure or delay by the
Agent or any Bank in exercising any right, power or
privilege hereunder or under any Note shall operate as a
waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law.
SECTION 9.03. Expenses; Documentary Taxes;
Indemnification. (a) The Borrower shall pay (i) all out-of
pocket expenses of the Agent, including fees and
disbursements of special counsel for the Agent, in
connection with the preparation of this Agreement, any
waiver or consent hereunder or any amendment hereof or any
Default or alleged Default hereunder and (ii) if an Event of
Default occurs, all out-of-pocket expenses incurred by the
<PAGE>
Agent or any Bank, including fees and disbursements of
counsel, in connection with such Event of Default and
collection and other enforcement proceedings resulting
therefrom. The Borrower shall indemnify each Bank against
any transfer taxes, documentary taxes, assessments or
charges made by any governmental authority by reason of the
execution and delivery of this Agreement or the Notes.
(b) The Borrower agrees to indemnify the Agent and
each Bank, their respective affiliates and the respective
directors, officers, agents and employees of the foregoing
(each an "Indemnitee") and hold each Indemnitee harmless
from and against any and all damages, costs and expenses of
any kind (including, without limitation, the reasonable fees
and disbursements of counsel for any Indemnitee in
connection with any investigative, administrative or
judicial proceeding, whether or not such Indemnitee shall be
designated a party thereto) which may be incurred by any
Indemnitee, relating to or arising out of this Agreement or
any actual or proposed use of proceeds of Loans hereunder;
provided that no Indemnitee shall have the right to be
indemnified hereunder for its own gross negligence or
willful misconduct as determined by a court of competent
jurisdiction. The Borrower shall not be liable for any
settlement effected without the Borrower's consent, which
consent shall not be unreasonably withheld.
SECTION 9.04. Sharing of Set-Offs. Each Bank agrees
that if it shall, by exercising any right of set-off or
counterclaim or otherwise, receive payment of a proportion
of the aggregate amount of principal and interest due with
respect to any Note held by it which is greater than the
proportion received by any other Bank in respect of the
aggregate amount of principal and interest due with respect
to any Note held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such
participation in the Notes held by the other Banks, and such
other adjustments shall be made, as may be required so that
all such payments of principal and interest with respect to
the Notes held by the Banks shall be shared by the Banks pro
rata; provided that nothing in this Section shall impair the
right of any Bank to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to
such exercise to the payment of indebtedness of the Borrower
other than its indebtedness under the Notes. The Borrower
agrees, to the fullest extent it may effectively do so under
applicable law, that any holder of a participation in a
Note, whether or not acquired pursuant to the foregoing
arrangements, may exercise rights of set-off or counterclaim
and other rights with respect to such participation as fully
as if such holder of a participation were a direct creditor
of the Borrower in the amount of such participation.
<PAGE>
SECTION 9.05. Amendments and Waivers. Any provision
of this Agreement or the Notes may be amended or waived if,
but only if, such amendment or waiver is in writing and is
signed by the Borrower and the Required Banks
(and, if the rights or duties of the Agent are affected
thereby, by the Agent); provided that no such amendment or
waiver shall, unless signed by all the Banks, (i) increase
or decrease the Commitment of any Bank (except for a ratable
decrease in the Commitments of all Banks) or subject any
Bank to any additional obligation, (ii) reduce the principal
of, accrued interest on, or rate of interest on, any Loan or
any fees hereunder, (iii) postpone the date fixed for any
payment of principal of or interest on any Loan or any fees
hereunder or the Termination Date or (iv) change the
percentage of the Commitments or of the aggregate unpaid
principal amount of the Notes, or the number of Banks, which
shall be required for the Banks or any of them to take any
action under this Section or any other provision of this
Agreement.
SECTION 9.06. Successors and Assigns. (a) The
provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrower may not
assign or otherwise transfer any of its rights under this
Agreement without the prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more
banks or other institutions (each a "Participant")
participating interests in its Commitment or any or all of
its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon
notice to the Borrower and the Agent, such Bank shall remain
responsible for the performance of its obligations
hereunder, and the Borrower and the Agent shall continue to
deal solely and directly with such Bank in connection with
such Bank's rights and obligations under this Agreement. Any
agreement pursuant to which any Bank may grant such a
participating interest shall provide that such Bank shall
retain the sole right and responsibility to enforce the
obligations of the Borrower hereunder including, without
limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement; provided that
such participation agreement may provide that such Bank will
not agree to any modification, amendment or waiver of this
Agreement described in clause (i), (ii) or (iii) of Section
9.05 without the consent of the Participant. The Borrower
agrees that each Participant shall, to the extent provided
in its participation agreement, be entitled to the benefits
<PAGE>
of Article VIII with respect to its participating interest.
An assignment or other transfer which is not permitted by
subsection (c) or (d) below shall be given effect for
purposes of this Agreement only to the extent of a
participating interest granted in accordance with this
subsection (b).
(c) Any Bank may at any time assign to one or more
banks or other institutions (each an "Assignee") all, or a
proportionate part of all, of its rights and obligations
under this Agreement and the Notes, and such Assignee shall
assume such rights and obligations, pursuant to an
instrument executed by such Assignee and such transferor
Bank, with (and subject to) the subscribed consent of the
Borrower and the Agent; provided that if an Assignee is an
affiliate of such transferor Bank, no such consent shall be
required. Upon execution and delivery of such an instrument
and payment by such Assignee to such transferor Bank of an
amount equal to the purchase price agreed between such
transferor Bank and such Assignee, such Assignee shall be a
Bank party to this Agreement and shall
have all the rights and obligations of a Bank with a
Commitment as set forth in such instrument of assumption,
and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required.
Upon the consummation of any assignment pursuant to this
subsection (c), the transferor Bank, the Agent and the
Borrower shall make appropriate arrangements so that, if
required, a new Note is issued to the Assignee. If the
Assignee is not incorporated under the laws of the United
States of America or a state thereof, it shall, prior to the
first date on which interest or fees are payable hereunder
for its account, deliver to the Borrower and the Agent
certification as to exemption from deduction or withholding
of any United States federal income taxes in accordance with
Section 2.13.
(d) Any Bank may at any time assign all or any portion
of its rights under this Agreement and its Note to a Federal
Reserve Bank. No such assignment shall release the
transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of
any Bank's rights shall be entitled to receive any greater
payment under Section 8.03 than such Bank would have been
entitled to receive with respect to the rights transferred,
unless such transfer is made with the Borrower's prior
written consent or by reason of the provisions of Section
8.02 or 8.03 requiring such Bank to designate a different
Applicable Lending Office under certain circumstances or at
a time when the circumstances giving rise to such greater
payment did not exist.
<PAGE>
SECTION 9.07. Collateral. Each of the Banks
represents to the Agent and each of the other Banks that it
in good faith is not relying upon any "margin stock" (as
defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
SECTION 9.08. New York Law. This Agreement and each
Note shall be construed in accordance with and governed by
the law of the State of New York.
SECTION 9.09. Counterparts; Integration. This
Agreement may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement
and understanding among the parties hereto and supersedes
any and all prior agreements and understandings, oral or
written, relating to the subject matter hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
JOHN WILEY & SONS, INC.
By /s/ Robert D. Wilder
Senior Vice President
& Chief Financial Officer
605 Third Avenue
New York, New York 10058-0012
Facsimile number: (212) 850-6088
Commitments
$20,000,000 MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By /s/ Vance B. Barbour
Associate
$15,000,000 CHEMICAL BANK
By /s/ Debra J. Runkle
Vice President
$15,000,000 CORESTATES BANK, N.A.
By /s/ Melissa G. Landay
Assistant Vice President
_________________
Total Commitments
$50,000,000
=================
<PAGE>
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /s/ Vance B. Barbour
Associate
60 Wall Street
New York, New York 10260-0060
Attention: Vance B. Barbour
Facsimile number: (212) 648-5017
<PAGE>
EXHIBIT A
NOTE
New York, New York
March 30, 1995
For value received, JOHN WILEY & SONS, INC., a New York
corporation (the "Borrower"), promises to pay to the
order of ______________ (the "Bank"), for the account of its
Applicable Lending Office, the unpaid principal amount of
each Loan made by the Bank to the Borrower pursuant to the
Credit Agreement referred to below on the last day of the
Interest Period relating to such Loan. The Borrower
promises to pay interest on the unpaid principal amount of
each such Loan on the dates and at the rate or rates
provided for in the Credit Agreement. All such payments of
principal and interest shall be made in lawful money of the
United States in Federal or other immediately available
funds at the office of Morgan Guaranty Trust Company of New
York, 60 Wall Street, New York, New York.
