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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 10-Q
Quarterly Report under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarterly Period Ended Commission File
July 1, 1995 No. 0-17540
MONTGOMERY WARD HOLDING CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 36-3571585
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Montgomery Ward Plaza
Chicago, Illinois 60671
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number Including Area Code:
(312) 467-2000
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 .
At July 29, 1995, there were 19,807,175 shares of Class A Common
Stock and 25,000,000 shares of Class B Common Stock of the
Registrant outstanding.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
INDEX
Page
Montgomery Ward Holding Corp.
Consolidated Statements of Income . . . . . . . . .2
Consolidated Condensed Balance Sheet. . . . . . . .4
Consolidated Statement of Cash Flows. . . . . . . .5
Notes to Consolidated Condensed Financial
Statements . . . . . . . . . . . . . . . . . . . .7
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MONTGOMERY WARD HOLDING CORP.
CONSOLIDATED STATEMENT OF INCOME
(Millions of dollars, except per share amounts)
For the 13-Week
Period Ended
July 1, July 2,
1995 1994
Revenues
Net sales, including leased and licensed
department sales . . . . . . . . . . . . . . $1,520 $1,519
Direct response marketing revenues,
including insurance. . . . . . . . . . . . . 135 113
Total Revenues . . . . . . . . . . . . . . 1,655 1,632
Costs and Expenses
Cost of goods sold, including net occupancy
and buying expense . . . . . . . . . . . . . 1,210 1,183
Operating, selling, general and
administrative expenses, including
benefits and losses of direct
response operations. . . . . . . . . . . . . 405 395
Interest expense, net of investment
income . . . . . . . . . . . . . . . . . . . 24 14
Total Costs and Expenses . . . . . . . . . 1,639 1,592
Income Before Income Taxes . . . . . . . . . . 16 40
Income Tax Expense . . . . . . . . . . . . . . 5 12
Net Income . . . . . . . . . . . . . . . . . . 11 28
Preferred Stock Dividend Requirements. . . . . 1 1
Net Income Applicable to
Common Shareholders . . . . . . . . . . . . . $ 10 $ 27
Net Income per Common Share
Class A . . . . . . . . . . . . . . . . . . . $ .25 $ .62
Class B . . . . . . . . . . . . . . . . . . . $ .20 $ .53
Cash Dividends Declared Per Common Share
Class A . . . . . . . . . . . . . . . . . . . $ - $ .50
Class B . . . . . . . . . . . . . . . . . . . $ - $ .50
See notes to consolidated condensed financial statements.
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MONTGOMERY WARD HOLDING CORP.
CONSOLIDATED STATEMENT OF INCOME
(Millions of dollars, except per share amounts)
For the 26-Week
Period Ended
July 1, July 2,
1995 1994
Revenues
Net sales, including leased and licensed
department sales . . . . . . . . . . . . . . $2,877 $2,734
Direct response marketing revenues,
including insurance. . . . . . . . . . . . . 265 220
Total Revenues . . . . . . . . . . . . . . 3,142 2,954
Costs and Expenses
Cost of goods sold, including net occupancy
and buying expense . . . . . . . . . . . . . 2,285 2,114
Operating, selling, general and
administrative expenses, including
benefits and losses of direct
response operations. . . . . . . . . . . . . 805 759
Interest expense, net of investment
income . . . . . . . . . . . . . . . . . . . 43 25
Total Costs and Expenses . . . . . . . . . 3,133 2,898
Income Before Income Taxes . . . . . . . . . . 9 56
Income Tax Expense . . . . . . . . . . . . . . 2 18
Net Income . . . . . . . . . . . . . . . . . . 7 38
Preferred Stock Dividend Requirements. . . . . 2 1
Net Income Applicable to
Common Shareholders . . . . . . . . . . . . . $ 5 $ 37
Net Income per Class A Common Share. . . . . . $ .12 $ .85
Net Income per Class B Common Share. . . . . . $ .10 $ .74
Cash Dividends Declared Per Common Share
Class A . . . . . . . . . . . . . . . . . . . $ - $ .50
Class B . . . . . . . . . . . . . . . . . . . $ - $ .50
See notes to consolidated condensed financial statements.
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MONTGOMERY WARD HOLDING CORP.
CONSOLIDATED CONDENSED BALANCE SHEET
(Millions of dollars)
ASSETS
July 1, December 31,
1995 1994
Cash and cash equivalents . . . . . . . . . $ 41 $ 33
Short-term investments . . . . . . . . . . . 17 3
Investments of insurance operations. . . . . 319 314
Total Cash and Investments . . . . . . . 377 350
Trade and other accounts receivable. . . . . 121 112
Accounts and notes receivable
from affiliates . . . . . . . . . . . . . . - 6
Total Receivables. . . . . . . . . . . . 121 118
Merchandise inventories. . . . . . . . . . . 1,583 1,625
Prepaid pension contribution . . . . . . . . 328 324
Federal income taxes receivable. . . . . . . 22 -
Properties, plants and equipment, net of
accumulated depreciation and
amortization. . . . . . . . . . . . . . . . 1,371 1,396
Direct response and insurance
acquisition costs . . . . . . . . . . . . . 347 322
Other assets . . . . . . . . . . . . . . . . 428 402
Total Assets . . . . . . . . . . . . . . . . $4,577 $4,537
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings. . . . . . . . . . . . $ 819 $ 144
Trade accounts payable . . . . . . . . . . . 1,219 1,719
Accrued liabilities and other
obligations . . . . . . . . . . . . . . . . 1,073 1,231
Federal income taxes payable . . . . . . . . 4 14
Insurance policy claim reserves. . . . . . . 240 236
Long-term debt . . . . . . . . . . . . . . . 223 228
Obligations under capital leases . . . . . . 78 81
Deferred federal income taxes. . . . . . . . 149 122
Total Liabilities. . . . . . . . . . . . 3,805 3,775
Redeemable Preferred Stock . . . . . . . . . 75 75
Shareholders' Equity
Common stock. . . . . . . . . . . . . . . . - -
Capital in excess of par value. . . . . . . 24 23
Retained earnings . . . . . . . . . . . . . 756 751
Unrealized gain on marketable equity
securities . . . . . . . . . . . . . . . . 10 2
Less: Treasury stock, at cost. . . . . . . (93) (89)
Total Shareholders' Equity . . . . . . . 697 687
Total Liabilities and
Shareholders' Equity. . . . . . . . . . . . $4,577 $4,537
See notes to consolidated condensed financial statements.
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MONTGOMERY WARD HOLDING CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Millions of dollars)
For the 26-Week
Period Ended
July 1, July 2,
1995 1994
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . $ 7 $ 38
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization. . . . . . . 62 51
Deferred income taxes. . . . . . . . . . . 22 (4)
Changes in operating assets and liabilities:
(Increase) decrease in:
Trade and other accounts receivable. . . . (3) (20)
Accounts and notes receivable from
affiliates. . . . . . . . . . . . . . . . 6 (15)
Merchandise inventories. . . . . . . . . . 42 (35)
Prepaid pension contribution . . . . . . . (4) (7)
Federal income tax receivable. . . . . . . (22) -
Other assets . . . . . . . . . . . . . . . (59) (21)
Increase (decrease) in:
Trade accounts payable . . . . . . . . . . (500) (241)
Federal income taxes payable, net. . . . . (10) 8
Accrued liabilities and other
obligations . . . . . . . . . . . . . . . (158) (120)
Insurance policy claim reserves. . . . . . 4 (3)
Net cash used in operations . . . . . . . (613) (369)
Cash flows from investing activities:
Acquisition of Lechmere, net of cash
acquired . . . . . . . . . . . . . . . . . . - (109)
Purchase of short-term investments. . . . . . (18) (130)
Purchase of investments of insurance
operations . . . . . . . . . . . . . . . . . (261) (295)
Sale of short-term investments. . . . . . . . 4 143
Sale of investments of insurance
operations . . . . . . . . . . . . . . . . . 269 298
Capital expenditures. . . . . . . . . . . . . (47) (42)
Disposition of properties, plants and
equipment, net . . . . . . . . . . . . . . . 12 1
Net cash used for
investing activities . . . . . . . . . .$ (41) $(134)
See notes to consolidated condensed financial statements.
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MONTGOMERY WARD HOLDING CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Millions of dollars)
For the 26-Week
Period Ended
July 1, July 2,
1995 1994
Cash flows from financing activities:
Proceeds from short-term borrowings . . . . . $7,246 $3,253
Payments on short-term borrowings . . . . . . (6,571) (2,937)
Proceeds from issuance of
long-term debt . . . . . . . . . . . . . . . - 166
Payments of Montgomery Ward
long-term debt . . . . . . . . . . . . . . . (5) (4)
Payments of Lechmere
long-term debt . . . . . . . . . . . . . . . - (88)
Payments of obligations under
capital leases . . . . . . . . . . . . . . . (3) (4)
Proceeds from issuance of
Common Stock . . . . . . . . . . . . . . . . 1 1
Proceeds from issuance of
Preferred Stock. . . . . . . . . . . . . . . - 75
Cash dividends paid . . . . . . . . . . . . . (2) (23)
Purchase of treasury stock, at cost . . . . . (4) (4)
Net cash provided by
financing activities. . . . . . . . . . . 662 435
Increase (decrease) in cash and
cash equivalents. . . . . . . . . . . . . . . 8 (68)
Cash and cash equivalents at
beginning of period . . . . . . . . . . . . . 33 98
Cash and cash equivalents at
end of period . . . . . . . . . . . . . . . . $ 41 $ 30
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Income taxes . . . . . . . . . . . . . . . $ 22 $ 19
Interest . . . . . . . . . . . . . . . . . $ 41 $ 24
Non-cash financing activity:
Notes issued for purchase of
Treasury stock . . . . . . . . . . . . . . . $ - $ 3
Non-cash investing activity:
Change in unrealized gain on
marketable equity securities . . . . . . . . $ 8 $ 4
See notes to consolidated condensed financial statements.
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MONTGOMERY WARD HOLDING CORP.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Millions of dollars, except per share amounts)
1. Condensed Financial Statements
Montgomery Ward Holding Corp. (the Company or MW Holding)
conducts its operations through its only direct subsidiary,
Montgomery Ward & Co., Incorporated (Montgomery Ward). In the
opinion of management, the unaudited financial statements of the
Company include all adjustments necessary for a fair presentation.
All such adjustments are of a normal recurring nature. The
condensed financial statements should be read in the context of the
financial statements and notes thereto filed with the Securities
and Exchange Commission in MW Holding's 1994 Annual Report on Form
10-K. Certain prior period amounts have been reclassified to be
comparable with the current period presentation.
2. Net Income Per Common Share
Net income per common share is computed as follows:
13-Week Period Ended
July 1, 1995
Class A Class B
Earnings available for Common
Shareholders . . . . . . . . . . . $ 5 $ 5
Weighted average number of common
and common equivalent shares
(stock options) outstanding. . . . 20,149,005 25,000,000
Earnings per share. . . . . . . . . $ .25 $ .20
13-Week Period Ended
July 2, 1994
Class A Class B
Earnings available for Common
Shareholders . . . . . . . . . . . $13 $14
Weighted average number of common
and common equivalent shares
(stock options) outstanding. . . . 21,395,584 25,000,000
Earnings per share. . . . . . . . . $ .62 $ .53
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MONTGOMERY WARD HOLDING CORP.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Millions of dollars, except per share amounts)
2. Net Income Per Common Share (continued)
Net income per common share is computed as follows:
26-Week Period Ended
July 1, 1995
Class A Class B
Earnings available for Common
Shareholders . . . . . . . . . . . $ 2 $ 3
Weighted average number of common
and common equivalent shares
(stock options) outstanding. . . . 20,246,555 25,000,000
Earnings per share. . . . . . . . . $ .12 $ .10
26-Week Period Ended
July 2, 1994
Class A Class B
Earnings available for
Common Shareholders. . . . . . . . $18 $19
Weighted average number of common
and common equivalent shares
(stock options) outstanding. . . . 21,514,129 25,000,000
Earnings per share. . . . . . . . . $.85 $.74
3. Acquisition of Lechmere, Inc.
Montgomery Ward acquired in a merger transaction all the stock
of LMR Acquisition Corporation (LMR) which owns 100% of the stock
of Lechmere, Inc. (Lechmere) on March 30, 1994. The aggregate
purchase price was $113. The acquisition was accounted for as a
purchase.
4. Benefits and Losses
Operating, selling, general and administrative expenses include
benefits and losses related to direct response marketing operations
of $29 and $25 for the 13-week periods ended July 1, 1995 and July
2, 1994, respectively and $57 and $52 for the 26-week periods ended
July 1, 1995 and July 2, 1994, respectively.
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MONTGOMERY WARD HOLDING CORP.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Millions of dollars)
5. Subsequent Event
On July 11, 1995, Montgomery Ward entered into a Note Purchase
Agreement (1995 Note Purchase Agreement) with various lenders
involving the private placement of $180 of Senior Notes which have
maturities of from five to ten years at fixed interest rates
varying from 6.52% to 6.98%. Proceeds from the debt issue were
used to pay short-term borrowings incurred to fund the Company's
acquisition of Lechmere.
Borrowings under the 1995 Note Purchase Agreement are subject to
various restrictions on Montgomery Ward, including the satisfaction
of certain financial tests which include restrictions on the
payment of dividends. The dividend restrictions under the 1995
Note Purchase Agreement are currently less restrictive than the
restrictions imposed by the Long Term Credit Agreement and Short
Term Credit Agreement.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion and analysis of results of operations
for MW Holding compares the second quarter of 1995 to the second
quarter of 1994, as well as the first six months of 1995 to the
first six months of 1994. All dollar amounts referred to in this
discussion are in millions, and all income and expense items are
shown before income taxes, unless specifically stated otherwise.
MW Holding's business is seasonal, with one-third of the sales
traditionally occurring in the fourth quarter; accordingly, the
results of operations for the quarter and the first six months are
not necessarily indicative of the results for the entire year.
Results of Operations
Second Quarter 1995 Compared with Second Quarter 1994
Net income for the second quarter of 1995 was $11, a decrease of
$17 from the prior year. The prior year results include a
favorable income tax adjustment of $3.
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MONTGOMERY WARD HOLDING CORP.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Results of Operations (continued)
Second Quarter 1995 Compared with Second Quarter 1994 (continued)
Consolidated total revenues (net sales and direct response
marketing revenues, including insurance) were $1,655 compared with
$1,632 in 1994. Net sales increased $1. Apparel sales increased
5% and were impacted by the shift in the Easter selling season from
the first quarter of 1994 to the second quarter of 1995. Hardlines
sales decreased 1%. Comparable store sales decreased 2%.
Direct response marketing revenues increased $22, or 19%, to
$135. The increase was primarily due to increased insurance and
club membership levels.
Gross margin (net sales less cost of goods sold) dollars were
$310, a decrease of $26, or 8%, from the second quarter of last
year. The decrease in gross margin was due to a decrease in the
gross margin rate ($20) and increased occupancy costs primarily
related to new stores ($6). The decrease in the gross margin rate
was due to decreased Hardlines margin rates. Competitive pressures
continue to have a negative impact on margin rates.
Operating, selling, general and administrative expenses
increased $10, or 3%, from the prior year. This increase was due
to the impact of new store openings of $10, increased advertising
and promotional costs of $7 and increased benefits and losses of
direct response operations of $4, partially offset by decreased
operating and administrative costs of $2 and the increased income
generated from the sale of product service contracts of $9. In
addition, the Company continued to incur transition expenditures
associated with the integration of Lechmere's operations, stores
and merchandise information systems.
Net interest expense increased $10, or 71%, from the prior year
due to increased borrowings (as more fully described in the
Discussion of Financial Condition), as well as increased interest
rates.
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MONTGOMERY WARD HOLDING CORP.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Results of Operations (continued)
First Six Months of 1995 Compared with First Six Months of 1994
Consolidated net income was $7, a decrease of $31 from the prior
year. Net income for 1995 includes a first quarter loss from
operations of Lechmere. Lechmere was acquired on March 30, 1994,
therefore 1994 results include Lechmere for the second quarter
only. In addition, the prior year results include a favorable
income tax adjustment of $3.
Consolidated total revenues were $3,142 compared with $2,954 in
1994. Net sales increased $143, or 5% of which $192 was
attributable to the first quarter impact of Lechmere. Excluding
Lechmere's first quarter impact, net sales decreased $49. The
decreased sales reflect a 3% decrease in Hardlines sales, partially
offset by a 1% increase in Apparel sales. Sales on a comparable
store basis, which reflects only the stores in operation for both
the first six months of 1995 and 1994, decreased 4%.
Direct response marketing revenues increased $45, or 20%, to
$265. The increase was primarily due to increased credit and club
membership levels. The acquisitions of Smilesaver in April, 1994
and Credit Card Sentinel in October, 1994 accounted for an increase
of $5.
Gross margin dollars, including Lechmere, were $592, a decrease
of $28, or 4%, from the first six months of last year. The
decrease was due to the decreased gross margin rate ($50) and
increased occupancy costs ($20), partially offset by the gross
margin impact of the increase in sales ($40) and decreased buying
office and other expenses ($2). The decrease in the gross margin
rate was impacted by the inclusion of Lechmere for six months of
1995, causing a heavier emphasis in appliances and electronics.
These businesses tend to have lower margin rates. Continued
competitive pressures also had a negative impact on margin rates.
<PAGE>
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Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Results of Operations (continued)
First Six Months of 1995 Compared with First Six Months of 1994
(continued)
Operating, selling, general and administrative expenses,
including the first quarter impact of Lechmere, increased $46, or
6%, from the prior year. Excluding Lechmere's first quarter
impact, operating, selling, general and administrative expenses
increased by $12. See "Second Quarter 1995 Compared With Second
Quarter 1994" for a discussion of the significant expenditures made
by the Company with respect to Lechmere. This increase was due to
the impact of new store openings of $20, increased benefits and
losses of direct response operations of $5, and increased
advertising and promotional costs of $4, partially offset by the
increased income generated from the sale of product service
contracts of $17.
Net interest expense increased $18, or 72%, from the prior year
due to increased borrowings (as more fully described in the
Discussion of Financial Condition), the first quarter impact of
higher borrowings due to the Lechmere acquisition, and increased
interest rates.
Discussion of Financial Condition
Montgomery Ward is the only direct subsidiary of MW Holding and
therefore Montgomery Ward and its subsidiaries are MW Holding's
sole source of funds.
Montgomery Ward has entered into a Long Term Credit Agreement
(Long Term Agreement) dated as of September 15, 1994 with various
lenders. The Long Term Agreement, which expires September 15,
1999, provides for a revolving facility in the principal amount of
$603. As of July 1, 1995, $529 was outstanding under the Long Term
Agreement. Concurrently, Montgomery Ward also entered into a Short
Term Credit Agreement (Short Term Agreement) dated as of September
15, 1994 with various lenders. The Short Term Agreement,
which expires September 14, 1995, provides for a revolving facility
in the principal amount of $297. As of July 1, 1995, $215 was
outstanding under the Short Term Agreement. In addition, $75 was
outstanding under short-term uncommitted bank lines of credit as of
July 1, 1995, which the Company uses periodically at seasonal
working capital peaks to diversify its borrowings.
<PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Results of Operations (continued)
Discussion of Financial Condition (continued)
Montgomery Ward has filed a request for extension for both the
Long Term Agreement and the Short Term Agreement in order to extend
the due dates to September 6, 2000 and September 6, 1996,
respectively. It is anticipated this request will be granted.
Under the Long Term Agreement and the Short Term Agreement
(collectively, the Agreements), Montgomery Ward may select among
several interest rate options, including a rate negotiated with one
or more of the various lenders. The interest rates for the
aforementioned bank borrowings are based on market rates and
significant increases in market interest rates will increase
interest payments required. A commitment fee is payable based upon
the unused amount of each facility, although under certain
circumstances, an additional fee may be payable to lenders not
participating in a negotiated rate loan.
During the fourth quarter of 1994, Montgomery Ward entered into
interest rate exchange and cap agreements with various banks to
offset the market risk associated with an increase in interest
rates under both the Long Term Agreement and Short Term Agreement.
The aggregate notional principal amounts under the interest rate
exchange agreements is $175 in 1995. Under the terms of the
interest rate exchange agreements, Montgomery Ward pays the banks
a weighted average fixed rate of 7.4% multiplied by the notional
principal amount in 1995 and will receive the one-month daily
average London Interbank Offered (LIBO) rate multiplied by the
notional principal amount. The average aggregate notional
principal amounts under the various cap agreement is $154 in 1995.
Under the terms of the cap agreements, Montgomery Ward receives
payments from the banks when the one-month daily average LIBO rate
exceeds the 5.5% cap strike rate in 1995. Such payments will equal
the amount determined by multiplying the notional principal amount
by the excess of the percentage rate, if any, of the one-month
daily average LIBO rate over the cap strike rate. The interest
rate exchange and cap agreements increased the effective borrowing
rate under the Agreements by .4% for the 26-week period ended July
1, 1995. Montgomery Ward is exposed to credit risk in the event of
nonperformance by the other parties to the interest rate exchange
and cap agreements; however, Montgomery Ward anticipates full
performance by the counterparties.
<PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Discussion of Financial Condition (continued)
On July 11, 1995, Montgomery Ward entered into a Note Purchase
Agreement (1995 Note Purchase Agreement) with various lenders
involving the private placement of $180 of Senior Notes which have
maturities of from five to ten years at fixed interest rates
varying from 6.52% to 6.98%. Proceeds from the debt issue were
used to repay short-term borrowings incurred to fund the Company's
acquisition of Lechmere. See Note 5 to the Consolidated Condensed
Financial Statements.
The Agreements, the 1993 Note Purchase Agreements and the 1995
Note Purchase Agreement impose various restrictions on Montgomery
Ward, including the satisfaction of certain financial tests which
include restrictions on payments of dividends. Under the terms of
the Agreements, which are currently the most restrictive of the
financing agreements as to dividends, distributions and
redemptions, Montgomery Ward may not pay dividends or make any
other distributions to the Company or redeem any Common Stock in
excess of (1) $63 on a cumulative basis, plus (2) 50% of
Consolidated Net Income of Montgomery Ward (as defined in the
Agreements) after January 1, 1994, plus (3) any repayment by the
Company of any loan or advance made by Montgomery Ward to the
Company which was received after January 1, 1994, plus (4) capital
contributions received by Montgomery Ward after January 1, 1994,
plus (5) net proceeds received by Montgomery Ward from (a) the
issuance of capital stock including treasury stock but excluding
Debt-Like Preferred Stock (as defined in the Agreements) or (b) any
indebtedness which is converted into shares of capital stock other
than Debt-Like Preferred Stock of Montgomery Ward or the Company,
after January 1, 1994, plus (6) an adjustment of $45 for 1994
through 1996, $30 in 1997 and $15 in 1998.
Seasonal financing requirements were expected to increase in the
first six months of 1995 due to new store openings and the Lechmere
acquisition. The Company has made, and will continue to make
significant investments in Lechmere's operations, particularly in
the computer systems used by store and buying office associates.
However, lower than expected sales and lower inventory turnover
also contributed to the increase in debt levels and interest
expense versus the prior year. Higher short term interest rates
were also a factor behind the increase in interest expense.
Inventory management initiatives are underway which are intended to
reduce working capital and debt levels in the Fall season.
<PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Discussion of Financial Condition (continued)
Future cash needs are expected to be provided by ongoing
operations, the sale of customer receivables to Montgomery Ward
Credit Corporation (Montgomery Ward Credit), a subsidiary of GE
Capital and borrowings under the Agreements (as expected to be
extended).
Capital expenditures during the first six months of 1995 of $47
were primarily related to expenditures for the opening of one
Electric Avenue & More store, the relocation of one Lechmere store
and various merchandise fixture and presentation programs. Capital
expenditures for the comparable 1994 period were $42.
<PAGE>
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
10.(i)(F)(1) Amendment dated June 30, 1995 to Note Purchase
Agreements dated March 1, 1993 between Montgomery
Ward & Co., Incorporated and various lenders.
10.(i)(J) Note Purchase Agreement dated July 11, 1995 between
Montgomery Ward & Co., Incorporated and various
lenders.
<PAGE>
<PAGE>
SIGNATURE
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.
REGISTRANT MONTGOMERY WARD HOLDING CORP.
BY JOHN L. WORKMAN
NAME AND TITLE John L. Workman, Executive Vice President,
Chief Financial Officer and Assistant Secretary
DATE August 15, 1995
Exhibit 10(i)(F)(1)
FIRST AMENDMENT
TO NOTE PURCHASE AGREEMENTS
DATED AS OF MARCH 1, 1993
THIS FIRST AMENDMENT is made and entered into as of this 30th_
day of June, 1995 by and among MONTGOMERY WARD & CO., INCORPORATED
(the "Company") and the holders of the Notes (as hereinafter
defined) who are signatory hereto (the "Signatory Noteholders").
P R E A M B L E
Pursuant to identical Note Purchase Agreements, each dated as
of March 1, 1993 (the "Note Purchase Agreements"), entered into
between the Company and the respective purchasers of the Notes, the
Company issued $100,000,000 in aggregate principal amount of its
notes (the "Notes") to such note purchasers consisting of the
Company's 7.07% Series A Senior Notes due 1998 in the aggregate
principal amount of $9,500,000, 7.56% Series B Senior Notes due
2003 in the aggregate principal amount of $2,000,000, 7.61% Series
C Senior Notes due 2003 in the aggregate principal amount of
$22,000,000, 7.92% Series D Senior Notes due 2001 in the aggregate
principal amount of $11,000,000, 8.13% Series E Senior Notes due
2003 in the aggregate principal amount of $5,000,000, 8.18% Series
F Senior Notes due 2003 in the aggregate principal amount of
$12,500,000 and 8.18% Series G Senior Notes due 2005 in the
aggregate principal amount of $38,000,000, all of which Notes
remain outstanding on the date hereof, with no principal payments
having been made thereon.
The Company has made a request to each of the registered
holders of Notes pursuant to Section 12 of the Note Purchase
Agreements that the Note Purchase Agreements be amended in certain
respects and the registered holders of the Notes which are
signatories hereto and which together are the holders of not less
than 66-2/3% in aggregate unpaid principal amount of all the Notes
outstanding at the time of execution of this First Amendment have
agreed to amend the Note Purchase Agreements as hereinafter
provided.
THEREFORE, IT IS MUTUALLY AGREED BY THE PARTIES HERETO AS
FOLLOWS:
1. Restricted Payments. Clause (ii) of Section 6.5 of the
Note Purchase Agreements is hereby deleted and the following clause
(ii) is substituted therefor:
"(ii) the aggregate amount of all sums and property
included in all Restricted Payments directly or indirectly
declared, ordered, paid, distributed, made or set apart by the
Company and its Restricted Subsidiaries during the period from
and including December 29, 1991 to and including the date of
such proposed action shall not exceed the sum of (A)
$50,000,000, plus (B) 50% (or minus 100% in case of any
deficit) of Consolidated Net Income for the period, taken as
one accounting period, from and including December 29, 1991 to
and including the end of the most recently completed Fiscal
Quarter, plus (C) the amount of any dividend or distribution
paid by the Company after December 28, 1991 to the extent that
such amount was used to reduce the Parent Senior Preferred
Stock and the Parent Junior Preferred Stock, plus (D) any
repayment by the Parent received after December 28, 1991 of
any loan or advance made by the Company or a Restricted
Subsidiary, plus (E) any capital contributions received by the
Company after December 28, 1991, plus (F) an amount equal to
the net proceeds (in cash or, if the consideration therefor is
other than cash, the fair value of such consideration as
determined in good faith by the Board of Directors) received
by the Company from the issue or sale after December 28, 1991
of any shares of capital stock of, or other equity interest
in, the Company (including treasury stock but excluding Debt-
Like Preferred Stock), plus (G) an amount equal to the net
proceeds (in cash or, if the consideration therefor is other
than cash, the fair value of such consideration as determined
in good faith by the Board of Directors) from the issue or
sale at any time of that portion of any indebtedness (other
than Subordinated Debt) of the Company or a Subsidiary which,
after December 28, 1991, is converted into shares of capital
stock of, or other equity interest in, the Company (but
excluding Debt-Like Preferred Stock) or into indebtedness of,
or shares of capital stock of, or other equity interest in,
the Parent, plus (H) the FAS 106 Adjustment Factor;"
2. Transactions with Affiliates. Section 6.7 of the Note
Purchase Agreements is hereby deleted and the following Section 6.7
is substituted therefor:
"6.7. Transactions with Affiliates. The Company will
not, and will not permit any Restricted Subsidiary to,
directly or indirectly, enter into or be a party to any
transaction or arrangement (including, without limitation, the
contribution, transfer, purchase, sale or exchange of
property, or the rendering of any service, or the payment of
management or other service fees) with any of its Affiliates
unless such transaction or arrangement is entered into in the
ordinary course of and pursuant to the reasonable requirements
of the Company's or such Restricted Subsidiary's business and
upon terms that are fair and reasonable and no less favorable
to the Company or to such Restricted Subsidiary and the
Company, taken together, as the case may be, than those which
might be obtained at the time on an arm's-length basis from
any Person which is not such an Affiliate; provided, however
that the foregoing restrictions shall not apply to (i)
transactions relating to the MWCC Receivables Purchase
Agreement as in effect on the date hereof or as amended from
time to time in compliance with Section 6.2l, (ii)
transactions between the Company and a Wholly Owned Restricted
Subsidiary or between Wholly Owned Restricted Subsidiaries,
(iii) loans or advances made in the ordinary course of
business to officers of the Company or any Restricted
Subsidiary in their capacity as such, (iv) loans and advances
by the Company or any Restricted Subsidiary to the Parent made
in compliance with Section 6.5 and (v) transactions between
the Company or a Wholly Owned Restricted Subsidiary, on the
one hand, and a Wholly Owned Subsidiary, on the other,
relating to the provision of administrative, accounting and
management services, and provided further that any transaction
(x) between the Company or any Restricted Subsidiary, on the
one hand, and an officer or director of a Restricted
Subsidiary, on the other, not otherwise permitted under this
Section which is effected without the approval of the Board of
Directors or the Chief Executive Officer of the Company in
violation of established written Company procedures or (y)
which constitutes a crime or tortious wrongdoing against the
Company and its Subsidiaries shall not constitute a default
hereunder."
3. Change in Certain Defined Terms. Section 9.1 of the Note
Purchase Agreements is hereby amended so that the definitions of
"Capital Base", "Restricted Payment" and "Total Capitalization"
shall read in their entirety as follows:
"Capital Base: at any date of determination,
Consolidated Shareholders' Equity of the Company, less the sum
of (i) the aggregate amount of all outstanding advances by the
Company to, and investments of the Company in, Unrestricted
Subsidiaries, (ii) the value of all treasury stock carried as
an asset by the Company or any Subsidiary the equity of which
is included in the Consolidated Shareholders' Equity and (iii)
the aggregate amount of all general intangibles (including,
without limitation, goodwill, franchises, licenses, patents,
trademarks, trade names, copyrights, service marks, brand
names and corporate organization expense) of the Company and
its Restricted Subsidiaries; provided, however, that the
following shall not be considered a general intangible asset
of the Company and its Restricted Subsidiaries for purposes of
this definition: (v) assets under Capital Leases, (w) prepaid
expenses (including, without limitation, prepaid pension costs
and prepaid royalties) and other costs or expenditures which
under GAAP are capitalized and amortized over the periods to
which such costs or expenditures relate (including, without
limitation, unamortized deferred marketing acquisition costs,
unamortized customer service contract costs and unamortized
system development costs), (x) the unamortized balance of the
value at June 23, 1988 of insurance licenses of the Company's
insurance Subsidiaries (which amount does not exceed
$9,000,000 as of the date hereof), (y) the unamortized balance
of the value at June 23, 1988 of marketing rights of the
Company and its Subsidiaries (which amount does not exceed
$18,000,000 as of the date hereof) and (z) all goodwill
arising out of the acquisition by the Company of all the stock
of LMR Acquisition Corporation and its wholly owned
Subsidiary, Lechmere, Inc., (including any goodwill on the
books of LMR Acquisition Corporation and Lechmere, Inc. at the
time of such acquisition by the Company) pursuant to the
Agreement and Plan of Merger dated March 17, 1994 by and among
the Company, MW Merger Corp., LMR Acquisition Corporation,
Lechmere, Inc. and the stockholders of LMR Acquisition
Corporation who became parties thereto, as heretofore and
hereafter amended (which amount did not exceed $l20,000,000 at
April 1, 1995), all as determined in accordance with GAAP."
* * *
"Restricted Payment: (a) any payment or distribution or
the incurrence of any liability to make any payment or
distribution, in cash, property or other assets (other than
shares of any class of capital stock of, or other equity
interest in, the Company (other than Debt-Like Preferred
Stock)) upon or in respect of any share of any class of
capital stock of, or other equity interest in, the Company
(other than Debt-Like Preferred Stock) or any warrants, rights
or options evidencing a right to purchase or acquire any such
shares of capital stock of, or other equity interest in, the
Company, including, without limiting the generality of the
foregoing, payments or distributions as dividends and payments
or distributions for the purpose of purchasing, acquiring,
retiring or redeeming any such shares of stock or other equity
interest or any warrants, rights or options to purchase or
acquire any such shares of stock or other equity interest or
making any other distribution in respect of any such shares of
stock or other equity interest (or any warrants, rights or
options evidencing a right to purchase or acquire any such
shares of stock or other equity interest) and (b) any loan or
advance made by the Company or any Restricted Subsidiary to
the Parent. Notwithstanding the foregoing, in no event shall
any payment by the Company of amounts required to be paid
pursuant to any tax sharing or tax allocation arrangement
constitute a Restricted Payment for purposes of this Agreement
so long as, subject to the effect of reasonably calculated
payments of estimated tax (it being understood that any excess
of such estimated tax payments for any taxable period over the
payment limitation described below for such period will be
returned to the Company), the amount paid by the Company and
its Subsidiaries pursuant to any such tax sharing or tax
allocation arrangement for any taxable period shall not exceed
the excess of the aggregate tax liability, including interest
and penalties, if any, of the Company and its Subsidiaries for
such period and all prior periods with respect to which the
Company and such Subsidiaries filed consolidated federal
income tax returns with the Parent (calculated as if the
Company, together with such Subsidiaries, had been filing on
a consolidated return basis as a separate affiliated group for
the then current taxable period and all prior periods and
after giving effect to the adjustments contemplated by Treas.
Reg. 1.1552-1(a)(2)(ii)(a)-(i)) over the net amount paid
(with appropriate adjustment for tax refunds from the
government not yet received) by the Company and its
Subsidiaries pursuant to any such tax sharing or tax
allocation arrangements for all taxable periods ending prior
to the beginning of the then current taxable period with
respect to which the Company and such Subsidiaries filed
consolidated federal income tax returns with the Parent;
provided, however, that similar principles shall apply for
state, local and foreign income and franchise tax purposes
where tax liability is determined on a unitary basis or
reportable on a combined or consolidated return involving more
than one corporation.
* * *
"Total Capitalization: as at any date of determination,
equals (i) Total Senior Funded Debt as at such date plus (ii)
Total Subordinated Debt as at such date plus (iii) Total Debt-
Like Preferred Stock plus (iv) Capital Base as at the end of
the most recently completed Fiscal Quarter plus (v) the FAS
106 Adjustment Factor plus (vi) any repayments of loans or
advances to Parent received by the Company since the end of
the most recently completed Fiscal Quarter plus (vii) any
capital contributions received by the Company since the end of
the most recently completed Fiscal Quarter plus (viii) an
amount equal to the net proceeds received by the Company from
the issue or sale after the end of the most recently completed
Fiscal Quarter of any shares of its capital stock (including
treasury stock but excluding Debt-Like Preferred Stock) plus
(ix) an amount equal to the net proceeds from the issue or
sale at any time of that portion of any indebtedness (other
than Subordinated Debt) of the Company or any Restricted
Subsidiary which after the end of the most recently completed
Fiscal Quarter is converted into shares of capital stock (but
excluding Debt-Like Preferred Stock) of the Company or into
indebtedness or shares of capital stock of the Parent, plus
(x) any decrease since the end of the most recently completed
Fiscal Quarter in the aggregate amount of all advances by the
Company to, and investments of the Company in, Unrestricted
Subsidiaries other than any decrease resulting from any
aggregate net loss incurred by such Unrestricted Subsidiaries
since the end of the most recently completed Fiscal Quarter
minus (xi) any Restricted Payments made since the end of the
most recently completed Fiscal Quarter minus (xii) any
increase since the end of the most recently completed Fiscal
Quarter in the aggregate amount of all advances by the Company
to, and investments of the Company in, Unrestricted
Subsidiaries other than any increase resulting from any
aggregate net income of such Unrestricted Subsidiaries since
the end of the most recently completed Fiscal Quarter."
4. Changes in GAAP. The References contained in Sections
9.2(a) and 9.2(b) of the Note Purchase Agreements to the "audited
consolidated financial statements of the Company and its
Subsidiaries as at December 28, 1991" and in Section 9.2(c) of the
Note Purchase Agreements to the "Company's audited financial
statements as at December 28, 1991" are hereby changed to the
"audited consolidated financial statements of the Company and its
Subsidiaries as at December 3l, 1994." The wording contained in
the second through the fourth lines of Section 9.2(b) of the Note
Purchase Agreements reading "except for the changes required in
implementing Financial Accounting Standards Board Statements No.
