<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) January 6, 1997
Montgomery Ward Holding Corp.
(Exact name of registrant as specified in its charter)
Delaware 0-17540 36-3571585
(State or other (Commission File (IRS Employer
Jurisdiction of Number) Identification
incorporation) Number)
Montgomery Ward Plaza, Chicago, Illinois 60671
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 476-2000
(Former name or former address, if changed since last report) <PAGE>
<PAGE>
ITEM 5. OTHER EVENTS.
Effective January 6, 1997, in connection with the appointment
of Roger V. Goddu as Chief Executive Officer and a director of Montgomery
Ward Holding Corp. (the "Company") and as Chief Executive Officer of
Montgomery Ward & Co., Incorporated, a wholly-owned subsidiary of the
Company ("Montgomery Ward"), each of Spencer H. Heine, John L. Workman
and G. Joseph Reddington resigned as directors of the Company. Messrs.
Heine, Workman and Reddington served on the Board of Directors of the
Company as designees of Bernard F. Brennan, Chairman of the Board of
the Company and formerly Chief Executive Officer of the Company and
of Montgomery Ward.
Pursuant to an amendment to that certain Stockholders'
Agreement dated as of June 17, 1988, as amended (the "Amendment
Agreement"), General Electric Capital Corporation ("GECC") has the
right to designate five (5) designees to serve as directors of the
Company, Mr. Brennan has the right to designate three (3) designees
to serve as directors of the Company and Mr. Goddu, as Chief
Executive Officer, has the right to designate two (2) designees to
serve as directors of the Company. GECC beneficially owns 25,000,000
shares of Class B Common Stock of the Company, constituting 100.0% of
the outstanding shares of Class B Common Stock and 57.4% of the
outstanding shares of Common Stock of the Company. Mr. Brennan
beneficially owns 16,328,366 shares of Class A Common Stock of the
Company (including such shares held by Mr. Brennan as voting
trustee), constituting 88.1% of the outstanding shares of Class A
Common Stock and 37.5% of the outstanding shares of Common Stock of
the Company. The Amendment Agreement and the By-Laws of the Company
pursuant thereto provide that any action to be taken by the Board of
Directors of the Company requires the affirmative vote of two-thirds
of the full Board of Directors. Prior to the appointment of Mr.
Goddu, neither GECC nor Mr. Brennan, through their designees, could
effect such a two-thirds vote without the participation of designees
of the other party. Currently, GECC could effect such a vote with
the participation of the designees of either Mr. Brennan or Mr. Goddu
(although there are currently two vacancies on the Board of Directors
of the Company, as each of Mr. Brennan and Mr. Goddu currently has
yet to name one of his respective designees).
Pursuant to the Amendment Agreement, the number of
directorships to be designated by Mr. Brennan is subject to reduction
(and the number of directorships to be designated by GECC is subject
to increase) in the event of certain reductions in the percentage
ownership of the Company's common stock of Mr. Brennan and his
permitted transferees. The Amendment Agreement also contains
provisions with respect to, among other matters, transfer
restrictions with respect to shares of common stock of the Company,
certain "put" and "call" rights and restrictions on such rights,
registration rights, certain "drag-along" rights for GECC and "tag-
along" rights for Mr. Brennan and rights of refusal for new
securities. <PAGE>
<PAGE>
The foregoing description of the Amendment Agreement is
qualified in its entirety by reference to the text of the Amendment
Agreement, which is filed as Exhibit 1 hereto and incorporated herein
by reference. The Stockholders' Agreement as in force prior to such
amendment is also incorporated herein by reference and is filed as
Exhibit 2 hereto.
ITEM 7. EXHIBITS
1. Amendment Agreement dated as of December 10, 1996 among
Montgomery Ward, Bernard F. Brennan and GECC.
2. Stockholders' Agreement dated as of June 17, 1988, as
amended through December 29, 1994, incorporated by
reference to Exhibit 4(e) to the Company s Registration
Statement on Form S-8 (Registration No. 33-57075).<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the issuer has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
MONTGOMERY WARD HOLDING CORP.
January 20, 1997 By: /s/ John L. Workman
John L. Workman
Executive Vice President
Chief Financial Officer<PAGE>
<PAGE>
EXHIBIT 1
AMENDMENT AGREEMENT
AMENDMENT AGREEMENT (the "Agreement"), dated as of December 10,
1996, by and among Montgomery Ward Holding Corp. (the "Company"),
Bernard F. Brennan ("Brennan") and General Electric Capital
Corporation ("GE Capital").
