NOTE AMENDMENT AGREEMENT
NOTE AMENDMENT AGREEMENT, dated as of November 1, 1995 (this
"Agreement"), among The Prudential Insurance Company of America,
a New Jersey corporation ("Holder"), Federated Noteholding
Corporation II, a Delaware corporation ("Maker"), and Federated
Department Stores, Inc., a Delaware corporation ("Parent").
RECITALS:
A. Holder is the payee of a Promissory Note of Maker,
dated October 11, 1995, in the principal amount of
$222,322,613.20 (the "Existing Note").
B. In connection with the Purchase Agreement, dated as of
August 14, 1995 (as such agreement may be amended, supplemented
or otherwise modified from time to time, the "Purchase
Agreement"), among Holder, Maker and Parent, Holder and Maker
have agreed to amend and restate the Existing Note to increase
the principal amount thereof to $242,322,613.20.
NOW, THEREFORE, the parties hereto agree as follows:
1. Amendment of Note. On November 3, 1995, Maker shall
amend and restate the Existing Note by executing and delivering
to Holder an Amended and Restated Promissory Note in the form
attached hereto as Exhibit A (the "Amended and Restated Note").
Contemporaneously with and in exchange for Maker's execution and
delivery of the Amended and Restated Note, Holder agrees to
deliver the Existing Note to Maker for cancellation.
2. Buyer's Note. From and after the execution and
delivery of the Amended and Restated Note, the term "Buyer's
Note" shall mean and refer to the Amended and Restated Note (as
such note may be amended, supplemented or otherwise modified from
time to time) for all purposes under the Transaction Documents
(as defined in the Amended and Restated Note), including, without
limitation, the definition of "Buyer's Note" in Section 1.2.2 of
the Purchase Agreement.
3. Consent of Parent. Parent hereby consents to the
execution and delivery by the Maker of the Amended and Restated
Note in exchange for the Existing Note and confirms that the
amendment and restatement of the Existing Note will not alter or
impair the liability or obligations of the Parent, or the rights
and security interests of Holder, under any Transaction Document,
including, without limitation, the Guaranty (as defined in the
Purchase Agreement) and the Parent Pledge Agreement (as defined
in the Purchase Agreement), to which the Parent is a party.
4. Counterparts and Execution. This Agreement may be
executed in one or more counterparts, all of which shall be
considered one and the same agreement, and shall become effective
when one or more such counterparts have been signed by each of
the parties and delivered to the other parties.
5. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the internal laws of the State
of New York, without regard to the principles of conflict of laws
thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: \s\ Ray Giordano
Name: Ray Giordano
Title: Vice President
FEDERATED NOTEHOLDING
CORPORATION II
By: \s\ Dennis J. Broderick
Name: Vice President
Title: Vice President
FEDERATED DEPARTMENT STORES, INC.
By: \s\ Dennis J. Broderick
Name: Vice President
Title: Vice President
Exhibit A
AMENDED AND RESTATED PROMISSORY NOTE
$242,322,613.20 New York, N.Y.
October 11, 1995
FOR VALUE RECEIVED, the undersigned, Federated
Noteholding Corporation II, a Delaware corporation ("Maker"),
promises to pay to the order of The Prudential Insurance Company
of America, a New Jersey corporation (together with any
subsequent holder of this Note, "Holder"), at its offices located
at 751 Broad Street, Newark, New Jersey 07102, or at such other
address as Holder may from time to time designate in writing, the
principal sum of $242,322,613.20, together with interest thereon
from the date hereof on the unpaid principal balance at the rate
and as herein provided. Unless otherwise specified by Holder in
writing, all payments on this Note shall be made in lawful money
of the United States of America and in immediately available
funds, by a wire transfer of funds to The Prudential Insurance
Company of America Mortgage Loan Service Account No. 050-54-493
at Morgan Guaranty Trust Company of New York, 23 Wall Street, New
York, New York 10015, Reference Mortgage Loan No. 6 101 003.
The principal amount of this Note and all accrued and unpaid
interest thereon shall become due and be paid at 12:00 noon,
Eastern Time, on October 11, 2000 (the "Maturity Date") or any
earlier date on which such principal and interest becomes due
under the terms of this Note.