106 relating to postretirement benefits and No. l09 relating to
income taxes," is hereby deleted. In Section 9.2(b) of the Note
Purchase Agreements in the second line on page 67, insert the word
"Consolidated Shareholders' Equity," between "Income," and
"Consolidated Total Assets." In Section 9.2(b) of the Note
Purchase Agreements, in the twenty-first line, delete the phrase
"as in effect on the date of the Agreements" and insert in lieu
thereof the phrase "as in effect and applicable to the audited
financial statements of the Company and its Subsidiaries as at
December 3l, 1994". In Section 9.2(c) of the Note Purchase
Agreements in the second and third lines, delete the wording
"(except for Financial Accounting Standards Board Statements 106
and 109)".
5. Representations. The Company represents and warrants to
all the registered holders of the Notes that (i) the Company has
fully complied with the provisions of paragraph (c) of Section 12
of the Note Purchase Agreements, (ii) at the time of and after
giving effect to the amendments set forth herein, no Default or
Event of Default (as such terms are defined in the Note Purchase
Agreements) has occurred or is continuing and (iii) the execution,
delivery and performance of this First Amendment by the Company
does not require the consent of any other Person under any
document, instrument or agreement to which the Company is a party
or by which the Company is bound. Each of the Signatory
Noteholders represents and warrants to the Company and the other
registered holders of the Notes that it is the holder of the
aggregate unpaid principal amount of the Notes set forth by its
name on the signatory pages of this First Amendment.
6. Effective Date of First Amendment. This First Amendment
shall become effective in accordance with Section 12 of the Note
Purchase Agreements when executed and delivered by the Company and
Signatory Noteholders who together hold at least 66 2/3% in
aggregate unpaid principal amount of all the Notes outstanding at
the time of such execution and delivery.
7. Effect of First Amendment. On and after the effective
date hereof, each reference in the Note Purchase Agreements and
related documents to the Note Purchase Agreements to "the
Agreements" or "this Agreement" or words of like import shall
unless the context otherwise requires, be deemed to refer to the
Note Purchase Agreements as amended hereby. Except as hereinabove
specifically amended, all the other terms and agreements of the
Note Purchase Agreements shall remain in full force and effect, and
upon the effectiveness of the amendment provided for herein, the
Note Purchase Agreements shall remain the legal, valid and binding
obligations of the Company.
8. Fees and Expenses Relating to First Amendment. The
Company reaffirms its agreement under Section 15.1 of the Note
Purchase Agreements to pay all fees and out-of-pocket costs and
expenses of Whitman Breed Abbott & Morgan as special counsel to the
holders of the Notes in connection with the review of the First
Amendment.
9. Law Governing First Amendment. The First Amendment shall
be governed by, and construed and enforced in accordance with, the
laws of the State of New York.
10. Headings. The headings in this First Amendment are for
convenience of reference only and shall not limit or otherwise
affect the meaning or construction of any of the terms hereof.
11. Counterparts. This First Amendment may be executed in any
number of counterparts, each of which shall be an original, but all
of which together shall constitute one instrument.
<PAGE>
IN WITNESS WHEREOF the parties have executed this First
Amendment as of the day hereinabove first written.
MONTGOMERY WARD & CO., INCORPORATED
By: /s/ Douglas V. Gathany
Name: Douglas V. Gathany
Title: Senior Assistant Treasurer
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By: /s/ Loren S. Archibald
Name: Loren S. Archibald
Title: Managing Director-Private Placement
Aggregate Unpaid Principal Amount of
Notes Currently Held: $35,000,000
NATIONWIDE LIFE INSURANCE COMPANY
By: /s/ Jeffrey G. Milburn
Name: Jeffrey G. Milburn
Title: V.P. Corporate Fixed-Income Securities
Aggregate Unpaid Principal Amount of
Notes Currently Held: $15,000,000
SUN LIFE ASSURANCE COMPANY OF
CANADA (U.S.)
By:
Name:
Title:
Aggregate Unpaid Principal Amount of
Notes Currently Held: $9,000,000
<PAGE>
AID ASSOCIATION FOR LUTHERANS
By: /s/ R. Jerry Scheel
Name: R. Jerry Scheel
Title: Second Vice President-Securities
Aggregate Unpaid Principal Amount of
Notes Currently Held: $10,000,000
By: /s/ James Abitz
Name: James Abitz
Title: Vice President-Securities
INCE & CO.(1)
By:
Name:
Title:
Aggregate Unpaid Principal Amount of
Notes Currently Held: $5,000,000
EMPLOYERS LIFE INSURANCE COMPANY
OF WAUSAU
By: /s/ Jeffrey G. Milburn
Name: Jeffrey G. Milburn
Title: Attorney-In-Fact
Aggregate Unpaid Principal Amount of
Notes Currently Held: $3,000,000
THE FRANKLIN LIFE INSURANCE COMPANY
By: /s/ Julia S. Tucker
Name: Julia S. Tucker
Title: Investment Officr
Aggregate Unpaid Principal Amount of
Notes Currently Held: $5,000,000
(1) Nominee for The Canada Life Assurance Company
<PAGE>
ATWELL & CO.(2)
By: /s/ Michael C. Knebel
Name: Michael C. Knebel
Title: Vice President & Treasurer
Aggregate Unpaid Principal Amount of
Notes Currently Held: $5,000,000
CUMMINGS & CO.(3)
By:
Name:
Title:
Aggregate Unpaid Principal Amount of
Notes Currently Held: $2,500,000
WOODMEN ACCIDENT AND LIFE COMPANY
By: /s/ A. M. McCray
Name: A. M. McCray
Title: Vice President & Asst. Treasurer
Aggregate Unpaid Principal Amount of
Notes Currently Held: $2,500,000
BERKSHIRE LIFE INSURANCE COMPANY
By: /s/ Ellen I. Whittaker
Name: Ellen I. Whittaker
Title: Investment Officer
Aggregate Unpaid Principal Amount of
Notes Currently Held: $2,000,000
(2) Nominee for Safeco Life Insurance Company
(3) Nominee for Canada Life Insurance Company of America
<PAGE>
FINANCIAL HORIZONS LIFE INSURANCE
COMPANY
By: /s/ Jeffrey G. Milburn
Name: Jeffrey G. Milburn
Title: V.P. Corporate Fixed-Income Securities
Aggregate Unpaid Principal Amount of
Notes Currently Held: $2,000,000
PROVIDENT MUTUAL LIFE INSURANCE
COMPANY OF PHILADELPHIA
By: /s/ S. C. Lange
Name: S. C. Lange
Title: Vice President
Aggregate Unpaid Principal Amount of
Notes Currently Held: $1,000,000
MINGIC & CO.(4)
By: /s/ S. C. Lange
Name: S. C. Lange
Title: Vice President
Aggregate Unpaid Principal Amount of
Notes Currently Held: $1,000,000
SUN LIFE ASSURANCE COMPANY OF CANADA
By:
Name:
Title:
Aggregate Unpaid Principal Amount of
Notes Currently Held: $2,000,000
(4) Nominee for Provident Mutual Life Insurance Company of
Philadelphia.
Exhibit 10.(i)(J)
MONTGOMERY WARD & CO., INCORPORATED
NOTE PURCHASE AGREEMENT
Dated as of July 11, 1995
$80,000,000 6.52% Series H Senior Notes due 2000
$86,000,000 6.74% Series I Senior Notes due 2002
$14,000,000 6.98% Series J Senior Notes due 2005
<PAGE>
TABLE OF CONTENTS
(Not part of the Note Purchase Agreement)
Section Page
1. THE NOTES; THE CLOSING; ETC. . . . . . . . . . . . . . . . . . . .1
1.1. Authorization and Description of Notes. . . . . . . . . . . .1
1.2. Sale and Purchase of Notes. . . . . . . . . . . . . . . . . .2
1.3. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . .3
1.4. Application of Proceeds . . . . . . . . . . . . . . . . . . .3
1.5. Purchase for Investment . . . . . . . . . . . . . . . . . . .3
1.6. Source of Funds -- ERISA. . . . . . . . . . . . . . . . . . .4
2. CONDITIONS TO CLOSING. . . . . . . . . . . . . . . . . . . . . . .4
2.1. Proceedings Satisfactory. . . . . . . . . . . . . . . . . . .4
2.2. Opinions of Counsel . . . . . . . . . . . . . . . . . . . . .5
2.3. Representations and Warranties. . . . . . . . . . . . . . . .5
2.4. Performance; No Default . . . . . . . . . . . . . . . . . . .5
2.5. Compliance Certificate. . . . . . . . . . . . . . . . . . . .5
2.6. Legal Investment. . . . . . . . . . . . . . . . . . . . . . .5
2.7. Absence of Certain Events . . . . . . . . . . . . . . . . . .5
2.8. Consents and Approvals. . . . . . . . . . . . . . . . . . . .6
2.9. Sales to All the Note Purchasers. . . . . . . . . . . . . . .6
2.10. Fees Payable at Closing. . . . . . . . . . . . . . . . .6
2.11. Private Placement Numbers. . . . . . . . . . . . . . . .6
3. PAYMENT AND PREPAYMENT OF NOTES. . . . . . . . . . . . . . . . . .7
3.1. Required Principal Payments . . . . . . . . . . . . . . . . .7
3.2. Optional Prepayments with Premium . . . . . . . . . . . . . .7
3.3. Notice of Optional Prepayments; Calculation of
Premium . . . . . . . . . . . . . . . . . . . . . . . . . .7
3.4. Allocation of Partial Prepayments . . . . . . . . . . . . . .8
3.5. Maturity; Surrender, etc. . . . . . . . . . . . . . . . . . .8
3.6. Limitation on Prepayment and Acquisition of Notes . . . . . .8
3.7. Payments Due on Other than a Business Day . . . . . . . . . .8
4. FINANCIAL STATEMENTS; INFORMATION. . . . . . . . . . . . . . . . .8
5. INSPECTION OF PROPERTIES AND BOOKS; CONFIDENTIALITY. . . . . . . 13
6. COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.1. Payment of Notes; Late Charge . . . . . . . . . . . . . . . 15
6.2. Maintenance of Certain Financial Conditions . . . . . . . . 15
6.3. Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.4. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.5. Restricted Payments . . . . . . . . . . . . . . . . . . . . 22
6.6. Restrictions on Repayment of Subordinated Debt and
Debt-Like Preferred Stock . . . . . . . . . . . . . . . . 24
6.7. Transactions with Affiliates. . . . . . . . . . . . . . . . 24
6.8. Consolidation, Merger, Sale of Assets, etc. . . . . . . . . 25
6.9. Limitation on Sale-Leasebacks . . . . . . . . . . . . . . . 26
6.10. Nature of Business . . . . . . . . . . . . . . . . . . 26
6.11. Maintenance of Office. . . . . . . . . . . . . . . . . 26
6.12. Books and Records; Fiscal Year . . . . . . . . . . . . 27
6.13. Corporate Existence; Licenses, etc.. . . . . . . . . . 27
6.14. Payment of Taxes, Claims for Labor and
Materials, etc. . . . . . . . . . . . . . . .. . . . . 27
6.15. Maintenance of Properties. . . . . . . . . . . . . . . 27
6.16. Insurance. . . . . . . . . . . . . . . . . . . . . . . 27
6.17. Compliance with Laws . . . . . . . . . . . . . . . . . 28
6.18. Subsidiary Dividends, Distributions and
Transfers . . . . . . . . . . . . . . . . . . . . . . . . 28
6.19. Designation of Restricted Subsidiaries . . . . . . . . 28
6.20. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . 29
6.21. Amendments to MWCC Receivables Purchase
Agreement. . . . . . . . . . . . . . . . . . . . . . . 29
7. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 29
7.1. Organization and Authority of the Company, etc. . . . . . . 30
7.2. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . 30
7.3. Qualification . . . . . . . . . . . . . . . . . . . . . . . 30
7.4. Business and Property; Financial Statements, etc. . . . . . 31
7.5. Changes, etc. . . . . . . . . . . . . . . . . . . . . . . . 32
7.6. Title to Property; Leases . . . . . . . . . . . . . . . . . 32
7.7. Compliance with Laws, Other Instruments; No
Conflicts, etc. . . . . . . . . . . . . . . . . . . . . . 33
7.8. Consent and Approvals . . . . . . . . . . . . . . . . . . . 34
7.9. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . 34
7.10. Licenses, Patents, Trademarks, Authorizations,
etc. . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.11. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 34
7.12. Compliance with ERISA. . . . . . . . . . . . . . . . . 35
7.13. Private Offering . . . . . . . . . . . . . . . . . . . 36
7.14. Use of Proceeds; Margin Regulations. . . . . . . . . . 37
7.15. Debt, etc. . . . . . . . . . . . . . . . . . . . . . . 37
7.16. Status Under Certain Statutes; Other
Regulations . . . . . . . . . . . . . . . . . . . . . 38
7.17. Labor Matters. . . . . . . . . . . . . . . . . . . . . 38
7.18. Full Disclosure. . . . . . . . . . . . . . . . . . . . 38
7.19. Environmental Matters. . . . . . . . . . . . . . . . . 39
7.20. Ranking of Obligations under this Agreement. . . . . . 40
7.21. Foreign Assets Control Regulations, etc. . . . . . . . 40
8. EVENTS OF DEFAULT; REMEDIES. . . . . . . . . . . . . . . . . . . 40
8.1. Events of Default Defined; Acceleration of Maturity . . . . 40
8.2. Default Remedies. . . . . . . . . . . . . . . . . . . . . . 44
8.3. Remedies Cumulative . . . . . . . . . . . . . . . . . . . . 45
8.4. Remedies Not Waived . . . . . . . . . . . . . . . . . . . . 45
8.5. Annulment of Acceleration of Notes. . . . . . . . . . . . . 45
9. DEFINITIONS AND CONSTRUCTION . . . . . . . . . . . . . . . . . . 46
9.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . 46
9.2. Accounting Terms. . . . . . . . . . . . . . . . . . . . . . 64
10. REGISTRATION, TRANSFER AND EXCHANGE OF NOTES . . . . . . . . . . 66
10.1. Note Register. . . . . . . . . . . . . . . . . . . . . 66
10.2. Transfer and Exchange. . . . . . . . . . . . . . . . . 66
10.3. Owners and Holders of Notes. . . . . . . . . . . . . . 66
11. LOST, ETC. NOTES . . . . . . . . . . . . . . . . . . . . . . . . 66
12. AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . . 67
13. DIRECT PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . 68
14. LIABILITIES OF THE PURCHASER . . . . . . . . . . . . . . . . . . 69
15. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . 69
15.1. Expenses . . . . . . . . . . . . . . . . . . . . . . . 69
15.2. Reliance on and Survival of Representations. . . . . . 70
15.3. Successors and Assigns . . . . . . . . . . . . . . . . 70
15.4. Notices. . . . . . . . . . . . . . . . . . . . . . . . 70
15.5. LAW GOVERNING. . . . . . . . . . . . . . . . . . . . . 70
15.6. SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL. . . . . . . . . . . . . . . . . . . . . . . . . 71
15.7. Headings, etc. . . . . . . . . . . . . . . . . . . . . 71
15.8. Substitution of Purchaser. . . . . . . . . . . . . . . 71
15.9. Entire Agreement . . . . . . . . . . . . . . . . . . . 72
15.10. Counterparts. . . . . . . . . . . . . . . . . . . . . . . 72
15.11. Severability. . . . . . . . . . . . . . . . . . . . . . . 72
<PAGE>
SCHEDULE I Payment and Notice Information
SCHEDULE II Information Relating to Subsidiaries
SCHEDULE III Existing Liens and Debt of the Company and
its Subsidiaries
SCHEDULE IV Certain Tax Matters
EXHIBIT A-1 Form of Series H Note
EXHIBIT A-2 Form of Series I Note
EXHIBIT A-3 Form of Series J Note
EXHIBIT B Form of Opinion of Company's Special
Counsel
EXHIBIT C Contents of Opinion for Successor
Transaction
<PAGE>
MONTGOMERY WARD & CO., INCORPORATED
Montgomery Ward Plaza
Chicago, Illinois 60671-0001
Dated as of July 11, 1995
To Each of the Several Note Purchasers
Named in Schedule I
to this Agreement
Ladies and Gentlemen:
The undersigned, MONTGOMERY WARD & CO.,
INCORPORATED, a corporation organized under the laws of the
State of Illinois (the "Company"), hereby agrees with you as
follows:
1. THE NOTES; THE CLOSINGS; ETC.
1.1. Authorization and Description of Notes. The
Company has duly authorized the issuance and sale of:
(a) its 6.52% Series H Senior Notes due July 15,
2000 in the aggregate principal amount of $80,000,000
(together with all notes issued in substitution,
replacement or exchange therefor in accordance with the
terms of this Agreement, the "Series H Notes"), each of
which shall (i) bear interest from the date thereof on
the unpaid principal amount thereof at the rate of 6.52%
per annum (computed on the basis of a 360-day year of
twelve 30-day months) payable semiannually in arrears on
January 15 and July 15 of each year commencing on July
15, 1995, and with interest on any overdue principal
(including any overdue prepayment of principal) and (to
the extent permitted by applicable law) on any overdue
premium and any overdue interest, at the Default Rate
until paid, such overdue interest, if any, to be payable
semiannually as aforesaid or, at the option of the
registered holder of such Note, on demand, and (ii)
mature and be payable as to the entire remaining unpaid
principal amount thereof on July 15, 2000;
(b) its 6.74% Series I Senior Notes due July 15,
2002 in the aggregate principal amount of $86,000,000
(together with all notes issued in substitution,
replacement or exchange therefor in accordance with the
terms of this Agreement, the "Series I Notes"), each of
which shall (i) bear interest from the date thereof on
the unpaid principal amount thereof at the rate of 6.74%
per annum (computed on the basis of a 360-day year of
twelve 30-day months) payable semiannually in arrears on
January 15 and July 15 of each year commencing on July
15, 1995, and with interest on any overdue principal
(including any overdue prepayment of principal) and (to
the extent permitted by applicable law) on any overdue
premium and any overdue interest, at the Default Rate
until paid, such overdue interest, if any, to be payable
semiannually as aforesaid or, at the option of the
registered holder of such Note, on demand, and (ii)
mature and be payable as to the entire remaining unpaid
principal amount thereof on July 15, 2002; and
(c) its 6.98% Series J Senior Notes due July 15,
2005 in the aggregate principal amount of $14,000,000
(together with all notes issued in substitution,
replacement or exchange therefor in accordance with the
terms of this Agreement, the "Series J Notes"), each of
which shall (i) bear interest from the date thereof on
the unpaid principal amount thereof at the rate of 6.98%
per annum (computed on the basis of a 360-day year of
twelve 30-day months) payable semiannually in arrears on
January 15 and July 15 of each year commencing on July
15, 1995, and with interest on any overdue principal
(including any overdue prepayment of principal) and (to
the extent permitted by applicable law) on any overdue
premium and any overdue interest, at the Default Rate
until paid, such overdue interest, if any, to be payable
semiannually as aforesaid or, at the option of the
registered holder of such Note, on demand, and (ii)
mature and be payable as to the entire remaining unpaid
principal amount thereof on July 15, 2005.
The Series H Notes, the Series I Notes and the Series J Notes
(i) shall be in substantially the forms of Exhibits A-1
through A-3, respectively, and (ii) are sometimes referred to
herein collectively as the "Notes" and separately as a
"series" of Notes. Except as the context may otherwise
require, capitalized terms used and not otherwise defined
herein shall have the respective meanings assigned thereto in
Section 9. Unless otherwise specified, any reference in this
Agreement to a particular Section, paragraph or clause, or to
a particular Schedule or Exhibit, shall be considered a
reference to that Section, paragraph or clause of, or to that
Schedule or Exhibit to, this Agreement.
1.2. Sale and Purchase of Notes. (a) The Company
will issue and sell to you and, subject to the terms and
conditions hereof and in reliance on the representations and
warranties of the Company contained herein and the
representations and warranties otherwise made by or on behalf
of the Company in connection with the transactions
contemplated hereby, you will purchase from the Company, at
the Closing provided for in Section 1.3, Notes of such series
and in the aggregate principal amount shown opposite your name
on Schedule I, each such purchase to be at the purchase price
of 100% of such principal amount. Concurrently with the
execution and delivery to you by the Company of the
counterpart of this Agreement, the Company is executing and
delivering counterparts to the other institutional purchasers
(the "Other Purchasers") named in Schedule I providing for the
sale of Notes by the Company to the Other Purchasers in the
principal amounts specified in Schedule I.
(b) The sales of Notes to you and the Other
Purchasers (you and the Other Purchasers being hereinafter
sometimes referred to collectively as the "Note Purchasers")
are to be separate sales made by the Company to the Note
Purchasers. The obligations of the Company hereunder shall be
several and not joint, and this Agreement shall for all
purposes be construed and deemed to be a separate agreement
between the Company and each of the Note Purchasers, the Note
Purchasers acting severally and not jointly, with the same
effect as though a separate agreement with each such Note
Purchaser to the effect herein provided were hereby entered
into between the Company and each such Note Purchaser.
1.3. Closing. The sale and purchase of the Notes
shall take place on July 11, 1995, or such subsequent Business
Day as you, the Other Purchasers and the Company shall agree
(the "Closing Date" and the closing held hereunder on such
date herein, the "Closing"). The Closing shall take place at
the offices of Whitman Breed Abbott & Morgan, 200 Park Avenue,
New York, New York 10166, commencing at 10:00 A.M., New York
City time. At the Closing the Company will deliver to you one
or more Notes (as you may designate) of the series and in the
principal amount to be purchased by you on the Closing Date as
shown opposite your name on Schedule I, each dated the Closing
Date and registered in your name (or the name of your nominee
set forth on Schedule I), against delivery by you to the
Company of the purchase price therefor by wire transfer of the
amount thereof to the Company's account No. 52-70960
maintained at The First National Bank of Chicago, ABA No.
071000013. If at the Closing the Company shall fail to tender
such Notes to you as provided herein, or if any of the
conditions specified in Section 2 shall not have been ful-
filled to your satisfaction, you shall, at your election, be
relieved of all further obligations under this Agreement,
without thereby waiving any other rights you may have by
reason of such failure or such non-fulfillment.
1.4. Application of Proceeds. The Company will
apply the proceeds from the sale of the Notes (subject in any
event to the provisions of Section 7.14) as follows: (a) a
portion of such proceeds will be used to retire Indebtedness
for Borrowed Money of the Company and (b) the balance of such
proceeds will be used by the Company for general corporate
purposes.
1.5. Purchase for Investment. You represent to the
Company that on the Closing Date you will acquire the Notes
being purchased by you for your own account for investment and
not with a view to, or for sale in connection with, the
distribution (as such term is used in Section 2(11) of the
Securities Act) of any part thereof, provided that the
disposition of your property shall at all times be and remain
within your control. You and the Company each acknowledge
that each Note is a "security" as defined in Section 2(1) of
the Securities Act and Section 3(a)(10) of the Exchange Act.
1.6. Source of Funds -- ERISA. You represent to the
Company that at least one of the following statements is an
accurate representation as to the source of funds to be used
by you to pay the purchase price of the Notes to be purchased
by you hereunder on the Closing Date:
(a) no part of such funds constitutes assets
allocated to any separate account maintained by you in
which any employee benefit plan (or its related trust)
has any interest; or
(b) to the extent that any part of such funds
constitutes assets allocated to any separate account
maintained by you, you have disclosed to the Company the
name of each employee benefit plan whose assets in such
account exceed 10% of the total assets of such account as
of the date of such purchase (and for the purposes of
this clause, all employee benefit plans maintained by the
same employer or employee organization are deemed to be
a single plan); or
(c) such funds constitute assets of one or more
specific employee benefit plans which you have identified
to the Company.
As used in this Section, the terms "employee benefit plan" and
"separate account" shall have the respective meanings assigned
to such terms in Section 3 of ERISA.
Each Note Purchaser whose source of funds includes assets
of its general account hereby represents that no employee
benefit plan or employee benefit plans maintained by a single
employer (including an "affiliate" thereof, as defined in
Section V(a) of the proposed prohibited transaction class
exemption published by the Department of Labor in the Federal
Register on August 22, 1994 (59 FR 43134, August 22, 1994)) or
employee organization hold an interest or interests as
contractholders in such general account, the reserves for
which (determined under Section 807(d) of the Code) exceed 10%
of the total of all liabilities of such general account.
2. CONDITIONS TO CLOSING. Your obligation to
purchase and pay for the Notes to be purchased by you
hereunder on the Closing Date is subject to the fulfillment to
your satisfaction, prior to or at the Closing, of each of the
following conditions:
2.1. Proceedings Satisfactory. All proceedings
taken in connection with the authorization, issuance and sale
of the Notes to be issued on the Closing Date and the
consummation of the transactions contemplated by this
Agreement and all documents and papers relating thereto shall
be satisfactory in form, scope and substance to you and your
special counsel, and you and your special counsel shall have
received copies (executed or certified as may be appropriate)
of such documents and papers as you or your counsel may
reasonably request in connection therewith.
2.2. Opinions of Counsel. You shall have received
favorable opinions, each dated the Closing Date, addressed to
you and satisfactory in form, scope and substance to you and
your special counsel, from (i) Altheimer & Gray, special
counsel to the Company, substantially in the form of Exhibit
B and covering such other matters as you or your special
counsel may reasonably request due to circumstances or events
of which you or your counsel were not aware as of the date of
the execution and delivery of this Agreement, and (ii) Whitman
Breed Abbott & Morgan, your special counsel in connection with
the transactions contemplated by this Agreement, covering such
matters as you may reasonably request.
2.3. Representations and Warranties. All
representations and warranties of the Company contained in
this Agreement or otherwise made by or on behalf of the
Company in connection with the transactions contemplated
hereby shall be true and correct when made and (except as
affected by the consummation of such transactions) as of the
time of the Closing with the same effect as though such
representations and warranties had been made on and as of the
Closing Date.
2.4. Performance; No Default. The Company shall
have performed all agreements and complied with all conditions
contained herein required to be performed or complied with by
it prior to or at the Closing, and at the time of the Closing
(and after giving effect to the sale of the Notes to you and
the Other Purchasers on the Closing Date and the application
of the proceeds of such sales) no condition or event shall
exist which constitutes a Default or an Event of Default.
2.5. Compliance Certificate. The Company shall have
delivered to you an Officers' Certificate, dated the Closing
Date, certifying that the conditions specified in Sections 2.3
and 2.4 have been fulfilled.
2.6. Legal Investment. On the Closing Date the
Notes to be purchased by you hereunder shall be and qualify as
a legal investment for you under the laws and regulations of
each jurisdiction to which you may be subject (without resort
to any basket or leeway provisions of said laws, such as New
York Insurance Law Section 1405(a)(8)) and the purchase thereof
shall not subject you to any penalty or other onerous
condition pursuant to any such law or regulation; and you
shall have received such certificates or other evidence as you
may request demonstrating the satisfaction of this condition.
2.7. Absence of Certain Events. There shall not
have occurred any Material Adverse Change in the Business or
Condition of the Company and its Subsidiaries, taken as a
whole, from that reflected in the Memorandum and the most
recent audited financial statements of the Company referred to
in Section 7.4. Since the date of the balance sheet included
in such financial statements, the Company shall not have (i)
consolidated or merged with or into, or participated in a
share exchange with, any Person or (ii) sold, leased or
otherwise disposed of any assets or properties in a
transaction or series of transactions which, either
individually or in the aggregate, has resulted in a Material
Adverse Change in the Business or Condition of the Company and
its Subsidiaries, taken as a whole, from that reflected in the
Memorandum and the most recent audited financial statements of
the Company referred to in Section 7.4.
2.8. Consents and Approvals. All actions,
approvals, consents, waivers, exemptions, Orders,
authorizations, registrations, declarations, filings and
recordings (collectively, "Approvals"), if any, which are
required to be taken, given, obtained, filed or recorded, as
the case may be, by or from or with (a) any Governmental Body,
(b) any trustee or holder of any indebtedness, obligation or
securities of the Company or any of its Subsidiaries or (c)
any other Person, in connection with the legal and valid
execution and delivery by the Company of this Agreement and
the Notes to be issued on the Closing Date and the
consummation of the transactions contemplated by this
Agreement shall have been duly taken, given, obtained, filed
or recorded, as the case may be, and all such Approvals shall
be final, subsisting and in full force and effect on the
Closing Date, and shall not be subject to any further
proceedings or appeals or any conditions subsequent not
approved by you. Certified copies or other appropriate
evidence of all such Approvals, in form, scope and substance
satisfactory to you and your special counsel, shall have been
delivered to you and your special counsel.
2.9. Sales to All the Note Purchasers. This
Agreement shall have been duly entered into by all the parties
hereto and, simultaneously with the purchase of the Notes to
be purchased by you at the Closing, each of the Other
Purchasers shall have purchased the Notes to be purchased by
it at the Closing pursuant to this Agreement and the Company
shall have received payment in full of the purchase price
thereof.
2.10. Fees Payable at Closing. The Company
shall have paid the legal fees and other expenses of your
special counsel referred to in Section 15.1 and all other fees
and expenses for which the Company is obligated pursuant to
Section 15.1 and for which the Company shall have received
invoices on or prior to the Business Day preceding the Closing
Date.
2.11. Private Placement Numbers. The Company
shall have obtained from the Standard & Poor's CUSIP Service
Bureau Private Placement Numbers for the Notes.
3. PAYMENT AND PREPAYMENT OF NOTES.
3.1. Required Principal Payments.
(a) Payments with Respect to the Series H Notes.
On July 15, 2000, the Company will pay the entire unpaid
principal amount of the Series H Notes, together with all
interest thereon.
(b) Payments with Respect to the Series I Notes.
On July 15, 2002, the Company will pay the entire unpaid
principal amount of the Series I Notes, together with all
interest accrued thereon.
(c) Payments with Respect to the Series J Notes.
On July 15, 2005, the Company will pay the entire unpaid
principal amount of the Series J Notes, together with all
interest accrued thereon.
3.2. Optional Prepayments with Premium. The Notes
shall not be subject to prepayment at the option of the
Company except as hereinafter provided in this Section. The
Company may at any time, at its option, upon notice as
provided in Section 3.3, on the date specified in such notice,
prepay the Notes at any time in whole or from time to time in
part (in integral multiples of at least $500,000), each such
optional prepayment to be made at 100% of the principal amount
of the Notes so to be prepaid together with interest accrued
on such principal amount to the date of prepayment, plus a
prepayment premium equal to the Makewhole Amount determined in
respect of such principal amount; provided, however, that so
long as Notes of more than one series shall remain
outstanding, the Company shall not prepay any Notes at its
option on any date pursuant to this Section 3.2 unless the
principal amount of Notes to be prepaid shall be allocated
among the series in proportion to the aggregate principal
amount of each series outstanding immediately prior to such
prepayment.
3.3. Notice of Optional Prepayments; Calculation of
Premium. The Company will give each holder of a Note, with
respect to each optional prepayment, (a) written notice
thereof (which notice shall be irrevocable) at least 30 and
not more than 60 days prior to the date fixed for such
prepayment, specifying (i) such date of prepayment and the
principal amount of each Note held by such holder so to be
prepaid, and (ii)(A) accrued interest payable to such holder
in respect of such prepayment and (B) the Company's estimate
as of the date of such notice of the Makewhole Amount, if any,
applicable in respect of such prepayment, showing in each case
in reasonable detail the calculation thereof and, with respect
to the Makewhole Amount, the Treasury Rate used in such
calculation, and (b) further written notice (a copy of which
shall be telefaxed by the Company to each such holder
concurrently with the sending thereof) at least two Business
Days prior to the date fixed for such payment, specifying the
Makewhole Amount, if any, actually applicable in respect of
such prepayment, determined as of the date of such further
notice, showing in reasonable detail the calculation thereof
and the Treasury Rate used in such calculation.
3.4. Allocation of Partial Prepayments. In the case
of each prepayment, whether required or optional, of less than
the entire unpaid principal amount of all outstanding Notes of
any series, the principal amount of the Notes so to be prepaid
shall be allocated among all of the Notes of such series at
the time outstanding in proportion, as nearly as practicable,
to the respective principal amounts thereof not theretofore
prepaid.
3.5. Maturity; Surrender, etc. In the case of each
prepayment of Notes, the principal amount of each Note to be
prepaid shall become due and payable on the date fixed for
such prepayment in the notice of such prepayment given
pursuant to Section 3.3, together with interest accrued on
such principal amount to such date and the premium, if any,
payable in connection with such prepayment. Any Note paid or
prepaid in full shall thereafter be surrendered to the Company
upon its written request therefor and canceled and not
reissued. No Note shall be issued in lieu of any paid or
prepaid principal amount of any Note.
3.6. Limitation on Prepayment and Acquisition of
Notes. The Company will not, and will not permit any of its
Affiliates or Subsidiaries to, pay, prepay, purchase, redeem
or otherwise acquire directly or indirectly any Note except by
way of payment or prepayment by the Company in accordance with
the terms of this Agreement; provided, however, that nothing
in this Section 3.6 shall prohibit the Company or any of its
Affiliates or Subsidiaries from purchasing, on an arm's-length
basis, any Note which the holder thereof is offering for sale
in the secondary market.
3.7. Payments Due on Other than a Business Day. If
any payment or prepayment of principal, premium, if any, or
interest on or with respect to any Note or Notes becomes due
and payable on any day that is not a Business Day, the amount
of such payment shall be payable on the next succeeding
Business Day and with respect to any such payment of
principal, interest shall continue to accrue thereon during
any such extension period at the applicable rate of interest
in effect immediately prior to such extension.
4. FINANCIAL STATEMENTS; INFORMATION. The Company
will furnish to you, so long as you or your nominee shall be
obligated to purchase or shall hold any of the Notes, and to
each other institutional holder of outstanding Notes (and, in
the case of the information referred to in clause (i) of this
Section, to any prospective purchaser of Notes which is
identified to the Company):
(a) Quarterly Statements. Within 60 days after the
end of each of the first three Fiscal Quarters in each
Fiscal Year of the Company (in duplicate), (i) an
unaudited consolidated balance sheet of the Company and
its Subsidiaries as of the end of such Fiscal Quarter,
the related unaudited consolidated statement of income of
the Company and its Subsidiaries for such Fiscal Quarter
and for the portion of the Fiscal Year ended with the
last day of such Fiscal Quarter and the related unaudited
consolidated statement of cash flows of the Company and
its Subsidiaries for the portion of the Fiscal Year ended
with the last day of such Fiscal Quarter and (ii) an
unaudited consolidated balance sheet of the Company and
its Restricted Subsidiaries as of the end of such Fiscal
Quarter, setting forth in each case in comparative form
the respective figures (x) in the case of each
consolidated balance sheet, as of the last day of the
prior Fiscal Year and (y) in the case of the consolidated
statements of income and cash flows, for the
corresponding periods of the previous Fiscal Year, all in
reasonable detail and certified by a Responsible Officer
of the Company as complete and correct in all material
respects, subject to changes resulting from normal year-
end audit adjustments;
(b) Annual Statements. Within 105 days after the
end of each Fiscal Year of the Company (in duplicate),
(i) a consolidated balance sheet of the Company and its
Subsidiaries as of the end of such Fiscal Year and the
related consolidated statements of income, shareholders'
equity and cash flows of the Company and its Subsidiaries
for such Fiscal Year, setting forth in each case in
comparative form the respective figures as of the end of
and for the previous Fiscal Year, all in reasonable
detail and accompanied by a report thereon of Arthur
Andersen & Co., S.C. or other independent certified
public accountants of recognized national standing
selected by the Company, which report shall identify
those circumstances in which a change in the accounting
principles being applied has occurred or the accounting
principles employed have not been consistently applied in
the current period in relation to the preceding period if
such inconsistency materially affects the comparability
of the financial statements for such periods, shall be
unqualified as to scope limitations imposed by the
Company and shall state that such financial statements
present fairly, in all material respects, the financial
position of the Company and its Subsidiaries as at the
dates indicated and the results of their operations and
cash flows for the periods indicated and have been
prepared in accordance with GAAP, that the examination of
such accountants was conducted in accordance with
generally accepted auditing standards and that such audit
provides a reasonable basis for its opinion; and (ii) an
unaudited consolidated balance sheet of the Company and
its Restricted Subsidiaries as at the end of such Fiscal
Year, setting forth in comparative form the respective
figures for the preceding fiscal year, which balance
sheet shall be in reasonable detail and certified as
complete and correct in all material respects and as
having been prepared in accordance with GAAP by the Chief
Financial Officer or Treasurer of the Company;
(c) Officers' Certificates. Concurrently with each
delivery of financial statements pursuant to clause (a)
or (b) of this Section, an Officers' Certificate (in
duplicate):
(i) stating that the signatories thereto have
reviewed the terms of this Agreement and of the
Notes, and that such signatories do not have
knowledge, as at the date of such Officers'
Certificate, of the existence of any condition or
event which constitutes (or which, during or at the
end of the accounting period covered by the
financial statements then being furnished,
constituted) an Event of Default or a Default
(other than an Excluded Claimed Default or a
Default which was capable of being cured, and was
in fact cured, prior to the expiration of the
period for the giving of notice by the Company of
the existence thereof in accordance with clause (g)
of this Section), or, if any such condition or
event existed or exists, specifying the nature and
period of existence thereof and what action the
Company has taken or is taking or proposes to take
with respect thereto.