W I T N E S S E T H:
WHEREAS, the Company, Brennan and GE Capital are parties to
that certain Stockholders' Agreement, amended and restated as of
December 29, 1994 (the "Stockholders' Agreement"), and capitalized
terms used herein, but not otherwise defined, are used as defined in
the Stockholders' Agreement and article, section or subsection
references used herein are references to articles, sections or
subsections of the Stockholders' Agreement (except for paragraph 19
hereof in which references to articles, sections or subsections are
references to articles, sections or subsections of the Company's
By-laws);
WHEREAS, Brennan and GE Capital have the authority under
Section 8.2 of the Stockholders' Agreement to amend the Stockholders'
Agreement; and
WHEREAS, each of the parties hereto desires to amend the
Stockholders' Agreement and the Company's By-laws as hereinafter set
forth.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Section 1.2 is hereby amended by adding the following
definitions where they should appear in such section in alphabetical
order:
<PAGE>
"Affiliate" means with respect to any Person,
any other Person which, at the time of the
applicable determination, the first Person
controls, which at such time controls the
first Person, or which at such time is under
common control with the first Person. For
purposes of the preceding sentence, "control"
means the power, direct or indirect, to
direct or cause the direction of the
management and policies of a Person through
voting securities, contract or otherwise.
"Fully Diluted Equity" means the number of
shares of common capital stock of the Company
of any series or class outstanding as of the
date of determination plus the number of such
shares subject to any then outstanding
options (whether Options, Purchase Rights or
other options and whether or not then
exercisable).
"Independent Third Party" means any Person
who, immediately prior to the contemplated
transaction, is not GE Capital or a GE
Capital Affiliate and is not a creditor of
the Company or any other member of the Ward
Group for a principal amount in excess of
$500,000 and does not own or have the right
to acquire in excess of 5% of any class of
the Company's equity capital stock on a
fully-diluted basis (each a "Related Party"),
who is not an Affiliate of any such Related
Party.
"Sale of the Company" means the sale of the
Company to an Independent Third Party or
group of Independent Third Parties pursuant
to which such party or parties acquire (i)
all or at least 90% of the issued and
outstanding capital stock of the Company
(whether by merger, consolidation or sale or
transfer of stock) or (ii) all or
substantially all of the Company's assets
determined on a consolidated basis."
2. Section 1.5(a) and (b) are hereby relettered as Sections
1.5 (b) and (c) and a new Section 1.5(a) is hereby added as follows:
"(a) expressly subject to Section 1.9,
the provisions of Article II shall not apply
to a Transfer by a Controlling Shareholder
which is registered under the Act or sold
<PAGE>
pursuant to Rule 144 or to a Transfer by GE
Capital or a GE Capital Affiliate at a time
at which Brennan is not entitled to designate
members of the Board of Directors pursuant to
Article V;"
and the following shall be added at the beginning of new Section
1.5(b): "Except as provided in (a) above,".
3. Section 1.6 is hereby amended to add at the end thereof
the following:
"; provided, however, that Brennan and his
Permitted Transferees and GE Capital and the
GE Capital Affiliates agree that with respect
to themselves and with respect to any Person
who becomes bound by this Agreement after
December 10, 1996, each of the provisions of
Article V shall be in effect until December
31, 2006, except Section 5.8 which shall
remain in effect so long as this Agreement
remains in effect."
4. Sections 3.5(a), (c) and (d) are hereby deleted and
replaced with the words Intentionally omitted .
5. Section 3.5(b) is hereby amended by inserting after the
words "from time to time" the first appearance of the words "at any
time on or after January 1, 1999".