All capitalized terms used in this Note and not
otherwise defined have the meanings given in the Purchase
Agreement dated as of August 14, 1995 (the "Purchase Agreement")
among Maker, Holder and Federated Department Stores, Inc., a
Delaware corporation and the parent company of Maker ("Parent").
The principal amount from time to time outstanding
hereunder shall bear interest at a rate per annum (the "Interest
Rate") (i) from the date hereof through the Conversion Date (as
hereafter defined), equal to the LIBOR Rate (as hereafter
defined) plus one and one quarter percent (1.25%), provided that
$20,000,000 principal amount of this Note shall not begin to bear
interest until October 26, 1995, but shall not otherwise be
treated any differently than the remaining principal amount of
this Note, and (ii) from the Conversion Date through the Maturity
Date, equal to the Fixed Rate (as hereafter defined). Interest
on the unpaid balance of the Note shall be computed on the actual
number of days elapsed, and a year of 360 days.
On the Conversion Date, Maker shall pay to Holder a fee
equal to the product of (i) one half percent (0.5%) and (ii) an
amount equal to the difference of Seventy Five Million Dollars
($75,000,000) (or such lower amount, if any, that Maker may have
elected on or prior to the Conversion Date for purposes of the
third paragraph immediately succeeding this paragraph) minus the
aggregate principal amount of Asset Sale Prepayments (as
hereafter defined) made on this Note on or prior to such
Conversion Date (such amount to be deemed to equal zero if such
difference is a negative number).
For purposes of this Note, (i) "LIBOR Rate" means, with
respect to any Interest Period (as hereafter defined), the rate
for deposits in U.S. dollars for a period equal to such Interest
Period (a) that appears in the Wall Street Journal as the London
Interbank Offered Rate in effect for the day that is two business
days (i.e., days on which banks are not required or authorized to
close in New York City and, if the applicable business day
applies to principal amounts bearing interest at the LIBOR Rate,
days on which business in the London interbank market is
conducted) before the first day of such Interest Period and, if
such rate is not published in the Wall Street Journal, (b) that
appears on the display designated as "Page 3750" on the Telerate
Service (or such other page as may replace Page 3750 on that
service for the purpose of displaying London interbank offered
rates of major banks) at 11:00 a.m. (London time) two business
days before the first day of such Interest Period; (ii) "Interest
Period" means a period of one month, with the first such Interest
Period commencing on the date of this Note and each succeeding
Interest Period commencing on the last day of the preceding
Interest Period, provided that, if the date of this Note shall be
a date other than the first day of a month, the initial interest
period shall begin on the date of this Note and end on the first
business day of the second month immediately succeeding the date
of this Note and the LIBOR Rate payable with respect to such
initial Interest Period shall be determined as if such initial
Interest Period was a period of one month; it being understood
that whenever the last day of any Interest Period would otherwise
occur on a day other than a business day, the last day of such
Interest Period shall be extended to occur on the next succeeding
business day, provided that if such extension would cause the
last day of such Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur
on the next preceding business day, and whenever the first day of
any Interest Period occurs on a day for which there is no
numerically corresponding day in the calendar month at the end of
such Interest Period, such Interest Period shall end on the last
business day of such calendar month; (iii) "Conversion Date"
means the earlier of (a) April 11, 1996 and (b) any date that the
Maker shall specify, upon one business day's prior written notice
to the Holder, as the Conversion Date; and (iv) "Fixed Rate"
means a rate per annum, determined as of 1:00 p.m. (New York City
time) on the second business day immediately preceding the
Conversion Date, equal to (a) the annual yield of actively traded
United States Treasury securities having an original maturity
equal to the remaining life of this Note (determined based on the
period extending from the Conversion Date through the Maturity
Date) or, if no such securities shall exist, the average annual
yield (based on a straight-line interpolation) of such securities
having original maturities most closely approximating the
remaining life of this Note, in each case, as such annual yield
for such securities appears, at such time and on such business
day, on the applicable display on the Telerate Service displaying
the annual yields of United States Treasury securities, plus (b)
one and three quarters percent (1.75%); and (v) "Cumulative Asset
Sale Deficiency" means, on any date, the amount by which (a) the
aggregate Stated Value (as hereafter defined) of all retail
stores on or constituting Mortgaged Properties (as hereafter
defined) sold in Assets Sales (as hereafter defined) on or prior
to such date exceeds (b) the sum of (1) the aggregate Net
Proceeds (as hereafter defined) of all retail stores on or
constituting Mortgaged Properties sold in Asset Sales on or prior
to such date and (2) the aggregate amount paid pursuant to
subclause (ii) of clause (b) of the fourth following paragraph on
account of all Asset Sales on or prior to such date.
