SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT 1934
For the quarterly period ended October 31, 1996 Commission File No. 1-11507
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES ACT OF 1934
For the transition period from to
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 Identification No.)
incorporation or organization)
605 THIRD AVENUE, NEW YORK, NY 10158-0012
(Address of principal executive offices) Zip Code
Registrant's telephone number, (212) 850-6000
including area code
NOT APPLICABLE
Former name, former address, and former fiscal year,
if changed since last report
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 [ ]
The number of shares outstanding of each of the Registrant's classes of common
stock as of October 31, 1996 were:
Class A, par value $1.00 - 12,819,945
Class B, par value $1.00 - 3,201,058
This is the first of a twelve page document
<PAGE>
JOHN WILEY & SONS, INC.
INDEX
PART I - FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements.
Condensed Consolidated Statements of Financial Position - Unaudited
as of October 31, 1996 and 1995; and April 30, 1996............ 3
Condensed Consolidated Statements of Income - Unaudited
for the Six Months ended October 31, 1996 and 1995............ 4
Condensed Consolidated Statements of Cash Flow - Unaudited
for the Six Months ended October 31, 1996 and 1995............ 5
Notes to Unaudited Condensed Consolidated Financial Statements. .6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................. 9
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders..............11
Item 6. Exhibits and Reports on Form 8-K.................................11
SIGNATURES 12
EXHIBITS
10.1 Credit Agreement Dated as of November 15, 1996
27 Financial Data Schedule
<PAGE>
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In thousands)
<TABLE>
<CAPTION>
(UNAUDITED)
October 31, April 30,
------------------------------
1996 1995 1996
-------- -------- --------
<S> <C> <C> <C>
Assets
Current Assets
Cash and cash equivalents ......................... $ 1,290 2,078 55,284
Accounts receivable ............................... 71,786 62,484 60,276
Inventories ....................................... 59,995 45,622 43,981
Deferred income tax benefits ...................... 20,991 7,981 7,677
Prepaid expenses .................................. 4,337 3,305 3,413
-------- -------- --------
Total Current Assets .............................. 158,399 121,470 170,631
Product Development Assets ........................ 31,680 27,460 30,282
Property and Equipment ............................ 28,778 21,737 22,989
Intangible Assets ................................. 169,442 51,452 52,394
Other Assets ...................................... 13,552 7,655 8,205
======== ======== ========
Total Assets ...................................... $401,851 229,774 284,501
======== ======== ========
Liabilities & Shareholders' Equity
Current Liabilities
Notes payable and current portion of long-term debt $ 4,062 15,355 0
Accounts and royalties payable .................... 41,274 36,011 36,952
Deferred subscription revenues .................... 30,520 20,635 71,999
Accrued income taxes .............................. 7,165 9,937 5,068
Other accrued liabilities ......................... 36,345 20,322 25,097
-------- -------- --------
Total Current Liabilities ......................... 119,366 102,260 139,116
Long-Term Debt .................................... 121,000 0 0
Other Long-Term Liabilities ....................... 25,812 14,226 14,994
Deferred Income Taxes ............................. 12,211 5,293 12,409
Shareholders' Equity .............................. 123,462 107,995 117,982
======== ======== ========
Total Liabilities & Shareholder's Equity .......... $401,851 229,774 284,501
======== ======== ========
</TABLE>
The accompanying Notes are an integral part of the condensed
consolidated financial statements.
<PAGE>
JOHN WILEY & SONS, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands except per share information)
<TABLE>
<CAPTION>
Three Months Six Months
Ended October 31, Ended October 31,
---------------------------------------------------------------------------------------
1996 1995 1996 1995
------- ------- --------- ---------
<S> <C> <C> <C> <C>
Revenues ............................ $ 107,070 86,831 206,287 174,923
Costs and Expenses
Cost of sales ....................... 37,490 29,329 71,172 58,201
Operating and administrative expenses 60,171 49,268 112,499 95,887
Amortization of intangibles ......... 2,220 1,115 3,711 2,220
--------- --------- --------- ---------
Total Costs and Expenses ............ 99,881 79,712 187,382 156,308
--------- --------- --------- ---------
Operating Income .................... 7,189 7,119 18,905 18,615
Interest Income and Other ........... 21 134 344 531
Interest Expense .................... (1,750) (187) (2,494) (216)
--------- --------- --------- ---------
Interest Income (Expense) - Net ..... (1,729) (53) (2,150) 315
--------- --------- --------- ---------
Income Before Taxes ................. 5,460 7,066 16,755 18,930
Provision For Income Taxes .......... 1,966 2,826 6,032 7,572
--------- --------- --------- ---------
Net Income .......................... $ 3,494 4,240 10,723 11,358
========= ========= ========= =========
Net Income Per share
Primary ............................. $ 0.21 0.26 0.65 0.69
Fully Diluted ....................... $ 0.21 0.26 0.65 0.69
Cash Divident Per Share
Class A Common ...................... $ 0.1000 0.0875 0.2000 0.1750
Class B Common ...................... $ 0.0875 0.0775 0.1750 0.1550
Average Shares
Primary ............................. 16,447 16,538 16,486 16,496
Fully Diluted ....................... 16,492 16,568 16,507 16,517
</TABLE>
The accompanying Notes are an integral part of the condensed
consolidated financial statements
<PAGE>
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW - UNAUDITED
(In thousands)
Six Months
Ended October 31,
------------------------
1996 1995
--------- ---------
Operating Activities
Net income ................................... $ 10,723 11,358
Non-cash items ............................... 23,235 25,495
Net change in operating assets and liabilities (72,917) (63,063)
--------- ---------
Cash Used in Operating Activities ............ (38,959) (26,210)
--------- ---------
Investing Activities
Additions to product development assets ...... (13,327) (11,909)
Additions to property and equipment .......... (4,409) (4,153)
Acquisition of publishing assets ............. (103,968) (1,467)
Proceeds from sale of publishing lines ....... 0 0
--------- ---------
Cash Used for Investing Activities ........... (121,704) (17,529)
--------- ---------
Financing Activities
Purchase of treasury shares .................. (5,505) (1,162)
Additions to long-term debt .................. 121,000 0
Repayment of acquired debt ................... (10,542) 0
Net borrowings of short-term debt ............ 4,062 14,705
Cash dividends ............................... (3,139) (2,748)
Proceeds from exercise of stock options ...... 509 840
--------- ---------
Cash Provided by Financing Activities ........ 106,385 11,635
--------- ---------
Effects of Exchange Rate Changes on Cash ..... 284 (228)
--------- ---------
Cash and Cash Equivalents
Decrease for Period .......................... (53,994) (32,332)
Balance at Beginning of Period ............... 55,284 34,410
========= =========
Balance at End of Period ..................... $ 1,290 2,078
========= =========
Cash Paid During the Period for
Interest ..................................... $ 2,179 103
Income taxes ................................. $ 4,415 728
The accompanying Notes are an integral part of the condensed
consolidated financial statements.
<PAGE>
JOHN WILEY & SONS, INC., AND SUBSIDIARIES
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1996
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments, consisting only
of normal recurring adjustments, necessary to present fairly the Company's
consolidated financial position as of October 31, 1996 and 1995, and April
30, 1996, and results of operations and cash flows for the periods ended
October 31, 1996 and 1995. These statements should be read in conjunction
with the most recent audited financial statements contained in the
Company's Form 10-K for the fiscal year ended April 30, 1996.
The results for the six months ended October 31, 1996 are not necessarily
indicative of the results to be expected for the full year.
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.