6. Section 3.11 is hereby amended by adding immediately
before the words "("Article III Closing Date")" the following:
", or in the case of a purchase or sale of
such Shares pursuant to Section 3.5, on the
30th day next following the day on which
notice of exercise of the right to sell such
Shares is given under Section 3.5"
7. Section 4.2 (b) is hereby amended by adding at the end
thereof the following:
"; provided, however, that, except as a
participant in any loan made to any member or
members of the Ward Group by banks, insurance
companies or other unrelated third parties so
long as neither GE Capital nor any GE Capital
Affiliate is the controlling participant,<PAGE>
<PAGE>
neither GE Capital nor any GE Capital
Affiliate shall enter into any contract or
agreement with any member of the Ward Group
which would impose restrictions on the
Company's ability to repurchase its Shares
under Section 3.5 or make payments on account
of the Purchase Price thereof that are more
onerous than any such restrictions that exist
as of December 1, 1996 under the material
loan agreements to which members of the Ward
Group were a party on such date"
8. Section 4.3 is hereby amended by adding immediately after
the words "Except as otherwise determined by the Board of Directors"
the following:
"with the prior written consent of Brennan
(and, if Brennan is no longer alive or
legally competent, Brennan's Permitted
Transferees holding a majority of the Shares
held at such time by all such Permitted
Transferees) to the extent that any such
determination of the Board of Directors would
reduce the Cash Payments Limitation with
respect to Brennan or his Permitted
Transferees"
and by adding at the end of the first sentence of such Section 4.3
the following:
"(it being understood that the Insurance
Proceeds shall be first applied to repurchase
Shares from the Management Shareholder (or
his Permitted Transferees) whose death has
given rise to such Insurance Proceeds)"
9. The words of the first paragraph of Section 5.2,
beginning with the word "consisting" and ending with the term "GE
Capital," are hereby deleted and replaced with the following:
". . . consisting of ten members, five
to be designated by Brennan and five to be
designated by GE Capital; provided, however,
at such time as Brennan ceases to be the
Chairman of the Board and Chief Executive
Officer of Ward, Brennan shall cause two of
his designees then serving as members of the
Board of Directors to resign effective upon
the appointment of a successor Chairman of
the Board and Chief Executive Officer of
Ward, which such successor shall be entitled<PAGE>
<PAGE>
to designate two members (including himself)
and Brennan thereafter shall be entitled to
designate three members of the Board of
Directors."
10. Section 5.2(a) is hereby amended in its entirety to read
as follows:
"(a) any Transfer of Shares to a Person shall
not be effective until such Person executes a
written agreement pursuant to which such
Person acknowledges and agrees that the
Shares Transferred to it remain subject to
all restrictions on Transfer contained in
this Agreement and that it is subject to the
voting provisions applicable to Brennan
immediately prior to the consummation of the
Transfer including, without limitation, the
provisions contained herein relating to
voting for members of the Board of Directors
designated by Brennan, GE Capital and the
Chairman of the Board and Chief Executive
Officer of Ward."
11. Section 5.2 is hereby amended to add a new subparagraphs
(d) and (e) thereof to read in its entirety as follows:
"(d)(X) at such time, if any, as
Brennan and his Permitted Transferees
collectively shall cease to own, in the
aggregate, more than 50% of the Shares which
they held on December 1, 1996 and Brennan is
no longer the Chairman of the Board and Chief
Executive Officer of Ward, the number of
members of the Board of Directors which GE
Capital shall have the right to designate
shall be increased by two and the number of
members of the Board of Directors which
Brennan shall have the right to designate
shall be reduced by two, and (Y) at such
time, if any, as Brennan and his Permitted
Transferees collectively shall cease to own,
in the aggregate, more than 20% of the Shares
which they held on December 1, 1996 and
Brennan is no longer the Chairman of the
Board and Chief Executive Officer of Ward,
Brennan shall no longer have the right to
designate any member of the Board of
Directors and the members that Brennan would
have been entitled to designate (after taking
into account the number of directors GE
Capital is entitled to designate as a result<PAGE>
<PAGE>
of the decrease in ownership below the 50%
level described in (X) above) shall be
designated by the Chairman of the Board and
Chief Executive Officer of Ward.
(e) in the event of Brennan's death
or legal incompetence, his rights, if any, to
designate directors hereunder shall be
exercisable by his Permitted Transferees
based on a vote of a majority of the Shares
held by such Permitted Transferees."