Interest on the outstanding principal amount of this
Note shall be payable monthly in arrears on the last day of each
Interest Period prior to the Conversion Date, monthly in arrears
on the first business day of each month following the Conversion
Date and on the Maturity Date.
At any time and from time to time (i) from the date of
this Note through (but excluding) the Conversion Date, Maker may
prepay this Note, in whole or in part, without penalty or
premium, and (ii) from and including the Conversion Date through
and including the day occurring 18 months after the Conversion
Date (such 18-month period being the "Prepayment Period"), Maker
may prepay this Note, without penalty or premium, in an aggregate
principal amount up to an amount (the "Yield-Free Prepayment
Amount") equal to the difference of (a) Seventy Five Million
Dollars ($75,000,000) (or such lower amount as Maker may have
elected by notice to the Holder on or prior to the Conversion
Date) minus (b) the aggregate principal amount of Asset Sale
Prepayments (as hereafter defined) made during the period covered
by clause (i) above (such amount to be deemed to equal zero if
such difference is a negative number), together, in each case
above, with accrued and unpaid interest on the principal amount
prepaid, and, in any such case, Maker shall give Holder at least
five business days' prior notice of the intended prepayment.
The Maker shall, on any day on which the outstanding
principal balance of this Note shall be less than $100,000,000,
prepay the outstanding principal balance of this Note in whole,
together with accrued and unpaid interest on the principal amount
so prepaid.
Upon any sale (an "Asset Sale") by any person,
including Parent or any subsidiary of Parent, of any mortgaged
property included within the Collateral and listed on Schedule 1
hereto (each such property, a "Mortgaged Property") other than a
Mortgaged Property in respect of which a prepayment has
theretofore been made pursuant to the next following paragraph,
Maker shall prepay the outstanding principal balance of this Note
(each such prepayment, an "Asset Sale Prepayment") in an amount
equal to the sum of (i) the lesser of, or, if after giving effect
to such Asset Sale, more than ten (10) retail stores (exclusive
of any warehouse or storage facilities) on or constituting
Mortgaged Properties shall have been sold by any Asset Seller (as
hereafter defined), the greater of, (a) the net proceeds (net of
reasonable and customary selling costs and expenses, including,
without limitation, fees and expenses with respect to legal and
brokerage fees, commissions and disbursements, incurred in
connection with such sale and of all taxes and other governmental
costs and expenses, other than income taxes, actually paid or
estimated, in good faith, to be payable by the seller in
connection with such sale) of such Asset Sale (the "Net
Proceeds") actually received by the seller of the Mortgaged
Property (the "Asset Seller") and (b) the stated value of such
Mortgaged Property set forth on Schedule 1 hereto (the "Stated
Value") and (ii) such additional amount, if any, as may be
required to result in the Cumulative Asset Sale Deficiency, after
giving effect to such Asset Sale and all amounts prepaid in
respect thereof pursuant to this paragraph, being no greater than
$10,000,000. For purposes of the foregoing, if the Asset Seller
shall receive noncash proceeds as all or part of the
consideration for an Asset Sale, the Asset Seller shall be deemed
to have actually received gross proceeds in an amount equal to
the principal amount of any debt instruments, and the fair value
(as determined in good faith by the Asset Seller) of any other
noncash proceeds, included in such consideration and Maker shall
make a prepayment under this Note as required above as if the
Asset Seller actually received Net Proceeds in an amount
determined based upon such Asset Seller's deemed receipt of gross
proceeds.
Each Asset Sale Prepayment shall be due and payable on
the date on which the Asset Seller receives (or, in the case of
noncash proceeds, is deemed to have received) the Net Proceeds of
the Asset Sale relating thereto.