(ii) setting forth facts and computations in
reasonable detail demonstrating compliance at the
end of such accounting period with the restrictions
contained in Sections 6.2, 6.3(f), 6.4(t), 6.5 and
6.9, provided that, for purposes of such
certificate, the calculations relating to Section
6.2(a) and 6.2(b) shall be made as of the end of
such Fiscal Quarter and the calculations relating
to Sections 6.3(f), 6.4(t), 6.5 and 6.9 shall be
made on the assumption that all relevant
transactions that occurred during such Fiscal
Quarter occurred on the last day of such Fiscal
Quarter; and
(iii) setting forth in sufficient detail the
adjustments required in order to reconcile the results
of the computations used in providing the information
set forth in subclause (ii) of this clause (c) with
the corresponding results which would have been
obtained if such computations (and the components
thereof) had been made in accordance with GAAP in
effect on the date as of which such calculations were
made;
(d) Accountant's Certificates. Together with each
delivery of annual financial statements pursuant to clause
(b) of this Section, a written statement (in duplicate)
from the independent certified public accountants referred
to in said clause (b) who have reported on such financial
statements:
(i) stating whether, in the course of their
audit examination or otherwise, anything has come to
their attention concerning the existence during the
Fiscal Year covered by such financial statements (and
whether they have knowledge of the existence as of the
date of such written statement) of any condition or
event which constitutes a Default or an Event of
Default under any of the terms or provisions of this
Agreement insofar as any such terms or provisions
pertain to or involve accounting matters or
determinations, and, if so, specifying the nature and
period of existence thereof; and
(ii) stating that they have reviewed the
Officers' Certificate delivered in connection with
such annual financial statements pursuant to clause
(c) of this Section for such Fiscal Year, and, based
upon their annual audit examination or otherwise,
nothing has come to their attention which causes them
to believe that the information contained in such
Officers' Certificate pursuant to clause (c)(ii) of
this Section is not correct or that the matters set
forth in such Officers' Certificate pursuant to such
clause (c)(ii) have not been properly stated in
accordance with the terms of this Agreement;
(e) Commission and Other Reports. Within 15 days
after the filing or distribution thereof, copies of (i) all
financial statements, reports, notices, proxy statements
and other written information sent or distributed generally
by (x) the Parent to any class of its security holders or
(y) the Company to any class of its security holders other
than the Parent, (ii) all regular and periodic reports
(including, if applicable, reports on Form 8-K) and all
registration statements, proxy statements, and prospectuses
filed by the Parent or the Company or any of its
Subsidiaries with any securities exchange or with the
Commission, and (iii) all press releases by the Parent or
the Company or any of its Subsidiaries to the public
concerning material developments in the business of the
Parent, the Company or the Company and its Subsidiaries,
taken as a whole;
(f) Audit Reports. Promptly upon receipt thereof
(and in any event within 15 Business Days thereafter),
copies (in duplicate) of any report submitted to the
Company or any of its Subsidiaries by its independent
certified public accountants in their role as external
auditors, as opposed to internal auditors, of the Company
and its Subsidiaries in connection with any special audit
(other than a report resulting from a special audit
conducted under the guidance of counsel to which the
attorney work-product and/or the attorney-client privilege
applies) of the Company or any Subsidiary made by such
accountants which contains disclosure or discussion of any
development which is likely to have a Material Adverse
Effect;
(g) Defaults, etc. Promptly upon (and in any event
within two Business Days (in the case of an event
described in clause (a) or (b) of Section 8.1) and within
five Business Days (in the case of any event described in
any other clause of Section 8.1) after) any Responsible
Officer of the Company obtaining knowledge of any
condition or event which constitutes an Event of Default
or a Default, or becoming aware that the holder of any
Note has given any notice or instituted any legal
proceedings with respect to a claimed Default or Event of
Default or that any Person has given any notice to the
Company or any Restricted Subsidiary or instituted any
legal proceedings with respect to a claimed default under
or in respect of any Indebtedness for Borrowed Money
referred to in Section 8.1(e) (other than, in any such
case, an Excluded Claimed Default and other than a
Default which is capable of being cured, and is in fact
cured, prior to the expiration of the period for the
furnishing by the Company of an Officers' Certificate as
to the existence thereof prescribed in this clause (g),
as to which the notice requirement set forth in this
clause (g) shall not apply), an Officers' Certificate
specifying in reasonable detail the nature and period of
existence thereof and what action the Company has taken
or is taking or proposes to take with respect thereto;
(h) ERISA. Promptly (and in any event within five
Business Days) after any Responsible Officer of the
Company (i) knows or has received written notice of the
occurrence of any Termination Event, (ii) with respect to
any Multiemployer Plan, receives notice as prescribed in
ERISA of any withdrawal liability assessed against any
Company Group Member or of a determination that any
Multiemployer Plan is in reorganization or insolvent
(both within the meaning of Title IV of ERISA), or (iii)
knows or has received written notice that any Plan has
incurred an "accumulated funding deficiency" (as such
term is defined in Section 412 of the Code or Section 302
of ERISA), whether or not waived, a description of such
event or a copy of such notice and a statement by a
Responsible Officer of the Company of the action which is
proposed to be taken with respect thereto;
(i) Rule 144A Information. During any period in
which the Company is not a public reporting company
subject to Section 13 and Section 15(d) of the Exchange
Act, promptly upon request therefor (and in any event
within five Business Days thereafter) by any holder of
Notes or by any prospective "qualified institutional
buyer" (as defined in Rule 144A (or any successor rule)
promulgated by the Commission under the Securities Act)
of any Notes designated by the holder thereof, all
information, statements, reports, descriptions of
business, products and services, financial statements and
other information that may be required to be delivered by
a holder of Notes in order to satisfy the requirements of
said Rule 144A;
(j) Litigation, etc. Written notice of any
litigation, administrative proceeding or judgment,
together with a description thereof and the steps being
taken by the Company and its Subsidiaries with respect
thereto, all to such extent and at such time as the
Company would be required to make such disclosure if the
Company were a public reporting company under the
Exchange Act (it being understood that to the extent such
disclosures are contained in the reports filed by the
Parent with the Commission, then the disclosure hereunder
required to be made by the Company to the Purchasers may
be made by furnishing to the Purchasers a copy of such
reports of the Parent as filed with the Commission);
(k) MWCC Receivables Purchase Agreement. Promptly
upon any amendment or modification to the MWCC
Receivables Purchase Agreement, a true and correct copy
thereof accompanied by a certificate of a Responsible
Officer certifying thereto;
(l) Change of Control. Promptly upon (and in any
event within five Business Days after) any Responsible
Officer of the Company obtaining knowledge of (i) the
occurrence of a "Change of Control" (as defined in the
Credit Agreement) which is continuing or (ii) the
exercise by any banks party to either the Credit
Agreement or the Short Term Credit Agreement of their
rights under Section 5 thereunder, respectively, written
notice thereof describing the same and the steps (if any)
being taken by the Company and its Subsidiaries with
respect thereto;
(m) Substitution of Assets in Existing Asset Pool.
Promptly upon (and in any event within 15 days after) the
substitution of an Unencumbered After-Acquired Asset for
an asset in the Existing Asset Pool as permitted by the
proviso to Section 6.3(f)(ii)(z), a certificate of a
Responsible Officer describing in reasonable detail the
assets involved in such substitution and certifying as to
the fair market value of such assets;
(n) Utilization of Sale-Leaseback Proceeds.
Promptly upon (and in any event within 15 days after) any
proceeds from the sale or disposition of a property
subject to a Sale-Leaseback becoming Utilized Proceeds,
a certificate of a Responsible Officer describing in
reasonable detail the transactions pursuant to which such
proceeds became Utilized Proceeds;
(o) Restricted Subsidiaries. Concurrently with
each delivery of financial statements pursuant to clause
(a) or (b) of this Section, if, during the Fiscal Quarter
ending on the date of such financial statements, the
designation of any Subsidiary was changed from that of a
Restricted Subsidiary to an Unrestricted Subsidiary, or
from an Unrestricted Subsidiary to a Restricted
Subsidiary, a certificate of a Responsible Officer
identifying each such Subsidiary and the change in its
designation; and
(p) Requested Information. Promptly upon request
therefor, such other information as to the Business or
Condition of the Company or its Subsidiaries as may from
time to time be reasonably requested by the holder of any
Note.
5. INSPECTION OF PROPERTIES AND BOOKS;
CONFIDENTIALITY. (a) So long as you, your nominee or any
other institutional investor shall hold any Note, your or
such other institutional holder's representative or
representatives may, upon two Business Days' prior notice to
the Company, visit and inspect any of the properties of the
Company and its Restricted Subsidiaries, including their
respective books of account and those records, reports and
other papers which are reasonably necessary to evaluate the
Business or Condition of the Company or of the Company and
its Restricted Subsidiaries, taken as a whole, make copies
and extracts therefrom, and discuss their affairs, finances
and accounts with the Chief Financial Officer or Treasurer of
the Company (or such other appropriate officers of the
Company whom shall be designated by the Company for such
purpose) and the Company's independent public accountants
(and the Company hereby authorizes and directs each such
Person to engage in such discussions), all at such reasonable
times during normal business hours and as often as may be
reasonably requested, provided that, during the continuance
of any Default or Event of Default, (i) your or such other
institutional investor's reasonable travel and lodging
expenses incurred in connection with any such inspection
shall be borne by the Company, (ii) the reasonable costs and
expenses of any outside consultants hired by the holders of
a majority in aggregate principal amount of the Notes in
connection with such inspection shall be borne by the
Company, subject to the limitation that the Company shall not
be required to pay the expenses of more than one such
consultant or firm of consultants having expertise in the
same field, (iii) any such visit or inspection shall in any
event be deemed to have been reasonably requested if at least
one Business Day prior to the date on which you or any such
institutional holder intends to make the same the Company
shall have been advised thereof, and (iv) any officer or
employee of the Company or any Restricted Subsidiary who has
information relevant to such Default or Event of Default or
to the Company's plans in respect thereof with whom you or
your representative requests to meet shall be made available.
(b) You agree, and (by its acceptance of any Note)
each other holder of a Note or Notes shall be deemed to have
agreed, to use reasonable efforts to hold in confidence, in
accordance with, as the case may be, your or such other
holder's standard internal procedures (i) all information not
generally available to the public furnished to you or such
holder, as the case may be, pursuant to clauses (c(ii)), (d),
(g), (h), (j), (k) and (l) of Section 4 or contained in any
document which has been reproduced in any manner by you or
any such holder or your respective representatives which was
obtained in connection with an inspection of the books of
account and other records, reports and papers of the Company
and its Restricted Subsidiaries conducted by you or any such
holder or your respective representatives as permitted by
Section 5(a), whether or not such information has been
designated as "confidential", and (ii) all information not
generally available to the public furnished to you or such
holder, as the case may be, pursuant to Section 4 or Section
5(a), as the case may be (other than information described in
clause (i) above), which has been designated by the Company
or a Subsidiary in writing as "confidential" at the time
furnished; provided, however, that you and such other holder
may in any event disclose any such information irrespective
of whether or not such information shall be non-public or
shall have been designated as "confidential" (1) to other
holders of Notes and to actual or prospective institutional
purchasers of Notes and prospective institutional assignees
pursuant to Section 15.3, provided that, with respect to any
such information delivered to you consisting of budgets or
forecasts, such disclosure may only be made in connection
with a proposed transaction that is not pursuant to (A) an
effective registration statement under the Securities Act or
(B) Rule 144 (or any similar provision then in effect)
promulgated under the Securities Act), (2) as may be required
or necessary to protect your interests in connection
therewith pursuant to or in connection with any action, suit
or proceeding by, or any statute, rule or regulation of, any
Governmental Body having jurisdiction over you, (3) pursuant
to any Order of any court, arbitrator or Governmental Body
having jurisdiction over you or as otherwise required by law,
(4) as may be required or necessary to protect your interests
in connection therewith in any report, statement or testimony
required to be made to or before any Governmental Body having
jurisdiction over you or the National Association of
Insurance Commissioners or similar organizations or their
successors, (5) to your or such other holders' auditors (to
the extent required in the course of their audit) or counsel
or to your or such other holder's employees (to the extent
necessary in the ordinary course of such employees' duties),
(6) which, after disclosure to you or such other holder, as
the case may be, becomes publicly known without breach of
this Section 5(b), or (7) to the extent that you or any such
holder in good faith believes it necessary in the enforcement
of your or such holder's rights under this Agreement and the
Notes; and the Company expressly consents to the disclosure
of any such information to any of such Persons (and under any
such circumstances) contemplated in this clause; and provided
further, that any Person to whom any such information shall
be disclosed pursuant to clause (1) of the foregoing proviso
shall agree to be bound by and subject to the provisions of
this Section 5(b). In addition, you hereby acknowledge that
you are aware that the United States securities laws restrict
the purchase and sale of securities by Persons who possess
certain nonpublic information relating to the issuer of such
securities.
6. COVENANTS. The Company covenants and agrees
that from the date of this Agreement through the Closing Date
and thereafter so long as any Note shall be outstanding:
6.1. Payment of Notes; Late Charge. The Company
will duly and punctually pay the principal of, premium, if
any, and interest on the Notes in accordance with the terms
of the Notes and this Agreement. If the Company fails to
make any payment of principal of, premium, if any, and
interest on any Note on the due date therefor in accordance
with the terms of such Notes and this Agreement, the Company
will pay to the holder of such Note, in addition to all other
amounts required to be paid in accordance with the terms of
the Notes and this Agreement, on demand, a late charge equal
to the lesser of (i) such holder's pro rata share of $30,000
and (ii) 1% of the sum of the amount overdue on such Note
plus all interest which has accrued and is payable in respect
of such overdue amount at the Default Rate.
6.2. Maintenance of Certain Financial Conditions.
(a) Minimum Required Shareholders' Equity. The
Company will not on any date permit Consolidated
Shareholders' Equity to be less than the lesser of
(i) the total of $471,000,000 plus 25% (or 0%
in the case of a deficit) of Consolidated Net Income
for each of the complete Fiscal Years occurring after
the Fiscal Year ended December 31, 1994 and ending
prior to such date minus the FAS 106 Adjustment
Factor, and
(ii) $800,000,000 minus the FAS 106 Adjustment
Factor.
(b) Priority Debt. The Company will not on any
date permit the aggregate outstanding amount of all Priority
Debt of the Company and its Restricted Subsidiaries to exceed
50% of the sum of (i) the book value, net of accumulated
depreciation and amortization, of the properties, plant and
equipment (including assets subject to Capital Leases) plus
(ii) the value (determined in accordance with the next
succeeding sentence) of the Attributable Assets of the
Company and its Restricted Subsidiaries as of such date. For
purposes of this Section 6.2(b), as of any date of
determination, the value of each Attributable Asset of the
Company or any Restricted Subsidiary shall be deemed to be
equal to the amount of the Attributable Debt, as of such date
of determination, in respect of the Sale-Leaseback relating
to such Attributable Asset.
6.3. Debt. The Company will not, and will not
permit any Restricted Subsidiary to create, assume, incur,
issue, or otherwise become or remain liable in respect of,
any Funded Debt, except that:
(a) the Company may become and remain liable in
respect of the Funded Debt evidenced by the Notes;
(b) the Company and its Restricted Subsidiaries may
remain liable in respect of the Funded Debt outstanding on
the date of this Agreement and described in Schedule III
or reflected on the Company's most recent audited
financial statements referred to in Section 7.4;
(c) the Company may become and remain liable in
respect of Funded Debt owing to any Wholly Owned
Restricted Subsidiary, and any Restricted Subsidiary may
become and remain liable in respect of Funded Debt of such
Restricted Subsidiary owing to the Company or any Wholly
Owned Restricted Subsidiary;
(d) the Company or any Restricted Subsidiary may
become and remain liable with respect to Funded Debt which
is secured by a Lien on any property or asset of the
Company or any Restricted Subsidiary, if but only if
substantially simultaneously with the incurring of such
Lien the property or asset subject thereto is transferred
to an Unrestricted Subsidiary and all liability with
respect to such Funded Debt is, upon such transfer,
unconditionally released or canceled in such manner so as
to eliminate all liability of the Company or any
Restricted Subsidiary under such Lien and such Funded Debt
secured thereby;
(e) the Company and any Restricted Subsidiary may
become and remain liable in respect of (i) the Funded Debt
of any Person existing at the time such Person is merged
into or consolidated with the Company or such Restricted
Subsidiary or existing at the time of a sale, lease or
other disposition of the properties of such Person, or a
division thereof, as an entirety or substantially as
an entirety, to the Company or such Restricted Subsidiary,
provided that such Funded Debt was not incurred in
contemplation of any such event, and (ii) any extension,
renewal or refinancing of any such Funded Debt, if and
only if such renewal, extension or refinancing does not,
except for any premium or fee payable in connection
therewith and the current portion, if any, of the Funded
Debt being renewed, extended or refinanced, increase the
principal amount of such Funded Debt;
(f) the Company and any Restricted Subsidiary may
become and remain liable in respect of Funded Debt in
addition to that permitted by the foregoing provisions of
this Section if, on the date on which the Company or any
such Restricted Subsidiary proposes to incur any such
Funded Debt (the "Incurrence Date") and immediately after
giving effect to such incurrence and the substantially
concurrent incurrence or retirement of any other Funded
Debt by the Company and its Restricted Subsidiaries and
the application of the proceeds of all such Funded Debt,
Total Funded Debt shall not exceed 60% of Total
Capitalization; provided, however that nothing in this
clause shall permit:
(i) the incurrence of any Senior Funded Debt
on such Incurrence Date unless (in addition to
compliance with the foregoing restrictions),
immediately after giving effect to such incurrence of
Senior Funded Debt and the substantially concurrent
incurrence or retirement of any other Senior Funded
Debt by the Company and its Restricted Subsidiaries
and the application of the proceeds of all such
Senior Funded Debt, Total Senior Funded Debt shall
not exceed 50% of Total Capitalization, or
(ii) the incurrence of any Priority Debt on
such Incurrence Date unless (in addition to
compliance with the foregoing restrictions),
immediately after giving effect to such incurrence of
Priority Debt and the substantially concurrent
incurrence or retirement of any other Priority Debt
by the Company and its Restricted Subsidiaries and
the application of the proceeds of all such Priority
Debt,
(y) the Company shall be in compliance
with Section 6.2(b); and
(z) the aggregate outstanding amount of
all Priority Debt of the Company and its
Restricted Subsidiaries created, assumed,
incurred or issued by the Company and its
Restricted Subsidiaries secured by the
assets contained in the Existing Asset
Pool shall not exceed 5% of Total
Capitalization; provided, however that,
notwithstanding the foregoing provisions
of this subclause (z), the Company or any
Restricted Subsidiary shall be permitted
to create, assume, incur or issue
Priority Debt secured by any asset in the
Existing Asset Pool in excess of the
restrictions contained in such foregoing
provisions, but only if, substantially
simultaneously with the creation or
incurrence of the applicable Lien on such
asset, the Company shall designate for
inclusion in the Existing Asset Pool in
substitution for such asset an
Unencumbered After-Acquired Asset with a
fair market value (determined in good
faith by the Company) equal to or greater
than that of such asset. If the Company
exercises its right set forth in the
immediately preceding proviso to
substitute an Unencumbered After-Acquired
Asset for an asset contained in the
Existing Asset Pool, such Unencumbered
After-Acquired Asset will constitute an
asset in the Existing Asset Pool for all
purposes of this Agreement from and after
the effective date of such substitution.
For all purposes of this Section, (1) in the event the
Company or any Restricted Subsidiary shall extend, renew,
refund or refinance any Funded Debt, the Company or such
Restricted Subsidiary, as the case may be, shall be deemed to
have created, assumed or incurred such Funded Debt at the
time of such extension, renewal, refunding or refinancing and
(2) any Person becoming a Restricted Subsidiary after the
date of this Agreement shall be deemed to have created,
assumed or incurred all of its then outstanding Funded Debt
at the time it becomes a Restricted Subsidiary. The Company
will not in any event incur, create, assume or permit to
exist any Funded Debt of the Company owing to any of its
Subsidiaries other than Wholly Owned Subsidiaries.
6.4. Liens. The Company will not, and will not
permit any Restricted Subsidiary to, create, incur, assume or
permit to exist any Lien on or with respect to any asset of
any character of the Company or any Restricted Subsidiary
(whether held on the date hereof or hereafter acquired) or
any interest therein or any income or profits therefrom
unless the Notes are equally and ratably secured in
accordance with the provisions of the last sentence of this
Section 6.4, except:
(a) any Liens created solely to secure the deferred
purchase price of any property or asset (other than After-
Acquired Operating Property) acquired or constructed by
the Company or any Restricted Subsidiary after the date
hereof, or Liens created to secure Indebtedness for
Borrowed Money incurred solely for the purposes of
financing the acquisition or construction of such property
if such Indebtedness for Borrowed Money is incurred at the
time or within 180 days after such acquisition or
construction, or any Liens existing on any property or
asset at the time of its acquisition by the Company or any
Restricted Subsidiary, provided that (i) the aggregate
principal amount of all Indebtedness for Borrowed Money
secured by all such Liens on any such property shall at no
time exceed the total purchase price or construction cost
of such property and (ii) in no event shall any such Lien
attach to property of the Company or a Restricted
Subsidiary other than the property acquired or constructed
(including any improvements, additions or betterments
thereto made since such property was originally acquired
or constructed) and the rights and documents relating
thereto;
(b) Liens specified on Schedule III or shown on the
Company's most recent audited financial statements
referred to in Section 7.4 and existing on the date of
this Agreement;
(c) Liens on customer receivables and the proceeds
thereof which are created in accordance with the terms of
the MWCC Receivables Purchase Agreement or which arise by
reason of the sale of customer receivables and the
proceeds thereof, provided that, in any event, a Lien
arising in connection with a transaction involving the
transfer of customer receivables and the proceeds
thereof, which transfer under GAAP is treated as a sale,
shall conclusively be deemed a sale under this clause
(c);
(d) Liens (other than Liens created or imposed
under ERISA) for taxes, assessments or governmental
charges or levies either not yet due or the payment of
which is being contested in good faith and by appropriate
proceedings and with respect to which the Company has
provided for and is maintaining adequate reserves in
accordance with GAAP;
(e) any Lien in the nature of an easement, grant,
license, permit, reservation, agreement, undertaking,
restriction or condition with respect to cables, pipes,
wires, telephone or telegraph poles, sewers, railroad
tracks or other public utility purposes or roads, walks
or other rights-of-way or for joint or common use of real
properties or facilities, including any reciprocal
construction, operating and easement agreement, or any
other similar encumbrance, including, but not limited to,
any lease, sublease, easement, grant or license to use or
restriction on the right to use, which does not
materially impair the usefulness of the property or the
asset in question in the conduct of the business and
operations of the Company or the Restricted Subsidiary
which owns such property or asset;
(f) Liens of landlords, carriers, warehousemen,
mechanics, materialmen, vendors and other similar Liens
incurred in the ordinary course of business for sums
either not yet due or the payment of which is being
contested in good faith and by appropriate proceedings;
(g) rights of lessees, sublessees or assignees of
the Company or a Restricted Subsidiary with respect to
assets of the Company or such Restricted Subsidiary so
leased, sublet or assigned;
(h) Liens on goods acquired pursuant to the
issuance of Commercial Letters of Credit, provided that
such Liens shall only secure the reimbursement
obligations or other amounts to be paid under the
agreement with the issuer or an Affiliate of the issuer
of such Commercial Letters of Credit;
(i) any Lien existing on assets of any Person at
the time such Person first becomes a Restricted
Subsidiary, provided that such Lien was not created,
extended or renewed in contemplation of such event and
attaches solely to such assets;
(j) Liens on assets of the Company consisting of
Capital Leases, other leases, or Conditional Sale
Obligations in favor of any Wholly Owned Restricted
Subsidiary, and Liens on assets of any Restricted
Subsidiary in favor of the Company or a Wholly Owned
Restricted Subsidiary;
(k) Liens arising in the ordinary course of
business for sums not due or sums being contested in good
faith and by appropriate proceedings, but not involving
any deposits or advances or indebtedness for borrowed
money or the deferred purchase price of property or
services;
(l) Liens securing the Notes which Liens were
created in compliance with the last sentence of this
Section;
(m) Liens granted to landlords or to any landlord's
mortgagee in the Company's or any Restricted Subsidiary's
sublessor's interest in a sublease to secure a consent to
such sublease or an agreement to execute a non-
disturbance agreement in favor of the sublessee
thereunder from such landlord or landlord's mortgagee;
(n) any attachment, judgment or other similar Lien
arising in connection with court proceedings, provided
that (i) the execution or other enforcement of such Lien
is effectively stayed and the claims secured thereby are
being actively contested in good faith and by
appropriate proceedings diligently conducted and
effective to prevent the forfeiture or sale of any
property of the Company or any Restricted Subsidiary or
any interference with the ordinary use thereof by the
Company or any Restricted Subsidiary, and (ii) such
reserve or other appropriate provision, if any, in the
amounts and of the types as shall be required by GAAP
shall have been made therefor (or, if no such reserve or
other provision is required, the Company or such
Restricted Subsidiary shall have set aside on its books
reserves deemed by the Company to be adequate therefor);
(o) Liens (other than Liens created or imposed
under ERISA) incurred or deposits made in the ordinary
course of business in connection with workers'
compensation, unemployment insurance and other types of
social security, or to secure the performance of
tenders, statutory obligations, surety, safety bonds,
appeal bonds (but only to the extent that such reserve
or other appropriate provision, if any, in the amounts
and of the types as shall be required by GAAP shall have
been made therefor (or, if no such reserve or other
provision is required, to the extent that the Company or
such Restricted Subsidiary shall have set aside on its
books reserves deemed by the Company to be adequate
therefor)), bids, leases, contracts (other than a
contract for the repayment of Indebtedness for Borrowed
Money of the Company or any Subsidiary), performance and
return-of-money bonds and other similar obligations;
(p) any Lien on any property or asset of the
Company or a Restricted Subsidiary, but only if
substantially simultaneously with the incurring of such
Lien the property or asset subject thereto is
transferred to an Unrestricted Subsidiary and all
liability of the Company and any Restricted Subsidiary
with respect to the indebtedness secured by such Lien
is, upon such transfer, unconditionally released or
canceled in such manner so as to eliminate all liability
of the Company or any Restricted Subsidiary under such
Lien and any indebtedness secured thereby;
(q) any Lien arising under a lease (other than a
Capital Lease or a lease entered into in connection with
a Sale-Leaseback) and attaching only to the property so
leased and any improvement made thereon or thereto;
(r) any Lien on the obligation of the Company or
any Restricted Subsidiary under any lease or other
document related to the operation, use or occupancy of
real or personal property or in any guaranty by the
Company or any Restricted Subsidiary of the obligation of
any Person under any lease or other document related to
the operation, use or occupancy of real or personal
property;
(s) extensions, renewals, refinancings or
replacements of Liens permitted by clauses (a), (b) and
(i) of this Section, provided that (i) at the time of
such extension, renewal, refinancing or replacement, the
incurrence of the Indebtedness for Borrowed Money secured
by such Lien shall be permitted under Section 6.3 and
(ii) such extension, renewal, refinancing or replacement
is limited to the property originally encumbered by such
Lien (including any improvements, additions or
betterments thereto made since the property was
originally encumbered by such Lien); and
(t) Liens in addition to those permitted by the
foregoing clauses of this Section securing Indebtedness
for Borrowed Money incurred after the date hereof in
compliance with Section 6.3(f); provided, however, that
no Lien shall be created, incurred or assumed pursuant to
this clause (t) unless, immediately after giving effect
thereto, to the substantially concurrent incurrence of
any other Indebtedness for Borrowed Money and to the
substantially concurrent retirement of any other
Indebtedness for Borrowed Money, the Company shall be
permitted to incur and remain liable in respect of at
least $1.00 of additional Funded Debt constituting
Priority Debt pursuant to Section 6.3(f).
For all purposes of this Section, any extension,
renewal, refunding or refinancing of any Lien by the Company
or any Restricted Subsidiary shall be deemed to be an
incurrence of such Lien at the time of such extension,
renewal, refunding or refinancing. In the event that any
property or asset of the Company or any Restricted
Subsidiary shall become or be subject to a Lien not
permitted by any of the foregoing clauses (a) through (t),
the Company shall make or cause to be made effective
provision whereby the obligations of the Company under this
Agreement and the Notes will be secured equally and ratably
with all other obligations secured by such Lien, and the
documentation effecting such securitization shall be in form
and substance satisfactory to the holders of the Notes and
shall provide, in any event, that the collateral pledged
thereunder to the holders of the Notes shall not be released
from the Lien created thereby notwithstanding the release of
such collateral from any Lien thereon granted to Persons
other than the holders of the Notes.
6.5. Restricted Payments. The Company will not,
directly or indirectly (through a Subsidiary or otherwise),
declare, order, pay, distribute, make or set apart any sum
or property for any Restricted Payment unless, both at the
time of and immediately after effect has been given to such
proposed action:
(i) no Default or Event of Default shall have
occurred and be continuing, and
(ii) the aggregate amount of all sums and property
included in all Restricted Payments directly or
indirectly declared, ordered, paid, distributed, made or
set apart by the Company and its Restricted Subsidiaries
during the period from and including January 1, 1995 to
and including the date of such proposed action shall not
exceed the sum of (A) $78,000,000, plus (B) 50% (or minus
100% in case of any deficit) of Consolidated Net Income
for the period, taken as one accounting period, from and
including January 1, 1995 to and including the end of the
most recently completed Fiscal Quarter, plus (C) any
repayment by the Parent received after December 31, 1994
of any loan or advance made by the Company or a
Restricted Subsidiary, plus (D) any capital contributions
received by the Company after December 31, 1994, plus (E)
an amount equal to the net proceeds (in cash or, if the
consideration therefor is other than cash, the fair value
of such consideration as determined in good faith by the
Board of Directors) received by the Company from the
issue or sale after December 31, 1994 of any shares of
capital stock of, or other equity interest in, the
Company (including treasury stock but excluding Debt-Like
Preferred Stock), plus (F) an amount equal to the net
proceeds (in cash or, if the consideration therefor is
other than cash, the fair value of such consideration as
determined in good faith by the Board of Directors) from
the issue or sale at any time of that portion of any
indebtedness (other than Subordinated Debt) of the
Company or a Subsidiary which, after December 31, 1994,
is converted into shares of capital stock of, or other
equity interest in, the Company (but excluding Debt-Like
Preferred Stock) or into indebtedness of, or shares of
capital stock of, or other equity interest in, the
Parent, plus (G) the FAS 106 Adjustment Factor;
provided, however, that notwithstanding the limitations set
forth in the foregoing provisions of this Section, so long
as no Default or Event of Default shall have occurred and be
continuing (both at the time of and immediately after giving
effect to such action), the Company may make Restricted
Payments consisting of payments to the Parent to enable the
Parent to pay its corporate and business expenses, provided
that the aggregate amount of such Restricted Payments
permitted hereunder shall not exceed $2,000,000 in any
Fiscal Year (it being agreed that if the aggregate amount of
such Restricted Payments made to the Parent in any Fiscal
Year is less than $2,000,000, the amount of the unused
portion may be carried forward and added to the amount of
Restricted Payments allowed to be made to the Parent under
this subclause in the next succeeding Fiscal Year).
For all purposes of this Section, the amount
involved in any Restricted Payment directly or indirectly
declared, ordered, paid, distributed, made or set apart in
property shall be deemed to be the greater of (x) the fair
value of such property (as determined in good faith by the
Board of Directors) and (y) the net book value thereof on
the book of the Company or any Restricted Subsidiary (as
determined in accordance with GAAP), as determined on the
date such Restricted Payment is declared, ordered, paid,
distributed, made or set apart.
The Company will not pay any dividend which it has
not declared nor will it declare any dividend (other than
dividends payable solely in shares of its common stock) on
any shares of any class of its capital stock which is
payable more than 60 days after the date of declaration
thereof.
6.6. Restrictions on Repayment of Subordinated Debt
and Debt-Like Preferred Stock. The Company will not,
directly or indirectly (through a Subsidiary or otherwise),
declare, order, pay, distribute, make or set apart any sum
or property for any optional prepayments of principal of or
prepayment charge or premium on, or any redemption,
retirement, purchase or other acquisition, directly or
indirectly, of any Subordinated Debt or any Debt-Like
Preferred Stock of the Company unless (i) both at the time
of and immediately after giving effect to such action, no
Default or Event of Default shall have occurred and be
continuing, and (ii) immediately after giving effect to such
payment and to the substantially concurrent incurrence or
retirement of other Funded Debt and the application of the
proceeds thereof, the Company shall be entitled to incur at
least $1.00 of additional Funded Debt under Section 6.3(f).
6.7. Transactions with Affiliates. The Company
will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, enter into or be a party to any
transaction or arrangement (including, without limitation,
the contribution, transfer, purchase, sale or exchange of
property, or the rendering of any service, or the payment of
management or other service fees) with any of its Affiliates
unless such transaction or arrangement is entered into in
the ordinary course of and pursuant to the reasonable
requirements of the Company's or such Restricted
Subsidiary's business and upon terms that are fair and
reasonable and no less favorable to the Company or to such
Restricted Subsidiary and the Company, taken together, as
the case may be, than those which might be obtained at the
time on an arm's-length basis from any Person which is not
such an Affiliate; provided, however that the foregoing
restrictions shall not apply to (i) transactions relating to
the MWCC Receivables Purchase Agreement as in effect on the
date hereof or as amended from time to time in compliance
with Section 6.21, (ii) transactions between the Company and
a Wholly Owned Restricted Subsidiary or between Wholly Owned
Restricted Subsidiaries, (iii) loans or advances made in the
ordinary course of business to officers of the Company or
any Restricted Subsidiary in their capacity as such, (iv)
loans and advances by the Company or any Restricted
Subsidiary to the Parent made in compliance with Section 6.5
and (v) transactions between the Company or a Wholly Owned
Restricted Subsidiary, on the one hand, and a Wholly Owned
Subsidiary, on the other, relating to the provision of
administrative, accounting and management services; and
provided further that any transaction (x) between the
Company or any Restricted Subsidiary, on the one hand, and
an officer or director of a Restricted Subsidiary, on the
other, not otherwise permitted under this Section which is
effected without the approval of the Board of Directors or
the Chief Executive Officer of the Company in violation of
established written Company procedures or (y) which
constitutes a crime or tortious wrongdoing against the
Company and its Subsidiaries shall not constitute a default
hereunder.
6.8. Consolidation, Merger, Sale of Assets, etc.
The Company will not voluntarily liquidate or dissolve, or
consolidate or merge with or into any other Person, or
permit any other Person to consolidate with or merge with or
into it, or participate in a share exchange with or sell,
lease, transfer, contribute or otherwise dispose of all or
substantially all of its assets to any other Person, except
that, subject in any event to compliance with the last
paragraph of this Section:
(a) the Company may consolidate or merge with any
other corporation if the Company shall be the continuing
or surviving corporation; and
(b) the Company may consolidate with or merge
into, or sell, lease, transfer or otherwise dispose of
its assets as an entirety or substantially as an
entirety, to any other Person (a "Successor"; any such
consolidation, merger or disposition of assets being
hereinafter referred to as a "Successor Transaction"),
but only if such Successor (i) is a solvent corporation
duly organized, validly existing and in good standing
under the laws of the United States of America or any
state thereof and (ii) expressly assumes, not later than
the consummation of such Successor Transaction, pursuant
to a written agreement, the due and punctual payment of
the principal of, premium, if any, and interest on the
Notes according to their tenor, and the due and punctual
performance and observance of the obligations of the
Company under this Agreement, an executed counterpart of
which agreement shall have been furnished to each holder
of Notes together with a favorable opinion of counsel to
the effect set forth in Exhibit C. Upon consummation of
a Successor Transaction and the effective assumption of
the due and punctual payment of the principal of premium,
if any, and interest on the Notes according to their
tenor, and the due and punctual performance and
observance of the obligations of the Company under this
Agreement, the Successor shall succeed to and be
substituted for the Company, with the same effect as if
it were an original party to this Agreement, and in the
event of any such Successor Transaction consisting of a
disposition of assets, the Company shall be released from
its obligations under the Notes and this Agreement.
No consolidation, merger, sale, lease, transfer,
contribution or other disposition referred to in clause (a)
or (b) of this Section shall be permitted under this Section
unless at the time of and immediately after giving effect to
any such transaction, (A) no Default or Event of Default
shall have occurred and be continuing, (B) to the extent
that as a result of such Successor Transaction, any asset
owned by the Company or a Restricted Subsidiary immediately
prior thereto would be subjected to a Lien of any other
party to such Successor Transaction, simultaneously with
such Successor Transaction or prior thereto, effective
provision shall be made for securing (equally and ratably
with any other indebtedness of or guaranteed by the Company
then entitled to a Lien on such asset) the obligations of
the Company under the Notes and this Agreement in accordance
with the provisions of the last sentence of Section 6.4, and
(C) after giving effect to such Successor Transaction and to
the substantially concurrent incurrence or retirement of any
Funded Debt of the Company and its Restricted Subsidiaries,
and the application of the proceeds thereof, (i) Total
Senior Funded Debt shall not exceed 50% of Total
Capitalization and (ii) Total Funded Debt shall not exceed
60% of Total Capitalization (it being agreed that, solely
for purposes of determining compliance with this clause (C),
the consolidated shareholders' equity of the Person (other
than the Company) party to such merger, consolidation or
transfer of assets as of the end of such Person's most
recently completed fiscal quarter prior to such Successor
Transaction shall be used to compute that portion of "Total
Capitalization" which is attributable to such Person,
adjusted upward for any capital contributions or proceeds
from the sale of shares of capital stock of such Person
received by such Person after the end of such fiscal
quarter, and adjusted downward by any distributions with
respect to the capital stock of such Person made after the
end of such fiscal quarter).