12. The introductory paragraph of Section 5.3 prior to clause
(a) thereof is hereby amended in its entirety to read as follows:
"5.3 Supermajority Requirement. At
all times in which this Article V is in
force, GE Capital, the GE Capital Affiliates,
Brennan, his Permitted Transferees and each
Person who becomes a party to this Agreement
after December 10, 1996 shall vote its or his
Shares and otherwise take all action
necessary or appropriate to cause the By-laws
of the Company to provide, and the
Shareholders agree that, unless otherwise
specifically provided herein, all action to
be taken by the Company or any member of the
Ward Group which requires action of the Board
of Directors, shall require the affirmative
vote of not less than two-thirds (2/3) of the
entire Board of Directors (i.e., at least
two-thirds (2/3) of the number of
directorships, regardless of how many
directors are then in office). The actions
which shall require action by such Board of
Directors shall include, without limitation,
the following:"
13. Section 5.5 is hereby amended in its entirety to read as
follows:
"5.5 By-Laws of Members of the Ward
Group. GE Capital, the GE Capital
Affiliates, Brennan, his Permitted
Transferees and each Person who becomes a
party to this Agreement after December 10,
1996 shall vote its or his Shares and
otherwise take all action necessary or
appropriate to cause the Company to promptly
cause the By-laws of each member of the Ward
Group that is a "Significant Subsidiary"
under Regulation S-X of the Act (or under any
successor regulation) (a "Significant Ward
<PAGE>
Group Member"), other than the Company, to be
amended to provide that no action requiring
Board of Directors approval or authorization
including, without limitation, those items
referred to in Section 5.3 hereof applicable
to such member, may be taken by a member of
the Ward Group without the affirmative vote
of not less than two-thirds (2/3) of the
entire Board of Directors (i.e., at least
two-thirds (2/3) of the number of
directorships, regardless of how many
directors are then in office) of (i) such
member of the Ward Group and (ii) the
Company."
14. Section 5.6 is hereby deleted in its entirety and
replaced with the words "Intentionally omitted."
15. ARTICLE V is hereby amended to add a new Section 5.9
which shall read as follows:
"5.9 Board Members of the Significant
Ward Group Members. GE Capital, the GE
Capital Affiliates, Brennan, his Permitted
Transferees and each Person who becomes a
party to this Agreement after December 10,
1996 shall vote its or his Shares and
otherwise take all action necessary or
appropriate to cause the boards of directors
of Ward and each Significant Ward Group
Member to have the same members as the Board
of Directors of the Company."
16. ARTICLE VI is hereby renamed "Registration Rights and
Other Shareholder Rights." Section 6.1(a) is hereby amended to delete
"July 1, 1992" and replace it with "January 1, 1999".
17. Section 6.1(a)(i) is hereby amended to add in the third
sentence thereof after the words "Each Demanding Group" the words
"(other than the Brennan Group)" and is hereby further amended to add
at the end of such Section the following:
"In addition to the foregoing, Brennan and
his Permitted Transferees (the "Brennan
Group") shall be entitled to (A) one Demand
Registration (other than a Demand
Registration on Form S-3 promulgated by the
Commission or any successor form) (the
"Brennan Long-Form Demand") and (B) at any
time at which the Company is eligible to
register Shares on Form S-3 or any successor
form, an unlimited number of Demand
<PAGE>
Registrations on Form S-3. The Brennan Group
shall be deemed to be a separate Demanding
Group for all provisions of this ARTICLE VI"
18. Section 6.1(c) is hereby amended to add at the end
thereof the following:
"Notwithstanding the foregoing provisions of
this Section 6.1(c), in the event of the
Brennan Long-Form Demand, no notice shall be
given to any other Group or members thereof
and no Person (including the Company) shall
have a right to participate in the Brennan
Long-Form Demand other than Brennan and his
Permitted Transferees except on a basis
subordinate to that of Brennan and his
Permitted Transferees."
18. The following new sections are hereby added to ARTICLE VI
following Section 6.13:
"Section 6.14 Rights of Inclusion.
(a) Neither GE Capital nor a GE Capital
Affiliate (collectively, the "Selling
Shareholder") shall directly or indirectly
Transfer any of its Shares to any third party
in a single transaction or series of
transactions unless the terms and conditions
of such Transfer contains an offer to Brennan
and each of his Permitted Transferees (the
"Receiving Shareholders") to include in such
Transfer such number of Shares then owned by
the Receiving Shareholders in accordance with
Section 6.14(b) below. At least 20 days
prior to effecting any such third party
Transfer, the Selling Shareholder promptly
shall cause the terms and conditions of such
proposed Transfer to be reduced to a
reasonably detailed writing (which writing
shall identify the third party purchaser and
shall include the offer to the Receiving
Shareholders to purchase or otherwise acquire
their Shares, according to the terms and
subject to the conditions of this Section
6.14), and shall deliver, or cause the third
party to deliver, written notice (the
"Notice") of the terms of such Transfer to
each Receiving Shareholder. The Notice shall
be accompanied by a true and correct copy of
the agreement, if any, embodying the terms
and conditions of the proposed Transfer or
such written summary thereof if there is no
agreement. At any time after receipt of the
<PAGE>
Notice (but in no event later than 15
business days after receipt), any or all of
the Receiving Shareholders, may accept the
offer included in the Notice for up to such
number of Shares as determined in accordance
with the provisions of Section 6.14(b) below,
by furnishing irrevocably written notice of
such acceptance to the Selling Shareholder
and to the third party purchaser.
