-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, cNtSuuYERmvKFc2VnQi1uPNT+NWN/4WuoBt6vV4S1K0L0VBeAMevNcE4jSPMvLXE Uy0uIa+1z4n6AMYkEhmaFQ== 0000836974-94-000026.txt : 19941116 0000836974-94-000026.hdr.sgml : 19941116 ACCESSION NUMBER: 0000836974-94-000026 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19941001 FILED AS OF DATE: 19941115 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MONTGOMERY WARD HOLDING CORP CENTRAL INDEX KEY: 0000836974 STANDARD INDUSTRIAL CLASSIFICATION: 5311 IRS NUMBER: 363571585 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-17540 FILM NUMBER: 94560249 BUSINESS ADDRESS: STREET 1: ONE MONTGOMERY WARD PLZ CITY: CHICAGO STATE: IL ZIP: 60671 BUSINESS PHONE: 3124672000 10-Q 1 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 October 1, 1994 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 October 29, 1994, there were 19,480,533 shares of Class A Common Stock and 25,000,000 shares of Class B Common Stock of the Registrant outstanding. - ------------------------------------------------------------------- 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 MONTGOMERY WARD HOLDING CORP. CONSOLIDATED STATEMENT OF INCOME (Millions of dollars, except per share amounts) For the 13-Week Period Ended October 1, October 2, 1994 1993 Revenues Net sales, including leased and licensed department sales. . . . . . . $1,574 $ 1,327 Direct response marketing revenues, including insurance. . . . . . . . . . 119 102 Total Revenues . . . . . . . . . . . 1,693 1,429 Costs and Expenses Cost of goods sold, including net occupancy and buying expense . . . . . 1,234 1,009 Operating, selling, general and administrative expenses, including benefits and losses of direct response operations. . . . . . . . . . 420 383 Interest expense, net of investment income . . . . . . . . . . . . . . . . 16 13 Total Costs and Expenses . . . . . . 1,670 1,405 Income Before Income Taxes . . . . . . . 23 24 Income Tax Expense . . . . . . . . . . . 8 10 Net Income . . . . . . . . . . . . . . . 15 14 Preferred Stock Dividend Requirements. . 1 - Net Income Applicable to Common Shareholders . . . . . . . . . . $ 14 $ 14 Net Income per Common Share Class A . . . . . . . . . . . . . . . . $ .33 $ .33 Class B . . . . . . . . . . . . . . . . $ .29 $ .29 Cash Dividends Declared Per Common Share Class A . . . . . . . . . . . . . . . . $ - $ .50 Class B . . . . . . . . . . . . . . . . $ - $ .50 See notes to consolidated condensed financial statements. MONTGOMERY WARD HOLDING CORP. CONSOLIDATED STATEMENT OF INCOME (Millions of dollars, except per share amounts) For the 39-Week Period Ended October 1, October 2, 1994 1993 Revenues Net sales, including leased and licensed department sales. . . . . . . $4,310 $ 3,770 Direct response marketing revenues, including insurance. . . . . . . . . . 339 298 Total Revenues . . . . . . . . . . . 4,649 4,068 Costs and Expenses Cost of goods sold, including net occupancy and buying expense . . . . . 3,347 2,845 Operating, selling, general and administrative expenses, including benefits and losses of direct response operations. . . . . . . . . . 1,182 1,107 Interest expense, net of investment income . . . . . . . . . . . . . . . . 41 34 Total Costs and Expenses . . . . . . 4,570 3,986 Income Before Income Taxes . . . . . . . 79 82 Income Tax Expense . . . . . . . . . . . 26 31 Net Income . . . . . . . . . . . . . . . 53 51 Preferred Stock Dividend Requirements. . 2 - Net Income Applicable to Common Shareholders . . . . . . . . . . $ 51 $ 51 Net Income per Common Share Class A . . . . . . . . . . . . . . . . $ 1.18 $1.16 Class B . . . . . . . . . . . . . . . . $ 1.02 $1.03 Cash Dividends Declared Per Common Share Class A . . . . . . . . . . . . . . . . $ .50 $ .50 Class B . . . . . . . . . . . . . . . . $ .50 $ .50 See notes to consolidated condensed financial statements. MONTGOMERY WARD HOLDING CORP. CONSOLIDATED CONDENSED BALANCE SHEET (Millions of dollars) ASSETS October 1, January 1, 1994 1994 Cash and cash equivalents . . . . . . $ 37 $ 98 Short-term investments . . . . . . . . 25 19 Investments of insurance operations. . 305 296 Total Cash and Investments . . . . 367 413 Trade and other accounts receivable. . 94 62 Accounts and notes receivable from affiliates . . . . . . . . . . . 14 4 Total Receivables. . . . . . . . . 108 66 Merchandise inventories. . . . . . . . 1,630 1,242 Prepaid pension contribution . . . . . 321 310 Properties, plants and equipment, net of accumulated depreciation and amortization. . . . . . . . . . . 1,367 1,263 Direct response insurance acquisition costs . . . . . . . . . . 312 295 Other assets . . . . . . . . . . . . . 383 246 Total Assets . . . . . . . . . . . . . $4,488 $3,835 LIABILITIES AND SHAREHOLDERS' EQUITY Short-term borrowings. . . . . . . . . $ 562 $ - Trade accounts payable . . . . . . . . 1,410 1,358 Accrued liabilities and other obligations . . . . . . . . . . . . . 1,134 1,197 Federal income taxes payable . . . . . 3 7 Insurance policy claim reserves. . . . 236 237 Long-term debt . . . . . . . . . . . . 233 213 Obligations under capital leases . . . 83 89 Deferred federal income taxes. . . . . 120 127 Total Liabilities. . . . . . . . . 3,781 3,228 Redeemable Preferred Stock . . . . . . 75 - Shareholders' Equity Common stock. . . . . . . . . . . . . - - Capital in excess of par value. . . . 21 19 Retained earnings . . . . . . . . . . 687 658 Unrealized gain on marketable securities . . . . . . . . . . . . . 5 3 Less: Treasury stock, at cost. . . . (81) (73) Total Shareholders' Equity . . . . 632 607 Total Liabilities and Shareholders' Equity. . . . . . . . . $4,488 $3,835 See notes to consolidated condensed financial statements. MONTGOMERY WARD HOLDING CORP. CONSOLIDATED STATEMENT OF CASH FLOWS (Millions of dollars) For the 39-Week Period Ended October 1, October 2, 1994 1993 Cash flows from operating activities: Net income. . . . . . . . . . . . . . . $ 53 $ 51 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization. . . . 78 74 Deferred income taxes. . . . . . . . 10 11 Changes in operating assets and liabilities: (Increase) decrease in: Trade and other accounts receivable . . . . . . . . . . . . (20) (14) Accounts and notes receivable from affiliates. . . . . . . . . . (10) 1 Merchandise inventories . . . . . . (248) (254) Prepaid pension contribution. . . . (11) (10) Other assets. . . . . . . . . . . . (43) (38) Increase (decrease) in: Trade accounts payable. . . . . . . (17) (78) Federal income taxes payable, net . (4) (4) Accrued liabilities and other obligations. . . . . . . . . . . . (125) (81) Insurance policy claim reserves . . (1) (2) Net cash used in operations. . . (338) (344) Cash flows from investing activities: Acquisition of Lechmere, net of cash acquired. . . . . . . . . . . . . (109) - Purchase of short-term investments. . . (183) (170) Purchase of investments of insurance operations . . . . . . . . . . . . . . (476) (455) Sale of short-term investments. . . . . 177 165 Sale of investments of insurance operations . . . . . . . . . . . . . . 470 450 Capital expenditures. . . . . . . . . . (114) (93) Disposition of properties, plants and equipment, net . . . . . . . . . . . . 1 3 Sale of assets held for disposition . . 1 3 Net cash used for investing activities . . . . . $(233) $ (97) See notes to consolidated condensed financial statements. MONTGOMERY WARD HOLDING CORP. CONSOLIDATED STATEMENT OF CASH FLOWS (Millions of dollars) For the 39-Week Period Ended October 1, October 2, 1994 1993 Cash flows from financing activities: Proceeds from short-term borrowings . . . . . . . . . . . . . . $6,255 $ 5,346 Payments of short-term borrowings . . . . . . . . . . . . . .(5,693) (5,020) Proceeds from issuance of long-term debt . . . . . . . . . . . . 166 100 Payments of Montgomery Ward long-term debt . . . . . . . . . . . . (172) (7) Payments of Lechmere long-term debt . . (88) - Payments of obligations under capital leases . . . . . . . . . . . . (6) (5) Cash dividends paid . . . . . . . . . . (24) (23) Proceeds from issuance of Common Stock . . . . . . . . . . . . . 2 - Proceeds from issuance of Preferred Stock. . . . . . . . . . . . 75 - Purchase of treasury stock, at cost. . . . . . . . . . . . . . . . (5) (6) Net cash provided by financing activities. . . . . . . . 510 385 Decrease in cash and cash equivalents . . . . . . . . . . . . . . (61) (56) Cash and cash equivalents at beginning of period . . . . . . . . . . 98 81 Cash and cash equivalents at end of period . . . . . . . . . . . . . $ 37 $ 25 Supplemental disclosure of cash flow information: Cash paid during the period for: Income taxes . . . . . . . . . . . . $ 25 $ 42 Interest . . . . . . . . . . . . . . $ 40 $ 46 Non-cash financing activity: Notes issued for purchase of Treasury Stock . . . . . . . . . . . . $ 3 $ - Non-cash investing activity: Change in unrealized gain on marketable securities. . . . . . . . . $ 2 $ - Like-kind exchange of assets. . . . . . $ 4 $ - See notes to consolidated condensed financial statements. 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 1993 Annual Report on Form 10-K. Certain prior period amounts have been reclassified to be comparable with the current period presentation. Effective January 2, 1994, the Company adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" (FAS No. 115). Under FAS No. 115, all debt securities are classified as "available-for- sale" and are stated at fair market value with all changes in unrealized gains or losses included in Shareholder's Equity. The adoption of FAS No. 115 increased Investments of insurance operations by $17, Deferred income taxes by $6 and Unrealized gain on marketable securities by $11 as of January 2, 1994 and had no impact on the results of operations of the Company. 2. Net Income Per Common Share Net income per common share is computed as follows: 13-Week Period Ended October 1, 1994 Class A Class B Earnings applicable to Common Shareholders after deducting preferred stock dividend requirements. . . . . . . $ 7 $ 7 Weighted average number of common and common equivalent shares (stock options) outstanding. . . . 21,309,266 25,000,000 Earnings per share. . . . . . . . . $ .33 $ .29 13-Week Period Ended October 2, 1993 Class A Class B Earnings applicable to Common Shareholders . . . . . . . . . . . $ 7 $ 7 Weighted average number of common and common equivalent shares (stock options) outstanding. . . . 21,617,783 25,000,000 Earnings per share. . . . . . . . . $ .33 $ .29 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: 39-Week Period Ended October 1, 1994 Class A Class B Earnings applicable to Common Shareholders after deducting preferred stock dividend requirements . . . . . . . . . . . $25 $26 Weighted average number of common and common equivalent shares (stock options) outstanding. . . . 21,459,648 25,000,000 Earnings per share. . . . . . . . . $1.18 $1.02 39-Week Period Ended October 2, 1993 Class A Class B Earnings applicable to Common Shareholders. . . . . . . . $25 $26 Weighted average number of common and common equivalent shares (stock options) outstanding. . . . 21,945,869 25,000,000 Earnings per share. . . . . . . . . $1.16 $1.03 MONTGOMERY WARD HOLDING CORP. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Millions of dollars) 3. Debt Agreements Montgomery Ward 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 on September 15, 1999, provides for a revolving facility in the principal amount of $603. 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 on September 14, 1995, provides for a revolving facility in the principal amount of $297. On September 15, 1994 all borrowings outstanding under the Amended and Restated Credit Agreement, the Short Term Credit Agreement and the Term Loan Agreement were repaid and the agreements were terminated. The Long Term Agreement, the Short Term Agreement (collectively, the Agreements) and the Note Purchase Agreements 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 Long Term Agreement and the Short Term Agreement 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 of Montgomery Ward 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 of any loan or advance to the Company 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. The Montgomery Ward Preferred discussed in Note 5 constitutes Debt-Like Preferred Stock for purposes of dividend restrictions under the Agreements. To date, Montgomery Ward has been in compliance with all such financial tests. MONTGOMERY WARD HOLDING CORP. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Millions of dollars) 4. 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 comprised of an estimated price of $113 and a contingent purchase price payable in 1995 of up to $20 in cash and the issuance of up to 400,000 shares of Class A Common Stock, Series 1 (or at the option of Montgomery Ward, up to 400,000 shares of Class A Common Stock, Series 3). The exact amount, if any, of the contingent price to be paid is dependent on Lechmere achieving or exceeding a specified gross margin amount during the period commencing February 27, 1994 and ending February 25, 1995. The closing price included a $10 promissory note (the Note) of Montgomery Ward, which bears interest at a rate of 4.87% per annum. Seventy-five percent of the accrued interest on and principal of the Note are payable 540 days after the date of the Note and the balance is payable three years after the date of the Note. The Note, which is secured by a standby letter of credit, is to be reduced upon the occurrence of certain specified circumstances. As part of the closing, Montgomery Ward advanced approximately $88 and assumed $3 in obligations to enable Lechmere to retire its outstanding bank debt and subordinated debt. The acquisition was accounted for as a purchase. The purchase price has been allocated to Lechmere's net assets based upon preliminary results of asset valuations and liability and contingency assessments. Actual adjustments may differ based on the results of further evaluations of the fair value of the acquired assets and liabilities. Any differences between preliminary and actual adjustments are not expected to have a material impact on the consolidated financial statements. The preliminary allocation is summarized as follows: Inventory. . . . . . . . . . . . . . . . . . . $140 Properties, Plants & Equipment . . . . . . . . 60 Goodwill . . . . . . . . . . . . . . . . . . . 119 Other Assets . . . . . . . . . . . . . . . . . 21 Due to Montgomery Ward . . . . . . . . . . . . (88) Accounts Payable and Other Liabilities . . . . (139) $113 MONTGOMERY WARD HOLDING CORP. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Millions of dollars, except per share amounts) 5. Senior Preferred Stock On April 27, 1994, the Company issued 750 shares of a new series of Senior Preferred Stock (Senior Preferred Stock) to GE Capital in exchange for $75 in cash. The Company used the proceeds to acquire 750 shares of a new issue of Senior Preferred Stock of Montgomery Ward (Montgomery Ward Preferred) for $75 and Montgomery Ward used the proceeds to reduce short-term borrowings. Holders of the Senior Preferred Stock are entitled to receive cumulative cash dividends of $4,850 per share, per annum, in equal quarterly payments. The Company may, upon 10 days notice, redeem the Senior Preferred Stock at a price of $100,000 per share. On or after April 28, 1999, upon four months written notice by the holders, the Company is required to redeem the Senior Preferred Stock at a price of $100,000 per share. 6. Common Stock At the Company's annual meeting of stockholders on May 20, 1994, the stockholders of the Company approved an amendment to the Company's Certificate of Incorporation authorizing the issuance of 400,000 shares of Class A Common Stock, Series 3, $.01 par value. None of the Series 3 Stock is presently issued or outstanding. Subsequent to quarter end, the shareholders granted approval for the authorization of an additional 2,000,000 shares of Class A Common Stock, Series 3. The shareholders also approved an amendment to the Montgomery Ward & Co., Incorporated Stock Ownership Plan (the Plan) to increase the number of Class A shares allocated to the Plan to include the 2,000,000 Series 3 shares. 7. Benefits and Losses Included with operating, selling, general and administrative expenses are the following benefits and losses related to direct response marketing operations: 13-Week Period Ended 39-Week Period Ended October 1, October 2, October 1, October 2, 1994 1993 1994 1993 $26 $24 $78 $70 MONTGOMERY WARD HOLDING CORP. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Millions of dollars) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) The following discussion and analysis of results of operations for MW Holding compares the third quarter of 1994 to the third quarter of 1993, as well as the first nine months of 1994 to the first nine months of 1993. 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 nine months are not necessarily indicative of the results for the entire year. Results of Operations Third Quarter 1994 Compared with Third Quarter 1993 Consolidated net income increased $1, or 7% from the prior year. Consolidated net income applicable to common shareholders for the third quarter of 1994 was $14, which was even with the prior year. Consolidated total revenues (net sales and direct response marketing revenues, including insurance) were $1,693 compared with $1,429 in 1993. Net sales increased $247, or 19% of which $193 was attributable to Lechmere, which was acquired on March 30, 1994. Apparel reported sales increases of 4% and Hardlines sales increased 5% over the third quarter of 1993. Sales on a comparable store basis, which reflects only the stores in operation for both the third quarter of 1994 and 1993, increased 3%. Montgomery Ward opened three "Electric Avenue & More" stores at the end of the third quarter. This new specialty power format combines appliances/electronics (Electric Avenue), furniture (Rooms & More) and fine jewelry (Gold 'N Gems). The stores, which include an expanded assortment, contain Montgomery Ward's and Lechmere's most successful merchandise categories in a format designed for mid- sized markets. Direct response marketing revenues increased $17, or 17%, to $119. The increase was primarily due to increased club membership levels. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Results of Operations (continued) Third Quarter 1994 Compared with Third Quarter 1993 (continued) Gross margin (net sales less cost of goods sold) dollars, including Lechmere, were $340, an increase of $22, or 7%, from the third quarter of last year. This increase was due to the gross margin impact of the increased sales ($71), partially offset by the decrease in the margin rate on sales ($36) and increased occupancy costs ($13) related to new store openings. The decrease in the margin rate was impacted by the lower margin rates of Lechmere (which has a heavier emphasis in appliances and electronics and the lower margin rates that accompany these businesses) and continued competitive pressures. Operating, selling, general and administrative expenses increased $37, or 10%, from the prior year. Excluding Lechmere's expenses, operating, selling, general and administrative expenses increased by $5. The increase was due to the impact of new store openings of $11, increased benefits and losses of direct response operations of $2, and increased operating and other administrative expenses of $1, partially offset by decreased store payroll costs of $9. Net interest expense increased $3, or 23%, from the prior year primarily due to increased borrowings under the Term Loan Agreement. Borrowings under the Term Loan Agreement were made in the first quarter of 1994 in connection with the acquisition of Lechmere. Income tax expense of $8 decreased $2, or 20% from 1993. A charge of $2 for the impact of the retroactive increase in the Federal income tax rate from 34% to 35% on the first nine months of 1993 is reflected in the 1993 third quarter results. First Nine Months of 1994 Compared with First Nine Months of 1993 Consolidated net income increased $2, or 4% from the prior year. Consolidated net income applicable to common shareholders for the first nine months of 1994 was $51, which was even with the prior year. Consolidated total revenues were $4,649 compared with $4,068 in 1993. Net sales increased $540, or 14% of which $374 was attributable to Lechmere, which was acquired on March 30, 1994. Sales on a comparable store basis, which reflects only the stores in operation for both the first nine months of 1994 and 1993, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Results of Operations (continued) First Nine Months of 1994 Compared with First Nine Months of 1993 (continued) increased 3%. Direct response marketing revenues increased $41, or 14%, to $339. The increase was primarily due to increased club membership levels. Gross margin dollars, including Lechmere, were $963, an increase of $38, or 4%, from the first nine months of last year. This increase was due to the gross margin impact of the increased sales ($160), partially offset by the decrease in the margin rate on sales ($86), increased occupancy costs primarily as a result of new store openings ($28), and increased buying office and other expenses ($8). The decrease in the margin rate was impacted by the lower margin rates of Lechmere (which has a heavier emphasis in appliances and electronics and the lower margin rates that accompany these businesses) and continued competitive pressures. Operating, selling, general and administrative expenses increased $75, or 7%, from the prior year. Excluding Lechmere, operating, selling, general and administrative expenses increased $8. This increase was attributable to the impact of new store openings of $29, increased benefits and losses of direct response operations of $8 and increased other administrative and operating costs of $2, partially offset by decreased store payroll costs of $19 and decreased advertising and other promotional costs of $12. Net interest expense increased $7, or 21% from the prior year due to borrowings under the Term Loan Agreement. Borrowings under the Term Loan Agreement were made in connection with the acquisition of Lechmere and were outstanding through September 15, 1994. Income taxes decreased $5 due to favorable tax adjustments of $3 reported in the second quarter of 1994, as well as a 1993 third quarter charge of $2 for the retroactive increase in the Federal income tax rate. 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. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Results of Operations (continued) Discussion of Financial Condition (continued) During the first quarter of 1994, Montgomery Ward borrowed the entire $165 available under a Term Loan Agreement dated as of November 24, 1993 with various banks (Term Loan Agreement). This loan was used to partially finance the acquisition of Lechmere as discussed below. Montgomery Ward 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 on September 15, 1999, provides for a revolving facility in the principal amount of $603. As of October 1, 1994, $397 was outstanding under the Long Term Agreement. 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 on September 14, 1995, provides for a revolving facility in the principal amount of $297. As of October 1, 1994, $165 was outstanding under the Short Term Agreement. Proceeds from borrowings under the Long Term Agreement and the Short Term Agreement (collectively, the Agreements) were used to pay all borrowings outstanding under the Amended and Restated Credit Agreement, the Short Term Credit Agreement and the Term Loan Agreement and the agreements were terminated. Under the Agreements, Montgomery Ward may select among several interest options, including a rate negotiated with one or more of the various lenders. A commitment fee is payable based upon the unused amount of the facility, although in the case of any negotiated rate loan, an additional fee may be payable to the lenders not participating in the negotiated rate loan. Subsequent to quarter end, 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 $100 in 1994, $175 in 1995 through 1997 and $75 in 1998 through 1999. Under the terms of the interest rate exchange agreements, Montgomery Ward pays the banks a weighted average fixed rate of 7.2% in 1994, 7.4% from 1995 through 1997 and 7.6% from 1998 through 1999 and will receive the one-month daily average London Interbank Offered (LIBO) rate in each case multiplied by the notional principal amount. The average aggregate notional principal amounts under the various cap agreements is $63 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Results of Operations (continued) Discussion of Financial Condition (continued) in the fourth quarter of 1994, $154 in 1995, $158 in 1996 and $113 in 1997. Under the terms of the cap agreements, Montgomery Ward receives payments from the banks when the one-month daily average LIBO rate exceeds the 5.0% cap strike in 1994, 5.5% cap strike rate in 1995, 6% cap strike rate in 1996 and 7.0% cap strike rate in 1997. Such payments will equal the amount determined by multiplying the notional principal amount by the percentage, if any, by which the one-month daily average LIBO rate exceeds the cap strike rate. 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. The Agreements and the Note Purchase Agreements 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 of Montgomery Ward 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 of any loan or advance to the Company 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, after January 1, 1994, plus (6) an adjustment of $45 for 1994 through 1996, $30 in 1997 and $15 in 1998. The Montgomery Ward Preferred discussed below constitutes Debt-Like Preferred Stock for purposes of the dividend restrictions under the Agreements. On April 27, 1994, the Company issued 750 shares of a new series of Senior Preferred Stock (Senior Preferred Stock) to GE Capital in exchange for $75 in cash. The Company used the proceeds to acquire 750 shares of a new issue of Senior Preferred Stock of Montgomery Ward (Montgomery Ward Preferred) for $75 and Montgomery Ward used the proceeds to reduce short-term borrowings. 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 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 comprised of an estimated price of $113 and a contingent purchase price payable in 1995 of up to $20 in cash and the issuance of up to 400,000 shares of Class A Common Stock, Series 1 (or at the option of Montgomery Ward, up to 400,000 shares of Class A Common Stock, Series 3). The exact amount, if any, of the contingent price to be paid is dependent on Lechmere achieving or exceeding a specified gross margin amount during the period commencing February 27, 1994 and ending February 25, 1995. The closing price included a $10 promissory note (the Note) of Montgomery ward, which bears interest at a rate of 4.87% per annum. Seventy-five percent of the accrued interest on and principal of the Note are payable 540 days after the date of the Note and the balance is payable three years after the date of the Note. The Note, which is secured by a standby letter of credit, is to be reduced upon the occurrence of certain specified circumstances. As part of the closing, Montgomery Ward advanced approximately $88 and assumed $3 of obligations to enable Lechmere to retire its outstanding bank debt and subordinated debt. The purchase of and advances to Lechmere were financed by the proceeds from borrowings under the Agreements. Future cash needs are expected to be provided by ongoing operations, the sale of customer receivables to Montgomery Ward Credit Corporation, a subsidiary of GE Capital (Montgomery Ward Credit), pursuant to the Account Purchase Agreement with Montgomery Ward Credit, borrowings under the Long Term Agreement and the Short Term Agreement and the disposition of capital assets related to facility closings. Capital expenditures during the first nine months of 1994 of $114 were primarily related to expenditures for opening three Electric Avenue & More stores, one full line store, one retail outlet store and various merchandise fixture and presentation programs. Capital expenditures for the comparable 1993 period were $93. The Board of Directors declared a cash dividend of fifty cents per common share for a total of $22 on May 20, 1994 to shareholders of record on June 15, 1994. This dividend was paid on June 23, 1994. PART II - OTHER INFORMATION Item 1. Legal Proceedings. None. Item 2. Changes in Securities. On October 25, 1994, a Certificate of Amendment to the Company's Certificate of Incorporation was filed with the Secretary of State of the State of Delaware. The Certificate of Amendment, among other things, increased the number of shares of Class A Common Stock, Series 3, of the Company authorized for issuance from 400,000 to 2,400,000. All 2,000,000 of such newly- authorized shares have been reserved for issuance under the Montgomery Ward & Co., Incorporated Stock Ownership Plan. As of the date hereof, no shares of Class A Common Stock, Series 3, have been issued and no such shares are outstanding. The Certificate of Amendment did not in any way amend the rights of any class or series of the Company's common stock as set forth in the Certificate of Incorporation. Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. Pursuant to a Proxy Statement dated October 17, 1994, the stockholders of the Company were asked to execute consents in lieu of a special meeting of the stockholders of the Company. All of the stockholders of record of the Company executed and returned the consents before October 20, 1994. Pursuant to the consent, the stockholders (i) approved the Certificate of Amendment to the Certificate of Incorporation of the Company, which is described in Item 2 above; and (ii) approved an amendment to the Montgomery Ward & Co., Incorporated Stock Ownership Plan (the "Plan") reserving the 2,000,000 newly authorized shares of Class A Common Stock, Series 3, of the Company, for issuance under the Plan. Item 5. Other Information. None. PART II - OTHER INFORMATION (continued) Item 6. Exhibits and Reports on Form 8-K. 3.2(iv) Certificate of Amendment to Certificate of Incorporation of Montgomery Ward Holding Corp. dated October 25, 1994. 3.3(i) Amendment No. 1 to Restated By-laws of Montgomery Ward Holding Corp. dated September 21, 1994. 9.(i) Voting Trust Agreement dated as of October 21, 1994. 10.(iv)(A)(1)(a) Amendment No. 14 to Stockholders' Agreement dated September 22, 1994. 10.(i)(G) Long Term Credit Agreement dated as of September 15, 1994 among Montgomery Ward & Co., Incorporated, various banks, 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. 10.(i)(H) Short Term Credit Agreement dated as of September 15, 1994 among Montgomery Ward & Co., Incorporated, various banks, 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. 10.(iv)(A)(iii) Amendment No. 1 to the Amended and Restated Montgomery Ward & Co. Stock Ownership Plan dated October 20, 1994. 10.(iv)(A)(5) Amendment No. 10 to Montgomery Ward & Co., Incorporated Stock Ownership Plan Terms and Conditions dated September 22, 1994. 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 November 15, 1994 EXHIBIT INDEX EXHIBIT SUBMISSION MEDIA - ------- ---------------- 3.2(iv) Certificate of Amend- ment to Certificate of Incorporation of Montgomery Ward Holding Corp. dated October 25, 1994. 3.3(i) Amendment No. 1 to Restated By-laws of Montgomery Ward Holding Corp. dated September 21, 1994. 9.(i) Voting Trust Agreement dated as of October 21, 1994. 10.(iv)(A)(1)(a) Amendment No. 14 to Stockholders' Agreement dated September 22, 1994. 10.(i)(G) Long Term Credit Agreement dated as of September 15, 1994 among Montgomery Ward & Co., Incorporated, various banks, 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. EXHIBIT INDEX EXHIBIT SUBMISSION MEDIA - ------- ---------------- 10.(i)(H) Short Term Credit Agreement dated as of September 15, 1994 among Montgomery Ward & Co., Incorporated, various banks, 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. 10.(iv)(A)(iii) Amendment No. 1 to the Amended and Restated Montgomery Ward & Co. Stock Ownership Plan dated October 20, 1994. 10.(iv)(A)(5) Amendment No. 10 to the Montgomery Ward & Co., Incorporated Stock Owner- ship Plan Terms and Conditions dated September 22, 1994. EX-3 2 EXHIBIT 3.2(iv) CERTIFICATE OF AMENDMENT TO CERTIFICATE OF INCORPORATION OF MONTGOMERY WARD HOLDING CORP. MONTGOMERY WARD HOLDING CORP., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation"), does hereby certify as follows: 1. The original Certificate of Incorporation of the Corporation was filed in the Office of the Secretary of State of Delaware on February 8, 1988 and recorded in the office of the Recorder of Kent County, Delaware. The name under which the Corporation was originally incorporated is BFB Acquisition Corp. 2. A Certificate of Correction of Certificate of Incorporation of the Corporation was filed in the Office of the Secretary of State of Delaware on February 9, 1988. 3. The original Restated Certificate of Incorporation of the Corporation was filed in the Office of the Secretary of State of Delaware on June 17, 1988 and amendments thereto were filed on each of June 20, 1988; June 24, 1988; January 30, 1990; and March 20, 1992. 4. The Second Restated Certificate of Incorporation of the Corporation was filed in the Office of the Secretary of State of Delaware on June 25, 19992 and an amendment thereto was filed on April 27, 1994. 5. The Third Restated Certificate of Incorporation of the Corporation was filed in the Office of the Secretary of State of Delaware on June 28, 1994. 6. The Board of Directors of the Corporation, at a meeting duly called and held, authorized, adopted and approved resolutions proposing and declaring advisable the First Amendment to the Third Restated Certificate of Incorporation of the Corporation, setting forth amendment to Articles SECOND and FOURTH thereof as follows: Article SECOND is amended in its entirety to read as follows: "SECOND: The address of its registered office in the State of Delaware is 32 Loockerman Square, Suite L- 100, in the City of Dover 19901, County of Kent. The name of its registered agent at such address is the Prentice-Hall Corporation System, Inc." That portion of Article FOURTH which precedes the heading "PART A. SENIOR PREFERRED STOCK" is amended in its entirety to read as follows: "FOURTH: The total number of shares of capital stock which the Corporation shall have authority to issue is fifty-seven million eight hundred twelve thousand seven hundred fifty (57,812,750) consisting of the following amounts in the following designations: 1. Common Stock. Fifty-seven million eight hundred twelve thousand (57,812,000) shares of Common Stock, par value one cent ($0.01) per share (hereinafter referred to as "Common Stock"), which shall consist of the following classes: (a) thirty-two million eight hundred twelve thousand (32,812,000) shares of Class A Common Stock (hereinafter referred to as "Class A Common Stock"), which shall consist of the following series: (i) twenty-five million (25,000,000) shares of Class A Common Stock, Series 1 (hereinafter referred to as "Class A Common Stock, Series 1"), and (ii) five million four hundred twelve thousand (5,412,000) shares of Class A Common Stock, Series 2 (hereinafter referred to as "Class A Common Stock, Series 2"), and (iii) two million four hundred thousand (2,400,000) shares of Class A Common Stock, Series 3 (hereinafter referred to as "Class A Common Stock, Series 3"), and (b) twenty-five million (25,000,000) shares of Class B Common Stock (hereinafter referred to as "Class B Common Stock"). 2. Preferred Stock. Seven hundred fifty (750) shares of Preferred Stock, par value one dollar ($1.00) per share (hereinafter referred to as "Preferred Stock" or "Senior Preferred Stock"). Such shares of Common Stock and Preferred Stock may be issued for such consideration, not less than the par value thereof, as shall be fixed from time to time by the Board of Directors, and shares issued for not less than the consideration so fixed shall be fully paid and non- assessable. A statement of the powers, preferences, rights, qualifications, limitations, restrictions and the relative, participating, optional and other special rights in respect of the shares of each class or series of stock is as follows:" Section 2(b)(i) of Part B of Article FOURTH is amended in its entirety to read as follows: "(i) At such time, if any, as GE Capital and GE Capital Affiliates shall cease to own, in the aggregate, beneficially or of record, twenty percent (20%) or more of the shares of Common Stock which GE Capital and GE Capital Affiliates purchased in June 1988, (x) if the number of directorships on the Board of Directors of the Corporation at such time shall be nine (9), the number of directors shall be automatically changed to seven (7), the holders of the Class A Common Stock, voting as a class, shall be entitled to elect five (5) of such directors, and the holders of the Class B Common Stock, voting as a class, shall be entitled to elect two (2) of such directors, and (y) if the number of directorships on the Board of Directors of the Corporation at such time shall be eleven (11), the number of directors shall be automatically changed to nine (9), the holders of the Class A Common Stock, voting as a class, shall be entitled to elect seven (7) of such directors, and the holders of the Class B Common Stock, voting as a class, shall be entitled to elect two (2) of such directors; provided, however, that, in either of the foregoing cases, as long as the Account Purchase Agreement referred to in the Stockholders Agreement is in effect and GE Capital or any GE Capital Affiliate shall own beneficially or of record any shares of Class B Common Stock, GE Capital shall have the right to elect one (1) of the two (2) directors which the holders of the Class B Common Stock shall be entitled to elect and all other holders of Class B Common Stock in the aggregate shall be entitled to elect the other of the two (2) directors which the holders of Class B Common Stock shall be entitled to elect. A vacancy in the directorships to be elected, respectively, by the holders of the Class A Common Stock or the Class B Common Stock may be filled only by the vote or written consent of the holders of Class A Common Stock or Class B Common Stock, as the case may be." 7. The Stockholders of the Corporation, by unanimous written consent, adopted resolutions authorizing, adopting and approving the aforesaid amendments to Articles SECOND and FOURTH of the third Restated Certificate of Incorporation of the Corporation. 8. Except to the extent specifically provided to the contrary in this Certificate of Amendment, the terms, provisions and conditions of the Certificate of Incorporation of the Corporation shall remain unamended and in full force and effect. 9. This Certificate of Amendment has been duly adopted in accordance with the provisions of Section 242 of the General Corporation law of the State of Delaware. IN WITNESS WHEREOF, MONTGOMERY WARD HOLDING CORP. has caused this certificate to be signed by Bernard F. Brennan, its Chairman of the Board and Chief Executive Officer, and attested by Spencer H. Heine, its Secretary, this 25th day of October, 1994. MONTGOMERY WARD HOLDING CORP. By: /s/ Bernard F. Brennan Chairman of the Board and Chief Executive Officer (CORPORATE SEAL) By: /s/ Spencer H. Heine Secretary EX-3 3 EXHIBIT 3.3(i) AMENDMENT NO. 1 TO RESTATED BY-LAWS OF MONTGOMERY WARD HOLDING CORP. This Amendment No. 1 ("Amendment No. 1") to the Restated By-laws of MONTGOMERY WARD HOLDING CORP., a Delaware corporation (the "Company"), is consented to and made as of the 21st day of September, 1994 pursuant to a unanimous consent of the Board of Directors of the company in lieu of a meeting. 1. Paragraph (a) of Section 1 of Article III of the By- laws is hereby amended and restated as of the date hereof as set forth on Exhibit A hereto. 2. This Amendment No. 1 is adopted by the Board of Directors of the Company as provided in Article IX of the By-laws. 3. Except as amended hereby, the By-laws, as previously amended, shall remain in full force and effect. EXHIBIT A (a) Number of Directors Except as otherwise provided in the other paragraphs of this Section 1, the total number of directors which shall be elected by the stockholders shall be eleven (11), of which six (6) shall be designated by the "Designator" (defined in Article VIII) and five (5) shall be designated by "GE Capital" (defined in Article VIII). EX-9 4 EXHIBIT 9.(i) VOTING TRUST AGREEMENT This VOTING TRUST AGREEMENT ("Agreement") is entered into as of October 21, 1994, by and among MONTGOMERY WARD HOLDING CORP., a Delaware corporation (the "Company"); BERNARD F. BRENNAN, as the voting trustee (in such capacity and with his successor(s) being hereinafter referred to as the "Voting Trustee"); ELAINE REYNOLDS, as the initial stockholder hereunder (the "Initial Stockholder") and such other persons or entities who become parties hereto upon their acquisition of shares of Common Stock of the Company (hereinafter, collectively with the Initial Stockholder, referred to individually as a "Stockholder" and collectively as the "Stockholders"). Recitals A. The Company has issued to the Initial Stockholder one (1) share of Class A Common Stock, Series 1, and the Company presently contemplates hereafter issuing shares of Common Stock ("Common Stock") of the Company to persons or entities who will hereafter become parties to this Agreement. The shares of Common Stock issued to Stockholders, including the Share issued to the Initial Stockholder, will herein sometimes be referred to as the "Shares"; B. The Voting Trustee and the Stockholders deem it necessary and advisable to deposit the Shares with the Voting Trustee on the terms and conditions hereinafter set forth in order to assure that the holders of the Shares vote with a single voice with respect to all matters submitted to the vote of stockholders of the Company. Agreements NOW, THEREFORE, in consideration of the premises and mutual covenants hereinafter contained, the parties hereto, intending to be legally bound, hereby agree as follows: 1. Filing of Agreement with the Company; Availability for Inspection by Stockholders. Copies of counterparts of this Agreement, signed by all the Stockholders and of every agreement supplemental to this Agreement or amending this Agreement, shall be filed in the principal office of the Company, which currently is located at Montgomery Ward Plaza, Chicago, Illinois 60671-0042 and in the registered office of the Company in the State of Delaware, and shall be open to the reasonable inspection of any Stockholder of the Company or beneficiary of the trust under this Agreement. The "Voting Trust Certificates" (as defined in Section 3) issued as provided in this Agreement shall be issued, received and held subject to all of the terms of this Agreement and the respective agreements or Notices of Exercise executed by the Stockholders pursuant to which such Stockholders acquired their Shares and, as applicable, a certain Stockholders' Agreement dated as of June 17, 1988, as amended from time to time (the "Stockholders' Agreement) and/or the Montgomery Ward & Co., Incorporated Stock Ownership Plan Terms and Conditions, as amended from time to time (the "Terms and Conditions"). 2. Transfer of Shares. (a) Each of the Stockholders is depositing or causing to be deposited with the Voting Trustee (or with a national bank or other bank with capital of at least $100,000,000 designated by the Voting Trustee, from time to time (the "Custodian")) such Stockholder's Shares by delivery to the Voting Trustee (or Custodian, if any) of a certificate (or certificates) representing the Shares owned by such Stockholder, together with appropriate stock powers transferring such certificate(s) to the Voting Trustee, with any requisite stock transfer stamps annexed thereto. The Stockholders and the Voting Trustee (or Custodian, if any) shall take such action as is necessary to effect the transfer of the Shares to, and in the name of, the Voting Trustee on the books of the Company, including the immediate filing of this Agreement with the Secretary of the Company. The certificate(s) for Shares so transferred and delivered to the Voting Trustee pursuant to this Agreement shall be surrendered by the Voting Trustee to the Company or transfer agent, if any, and cancelled, and a new certificate (or certificates) therefor shall be issued to and held by the Voting Trustee in the name of "Bernard F. Brennan, as Voting Trustee". Upon receipt by the Voting Trustee of the certificate(s) for Shares and upon the transfer of the Shares into the name of the Voting Trustee, the Voting Trustee shall hold the Shares, as stockholder of record, subject to the terms and conditions of this Agreement. (b) The Voting Trustee may designate a Custodian to act for and on behalf of the Voting Trustee under this Agreement. If a Custodian is designated by the Voting Trustee, such person shall be empowered, at the direction of the Voting Trustee acting in any manner consistent with this Agreement, to deal with Shares and Voting Trust Certificates on the Voting Trustee's behalf as if the Custodian were the Voting Trustee. The Custodian's actions taken pursuant to this Agreement, in accordance with the Voting Trustee's instructions consistent with this Agreement, shall be deemed to be those of the Voting Trustee. 3. Issuance of Voting Trust Certificates. Promptly after the delivery of Shares by each Stockholder, the Voting Trustee shall issue or cause to be issued by the Custodian, if any, to each Stockholder, in exchange for the Shares delivered by him or her pursuant to this Agreement, a Voting Trust Certificate(s) substantially in the form annexed as Exhibit A hereto (the "Voting Trust Certificate(s)"), representing in the aggregate the number of Shares delivered by the respective Stockholder. Except as otherwise provided in this Agreement (including, without limitation, Section 5), all options, rights of purchase, and other powers and privileges affecting the Shares represented by the Voting Trust Certificates (including, without limitation, those provided for in the Stockholders' Agreement and the Terms and Conditions) shall attach to the Voting Trust Certificates issued pursuant to this Agreement which represent the Shares. 4. Authority of Voting Trustee to Vote the Shares, Enter Into Agreements. (a) The Voting Trustee shall hold the Shares transferred to him pursuant to Sections 2, 5 and 12 of this Agreement under the terms and conditions set forth in this Agreement. As long as any of the Shares are subject to this Agreement and until the actual delivery by the Voting Trustee (or Custodian, if any), to the stockholders beneficially owning such Shares, of stock certificates in exchange for Voting Trust Certificates, pursuant to Section 11(b) of this Agreement, the Voting Trustee shall have full power and authority, and is hereby fully and exclusively empowered and authorized, to vote in person or by proxy the Shares deposited pursuant to this Agreement and transferred to him (including any changed or additional Shares, as provided in Section 5) at all meetings of the stockholders of the Company or to give written consents in lieu of voting such Shares in respect of any and all matters on which Shares are entitled to vote, including without limitation, the election of directors. (b) The Voting Trustee's power to vote such Shares and give consents in respect thereof pursuant to this Agreement shall be irrevocable. The Voting Trustee shall have the right to waive notice of any meeting of stockholders of the Company in respect of such Shares. The Voting Trustee may exercise any power or perform any act pursuant to this Agreement by an agent or attorney duly authorized and appointed by him. (c) The Voting Trustee shall have full power and authority to execute, deliver and perform the Stockholders Agreement and the Terms and Conditions and enter into any amendments with respect thereto without notice to the Stockholders. (d) Nothing contained in this Agreement shall disqualify the Voting Trustee or successor trustees from serving as such if the Voting Trustee does any of the following, nor shall anyone serving in such capacity be incapacitated from doing any of the following: (i) dealing or contracting with the Company or any of its affiliates, either as a vendor, purchaser, or otherwise, nor shall any transaction or contract be affected or invalidated by reason of the fact that the Voting Trustee or any firm or corporation affiliated with the Voting Trustee is in any way interested in such transaction or contract; nor shall the Voting Trustee be liable to account to the Company or to any stockholder thereof for any profits realized by, from or through any transaction or contract by reason of the fact that the Voting Trustee or any firm or corporation affiliated with the Voting Trustee is interested in such transaction or contract; or (ii) serving the Company or any of its affiliates as an officer or director, or in any other capacity, and receiving compensation therefor. (e) Anything elsewhere in this Agreement to the contrary notwithstanding, the holders of Voting Trust Certificates, and not the Voting Trustee, shall have the exclusive right to approve, waive or consent to the matters referred to in Sections 6.11(d), 6.11(e) and 8.2(a) of the Stockholders Agreement and the matters referred to in Section 7.2(a) of the Terms and Conditions. 5. Receipt of Additional Stock Certificates. (a) If the Voting Trustee shall receive any shares of the Company, any successor or successors of the Company or any entity which controls, directly or indirectly, the Company or a successor to the Company, issued by way of dividend, split-up, recapitalization, reorganization, merger, consolidation, or any other change or adjustment in respect of the Shares held by him pursuant to this Agreement, the Voting Trustee (or Custodian, if any) shall hold the stock certificates representing such additional or changed shares, to the extent that such shares have voting rights (including voting rights contingent upon the occurrence of specified events), subject to the terms of this Agreement and shall issue, or cause to be issued by the Custodian, if any, Voting Trust Certificates representing such changed or additional stock certificates to the respective holders of the then outstanding Voting Trust Certificates entitled thereto. Any stock certificates of the Company or any successor or successors of the Company or of any entity which controls, directly or indirectly, the Company or any successor to the Company, issued to the Voting Trustee with respect to the Shares that are subject to this Agreement which do not have any such voting rights shall be delivered to the respective registered holders of the then outstanding Voting Trust Certificates in proportion to the number of Shares respectively represented by the Voting Trust Certificates. (b) The term "Shares", as used in this Agreement, shall, without limiting the generality of anything elsewhere herein contained, include, in addition to the Shares originally deposited with the Voting Trustee, all additional shares of the Company or any successor or successors of the Company or of any entity which controls, directly or indirectly, the Company or any successor to the Company, deposited with the Voting Trustee, pursuant to Section 5(a) or retained by the Voting Trustee pursuant to Section 7. The term "Company", as used in this Agreement, shall, without limiting the generality of anything elsewhere herein contained, include, in addition to Montgomery Ward Holding Corp., any successor or successors to Montgomery Ward Holding Corp. or any entity which controls, directly or indirectly, Montgomery Ward Holding Corp. or any successor to Montgomery Ward Holding Corp. 6. Dividends and Distributions. Except as otherwise provided in Section 5, if the Company shall pay dividends or any distribution on or in respect of the Shares, it shall pay the same to the Voting Trustee, who shall promptly distribute, or cause the distribution to be made by the Custodian (if any) of, the same among the holders of record of then outstanding Voting Trust Certificates in proportion to the number of Shares in respect of which the dividends are paid or distribution is made, which are respectively represented by their Voting Trust Certificates. 7. Subscription for Securities of the Company. In case any shares or other securities of the Company are offered for subscription to the holders of the Shares, the Voting Trustee (or Custodian, if any), promptly upon receipt of notice of such offer, shall mail a copy thereof to each holder of Voting Trust Certificates. Upon actual receipt (any deemed receipt in accordance with Section 13 notwithstanding) by the Voting Trustee, prior to the last day fixed by the Company for subscription and payment, of a request so to subscribe from such holder accompanied by the requisite sum of money and appropriate form required to subscribe for such shares or securities, the Voting Trustee shall make, or cause to be made, such subscription and payment. If the shares or other securities so subscribed for are voting securities (including securities with voting rights contingent upon the occurrence of specified events) of the Company, the certificates therefor shall be issued and held by the Voting Trustee (or Custodian, if any), as stockholder of record, subject to the terms and conditions of this Agreement and the Voting Trustee shall issue or cause to be issued by the Custodian, if any, to the subscribing holder a Voting Trust Certificate in respect thereof. If the shares or other securities so subscribed for are non-voting securities of the Company, the certificates therefor shall be issued to the subscribing holder and the Voting Trustee shall mail or deliver such certificates or, cause them to be mailed and delivered by the Custodian, if any, to such holder. 8. No Compensation; Expenses. The Voting Trustee shall serve without compensation, but shall be entitled to reimbursement as set forth in this Agreement for expenses and charges which may be incurred as Voting Trustee, including but not limited to the employment of the Custodian, if any, and such agents, attorneys and counsel as the Voting Trustee may deem necessary and proper for the carrying out of this Agreement, and all taxes or other governmental charges paid or incurred as a result of the transfer or issuance of any Shares or Voting Trust Certificates or in respect of the ownership of the Shares held as trustee or in respect of any dividends, distributions or other rights in respect of such stock. Any such charges or expenses incurred shall be promptly reimbursed to the Voting Trustee by the Company and the Voting Trustee shall have a first lien on any and all distributions in respect of the Shares to secure the Voting Trustee's rights to such reimbursements. 9. Exculpation; Indemnification of Voting Trustee. The Voting Trustee shall not be liable by reason of any matter arising out of or in relation to this Agreement, except for such loss or damage as the holders of Voting Trust Certificates may suffer by reason of the Voting Trustee's willful misconduct, and, without limiting the generality of the foregoing, the Voting Trustee shall not be liable for any action taken, or omitted to be taken, by him in reliance upon and in conformity with, the advice of counsel, or by reason of any error of judgment or mistake of law or other mistake, or for any act or omission of any agent or attorney, or for any misconstruction of this Agreement, or for any action of any sort taken or omitted thereunder or believed by the Voting Trustee to be in accordance with the provisions and intents hereof or otherwise. The Voting Trustee shall be indemnified and held harmless by the Company from and against any and all of the Voting Trustee's actions pursuant to this Agreement, except for such Voting Trustee's willful misconduct. The Voting Trustee shall not be required to give a bond or other security for the faithful performance of his duties as such and shall be entitled to receive prompt payments in respect of the indemnification provided by this Agreement in advance of the final adjudication of any disputes relating thereto. 10. Successor Voting Trustee. (a) So long as Bernard F. Brennan shall be a "Management Shareholder" (as defined in the Stockholders' Agreement), of the Company, he shall be the Voting Trustee. (b) For the purposes of this paragraph (b), all references to ownership of Shares shall include the legal and beneficial ownership of Shares held in the Voting Trust and a Stockholder shall be so deemed to own as well all Shares owned by his "Permitted Transferees" (as defined in the Stockholders' Agreement and the Terms and Conditions). If any of the following events occurs with respect to Bernard F. Brennan (each of such events being herein sometimes referred to as a "Terminating Event"): he shall (i) cease to be a Management Shareholder, (ii) die, (iii) resign as Voting Trustee, or (iv) be adjudicated incompetent, then, upon the occurrence of such Terminating Event, the Management Shareholder, who, from time to time, after the occurrence of the Terminating Event, is both the owner of the largest number of Shares and an employee of the "Ward Group" (as such term is defined in the Stockholders' Agreement), shall be the successor Voting Trustee; provided, however, that after the first anniversary of the date of such Terminating Event, the successor Voting Trustee shall consist of a committee comprised of said Management Shareholder and the two most senior officers, from time to time (other than said Management Shareholder) of the Ward Group who are also Management Shareholders. Said committee shall act by the vote of a majority of its members. So long as Bernard F. Brennan is serving as the Voting Trustee, he may, at any time or from time to time, rescind, alter or amend, in whole or in part, any or all of the provisions of this paragraph by written notice to the Stockholders. Such rescissions, alterations or amendments shall remain in force until the termination of this Agreement or for such shorter period or periods as Bernard F. Brennan shall state in such notice or any subsequent notice or notices served while he is serving as Voting Trustee. (c) The rights, powers, privileges and obligations of the Voting Trustee acting as such pursuant to this Agreement shall be possessed by any successor Voting Trustee with the same effect as though such successor had originally been a party to this Agreement. The words "Voting Trustee" as used in this Agreement mean the Voting Trustee or any successor Voting Trustee acting under this Agreement. 11. Termination. (a) The Voting Trust created by this Agreement shall be effective and remain in force until the occurrence of the earliest of the following events: (i) the election of the Voting Trustee to terminate this Agreement by written notice to the holders of Voting Trust Certificates at any time after the date of this Agreement; or (ii) if there shall be no Voting Trustee in office, the failure of a successor Voting Trustee to be designated as provided in this Agreement or to serve for a period of 120 consecutive days. (b) Upon the termination of the Voting Trust with respect to any or all of the Shares (it being understood that a termination with respect to some Shares shall not terminate the Voting Trust with respect to other Shares), the Voting Trustee shall in exchange for, and upon the surrender of, the Voting Trust Certificates representing such Shares, deliver or cause to be delivered by the Custodian, if any, stock certificates to the holder of such Voting Trust Certificates. (c) If, in the event of the bankruptcy, receivership, dissolution or total or partial liquidation of the Company, whether voluntary or involuntary, the Voting Trustee shall receive any monies, securities and property to which the respective registered holders of the then outstanding Voting Trust Certificates shall be entitled, the Voting Trustee shall distribute or cause the distribution to be made by the Custodian, if any, of such monies, securities and property to the respective registered holders of the then outstanding Voting Trust Certificates in proportion to the number of Shares respectively represented by their Voting Trust Certificates, except any voting securities, which shall be retained by the Voting Trustee and shall become "Shares" hereunder. (d) The death, disability or incompetency of a holder of a Voting Trust Certificate during the term of this Agreement shall in no way affect the validity or enforceability of this Agreement or the Voting Trust Certificates issued pursuant to this Agreement, which shall remain in full force and effect. (e) If the Company shall acquire any Voting Trust Certificates, the Company may thereupon, at its option, deliver such Voting Trust Certificates to the Voting Trustee (or Custodian, if any) and shall receive in exchange the Common Stock or other securities represented by such Voting Trust Certificates. Upon such exchange the Voting Trust Certificates so delivered shall be cancelled. Any Voting Trust Certificates held by the Company shall not be deemed to be outstanding. 12. Additional Parties. If any person who is not a Stockholder shall acquire Common Stock of record and desires, or is required as a condition to such acquisition, to enter into and become a party to this Agreement, the parties to this Agreement hereby agree that such person, upon execution of a counterpart to this Agreement, shall become a party to this Agreement and be deemed to be a Stockholder for all purposes of this Agreement as if such person had originally executed this Agreement, and the Voting Trust herein created shall continue to remain in effect. 13. Notices. All notices, statements, instructions or other documents required to be given in accordance with this Agreement, shall be in writing and shall be given either personally or by mailing the same in a sealed envelope, first-class mail postage prepaid and either registered or certified, return receipt requested, addressed to, or sent by telegram, telex, confirmed telecopy or similar form of confirmed telecommunication (with a copy to follow by mail): If to the Voting Trustee: Bernard F. Brennan c/o Montgomery Ward Holding Corp. Montgomery Ward Plaza Chicago, Illinois 60671-0042; if a Custodian has been appointed and is serving, and the holders of Voting Trust Certificates have been so notified, then a copy is to be sent to the Custodian at the address provided in such notice; and if to the holders of the Voting Trust Certificates, at their respective addresses as shown on the records of the Voting Trustee (or Custodian, if any) or to such other addresses as a holder or the Voting Trustee shall designate pursuant to notice in the manner set forth in this Agreement. Notices sent by mail shall be deemed served on the second day after being deposited in the mail. Notices sent by other means in accordance with this Section 13 shall be deemed served upon receipt. Notices to be sent to a successor Voting Trustee shall be sent to the person and at the address designated by notice served in the manner herein provided. 14. Entire Agreement. This Agreement constitutes the entire understanding among the parties to this Agreement with respect to the subject matter of this Agreement and no modification, amendment or waiver of any provision of this Agreement shall be valid unless in writing signed by the Voting Trustee and holders of Voting Trust Certificates representing the beneficial interest in a majority of the shares of Class A Common Stock constituting Shares under this Agreement. 15. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective heirs, executors, administrators and permitted successors and assigns. 16. Governing Law. Regardless of the place of execution, this Agreement shall be governed by and construed in accordance with the laws of the State of Delaware (without regard to Delaware's conflicts of laws principles). Each Stockholder agrees to submit to personal jurisdiction and to waive any objection as to venue of federal courts in the Northern District of Illinois or state courts in the County of Cook, State of Illinois. Service of process on a Stockholder or Stockholders in any action arising out of or relating to this Agreement shall be effective if served upon such Stockholder or Stockholders by mail in accordance with Section 13. 17. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. 18. Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. In addition, each Stockholder and the Voting Trustee hereby agree that in the event any court shall finally hold that any provision hereof is unenforceable or invalid, such provisions hereof shall not be rendered void, but shall apply to such extent as the court may judicially determine or indicate constitutes a valid and enforceable provision under the circumstances involved. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written. THE COMPANY: MONTGOMERY WARD HOLDING CORP. By: Spencer H. Heine, Executive Vice President, Secretary and General Counsel VOTING TRUSTEE: Bernard F. Brennan STOCKHOLDER: Elaine Reynolds Exhibit A Voting Trust Certificate for Shares of Common Stock, par value $0.01 per share, of MONTGOMERY WARD HOLDING CORP., a Delaware corporation No. of Shares Certificate No. Class Series THIS IS TO CERTIFY THAT upon the termination of a certain Voting Trust Agreement, dated October 21, 1994, by and among Montgomery Ward Holding Corp.; Bernard F. Brennan, as Voting Trustee; and certain common stockholders of Montgomery Ward Holding Corp., pursuant to which agreement this certificate has been issued, will be entitled to receive certificates, expressed to be fully- paid and non-assessable, for the number of shares, and of the class, and of the series, hereinabove specified (the "Shares") and for the duration of such Voting Trust Agreement, to receive distributions equal to the cash or property or nonvoting stock distributions, if any, collected by the Voting Trustee (or Custodian, if any) upon a like number of the Shares standing in the name of the Voting Trustee. Prior to the actual delivery of such certificates, the Voting Trustee (or Custodian, if any), with respect to any and all of the Shares shall possess and be entitled to exercise, in the manner and to the extent provided in the aforesaid Voting Trust Agreement, all of the rights of every kind of the holder of this certificate, including the right to vote and take part in, or to consent to any corporate or stockholders' action, it being expressly stipulated that no right to vote, or take part in, or to consent to any corporate or stockholders' action, shall pass by, or under, this certificate. This certificate is not valid unless signed by the Voting Trustee or the appointed Custodian. The holder hereof, by accepting this certificate, manifests his consent that the undersigned Voting Trustee may treat the registered holder hereof as the true owner for all purposes, except the delivery of certificates for Shares, which delivery shall not be made without the surrender hereof. IN WITNESS WHEREOF, the undersigned, the Voting Trustee, has caused this certificate to be signed as of the day of , 19 . VOTING TRUSTEE: Bernard F. Brennan CUSTODIAN: By: Title: The sale, assignment, transfer, pledge, hypothecation or other encumbrance of this Voting Trust Certificate or the common stock (or any interest therein) represented hereby is subject to the restrictions, terms and conditions set forth in the Voting Trust Agreement described in this Certificate and pursuant to which this Certificate is issued, to a certain Stockholders' Agreement among the Company, its shareholders and holders of Voting Trust Certificates, dated June 17, 1988, as amended from time to time and/or to the Montgomery Ward & Co., Incorporated Stock Ownership Plan Terms and Conditions, as amended from time to time. A copy of said Stockholders' Agreement and a copy of said Terms and Conditions are on file in the office of the Secretary of the corporation. No sale, assignment, transfer, pledge, hypothecation or other encumbrance of this Certificate, or the shares of common stock represented by this Certificate, may be effected, except pursuant to the terms of said Stockholders' Agreement or said Terms and Conditions, as applicable. In addition, this Certificate and/or the shares of common stock represented by this Certificate, as the case may be, may not be sold or transferred in the absence of an effective Registration Statement (for the interest in the Voting Trust represented by this Certificate or said shares of common stock represented hereby, as the case may be) under the Securities Act of 1933 or pursuant to an applicable exemption from registration. In connection with any proposed sale or transfer of this Certificate, or the shares of common stock represented hereby, as the case may be, pursuant to an exemption from registration, the holder of this Certificate, or shares of common stock represented by this Certificate, as the case may be, may be required to deliver to the corporation an opinion of counsel satisfactory to the corporation, or the corporation may require that it shall have received an opinion of its counsel, that registration under said Act is not required. In addition, the right to vote the shares of common stock represented by this Certificate is restricted in the manner provided in said Stockholders' Agreement and in said Terms and Conditions. ASSIGNMENT FOR VALUE RECEIVED, does hereby sell, assign and transfer unto all of the undersigned's right, title and interest in and to this Voting Trust Certificate, and does hereby irrevocably constitute and appoint to be the undersigned's attorney to transfer this Voting Trust Certificate on the books of the within named Voting Trustee, with full power of substitution in the premises. Dated: Transferor's signature IN PRESENCE OF Witness' signature Print name of witness: EX-10 5 EXHIBIT 10.(iv)(A)(1)(a) AMENDMENT NO. 14 TO STOCKHOLDERS' AGREEMENT This Amendment No. 14 to Stockholders' Agreement ("Amendment No. 14") is consented to and made as of the 22nd day of September, 1994 by and among MONTGOMERY WARD HOLDING CORP., a Delaware corporation, (the "Company"), Bernard F. Brennan, individually and as attorney-in-fact for certain other parties to a certain Stockholders' Agreement dated as of June 17, 1988, as heretofore amended and restated (the "Stockholders' Agreement"), General Electric Capital Corporation, a New York corporation, and Myron Lieberman, as Trustee of the Brennan 1988 MW Trust. WHEREAS, as two amendments entitled "Amendment No. 12 to Stockholders' Agreement" have amended the Stockholders' Agreement, this amendment is entitled "Amendment No. 14 to Stockholders' Agreement", notwithstanding the fact that no "Amendment No. 13 to Stockholders' Agreement" exists; and WHEREAS, it is desired that the number of directorships of the Company be increased to eleven; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Section 5.2 of the Stockholders' Agreement is hereby amended and restated as of the date hereof as set forth on Exhibit A hereto. 2. This Amendment No. 14 is adopted by the Company with the consent of the holders of not less than 66 2/3% of the outstanding Shares of each class, as provided in Section 8.2 of the Stockholders' Agreement. 3. Except as amended hereby, the Stockholders' Agreement, as previously amended, shall remain in full force and effect. IN WITNESS WHEREOF, the undersigned hereby consent to and execute this Amendment No. 14 as of the day and year first above written. MONTGOMERY WARD HOLDING CORP. GENERAL ELECTRIC CAPITAL f/k/a BFB Acquisition Corp. CORPORATION By: /s/Bernard F. Brennan By: Bernard F. Brennan, Its: Chairman and Chief Executive Officer /s/Bernard F. Brennan /s/Myron Lieberman Bernard F. Brennan, Myron Lieberman, as Trustee individually, and as attorney-in- of the Brennan 1988 MW fact for the beneficial owners Trust of all Shares (as defined in the Stockholders' Agreement) held by him as Voting Trustee under that certain Voting Trust Agreement dated as of June 21, 1988. EXHIBIT A 5.2 Election of Directors. Subject to the limitations set forth herein, and in addition to any provisions relating to the election of directors by the holders of Preferred Stock which are contained in the Certificate of Incorporation and By-laws of the Company, at all times in which this Article V is in effect, the By- laws of the Company shall provide, and the Shareholders agree to vote, for the election of a Board of Directors consisting of eleven members, six to be designated by the Designator and five to be designated by GE Capital. The By-laws shall further provide, and the Shareholders agree, that, disregarding any directors which may be elected by the holders of Preferred Stock pursuant to the provisions of the Company's Certificate of Incorporation; (a) Intentionally omitted; (b) at such time, if any, as GE Capital and the GE Capital Affiliates shall cease to own, in the aggregate, more than 50% of the Shares which GE Capital and the GE Capital Affiliates have purchased in June 1988, the number of members of the Board of Directors which the Designator shall have the right to designate shall be increased by one and the number of members of the Board of Directors which GE Capital shall have the right to designate shall be reduced by one; and (c) at such time, if any, as GE Capital and the GE Capital Affiliates shall cease to own, in the aggregate, 20% or more of the Shares which GE Capital and the GE Capital Affiliates have purchased in June 1988, GE Capital shall no longer have the right to designate members of the Board of Directors in accordance with the foregoing provisions of this Section 5.2; and the number of directors to be elected shall be reduced to nine, seven to be elected by the Class A Shareholders, voting as a class, and two to be elected by the Class B Shareholders, voting as a class; provided, however, that as long as that certain Account Purchase Agreement, dated as of June 24, 1988, between Ward and Montgomery Ward Credit Corporation (the "Account Purchase Agreement") shall be in effect and GE Capital or any GE Capital Affiliate shall own any Class B Shares, GE Capital shall have the right to elect one of the two directors to be elected by the Class B Shareholders. In the event of a vacancy on the Board of Directors, the party who had the right to designate the director whose seat is vacant shall have the right to designate the party who shall fill the vacancy. The party who had the right to designate a director shall also have the right to cause that director to be removed. EX-10 6 LONG TERM CREDIT AGREEMENT dated as of September 15, 1994 among MONTGOMERY WARD & CO., INCORPORATED, VARIOUS BANKS, 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 TABLE OF CONTENTS Page SECTION 1 CERTAIN DEFINITIONS.. . . . . . . . . . . . . . . . 1 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . 1 1.2 Groups and Types of Loans. . . . . . . . . . . . . . 19 SECTION 2 REVOLVING LOANS . . . . . . . . . . . . . . . . . . 20 2.1 Commitment to Make Revolving Loans . . . . . . . . . 20 2.2 Revolving Loan Limits. . . . . . . . . . . . . . . . 20 2.3 Borrowing Procedure. . . . . . . . . . . . . . . . . 21 2.4 Repayment. . . . . . . . . . . . . . . . . . . . . . 21 2.5 Revolving Notes. . . . . . . . . . . . . . . . . . . 21 2.6 Voluntary Termination or Reduction of the Commitments. . . . . . . . . . . . . . . . . . . . . 21 2.7 Extension of the Termination Date. . . . . . . . . . 22 SECTION 3 SWING LOANS.. . . . . . . . . . . . . . . . . . . . 23 3.1 Commitment to Make Swing Loans.. . . . . . . . . . . 23 3.2 Swing Loan Limits. . . . . . . . . . . . . . . . . . 23 3.3 Borrowing Procedure. . . . . . . . . . . . . . . . . 24 3.4 Interest and Repayment.. . . . . . . . . . . . . . . 24 3.5 Swing Notes. . . . . . . . . . . . . . . . . . . . . 24 3.6 Participation of Banks . . . . . . . . . . . . . . . 25 SECTION 4 NEGOTIATED LOANS. . . . . . . . . . . . . . . . . . 25 4.1 Negotiated Loan Option . . . . . . . . . . . . . . . 25 4.2 Negotiated Loan Limits . . . . . . . . . . . . . . . 25 4.3 Procedure for Negotiated Loans . . . . . . . . . . . 26 4.4 Interest and Repayment . . . . . . . . . . . . . . . 27 4.5 Negotiated Loan Notes. . . . . . . . . . . . . . . . 27 SECTION 5 TERMINATION OF COMMITMENTS UPON A CHANGE OF CONTROL. . . . . . . . . . . . . . . 27 SECTION 6 INTEREST AND FEES . . . . . . . . . . . . . . . . . 28 6.1 Interest Rates . . . . . . . . . . . . . . . . . . . 28 6.2 Eurodollar Margin Increment. . . . . . . . . . . . . 28 6.3 Interest Payment Dates . . . . . . . . . . . . . . . 29 6.4 Setting and Notice of Loan Rates . . . . . . . . . . 29 6.5 Commitment Fee . . . . . . . . . . . . . . . . . . . 30 6.6 Displaced Commitment Fee . . . . . . . . . . . . . . 31 6.7 Agents' Fees . . . . . . . . . . . . . . . . . . . . 31 6.8 Computation of Interest and Fees . . . . . . . . . . 31 6.9 Determination of Margin and Fee Increase . . . . . . 31 SECTION 7 REVOLVING LOAN PROCEDURES; CONVERSIONS AND CONTINUATIONS . . . . . . 32 7.1 Procedure for Revolving Loans. . . . . . . . . . . . 32 7.2 Conversion and Continuation Procedures . . . . . . . 34 SECTION 8 MAKING AND SHARING OF PAYMENTS AND PREPAYMENTS; SETOFF; TAXES; RECORDKEEPING. 35 8.1 Making of Payments . . . . . . . . . . . . . . . . . 35 8.2 Sharing of Payments. . . . . . . . . . . . . . . . . 36 8.3 Setoff . . . . . . . . . . . . . . . . . . . . . . . 38 8.4 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 38 8.5 Recordkeeping. . . . . . . . . . . . . . . . . . . . 40 SECTION 9 CHANGE OF CIRCUMSTANCES.. . . . . . . . . . . . . . 42 9.1 Reserve and Capital Adequacy Costs . . . . . . . . . 42 9.2 Increased Costs. . . . . . . . . . . . . . . . . . . 44 9.3 Basis for Determining Interest Rate Inadequate or Unfair . . . . . . . . . . . . . . . . . . . . . . . 45 9.4 Changes in Law Rendering Certain Loans Unlawful. . . 46 9.5 Funding Losses . . . . . . . . . . . . . . . . . . . 46 9.6 Discretion of Banks as to Manner of Funding. . . . . 47 9.7 Conclusiveness of Statements; Survival of Provisions . . . . . . . . . . . . . . . . . . . . . 47 9.8 Negotiated Loans . . . . . . . . . . . . . . . . . . 47 SECTION 10 REPRESENTATIONS. . . . . . . . . . . . . . . . . . 47 10.1 Organization, etc . . . . . . . . . . . . . . . . . 48 10.2 Authorization; No Conflict. . . . . . . . . . . . . 48 10.3 Validity and Binding Nature . . . . . . . . . . . . 48 10.4 Financial Statements. . . . . . . . . . . . . . . . 48 10.5 Litigation and Contingent Liabilities . . . . . . . 49 10.6 Title to Property . . . . . . . . . . . . . . . . . 49 10.7 Liens . . . . . . . . . . . . . . . . . . . . . . . 49 10.8 Subsidiaries. . . . . . . . . . . . . . . . . . . . 49 10.9 Plans and Welfare Plans . . . . . . . . . . . . . . 49 10.10 Investment Company Act . . . . . . . . . . . . . . 50 10.11 Public Utility Holding Company Act . . . . . . . . 50 10.12 Regulations G, U and X . . . . . . . . . . . . . . 50 10.13 Labor Controversies. . . . . . . . . . . . . . . . 50 10.14 Tax Status . . . . . . . . . . . . . . . . . . . . 50 10.15 No Default . . . . . . . . . . . . . . . . . . . . 51 10.16 Compliance with Applicable Laws. . . . . . . . . . 51 10.17 Licenses, etc. . . . . . . . . . . . . . . . . . . 51 10.18 Purpose. . . . . . . . . . . . . . . . . . . . . . 52 SECTION 11 COVENANTS. . . . . . . . . . . . . . . . . . . . . 52 11.1 Reports, Certificates and Other Information . . . . 52 11.2 Liens . . . . . . . . . . . . . . . . . . . . . . . 54 11.3 Minimum Consolidated Shareholder's Equity . . . . . 58 11.4 Ratio of Debt to Total Capitalization . . . . . . . 58 11.5 Purchase or Redemption of the Company's Securities; Dividend Restrictions; Payments to the Parent . . . . . . . . . . . . . . . . . . . . . . . 58 11.6 Mergers, Consolidations, Sales. . . . . . . . . . . 60 11.7 Compliance with Applicable Laws . . . . . . . . . . 62 11.8 ERISA . . . . . . . . . . . . . . . . . . . . . . . 62 11.9 Corporate Existence and Franchises. . . . . . . . . 63 11.10 Maintenance of Tangible Property . . . . . . . . . 63 11.11 Maintenance of Intangible Property . . . . . . . . 63 11.12 Books, Records and Inspections . . . . . . . . . . 63 11.13 Insurance. . . . . . . . . . . . . . . . . . . . . 63 11.14 Payment of Taxes . . . . . . . . . . . . . . . . . 63 11.15 Other Agreements . . . . . . . . . . . . . . . . . 64 11.16 Regulation U . . . . . . . . . . . . . . . . . . . 64 11.17 Subordinated Debt. . . . . . . . . . . . . . . . . 64 11.18 Debt-Like Preferred Stock. . . . . . . . . . . . . 64 11.19 Further Assurances . . . . . . . . . . . . . . . . 65 SECTION 12 CONDITIONS.. . . . . . . . . . . . . . . . . . . . 65 12.1 Effectiveness of Agreement. . . . . . . . . . . . . 65 12.2 Conditions to Loans . . . . . . . . . . . . . . . . 67 SECTION 13 EVENTS OF DEFAULT AND THEIR EFFECT . . . . . . . . 68 13.1 Events of Default . . . . . . . . . . . . . . . . . 68 13.2 Effect of Event of Default. . . . . . . . . . . . . 71 SECTION 14 THE AGENTS . . . . . . . . . . . . . . . . . . . . 72 14.1 Authorization . . . . . . . . . . . . . . . . . . . 72 14.2 Indemnification . . . . . . . . . . . . . . . . . . 72 14.3 Action on Instructions of the Required Banks. . . . 73 14.4 Payments. . . . . . . . . . . . . . . . . . . . . . 73 14.5 Exculpation . . . . . . . . . . . . . . . . . . . . 75 14.6 Credit Investigation. . . . . . . . . . . . . . . . 75 14.7 Agents and Affiliates . . . . . . . . . . . . . . . 76 14.8 Resignation and Removal . . . . . . . . . . . . . . 76 14.9 Advisory Agent. . . . . . . . . . . . . . . . . . . 77 SECTION 15 GENERAL. . . . . . . . . . . . . . . . . . . . . . 77 15.1 Waiver; Amendments. . . . . . . . . . . . . . . . . 77 15.2 Notices . . . . . . . . . . . . . . . . . . . . . . 78 15.3 Computations. . . . . . . . . . . . . . . . . . . . 79 15.4 Participations; Assignments; Replacement of Banks. . . . . . . . . . . . . . . . . . . . . . . . 80 15.5 Costs, Expenses and Taxes . . . . . . . . . . . . . 85 15.6 Indemnification . . . . . . . . . . . . . . . . . . 86 15.7 Regulation U. . . . . . . . . . . . . . . . . . . . 86 15.8 Captions. . . . . . . . . . . . . . . . . . . . . . 87 15.9 Governing Law; Severability . . . . . . . . . . . . 87 15.10 Waiver of Jury Trial . . . . . . . . . . . . . . . 87 15.11 Counterparts; Effectiveness. . . . . . . . . . . . 87 15.12 Supersession . . . . . . . . . . . . . . . . . . . 87 15.13 Successors and Assigns . . . . . . . . . . . . . . 87 SCHEDULES and EXHIBITS SCHEDULES SCHEDULE I Banks, Commitments and Termination Dates (Sections 1.1, 2.7 and 15.4) SCHEDULE IA Special Commitment Fee (Section 6.5(b)) SCHEDULE II Litigation (Section 10.5) SCHEDULE III Liens (Section 10.7) SCHEDULE IV Subsidiaries and Restricted Subsidiaries (Section 10.8) SCHEDULE V Post-Retirement Welfare Plan Benefits (Section 10.9) SCHEDULE VI Tax Sharing Arrangements (Section 11.5) SCHEDULE VII Management Investors (Section 1.1) SCHEDULE VIII Finder's List (Section 1.1) EXHIBITS FORM OF EXHIBIT A Revolving Note (Section 2.5) EXHIBIT B Extension Request (Section 2.7) EXHIBIT C Extension Reply (Section 2.7) EXHIBIT D Swing Note (Section 3.5) EXHIBIT E Negotiated Note (Section 4.5) EXHIBIT F Revolving Loan Request (Section 7.1) EXHIBIT G Swing Loan Request (Section 3.3) EXHIBIT H Negotiated Loan Confirmation (Section 4.3) EXHIBIT I Officer's Certificate (Section 11.1(c)) EXHIBIT J Opinion of Counsel for the Company (Section 12.1) EXHIBIT K Certificate as to Satisfaction of Conditions (Section 12.1) EXHIBIT L Assignment and Acceptance (Section 15.4(b)) EXHIBIT M Replacement Agreement (Section 15.4(e)) LONG TERM CREDIT AGREEMENT THIS LONG TERM CREDIT AGREEMENT (this "Agreement"), dated as of September 15, 1994, is among MONTGOMERY WARD & CO., INCORPORATED, an Illinois corporation (herein, together with its successors and permitted assigns, called the "Company"), the banks listed on the signature pages hereof (herein, together with their respective successors and assigns, collectively called the "Banks" and individually called a "Bank"), THE FIRST NATIONAL BANK OF CHICAGO, as documentary agent for the Banks (herein, in such capacity, together with its successors and assigns in such capacity, called the "Documentary Agent"), THE BANK OF NOVA SCOTIA, as administrative agent for the Banks (herein, in such capacity, together with its successors and assigns in such capacity, called the "Administrative Agent"), THE BANK OF NEW YORK, as negotiated loan agent for the Banks (herein, in such capacity, together with its successors and assigns in such capacity, called the "Negotiated Loan Agent"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as advisory agent for the Banks (herein, in such capacity, together with its successors and assigns in such capacity, called the "Advisory Agent") (the Documentary Agent, the Administrative Agent, the Negotiated Loan Agent and the Advisory Agent are herein collectively called the "Agents" and individually called an "Agent"). WHEREAS, the Company wishes to be able to borrow funds from the Banks from time to time on a revolving basis; and WHEREAS, subject to the terms and conditions set forth herein, the Banks are willing to make loans to the Company; NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the parties hereto agree as follows: SECTION 1 CERTAIN DEFINITIONS. 