6.9. Limitation on Sale-Leasebacks. The Company
will not, and will not permit any Restricted Subsidiary to,
enter into any Sale-Leaseback unless, immediately after
giving effect thereto, the conditions specified in
subclauses (y) and (z) of clause (ii) to the proviso to
Section 6.3(f) shall be satisfied.
6.10. Nature of Business. The Company will not, and
will not permit any Restricted Subsidiary to, engage in any
line of business in which the Company and its Restricted
Subsidiaries are not currently engaged if as a result
thereof the business engaged in by the Company and its
Restricted Subsidiaries, taken as a whole, would, in the
reasonable opinion of the Company, be substantially
different from what it was on the date of this Agreement (as
generally described in the Memorandum); provided, however,
that the future sale of lines of merchandise and services
which are not currently being offered by the Company and its
Restricted Subsidiaries to their retail customers shall not
be deemed to constitute a new line of business for purposes
of this Section. In addition, the Company shall at all
times cause a substantial percentage of the business of the
Company and its Restricted Subsidiaries, taken as a whole,
to be derived from the sale of merchandise and services to
retail customers.
6.11. Maintenance of Office. Until the principal,
premium, if any, and interest on the Notes shall have been
paid in full to the registered holders thereof, the Company
will maintain its principal office at a location in the
United States of America where notices, presentations and
demands in respect of this Agreement and the Notes may be
made upon it, and will notify each holder of a Note in
writing of any change of location of such office at least 30
days prior to such change of location. Such office shall
first be maintained at Montgomery Ward Plaza, Chicago,
Illinois 60671-0001.
6.12. Books and Records; Fiscal Year. The Company
will, and will cause each Subsidiary to, (a) keep proper
books of record and account in which full, true and correct
entries will be made of all its business dealings and
transactions and (b) maintain a system of accounting
established and administered in such a manner as to permit
its financial statements to be prepared in accordance with
GAAP.
6.13. Corporate Existence; Licenses, etc. The
Company will, and will cause each Restricted Subsidiary to,
do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence
(except as otherwise permitted by Section 6.8) and its
charter and statutory rights and all licenses, leases and
franchises necessary in any material respect for the conduct
of its business as now conducted and as proposed to be
conducted; except that (i) the existence of any Restricted
Subsidiary and its charter and statutory rights may be
terminated and (ii) subject to compliance with Section 6.8
the rights, licenses, leases and franchises of the Company
or any Restricted Subsidiary may be abandoned, modified or
terminated if such abandonment, modification or termination,
either individually or together with all other such
abandonments, modifications and terminations, would not have
a Material Adverse Effect.
6.14. Payment of Taxes, Claims for Labor and
Materials, etc. The Company will, and will cause each of
its Subsidiaries to, promptly pay and discharge or cause to
be promptly paid and discharged when due and before the same
shall become delinquent (a) all taxes, assessments and
governmental charges or levies imposed upon it or upon its
income or profits or upon any of its franchises, Licenses,
businesses or property (real, personal or mixed), or upon
any part thereof, (b) all claims of landlords, carriers,
warehousemen, mechanics, materialmen and other similar
Persons for labor, materials, supplies and rentals which, if
unpaid, might by law become a Lien or charge upon any of its
property, and (c) all trade accounts payable in accordance
with applicable business terms; provided, however, that the
failure of the Company or any of its Subsidiaries to pay any
such tax, assessment, charge, levy, claim or account payable
shall not be required or constitute a default hereunder if
and for so long as the amount, applicability or validity
thereof shall concurrently be contested in good faith by
appropriate and timely actions or proceedings diligently
pursued, and if such reserve or other appropriate provision,
if any, as shall be required by GAAP shall have been made
therefor.
6.15. Maintenance of Properties. The Company will,
and will cause each Subsidiary to, maintain and keep, or
cause to be maintained and kept, all properties (whether
owned or leased) used or useful in the business of the
Company and its Subsidiaries in good repair, working order
and condition (ordinary wear and tear excepted) in all
material respects.
6.16. Insurance. The Company will, and will cause
each Subsidiary to, keep adequately insured, by financially
sound and reputable insurers, all of its property of a
character customarily insured against by prudent
corporations engaged in the same or a similar business and
similarly situated against loss or damage of the kinds and
in amounts customarily insured against by such corporations,
and with deductibles, self insurance or coinsurance no
greater than is customary, and carry, with such insurers in
customary amounts, such other insurance, including public
liability insurance and insurance against claims for any
violation of applicable law, as is customarily carried by
prudent corporations of established reputation engaged in
the same or a similar business and similarly situated.
6.17. Compliance with Laws. The Company will not,
and will not permit any Subsidiary to, knowingly violate in
any material respect any law, statute, rule, regulation or
ordinance or any Order of, or restriction imposed by, any
court, arbitrator or Governmental Body in respect of the
conduct of its business and the ownership of its properties
(including, without limitation, all Environmental Laws and
all applicable laws, statutes, rules, regulations,
ordinances and Orders relating to occupational health and
safety standards, consumer protection and equal employment
opportunities); provided, however, that any violation in any
material respect by the Company or any of its Subsidiaries
of any Environmental Law or any employee benefit, health or
safety Order, rule or regulation, either individually or
together with all other such violations, shall not be deemed
a breach of this Section 6.17 so long as (i) such violation,
either individually or together with all other such
violations, would not be likely to prevent the Company from
performing its obligations under this Agreement and the
Notes and (ii) the Company or such Subsidiary, upon notice
of such violation, takes appropriate action to cure such
violation.
6.18. Subsidiary Dividends, Distributions and
Transfers. Except as required by applicable law, the
Company will not permit any Restricted Subsidiary to enter
into, adopt, create or otherwise be or become bound by or
subject to, any contract or charter or by-law provision
limiting the amount of, or otherwise imposing restrictions
on the declaration, payment or setting aside of funds for
the making of, dividends or other distributions in respect
of the capital stock of such Restricted Subsidiary to the
Company or another Restricted Subsidiary.
6.19. Designation of Restricted Subsidiaries.
(a) The Company will not permit any Restricted
Subsidiary to be designated as, or otherwise to become, an
Unrestricted Subsidiary unless immediately after such
designation, and after giving effect thereto, (i) no Default
or Event of Default shall have occurred and be continuing,
and (ii) the Company shall be permitted to incur at least
$1.00 of additional Funded Debt pursuant to Section 6.3(f).
(b) The Company will not permit any Unrestricted
Subsidiary to be designated as a Restricted Subsidiary
unless (A) immediately after such event, and after giving
effect thereto, (i) no Default or Event of Default shall
have occurred and be continuing, and (ii) the Company shall
be permitted to incur at least $1.00 of additional Funded
Debt pursuant to Section 6.3(f), and (B) such Unrestricted
Subsidiary had not previously been a Restricted Subsidiary
at any time within the three year period prior to the date
of any such proposed designation.
6.20. ERISA. The Company will not, and will not
permit any Subsidiary or any Company Group Member to:
(i) permit to exist with respect to any Plan any
"accumulated funding deficiency" (as such term is defined
in Section 412 of the Code or Section 302 of ERISA),
whether or not waived;
(ii) permit to be filed a notice of intent to
terminate a Plan or Plans under Title IV of ERISA other
than in a standard termination under Section 4041(b) of
ERISA;
(iii) permit to be instituted by the PBGC
proceedings under Title IV of ERISA to terminate or to
cause a trustee to be appointed to administer any Plan or
Plans; or
(iv) withdraw from any Multiemployer Plan;
if there shall result from any such event or events referred
to in clauses (i) through (iv) of this Section 6.20 a
reasonable risk of incurring a liability on the part of any
Company Group Member which would have a Material Adverse
Effect; provided, however, that the occurrence of any event
referred to in clause (iv) of this Section 6.20 shall not be
deemed a breach of this Section 6.20 so long as (x) the
occurrence of such event, either individually or together
with the occurrence of all other events described in clauses
(i) through (iv) of this Section 6.20, would not be likely
to prevent the Company from performing its obligations under
this Agreement and the Notes and (y) any liability
associated with the occurrence of such event is paid when
due.
6.21. Amendments to MWCC Receivables Purchase
Agreement. The Company will not enter into any amendment to
the MWCC Receivables Purchase Agreement as in effect on the
date hereof which amendment would have a Material Adverse
Effect or would be materially disadvantageous to the holders
of the Notes, unless the holders of not less than 51% of the
Notes at the time outstanding consent to such amendment.
7. REPRESENTATIONS AND WARRANTIES. The Company
represents and warrants to you that:
7.1. Organization and Authority of the Company,
etc. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Illinois and has all requisite legal right, power and
authority (i) in all material respects to own or hold under
lease the property it purports to own or hold under lease
and to carry on its business as now conducted, (ii) to enter
into this Agreement, (iii) to perform its obligations under
this Agreement and the Notes and (iv) to consummate the
transactions contemplated hereby (including the issuance and
sale of the Notes). The Company has, by all necessary
corporate action (no action of shareholders of the Company
being required by law, by its charter or by-laws, or
otherwise in connection therewith), duly authorized the
execution and delivery of this Agreement and the Notes and
the performance of its obligations under this Agreement and
the Notes and the consummation of the transactions
contemplated hereby (including the issuance and sale of the
Notes). This Agreement constitutes and the Notes, when duly
issued and delivered in accordance with the provisions of
this Agreement, will constitute the legal, valid and binding
obligations of the Company, enforceable against the Company
in accordance with their respective terms except as such
enforceability may be limited by the application of
bankruptcy, moratorium, reorganization and other laws
affecting the rights of creditors generally or by general
equitable principles (whether a proceeding is brought in
equity or at law).
7.2. Subsidiaries. Schedule II lists all existing
Subsidiaries of the Company, indicates which existing
Subsidiaries are Restricted Subsidiaries and correctly sets
forth, as to each Subsidiary (a) its name, (b) its
jurisdiction of incorporation and (c) the percentage of its
issued and outstanding shares of capital stock, exclusive of
directors qualifying shares, owned by the Company or one of
its Subsidiaries (specifying each such Subsidiary). Each
such Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite
legal right, power and authority in all material respects to
own or hold under lease the property it purports to own or
hold under lease and to carry on its business as now
conducted. All the outstanding shares of capital stock of
each such Subsidiary have been duly authorized and validly
issued and are fully paid and non-assessable and all such
shares indicated on Schedule II as owned by the Company or
any other Subsidiary are owned beneficially and of record by
the Company or such other Subsidiary, as the case may be,
free and clear of any Lien. There are no outstanding
rights, options, warrants, conversion rights or agreements
for the purchase or acquisition from the Company or any of
its Subsidiaries of any shares of capital stock of any of
such Restricted Subsidiaries.
7.3. Qualification. Each of the Company and its
Subsidiaries is duly qualified or licensed and in good
standing as a foreign corporation duly authorized to do
business in each jurisdiction (other than the jurisdiction
of its incorporation) in which the nature of its activities
or the character of the properties it owns or leases makes
such qualification or licensing necessary and where failure
to maintain such qualification or license could have a
Material Adverse Effect on the Company or such Subsidiary.
7.4. Business and Property; Financial Statements,
etc. The Company has furnished to you a true and complete
copy of the Confidential Information Memorandum, dated May
1995 (together with the schedules, exhibits and attachments
thereto, the "Memorandum"), prepared by ABN AMRO Bank N.V.
and NationsBanc Capital Markets, Inc. (together, the
"Placement Agents") in connection with the offering by the
Placement Agents, on behalf of the Company, of the Notes.
The Memorandum correctly describes in all material respects,
as of its date, the business and material properties of the
Company and its Subsidiaries and the nature of their
respective operations. The Memorandum contains (i) Ratio
Comparisons of the Company with Major Retailers for 1994,
(ii) Financial Summary for the Years 1992 through 1994,
respectively, (iii) Total Company Sales and Earnings for
1992 through 1994, respectively, (iv) Projected Total
Company Sales and Earnings for 1995 through 1999,
respectively, (v) Total Stores Merchandising Sales and
Earnings for 1992 through 1994, respectively, (vi) Projected
Total Stores Merchandising Sales and Earnings for 1995
through 1999, respectively,(vii) Comparable Stores
Merchandising Sales and Earnings for 1994 and Projected
Comparable Stores Merchandising Sales and Earnings for 1995
through 1999, respectively, (viii) New Stores Merchandising
Sales and Earnings for 1994 and Projected New Stores
Merchandising Sales and Earnings for 1995 through 1999,
respectively, (ix) Total Lechmere Revenues and Earnings for
1992 through 1994, respectively, (x) Total Projected
Lechmere Revenues and Earnings for 1995 through 1999,
respectively, (xi) Signature Revenues and Earnings for 1992
through 1994, respectively, (xii) Signature's Projected
Revenues and Earnings for 1995 through 1999, respectively,
(xiii) Capital Expenditures for 1992 through 1994,
respectively, (xiv) Projected Capital Expenditures for 1995
through 1999, respectively, (xv) Planned New Stores 1995
through 1999, respectively, (xvi) Balance Sheet of the
Company at year end 1992 through 1994, respectively, (xvii)
Projected Balance Sheet of the Company at year end 1995
through 1999, respectively, (xviii) Cash Flows for the
Company for 1992 through 1994, respectively, (xix) Projected
Cash Flows for the Company for 1995 through 1999,
respectively, (xx) the Company's audited Consolidated
Statements of Income for the 52-week periods ended December
29, 1990, December 28, 1991, January 1, 1994, and December
31, 1994 and for the 53-week period ended January 2, 1993,
respectively, (xxi) the Company's audited Consolidated
Balance Sheet as at December 29, 1990, December 28, 1991,
January 2, 1993, January 1, 1994 and December 31, 1994,
respectively, (xxii) the Company's audited Consolidated
Statements of Shareholders' Equity for the 52-week periods
ended December 29, 1990, December 28, 1991, January 1, 1994,
and December 31, 1994 and for the 53-week period ended
January 2, 1993, respectively, (xxiii) the Company's audited
Consolidated Statement of Cash Flows for the 52-week periods
ended December 29, 1990, December 28, 1991, January 1, 1994,
and December 31, 1994 and for the 53-week period ended
January 2, 1993, respectively, (xxiv) the Parent's Form 10-K
for the 52-week period ending December 31, 1994 (including
(A) the Parent's audited Consolidated Statements of Income
for the 52-week periods ended January 1, 1994 and December
31, 1994 and for the 53-week period ended January 2, 1993,
respectively, (B) the Parent's audited Consolidated Balance
Sheet as at January 1, 1994 and December 31, 1994,
respectively, (C) the Parent's audited Consolidated
Statement of Shareholders' Equity for the 52-week periods
ended January 1, 1994 and December 31, 1994 and for the 53-
week period ended January 2, 1993, respectively, and (D) the
Parent's audited Consolidated Statement of Cash Flows for
the 52-week periods ended as of January 1, 1994 and December
31, 1994 and for the 53-week period ended January 2, 1993,
respectively, and (xxv) the Parent's Form 10-Q for the
quarterly period ended April 1, 1995 (including (A) the
Parent's unaudited Consolidated Statements of Income for the
13-week periods ended April 2, 1994 and April 1, 1995,
respectively, (B) the Parent's unaudited Consolidated
Condensed Balance Sheet as at December 31, 1994 and April 1,
1995, respectively, and (C) the Parent's unaudited
Consolidated Statement of Cash Flows for the 13-week periods
ended April 2, 1994 and April 1, 1995, respectively). The
Company has also delivered to you the Parent's 10-K reports
for its fiscal years ended December 29, 1990, December 28,
1991, January 2, 1993 and January 1, 1994. All audited
financial statements included in the Memorandum or described
in the preceding sentences and all related schedules and
notes have been prepared in accordance with GAAP, in each
case applied on a consistent basis throughout the periods
specified (except for changes specifically noted therein),
are correct and complete in all material respects and
present fairly the financial position of such corporation or
corporations to which they relate as at the respective dates
thereof and the results of operations and changes in
financial position (or cash flows, as applicable) of such
corporation or corporations for the respective periods
specified. The projected financial statements contained in
the Memorandum and the other projections referred to in the
Memorandum were prepared based on assumptions which were
reasonable at the time of such preparation and made in good
faith, and such assumptions remain reasonable as of the date
hereof. Except as reflected in the financial statements
referred to in this Section (or the notes thereto), neither
the Company nor any of its Subsidiaries had, as of the date
of such financial statements, any material liabilities,
contingent or otherwise.
7.5. Changes, etc. Since the date of the most
recent audited balance sheet of the Company referred to in
Section 7.4 (a) the business of the Company and its
Subsidiaries has been conducted only in the ordinary course
and there has been no Material Adverse Change in the
Business or Condition of the Company and its Subsidiaries,
taken as a whole, and (b) there has been no occurrence or
development, whether or not insured against, which has had
a Material Adverse Effect in the Business or Condition of
the Company and its Subsidiaries, taken as a whole.
7.6. Title to Property; Leases. The Company and
each of its Subsidiaries has good and marketable title in
fee simple (or its equivalent under applicable law) to the
real properties they purport to own and good title to the
other properties they purport to own, including those
reflected in the most recent audited balance sheet of the
Company referred to in Section 7.4 or purported to have been
acquired by the Company or any of its Subsidiaries after the
date of such balance sheet (other than properties disposed
of in the ordinary course of business), free and clear of
Liens other than Liens permitted by Section 6.4 except where
the failure to maintain such title to any property, either
alone or together with all other such failures, would not
have a Material Adverse Effect. The Company and its
Subsidiaries enjoy peaceful and undisturbed possession in
all material respects under all leases of all personal and
all real property under which they operate; all such leases
are valid and subsisting and in full force and effect in all
material respects; and neither the Company nor any of its
Subsidiaries is in default in the performance or observance
of its obligations under any provisions of any such lease
which default could, either alone or together with all other
such defaults, have a Material Adverse Effect.
7.7. Compliance with Laws, Other Instruments; No
Conflicts, etc. (a) Neither the Company nor any of its
Subsidiaries is in violation of any term or provision of its
corporate charter or by-laws or other organizational
documents. Neither the Company nor any of its Subsidiaries
is in violation or default of (i) any term or provision of
any agreement, indenture, mortgage, instrument or License to
which it is a party or by which it or any of its properties
may be bound or affected, or (ii) any existing statute, law,
governmental rule, regulation or ordinance, or any Order of
any court, arbitrator or Governmental Body applicable to it
or its properties (including, without limitation, any
statute, law, rule, regulation, ordinance or Order relating
to occupational health and safety standards, consumer
protection or equal employment practice requirements), the
consequences of which violation or default, either in any
one case or taken together with all other such violations or
defaults, could have a Material Adverse Effect.
(b) None of the execution and delivery of this
Agreement or the Notes or the consummation of the
transactions contemplated hereby or the performance of the
terms and provisions hereof and thereof will (i) result in
any breach of or be in conflict with or constitute a default
(or an event which with notice or lapse of time or both
would become a default) under, or give to others any right
of termination, amendment, acceleration or cancellation of,
or result in a loss of any benefit to which the Company or
any of its Subsidiaries is entitled under, or result in (or
require) the creation of any Lien upon any property of the
Company or any of its Subsidiaries under, its corporate
charter or by-laws or other organizational documents, or any
term of any agreement, indenture, mortgage, instrument or
License to which the Company or any of its Subsidiaries is
a party or by which the Company or any of their respective
properties may be bound or affected, or (ii) violate any
provision of any statute, law, rule, regulation or ordinance
or any Order of any court, arbitrator or of any Governmental
Body applicable to the Company or any of its Subsidiaries or
their respective properties.
7.8. Consent and Approvals. No Approval by, from
or with, and no other action in respect of, any Governmental
Body or any other Person (including any trustee or holder of
any indebtedness, securities or other obligations of the
Company or any of its Subsidiaries) is required (a) for or
in connection with the valid execution and delivery by the
Company of or the performance by the Company of its
obligations under this Agreement or the Notes or the
consummation by the Company of the transactions contemplated
hereby, including the offer, issuance, sale and delivery by
the Company of the Notes or (b) as a condition to the
legality, validity or enforceability as against the Company
of this Agreement or the Notes.
7.9. Litigation. There are no actions, suits or
proceedings pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its
Subsidiaries or any of their respective properties (and no
basis therefor is known to the Company) in any court or
before any arbitrator of any kind or before or by any
Governmental Body, which (a) question the validity or
legality of this Agreement or the Notes or the MWCC
Receivables Purchase Agreement or any action taken or to be
taken pursuant to this Agreement or the Notes or (b) might
result, either in any one case or in the aggregate, (i) in
an impairment of the ability of the Company to perform its
obligations under this Agreement, the Notes or the MWCC
Receivables Purchase Agreement, or (ii) in a Material
Adverse Change.
7.10. Licenses, Patents, Trademarks, Authorizations,
etc. The Company and its Subsidiaries own, possess or have
the right to use (without any known conflict with the rights
of others) all permits, franchises, patents, trademarks,
service marks, trade names, copyrights, licenses, permits
and governmental or other authorizations or the like
(collectively, "Licenses") which are necessary to the
conduct of their respective businesses as conducted on the
date hereof and with respect to which the failure to own,
possess or have the right to use could, either alone or
together with all other such failures, have a Material
Adverse Effect. Each such License is in full force and
effect, and the Company or its applicable Subsidiary, as the
case may be (whichever shall own, possess or have the right
to use the same), has fulfilled and performed its obli-
gations with respect thereto in all material respects. No
default in the performance or observance by the Company or
any such Subsidiary of its obligations thereunder has
occurred (and, so far as is known to the Company no other
event has occurred) which permits, or after notice or lapse
of time or both would permit, the revocation or termination
of any such License or which has had, or in the future may
(so far as the Company can now reasonably foresee) have, a
Material Adverse Effect.
7.11. Taxes. The Company and its Subsidiaries have
filed each tax return which is required by law to have been
filed by them in any jurisdiction except where the failure
to file such return could not, either individually or
together with all other such failures, have a Material
Adverse Effect. The Company and its Subsidiaries have paid,
or made appropriate provisions on their books and records
therefor, all taxes, assessments, fees and charges of each
Governmental Body shown to be owing on such returns to the
extent the same have become due and payable and before they
have become delinquent other than (i) those presently
payable without penalty or interest, (ii) those being
contested in good faith by appropriate and timely actions or
proceedings diligently pursued with respect to which
adequate reserves have been established in accordance with
GAAP on the basis of the best estimates of ultimate
liability by the entity responsible therefor and (iii)
taxes, assessments, fees and charges the non-payment of
which could not, either individually or in the aggregate,
have a Material Adverse Effect. The Federal income tax
returns of the Company and its consolidated Subsidiaries
have been examined and reported on by applicable taxing
authorities or closed by applicable statute for all Fiscal
Years through the Fiscal Year ended December 29, 1990.
Except as set forth on Schedule IV, the Company does not
know of any material additional assessment or proposed
assessment for any Fiscal Year, and no material controversy
in respect of additional Federal or state income taxes is
pending or to the knowledge of the Company is threatened.
In the opinion of the Company, all tax liabilities
(including taxes for all open years and for its current
fiscal period and including any such tax liabilities which
are likely to result from those items set forth on Schedule
IV) are adequately provided for on the books of the Company
and its consolidated Subsidiaries in accordance with GAAP.
It is recognized and acknowledged by the Purchasers
that, from 1976 through June 22, 1988, for federal income
tax purposes the Company and its Subsidiaries were members
of the affiliated group of which Mobil Corporation
("Mobil"), the Company's ultimate parent corporation during
such period, was the common parent, and the income of the
Company and its Subsidiaries was included in the
consolidated federal income tax returns of Mobil for such
period. All filings and payments with respect to such
period have been made directly by Mobil, and all refunds
with respect thereto have been paid directly to Mobil; and
the Company and its Subsidiaries have made and received
payments with respect to such taxes under tax sharing
agreements with Mobil and/or a Subsidiary thereof.
Accordingly, all representations and warranties made in this
Section 7.11 with respect to federal income taxes as they
relate to such period are qualified to the best of the
Company's general knowledge of Mobil's practices and
procedures. To the best of its knowledge the Company has
made all payments which are now due to Mobil under such tax
sharing agreements.
7.12. Compliance with ERISA. (a) Except to the
extent that the following, considered in the aggregate,
would not reasonably be expected to subject the Company or
any of its Subsidiaries to a liability or involve an amount
which, in the aggregate, would have a Material Adverse
Effect, (i) no Termination Event has occurred, and, to the
best of the Company's knowledge, no event or condition has
occurred or exists as a result of which any Termination
Event would reasonably be expected to occur, with respect to
any Plan, (ii) no accumulated funding deficiency (as defined
in Section 302 of ERISA or Section 412 of the Code), whether
or not waived, has occurred with respect to any Plan, (iii)
the present value of all accrued benefits under each Plan
(based on those assumptions used to fund such Plan, which
assumptions are reasonable) did not, as of the most recent
valuation date, which for any such Plan was not earlier than
16 months prior to the date as of which this representation
is made, exceed the then current value of the assets of such
Plan allocable to such benefits, (iv) no Company Group
Member has incurred, or, to the best of the Company's
knowledge, is reasonably expected to incur, any withdrawal
liability to any Multiemployer Plan which has not been
satisfied in full, (v) no Company Group Member has received
any notification that any Multiemployer Plan is in
reorganization (as defined in Section 4241 of ERISA), is
insolvent (as defined in Section 4245 of ERISA) or has been
terminated, within the meaning of Title IV of ERISA, and, to
the best of the Company's knowledge, no Multiemployer Plan
is reasonably expected to be in reorganization or insolvent
or to be terminated, (vi) no prohibited transaction (within
the meaning of Section 406 of ERISA or Section 4975 of the
Code) or breach of fiduciary responsibility has occurred
which has subjected or, to the best of the Company'
knowledge, would reasonably be expected to subject any
Company Group Member to any liability under Section 406,
409, 502(i) or 502(1) of ERISA or Section 4975 of the Code,
or under any agreement or other instrument pursuant to which
such Company Group Member has agreed or is required to
indemnify any person against any such liability, and (vii)
no Company Group Member has incurred, or, to the best of the
Company's knowledge, is reasonably expected to incur, any
liability to the PBGC (other than for insurance premiums,
which have been paid when due) which has not been satisfied
in full.
(b) Full payment has been made on or before the
due date thereof of all amounts which any Company Group
Member is or was required under the terms of each Plan to
have paid as contributions to such Plan as of the date
hereof.
(c) No Lien imposed under the Code or ERISA on the
assets of any Company Group Member exists or, to the best of
the Company's knowledge, is reasonably likely to arise on
account of any Plan.
(d) Based on your representation in Section 1.6,
and in reliance upon an assumption that the relevant
provisions of the proposed prohibited transaction class
exemption published by the Department of Labor in the
Federal Register on August 22, 1994 (59 FR 43134, August 22,
1994) will become final in the form so published, the
execution and delivery of this Agreement and the issue and
sale of the Notes as herein contemplated will not involve
any transaction in connection with which a tax or penalty
could be imposed pursuant to Section 4975 of the Code or
Section 502 of ERISA.
7.13. Private Offering. Neither the Company nor the
Placement Agents (the only Persons authorized or employed by
the Company to act on its behalf in connection with the
offer and sale of the Notes or any similar securities of the
Company) or any other Person has offered the Notes or any
similar securities of the Company for sale to, or solicited
any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, any Person
other than you, the Other Purchasers and 117 other
institutional investors, each of which was offered the Notes
at private sale for investment. Neither the Company nor any
other Person acting on its behalf has taken, or will take,
any action which would subject the issuance or sale of the
Notes to Section 5 of the Securities Act or to the
registration or qualification requirements of any securities
or blue sky law of any applicable jurisdiction.
7.14. Use of Proceeds; Margin Regulations. The
Company will apply the proceeds from the sale of the Notes
under this Agreement as provided in Section 1.4. No part of
the proceeds from the sale of the Notes will be used,
directly or indirectly, for the purpose of purchasing or
carrying any "margin stock" within the meaning of Regulation
G of the Board of Governors of the Federal Reserve System
(12 CFR 207, as amended), or for the purpose of purchasing
or carrying or trading in any securities under such
circumstances as to involve the Company in a violation of
Regulation X of said Board (12 CFR 224, as amended) or to
involve any broker or dealer in a violation of Regulation T
of said Board (12 CFR 220, as amended). No Indebtedness for
Borrowed Money being reduced or retired out of the proceeds
of the sale of the Notes was incurred for the purpose of
purchasing or carrying any margin stock within the meaning
of such Regulation G or any "margin security" within the
meaning of such Regulation T, and the Company does not own
or have any present intention of acquiring directly or
indirectly any such margin stock or any such margin
security. The assets of the Company and its Subsidiaries do
not consist on the date hereof of any such margin stock or
any such margin security. None of the transactions
contemplated by this Agreement (including, without
limitation, the direct or indirect use of the proceeds from
the sale of the Notes) will violate or result in a violation
of Section 7 of the Exchange Act or any regulations issued
pursuant thereto, including, without limitation, said Regu-
lation G, Regulation T and Regulation X.
7.15. Debt, etc. Schedule III correctly describes
all secured and unsecured Indebtedness for Borrowed Money of
the Company and each of its Subsidiaries incurred since the
date of the most recent audited financial statements of the
Company referred to in Section 7.4. No event of default,
payment default or, to the best of the Company's knowledge,
any other default exists or, after giving effect to the
issuance and sale of the Notes pursuant to this Agreement,
will exist (or, but for the waiver thereof, would exist)
under any instrument or agreement evidencing, providing for
the issuance or securing of, or otherwise relating to any
Indebtedness for Borrowed Money of the Company or any
Subsidiary. The Company is not a party to or bound by any
charter provision, by-law, other organizational document
agreement, indenture, mortgage, lease, instrument or License
which contains any restriction on the incurrence by it of
any Indebtedness for Borrowed Money other than (i) this
Agreement, (ii) that certain Long Term Credit Agreement,
dated as of September 15, 1994 (the "Credit Agreement"),
among the Company, various banks named therein, The First
National Bank of Chicago, as Documentary Agent, The Bank of
Nova Scotia, as Administrative Agent, The Bank of New York,
as Negotiated Loan Agent, and Bank of America National Trust
and Savings Association, as Advisory Agent, (iii) that
certain Short Term Credit Agreement, dated as of September
15, 1994 (the "Short Term Credit Agreement") among the
Company and the other parties to the Credit Agreement, (iv)
those certain Note Purchase Agreements, dated as of March 1,
1993, as amended (the "1993 Note Purchase Agreements") each
between the Company and one of the note purchasers named in
Schedule I thereto, (v) that certain Purchase and Master
Lease Agreement, dated as of January 15, 1995 (the "Credit
Lyonnais Lease"), among the Company, Lechmere, the Lessors
referred to therein and Credit Lyonnais Chicago Branch, as
Agent for the Lessors, and (vi) that certain Purchase and
Master Lease Agreement, dated as of March 15, 1995 (the
"Sumitomo Lease"), among the Company, Lechmere, the Lessors
referred to therein and Sumitomo Bank Leasing and Finance,
Inc., as Agent for Lessors. True and correct copies of the
Credit Agreement, the Short Term Credit Agreement, the 1993
Note Purchase Agreements, the Credit Lyonnais Lease and the
Sumitomo Lease have been delivered to your special counsel.
The Company is permitted to incur the Indebtedness for
Borrowed Money evidenced by the Notes in accordance with the
terms of the Credit Agreement, the Short Term Credit
Agreement, the 1993 Note Purchase Agreements, the Credit
Lyonnais Lease and the Sumitomo Lease.
7.16. Status Under Certain Statutes; Other
Regulations. Neither the Company nor any of its
Subsidiaries is an "investment company" or a Person directly
or indirectly "controlled" by or "acting on behalf of" an
"investment company" within the meaning of the Investment
Company Act of 1940, as amended. Neither the Company nor
any of its Subsidiaries is a "holding company," or a
"subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," as such terms are defined
in the Public Utility Holding Company Act of 1935, as
amended. Neither the Company nor any of its Subsidiaries is
a "public utility," as such term is defined in the Federal
Power Act, as amended. The Company is not subject to
regulation under any Federal or state law, statute, rule,
regulation or ordinance which limits its ability to incur
Indebtedness for Borrowed Money.
7.17. Labor Matters. There are no labor disputes
between the Company or any of its Subsidiaries on the one
hand and any of its employees or representatives of such
employees on the other hand which in the aggregate could
have a Material Adverse Effect.
7.18. Full Disclosure. None of this Agreement, the
Memorandum or any other document, certificate or instrument
delivered to you by or on behalf of the Company in
connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make
the statements contained herein or therein, in light of the
circumstances under which the same were made, not
misleading. There is no fact known to the Company which
Materially Adversely Affects or in the future may (so far as
the Company can now reasonably foresee) have a Material
Adverse Effect or impair the ability of the Company to
perform its obligations under this Agreement or the Notes
which has not been set forth or reflected in this Agreement,
the Memorandum or in the other documents, certificates and
instruments referred to herein and delivered to you by or on
behalf of the Company on or prior to the date hereof in
connection with the transactions contemplated by this
Agreement.
7.19. Environmental Matters. (a) The Company and
its Subsidiaries currently hold and at all times heretofore
the Company and its Subsidiaries held all Environmental
Permits that they are or were required to hold under all
Environmental Laws except to the extent failure to have any
such Environmental Permit will not cause a Material Adverse
Effect.
(b) The Company and its Subsidiaries currently are,
and at all times heretofore the Company and its Subsidiaries
have been, in compliance with all terms and conditions of
all such Environmental Permits and, to the best of the
Company's knowledge, the Company and its Subsidiaries are,
and at all times heretofore have been, in compliance with
all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and
timetables contained in all applicable Environmental Laws
except to the extent failure to comply therewith, in any one
case or in the aggregate, will not cause a Material Adverse
Effect.
(c) The Company and its Subsidiaries have never
received, and, so far as is known to the Company, no
predecessor in interest of the Company or any of its
Subsidiaries in respect of any of the Company Premises has
ever received, from any Governmental Body or other Person
any notice of, and the Company has no knowledge of, any
past, present or future events, conditions, circumstances,
activities, practices, incidents, actions or plans that
could interfere with or prevent compliance or continued
compliance in all material respects with the Environmental
Permits referred to in clause (b) of this Section or any
scheduled renewals thereof or any Environmental Laws, or
that could give rise to any liability on the part of the
Company and its Subsidiaries or otherwise form the basis of
any claim, action, demand, request, notice, suit,
proceeding, hearing, study or investigation (collectively,
"Environmental Claims") involving the Company or any of its
Subsidiaries, based on or related to (i) a violation of any
Environmental Law or (ii) the manufacture, generation,
refining, processing, distribution, use, sale, treatment,
receipt, storage, disposal, transport, arranging for
transport or handling, or the emission, discharge, release
or threatened release into the environment, of any Hazardous
Substance, other than liabilities, noncompliances, notices,
events, conditions, circumstances, activities, practices,
incidents, actions, plans or Environmental Claims referred
to in this clause (c) that will not cause, either in any one
case or in the aggregate, a Material Adverse Effect.
7.20. Ranking of Obligations under this Agreement.
The obligations of the Company under this Agreement and the
Notes rank pari passu with the claims of all other senior
unsecured creditors of the Company.
7.21. Foreign Assets Control Regulations, etc.
Neither this Agreement nor any transaction contemplated
hereby (including the issuance and sale of the Notes) is or
will be in violation of the Foreign Funds Control
Regulations, the Transaction Control Regulations, the
Foreign Assets Control Regulations, the Iranian Assets
Control Regulations, the Nicaraguan Trade Control
Regulations, the Libyan Sanction Regulations or the South
African Trade Control Regulations of the United States
Treasury Department (as defined in 31 CFR, Subtitle B,
Chapter V, as amended). Neither the Company nor any of its
Subsidiaries is a "national" of a "designated foreign
country" or of any foreign country subject to any
restriction, or a Person defined as a "designated foreign
country", under said Chapter V, as amended.