(b) In the event that any Receiving
Shareholder elects to accept the offer
included in the Notice described in Section
6.14(a) above, such Receiving Shareholder
(the "Included Receiving Shareholder") shall
Transfer such number of its Shares pursuant
to (and upon consummation of) such third
party disposition which is equal to the
product of (X) the total number of Shares to
be Transferred to the third party in such
transaction and (Y) a fraction, the numerator
of which shall equal the total number of
Shares then owned by such Included Receiving
Shareholder, and the denominator of which
shall equal the total number of Shares then
outstanding held by the Selling Shareholder
and the Receiving Shareholders.
(c) The purchase of Shares pursuant
to this Section 6.14 shall be made on the
same terms (including, without limitation,
the per share consideration and method of
payment, and the date of Transfer), and
subject to the same conditions, if any, as
are provided to the Selling Shareholder and
stated in the Notice to the extent that the
Receiving Shareholders are capable of
performing such terms and conditions and, to
the extent that they are not so capable, the
Receiving Shareholders sale of Shares in
such transaction shall not be subject to such
terms and conditions.
(d) Upon the consummation of the
Transfer of Shares pursuant to the third
party Transfer, the Selling Shareholder shall
(i) cause the third party to remit directly
to each Included Receiving Shareholder the
sales price of its Shares and (ii) furnish
such other evidence of the completion and
time of completion of such Transfer and the
terms thereof as may reasonably be requested
by such Included Receiving Shareholder.
<PAGE>
(e) If a Receiving Shareholder has
not delivered to the Selling Shareholder and
to the third party written notice of its
acceptance of the offer contained in the
notice within 15 business days after the
receipt of such Notice, it shall be deemed to
have waived any and all rights pursuant to
this Section 6.14 with respect to the
proposed Transfer, of its Shares described in
the Notice, and the Selling Shareholder shall
have 60 days (calculated form the first day
next succeeding the expiration of the 15
business days acceptance period described
above) in which to dispose of the aggregate
amount of Shares described in the notice to
the third party identified in the notice, on
terms not more favorable to the Selling
Shareholder than those which were set forth
in the Notice. If a Receiving Shareholder
has not delivered irrevocable written notice
of acceptance as described in the preceding
sentence and, if after 60 days following
receipt of the Notice, the Selling
Shareholder and the third party shall not
have completed the Transfer of Shares to be
sold in connection therewith in accordance
with the terms of the proposed Transfer, all
the restrictions on the Transfer of Shares
contained in this Section 6.14 shall again be
in force and effect.
(f) If the Company or any other
member of the Ward Group sells shares to an
employee stock ownership plan or its
equivalent (an "ESOP") and the Board of
Directors of the Company determines at such
time to permit stockholders to sell shares to
such ESOP, Brennan and his Permitted
Transferees and GE Capital and the GE Capital
Affiliates (the "Participating Sellers")
shall be given the right to sell their shares
to such ESOP with each of the Participating
Sellers being permitted to sell to the ESOP a
number of Shares which is equal to the
product of (X) the total number of Shares to
be sold by all stockholders to the ESOP and
(Y) a fraction, the numerator of which shall
equal the total number of Shares then owned
by such Participating Seller, and the
denominator of which shall equal the total
number of Shares then outstanding owned by
all of the Participating Sellers in the
aggregate.
<PAGE>
(g) Subsection (a) through (d),
inclusive of this Section 6.14, shall
terminate upon the Public Offering
Termination Date and shall not be in effect
at any time at which GE Capital and the GE
Capital Affiliates do not own in the
aggregate at least 35% of the Fully Diluted
Equity.