Inventories were as follows:
October 31, April 30,
------------------ --------------
1996 1995 1996
-------- -------- --------
(Thousands)
Finished goods ....... $ 49,336 37,408 39,616
Work-in-process ...... 9,350 6,494 4,865
Paper, cloth and other 5,166 5,983 3,026
-------- -------- --------
63,852 49,885 47,507
LIFO reserve ......... (3,857) (4,263) (3,526)
-------- -------- --------
Total inventories .... $ 59,995 45,622 43,981
-------- -------- --------
Approximately $10 million of the increase in inventories at October 31,
1996 relates to the acquisition of VCH.
In June 1996, the Company completed the acquisition of a 90% interest in
the German based VCH Publishing Group (VCH) through the purchase of 90% of
the shares of VCH Verlagsgesellschaft mbH for approximately $99 million in
cash, including estimated expenses. VCH is a leading scientific, technical,
and professional publisher of journals and books in such disciplines as
chemistry, architecture, civil engineering and law.
The transaction was initially financed through available cash balances,
existing lines of credit, and a $75 million bridge line of credit.
Subsequent to October 31, 1996, the Company obtained permanent financing as
more fully described in note 6.
In July 1996, the Company acquired the publishing assets of Technical
Insights, Inc., a publisher of print and electronic newsletters in various
areas of science and technology for approximately $3.8 million in cash.
These acquisitions have been accounted for by the purchase method, and the
accompanying financial statements include the net assets acquired and
results of operations since date of acquisition. The cost of the
acquisitions has been allocated on the basis of preliminary estimates of
the fair values of the assets acquired and the liabilities assumed. Final
asset and liability fair values may differ based on appraisals and tax
bases, however it is anticipated that any changes will not have a material
effect in the aggregate on the consolidated financial position of the
Company. The excess of cost over the preliminary estimate of the fair value
of the tangible assets acquired amounted to approximately $120 million
relating to acquired publication rights, noncompete agreements, goodwill
and other intangibles and is being amortized on a straight line basis over
an estimated average life of 30 years.
The following pro forma information presents the results of operations of
the Company as if the VCH acquisition had been consummated as of May 1,
1995. The pro forma effects for Technical Insights were not material. The
pro forma financial information is not necessarily indicative of the actual
results that would have been obtained had the acquisition been consummated
as of May 1, 1995, nor is it necessarily indicative of future results of
operations.
(In thousands, except per share information)
Six Months
Ended October 31,
-----------------------------------
1996 1995
-------- -------
(In thousands, except per share information
Revenues .................... $ 215,963 $ 205,712
Net Income .................. $ 9,314 $ 7,147
Net Income Per Share ........ 0.56 0.43
In November 1996, the Company entered into a seven year $175 million
credit agreement expiring on October 31, 2003 with nine banks to obtain
permanent financing for the VCH acquisition and to replace its existing $50
million revolving credit facility. The new credit agreement consists of a
term loan under which the Company may borrow up to $125 million and a new
$50 million revolving credit facility. The Company has the option of
borrowing at the following floating interest rates: (i) Eurodollars at a
rate based on the London Interbank Offered Rate (LIBOR) plus an applicable
margin ranging from .15% to .30% depending on certain coverage ratios or
(ii) dollars at a rate based on the current certificate of deposit rate,
plus an applicable margin ranging from .275% to .425% depending on certain
coverage ratios or (iii) dollars at the higher of (a) the Federal Funds
Rate plus .5% and (b) the banks' prime rate. In addition, the Company pays
a facility fee ranging from .10% to .20% on the total facility depending on
certain coverage ratios.
<PAGE>
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. Amounts outstanding under the term loan as of December 31,
1996 have mandatory repayments of 24% of such amount on October 31, 2000,
2001 and 2002, respectively, and 28% on October 31, 2003. At October 31,
1996, $121 million of short-term obligations have been classified as
long-term as it is the Company's intention to refinance these obligations
under the new term loan facility.
The new credit agreement contains certain restrictive covenants related to
minimum net worth, funded debt levels, an interest coverage ratio and
restricted payments, including a cumulative limitation for dividends paid
and share repurchases. Under the most restrictive covenant, approximately $
48.5 million was available for the payment of future dividends as of
October 31, 1996.
Effective May 1, 1996, the Company adopted the Financial Accounting
Standards Board's Statement of Financial Accounting Standards ("SFAS") No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of". This standard establishes the accounting for the
impairment of long-lived assets, certain identifiable intangibles and
goodwill related to those assets to be held and used, and for long-lived
assets and certain identifiable intangibles to be disposed of. The adoption
of this standard did not have a material effect on the consolidated
financial statements of the Company.
Effective May 1, 1996, the Company adopted the Financial Accounting
Standards Board's SFAS No. 123. "Accounting for Stock-Based Compensation"
("SFAS 123"). This standard established accounting and reporting standards
for stock-based employee compensation. The Company will continue to measure
compensation costs for its stock-based compensation plans using the
intrinsic value-based method, and will include certain pro forma
disclosures required by SFAS 123 in its audited financial statements for
the fiscal year ended April 30, 1997. The adoption of this standard did not
have a material effect on the consolidated financial statements of the
Company.
<PAGE>
JOHN WILEY & SONS, INC., AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OCTOBER 31, 1996
FINANCIAL CONDITION
During this seasonal period of cash usage, operating activities used $39.0
million of cash, or $12.7 million more than the prior year's comparable
period. The increase was primarily due to higher expense levels to support
the higher volume of business. The use of cash during this period is
consistent with the seasonality of the journal subscription and the
educational sector's receipts cycle which occur, for the most part, in the
second half of the fiscal year.
Investing activities used $121.7 million during the current quarter, or
$104.2 million more than the comparable prior year's quarter, primarily due
to the VCH and Technical Insights acquisitions as mentioned in note 5 to
the financial statements.
Financing activities primarily reflect the financing for the above
acquisitions, as well as dividend payments and purchases of treasury shares
during the period. In November 1996, the Company entered into a new $175
million credit agreement to obtain permanent financing for the VCH
acquisition and to replace its existing $50 million revolving credit
facility, as more fully described in note 6 to the financial statements.
RESULTS OF OPERATIONS
SECOND QUARTER ENDED OCTOBER 31, 1996
Revenues for the second quarter advanced 23% to $107.1 million compared
with $86.8 million in the prior year. Operating income for the current
quarter was $7.2 million compared with $7.1 million in the prior year. Net
income declined from $4.2 million in the prior year to $3.5 million. The
current quarter includes the results of operations of VCH Publishing Group
which was acquired in June 1996, and which had the effect of increasing
revenues by approximately 16%, and reducing operating income by $0.2
million and net income by $1.2 million, or $0.07 per share, primarily due
to amortization of intangibles and financing costs related to the
acquisition.
Excluding VCH, the improvement in revenues and operating income was
primarily attributable to strong performances in the Company's scientific,
technical and medical journals program and in its college division.
International operations continued to produce healthy revenue gains.
Similar to the experience of other companies in the trade publishing
markets, the domestic professional/trade division posted lower revenues and
operating income reflecting a change by a small number of large wholesalers
and retailers to just-in-time inventory management policies, which also
resulted in higher returns.
Cost of sales as a percentage of revenues increased from 33.8% in the prior
year to 35.0% due to product mix and higher royalty costs. Operating
expenses as a percentage of revenues were 56.2% in the current quarter
compared with 56.7% in the prior year's second quarter.
Interest expense increased by $1.6 million due to the financing costs
related to the VCH acquisition. The effective tax rate of 36% in the
current quarter reflects a reduction of 4% from the prior year's second
quarter due in large part to the tax benefits of VCH's acquisition related
amortization and financing costs.
RESULTS OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1996
Revenues for the first six months of fiscal 1997 were $206.3 million, or
18% ahead of the $174.9 million in the comparable prior year period.
Operating income was $18.9 million, or $0.3 million ahead of the prior year
period. Net income of $10.7 million for the current year period declined by
$0.6 million from the prior year. The current year period includes the
results of VCH Publishing Group since date of acquisition in June 1996,
which had the effect of increasing revenues by approximately 11%, and
reducing operating income by $0.9 million and net income by $2.2 million,
or $0.13 per share, primarily due to amortization of intangibles and
financing cost related to the acquisition.