All Loans made by the Bank, the respective types and
maturities thereof and all repayments of the principal
thereof shall be recorded by the Bank and, prior to any
transfer hereof, appropriate notations to evidence the
foregoing information with respect to each such Loan then
outstanding shall be endorsed by the Bank on the schedule
attached hereto, or on a continuation of such schedule
attached to and made a part hereof; provided that the
failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the Credit
Agreement dated as of March 30, 1995 among the Borrower, the
banks listed on the signature pages thereof and Morgan
Guaranty Trust Company of New York, as Agent (as the same
may be amended from time to time, the "Credit Agreement").
Terms defined in the Credit Agreement are used herein with
the same meanings. Reference is made to the Credit
Agreement for provisions for the prepayment hereof and the
acceleration of the maturity hereof.
JOHN WILEY & SONS, INC.
By___________________________
Title:
<PAGE>
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
____________________________________________________________
Amount of
Amount of Type of Principal Maturity Notation
Date Loan Loan Repaid Date Made By
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
<PAGE>
EXHIBIT B
OPINION OF
COUNSEL FOR THE BORROWER
March 30, 1995
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260-0060
Dear Sirs:
I am counsel for John Wiley & Sons, Inc., a New York
corporation (the "Borrower") and have acted as counsel to
the Borrower in connection with the Credit Agreement (the
"Agreement") dated as of March 30, 1995 among the Borrower,
the banks named therein and Morgan Guaranty Trust Company of
New York, as Agent. Terms defined in the Agreement are used
herein as therein defined.
I have examined originals or copies, certified or
otherwise identified to my satisfaction, of such documents,
corporate records, certificates of public officials and
other instruments and have conducted such other
investigations of fact and law as we have deemed necessary
or advisable for purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion
that:
1. The Borrower is a corporation duly
incorporated, validly existing and in good standing under
the laws of the State of New York, and has all corporate
powers and all material governmental licenses,
authorizations, consents and approvals required to carry on
its business as now conducted.
<PAGE>
2. The execution, delivery and performance by the
Borrower of the Agreement and each Note are within the
Borrower's corporate power, have been duly authorized by all
necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or
official and do not contravene, or constitute a default
under, any provision of applicable law or regulation or of
the Restated Certificate of Incorporation or by-laws of the
Borrower or of any agreement, judgment, injunction, order,
decree or other instrument binding upon the Borrower or
result in the creation or imposition of any Lien on any
asset of the Borrower or any of its Subsidiaries.
3. The Agreement constitutes a valid and binding
agreement of the Borrower and each Note constitutes a valid
and binding obligation of the Borrower, in each case
enforceable in accordance with its terms, except as the same
may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and by general
principles of equity.
4. There is no action, suit or proceeding pending
against, or to the best of my knowledge threatened against
or affecting the Borrower or any of its Subsidiaries before
any court or arbitrator or any governmental body, agency or
official, in which there is a reasonable possibility of an
adverse decision which could materially adversely affect the
business, consolidated financial position or consolidated
results of operations of the Borrower and its Consolidated
Subsidiaries or which in any manner draws into question the
validity of the Agreement or each Note.
5. I have no reason to believe that each of the
Borrower's Subsidiaries is not a corporation duly
incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation, or that each
does not have all corporate powers and all material
governmental licenses, authorizations, consents and
approvals required to carry on its business as now
conducted.
Very truly yours,
<PAGE>
EXHIBIT C
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENT
March 30, 1995
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260-0060
Dear Sirs:
We have participated in the preparation of the Credit
Agreement (the "Credit Agreement") dated as of March 30,
1995 among John Wiley & Sons, Inc., a New York corporation
(the "Borrower"), the banks listed on the signature pages
thereof (the "Banks") and Morgan Guaranty Trust Company of
New York, as Agent (the "Agent"), and have acted as special
counsel for the Agent for the purpose of rendering this
opinion pursuant to Section 3.01(d) of the Credit Agreement.
Terms defined in the Credit Agreement are used herein as
therein defined.
We have examined originals or copies, certified or
otherwise identified to our satisfaction, of such documents,
corporate records, certificates of public officials and
other instruments and have conducted such other
investigations of fact and law as we have deemed necessary
or advisable for purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion
that:
1. The execution, delivery and performance by the
Borrower of the Credit Agreement and each Note are within
the Borrower's corporate powers and have been duly
authorized by all necessary corporate action.
2. The Credit Agreement constitutes a valid and
binding agreement of the Borrower and each Note constitutes
<PAGE>
a valid and binding obligation of the Borrower, in each case
enforceable in accordance with its terms, except as the same
may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and by general
principles of equity.
We are members of the Bar of the State of New York and
the foregoing opinion is limited to the laws of the State of
New York and the federal laws of the United States of
America. In giving the foregoing opinion, we express no
opinion as to the effect (if any) of any law of any
jurisdiction (except the State of New York) in which any
Bank is located which limits the rate of interest that such
Bank may charge or collect.
This opinion is rendered solely to you in connection
with the above matter. This opinion may not be relied upon
by you for any other purpose or relied upon by any other
person without our prior written consent.
Very truly yours,
Exhibit 10.12
JOHN WILEY & SONS, INC.
FY 1996 EXECUTIVE ANNUAL INCENTIVE PLAN
PLAN DOCUMENT
CONFIDENTIAL
JUNE 15, 1995
<PAGE>
CONTENTS
Section Subject Page
I. Definitions 2
II. Plan Objectives 3
III. Eligibility 3
IV. Performance Objectives and Measurement 3
V. Performance Evaluation 4
VI. Payouts 6
VII. Status Changes 6
VIII. Administration and Other Matters 6
-1-
<PAGE>
I. DEFINITIONS
Following are definitions for words and phrases used in this document.
Unless the context clearly indicates otherwise, these words and
phrases are considered to be defined terms and appear in this document
in italicized print:
company John Wiley & Sons, Inc.
plan The company's FY (Fiscal Year) 1996 Executive Annual Incentive
Plan described in this document and any written amendments to this
document.
plan year The twelve month period from May 1, 1995 to April 30,
1996.
executive compensation and development committee (ECDC) The
committee of the company's Board of Directors (Board) responsible for
reviewing executive compensation.
financial goals A participant's objective to achieve specific
financial results for FY 1996, including interim revised financial
goals, if any, as approved and communicated in writing, as described
in Sections IV and V below.
financial results Total company or division achievement against
financial goals set for FY 1996.
strategic milestone A participant's objective to achieve specific
results for FY 1996, including interim revised strategic milestones,
if any, as approved and communicated in writing, as described in
Sections IV and V below. Strategic milestones are leading indicators
of performance.
participant Any person who is eligible to and is selected to
participate in the plan, as defined in Section III.
base salary The participant's total amount of base salary,
calculated as follows: base salary as of June 26,1995, or the date
of hire, or promotion into the plan, if later, adjusted for any
increases or decreases during FY 1996, on a prorated basis and
adjusted for any amount of time the participant may not be in the plan
for reasons of hire, promotion, death, disability, retirement and/or
termination.
payout Actual gross dollar amount paid to a participant under the
plan, if any, for achievement of financial goals and strategic
milestones, as further discussed in this plan.
target incentive percent The percent applied to the participant's
base salary to determine the target incentive amount.
target incentive amount The amount, if any, that a participant is
eligible to receive if a participant achieves 100% of his/her
financial goals and strategic milestones. The incentive for financial
goals should constitute at least 70% of the target incentive amount
for the participant.
performance levels
threshold The minimum acceptable level of achievement of each
financial goal and strategic milestone. If threshold performance
is achieved against all financial goals and strategic milestones, a
participant may earn 50% of the target incentive amount for which
he/she is eligible.
target Achievement in aggregate of target financial goals and
strategic milestones. Each individual financial goal and strategic
milestone is set at a level which is both challenging and
achievable.
outstanding Superior achievement of financial goals and strategic
milestones, both in quality and scope, with limited time and
resources. If outstanding performance is achieved against all
financial goals and strategic milestones, the maximum amount a
participant may earn is 150% of the target incentive amount.
-2-
<PAGE>
payout factor Percentage of financial goals and strategic milestones
deemed achieved, used to determine the payout for which a participant
is eligible.
II. PLAN OBJECTIVES
The purpose of the FY 1996 Executive Annual Incentive Plan is to
enable the company to reinforce and sustain a culture devoted to
excellent performance, emphasize performance at the corporate and
division levels, reward significant contributions to the success of
Wiley, and attract and retain highly qualified executives.