1.1 Definitions. When used herein the following terms have the following respective meanings (it being understood that a finder's list is attached as Schedule VIII): "Adjusted Commitment" - see Section 8.2(a). "Administrative Agent" - see Preamble. "Advisory Agent" - see Preamble. "Affiliate" means with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. A Person shall be deemed to control another Person if such first Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such other Person, whether through ownership of voting securities, by contract or otherwise. "Agent(s)" - see Preamble. "Agent Parties" - see Section 14.2. "Aggregate Commitment" means $603,000,000 or such lesser amount as the Company may specify from time to time pursuant to Section 2.6 or as may be determined pursuant to Section 2.7. "Agreement" - see Preamble. "Applicable Agent" means (i) with respect to matters involving the Loans (other than the Negotiated Loans), the Administrative Agent, and (ii) with respect to matters involving the Negotiated Loans, the Negotiated Loan Agent. "Assignee(s)" - see Section 15.4(b). "Assignment" - see Section 15.4(b). "Authorized Officer" means the President, the Chief Executive Officer, the Chief Financial Officer, the Treasurer or any Assistant Treasurer of the Company. "Bank(s)" - see Preamble. "Bank Parties" - see Section 15.6. "Base Rate" means at any time and from time to time the higher of (i) the rate per annum then most recently publicly announced or established by the Bank which is acting as the Administrative Agent as its "reference rate" or "prime rate" (or such Bank's equivalent thereof) at its Funding Office for Base Rate Loans, or (ii) the Federal Funds Rate plus 1/2 of 1% per annum. "Base Rate Loan" means any Loan (other than a Negotiated Loan) which bears interest by reference to the Base Rate. "Business Day" means (i) any day of the year other than a Saturday, a Sunday or other day on which banks in Chicago, Atlanta or New York City are authorized or required by law to close, and (ii) if the applicable Business Day relates to the determination of a Eurodollar Rate or to the funding or payment of a Eurodollar Loan, a day on which dealings are carried on in the London interbank eurodollar market. "Capital Base" means at any time the sum of Subordinated Debt plus Consolidated Shareholder's Equity of the Company plus the FAS 106 Capital Base Factor, each as at the end of the Fiscal Year or Fiscal Quarter, as the case may be, ended on the date as of which "Capital Base" is being determined, less each of (i) the aggregate amount of all outstanding advances by the Company to, and investments of the Company in, Non-Restricted Subsidiaries, (ii) the aggregate value of all treasury stock carried as an asset by the Company or any Subsidiary the equity of which is included in the Company's Consolidated Shareholder's 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 included as a general intangible of the Company and its Restricted Subsidiaries for purposes of this definition: (a) assets under capital leases, (b) 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), (c) as of the date of determination, the unamortized balance of the value at June 23, 1988 of insurance licenses of the Company's insurance Restricted Subsidiaries, (d) as of the date of determination, the unamortized balance of the value at June 23, 1988 of marketing rights of the Company and its Restricted Subsidiaries, and (e) 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, all as determined (except as set forth in Section 15.3) in accordance with GAAP. "Capitalized Lease Obligations" means with respect to any Person any amounts payable by such Person with respect to any lease of any tangible or intangible property (whether real, personal or mixed), however denoted, which is required by GAAP to be reflected as a liability on such Person's balance sheet. "Change" - see Section 9.1(b). "Change of Control" means (a) the sale or other disposition, at any time or times after the Effective Date, to any Person other than a Qualified Purchaser, of an aggregate of 50% or more of the Outstanding Original Shares or (b) no Outstanding Original Shares remain outstanding. Anything to the contrary notwithstanding, at any time of determination no Change of Control shall be deemed to have occurred because, or as a result, of any events, facts and/or circumstances if theretofore either (i) shares of voting common stock of the Parent have been sold to the public pursuant to a registration statement filed with the SEC, which registration statement became effective and the gross proceeds of such offering were at least $100,000,000 or (ii) the Consolidated Shareholder's Equity of the Company was equal to or greater than $710,000,000 either (x) at the end of the then most recently ended Fiscal Quarter or (y) at the end of not less than any eight consecutive Fiscal Quarters prior thereto. "Class A Common Stock" means the issued and outstanding shares from time to time of Class A Common Stock of the Parent or the shares of stock into which such shares shall have been converted or for which such shares were exchanged in connection with any merger, consolidation or sale of substantially all the assets of the Company or the Parent. "Code" means the Internal Revenue Code of 1986, as amended. "Commitment" means, for each Bank, such Bank's commitment to make Revolving Loans on the terms and subject to the conditions of this Agreement, the maximum amount of such commitment being the amount opposite such Bank's name on Schedule I as the same may be revised pursuant to Section 2.6 or 2.7; and "Commitments" means, collectively, the commitments of all of the Banks to make Revolving Loans on the terms and subject to the conditions of this Agreement. "Company" - see Preamble. "Company Register" - see Section 8.5(a). "Conditional Sale Obligations" means 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 and under which a security interest (other than a statutory vendor's lien) is specifically retained by the seller until the deferred purchase price is paid in full, 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" means the aggregate of the net income of the Company and its Subsidiaries, determined (except as otherwise provided in Section 15.3) on a consolidated basis in accordance with GAAP. "Consolidated Shareholder's Equity" has (except as otherwise provided in Section 15.3) the meaning assigned to such phrase by GAAP. "Continue," "Continuation" and "Continued" refer to continuations of Loans pursuant to Section 7.2. "Conversion Notice" - see Section 7.2(a). "Convert", "Conversion" and "Converted" refer to conversions of Loans pursuant to Section 7.2. "Corporate Transaction" - see Section 11.6. "Debt" means as to any Person at any time (i) all of such Person's Indebtedness for Borrowed Money, plus (ii) all of such Person's Capitalized Lease Obligations, plus (iii) if such Person is the Company or a Restricted Subsidiary, without double counting, the Capitalized Lease Obligations of any Non-Restricted Subsidiary reflected on the balance sheet of such Non-Restricted Subsidiary for which the Company or such Restricted Subsidiary is liable directly or indirectly under a Guaranty, less (iv) all Subordinated Debt. "Debt-Like Preferred Stock" means any class of stock of the Company 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 Liabilities in the event of the occurrence and continuance of any Event of Default. "Displaced Loans" - see Section 6.6. "Documentary Agent" - see Preamble. "Dollar(s)" and the sign "$" mean lawful money of the United States of America. "Effective Date" - see Section 12.1. "Equalization Amount" - see Section 8.4(c). "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, together with the regulations thereunder and under the Code, in each case as in effect from time to time. References to sections of ERISA shall be deemed also to refer to any successors to such sections. "ERISA Affiliate" means any corporation, trade or business that is, along with the Company, a member of a controlled group of corporations or a controlled group of trades or businesses, as described in sections 414(b) and 414(c), respectively, of the Code or section 4001 of ERISA. "Eurocurrency Reserve Percentage" means, with respect to any day, a percentage (expressed as a decimal) equal to the percentage in effect on such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any marginal reserve requirement) applicable to "Eurocurrency liabilities" pursuant to Regulation D or any other then applicable regulation of said Board of Governors which prescribes reserve requirements applicable to "Eurocurrency liabilities" as presently defined in Regulation D. "Eurodollar Loan" means any Loan (other than a Negotiated Loan) which bears interest at a rate determined by reference to the Eurodollar Rate. "Eurodollar Margin Increment" - see Section 6.2. "Eurodollar Rate" means, with respect to any Interest Period, and subject to Section 6.4(b), the rate per annum equal to the arithmetic mean (rounded upwards, if necessary, to the nearest 1/16 of 1%) of the respective rates per annum notified to the Administrative Agent by the Reference Banks (or any thereof) prior to 9:30 a.m., Chicago time, on the second Business Day prior to the commencement of such Interest Period as the rate at which Dollar deposits are offered by the principal London office of each such Reference Bank to prime banks in the London interbank eurodollar market as at or about 11:00 a.m., London time, for delivery for same day value on the first day of such Interest Period, for the number of days comprised therein and in an amount approximately equal to the amount of such Reference Bank's Eurodollar Loan for such Interest Period. "Eurodollar Rate (Reserve Adjusted)" means, with respect to any Interest Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined pursuant to the following formula: Eurodollar Rate = Eurodollar Rate (Reserve Adjusted) 1-Eurocurrency Reserve Percentage "Event of Default" means any of the events described in Section 13.1. "Existing Credit Agreements" means collectively (i) the Amended and Restated Credit Agreement, dated September 22, 1992, as amended, among the Company, various lenders from time to time party thereto and certain agents listed on the signature pages thereof, (ii) the Short Term Credit Agreement, dated September 22, 1992, as amended, among the Company, various lenders from time to time party thereto and certain agents listed on the signature pages thereof, and (iii) the Term Loan Agreement, dated November 24, 1993, among the Company, various lenders from time to time party thereto and certain agents listed on the signature pages thereof. "Existing Termination Date" - see Section 2.7. "Extension Banks" - see Section 2.7. "Extension Reply" - see Section 2.7. "Extension Request" - see Section 2.7. "FAS 106 Capital Base Factor" means, as at the date of determination, the dollar amount set forth below opposite the Fiscal Year in which such date occurs: Fiscal Year FAS 106 Capital Base Factor 1994 75,000,000 1995 60,000,000 1996 45,000,000 1997 30,000,000 1998 15,000,000 1999 and each 0 Fiscal Year thereafter "FAS 106 Minimum Equity Factor" means, as at the date of determination, the dollar amount set forth below opposite the Fiscal Year in which such date occurs: Fiscal Year FAS 106 Minimum Equity Factors 1994 67,500,000 1995 60,000,000 1996 45,000,000 1997 30,000,000 1998 15,000,000 1999 and each 0 Fiscal Year thereafter "FAS 106 Restricted Payment Factor" means, as at the date of determination, the dollar amount set forth below opposite the Fiscal Year in which such date occurs: Fiscal Year FAS 106 Restricted Payment Factors 1994 45,000,000 1995 45,000,000 1996 45,000,000 1997 30,000,000 1998 15,000,000 1999 and each 0 Fiscal Year thereafter "Federal Funds Rate" means, for any day, the rate set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Board of Governors of the Federal Reserve System (including any such successor, "H.15(519)") for that day opposite the caption "Federal Funds (Effective)". If on any relevant day such rate is not yet published in H.15(519), the rate for that day will be the rate set forth in the daily statistical release designated as the Composite 3:30 P.M. Quotations for U.S. Government Securities, or any successor publication, published by the Federal Reserve Bank of New York (including any such successor, the "Composite 3:30 P.M. Quotations") for that day under the caption "Federal Funds Effective Rate". If on any relevant day the appropriate rate for such day is not yet published in either H.15(519) or the Composite 3:30 P.M. Quotations, the rate for such day will be the arithmetic mean of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m., New York time, on that day by each of three leading brokers of Federal funds transactions in New York City, selected by the Administrative Agent. "Fee Increase" - see Section 6.9. "Finance Obligation(s)" means with respect to any Person, as of the date of determination thereof, (i) any and all of such Person's Indebtedness for Borrowed Money, (ii) any and all of such Person's actual or contingent reimbursement obligations with respect to letters of credit issued for such Person's account, (iii) any and all of such Person's actual or contingent obligations with respect to interest swap agreements or currency swap agreements or other hedge agreements relating to fluctuations in interest rates or currencies, (iv) any and all of such Person's liabilities under Title IV of ERISA, and (v) any and all indebtedness or obligations of any of the types described in the preceding clauses (i), (ii), (iii) and (iv) for which such Person is liable, directly or indirectly, under a Guaranty. "Fiscal Quarter" means a fiscal quarter of any Fiscal Year. "Fiscal Year" means a fiscal year of the Company which 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. "Fixed Rate Loan(s)" means any Loan other than (i) a Base Rate Loan, and (ii) a Negotiated Loan which bears interest at a fluctuating interest rate. "Funding Date" means the date on which any Loan is disbursed or scheduled to be disbursed. "Funding Office" means (i) with respect to any Negotiated Loan by any Bank, the office or Affiliate of such Bank specified in the acceptance of the related Negotiated Loan Confirmation, and (ii) with respect to any Eurodollar Loan or Base Rate Loan by any Bank, the office or Affiliate of such Bank specified for such Type of Loan beneath such Bank's signature hereto or in any relevant Assignment. Any Bank's Funding Office for a particular Loan shall be the office or Affiliate through which such Bank shall fund or shall have funded such Loan. Subject to Section 9.6(b), each Funding Office of each Bank may be changed to another domestic or foreign office of such Bank or domestic or foreign office of any Affiliate of such Bank upon written notice from such Bank to the Company, the Administrative Agent and the Negotiated Loan Agent. "GAAP" means the generally accepted accounting principles applied in the preparation of the audited consolidated financial statements of the Company and its Subsidiaries as at January 1, 1994, with (except as otherwise provided in Section 15.3) such changes thereto as (a) shall be consistent with the then effective principles promulgated or adopted by the Financial Accounting Standards Board and its predecessors and successors, and (b) shall be concurred in by the independent certified public accounts of recognized national standing certifying any financial statements of the Company and its Subsidiaries. "GE Capital" means General Electric Capital Corporation, together with its successors and assigns. "Group" - see Section 1.2. "Guaranty" means any instrument or document by which a Person has directly or indirectly guaranteed (whether by discount or otherwise), endorsed (other than for collection or deposit in the ordinary course of business), discounted with recourse to such Person or with respect to which such Person is otherwise directly or indirectly liable for the indebtedness or obligations of any other Persons, including, without limitation, indebtedness in effect guaranteed by such Person through any agreement (contingent or otherwise) to (i) purchase, repurchase or otherwise acquire such indebtedness, (ii) provide funds for the payment or discharge of such indebtedness or any other liability of the obligor of such indebtedness (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), (iii) maintain the solvency or other financial condition of the obligor of such indebtedness, or (iv) make payment for any products, materials, supplies, transportation or services pursuant to an agreement which requires such payment regardless of the non-delivery or non-furnishing thereof, if in any such case the purpose or intent of such agreement is to provide assurance that such indebtedness will be paid or discharged or that any agreements relating thereto will be complied with or that the holders of such indebtedness will be protected against loss in respect thereof. "Indebtedness for Borrowed Money" means with respect to any Person, as of the date of determination thereof, (i) any and all of such Person's indebtedness for borrowed money (including, without limitation, indebtedness for borrowed money which is subordinated), (ii) any and all of such Person's Conditional Sale Obligations, (iii) any and all indebtedness secured by any Lien with respect to any property or asset owned by such Person, regardless of whether the indebtedness secured thereby shall be of or shall have been assumed by such Person, and (iv) any and all indebtedness or obligations of any of the types described in the preceding clauses (i), (ii) and (iii) for which such Person is liable, directly or indirectly, under a Guaranty; provided, however, that the obligations of a lessee under a lease shall not constitute Indebtedness for Borrowed Money and any indebtedness 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. "Indemnified Liabilities" - see Section 15.6. "Interest Period" means (i) with respect to any Eurodollar Loan, the period commencing on such Eurodollar Loan's Funding Date (or on the date such Loan was Converted to or Continued as a Eurodollar Loan) and ending 1, 2, 3 or 6 months thereafter as selected by the Company pursuant to Section 7.1(a) or 7.2, (ii) with respect to any Base Rate Loan, the period commencing on such Base Rate Loan's Funding Date (or on the date such Loan was Converted to or Continued as a Base Rate Loan) and ending on the last Business Day of the next following March, June, September or December, whichever comes first, (iii) with respect to any Swing Loan, the period commencing on such Swing Loan's Funding Date and ending on the date specified by the Company in its request for such Swing Loan, which date shall fall not later than 7 days after such Funding Date, and (iv) with respect to any Negotiated Loan, the period commencing on such Negotiated Loan's Funding Date and ending on the date specified by the Company in its Negotiated Loan Confirmation for such Negotiated Loan; provided, however, that: (A) if an Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next succeeding Business Day (unless, in the case of a Eurodollar Loan, such next succeeding Business Day would fall in the next succeeding calendar month, in which case such Interest Period shall end on the next preceding Business Day); (B) in the case of an Interest Period for any Eurodollar Loan, if there exists no day numerically corresponding to the day such Loan was made in the month in which the last day of such Interest Period would otherwise fall, such Interest Period shall end on the last Business Day of such month; (C) if an Interest Period for any Negotiated Loan would otherwise extend beyond 182 days after such Negotiated Loan's Funding Date, such Interest Period shall end on the 182nd day after such Funding Date unless such day is not a Business Day, in which case such Interest Period shall end on the next preceding Business Day; and (D) no Interest Period for any Revolving Loan or Swing Loan shall extend beyond the next occurring Termination Date for any Bank. "Liabilities" means any and all of the Company's obligations to the Agents and the Banks, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due, which arise out of or in connection with this Agreement, any Note or any document, instrument or agreement executed in connection with any of the foregoing. "Lien" means any mortgage, pledge, lien, security interest or other charge, including the retained security title of a conditional vendor or lessor. "Litigation" means any litigation, proceeding (including without limitation any governmental proceeding or arbitration proceeding), claim, lawsuit and/or investigation (including, without limitation, any environmental litigation, proceeding, claim, lawsuit and/or investigation) pending or threatened against or involving the Company or any Subsidiary or any of its or their businesses or operations. "Loan Request" means any Revolving Loan Request, any Swing Loan Request and any Negotiated Loan Confirmation. "Loans" means, collectively, the Negotiated Loans, the Revolving Loans and the Swing Loans, and "Loan" means, individually, any Negotiated Loan, Revolving Loan or Swing Loan. "Management Investor" means (i) any Person who is listed in Schedule VII, (ii) any Person who on the Effective Date is the owner of any shares of Class A Common Stock, and (iii) any Person who on the date of determination, whether or not such Person is otherwise a Management Investor, is an employee of the Company, the Parent or their Subsidiaries or a director of the Parent (elected to the Board of Directors by the Class A Common Stock shareholders) and is then either the owner of shares of Class A Common Stock or the holder of options to purchase shares of Class A Common Stock pursuant to any employee stock option plan established by or for the benefit of the employees of the Company, the Parent or their Subsidiaries or directors of the Parent. "Margin Stock" has the meaning given to such term in Regulations U and/or X. "Master Register" - see Section 8.5(b). "Material Litigation" or "Material Litigation Development" means any Litigation or development in any Litigation which could individually or in the aggregate impair the validity or enforceability of or the ability of the Company to perform any of its obligations under this Agreement or the Notes or the MWCC Receivables Purchase Agreement, or materially impair the ability of the Company to conduct business substantially as now conducted, or materially and adversely affect the consolidated business, operations, prospects or financial condition of the Company and its Subsidiaries, taken as a whole. "MWCC" means Montgomery Ward Credit Corporation. "MWCC Receivables Purchase Agreement" means the Account Purchase Agreement between MWCC and the Company, together with the Guaranty made by GE Capital of MWCC's obligations under such Account Purchase Agreement, both dated as of June 24, 1988, as the same may be amended, modified or supplemented from time to time in a manner which does not result in an Event of Default under Section 13.1(j). "Mobil" - see Section 10.14(c). "Multiemployer Plan" means a "multiemployer plan", as such term is defined in section 4001(a) of ERISA, which is subject to Title IV of ERISA and to which the Company or any ERISA Affiliate contributed or otherwise may have any liability. "Negotiated Loan Agent" - see Preamble. "Negotiated Loan Confirmation" - see Section 4.3(a). "Negotiated Loan Register" - see Section 8.5(c). "Negotiated Loans" - see Section 4.1. "Negotiated Note(s)" - see Section 4.5. "Non-Restricted Subsidiary" means each Subsidiary which is not a Restricted Subsidiary. "Non-United States Person" means a Person who is not (i) a citizen or resident of the United States, (ii) a corporation, partnership or other entity created or organized under the laws of the United States, or (iii) an estate or trust the income of which is subject to United States federal income taxation regardless of its source; and "United States" means the United States of America (including the States and the District of Columbia). "Notes" means, collectively, the Revolving Notes, the Negotiated Notes and the Swing Notes; and "Note" means any individual Revolving Note, Negotiated Note or Swing Note. "Outstanding Original Shares" means all shares of Class A Common Stock held by Management Investors at the close of business on June 23, 1988 (including any shares of stock and any options, warrants or other rights convertible or exchangeable for shares of such stock received as a direct or indirect result of any stock dividend, stock split or capitalization with respect to such stock) but excluding any such Class A Common Stock repurchased by the Parent under the Parent Shareholders' Agreement with respect to any Management Investor, which repurchased shares have not been (i) resold to a Management Investor or an employee stock ownership plan established by or for the benefit of the employees of the Company, the Parent or their Subsidiaries, or (ii) reserved for issuance to employees of the Company, the Parent or other Subsidiaries or directors of the Parent, pursuant to an employee stock option plan established for the benefit of such employees or directors. "Parent" means Montgomery Ward Holding Corp., a Delaware corporation, together with any Successor to Parent. "Parent Shareholders' Agreement" means the agreement dated as of June 22, 1988 among the Parent and certain shareholders thereof, as such agreement has been and may hereafter be amended, modified or supplemented from time to time in a manner not inconsistent with this Agreement. "Participant(s)" - see Section 15.4(a). "Payment Sharing Notice" means a written notice from any Bank or any Agent to all other parties under this Agreement, given at any time that an Event of Default has occurred and is continuing, which directs the Agents to allocate payments received from the Company in accordance with Section 8.2. "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Percentage" - see Section 2.2(a). "Permitted Lien" - see Section 11.2. "Person" means an individual or a corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, government (or an agency or political subdivision thereof) or other entity of any kind. "Plan" means a "pension plan", as such term is defined in ERISA, which is subject to Title IV of ERISA (other than a Multiemployer Plan), established or maintained by the Company or any ERISA Affiliate as to which the Company or any ERISA Affiliate contributed or is a member or otherwise may have any liability, including any liability by reason of having been a substantial employer within the meaning of section 4063 of ERISA at any time during the five years preceding the Effective Date, or by reason of being deemed to be a contributing sponsor under section 4069 of ERISA. "Qualified Purchaser" means (i) any Management Investor, (ii) the Company and the Parent, (iii) GE Capital or a parent or subsidiary thereof, (iv) a spouse, descendant or ancestor of a Management Investor, or a spouse of a descendant or ancestor of a Management Investor, or a trustee of a trust or custodian of a custodianship for the benefit of one or more of the foregoing and/or a Management Investor, (v) the personal representative or any heir, legatee or devisee of any Management Investor, or (vi) any employee stock ownership plan established by or for the benefit of employees of the Company, the Parent or their Subsidiaries. "Ratio of Earnings to Fixed Charges" means for any Ratio Period, the ratio of (i) the sum of Consolidated Net Income for such Ratio Period before addition of any amount for interest income and before deduction of any amount for all income taxes, interest expense, depreciation, amortization and rental expense, to (ii) the sum of the excess of all interest expense over interest income plus all rental expense plus capital expenditures (other than asset additions under capital leases determined in accordance with GAAP, except as set forth in Section 15.3) of the Company and its Subsidiaries payable with respect to such Ratio Period, all as determined in accordance with GAAP (except as set forth in Section 15.3). "Ratio Period" means the eight (8) consecutive Fiscal Quarters ending as of the date as of which the Ratio of Earnings to Fixed Charges is being determined. "Reference Banks" means The First National Bank of Chicago, The Bank of New York and The Bank of Nova Scotia. "Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System and any successor rule or regulation of similar import as in effect from time to time. "Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System and any successor rule or regulation of similar import as in effect from time to time. "Regulation X" means Regulation X of the Board of Governors of the Federal Reserve System and any successor rule or regulation of similar import as in effect from time to time. "Renewal Date" - see Section 2.7. "Renewed Termination Date" - see Section 2.7. "Replacement Agreement" - see Section 15.4(e). "Replacement Bank" - see Section 15.4(e). "Reply Date" - see Section 2.7. "Reportable Event" has the meaning given to such term in ERISA. "Required Banks" means at any time Banks having at least 66-2/3% of the aggregate amount of the Commitments or, if the Commitments shall have been terminated, holding Notes evidencing at least 66-2/3% of the aggregate unpaid principal amount of the Loans. "Restricted Payment" - see Section 11.5. "Restricted Subsidiary" means any Subsidiary designated as such by the Company's Board of Directors or by an officer of the Company authorized by the Board of Directors to make such designation and which designation shall not thereafter have been cancelled by the Company's Board of Directors or by an officer of the Company authorized by the Board of Directors to effect such cancellation; provided, however, that a Subsidiary may be designated as a Restricted Subsidiary or such designation may be cancelled if and only if immediately after such designation or cancellation, and after giving effect thereto, no Event of Default or Unmatured Event of Default shall have occurred and be continuing. "Revolving Loan(s)" - see Section 2.1. "Revolving Loan Request" - see Section 7.1(a). "Revolving Note" - see Section 2.5. "Risk-Based Capital Guidelines" - see Section 9.1(b). "SEC" means the Securities Exchange Commission and any successor thereof. "Secured Indebtedness" - see Section 11.2(xix). "Short Term Credit Agreement" means that certain Short Term Credit Agreement dated as of the date of this Agreement, among the Company, the Agents and the Banks, as the same may be amended, modified or supplemented from time to time. "Special Commitment Fee Termination Date" - see Section 6.5(b). "Special Restricted Subsidiary" means any Restricted Subsidiary (i) with assets that constitute one percent (1%) or less of the total assets of the Company and all Restricted Subsidiaries, (ii) with net income for the most recent Fiscal Year that constitutes one percent (1%) or less of the total net income of the Company and all Restricted Subsidiaries for the most recent Fiscal Year, and (iii) with equity of less than $4,000,000. "Subordinated Debt" means indebtedness of the Company which is subordinated to the prior payment of the Liabilities on terms and conditions acceptable to the Required Banks; provided that any payments of principal which are scheduled to occur prior to the last occurring Termination Date of any Bank (pursuant to Section 2.7) shall not constitute Subordinated Debt. "Subsidiary" means a corporation of which the Company and/or its other Subsidiaries own, directly or indirectly, such number of outstanding shares as have more than 50% of the ordinary voting power for the election of such corporation's directors. "Successor to Parent" - see Section 13.1(h). "Swing Loan(s)" - see Section 3.1. "Swing Loan Bank" means as to any Swing Loan, the Bank making or which made such Swing Loan. "Swing Loan Percentage" means as to any Bank with respect to any Swing Loan, the ratio (expressed as a percentage) of (i) the Unused Commitment of such Bank to (ii) the aggregate of the Unused Commitments of all Banks, such percentage to be calculated as if such Swing Loan were not outstanding at the time of determination. "Swing Loan Request" - see Section 3.3. "Swing Note(s)" - see Section 3.5. "Tax Benefit" - see Section 8.4(c). "Taxes" - see Section 8.4(a). "Terminated Bank" - see Section 15.4(e). "Termination Date" means, with respect to each Bank, the earlier to occur of (i) the later of (a) the fifth anniversary of the Effective Date or (b) the date to which the Commitment of such Bank has been extended pursuant to Section 2.7, or (ii) such other date on which the Aggregate Commitments shall terminate pursuant to Section 5 or 13.2 or be reduced to zero pursuant to Section 2.6 and, if in any case such day is not a Business Day, the next succeeding Business Day. "Total Capitalization" means at any time the sum of Debt of the Company and its Restricted Subsidiaries plus Capital Base plus all Debt-Like Preferred Stock; provided, however, that if Total Capitalization is being determined as at any date which is not the last day of a Fiscal Quarter, "Total Capitalization" equals (i) Debt of the Company and its Restricted Subsidiaries, plus (ii) all Debt-Like Preferred Stock, plus (iii) Capital Base as at the end of the most recently completed Fiscal Quarter, plus (iv) any repayments of loans or advances to Parent received by the Company since the end of the most recently completed Fiscal Quarter, plus (v) any capital contributions received by the Company since the end of the most recently completed Fiscal Quarter, plus (vi) 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 (vii) 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 (viii) 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, Non-Restricted Subsidiaries other than any decrease resulting from any aggregate net loss incurred by such Non-Restricted Subsidiaries since the end of the most recently completed Fiscal Quarter, minus (ix) any Restricted Payments made since the end of the most recently completed Fiscal Quarter, minus (x) 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, Non-Restricted Subsidiaries other than any increase resulting from any aggregate net income of such Non-Restricted Subsidiaries since the end of the most recently completed Fiscal Quarter. "Type" - see Section 1.2. "Unmatured Event of Default" means any event which if it continues uncured will, with lapse of time or notice or lapse of time and notice, constitute an Event of Default. "Unused" means as to any Commitment of any Bank, at any time, the greater of (i) zero or (ii) the Commitment of such Bank minus the then outstanding Revolving Loans, Negotiated Loans and Swing Loan of such Bank (or Swing Loans, in the case of the Bank which is acting as the Administrative Agent), provided that for purposes of distributing commitment fees under Sections 6.5 and 6.6, the term "Unused" shall be determined without subtracting any outstanding Swing Loans. "Welfare Plan" has the meaning assigned to such term by ERISA. 1.2 Groups and Types of Loans. Loans hereunder are distinguished by "Type" and by "Group". The "Type" of a Loan refers to whether such Loan is a Base Rate Loan or a Eurodollar Loan or a Negotiated Loan. A "Group" of Loans consists of Revolving Loans of the same Type, with the same Funding Date or Conversion or Continuation date, and having the same Interest Period. SECTION 2 REVOLVING LOANS. 2.1 Commitment to Make Revolving Loans. On the terms and subject to the conditions of this Agreement, each of the Banks, severally and for itself alone, agrees to make revolving loans to the Company (herein collectively called the "Revolving Loans" and individually called a "Revolving Loan") on a revolving basis from time to time before the Termination Date for such Bank in amounts equal to such Bank's Percentage of such aggregate amounts as the Company may from time to time request pursuant to Section 7.1, but subject to the limits specified in Section 2.2. The Revolving Loans may be either Eurodollar Loans or Base Rate Loans, as selected by the Company pursuant to Section 7.1. 2.2 Revolving Loan Limits. The Revolving Loans shall be subject to the following limits as determined by the Administrative Agent pursuant to Section 8.5(b): (a) Each Bank's share of a Group of Revolving Loans shall be equal to the ratio (expressed as a percent) that (i) the Unused Commitment of such Bank immediately prior to giving effect to the funding of such Group, plus the aggregate principal amount (or portion thereof) of all Loans of such Bank to be repaid concurrently with the proceeds of such funding (but not in excess of such Bank's Commitment), minus the aggregate principal amount of all Loans of such Bank which have been requested (or in the case of Negotiated Loans, confirmed) but not yet funded and which are to be funded prior to the expiration of the Interest Period of such Group, bears to (ii) the aggregate of the Unused Commitments of all Banks immediately prior to giving effect to such funding, plus the aggregate principal amount (or portion thereof) of all Loans to be repaid concurrently with the proceeds of such funding, minus the aggregate principal amount of all Loans which have been requested (or in the case of Negotiated Loans, confirmed) but not yet funded and which are to be funded prior to the expiration of the Interest Period of such Group (such percentage, as to each Bank with respect to the Group of Revolving Loans relating to such funding, being herein called such Bank's "Percentage"); and (b) The aggregate principal amount of all Revolving Loans of all Banks at any one time outstanding, when added to the aggregate principal amount of all Swing Loans and Negotiated Loans then outstanding, shall not exceed the then Aggregate Commitment. 2.3 Borrowing Procedure. The Company shall make requests for Revolving Loans, and each Bank (and, to the extent that the Administrative Agent has received immediately available funds from one or more Banks, the Administrative Agent) shall fund such requests, pursuant to the procedure set forth in Section 7.1. 2.4 Repayment. The Company promises to pay to each Bank on such Bank's Termination Date (or earlier date required under Section 7.2(c)) the principal amount of all Revolving Loans made by such Bank which remain outstanding on such Termination Date (or such earlier date). 2.5 Revolving Notes. Each Revolving Loan shall be evidenced by the Company's promissory note (as amended, modified or supplemented from time to time, and together with any renewals thereof or exchanges or substitutions therefor, collectively called the "Revolving Notes" and individually called a "Revolving Note") substantially in the form set forth as Exhibit A, with appropriate insertions, each of which shall be dated the Effective Date and made payable to the order of each Bank, respectively. 2.6 Voluntary Termination or Reduction of the Commitments. (a) Termination. At any time on at least five days' prior irrevocable notice received by the Administrative Agent (which shall promptly on the same day or on the next Business Day advise each other Agent and each Bank thereof), the Company may terminate concurrently the Commitments of all the Banks in their entirety upon payment in full (in Dollars and in same day funds) of all outstanding Revolving Loans, Negotiated Loans and Swing Loans, together with all interest accrued thereon and all fees and other obligations (including breakage fees pursuant to Section 9.5) of the Company related thereto. (b) Reduction. At any time on at least five days' prior irrevocable notice received by the Administrative Agent (which shall promptly on the same day or on the next Business Day advise each other Agent and each Bank thereof), the Company may permanently reduce the Aggregate Commitment (such reduction to be pro rata among the Banks according to their respective Commitments). Concurrently with each such reduction of the Aggregate Commitment, the Company shall make a mandatory prepayment of the Loans such that after giving effect thereto (i) the sum of all outstanding Revolving Loans, Negotiated Loans and Swing Loans shall not exceed the then reduced amount of the Aggregate Commitment, and (ii) the aggregate principal amount of all Revolving Loans of any Bank, plus (except in the case of the Bank which is the Administrative Agent) any Swing Loan of such Bank, shall not exceed the amount of such Bank's Commitment as so reduced. Each prepayment pursuant to this Section 2.6(b) shall be subject to the provisions of Section 8.1. 2.7 Extension of the Termination Date. (a) From time to time, the Company may request (but not more than once in any calendar year) each Bank to extend the Termination Date then in effect for such Bank ("Existing Termination Date") to a date ("Renewed Termination Date") stipulated by the Company in such request which is not more than one year after the Existing Termination Date. The Company shall give written notice of such request to the Agents and each Bank, such notification to be in the form set forth on Exhibit B hereto ("Extension Request"). On or before the date ("Reply Date") specified by the Company in its Extension Request (which shall be 30 days after the date on which the Extension Request was given, or if such 30th day is not a Business Day, the immediately preceding Business Day), each of the Banks shall notify the Company and the Administrative Agent in writing whether or not such Bank will consent to the proposed Termination Date extension, such notification to be in the form set forth on Exhibit C hereto ("Extension Reply"). If, but only if, each of the following conditions are satisfied: (i) On or prior to the Reply Date, the Administrative Agent shall have received Extension Replies representing consents to the Extension Request executed by Banks representing at least 66-2/3% of the Commitments of all Banks; (ii) On or prior to the date ("Renewal Date") which is 45 days after the Reply Date, the Administrative Agent shall have received Extension Replies representing consents to the Extension Request executed by Banks (the "Extension Banks") representing not less than 90% of the Commitments of all Banks at such time; and (iii) On the Renewal Date no Event of Default or Unmatured Event of Default exists and the Administrative Agent shall have received from the Company a certificate of an Authorized Officer of the Company dated such Renewal Date to such effect, then on such Renewal Date, the Termination Date for each of the Extension Banks (but not for any Bank which is not an Extension Bank) shall be so extended to the Renewed Termination Date. Notwithstanding the foregoing, upon written notice to the Company, the Administrative Agent and the Negotiated Loan Agent given at any time after such Renewal Date, any Bank which is not an Extension Bank may extend its Termination Date to the Renewed Termination Date applicable to the Extension Banks by furnishing an Extension Reply to the Administrative Agent. Promptly after any of the foregoing extensions, the Administrative Agent shall forward to the Negotiated Loan Agent and all Banks a revised Schedule I setting forth for each Bank the amount of such Bank's Commitment, such Bank's Termination Date and the Aggregate Commitment after giving effect to such extensions. (b) As long as the Short Term Credit Agreement is in effect, the Company agrees that the date of the Extension Request and the Reply Date shall coincide with the date of the extension request and the reply date then requested by the Company pursuant to the Short Term Credit Agreement. SECTION 3 SWING LOANS. 3.1 Commitment to Make Swing Loans. On the terms and subject to the conditions of this Agreement, each of the Banks severally, and for itself alone, agrees to make loans (herein collectively called "Swing Loans" and individually called a "Swing Loan") to the Company in such amounts as the Company may from time to time request, but subject to the limits specified in Section 3.2. exceed the following limits: (i) no Bank (except the Bank which is Administrative Agent) shall be obligated to make any Swing Loan in excess of the Unused Commitment of such Bank, (ii) the aggregate principal amount of Swing Loans at any one time outstanding as determined by the Administrative Agent pursuant to Section 8.5(b), when added to all swing loans (if any) then outstanding under the Short Term Credit Agreement, shall not exceed $30,000,000, (iii) so long as the aggregate principal amount of all Loans under this Agreement, when added to the aggregate principal amount of all loans (if any) then outstanding under the Short Term Credit Agreement, shall exceed $301,500,000, the Company shall have no right to request from any Bank other than the Bank which is Administrative Agent, and no Bank other than the Bank which is Administrative Agent shall be required to make, any Swing Loan, (iv) there shall be not more than one Swing Loan outstanding at any one time from any Bank which is not the Administrative Agent, and (v) the aggregate principal amount of Swing Loans shall not exceed the limits specified in Section 2.2(b). 3.3 Borrowing Procedure. Each Swing Loan shall be made on notice, delivered by the Company to the Swing Loan Bank and to the Administrative Agent, not later than 1:00 p.m., Chicago time, or such other time agreed to by the Company and the Swing Loan Bank, on the date on which the Company desires to obtain such Swing Loan, such notice to be in writing or by telex, or telephonic notice confirmed promptly thereafter in writing, substantially in the form of Exhibit G ("Swing Loan Request"). Not later than 2:00 p.m., Chicago time, or such other time agreed to by the Company and the Swing Loan Bank, on such date, the Swing Loan Bank shall provide the Company, at the Funding Office of such Bank for Base Rate Loans, immediately available funds in the amount of such Swing Loan unless prior to such time the Administrative Agent shall have advised the Swing Loan Bank that such Loan would not be within the limits specified in Section 3.2 or the Swing Loan Bank becomes aware that the conditions set forth in Section 12.2 have not been satisfied with respect to such Loan, in either of which events such Swing Loan shall not be made. Concurrently with each funding of a Swing Loan, the Swing Loan Bank shall give notice of such Swing Loan to the Administrative Agent. The Swing Loan Bank shall be entitled to assume that each of the conditions to the making of the Swing Loan have been satisfied absent actual knowledge to the contrary received by the Swing Loan Bank. 3.4 Interest and Repayment. Each Swing Loan shall, before the maturity of such Swing Loan, bear interest at the Base Rate. Each Swing Loan (including accrued interest) shall be due and payable on the last day of the Interest Period applicable thereto, but in no event later than the Termination Date of the Bank making such Swing Loan. Each Swing Loan shall be prepayable, at the Company's option, on notice to each of the Swing Loan Bank and the Administrative Agent. Each payment of principal or interest on a Swing Loan shall be made by the Company directly to the Swing Loan Bank at its Funding Office for Base Rate Loans accompanied by notice to the Administrative Agent. Promptly upon repayment of any Swing Loan, the Swing Loan Bank shall advise the Administrative Agent thereof. 3.5 Swing Notes. Each Swing Loan shall be evidenced by the Company's promissory note (as amended, modified or supplemented from time to time, and together with any renewals thereof or exchanges or substitutions therefor, collectively called the "Swing Notes" and individually called a "Swing Note") substantially in the form of Exhibit D, with appropriate insertions, which shall be dated the Effective Date and made payable to the order of each Bank, respectively. 3.6 Participation of Banks. From time to time when any Swing Loans are outstanding, (a) upon written demand made of the Administrative Agent and the Company by any Swing Loan Bank, the Company agrees to request Loans from all of the Banks in accordance with Section 2.1 and to apply the proceeds of such Loans to the repayment of all outstanding Swing Loans of such Swing Loan Bank; and (b) upon written demand by any Swing Loan Bank, each other Bank irrevocably and unconditionally shall purchase and receive from such Swing Loan Bank, without recourse or warranty (except that the outstanding Swing Loans in fact were made and not theretofore sold or assigned by such Swing Loan Bank), an undivided interest and participation in the Swing Loans then outstanding of such Swing Loan Bank, by paying to the Administrative Agent, in Dollars and in same day funds, an amount equal to such other Bank's Swing Loan Percentage of all Swing Loans of such Swing Loan Bank then outstanding, whereupon the Administrative Agent shall promptly, but not more than one Business Day thereafter, pay over such funds to such Swing Loan Bank. Upon receipt by such Swing Loan Bank of the funds required to be paid to the Administrative Agent, such Swing Loans shall thereafter be treated in all respects as Base Rate Revolving Loans under this Agreement, except that such Swing Loan Bank may retain for its own account all interest accrued thereon prior to the date of each such payment. SECTION 4 NEGOTIATED LOANS 4.1 Negotiated Loan Option. On the terms and subject to the conditions of this Agreement, each of the Banks, severally and for itself alone, agrees that the Company shall have the option from time to time to request loans (herein collectively called "Negotiated Loans" and individually called a "Negotiated Loan"), and that if such Bank, in its sole discretion, accepts such request for a Negotiated Loan it will make such Negotiated Loan to the Company in accordance with such request as so accepted, subject, however, to the limits specified in Section 4.2. No Bank shall be obligated to accept any request for a Negotiated Loan. 4.2 Negotiated Loan Limits. The aggregate principal amount of all Negotiated Loans, when added to the aggregate principal amount of all Revolving Loans and Swing Loans then outstanding, all as determined by the Administrative Agent pursuant to Section 8.5(b), shall not exceed the Aggregate Commitment at any time. Subject to the foregoing, the Negotiated Loans of any Bank may be less than, equal to or greater than the Commitment of such Bank. 4.3 Procedure for Negotiated Loans. (a) Negotiated Loan Confirmation. The Company shall make each request for a Negotiated Loan by furnishing a request to any Bank selected by the Company, such request to be in writing, or by telex or telephonic notice confirmed promptly thereafter in writing, substantially in the form of Exhibit H ("Negotiated Loan Confirmation"). Each Negotiated Loan Confirmation shall specify the principal amount, the Interest Period, the interest rate, and the Funding Date of such Negotiated Loan, together with the other information provided for in the Negotiated Loan Confirmation. Concurrently with each acceptance by a Bank of a Negotiated Loan Confirmation, the Company and the accepting Bank shall advise in writing, or by telex or telephonic notice confirmed promptly thereafter in writing, each of the Negotiated Loan Agent and the Administrative Agent of the amount, maturity and Funding Date of the requested Negotiated Loan as so accepted. (b) Funding of Negotiated Loans. (i) Not later than 12:00 noon, Chicago time, on the Funding Date of each Negotiated Loan, the Bank making such Negotiated Loan shall provide (subject to netting pursuant to Section 7.1(d)) the Negotiated Loan Agent at such Agent's Funding Office with immediately available Dollars covering such Bank's Negotiated Loan to be funded on such Funding Date. The Negotiated Loan Agent shall pay over such funds to the Company on such day unless prior to such time, the Negotiated Loan Agent receives notice from the Company or the Administrative Agent, whether pursuant to Section 4.3(b)(ii) or Section 8.5(b) or otherwise, that the Company has not satisfied the conditions set forth in Section 12. If the Negotiated Loan Agent receives such notice, then (A) the Negotiated Loan Agent shall not pay over such funds to the Company on such day, (B) the Loan Request related to such Loan or Loans shall be deemed cancelled in its entirety, (C) the Company shall be liable to such Bank in accordance with Section 9.5, and (D) the Negotiated Loan Agent shall return the amount previously provided to the Negotiated Loan Agent by such Bank on the next following Business Day, together with interest on such amount for each day that elapses from and including the originally scheduled Funding Date of such Negotiated Loan(s) to but excluding the day on which the Negotiated Loan Agent so returns such amount at the Federal Funds Rate for each such day, based upon a year of 360 days. (ii) The Company agrees to notify the Negotiated Loan Agent, the Administrative Agent and the Bank scheduled to make a Negotiated Loan immediately of any failure to satisfy the conditions set forth in Section 12. The Negotiated Loan Agent shall be entitled to assume that each of such conditions have been satisfied absent actual knowledge to the contrary received by the Negotiated Loan Agent. (iii) Concurrent with each funding of a Negotiated Loan, the Negotiated Loan Agent shall advise the Administrative Agent thereof. 4.4 Interest and Repayment. Each Negotiated Loan shall bear interest payable at such rate and at such times as set forth in the related Negotiated Loan Confirmation, it being understood that such interest rate may be fixed or fluctuating and may be less than, equal to or greater than the interest rate applicable to Revolving Loans or Swing Loans. Each Negotiated Loan shall mature on the last day of the Interest Period applicable thereto, but in no event later than the Termination Date of the Bank making such Negotiated Loan. Accrued interest on each Negotiated Loan shall be payable directly to the Bank making such Negotiated Loan. The principal of each Negotiated Loan shall be paid by the Company to the Negotiated Loan Agent for the account of the Bank making such Negotiated Loan. Promptly upon repayment of each Negotiated Loan, the Negotiated Loan Agent shall advise the Administrative Agent thereof. Each Bank making a Negotiated Loan shall give notice in writing to the Administrative Agent and the Negotiated Loan Agent of any failure by the Company to pay interest when due on any Negotiated Loan. 4.5 Negotiated Loan Notes. Each Negotiated Loan shall be evidenced by the Company's promissory note (as amended, modified or supplemented from time to time and together with any renewals thereof or exchanges or substitutions thereof, collectively called the "Negotiated Notes" and individually called a "Negotiated Note" and being substantially in the form set forth in Exhibit E), in each case with appropriate insertions, each of which shall be dated the Effective Date and made payable to the order of each Bank, respectively. SECTION 5 TERMINATION OF COMMITMENTS UPON A CHANGE OF CONTROL If a Change of Control occurs, then upon thirty days' written notice to the Company given not later than 180 days after the date on which written notice of the occurrence of such Change of Control is given to the Banks pursuant to Section 11.1(h) following any Change of Control, (i) the Required Banks may by notice to the Company terminate the Commitments of all of the Banks, whereupon all of the Commitments shall terminate immediately, and (ii) Banks holding Notes evidencing at least 66-2/3% of the aggregate unpaid principal amount of all Loans may by notice to the Company declare all Liabilities to be due and payable, whereupon all Liabilities shall become immediately due and payable, all without presentment, demand or further notice of any kind, all of which are hereby waived by the Company. SECTION 6 INTEREST AND FEES. 6.1 Interest Rates. The Company hereby promises to pay interest on the unpaid principal amount of each Loan for the period commencing on the Funding Date of such Loan until such Loan is paid in full, as follows: (a) if such Loan is a Base Rate Loan or a Swing Loan, at a rate per annum equal to the Base Rate from time to time in effect; (b) if such Loan is a Eurodollar Loan, at a rate per annum during each Interest Period equal to the Eurodollar Rate applicable to such Interest Period, plus 0.375% per annum, plus any applicable Eurodollar Margin Increment; and (c) if such Loan is a Negotiated Loan, at a rate determined pursuant to Section 4.4; provided, however, that after maturity of any Loan (whether by acceleration or otherwise), such Loan shall bear interest on the unpaid principal amount thereof at a rate per annum equal to the Base Rate from time to time in effect (but not less than the applicable interest rate in effect at maturity) plus 2% per annum. The Company hereby further promises to pay any additional interest on the unpaid principal amount of each applicable Fixed Rate Loan, whether before or after the maturity thereof, as may be required in accordance with Section 9. 6.2 Eurodollar Margin Increment. If at the end of any Fiscal Quarter, the Ratio of Earnings to Fixed Charges determined as of the last day of such Fiscal Quarter is less than 1.25:1, or if the Company has failed to provide on a timely basis the certificate required to be furnished by it pursuant to Section 11.1(c), then subject to Section 6.9, from and including the first day after the end of such Fiscal Quarter to but excluding the first day after the end of the following Fiscal Quarter, the Company shall pay additional interest with respect to its Eurodollar Loans outstanding during such following Fiscal Quarter in an amount equal to 0.125% per annum (the "Eurodollar Margin Increment"). 6.3 Interest Payment Dates. Accrued interest on each Loan shall be payable on the last day of the Interest Period therefor and on each Conversion date related to such Loan; provided, however, that accrued interest on each Eurodollar Loan which has an Interest Period of 6 months shall be payable on the 90th day of such Interest Period or, if such day is not a Business Day, on the next succeeding Business Day; and provided, further, that any interest payable with respect to an applicable Eurodollar Margin Increment shall be payable within fifteen days of the last day of the Fiscal Quarter during which such Eurodollar Margin Increment is applicable and on the Termination Date to the extent any Eurodollar Margin Increment has theretofore accrued and remains outstanding. After maturity of any Loan, accrued interest on such Loan shall be payable on demand. 6.4 Setting and Notice of Loan Rates. (a) The applicable interest rate for each Loan (other than a Negotiated Loan) shall be determined by the Administrative Agent and, in the case of Eurodollar Loans, notice thereof shall be given by the Administrative Agent to the Company and each Bank promptly, but in any event on the same day as received. Each determination of the applicable interest rate by the Administrative Agent shall be conclusive and binding upon the parties hereto, in the absence of manifest error. (b) In the case of Eurodollar Loans, each Reference Bank agrees to use its best efforts to notify the Administrative Agent in a timely fashion of its applicable rate after the Administrative Agent's request therefor. If as to any Interest Period any one or more of the Reference Banks is unable or for any reason fails to notify the Administrative Agent of its applicable rate by 9:30 a.m., Chicago time, two Business Days before the beginning of such Interest Period, then the applicable Eurodollar Rate shall be determined on the basis of the rate or rates of which the Administrative Agent is given notice by the remaining Reference Bank or Banks by such time. If none of the Reference Banks notifies the Administrative Agent of such a rate prior to 9:30 a.m., Chicago time, two Business Days before the beginning of such Interest Period, then (i) the Administrative Agent shall promptly notify the other parties thereof and (ii) at the Company's option, the Loan Request or Conversion Notice delivered by the Company with respect to such Interest Period shall be cancelled or, if not cancelled, shall be deemed to have specified a Base Rate Loan. (c) The Administrative Agent shall, upon written request of the Company or any Bank, deliver to the Company or such Bank a statement showing the computations used by the Administrative Agent in determining the interest rate applicable to any Eurodollar Loan. 6.5 Commitment Fees. (a) The Company agrees to pay to the Administrative Agent for the account of each Bank (pro rata in accordance with the average daily amount of the Unused Commitment of such Bank), within fifteen days of the last day of December 1994, and thereafter within fifteen days of the last day of each calendar quarter of each year until the Termination Date for such Bank, and on the Termination Date for such Bank, a commitment fee computed at the rate of 0.12% per annum on the average daily amount of the Aggregate Commitment minus the aggregate principal amount of all Revolving Loans and Negotiated Loans then outstanding during the quarterly or other period preceding the date of such payment (commencing, in the case of the first of such periods, on and as of the Effective Date), payable in arrears for the quarterly or other period then ending; provided, however, that if at the end of any Fiscal Quarter, the Ratio of Earnings to Fixed Charges determined as of the last day of such Fiscal Quarter is less than 1.25:1 then from and including the first day after the end of such Fiscal Quarter to but excluding the first day after the end of the following Fiscal Quarter, the rate set forth above shall be increased by 0.0675% per annum. (b) During the period commencing on the Effective Date and ending on the second anniversary of the Effective Date (the "Special Commitment Fee Termination Date"), the Company agrees to pay to the Administrative Agent for the account of each Bank listed on Schedule IA, a special commitment fee which shall be in addition to the commitment fee payable under Section 6.5(a). Such special commitment fee shall be payable within fifteen days of the last day of December 1994, and thereafter within fifteen days of the last day of each calendar quarter of each year for such Bank, and on the Special Commitment Fee Termination Date, and shall be computed at the rate of 0.08% per annum on the average daily amount determined by subtracting the outstanding Loans made by such Bank hereunder from the amount set forth opposite such Bank's name on Schedule IA. Such special commitment fee shall be payable in arrears for the quarterly or other period then ending. 6.6 Displaced Commitment Fee. The Company agrees to pay to the Administrative Agent for the account of each Bank (pro rata in accordance with the respective average daily amount of the Unused Commitment of each Bank), within fifteen days of the last day of December 1994, and thereafter within 15 days of the last day of each calendar quarter of each year until the Termination Date of such Bank and on the Termination Date of such Bank, a displaced commitment fee computed at the rate of 0.10% per annum on the average daily amount of Displaced Loans during the quarterly or other period preceding the date of such payment (commencing, in the case of the first of such periods, on and as of the Effective Date), payable in arrears for the quarterly or other period then ending. As used herein, the term "Displaced Loans" means for all Banks which, as a result of their Negotiated Loans, have made Loans in excess of their respective Commitment, the Loans representing the excess of all Loans made by such Banks over the aggregate Commitments of such Banks. 6.7 Agents' Fees. The Company agrees promptly to pay to each Agent such fees as may be agreed from time to time by the Company and such Agent. 6.8 Computation of Interest and Fees. Interest on Eurodollar Loans shall be computed for the actual number of days elapsed on the basis of a 360-day year. Interest on Negotiated Loans shall be computed in accordance with the related Negotiated Loan Confirmations. Interest on Base Rate Loans and all fees shall be computed for the actual number of days elapsed on the basis of a 365- or, if applicable, 366-day year. The interest rate applicable to each Base Rate Loan, and after maturity of any other Type of Loan the interest rate applicable to such Loan, shall change simultaneously with each change in the Base Rate without any notice or other action involving the Company. 6.9 Determination of Margin and Fee Increase. For the purposes of calculating the Eurodollar Margin Increment in Section 6.2 or any fee increase (a "Fee Increase") in Section 6.5, the Ratio of Earnings to Fixed Charges as at the end of any Fiscal Quarter shall be determined (i) in the case of each of the first three Fiscal Quarters of any Fiscal Year by reference to the certificate from the Company to be delivered to each of the Banks pursuant to Section 11.1(c) and (ii) in the case of the last Fiscal Quarter of any Fiscal Year, initially by reference to a certificate from the Company to be delivered to each of the Banks not later than ninety days following the end of such Fiscal Quarter in the form of the certificate delivered pursuant to the foregoing clause (i) (but limited to the calculation of the Ratio of Earnings to Fixed Charges). Each such certificate shall contain the Company's calculation of the Ratio of Earnings to Fixed Charges as at the end of the preceding Fiscal Quarter. Until receipt by the Banks of such certificate, failure of the Company to furnish such certificate on a timely basis shall be deemed (for purposes of Sections 6.2 and 6.5) to constitute an acknowledgement by the Company that the Ratio of Earnings to Fixed Charges is less than 1.25:1. If, in the case of any Fiscal Quarter, the actual Ratio of Earnings to Fixed Charges as at the end of the preceding Fiscal Quarter (as determined by reference to the audited report delivered pursuant to Section 11.1, to any correction with respect to any certificate previously furnished by the Company or to any certificate furnished on an untimely basis) results in a Eurodollar Margin Increment or a Fee Increase different from that applied in connection with the Company's calculation, such new Eurodollar Margin Increment or Fee Increase shall come into effect immediately upon the Banks' receipt of such report, correction or untimely certificate and shall be given retroactive effect to and including the first day of the Fiscal Quarter immediately following the Fiscal Quarter to which such report, correction or untimely certificate relates, and within fifteen days of the Banks' receipt of such report, correction or untimely certificate, either the Company shall pay to the Administrative Agent (for the account of the Banks) or the Banks shall pay to the Administrative Agent (for return to the Company) such amounts as shall be necessary to give effect to such new Eurodollar Margin Increment or such new Fee Increase. SECTION 7 REVOLVING LOAN PROCEDURES; CONVERSIONS AND CONTINUATIONS. 7.1 Procedure for Revolving Loans. (a) Loan Requests. The Company shall give the Administrative Agent irrevocable telephonic notice (promptly confirmed in writing on the same day), not later than 9:30 a.m., Chicago time, of each borrowing of Revolving Loans (i) in the case of a Eurodollar Loan, at least three (3) Business Days prior to the Funding Date for such Loans and (ii) in the case of a Base Rate Loan, on the Funding Date for such Loans. The Administrative Agent shall advise each Bank of such notice promptly, but in any event on the same day as received, and, in the case of Eurodollar Loans, request each Reference Bank to notify the Administrative Agent of its applicable rate (as contemplated in the definition of Eurodollar Rate). Each such notice from the Company to the Administrative Agent shall be substantially in the form of Exhibit F ("Revolving Loan Request") with appropriate insertions, and shall specify (i) the Funding Date for the Revolving Loans requested, (ii) the aggregate amount of the Revolving Loans requested (in an amount permitted under Section 7.1(b)), (iii) whether the requested Revolving Loans shall be Eurodollar Loans or Base Rate Loans, and (iv) in the case of Eurodollar Loans, the Interest Period therefor (subject to the limitations set forth in the definition of Interest Period). (b) Amount and Increments of Revolving Loans. Each of the Company's Revolving Loan Requests shall request Revolving Loans in a minimum aggregate amount of $5,000,000 or an integral multiple of $1,000,000 over such amount, not to exceed, in the aggregate at any one time outstanding, the limits specified in Section 2.2 (c) Funding of Revolving Loans. (i) Not later than 12:00 noon, Chicago time, on each Funding Date for Revolving Loans, each Bank shall provide (subject to netting pursuant to Section 7.1(d)) the Administrative Agent at such Agent's Funding Office for Base Rate Loans with immediately available Dollars covering such Bank's Revolving Loan and, if the conditions set forth in Section 12 shall have been satisfied not later than 9:00 a.m., Chicago time, on such date, such Agent shall pay over such funds to the Company on such day. If such conditions have not been satisfied prior to such time, then (A) such Agent shall not pay over such funds to the Company on such day, (B) the Loan Request related to such Loan shall be deemed cancelled in its entirety, (C) the Company shall be liable to each Bank in accordance with Section 9.5, and (D) such Agent shall return the amount previously provided to such Agent by each Bank on the next following Business Day together with interest on such amount for each day that elapses from and including such Loan's originally scheduled Funding Date to but excluding the day on which such Agent so returns such amount at the Federal Funds Rate for each such day, based upon a year of 360 days. (ii) The Company, notwithstanding its previous delivery of any documents required under Section 12 with respect to a particular Loan, agrees to notify the Administrative Agent immediately of any failure to satisfy the conditions precedent to the making of any Revolving Loan. The Administrative Agent shall be entitled to assume, after it has received each of the documents required under Section 12 with respect to a particular Loan, that each of the conditions precedent to the making of such Loan have been satisfied absent actual knowledge to the contrary received by such Agent prior to the time of the receipt of such documents. (d) Netting. If any Bank makes a Loan hereunder on a day on which the Company is to repay all or any part of any outstanding Revolving Loan, Swing Loan or Negotiated Loan, as the case may be, held by such Bank, such Bank shall apply the proceeds of such new Loan to make such repayment and only an amount equal to the positive difference, if any, between the amount being borrowed from such Bank and the amount being repaid to such Bank shall be made available by such Bank to the Administrative Agent as provided in Section 7.1(c). 7.2 Conversion and Continuation Procedures. (a) The Company may (i) Convert all or any part of any Group of outstanding Revolving Loans (on a pro rata basis among the Banks based upon their respective Percentage share of such Group) into Revolving Loans of a different Type or (ii) Continue on the same basis all or any part of any Group of outstanding Revolving Loans as the same Type; provided, that, in any case the Company shall give an irrevocable notice of such Conversion or Continuation (a "Conversion Notice") to the Administrative Agent by 10:00 a.m., Chicago time, on a day which in the case of a Conversion into or a Continuation of Base Rate Loans is at least one (1) Business Day prior to the proposed date of such Conversion or Continuation and, in the case of a Conversion into or a Continuation of Eurodollar Loans, is at least three (3) Business Days prior to such date. Each such Conversion Notice shall be effective upon the Administrative Agent's receipt thereof, shall be in writing (or by telephone promptly confirmed in writing on the same day), shall specify the date and amount of such Conversion or Continuation, the Group of Loans to be so Converted or Continued, the Type of Loans to be Converted into, and the Interest Period(s) to be applicable to such Loans (in the case of Eurodollar Loans). Promptly upon receipt of each Conversion Notice the Administrative Agent shall advise each Bank thereof and, in the case of Conversions into or Continuations of Eurodollar Loans, shall request each Reference Bank to notify such Agent of its applicable rate (as contemplated in the definition of Eurodollar Rate). (b) Each Conversion or Continuation of Revolving Loans shall be in an aggregate principal amount of at least $5,000,000 and an integral multiple of $1,000,000 over such amount. If the Company does not deliver a Conversion Notice on or before the day that is three (3) Business Days before the last day of the then current Interest Period with respect to any Revolving Loan that is a Eurodollar Loan, such Revolving Loan automatically shall be Converted into a Base Rate Loan at the end of its then current Interest Period unless theretofore paid in full. If the Company does not deliver a Conversion Notice on or before the day before the last day of the then current Interest Period with respect to any Revolving Loan that is a Base Rate Loan, such Revolving Loan automatically shall be Continued as a Base Rate Loan at the end of its then current Interest Period unless theretofore paid in full. (c) Notwithstanding any other provision of this Agreement, (i) no Group of Revolving Loans shall be Continued or Converted, if 4 Business Days before the last day of the then current Interest Period, any Bank notifies the Administrative Agent that such Loans are not to be Continued or Converted, in which case such Group of Loans shall be due and payable on the last day of such Interest Period; provided, however, that this clause (i) shall not apply to any Group of Revolving Loans which was made pro rata according to each Bank's Commitment, (ii) neither Swing Loans nor Negotiated Loans shall be Continued or Converted pursuant to this Agreement, it being understood that such Loans shall mature (if not earlier) at the end of their respective Interest Periods, and (iii) no Loans shall be Converted to Negotiated Loans or Swing Loans under this Section 7.2. SECTION 8 MAKING AND SHARING OF PAYMENTS AND PREPAYMENTS; SETOFF; TAXES; RECORDKEEPING. 8.1 Making of Payments. (a) All payments of principal of, or interest on, the Loans, and all payments of commitment fees, shall be made by the Company to the Applicable Agent in immediately available Dollars for the account of the Banks or the holders of the applicable Loans, as the case may be; provided, that (i) the principal of and accrued interest on each Swing Loan shall be payable directly to the Swing Loan Bank pursuant to Section 3.4, and (ii) accrued interest on each Negotiated Loan shall be payable directly to the Bank that made such Negotiated Loan pursuant to Section 4.4. All such payments shall be made (or initiated, in the case of payments being made by Fedwire) to the Applicable Agent or applicable Bank, as the case may be, at its respective office shown below its signature hereto (or at such other office as may be designated from time to time by the Applicable Agent or such Bank by notice to the other parties), not later than 12:00 noon, Chicago time, on the date due; and funds received after that hour shall be deemed to have been received by the Applicable Agent or applicable Bank, as the case may be, on the next following Business Day. Notwithstanding the foregoing, all payments under Section 9 shall be made by the Company directly to the Persons entitled thereto. (b) Voluntary Loan Prepayments. The Company may voluntarily prepay Loans from time to time in whole or in part, provided that (a) the Company shall give the Administrative Agent (which shall promptly advise each Bank) not less than three (3) Business Days' (in the case of Eurodollar Loans) or one (1) Business Day's (in the case of Base Rate Loans) prior notice thereof, specifying the Loans to be prepaid and the date and amount of prepayment, (b) Negotiated Loans may be prepaid only in accordance with the terms of the accepted Negotiated Loan Confirmation related thereto or with the consent of the Bank making such Negotiated Loan, (c) any prepayment of any Loan shall include accrued interest on the principal amount being paid to the date of prepayment, (d) any prepayment of a Fixed Rate Loan shall be subject to the provisions of Section 9.5, and (e) Loans in the same Group shall be prepaid on a pro rata basis among the Banks based upon their respective Percentage of such Group. 8.2 Sharing of Payments. (a) Reallocation. Promptly upon the giving of any Payment Sharing Notice, the Banks shall purchase and sell among themselves (without recourse) such participations in the Revolving Loans and Swing Loans so that after giving effect thereto with respect to each Bank: (A) the ratio of (i) the aggregate principal amount of its then outstanding Loans other than Negotiated Loans to (ii) the aggregate principal amount of all then outstanding Loans other than Negotiated Loans shall equal (B) the ratio of (i) the amount, if any, by which such Bank's Commitment exceeds the aggregate principal amount of the Negotiated Loans of such Bank then outstanding (such Bank's "Adjusted Commitment") to (ii) the aggregate of all Adjusted Commitments of all Banks, all in such manner as may be determined by the Administrative Agent. (b) Proration of Payments. Whenever (i) any payment received by either the Administrative Agent or the Negotiated Loan Agent to be distributed to the Banks in connection with the Loans or otherwise in connection herewith is insufficient to pay in full any amounts then due and payable to the Banks in connection with the Loans, and/or (ii) after receipt by either the Administrative Agent or the Negotiated Loan Agent of a Payment Sharing Notice, then any payments (if any) received (and not theretofore distributed) by the Negotiated Loan Agent with respect to Negotiated Loans shall be paid over to the Administrative Agent and all payments received by the Administrative Agent (whether from the Negotiated Loan Agent or the Company) shall be distributed to the Banks by the Administrative Agent in the following order: first, to the payment of fees and expenses due and payable to the Agents under or in connection with this Agreement; second, to the payment of all fees, expenses and other amounts payable under Sections 6, 15.5 and 15.6, ratably among the Banks in accordance with the aggregate amount of such payments owed to each Bank; third, to the payment of interest then due and payable on the Loans, ratably among the Banks in accordance with the aggregate amount of interest owed to each Bank; fourth, to the payment of the principal amount of the Loans, ratably among the Banks in accordance with the aggregate principal amount owed to each Bank; and fifth, to the payment of all remaining Liabilities (if any) under this Agreement, ratably among the Banks and the Agents according to the aggregate amount of such Liabilities owing to each Bank and each Agent. (c) Sharing. If any Bank, other holder of a Loan, or any Participant or Assignee shall obtain any payment or other recovery (whether voluntary, involuntary, by application of offset or otherwise) on account of principal of, interest on or fees or other amounts hereunder in excess of the share of payments and other recoveries (exclusive of payments or recoveries under Sections 8.4, 9 and 15.4(e) and exclusive of payments to a Bank on the Termination Date of such Bank by reason of the failure of such Bank to extend its Commitment pursuant to Section 2.7) such Bank or other Person would have received if such payment or recovery had been in accordance with Sections 8.2(a) and (b), such Bank or other Person shall purchase from the other Banks or Persons, in a manner to be specified by the Administrative Agent, such participations in the Loans, as the case may be, held by them as shall be necessary to cause such purchasing Bank or other Person to share the excess payment or other recovery ratably with each of them in accordance with Sections 8.2(a) and (b), as applicable; provided, however, that if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing Bank or Person, the purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest. 8.3 Setoff. The Company agrees that each Agent, each Bank (with respect to its Loans and with respect to any participations it purchases pursuant to Sections 3.6 and 8.2, with the same effect as if the amount of such participating interest were owing directly to such Bank) and each holder of a Note shall have all rights of setoff and bankers' lien provided by applicable law and, in addition thereto, the Company agrees that at any time (i) any amount owing by the Company under this Agreement or any Note is then due, directly or indirectly, to any Agent, any Bank or any such holder, or (ii) any Event of Default shall have occurred and be continuing, each Agent, each Bank and each such holder may apply to the payment of such amount any and all balances, credits, deposits, accounts or moneys of the Company then or thereafter with such Agent, such Bank or such holder, it being understood that the aggregate amounts set off shall at no time exceed the Liabilities. 8.4 Taxes. (a) All payments made by the Company to any Agent or any Bank under or in connection with this Agreement and the Notes shall be made without any setoff or counterclaim, and free and clear of and without deduction or withholding for or on account of any present or future Taxes now or hereafter imposed by any governmental or other authority, except to the extent that such deduction or withholding is compelled by law. As used herein, the term "Taxes" shall include all income, excise and other taxes of whatever nature (other than taxes generally assessed on the overall net income of any Agent or any Bank, as the case may be, by the government or other authority of the country in which such Agent or such Bank is incorporated or in which such Bank's Funding Office or the office through which such Agent is acting is located provided that taxes so assessed on any additional amounts payable hereunder shall constitute "Taxes") as well as all levies, imposts, duties, charges or fees of whatever nature. If the Company is compelled by law to make any such deductions or withholdings it will: (i) pay to the relevant authorities the full amount required to be so withheld or deducted; (ii) (except to the extent that such deduction or withholding results from the breach, by the recipient of a payment, of its agreement, if any, contained in Section 8.4(b) or would not be required if such recipient's representation or warranty contained in Section 8.4(b), if any, were true) pay such additional amounts (including, without limitation, any penalties, interest or expenses) as may be necessary in order that the net amount received by each Agent and each Bank after such deductions or withholdings (including any required deduction or withholding on such additional amounts) shall equal the amount such payee would have received had no such deductions or withholdings been made; and (iii) promptly forward to the Applicable Agent (for delivery to such payee) an official receipt or other documentation satisfactory to the Applicable Agent and such payee evidencing such payment to such authorities. Moreover, if any Taxes are directly asserted against any Agent or any Bank, such payee may pay such Taxes and the Company (except to the extent that such Taxes result from the breach, by such payee, of its agreement contained in Section 8.4(b), if any, or would not be asserted if such payee's representation or warranty contained in Section 8.4(b), if any, were true) promptly shall reimburse the payee for such Taxes and shall pay such additional amount (including, without limitation, any penalties, interest or expenses in connection therewith) as may be necessary in order that the net amount received by such payee after the payment of such Taxes (including any Taxes on such additional amount) shall equal the amount such payee would have received had no such Taxes been asserted. For purposes of this Section 8.4, a distribution hereunder by any Agent to or for the account of any Bank shall be deemed to be a payment by the Company. The Company's agreement under this Section 8.4 shall survive repayment of the Liabilities, cancellation of the Notes and/or any termination of this Agreement. (b) In consideration of, and as a condition to, the Company's undertakings in Section 8.4(a), each Bank which is a Non-United States Person agrees (to the extent it is permitted to do so under the laws and any applicable double taxation treaty of the jurisdiction of its incorporation and the jurisdiction in which its Funding Office is located) to execute and deliver to the Administrative Agent for delivery to the Company, before the first scheduled payment date hereunder in each calendar year, either (i) two United States Internal Revenue Service Forms 1001 or (ii) two United States Internal Revenue Service Forms 4224 together with two United States Internal Revenue Service Forms W-9, or any successor forms, as appropriate, properly completed and claiming complete or partial, as the case may be, exemption from withholding and deduction of United States Federal Taxes. Each Bank which is a Non-United States Person represents and warrants to the Company that, at the Effective Date, (x) its Eurodollar Loan and Base Rate Loan Funding Offices are entitled to receive payments of interest hereunder without deduction or withholding for or on account of any Taxes imposed by the United States or any political subdivision thereof and (y) it is permitted to take the actions described in the preceding sentence under the laws and any applicable double taxation treaties of the jurisdictions specified in the preceding sentence. (c) If at any time any Bank by reason of payment by the Company of any Taxes determines in its sole discretion that it has obtained a net credit against, or return or reduction of, any tax (other than the tax to which the payment by the Company relates) payable by it which it would not have enjoyed but for such payment ("Tax Benefit"), such Bank shall thereupon pay to the Company the amount which such Bank shall certify to be the amount that, after payment, will leave such Bank in the same economic position it would have been in had it received no such Tax Benefit ("Equalization Amount"); provided, however, that (i) if such Bank shall subsequently determine that it has lost the benefit of all or a portion of such Tax Benefit, the Company shall promptly remit to such Bank the amount certified by such Bank to be the amount necessary to restore such Bank to the position it would have been in if no payment had been made pursuant to this Section 8.4(c), (ii) if such Bank shall be prevented by applicable law from paying the Company all or any portion of the Equalization Amount owing the Company, such payment need not be made, (iii) such Bank shall be under no obligation to utilize any Taxes either as credits or deductions, (iv) the Company shall not be entitled to require such Bank to supply it with details of its tax position and (v) nothing contained herein shall interfere with the right of any Bank to arrange its tax affairs as it sees fit. A certificate submitted by a Bank pursuant to this Section 8.4(c) shall be conclusive, in the absence of manifest error. 