In addition to the foregoing, if, on the last day of
the Prepayment Period, one or more stores on the Mortgaged
Properties are then Closed for Business (as hereafter defined),
Maker shall, on such last day, prepay the outstanding principal
balance of this Note in an amount equal to the aggregate of the
Stated Values of all such Mortgaged Properties, if any.
Following the Prepayment Period, whenever a store on a Mortgaged
Property is Closed for Business, (a) Maker shall, on or before
the fifth business day after such store is Closed for Business,
prepay the outstanding principal balance of this Note in an
amount equal to the Stated Value of such Mortgaged Property and
(b) such store shall be deemed to have been sold by an Asset
Seller for purposes of clause (i) of the second preceding
paragraph. A store shall be considered "Closed for Business," if
such store has been permanently closed for business or if more
than fifty percent (50%) of the selling area of such store has
been closed to the public for more than thirty (30) consecutive
days other than for repair or remodeling.
With respect to any prepayments (whether voluntary or
mandatory or upon an Asset Sale or pursuant to the immediately
preceding paragraph or upon acceleration following the occurrence
and during the continuance of a Default) of principal on this
Note (i) made during the Prepayment Period in an aggregate
principal amount in excess of the Yield-Free Prepayment Amount or
(ii) made after the expiration of the Prepayment Period, the
Maker shall pay, in addition to accrued and unpaid interest on
the principal amount prepaid, the Yield Maintenance Premium set
forth in Schedule 2 hereto.
The principal amount evidenced by this Note, together
with accrued and unpaid interest, may be declared to be, or may
automatically become, immediately due and payable upon the
occurrence and during the continuance of any of the following
events (each a "Default"):
(1) Maker fails to make any payment of
principal (including without limitation mandatory
prepayments of principal) or interest or other amounts
due hereunder or under any other Transaction Document
(as hereafter defined) when the same becomes due and
payable; or
(2) A default occurs under any contract,
agreement, lease, document, or other obligation to
which the Maker or Parent or any subsidiary of Parent
is a party or by which any of their respective
properties are bound (other than a Transaction
Document), and such default (i) arises from the failure
of any such entity to make, at the final maturity
thereof, after giving effect to any applicable grace
period, any payment in respect of indebtedness of any
such entity in excess of $25,000,000 aggregate
principal amount or (ii) causes indebtedness of any
such entity in excess of $25,000,000 aggregate
principal amount to become due prior to its stated
maturity or prior to its regularly scheduled dates of
payment; or
(3) (i) Maker or Parent or any subsidiary of
Parent shall (a) generally not pay its debts as such
debts become due, or shall admit in writing its
inability to pay its debts generally, or (b) make a
general assignment for the benefit of creditors, (ii)
any proceeding shall be instituted by or against any
such entity seeking to adjudicate it as bankrupt or
insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency, or reorganization
or relief of debtors, or seeking the entry of an order
for relief or the appointment of a receiver, trustee,
custodian, or other similar official for it or for any
substantial part of its property and, in the case of
any such proceedings instituted against any such entity
(but not instituted by it), either such proceedings
shall remain undismissed or unstayed for a period of 45
calendar days or any of the actions sought in such
proceedings shall occur, or (iii) any such entity shall
take any corporate action to authorize any of the
actions set forth above in this paragraph (3); or
(4) Either of Maker or Parent is dissolved;
or
(5) Any representation or warranty made or
deemed made by Maker or Parent in this Note, the
Purchase Agreement, the Pledge and Security Agreement
dated the date hereof between Maker and Holder, the
Guarantee Agreement dated the date hereof between
Parent and Holder, the Pledge Agreement dated the date
hereof between Parent and Holder or any note, agreement
or other document delivered in connection with any
thereof or pursuant to any thereof (the foregoing
instruments collectively, whether now existing or
hereafter delivered, the "Transaction Documents") is
false in any material respect when made or deemed made;
or
(6) Maker or Parent defaults in any material
respect in the full and timely performance of any of
its obligations under any of the Transaction Documents,
provided that Holder has given Maker and Parent at
least 15 calendar days' written notice of the