6.15 Sale of the Company. (a) At any
time, GE Capital together with any holder or
holders who, together with GE Capital, hold
more than 50% of the Shares seek a Sale of
the Company to an Independent Third Party or
Independent Third Parties that want to
acquire (i) all or at least 90% of the issued
and outstanding capital stock of the Company
(whether by merger, consolidation or sale or
transfer of stock) or (ii) all or
substantially all of the Company's assets on
a consolidated basis, the provisions of this
Section 6.15 shall apply except to the extent
set forth in (g) below. Any such holder or
holders shall give Brennan and each of his
Permitted Transferees (the "Brennan
Shareholders") notice of such holder or
holders intention to commence any initiative
to seek a Sale of the Company to an
Independent Third Party (it being understood
that such an intention shall not be
considered to exist until such holder or
holders proceed beyond informal discussions
regarding a potential Sale of the Company)
and, to the extent such holder or holders
seek to provide any potential purchasers with
confidential information regarding the
Company or any other member of the Ward
Group, such holder or holders shall, on
behalf of the Company, obtain customary
confidentiality agreements signed by such
purchasers and provide the Board of Directors
with a reasonable opportunity to review and
comment upon any such information that such
holder or holders seek to provide to any
potential purchasers.
(b) The holder or holders proposing a
Sale of the Company (the "Proposing
Shareholders") shall deliver written notice
to the Brennan Shareholders setting forth
the net consideration per Share to be paid
in connection with such Sale of the Company
and the terms of payment thereof (the
"Company Sale Notice"). In the event that
<PAGE>
the consideration to be paid in connection
with a Sale of the Company is other than
cash, the Company Sale Notice shall be
accompanied by a written determination (the
"Initial Valuation Determination") by a
reputable investment banking firm or national
accounting firm (the fees and expenses of
which shall be borne by the Proposing
Shareholders) of the cash equivalent value of
the net consideration to be paid per Share.
If the Sale of the Company is structured as a
sale of assets, the net consideration per
Share shall be computed based upon the
consideration that would be payable to the
Company's Shareholders upon a liquidation of
the Company immediately after such sale of
assets, taking into account any taxes payable
by the Company and any liabilities retained
by the Company (including any liabilities to
redeem preferred stock) in connection with
such sale of assets.
(c) Each Brennan Shareholder shall
vote for, consent to and raise no objections
against the transaction described in the
Company Sale Notice, and if the Sale of the
Company is structured as a sale of stock,
each Brennan Shareholder shall sell his, her
or its Shares on the terms and conditions set
forth in the Company Sale Notice.
(d) The Proposing Shareholders shall
have 90 days after the expiration of the
Company Sale Election Period to consummate
the Sale of the Company with an Independent
Third Party at a net consideration per share
no more favorable to the purchasing party
than the net consideration per share
specified in the Company Sale Notice. If the
Sale of the Company is not consummated within
such 90-day period, the Proposing
Shareholders shall comply with the provisions
of this Section 6.15 for any subsequent Sale
of the Company.
(e) If the Sale of the Company is
structured as (x) a merger or consolidation,
each of the Brennan Shareholders shall waive
any dissenters rights, appraisal rights or
similar rights in connection with such merger
or consolidation or (y) a sale of stock, each
Brennan Shareholder shall agree to sell all
of his, her or its Shares and rights to
acquire shares of Shares on the terms and
<PAGE>
conditions approved by the Proposing
Shareholders, each Brennan Shareholder shall
take all necessary or desirable actions in
connection with the consummation of the Sale
of the Company as reasonably requested by the
Company and each Brennan Shareholder shall
pay its pro rata share (based on the number
of Shares owned) of the expenses incurred by
the Shareholders in connection with such Sale
of the Company and shall be obligated to join
on a pro rata basis (based on the number of
Shares owned) in any indemnification or other
obligations that the Proposing Shareholders
agree to provide in connection with such Sale
of the Company other than any such
obligations that relate specifically to a
particular Shareholder such as
indemnification with respect to
representations and warranties given by a
Shareholder regarding such Shareholder's
title to and ownership of Shares); provided,
however, that no Shareholder shall be
obligated in connection with such Sale of the
Company to agree to indemnify or hold
harmless the prospective transferee(s) with
respect to an amount in excess of the net
cash proceeds paid to such Shareholder in
connection with such Sale of the Company.