III. ELIGIBILITY
The participant is selected by the President and CEO of the company,
from among those employees in key management positions deemed able to
make the most significant contributions to the growth and
profitability of the company, with the approval of the ECDC. The
President and CEO of the company is a participant.
IV. PERFORMANCE OBJECTIVES AND MEASUREMENT
The plan employs two categories of objectives for performance
measurement: financial goals and strategic milestones. The weighting
of and between the two measures may vary, depending upon the
participant's position. Weighting is recommended by the participant's
manager and approved by the President and CEO, if the President and
CEO is not the participant's manager.
A.Financial Goals
1. Financial goals for the company are determined near the
beginning of the plan year by the President and CEO. The
President and CEO's goals are reviewed and approved by the
Finance Committee of the Board and ECDC, and approved by the
Board.
2. Financial goals are set for the company as a whole and for each
division and may be revised in the interim, as appropriate. The
participant will be given specific financial goals, based on an
appropriate mix of company and/or division objectives.
3. Financial goals include defining levels of performance
(threshold, target and outstanding) and the measures of each.
B. Strategic Milestones
1. Strategic milestones are non-financial individual objectives
over which the participant has a large measure of control, which
lead to, or are expected to lead to improved performance for the
company in the future. Strategic milestones are determined near
the beginning of the plan year by the participant, and approved
by the participant's manager, if the President and CEO is not
the participant's manager.
2. The strategic milestones for the President and CEO are reviewed
and approved by the Executive and Policy Committee of the Board
and by the Board.
3. The strategic milestones for the President and CEO should be
appropriately reflected in those of all other employees at all
levels. Each participant collaborates with his/her manager in
setting strategic milestones. The strategic milestones may be
revised in the interim, as appropriate.
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4. The determination of strategic milestones includes defining a
target level of performance and the measure of such, and may
include defining threshold and outstanding levels of performance
and the measures of such.
V. PERFORMANCE EVALUATION
A. Financial Results
1. Actual financial results achieved by the company and by each
group and division will be calculated at the end of the plan
year, subject to adjustment for audited results, and will be
compared with previously set financial goals.
2. Actual financial results will be reviewed by the participant's
manager and the President and CEO and a payout factor
determined. The payout factor is based on a judgment of the
relative importance of financial results and the achievement
compared to the financial goals. This payout factor is subject
to the review and approval of the President and CEO. The ECDC
will evaluate the President and CEO's financial results and
will recommend to the Board his/her financial results payout
factor.
B. Strategic Milestones
1. Achievement of a participant's strategic milestones will be
determined at the end of the plan year by comparing results
achieved to previously set objectives.
2. Each participant's manager will recommend a payout factor for
achievement of all strategic milestones compared with the
previously set objectives. In determining the payout factor,
the overall performance on all strategic milestones will be
considered. This payout factor is subject to the review and
approval of the President and CEO, the ECDC and the Board. The
ECDC will recommend to the Board for approval the payout factor
for the President and CEO's achievement of his/her strategic
milestones based on the Executive and Policy Committee of the
Board's evaluation of his/her achievement compared with the
previously set objectives.
C. Award Determination
1. Financial goals, established for each participant, may include
one or more organizational level's financial goals (e.g.
company and division), and one or more financial goal for a
particular organizational unit. At least threshold
performance, in aggregate, of a participant's particular
organizational level is necessary for the participant to
receive a payout for the particular organizational level.
However, once the overall threshold is achieved, the non-
achievement of any one particular financial goal's target
objective does not preclude a payout for all the participant's
financial goals.
2. At least threshold performance of financial goals is required
of the participant's organizational level for a payout of
strategic milestones to be made. If the participant is
measured against more than one organizational level, at least
threshold performance of financial goals, is required of the
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organizational level which has the greatest percent weighting
of the organizational levels' target incentive amount for a
payout of strategic milestones to be made. If the percent
weighting of the target incentive amount is equal for all the
organizational levels against which the participant is
measured, then at least threshold performance of financial
goals is required of all the participant's organizational
levels for a payout of strategic milestones to be made.
3. Payout eligibility will be determined by calculating the amount
for achievement of financial goals and strategic milestones and
adding the two together, as follows:
EAIP PAYOUT ELIGIBILITY CALCULATION
FINANCIAL RESULTS PAYOUT AMOUNT
Base Salary X Target Incentive Percent
X Weighting of Financial Goals X Payout Factor
= Financial Goals Payout Eligibility
STRATEGIC MILESTONES PAYOUT AMOUNT
Base Salary X Target Incentive Percent
X Weighting of Strategic Milestones X Payout Factor
= Strategic Milestones Payout Eligibility
EAIP PAYOUT ELIGIBILITY
Financial Goals Payout Amount + Strategic Milestones Payout Amount
= EAIP Payout Eligibility
4. Notwithstanding anything to the contrary, the maximum payout,
if any, a participant may receive is 150% of the target
incentive amount.
5. The foregoing EAIP payout eligibility calculation is intended
to set forth general guidelines on how awards are to be
determined. The purpose of this plan is to motivate the
participant to perform in an outstanding manner. The President
and CEO has discretion under this plan to take into
consideration the contribution of the participant, the
participant's management of his/her organizational unit and
other relevant factors, positive or negative, which impact the
company's, the participant's organizational unit(s), and the
participant's performance overall in determining whether to
recommend granting or denying an award, and the amount of the
award, if any. If the participant is the President and CEO,
such discretion is to be exercised by the ECDC and the Board.
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VI. PAYOUTS
Payouts will be made within 90 days after the end of the plan year and
will be based on audited financial results.
VII. STATUS CHANGES
A. In the event of a participant's death, disability, retirement or
leave of absence prior to payout from the plan, the payout, if
any, will be determined by the President and CEO in his/her sole
discretion, subject to any approval of the ECDC in its sole
discretion, subject to any required Board approvals. If the
participant is the President and CEO, such approval is required by
the Board, in its sole discretion.
B. A participant who resigns, or whose employment is terminated by
the company, with or without cause, before payout from the plan is
distributed, will not receive a payout. Exception to this
provision shall be made only with the approval of the ECDC, in its
sole discretion, subject to any required Board approvals. If the
participant is the President and CEO, such approval is required by
the Board in its sole discretion.
C. A participant who transfers between divisions of the company, will
have his/her payout prorated to the nearest fiscal quarter for the
time spent in each division, based on the achievement of financial
goals and strategic milestones established for the position in
each division, and based upon a judgment of the participant's
contribution to the achievement of goals in each position,
including interim revisions, if appropriate.
D. A participant who is appointed to a position with a different
target incentive percent will have his/her payout prorated to the
nearest fiscal quarter for the time spent in each position, based
on the achievement of financial goals and strategic milestones
established for each position.
E. A participant who is hired or promoted into an eligible position
during the plan year may receive a prorated payout as determined
by the President and CEO, in his/her sole discretion, subject to
the approval of the ECDC.
VIII. ADMINISTRATION AND OTHER MATTERS
A. The plan is effective for the plan year. It will terminate,
subject to payout, if any, in accordance with and subject to the
provisions of this plan unless renewed by the company in writing
in its sole discretion.
B. This plan will be administered by the President and CEO, who will
have authority to interpret and administer this plan, including,
without limitation, all questions regarding eligibility and status
of the participant, subject to the approval of the ECDC required
under this plan or the by-laws of the company.
C. This plan may be withdrawn, amended or modified at any time, and
for any reason, in writing, in the company's sole discretion.
D. The determination of an award and payout under this plan, if any,
is subject to the approval of the President and CEO, the ECDC, and
the Board in their sole discretion. This plan does not confer
upon any participant the right to receive any payout, or payment
of any kind whatsoever.
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E. No participant shall have any vested rights under this plan. This
plan does not constitute a contract.
F. All deductions and other withholdings required by law shall be
made to the participant's payout, if any.
Exhibit 10.13
JOHN WILEY & SONS, INC.
FY 1996 EXECUTIVE LONG TERM INCENTIVE PLAN
PLAN DOCUMENT
CONFIDENTIAL
JUNE 15, 1995
<PAGE>
CONTENTS
Section Subject Page
I. Definitions 2
II. Plan Objectives 4
III. Eligibility 4
IV. Incentive 4
V. Performance Measurement and Objectives 4
VI. Performance Evaluation 5
VII. Payouts 6
VIII. Restricted Stock Award Provisions 7
IX. Stock Option 8
X. Administration and Other Matters 8
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I. DEFINITIONS
Following are definitions for words and phrases used in this document.