occurrence or existence of such default and, unless
such obligation is under the Guarantee, such obligation
is not immaterial or insignificant in nature; or
(7) A judgment or judgments in an aggregate
amount in excess of $10,000,000, to the extent not
covered by insurance, shall be rendered against Maker
or Parent or any subsidiary of Parent and within 60
days after entry thereof such judgment is not
discharged or execution thereof stayed pending appeal,
or within 60 days after the expiration of any such
stay, such judgment is not discharged; or
(8) Maker or Parent challenges in writing
the legality, validity, enforceability or binding
effect of any of the Transaction Documents, or consents
to or acquiesces in such challenge by any other person
or entity, or any court of competent jurisdiction
determines that any of the Transaction Documents is
illegal, invalid, unenforceable or not binding; or
(9) After such time as Parent shall have,
directly or indirectly, acquired all of the Common
Stock pursuant to the Merger Agreement, Parent shall
cease to own, directly or indirectly, capital stock of
the Company representing a majority of the voting power
of shares entitled to vote generally in the election of
directors of the Company;
then, and in every such event, (i) if such Default is not a
Default specified in subclause (ii) or (iii) of clause (3) above,
Holder may, by notice in writing to Maker, immediately declare
this Note to be, and it shall thereupon become, due and
immediately payable without presentment, demand, protest, or
other notice of any kind, all of which are hereby expressly
waived, and if such Default is a Default specified in subclause
(ii) or (iii) of clause (3) above, this Note shall automatically
become immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby
expressly waived and (ii) Holder shall have such other rights to
enforce all or any of the obligations of the Maker or Parent
under this Note and the other Transaction Documents as are given
hereunder or thereunder or by law.
All payments and prepayments of amounts due hereunder
shall be applied as follows:
(1) First, to payment or reimbursement of
all costs and expenses of Holder to be paid or
reimbursed by Maker and not theretofore paid or
reimbursed;
(2) Second, to the payment of all interest
theretofore accrued and unpaid hereunder;
(3) Third, to the payment in full of the
entire principal amount outstanding hereunder; and
(4) Fourth, to the payment of all other
amounts due to Holder under any Transaction
Document.
If Maker fails to make any payment of principal,
accrued and unpaid interest or any other amount due hereunder or
under any Transaction Document on any due date therefor, whether
at stated maturity, by required prepayment, by acceleration, or
otherwise, the unpaid amount (including, to the extent
enforceable at law, any unpaid amount of interest) shall bear
interest at the Default Rate until paid. For purposes of this
Note, the "Default Rate" shall be a rate per annum equal to the
sum of the LIBOR Rate in effect from time to time plus 3.25% or
the Fixed Rate plus 2%, as applicable. Maker shall also pay to
Holder, in addition to the amount due, all reasonable costs and
expenses incurred by Holder in collecting or enforcing, or
attempting to collect or enforce this Note, including without
limitation court costs and reasonable attorneys' fees and
expenses (including reasonable attorneys' fees and expenses on
any appeal by either Maker or Holder and in any bankruptcy
proceeding).
With respect to the amounts due pursuant to this Note,
Maker waives the following:
(1) All rights of exemption of property from levy or
sale under execution or other process for the collection of
debts under the Constitution or laws of the United States or
any State thereof;
(2) Demand, presentment, protest, notice of dishonor,
notice of nonpayment, suit against any party, diligence in
collection of this Note, and all other requirements
necessary to enforce this Note; and
(3) Any further receipt by or acknowledgment of any
collateral now or hereafter deposited as security for the
indebtedness evidenced by this Note.
In no event shall any amount deemed to constitute
interest due or payable hereunder (including interest calculated
at the Default Rate) exceed the maximum rate of interest
permitted by applicable law (the "Maximum Amount"), and in the
event such payment is inadvertently paid by Maker or
inadvertently received by Holder, then such sum shall be credited
as a payment of principal or other amounts (other than interest)
outstanding hereunder, and if in excess of the outstanding amount
of principal or other amounts outstanding hereunder, shall be
immediately returned to Maker upon such determination. It is the
express intent hereof that Maker not pay and Holder not receive,
directly or indirectly, interest in excess of the Maximum Amount.