8.5 Recordkeeping. (a) The Company. The Company shall maintain a register (the "Company Register") in which it shall (i) record on a daily basis all Loans made by each Bank (including each Group and each Type of Loan) to the Company pursuant to this Agreement and all payments of the principal amount thereof, and (ii) calculate on a daily basis the outstanding principal amount of each Loan. At any time the Company becomes aware of the failure of any Loan or requested Loan to be within the limits specified in Section 2.2, 3.2 or 4.2, it shall notify the Administrative Agent, the Negotiated Loan Agent and the Banks of such failure. On the last day of each week, the Company shall furnish to the Administrative Agent and the Negotiated Loan Agent a copy of the Company Register with respect to such week. Upon request of any Agent or any Bank, the Company shall advise the requesting party of the information contained in such Company Register or, if so requested, furnish a copy of the Company Register as it exists from time to time. (b) The Administrative Agent. The Administrative Agent shall maintain a register ("Master Register") in which it shall (i) calculate each Bank's Percentage of each Group of Revolving Loans, (ii) record on a daily basis all Loans made by each Bank (including each Group and each Type of Loan) to the Company pursuant to this Agreement and all payments of the principal amount thereof, (iii) calculate on a daily basis the outstanding principal amount of each Loan, (iv) calculate at the end of each Interest Period for each Loan (except the Negotiated Loans) the interest accrued for such Interest Period and (v) upon the giving of a Payment Sharing Notice, make the calculations required for the reallocation, proration and sharing provided for in Section 8.2. The Master Register shall be rebuttable presumptive evidence of the Loans and payments so recorded and principal amount and interest so calculated. At any time the Administrative Agent becomes aware of the failure of any Loan or requested Loan to be within the limits specified in Section 2.2, 3.2 or 4.2 or to satisfy the conditions of Section 12, it shall notify the Company, the Negotiated Loan Agent and the Banks of such failure. Within ten (10) Business Days of the last day of each Fiscal Quarter, the Administrative Agent shall furnish to the Company and each Bank a copy of the Master Register with respect to such Fiscal Quarter. Upon request of the Company or any Bank, the Administrative Agent shall advise the requesting party of the information contained in such Master Register or, if so requested, furnish a copy of the Master Register as it exists from time to time. (c) Negotiated Loan Agent. The Negotiated Loan Agent shall maintain a register ("Negotiated Loan Register") in which it shall (i) record on a daily basis all Negotiated Loans made by each Bank to the Company pursuant to this Agreement and all payments of the principal amount thereof, and (ii) calculate on a daily basis the outstanding principal amount of each Negotiated Loan. The Negotiated Loan Register shall be rebuttable presumptive evidence of the Negotiated Loans and payments so recorded and principal amount so calculated. At any time the Negotiated Loan Agent becomes aware of the failure of any Negotiated Loan or requested Negotiated Loan to be within the limit specified in Section 4.2, it shall notify the Company, the Administrative Agent and the Banks of such failure. Within five (5) Business Days of the last day of each Fiscal Quarter, the Negotiated Loan Agent shall furnish to the Company and the Administrative Agent a copy of the Negotiated Loan Register with respect to such Fiscal Quarter. Upon request of the Company or any Bank, the Negotiated Loan Agent shall advise the requesting party of the information contained in such Negotiated Loan Register or, if so requested, furnish a copy of the Negotiated Loan Register as it exists from time to time. (d) Each Bank. All Loans made by each Bank to the Company pursuant to this Agreement and all payments of the principal and interest thereon shall be evidenced by such Bank in its books and records or, at such Bank's option, on the schedule attached to its respective Note which evidences such Loans, which books and records or schedule shall be rebuttable presumptive evidence of the principal and interest owing and unpaid on such Note. (e) Failure to Record. The failure to record any information in the Company Register, the Master Register, the Negotiated Loan Register, any books or records or any schedule to any Note, or any error in so recording any such information shall not limit or otherwise affect the Company's obligations hereunder or under any Note to repay the principal amount of any Loan together with all interest accruing thereon. (f) Conflicts. To the extent that at any time any Bank or Agent or the Company is aware of any conflict between or among the Company Register, the Master Register, the Negotiated Loan Register and the records of any other party to this Agreement, such party shall immediately advise each of the other parties to this Agreement and the affected parties shall use their best efforts to resolve such conflict. SECTION 9 CHANGE OF CIRCUMSTANCES. 9.1 Reserve and Capital Adequacy Costs. (a) If Regulation D shall require reserves actually to be maintained in connection with any Eurodollar Loan or any Eurocurrency liabilities with respect thereto of any Bank, regardless of whether such Eurodollar Loan is then outstanding, such Bank may require the Company to pay (and the Company agrees to pay) additional interest on such Eurodollar Loan at a rate per annum equal to the difference between the Eurodollar Rate (Reserve Adjusted) and the Eurodollar Rate for such Eurodollar Loan's Interest Period. Any Bank wishing to require such payment with respect to any such Eurodollar Loan or any Eurocurrency liabilities with respect thereto shall give notice thereof at least three (3) Business Days prior to the last day of such Eurodollar Loan's Interest Period if such Eurodollar Loan is then outstanding or at least one (1) Business Day prior to the commencement of such Interest Period if such Eurodollar Loan is not then outstanding. On the last day of each Interest Period relating to each such Eurodollar Loan of such Bank, the Company shall pay directly to such Bank such additional interest. Once given, each such notice by a Bank shall be deemed automatically to continue in effect and apply to all of such Bank's Eurodollar Loans until such Bank revokes such notice. At such time, if any, as such Bank shall not be required so to maintain reserves, such Bank agrees so to notify the Company. (b) If a Bank reasonably determines that the amount of capital required or expected to be maintained by such Bank, any Funding Office of such Bank or any corporation controlling such Bank attributable to this Agreement, the Loans or its obligation to make Loans hereunder is increased as a result of a Change (as hereinafter defined), then, within 15 days of demand by such Bank (with a copy of such demand to the Applicable Agents), the Company shall pay such Bank the amount which such Bank determines is necessary to compensate it for any reduction in the rate of return on capital to an amount below that which such Bank, such Funding Office or such corporation could have achieved but for such Change and is attributable to this Agreement, the Loans or its obligation to make Loans hereunder. "Change" means (i) any change after the Effective Date in the Risk-Based Capital Guidelines (as hereinafter defined) or (ii) any adoption of or change in any other law, governmental or quasi-governmental rule, regulation, policy, guideline, interpretation, or directive (whether or not having the force of law) after the Effective Date which affects the amount of capital required or expected to be maintained by any Bank or any Funding Office or any corporation controlling any Bank or (iii) any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof or (iv) compliance by any Bank (or any Funding Office or corporation of any Bank) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency. "Risk-Based Capital Guidelines" means (i) the risk-based capital guidelines in effect in the United States on the Effective Date, including transition rules, and (ii) the corresponding capital regulations promulgated by regulatory authorities outside the United States implementing the July 1988 report of the Basle Committee on Banking Regulation and Supervisory Practices entitled "International Convergence of Capital Measurements and Capital Standards," including transition rules, and any amendments to such regulations adopted prior to the Effective Date. 9.2 Increased Costs. If (i) Regulation D, or (ii) after the Effective Date, the adoption of, or any change in, any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or any Funding Office of such Bank) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency, whether or not having the force of law, (a) shall subject any Bank (or any Funding Office of such Bank) to any tax, duty or other charge with respect to its Fixed Rate Loans, its Notes, or its obligation to make Fixed Rate Loans, or shall change the basis of taxation of payments to any Bank (or any Funding Office of such Bank) of the principal of or interest on its Fixed Rate Loans owed to it or any other amounts due under this Agreement in respect of its Fixed Rate Loans, its Notes, or its obligation to make Fixed Rate Loans (except for changes in the rate of tax on the overall net income of such Bank or its Funding Office imposed by the government or other authority of the country in which such Bank is incorporated or in which such Bank's Funding Office is located); or (b) shall impose, modify or deem applicable any reserve (including, without limitation, any reserve imposed by the Board of Governors of the Federal Reserve System, but excluding any reserve included in the determination of interest rates pursuant to Section 6), special deposit, capital adequacy, minimum capital, capital ratio, deposit insurance or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Bank (or any Funding Office of such Bank); or (c) shall impose, modify or deem applicable any capital adequacy or similar requirement on any Bank; or (d) shall impose on any Bank (or any Funding Office of such Bank) any other condition affecting its Fixed Rate Loans or its Notes or its obligation to make or maintain Fixed Rate Loans; and the result of any of the foregoing is to increase the cost to (or in the case of Regulation D, to impose an additional cost on) such Bank (or any Funding Office of such Bank) of making or maintaining any Fixed Rate Loan, or to reduce the amount of any sum received or receivable by such Bank (or such Bank's Funding Office) under this Agreement or under its Notes with respect thereto, or to reduce the rate of return on such Bank's capital to a level below that which such Bank could have achieved but for such adoption or compliance (taking into consideration such Bank's policies with respect to capital adequacy) by an amount which such Bank determines to be material, then within 10 days after demand by such Bank (which demand shall be accompanied by a statement setting forth the basis of such demand), the Company shall pay directly to such Bank such additional amount or amounts as will compensate such Bank for such increased cost or such reduction. Each Bank promptly shall notify the Company and the Administrative Agent of any event of which it has knowledge, occurring after the Effective Date, which will entitle such Bank to compensation pursuant to this Section 9.2 and will designate a different Funding Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in such Bank's sole judgment, be otherwise disadvantageous to such Bank. 9.3 Basis for Determining Interest Rate Inadequate or Unfair. If with respect to any Interest Period: (a) the Reference Banks advise the Administrative Agent that deposits in Dollars (in the applicable amounts) are not being offered by the Reference Banks in the relevant market for such Interest Period, or the Administrative Agent otherwise determines (which determination shall be binding and conclusive on all parties) that, by reason of circumstances affecting the London interbank eurodollar market, adequate and reasonable means do not exist for ascertaining the applicable Eurodollar Rate; or (b) the Required Banks (or any Bank scheduled to make a Negotiated Loan) advise the Administrative Agent or the Negotiated Loan Agent, as the case may be, that, as determined by the Administrative Agent or such Bank, the Eurodollar Rate, in the case of Eurodollar Loans, or the negotiated rate, in the case of a Negotiated Loan, will not adequately and fairly reflect the cost to the Required Banks (or such Bank) of maintaining or funding Eurodollar Loans or Negotiated Loans for such Interest Period, or that the making or funding of Eurodollar Loans or Negotiated Loans has become impracticable as a result of an event occurring after the Effective Date which in such Required Banks' (or such Bank's) opinion materially affects such Eurodollar Loans or Negotiated Loans, then so long as such circumstances shall continue: (i) the Administrative Agent promptly shall notify the Company and the Banks thereof, (ii) in the case of Eurodollar Loans, no Bank shall be under any obligation to make Eurodollar Loans or to Continue any Loan as, or Convert any Loan to, a Eurodollar Loan, and (iii) in the case of Negotiated Loans, such Bank shall be under no obligation to make any Negotiated Loan, irrespective of any previous acceptance of any Negotiated Loan Confirmation. 9.4 Changes in Law Rendering Certain Loans Unlawful. In the event that any change in (including the adoption of any new) applicable laws or regulations, or in the interpretation of applicable laws or regulations by any governmental or other regulatory body charged with the interpretation or administration thereof, would, in any Bank's opinion, make it unlawful for such Bank to make, maintain or fund Fixed Rate Loans, then (a) such Bank shall promptly notify each of the other parties hereto, (b) all Banks' obligations (if any) to make any Fixed Rate Loan made unlawful for such Bank shall, upon the effectiveness of such event, be suspended for the duration of such unlawfulness, and (c) on the last day of the then current Interest Period for each such Fixed Rate Loan (or, in any event, if such Bank so requests, on such earlier date as may be required by the relevant law, regulation or interpretation), such Fixed Rate Loan shall be repaid in full, together with accrued interest and any amounts payable under Section 9.5. 9.5 Funding Losses. The Company hereby agrees that upon demand by any Bank (which demand shall be accompanied by a statement setting forth the basis for the calculations of the amount being claimed) the Company will indemnify such Bank against any net loss or expense which such Bank may sustain or incur (including, without limitation, any net loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Bank to fund or maintain Fixed Rate Loans), as reasonably determined by such Bank, as a result of (a) any payment or mandatory or voluntary prepayment (including, without limitation, any payment resulting from an acceleration upon the occurrence of any Event of Default or Change of Control) of any Fixed Rate Loan of such Bank on a date other than the last day of such Loan's Interest Period, (b) any Conversion of any Eurodollar Loan on a date other than the last day of such Loan's Interest Period, or (c) any failure of the Company to borrow, Continue or Convert any Loans on the originally scheduled date specified therefor pursuant to this Agreement (including, without limitation, any failure to borrow resulting from any failure to satisfy the conditions precedent to such borrowing). For this purpose, all notices to the Administrative Agent or the Negotiated Loan Agent pursuant to this Agreement shall be deemed to be irrevocable. 9.6 Discretion of Banks as to Manner of Funding. (a) Notwithstanding any other provision of this Agreement to the contrary, each Bank shall be entitled to fund and maintain its funding of all or any part of its Loans in any manner it sees fit; it being understood, however, that for the purposes of this Agreement all determinations hereunder shall be made as if such Bank had actually funded and maintained each Fixed Rate Loan during the Interest Period for such Loan through the purchase of deposits having a maturity (and in the case of Eurodollar Loans, bearing interest at the Eurodollar Rate) corresponding to such Interest Period. (b) The Company shall not be obligated under this Agreement to make any greater payment to any Bank which changes any Funding Office than such Bank would have been entitled to receive if such Funding Office had not been changed, unless such Funding Office was changed (i) with the Company's prior written consent, (ii) at the Company's request, (iii) to mitigate or avoid the suspension of such Bank's obligations or the requirement of payment of increased costs in the circumstances contemplated by Section 9.1(a), 9.2, 9.3 or 9.4, or (iv) at a time when the circumstances giving rise to such greater payment did not exist. 9.7 Conclusiveness of Statements; Survival of Provisions. Determinations and statements of any Bank pursuant to Sections 9.1 through 9.6 shall be conclusive absent manifest error, and the provisions of Sections 9.1 through 9.6 shall survive termination of this Agreement and payment of the Notes. 9.8 Negotiated Loans. The provisions of Sections 9.1 through 9.6 shall not apply to any Negotiated Loan to the extent that the related Negotiated Loan Confirmation expressly so provides. SECTION 10 REPRESENTATIONS. To induce the Banks to enter into this Agreement and to make Loans hereunder, the Company hereby makes the following representations and warranties to the Agents and the Banks: 10.1 Organization, etc. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Illinois; each Subsidiary is a corporation duly organized, validly existing and in good standing under the laws of the state of its respective incorporation; and each of the Company and each Subsidiary is duly qualified and in good standing as a foreign corporation authorized to do business in each jurisdiction where, because of the nature of its activities or properties, such qualification is required and the failure so to qualify would have a material adverse effect on the business, credit, operation, financial condition or prospects of the Company and its Restricted Subsidiaries taken as a whole. 10.2 Authorization; No Conflict. The execution, delivery and performance of this Agreement and the Notes, and the borrowings hereunder, (i) are within the Company's corporate powers, (ii) have been duly authorized by all necessary corporate action, (iii) do not require any governmental approval which has not been previously obtained (and each such governmental approval that has been previously obtained remains effective), (iv) do not and will not contravene or conflict with any provision of law, or of any judgment, decree or order, or of the Company's charter or by-laws, and (v) do not and will not contravene or conflict with, or cause any Lien to arise under, any provision of any agreement binding upon the Company, any Subsidiary or any of their respective properties. 10.3 Validity and Binding Nature. This Agreement is, and the Notes when duly executed and delivered by the Company will be, legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforcement may be limited by the application of bankruptcy, moratorium, reorganization or other laws affecting the rights of creditors generally or by general principles of equity (whether or not a proceeding is brought in a court of law or equity). 10.4 Financial Statements. (a) The Company has furnished to the Banks true and correct copies of the Company's audited consolidated financial statements as at January 1, 1994, and its unaudited consolidated financial statements as at July 2, 1994. Such financial statements have been prepared in conformity with GAAP (subject to normal year-end audit adjustments in the case of such unaudited consolidated financial statements, and subject to the information set forth in the footnotes to such audited consolidated financial statements), and fairly present the financial condition of the Company and its Subsidiaries as at such dates and the results of their operations for the periods then ended. (b) Since either of the dates of the financial statements referred to in Section 10.4(a), there has been no material adverse change in the business, credit, operations, financial condition or prospects of the Company and its Subsidiaries taken as a whole. 10.5 Litigation and Contingent Liabilities. No Material Litigation is pending or, to the Company's knowledge, threatened against the Company except as set forth in Schedule II or as set forth in the 10-K Report of the Parent for the fiscal year ended January 1, 1994, or the 10-Q Report of the Parent for the period ended July 2, 1994, all as filed with the SEC. Other than any liability incident to such Material Litigation, neither the Company nor its Subsidiaries have any material contingent liabilities not provided for or disclosed in the financial statements referred to in Section 10.4. 10.6 Title to Property. The Company and its Subsidiaries own and hold, with respect to material real property, good and marketable title, and with respect to other material property, good and valid title, to their respective assets and property reflected in the financial statements referred to in Section 10.4 or acquired since such dates (other than assets and property sold or disposed of in the ordinary course of business), free and clear of any Lien except those referred to in Section 10.7 or permitted under Section 11.2. 10.7 Liens. None of the assets of the Company or any Subsidiary is subject to any Lien, except Liens shown in the financial statements referred to in Section 10.4 or in Schedule III or permitted under Section 11.2. 10.8 Subsidiaries. The Company has no Subsidiaries or Restricted Subsidiaries, as the case may be, except those listed in Schedule IV. 10.9 Plans and Welfare Plans. No steps have been instituted to terminate any Plan, no contribution failure has occurred with respect to any Plan sufficient to give rise to a lien under section 302(f) of ERISA, and no Plan has incurred an "accumulated funding deficiency" within the meaning of section 412 of the Code or Part 3 of Title I of ERISA. To the best of the Company's knowledge, no condition exists or event or transaction has occurred in connection with any Plan which is reasonably likely to have a material adverse effect on the business or financial condition of the Company and its ERISA Affiliates taken as a whole. Neither the Company nor any ERISA Affiliate has any material contingent liability with respect to any post-retirement benefit under a Welfare Plan, except for liability for continuation coverage described in Part 6 of Title I of ERISA, and except as listed on Schedule V. 10.10 Investment Company Act. The Company is neither an "investment company" nor a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. 10.11 Public Utility Holding Company Act. Neither the Company nor any Subsidiary 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", within the meaning of the Public Utility Holding Company Act of 1935, as amended. 10.12 Regulations G, U and X. The Company is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock. None of the Company, the Parent, any Affiliate of either of them or any Person acting on their behalf has taken or will take action to cause the execution, delivery or performance of this Agreement, the Notes, the making of the Loans or the use of proceeds of the Loans to violate Regulation G, U or X of the Board of Governors of the Federal Reserve System. 10.13 Labor Controversies. There are no labor controversies pending or threatened against the Company or any of its Subsidiaries which, if adversely determined, would materially and adversely affect the business, credit, operations, financial condition or prospects of the Company and its Subsidiaries, taken as a whole. 10.14 Tax Status. (a) All tax returns, reports and forms required to be filed with any domestic or foreign taxing authority in connection with any activities or assets of the Company or any Subsidiary have been filed, except where the failure to file any such return, report or form would not have any material adverse effect on the business or financial condition of the Company and its Subsidiaries taken as a whole. (b) All taxes required to be paid with respect to the activities or assets of the Company and its Subsidiaries have been duly paid or provisions deemed appropriate were made by the Parent and/or the Company and its Subsidiaries, on the books and records therefor, except such amounts (i) as are contested in good faith and as to which adequate reserves in accordance with GAAP were provided by the Company in accordance with the best estimates of ultimate liability by the entity responsible therefor or (ii) the non-payment of which would not have a material adverse effect on the business or financial condition of the Company and its Subsidiaries taken as a whole. (c) It is recognized and acknowledged by the Banks 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 were 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 Sections 10.14(a) and 10.14(b) 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. 10.15 No Default. No event has occurred and no condition exists which, upon the execution and delivery of this Agreement or upon the funding of any Loan, will constitute an Event of Default or Unmatured Event of Default. 10.16 Compliance with Applicable Laws. To the best of the Company's knowledge, the Company and its Subsidiaries are in compliance with the requirements of all applicable laws, rules, regulations and orders of all governmental authorities (Federal, state, local or foreign, and including, without limitation, employee benefit, environmental and health and safety laws, rules, regulations and orders), a breach of which would materially and adversely affect the business, credit, operations, financial condition or prospects of the Company and its Subsidiaries taken as a whole. knowledge, neither the Company nor any of its Subsidiaries has failed to obtain any licenses, permits, franchises or other governmental authorizations necessary to the ownership of its respective properties or to the conduct of its respective business, which violation or failure to obtain might materially and adversely affect the business, credit, operations, financial condition or prospects of the Company and its Subsidiaries taken as a whole. 10.18 Purpose. The purpose of the Loans shall be: (a) to repay loans under the Existing Credit Agreements; (b) for capital expenditures; and (c) for working capital and other general corporate purposes of the Company. SECTION 11 COVENANTS. From the Effective Date until the expiration or termination of all of the Banks' Commitments, and thereafter until payment in full of all Liabilities, the Company agrees that, unless at any time the Required Banks shall otherwise expressly consent in writing, it will: 11.1 Reports, Certificates and Other Information. Furnish or cause to be furnished to each Bank: (a) Audit Report. Within 105 days after each Fiscal Year, a copy of an annual audit report of the Company and its Subsidiaries prepared on a consolidated basis and in conformity with GAAP duly certified by independent certified public accountants of recognized standing selected by the Company, together with a letter from such accountants as provided in Section 11.1(d) below. (b) Interim Reports. Within 60 days after each Fiscal Quarter (except the last Fiscal Quarter in a Fiscal Year), a copy of the unaudited consolidated financial statements of the Company and its Subsidiaries prepared in accordance with GAAP (subject to normal year end audit adjustments) consisting of at least a balance sheet as at the close of such Fiscal Quarter, statements of earnings for such Fiscal Quarter and for the period from the beginning of such Fiscal Year to the close of such Fiscal Quarter, and a statement of changes in cash flow from the beginning of such Fiscal Year to the close of such Fiscal Quarter. (c) Officer's Certificate. Contemporaneously with the furnishing of a copy of each annual audit report and of each set of quarterly statements provided for in this Section 11.1, a certificate in the form of Exhibit I, duly completed, dated the date of such annual report or such quarterly statements and signed by an Authorized Officer on behalf of the Company to the effect that, to the best of such Authorized Officer's knowledge, no Event of Default or Unmatured Event of Default has occurred, and is continuing, or, if there is any such event, describing it and the steps, if any, being taken with respect thereto, and containing the computations and other information provided for therein. (d) Accountant's Letter. Contemporaneously with the furnishing of the Company's annual audit report under Section 11.1(a), a letter from the Company's certified public accountants addressed to each Agent and each Bank (i) stating that such accountants have not become aware of any Event of Default or Unmatured Event of Default pertaining to accounting matters (or, if there is any such event, describing it and the steps, if any, being taken with respect thereto), (ii) stating that such accountants have been informed that a primary intent of the Company was for the professional services such accountants provided to the Company in preparing the Company's audit report to benefit or influence the Agents and the Banks, and identifying each Agent and each Bank as a party that the Company has indicated intends to rely on such professional services provided to the Company by such accountants and (iii) containing a computation of the financial tests in Sections 11.3, 11.4 and 11.5. (e) Reports to SEC and to Shareholders. Promptly within 15 days of the filing or making thereof, copies of each filing and report made by the Parent, the Company or any Subsidiary with or to the SEC or any other securities exchange, and, if the Company shall have registered under the Securities Exchange Act of 1934, as amended, as to any of the Company's equity securities, copies of each communication from the Company to shareholders generally. (f) Notice of Default. Forthwith upon learning of the occurrence of an Event of Default or Unmatured Event of Default, written notice thereof describing the same and the steps (if any) being taken by the Company and its Subsidiaries with respect thereto. (g) Notice of Certain Litigation. Written notice of the institution of any Litigation or the occurrence of any development with respect to any Litigation, 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 Securities Exchange Act of 1934, as amended (it being understood that to the extent such disclosures are contained in the reports filed by the Company's Parent with the SEC, then the disclosure hereunder required to be made by the Company to the Banks may be made by furnishing to the Banks a copy of such reports of the Parent as filed with the SEC). (h) Notice of Change of Control. Forthwith upon learning of the occurrence of any Change of Control, written notice thereof, describing the same and the steps (if any) being taken by the Company and its Subsidiaries with respect thereto. (i) Amendments. Promptly upon any amendment or modification, whether or not material, to the MWCC Receivables Purchase Agreement, a copy thereof certified as true and correct by an Authorized Officer on behalf of the Company. (j) Other Information. From time to time such other information concerning the Company and its Subsidiaries as any Bank or any Agent may reasonably request. 11.2 Liens. Not, and not permit any Restricted Subsidiary to, create, incur, assume or permit to exist any Lien with respect to any assets now owned or hereafter acquired, except the following (each, a "Permitted Lien"): (i) Liens arising in connection with a financing or refinancing of every description (including, without limitation, sale-leaseback transactions and secured borrowings) of any real estate (including leasehold interests) or tangible fixed assets acquired or constructed by the Company or a Restricted Subsidiary after January 1, 1994, and attaching only to the property so acquired or constructed and the rights and documents related thereto, (ii) Liens existing on the Effective Date as set forth on Schedule III or shown in the financial statements referred to in Section 10.4, (iii) Liens on customer receivables and proceeds thereof, (iv) Liens for current taxes, assessments or other charges not delinquent or for taxes, assessments or other charges 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, (v) 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 in any case in the opinion of the Company 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, (vi) Liens of carriers, warehousemen, mechanics, materialmen, vendors, landlords and similar Liens incurred in the ordinary course of business for sums not due or sums being contested in good faith and by appropriate proceedings, (vii) 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, (viii) Liens on goods acquired pursuant to the issuance of 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 letters of credit, existing at the time such Subsidiary becomes a Restricted Subsidiary, (x) Liens in favor of the Company or any Restricted Subsidiary, (xi) 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, (xii) Liens in favor of the Agents (or any of them) or the Banks in their capacity as agents or lenders under this Agreement or the Short Term Credit Agreement, provided that such Liens shall ratably secure all loans under this Agreement and the Short Term Credit Agreement, (xiii) Liens arising under capital leases and attaching only to the property leased thereunder, (xiv) 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, (xv) any Lien arising out of a judgment or award against the Company or any Restricted Subsidiary with respect to which the Company or such Restricted Subsidiary shall in good faith be prosecuting an appeal or proceeding for review or any Lien incurred by the Company or any Restricted Subsidiary for the purpose of obtaining a stay or discharge in the course of any legal proceeding to which the Company or such Restricted Subsidiary is a party, Restricted Subsidiary to exercise any privilege or license, to secure the performance of any bid, tender, contract or lease to which the Company or such Restricted Subsidiary is a party, to secure any public or statutory obligation of the Company or any Restricted Subsidiary or to secure any safety, stay or appeal bond to which the Company or any Restricted Subsidiary is a party, or any other similar Lien made in the ordinary course of business, (xvii) 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 or entity under any lease or other document related to the operation, use or occupancy of real or personal property, (xviii) other non-material Liens incurred in the ordinary course of business (including those in connection with obligations to pay workmen's compensation or unemployment insurance, performance bonds, security deposits and the like), and (xix) additional Liens securing Secured Indebtedness (as defined below), if as a result of the transaction giving rise to any such Liens (and after giving effect thereto on a pro forma basis) the aggregate amount of the (i) Secured Indebtedness of the Company and its Restricted Subsidiaries and (ii) (without double-counting) Indebtedness for Borrowed Money of the Restricted Subsidiaries but only in each case incurred subsequent to the Effective Date in a transaction which gave rise to Liens other than Permitted Liens described in the preceding clauses (i) through (xviii) inclusive) is less than or equal to 1% of the total assets of the Company and its Restricted Subsidiaries as of the end of the last full Fiscal Quarter preceding such transaction. For purposes hereof, "Secured Indebtedness" means any Indebtedness for Borrowed Money or other indebtedness incurred in connection with the acquisition of property, which Indebtedness for Borrowed Money or other indebtedness is secured by a Lien of or upon any property or asset of the Company or any Restricted Subsidiary. provided, however, with respect to the preceding clauses (i) through (xix) inclusive, (a) neither the Company nor any Restricted Subsidiary shall permit to exist any Lien securing notes or obligations payable or owing by the Company pursuant to the MWCC Receivables Purchase Agreement except (x) to the extent provided therein or (y) to the extent of clauses (xi) and (xv), and (b) none of such Liens shall encumber any inventory of the Company or its Restricted Subsidiaries or secure trade debt of the Company or its Restricted Subsidiaries except to the extent of clauses (ii), (viii), (ix), (x), (xi), (xii), (xiv), (xv), (xix) and to the extent such Lien is a possessory Lien which arises by operation of law, clause (vi); provided that Liens on inventory or securing trade debt under clause (xix) shall not exceed $5,000,000 or the amount permitted under clause (xix) whichever is less. 11.3 Minimum Consolidated Shareholder's Equity. Not permit the Consolidated Shareholder's Equity of the Company as at the end of each Fiscal Year to be less than the lesser of (i) $441,000,000 minus the FAS 106 Minimum Equity Factor plus 25% of Consolidated Net Income for each complete Fiscal Year after the Company's Fiscal Year ended January 1, 1994 in which there was such income, and (ii) $800,000,000 minus the FAS 106 Minimum Equity Factor; provided, however, that if the Ratio of Earnings to Fixed Charges determined as of the last day of any Fiscal Quarter shall be less than 1.10:1, then the Company shall not permit Consolidated Shareholder's Equity at the end of the next Fiscal Quarter to be less than the lesser of (x) $537,000,000 plus 50% of Consolidated Net Income for each complete Fiscal Year ended after January 1, 1994 in which there was such income, plus 50% of cumulative Consolidated Net Income for any incomplete Fiscal Year (to the extent there was such income) through the end of the most recently completed Fiscal Quarter and (y) $1,000,000,000. 11.4 Ratio of Debt to Total Capitalization. Not permit (i) Debt of the Company and its Restricted Subsidiaries to exceed 60% of Total Capitalization as of the last day of each of the first three Fiscal Quarters of each Fiscal Year, or (ii) Debt of the Company and its Restricted Subsidiaries to exceed 50% of Total Capitalization as of the last day of each Fiscal Year. 11.5 Purchase or Redemption of the Company's Securities; Dividend Restrictions; Payments to the Parent. Not (a) declare or pay any dividend or make any distribution on any capital stock of the Company to its stockholders (other than dividends or distributions payable in shares of capital stock of the Company or stock splits), (b) make any loans or advances to the Parent, (c) purchase or redeem or otherwise acquire or retire for value any shares of capital stock of the Company, or (d) permit any Subsidiary to purchase, redeem or otherwise acquire for value any shares of capital stock of the Company (each such payment described in any of the foregoing clauses (a), (b), (c) and (d) a "Restricted Payment"), if, upon giving effect thereto, the sum of such dividends, distributions, purchases, redemptions and other acquisitions and retirements (other than dividends, distributions, purchases, redemptions and other acquisitions or retirements of Debt-Like Preferred Stock of the Company), paid or made subsequent to January 1, 1994, would exceed the aggregate of: (i) $63,000,000; plus (ii) 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 2, 1994 to the end of the most recent full Fiscal Quarter; plus (iii) any repayment by the Parent of any loan or advance made by the Company to the Parent which repayment is received after January 1, 1994; plus (iv) any capital contributions received by the Company after January 1, 1994; plus (v) the net proceeds to the Company (in cash or, if the consideration is other then cash, the fair value thereof as determined by the Board of Directors of the Company) of the issue or sale after January 1, 1994 of capital stock, including treasury stock but excluding Debt-Like Preferred Stock, of the Company; plus (vi) an amount equal to the net proceeds to the Company (in cash or, if the consideration is other than cash, the fair value thereof as determined by the Board of Directors of the Company) from the issue or sale at any time of any indebtedness of the Company or a Subsidiary which, after January 1, 1994, is converted into shares of capital stock (but excluding Debt-Like Preferred Stock) of the Company or the Parent; plus (vii) an amount equal to the FAS 106 Restricted Payment Factor; provided, however, that: (x) the Company shall not make any such Restricted Payment if before or after giving effect thereto an Event of Default or Unmatured Event of Default shall exist; (y) notwithstanding the foregoing, so long as no Event of Default or Unmatured Event of Default shall exist before or after giving effect thereto, the Company may (i) declare or pay any dividend or make any distribution within 60 days after the date of its declaration, if on such date such declaration did not violate the provisions of Section 11.5(a), and (ii) pay amounts to the Parent to permit the Parent to pay its corporate and business expenses in an aggregate amount for all such payments not to exceed $2,000,000 per Fiscal Year (with any amounts not so used in a given Fiscal Year carried over and added to the amount permissible to be paid in the next Fiscal Year); and (z) notwithstanding the foregoing, the Company may pay amounts required to be paid pursuant to any tax sharing or tax allocation arrangements meeting the standards specified in Schedule VI. 11.6 Mergers, Consolidations, Sales. Not permit any consolidation of the Company with or merger of the Company into any other corporation or corporations (whether or not affiliated with the Company) or successive consolidations in which the Company or its successor or successors shall be a party or parties or any sale or conveyance of the property of the Company as an entirety or substantially as an entirety, to any other corporation (whether or not affiliated with the Company) authorized to acquire and operate the same (any such consolidation, merger, sale or conveyance is referred to herein as a "Corporate Transaction") unless each of the following conditions is met: (i) to the extent that as a result of such Corporate Transaction, any property of the Company or a Restricted Subsidiary immediately prior thereto would be subjected to any Lien of any other party to such Corporate Transaction, simultaneously with such Corporate 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 thereto) the due and punctual payment of the Liabilities by a prior Lien upon such asset; (ii) upon the occurrence of any such Corporate Transaction all the obligations of the Company under this Agreement and the Notes shall be expressly assumed in writing by the corporation formed by such consolidation, or into which the Company shall have been merged, or by the corporation which shall have acquired such property (in each such case, the "surviving entity"), such assumption to be accompanied by an opinion of counsel for the surviving entity to the effect that such assumption has been duly authorized, executed and delivered by, and is the legal, valid and binding obligation of, the surviving entity; (iii) immediately after giving effect to such Corporate Transaction and to the retirement of any Debt to be retired substantially concurrently therewith, no Event of Default or Unmatured Event of Default shall have occurred and be continuing, and the Company shall deliver a certificate signed by an Authorized Officer to such effect; (iv) the surviving entity shall be domiciled in the United States; (v) after giving effect to such Corporate Transaction and to the retirement of any Debt to be retired substantially concurrently therewith on a pro forma basis (calculated using financial information for each party to such Corporate Transaction from such party's most recently ended fiscal quarter), the ratio (expressed as a percent) of Debt to Total Capitalization for the surviving or successor party shall not exceed (a) 60% in the case where the most recently ended fiscal quarter for the Company was one of the first three Fiscal Quarters of a Fiscal Year or (b) 50% in the case where the most recently ended fiscal quarter for the Company was the last Fiscal Quarter of a Fiscal Year; (vi) the Company shall have given at least 30 days' prior written notice of such Corporate Transaction to the Agents and the Banks; and (vii) after giving effect to such Corporate Transaction, no Change of Control shall exist. Upon consummation of the Corporate Transaction and the assumption of the Company's obligations under this Agreement by the surviving entity, such surviving entity 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 sale or conveyance, the Company shall be released from its obligations under this Agreement. Except for the merger of any Restricted Subsidiary into the Company or another Restricted Subsidiary, the Company shall not permit any Restricted Subsidiary to be a party to any Corporate Transaction if before or after giving effect thereto an Event of Default or Unmatured Event of Default shall exist. 11.7 Compliance with Applicable Laws. Not, and not permit any of its Subsidiaries to, knowingly violate in any material respect any of the requirements of all applicable laws, rules, regulations, and orders of any governmental authority (Federal, state, local or foreign, and including, without limitation, employee benefit, environmental, health and safety laws, rules, regulations and orders); provided, however, that any material breach by the Company or any of its Subsidiaries of any employee benefit, environmental, health or safety order, rule or regulation shall not be deemed a breach of this Section 11.7 so long as such violation would not be likely to prevent the Company from performing its obligations under this Agreement and the Company or such Subsidiary, upon notice of such violation, takes appropriate action to cure such violation. 11.8 ERISA. (a) Forthwith upon learning of (i) the incurrence of any material liability of the Company or any ERISA Affiliate pursuant to Title IV of ERISA in connection with the termination of any Plan or withdrawal or partial withdrawal from any Multiemployer Plan , (ii) a failure to satisfy the minimum funding standards of section 412 of the Code or Part 3 of Title I of ERISA by any Plan for which the Company or any ERISA Affiliate is plan administrator (as defined in ERISA), (iii) the receipt of a notice by any Plan that the PBGC intends to terminate or apply for the appointment of a trustee to administer the Plan, (iv) the receipt of a notice of complete or partial withdrawal liability under Title IV of ERISA from a Multiemployer Plan or a notice that any Multiemployer Plan is in reorganization, is insolvent or has been terminated, (v) the application for a waiver of the minimum funding standard under section 412 of the Code, (vi) the filing of a notice of intent to terminate a Plan under section 4041(c) of ERISA, or (vii) notice of withdrawal from any Plan pursuant to section 4063 of ERISA, furnish or cause to be furnished to each Bank written notice thereof. (b) Not, and not permit any of its Subsidiaries to, permit (i) any Plan to incur any "accumulated funding deficiency" (within the meaning of Part 3 of Title I of ERISA or section 412 of the Code) or (ii) any Plan for which the Company or any ERISA Affiliate is plan administrator (as defined in ERISA) to fail to satisfy the minimum funding standards of section 412 of the Code or Part 3 of Title I of ERISA. 11.9 Corporate Existence and Franchises. Except as otherwise expressly permitted in Section 11.6, maintain in full force and effect its separate existence and all material rights, licenses, leases and franchises used in the conduct of its business. 11.10 Maintenance of Tangible Property. Maintain, and cause each of its Subsidiaries to maintain, in all material respects all of the real property, inventory and equipment owned, leased or used by such entity in good condition and repair, and prevent any waste or unusual or unreasonable depreciation thereof. 11.11 Maintenance of Intangible Property. Protect, preserve and maintain, and cause each of its Subsidiaries to protect, preserve and maintain, in all material respects all of its material trademarks and trade names in full force and effect, by, without limitation, defending against and/or prosecuting at its own expense any and all suits claiming infringement or dilution of any thereof or injury to the goodwill associated with any thereof and by filing any applications and doing any and all other things which may from time to time be necessary or advisable for the renewal or registration of each thereof. 11.12 Books, Records and Inspections. Maintain, and cause each Subsidiary to maintain, complete and accurate books and records; permit, and cause each Subsidiary to permit, reasonable access by each Agent and each Bank to the books and records of the Company and of each Subsidiary during regular business hours upon two Business Days' prior written notice to the Company; and permit, and cause each Subsidiary to permit, each Agent and each Bank to inspect the properties and operations of the Company and of such Subsidiary during regular business hours upon two Business Days' prior written notice to the Company. 11.13 Insurance. Maintain, and cause each Subsidiary to maintain, such insurance upon its real property, inventory and equipment (including self-insurance to the extent of, and in a manner consistent with, the past practices of such entity) to such extent and against such hazards and liabilities, as is required by law or customarily maintained by companies similarly situated. 11.14 Payment of Taxes. Promptly pay, and cause each Subsidiary to pay, when due all taxes, assessments or other charges owing by the Company and each Subsidiary except taxes, assessments and other charges which shall be diligently contested in good faith by appropriate proceedings and as to which adequate reserves shall have been set aside in accordance with GAAP. 11.15 Other Agreements. Not (a) enter into any agreement containing any provision which would be violated or breached by the performance of its obligations hereunder or under any instrument or document delivered or to be delivered by it hereunder or in connection herewith, or (b) permit any Restricted Subsidiary to enter into any agreement which prohibits in any material respect such Subsidiary from declaring or paying dividends or making advances to the Company. 11.16 Regulation U. Not use or permit any proceeds of the Loans to be used, either directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of purchasing or carrying Margin Stock. 11.17 Subordinated Debt. With respect to any Subordinated Debt, not make or effect or permit any Subsidiary to make or effect any payment, prepayment, redemption, purchase or defeasance of any such Subordinated Debt if (i) such payment, prepayment, redemption, purchase or defeasance is prohibited by the terms of the instrument governing such Subordinated Debt, (ii) before or after giving effect thereto an Event of Default or Unmatured Event of Default shall exist, or (iii) immediately after giving effect thereto and to the substantially concurrent incurrence or retirement of other Debt and the application of the proceeds thereof the ratio (expressed as a percent) of Debt of the Company and its Restricted Subsidiaries to Total Capitalization exceeds (a) 60% in the case where the most recently ended Fiscal Quarter was one of the first three Fiscal Quarters of a Fiscal Year, or (b) 50% in the case where the most recently ended Fiscal Quarter was the last Fiscal Quarter of a Fiscal Year. 11.18 Debt-Like Preferred Stock. With respect to any Debt-Like Preferred Stock, not make any dividend, distribution, purchase, redemption, acquisition or retirement of any Debt-Like Preferred Stock if (i) such dividend, distribution, purchase, redemption, acquisition or retirement is prohibited by the terms of the instrument governing such Debt-Like Preferred Stock, (ii) before or after giving effect thereto an Event of Default or Unmatured Event of Default shall exist, or (iii) immediately after giving effect thereto and to the substantially concurrent incurrence or retirement of other Debt and the application of the proceeds thereof the ratio (expressed as a percent) of Debt of the Company and its Restricted Subsidiaries to Total Capitalization exceeds (a) 60% in the case where the most recently ended Fiscal Quarter was one of the first three Fiscal Quarters of a Fiscal Year, or (b) 50% in the case where the most recently ended Fiscal Quarter was the last Fiscal Quarter of a Fiscal Year. 11.19 Further Assurances. At its sole expense, upon request of the Administrative Agent, forthwith execute and deliver, or cause to be executed and delivered to such Agent, in due form for filing or recording (the Company hereby agreeing to pay the cost of filing or recording the same in all public offices deemed necessary by such Agent), such documents, and do such other acts and things, all as such Agent may from time to time reasonably request so as to implement the provisions of this Agreement. SECTION 12 CONDITIONS. The effectiveness of this Agreement and each Bank's obligation to make its Loans is subject to the following conditions: 12.1 Effectiveness of Agreement. This Agreement shall become effective on such date (the "Effective Date") on which, unless waived in writing by all of the Banks, each of the following conditions precedent or concurrent shall be satisfied: (a) Documents. On or before September 15, 1994, or such later date as may be agreed to by the Required Banks, the Documentary Agent shall have received all of the following, each duly executed and dated the Effective Date or such other date satisfactory to the Documentary Agent, in form and substance reasonably satisfactory to the Documentary Agent and special counsel to the Banks, and each (except for the Notes, of which only the originals shall be signed) in sufficient number of counterparts to provide one for each Bank: (i) Credit Agreements. Counterparts of this Agreement and the Short Term Credit Agreement, whether on the same or different counterparts, executed by the Company and all of the Banks (or in the case of any Bank as to which an executed counterpart shall not have been so received, telegraphic, telefax, telex or other written confirmation of execution of a counterpart hereof by such Bank); (ii) Notes. One Revolving Note, one Negotiated Note and one Swing Note of the Company payable to the order of each Bank; (iii) Resolutions. Certified copies of (i) the articles of incorporation and by- laws of the Company, (ii) resolutions of the Company's Board of Directors authorizing or ratifying the execution, delivery, performance of and borrowings under, respectively, this Agreement, the Notes, and any other documents provided for herein or therein to be executed by the Company and (iii) all documents evidencing any necessary corporate action, consents and governmental approvals (if any) with respect to this Agreement, the Notes and any other documents provided for herein or therein to be executed by the Company; (iv) Good Standing. Good standing certificate for the Company issued by the Secretary of State of Illinois; (v) Incumbency and Signatures. A certificate of the Secretary or an Assistant Secretary of the Company certifying the names of the officer or officers thereof authorized to sign this Agreement, the Notes and the other documents provided for in this Agreement, together with a sample of the true signature of each such officer (it being understood that each Agent and each Bank may conclusively rely on each such certificate until formally advised by a like certificate of any changes therein); (vi) Opinion of Counsel for the Company. The opinion of Altheimer & Gray, counsel for the Company, addressed to the Agents and the Banks, substantially in the form of Exhibit J; (vii) Certificate. A certificate signed by an Authorized Officer on behalf of the Company substantially in the form of Exhibit K to the effect that (i) on the Effective Date no Event of Default or Unmatured Event of Default has occurred and is continuing or shall result from the making of any Loan on such date, (ii) the Company's representations and warranties contained in Sections 10.1 through 10.18 are true and correct as of the Effective Date with the same effect as though made on the Effective Date, and (iii) all of the conditions set forth in this Section 12.1 have been satisfied; (viii) Termination Letter. A letter signed by an Authorized Officer on behalf of the Company addressed to each of the agents and the lenders under the Existing Credit Agreements terminating as of the Effective Date any and all commitments of the lenders to make loans thereunder (it being understood that the Banks hereby waive any requirement under the Existing Credit Agreements that the Company give prior notice of the termination of such commitments); and (ix) Other. Such other documents as the Documentary Agent or any Bank may reasonably request. (b) Short Term Credit Agreement. The Short Term Credit Agreement shall have become effective. Concurrently with the effectiveness of this Agreement, the Company shall repay in full the principal of and accrued interest on all loans outstanding and accrued fees under the Existing Credit Agreements. 12.2 Conditions to Loans. On and after the Effective Date, each Bank's obligation to make Loans (including the initial Loan and each subsequent Loan) or for a Continuation or a Conversion is subject, unless waived in writing by the Required Banks, to the conditions precedent that: (a) no Event of Default or Unmatured Event of Default shall have occurred and be continuing or shall result from the making of such Loan; (b) the Company's representations and warranties contained in Sections 10.1, 10.2, 10.3, 10.4(a), 10.7, 10.10, 10.11, 10.12, 10.15, and 10.18, shall be true and correct as of the date of such requested Loan, Continuation or Conversion with the same effect as though made on the date of such Loan, Continuation or Conversion; and (c) such Loan shall not exceed the limits specified in Section 2.2, 3.2 or 4.2 and no notice of any such excess shall have been given by the Administrative Agent. Each request by the Company for a Loan or for a Continuation or a Conversion as described in this Section 12.2 shall be deemed to automatically constitute a representation and warranty by the Company to the effect that all of the conditions set forth in this Section 12.2 for the making of such Loan will be fully and completely satisfied as of the date of, and after giving effect to, the making of such Loan, Continuation or Conversion. SECTION 13 EVENTS OF DEFAULT AND THEIR EFFECT. 13.1 Events of Default. Each of the following shall constitute an Event of Default under this Agreement: (a) Non-Payment of Notes and Certain Fees. Default, and continuance thereof for three Business Days after notice thereof to the Company by any Agent, any Bank or the holder of any Note, in the payment when due of (i) any principal of or interest on any Loan or (ii) any amount payable under Section 6.5, 6.6 or 6.7. (b) Non-Payment of Certain Other Amounts under this Agreement. Default, and continuance thereof for ten Business Days after notice thereof to the Company by any Agent, any Bank or the holder of any Note, in the payment when due of any material amount under this Agreement (and not constituting an Event of Default under clause (a) above). (c) Non-Payment of Finance Obligations. Default in the payment when due (subject to any applicable grace period), whether by acceleration or otherwise, of any Finance Obligation of the Company or any Restricted Subsidiary or default in the performance or observance of any obligation or condition with respect to any such Finance Obligation if (i) the effect of such default is to accelerate the maturity of any such Finance Obligation or cause any such Finance Obligation to be prepaid, purchased or redeemed or (ii) the holder or holders thereof, or any trustee or agent for such holders, (x) causes such Finance Obligation to become due and payable prior to its expressed maturity or to be prepaid, purchased or redeemed or (y) receives 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 Parent, the Company or any Restricted Subsidiary or (iii) in case such default is a default in the payment when due, such default has not been remedied within five Business Days after notice thereof to the Company by any Agent, any Bank, the holder of any Note or the holder or holders of such Finance Obligation or any trustee or agents for such holders; provided, however, that no such default under this clause (c) shall constitute an Event of Default unless the amount of Finance Obligations so affected is at least $5,000,000. (d) Bankruptcy, Insolvency, etc. The occurrence of any of the following events: (i) the Company or any Restricted Subsidiary becomes insolvent or generally fails to pay, or admits in writing its inability or refusal to pay, debts as they become due; or (ii) the Company or any Restricted Subsidiary applies for, consents to, or acquiesces in the appointment of a trustee, receiver or other custodian for the Company or such Restricted Subsidiary or any property thereof, or makes a general assignment for the benefit of creditors; or, (iii) in the absence of such application, consent or acquiescence, a trustee, receiver or other custodian is appointed for the Company or any Restricted Subsidiary or for a substantial part of the property of any thereof and is not discharged within 60 days; or (iv) any bankruptcy, reorganization, debt arrangement, or other case or proceeding under any bankruptcy or insolvency law, or any dissolution or liquidation proceeding (except the voluntary dissolution, not under any bankruptcy or insolvency law, of a Restricted Subsidiary), is commenced in respect of the Company or any Restricted Subsidiary, and if such case or proceeding is not commenced by the Company or such Restricted Subsidiary, it is consented to or acquiesced in by the Company or such Restricted Subsidiary or remains for 60 days undismissed; or (v) the Company or any Restricted Subsidiary takes any corporate action to authorize, or in furtherance of, any of the foregoing; provided that the provisions of this Section 13.1(d) shall not apply to any Special Restricted Subsidiary to which the foregoing provisions of Section 13.1(d) would otherwise apply, which together with all other Special Restricted Subsidiaries with respect to which an event described in the foregoing provisions of Section 13.1(d) shall have occurred, has assets which do not exceed one percent (1%) of the total assets of the Company and its Restricted Subsidiaries. (e) Specified Non-Compliance with this Agreement. Failure by the Company to comply with or to perform its obligations under Sections 11.3 through 11.6 of this Agreement. (f) Other Non-Compliance with this Agreement. Failure by the Company to comply with or to perform its obligations under any provision of this Agreement (and not constituting an Event of Default under any of the other provisions of this Section 13.1) and (i) continuance of such failure for 30 days after notice thereof to the Company by any Agent, any Bank or the holder of any Note specifying such failure if such failure can be cured with diligence within such 30-day period by the Company or can be cured by the payment of money, or (ii) continuance of such failure for 60 days after notice thereof to the Company by an Agent, any Bank or the holder of any Note specifying such failure if such failure cannot with diligence be cured within such 30-day period and cannot be cured by the payment of money. (g) Representations and Warranties. Any representation or warranty made by the Company herein is breached or contains any statement which is false or misleading in any material respect, or any schedule, certificate or other writing furnished by the Company to any Agent, any Bank or the holder of any Note pursuant to this Agreement contains any material statement which is false or misleading in any material respect on the date as of which the facts therein set forth are (or are deemed to be) stated or certified. (h) Stock Ownership. Until such time as under the provisions of Section 5 a Change of Control can no longer be deemed to have occurred, Parent or Successor to Parent (except by reason of a merger of the Company into the Parent) shall fail to own, directly or indirectly, 100% of the capital stock (excluding Debt-Like Preferred Stock) of the Company (or any successor to the Company permitted by Section 11.6) free and clear of all Liens. "Successor to Parent" refers to the Person into which the Parent shall have been merged or in the case of a consolidation involving the Parent, the Person formed by such consolidation or in the case of the sale of substantially all the assets of the Parent, the Person to whom substantially all of the assets of the Parent shall have been transferred or conveyed; provided, in each case, voting shares of the capital stock of, or voting equity interests in, such Person are converted from or exchanged for Class A Common Stock. (i) Judgments. Final judgment or judgments (after the expiration of all times to appeal therefrom) for the payment of money in excess of $5,000,000 in the aggregate shall be rendered against Company or any of its Restricted Subsidiaries and the same shall not be (i) fully covered by insurance or (ii) vacated, stayed, bonded, paid or discharged for a period of sixty (60) days. (j) MWCC Receivables Purchase Agreement. (i) An amendment which materially adversely affects the Banks shall be made to the MWCC Receivables Purchase Agreement without the prior written consent of the Required Banks, including, without limitation, any amendment thereto which secures the Seller Notes (as defined therein) or which provides for any of such Seller Notes to be payable on a date earlier than the date on which such Seller Notes are payable as at the date of this Agreement, (ii) the MWCC Receivables Purchase Agreement shall fail to remain in full force and effect, (iii) any default by the Company under the MWCC Receivables Purchase Agreement (after the expiration of any applicable grace period) shall occur and be continuing which has not been waived by MWCC and which provides MWCC thereunder with the right to terminate MWCC's obligation to purchase customer receivables thereunder from the Company, or (iv) the Company or MWCC shall give notice of termination or take any action to terminate thereunder (other than the notice to terminate at the expiration of a 10-year period and other than a termination by the Company pursuant to which a wind down or transition of at least one year is provided). (k) Short Term Credit Agreement. An Event of Default (as defined in the Short Term Credit Agreement) shall occur. 13.2 Effect of Event of Default. If any Event of Default described in Section 13.1(d) shall occur, automatically all of the Commitments (if they have not theretofore terminated) shall immediately terminate and automatically all Liabilities shall become immediately due and payable, all without presentment, demand or notice of any kind all of which are hereby waived; and, in the case of any other Event of Default, unless such Event of Default shall have been cured, (i) the Administrative Agent may and, upon the written request of the Required Banks, shall declare all Commitments (if they have not theretofore terminated) to be terminated whereupon all such Commitments (if they have not theretofore terminated) shall immediately terminate, and (ii) the Administrative Agent may and, upon the written request of Banks holding Notes evidencing at least 66-2/3% of the aggregate unpaid principal amount of the Loans, declare all Liabilities to be due and payable, whereupon all such Liabilities shall become immediately due and payable, all without presentment, demand or notice of any kind, all of which are hereby waived. The Administrative Agent shall promptly advise the Company and each Bank of any such declaration, but failure to do so shall not impair the effect of such declaration. Notwithstanding the foregoing, no rescission of a termination of the Commitments shall be made without the written consent of all of the Banks, and no rescission of any acceleration of any of the Loans shall be made without the written consent of the Banks holding 100% of the aggregate unpaid principal amount of the Loans so accelerated. SECTION 14 THE AGENTS. 14.1 Authorization. Each Bank and the holder of each Note authorizes each Agent to act on behalf of such Bank or holder to the extent provided in this Agreement and in any other document or instrument delivered hereunder or in connection herewith, and to take such other action as may be reasonably incidental thereto. Subject to the provisions of Section 14.3, each Agent, in its capacity as such, will take such action permitted by any agreement delivered in connection with this Agreement as may be requested in writing by the Required Banks or all Banks, as appropriate. 14.2 Indemnification. The Banks severally agree to indemnify each Agent, in its capacity as such, and each officer, director, employee and agent of each Agent (herein collectively called the "Agent Parties" and individually called an "Agent Party"), ratably according to their respective Commitments to the extent not reimbursed by the Company, from and against any and all actions, causes of action, suits, losses, liabilities, damages, and expenses which may at any time (including without limitation at any time following the payment of any of the Liabilities) be imposed on, incurred by or asserted against such Agent Party in any way relating to or arising out of this Agreement, or any documents contemplated by or referred to herein or the transactions contemplated hereby or any action taken or omitted by such Agent Party under or in connection with any of the foregoing; provided, that no Bank shall be liable for the payment to such Agent Party of any portion of such actions, causes of action, suits, losses, liabilities, damages, and expenses resulting from such Agent Party's gross negligence or willful misconduct. All obligations provided for in this Section 14.2 shall survive satisfaction of the Liabilities, cancellation of the Notes and any termination of this Agreement. 14.3 Action on Instructions of the Required Banks. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of the Notes), no Agent shall be required to exercise any discretion or take any action, but each Agent shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Banks, and such instructions shall be binding upon the Banks (including, without limitation, all subsequent holders of the Notes); provided, however, that no Agent shall be required to take any action which exposes such Agent to personal liability or which is contrary to this Agreement or applicable law. The relationship between the Agents and the Banks is and shall be that of agent and principal only and nothing herein contained shall be construed to constitute any Agent a trustee for any party hereto or any holder of a Note or of a participation therein nor to impose on any Agent duties and obligations other than those expressly provided for herein. (a) The Applicable Agent shall be entitled to assume that each Bank has made the proceeds of each of its Loans available in accordance with this Agreement unless such Bank notifies such Agent prior to 11:30 a.m., Chicago time, on the Funding Date for such Loan that it does not intend to make such Loan, it being understood that no such notice shall relieve such Bank of any of its obligations under this Agreement. If the Applicable Agent makes any payment to the Company on the assumption that a Bank has made the proceeds of its Loan available to the Applicable Agent but has not in fact done so, such Bank shall pay to the Applicable Agent on demand an amount equal to the amount of the Loan which it was obligated to make, together with interest thereon for each day that elapses from and including such Funding Date to the Business Day on which such sums become immediately available to the Applicable Agent, prior to 12:00 noon, Chicago time, at the Federal Funds Rate for each such day, based upon a year of 360 days. (b) Each Agent shall be entitled to assume that the Company has made all payments due hereunder on the due date thereof unless it receives notification prior to any such due date from the Company that the Company does not intend to make any such payment, it being understood that no such notice shall relieve the Company of any of its obligations under this Agreement. If any Agent distributes any payment to a Bank or any Assignee hereunder in the belief that the Company has paid to such Agent the amount thereof but the Company has not in fact paid to such Agent such amount, such Bank or Assignee shall pay to such Agent on demand an amount equal to the amount of the payment made by such Agent to such Bank, together with interest thereon for each day that elapses from and including the date on which such Agent made such payment to but excluding the Business Day on which the amount of such payment is returned to such Agent in immediately available funds prior to 12:00 noon, Chicago time, at the Federal Funds Rate for each such day, based upon a year of 360 days. If the amount of such payment is not returned to such Agent in immediately available funds within five (5) Business Days after such demand for payment was made by such Agent, such Bank or Assignee shall pay to such Agent on demand an amount calculated in the manner specified in the preceding sentence after substituting the term "Base Rate" for the term "Federal Funds Rate". A certificate of the Applicable Agent submitted to any Bank with respect to amounts owing under this Section 14.4(b) shall be conclusive absent manifest error. (c) Each Agent shall promptly remit to each Bank or other holder its share of all payments received by such Agent for the account of such Bank or holder, such remittance to be in Dollars and in same day funds (or, if different, the kind of funds received by such Agent). Unless expressly provided otherwise in this Agreement, each Agent shall distribute payments to the Banks on the same day on which such Agent received the corresponding payment from the Company if such payment from the Company was received before 12:00 noon, Chicago time, and on the next Business Day if such payment from the Company was received after 12:00 noon, Chicago time, and if any Agent does not distribute payments to the Banks on the day when due such Agent shall pay to each Bank entitled to receive payment, on demand by such Bank, interest on the payment due to such Bank for each day that elapses from and including the date on which such payment was due to but excluding the Business Day on which such payment is made to such Bank in immediately available funds prior to 12:00 noon, Chicago time, at the Federal Funds Rate for each such day, based upon a year of 360 days. If the amount of such payment is not made to any Bank in immediately available funds within five (5) Business Days after such payment was due to such Bank, such Agent shall pay to such Bank on demand an amount calculated in the manner specified in the preceding sentence after substituting the term "Base Rate" for the term "Federal Funds Rate". A certificate of any Bank submitted to any Agent with respect to amounts owing under this Section 14.4(c) shall be conclusive absent manifest error. 14.5 Exculpation. Each Agent shall be entitled to rely upon advice of counsel concerning legal matters, and upon this Agreement and any Note, security agreement, schedule, certificate, statement, report, notice or other writing which it believes to be genuine or to have been presented by a proper person. No Agent Party shall (i) be responsible for any recitals, representations or warranties contained in, or for the execution, validity, genuineness, effectiveness or enforceability of, this Agreement or any Note, security agreement, schedule, certificate, statement, report, notice or other writing delivered hereunder or in connection herewith, (ii) be responsible for the validity, genuineness, perfection, effectiveness, enforceability, existence, value or enforcement of any collateral security, (iii) be deemed to have knowledge of an Event of Default or Unmatured Event of Default until after having received actual notice thereof from the Company or any Bank, (iv) be under any duty to inquire into or pass upon any of the foregoing matters, or to make any inquiry concerning the performance by the Company or any other obligor of its obligations, or (v) in any event, be liable as such for any action taken or omitted by it or them, except for its or their own gross negligence or willful misconduct. The agency hereby created shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, any Agent in its individual capacity. shall cause each actual or potential Assignee or Participant to acknowledge to such Bank in its assignment or participation agreement with such Bank that (i) it has made and will continue to make such inquiries and has taken and will take such care on its own behalf as would have been the case had it made the Loans directly to the Company without the intervention of any Agent or any other Person, and (ii) it has made and will continue to make its own credit analysis and decisions relating to this Agreement independently and without reliance upon any Agent or any other Bank, and based on such documents and information as it has deemed appropriate. Each Bank agrees and acknowledges and shall cause each actual or potential Assignee or Participant to agree with, and acknowledge to, such Bank in its assignment or participation agreement with such Bank that no Agent or any other Bank makes any representations or warranties about the creditworthiness of the Company or any other party to this Agreement or with respect to the legality, validity, sufficiency or enforceability of this Agreement or any Note or the value of any security therefor. 14.7 Agents and Affiliates. Each Agent and each of its successors as an Agent shall have the same rights and powers hereunder as any other Bank and may refrain from exercising the same as though it were not an Agent, and each Agent and each such successor and its Affiliates may accept deposits from and generally engage in any kind of business with the Company or any Affiliate thereof as if such Agent and each such successor were not an Agent. 14.8 Resignation and Removal. (a) Any Agent may resign as such at any time upon at least 30 days' prior notice to the Company and the Banks, and any Agent may be removed as such at any time by vote of the Required Banks and notice to the retiring Agent and the Company. In the event of any such resignation or removal, the Required Banks shall as promptly as practicable (but with five (5) Business Days' prior written notice being given to the Company) appoint a successor Agent. If no successor Agent shall have been so appointed, and shall have accepted such appointment within 30 days after either the retiring Agent's giving of notice of resignation or the Required Banks' vote to remove the retiring Agent, then the retiring Agent may, on behalf of the Banks, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof or under the laws of another country which is doing business in the United States and having a combined capital, surplus and undivided profits of at least $100,000,000. (b) The Company may, at any time, remove any Agent upon five days' prior written notice to such Agent and each Bank; provided, however, that any such removal may not become effective prior to the time that a successor Agent, appointed by the Company and having the qualifications described above with respect to successor Agents which may be appointed by a retiring Agent, shall have accepted such appointment and begun to serve as Agent hereunder; and provided, further, that in case an Event of Default or Unmatured Event of Default shall have occurred and be continuing, the Company may remove an Agent only with the written consent of the Required Banks. (c) Upon its acceptance of its appointment, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from all further duties and obligations as Agent under this Agreement. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Agreement shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. 14.9 Advisory Agent. Bank of America National Trust and Savings Association ("Bank of America"), as Advisory Agent shall not have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Banks as such. Without limiting the foregoing, Bank of America shall not have or be deemed to have any fiduciary relationship with any Bank. Each Bank acknowledges that it has not relied, and will not rely, on Bank of America in deciding to enter into this Agreement or in taking or not taking action hereunder. SECTION 15 GENERAL. 15.1 Waiver; Amendments. No delay on the part of any Agent, any Bank or the holder of any Note in the exercise of any right, power or remedy shall operate as a waiver thereof, nor shall any single or partial exercise by any of them of any right, power or remedy preclude any other or further exercise thereof, or the exercise of any other right, power or remedy. Except as otherwise specifically provided in this Agreement, the concurrence of the Required Banks shall be required for any amendment, modification or waiver of, or consent with respect to, any provision of this Agreement, the Notes or other documents, instruments or agreements affecting the rights of such Banks. Any amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Notwithstanding the foregoing: (a) the consent of all Banks shall be required for any amendment, modification, waiver or consent with respect to the following: (i) any change in the amount or the scheduled timing of the payment of principal or any extension of the maturity thereof, (ii) any reduction in the rate of interest or any change in the timing of the payment of such interest, (iii) any change or reduction in or any waiver of the amount of any fees under Sections 6.5 or 6.6 or any change in the timing of the payment of any such fees, (iv) except as provided in Section 2.7 with respect to a Bank's Commitment, any extension of such Commitment or any increase in the amount of such Commitment, or (v) any change in the allocation of proceeds or payments among the Banks; (b) the consent of all Banks shall be required for any amendment, modification, waiver or consent relating to any of the following items: (i) any change in Section 12.1, or (ii) any change in this Section 15.1, or (iii) any change to the definition of Required Banks or any provision which specifies the requisite level or number of Banks which are required to amend, modify, waive or consent to any provisions of this Agreement. (c) no provisions of Section 6.7 or Section 14 shall be amended, modified or waived without the consent of all Agents. 