(f) The obligation of the Brennan
Shareholders to participate in any Sale of
the Company hereunder are subject to the
satisfaction of the following conditions:
(i) upon consummation of the Sale of the
Company hereunder, the Brennan Shareholders,
GE Capital and the GE Capital Affiliates
shall receive the same form and amount of
consideration per Share (including for this
purpose, amounts allocated to noncompetition,
consulting and other arrangements which the
Brennan Shareholders are capable of
performing), or if any such holders of Shares
are given an option as to the form and
consideration to be received, all such
holders shall be given the same option and
(ii) if a Proposing Shareholder or an
Affiliate of any Proposing Shareholder is a
holder of debt or equity securities other
than Shares, the Sale of the Company shall
not involve the payment of any premiums,
refinancing fees or other amounts in respect
of such debt or equity securities other than
any amounts payable pursuant to the terms
governing such debt or equity securities.
<PAGE>
(g) This Section 6.15 shall not apply
to any Sale of the Company which involves a
sale or other disposition by GE Capital or
one of the GE Capital Affiliates of the Ward
Group related credit operations of GE Capital
or of any GE Capital Affiliates (whether
occurring before, concurrent with or after
such Sale of the Company) to the Independent
Third Party that is a party to such Sale of
the Company or any party which is an
Affiliate of such Independent Third Party and
the Brennan Shareholders shall have no
obligation to cooperate with or participate
in any such Sale of the Company pursuant to
this Section 6.15.
(h) This Section 6.15 shall terminate
upon the Public Offering Termination Date and
shall not apply at any time at which GE
Capital and the GE Capital Affiliates do not
own in the aggregate at least 35% of the
Fully Diluted Equity .
6.16 Right of First Refusal for New
Securities. (a) The Company hereby grants to
GE Capital, the GE Capital Affiliates,
Brennan and his Permitted Transferees (the
"Included Shareholders") a right of first
refusal to purchase shares of any New
Securities (as defined below) which the
Company may, from time to time, propose to
sell and issue. Such right of first refusal
shall allow each Included Shareholder to
purchase a pro rata portion of the Shares as
may be included in the New Securities
proposed to be issued, determined with
reference to the aggregate number of
outstanding Shares held by the Included
Shareholders before the proposed issuance of
New Securities. In the event an Included
Shareholder does not purchase any or all of
its pro rata portion of New Securities, the
remaining Included Shareholders shall have
the right to purchase a pro rata portion of
such unpurchased New Securities until all of
the New Securities are purchased or until no
other Included Shareholder desires to
purchase any more New Securities. The right
of first refusal granted hereunder shall
terminate with respect to any particular
issuance of New Securities if unexercised
within 10 business days after receipt of the
notice described in Section 6.16(c) hereof
with respect to such issuance.
<PAGE>
(b) "New Securities" shall mean any
authorized but unissued Shares, and any
treasury shares, of capital stock of the
Company and all rights, options or warrants
to purchase capital stock, and securities of
any type whatsoever that are, or may become,
convertible into capital stock; provided,
however, that the term "New Securities" does
not include (i) securities issued pursuant to
the acquisition of another corporation by the
Company by merger, purchase of all or
substantially all of the assets or other
reorganization whereby the Company shall
become the owner of more than 50% of the
voting power of such corporation; (ii) Shares
issued in connection with any stock split or
stock dividend of the Company; (iii) Shares
issued pursuant to any underwritten public
offering and sale of equity securities of the
Company pursuant to an effective registration
statement under the Act; (iv) options or
awards of stock granted in accordance with
the Company s past custom and practice and
any Shares issued pursuant to the exercise of
options; and (v) options (and any Shares
issued pursuant to the exercise thereof),
awards or Sharesgranted or issued to a new
management team put in place for the Retailer
and its subsidiaries at any time after
December 1, 1996 so long as such options (and
any Shares issued pursuant to the exercise
thereof), awards and Shares do not exceed in
the aggregate 15% of the Fully Diluted Equity
measured as of December 1, 1996.
(c) In the event the Company proposed
to undertake an issuance of New Securities,
it shall give each Included Shareholder
written notice of its intention, describing
the number of Shares it intends to issue as
New Securities, the purchase price therefor
(which shall be payable solely in cash) and
the terms upon which the Company proposes to
issue the same. Each Included Shareholder
shall have 10 business days from the date
such notice is given to determine whether to
purchase all or any portion of its pro rata
share of such New Securities for the purchase
price and upon the terms specified in the
notice by giving written notice to the
Company and stating therein the quantity of
New Securities to be purchased.