Holder shall not by any act, delay, omission, or
otherwise be deemed to have modified, amended, waived, extended,
discharged, or terminated any of its rights or remedies, and no
modification, amendment, waiver, extension, discharge, or
termination of any kind shall be valid unless in writing and
signed by Holder. All rights and remedies of Holder under the
terms of this Note and applicable statutes or rules of law shall
be cumulative, and may be exercised successively or concurrently.
Maker agrees that there are no defenses, equities, or setoffs
with respect to the obligations set forth herein, and to the
extent any such defenses, equities, or setoffs may exist, the
same are hereby expressly released, forgiven, waived, and forever
discharged. The obligations of Maker hereunder shall be binding
upon and enforceable against Maker and its successors and
assigns.
Wherever possible, each provision of this Note shall be
interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Note is 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 Note.
Holder may, at its option, release to Maker any
collateral given to secure the indebtedness evidenced hereby, and
no such release shall impair the obligations of Maker to Holder.
This Note was negotiated in New York, and made by
Holder and accepted by Maker in the State of New York, which
State the parties agree has a substantial relationship to the
parties and to the underlying transaction embodied hereby, and in
all respects, including without limitation matters of
construction, validity, and performance, this Note and the
obligations arising hereunder shall be governed by, and construed
in accordance with, the internal laws of the State of New York
and any applicable law of the United States of America. To the
fullest extent permitted by law, Maker hereby unconditionally and
irrevocably waives any claim to assert that the laws of any other
jurisdiction governs this Note, and this Note shall be governed
by and construed in accordance with the laws of the State of New
York pursuant to 5-1401 of the New York General Obligations
Law.
Any legal suit, action, or proceeding against Holder or
Maker arising out of or relating to this Note shall be instituted
in any federal or state court in New York, New York, pursuant to
5-1402 of the New York General Obligations Law, and Maker
waives any objection which it may now or hereafter have to the
laying of venue of any such suit, action, or proceeding, and
Maker hereby irrevocably submits to the jurisdiction of any such
court in any such suit, action or proceeding. Maker does hereby
designate and appoint Jones, Day, Reavis & Pogue, 599 Lexington
Avenue, New York, New York 10022, Attention: Robert A. Profusek,
Esq., as its authorized agent to accept and acknowledge on its
behalf service of any and all process which may be served in any
such suit, action or proceeding in any federal or state court in
New York, New York, and agrees that service of process upon said
agent at said address (or at such other office in New York, New
York as may be designated by such agent in accordance with the
terms hereof), with a copy to Maker at the following address: 7
West Seventh Street, Cincinnati, OH 45202, Attention: Mr.
Ronald W. Tysoe, shall be deemed in every respect effective
service of process upon Maker in any such suit, action, or
proceeding in the State of New York. Maker (i) shall give prompt
notice to Holder of any changed address of its authorized agent
hereunder, (ii) may at any time and from time to time designate a
substitute authorized agent with an office in New York, New York
(which office shall be designated as the address for service of
process), and (iii) shall promptly designate such a substitute if
its authorized agent ceases to have an office in New York, New
York or is dissolved without leaving a successor.
MAKER, TO THE FULLEST EXTENT THAT IT MAY LAWFULLY DO
SO, WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING, INCLUDING
WITHOUT LIMITATION ANY TORT ACTION, BROUGHT WITH RESPECT TO THIS
NOTE. HOLDER MAY FILE A COPY OF THIS WAIVER WITH ANY COURT AS
WRITTEN EVIDENCE OF MAKER'S KNOWING, VOLUNTARY, AND BARGAINED-FOR
AGREEMENT IRREVOCABLY TO WAIVE ITS RIGHTS TO TRIAL BY JURY, AND
THAT, TO THE FULLEST EXTENT THAT IT MAY LAWFULLY DO SO, ANY
DISPUTE OR CONTROVERSY WHATSOEVER BETWEEN MAKER AND HOLDER SHALL
INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE
SITTING WITHOUT A JURY.
Maker may not assign or delegate this Note or any of
its rights or obligations hereunder without the prior consent of
Holder (which consent may be given or withheld in the sole
discretion of Holder). Holder may assign or delegate this Note
or any of its rights or obligations hereunder without prior
consent of or notice to Maker or Parent.