15.2 Notices. (a) Except as otherwise expressly provided in this Agreement, any notice hereunder to the Company, any Agent, any Bank or other holder shall be in writing. Notices given by telegram, telex, telecopier or personal delivery shall be deemed to have been given and received when sent (and, in the case of telex, the appropriate answerback is received) and notices given by mail shall be deemed to have been given and received three Business Days after the date when sent by registered or certified mail, postage prepaid, and addressed to the Company, such Agent, or such Bank (or other holder) at its address shown below its signature hereto, or at such other address as any such Person may, by written notice received by such other persons, have designated as its address for such purpose. Any Agent, any Bank or the holder of any Note giving any waiver, consent or notice to, or making any request upon, the Company hereunder shall promptly notify each Bank and the Applicable Agent thereof. Correspondence with respect to Negotiated Loans and notices of Loan Requests (other than Negotiated Loan Confirmations) made by the Company shall be directed to the persons specified for such purpose for each party on the signature pages hereto or in subsequent writings among the parties. Each Agent shall promptly transmit to each Bank (or share with each Bank the contents of) each notice it receives from the Company pursuant to this Agreement other than notices with respect to Negotiated Loans and Swing Loans which shall be furnished by the Administrative Agent through the Master Register pursuant to Section 8.5(b). Notices to any Agent in connection with borrowings, payments, Continuations or Conversions shall not be effective until actual receipt by such Agent. (b) Each Agent and each Bank shall be entitled to rely upon all telephonic notices without awaiting receipt of written versions of such notices and the Company shall hold each Agent, and each Bank harmless from, and shall indemnify each Agent and each Bank against, any loss, cost or expense ensuing from any such reliance. 15.3 Computations. (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. (b) Notwithstanding the preceding paragraph (a), except for the changes required in implementing Financial Accounting Standards Board Statements adopted prior to January 1, 1994 and which are to be implemented by the Company after January 1, 1994 (namely, Statements 115 and 116), 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 January 1, 1994 which result in a change in the earnings of the Company, Consolidated Net Income, Debt of the Company and its Restricted Subsidiaries, or Consolidated Shareholder's Equity of the Company, 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, Consolidated Net Income, Debt of the Company and its Restricted Subsidiaries, and Consolidated Shareholder's Equity of the Company for the purpose of applying the Consolidated Shareholder's Equity of the Company, Ratio of Earnings to Fixed Charges and the ratio of Debt to Total Capitalization tests and in determining applicable limitations on distributions with respect to the Company's capital stock. (c) While the Company and MWCC intend that the sale of receivables to MWCC by the Company under the MWCC Receivables Purchase Agreement be considered sales by the Company and not secured loans to the Company by MWCC, such transaction may be classified as a loan under Financial Accounting Standards Board Statement No. 77. Irrespective of whether such receivables sale transactions are classified as a sale or a loan under Financial Accounting Standards Board Statement No. 77, such transactions shall be treated as sales without recourse for the purposes of this Agreement and not a secured loan. 15.4 Participations; Assignments; Replacement of Banks. (a) Participations. Subject to the provisions of this Section 15.4, any Bank may at any time, in the ordinary course of its commercial banking business and in accordance with applicable law, sell to one or more banks or other financial institutions, and to such other Persons or types of Persons which the Company may from time to time approve in its sole discretion (collectively, "Participants") participating interests in any Loan owing to such Bank, or any Note held by such Bank, provided that no Bank shall, without the prior written notice to and consent of the Company (which consent may be withheld or granted, as the case may be, in the Company's sole discretion), sell any participation in any Commitment or any portion thereof. In the event of any such sale to a Participant, upon request by the Company the selling Bank shall give written notice, to the Company stating the Participant's name and address and the amount of the participation purchased, but (i) the Company and the Applicable Agent shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement, (ii) all amounts payable by the Company shall be determined as if such Bank had not sold such participation, and (iii) any Participant which is not an Affiliate of the selling Bank shall have no right to require the selling Bank to take or omit to take any action under this Agreement or any Note other than action directly affecting the extension of the stated maturity of any Loan, directly affecting any scheduled installment of principal or any scheduled reduction in the stated amount of, or interest on, any Loan in which such participation was sold, or reducing the principal or stated amount thereof or the rate of interest thereon or fees payable hereunder. Each Bank agrees to incorporate the requirements set forth in the preceding sentence into each participation agreement which such Bank enters into with any Participant. The Company agrees that if amounts outstanding under this Agreement and the Notes are due or unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall, if its participation agreement with the selling Bank so provides, be deemed to have the right of setoff in respect of its participating interest in amounts owing under this Agreement or any Note to the same extent as if the amount of its participating interest were owing directly to it as a Bank under this Agreement or any Note; provided that such right of setoff shall be subject to such Participant's obligation to share with the Banks, and the Banks agree to share with such Participant, as provided in Section 8.2(c). No participation contemplated in this Section 15.4 shall relieve any Bank either from its Commitment hereunder or from any of its other obligations hereunder and such Bank shall remain solely responsible for the performance thereof. (b) Assignments. Subject to the provisions of this Section 15.4, any Bank may, with the Company's prior written approval (which approval may be withheld or granted, as the case may be, in the Company's sole discretion), execute an assignment and acceptance substantially in the form of Exhibit L, with appropriate insertions (herein individually called an "Assignment" and collectively called the "Assignments"), whereby such Bank shall assign, without recourse and without representation or warranty except as specifically set forth in said Assignment, to one or more banks or other entities (herein individually called an "Assignee" and collectively called the "Assignees") all or any part of such Bank's rights and benefits, and delegate all or any part of such Bank's obligations, under this Agreement and its Notes; provided, that any such Assignment shall assign equal percentage amounts of the assignor Bank's Commitment under this Agreement and such Bank's commitment under the Short Term Credit Agreement. Notwithstanding the foregoing, if the Company shall unreasonably withhold approval of any requested assignment and shall not secure a replacement assignee with respect to such assignment proposed by any such Bank within 60 days after the request in writing to the Company for such approval, any such Bank may upon the expiration of such 60-day period complete the proposed assignment (but only on the terms proposed and to the Assignee proposed) and the Company agrees that the Assignment shall have the same effect as if executed by the Company. Upon execution, delivery and acceptance of each Assignment, from and after the effective date specified therein, which effective date shall be at least five (5) Business Days after the execution thereof, the Company, the Agents and the Banks agree that, to the extent of any such Assignment, (x) the Assignee thereunder shall, in addition to any rights, benefits and obligations hereunder held by it immediately prior to such effective date, have the rights, benefits and obligations of a Bank under this Agreement and the assignor Bank's Notes (including, without limitation, rights and benefits arising out of Section 9) and the same rights of setoff pursuant to Section 8.3 and obligation to share pursuant to Section 8.2 as it would have if it were a Bank hereunder to the extent that the same have been assigned and delegated to it pursuant to such Assignment, and (y) the assignor Bank shall, to the extent that rights, benefits and obligations hereunder have been assigned and delegated by it pursuant to such Assignment, relinquish its rights and benefits and be released from its obligations under this Agreement (and, in the case of an Assignment covering all or the remaining portion of an assignor Bank's rights, benefits and obligations under this Agreement, such Bank shall cease to be a party hereto), except that in all cases the assignor Bank shall remain entitled to the rights and benefits arising under Sections 6, 8.4, 9, 15.5 and 15.6 with respect to any period of time prior to the effective date of any such Assignment, and shall remain liable with respect to any of its obligations arising under Sections 6.9, 8.4(c), 14.2 and 15.5, with respect to any matters arising prior to the effective date of any such Assignment; provided, that: (i) each Agent and each Bank shall be entitled to continue to deal solely and directly with the assignor Bank in connection with the interests so assigned and delegated to the Assignee until written notice of such Assignment, together with addresses and related information with respect to the Assignee, shall have been given to each Agent and each Bank by the assignor Bank and the Assignee, (ii) if the Assignee is a Non-United States Person, it shall deliver to the Company and the Applicable Agent a written representation and undertaking substantially similar to Section 8.4(b), and (iii) the Company shall not be required to pay any costs, fees or taxes of any kind or nature with respect to the interest(s) assigned in excess of those payable by the Company in connection with such interest(s) prior to such assignment except for any costs, fees or taxes described in Section 8.4, 9 or 15.6. Upon its receipt of an Assignment executed by an assignor Bank and an Assignee, together with the Notes subject to such Assignment, the Applicable Agent shall, if such Assignment has been completed and is in substantially the form of Exhibit L, accept such Assignment and forward a photostatic copy thereof to the Company. Within five (5) Business Days after its receipt of a photostatic copy of such Assignment, the Company shall execute and deliver to the Applicable Agent, to be exchanged for the Notes delivered to the Applicable Agent by the assignor Bank, new Notes payable to the order of the Assignee in an amount equal to the Commitment assumed by it pursuant to such Assignment (or other amount applicable to Swing Notes or Negotiated Notes) and, if the assignor Bank has retained a Commitment hereunder, new Notes payable to the order of the assignor Bank in an amount equal to the Commitment retained by it hereunder (or other amount applicable to Swing Notes or Negotiated Notes). Such new Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Notes, shall be dated the effective date of such Assignment, shall be payable to the order of the Assignee or the assignor Bank, shall otherwise be in substantially the form of such surrendered Notes, and shall constitute Notes under this Agreement. Such new Notes shall be in replacement and substitution for, and not in payment of, the Notes delivered to the Applicable Agent by the assignor Bank. The Applicable Agent shall deliver such new Notes to the payee or payees thereof and shall mark the Notes previously held by the assignor Bank as "replaced" and shall deliver the same to the Company. The Administrative Agent shall from time to time distribute a revised Schedule I giving effect to any Assignments or other modifications hereunder. (c) Federal Reserve. Anything contained in this Agreement to the contrary notwithstanding, and without the need to comply with any of the formal or procedural requirements set forth in this Agreement, any Bank may at any time and from time to time grant a participation in, assign, deposit or pledge all or any portion of its rights under this Agreement or the Notes to a Federal Reserve Bank; provided, however, no such participation, assignment, deposit or pledge shall relieve such Bank of any of its obligations under this Agreement. (d) Information. Notwithstanding the terms of any previous confidentiality agreements with respect to the subject matter hereof between the Company and any Bank, from and after the Effective Date any Bank may furnish any information concerning the Parent, the Company and the Subsidiaries which has been furnished to such Bank pursuant hereto to any Assignee, Participant, or potential Assignee or Participant; provided, however, that the recipient of such information shall, prior to being furnished with any such information, agree to maintain the confidentiality of such information. Notwithstanding the foregoing sentence, any Agent, Bank, Assignee, Participant or potential Assignee or Participant shall be permitted to disclose information regarding the Company and its Subsidiaries (i) to any other Agent or Bank, or to any Assignee or Participant, (ii) to any Affiliate, agent or employee that agrees to be bound by this Section 15.4(d), (iii) upon order of any court or administrative agency, (iv) upon the request or demand of any regulatory agency or authority having jurisdiction over such party, (v) which has been publicly disclosed, (vi) which has been obtained from any Person that is not a party hereto or an Affiliate, agent or employee of any such party, (vii) in connection with the exercise of any remedy hereunder, or (viii) to such Person's certified public accountants and its attorneys. (e) Replacement of Banks. So long as no Event of Default or Unmatured Event of Default shall have occurred and be continuing, the Company shall have the right on five Business Days' written notice (except that, only concurrent written notice shall be required to replace a Bank for which concurrent notice is then provided for under the Short Term Credit Agreement) to each of the Agents and the Banks to substitute any financial institution designated by the Company (a "Replacement Bank") for any Bank designated by the Company as a terminated bank ("Terminated Bank"); provided, however, that the effectiveness of such substitution shall be subject to execution of an agreement substantially in the form of Exhibit M hereto ("Replacement Agreement") by the Replacement Bank, the Company and the Administrative Agent, providing for: (i) payment of all Liabilities of the Company then outstanding to the Terminated Bank (including without limitation all such amounts due such Bank under Sections 6, 8.4, 9, 15.5 and 15.6); (ii) the termination and release of all obligations of the Terminated Bank (excluding any obligations arising under Sections 6.9, 8.4(c), 14.2 and 15.5 with respect to any matters arising prior to the effective date of such termination); and (iii) the agreement of the Replacement Bank to become a party to this Agreement and to be bound under this Agreement with the same effect as if the Replacement Bank were the Terminated Bank immediately prior to such substitution. So long as the Short Term Credit Agreement is in effect, the Company shall not replace a Terminated Bank pursuant to this Section 15.4(e) unless the Company concurrently replaces such Terminated Bank with the same Replacement Bank under the Short Term Credit Agreement. Upon execution of such Replacement Agreement the Administrative Agent shall forward a copy thereof to each Bank and each other Agent, together with a revised Schedule I modified to reflect such substitution. Upon execution of such Replacement Agreement, the Replacement Bank shall be deemed to be a party to this Agreement and a Bank hereunder and the Terminated Bank will cease to be a party to this Agreement and a Bank hereunder but shall be entitled to all the indemnities provided by this Agreement with respect to matters arising out of action or inaction by any party while such Terminated Bank was a party to this Agreement. 15.5 Costs, Expenses and Taxes. (a) The Company agrees to pay on demand all fees and out-of-pocket costs and expenses of McDermott, Will & Emery (or other law firm acceptable to the Required Banks) as special counsel to the Documentary Agent and the Banks (and of other special counsel, if any, who may be retained by said counsel), in connection with the preparation, execution, delivery, administration and enforcement of this Agreement, the Notes and all other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection herewith, and any and all waivers, consents, amendments, modifications, replacements or restatements relating to any thereof; provided that the Company's obligations hereunder with respect to administration shall be limited to administration of or by the Banks which are Agents hereunder. Each Bank agrees to reimburse each Agent for such Bank's pro rata share (based upon its respective Commitment) of any reasonable costs or expenses incurred by such Agent on behalf of the Banks in connection with such administration and enforcement (including reasonable attorneys' fees and legal expenses) not paid by the Company except to the extent that such costs or expenses arise from such Agent's gross negligence or willful misconduct. (b) The Company further agrees (i) to pay on demand all reasonable fees and out-of-pocket expenses (including all attorneys' fees, legal expenses and allocated costs of staff counsel) of each Bank incurred directly in connection with the enforcement of this Agreement, the Notes and all other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection herewith, and any and all amendments, modifications, replacements or restatements relating to any thereof, and (ii) to pay, and to save each Agent and the Banks harmless from all liability for, any stamp or other taxes which may be payable in connection with the execution and delivery of this Agreement, the borrowings hereunder, or the issuance of the Notes or of any other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection herewith. (c) Except as otherwise provided in the preceding paragraphs (a) and (b), each party shall pay its own expenses in connection with this Agreement. All obligations provided for in this Section 15.5 shall survive repayment of the Loans, cancellation of the Notes and any termination of this Agreement. 15.6 Indemnification. In consideration of the execution and delivery of this Agreement by the Agents and the Banks, the Company hereby agrees to indemnify, exonerate and hold harmless each Bank, each Agent and each officer, director, employee and agent of each Bank and each Agent (herein collectively called the "Bank Parties" and individually called a "Bank Party") from and against any and all actions, causes of action, suits, losses, costs (including, without limitation, all documentary or other stamp taxes or duties), liabilities, damages and expenses (other than expenses covered by Section 15.5(a)) in connection therewith (irrespective of whether such Bank Party is a party to the action for which indemnification hereunder is sought), including, without limitation, reasonable attorneys' fees (including allocated costs of staff counsel) and disbursements (collectively herein called the "Indemnified Liabilities") incurred by the Bank Parties or any of them as a result of, or arising out of, or relating to any Loan or the use of the proceeds of any Loan except for any such Indemnified Liabilities arising on account of such Bank Party's gross negligence or willful misconduct and, if and to the extent that the foregoing undertaking may be unenforceable for any reason, the Company hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. All obligations provided for in this Section 15.6 shall survive repayment of the Liabilities, cancellation of the Notes and any termination of this Agreement. 15.7 Regulation U. Each Bank represents that it in good faith is not relying, either directly or indirectly, upon any Margin Stock as collateral security for the extension or maintenance by it of any credit provided for in this Agreement. 15.8 Captions. Section captions used in this Agreement are for convenience only, and shall not affect the construction of this Agreement. 15.9 Governing Law; Severability. This Agreement and each Note shall be a contract made under and governed by the laws of the State of Illinois without regard to conflict of laws principles. All obligations of the Company and the rights of the Agents, the Banks and any other holders of the Notes expressed herein or in the Notes shall be in addition to and not in limitation of those provided by applicable law. Whenever possible each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. Nothing herein shall require the Company to pay interest in excess of the maximum rate permitted by law. 15.10 Waiver of Jury Trial. Each of the Company, each Agent and each Bank waives any right to a trial by jury in any action or proceeding to enforce or defend any rights under this Agreement, any Note or any amendment, instrument, document or agreement delivered or which may in the future be delivered in connection herewith or arising from any banking relationship existing in connection with this Agreement, and agrees that any such action or proceeding shall be tried before a court and not before a jury. 15.11 Counterparts; Effectiveness. This Agreement may be executed in any number of counterparts and by the different parties on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same agreement. This Agreement shall become effective as of the Effective Date and the Documentary Agent shall so inform all of the parties hereto. 15.12 Supersession. This Agreement supersedes all prior or contemporaneous agreements with respect to the subject matter hereof. 15.13 Successors and Assigns. This Agreement shall be binding upon the Company, the Banks and the Agents and their respective successors and assigns, and shall inure to the benefit of the Company, the Banks and the Agents and the respective successors and assigns of the Banks and the Agents, it being understood that subject to Section 11.6, the Company shall not assign its rights hereunder without the consent of all of the Banks. * * * Delivered at Chicago, Illinois as of the day, month and year first above written. MONTGOMERY WARD & CO., INCORPORATED By: Name: Douglas V. Gathany Title: Senior Assistant Treasurer One Montgomery Ward Plaza 844 North Larrabee Chicago, Illinois 60671 Attention: Treasurer Telephone: (312) 467-7238 Telecopy: (312) 467-7421 Person to whom Negotiated Loan correspondence should be addressed: Douglas V. Gathany Senior Assistant Treasurer Telephone: (312) 467-7238 Telecopy: (312) 467-7421 Person to whom copies of notices under Section 13.2 should also be sent: Montgomery Ward & Co., Incorporated One Montgomery Ward Plaza 535 West Chicago Avenue Chicago, Illinois 60671 Attention: Secretary THE FIRST NATIONAL BANK OF CHICAGO, in its individual capacity and in its capacity as Documentary Agent By: Name: Jeanette Ganousis Title: Vice President Mail Suite 0088 One First National Plaza Chicago, IL 60670 Telephone: (312) 732-6066 Telecopy: (312) 732-5161 Person to whom Negotiated Loan correspondence should be addressed: Dennis Degen Administrative Coordinator Telephone: (312) 732-6246 Telecopy: (312) 732-2715 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Dennis Degen Administrative Coordinator Telephone: (312) 732-6246 Telecopy: (312) 732-2715 Base Rate Loan Funding Office: The First National Bank of Chicago One First National Plaza Chicago, IL 60670 Eurodollar Loan Funding Office: The First National Bank of Chicago One First National Plaza Chicago, IL 60670 THE BANK OF NEW YORK, in its individual capacity and in its capacity as Negotiated Loan Agent By: Name: Bruce C. Miller Title: Vice President One Wall Street New York, NY 10286 Telephone: (212) 635-1172 Telecopy: (212) 635-1208 Person to whom Negotiated Loan correspondence should be addressed: Carol Surles, 18th Floor Telephone: (212) 635-4695 Telecopy: (212) 635-6365 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Carol Surles, 18th Floor Telephone: (212) 635-4695 Telecopy: (212) 635-6365 Base Rate Loan Funding Office: The Bank of New York Commercial Loan Servicing Dept. 101 Barclay Street New York, NY 10007 Eurodollar Loan Funding Office: The Bank of New York Euro Dollar/Cayman Funding Area 101 Barclay Street New York, NY 10007 THE BANK OF NOVA SCOTIA, in its individual capacity and in its capacity as Administrative Agent By: Name: F.C.H. Ashby Title: Senior Assistant Agent Suite 2700 600 Peachtree NE Atlanta, GA 30308 Telephone: (404) 877-1500 Telecopy: (404) 888-8998 Telex: 00542319 Person to whom Negotiated Loan correspondence should be addressed: Sarah Schramm NYA - Treasury Telephone: (212) 225-5550 Telecopy: (212) 225-5517 Telex: ITT421791 WUI669859 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Ed Moussa Atlanta Agency Telephone: (404) 877-1500 Telecopy: (404) 888-8998 Telex: 00542319 Base Rate Loan Funding Office: The Bank of Nova Scotia Atlanta Agency Suite 2700 600 Peachtree NE Atlanta, GA 30308 Eurodollar Loan Funding Office: The Bank of Nova Scotia Atlanta Agency Suite 2700 600 Peachtree NE Atlanta, GA 30308 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, in its individual capacity and in its capacity as Advisory Agent By: Name: M. Kathleen McVay Title: Senior Vice President 200 West Adams Street, Suite 2800 Chicago, Illinois 60606 Telephone: (312) 269-4644 Telecopy: (312) 269-4540 Person to whom Negotiated Loan correspondence should be addressed: M. Kathleen McVay Senior Vice President Telephone: (312) 269-4644 Telecopy: (312) 269-4540 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Pamela Quebbeman Bank of America 231 South LaSalle Street Chicago, Illinois 60697 Telephone: (312) 828-3586 Telecopy: (312) 987-5500 Base Rate Loan Funding Office: Bank of America National Trust and Savings Association Eurodollar Loan Funding Office: Bank of America National Trust and Savings Association CIBC INC. By: Name: David McGowan Title: Vice President Suite 2300 200 West Madison Street Chicago, IL 60606 Telephone: (312) 750-8730 Telecopy: (312) 726-8884 Person to whom Negotiated Loan correspondence should be addressed: Carol Kizzia 425 Lexington New York, New York 10017 Telephone: (212) 856-3693 Telecopy: (212) 856-6699 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Sherry Smith Assistant Vice President with a copy to: Junior Williams Associate 2 Paces West 2727 Paces Ferry Road, Suite 1200 Atlanta, GA 30339 Telephone: (404) 319-4820 Telecopy: (404) 319-4950 Telex: 54-2413 Base Rate Loan Funding Office: Canadian Imperial Bank of Commerce 2 Paces West 2727 Paces Ferry Road Suite 1200 Atlanta, GA 30339 Eurodollar Loan Funding Office: Canadian Imperial Bank of Commerce 2 Paces West 2727 Paces Ferry Road Suite 1200 Atlanta, GA 30339 NATIONSBANK OF NORTH CAROLINA By: Name: Christopher B. Torie Title: Senior Vice President 70 West Madison Street, 53rd Floor Chicago, Illinois 60602 Telephone: (312) 853-5794 Telecopy: (312) 853-9194 Person to whom Negotiated Loan correspondence should be addressed: Kathy Mumpower Telephone: (704) 386-7429 Telecopy: (704) 386-8694 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Kathy Mumpower Telephone: (704) 386-7429 Telecopy: (704) 386-8694 Base Rate Loan Funding Office: NationsBank of North Carolina #1 Nations Bank Plaza T 17-21 Charlotte, North Carolina 28255 Eurodollar Loan Funding Office: NationsBank of North Carolina #1 Nations Bank Plaza T 17-21 Charlotte, North Carolina 28255 THE LONG-TERM CREDIT BANK OF JAPAN, LTD. By: Name: Mark A. Thompson Title: Vice President and Deputy General Manager 190 South LaSalle Street Chicago, Illinois 60603 Telephone: (312) 704-5459 Telecopy: (312) 704-8505 Person to whom Negotiated Loan correspondence should be addressed: Will Schauble Vice President, Loan Operations Telephone: (312) 704-5494 Telecopy: (312) 704-8717 Telex: 825567 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Will Schauble Vice President, Loan Operations Telephone: (312) 704-5494 Telecopy: (312) 704-8717 Telex: 825567 Base Rate Loan Funding Office: 190 South LaSalle Street, Suite 800 Chicago, Illinois 60603 Eurodollar Loan Funding Office: 190 South LaSalle Street, Suite 800 Chicago, Illinois 60603 CREDIT LYONNAIS CHICAGO BRANCH By: Name: Attila Koc Title: Vice President, Corporate Group Head Marcus Katz, Vice President 227 West Monroe Street Chicago, IL 60606 Telephone: (312) 220-7307 Telecopy: (312) 641-0527 Telex: 6871734 Person to whom Negotiated Loan correspondence should be addressed: Marcus Katz, Vice President Telephone: (312) 220-7307 Telecopy: (312) 641-0527 Telex: 6871734 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Rosette Liptak Telephone: (312) 220-7319 Telecopy: (312) 641-5834 Telex: 6871734 Base Rate Loan Funding Office: Credit Lyonnais Chicago Branch 227 West Monroe Street Chicago, IL 60606 Eurodollar Loan Funding Office: Credit Lyonnais Cayman Island Branch c/o Credit Lyonnais Chicago Branch 227 West Monroe Street Chicago, Illinois 60606 CREDIT LYONNAIS CAYMAN ISLAND BRANCH By: Name: Attila Koc Title: Authorized Signature Marcus Katz, Vice President 227 West Monroe Street Chicago, IL 60606 Telephone: (312) 220-7307 Telecopy: (312) 641-0527 Telex: 6871734 Person to whom Negotiated Loan correspondence should be addressed: Marcus Katz, Vice President Telephone: (312) 220-7307 Telecopy: (312) 641-0527 Telex: 6871734 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Rosette Liptak Telephone: (312) 220-7319 Telecopy: (312) 641-5834 Telex: 6871734 Base Rate Loan Funding Office: Credit Lyonnais Chicago Branch 227 West Monroe Street Chicago, IL 60606 Eurodollar Loan Funding Office: Credit Lyonnais Cayman Island Branch c/o Credit Lyonnais Chicago Branch 227 West Monroe Street Chicago, Illinois 60606 BANCA COMMERCIALE ITALIANA, CHICAGO BRANCH By: Name: Julian M. Teodori Title: Senior Vice President By: Name: Diana R. Lamb Title: Vice President 150 North Michigan Avenue, Suite 1500 Chicago, Illinois 60601 Telephone: (312) 346-1112 Telecopy: (312) 346-5758 Telex: 212716 COMIT CHICAGO Person to whom Negotiated Loan correspondence should be addressed: Matthew V. Trujillo Assistant Vice President Telephone: (312) 346-1112 Telecopy: (312) 346-5758 Telex: 212716 COMIT CHICAGO Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Jonathan Sahr Loan Department Supervisor Telephone: (212) 607-3814 Telecopy: (212) 422-6651 Telex: 6790749 BCINY Base Rate Loan Funding Office: Banca Commerciale Italiana New York Branch One William Street New York, New York 10004 Eurodollar Loan Funding Office: Banca Commerciale Italiana New York Branch One William Street New York, New York 10004 THE DAI-ICHI KANGYO BANK, LTD., CHICAGO BRANCH By: Name: Masami Tsuboi Title: Vice President 10 South Wacker Drive Chicago, Illinois 60606 Telephone: (312) 715-6365 Telecopy: (312) 876-2011 Telex: 25-4515 Person to whom Negotiated Loan correspondence should be addressed: Richard R. Howard Assistant Vice President Telephone: (312) 715-6369 Telecopy: (312) 876-2011 Telex: 25-4515 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Gary Marthaler Officer Telephone: (312) 715-6451 Telecopy: (312) 876-2011 Telex: 25-4515 Base Rate Loan Funding Office: The Dai-Ichi Kangyo Bank, Ltd., Chicago Branch 10 South Wacker Drive Chicago, Illinois 60606 Eurodollar Loan Funding Office: The Dai-Ichi Kangyo Bank, Ltd., Chicago Branch 10 South Wacker Drive Chicago, Illinois 60606 THE MITSUBISHI BANK, LIMITED, CHICAGO BRANCH By: Name: Noboru Kobayashi Title: Joint General Manager 115 South LaSalle Street, Suite 2100 Chicago, Illinois 60603 Telephone: (312) 269-0753 Telecopy: (312) 263-2555 Telex: 190046 BISHIBANK Person to whom Negotiated Loan correspondence should be addressed: Alex Lam Vice President Telephone: (312) 269-0753 Telecopy: (312) 263-2555 Telex: 190046 BISHIBANK Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Janice Hennig Assistant Vice President Telephone: (312) 269-0473 Telecopy: (312) 263-2555 Telex: 190046 BISHIBANK Base Rate Loan Funding Office: 115 South LaSalle Street, Suite 2100 Chicago, Illinois 60603 Eurodollar Loan Funding Office: 115 South LaSalle Street, Suite 2100 Chicago, Illinois 60603 THE NORTHERN TRUST COMPANY By: Name: David Blowers Title: Vice President and Chicago Division Head Mr. James M. McMenamin 50 South LaSalle Street Chicago, Illinois 60675 Telephone: (312) 444-3555 Telecopy: (312) 630-1566 Person to whom Negotiated Loan correspondence should be addressed: Mr. James M. McMenamin 50 South LaSalle Street Chicago, Illinois 60675 Telephone: (312) 444-3555 Telecopy: (312) 630-1566 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Mr. James M. McMenamin 50 South LaSalle Street Chicago, Illinois 60675 Telephone: (312) 444-3555 Telecopy: (312) 630-1566 Base Rate Loan Funding Office: 50 South LaSalle Street Chicago, Illinois 60675 Eurodollar Loan Funding Office: 50 South LaSalle Street Chicago, Illinois 60675 THE SAKURA BANK, LTD. By: Name: Hajime Miyagi Title: Deputy General Manager 227 West Monroe Street, Suite 4700 Chicago, Illinois 60606 Telephone: (312) 201-5146 Telecopy: (312) 332-5345 Telex: 254048 Person to whom Negotiated Loan correspondence should be addressed: Kristin M. Hays Assistant Vice President Telephone: (312) 201-5141 Telecopy: (312) 332-5345 Telex: 254048 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Kristin M. Hays Assistant Vice President Telephone: (312) 201-5141 Telecopy: (312) 332-5345 Telex: 254048 Base Rate Loan Funding Office: 227 West Monroe Street, Suite 4700 Chicago, Illinois 60606 Eurodollar Loan Funding Office: 227 West Monroe Street, Suite 4700 Chicago, Illinois 60606 THE SANWA BANK, LIMITED, CHICAGO BRANCH By: Name: Jose A. Moreno Title: Vice President and Manager 10 South Wacker Drive Chicago, Illinois 60606 Telephone: (312) 368-3007 Telecopy: (312) 346-6677 Telex: 3735188 Person to whom Negotiated Loan correspondence should be addressed: Jose A. Moreno Vice President and Manager Telephone: (312) 368-3007 Telecopy: (312) 346-6677 Telex: 3735188 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Beverly Wyckoff Manager, Loan Administration Telephone: (312) 368-3016 Telecopy: (312) 346-6677 Telex: 3735188 Base Rate Loan Funding Office: 10 South Wacker Drive Chicago, Illinois 60606 Eurodollar Loan Funding Office: 10 South Wacker Drive Chicago, Illinois 60606 SWISS BANK CORPORATION By: Name: Nancy A. Russell Title: Associate Director By: Name: William A. McDonnell Title: Associate Director 141 West Jackson Boulevard Chicago, Illinois 60604 Telephone: (312) 554-6436 Telecopy: (312) 554-6410 or 6411 Telex: MCI 687 1764 SBOB UW Person to whom Negotiated Loan correspondence should be addressed: Paul Guider Associate Director Telephone: (212) 335-1009 Telecopy: (212) 335-1388 Telex: MCI 62841 swisbk uw Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Valerie Williams Administrative Assistant Telephone: (212) 574-3146 Telecopy: (212) 574-3180 Telex: MCI 62841 swisbk uw Base Rate Loan Funding Office: 141 West Jackson Boulevard Chicago, Illinois 60604 Eurodollar Loan Funding Office: 141 West Jackson Boulevard Chicago, Illinois 60604 U.S. NATIONAL BANK OF OREGON By: Name: Jeffrey C. Swift Title: Vice President National Corporate Banking 111 SW Fifth Avenue, Suite 2900 Portland, Oregon 97204 Telephone: (503) 275-6381 Telecopy: (503) 275-5428 Telex: #360549 Person to whom Negotiated Loan correspondence should be addressed: Jan Knox Participation Specialist Telephone: (503) 275-6561 Telecopy: (503) 275-4600 Telex: #360549 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Jan Knox Participation Specialist Telephone: (503) 275-6561 Telecopy: (503) 275-4600 Telex: #360549 Base Rate Loan Funding Office: Corporate Loan Servicing 555 S.W. Oak Street Portland, Oregon 97204 Eurodollar Loan Funding Office: Corporate Loan Servicing 555 S.W. Oak Street Portland, Oregon 97204 UNION BANK By: Name: Richard A. Sutter Title: Vice President 350 California Street, 11th Floor San Francisco, California 94101 Telephone: (415) 705-7090 Telecopy: (415) 705-7092 Person to whom Negotiated Loan correspondence should be addressed: Richard A. Sutter Vice President Telephone: (415) 705-7090 Telecopy: (415) 705-7092 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Richard A. Sutter Vice President Telephone: (415) 705-7090 Telecopy: (415) 705-7092 Base Rate Loan Funding Office: 350 California Street, 11th Floor San Francisco, California 94101 Eurodollar Loan Funding Office: 350 California Street, 11th Floor San Francisco, California 94101 ABN AMRO BANK N.V. By: Name: Jeffrey Dodd Title: Vice President By: Name: Patricia M. Luken Title: Vice President 135 South LaSalle Street, Suite 425 Chicago, Illinois 60674-9135 Telephone: (312) 904-5362 Telecopy: (312) 606-8425 Telex: 6732700 (Answerback: ABN AMRO CGO) Person to whom Negotiated Loan correspondence should be addressed: Loan Administration Telephone: (312) 443-2149 Telecopy: (312) 606-8435 Telex: 6732700 (Answerback: ABN AMRO CGO) Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Loan Administration Telephone: (312) 443-2149 Telecopy: (312) 606-8435 Telex: 6732700 (Answerback: ABN AMRO CGO) Base Rate Loan Funding Office: 135 South LaSalle Street, Suite 425 Chicago, Illinois 60674-9135 Eurodollar Loan Funding Office: 135 South LaSalle Street, Suite 425 Chicago, Illinois 60674-9135 FIRST BANK NATIONAL ASSOCIATION By: Name: Michael J. McGroarty Title: Vice President First Bank National Association 601 2nd Avenue South - MPFP0702 Minneapolis, Minnesota 55402-4302 Telephone: (612) 973-0552 Telecopy: (612) 973-0825 Backup Contact: Brenda Everson Commercial Associate First Bank National Association 601 2nd Avenue South - MPFP0702 Minneapolis, Minnesota 55402-4302 Telephone: (612) 973-0653 Telecopy: (612) 973-0825 Person to whom Negotiated Loan correspondence should be addressed: Brenda Everson Commericial Associate First Bank National Association 601 2nd Avenue South - MPFP0702 Minneapolis, Minnesota 55402-4302 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Brenda Everson Commericial Associate First Bank National Association 601 2nd Avenue South - MPFP0702 Minneapolis, Minnesota 55402-4302 Base Rate Loan Funding Office: First Bank National Association First Bank Place 601 2nd Avenue South Minneapolis, Minnesota 55402-4302 Eurodollar Loan Funding Office: First Bank National Association First Bank Place 601 2nd Avenue South Minneapolis, Minnesota 55402-4302 THE FIRST NATIONAL BANK OF BOSTON By: Name: Bethann Halligan Title: Director 100 Federal Street P. O. Box 2016 Boston, Massachusetts 02106-2016 Telephone: (617) 434-0144 Telecopy: (617) 434-0630 or (617) 434-6685 Person to whom Negotiated Loan correspondence should be addressed: Carol Rousseau Account Administrator Telephone: (617) 434-5777 Telecopy: (617) 434-0630 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Carol Rousseau Account Administrator Telephone: (617) 434-5777 Telecopy: (617) 434-0630 Base Rate Loan Funding Office: 100 Federal Street U. S. Corporate Boston, Massachusetts 02106 Eurodollar Loan Funding Office: 100 Federal Street U. S. Corporate Boston, Massachusetts 02106 THE FUJI BANK, LIMITED By: Name: Peter L. Chinnici Title: Joint General Manager 225 West Wacker Drive, Suite 2000 Chicago, Illinois 60606 Telephone: (312) 621-0515 Telecopy: (312) 621-0539 Person to whom Negotiated Loan correspondence should be addressed: James Fayen Assistant Vice President Telephone: (312) 621-0518 Telecopy: (312) 621-0539 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Cely Havarro Loans Administration Telephone: (312) 621-0538 Telecopy: (312) 621-0539 Base Rate Loan Funding Office: The Fuji Bank, Limited 225 West Wacker Drive, Suite 2000 Chicago, Illinois 60606 Eurodollar Loan Funding Office: The Fuji Bank, Limited 225 West Wacker Drive, Suite 2000 Chicago, Illinois 60606 PNC BANK, NATIONAL ASSOCIATION By: Name: Jon C. Otterberg Title: Commercial Banking Officer 500 West Madison Street, Suite 3140 Chicago, Illinois 60661 Telephone: (312) 906-3425 Telecopy: (312) 906-3420 Person to whom Negotiated Loan correspondence should be addressed: Jon C. Otterberg Commercial Banking Officer Telephone: (312) 906-3425 Telecopy: (312) 906-3420 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Tammy Dunn Administrative Secretary Telephone: (312) 906-3403 Telecopy: (312) 906-3420 Base Rate Loan Funding Office: PNC Bank, N.A. Fifth Avenue and Wood Street Pittsburgh, Pennsylvania 15222 Eurodollar Loan Funding Office: PNC Bank, N.A. Fifth Avenue and Wood Street Pittsburgh, Pennsylvania 15222 THE YASUDA TRUST AND BANKING CO., LTD. By: Name: Joseph C. Meek Title: Vice President and Manager 181 West Madison Street, Suite 4500 Chicago, Illinois 60602 Telephone: (312) 683-3800 Telecopy: (312) 683-3899 Telex: 446831 YTBCH Person to whom Negotiated Loan correspondence should be addressed: Douglas Warren Vice President Telephone: (312) 683-3839 Telecopy: (312) 683-3899 Telex: 446831 YTBCH Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Cindy Hartweger Loan Administration Telephone: (312) 683-3853 Telecopy: (312) 683-3899 Telex: 446831 YTBCH Base Rate Loan Funding Office: 181 West Madison Street, Suite 4500 Chicago, Illinois 60602 Eurodollar Loan Funding Office: 181 West Madison Street, Suite 4500 Chicago, Illinois 60602 THE FIRST NATIONAL BANK OF MARYLAND By: Name: James K. Fowler Title: Vice President 25 South Charles Street Baltimore, Maryland 21201 Telephone: (410) 244-4208 Telecopy: (410) 244-4294 Person to whom Negotiated Loan correspondence should be addressed: James K. Fowler Vice President Telephone: (410) 244-4208 Telecopy: (410) 244-4294 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: James K. Fowler Vice President Telephone: (410) 244-4208 Telecopy: (410) 244-4294 Base Rate Loan Funding Office: 25 South Charles Street Baltimore, Maryland 21201 Eurodollar Loan Funding Office: 25 South Charles Street Baltimore, Maryland 21201 ISTITUTO BANCARIO SAN PAOLO DI TORINO, S.P.A. By: Name: William DeAngelo Title: First Vice President 245 Park Avenue New York, NY 10167 Telephone: (212) 692-3150 Telecopy: (212) 599-5303 Telex: 220045 SPAOL UR Person to whom Negotiated Loan correspondence should be addressed: Michele M. von Kroemer Assistant Treasurer Telephone: (212) 692-3196 Telecopy: (212) 599-5303 Telex: 220045 SPAOL UR Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Michele M. von Kroemer Assistant Treasurer Telephone: (212) 692-3196 Telecopy: (212) 599-5303 Telex: 220045 SPAOL UR Base Rate Loan Funding Office: Istituto Bancario san Paolo Bank di Torino, S.p.A., New York Branch 245 Park Avenue New York, New York 10167 Eurodollar Loan Funding Office: Istituto Bancario san Paolo Bank di Torino, S.p.A., New York Branch 245 Park Avenue New York, New York 10167 KREDIETBANK N.V. By: Name: Patricia McCann Title: Vice President By: Name: Robert Snauffer Title: Vice President and Senior Credit Officer 125 West 55th Street, 10th Floor New York, New York 10019 Telephone: (212) 541-0733 Telecopy: (212) 956-5580 Telex: MCI 661572 KREDIETNV TRT 177789 KREDIETNV RCA 236777 Person to whom Negotiated Loan correspondence should be addressed: Lynda Resuma Assistant Treasurer Telephone: (212) 541-0657 Telecopy: (212) 956-5580 Telex: MCI 661572 KREDIETNV TRT 177789 KREDIETNV RCA 236777 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Lynda Resuma Assistant Treasurer Telephone: (212) 541-0657 Telecopy: (212) 956-5580 Telex: MCI 661572 KREDIETNV TRT 177789 KREDIETNV RCA 236777 Base Rate Loan Funding Office, New York: 125 West 55th Street, 10th Floor New York, New York 10019 Eurodollar Loan Funding Office, Grand Caymen: 125 West 55th Street, 10th Floor New York, New York 10019 UNION BANK OF SWITZERLAND - CHICAGO BRANCH By: Name: Walter R. Wolff Title: First Vice President 30 South Wacker Drive, 40th Floor Chicago, Illinois 60606 Telephone: (312) 993-5450 Telecopy: (312) 993-5530 Person to whom Negotiated Loan correspondence should be addressed: Scott K. Werneburg Credit Analyst Telephone: (312) 993-5435 Telecopy: (312) 993-5530 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Scott K. Werneburg Credit Analyst Telephone: (312) 993-5435 Telecopy: (312) 993-5530 Base Rate Loan Funding Office: Union Bank of Switzerland - Chicago Branch 30 South Wacker Drive, 40th Floor Chicago, Illinois 60606 Eurodollar Loan Funding Office: Union Bank of Switzerland - Chicago Branch 30 South Wacker Drive, 40th Floor Chicago, Illinois 60606 WELLS FARGO BANK, N.A. By: Name: John Huber Title: Vice President 420 Montgomery Street San Francisco, California 94163 Telephone: (415) 396-2257 Telecopy: (415) 421-1352 Person to whom Negotiated Loan correspondence should be addressed: John Huber Vice President Telephone: (415) 396-2257 Telecopy: (415) 421-1352 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Gail Landers Telephone: (415) 396-4915 Telecopy: (415) 989-4319 Base Rate Loan Funding Office: Wells Fargo Bank, N.A. 420 Montgomery Street San Francisco, California 94163 Eurodollar Loan Funding Office: Wells Fargo Bank, N.A. 420 Montgomery Street San Francisco, California 94163 BANCA DI ROMA, S.P.A. By: Name: Aurora Pensa Title: Vice President By: Name: Joyce Montgomery Title: Assistant Vice President 225 West Washington Street Chicago, Illinois 60606 Telephone: (312) 368-8855 Telecopy: (312) 726-3058 Telex: 190190 or 190107 Person to whom Negotiated Loan correspondence should be addressed: Aurora Pensa or Margaret Delay Telephone: (312) 704-2630 or (312) 704-2594 Telecopy: (312) 726-3058 Telex: 190190 or 190107 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Vincenza Geraci Telephone: (312) 704-2603 Telecopy: (312) 726-3058 Telex: 190190 or 190107 Base Rate Loan Funding Office: Banca di Roma - Chicago Branch 225 West Washington Street Chicago, Illinois 60606 Eurodollar Loan Funding Office: Banca di Roma - Chicago Branch 225 West Washington Street Chicago, Illinois 60606 COMERICA BANK By: Name: David L. Morrison Title: Account Officer 500 Woodward Avenue, MC 3279 Detroit, Michigan 48226 Telephone: (313) 222-3808 Telecopy: (313) 222-3330 Person to whom Negotiated Loan correspondence should be addressed: Beverly V. Jones Customer Assistant Telephone: (313) 222-3805 Telecopy: (313) 222-3330 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Beverly V. Jones Telephone: (313) 222-3805 Telecopy: (313) 222-3330 Base Rate Loan Funding Office: Comerica Bank 500 Woodward Avenue, MC 3279 Detroit, Michigan 48226 Eurodollar Loan Funding Office: Comerica Bank 500 Woodward Avenue, MC 3279 Detroit, Michigan 48226 BANK OF AMERICA ILLINOIS By: Name: M. Kathleen McVay Title: Authorized Officer 200 West Adams Street, Suite 2800 Chicago, Illinois 60606 Telephone: (312) 269-4644 Telecopy: (312) 269-4540 Person to whom Negotiated Loan correspondence should be addressed: M. Kathleen McVay Senior Vice President Telephone: (312) 269-4644 Telecopy: (312) 269-4540 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Pamela Quebbeman Bank of America Illinois 231 South LaSalle Street Chicago, Illinois 60697 Telephone: (312) 828-3586 Telecopy: (312) 987-5500 Base Rate Loan Funding Office: Bank of America Illinois 231 South LaSalle Street Chicago, Illinois 60697 Eurodollar Loan Funding Office: Bank of America Illinois 231 South LaSalle Street Chicago, Illinois 60697 SCHEDULES AND EXHIBITS to LONG TERM CREDIT AGREEMENT SCHEDULE I BANKS, COMMITMENTS AND TERMINATION DATES (Sections 1.1, 2.7 and 15.4) BANK NAME COMMITMENT TERMINATION DATE The Bank of New York 40,200,000 September 15, 1999 The Bank of Nova Scotia 40,200,000 September 15, 1999 CIBC Inc. 40,200,000 September 15, 1999 NationsBank of North Carolina 40,200,000 September 15, 1999 The Long-Term Credit Bank of Japan, Ltd. 36,850,000 September 15, 1999 Credit Lyonnais Chicago Branch and Credit Lyonnais Cayman Island Branch 33,500,000 September 15, 1999 The First National Bank of Chicago 33,500,000 September 15, 1999 Banca Commerciale Italiana, Chicago Branch 20,100,000 September 15, 1999 The Dai-Ichi Kangyo Bank, Ltd., Chicago Branch 20,100,000 September 15, 1999 The Mitsubishi Bank, Limited, Chicago Branch 20,100,000 September 15, 1999 Bank of America National Trust and Savings Association 16,750,000 September 15, 1999 Bank of America Illinois 16,750,000 September 15, 1999 The Northern Trust Company 16,750,000 September 15, 1999 The Sakura Bank, Ltd. 16,750,000 September 15, 1999 The Sanwa Bank, Limited, Chicago Branch 16,750,000 September 15, 1999 Swiss Bank Corporation 16,750,000 September 15, 1999 U.S. National Bank of Oregon 16,750,000 September 15, 1999 Union Bank 16,750,000 September 15, 1999 ABN AMRO Bank N.V. 13,400,000 September 15, 1999 First Bank Natioanl Association 13,400,000 September 15, 1999 The First National Bank of Boston 13,400,000 September 15, 1999 The Fuji Bank, Limited 13,400,000 September 15, 1999 PNC Bank, National Association 13,400,000 September 15, 1999 The Yasuda Trust and Banking Co., Ltd. 13,400,000 September 15, 1999 The First National Bank of Maryland 10,050,000 September 15, 1999 Istituto Bancario San Paolo di Torino, S.p.A., New York Branch 10,050,000 September 15, 1999 Kredietbank N.V. 10,050,000 September 15, 1999 Union Bank of Switzerland, Chicago Branch 10,050,000 September 15, 1999 Wells Fargo Bank, N.A. 10,050,000 September 15, 1999 Banca di Roma, S.P.A. 6,700,000 September 15, 1999 Comerica Bank 6,700,000 September 15, 1999 603,000,000 SCHEDULE IA SPECIAL COMMITMENT FEE (Section 6.5(b)) BANK NAME COMMITMENT The Bank of New York 19,090,908 The Bank of Nova Scotia 19,090,908 CIBC Inc. 19,090,908 NationsBank of North Carolina 19,090,908 Bank of America National Trust and Savings Association 15,909,092 Bank of America Illinois 15,909,092 The Long Term Credit Bank of Japan, Ltd. 9,545,455 Credit Lyonnais Chicago Branch and Credit Lyonnais Cayman Island Branch 19,090,908 The First National Bank of Chicago 9,545,455 Banca Commerciale Italiana, Chicago Branch 6,363,636 The Dai-Ichi Kangyo Bank, Ltd., Chicago Branch 12,727,273 The Mitsubishi Bank, Limited, Chicago Branch 12,727,273 The Northern Trust Company 12,727,273 The Sakura Bank, Ltd. 12,727,273 The Sanwa Bank, Limited, Chicago Branch 12,727,273 Swiss Bank Corporation 9,545,455 U.S. National Bank of Oregon 9,545,455 Union Bank 6,363,636 ABN AMRO Bank N.V. 12,727,273 First Bank National Association 3,181,818 The First National Bank of Boston 9,545,455 The Fuji Bank, Limited 0 PNC Bank, National Association 3,181,818 The Yasuda Trust and Banking Co., Ltd. 9,545,455 The First National Bank of Maryland 6,363,636 Istituto Bancario San Paolo di Torino, S.p.A., New York Branch 9,545,455 Kredietbank N.V. 9,545,455 Union Bank of Switzerland, Chicago Branch 9,545,455 Wells Fargo Bank, N.A. 0 Banca di Roma, S.P.A. 6,363,636 Comerica Bank 6,363,636 327,727,273 SCHEDULE II LITIGATION (Section 10.5) NONE SCHEDULE III LIENS (Section 10.7) 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 financial statements referred to in Section 10.4. 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 sheets included in the financial statements referred to in Section 10.4 classified as assets and obligations, respectively, under capital leases and similar such liens which may have been incurred in connection with the acquisition of assets after July 2, 1994. 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. Other liens incurred in the ordinary course of business which in the aggregate do not exceed $2,000,000. SCHEDULE IV SUBSIDIARIES AND RESTRICTED SUBSIDIARIES (Section 10.8) Set forth below is a list of all Subsidiaries of the Company as of September 15, 1994: American Delivery Service Company (Del.) Continental Transportation, Inc. (Del.) Brandywine DC, Inc. (Fla.) Brettward Properties Co., Inc. (Md.) Furniture Investors, Inc. (Del.) Huga Realty Inc. (Del.) Jefferson Stores, Inc. (Nev.) JRI Distributing, Inc. (Del.) LMR Acquisition Corporation (Mass.) Lechmere, Inc. (Mass.) Marcor Housing Systems, Inc. (Del.) Marinco Insurance U.S.A., Inc. (Vermont) 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.) 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 Ltda. (Brazil) Montgomery Ward Properties Corporation (Del.) 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.) Greater California Dental Plan (Calif.) I.S.S. Agency, Inc. (Del.) Montgomery Ward Auto Club, Inc. (Del.) Montgomery Ward Enterprises, Inc. (Del.) SignatureCard, Inc. (Ind.) 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 Services, 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. SCHEDULE V POST-RETIREMENT WELFARE PLAN BENEFITS (Section 10.9) The contents of footnote 6, entitled "Retirement Plans," to the Company's audited consolidated financial statements as at January 1, 1994 are incorporated herein by reference which footnote addresses the Montgomery Ward & Co., Incorporated Comprehensive Health Care Plan and certain matters related thereto. SCHEDULE VI SCHEDULE OF TAX SHARING ARRANGEMENTS AMONG PARENT AND ITS SUBSIDIARIES (Section 11.5) The following principles shall be applied with respect to the Parent and its Subsidiaries in allocating tax liability and tax benefits relating to federal, state, local and foreign taxes: (a) Payments shall be permitted to be made between members of an affiliated group filing a federal consolidated return, within the meaning of the federal income tax laws and the regulations thereunder, to effectuate an allocation of the tax liability among members of the affiliated group in accordance with the principles set forth in 26 C.F.R. paragraph 1.1552-1 and 26 C.F.R. paragraph 1.1502-33(d) and related regulations. 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. (b) The principles described in (a) above may be modified to the extent necessary to permit allocation of tax liability to any member on the basis of what would be that member's stand-alone tax liability, notwithstanding technical considerations set forth in the regulations. (c) The determinations of the allocations for tax liability pursuant to this Schedule shall be made in the manner determined by the Parent or the Company, without regard to the actual manner of dealing with the taxing authorities. (d) The principles applied pursuant to this Schedule shall in all material respects be consistently applied from year to year. Reference herein to tax liabilities include items of negative tax liability, i.e., tax benefits. SCHEDULE VII MANAGEMENT INVESTORS (Section 1.1) 1. Dominic M. Mangone 2. Mary Jo Marando as Trustee of the Joseph Mangone Trust dated June 19, 1988 3. Mary Jo Marando as Trustee of the Elizabeth Mangone Trust dated June 19, 1988 4. Mary Jo Marando as Trustee of the Gina Mangone Trust dated June 19, 1988 5. Mary Jo Marando as Trustee of the Michael Marando Trust dated June 19, 1988 6. Daniel F. Darr 7. John Bevan 8. William J. McCarthy 9. Henry Goldsmith 10. William Marginson 11. Larry J. Farrar 12. Daniel H. Levy 13. The Alan Mark Levy Irrevocable Trust dated July 11, 1988 14. The Michael Scott Levy Irrevocable Trust dated July 11, 1988 15. Donald L. Docken and Kathleen S. Docken, Trustees or their successors in trust under the Donald L. Docken Living Trust dated December 21, 1991 16. Malvin Pavik 17. Alvin Pavik, as Trustee of the Malvin Pavik Family Trust under Trust Agreement dated September 30, 1988 18. Alvin Pavik, as Trustee of the Alan C. Pavik Trust under Trust Agreement dated September 30, 1988 19. Alvin Pavik, as Trustee of the James A. Pavik Trust under Trust Agreement dated September 30, 1988 20. Alvin Pavik, as Trustee of the Paul T. Pavik Trust under Trust Agreement dated September 30, 1988 21. Alvin Pavik, as Trustee of the Debra L. Porter Trust under Trust Agreement dated September 30, 1988 22. Alvin Pavik, as Trustee of the Joan L. Geckle Trust under Trust Agreement dated September 30, 1988 23. Alvin Pavik, as Trustee of the Linda A. Pavik Trust under Trust Agreement dated September 30, 1988 24. Alvin Pavik, as Trustee of the Douglas T. Pavik Trust under Trust Agreement dated September 30, 1988 25. Alvin Pavik, as Trustee of the Kimberly S. Pavik Trust under Trust Agreement dated September 30, 1988 26. Alvin Pavik, as Trustee of Pavik Discretionary Trust under Trust Agreement dated December 9, 1988 27. Harold D. Kahn 28. Leslie A. Ball 29. Elizabeth Hebb-Sweney SCHEDULE VIII FINDER'S LIST (Section 1.1) "Adjusted Commitment" - used in Section 8.2(a)(B). "Administrative Agent" - used throughout. "Advisory Agent" - used in the Preamble and in definition of Agent. "Affiliate" - used in definition of Funding Office and in Sections 10.12, 11.2(viii), 14.7, 15.4(a)(iii) and 15.4(d). "Agent(s)" - used throughout. "Agent Parties" - used in Section 14.2. "Aggregate Commitment" - used in definition of Termination Date and in Sections 2.2(b), 2.6(b), 2.7, 4.2 and 6.5(a). "Agreement" - used throughout. "Applicable Agent" - used in Sections 8.1(a), 8.4, 9.1(b), 14.4, 15.2(a) and 15.4. "Assignee(s)" - used in Sections 8.2(c), 14.4(b), 14.6, 15.4(b) and 15.4(d). "Assignment" - used in definition of Funding Office and in Section 15.4(b). "Authorized Officer" - used in Sections 2.7(a), 11.1(c), 11.1(i), 11.6(iii) and 12.1(a). "Bank(s)" - used throughout. "Bank Parties" - used in Section 15.6. "Base Rate" - used in definition of Base Rate Loan and in Sections 3.4, 6.1, 6.8 and 14.4. "Base Rate Loan" - used throughout. "Business Day" - used throughout. "Capital Base" - used in definition of Total Capitalization. "Capitalized Lease Obligations" - used in definition of Debt. "Change" - used in Section 9.1(b). "Change of Control" - used in Sections 5, 9.5, 11.1(h), 11.6(vii) and 13.1(h). "Class A Common Stock" - used in definitions of Management Investor and Outstanding Original Shares and in Section 13.1(h). "Code" - used in definitions of ERISA, ERISA Affiliate and in Sections 10.9 and 11.8. "Commitment" - used throughout. "Company" - used throughout. "Company Register" - used in Section 8.5. "Conditional Sale Obligations" - used in definition of Indebtedness for Borrowed Money. "Consolidated Net Income" - used in definition of Ratio of Earnings to Fixed Charges and in Sections 11.3, 11.5(ii) and 15.3(b). "Consolidated Shareholder's Equity" - used in definition of Capital Base and in Sections 11.3 and 15.3(b). "Continue", "Continuation" and "Continued" - used in definition of Interest Period and in Sections 1.2, 7.2, 9.3, 9.5, 12.2 and 15.2(a). "Conversion Notice" - used in Sections 6.4(b) and 7.2. "Convert", "Conversion" and "Converted" - used in definition of Interest Period and in Sections 1.2, 6.3, 7.2, 9.3, 9.5, 12.2 and 15.2(a). "Corporate Transactions" - used in Section 11.6. "Debt" - used in definition of Total Capitalization and in Sections 11.4, 11.6, 11.17, 11.18 and 15.3(b). "Debt-Like Preferred Stock" - used in definition of Total Capitalization and Sections 11.5, 11.18 and 13.1(h). "Displaced Loans" - used in Section 6.6. "Documentary Agent" - used in Preamble and in Sections 12.1, 15.5(a) and 15.11. "Dollar(s)" and the sign "$" - used throughout. "Effective Date" - used throughout. "Equalization Amount" - used in Section 8.4(c). "ERISA" - used in definitions of ERISA Affiliate, Finance Obligations, Multiemployer Plan, PBGC, Plan, Reportable Event and Welfare Plan, and in Sections 10.9 and 11.8. "ERISA Affiliate" - used in definition of Multiemployer Plan and Plan and in Sections 10.9 and 11.8. "Eurocurrency Reserve Percentage" - used in the definition of Eurodollar Rate (Reserve Adjusted). "Eurodollar Loan" - used throughout. "Eurodollar Margin Increment" - used in Sections 6.1(b), 6.2, 6.3 and 6.9. "Eurodollar Rate" - used in various definitions and in Sections 6.1(b), 6.4(b), 7.1(a), 7.2, 9.1(a), 9.3 and 9.6(a). "Eurodollar Rate (Reserve Adjusted)" - used in various definitions and in Section 9.1. "Event of Default" - used throughout. "Existing Credit Agreements" - used in Sections 10.18 and 12.1. "Existing Termination Date" - used in Section 2.7. "Extension Banks" - used in Section 2.7. "Extension Reply" - used in Section 2.7. "Extension Request" - used in Section 2.7. "FAS 106 Capital Base Factor" - used in definition of Capital Base. "FAS 106 Minimum Equity Factor" - used in Section 11.3. "FAS 106 Restricted Payment Factor" - used in Section 11.5. "Federal Funds Rate" - used in definition of Base Rate and in Sections 4.3, 7.1(i) and 14.4. "Fee Increase" - used in Section 6.9. "Finance Obligations" - used in Section 13.1(c). "Fiscal Quarter" - used throughout. "Fiscal Year" - used throughout. "Fixed Rate Loan(s)" - used in Sections 6.1, 8.1, 9.2, 9.4, 9.5 and 9.6. "Funding Date" - used in definition of Interest Period and in Sections 1.2, 4.3, 6.1, 7.1, and 14.4. "Funding Office" - used in definition of Base Rate and in Sections 3.3, 3.4, 4.3, 7.1, 8.4, 9.1, 9.2 and 9.6. "GAAP" - used throughout. "GE Capital" - used in definitions of MWCC Receivables Purchase Agreement and Qualified Purchaser. "Group" - used in Sections 1.2, 2.2, 7.2, 8.1 and 8.5. "Guaranty" - used in definitions of Debt, Finance Obligations, Indebtedness for Borrowed Money, MWCC Receivables Purchase Agreement. "Indebtedness for Borrowed Money" - used in definitions of Debt and Finance Obligation and in Section 11.2(xix). "Indemnified Liabilities" - used in Section 15.6. "Interest Period" - used throughout. "Liabilities" - used in definitions of Debt-Like Preferred Stock and Subordinated Debt and in Sections 5, 8.2, 8.3, 8.4, 11.6(i), 13.2, 14.2, 15.4(e) and 15.6. "Lien" - used in definition of Indebtedness for Borrowed Money and in Sections 10.2, 10.6, 10.7, 11.2, 11.6(i) and 13.1(h). "Litigation" - used in definition of Material Litigation and in Section 11.1(g). "Loan Request" - used in Sections 4.3(b), 6.4(b), 7.1 and 15.2. "Loans" - used throughout. "Management Investor" - used in definitions of Outstanding Original Shares and Qualified Purchaser. "Margin Stock" - used in Sections 10.12, 11.16 and 15.7. "Master Register" - used in Sections 8.5 and 15.2(a). "Material Litigation" or "Material Litigation Development" - used in Section 10.5. "Mobil" - used in Section 10.14(c). "MWCC" - used in definition of MWCC Receivables Purchase Agreement and in Sections 13.1(j) and 15.3(c). "MWCC Receivables Purchase Agreement" - used in definition of Material Litigation and in Sections 11.1, 11.2, 13.1 and 15.3. "Multiemployer Plan" - used in Section 11.8. "Negotiated Loan Agent" - used in Preamble and in definitions of Applicable Agent and Funding Office and in Sections 2.7(a), 4.3, 4.4, 8.2(b), 8.5, 9.3(b) and 9.5. "Negotiated Loan Confirmation" - used in definitions of Funding Office, Interest Period and Loan Request and in Sections 4.3, 4.4, 6.8, 8.1(b), 9.3, 9.8 and 15.2. "Negotiated Loan Register" - used in Section 8.5. "Negotiated Loans" - used throughout. "Negotiated Note(s)" - used in definition of Notes and in Sections 4.5, 12.1(ii) and 15.4(b). "Non-Restricted Subsidiary" - used throughout. "Non-United States Person" - used in Sections 8.4(b) and 15.4(b). "Notes" - used throughout. "Outstanding Original Shares" - used in definition of Change of Control. "Parent" - used in definitions of Change of Control, Class A Common Stock, Management Investors, Outstanding Original Shares, Parent Shareholder's Agreement, Qualified Purchaser and Total Capitalization and in Sections 10.5, 10.12, 10.14(b), 11.1(e), 11.1(g), 11.5, 11.5(vi), 11.5(y), 13.1(c), 13.1(h) and 15.4(c). "Parent Shareholders' Agreement" - used in the definition of Outstanding Original Shares. "Participant(s)" - used in Sections 8.2, 14.6 and 15.4. "Payment Sharing Notice" - used Sections 8.2 and 8.5(b). "PBGC" - used in Section 11.8. "Percentage" - used in Section 2.1, 2.2(a), 7.2(a), 8.1(b) and 8.5(b). "Permitted Lien" - used throughout. "Person" - used throughout. "Plan" - used in Sections 10.9 and 11.8. "Qualified Purchaser" - used in definition of Change of Control. "Ratio of Earnings to Fixed Charges" - used in definition of Ratio Period and in Sections 6.2, 6.5, 6.9, 11.3 and 15.3(b). "Ratio Period" - used throughout. "Reference Banks" - used definition of Eurodollar Rate and in Sections 6.4 and 9.3. "Regulation D" - used in definition of Eurocurrency Reserve Percentage and in Sections 9.1 and 9.2. "Regulation U" - used in definition of Margin Stock and in Sections 10.12, 11.16 and 15.7. "Regulation X" - used in definition of Margin Stock and Section 10.12. "Renewal Date" - used in Section 2.7. "Renewed Termination Date" - used in Section 2.7. "Replacement Agreement" - used in Section 15.4(e). "Replacement Bank" - used in Section 15.4(d). "Reply Date" - used in Section 2.7. "Reportable Event" - used throughout. "Required Banks" - used in definition of Subordinated Debt and in Sections 5, 9.3(b), 11, 12.1(a), 12.2, 13.1(j), 13.2, 14.1, 14.3, 14.8, 15.1 and 15.5(a). "Restricted Payment" - used in definition of Total Capitalization and in Section 11.5. "Restricted Subsidiary" - used throughout. "Revolving Loans" - used throughout. "Revolving Loan Request" - used in Section 7.1. "Revolving Note" - used throughout. "Risk-Based Capital Guidelines" - used in Section 9.1(b). "SEC" - used in definition of Change of Control and Section 11. "Secured Indebtedness" - used in Section 11.2(xix). "Short Term Credit Agreement" - used in definition of Existing Credit Agreements and in Sections 2.7, 3.2, 11.2(xii), 12.1(a)(i), 12.1(b), 13.1(k), 15.4(b) and 15.4(e). "Special Commitment Fee Termination Date" - used in Section 6.5(b). "Special Restricted Subsidiary" - used in Section 13.1. "Subordinated Debt" - used in definitions of Capital Base, Debt and Total Capitalization and in Section 11.17. "Subsidiary" - used throughout. "Successor to Parent" - used in definition of Parent and in Section 13.1(h). "Swing Loan(s)" - used throughout. "Swing Loan Bank" - used in Sections 3.3, 3.4, 3.6 and 8.1. "Swing Loan Percentage" - used in Section 3.6. "Swing Loan Request" - used in definition of Loan Request and in Section 3.3. "Swing Note(s)" - used in definition of Notes and in Section 3.5, 12.1(a)(ii) and 15.4(b). "Tax Benefit" - used in Section 8.4(c). "Taxes" - used in Section 8.4. "Terminated Bank" - used in Section 15.4(e). "Termination Date" - used in definitions of Interest Period and Subordinated Debt and in Sections 2.1, 2.4, 2.7, 3.4, 4.4, 6.3, 6.5 and 6.6. "Total Capitalization" - used in Sections 11.4, 11.6 and 15.3(b). "Type" - used in definition of Funding Office and in Sections 1.2, 6.8, 7.2 and 8.5. "Unmatured Event of Default" - used in definition of Restricted Subsidiary and in Sections 2.7(e), 10.15, 11.1, 11.5, 11.6, 11.17, 11.18, 12.1, 12.2(a), 14.5, 14.8(b) and 15.4(e). "Unused" - used in Sections 2.2(a), 3.2, 6.5 and 6.6. "Welfare Plan" - used in Section 10.9. EXHIBIT A FORM OF REVOLVING NOTE (Section 2.5) $ September 15, 1994 Chicago, Illinois FOR VALUE RECEIVED, the undersigned hereby promises to pay to the order of (the "Bank") at the office of the Administrative Agent specified in the Credit Agreement hereinafter referred to, the principal amount of DOLLARS ($ ) or, if less, the aggregate unpaid principal amount of all Revolving Loans made by the Bank to the undersigned pursuant to the Credit Agreement (as shown in the records of the Bank or, at the Bank's option, on the schedule attached hereto and any continuation thereof). The principal amount of each Revolving Loan evidenced hereby shall be payable on or before the Bank's Termination Date. The undersigned further promises to pay interest on the unpaid principal amount of each Revolving Loan evidenced by this Note from the date of such Revolving Loan until such Revolving Loan is paid in full, payable at such rate(s) and at such time(s) as provided in the Credit Agreement. This Note evidences indebtedness incurred under, and is sub- ject to the terms and provisions of, the Long Term Credit Agreement dated as of September 15, 1994 (as the same may be amended, modified or supplemented from time to time, the "Credit Agreement"), among the undersigned, certain banks (including the Bank) and certain agents (including the Administrative Agent), to which Credit Agreement reference is hereby made for a statement of said terms and provisions. Terms used but not otherwise defined herein are used herein as defined in the Credit Agreement. In addition to and not in limitation of the foregoing, but subject to the provisions of the Credit Agreement, the undersigned further agrees to pay on demand all attorneys' fees and legal expenses (including allocated costs of staff counsel) incurred by the holder of this Note in connection with the enforcement of this Note, and any and all amendments, modifications, replacements or restatements relating to this Note. This Note is made under and governed by the laws of the State of Illinois without regard to conflict of laws principles. MONTGOMERY WARD & CO., INCORPORATED By Title Schedule attached to Revolving Note dated September 15, 1994 of MONTGOMERY WARD & CO., INCORPORATED payable to the order of . Date of Loan, Interest Conversion or Interest Amount of Rate Per Amount ofNotation Continuation Period Loan Annum Payment Made By EXHIBIT B FORM OF EXTENSION REQUEST (Section 2.7) [Date] THE FIRST NATIONAL BANK OF CHICAGO, individually and as Documentary Agent One First National Plaza Chicago, Illinois 60670 THE BANK OF NOVA SCOTIA, individually and as Administrative Agent 600 Peachtree Street NE, Suite 2700 Atlanta, Georgia 30308 THE BANK OF NEW YORK, individually and as Negotiated Loan Agent One Wall Street New York, New York 10286 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, individually and as Advisory Agent 600 Peachtree Street NE, Suite 2700 Atlanta, Georgia 30308 The Banks listed on Schedule I attached hereto and parties to the Credit Agreement referred to below Gentlemen: This constitutes an Extension Request pursuant to the Long Term Credit Agreement dated as of September 15, 1994 (as amended, modified or supplemented, the "Credit Agreement"), among Montgomery Ward & Co., Incorporated (the "Company"), the banks named therein and the agents named therein. Terms not otherwise expressly defined herein shall have the meanings set forth in the Credit Agreement. The Company hereby requests that the Termination Date be extended to ________________, 19__. The Company hereby further requests that you indicate your consent to this requested extension by executing both copies of the enclosed Extension Reply and returning one copy to the Company and one copy to The Bank of Nova Scotia by not later than _____________, 19___. Very truly yours, MONTGOMERY WARD & CO., INCORPORATED By: Its: SCHEDULE I To Extension Request dated ______________, 19__ EXHIBIT C FORM OF EXTENSION REPLY (Section 2.7) [Bank's Letterhead] [Dated on or before the Reply Date] Montgomery Ward & Co., Incorporated Montgomery Ward Plaza 844 North Larrabee Chicago, Illinois 60671 Attention: Treasurer The Bank of Nova Scotia, as Administrative Agent 600 Peachtree Street NE, Suite 2700 Atlanta, Georgia 30308 Re: Montgomery Ward & Co., Incorporated Ladies and Gentlemen: The undersigned, pursuant and subject to the provisions of that certain Long Term Credit Agreement dated as of September 15, 1994 (as amended, modified or supplemented, the "Credit Agreement"), among Montgomery Ward & Co., Incorporated (the "Company"), the banks named therein and the agents named therein hereby [consents to] [does not consent to] the Extension Request of the Company dated , 19 . Very truly yours, [name of Bank] By: Its: EXHIBIT D FORM OF SWING NOTE (Section 3.5) $ September 15, 1994 Chicago, Illinois FOR VALUE RECEIVED, the undersigned hereby promises to pay to the order of ____________________________ (the "Bank") at the Bank's office specified in the Credit Agreement hereinafter referred to, the principal amount of DOLLARS ($__________) or, if less, the aggregate unpaid principal amount of all Swing Loans made by the Bank to the undersigned pursuant to the Credit Agreement (as shown in the records of the Bank or, at the Bank's option, on the schedule attached hereto and any continuation thereof). The principal amount of each Swing Loan evidenced hereby shall be payable on the dates specified in the Credit Agreement and in any event, on or before the Bank's Termination Date. The undersigned further promises to pay interest on the unpaid principal amount of each Swing Loan evidenced by this Note from the date of such Swing Loan until such Swing Loan is paid in full, payable at such rate(s) and at such time(s) as provided in the Credit Agreement. This Note evidences indebtedness incurred under, and is sub- ject to the terms and provisions of, the Long Term Credit Agreement dated as of September 15, 1994 (as the same may be amended, modified or supplemented from time to time, the "Credit Agreement"), among the undersigned, certain banks (including the Bank) and certain agents, to which Credit Agreement reference is hereby made for a statement of said terms and provisions. Terms used but not otherwise defined herein are used herein as defined in the Credit Agreement. In addition to and not in limitation of the foregoing, but subject to the provisions of the Credit Agreement, the undersigned further agrees to pay on demand all attorneys' fees and legal expenses (including allocated costs of staff counsel) incurred by the holder of this Note in connection with the enforcement of this Note, and any and all amendments, modifications, replacements or restatements relating to this Note. This Note is made under and governed by the laws of the State of Illinois without regard to conflict of laws principles. MONTGOMERY WARD & CO., INCORPORATED By_________________________________ Title______________________________ Schedule attached to Swing Note dated September 15, 1994 of MONTGOMERY WARD & CO., INCORPORATED payable to the order of ___________________________. Interest Date of Maturity Amount of Rate Per Amount of Notation Loan Date Loan Annum Payment Made By EXHIBIT E FORM OF NEGOTIATED NOTE (Section 4.5) $__________________________ September 15, 1994 Chicago, Illinois FOR VALUE RECEIVED, the undersigned hereby promises to pay to the order of (the "Bank") at the office of the Negotiated Loan Agent specified in the Credit Agreement hereinafter referred to, the principal amount of ______________ MILLION DOLLARS ($________________) or, if less, the aggregate unpaid principal amount of all Negotiated Loans made by the Bank to the undersigned pursuant to the Credit Agreement (as shown in the records of the Bank or, at the Bank's option, on the schedule attached hereto and any continuation thereof). The principal amount of each Negotiated Loan evidenced hereby shall be payable at the expiration of the Interest Period applicable thereto and, in any event, on or before the Bank's Termination Date. The undersigned further promises to pay interest, at the office of the Bank specified in the Credit Agreement, on the unpaid principal amount of each Negotiated Loan from the date of such Negotiated Loan until such Negotiated Loan is paid in full, payable at such rate(s) and at such time(s) as provided in the Credit Agreement. This Note evidences indebtedness incurred under, and is subject to the terms and provisions of, the Long Term Credit Agreement dated as of September 15, 1994 (as the same may be amended, modified or supplemented from time to time, the "Credit Agreement"), among the undersigned, certain banks (including the Bank) and certain agents (including the Negotiated Loan Agent), to which Credit Agreement reference is hereby made for a statement of said terms and provisions. Terms used but not otherwise defined herein are used herein as defined in the Credit Agreement. In addition to and not in limitation of the foregoing, but subject to the provisions of the Credit Agreement, the undersigned further agrees to pay on demand all attorneys' fees and legal expenses (including allocated costs of staff counsel) incurred by the holder of this Note in connection with the enforcement of this Note and any and all amendments, modifications, replacements or restatements relating to this Note. This Note is made under and governed by the laws of the State of Illinois without regard to conflict of laws principles. MONTGOMERY WARD & CO., INCORPORATED By_________________________________ Title______________________________ Schedule attached to Negotiated Loan Note dated September 15, 1994 of MONTGOMERY WARD & CO., INCORPORATED payable to the order of ______________________________. Date Interest of Interest Maturity Amount of Rate Per Amount ofNotation Loan Period Date Loan Annum Payment Made By EXHIBIT F FORM OF REVOLVING LOAN REQUEST (Section 7.1) ____________________, 19__ THE BANK OF NOVA SCOTIA, as Administrative Agent Atlanta Agency 600 Peachtree Street NE, Suite 2700 Atlanta, Georgia 30308 Attention: __________________ Ladies and Gentlemen: This constitutes a Revolving Loan Request for Revolving Loans under and as defined by the Long Term Credit Agreement, dated as of September 15, 1994 (as amended, modified or supplemented, the "Credit Agreement"), among Montgomery Ward & Co., Incorporated (the "Company"), the Banks and Agents referred to therein and The Bank of Nova Scotia, as Administrative Agent. Terms not otherwise expressly defined herein shall have the meanings set forth in the Credit Agreement. The Company hereby requests the following Revolving Loans, on the terms and subject to the conditions of the Credit Agreement: (a) Aggregate Principal Amount: $_______________. (b) Funding Date:_______________, 19__. (c) Type of Loan: [Eurodollar Loan] [Base Rate Loan] [(d) Interest Period:_______________ months.] The Company hereby certifies, represents and warrants to the Agents and the Banks as follows: (i) no Event of Default or Unmatured Event of Default has occurred and is continuing as of the date hereof or shall result from the making of the Loans requested hereby, (ii) the Company's representations and warranties contained in Sections 10.1, 10.2, 10.3, 10.4(a), 10.7, 10.10, 10.11, 10.12, 10.15, and 10.18 of the Credit Agreement shall be true and correct as of the Funding Date of the Loans requested hereby with the same effect as though made on such date, and (iii) all conditions to the making of the Loans requested herein will be satisfied as of the Funding Date of such requested Loans. Very truly yours, MONTGOMERY WARD & CO., INCORPORATED By:___________________________ Its:_______________________________ cc: The Bank of Nova Scotia Chicago Representative Office 181 West Madison Street, Suite 3700 Chicago, Illinois 60602 EXHIBIT G FORM OF SWING LOAN REQUEST (Section 3.3) , 19__ THE BANK OF NOVA SCOTIA, as Administrative Agent Atlanta Agency 600 Peachtree Street NE, Suite 2700 Atlanta, Georgia 30308 Attention: ______________________, as Swing Loan Bank [Address] Ladies and Gentlemen: This constitutes a Swing Loan Request under that certain Long Term Credit Agreement, dated as of September 15, 1994 (as amended, modified or supplemented, the "Credit Agreement"), among Montgomery Ward & Co., Incorporated (the "Company"), and the Banks and Agents referred to therein. Terms not otherwise expressly defined herein shall have the meanings set forth in the Credit Agreement. The Company hereby requests a Swing Loan, subject to the terms of the Credit Agreement, as follows: (a) Funding Date: , 19__. (b) Aggregate principal amount of Loan requested: $ (c) Interest Period ending date: , 19__. The Company hereby certifies, represents and warrants to the Agents and the Banks as follows: (i) no Event of Default or Unmatured Event of Default has occurred and is continuing as of the date hereof or shall result from the making of the Swing Loan requested hereby, (ii) the Company's representations and warranties contained in Sections 10.1, 10.2, 10.3, 10.4(a), 10.7, 10.10, 10.11, 10.12, 10.15, and 10.18 of the Credit Agreement shall be true and correct as of the date of the making of the Swing Loan requested hereby with the same effect as though made on such date, and (iii) all conditions to the making of the Swing Loan requested hereby will be satisfied as of the Funding Date of such requested Swing Loan. Very truly yours, MONTGOMERY WARD & CO., INCORPORATED By: Its: cc: The Bank of Nova Scotia Chicago Representative Office 181 West Madison Street, Suite 3700 Chicago, Illinois 60602 EXHIBIT H FORM OF NEGOTIATED LOAN CONFIRMATION (Section 4.3) , 19__ _____________________, as Negotiated Loan Bank _____________________ _____________________ Ladies and Gentlemen: This constitutes a Negotiated Loan Confirmation under that certain Long Term Credit Agreement, dated as of September 15, 1994 (as amended, modified or supplemented, the "Credit Agreement"), among Montgomery Ward & Co., Incorporated (the "Company") and the Banks and Agents referred to therein. Terms not otherwise expressly defined herein shall have the meanings set forth in the Credit Agreement. The Company hereby confirms its request for a Negotiated Loan, subject to the terms of the Credit Agreement, as follows: (a) Funding Date: , 19__. (b) Principal amount of Negotiated Loan requested: $__________________. (c) Interest Period ending date: , 19__. (d) Interest Rate: ______________; payable on _____________. (e) Interest calculated on a 360 day year or 365 day year . (f) [The Negotiated Loan may be prepaid at any time without premium or penalty]. [Upon the prepayment of the Negotiated Loan prior to maturity, the Company shall also pay the following prepayment premium ____________.] (g) Funding office: ________________________________. (h) Sections 9.1 through 9.6 apply to the Negotiated Loan requested hereby [ ]. (i) Other terms: ____________________________________ _________________________________________________. The Company hereby reaffirms that all provisions of the Credit Agreement, including without limitation Sections 11 and 13 thereof, apply to the Negotiated Loan requested hereby and certifies, represents and warrants to the Agents and the Banks as follows: (i) no Event of Default or Unmatured Event of Default has occurred and is continuing as of the date hereof or shall result from the making of the Negotiated Loan requested hereby, (ii) the Company's representations and warranties contained in Sections 10.1, 10.2, 10.3, 10.4(a), 10.7, 10.10, 10.11, 10.12, 10.15, and 10.18 of the Credit Agreement shall be true and correct as of the date of the making of the Negotiated Loan requested hereby with the same effect as though made on such date, and (iii) all conditions to the making of the Negotiated Loan requested herein have been or will be satisfied as of the Funding Date of such requested Negotiated Loan. Very truly yours, MONTGOMERY WARD & CO., INCORPORATED By: Its: Acknowledged and Agreed this ____ day of ___________ 19__. [Name of Bank] By:__________________________ Its:_________________________ EXHIBIT I FORM OF OFFICER'S CERTIFICATE (Section 11.1(c)) To: The Banks and the Agents parties to the Credit Agreement referred to below This Certificate is furnished pursuant to Section 11.1(c) of the Long Term Credit Agreement, dated as of September 15, 1994 (the "Credit Agreement") among Montgomery Ward & Co., Incorporated, an Illinois corporation (the "Company"), the banks named therein (the "Banks") and the agents named therein (the "Agents"). Capitalized terms used herein but not otherwise defined herein shall have the same meanings as those assigned to them in the Credit Agreement. I hereby certify to the Banks and the Agents, on behalf of the Company, as follows: 1. Since _______________, 19__, I have been the duly qualified and acting ____________ of the Company, and I am familiar with the financial statements and financial affairs of the Company. I am authorized to execute this Certificate on behalf of the Company. 2. A true and correct copy of the [annual audit report] [quarterly unaudited consolidated financial statement] of the Company and its Subsidiaries for the [Fiscal Year] [Fiscal Quarter] ended on _______________, 19__, is attached hereto as Annex A. 3. To the best of my knowledge, as of the date of this Certificate, no Event of Default or Unmatured Event of Default has occurred and is continuing [except as follows: [include description of any such event and the steps being taken, if any, with respect thereto]]. 4. Attached hereto as Annex B is a true and correct computation, to the best of my knowledge, as of the dates referred to therein of the financial ratios and/or financial restrictions contained in Sections 11.3, 11.4 and 11.5 of the Credit Agreement and of the Ratio of Earnings to Fixed Charges. 5. Attached hereto as Annex C is a complete description (to the extent such disclosure would be required to be made by the Company if the Company were a public reporting company under the Securities Exchange Act of 1934, as amended) to the best of my knowledge, as of the date of this Certificate of any Material Litigation which has been instituted or any Material Litigation Development which has occurred since the date of the most recent Officer's Certificate of the Company [or, in the case of the first Officer's Certificate, since the Effective Date]. 