Excluding VCH, the improvements in revenues and operating income for the
period are attributable to the same factors noted in the results of
operations for the second quarter.
For the year-to-date, costs of sales as a percentage of revenues increased
from 33.3% to 34.5%, and operating expenses declined from 54.8% to 54.5%.
Interest expense increased by $2.3 million due to the financing costs
related to the VCH acquisition. The effective tax rate of 36% in the
current period reflects a reduction of 4% from the prior year due in large
part to the tax benefits of VCH's acquisition related amortization and
financing costs.
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders The
following matters were voted upon at the annual meeting of
shareholders of the Company on September 19, 1996.
Election of Directors
Fifteen directors as indicated in the Proxy Statement were elected
to the Board, five of whom were elected by the holders of Class A
Common Stock, and ten by the holders of Class B Common Stock
Amendment of the 1991 Key Employee Stock Plan
The amendment to limit to 150,000 the maximum number of shares of
Class A Common Stock of the Company for which, in the aggregate,
options, performance stock awards, and restricted stock awards can
be granted to any one individual in any calendar year.
Votes for 3,813,259
Votes against 43,716
Abstentions 20,083
Ratification of Appointment of Arthur Andersen LLP, as
Independent Public Accountants for the
Fiscal Year Ending April 30, 1997
The appointment was ratified as follows:
Votes for 3,887,199
Votes against 2,234
Abstentions 2,424
Item 6. Exhibits and Reports on Form 8-K
--------------------------
(a) Exhibits
------
10.1 Credit agreement dated as of November 15, 1996 among the
Company, the Banks from time to time parties hereto, and
Morgan Guaranty Trust Company of New York, as Agent.
27 Financial Data Schedule
(b) Reports on Form 8-K
----------------
The Company filed a Form 8-K/A dated June 13, 1996 amending
the Form 8-K dated June 13, 1996 to provide Financial
Statements of Businesses Acquired under Item 7(a) and Pro
Forma Financial Information under Item 7(b).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JOHN WILEY & SONS, INC.
Registrant
By/s/ Charles R. Ellis
--------------
Charles R. Ellis
President and
Chief Executive Officer
By/s/ Robert D. Wilder
--------------
Robert D. Wilder
Executive Vice President and
Chief Financial Officer
Dated: December 12, 1996
CONFORMED COPY
$175,000,000
CREDIT AGREEMENT
dated as of
November 15, 1996
among
John Wiley & Sons, Inc.,
The Banks From Time to Time Parties Hereto
and
Morgan Guaranty Trust Company of New York,
as Agent
J.P. Morgan Securities Inc.,
Arranger
TABLE OF CONTENTS
Page
ARTICLE 1Definitions
Section 1.01. Definitions 1
Section 1.02. Accounting Terms and Determinations 15
Section 1.03. Classes and Types of Loans and Borrowings 16
ARTICLE 2Credits
Section 2.01. Commitments to Lend 16
Section 2.02. Method of Borrowing 17
Section 2.03. Notes 18
Section 2.04. Maturity of Loans 19
Section 2.05. Interest Rates 19
Section 2.06. Facility Fees 23
Section 2.07. Optional Termination or Reduction of Commitments 23
Section 2.08. Method of Electing Interest Rates 23
Section 2.09. Scheduled Termination of Commitments 25
Section 2.10. Mandatory Prepayments and Repayments 25
Section 2.11. Optional Prepayments25
Section 2.12. General Provisions as to Payments 26
Section 2.13. Funding Losses 27
Section 2.14. Computation of Interest and Fees 27
Section 2.15. Change of Control 27
<PAGE>
ARTICLE 3Conditions
Section 3.01. Effectiveness 29
Section 3.02. Borrowings 30
Section 3.03. Transitional Provisions 30
ARTICLE 4Representations and Warranties
Section 4.01. Corporate Existence and Power 31
Section 4.02. Corporate and Governmental Authorization;
No Contravention 31
Section 4.03. Binding Effect 31
Section 4.04. Financial Information 31
Section 4.05. Litigation 32
Section 4.06. Compliance with ERISA 32
Section 4.07. Taxes 32
Section 4.08. Subsidiaries 33
Section 4.09. Not an Investment Company 33
Section 4.10. Status of Notes 33
Section 4.11. Environmental Matters 33
ARTICLE 5Covenants
Section 5.01. Information 33
Section 5.02. Payment of Taxes; Insurance; Maintenance of Corporate
Existence 36
Section 5.03. Maintenance of Property; Conduct of Business 36
Section 5.04. Compliance with Laws37
Section 5.05. Inspection of Property, Books and Records 37
Section 5.06. Limitation on Liens 37
Section 5.07. Consolidations, Mergers and Sales of Assets 38
Section 5.08. Use of Proceeds 39
Section 5.09. Subsidiary Debt 39
Section 5.10. Consolidated Shareholders' Equity 39
Section 5.11. Debt to Subsidiaries39
Section 5.12. EBIT/Interest Ratio 39
Section 5.13. Leverage Ratio 39
Section 5.14. Restricted Payments and Guarantees 39
ARTICLE 6Defaults
Section 6.01. Events of Default 40
Section 6.02. Notice of Default 42
ARTICLE 7The Agent
Section 7.01. Appointment and Authorization 42
Section 7.02. Agent and Affiliates42
Section 7.03. Action by Agent 42
Section 7.04. Consultation with Experts 43
Section 7.05. Liability of Agent 43
Section 7.06. Indemnification 43
Section 7.07. Credit Decision 43
Section 7.08. Successor Agent 44
Section 7.09. Agent's Fee 44
ARTICLE 8Change in Circumstance
Section 8.01. Basis for Determining Interest Rate Inadequate or
Unfair 44
Section 8.02. Illegality 45
Section 8.03. Increased Cost and Reduced Return 46
Section 8.04. Taxes 47
Section 8.05. Base Rate Loans Substituted for Affected Fixed Rate 49
Section 8.06. Substitution of Bank49
ARTICLE 9Miscellaneous
Section 9.01. Notices 50
Section 9.02. No Waivers 50
Section 9.03. Expenses; Documentary Taxes; Indemnification 50
Section 9.04. Sharing of Set-Offs 51
Section 9.05. Amendments and Waivers 51
Section 9.06. Successors and Assigns 52
Section 9.07. Collateral 53
Section 9.08. New York Law 53
Section 9.09. Counterparts; Integration 53
EXHIBIT A - Note
EXHIBIT B - Opinion of Counsel for the Borrower
EXHIBIT C - Opinion of Davis Polk & Wardwell,
Special Counsel for the Agent
CREDIT AGREEMENT
<PAGE>
AGREEMENT dated as of November 15, 1996 among JOHN WILEY & SONS, INC., the BANKS
from time to time parties hereto and MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Agent. The parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.1. Definitions. Meanings:
Acquisition means the Acquisition by the Borrower of 90% of the outstanding
capital stock of VCH Publishing Group from Pallas Investment Group, the German
Chemical Society and the German Pharmaceutical Society.
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, an
administrative questionnaire in the form prepared 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). 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 which bears interest at the Base Rate pursuant to
the applicable Notice of Borrowing or Notice of Interest Rate Election or the
provisions of Article 8.
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 1996 Form 10-K means the Borrower's annual report on Form 10-K for
the fiscal year ended April 30, 1996, as filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934.
Borrowing has the meaning set forth in Section 1.03.
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).
CD Loan means (i) a Loan which bears interest at a CD Rate pursuant to the
applicable Notice of Borrowing or Notice of Interest Rate Election or (ii) an
overdue amount which was a CD Loan immediately before it became overdue.