This Note is secured by, and entitled to the benefits
of, a Pledge and Security Agreement between Maker and Holder
dated concurrently herewith. Parent has guaranteed all of the
obligations of Maker under this Note and the other Transaction
Documents under a Guarantee Agreement between Parent and Holder
dated concurrently herewith. The obligations of Parent under
such Guarantee Agreement are secured by a pledge of the stock of
Maker and certain other collateral related thereto under a Pledge
Agreement between Parent and Holder dated concurrently herewith.
IN WITNESS WHEREOF, Maker has caused this Note to be
duly executed on its behalf as of the day and year first above
written.
FEDERATED NOTEHOLDING CORPORATION II
By:
Name:
Title:
SCHEDULE 1
STATED VALUES OF MORTGAGED PROPERTIES
Store Stated
Value1
San Francisco $15,500
Stonestown 11,800
Glendale 17,200
Del Amo 15,500
Stevens Crk/Valley 13,000
Fair
Oakland 6,200
Montclair 7,500
Stanford 5,300
Chula Vista 8,000
Sherman Oaks (1993 9,700
Sales)
Arden Fair 6,400
Vallco 4,400
Newpark 4,000
Newport Beach 5,300
Paradise Valley 4,800
Thousand Oaks 6,000
Fairfield/Solano 4,000
El Cerrito 5,000
Escondido 6,300
La Jolla 5,900
Huntington Beach 7,500
West Covina 6,000
Country Club 4,400
Santa Barbara 4,300
Panorama City 5,100
Biltmore 5,600
Fresno 4,200
Tuscon Mall 3,500
Long Beach 5,100
Crenshaw/Baldwin H. 3,000
Ventura 5,500
Service Center 5,000
$221,000
- -------------------------
1 In thousands.
SCHEDULE 2
YIELD MAINTENANCE PREMIUM
If the Note is prepaid for any reason, whether voluntarily or
involuntarily, or after acceleration by Holder upon an Event of
Default, at a time when the Note requires the payment of the
Yield Maintenance Premium in respect of such prepayment, Maker
shall pay a prepayment premium (the "Yield Maintenance Premium")
equal to an amount equal to the Present Value of the Loan (as
hereinafter defined) less the amount of principal being prepaid,
including accrued interest, if any, calculated as of the
Prepayment Date.
The foregoing notwithstanding, if the Note is prepaid during the
ninety (90) day period immediately prior to the Maturity Date,
there shall be no Yield Maintenance Premium payable on account of
such prepayment.
Holder shall notify Maker of the approximate amount (the exact
amount to be determined on the Prepayment Date) and basis of
determination of the Yield Maintenance Premium. Holder shall not
be obligated to accept any prepayment of the principal balance of
the Note in respect of which the Yield Maintenance Premium is
payable unless such prepayment is accompanied by the Yield
Maintenance Premium and all accrued interest and other sums then
due under the Note.
For the purposes of determining the Yield Maintenance Premium,
the following terms shall have the following meanings:
The "Treasury Rate" is the semi-annual yield on the Treasury
Constant Maturity Series with maturity equal to the remaining
life of the Note, for the week prior to the Prepayment Date, as
reported in Federal Reserve Statistical Release H.15 _ Selected
Interest Rates, conclusively determined by the Holder on the
Prepayment Date, absent manifest error. The rate will be
determined by linear interpolation between the yields reported in
Release H.15, if necessary. (In the event Release H.15 is no
longer published, Holder shall select a comparable publication to
determine the Treasury Rate.)
The "Discount Rate" is the rate which, when compounded monthly,
is equivalent to the Treasury Rate, when compounded semi-
annually.
The "Present Value of the Loan" shall be determined by
discounting all scheduled payments of principal and interest
remaining to maturity of the Note, attributed to the amount being
prepaid, at the Discount Rate. If prepayment occurs on a date
other than a scheduled monthly payment date, the actual number of
days remaining from the Prepayment Date to the next scheduled
monthly payment date will be used to discount within this period.
Maker agrees that Holder shall not be obligated to actually
reinvest the amount prepaid in any Treasury obligations as a
condition precedent to receiving the Yield Maintenance Premium.