Unless the context clearly indicates otherwise, these words and
phrases are considered to be defined terms and appear in this document
in italicized print:
company John Wiley & Sons, Inc.
plan The company's FY (Fiscal Year) 1996 Executive Long Term
Incentive Plan as set forth in this document.
shareholder plan The company's 1991 Key Employee Stock Plan.
plan cycle The three year period from May 1, 1995 to April 30,
1998.
executive compensation and development committee (ECDC) The
committee of the company's Board of Directors (Board) responsible for
reviewing executive compensation.
cumulative financial goals The company's objectives to achieve
specific cumulative financial results in terms of income, cash flow,
return on equity and return on investment, as defined below, for the
plan cycle, including interim revised cumulative financial goals, if
any, as determined by the ECDC, the Finance Committee and the Board,
and confirmed in writing.
cumulative financial results The company's actual achievement
against the cumulative financial goals set for the plan cycle, as
reflected in the company's audited financial statements.
participant Any person who is eligible and is selected to
participate in the plan, as defined in Section III.
target incentive The target incentive has two components as
determined and authorized by the ECDC at the committee meeting held on
June 15, 1995: a restricted stock award, and cash, which combined
represent the value that a participant is eligible to receive if 100%
of his/her applicable cumulative financial goals are achieved and the
participant remains an employee of the company through April 30, 2000,
except as otherwise provided in Section VIII. The target incentive is
based on the participant's position and is described in Section IV.
stock Class A Common Stock of the company.
restricted stock Stock issued pursuant to this plan and the
shareholder plan that is subject to forfeiture. The value of each
share of restricted stock under this plan will be determined by
reference to the stock closing sale price, as reported by NASDAQ, on
the date the ECDC acts at the beginning of the plan cycle (June 15,
1995). In the event the stock is not traded on June 15, 1995 or the
date the ECDC acts, whichever is later, the closing sales price shall
be the price of the stock on the next day after June 15, 1995 or the
date the ECDC acts on which the stock trades.
restricted period The period during which the shares of restricted
stock shall be subject to forfeiture in whole or in part, as defined
in the shareholder plan, in accordance with the terms of the award.
plan end adjusted restricted stock award. The final amount of
restricted stock awarded to a participant, at the end of the plan
cycle after adjustments, if any, are made, as set forth in Section
VIII.
stock option A right granted as a participant, as more fully
described under Section IX, to purchase a specific number of shares of
stock at a specified price. The stock option granted under this plan
will be non-qualified (i.e. is not intended to comply with the terms
and conditions for a tax-qualified option, as set forth in Section
422A of the Internal Revenue Code of 1986).
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grant date The date on which a participant is granted the stock
option. This is also the date on which the exercise price of the
stock option is based.
payout amount Actual gross cash dollar amount paid plus the dollar
value of the plan end adjusted restricted stock award, as set forth in
Section VIII, to a participant under this plan, if any, for
achievement of the cumulative financial goals, as further discussed in
this plan.
performance levels
threshold The minimum acceptable level of achievement for each
cumulative financial goal. If threshold performance is achieved
against all company cumulative financial goals, a participant may
earn 25% of the target incentive amount for which he/she is
eligible. If threshold performance is achieved against all
divisional cumulative financial goals, a participant may earn 50% of
the target incentive amount for which he/she is eligible.
target Achievement in aggregate of the cumulative financial
goals. Each individual cumulative financial goal is set at a level
which is both challenging and achievable.
outstanding Superior achievement of the cumulative financial
goals. If outstanding performance is achieved against all
cumulative financial goals, the maximum amount a participant may
earn is 150% of the target incentive amount for which he/she is
eligible.
payout factor The percentage applied to the target incentive amount
exclusive of the stock option portion, if any, to determine the payout
amount based on the percentage of cumulative financial goals deemed
achieved.
cumulative consolidated net income (net income) Reported net income
after taxes adjusted for the after-tax effect of : (1) any unusual
activity, and (2) any capital stock repurchase or other unusual
capital stock transaction.
cumulative cash flow from operations after investing activities (cash
flow) Net income, excluding unusual items not related to the period
being measured, plus/minus any non-cash items included in net income
and changes in operating assets and liabilities, minus normal
investments in product development assets and property and equipment.
company average return on equity (ROE) The simple average ROE of
the three fiscal years in the plan cycle. Each fiscal year ROE is net
income, excluding unusual items not related to the period being
measured, divided by the average of the total shareholders' equity.
company average return on investment (ROI) The simple average ROI
of the three fiscal years in the plan cycle. Each fiscal year ROI is
net income, excluding unusual items not related to the period being
measured, plus amortization of intangibles and interest expense after
taxes, divided by the average of total shareholders' equity plus long-
term and short-term debt.
cumulative divisional operating income (divisional operating income)
Divisional operating income is defined as operating income before
taxes excluding the effects of any unusual activity.
divisional cumulative cash flow from operations after investing
activities (divisional cash flow) Operating income before
allocations and taxes, excluding unusual items not related to the
period being measured, plus/minus any non-cash items included in
operating income (other than provisions for bad debts), and changes in
controllable assets and liabilities, less normal investments in
product development assets and direct property and equipment
additions. Controllable assets and liabilities are inventory,
composition, author advances, other deferred publication costs, and
deferred subscription revenues.
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divisional average return on investment (ROI) The simple average
ROI of the three fiscal years in the plan cycle. Each fiscal year ROI
is operating income before allocations and taxes, excluding unusual
items not related to the period being measured, plus amortization of
intangibles and increases in deferred subscription revenues (net of
any deferred subscription revenues acquired during the year), divided
by the average of fully allocated net investment. Net investment is
defined as controllable assets plus allocated accounts receivable, raw
materials inventory and LIFO reserve, corporate property and
equipment, accounts payable, trade customer credit balance, royalties
payable, cumulative amortization and write-offs of intangible assets
since May 1, 1989, deferred subscription liability balance, net of any
deferred subscription liability balance at the date of acquisition for
businesses acquired since May 1, 1989, and inventory consigned to the
division, less divisional inventory consigned to others. Controllable
assets are defined as inventory, composition costs, author advances,
pre-publication costs, divisional property and equipment, acquired
publication rights and other intangible assets, other deferred assets
and deferred subscription liability.
II. PLAN OBJECTIVES
The purpose of this plan is to enable the company to reinforce and
sustain a culture devoted to excellent performance, emphasize long
term financial performance at the corporate and division levels,
reward significant contributions to the success of the company,
attract and retain highly qualified executives, and provide an
opportunity for each participant to acquire equity in the company.
III. ELIGIBILITY
The participant is selected by the ECDC in its sole discretion, from
among those employees in key management positions deemed able to make
the most significant contributions to the growth and profitability of
the company. An employee must be a participant of the FY 1996
Executive Annual Incentive Plan to be eligible to participate in this
plan. The President and CEO of the company is a participant.
IV. INCENTIVE
A.The participant's target incentive is determined based on the
participant's position in the company and the contributions the
position is deemed able to make in achieving the cumulative
financial goals of the company.
B.The participant's target incentive is recommended by the President
and CEO to the ECDC for its and the Board's approval. In the case
of the President and CEO, the target incentive is recommended by
the ECDC for the Board's approval.
C.The incentive's two components may be restricted stock, if
authorized by the ECDC, and cash.
V. PERFORMANCE MEASUREMENT AND OBJECTIVES
A. The objectives for the cumulative financial goals are recommended
by the ECDC with the advice of the Finance Committee to the Board
for its approval. The cumulative financial goals performance
objectives are set at a level which are challenging and
achievable.
B. Cumulative financial goals established for each participant may
include one or more organizational level's financial goals (e.g.
company and division), and one or more financial goals for a
particular organizational unit (e.g. cash flow, income, ROE and
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ROI). The weighting of and between the two organizational levels'
cumulative financial goals may vary, depending upon the
participant's position. Weighting of the participant's cumulative
financial goals is recommended by the President and CEO to the
ECDC. In the case of the President and CEO, the cumulative
financial goals are company net income, cash flow, ROE and ROI.
C. Threshold, target and outstanding performance levels for the
cumulative financial goals are recommended by the President and
CEO for approval by the ECDC, the Finance Committee of the Board
and the Board.
VI. PERFORMANCE EVALUATION
A. Cumulative Financial Results
1. Actual cumulative financial results achieved by the company and
by each division will be calculated at the end of the plan
cycle, subject to adjustment for audited results, and will be
compared with the previously set cumulative financial goals.
2. The cumulative financial results will be reviewed by the
President and CEO to determine proposed payout factors for the
company and for the divisions.
3. The President and CEO will provide to the ECDC a view of the
company's achievement of its cumulative financial goals, as
well as divisional achievement of like objectives, if any, and
will recommend payout factors to be used for the company and
divisional objectives.