CD Rate means a rate of interest determined pursuant to Section 2.05(b) on
the basis of an Adjusted CD Rate. CD Reference Banks means The Chase Manhattan
Bank, CoreStates Bank, N.A. and Morgan Guaranty Trust Company of New York.
Class has the meaning set forth in Section 1.03.
Commitment means any Term Loan Commitment or Revolving Credit Commitment, and
Commitments means any or all of the foregoing, as the context may require.
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 EBITDA means, for any fiscal period, Consolidated EBIT for such
period plus, to the extent deducted in determining Consolidated EBIT for such
period, depreciation and amortization expense.
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),
<PAGE>
(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 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, 1996,
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 November 1, 1996.
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 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 180 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.
Domestic Business Day means any day except a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required 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 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/Interest 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) Consolidated
Interest Charges for such period.
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,
<PAGE>
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.
Euro-Dollar Lending Office means, as to each Bank, its 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 which bears interest at a Euro-Dollar Rate
pursuant to the applicable Notice of Borrowing or Notice of Interest Rate
Election.
Euro-Dollar Rate means a rate of interest determined pursuant to Section
2.05(c) on the basis of an Adjusted London Interbank Offered Rate.
Euro-Dollar Reference Banks means The Chase Manhattan Bank, Fleet Bank N.A.
and Morgan Guaranty Trust Company of New York.
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. Existing Credit
Agreements means the $50,000,000 Credit Agreement dated as of
March 30, 1995 and the $75,000,000 Credit Agreement dated as of June 12, 1996,
each among the Borrower, the banks parties thereto and Morgan Guaranty Trust
Company of New York, as agent for such banks.
Exposure means, at any time as to any Bank, the sum of (i) such Bank's Term
Loan Commitment, if still in existence, or the outstanding principal amount of
such Bank's Term Loans, if its Term Loan Commitment is no longer in existence,
plus (ii) such Bank's Revolving Credit Commitment, if still in existence, or the
outstanding principal amount of such Bank's Revolving Credit Loans, if its
Revolving Credit Commitment is no longer in existence.
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.
Group of Loans means at any time a group of Loans of any Class consisting of
(i) all Loans of such Class which are Base Rate Loans at such time or (ii) all
Loans of such Class which are Euro-Dollar Loans or CD Loans having the same
Interest Period at such time, provided that, if a Loan of any particular Bank is
converted to or made as a Base Rate Loan pursuant to Article 8, such Loan shall
be included in the same Group or Groups of Loans from time to time as it would
have been in if it had not been so converted or made.
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 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 Loan, the period
commencing on the date of borrowing specified in the applicable Notice of
Borrowing or on the date specified in the applicable Notice of Interest Rate
Election and ending one, two, three or six months thereafter, as the Borrower
may elect in the applicable notice; 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;
<PAGE>
(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 clauses (c) and (d) below, end on the last Euro-Dollar
Business Day of a calendar month;
(c) no Interest Period for any Revolving Credit Loan shall extend beyond
the scheduled Termination Date; and
(d) no Interest Period applicable to any Term Loan shall extend beyond
any date upon which is due any scheduled principal payment in respect of the
Term Loans unless the aggregate principal amount of Term Loans represented by
Base Rate Loans, or by Fixed Rate Loans having Interest Periods that will expire
on or before such date, equals or exceeds the amount of such principal payment.
(2) with respect to each CD Loan, the period commencing on the date of
borrowing specified in the applicable Notice of Borrowing or on the date
specified in the applicable Notice of Interest Rate Election and ending 30, 60,
90 or 180 days thereafter, as the Borrower may elect in the applicable notice;
provided that:
(a) any Interest Period (other than an Interest Period determined
pursuant to clause (b) or (c) below) 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;
(b) no Interest Period for any Revolving Credit Loan shall extend beyond
the scheduled Termination Date; and
(c) no Interest Period applicable to any Term Loan shall extend beyond
any date upon which is due any scheduled principal payment in respect of the
Term Loans unless the aggregate principal amount of Term Loans represented by
Base Rate Loans, or by Fixed Rate Loans having Interest Periods that will expire
on or before such date, equals or exceeds the amount of such principal payment.
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.
Leverage Ratio means, at any date, the ratio of Consolidated Debt at such date
to Consolidated EBITDA for the period of four consecutive fiscal quarters most
recently ended on or prior to such date.
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.
Loan means a Base Rate Loan, a Euro-Dollar Loan or a CD Loan and Loans means
Base Rate Loans, Euro-Dollar Loans, CD Loans or any combination of the three;
provided that, if any such Loan or Loans (or portions thereof) are combined or
subdivided pursuant to a Notice of Interest Rate Election, the term Loan shall
refer to the combined principal amount resulting from such combination or to
each of the separate principal amounts resulting from such subdivision, as the
case may be.
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. 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. Notice of Interest Rate Election has the meaning set
forth in Section 2.08. 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 (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 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
limited liability company, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
<PAGE>
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.
Quarterly Dates means each July 31, October 31, January 31, and April 30.
Reference Banks means the CD Reference Banks or the Euro-Dollar Reference
Banks, as the context may require, and Reference Bank means any one of such
Reference Banks.
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 Exposures at such time.
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, on the
date of acquisition, one of the three highest credit ratings of either Standard
& Poor's Ratings Services ( 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, on the date of acquisition, one of the three 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, which are, on the date of acquisition, 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 any Person other than a
Subsidiary 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 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 Bank means each Bank identified on the signature pages hereof
as having a Revolving Credit Commitment and each Assignee which acquires a
Revolving Credit Commitment and/or Revolving Credit Loans pursuant to Section
9.06(c), and their respective successors.
Revolving Credit Commitment means,
(i) with respect to each Revolving Credit Bank listed on the signature
pages hereof, the amount set forth opposite the name of such Bank under the
heading Revolving Credit Commitment on the signature pages hereof, or
<PAGE>
(ii) with respect to each Assignee which becomes a Revolving Credit
Bank pursuant to Section 9.06(c), the amount of the Revolving Credit Commitment
thereby assumed by it,
in each case as such amount may be reduced from time to time pursuant
to Section 2.07 or increased or reduced by reason of an assignment to or by such
Bank in accordance with Section 9.06(c).
Revolving Credit Loan means a loan made by a Revolving Credit Bank pursuant to
Section 2.01(b). Revolving Credit Period means the period from and including
the Effective Date to but not including the
Termination Date.
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. Term Availability Period means the period
from and including the Effective Date to and including December 31,
1996.
Term Loan means a loan made by a Term Loan Bank pursuant to Section 2.01(a).
Term Loan Bank means each Bank identified on the signature pages hereof as
having a Term Loan Commitment and each Assignee which acquires a Term Commitment
and/or Term Loan pursuant to 9.06(c), and their respective successors.
Term Loan Commitment means,
(i) with respect to each Term Loan Bank listed on the signature pages
hereof, the amount set forth opposite the name of such Bank under the heading
Term Loan Commitment on the signature pages hereof, or
(ii) with respect to each Assignee which becomes a Term Loan Bank
pursuant to Section 9.06(c), the amount of the Term Loan Commitment thereby
assumed by it,
in each case as such amount may be reduced from time to time pursuant
to Section 2.07 or increased or reduced by reason of an assignment to or by such
Bank in accordance with Section 9.06(c).
Termination Date means October 31, 2003, or, if 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.
Type has the meaning set forth in Section 1.03.
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.
United States means the United States of America, including the States and the
District of Columbia, but excluding its territories and possessions.
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 1.2.