6. Attached hereto as Annex D is a true, correct and complete list, to the best of my knowledge, as of the date of this Certificate of any [changes in the list of Restricted Subsidiaries (excluding Special Restricted Subsidiaries) which have occurred since the date of the most recent Officer's Certificate [or, in the case of the first Officer's Certificate, since the Effective Date]] [changes in the list of the Company's Subsidiaries or in the list of Restricted Subsidiaries which have occurred since the date of the Officer's Certificate of the Company dated as of the close of the Company's immediately preceding Fiscal Year [or, in the case of the first Officer's Certificate dated as of the close of the Fiscal Year containing the Effective Date, since the Effective Date]]. IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of _______________, 19__. ___________________________ Name:_________________________ Title:________________________ of Montgomery Ward & Co., Incorporated ANNEX A TO OFFICER'S CERTIFICATE DATED AS OF , 19 [Attach copy of annual audit report or quarterly unaudited consolidated financial statement, as appropriate] ANNEX B TO EXHIBIT I TO OFFICER'S CERTIFICATE DATED AS OF , 19 1. Section 11.3 - Minimum Consolidated Shareholder's Equity as of the end of Fiscal Year ended as of the date of this Officer's Certificate. (a) 25% of Consolidated Net Income for each complete Fiscal Year ended after January 1, 1994 in which there was income. $______ (b) FAS 106 Minimum Equity Factor $______ (c) $441,000,000 plus Item 1(a) less Item 1(b). $______ (d) The lesser of (i) $800,000,000 less the FAS 106 Minimum Equity Factor or (ii) Item 1(c) is the Minimum Consolidated Shareholder's Equity for the Fiscal Year ended as of the date of this Officer's Certificate. $______ (e) Actual Consolidated Shareholder's Equity of the Company for Fiscal Year ended as of the date of this Officer's Certificate (such amount to be equal to or greater than the amount shown in Item 1(d)). $______ 2. Section 11.3 - Minimum Consolidated Shareholder's Equity at the end of Fiscal Quarter ended as of the date of this Officer's Certificate. (a) 50% of the Consolidated Net Income for each complete Fiscal Year ended after January 1, 1994 in which there was income, and for the period commencing immediately following the close of the last complete Fiscal Year and ending as of the date of this Officer's Certificate. $______ (b) $537,000,000 plus the amount in Item 2(a). $______ (c) The lesser of $1,000,000,000 and Item 2(b) is the Minimum Consolidated Shareholder's Equity for the Fiscal Quarter ended as of the date of this Officer's Certificate. $______ (d) Actual Consolidated Shareholder's Equity of the Company for Fiscal [Year] [Quarter] ended as of the date of this Officer's Certificate (such amount to be equal to or greater than the amount shown in Item 2(c)). $______ 3. Section 11.4 - Debt to Total Capitalization (a) Debt of the Company and Restricted Subsidiaries as of the date of this Officer's Certificate: (i) Indebtedness for Borrowed Money. $______ (ii) Capitalized Lease Obligations. $______ (iii) Without double counting for items covered in (i) and (ii), Capitalized Lease Obligations of Non-Restricted Subsidiaries for which the Company or a Restricted Subsidiary is liable directly or indirectly under a Guaranty. $______ (iv) Subordinated Debt. $______ (v) Items (i) plus (ii) plus (iii) less Item (iv) equals Debt. $______ (b) Capital Base as of the date of this Officer's Certificate: (i) Subordinated Debt. $______ (ii) Consolidated Shareholder's Equity. $______ (iii) FAS 106 Capital Base Factor. $______ (iv) All outstanding advances by the Company to, and investment of the Company in, Non-Restricted Sub- sidiaries. $______ (v) Value of all treasury stock of the Company carried as an asset. $______ (vi) The aggregate amount of all general intangibles of the Company and its Restricted Subsidiaries. $______ (vii) Item 3(b)(i) plus Item 3(b)(ii) plus Item 3(b)(iii) less Items 3(b)(iv), 3(b)(v) and 3(b)(vi) equals the Capital Base. $______ (c) Debt-Like Preferred Stock. $______ (d) Total Capitalization as of the date of this Officer's Certificate - the sum of Debt (Item 3(a)(v)) plus Capital Base (Item 3(b)(vii)) plus Debt-Like Preferred Stock (Item 3(c)) equals Total Capitalization. $______ (e) Debt to Total Capitalization. Divide Debt of Company and Restricted Subsidiaries (Item 3(a)(v)) by Total Capitalization of the Company and Restricted Subsidiaries (Item 3(d)), and express result as a percentage (such percentage is not to exceed (i) 60% as of last day of any Fiscal Quarter or (ii) 50% as of the last day of any Fiscal Year). ______% 4. Ratio of Earnings to Fixed Charges for the Ratio Period ended as of the date of this Officer's Certificate (a) Each of the following items to be for the Company and its Subsidiaries for the Ratio Period ended as of the date of this Officer's Certificate: (i) Net income. $______ (ii) Interest income. $______ (iii) Income taxes. $______ (iv) Interest expense. $______ (v) Depreciation and amortization. $______ (vi) Rental expense. $______ (b) Item 4(a)(i) less Item 4(a)(ii) and plus Items 4(a)(iii), 4(a)(iv), 4(a)(v) and 4(a)(vi). $______ over interest income plus all rental expense for the Company and its Subsidiaries and capital expenditures (other than asset additions under capital leases determined in accordance with GAAP, (except as set forth in Section 15.3)) of the Company and its Subsidiaries payable with respect to the Ratio Period ended as of the date of this Officer's Certificate. $______ (d) Ratio of Earnings to Fixed Charges (ratio of Item 4(b) to Item 4(c)). ___:___ 5. Section 11.5 - Purchase, Redemption, Dividends, etc. (a) The sum of all of the following which have been paid or made subsequent to January 1, 1994 on or before the date of this Officer's Certificate (but excluding any dividends, distributions, purchases, redemptions and other acquisitions or retirements of Debt-Like Preferred Stock of the Company): (i) dividends or distributions on any capital stock of the Company (other than stock dividends or splits), $______ (ii) increase in outstanding loans and advances to the Parent since January 1, 1994, $______ (iii)purchases, redemptions or other acquisitions of any shares of capital stock of the Company by the Company (other than for Debt-Like Preferred Stock), and $______ (iv) purchases, redemptions or other acquisitions of any shares of capital stock of the Company (other than for Debt-Like Preferred Stock) by a Subsidiary. $______ (v) Total Restricted Payments. $______ (b) 50% (or minus 100% in the case of any deficit) of Consolidated Net Income of the Company and its Subsidiaries for the period, taken as one accounting period, from and including January 2, 1994, to the end of the Company's Fiscal Quarter ended as of the date of this Officer's Certificate. $______ (c) Decrease in outstanding loans and advances to the Parent since January 1, 1994. $______ (d) Any capital contributions received by the Company after January 1, 1994. $______ (e) The net proceeds to the Company (in cash or, if the consideration is other then cash, the fair value thereof as determined by the Board of Directors of the Company) of the issue or sale after January 1, 1994 of capital stock, including treasury stock but excluding Debt-Like Preferred Stock, of the Company. $______ (f) An amount equal to the net proceeds to the Company (in cash or, if the consideration is other than cash, the fair value thereof as determined by the Board of Directors) from the issue or sale at any time of any indebtedness of the Company or a Subsidiary which, after January 1, 1994, is converted into shares of capital stock (but excluding Debt-Like Preferred Stock) of the Company or the Parent. $______ (g) FAS 106 Restricted Payment Factor $______ (h) $63,000,000 plus the sum of Items 5(b), 5(c), 5(d), 5(e), 5(f) and 5(g). The amount of this Item 5(h) must be greater than the amount of Item 5(a)(v). $______ ANNEX C TO OFFICER'S CERTIFICATE DATED AS OF , 19 [Description of any Material Litigation or Material Litigation Development to the extent such disclosure would be required to be made by the Company if the Company were a reporting company under the Securities Exchange Act of 1934.] See the [Annual Report on Form 10-K] [Quarterly Report on Form 10-Q] of the [Company] [Parent] for the period ended as of the date of this Officer's Certificate. ANNEX D TO OFFICER'S CERTIFICATE DATED AS OF , 19 Changes in the list of [Restricted Subsidiaries (excluding Special Restricted Subsidiaries)] [Subsidiaries and Restricted Subsidiaries] since the Officer's Certificate dated as of the close of the immediately preceding Fiscal [Quarter*/] [Year**/]: EXHIBIT J FORM OF OPINION OF COUNSEL FOR THE COMPANY (Section 12.1(a)(vi)) [Letterhead of Counsel to the Company] September 15, 1994 THE FIRST NATIONAL BANK OF CHICAGO, individually and as Documentary Agent One First National Plaza Chicago, Illinois 60670 THE BANK OF NOVA SCOTIA, individually and as Administrative Agent 600 Peachtree Street NE, Suite 2700 Atlanta, Georgia 30308 THE BANK OF NEW YORK, individually and as Negotiated Loan Agent One Wall Street New York, New York 10286 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, individually and as Advisory Agent 600 Peachtree Street NE, Suite 2700 Atlanta, Georgia 30308 The Banks listed on Schedule I attached hereto and parties to the Credit Agreement referred to below Gentlemen: We have acted as special counsel to Montgomery Ward & Co., Incorporated, an Illinois corporation (the "Company"), in connection with the negotiation, execution and delivery by the Company of (i) that certain Long Term Credit Agreement (the "Long Term Credit Agreement") dated as of September 15, 1994, among the Company, the banks named therein and listed on Schedule I attached hereto and the agents named therein and listed above, and in connection with the transactions and other documents and instruments described therein or consummated or executed and delivered in connection therewith and (ii) that certain Short Term Credit Agreement (the "Short Term Credit Agreement") dated as of September 15, 1994, among the Company, the banks named therein and listed on Schedule I attached hereto and the agents named therein and listed above, and in connection with the transactions and other documents and instruments described therein or executed and delivered in connection therewith. When terms are capitalized and used herein and are not otherwise defined herein, such terms are used herein and shall have the meanings ascribed to such terms in the Long Term Credit Agreement. In connection with this opinion, we have examined a counterpart of the Long Term Credit Agreement executed by the Company, a counterpart of the Short Term Credit Agreement executed by the Company and executed copies of the notes (the "Notes") being delivered by the Company pursuant to both such agreements. Except as provided below, we have also investigated such questions of law, have made such factual inquiries and have examined the original, certified, conformed or photostatic copies of all such records of the Company and all such documents, certificates of public officials, certificates of officers and representatives of the Company and others, and such other documents, and relied on the same, all as we deem relevant, necessary or appropriate for the opinions hereinafter expressed. As to indicated matters, our opinions as expressed below are based solely upon conclusions as to such matters set forth in the opinion of G. T. Morgan, Esq., Senior Associate General Counsel to the Company, a copy of which is attached hereto as Exhibit A and we have assumed, with your permission, the correctness of the matters set forth therein, except for paragraph 3 of such opinion. Our opinion is, except as otherwise specifically indicated in the preceding sentence, in every respect based upon and subject to the assumptions, qualifications, limitations and matters set forth in said opinion (and the exhibits thereto) attached hereto as Exhibit A, and as otherwise provided herein. On the basis of all of the foregoing, and subject to the additional qualifications, assumptions and limitations set forth below, 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. 2. The execution, delivery and performance by the Company of the Long Term Credit Agreement, the Short Term Credit Agreement and the Notes (a) are within the Company's corporate powers, (b) have been duly authorized by all necessary corporate and other action, (c) do not require any governmental approval which has not been previously obtained (and each such governmental approval that has been previously obtained remains effective), (d) do not conflict with any provision of law, or of any judgment, decree or order, or of the Company's charter or by-laws, and (e) to our knowledge, do not and will not contravene or conflict with, or cause any Lien to arise under, any provision of any agreement binding upon the Company, any material Subsidiary or any of their respective properties. 3. The Long Term Credit Agreement, the Short Term Credit Agreement and the Notes have been duly executed and delivered by the Company and are the legal, valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms except as such enforcement may be limited by the application of bankruptcy, moratorium, reorganization or other laws or legal principles affecting the rights of creditors generally or by general principles of equity (whether or not a proceeding is brought in a court of law or equity). 4. The Company is not an "investment company" or a company "controlled" by an "investment company," within the meaning of the Investment Company Act of 1940, as amended. 5. Neither the Company nor any material Subsidiary 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," within the meaning of the Public Utility Holding Company Act of 1935, as amended. 6. Except as set forth in Schedule II to the Long Term Credit Agreement, in the annual report on form 10-K of the Parent for the fiscal year ended January 1, 1994 or in the quarterly report on form 10-Q of the Parent for the fiscal quarter ended July 2, 1994, no Material Litigation is pending or threatened against the Company. The opinions set forth above are subject to the following additional qualifications: (a) We have assumed, with your permission, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, 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 Long Term Credit Agreement and the Short Term Credit Agreement by the Banks 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 with respect to matters referred to or set forth in paragraphs 1, 2 (except as to that part of paragraph 2(d) which deals with "conflict with any provision of law" (with respect to which we partially relied on said opinion of Mr. Morgan)) and 6 of this letter. As indicated above, said opinion is attached hereto as Exhibit A. (d) 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 law of the State of Illinois and the federal law of the United States. Accordingly, we express no opinion as to the laws of any states, or as to any matter subject to such laws, other than the laws of the State of Illinois. We also do not render any opinion as to whether any state, other than the State of Illinois, would uphold the choice of law provisions in the Long Term Credit Agreement and the Short Term Credit Agreement. (e) 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. (f) 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 Montgomery Ward Holding Corp., a Delaware corporation (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 the Parent. This opinion is delivered pursuant to the Long Term Credit Agreement and the Short Term Credit Agreement and is furnished only to the Agents and the Banks and their Assignees and Participants and their respective counsel, and is solely for their benefit in connection with the above transactions. Very truly yours, SCHEDULE I To Opinion Dated September 15, 1994 of Counsel to the Company EXHIBIT A To Opinion Dated September 15, 1994 of Counsel to the Company [MONTGOMERY WARD & CO., INCORPORATED LETTERHEAD] September 15, 1994 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 Banks in connection with the transactions contemplated by (i) that certain Long Term Credit Agreement ("Long Term Credit Agreement") dated as of September 15, 1994, among the Company, the banks named therein and listed on Schedule I attached hereto and the agents named therein and listed on Schedule II attached hereto, and (ii) that certain Short Term Credit Agreement ("Short Term Credit Agreement") dated as of September 15, 1994, among the Company, the banks named therein and listed on Schedule I hereto and the agents named therein and listed on Schedule II hereto. In connection with this opinion, I have examined a counterpart of the Long Term Credit Agreement executed by the Company, a counterpart of the Short Term Credit Agreement executed by the Company and executed copies of each of the notes (the "Notes") being delivered by the Company pursuant to both such Agreements. Except as provided below, I have also investigated such questions of law, have made such factual inquiries and have examined the original, certified, conformed or photostatic copies of all such records of the Company and all such documents, certificates of public officials, certificates of officers and representatives of the Company and others, and such other documents, all as I deem relevant, necessary or appropriate for the opinions hereinafter expressed. When terms are capitalized and used herein and are not otherwise defined herein, such terms are used herein and shall have the meaning ascribed to such terms in the Long Term Credit Agreement. On the basis of all the foregoing, and subject to the additional qualifications, assumptions and limitations set forth below, 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. 2. The execution, delivery and performance by the Company of the Long Term Credit Agreement, the Short Term Credit Agreement and the Notes (a) are within the Company's corporate powers, (b) have been duly authorized by all necessary corporate and other action, (c) do not require any government approval which has not been previously obtained, (d) do not conflict with any provision of law, or of any judgment, decree or order, or of the Company's charter or by-laws, and (e) to my knowledge, do not and will not contravene or conflict with, or cause any Lien to arise under, any provision of any agreement binding upon the Company, any Subsidiary or any of their respective properties. 3. The Long Term Credit Agreement, the Short Term Credit Agreement and the Notes have been duly executed and delivered by the Company and the Long Term Credit Agreement and the Short Term Credit Agreement are, and any Negotiated Note evidencing an outstanding Negotiated Loan, any Term Note evidencing an outstanding Term Loan and any Swing Note evidencing an outstanding Swing Loan made pursuant to the provisions of the Long Term Credit Agreement or the Short Term Credit Agreement during the period such Loan remains outstanding will be the legal, valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms except as such enforcement may be limited by the application of bankruptcy, moratorium, reorganization or other laws or legal principles affecting the rights of creditors generally or by general principles of equity (whether or not a proceeding is brought in a court of law or equity). 4. Except as set forth in Schedule II to the Long Term Credit Agreement, in the annual report on form 10-K of the Parent for the fiscal year ended January 1, 1994 or in the quarterly report on form 10-Q of the Parent for the fiscal quarter ended July 2, 1994, no Material Litigation is pending or threatened against the Company. The opinions set forth above are subject to the following additional qualifications: (a) I have assumed, with your permission, the genuineness of all signatures, the authenticity of all documents submitted to me as originals, 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 officers and representatives of the Company. (b) I have assumed, with your permission, the due execution and delivery of the Long Term Credit Agreement and the Short Term Credit Agreement by the Banks and all other documents and instruments delivered in connection therewith by each of the parties thereto, other than the Company. (c) 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 the law 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 matter subject to such laws, other than the laws of the State of Illinois. I also do not render any opinion as to whether any state, other than the State of Illinois, would uphold the choice of law provisions in the Long Term Credit Agreement and the Short Term Credit Agreement Documents. (d) I am a shareholder of Montgomery Ward Holding Corp., a Delaware corporation (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. (e) My opinion is limited to the matters expressly set forth herein and no opinion is to be implied or inferred beyond the matters expressly so stated. You, the Banks and the Agents (and their Assignees and Participants) and their respective counsel are entitled to rely on the opinion hereinbefore set forth and you are hereby authorized to attach this letter of opinion as an exhibit to the Loan Opinion delivered pursuant to Section 12.1(a)(vi) of the Long Term Credit Agreement and the Short Term Credit Agreement. Very truly yours, G. T. Morgan, Esq., Senior Associate General Counsel Montgomery Ward & Co., Incorporated SCHEDULE I To Opinion Dated September 15, 1994 of G. T. Morgan, Esq. SCHEDULE II THE FIRST NATIONAL BANK OF CHICAGO, individually and as Documentary Agent One First National Plaza Chicago, Illinois 60670 THE BANK OF NOVA SCOTIA, individually and as Administrative Agent 600 Peachtree Street NE, Suite 2700 Atlanta, Georgia 30308 THE BANK OF NEW YORK, individually and as Negotiated Loan Agent One Wall Street New York, New York 10286 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, individually and as Advisory Agent 600 Peachtree Street NE, Suite 2700 Atlanta, Georgia 30308 EXHIBIT K FORM OF CERTIFICATE AS TO SATISFACTION OF CONDITIONS (Section 12.1(a)(vii)) To: The Banks and the Agents parties to the Credit Agreement referred to below. This Certificate is furnished pursuant to Section 12.1(a)(vii) of the Long Term Credit Agreement, dated as of September 15, 1994 (the "Credit Agreement"), among Montgomery Ward & Co., Incorporated, an Illinois corporation (the "Company"), the banks named therein (the "Banks") and the agents named therein (the "Agents"). Capitalized terms used herein but not otherwise defined herein shall have the same meanings as those assigned to them in the Credit Agreement. I hereby certify to the Banks and the Agents, on behalf of the Company that, I am the duly qualified and acting __________ of the Company, and I am authorized to execute this Certificate on behalf of the Company and I further certify as follows: 1. As of the date hereof no Event of Default or Unmatured Event of Default has occurred and is continuing or shall result from the making of any Loan on the date hereof. 2. The Company's representations and warranties contained in Sections 10.1 through 10.18 are true and correct as of the date hereof. 3. All of the conditions precedent to the Credit Agreement becoming effective, which conditions are set forth in Section 12.1 of the Credit Agreement, have been satisfied as of the date of this Certificate. IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of September, 1994. Name: Title: of Montgomery Ward & Co., Incorporated EXHIBIT L FORM OF ASSIGNMENT AND ACCEPTANCE (Section 15.4(b)) Reference is made to the Long Term Credit Agreement, dated as of September 15, 1994 (herein, as heretofore amended, modified or supplemented, called the "Credit Agreement"), among Montgomery Ward & Co., Incorporated, an Illinois corporation (the "Company"), and the Banks and Agents parties thereto. Terms used but not otherwise defined herein are used herein as defined in the Credit Agreement. (the "Assignor") and (the "Assignee") hereby agree as follows: 1. The Assignee hereby purchases and assumes from the Assignor, and the Assignor hereby sells and assigns and delegates to the Assignee, without recourse and without representation or warranty except as specifically set forth in paragraph 2 below, a ______%1/ interest in and to all of the Assignor's rights, benefits and obligations under the Credit Agreement, including, without limitation, rights of setoff pursuant to Section 8.3 of the Credit Agreement, and obligations to share pursuant to Section 8.2 of the Credit Agreement, which (after giving effect to any other assignments thereof made prior to the date hereof, whether or not such assignments have become effective, but without giving effect to any other assignments thereof also made on the date hereof) is $__________, and also including, without limitation, the same _____% 1/interest in: (a) the aggregate outstanding principal amount of the Revolving Loans, Swing Loans [and Negotiated Loans] owing to the Assignor, which (after giving effect to any other assignments thereof made prior to the date hereof, whether or not such assignments have become effective, but without giving effect to any other assignments thereof also made on the date hereof) is $____________; and (b) the Revolving Note, Swing Note [and Negotiated Note] held by the Assignor. 2. (a) The Assignor represents and warrants that the Assignor has received the Company's consent to this Assignment and Acceptance (a true and correct copy of the letter from the Company evidencing such consent being attached hereto as Annex A). (b) The Assignor represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim. (c) The Assignee acknowledges and agrees that neither the Assignor nor any Agent nor any other Bank makes any representation or warranty or assumes any responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or any other instrument or document furnished pursuant thereto or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant thereto. (d) The Assignee acknowledges and agrees that neither the Assignor nor any Agent nor any other Bank makes any representation or warranty or assumes any responsibility with respect to the financial condition or creditworthiness of the Company or the performance or observance by the Company of any of its obligations under the Credit Agreement or any other instrument or document furnished pursuant thereto. The Assignee acknowledges and agrees that (i) the Assignee has made and will continue to make such inquiries and has taken and will continue to take such care on its own behalf as would have been the case had it made Loans directly to the Company without the intervention of the Assignor, any Agent or any other Person, and (ii) the Assignee has made and will continue to make its own credit analysis and decisions relating to the Credit Agreement independently and without reliance upon the Assignor, any Agent or any other Person, and based on such documents and information as it has deemed appropriate. (e) The Assignor represents and warrants that on the date hereof it is assigning an equal percentage amount of its commitment to make revolving loans and swing loans under the Short Term Credit Agreement as well as the revolving note and swing note evidencing such loans respectively. (f) The Assignor attaches the Revolving Note and Swing Note referred to in paragraph 1(b) above and requests that (i) the Applicable Agent exchange such Notes for new Notes as follows: a Revolving Note dated ______________, 19___ in the principal amount of $___________ payable to the order of the Assignee, a Swing Note dated __________, 19___ in the principal amount of $__________ payable to the order of the Assignee [, a Revolving Note dated __________, 19__ in the principal amount of $__________ payable to the order of the Assignor and a Swing Note dated __________, 19__ in the principal amount of $__________ payable to the order of the Assignor] and (ii) a Negotiated Note dated __________, 19__ in the principal amount of $__________ payable to the order of the Assignee]. (g) No Negotiated Loans are currently owing to the Assignor [except in the outstanding principal amount of $__________]. [(h) The Assignor and the Assignee agree and acknowledge that the assignment made herein shall be supplemented by an assignment supplement of even date herewith with regard to the payment of interest and certain fees between the Assignor and the Assignee which shall include the amount of commitment fees on Loans currently outstanding.] 3. The effective date for this Assignment and Acceptance shall be __________________, 19__ (the "Assignment Date").2/ Following the execution of this Assignment and Acceptance by the Assignor and the Assignee, it will be delivered to the Applicable Agent for acceptance by the Applicable Agent. At such time, if the Assignee is a Non-United States Person, it shall also deliver to the Applicable Agent a written representation and warranty substantially similar to that contained in Section 8.4(b) of the Credit Agreement. Following such acceptance by the Applicable Agent of this Assignment and Acceptance, a photostatic copy hereof shall be delivered to the Company, together with the representation and warranty described above. The Applicable Agent shall deliver the new Notes executed by the Company to the payees thereof and shall mark the Notes referred to in paragraph 1(b) above as "replaced" and shall deliver the same to the Company. 4. Upon such acceptance by the Applicable Agent, as of the Assignment Date, (a) the Assignee shall, in addition to any rights, benefits and obligations under the Credit Agreement held by it immediately prior to the Assignment Date, have the rights, benefits and obligations under the Credit Agreement that have been assigned to it pursuant to this Assignment and Acceptance, and (b) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and benefits and be released from its obligations under the Credit Agreement, except that the Assignor shall remain entitled to the rights and benefits arising under Sections 6, 8.4, 9 and 15.6 of the Credit Agreement, and shall remain liable with respect to any of its obligations arising under Sections 6.9, 8.4(c), 14.2 and 15.5 of the Credit Agreement, with respect to any matters arising prior to the Assignment Date. 5. Upon such acceptance by the Applicable Agent, from and after the Assignment Date, the Applicable Agent shall make all payments under the Credit Agreement and the Revolving Note and Swing Note in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and commitment and other fees with respect thereto) to the Assignee. The Assignor and the Assignee shall make all appropriate adjustments in payments under the Credit Agreement and the Revolving Note, Swing Note [and Negotiated Note] for periods prior to (and, if agreed to, in the case of commitment fees or interest, after) the Assignment Date directly between themselves. 6. After acceptance by the Applicable Agent, the Assignor and the Assignee agree to give written notice of this Assignment and Acceptance to each Bank and each Agent, which written notice shall include the addresses and related information with respect to the Assignee. 7. This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of Illinois without regard to conflict of laws principles. [NAME OF ASSIGNOR] By: Title: [NAME OF ASSIGNEE] By: Title: Accepted this __ day Copies of all notices, etc, of ____________, 19__. should be sent to: [NAME OF APPLICABLE AGENT], as Applicable Agent Attention: By: Telephone: Title: Telecopy: Telex: Base Rate Loan Funding Office: Eurodollar Loan Funding Office: 1/ Specify percentage in no more than 4 decimal points. 2/ See Section 15.4(b). Such date shall be at least five (5) Business Days after the execution of this Assignment and Acceptance. ANNEX A TO ASSIGNMENT AND ACCEPTANCE [Attach a copy of the letter from the Company consenting to this Assignment and Acceptance] EXHIBIT M FORM OF REPLACEMENT AGREEMENT (Section 15.4(e)) This Agreement, dated as of ___________, 19__, constitutes a Replacement Agreement pursuant to Section 15.4(e) of the Long Term Credit Agreement dated September 15, 1994 (as amended, modified or supplemented, the "Credit Agreement"), among Montgomery Ward & Co., Incorporated (the "Company"), the banks named therein and the agents named therein. Terms not otherwise expressly defined herein shall have the meanings set forth in the Credit Agreement. 1. The Company hereby (a) represents and warrants that no Event of Default or Unmatured Event of Default has occurred and is continuing, and (b) concurrently herewith agrees to pay all Liabilities of the Company now outstanding to ___________________ (the "Terminated Bank") (including without limitation all such amounts due the Terminated Bank under Sections 6, 8.4, 9, 15.5 and 15.6 of the Credit Agreement), which Liabilities on the date hereof are $ . 2. All obligations of the Terminated Bank (excluding any obligations arising under Sections 6.9, 8.4(c), 14.2 and 15.5 of the Credit Agreement with respect to any matters arising prior to the effective date of such termination) are hereby terminated and the Terminated Bank is hereby released therefrom and the Terminated Bank hereby ceases to be a party to the Credit Agreement and a Bank thereunder. 3. _________________ (the "Replacement Bank") hereby becomes a party to the Credit Agreement and a Bank thereunder and agrees to be bound thereby with the same effect as if the Replacement Bank were the Terminated Bank immediately prior to such substitution. The Commitment of the Replacement Bank shall be $ and the Termination Date for such Bank shall be ________________, 19__. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Illinois. This Agreement may be executed in any number of counterparts and by the different parties on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Agreement. MONTGOMERY WARD & CO., INCORPORATED By: Title: [REPLACEMENT BANK] By: Title: THE BANK OF NOVA SCOTIA, in its capacity as Administrative Agent By: Title: EX-10 7 SHORT TERM CREDIT AGREEMENT dated as of September 15, 1994 among MONTGOMERY WARD & CO., INCORPORATED, VARIOUS BANKS, 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 TABLE OF CONTENTS Page SECTION 1 CERTAIN DEFINITIONS.. . . . . . . . . . . . . . . . 1 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . 1 1.2 Groups and Types of Loans. . . . . . . . . . . . . . 20 SECTION 2 REVOLVING LOANS . . . . . . . . . . . . . . . . . . 20 2.1 Commitment to Make Revolving Loans . . . . . . . . . 20 2.2 Revolving Loan Limits. . . . . . . . . . . . . . . . 20 2.3 Borrowing Procedure. . . . . . . . . . . . . . . . . 21 2.4 Repayment. . . . . . . . . . . . . . . . . . . . . . 21 2.5 Revolving Notes. . . . . . . . . . . . . . . . . . . 21 2.6 Voluntary Termination or Reduction of the Commitments. . . . . . . . . . . . . . . . . . . . . 21 2.7 Extension of the Termination Date. . . . . . . . . . 22 SECTION 3 SWING LOANS.. . . . . . . . . . . . . . . . . . . . 24 3.1 Commitment to Make Swing Loans.. . . . . . . . . . . 24 3.2 Swing Loan Limits. . . . . . . . . . . . . . . . . . 24 3.3 Borrowing Procedure. . . . . . . . . . . . . . . . . 24 3.4 Interest and Repayment.. . . . . . . . . . . . . . . 25 3.5 Swing Notes. . . . . . . . . . . . . . . . . . . . . 25 3.6 Participation of Banks . . . . . . . . . . . . . . . 25 SECTION 4 NEGOTIATED LOANS. . . . . . . . . . . . . . . . . . 26 4.1 Negotiated Loan Option . . . . . . . . . . . . . . . 26 4.2 Negotiated Loan Limits . . . . . . . . . . . . . . . 26 4.3 Procedure for Negotiated Loans . . . . . . . . . . . 26 4.4 Interest and Repayment . . . . . . . . . . . . . . . 28 4.5 Negotiated Loan Notes. . . . . . . . . . . . . . . . 28 SECTION 5 TERMINATION OF COMMITMENTS UPON A CHANGE OF CONTROL. . . . . . . . . . . . . . . 28 SECTION 6 INTEREST AND FEES . . . . . . . . . . . . . . . . . 29 6.1 Interest Rates . . . . . . . . . . . . . . . . . . . 29 6.2 Eurodollar Margin Increment. . . . . . . . . . . . . 29 6.3 Interest Payment Dates . . . . . . . . . . . . . . . 29 6.4 Setting and Notice of Loan Rates . . . . . . . . . . 30 6.5 Commitment Fee . . . . . . . . . . . . . . . . . . . 31 6.6 Displaced Commitment Fee . . . . . . . . . . . . . . 31 6.7 Agents' Fees . . . . . . . . . . . . . . . . . . . . 31 6.8 Computation of Interest and Fees . . . . . . . . . . 31 6.9 Determination of Margin and Fee Increase . . . . . . 32 SECTION 7 REVOLVING LOAN PROCEDURES; CONVERSIONS AND CONTINUATIONS . . . . . . 33 7.1 Procedure for Revolving Loans. . . . . . . . . . . . 33 7.2 Conversion and Continuation Procedures . . . . . . . 34 SECTION 8 MAKING AND SHARING OF PAYMENTS AND PREPAYMENTS; SETOFF; TAXES; RECORDKEEPING. 36 8.1 Making of Payments . . . . . . . . . . . . . . . . . 36 8.2 Sharing of Payments. . . . . . . . . . . . . . . . . 37 8.3 Setoff . . . . . . . . . . . . . . . . . . . . . . . 38 8.4 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 39 8.5 Recordkeeping. . . . . . . . . . . . . . . . . . . . 41 SECTION 9 CHANGE OF CIRCUMSTANCES.. . . . . . . . . . . . . . 43 9.1 Reserve and Capital Adequacy Costs . . . . . . . . . 43 9.2 Increased Costs. . . . . . . . . . . . . . . . . . . 44 9.3 Basis for Determining Interest Rate Inadequate or Unfair . . . . . . . . . . . . . . . . . . . . . . . 46 9.4 Changes in Law Rendering Certain Loans Unlawful. . . 46 9.5 Funding Losses . . . . . . . . . . . . . . . . . . . 47 9.6 Discretion of Banks as to Manner of Funding. . . . . 47 9.7 Conclusiveness of Statements; Survival of Provisions . . . . . . . . . . . . . . . . . . . . . 48 9.8 Negotiated Loans . . . . . . . . . . . . . . . . . . 48 SECTION 10 REPRESENTATIONS. . . . . . . . . . . . . . . . . . 48 10.1 Organization, etc . . . . . . . . . . . . . . . . . 48 10.2 Authorization; No Conflict. . . . . . . . . . . . . 48 10.3 Validity and Binding Nature . . . . . . . . . . . . 49 10.4 Financial Statements. . . . . . . . . . . . . . . . 49 10.5 Litigation and Contingent Liabilities . . . . . . . 49 10.6 Title to Property . . . . . . . . . . . . . . . . . 50 10.7 Liens . . . . . . . . . . . . . . . . . . . . . . . 50 10.8 Subsidiaries. . . . . . . . . . . . . . . . . . . . 50 10.9 Plans and Welfare Plans . . . . . . . . . . . . . . 50 10.10 Investment Company Act . . . . . . . . . . . . . . 50 10.11 Public Utility Holding Company Act . . . . . . . . 50 10.12 Regulations G, U and X . . . . . . . . . . . . . . 51 10.13 Labor Controversies. . . . . . . . . . . . . . . . 51 10.14 Tax Status . . . . . . . . . . . . . . . . . . . . 51 10.15 No Default . . . . . . . . . . . . . . . . . . . . 52 10.16 Compliance with Applicable Laws. . . . . . . . . . 52 10.17 Licenses, etc. . . . . . . . . . . . . . . . . . . 52 10.18 Purpose. . . . . . . . . . . . . . . . . . . . . . 52 SECTION 11 COVENANTS. . . . . . . . . . . . . . . . . . . . . 52 11.1 Reports, Certificates and Other Information . . . . 53 11.2 Liens . . . . . . . . . . . . . . . . . . . . . . . 55 11.3 Minimum Consolidated Shareholder's Equity . . . . . 58 11.4 Ratio of Debt to Total Capitalization . . . . . . . 59 11.5 Purchase or Redemption of the Company's Securities; Dividend Restrictions; Payments to the Parent . . . . . . . . . . . . . . . . . . . . . . . 59 11.6 Mergers, Consolidations, Sales. . . . . . . . . . . 60 11.7 Compliance with Applicable Laws . . . . . . . . . . 62 11.8 ERISA . . . . . . . . . . . . . . . . . . . . . . . 63 11.9 Corporate Existence and Franchises. . . . . . . . . 63 11.10 Maintenance of Tangible Property . . . . . . . . . 63 11.11 Maintenance of Intangible Property . . . . . . . . 63 11.12 Books, Records and Inspections . . . . . . . . . . 64 11.13 Insurance. . . . . . . . . . . . . . . . . . . . . 64 11.14 Payment of Taxes . . . . . . . . . . . . . . . . . 64 11.15 Other Agreements . . . . . . . . . . . . . . . . . 64 11.16 Regulation U . . . . . . . . . . . . . . . . . . . 64 11.17 Subordinated Debt. . . . . . . . . . . . . . . . . 64 11.18 Debt-Like Preferred Stock. . . . . . . . . . . . . 65 11.19 Further Assurances . . . . . . . . . . . . . . . . 65 SECTION 12 CONDITIONS.. . . . . . . . . . . . . . . . . . . . 65 12.1 Effectiveness of Agreement. . . . . . . . . . . . . 65 12.2 Conditions to Loans . . . . . . . . . . . . . . . . 68 SECTION 13 EVENTS OF DEFAULT AND THEIR EFFECT . . . . . . . . 68 13.1 Events of Default . . . . . . . . . . . . . . . . . 68 13.2 Effect of Event of Default. . . . . . . . . . . . . 72 SECTION 14 THE AGENTS . . . . . . . . . . . . . . . . . . . . 73 14.1 Authorization . . . . . . . . . . . . . . . . . . . 73 14.2 Indemnification . . . . . . . . . . . . . . . . . . 73 14.3 Action on Instructions of the Required Banks. . . . 73 14.4 Payments. . . . . . . . . . . . . . . . . . . . . . 74 14.5 Exculpation . . . . . . . . . . . . . . . . . . . . 75 14.6 Credit Investigation. . . . . . . . . . . . . . . . 76 14.7 Agents and Affiliates . . . . . . . . . . . . . . . 76 14.8 Resignation and Removal . . . . . . . . . . . . . . 76 14.9 Advisory Agent. . . . . . . . . . . . . . . . . . . 77 SECTION 15 GENERAL. . . . . . . . . . . . . . . . . . . . . . 77 15.1 Waiver; Amendments. . . . . . . . . . . . . . . . . 77 15.2 Notices . . . . . . . . . . . . . . . . . . . . . . 78 15.3 Computations. . . . . . . . . . . . . . . . . . . . 79 15.4 Participations; Assignments; Replacement of Banks. . . . . . . . . . . . . . . . . . . . . . . . 80 15.5 Costs, Expenses and Taxes . . . . . . . . . . . . . 85 15.6 Indemnification . . . . . . . . . . . . . . . . . . 86 15.7 Regulation U. . . . . . . . . . . . . . . . . . . . 87 15.8 Captions. . . . . . . . . . . . . . . . . . . . . . 87 15.9 Governing Law; Severability . . . . . . . . . . . . 87 15.10 Waiver of Jury Trial . . . . . . . . . . . . . . . 87 15.11 Counterparts; Effectiveness. . . . . . . . . . . . 88 15.12 Supersession . . . . . . . . . . . . . . . . . . . 88 15.13 Successors and Assigns . . . . . . . . . . . . . . 88 SCHEDULES and EXHIBITS SCHEDULES SCHEDULE I Banks, Commitments and Termination Dates (Sections 1.1, 2.7 and 15.4) SCHEDULE II Litigation (Section 10.5) SCHEDULE III Liens (Section 10.7) SCHEDULE IV Subsidiaries and Restricted Subsidiaries (Section 10.8) SCHEDULE V Post-Retirement Welfare Plan Benefits (Section 10.9) SCHEDULE VI Tax Sharing Arrangements (Section 11.5) SCHEDULE VII Management Investors (Section 1.1) SCHEDULE VIII Finder's List (Section 1.1) EXHIBITS FORM OF EXHIBIT A Revolving Note (Section 2.5) EXHIBIT B Extension Request (Section 2.7) EXHIBIT C Extension Reply (Section 2.7) EXHIBIT D Swing Note (Section 3.5) EXHIBIT E Negotiated Note (Section 4.5) EXHIBIT F Revolving Loan Request (Section 7.1) EXHIBIT G Swing Loan Request (Section 3.3) EXHIBIT H Negotiated Loan Confirmation (Section 4.3) EXHIBIT I Officer's Certificate (Section 11.1(c)) EXHIBIT J Opinion of Counsel for the Company (Section 12.1) EXHIBIT K Certificate as to Satisfaction of Conditions (Section 12.1) EXHIBIT L Assignment and Acceptance (Section 15.4(b)) EXHIBIT M Replacement Agreement (Section 15.4(e)) SHORT TERM CREDIT AGREEMENT THIS SHORT TERM CREDIT AGREEMENT (this "Agreement"), dated as of September 15, 1994, is among MONTGOMERY WARD & CO., INCORPORATED, an Illinois corporation (herein, together with its successors and permitted assigns, called the "Company"), the banks listed on the signature pages hereof (herein, together with their respective successors and assigns, collectively called the "Banks" and individually called a "Bank"), THE FIRST NATIONAL BANK OF CHICAGO, as documentary agent for the Banks (herein, in such capacity, together with its successors and assigns in such capacity, called the "Documentary Agent"), THE BANK OF NOVA SCOTIA, as administrative agent for the Banks (herein, in such capacity, together with its successors and assigns in such capacity, called the "Administrative Agent"), THE BANK OF NEW YORK, as negotiated loan agent for the Banks (herein, in such capacity, together with its successors and assigns in such capacity, called the "Negotiated Loan Agent"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as advisory agent for the Banks (herein, in such capacity, together with its successors and assigns in such capacity, called the "Advisory Agent") (the Documentary Agent, the Administrative Agent, the Negotiated Loan Agent and the Advisory Agent are herein collectively called the "Agents" and individually called an "Agent"). WHEREAS, the Company wishes to be able to borrow funds from the Banks from time to time on a revolving basis; and WHEREAS, subject to the terms and conditions set forth herein, the Banks are willing to make loans to the Company; NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the parties hereto agree as follows: SECTION 1 CERTAIN DEFINITIONS. 1.1 Definitions. When used herein the following terms have the following respective meanings (it being understood that a finder's list is attached as Schedule VIII): "Adjusted Commitment" - see Section 8.2(a). "Administrative Agent" - see Preamble. "Advisory Agent" - see Preamble. "Affiliate" means with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. A Person shall be deemed to control another Person if such first Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such other Person, whether through ownership of voting securities, by contract or otherwise. "Agent(s)" - see Preamble. "Agent Parties" - see Section 14.2. "Aggregate Commitment" means $297,000,000 or such lesser amount as the Company may specify from time to time pursuant to Section 2.6 or as may be determined pursuant to Section 2.7. "Agreement" - see Preamble. "Applicable Agent" means (i) with respect to matters involving the Loans (other than the Negotiated Loans), the Administrative Agent, and (ii) with respect to matters involving the Negotiated Loans, the Negotiated Loan Agent. "Assignee(s)" - see Section 15.4(b). "Assignment" - see Section 15.4(b). "Authorized Officer" means the President, the Chief Executive Officer, the Chief Financial Officer, the Treasurer or any Assistant Treasurer of the Company. "Bank(s)" - see Preamble. "Bank Parties" - see Section 15.6. "Base Rate" means at any time and from time to time the higher of (i) the rate per annum then most recently publicly announced or established by the Bank which is acting as the Administrative Agent as its "reference rate" or "prime rate" (or such Bank's equivalent thereof) at its Funding Office for Base Rate Loans, or (ii) the Federal Funds Rate plus 1/2 of 1% per annum. "Base Rate Loan" means any Loan (other than a Negotiated Loan) which bears interest by reference to the Base Rate. "Business Day" means (i) any day of the year other than a Saturday, a Sunday or other day on which banks in Chicago, Atlanta or New York City are authorized or required by law to close, and (ii) if the applicable Business Day relates to the determination of a Eurodollar Rate or to the funding or payment of a Eurodollar Loan, a day on which dealings are carried on in the London interbank eurodollar market. "Capital Base" means at any time the sum of Subordinated Debt plus Consolidated Shareholder's Equity of the Company plus the FAS 106 Capital Base Factor, each as at the end of the Fiscal Year or Fiscal Quarter, as the case may be, ended on the date as of which "Capital Base" is being determined, less each of (i) the aggregate amount of all outstanding advances by the Company to, and investments of the Company in, Non-Restricted Subsidiaries, (ii) the aggregate value of all treasury stock carried as an asset by the Company or any Subsidiary the equity of which is included in the Company's Consolidated Shareholder's 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 included as a general intangible of the Company and its Restricted Subsidiaries for purposes of this definition: (a) assets under capital leases, (b) 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), (c) as of the date of determination, the unamortized balance of the value at June 23, 1988 of insurance licenses of the Company's insurance Restricted Subsidiaries, (d) as of the date of determination, the unamortized balance of the value at June 23, 1988 of marketing rights of the Company and its Restricted Subsidiaries, and (e) 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, all as determined (except as set forth in Section 15.3) in accordance with GAAP. "Capitalized Lease Obligations" means with respect to any Person any amounts payable by such Person with respect to any lease of any tangible or intangible property (whether real, personal or mixed), however denoted, which is required by GAAP to be reflected as a liability on such Person's balance sheet. "Change" - see Section 9.1(b). "Change of Control" means (a) the sale or other disposition, at any time or times after the Effective Date, to any Person other than a Qualified Purchaser, of an aggregate of 50% or more of the Outstanding Original Shares or (b) no Outstanding Original Shares remain outstanding. Anything to the contrary notwithstanding, at any time of determination no Change of Control shall be deemed to have occurred because, or as a result, of any events, facts and/or circumstances if theretofore either (i) shares of voting common stock of the Parent have been sold to the public pursuant to a registration statement filed with the SEC, which registration statement became effective and the gross proceeds of such offering were at least $100,000,000 or (ii) the Consolidated Shareholder's Equity of the Company was equal to or greater than $710,000,000 either (x) at the end of the then most recently ended Fiscal Quarter or (y) at the end of not less than any eight consecutive Fiscal Quarters prior thereto. "Class A Common Stock" means the issued and outstanding shares from time to time of Class A Common Stock of the Parent or the shares of stock into which such shares shall have been converted or for which such shares were exchanged in connection with any merger, consolidation or sale of substantially all the assets of the Company or the Parent. "Code" means the Internal Revenue Code of 1986, as amended. "Commitment" means, for each Bank, such Bank's commitment to make Revolving Loans on the terms and subject to the conditions of this Agreement, the maximum amount of such commitment being the amount opposite such Bank's name on Schedule I as the same may be revised pursuant to Section 2.6 or 2.7; and "Commitments" means, collectively, the commitments of all of the Banks to make Revolving Loans on the terms and subject to the conditions of this Agreement. "Company" - see Preamble. "Company Register" - see Section 8.5(a). "Conditional Sale Obligations" means 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 and under which a security interest (other than a statutory vendor's lien) is specifically retained by the seller until the deferred purchase price is paid in full, 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" means the aggregate of the net income of the Company and its Subsidiaries, determined (except as otherwise provided in Section 15.3) on a consolidated basis in accordance with GAAP. "Consolidated Shareholder's Equity" has (except as otherwise provided in Section 15.3) the meaning assigned to such phrase by GAAP. "Continue," "Continuation" and "Continued" refer to continuations of Loans pursuant to Section 7.2. "Conversion Notice" - see Section 7.2(a). "Convert", "Conversion" and "Converted" refer to conversions of Loans pursuant to Section 7.2. "Corporate Transaction" - see Section 11.6. "Debt" means as to any Person at any time (i) all of such Person's Indebtedness for Borrowed Money, plus (ii) all of such Person's Capitalized Lease Obligations, plus (iii) if such Person is the Company or a Restricted Subsidiary, without double counting, the Capitalized Lease Obligations of any Non-Restricted Subsidiary reflected on the balance sheet of such Non-Restricted Subsidiary for which the Company or such Restricted Subsidiary is liable directly or indirectly under a Guaranty, less (iv) all Subordinated Debt. "Debt-Like Preferred Stock" means any class of stock of the Company 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 Liabilities in the event of the occurrence and continuance of any Event of Default. "Displaced Loans" - see Section 6.6. "Documentary Agent" - see Preamble. "Dollar(s)" and the sign "$" mean lawful money of the United States of America. "Effective Date" - see Section 12.1. "Equalization Amount" - see Section 8.4(c). "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, together with the regulations thereunder and under the Code, in each case as in effect from time to time. References to sections of ERISA shall be deemed also to refer to any successors to such sections. "ERISA Affiliate" means any corporation, trade or business that is, along with the Company, a member of a controlled group of corporations or a controlled group of trades or businesses, as described in sections 414(b) and 414(c), respectively, of the Code or section 4001 of ERISA. "Eurocurrency Reserve Percentage" means, with respect to any day, a percentage (expressed as a decimal) equal to the percentage in effect on such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any marginal reserve requirement) applicable to "Eurocurrency liabilities" pursuant to Regulation D or any other then applicable regulation of said Board of Governors which prescribes reserve requirements applicable to "Eurocurrency liabilities" as presently defined in Regulation D. "Eurodollar Loan" means any Loan (other than a Negotiated Loan) which bears interest at a rate determined by reference to the Eurodollar Rate. "Eurodollar Margin Increment" - see Section 6.2. "Eurodollar Rate" means, with respect to any Interest Period, and subject to Section 6.4(b), the rate per annum equal to the arithmetic mean (rounded upwards, if necessary, to the nearest 1/16 of 1%) of the respective rates per annum notified to the Administrative Agent by the Reference Banks (or any thereof) prior to 9:30 a.m., Chicago time, on the second Business Day prior to the commencement of such Interest Period as the rate at which Dollar deposits are offered by the principal London office of each such Reference Bank to prime banks in the London interbank eurodollar market as at or about 11:00 a.m., London time, for delivery for same day value on the first day of such Interest Period, for the number of days comprised therein and in an amount approximately equal to the amount of such Reference Bank's Eurodollar Loan for such Interest Period. "Eurodollar Rate (Reserve Adjusted)" means, with respect to any Interest Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined pursuant to the following formula: Eurodollar Rate = Eurodollar Rate (Reserve Adjusted) 1-Eurocurrency Reserve Percentage "Event of Default" means any of the events described in Section 13.1. "Existing Credit Agreements" means collectively (i) the Amended and Restated Credit Agreement, dated September 22, 1992, as amended, among the Company, various lenders from time to time party thereto and certain agents listed on the signature pages thereof, (ii) the Short Term Credit Agreement, dated September 22, 1992, as amended, among the Company, various lenders from time to time party thereto and certain agents listed on the signature pages thereof, and (iii) the Term Loan Agreement, dated November 24, 1993, among the Company, various lenders from time to time party thereto and certain agents listed on the signature pages thereof. "Existing Termination Date" - see Section 2.7. "Extension Banks" - see Section 2.7. "Extension Reply" - see Section 2.7. "Extension Request" - see Section 2.7. "FAS 106 Capital Base Factor" means, as at the date of determination, the dollar amount set forth below opposite the Fiscal Year in which such date occurs: Fiscal Year FAS 106 Capital Base Factor 1994 75,000,000 1995 60,000,000 1996 45,000,000 1997 30,000,000 1998 15,000,000 1999 and each 0 Fiscal Year thereafter "FAS 106 Minimum Equity Factor" means, as at the date of determination, the dollar amount set forth below opposite the Fiscal Year in which such date occurs: Fiscal Year FAS 106 Minimum Equity Factors 1994 67,500,000 1995 60,000,000 1996 45,000,000 1997 30,000,000 1998 15,000,000 1999 and each 0 Fiscal Year thereafter "FAS 106 Restricted Payment Factor" means, as at the date of determination, the dollar amount set forth below opposite the Fiscal Year in which such date occurs: Fiscal Year FAS 106 Restricted Payment Factors 1994 45,000,000 1995 45,000,000 1996 45,000,000 1997 30,000,000 1998 15,000,000 1999 and each 0 Fiscal Year thereafter "Federal Funds Rate" means, for any day, the rate set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Board of Governors of the Federal Reserve System (including any such successor, "H.15(519)") for that day opposite the caption "Federal Funds (Effective)". If on any relevant day such rate is not yet published in H.15(519), the rate for that day will be the rate set forth in the daily statistical release designated as the Composite 3:30 P.M. Quotations for U.S. Government Securities, or any successor publication, published by the Federal Reserve Bank of New York (including any such successor, the "Composite 3:30 P.M. Quotations") for that day under the caption "Federal Funds Effective Rate". If on any relevant day the appropriate rate for such day is not yet published in either H.15(519) or the Composite 3:30 P.M. Quotations, the rate for such day will be the arithmetic mean of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m., New York time, on that day by each of three leading brokers of Federal funds transactions in New York City, selected by the Administrative Agent. "Fee Increase" - see Section 6.9. "Finance Obligation(s)" means with respect to any Person, as of the date of determination thereof, (i) any and all of such Person's Indebtedness for Borrowed Money, (ii) any and all of such Person's actual or contingent reimbursement obligations with respect to letters of credit issued for such Person's account, (iii) any and all of such Person's actual or contingent obligations with respect to interest swap agreements or currency swap agreements or other hedge agreements relating to fluctuations in interest rates or currencies, (iv) any and all of such Person's liabilities under Title IV of ERISA, and (v) any and all indebtedness or obligations of any of the types described in the preceding clauses (i), (ii), (iii) and (iv) for which such Person is liable, directly or indirectly, under a Guaranty. "Fiscal Quarter" means a fiscal quarter of any Fiscal Year. "Fiscal Year" means a fiscal year of the Company which 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. "Fixed Rate Loan(s)" means any Loan other than (i) a Base Rate Loan, and (ii) a Negotiated Loan which bears interest at a fluctuating interest rate. "Funding Date" means the date on which any Loan is disbursed or scheduled to be disbursed. "Funding Office" means (i) with respect to any Negotiated Loan by any Bank, the office or Affiliate of such Bank specified in the acceptance of the related Negotiated Loan Confirmation, and (ii) with respect to any Eurodollar Loan or Base Rate Loan by any Bank, the office or Affiliate of such Bank specified for such Type of Loan beneath such Bank's signature hereto or in any relevant Assignment. Any Bank's Funding Office for a particular Loan shall be the office or Affiliate through which such Bank shall fund or shall have funded such Loan. Subject to Section 9.6(b), each Funding Office of each Bank may be changed to another domestic or foreign office of such Bank or domestic or foreign office of any Affiliate of such Bank upon written notice from such Bank to the Company, the Administrative Agent and the Negotiated Loan Agent. "GAAP" means the generally accepted accounting principles applied in the preparation of the audited consolidated financial statements of the Company and its Subsidiaries as at January 1, 1994, with (except as otherwise provided in Section 15.3) such changes thereto as (a) shall be consistent with the then effective principles promulgated or adopted by the Financial Accounting Standards Board and its predecessors and successors, and (b) shall be concurred in by the independent certified public accounts of recognized national standing certifying any financial statements of the Company and its Subsidiaries. "GE Capital" means General Electric Capital Corporation, together with its successors and assigns. "Group" - see Section 1.2. "Guaranty" means any instrument or document by which a Person has directly or indirectly guaranteed (whether by discount or otherwise), endorsed (other than for collection or deposit in the ordinary course of business), discounted with recourse to such Person or with respect to which such Person is otherwise directly or indirectly liable for the indebtedness or obligations of any other Persons, including, without limitation, indebtedness in effect guaranteed by such Person through any agreement (contingent or otherwise) to (i) purchase, repurchase or otherwise acquire such indebtedness, (ii) provide funds for the payment or discharge of such indebtedness or any other liability of the obligor of such indebtedness (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), (iii) maintain the solvency or other financial condition of the obligor of such indebtedness, or (iv) make payment for any products, materials, supplies, transportation or services pursuant to an agreement which requires such payment regardless of the non-delivery or non-furnishing thereof, if in any such case the purpose or intent of such agreement is to provide assurance that such indebtedness will be paid or discharged or that any agreements relating thereto will be complied with or that the holders of such indebtedness will be protected against loss in respect thereof. "Indebtedness for Borrowed Money" means with respect to any Person, as of the date of determination thereof, (i) any and all of such Person's indebtedness for borrowed money (including, without limitation, indebtedness for borrowed money which is subordinated), (ii) any and all of such Person's Conditional Sale Obligations, (iii) any and all indebtedness secured by any Lien with respect to any property or asset owned by such Person, regardless of whether the indebtedness secured thereby shall be of or shall have been assumed by such Person, and (iv) any and all indebtedness or obligations of any of the types described in the preceding clauses (i), (ii) and (iii) for which such Person is liable, directly or indirectly, under a Guaranty; provided, however, that the obligations of a lessee under a lease shall not constitute Indebtedness for Borrowed Money and any indebtedness 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. "Indemnified Liabilities" - see Section 15.6. "Interest Period" means (i) with respect to any Eurodollar Loan, the period commencing on such Eurodollar Loan's Funding Date (or on the date such Loan was Converted to or Continued as a Eurodollar Loan) and ending 1, 2, 3 or 6 months thereafter as selected by the Company pursuant to Section 7.1(a) or 7.2, (ii) with respect to any Base Rate Loan, the period commencing on such Base Rate Loan's Funding Date (or on the date such Loan was Converted to or Continued as a Base Rate Loan) and ending on the last Business Day of the next following March, June, September or December, whichever comes first, (iii) with respect to any Swing Loan, the period commencing on such Swing Loan's Funding Date and ending on the date specified by the Company in its request for such Swing Loan, which date shall fall not later than 7 days after such Funding Date, and (iv) with respect to any Negotiated Loan, the period commencing on such Negotiated Loan's Funding Date and ending on the date specified by the Company in its Negotiated Loan Confirmation for such Negotiated Loan; provided, however, that: (A) if an Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next succeeding Business Day (unless, in the case of a Eurodollar Loan, such next succeeding Business Day would fall in the next succeeding calendar month, in which case such Interest Period shall end on the next preceding Business Day); (B) in the case of an Interest Period for any Eurodollar Loan, if there exists no day numerically corresponding to the day such Loan was made in the month in which the last day of such Interest Period would otherwise fall, such Interest Period shall end on the last Business Day of such month; (C) if an Interest Period for any Negotiated Loan would otherwise extend beyond 182 days after such Negotiated Loan's Funding Date, such Interest Period shall end on the 182nd day after such Funding Date unless such day is not a Business Day, in which case such Interest Period shall end on the next preceding Business Day; and (D) no Interest Period for any Loan shall extend beyond the date which is 66 days after the Termination Date then in effect for any Bank. "Liabilities" means any and all of the Company's obligations to the Agents and the Banks, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due, which arise out of or in connection with this Agreement, any Note or any document, instrument or agreement executed in connection with any of the foregoing. "Lien" means any mortgage, pledge, lien, security interest or other charge, including the retained security title of a conditional vendor or lessor. "Litigation" means any litigation, proceeding (including without limitation any governmental proceeding or arbitration proceeding), claim, lawsuit and/or investigation (including, without limitation, any environmental litigation, proceeding, claim, lawsuit and/or investigation) pending or threatened against or involving the Company or any Subsidiary or any of its or their businesses or operations. "Loan Request" means any Revolving Loan Request, any Swing Loan Request and any Negotiated Loan Confirmation. "Loans" means, collectively, the Negotiated Loans, the Revolving Loans and the Swing Loans, and "Loan" means, individually, any Negotiated Loan, Revolving Loan or Swing Loan. "Long Term Credit Agreement" means that certain Long Term Credit Agreement dated as of the date of this Agreement, among the Company, the Agents and the Banks, as the same may be amended, modified or supplemented from time to time. "Management Investor" means (i) any Person who is listed in Schedule VII, (ii) any Person who on the Effective Date is the owner of any shares of Class A Common Stock, and (iii) any Person who on the date of determination, whether or not such Person is otherwise a Management Investor, is an employee of the Company, the Parent or their Subsidiaries or a director of the Parent (elected to the Board of Directors by the Class A Common Stock shareholders) and is then either the owner of shares of Class A Common Stock or the holder of options to purchase shares of Class A Common Stock pursuant to any employee stock option plan established by or for the benefit of the employees of the Company, the Parent or their Subsidiaries or directors of the Parent. "Margin Stock" has the meaning given to such term in Regulations U and/or X. "Master Register" - see Section 8.5(b). "Material Litigation" or "Material Litigation Development" means any Litigation or development in any Litigation which could individually or in the aggregate impair the validity or enforceability of or the ability of the Company to perform any of its obligations under this Agreement or the Notes or the MWCC Receivables Purchase Agreement, or materially impair the ability of the Company to conduct business substantially as now conducted, or materially and adversely affect the consolidated business, operations, prospects or financial condition of the Company and its Subsidiaries, taken as a whole. "Maturity Date" means at any time as to any Bank, the date which is 66 days after the Termination Date then in effect for such Bank or, if such date is not a Business Day, the next succeeding Business Day; provided that if as of such Termination Date the conditions set forth in Section 2.7(e) are satisfied, then, for any Banks which have not consented to an extension of the Termination Date pursuant to Section 2.7, Maturity Date shall mean such Termination Date (without giving effect to such extension) or, if such date is not a Business Day, the immediately preceding Business Day. "MWCC" means Montgomery Ward Credit Corporation. "MWCC Receivables Purchase Agreement" means the Account Purchase Agreement between MWCC and the Company, together with the Guaranty made by GE Capital of MWCC's obligations under such Account Purchase Agreement, both dated as of June 24, 1988, as the same may be amended, modified or supplemented from time to time in a manner which does not result in an Event of Default under Section 13.1(j). "Mobil" - see Section 10.14(c). "Multiemployer Plan" means a "multiemployer plan", as such term is defined in section 4001(a) of ERISA, which is subject to Title IV of ERISA and to which the Company or any ERISA Affiliate contributed or otherwise may have any liability. "Negotiated Loan Agent" - see Preamble. "Negotiated Loan Confirmation" - see Section 4.3(a). "Negotiated Loan Register" - see Section 8.5(c). "Negotiated Loans" - see Section 4.1. "Negotiated Note(s)" - see Section 4.5. "Non-Restricted Subsidiary" means each Subsidiary which is not a Restricted Subsidiary. "Non-United States Person" means a Person who is not (i) a citizen or resident of the United States, (ii) a corporation, partnership or other entity created or organized under the laws of the United States, or (iii) an estate or trust the income of which is subject to United States federal income taxation regardless of its source; and "United States" means the United States of America (including the States and the District of Columbia). "Notes" means, collectively, the Revolving Notes, the Negotiated Notes and the Swing Notes; and "Note" means any individual Revolving Note, Negotiated Note or Swing Note. "Outstanding Original Shares" means all shares of Class A Common Stock held by Management Investors at the close of business on June 23, 1988 (including any shares of stock and any options, warrants or other rights convertible or exchangeable for shares of such stock received as a direct or indirect result of any stock dividend, stock split or capitalization with respect to such stock) but excluding any such Class A Common Stock repurchased by the Parent under the Parent Shareholders' Agreement with respect to any Management Investor, which repurchased shares have not been (i) resold to a Management Investor or an employee stock ownership plan established by or for the benefit of the employees of the Company, the Parent or their Subsidiaries, or (ii) reserved for issuance to employees of the Company, the Parent or other Subsidiaries or directors of the Parent, pursuant to an employee stock option plan established for the benefit of such employees or directors. "Parent" means Montgomery Ward Holding Corp., a Delaware corporation, together with any Successor to Parent. "Parent Shareholders' Agreement" means the agreement dated as of June 22, 1988 among the Parent and certain shareholders thereof, as such agreement has been and may hereafter be amended, modified or supplemented from time to time in a manner not inconsistent with this Agreement. "Participant(s)" - see Section 15.4(a). "Payment Sharing Notice" means a written notice from any Bank or any Agent to all other parties under this Agreement, given at any time that an Event of Default has occurred and is continuing, which directs the Agents to allocate payments received from the Company in accordance with Section 8.2. "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Percentage" - see Section 2.2(a). "Permitted Lien" - see Section 11.2. "Person" means an individual or a corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, government (or an agency or political subdivision thereof) or other entity of any kind. "Plan" means a "pension plan", as such term is defined in ERISA, which is subject to Title IV of ERISA (other than a Multiemployer Plan), established or maintained by the Company or any ERISA Affiliate as to which the Company or any ERISA Affiliate contributed or is a member or otherwise may have any liability, including any liability by reason of having been a substantial employer within the meaning of section 4063 of ERISA at any time during the five years preceding the Effective Date, or by reason of being deemed to be a contributing sponsor under section 4069 of ERISA. "Qualified Purchaser" means (i) any Management Investor, (ii) the Company and the Parent, (iii) GE Capital or a parent or subsidiary thereof, (iv) a spouse, descendant or ancestor of a Management Investor, or a spouse of a descendant or ancestor of a Management Investor, or a trustee of a trust or custodian of a custodianship for the benefit of one or more of the foregoing and/or a Management Investor, (v) the personal representative or any heir, legatee or devisee of any Management Investor, or (vi) any employee stock ownership plan established by or for the benefit of employees of the Company, the Parent or their Subsidiaries. "Ratio of Earnings to Fixed Charges" means for any Ratio Period, the ratio of (i) the sum of Consolidated Net Income for such Ratio Period before addition of any amount for interest income and before deduction of any amount for all income taxes, interest expense, depreciation, amortization and rental expense, to (ii) the sum of the excess of all interest expense over interest income plus all rental expense plus capital expenditures (other than asset additions under capital leases determined in accordance with GAAP, except as set forth in Section 15.3) of the Company and its Subsidiaries payable with respect to such Ratio Period, all as determined in accordance with GAAP (except as set forth in Section 15.3). "Ratio Period" means the eight (8) consecutive Fiscal Quarters ending as of the date as of which the Ratio of Earnings to Fixed Charges is being determined. "Reference Banks" means The First National Bank of Chicago, The Bank of New York and The Bank of Nova Scotia. "Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System and any successor rule or regulation of similar import as in effect from time to time. "Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System and any successor rule or regulation of similar import as in effect from time to time. "Regulation X" means Regulation X of the Board of Governors of the Federal Reserve System and any successor rule or regulation of similar import as in effect from time to time. "Renewed Termination Date" - see Section 2.7. "Replacement Agreement" - see Section 15.4(e). "Replacement Bank" - see Section 15.4(e). "Reply Date" - see Section 2.7. "Reportable Event" has the meaning given to such term in ERISA. "Required Banks" means at any time Banks having at least 66-2/3% of the aggregate amount of the Commitments or, if the Commitments shall have been terminated, holding Notes evidencing at least 66-2/3% of the aggregate unpaid principal amount of the Loans. "Restricted Payment" - see Section 11.5. "Restricted Subsidiary" means any Subsidiary designated as such by the Company's Board of Directors or by an officer of the Company authorized by the Board of Directors to make such designation and which designation shall not thereafter have been cancelled by the Company's Board of Directors or by an officer of the Company authorized by the Board of Directors to effect such cancellation; provided, however, that a Subsidiary may be designated as a Restricted Subsidiary or such designation may be cancelled if and only if immediately after such designation or cancellation, and after giving effect thereto, no Event of Default or Unmatured Event of Default shall have occurred and be continuing. "Revocation Cut-Off Date" - see Section 2.7. "Revolving Loan(s)" - see Section 2.1. "Revolving Loan Request" - see Section 7.1(a). "Revolving Note" - see Section 2.5. "Risk-Based Capital Guidelines" - see Section 9.1(b). "SEC" means the Securities Exchange Commission and any successor thereof. "Secured Indebtedness" - see Section 11.2(xix). "Special Restricted Subsidiary" means any Restricted Subsidiary (i) with assets that constitute one percent (1%) or less of the total assets of the Company and all Restricted Subsidiaries, (ii) with net income for the most recent Fiscal Year that constitutes one percent (1%) or less of the total net income of the Company and all Restricted Subsidiaries for the most recent Fiscal Year, and (iii) with equity of less than $4,000,000. "Subordinated Debt" means indebtedness of the Company which is subordinated to the prior payment of the Liabilities on terms and conditions acceptable to the Required Banks; provided that any payments of principal which are scheduled to occur prior to the Maturity Date of any Bank (pursuant to Section 2.7) shall not constitute Subordinated Debt. "Subsidiary" means a corporation of which the Company and/or its other Subsidiaries own, directly or indirectly, such number of outstanding shares as have more than 50% of the ordinary voting power for the election of such corporation's directors. "Successor to Parent" - see Section 13.1(h). "Swing Loan(s)" - see Section 3.1. "Swing Loan Bank" means as to any Swing Loan, the Bank making or which made such Swing Loan. "Swing Loan Percentage" means as to any Bank with respect to any Swing Loan, the ratio (expressed as a percentage) of (i) the Unused Commitment of such Bank to (ii) the aggregate of the Unused Commitments of all Banks, such percentage to be calculated as if such Swing Loan were not outstanding at the time of determination. "Swing Loan Request" - see Section 3.3. "Swing Note(s)" - see Section 3.5. "Tax Benefit" - see Section 8.4(c). "Taxes" - see Section 8.4(a). "Terminated Bank" - see Section 15.4(e). "Termination Date" means, with respect to each Bank, the earlier to occur of (i) the later of (a) the 364th day after the Effective Date or (b) the date to which the Commitment of such Bank has been extended pursuant to Section 2.7, or (ii) such other date on which the Aggregate Commitments shall terminate pursuant to Section 5 or 13.2 or be reduced to zero pursuant to Section 2.6 and, if in any case such day is not a Business Day, the next preceding Business Day. "Total Capitalization" means at any time the sum of Debt of the Company and its Restricted Subsidiaries plus Capital Base plus all Debt-Like Preferred Stock; provided, however, that if Total Capitalization is being determined as at any date which is not the last day of a Fiscal Quarter, "Total Capitalization" equals (i) Debt of the Company and its Restricted Subsidiaries, plus (ii) all Debt-Like Preferred Stock, plus (iii) Capital Base as at the end of the most recently completed Fiscal Quarter, plus (iv) any repayments of loans or advances to Parent received by the Company since the end of the most recently completed Fiscal Quarter, plus (v) any capital contributions received by the Company since the end of the most recently completed Fiscal Quarter, plus (vi) 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 (vii) 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 (viii) 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, Non-Restricted Subsidiaries other than any decrease resulting from any aggregate net loss incurred by such Non-Restricted Subsidiaries since the end of the most recently completed Fiscal Quarter, minus (ix) any Restricted Payments made since the end of the most recently completed Fiscal Quarter, minus (x) 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, Non-Restricted Subsidiaries other than any increase resulting from any aggregate net income of such Non-Restricted Subsidiaries since the end of the most recently completed Fiscal Quarter. "Type" - see Section 1.2. "Unmatured Event of Default" means any event which if it continues uncured will, with lapse of time or notice or lapse of time and notice, constitute an Event of Default. "Unused" means as to any Commitment of any Bank, at any time, the greater of (i) zero or (ii) the Commitment of such Bank minus the then outstanding Revolving Loans, Negotiated Loans and Swing Loan of such Bank (or Swing Loans, in the case of the Bank which is acting as the Administrative Agent), provided that for purposes of distributing commitment fees under Sections 6.5 and 6.6, the term "Unused" shall be determined without subtracting any outstanding Swing Loans. "Welfare Plan" has the meaning assigned to such term by ERISA. 1.2 Groups and Types of Loans. Loans hereunder are distinguished by "Type" and by "Group". The "Type" of a Loan refers to whether such Loan is a Base Rate Loan or a Eurodollar Loan or a Negotiated Loan. A "Group" of Loans consists of Revolving Loans of the same Type, with the same Funding Date or Conversion or Continuation date, and having the same Interest Period. SECTION 2 REVOLVING LOANS. 2.1 Commitment to Make Revolving Loans. On the terms and subject to the conditions of this Agreement, each of the Banks, severally and for itself alone, agrees to make revolving loans to the Company (herein collectively called the "Revolving Loans" and individually called a "Revolving Loan") on a revolving basis from time to time before the Termination Date for such Bank in amounts equal to such Bank's Percentage of such aggregate amounts as the Company may from time to time request pursuant to Section 7.1, but subject to the limits specified in Section 2.2. The Revolving Loans may be either Eurodollar Loans or Base Rate Loans, as selected by the Company pursuant to Section 7.1. 2.2 Revolving Loan Limits. The Revolving Loans shall be subject to the following limits as determined by the Administrative Agent pursuant to Section 8.5(b): (a) Each Bank's share of a Group of Revolving Loans shall be equal to the ratio (expressed as a percent) that (i) the Unused Commitment of such Bank immediately prior to giving effect to the funding of such Group, plus the aggregate principal amount (or portion thereof) of all Loans of such Bank to be repaid concurrently with the proceeds of such funding (but not in excess of such Bank's Commitment), minus the aggregate principal amount of all Loans of such Bank which have been requested (or in the case of Negotiated Loans, confirmed) but not yet funded and which are to be funded prior to the expiration of the Interest Period of such Group, bears to (ii) the aggregate of the Unused Commitments of all Banks immediately prior to giving effect to such funding, plus the aggregate principal amount (or portion thereof) of all Loans to be repaid concurrently with the proceeds of such funding, minus the aggregate principal amount of all Loans which have been requested (or in the case of Negotiated Loans, confirmed) but not yet funded and which are to be funded prior to the expiration of the Interest Period of such Group (such percentage, as to each Bank with respect to the Group of Revolving Loans relating to such funding, being herein called such Bank's "Percentage"); and (b) The aggregate principal amount of all Revolving Loans of all Banks at any one time outstanding, when added to the aggregate principal amount of all Swing Loans and Negotiated Loans then outstanding, shall not exceed the then Aggregate Commitment. 2.3 Borrowing Procedure. The Company shall make requests for Revolving Loans, and each Bank (and, to the extent that the Administrative Agent has received immediately available funds from one or more Banks, the Administrative Agent) shall fund such requests, pursuant to the procedure set forth in Section 7.1. 2.4 Repayment. The Company promises to pay to each Bank on such Bank's Maturity Date (or earlier date required under Section 7.2(c)) the principal amount of all Revolving Loans made by such Bank which remain outstanding on such Maturity Date (or such earlier date). 2.5 Revolving Notes. Each Revolving Loan shall be evidenced by the Company's promissory note (as amended, modified or supplemented from time to time, and together with any renewals thereof or exchanges or substitutions therefor, collectively called the "Revolving Notes" and individually called a "Revolving Note") substantially in the form set forth as Exhibit A, with appropriate insertions, each of which shall be dated the Effective Date and made payable to the order of each Bank, respectively. 2.6 Voluntary Termination or Reduction of the Commitments. prior irrevocable notice received by the Administrative Agent (which shall promptly on the same day or on the next Business Day advise each other Agent and each Bank thereof), the Company may terminate concurrently the Commitments of all the Banks in their entirety upon payment in full (in Dollars and in same day funds) of all outstanding Revolving Loans, Negotiated Loans and Swing Loans, together with all interest accrued thereon and all fees and other obligations (including breakage fees pursuant to Section 9.5) of the Company related thereto. (b) Reduction. At any time on at least five days' prior irrevocable notice received by the Administrative Agent (which shall promptly on the same day or on the next Business Day advise each other Agent and each Bank thereof), the Company may permanently reduce the Aggregate Commitment (such reduction to be pro rata among the Banks according to their respective Commitments). Concurrently with each such reduction of the Aggregate Commitment, the Company shall make a mandatory prepayment of the Loans such that after giving effect thereto (i) the sum of all outstanding Revolving Loans, Negotiated Loans and Swing Loans shall not exceed the then reduced amount of the Aggregate Commitment, and (ii) the aggregate principal amount of all Revolving Loans of any Bank, plus (except in the case of the Bank which is the Administrative Agent) any Swing Loan of such Bank, shall not exceed the amount of such Bank's Commitment as so reduced. Each prepayment pursuant to this Section 2.6(b) shall be subject to the provisions of Section 8.1. 