B. Award Determination
1. At least threshold performance, in aggregate, of a
participant's particular organizational level's objectives is
necessary for the participant to receive a payout for the
particular organizational level. However, once the overall
threshold is achieved, the non-achievement of any one
particular cumulative financial goal's target objective does
not preclude a payout.
2. The determination of the performance level achievement
(threshold, target and outstanding, or points in between) for
each organizational level's cumulative financial goals will be
made independent of any other organizational level's cumulative
financial goals a participant may have.
3. If the participant has more than one organizational level's
cumulative financial goals, the non-achievement of a threshold
performance level of one organizational level's cumulative
financial goals does not preclude a payout for the other
organizational level's cumulative financial goals.
4. The following details the effect of the cumulative financial
results performance levels on a participant's payout amount.
The actual payout factors will be in the sole judgment and
discretion of the ECDC, taking into account the following
guidelines:
a. For below threshold performance in aggregate, the payout
amount is zero.
b. For company threshold performance in aggregate, 25% of the
target incentive may be recommended. For divisional
threshold performance in aggregate, 50% of the target
incentive may be recommended
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c. For between company threshold and target performance in
aggregate, at minimum 25% of the target incentive and up to
100% of the target incentive may be recommended. For
between divisional threshold and target performance in
aggregate, at minimum 50% of the target incentive and up to
100% of the target incentive may be recommended.
d. For target performance in aggregate, 100% of the target
incentive may be recommended.
e. For between target and outstanding performance in
aggregate, at minimum 100% of the target incentive and up
to 150% of the target incentive may be recommended.
f. For outstanding performance in aggregate, 150% of the
target incentive may be recommended.
5. Notwithstanding anything to the contrary, the maximum payout
amount, if any, a participant may receive is 150% of the target
incentive.
VII PAYOUTS
A. The cash payout amount will be based on the following formula:
Target Incentive x Corporate Weighting x Payout Factor =
Corporate Incentive Payout
Target Incentive x Divisional Weighting x Divisional Payout Factor
= Divisional Incentive Payout
Corporate Incentive Payout + (if applicable) Divisional Incentive
Payout - (Plan End Adjusted Restricted Stock Award x Stock Price at
Beginning of Plan Cycle) = Cash Payout Amount
Note: See Section VIII for information regarding the proportion of
the payout amount which is paid in cash and in restricted stock.
B. The restricted stock portion of the payout amount, if any, will be
made as set forth in Section VIII below. The determination by the
ECDC of plan end adjusted restricted stock shall constitute payout
of this portion of the award.
C. The cash payout, if any, of the payout amount will be made within
90 days after the end of the plan cycle.
D. In the event of a participant's death, permanent disability,
retirement or leave of absence prior to payout from this plan,
restricted stock awarded at the beginning of the plan cycle, if
any, is forfeited, and the payout amount, if any, will be
determined by the ECDC in its sole discretion.
E. A participant who resigns, or whose employment is terminated by
the company, with or without cause, prior to payout from this
plan, is not eligible for a payout amount and shall forfeit any
restricted stock awarded at the beginning of the plan cycle.
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VIII. RESTRICTED STOCK AWARD PROVISIONS
A. Since one of the objectives of this plan is to provide the
participant with an equity stake in the company and align
management and shareholder interests, it is intended that a
portion of the target incentive, will be awarded in equity
(restricted stock and stock options) and the remaining portion
will be awarded in cash. At the beginning of the plan cycle, the
ECDC will determine the proportion of the target incentive that
will be allocated between restricted stock, and cash. While it is
intended that such proportions will be maintained, the actual
proportions may be adjusted by the ECDC at the end of the plan
cycle, in its sole discretion.
B. Restricted stock, if any, shall be awarded at the beginning of the
plan cycle, after the June, 1995 ECDC meeting. The amount of
restricted stock awarded shall be based on the proportion of the
target incentive allocated to restricted stock, as determined by
the ECDC. The value of each share will be determined based on the
stock closing sale price, as reported by NASDAQ, on the date the
ECDC acts at the beginning of the plan cycle (June 15, 1995). In
the event the stock is not traded on June 15, 1995 or the date the
ECDC acts, whichever is later, the closing sales price shall be
the price of the stock on the next day after June 15, 1995 or the
date the ECDC acts on which the stock trades. The restricted
stock awarded at the beginning of the plan cycle also is subject
to adjustment at the end of the plan cycle as set forth in
Sections VIII (C) and (D) below. Restricted stock, if any, shall
be awarded pursuant to the shareholder plan, as approved by the
ECDC. In addition to the terms and conditions set forth in the
shareholder plan and Section VII (D) and (E) above, the following
conditions shall apply:
1. The participant shall have the right to receive dividends or
other distributions with respect to restricted stock shares
received at the beginning of the plan cycle and shall have
the right to vote such shares, however the restricted stock
may not be sold or transferred until all restrictions lapse.
Restricted stock shall be legended and held by the Company.
2. Withholding taxes relating to restricted stock awarded may be
satisfied by surrendering shares to the company, in lieu of
cash, upon lapse of the restriction.
3. The restricted period for restricted stock awarded shall be
as follows: subject to continued employment except as
otherwise set forth in the shareholder plan or Sections VII
and VIII of this plan, the lapse of restrictions on one-half
of the restricted stock awarded will occur on the first
anniversary (April 30, 1999) of the plan end date at which
time the participant will receive a new stock certificate in
a number of shares equal to one-half of the restricted stock
awarded with the restrictive legend deleted, and the lapse of
restrictions on the remaining half will occur on the second
anniversary (April 30, 2000) of the plan end date at which
time the participant will receive a new stock certificate in
a number of shares equal to the remaining half with the
restrictive legend deleted.
4. If the participant dies or becomes permanently disabled
during the restricted period, the restrictions on the
restricted stock will lapse on the date of such event.
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5. If the participant retires during the restricted period at or
after his/her normal retirement date, the restrictions on the
restricted stock will lapse on the date of such event.
6. If the participant takes early retirement during the
restricted period, the restrictions on the restricted stock
will not lapse until the restricted period expires. If the
participant dies between the time the participant takes early
retirement and the end of the restricted period (April 30,
2000), the lapse of restrictions on the restricted stock will
occur on the date of such event.
7. The restricted stock may be adjusted by the ECDC for any
change in the capital stock of the company, as provided in
Section II of the shareholder plan and is in all respects
subject to the provisions of that plan.
8. In the event of a change of control, as defined in the
shareholder plan, all shares of restricted stock which would
otherwise remain subject to restrictions under the plan shall
be free of such restrictions.
C. The number of shares of restricted stock awarded at the beginning
of the plan cycle, may be adjusted at the end of the plan cycle
for the following reasons: (1) if the proportion of the target
incentive award is restricted stock is adjusted at plan year end
by the ECDC as set forth in Section VIII (A) and/or (2) when the
payout factor is adjusted at plan year end based on actual
achievement of target objectives.
D. An adjustment to the restricted stock will be determined as
follows: The final proportion (%) of restricted stock established
by the ECDC at the end of the plan cycle times (x) the payout
amount equals (=) that part of the payout amount to be awarded in
restricted stock. The result of this calculation will be divided
by the stock price set at the beginning of the plan cycle, as
previously defined, to give the number of shares for the plan end
adjusted restricted stock award. The result of this calculation
will be compared to the restricted stock awarded at the beginning
of the plan cycle, and the appropriate amount of restricted stock
will be awarded or forfeited, as required, to bring the restricted
stock award to the number of shares designated as the plan end
adjusted stock award.
IX. STOCK OPTION
The participant may be granted a stock option pursuant to the
shareholder plan at the beginning of the plan cycle, representing
another incentive vehicle by which the participant is able to share in
the equity growth of the company. The number of shares in the stock
option granted to a participant under this plan is based on a set of
variables and assumptions, applied consistently to all participants,
regarding the monetary value a participant might receive upon exercise
of the stock option. The terms and conditions of the award of the
stock option are contained in the shareholder plan and in the stock
option award. Withholding taxes relating to the gain realized on the
exercise of an option may be satisfied by surrendering to the company
the equivalent value of the taxes, or a portion thereof, in option
shares in lieu of cash.
X. ADMINISTRATION AND OTHER MATTERS
A.This plan will be administered by the ECDC, who will have authority
in its sole discretion to interpret and administer this plan,
including, without limitation, all questions regarding eligibility
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and status of any participant, and no participant shall have any
right to receive any restricted stock or payment of any kind
whatsoever, except as determined by the ECDC hereunder.