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 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. Section 1.3. Classes and Types
of Loans and Borrowings. The term Borrowing denotes the aggregation of Loans of
one or more Banks to be made to the Borrower pursuant to Article 2 on the same
date, all of which Loans are of the same Class and Type (subject to Article 8)
and, except in the case of Base Rate Loans, have the same initial Interest
Period. Loans hereunder are distinguished by Class and by Type . The Class of a
Loan (or of a Commitment to make such a Loan or of a Borrowing comprised of such
Loans) refers to the determination whether such Loan is a Term Loan or Revolving
Credit Loan, each of which constitutes a Class. The Type of a Loan refers to the
determination whether such Loan is a Euro-Dollar Loan, a CD Loan or a Base Rate
Loan. Identification of a Loan (or a Borrowing) by both Class and Type (e.g., a
Term Euro-Dollar Loan ) indicates that such Loan is both a Term Loan and a
Euro-Dollar Loan (or that such Borrowing is comprised of such Loans).
<PAGE>
ARTICLE 2
Credits
Section 2.1. Commitments to Lend. (a) Term Loans. During the Term Availability
Period each Term Loan Bank severally agrees, on the terms and conditions set
forth in this Agreement, to make Term Loans to the Borrower from time to time in
amounts not to exceed in the aggregate the amount of its Term Loan Commitment.
Each Borrowing under this Section 2.01(a) shall be in an aggregate principal
amount of (x) in the case of the initial Borrowing, $20,000,000 or (y) in the
case of any subsequent Borrowing, $5,000,000 or, in either case, any larger
multiple of $1,000,000 (except that (i) any such Borrowing may be in the exact
amount necessary to refund the principal amount of loans maturing under the
Existing Credit Agreements on the date of such Borrowing and (ii) any such
Borrowing may be in the aggregate amount of the unused Term Loan Commitments)
and shall be made from the several Banks ratably in proportion to their
respective Commitments. The Term Loan Commitments are not revolving in nature,
and amounts repaid or prepaid pursuant to Section 2.10 or Section 2.11 shall not
be reborrowed.
(b) Revolving Credit Loans. During the Revolving Credit Period, each
Revolving Credit Bank severally agrees, on the terms and conditions set forth in
this Agreement, to make Revolving Credit Loans to the Borrower from time to time
in an aggregate amount at any time outstanding not to exceed the amount of its
Revolving Credit Commitment. Within the limits specified in this Agreement, the
Borrower may borrow under this Section 2.01(b), prepay Loans to the extent
permitted by Section 2.11 and reborrow at any time during the Revolving Credit
Period pursuant to this Section 2.01(b). Each Borrowing under this Section
2.01(b) shall be in the 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 Revolving Credit Commitments) and shall be made from the
several Revolving Credit Banks ratably in proportion to their respective
Revolving Credit Commitments.
2.2Method 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) the Class and initial Type of Loans comprising such borrowing; and
(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 participating therein 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 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 3 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) 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 subsection (c) 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 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.
2.3Notes(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 Class and/or 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 Class and/or 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 Class 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.
<PAGE>
2.4Maturity of LoansThe Term Loans shall mature, and the principal amount
thereof shall be due and payable, in installments as provided in Section
2.10(a). The Revolving Credit Loans shall mature, and the principal amount
thereof shall be due and payable, on the Termination Date. 2.5Interest 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 for such day. Such interest shall be
payable at maturity, quarterly in arrears on each Quarterly Date prior to
maturity and, with respect to the principal amount of any Base Rate Loan
converted to a Fixed Rate Loan, on the date such Base Rate Loan is so converted.
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 each day during each Interest Period applicable thereto, at
a rate per annum equal to the sum of the Applicable Margin for such day plus the
Adjusted CD Rate applicable to such Interest Period; provided that if any CD
Loan shall, as a result of clause (2)(b) or (2)(c) 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 at the date such payment was due 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
average (rounded upward, if necessary, to the next higher 1/100 of 1%) of the
prevailing rates 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 each CD Reference Bank of its certificates of
deposit in an amount comparable to the unpaid principal amount of the CD Loan of
such CD Reference Bank 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. ss.
327.4(a) (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.
<PAGE>
(c) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during each Interest Period applicable
thereto, at a rate per annum equal to the sum of the Applicable Margin for such
day plus the Adjusted London Interbank Offered Rate applicable to such Interest
Period. 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.
The London Interbank Offered Rate applicable to any Interest Period means the
rate per annum at which deposits in dollars are offered to each of the
Euro-Dollar Reference Banks 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 such Euro-Dollar Reference Bank 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 for such day plus the Adjusted London Interbank Offered Rate
applicable to such Loan at the date such payment was due and (ii) the Applicable
Margin for such day plus the quotient obtained (rounded upwards, if necessary,
to the next higher 1/100 of 1%) by dividing (x) the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the respective rates 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 each of the Euro-Dollar Reference Banks are offered
to such Euro-Dollar Reference Bank 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 Leverage Ratio as of the last day of the then
immediately preceding fiscal quarter (the Reference Ratio ) was greater than
200%, 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 Reference Ratio
was equal to or less than 200% but greater than 100%, the applicable amount set
forth in the table below under the caption Level II, (iii) for each day during
any fiscal quarter as to which the Reference Ratio was equal to or less than
100% but greater than 50%, the applicable amount set forth in the table below
under the caption Level III, and (iv) for each day during any fiscal quarter as
to which the Reference Ratio was equal to or less than 50%, the applicable
amount set forth in the table below under the caption Level IV.
Level I
Level II
Level III
Level IV
<PAGE>
Euro-Dollar Loans
0.30%
0.25%
0.20%
0.15%
CD Loans
0.425%
0.375%
0.325%
0.275%
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 Leverage 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.
2.6Facility FeesThe Borrower shall pay to the Agent, for the account of the
Banks ratably in accordance with their respective Exposures, a facility fee for
each day at a rate per annum equal to (i) 0.20% for any day on which Level I (as
such term is used in Section 2.05) applies, (ii) 0.125% for any day on which
Level II (as such term is used in Section 2.05) applies, (iii) 0.10% for any day
on which Level III or Level IV (as such terms are used in Section 2.05) applies,
on the aggregate amount of the Exposures on such day; provided that the Exposure
of any Bank hereunder for purposes of calculation of such facility fees (and
solely for such purpose) shall be deemed reduced (but not below zero) by the
aggregate outstanding principal amount of loans made by such Bank under the
Existing Credit Agreements for each day on which such loans remain outstanding.
Such facility fees shall accrue for each day from and including the Effective
Date to but excluding the Termination Date (or such earlier or later date on
which no Bank has any Exposure). Accrued fees under this Section 2.06 shall be
payable quarterly in arrears on each Quarterly Date and on the Termination Date
(or such earlier or later date). 2.7Optional Termination or Reduction of
CommitmentsThe Borrower may, upon at least three Domestic Business Days' notice
to the Agent, (i) terminate the Commitments of either Class at any time, if no
Loans of such Class are outstanding at such time or (ii) ratably reduce from
time to time by an aggregate amount of $5,000,000 or a larger multiple of
$1,000,000 the aggregate amount of the Commitments of either Class in excess of
the aggregate outstanding amount of the Loans of such Class. Upon receipt of any
notice pursuant to this Section 2.07, the Agent shall promptly notify each
affected Bank of the contents of such notice. 2.8Method of Electing Interest
Rates(a) The Loans included in each Borrowing shall bear interest initially at
the type of rate specified by the Borrower in the applicable Notice of
Borrowing. Thereafter, the Borrower may from time to time elect to change or
continue the type of interest rate borne by each Group of Term Loans and
Revolving Credit Loans (subject in each case to the provisions of Article 8 and
the last sentence of this subsection (a)), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect to
convert such Loans to CD Loans as of any Domestic Business Day or to Euro-Dollar
Loans as of any Euro-Dollar Business Day;
(ii) if such Loans are CD Loans, the Borrower may elect to convert such
Loans to Base Rate Loans or Euro-Dollar Loans or elect to continue such Loans as
CD Loans for an additional Interest Period, in either case effective on the last
day of the then current Interest Period applicable to such Loans; and
(iii) if such Loans are Euro-Dollar Loans, the Borrower may elect to
convert such Loans to Base Rate Loans or CD Loans or elect to continue such
Loans as Euro-Dollar Loans for an additional Interest Period, in either case as
of the last day of the then current Interest Period applicable to such Loans.