2.7 Extension of the Termination Date. (a) At any time not more than 60 nor less than 40 days prior to the Termination Date then in effect for each Bank (such Bank's "Existing Termination Date"), the Company may request (but not more than once in any calendar year) each Bank to extend its Existing Termination Date to the date ("Renewed Termination Date") which is 364 days after the Revocation Cut-Off Date (defined below) or, if such 364th day is not a Business Day, the immediately preceding Business Day. Such request shall be delivered to the Agents and each Bank and shall be in the form set forth on Exhibit B hereto ("Extension Request"). (b) On or before the date ("Reply Date") specified by the Company in its Extension Request (which shall be 30 days after the date on which the Extension Request was given, or if such 30th day is not a Business Day, the immediately preceding Business Day), each of the Banks shall notify the Company and the Administrative Agent in writing whether or not such Bank will consent to such Extension Request, such notification to be in the form set forth on Exhibit C hereto ("Extension Reply"). No Bank shall be obligated to consent to any such Extension Request. Failure of a Bank to furnish an Extension Reply prior to the Existing Termination Date shall constitute a refusal by such Bank to extend its Existing Termination date, it being understood, however, that prior to the Existing Termination Date, any Bank which has not consented to such Extension Request may do so by furnishing to the Company and the Administrative Agent an Extension Reply consenting to such Extension Request. (c) Prior to the date ("Revocation Cut-Off Date") which is 4 Business Days prior to the Existing Termination Date, each Bank in its absolute and sole discretion may revoke any Extension Reply previously executed by it by furnishing written notice of such revocation to the Company and the Administrative Agent. Any Extension Reply executed by a Bank after the Revocation Cut-Off Date and any Extension Reply not revoked before the close of business on the Revocation Cut-Off Date shall be irrevocable. (d) If, by the close of business on the second Business Day prior to the Existing Termination Date, the Administrative Agent has not received Extension Replies representing consents to the Extension Request executed by Banks representing at least 66-2/3% of the Commitments of all Banks, then on the Business Day before the Existing Termination Date the Company shall prepay all Loans (whether Revolving Loans, Swing Loans, or Negotiated Loans) then outstanding and all amounts related thereto, including, without limitation, all accrued interest and fees pursuant to Section 6 and breakage fees pursuant to Section 9.5 and shall make a borrowing of Revolving Loans from all Banks, pro rata among the Banks according to each Bank's Commitment, in an amount which (together with other funds then available to the Company) shall be at least sufficient to prepay such Loans and amounts related thereto. (e) If, but only if, the following conditions shall have been satisfied: (i) On or prior to the Reply Date, the Administrative Agent shall have received Extension Replies which (A) represent consents to the Extension Request, and (B) have been executed by Banks representing at least 66-2/3% of the Commitments of all Banks; (ii) On or prior to the close of business on the Existing Termination Date, the Administrative Agent shall have received Extension Replies which (A) represent consents to the Extension Request, (B) have been executed by Banks (the "Extension Banks") representing at least 66-2/3% of the Commitments of all Banks, and (C) have not been revoked prior to the close of business on the Revocation Cut-Off Date; and (iii) As of the Existing Termination Date, no Event of Default or Unmatured Event of Default shall exist and the Administrative Agent shall have received from the Company a certificate of an Authorized Officer of the Company dated the date of such Existing Termination Date to such effect, then on such Existing Termination Date (A) the Termination Date for each of the Extension Banks (but not for any Bank which is not an Extension Bank) shall be extended to the Renewed Termination Date, and (B) the Company shall pay in full all Loans with respect to all Banks which are not Extension Banks. (f) For purposes of satisfying the conditions in Section 2.7(e), the Company shall have the right, pursuant to Section 15.4(e), to replace Banks, including during the period from the Reply Date through the Existing Termination Date. SECTION 3 SWING LOANS. 3.1 Commitment to Make Swing Loans. On the terms and subject to the conditions of this Agreement, each of the Banks severally, and for itself alone, agrees to make loans (herein collectively called "Swing Loans" and individually called a "Swing Loan") to the Company in such amounts as the Company may from time to time request, but subject to the limits specified in Section 3.2. 3.2 Swing Loan Limits. The Swing Loans shall not exceed the following limits: (i) no Bank (except the Bank which is Administrative Agent) shall be obligated to make any Swing Loan in excess of the Unused Commitment of such Bank, (ii) the aggregate principal amount of Swing Loans at any one time outstanding as determined by the Administrative Agent pursuant to Section 8.5(b), when added to all swing loans (if any) then outstanding under the Long Term Credit Agreement, shall not exceed $30,000,000, (iii) so long as the aggregate principal amount of all Loans under this Agreement, when added to the aggregate principal amount of all loans (if any) then outstanding under the Long Term Credit Agreement, shall exceed $301,500,000, the Company shall have no right to request from any Bank other than the Bank which is Administrative Agent, and no Bank other than the Bank which is Administrative Agent shall be required to make, any Swing Loan, (iv) there shall be not more than one Swing Loan outstanding at any one time from any Bank which is not the Administrative Agent, and (v) the aggregate principal amount of Swing Loans shall not exceed the limits specified in Section 2.2(b). 3.3 Borrowing Procedure. Each Swing Loan shall be made on notice, delivered by the Company to the Swing Loan Bank and to the Administrative Agent, not later than 1:00 p.m., Chicago time, or such other time agreed to by the Company and the Swing Loan Bank, on the date on which the Company desires to obtain such Swing Loan, such notice to be in writing or by telex, or telephonic notice confirmed promptly thereafter in writing, substantially in the form of Exhibit G ("Swing Loan Request"). Not later than 2:00 p.m., Chicago time, or such other time agreed to by the Company and the Swing Loan Bank, on such date, the Swing Loan Bank shall provide the Company, at the Funding Office of such Bank for Base Rate Loans, immediately available funds in the amount of such Swing Loan unless prior to such time the Administrative Agent shall have advised the Swing Loan Bank that such Loan would not be within the limits specified in Section 3.2 or the Swing Loan Bank becomes aware that the conditions set forth in Section 12.2 have not been satisfied with respect to such Loan, in either of which events such Swing Loan shall not be made. Concurrently with each funding of a Swing Loan, the Swing Loan Bank shall give notice of such Swing Loan to the Administrative Agent. The Swing Loan Bank shall be entitled to assume that each of the conditions to the making of the Swing Loan have been satisfied absent actual knowledge to the contrary received by the Swing Loan Bank. 3.4 Interest and Repayment. Each Swing Loan shall, before the maturity of such Swing Loan, bear interest at the Base Rate. Each Swing Loan (including accrued interest) shall be due and payable on the last day of the Interest Period applicable thereto, but in no event later than the Termination Date of the Bank making such Swing Loan. Each Swing Loan shall be prepayable, at the Company's option, on notice to each of the Swing Loan Bank and the Administrative Agent. Each payment of principal or interest on a Swing Loan shall be made by the Company directly to the Swing Loan Bank at its Funding Office for Base Rate Loans accompanied by notice to the Administrative Agent. Promptly upon repayment of any Swing Loan, the Swing Loan Bank shall advise the Administrative Agent thereof. 3.5 Swing Notes. Each Swing Loan shall be evidenced by the Company's promissory note (as amended, modified or supplemented from time to time, and together with any renewals thereof or exchanges or substitutions therefor, collectively called the "Swing Notes" and individually called a "Swing Note") substantially in the form of Exhibit D, with appropriate insertions, which shall be dated the Effective Date and made payable to the order of each Bank, respectively. 3.6 Participation of Banks. From time to time when any Swing Loans are outstanding, (a) upon written demand made of the Administrative Agent and the Company by any Swing Loan Bank, the Company agrees to request Loans from all of the Banks in accordance with Section 2.1 and to apply the proceeds of such Loans to the repayment of all outstanding Swing Loans of such Swing Loan Bank; and (b) upon written demand by any Swing Loan Bank, each other Bank irrevocably and unconditionally shall purchase and receive from such Swing Loan Bank, without recourse or warranty (except that the outstanding Swing Loans in fact were made and not theretofore sold or assigned by such Swing Loan Bank), an undivided interest and participation in the Swing Loans then outstanding of such Swing Loan Bank, by paying to the Administrative Agent, in Dollars and in same day funds, an amount equal to such other Bank's Swing Loan Percentage of all Swing Loans of such Swing Loan Bank then outstanding, whereupon the Administrative Agent shall promptly, but not more than one Business Day thereafter, pay over such funds to such Swing Loan Bank. Upon receipt by such Swing Loan Bank of the funds required to be paid to the Administrative Agent, such Swing Loans shall thereafter be treated in all respects as Base Rate Revolving Loans under this Agreement, except that such Swing Loan Bank may retain for its own account all interest accrued thereon prior to the date of each such payment. SECTION 4 NEGOTIATED LOANS 4.1 Negotiated Loan Option. On the terms and subject to the conditions of this Agreement, each of the Banks, severally and for itself alone, agrees that the Company shall have the option from time to time to request loans (herein collectively called "Negotiated Loans" and individually called a "Negotiated Loan"), and that if such Bank, in its sole discretion, accepts such request for a Negotiated Loan it will make such Negotiated Loan to the Company in accordance with such request as so accepted, subject, however, to the limits specified in Section 4.2. No Bank shall be obligated to accept any request for a Negotiated Loan. The Company shall not request any Negotiated Loan that would fund within the two Business Days before the then effective Termination Date, unless the Company shall have then received Extension Replies which represent unrevoked consents to the Extension Request which have been executed by Banks representing at least 66-2/3% of the Commitments. 4.2 Negotiated Loan Limits. The aggregate principal amount of all Negotiated Loans, when added to the aggregate principal amount of all Revolving Loans and Swing Loans then outstanding, all as determined by the Administrative Agent pursuant to Section 8.5(b), shall not exceed the Aggregate Commitment at any time. Subject to the foregoing, the Negotiated Loans of any Bank may be less than, equal to or greater than the Commitment of such Bank. 4.3 Procedure for Negotiated Loans. (a) Negotiated Loan Confirmation. The Company shall make each request for a Negotiated Loan by furnishing a request to any Bank selected by the Company, such request to be in writing, or by telex or telephonic notice confirmed promptly thereafter in writing, substantially in the form of Exhibit H ("Negotiated Loan Confirmation"). Each Negotiated Loan Confirmation shall specify the principal amount, the Interest Period, the interest rate, and the Funding Date of such Negotiated Loan, together with the other information provided for in the Negotiated Loan Confirmation. Concurrently with each acceptance by a Bank of a Negotiated Loan Confirmation, the Company and the accepting Bank shall advise in writing, or by telex or telephonic notice confirmed promptly thereafter in writing, each of the Negotiated Loan Agent and the Administrative Agent of the amount, maturity and Funding Date of the requested Negotiated Loan as so accepted. (b) Funding of Negotiated Loans. the Funding Date of each Negotiated Loan, the Bank making such Negotiated Loan shall provide (subject to netting pursuant to Section 7.1(d)) the Negotiated Loan Agent at such Agent's Funding Office with immediately available Dollars covering such Bank's Negotiated Loan to be funded on such Funding Date. The Negotiated Loan Agent shall pay over such funds to the Company on such day unless prior to such time, the Negotiated Loan Agent receives notice from the Company or the Administrative Agent, whether pursuant to Section 4.3(b)(ii) or Section 8.5(b) or otherwise, that the Company has not satisfied the conditions set forth in Section 12. If the Negotiated Loan Agent receives such notice, then (A) the Negotiated Loan Agent shall not pay over such funds to the Company on such day, (B) the Loan Request related to such Loan or Loans shall be deemed cancelled in its entirety, (C) the Company shall be liable to such Bank in accordance with Section 9.5, and (D) the Negotiated Loan Agent shall return the amount previously provided to the Negotiated Loan Agent by such Bank on the next following Business Day, together with interest on such amount for each day that elapses from and including the originally scheduled Funding Date of such Negotiated Loan(s) to but excluding the day on which the Negotiated Loan Agent so returns such amount at the Federal Funds Rate for each such day, based upon a year of 360 days. (ii) The Company agrees to notify the Negotiated Loan Agent, the Administrative Agent and the Bank scheduled to make a Negotiated Loan immediately of any failure to satisfy the conditions set forth in Section 12. The Negotiated Loan Agent shall be entitled to assume that each of such conditions have been satisfied absent actual knowledge to the contrary received by the Negotiated Loan Agent. (iii) Concurrent with each funding of a Negotiated Loan, the Negotiated Loan Agent shall advise the Administrative Agent thereof. 4.4 Interest and Repayment. Each Negotiated Loan shall bear interest payable at such rate and at such times as set forth in the related Negotiated Loan Confirmation, it being understood that such interest rate may be fixed or fluctuating and may be less than, equal to or greater than the interest rate applicable to Revolving Loans or Swing Loans. Each Negotiated Loan shall mature on the last day of the Interest Period applicable thereto, but in no event later than the Maturity Date of the Bank making such Negotiated Loan. Accrued interest on each Negotiated Loan shall be payable directly to the Bank making such Negotiated Loan. The principal of each Negotiated Loan shall be paid by the Company to the Negotiated Loan Agent for the account of the Bank making such Negotiated Loan. Promptly upon repayment of each Negotiated Loan, the Negotiated Loan Agent shall advise the Administrative Agent thereof. Each Bank making a Negotiated Loan shall give notice in writing to the Administrative Agent and the Negotiated Loan Agent of any failure by the Company to pay interest when due on any Negotiated Loan. 4.5 Negotiated Loan Notes. Each Negotiated Loan shall be evidenced by the Company's promissory note (as amended, modified or supplemented from time to time and together with any renewals thereof or exchanges or substitutions thereof, collectively called the "Negotiated Notes" and individually called a "Negotiated Note" and being substantially in the form set forth in Exhibit E), in each case with appropriate insertions, each of which shall be dated the Effective Date and made payable to the order of each Bank, respectively. SECTION CONTROL If a Change of Control occurs, then upon thirty days' written notice to the Company given not later than 180 days after the date on which written notice of the occurrence of such Change of Control is given to the Banks pursuant to Section 11.1(h) following any Change of Control, (i) the Required Banks may by notice to the Company terminate the Commitments of all of the Banks, whereupon all of the Commitments shall terminate immediately, and (ii) Banks holding Notes evidencing at least 66-2/3% of the aggregate unpaid principal amount of all Loans may by notice to the Company declare all Liabilities to be due and payable, whereupon all Liabilities shall become immediately due and payable, all without presentment, demand or further notice of any kind, all of which are hereby waived by the Company. SECTION 6 INTEREST AND FEES. 6.1 Interest Rates. The Company hereby promises to pay interest on the unpaid principal amount of each Loan for the period commencing on the Funding Date of such Loan until such Loan is paid in full, as follows: (a) if such Loan is a Base Rate Loan or a Swing Loan, at a rate per annum equal to the Base Rate from time to time in effect; (b) if such Loan is a Eurodollar Loan, at a rate per annum during each Interest Period equal to the Eurodollar Rate applicable to such Interest Period, plus 0.375% per annum, plus any applicable Eurodollar Margin Increment; and (c) if such Loan is a Negotiated Loan, at a rate determined pursuant to Section 4.4; provided, however, that after maturity of any Loan (whether by acceleration or otherwise), such Loan shall bear interest on the unpaid principal amount thereof at a rate per annum equal to the Base Rate from time to time in effect (but not less than the applicable interest rate in effect at maturity) plus 2% per annum. The Company hereby further promises to pay any additional interest on the unpaid principal amount of each applicable Fixed Rate Loan, whether before or after the maturity thereof, as may be required in accordance with Section 9. 6.2 Eurodollar Margin Increment. If at the end of any Fiscal Quarter, the Ratio of Earnings to Fixed Charges determined as of the last day of such Fiscal Quarter is less than 1.25:1, or if the Company has failed to provide on a timely basis the certificate required to be furnished by it pursuant to Section 11.1(c), then subject to Section 6.9, from and including the first day after the end of such Fiscal Quarter to but excluding the first day after the end of the following Fiscal Quarter, the Company shall pay additional interest with respect to its Eurodollar Loans outstanding during such following Fiscal Quarter in an amount equal to 0.125% per annum (the "Eurodollar Margin Increment"). 6.3 Interest Payment Dates. Accrued interest on each Loan shall be payable on the last day of the Interest Period therefor and on each Conversion date related to such Loan; provided, however, that accrued interest on each Eurodollar Loan which has an Interest Period of 6 months shall be payable on the 90th day of such Interest Period or, if such day is not a Business Day, on the next succeeding Business Day; and provided, further, that any interest payable with respect to an applicable Eurodollar Margin Increment shall be payable within fifteen days of the last day of the Fiscal Quarter during which such Eurodollar Margin Increment is applicable and on the Maturity Date to the extent any Eurodollar Margin Increment has theretofore accrued and remains outstanding. After maturity of any Loan, accrued interest on such Loan shall be payable on demand. 6.4 Setting and Notice of Loan Rates. (a) The applicable interest rate for each Loan (other than a Negotiated Loan) shall be determined by the Administrative Agent and, in the case of Eurodollar Loans, notice thereof shall be given by the Administrative Agent to the Company and each Bank promptly, but in any event on the same day as received. Each determination of the applicable interest rate by the Administrative Agent shall be conclusive and binding upon the parties hereto, in the absence of manifest error. (b) In the case of Eurodollar Loans, each Reference Bank agrees to use its best efforts to notify the Administrative Agent in a timely fashion of its applicable rate after the Administrative Agent's request therefor. If as to any Interest Period any one or more of the Reference Banks is unable or for any reason fails to notify the Administrative Agent of its applicable rate by 9:30 a.m., Chicago time, two Business Days before the beginning of such Interest Period, then the applicable Eurodollar Rate shall be determined on the basis of the rate or rates of which the Administrative Agent is given notice by the remaining Reference Bank or Banks by such time. If none of the Reference Banks notifies the Administrative Agent of such a rate prior to 9:30 a.m., Chicago time, two Business Days before the beginning of such Interest Period, then (i) the Administrative Agent shall promptly notify the other parties thereof and (ii) at the Company's option, the Loan Request or Conversion Notice delivered by the Company with respect to such Interest Period shall be cancelled or, if not cancelled, shall be deemed to have specified a Base Rate Loan. (c) The Administrative Agent shall, upon written request of the Company or any Bank, deliver to the Company or such Bank a statement showing the computations used by the Administrative Agent in determining the interest rate applicable to any Eurodollar Loan. 6.5 Commitment Fee. The Company agrees to pay to the Administrative Agent for the account of each Bank (pro rata in accordance with the average daily amount of the Unused Commitment of such Bank), within fifteen days of the last day of December 1994, and thereafter within fifteen days of the last day of each calendar quarter of each year until the Termination Date for such Bank, and on the Termination Date for such Bank, a commitment fee computed at the rate of 0.10% per annum on the average daily amount of the Aggregate Commitment minus the aggregate principal amount of all Revolving Loans and Negotiated Loans then outstanding during the quarterly or other period preceding the date of such payment (commencing, in the case of the first of such periods, on and as of the Effective Date), payable in arrears for the quarterly or other period then ending; provided, however, that if at the end of any Fiscal Quarter, the Ratio of Earnings to Fixed Charges determined as of the last day of such Fiscal Quarter is less than 1.25:1 then from and including the first day after the end of such Fiscal Quarter to but excluding the first day after the end of the following Fiscal Quarter, the rate set forth above shall be increased by 0.0675% per annum. 6.6 Displaced Commitment Fee. The Company agrees to pay to the Administrative Agent for the account of each Bank (pro rata in accordance with the respective average daily amount of the Unused Commitment of each Bank), within fifteen days of the last day of December 1994, and thereafter within 15 days of the last day of each calendar quarter of each year until the Termination Date of such Bank and on the Termination Date of such Bank, a displaced commitment fee computed at the rate of 0.10% per annum on the average daily amount of Displaced Loans during the quarterly or other period preceding the date of such payment (commencing, in the case of the first of such periods, on and as of the Effective Date), payable in arrears for the quarterly or other period then ending. As used herein, the term "Displaced Loans" means for all Banks which, as a result of their Negotiated Loans, have made Loans in excess of their respective Commitment, the Loans representing the excess of all Loans made by such Banks over the aggregate Commitments of such Banks. 6.7 Agents' Fees. The Company agrees promptly to pay to each Agent such fees as may be agreed from time to time by the Company and such Agent. 6.8 Computation of Interest and Fees. Interest on Eurodollar Loans shall be computed for the actual number of days elapsed on the basis of a 360-day year. Interest on Negotiated Loans shall be computed in accordance with the related Negotiated Loan Confirmations. Interest on Base Rate Loans and all fees shall be computed for the actual number of days elapsed on the basis of a 365- or, if applicable, 366-day year. The interest rate applicable to each Base Rate Loan, and after maturity of any other Type of Loan the interest rate applicable to such Loan, shall change simultaneously with each change in the Base Rate without any notice or other action involving the Company. 6.9 Determination of Margin and Fee Increase. For the purposes of calculating the Eurodollar Margin Increment in Section 6.2 or any fee increase (a "Fee Increase") in Section 6.5, the Ratio of Earnings to Fixed Charges as at the end of any Fiscal Quarter shall be determined (i) in the case of each of the first three Fiscal Quarters of any Fiscal Year by reference to the certificate from the Company to be delivered to each of the Banks pursuant to Section 11.1(c) and (ii) in the case of the last Fiscal Quarter of any Fiscal Year, initially by reference to a certificate from the Company to be delivered to each of the Banks not later than ninety days following the end of such Fiscal Quarter in the form of the certificate delivered pursuant to the foregoing clause (i) (but limited to the calculation of the Ratio of Earnings to Fixed Charges). Each such certificate shall contain the Company's calculation of the Ratio of Earnings to Fixed Charges as at the end of the preceding Fiscal Quarter. Until receipt by the Banks of such certificate, failure of the Company to furnish such certificate on a timely basis shall be deemed (for purposes of Sections 6.2 and 6.5) to constitute an acknowledgement by the Company that the Ratio of Earnings to Fixed Charges is less than 1.25:1. If, in the case of any Fiscal Quarter, the actual Ratio of Earnings to Fixed Charges as at the end of the preceding Fiscal Quarter (as determined by reference to the audited report delivered pursuant to Section 11.1, to any correction with respect to any certificate previously furnished by the Company or to any certificate furnished on an untimely basis) results in a Eurodollar Margin Increment or a Fee Increase different from that applied in connection with the Company's calculation, such new Eurodollar Margin Increment or Fee Increase shall come into effect immediately upon the Banks' receipt of such report, correction or untimely certificate and shall be given retroactive effect to and including the first day of the Fiscal Quarter immediately following the Fiscal Quarter to which such report, correction or untimely certificate relates, and within fifteen days of the Banks' receipt of such report, correction or untimely certificate, either the Company shall pay to the Administrative Agent (for the account of the Banks) or the Banks shall pay to the Administrative Agent (for return to the Company) such amounts as shall be necessary to give effect to such new Eurodollar Margin Increment or such new Fee Increase. SECTION 7 REVOLVING LOAN PROCEDURES; CONVERSIONS AND CONTINUATIONS. 7.1 Procedure for Revolving Loans. (a) Loan Requests. The Company shall give the Administrative Agent irrevocable telephonic notice (promptly confirmed in writing on the same day), not later than 9:30 a.m., Chicago time, of each borrowing of Revolving Loans (i) in the case of a Eurodollar Loan, at least three (3) Business Days prior to the Funding Date for such Loans and (ii) in the case of a Base Rate Loan, on the Funding Date for such Loans. The Administrative Agent shall advise each Bank of such notice promptly, but in any event on the same day as received, and, in the case of Eurodollar Loans, request each Reference Bank to notify the Administrative Agent of its applicable rate (as contemplated in the definition of Eurodollar Rate). Each such notice from the Company to the Administrative Agent shall be substantially in the form of Exhibit F ("Revolving Loan Request") with appropriate insertions, and shall specify (i) the Funding Date for the Revolving Loans requested, (ii) the aggregate amount of the Revolving Loans requested (in an amount permitted under Section 7.1(b)), (iii) whether the requested Revolving Loans shall be Eurodollar Loans or Base Rate Loans, and (iv) in the case of Eurodollar Loans, the Interest Period therefor (subject to the limitations set forth in the definition of Interest Period). (b) Amount and Increments of Revolving Loans. Each of the Company's Revolving Loan Requests shall request Revolving Loans in a minimum aggregate amount of $5,000,000 or an integral multiple of $1,000,000 over such amount, not to exceed, in the aggregate at any one time outstanding, the limits specified in Section 2.2 (c) Funding of Revolving Loans. (i) Not later than 12:00 noon, Chicago time, on each Funding Date for Revolving Loans, each Bank shall provide (subject to netting pursuant to Section 7.1(d)) the Administrative Agent at such Agent's Funding Office for Base Rate Loans with immediately available Dollars covering such Bank's Revolving Loan and, if the conditions set forth in Section 12 shall have been satisfied not later than 9:00 a.m., Chicago time, on such date, such Agent shall pay over such funds to the Company on such day. If such conditions have not been satisfied prior to such time, then (A) such Agent shall not pay over such funds to the Company on such day, (B) the Loan Request related to such Loan shall be deemed cancelled in its entirety, (C) the Company shall be liable to each Bank in accordance with Section 9.5, and (D) such Agent shall return the amount previously provided to such Agent by each Bank on the next following Business Day together with interest on such amount for each day that elapses from and including such Loan's originally scheduled Funding Date to but excluding the day on which such Agent so returns such amount at the Federal Funds Rate for each such day, based upon a year of 360 days. (ii) The Company, notwithstanding its previous delivery of any documents required under Section 12 with respect to a particular Loan, agrees to notify the Administrative Agent immediately of any failure to satisfy the conditions precedent to the making of any Revolving Loan. The Administrative Agent shall be entitled to assume, after it has received each of the documents required under Section 12 with respect to a particular Loan, that each of the conditions precedent to the making of such Loan have been satisfied absent actual knowledge to the contrary received by such Agent prior to the time of the receipt of such documents. (d) Netting. If any Bank makes a Loan hereunder on a day on which the Company is to repay all or any part of any outstanding Revolving Loan, Swing Loan or Negotiated Loan, as the case may be, held by such Bank, such Bank shall apply the proceeds of such new Loan to make such repayment and only an amount equal to the positive difference, if any, between the amount being borrowed from such Bank and the amount being repaid to such Bank shall be made available by such Bank to the Administrative Agent as provided in Section 7.1(c). 7.2 Conversion and Continuation Procedures. (a) The Company may (i) Convert all or any part of any Group of outstanding Revolving Loans (on a pro rata basis among the Banks based upon their respective Percentage share of such Group) into Revolving Loans of a different Type or (ii) Continue on the same basis all or any part of any Group of outstanding Revolving Loans as the same Type; provided, that, in any case the Company shall give an irrevocable notice of such Conversion or Continuation (a "Conversion Notice") to the Administrative Agent by 10:00 a.m., Chicago time, on a day which in the case of a Conversion into or a Continuation of Base Rate Loans is at least one (1) Business Day prior to the proposed date of such Conversion or Continuation and, in the case of a Conversion into or a Continuation of Eurodollar Loans, is at least three (3) Business Days prior to such date. Each such Conversion Notice shall be effective upon the Administrative Agent's receipt thereof, shall be in writing (or by telephone promptly confirmed in writing on the same day), shall specify the date and amount of such Conversion or Continuation, the Group of Loans to be so Converted or Continued, the Type of Loans to be Converted into, and the Interest Period(s) to be applicable to such Loans (in the case of Eurodollar Loans). Promptly upon receipt of each Conversion Notice the Administrative Agent shall advise each Bank thereof and, in the case of Conversions into or Continuations of Eurodollar Loans, shall request each Reference Bank to notify such Agent of its applicable rate (as contemplated in the definition of Eurodollar Rate). (b) Each Conversion or Continuation of Revolving Loans shall be in an aggregate principal amount of at least $5,000,000 and an integral multiple of $1,000,000 over such amount. If the Company does not deliver a Conversion Notice on or before the day that is three (3) Business Days before the last day of the then current Interest Period with respect to any Revolving Loan that is a Eurodollar Loan, such Revolving Loan automatically shall be Converted into a Base Rate Loan at the end of its then current Interest Period unless theretofore paid in full. If the Company does not deliver a Conversion Notice on or before the day before the last day of the then current Interest Period with respect to any Revolving Loan that is a Base Rate Loan, such Revolving Loan automatically shall be Continued as a Base Rate Loan at the end of its then current Interest Period unless theretofore paid in full. (c) Notwithstanding any other provision of this Agreement, (i) no Group of Revolving Loans shall be Continued or Converted, if 4 Business Days before the last day of the then current Interest Period, any Bank notifies the Administrative Agent that such Loans are not to be Continued or Converted, in which case such Group of Loans shall be due and payable on the last day of such Interest Period; provided, however, that this clause (i) shall not apply to any Group of Revolving Loans which was made pro rata according to each Bank's Commitment, (ii) neither Swing Loans nor Negotiated Loans shall be Continued or Converted pursuant to this Agreement, it being understood that such Loans shall mature (if not earlier) at the end of their respective Interest Periods, and (iii) no Loans shall be Converted to Negotiated Loans or Swing Loans under this Section 7.2. SECTION 8 MAKING AND SHARING OF PAYMENTS AND PREPAYMENTS; SETOFF; TAXES; RECORDKEEPING. 8.1 Making of Payments. (a) All payments of principal of, or interest on, the Loans, and all payments of commitment fees, shall be made by the Company to the Applicable Agent in immediately available Dollars for the account of the Banks or the holders of the applicable Loans, as the case may be; provided, that (i) the principal of and accrued interest on each Swing Loan shall be payable directly to the Swing Loan Bank pursuant to Section 3.4, and (ii) accrued interest on each Negotiated Loan shall be payable directly to the Bank that made such Negotiated Loan pursuant to Section 4.4. All such payments shall be made (or initiated, in the case of payments being made by Fedwire) to the Applicable Agent or applicable Bank, as the case may be, at its respective office shown below its signature hereto (or at such other office as may be designated from time to time by the Applicable Agent or such Bank by notice to the other parties), not later than 12:00 noon, Chicago time, on the date due; and funds received after that hour shall be deemed to have been received by the Applicable Agent or applicable Bank, as the case may be, on the next following Business Day. Notwithstanding the foregoing, all payments under Section 9 shall be made by the Company directly to the Persons entitled thereto. (b) Voluntary Loan Prepayments. The Company may voluntarily prepay Loans from time to time in whole or in part, provided that (a) the Company shall give the Administrative Agent (which shall promptly advise each Bank) not less than three (3) Business Days' (in the case of Eurodollar Loans) or one (1) Business Day's (in the case of Base Rate Loans) prior notice thereof, specifying the Loans to be prepaid and the date and amount of prepayment, (b) Negotiated Loans may be prepaid only in accordance with the terms of the accepted Negotiated Loan Confirmation related thereto or with the consent of the Bank making such Negotiated Loan, (c) any prepayment of any Loan shall include accrued interest on the principal amount being paid to the date of prepayment, (d) any prepayment of a Fixed Rate Loan shall be subject to the provisions of Section 9.5, and (e) Loans in the same Group shall be prepaid on a pro rata basis among the Banks based upon their respective Percentage of such Group. (c) Mandatory Loan Prepayments. The Company shall prepay Loans pursuant to the provisions of Section 2.7(d). 8.2 Sharing of Payments. (a) Reallocation. Promptly upon the giving of any Payment Sharing Notice, the Banks shall purchase and sell among themselves (without recourse) such participations in the Revolving Loans and Swing Loans so that after giving effect thereto with respect to each Bank: (A) the ratio of (i) the aggregate principal amount of its then outstanding Loans other than Negotiated Loans to (ii) the aggregate principal amount of all then outstanding Loans other than Negotiated Loans shall equal (B) the ratio of (i) the amount, if any, by which such Bank's Commitment exceeds the aggregate principal amount of the Negotiated Loans of such Bank then outstanding (such Bank's "Adjusted Commitment") to (ii) the aggregate of all Adjusted Commitments of all Banks, all in such manner as may be determined by the Administrative Agent. (b) Proration of Payments. Whenever (i) any payment received by either the Administrative Agent or the Negotiated Loan Agent to be distributed to the Banks in connection with the Loans or otherwise in connection herewith is insufficient to pay in full any amounts then due and payable to the Banks in connection with the Loans, and/or (ii) after receipt by either the Administrative Agent or the Negotiated Loan Agent of a Payment Sharing Notice, then any payments (if any) received (and not theretofore distributed) by the Negotiated Loan Agent with respect to Negotiated Loans shall be paid over to the Administrative Agent and all payments received by the Administrative Agent (whether from the Negotiated Loan Agent or the Company) shall be distributed to the Banks by the Administrative Agent in the following order: first, to the payment of fees and expenses due and payable to the Agents under or in connection with this Agreement; second, to the payment of all fees, expenses and other amounts payable under Sections 6, 15.5 and 15.6, ratably among the Banks in accordance with the aggregate amount of such payments owed to each Bank; third, to the payment of interest then due and payable on the Loans, ratably among the Banks in accordance with the aggregate amount of interest owed to each Bank; fourth, to the payment of the principal amount of the Loans, ratably among the Banks in accordance with the aggregate principal amount owed to each Bank; and fifth, to the payment of all remaining Liabilities (if any) under this Agreement, ratably among the Banks and the Agents according to the aggregate amount of such Liabilities owing to each Bank and each Agent. (c) Sharing. If any Bank, other holder of a Loan, or any Participant or Assignee shall obtain any payment or other recovery (whether voluntary, involuntary, by application of offset or otherwise) on account of principal of, interest on or fees or other amounts hereunder in excess of the share of payments and other recoveries (exclusive of payments or recoveries under Sections 8.4, 9 and 15.4(e) and exclusive of payments to a Bank on the Maturity Date of such Bank by reason of the failure of such Bank to extend its Commitment pursuant to Section 2.7) such Bank or other Person would have received if such payment or recovery had been in accordance with Sections 8.2(a) and (b), such Bank or other Person shall purchase from the other Banks or Persons, in a manner to be specified by the Administrative Agent, such participations in the Loans, as the case may be, held by them as shall be necessary to cause such purchasing Bank or other Person to share the excess payment or other recovery ratably with each of them in accordance with Sections 8.2(a) and (b), as applicable; provided, however, that if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing Bank or Person, the purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest. 8.3 Setoff. The Company agrees that each Agent, each Bank (with respect to its Loans and with respect to any participations it purchases pursuant to Sections 3.6 and 8.2, with the same effect as if the amount of such participating interest were owing directly to such Bank) and each holder of a Note shall have all rights of setoff and bankers' lien provided by applicable law and, in addition thereto, the Company agrees that at any time (i) any amount owing by the Company under this Agreement or any Note is then due, directly or indirectly, to any Agent, any Bank or any such holder, or (ii) any Event of Default shall have occurred and be continuing, each Agent, each Bank and each such holder may apply to the payment of such amount any and all balances, credits, deposits, accounts or moneys of the Company then or thereafter with such Agent, such Bank or such holder, it being understood that the aggregate amounts set off shall at no time exceed the Liabilities. 8.4 Taxes. (a) All payments made by the Company to any Agent or any Bank under or in connection with this Agreement and the Notes shall be made without any setoff or counterclaim, and free and clear of and without deduction or withholding for or on account of any present or future Taxes now or hereafter imposed by any governmental or other authority, except to the extent that such deduction or withholding is compelled by law. As used herein, the term "Taxes" shall include all income, excise and other taxes of whatever nature (other than taxes generally assessed on the overall net income of any Agent or any Bank, as the case may be, by the government or other authority of the country in which such Agent or such Bank is incorporated or in which such Bank's Funding Office or the office through which such Agent is acting is located provided that taxes so assessed on any additional amounts payable hereunder shall constitute "Taxes") as well as all levies, imposts, duties, charges or fees of whatever nature. If the Company is compelled by law to make any such deductions or withholdings it will: (i) pay to the relevant authorities the full amount required to be so withheld or deducted; (ii) (except to the extent that such deduction or withholding results from the breach, by the recipient of a payment, of its agreement, if any, contained in Section 8.4(b) or would not be required if such recipient's representation or warranty contained in Section 8.4(b), if any, were true) pay such additional amounts (including, without limitation, any penalties, interest or expenses) as may be necessary in order that the net amount received by each Agent and each Bank after such deductions or withholdings (including any required deduction or withholding on such additional amounts) shall equal the amount such payee would have received had no such deductions or withholdings been made; and (iii) promptly forward to the Applicable Agent (for delivery to such payee) an official receipt or other documentation satisfactory to the Applicable Agent and such payee evidencing such payment to such authorities. Moreover, if any Taxes are directly asserted against any Agent or any Bank, such payee may pay such Taxes and the Company (except to the extent that such Taxes result from the breach, by such payee, of its agreement contained in Section 8.4(b), if any, or would not be asserted if such payee's representation or warranty contained in Section 8.4(b), if any, were true) promptly shall reimburse the payee for such Taxes and shall pay such additional amount (including, without limitation, any penalties, interest or expenses in connection therewith) as may be necessary in order that the net amount received by such payee after the payment of such Taxes (including any Taxes on such additional amount) shall equal the amount such payee would have received had no such Taxes been asserted. For purposes of this Section 8.4, a distribution hereunder by any Agent to or for the account of any Bank shall be deemed to be a payment by the Company. The Company's agreement under this Section 8.4 shall survive repayment of the Liabilities, cancellation of the Notes and/or any termination of this Agreement. (b) In consideration of, and as a condition to, the Company's undertakings in Section 8.4(a), each Bank which is a Non-United States Person agrees (to the extent it is permitted to do so under the laws and any applicable double taxation treaty of the jurisdiction of its incorporation and the jurisdiction in which its Funding Office is located) to execute and deliver to the Administrative Agent for delivery to the Company, before the first scheduled payment date hereunder in each calendar year, either (i) two United States Internal Revenue Service Forms 1001 or (ii) two United States Internal Revenue Service Forms 4224 together with two United States Internal Revenue Service Forms W-9, or any successor forms, as appropriate, properly completed and claiming complete or partial, as the case may be, exemption from withholding and deduction of United States Federal Taxes. Each Bank which is a Non-United States Person represents and warrants to the Company that, at the Effective Date, (x) its Eurodollar Loan and Base Rate Loan Funding Offices are entitled to receive payments of interest hereunder without deduction or withholding for or on account of any Taxes imposed by the United States or any political subdivision thereof and (y) it is permitted to take the actions described in the preceding sentence under the laws and any applicable double taxation treaties of the jurisdictions specified in the preceding sentence. (c) If at any time any Bank by reason of payment by the Company of any Taxes determines in its sole discretion that it has obtained a net credit against, or return or reduction of, any tax (other than the tax to which the payment by the Company relates) payable by it which it would not have enjoyed but for such payment ("Tax Benefit"), such Bank shall thereupon pay to the Company the amount which such Bank shall certify to be the amount that, after payment, will leave such Bank in the same economic position it would have been in had it received no such Tax Benefit ("Equalization Amount"); provided, however, that (i) if such Bank shall subsequently determine that it has lost the benefit of all or a portion of such Tax Benefit, the Company shall promptly remit to such Bank the amount certified by such Bank to be the amount necessary to restore such Bank to the position it would have been in if no payment had been made pursuant to this Section 8.4(c), (ii) if such Bank shall be prevented by applicable law from paying the Company all or any portion of the Equalization Amount owing the Company, such payment need not be made, (iii) such Bank shall be under no obligation to utilize any Taxes either as credits or deductions, (iv) the Company shall not be entitled to require such Bank to supply it with details of its tax position and (v) nothing contained herein shall interfere with the right of any Bank to arrange its tax affairs as it sees fit. A certificate submitted by a Bank pursuant to this Section 8.4(c) shall be conclusive, in the absence of manifest error. 8.5 Recordkeeping. (a) The Company. The Company shall maintain a register (the "Company Register") in which it shall (i) record on a daily basis all Loans made by each Bank (including each Group and each Type of Loan) to the Company pursuant to this Agreement and all payments of the principal amount thereof, and (ii) calculate on a daily basis the outstanding principal amount of each Loan. At any time the Company becomes aware of the failure of any Loan or requested Loan to be within the limits specified in Section 2.2, 3.2 or 4.2, it shall notify the Administrative Agent, the Negotiated Loan Agent and the Banks of such failure. On the last day of each week, the Company shall furnish to the Administrative Agent and the Negotiated Loan Agent a copy of the Company Register with respect to such week. Upon request of any Agent or any Bank, the Company shall advise the requesting party of the information contained in such Company Register or, if so requested, furnish a copy of the Company Register as it exists from time to time. (b) The Administrative Agent. The Administrative Agent shall maintain a register ("Master Register") in which it shall (i) calculate each Bank's Percentage of each Group of Revolving Loans, (ii) record on a daily basis all Loans made by each Bank (including each Group and each Type of Loan) to the Company pursuant to this Agreement and all payments of the principal amount thereof, (iii) calculate on a daily basis the outstanding principal amount of each Loan, (iv) calculate at the end of each Interest Period for each Loan (except the Negotiated Loans) the interest accrued for such Interest Period and (v) upon the giving of a Payment Sharing Notice, make the calculations required for the reallocation, proration and sharing provided for in Section 8.2. The Master Register shall be rebuttable presumptive evidence of the Loans and payments so recorded and principal amount and interest so calculated. At any time the Administrative Agent becomes aware of the failure of any Loan or requested Loan to be within the limits specified in Section 2.2, 3.2 or 4.2 or to satisfy the conditions of Section 12, it shall notify the Company, the Negotiated Loan Agent and the Banks of such failure. Within ten (10) Business Days of the last day of each Fiscal Quarter, the Administrative Agent shall furnish to the Company and each Bank a copy of the Master Register with respect to such Fiscal Quarter. Upon request of the Company or any Bank, the Administrative Agent shall advise the requesting party of the information contained in such Master Register or, if so requested, furnish a copy of the Master Register as it exists from time to time. (c) Negotiated Loan Agent. The Negotiated Loan Agent shall maintain a register ("Negotiated Loan Register") in which it shall (i) record on a daily basis all Negotiated Loans made by each Bank to the Company pursuant to this Agreement and all payments of the principal amount thereof, and (ii) calculate on a daily basis the outstanding principal amount of each Negotiated Loan. The Negotiated Loan Register shall be rebuttable presumptive evidence of the Negotiated Loans and payments so recorded and principal amount so calculated. At any time the Negotiated Loan Agent becomes aware of the failure of any Negotiated Loan or requested Negotiated Loan to be within the limit specified in Section 4.2, it shall notify the Company, the Administrative Agent and the Banks of such failure. Within five (5) Business Days of the last day of each Fiscal Quarter, the Negotiated Loan Agent shall furnish to the Company and the Administrative Agent a copy of the Negotiated Loan Register with respect to such Fiscal Quarter. Upon request of the Company or any Bank, the Negotiated Loan Agent shall advise the requesting party of the information contained in such Negotiated Loan Register or, if so requested, furnish a copy of the Negotiated Loan Register as it exists from time to time. (d) Each Bank. All Loans made by each Bank to the Company pursuant to this Agreement and all payments of the principal and interest thereon shall be evidenced by such Bank in its books and records or, at such Bank's option, on the schedule attached to its respective Note which evidences such Loans, which books and records or schedule shall be rebuttable presumptive evidence of the principal and interest owing and unpaid on such Note. information in the Company Register, the Master Register, the Negotiated Loan Register, any books or records or any schedule to any Note, or any error in so recording any such information shall not limit or otherwise affect the Company's obligations hereunder or under any Note to repay the principal amount of any Loan together with all interest accruing thereon. (f) Conflicts. To the extent that at any time any Bank or Agent or the Company is aware of any conflict between or among the Company Register, the Master Register, the Negotiated Loan Register and the records of any other party to this Agreement, such party shall immediately advise each of the other parties to this Agreement and the affected parties shall use their best efforts to resolve such conflict. SECTION 9 CHANGE OF CIRCUMSTANCES. 9.1 Reserve and Capital Adequacy Costs. (a) If Regulation D shall require reserves actually to be maintained in connection with any Eurodollar Loan or any Eurocurrency liabilities with respect thereto of any Bank, regardless of whether such Eurodollar Loan is then outstanding, such Bank may require the Company to pay (and the Company agrees to pay) additional interest on such Eurodollar Loan at a rate per annum equal to the difference between the Eurodollar Rate (Reserve Adjusted) and the Eurodollar Rate for such Eurodollar Loan's Interest Period. Any Bank wishing to require such payment with respect to any such Eurodollar Loan or any Eurocurrency liabilities with respect thereto shall give notice thereof at least three (3) Business Days prior to the last day of such Eurodollar Loan's Interest Period if such Eurodollar Loan is then outstanding or at least one (1) Business Day prior to the commencement of such Interest Period if such Eurodollar Loan is not then outstanding. On the last day of each Interest Period relating to each such Eurodollar Loan of such Bank, the Company shall pay directly to such Bank such additional interest. Once given, each such notice by a Bank shall be deemed automatically to continue in effect and apply to all of such Bank's Eurodollar Loans until such Bank revokes such notice. At such time, if any, as such Bank shall not be required so to maintain reserves, such Bank agrees so to notify the Company. (b) If a Bank reasonably determines that the amount of capital required or expected to be maintained by such Bank, any Funding Office of such Bank or any corporation controlling such Bank attributable to this Agreement, the Loans or its obligation to make Loans hereunder is increased as a result of a Change (as hereinafter defined), then, within 15 days of demand by such Bank (with a copy of such demand to the Applicable Agents), the Company shall pay such Bank the amount which such Bank determines is necessary to compensate it for any reduction in the rate of return on capital to an amount below that which such Bank, such Funding Office or such corporation could have achieved but for such Change and is attributable to this Agreement, the Loans or its obligation to make Loans hereunder. "Change" means (i) any change after the Effective Date in the Risk-Based Capital Guidelines (as hereinafter defined) or (ii) any adoption of or change in any other law, governmental or quasi-governmental rule, regulation, policy, guideline, interpretation, or directive (whether or not having the force of law) after the Effective Date which affects the amount of capital required or expected to be maintained by any Bank or any Funding Office or any corporation controlling any Bank or (iii) any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof or (iv) compliance by any Bank (or any Funding Office or corporation of any Bank) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency. "Risk-Based Capital Guidelines" means (i) the risk-based capital guidelines in effect in the United States on the Effective Date, including transition rules, and (ii) the corresponding capital regulations promulgated by regulatory authorities outside the United States implementing the July 1988 report of the Basle Committee on Banking Regulation and Supervisory Practices entitled "International Convergence of Capital Measurements and Capital Standards," including transition rules, and any amendments to such regulations adopted prior to the Effective Date. 9.2 Increased Costs. If (i) Regulation D, or (ii) after the Effective Date, the adoption of, or any change in, any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or any Funding Office of such Bank) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency, whether or not having the force of law, (a) shall subject any Bank (or any Funding Office of such Bank) to any tax, duty or other charge with respect to its Fixed Rate Loans, its Notes, or its obligation to make Fixed Rate Loans, or shall change the basis of taxation of payments to any Bank (or any Funding Office of such Bank) of the principal of or interest on its Fixed Rate Loans owed to it or any other amounts due under this Agreement in respect of its Fixed Rate Loans, its Notes, or its obligation to make Fixed Rate Loans (except for changes in the rate of tax on the overall net income of such Bank or its Funding Office imposed by the government or other authority of the country in which such Bank is incorporated or in which such Bank's Funding Office is located); or (b) shall impose, modify or deem applicable any reserve (including, without limitation, any reserve imposed by the Board of Governors of the Federal Reserve System, but excluding any reserve included in the determination of interest rates pursuant to Section 6), special deposit, capital adequacy, minimum capital, capital ratio, deposit insurance or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Bank (or any Funding Office of such Bank); or (c) shall impose, modify or deem applicable any capital adequacy or similar requirement on any Bank; or (d) shall impose on any Bank (or any Funding Office of such Bank) any other condition affecting its Fixed Rate Loans or its Notes or its obligation to make or maintain Fixed Rate Loans; and the result of any of the foregoing is to increase the cost to (or in the case of Regulation D, to impose an additional cost on) such Bank (or any Funding Office of such Bank) of making or maintaining any Fixed Rate Loan, or to reduce the amount of any sum received or receivable by such Bank (or such Bank's Funding Office) under this Agreement or under its Notes with respect thereto, or to reduce the rate of return on such Bank's capital to a level below that which such Bank could have achieved but for such adoption or compliance (taking into consideration such Bank's policies with respect to capital adequacy) by an amount which such Bank determines to be material, then within 10 days after demand by such Bank (which demand shall be accompanied by a statement setting forth the basis of such demand), the Company shall pay directly to such Bank such additional amount or amounts as will compensate such Bank for such increased cost or such reduction. Each Bank promptly shall notify the Company and the Administrative Agent of any event of which it has knowledge, occurring after the Effective Date, which will entitle such Bank to compensation pursuant to this Section 9.2 and will designate a different Funding Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in such Bank's sole judgment, be otherwise disadvantageous to such Bank. 9.3 Basis for Determining Interest Rate Inadequate or Unfair. If with respect to any Interest Period: (a) the Reference Banks advise the Administrative Agent that deposits in Dollars (in the applicable amounts) are not being offered by the Reference Banks in the relevant market for such Interest Period, or the Administrative Agent otherwise determines (which determination shall be binding and conclusive on all parties) that, by reason of circumstances affecting the London interbank eurodollar market, adequate and reasonable means do not exist for ascertaining the applicable Eurodollar Rate; or (b) the Required Banks (or any Bank scheduled to make a Negotiated Loan) advise the Administrative Agent or the Negotiated Loan Agent, as the case may be, that, as determined by the Administrative Agent or such Bank, the Eurodollar Rate, in the case of Eurodollar Loans, or the negotiated rate, in the case of a Negotiated Loan, will not adequately and fairly reflect the cost to the Required Banks (or such Bank) of maintaining or funding Eurodollar Loans or Negotiated Loans for such Interest Period, or that the making or funding of Eurodollar Loans or Negotiated Loans has become impracticable as a result of an event occurring after the Effective Date which in such Required Banks' (or such Bank's) opinion materially affects such Eurodollar Loans or Negotiated Loans, then so long as such circumstances shall continue: (i) the Administrative Agent promptly shall notify the Company and the Banks thereof, (ii) in the case of Eurodollar Loans, no Bank shall be under any obligation to make Eurodollar Loans or to Continue any Loan as, or Convert any Loan to, a Eurodollar Loan, and (iii) in the case of Negotiated Loans, such Bank shall be under no obligation to make any Negotiated Loan, irrespective of any previous acceptance of any Negotiated Loan Confirmation. 9.4 Changes in Law Rendering Certain Loans Unlawful. In the event that any change in (including the adoption of any new) applicable laws or regulations, or in the interpretation of applicable laws or regulations by any governmental or other regulatory body charged with the interpretation or administration thereof, would, in any Bank's opinion, make it unlawful for such Bank to make, maintain or fund Fixed Rate Loans, then (a) such Bank shall promptly notify each of the other parties hereto, (b) all Banks' obligations (if any) to make any Fixed Rate Loan made unlawful for such Bank shall, upon the effectiveness of such event, be suspended for the duration of such unlawfulness, and (c) on the last day of the then current Interest Period for each such Fixed Rate Loan (or, in any event, if such Bank so requests, on such earlier date as may be required by the relevant law, regulation or interpretation), such Fixed Rate Loan shall be repaid in full, together with accrued interest and any amounts payable under Section 9.5. 9.5 Funding Losses. The Company hereby agrees that upon demand by any Bank (which demand shall be accompanied by a statement setting forth the basis for the calculations of the amount being claimed) the Company will indemnify such Bank against any net loss or expense which such Bank may sustain or incur (including, without limitation, any net loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Bank to fund or maintain Fixed Rate Loans), as reasonably determined by such Bank, as a result of (a) any payment or mandatory or voluntary prepayment (including, without limitation, any payment resulting from an acceleration upon the occurrence of any Event of Default or Change of Control) of any Fixed Rate Loan of such Bank on a date other than the last day of such Loan's Interest Period, (b) any Conversion of any Eurodollar Loan on a date other than the last day of such Loan's Interest Period, or (c) any failure of the Company to borrow, Continue or Convert any Loans on the originally scheduled date specified therefor pursuant to this Agreement (including, without limitation, any failure to borrow resulting from any failure to satisfy the conditions precedent to such borrowing). For this purpose, all notices to the Administrative Agent or the Negotiated Loan Agent pursuant to this Agreement shall be deemed to be irrevocable. 9.6 Discretion of Banks as to Manner of Funding. (a) Notwithstanding any other provision of this Agreement to the contrary, each Bank shall be entitled to fund and maintain its funding of all or any part of its Loans in any manner it sees fit; it being understood, however, that for the purposes of this Agreement all determinations hereunder shall be made as if such Bank had actually funded and maintained each Fixed Rate Loan during the Interest Period for such Loan through the purchase of deposits having a maturity (and in the case of Eurodollar Loans, bearing interest at the Eurodollar Rate) corresponding to such Interest Period. (b) The Company shall not be obligated under this Agreement to make any greater payment to any Bank which changes any Funding Office than such Bank would have been entitled to receive if such Funding Office had not been changed, unless such Funding Office was changed (i) with the Company's prior written consent, (ii) at the Company's request, (iii) to mitigate or avoid the suspension of such Bank's obligations or the requirement of payment of increased costs in the circumstances contemplated by Section 9.1(a), 9.2, 9.3 or 9.4, or (iv) at a time when the circumstances giving rise to such greater payment did not exist. 9.7 Conclusiveness of Statements; Survival of Provisions. Determinations and statements of any Bank pursuant to Sections 9.1 through 9.6 shall be conclusive absent manifest error, and the provisions of Sections 9.1 through 9.6 shall survive termination of this Agreement and payment of the Notes. 9.8 Negotiated Loans. The provisions of Sections 9.1 through 9.6 shall not apply to any Negotiated Loan to the extent that the related Negotiated Loan Confirmation expressly so provides. Notwithstanding the foregoing, the provisions of Section 9.5 shall apply to any prepayment of Negotiated Loans pursuant to Section 2.7(d) regardless of the terms of any Negotiated Loan Confirmation. SECTION 10 REPRESENTATIONS. To induce the Banks to enter into this Agreement and to make Loans hereunder, the Company hereby makes the following representations and warranties to the Agents and the Banks: 10.1 Organization, etc. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Illinois; each Subsidiary is a corporation duly organized, validly existing and in good standing under the laws of the state of its respective incorporation; and each of the Company and each Subsidiary is duly qualified and in good standing as a foreign corporation authorized to do business in each jurisdiction where, because of the nature of its activities or properties, such qualification is required and the failure so to qualify would have a material adverse effect on the business, credit, operation, financial condition or prospects of the Company and its Restricted Subsidiaries taken as a whole. 10.2 Authorization; No Conflict. The execution, delivery and performance of this Agreement and the Notes, and the borrowings hereunder, (i) are within the Company's corporate powers, (ii) have been duly authorized by all necessary corporate action, (iii) do not require any governmental approval which has not been previously obtained (and each such governmental approval that has been previously obtained remains effective), (iv) do not and will not contravene or conflict with any provision of law, or of any judgment, decree or order, or of the Company's charter or by-laws, and (v) do not and will not contravene or conflict with, or cause any Lien to arise under, any provision of any agreement binding upon the Company, any Subsidiary or any of their respective properties. 10.3 Validity and Binding Nature. This Agreement is, and the Notes when duly executed and delivered by the Company will be, legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforcement may be limited by the application of bankruptcy, moratorium, reorganization or other laws affecting the rights of creditors generally or by general principles of equity (whether or not a proceeding is brought in a court of law or equity). 10.4 Financial Statements. (a) The Company has furnished to the Banks true and correct copies of the Company's audited consolidated financial statements as at January 1, 1994, and its unaudited consolidated financial statements as at July 2, 1994. Such financial statements have been prepared in conformity with GAAP (subject to normal year-end audit adjustments in the case of such unaudited consolidated financial statements, and subject to the information set forth in the footnotes to such audited consolidated financial statements), and fairly present the financial condition of the Company and its Subsidiaries as at such dates and the results of their operations for the periods then ended. (b) Since either of the dates of the financial statements referred to in Section 10.4(a), there has been no material adverse change in the business, credit, operations, financial condition or prospects of the Company and its Subsidiaries taken as a whole. 10.5 Litigation and Contingent Liabilities. No Material Litigation is pending or, to the Company's knowledge, threatened against the Company except as set forth in Schedule II or as set forth in the 10-K Report of the Parent for the fiscal year ended January 1, 1994, or the 10-Q Report of the Parent for the period ended July 2, 1994, all as filed with the SEC. Other than any liability incident to such Material Litigation, neither the Company nor its Subsidiaries have any material contingent liabilities not provided for or disclosed in the financial statements referred to in Section 10.4. 10.6 Title to Property. The Company and its Subsidiaries own and hold, with respect to material real property, good and marketable title, and with respect to other material property, good and valid title, to their respective assets and property reflected in the financial statements referred to in Section 10.4 or acquired since such dates (other than assets and property sold or disposed of in the ordinary course of business), free and clear of any Lien except those referred to in Section 10.7 or permitted under Section 11.2. 10.7 Liens. None of the assets of the Company or any Subsidiary is subject to any Lien, except Liens shown in the financial statements referred to in Section 10.4 or in Schedule III or permitted under Section 11.2. 10.8 Subsidiaries. The Company has no Subsidiaries or Restricted Subsidiaries, as the case may be, except those listed in Schedule IV. 10.9 Plans and Welfare Plans. No steps have been instituted to terminate any Plan, no contribution failure has occurred with respect to any Plan sufficient to give rise to a lien under section 302(f) of ERISA, and no Plan has incurred an "accumulated funding deficiency" within the meaning of section 412 of the Code or Part 3 of Title I of ERISA. To the best of the Company's knowledge, no condition exists or event or transaction has occurred in connection with any Plan which is reasonably likely to have a material adverse effect on the business or financial condition of the Company and its ERISA Affiliates taken as a whole. Neither the Company nor any ERISA Affiliate has any material contingent liability with respect to any post-retirement benefit under a Welfare Plan, except for liability for continuation coverage described in Part 6 of Title I of ERISA, and except as listed on Schedule V. 10.10 Investment Company Act. The Company is neither an "investment company" nor a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. 10.11 Public Utility Holding Company Act. Neither the Company nor any Subsidiary 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", within the meaning of the Public Utility Holding Company Act of 1935, as amended. 10.12 Regulations G, U and X. The Company is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock. None of the Company, the Parent, any Affiliate of either of them or any Person acting on their behalf has taken or will take action to cause the execution, delivery or performance of this Agreement, the Notes, the making of the Loans or the use of proceeds of the Loans to violate Regulation G, U or X of the Board of Governors of the Federal Reserve System. 10.13 Labor Controversies. There are no labor controversies pending or threatened against the Company or any of its Subsidiaries which, if adversely determined, would materially and adversely affect the business, credit, operations, financial condition or prospects of the Company and its Subsidiaries, taken as a whole. 10.14 Tax Status. (a) All tax returns, reports and forms required to be filed with any domestic or foreign taxing authority in connection with any activities or assets of the Company or any Subsidiary have been filed, except where the failure to file any such return, report or form would not have any material adverse effect on the business or financial condition of the Company and its Subsidiaries taken as a whole. (b) All taxes required to be paid with respect to the activities or assets of the Company and its Subsidiaries have been duly paid or provisions deemed appropriate were made by the Parent and/or the Company and its Subsidiaries, on the books and records therefor, except such amounts (i) as are contested in good faith and as to which adequate reserves in accordance with GAAP were provided by the Company in accordance with the best estimates of ultimate liability by the entity responsible therefor or (ii) the non-payment of which would not have a material adverse effect on the business or financial condition of the Company and its Subsidiaries taken as a whole. (c) It is recognized and acknowledged by the Banks 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 were 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 Sections 10.14(a) and 10.14(b) 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. condition exists which, upon the execution and delivery of this Agreement or upon the funding of any Loan, will constitute an Event of Default or Unmatured Event of Default. 10.16 Compliance with Applicable Laws. To the best of the Company's knowledge, the Company and its Subsidiaries are in compliance with the requirements of all applicable laws, rules, regulations and orders of all governmental authorities (Federal, state, local or foreign, and including, without limitation, employee benefit, environmental and health and safety laws, rules, regulations and orders), a breach of which would materially and adversely affect the business, credit, operations, financial condition or prospects of the Company and its Subsidiaries taken as a whole. 10.17 Licenses, etc. To the best of the Company's knowledge, neither the Company nor any of its Subsidiaries has failed to obtain any licenses, permits, franchises or other governmental authorizations necessary to the ownership of its respective properties or to the conduct of its respective business, which violation or failure to obtain might materially and adversely affect the business, credit, operations, financial condition or prospects of the Company and its Subsidiaries taken as a whole. 10.18 Purpose. The purpose of the Loans shall be: (a) to repay loans under the Existing Credit Agreements; (b) for capital expenditures; and (c) for working capital and other general corporate purposes of the Company. SECTION 11 COVENANTS. From the Effective Date until the expiration or termination of all of the Banks' Commitments, and thereafter until payment in full of all Liabilities, the Company agrees that, unless at any time the Required Banks shall otherwise expressly consent in writing, it will: 11.1 Reports, Certificates and Other Information. Furnish or cause to be furnished to each Bank: (a) Audit Report. Within 105 days after each Fiscal Year, a copy of an annual audit report of the Company and its Subsidiaries prepared on a consolidated basis and in conformity with GAAP duly certified by independent certified public accountants of recognized standing selected by the Company, together with a letter from such accountants as provided in Section 11.1(d) below. (b) Interim Reports. Within 60 days after each Fiscal Quarter (except the last Fiscal Quarter in a Fiscal Year), a copy of the unaudited consolidated financial statements of the Company and its Subsidiaries prepared in accordance with GAAP (subject to normal year end audit adjustments) consisting of at least a balance sheet as at the close of such Fiscal Quarter, statements of earnings for such Fiscal Quarter and for the period from the beginning of such Fiscal Year to the close of such Fiscal Quarter, and a statement of changes in cash flow from the beginning of such Fiscal Year to the close of such Fiscal Quarter. (c) Officer's Certificate. Contemporaneously with the furnishing of a copy of each annual audit report and of each set of quarterly statements provided for in this Section 11.1, a certificate in the form of Exhibit I, duly completed, dated the date of such annual report or such quarterly statements and signed by an Authorized Officer on behalf of the Company to the effect that, to the best of such Authorized Officer's knowledge, no Event of Default or Unmatured Event of Default has occurred, and is continuing, or, if there is any such event, describing it and the steps, if any, being taken with respect thereto, and containing the computations and other information provided for therein. (d) Accountant's Letter. Contemporaneously with the furnishing of the Company's annual audit report under Section 11.1(a), a letter from the Company's certified public accountants addressed to each Agent and each Bank (i) stating that such accountants have not become aware of any Event of Default or Unmatured Event of Default pertaining to accounting matters (or, if there is any such event, describing it and the steps, if any, being taken with respect thereto), (ii) stating that such accountants have been informed that a primary intent of the Company was for the professional services such accountants provided to the Company in preparing the Company's audit report to benefit or influence the Agents and the Banks, and identifying each Agent and each Bank as a party that the Company has indicated intends to rely on such professional services provided to the Company by such accountants and (iii) containing a computation of the financial tests in Sections 11.3, 11.4 and 11.5. (e) Reports to SEC and to Shareholders. Promptly within 15 days of the filing or making thereof, copies of each filing and report made by the Parent, the Company or any Subsidiary with or to the SEC or any other securities exchange, and, if the Company shall have registered under the Securities Exchange Act of 1934, as amended, as to any of the Company's equity securities, copies of each communication from the Company to shareholders generally. (f) Notice of Default. Forthwith upon learning of the occurrence of an Event of Default or Unmatured Event of Default, written notice thereof describing the same and the steps (if any) being taken by the Company and its Subsidiaries with respect thereto. (g) Notice of Certain Litigation. Written notice of the institution of any Litigation or the occurrence of any development with respect to any Litigation, 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 Securities Exchange Act of 1934, as amended (it being understood that to the extent such disclosures are contained in the reports filed by the Company's Parent with the SEC, then the disclosure hereunder required to be made by the Company to the Banks may be made by furnishing to the Banks a copy of such reports of the Parent as filed with the SEC). (h) Notice of Change of Control. Forthwith upon learning of the occurrence of any Change of Control, written notice thereof, describing the same and the steps (if any) being taken by the Company and its Subsidiaries with respect thereto. (i) Amendments. Promptly upon any amendment or modification, whether or not material, to the MWCC Receivables Purchase Agreement, a copy thereof certified as true and correct by an Authorized Officer on behalf of the Company. (j) Other Information. From time to time such other information concerning the Company and its Subsidiaries as any Bank or any Agent may reasonably request. 11.2 Liens. Not, and not permit any Restricted Subsidiary to, create, incur, assume or permit to exist any Lien with respect to any assets now owned or hereafter acquired, except the following (each, a "Permitted Lien"): (i) Liens arising in connection with a financing or refinancing of every description (including, without limitation, sale-leaseback transactions and secured borrowings) of any real estate (including leasehold interests) or tangible fixed assets acquired or constructed by the Company or a Restricted Subsidiary after January 1, 1994, and attaching only to the property so acquired or constructed and the rights and documents related thereto, (ii) Liens existing on the Effective Date as set forth on Schedule III or shown in the financial statements referred to in Section 10.4, (iii) Liens on customer receivables and proceeds thereof, (iv) Liens for current taxes, assessments or other charges not delinquent or for taxes, assessments or other charges 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, (v) 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 in any case in the opinion of the Company 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, (vi) Liens of carriers, warehousemen, mechanics, materialmen, vendors, landlords and similar Liens incurred in the ordinary course of business for sums not due or sums being contested in good faith and by appropriate proceedings, (vii) 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, (viii) Liens on goods acquired pursuant to the issuance of 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 letters of credit, (ix) Liens on assets of a Restricted Subsidiary existing at the time such Subsidiary becomes a Restricted Subsidiary, (x) Liens in favor of the Company or any Restricted Subsidiary, (xi) 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, (xii) Liens in favor of the Agents (or any of them) or the Banks in their capacity as agents or lenders under this Agreement or the Long Term Credit Agreement, provided that such Liens shall ratably secure all loans under this Agreement and the Long Term Credit Agreement, (xiii) Liens arising under capital leases and attaching only to the property leased thereunder, (xiv) 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, (xv) any Lien arising out of a judgment or award against the Company or any Restricted Subsidiary with respect to which the Company or such Restricted Subsidiary shall in good faith be prosecuting an appeal or proceeding for review or any Lien incurred by the Company or any Restricted Subsidiary for the purpose of obtaining a stay or discharge in the course of any legal proceeding to which the Company or such Restricted Subsidiary is a party, (xvi) any Lien to enable the Company or any Restricted Subsidiary to exercise any privilege or license, to secure the performance of any bid, tender, contract or lease to which the Company or such Restricted Subsidiary is a party, to secure any public or statutory obligation of the Company or any Restricted Subsidiary or to secure any safety, stay or appeal bond to which the Company or any Restricted Subsidiary is a party, or any other similar Lien made in the ordinary course of business, (xvii) 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 or entity under any lease or other document related to the operation, use or occupancy of real or personal property, (xviii) other non-material Liens incurred in the ordinary course of business (including those in connection with obligations to pay workmen's compensation or unemployment insurance, performance bonds, security deposits and the like), and (xix) additional Liens securing Secured Indebtedness (as defined below), if as a result of the transaction giving rise to any such Liens (and after giving effect thereto on a pro forma basis) the aggregate amount of the (i) Secured Indebtedness of the Company and its Restricted Subsidiaries and (ii) (without double-counting) Indebtedness for Borrowed Money of the Restricted Subsidiaries but only in each case incurred subsequent to the Effective Date in a transaction which gave rise to Liens other than Permitted Liens described in the preceding clauses (i) through (xviii) inclusive) is less than or equal to 1% of the total assets of the Company and its Restricted Subsidiaries as of the end of the last full Fiscal Quarter preceding such transaction. For purposes hereof, "Secured Indebtedness" means any Indebtedness for Borrowed Money or other indebtedness incurred in connection with the acquisition of property, which Indebtedness for Borrowed Money or other indebtedness is secured by a Lien of or upon any property or asset of the Company or any Restricted Subsidiary. provided, however, with respect to the preceding clauses (i) through (xix) inclusive, (a) neither the Company nor any Restricted Subsidiary shall permit to exist any Lien securing notes or obligations payable or owing by the Company pursuant to the MWCC Receivables Purchase Agreement except (x) to the extent provided therein or (y) to the extent of clauses (xi) and (xv), and (b) none of such Liens shall encumber any inventory of the Company or its Restricted Subsidiaries or secure trade debt of the Company or its Restricted Subsidiaries except to the extent of clauses (ii), (viii), (ix), (x), (xi), (xii), (xiv), (xv), (xix) and to the extent such Lien is a possessory Lien which arises by operation of law, clause (vi); provided that Liens on inventory or securing trade debt under clause (xix) shall not exceed $5,000,000 or the amount permitted under clause (xix) whichever is less. 11.3 Minimum Consolidated Shareholder's Equity. Not permit the Consolidated Shareholder's Equity of the Company as at the end of each Fiscal Year to be less than the lesser of (i) $441,000,000 minus the FAS 106 Minimum Equity Factor plus 25% of Consolidated Net Income for each complete Fiscal Year after the Company's Fiscal Year ended January 1, 1994 in which there was such income, and (ii) $800,000,000 minus the FAS 106 Minimum Equity Factor; provided, however, that if the Ratio of Earnings to Fixed Charges determined as of the last day of any Fiscal Quarter shall be less than 1.10:1, then the Company shall not permit Consolidated Shareholder's Equity at the end of the next Fiscal Quarter to be less than the lesser of (x) $537,000,000 plus 50% of Consolidated Net Income for each complete Fiscal Year ended after January 1, 1994 in which there was such income, plus 50% of cumulative Consolidated Net Income for any incomplete Fiscal Year (to the extent there was such income) through the end of the most recently completed Fiscal Quarter and (y) $1,000,000,000. 