B.The company will have no obligation to reserve or otherwise fund in
advance any amount which may become payable under the plan.
C.Restricted stock awarded and cash paid out under this plan shall
not be considered as compensation for purposes of defining
compensation for retirement, savings or supplemental executive
retirement plans, or similar type plans.
D.This plan may not be modified or amended except with the approval
of the ECDC. Notwithstanding the foregoing, Section VIII B (8)
shall not be amended.
E.In the event of a conflict between the provisions of this plan and
the provisions of the shareholder plan, the latter shall apply.
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Exhibit 10.14
1994 SENIOR EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of
July, 1994, as amended and restated as of the 29th
day of March, 1995, by and between John Wiley &
Sons, Inc., a New York corporation, with offices
at 605 Third Avenue, New York, New York 10158
(hereinafter referred to as the
"Corporation"), and Charles R. Ellis presently residing
at 300 East 54th Street, Apartment 34K, New York,
New York 10022 (hereinafter referred to as the
"Executive").
W I T N E S S E T H :
Executive is presently employed as
President and Chief Executive Officer of the
Corporation. The Corporation and Executive entered
into an Agreement dated as of July 1, 1994 (the
"Original Agreement") regarding Executive's employment
with the Corporation. The Corporation and
Executive desire to amend and restate the Original
Agreement and to enter into an agreement of
employment on the terms and subject to the
conditions hereinafter set forth.
<PAGE>
NOW THEREFORE, the parties agree as follows:
1. Employment.
1.1 The Corporation hereby employs Executive
as President and Chief Executive Officer of the
Corporation.
1.2 Executive hereby accepts such employment
and shall devote his full business time, attention,
knowledge and skills faithfully, diligently and to the
best of his ability to the performance of his duties.
Executive shall do such traveling as may be
reasonably required of him in the performance of his
duties. Executive shall be subject to and shall
observe and carry out such reasonable rules,
regulations, policies, directions and
restrictions consistent with the duties to be performed
by him hereunder as the Corporation shall from time to
time establish.
1.3 If at any time during the term of
employment the Board of Directors of the Corporation
shall, without his consent, and other than for cause or
on account of death, disability or retirement, fail to
re-elect Executive as President and Chief Executive
Officer or shall remove him from such office, Executive
shall have the right, exercisable by written notice to
the Corporation within ten business days after the
occurrence of such failure to re-elect or removal, to
terminate his services hereunder, effective as of the
last day of the month of receipt by the Corporation of
any such written notice, and Executive shall have no
further obligation under this Agreement. Termination of
Executive's services under this Section shall be
treated as a termination of employment by the
Corporation other than for cause and shall be governed
by the provisions of Section 6.2 of this Agreement.
-2-
<PAGE>
1.4 Executive shall not be entitled to
compensation other than the compensation provided for
(or otherwise referred to) in this Agreement for any
services he may render as a director or officer of any
of the Corporation's subsidiaries.
1.5 Executive shall not without the prior
written approval of the Corporation accept employment
or compensation from or perform services of any nature
for any business enterprise other than the Corporation
or any of its subsidiaries or joint-venture entities.
1.6 Executive shall not without the prior
written approval of the Corporation invest in any
business enterprise -
1.6.1 if such enterprise engages in or
involves a "Restricted Business" as that term is hereinafter
defined in Section 8.1;
1.6.2 if such investment interferes with the
performance of Executive's duties hereunder; or
-3-
<PAGE>
1.6.3 if such investment would violate the
Corporation's announced business policy with respect to
employee interests in suppliers of goods or services to
the Corporation or any of its subsidiaries.
Notwithstanding the foregoing, Executive may invest
in securities of any company if such securities are
listed for trading on a national stock exchange or
traded on the over-the-counter market and Executive's
investment therein represents less than one percent
(1%) of the total number of outstanding shares of the
class of shares or outstanding principal amount of the
class of other securities of such company, as the
case may be.
1.7 Executive shall not without the prior
written approval of the Corporation serve on the board
of directors of any business enterprise other than
the Corporation or any of its subsidiaries.
2. Term.
2.1 Executive's term of employment hereunder
shall commence as of July 1, 1994 and shall continue
through July 20, 1998, unless sooner terminated in
accordance with this Agreement, and thereafter as
herein provided. Executive's term of employment
shall automatically renew for a subsequent two
year term, beginning on July 21, 1998, subject to
the terms of this Agreement, unless either party gives
written notice 90 days or more prior to the
expiration of the then existing term of his or its
decision not to renew. Failure by the
Corporation to renew, although not a termination by
the Corporation without cause or for cause, shall for
purposes of the benefits intended to be provided to
Executive (and the obligations of Executive under
Section 6.5) be deemed to constitute a termination
without cause.
-4-
<PAGE>
3. Compensation.
3.1 As compensation for his services
hereunder, the Corporation shall pay Executive a base salary at the
rate of three hundred seventy thousand ($370,000)
Dollars per annum, subject to increase as hereinbelow
provided, payable in equal installments no less
frequently than monthly.
3.2 Executive shall be eligible to participate
in all of the Corporation's
executive compensation plans in which any senior vice
president is eligible to participate, including but not
limited to the Executive Annual Incentive Plan
("EAIP"), the Executive Long Term Incentive Plan
("ELTIP"), or equivalents, for so long as such plans
remain in effect and shall also be entitled to all of
his other presently existing employment benefits and
perquisites or equivalents.
3.3 Executive's compensation shall be reviewed
periodically in accordance with procedures and policies
established by the Corporation for salary review of its
officers.
-5-
<PAGE>
3.4 To the extent coverage is not
duplicative of that provided under an executive
compensation plan in which Executive is eligible to
participate, Executive shall be included to the extent
eligible under any and all plans providing benefits
generally for the Corporation's employees, including,
but not limited to, pension, group life insurance,
hospitalization, medical and disability plans. The
Corporation shall not, however, be under any obligation
to continue the existence of any executive compensation
or other employee benefit plan referred to in Section
3.2 or this Section 3.4.
3.5 The Executive Compensation and
Development Committee (the "Committee") intends, at a
meeting of the Committee to be held before the end of
June 1995, to grant to Executive under the 1991 Key
Employee Stock Plan 15,000 post 7/6/94 split shares of
Class A Common Stock of the Corporation, par value $1
per share ("Common Stock"), pursuant to substantially
the same terms and subject to substantially the same
conditions and restrictions as the restricted stock
awarded to Executive by the Corporation on June 23,
1994, as the same may be amended from time to time;
provided, however, that no "Transfer Restriction" (as
defined in the Restricted Stock Award Agreement, dated
as of June 23, 1994, between the Corporation and
Executive) shall be placed on the restricted stock
granted in 1995. Upon the retirement of Executive with
the consent and approval of the Board of Directors of
the Corporation, all restrictions with respect to all
restricted stock granted to Executive shall lapse.
3.6 Subject to the next sentence of this
Section 3.6, (i) should the 1995 restricted stock award
contemplated by Section 3.5 not be timely granted, or
should any such award be altered or impaired
thereafter, other than as contemplated by the 1991 Key
Employee Stock Plan or (ii) should the Corporation
cease to provide incentive compensation plans in which
Executive is eligible to participate, substantially
similar to those described in Section 3.2 above, and of
a value to Executive substantially similar to that of
the present plans, Executive shall have the right to
terminate his services hereunder, exercisable by
written notice to the Corporation within ten business
days after (i) the end of June 1995, or (ii) the
cessation of such plans, as applicable, effective as of
the last day of the month of receipt by the Corporation
of any such notice, and Executive shall have no further
obligation of any kind under or arising out of this
Agreement. Should a circumstance or event not within
the reasonable contemplation of the parties at the date
hereof arise on or before the date when the Committee
meets to award grants of the kind contemplated by
Section 3.5 that makes it inadvisable or undesirable in
the reasonable judgment of the Committee to grant to
Executive the awards contemplated by that Section, and
should the Committee and/or the Board of Directors of
the Corporation (as may be required) on or about such
date, because of such intervening circumstance or
event, instead bestow upon Executive benefits of
reasonably equivalent value and having comparable
vesting dates, Executive shall thereupon forego his
right of termination under the preceding sentence.
Termination of Executive's services under this Section
3.6 shall be treated as a termination of employment by
the Corporation other than for cause and shall be
governed by the provisions of Section 6.2.
4. Vacation.
Executive shall be entitled to four
weeks of paid vacation, or such greater amount, if
any, as provided in the policies of the Corporation
then applicable to Executive, each calendar year
during the period of his employment hereunder, to be
taken at times mutually agreeable to Executive and
the Corporation.