Each such election shall be made by delivering a notice (a Notice of
Interest Rate Election ) to the Agent not later than 11:00 A.M. (New York City
time) on the third Euro-Dollar Business Day before the conversion or
continuation selected in such notice is to be effective. A Notice of Interest
Rate Election may, if it so specifies, apply to only a portion of the aggregate
principal amount of the relevant Group of Loans; provided that (i) such portion
is allocated ratably among the Loans comprising such Group and (ii) the portion
to which such Notice applies, and the remaining portion to which it does not
apply, are each $5,000,000 or any larger multiple of $1,000,000. If no such
notice is timely received prior to the end of an Interest Period, the Borrower
shall be deemed to have elected that all Loans having such Interest Period be
converted to Base Rate Loans. Notwithstanding the foregoing, the Borrower may
not elect to convert any Loan to, or continue any Loan as, a Fixed Rate Loan
pursuant to any Notice of Interest Rate Election if at the time such notice is
delivered a Default shall have occurred and be continuing. (b) Each Notice of
Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such notice applies;
(ii) the date on which the conversion or continuation selected in such
notice is to be effective, which shall comply with the applicable clause of
subsection (a) above;
<PAGE>
(iii) if the Loans comprising such Group are to be converted, the new Type
of Loans and, if such Loans are being converted to Fixed Rate Loans, the
duration of the next succeeding Interest Period applicable thereto; and
(iv) if such Loans are to be continued as Fixed Rate Loans for an
additional Interest Period, the duration of such additional Interest Period.
Each Interest Period specified in a Notice of Interest Rate Election
shall comply with the provisions of the definition of Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election from the
Borrower pursuant to subsection (a) above, the Agent shall promptly notify each
Bank of the contents thereof and such notice shall not thereafter be revocable
by the Borrower.
(d) An election by the Borrower to change or continue the rate of interest
applicable to any Group of Loans pursuant to this Section 2.08 shall not
constitute a Borrowing subject to the provisions of Section 3.02. 2.9Scheduled
Termination of Commitments(a) The Term Loan Commitments shall terminate at the
close of business on the last day of the Term Availability Period.
(b) The Revolving Credit Commitments shall terminate on the Termination
Date. 2.10Mandatory Prepayments and Repayments(a) Term Loan Amortization. On
each date set forth below, there shall become due and payable, and the Borrower
shall repay, an aggregate principal amount of the Term Loans equal to the
applicable percentage of the outstanding Term Loans as of December 31, 1996, set
forth below opposite such date:
Date
Amount
October 31, 2000
24%
October 31, 2001
24%
October 31, 2002
24%
October 31, 2003
28%
(b) Applications of Prepayments.
(i) Each prepayment of Term Loans shall be applied ratably to the
respective Term Loans of all of the Banks.
(ii) The amount of any prepayment of Term Loans pursuant to Section
2.11 shall be applied to reduce the amount of subsequent scheduled payments of
the Term Loans required pursuant to subsection (a) ratably by amount.
(iii) Each payment of principal of the Term Loans shall be made
together with interest accrued on the amount paid to the date of payment.
2.11Optional Prepayments(a) Subject in the case of any Fixed Rate Loan to
Section 2.13, the Borrower may, (i) upon at least one Domestic Business Day's
notice to the Agent, prepay the Group of Base Rate Loans of any Class or (ii)
upon at least (x) in the case of CD Loans, one Domestic Business Day's notice to
the Agent and (y) in the case of Euro-Dollar Loans, three Euro-Dollar Business
Days' notice to the Agent, prepay on the last day of the related Interest Period
any Group of Fixed Rate Loans of any Class, in each case in whole at any time,
or from time to time in part in amounts aggregating $2,000,000 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 of a Group of Loans shall be applied to prepay ratably the Loans of
the Banks included in such Group.
(b) 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.
<PAGE>
2.12General 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 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.
2.13Funding LossesIf the Borrower makes any payment of principal with respect to
any Fixed Rate Loan or any Fixed Rate Loan is converted (pursuant to Article 6
or 8 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, prepay, convert into or continue
any Fixed Rate Loans after notice has been given to any Bank in accordance with
Section 2.02(b), 2.08(c) or 2.11(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, prepay, convert or continue, 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. 2.14Computation of Interest and FeesInterest based on
the Prime Rate hereunder and facility fees shall be computed on the basis of a
year of 365 days (or 366 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). 2.15Change of ControlIf 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(s), 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 any
other amounts payable hereunder for its account to be, and such Note, such
interest 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 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 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.
<PAGE>
Change of 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.
3Conditions3.1EffectivenessThis 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;
(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,
dated the Effective Date;
(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; and
(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;
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 November 30, 1996. 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. 3.2BorrowingsThe obligation of any Bank to make a Loan on
the occasion of any Borrowing is subject to the satisfaction of the following
conditions:
(a) receipt by the Agent of notice of such Borrowing as required by Section
2.02;
(b) the fact that, immediately after such Borrowing, (i) in the case of
a Term Borrowing, the sum of the aggregate principal amount of Term Loans
borrowed hereunder and the aggregate outstanding principal amount of loans under
the Existing Credit Agreements will not exceed the aggregate amount of the Term
Loan Commitments and (ii) in the case of a Revolving Credit Borrowing, the
aggregate outstanding principal amount of the Revolving Credit Loans will not
exceed the aggregate amount of the Revolving Credit 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 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. 3.3Transitional Provisions On the Effective
Date, the commitments of the Banks under the Existing Credit Agreements shall
terminate; provided that facility fees shall continue to accrue under each of
the Existing Credit Agreements, for the respective accounts of the banks parties
thereto ratably in proportion to their commitments thereunder immediately prior
to such termination, at the respective rates per annum specified therein on the
aggregate principal amount of loans outstanding thereunder for so long as any
loans remain outstanding thereunder. Such fees shall be payable when the loans
outstanding under the Existing Credit Agreements are repaid in full.
<PAGE>
4Representations and WarrantiesThe Borrower represents and warrants that:
4.1Corporate Existence and PowerThe 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. 4.2Corporate and Governmental Authorization; No ContraventionThe
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, 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 any Subsidiary or result in the creation or imposition of any
Lien on any asset of the Borrower or any of its Subsidiaries. 4.3Binding
EffectThis 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. 4.4Financial Information(a) The
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as
of April 30, 1996 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 1996 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 July 31, 1996 and the related unaudited
consolidated condensed statements of income and cash flows for the three months
then ended, set forth in the Borrower's quarterly report for the fiscal quarter
ended July 31, 1996 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 4.04, the consolidated
financial position of the Borrower and its Consolidated Subsidiaries as of such
date and their consolidated results of operations and cash flows for such three
month period (subject to normal year-end adjustments).
(c) Since July 31, 1996 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 (it being
understood that consummation of the Acquisition does not constitute such a
change).
4.5LitigationThere is no action, suit or proceeding pending against, or to the
knowledge of the Borrower 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 or enforceability of this Agreement or the Notes. 4.6Compliance with
ERISAEach 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. 4.7TaxesThe 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. 4.8SubsidiariesEach 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. 4.9Not an Investment
CompanyThe Borrower is not an investment company within the meaning of the
Investment Company Act of 1940, as amended. 4.10Status of NotesThe 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.
4.11Environmental MattersThe 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.