8. EVENTS OF DEFAULT; REMEDIES.
8.1. Events of Default Defined; Acceleration of
Maturity. If any of the following conditions or events
(each herein called an "Event of Default") shall occur and
be continuing (whatever the reason for such Event of Default
and whether it shall be voluntary or involuntary or come
about or be effected by operation of law or pursuant to or
in compliance with judicial or governmental or
administrative order or action or otherwise):
(a) default shall be made in the due and punctual
payment of all or any part of the principal of or
premium, if any, on any Note when and as the same shall
become due and payable, whether on a date fixed for
prepayment, at stated maturity, by acceleration or
declaration, or otherwise; or
(b) default shall be made in the due and punctual
payment of any interest on any Note when and as such
interest shall become due and payable, and such default
shall have continued for a period of two Business Days
after actual knowledge thereof by a Responsible Officer
of the Company (through notice thereof by the holder of
any Note or otherwise); or
(c) default shall be made in the due performance or
observance of any covenant, provision, agreement or
condition contained in Section 6.2, Section 6.3, Section
6.5, Section 6.6, Section 6.8 or Section 6.9; or
(d) default shall be made in the due performance or
observance of any other covenant, provision, agreement or
condition contained in this Agreement (other than any
default referred to in the foregoing clauses (a), (b) and
(c)) and (i) if such default can be cured by the Company
with diligence or by the payment of money such default
shall have continued for a period of 30 days after the
holders of not less than 20% of the unpaid principal
amount of the Notes at the time outstanding shall have
given notice of such default to the Company or (ii)
if such default cannot with diligence be cured by the
Company within such 30-day period and cannot be cured by
the payment of money, such default shall have continued
for a period of 60 days after the holders of not less
than 20% of the unpaid principal amount of the Notes at
the time outstanding shall have given notice of such
default to the Company; provided, however, that (x) if
the Company shall give notice of the occurrence of such
default after the expiration of the period of five
Business Days established for the giving of such notice
in Section 4(g) but prior to the expiration of, in the
case of a default to which the 30-day cure period would
be applicable, the 30th day following the date such
notice was required to have been given or, in the case of
a default to which the 60-day cure period would be
applicable, prior to the 60th day following the date such
notice was required to have been given, the period within
which the Company has the right to cure such default
after the holders of the requisite unpaid principal
amount of the Notes have given notice of such default to
the Company shall be reduced by the number of days which
elapsed between the date the notice of such default was
required to have been given by the Company pursuant to
Section 4(g) and the date on which such notice was
actually given by the Company, and (y) if the Company
shall fail to give such notice as required by such
Section 4(g) prior to the expiration of the 30-day cure
period or 60-day cure period, as applicable, set forth in
this clause (d), the holders of the Notes shall be deemed
to have given the Company notice of such default on the
last day of such period of five Business Days and the
applicable cure period shall be deemed to have commenced
running on the last day of such period of five Business
Days; or
(e) default shall be made (i) in the payment when
due (subject to any applicable grace period), whether on
an interest payment date or on a date fixed for
prepayment at stated maturity, by acceleration or
declaration or otherwise of any Indebtedness for Borrowed
Money of the Company (other than the Notes) or any
Restricted Subsidiary or (ii) in the due performance or
observance of any covenant, provision, agreement or
condition contained in any documents evidencing or
providing for the issuance or securing of any such
Indebtedness for Borrowed Money (other than, in any such
case, an Excluded Claimed Default) if
(x) the effect of such default is to
accelerate the maturity of any such Indebtedness for
Borrowed Money or to cause any of such Indebtedness
for Borrowed Money to be prepaid, purchased or
redeemed, or
(y) the holder or holders thereof (or a
trustee or agent on behalf of such holders) (1)
cause such Indebtedness for Borrowed Money to become
due and payable prior to its expressed maturity or
to be prepaid, purchased or redeemed or (2) receive
any payment (other than any payment which was
scheduled to be made prior to the occurrence of such
default), guarantee or security or other concession
from or on behalf of the Company or any Restricted
Subsidiary, or
(z) in the event that such default is a
default in the payment when due of any such
Indebtedness for Borrowed Money, such default has
not been remedied within five Business Days after
the holders of not less than 20% of the unpaid
principal amount of the Notes at the time
outstanding or the holder or holders (or a trustee
or agent on behalf of such holders) of such
Indebtedness for Borrowed Money shall have given
notice of such default to the Company; provided,
however, that (1) if the Company shall give notice
of the occurrence of such default after the
expiration of the period of five Business Days
established for the giving of such notice in Section
4(g) but prior to the fifth Business Day following
the date such notice was required to have been
given, the period within which the Company has the
right to cure such default after the holders of the
requisite principal amount of the Notes have given
notice of such default to the Company shall be
reduced by the number of days which elapsed between
the date the notice of such default was required to
have been given by the Company pursuant to Section
4(g) and the date on which such notice was actually
given by the Company, and (2) if the Company shall
fail to give such notice as required by such Section
4(g) prior to the expiration of the five Business
Day cure period set forth in this subclause (z), the
holders of the Notes shall be deemed to have given
the Company notice of such default on the last day
of such period of five Business Days and the cure
period shall be deemed to have commenced running on
the last day of such period of five Business Days;
provided, however, that, in no event shall any default
under this subdivision (e) constitute an Event of Default
unless the aggregate outstanding amount of all
Indebtedness for Borrowed Money so affected is at least
$5,000,000; or
(f) the Company or any Restricted Subsidiary shall
(i) apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part
of its property, (ii) become insolvent or be generally
unable to or shall generally fail or admit in writing its
inability to pay its debts as such debts become due,
(iii) make a general assignment, arrangement or
composition with or for the benefit of its creditors,
(iv) commence a voluntary case under the Federal
Bankruptcy Code (as now or hereafter in effect), (v) file
a petition seeking to take advantage of any bankruptcy,
insolvency, moratorium, reorganization or other similar
law affecting the enforcement of creditors' rights
generally, (vi) acquiesce in writing to, or fail to
controvert in a timely or appropriate manner, any
petition filed against it in an involuntary case under
such Bankruptcy Code, (vii) take any action under the
laws of any jurisdiction (foreign or domestic) analogous
to any of the foregoing, or (viii) take any action in
furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the foregoing; provided,
however, that the provisions of this clause (f) shall not
apply to any Insignificant Subsidiary to which the
foregoing provisions of this clause (f) would otherwise
apply which, together with all other Insignificant
Subsidiaries with respect to which an event described in
this clause (f) shall have occurred, has assets which do
not exceed one percent of Consolidated Total Assets; or
(g) a proceeding or case shall be commenced in
respect of the Company or any Restricted Subsidiary,
without its application or consent, in any court of
competent jurisdiction, seeking (i) the liquidation,
reorganization, moratorium, dissolution, winding up, or
composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator
or the like of it or of all or any substantial part of
its assets, or (iii) similar relief in respect of it
under any law providing for the relief of debtors, and
such proceeding or case described in clause (i), (ii) or
(iii) shall continue undismissed, or unstayed and in
effect, for a period of 60 days or an order for relief
shall be entered in an involuntary case under the Federal
Bankruptcy Code (as now or hereafter in effect) against
the Company or any Restricted Subsidiary or action under
the laws of any jurisdiction (foreign or domestic)
analogous to any of the foregoing shall be taken with
respect to the Company or any Restricted Subsidiary and
shall continue undismissed, or unstayed and in effect for
period of 60 days; provided, however, that the provisions
of this clause (g) shall not apply to any Insignificant
Subsidiary to which the foregoing provisions of this
clause (g) would otherwise apply which, together with all
other Insignificant Subsidiaries with respect to which an
event described in this clause (g) shall have occurred,
has assets which do not exceed one percent of
Consolidated Total Assets; or
(h) a final judgment or decree (after the
expiration of all times to appeal therefrom) for the
payment of money shall be rendered by a court of
competent jurisdiction against the Company or any
Restricted Subsidiary which, either alone or together
with other outstanding judgments or decrees against the
Company or one or more of its Restricted Subsidiaries,
shall aggregate more than $5,000,000 and the same shall
not be (i) fully covered by insurance or (ii) vacated,
stayed, bonded, paid or discharged within 60 days from
the date of entry thereof; or
(i) any representation or warranty made by the
Company in this Agreement or in any certificate or other
instrument delivered hereunder or pursuant hereto or in
connection with any provision hereof shall prove to have
been false or incorrect or breached in any material
respect on the date as of which made;
then (i) upon the occurrence on any date of any Event of
Default described in clause (f) or (g) of this Section with
respect to the Company, the unpaid principal amount of all
Notes, together with the interest accrued thereon in
accordance with the terms thereof and hereof (which interest
shall be deemed matured) and all other amounts payable by
the Company hereunder shall automatically become immediately
due and payable, without presentment, demand, protest,
notice of intention to accelerate, notice of acceleration,
or other requirements of any kind, all of which are hereby
expressly waived by the Company, and (ii) upon the
occurrence on any date or during the continuance of any
other Event of Default, the holder or holders of not less
than 51% of the unpaid principal amount of the Notes at the
time outstanding may, by written notice to the Company,
declare the unpaid principal amount of all Notes to be, and
the same shall forthwith become, due and payable, together
with the interest accrued thereon in accordance with the
terms thereof and hereof (which interest shall be deemed
matured) and all other amounts payable by the Company
hereunder, plus (to the extent permitted by applicable law)
the Makewhole Amount (determined as of the date of such
declaration in respect of such principal amount of Notes),
without presentment, demand, protest, notice or other
requirements of any kind, all of which are hereby expressly
waived by the Company; provided that, upon the occurrence on
any date or during the continuance of an Event of Default
described in clause (a) or (b) of this Section with respect
to any Note, the holder or holders of not less than 5% of
the unpaid principal amount of the Notes at the time
outstanding may, by written notice to the Company, declare
the unpaid principal amount of the Notes to be, and the same
shall forthwith become, due and payable, together with the
interest accrued thereon in accordance with the terms
thereof and hereof (which interest shall be deemed matured)
and all other amounts payable by the Company hereunder, plus
(to the extent permitted by applicable law) the Makewhole
Amount (determined as of the date of such declaration in
respect of such principal amount of Notes), without
presentment, demand, protest, notice or other requirements
of any kind, all of which are hereby expressly waived by the
Company.
8.2. Default Remedies. If any Event of Default
shall have occurred and be continuing, the holder of any
Note may proceed to protect and enforce its rights under
this Agreement or such Note, either by suit in equity or by
action at law or both, whether for specific performance of
any covenant or agreement contained in this Agreement or in
aid of the exercise of any power granted in this Agreement,
or the holder of any Note may proceed to enforce the payment
of all sums due upon such Note or under this Agreement or to
enforce any other legal or equitable right available to the
holder of such Note. The Company covenants that if it shall
default in the making of any payment due under any Note or
in the performance or observance of any covenant or
agreement contained in this Agreement, it will pay to the
holder thereof such further amounts, to the extent lawful,
as shall be sufficient to pay the costs and expenses of
collection or of otherwise enforcing such holder's rights,
including, without limitation, reasonable counsel fees and
disbursements. The obligations of the Company pursuant to
the immediately preceding sentence shall survive the
transfer or payment in full of the Notes.
8.3. Remedies Cumulative. No remedy herein
conferred upon you or the holder of any Note is intended to
be exclusive of any other remedy and each and every such
remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at
law or in equity or by statute or otherwise.
8.4. Remedies Not Waived. No course of dealing
between the Company and you or the holder of any Note and no
delay or failure in exercising any rights hereunder or under
any Note in respect thereof shall operate as a waiver of or
otherwise prejudice any of your rights or the rights of any
holder of any Note.
8.5. Annulment of Acceleration of Notes. The
provisions of Section 8.1 are subject to the condition that
if the principal of, Makewhole Amount, if any, and accrued
interest on all outstanding Notes shall have been declared
immediately due and payable (other than by reason of an
Event of Default of the character described in clause (a) or
(b) of Section 8.1), the holders of at least 66 2/3% in
aggregate unpaid principal amount of the Notes then
outstanding may, by written instrument filed with the
Company, rescind and annul such declaration and the
consequences thereof; provided, however, that at the time
such declaration is annulled and rescinded:
(a) no judgment or decree shall have been entered
for the payment of any money due pursuant to the Notes or
this Agreement;
(b) all arrears of principal, Makewhole Amount, if
any, and interest upon all of the Notes and all other
sums payable under the Notes and under this Agreement
(including costs and expenses of the holders incurred in
connection with such notice under Section 8.1 and the
exercise of remedies under Section 8.2, but excluding any
principal, interest or Makewhole Amount on the Notes
which has become due and payable by reason of such notice
under Section 8.1) shall have been duly paid; and
(c) each and every other Default and Event of
Default shall have been remedied or waived pursuant to
Section 12 or otherwise made good or cured;
and provided, further, that no such rescission and annulment
shall extend to or affect any subsequent Default or Event of
Default or impair any right consequent thereon.
9. DEFINITIONS AND CONSTRUCTION.
9.1. Defined Terms. Except as otherwise specified
or as the context may otherwise require, the following terms
have the respective meanings set forth below whenever used
in this Agreement (terms defined in the singular to have a
correlative meaning when used in the plural and vice versa):
Acquired: when used with reference to the
acquisition and/or construction of Operating Property by the
Company or a Restricted Subsidiary, the Company or a
Restricted Subsidiary shall be deemed to have "Acquired" a
particular piece of Operating Property as of the date such
Operating Property is placed into operation by the Company
or such Restricted Subsidiary; provided, however, that in no
event shall any piece of Operating Property be deemed to
have been acquired by the Company or a Restricted Subsidiary
until the later of (i) the date of acquisition of such
Property from a third party (including an Unrestricted
Subsidiary) and (ii) the date of completion of original
construction thereof or, if applicable, the date of
completion of substantial reconstruction, renovation,
remodeling or expansion thereof.
Affiliate: with respect to any designated Person,
any other Person (a) directly or indirectly through one or
more intermediaries controlling or controlled by or under
direct or indirect common control with such designated
Person, (b) which beneficially owns or holds 5% or more of
the shares of any class of Voting Stock (or in the case of
a Person which is not a corporation, 5% or more of the
equity interest) of such designated Person, (c) 5% or more
of any class of the Voting Stock (or in the case of a Person
which is not a corporation, 5% or more of the equity
interest) of which is beneficially owned or held by such
designated Person or (d) who is an officer or director of
such designated Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used
with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person,
whether through the ownership of Voting Stock or by contract
or otherwise.
After-Acquired Operating Property: all Operating
Property which is Acquired by the Company or a Restricted
Subsidiary after the Closing Date.
Agreement: this Agreement as the same may be
hereafter amended from time to time pursuant to the
provisions hereof.
Approvals: as defined in Section 2.8.
Attributable Asset: as of any date of
determination, any property or asset which prior to such
date had been owned by the Company or any Restricted
Subsidiary and which as of such date is subject to a Sale-
Leaseback.
Attributable Debt: in respect of any Sale-
Leaseback, as at any date of determination, an amount equal
to (i) the present value (discounted at the rate of interest
used by the lessee under such Sale-Leaseback at the date
such Sale-Leaseback is entered into to determine whether the
applicable lease should be classified under GAAP as a
Capital Lease or an operating lease) of the obligation of
the lessee for net rental payments during the remainder of
the Initial Term of such Sale-Leaseback lease minus (ii) the
aggregate amount of Utilized Proceeds from the sale or other
disposition of the property or asset subject to such Sale-
Leaseback. As used in this definition, "net rental
payments" under any lease for any period means the sum of
such rental and other payments required to be paid in such
period by the lessee thereunder, but excluding, however, any
amount required to be paid by such lessee (whether or not
designated as rent or additional rent) on account of
maintenance and repairs, insurance, taxes, assessments,
water rates or similar charges required to be paid by such
lessee thereunder or any amounts required to be paid by such
lessee thereunder contingent upon the amount of sales or any
amount payable by such lessee as ground rentals on land
owned by a Person other than the lessor under the Sale-
Leaseback lease.
Board of Directors: the Board of Directors of the
Company or a duly authorized committee of directors lawfully
exercising the relevant powers of such Board of Directors.
Business Day: any day other than a Saturday, Sunday
or any other day on which commercial banks are required or
authorized by law or regulation to be closed in New York,
New York.
Business or Condition: of any Person, the business,
operations, assets, properties, earnings, condition
(financial or other) or reasonably foreseeable prospects of
such Person, provided that such term, when used without
reference to any particular Person, shall mean the Business
or Condition of the Company and its Restricted Subsidiaries
taken as a whole.
Capital Base: at any date of determination,
Consolidated Shareholders' Equity of the Company, less the
sum of (i) the aggregate amount of all outstanding advances
by the Company to, and investments of the Company in,
Unrestricted Subsidiaries, (ii) the value of all treasury
stock carried as an asset by the Company or any Subsidiary
the equity of which is included in the Consolidated
Shareholders' Equity and (iii) the aggregate amount of all
general intangibles (including, without limitation,
goodwill, franchises, licenses, patents, trademarks, trade
names, copyrights, service marks, brand names and corporate
organization expense) of the Company and its Restricted
Subsidiaries; provided, however, that the following shall
not be considered a general intangible asset of the Company
and its Restricted Subsidiaries for purposes of this
definition: (v) assets under Capital Leases, (w) prepaid
expenses (including, without limitation, prepaid pension
costs and prepaid royalties) and other costs or expenditures
which under GAAP are capitalized and amortized over the
periods to which such costs or expenditures relate
(including, without limitation, unamortized deferred
marketing acquisition costs, unamortized customer service
contract costs and unamortized system development costs),
(x) the unamortized balance of the value at June 23, 1988 of
insurance licenses of the Company's insurance Subsidiaries
(which amount does not exceed $9,000,000 as of the date
hereof), (y) the unamortized balance of the value at June
23, 1988 of marketing rights of the Company and its
Subsidiaries (which amount does not exceed $18,000,000 as of
the date hereof), all as determined in accordance with GAAP
and (z) all goodwill arising out of the acquisition by the
Company of all the stock of LMR Acquisition Corporation and
its wholly-owned subsidiary, Lechmere (including any
goodwill on the books of LMR Acquisition Corporation and
Lechmere at the time of such acquisition by the Company)
pursuant to the Agreement and Plan of Merger dated March 17,
1994 by and among the Company, MW Merger Corp., LMR
Acquisition Corporation, Lechmere and the stockholders of
LMR Acquisition Corporation who became parties thereto
(which amount does not exceed $120,000,000 as of the date
hereof), as heretofore and hereafter amended, all as
determined in accordance with GAAP.
Capital Lease: as applied to any Person, any lease
of any property (whether real, personal or mixed) by such
Person as lessee which would, in accordance with GAAP, be
required to be classified and accounted for as a capital
lease on the balance sheet of such Person, other than, in
the case of the Company or any Restricted Subsidiary, any
such lease under which the Company or a Wholly Owned
Restricted Subsidiary is the lessor.
Capital Lease Obligation: as at any date, with
respect to any Capital Lease, the amount of the obligation
of the lessee thereunder which would, in accordance with
GAAP, appear on a balance sheet of such lessee in respect of
such Capital Lease.
Closing: as defined in Section 1.3.
Closing Date: as defined in Section 1.3.
Code: the Internal Revenue Code of 1986, as
amended, and any successor statute thereto, as interpreted
by the rules and regulations issued thereunder, in each case
as in effect from time to time.
Commercial Letters of Credit: any letter of credit
or similar instrument issued by a bank for the purpose of
providing the primary payment mechanism in connection with
the purchase of any materials or goods by the Company or any
of its Restricted Subsidiaries in the ordinary course of
business of the Company or such Restricted Subsidiary.
Commission: the Securities and Exchange Commission
and any other similar or successor agency of the Federal
government administering the Securities Act and the Exchange
Act.
Company: as defined in the opening paragraph of
this Agreement.
Company Group Member: the Company, each Subsidiary,
and each of their respective predecessors and (a) each
corporation that is or was at any time a member of the same
controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Company or any
Subsidiary, or any of their respective predecessors, (b)
each trade or business, whether or not incorporated, that is
or was at any time under common control (within the meaning
of Section 414(c) of the Code) with the Company or any
Subsidiary, or any of their respective predecessors, and (c)
each trade or business, whether or not incorporated, that is
or was at any time a member of the same affiliated service
group (within the meaning of Sections 414(m) and (o) of the
Code) as the Company or any Subsidiary, or any of their
respective predecessors; provided, however, that the term
"Company Group Member" shall not include any corporation or
trade or business for any period during which the
termination or withdrawal from any employee pension benefit
plan (as defined in Section 3(2) of ERISA) by such
corporation or trade or business could not subject the
Company or any Subsidiary of the Company to any liability
under the Code or ERISA.
Company Premises: real property in which the
Company, any Subsidiary, or any Person which has at any time
been a Subsidiary at any time has or ever had any direct or
indirect interest, including, without limitation, ownership
thereof, or any arrangement for the lease, rental or other
use thereof, or the retention or claim of any mortgage or
security interest therein or thereon.
Conditional Sale Obligation: with respect to any
Person, any amounts payable by such Person which are
required by GAAP to be reflected as liabilities on such
Person's balance sheet with respect to agreements for the
purchase of real property or other tangible fixed assets on
extended deferred payment terms covering a period of one
year or more, but excluding any agreements under which the
asset being acquired is classified as an asset under a
capital lease rather than as an asset which is owned in
accordance with GAAP.
Consolidated Net Income: for any period, the net
income (or deficit) of the Company and its Subsidiaries for
such period (taken as a cumulative whole) determined in
accordance with GAAP on a consolidated basis, after
deducting portions of income properly attributable to
outside minority interests, if any, in the stock and surplus
of any Subsidiary.
Consolidated Shareholders' Equity: as at any date
of determination, shareholders' equity of the Company,
determined in accordance with GAAP on a consolidated basis
but excluding, in any event, all amounts attributable to any
issued and outstanding Debt-Like Preferred Stock of the
Company.
Consolidated Total Assets: as of any date of
determination, assets of the Company and its Restricted
Subsidiaries determined in accordance with GAAP on a
consolidated basis.
Continuing Revolving Loans: of any Person, as of
any date as of which the amount thereof is to be determined,
the lowest aggregate principal amount of Revolving Loans at
or below which such Person's Revolving Loans were maintained
for a period of at least 30 consecutive days occurring
within the thirteen-month period immediately preceding such
date of determination.
Credit Agreement: as defined in Section 7.15.
Credit Lyonnais Lease: as defined in Section 7.15.
Debt-Like Preferred Stock: any class of stock of
the Company or any Subsidiary which by its terms (i) has any
of the following characteristics: (x) it is redeemable at
a fixed or determinable date or dates, whether by operation
of a sinking fund or otherwise, (y) it is redeemable at the
option of the holder; or (z) it has conditions for
redemption which are not solely within the control of the
issuer, such as stock which must be redeemed out of future
earnings, and (ii) is validly and effectively made
subordinate and junior in right of payment to the Notes in
the event of the occurrence and continuance of any Event of
Default.
Default: any condition or event which, with notice
or lapse of time or both, would become an Event of Default.
Default Rate: with respect to any series of Notes,
the greater of (a) the sum of the interest rate borne by
such series of Notes plus 2% and (b) the sum of the prime
rate announced from time to time by Citibank N.A. at its
principal office in New York, New York plus 2%.
Environmental Claims: as defined in Section 7.19.
Environmental Law: any past, present or future
Federal, state, local or foreign statutory or common law to
which the Company or any of its Subsidiaries is subject, or
any regulation, ordinance, code, plan, Order, permit, grant,
franchise, concession, restriction or agreement issued,
entered, promulgated or approved thereunder, relating to (a)
the environment, human health or safety, including, without
limitation, emissions, discharges, releases or threatened
releases of Hazardous Substances into the environment
(including, without Limitation, air, surface water,
groundwater or land), or (b) the manufacture, generation,
refining, processing, distribution, use, sale, treatment,
receipt, storage, disposal, transport, arranging for
transport, or handling of Hazardous Substances.
Environmental Permits: collectively, any and all
permits, consents, licenses, approvals and registrations of
any nature at any time required pursuant to or in order to
comply with any Environmental Law.
ERISA: the Employee Retirement Income Security Act
of 1974, as amended, and any successor statute thereto as
interpreted by the rules and regulations thereunder, all as
the same may be in effect from time to time. References to
sections of ERISA shall be construed also to refer to any
successor sections.
Event of Default: as defined in Section 8.1.
Exchange Act: the Securities Exchange Act of 1934,
or any similar Federal statute, and the rules and
regulations of the Commission thereunder, all as the same
may be in effect from time to time.
Excluded Claimed Default: any claimed default or
event of default under (a) any Capital Lease under which the
Company or any Restricted Subsidiary is a lessee or (b) any
Guaranty given by the Company or a Restricted Subsidiary
with respect to the performance by the lessee of its
obligations under a Capital Lease which in any such case
occurs in connection with a good faith dispute the Company
or such Restricted Subsidiary, as applicable, has with the
lessor thereunder and with respect to which the Company or
such Restricted Subsidiary has made such reserve or other
appropriate provision, if any, in the amounts and of the
types as is required therefor in connection with GAAP (or,
if no such reserve or other provision is required under
GAAP, such reserve or other provision as shall be deemed by
the Company to be adequate therefor).
Existing Asset Pool: those assets owned by the
Company or any Restricted Subsidiary on March 1, 1993 which
were not, as of such date, subject to any Lien thereon
securing any Indebtedness for Borrowed Money of the Company
or any Restricted Subsidiary.
FAS 106 Adjustment Factor: as at of date of
determination, the dollar amount set forth below opposite
the Fiscal Year in which such date occurs:
Fiscal Year FAS 106 Adjustment
Factors
1995 Fiscal Year $60,000,000
1996 Fiscal Year 45,000,000
1997 Fiscal Year 30,000,000
1998 Fiscal Year 15,000,000
1999 Fiscal Year and each 0
Fiscal Year thereafter
Fiscal Quarter: a fiscal quarter of any Fiscal
Year.
Fiscal Year: a fiscal year of the Company which
in no event shall be a period in excess of 53 weeks and
which, as of the date hereof, begins on the Sunday following
the Saturday closest to December 31 of any calendar year and
ends on the Saturday closest to December 31 of the next
succeeding calendar year.
Funded Debt: as applied to any Person, as at any
date of determination, all Indebtedness for Borrowed Money
of such Person which by its terms matures more than one year
from the date as of which Funded Debt is being determined
thereof (or, in the case of all Indebtedness for Borrowed
Money of such Person consisting of Debt-Like Preferred Stock
issued by such Person, all such Debt-Like Preferred Stock
which is either redeemable more than one year from the date
as of which Funded Debt is being determined or redeemable on
a date which cannot be determined as of such date of
determination) plus such Person's Continuing Revolving
Loans; provided, however, that in no event shall the term
"Funded Debt" include with respect to any Person: (i) any
such Indebtedness for Borrowed Money for the payment or
redemption of which at maturity or on a redemption date the
necessary sums have been indefeasibly deposited in trust and
which such Person is entitled, in accordance with GAAP, to
exclude from its balance sheet, (ii) any portion of
Indebtedness for Borrowed Money which is redeemable through
any sinking fund payment and is included in current
liabilities of such Person pursuant to GAAP, (iii) any
portion of any Indebtedness for Borrowed Money which is
required by the terms thereof to be paid within one year
from such date or on demand, (iv) any Indebtedness for
Borrowed Money maturing in less than one year (even though
such Indebtedness for Borrowed Money is by its terms
renewable at the option of the obligor to a date more than
one year from such date of determination) which is secured
by such Person's customer receivables in accordance with the
provisions of Section 6.4(c); and (v) such Person's
outstanding Revolving Loans to the extent that such
Revolving Loans are not Continuing Revolving Loans unless
and to the extent that (x) such Revolving Loans are required
under GAAP to be classified on such Person's balance sheet
as long term debt or (y) such Person may under GAAP elect,
and actually does elect, to treat such Revolving Loans as
long term debt on its balance sheet.
GAAP: generally accepted accounting principles as
from time to time set forth in the opinions of the
Accounting Principles Board of the American Institute of
Certified Public Accountants and in statements by the
Financial Accounting Standards Board or in such opinions and
statements of such other entities as shall be deemed to be
encompassed within the definition of "generally accepted
accounting principles" in statements or opinions issued by
the Auditing Standards Board of the American Institute of
Certified Public Accountants.
Governmental Body: any Federal, state, municipal,
local or other governmental department, commission, board,
bureau, agency, instrumentality, political subdivision or
taxing authority, of any country.
Guaranty: as applied to any Person, any direct or
indirect liability, contingent or otherwise, of such Person
with respect to any indebtedness, lease, dividend or other
obligation of another, including, without limitation, any
such obligation directly or indirectly guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary
course of business) or discounted or sold with recourse
(including receivables) by such Person, or in respect of
which such Person is otherwise in any manner directly or
indirectly liable, including, without limitation, any such
obligation in effect guaranteed by such Person through any
stand-by letter of credit with respect to which such Person
is the account party or any agreement (contingent or
otherwise) to (a) purchase, repurchase or otherwise acquire
such obligation, or (b) provide funds for the payment or
discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or
otherwise), or (c) maintain the solvency or any balance
sheet or other financial condition of the obligor of such
obligation, or (d) make payment for any products, materials
or supplies or for any transportation or services regardless
of the non-delivery or non-furnishing thereof, in any such
case if the purpose or intent of such agreement is to
provide assurance that such obligation will be paid or
discharged, or that any agreements relating thereto will be
complied with, or that the holders of such obligation will
be protected against loss in respect thereof, provided,
that in no event shall any recourse obligation of the
Company under the MWCC Receivables Purchase Agreement or any
other agreement pursuant to which the Company or any
Restricted Subsidiary sells customer receivables and the
proceeds thereof constitute a "Guaranty" by the Company of
such receivables. For the purposes of the foregoing
sentence a transaction involving the transfer of customer
receivables and the net proceeds thereof which transfer
under GAAP is treated as sale shall conclusively be deemed
a sale. For purposes of all computations made under this
Agreement the amount of any Guaranty shall be equal to the
amount of the obligation guaranteed or, if not stated or
determined, the maximum reasonably anticipated liability in
respect thereof (assuming such Person is required to perform
thereunder) as determined by such Person in good faith.
Hazardous Substances: collectively, contaminants;
pollutants; toxic or hazardous chemicals, substances,
materials, wastes and constituents; petroleum products;
polychlorinated biphenyls; medical wastes; infectious
wastes; asbestos; paint containing lead; and urea formaldehyde.
Incurrence Date: as defined in Section 6.3.
Indebtedness for Borrowed Money: as applied to
any Person, as of any date as of which the amount thereof is
to be determined, all of the following obligations of such
Person which would, in accordance with GAAP, be classified
on a balance sheet of such Person prepared as of such date
as such obligations (without duplication):
(a) all indebtedness of such Person for borrowed
money, including without limitation, any such
indebtedness evidenced by bonds, debentures, notes,
drafts or similar instruments;
(b) all indebtedness secured by any mortgage,
security agreement, deed of trust, or the equivalent
thereof on property owned by such Person even though
such Person has not assumed or become liable for the
payment of such indebtedness;
(c) all Conditional Sale Obligations of such
Person;
(d) all Debt-Like Preferred Stock issued by such
Person;
(e) all Capital Lease Obligations; and
(f) all Guaranties by such Person of or with
respect to obligations of the character referred to in
the foregoing clauses (a) through (e) of another
Person, provided, that any retained contingent
liability of such Person with respect to a Capital
Lease under which such Person was a lessee which has
been assigned to a new lessee shall not constitute
Indebtedness for Borrowed Money of such Person except
to the extent, if any, that such Person has set aside
a reserve on its books with respect to such retained
contingent liability;
provided, however, that in determining the Indebtedness for
Borrowed Money of any Person, (i) any of the above listed
obligations for which such Person is jointly and severally
liable with one or more other Persons (including, without
limitation, all such obligations of any partnership or joint
venture of which such Person is a general partner or co-
venturer (other than obligations which by law or by their
terms are non-recourse against such Person)) shall be
included at the full amount thereof without regard to any
right such Person may have against any such other Persons
for contribution or indemnity, and (ii)(x) the obligations
of a lessee under a lease (other than a Capital Lease), and
(y) any Indebtedness for Borrowed Money incurred by such
Person which by the terms of the related agreement is
required to be used to retire a payment obligation to a
trade creditor arising from the purchase by such Person of
goods and services acquired for the purpose of resale in the
ordinary course of such Person's business shall not
constitute Indebtedness for Borrowed Money and (iii)
indebtedness described in clause (b) above in excess of the
higher of the fair market value (determined in good faith by
the Company) and the net book value (determined in
accordance with GAAP) of the property securing such
indebtedness shall be excluded from the definition of
"Indebtedness for Borrowed Money"; and provided, further,
that, in no event shall any indebtedness of the character
described in clause (b) above constitute Indebtedness for
Borrowed Money for purposes of Section 8.1(e)).
Initial Term: the original base term of a lease
(including any period for which such lease has been extended
or may, at the option of the lessor, be extended) but
excluding any period or periods for which the lessee shall
have the right to extend the term of such lease, all as
determined at the time of the execution of such lease.
Insignificant Subsidiaries: as at any date of
determination, any Restricted Subsidiary (i) with assets
that constitute one percent (1%) or less of Consolidated
Total Assets as of such date, (ii) with net income for its
most recently completed Fiscal Year that constitutes one
percent (1%) or less of Consolidated Net Income for such
Fiscal Year, and (iii) with equity of less than $4,000,000.
Lechmere: Lechmere, Inc., a Massachusetts
corporation.
Licenses: as defined in Section 7.10.
Lien: as to any Person, any mortgage, lien
(statutory or other), pledge, assignment, hypothecation,
charge, security interest or other encumbrance in or on, or
any interest or title of any vendor, lessor, lender or other
secured party to or of such Person under any conditional
sale, trust receipt or other title retention agreement or
Capital Lease with respect to, any property or asset of such
Person, or the signing or filing of a financing statement
which names such Person as debtor, or the signing of any
security agreement authorizing any other party as the
secured party thereunder to file any financing statement
which names such Person as debtor. For purposes of this
Agreement, a Person shall be deemed to be the owner of any
property which it has placed in trust for the benefit of
holders of Indebtedness for Borrowed Money of such Person
which Indebtedness for Borrowed Money is deemed to be
extinguished under GAAP but for which such Person remains
legally liable, and such trust shall be deemed to be a Lien,
provided that if such property has been placed in trust to
enable such Person to secure the release of real property
owned by such Person free and clear of all Liens on such
real property in favor of the holders of such Indebtedness
for Borrowed Money securing the payment thereof, and such
release is in fact so effected as of the placing of such
property in trust, such trust shall not be deemed to be a
Lien and the Person who places such property in such trust
shall not be deemed to be the owner of the property placed
therein.
Makewhole Amount: applicable in respect of any
prepayment of all or any portion of the principal amount of
any Note pursuant to Section 3.2 or the acceleration of the
payment of the principal amount of any Note under certain
circumstances described in Section 8.1 (such prepaid or
accelerated principal amount of any Note being hereinafter
referred to as the "Prepaid Principal"), the greater of (a)
zero and (b) the excess of:
(i) the sum of the respective present values as
of the date such Makewhole Amount becomes due and
payable of: (A) each prepayment of principal, if any,
required to be made with respect to such Prepaid
Principal during the remaining term to maturity of the
Notes, (B) the payment of principal balance required to
be made at final maturity with respect to such Prepaid
Principal, and (C) each payment of interest which would
be required to be paid during the remaining term to
maturity of the Notes with respect to such Prepaid
Principal from time to time outstanding, determined, in
the case of each such required prepayment, principal
payment at final maturity and interest payment, by
discounting the amount thereof (on a semiannual basis)
from the date fixed therefor back to the date such
Makewhole Amount becomes due and payable at the
Reference Rate (assuming for such purpose that all such
payments and prepayments of principal and payments of
interest with respect to such Prepaid Principal were
made when due pursuant to the terms thereof and hereof,
and that no other payment or prepayment with respect to
such Prepaid Principal was made),
over
(ii) the amount of such Prepaid Principal.
For purposes hereof, the "Reference Rate" applicable in
respect of any Note shall mean a per annum rate equal to the
sum of (i) .50% plus (ii) the Treasury Rate.
Material Adverse Change; Material Adverse Effect;
Materially Adverse: in, on or to, as appropriate, any
Person, a material adverse change in such Person's Business
or Condition, a material adverse effect on such Person's
Business or Condition or an event which is materially
adverse to such Person's Business or Condition; provided
that, any such term, when used without reference to any
particular Person, shall mean such change in or effect on or
event adverse to, as the case may be, the Company and its
Restricted Subsidiaries taken as a whole.
Memorandum: as defined in Section 7.4.
Mobil: as defined in Section 7.11.
Multiemployer Plan: a plan defined as such in
Section 3(37) of ERISA with respect to which any Company
Group Member is making or incurring an obligation to make
contributions or could otherwise incur any liability under
the Code or ERISA.
Multiple Employer Plan: a Plan to which any
Company Group Member, and at least one employer other than
a Company Group Member, (i) is making or incurring an
obligation to make contributions or (ii) has made or
incurred an obligation to make contributions and with
respect to which any Company Group Member could incur any
liability under the Code or ERISA.
MWCC: Montgomery Ward Credit Corporation, a
Delaware corporation.
MWCC Receivables Purchase Agreement: the Account
Purchase Agreement between MWCC and the Company, together
with the Guaranty made by General Electric Capital
Corporation of MWCC's obligations under such Account
Purchase Agreement, both dated as of June 24, 1988, as
heretofore amended and as the same may hereafter be amended,
modified or supplemented from time to time in accordance
with the terms hereof and thereof.
1993 Note Purchase Agreements: as defined in
Section 7.15.
Note Purchasers: as defined in Section 1.2(b).
Note Register: as defined in Section 10.1.
Notes: as defined in Section 1.1.
Officers' Certificate: a certificate executed on
behalf of the Company by two Responsible Officers, at least
one of whom shall be its Chief Financial Officer, Treasurer
or an Assistant Treasurer.