-6-
<PAGE>
5. Change of Position
5.1 At any time during the term of this
Agreement, or upon completion of Executive's first
term of employment hereunder on July 20, 1998,
Executive may, upon 90 days written notice to the
Corporation, request to be employed by the Corporation
(x) in a senior management position with less
responsibility than President and Chief Executive
Officer for a period of 24 months or (y) as an
internal consultant to management and/or the Board of
Directors of the Corporation (provided, that under
such consultancy the knowledge, skills and experience
of Executive would be generally available and
accessible to the Corporation in such a manner as
would continue to qualify him as an employee of
the Corporation) for a period of 24 months (either
(x) or (y), a "Change of Position"), and the
Corporation shall honor such request. In the event
of a Change of Position, the obligations of the
Corporation to Executive shall be limited to the
following:
5.1.1 Salary accrued to the effective date of
such Change of Position;
5.1.2 Continuation of base salary at the per
annum rate then in effect, for a period of 24 months
from the effective date of such Change of Position
(hereinafter the "Change Period"); and
-7-
<PAGE>
5.1.3 Coverage during such Change Period under
the employee benefit plans referred to in Section 3.4
or provisions for comparable benefits outside such
plans. Executive shall have no right to continued
employment with the Corporation beyond the Change
Period. The Board of Directors is not precluded
from, in its discretion, awarding Executive
supplemental bonus compensation based on the
contributions of Executive to the Corporation and the
performance of the Corporation during the Change
Period. Notwithstanding the foregoing, the
obligations of the Corporation to Executive under
this Section 5.1 shall not extend beyond July 20, 2000
without the consent of the Board of Directors of the
Corporation.
6. Termination of Employment By
Corporation.
6.1 The Corporation may terminate
Executive's employment hereunder at any time for cause
without further obligation or liability except as
hereinbelow stated in this Section 6.1. For purposes
of this Agreement, the term "cause" shall be limited to
the following grounds:
6.1.1 Executive's refusal to substantially
perform his duties or otherwise fulfill his material
obligations under this Agreement (for reasons other
than death or disability), in any such case after
due written notice thereof, or serious willful
misconduct in respect of his obligations hereunder;
-8-
<PAGE>
6.1.2 Conviction of a felony crime;
6.1.3 Perpetration of a fraud against the
Corporation or misappropriation of the Corporation's
property;
6.1.4 Habitual intoxication or illegal use of
habit forming substances; or
6.1.5 Knowingly making a material false
statement to the Corporation's Board of Directors or
management regarding the affairs of the Corporation.
In the event Executive's employment is terminated for
cause, no further payments of salary or benefits of
any kind or nature (except to the extent accrued to the
date of termination) shall be paid to Executive,
and Executive shall have no further claim against the
Corporation under the terms of this Agreement or
otherwise relating to his employment.
6.2 Corporation may terminate Executive's
employment hereunder at any time without cause. In the
event of such termination the obligations of the
Corporation to Executive shall be limited to the
following:
6.2.1 Salary accrued to the effective date of
such termination;
-9-
<PAGE>
6.2.2 Continuation of base salary at the per
annum rate then in effect, until July 20, 1998, and for
a period of 24 months thereafter (hereinafter the
"Severance Period");
6.2.3 The "target incentive amount" under any
executive annual incentive plan established by the
Corporation for a fiscal year ending during the
Severance Period, and the same "target incentive
amount" for any such executive annual incentive plan,
pro-rated to the end of the Severance Period, for a
fiscal year commencing during but ending after the
Severance Period, or the equivalent under any bonus or
variable compensation plan which may hereafter be
adopted by the Corporation in lieu of such executive
annual incentive plan;
6.2.4 The value of the "payout amount," in
cash, for any executive long term incentive plan
established by the Corporation, the plan cycle of which
ends within 12 months after the effective date of
termination, pro-rated to the date of termination;
6.2.5 Lapse of restrictions on any outstanding
restricted stock awards granted under any executive
long term incentive plan established by the
Corporation, but not vested on the effective date of
termination, or at the Corporation's option, the cash
value of the restricted stock forfeited under such
awards based on "fair market value" on the effective
date of termination; and
-10-
<PAGE>
6.2.6 Coverage during such Severance Period
under the following employee benefit plans or
provisions for comparable benefits outside such plans,
but only to the extent comparable coverage is not
provided by any new employer: (1) Group Health
Insurance Program; (2) Long-Term Disability Plan (as
provided under such Plan, the Executive shall be
required to pay the premium); (3) Group Life and
Accidental Death and Dismemberment Insurance (at the
levels in effect at the date of termination of
employment, taking into account any waiver of coverage
under the Corporation's Supplemental Executive
Retirement Program).
For purposes of Section 6.2.5, the "fair market
value" shall be the mean between the bid and asked
prices at which the Common Stock is quoted in the over-
thecounter market on the effective date of
termination as reported by NASDAQ or any successor
thereto. If no such quotations are available on
such date, the most recent date, within a
reasonable time, upon which such quotations
are available shall be used. If at any time Common
Stock shall be listed on a national securities
exchange, the mean between the highest and lowest
prices at which the Common Stock is traded on such
exchange on such date shall be used. If there is
no sale of the Common Stock on such
exchange on such date, the mean between the bid and
asked prices on such exchange at the close of the
market on such date shall be deemed to be the fair
market value of the Common Stock.
- 11-
<PAGE>
Executive shall not be required to
seek other employment during such Severance Period, but
in the event Executive renders personal services
during such period to any person or firm other than
the Corporation, whether as an employee, a partner
or as a self-employed individual and earns income
(whether or not then payable) attributable to the
performance of such personal services during either
the 12 month period commencing on the date of
termination of employment or the next succeeding 12
month period in excess of $75,000 per such 12 month
period, (i) Executive shall notify the Corporation, in
accordance with Section 10.3 hereof, within 15 days of
the commencement of such employment, and (ii) the
amount of salary which the Corporation would
otherwise be required to pay Executive during such
12 month period shall be reduced dollar for dollar
by such excess amount. If as a result of
Executive's accruing such income, the Corporation
has overpaid Executive, Executive shall promptly
reimburse the Corporation for the amount of such
overpayment.
-12-
<PAGE>
6.3 Executive agrees that the payments
described in Section 6.2 shall be full and adequate
compensation to Executive for all damages he may
suffer as a result of the termination of his
employment pursuant to Section 6.2, and hereby waives
and releases the Corporation from any and all
obligations or liabilities to Executive arising from or
in connection with Executive's employment with the
Corporation or the termination of his employment
including, without limitation, all rights and claims
Executive may have under the Corporation's severance
policy and federal, state or local statutes,
regulations or ordinances or under any common law
principles of breach of contract or the covenant of
good faith and fair dealing, defamation, wrongful
discharge, intentional infliction of emotional distress
or promissory estoppel; provided, however, that any
rights and benefits Executive may have under the
employment benefit plans and programs of the
Corporation, including, without limitation, the
Corporation's Supplemental Executive
Retirement Program, in which Executive is a
participant, shall be determined in accordance with
the terms and provisions of such plans and
provisions.
6.4 If Executive voluntarily resigns from
all employment with the Corporation, the Corporation
shall have no further obligation to Executive except
for salary accrued to the effective date of such
resignation.
-13-
<PAGE>
6.5 In the event the Corporation terminates
Executive's employment, whether with or without cause,
or in the event of Executive's voluntary resignation
from all employment with the Corporation, Executive if
so requested by the Corporation shall assist in the
orderly transfer of authority and responsibility to his
successor.
7. Death or Disability.
7.1 In the event of the death of Executive
during the term of employment under this Agreement
or during the period when payments are being made
pursuant to Section 6.2.2, this Agreement shall
terminate and all obligations to Executive shall
cease as of the date of death except that the
Corporation will pay the then base salary under
Section 3.1 until the end of the month in which
Executive dies, and except for any rights and benefits
of Executive under the benefit plans and programs of
the Corporation including, without limitation, the
Supplemental Executive Retirement Plan in which
Executive is a participant, as determined in
accordance with the terms and provisions of
such plans and programs. The payout under the EAIP,
or equivalent, for the fiscal year in which Executive's
death occurs, shall be annualized and paid at the
normal time to Executive's estate pro rata to the
date of death. The value of the "payout amount,"
in cash, for any executive long term incentive plan
established by the Corporation, the plan cycle of
which ends within 12 months after the date of
Executive's death, shall be paid at the normal time to
Executive's estate.