<PAGE>
5CovenantsThe Borrower agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Note remains unpaid: 5.1InformationThe
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 balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such fiscal year and the related
consolidated statements of income, retained earnings and cash flows for such
year, setting forth in each case in comparative form the figures as of the end
of and for the previous fiscal year, prepared in accordance with generally
accepted accounting principles consistently applied and reported on by Arthur
Andersen L.L.P. 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;
(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
as of the end of and 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
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 5 hereof
and setting forth calculations demonstrating compliance with the covenants set
forth in Sections 5.06 and 5.09 through 5.14; (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; (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 copy 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;
<PAGE>
(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 $10,000,000 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.
5.2Payment of Taxes; Insurance; Maintenance of Corporate ExistenceThe 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 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 and (ii) 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.
5.3Maintenance 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.
5.4Compliance with LawsThe 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. 5.5Inspection of Property, Books and
RecordsThe 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. 5.6Limitation on LiensThe 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 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;
<PAGE>
(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 $15,000,000;
(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;
(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 $10,000,000; and
(i) Liens not otherwise permitted by the foregoing clauses of this
Section 5.06 securing Debt in an aggregate principal amount at any time
outstanding not to exceed 5% of Consolidated Net Worth.
5.7Consolidations, Mergers and Sales of AssetsThe 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. 5.8Use of
ProceedsThe proceeds of the Loans made under this Agreement will be used by the
Borrower for its general corporate purposes (including refinancing of the
Acquisition). None of such proceeds will be used in violation of any applicable
law or regulation. 5.9Subsidiary DebtSubsidiary 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.
5.10Consolidated Shareholders' EquityConsolidated Shareholders' Equity will at
no time be less than the sum of (i) $70,000,000 plus (ii) an amount equal to 25%
of Consolidated Net Income for each fiscal year of the Borrower ending after May
1, 1996 and on or prior to the date of determination, in each case, for which
Consolidated Net Income is positive (but with no deduction on account of
negative Consolidated Net Income for any fiscal year of the Borrower). 5.11Debt
to SubsidiariesThe 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.
5.12EBIT/Interest RatioThe EBIT/Interest Ratio will not, at the last day of any
fiscal quarter, be less than 200%. 5.13Leverage RatioThe Leverage Ratio will at
no time exceed 350%. 5.14Restricted Payments and GuaranteesThe Borrower will
not, directly or indirectly, make any Restricted Payment 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, 1996 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
$50,000,000 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. 6Defaults6.1Events of DefaultIf 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 5.14, 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
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 (together
with accrual interest thereon) 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.6.2Notice of DefaultThe 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.
<PAGE>
7The Agent7.1Appointment and AuthorizationEach 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. 7.2Agent and AffiliatesMorgan Guaranty Trust Company of New
York 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. 7.3Action by AgentThe
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 6. 7.4Consultation with ExpertsThe 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. 7.5Liability of AgentNeither 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, 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 3, 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. Without limiting the generality of the foregoing,
the use of the term agent in this Agreement with reference to the Agent is not
intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable law. Instead, such term is used
merely as a matter of market custom and is intended to create or reflect only an
administrative relationship between independent contracting parties.
7.6IndemnificationEach 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. 7.7Credit DecisionEach 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. 7.8Successor AgentThe 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 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 7 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent. 7.9Agent's FeeThe
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.
8Change in Circumstance8.1Basis for Determining Interest Rate Inadequate or
UnfairIf on or prior to the first day of any Interest Period for any Fixed Rate
Loan:
(a) the Agent is advised by the Reference Banks that deposits in
dollars (in the applicable amounts) are not being offered to the Reference Banks
in the relevant market for such Interest Period, or
(b) Banks having 50% or more of the aggregate amount of the Loans
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,
<PAGE>
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, (i) the obligations of the Banks
to make CD Loans or Euro-Dollar Loans, as the case may be, or to continue or
convert outstanding Loans as or into CD Loans or Euro-Dollar Loans, as the case
may be, shall be suspended and (ii) each outstanding CD Loan or Euro-Dollar
Loan, as the case may be, shall be converted into a Base Rate Loan on the last
day of the then current Interest Period applicable thereto. 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.8.2IllegalityIf, 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, or to convert outstanding Loans into 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 notice
is given, each Euro-Dollar Loan of such Bank then outstanding shall be converted
to a Base Rate Loan either (a) on the last day of the then current Interest
Period applicable to such Euro-Dollar Loan if such Bank may lawfully continue to
maintain and fund such Loan to such day or (b) immediately if such Bank shall
determine that it may not lawfully continue to maintain and fund such Loan to
such day. 8.3Increased 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 shall impose, modify or deem applicable any reserve, special
deposit, insurance assessment or similar requirement (including, without
limitation, any such requirement imposed by the Board of Governors of the
Federal Reserve System, but excluding (i) with respect to any CD Loan any such
requirement included in an applicable Domestic Reserve Percentage or Assessment
Rate and (ii) 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 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 8.03 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 8.03 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.
8.4Taxes(a) For the purposes of this Section 8.04 the following terms have the
following meanings: Taxes means any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings
with respect to any payment by the Borrower pursuant to this Agreement or under
any Note, and all liabilities with respect thereto, excluding (i) in the case of
each Bank and the Agent, taxes imposed on its income, and franchise or similar
taxes imposed on it, by a jurisdiction under the laws of which such Bank or the
Agent (as the case may be) is organized or in which its principal executive
office is located or, in the case of each Bank, in which its Applicable Lending
Office is located and (ii) in the case of each Bank, any United States
withholding tax imposed on such payments but only to the extent that such Bank
is subject to United States withholding tax at the time such Bank first becomes
a party to this Agreement.
Other Taxes means any present or future stamp, mortgage recording or
documentary taxes and any other excise or property taxes, or similar charges or
levies, which arise from any payment made pursuant to this Agreement or under
any Note or from the execution or delivery or enforcement of, or otherwise with
respect to, this Agreement or any Note.
(b) Any and all payments by the Borrower to or for the account of any
Bank or the Agent hereunder or under any Note shall be made without deduction
for any Taxes or Other Taxes; provided that, if the Borrower shall be required
by law to deduct any Taxes or Other Taxes from any such payments, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section) such Bank or the Agent (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrower shall make such deductions, (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law and (iv) the Borrower shall furnish to the Agent,
at its address referred to in Section 9.1, the original or a certified copy of a
receipt evidencing payment thereof.
<PAGE>
(c) The Borrower agrees to indemnify each Bank and the Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section) paid by such Bank or the Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be paid within 15 days after such
Bank or the Agent (as the case may be) makes demand therefor.
(d) Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on the signature pages hereof and on
or prior to the date on which it becomes a Bank in the case of each other Bank,
and from time to time thereafter if requested in writing by the Borrower (but
only so long as such Bank remains lawfully able to do so), shall provide the
Borrower and the Agent with Internal Revenue Service Form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Bank is entitled to benefits under an income tax treaty to
which the United States is a party which exempts the Bank from United States
withholding tax or reduces the rate of withholding tax on payments of interest
for the account of such Bank or certifying that the income receivable pursuant
to this Agreement is effectively connected with the conduct of a trade or
business in the United States.
(e) For any period with respect to which a Bank has failed to provide
the Borrower or the Agent with the appropriate form pursuant to Section 8.04(d)
(unless such failure is due to a change in treaty, law or regulation occurring
subsequent to the date on which such form originally was required to be
provided), such Bank shall not be entitled to indemnification under Section
8.04(b) or 8.04(c) with respect to Taxes imposed by the United States; provided
that if a Bank, which is otherwise exempt from or subject to a reduced rate of
withholding tax, becomes subject to Taxes because of its failure to deliver a
form required hereunder, the Borrower shall take such steps as such Bank shall
reasonably request to assist such Bank to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for the
account of any Bank pursuant to this Section 8.04, then such Bank will change
the jurisdiction of its Applicable Lending Office if, in the judgment of such
Bank, such change (i) will eliminate or reduce any such additional payment which
may thereafter accrue and (ii) is not otherwise disadvantageous to such Bank.