11.4 Ratio of Debt to Total Capitalization. Not permit (i) Debt of the Company and its Restricted Subsidiaries to exceed 60% of Total Capitalization as of the last day of each of the first three Fiscal Quarters of each Fiscal Year, or (ii) Debt of the Company and its Restricted Subsidiaries to exceed 50% of Total Capitalization as of the last day of each Fiscal Year. 11.5 Purchase or Redemption of the Company's Securities; Dividend Restrictions; Payments to the Parent. Not (a) declare or pay any dividend or make any distribution on any capital stock of the Company to its stockholders (other than dividends or distributions payable in shares of capital stock of the Company or stock splits), (b) make any loans or advances to the Parent, (c) purchase or redeem or otherwise acquire or retire for value any shares of capital stock of the Company, or (d) permit any Subsidiary to purchase, redeem or otherwise acquire for value any shares of capital stock of the Company (each such payment described in any of the foregoing clauses (a), (b), (c) and (d) a "Restricted Payment"), if, upon giving effect thereto, the sum of such dividends, distributions, purchases, redemptions and other acquisitions and retirements (other than dividends, distributions, purchases, redemptions and other acquisitions or retirements of Debt-Like Preferred Stock of the Company), paid or made subsequent to January 1, 1994, would exceed the aggregate of: (i) $63,000,000; plus (ii) 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 2, 1994 to the end of the most recent full Fiscal Quarter; plus (iii) any repayment by the Parent of any loan or advance made by the Company to the Parent which repayment is received after January 1, 1994; plus (iv) any capital contributions received by the Company after January 1, 1994; plus (v) the net proceeds to the Company (in cash or, if the consideration is other then cash, the fair value thereof as determined by the Board of Directors of the Company) of the issue or sale after January 1, 1994 of capital stock, including treasury stock but excluding Debt-Like Preferred Stock, of the Company; plus (vi) an amount equal to the net proceeds to the Company (in cash or, if the consideration is other than cash, the fair value thereof as determined by the Board of Directors of the Company) from the issue or sale at any time of any indebtedness of the Company or a Subsidiary which, after January 1, 1994, is converted into shares of capital stock (but excluding Debt-Like Preferred Stock) of the Company or the Parent; plus (vii) an amount equal to the FAS 106 Restricted Payment Factor; provided, however, that: (x) the Company shall not make any such Restricted Payment if before or after giving effect thereto an Event of Default or Unmatured Event of Default shall exist; (y) notwithstanding the foregoing, so long as no Event of Default or Unmatured Event of Default shall exist before or after giving effect thereto, the Company may (i) declare or pay any dividend or make any distribution within 60 days after the date of its declaration, if on such date such declaration did not violate the provisions of Section 11.5(a), and (ii) pay amounts to the Parent to permit the Parent to pay its corporate and business expenses in an aggregate amount for all such payments not to exceed $2,000,000 per Fiscal Year (with any amounts not so used in a given Fiscal Year carried over and added to the amount permissible to be paid in the next Fiscal Year); and (z) notwithstanding the foregoing, the Company may pay amounts required to be paid pursuant to any tax sharing or tax allocation arrangements meeting the standards specified in Schedule VI. 11.6 Mergers, Consolidations, Sales. Not permit any consolidation of the Company with or merger of the Company into any other corporation or corporations (whether or not affiliated with the Company) or successive consolidations in which the Company or its successor or successors shall be a party or parties or any sale or conveyance of the property of the Company as an entirety or substantially as an entirety, to any other corporation (whether or not affiliated with the Company) authorized to acquire and operate the same (any such consolidation, merger, sale or conveyance is referred to herein as a "Corporate Transaction") unless each of the following conditions is met: (i) to the extent that as a result of such Corporate Transaction, any property of the Company or a Restricted Subsidiary immediately prior thereto would be subjected to any Lien of any other party to such Corporate Transaction, simultaneously with such Corporate 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 thereto) the due and punctual payment of the Liabilities by a prior Lien upon such asset; (ii) upon the occurrence of any such Corporate Transaction all the obligations of the Company under this Agreement and the Notes shall be expressly assumed in writing by the corporation formed by such consolidation, or into which the Company shall have been merged, or by the corporation which shall have acquired such property (in each such case, the "surviving entity"), such assumption to be accompanied by an opinion of counsel for the surviving entity to the effect that such assumption has been duly authorized, executed and delivered by, and is the legal, valid and binding obligation of, the surviving entity; (iii) immediately after giving effect to such Corporate Transaction and to the retirement of any Debt to be retired substantially concurrently therewith, no Event of Default or Unmatured Event of Default shall have occurred and be continuing, and the Company shall deliver a certificate signed by an Authorized Officer to such effect; (iv) the surviving entity shall be domiciled in the United States; (v) after giving effect to such Corporate Transaction and to the retirement of any Debt to be retired substantially concurrently therewith on a pro forma basis (calculated using financial information for each party to such Corporate Transaction from such party's most recently ended fiscal quarter), the ratio (expressed as a percent) of Debt to Total Capitalization for the surviving or successor party shall not exceed (a) 60% in the case where the most recently ended fiscal quarter for the Company was one of the first three Fiscal Quarters of a Fiscal Year or (b) 50% in the case where the most recently ended fiscal quarter for the Company was the last Fiscal Quarter of a Fiscal Year; (vi) the Company shall have given at least 30 days' prior written notice of such Corporate Transaction to the Agents and the Banks; and Transaction, no Change of Control shall exist. Upon consummation of the Corporate Transaction and the assumption of the Company's obligations under this Agreement by the surviving entity, such surviving entity 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 sale or conveyance, the Company shall be released from its obligations under this Agreement. Except for the merger of any Restricted Subsidiary into the Company or another Restricted Subsidiary, the Company shall not permit any Restricted Subsidiary to be a party to any Corporate Transaction if before or after giving effect thereto an Event of Default or Unmatured Event of Default shall exist. 11.7 Compliance with Applicable Laws. Not, and not permit any of its Subsidiaries to, knowingly violate in any material respect any of the requirements of all applicable laws, rules, regulations, and orders of any governmental authority (Federal, state, local or foreign, and including, without limitation, employee benefit, environmental, health and safety laws, rules, regulations and orders); provided, however, that any material breach by the Company or any of its Subsidiaries of any employee benefit, environmental, health or safety order, rule or regulation shall not be deemed a breach of this Section 11.7 so long as such violation would not be likely to prevent the Company from performing its obligations under this Agreement and the Company or such Subsidiary, upon notice of such violation, takes appropriate action to cure such violation. 11.8 ERISA. (a) Forthwith upon learning of (i) the incurrence of any material liability of the Company or any ERISA Affiliate pursuant to Title IV of ERISA in connection with the termination of any Plan or withdrawal or partial withdrawal from any Multiemployer Plan, (ii) a failure to satisfy the minimum funding standards of section 412 of the Code or Part 3 of Title I of ERISA by any Plan for which the Company or any ERISA Affiliate is plan administrator (as defined in ERISA), (iii) the receipt of a notice by any Plan that the PBGC intends to terminate or apply for the appointment of a trustee to administer the Plan, (iv) the receipt of a notice of complete or partial withdrawal liability under Title IV of ERISA from a Multiemployer Plan or a notice that any Multiemployer Plan is in reorganization, is insolvent or has been terminated, (v) the application for a waiver of the minimum funding standard under section 412 of the Code, (vi) the filing of a notice of intent to terminate a Plan under section 4041(c) of ERISA, or (vii) notice of withdrawal from any Plan pursuant to section 4063 of ERISA, furnish or cause to be furnished to each Bank written notice thereof. (b) Not, and not permit any of its Subsidiaries to, permit (i) any Plan to incur any "accumulated funding deficiency" (within the meaning of Part 3 of Title I of ERISA or section 412 of the Code) or (ii) any Plan for which the Company or any ERISA Affiliate is plan administrator (as defined in ERISA) to fail to satisfy the minimum funding standards of section 412 of the Code or Part 3 of Title I of ERISA. 11.9 Corporate Existence and Franchises. Except as otherwise expressly permitted in Section 11.6, maintain in full force and effect its separate existence and all material rights, licenses, leases and franchises used in the conduct of its business. 11.10 Maintenance of Tangible Property. Maintain, and cause each of its Subsidiaries to maintain, in all material respects all of the real property, inventory and equipment owned, leased or used by such entity in good condition and repair, and prevent any waste or unusual or unreasonable depreciation thereof. 11.11 Maintenance of Intangible Property. Protect, preserve and maintain, and cause each of its Subsidiaries to protect, preserve and maintain, in all material respects all of its material trademarks and trade names in full force and effect, by, without limitation, defending against and/or prosecuting at its own expense any and all suits claiming infringement or dilution of any thereof or injury to the goodwill associated with any thereof and by filing any applications and doing any and all other things which may from time to time be necessary or advisable for the renewal or registration of each thereof. 11.12 Books, Records and Inspections. Maintain, and cause each Subsidiary to maintain, complete and accurate books and records; permit, and cause each Subsidiary to permit, reasonable access by each Agent and each Bank to the books and records of the Company and of each Subsidiary during regular business hours upon two Business Days' prior written notice to the Company; and permit, and cause each Subsidiary to permit, each Agent and each Bank to inspect the properties and operations of the Company and of such Subsidiary during regular business hours upon two Business Days' prior written notice to the Company. 11.13 Insurance. Maintain, and cause each Subsidiary to maintain, such insurance upon its real property, inventory and equipment (including self-insurance to the extent of, and in a manner consistent with, the past practices of such entity) to such extent and against such hazards and liabilities, as is required by law or customarily maintained by companies similarly situated. 11.14 Payment of Taxes. Promptly pay, and cause each Subsidiary to pay, when due all taxes, assessments or other charges owing by the Company and each Subsidiary except taxes, assessments and other charges which shall be diligently contested in good faith by appropriate proceedings and as to which adequate reserves shall have been set aside in accordance with GAAP. 11.15 Other Agreements. Not (a) enter into any agreement containing any provision which would be violated or breached by the performance of its obligations hereunder or under any instrument or document delivered or to be delivered by it hereunder or in connection herewith, or (b) permit any Restricted Subsidiary to enter into any agreement which prohibits in any material respect such Subsidiary from declaring or paying dividends or making advances to the Company. 11.16 Regulation U. Not use or permit any proceeds of the Loans to be used, either directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of purchasing or carrying Margin Stock. 11.17 Subordinated Debt. With respect to any Subordinated Debt, not make or effect or permit any Subsidiary to make or effect any payment, prepayment, redemption, purchase or defeasance of any such Subordinated Debt if (i) such payment, prepayment, redemption, purchase or defeasance is prohibited by the terms of the instrument governing such Subordinated Debt, (ii) before or after giving effect thereto an Event of Default or Unmatured Event of Default shall exist, or (iii) immediately after giving effect thereto and to the substantially concurrent incurrence or retirement of other Debt and the application of the proceeds thereof the ratio (expressed as a percent) of Debt of the Company and its Restricted Subsidiaries to Total Capitalization exceeds (a) 60% in the case where the most recently ended Fiscal Quarter was one of the first three Fiscal Quarters of a Fiscal Year, or (b) 50% in the case where the most recently ended Fiscal Quarter was the last Fiscal Quarter of a Fiscal Year. 11.18 Debt-Like Preferred Stock. With respect to any Debt-Like Preferred Stock, not make any dividend, distribution, purchase, redemption, acquisition or retirement of any Debt-Like Preferred Stock if (i) such dividend, distribution, purchase, redemption, acquisition or retirement is prohibited by the terms of the instrument governing such Debt-Like Preferred Stock, (ii) before or after giving effect thereto an Event of Default or Unmatured Event of Default shall exist, or (iii) immediately after giving effect thereto and to the substantially concurrent incurrence or retirement of other Debt and the application of the proceeds thereof the ratio (expressed as a percent) of Debt of the Company and its Restricted Subsidiaries to Total Capitalization exceeds (a) 60% in the case where the most recently ended Fiscal Quarter was one of the first three Fiscal Quarters of a Fiscal Year, or (b) 50% in the case where the most recently ended Fiscal Quarter was the last Fiscal Quarter of a Fiscal Year. 11.19 Further Assurances. At its sole expense, upon request of the Administrative Agent, forthwith execute and deliver, or cause to be executed and delivered to such Agent, in due form for filing or recording (the Company hereby agreeing to pay the cost of filing or recording the same in all public offices deemed necessary by such Agent), such documents, and do such other acts and things, all as such Agent may from time to time reasonably request so as to implement the provisions of this Agreement. SECTION 12 CONDITIONS. The effectiveness of this Agreement and each Bank's obligation to make its Loans is subject to the following conditions: 12.1 Effectiveness of Agreement. This Agreement shall become effective on such date (the "Effective Date") on which, unless waived in writing by all of the Banks, each of the following conditions precedent or concurrent shall be satisfied: (a) Documents. On or before September 15, 1994, or such later date as may be agreed to by the Required Banks, the Documentary Agent shall have received all of the following, each duly executed and dated the Effective Date or such other date satisfactory to the Documentary Agent, in form and substance reasonably satisfactory to the Documentary Agent and special counsel to the Banks, and each (except for the Notes, of which only the originals shall be signed) in sufficient number of counterparts to provide one for each Bank: (i) Credit Agreements. Counterparts of this Agreement and the Long Term Credit Agreement, whether on the same or different counterparts, executed by the Company and all of the Banks (or in the case of any Bank as to which an executed counterpart shall not have been so received, telegraphic, telefax, telex or other written confirmation of execution of a counterpart hereof by such Bank); (ii) Notes. One Revolving Note, one Negotiated Note and one Swing Note of the Company payable to the order of each Bank; (iii) Resolutions. Certified copies of (i) the articles of incorporation and by- laws of the Company, (ii) resolutions of the Company's Board of Directors authorizing or ratifying the execution, delivery, performance of and borrowings under, respectively, this Agreement, the Notes, and any other documents provided for herein or therein to be executed by the Company and (iii) all documents evidencing any necessary corporate action, consents and governmental approvals (if any) with respect to this Agreement, the Notes and any other documents provided for herein or therein to be executed by the Company; (iv) Good Standing. Good standing certificate for the Company issued by the Secretary of State of Illinois; (v) Incumbency and Signatures. A certificate of the Secretary or an Assistant Secretary of the Company certifying the names of the officer or officers thereof authorized to sign this Agreement, the Notes and the other documents provided for in this Agreement, together with a sample of the true signature of each such officer (it being understood that each Agent and each Bank may conclusively rely on each such certificate until formally advised by a like certificate of any changes therein); (vi) Opinion of Counsel for the Company. The opinion of Altheimer & Gray, counsel for the Company, addressed to the Agents and the Banks, substantially in the form of Exhibit J; (vii) Certificate. A certificate signed by an Authorized Officer on behalf of the Company substantially in the form of Exhibit K to the effect that (i) on the Effective Date no Event of Default or Unmatured Event of Default has occurred and is continuing or shall result from the making of any Loan on such date, (ii) the Company's representations and warranties contained in Sections 10.1 through 10.18 are true and correct as of the Effective Date with the same effect as though made on the Effective Date, and (iii) all of the conditions set forth in this Section 12.1 have been satisfied; (viii) Termination Letter. A letter signed by an Authorized Officer on behalf of the Company addressed to each of the agents and the lenders under the Existing Credit Agreements terminating as of the Effective Date any and all commitments of the lenders to make loans thereunder (it being understood that the Banks hereby waive any requirement under the Existing Credit Agreements that the Company give prior notice of the termination of such commitments); and (ix) Other. Such other documents as the Documentary Agent or any Bank may reasonably request. (b) Long Term Credit Agreement. The Long Term Credit Agreement shall have become effective. Concurrently with the effectiveness of this Agreement, the Company shall repay in full the principal of and accrued interest on all loans outstanding and accrued fees under the Existing Credit Agreements. 12.2 Conditions to Loans. On and after the Effective Date, each Bank's obligation to make Loans (including the initial Loan and each subsequent Loan) or for a Continuation or a Conversion is subject, unless waived in writing by the Required Banks, to the conditions precedent that: (a) no Event of Default or Unmatured Event of Default shall have occurred and be continuing or shall result from the making of such Loan; (b) the Company's representations and warranties contained in Sections 10.1, 10.2, 10.3, 10.4(a), 10.7, 10.10, 10.11, 10.12, 10.15, and 10.18, shall be true and correct as of the date of such requested Loan, Continuation or Conversion with the same effect as though made on the date of such Loan, Continuation or Conversion; and (c) such Loan shall not exceed the limits specified in Section 2.2, 3.2 or 4.2 and no notice of any such excess shall have been given by the Administrative Agent. Each request by the Company for a Loan or for a Continuation or a Conversion as described in this Section 12.2 shall be deemed to automatically constitute a representation and warranty by the Company to the effect that all of the conditions set forth in this Section 12.2 for the making of such Loan will be fully and completely satisfied as of the date of, and after giving effect to, the making of such Loan, Continuation or Conversion. SECTION 13 EVENTS OF DEFAULT AND THEIR EFFECT. 13.1 Events of Default. Each of the following shall constitute an Event of Default under this Agreement: (a) Non-Payment of Notes and Certain Fees. Default, and continuance thereof for three Business Days after notice thereof to the Company by any Agent, any Bank or the holder of any Note, in the payment when due of (i) any principal of or interest on any Loan or (ii) any amount payable under Section 6.5, 6.6 or 6.7. (b) Non-Payment of Certain Other Amounts under this Agreement. Default, and continuance thereof for ten Business Days after notice thereof to the Company by any Agent, any Bank or the holder of any Note, in the payment when due of any material amount under this Agreement (and not constituting an Event of Default under clause (a) above). (c) Non-Payment of Finance Obligations. Default in the payment when due (subject to any applicable grace period), whether by acceleration or otherwise, of any Finance Obligation of the Company or any Restricted Subsidiary or default in the performance or observance of any obligation or condition with respect to any such Finance Obligation if (i) the effect of such default is to accelerate the maturity of any such Finance Obligation or cause any such Finance Obligation to be prepaid, purchased or redeemed or (ii) the holder or holders thereof, or any trustee or agent for such holders, (x) causes such Finance Obligation to become due and payable prior to its expressed maturity or to be prepaid, purchased or redeemed or (y) receives 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 Parent, the Company or any Restricted Subsidiary or (iii) in case such default is a default in the payment when due, such default has not been remedied within five Business Days after notice thereof to the Company by any Agent, any Bank, the holder of any Note or the holder or holders of such Finance Obligation or any trustee or agents for such holders; provided, however, that no such default under this clause (c) shall constitute an Event of Default unless the amount of Finance Obligations so affected is at least $5,000,000. (d) Bankruptcy, Insolvency, etc. The occurrence of any of the following events: (i) the Company or any Restricted Subsidiary becomes insolvent or generally fails to pay, or admits in writing its inability or refusal to pay, debts as they become due; or (ii) the Company or any Restricted Subsidiary applies for, consents to, or acquiesces in the appointment of a trustee, receiver or other custodian for the Company or such Restricted Subsidiary or any property thereof, or makes a general assignment for the benefit of creditors; or, (iii) in the absence of such application, consent or acquiescence, a trustee, receiver or other custodian is appointed for the Company or any Restricted Subsidiary or for a substantial part of the property of any thereof and is not discharged within 60 days; or (iv) any bankruptcy, reorganization, debt arrangement, or other case or proceeding under any bankruptcy or insolvency law, or any dissolution or liquidation proceeding (except the voluntary dissolution, not under any bankruptcy or insolvency law, of a Restricted Subsidiary), is commenced in respect of the Company or any Restricted Subsidiary, and if such case or proceeding is not commenced by the Company or such Restricted Subsidiary, it is consented to or acquiesced in by the Company or such Restricted Subsidiary or remains for 60 days undismissed; or (v) the Company or any Restricted Subsidiary takes any corporate action to authorize, or in furtherance of, any of the foregoing; provided that the provisions of this Section 13.1(d) shall not apply to any Special Restricted Subsidiary to which the foregoing provisions of Section 13.1(d) would otherwise apply, which together with all other Special Restricted Subsidiaries with respect to which an event described in the foregoing provisions of Section 13.1(d) shall have occurred, has assets which do not exceed one percent (1%) of the total assets of the Company and its Restricted Subsidiaries. (e) Specified Non-Compliance with this Agreement. Failure by the Company to comply with or to perform its obligations under Sections 11.3 through 11.6 of this Agreement. (f) Other Non-Compliance with this Agreement. Failure by the Company to comply with or to perform its obligations under any provision of this Agreement (and not constituting an Event of Default under any of the other provisions of this Section 13.1) and (i) continuance of such failure for 30 days after notice thereof to the Company by any Agent, any Bank or the holder of any Note specifying such failure if such failure can be cured with diligence within such 30-day period by the Company or can be cured by the payment of money, or (ii) continuance of such failure for 60 days after notice thereof to the Company by an Agent, any Bank or the holder of any Note specifying such failure if such failure cannot with diligence be cured within such 30-day period and cannot be cured by the payment of money. (g) Representations and Warranties. Any representation or warranty made by the Company herein is breached or contains any statement which is false or misleading in any material respect, or any schedule, certificate or other writing furnished by the Company to any Agent, any Bank or the holder of any Note pursuant to this Agreement contains any material statement which is false or misleading in any material respect on the date as of which the facts therein set forth are (or are deemed to be) stated or certified. (h) Stock Ownership. Until such time as under the provisions of Section 5 a Change of Control can no longer be deemed to have occurred, Parent or Successor to Parent (except by reason of a merger of the Company into the Parent) shall fail to own, directly or indirectly, 100% of the capital stock (excluding Debt-Like Preferred Stock) of the Company (or any successor to the Company permitted by Section 11.6) free and clear of all Liens. "Successor to Parent" refers to the Person into which the Parent shall have been merged or in the case of a consolidation involving the Parent, the Person formed by such consolidation or in the case of the sale of substantially all the assets of the Parent, the Person to whom substantially all of the assets of the Parent shall have been transferred or conveyed; provided, in each case, voting shares of the capital stock of, or voting equity interests in, such Person are converted from or exchanged for Class A Common Stock. (i) Judgments. Final judgment or judgments (after the expiration of all times to appeal therefrom) for the payment of money in excess of $5,000,000 in the aggregate shall be rendered against Company or any of its Restricted Subsidiaries and the same shall not be (i) fully covered by insurance or (ii) vacated, stayed, bonded, paid or discharged for a period of sixty (60) days. (j) MWCC Receivables Purchase Agreement. (i) An amendment which materially adversely affects the Banks shall be made to the MWCC Receivables Purchase Agreement without the prior written consent of the Required Banks, including, without limitation, any amendment thereto which secures the Seller Notes (as defined therein) or which provides for any of such Seller Notes to be payable on a date earlier than the date on which such Seller Notes are payable as at the date of this Agreement, (ii) the MWCC Receivables Purchase Agreement shall fail to remain in full force and effect, (iii) any default by the Company under the MWCC Receivables Purchase Agreement (after the expiration of any applicable grace period) shall occur and be continuing which has not been waived by MWCC and which provides MWCC thereunder with the right to terminate MWCC's obligation to purchase customer receivables thereunder from the Company, or (iv) the Company or MWCC shall give notice of termination or take any action to terminate thereunder (other than the notice to terminate at the expiration of a 10-year period and other than a termination by the Company pursuant to which a wind down or transition of at least one year is provided). (k) Long Term Credit Agreement. An Event of Default (as defined in the Long Term Credit Agreement) shall occur. 13.2 Effect of Event of Default. If any Event of Default described in Section 13.1(d) shall occur, automatically all of the Commitments (if they have not theretofore terminated) shall immediately terminate and automatically all Liabilities shall become immediately due and payable, all without presentment, demand or notice of any kind all of which are hereby waived; and, in the case of any other Event of Default, unless such Event of Default shall have been cured, (i) the Administrative Agent may and, upon the written request of the Required Banks, shall declare all Commitments (if they have not theretofore terminated) to be terminated whereupon all such Commitments (if they have not theretofore terminated) shall immediately terminate, and (ii) the Administrative Agent may and, upon the written request of Banks holding Notes evidencing at least 66-2/3% of the aggregate unpaid principal amount of the Loans, declare all Liabilities to be due and payable, whereupon all such Liabilities shall become immediately due and payable, all without presentment, demand or notice of any kind, all of which are hereby waived. The Administrative Agent shall promptly advise the Company and each Bank of any such declaration, but failure to do so shall not impair the effect of such declaration. Notwithstanding the foregoing, no rescission of a termination of the Commitments shall be made without the written consent of all of the Banks, and no rescission of any acceleration of any of the Loans shall be made without the written consent of the Banks holding 100% of the aggregate unpaid principal amount of the Loans so accelerated. SECTION 14 THE AGENTS. 14.1 Authorization. Each Bank and the holder of each Note authorizes each Agent to act on behalf of such Bank or holder to the extent provided in this Agreement and in any other document or instrument delivered hereunder or in connection herewith, and to take such other action as may be reasonably incidental thereto. Subject to the provisions of Section 14.3, each Agent, in its capacity as such, will take such action permitted by any agreement delivered in connection with this Agreement as may be requested in writing by the Required Banks or all Banks, as appropriate. 14.2 Indemnification. The Banks severally agree to indemnify each Agent, in its capacity as such, and each officer, director, employee and agent of each Agent (herein collectively called the "Agent Parties" and individually called an "Agent Party"), ratably according to their respective Commitments to the extent not reimbursed by the Company, from and against any and all actions, causes of action, suits, losses, liabilities, damages, and expenses which may at any time (including without limitation at any time following the payment of any of the Liabilities) be imposed on, incurred by or asserted against such Agent Party in any way relating to or arising out of this Agreement, or any documents contemplated by or referred to herein or the transactions contemplated hereby or any action taken or omitted by such Agent Party under or in connection with any of the foregoing; provided, that no Bank shall be liable for the payment to such Agent Party of any portion of such actions, causes of action, suits, losses, liabilities, damages, and expenses resulting from such Agent Party's gross negligence or willful misconduct. All obligations provided for in this Section 14.2 shall survive satisfaction of the Liabilities, cancellation of the Notes and any termination of this Agreement. 14.3 Action on Instructions of the Required Banks. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of the Notes), no Agent shall be required to exercise any discretion or take any action, but each Agent shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Banks, and such instructions shall be binding upon the Banks (including, without limitation, all subsequent holders of the Notes); provided, however, that no Agent shall be required to take any action which exposes such Agent to personal liability or which is contrary to this Agreement or applicable law. The relationship between the Agents and the Banks is and shall be that of agent and principal only and nothing herein contained shall be construed to constitute any Agent a trustee for any party hereto or any holder of a Note or of a participation therein nor to impose on any Agent duties and obligations other than those expressly provided for herein. 14.4 Payments. (a) The Applicable Agent shall be entitled to assume that each Bank has made the proceeds of each of its Loans available in accordance with this Agreement unless such Bank notifies such Agent prior to 11:30 a.m., Chicago time, on the Funding Date for such Loan that it does not intend to make such Loan, it being understood that no such notice shall relieve such Bank of any of its obligations under this Agreement. If the Applicable Agent makes any payment to the Company on the assumption that a Bank has made the proceeds of its Loan available to the Applicable Agent but has not in fact done so, such Bank shall pay to the Applicable Agent on demand an amount equal to the amount of the Loan which it was obligated to make, together with interest thereon for each day that elapses from and including such Funding Date to the Business Day on which such sums become immediately available to the Applicable Agent, prior to 12:00 noon, Chicago time, at the Federal Funds Rate for each such day, based upon a year of 360 days. (b) Each Agent shall be entitled to assume that the Company has made all payments due hereunder on the due date thereof unless it receives notification prior to any such due date from the Company that the Company does not intend to make any such payment, it being understood that no such notice shall relieve the Company of any of its obligations under this Agreement. If any Agent distributes any payment to a Bank or any Assignee hereunder in the belief that the Company has paid to such Agent the amount thereof but the Company has not in fact paid to such Agent such amount, such Bank or Assignee shall pay to such Agent on demand an amount equal to the amount of the payment made by such Agent to such Bank, together with interest thereon for each day that elapses from and including the date on which such Agent made such payment to but excluding the Business Day on which the amount of such payment is returned to such Agent in immediately available funds prior to 12:00 noon, Chicago time, at the Federal Funds Rate for each such day, based upon a year of 360 days. If the amount of such payment is not returned to such Agent in immediately available funds within five (5) Business Days after such demand for payment was made by such Agent, such Bank or Assignee shall pay to such Agent on demand an amount calculated in the manner specified in the preceding sentence after substituting the term "Base Rate" for the term "Federal Funds Rate". A certificate of the Applicable Agent submitted to any Bank with respect to amounts owing under this Section 14.4(b) shall be conclusive absent manifest error. (c) Each Agent shall promptly remit to each Bank or other holder its share of all payments received by such Agent for the account of such Bank or holder, such remittance to be in Dollars and in same day funds (or, if different, the kind of funds received by such Agent). Unless expressly provided otherwise in this Agreement, each Agent shall distribute payments to the Banks on the same day on which such Agent received the corresponding payment from the Company if such payment from the Company was received before 12:00 noon, Chicago time, and on the next Business Day if such payment from the Company was received after 12:00 noon, Chicago time, and if any Agent does not distribute payments to the Banks on the day when due such Agent shall pay to each Bank entitled to receive payment, on demand by such Bank, interest on the payment due to such Bank for each day that elapses from and including the date on which such payment was due to but excluding the Business Day on which such payment is made to such Bank in immediately available funds prior to 12:00 noon, Chicago time, at the Federal Funds Rate for each such day, based upon a year of 360 days. If the amount of such payment is not made to any Bank in immediately available funds within five (5) Business Days after such payment was due to such Bank, such Agent shall pay to such Bank on demand an amount calculated in the manner specified in the preceding sentence after substituting the term "Base Rate" for the term "Federal Funds Rate". A certificate of any Bank submitted to any Agent with respect to amounts owing under this Section 14.4(c) shall be conclusive absent manifest error. 14.5 Exculpation. Each Agent shall be entitled to rely upon advice of counsel concerning legal matters, and upon this Agreement and any Note, security agreement, schedule, certificate, statement, report, notice or other writing which it believes to be genuine or to have been presented by a proper person. No Agent Party shall (i) be responsible for any recitals, representations or warranties contained in, or for the execution, validity, genuineness, effectiveness or enforceability of, this Agreement or any Note, security agreement, schedule, certificate, statement, report, notice or other writing delivered hereunder or in connection herewith, (ii) be responsible for the validity, genuineness, perfection, effectiveness, enforceability, existence, value or enforcement of any collateral security, (iii) be deemed to have knowledge of an Event of Default or Unmatured Event of Default until after having received actual notice thereof from the Company or any Bank, (iv) be under any duty to inquire into or pass upon any of the foregoing matters, or to make any inquiry concerning the performance by the Company or any other obligor of its obligations, or (v) in any event, be liable as such for any action taken or omitted by it or them, except for its or their own gross negligence or willful misconduct. The agency hereby created shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, any Agent in its individual capacity. 14.6 Credit Investigation. Each Bank acknowledges and shall cause each actual or potential Assignee or Participant to acknowledge to such Bank in its assignment or participation agreement with such Bank that (i) it has made and will continue to make such inquiries and has taken and will take such care on its own behalf as would have been the case had it made the Loans directly to the Company without the intervention of any Agent or any other Person, and (ii) it has made and will continue to make its own credit analysis and decisions relating to this Agreement independently and without reliance upon any Agent or any other Bank, and based on such documents and information as it has deemed appropriate. Each Bank agrees and acknowledges and shall cause each actual or potential Assignee or Participant to agree with, and acknowledge to, such Bank in its assignment or participation agreement with such Bank that no Agent or any other Bank makes any representations or warranties about the creditworthiness of the Company or any other party to this Agreement or with respect to the legality, validity, sufficiency or enforceability of this Agreement or any Note or the value of any security therefor. 14.7 Agents and Affiliates. Each Agent and each of its successors as an Agent shall have the same rights and powers hereunder as any other Bank and may refrain from exercising the same as though it were not an Agent, and each Agent and each such successor and its Affiliates may accept deposits from and generally engage in any kind of business with the Company or any Affiliate thereof as if such Agent and each such successor were not an Agent. 14.8 Resignation and Removal. (a) Any Agent may resign as such at any time upon at least 30 days' prior notice to the Company and the Banks, and any Agent may be removed as such at any time by vote of the Required Banks and notice to the retiring Agent and the Company. In the event of any such resignation or removal, the Required Banks shall as promptly as practicable (but with five (5) Business Days' prior written notice being given to the Company) appoint a successor Agent. If no successor Agent shall have been so appointed, and shall have accepted such appointment within 30 days after either the retiring Agent's giving of notice of resignation or the Required Banks' vote to remove the retiring Agent, then the retiring Agent may, on behalf of the Banks, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof or under the laws of another country which is doing business in the United States and having a combined capital, surplus and undivided profits of at least $100,000,000. (b) The Company may, at any time, remove any Agent upon five days' prior written notice to such Agent and each Bank; provided, however, that any such removal may not become effective prior to the time that a successor Agent, appointed by the Company and having the qualifications described above with respect to successor Agents which may be appointed by a retiring Agent, shall have accepted such appointment and begun to serve as Agent hereunder; and provided, further, that in case an Event of Default or Unmatured Event of Default shall have occurred and be continuing, the Company may remove an Agent only with the written consent of the Required Banks. (c) Upon its acceptance of its appointment, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from all further duties and obligations as Agent under this Agreement. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Agreement shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. 14.9 Advisory Agent. Bank of America National Trust and Savings Association ("Bank of America"), as Advisory Agent shall not have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Banks as such. Without limiting the foregoing, Bank of America shall not have or be deemed to have any fiduciary relationship with any Bank. Each Bank acknowledges that it has not relied, and will not rely, on Bank of America in deciding to enter into this Agreement or in taking or not taking action hereunder. SECTION 15 GENERAL. 15.1 Waiver; Amendments. No delay on the part of any Agent, any Bank or the holder of any Note in the exercise of any right, power or remedy shall operate as a waiver thereof, nor shall any single or partial exercise by any of them of any right, power or remedy preclude any other or further exercise thereof, or the exercise of any other right, power or remedy. Except as otherwise specifically provided in this Agreement, the concurrence of the Required Banks shall be required for any amendment, modification or waiver of, or consent with respect to, any provision of this Agreement, the Notes or other documents, instruments or agreements affecting the rights of such Banks. Any amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Notwithstanding the foregoing: (a) the consent of all Banks shall be required for any amendment, modification, waiver or consent with respect to the following: (i) any change in the amount or the scheduled timing of the payment of principal or any extension of the maturity thereof, (ii) any reduction in the rate of interest or any change in the timing of the payment of such interest, (iii) any change or reduction in or any waiver of the amount of any fees under Sections 6.5 or 6.6 or any change in the timing of the payment of any such fees, (iv) except as provided in Section 2.7 with respect to a Bank's Commitment, any extension of such Commitment or any increase in the amount of such Commitment, or (v) any change in the allocation of proceeds or payments among the Banks; (b) the consent of all Banks shall be required for any amendment, modification, waiver or consent relating to any of the following items: (i) any change in Section 12.1, or (ii) any change in this Section 15.1, or (iii) any change to the definition of Required Banks or any provision which specifies the requisite level or number of Banks which are required to amend, modify, waive or consent to any provisions of this Agreement. (c) no provisions of Section 6.7 or Section 14 shall be amended, modified or waived without the consent of all Agents. 15.2 Notices. (a) Except as otherwise expressly provided in this Agreement, any notice hereunder to the Company, any Agent, any Bank or other holder shall be in writing. Notices given by telegram, telex, telecopier or personal delivery shall be deemed to have been given and received when sent (and, in the case of telex, the appropriate answerback is received) and notices given by mail shall be deemed to have been given and received three Business Days after the date when sent by registered or certified mail, postage prepaid, and addressed to the Company, such Agent, or such Bank (or other holder) at its address shown below its signature hereto, or at such other address as any such Person may, by written notice received by such other persons, have designated as its address for such purpose. Any Agent, any Bank or the holder of any Note giving any waiver, consent or notice to, or making any request upon, the Company hereunder shall promptly notify each Bank and the Applicable Agent thereof. Correspondence with respect to Negotiated Loans and notices of Loan Requests (other than Negotiated Loan Confirmations) made by the Company shall be directed to the persons specified for such purpose for each party on the signature pages hereto or in subsequent writings among the parties. Each Agent shall promptly transmit to each Bank (or share with each Bank the contents of) each notice it receives from the Company pursuant to this Agreement other than notices with respect to Negotiated Loans and Swing Loans which shall be furnished by the Administrative Agent through the Master Register pursuant to Section 8.5(b). Notices to any Agent in connection with borrowings, payments, Continuations or Conversions shall not be effective until actual receipt by such Agent. (b) Each Agent and each Bank shall be entitled to rely upon all telephonic notices without awaiting receipt of written versions of such notices and the Company shall hold each Agent, and each Bank harmless from, and shall indemnify each Agent and each Bank against, any loss, cost or expense ensuing from any such reliance. 15.3 Computations. (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. (b) Notwithstanding the preceding paragraph (a), except for the changes required in implementing Financial Accounting Standards Board Statements adopted prior to January 1, 1994 and which are to be implemented by the Company after January 1, 1994 (namely, Statements 115 and 116), 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 January 1, 1994 which result in a change in the earnings of the Company, Consolidated Net Income, Debt of the Company and its Restricted Subsidiaries, or Consolidated Shareholder's Equity of the Company, 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, Consolidated Net Income, Debt of the Company and its Restricted Subsidiaries, and Consolidated Shareholder's Equity of the Company for the purpose of applying the Consolidated Shareholder's Equity of the Company, Ratio of Earnings to Fixed Charges and the ratio of Debt to Total Capitalization tests and in determining applicable limitations on distributions with respect to the Company's capital stock. (c) While the Company and MWCC intend that the sale of receivables to MWCC by the Company under the MWCC Receivables Purchase Agreement be considered sales by the Company and not secured loans to the Company by MWCC, such transaction may be classified as a loan under Financial Accounting Standards Board Statement No. 77. Irrespective of whether such receivables sale transactions are classified as a sale or a loan under Financial Accounting Standards Board Statement No. 77, such transactions shall be treated as sales without recourse for the purposes of this Agreement and not a secured loan. 15.4 Participations; Assignments; Replacement of Banks. (a) Participations. Subject to the provisions of this Section 15.4, any Bank may at any time, in the ordinary course of its commercial banking business and in accordance with applicable law, sell to one or more banks or other financial institutions, and to such other Persons or types of Persons which the Company may from time to time approve in its sole discretion (collectively, "Participants") participating interests in any Loan owing to such Bank, or any Note held by such Bank, provided that no Bank shall, without the prior written notice to and consent of the Company (which consent may be withheld or granted, as the case may be, in the Company's sole discretion), sell any participation in any Commitment or any portion thereof. In the event of any such sale to a Participant, upon request by the Company the selling Bank shall give written notice, to the Company stating the Participant's name and address and the amount of the participation purchased, but continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement, (ii) all amounts payable by the Company shall be determined as if such Bank had not sold such participation, and (iii) any Participant which is not an Affiliate of the selling Bank shall have no right to require the selling Bank to take or omit to take any action under this Agreement or any Note other than action directly affecting the extension of the stated maturity of any Loan, directly affecting any scheduled installment of principal or any scheduled reduction in the stated amount of, or interest on, any Loan in which such participation was sold, or reducing the principal or stated amount thereof or the rate of interest thereon or fees payable hereunder. Each Bank agrees to incorporate the requirements set forth in the preceding sentence into each participation agreement which such Bank enters into with any Participant. The Company agrees that if amounts outstanding under this Agreement and the Notes are due or unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall, if its participation agreement with the selling Bank so provides, be deemed to have the right of setoff in respect of its participating interest in amounts owing under this Agreement or any Note to the same extent as if the amount of its participating interest were owing directly to it as a Bank under this Agreement or any Note; provided that such right of setoff shall be subject to such Participant's obligation to share with the Banks, and the Banks agree to share with such Participant, as provided in Section 8.2(c). No participation contemplated in this Section 15.4 shall relieve any Bank either from its Commitment hereunder or from any of its other obligations hereunder and such Bank shall remain solely responsible for the performance thereof. (b) Assignments. Subject to the provisions of this Section 15.4, any Bank may, with the Company's prior written approval (which approval may be withheld or granted, as the case may be, in the Company's sole discretion), execute an assignment and acceptance substantially in the form of Exhibit L, with appropriate insertions (herein individually called an "Assignment" and collectively called the "Assignments"), whereby such Bank shall assign, without recourse and without representation or warranty except as specifically set forth in said Assignment, to one or more banks or other entities (herein individually called an "Assignee" and collectively called the "Assignees") all or any part of such Bank's rights and benefits, and delegate all or any part of such Bank's obligations, under this Agreement and its Notes; provided, that any such Assignment shall assign equal percentage amounts of the assignor Bank's Commitment under this Agreement and such Bank's commitment under the Long Term Credit Agreement. Notwithstanding the foregoing, if the Company shall unreasonably withhold approval of any requested assignment and shall not secure a replacement assignee with respect to such assignment proposed by any such Bank within 60 days after the request in writing to the Company for such approval, any such Bank may upon the expiration of such 60-day period complete the proposed assignment (but only on the terms proposed and to the Assignee proposed) and the Company agrees that the Assignment shall have the same effect as if executed by the Company. Upon execution, delivery and acceptance of each Assignment, from and after the effective date specified therein, which effective date shall be at least five (5) Business Days after the execution thereof, the Company, the Agents and the Banks agree that, to the extent of any such Assignment, (x) the Assignee thereunder shall, in addition to any rights, benefits and obligations hereunder held by it immediately prior to such effective date, have the rights, benefits and obligations of a Bank under this Agreement and the assignor Bank's Notes (including, without limitation, rights and benefits arising out of Section 9) and the same rights of setoff pursuant to Section 8.3 and obligation to share pursuant to Section 8.2 as it would have if it were a Bank hereunder to the extent that the same have been assigned and delegated to it pursuant to such Assignment, and (y) the assignor Bank shall, to the extent that rights, benefits and obligations hereunder have been assigned and delegated by it pursuant to such Assignment, relinquish its rights and benefits and be released from its obligations under this Agreement (and, in the case of an Assignment covering all or the remaining portion of an assignor Bank's rights, benefits and obligations under this Agreement, such Bank shall cease to be a party hereto), except that in all cases the assignor Bank shall remain entitled to the rights and benefits arising under Sections 6, 8.4, 9, 15.5 and 15.6 with respect to any period of time prior to the effective date of any such Assignment, and shall remain liable with respect to any of its obligations arising under Sections 6.9, 8.4(c), 14.2 and 15.5, with respect to any matters arising prior to the effective date of any such Assignment; provided, that: (i) each Agent and each Bank shall be entitled to continue to deal solely and directly with the assignor Bank in connection with the interests so assigned and delegated to the Assignee until written notice of such Assignment, together with addresses and related information with respect to the Assignee, shall have been given to each Agent and each Bank by the assignor Bank and the Assignee, (ii) if the Assignee is a Non-United States Person, it shall deliver to the Company and the Applicable Agent a written representation and undertaking substantially similar to Section 8.4(b), and (iii) the Company shall not be required to pay any costs, fees or taxes of any kind or nature with respect to the interest(s) assigned in excess of those payable by the Company in connection with such interest(s) prior to such assignment except for any costs, fees or taxes described in Section 8.4, 9 or 15.6. Upon its receipt of an Assignment executed by an assignor Bank and an Assignee, together with the Notes subject to such Assignment, the Applicable Agent shall, if such Assignment has been completed and is in substantially the form of Exhibit L, accept such Assignment and forward a photostatic copy thereof to the Company. Within five (5) Business Days after its receipt of a photostatic copy of such Assignment, the Company shall execute and deliver to the Applicable Agent, to be exchanged for the Notes delivered to the Applicable Agent by the assignor Bank, new Notes payable to the order of the Assignee in an amount equal to the Commitment assumed by it pursuant to such Assignment (or other amount applicable to Swing Notes or Negotiated Notes) and, if the assignor Bank has retained a Commitment hereunder, new Notes payable to the order of the assignor Bank in an amount equal to the Commitment retained by it hereunder (or other amount applicable to Swing Notes or Negotiated Notes). Such new Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Notes, shall be dated the effective date of such Assignment, shall be payable to the order of the Assignee or the assignor Bank, shall otherwise be in substantially the form of such surrendered Notes, and shall constitute Notes under this Agreement. Such new Notes shall be in replacement and substitution for, and not in payment of, the Notes delivered to the Applicable Agent by the assignor Bank. The Applicable Agent shall deliver such new Notes to the payee or payees thereof and shall mark the Notes previously held by the assignor Bank as "replaced" and shall deliver the same to the Company. The Administrative Agent shall from time to time distribute a revised Schedule I giving effect to any Assignments or other modifications hereunder. (c) Federal Reserve. Anything contained in this Agreement to the contrary notwithstanding, and without the need to comply with any of the formal or procedural requirements set forth in this Agreement, any Bank may at any time and from time to time grant a participation in, assign, deposit or pledge all or any portion of its rights under this Agreement or the Notes to a Federal Reserve Bank; provided, however, no such participation, assignment, deposit or pledge shall relieve such Bank of any of its obligations under this Agreement. (d) Information. Notwithstanding the terms of any previous confidentiality agreements with respect to the subject matter hereof between the Company and any Bank, from and after the Effective Date any Bank may furnish any information concerning the Parent, the Company and the Subsidiaries which has been furnished to such Bank pursuant hereto to any Assignee, Participant, or potential Assignee or Participant; provided, however, that the recipient of such information shall, prior to being furnished with any such information, agree to maintain the confidentiality of such information. Notwithstanding the foregoing sentence, any Agent, Bank, Assignee, Participant or potential Assignee or Participant shall be permitted to disclose information regarding the Company and its Subsidiaries (i) to any other Agent or Bank, or to any Assignee or Participant, (ii) to any Affiliate, agent or employee that agrees to be bound by this Section 15.4(d), (iii) upon order of any court or administrative agency, (iv) upon the request or demand of any regulatory agency or authority having jurisdiction over such party, (v) which has been publicly disclosed, (vi) which has been obtained from any Person that is not a party hereto or an Affiliate, agent or employee of any such party, (vii) in connection with the exercise of any remedy hereunder, or (viii) to such Person's certified public accountants and its attorneys. (e) Replacement of Banks. So long as no Event of Default or Unmatured Event of Default shall have occurred and be continuing, the Company shall have the right on five Business Days' written notice (except during the period from a Revocation Cut-Off Date to the then existing Termination Date, only concurrent written notice shall be required to replace a Bank which has not then irrevocably consented to an Extension Request) to each of the Agents and the Banks to substitute any financial institution designated by the Company (a "Replacement Bank") for any Bank designated by the Company as a terminated bank ("Terminated Bank"); provided, however, that the effectiveness of such substitution shall be subject to execution of an agreement substantially in the form of Exhibit M hereto ("Replacement Agreement") by the Replacement Bank, the Company and the Administrative Agent, providing for: (i) payment of all Liabilities of the Company then outstanding to the Terminated Bank (including without limitation all such amounts due such Bank under Sections 6, 8.4, 9, 15.5 and 15.6); (ii) the termination and release of all obligations of the Terminated Bank (excluding any obligations arising under Sections 6.9, 8.4(c), 14.2 and 15.5 with respect to any matters arising prior to the effective date of such termination); and (iii) the agreement of the Replacement Bank to become a party to this Agreement and to be bound under this Agreement with the same effect as if the Replacement Bank were the Terminated Bank immediately prior to such substitution. So long as the Long Term Credit Agreement is in effect, the Company shall not replace a Terminated Bank pursuant to this Section 15.4(e) unless the Company concurrently replaces such Terminated Bank with the same Replacement Bank under the Long Term Credit Agreement. Upon execution of such Replacement Agreement the Administrative Agent shall forward a copy thereof to each Bank and each other Agent, together with a revised Schedule I modified to reflect such substitution. Upon execution of such Replacement Agreement, the Replacement Bank shall be deemed to be a party to this Agreement and a Bank hereunder and the Terminated Bank will cease to be a party to this Agreement and a Bank hereunder but shall be entitled to all the indemnities provided by this Agreement with respect to matters arising out of action or inaction by any party while such Terminated Bank was a party to this Agreement. 15.5 Costs, Expenses and Taxes. (a) The Company agrees to pay on demand all fees and out-of-pocket costs and expenses of McDermott, Will & Emery (or other law firm acceptable to the Required Banks) as special counsel to the Documentary Agent and the Banks (and of other special counsel, if any, who may be retained by said counsel), in connection with the preparation, execution, delivery, administration and enforcement of this Agreement, the Notes and all other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection herewith, and any and all waivers, consents, amendments, modifications, replacements or restatements relating to any thereof; provided that the Company's obligations hereunder with respect to administration shall be limited to administration of or by the Banks which are Agents hereunder. Each Bank agrees to reimburse each Agent for such Bank's pro rata share (based upon its respective Commitment) of any reasonable costs or expenses incurred by such Agent on behalf of the Banks in connection with such administration and enforcement (including reasonable attorneys' fees and legal expenses) not paid by the Company except to the extent that such costs or expenses arise from such Agent's gross negligence or willful misconduct. (b) The Company further agrees (i) to pay on demand all reasonable fees and out-of-pocket expenses (including all attorneys' fees, legal expenses and allocated costs of staff counsel) of each Bank incurred directly in connection with the enforcement of this Agreement, the Notes and all other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection herewith, and any and all amendments, modifications, replacements or restatements relating to any thereof, and (ii) to pay, and to save each Agent and the Banks harmless from all liability for, any stamp or other taxes which may be payable in connection with the execution and delivery of this Agreement, the borrowings hereunder, or the issuance of the Notes or of any other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection herewith. (c) Except as otherwise provided in the preceding paragraphs (a) and (b), each party shall pay its own expenses in connection with this Agreement. All obligations provided for in this Section 15.5 shall survive repayment of the Loans, cancellation of the Notes and any termination of this Agreement. 15.6 Indemnification. In consideration of the execution and delivery of this Agreement by the Agents and the Banks, the Company hereby agrees to indemnify, exonerate and hold harmless each Bank, each Agent and each officer, director, employee and agent of each Bank and each Agent (herein collectively called the "Bank Parties" and individually called a "Bank Party") from and against any and all actions, causes of action, suits, losses, costs (including, without limitation, all documentary or other stamp taxes or duties), liabilities, damages and expenses (other than expenses covered by Section 15.5(a)) in connection therewith (irrespective of whether such Bank Party is a party to the action for which indemnification hereunder is sought), including, without limitation, reasonable attorneys' fees (including allocated costs of staff counsel) and disbursements (collectively herein called the "Indemnified Liabilities") incurred by the Bank Parties or any of them as a result of, or arising out of, or relating to any Loan or the use of the proceeds of any Loan except for any such Indemnified Liabilities arising on account of such Bank Party's gross negligence or willful misconduct and, if and to the extent that the foregoing undertaking may be unenforceable for any reason, the Company hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. All obligations provided for in this Section 15.6 shall survive repayment of the Liabilities, cancellation of the Notes and any termination of this Agreement. 15.7 Regulation U. Each Bank represents that it in good faith is not relying, either directly or indirectly, upon any Margin Stock as collateral security for the extension or maintenance by it of any credit provided for in this Agreement. 15.8 Captions. Section captions used in this Agreement are for convenience only, and shall not affect the construction of this Agreement. 15.9 Governing Law; Severability. This Agreement and each Note shall be a contract made under and governed by the laws of the State of Illinois without regard to conflict of laws principles. All obligations of the Company and the rights of the Agents, the Banks and any other holders of the Notes expressed herein or in the Notes shall be in addition to and not in limitation of those provided by applicable law. Whenever possible each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. Nothing herein shall require the Company to pay interest in excess of the maximum rate permitted by law. 15.10 Waiver of Jury Trial. Each of the Company, each Agent and each Bank waives any right to a trial by jury in any action or proceeding to enforce or defend any rights under this Agreement, any Note or any amendment, instrument, document or agreement delivered or which may in the future be delivered in connection herewith or arising from any banking relationship existing in connection with this Agreement, and agrees that any such action or proceeding shall be tried before a court and not before a jury. 15.11 Counterparts; Effectiveness. This Agreement may be executed in any number of counterparts and by the different parties on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same agreement. This Agreement shall become effective as of the Effective Date and the Documentary Agent shall so inform all of the parties hereto. 15.12 Supersession. This Agreement supersedes all prior or contemporaneous agreements with respect to the subject matter hereof. 15.13 Successors and Assigns. This Agreement shall be binding upon the Company, the Banks and the Agents and their respective successors and assigns, and shall inure to the benefit of the Company, the Banks and the Agents and the respective successors and assigns of the Banks and the Agents, it being understood that subject to Section 11.6, the Company shall not assign its rights hereunder without the consent of all of the Banks. * * * Delivered at Chicago, Illinois as of the day, month and year first above written. MONTGOMERY WARD & CO., INCORPORATED By: Name: Douglas V. Gathany Title: Senior Assistant Treasurer One Montgomery Ward Plaza 844 North Larrabee Chicago, Illinois 60671 Attention: Treasurer Telephone: (312) 467-7238 Telecopy: (312) 467-7421 Person to whom Negotiated Loan correspondence should be addressed: Douglas V. Gathany Senior Assistant Treasurer Telephone: (312) 467-7238 Telecopy: (312) 467-7421 Person to whom copies of notices under Section 13.2 should also be sent: Montgomery Ward & Co., Incorporated One Montgomery Ward Plaza 535 West Chicago Avenue Chicago, Illinois 60671 Attention: Secretary THE FIRST NATIONAL BANK OF CHICAGO, in its individual capacity and in its capacity as Documentary Agent By: Name: Jeanette Ganousis Title: Vice President Mail Suite 0088 One First National Plaza Chicago, IL 60670 Telephone: (312) 732-6066 Telecopy: (312) 732-5161 Person to whom Negotiated Loan correspondence should be addressed: Dennis Degen Administrative Coordinator Telephone: (312) 732-6246 Telecopy: (312) 732-2715 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Dennis Degen Administrative Coordinator Telephone: (312) 732-6246 Telecopy: (312) 732-2715 Base Rate Loan Funding Office: The First National Bank of Chicago One First National Plaza Chicago, IL 60670 Eurodollar Loan Funding Office: The First National Bank of Chicago One First National Plaza Chicago, IL 60670 THE BANK OF NEW YORK, in its individual capacity and in its capacity as Negotiated Loan Agent By: Name: Bruce C. Miller Title: Vice President One Wall Street New York, NY 10286 Telephone: (212) 635-1172 Telecopy: (212) 635-1208 Person to whom Negotiated Loan correspondence should be addressed: Carol Surles, 18th Floor Telephone: (212) 635-4695 Telecopy: (212) 635-6365 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Carol Surles, 18th Floor Telephone: (212) 635-4695 Telecopy: (212) 635-6365 Base Rate Loan Funding Office: The Bank of New York Commercial Loan Servicing Dept. 101 Barclay Street New York, NY 10007 Eurodollar Loan Funding Office: The Bank of New York Euro Dollar/Cayman Funding Area 101 Barclay Street New York, NY 10007 THE BANK OF NOVA SCOTIA, in its individual capacity and in its capacity as Administrative Agent By: Name: F.C.H. Ashby Title: Senior Assistant Agent Suite 2700 600 Peachtree NE Atlanta, GA 30308 Telephone: (404) 877-1500 Telecopy: (404) 888-8998 Telex: 00542319 Person to whom Negotiated Loan correspondence should be addressed: Sarah Schramm NYA - Treasury Telephone: (212) 225-5550 Telecopy: (212) 225-5517 Telex: ITT421791 WUI669859 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Ed Moussa Atlanta Agency Telephone: (404) 877-1500 Telecopy: (404) 888-8998 Telex: 00542319 Base Rate Loan Funding Office: The Bank of Nova Scotia Atlanta Agency Suite 2700 600 Peachtree NE Atlanta, GA 30308 Eurodollar Loan Funding Office: The Bank of Nova Scotia Atlanta Agency Suite 2700 600 Peachtree NE Atlanta, GA 30308 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, in its individual capacity and in its capacity as Advisory Agent By: Name: M. Kathleen McVay Title: Senior Vice President 200 West Adams Street, Suite 2800 Chicago, Illinois 60606 Telephone: (312) 269-4644 Telecopy: (312) 269-4540 Person to whom Negotiated Loan correspondence should be addressed: M. Kathleen McVay Senior Vice President Telephone: (312) 269-4644 Telecopy: (312) 269-4540 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Pamela Quebbeman Bank of America 231 South LaSalle Street Chicago, Illinois 60697 Telephone: (312) 828-3586 Telecopy: (312) 987-5500 Base Rate Loan Funding Office: Bank of America National Trust and Savings Association Eurodollar Loan Funding Office: Bank of America National Trust and Savings Association CIBC INC. By: Name: David McGowan Title: Vice President Suite 2300 200 West Madison Street Chicago, IL 60606 Telephone: (312) 750-8730 Telecopy: (312) 726-8884 Person to whom Negotiated Loan correspondence should be addressed: Carol Kizzia 425 Lexington New York, New York 10017 Telephone: (212) 856-3693 Telecopy: (212) 856-6699 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Sherry Smith Assistant Vice President with a copy to: Junior Williams Associate 2 Paces West 2727 Paces Ferry Road, Suite 1200 Atlanta, GA 30339 Telephone: (404) 319-4820 Telecopy: (404) 319-4950 Telex: 54-2413 Base Rate Loan Funding Office: Canadian Imperial Bank of Commerce 2 Paces West 2727 Paces Ferry Road Suite 1200 Atlanta, GA 30339 Eurodollar Loan Funding Office: Canadian Imperial Bank of Commerce 2 Paces West 2727 Paces Ferry Road Suite 1200 Atlanta, GA 30339 NATIONSBANK OF NORTH CAROLINA By: Name: Christopher B. Torie Title: Senior Vice President 70 West Madison Street, 53rd Floor Chicago, Illinois 60602 Telephone: (312) 853-5794 Telecopy: (312) 853-9194 Person to whom Negotiated Loan correspondence should be addressed: Kathy Mumpower Telephone: (704) 386-7429 Telecopy: (704) 386-8694 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Kathy Mumpower Telephone: (704) 386-7429 Telecopy: (704) 386-8694 Base Rate Loan Funding Office: NationsBank of North Carolina #1 Nations Bank Plaza T 17-21 Charlotte, North Carolina 28255 Eurodollar Loan Funding Office: NationsBank of North Carolina #1 Nations Bank Plaza T 17-21 Charlotte, North Carolina 28255 THE LONG-TERM CREDIT BANK OF JAPAN, LTD. By: Name: Mark A. Thompson Title: Vice President and Deputy General Manager 190 South LaSalle Street Chicago, Illinois 60603 Telephone: (312) 704-5459 Telecopy: (312) 704-8505 Person to whom Negotiated Loan correspondence should be addressed: Will Schauble Vice President, Loan Operations Telephone: (312) 704-5494 Telecopy: (312) 704-8717 Telex: 825567 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Will Schauble Vice President, Loan Operations Telephone: (312) 704-5494 Telecopy: (312) 704-8717 Telex: 825567 Base Rate Loan Funding Office: 190 South LaSalle Street, Suite 800 Chicago, Illinois 60603 Eurodollar Loan Funding Office: 190 South LaSalle Street, Suite 800 Chicago, Illinois 60603 CREDIT LYONNAIS CHICAGO BRANCH By: Name: Attila Koc Title: Vice President, Corporate Group Head Marcus Katz, Vice President 227 West Monroe Street Chicago, IL 60606 Telephone: (312) 220-7307 Telecopy: (312) 641-0527 Telex: 6871734 Person to whom Negotiated Loan correspondence should be addressed: Marcus Katz, Vice President Telephone: (312) 220-7307 Telecopy: (312) 641-0527 Telex: 6871734 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Rosette Liptak Telephone: (312) 220-7319 Telecopy: (312) 641-5834 Telex: 6871734 Base Rate Loan Funding Office: Credit Lyonnais Chicago Branch 227 West Monroe Street Chicago, IL 60606 Eurodollar Loan Funding Office: Credit Lyonnais Cayman Island Branch c/o Credit Lyonnais Chicago Branch 227 West Monroe Street Chicago, Illinios 60606 CREDIT LYONNAIS CAYMAN ISLAND BRANCH By: Name: Attila Koc Title: Authorized Signature Marcus Katz, Vice President 227 West Monroe Street Chicago, IL 60606 Telephone: (312) 220-7307 Telecopy: (312) 641-0527 Telex: 6871734 Person to whom Negotiated Loan correspondence should be addressed: Marcus Katz, Vice President Telephone: (312) 220-7307 Telecopy: (312) 641-0527 Telex: 6871734 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Rosette Liptak Telephone: (312) 220-7319 Telecopy: (312) 641-5834 Telex: 6871734 Base Rate Loan Funding Office: Credit Lyonnais Chicago Branch 227 West Monroe Street Chicago, IL 60606 Eurodollar Loan Funding Office: Credit Lyonnais Cayman Island Branch c/o Credit Lyonnais Chicago Branch 227 West Monroe Street Chicago, Illinios 60606 BANCA COMMERCIALE ITALIANA, CHICAGO BRANCH By: Name: Julian M. Teodori Title: Senior Vice President By: Name: Diana R. Lamb Title: Vice President 150 North Michigan Avenue, Suite 1500 Chicago, Illinois 60601 Telephone: (312) 346-1112 Telecopy: (312) 346-5758 Telex: 212716 COMIT CHICAGO Person to whom Negotiated Loan correspondence should be addressed: Matthew V. Trujillo Assistant Vice President Telephone: (312) 346-1112 Telecopy: (312) 346-5758 Telex: 212716 COMIT CHICAGO Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Jonathan Sahr Loan Department Supervisor Telephone: (212) 607-3814 Telecopy: (212) 422-6651 Telex: 6790749 BCINY Base Rate Loan Funding Office: Banca Commerciale Italiana New York Branch One William Street New York, New York 10004 Eurodollar Loan Funding Office: Banca Commerciale Italiana New York Branch One William Street New York, New York 10004 THE DAI-ICHI KANGYO BANK, LTD., CHICAGO BRANCH By: Name: Masami Tsuboi Title: Vice President 10 South Wacker Drive Chicago, Illinois 60606 Telephone: (312) 715-6365 Telecopy: (312) 876-2011 Telex: 25-4515 Person to whom Negotiated Loan correspondence should be addressed: Richard R. Howard Assistant Vice President Telephone: (312) 715-6369 Telecopy: (312) 876-2011 Telex: 25-4515 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Gary Marthaler Officer Telephone: (312) 715-6451 Telecopy: (312) 876-2011 Telex: 25-4515 Base Rate Loan Funding Office: The Dai-Ichi Kangyo Bank, Ltd., Chicago Branch 10 South Wacker Drive Chicago, Illinois 60606 Eurodollar Loan Funding Office: The Dai-Ichi Kangyo Bank, Ltd., Chicago Branch 10 South Wacker Drive Chicago, Illinois 60606 THE MITSUBISHI BANK, LIMITED, CHICAGO BRANCH By: Name: Noboru Kobayashi Title: Joint General Manager 115 South LaSalle Street, Suite 2100 Chicago, Illinois 60603 Telephone: (312) 269-0753 Telecopy: (312) 263-2555 Telex: 190046 BISHIBANK Person to whom Negotiated Loan correspondence should be addressed: Alex Lam Vice President Telephone: (312) 269-0753 Telecopy: (312) 263-2555 Telex: 190046 BISHIBANK Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Janice Hennig Assistant Vice President Telephone: (312) 269-0473 Telecopy: (312) 263-2555 Telex: 190046 BISHIBANK Base Rate Loan Funding Office: 115 South LaSalle Street, Suite 2100 Chicago, Illinois 60603 Eurodollar Loan Funding Office: 115 South LaSalle Street, Suite 2100 Chicago, Illinois 60603 THE NORTHERN TRUST COMPANY By: Name: David Blowers Title: Vice President and Chicago Division Head Mr. James M. McMenamin 50 South LaSalle Street Chicago, Illinois 60675 Telephone: (312) 444-3555 Telecopy: (312) 630-1566 Person to whom Negotiated Loan correspondence should be addressed: Mr. James M. McMenamin 50 South LaSalle Street Chicago, Illinois 60675 Telephone: (312) 444-3555 Telecopy: (312) 630-1566 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Mr. James M. McMenamin 50 South LaSalle Street Chicago, Illinois 60675 Telephone: (312) 444-3555 Telecopy: (312) 630-1566 Base Rate Loan Funding Office: 50 South LaSalle Street Chicago, Illinois 60675 Eurodollar Loan Funding Office: 50 South LaSalle Street Chicago, Illinois 60675 THE SAKURA BANK, LTD. By: Name: Hajime Miyagi Title: Deputy General Manager 227 West Monroe Street, Suite 4700 Chicago, Illinois 60606 Telephone: (312) 201-5146 Telecopy: (312) 332-5345 Telex: 254048 Person to whom Negotiated Loan correspondence should be addressed: Kristin M. Hays Assistant Vice President Telephone: (312) 201-5141 Telecopy: (312) 332-5345 Telex: 254048 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Kristin M. Hays Assistant Vice President Telephone: (312) 201-5141 Telecopy: (312) 332-5345 Telex: 254048 Base Rate Loan Funding Office: 227 West Monroe Street, Suite 4700 Chicago, Illinois 60606 Eurodollar Loan Funding Office: 227 West Monroe Street, Suite 4700 Chicago, Illinois 60606 THE SANWA BANK, LIMITED, CHICAGO BRANCH By: Name: Jose A. Moreno Title: Vice President and Manager 10 South Wacker Drive Chicago, Illinois 60606 Telephone: (312) 368-3007 Telecopy: (312) 346-6677 Telex: 3735188 Person to whom Negotiated Loan correspondence should be addressed: Jose A. Moreno Vice President and Manager Telephone: (312) 368-3007 Telecopy: (312) 346-6677 Telex: 3735188 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Beverly Wyckoff Manager, Loan Administration Telephone: (312) 368-3016 Telecopy: (312) 346-6677 Telex: 3735188 Base Rate Loan Funding Office: 10 South Wacker Drive Chicago, Illinois 60606 Eurodollar Loan Funding Office: 10 South Wacker Drive Chicago, Illinois 60606 SWISS BANK CORPORATION By: Name: Nancy A. Russell Title: Associate Director By: Name: William A. McDonnell Title: Associate Director 141 West Jackson Boulevard Chicago, Illinois 60604 Telephone: (312) 554-6436 Telecopy: (312) 554-6410 or 6411 Telex: MCI 687 1764 SBOB UW Person to whom Negotiated Loan correspondence should be addressed: Paul Guider Associate Director Telephone: (212) 335-1009 Telecopy: (212) 335-1388 Telex: MCI 62841 swisbk uw Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Valerie Williams Administrative Assistant Telephone: (212) 574-3146 Telecopy: (212) 574-3180 Telex: MCI 62841 swisbk uw Base Rate Loan Funding Office: 141 West Jackson Boulevard Chicago, Illinois 60604 Eurodollar Loan Funding Office: 141 West Jackson Boulevard Chicago, Illinois 60604 U.S. NATIONAL BANK OF OREGON By: Name: Jeffrey C. Swift Title: Vice President National Corporate Banking 111 SW Fifth Avenue, Suite 2900 Portland, Oregon 97204 Telephone: (503) 275-6381 Telecopy: (503) 275-5428 Telex: #360549 Person to whom Negotiated Loan correspondence should be addressed: Jan Knox Participation Specialist Telephone: (503) 275-6561 Telecopy: (503) 275-4600 Telex: #360549 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Jan Knox Participation Specialist Telephone: (503) 275-6561 Telecopy: (503) 275-4600 Telex: #360549 Base Rate Loan Funding Office: Corporate Loan Servicing 555 S.W. Oak Street Portland, Oregon 97204 Eurodollar Loan Funding Office: Corporate Loan Servicing 555 S.W. Oak Street Portland, Oregon 97204 UNION BANK By: Name: Richard A. Sutter Title: Vice President 350 California Street, 11th Floor San Francisco, California 94101 Telephone: (415) 705-7090 Telecopy: (415) 705-7092 Person to whom Negotiated Loan correspondence should be addressed: Richard A. Sutter Vice President Telephone: (415) 705-7090 Telecopy: (415) 705-7092 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Richard A. Sutter Vice President Telephone: (415) 705-7090 Telecopy: (415) 705-7092 Base Rate Loan Funding Office: 350 California Street, 11th Floor San Francisco, California 94101 Eurodollar Loan Funding Office: 350 California Street, 11th Floor San Francisco, California 94101 ABN AMRO BANK N.V. By: Name: Jeffrey Dodd Title: Vice President By: Name: Patricia M. Luken Title: Vice President 135 South LaSalle Street, Suite 425 Chicago, Illinois 60674-9135 Telephone: (312) 904-5362 Telecopy: (312) 606-8425 Telex: 6732700 (Answerback: ABN AMRO CGO) Person to whom Negotiated Loan correspondence should be addressed: Loan Administration Telephone: (312) 443-2149 Telecopy: (312) 606-8435 Telex: 6732700 (Answerback: ABN AMRO CGO) Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Loan Administration Telephone: (312) 443-2149 Telecopy: (312) 606-8435 Telex: 6732700 (Answerback: ABN AMRO CGO) Base Rate Loan Funding Office: 135 South LaSalle Street, Suite 425 Chicago, Illinois 60674-9135 Eurodollar Loan Funding Office: 135 South LaSalle Street, Suite 425 Chicago, Illinois 60674-9135 FIRST BANK NATIONAL ASSOCIATION By: Name: Michael J. McGroarty Title: Vice President First Bank National Association 601 2nd Avenue South - MPFP0702 Minneapolis, Minnesota 55402-4302 Telephone: (612) 973-0552 Telecopy: (612) 973-0825 Backup Contact: Brenda Everson Commercial Associate First Bank National Association 601 2nd Avenue South - MPFP0702 Minneapolis, Minnesota 55402-4302 Telephone: (612) 973-0653 Telecopy: (612) 973-0825 Person to whom Negotiated Loan correspondence should be addressed: Brenda Everson Commericial Associate First Bank National Association 601 2nd Avenue South - MPFP0702 Minneapolis, Minnesota 55402-4302 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Brenda Everson Commericial Associate First Bank National Association 601 2nd Avenue South - MPFP0702 Minneapolis, Minnesota 55402-4302 Base Rate Loan Funding Office: First Bank National Association First Bank Place 601 2nd Avenue South Minneapolis, Minnesota 55402-4302 Eurodollar Loan Funding Office: First Bank National Association First Bank Place 601 2nd Avenue South Minneapolis, Minnesota 55402-4302 THE FIRST NATIONAL BANK OF BOSTON By: Name: Bethann Halligan Title: Director 100 Federal Street P. O. Box 2016 Boston, Massachusetts 02106-2016 Telephone: (617) 434-0144 Telecopy: (617) 434-0630 or (617) 434-6685 Person to whom Negotiated Loan correspondence should be addressed: Carol Rousseau Account Administrator Telephone: (617) 434-5777 Telecopy: (617) 434-0630 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Carol Rousseau Account Administrator Telephone: (617) 434-5777 Telecopy: (617) 434-0630 Base Rate Loan Funding Office: 100 Federal Street U. S. Corporate Boston, Massachusetts 02106 Eurodollar Loan Funding Office: 100 Federal Street U. S. Corporate Boston, Massachusetts 02106 THE FUJI BANK, LIMITED By: Name: Peter L. Chinnici Title: Joint General Manager 225 West Wacker Drive, Suite 2000 Chicago, Illinois 60606 Telephone: (312) 621-0515 Telecopy: (312) 621-0539 Person to whom Negotiated Loan correspondence should be addressed: James Fayen Assistant Vice President Telephone: (312) 621-0518 Telecopy: (312) 621-0539 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Cely Havarro Loans Administration Telephone: (312) 621-0538 Telecopy: (312) 621-0539 Base Rate Loan Funding Office: The Fuji Bank, Limited 225 West Wacker Drive, Suite 2000 Chicago, Illinois 60606 Eurodollar Loan Funding Office: The Fuji Bank, Limited 225 West Wacker Drive, Suite 2000 Chicago, Illinois 60606 PNC BANK, NATIONAL ASSOCIATION By: Name: Jon C. Otterberg Title: Commercial Banking Officer 500 West Madison Street, Suite 3140 Chicago, Illinois 60661 Telephone: (312) 906-3425 Telecopy: (312) 906-3420 Person to whom Negotiated Loan correspondence should be addressed: Jon C. Otterberg Commercial Banking Officer Telephone: (312) 906-3425 Telecopy: (312) 906-3420 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Tammy Dunn Administrative Secretary Telephone: (312) 906-3403 Telecopy: (312) 906-3420 Base Rate Loan Funding Office: PNC Bank, N.A. Fifth Avenue and Wood Street Pittsburgh, Pennsylvania 15222 Eurodollar Loan Funding Office: PNC Bank, N.A. Fifth Avenue and Wood Street Pittsburgh, Pennsylvania 15222 THE YASUDA TRUST AND BANKING CO., LTD. By: Name: Joseph C. Meek Title: Vice President and Manager 181 West Madison Street, Suite 4500 Chicago, Illinois 60602 Telephone: (312) 683-3800 Telecopy: (312) 683-3899 Telex: 446831 YTBCH Person to whom Negotiated Loan correspondence should be addressed: Douglas Warren Vice President Telephone: (312) 683-3839 Telecopy: (312) 683-3899 Telex: 446831 YTBCH Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Cindy Hartweger Loan Administration Telephone: (312) 683-3853 Telecopy: (312) 683-3899 Telex: 446831 YTBCH Base Rate Loan Funding Office: 181 West Madison Street, Suite 4500 Chicago, Illinois 60602 Eurodollar Loan Funding Office: 181 West Madison Street, Suite 4500 Chicago, Illinois 60602 THE FIRST NATIONAL BANK OF MARYLAND By: Name: James K. Fowler Title: Vice President 25 South Charles Street Baltimore, Maryland 21201 Telephone: (410) 244-4208 Telecopy: (410) 244-4294 Person to whom Negotiated Loan correspondence should be addressed: James K. Fowler Vice President Telephone: (410) 244-4208 Telecopy: (410) 244-4294 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: James K. Fowler Vice President Telephone: (410) 244-4208 Telecopy: (410) 244-4294 Base Rate Loan Funding Office: 25 South Charles Street Baltimore, Maryland 21201 Eurodollar Loan Funding Office: 25 South Charles Street Baltimore, Maryland 21201 ISTITUTO BANCARIO SAN PAOLO DI TORINO, S.P.A. By: Name: William DeAngelo Title: First Vice President 245 Park Avenue New York, NY 10167 Telephone: (212) 692-3150 Telecopy: (212) 599-5303 Telex: 220045 SPAOL UR Person to whom Negotiated Loan correspondence should be addressed: Michele M. von Kroemer Assistant Treasurer Telephone: (212) 692-3196 Telecopy: (212) 599-5303 Telex: 220045 SPAOL UR Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Michele M. von Kroemer Assistant Treasurer Telephone: (212) 692-3196 Telecopy: (212) 599-5303 Telex: 220045 SPAOL UR Base Rate Loan Funding Office: Istituto Bancario san Paolo Bank di Torino, S.p.A., New York Branch 245 Park Avenue New York, New York 10167 Eurodollar Loan Funding Office: Istituto Bancario san Paolo Bank di Torino, S.p.A., New York Branch 245 Park Avenue New York, New York 10167 KREDIETBANK N.V. By: Name: Patricia McCann Title: Vice President By: Name: Robert Snauffer Title: Vice President and Senior Credit Officer 125 West 55th Street, 10th Floor New York, New York 10019 Telephone: (212) 541-0733 Telecopy: (212) 956-5580 Telex: MCI 661572 KREDIETNV TRT 177789 KREDIETNV RCA 236777 Person to whom Negotiated Loan correspondence should be addressed: Lynda Resuma Assistant Treasurer Telephone: (212) 541-0657 Telecopy: (212) 956-5580 Telex: MCI 661572 KREDIETNV TRT 177789 KREDIETNV RCA 236777 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Lynda Resuma Assistant Treasurer Telephone: (212) 541-0657 Telecopy: (212) 956-5580 Telex: MCI 661572 KREDIETNV TRT 177789 KREDIETNV RCA 236777 Base Rate Loan Funding Office, New York: 125 West 55th Street, 10th Floor New York, New York 10019 Eurodollar Loan Funding Office, Grand Caymen: 125 West 55th Street, 10th Floor New York, New York 10019 UNION BANK OF SWITZERLAND - CHICAGO BRANCH By: Name: Walter R. Wolff Title: First Vice President 30 South Wacker Drive, 40th Floor Chicago, Illinois 60606 Telephone: (312) 993-5450 Telecopy: (312) 993-5530 Person to whom Negotiated Loan correspondence should be addressed: Scott K. Werneburg Credit Analyst Telephone: (312) 993-5435 Telecopy: (312) 993-5530 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Scott K. Werneburg Credit Analyst Telephone: (312) 993-5435 Telecopy: (312) 993-5530 Base Rate Loan Funding Office: Union Bank of Switzerland - Chicago Branch 30 South Wacker Drive, 40th Floor Chicago, Illinois 60606 Eurodollar Loan Funding Office: Union Bank of Switzerland - Chicago Branch 30 South Wacker Drive, 40th Floor Chicago, Illinois 60606 WELLS FARGO BANK, N.A. By: Name: John Huber Title: Vice President 420 Montgomery Street San Francisco, California 94163 Telephone: (415) 396-2257 Telecopy: (415) 421-1352 Person to whom Negotiated Loan correspondence should be addressed: John Huber Vice President Telephone: (415) 396-2257 Telecopy: (415) 421-1352 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Gail Landers Telephone: (415) 396-4915 Telecopy: (415) 989-4319 Base Rate Loan Funding Office: Wells Fargo Bank, N.A. 420 Montgomery Street San Francisco, California 94163 Eurodollar Loan Funding Office: Wells Fargo Bank, N.A. 420 Montgomery Street San Francisco, California 94163 BANCA DI ROMA, S.P.A. By: Name: Aurora Pensa Title: Vice President By: Name: Joyce Montgomery Title: Assistant Vice President 225 West Washington Street Chicago, Illinois 60606 Telephone: (312) 368-8855 Telecopy: (312) 726-3058 Telex: 190190 or 190107 Person to whom Negotiated Loan correspondence should be addressed: Aurora Pensa or Margaret Delay Telephone: (312) 704-2630 or (312) 704-2594 Telecopy: (312) 726-3058 Telex: 190190 or 190107 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Vincenza Geraci Telephone: (312) 704-2603 Telecopy: (312) 726-3058 Telex: 190190 or 190107 Base Rate Loan Funding Office: Banca di Roma - Chicago Branch 225 West Washington Street Chicago, Illinois 60606 Eurodollar Loan Funding Office: Banca di Roma - Chicago Branch 225 West Washington Street Chicago, Illinois 60606 COMERICA BANK By: Name: David L. Morrison Title: Account Officer 500 Woodward Avenue, MC 3279 Detroit, Michigan 48226 Telephone: (313) 222-3808 Telecopy: (313) 222-3330 Person to whom Negotiated Loan correspondence should be addressed: Beverly V. Jones Customer Assistant Telephone: (313) 222-3805 Telecopy: (313) 222-3330 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Beverly V. Jones Telephone: (313) 222-3805 Telecopy: (313) 222-3330 Base Rate Loan Funding Office: Comerica Bank 500 Woodward Avenue, MC 3279 Detroit, Michigan 48226 Eurodollar Loan Funding Office: Comerica Bank 500 Woodward Avenue, MC 3279 Detroit, Michigan 48226 BANK OF AMERICA ILLINOIS By: Name: M. Kathleen McVay Title: Authorized Officer 200 West Adams Street, Suite 2800 Chicago, Illinois 60606 Telephone: (312) 269-4644 Telecopy: (312) 269-4540 Person to whom Negotiated Loan correspondence should be addressed: M. Kathleen McVay Senior Vice President Telephone: (312) 269-4644 Telecopy: (312) 269-4540 Person to whom all Loan Requests (other than Negotiated Loan Confirmations) should be addressed: Pamela Quebbeman Bank of America Illinois 231 South LaSalle Street Chicago, Illinois 60697 Telephone: (312) 828-3586 Telecopy: (312) 987-5500 Base Rate Loan Funding Office: Bank of America Illinois 231 South LaSalle Street Chicago, Illinois 60697 Eurodollar Loan Funding Office: Bank of America Illinois 231 South LaSalle Street Chicago, Illinois 60697 SCHEDULES AND EXHIBITS to SHORT TERM CREDIT AGREEMENT SCHEDULE I BANKS, COMMITMENTS AND TERMINATION DATES (Sections 1.1, 2.7 and 15.4) BANK NAME COMMITMENT TERMINATION DATE The Bank of New York 19,800,000 September 14, 1995 The Bank of Nova Scotia 19,800,000 September 14, 1995 CIBC Inc. 19,800,000 September 14, 1995 NationsBank of North Carolina 19,800,000 September 14, 1995 The Long-Term Credit Bank of Japan, Ltd. 18,150,000 September 14, 1995 Credit Lyonnais Chicago Branch and Credit Lyonnais Cayman Island Branch 16,500,000 September 14, 1995 The First National Bank of Chicago 16,500,000 September 14, 1995 Banca Commerciale Italiana, Chicago Branch 9,900,000 September 14, 1995 The Dai-Ichi Kangyo Bank, Ltd., Chicago Branch 9,900,000 September 14, 1995 The Mitsubishi Bank, Limited, Chicago Branch 9,900,000 September 14, 1995 Bank of America National Trust and Savings Association 8,250,000 September 14, 1995 Bank of America Illinois 8,250,000 September 14, 1995 The Northern Trust Company 8,250,000 September 14, 1995 The Sakura Bank, Ltd. 8,250,000 September 14, 1995 The Sanwa Bank, Limited, Chicago Branch 8,250,000 September 14, 1995 Swiss Bank Corporation 8,250,000 September 14, 1995 U.S. National Bank of Oregon 8,250,000 September 14, 1995 The Union Bank 8,250,000 September 14, 1995 ABN AMRO Bank N.V. 6,600,000 September 14, 1995 The First Bank National Association 6,600,000 September 14, 1995 The First National Bank of Boston 6,600,000 September 14, 1995 The Fuji Bank, Limited 6,600,000 September 14, 1995 PNC Bank, National Assoociation 6,600,000 September 14, 1995 The Yasuda Trust and Banking Co., Ltd. 6,600,000 September 14, 1995 The First National Bank of Maryland 4,950,000 September 14, 1995 Istituto Bancario San Paolo di Torino, S.p.A., New York Branch 4,950,000 September 14, 1995 Kredietbank N.V. 4,950,000 September 14, 1995 Union Bank of Switzerland, Chicago Branch 4,950,000 September 14, 1995 Wells Fargo Bank, N.A. 4,950,000 September 14, 1995 Banca di Roma, S.P.A. 3,300,000 September 14, 1995 Comerica Bank 3,300,000 September 14, 1995 297,000,000 SCHEDULE II LITIGATION (Section 10.5) NONE SCHEDULE III LIENS (Section 10.7) 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 financial statements referred to in Section 10.4. 