<PAGE>
(d) Notwithstanding any provision of
this Agreement to the contrary, each Included
Shareholder shall have the right from time to
time and at any time to assign in whole or in
part its right to purchase New Securities
hereunder to any other person or entity.
6.17 Compliance with Article II.
Notwithstanding anything to the contrary in
Article II, the provisions of Article II
shall not be applicable to the Transfer of
Shares by GE Capital and/or a GE Capital
Affiliate as to which the provisions of
Sections 6.14 and 6.15 are applicable."
20. Promptly following the expiration of the provisions of
Article V, (i) Section 5.8 shall be amended by deleting the words
"and voting control" in the fourth line of Section 5.8 and (ii) each
of the parties hereto agrees to cause the By-laws of the Company to
be amended, and to cause the By-Laws of each member of the Ward Group
to be amended in form and substance, as follows:
A. Section 1(a) of Article III shall be
amended in its entirety to read as follows:
"(a) Number of Directors. The number
of directors constituting the entire
board shall be nine (9), or such other
number as may be fixed from time to
time by action of the stockholders or
the Board of Directors."
B. Each of paragraphs (b), (c), and (d) of
Section 1 of Article III shall be deleted in
its entirety and replaced with the words
"Intentionally Omitted."
C. Paragraph (f) of Section 1 of Article
III shall be amended in its entirety to read
as follows:
"(f) Vacancies. Unless otherwise
provided in these By- laws, vacancies
on the Board of Directors, whether
caused by resignation, death,
disqualification, removal, an increase
in the authorized number of directors
or otherwise, may be filled by the
affirmative vote of a majority of the
remaining directors, although less than
<PAGE>
a quorum, or by a sole remaining
director, or at a special meeting of
the stockholders, by the holders of
shares entitled to vote for the
election of directors."
D. Section 3 of Article III shall be
amended in its entirety to read as follows:
"Section 3. Removal of Directors. Any
or all of the direc tors may be
removed, with or without cause, by the
holders of a majority of the shares of
stock outstanding and entitled to vote
for the election of directors."
E. Section 10 of Article III shall be
deleted in its entirety and replaced with the
words "Intentionally Omitted."
F. Section 15 of Article III shall be
amended in its entirety to read as follows:
"Section 15. Powers and
Committees. Any such committee, to the
extent provided in the resolution of
the board of directors, shall have and
may exercise all the powers and
authority of the board of directors in
the management of the business and
affairs of the corporation and may
authorize the seal of the corporation
to be affixed to all papers which may
require it; provided, however, that no
such committee shall take any action or
do anything in the exercise of any
power or authority in excess of that
permitted to be taken by a committee of
directors under any applicable
provisions of the Delaware GCL. Such
committee or committees shall have such
name or names as may be determined from
time to time by resolution adopted by
the board of directors.
G. Article IX shall be amended in its
entirety to read as follows:
"The board of directors or the
stockholders may alter, amend or repeal
these by-laws, or enact such other
by-laws as in their judgment may be
advisable for the regulation of the
conduct of the affairs of the
corporation."
<PAGE>
H. The appropriate terms in Section 5 of
Article VIII shall be deleted.
21. Brennan and GE Capital shall promptly use their best
efforts to cause the By-laws of the Company and each member of the
Ward Group to be amended to effectuate the provisions hereof.
22. Except as amended hereby, all provisions, terms and
conditions of the Stockholders' Agreement shall remain in full force
and effect. As amended hereby, the Stockholders' Agreement is
ratified and confirmed in all respects.
23. This Agreement shall be governed by, interpreted and
construed under, the laws of the State of Delaware without regard to
the provisions of conflict of laws.
24. Each of the parties hereto represents and warrants to
each other that it has the requisite power and authority to execute
and deliver this Agreement.
25. This Agreement may be executed in counterparts. Each
such counterpart shall be deemed to be an original and all of such
counterparts, when taken together, shall constitute a single
instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Edward D. Stewart
Edward D. Stewart
BERNARD F. BRENNAN
/s/ Bernard F. Brennan
Type 1 Management Shareholder
Agreed and Consented to this 10th day
of December 1996:
MONTGOMERY WARD HOLDING CORP.
By: /s/ Spencer H. Heine
Spencer H. Heine<PAGE>