Operating Property: all real property, including
the improvements thereon (other than equipment or fixtures),
owned by the Company or a Restricted Subsidiary and
constituting a store, warehouse, distribution center or
tire, battery and automotive accessory and service center
located within the United States.
Order: any order, writ, injunction, decree,
judgment, award, determination, direction or demand.
Other Purchasers: as defined in Section 1.2(b).
outstanding: when used with reference to the
Notes as of a particular time, all Notes theretofore issued
as provided in this Agreement, except (a) Notes theretofore
reported as lost, stolen, damaged or destroyed, or
surrendered for transfer, exchange or replacement, in
respect of which replacement Notes have been issued, (b)
Notes theretofore paid in full, and (c) Notes theretofore
canceled by the Company or delivered to the Company for
cancellation; provided, however, that, for the purpose of
determining whether holders of the requisite principal
amount of the Notes have made or concurred in any amendment,
waiver, consent, approval, declaration, notice or other
communication under this Agreement, Notes owned by the
Company, any Subsidiary of the Company or any Affiliates
thereof shall not be deemed to be outstanding.
Parent: Montgomery Ward Holding Corp., a Delaware
corporation, and, on the date of this Agreement, the holder
of 100% of the outstanding Voting Stock of the Company, and
its successors and assigns.
PBGC: the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and
any successor thereof.
Person: any individual, corporation, association,
partnership, joint venture, trust or estate, organization,
business, government or agency or political subdivision
thereof, or any other entity.
Placement Agents: as defined in Section 7.4.
Plan: any employee pension benefit plan (as
defined in Section 3(2) of ERISA) maintained by any Company
Group Member or with respect to which any Company Group
Member could otherwise incur any liability under the Code or
ERISA.
Prepaid Principal: as defined in the definition
of the term "Makewhole Amount."
Priority Debt: without duplication, any of (i)
Indebtedness for Borrowed Money of any Restricted Subsidiary
(other than Indebtedness for Borrowed Money of any
Restricted Subsidiary owing to the Company or to a Wholly
Owned Restricted Subsidiary), (ii) Indebtedness for Borrowed
Money secured by a Lien on the assets of the Company or any
Restricted Subsidiary other than Liens permitted under
clauses (c) through (r) of Section 6.4 and (iii)
Attributable Debt in respect of all Sale-Leasebacks entered
into after the date of this Agreement.
Reference Rate: as defined in the definition of
the term "Makewhole Amount."
Reportable Event: any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder,
other than those events as to which the thirty-day notice
requirement of such section or such regulations is waived
under subsection .13, .14, .15, .18, .19, or .20 of PBGC
Reg. Section 2615.
Responsible Officer: the Chief Executive Officer,
the Chief Financial Officer, the Treasurer, any Assistant
Treasurer of the Company and any Person, regardless of
title, who shall at any time either (i) perform the same
duties as are performed on the date hereof by any of the
foregoing officers or (ii) be charged with responsibility
for monitoring or administering the Company's compliance
with this Agreement.
Restricted Payment: (a) any payment or
distribution or the incurrence of any liability to make any
payment or distribution, in cash, property or other assets
(other than shares of any class of capital stock of, or
other equity interest in, the Company (other than Debt-Like
Preferred Stock)) upon or in respect of any share of any
class of capital stock of, or other equity interest in, the
Company (other than Debt-Like Preferred Stock) or any
warrants, rights or options evidencing a right to purchase
or acquire any such shares of capital stock of, or other
equity interest in, the Company, including, without limiting
the generality of the foregoing, payments or distributions
as dividends and payments or distributions for the purpose
of purchasing, acquiring, retiring or redeeming any such
shares of stock or other equity interest or any warrants,
rights or options to purchase or acquire any such shares of
stock or other equity interest or making any other
distribution in respect of any such shares of stock (or any
warrants, rights or options evidencing a right to purchase
or acquire any such shares of stock or other equity
interest) and (b) any loan or advance made by the Company or
any Restricted Subsidiary to the Parent. Notwithstanding
the foregoing, in no event shall any payment by the Company
of amounts required to be paid pursuant to any tax sharing
or tax allocation arrangement constitute a Restricted
Payment for purposes of this Agreement so long as, subject
to the effect of reasonably calculated payments of estimated
tax (it being understood that any excess of such estimated
tax payments for any taxable period over the payment
limitation described below for such period will be returned
to the Company), the amount paid by the Company and its
Subsidiaries pursuant to any such tax sharing or tax
allocation arrangement for any taxable period shall not
exceed the excess of the aggregate tax liability, including
interest and penalties, if any, of the Company and its
Subsidiaries for such period and all prior periods with
respect to which the Company and such Subsidiaries filed
consolidated federal income tax returns with the Parent
(calculated as if the Company, together with such
Subsidiaries, had been filing on a consolidated return basis
as a separate affiliated group for the then current taxable
period and all prior periods and after giving effect to the
adjustments contemplated by Treas. Reg. Section 1.1552-
1(a)(2)(ii)(a)-(i)) over the net amount paid (with
appropriate adjustment for tax refunds from the government
not yet received) by the Company and its Subsidiaries
pursuant to any such tax sharing or tax allocation
arrangements for all taxable periods ending prior to the
beginning of the then current taxable period with respect to
which the Company and such Subsidiaries filed consolidated
federal income tax returns with the Parent; provided,
however, that similar principles shall apply for state,
local and foreign income and franchise tax purposes where
tax liability is determined on a unitary basis or reportable
on a combined or consolidated return involving more than one
corporation.
Restricted Subsidiary: any Subsidiary of the
Company which is (a) listed as a Restricted Subsidiary on
Schedule II, (b) designated a Restricted Subsidiary after
the date hereof by resolution of the Board of Directors or
(c) designated a Restricted Subsidiary after the date hereof
by an officer of the Company authorized to make such
designation by the Board of Directors so long as, in each
case, such Subsidiary shall not have been, as of the
applicable date of determination, redesignated as an
Unrestricted Subsidiary by resolution of the Board of
Directors or by an officer of the Company authorized to make
such redesignation by the Board of Directors.
Revolving Loans: as applied to any Person, as of
any date as of which the amount thereof is to be determined,
all obligations of such Person in respect of Indebtedness
for Borrowed Money which, pursuant to the terms of a
revolving credit agreement or otherwise, is renewable or
extendible at the option of such Person for a period ending
more than one year after such date of determination.
Sale-Leaseback: any arrangement (other than a
Capital Lease) with any Person providing for the leasing by
the Company or any Restricted Subsidiary, as lessee, of any
asset which has been owned by the Company or such Restricted
Subsidiary, as the case may be, for a period in excess of
(a) with respect to any asset in the Existing Asset Pool
(including Unencumbered After-Acquired Assets which have
been substituted into the Existing Asset Pool as permitted
by the proviso to Section 6.3(f)(ii)(z)), 180 days, and (b)
with respect to any other asset of the Company or any
Restricted Subsidiary, three years, and which has been or is
to be sold or otherwise transferred by the Company or any
Restricted Subsidiary to such Person (or an Affiliate of
such Person) with the intention of entering into such a
lease, other than (i) in the case of the Company or any
Restricted Subsidiary, any such arrangement under which the
Company or a Wholly Owned Restricted Subsidiary is the
lessor or (ii) any such arrangement which has an Initial
Term of less than three years.
Securities Act: the Securities Act of 1933, or
any similar Federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in
effect from time to time.
Senior Funded Debt: as applied to any Person, as
of the date of determination thereof, all Funded Debt of
such Person which does not constitute Subordinated Debt or
Debt-Like Preferred Stock.
Series H Notes: as defined in Section 1.1(a).
Series I Notes: as defined in Section 1.1(b).
Series J Notes: as defined in Section 1.1(c).
Short Term Credit Agreement: as defined in
Section 7.15.
Signature: Signature Financial/Marketing, Inc.,
a Delaware corporation and a Subsidiary of the Company,
together with its Subsidiaries.
Subordinated Debt: all unsecured Indebtedness for
Borrowed Money incurred by the Company which (a) has a
Weighted Average Life to Maturity greater than that of the
Notes, (b) has a final maturity subsequent to July 15, 2005
and (c) is validly and effectively made subordinate and
junior in right of payment to the Notes pursuant to
subordination provisions (to which the holder of such
Indebtedness for Borrowed Money shall have agreed in writing
to be bound) contained in the instrument evidencing such
Indebtedness for Borrowed Money or under which the same is
outstanding (and to which appropriate reference shall be
made in the instrument evidencing such Indebtedness for
Borrowed Money) no less favorable to the holders of the
Notes than the subordination provisions which have been
approved in writing by the holders of not less than 66 2/3%
in aggregate unpaid principal amount of all the Notes then
outstanding.
Subsidiary: with respect to any Person, any
corporation more than 50% of the Voting Stock of which is at
the time owned by such Person and/or one or more of its
other subsidiaries. Unless otherwise specified, any
reference to a Subsidiary is intended as a reference to a
Subsidiary of the Company.
Successor: as defined in Section 6.8(b).
Successor Transaction: as defined in Section
6.8(b).
Sumitomo Lease: as defined in Section 7.15.
Termination Event: (a) with respect to any Plan,
the occurrence of a Reportable Event or an event described
in Section 4062(e) of ERISA, or (b) the withdrawal of any
Company Group Member from a Multiple Employer Plan during a
plan year in which it was a substantial employer (as such
term is defined in Section 4001(a)(2) of ERISA), or the
termination of a Multiple Employer Plan, or (c) the
distribution of a notice of intent to terminate a Plan or
Multiemployer Plan pursuant to Section 4041(a)(2) or 4041A
of ERISA or the treatment of a Plan amendment as a
termination under Section 4041 or 4041A of ERISA, or (d) the
institution of proceedings to terminate a Plan or
Multiemployer Plan by the PBGC under Section 4042 of ERISA,
or (e) the complete or partial withdrawal of any Company
Group Member from a Multiemployer Plan.
this Agreement: this Note Purchase Agreement
(together with the Schedules and Exhibits hereto), as from
time to time amended, modified or supplemented in accordance
with its terms.
Total Capitalization: as at any date of
determination, equals (i) Total Senior Funded Debt as at
such date plus (ii) Total Subordinated Debt as at such date
plus (iii) Total Debt-Like Preferred Stock plus (iv) Capital
Base as at the end of the most recently completed Fiscal
Quarter plus (v) the FAS 106 Adjustment Factor plus (vi) any
repayments of loans or advances to Parent received by the
Company since the end of the most recently completed Fiscal
Quarter plus (vii) any capital contributions received by the
Company since the end of the most recently completed Fiscal
Quarter plus (viii) an amount equal to the net proceeds
received by the Company from the issue or sale after the end
of the most recently completed Fiscal Quarter of any shares
of its capital stock (including treasury stock but excluding
Debt-Like Preferred Stock) plus (ix) an amount equal to the
net proceeds from the issue or sale at any time of that
portion of any indebtedness (other than Subordinated Debt)
of the Company or any Restricted Subsidiary which after the
end of the most recently completed Fiscal Quarter is
converted into shares of capital stock (but excluding Debt-
Like Preferred Stock) of the Company or into indebtedness or
shares of capital stock of the Parent, plus (x) any decrease
since the end of the most recently completed Fiscal Quarter
in the aggregate amount of all advances by the Company to,
and investments of the Company in, Unrestricted Subsidiaries
other than any decrease resulting from any aggregate net
loss incurred by such Unrestricted Subsidiaries since the
end of the most recently completed Fiscal Quarter minus (xi)
any Restricted Payments made since the end of the most
recently completed Fiscal Quarter minus (xii) any increase
since the end of the most recently completed Fiscal Quarter
in the aggregate amount of all advances by the Company to,
and investments of the Company in, Unrestricted Subsidiaries
other than any increase resulting from any aggregate net
income of such Unrestricted Subsidiaries since the end of
the most recently completed Fiscal Quarter.
Total Debt-Like Preferred Stock: as at any date
of determination, the outstanding amount attributable to all
Debt-Like Preferred Stock of the Company, determined in
accordance with GAAP.
Total Funded Debt: as at any date of
determination, the aggregate principal amount of all Funded
Debt of the Company and its Restricted Subsidiaries
outstanding on such date, determined in accordance with GAAP
on a consolidated basis.
Total Senior Funded Debt: as at any date of
determination, the aggregate principal amount of all Senior
Funded Debt of the Company and its Restricted Subsidiaries
outstanding on such date, determined in accordance with GAAP
on a consolidated basis.
Total Subordinated Debt: as at any date of
determination, the aggregate principal amount of all
Subordinated Debt of the Company and its Restricted
Subsidiaries outstanding on such date, determined in
accordance with GAAP on a consolidated basis.
Treasury Rate: for purposes of any determination
of the Makewhole Amount in respect of any principal amount
of any Note, the yield to maturity for actively traded
marketable United States Treasury fixed interest rate
securities (with maturities equal to the remaining term to
maturity (rounded to the nearest month) of the Notes being
prepaid or paid as of the date of determination as set forth
on page "USD" of the Bloomberg Financial Markets Service
(or, if not available, any other nationally recognized
trading screen reporting on-line intraday trading in United
States Treasury fixed interest rate securities) at 9:00 A.M.
(New York City time) as of the Business Day preceding the
date of determination. In the event that no such nationally
recognized trading screen reporting on-line trading in
United States Treasury fixed interest rate securities is
available, "Treasury Rate" shall mean the arithmetic mean of
the yields under the respective headings "This Week" and
"Last Week" published in the Statistical Release under the
caption "Treasury Constant Maturities" for the maturity
corresponding to the remaining term to maturity (rounded to
the nearest month) of the Notes being prepaid or paid. For
the purposes of calculating the Treasury Rate, the most
recent Statistical Release published prior to the date of
determination of the Makewhole Amount shall be used. If no
possible maturity for United States Treasury fixed interest
rate securities exactly corresponds to such rounded term to
maturity, yields for the two most closely corresponding
published maturities shall be calculated and the Treasury
Rate shall be interpolated from such yields on a straight-
line basis, rounding in each of such relevant periods to the
nearest month.
Unencumbered After-Acquired Asset: Operating
Property of the Company or any Restricted Subsidiary which
is Acquired, and any other asset of the Company or any
Restricted Subsidiary which is acquired, by the Company or
such Subsidiary after March 1, 1993 and which is not, as of
the date of substitution thereof for an asset in the
Existing Asset Pool, subject to a Lien thereon securing any
Indebtedness for Borrowed Money of the Company or any
Restricted Subsidiary.
Utilized Proceeds: in respect of any Sale-
Leaseback, the aggregate amount of the net proceeds from the
sale or other disposition of any asset disposed of in
connection with such Sale-Leaseback which is applied, within
12 months after the sale or other disposition of such asset,
to (x) the purchase of income-generating assets (whether
new, additional or replacement property but exclusive of
property purchased in the ordinary course of regular upkeep
and maintenance) (including Operating Property) which can be
used by the Company and its Restricted Subsidiaries in the
conduct of the business permitted to be engaged in by the
Company and its Restricted Subsidiaries in accordance with
Section 6.10 or (y) the prepayment of Priority Debt.
Unrestricted Subsidiary: any Subsidiary of the
Company other than a Restricted Subsidiary.
Voting Stock: capital stock of a corporation the
holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate
directors (or persons performing similar functions) of such
corporation.
Weighted Average Life to Maturity: as applied to
any indebtedness at any date, the number of years (or
portions of years) obtained by dividing (a) the then
outstanding principal amount of such indebtedness into (b)
the total of the products obtained by multiplying (i) the
amount of each then remaining installment, sinking fund,
serial maturity or other required payment of principal,
including payment at final maturity, in respect thereof, by
(ii) the number of years (calculated to the nearest one-
twelfth) which will elapse between such date and the date on
which such payment is to be made.
Wholly Owned Subsidiary: any Restricted
Subsidiary all of the outstanding shares of capital stock
and other equity securities of any class or classes of
which, other than directors' qualifying shares, shall at the
time be owned by the Company either directly or through one
or more Wholly Owned Restricted Subsidiaries.
Wholly Owned Subsidiary: any Subsidiary all of
the outstanding shares of capital stock and other equity
securities of any class or classes of which, other than
directors' qualifying shares, shall at the time be owned by
the Company either directly or through one or more Wholly
Owned Subsidiaries.
9.2. Accounting Terms.
(a) Where the character or amount of any asset or
liability or item of income or expense is required to be
determined or any consolidation or other accounting
computation is required to be made for the purpose of this
Agreement, such determination or calculation shall, at any
time and to the extent applicable and except as otherwise
specified in this Agreement, be made in accordance with
GAAP, applied in the preparation of the audited consolidated
financial statements of the Company and its Subsidiaries as
at December 31, 1994, with (except as otherwise provided in
paragraph (b) of this Section 9.2) such changes thereto as
(i) shall be consistent with the then effective GAAP and
(ii) shall be concurred in by the independent certified
public accountants of recognized national standing
certifying any financial statements of the Company and its
Subsidiaries.
(b) Notwithstanding the provisions of paragraph
(a) of this Section 9.2, in the event of any changes in GAAP
as applied in preparing the audited financial statements of
the Company and its consolidated Subsidiaries as at December
31, 1994 which result in a change in the earnings of the
Company, Attributable Debt, Capital Base, Capital Lease
Obligations, Conditional Sales Obligations, Consolidated Net
Income, Consolidated Shareholders' Equity, Consolidated
Total Assets, Funded Debt, Indebtedness for Borrowed Money,
Priority Debt, Total Capitalization, Total Funded Debt or
Total Senior Funded Debt, such change (net of related tax
effects, if any) shall be added back to or subtracted from,
as the case may be, any determination of the earnings of the
Company, Attributable Debt, Capital Base, Capital Lease
Obligations, Conditional Sales Obligations, Consolidated Net
Income, Consolidated Shareholders' Equity, Consolidated
Total Assets, Funded Debt, Indebtedness for Borrowed Money,
Priority Debt, Total Capitalization, Total Funded Debt and
Total Senior Funded Debt, for the purpose of determining
whether or not the Company has complied with the covenants
contained in Sections 6.2, 6.3, 6.4(c), 6.4(t), 6.5, 6.8 and
6.9. In such event, there shall be included as a part of
the information provided pursuant to clause (ii) of Section
4(c) information in reasonable detail reconciling the
differences in the results of the calculations set forth
therein which would have resulted had GAAP in effect on the
date as of which such calculations were made, rather than
GAAP as in effect and applicable to the preparation of the
audited financial statements of the Company and its
Subsidiaries as at December 31, 1994, been applied in the
preparation thereof.
(c) The parties hereto recognize that the
covenant standards to be met by the Company in Sections 6.2,
6.3, 6.4(c), 6.4(t), 6.5, 6.8 and 6.9 were based upon GAAP
in effect at the time of the preparation of the audited
financial statements of the Company and its Subsidiaries as
at December 31, 1994. However, the parties hereto also
recognize that over time subsequent changes in GAAP may
result in differences in GAAP applied in the preparation of
financial statements prepared in accordance with
paragraph (a) of this Section 9.2, and GAAP applied in
determining the Company's compliance with Sections 6.2, 6.3,
6.4(c), 6.4(t), 6.5, 6.8 and 6.9 could cause an undue burden
on the Company in maintaining its records and preparing
calculations based on GAAP differing from those used in the
preparation of current financial statements of the Company
and may cause such financial statements and the calculations
used in determining covenant compliance to be unusually
confusing to the holders of the Notes. Therefore, in the
event such differences in the application of GAAP occur, the
parties agree that upon request of the Company or holders of
at least twenty percent (20%) in aggregate principal amount
of the Notes then outstanding, they will enter into
discussions with a view to amending the applicable
provisions of the Agreement equitably so as to allow the
determinations under Sections 6.2, 6.3, 6.4(c), 6.4(t), 6.5,
6.8 and 6.9 to be made, using then current GAAP, without
changing the original intent of the parties in establishing
the financial standards to be met by the Company. However,
no change in GAAP that would affect or could affect (for any
present or future period) the method of calculation of any
of said financial covenants, standards or terms shall be
given effect in such calculations until such provisions are
amended, in a manner satisfactory to the Company and the
holders of at least 66 2/3% in aggregate principal amount of
the Notes at the time outstanding, to so reflect such change
in GAAP.
10. REGISTRATION, TRANSFER AND EXCHANGE OF NOTES.
10.1. Note Register. The Company will keep,
at its office maintained pursuant to Section 6.11, a
register (the "Note Register") in which, at its expense, it
will provide for the registration and registration of
transfer of the Notes.
10.2. Transfer and Exchange. Whenever any
Note or Notes shall be surrendered at the office of the
Company referred to in Section 10.1 for exchange or for
registration of transfer, duly endorsed, or accompanied by
a written instrument of transfer duly executed, by the
registered holder of such Note or such holder's attorney
duly authorized in writing, the Company will, at its
expense, within five (5) Business Days, execute and deliver
in exchange therefor a new Note or Notes, as the case may
be, in denominations of at least $100,000 (except one Note
may be issued in a lesser principal amount if the unpaid
principal amount of the surrendered Note is not evenly
divisible by, or is less than, $100,000), as may be
requested by such holder or the transferee, in the same
aggregate unpaid principal amount as the aggregate unpaid
principal amount of the Note or Notes so surrendered. Each
such new Note shall be made payable to and registered in the
name of the Person or Persons requested by such holder. Any
Note issued in exchange for any other Note or upon transfer
thereof shall carry the rights to unpaid interest and
interest to accrue which were carried by the Note so
exchanged or transferred, and neither gain nor loss of
interest shall result from any such transfer or exchange.
10.3. Owners and Holders of Notes. The
Company and any agent of the Company may treat the Person in
whose name any Note is registered as the owner and holder of
such Note for the purpose of receiving payment of the
principal of and the interest on such Note and for all other
purposes whatsoever, whether or not such Note shall be
overdue.
11. LOST, ETC. NOTES. Upon receipt by the
Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of any Note, and (in
case of loss, theft or destruction) of indemnity or security
in form satisfactory to it, or, if mutilated, upon surrender
of such Note for cancellation, the Company will, at its
expense, within five (5) Business Days, issue and deliver in
lieu of such Note a new Note, of like tenor in a like unpaid
principal amount, dated so that there will be no loss of
interest on such lost, stolen, destroyed or mutilated Note.
Notwithstanding the foregoing provisions of this Section, if
any Note of which you are, or any other institutional holder
(or your or any such other holder's nominee) is the owner is
lost, stolen or destroyed, then your or such other holder's
(or your or its nominee's) written statement by an
authorized officer as to such loss, theft or destruction
shall be accepted as satisfactory evidence thereof, and no
indemnity or security shall be required as a condition to
the execution and delivery by the Company of a new Note in
lieu of such Note (or as a condition to the payment thereof,
if due and payable) other than your or such institutional
holder's unsecured written agreement to indemnify the
Company.
12. AMENDMENT AND WAIVER. (a) Any term,
provision, covenant, agreement or condition of this
Agreement or of the Notes may, with the written consent of
the Company, be amended or modified, or compliance therewith
may be waived (either generally or in a particular instance
and either retroactively or prospectively), by one or more
substantially concurrent written instruments signed by the
holder or holders of not less than 66 2/3% in aggregate
unpaid principal amount of all Notes at the time
outstanding; provided, that;
(i) no such amendment, modification or waiver
shall be effective prior to the Closing without your
consent and the consent of each of the Other
Purchasers;
(ii) no such amendment, modification or waiver
shall (A) change the principal of, or change the rate
of interest or change the time of payment of principal,
or premium, if any, or interest on any of the Notes,
(B) modify any of the provisions of this Agreement or
of the Notes with respect to the payment or prepayment
thereof (including, without limitation, amending or
modifying the definition of the term "Makewhole
Amount", "Prepayment Event", "Reference Rate" or
"Prepaid Principal") (other than, with respect to the
foregoing clauses (A) and (B), which may be deemed to
have occurred as a result of the rescission and
annulment of an acceleration of the Notes pursuant to
Section 8.5, with respect to which the provisions of
Section 8.5 shall govern), (C) change the percentage of
holders of Notes required to accelerate or rescind any
acceleration of the Notes, (D) amend the terms of the
proviso to clause (ii) of Section 8.1, or (E) modify
any provision of this Section, without the consent of
the holders of all Notes then outstanding; and
(iii) no such amendment, modification or
waiver shall extend to or affect any obligation not
expressly waived or impair any right consequent
thereon.
(b) Any amendment, modification or waiver
pursuant to this Section shall apply equally to all the
holders of the Notes and shall be binding upon them, upon
each future holder of any Note and upon the Company, in each
case whether or not a notation thereof shall have been
placed on any Note. Promptly after any amendment, modifica-
tion or waiver pursuant to this Section has become
effective, the Company shall deliver to each holder of a
Note a true and complete copy of the written instruments
pursuant to which such amendment, modification or waiver was
effected, signed by the holder or holders of the requisite
percentage of outstanding Notes and setting forth any such
amendment or modification or the terms of any such waiver.
(c) The Company will not, and will not permit any
of its Subsidiaries or Affiliates, directly or indirectly,
agree to or finalize negotiations with respect to any
proposed amendment, modification or waiver of any of the
provisions of this Agreement or the Notes unless each holder
of Notes (irrespective of the amount of Notes then owned by
it) shall be informed thereof by the Company and shall be
afforded the opportunity of considering the same and shall
be supplied by the Company with sufficient information to
enable it to make an informed decision with respect thereto.
The Company will not, and will not permit any of its
Subsidiaries or Affiliates, directly or indirectly, to offer
or pay any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, to any holder of
Notes in order to obtain such holder's consent to any
amendment, modification or waiver of any term or provision
of this Agreement or the Notes or any annulment or
rescission of acceleration pursuant to Section 8.5, unless
such remuneration or inducement is concurrently paid on the
same terms proportionately to each holder of Notes then
outstanding regardless of whether or not such holder
consents to such amendment, modification or waiver.
13. DIRECT PAYMENT. Notwithstanding anything to
the contrary in this Agreement or the Notes, so long as you
or any nominee designated by you shall be the holder of any
Note, the Company shall promptly and punctually pay all
amounts which become due and payable on such Note or
hereunder to you at your address and in the manner set forth
in Schedule I, or at such other place within the United
States of America and in such other manner as you may
designate for the purpose by notice to the Company, without
presentation or surrender of such Note or the making of any
notation thereon, except that any Note paid or prepaid in
full shall, following such payment or prepayment, be
surrendered to the Company for cancellation, upon its
written request therefor, at its office maintained pursuant
to Section 6.11 or at the place of payment specified in the
Notes. If any holder of any Note shall direct payment by
mail, anything in this Agreement to the contrary
notwithstanding, such payment shall be considered to be
timely made if deposited (posted and certification fees, if
any, prepaid) at least two Business Days prior to the due
date in the U.S. mail, provided that if such payment has not
been actually received on or prior to the due date then such
holder shall so notify the Company, in which case the
Company shall make arrangements to effect such payment
either by wire transfer on the same date of, or by mail
within two Business Days after, its receipt of such notice
and payment instructions and such payment so received shall
be deemed to be timely made. You agree that prior to the
sale, transfer or other disposition of any such Note, you
will make a notation thereon of the portion of the principal
amount paid or prepaid and the date to which interest has
been paid thereon, or surrender the same in exchange for a
Note or Notes aggregating the same principal amount as the
unpaid principal amount of the Note so surrendered. The
Company shall enter into an agreement similar to that
contained in the first sentence of this Section with any
other institutional holder of outstanding Notes (or nominee
thereof) who shall make with the Company an agreement
similar to that contained in the second sentence of this
Section.
14. LIABILITIES OF THE PURCHASER. Neither this
Agreement nor any disposition of any of the Notes shall be
deemed to create any liability or obligation on your part or
that of any other holder of any Note to enforce any
provision hereof or of any of the Notes for the benefit or
on behalf of any other Person who may be the holder of any
Note.
15. MISCELLANEOUS.
15.1. Expenses. Whether or not the
transactions contemplated hereby are consummated, the
Company shall: (a) directly pay the fees and disbursements
of special counsel and of any local counsel retained by the
holders of a majority in aggregate principal amount of the
Notes for any services rendered in connection with such
transactions or in connection with any actual or proposed
amendment, waiver or consent pursuant to the provisions
hereof, including, without limitation, any amendments,
waivers or consents resulting from any work-out, negotiation
or restructuring relating to the performance by the Company
of its obligations under this Agreement and the Notes
(whether or not the same becomes effective), and all other
expenses in connection therewith (including, without
limitation, document production and reproduction expenses
and the cost of obtaining private placement numbers from the
Standard & Poor's CUSIP Service Bureau); (b) reimburse you
for your out-of-pocket expenses in connection with such
transactions and the exercise of your rights hereunder, and
each such actual or proposed amendment, waiver or consent
pursuant to the provisions hereof (whether or not the same
becomes effective), and any items of the character referred
to in clause (a) which shall have been paid by you, and pay
the cost of transmitting Notes (insured to your
satisfaction) to you upon the issuance thereof; (c) pay, and
save you and each subsequent holder of any Note harmless
from and against, any and all liability and loss with
respect to or resulting from the nonpayment or delayed
payment of any and all placement fees and other liability to
pay any agent or finder in connection with the sale of the
Notes to you; and (d) pay all documentary, stamp or similar
taxes (including interest and penalties) which may be
payable in respect of the execution and delivery or issuance
(but not the transfer) of any of the Notes or of any
amendment of, or waiver or consent under or with respect to,
this Agreement or of any of the Notes and save you and all
subsequent holders of the Notes harmless against any loss or
liability resulting from nonpayment or delay in payment of
any such tax. The obligations of the Company under this
Section shall survive payment and transfer of any Notes.
15.2. Reliance on and Survival of
Representations. All agreements, covenants, representations
and warranties of the Company herein or of (or on behalf of)
the Company in any certificates or other instruments
delivered pursuant to this Agreement shall: (a) be deemed
to be material and to have been relied upon by you,
notwithstanding any investigation heretofore or hereafter
made by you or on your behalf, and (b) survive the execution
and delivery of this Agreement and the delivery of the Notes
to you and any investigation made at any time by you or on
your behalf or any disposition of any of the Notes.
15.3. Successors and Assigns. All covenants
and agreements in this Agreement by or on behalf of the
respective parties hereto shall bind and inure to the
benefit of their respective successors and assigns. The
provisions of this Agreement are intended to be for the
benefit of all holders from time to time of the Notes, and
shall be enforceable by any such holder, whether or not an
express assignment to such holder of rights under this
Agreement has been made by you or your successor or assign.
15.4. Notices. Unless otherwise expressly
provided in this Agreement, all notices, opinions and other
communications provided for in this Agreement shall be in
writing and delivered by hand or mailed, first class postage
prepaid, or sent by overnight courier, or by confirmed
telefax transmission (confirmed by hand-delivered, mailed or
overnight courier copy) addressed (a) if to the Company, to
Montgomery Ward & Co., Incorporated, Montgomery Ward Plaza,
844 N. Larrabee, Chicago, Illinois 60671, marked for the
attention of the Treasurer, with a copy addressed to
Montgomery Ward & Co., Incorporated, Montgomery Ward Plaza,
535 W. Chicago Ave., Chicago, Illinois 60671, marked for the
attention of the Secretary or, if such communication shall
be by facsimile transmission, to the attention of the
Treasurer, at (312) 467-7421 (with confirmation to be made
to the Treasurer at (312) 467-3242) and with a copy of such
communication to the Secretary at (312) 467-7898 (with
confirmation to be made to the Secretary at (312) 467-2230)
or at such other address or facsimile numbers as the Company
may hereafter designate by notice to each holder of any Note
at the time outstanding, or (b,) if to you, at your address
as set forth in Schedule I or, if such communication shall
be by facsimile communication, to the number designated for
such purpose in Schedule I (and with confirmation to be made
to the Person and at the number designated for such purpose
on Schedule I) or at such other address or facsimile number
as you may hereafter designate by notice to the Company, or
(c) if to any other holder of any Note, at the address of
such holder as it appears on the Note Register.
15.5. LAW GOVERNING. THIS AGREEMENT AND THE
NOTES AND ALL AMENDMENTS, SUPPLEMENTS, MODIFICATIONS,
WAIVERS AND CONSENTS RELATING HERETO OR THERETO SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.
15.6. SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL. THE COMPANY HEREBY CONSENTS TO THE JURISDICTION
OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF
NEW YORK, STATE OF NEW YORK, AND IRREVOCABLY AGREES THAT ALL
ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT OR THE
NOTES MAY BE LITIGATED IN SUCH COURTS, AND THE COMPANY
WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER
VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY
PROCEEDING IN ANY SUCH COURT AND WAIVES PERSONAL SERVICE OF
ANY AND ALL PROCESS UPON IT, AND CONSENTS THAT ALL SUCH
SERVICE OF PROCESS MAY BE MADE BY MAIL OR MESSENGER DIRECTED
TO IT AS PROVIDED IN SECTION 15.4 AND THAT SERVICE SO MADE
SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL
RECEIPT OR FIVE BUSINESS DAYS AFTER THE SAME SHALL HAVE BEEN
MAILED TO THE COMPANY IN ACCORDANCE HEREWITH. NOTHING
CONTAINED IN THIS SECTION SHALL AFFECT THE RIGHT OF ANY
HOLDER OF NOTES TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO BRING ANY ACTION OR PROCEEDING IN THE
COURTS OF ANY JURISDICTION AGAINST THE COMPANY OR TO ENFORCE
A JUDGMENT OBTAINED IN THE COURTS OF ANY OTHER JURISDICTION.
THE COMPANY ACKNOWLEDGES THAT THE TIME AND EXPENSE REQUIRED
FOR TRIAL BY JURY EXCEED THE TIME AND EXPENSE FOR A BENCH
TRIAL AND HEREBY WAIVES, TO THE EXTENT PERMITTED BY LAW,
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, THE NOTES OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
15.7. Headings, etc. The headings in this
Agreement are for convenience of reference only and shall
not limit or otherwise affect the meaning or construction of
any of the terms hereof.
15.8. Substitution of Purchaser. You shall
have the right to substitute a subsidiary wholly owned by
you as a Note Purchaser of any or all of the Notes to be
purchased by you on the Closing Date by written notice
delivered to the Company, which notice shall be signed by
you and such subsidiary and shall contain such subsidiary's
agreement to be bound by this Agreement; provided, however,
that such agreement may contain a statement to the effect
that such subsidiary at all times has the right to sell the
Notes being purchased by it to you. The Company agrees
that, upon the Company's receipt of such notice and except
to the extent otherwise specified therein, wherever the word
"you" is used in this Agreement (other than in this
Section), such word shall be deemed to refer to such
subsidiary in lieu of you. If any subsidiary has been
substituted as a Note Purchaser of any Notes and shall
subsequently transfer such Notes to you, then you will
thereafter be liable for all obligations and entitled to all
the rights and benefits of the purchaser of such Notes under
this Agreement.
15.9. Entire Agreement. This Agreement
embodies the entire agreement and understanding between you
and the Company and supersedes all prior agreements and
understandings relating to the subject matter hereof.
15.10. Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall
be an original, but all of which together shall constitute
one instrument.
15.11. Severability. Any provision of this
Agreement which shall be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or enforceability without
invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any
other jurisdiction.
<PAGE>
If you are in agreement with the foregoing, please
sign the form of acceptance on the accompanying counterparts
of this Agreement whereupon this Agreement shall become a
binding agreement between you and the Company.
Very truly yours,
MONTGOMERY WARD & CO.,
INCORPORATED
By /s/ Carol J. Harms
Name: Carol J. Harms
Title: Vice President and
Treasurer
The foregoing Agreement is hereby accepted
and agreed to as of the date hereof.
NEW YORK LIFE INSURANCE COMPANY
By /s/ Karen Hiniker
Name: Karen Hiniker
Title: Assistant Vice President
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By /s/ Willma H. Davis
Name: Willma H. Davis
Title: Second Vice President
THE TRAVELERS INSURANCE COMPANY
By /s/ Teresa M. Torrey
Name: Teresa M. Torrey
Title: Second Vice President
<PAGE>
NATIONWIDE LIFE INSURANCE COMPANY*
WEST COAST LIFE INSURANCE COMPANY**
WISCONSIN HEALTH CARE LIABILITY
INSURANCE PLAN**
*By /s/ Jeffrey G. Milburn
Name: Jeffrey G. Milburn
Title: Vice President
Corporate Fixed-Income Securities
**By /s/ Jeffrey G. Milburn
Name: Jeffrey G. Milburn
Title: Attorney-in-fact
SUN LIFE ASSURANCE COMPANY OF CANADA
By /s/ C. James Prieur
Name: C. James Prieur
Title: Vice President, Investments
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
By /s/ John N. Whelihan
Name: John N. Whelihan
Title: Vice President, U.S. Private Placements - For
President
By /s/ Margaret S. Mead
Name: Margaret S. Mead
Title: Assistant Vice President & Counsel - For
Secretary
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By CIGNA INVESTMENTS, INC.
By /s/ James F. Coggins, Jr.
Name: James F. Coggins, Jr.