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 sheets included in the financial statements referred to in Section 10.4 classified as assets and obligations, respectively, under capital leases and similar such liens which may have been incurred in connection with the acquisition of assets after July 2, 1994. 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. Other liens incurred in the ordinary course of business which in the aggregate do not exceed $2,000,000. SCHEDULE IV SUBSIDIARIES AND RESTRICTED SUBSIDIARIES (Section 10.8) Set forth below is a list of all Subsidiaries of the Company as of September 15, 1994: American Delivery Service Company (Del.) Continental Transportation, Inc. (Del.) Brandywine DC, Inc. (Fla.) Brettward Properties Co., Inc. (Md.) Furniture Investors, Inc. (Del.) Huga Realty Inc. (Del.) Jefferson Stores, Inc. (Nev.) JRI Distributing, Inc. (Del.) LMR Acquisition Corporation (Mass.) Lechmere, Inc. (Mass.) Marcor Housing Systems, Inc. (Del.) Marinco Insurance U.S.A., Inc. (Vermont) 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.) 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 Ltda. (Brazil) Montgomery Ward Properties Corporation (Del.) 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.) Greater California Dental Plan (Calif.) I.S.S. Agency, Inc. (Del.) Montgomery Ward Auto Club, Inc. (Del.) Montgomery Ward Enterprises, Inc. (Del.) SignatureCard, Inc. (Ind.) 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 Services, 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. SCHEDULE V POST-RETIREMENT WELFARE PLAN BENEFITS (Section 10.9) The contents of footnote 6, entitled "Retirement Plans," to the Company's audited consolidated financial statements as at January 1, 1994 are incorporated herein by reference which footnote addresses the Montgomery Ward & Co., Incorporated Comprehensive Health Care Plan and certain matters related thereto. SCHEDULE VI SCHEDULE OF TAX SHARING ARRANGEMENTS AMONG PARENT AND ITS SUBSIDIARIES (Section 11.5) The following principles shall be applied with respect to the Parent and its Subsidiaries in allocating tax liability and tax benefits relating to federal, state, local and foreign taxes: (a) Payments shall be permitted to be made between members of an affiliated group filing a federal consolidated return, within the meaning of the federal income tax laws and the regulations thereunder, to effectuate an allocation of the tax liability among members of the affiliated group in accordance with the principles set forth in 26 C.F.R. paragraph 1.1552-1 and 26 C.F.R. paragraph 1.1502-33(d) and related regulations. 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. (b) The principles described in (a) above may be modified to the extent necessary to permit allocation of tax liability to any member on the basis of what would be that member's stand-alone tax liability, notwithstanding technical considerations set forth in the regulations. (c) The determinations of the allocations for tax liability pursuant to this Schedule shall be made in the manner determined by the Parent or the Company, without regard to the actual manner of dealing with the taxing authorities. (d) The principles applied pursuant to this Schedule shall in all material respects be consistently applied from year to year. Reference herein to tax liabilities include items of negative tax liability, i.e., tax benefits. SCHEDULE VII MANAGEMENT INVESTORS (Section 1.1) 1. Dominic M. Mangone 2. Mary Jo Marando as Trustee of the Joseph Mangone Trust dated June 19, 1988 3. Mary Jo Marando as Trustee of the Elizabeth Mangone Trust dated June 19, 1988 4. Mary Jo Marando as Trustee of the Gina Mangone Trust dated June 19, 1988 5. Mary Jo Marando as Trustee of the Michael Marando Trust dated June 19, 1988 6. Daniel F. Darr 7. John Bevan 8. William J. McCarthy 9. Henry Goldsmith 10. William Marginson 11. Larry J. Farrar 12. Daniel H. Levy 13. The Alan Mark Levy Irrevocable Trust dated July 11, 1988 14. The Michael Scott Levy Irrevocable Trust dated July 11, 1988 15. Donald L. Docken and Kathleen S. Docken, Trustees or their successors in trust under the Donald L. Docken Living Trust dated December 21, 1991 16. Malvin Pavik 17. Alvin Pavik, as Trustee of the Malvin Pavik Family Trust under Trust Agreement dated September 30, 1988 18. Alvin Pavik, as Trustee of the Alan C. Pavik Trust under Trust Agreement dated September 30, 1988 19. Alvin Pavik, as Trustee of the James A. Pavik Trust under Trust Agreement dated September 30, 1988 20. Alvin Pavik, as Trustee of the Paul T. Pavik Trust under Trust Agreement dated September 30, 1988 21. Alvin Pavik, as Trustee of the Debra L. Porter Trust under Trust Agreement dated September 30, 1988 22. Alvin Pavik, as Trustee of the Joan L. Geckle Trust under Trust Agreement dated September 30, 1988 23. Alvin Pavik, as Trustee of the Linda A. Pavik Trust under Trust Agreement dated September 30, 1988 24. Alvin Pavik, as Trustee of the Douglas T. Pavik Trust under Trust Agreement dated September 30, 1988 25. Alvin Pavik, as Trustee of the Kimberly S. Pavik Trust under Trust Agreement dated September 30, 1988 26. Alvin Pavik, as Trustee of Pavik Discretionary Trust under Trust Agreement dated December 9, 1988 27. Harold D. Kahn 28. Leslie A. Ball 29. Elizabeth Hebb-Sweney SCHEDULE VIII FINDER'S LIST (Section 1.1) "Adjusted Commitment" - used in Section 8.2(a)(B). "Administrative Agent" - used throughout. "Advisory Agent" - used in the Preamble and in definition of Agent. "Affiliate" - used in definition of Funding Office and in Sections 10.12, 11.2(viii), 14.7, 15.4(a)(iii) and 15.4(d). "Agent(s)" - used throughout. "Agent Parties" - used in Section 14.2. "Aggregate Commitment" - used in definition of Termination Date and in Sections 2.2(b), 2.6(b), 4.2 and 6.5. "Agreement" - used throughout. "Applicable Agent" - used in Sections 8.1(a), 8.4, 9.1(b), 14.4, 15.2(a) and 15.4. "Assignee(s)" - used in Sections 8.2(c), 14.4(b), 14.6, 15.4(b) and 15.4(d). "Assignment" - used in definition of Funding Office and in Section 15.4(b). "Authorized Officer" - used in Sections 2.7(e), 11.1(c), 11.1(i), 11.6(iii) and 12.1(a). "Bank(s)" - used throughout. "Bank Parties" - used in Section 15.6. "Base Rate" - used in definition of Base Rate Loan and in Sections 3.4, 6.1, 6.8 and 14.4. "Base Rate Loan" - used throughout. "Business Day" - used throughout. "Capital Base" - used in definition of Total Capitalization. "Capitalized Lease Obligations" - used in definition of Debt. "Change" - used in Section 9.1(b). "Change of Control" - used in Sections 5, 9.5, 11.1(h), 11.6(vii) and 13.1(h). "Class A Common Stock" - used in definitions of Management Investor and Outstanding Original Shares and in Section 13.1(h). "Code" - used in definitions of ERISA, ERISA Affiliate and in Sections 10.9 and 11.8. "Commitment" - used throughout. "Company" - used throughout. "Company Register" - used in Section 8.5. "Conditional Sale Obligations" - used in definition of Indebtedness for Borrowed Money. "Consolidated Net Income" - used in definition of Ratio of Earnings to Fixed Charges and in Sections 11.3, 11.5(ii) and 15.3(b). "Consolidated Shareholder's Equity" - used in definition of Capital Base and in Sections 11.3 and 15.3(b). "Continue", "Continuation" and "Continued" - used in definition of Interest Period and in Sections 1.2, 7.2, 9.3, 9.5, 12.2 and 15.2(a). "Conversion Notice" - used in Sections 6.4(b) and 7.2. "Convert", "Conversion" and "Converted" - used in definition of Interest Period and in Sections 1.2, 6.3, 7.2, 9.3, 9.5, 12.2 and 15.2(a). "Corporate Transactions" - used in Section 11.6. "Debt" - used in definition of Total Capitalization and in Sections 11.4, 11.6, 11.17, 11.18 and 15.3(b). "Debt-Like Preferred Stock" - used in definition of Total Capitalization and in Sections 11.5, 11.18 and 13.1(h). "Displaced Loans" - used in Section 6.6. "Documentary Agent" - used in Preamble and in Sections 12.1, 15.5(a) and 15.11. "Dollar(s)" and the sign "$" - used throughout. "Effective Date" - used throughout. "Equalization Amount" - used in Section 8.4(c). "ERISA" - used in definitions of ERISA Affiliate, Finance Obligations, Multiemployer Plan, PBGC, Plan, Reportable Event and Welfare Plan, and in Sections 10.9 and 11.8. "ERISA Affiliate" - used in definition of Multiemployer Plan and Plan and in Sections 10.9 and 11.8. "Eurocurrency Reserve Percentage" - used in the definition of Eurodollar Rate (Reserve Adjusted). "Eurodollar Loan" - used throughout. "Eurodollar Margin Increment" - used in Sections 6.1(b), 6.2, 6.3 and 6.9. "Eurodollar Rate" - used in various definitions and in Sections 6.1(b), 6.4(b), 7.1(a), 7.2, 9.1(a), 9.3 and 9.6(a). "Eurodollar Rate (Reserve Adjusted)" - used in various definitions and in Section 9.1. "Event of Default" - used throughout. "Existing Credit Agreements" - used in Sections 10.18 and 12.1. "Existing Termination Date" - used in Section 2.7. "Extension Banks" - used in Section 2.7. "Extension Reply" - used in Section 2.7. "Extension Request" - used in Section 2.7, 4.1 and 15.4(e). "FAS 106 Capital Base Factor" - used in definition of Capital Base. "FAS 106 Minimum Equity Factor" - used in Section 11.3. "FAS 106 Restricted Payment Factor" - used in Section 11.5. "Federal Funds Rate" - used in definition of Base Rate and in Sections 4.3, 7.1(i) and 14.4. "Fee Increase" - used in Section 6.9. "Finance Obligations" - used in Section 13.1(c). "Fiscal Quarter" - used throughout. "Fiscal Year" - used throughout. "Fixed Rate Loan(s)" - used in Sections 6.1, 8.1, 9.2, 9.4, 9.5 and 9.6. "Funding Date" - used in definition of Interest Period and in Sections 1.2, 4.3, 6.1, 7.1, and 14.4. "Funding Office" - used in definition of Base Rate and in Sections 3.3, 3.4, 4.3, 7.1, 8.4, 9.1, 9.2 and 9.6. "GAAP" - used throughout. "GE Capital" - used in definitions of MWCC Receivables Purchase Agreement and Qualified Purchaser. "Group" - used in Sections 1.2, 2.2, 7.2, 8.1 and 8.5. "Guaranty" - used in definitions of Debt, Finance Obligations, Indebtedness for Borrowed Money, MWCC Receivables Purchase Agreement. "Indebtedness for Borrowed Money" - used in definitions of Debt and Finance Obligation and in Section 11.2(xix). "Indemnified Liabilities" - used in Section 15.6. "Interest Period" - used throughout. "Liabilities" - used in definitions of Debt-Like Preferred Stock and Subordinated Debt and in Sections 5, 8.2, 8.3, 8.4, 11.6(i), 13.2, 14.2, 15.4(e) and 15.6. "Lien" - used in definition of Indebtedness for Borrowed Money and in Sections 10.2, 10.6, 10.7, 11.2, 11.6(i) and 13.1(h). "Litigation" - used in definition of Material Litigation and in Section 11.1(g). "Loan Request" - used in Sections 4.3(b), 6.4(b), 7.1 and 15.2. "Loans" - used throughout. "Long Term Credit Agreement" - used in Sections 3.2, 11.2(xii), 12.1(a)(i), 12.1(b), 13.1(k), 15.4(b) and 15.4(e). "Management Investor" - used in definitions of Outstanding Original Shares and Qualified Purchaser. "Margin Stock" - used in Sections 10.12, 11.16 and 15.7. "Master Register" - used in Sections 8.5 and 15.2(a). "Material Litigation" or "Material Litigation Development" - used in Section 10.5. "Maturity Date" - used in definition of Subordinated Debt and in Sections 2.4, 6.3 and 8.2(c). "Mobil" - used in Section 10.14(c). "MWCC" - used in definition of MWCC Receivables Purchase Agreement and in Sections 13.1(j) and 15.3(c). "MWCC Receivables Purchase Agreement" - used in definition of Material Litigation and in Sections 11.1, 11.2, 13.1 and 15.3. "Multiemployer Plan" - used in Section 11.8. "Negotiated Loan Agent" - used in Preamble and in definitions of Applicable Agent and Funding Office and in Sections 4.3, 4.4, 8.2(b), 8.5, 9.3(b) and 9.5. "Negotiated Loan Confirmation" - used in definitions of Funding Office, Interest Period and Loan Request and in Sections 4.3, 4.4, 6.8, 8.1(b), 9.3, 9.8 and 15.2. "Negotiated Loan Register" - used in Section 8.5. "Negotiated Loans" - used throughout. "Negotiated Note(s)" - used in definition of Notes and in Sections 4.5, 12.1(ii) and 15.4(b). "Non-Restricted Subsidiary" - used throughout. "Non-United States Person" - used in Sections 8.4(b) and 15.4(b). "Notes" - used throughout. "Outstanding Original Shares" - used in definition of Change of Control. "Parent" - used in definitions of Change of Control, Class A Common Stock, Management Investors, Outstanding Original Shares, Parent Shareholder's Agreement, Qualified Purchaser and Total Capitalization and in Sections 10.5, 10.12, 10.14(b), 11.1(e), 11.1(g), 11.5, 11.5(vi), 11.5(y), 13.1(c), 13.1(h) and 15.4(c). "Parent Shareholders' Agreement" - used in the definition of Outstanding Original Shares. "Participant(s)" - used in Sections 8.2, 14.6 and 15.4. "Payment Sharing Notice" - used Sections 8.2 and 8.5(b). "PBGC" - used in Section 11.8. "Percentage" - used in Section 2.1, 2.2(a), 7.2(a), 8.1(b) and 8.5(b). "Permitted Lien" - used throughout. "Person" - used throughout. "Plan" - used in Sections 10.9 and 11.8. "Qualified Purchaser" - used in definition of Change of Control. "Ratio of Earnings to Fixed Charges" - used in definition of Ratio Period and in Sections 6.2, 6.5, 6.9, 11.3 and 15.3(b). "Ratio Period" - used throughout. "Reference Banks" - used definition of Eurodollar Rate and in Sections 6.4 and 9.3. "Regulation D" - used in definition of Eurocurrency Reserve Percentage and in Sections 9.1 and 9.2. "Regulation U" - used in definition of Margin Stock and in Sections 10.12, 11.16 and 15.7. "Regulation X" - used in definition of Margin Stock and in Section 10.12. "Renewed Termination Date" - used in Section 2.7. "Replacement Agreement" - used in Section 15.4(e). "Replacement Bank" - used in Section 15.4(d). "Reply Date" - used in Section 2.7. "Reportable Event" - used throughout. "Required Banks" - used in definition of Subordinated Debt and in Sections 5, 9.3(b), 11, 12.1(a), 12.2, 13.1(j), 13.2, 14.1, 14.3, 14.8, 15.1 and 15.5(a). "Restricted Payment" - used in definition of Total Capitalization and in Section 11.5. "Restricted Subsidiary" - used throughout. "Revocation Cut-Off Date" - used in Sections 2.7 and 15.4(e). "Revolving Loans" - used throughout. "Revolving Loan Request" - used in Section 7.1. "Revolving Note" - used throughout. "Risk-Based Capital Guidelines" - used in Section 9.1(b). "SEC" - used in definition of Change of Control and Section 11. "Secured Indebtedness" - used in Section 11.2(xix). "Special Restricted Subsidiary" - used in Section 13.1. "Subordinated Debt" - used in definitions of Capital Base, Debt and Total Capitalization and in Section 11.17. "Subsidiary" - used throughout. "Successor to Parent" - used in definition of Parent and in Section 13.1(h). "Swing Loan(s)" - used throughout. "Swing Loan Bank" - used in Sections 3.3, 3.4, 3.6 and 8.1. "Swing Loan Percentage" - used in Section 3.6. "Swing Loan Request" - used in definition of Loan Request and in Section 3.3. "Swing Note(s)" - used in definition of Notes and in Section 3.5, 12.1(a)(ii) and 15.4(b). "Tax Benefit" - used in Section 8.4(c). "Taxes" - used in Section 8.4. "Terminated Bank" - used in Section 15.4(e). "Termination Date" - used in definitions of Interest Period and Maturity Date and in Sections 2.1, 2.7, 3.4, 4.1, 6.5, 6.6 and 15.4(e). "Total Capitalization" - used in Sections 11.4, 11.6 and 15.3(b). "Type" - used in definition of Funding Office and in Sections 1.2, 6.8, 7.2 and 8.5. "Unmatured Event of Default" - used in definition of Restricted Subsidiary and in Sections 2.7(e), 10.15, 11.1, 11.5, 11.6, 11.17, 11.18, 12.1, 12.2(a), 14.5, 14.8(b) and 15.4(e). "Unused" - used in Sections 2.2(a), 3.2, 6.5 and 6.6. "Welfare Plan" - used in Section 10.9. EXHIBIT A FORM OF REVOLVING NOTE (Section 2.5) $ September 15, 1994 Chicago, Illinois FOR VALUE RECEIVED, the undersigned hereby promises to pay to the order of (the "Bank") at the office of the Administrative Agent specified in the Credit Agreement hereinafter referred to, the principal amount of DOLLARS ($ ) or, if less, the aggregate unpaid principal amount of all Revolving Loans made by the Bank to the undersigned pursuant to the Credit Agreement (as shown in the records of the Bank or, at the Bank's option, on the schedule attached hereto and any continuation thereof). The principal amount of each Revolving Loan evidenced hereby shall be payable on or before the Bank's Maturity Date. The undersigned further promises to pay interest on the unpaid principal amount of each Revolving Loan evidenced by this Note from the date of such Revolving Loan until such Revolving Loan is paid in full, payable at such rate(s) and at such time(s) as provided in the Credit Agreement. This Note evidences indebtedness incurred under, and is subject to the terms and provisions of, the Short Term Credit Agreement dated as of September 15, 1994 (as the same may be amended, modified or supplemented from time to time, the "Credit Agreement"), among the undersigned, certain banks (including the Bank) and certain agents (including the Administrative Agent), to which Credit Agreement reference is hereby made for a statement of said terms and provisions. Terms used but not otherwise defined herein are used herein as defined in the Credit Agreement. In addition to and not in limitation of the foregoing, but subject to the provisions of the Credit Agreement, the undersigned further agrees to pay on demand all attorneys' fees and legal expenses (including allocated costs of staff counsel) incurred by the holder of this Note in connection with the enforcement of this Note, and any and all amendments, modifications, replacements or restatements relating to this Note. This Note is made under and governed by the laws of the State of Illinois without regard to conflict of laws principles. MONTGOMERY WARD & CO., INCORPORATED By Title Schedule attached to Revolving Note dated September 15, 1994 of MONTGOMERY WARD & CO., INCORPORATED payable to the order of . Date of Loan, Interest Conversion or Interest Amount of Rate Per Amount ofNotation Continuation Period Loan Annum Payment Made By EXHIBIT B FORM OF EXTENSION REQUEST (Section 2.7) [Date] THE FIRST NATIONAL BANK OF CHICAGO, individually and as Documentary Agent One First National Plaza Chicago, Illinois 60670 THE BANK OF NOVA SCOTIA, individually and as Administrative Agent 600 Peachtree Street NE, Suite 2700 Atlanta, Georgia 30308 THE BANK OF NEW YORK, individually and as Negotiated Loan Agent One Wall Street New York, New York 10286 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, individually and as Advisory Agent 600 Peachtree NE, Suite 2700 Atlanta, Georgia 30308 The Banks listed on Schedule I attached hereto and parties to the Credit Agreement referred to below Gentlemen: This constitutes an Extension Request pursuant to the Short Term Credit Agreement dated as of September 15, 1994 (as amended, modified or supplemented, the "Credit Agreement"), among Montgomery Ward & Co., Incorporated (the "Company"), the banks named therein and the agents named therein. Terms not otherwise expressly defined herein shall have the meanings set forth in the Credit Agreement. The Company hereby requests that the Termination Date be extended to ________________, 19__. The Company hereby further requests that you indicate your consent to this requested extension by executing both copies of the enclosed Extension Reply and returning one copy to the Company and one copy to The Bank of Nova Scotia by not later than _____________, 19___. Very truly yours, MONTGOMERY WARD & CO., INCORPORATED By: Its: SCHEDULE I To Extension Request dated ______________, 19__ EXHIBIT C FORM OF EXTENSION REPLY (Section 2.7) [Bank's Letterhead] [Dated on or before the Reply Date] Montgomery Ward & Co., Incorporated Montgomery Ward Plaza 844 North Larrabee Chicago, Illinois 60671 Attention: Treasurer The Bank of Nova Scotia, as Administrative Agent 600 Peachtree Street NE, Suite 2700 Atlanta, Georgia 30308 Re: Montgomery Ward & Co., Incorporated Ladies and Gentlemen: The undersigned, pursuant and subject to the provisions of that certain Short Term Credit Agreement dated as of September 15, 1994 (as amended, modified or supplemented, the "Credit Agreement"), among Montgomery Ward & Co., Incorporated (the "Company"), the banks named therein and the agents named therein hereby [consents to] [does not consent to] the Extension Request of the Company dated , 19 . Very truly yours, [name of Bank] By: Its: EXHIBIT D FORM OF SWING NOTE (Section 3.5) $ September 15, 1994 Chicago, Illinois FOR VALUE RECEIVED, the undersigned hereby promises to pay to the order of ____________________________ (the "Bank") at the Bank's office specified in the Credit Agreement hereinafter referred to, the principal amount of DOLLARS ($__________) or, if less, the aggregate unpaid principal amount of all Swing Loans made by the Bank to the undersigned pursuant to the Credit Agreement (as shown in the records of the Bank or, at the Bank's option, on the schedule attached hereto and any continuation thereof). The principal amount of each Swing Loan evidenced hereby shall be payable on the dates specified in the Credit Agreement and in any event, on or before the Bank's Termination Date. The undersigned further promises to pay interest on the unpaid principal amount of each Swing Loan evidenced by this Note from the date of such Swing Loan until such Swing Loan is paid in full, payable at such rate(s) and at such time(s) as provided in the Credit Agreement. This Note evidences indebtedness incurred under, and is subject to the terms and provisions of, the Short Term Credit Agreement dated as of September 15, 1994 (as the same may be amended, modified or supplemented from time to time, the "Credit Agreement"), among the undersigned, certain banks (including the Bank) and certain agents, to which Credit Agreement reference is hereby made for a statement of said terms and provisions. Terms used but not otherwise defined herein are used herein as defined in the Credit Agreement. In addition to and not in limitation of the foregoing, but subject to the provisions of the Credit Agreement, the undersigned further agrees to pay on demand all attorneys' fees and legal expenses (including allocated costs of staff counsel) incurred by the holder of this Note in connection with the enforcement of this Note, and any and all amendments, modifications, replacements or restatements relating to this Note. This Note is made under and governed by the laws of the State of Illinois without regard to conflict of laws principles. MONTGOMERY WARD & CO., INCORPORATED By_________________________________ Title______________________________ Schedule attached to Swing Note dated September 15, 1994 of MONTGOMERY WARD & CO., INCORPORATED payable to the order of ___________________________. Interest Date of Maturity Amount of Rate Per Amount of Notation Loan Date Loan Annum Payment Made By EXHIBIT E FORM OF NEGOTIATED NOTE (Section 4.5) $__________________________ September 15, 1994 Chicago, Illinois FOR VALUE RECEIVED, the undersigned hereby promises to pay to the order of (the "Bank") at the office of the Negotiated Loan Agent specified in the Credit Agreement hereinafter referred to, the principal amount of ______________ MILLION DOLLARS ($________________) or, if less, the aggregate unpaid principal amount of all Negotiated Loans made by the Bank to the undersigned pursuant to the Credit Agreement (as shown in the records of the Bank or, at the Bank's option, on the schedule attached hereto and any continuation thereof). The principal amount of each Negotiated Loan evidenced hereby shall be payable at the expiration of the Interest Period applicable thereto and, in any event, on or before the Bank's Maturity Date. The undersigned further promises to pay interest, at the office of the Bank specified in the Credit Agreement, on the unpaid principal amount of each Negotiated Loan from the date of such Negotiated Loan until such Negotiated Loan is paid in full, payable at such rate(s) and at such time(s) as provided in the Credit Agreement. This Note evidences indebtedness incurred under, and is subject to the terms and provisions of, the Short Term Credit Agreement dated as of September 15, 1994 (as the same may be amended, modified or supplemented from time to time, the "Credit Agreement"), among the undersigned, certain banks (including the Bank) and certain agents (including the Negotiated Loan Agent), to which Credit Agreement reference is hereby made for a statement of said terms and provisions. Terms used but not otherwise defined herein are used herein as defined in the Credit Agreement. In addition to and not in limitation of the foregoing, but subject to the provisions of the Credit Agreement, the undersigned further agrees to pay on demand all attorneys' fees and legal expenses (including allocated costs of staff counsel) incurred by the holder of this Note in connection with the enforcement of this Note and any and all amendments, modifications, replacements or restatements relating to this Note. This Note is made under and governed by the laws of the State of Illinois without regard to conflict of laws principles. MONTGOMERY WARD & CO., INCORPORATED By_________________________________ Title______________________________ Schedule attached to Negotiated Loan Note dated September 15, 1994 of MONTGOMERY WARD & CO., INCORPORATED payable to the order of ______________________________. Date Interest of Interest Maturity Amount of Rate Per Amount ofNotation Loan Period Date Loan Annum Payment Made By EXHIBIT F FORM OF REVOLVING LOAN REQUEST (Section 7.1) ____________________, 19__ THE BANK OF NOVA SCOTIA, as Administrative Agent Atlanta Agency 600 Peachtree Street NE, Suite 2700 Atlanta, Georgia 30308 Attention: __________________ Ladies and Gentlemen: This constitutes a Revolving Loan Request for Revolving Loans under and as defined by the Short Term Credit Agreement, dated as of September 15, 1994 (as amended, modified or supplemented, the "Credit Agreement"), among Montgomery Ward & Co., Incorporated (the "Company"), the Banks and Agents referred to therein and The Bank of Nova Scotia, as Administrative Agent. Terms not otherwise expressly defined herein shall have the meanings set forth in the Credit Agreement. The Company hereby requests the following Revolving Loans, on the terms and subject to the conditions of the Credit Agreement: (a) Aggregate Principal Amount: $_______________. (b) Funding Date:_______________, 19__. [(d) Interest Period:_______________ months.] The Company hereby certifies, represents and warrants to the Agents and the Banks as follows: (i) no Event of Default or Unmatured Event of Default has occurred and is continuing as of the date hereof or shall result from the making of the Loans requested hereby, (ii) the Company's representations and warranties contained in Sections 10.1, 10.2, 10.3, 10.4(a), 10.7, 10.10, 10.11, 10.12, 10.15, and 10.18 of the Credit Agreement shall be true and correct as of the Funding Date of the Loans requested hereby with the same effect as though made on such date, and (iii) all conditions to the making of the Loans requested herein will be satisfied as of the Funding Date of such requested Loans. Very truly yours, MONTGOMERY WARD & CO., INCORPORATED By:___________________________ Its:_______________________________ cc: The Bank of Nova Scotia Chicago Representative Office 181 West Madison Street, Suite 3700 Chicago, Illinois 60602 EXHIBIT G FORM OF SWING LOAN REQUEST (Section 3.3) , 19__ THE BANK OF NOVA SCOTIA, as Administrative Agent Atlanta Agency 600 Peachtree Street NE, Suite 2700 Atlanta, Georgia 30308 Attention: ______________________, as Swing Loan Bank [Address] Ladies and Gentlemen: This constitutes a Swing Loan Request under that certain Short Term Credit Agreement, dated as of September 15, 1994 (as amended, modified or supplemented, the "Credit Agreement"), among Montgomery Ward & Co., Incorporated (the "Company"), and the Banks and Agents referred to therein. Terms not otherwise expressly defined herein shall have the meanings set forth in the Credit Agreement. The Company hereby requests a Swing Loan, subject to the terms of the Credit Agreement, as follows: (a) Funding Date: , 19__. (b) Aggregate principal amount of Loan requested: $ (c) Interest Period ending date: , 19__. The Company hereby certifies, represents and warrants to the Agents and the Banks as follows: (i) no Event of Default or Unmatured Event of Default has occurred and is continuing as of the date hereof or shall result from the making of the Swing Loan requested hereby, (ii) the Company's representations and warranties contained in Sections 10.1, 10.2, 10.3, 10.4(a), 10.7, 10.10, 10.11, 10.12, 10.15, and 10.18 of the Credit Agreement shall be true and correct as of the date of the making of the Swing Loan requested hereby with the same effect as though made on such date, and (iii) all conditions to the making of the Swing Loan requested hereby will be satisfied as of the Funding Date of such requested Swing Loan. Very truly yours, MONTGOMERY WARD & CO., INCORPORATED By: Its: cc: The Bank of Nova Scotia Chicago Representative Office 181 West Madison Street, Suite 3700 Chicago, Illinois 60602 EXHIBIT H FORM OF NEGOTIATED LOAN CONFIRMATION (Section 4.3) , 19__ _____________________, as Negotiated Loan Bank _____________________ _____________________ Ladies and Gentlemen: This constitutes a Negotiated Loan Confirmation under that certain Short Term Credit Agreement, dated as of September 15, 1994 (as amended, modified or supplemented, the "Credit Agreement"), among Montgomery Ward & Co., Incorporated (the "Company") and the Banks and Agents referred to therein. Terms not otherwise expressly defined herein shall have the meanings set forth in the Credit Agreement. The Company hereby confirms its request for a Negotiated Loan, subject to the terms of the Credit Agreement, as follows: (a) Funding Date: , 19__. (b) Principal amount of Negotiated Loan requested: $__________________. (c) Interest Period ending date: , 19__. (d) Interest Rate: ______________; payable on _____________. (e) Interest calculated on a 360 day year or 365 day year . (f) [The Negotiated Loan may be prepaid at any time without premium or penalty]. [Upon the prepayment of the Negotiated Loan prior to maturity, the Company shall also pay the following prepayment premium ____________.] (g) Funding office: ________________________________. (h) Sections 9.1 through 9.6 apply to the Negotiated Loan requested hereby [ ]. (i) Other terms: ____________________________________ _________________________________________________. The Company hereby reaffirms that all provisions of the Credit Agreement, including without limitation Sections 11 and 13 thereof, apply to the Negotiated Loan requested hereby and certifies, represents and warrants to the Agents and the Banks as follows: (i) no Event of Default or Unmatured Event of Default has occurred and is continuing as of the date hereof or shall result from the making of the Negotiated Loan requested hereby, (ii) the Company's representations and warranties contained in Sections 10.1, 10.2, 10.3, 10.4(a), 10.7, 10.10, 10.11, 10.12, 10.15, and 10.18 of the Credit Agreement shall be true and correct as of the date of the making of the Negotiated Loan requested hereby with the same effect as though made on such date, and (iii) all conditions to the making of the Negotiated Loan requested herein have been or will be satisfied as of the Funding Date of such requested Negotiated Loan. Very truly yours, MONTGOMERY WARD & CO., INCORPORATED By: Its: Acknowledged and Agreed this ____ day of ___________ 19__. [Name of Bank] By:__________________________ Its:_________________________ EXHIBIT I FORM OF OFFICER'S CERTIFICATE (Section 11.1(c)) To: The Banks and the Agents parties to the Credit Agreement referred to below This Certificate is furnished pursuant to Section 11.1(c) of the Short Term Credit Agreement, dated as of September 15, 1994 (the "Credit Agreement") among Montgomery Ward & Co., Incorporated, an Illinois corporation (the "Company"), the banks named therein (the "Banks") and the agents named therein (the "Agents"). Capitalized terms used herein but not otherwise defined herein shall have the same meanings as those assigned to them in the Credit Agreement. I hereby certify to the Banks and the Agents, on behalf of the Company, as follows: 1. Since _______________, 19__, I have been the duly qualified and acting ____________ of the Company, and I am familiar with the financial statements and financial affairs of the Company. I am authorized to execute this Certificate on behalf of the Company. 2. A true and correct copy of the [annual audit report] [quarterly unaudited consolidated financial statement] of the Company and its Subsidiaries for the [Fiscal Year] [Fiscal Quarter] ended on _______________, 19__, is attached hereto as Annex A. 3. To the best of my knowledge, as of the date of this Certificate, no Event of Default or Unmatured Event of Default has occurred and is continuing [except as follows: [include description of any such event and the steps being taken, if any, with respect thereto]]. 4. Attached hereto as Annex B is a true and correct computation, to the best of my knowledge, as of the dates referred to therein of the financial ratios and/or financial restrictions contained in Sections 11.3, 11.4 and 11.5 of the Credit Agreement and of the Ratio of Earnings to Fixed Charges. 5. Attached hereto as Annex C is a complete description (to the extent such disclosure would be required to be made by the Company if the Company were a public reporting company under the Securities Exchange Act of 1934, as amended) to the best of my knowledge, as of the date of this Certificate of any Material Litigation which has been instituted or any Material Litigation Development which has occurred since the date of the most recent Officer's Certificate of the Company [or, in the case of the first Officer's Certificate, since the Effective Date]. 6. Attached hereto as Annex D is a true, correct and complete list, to the best of my knowledge, as of the date of this Certificate of any [changes in the list of Restricted Subsidiaries (excluding Special Restricted Subsidiaries) which have occurred since the date of the most recent Officer's Certificate [or, in the case of the first Officer's Certificate, since the Effective Date]] [changes in the list of the Company's Subsidiaries or in the list of Restricted Subsidiaries which have occurred since the date of the Officer's Certificate of the Company dated as of the close of the Company's immediately preceding Fiscal Year [or, in the case of the first Officer's Certificate dated as of the close of the Fiscal Year containing the Effective Date, since the Effective Date]]. IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of _______________, 19__. ___________________________ Name:_________________________ Title:________________________ of Montgomery Ward & Co., Incorporated ANNEX A TO OFFICER'S CERTIFICATE DATED AS OF , 19 [Attach copy of annual audit report or quarterly unaudited consolidated financial statement, as appropriate] ANNEX B TO EXHIBIT I TO OFFICER'S CERTIFICATE DATED AS OF , 19 1. Section 11.3 - Minimum Consolidated Shareholder's Equity as of the end of Fiscal Year ended as of the date of this Officer's Certificate. (a) 25% of Consolidated Net Income for each complete Fiscal Year ended after January 1, 1994 in which there was income. $______ (b) FAS 106 Minimum Equity Factor $______ (c) $441,000,000 plus Item 1(a) less Item 1(b). $______ (d) The lesser of (i) $800,000,000 less the FAS 106 Minimum Equity Factor or (ii) Item 1(c) is the Minimum Consolidated Shareholder's Equity for the Fiscal Year ended as of the date of this Officer's Certificate. $______ (e) Actual Consolidated Shareholder's Equity of the Company for Fiscal Year ended as of the date of this Officer's Certificate (such amount to be equal to or greater than the amount shown in Item 1(d)). $______ 2. Section 11.3 - Minimum Consolidated Shareholder's Equity at the end of Fiscal Quarter ended as of the date of this Officer's Certificate. (a) 50% of the Consolidated Net Income for each complete Fiscal Year ended after January 1, 1994 in which there was income, and for the period commencing immediately following the close of the last complete Fiscal Year and ending as of the date of this Officer's Certificate. $______ (b) $537,000,000 plus the amount in Item 2(a). $______ (c) The lesser of $1,000,000,000 and Item 2(b) is the Minimum Consolidated Shareholder's Equity for the Fiscal Quarter ended as of the date of this Officer's Certificate. $______ (d) Actual Consolidated Shareholder's Equity of the Company for Fiscal [Year] [Quarter] ended as of the date of this Officer's Certificate (such amount to be equal to or greater than the amount shown in Item 2(c)). $______ 3. Section 11.4 - Debt to Total Capitalization (a) Debt of the Company and Restricted Subsidiaries as of the date of this Officer's Certificate: (i) Indebtedness for Borrowed Money. $______ (ii) Capitalized Lease Obligations. $______ (iii) Without double counting for items covered in (i) and (ii), Capitalized Lease Obligations of Non-Restricted Subsidiaries for which the Company or a Restricted Subsidiary is liable directly or indirectly under a Guaranty. $______ (iv) Subordinated Debt. $______ (v) Items (i) plus (ii) plus (iii) less Item (iv) equals Debt. $______ (b) Capital Base as of the date of this Officer's Certificate: (i) Subordinated Debt. $______ (ii) Consolidated Shareholder's Equity. $______ (iii) FAS 106 Capital Base Factor. $______ (iv) All outstanding advances by the Company to, and investment of the Company in, Non-Restricted Sub- sidiaries. $______ (v) Value of all treasury stock of the Company carried as an asset. $______ (vi) The aggregate amount of all general intangibles of the Company and its Restricted Subsidiaries. $______ (vii) Item 3(b)(i) plus Item 3(b)(ii) plus Item 3(b)(iii) less Items 3(b)(iv), 3(b)(v) and 3(b)(vi) equals the Capital Base. $______ (c) Debt-Like Preferred Stock. $______ (d) Total Capitalization as of the date of this Officer's Certificate - the sum of Debt (Item 3(a)(v)) plus Capital Base (Item 3(b)(vii)) plus Debt-Like Preferred Stock (Item 3(c)) equals Total Capitalization. $______ (e) Debt to Total Capitalization. Divide Debt of Company and Restricted Subsidiaries (Item 3(a)(v)) by Total Capitalization of the Company and Restricted Subsidiaries (Item 3(d)), and express result as a percentage (such percentage is not to exceed (i) 60% as of last day of any Fiscal Quarter or (ii) 50% as of the last day of any Fiscal Year). ______% 4. Ratio of Earnings to Fixed Charges for the Ratio Period ended as of the date of this Officer's Certificate (a) Each of the following items to be for the Company and its Subsidiaries for the Ratio Period ended as of the date of this Officer's Certificate: (i) Net income. $______ (ii) Interest income. $______ (iii) Income taxes. $______ (iv) Interest expense. $______ (v) Depreciation and amortization. $______ (vi) Rental expense. $______ (b) Item 4(a)(i) less Item 4(a)(ii) and plus Items 4(a)(iii), 4(a)(iv), 4(a)(v) and 4(a)(vi). $______ (c) Sum of the excess of all interest expense over interest income plus all rental expense for the Company and its Subsidiaries and capital expenditures (other than asset additions under capital leases determined in accordance with GAAP, (except as set forth in Section 15.3)) of the Company and its Subsidiaries payable with respect to the Ratio Period ended as of the date of this Officer's Certificate. $______ (d) Ratio of Earnings to Fixed Charges (ratio of Item 4(b) to Item 4(c)). ___:___ 5. Section 11.5 - Purchase, Redemption, Dividends, etc. (a) The sum of all of the following which have been paid or made subsequent to January 1, 1994 on or before the date of this Officer's Certificate (but excluding any dividends, distributions, purchases, redemptions and other acquisitions or retirements of Debt-Like Preferred Stock of the Company): (i) dividends or distributions on any capital stock of the Company (other than stock dividends or splits), $______ (ii) increase in outstanding loans and advances to the Parent since January 1, 1994, $______ (iii)purchases, redemptions or other acquisitions of any shares of capital stock of the Company by the Company (other than for Debt-Like Preferred Stock), and $______ (iv) purchases, redemptions or other acquisitions of any shares of capital stock of the Company (other than for Debt-Like Preferred Stock) by a Subsidiary. $______ (v) Total Restricted Payments. $______ deficit) of Consolidated Net Income of the Company and its Subsidiaries for the period, taken as one accounting period, from and including January 2, 1994, to the end of the Company's Fiscal Quarter ended as of the date of this Officer's Certificate. $______ (c) Decrease in outstanding loans and advances to the Parent since January 1, 1994. $______ (d) Any capital contributions received by the Company after January 1, 1994. $______ (e) The net proceeds to the Company (in cash or, if the consideration is other then cash, the fair value thereof as determined by the Board of Directors of the Company) of the issue or sale after January 1, 1994 of capital stock, including treasury stock but excluding Debt-Like Preferred Stock, of the Company. $______ (f) An amount equal to the net proceeds to the Company (in cash or, if the consideration is other than cash, the fair value thereof as determined by the Board of Directors) from the issue or sale at any time of any indebtedness of the Company or a Subsidiary which, after January 1, 1994, is converted into shares of capital stock (but excluding Debt-Like Preferred Stock) of the Company or the Parent. $______ (g) FAS 106 Restricted Payment Factor $______ (h) $63,000,000 plus the sum of Items 5(b), 5(c), 5(d), 5(e), 5(f) and 5(g). The amount of this Item 5(h) must be greater than the amount of Item 5(a)(v). $______ ANNEX C TO OFFICER'S CERTIFICATE DATED AS OF , 19 [Description of any Material Litigation or Material Litigation Development to the extent such disclosure would be required to be made by the Company if the Company were a reporting company under the Securities Exchange Act of 1934.] See the [Annual Report on Form 10-K] [Quarterly Report on Form 10-Q] of the [Company] [Parent] for the period ended as of the date of this Officer's Certificate. ANNEX D TO OFFICER'S CERTIFICATE DATED AS OF , 19 Changes in the list of [Restricted Subsidiaries (excluding Special Restricted Subsidiaries)] [Subsidiaries and Restricted Subsidiaries] since the Officer's Certificate dated as of the close of the immediately preceding Fiscal [Quarter*/] [Year**/]: EXHIBIT J FORM OF OPINION OF COUNSEL FOR THE COMPANY (Section 12.1(a)(vi)) [Letterhead of Counsel to the Company] September 15, 1994 THE FIRST NATIONAL BANK OF CHICAGO, individually and as Documentary Agent One First National Plaza Chicago, Illinois 60670 THE BANK OF NOVA SCOTIA, individually and as Administrative Agent 600 Peachtree Street NE, Suite 2700 Atlanta, Georgia 30308 THE BANK OF NEW YORK, individually and as Negotiated Loan Agent One Wall Street New York, New York 10286 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, individually and as Advisory Agent 600 Peachtree NE, Suite 2700 Atlanta, Georgia 30308 The Banks listed on Schedule I attached hereto and parties to the Credit Agreement referred to below Gentlemen: We have acted as special counsel to Montgomery Ward & Co., Incorporated, an Illinois corporation (the "Company"), in connection with the negotiation, execution and delivery by the Company of (i) that certain Long Term Credit Agreement (the "Long Term Credit Agreement") dated as of September 15, 1994, among the Company, the banks named therein and listed on Schedule I attached hereto and the agents named therein and listed above, and in connection with the transactions and other documents and instruments described therein or consummated or executed and delivered in connection therewith and (ii) that certain Short Term Credit Agreement (the "Short Term Credit Agreement") dated as of September 15, 1994, among the Company, the banks named therein and listed on Schedule I attached hereto and the agents named therein and listed above, and in connection with the transactions and other documents and instruments described therein or executed and delivered in connection therewith. When terms are capitalized and used herein and are not otherwise defined herein, such terms are used herein and shall have the meanings ascribed to such terms in the Long Term Credit Agreement. In connection with this opinion, we have examined a counterpart of the Long Term Credit Agreement executed by the Company, a counterpart of the Short Term Credit Agreement executed by the Company and executed copies of the notes (the "Notes") being delivered by the Company pursuant to both such agreements. Except as provided below, we have also investigated such questions of law, have made such factual inquiries and have examined the original, certified, conformed or photostatic copies of all such records of the Company and all such documents, certificates of public officials, certificates of officers and representatives of the Company and others, and such other documents, and relied on the same, all as we deem relevant, necessary or appropriate for the opinions hereinafter expressed. As to indicated matters, our opinions as expressed below are based solely upon conclusions as to such matters set forth in the opinion of G. T. Morgan, Esq., Senior Associate General Counsel to the Company, a copy of which is attached hereto as Exhibit A and we have assumed, with your permission, the correctness of the matters set forth therein, except for paragraph 3 of such opinion. Our opinion is, except as otherwise specifically indicated in the preceding sentence, in every respect based upon and subject to the assumptions, qualifications, limitations and matters set forth in said opinion (and the exhibits thereto) attached hereto as Exhibit A, and as otherwise provided herein. On the basis of all of the foregoing, and subject to the additional qualifications, assumptions and limitations set forth below, 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. 2. The execution, delivery and performance by the Company of the Long Term Credit Agreement, the Short Term Credit Agreement and the Notes (a) are within the Company's corporate powers, (b) have been duly authorized by all necessary corporate and other action, (c) do not require any governmental approval which has not been previously obtained (and each such governmental approval that has been previously obtained remains effective), (d) do not conflict with any provision of law, or of any judgment, decree or order, or of the Company's charter or by-laws, and (e) to our knowledge, do not and will not contravene or conflict with, or cause any Lien to arise under, any provision of any agreement binding upon the Company, any material Subsidiary or any of their respective properties. 3. The Long Term Credit Agreement, the Short Term Credit Agreement and the Notes have been duly executed and delivered by the Company and are the legal, valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms except as such enforcement may be limited by the application of bankruptcy, moratorium, reorganization or other laws or legal principles affecting the rights of creditors generally or by general principles of equity (whether or not a proceeding is brought in a court of law or equity). 4. The Company is not an "investment company" or a company "controlled" by an "investment company," within the meaning of the Investment Company Act of 1940, as amended. 5. Neither the Company nor any material Subsidiary 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," within the meaning of the Public Utility Holding Company Act of 1935, as amended. 6. Except as set forth in Schedule II to the Long Term Credit Agreement, in the annual report on form 10-K of the Parent for the fiscal year ended January 1, 1994 or in the quarterly report on form 10-Q of the Parent for the fiscal quarter ended July 2, 1994, no Material Litigation is pending or threatened against the Company. The opinions set forth above are subject to the following additional qualifications: (a) We have assumed, with your permission, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, 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 Long Term Credit Agreement and the Short Term Credit Agreement by the Banks 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 with respect to matters referred to or set forth in paragraphs 1, 2 (except as to that part of paragraph 2(d) which deals with "conflict with any provision of law" (with respect to which we partially relied on said opinion of Mr. Morgan)) and 6 of this letter. As indicated above, said opinion is attached hereto as Exhibit A. (d) 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 law of the State of Illinois and the federal law of the United States. Accordingly, we express no opinion as to the laws of any states, or as to any matter subject to such laws, other than the laws of the State of Illinois. We also do not render any opinion as to whether any state, other than the State of Illinois, would uphold the choice of law provisions in the Long Term Credit Agreement and the Short Term Credit Agreement. (e) 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. (f) 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 Montgomery Ward Holding Corp., a Delaware corporation (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 the Parent. This opinion is delivered pursuant to the Long Term Credit Agreement and the Short Term Credit Agreement and is furnished only to the Agents and the Banks and their Assignees and Participants and their respective counsel, and is solely for their benefit in connection with the above transactions. Very truly yours, SCHEDULE I To Opinion Dated September 15, 1994 of Counsel to the Company EXHIBIT A To Opinion Dated September 15, 1994 of Counsel to the Company [MONTGOMERY WARD & CO., INCORPORATED LETTERHEAD] September 15, 1994 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 Banks in connection with the transactions contemplated by (i) that certain Long Term Credit Agreement ("Long Term Credit Agreement") dated as of September 15, 1994, among the Company, the banks named therein and listed on Schedule I attached hereto and the agents named therein and listed on Schedule II attached hereto, and (ii) that certain Short Term Credit Agreement ("Short Term Credit Agreement") dated as of September 15, 1994, among the Company, the banks named therein and listed on Schedule I hereto and the agents named therein and listed on Schedule II hereto. In connection with this opinion, I have examined a counterpart of the Long Term Credit Agreement executed by the Company, a counterpart of the Short Term Credit Agreement executed by the Company and executed copies of each of the notes (the "Notes") being delivered by the Company pursuant to both such Agreements. Except as provided below, I have also investigated such questions of law, have made such factual inquiries and have examined the original, certified, conformed or photostatic copies of all such records of the Company and all such documents, certificates of public officials, certificates of officers and representatives of the Company and others, and such other documents, all as I deem relevant, necessary or appropriate for the opinions hereinafter expressed. When terms are capitalized and used herein and are not otherwise defined herein, such terms are used herein and shall have the meaning ascribed to such terms in the Long Term Credit Agreement. On the basis of all the foregoing, and subject to the additional qualifications, assumptions and limitations set forth below, 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. 2. The execution, delivery and performance by the Company of the Long Term Credit Agreement, the Short Term Credit Agreement and the Notes (a) are within the Company's corporate powers, (b) have been duly authorized by all necessary corporate and other action, (c) do not require any government approval which has not been previously obtained, (d) do not conflict with any provision of law, or of any judgment, decree or order, or of the Company's charter or by-laws, and (e) to my knowledge, do not and will not contravene or conflict with, or cause any Lien to arise under, any provision of any agreement binding upon the Company, any Subsidiary or any of their respective properties. 3. The Long Term Credit Agreement, the Short Term Credit Agreement and the Notes have been duly executed and delivered by the Company and the Long Term Credit Agreement and the Short Term Credit Agreement are, and any Negotiated Note evidencing an outstanding Negotiated Loan, any Term Note evidencing an outstanding Term Loan and any Swing Note evidencing an outstanding Swing Loan made pursuant to the provisions of the Long Term Credit Agreement or the Short Term Credit Agreement during the period such Loan remains outstanding will be the legal, valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms except as such enforcement may be limited by the application of bankruptcy, moratorium, reorganization or other laws or legal principles affecting the rights of creditors generally or by general principles of equity (whether or not a proceeding is brought in a court of law or equity). 4. Except as set forth in Schedule II to the Long Term Credit Agreement, in the annual report on form 10-K of the Parent for the fiscal year ended January 1, 1994 or in the quarterly report on form 10-Q of the Parent for the fiscal quarter ended July 2, 1994, no Material Litigation is pending or threatened against the Company. The opinions set forth above are subject to the following additional qualifications: (a) I have assumed, with your permission, the genuineness of all signatures, the authenticity of all documents submitted to me as originals, 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 officers and representatives of the Company. (b) I have assumed, with your permission, the due execution and delivery of the Long Term Credit Agreement and the Short Term Credit Agreement by the Banks and all other documents and instruments delivered in connection therewith by each of the parties thereto, other than the Company. (c) 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 the law 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 matter subject to such laws, other than the laws of the State of Illinois. I also do not render any opinion as to whether any state, other than the State of Illinois, would uphold the choice of law provisions in the Long Term Credit Agreement and the Short Term Credit Agreement Documents. (d) I am a shareholder of Montgomery Ward Holding Corp., a Delaware corporation (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. (e) My opinion is limited to the matters expressly set forth herein and no opinion is to be implied or inferred beyond the matters expressly so stated. You, the Banks and the Agents (and their Assignees and Participants) and their respective counsel are entitled to rely on the opinion hereinbefore set forth and you are hereby authorized to attach this letter of opinion as an exhibit to the Loan Opinion delivered pursuant to Section 12.1(a)(vi) of the Long Term Credit Agreement and the Short Term Credit Agreement. Very truly yours, G. T. Morgan, Esq., Senior Associate General Counsel Montgomery Ward & Co., Incorporated SCHEDULE I To Opinion Dated September 15, 1994 of G. T. Morgan, Esq. SCHEDULE II THE FIRST NATIONAL BANK OF CHICAGO, individually and as Documentary Agent One First National Plaza Chicago, Illinois 60670 THE BANK OF NOVA SCOTIA, individually and as Administrative Agent 600 Peachtree Street NE, Suite 2700 Atlanta, Georgia 30308 THE BANK OF NEW YORK, individually and as Negotiated Loan Agent One Wall Street New York, New York 10286 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, individually and as Advisory Agent 600 Peachtree Street NE, Suite 2700 Atlanta, Georgia 30308 EXHIBIT K FORM OF CERTIFICATE AS TO SATISFACTION OF CONDITIONS (Section 12.1(a)(vii)) To: The Banks and the Agents parties to the Credit Agreement referred to below. This Certificate is furnished pursuant to Section 12.1(a)(vii) of the Short Term Credit Agreement, dated as of September 15, 1994 (the "Credit Agreement"), among Montgomery Ward & Co., Incorporated, an Illinois corporation (the "Company"), the banks named therein (the "Banks") and the agents named therein (the "Agents"). Capitalized terms used herein but not otherwise defined herein shall have the same meanings as those assigned to them in the Credit Agreement. I hereby certify to the Banks and the Agents, on behalf of the Company that, I am the duly qualified and acting __________ of the Company, and I am authorized to execute this Certificate on behalf of the Company and I further certify as follows: 1. As of the date hereof no Event of Default or Unmatured Event of Default has occurred and is continuing or shall result from the making of any Loan on the date hereof. 2. The Company's representations and warranties contained in Sections 10.1 through 10.18 are true and correct as of the date hereof. 3. All of the conditions precedent to the Credit Agreement becoming effective, which conditions are set forth in Section 12.1 of the Credit Agreement, have been satisfied as of the date of this Certificate. IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of September, 1994. Name: Title: of Montgomery Ward & Co., Incorporated EXHIBIT L FORM OF ASSIGNMENT AND ACCEPTANCE (Section 15.4(b)) Reference is made to the Short Term Credit Agreement, dated as of September 15, 1994 (herein, as heretofore amended, modified or supplemented, called the "Credit Agreement"), among Montgomery Ward & Co., Incorporated, an Illinois corporation (the "Company"), and the Banks and Agents parties thereto. Terms used but not otherwise defined herein are used herein as defined in the Credit Agreement. (the "Assignor") and (the "Assignee") hereby agree as follows: 1. The Assignee hereby purchases and assumes from the Assignor, and the Assignor hereby sells and assigns and delegates to the Assignee, without recourse and without representation or warranty except as specifically set forth in paragraph 2 below, a ______%1/ interest in and to all of the Assignor's rights, benefits and obligations under the Credit Agreement, including, without limitation, rights of setoff pursuant to Section 8.3 of the Credit Agreement, and obligations to share pursuant to Section 8.2 of the Credit Agreement, which (after giving effect to any other assignments thereof made prior to the date hereof, whether or not such assignments have become effective, but without giving effect to any other assignments thereof also made on the date hereof) is $__________, and also including, without limitation, the same _____% 1/interest in: (a) the aggregate outstanding principal amount of the Revolving Loans, Swing Loans [and Negotiated Loans] owing to the Assignor, which (after giving effect to any other assignments thereof made prior to the date hereof, whether or not such assignments have become effective, but without giving effect to any other assignments thereof also made on the date hereof) is $____________; and (b) the Revolving Note, Swing Note [and Negotiated Note] held by the Assignor. 2. (a) The Assignor represents and warrants that the Assignor has received the Company's consent to this Assignment and Acceptance (a true and correct copy of the letter from the Company evidencing such consent being attached hereto as Annex A). (b) The Assignor represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim. (c) The Assignee acknowledges and agrees that neither the Assignor nor any Agent nor any other Bank makes any representation or warranty or assumes any responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or any other instrument or document furnished pursuant thereto or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant thereto. (d) The Assignee acknowledges and agrees that neither the Assignor nor any Agent nor any other Bank makes any representation or warranty or assumes any responsibility with respect to the financial condition or creditworthiness of the Company or the performance or observance by the Company of any of its obligations under the Credit Agreement or any other instrument or document furnished pursuant thereto. The Assignee acknowledges and agrees that (i) the Assignee has made and will continue to make such inquiries and has taken and will continue to take such care on its own behalf as would have been the case had it made Loans directly to the Company without the intervention of the Assignor, any Agent or any other Person, and (ii) the Assignee has made and will continue to make its own credit analysis and decisions relating to the Credit Agreement independently and without reliance upon the Assignor, any Agent or any other Person, and based on such documents and information as it has deemed appropriate. (e) The Assignor represents and warrants that on the date hereof it is assigning an equal percentage amount of its commitment to make revolving loans and swing loans under the Long Term Credit Agreement as well as the revolving note and swing note evidencing such loans respectively. (f) The Assignor attaches the Revolving Note and Swing Note referred to in paragraph 1(b) above and requests that (i) the Applicable Agent exchange such Notes for new Notes as follows: a Revolving Note dated ______________, 19___ in the principal amount of $___________ payable to the order of the Assignee, a Swing Note dated __________, 19___ in the principal amount of $__________ payable to the order of the Assignee [, a Revolving Note dated __________, 19__ in the principal amount of $__________ payable to the order of the Assignor and a Swing Note dated __________, 19__ in the principal amount of $__________ payable to the order of the Assignor] and (ii) a Negotiated Note dated __________, 19__ in the principal amount of $__________ payable to the order of the Assignee]. (g) No Negotiated Loans are currently owing to the Assignor [except in the outstanding principal amount of $__________]. [(h) The Assignor and the Assignee agree and acknowledge that the assignment made herein shall be supplemented by an assignment supplement of even date herewith with regard to the payment of interest and certain fees between the Assignor and the Assignee which shall include the amount of commitment fees on Loans currently outstanding.] 3. The effective date for this Assignment and Acceptance shall be __________________, 19__ (the "Assignment Date").2/ Following the execution of this Assignment and Acceptance by the Assignor and the Assignee, it will be delivered to the Applicable Agent for acceptance by the Applicable Agent. At such time, if the Assignee is a Non-United States Person, it shall also deliver to the Applicable Agent a written representation and warranty substantially similar to that contained in Section 8.4(b) of the Credit Agreement. Following such acceptance by the Applicable Agent of this Assignment and Acceptance, a photostatic copy hereof shall be delivered to the Company, together with the representation and warranty described above. The Applicable Agent shall deliver the new Notes executed by the Company to the payees thereof and shall mark the Notes referred to in paragraph 1(b) above as "replaced" and shall deliver the same to the Company. 4. Upon such acceptance by the Applicable Agent, as of the Assignment Date, (a) the Assignee shall, in addition to any rights, benefits and obligations under the Credit Agreement held by it immediately prior to the Assignment Date, have the rights, benefits and obligations under the Credit Agreement that have been assigned to it pursuant to this Assignment and Acceptance, and (b) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and benefits and be released from its obligations under the Credit Agreement, except that the Assignor shall remain entitled to the rights and benefits arising under Sections 6, 8.4, 9 and 15.6 of the Credit Agreement, and shall remain liable with respect to any of its obligations arising under Sections 6.9, 8.4(c), 14.2 and 15.5 of the Credit Agreement, with respect to any matters arising prior to the Assignment Date. 5. Upon such acceptance by the Applicable Agent, from and after the Assignment Date, the Applicable Agent shall make all payments under the Credit Agreement and the Revolving Note and Swing Note in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and commitment and other fees with respect thereto) to the Assignee. The Assignor and the Assignee shall make all appropriate adjustments in payments under the Credit Agreement and the Revolving Note, Swing Note [and Negotiated Note] for periods prior to (and, if agreed to, in the case of commitment fees or interest, after) the Assignment Date directly between themselves. 6. After acceptance by the Applicable Agent, the Assignor and the Assignee agree to give written notice of this Assignment and Acceptance to each Bank and each Agent, which written notice shall include the addresses and related information with respect to the Assignee. 7. This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of Illinois without regard to conflict of laws principles. [NAME OF ASSIGNOR] By: Title: [NAME OF ASSIGNEE] By: Title: Accepted this __ day Copies of all notices, etc, of ____________, 19__. should be sent to: [NAME OF APPLICABLE AGENT], as Applicable Agent Attention: By: Telephone: Title: Telecopy: Telex: Base Rate Loan Funding Office: Eurodollar Loan Funding Office: 1/ Specify percentage in no more than 4 decimal points. 2/ See Section 15.4(b). Such date shall be at least five (5) Business Days after the execution of this Assignment and Acceptance. ANNEX A TO ASSIGNMENT AND ACCEPTANCE [Attach a copy of the letter from the Company consenting to this Assignment and Acceptance] EXHIBIT M FORM OF REPLACEMENT AGREEMENT (Section 15.4(e)) This Agreement, dated as of ___________, 19__, constitutes a Replacement Agreement pursuant to Section 15.4(e) of the Short Term Credit Agreement dated September 15, 1994 (as amended, modified or supplemented, the "Credit Agreement"), among Montgomery Ward & Co., Incorporated (the "Company"), the banks named therein and the agents named therein. Terms not otherwise expressly defined herein shall have the meanings set forth in the Credit Agreement. 1. The Company hereby (a) represents and warrants that no Event of Default or Unmatured Event of Default has occurred and is continuing, and (b) concurrently herewith agrees to pay all Liabilities of the Company now outstanding to ___________________ (the "Terminated Bank") (including without limitation all such amounts due the Terminated Bank under Sections 6, 8.4, 9, 15.5 and 15.6 of the Credit Agreement), which Liabilities on the date hereof are $ . 2. All obligations of the Terminated Bank (excluding any obligations arising under Sections 6.9, 8.4(c), 14.2 and 15.5 of the Credit Agreement with respect to any matters arising prior to the effective date of such termination) are hereby terminated and the Terminated Bank is hereby released therefrom and the Terminated Bank hereby ceases to be a party to the Credit Agreement and a Bank thereunder. 3. _________________ (the "Replacement Bank") hereby becomes a party to the Credit Agreement and a Bank thereunder and agrees to be bound thereby with the same effect as if the Replacement Bank were the Terminated Bank immediately prior to such substitution. The Commitment of the Replacement Bank shall be $ and the Termination Date for such Bank shall be ________________, 19__. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Illinois. This Agreement may be executed in any number of counterparts and by the different parties on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Agreement. MONTGOMERY WARD & CO., INCORPORATED By: Title: [REPLACEMENT BANK] By: Title: THE BANK OF NOVA SCOTIA, in its capacity as Administrative Agent By: Title: EX-10 8 EXHIBIT 10.(iv)(A)(iii) AMENDMENT NO. 1 TO THE AMENDED AND RESTATED MONTGOMERY WARD & CO., INCORPORATED STOCK OWNERSHIP PLAN This Amendment No. 1 to the amended and restated Montgomery Ward & Co., Incorporated Stock Ownership Plan (the "Plan") is made as of the 20th day of October, 1994. WHEREAS, MONTGOMERY HOLDING CORP., a Delaware corporation, (the "Company") has previously amended and restated the Plan; and WHEREAS, pursuant to Section 16 of the Plan the Company has reserved the right to amend the Plan; and WHEREAS, the Company desires to amend the Plan. NOW, THEREFORE, the Plan is hereby amended in the following manner: 1. The second sentence of Section 1 is deleted in its entirety and the following is inserted in lieu thereof: "The purpose of the Associate Plan of the Program is to attract and retain outstanding individuals as associates, advisors and consultants of Montgomery Ward Holding Corp. ("Company"), Montgomery Ward & Co., Incorporated ("Ward"), and their subsidiaries and affiliates (Company, Ward and their subsidiaries and affiliates, collectively or individually, "Ward Group"), excluding associates, advisors and consultants who are also directors of the Company, and to provide incentives for such associates, advisors and consultants to expand and improve the profits and achieve the objectives of the Ward Group by providing to such individuals opportunities to acquire shares of Class A Common Stock, Series 1 (par value $.01 per share) ("Series 1 Shares"), Class A Common Stock, Series 2 (par value $.01 per share) ("Series 2 Shares") and Class A Common Stock, Series 3 (par value $.01 per share) ("Series 3 Shares") of the Company (the Series 1 Shares, the Series 2 Shares and the Series 3 Shares being hereinafter collectively referred to as "Shares") and thereby provide such individuals with a greater proprietary interest in and closer identity with the Ward Group and its financial success." 2. The first sentence of Section 7 is deleted in its entirety and the following is inserted in lieu thereof: "The total number of Shares allocated to this Program and available to designated Participants under this Program is One Million (1,000,000) Series 1 Shares, Five Million Four Hundred Twelve Thousand (5,412,000) Series 2 Shares and Two Million (2,000,000) Series 3 Shares, except as such numbers of Shares shall be adjusted in accordance with the provisions of Section 11." 3. The following sentence is inserted as the first sentence of Section 12: "Notwithstanding anything herein to the contrary, no Awards, Purchase Rights or Options shall be granted to any person who is not an associate of the Company or of one of its direct or indirect subsidiaries unless the applicable Committee, by resolution, determines that such grant of an Award, Purchase Right or Option would not be contrary to the securities laws of any applicable jurisdictions at the time of such grant." EX-10 9 EXHIBIT 10.(iv)(A)(5) AMENDMENT NO. 10 TO MONTGOMERY WARD & CO., INCORPORATED STOCK OWNERSHIP PLAN TERMS AND CONDITIONS This Amendment No. 10 to the Montgomery Ward & Co., Incorporated Stock Ownership Plan Terms and Conditions ("Amendment No. 10") is consented to and made as of the 22nd day of September, 1994 by and among MONTGOMERY WARD HOLDING CORP., a Delaware corporation (the "Company"), and Bernard F. Brennan, individually and as attorney-in-fact for the other parties to those certain Montgomery Ward & Co., Incorporated Stock Ownership Plan Terms and Conditions as heretofore amended and restated (the "Terms and Conditions"). WHEREAS, it is desired that the number of directorships of the Company be increased to eleven; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged the parties hereto hereby agree as follows: 1. Section 5.2 of the Terms and Conditions is hereby amended and restated as of the date hereof as set forth on Exhibit A hereto. 2. This Amendment No. 10 is adopted by the Company with the consent of the holders of not less than 66 2/3 % of the outstanding Shares, as provided in Section 7.2 of the Terms and Conditions. IN WITNESS WHEREOF, the undersigned hereby consent to and execute this Amendment No. 10 as of the day and year first above written. MONTGOMERY WARD HOLDING CORP. By: /s/ Bernard F. Brennan Bernard F. Brennan, Chairman and Chief Executive Officer /s/ Bernard F. Brennan, individually, and as attorney-in-fact for the beneficial owners of all Shares (as defined in the Terms and Conditions) held by him as Voting Trustee under that certain Voting Trust Agreement dated as of June 21, 1988. EXHIBIT A 5.2 Election of Directors. Subject to the limitations set forth herein, and in addition to any provisions relating to the election of directors by the holders of Preferred Stock which are contained in the Certificate of Incorporation and By-laws of the Company, at all times in which this Article V is in effect, the By- laws of the Company shall provide, and the participants agree to vote, for the election of a Board of Directors consisting of eleven members, six to be designated by the Designator and five to be designated by GE Capital. The By-laws shall further provide, and the Participants agree, that, disregarding any directors which may be elected by the holders of Preferred Stock pursuant to the provisions of the Company's Certificate of Incorporation: (a) Intentionally omitted; (b) at such time, if any, as GE Capital and the GE Capital Affiliates shall cease to own, in the aggregate, more than 50% of the shares of Common Stock which GE Capital and the GE Capital Affiliates purchased on June 22, 1988, the number of members of the Board of Directors which the Designator shall have the right to designate shall be increased by one and the number of members of the Board of Directors which GE Capital shall have the right to designate shall be reduced by one; and (c) at such time, if any, as GE Capital and the GE Capital Affiliates shall cease to own, in the aggregate, 20% or more of the shares of Common Stock which GE Capital and the GE Capital Affiliates purchased on June 22, 1988, GE Capital shall no longer have the right to designate members of the Board of Directors in accordance with the foregoing provisions of this Section 5.2; and the number of directors to be elected shall be reduced to nine, seven to be elected by the holders of Class A Shares, voting as a class, and two to be elected by the holders of Class B Common Stock, voting as a class; provided, however, that as long as that certain Account Purchase Agreement, dated as of June 24, 1988, between Ward and Montgomery Ward Credit Corporation shall be in effect and GE Capital or any GE Capital Affiliate shall own any shares of Class B Common Stock, GE Capital shall have the right to elect one of the two directors to be elected by the holders of Class B Common Stock. In the event of a vacancy on the Board of Directors, the party who had the right to designate the director whose seat is vacant shall have the right to designate the party who shall fill the vacancy. The party who had the right to designate a director shall also have the right to cause that director to be removed. EX-27 10
5 1,000,000 9-MOS DEC-31-1994 OCT-1-1994 37 330 108 0 1630 0 1966 603 4488 0 0 0 75 0 632 4488 4310 4649 3347 3347 1182 0 41 79 26 53 0 0 0 53 1.18 1.18
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