-14-
<PAGE>
7.2 In the event that Executive shall become
entitled to salary continuation payments under the
Corporation's Group Long-Term Disability Insurance Plan
or under any generally similar plan then in effect, the
Corporation may, at its option, terminate the
employment of Executive hereunder without further
obligation or liability on the part of the Corporation
under the terms of this Agreement.
8 Restricted Covenant.
8.1 In consideration of the Corporation
entering into this Agreement, Executive shall
not, directly or indirectly, until July 21, 2000
(unless compliance herewith is excused pursuant to
Section 8.2), be employed by, render services to or
participate in the management, operation or control
of, or serve as advisor or consultant to or
otherwise become financially interested (other than
by passive ownership of securities constituting less
than one percent (1%) of such class of securities in
any one case) in any business of the same nature
as that now (or hereafter during the term of this
Agreement) carried on by the Corporation or any of
its subsidiaries (a "Restricted Business").
-15-
<PAGE>
8.2 Should a Change of Control (as defined
in the Corporation's Supplemental Executive Retirement
Plan) occur during the term of employment and should
the Executive terminate his employment for "Good
Reason" (as defined in said Plan) within a period of 18
months following such Change of Control such
termination by Executive shall constitute a waiver by
the Corporation of the restrictive covenant set forth
in Section 8.1 and Executive shall have no further
obligation to comply with its terms.
8.3 Executive acknowledges and agrees that
in the event of any violation of the restrictive
covenant set forth in Section 8.1, the Corporation
shall be authorized and entitled to obtain from any
court of competent jurisdiction temporary, preliminary
or permanent injunctive relief as well as an equitable
accounting of all profits or benefits arising out of
such violation and any damages for the breach of this
Agreement which may be applicable. The aforesaid
rights and remedies shall be independent, severable and
cumulative and shall be in addition to any other rights
or remedies to which the Corporation may be entitled.
8.4 The restrictions contained in this
Section 8 are intended to be reasonable. In the event
that any restriction contained herein is held by any
court of competent jurisdiction or arbitrator to be in
any respect unreasonable, the court so holding may
limit the territory to which it pertains or the period
of time in which it operates, or affect any other
change to the extent necessary to make it enforceable.
-16-
<PAGE>
The remaining provisions shall not be affected, but
shall, subject to the discretion of such court, remain
in full force and effect and any invalid and
unenforceable provision shall be deemed without further
action on the part of the parties hereto modified,
amended and limited to the extent necessary to render
the same valid and enforceable to the maximum extent
permissible.
8.5 Executive shall hold in a fiduciary
capacity for the benefit of the Corporation all
confidential information, knowledge and data relating
to or concerned with the Corporation's products,
operations, sales, business and affairs which are
proprietary and not readily ascertainable from trade
sources or other publicly available data, and he shall
not, at any time hereafter, use, disclose or divulge
any such confidential information, knowledge or data to
any person, firm or corporation other than to the
Corporation, its subsidiaries or its designees or
except as may otherwise be required in connection with
the business and affairs of the Corporation. A breach
of Executive's obligations hereunder shall entitle the
Corporation to seek injunctive or equitable relief
and/or damages from any court of competent
jurisdiction.
-17-
<PAGE>
9. Change of Control Agreements.
It is understood and agreed that none
of the benefits accruing to Executive under the 1991
Key Employee Stock Option Plan or Supplemental
Executive Retirement Plan resulting from a "change of
control" shall derogate from the rights granted to
Executive under this Agreement, and the rights
granted to him thereunder shall, subject to the
triggering events thereof, be supplementary to and not
in substitution for his rights hereunder.
10. General.
10.1 Subject to Section 8.2 and Section 9
hereof, this Agreement constitutes the entire
agreement concerning Executive's employment, and no
amendment or modification hereof shall be valid or
binding unless made in writing and signed by the
party against whom enforcement thereof is sought.
10.2 The provisions of Section 8 hereof shall
survive the termination or expiration of this
Agreement.
10.3 Any notice required, permitted, or
desired to be given pursuant to any of the provisions
of this Agreement shall be deemed to have been
sufficiently given or served for all purposes if
delivered in person or sent by registered or certified
mail, return receipt requested, postage and fees
prepaid, as follows:
-18-
<PAGE>
If to the Corporation, at:
605 Third Avenue
New York, New York 10158
Attention: W. Bradford Wiley II
with a copy to:
Richard S. Rudick, Esq.
John Wiley & Sons, Inc.
605 Third Avenue
New York, New York 10158
If to Executive, at:
300 East 54th Street
Apartment 34K
New York, New York 10022
Either of the parties hereto may at any time and from
time to time change the address to which notices shall
be sent hereunder by notice to the other party.
10.4 No course of dealing or any delay on the
part of the Corporation or Executive in exercising
any rights hereunder shall operate as a waiver of any
such rights. No waiver of any default or breach of
this Agreement shall be deemed a continuing waiver of
any other breach or default.
10.5 This Agreement relates to services to be
performed principally in, and accordingly shall
be governed, interpreted and construed in accordance
with the laws of the State of New York.
-19-
<PAGE>
10.6 If any provision or part of this
Agreement shall be held or declared to be void,
invalid or illegal for any reason by any court of
competent jurisdiction, such provision or part shall
be ineffective but shall not in any way invalidate or
affect any other provision or part of this
Agreement.
10.7 This Agreement, and the respective
rights and obligations of the parties hereunder, shall
inure to the benefit of, and shall be binding upon,
the Corporation and its successors and assigns.
10.8 Should there arise any claim, dispute or
controversy relating to this Agreement, or the
breach thereof, the parties shall use their best
efforts and good will to settle such claim,
dispute or controversy by amicable negotiations.
Except as provided in Sections 8.2 and 8.4, any such
claim, dispute or controversy that arises between the
parties relating to this Agreement that is not
amicably settled shall be resolved by arbitration,
as follows.
10.8.1 Any such arbitration shall be heard in
New York, New York, before a panel consisting of one
(1) to three (3) arbitrators, each of whom shall be
impartial. Except as the parties may otherwise agree,
all arbitrators shall be appointed in the first
instance by the President of the Association of the
Bar of the City of New York or, in the event of
his unavailability by reason of
disqualification or otherwise, by the Chairman of
the Executive Committee of the Association of the Bar
of the City of
-20-
<PAGE>
New York. In determining the number and
appropriate background of the arbitrators, the
appointing authority shall give due consideration to
the issues to be resolved, but his decision as to the
number of arbitrators and their identity shall be
final. Except as otherwise provided in this
Section 10.8, or as the parties may otherwise
agree, arbitration hereunder shall be governed by the
rules of the American Arbitration Association, as they
then exist.
10.8.2 An arbitration may be commenced by any
party to this Agreement by the service of a written
Request for Arbitration upon the other affected
parties. Such Request for Arbitration shall summarize
the controversy or claim to be arbitrated, and shall
be referred by the complaining party to the
appointing authority for appointment of arbitrators
ten (10) days following such service or
-21-
<PAGE>
thereafter. If the panel of arbitrators is not
appointed by the appointing authority within
thirty (30) days following such reference, any party
may apply to any court within the State of New
York for an order appointing arbitrators qualified
as set forth below. No Request for Arbitration shall
be valid if it relates to a claim, dispute,
disagreement or controversy that would have been time
barred under the applicable statute of limitations had
such claim, dispute or controversy been submitted to
the Supreme Court of the State of New York.
10.8.3 All attorneys' fees and costs of the
arbitration shall in the first instance be borne by
the respective party incurring such costs and fees,
but the arbitrators shall have the discretion to award
costs and/or attorneys' fees as they deem
appropriate under the circumstances. In addition
to the waiver set forth in Section 6.3 above, the
parties hereby expressly waive punitive damages, and
under no circumstances shall an award contain any
amount that in any way reflects punitive damages.
10.8.4 Judgment on the award rendered by the
arbitrators may be entered in any court having
jurisdiction thereof.
10.8.5 It is intended that claims, disputes or
controversies submitted to arbitration under this
Section 10.8 shall remain confidential, and to that
end it is agreed by the parties that neither the
facts disclosed in the arbitration, the issues
arbitrated, nor the views or opinions of any persons
concerning them, shall be disclosed to third persons
at any time, except to the extent necessary to
enforce an award or judgment or as required by law or
in response to legal process or in connection with
such arbitration.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed as of the day
and year first above written.
JOHN WILEY & SONS, INC.
Date: March 31, 1995
By /s/ W. Bradford Wiley II
Chairman of the
Board of Directors
/s/ Charles R. Ellis
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION AND THE CONSOLIDATED
STATEMENT OF INCOME AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000107140
<NAME> JOHN WILEY & SONS, INC.
<MULTIPLIER> 1000
<S> <C>
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