Title: Managing Director
<PAGE>
AID ASSOCIATION FOR LUTHERANS
By /s/ Jerry Scheel
Name: R. Jerry Scheel
Title: Second Vice President - Securities
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
By /s/ Julia S. Tucker
Name: Julia S. Tucker
Title: Investment Officer
LUTHERAN BROTHERHOOD
By /s/ Michael Landreville
Name: Michael Landreville
Title: Assistant Vice President
AMERICAN FAMILY LIFE INSURANCE COMPANY
By /s/ Phillip Hanifan
Name: Phillip Hannifan
Title: Investment Director
KANSAS CITY LIFE INSURANCE COMPANY
By /s/ Richard L. Finn
Name: Richard L. Finn
Title: Sr. Vice President, Finance
NORTH WEST LIFE ASSURANCE COMPANY OF CANADA
By MIMLIC ASSET MANAGEMENT COMPANY
By Guy M. de Lambert
Name: Guy M. de Lambert
Title: Vice President
<PAGE>
GREAT WESTERN INSURANCE COMPANY
By MIMLIC ASSET MANAGEMENT COMPANY
By /s/ Lynne M. Mills
Name: Lynne M. Mills
Title: Vice President
GUARANTEE RESERVE LIFE INSURANCE COMPANY
By MIMLIC ASSET MANAGEMENT COMPANY
By /s/ Lynne M. Mills
Name: Lynne M. Mills
Title: Vice President
NATIONAL TRAVELERS LIFE COMPANY
By MIMLIC ASSET MANAGEMENT COMPANY
By /s/ Lynne M. Mills
Name: Lynne M. Mills,
Title: Vice President
SECURITY MUTUAL LIFE INSURANCE COMPANY
By /s/ Kevin W. Hammond
Name: Kevin W. Hammond
Title:
WOODMEN ACCIDENT AND LIFE COMPANY
By /s/ M.F. Wilder
Name: M.F. Wilder
Title: Senior Vice President
and Treasurer
PROVIDENT MUTUAL LIFE INSURANCE
COMPANY
By /s/ James D. Kestner
Name: James D. Kestner
Title: Vice President
CONNECTICUT MUTUAL LIFE INSURANCE COMPANY
By /s/ Lawrence D. Stillman
Name: Lawrence D. Stillman
Title: Senior Investment Officer
CM LIFE INSURANCE COMPANY
By /s/Lawrence D. Stillman
Name: Lawrence D. Stillman
Title: Senior Investment Officer
<PAGE>
NEW YORK LIFE INSURANCE AND
ANNUITY CORPORATION
By /s/ Karen Hiniker
Name: Karen Hiniker
Title: Assistant Vice President
* * *
<PAGE>
SCHEDULE I
Payment and Notice Information
Name and Address of Purchaser
Principal Amount and
Series of Notes
Purchased
NEW YORK LIFE INSURANCE AND ANNUITY
CORPORATION
$30,000,000
Series H Notes
(1) All payments by wire or intrabank
transfer of immediately available
funds to:
Chemical Bank
New York, New York
ABA No. 021-000-128
for credit to the account of:
New York Life Insurance and Annuity
Corporation
General Account No. 008-0-57001
with sufficient information (including
issuer, interest rate, maturity, PPN
614223 D* 3 and whether payment is of
principal, premium, or interest) to
identify the source and application of
such funds, with advice of such
unscheduled or optional payments to:
New York Life Insurance and Annuity
Corporation
c/o New York Life Insurance Company
51 Madison Avenue
New York, New York 10010-1603
Attention: Treasury Department
Securities Income Section
Room 209
(2) All other communications to:
New York Life Insurance and Annuity
Corporation
c/o New York Life Insurance Company
51 Madison Avenue
New York, New York 10010-1603
Attention: Investment Department
Private Finance Group
Room 206
Telecopy No.: (212) 447-4122
with a copy to the above address, but
indicating:
Attention: Office of General Counsel
Investment Section, Room 105B
Telecopy No.: (212) 576-8340
NEW YORK LIFE INSURANCE COMPANY
51 Madison Avenue
New York, New York 10010
(1) All payments on account of the Notes
shall be made by wire or intrabank
transfer of immediately available
funds, with sufficient information
(including issuer, interest rate,
maturity, PPN 614223 D* 3 and whether
payment is of principal, premium or
interest) to identify the source and
application of such funds, to:
Morgan Guaranty Trust Company
of New York
ABA No. 021-000-238
for credit to the account of:
New York Life Insurance Company
General Account No. 810-00-000
$10,000,000
Series H Notes
with advice of any unscheduled or
optional payments
to:
New York Life Insurance Company
51 Madison Avenue,
New York, New York 10010-1603
Attention: Treasury Department
Securities Income Section, Room
209
Telecopy No. (212) 447-4160
(2) All other communications shall be
directed to:
New York Life Insurance Company
51 Madison Avenue,
New York, New York 10010-1603
Attention: Investment Department
Private Finance Group, Room 206
Telecopy No. (212) 447-4122
with a copy to the above address, but
indicating:
Attention: Office of the General
Counsel
Investment Section, Room 10SB
Telecopy No. (212) 576-8340
JOHN HANCOCK MUTUAL LIFE INSURANCE
COMPANY
200 Clarendon Street
Boston, Massachusetts 02117
$12,000,000
Series H Notes
$ 8,000,000
Series H Notes
(1) All payments on account of the Notes
or other obligations in accordance
with the provisions thereof shall be
made by bank wire transfer of
immediately available funds for
credit, not later than 12 noon,
Boston time, to:
The First National Bank of Boston
ABA No. 011000390
100 Federal Street
Boston, Massachusetts 02110
Account of: John Hancock Mutual Life
Insurance Company Private
Placement Collection Account
Account Number: 541-55417
On Order of: Montgomery Ward & Co., Inc.
(PPN 614223 D* 3)
(2) Contemporaneous with the above wire
transfer, advice setting forth (1)
the full name, interest rate and
maturity date of the Notes or other
obligations; (2) allocation of
payment between principal and
interest and any special payment; and
(3) name and address of Bank (or
Trustee) from which wire transfer was
sent, shall be delivered or mailed
to:
John Hancock Mutual Life Insurance
Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Securities Accounting Div
T-10
(3) All notices with respect to
prepayments, both scheduled and
unscheduled, whether partial or in
full, and notice of maturity shall be
delivered or mailed to:
John Hancock Mutual Life Insurance
Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Securities Accounting
Division
T-10
(4) All other communications which shall
include, but not be limited to,
financial statements and certificates
of compliance with financial
covenants, shall be delivered
or mailed to:
John Hancock Mutual Life Insurance
Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Bond and Corporate Finance
Dept. T-57
(5) All securities shall be registered in
the name of John Hancock Mutual Life
Insurance Company.
(6) Tax I.D. No. 04-1414660
THE TRAVELERS INSURANCE COMPANY
One Tower Square
Hartford, Connecticut 06183
$20,000,000
Series I Notes
(1) All payments on account of the Notes
shall be made in immediately
available funds at the opening of
business on the due date by
electronic funds transfer to:
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, NY 10081
ABA No. 021000021
for credit to the account of The
Travelers Insurance Company ("TIC"),
Consolidated Private Placement Account
No. 910-2-587434, providing sufficient
information with such wire transfer to
identify the source and application of
such funds, the due date of the payment
being made and if such payment is a
final payment; and with instructions to
give telephone advice of payment to
TIC's Securities Department (203) 954-
4348
(2) Contemporaneous with the above
electronic funds transfer, advice
setting forth (a) the full name,
private placement number, interest
rate and maturity date of the Notes,
(b) the allocation of payment between
principal, interest, premium or any
other payment, and (c) the name and
address of the bank from which
payment was made, shall be delivered,
mailed or telefaxed to:
The Travelers Insurance Company
One Tower Square
Hartford, CT 06183-2030
Attention: Securities Department --
Cashier
(3) All other communications:
The Travelers Insurance Company
One Tower Square
Hartford, CT 06183-2030
Attention: Securities Department --
Private Placements
Nominee: "TRAL & CO"
Tax I.D.# 06-0566090
CONNECTICUT MUTUAL LIFE INSURANCE COMPANY
140 Garden Street M/S 272
Hartford, Connecticut 06154
$9,000,000
Series I Notes
$2,000,000
Series I Notes
(1) All payments on account of the Notes
shall be made by wire transfer of
immediately available funds to:
The Bank of New York
ABA #021000018 BNF:IOC566
Attn: P&I Department
FOR: Connecticut Mutual Life Insurance
Co.
including issuer, interest rate, private
placement number, maturity, and whether
payment is of principal, interest,
and/or premium
(2) All audit confirmations:
Connecticut Mutual Life Insurance Co.
c/o The Bank of New York
P.O. Box 19266
Attn: P & I Department
Newark, NJ 07195
Audit confirmations can be sent via FAX
to (212) 495-2730
(3) Communication such as annual reports,
statements, waivers, amendments and
other notices of payment on or in
respect of the Notes should be sent
to:
Connecticut Mutual Life Insurance Co.
140 Garden Street
Hartford, CT 06154
Attn: Private Placements, MS 272
(4) The Notes should be registered as
follows:
Connecticut Mutual Life Insurance Co.
Tax ID #06-0304620
CM LIFE INSURANCE COMPANY
140 Garden Street M/S 272
Hartford, Connecticut 06154
$4,000,000
Series I Notes
(1) All payments on account of the Notes
shall be made by wire transfer of
immediately available funds to:
The Bank of New York
ABA #021000018 BNF:IOC566
Attn: P & I Department
FOR: CM Life Insurance Co.
including issuer, interest rate, private
placement number, maturity, and whether
payment is of principal, interest and/or
premium
(2) All audit confirmations:
CM Life Ins. Co.
c/o The Bank of New York
P.O. Box 19266
Attn: P & I Department
Newark, NJ 07195
Audit confirmations can be sent via Fax
to
(212) 495-2730
(3) Communication such as annual reports,
statements, waivers, amendments and
other notices of payment on or in
respect of the Notes should be sent
to:
CM Life Insurance Company
140 Garden Street
Hartford, CT 06154
Attn: Private Placements, MS 272
(4) The Notes should be registered as
follows:
CM Life Insurance Co.
Tax ID #06-1041383
NATIONWIDE LIFE INSURANCE COMPANY
One Nationwide Plaza
Columbus, OH 43215
(Separate Account OH)
Send notices and communications to:
Nationwide Life Insurance Company
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attention: Corporate Fixed-Income
Securities
Wiring instructions:
Morgan Guaranty Trust Company of New
York
ABA #021-000-238
JOURNAL #999-99-024
F/A/O Nationwide Life Insurance Company
Custody A/C #71615
Attn: Custody Service Dept.
PPN# 614223 D@ 1
Security Description: Montgomery Ward &
Co., Inc. Senior Notes
$11,500,000
Series I Notes
$ 1,000,000
Series I Notes
With notice of each such payment to:
Nationwide Life Insurance Company
One Nationwide Plaza (1-32-09)
Columbus, Ohio 43215-2220
Attention: Corporate Money Management
The original Note should be registered
in the name of
Nationwide Life Insurance Company and
delivered to:
Morgan Guaranty Trust Company of New
York
Safekeeping Incoming
55 Exchange Place - A Level
New York, NY 10260-0023
F/A/O Nationwide Life Insurance Company
Custody Account #71615
Tax I.D. # 31-4156830
WEST COAST LIFE INSURANCE COMPANY
343 Sansome Street
San Francisco, CA 94104
Send notices and communications to:
West Coast Life Insurance Company
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attention: Corporate Fixed-Income
Securities
Wiring instructions:
Morgan Guaranty Trust Company of New
York
ABA #021-000-238
JOURNAL #999-99-024
F/A/O West Coast Life Custody A/C #73290
Attn: Custody Service Dept.
PPN# 614223 D@ 1
Security Description: Montgomery Ward &
Co., Inc. Senior Notes
$2,000,000
Series I Notes
With notice of each such payment to:
West Coast Life Insurance Company
343 Sansome Street
San Francisco, CA 94104
Attention: Karl Snover
The original Note should be registered
in the name of West Coast Life Insurance
Company and delivered to:
Morgan Guaranty Trust Company of New
York
Safekeeping Incoming
55 Exchange Place - A Level
New York, NY 10260-0023
F/A/O West Coast Life Insurance Company
Custody Account #73290
A copy of the note should be mailed
directly to:
Mr. Karl Snover
West Coast Life Insurance Company
343 Sansome Street
San Francisco, CA 94104
Tax I.D. #94-0971150
WISCONSIN HEALTH CARE LIABILITY
INSURANCE PLAN
2000 Westwood Avenue
Wausau, Wisconsin 54401
Send notices and communications to:
Wisconsin Health Care Liability
Insurance Plan
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attention: Corporate Fixed-Income
Securities
$500,000
Series I Notes
Wiring Instructions:
Firstar Bank Milwaukee, N.A.
Account of Firstar Trust Company
ABA #075-000-022
For credit to Account 112 950 027
For further credit to Account 1690000
With notice of each such payment to:
Wisconsin Health Care Liability
Insurance Plan
2000 Westwood Avenue
Wausau, Wisconsin 54401
Attention: Ms. Lorraine Moran
Name of nominee in which Notes are to be
issued: Band & Co.
The original note should be delivered
to:
Firstar Bank Milwaukee, N.A.
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Securities Department -
Clybourn Level
A copy of the note should be mailed
directly to:
Ms. Lorraine Moran
Wisconsin Health Care Liability
Insurance Plan
2000 Westwood Avenue
Wausau, Wisconsin 54401
Tax I.D. #39-1256796
SUN LIFE ASSURANCE COMPANY OF
CANADA (U.S.)
One Sun Life Executive Park
Wellesley Hills, MA 02181
$10,000,000
Series I Notes
Wire transfers of principal and interest
payments with regard to the Notes are to
be directed to:
Chemical Bank (ABA
#021-000-128)
55 Water Street
New York, New York 10041
For the Account of: Sun Life
Assurance Company of Canada (U.S.)
#323-023177
All wire transfers are to be accompanied
by the PPN and the source and
application of the funds. In
addition, written notice of each
mandatory payment is to be mailed to:
Sun Life Assurance Company of
Canada (U.S.)
Three Sun Life Executive Park
Wellesley Hills, MA 02181
Attention: Manager, Investment
Accounting,
SC #3327
All other notices and correspondence,
including notices of optional
prepayments, are to be mailed to:
Sun Life Assurance Company of
Canada (U.S.)
One Sun Life Executive Park
Wellesley Hills, MA 02181
Attention: Investment Department/
Private Placements, SC #1303
Tax I.D. # 04-2461439
SUN LIFE ASSURANCE COMPANY OF
CANADA
One Sun Life Executive Park
Wellesley Hills, MA 02181
Wire transfers of principal and interest
with regard to the Notes are to be directed
to:
The Chase Manhattan Bank
(ABA# 021-000-021)
One Chase Manhattan Plaza
New York, New York 10081
For the account of Sun Life
Assurance Company of Canada
#910-2-590644* or
#910-2-721942**
All wire transfers are to be accompanied by
the PPN and the source and application of
the funds. In addition, written notice of
each mandatory payment is to be mailed to:
Sun Life Assurance Company of Canada
Three Sun Life Executive Park
Wellesley Hills, MA 02181
Attention: Manager, Investment
Accounting, SC #3327
All other notices and correspondence,
including notices of optional prepayments,
are to be mailed to:
Sun Life Assurance Company of Canada
One Sun Life Executive Park
Wellesly Hills, MA 02181
Attention: Investment Department/
Private Placements, SC# 1303
Tax I.D.#38-1082080
$ 1,500,000
Series I Notes*
$ 1,000,000**
Series I Notes
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
900 Cottage Grove Road
Hartford, Connecticut 06152
Name in Which Note is to be Registered:
CIG & Co.
$7,000,000
Series H Notes
$5,000,000
Series H Notes
Payment on Account of Note
Method: Federal Funds Wire Transfer
Account Information:
Chase NYC/CTR/
BNF=CIGNA Private
Placements/AC=9009001802
ABA# 021000021
Accompanying Information:
OBI=[name of company; description of
security; interest rate, maturity date;
PPN; due date and application (as among
principal, premium and interest of the
payment being made; contact name and
phone.]
Address for Notices Related to Payments:
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Securities Processing S-206
900 Cottage Grove Road
Hartford, CT 06152-2206
with a copy to:
Chase Manhattan Bank, N.A.
Private Placement Servicing
P.O. Box 1508
Bowling Green Station
New York, New York 10081
Attention: CIGNA Private Placements
FAX: 212-552-3107/1005
Address for All Other Notices:
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities Division
S-307
900 Cottage Grove Road
Hartford, Connecticut 06152-2307
Fax: 203-726-7203
Tax I.D. #13-3574027
AID ASSOCIATION FOR LUTHERANS
222 West College Avenue
Appleton, WI 54919-0001
All payments of principal, interest and
premium on the account of the security
shall be made by wire transfer (in
immedia
tely
availab
le
funds)
to:
Harris Trust and Savings Bank,
Chicago
ABA No. 071 000 288
A/C #109-211-3
Attn: Trust Collection/P & I
Ref. Information
Security Description
CUSIP
Payable Date
Principal & Interest breakdown
Interest rate for variable rate
All notices with respect to payments to:
Aid Association for Lutherans
Attention: Investment Accounting
4321 North Ballard Road
Appleton, WI 54919
and
Harris Trust and Savings Bank
Institutional Custody - 5E
111 West Monroe Street
Chicago, IL 60690-0755
$10,000,000
Series I Notes
Address for all other communications to:
Aid Association for Lutherans
Attention: Investment Department
4321 North Ballard Road
Appleton, WI 54919
Send securities to:
Ms. Polly Jozefczyk
Investment Manager Services 190/6
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, IL 60690
THE VARIABLE ANNUITY LIFE INSURANCE
COMPANY
2929 Allen Parkway
Houston, Texas 77019-2155
All payments to be made by wire transfer
of immediately available funds, with
sufficient information (including PPN #,
interest rate, maturity date, interest
amount, principal amount and premium
amount, if applicable) to identify the
source and application of such funds,
to:
ABA #011000028
State Street Bank and Trust Company
Boston, MA 02101
Re: The Variable Annuity Life Insurance
Company
AC-0125-821-9
OBI=PPN # and description of payment
Fund Number PA 54
$10,000,000
Series J Notes
Payment notices to:
The Variable Annuity Life Insurance
Company
and PA 54
c/o State Street Bank and Trust Company
Insurance Services Custody (AH2)
State Street South
Ann Hutchinson Offices, 2nd Floor
108 Myrtle Street
Two New Port Office Park
North Quincy, MA 02171
Facsimile Number: (617) 985-4923
Duplicate payment notices and all other
correspondences to:
The Variable Annuity Life Insurance
Company
c/o American General Corporation
Attn: Investment Research Department,
A37-01
P.O. Box 3247
Houston, Texas 77253-3247
Overnight Mail Address: 2929 Allen
Parkway
Houston, Texas 77019-
2155
Facsimile Number: (713) 831-1366
Tax I.D. Number: 74-1625348
LUTHERAN BROTHERHOOD
Payments to:
By Wire: Norwest Bank Minnesota, N.A.
ABA #091000019
For Credit to Trust Clearing
Account
#08-40-245
Attn: Carole Batchelder
For Credit to: Lutheran Brotherhood
Acct. No.: 12651300
$7,000,000
Series I Notes
By Mail: Lutheran Brotherhood
Norwest Bank Minnesota, N.A.
P.O. Box 1450
NW9919
Minneapolis, MN 55485
All payments must include the following
information:
A/C Lutheran Brotherhood
Account No.: 12651300
Security Description
Private Placement Number
Reference Purpose of Payment
Interest and/or Principal Breakdown
Notices of payments and written
confirmation of such wire transfers to:
Lutheran Brotherhood
Attn: Investment Accounting/Trading
Administrator
625 Fourth Avenue South
20th Floor
Minneapolis, MN 55415
All other communications to:
Lutheran Brotherhood
Attn: Investment Division
625 Fourth Avenue South
Minneapolis, MN 55415
Private Placement Notes sent to:
Norwest Bank Minnesota, N.A.
733 Marquette Avenue
5th Floor
Investors Building
Minneapolis, MN 55479-0047
With a copy to the Lutheran Brotherhood in-
house attorney.
AMERICAN FAMILY LIFE INSURANCE COMPANY
6000 American Parkway
Madison, Wisconsin 53783-0001
(1) All payments on or in respect of the
Notes to be by bank wire transfer of
Federal or other immediately
available funds. Each such wire
transfer shall set forth the name of
the Company, the full title
(including the coupon rate and final
maturity date) of the Notes, and
the due date and application (as
among principal, premium and
interest) of the payment being made.
Payment shall be made to:
$5,000,000
Series H Notes
Firstar Bank Milwaukee, N.A.
Acct. of Firestar Trust Company
ABA #075000022
For Credit to Acct. #112 950 027
Trust Acct. 000018012500
Attention: Accounting Department
(2) All notices and communications,
including notices with respect to
payments and written confirmation of
each such payment as well as
quarterly and annual financial
statements, to be addressed to:
American Family Life Insurance Company
6000 American Parkway
Madison, Wisconsin 53783-0001
Attention: Investment Division -
Private Placements
(3) Tax Identification Number: 39-
6040365
(4) Nominee Name in Which Notes are to be
Registered: BAND & Co.
(5) Notes to be sent special delivery
Federal Express to:
Firstar Bank of Madison
1 South Pinckney Street
Madison, WI 53703
Attn: Business Custody
KANSAS CITY LIFE INSURANCE CO.
3520 Broadway, Box 411587
Kansas City, Missouri 64141-1587
(1) Note Delivery Address:
United Missouri Trust Company, NY
Attn: John DeMarco
One Battery Park Plaza, 8th Floor
New York, NY 10004
$5,000,000
Series I Notes
(2) All confirmations:
Kansas City Life Insurance Company
Securities Division
Box 411587
Kansas City, MO 64141-1587
(3) Other Communications:
Kansas City Life Insurance Co.
3520 Broadway, Box 411587
Kansas City, MO 64141-1587
Attn: Anne C. Moberg
(4) Note Payment Instructions:
United Missouri Bank of Kansas City
ABA #1010 000 695
Credit of AC#0006823
FBO: Kansas City Life Insurance Company
AC#690182001
Attn: Securities Administration
(5) Registration of a Note:
UMBTRU & Co.
Tax ID # of UMBTRU 43-6295832
NORTH WEST LIFE ASSURANCE COMPANY OF CANADA
c/o MIMLIC Asset Management Company
400 North Robert Street
St. Paul, Minnesota 59101
(1) The Notes being purchased for The
North West Life Assurance Company of
Canada should be registered in
the name of The North West Life
Assurance Company of Canada. The
Notes should be forwarded to the
following address:
North West Life Assurance Company of
Canada
800-1040 West Georgia Street
Vancouver, British Columbia
Canada, V6E 4H1
Attn: Arthur Putz
$1,000,000
Series H Notes
(2) All notices and statements should be
sent to the
following:
North West Life Assurance Company of
Canada
c/o MIMLIC Asset Management Company
400 North Robert Street
St. Paul, MN 55101
Attn: Client Administrator
(3) The wire transfer address to which
all payments should be made is as
follows:
All payment on account of the Notes
shall be made by immediately available
funds to:
Seafirst SEA (Seattle-First National
Bank)
ABA # 125 000 024
RC# 90712
Reference North West Life Assurance
Company.
All wire transfers should identify the
source and application of funds.
(4) Tax I.D. #98-0018913
GREAT WESTERN INSURANCE COMPANY
c/o MIMLIC Asset Management Company
400 North Robert Street
St. Paul, Minnesota 55101
$500,000
Series J Notes
(1) The Notes being purchased for Great
Western Insurance Company should be
registered in the nominee name of
"Zions First National Bank for Great
Western Insurance Company". The
Notes should be forwarded to the
following address:
Bank of Utah
P.O. Box 231
Ogden, UT 84402
Attn: Richard Carroll, Trust Department
(2) All notices and statements should be
sent to the following address:
Great Western Insurance Company
c/o MIMLIC Asset Management Company
400 North Robert Street
St. Paul, MN 55101
Attn: Client Administrator
(3) The wire transfer address to which
all payments should be made is as
follows:
All payment on account of the Notes
shall be made by immediately available
funds to:
Zions First National Bank
Salt Lake City, UT
ABA #124-0000-54
Further credit to account #80-00005-2
Reference: Great Western Insurance
Company
All wires should identify the source and
application of funds.
(4) Any checks (in lieu of wire transfer)
should be sent to the following
address:
Zions First National Bank
Trust Department
P.O. Box 30880
Salt Lake City, UT 84130
Ref: Great Western Insurance Company
(5) Tax I.D. #87-0395954
GUARANTEE RESERVE LIFE INSURANCE COMPANY
c/o MIMLIC Asset Management Company
400 North Robert Street
St. Paul, Minnesota 55101
$500,000
Series J Notes
(1) The Notes being purchased for
Guarantee Reserve Life Insurance
Company should be registered in the
nominee name of "Gant & Co". The
Notes should be forwarded to the
following address:
Mercantile National Bank of Indiana
Ref: Guarantee Reserve Life Insurance
Company
5243 Hohman Avenue
Hammond, IN 46320
(2) All notices and statements should be
sent to the following address:
Guarantee Reserve Life Insurance Company
c/o MIMLIC Asset Management Company
400 North Robert Street
St. Paul, MN 55101
Attn: Client Administrator
(3) The wire transfer address to which
all payments of the Notes shall be
made is as follows:
All payments on account of the Notes
shall be made by wire transfer of
immediately available funds to:
Mercantile National Bank of Indiana
Hammond, IN
ABA #0719-12813
For Credit to Guarantee Reserve Life
Insurance
Company
Attn: Trust Department
Geneva DeVine
All wires should identify the source and
application of funds.
(4) Tax ID #35-0815760
NATIONAL TRAVELERS LIFE COMPANY
c/o MIMLIC Asset Management Company
400 North Robert Street
St. Paul, Minnesota 55101
$1,000,000
Series J Notes
(1) The Notes being purchased for
National Travelers Life Company
should be registered in the nominee
name of "VAR & Co". The Certificates
should be forwarded to the following
address:
First Trust, N.A.
P.O. Box 64190
180 East Fifth Street
4th Floor, Custody Window
St. Paul, MN 55164-0190
Attn: Peggy Sime
(2) All notices and statements should be
sent to the following address:
National Travelers Life Company
c/o MIMLIC Asset Management Company
400 North Robert Street
St. Paul, MN 55101
Attn: Client Administrator
(3) The wire transfer address to which
all payments should be made is as
follows:
All payments on account of the Notes
shall be made by wire transfer of
immediately available funds to:
First Bank N.A.
Minneapolis, MN
ABA #091-0000-22
For further credit to First Trust N.A.
Acct #180121167365
TSU: 050, for credit to National
Travelers Life
Company
Account #12609110
Attn: Peggy Sime (612) 244-0647
All wire transfers should identify the
source and application of funds.
(4) Tax ID #42-0432940
SECURITY MUTUAL LIFE INSURANCE COMPANY
200 Centennial Mall North
Lincoln, Nebraska 68501
$2,000,000
Series H Notes
(1) All payments on or in respect of the
Notes shall be made by wire transfer
of immediately available funds at the
opening of business on the due date
to:
National Bank of Commerce
13th & "O" Streets
Lincoln, NE
ABA No. 1040-00045
Account of: Security Mutual Life
Account No.: 40-797-624
Each such wire transfer shall set forth
the name of the issuer, the full title
of the Notes (including the rate and
final redemption or maturity date) and
application of such funds among
principal, premium and interest, if
applicable.
(2) All notices of payments and written
confirmations of such wire transfers
should be sent to:
The Security Mutual Life Insurance
Company
of Lincoln, Nebraska
200 Centennial Mall North
Lincoln, NE 68508
Attention: Mr. Kevin Hammond
Fax: (402) 434-9599
or
The Security Mutual Life Insurance
Company
of Lincoln, Nebraska
P.O. Box 82248
Lincoln, NE 68501
Tax I.D. No.: 47-0293990
WOODMEN ACCIDENT AND LIFE COMPANY
1526 K Street
Lincoln, Nebraska 68508
$2,000,000
Series J Notes
All payments on account of Notes held by
such purchaser shall be made by wire
transfer of immediately available
Federal funds to:
FirsTier Bank Lincoln, N.A.
ABA # 1040-0003-2
13th and N Streets
Lincoln, Nebraska 68508
For credit to Woodmen Accident and
Life Company
General Fund Account No. 092-909
Each such wire transfer shall set forth
the name of the Obligor, the full title
(including the interest rate and
final maturity date) of the Notes and
the due date and application (as among
principal, premium and interest) of the
payment being made.
Address for all notices relating to
payments and all other communications:
Woodmen Accident and Life Company
P.O. Box 82288
Lincoln, Nebraska 68501
Attention: Investment Operations
Address for Overnight Delivery/Express
Mail:
Woodmen Accident and Life Company
1526 K Street
Lincoln, Nebraska 68508
Attention: Investment Operations
Tax I.D.# 47-0339220
PROVIDENT MUTUAL LIFE INSURANCE COMPANY
1600 Market Street
Philadelphia, PA 19103
Facsimile: (215) 636-8322
Payment Instructions:
All payments on or in respect of the
Notes to be by wire transfer of
Federal or other immediately
available funds with sufficient
information to identify the payer,
the particular issue of notes and
whether the payment is for principal,
interest or premium to the following:
PNC Bank
Broad and Chestnut Streets
Philadelphia, PA 19101
ABA# 031-000-053
$1,500,000
Series I Notes<PAGE>
for credit to
Provident Mutual Life Insurance
Company
Account # 85-2000-4909
Notices:
All notices and communications to be
addressed as provided above, except
notices with respect to payments, which
should be addressed to -- Attention:
Treasurer.
Tax I.D. # 23-099-045-0
<PAGE>
SCHEDULE II
(Section 7.2)
Set forth below is a list of all Subsidiaries of the
Company as of June 30, 1995 all of which are Wholly Owned
Subsidiaries, and their respective jurisdictions of
incorporation:
American Delivery Service Company (Del.)
Continental Transportation, Inc. (Del.)
*Brandywine DC, Inc. (Fla.)
Brettward Properties Co., Inc. (Md.)
Furniture Investors, Inc. (Del.)
*Goode Investments, Inc. (Ill.)
Huga Realty Inc. (Del.)
Jefferson Stores, Inc. (Nev.)
JRI Distributing, Inc. (Del.)
*Lechmere Development Corporation (Del.)
LMR Acquisition Corporation (Mass.)
Lechmere, Inc. (Mass.)
Marcor Housing Systems, Inc. (Del.)
Marinco Insurance U.S.A., Inc. (Ver.)
MF Nevada Investments, Inc. (Nev.)
Michaelward Properties Co., Inc. (Md.)
Montgomery Ward Development Corporation (Del.)
Barretward Properties Co., Inc. (Md.)
First Mont Corporation (Del.)
Gabeward Properties Corporation (Del.)
*Garden Grove Development Corporation (Del.)
Joshward Properties Corporation (Del.)
Maryward Properties Corporation (Del.)
Montgomery Ward Land Corporation (Del.)
National Homefinding Service, Inc. (Del.)
Paulward Properties Co., Inc. (Md.)
*Robertward Properties Corporation (Del.)
Second Mont Corporation (Del.)
Seventh Mont Corporation (Del.)
*618 Corporation (Del.)
*619 Corporation (Del.)
The 535 Corporation (Del.)
*University Avenue Marketplace, Inc. (Del.)
Wycombe Properties, Inc. (Del.)
MPI, Inc. (Del.)
*MW Direct General, Inc. (Del.)
*MW Direct Limited, Inc. (Del.)
*MW Land Corporation (Del.)
Montgomery Ward Foundation (Ill., not-for-profit)
Montgomery Ward International, Inc. (Del.)
Montgomery Ward Hong Kong, Ltd. (Hong Kong)
*Montgomery Ward Commercial Ltd. (Brazil)
Montgomery Ward Properties Corporation (Del.)
<PAGE>
Brandywine Properties, Inc. (Del.)
M-W Fairfax Properties, Inc. (Va.)
*2825 Development Corporation (Del.)
Montgomery Ward Realty Corporation (Del.)
Montgomery Ward Securities, Inc. (Del.)
MW-Export, S.A. de C.V. (Mex.)
M-W Prestress, Inc. (Col.)
R M P Development Corporation (N. Mex.)
M-W Properties Corporation (Del.)
Fourth Wycombe Properties, Inc. (Del.)
M-W Restaurants Realty Corporation (Del.)
*998 Monroe Corporation (Del.)
Sacward Properties, Inc. (Del.)
*7th & Carroll Corporation (Del.)
Signature Financial/Marketing, Inc. (Del.)
Credit Card Sentinel, Inc. (Cal.)
Greater California Dental Plan (Cal.)
I.S.S. Agency, Inc. (Del.)
Montgomery Ward Auto Club, Inc. (Del.)
Montgomery Ward Enterprises, Inc. (Del.)
SignatureCard, Inc. (Ind.)
Montgomery Ward Financial Center, Inc. (Ill.)
Montgomery Ward Insurance Company (Ill.)
Montgomery Ward Life Insurance Company (Ill.)
Forum Insurance Company (Ill.)
Montgomery Ward Agency, Inc. (Ill.)
Montgomery Ward Clubs, Inc. (Del.)
National Dental Service, Inc. (Del.)
Signature Dental Plan of Florida, Inc. (Fl.)
Signature Investment Advisors, Inc. (Del.)
Signature's Nationwide Auto Club, Inc. (Del.)
Signature Agency, Inc. (Del.)
Signature Agency - Wyoming, Inc. (Wyo.)
The Signature Life Insurance Company of America(Ill.)
Standard T Chemical Company, Inc. (Del.)
Third Wycombe Properties, Inc. (Del.)
*2825 Realty Corporation (Del.)
Yard-Man Inc. (Del.)
WFL Realty, Inc. (Del.)
Except for those Subsidiaries listed above which are
preceded by an asterisk, the above listed Subsidiaries are
Restricted Subsidiaries.
<PAGE>
SCHEDULE III
(Sections 6.4(b) and 7.15)
Lien (Section 6.4(b)
Security interests with respect to fixtures (excluding
trade or store fixtures) and documents related to real
property which were granted in connection with a financing
of real property reflected in the audited consolidated
financial statements of the Company and its Subsidiaries
for the Fiscal Year ended December 31, 1994 (the "1994
Audited Financial Statements" ) referred to in Section
7.4.
Security interests with respect to leases which might be
classified for some purposes as conditional sales
contracts but which the Company on its consolidated
balance sheet included in the 1994 Audited Financial
Statements classified as assets and obligations,
respectively, under Capital Leases.
Security interests with respect to leases which might be
classified for some purposes as secured loans or
conditional sales contracts but which in accordance with
GAAP the Company classifies in its financial statements as
operating leases (including, without limitation, those
reflected in the footnotes to the 1994 Audited Financial
Statements).
Lien on the Dublin, California retail store property
securing certain indemnities extended by the Company, as
sublessor, and Toys 'R Us, as sublessee, under subleases
at various retail stores where the Company's lessor would
not execute a non-disturbance agreement with Toys 'R Us.
Indebtedness for Borrowed Money (Section 7.15)
Since the date of the 1994 Audited Financial Statements:
1. The scheduled payments have been made on the
remaining long-term debt listed in Note 11, and
no prepayments have been made on any such debt.
2. The Company and its Subsidiaries have not
incurred any additional Capital Lease
Obligations, and all scheduled payments have been
made on the Capital Leases reflected in the 1994
Audited Financial Statements.
3. Borrowing under the Credit Agreement and Short
Term Credit Agreement have ranged from $137.5
million to $792.0 million and the lowest
aggregate principal amount of loans under such
Agreements at or below which such loans were
maintained for a continuous 30 day period was
$448.0 million.
4. The Company has entered into short-term borrowing
arrangements with various banks pursuant to which
the Company may, with the lending bank's
approval, borrow up to $120.0 million.
Borrowings under these arrangements have ranged
from zero to $120.0 million.
<PAGE>
SCHEDULE IV
(Section 7.11)
None
<PAGE>
EXHIBIT A-1
to
Note Purchase Agreement
MONTGOMERY WARD & CO., INCORPORATED
6.52% Series H Senior Notes due 2000
No. July 11, 1995
$ New York, New York
Private Placement No.: 614223 D*3
MONTGOMERY WARD & CO., INCORPORATED, a corporation organized
under the laws of the State of Illinois (herein, together with
its successors and assigns, the "Company"), for value received,
hereby promises to pay to
, or registered assigns, the principal
amount of Dollars ($ ) (or so much thereof as
shall not have been prepaid) on July 15, 2000, with interest
(computed on the basis of a 360-day year of twelve 30-day months)
on the unpaid balance of such principal amount at the rate of
6.52% per annum from the date hereof, payable semiannually in
arrears on January 15 and July 15 of each year, commencing July
15, 1995, until such unpaid balance shall become due and payable
(whether at final maturity, at a date fixed for prepayment or
purchase or by declaration, acceleration or otherwise and at
maturity), and with interest on any overdue principal (including
any overdue required or optional prepayment of principal) and any
overdue premium, if any, and (to the extent permitted by
applicable law) any overdue interest at the Default Rate (as
defined in the Note Purchase Agreement referred to below) until
paid, such overdue interest, if any, to be payable semiannually
as aforesaid or, at the option of the registered holder hereof,
on demand. Payments of principal, premium, if any, and interest
on this Note shall be made in lawful money of the United States
of America at the principal office in New York, New York of
Morgan Guaranty Trust Company of New York, or at such other place
as may be provided pursuant to the Note Purchase Agreement
referred to below or, in certain circumstances, to the holder of
this Note as provided in Section 13 of said Note Purchase
Agreement. If any payment of principal, premium, if any, or
interest on or with respect to this Note becomes due and payable
on any day that is not a Business Day, such amount shall be
payable on the next succeeding Business Day and with respect to
payments of principal, interest shall continue to accrue during
any such extension period at the applicable rate of interest in
effect immediately prior to such extension. "Business Day" means
any day other than a Saturday, Sunday or any other day on which
commercial banks are required or authorized by law or regulation
to be closed in New York, New York.