8.5Base Rate Loans Substituted for Affected Fixed RateIf (i) the obligation of
any Bank to make or convert outstanding Loans to, Euro-Dollar Loans has been
suspended pursuant to Section 8.02 or (ii) any Bank has demanded compensation
under Section 8.03(a) or 8.04 with respect to its CD Loans or Euro-Dollar Loans
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
8.05 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 (or
continued as or converted into) CD Loans or Euro-Dollar Loans, as the case may
be, shall instead be Base Rate Loans (on which interest and principal shall be
payable contemporaneously with the related Fixed Rate Loans of the other Banks),
and
(b) after each of its CD Loans or Euro-Dollar Loans, as the case may
be, has been repaid (or converted to a Base Rate Loan), 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.
If such Bank notifies the Borrower that the circumstances giving rise
to such notice no longer apply, the principal amount of each such Base Rate Loan
shall be converted into a CD Loan or Euro-Dollar Loan, as the case may be, on
the first day of the next succeeding Interest Period applicable to the related
CD Loans or Euro-Dollar Loans of the other Banks. 8.6Substitution of BankIf (i)
the obligation of any Bank to make or maintain Euro-Dollar Loans has been
suspended pursuant to Section 8.02 or (ii) any Bank has demanded compensation
under Section 8.03 or 8.04, the Borrower shall have the right, with the
assistance of the Agent, to designate an Assignee which is a bank or other
financial institution to purchase for cash, pursuant to an instrument executed
by such Assignee and such Bank, the outstanding Loans and Commitment(s) of such
Bank and to assume all of such Bank's other rights and obligations hereunder
without recourse to or warranty by such Bank, for a purchase price equal to the
principal amount of all of such Bank's outstanding Loans plus any accrued but
unpaid interest thereon and the accrued but unpaid facility fees in respect of
such Bank's Commitment(s) hereunder plus such amount, if any, as would be
payable pursuant to Section 2.13 if the outstanding Loans of such Bank were
prepaid in their entirety on the date of consummation of such assignment, plus
the compensation then due and payable pursuant to Sections 8.03 and 8.04.
<PAGE>
9Miscellaneous9.1NoticesAll 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 9.01 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 2 or Article 8 shall not be
effective until received. 9.2No WaiversNo 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.
9.3Expenses; 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 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.
(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.
9.4Sharing of Set-OffsEach 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 9.04 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. 9.5Amendments and WaiversAny 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 any 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 for
termination of any Commitment 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 9.05 or any other provision of this Agreement. 9.6Successors
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 any or all of its
Commitments 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 of Article 8 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).
<PAGE>
(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 notice to the Borrower and subject
to the subscribed consent of the Agent; provided that if an Assignee is a Bank
or an affiliate of such transferor Bank, no such consent shall be required; and
provided further that any assignment shall not be less than $5,000,000, or if
less, shall constitute an assignment of all of such Bank's rights and
obligations under this Agreement and the Notes. 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(s) 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
8.04.
(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 or 8.04 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, 8.03 or 8.04 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.
9.7CollateralEach 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. 9.8New York LawThis Agreement and each Note
shall be construed in accordance with and governed by the law of the State of
New York. 9.9Counterparts; IntegrationThis 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.
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
Title: Executive Vice President & CFO
605 Third Avenue
New York, New York 10058-0012
Facsimile number: (212) 850-6088
<PAGE>
Commitments
Term Loan Commitment MORGAN GUARANTY TRUST COMPANY OF NEW YORK
$17,857,130 COMPANY OF NEW YORK
Revolving Credit Commitment
$7,142,870 By: /s/ George J. Stapleton
Title: Vice President
Term Loan Commitment THE ASAHI BANK, LTD.
$12,857,144
Revolving Credit Commitment By: /s/ Shinichi Furukawa
$5,142,856 Title: Senior Deputy Genereal Manager
Term Loan Commitment THE BANK OF NEW YORK
$12,857,144
Revolving Credit Commitment By: /s/ Wade E. Layton
$5,142,856 Title: Vice President
Term Loan Commitment BANK OF TOKYO-MITSUBISHI TRUST COMPANY
$12,857,144
Revolving Credit Commitment
$5,142,856 By: /s/ Paula Mueller
Title: Vice President
Term Loan Commitment CORESTATES BANK, N.A.
$15,714,288
Revolving Credit Commitment By: /s/ Melissa G. Landay
$6,285,712 Title: Vice President
Term Loan Commitment THE CHASE MANHATTAN BANK
$15,714,288
Revolving Credit Commitment By: /s/ Lisa M. Richardson
$6,285,712 Title: Vice President
Term Loan Commitment FLEET BANK, N.A.
$15,714,288
Revolving Credit Commitment By: /s/ John M. Tuohy
$6,285,712 Title: Vice President
Term Loan Commitment LLOYDS BANK PLC
$8,571,430
Revolving Credit Commitment By: /s/ Stephen J. Attree
$3,428,570 Title: Assistant Vice President
By: /s/ Theodore R. Walse
Title: Senior Vice President
Term Loan Commitment WACHOVIA BANK OF GEORGIA, N.A.
$12,857,144
Revolving Credit Commitment By: /s/ James McCreary
$5,142,856 Title: Senior Vice President
=================
Total Term Loan Commitments
$125,000,000
=================
Total Revolving Credit Commitments
$50,000,000
=================
Total Commitments
$175,000,000
<PAGE>
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent
By: /s/ George J. Stapleton
Title: Vice President
60 Wall Street
New York, New York 10260-0060
Attention: Vance B. Barbour
Facsimile number: (212) 648-5017
EXHIBIT A
NOTE
New York, New York
November 15, 1996
<PAGE>
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 dates and in the amounts specified in the Credit Agreement. 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 Classes 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 November 15, 1996 among the Borrower, the
banks from time to time parties thereto 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:_______________________
Name:
Title:
<PAGE>
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
Amount
Amount Class Type of Principal
Date of Loan of Loan of Loan Repaid Notation Made By
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<PAGE>
EXHIBIT B
OPINION OF
COUNSEL FOR THE BORROWER
November 15, 1996
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 November 15, 1996 among the Borrower, the
banks from time to time parties thereto 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 I have deemed necessary or advisable for purposes of this
opinion. Upon the basis of the foregoing, I am 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.
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 any Subsidiary 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 or enforceability 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,
EXHIBIT C
<PAGE>
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENT
--------------------------------------
November 15 , 1996
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 $175,000,000 Credit Agreement
(the Credit Agreement ) dated as of November 15, 1996 among John Wiley & Sons,
Inc., a New York corporation (the Borrower ), the Banks from time to time
parties thereto and Morgan Guaranty Trust Company of New York, as 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 the Notes 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 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,
<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>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> OCT-31-1996
<CASH> 1,290
<SECURITIES> 0
<RECEIVABLES> 103,061
<ALLOWANCES> 31,275
<INVENTORY> 59,995
<CURRENT-ASSETS> 158,399
<PP&E> 67,696
<DEPRECIATION> 38,918
<TOTAL-ASSETS> 401,851
<CURRENT-LIABILITIES> 119,366
<BONDS> 121,000
<COMMON> 20,547
0
0
<OTHER-SE> 102,915
<TOTAL-LIABILITY-AND-EQUITY> 401,851
<SALES> 0
<TOTAL-REVENUES> 206,287
<CGS> 0
<TOTAL-COSTS> 71,172
<OTHER-EXPENSES> 116,210
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,494
<INCOME-PRETAX> 16,755
<INCOME-TAX> 6,032
<INCOME-CONTINUING> 10,723
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,723
<EPS-PRIMARY> .65
<EPS-DILUTED> .65
</TABLE>