This Note is one of the duly authorized 6.52% Series H
Senior Notes due July 15, 2000 of the Company originally issued
in the aggregate principal amount of $80,000,000 pursuant to the
Note Purchase Agreement, dated as of July 11, 1995, between the
Company and certain institutional investors. The holder of this
Note is entitled to the rights and benefits of such Note Purchase
Agreement and may enforce the agreements of the Company contained
therein and exercise the remedies provided for thereby or
otherwise available in respect thereof. Reference is hereby made
to the Note Purchase Agreement for a statement of such rights and
benefits.
As provided in said Note Purchase Agreement, this Note is
subject to optional prepayments, in whole and in part, with a
premium, all as specified in said Note Purchase Agreement.
Upon surrender of this Note for registration of transfer,
duly endorsed, or accompanied by a written instrument of transfer
duly executed, by the registered holder hereof or his attorney
duly authorized in writing, a new Note or Notes aggregating a
like outstanding principal amount will be issued to and
registered in the name of the transferee. The Company and any
agent of the Company may treat the Person in whose name this Note
is registered as the holder and owner hereof for the purpose of
receiving payments and for all other purposes.
In case an Event of Default (as defined in said Note
Purchase Agreement) shall occur and be continuing, the principal
of this Note, together with interest and premium, in certain
circumstances shall become due and payable and in other
circumstances may be declared and become due and payable in the
manner and with the effect provided in said Note Purchase
Agreement.
THIS NOTE IS MADE AND DELIVERED IN NEW YORK, NEW YORK, AND
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.
MONTGOMERY WARD & CO., INCORPORATED
By:
Name:
Title:
<PAGE>
<PAGE>
EXHIBIT A-2
to
Note Purchase Agreement
MONTGOMERY WARD & CO., INCORPORATED
6.74% Series I Senior Notes due 2002
No. July 11, 1995
$ New York, New York
Private Placement No.: 614223 D@1
MONTGOMERY WARD & CO., INCORPORATED, a corporation organized
under the laws of the State of Illinois (herein, together with
its successors and assigns, the "Company"), for value received,
hereby promises to pay to
, or registered assigns, the
principal amount of Dollars ($ ) (or so much
thereof as shall not have been prepaid) on July 15, 2002, with
interest (computed on the basis of a 360-day year of twelve 30-
day months) on the unpaid balance of such principal amount at the
rate of 6.74% per annum from the date hereof, payable
semiannually in arrears on January 15 and July 15 of each year,
commencing July 15, 1995, until such unpaid balance shall become
due and payable (whether at final maturity, at a date fixed for
prepayment or purchase or by declaration, acceleration or
otherwise and at maturity), and with interest on any overdue
principal (including any overdue required or optional prepayment
of principal) and any overdue premium, if any, and (to the extent
permitted by applicable law) any overdue interest at the Default
Rate (as defined in the Note Purchase Agreement referred to
below) until paid, such overdue interest, if any, to be payable
semiannually as aforesaid or, at the option of the registered
holder hereof, on demand. Payments of principal, premium, if
any, and interest on this Note shall be made in lawful money of
the United States of America at the principal office in New York,
New York of Morgan Guaranty Trust Company of New York, or at such
other place as may be provided pursuant to the Note Purchase
Agreement referred to below or, in certain circumstances, to the
holder of this Note as provided in Section 13 of said Note
Purchase Agreement. If any payment of principal, premium, if
any, or interest on or with respect to this Note becomes due and
payable on any day that is not a Business Day, such amount shall
be payable on the next succeeding Business Day and with respect
to payments of principal, interest shall continue to accrue
during any such extension period at the applicable rate of
interest in effect immediately prior to such extension.
"Business Day" means any day other than a Saturday, Sunday or any
other day on which commercial banks are required or authorized by
law or regulation to be closed in New York, New York.
This Note is one of the duly authorized 6.74% Series I
Senior Notes due July 15, 2002 of the Company originally issued
in the aggregate principal amount of $86,000,000 pursuant to the
Note Purchase Agreement, dated as of July 11, 1995, between the
Company and certain institutional investors. The holder of this
Note is entitled to the rights and benefits of such Note Purchase
Agreement and may enforce the agreements of the Company contained
therein and exercise the remedies provided for thereby or
otherwise available in respect thereof. Reference is hereby made
to the Note Purchase Agreement for a statement of such rights and
benefits.
As provided in said Note Purchase Agreement, this Note is
subject to optional prepayments, in whole and in part, with a
premium, all as specified in said Note Purchase Agreement.
<PAGE>
Upon surrender of this Note for registration of transfer,
duly endorsed, or accompanied by a written instrument of transfer
duly executed, by the registered holder hereof or his attorney
duly authorized in writing, a new Note or Notes aggregating a
like outstanding principal amount will be issued to and
registered in the name of the transferee. The Company and any
agent of the Company may treat the Person in whose name this Note
is registered as the holder and owner hereof for the purpose of
receiving payments and for all other purposes.
In case an Event of Default (as defined in said Note
Purchase Agreement) shall occur and be continuing, the principal
of this Note, together with interest and premium, in certain
circumstances shall become due and payable and in other
circumstances may be declared and become due and payable in the
manner and with the effect provided in said Note Purchase
Agreement.
THIS NOTE IS MADE AND DELIVERED IN NEW YORK, NEW YORK, AND
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.
MONTGOMERY WARD & CO., INCORPORATED
By:
Name:
Title:
<PAGE>
<PAGE>
EXHIBIT A-3
to
Note Purchase Agreement
MONTGOMERY WARD & CO., INCORPORATED
6.98% Series J Senior Notes due 2005
No. July 11, 1995
$ New York, New York
Private Placement No.: 614223 E*2
MONTGOMERY WARD & CO., INCORPORATED, a corporation organized
under the laws of the State of Illinois (herein, together with
its successors and assigns, the "Company"), for value received,
hereby promises to pay to
, or registered assigns, the
principal amount of Dollars ($ ) (or so much
thereof as shall not have been prepaid) on July 15, 2005, with
interest (computed on the basis of a 360-day year of twelve 30-
day months) on the unpaid balance of such principal amount at the
rate of 6.98% per annum from the date hereof, payable
semiannually in arrears on January 15 and July 15 of each year,
commencing July 15, 1995, until such unpaid balance shall become
due and payable (whether at final maturity, at a date fixed for
prepayment or purchase or by declaration, acceleration or
otherwise and at maturity), and with interest on any overdue
principal (including any overdue required or optional prepayment
of principal) and any overdue premium, if any, and (to the extent
permitted by applicable law) any overdue interest at the Default
Rate (as defined in the Note Purchase Agreement referred to
below) until paid, such overdue interest, if any, to be payable
semiannually as aforesaid or, at the option of the registered
holder hereof, on demand. Payments of principal, premium, if
any, and interest on this Note shall be made in lawful money of
the United States of America at the principal office in New York,
New York of Morgan Guaranty Trust Company of New York, or at such
other place as may be provided pursuant to the Note Purchase
Agreement referred to below or, in certain circumstances, to the
holder of this Note as provided in Section 13 of said Note
Purchase Agreement. If any payment of principal, premium, if
any, or interest on or with respect to this Note becomes due and
payable on any day that is not a Business Day, such amount shall
be payable on the next succeeding Business Day and with respect
to payments of principal, interest shall continue to accrue
during any such extension period at the applicable rate of
interest in effect immediately prior to such extension.
"Business Day" means any day other than a Saturday, Sunday or any
other day on which commercial banks are required or authorized by
law or regulation to be closed in New York, New York.
This Note is one of the duly authorized 6.98% Series J
Senior Notes due July 15, 2005 of the Company originally issued
in the aggregate principal amount of $14,000,000 pursuant to the
Note Purchase Agreement, dated as of July 11, 1995, between the
Company and certain institutional investors. The holder of this
Note is entitled to the rights and benefits of such Note Purchase
Agreement and may enforce the agreements of the Company contained
therein and exercise the remedies provided for thereby or
otherwise available in respect thereof. Reference is hereby made
to the Note Purchase Agreement for a statement of such rights and
benefits.
As provided in said Note Purchase Agreement, this Note is
subject to optional prepayments, in whole and in part, with a
premium, all as specified in said Note Purchase Agreement.
<PAGE>
Upon surrender of this Note for registration of transfer,
duly endorsed, or accompanied by a written instrument of transfer
duly executed, by the registered holder hereof or his attorney
duly authorized in writing, a new Note or Notes aggregating a
like outstanding principal amount will be issued to and
registered in the name of the transferee. The Company and any
agent of the Company may treat the Person in whose name this Note
is registered as the holder and owner hereof for the purpose of
receiving payments and for all other purposes.
In case an Event of Default (as defined in said Note
Purchase Agreement) shall occur and be continuing, the principal
of this Note, together with interest and premium, in certain
circumstances shall become due and payable and in other
circumstances may be declared and become due and payable in the
manner and with the effect provided in said Note Purchase
Agreement.
THIS NOTE IS MADE AND DELIVERED IN NEW YORK, NEW YORK, AND
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.
MONTGOMERY WARD & CO., INCORPORATED
By:
Name:
Title:
<PAGE>
<PAGE>
EXHIBIT B
to
Note Purchase Agreement
FORM OF OPINION OF COUNSEL
FOR THE COMPANY
[Letterhead of Altheimer & Gray]
July 11, 1995
To each Note Purchaser listed
on the Attached Schedule, all
of which are Parties to the Note
Purchase Agreement referred to
below
Re: Montgomery Ward & Co., Incorporated
$180,000,000 Senior Note Offering
Ladies and Gentlemen:
We have acted as special counsel to Montgomery Ward & Co.,
Incorporated, an Illinois corporation (the "Company"), in
connection with (a) the issuance and sale by the Company,
pursuant to the Note Purchase Agreement, dated as of July 11,
1995 (the "Note Purchase Agreement"), among the Company and each
of the Note Purchasers named in Schedule I thereto, of (i) its
6.52% Series H Senior Notes due 2000 in the aggregate principal
amount of $80,000,000 (the "Series H Notes"), (ii) its 6.74%
Series I Senior Notes due 2002 in the aggregate principal amount
of $86,000,000 (the "Series I Notes") and (iii) its 6.98% Series
J Senior Notes due 2005 in the aggregate principal amount of
$14,000,000 (the "Series J Notes" and together with the Series H
Notes and the Series I Notes, the "Notes"), and (b) the purchase
by each of you today of Notes, in the principal amount and of the
series indicated opposite your name on Schedule I to the Note
Purchase Agreement. Capitalized terms used herein without
definition have the respective meanings attributed thereto in the
Note Purchase Agreement. Any reference hereinafter to the Notes
refers to the Notes being purchased by and delivered to you
today.
In so acting, we have participated in the preparation of and
are familiar with the Note Purchase Agreement and the Notes. We
have also relied upon the representations and warranties as to
factual matters contained in and made pursuant to the Note
Purchase Agreement and have relied upon the originals, or copies
certified or otherwise identified to our satisfaction, of such
certificates, documents, records and other instruments and
agreements as we have deemed necessary or appropriate to enable
us to render the opinions expressed below.
Our opinion is in every respect based upon, and subject to,
the assumptions, qualifications, limitations and matters set
forth herein.
We are of the opinion that:
1. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Illinois and has all requisite corporate power and authority (i)
in all material respects to own or hold under lease the property
it purports to own or hold under lease and to carry on its
business as now conducted, (ii) to enter into the Note Purchase
Agreement, (iii) to issue and sell the Notes being purchased by
you today and (iv) to perform its obligations under the Note
Purchase Agreement and the Notes.
2. The execution and delivery by the Company of the Note
Purchase Agreement and the Notes and the performance by the
Company of the transactions contemplated thereby (including the
issuance and sale of the Notes) have been duly authorized by all
necessary corporate action on the part of the Company (no action
of its shareholders being required therefor).
3. The Note Purchase Agreement and each of the Notes has
been duly executed and delivered by duly authorized officers of
the Company.
4. The courts of the State of Illinois should recognize
and enforce the choice of New York law as the governing law under
the Note Purchase Agreement and the Notes. If for any reason the
laws of the State of Illinois were to be applied in any suit
directly relating to the Note Purchase Agreement and Notes, the
Note Purchase Agreement and each of the Notes would constitute
the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by (a) applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws from time to time in effect affecting the enforcement of
creditors' rights generally and (b) general equitable principles
(regardless of whether such enforceability is being considered in
a proceeding in equity or at law).
5. Neither the execution and delivery by the Company of
the Note Purchase Agreement and the Notes nor the performance by
the Company of the terms and provisions thereof nor the
consummation of the transactions contemplated thereby will (a)
result in any breach of or be in conflict with or constitute a
default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or
result in (or require) the creation of any Lien in respect of any
property of the Company or its Subsidiaries pursuant to, the
corporate charter or by-laws or similar organic document of the
Company or any of its Subsidiaries, or any term of any agreement,
indenture, mortgage, instrument or license to which the Company
is a party or by which the Company or any of its Subsidiaries or
any of their respective properties may be bound or affected of
which we have knowledge after due inquiry with respect to such
matters was made of G.T. Morgan, and based upon his opinion, as
hereinafter described, to such effect, or (b) violate or be in
conflict with any provision of any presently existing statute,
law, rule, regulation or ordinance, or any Order known to us of
any court, arbitrator or Governmental Body applicable to the
Company or any of its Subsidiaries or any of their respective
properties.
6. To the best of our knowledge after due inquiry with
respect to such matters was made of G.T. Morgan, and based upon
his opinion, as hereinafter described, to such effect, there are
no actions, suits, proceedings or investigations pending or
threatened against or affecting the Company or any of its
property in any court or before any arbitrator of any kind or
before or by any Governmental Body which question the validity or
enforceability of the Note Purchase Agreement or the Notes or any
action taken or to be taken pursuant thereto or contemplated
thereby.
7. No Approval is required on the part of the Company by
or from or with any Governmental Body or, to our knowledge, any
trustee or holder of any indebtedness, obligation or securities
of the Company or any of its Subsidiaries (a) for or in
connection with the valid execution and delivery by the Company
of, or the performance by the Company of its obligations under,
the Note Purchase Agreement or the Notes or the consummation of
the transactions contemplated thereby, including the offer,
issuance, sale and delivery by the Company of Notes (other than
the approval of the Board of Directors and the board of directors
of Montgomery Ward Holding Corp., a Delaware corporation (the
"Parent"), which approvals have previously been obtained), or (b)
as a condition to the legality, validity or enforceability as
against the Company of the Note Purchase Agreement or the Notes.
8. The offer, issuance, sale and delivery of the Notes,
under the circumstances contemplated by the Note Purchase
Agreement, constitute transactions exempt from registration under
the Securities Act, and the qualification of an indenture in
respect thereof under the Trust Indenture Act of 1939, as
amended, is not required in connection with such offer, issuance,
sale and delivery of the Notes.
9. The Company is not an "investment company" or a Person
directly or indirectly "controlled" by or "acting on behalf of"
an "investment company" within the meaning of the Investment
Company Act of 1940, as amended. The Company is not a "holding
company", or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company", as such terms are defined in
the Public Utility Holding Company Act of 1935, as amended.
10. Neither the issuance, sale and purchase of the Notes
being purchased by and delivered to you today nor the application
of the proceeds of such Notes, in each case under the
circumstances contemplated by the Note Purchase Agreement, nor
the execution and delivery of the Note Purchase Agreement and
such Notes, involve any violation of Regulation G (12 CFR 207), T
(12 CFR 220), U (12 CFR 221) or X (12 CFR 224) of the Board of
Governors of the Federal Reserve System or any other regulation
of said Board, or Section 7 of the Exchange Act.
The opinions set forth above are subject to the following
additional qualifications and limitations:
(a) We have assumed, with your permission, the genuineness
of all signatures (other than signatures on behalf of the
Company), the authenticity of all documents submitted to us as
originals (other than the Note Purchase Agreement and the Notes
being purchased by and delivered to you today), the conformity to
the originals of all documents submitted to us as copies, and the
authenticity of the originals of all such latter documents. We
have also assumed the accuracy of the factual matters contained
in the documents we have examined and as related to us by
officers and representatives of the Company.
(b) We have assumed, with your permission, the due
execution and delivery of the Note Purchase Agreement by each of
the Note Purchasers and all other documents and instruments
delivered in connection therewith by each of the parties thereto,
other than the Company.
(c) With your permission, we have relied solely on the
aforesaid opinion of G.T. Morgan, Esq., Senior Associate General
Counsel to the Company, attached hereto as Exhibit A, with
respect to matters referred to, or set forth in, paragraphs 5
(except for that part of paragraph 5 (b) which deals with
"violate or be in conflict with any provision of any presently
existing statute, law, rule, regulation or ordinance"), 6 and 7
(except for that part of paragraph 7 which deals with "[n]o
Approval is required on the part of the Company by or from or
with Governmental Body") of this letter.
(d) With your permission, with respect to matters referred
to, or set forth in, paragraph 8, we have relied on statements
made by the Company in Section 7.13 of the Note Purchase
Agreement and on statements made by ABN AMRO Bank N.V. and
NationsBanc Capital Markets, Inc. (the "Co-Agents"), the
Company's Notes' placement co-agents, which statements are with
respect to the number, nature, knowledge and experience of the
investors to whom, and the manner in which, the Notes were
offered, and are made pursuant to the Co-Agents' respective
letters dated June 30, 1995 and June 30, 1995, attached hereto as
Exhibit B and Exhibit C, respectively.
(e) We are qualified to practice law in the State of
Illinois and we do not purport to be experts in any law other
than the laws of the State of Illinois and the federal laws of
the United States. Accordingly, we express no opinion as to the
laws of any states, or as to any matters subject to such laws,
other than laws of the State of Illinois.
(f) Our opinions are limited to the matters expressly set
forth herein and no opinion is to be implied or inferred beyond
the matters expressly so stated.
(g) Myron Lieberman, a member of this firm, is the sole
general partner of Lieberman Investment Limited Partnership, a
partnership in which one or more other members of this firm are
also partners. Lieberman Investment Limited Partnership is a
shareholder of the Parent, which owns all of the issued and
outstanding shares of the Company. Mr. Lieberman individually is
also a shareholder of the Parent and a director of the Company
and of the Parent. Any knowledge which Mr. Lieberman has by
reason of being a Director of the Company and the Parent is not
knowledge of Altheimer & Gray for purposes of this opinion. Mr.
Lieberman had no involvement in the negotiation or drafting of
the Note Purchase Agreement and no other involvement with the
Note Purchase Agreement other than in his capacity as a Director
of the Company.
This opinion is delivered to you pursuant to Section 2.2 of
the Note Purchase Agreement at the request and direction of the
Company with the understanding that it will be relied upon by you
in connection with the consummation of the transactions
contemplated by the Note Purchase Agreement. This opinion is
furnished only to the Note Purchasers and their counsel and
solely for their benefit in connection with the above
transactions. This opinion may not be relied upon by anyone else
in any respect, except that (i) you may furnish copies of this
opinion to prospective or actual transferees of any Notes held by
you and (ii) any such actual transferees may rely thereon.
Very truly yours,
Altheimer & Gray
<PAGE>
July 11, 1995
Altheimer & Gray
10 South Wacker Drive
Suite 4000
Chicago, Illinois 60606
Re: Montgomery Ward & Co., Incorporated
$180,000,000 Senior Note Offering
Ladies and Gentlemen:
As Senior Associate General Counsel to Montgomery Ward &
Co., Incorporated, an Illinois corporation (the"Company"), I
hereby render this opinion to induce and permit you to render
your opinion "Loan Opinion") to the Note Purchasers (as defined
hereinafter) in connection with (a) the issuance and sale by the
Company, pursuant to the Note Purchase Agreement, dated as of
July 11, 1995 (the "Note Purchase Agreement"), among the Company
and each of the Note Purchasers named in Schedule I thereto (the
"Note Purchasers"), of (i) its 6.52% Series H Senior Notes due
2000 in the aggregate principal amount of $80,000,000 (the
"Series H Notes"), (ii) its 6.74% Series I Senior Notes due 2002
in the aggregate principal amount of $86,000,000 (the "Series I
Notes") and (iii) its 6.98% Series J Senior Notes due 2005 in the
aggregate principal amount of $14,000,000 (the "Series J Notes"
and together with the Series H Notes and the Series I Notes, the
"Notes"), and (b) the purchase by each of the Note Purchasers
purchasing today Notes, in the principal amount and of the series
indicated opposite their respective names on Schedule I to the
Note Purchase Agreement. Capitalized terms used herein without
definition have the respective meanings attributed thereto in the
Note Purchase Agreement.
In so acting, I have participated in the preparation of and
am familiar with the Note Purchase Agreement and the Notes being
purchased by and delivered to the Note Purchasers today. I have
also relied upon the representations and warranties as to factual
matters contained in and made pursuant to the Note Purchase
Agreement and have relied upon the originals, or copies certified
or otherwise identified to my satisfaction, or such certificates,
documents, records and other instruments and agreements as I have
deemed necessary or appropriate to enable me to render the
opinions expressed below.
My opinion is in every respect based upon, and subject to,
the assumptions, qualifications, limitations and matters set
forth herein.
I am of the opinion that:
1. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Illinois and has all requisite corporate power and authority (i)
in all material respects to own or hold under lease the property
it purports to own or hold under lease and to carry on its
business as now conducted, (ii) to enter into the Note Purchase
Agreement, (iii) to issue and sell those Notes being purchased
today, and (iv) to perform its obligations under the Note
Purchase Agreement and the Notes being purchased today.
2. The execution and delivery by the Company of the Note
Purchase Agreement and the Notes, the performance by the Company
of the transactions contemplated thereby (including the issuance
and sale of the Notes) have been duly authorized by all necessary
corporate action on the part of the Company (no action of its
shareholders being required therefor).
3. The Note Purchase Agreement and each of the Notes being
purchased by and delivered to the Note Purchasers today has been
duly executed and delivered by duly authorized officers of the
Company.
4. If for any reason the laws of the State of Illinois
were to be applied in any suit directly relating to the Note
Purchase Agreement and Notes, the Note Purchase Agreement and
each of the Notes being purchased by and delivered to the Note
Purchasers today would constitute the legal, valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be
limited by (a) applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws from time to time in effect affecting
the enforcement of creditors' rights generally, and (b) general
equitable principles (regardless of whether such enforceability
is being considered in a proceeding in equity or at law).
5. Neither the execution and delivery by the Company of
the Note Purchase Agreement and the Notes being purchased by the
Note Purchasers today nor the performance by the Company of the
terms and provisions thereof nor the consummation of the
transactions contemplated thereby will (a) result in any breach
of or be in conflict with or constitute a default (or an event
which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in (or
require) the creation of any Lien in respect of any property of
the Company or its Subsidiaries pursuant to, the corporate
charter or by-laws or similar organic document of the Company or
any of its Subsidiaries, or any term of any agreements,
indenture, mortgage, instrument or license to which the Company
is a party or by which the Company or any of its Subsidiaries or
any of their respective properties may be bound or affected of
which I have knowledge after due inquiry, or (b) violate or be in
conflict with any provision of any presently existing statute,
law, rule, regulation or ordinance, or any Order known to me,
after due inquiry, of any court, arbitrator or Governmental Body
applicable to the Company or any of its Subsidiaries or any of
their respective Properties.
6. To the best of my knowledge after due inquiry there are
no actions, suits, proceedings or investigations pending or
threatened against or affecting the Company or any of its
property in any court or before any arbitrator of any kind or
before or by any Governmental Body which question the validity or
enforceability of the Note Purchase Agreement or the Notes being
purchased today or any action taken or to be taken pursuant
thereto or contemplated thereby.
7. No Approval is required on the part of the Company by
or from or with any Governmental Body or, to my knowledge, after
due inquiry, any trustee or holder of any indebtedness,
obligation or securities of the Company or any of its
Subsidiaries (a) for or in connection with the valid execution
and delivery by the Company of, or the performance by the Company
of its obligations under, the Note Purchase Agreement or the
Notes or the consummation of the transaction contemplated
thereby, including the offer, issuance, sale and delivery by the
Company of Notes (other than the approval of the Board of
Directors and the board of directors of Montgomery Ward Holding
Corp., a Delaware corporation the "Parent"), which approvals have
previously been obtained), or (b) as a condition to the legality,
validity or enforceability as against the Company of the Note
Purchase Agreement or the Notes.
8. The offer, issuance, sale and delivery of the Notes
being purchased by and delivered to the Note Purchasers today,
under the circumstances contemplated by the Note Purchase
Agreement, constitute transactions exempt from registration under
the Securities Act, and the qualification of an indenture in
respect thereof under the Trust Indenture Act of 1939, as
amended, is not required in connection with such offer, issuance,
sale and delivery of the Notes.
The opinions set forth above are subject to the following
additional qualifications and limitations:
(a) I have assumed, with your permission, the genuineness
of all signatures (other than signatures on behalf of the
Company), the authenticity of all documents submitted to me as
originals (other than the Note Purchase Agreement and the Notes
being purchased by and delivered to the Note Purchasers today and
the Officers' Certificate, Secretary's Certificate and
Certificate of Incumbency), the conformity to the originals of
all documents submitted to me as copies, and the authenticity of
the originals of all such latter documents. I have also assumed
the accuracy of the factual matters contained in the documents I
have examined and as related to me by other officers and
representatives of the Company.
(b) I have assumed, with your permission, the due execution
and delivery of the Note Purchase Agreement by each of the Note
Purchasers and all other documents and instruments delivered in
connection therewith by each of the parties thereto, other than
the Company.
(c) With your permission, with respect to matters referred
to, or set forth in, paragraph 8, I have relied on statements
made by the Company in Section 7.13 of the Note Purchase
Agreement and on statements made by ABN AMRO Bank N.V. and
NationsBanc Capital Markets, Inc. (the "Co-Agents"), the
Company's Notes' placement co-agents, which statements are with
respect to the number, nature, knowledge and experience of the
investors to whom, and the manner in which, the Notes were
offered, and are made pursuant to the Co-Agents' respective
letters dated June 30, 1995 and June 30, 1995, attached hereto as
Exhibit A and Exhibit B, respectively.
(d) I am qualified to practice law in the State of Illinois
and I do not purport to be an expert in any law other than laws
of the State of Illinois and the federal law of the United
States. Accordingly, I express no opinion as to the laws of any
states, or as to any matters subject to such laws, other than
laws of the State of Illinois.
(e) My opinions are limited to the matters expressly set
forth herein and no opinion is to be implied or inferred beyond
the matters expressly so stated.
(f) I am a shareholder of the Parent, which owns all of the
issued and outstanding shares of the Company, and I am the holder
of options to purchase shares of Class A Common Stock of the
Parent.
This opinion is delivered to you so that you and the Note
Purchasers can rely upon it and so that you can deliver the Loan
Opinion (in reliance hereon) pursuant to Section 2.2 of the Note
Purchase Agreement at the request and direction of the Company in
connection with the consummation of the transactions contemplated
by the Note Purchase Agreement. You may deliver this opinion to
the Note Purchasers and their counsel solely for your and their
benefit and reliance in connection with the above transactions.
This opinion may not be relied upon by anyone else in any
respect, except that (i) you or any Note Purchaser may furnish
copies of this opinion to prospective or actual transferee of any
Notes and (ii) any such actual transferee may rely thereon.
Very truly yours,
G.T. Morgan, Esq.,
Senior Associate General Counsel
Montgomery Ward & Co., Incorporated
<PAGE>
<PAGE>
Exhibit A to
Opinion of G.T.
Morgan
[Letterhead of ABN AMRO Bank, N.V.]
June 30, 1995
George Tad Morgan, Esq. Carol J. Harms
Senior Associate General Counsel Vice President and Treasurer
Montgomery Ward & Co., Montgomery Ward & Co.,
Incorporated Incorporated
Montgomery Ward Plaza Montgomery Ward Plaza
Chicago, Illinois 60671 Chicago, Illinois 60671
Altheimer & Gray
10 South Wacker Drive, Suite 4000
Chicago, Illinois 60606
Re: $180,000,000 Senior Notes due 2000-2005
Montgomery Ward & Co., Incorporated
Ladies and Gentlemen:
In reference to the proposed sale of the above-described
securities in which we have been acting as the Company's Private
Placement Co-Agent, we hereby confirm that the securities were
offered by us to no more than 23 institutional investors,
including the purchasers. We further confirm that, immediately
prior to making the offer to such offeree, we had reasonable
grounds to believe and did believe that such offeree had such
knowledge and experience in financing and business matters; that
it was capable of evaluating the merits and risks of the
investment in the securities; and immediately prior to confirming
the sale of the securities to the purchasers, after making
reasonable inquiry, we had reasonable grounds to believe and did
believe that each purchaser has such knowledge and experience in
financing and business matters that it was capable of evaluating
the merits and risks of the investment in the securities.
In connection, therewith, we did not offer the above-described
securities by any form of general solicitation or general
advertising, including: (a) any advertisement, article, notice
or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio, or (b) any
seminar or meeting whose attendees have been invited by any
general solicitation or advertising.
Sincerely,
ABN AMRO Bank, N.V.
By
Its
<PAGE>
<PAGE>
Exhibit B to
Opinion of G.T.
Morgan
[Letterhead of NationsBanc Capital Markets Letterhead]
June 30, 1995
Mr. George Tad Morgan, Esq. Ms. Carol J. Harms
Senior Associate General Counsel Vice President and Treasurer
Montgomery Ward & Co., Montgomery Ward & Co.,
Incorporated Incorporated
Montgomery Ward Plaza Montgomery Ward Plaza
Chicago, IL 60671 Chicago, IL 60671
Altheimer & Gray
10 South Wacker Drive, Suite 4000
Chicago, IL 60606
Re: $180,000,000 Senior Notes Due 2000-2005
Montgomery Ward & Co., Incorporated
Ladies and Gentlemen:
In reference to the proposed sale of the above-described
securities in which we have been acting as the Company's Private
Placement Co-Agent, we hereby confirm that the securities were
offered by us to no more than 110 institutional investors,
including the purchasers. We further confirm that, immediately
prior to making the offer to such offeree, we had reasonable
grounds to believe and did believe that such offeree had such
knowledge and experience in financing and business matters; that
it was capable of evaluating the merits and risks of the
investment in the securities; and immediately prior to confirming
the sale of the securities to the purchasers, after making
reasonable inquiry, we had reasonable grounds to believe and did
believe that each purchaser has such knowledge and experience in
financing and business matters that it was capable of evaluating
the merits and risks of the investment in the securities.
In connection, therewith, we did not offer the above-described
securities by any form of general solicitation or general
advertising, including: (a) any advertisement, article, notice
or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio, or (b) any
seminar or meeting whose attendees have been invited by any
general solicitation or advertising.
Sincerely,
NATIONSBANC CAPITAL MARKETS, INC.
By:
Its:
<PAGE>
<PAGE>
Exhibit B to
Opinion of
Altheimer & Gray
[Letterhead of ABN AMRO Bank, N.V.]
June 30, 1995
George Tad Morgan, Esq. Carol J. Harms
Senior Associate General Counsel Vice President and Treasurer
Montgomery Ward & Co., Montgomery Ward & Co.,
Incorporated Incorporated
Montgomery Ward Plaza Montgomery Ward Plaza
Chicago, Illinois 60671 Chicago, Illinois 60671
Altheimer & Gray
10 South Wacker Drive, Suite 4000
Chicago, Illinois 60606
Re: $180,000,000 Senior Notes due 2002-2005
Montgomery Ward & Co., Incorporated
Ladies and Gentlemen:
In reference to the proposed sale of the above-described
securities in which we have been acting as the Company's Private
Placement Co-Agent, we hereby confirm that the securities were
offered by us to no more than 23 institutional investors,
including the purchasers. We further confirm that, immediately
prior to making the offer to such offeree, we had reasonable
grounds to believe and did believe that such offeree had such
knowledge and experience in financing and business matters; that
it was capable of evaluating the merits and risks of the
investment in the securities; and immediately prior to confirming
the sale of the securities to the purchasers, after making
reasonable inquiry, we had reasonable grounds to believe and did
believe that each purchaser has such knowledge and experience in
financing and business matters that it was capable of evaluating
the merits and risks of the investment in the securities.
In connection, therewith, we did not offer the above-described
securities by any form of general solicitation or general
advertising, including: (a) any advertisement, article, notice
or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio, or (b) any
seminar or meeting whose attendees have been invited by any
general solicitation or advertising.
Sincerely,
ABN AMRO Bank, N.V.
By
Its
<PAGE>
<PAGE>
Exhibit C to
Opinion of Altheimer
& Gray
[Letterhead of NationsBanc Capital Markets Letterhead]
June 30, 1995
Mr. George Tad Morgan, Esq. Ms. Carol J. Harms
Senior Associate General Counsel Vice President and Treasurer
Montgomery Ward & Co., Montgomery Ward & Co.,
Incorporated Incorporated
Montgomery Ward Plaza Montgomery Ward Plaza
Chicago, IL 60194 Chicago, IL 60671
Altheimer & Gray
10 South Wacker Drive, Suite 4000
Chicago, IL 60606
Re: $180,000,000 Senior Notes Due 2000-2005
Montgomery Ward & Co., Incorporated
Ladies and Gentlemen:
In reference to the proposed sale of the above-described
securities in which we have been acting as the Company's Private
Placement Co-Agent, we hereby confirm that the securities were
offered by us to no more than 110 institutional investors,
including the purchasers. We further confirm that, immediately
prior to making the offer to such offeree, we had reasonable
grounds to believe and did believe that such offeree had such
knowledge and experience in financing and business matters; that
it was capable of evaluating the merits and risks of the
investment in the securities; and immediately prior to confirming
the sale of the securities to the purchasers, after making
reasonable inquiry, we had reasonable grounds to believe and did
believe that each purchaser has such knowledge and experience in
financing and business matters that it was capable of evaluating
the merits and risks of the investment in the securities.
In connection, therewith, we did not offer the above-described
securities by any form of general solicitation or general
advertising, including: (a) any advertisement, article, notice
or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio, or (b) any
seminar or meeting whose attendees have been invited by any
general solicitation or advertising.
Sincerely,
NATIONSBANC CAPITAL MARKETS, INC.
By:
Its:
<PAGE>
<PAGE>
EXHIBIT C
to
Note Purchase Agreement
The opinion of counsel referred to in Section 6.8(b) shall
be to the effect that:
1. The Successor is duly organized, validly existing and
in good standing in the jurisdiction of its organization.
2. The Successor has all requisite legal right, power and
authority to assume all of the obligations of the Company under
the Notes and the Agreement.
3. The assumption by the Successor of all the obligations
of the Company under the Notes and the Agreement will not (a)
result in any breach of or be in conflict with or constitute a
default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or
result in a loss of any benefit to which the Successor is
entitled under, or result in (or require) the creation of any
Lien in respect of any property of the Successor pursuant to, the
corporate charter or by-laws or similar organic document of the
Successor, or any term of any agreement, indenture, mortgage,
instrument or License to which the Successor is a party or by
which its properties may be bound or affected of which such
counsel has knowledge after due inquiry, or (b) violate or be in
conflict with any provision of any existing statute, law, rule,
regulation or ordinance, or any Order known to us of any court,
arbitrator or Governmental Body applicable to the Successor or
any of its properties.
4. The Successor has assumed the due and punctual payment
of the Notes according to their tenor and the due and punctual
performance of the obligations of the Company under the Agreement
and subject to customary qualifications, such assumption is valid
and enforceable in accordance with its terms, except as such
enforceability may be limited by (a) applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws from time
to time in effect affecting the enforcement of creditors' rights
generally and (b) general equitable principles (regardless of
whether such enforceability is being considered in a proceeding
in equity or at law).
5. The Agreement and the Notes constitute the legal, valid
and binding obligation of the Successor, enforceable against the
Successor in accordance with its terms, except as such
enforceability may be limited by (a) applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws from time
to time in effect affecting the enforcement of creditors' rights
generally and (b) general equitable principles (regardless of
whether such enforceability is being considered in a proceeding
in equity or at law).
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> JUL-01-1995
<CASH> 41
<SECURITIES> 336
<RECEIVABLES> 121
<ALLOWANCES> 0
<INVENTORY> 1583
<CURRENT-ASSETS> 0
<PP&E> 2021
<DEPRECIATION> 650
<TOTAL-ASSETS> 4577
<CURRENT-LIABILITIES> 00
<BONDS> 0
<COMMON> 0
75
0
<OTHER-SE> 697
<TOTAL-LIABILITY-AND-EQUITY> 4577
<SALES> 2877
<TOTAL-REVENUES> 3142
<CGS> 2285
<TOTAL-COSTS> 2342
<OTHER-EXPENSES> 748
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 43
<INCOME-PRETAX> 9
<INCOME-TAX> 2
<INCOME-CONTINUING> 7
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7
<EPS-PRIMARY> .12
<EPS-DILUTED> .12
</TABLE>
